Bishops plans to take on local rivals have stalled in shanghai. Asiagood morning to our asiapacific viewers. Upside, four the for four days in a row. Yvonne, it is valentines day so investors were feeling the love. Have my pink and red valentines day tie in gettingion as youre ready for the year of the dog in china. Interesting what happened. 2. 12 is where it came in. When s pxpecting 1. 9 cominget numbers were in. We ended up near session highs. Vonne despite how we see yields heading higher, it seems were shrugging off inflation print and adding to risk. The interesting to see s p 500 reverse and gain back the losses from this year already. Ramy lets get more into this yvonne, because the s p 500 advancing four days in a solidifying the rebound despite the higherthanexpected set by a decline in retail sales. Down, su keenan is here with more. It seems the bulls were ready to run. Su it seems were getting two stories, perhaps the economy not as strong as we thought with the decline in retail sales but inflation that did not spur a selloff as we saw two weeks ago, as you mentioned earlier, the nasdaq on track for one of its best weeks in almost three years. Snapshot because the dollar continues downward. Treasury yields at a fouryear high. Oil popping above the 60 mark bullish supply report where we saw eight straight weekly pipelinein a key supply storage area. Lets go into the bloomberg for a very interesting look. Qqqs, which, tracks the nasdaq, market darling gets dumped. Friday last week showing a huge move downward. One of the biggest dumps, theiest withdrawal since 2000 dotcom crash. Can you believe that . Billion was yanked from the power shares qqq and it like many investors have rushed back in. A rebound. Ck of sales we also saw retail where inflation was hot but spending cold. Saw Retail Stocks edge higher. Su the two balance each other and it looks like the bulls riskon sentiment carried the day. Stocks that were standouts, even stocks that were typically under pressure. Them. Le is one of they announced after the bell last night they had a new taco bell c. E. O. , brian nichol, will help lead the turnaround and investors all in. At thisa look heavily shorted. They would gought lower, fossil, trying rival apple in terms of the smart watch. They came out with strong sales and strong move forward and it 99 today alone. The oneweek chart, ended the with almost 90 gain. Needless to say, the best move in the companys history so it you the size of the moves to the upside. Lastly, lets go into Retail Stocks. Should have been a down day for retailers. Macys, j. C. Penney, struggling large retail chains Abercrombie Fitch is a mall store for teenagers. And the Monroe Company sells parts and auto sales were sentimenthe bullish carried these stocks higher and we had near record highs for the major index. Shrugging offs weak retail sales data. Asia, looking green, as well, heading into the chinese thin volumesday, could be throughout the Asian Session but new zealand, up. 25 , nzx. Big moves with the dollar on c. P. I. Data, sizable in asian currencies. Ax200 up. Ng the the aussie jobs number could be event. T and yields picking up higher, 2. 93 . Ies at be aussie premium seems to shrinking. Korea, checking japanese futures and trade in chicago, expecting a bounceback. 5 yesterday. Of yen strength back below 107. Of course, several markets asias closed for the Lunar New Year holidays. No trade on thursday in south china, taiwan or vietnam. Hong kong, taking a halfday afternoon or afterhours trading. Ramy in the United States, a deeper dive into the u. S. C. P. I. Data with policy editor kathleen hays. Thetarted the day in prehour down. Everyone said, oh, no. And we happened to come up ended near session highs. What happened . Kathleen it depends how you look at this. The question is how strong is the response from the Federal Reserve and how much do bond we did have ad selloff in bonds, the 10year note up to a january 2014 high. Lets look at the numbers. Were going to start with versus c. P. I. , january december. The headline month onmonth of 0. 1, forecast at 0. 3. That caught peoples eyes, c. P. I. Moves up, the feds key gauge has to move, too. Overmonth core unchanged at 0. 3. Overyear,ar unchanged at 2. 1 . Core unchanged, 2. 8 . There are caveats. If you look at the headline number, we have rising oil and gasoline prices. Oil pulled back but gasoline hasnt. Thats helping to fuel that 0. 5. Numbers,look at core jump in food prices but food away from home was a big driver of that. Of minimumbeen a lot wage increases at restaurants, establishments like that. Thats part of it. Not necessarily a cyclical indicator. Its moving those wages. We dont know if its a canary in the coal mine for other wages. Thatberg economics saying to a certain extent, january c. P. I. Overstates the extent of sayingon acceleration, its moving higher but not a big jump. But they also show a very interesting point. Looks at goods inflation versus Services Inflation and c. P. I. U see for the core, the Services Prices are this white line, 146. Number, and if you look at the far righthand side, theyve globled out 2. 5 year overyear. Prices, the blue line, still in deflationary territory, doing a little bit better but if you look at big picture broad forces, you dont see a spike up in inflation. Key inflation, for the Federal Reserve, for bond investors, for everybody, is, will what were seeing in the c. P. I. Translate deeplyese figures more and certainly into the numbers the fed watches closely, the deflator numbers. Get those later in the month. Yvonne are those bond bears overreacting on the data . Does it depend on wages . Sohleen wages are important, yvonne, because if youre a bull on inflation and bearish on bonds, you say it happen and boy, oh, boy, unemployment so low, labor so tight, youll see inflation accelerating this year. Want to show you a chart. Talked about the average Hourly Earnings jump up to 2. 6 and when you look at production that series works in set buties, its a sub a large part and that number is steady. Comment on retail sales. People saying that yes you had cold weather, that could have weak but theres also a consumer whose savings rate is dropping. Whose wages arent rising and squeezed andg after all this, the chance of a march areike in firmly back up at 100 so thats a slam dunk. This didnt really change reinforce that view but well see what happens over the course of the year. 4, or what. Yvonne thank you. Policy editor in new york. To the news with Courtney Collins. Courtney south korean president bowed to pressure and resigned but says he disagrees with the decision him out calling his treatment unfair. Zumas nine years in office have marred by scandals including bribery and selling influence. The anc is expected to name ramaphosa as acting president. Lives should be lost in my name and also the anc should be divided in my name. Come to thefore decision to resign as president immediateublic with effect. Courtney authorities in florida suspectede captured a gunman who killed numerous people at a high school in the south of the state. Identified as a former student, Broward County at least Office Counts 14 victims although it is unclear whether that means dead or wounded. Offered federal assistance to the state and condolences to victims families. A shooting at the headquarters of the National Security agency with at least one person wounded and a suspect in custody. S. U. V. Rammed a barrier at fort meade and the f. B. I. Says it appears all the gunfire was directed towards the vehicle. Three people were hurt but Authorities Say none of the by thes were caused shootings. The driver of the s. U. V. And two questioned. Re being and the taliban is offering it twurks talks with end almost 16 years of fighting in