tv Trending Business Bloomberg February 23, 2016 9:00pm-10:01pm EST
team as nine senior executive's retire. the brand is struggling with quality issues. follow me on twitter. session just got underway. where having a look at what is going on. we have gains and losses when it comes to the chinese market. >> had looks like things are looking better. we start off in the red, but the shanghai composite up, the hang seng still under pressure. the australian stocks continuing to see pressure of 1.2%, consumer staples and min
ers weighing on the index today. yen paring some gains as well. i think we are still off from the session lows and doing a little bit better. the macro concerns and focus, china being one of them. reducing that risk, but that was the big thing that triggered a lot of the scariness in the mood among investors when it loaded by the most in six weeks. when it comes to the currency, we are seeing that is taking , fuji,on exporters subaru, toyota. tdk also falling 3%. looking a-yen, things
little less strong. we are paring some of the strength we saw this morning. gold we also saw falling a little bit, pretty much flat. if you look at the year to date of where cold has been, the bullion called a superhero. it could rally as much as $1400 an ounce if this risk aversion intensifies. it has been the best performer among commodities this year. two minutes past 11 in tokyo. ,onda announcing a shakeup quality concerns persisting eight-year year after the carmaker replaced its chief executive. the current chief executive speaking, assembling a team of senior executives. this is after a year on the job.
we are on top of this as well. a new lineup of direct reports as well, and indeed where having him up. moment explaining his position and the new team he as trying to get together. we have juliet with more on this. we are seeing these recalls persisting at honda. live pictures of the ceo reassembling his team. honda not only dealing with internal quality problems, but the safety crisis at its top supplier. shares are down on this announcement of a management shakeup. the company holding this press conference currently. let's look at the changes at the top, at least what we know. junehairman will retire in , part of this management shakeup, which will see seven other executives exit. honda shares have fallen 18%
during his tenure, april 2013, joining honda in 1982. if we have a look at the charts, this is showing how honda has underperformed its peers. the white line is honda share price. we have seen it fall 18% during his tenure. if we compare that to the blue line, which is toyota, share price has risen by 23% under the same time. 11% gaine line is the in the bloomberg intelligence index of global automotive peers. we certainly have seen quite a bit of a loss coming through from the share price under his chairmanship. the president is really trying to put his staff on the company one year into the job. the head of honda's china business becomes executive vice number two.d his
honda also recalling thousands of 2016 civic cars, months after introducing the most crucial redesigned model. honda used to be the biggest customer for takata. since 2008, it has recalled vehicles worldwide to replace 30 million because of these takata airbag inflator's. we know the cause of death stone being investigated. -- we know that the cause of death is still being investigated. the announcement happening now in tokyo. we will have more on this story later on. we do want your opinion, tweet us your thoughts. getting back to oil, horrible time. taking another tumble at the a ring in oil minister said an agreement by saudi arabia and
russia to freeze output was ridiculous. he said the proposal to cut production at january levels puts unrealistic demands on iran as a returns to the market. erin clark is in tokyo. what else has the rainy minister said. -- the iranian minister said. >> right. the market reacted quite strongly yesterday, both wti and brent fell 4%. wellre both down today as after the iranian minister calls this proposal by russia and saudi arabia to really freeze production of january levels ridiculous, and he said it placed unrealistic demands on iran. it -- to a lot of people's hopes of there might be some grand bargain between opec and non-opec users to freeze production. the context is saudi arabia and russia producing a near record
levels. they are producing 10 million barrels a day for each of them. on the other hand, iran is returning to the market after international sanctions were lifted, trying to regain market share from only producing 2.9 million barrels a day. they said they want to boost reduction by 500,000 barrels a day over the next month or two, and a million over the next year. you have those two forces battling it out for market share amid these low prices, and that is what is causing prices to fall yesterday. the thing is opec has essentially been following a saudi-led strategy to drive higher cost producers out of business. where are we at the moment with that? >> right. it is interesting. a few minutes after the remarks from the iranian oil minister, his saudi counterpart spoke in houston. he was quite clear and said that saudi arabia would not cut
production because they simply don't trust that other opec members or other producers in the global market would also cut if there was some sort of grand agreement. he did reiterate commitment to this proposal announced with russia last week to freeze production at january output levels. ishink the way the market reading this is that it is a continuation of saudi arabia strategy to essentially flood the market and tried to drive out some of those higher cost producers. they are beginning to see results, bankruptcies for oil and gas producers in the u.s. are up. production has declined in the u.s. slightly, so they're starting to see that strategy bear fruit. the question is how long does it take to really drive out enough producers, and once you've done that, how much do prices recover. those are the two questions that analysts and people in the market are looking at now. rishaad: thank you very much indeed for that. let's turn to some of the other stories we are following,
