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tv   First Up With Angie Lau  Bloomberg  October 28, 2015 7:00pm-8:31pm EDT

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angie: will they, won't they? japan's production figures are due later this evening. the economy is in recession. was it all a dream? burst,after the bubble china's stocks are again trouncing the world. up."me to "first
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i am angie lau. hike beforea rate the end of the year. what should we read into this? and doesed often meets nothing. they did not change rates but it is the focus on a statement that creates the reaction in the market. we have economists that are on standby to scour changes and most importantly, in this particular round, the focus was on what would be said about a december rate hike. cap's the benchmark overnight, federal funds rate. the 0.25 range but the case for the december lift off continues to build according to those who are doing -- going through this and it is based on a reference to "the next
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meeting." ,hich is december 15 and 16 discussion on the lift off timing. it dropped warning that warned may global slowdown that restrict activity. they are saying they are monitoring the situation which is of note. there was concern about what they were going to say about anda, the rate cut, the ecb what that means about underlying weakness. they removed that statement so that is indicative. there are some that say janet yellen is choosing a forecast based on raising rates rather than looking at did we meet targets. there is a view that if the labor market improves, inflation will rise. there are some who observed all former phillyhe fed president who believes that the fed sent a confusing message perhaps therehat
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is a bit of a communication problem. let's listen. be helpful if they could become a little more specific about what it is going to take over the course of the year. they keep changing periodically what the criteria is. we will not do it this time because of china or this time because of europe or this time because of inflation or this time because of labor markets. that is not a very good strategy from my point of view. it confuses markets. they need to get more specificity into it i think. are dealingat we with and we could say many were caught off guard by what appears to be a hawkish town here in december. angie: what other reaction was there out there? saw treasuries tumbled. the fed has revived the betting probability now raised to 50% that they will do something by the end of the year.
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as you remember going into this meeting, fed fund futures which is what traders position themselves for in terms of raw rate hike was at 37% chance of anything happening for december. teachers telling us it would not have until march. that has changed based on the statement and that validates the views of goldman sachs, and others who are saying that the market was underestimating the possibility of a december rate hike very much down the table. if you look at what inc. stocks did, they led the rally. there is a view among investors that profit potential will increase if we get a rate hike center rather than later. there was a positive market rally and a pullback when that statement first came out getting view that the banks were confused. we had a pretty strong gain across the board by days end. and to: let's see how things
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play out today out of asia. thanks, su. to new zealand where things are looking in the green and that is after the new zealand central bank has interest rates on hold following three straight reductions. we have that new zealand dollar u.s. cents. at 66 to australia, we're seeing gains despite some pressures mounting for iron ore producers as pricing below $50 as china demands today. we are counting down to the opens in tokyo and seoul. let's take a look at japan. markets open in less than an hour. the nikkei to 25 close .7 of 1% higher. futures pointed to a higher open . they did signal that december is still in play. the dollar yen right now is 121.11. weakening at
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shares are looking like this in the first few minutes of trading after a weaker than expected for your profit of $7 billion, claiming .4 of 1%. national australia bank missed estimates. what is going on? margin fellnterest to 2.04%. the market had been expecting a stronger result. of23 billion was the median analysts surveyed. they give -- that is up 1% on year and it is the six consecutive record result for anz so the headline figure looks outstanding. the dividend flat, same as last
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year. there are increased anz shares due to the capital raising. it affects all the major banks. headwinds,to competition, and regulation. normally you see a result like this get punished the markets so it is interesting to see anz shares of by .51%. slower profit growth will be the challenge for the incoming ceo, shane elliott. angie: it is curious with prices in positive territory. let's shift focus and talk about woolworth's. they announced another set of disappointing sales numbers and profits are likely to be hit as well, aren't they? a pretty grim set of numbers announced they will worth. for it in liquor cells were up
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-- sales were up. announcedcompetitor their numbers, metrics on this a week ago. they are saying -- their same-store sales were up. it is an indication of how hard will worth is finding the struggle with competition. outlet all thest -- aldi. 20% and 35% between so a big hit expected to woolworth's profit. that was a rewards point and there was rumors they are looking at cutting their hardware chain loose. changes on the wafer will worse but with this announcement we are still waiting for them to open but when they do it will not be pretty, angie.
