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tv   Trending Business  Bloomberg  June 2, 2016 9:00pm-10:01pm EDT

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♪ rishaad: it is friday. it is the third of june. i am rishaad salamat. and you're watching "trending business". ♪ live in singapore and tokyo this hour. brent arising above $50 for the first time since november. price acceptable in the first half of next year. interested in the offer for takata, shares up
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strongly. raising half $1 billion. the company lost its chief executive on monday. do let us know what you think. follow me on twitter @rishaadtv, and use #trendingbusiness. weekast trading day of the in shanghai and hong kong underway in 30 minutes. others just starting off. david is taking stock of the mood. there's no real conviction ahead of the jobs report. back to levels at the start of the week. let me recap quickly. 500 above 2100, seven month high.
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stocks in europe, call it flat. europe was lower. emerging markets flat as well. no real conviction. volumes are light. we are well-off the highs of the last hour or so for every market open. doing this, .5%, not bad. we were seeing a lot more gains early on, at sense of caution out there. , that is the story in sydney, below 5300, well off the highs. korea,pi index in session lows, 1982 is the level. asia is looking like this. here is the heat map.
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three opening up. it is the best misleading. we are seeing gains, but claims are light. some sharper swings when you do have a day like this. the outlook at the moment or opec, thection from lack of a deal. , so youn from the ecb have the jobs report later on, i function of what markets think will happen midmonth. and you have the vote coming up in the u.k.. . options traders are looking at those two even risks. a lot of caution right now. we are seeing gains, but it looks to be capped at these levels. rishaad: noble is planning to
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raise half $1 billion to boost its balance sheet. the chairman says he will step down within 12 months. let's bring in our southeast asia correspondent. what details do you have on this? >> can you believe it? noble willproved by offer one share for each existing share. a 60% discount from its closing price on thursday. the rights issue is to cut that. noble has been trying to raise a billion dollars. it wants to shore up its balance sheet. it has been trying to turn around its fortunes, selling off parts of its company. the company said this week that it was planning to sell its u.s. business, noble america energy solutions. that announcement came less than a month after saying it was a
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core asset. it has been a turbulent week for noble. it was resigned, saying time to step down after four years at the helm. chairman will be leaving, opening the way for a succession plan. the company's shares have collapsed. its credit rating cut to junk. of accountinge praxis -- practices and a commodities slide. the execution plan remains uncertain, even though the capital raising plan would be positive. i want to show you noble shares, down 25% this year on top of the 65% drop last year. ahead for noble lacks
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clarity, still under a lot of pressure to regain investor confidence. it has not been able to calm the nerves. rishaad: thank you very much indeed for that. let's take a look at shares jumping, private equity firm said to be evaluating bids for takata. .et's get over to tokyo the is fundamentally question, how can anybody be ta, which manytaka are saying is a bottomless pit? >> there is definitely a puzzling question there when you have a company that has as many recalls. why our calculation, if you andine the u.s. and japan what is likely to follow and other parts of the world, this
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recall has exceeded 100 million airbags worldwide. the important thing to remember is that you really have a situation where the automakers are footing the bill for those costs. is ahe automakers, it question of how you are going to be able to extract and some of that cost back out of takata. can you do that without putting the company under? ta needs a financial sponsor, outside parties to come in and change the way the company has been operating. you look beyond the headlines of the airbags and all these recalls and the ugliness surrounding this, the problem is with thesead airbag inflator's, you have an underlying business that is quite strong, when you look at the seat else they have made,
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beyond airbag sales, steering wheels, and there is something to be said for the value of those assets. you are seeing some major names in the private equity space showing interest in this company. this is not going to be concluded overnight, is it? the negotiation will take months. >> that's right. this will be one heck of a due diligence job here. you will have to do a lot of negotiating with the carmakers. they will have to sign off on whatever the final resolution is for takata. whatwill want to know to extent whatever companies that come in will help to foot the bill for some of these recall costs. to theit is up automakers to what extent they want to extract some of the kata and put them
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on the hook for what they are responsible for here. certainly it will be months and years long negotiation between all the stakeholders involved. rishaad: thank you very much indeed. right, well, let's have a look at one telecomms net work which is under the microscope for breaking sanctions. we have that story and others we are covering for you today. sending: it is technology to what the u.s. government calls rogue nations. commercetment of issued at a subpoena. awei said it is committed to complying with laws and regulations.
