Skip to main content

tv   Trending Business  Bloomberg  May 1, 2016 9:00pm-11:01pm EDT

9:00 pm
rishaad: it is monday, may 2, in this is trending business. ♪ we are going to take you to sydney and singapore. we are watching asian stocks on the slide today, led by japan. strongestading at its level in 18 months. , down as well. more signs of stability in china.
9:01 pm
halliburton abandoning plans with baker hughes union regulators were not happy with loretta lynch saying no merger is too big to challenge. let us know what you think of our top stories on twitter. the yen dominating what is going on with japanese equity trading. the markets are closed today. reporter: talk about first trading day of may. markets. as reshot pointed out, have a look at japan. they are down 4%. a lot of that happening with a stronger japanese yen. australia, just about every stock on the nikkei underwater
9:02 pm
at the moment. when you take the losses back on thursday, we are down about 7.5% over just two trading days. let's break it down across sectors. down onngle sector is the nikkei. have a look at the nikkei volatility index. we are looking at a sharp jump. it up there? there we go -- 18% higher. that is something to watch. a lot of people are starting to downsize. when the yen starts jumping around, expect people to be risk-adverse. volatility is higher than usual. we are watching shares of
9:03 pm -- u.s. authorities are looking to to all cars that use their airbags. nitrate.nium we understand based on the report that the plant is going to be announced sometime toward the end of the month. shares are on the way to record lows. let me wrap up with an update on the japanese yen. hear low, theto same levels as mid-october 2014. boj --are the rishaad: absolutely. yen -- the u.s. has put
9:04 pm
japan on a watchlist for foreign exchange practices. what is this all about? shery: japan's finance minister media he will carefully watched the currency market to ensure that speculation does not continue in that he will take action if needed. the yen is at an 18 month high, refraining -- going against market expectations. this is the first time the japanese policymakers have tried to talk down the yen. analysts do not think this is the right time for the finance ministry to take a move. >> drawing a line in the sand is very difficult, particularly is a that the last surge totally logical response to what the boj did on thursday. it would be a strange place to intervene. they are worried.
9:05 pm
shery: the dollar weakness and a narrowing gap contributing to the yen strength as pressures inld in the u.s. participate japan. the comments are coming at a time when the u.s. is stepping up rhetoric on markets. they say japan is among countries put on a watchlist to gauge whether therefore exchange practices provide an unfair trade vantage over the u.s. the report says it in no way restrains japan's abilities to respond. the treasury pointed out it is important that japan use all quality lovers, including fiscal policy and structural reforms. they have been under fire japan's opposition leader telling the ft that halloween amex -- abenomics is failing.
9:06 pm
that he agrees that the investing --ow of the problem was that shinzo abe was not doing this. --ut a -- terra-cotta takata diving deeper. rishaad: and also talking to dominic schnider about that. tweet us your thoughts. china's factories exhibiting more encouraging signs of stability, if buying that further stimulus may not be needed. stephen engle is is looking at the latest index. previous it indicates easing has worked into the chinese economy. property and construction has recovered on a surgeon credit. the cmi stated above 50 for the second consecutive month in
9:07 pm
april after seven months in a row below 50. april's reading, we can say the economy may have stabilized are oftenrch numbers distorted because of the lunar holiday when many factories are close in february and the negative assertive orders for march -- april stall stability but new exports and imports dropped and employment showed factories continue to cut workers so there are some storm clouds on the horizon. pmi alsonmanufacturing showed continued positive conditions heard it slid slightly from march. at 53 point five, it still shows optimism. the stabilized readings eased the urgency to add monetary stimulants which risked fueling housing prices are further flooding cheap credit into sectors of the economy with overcapacity traditional
9:08 pm
industries like steel and coal. thateconomists say monetary policy will remain supportive in general but they do not see another rate cut into the fourth quarter at the earliest. prudent and a watch and wait approach are said to be the priorities after six rate cuts, the benchmark lending rate now stands at a record low of 4.3 5%. economists expect that could be cut to four point 1% but in the fourth quarter at the earliest and only if conditions deteriorate. now we areght, looking at the death of the multibillion-dollar merger and indeed some of the other stories out there with heidi. it is now official, halliburton and baker hughes have called off their $28 billion merger citing the challenges from industry conditions as a reason. the proposed union between a
9:09 pm
second and third largest firms have been causing antitrust resistance. from margin craig and that is solution could not be found to appease concerns. halliburton says that obtaining the necessary approval as well as general industry conditions damage the economics of the deal. to payrton will have baker hughes three point $5 billion by wednesday. common lynch's determination of victory saying that it shows that no merger is too big or complex to challenge. she reiterates the that it would have resulted in higher prices in decrease output. jc morgan -- jpmorgan grace says that the justice department's -- division is among many regulators investigation practices in asia -- the lender is also facing the fcc. jpmorgan said this on friday now regulations are seeking to work out whether the bank violated
9:10 pm
antibribery laws by hiring children and other relatives of well-connected politicians and clients in china. that would be in exchange for having business -- that was people familiar with the matter in 2013. they have not named the agencies disclosed in the matter. the bank says that it is responding to and collaborating with investigations. australian bank earnings are off to a great start. , 3% rise in cash property. trailing estimates by around 3%. they saw some growth and mortgages incorporate loans but bad debt -- they almost doubled on the year, soaring to the highest in six years. it is still a peep at the output for the australian economy. the morningstar and sydni says that bad debt remains the world card john just for well back but all aussie lenders who says the
9:11 pm
childhood of thought across mining, agricultural, dairy sectors lead to increased as take a liquid the stock is doing this hindi session, close decision though down by 4.5% to this point. rishaad: [indiscernible] -- firm to law form be listed on the history of the market. this is after they agreed to .ank amendments reaching agreements with their bankers and therefore avoiding bankruptcy. the company said it agreed to administer the terms of this existing facility agreement that ensures that loans do not have to be repeated until 2018 at which point they will be due to repay the 400 $80 million of debt in the financial year in 360 million dollars the following year. it's are now in the form of term loans.
