tv First Up With Angie Lau Bloomberg May 1, 2016 7:00pm-9:01pm EDT
signs of stability. new data suggests china's economy -- indicating little need for added stereo speared economics under pressure. the government says it is prepared to act if the eyyen rallies. first-half profit rises but misses estimates on dad deb -- bad debt. to read train an upgrade to tackle what the prime minister says are deep and structural changes. lau.day. i'm angie
welcome to "first up." we get straight to breaking news from south korea where the current account surplus widened to $10.1 billion in march, after it recorded a surplus of $7.51 billion, better than expected. we will check in on how korean markets reacted. to newasia-pacific, zealand, that market is open and falling 1/5 of 1%. 69 u.s. cents is the level for the u.s. dollar. rba decision tomorrow. counting down to the opens in australia, japan and korea. sydney pointing to a lower open. 76 u.s. cents. let's get over to japan. checking futures trading in chicago. a big drop for futures and indicating a lower open at the start of the session.
this, after it took a market holiday on friday. this is really the first chance for equity markets to react to that boj surprise decision to keep things as is. japan yen 106.65. continuing to strengthen there. lots of closed markets to tell you about today to mark labor day. china, hong kong, taiwan, singapore, thailand, malaysia and sri lanka and vietnam. our top story this morning, here in asia, china's factories are exhibiting more encouraging signs of stability, and that implies further stimulus may not be needed for the time being. we have got stephen engle looking at the latest pmi numbers. it looks like things have stabilized. we have gone beyond the lunar holidays. now we are into april data, so there is stabilization.
some of that targeted easing working into the system. at least to your point that perhaps as economist are increasingly thinking not predicting another pboc rate cut until later on down the road because this has been the recovery based on increased lending and construction. in particular, and housing. instead of focusing on deleveraging in the economy. really pushing this kind of stood minister get the economy going on and is working. look at the manufacturing pmi at 50.1. angie: this is 3.5 years worth of weakness. stephen: there was seven months below 50 for the manufacturing. this is the official pmi. the more private surveys tend to be bearish. in march,big pop up not big -- still barely above 50 -- but much better than the the fourth had in
quarter and the first quarter. april showing continued signs of stability. angie: as for stimulus, if not now, when? the consensus is for perhaps the pboc to revisit another rate cut if needed. they are in a watch and wait period. not till the fourth quarter. the benchmark one-year lending record low..35, a but most economists expect if things do start turning down into the fourth quarter, could be cut down to 4.1%. right now what we are seeing is strength domestically. some index of new orders in the pmi stood at 51. export orders and imports showing the external picture still weak. so, employment showing factories are cutting workers. so, there are some clouds on the horizon. angie: thanks. checking other headlines right now. the casinos are showing increased signs of stability.
its operators shipped their focus to attracting more casual gamblers. we are expecting a dip of 13%. gaming revenue dropped only 9% to $2.2 billion. as casino operators have been encouraged to diversify. halliburton and baker hughes is said to be prepared to call off their $28 billion merger with reports that an announcement could come today. the deal has met stiff antitrust resistance from regulators in the u.s. and europe. deadline at the end of april was set. if terminated, how -- halliburton would have to pay $3.5 billion in fees. oil producers are considered a deal to freeze output but mark mobius says there iso need. some analysts are warning oil mady tumble to $30. but mobius is betting prices
will rise. >> i do not think you need a freeze. you must remember that the demand for oil continues to rise. it is not going down. globally in the u.s. and globally has gone down precipitously. the supply has got to diminish despite what is happened in the middle east and the demand will continue to rise year, and the2% a commendation of this means we will see a higher price going forward. angie: you can watch more of that on our new show " bloomberg markets middle east." has kicked off earnings that australian banks reporting slighter weaker than expected first-half result. paul allen right from sydney right now. run us through the numbers.
what do they tell us? paul: first off, earnings were actually up 3%, but it was not what the market was expecting. billion was delivered and the average estimate was for $4 billion. it was dragged odown by the institutional arm. four major exposures according to westpac worth $252 million weighing on this result. the ceo says this is not a sign of malaise. he calls it a few pockets of stress.he's positive for the australian economy. a couple of other drag factor spirit all the major banks in australia have been capital raising. one capital ratio up to 10.5%. net interest martyr weaker than expected, down to 2.14%. interim dividends from westpac, that did come in as
expected as 94 cents on the dollar. it is a big week with anz and national australia bank reporting earnings this week. angie: paul allen live in sydney. you can get more on all the days top stories at our digital destination -- bloomberg business bringing together the best of bloomberg news. this week, bloomberg television and new regional content. also on bloomberg.com, it is crunch time for medical turned out -- for malcolm turnbull. but indian bond investors turned bullish as the rbi governor shows them the money. that is bloomberg.com/asia. check it out. the japanese government says it is ready to act if the yen's rally continues. it is now trading in the 106 territory and the opposition says abenomics is failing. where does japan stand now?
its finance minister again saying that one side - speculated movement in the dollar-yen rate is " extremely concerning, a warning that he will be watching currency movements very closely." that he will take action as they may be necessary. timehis is not the first that japan, japanese policymakers have warned about positively acting against these currency movements. but it is worth mentioning that it is the first time they are saying this when the japanese yen is at such levels. it hasn't been at this level in more than a year. it is at an 18 month high after refrain from further monetary easing, going against market expectations. now we are seeing the japanese currency gaining strength. in the past year, it has gained
10% against the dollar. also, we are seeing a dollar weakness is also adding to the yen's gains, because with the fed just frustrating dollar bulls by reiterating it is in no rush to increase interest rates, -- angie: we have that weak gdp, too. sheri: now we see the pressure on the japanese yen to blimb -- to climb against the dollar. the gap in real yields. the effect is narrowing. we are seeing more support for the japanese yen. consumer price pressures in t he u.s. building. this is making things more difficult for japanese policymakers. now we're hearing if central banks do not act and sit on the sidelines, credit suisse expects the yen to climb to 90 dollar.