afghanistan. An email from the leader says war was imposed on the group and choice is to resolve the situation through peaceful u. S. Mustnd says the end its occupation and accept afghanistans right to form, quote, a government consistent beliefs of our people. Global news 24 hours a day, 2700ed by more than journalists and analysts in more than 127 countries. Im Courtney Collins. Bloomberg. Yvonne still ahead, breaking down first half earnings. Ramy more on the u. S. Inflation situation and what it could mean the markets. Do you think we could lean to 4 . I think the fed will not be impressed yet. However, i think the base case remains three rate hikes this year. Look, what numbers like this do is they increase the odds, right . The market has priced in a little bit of probability of four rate hikes and i think the market is correct but at the same time i wouldnt expect the go overboard and become aggressive soon in response to data like this. I think it takes more to more. De them to do ramy as we were talking in the break, we said there was a surprise that the markets rose but the bond markets, you said, quote unquote, are suspicious. About that. I think the bond market is nervous about inflation, which even regardless. Fed, is not a good thing, obviously, for bonds. Theits suspicious about fed reactions if inflation i personallyup so think there is reason to be cautious on both of those counts. I dont think its obvious that is about to go through the roof and i think its even obvious that the fed will react aggressively if inflation a vengeance. Th thene its interesting, market psychology behind this. A year ago, if we saw inflation surprise to the upside, the market was quick to discount that as a oneoff and blaming structural issues bike the and the Amazon Effect globallization, technology. Has that gone away . The market isnk putting a few things together, looking at fiscal stimulus, cuts, household tax cuts and the budget deal was reached last week. And together with a tight labor market. Right . The economyink that a textbook tells you, youre worried about inflation coming up. However, the economy hasnt like the textbooks tell you it should work for at least the past 20 years. Look at the experience for the past 20 years, the had very little to do with wages, with the labor market. Economists like to say the phillips curve is flat. Wage can gos unemployment can go down, and inflation doesnt care. Era at thell a new fed under powell. His speech, i guess he was delicate in terms of talking about market volatility. Thinks the fed can stay the course this year. Change jayderail or powell and the feds view of year . Ikes this that inflation needs to be or doted in the p. C. E. , conditions need to tighten more . Personal watching the p. C. E. Is important. Today we learned about c. P. I. P. C. E. Are correlated but lets see what happens in a couple of weeks with the p. C. E. Data. However, theyre never swayed by one data point. Well see what happens in the future. Financial conditions are important, as well. And stock markets started the year in exuberant fashion but has retraced in good part gains made in january. At the same time, bond yields are going up. This means that financial conditions, whatever they were the beginning of the year, theyre now tighter so that forecast. To the feds so i think this means for them to become really more xoob rant exuberant, more aggressive on the inflation front, the hurdle is higher so see loosening in the financial conditions. Account, thet into forecast, take that into account. Ramy thats a great point. To play sound from our on Bloomberg Television earlier. It will depend on why the long rate is going up. If the long rate is going up because theres high inflation and people are expecting high inflation, then the fed will continue to raise those rates. So it really depends on what not just what the actual level is. So my forecast is roughly where fed is, sort of probably three hikes this year but dependly its going to on how the economy evolves and evolves. Ramy i want to go in on what he was talking about for the expectations of inflation. Do you think theres a new with peoplehology saying we can admit the economy enough . G roberto if you look at the hesls of the bond market, correct. 10year yields have gone up this year, a little bit because of inflation but has to do with sentiment, investors selling treasuries because there are places to put their money, not the fundamentals. So randy is completely correct. If this is the reason the fed sees 10year rates going up, you its not a reason to get aggressive. Inflation expectations are not going up. Butre up a little bit theyre still really low in historical terms. They used to be a lot higher than today years ago. So, yeah, i think its one more reason to be a little bit careful in assuming that the fed will go overboard here. Probably not. Yvonne roberto, appreciate your perspective. Roundupe, you can get a of the stories you need in daybreak. Ion of you can customize your settings only get the news on the about. Ies you care ramy dont forget, you can go to indepth analysis and news on bloomberg radio. Daybreak asia from 7 00 a. M. Hong kong or access via bloomberg radio. Com. Ramy this daybreak asia,. Yvonne a quick check on the latest headlines. Is warned it faces a funding squeeze. S P Global Ratings says it must boost investment before the amount required for qantas becomes too high. Says the average age of a qantas plane is about 10 years, aircraft at typical Singapore Airlines and almost emirates. That of ramy the equalcomm board will meet to plan the companys next broadcomsaling with hostile bid. The two sides held hours of theres no indication on whether theyre closer to largest techhe deal in history. Qualcomm rejected the proposal. Yvonne bullish forecast for for cisco. Rofit it sees revenue in the current period climbing as much as 5 from a year earlier, indicating billion. To 12. 1 also buying back stock after 70triating some of its billion overseas cash pile. Jumped thet suisse most in over two months after trading revenue rebounded along with market volatility. The bank says the first six weeks of the year showed a strong start in market dependent businesses with revenue gains of 10 in its Global Markets unit and 15 in asia pacific. The c. E. O. Says it shows the turnaroundof the plan falling into place. If you look at profit and the 8418, we aree from 85 of that target after two years. Off thednt be too far way so were well ahead. Next, a lookg up at the holdings of some of the Biggest Hedge Fund managers in the u. S. On daybreak asia. Yvonne 7 30 a. M. Thursday on in hong kong on this eve before the year of the dog embarks on all of us. Away from asias first major market open. Before the holiday starts. Ramy nice. Meantime, here, its 6 30 p. M. Whereday in new york markets closed in the positive. S p 500 up 1. 33 . See the Empire State Building going the other way in terms of color but green on the board, 44 in the u. S. Markets. Date, up byar to nearly 1 . Yvonne youre watching daybreak asia. Getting the news with Courtney Collins. Strongly oil Rose Research despite showing that the rate in to thetel nations fell toest since july according calculations. Compliance. Ved 93 russia says its keen to be part aramcoanticipated saudi i. P. O. Banks and a joint fund are in participating when the kingdom sells a stake in the company. Of i. P. O. Is the centerpiece weane the countrywe of oil. Zimbabwes most prominent Opposition Leader has died at the age of 65. Fight the political against president mugabe for two windes but failed to elections, often marred by allegations of violence and vote rigging. The former Labor Union Leader fored found the Movement Democratic change in 1999. Consumers love for the good things in life lifted sales of french wine and spirits to a record in 2017. Experts rose 8. 