tv First Up With Angie Lau Bloomberg October 8, 2015 7:00pm-8:01pm EDT
♪ angie: uncle up. the imf says china will be a bumpy ride. we are live in lima. growth says pimco forced him out in order to share in his profit pool. it is this the final whistle? suffer blank -- suffer -- fifa suspends sepp blatter. welcome to "first up." i'm angie lau, coming to you live from bloomberg's's asia
headquarters, right here in hong kong. let's check in on markets. it is friday morning for us here in asia. to australia right now, where stocks are still alphabetically coming online. futures have been pointing to a higher open, and right at the start of the session we have australian stock climbing 4/10 of 1%. , we saw the commodity spot rebound. the australian dollar spot is at 72 u.s. cents. to new zealand we go. let's head over there. new zealand .5% higher on this last trading day in asia. at 66aland dollar spot is u.s. cents. it continues to weaken. october 28 is the rate decision. we are also counting down to the open in japan. let's head over there.
mckay 225. -- nikkei closed down after china resumed trading yesterday stop they climbed 3%. -- yesterday. they climbed 3%. that is less than people were expecting. seeing a higher open for the nikkei dollar-yen right now. having steady at 119.92. holiday in both taiwan and south korea, no trading today. to our top story, the imf's annual meeting in peru. two issues have been dominating the sessions -- china and the fed. bloomberg is at the talks. what is the mood like their? -- there? reporter: it's been fun. it has been the first day at the imf. we have had great interviews, some exclusive, some first. i spoke to the managing director of the imf and the world bank
president. we spoke a lot about china. talks were not that negative. they said china has a bumpy ride due to an economic shifts. at the end of it, it is said ee a we will not s financial crisis, but a credit crunch. >> we are clearly seeing of authorities who want to be more market determined in the fixation of the interest rate and exchange rate. this is an anonymous change, change, -- an enormous which is difficult to absorb, manage, and communicate, but i do believe the chinese authorities understand that phenomenon, wants to play by the rules, want to monitor expectations as much as they can. that, as i said,
will also have bumps on the road. she talks about these massive transitions. what she is talking about is a move to a consumption led economy, but she is also talking about the fed hike. and the risk that poses for a purchasing -- for emerging economies, like china. angie: that's the thing, francine. you have been talking to a lot of top delegates there in lima. what are they more concerned about, china or the fed? angie,e: i would say, they are concerned about both. a lot of questions were still going to be asked at the chinese delegation to understand the linkage between the market turmoil that we saw and the prospects of the really economy. i have not heard anybody say
they are expecting a hard landing in china. evil are saying there will be a little bit of a bigger slowdown, but the conversation -- people are saying there will be a bit of a slowdown, but the conversation will be more about china behind closed doors. but it is the fed that brings the policymakers. i spoke to the south african bank governor, he says, sure, there are delays, it gives me more time because of to adjust so quickly. but it leads to uncertainty of the hike. i also asked a nobel prize winner, who told me the problem with the fed hiking is that the u.s. economy is not ready for it. the fact is that america's recovery is a need that. -- any big -- anemic. if you look at the true unemployment rate, people working part time looking for a full-time job, is well over 11%
or 12%. it is reflected in the wage stagnation that we have been seeing, a true sign of a weak labor market. i think they did the right thing not to raise interest rates. reporter: overall, a lot of the people we spoke to say it is a wait thet better to hike and to hike straight away. i also spoke to the chairman of the ubs, who was clear that markets should not rely too much on monetary policy. now is the right time to normalize, always you get all this -- otherwise you get cheap money floating around and it gets dangerous. angie: that is a critical discussion here in asia, fiscal reform and policy. francine, thank you for joining us. minutes,ow to the fed which showed concerns about china and the wider economy forming. su keenan has all the details. su?\ what we can say is we saw
stocks rise in the final hour. a lot of that has to do with relief over federal reserve minutes. there were as caution about raising rates. if you read the minutes, they were concerned about global risk . in the minutes, key expectations push into rates next year. the odds now are less than a 39% chance they will hike rates this year. to beforeo go back they met last month where the odds were a 63% chance, so a big change there. data shows lowestyment felt to the since late july. oil prices surged back to the $60 mark for the first time since late july. the most significant development, traders say, is that opec will climb more than previously projected, which is everything to do with cheaper
