Skip to main content

tv   Trending Business  Bloomberg  May 4, 2016 9:00pm-10:01pm EDT

9:00 pm
rishaad: this is "trending business." we are the live in shanghai. this is what we're watching. u.s. regulators with a larger recall of to cut airbags. up 70 million vehicles. the number could easily soar to over 100 million. from 34cing the holding
9:01 pm
to 27%. they are expected -- he is expected to step down as cochairman. china clampdown on nontraditional money lending. thousand online lenders collapsed in the past year. doubt forget to include the # trainingbusiness. -- trendingbusiness. we should get an idea of where the economy is going. david: 30 minutes we do get a lot of data points coming out of australia. we have retail sales a bit later on in the afternoon. inflation numbers are due out of taiwan. that is asia for you at the moment. we are flat, fairly mixed. southeast asia still seeing some
9:02 pm
pressure. keep your eye on this group of stocks. stock market has been down for eight or nine straight days. there has been pressure on the currency for various reasons. time one is opening it -- taiwan is opening as well. mainly flat. flowing into the u.s. dollar. underpinned by this rally we have seen in u.s. treasuries. the 30the all the way to year yields are on the way down. take your is at -- the tenure is at 177 basis points. we do expect trade to be this way basing it on the current news flow ahead of the jobs report. we are looking for 200,000 and if it comes in below that will for speculation. expect the dollar can -- to
9:03 pm
continue. that is what the likes of citibank are saying. let's get back to the dollar index. at 9328. the third day that the dollar is on the way up. everything else falling especially these oil related currencies. we saw a big tumble in the ruble. a big tumble in the lenny. a fairly big trade deficit for canada. all helping push money back into the u.s. currency. one other currency want to mention. watch out for the vietnamese currency. a fairly big move, the biggest move in about six or seven months. they just adjusted it. that is something to keep in mind. the cash market and about an hours time and very quickly, the aussie dollar. that says a lot about where we are as far as the majors right now. basically flat ahead of key data
9:04 pm
tomorrow in the united states. authorities ordering takata to replace airbags. it was already the biggest recall in american history. they found the root cause of these airbag failures. >> moisture is of a factor that these have exploded with so much force. this is another big blow in the crisis that takata has failed to contain. honda released a statement in the last half hour or so but in this latest recall these are the details. a number of insulators doubled from $28.8 million and you add $40 million to the mix -- 40 million to the mix with a -- 60
9:05 pm
million that have been impacted. it also includes airbag aflator's that do not have desiccant. that is what reduces the moisture and it started off with 12 manufacturers including honda, toyota, and fear chrysler. 17 manufacturers including the likes of tesla and land rover. satisfiedd it is not with recall rates. takata's recall of its inflators in a band-aid approach. they replace some and then some more and more. eventually all will have to be recalled. yvonne: all inflator's have to be replaced before the turn six years old which is when the risk of rupture increases. it was having a tough time catching up.
9:06 pm
analysts say it would have taken until the end of next year to replace those parts. the company saying that they face "severe challenges" with this latest batch and analysts say the stock has lost 75% of its value in the past year. rishaad: let's have a look at what is going on with rio tinto. -- there is a possible decision on the mongolian coppermine being closed. paul allen is there. how likely is the decision on this today? paul: the planets are aligned. the mineion to expand has been stalled for 18 months after rio tinto and the mongolian government disagreed on how to proceed. that this agreement was cleared up at the end of last year. rio tinto said they would be a decision in the june quarter. the planets are aligned.
9:07 pm
there is a lot of business to get out of the way as well. the chief executive is stepping down. he says it is a challenging time for the company. >> there is no doubt in my mind that the year ahead will be a tough one for the industry and for rio tinto. as market conditions are tough as i have seen them in recent years. there is no doubt it will take a lot of commitment and drive to find new ways of making our business even better and even stronger. i know that rio tinto has a chief executive to be in john sebastian and a world-class team to do exactly that. tinto everyt rio success. paul: he was very and closely -- very closely involved in the project so another reason to
9:08 pm
expect the decision is probably imminent. rishaad: thanks. sydney force there. let's have a look at some of the other stories we we're watching. heidi is starting off with a look at one car company that wants to increase production by 500% in two years. we saw shares gaining in extended training -- trading. they reported a quarterly loss that was less than expected. first-quarter loss came in at $.57 a share. the -- they are on track to deliver 80 to 90,000 new vehicles and aiming to ramp up production five fold over the next two years. this comes as two of its top production cheeks are leaving the company.