5 . American buyers boosted wine shipments for the first time in five years while chinas taste cognac took delivers to 5 billion. Federation says 2018 should also be positive. Global news 24 hours a day by more than 2700 journalists and analysts. Is Courtney Collins, this bloomberg. Yvonne thank you. Counting down to major market pacific. The asia close ones ahead of the chinese holiday. For Equity Investors, allful all of us obsessed with inflation, they seem to be shrugging it off. Koreas close. Closed. Surprising is the breaking down of what is usually an inverse relationship with andation rearing its head equities not liking that environment but we have momentum up and asia pacific i would imagine being light but zealand, market up. We are also looking at one mover in australia. The board, the biggest drop in not this one, the other, please. Board shows you some of the stock movers there. The other thing i want to when you look at futures over in japan, im looking at my futures here, the openg a pop at despite the yen strength coming through so it looks to be a good but quiet day across equity. Arkets yvonne bond bears emboldened overnight, what are we seeing in asia . Australian 10year 2. 93 so it has alle yield premium but dispeartd disappeared treasuries. The chart shows 7681, showing the story of whats changing in markets, the pickup in u. S. Inflation expectations bursting through the pace at which were the same, in australia, and thats basically push that to zero at the moment have a look at this chart, wide rangingh more implications on the currency markets here. Tonne what else do we need know today . Holiday, hong kong shuts at lunch. Data coming through with jobs data out of australia, Rate Decision out of indonesia, a of trade reports coming up but near term, about an hour now, the governor set to weak g. D. P. Report. Have a look at dollaryen, lows, 106 83. With whento contend speech. His ramy looking ahead to asia pacific. Meantime, some of the biggest Fund Managers in the u. S. Are reporting on when they bought quarter. Last Bloomberg News investing reporter has been digging through reports. Have hedge funds soured on the fangs here . Were seeing this earlier and even more now. Having cutbout co2 apple. It had been such a big supporter of the iphone x. Also sold facebook. But weve seen new in the last hour reported point 72 cut facebook. Weve seen google sellers, as well. Maverick, appaloosa. So those are the real sour areas the tech world. Youve seen twitter as a bright spot. Know that green light bought in but also co2, glenview a of people seeing positivity in twitter. Ramy besides twitter, is there optimism in terms of tech stocks . Or looking elsewhere that youre seeing . Simone i think people are really looking for tech to crack think weve necessarily seen that here, faang pessimism, its not complete. People who are buying these things and remember, they were quite well owned. Out, tevato point adr spikedcals, the as much as 12 after hours confirmed a stake and also Warren Buffetts 10thhire hathaway is the largest holder, disclosed today. Yvonne that was an interesting one from berkshire hathaway. Are some of the big buys or portfolio shifts, anything that stuck out to you . Of angst against gold mining companies. Therelooking just now, were several of them, really cutbacks in ownership amongst hedge funds. I point out that these gold kind of this inflation hedge. These are things that have been aspeoples portfolios, even the price of gold fell. They really held on to their gold miners. See them cutting gold miners at a time when inflation look like it may be coming back just a little was to me. Ing yvonne certainly is inflicting. Simone, thank you. Sticking to commodities, from salcoming through 22 first half anxious, Production Guidance from most operations, south 32. A breakdown from david stringer thisng us from melbourne morning. David, underlying earnings rose 14 . The miner will pay out higher butrreds dividends whats causing concern . David thats absolutely right. Positiveslots of here, high dividend payment, earnings numbers higher on the same period a year ago. There will be a special dividend with buy backs so positives for investors but are on the horizon. Weve seen miners earnings boosted by the rally in commodities prices extended into this year. Lots of predictions that will thatnue through 2018 but same rally is also raising the cost of some of the Raw Materials the miners use themselves, some of the ingredients they need to produce and silver. Aluminum and thats certainly a headwind for south 32 and competitors. South 32, theyve detailed today the of the finer detail of impact theyre seeing from those cost crushes. A concernagged it as going forward. Learned more in terms of energy coal assets in south32 . Ica from any progress on that front . Right. Thats the companys previously said april, itsaround energy coal mines in south africa will operate as a standalone business. Theres a lot of suggestion in the market that that will lead an eventual listing in johannesburg. Potentially there will be people interested in buying off south32. The company said that process to create the standalone business is progressing well and what it widerrecipitate is a south32,re through the looking at consolidating looking atnd simplifying the company as soon as thats completed. Ramy looking ahead, i hear from well newcrest on profit results. What are investors expecting there . David sure, australias big gold miner will see if investors sour on newcrest as weve heard they are on north american miners. Newcrest profit result will be weaker than the same period a year earlier. Issues atruggled with one of their largest mines in antralia last year after earthquake last year that disrupted production. Thats largely behind them now for investors will be on growth going forward. They want to know what the are for its two largest mines and how that can ahead. Ft output in years ramy looking at shares right 1 yeary up less than to date. Up on bloomberg, south32 kerr will join Bloomberg Markets to talk 2 30gh those results at time. Ydney switching gears, tesla facing the flood china. Seven months after announcing a shanghai toith explore local production, the company is struggling to finalize a deal. Tesla reporter has more on this from san francisco. Dana, what is the focus point here . Betweengreement point shanghai and tesla . Our understanding is that tesla is keen to start local production in shanghai for both cars and batteries but they want themselves and typically china requests American Companies who want to do ap shop in china to joint venture. Thats tricky for tesla. Is vertically integrated and likes to do things on its own. Agreementorporation with panasonic in batteries but entering the Chinese Market is for any american company. Tesla likely wants to do things its the worlds biggest auto market so the fact that theres not a deal yet is perplexing to some but talks are probably ongoing. Ramy tesla still sold in china but they want more market share there. Happening on the ground in terms of sales . Dana i think the sales in china fairly good, particularly for the model x s. U. V. Cars madenge is that outside of china are subject to this import tax that makes them chineseensive so for consumers, very highend people are attracted to the tesla brand premium and at a unless theres some kind of joint manufacturing agreement or the chineseth government, tesla will still face that tax which makes their themore expensive for market theyre trying to reach. Yvonne back in november, we heard from elon musk talking had in china,m he and tweeted about it saying dont set your watch for this of 2020 at the earliest, so it was a soft