including, well, it's all being heated around this debate regarding the iphone and its unlocking in washington. republican and democrat senators are proposing legislation that would force apple and other companies to comply with government orders for access to encrypted data. bittermes amid that standoff between apple and the fbi. the government gaining access in a phone used by the san bernardino shooter. a republican senator says apple is breaking the law and it is not something that can be applied sometime and not all the time. the dispute is part of a larger debate within congress, the administration, and the tech industry about whether law enforcement and intelligence agencies should be able to access encrypted communications. challenging times for j.p. morgan.
revenue from sales and trading has tumbled 20% this year. wall street's biggest firms have been hit by the global market route, while j.p. morgan slump -- also exacerbated by boosting revenue at the time. the divisions chief, daniel kendo, says lower earnings from capital equity markets underwriting may contribute to a 25% the client in the divisions fee revenues is quarter. furthergan also facing investigation into conflicts of interest in the way it sold and used its own investment products. sources say indy and a security regulators are investigating j.p. morgan on how they handled investment. the bank already agreed in december to pay more than $300 million to resolve allegations made by u.s. authorities. hugo boss shares plunged after it announced that its profit would decline by at least 10% this year.
the german company says their earnings, excluding special items, would decline by low , ande digits this year also will be able to reach its goal of an adjusted operating margin of 25%. company operated stores have been weaker than expected, mainly the u.s. and china. its stock plunging 20% in trading. to stem slowing sales, hugo boss is pulling back distribution at u.s. retailers, where the company cited highly professional levels of discounting. it is also adjusting prices in asia. the company joins early -- other luxury brands and feeling the follow-up from sluggish demand in china. the revision is the second in less than six months for hugo boss. on the website, were looking at how china is making a better beagle in a gene editing raise.
is reshuffling his team, nine members and top management set to retire. it is a declining market, but we have honda shares declining with it. outpacing those declines on the broader topics, 2.5% down at the moment for honda. to get you back to the markets, the currency markets, , plungingpound deeply, the lowest level for a while. the lowest since march 2009, -- below dollar 40 $1.40 and that is weighing on the currency. the weaker pound could offset the uk's other economic frailties and helpless inflation. sterling can travel a long way and a crisis, lighting the impact on sterling, the scottish referendum last year. our next guest says the risk of
britain leaving the eu could keep sterling volatile in the run-up to the referendum in june. strategist at fx the bank of singapore. thank you for joining us. it is surely not priced in, the breads -- the brexit. we will surely see more weakness as we head towards june. they will be more volatile. only certainty is that sterling will be volatile and the run-up to the referendum. polls are showing thed results, but overall message there is that the results are too close to call. sanguine over the immediate outlook for sterling. in the near term, the run-up to the referendum itself, the market will ignore the data, but
the data for the u.k. continues to show the fundamentals are ok, are sound. once the brexit risk -- the and ifdum happens -- there is no brexit, there's room for sterling to recover. rishaad: what are your forecasts? ever since boris johnson decided campaign, whatve are your thoughts? it is difficult to forecast sterling in the run-up to the referendum. it will be driven by headlines itself, but i think over all it could decline further, perhaps to $1.35, driven by the headlines, but i think it is interesting to note that the markets are still assigning a 30% to 35% possibility of grexit brexit despite
the headlines itself. rishaad: let's look at the other current is. euro get any impact? >> it does have an impact, but overall the impact is not dominant for the sterling, meaning a bigger negative for u.k. compared to europe itself. perhaps this explains why the euro-sterling continues to climb even though we see increasing impact on the sterling as well as the euro against the dollar itself. rishaad: this is also contingent on what happens with the dollar itself. economichave clear cut good news coming through from the u.s., signs of inflation, but there are other things that are not that convincing. much is this inverse
relationship between the dollar and gold at the moment playing out? gold, again, all herecting the same drivers , concerns about the global economy in terms of global recession. also, concerns about the u.s. growth to a certain extent, and this is why the fed rate expectations have lifted the gold price. lingerrm, concerns will and there could be -- it's possible gold could climb higher, but medium-term we're still taking a few that the concerns about u.s. growth look somewhat excessive and overdone. as the market begins to realize that the pricing of the fed rate hike is overdone we should see a decline in gold price in the medium-term.