9:09 pm
and cutting the stake in gaining revenue and continuing to tumble for the 23rd straight month. crown hold -- a sold $800 million in shares. also will step down as the cochairman. he will not become equity chairman under the deal. is taking them to 27%. their revenue is up and slightly missing estimates. down 27% over the past year. crown in sydney looking like this at 9/10 of a percent. -- .9 of 1%. which bank has cleared another hurdle in its $14 billion pursuit of the stock exchange.
9:10 pm
they said there have not been enough discussions with the lse and he does not have confidence in the deal but ellis he said the operator of the stock exchange never made an approach. the stock rise for the company also parting ways. shareholders had hoped for that higher offer. shares tumbling the most. i see surging in new york trade. this is the third go at buying lse. rishaad: we are looking at how open may have given up on its oil freeze. it is a good read created is on bloomberg.com/asia. debt could be facing a bad
9:11 pm
epidemic. how things could -- bad things could get ahead. we are looking at the markets. ♪
9:12 pm
9:13 pm
havead: global equities rebounded 11% since the february lows. should investors be chasing this because as of late we have seen a change of heart. but it to -- let's get to singapore steve. is it really a case of the moment, sell in may and go away? some: certainly we expect sort of volatility. the exact timing of weakness is always difficult to predict as is the magnitude. a couple of months ago we were saying equities were oversold and likely to bounce but we
9:14 pm
would be lightening up our equity exposure into that rally. the investment committee met last weekend reaffirmed that view saying we have come around 15% from the lows as you mentioned. he for now, 11%. this is a good idea to lighten up now ahead of volatility and weakness that we expect over the summer months. rishaad: yes, why? steve: if you look at the fundamentals they are still pretty fragile. caused the at what and thetabilization china stimulus. you see loose or financial conditions in the u.s. and a weaker u.s. dollar. you see the commodity [indiscernible] and they are interrelated. when you step back and say this is a short-term fundamental improvement do we extrapolate that over coming three to six
9:15 pm
months and our view is generally no. financial conditions need to tighten and the economy seems to be doing reasonably well. orders and employment rebounding strongly. that is in line there. so the fed we believe is tightening policy. we have concerns in europe. the brexit is of concern and things like grexit and the spanish elections and the final point coming to this part of the world, we really need to watch the chinese renminbi. dollar renminbi has been falling. if the dollar does firm up that will be harder to manage for them so that could be a source of volatility as well. rishaad: the language of the fed is as you said in your research notes is becoming more balanced and as we head toward june i suppose we will be choppy then and the cause of this brexit debate and that is taking its toll there. dollarime that the
9:16 pm
strengthens a bit and what are the indications? a good question. we met again yesterday to discuss the outlook for the dollar because we have seen it near test case support, the dollar index sitting on key support. the euro testing key resistance. the aussie keeping the low-key support recently. it is fitting into this picture saying are we going to see a batch from here? our central scenario remains that yes, we probably will see it stabilize but the next week or two it will be critical for the outlook for the dollar and also for risk appetite because of the dollar does breakthrough that support that might extend the risk appetite for global equities for a while longer. the chickens will come home to roost create -- roost. least, youe data at just use data as a guide more
9:17 pm
than anything else is showing signs of stability now. are we over the worst and how does that fit into your investment strategy? steve: this is part of the strongest stimulus we have seen since 2008-2009 for china so we should not underestimate the power that that can have we are starting to see signs that chinese authorities are looking to backtrack on that stimulus. we should always remember the authorities's number one priority is to deleverage the economy. and against that backdrop what we are seeing is going back to the old style deflationary policies over the past three or four months. we do not think that is sustainable from a policy and government perspective. that means that yes, the worst maybe kindness temporarily and that could extend another one or two months but ultimately we think china is in a structural deceleration trend from a growth perspective and markets need to factor than an. mindad: with all that in
9:18 pm
the imf is talking about its concerns when it comes to debt and emerging markets and in particular is it something that you have been flagging to clients or something that some of these credit risk insurers have also been doing? steve: absolutely. if you look at the local bond market that has been a major new story in china in recent times. the way we look at it we do not think chinese bonds are that attractive given the currency risk involved. what is interesting is this has not played out in international markets and you'll get asian corporate credit markets, they have been relatively resilient. to the concerns in china. the way we look at this is if you look historically at the returns and risk of volatility and investment grade credit that would suggest you would be liking this sector but given the risks in china and the