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angie: thanks for that. we will be watching all of it. you can get more on that story and all the days news at our new digital destination, bloomberg.com/asia. sign-up for our mobile alerts on our bloomberg mobile web in-depth. checking the other big earnings the stories this morning. nintendo missed estimates in the last quarter, net income tumbling. there were strong sales for the new super mario game. results sincet the new president. shares have been on a tear this year. and earning money abroad is looking more distant. this is their biggest loss in four years due to a slump in training -- trading. the near 300 $83 million will
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put a dent to achieve a profit overseas. overall net income smashed estimates thanks to a jump in investment ranking income. has hit a record low in extended trading after misting estimates in the last quarter. profit came in at 25 print -- twice five cents per share. analysts were expecting $.29. the business -- a ceo said business was more difficult than anticipated. shares have fallen 52% this year. inpal shares are tumbling extended trade after trailing estimates in the last quarter. this is paypal's first earnings report since july when it separated from ebay. us via skypeining from seattle or rather on the phone. spencer, investors seemed disappointed with the take rate
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or how much paypal keeps from each transaction. important? spencer: there has been a lot of focus on transaction volume growth. that is how much overall is each particular platform handling but they are looking more closely because they see that when you sign up a big merchant and this was demonstrated with square and starbucks, you sign a big merchant, they process a lot of payments for you but you also -- they negotiate down the amount of each transaction that you keep so they are looking at this rate and paypal overall payment value is going up. that the -- but the transaction is going down. is paypal's long-term strategy here? spencer: they are saying the drop in the take rate is an indication that their strategy is working. they see competition around them and they see a start up like
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square and the seattle pay, they companies, all these getting into mobile payments and even big banks with j.p. morgan chase announcing its own digital wallet. they see the key to defending themselves from all that competition is to maintain its growth rate and increase its share of overall transactions and the profit margin can wait. angie: any bright spots to tell then?ut, spencer: they did increase their overall accounts, the number of people with paypal accounts increased by 4 million. again, their transaction growth 20% year-over-year to about $70 billion so they did had -- have some metrics pointing in their favor. it is a matter of investors reacting negatively to that take rate. angie: thank you so much for that, out of san francisco for us.
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u.s. lawmakers have passed a new two-year budget that averts the potential debt default after the country was pushed to the brink in 2011 and 2013. the spending bill was approved in a rare eye partisan vote extending borrowing authority until march 2017 which may signal an end to the fiscal battles that have marked most of the obama presidency. coming up next, no change for the fed as it signals december could be the month to lift but we have some breaking news for you right now. salesorth tumbles after -- woolworth's tumbles after , seven and three quarters of the percent down -- 7.7 5% down. this after reporting disappointing sales. december could be a month to watch and our guest degrees. we are back in two.
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angie: paul ryan is expected to become house speaker today, in position to shape republican party procedure for the future. he was 20 81 elected to thousand 1998. he became the youngest chairman of the ways and means committee since 1861. electill democrat -- nancy pelosi. the foreign minister will be in vienna tomorrow. groups.d assad against biggest one of the
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crises in history. award the 2018 world cup to russia was taken before a vote. aid a discussion took place before 2010 two give it to russia. said his suspension is nonsense and the committee had failed. the s&p 500 climbed back following the fed announcement and is heading for its best month in four years. the dollar responded positively to news of a possible december rate hike, surging to a two-month high. crude oil saw a boost climbing after the u.s. signaled a pickup in demand. costs as higher borrowing make it less competitive against other assets. joining us now is scott rand.