target. Can elon musk do now . Is there still room for negotiation with shanghai . Dana oh, sure. I think the negotiations are very complex and take place over months so of several i wouldnt presume that the talks are dead by any stretch. Been delayed ast bit and what was really interesting to me was the fact there was nothing about china in teslas most recent letter to shareholders and no questions from analysts about china on the Earnings Call so abouthearing tesla talk how theyre excited about the forthcomingir crossover s. U. V. It sounds like theyre looking additional manufacturing capacity in the United States and the china capacity is maybe down thebit further line. Yvonne what does it mean for the chinese makers . Byd, islikes of baic, this a chance, given teslas pause, for them to resume and gain more market share in china . Dana sure. Aboutis very gung ho electric vehicles and obviously domestic automakers have many advantages. Tesla sees its competition in the e. V. Space theywith the germans and dont compete necessarily byds ofead with the the world. Its a different market segment. Localnger tesla waits for capacity, the slower the rollout be. Ramy dana hull talking about the trials of elon musk and tesla in china. Thank you very much. Lets check the yen right now. Were seeing that it is now at 106 spot 61, this is now at its ofest ever since november 2016, spanning more than a year here. 106. 65 is where we are, watchers as we monitor this strengthening situation. Up on daybreak asia, we speak to one of the in bitcoin. Ors why venture capitalist tim draper thinks crypto currencies are the biggest thing since the internet, next. Yvonne this is daybreak asia. Ramy now to bitcoin because the crypto currency surge along with broader crypto currency market after south korea fromred to retreat reported plans to ban mining and exchanges. The government says it will look Crypto Trading more transparent rather than banning it outright. Month of potential ban fueled a frenzied selloff. Koreanan 200,000 citizens have signed a petition denouncing the ban. On bitcoin with joined by tim, trailer park. Kathleen . Kathleen this is a Third Generation venture capitalist manyas invested in successful companies. Hes involved in tesla as well as skype. Were mostly interested in bitcoin. Welcome to the show. You. To have thanks for having me. Kathleen everybody who knows you knows you were interested in bitcoin before it existed. Where was your entry point and how have you stwuk it even when you lost your initial investment gawks debacle . Tim i did make an early hopes oft in getting for 250,000 getting 40,000 bitcoin and it turned out that mount gawks took it and the group that run us on theront mining and we wound up with almost nothing and when that thought thats the end, its too bad because this was going to be the currency open and crossnd border and global and so great. And suddenly, because there was or incompetence at mount gawks, we were going to away. T and it would go well, bitcoin only dropped about 10 on the news that mount gawks, the Biggest Exchange in or lost basically stole a bunch of all that bitcoin. That meant the world needs this. The world is wide open. Need this new kind of currency. They need a global currency whims not subject to the of some government or another. Its open, its transparent. It allows you to do you can go to anybitcoin and country in the world and use it. Move bitcoincan across border. Ofhleen there are a lot issues with bitcoin and many people having seen the 19,000,lar run up, comes crashing back down, above 9,000 today. Im sure you know what the chart like. One of our colleagues from Bloomberg Intelligence put this together. What it suggests is that bitcoin 1,000 again. What odds do you put on that . And where do you think its ultimately . Tim pretty low odds on that but think its funny. Ive turned my mind around say,etely and i look and i well, theres bitcoin and all these other currencies are very volatile against it. Im looking at it in a very different way because i think bitcoin is the future currency. Going tok me are you sell your bitcoin and i say why would i sell the future for the past . Why would i grab some weird fiat thing at the whims of a government. Kathleen whats the upside potential . Market forthe world currency is 86 trillion. Be crypto. T will or a large portion will be crypto. Really excited about all the great things can happen, all theinnovations, all extraordinary things happening because of crypto and bitcoin. Fact in fact, the unbank bankable through bitcoin. It youare making have 20, you want to the set up a bank account. Away. Nks will push you regulations on that account will sot the bank 200 a year theyve left this whole half of population alone and beyve just said you cant banked. Kathleen i would like to ask more specific questions. You say bitcoin is not a bubble. Bitcoins get stolen, exchanges are hacked. Even if its not a bubble, is it a safe investment for regular people . I have a friend who bought at 17,000. To 9,000. Own how do you respond to that . Tim my bitcoin is more secure than my dollars in the banks, wells fargo. My bitcoin is very secure. My dollar the block chain has not been hacked and whereas banks have been hacked over and they keepver and trying to its whackamole hackers away. The meanwhile, bitcoin is running independently, unhackable so far. Securemy bitcoin is more fiat currencies. You know, its hard for people to get their hands around think about it. Were actually creating a course Draper University from april 9 to 11 so that or to 12, so that people can learn how this whole economy is going and how the world will change. Kathleen wed love to have you back. Have breaking news in the japanese economy so we want to thank you. Draper fisher founder. Amazon my book on kathleen tim draper, thanks so much. Yvonne thank you. Machine orders coming through japan, big, big 11. 9 , thedropping monthonmonth jbs. We numbers. A drawdown inng contractionary territory. Out is coming from a blow quarter in the Fourth Quarter at 5. 7 nd of 2017 with the print. Year onyear also dropping 5 ramy, thisr and comes down to the strength of cap on howtting a much these japanese corporates to invest in terms of Capital Spending and boost wages so certainly a big question for the b. O. J. Plenty more to come on daybreak asia. Keep it right here. Yvonne recapping you on japan machine orders coming through 11. 9 drop, aaving the Fourth Quarter as decline in machine orders. You have to blame the strong yen. The b. O. J. Ion for its the yen at 106. 58, lowest since november 2016. Were going to keep watching where that goes. Meantime, coming up on the next hour of daybreak asia, bankrupt Singapore Investment strategy joining us. 8 00 a. M. Here in hong kong, live from bloombergs asian headquarters. I am yvonne man. Welcome to daybreak asia. Several asiapacific markets closed for Lunar New Year. But those that are open are tracking overnight gains on wall street. U. S. Inflation data supports the fed plan for only gradual hikes. The dollar, falling. Ramy from bloombergs Global Headquarters i am Ramy Inocencio in new york. It is just past 7 00 p. M. Wednesday. Problems pile up for the bank of japan. The strengthening yuan is making it hard to hit that 2 target. Macau, the year of the dog. Casinos and hotels expecting record numbers. Yvonne that strengthening yen not just dampening inflation, but also when it comes to japan and their Risk Appetite when it comes to spending more. We some machine orders for the month of december dropping like a rock. Close to 12 lower that month. We have seen a change in terms of how investors are viewing this yen a strength. Yen strength. Since november we have been looking at this negative correlation between the topix and nikkei 225 against the yen. As the yen was rising in blue, so were equities. We saw a rotation, a switch back to old times, where the yen could be a problem, especially for exporters. Ramy that is right, we are taking a look at the yen. So. S 106. 