9:12 pm
session there in sydney, right. millions of dead fish found on the beach. , of caution, over banks in australia. ♪
9:13 pm
9:14 pm
let's look at events across the asia-pacific. hsbc has been cutting jobs to save money. they posted a loss in the last quarter. tuesday, the imf releasing the latest report on the economic outlook for asia. it will address growth concerns in the china slowdown. we will hear from their head
9:15 pm
once they make public its findings. alibaba fourth quarter results on friday, sales expected to jump 33%. revenues expected from rising china retail and mobile shopping and advertising. they may surpass the revenue the liver in the previous quarter. friday also seeing a rare party .ongress in north korea the first since 1980, in the first under the leadership of -- kimhn them -- king jong-un. order nuclear testing around the event. at what isa look going on investment-wise. indeed, thewith, change of sentiment after that inflation reading from
9:16 pm
australia, making them more likely to see the reserve bank cutting rates sooner rather than later. what does that mean for the banking side in the lenders in australia? it is a very unusual time. we have the reserve bank meeting tomorrow. there is also the federal budget tomorrow. we are in an election campaign. the central bank has to respond to the most recent fix of inflation numbers, showing deflation. it is also constrained in terms of option analogy because we are looking at an early july election. we think that the cut tomorrow while not being priced by the market as a likelihood, it is probably 50-50 depending on when you look at the actual market. that is probably an 80% chance. if you look at what the banks are actually doing, some of them have priced it into their
9:17 pm
standard variable rates late last week. the national australia bank moved its variable interest rate . we think the reserve bank will move because one of the things a of the keyto do, one mandates is to target inflation. .nflation is no longer an issue they can further stimulate the economy. rishaad: what does it mean for marginal rates? and the balance sheet of those banks -- they have not been passing on cuts. have done, andy you touched on it, is that over the past year they have moved outside of the bank cutting cycle to dictate their own
9:18 pm
pricing. we have seen them pass on what the reserve bank has announced. they have increased that time. the standard variable rate for most mortgages in australia is between 4%-four .5%. different things are doing different things based on volume, pricing, and competition. if we see a cut, it at least 15-20 basis points will be passed on by the majority of banks because they wanted to drive volume. westpacsaw today is coming out and missing market estimates because of the compositional earnings in the only way you get to beat the market is to crozier topline and the only way as a bank to grow your topline is through volume. rishaad: a quick read on the budget tomorrow. how the be? guest: probably 95% political,
9:19 pm
probably 90% pre-released. i do not expect anything to come out that would be shocking. there will be more of a fiscal stance to start spending more money on infrastructure. we spoke about monetary policy. the impact is very marginal. both sides now see the importance of fiscal policy. rishaad: you are suggesting avoid industries which have a heavy weighting toward apple? guest: if you have a look at the , each asstries exposure to apple stock but a different way. if you see large shareholders moving out of the stock earnings starting to plateau, there is a case for what happened to microsoft 10 years ago, just towing out. -- plateau-ing out.
9:20 pm
rishaad: peter -- david: nasdaq will be -- rishaad: thank you. other stories making headlines per china says it sees signs of improvement in relations with japan but there is still a lack of trust. beijing commented after their visited the japanese minister. the shared trade relations worth more than $340 billion but ties have been strained by territorial disputes and by japan's decision to beef up its military and allow forces to serve overseas. tycoon expected to be expelled from parliament today for leaving the country and not paying debt. he owes more than $1.3 billion for his kingfisher airlines.
9:21 pm
is -- he is living in the u.k. he has already lost his diplomatic passport. a ban on the registration of large vehicles as part of an attempted to tackle pollution. the band was initially imposed in december. it has cut sales of two leader and greater cars while lifting the demand for strong -- smaller engines. toyota says sales in india fell 41% in march. journalistsver 2400 , this is bloomberg news. ♪ next, nothing seems to be slowing the rally when it comes to gold. ♪
9:22 pm
9:23 pm
9:24 pm
rishaad: this is trending business. nothing seems to be able to dull gold's shine. it is still in fashion. we have seen momentum continue to build. take a look at the dollar index and compare it to the gold price. we have seen this divergence widening. this is when it all happened on thursday. we saw that double whammy on the dollar. the boj decided to do nothing so the u.s. data has been pretty soft to the fed has been cautious about the second rate hike. the boj did absolutely nothing, the end spikes, further pressure on the dollar.
9:25 pm
$12.99 ang to about ounce on friday. we have come down a little bit since then. this is huge when it comes to supporting the gold price. at the raw material space altogether, we have seen a resurgence. take a look at silver. eight is beating gold in terms of advance. we have seen a 15% spike. we are now back to levels from one year ago. some analysts saying it is just a rocketing. look at gold, though. gold recently. if you take a look at what happened, we saw the futures and options contract fall to about 184,000 last week.
9:26 pm
dropyou are seeing is a 2% in those holdings. that is the most that we have seen since hedge funds turned bullish on the metal. so, the long wagers have fallen but the short bet have also declined. not everybody is to bearish on metal. rishaad: there is a feeling that there is too much optimism? yvonne: this could do the reverse. if you look at what goldman sachs said, the expect gold to fall for the next three months. they think that the stronger labor market is going to be the trigger for the fed to raise rates. they are sick about three rate
9:27 pm
hikes this year. -- they are thinking about three rate hikes this year. china could be said for a technology shakeup after new laws. ♪
9:28 pm
9:29 pm
stocks dropping again today for the fifth time in seven sessions. the yen is strengthening past 107. the earnings outlook for exporters. the finance minister said the government will intervene if the currency continues to appreciate. china's official factory gauge has manufacturing pmi coming in
9:30 pm
at 51.8. just below the average forecast. the dividing line between a contraction and expansion. that makes the case for restraint when it comes to additional stimulant. releasing a flood of cheap credit. calling off their plan to $28 billion merger. meeting stiff antitrust resistance in both the united states and europe. attorney general loretta lynch has called to the termination of victory. say no merger is too big or too complex to challenge. it is a range day out there in the stock market. david: what is typically not exactly the best month for equities, may. i go to the equity markets tummy tuck about that business survey. monthly indicators coming out right now.
