tv Trending Business Bloomberg May 12, 2016 9:00pm-10:01pm EDT
♪ the 13th ofday, may. this is "trending business." ♪ >> we are going to be live in tokyo and singapore at this hour. it is the apple effect, a new report says that iphone fails have fallen to a fraction of what they were four years ago. suppliers are starting to feel the chill of the reduced demand. anthony's on -- and nissan today, welcoming -- it is a challenge.
it offers huge opportunities. and change coming to struggling -- the new owner has done an initial review across the board. job -- jobs will go to reward hard workers. you can follow us on twitter. do not forget the #, trending business. out of south korea, the latest policy decisions. we have all the details. guest: as expected -- >> as expected by most looking at the policies at the moment, we have a seven-day rate. 1.5% and they kept it there. they will keep it there all the way, since the summer of 2015. and we should note that it as at a record low -- it is at a
record low. as expected, unchanged at 1.5%. that does not change the focus for the meeting on june 9. just because they did not do anything, the economy does not need it. there is a reason why they have it coming out with a non-consensus call, they may have done it this time, but not really. you look at the external situation. you look at the amount of debt in the system, in south korea, and the consumer debt. you can make a case. it is not crazy that they actually could cut rates sooner rather than later. quick reaction, the ball market -- bond market. we are looking at yields coming down further. and at the three-year, it is below the benchmark rate of 1.5%. yvonne: thank you. looking at how markets are
reacting. we will go to julia. te: it was widely affected in the bank of korea. interest rates on hold. if we look at the bloomberg terminal, you saw that they drop -- big drop. against the dollar, this is recouping a little bit now. coming back a little bit because they factored in. this came through as the decision hit the wires. the index has all in substantially, down by 4/10 of a percent. and other markets are turning negative as well. we were hoping for a more flat or subdued affect. we are looking at some weaknesses coming through. we are looking out losses from the earlier session, down
1/10 of a percent. holding onto gains from yesterday in the early session. and new zealand is pretty flat. i want to show you some of the apple suppliers, because we really did see the big drop coming through in the apple shares. seen this coming through today, saying that the weakness with apple, with the iphone sales falling, it is unwarranted because it was already factored into the market. if you look at the main manufacturers or suppliers in the asian region, this is falling significantly in tokyo. samsung electronics down about 2% in korea. and in taiwan, they are doing ok. only down by about 2.7%. i want to show you as well, that
we have had a poll out showing that this is going to weaken to the lowest level when it comes through. going back to you on. -- yvonne. pulled backman that nissan is taking on a new challenge. nissan,be helping making it the top shareholder. it is really good to see you. talk about this. mitsubishi motors looking at this this morning. what is it about the investor confidence that can turn this company around? >> if you looked all over for an executive in a position to do a rescue like this, you would not find anybody more all five -- more qualified than carlos. he has a long track record. go back to the 1990's and he was
the one that headed up the you -- the -- with michelin. that is where he made his name. they had a lot overcapacity, the french government latest from world, wanting -- role wanting to hold onto jobs. he made a goal of that. and he made it work. the next assignment he got was nissan, and it turned out ok. so he has quite a track record. he has written a lot about this and his career has been analyzed. investors can easily gain confidence from what he has done in the past. he has emphasized employing incentive pay for management, cutting out seniority pay my that sort of thing. that has helped revitalize companies in the past, so a lot of the problems that mitsubishi beht have had, have -- will
-- when he comes in and shakes things up. yvonne: what role does the management now have, now that nissan is working to restore trust in the company? >> for the near future, the top management will be spending time answering questions, guiding the probe as it goes along. today, there were reports that there were management orders to falsify data. that is a smoking gun is it is proved to be true. at the same time, you need to expect that they will have a lot to answer for, that will be the role going ahead, looking -- seeing the scandal through, following up with the government, deciding on payments as well. you will expect that nissan will be plotting the company's future and how it will integrate the
carmaker. yvonne: good news, at least for investors today. thank you. we'll take another look at that story later on. we want your opinion. you can always message as. -- us. sharp -- an initial review of the company by anyone or reveals -- new owner, reveals and efficiency throughout and production described as subpar. peter metellus more about the review -- tell us more about the review. give us highlights. >> sure. so we have our hands on the internal memo that was sent to employees at sharp, this is his first letter to them since he won the battle to gain control of the company. he told them that there is a harsh reality that they need to face.