9:19 pm
concentration of china and these indices we are seeing it is ok until it is not and you do not know when the positive sentiment is going to change but for us it at this stage to be recommending that strongly to clients. within corporate credit we still have a preference for u.s. investment grade bonds, corporate bonds because we like the spread involved, we like the yield and in a risk off environment they should be relatively well protected. thanks for that. steve brice at standard chartered. >> john kasich has suspended his presidential campaign, preventing donald trump's place candidate. he faces a challenge of persuading a bitterly divided party tonight behind him. many senior applicant and donors have said they will not support trump. immigrants,women,
9:20 pm
prisoners of war, and the disabled during his campaign. has dent -- the president has a blow. she usedhas said that [indiscernible] the attorney general will present his defense of the president saying there are no legal grounds for her removal. the senate committee will vote on friday whether to accept the report. 31 passengers and a crew member were hurt on a flight from of a to jakarta. the airbus a3 30 was preparing to dissent when it hit unexpected turbulence about 45 minutes out. 10 people were taken to the hospital. the others were treated for minor injuries at the airport clinic. not released many details except the shaking was well enough to damage overhead storage bins. -- i ams over
9:21 pm
yvonne man. rishaad: we look at what investors want. that is next. ♪
9:22 pm
9:23 pm
rishaad: your back with -- you are back with "trending business ." net earnings slightly below estimates. margins did improve. highest ining at the almost two months. food giant soaring after as much as 6%. in at $6.5ing billion. we had that last year merger as well. we have kraft heinz announcing
9:24 pm
factory closures and more than 5000 job cuts as it is trying to illuminate expenses -- eliminate expenses are yo. are soaring beating analyst estimates. generating $761 million in ticket sales, 13 times more than what it cost to make it. it is in a fitting from ad fees and higher sales. the company continued to beat earnings estimates. revenue growth has been in the debt -- double digits. shareholders feel a little bit beleaguered. looking for something that will
9:25 pm
boost the price. >> we talked about the story since that ipo in september of 2014. the share win up to about $120 in -- and the euphoria. it has lost one third of its value. it is only eight dollars above its ipo price at a year and half since then. it has not given a lot of return to investors even though profit has doubled in the last year. they posted which has beaten expectations. rishaad: they're not buying it for some reason. this is the reason why. the white line is the case of revenue growth. it is misleading because the size of revenue is so much larger. rishaad: exactly. >> investors want so much. pre-ipo they were getting 45 percent revenue growth year-over-year. you're not going to get that. what we are expecting is a 33%
9:26 pm
rise year-over-year in the fiscal fourth quarter which is pretty good but -- >> it is equal to 20% growth in 2012. >> they are getting total merchandise value through mobile shopping. that is increasing. they are getting better ads and retail sales have an improving even in the -- the slowing economy. --estors want to see news on return on investment for their m&a. they made pushes into e-commerce and southeast asia. ant financial.y, .ishaad: they want to have more overseas. where it is not anywhere jack ma wants. rishaad: thanks a lot. coming up, we go to australian
9:27 pm
trade and retail. seeing if the figures are the latest in disappointment in the market. and the open numbers are coming your way after this break. ♪
9:28 pm
[ soft music ] e.t. phone home. when you find something you love, you can never get enough of it. change the way you experience tv with xfinity x1. shoah, ha ha.ew artist. show me top male artist. my whole belieber fan group. it's not a competition, but if it was i won. xfinity x1 lets you access the greatest library of billboard music awards moments,
9:29 pm
simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. ♪ rishaad: top stories. haveall of all the airbags been doubled, replacing more ton 40 million more devices reduce moisture. those recalls will take place between now and the end of 201930 and two more deaths -- 2019 caret two more deaths -- 20 19. two more deaths related to those airbags. and looking at the resources industry, investors confirming
9:30 pm
copperminesed in the -- in sydney this morning, also profits, $2.5 billion. a trend among big investors pared and margins -- investors. and margins improving. loans fell 6% from a year ago. talking about australia, we will get to the retail numbers. i think that we have a handle on these, paul? paul: we will start with the trade numbers. a little bit unexpected, $2.1 billion, $2.9 billion was estimated. and this compares favorably with the february figure of $3.4 billion. waiting on imports, those rose about 1%.