9:31 pm
seeing a drop from the previous month. these are april numbers. business confidence in the region. a lot of that has to do with the strength of the australian dollar. indicators down led by japan. south korea is having a typical down day. a lot of that has to do with the japanese yen and its relationship to the dollar. let me get you the exact levels of the major benchmark indexes. the nikkei is just below 16,100. pushing into negative territory.
9:32 pm
the biggest decline is in japan. the united states might be expanding the recall to all airbags in the united states. nippon electric is down because of earnings. for this current fiscal year. a very abrupt change. about the nab business confidence survey. very strong australian dollar. ins is what is happening anticipation of the central bank decision tomorrow. rishaad: let's have a look at these shares. it did post slightly weaker than expected. about 5% down. let's go over to sydney and joined paul allen.
9:33 pm
paul: it was amiss although a very narrow one. now up to 10.5%. it was bad debt that really hit westpac this time around. that is the highest figure in six years. four main impairments. they declined to name who the foreword. and $252he bank million. -- part of some broader malaise. we don't see a broad-based deterioration in credit. if anything, it is the opposite.
9:34 pm
companies are using low interest rates to pay down debt. paul: he's saying it is just a pocket of stress. rishaad: market may not share brian's optimism there. paul: we have a rather informative chart for you. you can see that short bits on australian acts are up 41%. since the start of the year. westpac.y the case of that turned out to be a pretty good bet indeed. are down almost and about 12% for the year. we will get to see if these short-sellers are right to later in the week. we have other banks reporting earnings later this week. rishaad:
9:35 pm
said to be cutting 2000 jobs from its management and battery operations. is lookinger there to restructure the company after taking control in march. sharp earlier said it expects to post an operating loss of $1.6 billion. mitsubishi motors fuel efficiency scandal is far from over. sales slumped 45% last month. customer,ts biggest tumbled 31%. the scandal first emerged some two weeks ago. the covey says it's very existence may be at stake. the likes ofut china and japan and germany on a watchlist. seeing if they are trying to get
9:36 pm
an unfair trade advantage over america. using the criteria used to judge unfair practices. potential penalties. with limited manpower resources the prime minister says globalization technology is forcing the company -- country to transform to stay relevant. he said i am enjoying the experience. responding to those challenges. singapore is in the midst of this transformation. it is set up a committee on the future of its economy. how it can be done. is there.of urgency neighboring economies are catching up to it. growth is slowing. with a tight labor market, anpower could become
9:37 pm
bottleneck. here's what the prime minister had to say about it. in his may day rally speech. do is to transform the economy to create new opportunities and opportunities not just to earn a paycheck but to upgrade ourselves. so we can do more challenging jobs. that means restructuring our industries, that means reshaping our jobs. >> the government has put in place several measures in its recent budget. set aside about a hundred $50 million to help midcareer workers upgrade i tapping program's universities. it is no longer business as usual. uber and airbnb have disrupted the economy.
9:38 pm
no surprise. the opportunities are in technology. , they facebook, google are all expanding their operations in singapore. if you are a program error -- you willr or a coder be snapped up. it has to do that in a hurry. a nation of 5 million people with no natural resources. creation of jobs has always been at the heart of the economy. singapore's transformation. it is getting harder to stay relevant as it is no longer about picking the right sectors but now more constraints and competition. a nation in a hurry. rishaad: let's look at this crackdown is taking place in china.
9:39 pm
how big is this syntax market. >> the market is divided into two big sectors. sectorthe crowdfunding and the others the payment sector. the p2p sector is kind of led by the likes of facts and others start up players. in factrnment is not allowing anymore players to be launched. being.a for the time a big crackdown on that. the crackdown on some of the players asf these well. some of the more fortunate ones. rishaad:
9:40 pm
but they're also trying to encourage these fin tech companies as well are they. >> yes they are. they're trying to extend this type of financial technology to the poor people in china to try to get them online and try to get them into the financial sector. that is a great way to do it. it also provides a function that the banks don't provide as well. especially the small loans. rishaad: we've got all kinds of payment systems. you could argue the china leads the world with these systems. what is it going to encourage things like the bitcoin of the world. this is a really interesting question because in china it looks like the government probably is looking into digital currencies. .ot necessarily bitcoin
9:41 pm
the looking to expand the digital currency base and its monitoring of the economy. making things more efficient. especially in the countryside. to transfer wealth between people if you look at other countries even in africa like kenya. rishaad: with the world bank economist all agree that the financial reforms are indeed needed in china. no one agrees on how they should be implemented. more on this asia analytical issue after this break. ♪
9:42 pm
9:43 pm
9:44 pm
>> malaysia has received an official protest from taiwan after supporting 32 of the nationals to china. to face wire fraud charges. beijing claims jurisdiction over them as mainland chinese people reportedly have been the victims of scams that may be worth more than $1 billion a year. 100 suspects were sent to the prison over the weekend. they are all chinese nationals. on ao rico will default $420 million bond payment later today. that herest signal yet can't pay its debts. the governor warned that the government development bank would miss its obligation and called on washington for help. that any moody's said payment even agreed to by creditors constitutes default.
9:45 pm
withholding interest even temporarily is synonymous with default. japan has decided to abandon the satellite that was designed to study black holes. the $217 million project was launched in february to observe x-rays. contact was lost in march. scientists now think poor software caused it to spin out of control breaking off into the solar range. between the japanese air space agency nasa and other groups. ♪ rishaad: there has been more stability seen in chinese factories. easing may not be needed for the time being. we've also got steve engle here as well. looking at these pmi numbers.