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your reaction to the fed. scott: i think this is exactly what the market wanted, the fed provided more clarity, they are laying the groundwork. it started the weekend after the september meeting. janet yellen piled on. the statement filed on. i feel pretty good that we will have a rate increase in december. the market wants clarity. this is providing clarity and that is in my mind the main reason why we have had this big rally off the lows. angie: it really is as if good news is good news again, that the u.s. economy is looking that it is going to be pretty resilient here despite the rate hike and the jobs forecast as well. you saw also the uptick in banks and financials overnight on wall street. didn't do well today and i do not think
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interest rates are going to move up -- banks did do well today and i do not think interest rates are going to move up. some were arguing that the fed if they did something in december, it would give people more confidence that the fed had higher confidence in what was going on in the economy. the fed is frequently wrong in its projections. i do not think that had a heck of a lot to do with it. i think people believe the u.s. growth is modest but dependable. we are not going to see much inflation and we will see some better news out of the eurozone, out of japan and news of some stability in china. so you add all that together with valuations, technicals, and overall fundamentals. i think it makes a lot of sense to me with -- what the market did today. angie: it underscores what the fed did which was removed that line saying global developments may hinder growth. for an equity strategist, what
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does this mean now, what is in play? changing our not strategy at all. we have been leaning toward the consumer discretionary sector but we like technology. we like industrials which, believe it or not and a lot of our clients not want to believe this but industrials despite all the news globally which has been doom and gloom, industrials outperformed the s&p 500 since july. those three sectors that are very sensitive to the avenue and flow of the economy, i think those are going to do the best in coming quarters and over the next 12 months. what we do not want our clients doing is getting to defensive. staples, utilities will be underperformers. we want to lean to award a recovery of this -- continuation of this recovery here and abroad area -- abroad. angie: does it concern your you,tors, your clients,
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this seems to be lackluster and everyone is blaming the strong u.s. dollar. it will get stronger from there. scott: if you look at the market cap weighted earnings and the s&p is market capitalization weighted index, so far with over 50% of the companies, market cap related earnings are up over 8%. that is a pretty good number. the revenue number could better but i think i would describe it as not so the lackluster and if consensus coming in was looking for a decrease of 4% or 5%, we will probably be up a couple of percent when it it is over and that is pretty lackluster overall. it is slowly moving in the right direction. i think we are going to see some improvement. energy is the big wave, the
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anchor again. theill strip 3% or 4% off overall s&p earnings number this year but next year we will be back to 6% or 7%. investors are looking at that and saying that times are going to be better as we move into 2016 and through 2016. as youthe bright spot said, markets did what they needed to do after that fed announcement. and certainly that guidance. always good to talk to you thank you for joining us on the heels of that. equity strategist at wells fargo. coming up next, the rebound, we will take a look at the seesaw of the chinese markets as they see an october surge. details coming up after this short break. ♪
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angie: we have more breaking news to tell you about. profitorea operating coming in at 5 billion yuan. news. we will see how it trades at the start of the session. investors appear to be suffering from short-term memory loss. a buying frenzy after the summer meltdown that went to wait trillions of market value. zeb eckert is here with the dramatic turnaround.
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blue skies again. zeb: blue skies again at least for this week. a turnaround from that market rout. gain amongiggest benchmarks and developed and emerging economies. greece, weny and should note. two big players in their own right. by domesticled buyers. that is the critical change, the inflection point. individual companies that are favored by individual investors leading the market. you see fewer purchases by controlling shareholders. that is a sign that confidence persists and those indicators are playing out across all areas of the economy, surprisingly. long can this last?
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it is mixed. there are those who look at the fundamentals and they say stocks are overvalued. price-earnings ratios are not where they should be, that this market is being fueled by margins. we know margins debt is rising and that is risky debt. not necessarily looking at fundamentals. we will watch this to see if this rally has legs, as they say. angie: thank you. intelligent design. baidu's top dog in china. an exclusive report from silicon valley. ♪ (ee-e-e-oh-mum-oh-weh) (hush my darling...) (don't fear my darling...) (the lion sleeps tonight.)
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(hush my darling...) man snoring (don't fear my darling...) (the lion sleeps tonight.) woman snoring take the roar out of snore. yet another innovation only at a sleep number store.