japanese markets were closed on friday for the holiday but they are coming back on line in an hour. angie: doing some quick calculations ,5% drop at the start of the session. look, policymakers under fire, increasingly at home and abroad. the number of critics are growing. sheri: those commetns com -- comments come just as the u.s. has released its watchlist. they have put japan among other country in their currency exchange rate practices watch list. to past is among china, germany, south korea and hey juan. -- and taiwan. currencysays there practices need monitoring because they could provide an unfair traded manage over the u.s.. so, or according to the nikkei report, this treasury report doesn't in any way constrain japan from acting, but the report does note that in japan,
all policy leverage available, including fiscal policy and abenomics has come under fire. we are hearing japan's opposition leader saying that abeomics has failed because relies on monetary and fiscal policy instead of structural reforms. there needs to be more action on ow, boostingr private investment and raising productivity. the problem is that abe hasn't done that. angie: we need abenomics, not kuroda nomics. new data suggest that china grew last month. chief economist coming up next on "first up." ♪
in whole:. -- in hong kong. >> china says it sees signs of improvement in its relations with japan. beijing commented after -- met the visiting foreign minister. they share trade relations worth more than $340 billion but ties have been strained by territorial disputes and japan's decision to beef up its military. is expected to be expelled from parliament today for leaving the country and not paying his debts. $1.3said to owe more than billion. he is living in the u k and has offered various funds to prove he will pay up. delhi has asked britain to send them back to india.
japan has to abandon a satellite that was designed to study black holes. launched ins february. contract was lost in margin scientists think flawed software costed to spin out of control, breaking off its two solar arrays. it was a joint effort between the japanese aerospace agency as nasa. 2400 journalists and 150 bureaus around the world. this is bloomberg news. ck look now at the key events coming up in asia this week. hsbc releases first-quarter earnings on tuesday. stuart gulliver has been cutting jobs and shedding unprofitable businesses. 8sbc posted a loss of $85 million doing a fall -- due to a fall in income. on tuesday, the international monetary fund releases its latest report on economic outlook for asia.
it is expected to address the china slowdown. we will hear from the asia pacific head once the findings are made public. alibaba reports fourth-quarter results on friday with sales expected to jump 33%. revenue growth expected from rising china retail and increased monetization as mobile shopping and advertising. party also sees rare congress in north korea. the first meeting of the workers party since 1980, and the first under the leadership of kim jong-un. they expect to see kim shuffle his inner circle and consolidate his grip on power. he may also order a nuclear test around the event. joining us now to discuss the tree drivers is the -- the key drivers is the anz economist. let's get straight to chinese numbers paid you have p -- you
have pmi expanded. is it enough to be a trend? is it sustainable? it probably is enough to be a trend in the sense that we have other data that was told us the last few months china has picked up a lo t. the steel pmi data, sector is doing particularly well. there is some concerns about what that is going to do to the spare capacity which is apparently being close but maybe not permanently. the short-term indicators i'm trying to continue to look relatively good. angie: can pboc hold off, then? they certainly can. they have started to restrict liquidity a little bit in the money market. and i think that is and appropriate-- an response. it is difficult to see them
providing any easing steps while we are seeing these macro events going on in the form of continued strong money growth, a good rebound in the sectors which have been weak. while, at the same time, we have started to see a drift higher in terms of default and stresses in the corporate bond market. i think that combination keeps them very much sidelined. angie: the thing is, we have got that rising yield on on short debt. that is a concern, no doubt. ook, it is a concern but i think we agree that credit risk in china has been miss trust historically turned we are going to see corrective developments. and that is what we are seeing. also the fact, it is occurring with a pretty modest but a bit of a selloff in the government bond market is good news, because at least that re-pricing is occurring when the economic environment is a little better rather than when the environment is deteriorating as well. angie: it is a little
counterintuitive. if things are getting better and economy for china, why would you morereprice debt at a much negative perspective? look, i think it is all about the cost of credit and the availability of credit. if the economy is getting better, it is very easy monetary policy starts -- over the last 12-18 months, we will start to tighten up. we have seen some hints out of the pboc. i think that is what markets are responding to. angie: ok, we have got a strata, rba decision coming out tomorrow -- in australia. what is your expectation? richard: i do not think the rba will move tomorrow. the last inflation number was very low. all of a sudden it catapults australia into the realm of other countries which are facing uncomfortably weak inflation. i think the reality is, you need
to make a case that monetary easing is going to help return inflation to the target. i don't know of any good argument for that at that point. activity side of the economy is doing extremely well and the labor market looks ok, i off ande bank will hold try and look through a little bit of this low inflation data. angie: 1.5% year on year. 50 year low. it was a surprise. it is not necessarily the 1.5%, which matches global levels. it was the negative -- it was so off. richard: yeah. so, it's hard, i mean, given the degree of the surprise, you look at the detail of the numbers and actually downside surprises across a range of sectors left domestic inflation, then forecasters thought less imported inflation given the aussie had been depreciating for
most of the past couple years. less imported inflation sent forecasted thought -- that forecasters out. relatively weak wage growth, range ofps across a countries. as i say, the reality for monetary policy is you must have an expectation of a result. you look at the bank of japan, a number of years into an experiment of easy monetary policy, no apparent sustained inflation dividend from that. either you have an uncomfortable discussion with the market why you explain why you are not easing. or you ease a a few times and then have the discussion. prices are around 10% or 15% higher. angie: good talking to you. anz acting chief economist live from sydney. coming up next, not all doom and gloom. singapore's prime minister says company should take a long-term view on the slowdown coming up next. ♪
