tv First Up With Angie Lau Bloomberg May 11, 2015 7:00pm-8:01pm EDT
to you from hong kong. streaming on your mobile and bloomberg.com. top stories this morning in asia as it has been so often, greece. has scraped together enough cash to make an hundred million dollar payment to the imf but default is a threat. zeb eckert is covering the developments in europe. zeb: it is welcome news, the payment they will make. they put in a transfer order which tells you that the money will be transferred. on if itaking a poll would be transferred or not. the big check is in the mail but there are many more tracks that need to be mailed -- checks that need to be mailed but it does not eliminate the threat of default. the changes that greece must make to satisfy creditors. on monday,t packed
greece's problems are not insurmountable but they are big. the finance minister making it very clear. all sides being very honest that liquidity issues are coming to bear. in weeks, greece could be out of cash. isthe liquidity issue incredibly urgent. this is common knowledge, let's not beat around the bush. theeems to me that from perspective of the timeframe that we are facing, we are talking about the next couple of weeks. zeb: we take any signs of progress we can get. the markets are impressed with greece hasat authorized the item of payment but angie, billions more remain and creditors are not convinced they will be able to get this done. angie: is it progress? talks officially to where they were in february? it is months on from that.
talks are back at that level in terms of agreement that we saw in february because that is when the newly elected government in greece agreed to budget targets. monthsnce -- in the months si they have walked back on thatn. now they realize they must get a deal done. given him to the things they were not willing to give into into the giving the things they were not willing to give into before. this is progress on a limited scale. >> the deadline is the end of june. we have extended for four months. every week the talks continue. we have less time for implementation. forget, even if
they get the deal gone by the end of june, greece's problems are big. it could fall back into recession, that is very likely. the growth forecast has been slashed significantly. it has major issues. budgetary strains, cut to pensions. the host of issues that greece has to do with next. angie: the latest on the ongoing drama called greece. let's check in on markets this morning here in asia. in new zealand it is fractionally lower with the dollar spot unchanged at $.73. the new zealand dollar coming under sustained selling pressure. we are also thumping to the opens in australia, japan, and korea. let's head over to japan. this was the view from japan yesterday, climbing 1.25%. perhaps we will start at a higher open according to futures
in chicago. dollar/yen weakening. halted afterstocks rallying the most on friday in two months. . the rise to record highs? -- what stopped the rise to record highs? sue: one analyst calls it friendless volatility. endlessiend-- tr volatility. bonds are stabilizing on friday and they are down to. are focusedestors on the greek situation, a little concerned. also watching for when and how the fed will raise interest rates and listening to analysts forecast a slump in corporate earnings. a lot of them have reversed original forecasts as earnings are coming in better than reduced expectations but all of this causing stocks to go between gains and losses.
that brings us to the volatility index. the so-called fear index. is becoming a very crowded trade, especially today. what we found out is the number of trades and the lightning quick pace but they were put through at is staggering. almost $100 million worth of options to volatility changed hands in a split-second around noon today in chicago. that would normally be about half of a normal day's volume. today there were 40 trades that went off afternoon. these are contracts that are a bet on the value in the volatility rising over the next two months. some of the biggest trades were for more than 130,000 contracts in one trade. hard to tell why. buyingmost basic aspect, is a bet that turbulence will
rise which happens when stocks fall. when you do not know what direction they will go in, a lot of traders say to bet that it will continue to whipsaw. that is what the trades today were about. experts say that it looks like someone was hedging. someone wanted a lot of protection. you do not know if they are related. 99 million, is that the biggest trade ever? veterans say it is one of them and indicates that traders want a lot of protection. vix jumped by the end of trading with 100 million trading today, the highest since december. all of the transactions happened at the same a second, spanning many individual trades. some say that an individual may have divided up trades so they would go through quicker.