5 or a the meantime, lets take look at what is happening in asiapacific as you get underway. Yvonne lets get the check with the david ingles. After this inflation data was upside surprise. But Equity Investors taking this in stride. David a continuation of what we have seen this week, them coming in and being selected. We have to get started with this. Is set to speak about 40 minutes from now. Could be interesting the way he is approaching this. We will see what happens. Does he comment on the gdp report . Probably more likely. Here is where we are, 106. 69. Look at our longerterm chart. And is our u. S. Elections, retracement of abenomics. As you can see, there is a most nothing there below it. There is almost nothing there in terms of support. We are also getting comments. Here is the japanese yen. Strength is here to say, that is what they are saying. When you look at the trade weighted index against the currency and measure that against longerterm averages, this is 20 of where the yen should be. Yen strength is here to stay. Whether or not that becomes a problem for the boj is another matter. Not going to talk about this 33 6933 is 69 the chart i want to bring up. Part of this a survey is an assumption from a large manufacturers of where they think the Exchange Rate will be. Consumption, planning, those kinds of things. As you can see, the Exchange Rate is below where consumption is. Drag on earnings, especially for large multinationals, if it stays below the blue line. Something to watch here, 6933. Back on the inflation, interest from bank of america. You have two fiscal deficits, that will weigh on the dollar. 1 , it does not seem to matter, yen strength, whether that will hold. Signup china is already shut. Lots more to talk about within the hours ahead. Lets get more on the yen. We are joined by mark cranfield. I am in our terminal. Is the focalg 106 point. 9 to the yen. 5 it isas david was saying, not looking good. It has quite a bit further to go. One of my colleagues yesterday drew a longterm picture and suggested dollaryen may as go as far as 90, over the medium term. One thing traders are focusing on, the fact we are coming to twin deficits in the United States. Fiscal spending seems to be getting out of control again. The current deficit will only get wider. The current strength means more imports will come in. For people with long memories, wastwin deficits in America Associated with extreme weakness in the u. S. Dollar. If we are going back to Something Like that, it means dollar weakness could go on for quite a long time. Ionne i was just ramy was just about to ask you about dollar index. This is down a percent since december of 2016. How does that interplay with jp well . Jpy, as mark the dollaryen seems to have triggered this. If you look at movements, this is across the board weakness in the u. S. Dollar. Some of the rebound we saw after the inflation data yesterday, the u. S. Dollar strengthens initially. You look at the euro, the pound, the us trillion dollar, they rebounded so quickly and strongly. It shows you this is dollar weakness everywhere. Everywhere you look, the dollar is coming under pressure. We are likely to see asian currencies jumping on this, as well. There is no escape, even though the dollaryen may be leading, the dollar is down everywhere. Yvonne it is interesting given the fact the inflation data from the u. S. Overnight was hotter than expected, yet we are not seeing that dollar bid catch up anytime soon. What does it mean when it comes to equities . About twoen talking point 5 , the pain threshold for equities. The bulls to sell is it higher now . Where is the line in the sand . Mark maybe we have to see 3 on the u. S. Treasury, which is still about 10 basis points away. Maybe that is the trigger. It was interesting the way u. S. Equities rebounded, even though they were going up last night. Part of the story, we are seeing corporate buybacks. There is a very good story on bloomberg, just as large markets were selling off last week, there is a surging corporate buybacks, which is an indication people think there is longterm value in the u. S. Market. But this divergence cannot go on forever. Whether the breaking point is 3 in 10 years or 3. 25 , we have to wait and find out. At some stage, high yields will not be good for the equity market. Yvonne that certainly is the case. It is interesting. It was the wage data last friday that spark the correction when they came to equities. We are not quite seeing that with this data. Have we reached equilibrium now . Mark that is possible. The way markets are swinging around at the moment, you cannot really pin too much attention on anything except for a few hours. What is reassuring, the underlying trend in economies is good. The economic fundamentals have not been hurt. We have seen evidence of that from asia the past couple days. It is still very healthy. The u. S. , the central bank is taking a calm attitude. The fed is saying corrections come and go, it is not hurting the jobs market. These are more fundamental issues people will step back and say, yes, American Growth this year will be good. It will outperform smaller countries in the world, which is quite unusual. The picture underlying is one of health. But at some stage, valuations meet bond yields. There is a time in that latter half of this year when they will crash together and it will be too much and equities will be overpowered. But not just yet. Yvonne still looking for that inflection point. Thank you, mark cranfield. You can look at the insights from mark and his team from the mliv. You can see what is affecting your investments right now. Lets get first word news with Courtney Collins in new york. First up, police in florida say 17 people were killed in a School Shooting in southern Broward County. The suspected gunman has been arrested. He is said to be 18 years old and a former student at the school. Broward county sheriff scott israel said it was a catastrophic day. Offeredt trump has federal assistance to the state and condolences to the victims families. South african president jacob zuma bowed to pressure and resigned. But he says he disagrees with the ancs decision to force him out, calling the treatment unfair. His nine years in office have been marked by scandal, including bribery. There will be an active and acting president until next years election. No lives that should be lost in my name. The anc should never be divided in my name. Come to thefore decision to resign as president of the republic. President trump told a 25 ers he supported increase in the federal gas and diesel taxes to Fund Improvements in roads, bridges and public works. Democratic senator tom carter said he was surprised the president raised the idea that several times when meeting with members of key house and senate committees. Price has nots been increased since 1993. Oil rose strongly despite new Research Showing compliance with the opecled group has flipped. Among noncartel nations fell in january to 79 , the lowest since july. For more responsible than half of nonopec opec costs and achieved a 93 compliance. Sudan exceeded 100 . 