we remain bearish on gold and the medium-term. rishaad: you mentioned the yen. serial iselow one .1 that when the finance ministry intervenes? 1.10 is that when the finance ministry intervenes? >> not to be seen as manipulating the yen in terms of actual intervention, perhaps we need to see a much stronger yen than that before intervention comes in. , the breaks below 1.10 dollar-yen could go to 1.08 level. rishaad: thank you very much indeed from the bank of singapore. the stories making headlines, voting in the nevada caucuses has just got underway. the fourth stop on the republican presidential primary journey, polls are showing billionaire donald trump in front of his rivals by a double-digit margin, large
turnout expected at caucus sites throughout the state. trouble forpell florida senator marco rubio and texas senator ted cruz a nuclear defined by voter anger at establishment politicians. minister saysn beijing has the right to uphold its interests in the south china sea. he was speaking in washington after talks with john kerry dominated by territorial tensions and north korea's recent missile test. meeting, thetheir u.s. pacific forces commander told a hearing that beijing's deployment of missiles at 10 the south china sea into a motorized own. >> new radars on the reef over here, the runway, the 10,000 foot runway on the reef over here, and on fire across reef and other places, these are actions that are changing in my opinion the operational landscape in the south china sea. of a power plant in the
u.k. has collapsed, killing one person and injuring five others. regional fire authorities described it as a major incident with three people still missing. search and rescue teams were combing through a pile of rubble up to 30 meters high. the plant is about 100 kilometers west of london. it closed three years ago and was being dismantled. powered by over 2400 journalist and 150 bureaus around the world, this is bloomberg news. ♪ now despite property prices beginning to fall, hong kong does remain one of the most expensive cities in the world to live. what can we expect from the budget address later today? details, next. ♪
rishaad: 10:24 a.m. in hong kong. the territory's latest budget coming up in the next hour. do we expect to hear from the finance minister? the ninth annual budget since he became secretary, and he and the other lawmakers will be met by a small but rowdy band of protesters. he did say that 2016 will be a challenging year, faced with a deepening slowdown and china and an ever more uncertain global economic environment. let's take a look at that forecast for how to thousand 15 would pan out, gdp growth between 1% and 3%, headline inflation at three point 5%, underlying inflation at 3%. economists polled have forecast .hat gdp will be a 2.4%
one of the areas that they're the estimates. he's estimating the surface will be 38 billion hong kong dollars, but has gained a reputation and local media for being unable to estimate correctly. made lowball estimates in the past compared to reality. january, forecast was closer to $95.5 billion, taking governmentllion the is using to supply housing for the next 10 years, and also some accounting for a market that still leaves a surface far more than investment -- than estimated in the first place. rishaad: that is coming up in just over half an hour from now. just ahead on "trending business", next up las vegas.