no proof they are connected. it is something that many people at.aghast what it underscores is that there are expectations of higher volatility creeping into the market. angie: if there is one consensus it is that there is no clear direction from the data. thank you from bat out of new york. -- that out of new york. softbank did better than expected because the mobile business at home in japan offset losses at sprint in the u.s.. there was the announcement of a new president. is softbank making any progress with sprint? >> it is not smooth but they are making steps to turn around the company because they have cut capital spending. they are looking to boost profit. from japanrevenue that help to offset the losses from sprint. the carrier added 170,000 new
monthly subscribers which was reported a couple of weeks ago but that losses widened to $294 million from sprint. softbank, that income doubled on the year and operating profit up 21%. sales up 6% as well. full-year dividend at 40 and a share. -- yen a share. no forecast for the year due to a number of uncertain factors. they did talk about north america being the big challenge for softbank. if they are able to tackle valve in the company is looking good for the rest of the year. that thenl -- tackle the company is looking good for the rest of the year. they are talking about the global expansion. now asfocus will widen we aim to become a true global company.
we will continue to run the japanese telecommunication business and sprint in the u.s. but the focus will go beyond national borders in terms of internet technology and innovation. management roles will be taken by people who are high-level managers at top global companies. with the global expansion, the man they are hoping to spearhead this is the new president. it used to be a part of the company and the mobile business. -- he used to be part of the company in the mobile business. the ceo will remain as chairman and the former president will step down to focus on the japanese mobile business. angie: is that the guy that is sing to succeed -- uceed? yvonne: his chances are high. talking about it during the press conference, saying that he is the most
likely candidate to succeed him. he says that he has no plans to retire anytime soon. angie: meritocracy at its best. you can get more on that and the top stories at our digital business,n, bloomberg bringing together the best of bloomberg news, "business week," and digital content at one address. also at bloomberg.com right now, searching for the next jack ma. new wave of technology giants in china's startups in. scene. startup plus, in need of a vacation? companies that will help you pick up the tab. shares are falling after revenue missed estimates. most of the declines came from weak demand for the flagship gap brand. the company is attempting to reshuffle leadership and
products. oill is allowed to resume exporting off of the alaska coast three years after a written ran aground. opposedental groups are saying that it will destroy the ecosystem but regulators have imposed tough restrictions. to run $6 billion on the project over the past decade. the exports took a tumble, falling 22%. from the state backed association of automobile manufacturers show exports fell in the first months of the year, jeopardizing the export target of 860,000 units. political instability in key markets and policy changes are given as reasons for the slump. coming up next, as wall street ends a two-day rally, we take a look at the biggest threats to the u.s. market. back in two.
tracking stories making headlines around the world now, malaysia has detained boat people rescued. they are believed to be muslims from myanmar. around 200,000 migrants have reached shores and they fear that many more are still icy. about -- at sea. about 100,000 have lead me on more in recent years -- have fled myanmar in recent years. the storm that caused extensive flooding in the northern philippines is hitting southern japan. it is bringing heavy rain and winds about 20 miles an hour to okinawa. people inkilled 2
the philippines. it is expected to crack northeast, drenching central japan including tokyo. is underway at christie's in new york on a public also masterpiece that is picasso to be -- pablo masterpiece that is expected to become the most expensive sold at auction. a tribute tod as picasso's friend. christie's is predicting a winning bid of at least $143 million which would break the record setting from 2013 in the same auction room by francis bacon. in markets, the global bond route continues. treasuries at the highest level in years. oil dropped a third day in london among speculation that oversupply will persist.
