tv First Up With Angie Lau Bloomberg October 27, 2015 7:00pm-8:01pm EDT
as high hopes. apple links another record holiday but they are concerned that growth is to closely linked to the iphone. twitter sales may miss forecasts and user numbers remain anemic. shares are plunging after hours. alibaba devised a slowdown in china as sales jumped by one third. the stock is heading for its best -- best month since listing. welcome to "first up."
to our top story, it is a big day for tech earnings. to come, butlibaba we start with apple. predicting record holiday sales fueled by the demand for iphones and is continuing popularity in china. there are concerns that growth is becoming increasingly hard to find. let's bring in adam right now. how did apple do? adam: the most important thing to come up was aboutapple's forecast for the holidays. it said they would be reporting another record quarter. it good to ease some investor concerns that growth is slowing dramatically for the company. the company still facing nextions about where the big growth engines will come from beyond the iphone but they bought themselves a little bit of time going forward.
apple is still very popular in china though, right? adam: absolutely. tim cook spoke at length about the opportunities in china. he visited the country last lot and walk on the great wall. he visited retail store openings. the company will have 40 retail stores across the region by the middle of next year. he said this will be apple's biggest market in that they are investing heavily to make that so. >> here's the thing, it's all about the iphone. is there concern among investors that they are too reliant on it? adam: there are two schools of thought. the skeptics say apple is overly reliant on the eye on and they are nearing the ceiling for what the product can do. there's no big geographic area for it to be introduced. those who are more optimistic
say they can increase market share and it's a gateway into these other services like using an apple pay that provide other sources of revenue for the company. that, thanks so much for , they're in san francisco. let's talk about twitter, plunging after hours on news that quarter sales forecast may miss estimates. alsowdown in user growth showing challenges facing the returning ceo jack dorsey as he tries to turn twitter around. is sarah. what kind of trouble is twitter in here? sara: twitter's having the same problems over and over and have not done themselves out of the whole of slowing user growth. this is after jack dorsey has
been critical of the company and lowered expectations as much as he could. that theynot good forecast revenue for the fourth quarter below expectations. going to have to prove that the company can build a product that appeals to a wider base of users. how confident are investors that jack dorsey can pull this off? sara: he's made a series of drastic announcements. he has cut the staff 8%. he appointed a new chairman of unveiled and he has new twitter product that highlights what is happening in the world in a way that is easier for casual twitter users. deny here on the earnings call with anything that's going to happen in the future. all he would say is he wants
twitter to eventually be something easier for a wider base of people to use. so some action but not that much happening after the first flurry of announcements. we will see if those 140 characters stick. thanks so much for that. checking other headlines for you right now, ibm tumbled to its lowest in five years after disclosing its accounting practices are the subject of an official investigation. the u.s. regulators looking into the the treatment of certain transactions related to revenue. ibm said it has a rigorous and discipline process for preparing financial statements and is confident is reporting has been appropriate. in mergersbillion and acquisitions already this year. chipmaker may make a
bid for fairchild. the deal would help as the micro strengthen its product unit. fairchild is said to have held talks with others to help find a buyer. starwood was the top gainer on the s&p 500's rising -- rising the most on reports that at least three chinese companies are interested. all said to have presented separate proposals. in april starwood said it was exploring options including a possible sale. severalany operates brands. this check on mark critz wednesday morning. to australia we go -- on markets
this wednesday morning. were looking for australian inflation figures to come out this morning. to new zealand we go, and right now just fractionally higher. also counting down to the openings in japan and korea. yesterday we saw that four week rally in global stocks stall. .his is where it ended up today futures in chicago pointing to a higher open, but that has been the case for the last couple of days. we will see where the day brings us today. a lot of people just waiting to
see what happens. stocks in the u.s. fell for a second day as the fed began its policy meeting. let's get more from su keenan in new york. big weightars it's a and see before the fed makes its decision wednesday. for us that is tomorrow. is not expected that the fed will make a rate change, but it is expected it will be a statement that will be scoured for clues about if they move in december. all investors kind of waiting on this big decision. it is likely that they will keep rates at a record low, particularly with china's decision to cut borrowing costs. we've had our latest data showing a very mixed picture. janet yellen has mentioned china before.