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7:30 a.m. in hong kong. it is the last day of personal economic data. "first up."hing the top stories this hour. the fed says it is still considering a rate hike but .eclined to make a commitment
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policymakers raised the possibility of lift off in december based on realized and unexpected progress in reaching its goal. nine-one in favor of delaying the hike. reporthe company's first since the july separation from ebay. there take rate fell from one year earlier. profit at 31 cents a share beat analyst estimates. analysts were expecting $.29. it maintained its full-year earnings forecast. china's stocks are surging one month after an equity double burst. the shanghai composite has rebounded 11% with margin debt rising and volumes pick up. this time it is individual investors who are driving gains. the chinese president said markets are in self recovery mode. we have breaking news from korea
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crossing the bloomberg terminal. samsung out with numbers. david: this is a breakdown of the business for the third quarter. what we do have is we are looking at sales here, $51.7 -- 51.7 trillion korean won. we are looking at operating profits of 7.4 trillion won and billionroughly $6.5 u.s. a little bit lower than --imates, 5.3 trillion one won. are is more important, we looking at mobile. higher than estimates. the chip business that makes up the bulk, roughly half of income, 3.7 trillion
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are looking at the display business here. operating profits, 930 billion won. samsung in line with estimates roughly. you are getting a little bit of a beat when it comes to the mobile business. with data.t can we get that graphic up? third quarter, samsung stone the lead. that is a little bit lower compared to last year. what you should take note of when you look at the industry as a whole, apple surging from 11 and change to about 13.5% but the biggest gainers was really from huawei. 7.5%. in theira 61% increase
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own shipments. back later on to flesh this out further. back to you. angie: thank you so much for that. nintendo missed estimates in the second quarter with net income tumbling 87% on year. it saw strong sales of its new game but was pulled down for lackluster demand. grace, nintendo is set to announce details of its smartphone games. what are investors expecting to see? have anintendo will press surge to discuss their smartphone gains that they are developing. expecting,estors are the have the formal investment
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-- announcement at the presser today. thiswill release again year before december 31. definitely analysts and investors are expecting to see more details such as the timing and what sort of characters it is using. saying the hurdle for nintendo to release smartphone games is higher. makers entering into making smartphone games like this one i am holding. they have all entered into smartphone games. console makers are trying to games as a hit. there will be the more challenges for nintendo. angie: do the earnings numbers
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suggest the company is staying on track? grace: an analyst consensus of ¥10 billion for the second quarter but it was for the the first half with operating results. it is the first profit in five you can still see they are making some progress and their sales increasing although they have increased marketing and advertising as well. like the company feels because of increasing sales so they're on track to reach its annual target. they have to maintain their annual target so far. one thing important is we must note is for game makers the biggest event is the year-end holiday season. not knowill -- we do
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what they will be like during the holiday seasons. angie: what will drive nintendo under the new management? grace: the new smartphone game is a big expectation. but now it is already october so we do not know how much it can contribute to the earnings for this year but for the future it will be really taught -- powerful. that could be promising. game thatat, the new uses character figures are doing well. they are trying to improve their 3-d and software sales. these are the things that are nintendo'sive earnings for this year. tokyo onve for us in nintendo. thank you so much for that. time for look at the top stories on the bloomberg terminal.
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juliette: texas instruments is imid to be in talks to buy max integrated. willing to deal unless there is a very high premium. maxim jumped 9% at the close in new york hitting a market value of nearly $12 billion. deutsche bank says it is planning to suspend dividends for two years in a drive to cut costs. the aim to resume shareholder payouts from fiscal year 2017. john kline took over as ceo in july under pressure to lower expenses and boost capital buffers and reverse shares slump. will reveal his strategy later today. the widening wealth gap is one of the most important challenges facing the u.s.. ,peaking at the economic club he said it was unhealthy for
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society in the bank is trying to help young people find -- find employment. he spoke about the value of large banks and why higher taxes will have to be passed on. >> very few banks today, large, medium, or small are earning above the cost of capital. if we are taxed, we will absorb what we can of that but to be long-term viable shareholder propositions to stay in business, we have to cover our cost of equity. that means that some portion of that tax is going to be passed onto people who borrow, people who transact, and we absolutely do not want to do that. are the top corporate stories. angie: baidu's future is being plotted far away. emily chang got an exclusive tour of baidu's silicon valley operation.
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emily: artificial intelligence, speech recognition, all part of the work done here at baidu usa, the silicon valley arm of the chinese internet search giant. >> i think we are in a unique position. from silicons valley and from beijing and putting them together to create something that has not been seen yet. emily: one of the most ambitious intelligence program -- projects to come out. baidu recruited him to run its silicon valley ai lab in sunnydale, less than five miles away from google's headquarters. >> i thought about the potential of ai to transform health care. we're working hard on that. emily: what is next is one of the first projects to emerge from the deep learning unit. a sort of robocop meets webmd,
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an app called ask the doctor. >> the system has a lot of intelligence built into it. first of all, the speech part. people can talk to the app we developed to describe their symptoms. process system will deep speech and it can decide whether they can -- if you need to see a doctor. grand this is part of the vision for baidu's future from online to off-line services or letting users connect with nearby businesses are there smartphones. it isn't vision -- it is a vision he believes in so deeply he is willing to bet billions and sacrifice profit today all without a money back guarantee on future growth. >> in china we see the cell phone increasingly become a remote control for the physical environment.