welcome back. you are watching "first up." it muste has been told urgently transform its economy to ensure jobs and continued growth. the prime minister says globalization and technology is forcing the country to review how its business is done. life right now to singapore to haslinda amin. how is singapore responding to these tangent -- these challenges? about reachw, it is raining upgrading the skills of its workers. as you know, disruption is now a buzz word. we are seeing the likes of uber, airbnb, all about the. they disrupt the economy. it is no longer business as usual. technology allows us to do things differently. there is a need to reinvent certain industries. here is what the prime minister
had to say. >> the only way to do that is to transform the economy, create new opportunities and opportunities not just erarn a pay, but to upgrade ourselves so that we can do more challenging jobs. and that means restructuring our industries, that means we shaping our jobs. -- reshaping our jobs. has: the urgency is real. singapore grew 2.1% last year, the slowest pace since the financial crisis in 2009. after that, -- add to that, an aging population, tell you labor market and global competition and a slowing china -- angie: where are the opportunities in singapore and where the growth sectors? has: you have to look at the technology space. facebook,of apple,
google. they are expanding in a big way. their operations are growing, they are hiring more coders. so, singapore will have to respond by transforming its industries and create new jobs. now, it has to do it fast as well. jobs have always been at the heart of singapore's transformation. it set up a committee on the future economy but some economists say it's now much harder to retool the economy. it is no longer about picking winner sectors to prop up growth. they are a lot more constrained, unable to tap talent as freely as before. so, it is just a tougher environment now. angie: the cold reality of it all. challenges ahead. thank you for that. trading gets underway in tokyo again today after the long weekend. but if you're long japanese
angie: it is 8:30 in tokyo. we are awaiting the start of the open in japan. it is expected to be quite a fall, 30 minutes away from the opening of trading there as well as south korea and australia. stories, china officially saying its factory gauge, seeing signs that economy is stabilizing. forout this morning at 50.1 april, just under the average forecast by economists we surveyed. and conditions are improving. extension adds to strength of stimulus to avoid housing prices or flooding sectors with cheap credit.
shows -- the yen rally shows one of six near an 18 month high against the dollar. the currency surged after bank of reeve -- the bank of japan refrain from stimulus last me. the government will take action if necessary. not off to ankers great start. rise in cash profit in the first half, trailing estimates. also growth and mortgage loans, bad debt almost double on the year. but it is up the about the australian government -- economy. in by over 2400 journalists 150 news bureaus around the world, this is bloomberg news. let's check in on markets in the asia-pacific, to new zealand we go. the kiwi dollar is looking like this, $.69, seeing losses of 1%
counting down to the open of new zealand, south korea, australia as well. futures are better than expected . almost expanding pmi, first check in months from china, biggest trading partner for australia. that is going to help lift that a bit for the aussie dollar, but still seeing futures in sydney pointing to a lower start at the open. the big stories over in japan, futures trading in chicago. check out that drop. that is just a touch, we are seeing the strike -- slightly strengthening against the dollar, but 106.40 right now. of action,short japan reopening, and most indications, it will not be pretty. david: yeah, it is not. as you mentioned before the break, you feel the long position in japan, you may want to look away.
so 30 minutes to the open. futures talking about the contract traded in chicago. what i have here, can we get a close up, please? just a little bit, just to show you. wei is the miss pricing, price. contract,e osaka 60,330, closing at triple six. on thursday, that is a miss pricing of 2% drop. if you take what angie was pointing out, chicago futures, or the one in singapore, let me just get to the singapore number. we are roughly at 16,000. you do 2%, add a little 300 points lower, that is what you get. this is where we are. futuresain please, the contract at the moment. 666just do the simple math,
on thursday, roughly 80 points higher, but that is a 500 point drop maybe. we are looking at a fairly sharp drop at the open. if there is any miracle in the next 45 minutes or so. this mostly comes down to dollar-yen. we look at the long scenario, we take back to levels of october 2014. the fibonacci retracement, take yen row of 2011, dollar back in the summer. and look at the payoffs. we just broke this very important retracement level of 106 .60. that is important. elsewhere, a lot of other things. we are following pmi in china,
very good job wrapping things up with this. korean exports, bad news, 16 straight months dropping. , and a lotight there of this coming down to exports in china, down 18%. exports to japan down 25%. to south america down 40 percent. not exactly starting off with good news. let's go on to something else. angie: you could say that again. thank you. take a look at what else we are following with heidi. mitsubishi motors still having scandals. the nikkei news say the many slump $45 each month. 51%. tumbling mitsubishi motors has lost half of its market value since the scandal emerged two weeks ago. the company says its very existence a be at stake. sharp is cutting 2000 jobs for
management and battery operations. their new honor, fox,, is looking to change the company. they post an operating loss of 1.6 billion years -- dollars, but it could be as high as 2.3 billion. south korea got more than expected, shipping smartphones dropped 2.4%. imports are the same as last year. the traded ministries and says the global slowdown and lower oil prices will make export conditions difficult in may. and global port operators say they avoided a hard landing in china, but growth despite economic conditions. they rely a geographically diverse markets. they expect a return to growth in some european markets, and china remains a challenge. >> we are in china, many locations, jintao and others.
