tv First Up With Angie Lau Bloomberg May 22, 2016 7:00pm-9:01pm EDT
♪ angie: good morning, vietnam. obama begins a week long asian trip in hanoi. a frank exchange of views, g7 the mostalks featured tension in years. walking the boat would hurt hong kong's economy. bloomberg has evidence that is happening. welcome to "first up". i am angie lau. it is the first trading day of the week here.
markets in the asia-pacific, new zealand is falling fractionally, led down by materials and telecommunications. $.67.wi is at futures in australia looking like this. it is pointing to a slightly higher open, $.72, the aussie dollar level. let's get over to japan, wrapping up the finance ministers and policymakers for g7. futures in chicago pointing to a higher open. this could be helping a weaker yen. kicking off aa is weeklong trip to asia in hanoi. he is seeking closer economic and security ties with vietnam. we are traveling with the president right now.
president obama want to accomplish on this trip? >> good morning. it is a significant trip for president obama, wrapping up his time as u.s. president. his event toement asia, which has been a top priority for his administration for trade in defense relationships. onwants to press vietnam human rights, a country he thinks that has made progress, but will be meeting with civil society leaders while here. he wants to show to the world that vietnam is an increasingly important u.s. ally. angie: three days there, how significant is that? it is very long. it is unusual for the president to spend three days in a country like vietnam. next, buted to japan to spend three days in vietnam,
, that'sg to two cities a big deal. i think vietnam knows it. it is an important visit for the vietnamese leaders. president obama will meet with four different the enemies leaders one-on-one, so that is unusual. more simplees have political systems, but vietnam has a complicated one. president obama will meet with the president, prime minister, national assembly chairwoman, and the general secretary of the coming's party. he will hold a press conference with the vietnamese president today midday in hanoi. angie: old enemy and most recently newer and stronger friend, what message does obama's visit to vietnam send to china here? it sends an important message, and china knows it.
up hisnt obama will wrap presidency with a visit to china, traveling there for the g-20 later this year. by showing up in vietnam next door to china and on the south china sea, it sends a strategic message. the u.s. does not have any claims in the south china s ea, but it is a very important trade route for the u.s. given the immense void of to and from asia. the u.s. does not want to see anymore strife in that area. by showing up in vietnam and holding hands metaphorically with the vietnamese leadership, president obama is sending a message that the u.s. stands with its allies in the south china sea and will not tolerate further encroachment on shipping areas and an increased militarization of the south china sea, so president obama without doing much of anything
militarily is sending a strategic message. angie: traveling with the president, thank you so much for that. other headlines, the san francisco fed president said the economy should be solid enough to merit a great increase this data jobs and inflation are getting closer to central-bank targets. onliams does not vote monetary policy until 2018. investors see a 28% that the fed will raise rates next month. it has noepeated that plan to freeze oil production until the second half of the rts return to pre-sanction levels. it hopes to surpass 2.2 million barrels a day by midsummer, when it's due to meet its opec partners in vienna. iran is rebuilding the sector after sanctions for its nuclear program. lawmakers have approved a fresh round of austerity measures to
unlock emergency support from the eurozone. the greece by minister secured 153 votes in the chamber. they accused -- your group leaders meet tomorrow to assess greece's compliance with the bailout agreement that was struck last year. two days of talks between g7 finance ministers were marked by some of the sharpest currency divisions in years between japan and the u.s.. yvonne man was at the talks for us. what happened? not much. we did not get much appetite from the g7 nations when it came to a shared strategy on how to tackle slow global growth. the world's most developed nations agreed on several things , no currency wars, and some geopolitical risks to the economy when it comes to brexit, terrorism, and refugee flows,
but japan did not get that blessing it wanted from g7 as to what policy levers it wants to take moving forward to help it struggling economy. thisas we are waiting for extra spending, another dose of spending, coming out of japan in the next coming months. we heard a lot of tensions between leaders about the yen, particular from the u.s. and japan. the finance minister had a bilateral meeting with the u.s. treasury secretary jacob lew. theepeated his stance that yen is one side of the trading recently off of speculative trading, but it has first speculation itself of the government may intervene. we did not hear much from jack lew on this issue, but he said the moves in the currency are not volatile. we also heard from a noble laureate and the yield professor about fiscal policy and why we should not be that pessimistic
about it. take a listen. >> people look at national debt with too much fear. spent -- money is spent by the government on things that are real and important, it will be beneficial. i think there is a lot that can be done to improve the long run performance of the economy. there were no heated discussions between mr. lew and me. it is natural to have gaps in perspective and different interests. the only difference between the u.s. and japan is that the u.s. dollar is the reserve currency. there was a lot of talk about what constitutes disorderly moves in the yen. jack lew did speak about this briefly during a press briefing, saying that it is a high bar when it comes to disorderly
conditions. one example he brought forward was what japan did in 2011 when they got the blessing from g-7 nations to intervene in the currency. it seems that we are far away from that at this point. angie: what are we expecting at the leader summit this week? yvonne: we have been seeing competing views in the first meeting. hopefully, we will see more consensus. some protesters over the weekend in tokyo gathered at a park, saying there was no legitimacy a mom g7 nations when it came to making decisions about the global economy. behind closed doors, the topics we might be seeing on the agenda are the global economy, climate change, foreign policy. we are also looking out for barack obama, scheduled to visit .iroshima, that meeting starts thursday.
angie: yvonne man live in tokyo. the g7 finance cheese failing to reach consensus in japan, the yen there's are starting to falter. we have a look at the charts. the recent pullback may just be temporary? haidi: that is a concern that perhaps the wrist bite we have had so far is just short-lived. take a look at where we have been. the did manage to rally 12% against the u.s. dollar before pulling back at the beginning of may. we have seen those gains pared to 9%. if you take a look at what we are seeing in terms of the risk reversal, that is rising over the next six months to the highest in four years, so that does tell us that traders are becoming more wary where the yen goes from here.