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all these things people are transacting so much more often online in china than they do in the u.s. emily: baidu has tapped into its $12 billion cash pile on products like it's ai personal assistant. baidu has made more than a dozen investments in the last two years including a $169 million stake in a group buying platform for on-site services. in total baidu has set aside $2.2 billion over the next three years for online to off-line research and that number is only expected to grow. we could get speech radiation to a level where it was completely natural, where you did not have 90% accuracy but you had 99 present act mercy, that would be totally transformative. emily: emily chang, bloomberg san francisco. advises tonext guest dip in when it is down.
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hear from ubs after this short break. ♪
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angie: welcome back. angie:this number shaping up as a likely liftoff date. we saw what happened to the u.s. dollar. s ist: we think thi dollar supported. we're looking at a stronger dollar over the next weeks and months. that is something investors need to consider. the australia dollar, more downside. if you look at the latest numbers, not so great. there may be cuts. look for broad dollar strength versus the asian currency. sounds like the strategy
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at the earlier part of this year which was everyone was long the dollar. guest: absolutely. growth stillasian remains in place. rates andght increase that gives room to breathe. we have seen recent data out of asia. less negative, some people stabilization.as markets can get quite excited but the underlying situation in the economy shows a slowdown. maybe more moderate. dips. you say buy the to hear thatng this could be oversold territory, the value could be right now if we take advantage of it. what do you think? guest: we need to see some sort of acceleration in growth. happen.unlikely to we still have our challenges here. we increased leverage on the
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private side and we need to digest that. angie: what about the malaysian ringgit? it has been under pressure. if oil is going to pick up, shouldn't they ringgit dachshund the ringgit pickup -- shouldn't pick up?it guest: it has its political issue. the ringgit should pick up. of foreign lot holdings on the bond side. it could be a better story. at one stage you see a little bit of a slowdown in the depreciation in the rupiah. we need to take that under consideration. with its high inflation back drop, we are more on the quarter side. angie: let's talk oil here. there seems to be some bright
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spots on the horizon. how far away is this horizon? guest: not that far away. we're looking at six to 12 months. we talk about an additional $10, very quickly. trading around $70 per barrel. you might say that is a soft increase but you think about where we stood in the first half of the year. the market is rebalancing area do -- rebalancing. angie: earnings coming out this following. is it an opportunity to buy into the story? numbers willf the reflect the recent drop and some people are concerned. we are optimistic on the energy companies. we are in overweight. if you ask me how to benefit from higher oil prices you may
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not want to go into the future because you pay a premium. clearlygy sector, something to look into. for clients, a lower investment horizon. here generally, you look at the integrated side, who can benefit from different developments in the market. so look for the broad diversified, once with a good balance sheet, that would be the most prudent approach. guysto go for some of the in the u.s., some drillers area -- drillers. you for that. more breaking news on "first up," this time from japan. production data is coming out on the terminal. let's go straight to avon -- yvonne.
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these figures seen is very crucial. probably the most important set of data that we could be seeing ahead of the doj holocene decision that is happening tomorrow. most people, economists expecting that for the third theh that we will see factory output decline. what would that mean? industrial production for the month here actually rose 1%, that is a surprise. economists were expecting that to be 6% down when it came to the month of september. what this means now, we're not seeing a losing streak as much as they anticipated. we are seeing quite a bit of improvement. the euro in your numbers did -- year on year numbers did fall 10%. economists expected a 2.6 drop on industrial production after
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falling .4 of 1% in august. what does this mean? we are seeing a bit of improvement but some in -- economists are concerned about what will happen with these third quarter gdp numbers for japan. the trade ministry of japan says we need to see a 5% gain in order to see third quarter jeep to p -- gdp breach 0%. there is a good chance we might see contraction in another -- and another recession. since abe took office two years ago. -- high tensions are putting pressure on the doj. pi numbers -- a lot of this wing on stimulus. angie: it has seen some of the apartment buildings sag sideways. they may have another
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confession to make. details after the break. ♪
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angie: we're taking a look at the opens in japan and korea. we're taking the bullet train. it is pulling into the station. you can see that on the screen. it is really impressive and it is the key earnings driver for east japan rail. more tourists, more people taking the train. >> i am looking at the latest bond film.
