tv With All Due Respect Bloomberg January 7, 2016 8:00pm-9:01pm EST
bill gross says he expects main line shares to fall again. the man who invented the system after the crash of 1987 says beijing simply got it wrong. let's get your view on all this. follow me on twitter. it is all about that open. this is singapore and taiwan. they are behaving ahead of that. here is david. far s your surprising so -- unsurprising. you don't want to make big bets ahead of the opening on china. at the moment though it seems to me that markets have leveled off at about a quarter of one percent. japan and australia have come off session lows. just a few quick notes before the markets open.
behaving s been itself, just under 670 to the u.s. dollar. china released its latest reserves data which showed a record draw-down in december, over $100 billion. that is another thing to consider. let me get you those closing levels that we saw the chinese main land benchmarks. short in trading session. the question really is what is the market clearing price? if you let investors find the market he could lillibridge rum. on one end, you are now allowing a bigger playing field. when you have the circuit breakers, that is sort of market psychology. we know it is going to be a free for all, but will it be a free-fall? that is the question at the
moment. the glut of sell orders we didn't see yesterday, will we see that out in the first few minutes of trade? that is how things ended at about 7%. we will be back to update you on the opening numbers later. >> less than 10 minutes to go before the open of chinese markets. they have been closed since that emergency shut down since 24 1/2 hours ago. global rampant selling. ivan what can china do to stem the pain here? >> it could be that threshold, -- he suspension may be a the suspension bridge may be something to alleviate the pressure. investors can say hey, i can wait a little longer to decide if losses have gone too far or time to buy?
this flip-flopping from the pboc some say adds more chaos and shows china is changing the rules all the time and what is the policy right now? this was fueled by the surprise evaluation of the yen. the r and b fell to a five-year low. the threshold for these circuit breakers just too low. 7% declines in china are actually pretty common in this volatile market. the man responsible for the trading halt, not responsible for the system, nicolas brady, who is former u.s. treasury secretary. he says china just got it wrong. they need to widen the band. these are triggered too easily in a volatile market like china. a third of the hedge funds may things. mandatory
what happens today? bill says expect more panic. >> based on the e.t.f. in the united states, china is expected to be down 5% or 6%. it determines on whether they let markets clear. they haven't. to the extent it goes down more than 5% or %, who knows? >> you heard it from bill gross himself. that warning echoing billionaire george soros, who warns a larger crisis is brewing. china open at the bottom of the hour. >> well, the impact of china's market chaos is being felt globally. he s&p 500 has now had the worst ever start to the new year. tell us about this. >> good evening from new york. the markets are closed,
investors, a lot of them are licking their wounds after today. it was very ugly and red. the s&p and nasdaq are now at three-month lows. checking the equities, they are falling 2% to 3% for the session. the s&p saw its worst yearly start since 1928, losing 100 points so far. the reason is pretty much where you are, in china. with that said, that is making investors care about what is happening there, as they should be. i believe we have a bloomberg chart we can bring up that our producer pointed out to me. i want you to look at trading volume this week. it more than doubled between january 6 and january 7, the two bar charts on your right. that was between can the a.m. and 10:00 a.m. china time. that is a key hour because that . when beijing fixes the yuan
the devaluation has been rocking the markets, and investors are trading off that face. it happens after the new york markets closed. it should have happened just in the past few minutes. >> give us an idea of some of those big moves. there was not a single industry group spared in this route? >> you are right. take a look at my bloomberg terminal. information technology was down most, 3%. financials down 2.8%, and industrials down 2.8% as well. technology, the worst performing sector. apple had the biggest impact, falling about 4%, now 4.2%. it is now trading under that milestone $100 mark for the first time since october of 2014. rose enbilateral cut its estimates for earnings in i phone sales.