you have to understand, china, china's biggest challenge in my opinion is cost. we are ranging 20% in labor. charged every year for the first seven years. what china is doing is curbing costs. it is the only one. haidi: that was a look at stories making headlines. angie: nothing seems to be able gold's current shine. yvonne man is taking a look at this. gold is up something of a tear. you take a look at the past week or so, you can see momentum building. at the golden hearing yellow. -- you look at the gold here in yellow. this was on friday, quite a bit of an advance, two months or so.
thursday, we trackback to april 28. this is what we saw, this divergence when it came to the dollar index shown in green and gold, when the two paths crossed . and what happened, a double whammy on the dollar. we thought the fed dovish when they kept rates on hold, softer eco-data coming out, so u.s. more cautious when it comes to the second rate hike. and the boj's running markets -- stunning markets. more pressure on the dollar, so we see fall back, divergence to the rest ofd the week. those are huge issues that are going to support the price of gold and silver as alternatives. raw a look at the other materials as well. we have silver. that is also on a tear. we have seen the diversions as well with the dollar index, and
silver reaching to its highest level in more than a year. people have been quite bullish on that, i believe the hedge fund. when it came to the gold net lost, the hedge fund that mr. the party, they were stepping back from gold heads. since they were bullish 30 back in january. we have seen that increases in gold holdings until the last week that ended on april 26. that actually trimmed 184,000 futures and options contracts, we hit 184,000. this is a 2% drop when it came to those net long. that is a signal traders are cashing in on profits since we have seen this old rally, but on the other hand, we also sought short that declined. declines.ets the wages are falling for the first time in six weeks. the bloomberg
precious metals index. on quite an it is tear. this is how we saw this rally across all raw materials. 23% rebound this year. this is the biggest gain the have seen on this index in a decade. still looking pretty good when it comes to the gold, the silver , and the raw materials across the board. angie: yvonne, thanks. delta airlines has a new boss. this is after eight years of the president. he plans to make delta a more global airline. things, one, we will continue to do what we do and running the best airline on the prep planet, so we will do better at that. invest in the products, operations, to make sure reliability and service levels, they continue to grow. we set records three years in a row.
2016 will be another record-breaking year, and there is more we can do, because customer expectations are rising at the we are getting paid for it as a premium. the other thing is the continued international expansion of the business. we have been active in the last five years, made a number of investments in virgin atlantic, purchasing a similar deal with air mexico. mature, marginally there is growth, but there is not new cities or markets really being constructed. if you are going to look to grow for the future, it has to be outside of the u.s. in terms of where we can go, and i think there is great opportunity. toughamerica, brazil, place to be, but long-term, there will be a lot of growth and opportunity, right through mexico, the deal we are hoping to close before the end of the year very at an economy growing at a very young population, longest -- oldest city in the
world across the border, mexico city. china is an opportunity, u.s.-china traffic next year likely will be the largest international traffic flow. we made an investment in china eastern, our partner in shanghai. shanghai will continue to be not just the commercial capital of china but long-term, the commercial capital of asia. >> are you making money on those right now? >> not as much was we would like to, given the startup nature of the investment, but we would, there are restrictions going forward. the chinese companies are going up against their restriction cap's. you'll see capacity start to moderate in the next couple of years. we will allow chinese carriers and u.s. carriers to mature and harvest more the investments they make. has kepte jungle book top spot at north american box offices.
it beat three new releases to give disney the number one prize for a third straight weekend. $42 million, five times more than second-place the huntsman. this underscores disney's decision to announce nine new adaptations to the family film classics. coming up next, a rally gathering momentum, so what is driving the exchange rate?
suspects. all of the others are all chinese nationals. $120o rico will default on million bond. it cannot pay its debts. they want the government development bankers missed obligations and call on washington for help. moody said any nonpayment is a different breach, comes to a default. they could be holding interest even temporarily [indiscernible] india's top court has extended a ban on the registration of new vehicles as part of attempts to tackle pollution. it was initially imposed in december, renewed again on may 9. smallerssing demand for engines. powerful diesel engine saw a 41% decline in march. they are monitoring the level of air pollution.
this is bloomberg news. ,ngie: the yen rally continues 18 month high after the boj decided not to add firmer stimulus. let's check in with the senior fx strategist at westpac. it is at 106 right now. we have had a number of analysts say one of five is the point of intervention. will we see that to be with boj? >> i doubt it, but we can't rule it out. reiteration saying it is still an option. no matter the seventh meeting -- the g-7 meeting coming up in the international attitude against intervention, and that is certainly the case through the whole kuroda regime. so it is up to the mos in the end. very difficult, particularly given the last surge in the yen.
it is largely a response to what the boj did on thursday. it will be a very strange place to intervene, but they are worried about one-sided moves. angie: why are investors pouring into this trade and propping up the yen? is forubt too much of it money in terms of flows. some of it, and is speculative the positions we saw friday's report, so they will be pretty heavy about that. but mostly i think it is the outlook from japanese investors, if they are confident the yen is going to depreciate as a result of boj policy over the next year or two. they will be more comfortable about investing in on hedged -- unhedged bond positions, so
equity should pick up. we are determined about the boj policy, that can have an impact on the again, causing japanese investors to pour money back. angie: not helping is the weaker u.s. dollar against the backup for sport gdp that came in quite week. or is it the other way around? is the u.s. dollar reacting to a strong yen? look, i think the u.s. dollar will be hampered by the fed outlook for some time. we do expect things will change in the months ahead. we expect them to recover on a month-to-month basis to 110 and above. it will require markets become serious about the prospect of a fed tightening. we are looking for two hikes this year, that is what the fomc said in the forecast. short-term, gdp, q1 was lousy.