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. Ramy courtney, thank you very much. Still ahead as we head into the lunar holiday, capital curbs. The potential implications later this hour. Yvonne recovering from the rout, it could be months away. James cheo joins us. This is bloomberg. Welcome back, this is daybreak asia. I am Ramy Inocencio in new york. Yvonne i am yvonne man in hong kong. A rally of stocks continues in to a investors warming quicker pace of tightening for monetary policy. Aremore perspective we joined by james cheo from the bank of singapore. Joins us from the lion city. It james, thank you for joining us. Why are markets up when we have been so obsessed about inflation . We got this upside surprise from cpi overnight and yields are heading higher. Foremost, thend Global Economy is still healthy and strong. Therefore, it is helping fundamentals of companies. It is not surprising that markets are still going up. Also, the technical factors that have caused this selloff a few weeks ago, i think those are slowly being exhausted. In that sense, markets going up is not that surprising. Volatility is still going to be fairly high in the weeks and months ahead. It is not out of the woods of higher uncertainty. Yvonne it is interesting, given the fact we see these yields higher, and it continues to be the dollar in the dog pound. I have a chart here, 9511. The yen strength, despite what we saw in machine orders and what the boj is saying, have been decoupling from what we have seen in treasury yields. Dollar int does the is the dollar oversold . Is this the way things are in 2018 . Generally the dollar would be on the weakening path because it is not just the fed raising rates because of inflation. Aher federal banks are on tightening race to raise rates. It is no longer the only game in town. There are other major Central Banks raising rates that would reduce the dollar. What we are seeing now is a symptom of that trend manifesting itself. I am looking at the msci asia right now and it is down 6. 5 , ever since the pop for this year. I see in your note it could be as much as three months until stocks recover. Talk to me about this. James i think on average if you look through past cycles, during bull markets to have correction is very common. On average you can expect three months of volatility, based on historical experience over the past 20 years. This time around, it is hard to pinpoint where the bottom is or how long it will take. That using history as a guide, we have a little more for the uptrend to continue. The u. S. Cpi at number which came out in the last 12 hours, the one that is risk to the markets, investors shrugged it off. Looking ahead, what is the next big possible risk factor . Toes i still think you have interpret the data point as a whole trend. It shows inflation rising. Nevertheless, we should not interpret one data point and put so much weight on it if it moves higher than expected. Nevertheless, it is on a slow and steady path upwards. The biggest risk for markets is for come is for inflation to continuously go higher. It is a big risk. But so far, we are looking at forward indicators of conception, consumption, patterns. This upward it swing, inflation, will continue. I think inflation will be a big risk going forward. At this point, is interesting it is interesting to get your take. They are saying it is time to buy those dips. Are you also reducing risk, and if so, where . I think the message to our clients is, dont panic during this correction, it is very common. Are on a broad sector market level, valuations are not exactly cheap. Nevertheless, there are opportunities from a sectors perspective. Banks look very interesting. Banks. Margin benefits there are opportunities starting to look fairly interesting. Nevertheless, were not out of the woods yet. There will be more volatility. I think it is Interesting Times for investors. The yield timing i think bonds will start looking more attractive than equities. Recenterint do we the center point . It is hard to say at what point whether it is 3 or 3. 5 , it is hard to give a point. But currently the pace at which 10 year bond yields have arisen extremely fast, it is difficult for debt to continuously happen over the next couple weeks. But i think our recommendation to investors has been to actually reduce exposure to longduration, low yielding bonds. I think that core has worked out well so far and could continue in the weeks and months to come. At the same time, you want a diversified portfolio, want to add risks in equity markets, particularly european markets, for additional returns. This represents an interesting opportunity. Stay engaged, diversify across sectors, bonds, equities. We have about 30 seconds left. We are expecting governor kuroda to speak in a couple minutes. Is there anything we can do to stabilize yen at the moment . What is happening for the yen is a reaction of the markets. Initially the selloffs factored in equity markets. It looks like there is some stabilization in equity markets and spreading to currency markets in terms of the yen trading and gold buying. I dont think we have reached a point where the central bank will be wary about it yet. Nevertheless, lets watch how this global uncertainty or correction is going to pan out. I think it is early days for Central Banks to want to intervene and react. Yvonne thank you, james cheo, investment strategist in singapore. Happy new year, of course. Bloomberg subscribers, go to your terminal. It is also available on the bloomberg anywhere app. You can customize settings to get news on industries and assets you care about. This is bloomberg. Ramy this is daybreak asia. I am Remy Inocencio in new york. Yvonne i am yvonne man in hong kong. Problems are piling up for the yen. Making it difficult to get the 2 target. Lets go to our japan and korea editor to talk more about this. I think you hear it so often when it comes to all these economists and japan watchers, that the boj, they are set to continue with persistent monetary easing, they will be couple from the fed, until inflation hits 2 . The question is, do they have to do more now . Right. That is the question. Lately the speculation has been that the boj will take a step toward policy normalization with the economy in recent quarters running at 2 and the yen at a comfortable level. The question is whether the boj can do more. Went to the yield curve control framework in 2016. One of the reasons was sustainability. That is also one of the reasons economists have been speculating about policy normalization. This willy least, cool speculation about normalization. Whether the boj can or will do more is a matter of speculation right now. We expect to hear from governor kuroda in a 15 minutes time. Speaking of parliament, it will be interesting if he mentions anything about the currency moves we have seen. What will be a crucial level for the yen or the boj or finance ministry to finally take action . Henry that is also a matter of speculation. They are not going to broadcast that. At the current level it is a concern. It is hard to see the ministry of finance directly intervening in the market, particularly with Donald Trumps focus on currencies and trade. At least one economist told us , the yen breaking through 100 against the dollar would be a level that might prompt the boj to take some sort of action. But right now it is probably just a matter of them watching the market nervously, rather than planning to do anything about it. Ramy thank you, henry hoenig. Lets move ahead. Up next, the biggest travel day of the year in china. A look at those numbers and what the holiday means for the luxury sector. 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. Yvonne 8 30 in singapore. Looking sunny as we count down to the Chinese New Year holiday. Halfway to trading there. I am yvonne man in hong kong. Ramy i am remy innocence you in new york. You are watching daybreak asia. Yvonne breaking news from singapore after we got gdp numbers yesterday. Imports up 13 for the month of january. They were expecting 8. 9 . We will see what led to this. In terms of electronic exports it fell a second month, down 3. 