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tv   Charlie Rose  Bloomberg  February 9, 2016 10:00pm-11:01pm EST

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>> chinese tourists on his re-. -- on a spree. plus, have they got a deal for you? the delhi auto show in this hour of asia edge. >> keeping an eye on the markets. investors once again heading for the exit. down 2.5%. than 20% from last april.
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the singaporean market has come back online after a two-day break. it plays catch-up to this global selloff. markets in china, taiwan, korea, vietnam still closed. the first primary of the presidential race. victory for the antiestablishment candidates. donald trump trying on the republican one. bloomberg news watching and euro chief -- washington bureau chief joining us. is it the scale of bernie's defeat over hillary that might be causing the clinton campaign to do a little head scratching. >> a stunning night in new hampshire for bernie sanders. i expected him to win, but don't know about this big. he has won with every key demographic as well. with women.
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he was expected to win young voters. it is a big night and going to be a fundamentally disruptive right -- disruptive night for the democratic party. we'll have to see what her campaign comes back with as we move on with everything to play for now. rishaad: indeed. the other dog fight is the republican nomination. donald trump one out as expected. what do we know in terms of who came second or third? >> it looks like john kasich is going to finish second. that is a big win for him, an important win. but it is not clear how much it will be able to travel. his entire campaign was make or break in new hampshire. it is a good win for him, but he doesn't have the organization of some other establishment candidates. how far john kasich going to travel is going to depend on
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whether the establishment thinks he is viable as an establishment choice to back it with money, with organization. it is going to be difficult for him. rishaad: what do we know about marco rubio after he had to change feet in that debate on saturday. >> that was a moment that really changed the tenor of this entire race and the conjecture he of this entire race. he walked right into that gaffe. he seems like a programmed candidate, which is one thing people have criticized him for with -- criticized him for throughout. it looks like he may finish fourth, even behind jeb bush. his financing is going to dry up really quickly if that happens. he was seen as building momentum as the establishment choice. chances have taken a really severe hit here in new hampshire. rishaad: megan, thanks a lot for that.
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>> let's get back to the markets. a little bit of calm early on in the session but investors definitely off today. >> i think investors in this part of the region have taken this lunar new year a touch too far. firmly see every sector in the red, led by the telcos around 3.3%. we are certainly on track for a second day of declines. japan is on it lunch break, but have -- but let's have a look at some of the big losers. in the telco space, very much being heavily sold off. we are also seeing rick discussed through from banking stocks. australia, a bright spot at cba, the biggest bank on the asx 200, thanks to that better-than-expected profit number. you could still see the mining and energy players being heavily sold off.
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mentioned, we you are seeing investors battling back into safe havens. 115ly surging past that dollars mark. up by one half of 1%. heard some say, there could be an intervention in the market. 2011,en't seen that's his as we continue to see this again -- see the end really surge. some big earnings came out of the u.s. overnight with disney. a success for the new star wars awakens."e force more than $1 billion. income of 32% with revenue only up 14%. and, programming costs rose subscribers fell.
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fizz increases put some into coca-cola's earnings. revenues of $10 billion. -- it has also overhauled its bottling system. mc-choco potato fries part of mcdonald's japan's turnaround story. million through the end of next december. they cut jobs after a series of safety scandals including foreign objects found in food. more on that and the rest of the day's news at you can watch some of the interviews you may have missed on bloomberg today. it is just six weeks into
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2016, and goldman sachs is already reeling back on five of its six top trades. >> you can blame volatility and all of the markets. four x and also bonds. this is a man worries of credit worthiness as well. , three of the top picks within the first month. the standards and poor 500. also, the russian ruble strengthening against the south african rand. see the calls are becoming increasingly divergent there. they made a call on that one last month.