microsoft and setting new lows. jpmorgan, citigroup and wells fargo falling by as much as 5%. interestingly, energy shares were not the worst performing sector for once. w.t.i. crude did file more than 5%. oil futures are up off that, up by .6%. .8%. crude up by now with that said, west texas has now fallen every single trading day, losing more than 10%. energy stocks, chevron down the .5%. by about 3 on friday we are going to be watch for some hope out there, and that may take the form of the september jobs report. median fasters are calling for
an increase of 200,000 jobs. if it falls below that, we could see more reason for another day in the red. weem be watching for what happens with the china markets when they open about to minutes from now. >> premarket just about 10 minutes away. thank you for joining us it would be an understatement to say we will be having a more detailed look during the course of that program. we want your opinion. e-mail your thoughts to us. include the hashtag "trending business." julie having a look at volkswagen's latest plans to comply to u.s. emission standards and much more than that. >> that is right. we are hearing that v.w. may buy back tens of thousands of diesel tars in the -- cars in the states. it would be cheaper to purchase
more than 500,000 vehicles that don't comply with u.s. emission standards than fix them. they could buy back as many as 50,000 cars. negotiations continue, no decisions have been reached. a buy-back would be an extraordinary step, showing the sides of the challenge. v.w. shares have tanked in germany since the september admission that it had rigged the software of cars to beat those tests. let's check samsung. after it missed sales and profit in the fourth quarter, rading in seoul up 1%. sales were sluggish heading into the busy holiday season. -- they are ed a
information on smart phones. that is pressuring profit margins. businesses from screens to semiconductorors that supply makers. finally to singapore where shares in noble have opened like this, ouch, down almost 9% after standard and poor's cut its credit rating to junk. the downgrade adds to the lengthy list of problems for noble. it is facing criticism of its own accounting midwests. hey have lowered credit rating to bubble b police. noble's dollar bonds due in 2020 have dropped to a record low of 54.78 cents on the
dollar. that is according to the latest data on the terminal. more bad news for noble. it saw it loose 2/3 of its share value over the year. that big slump coming through today. >> what is going on with the went? >> we are looking at boeing, how it has topped airbus as the world's biggest maker of passenger planes. coming up later on the program, more on the comings and goings in china. we will hear from an optimist as the shanghai trading day gets going. 20 minutes to go to the open. we will see what everyone is expect to go see. this is trending business.
>> there we go. nifty futures actually. pretty much flat after the declines of 2.2% yesterday. this all against the background of the global equity route taking place. it is quite a start to the year as we have been reporting. trillions of dollars from the equity markets this year alone. is this the time to be making money? how do you mchale money in this environment? aberdeen by hugh of management group. great to see you. what is going on for you? >> well, for us it is very much business as usual. i am afraid over the years we have seen so many sharp market moves and so many contradictions from regulators, much as the same as we are seeing at the moment.
we just try and continue focusing on the fundamentals and identifying as far as equities are concerned, the best possible companies, the best possible prices. times like this give rise to opportunities for the long-term while people are panicking and seeking an exit. that is where the patient money can make money. but it could well be painful for the following few months. it is a few years after when you find out whether the decisions were good decisions or not. >> so you think this could take some time to unwind? >> yes. although certainly in china, the dropping of circuit breakers at least enables a clearing mechanism. anti such devices where they occur. it is better to have a big
clean-out and get on with life. of course the broad picture, broadly, is that the global , onomy is not doing very well and ultimately the big q.e. measures taken over the last quite a few years have not worked. so that i think is the real big disturbing back drop. he gyrations in a highly speculative, retail-driven market such as china are really a side show to that. >> well, there is a lot going on though. a lot of things at the start of this year. we have the saudi-iranian tensions, the chinese markets, the border issues in europe. we have a whole host of things all seemingly worrying people. but many of those factors are around, and the thing is why now select to sell off? it is a strange herd mentality.