so what will the statement be? will they go from describing the expanding,modestly or from moderate to modest? that would be a downgrade, some economists say. at a two-monthil low. this has a lot to do with the a new fuele've got supply report coming out wednesday morning. to -- oil drop down bouncing up and electronic trading this hour. wednesday should be an interesting day for the u.s. in terms of oil trade. durable goods fell in september while consumer confidence dropped to the lowest since january 2013, or the -- or by the biggest amount since then. so the fed is going into the
meeting with not the greatest picture of the u.s. economy. that ita is telling us is weakening. the same economy said that most people are expecting a cut in pay statement from the fed, so nothing really earth shattering. somewhate bonds react to the action in washington where we had the white house and top lawmakers coming to a deal that would avert a debt default after november 3. that also had the bonds moving there. what fed funds futures telling us. it looks like traders are betting on a move not before early next year and they will be scouring for arcane language in any minute change there might be. back to you. angie: thank you so much for that, su keenan. get more on that story and all the rest of today's market
moving news and our analysis on .ur website, bloomberg.com we have all the business news from around the asia-pacific. sign up for global alerts. we have breaking news right now crossing the bloomberg terminal. cominguarter net income in at $902 million. for 885 million dollars. that was third-quarter results .or ocbc coming to macau for the opening of the new $3 billion studio city resort. robert de niro, leonardo dicaprio graced the red carpet along with james packer. it is hoped the venture can revive the fortunes of macau and .uer gamblers back
take all measures necessary to defend its territory after u.s. warship passed within 12 nautical miles of one of its man-made reefs in the south china sea. the foreign ministry said the voice threatens what it calls indisputable chinese sovereignty , endangering staff on the regionald threatening peace and stability. the u.s. defense department said the patrol was on a routine operation to do friend -- defend underm of information international law. the united nations has voted overwhelmingly to back a cuban revolution condemning the long-running u.s. embargo. only israel was prepared to support the u.s. and vote it.nst washington considered sustaining from the annual vote for the -- it said iter did not reflect the spirit of engagement between president
obama and castro. goldman sachs said the drought in australia could see economic growth next year fall to its the weakest since the 1992 recession. the strongest el niño in 18 years could produce hot dry weather that could all -- hit already struggling farmland. says it's not being factored into anyone's forecasts further interest rate cuts by the rba. let's get back to markets now. -- waiting for the latest fed policy decision. energy shares led declines. oil did tumble to a two-month barrelclose at $43 a ahead of the release of data expected to show increasingly less stockpiles.
consol energy tumbles 21% after reporting third-quarter net income of $119 million, missing estimates there. drug makers the only group to advance with pfizer rising 2.5% after profit be estimates and the country -- company raised its 2015 sales outlook. frost is with us. i guess that is the big question that the fomc is trying to figure out over the next few days. >> we've been sitting at a zero funds rate for seven years. it was december 2008 that interest rates dropped to zero, so now they are stuck in a quandary. we begin tot do raise interest rates, or do we keep them where they are right now? we are telling our clients it is
necessary to begin to normalize interest rates. last time i was here i said we have basically run out of medicine in the medicine cabinet here in the united states. it is not like the fed can step in and begin to lower interest rates. row.e already at the at some point we have to see interest rates go back up again. angie: the big fears that the u.s. is not ready. say interest rates rise. wouldn't the worst-case scenario be that the fed would lose complete credibility if they had to reverse course? yellenkey is that janet 's continued to say that when they do raise interest rates, they will do so very slowly. let's be clear. let's say they raise interest rates from zero to a quarter. it's just simply less loose. of the bubblettom