9:46 pm
people are really reading quite a lot into this. this is the most excitement we will get for a reading of 50.1. which is right on the fence. it is important because this is the second month in a row where we are in positive territory with this. it also is showing that stability because we all know integrity in march the numbers are often distorted because of the lunar new year holiday. rishaad: it could be an obstacle to the
9:47 pm
sort of reforms that are needed and are hard to enact. pauline: everybody's been talking about reform since forever. the world bank, private-sector analysts, you guys. the devil is in the details. they say it is too little too late like local government debt. too much too soon. like opening the borders. is a very difficult thing to do for how to go forward. their policies without any worries. rishaad: when you have an economy with recovery they will not make the reforms because they are not needed. i disagree.
9:48 pm
steve: you can look at the other way and safety makes room for the reforms. pauline: the pmi numbers are very short term. it is just hovering there. on the border. it is too much. essentially the economy has no growth driving it. up one script the pmi percentage point of the decimal point. essentially they have got to change. i don't care how pmi goes. one percentage point here or there. they have to reform the economy. there is no dispute about that. we have had six interest rate cuts. we've had easing as a whole. now they are starting to work steel.eas like look at steel prices and steel construction. is this a danger sign as well.
9:49 pm
it is short-term monetary policy here or there. shuffled intot is the economy. this is a command economy. it has been adopted piecemeal over the years. rishaad: of job losses lot
9:50 pm
and that is something the president has already said he doesn't walk the frontline workers to be affected. this is the problem isn't it? pauline: they know the reforms are needed in different areas. it is who will hold structure itself. the need tohat ensure employment. one more thing that is holding back reforms that only seems to mention. the lack of challenge, regulatory, doctors and lawyers and accountants. there are plenty of chinese people overseas getting their mbas and whatnot but they are
9:51 pm
learning how to do things is in advanced economy. you cannot hit the ground running in china by studying the united states. steve: they can even find a successor right now. pauline: he has been groomed to since the 1990's. he's getting older. it is a big problem. rishaad: will these companies have this huge shakeout taking place. pauline: it will be one funeral at a time.
9:52 pm
it ensures the workers are compensated. i cannot see this present moment the concern over employment that there would be a broad overhaul. china has 1.5 billion employees. rishaad: up, thousands people are protesting in vietnam demanding better protection of its beaches. more on that coming up next. ♪
9:53 pm
9:54 pm
9:55 pm
there's no lack of transparency and that is what people of been criticized for. inprotests over the weekend vietnam. a very rare thing for vietnam. a lot of analysts saying this is the first big test that the government is facing. we are talking about four provinces being affected by this. we've had some 200 kilometers stretches of essential vietnamese beaches. fish wash uparm dead. the government says it doesn't know how came to be there. environmental damage has here in the fisheries industry. sunday's protests took place in hanoi and ho chi minh city. there is no accountability.
9:56 pm
they want reforms of the vietnamese people do not. they want to be in the catch fish and shrimp. they want to keep foreign investment coming through. that obviously doesn't want that to mr. displeasure. here's a tweet coming through. much more action is needed. an online petition to the white house. they want president obama to bring it up when he comes to visit vietnam in may. up, the surgeon japanese
9:57 pm
yen is not the only currency problem officials have to deal with. they've now been put on the united states watchlist. we'll have more on that in the next hour is trending business continues. ♪
9:58 pm
9:59 pm
♪ rishaad: will be live in sydney and singapore. asian equities are on the slide today. falling for the sixth time in seven sessions. oil falling for a second day. a global glut. the pressure of economics. the japanese yen continues to rise up to 106. this is an 18 month high.
10:00 pm
the japanese government says it is ready to act if the rally continues. gold is also rising within touching distance of the $1300 per ounce gold price level. now state of the market action. david: if you are long on japan you are losing some money. the other markets are closed. happening is is fueled by dollar weakness. the dollar has been down for six straight days. it is trading below 92 for the
10:01 pm
dollar index. that is propping up not only the japanese yen but other emerging market currencies. just about every single stock on the way down. glass cutting its guidance and leading the decline there. we are waiting for guidance on the drop-off ratio. about 9%. if you don't have very good news on your stock you can expected to be on the way down today. let's flesh out what is happening in australia. we are down 1%. down 2.5%.
10:02 pm
let's have a look at what is happening. been thesespot has gold producers. goldman sachs we just a few dollars above 1300 and ounce. called $2000 back in 2011 .e are just 54% short of gold australia's biggest gold producer. last i checked it was quite a day. 85%. some markets are reacting to the good news that the firm has managed to reach a deal with its bankers on this existing syndicated facility agreement. more breathing space before we
10:03 pm
start celebrating put this into context. the stock is trading at $.55. the share price was above the six australian dollars. longer term it is still way down. equities on the way down. rishaad: the japanese government said it is ready to act if the end is not stop its rally. sherry: japan's finance minister told local media he will carefully watch currency markets to ensure speculation doesn't continue. he will take action if needed. the japanese yen is now an 18 month high. that is after the bank of japan
10:04 pm
refrained from further monetary easing going against a market expectations. this is the not the first time japanese policymakers have tried .o talk down the yen many analysts don't think this is the right time for the finance ministry to make a move. >> drawing a line in the sand is very difficult. sherry: contributing to the yen's strength is the dollar's weakness. the united states is stepping up its rhetoric on trade markets. a treasury report says japan is among countries that have been put on a watchlist to gauge whether their foreign exchange practices provided unfair trade
10:05 pm
advantage over the united states. japanese economics has been under fire for much of the year for this very point. the opposition leader is already saying that the government's economic policy is failing. it relies heavily on monetary and fiscal policy rather than structural reform. he says he agrees on the policies third arrow of boosting private investments. diving deeper into negative interest rates. : perhaps further
10:06 pm
stimulus may not be needed. steve has been crunching these numbers. >> it tells us that there is stabilization. previous easing has worked its way into the economy. on a surge of new credit. china's official pmi staying above 50 for the second consecutive month. after seven months in a row below 50. optimismindicates more about improving conditions in china's factories. with april's reading we can start to see the economy is destabilized since the march numbers are often distorted upwards because of the lunar new year holiday. many japanese factories are closed. then they see new orders surge in march.