all of this does rely on what the boj does and what the fed does as well. if both or either one of the central banks move, then we will see that correlating move in the yen as well, and also the dollar. seen as fundable in the short-term -- as vulnerable in the short-term. as you say, a lot of this does rely on the dollar. angie: upside risk for the yen would be further dollar strength? haidi: yes. that's right. let me bring up this chart that shows you the other side of what were seeing in this correlation. ,t has been the dollar story not just the yen, not just the weakness in the japanese currency, not just for nobility when it comes to the boj, but really do surge we have seen in the u.s. dollar that has come off somewhat.
we have about a three-week rally in the u.s. dollar. there are concerns that perhaps given what we heard at the g7 that there is no currency agreement. theseer, there were rumors that we had this agreement between the central bankers in order to try to push forward this dollar weakness, which we did see. that is now being reversed. the world number two currency trader, deutsche bank, saying the dollar rally has legs. that the fed goes in june or july, that is more of a bullish signal for the dollar, but when it comes to the yen, there is no consensus. some of the most recent research , investors toeen bearish when it comes to dollar-yen. this is the yen rising between 110-120 in the coming months. have thisuroda does track record of surprising the markets. they see the boj could come
forward with more buying an etf buying as early as june. corey saying the yen has are to gain the most out of its g 10 tears, looking mighty over price, and also expect the boj to go again. on the other side of the equation, you have wells fargo and also ing saying this section is nature of the u.s. election campaign will be a problem for japanese policymakers as they try to curb any further strengthen their currency. lots more still to calm, including disappearing executives. thatll take a look at default and china. three weeks and the next fmo see c meeting, iso there room for rate hike. we will discuss that next on "first up" ♪
stories making headlines around the world. each of sending a submarine to search for the egypt air lack box flight recorders and has warned against jumping to conclusions about what happened. president cc said all scenarios remain open and nothing has yet been proved. the flight crashed into the sea on thursday on route from paris to cairo. the french air accident investigators said the plane sent automatic messages about smoke in the cabin before losing contact. the verdict is expected later today in the trial of a baltimore police officer charged with the arrest and subsequent death of freddie gray. he is accused of assault and misconduct and reckless endangerment. gray while he was handcuffed and shackled in the back of a police van. prosecutors say he unlawfully arrested grade and was negligent and not going him into his
seatbelt. india remains in the grips of a record heatwave with temperatures topping 51 degrees celsius. authorities issued a severe heat a third in western states. the monsoon is expected to bring cooler temperatures in the beginning of next month. ofia now has had two years poor rain, with droughts putting extra pressure on the economy. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. angie: on full show among the cheese ase disagreement on the yen overshadowed the meeting. let's discuss the other events this week. lew and theh jack showdown. be honest, it reflects the fact that the g7 has started to
shift towards structural reforms. that is something that should ring bells for japan and other economies in asia that have also postponed their structural reforms. there was no communiqué after the meeting of finance ministers. there was no coordination. everybody was expecting something cute >> everybody was expecting coordinated fiscal approach. the joint press release does volatility and orderly moves are a threat to global recovery. however, the disagreement is quite obvious. japan came out announcing that does not necessarily reflect a view of all the participants in the meeting. angie: what happens if they do go rogue? will lookve the u.s. very closely for any signs of fx manipulation in the markets or that limits the space that
governor kuroda has to implement depreciation. angie: can japan afford that economically? can it afford not to? >> economically, we saw porter when gdp on the upside. the detail show not such a rosy action. business investment and the mystic exception are quite frail. -- and a consumption are quite frail. coordinate fiscal and monetary policy stances. however, they have to be careful and can't forget about the third arrow. from -- that hear there needs to be structural fiscal policy and acted -- enacted. does that help economists forecast what the second half of the year will look like for japan? do you think we will get stimulus from both ends?
done onpect some more the fiscal and monetary policy fronts. perhaps a shift towards qualitative aspects, but it would be nice to see something done on the employment front. the biggest block to growth now is having so much of the labor force working on part-time employment and underpaid. angie: we have to talk about the fed now. june or july? minutesink that the from the april meeting opened the door for a june rate hike. where as the doves outnumber the hawks in the april meeting, it is unclear as to whether that will also be the case in june. remember this is the second of many interest rate hikes, so the u.s. fed does not have to wait until all the indicators to make the move. angie: many this year? >> one definitely in the second
half of june, and possibly another towards the end of the year. angie: you are totaling three for the whole year. what do you think will get us there? retail sales? a number of economic data sets coming out here it do think they will be robust enough for the fed to lift off? >> on friday, gdp figures, and i think we expect to see an improvement from the preliminary figure. primarily because some of the data released they came out after that announcement has been quite positive, denoting higher economic activity, in particular we saw net exports increase and private consumption increased, that thereelieve will be some recovery in the second half of the year. the u.s. should be on track to grow by over 2%. angie: is this the right move by the fed? have already factored in a lot of that u.s. dollar appreciation.
the fed needs to send the right message to the markets so that we don't have a repeat of what happened last year. they postponenger the decision to hike interest rates, the worse it will be. angie: the ripple effect is very intense in emerging markets and here in asia. do you think we will get the same effect? are the markets more discipline this time? >> from april's meeting, we saw that dovish fed does have positive implications for outflows. in asia, we have seen a reversal in outflows. almost all emerging markets -- angie: what if the opposite happens? >> the risk of a rate hike in june is that it risks outflows in the region. individual companies like china will have to implement measures to control capital outflows and push ahead with some reforms that will give the confidence we
angie: welcome back. if you are watching "first up". china's third highest official warned the people of hong kong to avoid rocking the boat or else risking harming the city's economy. he believes that street protests are not helping the cause. seems the vote may already be rocking for hong kong's economy. certainly some signs of
leaking as represented by a series of charts on the bloomberg showing us that hong kong's chief executive is actually the city's least popular leader since the return to china's sovereignty in 1997. seeing a slump in retail property and financial sectors. this poll shows that his approval rating has fallen to an average of around 40 on a scale of 0-100, and this is after starting at a lower base than his two predecessors, the purple line here showing his popularity. is he unpopular, but also more measurable statistic show us that hong kong's economy is slowing down. this is a chart of hong kong retail sales going back to june 2010. they have been steadily declining, and we actually saw a 12% slump coming through in hong
kong retail sales in the first quarter due to the crackdown on anticorruption and the selling of luxury goods. kong's economy unexpectedly contracted .41% in the first three months of the year, compared to the prior quarter. sinceas the steepest drop 2011. a plunging retail having an impact on the overall economy as well. we are also seeing property prices under pressure. you can see hong kong property prices have fallen by 12% over , andast -- from their peak a number of people are calling for property prices to fall even further, goldman sachs producing a further 20% drop as we see borrowing costs soar. these metrics as well as ipo hong, and it seems this kong economic boat may already be rocking.
angie: coming up, excuses excuses. we will take a look at some of the more unusual reasons given by companies for missing payments. you' show me top new artist. ah, ha ha. 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, simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc.