oil prices. meanwhile, on the vix, it has been retreating for the past seven days. is the longest straight decline since february 2014. companiesommodity have surged from 12% into the longest rally in more than a year. all of that easing investors. what about alcoa? headed the numbers look? su: a bit of a disappointment. they came after the bell. stock falling after hours. they ignore list that there is a global -- acknowledged that there is a global glut in terms of supply. we saw stocks all about 3% in extended trading. of course, they are the largest u.s. aluminum producer. they did maintain their forecast for global perception -- global
production. instrument -- interestingly, they said that demand has climbed six point 5% this year. they say china conception will stay at 9.2% for the year. they explain -- expect global alumina and the band to double -- eliminate -- a aluminum demand to double. that. thank you for checking other headlines, we are expecting tumbles one tokyo opens in the next hour. adr plunged nearly 10% after its profit forecast trailed estimates. the owner of the unicode brandon says that income will rise 4.5%, 906 $2 million this fiscal year, -- $962 million this fiscal year. but it remains confident in china. likes we have not seen any impact from the slowdown in china.
-- >> we have not seen any impact from the slowdown. i know some luxury brands have been following -- falling, but we have been doing well. do not expect a crash in the short or long-term. i see more opportunities in the coming years as china transitions to an export economy to one driven by domestic demand. angie: foreign lenders have sold at least $14 million worth of chinese and shares since 2012. deutsche bank could be adding to that, saying they may offload a $3.5 billion stake in washout. there are tieups with chinese leaders due to can sales -- concerns about earnings growth. pimco is being sued. gross says executives at the company he cofounded pushed them out in order to get their hands on the bonus. he says he wants to expose what he calls "improper, dishonest, and unethical behavior."
gross's departure last year sparked conversations at pimco. the world's largest mutual fund. both slackens a mission -- volkswagen's chief has apologized for the omission scandal. testifying to congress, he said that the cheating was not a vw corporate decision. let's go to our auto reporter joining us from washington. jeff, how soon will all this be fixed? i don't think we are going to see any quick fixes here. investors may have been hoping for something out of today's hearing that indicated the end don'tar, but we really think we are going to get there soon. earliest that any of the
consumers with cars in violation will see any fixes, early next year. for the bulk of owners in the united states, more than 300,000 horn goal owners, mr. really cannot put a timetable on those repairs, so that might last all of next year or more. angie: at the testimony today, and a revelation as to who was in -- who in vw made the decision to bypass the omissions rules? of thehat was really one big questions that lawmakers in washington wanted answers. they wanted to know who made the decision and how far up in the food chain it went at volkswagen. really stuck to what the company has said so far,
picking the blame on a small group of engineers. that answer did not satisfy the members of congress. they really expressed a lot of skepticism about that. area youk that is one should really keep your eye on, because there is an investigation going on. they are only now starting to get the documents from volkswagen. i think this will be something they really press on in the future. joining us from washington, d.c., covering the volkswagen scandal. thanks, jeff. coming up next, volatility in the u.s. markets eases by the most in 20 months. is it the end of the ride, or merely the calm before the storm? more on that when first up returns. ♪
making headlines. russia is denying the pentagon's claims of landing in iran. rockets at 11 targets and claims to have them all. the flight path would've taken over northern iran and iraq. defense officials -- u.s. defense officials say at least four of those missiles went off course. moscow says 26 missiles were fired targeting syria, but has made no mention of them going astray. new reports from amnesty international says that prisoners of from two inas risen 2013 to more than 90 now. and the top player in world football will stand trial for
tax fraud. the decision on barcelona's lionel messi comes three days before the spanish prosecutors had only his father, jorge, should face charges. the father and son will answer to three counts of tax invasion -- tax evasion, which carry potential jail sentences. they are accused of defrauding spain more than $4.5 million worth of taxes between 2007 and 2009. on the markets right now, oil .roze netflix among one of the top gainers in s&p, up more than 6% after raising the price of its most popular streaming subtraction. as 4%, butp as much amazon said they are adding home jewelry and hope the core -- home decker, -- decor. the s&p 500 closed above 2000
for the first time since the middle of august. let's get more on this with john brady. always good to talk to him. he is managing director of global futures at rj o'brien and associates. he joins us live from chicago. perhapsa good sign that the volatility is over, that perhaps this is the calm we have all been waiting for, john? john: i think so. at the open, there was a renewed fear of global deflation. chinese import and import prices certainly spoke for the markets. you saw emerging-market economies slow, but now you are seeing signs. particularly, oil above $50 a barrel, gold, likewise, is around $1140 an ounce.
