Critic is a china trumps trade representative. First over in tokyo, we have china and hong kong starting off in about half an hour. Singapore, taiwan, they are just starting. Bit of the tailwind coming correspondent certainly something for the bulls to put their hats on. When you look at europe, let me get started there. Closing get a record. Europe in general entering a bull market. We are adding a little to those gains. Have a look at wall street. S p 500, nice deck and the dow jones nasdaq and the dow jones up. When you look at asia, there you go. Japan is very much doing the heavy lifting. Just a few hundred points. We are just about 100, 150 points short. We get about 19,500. That takes as well and above the peak that we saw as we entered the last few days of 2016. These markets opening up have decent gains. In a bull market. Good. Lly has been rsi is well above, that is a market to watch. The sort of rally we have seen. The other thing of want to focus on is the currency market. Toppinghe dollar index a 14 year high overnight. Addingseeing the dollar to the strength that we saw. Below oner back dollar four. Dollar ring get very much in ringgit veryar much in focus. We are the dollars strength come through. Renminbi will be the focus. Have a look at what happens in the overnight yesterday. 17 . Well over 400 basis points. That comes out two hours from now. That is something to watch in the currency markets. Lets get you up to speed with what is happening in the first word news headlines. Heidi, a very good day. A red alert for smog and provinces across the north and east, treating the closure of factories comes and construction. There has been choking smog since the new year. Conditions are not expected to improve. Airconditioned air pollution in north china well above safety levels. Have taken aexit turn with the unexpected resignation of londons ambassador to the you to the eu. That is just weeks before the government is set to trigger article 50. He had been expected to oversee the first talks. It could take a decade for the u. K. To hammer out a trade deal with europe. President elect donald trump is claiming another jobs victory. The plug on alled project, saying they spent some of the 1. 6 billion saved on new jobs in michigan. The peso weakened against the willr on word that trump persuade investors to go. We see a more positive manufacturing environment under trump. We see progrowth policies he is outlining in tax and regulatory reforms. This is a vote of confidence that he can deliver on those things. News 24ndent global hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. U. S. President elect look like he is following through when it comes to trade matter. He has top that she has picked a top china critic. He has on the trade front picked three very opinionated, strongminded individuals on the trade front. Rishaad i can imagine and of those being friends of china. A lot of opinions being thrown at him from wilbur ross. Desks credited with your with reviving u. S. Steel and coal. He has railed against bad trade deals. He has warned against china bashing. He has this new trump white house, a National Trade council, peter navarro. Pretty much a china critic as well. He has also railed against china. What he says, constantly rigging trade in its favor. He has many times accused china of unfair trade practices. He is a former deputy in the reagan years. Fairly young man, 69 years old. He must have been in his 30s and the Reagan Administration. Say aboutat he had to lighthizer. And strike agreements that protect some of the most important sectors of the u. S. Economy, and has repeatedly fought in the private sector to prevent bad deals from hurting americans. He is the former National Treasurer for the bob dole campaign. He has deep connections to the republican establishment. Rishaad should we really be looking at semantics when it comes to donald trump . He is following through. He is putting people in place to do what he said he is going to do on day one. Whether that means he is going to name china a currency manipulator on day one, whether he is going to slap tariffs of as much as 40 on chinese imports, we do not know. Rishaad there has been some narrative that donald trump is taking a reaganesque approach against japan. He is that of using that against china. Look what reagan did in the second term of his office. He imposed quotas on japanese steel imports. He protected the u. S. Autos to a certain degree. , what harleyuctors davidson. This might be china might be trumps japan that reagan had. Coming fromquote er. Ht highs are lighthiz using tariffs is a republican tenet. They have pretty much laid out the blueprint. Rishaad thank you very much for that. China has made unprecedented as capitalinto this outflows accelerate. We have the details. What do we know . Correspondent another sign of the pboc plugging the gaps that continue to flow out of the financial system. E have a terminal chart we are talking about mediumterm lending facilities that the pboc has set up. The balance has increased more than 100 billion in the month of december alone. That is the biggest jump since we got data back and september of 2014. It highlights and underlines the growing pressures from these capital outflows. The yield when dropping. It is fueling these capital outflows. To the role of the contortionist the central bank is having to play. On one hand it as having to keep the funding going to support the financial system. Tryingother hand, it is to tackle these risks associated with very high corporate debt levels. More neutralto policy in light of what is overall a Stronger Economic picture. Rishaad we know that beijing is taking itself the line when it comes to foreign interaction. Is there an impact . At the end of last year, we suck capital controls in the form of restrictions on the amount