♪ angie: the imperial palace there will be a little bit busy no doubt welcoming g-7 leaders in western japan discussed topics including climate change and boosting infrastructure. we are 30 minutes away from the opening of trading there as well as in south korea and australia. includingtop stories, presidents arrived in vietnam at the start of a weeklong asia trip. he starts the week in hanoi, becoming the third sitting president to visit since the end of the war. washington is eager to upgrade relations with emerging regional
power was rapidly expanding middle-class is a promising market for american goods. g-7 leaders meet in japan later this week after finance spoke aboutscussion tactics. they complained about one-sided moves before a joint statement where all members about not to be that -- devalue. the president of the san francisco pads of the u.s. economy should be solid enough to merit a rate increase this year. john williams says jobs and inflation data are closer to policymakers targets. williams does not have a boat on monetary policy until 2018. chance nexte a 28% month. this is bloomberg news.
let's check in on the markets this monday morning to new zealand. we are seeing materials and telecommunications just fractionally lower. new zealand dollar is slightly rising at 67. counting down to the opens of australia and japan, futures and australia pointing to a higher open. 10 point pop at open. japan, trading was very busy this weekend for japan. and futures in chicago pointing to a lower open. focusing our attentions on the yen over at the g-7. promising to boost growth been yet while championing the poor. he and his coalition were seen
as having the strongest electoral mandate in 30 years, sparking optimism that he would be able to introduce much-needed reform. rosalind chin here is here taking a look at his record so far. has he been able to sustain momentum? some would say that the spark which he ignited may be heating up. things -- you cannot always push through. let's take a look at what he has done. people are hopeful that he could actually get something done after years of basically not much progress being made in the indian parliament. those looking for emerging markets might now be looking at south america, brazil. it was the fourth biggest emerging-market currency so far this year.
sovereign bonds delivered the fastest returns. they started to lag behind, brazil and russia this year. reforms he is been trying to push the have been blocked. he wanted to try to implement a goods and services tax which would be a key to balancing the budget while building infrastructure. he has also started backing off of some proposals, for example simplifying labor laws and making it easier to acquire land. investors have not been excited about those things because it is not making it easier to get investment in india. ballistic you look at some of his achievements. inflation, a huge problem, that has managed to come down. it was 11.5% in 2017. but it is thought to more than half of that. that is partly because of oil prices. helped, but is now down
to 5.39%. the regulated gas prices, cut the red tape. worked at the central bank to set an inflation target for the first time. all of these coming together. he has made some achievements. you could say that maybe those people who are looking for a fast burn may be looking for more of a slow burn now. money -- mother nature has been plaguing india. rosalind: there has been a drought which has caused concerns about growth rates. -- have not have my been as good as they should have been. this was actually affect what mom and dad and the nation as a whole as in their pockets. rosalind: is that putting pressure? --ie:
rosalind: some of his critics will be thing he has not in performing as he should. he should not be renewed for another term. however he has also had successes. the central banks started buying bonds again for the first time in two years in december and that has helped to curb huge swings and volatility. the critics will always be out there. we will see in the next two months whether the prime minister will decide. angie: thank you for that. let's take a look at what else we are following for you on the bloomberg this morning. toyota is teaming up with the inventor of the segue to design better wheelchairs. the deal gives toyota access to balancing technology and health dean kamen introduce a new
wheelchair which has two sets of powered wheels to help go up and down stairs. the agreement comes after toyota pledged to spend about $1 bill ion over five years. the chairman has resigned as chairman when you're after shares were at suspended in hong kong. they made an investigation by regulars and questions over its accounting practices. li was china's richest man. billion was wiped off and half an hour last may before shares were suspended. making --ight stop the brazilian playmaker says it is considering closing its
factory in will make a final decision later this year. it says it is falling due to a lack of falling incentive and tax laws make it cheaper to import planes anyway. g ona is making -- takin elon musk and jeff bezos in the space race. the mini-shuttle is set to blast off before splashing back down in the bay of bengal. it is supposed to be more cost effective. they point to spend only about spacelion on its entire point. that is a fraction of nasa's $ 149 billion -- $19 billion budget. for china correspondent has been taking a look into
this. of forgetting my homework of all and the dog ate it. my homeworkte excuse being used by a chinese company. they mysteriously go missing just before repayment is needed to be made. there is a shuffling of assets that happens as well. of course we have heard, we had headlines earlier this year when certain executives certainly went missing. i will give you some examples. not distribute interest without the company's ceo -- seal. money, just pay up. they said they could not republish a repayment because the holder of the seal was traveling on a train. i could not process the payment.
then one of their executives went missing, the chairman, in december. that caused a lot of anxiety for bondholders. there is some amusement around this but there is a serious side saying that these bizarre excuses are making investors nervous. it will prevent a lot of money to get in on the market on the mainland. angie: especially since china is looking to open it up a little bit more. how much do people want to pick up the debt market here? how much pressure is the market -- domestic bond market? has grown in size over the last six years them almost doubled in size. we know the money on the table, the outstanding debt with around $5.1 trillion. 10know 10 faulted -- companies have the faulted this year in china.
