Wage negotiations, the initial numbers coming out with the likes of toyota, meeting all the salary demands. That is something lauded by the likes of the prime minister. It is something they would like to see and it is playing into the direction of the boj, thinking about if we see any move next week. Japanese yen strength has been waited on equities, and we are seeing it, a little under pressure so far, but we also had u. S. Stocks retreating overnight. Is that a countdown . We have more inflation data and ppi numbers as the last step before we get the fed meeting next week. No change expected but it could play into the language we hear from jay powell and the signaling out of the meeting. For japan, you do see the border index flat right now, but lets look at how korea is coming online, as well, so you can see that the kospi is pretty much flat, watching the korean today because as we discussed the last hour, the yuan to be tracking today because we do have the country and regulators there once again doing another trial to extend the onshore yuan trading hours, so it is about the internationalization of the market. Can it make its aggression into develop Market Status . The extension is happening around the midpoint of the year. Haidi take a look at what we are watching when it comes to australia. We have a budget update, expecting some pretty good numbers despite these concerns over lower prices, even though they have stabilized a bit. We asked about the speech to be delivered later on in sydney, but watching other thematics in terms of the process gains we are seeing. Copper is seeing that big move. And we are seeing that as a reason why we are seeing miners and materials showing leadership in the session today. Or broadly, sydney being dragged down by financials communication sectors seeing a big drop, and Aussie Broadband down as much as 25 in the session, despite the upside we have from metals and coppers at the 11 month high. Take a look at treasuries and how they are trading. Strong demand for the bond auction, drawing lowerthanexpected yield. We are also seeing potentially a little bit of a reaction as we heard from u. S. Treasury secretary janet yellen, saying it is unlikely that arc it rates return to the levels prevailed before covid19. Of course, setting off that wave of inflation and higher yields. The final data points before the fed makes its decision, meeting ppi and retail sales and focus, as well. Of course, it is the fed and make of japan, and there is some debate over which is going to be more of the impactful decision. Boj officials are considering scrapping the by an Exchange Traded funds provided inflation target comes into size. Lets bring our economy and government editor, and as you get the countdown to the boj, potentially, whatever hearing when it comes to etfs . Brian yeah, so we have spoken to people close to the boj, and they have said that the policy board will discuss heading off all new purchases of etfs. This program was launched from 2010 as a means of losing the sector by lowering capital. The boj has now moved to approximately ¥70 trillion, equivalent to one years worth of national tax income, and along the way, the boj has been criticized at times for distorting prices in the market and undermining the ability of shareholders to conduct oversight incorporate governance by taking a huge share of the market. In recent times, we have seen the boj pull away from the buying last year, and the central bank only enter the market three times to buy etf. We saw the nikkei followed by 2 earlier this week, which in the past would have triggered buying , but the boj held out this week, a signal that it is already pretty much stopped buying stocks, and it make sense because they started the program, the nikkei was at about 10,000, and now we have hit the highest on record, and does not make a lot of sense for the boj to be entering the market in any case, so we are hearing that cutting off all new purchases is going to be under consideration. Bond market will continue to get some support in order to keep yields from flaring up too much. Annabelle it really does show we are on the path to normalization whether it comes in march or april, but we have also looked at the winners and losers that come out of any rate hike, as well. Brian yeah, so before i go into that, let me emphasize that when the bojends the negative right, it will not be there. We expect to see from the fed later this year. In terms of policy, the rate will go to 0. 1 which is, of course, still very low and loose, but having said that, it is a change, and we would expect to see winners and losers three banks should benefit because they can start to boost their lending margins for the first time in a long time, especially regional banks. Companies that import goods, including food and beverage, will probably get a lift. If the yen does rise from the boj hiking, and then later the fed cutting rates, that would also benefit companies that are reliant on energy, large amounts of energy, such as steelmakers. On the other hand, companies that are heavily indebted are going to take a hit, and according to the databank, some 250,000 companies in japan qualify as a zombie companies, about 17 of the total. A lot of those companies would probably go under and they lose access to essentially free money, and i could make a subtle segue now into public finance, japans public debt is the largest in the world as a proportion of the size of the economy and those net financing costs will go up. That could put a drag on his go policy Going Forward as the government tries to get its house in order. Haidi that was our asia reporter brian fowler in tokyo. Lets get more on the outlook for the boj. Annabelle lets bring in the global cio of oreana financial services, isaac poole. We are not expecting a huge step forward in rates, but do you think the door is closing somewhat on them being able to make an exit, as well . Isaac