of oney that could be spent acquisitions. Also the amount you can move overseas in terms of you want conversion. There is a 50,000 u. S. Conversion quota. Now chinese citizens have to jump over or through more loops sent troops to do that. They have to pledge not to use their foreign currency to buy property, securities or Insurance Products abroad. I have to outlining exactly what they will be spending their money on. The context is around 750 billion worth of capital outflows in the first months of 2016. Extrats say these requirements will probably ease some of these capital outflow pressures and another sector taking a hit. The casino sector in macau suffered fairly badly toward the end of last year. There are fears these capital restrictions and controls will restrict the amount that their customers are willing or able to spend on the blackjack tables in macau. We saw stocks trading slightly lower yesterday. Rishaad thank you very much. Looking ahead, the former r. B. I. Government says they will do the heavy lifting. We will hear the opinion later this hour. Seen as the main threat to Global Economy in the year ahead. Economists try to protect the year ahead, there is one thing certain the effects of 2016 global shocks likely to continue to be felt. Says investors are underestimating the risks of Donald Trumps incoming administration. I think it is a moment of extraordinary uncertainty, to the extent that markets seem not to appreciate. There are prospects that they could not work out well, at least for some future. There are enormous risks for the Global Economy. Rishaad this years french thation could in the end brings the end of the eurozone. Graduals been in the process of slowmotion disintegration. If le pen comes to power in france, this could be the beginning of the end of europe and the eurozone. Rishaad despite rising uncertainty, Eurasian Group president says the markets will hold up. You can see an environment that geopolitically is by far the worst that we have experienced in decades in 2017. Yet the investment into the u. S. Markets and the strength of the american dollar is going to grow. Rishaad lets bring in the head of icc investments. Thank you for joining us. What is your take on all of this . You are calling it 2017, the year of the pivot. , these thingsot take time. That always leads to a huge degree of uncertainty. Indeed it does. That is part of the reason why they key investment is a ounce investment allocation. The number of opportunities we and anflation protectionism, some of these opportunities, some of them are risks. Markets are taking a sanguine view. Some of these may be overextended. Some comments on trump, fiscal policy in particular. Time toings do take come through into the system and show up in the economic and earnings data. Overall we think it is a Glass Half Full some area. We are cautious and optimistic. We are hoping there is a reflationary scenario. We want a bit of insurance in the back pocket in case things take a turn for the worse. Rishaad as you say, it is hard to say what the good things are and what the negative things are here. You have alluded to a pivot toward fiscal policy, from lost from Monetary Policy. On top of that, globalization to protectionism and more geopolitical risk. The letter to the latitude of other things is concerning markets. It really depends what stance you take. You are clearly sing in the u. S. , that is a matter of degree and positioning. It is one of the reasons why we still think equity markets should do well. We believe there should be beneficiaries in domestic sectors. They are more exposed to global flows. More so in developed markets versus emerging markets. To us, that is a degree of positioning. The geopolitical side we think is one good reason to have insurance. A lot of Research Shows from acally, moving unipolar world to a more multiple world does tend to bring instability. Asia, investors have not been used to pricing in our preparing for geopolitics related volatilities. We think that is the reason why having a bit of balance in investment allocations. Balance in investment allocations. Positioning an upside it makes sense. Equally having a bit of protection against what we think would be inevitable out some volatility. Bouts of volatility. Yuan reference rates has been set. We have a number of 6. 926 against the dollar. The 6. 9498. Us what a making of this . How much more weakness can there be . Is it all contingent on where the dollar goes . We actually think it is much more about where the dollar goes the necessarily what is happening in china emerging markets. If you look at the dollar the past rate, over year or the past couple of years, it has been the dollar. During periods of dollar strength, you are seeing it weaken. During the dollar pullback, you are seeing it flat and out. Is central to weaken a bid on a basis. , tryinge strong dollar to achieve some sort of equalization. That its going up in the u. S. Is a key factor behind us. That move could potentially extend after a brief period of pullback. Environmentt in a should relate to moderately stronger dollar strength. Mean a slow, critical lower in the remnant be should continue. That should not come as a surprise. Historically, this environment is one where the dollar does well. Some countries do face more capital outflow than inflows. Rishaad this is actually the since mayan fixing 2008. Thes find out if you put ficc hat, lets put the commodity side of things and the commodities complex in focus. What is your view on that . A lot of for the dollar goes will also affect gold. On the base metal side, what are you making of things, especially when it comes to iron ore . Base metal, i think it is a mixed bag. A lot of it still depends on chinese Economic Growth. A few specific commodities, iron ore in particular, are important for the australian