that is obviously causing some concern. it is about the slowing growth and overcapacity problems. bad -- they suffered the worst sauces december 4014 last month. the bottom line is erratic excuses will make the bottom line more difficult. towill be more difficult payoff off the bond payments they need to be paid. no more excuses. the ratings agencies are on this. exactly, not good enough. thank you. china may miss a historic opportunity if it does not invest in more infrastructure. the best way to cruise -- boost growth. we have stephen engle in beijing with more. he is an influential
former central-bank advisor, he's now a research fellow. which is an advisory body to the chinese government. what he says is quite influential. a typical,ating tried and true response that he and that hasused been more money on bridges, roads, railways, airports. miss any, china may historical opportunity to his words, if it does not increase spending on infrastructure now. it wouldes not think be undermining the risk in this economy. he says the timing is right because the global economic downturn for one. he also says falling commodity prices. low interest rates in the west. .vercapacity in china
now is the time to spend more on infrastructure. critics obviously would argue that this would exacerbate the we saw following their response to the last crisis in 2008 when the global financial crisis out broke. yuanhad that 4 trillion package. muddy credit binge with the right thing to do back in 2009 because china avoided a hard landing. he says do it again. angie? angie: all right, thanks. coming up will get a check of some possible market movers in asia in your trading week. our reporters make their stock that just ahead. ♪
faces a year-long recession if voters decide to leave the european union must. treasury has made an assessment of the short-term impact on the so-called brexit. gdp, below the current estimate which is 484.3% increase. john kerry has urged myanmar's civilian led government to a net for the reforms. y met a week after the u.s. look at sanctions. of people in myanmar remains a sticking point. turkey's prime minister says he is backing the push to extend the powers of the presidency at the extent of his own office and
parliament. the turmoil has seen the lyra fall 6% this month. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. welcome to the second exchange. we have our three reporters here to tell us which stocks to keep an eye on. it is not done very well over the past year, pretty much tracking toshiba's downward spiral. but it is forecasting and operating profit of ¥14 billion for the current fiscal year. hopefully that will push it up. angie: conviction.
i'm looking at an australian operator of wind farms. they are all over the year. you might think they have peaked but now they are reporting that a chinese company is possibly eyeing them up as a potential acquisition. there could be movement on that. they had a extension plans. in the pipeline, 100,000 megawatts of product. change.inds of sales are up here on year. -- year on year. 6%.y nearly there you go. angie: those stock picks. coming up next, japan open
angie: breaking news out of japan. trade balance coming in, the surplus wider than expected. economists were expecting about 524 -- a bigger surplus that we saw in the month of march after a ¥755 billion print. got the contraction we have seen his worst come exports falling 10.1% on year. slightly worse than expected. but it is a much deeper drop them we saw for the month of march, 6.8% fall.
imports we see continuing to fall further down. 23.3% down on year for the month of april. that is also below estimates. much wider than we saw from the prior year. the exports falling for a seventh straight month. we saw japan aborting a recession. -- avoiding a recession. the currency on easily taking a bit of a pressure here on exports. we did see on the end of the month that the yen did strengthen to about 106 against the dollar. we continued to see this story as well, that is going to weigh on japan's exports. he dropped one oil is the one it caused imports to fall even more. in negativeports territory since january of 2015. 16 straight months where we have
seen those figures and the negative. what does this mean for policy? we have seen the yen's appreciation. that has eased some of the tension. but the yen hovering around 110. giving the chance to hold the policy during its june meeting. we are seeing the yen did strengthen up to the result. we are continuing to see strength here at the 110 spot. angie: thank you for that. at the open took japan. open in japan in just a few minutes now. it is looking like we are going to give that away at the start of the open. a bigger said, we had than expected surplus coming out of japan as a result of that stronger yen action. both disappointing. let's break down this japanese
data. just how integral was the yen to this trade data? particularly on the having ane, it is amplifying affect on the early drops in oil prices. it is making a contribution. but i think it is important to keep in mind, when we officially look at export volumes, the weakness in japanese export volumes is primarily attributable to the weakness abroad rather than the strength of the yen. just gradually passing through into exporters behavior. but it really reinforces as well the pressure that japan is under. looking for any support to intervene in the yen, still, they did not get it, especially from jack lew. jeremy: no. which still does not seem
unreasonable. a biggerweakness is policy, it is not clear to me that the yen is overvalued at these levels. i do not think actually that the yen depreciation at a large impact on the japanese economy and away. i think the u.s. is signaling that is happy that countries like japan are expanding fiscal policies. but -- angie: what was your biggest take away from the g7? i think you just underlines how difficult it is to get policy coordination in the current global environment. there was some lip service paid to the idea that the currency of the countries would engage and policies that will be targeting currency. but there is still no broad agreement on coordinated policy steps particularly with regards
to fiscal policy. that is a problem for the global economy. transition to economic growth is much weaker than it used to be. fiscal policy is the obvious response. politicalare not in a stage where they can make agreements about what to do. it probably will not be until the next major global economic downturn but that you see a more coordinated response. angie: you are usually based in edinburgh. japan walk the streets of , as you walk the streets going to the grocery stores and the malls, what are you seeing any real economy there that you think are headwinds that need to be overcome? jeremy: i am pretty convinced that the headwinds of growth are structural. the bank of japan has actually done a lot to support growth and support inflation over the past few years.
it can restore economic growth on its own, city government needs to do its part, not just with regard to fiscal policy but structural reforms. the so-called third arrow of the three arrows has been disappointing so far. it has not been brought enough and deep enough. potential growth is a very subdued. i think if you are going to see a catalyst for stronger growth in japan and the government needs to be able to do more on that front in particular. angie: quickly, do you have any forecast for boj stimulus? jeremy: i don't think in the very near term they seem likely to do much more. i think we would argue that they should have been doing more from the beginning of the year. it is not a good look if they continue to push out the expectation of when they hit their inflation targets because that undermines credibility of their policy objectives. but at the moment they seem to have a heavy status quo bias.