,ishaad: a look at top stories oil sliding after iran's oil minister says of plan to freeze production was particular's this was ridiculous. saudi arabia and russia agreed to cap out on january levels assuming others followed suit. asian shares falling for a second day. sterling's plunge deep in, dropping below $1.40 to its lowest level since 2009. policy markers say the uncertainty of brexit is
weighing. the weaker pound could offset uk's economic frailties and help boost inflation. wall street's finest are not immune to the global route. j.p. morgan says trading tumbled 20%, no let up in sight. underwriting can see fee revenue fall by 25% this quarter. turkey, let's have a look at what's going on. dvonne: still pretty mixe bank here, sour when it looks at the regional benchmark a come off the lows, but still a negative territory. the shanghai composite flat. the nikkei 225 down two thirds of 1%. stocks continuing to tumble, down one and a half percent.
-- down 1.5%. philippinesdown, down 1.3% as well. seeing moreg pressure, down 1%. here are some of the big movers, china's resources, resource related stocks, oil stocks in play. to read swinging back once again. some movers here, we do see in japan as we head into the lunch break, fuji oil. we did see the ratings of this boost sentiment a bit. morgan stanley upgraded the stock and expects strong performance of 9%. they say improvement and petroleum products spread and the announcement of next year's guidance could be drivers for the stock. he also says lawyer or prices on the stronger yen will also drive
down fuel costs. see the oil plays very much happening now, cathay pacific and qantas rising, qantas as much as 6% in sydney. sharp iners in tokyo, focus once again. the sharp board meeting today to evaluate these two competing .ffers for this takeover bid over politics in this. sharp falling ahead of this meeting. it was rising the last couple of sessions. hon hai also down. we will have a look at the shakeup at the top at honda, quality concerns persisting after they change their ceo. we've had changes in nine executives, the chairman and eight other executives all leaving. what is the latest?
>> we heard the president speaking earlier this morning. pressstill holding his conference in tokyo, trying to put his stamp on the company one year into the top job. he said they will clearly defined roles for various divisions this after they saw their share price coming under significant pressure. the changes see the chairman retire in june, part of the management shakeup. honda shares have fallen around 18% during the 10 year. says have a listen as he that honda really is trying to clearly define these roles. >> we want to ensure more clearly defined roles and responsibilities and to ensure consistent strategy around the world. therefore, we will change the organizational structure to one
that allows simple and speedy decision-making. under the chairman, we have seen him have this job since april 2013, joining honda in 1982. if we have a look at a chart, it shows how honda has actually underperformed its peers during that time. that white line is honda share april falling 18% since 2013. kumbaya that to the blue line, toyota, gains of 23% under the same time. ande has been an 11% gain the bloomberg intelligence index of global automotive peers as seen by that purple line. really, this shakeup needed to turn around honda's fortunes. rishaad: thank you. having a look at the trials and tribulations that honda. i just want to know one thing. they're doing all this, trying to get shareholder confidence back, what else of they up to? >> the recall of the 2016 civic
vehicles, announcing they wi of these thousands cars, one of the most crucial redesigned models. that has seen a manufacturing error that could lead to engine failures. we had the recall of all those ricotta formerhe -- takata faulty airbags. they will keep production strong around 900,000, and once they fix the problem with the civic, they will look into bringing the civic into the japanese market. a lot of concern about takata airbags and quality control issues. rishaad: you mentioned takata, the chief executive saying they're not thinking of
providing support to the troublemaker of those airbags. akata trying to figure out how they're going to finance that. rishaad: thanks a lot for that. check in quickly on some other stories. singapore's economy was in better shape less corner than initially forecasted, services, weakening manufacturing, exports, 6.2%. services have been a support for the economy, slowing growth in one of the largest export destinations for the city state hurting demand for its goods. , china, spinning off drilling business, could chairman confirming the news. they did not provide details on the timing or the size of the stake that would be spun off. we have refiners struggling with the oil price slump. cnoc says they will keep oil production steady. shares of that and deutsche bank
, absolutely soaring, confirmed they are in talks about a potential merger. shareal would be an all merger of equals and would create one of the biggest exchange companies in the world. be a strong rival to the cme group, the largest derivative market. shares in australia retail, industrial, let's have a look at what's going, 4.8% down at the moment. in lineany's results with estimates. let's get over to paul allen. to get that decline, what did they do wrong here? >> on the face of it, absolutely nothing. the first half net profit estimates, 1.3 9 billion, revenue up, 4.7%, 33 billion. $.91 per share interim dividend as well. it is a very diversified company, retail, supermarkets,