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on tuesday, 115 to the dollar for the end, and the euro rose to a three month high. the chief credit strategist wrote a note to clients saying that the markets -- they have been de-risking amid fears that there could be global recession. divergent monetary policy between the euro -- between the u.s., eurozone on in japan. spoke to, bloomberg the goldman sachs president. i think, in many respects, we have a bit of a liquidity prices -- liquidity crisis going on in the world today. part of the volatility that we
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have in these markets, i think, is really a lack of liquidity in the market. a small amount of buying or selling in any market today have a dramatic impact on prices. rosalind: things like they need a little more liquidity to temper the volatility. five out of six. haidi: there is basically a wager of commodities versus 50 banks. >> coming up later, and taken to court over mexican gang murders. extending losses.
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right after this.
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>> at these stories making headlines around the world. in taiwanper s.rthquake 141 people still missing. 530 people injured in the quake which brought down nine buildings. at least 10 people killed and 18 collidedhen two trains at 60 kilometers southeast of munich. the investigation will vocus on -- will focus on the crash. the failsafe switch was supposed
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to automatically stop trains on the same track. --y also said is thought washington says the north has expanded that uranium enrichment lance. potentially -- and reset a plutonium reactor. and 1500 journalists stations around the world, this is bloomberg. months and the yen is headed in another direction. moving in an inverse direction. head of asian markets, what are you making of this? >> it is a bit of a slap in the face to the doj. we've heard continuously inflation is going to hit that
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target. with heard all will be well six months from now, but suddenly out of the blue they are cutting interest rates. lo and behold, it does not achieve anything. >> it means they are going to try and get everything through into the market into various asset classes. we have reached 150, which some have called -- of a depends on how much switch of mood we see in japan and globally. at the moment we say it is a flavor of the week. the issue becomes how much stronger do we get before the boj realizes they have to do something else. it will be ludicrous if they have to cut rates further. the beauty of
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hindsight, doesn't look like panic? >> i think it is panic on their part but i think all of the central banks are panicking, not just the boj. as a result, we can expect the ecb to cut interest rates to negative or further negative. lo and behold, a couple current or ex-members are saying some are thinking of negative rates in the united rates going forward. rishaad: december is looking like more and more of a mistake, is it not? >> i was thinking that. backdrop rate global further. what are we going to do globally if everyone is moving towards negative interest rates? thingd: the incas, -- the it, thers have said thing is we have reached the
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limits of what a central bank can do. this goal policy is what we are getting into with central banks getting involved where the state should be playing its role. the states are not playing their role. would you not agree? >> i agree. the presentation i am giving this year gives that. near-term, we will see a lurch rates. negative interest we need to see much more expansionary fiscal policy if necessary, supported by banks. --cal qe, if you will >> you are talking about tax cuts. >> i am talking about governments massively spending. qe, instead of giving one trillion to banks, spending it into the real economy. rishaad: that is the problem, isn't it? the perception of where to put that money. inflating asset price rather than focusing on growth itself. >> could not agree more.
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the reason we are slow in doing that, we of been burned in the past by countries like zimbabwe trying that tactic. devaluing will not work. that is part and parcel of what we are seeing in this goal policy so far. a nudge nudge, wink week. wink week. w everything i am saying seems ludicrous and radical, but to me it seems rep -- logical where they are heading. we heading?re >> a . heading to ae all new way. paradigm shifts, etc.. michael: the new new normal is going to look a lot like what the old normal did.
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the government said, let's run a huge deficit. that will have side effects. if you start seeing that, you will have effects and at the same time you will have impact on the labor market. why should you allow other people to migrate to your country. there are lots of very retrograde side effects to what i am talking about but logically looking further ahead than the negative interest rate at the moment, i cannot see how we can avoided unless you see something radical helping elsewhere. the monetary side says, stop working basically. we are getting diminishing returns. absolutely, or negative. rishaad: stick around, michael. taking a break. looking at a striate, one of many countries facing the bear market.