♪ further evidence of the slowdown in japan. exports and imports fell more than forecast, a trade surplus of $7.5 billion. an exchange of views, g7 finance talks expose currency tensions. good morning, vietnam. toma begins a week long trip asia to boost economic and security ties. welcome to "first up". i am angie lau.
to our top story, the latest trade data from japan, imports and exports fell more than forecast last month, a trade surplus at $7.5 billion. yvonne man has the rundown in tokyo. was $2 that surplus billion more than what economists were expecting. mentioned, that is bigger than what we saw in march, a ¥750 billion surplus. the yen playing a factor and exports once again. exports dropping further than expected, 10.1%. that is getting worse than what we saw in march, falling for a seventh straight month. japan avoided a technical recession, which was helped by a recovery in exports, but we see
it getting worse for april. things may be dampening more, falling 23.3% on year in april. economists were expecting a 19.2% fall. we did see the yen strengthen towards the latter part of the month, so that is weighing on exports. it was a drop in oil prices that continued to dampen imports. import figures have been in negative territory since january 2015, the 16th straight month of contraction in imports. the yen'sen appreciation recently take a break since it did rise to 106. maybe that could be a pause for the boj to wait and hold on policy as they meet in june. the yen now, some strength, 3/10
of 1% to 110.03. again, this data worse than expected. angie: g7 finance ministers met over the weekend. you were there for that. this ahead of the leader summit this week here at what happened? yvonne: not much happened. we were all waiting for some kind of headline about the yen. we got some talk about that towards the end, but we did not get a global response. structural,tary, or in terms of how to boost global growth. ,hey did agree on brexit terrorism, and refugee flows, but japan really wanted the blessing from g7 nations on what policy levers they should be moving forward to help a struggling economy. this as we wait for another dose
of spending from japan in the next coming months. we saw a lot of tension when it came to the yen between the u.s. and japan. the finance minister did talk about this saying that we did have a bilateral meeting with jack lew. they talked about how the recent moves in the recent moves in the yen have been one-sided and speculative. they did not address whether japan will intervene, but did talk about the friction on those views of intervention between the u.s. and japan. take a listen. there were no heated discussions between mr. lew and me. it is natural to caps on perspective and different interests. between u.s.rest and japan is the u.s. dollar is the reserve currency. did mention the yen during his press briefing
with reporters, repeating his view that the yen's movement has not been overly volatile, but did say it is a high bar when it comes to disorderly conditions. was 2011 in japan after the devastating earthquake and tsunami when the g7 nations gave the ok for japan to intervene. it seems like we are still a ways away from that, but looking towards the leaders meeting this thursday, we expect to see issues about the global economy, climate change, and foreign policy. we did see some drama already this weekend in tokyo, protesters gathering in some of the parks in japan. they are saying there is no legitimacy among g7 leaders when it comes to making decisions behind close doors. angie: thank you for that. trading in the asia pacific. here's a look at how the session is shaping up. the yen want to look at
given that miss when it comes to trade numbers. we are seeing a little strength in the yen, dollar-yen coming down a bit, a 10th of 1%. thate not really seeing expected reaction in the japanese currency. it is still sitting at that 110 handle, sustained yen weakness over the past week or so, and it looks to be continuing as that g7 meeting continues. not a lot of consensus on where the currency goes from here, a split in terms of whether japan will intervene, whether there is political appetite for that, and so much depends on what the boj and the fed will do. a lot of speculation that both central banks could be moving in opposite directions and increasing policy diversions. a quick look at how the markets are shaping up in terms of those first few minutes of trading. thel, tokyo and sydney, and nikkei 225 extending losses.
some declines with crude in the session given comments from iran that they will not join in on the freeze agreement. thesee seen a number of oil refiners in tokyo taking a beating in the early session. in terms of the australian session, upside 2/10 of 1%, energy names, and oil down. some weakness across minors despite retracement after that 6% decline towards the end of last week. seeing inat we are terms of that commodity space, wti extended weakness, down 6/10 of a percent, $48.15. focus is moving towards the next opec meeting on june 2. we are watching gold as well. perhaps a little risk aversion coming into play, but holding flat at the moment. angie: checking other headlines,
shares look like this in early trading on the asx 200 and australia. rising more than 10%. pricesope says higher and earlier expected delivery will boost its next results $270 million aussie dollars. iran has repeated that it has no plan to join a freeze in oil production until the second half of the year or until its exports returned to pre-sentient levels. ahead of the state oil company says it hopes to surpass two barrelsw -- 2.2 million a day by summer. it will meet with opec partners in vienna next week. building its energy sector fund the lifting of sanctions for its nuclear program. lawmakers approve austerity measures to unlock emergency support for the eurozone. 153 votesy or secured
in the 300 seat chamber. opposition rejected most measures and accused him of ruining the economy. your group leaders meet tomorrow on the bailout agreement. off aent obama kicking weeklong trip to asia in hanoi, seeking closer economic and security ties with vietnam in the face of china's influence in the region. a reporter is traveling with the president and joins us on the line. what does president obama want to accomplish on this trip? >> president obama has a lot of goals. he starts off in asia in vietnam and will wrap up in japan for the g7 and traveling to commercial him a, the first u.s. president to visit the side of the nuclear bombing during world war ii. in vietnam, president obama is ite for three days to make
clear how important the relationship between the u.s. and vietnam is, an important due to thelly increasing lose by china and the south china seas, so president obama is here to assure the vietnamese that he has their back and to talk up the increasing importance of the military and trade relationship with this country. angie: how significant is then this trip? is a very significant trip. to spend three days in a country like vietnam is unusual for president obama. his first time as president, and to be here for three days, visiting two cities, indication of the magnitude of importance of the trip to him. he was already planning to go to the g7 meeting in japan and tacked on the visit to vietnam ahead of the g7, so he chose to visit this country as president,
becoming the third u.s. president since the vietnam war to visit vietnam. he will be looking forward to vietnam, expected to be an increasingly important trade partner. theill be talking up transpacific partnership, which president obama would like to see the u.s. congress passed, and he will be meeting with some members of civil society and be an important and voice and trying to get more freedoms in vietnamese society. obama showssident up in a country like vietnam, he talks about the importance of freedoms to the people that those countries may lack. angie: how do you think china will regard this obama visit? china is always attends neighbor with vietnam. the relationship goes both ways. the fact that president obama is here in hanoi, and even if he the not talk about th