to be aems normalization trade in place today in north america. we saw s&p futures get above the 1991 key technical fibonacci and above thevel, 2000 level. there is a sense of normalcy coming about the market. of course, that was punctuated in the minutes, which suggested that the fed state on hold and in september because of the volatility in the markets. it seems to be a temporary hold. how mucht normalization can we have, since we are all waiting for this rate hike? that's right, but other central banks are in play. there has been chatter about the importance of the october 22 ecb meeting. keep in mind that the ecb finds itself in a bit of a fix. they recently announced that they are going to move up their
schedule of quantitative easing in order to avoid market distortions during the december holiday. . -- holiday period. there is a bigger player on the chessboard that has to do with a stronger euro currency against the dollar yen and won, and a shadow in the market that perhaps the ecb might these things a little bit, and maybe there is still a little more stimulus into the european monetary markets with the idea that they can stay still and the next three to four months and see how the european economy continues to develop over the fourth quarter. angie: as you take a look at the domestic horizon, what do you think could be the thing that could take the legs under this normalization? kick thehe legs -- legs under the normalization? jon: i think that will be seen
in washington, d.c. today kevin mccarthy step act from his run for speaker of the house for the republicans, so there is interesting political dynamics. an increase, if you will, an increase in political volatility. at the end of the day, you had these -- have the debt ceiling in november or december, and that has the potential to be another volatile episode. the former he know that, we will first have to get a new speaker of the house of representatives -- before we know that, we will have to get a new speaker from the republican party. angie: john brady, always good to have you. thank you for that. coming up next, blatter suspended. fifa bars its embattled president, top aide, and who will succeed him? all the latest on red sox -- on world soccer's corruption inquiry when first up returns.
stop -- uruguay. japan going for a third when against india. italy played romania and france plays ireland. match is inhe big carta. australia will be without michael hooper, who has been banned for one game. lost a player to an injury, but we hope that they can succeed against the wallabies. -- compete against the wallabies. kickoff is at 6:45 in london. that's 4:45 there. three of world soccer's most powerful men have now been suspended. it is part of the widening investigation into corruption. david is here with the latest
headlines from fifa. david: things got serious overnight. fifa president sepp blatter, you have the secretary-general, and michel -- basicallyis said he intends to run for president. we will talk about the applications of that. all three have been suspended for 90 days. -- it may beption extended to as much as 45 more days. they have been banned from all activities related to football -- domestic, international, effective immediately. has beenng mong-joon banned for six years. he has been found guilty internally. infringing on several fee for rules -- fifa roles. -- rules. angie: so then who's left? what is this mean for the
upcoming presidency battle? david: it basically opens it up to ali. he is a favorite now. several other names have been floating. louise figo. -- of the us trillion soccer club is a 500-1 favorite. he is behind piers morgan. 202. angie: that goes to show how incredible this entire scandal has been. thank you for that, david. coming up next, not so fast, a week profit forecast may mean a to the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20.
