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tv   Trending Business  Bloomberg  March 9, 2016 9:00pm-10:01pm EST

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weekend. man versus machine, the machine won. best playerng the of a chinese board game. ,ollow me on twitter @rishaadtv use the #trendingbusiness. year,art of the hindu new jakarta in frame, as indeed the rest of the markets. asian stocks gaining for the first time this week, positive sentiment on expectations the ecb will boost stimulus. we already had a rate cut this morning. we have japan gaining 1%, turning positive for the first time this week, producer prices
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contracted 3.4% in february, in line with estimates. same story in china. the shanghai composite declining, extending yesterday's losses, down 7/10 of 1%. up. seng the cost be kospi up. .he weakening korean yuan oil, butbound and today losing ground, down 3/10 of 1%. see song this week after cap its
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same story with brent, managing to hold onto gains above $40 per barrel, but still coming down half a percent. news, cpi, pping numbers, inflation data from china. >> millions of chinese traveling, eating out, shopping, dining, food prices were a considerable element of this latest cpi report, a bit thanger than expected. bloomberg called for a 1.8% increase, down to the price of seafood, fresh vegetables, pork prices in china.
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2.3% is still well below the china's 3%.s of if those price gains are stabilize, and easing of deflation,er investment, profit margins, so cpi still well below the government's target range. this pickup and prices not constraining room for easier monetary policy at this juncture. numbers, the price of goods at the factory gate, producer prices in china, some slight moderation. our survey called for 4.9% contraction in ppi, and that's what we got, compared with 5.3% deflationary number in january, so this reflects higher demand
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expectations since late last year according to goldman sachs. all in all, no of alarming figures, the price of food always a key veritable in the chinese economic data, especially consumer prices and the fact that lunar new year holiday falls in the middle of this report. that tells you why we saw these price gains. if prices continue at a moderate place, then sensually all is well and the pboc can keep its current pace of monetary policy. rishaad: japanese power companies, looking at that later on in the show. we want your opinion. korea keeping rates on hold this morning. sprang and easing surprise. markets look ahead to the big
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one, what does the ecb do when it needs? -- when it meets. draghi expected to deliver the goods, but take a look at what we had so far. two diversion decisions, korea a close call, seven out of 18 economists seeing a cut, but keeping rates on hold. bok cited rising debt levels for keeping rates on hold. it says it has been rising to greater levels, also capital flows in tents of fine, weakening the yuan, also a reason for the bok to hold. low, consumption weaker, sentiment sluggish, global risks prevail. we heard this from just about every central bank. we are expecting to get more
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from a press conference in the next 10-20 minutes. in the meantime, new zealand central-bank surprising the market, cutting to a new record low, 2.25 percent. economists actually expecting the rbn to hold. inflation expectations, kiwi dollar, all reasons for more accommodative policy, also citing the potential for further easing. those two asian decisions out of the way, all attention shifting to frankfurt. friday, turning to mario draghi, want reassurance that monetary policy will remain the focus and boost growth in the block. expectations are high. he has disappointed before. he said in january that officials will consider more
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stimulus. all economists expect the ecb to cut rates further into negative, also to increase the pace and amount of bond purchases. once we have the ecb out of the way, the fed meets next week. closely watching their foreign counterparts, bank of japan meeting at the same time, and much of that focus on what more the ecb and the boj can do in terms of easing and the impacts on the dollar. trengths. dollars sha would support no move from the march meeting. rishaad: right, getting you to that story. japanese power companies and the reasons why, and a roundup of
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other headlines. >> shares have plunge, leading japanese utilities lower, a court in japan order two nuclear reactors shut down. operate the plants because of safety concerns. they will begin shutting down number three today. coldr four was put in shutdown on march 2 after an alarm went off. this deals a blow to energy after thehinzo abe 2011 fukushima disaster. ceo,wagen says it's u.s. michael horn, has quit. -- role will be field by filled according to a statement by vw. sharplyen shares fell at the open and frankfurt after