south china sea, showing up here and shoring up the relationship is an important signal to china. have upset the vietnamese with their increasing presence in the south china sea, including waters that vietnam claims as its own. hisident obama reiterating message that the u.s. once the dispute in that region to be settled diplomatically and that he wants the rule of law to be respected and that the u.s. will continue to do overflights and navigation operations in the south china sea, sending a key strategic message to china and to the u.s. allies, including not limited to vietnam, that the u.s. is at least watching, even if it is not involved in the dispute, because the u.s. has no claims in that region. angie: thank you for watching it closely for us as you travel with the president. coming up next, is the door
angie: 8:15 a.m. in hong kong, the stories making headlines. egypt sending a submarine to search for flight recorders, warned against jumping to conclusions about what happened. the president said all scenarios remain open and nothing has been proved. the flight crashed into the sea on thursday from paris to cairo. french air investigators said the plane sent messages about smoke before it lost contact. the trial of a baltimore police officer charged in the death of freddie gray. he is accused of assault, misconduct, and reckless endangerment. gray died after he was
handcuffed and shackled in the back of a police van. prosecutors say he unlawfully arrested freddie gray and the officer was negligent and not buckling him into his seatbelt. india in the grip of a record heatwave with amateurs topping 51 degrees celsius at times. authorities issued severe heat alerts and western states. is expected to bring cooler temperatures from the beginning of next month. india has had two years of poor rains and a drought putting extra pressure on the economy. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. let's check the markets trading in the asia-pacific. starting off next. -- starting off mixed. investors digest that worse than expected export and import figure. and australia fractionally
in positive territory. let's bring in head of strategy and research with state street global advisors. would you think is driving the mood in the markets these days? we believe we are at a point where we have two things that are changing, the fed and china. on the fed side, the market is catching up. will beeeing that there two hikes, but most likely starting in july. on china, we see the mood around favor atpansion and in the expense of growth is also changing, where we see more curve on credit and china, which could curb the mini cycle. it is july.hink did that change up to the latest minutes? we were already in the
camp of two hikes, so we believe the market is playing catch-up with us in the fed. we willunlikely given unlikely have all the data, including the geopolitical stance of a global nature and brexit. you taking an assessment of what your clients are telling you? did a survey of 400 institutional investors. we found they are still ,xpecting double-digit returns 10.9 percent for the global portfolio. angie: is that overly optimistic? >> we believe so. our expectation is in the low to middle single it digits -- single digits. they are looking to realign for portfolios with more active investing. angie: how do you look at the
toameters that clients want include in their portfolio when it comes to playing in the volatility space? >> we first need to align their exposure with their beliefs, and the police should be around what kind of risk i am ready to take to hit my return target, and with somed be downside risk strategies. remainsve volatility quite high, and to get a positive return, you need to reduce the drawdown. ofie: especially in the age convergence where everything is moving in tandem with each other. >> convergence or diversions of onitary policy, divergence some economic data create some as simple as the u.s. yield curve, a big
diversions between the two year and the 10 year. that creates more volatility because investors are not sure which one to look at for guidance. angie: what about japan, g7 just wrapped, very interesting tensions rising about currency. japan is indicating that the strong yen is a problem. >> the strong yen has been a problem for the first quarter, and exports are a result of that. for thedata was better first quarter, but if you look at the one-year basis, gdp is flat, so what we see in japan, and that's why we have turned more cautious on japan and underweight for global portfolio , because we believe the yen is eating earnings and that is having an impact on the japanese stock market. angie: you have any conviction place this week? >> not in the short term. one story we have put more hope
in is gold. we have increased our waiting in gold because if you look at the global yield markets, you have , so the so-called cost of carry of gold is not there anymore, especially for japanese investors or european investors. angie: four investors interested in the gold space, what products are you recommending? >> there are etf's that are physically backed as well, so when you buy etf's, you have that in gold, so that's an easy way to have liquid exposure. if they want to own gold for the long-term, they can buy gold and store it. angie: you have to find the space here in hong kong. thank you so much for that. thank you for joining us. looking ahead, don't miss our exclusive interview with the
offshore yuan and volatility jump. a june rate hike could accelerate china's capital outflow problems. markets, indian rupee saw its first week since january on speculation that fed rate hikes will accelerate outflows from emerging-market assets. the rupee retreated 1% last week, down 2% this year, ages worst-performing currency. overseeing holdings fell by $634 million in four days, the biggest tech line in 12 weeks. the slow pace of pushing through structural reforms and policy by the government also seemed to be putting for their downward pressure on the rupee. when it comes to the yen, it seems that analysts can't agree with the future holds. one analyst says investors are too bearish on dollar-yen and said the japanese currency is rising through 120 in the coming months. doesays governor kuroda
shock the markets, and he will likely expand buying next month. on theargo is neutral again but says intervention is looking unlikely. ing is bullish on the yen and says the protection is nature of u.s. elections will make it hard for japanese policymakers to curb yen strength. finally, state street saying watch out for risks has the potential for markets to fall back into risk aversion mode, heading straight back to yen as a safe haven. thehe meantime, the more yen falls, the more wary traders are becoming. its gains 9%ared against the dollar, but options vulnerability in the short term. protectingal ratio against yen gains for six months at the highest in four years compared to one month. blue here, andhe
it is clearly diverging from the one-month arete in the white air. tradershis does tell us feel that the yen weakness is just short-lived. those of the stories driving the forex markets is morning. angie: the big screen of the angry birds game, which reveals why the birds are so angry, top the north american box office over the weekend. the movie turk $39 million to add joe out captain america after three weeks at number one. recently cuter jobs due to waning interest in the franchise. coming up, increase in investment, former pboc governor says china must raise spending levels risk missing out. live in beijing for you, coming up next. ♪ okay, ready?