10:07 pm
new exports and imports dropped. still showing optimism. it risks fueling housing prices are further flooding cheap credit into certain sectors of the economy with overcapacity. i would mention steel and coal. they expect monetary policy to remain supportive in general. they don't see another rate cut into the fourth quarter at the earliest. waitnt and a watch and approach. that will be a priority at pse.s like the the benchmark one-year lending rate now stands at a record low. many economists believe that could be cut to as low as 4.1%
10:08 pm
in the fourth quarter at the earliest. only if conditions deteriorate from here. rishaad: here's a look at some other stories. haidi: it is all over halliburton's merger has been officially called off. the $20 billion deal was challenged by regulatory authorities. the proposed union between the second and third largest oil service firms met with stiff antitrust resistance. it cannot be found to appease these concerns. obtaining these approvals and general industry conditions could really damaged the economics of a deal. it will announce the termination fee of $3.5 billion by this wednesday.
10:09 pm
u.s. attorney general loretta lynch has called this a victory. she says it shows that no merger is too big or too complex to challenge. she reiterated that the merger would is resulted in higher prices and reduced output. thelargest u.s. lender says justice department's criminal division is investigating its practices in asia. seceing probed by the regulators are seeking to determine whether the bank violated anti-bribery laws. namedan hadn't until now the agency in his disclosures on this matter. until friday's quarterly regulatory filing. incorporating with these investigations.
10:10 pm
the airbag maker is plunging again. said that u.s. regulators plan to push for an expansion of a recall is already the biggest automotive history. the national highway traffic safety administration told carmakers that recalls will airbagsl vehicles with lacking a desiccant keeps them from deteriorating. there are more than a hundred million such vehicles worldwide. the stock is looking like this right now. it is still down 10% on the session. shotrishaad: is crunch time for malcolm turnbull as australia gets ready to unveil its budget. you are watching trending business. ♪
10:11 pm
10:12 pm
10:13 pm
rishaad: the japanese yen is it the strongest levels we seen since 2014. were talking about these lines in the sand. how to stymie this rally. >> people were talking about a line in the sand at 110.
10:14 pm
so that line has gotten very blurred. i think we're going to see more yen strength. if you look at the latest number it doesn't make sense. rishaad: the bank of japan's decision to do nothing was quite inexplicable. >> i think they have more confidence in their policy. they looking at the outlook. some of the short-term indicators tell me that if there is disappointment. this uncertainty that now the bank of japan has created, connectivity probably will indicate the strength. we may be looking at 105 potentially even 100. rishaad: one bank now has 90 and its forecast. >> it also depends on what you see happening with the u.s. dollar. in the second half of the year, we shift to see the fed coming
10:15 pm
with more normalization. if that takes place, that could give a boost to the dollar yen relationship. half of it at least has to do with the dollar's weakness. if you look at what is happened this year it was all about the u.s. economy. we have seen some improvement of late. overall the market looks for that activity. i think more importantly looking back is looking forward. if you see the good employment numbers. look at the number the comes out
10:16 pm
next week to get a good print of over a thousand. the market will start to see that the economy in the u.s. might accelerate. in the coming quarter. that should give us some confidence that this dollar weakness may actually reverse. that would have a big impact on the second half of the year. rishaad: more so perhaps against the australian dollar? in the case of australia i think we've seen a lot of support for the commodity prices. something i think will reverses well. taking some of the strength out of the oil prices. that will also be negative. we saw the inflation numbers very much below expectations. there is definitely room to maneuver. these things have signaled the market that we are unhappy with the strength of what is being met. with that component in place, the federal reserve is likely to signal more activity in terms of normalized rates. below 0.7.rop
10:17 pm
in terms of timeframe, i would say three to six months. rishaad: that there is a recovery taking place when it comes to commodities. we can certainly see that with the gold price. touching $1300 per ounce. >> if you look at goals, clearly breach ofalled for a that threshold. look at the speculative decisions. that scares me because once the market starts to realize, that story on the dollar is changing. some of the reversal on that speculation will the gold price negatively. i wouldn't chase gold higher. think about the momentum and the stop loss orders that are potentially out there.
10:18 pm
if you look at medals overall, what quite clear is that the bulk is done quite well especially since it is all about construction. the performance hasn't been that stellar. maybe there more potential in europe for release we will see some of those activities in base metals. most of the markets are still oversupplied. but if china can hold up. the base metal might be better supported. i can't say that for oil. oil has too much supply out there. here i would be more cautious. agriculture, we have lot mean yeah. the risk is out there. and the be the yield planting intentions. i think you'll see a increase in crop usage ratio. already having expectations these prices will not go up.
10:19 pm
haidi: makingre the stories headlines. china's seas signs of improvement in his relationship with japan. it's still there is a lack of mutual trust. aging commented after the minister met his counterpart in the two countries shared trade relations worth more than $340 billion. times of been strained by territorial disputes and japan's decision to beef up its military. to allow its forces to serve overseas. is expected toon be expelled from parliament today for leaving the country and not paying his debt. than $1.3 to oh more billion for his defunct kingfisher airlines. he denies that he is a willful defaulter. the unitedg in kingdom and has offered various sums to prove that he will pay up.