q2 will be better but not that great. until it becomes a real present danger that we will have a fed hike, the dollar will be slightly on the backslide against the low yielding currencies like the yen and the euro. angie: what is a good strategy when it comes to the u.s. dollar, and where are you calling it for the end of the year? >> look, against the euro, we are thinking 108. we do think it to recover after those two hikes. the dollar-yen may be 112 by year end. it we expected to gain against the aussie, perhaps canada and new zealand as well. we will see some pretty decent growth numbers from the u.s. over the next few months, and the fed finally deliver, but that is not price in. there is no fed hikes until early next year. it is hard to make the case for
that occurring very short-term, particularly not on dollar-yen. you really need to be active to bide your time on dollar-yen. it is difficult to position for it. angie: any time left for bets on the aussie dollar ahead of the rb eight tomorrow? >> that is probably a good word. market price is 50-50, so the aussie dollar will move very sharply at 2:30 local time one way or the other. holds steady, inflation numbers or low, but growth is far more encouraging. we think that will be the focus. if that is the case, the aussie said -- should surged through $.77, and otherwise below $.75. angie: if you look at chinese export or import, even south korea dropping 18.4%, australia caps on china as its biggest trading partner.
when we see those numbers as it relates to regional economy, that has got to be a concern. >> it is. i think overall we have had a really big rebound in that key commodity prices. iron ore at $66. the hard numbers on the region and the economy, and regional trade numbers, they could point overall,o a soft trade and the commodity price surge really does look to be speculatively driven, not backed by an improvement in the growth. there is cause for concern. australia will continue to trade deficits. we have expected that the aussie will be falling in the second half of the year towards low 70's, $.71. angie: all about the dollars. sean callow, thanks for that, live out of sydney.
angie: welcome to the stock exchange, looking at the open in japan, south korea, and australia. we have reporters telling us what we are looking at. haidi: i am looking at gun how online, they make gains for apps, internet, including the apparently very popular puzzles and dragons game. 41 million downloads. not a longgie: weekend for us. little bit. [speaking simultaneously] haidi: you have got to play a little bit. this stock is a very poorly today while they are underperforming, japanese market down. it also announced first quarter
earnings which has been terrible with 40% when it comes to operating down. net income also 30% down. shares lower than scheduled. this has quite an impact anduding a new puzzles dragons game out on nintendo at the end of july. i'm expecting given the downside for the market. >> is all fun and games. angie: game on, haidi lun. shipbuilding. earnings him out last week, didn't look pretty good. everything was negative, profit revenue and that income. we have seen this downturn when it comes to shipbuilding's nest. we have seen prices from nearly two years, and growth. they are forecasting profits to surge 84%. looking a lot more optimistic for the rest of the year. stock has been down 24% the past
year. >> huge. angie: all right sherry. shery: japan's largest utility, tokyo electric power company, they are infamous because of the fukushima disaster. their income scheme -16%, plunging 69% on year. they had repairman charges because of the high powerful facilities, and the liberalization of the electors in the market, which shinzo abe is pushing for more cap edition and more -- competition and more range of on regional power utilities and liability. we are seeing the power industry in japan getting shaken up. talk to electric power company now seeing gains, huge losses. go, mitsuie have cap engineering, gung ho, watching that. that is the verdict from the stock exchange.
japan have been waiting for is upon us. let's get straight to david who has the initial estimate. david: out of the gate, there is a 2% drop. let's see how that pulls out. 2% lower. of course, it is a simple story. the last time japan traded the yen, it was at .08. kfon u.s. markets, there was a series of bad data points. it was little bit bigger this morning. 2% at the open. keep in mind that a lot of markets are closed today across the region on holiday. you only have a handful of markets. see, we are basically going for it another week of losses. a fairly sharp drop in equity across the region. the dollar it has weakened substantially.
there is a strain in the japanese currency. update on whatan we are seeing as far as the currency is concerned. let's get the yen up. 106.46 is your level. we are closer to about 108. it is the shock from the boj not doing anything. we are pushing this further. berkeley is basically saying the third quarter will go to 100. we may see 98. it is fairly reflective of what the market is seeing right now at the moment. there is also the risk of intervention from japan. sherry will talk about that later on. we have the business sentiment. 76.15 right now is the level for the aussie dollar.
on saturday. out for 16 straight months, we have declined. ok fine. that is the story for korea. that tells you a lot about demand elsewhere. from exports to china, we are down 18%. japan experts are down by a quarter. south america, 40%. see some bigng to movement in japan. let's get the chart of. , that comesabout 5% after a 4% decline last month. a few things. you have the news saying the company will be posting about ¥50 billion loss. it may cut down several jobs.
that is according to this news report. can we get sony up? sony is not trading. seeing 2%ishi, we are gains. that is on top of the 6.5% gain we saw on thursday. that has not been impacted by the fuel consumption testing data. 61, it was trading at much higher levels back then. i guess people are coming in right now. that is the hope. let me get you an update on where we are for the nikkei 225. 3.5% is the damage. we will continue to track the data. a lot of markets are closed. the data will be focused on these three markets. you get these big moves right
here on the nikkei 225. angie: breaking news for you right now. it is official. halliburton and baker hughes are ending their merger pact. this is following an exclusive story we broke here at bloomberg that they were preparing to call $228 billion merger. it has met antitrust resistance from the u.s. and europe. set butline was halliburton is going to pay baker hughes $3.5 billion in termination fees. and baker hughes are calling off their merger. westpac has kicked off earnings. there are slightly weaker results. paul allen is joining us from sydney. run is through the numbers. -- run us through the numbers.