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they declined to comment on any document request. in march, the commerce department block u.s. exports to second-biggest maker of telecomms equipment. customers were unable to access some online services for more than two hours on thursday. of the 49 webzen services suffered outages, apple tv photos, the app store, and some icloud functions. the service is restored, but users may experience slower than usual performance. services represent the company's fastest growing revenue sector, jumping 20% in the three months through march. in a bid to seal the deal, there
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is a plan to visit beijing next week. -- ceo of the stanza lufthansa said he will meet with senior managers. they are working on joint ventures along all main hall markets as it tries to stave off the loss of traffic to middle eastern rivals. rishaad: how taiwan is switching away from china two weeks after its new president took over. it is on later on the show, china's plans to deal with -- hit a snag. opec rejecting a production ceiling. this is "trending business". ♪
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rishaad: all right, you are back
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with "trending business". opec saying it strategy is succeeding. they decided a limit is unnecessary at this stage. ministers were united in their optimism that the oil market is approving. let's check on crude. the bti, unchanged, $50 a barrel. brent, above that important psychological handle. my next guest says we should not expect the cartel to cut production. we did not expect much. they did not build it out. we got what we expected. a do abouteally much nothing. expectations were low going in. >> it wasn't a special meeting. >> that's right. it was unlike the meeting two
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months ago. rishaad: one thing they did agree on is this new secretary general. is this job essentially unimportant? >> essentially this is a figurehead role, a ceremonial role. it does not have much bearing in terms of what opec's future strategy will be. rishaad: that is dictated by a certain player in opec? the shots and opec. it has the largest amount of spare capacity and the largest production, so saudi dictates what the strategy is, and the others tend to follow. rishaad: people work keen to see what the new oil minister had to say. did he say anything controversial or out of the ordinary? >> not really. he is certainly looking to build bridges within opec. we saw sentiment and prove a little bit with iran.
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fundamentally, his stance is that market forces are really ng to dictate what happens with oil going forward. it's a big difference from february, isn't it? we saw them beginning to panic when oil was heading to $22 a barrel. more calm and considered, supply and demand coming into equilibrium. are seeing a significant rebalancing in the market. with opec, the feeling is a lot better than it was in february. oil prices have lifted from $27 to over $50. there is clear evidence the strategy is working. i cap is irrelevant if it does not filter down to member countries. athaad: right, with oil
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these levels, where do you see it going next? situation where we see shale producers finding it economical to produce again? >> it is over $50 a barrel when we start to see riggs coming rigs coming back. we are starting to see supply come off quite sharply, china, veryo, the u.s., dropping quickly, so we are moving into a market undersupplied rather than the oversupply we have had. rishaad: it happened quicker than most pundits were saying. >> the reason for that is that demand has been stronger than people expected. time, the capital starting tocuts are filter through into production, and so we are getting a rebalancing. what is the new equilibrium
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price of the market? at some point, the rigs will come back. rishaad: we were talking to the norwegian energy minister who said don't expect to see $100 a barrel again. >> i think the days of $100 a barrel are gone for some time. $50 to $70 as a barrel range. shale will set that price range. rishaad: absolutely. a color brimmed is happy? >> it is. an opec perspective, it is a much better number than they had. ,or nigeria, libya, venezuela they are still not breaking even on their budget. for some opec members, this will create a lot of pressure. rishaad: we don't even know who the libyan government is at the moment. the iragi supply is still restricted. we have have those canadian
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wildfires as well. when these all come back, do we see another lurch down before we recover? >> i think we should see some consolidation in the market as canadian production comes back. in the short-term, oil goes back to $60 a barrel. the geopolitical risk in nigeria and venezuela will get worse in the storm -- short-term. venezuela, affectively they have sucked a large parts of the economy, importing goods is difficult. that could lead to more volatility in the short-term. rishaad: thank you very much indeed for that. that's a look at what has been going on in opec and beyond. >> the stories making headlines around the world. paul ryan has finally endorsed donald trump for president, ending a standoff between the top elected republican and the parties white house contender.