10:20 pm
they have extended the ban on the registration of new large vehicles as part of the task to tackle the city's pollution. the band was initially posted in september. it will be reviewed again on may 9. it has cut sales on larger cars while lifting demand for smaller engines and gasoline powered models. sales of its more powerful diesel in india fell 41% in march. gently rivals beijing for the level of air pollution. this is bloomberg news. ♪ rishaad: we can wonder what china is doing to encourage the growth of financial technology companies. that story and more when trending business continues. ♪
10:21 pm
10:22 pm
10:23 pm
rishaad: this is trending business. looking at financial technology companies. we talking about alibaba among others. our analyst is alex gardner. this is a massive market. which 800n people of million use the internet and use e-commerce. who is dominating this market? those three companies have about $3 trillion of market and business in the payment sector. hand, theer crowdfunding space which is dominated by others about $80 billion in that market. huge figures. we are not likely to see them go
10:24 pm
down anytime soon. rishaad: trying to control these thin tech companies. alex: it is a divide between companies that are in the payment space and our innovative, on the other hand the peer-to-peer lending space is not encouraging the startups of any new peer-to-peer platforms. they are worried about fraud and the client money issue. it is a subdivide in the thin market. china isal outflow in
10:25 pm
not something that the chinese government is encouraging. some companies enable you to do that. rishaad: let's talk about digital currencies, currency wallets. what is the authorities view on the bitcoin technology? the technology behind that. alex: there are a number of issues there. are going toallets be encouraged by china but only on china's terms. state run digital currency could be in the works. the authorityf has pretty much said it. bitcoin is definitely not in their idea at the moment. transfernables you to money without the monitoring of the government. which is precisely what they don't want to do. rishaad:
10:26 pm
what is the technology and how does it work? alex: block chain is a huge phenomenon of 2016. 40 of the major banks of the world are getting together and trying to come up with block chain standards. the opportunity is that if they don't get into it now then the market may pass them by. if they don't do it now they would never do it. it is encrypted and distributed ledgers that banks can use to ,ransfer money and trade immediate settlements. reducing the execution risk. paying the banks money. rishaad: thank you very much. up, the golden
10:27 pm
opportunity that the hedge funds have coming up. we'll tell you what that is. we will tell you when trending business returns in a couple of minutes from now. ♪
10:28 pm
10:29 pm
rishaad: asian equities dropping again today for the sixth time in seven sessions led down by sharp losses in japan. yen strengthening fast at 107 levels capping its biggest two-day gain against the dollar since 2008 and weighing on the earnings outlook for the exporters. finance minister has said the government will intervene if the currency continues to rise. signs that the china economy is stabilizing coming in at 50.1 for april just below the average forecasts there.
10:30 pm
any number above 50 indicating conditions are getting better, the expansion adding restraint to any additional stimulus. releasing a flood of cheap credit. they've called off the planned merger between the second and third biggest oil services company meeting with stiff antitrust resistance in the u.s. and europe with loretta lynch calling the termination a victory saying it shows no merger is too big or too complex to challenge. a bit of a relief in tokyo as traders there head off for their one hour long lunch break. david has a look at what is oing on market wise. >> the markets that are open, rish, are headed south. that's lunch break, the closing bell for the morning session couldn't come early enough. have a look at the nikkei, so
10:31 pm
we've been bobbling between 3.5 and 4% losses, one point, still obviously down about 7% from thursday. combine the two losses here. 23, 24 trillion yen. just for the nikkei. 2% there on the index. of course most markets are shut. it doesn't mean of course we're not getting action. in fact on a day like this with volume fairly, fairly thin except for japan you tend to get these moves here. let me flesh this out further. before i get back to the equity market. let me show you what's happening in the bond market. the japanese 10-year bond worth negative 0.11. what's getting a record low at the moment is the 20-year. we are at, we hit 24 basis points a few moments ago. i think we're about 25 at the moment. really just academic. still very low levels. then of course may 10, may 11, may 12.
10:32 pm
fairly hefty big bond options coming out of japan. we're still going to see robust emand there. they're going to try to keep doing it. to get you the levels here nikkei, topics, holding on to 16,000. topix below 1300, dollar/yen. .ig movers in the morning both these moves down. down to earnings. so they basically cut their uideans for the full year. they projected below estimates. it's forecasting higher earnings and also forecasting a higher dividend. fairly clear how markets are reacting. by the way, one of the six or
10:33 pm
seven on the nikkei 225 on the way up. everything else headed this way. rish? rishaad: also want to check on shares in -- we were down by about 4.7%, the company coming out with slightly weaker than expected first half results. let's go to sydney. paul? >> rish, it wasn't too bad a set of numbers from westpac the market expecting around $4 billion cash profit. they got 3.9. not much of a miss. westpac has been aggressively capital raising as have all of the major banks in australia. they put together 6 billion over the period. and it's the drag on all of this though was really bad debt. bad debts rising to the highest in six years. charges $667 million. nd they were just four large exposures which westpac declined to identify alone
10:34 pm
worth $250 million in impairments. the c.e.o. says it's not part of some broader malaise. >> if we look at the portfolio over all, stress levels are essentially stable. we don't see a broad based deterioration in credit quality. if anything the opposite as companies are using low interest rates to pay down debt. >> brian hartser saying it is just a few pockets of stress and over all he is pretty optimistic about the australian economy, rish. rishaad: it does seem many investors didn't really share that optimism. i guess this is also reflected in aussie banks generally speaking as well. sure bets on the rise there as well certainly. >> that's right. they've hit a tough year have the australian banks over the past 12 months and yet we take a look at this chart and you see just how much it has increased in the aussie banks up 41% since the start of the
10:35 pm
year and certainly if we take a look at westpac shares this morning currently off 4%, they were off almost 5% at one stage. looks like the short bets were well placed. we'll get to see a little more later in the week. reports on tuesday, we'll see if the short sellers have a drive there as well. for most investors they buy these aussie banks mainly for the yield and in that respect still a pretty healthy result. 94% dividend and that was in line with what was expected. rishaad: paul allen there in sydney. checking on some of the other stories we're following, said to be investigating its bankers over padded expense reports and improperly lending money to colleagues. three managing directors have left the bank over the last six months as a result this of probe. chief executive bill winters said last week standard chartered needs to tighten up
10:36 pm
everything around risk expenses and compliance. a narrow 1.4% gain in first quarter profit despite a rising number of bad loans that income rising to $10.5 billion while nonperforming loans jumped to more than $27 billion. the reinedor is the only one of china's big five banks to raise its bad loan ratio during the period. ccb fell below the regulatory minimum of 150%. opec and other oil producers are still considering a deal to freeze output but franklin resources says there is no need. some analysts are warning oil may tumble to 35 per barrel because of the global supply glut but they're betting prices will actually go up at mobius. >> i don't think you need a freeze. the market will handle it. you must remember the demand for oil continues to rise. it's not going down. the recount globally in the u.s. and globally has gone down