that financial performance as deteriorated since 2012, he used the term subpar for performance, including the results from the latest year that were just disclosed, they lost money for the second straight year. he said, unfortunately, that this would result in job cuts at the company and other moves to improve the efficiency of the company. this came after he was in negotiations to win control of the company, he pledged to try to retain jobs as much as possible, as long as workers try hard. employeesooking for to put their heart and soul into the company can'-- into the company, but he also said that there would be hard times ahead. yvonne: what more do we know about the backdrop of foxxcon? empire inbuilt an
taiwan and mainland china, making all sorts of electronics, particularly for apple. he is a supplier for iphone and other devices that apple makes, so that has been a great business. right now, they are looking at the slowdown in iphone sales, and more broadly in the smartphone industry, so his major company reported earnings yesterday and there was a decline in probability there. push forackdrop to his sharp is that he has his own challenges ahead. yvonne: ok, thank you so much. we will take a look at some of the other stories we are watching today. starting off with more earnings from singapore airlines. >> it has been hurt by the set of lungs and oil -- sudden plunge in oil prices. they reported net income
reporting fivefold, to $164 million, but that was less than the $181 million that was forecast. the airline did carry more passengers over the lunar new year, but this was offset by losses. singapore airlines is lower. and -- airlines is reported to have profit in the first quarter, compared to a year ago, that is according to staff. profit for the first quarter is estimated to be between -- around $4 million. and outgoing ceo moehler exhibited -- educated that two other factors. and looking at trade that has successfully raised that is secured $3 billion in new financing through a loan. however, it had been seeking
more than that. noble says that it is narrowing liquidity. and stocks tumbled in the first quarter. they are trying to turn the company around by selling assets. go a tech company trying to private, they could have problems. converting a large sum of money into -- and a consortium of investors. they cannot move everything offshore in a single batch. bloomberg has been told that negotiations between the consortium and beijing are ongoing. isnne: coming up later, it decision day. we will take a look at the decision after the bank of korea decides to keep rates on hold. next, find out why the next guest says gold may be falling.
yvonne: oil heading for a weekly gain as investors weigh things in the u.s. and production restricted by the wildfires. we have seen a rebound and the early start of the year, but crude oil is down today. down 1.2% right now. earlier my bloomberg -- earlier, bloomberg spoke to an analyst on his take. >> there are some a different moving parts to try to forecast the price of oil, i would much rather try to narrow it down to , wherestem like l and g i can look at demand and supply
and make an educated analysis about this. if i am looking at global oil, i need to take about what demand in china is, how much is going to reserves, things i do not know. yvonne: we will get more now with michael. joins us from singapore. great to have you. we will look at the oil here. directionure in the to go, you have so many moving parts. oil in nigeria, the u.s., you cannot forget about iran, going back to pre-sanction levels, what do you think? guest: i think that he is right, do not forget that also oil, haveother risk assets, very strongly rebounded. the question is, have we seen a
pullback, or will we see higher levels? the real person is, this is a 200 straight month of expansion in the u.s. the real question is, whether the economy can do more, especially if we go into the november election, and the uncertainty that brings, said the economic numbers could continue to disappoint. oil could be on the high side. potentially. yvonne: so, we have been above 45 of late, where can we go? what is your forecast? guest: i think that we could he oil back into the -- could see oil back into the 32 level. because, if you think about news out of kuwait, that they will basically increase oil