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reports that u.s. authorities are widening the inquiry into the omissions scandals. 3% after the wall street journal says the justice department is looking at the debbie's use of bank fraud and tax laws. in france, opening an investigation for aggravated fraud, following a preliminary inquiry. the man once known as the king of wall street has died at the age of 86. the former managing partner and chairman of salomon brothers transformed it from a traditional bond trader into one of the most profitable investment banking firms, pioneering mortgage backed securities and becoming the largest underwriter of municipal bonds. he often told traders they should come to work "ready to bite the -- off a bear every day." the cause was pneumonia. rishaad: we're looking at what china's middle class really earns and what they spend it on. have a look at it at
9:10 pm later, a way to pay for the potential merger with the operator of the london stock exchange. we will crunch the numbers for you. sluggish earnings growth this year and next, i chief asia strategist is with us next. strategist issia with us next. ♪
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>> welcome back it is 10:12 a.m. in hong kong. these are the stories making headlines around the world. fire korea reported to of two missiles into the sea in japan hours after releasing photos of what pyongyang says is a nuclear weapon. this is the first time the north has displayed what could be a nuclear design. western analysts say it is probably a mockup and not a functioning device. they have claimed to have
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developed nuclear devices small enough to be fitted on missiles. myanmar takes another step towards open democracy, naming potential nominees for president. the upper and lower houses of parliament and the military block will each name one candidate, with lawmakers voting later this month. is unlikely tont be aung san suu kyi, constitutionally barred from the post as her two sons are british and negotiations have come to nothing. be "above theill president." lula da silva has been charged with corruption, related to money laundering and hiding assets. he has repeatedly denied wrongdoing, stating investigators are targeting all editions and executives in a graft inquiry known as carwash.
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powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. well, a bit of a rebound for equities despite losses when it comes to japanese utilities, the first gain over all for the regional benchmark, but where is the real value in this part of the world? out. find tim is chief asia pacific strategist at goldman sachs. let's start with the latest news. number,this ppi -- cpi was there anything surprising to you. the cpi number was a surprise relative to expectations, but it though the driver for that was food prices, mostly volatile, not sure we should read too much into that. the ppi number was negative, but less so, so the market is keying off the inflection point.
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stringing a few thoughts are some signs of green shoots and terms of the manufacturing sector in china, for example excavators sales have become positive for the first time in about two years, besome signs that may china's growth momentum may be stabilizing, and that is what people are keying off of. rishaad: what is being done about that ppi number? capacity,nts excess bloated state owned enterprises, doesn't it? what has been addressed? has anything been addressed? degree, but a lot more supply side and structural reform needs to take place. the one encouraging statistic is there is some closure of excess capacity, for example in the steel sector and cement sector, but there is still a lot longer to go, and indeed if you look at meeting -- pc
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rishaad: the bulk of it is done now. >> correct. the broad parameters have come out over the weekend. the two basic messages, a clear focus on growth, maintaining growth at 6.5% to 7% with no allowance for shortfall below 6.5%, suggesting that policy will be more accommodative and stimulated in the short-term, continuing emphasis on the longer-term structural reforms, but not as much detail to act that up, so our take on this is that in the near term we will have more stimulative short-term policy, monetary and fiscal, but that the jury is still out in terms of the more structural, deeper seated reforms. theaad: the other thing is renminbi. presidente advising
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xi jinping, what would you be telling him? lay out our view on what is likely to happen, and that is we think there will be a modest pace of depreciation for the renminbi, 7.0 is our 12 month forecast, expectations the dollar will be strong and the trade weighted basket the renminbi is keying off of will decline, more depreciation versus that basket itself, and that gets his from 685 to seven. we think the pace is likely to be a modest and gradual one, and some of the pressure the market has been exerting and expecting with respect to the renminbi has been modified by the capital outflow numbers. when you make adjustments, about $40 billion of out lows versus $90 billion in the previous month, so some of the near term