>> it was up 3%. it is a very narrow number. coming in at $3.9 billion. it has allrs here, the major banks here in australia. their teamwork -- tier one capital ratio has declined. it is down to 2.14%. as you mentioned, the big thing was institutional lending. now the ceo says this was not a sign of delays. it is just a few pockets of stress and he is positive the outlook will be good. the market may not share his optimism. are they rising? >> yes, they are.
take a look at this chart. you can see how bearish market has become on the aussie market. 41% since the start of the year. we are not going to have to wait too long before we find out if these figures are correct. have national australia bank. we will have commonwealth later in the year. -- stocksese starks have healthy dividends. 94 $.94 per share. angie: thank you so much for that. checking other headlines for you right now, they are expecting to -- it'sate is bankers bankers. several employees and dubai have left the bank over the past few
months. ceo bill winters said that is going tortered up its compliance. opec and other oil producers are still considering a deal to freeze out. analysts are warning that oil will tumbled to $30 a barrel because of the supply glut. i don't think you need a freeze. i think the market will handle it. -- remember the demand for oil continues to rise. on recount globally has down. -- gone down. the supply has to diminish despite what is happening. the demand will continue to rise, maybe one or 2%.
the combination of this means that we are going to see a higher price going forward. watch more of his interview on bloomberg markets: middle east. 2:00 p.m. for those of you watching us in sydney. let's go to our top stories this morning. china's factories are showing more stability. further stimulus may not be needed. stephen engle is taking a look at the numbers. >> this is interesting because it is showing stability beyond this -- the distortions. april, march was a big number four factory output -- for the actor he output. there was a lot of sentiment issues. that sends signals to the
market. seems to have rebounded from that. the manufacturing pmi held steady at 50.1. we were at 50.2 in march. it is much better than the previous seven months when we were in negative territory. it mostly stayed on factories. this is the official pmi here. we are seeing old drivers coming into play here. it will offer that stability. there has been lots of lending in the first quarter of the year. the property has been booming. maybe the central bank having to hold off for now. we have had a lot of cuts and easingeasures -- measures. they want to stoke the economy but not the bad side. angie: are they holding off on
stimulus? >> we talked to a number of , there was a consensus that they would have to cut again. now the consensus estimate seems to be wanting to hold off. it will probably be in the fourth quarter when they will take it from 3.5% down to 4.1%. that seems to be the consensus. angie: we have breaking news for you right now. we are checking westpac shares. it is falling in sydney. hisas brought down by institutional business. watching sony. it is now trading in japan. loss was $812 million.
♪ >> it is a: 14 in hong kong. these are the stories making headlines around the world. china has seen signs of improvement on its relationship with japan. there are still signs of distrust. the two countries share trade relations worth 300 and $14 billion. the ties have been strained by territorial disputes. the indian drinks tycoon is
expected to be dispelled from congress today. than $1.3 to own more billion but denies that he is willful. he is living in the u.k. and has already lost his diplomatic passport. abandon adecided to study to study -- black holes. it was launched in februy. contact was lost with the satellite in march. the satellite was a joint effort between the japanese aerospace industry and nasa. powered by over 400 journalists and 150 bureaus around the world, this is bloomberg news. i'm haidi lun. check let's quickly nikkei for you.
we did see losses today in asia as a result. being on market holiday, the equity markets had a chance to that thethe surprise boj did absolutely nothing. this is the biggest gain since the 2008 crisis. we are seeing and strengthen -- it strengthen per dollar. we are seeing losses on the asian markets since monday morning. from get more right now melbourne. it is all about japan this morning. certainly. we are playing a bit of catch-up they are after coming back from holiday. -- we arehat the sitting around the 106 is not positive at all.
the trend looks like we could be seeing increased strength, perhaps pushing it to 105 within the next day or two. angie: there could be a point where they will intervene. will we get there? it is difficult to say. i would note that the u.s. published that report over the next couple of days. it sanctions japan as well as china and japan -- germany. there have been some words with u.s. officials to japanese officials. i do not think there are many in the global financial community welcoming renewed intervention to push the yen down. it is difficult to know what the level will be for the government. the 106 level, we are coming close to it.
i would imagine somewhere at the 100 level, the government will be ready to intervene again. angie: a lot of people were caught on the back foot. a lot of money managers that we talked to really change their in downgrading their rating on japan and equities there. how about you? >> certainly. some expecting to see expansion of etf purchases. have beencuts regarded as a poor move by the markets, at least some further bondsion or new buying of would not have gone astray last week. enough last week was not to push the boj to action, it is difficult to see what more they
can do. out tos they are tapped muster new a con -- economic stimulus. they will not continue. the focus is increasingly on the government and a lot of people have been floating the idea of helicopter drop money. they have mentioned gift certificates. there are going to be experimental policies. anything could be on the table for japan. angie: what is on the table tomorrow for policymakers? it has taken a dramatic change in market perception since the cpi release last week. the first quarter weakened quite substantially. we saw a big drop in the cpi numbers last week. that will be brought up at the
meeting tomorrow. economists deem it quite likely to keep rates on hold. the likelihood of a rate cut by .he rba has greatly increased if we see this trend in inflation continuing into the second quarter, a rate cut by the rba seems increasingly likely. especially if we start seeing a weakening in the australian housing market. a very interesting time in australian politics regarding the rba. we will have the budget on and if thewell government wants to elect a new rba government, they need to do so this week. they are likely to call it a new election on july 2. due to that fact, if they do not
call in new rba governor, they had -- would have to wait until august. that could be destabilizing. what is the probability of glenn stevens not being the governor next week? >> he will still be the governor they will choose who will take over for him in september. it seems it would be a good idea to do that this week giving that waiting until august could be destabilizing and lead to uncertainty. naming a successor now would be a good idea in helping smooth that transition when it comes in the second half of the year. angie: all right, that is september. i want to talk about china here.
