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tv   First Up With Angie Lau  Bloomberg  September 21, 2015 7:00pm-8:01pm EDT

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the stocks take flight. four said officials talk up the case for a rate hike this year. coming to america. cyber security set to dominate. apps.bad apple pulls products from its online stores after chinese developers are duped into using malware. welcome to "first up." livengie lau coming to you
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from bloomberg's headquarters in hong kong. let's check in on markets for you tuesday morning. new zealand is climbing about .1%. higher is the new zealand dollar, worth about 63 u.s. cents. one market to tell you about is another -- it public holiday in japan. the u.s. starks started the week with games, making up for some of their post-fed meeting losses. we have su keenan with all of the details. su: we saw the market reverse a two-day selloff. sant of this had to do with francisco had president john wayne's and policymakers coming laying out a
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case for the fed to raise rates. the decision not to raise rates was a close call. many say the fed's job is to manage market expectations and there is a view that many people did not expect the fed to pull presserger, the fed explain their position came off as a debacle. there are a a lot of people feel they did the right thing. >> special conditions have already tightened a little bit equity prices falling. i think it is a big deal when the fed starts raising rates. they make very dovish language going forward that it will create certainty in the mind of investors, and i think that is not right. su: it appears a lot of
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investors still cautious. the latest data showing that sales of existing homes fell. we had merck and many of the biotech stocks under pressure, really taking a hit after democratic residential candidate hillary clinton tweeted that she would be releasing a plan to combat the high cost of prescription drugs. alibaba in the spotlight, falling as restrictions and it following the chinese e-commerce company's initial public offering. down 32% from its first day of trading last september when it was hottest ipo of the year, it seemed. all eyes are on yahoo!, is still working out what to do with its 15% stake of-- alibaba. indonesian president will
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meet barack obama at the white house. they are expected to discuss climate and energy issues. between theperation u.s. and indonesia will also be on the agenda. way toosborne is on a china for a deal in a new nuclear power plant. they guarantee they will give $3 billion in funding. the financial times says the chinese may help finance two forts in return controlling a stake in a third power station. many apple users were exposed to malicious software after chinese developers were tricked to using malicious code in their applications. the code secretly collected information like passwords and other credentials. t say they have fixed
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the affected software, which were spread through counterfeited tools for ipads. apple has removed 39 infected apps. is u.s. justice department beginning a criminal investigation into volkswagen admitted totomaker cheating. what action has the doj taken? bashed volkswagen for manipulate these omissions test. very, very serious bad news for volkswagen. angie: it is bad news, but what are the defeat devices that they
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admitted to putting in the cars, and how is the doj going to take this case? del: what folks wagon did was it installed -- volkswagen did was it installed software on hundreds of thousands of vehicles which reduce the amount of pollution coming from the vehicle during emissions tests. you take it to the dmv and they run a test to see how much pollution is coming out of the vehicle. particles and carbon dioxide and other pollutants. what they did is the software dampened that and made them a lot less. when they weren't being used, the independent group tested the vehicle and they were 10-40 times worse when they ran the test. that is a pretty serious violation. it is not just a mistake. it is designed to do that. the justice department is going to investigate this. they have many tales to -- they
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have many ways to do it. warrants, search prosecutors from the environmental division of the justice department are leading the investigation. the epa has a wealth of material on what the volkswagen has done, and the fbi. angie: it was not a mistake. it was software designed to achieve the government test. one of the potential consequences? jail time? su: it ranges -- del: it ranges. say they find a specific executive that had e-mails or there is testimony that shows they specifically tried to manipulate these cars to defeat missions standards. that is a crime -- defeat emissions standards. that is a crime. there are lots of sanctions the justice department can levy. gm got smacked around and i
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believe it had to pay a $900 million fine for what he had done with its cars that were causing deaths on the highways. angie: thank you so much for that on the doj investigation into volkswagen. you can get more on that story and all the day's top stories that are digital destination, bloomberg business. bringing together the best of bloomberg news, newsweek, television, and digital content at one address. exit from the republican presidential race. plus, streaming music is officially a bigger business than physical music sales in the united states for the first time ever. it will be digital downloads by next year. that is at bloomberg.com. check it out. chinese president cheesy thing jinping is ini
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the united states, where he will stop at seattle for meetings with business leaders and will head to washington later in the week for more formal proceedings. seattle? stephen: it is safe. this has microsoft, boeing, starbucks, amazon, costco. they are all based there. washington dc is a hornets nest a politician. xi jinping would not get the one reception when he landed u.s. soil when he landed in washington dc instead of washington state. he will meet bill gates, do a number of different things before he goes to more contentious issues dealing with them. i will get to those in a second.