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outflow pressure has moderated, and that has also been complementary with the renminbi trading range. rishaad: what does this leave equities in in china? health care, telecoms, technology, it was a crowded trade? >> true. wem a strategic standpoint are market weight and on the cautious side because growth is decelerating, earnings growth sluggish, and we think it is tough to make a strategic bouquets for china. that being said, given how significantly china traded down, , weto the mid-february low had a 13% recovery, but it is still lagging the rest of the region. we think there is some catch up they can take plays, partly because of the near term cyclical stimulus. attacked gold recovery ongoing,
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which continues into march, and that one of the best ways to adr'shat is through the in the united states, a clear catalyst for the other 50% weighting coming into the index at the end of may, so you have stocks which have had good growth, earnings revised up, valuations lower, positioning light, and we think there is something around $234 billion of net lying associated with the index inclusion coming up in may. rishaad: if it happens? >> it will happen. it is a done deal. we think the market will refocus on that. that is one of the best trades out there. rishaad: stick with this, if you would. back with views about the other economies in this part of the world. ♪
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thisad: you are back with is "trending business". we were talking china, bank of korea, a bit more negative on the economy? >> we would go with that view. that korea needs to ease policy further in order to promote economic growth. there are some challenges doing that from a cyclical policy standpoint. issue has to do with trade stagnation, and that's a deeper more structural problem than one that can be fixed by policy moves. in order to have short term cyclical stimulus, there are three options. fiscal, monetary, and exchange rate. it is tougher on the fiscal
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side. steady, so wes think the way in which policy will be eased is for the currency to depreciate. rishaad: it should be. we have a lot of capital output. >> those are being encouraged, by the way. we believe the korean yuan , 7% underwater if our currency view is right, and on top of that a more bearish consensus view on earnings growth. we lowered our forecast for 2016 plus 3%, soensus is we think there are more downside revisions to consensus numbers and in an environment of new earnings growth and where valuations are inexpensive and absolute terms, but not particularly inexpensive relative to other markets. there is not a time of upside for the korean equity market. we feel there are better areas in the region. rishaad: what?
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>> better trend growth and cyclical upturn are the indonesian, india, and the philippines. 6-7% over the next five years trend growth, and cyclical improvement and cyclical improvement in each one of those economies that we will think will map down onto earnings growth. the places we are expecting better earnings growth this year above the 1% expecting in aggregate would be in those three places, earnings growth of 10% in each case. aboutd: we were talking indonesia with michael price. he likes indonesia as well. >> as do we, a lot of opportunities. rishaad: the infrastructure part of it, but a bit overdone, hasn't it? it's better to travel than arrive? >> for the spending taking place in terms of actual spending in
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indonesia will be quite positive. last year there was some problems with the president getting his and place, and so some cabinet reshuffle which impeded implementation of economic lands. number two, infrastructure spending does not take lace on a linear basis. you have to do the planning first-come it in the digging, planning, and spending letter. the implementation curve is like , so indonesia had a big scaling up in terms of the money being spent in the fourth quarter, continuing in 2016. delta will beur significant, and we think that will drive earnings and help us stocks. rishaad: india? have reaffirmed our overweight. there are some near-term issues, particularly the sluggishness of earnings recovery, but overall india willink
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deliver 10% eps growth, and 14% next. relative to the other constrained opportunities, we think that is a decent place to be. how is your view on the philippines, constrained or otherwise? path tou look at cycles, the election has been something where the market has rallied into the election, because you tend to get stimulus and spending taking place, so near term given the election is in may, that ought to be a tail wind judging from past cycles. more importantly if you look at the different candidates, none of them appeared to be espousing a platform that is radically ,ifferent from the current one so we don't think it will be a big disruption in terms of the core economic trajectory, which also includes and hast spending on infrastructure and other stimulative measures. we think it looks good. rishaad: always a pleasure. >> thank you very much.