home improvement stores. also have chemicals, energy, fertilizer, and coal production. if you're looking for a drive, perhaps that last one, coal makes up 30% of west farmers mers earnings.sfar remains challenging in the short-term, but take a look at the selloff, 5%. rishaad: sticking with the commodities complex, a solid first-half result early, but the stock has not been embraced by the market, has it? here, difficult to see with the bad news was exactly. yes, the first-half net profit was down 4%, but still better than what the market was expecting. the results of 319 million, revenue for the half, 3.3
billion, and working hard to get its debt under control, down to a shade over $6 billion. that will save them $88 million a year in interest. a metric time and the first-half down 47% to $16. still,n is to get lower $20 $.80 by july breakeven cost good when you compare that against the iron or spot price which is weak but recovering, $51 per ton, they're pretty well-positioned here. once again, the stock is off today. now to: from sydney , voting underway for the republican caucus there, polls suggesting donald trump as a double-digit lead over ted cruz and marco rubio.
megan murphy is following the race in las vegas and joins us on the phone. what would it mean for the republican race of donald trump wins by a large margin, as is being touted at the moment? ,> you can cut this both ways another big win for him in nevada saying he has the strength and momentum and will run the table coming into super tuesday. or you can look at it and say small states, unpredictable and say it does not mean anything. the truth is that it does matter a lot. it will keep him in pole position, keep in with the momentum and the man to beat, of even though a lot establishment republicans don't want to admit it, donald trump is the strong as candidate in this race right now. that we is it possible could see a surprise? it is possible we could.
we have early reports out of polling places in nevada of what we were afraid of, which is chaos. able toes, people not get balance, some allegations that people are actively supporting trump at the caucus sites, which is not allowed. it's possible in all this chaos that we could see something , but, a big latino turnout i think that would surprise most commentators. when you talk to voters out here , they seem to be supporting trump, at least in las vegas where he has a hotel. , we turnafter nevada to the big one, super tuesday, bigger and more diverse states in play. how does the dynamics of the race shift? is it essentially still donald trump sprays to lose here? >> it is donald trump's race to lose here, but what you will see is candidates like marco rubio
and ted cruz trying to get the core demographic electorate out. suburbanio targeting areas, wealthier voters, more educated, where he can try to block off delegates even if donald trump wins the share of the vote. with ted cruz, he needs to win texas. that is where he is from, a senator from, where he will try to rally his evangelical base of voters to deliver a win. if he loses in texas, his race is over. rishaad: thank you very much for that joining us from las vegas. a break, coming back, countdown to the hong kong budget. after the break, a look at what to expect. this is "trending business". ♪
hong kong budget. what are we looking for here? the hong kong financial secretary has said 2016 will be a challenging year and they're looking at a slowdown in china and an uncertain economic environment. he has been known for his giveaways that help domestic consumption in hong kong, the subject of a lot of discussion. what is your take on the budget this year and what they giveaways might the? he has given away 34 billion hong kong dollars last year. surplus, and a big chunk of this will be spent on freebies. retail sales have fallen by 3% in 2016.
more needs to be done to boost the message consumption. ,ther things include waivers and finally we expect to see more money spent promoting the brand as a tourism center. what about the long-term? there's been a lot of discussion giveaways helping the economy at all. one offs are not enough to boost the competitiveness of hong kong is a region. the policy chief by the chief executive started with references to the initiative. we expect to see some of those references materializes actionable. one issue has been championed by the chinese government to boost interconnectivity in the region, -- so hong kong
could play a pivotal role in promoting the expansion of the strategy globally. a lot has been done already, physical infrastructure with a link to macau and the express train, but unfortunately physical infrastructure is not enough. done tods to be increase the competitiveness of the region from the position of human capital. we will see more students studying in hong kong and more initiatives included in the budget. inalind: the occupy protest 2014 were driven in part by students. they were highlighting the issues facing lots of yen people in hong kong, the increasing wealth gap, the difficulty and affording property here. our new measures going to be
introduced? -- are new measures going to be introduced? have been behind some of the events we have seen in hong kong in the past. we deftly expect to see some targeted measures to try to address the social tensions, increasing social spending. rosalind: and also maybe for the elderly -- >> and access to education. his own forecast is very wide, between 1% and 3%, a wide range of areas. >> that is a wide range. 2.4%, making at the whole year at 2.5%. we see significant downside pressure, especially looking forward.