production to record levels, many countries looking at $45 per barrel, they have a strong sense to supply more oil, especially if you think the probability of the u.s. recession is rising. hence, oil prices would fall again, why not make the most out of it at this higher level. at this level, many producers want to produce as much as possible. with news out of kuwait, it shows as that they are officially committed to raising production and i think the other countries might follow. yvonne: ok. so, you are not opportunistic when it comes to the earnings season in the u.s. a majority of surprises and expectations so low, could we see any type of upside here with the rally? or are we losing steam? guest: i think that we are --steam.eam, --
if you think about the reasons for that, the s&p 500 trailing in earnings, they are around 23.6. the estimated pe is around 19. the historic low is 15. so more importantly, we need stronger gdp growth in order to justify this and breakthrough the record high level of 2136, so the risk and reward ratio is more like a pullback. from a portfolio point of view, now is the time to look ahead is, protecting -- hedges, protecting -- and looking at risk management. in february, when the market fell off the cliff, maybe we had too much there. and maybe now we have complained the -- complacency. yvonne: so we could very likely fall to 1300 levels with the s&p
500? guest: over 2-3 years, potentially yes. many people have pointed out that equities are the preferred class. i mean, fixed income is priced anduse of -- mis-priced, equities could be looking at current levels, the downside risk could be around 40%. 15, thaterage pe is means is that a percent correction from here. yvonne: i am really interested to get your take on gold. we have seen the rally, could we be in for what is looking like an oil slide, saying -- seeing ingles live? -- gold slide? guest: many investors continue
to see it as precious. in the currency market, most central banks are unofficially debasing the currency. the european union and japan. and the u.s., when they are started quantifiably easy, i suppose the analogy between gold and oil is right. many times, the forecast was, oil prices move up and it was only until that it was only in 2007 when the market was making a further move up, saying, the forecast went above oil prices. $148 a barrel and the market, some people say, we were on a notto $35 manatt $200 -- $200. so many places have a view that gold prices could be climbing. it has outperformed the s&p 500
by 20%. so the trend is strong. many are raising target said that they are below the current prices. we are looking at the digit move -- head up move happening and that means that gold could move further. yvonne: thank you. still remaining bearish on goal. thank you for joining us. live fromsingapore -- singapore. >> stories making headlines, paul ryan says talks with donald trump were encouraging, but he is not ready to endorse him for president. is --yan asks if he enough to get support. and the u.s. navy looking at and sailors who went off coast. they were reported in january and the crew was held for 15 hours. the navy issued a statement, saying that they had lost
confidence in the commander who was responsible for those in his quadruped and iran -- in his quadruped and -- iran blaming saudi arabian in confidence for the death of citizens. and sabotage over security. this is bloomberg news. yvonne: up next, personal details of chinese tycoons leaked on twitter. we will have reaction from shanghai. ♪
elite? is -- that iss right. this is big names from financial business. we are talking about the ceo of alibaba. and a property tycoon, as well as the governor have at least one major chinese province. this is on twitter, as we well-known -- as we all know, is not official in china. it appears that this user, who is going by a name that is chinese or resident id card, putting on the identification numbers, in some cases, residential addresses of these high profile people. allegedly, also their children. they have managed to identify two of these to be authentic
♪ yvonne: top stories trending. these on shares are searching in tokyo after it recent stake in mitsubishi. the deal is a crucial lifeline for mitsubishi whose market values have fallen more than 40% over the fuel economy scandal. shares are lowered today. they say there are both risk and opportunities with the deal. sharp is higher after the new boss informed staff of another annual loss.