burst in 2002 when the fed was lowering interest rates from the big reception we were in, they lowered interest rates to one. we are 100 basis points below that now. we're not in fear that the fed tol jerk interest rates up 4% or 5%. we think they will do so very slowly and watched to see the impact on the economy. point.that is a solid >> on the fixed income side, you need to be very cautious. watch interest rates begin to rise, we're not expecting them to rise for some time. most analysts are looking to march for the first interest rate move. when that does happen, we want to make sure the bonds we hold, we want to be very cautious with anything long-term. we like floating rates, we like short-term bonds. something going
back to our clients, if interest rates do rise, this is a sign that the fed inc. the u.s. economy is improving. that is great news. the worst thing would be for the fed to step in and say we are thinking about re-stimulating the economy. the fact that we're having this discussion about raising interest rate is really healthy. we just had china talk about stimulating the economy. last week europe talked about lowering interest rates. they are nervous about where their economy is right now. we went through a giant, great recession. looking forward, we came out of the great recession in 2009. now we are six years later. at what point do we begin to normalize interest rates and give the fed more medicine if we do start to falter? and wethat is the case,
we are counting down to the biggest game of the rugby world cup. to test sides against each other. each side has won the trophy twice. in 1987 and last time around, australia in 1991 and 1999. nigel owens will take charge of the game at twickenham on saturday. >> all the talk about the last -- as as has been about player you have to put into the back of your mind. finally at the point where we can talk about it now. >> it's all about just doing a job well every day. there is still a game to play and that's the most important doing oure week and
job really well. .ou have to keep improving angie: alibaba has return -- confirmed its return to form. cap their best run since last year's listing. capturing the shift to mobile shopping. david is here to break down the numbers. it's all about the smart zone these days in china. show thatre able to it was largely the macro story in china. it was a broad-based rally.
it look at the chinese stocks listed in the u.s.. they reported higher results across most metrics. they basically came in line with estimates. it still showed substantial growth. over $2etail, just billion. about $1.6 billion. you wass merchandise the most impressive. what makes the alibaba story for the third quarter interesting is big techke other companies in more developed markets, the growth is really because more people are using the internet and migrating to smarter phones. if you look at developed markets, it's getting people to spend more because the penetration rate is quite high.
alibaba is very diversified. the cloud business is doing well. >> they've spent if not double the amount they spent last year in acquisitions, diversifying away from the macro slowdown. i'm not a who said it on the conference call, but it's still very early on. not being the first to pitch in the first inning is how they described it. angie: coming up, we will be live in singapore
it is 7:30 here in hong kong. a little bit of a smoggy day of the great clouds have parted. here is a live look of the city in tokyo. the central business district where we are right now. already minutes away from the open of trading in japan and south korea. you are watching "first up." the top stories this hour, apple is predicting record holiday
season sales you'll by demand for iphones. sales of which don't 22% in the three months through september. they held the declining demand for the ipad. tim cook said apple will continue to invest heavily in china area he said apple remains on track to have 40 stores in china by the middle of next year. news thelunging on fourth quarter may miss estimates. jack dorsey has been candid about the challenges but the slowdown in user growth shows the scale of impact. he has hired executive chairman from google to improve board oversight. thatgiven no indication twitter's problems are going away soon. alibaba shares rose the most in two months. sales jumped 32% despite the slowdown in china. devicesfor mobile
triple to nearly $1.7 billion. alibaba stock heading for the best month since last year's ipo. let's check our markets in asia this wednesday morning. justealand seeing fractionally higher, not much people are waiting for the fomc decision. australia, the asx 200 falling .4%. the australian spot is at 71 u.s. cents. that's head over to japan, the fell off yesterday. yesterday we saw that global rally. chicago nikkei futures pointing to a slightly higher open. slightly stronger yen.