it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. i just had a horrible nightmare. my company's entire network went down, and i was home in bed, unaware. but that would never happen. comcast business monitors my company's network 24 hours a day and calls and e-mails me if something, like this scary storm, takes it offline. so i can rest easy. what. you don't have a desk bed? don't be left in the dark. get proactive alerts 24/7. comcast business. built for business.
transformation that will still go read -- still create turbulence for the global economy. authorities who want to be more market determined in the exchange rate, and the fixation of the interest rate, and this is an enormous change, which is difficult to absorb, difficult to manage, difficult to communicate, but i do believe that the chinese authorities understand that and one to play by the rules, want to monitor expectations as much as they can, but it is draining, and it is a process that will have bumps on the road angie:. -- bumps on the road. angie: oil is back to $50 for the first time since july. the west texas intermediate settle that $49.43, with futures breaking through $50.
crude advanced by more than 2% to $53. the imf expects cloying -- global oil to the -- to decline more the 150 barrels a day that -- barrels a day. volkswagen says that fixing all the vehicles involved in the admissions scandal may take years. michaelng to congress, horn said it was done by a few engineers in germany. poor apologized -- horn apologized for the scandal. the return for the chinese a return in shanghai starts, but it posted a decline. has been monitoring. what can we expect on this final trading day of the week? juliette: good morning. the positives from the u.s.
market are looking asian markets. we see the original benchmark index back in the black during early trading. the asian adr index was up, which is a positive sign for us in the region today. comments from the fed suggesting that the september rate call was not as close as many had expected. as you mentioned, that really solid oil price really lifting energy prices as well. we are seeing that here in australia, too. the asx 200 up i 1.2%, really led by the solid gains coming energy players. oil prices have actually lifted 10% in october so far. when japan opens, we will watch fast retailing, we saw a big drop come through in fast retailing adr yesterday. this is the big picture on the shanghai composite yesterday. we saw a big lift from tech players, text stops up by 7%. -- tech stocks up bites 7%.
-- by 7%. the u.s. is suggesting a lot of buying coming back following the holiday. that we have seen coming through in equity is coming out of bonds. you can see money coming alone australia -- out of australia and the u.s. bonds. there is a little bit of money coming into japanese bonds and yields at 0.31%. down slightly, angie. angie: thank you. isl gross is learned -- known as the bond king. his position as cofounder of pimco seemed rocksolid until his until his dramatic departure a year ago. he is firing back, saying he was forced out of money, and he wants millions. he's not going away quietly. guest: not going away.
there is a storm growing, if you will, and this lawsuit is taking hundreds of millions of dollars from pimco. was one of the original founders of pimco, the bond king, a legend in his own right, but in recent years things started to change and brought in asian, his deputy, wanted to move into more risky products, other asset classes, which he did not favor. up a situation for a power struggle, which, needed in ousting last year. here's what the lawsuit alleges -- driven by a lust for power, greed, and they desired to improve their own financial position and reputation at the expense of investors and decency, a pimco managing director plotted to drive bill gross out of pimco in order to take a percentage of his
profitability. he is at a 20% stake in the profit pool. he alleges that they want to -- interesting to see how this will play out. we have pimco itself saying the lawsuit has no merit and the legal team will respond in court. angie, i want to -- i want you to listen in to our conversation with bill gross. he talked about how his exit from pimco played out. >> i did not like how i left, so to speak, pimco, and i did not care for the aspersions that somehow i might've lost my touch. i don't think i have lost my touch. i am in this seven days a week, 18 hours a day. that is the truth. hopefully, the performance numbers speak to confidence. guest: pimco left september 26
-- bill gross, rather, left pimco september 26. he is now with a capital group in denver, running a small bond fund. pimco has evolved. dan isaacson is the money manager who replaced the gross, and isaacson himself is named in this lawsuit, so there is a lot of personal jobs. mohammed al arian also named. foras the heir apparent many years. he announced his recognition at the -- resignation at the start of 2014. that is what prompted the talks of bill gross is dealing with employees. what are the applications for money managers? -- bill grossades was a polarizing figure at pimco in the industry. there was a lot of criticism of his abrasive style, his unorthodox working roles, the
way he treated some of his coworkers. a lot of those colorful details came out over the course of the past year with this somewhat messy departure. there has been a missing -- a messy reaction on wall street. some of his colleagues are saying it is a bit rich for him to come back now and claim he wants back compensation and will join it -- donate it to charity. it does not add up. wasrs say, well, bill gross a good bond manager, he was ousted from the job you did well at over the years because he was not willing to go with the new direction of the firm. it is a complicated case, and lots of the personalities involved. a lot of money, angie. angie: thank you so much for that. time now for a look at some of the top corporate stories on the bloomberg toward a -- bloomberg terminal. here is haslinda. haslinda: global sales of personal computers fell nearly 80% in the fourth quarter. dropecline follows a 9.5% in the previous period.