they promised to it in best in -- invest in new technology to turn things around and reward staff who put their heart and soul into rebuilding an icon. they put the loss at $2.3 billion a second yearly shortfall. profit missed forecast on fuel hedging. it was less than the $183 million analysts were forecasting. the airline carried more passengers over the lunar youth -- new year. let's bring in juliet. the 13th, joining us. juliette: it is a little bit on a miss -- ominous. seeing quite a lot coming through in this region
throughout what has been a healthy trading week. hong kong coming down to 4/10 of 1%. a number of energy players coming off today after a bit of a rally in those crude players. shanghai opening lower by 4/10 of 1%. you can see southeast asia has been weaker. the philippines have been doing their own thing, up due to the election. the election has been on a bit of a tear. korea down by .5% at the moment. the bank of korea leaving rates at 1.5% as expected. australia and new zealand are looking flat. if you look at the regional index, lower yesterday, but lower for a second session. it is that story of we are only seeing defensive players hire -- higher.
also an easing coming through on the crude contract. we want to show you some of the stocks we have enjoyed to. -- we have been watching. apple is falling. the lowest since june 2014. a report in a drop of iphone sales. their majorne of suppliers is down over 4.5%. mitsubishi and nissan shares -- nissan taking that stake in mitsubishi for $2.2 billion. nissan shares are up thomas 5%. -- up to almost 5%. it is a quote win win transaction between nissan and mitsubishi. we have a personal interest in seeing mitsubishi survive. have thist that we partnership with mitsubishi, we
obviously care about the viability of the company and the health of the company, if not, we have a problem. then we would have no cars for the japanese market. solidity, the health, and viability of myth to be she is important. -- of mitsubishi is important. the is why we think at moment, this partner -- extending a hand in discussing a partnership with something that was totally natural. totally natural. on top of this, it makes sense. you know, very well that there are a lot of things going on -- japanesenese and authorities and mitsubishi and other regulatory authorities.
there is a new diligence. this memory of understanding is based on a clear exchange between us and mr. rishi -- us and mitsubishi. hopefully nothing will come that would challenge this understanding. it should take a few months to be done correctly. i think in the meantime a lot of the uncertainty around this unfortunate situation will be done. yvonne: that was the nissan ceo. the bank of japan says they are releasing a new index to trace household consumption after criticism of the quality of its economic data. let's go to our managing editor, brian fowler. good to see you. why is the boj creating this new measure? brian: first of all, the boj's
contention that the cycle -- higher growth leading to rising incomes and more spending is a little bit hard to support. consumption data lately has been week. -- weak. consumption represents 60% of gdp it is important. there is criticism that the existing data is incomplete. one. is that existing data relied too heavily on input from the elderly. why is that? that is because the old people are the only ones with time to fill out long forms about spending. figures are supposedly going to be more thorough and giving us a complete picture of the spending patterns in japan. yvonne: do we know what it will show? will it reflect better data? journalist,cynical let me guess that somehow these figures are going to be a little bit magically more bullish than what we have out there already.
you may recall a few weeks ago that the government's released household spending data showing that household spending fell 5.3% on year in march. i would guess these numbers will somehow be a little better than that. having said that, one of the big problems with the economy is that wage growth is stagnant. wage growth hits the younger people, the consumers. it is hard to believe the data will be too much better than what we saw in household spending. other: of course the question is, is this going to affect policy? races in the sales tax or bank of japan easing? ryan: i think it will definitely become part of the dialogue. we obtained a document, we reported on this a few days ago abbe's top mr. advisers. he was putting a lot of infosys on fiscal policy. he said the sales tax hike
should be as punt. he said the government should compile a ¥10 trillion supplementary budget immediately. i would guess that somehow the government will find a way to incorporate the data from today into that dialogue to back this sort of proposals. -- those sort of proposals. yvonne: brian fowler joining us live. --cking on other stories japanese bank profits could be the lowest in four years. analyst we surveyed said that from different companies might fall to $21 billion this fiscal year. that is 7% below last year's projection. japanese banks have been the worst performers on the tokyo exchange since the boj decision to charge lenders for some reserves. we demand from chinese consumers and hedging losses on gold. hitting the bottom line of the world's biggest jewelry