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rishaad: next, the nasdaq's shopping cart, and announcing its fourth acquisition. details after this very short break. ♪
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rishaad: a look at our top stories. asian stocks on the rise, oil at three-month highs, new ecb stimulus hopes today. japanese utilities dropping after shutdown to nuclear reactors were ordered to be shut down. jumped lastces month, the most since mid-2013, driven higher by the festive
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feasting. food prices surging more than producer price index dropping 5%. china cpi up by 2.3%. weakens, bank of korea holding interest rate fortnight consecutive month. earlier, the rbn drop its key rate to a low, 2.25%. tokyo closing out this morning. here's a look at the markets. stocks in hong kong gaining for the first time this week, but bucking the trend is pr ada. that is after rallying all week,
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hading 22% before burberry become a takeover target. this might be a slight correction. analysts had been long errors on the stock. long bearish on the stock. ithay pacific ceo saying will grow to capacity by 4% to 5% this year, but the company has been cut to hold at hsbc, losing 2.4%. .52%, --na up one 1.52%, the rebound in crude, not having massive layoffs amid lower oil prices. not rulen 1.4%, would out buying assets in media and telecom firms. this is how stocks traded this morning.
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we have these utilities feeling the pressure after a court ordered to nuclear reactors be shut down. 15%, theectric falling biggest plunge since 2013. tokyo electric falling more than 3%. leading the gains has been paper manufacturing, neap on paper up 6.5% after credit squeeze -- credit suisse increase the rating, after the rebound of group 5% in the previous session. let's take a look at oil, still up 2.5%. this is despite a ratings cut by ubs. we are taking a look at rio escue after that
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iron ore prices, after the record surge of 19%. rishaad: thank you. the latest reading on that china inflation number. prices rising the most since mid-2014, the cost of food yearng amid the lunar new holiday, more than observers were expecting. our chief asia economics correspondent with a look at this increase. welcomed, but was it down to everyone having a gargantuan feasted chinese new year? families rushing to buy pork and vegetables to stock up, and also cold weather, so we can't take too much from this one cpi. china is facing the same low inflation pressure as the rest of the world because of falling prices and a lack of demand. deflation,s, margin but the pace of deterioration is
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not getting worse. rishaad: it is at the margin, 48 months of this. i never heard of ppi being in such a sustained fall. it there isght here no circuit breaker. -- you're right. there is no circuit breaker. they are weighing expansion plans, profit, hiring plans, so the real negative for the chinese economy. of 3%d: it was a target when it comes to the consumer price index at least, what is that leave them? >> it leaves them with plenty of room to ease monetary policy. rishaad: does he get rid of the fear of deflation or further disinflation? >> certainly they are losing the battle on the ppi side. radical approach. that is why people are urging economist to restructure. side, they are not in
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as bad a spot. look at japan, zero, long way from their 2% target. 2.3% in the eu, u.s. not much better. question is, will it impact and flow through the economy. room if you have the they need to. rishaad: thank you. after a year of wild swings, investors in china have one thing they can count on, a late day rally. buyers intent on beating negative market forces. >> if you look at each of the past six sessions of the shanghai composite, we have ended the day with a late rally gain, investors buying up state owned enterprises. let's take a look at one clear example of this and try to figure out who these investors are because bloomberg has delved into the numbers. --se are the shares of
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listed in shanghai. the blue line is the shanghai composite. what this analysis shows is that as the shanghai composite hits surgebig lows, icbc, they , not consistent with the rest of the stocks in the market or many other shares listed in shanghai, so why are these selected names advancing? the theory is that the state entities are swooping in to prop up the market and the share price of these major chinese companies. this was last summer, july and august, when we saw that trillion dollar market route. you seeward to today, the shares of icbc, the white line, surging. the shanghai composite continues to move lower. this is something investors watch closely. given the national people's