>> but marketing were ever thus, i think. markets are driven by hrds. you wonder why at times they go up. everyone jumping on the bandwagon when they go up, and i am afraid it is exactly the same when they go down. people are trained to take measured views. it can be quite problematical. going against the herd, you can look very stupid, very quickly. but it is really having those longer term horizons and trying to step back as much from the noise. and there is a hell of a lot of noise as we are seeing on a day like today. everyone is focusing on what is going to happen in 20 minutes chinese market opens. in the longer term scheme of
things, nobody will be talking about today in a year's time. it will all be long, long forgotten, and fundamentals will be thought of far more, what has actually happened in the economy, what has actually happened to individual companies. >> hugh, the thing here is we contagion a global effect from this when in fact not many foreigners are exposed to this market. what is this telling us and what about the way the rules around trading the yuan are changing as well? >> you've hit the nail on the head. the chinese market, big though it is, and a big part of indexes, your average of most fournette investors is a mere
speck. most people don't have much money invested in china. we don't have much, and we are a very focused player on some of the fast-growing markets like china. we could have had a lot of money there, but i think most rational investors have avoided china. it has been purely domestic, purely retail, so logically it should have no effect. but i think it exposes a lot of things people are worrying about in the rest of the world. you listed some of them, oil, border tensions. but i still think the big driver underneath is the huge policies that we have had out of u.s. governments, japanese governments and chinese governments, on the principle of money that have simply failed to work and ignite the global economy.
although we are clutching at straws, the global economy still remains very sluggish as we see from samsung's figures from today, for example. apple, companies like that. things are quiet. >> hugh, thanks a lot. great to see you. ugh young from aberdeen. shanghai up 158 points, .75%. >> the stories making headlines around the world. kim young will mark un's birthday by turning up the volume at the border. years of sanctions and other pents have failed to bring to any meaningful talk. the war of words between iran and saudi arabia is heating up
with teheran accusing iran of hitting the ray emery in yemen. missiles landed nearby. witness in the city say there is no visible damage to the building and there have been no ecent attacks in the area. michelle futbol boss, run. has ended his he and sepp blatter are being investigated for a payment for awarding a contract. both are denying any wrongdoing. >> we are coming down to the open in hong kong and china. we are seeing positively premarket. this is a view of shanghai. we may be in for another wild ride. we are going to find out in about seven minutes from now.
>> you are back with "trending business." hong kong china markets opening up five minutes from now. here is david. >> finally perhaps a bit of hope here. need news following this fixing from the pboc. 46 .36 against the u.s. dollar. we saw the off shore market play a bit of catch-up, gaining now. asian stocks reversed earlier losses. we are seeing gains across asia right now. s&p futures seeing some gains. we have an update now of what
shanghai will likely be doing. 2.5% gains. that is what it looks like we will get at the open. 2.5% gains, and it looks like volumes should be spiking. if my data is correct here, and this is just the opening minutes. it is not as accurate as it would be about two or three hours into trade. 20,000 times the daily average. that number tense to go down. 2.5% gains at the open for shanghai. hang seng up .8%. the heavy weighted stocks look like they are going to join this rally. hopefully it holds. we will see what happens, will be a free-for-all or just a free-paul? back to you. >> waiting for the opening numbers to come through. "trending business" when we do return. we have a terminal on the
>> a look at our top stories. after the action lasted a matter of minutes thursday, trading stopped. this time there are no circuit breakers. they suspended the mechanism four days after bringing it in. things are pointing to gains. it is the worst start to a year for global equities with 2.5 trillion wiped out in three days. some say the things faces
markets are akin to those acing the investors in 2008. phone shippers still declines. david what, is the open like? >> it is a complete reversal of what we saw about 30 minutes back. as expected, given that the p boc did not weaken the fixing, perhaps giving a cue to the market that things may be calming down right now. before that actual fixing, losses did level off a bit. that is the picture across asia. hang seng up 1%. shanghai is up 2.7%. let me get you those opening levels to be more clear on where we are as far as the marks are concerned. here we go. you have shanghai shares here.