york,g on stocks in new mobile energy led energy shares to the biggest drop since january. it was close but no cigar for u.s. stocks after closing friday within two points of a record. they slept half a percent on monday -- slipped have a percent on monday. we are joined from pittsburgh by mark. in this environment right now, with the jobs report as you said where goldilocks data set pretty much it is not driving market sentiment and yet we are seeing a bit of a selloff. more volatility? mark: i think so. the percentage of days where the dow has gone up or down and today we had a 30% which is above the average of 23% going
back to 1902. volatility is already with us. full valuations in u.s. equity markets are being met at the intersection of changing fed morey, whether in june or likely september. either way the fed seems eager to get on the path of raising interest rates and as a consequence of that the prospects of risk out there. that is enough to induce continued volatility. angie: i guess that is why we -- vix index with interesting trades, investors betting that we could see more volatility. mark: no doubt about it. today is a case in point where we saw a backup in yields. nonetheless, you are talking about a 10 year treasury bond yielding 2.5 dr. .25%. 2.25%.
hardly competitive in terms of the returns investors should expect from equities. that has the anxiety infiltrated into the market since the last time we have the effect from the temper tantrum in 2013 where the yields bunched up to around 3% on the 10 year. we had a severe selloff in the interest rates sectors. i think the market is vulnerable to continued volatility and wider swings than what we are seeing. angie: in terms of strategy, what do you do? do you stay in the u.s. or search for growth elsewhere? what do you like? it is a case of not abandoning u.s. equities but saying inc. -- increase allocations to non-us equities, particularly japan.
where prospects economically and in terms of earning directories are brighter than the u.s. that said i think that u.s. equities grind higher. as a consequence of affirming economic fundamentals and which is profit growth starting to be marked up for the first time which has not been the case for the first three or four months of this year. i think the lack of alternatives will still be a driver to equity returns. whether u.s. allocated or globally diversified. it will be better than low yielding fixed-income instruments. angie: if you do not want money parked on the sidelines, what sectors do you think are most attractive? us, sectors include financials, domestic and global economic conditions, a slight bump in the yield curve should be good for net interest margins.
that, we like the consumer discretionary sector. not all components but areas restaurants but should be the beneficiaries of an improving lot for the consumer which is benefiting from job growth and wage increases which are occurring and we expect to accelerate over the balance of 2015. angie: accelerate, fine. what about headwinds? any threats to the expected continued growth? lender,e could be a fed that they act -- blunder, that they act prematurely. that good for the economic expansion and equities would be degraded -- that could thwart economic expansion and equities could be degraded. ,any countries around the world particularly opec, depend on
triple digit oil prices to maintain social programs and stability. you could see a geopolitical low oil as a result of prices in oil-producing nations and that is a risk that is a high probability event coming in the next couple of quarters unless we see oil prices will markedly higher. angie: geopolitical risk is something that we keep a close eye on here in asia. thank you for joining us out of pittsburgh. mark, chief investment strategist. " isng up next, "avengers expected to be the highest earning film and chinese movie history. hollywoodme back, why is looking for beijing for more than a box office boost. ♪
back, you are watching "first up." avengers" are set to become superheroes in china. pre-bookingsy and "furiousay overtake seven" is the top grossing movie there. joining us for more is paul sweeney. how important is china to avengers? paul: china will be important for "avengers." it had a strong opening around the world, a little below the
expectations that were floated a couple of weeks ago but still a huge box office around the world. china is the one that will push over $1 billion in global box office. some say that it could top "furious". angie: incredible. it is interesting strategy that they are opening in china a little later than other markets around the world. how is the movie done so far? paul: pretty well. in fact, close to $1 billion in global box office already. officespened most box around the world. the first movie did $1.5 billion in global box office so this is a little way to go but opening in china will get it closer to 1.5 billion if not over. angie: it is a great, action-packed film. understandneed to
complex storylines to get it. caterersow hollywood asia?na and i will visit doing that? -- how wealth is it doing that? -- else is it doing that? paul: they have to be confident that it will play globally. if that means putting in local talent and actors and scenery, shoot on asia? i will visit doing that? -- how wealth is it doing that? location in parts of asia, they are all about doing that because the big-budget movies, they have to play well globally and generate box office globally because some of them cost more than $200 million. much forank you so that. coming up next, budget day in
angie: it is 7:30 in the morning in hong kong and that is a live look from our bloomberg asian headquarters here at victoria headquarters. the sun is out, hopefully for the rest of the week. we are 30 minutes away from the opening of trading in australia, japan, and south korea. you are watching "first up." the top stories this hour. greece is the next two weeks are critical as it tries to assure skeptical creditors that it can reform and avoid default.