there are a number of growth headwinds to the region, including acceleration and china, outflows from hong kong, and problems in the housing sector. down and expect -- rosalind: how will that impact the figures for the year? >> significant surplus comes from indirect taxing from land sales and houses, so deftly a significant fall in the value that will impact government revenues and on the growth outlook for the region. rosalind: thank you. are waiting to hear from the financial secretary in less than 20 minutes. rishaad: let's have a look at
some of the stories making headlines. one of the candidates trying to , aceed sepp blatter jordanian prince insist that transparent voting booths must be used. in december, saif blatter was banned from football for eight years. a recall of mars and snicker bars, deemed unsafe for a customer inter germany found a piece of red plastic. we'll look at the impact on products made in the company's dutch factory, but does extend as far as vietnam and sri lanka. indonesia has destroyed 31 votes it had seized from philippines, myanmar, blown up and scuttled.
indonesia has demolished more than 150 boats in the ongoing campaign to deter foreign fishermen from incurring -- encroaching on indonesian waters. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am rishaad salamat. up next, are we headed for a currency war? g-20 five finance ministers looking at the conflict when they meet in china. more when "trending business" returns. ♪
rishaad: you're watching "trending business" on bloomberg. threat of a currency war could dominate g-20 talks in shanghai. steve engle's having a look at this gathering in a bit more detail. coordination is always achieved at these meetings, it just depends on the language and how fake it can be are how precise. >> there will be a lot of dialogue. whether there will be consensus and coronation is yet to be seen. we have people talking on the record to bloomberg about the agenda that has not been published, saying they will discuss ways to bolster the financial safety net for the global financial system.
we have full page bullet points as well we can bring up and see what the agenda will be, correlating existing resources such as foreign exchange reserves, regional emergency funding agreements, central-bank swap lines, real, fun exciting stuff. to push for more coordination and cooperation and dialogue from the chinese, which makes it more interesting. china is chairing. havead: the fact that they stewardship of this this year, how important is that? >> you can't keep quiet, right? you have visiting central bank governors and financial chiefs this weekend, and in september the leader summit also in china, so you can't do what has been done the last six months, not comment, not even be seen in
public. they have the devalue wishon in august, and since then they have been defending the currency. we had all the market turmoil at the beginning of the year, and the rest of the world is concerned about the direction, telegraph a little bit. one thing and focus on friday is a speech. rishaad: he has not been seen for a while. within 48 hours of that the valuation in august, his deputy was addressing the media. it is usually him. your member july 2005, i remember exactly where i was when they detailed -- depegged from the dollar. it is their policy
pronouncements for a much in the crosshairs? is not, there necessarily any major news that will come out of these officials who spoke to us on condition of anonymity, but we could get momentum for future moves out of the g-20. china will say all the right things, but it's about the action going for it. rishaad: thank you. that is it for this midweek edition of "trending business". stay tuned for the midweek edition of "asia edge". is ahead of age and strategy. "asia edge" coming your way next. ♪
sounds like my ride's ready. don't get stuck on hold. reach an expert fast. comcast business. built for business. ♪ studios in new york city, this is "charlie rose." charlie: bill gates is here, he is microsoft's cochair and cofounder of the bill and melinda gates foundation. he has gathered investors to put billions into clean energy research and development. the group known as the breakthrough -- they include mark zuckerberg, jeff bezos and more. a parallel public effort was also announced.