9:31 pm
and exports up 4%. a very good trade read for the month of march. and also better than expected, the retail sales. they expected a 3% rise and we have seen an improvement from february. another number, quarter on quarter, inflation removed from retail sales, coming in at about .5%, lower than expected. a good set of numbers from the trade and retail. rishaad: nice. no doubt we will be revisiting that head and david -- --isiting that area and that. and david, what do we have? bloomberg, is the obviously. we are looking at where we are with the aussie dollar. not quite recovering the levels.
9:32 pm
it is at about $.70. we are looking at a reaction, zooming in. this is the pop that we see. not a lot. there we go. it looks a lot over one day, but --are approaching 75 u.s. at 75 cents. we are looking at the equity market data been flirting with 5300 for the most part of the two sessions. we are getting close to 5350, after surprising cuts. expandinge have this budget, if you will. 5282 is the level right now. so that is about 30 points over the course of five days. just to give you what it looks 11 points.- up
9:33 pm
and this is what asia looks like. let me sort this through so we can have order to this chaos. markets open at the moment, let me make sure -- there we go. three market, australia, new zealand and mongolia leading. look at the flipside. we will take a look at what is down. southeast asia under pressure, malaysia looking at declines them as well as the philippines. and gaining about half of 1%. redcan notice the shades of and green, so when the color is outliers it -- it is an based on the asset. so what that tells you is that this is a standard deviation. basically indicating that move. 23,000 is the level. and this have to do with the dollar falling a little bit.
9:34 pm
and the adjustment with the u.s. dollar. and another cool feature, we have this, just click it. it will give you all the moves. and we just got of course, retail sales and trade numbers out of australia. the story is oil prices on the way of -- up. -- and a look at where we are right below. 4357 is the level. long story short, we are looking at some weakness falling through a little bit. it is still fairly flat, worse yesterday. this came ahead of the jobs report for tomorrow night. as to make or break june
9:35 pm
if the fed will raise rates. rishaad: and checking on other stories. the biggest container carrier not free from criticism, having flopping shipping rates. another three months to settle interest and worth nearly $5 billion. it is part of a concession. and we are getting word that there will be more --- more jb cuts, most of them in the lending trading -- london trading division. they will eliminate 6000 physicians this year with -- positions this year. this is after a second quarterly loss. and singapore's state investment company. looking at an asset manager, part of the deal with investments managed by a private
9:36 pm
company aren't -- owned by argyle. in awill be investing company that distributes medical instruments. dissolve theis to advisory board of the troubled state in the face of a widening investigation into a legend money laundering -- a legend money-laundering and embezzlement. and we have been following this right from the start. i mean, we get a little bit of information, every day. we have this bit of information. thing, this does not mean the end of global investigations. that will continue. the resignation does not confer absolution. one analyst said only the findings will prove conclusive. the board has been criticized for being irresponsible and signing off on the transaction. with it being dissolved, they
9:37 pm
will have limited responsibility. and some say, they may also be dissolved at some point. and recently weeks, there have been development. ishave heard -- always know that individuals are already being investigated elsewhere and there are multiple investigations happening around the world in luxembourg, the u.s., and winterland -- switzerland. they have charged two people in their probe. and chairman of the board, foreign inquiries have not implicated him exclusively. $600 million found in his personal account, a donation from the royal family from saudi arabia. he has not been charged with any wrongdoing. a month ago, inquiry called for a law enforcement inquiry,
9:38 pm
saying that they found $4.2 billion in the regular transactions. and -- you riegler transactions. swiss authorities have also made that assessment. rishaad: where are we with their finances, is it likely that they could default again? guest: we do not know. the next payment is due next week on the 11th of may, so that is a day to look out for. as you know, last week they voted on the interest of a $1.75 billion bond, so that could be guaranteed by the government. according to people familiar askedhe matter, 1mdb investors to hold off requests on debt. they say that they have enough funds to make interest payments, the market has been following this story for more than a year, but default could create a negative sentiment and thinking
9:39 pm
debt in malaysia -- thinking debt in malaysia. it will have to clear the air in the market. rishaad: thank you. breaking debt problem -- reaching higher proportions. what some call a looming crisis. ♪