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and an article for his hometown wisconsin newspaper, ryan said the two have more common ground than disagreement. hillary clinton has stepped up her attacks on trump calling him temperamentally unfit to be president. she says his policies are "a busier bizarre rants, personal feuds." mh 17 was flying from amsterdam to kuala lumpur in july 2 years ago at the height of the fighting between key have and pro-russian separatists. the triple seven was most likely hit by a missile fired from rebel territory. all 298 people on board were killed. that had they been more careful choosing what path they want to take, they could have avoided this, and that is the position we are taking.
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say for not taking seriously the warnings that were given. has seen the rains river sand in paris break its banks. moved precious artwork out of basement areas. the river has not been this high since 1982. storms have left a people dead and thousands of homes without power. paris had three times its average rainfall in may. monday's rainfall set a record. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. up next, taking on the to make itsthe fed stress test even tougher. this is "trending business". ♪
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rishaad: you are back with
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"trending business". the fed is promising down to to crack down on big banks. >> stress tests for wall street's biggest banks are going to get tougher. that is the take away. it won't be tough across the board. would seekse changes to penalize the larger more complex banks but would ease off on smaller regional competitors. take a listen to see how it might be done. >> what we will be doing his a review of the stress test system we have. we want to change the post stress requirements for the amount of capital that banks need to have, even after
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observing the losses hypothesized in the stress scenario. >> it is an increase in capital targets for the big banks, and there are eight of them in focus. morgan, citigroup, goldman sachs, morgan stanley, wells fargo, state street. impact bank stocks to the downside. the bank index rose for tens of a percent in thursday's trade. the fed could exempt them from stress tests. those banks include bb&t and zions bancorp, those that have less than $250 billion in assets. he hopes the fed will have those changes in place in 2017. the idea behind all of this he says is that you can have smaller banks fail, but with the larger banks, they need to be
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much more resilient in the face of an economic downturn. let's have a look at some other stories we are tracking. two former deutsche bank staff are facing charges over the rigging of interest rates. yorkas a supervisor in new and the other a london trader, accused of manipulating libor. to investigation has led charges against some 15 bankers and brokers with two convicted at trial and others pleading guilty. local airlines earnings are set to soar as the plunge and oil offsets passenger growth. the international air transport association is expecting net billion, reach $39.4 3.1 billion more than forecast. we have to take a break. , areg up, china's banks
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they heading for a toxic shock? the plan to tackle bad debt. the start of the trading day in hong kong and china. the numbers are next. ♪
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a look at our top stories, asian stocks tracking a u.s. rebound as the s&p hit a high. japanese shares driving the benchmark higher. akataen retreating and t one of the biggest caner's -- gainers. opec maintaining status quo. the cartel failed to agree on a production ceiling.
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ministers were united in their optimism that oil markets are improving. appointed a new secretary general. noble group approved to raise around $500 million to bolster its balance sheet. the chief executive resigned this week. the founder and chairman will go within 12 months. the company will offer one share for each existing share, a 63% discount from thursday's close. uphave hong kong on the way premarket. the r&b also entering the fray. david: the tail wind blowing across the pacific from wall street where the s&p closed above 2100. you are looking at the offshore rates, 6.5892.
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pboc sets the yuan at 6.5793. have a look at what is happening in the chinese equity markets. , shares above 8800. we are seeing gains at the moment. here, we talk about with upcoming changes respect to the msci. aey have added allocation for shares. they have taken the money from their hong kong allocation, so that is the thinking on how you position yourself in light of the upcoming change. , upgrading its call on shares of hong kong
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a company that runs the equity stock exchange in the city. msci will more likely than not announce the inclusion of a shares. the mechanism here will be increased turnover. through -- and that will increase the bottom line. that is a the recommendation here. the broader picture looking like this. asia, most stocks up. 47% of shares on the way up. by m's light ahead of the jobs is light aheade of the jobs report coming out of the u.s.. ,ave a look at the nikkei 225 fast retailing leading the gains there today.
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sales inon the back of may up 6%, the biggest gain so far this year. a little bit of positivity at ahead of what a lot of people are saying is a crucial report on the u.s. employment picture. rishaad: thanks for that. rent crude remaining around the $50 a barrel level. crude remaining around the $50 a barrel level. the question is, we just had new he sees oiling that going up to $60 a barrel by the in the year. .> the disruptions have helped estimated that rebalancing phase had started in may. it is maintaining the status quo strategy of helping oil, but it
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is a strategy that is working. u.s. production declined. decline, so it's working. rishaad: to have a ceiling was unacceptable to iran. there was a lot of bridge building that went on. it was an olive branch from saudi arabia. they scuttle that very quickly. the meeting seemed more unified than previous meetings. rishaad: a new secretary general. ,> they agreed on something which they have not been able to do for a long time. most of the ministers agreed that the market is rebalancing, agreed to a new secretary general, so it is going in the right direction. rishaad: what next? >> there might be some risks on the horizon.