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simply by using your voice. the billboard music awards, live sunday may 22nd, 8/5 pacific, only on abc. a 30 a.m. in singapore and asian markets are swinging back-and-forth. -- it is 8:30 a.m. in singapore and asian markets are swinging back and forth. .ou're watching "first up" most stocks have opened lower, oil refusing to freeze output. 110 to is trading around the dollar after finance discords talks exposed on currency policy. japanese exports fell for seven ght month.
imports dropped 23%. surplus of $7.5 billion, underscoring the mounting challenges to revive the economy. in vietnam ata the start of a weeklong asian trip to build stronger ties in the face of china's growing influence. he is the first sitting president to visit since the end of the war. washington is eager to upgrade its rapidly expanding middle-class market offers opportunities for goods. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. let's take a look at markets trading in the asia-pacific right now. nikkei 225 extending losses. down on the heels of that disappointing export-import data. kospi higher, but australia has
slipped into negative territory. two markets closed, no training in sri lanka or bangladesh. two days of talks between g7 finance ministers ended without consensus on currency. it was marked by a growing divide between the u.s. and japan. let's get more with our chief asia economics correspondent. what is the difference between u.s. and japan in terms of their positioning right now? >> good morning. these are some of the biggest differences in years between japan and the u.s. on the exchange rates. pushingcular, they were the line that the recent trading has been speculative and one-sided. he got short shrift from jacob that it is a act high bar to qualify as does early training. does not allow
interventions for competitive purposes to help exporters and the like. agreeing on the definition of what disorderly is and what trading commissions are that can allow governments to step in, that is why japan is putting its flag in the sand. angie: it does mean japan must intervene. can we expect it? >> we are a long way from them intervening. we know they have other options on the table. they are planning a fiscal statement. time, they are consistently raising the yen is an issue, so on the one hand they are trying to make it clear that the g-20 says if conditions are disorderly, they have the option to intervene. i don't think we are there yet. the yen starts running again
hard, they could say they have the option on the table. angie: the latest trade data shows it is still messy in japan because of that strong in. >> certainly not good news ahead of the leader summit. it's hard to look as the impact of the strong currency there on japanese exporters. it is all exchange rate. a lot of it is global demand being weak. it shows you that japan's economy continues to scrape along the bottom, and there's significant pressure to respond, and that's why there's a view abe will use this week's summit. there will be interesting to see how much traction he gets. angie: thank you. pboc advisor says china may miss a historic opportunity if it does not invest more in infrastructure.
he says it is the best way to boost growth and won't undermine efforts to overhaul the economy. we are in beijing with more right now. why does he say now is the right time? he is an extremely influential former advisor to the central bank. at theow a senior fellow chinese academy of social sciences, a think tank advisor to the chinese government. is extremely influential. in fact, he never does television interviews. i have tried to get him on camera, but he won't. he did speak at a conference in beijing and said that he is advocating the typical tried-and-true response that chinese leaders have had an years past when facing economic challenges, that is to spend more on roads, railways, bridges, airports, and other infrastructure. he says, the quote that he gives is that china will miss a
historical opportunity if it does not increase this infrastructure investment right with growth dipping down into the mid-6% range. he doesn't think such a binge on infrastructure would undermine the efforts to reform the economy and says the timing is right because of the global economic downturn. that is one reason, but also the falling commodity prices, low interest rates, and also overcapacity in china. they could help with all away some of this overcapacity in key industries with more spending on infrastructure. critics would argue that this would exacerbate the credit binge much like how china responded back in 2009 to the global financial crisis, -- 4ing 4,000,000,000,001 trillion yuan that they are still working off today. angie: certainly you're not saying china is immune to a
financial crisis did what is the biggest risk he sees? >> this time around, you're isht, but he says that china unlikely to experience a financial crisis as long as there is no large-scale capital flight, which of course we had late last year, an estimated $1 trillion flowed out of china last year on some confidence issues, but not all of that was capital flight. it was alarming to the authorities here in beijing to see that big capital flight, and it's a big reason why authorities have tried to reassure the markets that the yuan will not depreciate to significantly. he does say that if there is to be a crisis this time around with a slowing pace of growth in china, it would be from rising nonperforming loans, which banks that lending and company stopped barbering and the economy grinds --a halt, so a credit binge binge may not be the right word -- but more credit for
infrastructure may be better than a banking crisis where nonperforming loans. banks lending and company stopped borrowing. angie: thank you. let's take a look at what else we are following on the bloomberg today. the president of the san francisco fed said the u.s. economy should be solid enough to merit a rate increase this year. and williams says it jobs inflation data are getting closer and closer to the central banks target. williams does not vote on monetary policy until 2018. investors now see a 20% chance that the fed will raise rates next month. toyota is designing better wheelchairs to give access to balancing technology and help to introduce a new version of its wheelchair, which uses two sets of powered wheels to walk up and down stairs and help disabled
people stand face-to-face with others. the agreement comes after he pledged to spend about a billion dollars over five years to research artificial intelligence and robotics. shareholderand main has resigned as chairman and executive director one year after shares were suspended in hong kong. the company says it is shaking up the board to improve governance amid an investigation by regulators and questions over accounting practices. for a time he was china's richest man on the back of the soaring stock price, but $19 billion in market by you was wiped out in half an hour last make before shares were suspended. and, making planes in china. ,t is cheaper to import them the present plane maker says it is considering closing its factory and will make a final decision by the middle of this year. it says chinese demand for its
jets is falling to lack of incentives and tax laws make it cheaper to import planes anyway. that was a look at some of the stories making headlines. angie: chinese defaults are on the rise. of unusualist excuses used by firms for missing payments. china correspondent tom mackenzie looking at the list of excuses. what you hearing from people not able to pay back money? companies are getting increasingly creative around these excuses, a lot of them revolving around that stamps or seal used in china that officiates paperwork. is bureaucracy, and a classic part of chinese bureaucracy. a lot of the excuses revolve around that with people saying they can't make the payment because of the lack of a stamp. a sema company said they can't make a payment because they
don't have the stamp. another example was a utility companies saying our managers are traveling and we can't do it. and you have managers and executives going missing for a linkeds, sometimes corruption scandals, sometimes not. about onsome shuffling and off the books, and it's all about a lack of protection for bondholders. there's also a lack of transparency in the documentation of some of these bonds. fitch raising a red flag saying that these excuses are utterly bazaar. it points to chaos and some of these companies when it comes to the management. it will deter foreign investors from getting in on the bond market. it also underscores the lack of legal structure in place in china to deal with these defaults, and also reveals that debt bond market in china is really volatile.