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spectre has brought in $2.9 million. with itsng through earnings today in japan. that will be after the bell but we are still expecting it to do quite well, up 39%. if you areso great living in one of these buildings. againt is this company anch was in charge of apartment complex. that wasanother one found to have fudged the data. the government when over some data and they found that one of these projects in hokkaido may have been -- the data may have been fudged.
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involves a lotn of these reports in japan. we will see how that plays out area do -- plays out. toie: can you imagine trying move out or sell that unit? not going to happen. zeb: friends of my parents in pennsylvania bought a house up against the mountains, beautiful wooded area until they found out it was infested with snakes in the middle of the night. a huge snake problem at that. you get hungry, there is protein that is available. back in an hour.
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we will see. on price falls below $50 demand from china. why some are saying i
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♪ angie: surprising strength, japan towards off fear on the factory floor. wrong numbers sending galaxy numbers phone sales down. and countdown to lift off, the fed saying the u.s. is making progress. welcome to first look, coming to you live from our asian headquarters here in hong kong.
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pace may be picking up with production, unexpectedly rising in september. chief agentws' correspondent joining us. >> good morning. this set of data was going to be a wildcard for the bank of japan. it has surprise on the upside, suggesting that the activity and conditions are a bit better than anticipated. they may be turning a corner, a tentative signal though it is. it may be that the margins of the fear is that japan entered a recession in the third quarter, would be the second since the prime minister came to office. by all accounts, it is a surprise on the upside. but of course, one set of data did not change the picture for japan just yet. mean forat might it the boj tomorrow? very it is obviously a
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interesting debate this time around. it is one of the most-watched meetings in some time. it has been described by our colleagues, economists are quite divided. they have a number of options before them, they can extend the qe program. or they can go into new territory, according to some economists, they will expand stock market buying. i would say at the margin, you would see that the data today is showing the bank of japan may sit still tomorrow. but we will have to wait and see, because it is not settling nicely. angie: a knife adagedge indeed. what happens if they don't move tomorrow? enda: if you look at the global story right now, the people's bank of china moved last week. and the ecb has signaled they will ease going forward.
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those banks are easing, and those economies get traction, that is a positive for japan. it may be viewed as why do we need to ease? and you cannot ignore the fed. they signaled today that the rate hike is still potentially in the cards. if they do that, that is a strong u.s. dollar story. that has implications for japan. so in you look at the global story, lots to consider for japan, whether they should or should not move on what the big central-bank and what the main trading partners are doing. curran there for us. better than expected out of japan. let us stay with japan now, as the market opens in tokyo. he joins us with the open indications. tracking a mixed performance at the opening, investors trying to go.
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we did get clarity from the federal reserve, and that is driving the dollar to its strongest level since august. i will get to the aussie and the kiwi in a moment. with the equity markets, just getting underway here, and this is what we are seeing. pointing to a higher opening in tokyo, and you are getting that now -- 9/10 of 1%. you are seeing the other index advanced today, as well. some other activity in wellington, new zealand. lower by 1/10. we did see the s&p 500 powered by banking stocks, to a two-month high. a filterhere could be through that industry group today in the asian-pacific. let us check in on the japanese yen, in the wake of the industrial production numbers. and ahead of the bank of japan meeting, and the result 12094, that compares with 121 levels yesterday. keep your eye on the currency to
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him and speaking of currencies, the aussie and the kiwi extending losses into a third day. watch those currencies as the australian recession goes underway. several movers to tell you about today in tokyo. let us begin with ama. 2.5%, down 2.4% here. the stock moving, however it is reporting an increase in his latest results. increased in the first half net income year on year, a nice performance there. risingt is helped by tourist numbers copper degree from china. rising i believe .or the 34th the first day growth project of the new james bond film doing well at the box office. we will have to go see it.