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shale producers are under a lot of debt pressure at the moment. constant declines or a trend of declines would help the market move higher. muchad: thank you very indeed. right, let's check some other stories. yer has secured $63 billion for its pursuit of monsanto. should the deal go three, it will create the world's egg a supplier of farm chemicals and seed. snapchat said to have overtaken twitter. would you believe it is only four years old? the 110ilding on million users it had in december. twitter was once the second-most
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popular social network. messaging interbank system, swift, said it expects more hacking cases to emerge and said upgrading its defenses will take years. they say it will take some time to install. hackers used swift messages to steal $81 -- $81 million from the accounts of bangladesh. here is a deal that few outside the chinese state financial system seem willing to take, swapping bad debt for what could be bad equity. the government's plan to rid banks of nonperforming loans is hitting a bit of a snag. we are looking at who is buying this and who is not. >> why would people by bad equity -- rishaad: that's the idea.
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if you have bad debt, it only creates bad equity at the end of the day. >> this is what the chinese government is trying to do to clean up. they have also scale back the program. trillion worth of corporate debt at risk. swap is not aty huge thing. , the bigot the panacea one pill to solve the problem. what we are seeing from the initial sales, may 20 six, bank of china headed to do you offer -- a debut offer. other banks, china merchants, same day, similar offerings. 60% sold to other banks. you have banks buying other banks'bad debt.
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citic securities saying china don't have enough domestic institutional investors with the expertise to price such complex products. stage, it doesn't look like they have a lot of buyers, except those within the state. rishaad: it is essentially a government bailout? >> a chart shows an interesting trend. of outstanding debt is in the chinese banking system and could go sour by the end of this year. rishaad: it's down 33%. >> see that first drop off on the first left that far left. that is when bank of china and china construction bank received their capital injections ahead of their ipos. this was 2000 something, i can't remember exactly. infusion of
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capital, then that large drop-off in the middle, agricultural bank of china receiving its bailout from the government. then we plateaued, and look what has happened. since the big stimulus package, the big run up in debt. this is what one person had to say. here's a quote from and stevenson yang "the chinese authorities have yet to accept that a bank bailout costing trillions will be required. she says it will be required soon." rishaad: this is going to take some time. thank you very much indeed. aboutn sachs warning china bank, saying there is a -- risk -- growing list of capital outflows. that could spark a global selloff. this is a domino effect worried -- effect. pretty blunt in its
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assessment, goldman sachs and they shifted their view on the yuan to a negative in this note yesterday. the pboc is guiding the yuan lower against the dollar, and their is a risk that it reignites the capital flight we saw in august doing that evaluation. we did see that impact in august last year. let me bring that up for you. here and here. in january, re-exacerbated by that volatility. currently trading close to a five-year low as the likelihood of a fed rate increase is leading to further strengthen the dollar. they are trying to take some of the downward pressure off of the currency. may be the first -- worst month for the yuan since the dividing
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ration. global markets have been increasingly sensitive to any perception of yuan depreciation. by march, with the fed lowering forecast for long-term borrowing costs, so it is a ripple affect and something central bankers are having to take into account. downe meantime, shanghai 17% year to date, so certainly better than where we were a few days ago, but still taking the wooden spoon in terms of global performance. it is trying to keep it steady against a basket of currencies. that theachs saying sweet spot of being able to
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balance that won't last long for the pboc, saying this strategy will not be particularly successful in stemming capital outflows. turn, the decline in the currency threatens to slow the pace of the fed when it comes to tightening policy. goldman saying that there is a good chance that markets will speculate over the need for a yuan devaluation, even if the message from beijing is not such. we are still waiting for the msci decision on whether to include a shares. comesow volume's when it ahead of that. it will be interesting to see what happens to the yuan and the markets after that decision comes through. up next, showing loyalty. how chinese consumers compared to picking and sticking. the latest market research next on "trending business". ♪
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>> it is 9:45 a.m. in hong kong. these other stories making headlines. placing a bet on small-cap companies in india, saying government reforms will boost earnings and the country is on the cusp of an interesting opportunity. the index for such stocks has trailed the overall benchmark, but he sees things rising soon. a seven year old boy missing for almost a week has been found alive. the parents of the boy left him alone in the forest as a punishment from his behavior. they initially claimed their son vanished while looking for wild vegetables. he was found in a nearby town in