national australia bank shares looking like this. 1.4% down after it reported a 16% rise in full-year profit this morning. announcing a partial sale of its insurance unit. let's assess all of this with paul allen in sydney. plenty of news again this morning. let's start with that full-year result. not what analysts expected, was it? >> no, it wasn't. the headline looked good, $5.8 billion, up 16%. but the analysts were expecting much more, six point we 7 billion was the median estimate of analysts surveyed. the dividend at least was as expected, $.99. as you say, a very news rich
announcement this morning. for news on the sale of the insurance unit as much as expected, as we discussed yesterday, they will sell 80% of that unit. 1.7 billion u.s. dollars. costs will take a $1.1 billion hit on the deal. however it will improve their tier one capital ratio by 50 basis points. this will come as a considerable relief to the market. this has been talked about for quite some time. they will spin off the bank in the u.k.. that will be gone by february. there'll be an ipo and bring to close an underwhelming chapter in the bank's history. it all fits with the broader
strategy from the ceo to get rid of underperforming assets and get back to the business of being a bank and focus on the australian market in particular. all the banks here are working on raising their capital to get in line with new regulations here in ahlstrom rally a to make the banks among the strongest in the world. bankingen a lot of stocks selling old. goldman sachs increasing their holdings. they think the selloff is overdone and there is a bright future for australia's banks. angie: thank you so much for that, paul allen out of sydney. time for some of the top corporate stories from the bloomberg terminal. fallout, ping on says banking revenue and higher , profitfrom premiums
fell 71% in the last quarter. bp income topped analysts estimates by about 44%, coming in at $1.8 billion, thanks to earnings from refining. however the company is bracing itself for a prolonged. low crude prices. royal dutch shell and exxon mobil will report later this week. ford says it will deliver strong results in the years to come, despite third-quarter profit that disappointed investors. the cfo said it is bizarre to think that the company has let the market down. he also said ford still has not reached its peak. net income more than doubled from a year earlier but earnings
missed expectations. ford maintained its full-year forecast. >> we actually met expectations. revenue was stronger and cash flow was far stronger. then income was $1.9 billion. strong performance across the business. past the date be or not, as people understand the quality of the performance we delivered, the value will be recognized by the market. >> those are your top stories this hour. angie: singapore has retained its crown as the easiest place in the world to do business. china and india move up the rankings. australia falls out of the top 10.
haslinda amin has the latest world banking report. >> it is 7:00 a.m. here in singapore but we will still pop the champagne. it has to do with the regulatory environment. it's easy to start a business, forconstruction permits and asian economies made it to the top five this year. denmark, south korea, and hong kong. australia dropped out and was replaced by sweden. you're wondering about the u.s., it's at number seven. this report ranks countries based on a dozen indicators. the best performer standout because they allow for efficient and transparent business and markets.
it's not about having little regulation. the world bank made that very clear. that's how about low income countries here? >> they have done better. they have been doing better since the ranking was created 13 years ago. according to the world bank is because low income countries have the chance to look at best practices in other economies. they are beginning to adopt many practices. take india for example. places.ned 12 the rankings have become a focus . they set the goal of reaching the top 50 and he wants to do it in two years. ambitious, but there's nothing wrong with that. trying to make it easier for companies wanting in, they no longer wire minimum nor al deposits
certificate to start operations. the country made it easier to get electricity with companies in london able to connect to the power grid two weeks earlier than before. prospects looking pretty good, and reforms are underway. angie: thank you so much for that. hong kong's reputation for high in shopping is increasingly under pressure. things are changing. luxury retailers have struggled under the weight of sky rent and falling sales. lisa is here in the studio with us this morning. lisa is based here in hong kong. essentially, what are we talking about when we talk about what is happening in hong kong? isa: luxury retail sales have
the dropping, especially in watches and jewelry to hartman -- segment. luxury retailers have been asking for rental discounts and in some cases they are canceling their leases. angie: who are the retailers were talking about and who is taking over? lisa: what is most notable ones is coach. other retailers that are moving in, one is called bonjour. another is a brand that has more mass appeal. angie: that is video of the coach store. this is right in the heart of the shopping district. when they opened in 2008, a lot of people were caught in the buzz.
huge visual marker for coach and other luxury retailers. but of course we have seen the lull in tourist numbers that we saw those protests here last year. how long is this lull expected to last? lisa: analyst have been speaking about the fact that there's no real tourist attraction. the ones who have that spending power of going to places like europe and japan where the currency is in their favor. getting some chinese tourists coming to hong kong but they have less spending power than the ones that have been coming recently. in terms of the hong kong tourism industry, it's a big question about what will happen in the future. thanks for covering that
angie: six eu companies are being sued for failing to a net loss that allow depositors to have their savings taken. they have implemented plans for so-called bail in should banks or other financial institutions get into difficulty. it means that in the event of bank failure, personal and corporate deposits can be confiscated. rescue workers say the number of people killed in monday's powerful earthquake in afghanistan is expected to rise.