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one seems to be a bit of a bright spot. with that video, the details live from sydney next on asia edge. ♪
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>> welcome back, you're watching asia edge. the country's biggest retail lender reported a slightly better than did report. with me from said he, we're talking about the headlines. let's look at some other numbers. >> the bank a bright spot today. profit for $.8 billion, 3.3 alien u.s. driven by growth.
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it wasn't all perfect. for example, net interest margins remained flat at 2.06%. some expectation those would improve. to 10ne capital ratio, up .2%. some regulatory changes in australia requiring banks to strengthen their balance sheets, which they have been doing. that has provided a bit of a drag on profits. take a look at stock prices. inay after rejecting stock just about every other on tuesday. currently up 1.7% compares well to one .5%. lotgs could be a whole worse on the local index today. that index really making things look a little bit better
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despite what we are seeing. a press conference right now to go through results. any takeaways so far? well, the ceo has addressed a lot of what is going on in the macro picture at the moment. he had this to say, the market reaction is "out of proportion risk." he says funding ability remains high. this sectort that accounts for 1.8% of the commonwealth bank balance sheet will stop said efforts have grown but only to 1.9% of that. this ceo painting a very bright picture of the shape of commonwealth bank and as i mentioned, the market responded warmly to his words. currently, 1.6%.
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heidi: we will take what we can get in terms of good news. speaking of lenders, hsbc back in. greg from bloomberg news legal team has background on a story. here thatlegal theory has been applied elsewhere to terrorism in the middle east and the lawyers here are basically arguing that under the antiterrorism law what happened in mexico, these drug cartels are terrorist organizations and therefore the bank that finances the operations can be liable. are the plaintiffs seeking in terms of the value of this action? that: they have not put any value on this, however based on the value of other legal claims i have read for actions
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involving iran on middle eastern ouches that have an -- they will ask for at least several hundred million dollars. heidi: can you tell us why this is being in texas rather than new york or los angeles courts? greg: brownsville texas is right mexico ander of diapers in the recent was filed there, first of all, one of the victims is a native of that town so there will be local sympathy. the judge in the circuit would be intimately aware of how brutal, violent and terrible the damage is that has been caused by the mexican drug cartels as opposed to new york, where there is not any direct knowledge. judges in brownsville, texas, will be aware of how dangerous these organizations are.
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crack some of the other stories >> some ofwing, -- the other stories we are following. a sixth straight decline, the lowest in three years. nomura ceo refused to comment. we are looking at another decline this tuesday. outside of asia, profits this year. putting it down to japan's slowing economy. 4.7 percent. just shy of $709 mark. said -- yokohama has resigned. the president has considered
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putting the company. insisting falsify data was not a cover up. did not try to hide it the defect in the building. and for the afternoon in tokyo, coming up
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heidi: you're watching asia edge. donald trump and bernie sanders have claimed victories in the new hampshire victory. sanders won easily over hillary clinton. trump, meanwhile beat the crowded republican field. governor john kasich coming in at second place. japanese-bank to company could see the creation of a new smart home appliances company.
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pitching a cash injection of about 2.5 billion dollars. this will be made at the end of this month. shares down more than 6%. and shares have made gains after the lender posted a 3.9% increase. slightly better than expected. bigfirst of australia's four banks to report show global volatility is showing issues, but liquidity remains strong. the latest from the markets. japan coming back online after a tough morning session. here's juliet. juliet: thank you, heidi. down 2.4% in the morning session. coming back in the early part of the afternoon. down 2.18%. poised toade, now enter bear market territory.
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seeingrom that, we are widespread selling coming through from the mining and i.t. stock. looking ok. malaysia is down 1%. singapore has had its worst session and three weeks as it pays catch up to the global selloff, coming back online after a two-day break. looking at the regional index, every sector is firmly in the red. telcos down 3.3%. coming back from the basic iterial stock as well as mentioned in australia, seeing those companies coming under pressure. in japan, a week performer down by 1%. , money isng these going into treasuries meaning the yields on bonds, particularly in japan down.