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in seattle, he will give a major policy speech tuesday evening, which is tomorrow our time, sponsored by the national committee on u.s.-china relations and the u.s.-china business council. henry kissinger will be there. wednesday will be the big day. he will visit boeing's everett factory as well. as well as a finishing plant, possibly in china. according to the "seattle times." he will go to lincoln high school in tacoma. he visited there in 1993 when he was an official. in the evening or afternoon he will have a tech powwow, if you will. the chinese internet industry forum sponsored by intel. tim cook, jack ma, pony ma, bob iger, howard schultz, a long
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list of people. lots before he goes on to washington dc on thursday. then the united nations in new york on friday, saturday, sunday before he turns back. angie: what are the major issues talking about? stephen: i could probably name five and we would not talk about the -- we would not scratch the surface. trade deficit. at an all-time high. south china sea on a geopolitical and military front. china claims 4/5 of the south china sea. very contentious issues. climate change. we are leading up to the paris meetings. these are the world's two biggest commuters. cyber security one of the more contentious issues that mr.
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obama wants from mr. xi. >> china believes that china and the united states are the countries that should try to work together, work out the and ther cyber security spirit of equality, mutual benefit, and mutual respect. stephen: interestingly, "the new york times" is reporting that on the agenda is an arms accord-like deal for cyber security based on a updated u.n. code of conduct, if you will. that will be interesting. human rights is the fifth issue we will likely discuss on this trip. angie: thank you very much for that, stephen. restoring investor confidence. what does china need to do to calm the market? ♪
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angie: the u.n. nuclear agency said iran is moving closer to having sanctions lifted. after meeting president rouhani and other officials, iaea director says significant progress has been made. iran's cooperation has helped the agency investigate past nuclear activities that may have a military dimension. has taken office as greek prime minister. the coalition between the syriza free greece will have 155 republican yields on greek bonds have fallen as a result. a january vote prompted a selloff insecurities.
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u.s. extradition proceedings against jack warner have been approved by trinidad's attorney general. warner is wanted on charges of bribes and racketeering. he was dieted in -- he was indicted in may along with 13 other officials in fifa. biotech stocks tumbling in the u.s. after hillary clinton tweeted she will come up with a plan to combat the high cost of prescription drugs. almostbiotech index fell 4.5%. stocks.ed u.s. shares jumped by the most in a month. facebook joins 1.2%. shares have been gaining 428 session. it is the longest winning streak ever. reversed losses,
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gaining .5%. research joinsf? us from chicago. what is driving the market? >> it is largely fed talk right now. rating rates is a big deal for the markets. it has been the backbone of the rally we had the last five or six years and it is trying to figure out what the fed wants to do next. the fed is not going to move until the spring of 2016. i know people have said maybe october, maybe december, but janet yellen is the voice that matters and she seems very dovish at her press conference last week. we had for fed presidents that they expect -- say that they expect rates to rise this year. presidentd fed
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say they would raise rates in set ember. the fed is driven by bill dudley, they are driven by stan fisher, the vice-chairman, he is a bit more hawkish, and janet yellen, who has not spoken much but she will in the last week. she is coming out more dovish than people thought. it looks like there will be no rate hike this year. angie: another big mover, the pharma stocks took a dive after hillary clinton made a note of policy changes perhaps that she wants to enact after one pharmaceutical company raised a from $13 disease drug to $750 a pill. jim: that was tarring that did it. even though the drug has been around for decades, it has been a money-losing drug. they acquired the company making the drug and they found that
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even that if they raise it to $750 a pill, most insurance companies would pay because the alternative is to deleterious. the problem is there are a lot of legacy drugs that are doing that. at the world gets more competitive, they will have to raise rates were dropped the drug. if we are regulate that money-losing drugs have to stay as money-losing drugs, it is not going to be a good thing for those companies. angie: do you think is going to continue pressure on pharma stocks, especially ahead of the 2016 election? it might be a political issue. jim: only unless the republican candidate who probably won't be for it, whoever emerges from the field looks like they are going to get the upper hand on winning the election. then i think the pharma stocks ease up. it looks like the pharma and biotech stocks might be another
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way of playing the election more than any other sector. angie: what should investors do right now? what are you telling your clients do with their money? jim: it will be a tough one because you have the thing over the market with the fed you have poor earnings because a big driver of earnings in the u.s. is the financial sector and the energy sector. the energy sector is a disaster. financials need higher rates to make more money and they are not getting it. earnings will not be there for at least a couple of quarters and the fed is threatening to raise rates, which is a dampen on the market altogether. it doesn't mean that the market goes down anymore. it might retest the august lows. i don't think it is going anywhere. investors should not be in any hurry to buy this market right now. they will probably continue to drift lower in this environment, give you a better total return.