9 for january. Certainly what we saw with the gdp numbers, we did see that dragon manufacturing. We still see this Global Demand story, global export story, quite intact. These numbers justify that. Ramy we have australian breaking numbers coming in from the employment rate. The Unemployment Rate coming in, 5. 5 . This was against the prior month, also 5. 5 . There was a beat in terms of the employment changed. Butxpected was plus 15,000, the actual was 16,000. As for Participation Rate, 55. 6 . According to consensus by bloomberg. Pretty much spot on. The jobless rate has been holding at 5. 5 since the past half year. The Participation Rate has also been rising the past half year. Steady as she goes in terms of expectations. Itnne it is interesting, seems to be a mixed picture when we come to the fulltime and parttime employment changes. Perhaps that is why we are seeing a little uncertainty when it comes to the aussie. Fulltime employment actually 49 a day back, day before valentines day. As you can see, the dollar is weakened against its major peers. Individual stories for obvious reasons. Outflow, au a broad net outflow come out of the u. S. Dollar. The rand, you have politics helping clarity. Helping that move up. There is the aussie dollar up 1 . The other thing i want to bring up. The reason i am looking at dxy, two weeks ago we had Tom Schroeder join us on the show, a technical analyst. He gave us this chart of dxy. 8850 is the level you are going to watch. In terms of the dollar, that is 1. 25. That equates to that Exchange Rate. The technicals do not look good for dxy. You have the dollar moving down. Other people,nd there are massive outflows out of the u. S. Dollar. As you can see in the same way dollaryens chart looks like this, there is nothing there. It is hard to imagine where Central Support comes up next. Have a look at that. We have the jobs number out of australia, u. S. Inflation. Put everything together and what you have is Inflation Expectations in the u. S. Outpacing that in australia. That shrunk the yield premium. Something to watch. This will also have wideranging implications on where the aussie goes from here and what the rba does and whether or not they should move earlier than expected. Ramy david, thank you very much. A great look at the charts. Lets get first word news with Courtney Collins. Police in florida now say 17 people were killed in a School Shooting in southern Broward County mayor. State Authorities Say the suspected gunman has been arrested. He is said to be 18 years old and a former student at the school. Broward county sheriff scott israel says it was a catastrophic day. President trump has offered federal assistance to the state and condolences to the victims families. That taliban is offering talks with washington to end almost 16 years of fighting in afghanistan. And emailed letter from leadership say war was imposed on the group and the choice now is to resolve the situation with peaceful dialogue. They say the u. S. Must end its occupation and expect afghanistan ranks to form a government consistent with the beliefs of our people. Russia says it is eager to be part of the anticipated saudi aramco ipo. Banks and a joint fund in china are interested in participating with a stake in the company in what could be a record deal. The ipo is the centerpiece of saudi plans to wean the economy off oil. Some analysts have offered lower estimates. Consumers love for the good things in life. Look at sales of fine french wine and spirits to a record in 2016. Exports rose 8. 5 last year to more than 15 billion. American buyers boosted wind shipped for the first time in five years, while chinas taste for cognac took deliveries to 5 billion. They said 2018 should also be positive. 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. Ramy courtney, thank you very much. Meantime, it is new years eve for much of asia as billions of people prepared to ring in the year of the dog. It has been an enormous moment and some of the numbers are mind blowing. Day goodbye to the rooster. This Lunar New Year will ring in the dog days. In china, the biggest travel rush on the planet. 3 billion trips, 65 million biplane. Expect higher fares. Theost in profits with government relaxing price controls on more routes. Total retail spending expected to reach 143 billion. Luxury brands are lining up for a taste of the pie, catering to the canine aside. Side. 46 billion envelopes percent on wechat in the first six days of the holiday in 2017. Alibaba will give away nearly 100 million on cctvs spring festival galler, a mere 70 million viewers. Macau casinos expect spending volumes to increase 20 from last year. The good luck finding a room. Morgan stanley says major hotels are fully booked. And expect fireworks. 75,000 boxes will be sold in beijing alone. Meaning, the year of the dog will start off with a bang. Ramy did you get all those numbers . Lotice it to say, a happening for the Chinese New Year, as well as in india and vietnam. Vietnam,no trading in and hong kong closes at lunchtime for the Lunar New Year holiday. Travelexpecting lots of and lots of spending as people across asia feast, shop and gamble. Our analyst joins us from singapore. Lets look to macau. Their gambling revenue was up year on year. Looking to february and the Lunar New Year, seems a lot of people will begin blinged to take advantage hopefully, of their luck. Definitely. I will be surprised if we do not see another doubledigit increase in the month of february. We have fully booked hotels. I think it is going to be a good number, especially for the vip business. Which casinos do you think will benefit the most from this influx of chinese folks coming to macau . We have the lower end, the higher end, vip gaming tables which casinos . I think the highend casinos and especially the new ones, especially mgm, i am putting my bets they will be there this Lunar New Year with all the new facilities, infrastructure and entertainment. The will be enough to lure Chinese Lunar crowd. Lets hope service keeps up to bring in more work he visitors for the rest of the year. Yvonne we have been talking to Property Developers in hong kong, saying retail sales are back, chinese visitors are coming back. What exactly are they buying when it comes to Luxury Brands . Is it cosmetics, watches . We have the very good signs that luxury watches will be one category to look at in the Lunar New Year. Export numbers to hong kong are celebrating into december. I think a strong yuan is definitely helping the spending in current inclination toward luxury watches. Notwithstanding jewelry will also be one category to look at. If you look at the historical numbers, these two items generally contribute a higher amount during the holiday. Yvonne cant forget that jewelry. And pricier items people dubai during the lunar buyyear. People do during the Lunar New Year. These truly chains, are they positioned well . Catherine gold overall accounts for half of the differences at [indiscernible] a higher gold prices and notwithstanding the recent volatility we have seen on the stock market, we may actually see something Chinese Shoppers are going back to with a former safe haven, for prosperity reasons, into the year of the dog. Yvonne of course, inflation hedges, as well. Thank you, our senior analyst. China is heading into the Lunar New Year on the back of record new lows and slight inflation pressures. The growing pains. This is bloomberg. Yvonne this is daybreak asia. I am yvonne man in hong kong. Ramy i am Ramy Inocencio in new york. A new chapter could be beginning in china as authorities consider the consequences of the yuan nearing its highest level since 2015. Enda curran joins us. If there were some relaxing, how might this play out . Enda good morning. The backdrop is, a strong currency is