we have plenty of pmi's coming out. we are still in some -- expansion territory. >> certainly. we saw in the subcomponents of the manufacturing pmi, they both sed up, thatt -- ea is a bit disconcerting. the biggest concern is the huge amount of credit growth in china in january and march. even then, we are not seeing that manufacturing pmi being able to hold their levels. despite such an aggressive expansion, it is a bit theerning and heightens credit intensity and china. the amount of output they are getting is certainly declining.
the focus for china should not old growthg this strategy but trying to deal with the debt and making the efficiency of their credit .mprove by lowering the debt angie: you are identifying market yields in china increasing. we're going to leave you there. life from melbourne. next, will the government step in? details on our headlines coming up next. ♪
headlines. new day, same story. strong.is it is now pushing to 106. we are seeing the exchange dropped to 100 by the end of the third quarter. 92.95 for dx why. we are seeing a long streak of declines there. dollar, the rba decides on policy tomorrow. stevens may low -- no longer be the case. 1.75%, thisrd of comes after shocking data showing the first drop in her prices. -- consumer prices. 16th korea reported a straight monthly drop, more than
11% in april. march, current account surplus came well above estimates. and in china, the manufacturing pmi fell. it is still a little bit positive there. 53.5. like any good cooking show, the lasagna is out of the oven. if you look at a 50% probability that they might cut tomorrow, 27 economists say it will stay put. others say it is going to jump tomorrow. the aussie dollar says it is not going to raise rates anytime soon. it will impact very quickly. we will talk about the japanese yen after the break. here is where we are right now. it is pushing one of six. that is when the boj surprise
you can never get enough of it. change the way you experience tv with xfinity x1. ♪ >> it is 9:30 in tokyo. after a market holiday on friday, markets are reacting to the boj doing nothing. shares right now are down three point 4%. trading underway for about 30 minutes. you are watching "first up." 4% after japan tumbled the return from the break. biggest two day gain since 2008. says theinister government will intervene if it continues to rise. australian bankers are not off
to a great start. trailed estimates. but itowth in mortgages doubled on the year. westpac shares fell in sydney. china officials factory gauge shows it is stabilizing. 51.4.cturing pmi came in any number above 50 indicates conditions are improving. powered by over 400 journalists and 150 bureaus around the world, this is bloomberg news. we have got further breaking news headlines coming out of the hughesrton and baker ending their merger.
it is now being commented by the doj saying that it is a victory for the u.s. economy. lorettaorney general lynch says there is no merger toobig for challenges -- big for challenges. read the writing on the wall not only from antitrust doj, butrs and the also in europe. agreementd up their and halliburton now have to pay $3.5 billion in two baker hughes. shaping up to be a horrible start to may. david is watching this. david: it was a low for the nikkei 225. we barely into the trading session. moment, 16,088.
, have a looknt out at this. is a measure on how much protection there is of the market. a big spike there. 15%. 31.75. we have been talking about this all morning but i cannot emphasize this enough. before the boj meeting, we were at 111. now we are here. barkley says we could be here by the next quarter. we will talk about that in just a moment. before he gets australia, can we get the shares up. it is down by 16%.
12% at the moment. there was a report out of the nikkei newspaper that the u.s. will be expanding their recall of cars to all vehicles that use the airbags made by the company. the story is not done, it is continuing to give. shares are down 13%. we have not heard from the company yet but they might come out and clarify that report from the nikkei 225. already seeing a reaction. as promised, australia is doing this. you want to look at commodity prices. prices of gold, prices of oil. we will talk about more in just a moment. by pointerials are up 01% -- .01%.
let's break that down for you. there we go. 11 out of 14 are on the way up. that is a direct correlation i the underlying commodity prices and what happened to the equity markets. the big story is in japan. angie: thanks, david. japanese economy says it is ready to act. trading andacing -- abenomics is failing. where does japan stand now? shery: it is very difficult situation. thisare saying one side of --ulated movement speculative movement is extremely concerning and japan will keep an eye. take action if necessary. this is not the first time we're hearing policymakers trying to talk down the yen.
that this is not the right time for the finance ministry to take -- make a move. here is what one analyst says. >> drawing a line in the sand is given this last surge of the yen is a logical response to what the boj did on thursday. it would be a strange place to intervene but they are worried about this one-sided move. to thehe is referring boj move last thursday not to intervene. it went against market expectations. what we're seeing is adding to weakness.llar they are not in a hurry to raise rates. we are also seeing and narrowing gap -- a narrowing gap. that is also supporting the yen.
if both central banks in japan and the u.s. stay on the sidelines and don't act, we could see the yen surpassed the dollar level. angie: what is going to happen? policymakers are under fire. shery: that is right. those comments, at a time when the u.s. is stepping up. put ons on the country's a watchlist. they are having to be put under close monitoring because they could provide an unfair trade advantage over the u.s. the treasury is saying it is incredibly important for the -- japan to use all policy leverage including fiscal policy in order to lift growth. has been under fire because of this very point.
because iis failing have a -- a be realized very quickly. angie: thank you so much for that. let's take a look at what else --.re following for you to the airline says it plans to reduce capacity by 5%. the main cuts featured on regional routes. bank postingction a narrow percent gain. to $10.5e rose billion. the lender is the only one of china's banks to raise its bad loan coverage ratio.