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talk: jim, always good to to you. bianco.nd go -- jim china's crackdown on luxury and extravagance. ♪
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angie: burberry fell more than 1% after prospects of an imminent rebound in china.
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christopher bailey was speaking at the london fashion week show. sales of its designer look where -- sales of its designer where have fallen to a two-year low following china's crackdown on selling of extravagance. it released its latest collection via snapshot. asked christopher bailey about their social media initiative. christopher: we worked with snapchat. was talking to evan spiegel and he is a creative and creative innovation in his heart. the way we were talking about his industry, there are so many similarities with ours. it is always moving, this passion for nweewness. we decided to do something fun with the show.
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we did a live snapchat show last night. the attitude of that show was very free, very easy. they did it in a studio. a couple of models with a little phone. the merging of that relaxed moment with today, which is a orchestra,a 32 piece beautiful guest list in the royal park. it is important to distinguish these different worlds. for me, what is exciting is when they converge. the fashion and technology injuries are coming closer together -- industries are coming together? christopher: i think all industries are coming together, industry, fashion, music, technology. fashion and music is about expressing an attitude. i think it is a very natural
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beauty. francine: how important is entrepreneurship and how important is originality christopher: it is so important. originality, creativity need to thrive to keep the movement going forward. that is the root of a brand, when it stays curious with an open mind. it will continue to thrive. there are lots of changes going on in the world. they have to have that thing of moving. francine: tell me a little bit about this music partnership with apple. this is exciting. christopher: music has been such a big part of our dna for many years. we launched acoustic may years ago. we have worked with many artists on public projects we do, things like big offense. artists whenwith
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they are just starting out as well. it is the juxtaposition of those two different worlds. we started this project with apple music. we worked with apple a long time. it is a natural union because of everything we do. it is a technology company. suchng -- there are blurred lines today, i think. angie: coming up next, the apple store suffers its worst-ever malware attack, potentially affecting tens of millions of people. we will have all the details for you "first up" returns. before you pick up your iphone, you want to check this story out. ♪ sure, tv has evolved over the years.
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angie: it's 7:30 right now in hong kong. the thunderstorms on the horizon, that's a live look as the peak as we scroll back down from the central business district. the 30 minutes of trading in south korea, remember it is closed until thursday. you are watching "first up." the top stories this hour, u.s. shares have risen after another
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fed official added his voice to those hoping for lift off later this year. this time the federal reserve bank of atlanta president saying although he voted against the rate hike due to market volatility, it was a close call. it makes him the fourth oficymaker to begun in favor the rise happening sooner rather than later. a tweet from u.s. democratic presidential candidate hillary clinton that -- sent biotechnology stock loader in the united states. index tumbled tax 4%. she said she would release a plan to combat the high cost of description drugs. the u.s. justice department is said to be conducting a criminal investigation into volkswagen,
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according to officials familiar with the inquiry. it comes after the automaker admitted to cheating air pollution test. bad news for the company does not end there. shares plunged in frankfurt monday, prompting the german regulator to look into possible trading violations. let's check in on markets in asia right now. to new zealand where were seeing gains of .10%. we're counting down to the opens in australia and korea and it looks like futures are pacing the u.s. stock rally is a lot of voices are coming out in favor of that fed rate hike this year. a reminder, no trading in japan today as the country observes a national holiday there. appes controls on developers are sometimes likened to the fort knox of internet security. wayhackers have now found a
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to breach that highly secure system. that's exactly what happened in china, now forcing apple to pull some offerings from its app store. we have zeb eckert here with more. which apps are we talking about? zeb: saying this malicious software was encoded into its wii chat applications, one example of the vast number of applications that have been effected. apple security protocols are not so stringent, the fact that this malware was able to get through a bogus apple xcode tools let developers were using. a clever way of inserting itself. other companies affected, the taxi hailing application, china southern airlines.