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angie: thank you so much for that. samsung,ing looks at david is here. just how bad were the results, david? david: let us put the earnings aside for a moment. that is not important at this moment. what is really moving the stocks, this massive buyback plan they announced a minute before the markets open. about a $10 billion buyback over the course of three or four stages. shares are up now, over 4%. minutes, ofng six trading and south korea, samsung is added close to $7 billion with market cap. because of this, we're looking million.ack of $2.23 it is a massive buyback, again. they will be using 30% of their
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free cash flow for the shareholder return. shares are up, we are close to 5% -- the highest level since may. and it would be the best since october 7, since we had an 8% pop. very quickly, earnings are ok. sales, profit of $6.5 billion. althoughit of a myth, you do get an improvement when it comes to the mobile business. but that being said, in terms of guidance, it is more or less the same profit levels and margins. i do also want to know, when you look at the south korean didency, the weak currency give samsung some favors. fx rate impact, let me read this really quickly here. 800 billion gain.
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what is my math going now? give me one second. $700 millionlhly as far as fx is concerned. the big story here is buyback, 10 billion u.s. dollars. angie: shares of australian retailer woolworth falling, at lowerediler announced first-half profit expectations, now down a .3%. we have paul allen with more on the story in sydney. how bad were these numbers? and what is the problem at woolworth? paul: as to the problem, it is a long list. pretty near the top is that they literally do not have a leader right now. theyeo is on his way out, have no one duck just yet. but in the meantime, sales are falling quite badly. third-quarter sales off 2.5%.
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food and liquor sales were up, but the same store that posted another decline there -- down 1% there as well. it resulted in this morning that first-half profit is going to decline by 28-35%. it is going to decline sharply to $900 million and $1 billion. the head struggling with competition here in australia, not only from the low-cost grocery chain aldi. l's.also from kho they managed an increase at 3.6%. so suggest the problem is that the market, something going on inside woolworth. they're trying to do something about it. they have recently ditched their rewards program, which was a frequent flyer program. suggesting that the troubled hardware chain masters is going to go soon. in the meantime, getting a new leader or ceo certainly might
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help. we have shares off by a .3%. angie: it was a downturn. let us turn to financials right now. paul, out with another record four-year profit. but it was not that great. right? paul: that is right, the headline looks fantastic. up 1%. but the market always expect fantastic things from the australian banks. the analyst surveyed by bloomberg expected more. so in that respect, it was a disappointment. 22% tot charges were up $1.2 billion. and the net interest margin down nine basis points. the dividend looks good, but it is exactly the same as last year. lowthe headwinds from
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growth, and regulation, we did see shares pop in the first days of drapery it but they're off. out,the announcement came it does illustrate the challenges for the incoming ceo shane elliott. angie: thank you for that, paul allen. a reminder you can get more on that story and of course all of the day's news at our new digital destination, bloomberg.com/asia. breaking news and analysis across the pacific region. all you have to do is sign up for a mobile alert on our web and app. checking other stories making headlines for you right now, nintendo missed estimates. net income tumbling 80%. they were looking to the super mario wii game. result nintendo's first since a new president. he is due to announce details of
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the smartphone service later today. nintendo shares have been on a tear. 88% higher. earning money abroad, that is looking ever more distant as international operations posted their biggest loss in four years -- due to a slump in trading. and a settlement of a lawsuit with an italian bank. the near $380 million loss will put a dent in the profits overseas for years. despite that, overall net mashed' sham estimates. at about $175 million, the company was under pressure. line's oipo.
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just ahead, the fed latest report card says there's still no improvement. we will ask our next guest for up"take, when "first returns. ♪
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angie: making headlines around the world, iran is joining talks on the future of syria. will be inter tomorrow at the invitation of the united states. bashirs backed president al-assad against the rebel groups, some of which are supported by saudi arabia. years of fighting has sparked one of the weakest refugee crises in history. thousands of people are seeking a new life elsewhere. former vice presidential nominee all ryan is expected to become white house speaker today, the republican party member was just
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28 when elected the house in 1998. he becomes the youngest chairman of the ways and means to me since 1861. the democrats will nominate nancy pelosi.with a republican majority, that means ryan's nomination is a done deal. sepp blatter says his decision to award the cup to rush it was decided before. he calls a discussion took place in 2010 to do the tournament to russia, and the following want to america. however a late swing and support sent the cup to qatar. --says that feet was ethics fifa's ethics committee was solid. liftoff was still on board. michael mckee has been on stand.