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congress underway, it is having an impact on asset prices, perceptions of the market, and the trajectory of these markets. this npc is coming to an end, so what are the predictions. realistic trade, more realistic market movement, given the fact that beijing authorities won't intervene in the markets at the pace they have been in recent days. this is something to watch closely. near-term data has been relatively negative in china, the fact that market surged on bad economic data is kind of perverse what is at work? investors trying to get to the bottom of it. this very simple analysis gives you a glimpse into what may be happening in shanghai. rishaad: just getting now to breaking news, the language out of pyongyang grows more bellicose a day after the north
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said it had the ability to put a nuclear device on a ballistic missile. they have upped the ante when it comes to so, korea, saying that all agreements with the south have been nullified and they will liquidate all south korean assets, companies and organizations. also going on to say they will take special measures to it the south with political, military, and economic strikes. this is something that is likely to be increasing tensions in the korean peninsula. staying with korea, the economy and south, the minister of the bok saying the current interest rate is a, did of accommodating enough, adding to some of the
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other remarks being made by him earlier on, suggesting the economy in the south was improving, but the improvement was not as good as it was before. that's what we have at the moment coming through. north korea saying it will liquidate all south korean toets and upping the ante take special measures to hit the south with political, military, and economic strikes, likely to increase tensions there on the korean peninsula. ok, let's check on other stories. alibaba signed a five-year loan agreement worth $3 billion, planning to market the loan to other lenders and could boost its size to $4 billion to pending on demand. the u.s. regulatory filing says it will pay 110 basis points .ore than libor alibaba uses the cash to finance m&a. estimates,eat
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revenue rose by a half to $370 million, the publicly traded company, jack dorsey says he remains optimistic on growth. , theck word on qantas airline helped by a week australian dollar and cheap oil. the carrier is benefiting from increased travel to australia, and optimistic for the future as well. he said qantas is in a good position to return money to shareholders. the business is producing a lot of net free cash flows. the vast majority will be returned to shareholders. we have the best balance sheet we have had in a long while. bought a load of heavily innvesting products come so in a position to return a lot more to shareholders over the next few years. rishaad: we've been talking about the potential merger with
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the london stock exchange. they have perhaps found a way to pay for part of it, selling its options market to nasdaq, $1.1 billion under consideration. what does this mean for the nasdaq? what does it bring to them? becomes the biggest options exchange operator and the united state 40% market share in the u.s., six options exchanges. we will see if they consolidate those going forward. i doubt it. ,hey still don't have the vix the fear gauge. rishaad: the volatility gauge. >> based on the s&p 500. they don't have anything to compete with that. 's main product. rishaad: we cap talk about
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nasdaq without talking about deutsche forces intent to buy the london stock exchange. where are we with that? waiting,g pattern, maybe early next week they will reveal terms of the merger. merger. boorse talking rishaad: lurking in the centers, international exchange. >> lurking in the wings, not the shadows surely. putting outically their books and seeing if they want to put in a bid. they will wait to see what deutsche boorse and lse will agree to before going forward. it seems to be all go from there. rishaad: there seems to be nothing going on whatsoever, possibly another boorse? >> could be. things go in ways. if you years ago there was a lot activity.e m&a
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they are like national airlines, a lot of politics and native feeling that comes into it did we will see how many deals go through. , there is that side of it, too. see more activity, but whether this gets approved by regulators, we will have to see. rishaad: we have to take a break. coming up, a $1 billion plot to rob the fed, and why the money trail leads to casinos in manila. back in a few minutes. ♪
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>> welcome back. it is 10:45 a.m. in hong kong. these are the stories making headlines around the world.