tom: absolutely. at the biggest selloff since 2014, 10 defaults this year, more than all of 2015, so there are concerns. ec regulators probing what is going on with the underwriters, sing the underwriters are not doing a good enough job to check these bonds through the lifecycle of those bonds. even the regulators getting concerned. you have questions over the role of ratings agencies in china, who some seem to say are overly keen to stamp a aaa rating. underwriters example of bonds being listed, then three months later the companies are in default, so this is a concern. there needs to be more transparency, analysts say, and more clarity in the paperwork if foreign investors will invest in the market. what can you do? angie: thanks.
angie: 8:45 a.m. in hong kong, the stories making headlines around the world. and warned it faces a year-long recession if voters decide to leave the european union. the treasury has made an assessment of the brexit and will publish the results later today. under what it calls a shock below currentand estimates. inflation is also seen rising sharply, while house prices would fall. urged myanmar's government to enact further
reforms. he met the foreign minister and aung san suu kyi after the u.s. lifted sanctions on 10 state-run companies and banks. in western myanmar of people there remains a stinking point -- sticking point. turkey's prime minister e-cig saysays he is -- designate he's backing the president. replaces the prime minister who resigned after losing a power struggle. the turmoil has seen the currency fall 6% this month. the stock market benchmark's down 16% in dollar terms, the worst performer among major markets. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. prime minister modi swept a powder, promising to biz growth while champing the poor.
and their coalition were seen as having the strongest mandate in 30 years, sparking optimism that he would introduce much-needed reforms. did he do it? we have in taking a look at the record so far. has he been able to maintain or sustain his momentum? looking for fast-paced emerging markets, you could say the steam has come off a little bit for india. some investors are saying you could look at brazil, south america, or russia. let's look at the worst performer among the four biggest markets, asia's worst performer as well. think they lagged behind brazil and russia.
made minister modi has some progress, but he does not have a majority in the upper house. for example, he wanted to put into place a goods and services tax, and that has yet to get through. he is starting to back off. he's finding it a little bit difficult to get the states governments on board to make it easier to acquire land. these are issues investors are looking at. he has obviously made some inroads into areas, for example the stock market. he has relaxed foreign investment limits, deregulated gas prices, cut red tape. issue, inflation was
rocketing in november before he came into power. 5.39%, partly held by the falling oil price, but there has been some moves to bolster and keep up that cpi keep it lower. governor under pressure here, why? >> there have been reports that there has been increasing tension with some members, politicians, in his government. also fueling the reports that he may not have his term renewed in september when it comes up. the fact that the finance minister refuses to comment. economists polled by bloomberg say that they see his term will be extended. angie: thanks. you can get that story and all the day's top stories at our digital destination, bloomberg
business brings together everything in one address. bloomberg.com, india taking on elon musk in the space race with new, reasonable spacecraft. the latest on the downed egyptair fright -- flight. the egyptian president warns about jumping to conclusions. china's third highest official last week warned the people of hong kong to avoid rocking the boat or else risk harming the city's economy. he believes that street protests are not helping the cause. it seems the boat may already be rocking for hong kong's economy. >> that's right. at least some signs of leaking. we have a series of charts showing as a number of things. this is the approval rating, and
he's the city's least popular leader since the return to china's sovereignty in 1997. his 45roval rating over months in service, holding at 40 , according to a hong kong university opinion poll. that is after it started at a lower base than those of his two predecessors. not only those masters -- also seebut we can that hong kong's economy is starting to slow down. chart shows us retail sales have been steadily declining back to 2010. in the first quarter of this year, we actually saw a retail sales plunged 12% due to the crackdown on anticorruption and the selling of luxury goods. the same's economy at time unexpectedly contracted 4.1% in the first three months compared to the prior quarter, and that was the steepest drop
since 2011. we have also seen as you can tell from this chart that property prices have been coming under pressure in hong kong. in fact, they are down 12% from their peak, and they are continuing to plunge according to forecasts. predicting another drop in home prices by 20% in hong kong. withumber of homeowners less than their mortgages have soared in the first quarter according to a hong kong monitory -- monetary authority. we have also seen ipo sales down 40%. bond sales at sign by 64%. street protests or not, the hong kong economic boat may already be rocking. angie: up next, rumors of interest from china could see shares in an austrian energy company take off in sydney. your market movers are just ahead on bloomberg television. ♪
toshiba company. 40% over the past 12 months in line with the parent company. angie: all right. >> energy. angie: not a winner either. >> not a winner. up, two point 5%, but i am way down at the bottom. up, operator of wind farms in australia, and the reports that a chinese company was looking to add it as an acquisition. investors taking some heart from that. they have a lot of capacity this company. they also have some government to get more wind energy on the grids in australia, so hence china taking a look at this one. angie: just not enough today.
ncl says sales grew 4.3% year on year, but investors weren't too happy with that news. also, it has said that sales increased for the full year previously, but operating profits were down due to weak consumer depend -- demand in japan. we will see how it does. angie: thanks. that is the verdict on the stock exchange. our reporters picks are based on news events. that is it for today. "trending business" is coming up. >> keeping up with the oil market. people positioning themselves ahead of that opec meeting. iran's position,
saying it needs to get its production up to pre-sanctions levels. looking at exports of 2.2 million barrels a day. it looks like we had into that meeting with iran keeping itself at when it comes to that. at what is coming up, data today from japan showing the yen is playing out when it comes to the exports picture. looking ahead to what janet yellen may be saying on friday. we will look at the latest out of egypt air and where we are with what happened to this aircraft between friday and now. what do we know today. ♪
♪ it is monday, the 23rd of may. i am rishaad salamat. this is "trending business". ♪ rishaad: right, taking you to tokyo, singapore, and annoy. japanese exports dropping, the yen strength blamed. imports and exports worse than forecast, a wider trade surplus. oil sliding again with iran rejecting calls for a freeze.