giving them breathing room. And easing capital flows is a bit more to weigh twoway. It is early stages. There might be some tweaking or softening of inflation investor flows. Capital controls settings are neutral, indicating perhaps they wont be clamping down with new measures. It is a wind of opportunity for them to ease pressure. I do not expect them to ease capital controls overall. Rebuilding ande they will not want to reverse that anytime soon. Yvonne i guess 2015 is still in the back of our mind. Do you think that is a still in the back of regulators when it ands to how easily gradually they will be list they will be lifting capital control . Enda it has to be. Trillion worth of reserves at a record pace. Theyre looking for opportunities to soften control of moneymore twoway and flexibility in the Exchange Rate. There is a feeling that yuan can become strong and is somewhat eroding chinas strength. As you say, that does not equate to [indiscernible] yvonne we have seen a little hints of it. Shenzhen has been opening up a little bit for more investment. What measures could it take . You mentioned these twoway crossborder flows, but it is not too direct. Enda these are modern measures, modern steps. We see tweaking of investor quotas. You need aholesaler, green light toward corporate transactions. Clamp down on those and codify the areas where you can buy assets. It would take the lid off of Household Savings and allow consumers to take as much earnings as they want on holidays with them. That is not the case, i think we are away from that happening. Yvonne thank you, enda curran, joining us in hong kong. Analyst,ng in an joining us live this morning from singapore. What is your take on all this . Is there really an appetite from chinese regulators to loosen capital controls given the strength we have seen in the currency . Enda, i would echo what was a saying. Account liberalization is gradual. I think they are putting more emphasis on the correct sequencing of reforms. Domesticn so far as concerns are deleveraging, moving beyond the financial importantose would be complements to what they are trying to accomplish in the upcoming year. We help for more on these fronts and the growth target as well, shortly after Chinese New Year. Yvonne given what we see in the credit data, we have seen deleveraging at work and moving away from shadow banking to where these mainstream lending facilities. What is your take on the success of the regulatory front so far . Do you think this is deleveraging at work or just credit deceleration . It is deceleration, but a good beginning. In so far as your aggregate gdp starts to stabilize, which it is. That is a great beginning. To sustain that process, Reform Efforts need to shift not just toward secondtier institutions, and more toward the soes. Debt accumulation has not gone off significantly. Can begin tothey target those areas in the second half of the year, that would sustain this deleveraging momentum and thereby deepen the reform credibility. Which i think is an important complement to account liberalization, which is also underway. The pboc says the nation faces slight increasing pressure from inflation, which could be closely watched. I want your take on that. G btv 3146. We can see where cpi has been. It did fall just in the past month or so. From your perspective, rising pressure on inflation . Aninda there is rising pressure on inflation. We are not too concerned about it. The chinese economy will slow down from last year. There will be pentup pressure in the Services Sector and the domestic side of the economy, but it will not derail the overall trajectory of inflation relative to their soft target of 2 , which is there a threshold of tolerance for inflation. 5332. one more, g btv you were talking about deleveraging with yvonne. We are seeing this in the blue, all the way on the righthand side of the screen. Jump up to 2. 9 trillion. This is the most since records were kept in 1992. What is your reaction to this when you see this pop . In so far as the quality of lending begins to improve, it is coming off of the shadow bank formals and more toward bank loans, that is not a bad thing in and of itself. When you look at the ratio, that is beginning to come off. It is still growing at an 8 handle, the slowest rate of growth i can think of in a very long time. We are seeing qualitative improvements in the underlying credit data. That is encouraging for the trajectory of chinese reforms. Yvonne are there signs that implicit guarantees are dead now . Aninda pardon me, could you repeat the question . Yvonne are there real signs you are seeing that implicit guarantees are dead now . Aninda not really. We did see a spate of consolidation incapacity sectors. But that can be extended out without destabilizing growth expectations, more broadly, would be important to watch. The overall crux of implicit guarantees remains in place. The degree to which they are able to address it in the second half of this year would be interesting to watch. Yvonne what is the right policy prescription . Is there more room to adjust rates higher . If we do see that in the picture, this could cause more pain, right . We are looking at a bit more Structural Reforms complemented by cyclical easing. The market is under stress in that you can provide more differentiating easing to the Housing Market to provide prolonged a stress on that front, a good, cyclical offset to the structural reform that needs to progress. Thank you, joining us live from singapore. We have more ahead. This is bloomberg. Yvonne this is daybreak asia. I am yvonne man in hong kong. Ramy and i am Ramy Inocencio in new york. It has a warned funding squeeze, having delayed funding for too long. They must boost investment before the amount required becomes too high. And says shareholder returns may have to be cut. The average age of a qantas plane is 10 years older than a typical aircraft, and most almost double the figure at emirates. Yvonne the next steps in dealing with broadcoms bid. Two sides a held two hours of talks. But they are no closer to the largest deal in tech history. Finalejected broadcoms proposal, saying it is still undervalued. An Indian Online Shopping site is opening a space in new delhi to boost business. They are backed by alibaba and the store will allow customers to browse before making purchases via an app. They will offer sameday delivery and handle returns. It is expected to top 1 trillion by 2020. Yvonne that is almost did for us. Time for a quick check what is coming up in Bloomberg Markets. What are you watching . Going to continue to talk about the conundrum the markets are in. What do you make of the fact of selloffs, and the pickup of inflation, in the same combination . We will talk more about the expectations when it comes to this, with our guest joining us here in sydney. Dont be concerned about a potential rampant pickup in inflation. The prospects are benign. It is against the backdrop of strong global growth. We will also talk about the surge in the yen. Is it just a negative dollar storied . What does it mean when it comes to bank of japan policy . Also joining us, a citigroup strategist. We will be speaking to him about the cpi print. Is it actually going to pass through . There are concerns if it will pass through to core inflation. It indonesian decision. Ramy that is it from daybreak asia. This is bloomberg. 9 00 a. M. In hong kong, 12 00 in sydney. I am haidi run. This is Bloomberg Markets asia. The yen extends its gains as the asiapacific runs with the rally. Investors are expecting higher inflation and more fed hikes. Problems at the bank of japan. The stronger yen is making it more difficult to hit the 2 inflation target. Qantas warned about its aging fleet. S p said they must upgrade soon before