%. hares up 1.7%. if we could get the other indexes up. 3% at the open. what did we get? pboc setting the reference rate 3% fapes. >> there is more risk appetite right now following the fixing. let's wait for this to update. here is 666, a bad omen. that is the move after that fixing. the whole dollar-yen should be weaker. money moves into riskier
currencies as expected. aussie dollars seeing some gains after the fixing. milar looking chart, 71 u.s. cents. i would wrap things up with a look at the bond markets. let's see if we have come full circle from being risk averse. the answers is perhaps a small yes. jgb yields are up 25 basis points after falling for four consecutive points. i guess it worked for now, stripping out the circuit breakers. we will see. >> for now, two minutes into the session. let see what happens. thanks, david. let's have a closer look at guard. h alex circuit breakers, good thing or bad thing, or is it a gray area? >> it is a gray area. sometimes it works with compute rised trading where the market is spinning out of control. and then other times say in the
china instance, maybe the 7% and 5% figures are too loe and being triggered too quickly. >> what are the steps? does the regulator there or the government have enough ammo? >> great question. they have thrown so much ammo at the market already in the last six months. they have suspended i.p.o.'s. they have implicitly ordered certain participants in the markets and traders to just stop trading, to stop selling. they have done this circuit reaker, and they have detained certain market participants as well. they have thrown a lot of ammo at the question. has it worked? happens not. we will see. >> what do they do next? we can't have the situation popping up every three, four or five months, can we? >> absolutely. can they slow their weight behind the market, or they can actually let the market take
its course and let capitalism reign. >> we are just heard from hugh young. just let the market clear itself. that is what he is talking about. a lot of people get hurt by that of course. >> exactly. a lot of people can get hurt by a falling market, but also a lot of people can get hurt by a market that is in suspension as well. with these trading halts, people can't get out of the market. there is this pent-up need to sell their stocks. >> redemption is one thing if you are a fund. >> exactly. the fund, how do they get out of it? there are these consequences, which are difficult to foresee. let's hope we have a clear direction from the chinese government. >> thanks, alex. let's take a look at commodities. there is a similar sense of gloom hanging over it, but oil particularly. crude near 12-year lows, pushing the price toward the $30 a barrel handle.
ben is with me now. how close are we to $30? it would be quite remarkable. i am sure when you remember that when oil was just about $10 a barrel. >> it has been an interesting week for all. it was only monday that we were chatting about iran and saudi arabia, and the tensions there, and prices shot up for brent 4.6%. we look further into this week and china has really stirred up the market, not just oil, but the entire market. $30 oil, something that has been flagged boo i a few investors. they said we are close to it. china has accelerated that. it is the same old supply situations. we have u.s. crude supplies at 100 million barrels over the five-year average. the first half of 2016 has long been forecasted as a tough time for oil, with some rebalancing
to the second half. >> where are we? $34? that is the brent. the spread between brent and w.i. is very narrow now, too? >> it is. it is around 26 cents. a few years ago that was a $20 spread. that is largely because of the removal of that 40-year ban on exports in the u.s. that may alleviate the glut in some respect. to om the oil price now this idea being bandied about, the biggest oil company in the world closely held by saudi would be amco, this worth trillions of dollars. but it is not as straight-forward as that. it would be seen as a fire sale because of the problems that saudi arabia has with the budget.