it initiated the transfer of more than $800 million to the imf but says liquidity is becoming a major issue. the ecb meets on wednesday to discuss emergency funding for greece. expecting more volatility in the u.s. markets over the next few months. almost $100 million worth of ations changed hand in split-second overnight. that is half the volume on a normal day. the fix index jumped nearly 8%. profit rising to 1.6 oh yeah dollars. 1.6 is a drop of 9% -- million dollars. that is a drop of 9% year on year. they haven't trying to sell off debt from the acquisition of sprint. change, announcing a new president. younger than i's
am and more skillful than i am in many ways. he is a great person. we consider him the most likely person to be my successor, that i have no intention of retiring anytime soon. angie: did its budget day in australia with the abbott government taking a deficit blowout thanks to be plunging price of key commodities, including iron ore. non-mining sectors are looking sluggish and some economists are talking about a possible recession. what can the government do to turn this around? limitede government is in with what they can do. anything they try may get bogged down. i have a problem on their hands. the deficit is expected to be about $40 billion according to those polled by bloomberg.
there will be a few cherries in the budget. there is a $3.5 billion childcare plan, there will be tax breaks for small businesses. they have to do something on the revenue side as well. it looks like multinational corporations are going to be firmly in the sights of the government over the coming 12 months. the treasurer held a press conference yesterday. a lot of the budget does get deliberately leaked in advance. one of the things he showed us was a flowchart having to do with taxation of large companies and went along the lines of i, the foreign multinational, is the revenue of $1 billion. is your australian revenue booked on shore? you could be liable for a large tax bill and a fine of 100% of that bill. >> there are 30 companies that are engaged in this activity. obviously they have not been paying their fair share of tax
in australia. they have been paying in australia. only by being embedded in their businesses have we been able to work out their business model. we have identified the sums that have been shifted and are now identifying the actual amount that is required to be remitted in tax is a different story. angie: many key measures of last year's budget never made it through australia's divided senate. will this one meet the same fate? paul: there is a powerful political dimension to be sure. the tax is likely to be unpopular with voters. it will not flag a $40 billion revenue hole. this is the problem the government has on their hands. last year they were describing the senate as feral. anyis difficult to get an
kind of reform through. tony abbott was nicknamed dr. no because he voted down anything the government tried to achieve. this is what the government has on its hand. business lacks stability and nothing particularly jarring will happen over the next 12 months. we still have the senate being urged to pass the budget because the economic picture in australia does seem to be getting linear. the debt is growing. the first budget for political reasons is not going to do a tremendous amount to try to remedy that. angie: paul allen watching the australian budget coming down today in canberra. malaysia's fundamental economic picture remains clouded despite the recent oil rally. the rating agency is preparing its second-quarter review and it
has flag a 50% chance of a downgrade. let's go to as haslinda amin. : it all comes down to macro economic fundamentals and they are not looking good. fitch says the rally may help the overall picture. it does not alter the fact that my lay ship has a shrinking -- strugglings been with a fiscal shortfall for almost two decades. mounting debt after a stage one investment company. that makes malaysia's debt more exposed. the concern remains. no doubt there have been some effort to address the issues like the new policy implemented last month, but they are not enough.