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so far, below 0%. having a look at australia, the yield is faring a little bit better than 2.4% but the japanese have been coming under a lot of pressure. the japanese yen back in focus, pushing past 115 to the dollar. the u.s. dollar down around a third of 1%. 48 and also14 seeing a rush into the gold, up 1/10 of a percent today. it had its best start to a calendar year since 1980. -- stors look woody's they bank of america, merrill lynch, said they could strengthen another 3.5%. >> the negative interest rates meant to help drive money and
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the younger weaker good. weaker. no further liquidity coming into the system, and that kind of limitation and question of the boj has worried. rishaad: one of the -- we talked to nick smith. nick: more often than not, strong yen has gone was strong corporate profits. the opposite at the moment, it is important to understand the reasons for that. then you know what to sell. when you get some strong yen, you're thinking, oh dear i better be docking my exporters when you should be thinking i want to dump things to do with
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risk, especially financial stocks which are getting creamed at the moment. rishaad: the banks are starting to run out of options. says, not just yet. >> negative interest rate can be n alternatives a measure to purchasing even more debt which might not the realistic given the purchase and the secondary market. ofyou would call it a move desperation, not just jet. given the right circumstances, perhaps the new rules might be able to give the japanese market the liquidity it needs. heidi: let's get back to one of our top stories. let us take a look at where shares are sitting now. down by over 6%.
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the japanese government act a fund that is hitting for a rescue plan. pitching the creation of a smart giant.pliances let's get over to our asia managing editor, peter. peter, what is this all about? now we have two bidders who are trying to take control of sharp. ex-con and, taiwan's on the other side, innovation net work. it is complex. they are looking to inject capital to build up the lcd business, the business that makes glass panels for iphones and other mobile devices. they are also pitching an idea of a smart home appliance giant. they went combined sharp with a couple units from japanese
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companies, including toshiba some appliance business. they would research and create small appliances that would convey you to your refrigerator or washing machine over the internet. that would be one of the more profitable parts of the is is and they think it would be profitable if they could come to hate globally -- if they could compete globally to scale. a difference. foxconn is offering a package worth about ¥660 billion. some of that would go into sharp in the form of buying new shares. about ¥225 billion would be used to acquire preferred shares. 300he other side, offering ¥30 into sharp to help build operations in the region. are saying preferred shares would actually be forgiven for no money. the ideas both companies want to
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change the operations fundamentally to be able to make sharp more competitive, it has been losing money for years. with: this is a story pretty wild stock movements. how much longer do investors have to wait before we get a decision on this? that is a very good question, it has been dragging on for years. we thought it would end a long time ago, and then last week there was a board meeting and which we thought there would he a decision where the board would pick between the two primary bidders. now foxconn says it expects a deal by the end of this month, we will see if they are able to hit that deadline. that was peter walking us through the latest in the foxconn deal with toshiba. the lunar he new year provides a chance for millions of chinese to travel abroad and spend.