dollar. Things are not getting worse. We have seen stability come through in chinese growth data. We have seen stability in some of the industrial metal data. Lookingot necessarily for a massive bull market in industrial metals. If we get one, fantastic, that is a bonus. Couldelated commodities return based on a view of more stability. Those are reasons to stop adding in on the Positive Side in investment allocation. That is something we are more comfortable with, but in a sort of selective way. Definitely well within a greater balance. Rishaad thank you very much. Have to take a break. But next, why asias richest families are turning away from hedge funds and looking to private equity instead. Rishaad were back with Bloomberg Markets. Funds arent risk of losing more top investors. The richest families are said to be disappointed with mediocre returns. Tell us a story. Indeed, thet returns have been disappointing. 0. 8 funds on average made last year. Compares to global returns of 3. 4 , and returns an america of 6. 5 . Asia disappointed last year. To turn are starting their backs on hedge funds and investing more in private actor he private equity. Rishaad we often have Michael Price who looks after the wealth advisors. He is seeing all of this. The families are generally younger than their peers in europe and the u. S. Does that play a role . Indeed it does. Most of the money in asia is first or Second Generation money. Families is older in europe and the United States. As a consequence, there is less of a separation between the let between the wealth of the family and the business of a family in asia. The patriarch, the owner of the family office, is still more return oriented in asia. He or she is more aggressive. They want higher returns, better than the United States or europe. , thedea of Family Offices mandate is much more about capital reservation. It asia, they want higher returns. That is the reason why they are not happy with the returns of the hedge fund. Effective . Rticularly correspondent it is the smaller hedge funds. Assets of about 100 million u. S. Dollars to get coveted money. Size, toto reach that reach that 100 million, you office. Family you dont get the money from the offices, you have a problem. Rishaad thank you very much. Capital flight from Family Offices. Has a up, indonesia pointed message for j. P. Morgan chase. We have hong kong and shanghai starting up their station. Hong kong looking like it will have a marginally positive start. With the xfinity tv app, anything with a screen is a tv. Stream 130 live channels. Plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Rishaad this is Bloomberg Markets asia. We are just about to start the session off in hong kong. It is the day we are seeing gains. The yuan fixing coming in just a short while ago. Lowest and weakest since may 2008. We have positivity coming from new york. Correspondent lets talk about the yuan fix. 6. 9578 is the offshore exchange rate. You saw been a strengthening here. A lot of this is semantics. Levels lastches seen 15 years ago, inevitably we will get record. Were focused on the basket. A lot of that obviously has to do with the fact they are shipped away from the reception. Is remnant be is put 6. 9578, the weakest fix since may 2008. What are we seeing here . It is generally up across the region. That puts you at 100 over at europe. A record high going back to 1983. Can we get futures . Hang seng up a fifth of 1 . Shanghai composite, 1 gain. Well over 85 of shares on the way up. What does that mean . It was the worst performing market in 2016. The Bigger Picture is the money coming out of china. We talked earlier about the record amount of injection to basically maintain these levels. Back here to hong kong, we were talking about these fixes, the overnight. About two hours, we will get the latest fixing on just how much borrowing costs in renminbis. Just something to watch. Nothing there. Top three, bottom three. Any sort of reaction to the other data. Retail sales following falling for 24 straight months. More than expected. That data in hong kong is generally good. China is concerned markets are losing a bit of momentum. A session high over in japan. It was a good day yesterday. Are seeing some consolidation. It is too early to say. Take a look at how some of these markets have flatlined. Thank you indeed. First word news headlines. Haidi lun is in sydney for us. President elect donald trump has again signaled a tougher line when it comes to naming a china critic as the head of the u. S. Trade representatives office. He will replace michael froman, 11 talks on the transpacific partnership. He said they undermine american jobs. A bank run by Donald Trumps pick for treasury may have engaged in widespread misconduct. This is from a memo from the California AttorneyGenerals Office. Theyre accused of manipulating the results of home auctions. Debts they say it is unlikely medicinova about the conduct. To receive anyly other concessions from india to start making iphones in the country, after it was said to have sought discounts on import and export duties. They say they cannot be eased for just one company. India has already relaxed rules. British airways is taking action next week. A cabin crew walkout will occur on generative, threatening widespread disruption to flyers. They divided their action after conciliation talks. Accuses them of forcing recently hired staff to live on socalled poverty pay. I am haidi lun. This is bloomberg. Indonesia has been fighting back at j. P. Morgan chase, the take issuing a downgrade the bank issuing a downgrade. First of all, a background . After donald trump was elected, j. P. Morgan issued reports which translated the bank said it was a Tactical Response to Donald Trumps election. J. P. Morgan chase is that report indonesia, saying it is not accurate or credi