10:37 pm
precipitously. this only means that the supply has got to diminish despite what's happening here in the middle east. and the demand will continue to rise maybe 1% or 2% year and means bination of this we'll see a higher price for oil going forward. rishaad: much more of that on our new show bloomberg markets midday, middle east, hong kong, 2:00 p.m. in sydney and 8:00 a.m. in dubai. nothing seems to be able to dull a gold currency shine like an 18-month high having the biggest advance in twomonths. gold is on something of a tear to put it mildly. what is actually behind it? >> hi, rish. a lot of momentum building behind gold right now thanks to the weaker dollar of course. you take a look at the dollar index and compare it to the current gold price, we have seen this divergence wide in the past couple days or so. this all started last thursday
10:38 pm
when we saw that double whammy on the dollar. so the fed and the boj decided to do nothing. we've seen softer u.s. data come in so the fed a little more cautious now when it comes to raising rates for a second time. boj doing absolutely nothing. yen spiked. further pressure on the dollar. so gold actually reaching the one-year high now. we actually hit 12.99 an ounce on friday. we're slightly below that now but again, these are huge issues that are going to be supporting the gold price as well as other alternatives. other alternatives, we talked about the raw materials space. we have to talk about silver, too. actually could be the star here. it was beating gold in terms of its best month so far. spiked about 15%. the best month we've seen in silver since 2013. we are close to that one-year high we saw back in may. what is going on? we see that we could be more demand when it comes to china. the eco data has stabilized a
10:39 pm
bit. there is this optimism that the industrial usage of silver is going to increase and march imports of silver we saw in march coming into the mainland climbed 39%. so that is certainly a boosting silver right now. the hedge funds have been piling up the silver but recently we've seen the net holdings of gold from hedge funds actually drop slightly there. the futures and options contracts now at 184,000. what you're seeing here is about a 2% drop from the week before and that is the biggest drop in terms of net holdings for gold since hedge funds turned bullish on the metal starting in january. what is going on here? could be some traders cashing in on some recent profits. we have seen the wagers drop but also on the flip side the short bets have also declined so not exactly like we're seeing investors getting too bearish on gold right now, rish, still a pretty safe bet.
10:40 pm
rishaad: okay. you're touch on this. -- you're touching on this. people aren't polly anna about gold or overly optimistic whafment do analysts make of it? >> this has really rebounded quite a bit. 23% jump this year. that is the biggest gain to a start of the year in a decade. but goldman sachs is one that is not too optimistic. they say that, you know what? gold is going to fall to about 1100 in the next three months or so. a thousand in a year. why? they think the stronger labor market in the u.s. could be the trigger here for the fed to raise rates. they're actually expecting three rate hikes this year and if that is the case this whole story could look into a reversal. for the short term it looks like more momentum is building. rishaad: thanks, yvonne. let's look at singapore. it's been told it must urgently transform its economy to ensure that jobs are created and that there is continued growth.
10:41 pm
the prime minister said globalization and technology are forcing their country to review how business is done. let's get to our southeast asia correspondent. now, how is singapore actually esponding to this challenge? >> well, you said it, rish, about getting workers with the right skills. that is key to transforming the singapore economy and is more urgent because growth is slowing. the labor market is tightening. competition is intensifying. singapore is in the midst of this transformation. it set up a committee for the future economy to look at how this can be achieved. and is a sense of urgency here is what the prime minister had to say in his may day rally speech. >> the only way to do that is to transform the economy, create new opportunities, and get tunities not just to
10:42 pm
the pay but to upgrade ourselves so that we can do more challenging jobs. and that means restructuring our industries, reshaping our jobs. >> to be sure government programs have been put in place, initiatives like skilled future or adapt and grow all covering mid career singaporians as well as retrenched workers. we've seen a lot of disruption of late. no longer business as usual. the likes of uber, and others, have shown how business operations have changed with the advancement of technology. it is really about creating jobs for the future economy. rish? rishaad: yeah. well, the thing is, what's happening in singapore already here has been -- how is it repositioning itself? you please, what are the opportunities? >> you have to take a look at the technology sector in particular where you see most opportunities, the likes of apple, facebook, google, all
10:43 pm
expanding their operations, with more programmers, coders. singapore will have to respond by providing workers with the skills to fill those positions. this is not the first time singapore has had to reinvent its economy but some say it is more difficult this time around. it is no longer just about identifying growth sectors like wealth management, growth sectors, or technology for are that matter, rish. rishaad: thanks. there in singapore. coming up we'll hear from delta's new boss on where he sees growth opportunities for the airline coming up next on "trending business." ♪
10:44 pm
10:45 pm
>> welcome back. it is 10:45 here in hong kong. 11:45 in tokyo. these are the stories making headlines. malaysia has received an official protest from taiwan
10:46 pm
after deporting 32 of the island's nationals to china to face wire fraud charges. beijing claims jurisdiction over them as mainland chinese people are reported to have been the victims of scams that may be worth more than a billion dollars a year. the group is part of almost a hundred suspects. the others are all chinese nationals. puerto rico will default on a $420 million bond payment later today. the clearest signal yet. the governor warned that the government would miss the obligation and called on washington for help. last week moody said any nonpayment even if agreed to by creditors constitutes a default. global ratings said withholding interest even temporarily is synonymous with default. japan has decided to abandon a satellite that was des "e.t.-insider" study black
10:47 pm
holes. the $270 million astro age also nown as hitomi was launched in february to observe but contact was lost in march and scientists now think flawed software cause today to spin out of control breaking off its two solar rays. the satellite was a joint effort between the japanese aerospace agency, nasa, and others. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. rishaad: delta airlines has a new boss today taking over as chief executive after eight years as president. he told bloomberg he plans to make delta a much more global airline. >> there are two things. one, we'll continue to do what we do in running the best airline on the planet. we can do better at that. we'll continue to invest in the operation, invest in the product to make sure the reliability and the service
10:48 pm
levels don't, you know, they continue to grow while we set records three years in a row with respect to our operating performance 2016 will be another record-breaking year and there's more we can do because our customer expectations are rising and we're getting paid for it as a premium. that's one thing. i think the other thing you'll see me focus heavily on is the continued international expansion of our business. we've been active in the last five years, made a number of investments. we're in the process of doing a similar deal in mexico. the u.s. industry is largely a mature industry. there is growth in this industry but not new cities, not new markets, not new airports really being constructed. so if you're 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's great international opportunity still to be had. >> where? >> latin america, brazil. tough place to be right now. but there is long term a lot of growth and opportunity. right up through central america into mexico which is the deal that we're hoping to close before the end of the year.