manufacturers face challenges from smart phones tablets, as well as from the strong dollar. qualcomm is looking to go outside the mobile phone market by taking on intel at its own game. it demonstrated a new product designed for several computers. courts,chip contains 24 and it is designed as an alternative for intel processors. and netflix has raised the price of its most popular streaming package in the united states, canada, and latin america. new customers will pay an extra dollar a month, while the plan allows users to have two banks obstructions at once. once. subscriptions at netflix shares closed 2% higher in new york. this is the headlines at the hour. luxury retailers and yet
is seeing a global decline in its shoes. it sees consolidation. -- the ceo told me that he remains committed to china and is raising the game in japan and macau. the slowdown among the adjustment -- the slowdown, or the adjustment -- i think china is a consolidation of stores, of locations, but we remain positive into the next year. we are here for the long run. reporter: have you experienced, with the devaluation of the yuan, that perhaps your luxury consumer is going somewhere else to buy? >> in a year like this, surely the markets have been affected.
there has been devaluation of several currencies. that has an impact. i figured would be a temporary situation. next year will be a better year. angie: have you increased prices in china? >> no, absolutely not, because we believe there is an economic adjustment oppresses. in general right now, in any -- if we take prices down here, we will adjust them up in europe. i think that we are going through an adjustment process. to bring newg stores. -- two new stores. angie: macau was shut down. the fact that macau
is gaining entertainment businesses, and get shows that there is some long-term prospects. angie: what is your outlook for hong kong? >> it looks strong. it will remain an important financial hub for china and the world. angie: what does 2016 look like zanga --luxury retailers? >> when you make a mistake, you have to admit it. for 2016, i am more careful. i plan may be small increase, a single-digit increase, but you i would prefer to
not be too bullish. not use our market expansion too much because we want to keep doing the right things. i see 2016 as a year of gradual amounts. angie: and you remain committed in china? guest: we remain very committed. china is our number one market outside of the states. we will keep investing in china. those are beautiful suits. mr. zenga in hong kong. coming up next, vw says it will take years to clean up its admissions mess. we will talk about the scandal,
angie: checking other stories making headlines. israel has tighten security. eight israelis were stat on thursday and two palestinians were killed in a clash with police. netanyahu says israel is in the middle of a "cool wave of -- colonel wave of terror." under the agens of 50 have been barred from the mosque. the u.s. is being called to support a proposed ban on lithium batteries on flights. this points to research showing causeating batteries can explosion, bringing down a plane. billions of lithium batteries power devices from smartphones, laptops, and toothbrushes, and
the proposed ban would not affect cargo freighters or other types of batteries. germany chancellor merkel is being tipped for the nobel peace prize later today. she became the face of inclusive last monthlusiveness by welcoming refugees from syria. pope francis is also gaining support for opening the vatican thomas people and for demanding a greater distribution of wealth for the needy. the peace prize will be awarded later today in oslo. let's return to the vw emissions scandal. it is said that fixing all of the in -- vehicles involved may take years. a spokesperson says they did not make a corporate decision, but the engineers in germany did. astralia has announced voluntary recall of vehicles fitted with the device. let's discuss this with an industry veteran.