9:40 pm
9:41 pm
♪ is 9:41 a.m. in hong kong. making headlines with the palestinian authority has suspended cooperation with israel in protest of military operations in the west bank. this coincides with tension at the border with gaza, which saw gunfire on wednesday. chief negotiators said that the executive committee would
9:42 pm
redefine all relations with israel, including political, economic and security ties. and a state of emergency declared in alberta as a wildfire in the region forces more than 80,000 people to leave their homes. at least 1600 buildings have been damaged or destroyed in fort mcmurray. and there are companies reducing production in alberta and opening up work at camps as emergency shelters. high temperatures are fueling the fire. large portion of the town could be lost. and the fight over disputed islands in the south challenge -- china sea. this is also claimed by the philippines. they have a tradition of putting on shows to boost the communist party. whosong speaks of a soldier
9:43 pm
postponed his wedding so often that his fiancee goes to the island to marry him. and 150 bureaus around the world, bloomberg news. rishaad: in china, increasingly concerned about consequences of the failure of investment companies and online lenders. some firms have been ordered to close on busy streets. there is social unrest and protest. here is gregory. how serious is this? think there are these protests of investors who have lost money by investing in some of these less legitimate products occurred quite for delete over the past few years. the latest move by the government shows that they are
9:44 pm
more concerned with the protests themselves than any of the money lost by the investors, lurd -- lured by advertisements of high returns and sometimes just straight fraud. rishaad: the chinese authorities have spent years promoting the lighting, so how will this affect more businesses? you know, there is possible effects of dampening the credit of these new start up credit agencies that are easier able to lend to small businesses and making them less available, where a small business cannot hope to get a loan from a bank, they have been able to get funding from peer-to-peer online lending -- lenders and other
9:45 pm
smaller lending operations. it is possible that this crackdown will make that less accessible to these businesses at a time when china is facing the lowest growth in five or six years. rishaad: thank you. have straight to steve, we data coming out. steve? guest: this is for services like construction. below the previous month in april, so we are looking at a little bit of steam in the service industry coming out with manufacturing. it also slid. mi's heightened. in march, we had 52.2. keep in mind, the services and the official, the have never been below 50 cents of their inception's.
9:46 pm
they are starting to come down a little bit. december in the nonmanufacturing private sector services companies, they were at 50.2. starting to show weakness. improved in the first couple of months of the year, but now coming off the mark ties of -- 51.8.high of and to the official nonmanufacturing pmi a couple of days ago, we got that on sunday. it was also below march at 53.5. fairly robust, but below the previous month. what we have seen in the official pmi is directly correlated to some of the indirect stimulus, or direct stimulus from the government, that is in construction. it has been picking up and it is helping the services sector even as manufacturing and older sectors in the economy have showed weakness. the headline, a little bit lower than expected for
9:47 pm
nonmanufacturing. it is at 51.8 for the pmi. rishaad: thank you. kong. in hong francis, thank you for joining us. tell me something, what steve has just been breaking, nonmanufacturing data. what is your take? guest: it is worrisome, we downgraded the market recently on these numbers. .he official pmi also weekend there is something wrong, you gave up so much credit at the end of the first quarter met that you should have strong results. rishaad: the lagging effect with that. guest: yes and no, these are basically surveys. is the business getting better? thant is a slightly worse last month. rishaad: you have to look at the outlet in particular. what they are looking at three
9:48 pm
months from now, they are optimistic, that is the case. guest: usually when you get credit, you get more orders and you have non-fracturing -- nonmanufacturing pmi. it is not make sense how the data has played out. this should be high for manufacturing. rishaad: you are saying that this stage is worrisome, you are becoming more cautious, why? guest: the government pumped up the stimulus in the first quarter, it was very high and now it is starting to fade. maybe this is showing up in the pmi numbers now. rishaad: we have seen instability in the manufacturing side at least. guest: you are actually looking at manufacturing pmi, they are above 50. but that is still softened, just like nonmanufacturing. rishaad: that is right. that is fundamentally the problem. guest: are they addressing it at a local level. even on the national level. they gave out a lot of credit.