retailer. there for luminary earnings report says the full-year profit fell between 40% and 50%. the china slowdown and anticorruption campaign has hurt luxury retailers in hong kong and macau. hong kong sales fell 12% in the first quarter with jewelry and watch sales plummeting. the bank of england has given it strongest warning yet on the threat posed if the u.k. leaves the union. that brexitsaid could cause a recession and any monetary policy decisions will need more time to work. the bank's quarterly report also inferred that brexit could affect financial stability, but they stopped short of long-term predictions. >> notable increase in inflation, that is the judgment, rigorous analysis and careful consideration. it is a judgment of the independent mpc. it is the judgment of all
members. there is a range of possible scenarios around those directions, which could possibly include a technical recession. could possibly include that. yvonne: global ready leaders have already next more than $20 billion in deals this week -- nixed $20 billion in deals this week. we are hearing about bayer and monsanto, potential mergers could create the largest supplier of what -- the goals of seeds and farm? >> this would be a great opportunity for bayer to buy products like ran -- roundup. giantows them to create a supplier of things from everything from genetically modified needs to herbicides and seeds todes -- herbicides and insecticides. yvonne: could this prompt others
to make deals of their own? brian: a lot of this is because earnings growth is stalling. a lot of these suppliers -- farmers incomes are struggling right now. prices for some of the main crops right now like corn and soybeans have gone down a lot. this is really making farmers surfer. -- suffer. they are unable to pay for some of these important technologies. ben: at the same time they become more important. there population grows, is not enough land and farmers have to become more efficient. yvonne: how will regulators respond? ben: that is exactly what they will look at. each individual deal -- would not cause too much consolidation in the industry. all of the deals added together, this one, now, dupont, kim china going after syngenta, when you add them together, the industry landscape is changing, that is what regulators will look at. yvonne: thank you.
yvonne: it is 9:43 in hong kong. these are the stories making headlines around the world. the new acting president of brazil says the countries that ability needs rescuing after the senate voted to impeach the ruler. made it hismer priority. spoke, denying financial is conduct. she has vowed to use all legal means to fight impeachment. many say she is unlikely to win.
are investigating the payment of $2 million into a singapore account from a should companies -- from a japanese bank just before tokyo won the olympics. they said the payment was to a company. the u.k. guardian says money was paid to a singapore account linked to be son of a former ioc veteran. the japanese cabinet secretary says the slate was clean and they are not aware of investigation. solar impulse is in the sky again on the 11th leg of its around the world voyage powered by the sun. journey is dueer to take almost 18 hours. it will circumnavigate the world without using fuel. it is expected to make at least one more stop in the u.s. before crossing the atlantic to europe or north africa. news.s bloomberg moste: there is one thing
investors and economists can agree on, south central banks are running out of any nation -- ammunition. david is here to explain. david: it might just be one case where they didn't -- if they didn't do it now, they might later. i will show you a few things that could make the case justified. not saying it will happen next meeting. you're looking at the change in exports. we know it is an exporting economy. have a look at the streak of declines. it has not been well. that is the economy. let's take you to what the market is saying, the benchmark rate, 1.5%. the yield on the three and five year. these rates tend to mirror each other. you could actually make the argument that the two times in the past that the three-year fell the lead -- below the benchmark rate we saw a
subsequent cut in interest rates. obviously they will not be forced into doing so because of that, but that is being priced in. to make this clear, in orange, that is the bank of korea base rate. what color? that is jade. five year is at 1.52%. here in cobalt, that is the three year yield, 1.42%. it is worth noting as well, when they did come out with the great position about 40 minutes ago we saw a slight uptick in the three-year. still treating below that. -- trading below that. the next chart is what i call pure pressure. do i have it -- pure pressure -- peer pressure. do i have it? here it is, key interest rate. could we get a close-up? white is the bank of korea. rba is in blue.