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japan has ordered the shutdown of two nuclear reactors, dealing a blow to the prime minister's engine e.g. plans. they cannot -- the prime minister's energy plans. number three came back online in january, number four was put down in a cold shutdown after an alarm went off. stock plunging the most in three years on the news, still down by 15%. japan's other electric companies also sharply lower today. donald trump making overtures to the republican leadership as he 60 consolidate his front runner status for the party's presidential nomination. donald trump says he had a conciliatory discussion with paul ryan, the to respect each other. ted cruz onesaid about 100 delegates after donald trump one about a hundred delegates,
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putting him higher. pictures released showing damage to one of google's cars in the bus it hit. the transportation authority released the video in a public records request. suvlf driving lexus sideswiped the bus at low speeds , accepting partial responsibility. cause says human drivers similar accidents all the time. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. now, an attempt to steal almost $1 billion from the federal reserve link to can seen as in manila most of the money is safe, but almost $100 million missing in one of the biggest cases of potential money laundering in the philippines. our reporter at large is with me now. it is a murky story. where does the trail go? >> it starts in bangladesh. cyber andstory about
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vulnerability, and bangladesh is sort of vulnerable. here is a country expanding economically, built up foreign reserves, but does not really have the infrastructure within bangladesh to protect itself. the bangladeshi central-bank has parked some money in new york. rishaad: a billion dollars? >> more than a billion dollars. it has been hacked. the hack went into the central bank and sent the message to the new york fed saying we would like to transfer some money to the philippines, and the message was sent using the normal swift protocols, international codes ,hat are used for transactions international transactions. the newark fed acted on this instruction and send the money to a bank in the philippines. the bangladeshis said the new york fed should have checked record them to make sure this
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was supposed to be done. the new york fed apparently didn't, and so the bangladeshis want to take legal action against the new york fed for sending the money over. there was a couple of transactions, amounting to nearly $1 billion that nearly made it. rishaad: nearly, but how much was stolen? >> what has been stolen is 81 million u.s. dollars sent in the first transaction to the philippines, winter bank him and from the bank it went into the account of a chinese-filipino businessman who has links to the casinos in the philippines, and that money was then somehow put backut that -- into the bank account, and some of it came to hong kong, and someone to sri lanka, where was recovered and went back to the bangladeshis. that was the first transaction,
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which was successful. then it looks as if they tried another transaction, this time for $870 million, but this one was boiled by the new york fed, which didn't act on the swift protocols that had been sent. rishaad: why the philippines? does it have any implications for president aquino? turn a singly risks his reputation. he has been trying to clean up the philippine reputation, but they set up this anti-money-laundering counsel, but in 2012 lawmakers got together and lobbied the government not to include casinos among the institutions which have to report suspicious --nsactions to the monday money-laundering counsel. when you think one launders money come you think race track or casinos, and it's not there.
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that's why does look shady. rishaad: murky. thank you, david. coming up, a trade spat between india and the european union, the focus is drugs. we will have more. we are live in mumbai next. ♪
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rishaad: you are back with "trending business".
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india may challenge the european union for tougher trademark regulations. let's get over to mumbai. tell us more about these new rules coming out of the eu. there talking about the $15 billion garment industry in increasingly important global supplier, but bogged down by quality issues after the u.s. fda banned a series of factories producing medicines due to inadequate standards. have regulatory some indianbanning plans for producing drugs for their own markets. u.s.,spections from the eu, and u.k. have only increased across the pharma industry. allowles from this month
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owners of eu trademarks to prevent the transit shipment of goods and medicines without authorization. india may challenge the stricter trademark rules that could stop exports of generic drugs. they want them to remove the though shipments, even the eu has signaled that imports of medicine won't be affected. rishaad: thank you. battle of the latest man versus machine, and a victory for artificial intelligence. googles program beat the world's top player in the ancient board game go. it was created by google's deep mind the vision. match was, this
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streamed. it got more than 1.3 million viewers. the next game is coming up soon. they will be showing all those on youtube. deep mind is an artificial intelligent system. google is a that leader in the next generation of supersmart computing. let's take a look at what the deep mind founder said. we landed it on the moon. , also interested in artificial intelligence, congratulations. we thought they were 10 years away from achieving this. this was a surprise when because artificial intelligence -- rishaad: this game is more complicated and intricate than chess. itself has many
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more squares for more possibilities. , butoks more simple actually is a more complicated game. do we need to worry about ai taking over people's jobs, humans, or just doing one thing? rishaad: we will keep an eye on that. that is it for "trending business". "asia edge" next. we will recap the big stories of the day. it is all about central banks. "asia edge" coming up next. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: ursula von der leyen is here. she is the defense minister for germany. she talks with american authorities in washington. we are pleased to have her on this program to talk not only about germany's role around the world, but also critical issues facing relationships with the united states, the european union, russia, iran, and other countries. so i begin with this question though, you entered politics in 2001. you are a doctor, gynecologist. your husband was a professor of medicine. you spent time in ama.


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