they are showing signs of to -- stability and april. they are attracting more casual gamblers and tourist. gaining revenue and dropped 9.5% to $2.2 billion. they have been encouraged to diversify and slowdown. it avoided a fall in china. relies on diversifying markets. it expects to see a return to growth in some european markets that china remains a challenge. we have seen growth. you have to understand china. china is curbing costs.
we are facing a 20% increase in for the past seven years. china is curbing growth. haidi: that was the story. nothing seems to be able golds shine.ll yvonne has been taking a look for us. yvonne: we have seen the momentum really build on the metal this past month. if you compare the dollar index to the gold rally, you can see this divergence has widened here . we did hit 12.99 on friday. dollar has hit that 11 month low. ont all started happening
april 28. we saw a double whammy on the dollar. to fed and the boj continued keep things unchanged. also, the boj stunt markets by doing absolutely nothing so we saw the yen spike and there was more pressure on the dollar. those are huge issues that are going to be supporting the price of gold as well as other alternatives in terms of the raw materials. take a look at silver. it is just skyrocketing. seeing it at 17.82 an ounce. it has reached a record. we have reached the highest sawl since last may when we
the price of silver around the current price right now. that is looking good. silver is actually beating goals -- gold. they actually trimmed some of holdings at april 26. we saw the contracts and futures actually dropped to 184,000. that is what you are seeing here , a 2% drop. that is the biggest drop we have seen compared to these old holdings -- gold holdings. thelast time it fell was in march. -- march period. the short bets have also declined. not everyone is to bearish. ahead, prime
♪ >> singapore is focusing on upgrading to transform its economy. lee hsienminister --ng says they are forcing forced to review how they do business. how urgent is it for singapore to transform? well, it has to transform or be left behind. singapore grew about 2% last year at the slowest pace since 2009. with an aging population, a slowing china and global
competition, it risks losing its competitiveness. here is what the prime minister had to say at his speech. >> the only way is to transform the economy, create new opportunities, not just to get bigger pay, but to our -- upgrade ourselves so we can do more challenging jobs. that means restructuring our industries, that means we shaping our jobs. -- we shaping our jobs. >> it will target midcareer workers. it is no longer business as usual. --have seen how cooper and
uber transform themselves. angie: which growth sectors are they focusing on? a lot of opportunities in the tech space, they are all expanding here. their operations are growing. they are hiring more workers. responde will have to with workers to fill those positions. they have to do that in a hurry. singapore has no natural resources. the creation of jobs has always been at the heart of its economy. it is getting harder to stay relevant. it is no longer about picking the right sectors to develop, they are more constraints now. it is getting a lot tougher. angie: thank you for that. the stories making headlines around the world. received an
official complaint from taiwan for deporting several officials. jurisdiction. it may be worth more than a billion dollars a year. the others are all chinese nationals. ohrto rico will default on $120 billion bond payment. it cannot pay its debts. it is calling on washington to help. nonpayment will constitute a default. it is withholding interest even temporarily. india's board has extended a band -- ban on certain vehicles. stated in december.
says diesel bellevue colts -- vehicles fell 1%. powered by over 400 journalists and 150 bureaus around the world, this is bloomberg news. i'm haidi lun. angie: delta airlines has a new boss today. takes over today. he plans to make delta a much more global airline. >> we are going to continue to do what we do, running the best airline on the planet. we can do better. we are to continue investing in and making sure the service levels continue to grow. we set records three years in a row. 2015 will be another record-breaking year. there is more we can do. customer extrication's --
expectations are rising. the other thing is the continued international expansion of our business. we have been active the past five years. we're in the process of doing another deal in mexico. the u.s. industry is largely a mature industry. there is growth in this industry. there are not new markets or airports being constructed. if you're going to look to grow for the future, it has to be outside the u.s. there are still greater opportunities to be had. >> where? >> brazil. we're hoping to close a deal and mexico. the economy is growing, there is young population. mexico city is the largest city in the world and it is across our border. china is an opportunity. china traffic is
significant. shanghai is going to continue to be the commercial capital of china but the long-term capital of asia. a lot of capacity has been added between the u.s. and china. are you making money on those routes? >> yes, not as much as we would like to. there are restrictions on to how much capacity can be added. i think you are going to see the capacity start to moderate in the next couple of years. it will allow both of us to mature and harvest more investments. talkingwas ed bastian to us. book" tops the movie
♪ to the stock exchange. what are reporters are watching. >> the moment of truth. let's give her a minute or two. it publicly was not hard to make a directional call. online, they make online gains. popular puzzles and dragons game. it exceeded one million downloads a couple of weeks ago. it looks like candy crushed me. -- crash -- crush to
me. >> i had to stop. how can this is not helping? it has been a tough, uphill battle. a 40% decline in their income. a 30% decline in revenue. 13, 18 in them previous year. on the upside, they have quite a bit of stuff coming up. they are releasing a new game at the end of july. >> a secret gamer over here. do.his is what we it was falling as much as 2%. having bady were
earnings for the full year. the operating income all fell 20% from a year ago. they are quite optimistic of what is going to happen. they raised their forecast. goingipbuilders are through this downturn when it comes to slow growth. crude prices have happened. these oil rigs have been delayed, products delay. they are now blogging a full net of 69%. 3.7%.ock is down they have impairment charges on power facilities. we are seeingt that effect in japan. angie: it is a holiday here in hong kong. we are here at work.
over to you. >> looking at this data which came over, the worst may be over for the chinese economy. next, are there any further stimulus? at the moment, what is going on there? it took a big hit today. strength, at what point does the bank of japan get in there and come to the support of the dollar against the japanese currency? of dead fish in vietnam is causing a storm of criticism for the authorities. that is what is going on in social media. ♪