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apple rectifying the problem with individuals updating and re-releasing their software and 39 pulled altogether from the apple store in china. angie: it raises a lot of questions about our mobile devices. if there is malware on our oures, how vulnerable or iphones or ipads along with the apps that we use every day? zeb: they are vulnerable. there are other conduits through which these hackers can enter these codes. it is likely hackers would use these conduits again, so this is a lesson for them. angie: what does it do, does it take our names, phone numbers, credit card information? : everything that you would want to safeguard. angie: time for look at some of the top corporate stories on the
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bloomberg terminal. >> apple is accelerating plans to build an electric car, according to the wall street journal. a name sources say apple is aiming to ship its first car by 2019. it had to be delayed last week due to a bug in the system at the apple watch software update is now available. its new features include different watch faces. it allows owners to download apps from outside developers that use its sensor. apple has not released any further information about the that caused the delay. to set up aning indonesian entity after police in jakarta seized its cars and questions its drivers, saying that apple does not have the right permits to operate there. says it is obeying the law
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and working closely with customers. those are your top corporate headlines this hour. alexis tsipras has a long to do list as he retakes the prime minister's office. he promises to revive the economy and demand debt relief. >> alexis tsipras has now been sworn in as prime minister of greece for the second time after that resounding electoral victory on sunday. is expected tog bring his new government together who will also be sworn in. then time is of the essence. by the end of october the creditors will be here in assets to review the bailout. then they will have to look at the recapitalization of the country's banks.
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25 million euros is being set aside for that and at the moment the ecb is going through its reviews of the greek banking system and stress tests that will be finished by the end of the year. along with that, alexis tsipras plus new government as they will best there's expected to be some tension with the creditors in the next few months. targets of deadlines and maybe missed that may exacerbate that tension. andoes have a mandate critics will be watching and listening very carefully to what he says in the weeks and months ahead. chinese president prepares for his first state visit to the u.s. and one of the top foreign affairs officials is playing down their differences. betty liu spoke exclusively to in former foreign minister washington. they started by talking about how china plans to respond to with cyber espionage.
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>> china believes that china and the united dates and other countries should really try to work together, work out the rules for cyber security. benefitsirit of mutual and mutual respect, china itself is a victim of hacking activities. the chinese government is firmly against hacking of any kind. in anyme say that case,y, if there is a then it should be given sufficient attention, and given now the internet is transnational and its
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activities could be covert, it to train a country to do the investigation and i think every country should take a responsible, prudent attitude and should proceed on factual ground. >> how you account for the white house, they said to have .vidence of recent cyberattacks they can trace those cyberattacks back to origins in china. how do you account for that? >> a think it is better to let tell people side there position, but the two sides stay in close touch on this issue, and i believe it is important for any government anywhere to adopt a prudent and
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responsible attitude. and let me say that china is a responsible country and we are firmly against any kind of hacking activities. cyber attacks and china and the united states can issue,ry closely on this to make cyberspace secure and transparent for all. betty: is there one answer to resolve this? there are manyat positive factors going along the way of cooperation between china and the united states on this issue. have thetries should interest of all our people in mind and they should have more exchanges with each other to give them mutual trust and to
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understand each other's policies really well. picture.he real betty: of cyber espionage? >> of our country's position on the issue. let me emphasize that china is against hacking of any kind, and we have made our view very clear to the american side and two other parties as well. >> there were many other things to discuss when betty liu sat down with him. you can watch the full interview with china airing today at 9:00 p.m. eastern time for those watching in the united states. 12 noonasia it is on at hong kong and singapore time, for those watching in australia and sydney it is 2:00 p.m. coming up next, perhaps losing its sparkle.
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for diamond could be flattening out despite record sales last year. you are watching "first up." ♪
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angie: hungary has given its army greater powers to control migrants at its borders, including the use of nonlethal weapons. prime minister said his country's being overrun by a silent seeker's who accuses of breaking down the doors of europe. beenrian authorities have guiding migrants onto trains taking them straight to austria. an emergencyld summit on the crisis tomorrow. israel and russia say to have worked at a way to avoid potential lashes tween their troops should they come across each other in syria. russia is considering deploying .roops to aid bashar al-assad
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israel's benjamin netanyahu says he's reached an agreement with vladimir putin and they met in moscow. a huge group of republican presidential contenders has just gotten a little smaller. with the withdrawal of wisconsin governor scott walker. theays he wants to thin field so the party can find an alternative to the current front runner. he did not mention donald trump by name but urged others to pullout for the same reason. he had promised as recently as sunday to stay in the race but had one -- less than 1% of support in a recent poll. the diamond industry has lost a little bit of its sparkle after record sales last year. sales are flat this year and prices for uncut diamonds are slumping. joining us is the ceo of
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debeers. you brought some very sparkly things for us morning but unfortunately, when it comes to the global economy, it's in the middle of a slump. not a lot of buyers, i guess. >> we are optimistic. obviously luxury goods like diamonds are impacted by the overall economic environment and the slowdown in the economy in china has obviously impacted the level of both. 2014,a record year in with all the major market showing growth, we are still achieving the same sort of sales we did in the first half of 2015. so a big season yet to come, christmas, chinese new year all in the next four or five months. there's a lot to look forward to. you've noted all those culturally important holidays were people around the world from the united states to india and china and the rest, but how is india and asia and china
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perhaps faring in this global economy when it comes to sales? >> india and china have been real motors of rove. america is the largest market but over the last decade, india and china have been growing double digits and driving growth. immune fromot economic slowdown, in the longer-term picture there's no doubt there is still substantial opportunity in china. we've seen strong growth from the tier three and tear for market as diamond retailers push out across china. in the report we just published, we've seen strong growth in the 18-29 year old chinese women receiving diamonds for important milestones. birthdays, obviously the wedding is key, anniversaries among young married. so the idea of the diamond really beginning to penetrate with the young chinese.