rating, the minus fourth lowest investor grade, is at risk. angie: the state investment fund is prompting increasing calls for the prime minister to step down. what has been his response? haslinda: he has brushed off calls for him to quit. he says he will not succumb to pressure, that he still has the support of malaysians, the party members. you are right. there has been mounting pressure for him to step down. attacks coming from a former prime minister and also from top party leaders. critics raise the questions of corporate governance, of corruption. one mdb as a debt of almost 12 leading dollars. over the weekend the scandal gained momentum when it was found to have tapped into a
pilgrimage fund. it was meant to help bail out 1mdb. they say there has been no longer. malaysia's political saga continues. angie: thanks for that. wynn resort's biggest shareholder has cut its stake in the company via most 40%. million --w $10.1 10.1 million shares down. with the resort set to open a macau, revenue has fallen for three straight months. google has revealed that itself driving vehicles have been involved in 11 minor accidents over the six years they have been testing. the company says its technology was not to blame in most of the incidents. it involves cars being hit from behind. no injuries were reported from the collisions for google maintains the technology is
capable of taking action earlier and faster than human drivers -- human drivers. mcdonald's in japan has managed to slow the decline in same for sales over the first quarter. it has maintained its forecasted loss of $318 million for the full year. the company has been trying to rebuild confidence after some customers found foreign objects, including a human tooth, in their food. >> the project adds another important layer to our trust and transparency efforts with moms and all customers. one of the things i've learned from being out in these seven meetings with moms if they want more transparency from mcdonald's. they want to know more about our food, where it comes from, how it's prepared, who takes care of food safety and quality. angie: we have breaking news right now. pablo the cost -- pablo
picasso's painting sold for an auction record of $179.4 million. 1955 as apleted in tribute to cost so -- picasso's friend. reporting they are having the money market rate. xiaomi, the handset maker, that is what we know it for. what is the latest move? >> the report as they have a money management fund. basicallyhat you can link a national id to china and link a bank card to the account and they can settle the account with as little as one rmb.
i can show you on this. click on the app. reports very, what it is offering summer between 4.3 to just under five cents. angie: that is pretty good. rosalind: online they are much higher. the returns are much higher than what banks are offering. angie: real interest rates in china right now are 3.25%. rosalind: yes. you put in one rmb and get 4.9 after seven days. that is what it is advertising, what is offering. if you click on here than it takes you to another page, which is another giveaway for opening an account.
it is managed by a bigger company. it is fairly well-established and has a range of things under its umbrella. it is managed -- if you were at about putting your money into something like this, it has a stable reputation. angie: is this an unusual step for such a young company? rosalind: well, yes. xiaomi is a young company. however if you look at the tech sector in china there are already bigger companies which have these kinds of online management accounts. alibaba, 10 sent. biggest, as ahe management fund is that -- alibaba, the biggest, has a management fund that is fourth largest in the world. users, $93million billion in terms of deposits. xiaomi is entering a field where it has very big players to
compete against. maker, a a smart phone device maker. they make tablets as well. it does not make much profit, if any, from the devices. what it is looking to make rough it out of is services. this is why it is trying to build its system, other areas in which you can make money from. this is one of them. it is going into this online money management area now. -- it continues in. we can see how that bodes in the coming month. angie: the physical phones is the to get -- is to get the consumer in the door. rosalind: now they can leverage and sell services. angie: interesting. thanks for that. next, we checked the prospects of one of the world's biggest auto parts supplier in the region. "ur conversation when "first up
angie: greece has cleared another that hurdle, initiating a transfer of $830 million to the imf. athens has gone out of its way to convince skeptical creditors that it is determined to avoid default. the ecb meets for emergency funding to greece on wednesday. sources say is highly unlikely the bank will restrict the flow of cash by asking for a term. iran says it is ready to call for a cease-fire in yemen. tehran was seen as supporting the rebels and forcing the present to plea. a coalition led by saudi arabia