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made a tripain has to japan that much affordable and attractive. but given what we are seeing with the japanese currency, david assailed to take us here through the outlook. a pretty unfortunate time for the yen to do what it is doing right now. >> it is a good saying that before whathappened you have seen. let us step back. let us set aside these events. this is a longer-term view of the explosion of tourists into japan. self-explanatory here. this is over the course of five years. september, december. this is when economics ticked off, the yen weekend. -- weakened. tourists into the country. at these levels, 500,000 every month. 2015, averaging over
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1.6 million tourists every month. what part of this, i guess, is chinese? so, let me just which my boards quickly and give you that number. the chinacording to outbound tourism research institute. their latest piece of data is actually as of september. it is quarterly data, not ugly. do the math and this roughly comes out to 500,000 tourists from china to japan every month. at 1.5, that is about one-yard. one year and a half ago, this number was about 100,000. it's not like the chinese government suddenly became five times richer. the drop in the chinese chin made it or affordable for more chinese, not only chinese, but more tourists from asia to make
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the trip into japan. despite recent gains in recent days, and let me shift this again for a quickly, the yanis still at very much levels compared to five years ago's. the hong kong dollar has gained 50 are sent. others off bythe about 54%. these are the countries they are coming from. not counting europe or the u.s. but if you are an asian non-resident of japan you are exempt from the sales tax they jacked up and forced the country into recession. this has worked insofar as attracting tourists. it is not looking good at the moment. the same chart, let me shift the timeframe to the start of this month, suddenly we are looking at a much stronger japanese yen against every single currency in
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asia and every single currency -- would we do -- major currency on earth. ok, it is live tv. there with me. all right. all right. you know what -- there we go. so, where do we go from here? the recent strength in the japanese currency, against everything else. if this continues, these budget-conscious tourists may look elsewhere. lunar new year, the yen has started to strengthen. i looking at some of these charts, and we have one to look at quickly. on top yen, if you are a bloomberg client, it is the top story. it shows you the technical indicators, may actually showed the yen pushing towards the lower end of the technical
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indicator for the first time since 2012. rishaad: we're looking at gold. losing its so-called monkey magic. people have been scared to go into other asset markets. >> this is the year of the monkey. a lot of buying of gold jewelry. wife's family has lots of gold in gives it out as gifts during the year. in hong kong, the gold shops do so much risk business. about a decade ago, i was up to one of their showrooms. they have a solid old toilet -- a solid gold toilet. the tour buses would take a look at that and they would be channeled to various places to buy gold. seasonal demand from chinese buyers accounts for about one quarter of the gold jewelry
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purchases. this is a big driver of prices. biggest rallyts since 1980. it is again a safe haven. touched a seven-month high of $721 an ounce. some of the biggest gold miners in a stronger. australia as gold reducers surge to its highest level since may 2013. 8.25% tuesday. in the last four sessions, not including today, new crest was up about 25% over the last or sessions. but let's bring up 2015 because over the last 10 years we have seen the same pattern in gold. january, prices surge ahead of the lunar new year holiday, it peters out, pricing power is not there when china closes down for one week and then in march.
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that is what you see, big spike in january and february depending upon where the lunar new year falls and in march, a drop-off in prices. the sameing to see kind of drop-off. we are already seeing a little bit of the same weakness in the stocks and gold futures today. this will continue on to the rest of the year. rishaad: thank you very much. heidi: coming up, china may be all about fireworks and celebrations for the lunar new year right now but it's economic troubles are far from over. we will talk about the gathering storm clouds in our group discussion coming up next. ♪
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♪ rishaad: welcome back to asia edge. i have juliet with me. we are talking about new power.
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saying, we keep having this phrase, turned it around. you come from the school of thought where it is all about the credit cycle. what has changed in the world from 2008 until now. going back to the 1950's. >> basically, from the 1950's to the late 1970's, you had a fairly moderate increase in debt . from the 1980's onwards, we had what was in retrospect a new paradigm. rishaad: reaganomics i suppose. reaganomics. we saw this explosion in debt and asset prices. they carried on until 2008 when that debt pile up around 28 years basically came off the rails. then central banks stepped in to try to artificially inject more debt into the system which created asset doubles particularly in prop -- profit
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markets. he wheels are coming off as that because we pushed those bubbles as far as they can go. not want to borrow and the poor cannot hurl any more if the recession is bifurcated. thingd: it is a good they're are not borrowing. michael: you can say that. but the problem is if the war cannot borrow and the rich don't want tomorrow, -- the problem is if the poor cannot borrow and the rich do not want to borrow. heidi: we have a lot of people scrambling to read up. is this the high-yield crisis we saw at the end of last year translated into 2016? are we staring down the barrel? >> i think the problem is addressing not the liquidity
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problem, central banks can continue to throw money into the system but at the and of the banks,e problem is institutions, companies, and households are not solvent, ultimately you have to pay the piper. heidi: tom cruise, sadly not my top 10, but the edge of tomorrow, can you tell me why you are so bearish about the current market. michael: in the edge of tomorrow, tom cruise's guild over and over in dover again. -- he film me and tom cruise. we are both eternal. basically, he knows in advance the aliens are going to lose ante keeps finding new ways of telling the top brass they're going to lose ante keeps being killed, but eventually they
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listen to him. i dressing the paradigm, you cannot keep trying to force more debt into the system. we need to see something change. we need to see something new being injected into the system. or we will see this over and over again. rishaad: the definition of lunacy by einstein. michael: that is what we are doing. ask the problem being there is note demand for credit -- no >> the problem is there is no demand for credit. rates are at zero but no one is borrowing. how do i jack up aggregate demand? >> let's paint people. that seems to be something companies minimize.