>> it is interesting. >> i.p.o., the idea has been floated one of the crown princes. >> yes. officials haven't given any data, but it is a behemoth in the oil industry. if you look at their reserves alone, they are about 261 billion barrels. in comparison to exxon, that is 10 times for what exxon has. conservative estimates could value the company at $2.5 trillion. exxon is about $320 billion. >> so the bank, this may be a great thing to get in on. with respect to the oil market, unless we see anything in terms of supply on that front, it probably won't have much of an effect there. >> thank you, ben. we are going to ache a look at something away from what has been happening with commodities, with equity markets and have a look at the world's leading smartphone
maker because it missed estimates in the last quarter. samsung blamed chip prices as profits came up shy. zeb, tell us about that? >> the company facing intense competition from rivals in the smartphone space, but also in the chip space. it supplies apple. as apple and others face a bit of dribble. samsung's chip division under pressure as well. this fourth quarter earnings guidance, preliminary operating profit came in at $5.1 billion versus a $5.5 billion estimate, weaker than expected and capping a difficult year for the world's largest smartphone maker. on the year, the stock down about 5%, third annual decline, and $8 billion of market value lost over the cost of the last year. they replaced the smartphone chief. the new leader is the former head of the mobile and payment
platform division, the security and payment platform, samsung pay. that tells you where they are headed. they said yesterday in a speech that it needs for focus more on software and the platforms that will deliver the customers and the customer experience. very interested to see how this company is navigating a difficult environment. >> as you have alluded to, it is mucher than that. >> absolutely. the smartphone the biggest piece of the company, but it also is very active in the semi-conductor space and chip business. chip has seen falling prices, a major challenge. the display business continues to face headwinds. samsung is at an inflection point where it has to figure out how it is going to change the business, how it changes to that software and platform space. investors are generally positive on the stock, south
korea's biggest company. 48 buys today by analysts, three holds and one lone sell rating. the majority of investor sentiment seems to be stick with samsung and buy those shares. they are navigating a tough environment and big competition from the chinese. >> thank you. michael letzig tell you what we have coming up next. we are more on this turmoil in china. hedge funds facing forced sales. we had panic earlier in the week. "trending business" returns in autopsy kl of minutes.
>> gains for most markets. some have actually turned back around. australia is down about .3%. new zealand down 1.2% and the philippines seeing some pressure. that being said, it is looking much better now. it is still early. out of the gates, shanghai was up 2.5%. some of the big moves, just to give you a quick look, oil play is up 2%. unicom, boc, and casino stocks getting some love in china. over in japan, top three, bottom three. i believe they did cut their sales forecast after the markets closed yesterday. that should be contributing to losses there. that is a very heavily weighted stock. if you strip that out, it should be up by much more. you have resources on the way up.
another category on the way down. have a look at what is happening if you supplies and dice groups in the asia pacific. we are up .5%. financials, brokers, consumers goods in this area. oil prices, which have taken a backseat to what is happening in chan. it hit a 2004 low yesterday. are we seeing this consequent rebound across airlines? not consistently. this of course travel and leash impacts us all. you are talking airlines, rail rates and so forth. no a consistent picture there. let me rap things up with gold prices. gold gold did get bid up to a two or three-month high. it was $1110 this morning.
it has given back a little bit since this morning. back to you. >> trying to make sense of all this, joining us from atlanta is investment management. what is going on? let talk about equities first. then we move on to the currency side of things? how are you dealing with it, and how are you viewing it? >> number one, we don't feel surprised at all for such a sharp correction of the stock markets. you look at the mood, investor sentiment, at what is happening, the money outflows for consecutive 2-3 months and look at the weak economy. what do you expect? >> why didn't it happen before then? why did it start beginning of january, bang, four days? >> nobody can know what the
regulators want to achieve. obviously they announced something in a rush, but they are trying to stabilize the market. however, there is too much speculation around the world with the chinese market. at the end of the day, do you want to make investment in china or not? this is the number one answer. number two, there are good values. there are undervalued names. this is speculation. you just take a wait and see attitude. you don't need to feel surprise nonsense of ke it. a lot of commentators are shocked about this. remain shock. >> remain cock. we start off with a positive session, and we are down now.