has been bombing forces for weeks. 700 people have been killed in the attacks. japan has made a significant ,hift in its pacifist policy moving ahead with legislation to strengthen its military role. the ruling coalition has agreed on a package of bills that would loosen restrictions imposed after world war ii. it would allow japan to contribute more with its allies in the u.s. and protect allies abroad. the constitution limits japan to defending itself at home. parts supplier bosch is releasing reports this morning. south asian countries make up one of its fastest-growing region. martin hayes, it is good to see you. where you sing the fastest growth in the region? totin: if i can just come basically bosch totals, global,
we had a good year last year with a 3.6 -- 6.3% increase on our turnover. the sale was $49 billion worldwide. increase, 70% on previous year making a total of 13 billion euros. now to southeast asia. southeast asia, we saw around 700,000 -- sorry, 700 million euros, a 7% increase. increase inmainly indonesia, in the automotive of thailand and vietnam. southeast asia continues to be one of the fastest growing regions for bosch. angie: not only because it's role in the global supply chain, but interesting that you are tapping into a growing
demographic of middle-class, improving infrastructure and the like. which on the list of growth drivers the ucs the model for you? -- drivers do you see as the model for you? martin: i don't think it is the model. it is more about the opportunities that exist in these markets. we are seeing an increased pace of organization in southeast asia. i think the figure that the population will increase to 700 million by 2025 and over 52% of these will be living in urban areas. this offers for bosch a great potential to captivate those markets and ensure our presence in those markets. bosch is already in seven of the different capitals of indonesia. we will expand that up to eight
by the end of this year. it is almost a second or third tier. philippines, the it is one of the cities. we are looking to expand into that by the end of the year. have three sales offices in the philippines at the moment. this is happening all around. the next one is industrialization. these populations are looking for, as you said, infrastructure, development, and the innovation of products. for predictiveng maintenance of systems. that we can work out with their innovation systems. i think also key to this is -- angie: yeah. martin: is a rise in the consumer class. angie: i didn't want to ask you about emerging markets like landmark, laos, cambodia -- like
myanmar, laos, cambodia. they are coming online. for a lot of people these are countries that are trying to get a foothold in the asia economy. geopolitical problems continue to persist there. how are you dealing with those headwinds? martin: i think it comes down basically to our strategy. bosch is here for the long term. we have been in southeast asia since the early 1920's. we were first in indonesia in 1919. we moved into myanmar some years ago and cambodia has been a presence for some time. we also design and develop the products in the markets as well. we make sure they have the right products, but also at the right price as well. a power tool sold in myanmar has to be of the correct type of
these guys use it. it depends on the fact of what we put back into the committees. taking myanmar as an example, training, schooling is important. this is one of the key values of bosch. vocational training is key to the fundamentals of bosch. we have already set up vocational training. a big one in vietnam, and highland as well. do that to do -- we will move to do that in myanmar and cambodia. angie: thank you so much for talking with us today. that is bosch southeast asia president. bridgestone after their first quarter missed. this is "first up." ♪
our reporters are here to tell us what stocks they are keeping an ion. countryatching a small called k.i.a.. it makes traffic lights and things for a bullet train. a judge in london has ordered the company and the company before proceedings to pay 107 million u.s. dollars to tie airways. to leaseays had planes. angie: people had to stand on flights. no, that was another thing. [laughter] david: grip those bars and prepare for flight. angie: turbulence. david: it is a fairly big amount because the company had profit of $100 million. they basically wiped it out. how about some music in here? >> the manufacture of the physical instrument, channeling
back to my childhood roots. piano. lessons, ensemble. stock is up about 29%. eugene investments and security just rated a strong buy, saying they expected 3620 and a share. share. yen a angie: and jeb? >> i'm going to ask you a ridiculous question. have you had your tires rotated lately? angie: that is a very personal question. [laughter] >> we're talking about bridgestone today, the tire maker. i'm going to get a lot of flak from this am. it missed first-quarter sales. is keeping the year and target. so don't ship off the
mark: with all due respect to fans of the recently-canceled "american idol," if you still need your popularity fix, we got you covered. on the show tonight, jeb is up, rubio is about the same, and first it is obama versus warren. the president told yahoo! that the most newsworthy senator who is running for president is getting her facts wrong entrée. she says the potus is not being