-- it seemsout this that for the past month, and when it does not seem to get any better, it just seems that as onionel the layers of the of this scandal, it is more shocking. yeah, good morning, angie. yes, i am also astounded by how this will scandal has evolved. elgate" now.dies i don't know what to make of it. one thing's for sure, authorities are losing patience with volkswagen. up who made clear the decision. in my opinion, it is not believable that it was only a couple of engineers. why don't you think, why
don't you believe that this was a true statement? that the leadership at no idea about it? guest: right. there is one thing when you look at the history, now that we look a -- now that we know more about ago,istory since two weeks one of the main things in the u.s. was to promote diesel, but they apparently did not want to spend too much money on that, at least not into the first iteration, until 2009 or so. but they said they had promoted it, and they said this is our unique selling point in the u.s., so it is kind of a corporate thing to go into. well, it will be taken care of by the engineers. i am pretty confident that there involved,me managers
but don't ask me who. we don't know what this point. but i'm sure that authorities will find out in due time. angie: no doubt as you take a look through your eyes, as automotive expert -- as an automotive expert, how deep this investigation go, how many heads could roll the on the individual -- beyond the leadership level? angie: beyond the leadership -- >> beyond the leadership level, i think there will be a lot of people in the engineering department. i am not sure if they will go down to the lower levels, it will be mostly the leadership, but don't ask me how many. at this point, we really don't know how big the scandal is and how many people were involved. angie: volkswagen survive here? -- can volkswagen survive year?
will: yes, i think it survive, but they have to open up the books. if quite a number of managers were involved, i think they can still survive, and it is in the interest of germany and europe to make sure that they find a way out of it. the bigger issue is not only folks like him, it is also the diesel itself -- it is in volkswagen, the diesel itself is in question now. 50% of the cars are actually diesel. that is a big issue. angie: we have talked a lot about recalls in the past. how does this scandal rank for the automotive industry? i think it is as bad as takata and is comparable with the bp disaster and away. how manyd to say
deaths were actually caused by emissions that were led out by the cars, we don't know, but i am sure congress will focus on that. it is at least as big as takata. i do get is actually bigger than the toyota scandal -- i think it is actually bigger than the toyota scandal. it ranks in the top league of any for the automotive industry. angie: thank you for putting that in context for us. think anybody is happy to experience it either, to have been lied to intentionally. we are going to leave it there, j s c automotive joining us out of shanghai. coming up next, a profit boost for a japanese retailer. the details when "first up" continues. ♪
♪ to the stocke exchange. we are taking a look ahead to the open in japan. our reporters are here to tell us what stocks they are keeping an eye on. we don't really have a big pool to choose from. basedmaceutical company out of tokyo, 1800 employees. first half of it among guidance was 5.7 billion. the nikkei is reporting maynight that that profit be higher. nice, if it turns out to be true. reporter: i went up to alphabet just slightly. first-half operating profit rose billion..41
you can see that this stock has not done well at all and has not done -- does not have great research on it either. but this big increase in operating profit should help the stock out today. it is a department store owner that also has restaurants in tokyo. david: a very good restaurant. angie: interesting that you knew that. speaking of japan, how about a calming image. . beautiful view of mount fuji you can see the view if you stay at anyone, not anyone, but some of -- [laughter] angie: keep explaining the travel package. reporter: remember to have your pet stayed or neutered. who she know --hoshino resorts profits are doing well.
john: i'm john heilemann. mark: and i'm mark halperin. and "with all due respect" to john boehner, you ain't going anywhere anytime soon. ♪ it's a big newsday on the show. red-hot focus groups, but first red-hot house republicans. kevin mccarthy is donezo. he won't be majority speaker. here's what happened this afternoon. >> if we are going to unite and be strong, we need a new face to