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how our online sales changing the face of the industry? beautiful pieces that i can physically take a look at. are you generating this kind of excitement when you're doing sales online? an important marketing tool. particularly in china and india, it's more a marketing that a sales tool. people use online to learn a lot about product they may not know much about. it's a great way to learn a little bit about the quality of diamonds before you go into the store. angie: brands are increasingly important. why? >> brands are crucial. in the first half of the year, the growth for the overall market in china is 304%. think the chinese consumer andeciates the brand look the quality.
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the -- what they really want is top quality diamonds and the brand is a way to be confident what they're getting. angie: there's already a 15% slump this year compared to last. volatilitya bit of because of the strong market we had in 2014. a little bit of volatility this year. retail pricing is pretty consistent through diamond jewelry firms. the key will be what happens in christmas and chinese new year. very disciplined market as well. you don't have the opec situation as you do in gas. terms of supply, we do start cutting back on supply to control the level of pricing? >> we don't seek to control it in that way. what we do is respond to the demand for new rough diamonds by our clients. there's no doubt that after the strong sales last year and the slowdown in the chinese economy
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that our clients have inventories and need to work down to the season. so we've been selling lower quantities of diamonds to her clients. it's all about supply and demand and with demand in china and places like india adding to the supplies areet, pretty constrained in the long-term. the picture looks pretty good long-term for pricing. angie: long-term sparkly, short-term not so sparkly. what is in the pipeline for you? it's one of the challenges of the diamond industry, there is not a lot of new supply around. a lot of the big minds have been going for 30 or 40 years. fortunately debeers does have a new project coming on stream toward the end of next year. deep into the arctic, not easy to get two, -40 degrees in the winter, but we go to whatever
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links we have to to find new diamonds. a very warm jacket. let's finish this off with this beautiful diamond that you have brought here. what are you showing us? there are a lot of products out there. why should we pay premium for a brand? >> what we have learned is that the fundable thing that fundamental thing is confidence. they want to be confident they have one of the most beautiful diamonds in the world, and that's not easy. they want to be confident that their diamond on its journey from the mine to their finger has made it positive contribution to all the communities. you can see a forever mark diamond has the invisible inscription of the icon. you can only see it on this reader invisible to the eye. it says to the consumer it's one of the world's most beautiful
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diamonds and you can be proud of the contribution. angie: where do you even fit all those numbers on that diamond? >> it is pretty small. angie: thank you so much for joining us. the ceo of the beers were ever mark. thanks for joining us. one aussie conglomerate gets a boost. that's when we return on "first up." ♪
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angie: welcome to the stock exchange. were looking ahead to the open in australia and south korea. cell areclosed reporters are here to tell us whether keeping an eye on in those two markets. >> pbg telecom, not bad.
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out with some very rosy earnings this year. they increase their earnings target 33%. dividend also coming in little higher than estimates. so it should be a good day. angie: but will it be? [laughter] >> i'm hearing the infrastructure arm has been for a dutch oil storage group terminal. the bids are higher than the closing price, so we will see what happens. other companies bidding goldman sachs and jpmorgan, according to some reports. yesterday it fell a little bit, so we will see what it does today. angie: that's an old favorite. >> an oldie but a goodie.
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has anyone stayed at hotel sheila? i have on several occasions. it's owned by samsung but that's not the reason for picking it today. is going to list as early as february. it will be interesting to see the competition because earnings are improving. it's up 27% so you may see a big competitive hike. always a bit of drama over there in south korea. that's the verdict from this talk exchange. .e will be back in an hour looking at the next hour of the show, a look at what could be the most important trip for the chinese president this sure. onpecial report on what is his agenda.
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we are counting down to the open in australia and korea. this is "first up." ♪
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john: with all due respect to scott walker, that hold back down thing? not so much. scott walker of wisconsin, the union chris seder is dropping out of the presidential race. >> today i believe i'm being called to lead by helping to clear the field in this race so that a positive, conservative message can rise to the top of the field. scott walker, front

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