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naturally, the ceo does well. that if you do not pay people very much, they do not spend very much unless they can borrow. and, they cannot borrow anymore. if the people cannot be paid more eco-is the globalized economy we have sees continual outsourcing, there is no growth. >> if there is no growth, why should i pay my workers more? rishaad: it is a vicious circle. why is there this reluctance to spend money and invest? >> it is like a gain theory. ,f you pay your workers more you are the one who loses. everybody else pays their workers less and sells their pro-dex to your workers. only if everyone does it in loch
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side so we go from a vicious circle to a virtuous circle. we are not seeing any joint-up thinking. we need someone, somewhere to cali meeting and have everyone important sit down and say, what new things can we try to get out of this, which are actually old things as i said. what are the tools they should be looking at? michael: net is one told that is critical but it will not happen by itself. we will see a lot of policies that regard these as populist or retrograde. if you look at the new hampshire result today, i am not surprised. right and sanders on the left. a lot more that to come from every major democracy going forward until eventually we stumble back upon these solutions we used to use. >> happy new year. [laughter]
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rishaad: coming up, giving chase. carmakers are going after a captive audience in india. heidi: we are going to report from delhi after this very short break. stay with us.
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♪ >> you are back with asia edge. wealthier middle class. rishaad: those people want to spend money on things like luxury cars. pitching to india's new rich at the expo in new delhi. in$350,000 burning a hole the pocket can buy this bmw and tell their friends it is not just any old bmw, it is a bmw
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guaranteed to turn heads in the country when most vehicles are priced in four figures rather than six. -- makers arekers banking on a new class of the wealthy that are eager to show off that wealth. peoplee are basically who will want a luxury product. >> according to credit space, the number of millionaires and india is expected to surge to more than 300,000. with a growing pool of potential customers, the automakers are working at ringing down the price. volkswagen, mercedes, and audi have all open plants in india to become more competitive.
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>> the competition, still a competitive price. going back five years, you will see the price was too high, now not that high. more competitive, better pricing. reporter: one piece of the picture missing. this is the promotional picture at the auto show and this is a typical street and mom bank. taking out for expensive -- taking out an expensive vehicle on india's notably congested roads might require a gold-plated insurance policy. rishaad: the car companies targeting the rich and growing india middle-class. --di: it is knee falling in -- ey
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more than $1 billion. heidi: net income rising by 14%. is this how the force works? is this how the force works? the conference call. the ultimate arena for business. hour after hour of diving deep, touching base, and putting ducks in rows. the only problem with conference calls: eventually they have to end. unless you have the comcast business voice mobile app. it lets you switch seamlessly from your desk phone to your mobile with no interruptions. i've never felt so alive. make your business phone mobile with voice mobility. comcast business. built for business.
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♪ >> is just after noon here in hong kong. this is an of eight of our top stories. its lowest ever since 2014, the yen holding a one-year high. mining down even as oil climbed back up to $28 a battle. facing a bear market. donald trump and bernie sanders have taken the respective republican and democratic primaries in new hampshire. john kasich in a crowded field. sanders a clear victor of hillary clinton.


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