they are .6% now. the shanghai composite down now. let hope the rot doesn't continue. the thing is, in your view, should the authoritying be intervening more or keeping the same thing going. you said yourself, it is a bit confusing, their approach, or should they let the markets clear themselves? >> it is too late for that now. they have they are intervened in the first place, so it is too late to do that. but they are learning fast. at the end of the day, we have to find what are the things behind it. you and me and most of the people, we are still in the dark i have to say. however, you guys -- everybody talks about it. we can now believe the stock market alone and not talking the battle here. the key issue here is the
direction of the currency, the exchange between the chinese yen, and the basket of currency. >> that is exactly what it is because they are moving to the basket and not just the dollar. is that really what is behind the depreciation of the r and b? >> you look at one country, the direction of the currencies, it is the yuan. in other words, it is a joey -- it is a geo political activity of the government. this move is well prepared, elieve me. on the day china became the i.c.r., inclusion -- >> a special drawing. >> it was the first of december. since then, the regulator, the authority in china, has been
kept very busy to move it in the right direction. there has been a lot of argument whether weak currency, where it happens. when it comes now, it is not that way. 2% to 3% depreciation. so what? it is well prepared by a lot of participation, but it happens to be the timing is to bad. >> that is just the point. i.m.f. who had winked? were they told the truth of what would be happening, or what is it insisting its country get those special drawing rights? >> believe me. it is out -- the cold war. >> i am not questioning that. >> you look at the usual movement, i think there are plenty of them in demand, and the supply too. but you use strategy, come back to my profession.
when we want to have an asset's location, we have to ask whether you want to invest in this country or not. the answer is absolutely yes. you don't have much choice. so come back. is temporary correction or depreciation, this speculative move of the currency, show the world chinese leaders are very calm. they are ready for that. they prepared for that. they determined to move the rrency to globalization or internationalization. it is a testing of the water at this moment. >> we need a quick break. we will be right back after this very short break.
>> back with "trending business." you are back with atlantis investment manage. i was saying perhaps the i.m.f. had the wool pulled over its eyes to get the special drawing rights without actually getting the transparency for the months and years. >> bigger and bigger transparency. >> we getting that? no. >> we are working to this direction. can't you see? >> who are you we moving to this direction? how slowly are we moving? >> everybody is blaming it is nder manipulation. moving from one current sip fixed to a basket of 13. actually the chinese government is moving in the direction that
is happening now. it will be fully floating. that means not really weaker, but we call speculative move. it is just a period of time. why do you look at the other countries moving to this direction with it's currency? it is exactly the pattern. why pin to chinese currency? everybody is so excited about that. you know why? because there is nothing else between the currency. that is a game. >> you say it is a game. fair value seems to be 6.2 or 6.3. that seems to have gone out the window. >> after the inclusion. the direction is off. the amount is going to be uller and especially the
flight of capital overseas. it will be temporarily weak. >> montreal you say? >> temporarily because it is speculative because people need to did i jest their behavior regarding trades and regarding how to digest government mentality and also the demand. it is in the writing. fair value will be through demand and supply over time. this time it may be two to three months. we will fwind the point. where is the fair value? between 6.5 to 6.9. that is the mark. that is the exchange rate against a basket of 13 currencies stabilized. >> we have just seen the
shanghai market turn again going positive. r and b going down. >> does this telling us anything about the state of the chinese economy? >> the state of the commines -- of the chinese economy is under big pressure. so much is happening at one time, it is a big chapping. things copy and the that are coming to saturation. you have a down economy, a down market, a down currency. you need to find the dynamic point to come around. i am sure they have a lot of resources to turn the economy around. they are doing that really quick. we will see the low point very soon, probably the first half of this year, 2016. this is really the inflection
>> it is friday the 8th of january. this is "trending business." i am richard. ♪ [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org . >> live in new york. bank of mumbai this hour. this is what we are watching. it is the ultimate rollercoaster ride for investors. another 30 minutes of drama in shanghai. markets across the asia-pacific on the edge at the end of the first full week of trading. volkswagen considers a change of strategy in the united states. it says it is buying back cars
with the defeat devices would be cheaper than trying to fix them. nd saudi arabia may float ra -- aramco, becoming the most valuable company in the world, eclipsing even apple. this is "trending business." the session about to get under way over in jakarta. let take a look at what is going on. here is david. >> trying to find it's balance, i guess. rst off, it would be good to perhaps give credit where credit is due. the trading day is now officially longer than yesterday. we have gone past 30 minutes, and based on my count, we are going for eight direction changes now for the shanghai composite. currently up 43 points to