9:49 pm
but ifere new orders this is not going to new orders, where is the credit going? financing, liquidity, which companies would reflect of the bad situation we are talking about. rishaad: and this is how it goes. in your research, when we look at banks, people are saying, it is not as bad as all that. you are saying that that does not reflect what is going on. and we ask the question, when is a nonperforming loan or a bad one, actually about -- a bad loan? guest: we are a little more lax when recognizing npl. the number should be quite higher. very simply, you add in npl and they are at 5% already. standards are being complicated now. they are moving toward western
9:50 pm
standards and the numbers should be higher. thatad: you are suggesting it is not 1.6, but closer to 70%. -- 17%. that is a huge difference. guest: it is really bottom up. we look at all the companies and look at if they recovered interest. what that tells you, if you cannot pay interest, you are in bad debt. whether you recognize it or not. the market will recognize it very fast. rishaad: one reason they are there is a good the lack of reform from the government and enterprises. there are some signs of that changing, is there not? guest: very slow, because the economy is difficult this year. it slowed down a lot of reforms. financial reforms, they are pushing ahead, but generally they have slow down -- slowed it down. rishaad: and job losses, that is the fear. that is what chinese authorities are dealing with with the
9:51 pm
population. they are keeping the jobs. guest: it is a political transition year and also i think that corporate balance sheets are stressed, so the accommodation of those is read -- destabilizing things. it is not that easy to do reform, so they decided to slow down. rishaad: what is going to be the catalyst for the authorities to act? there is so much pressure on them to do something. guest: i think this year, the government will always try to take the least painful way out. the catalyst -- i look at the industrial sector, we are back to 2008 levels. rishaad: and you look at that with the pmi's, there is contraction with that. maybe 47 months in a row now. guest: i think that will not change. i think that we are going on a path of slowing down, putting
9:52 pm
more pressure on the mpl's. rishaad: and where does -- the in all this? guest: i think there will be downward pressure. mainly because of the cash flow. they will close a lot of loopholes. rishaad: essentially a slowing period for how long? a year or two? guest: i think it we do not deal with this up front, we will have lower growth. it will be difficult to do. rishaad: thank you, francis. iphone, the leather collection. not quite what you may think. more on apples latest trade market in china. -- trade battle in china. ♪
9:53 pm
9:54 pm
♪ rishaad: apple has been having a
9:55 pm
tough time in china. itunes suffering a shutdown and now losing a legal battles that have exclu rights to the apple brand and iphone name, allowing accessory makers to keep using it on well it's -- wa llets and purses. this is an extraordinary story. guest: it is. do not tell me that you do not have an iphone back or briefcase . rishaad: i collect them all. guest: the court ruled that ipo -- apple does not have occlusive rights to when it comes to other things. rishaad: a registered trademark? guest: this is handbags and leather goods, products using the iphone name on its accessories, very strange to me. anyway, this is the latest below
9:56 pm
for apple in china. it has to do with fake versions of their own products. and fake stores popping up all over the place in china and now it is having to follow -- swallow this pill. the copyright only fits well in a sentence with infringement, so a lot of -- exactly. there is going to be a lot of different iphones in china. i guess if you are talking about handbags, it could last longer. and even donald trump getting dragged into this. is it is an example of america getting ripped off by china? some scathing reaction on social media. rishaad: thank you. we need to take a break. still ahead, opec and to the new plans for the next meeting next
9:57 pm
month. and a market check when we return. asian equities down. we are back, right after this. ♪
9:58 pm
9:59 pm
10:00 pm
announcer: from our studios in new york city, this is "charlie rose." charlie: you begin with sports and one of the biggest upsets in european football history is not sports in general. underdogs leicester city won the english premier league on monday after a consistently strong season. the upended traditional expectations, competing against wealthy clubs such as chelsea and manchester united. some of their players were competing in a amateur league's a few years ago. here to talk about this fairytale championship is john mickelthwait.

16 Views

info Stream Only

Uploaded by TV Archive on