10:49 pm
an economy that is growing a multiple of the u.s. economy, very young population. largest city in the world. mexico city sitting just across our border. big opportunities there. china is an opportunity. the u.s.-to-china traffic next year will likely be the largest international traffic flow in the world. we've made an investment in our partner in shanghai. i think shanghai will continue to become not just the commercial capital of china but long term the commercial capital of asia. >> a lot of capacity has been added between the u.s. and china. are you making money on those routes right now? >> we are making money. not as much as we'd like to given the startup nature of the investment but there are also restrictions about how much capacity can be added going forward. the u.s. and china, chinese airlines are running up against their capacity caps with respect to the bilateral. i think you'll see the capacity start to moderate here in the next couple of years. we'll allow both the chinese carriers and u.s. carriers to mature a little more in the investments they've made.
10:50 pm
>> what the longer term plan as you look out say 10 years. you have this investment in china eastern. will that become a joint venture? doon 'tis patient? can you envision an open skies agreement between the u.s. and china? >> i sure hope so. you listen to the political rhetoric today. i am not certain where the u.s. politicians are headed but from a long-term commercial per spectrometry ive and a trade perspective absolutely. when you look at the success we've had with our partners in europe building by far the most successful trans atlantic j.v. in the world and the seamlessness of travel between the u.s. and europe looking to recreate that now in latin america whether it be in mexico or brazil or some other developing markets there is no reason we can't long term have that in china. it is going to take a long time. it's a little difficult because the costs of the airplanes when you fly in the u.s. and anywhere in asia not just in china, it is an incredibly expensive investment so will
10:51 pm
modulate the level and the growth over time but i think we can certainly enhance our prospects there. >> would you go so far as to say it's something they're counting on? >> i think it's going to happen and you need to position for it and be out in front of it. >> is that what you mean when you talk about turning shanghai into a hub for delta? >> long term. shanghai is going to be a very important market for connecting. there are so many cities within china that, with multi-million population maps. probably can't afford direct service to the u.s. but they feed into shanghai and beijing. also very large in beijing. we have a great partner with china southern. we're spending a lot of time. on the ground in china we just hired a head of china, in shanghai, positioned him well. i think long term we're moving a lot of our asian center of operations from tokyo to shanghai and it should be the hub of the future.
10:52 pm
>> delta's incoming chief executive ed bastian. all right. still ahead, vietnam's leaders facing popular anger about how it handled an environmental disaster. looking at that next on "trending business."
10:53 pm
10:54 pm
rishaad: this is "trending business." now vietnam's capital is facing widespread criticism on social media after millions of dead fish washed up along 200 kilometers of coast line. well, a lot of criticism. it's a new government as well. >> it is. this is perhaps the first big test that the government has to face. trying to balance keeping foreign investors interested in the country and also keeping the domestic populace happy. there has been a lot of criticism that perhaps this was caused by a taiwanese company, a spin-off of taiwan's formosa plastics. the company has been questioned and it has in fact apologized though it says no direct link as been proven with why this 200-kilometer stretch of beach has been populated with both wild and farm fish washing up dead. the government felt they don't know why or how this came to be and said it caused economic and environmental damage obviously and hurt the fishing industry, particularly resulted in puzzled sentiment among
10:55 pm
citizens which is a way of describing what really has been anger and outrage as you can see. protests in vietnam aren't particularly common but we did see people in the streets of hanoi and ho chi minh on sunday. these signs they're waving include sentiment like please return our clean oceans to us. they really have been criticizing the government for not responding fast enough and not acting with greater transparency. rishaad: this is what we have right now with this. any response from the government at all with regard to all this? >> the government says it is investigating. we've also had provincial leaders going out for a swim into the waters to try and prove that they are in fact safe to use. it's terrible timing with a number of holidays and tourists around. >> tourism will be hit by this as well. >> exactly. shaad: this company -- we're also seeing reaction of course
10:56 pm
not just on twitter but here is another one. much more is needed. a full investigation by an independent authority must be conducted. so certainly there is some doubt over whether an official investigation would be sufficient and finally great reaction from vietnam. great promotion and marketing for vietnam. dead fish from ha ting to da nang. fantastic. rishaad: that's it for this onday "trending business." ♪
10:57 pm
10:58 pm
10:59 pm
>> we're live in hong kong and this is "asia edge." top stories this hour the pressure is building on eab-nomics with the yen at an 18-month high. the government says it is ready to act. more signs of stability in china. the latest check, positive again negative ates the need for imminent stimulus some say. gold extended its gains to the highest since january last year within touching distance of 1300 dollars. also coming up this hour,
11:00 pm
reform or risk being left behind? singapore's prime minister says it is time for radical change as the city tackles a sluggish economy. >> this is the first trading day of may. japan is the big market story today not because of a lot of growth but because of the moves in the morning session. on the lunch break right now, tokyo wasn't the best start. fell 3.6% in the morning session. very heavy volume there. dollar/yen now looking at 106 levels. . 's been volatile all morning of course especially new york. taking their jabs at this. that is sending the nikkei surging by 16% we saw in the morning, the cost of protection there. now the demand for safety is sending bond prices high inner


info Stream Only

Uploaded by TV Archive on