the afghan government has ordered the army to leave rescue efforts. the taliban called on people to offer food and shelter. the 7.5 magnitude quake was centered in the mountains and felt as far away as delhi. forest fires in indonesia are starting to hurt the economy. the choking haze has cut oil production and briefly shut down a bp gas plant. smoke in borneo has spread across southeast asia causing respiratory illnesses and forcing the president to cut short a trip to the u.s.. a strong el niño has made this year's haze one of the worst on record. geopolitical pressures on emerging markets, let's take a closer look at other pressures
ahead of thearkets two day meeting of the fed. october has been a strong month with investors putting almost emergingon back into markets stocks. our next guest continues to see opportunities here. ricardo is head of emerging markets at babson capital management. more opportunities but a lot of volatility, to be sure. where are you seeing some bright spots? spot, clearest bright interest rates or an attractive proposition for investors. global rates have been coming down for a long time, emerging-market rates still have a lot more room to go down. >> which markets are most
prepared and which are not? >> the one that is artist is china but it has the most resources. we like to see currencies that are floating so they have a self adjusting mechanism. we just saw some video in indonesia with the hades starting to impact -- haze starting to impact that country. are those pressures that you are mindful of as well? quick certainly so. other countries have bounced back from earthquakes and fires. i would be surprised if this is any different. type ofibility to these events has been remarkable. angie: earthquakes are one thing, but this is man-made disaster and it seems to be consistent every year.
are you starting to factor this into your analysis? >> we are starting to factor in man-made disasters. we see those in the macro numbers in this country. angie: what do you expect to hear from janet yellen, what kind of guidance to the markets need to hear? >> the market needs to hear that they will be completely data dependent. the fed has said they want to hike this year. now it is looking increasingly untenable. it is better to wait for each meeting and the fed not to be making any promises. >> what the fed is doing is almost neutralized by what the ecb is doing and what we expect might be coming down the line from the boj. how is this going to affect the global currency market?
-- theink the doctor dollar could strengthen further. japanesemay fall, the yen may fall against the u.s. dollar. a lot of emerging-market currencies have already fallen. from an emerging market perspective, we are close to the bottom on the currency space. angie: do you the safety had been play on the japanese yen will continue as we look at the volatility? >> my assumption is it will start to reduce in the future. emerging markets have adjusted for the most part. they have a more competitive currency. angie: i have to ask about china. do you expect depreciation in 2016? >> i hope that happens. angie: and the reason?
>> is better for china to let the currency move due to market forces. that is what it says it wants to do ahead of the imf decision in november. thanks for joining us. we have breaking news right now out of japan to share with you. retail sales for september fell 0.2% on year. economists were expecting 0.4%. the yen right on now. this is the reaction of the yen. not much reaction there, pretty much flat, staying put ahead of those retail sales figures. earnings season has been a disappointment in japan.
angie: welcome back. you're watching "first up." scouring the statement for clues on the next rate rise. we have mike mckee with the story from new york. angie: we have a bit of a problem with mike mckee's report. we will get that to you when we figure that out. yout now, we want to take to the stock exchange.
we are taking a look ahead to the opening in japan and south korea. our intrepid reporters will tell us what stocks they are keeping an eye on and no technical difficulties are allowed. [laughter] >> i wasn't following this conversation. >> the manufacturer of locomotive, passenger, and freight rail cars has posted unexpected losses. all scene operating profit $361 million when they were actually forecasting a profit of more than $10 million. so they fell for the last two days. only one analyst looking at the stock to sell.
>> i'm looking at a company in japan as well. it sells factory automation equipment, things that make your factories become more efficient. it lowered its fiscal year forecast quite a bit. theyey thing here is decrease their dividend forecast for the year. you never do that unless you really have to. aat means we might see buyback. >> i thought that was a very interesting stop. you beat me to it. [laughter] angie: like i said, no technical difficulties, no excuses. you guys pick the stocks and the market will decide. that's the name of the game.