purple, thailand. the orange is the benchmark rate in taiwan. suffice it to say i will not get into details, treating it fairly rural -- low rates. no one lives in a vacuum. obviously what happens elsewhere impacts what happens. these are key expert in countries as well. they export different things. yvonne: thank you. let's get more reaction from young sun kwon. i know you did expect no change. how much longer can they afford to wait? believe thatn: we the ok will cut interest rates in july. this is because what happened in korea now is the government has pushed hard on corporate restructuring. that means, we believe there should be an extra budget for fiscal year 2016. we expect the government to asounce that in july as well
the capitalization plan for the policy for bank of a korea in relation to the corporate restructuring. we think the monetary policy easing will be part of this stimulus package. it is something overtime. we believe they will work on the interest rate in july. yvonne: maybe july. let's talk about the corporate restructuring, we see the ailing industries like shipping. they have struggled. the central bank has come in. they would eventually have to step in. we see with corporate restructuring that could be a strain when it comes to corporate debt. we also see in terms of cash crunches for healthy companies. : if they really concentrate on the shipbuilding industries, they are struggling with the capacity because the
investment demand is more like structural. that is why, right now is a good time to do the corporate restructuring. what is happening to this one? in pl'sy they should be -- npl. who pays? -- thek the combination fiscal plus, the monetary, the government and the bank will likely face that together to formulate the funds. this kind of corporate restructuring is a down service to economy growth. there should be some layoff at the same time, they should be increasing risk in the corporate bond market. probably the corporate will likely reduce their pay tax to maintain some of the liquidity. all of this restructuring is a
risk to economy growth. the labor market as well. for the monetary easing is necessity. yvonne: could we see more downside? : this year the be ok -- the bank of korea was 2.8%. the data was up for april. we think the q2 gdp will be 2.5%. not much different from the q1. that means there is a downside risk. yvonne: internally we see domestic conditions have deteriorated. external demand -- let's talk about that. we have seen stabilization in the chinese data of course, but can you say the economy has reached firmer ground? : it symbolizes --
it is good for china's domestic demand. it is not help for the rest of asia. when looking at the exports for south korea, import declined. i think it is more like a structural -- this is kind of a huge change. fromcing china's economy investment to consumption. factorsit is export geared into investment demand in china. yvonne: we have to leave it there. young sun kwon, thank you so much. coming up, from coffee making robots to self growing suitcases, more on the gadgets generating the biggest buzz of the consumers electronics show in shanghai. next. ♪
yvonne: the consumer electronics show is about to wrap up in shanghai. the event doubled in its second year with more than 300 exhibitors and 30,000 people. we have been looking at some of the hottest gadgets. haidi: tell me about this? what inspired you to create something like this? >> mrs. the first robotic suitcase. it can follow you and go around you. haidi: is a going to run away and get lost? >> the distance between you and the suitcase is larger than one meter or two meters. -- he and i have become firm friends. he will also become a friend of
children. >> and educator and a safety monitor. for example, a mother at work can use her smartphone to monitor things to see what the child is doing at home. labi: the guys at bubble have come up with this robot coffee maker. look at it go. ♪ can it make a good cup of coffee? bad, but i think i will stick to mine. this is hector. he is in the prototype stage. he has a webcam.
in the future the company has some lofty ambitions. they say potentially he could be used for search and rescue missions, even one day going into safe -- space expiration. -- exploration. i am told that means he wants a hug. it is like a rock the vote be a -- it is like arachnophobia for the digital age. i am going to put you down. wearables too robots that make coffee for you and suitcases that trail you around, we have seen a lot of cool things here. we have got a glimpse into the future where the lines between digital and physical are becoming blurred. it is time to go home. signing off. time to go home. keep up the pace.
♪ >> from our studios in new york city, this is "charlie rose." charlie: let me start with the guy in the middle, mark, tell me right now, right now, what are the five most important questions about the political year that we are in? mark: five? charlie: ok 10. the five most important you're knowarch of, obviously we it will be when donald trump talks to paul ryan.