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michael: the fed did give us a more hawkish view of the prospects for rate move in the near future. according to the statement, not only have economic conditions not change all that much, they have improved slightly. the fed dropped its reference to global economic restraining growth, and putting downward pressure on inflation. a given an upgrade to household and business spending, now they say expanding at solid rates in recent months. the pace of job gains as slocum, they note the of employment rate has stayed steady. and there is no change in the assessment of inflation running below the target/ but that is because of declines in energy prices and not energy imports, that will save inflation to move to 2% target/ perhaps most important, the fed also points to the december meeting and suggest they will actively consider a rate increase at that time. so now the focus turns to the date of the fed will get before
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on data-dependent fed meats october 16. a couple of consumer business spending data, janet yellen has a major speech on the economy, and testified before the joint economic committee on december 3. if the fed wants to send a more concrete signal, there is but give opportunity to do that. so while we may have zero interest rates for at least another month and a half, there is no guarantee that will last into 2016. michael mckee, bloomberg washington. angie: let us take a look at how this might play out in the markets right now. joining us is the head of global research at tokyo mitsubishi usa. in fed, probably a liftoff december. what does this mean for everybody else? >> we think that boj will stand . the biggest mind and my argument, they have significantly mucked up the
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operation of the boj market. if there were going to exaggerate further, that would muck it up even more. that is reason not to do anything right now. angie: what is a disaster, to doingt up, what are they and what is that impacting the long-term deal? -- i should be clear. 90%an they are taking the of the new issues. if they were going to expand the program even further, they will become the whole bond market -- the whole government bond market. that will be very and comfortable in japan because of, you know, the interest of their institutional investors/ that is why i don't think they will move. veryd the fed, this is interesting. i would say that maybe this is the first time that i have really seen janet yellen start taking leadership read of this/ . some of the so-called dovish
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dissenters, particularly governor brainard and governor ullo, they all voted for the decision. they're very much keeping december as a live option. that is what we have been discussing clients as well. i think that dissent was already known in the market. it is more of a surprise that some of the so-called doves fell in behind majority decision. investors, tos of price in a december rate hike now, does that change any strategy for you? for advice given to clients? reasoni think that the the decision was so interesting and important last night, this actually sets us up for a better reason to take on some risk. not all risk has been removed.
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but there is big uncertainty about when the fed will liftoff. i think it is largely behind it, increasing and disappearing into the background. that will give us a clear field to think about how to position portfolios and so on as we go into 2016. more play inld see the equity markets, more upside in the equity markets between now and december 3? cliff: at the most, the market will see another three rate hikes next year -- maybe less. that pace of rate hiking is not going to dissuade i think anybody from taking on some longer-term deals. i agree with you. angie: which sectors? cliff: by sector, i think the consumer is sort of ok. you know, i am weary of the internet sector. i see a lot of fluff there.
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i would actually look at industrials, good old-fashioned companies like ge. they announced something very interesting, the divesting plans and so on. there will be decent value they're going forward. angie: time to play. goodb toalways see you. details and headlines coming up in a few. ♪
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>> these are your f x headlines. the u.s. dollar is in a two-month high come after the federal reserve indicated a rate hike in 2015. the u.s. economy is growing at a pace, leaving room for rate tightening in december. says it brings in policy diversions with the ecb. investors still see the dollar-euro as the dollar strength story. with the dollar at its strongest level since august, the aussie and key we are exiting losses into the tay. sayingk of new zealand that rates will be on hold. and the wellington bank says a for the reduction seems likely, the policymakers are watching the data and waiting as they
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decide whether to move again. prices, getting the picture for the governor's efforts to bolster the economy. following central-bank action, anticipated action in japan. yen following in industrial production. iny posted an affected rise september, it gives the boj reason to hold on policy tomorrow. it allows them to keep the view the production is on trend -- rising on trend. it was up 1% from month-to-month, the estimate was 6/10 of 1%. and the bank of japan out with a policy decision tomorrow. let's take a look at how currencies are trading in the asian pacific. what we are seeing with the u.s. dollar index, modest pressure there. the trend is higher according to analysts given what we are
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seeing for the prospect of higher rates. 66 in the dollar yen looks like .72 on the back of industrial production figures. those are the stories driving the foreign exchange market this morning. angie: thanks, zeb,. . coming up next, sales are up but profit is down. nintendo says is still on track. live in tokyo, after the short break. ♪ buddy- nice place, nice car what happened?
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