i do, and the bank of japan has a history of under delivering, and that is really the challenge here, they have left things so late, and you see that inflation is moving lower. This wont be a big pivot. We might get one rate hike, possibly two, but i dont think this will be a meaningful move higher. The real risk is if the global or if japans economy slows further, they could be cutting by the end of the year, and that would be a real challenge for them. Annabelle we discussed the winners and losers in that environment. As the equity market then wi n . Isaac with an initial rate hike, that could be a positive signal, moving away from this natural pressure that has been there for a decade or more. That is a positive development to start off with, but we know the economy is slowing already there. Wages are being pushed higher. That is going to be a challenge to digest that. And, so, if i look out at the end of the year, there could be real headwinds to the equity market in japan. Haidi that goes to our question of the day, which pertains to what happens to the dollar and what is more impactful, the bank of japan decision or the fed decision . But what is more impactful for risk assets more broadly . I feel like the rba hardly will get a look in on the same day next week. [laughter] isaac yeah, i mean, it really is all about the Global Investment community, and it is only worried about what the fed will do, how soon they will cut, and what that will allow the economy to do over the second half of the year, and we are seeing that the u. S. Economy is slowing. The Unemployment Rate has moved higher, and retail sales are weaker in general. Unfortunately, this is happening as inflation has been sticky, and a real risk that the fed disappoints the market, even though it is being dragged to three rate cuts, and that is all that is going to matter for the currency and equity markets, like the rest of this year, i think, because, ultimately, fundamentals are week, Earnings Growth is low, so if rates are cut because the economy is slowing, that could be a catalyst for u. S. Equity valuations and a real risk to extended valuations now. Annabelle theres that mean there could be a contrarian opportunity for china . Haidi whether it be actual, you know, start of incremental policy or the fact valuations have been sitting so low and investors are a bit over the narrative, things seem to be improving. Isaac they are. I think that it is really clear that chinas economy is growing, although i dont think we will see a real acceleration. The real opportunity is, one, the relative valuations. They are very low and probably have bottomed out now. The other part is that chinas authorities have been quite canny about releasing monetary and fiscal policy over the last 12 months. So we could see a global and u. S. Slow down, and then you will see china will have plenty of ability to add to the stimulus, and that means if we get that slow down, you have the benefit of valuations and what could be a real surge and policy support for chinese equities. Annabelle when it comes to policy support, if you look at the performance of chinese equities, the ones that are tied to the new economy are the ones that have been better, renewables and materials are the smaller growth stocks, as well on that ain tech bit, but is that sector that you really would like to be going into . Isaac globally, that is a sector that is stretched. But, it is the new economy. That is the focus of chinese authorities over not just the last year or so, but many years, move away from the Old Industrial led, investment led growth to something that represents domestic consumption and Domestic Research and development, and those other the areas you probably want to focus in on, but you do need to be aware of the risks of getting stretched. Haidi that was isaac poole, the global cio at oriana financial services. Lets look at the movers, 12 minutes into trade, this is what we are seeing in terms of nippon, moving higher, and u. S. Steel fell overnight because there is the concern around the proposal that nippon still has to purchase, and that is according to sources familiar with the matter telling us that President Joe Biden could soon release a statement of concern about that deal, so, as i said, u. S. Steel under pressure and we are not seeing that translate across to nippon steel. Keeping an eye on the automakers because we do understand that nissan is weighing ev partnerships with honda, both moving a little bit high so far. Lets change on because i mentioned nippon, but there is still the focus on the copper linked to as well. We did have reports that chinese coppers smelters could be weighing capacity cuts and that drove the price of copper higher to a seven month high. We are seeing copper names moving higher today at the start of trade in japan and korea. We have also seen them getting in australia so far. That is really the action so far in the market session, but proudly today, we are just seeing equities treading water so far, following what we had in the u. S. Session, the countdown to the last inflation print expectations, again, around what the fed as next week and with the boj does, as well. Haidi of course, watching the tech space, as well, into the start of trading in china, we will be watching any kind of followthrough from this build to force a sale of tiktok, and setting up a fresh flashpoint between washington and beijing, this is bloomberg. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. Haidi the u. S. House of representatives passed a bill to ban tiktok and the u. S. Unless its chinese owner sells the video sharing app. Buddy carter told supporters of the bill see it solely as an issue of National Security. We are not talking about banning tiktok. This is up to tiktok and bytedance. They make the decision on whether they would like it to go away or whether they would like to divest themselves. The ownership of this. This is two questions. First, this is a question about is this going to be banned . No, they have to divest themselves and that is a question they can only answer. The second question is in the house and senate, and that is this is about National Security, and are we going to take National Security seriously . The number one responsibility of the federal government is to protect our homeland and citizens. We have to take it seriously, and it is about National Security. Congressman, thank you for your time this morning. Project texas was the plan whereby the u. S. User data of the tiktok app would be housed in data centers onshore in the u. S. , owned and operated by oracle. Were you not convinced of that plan such that you cosponsor the bill . Why did that not work . Buddy it does not matter where they are based, if it is owned by the Chinese Communist party, that is a problem, and that is the responsibility of congress. It is their responsibility to guard against these kind of National Security issues. That is why we acted on this, and i would beg to differ with some of my colleagues who are saying this was to rest. Too rushed. We have talked about this a long time, and tiktok has been banned on government phones for some time now, so this is not anything new. Again, this is not a ban. We are just saying that bytedance, the Parent Company of tiktok, that is owned by the Chinese Communist party, they must divest themselves of this. Haidi that was the Georgia Republican congressman buddy carter speaking to us on bloomberg technology. Lets bring in our executive editor for Asian Technology from tokyo. It is not clear if this bill will become law, but we do know that tiktok is not going to go down easily on this one either. That is right. This bill has picked up quite a bit of momentum and it surprised quite a few people, as mentioned briefly. This has been talked about for years, even after the Trump Administration discussed it in various forms and reasons, but now it has gotten past the house, and it is headed towards the senate. The fate is uncertain, senators have expressed some concerns about this. But it is very much possible, and biden has already said [indiscernible] and as we have reported, they are planning a legal strategy to fight back against this. They feel like they have legal grounds to stop this and slow it down, partly over speech grounds, partly because they have not, if you like, they have not met the burden of proof with cost influence that tiktok is using, so we can anticipate there will be a legal fight. None of the questions is whether they will have to proceed some separation in the shortterm, even if they do continue to fight it. Haidi can we talk about the longer possible scenarios . Who are they potentially sell to . Could they not sell and just survive or thrive without the u. S. Market . These are all very good questions, so the Strategic Options for bytedance, the Parent Company of tiktok, would probably be almost threefold. It could just close down the u. S. Operations, and they could, and they have over 700 million users. Tiktok is popular globally, but u. S. Is the most lucrative market, bringing in the most revenue, so that is a challenge for them. It could also separate the u. S. Market and separate the u. S. Market and let that stand alone. That is difficult from an operations standpoint and cost standpoint because you have to operated separately from the rest of tiktok, separate management, and as we talked about, separate data and privacy issues, or they could look to spin off tiktok itself globally, not just the u. S. , but globally. From a business standpoint, that would free the company from the overreach of bytedance in particular, and create political concerns. We have a powerful tech company that could compete with the metas and facebooks of the world and google. They have tremendous reach and a strong global presence. The problem is that i dance would perhaps lose one of the most important operations, and the Chinese Government has said if bytedance would like to proceed with anything like that, it needs to gain approval from beijing first read they are concerned about ip from china going into other markets three they have to deal with not just the u. S. Government but the Chinese Government. Haidi that was our executive editor for Asian Technology, talking through possible scenarios as tiktok thats ready for this fight. You can get a roundup of stories you need to know in todays edition of daybreak. Bloomberg subscribers can find that other terminals. It is also available in the bloomberg anywhere app. You can customize the settings so you get news on the industries and assets you care about. This is bloomberg. Get help reaching your goals with j. P. Morgan wealth plan, a digital money coach in the chase mobile® app. Use it to set and track your goals, big and small. And see how changes you make today. Could help put them within reach. From your first big move to retiring poolside and the other goals along the way. Wealth plan can help get you there. J. P. Morgan Wealth Management. Thanks to avalara, we can calculate sales tax automatically. Avalarahhhhhh what if tax rates change . Ahhhhhh filing sales tax returns . Ahhhhhh business license guidance . Ahhhhhh crossborder sales . Ahhhhhh item classification . Ahhhhhh does it connect with acc. . Ahhhhhh ahhhhhh ahhhhhh haidi as australia grapples with rising housing costs, in sydney, some residents are protesting a plan to build answer apartments around the city. Paul allen reports. Call the name of the name of the protest is called save sydney, and it may be doing the opposite. These protesters would like to stop laws that would allow more highrisees in the suburbs. The housing shortage is one of the reasons that sydney property is among the most expensive. Planners have asked the State Government to increase supply and do it by building up instead of out. Greater sydney has relatively low population density