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relatively good health. prince died of a next overdose of a powerful painkiller. not touch report said he took the drug himself. he was found dead at his minneapolis home. the painkiller is 50 times more potent than heroin and is linked to a recent surge in overdose deaths. prince had a reputation for said living, that friends he took medication for physical problems related to decades of performing. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. data,d: manufacturing breaking news out of china, the unofficial pmi for services. 51.2, and it has come down a fraction at the moment. indeed, we all know
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about the rise of the middle class in china, but how can brands tap into this affluence. loyalty programs are still critical for engagement with cash-up consumers. what was this survey about? what were you trying to get to with it? it is trying to understand this mass affluent segment across asia, what motivates them and what they want from a relationship with a brand. rishaad: give us an idea of what you found. did it surprise you? >> it did surprise us a little bit. loyalty and the desire to have a relationship with a rand is very strong in china. said theye consumers were in programs and wanted to have that relationship. those numbers were a lot lower and singapore.
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consumers were more jaded and had higher expectations. they were wanting something more personalized. rishaad: right, so it's about and for this opportunity for the brands themselves to make them relevant for customers. >> that's critical. consumers, if you look at your they expect a highly customized experience and is right for them as an individual. that expectation cuts across many brands, higher in the brands especially. expect loyalty programs to drive and deliver that for them. in some cases, that is not happening. rishaad: give me some examples of this. i know you have worked with a lot of companies in order to get how they approach their customer. endif you look at high i
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retail brands, it is an unpublished approach. now that has been automated and it is much more systematic, but it's still drives high touch relationships and high touch recognition. the apparelat market, it is a sector focused on discounts traditionally. they have been successful in that is aboutdel driving rewards and driving people back into the store. earn, and that drives ongoing loyalty and business. rishaad: any of the company to thought got it right? right withas it loyalty across asia. they have had a terrible time in the past, but they have come back strongly.
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there approach to loyalty is an important part of how they engage. rishaad: ok, but it is interesting when you look at the chinese consumer, they are loyal to banks, but are they really loyal? >> this is it. us ishe research told that 70% of consumers across asia were very loyal to their banking partner. the worry is that that is sometimes because of apathy and barriers to exit that the banks have put into place. we have other disruptors coming into the market and it will be easier and more attractive to move away. most of the banks have a rudimentary loyalty proposition in place, but not very customized. there is a need for banks to move forward and drive a much more customized proposition,
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making sure they are doing it right for every individual. rishaad: i had the same bank in the u.k. as well, and my expense with this particular entity in the u.k. and here is vastly different. here it is not really the same. it is not nearly as good. >> that is an issue that the banks are aware of and are working on. across different markets, different jurisdictions, different rules, but it is the same brand. banks have done better at integrating across markets and ensuring that you have eight seamless experience when going from one market to another. how you drive the loyalty part of that, give people what they want in any market is very important. hotels have done a very good job of that. they have grown their programs into big programs. you have one relationship with them. rishaad: they have created all these different tiers.
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there may be one over all starwood, but they have so many subsets. >> that's true. you look at the approach that cathay pacific took it based -- took. they split their propositions. they have programs that are viable for anybody interested in travel. rishaad: thank you so much for coming in. right, coming up, tough questions for while way -- huawe supplyingther it is technology to rogue nations. that is coming up on "trending business". ♪
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rishaad: the u.s. government turning its gaze on to huawei technology.
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it has asked about exports to certain countries. what is washington looking at here? to people familiar with the matter, the u.s. commerce department has issued an administrative subpoena. they basically want to know if is sending technologies to iran, north korea, syria. anyway, huawei makes network and telecommunications equipment. there are suspicions that they might eat violating u.s. sanctions. it does not mean that huawei is it reexported u.s. products to those regimes. said it is committed to complying with laws and
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regulations in the markets where it operates. it did refuse to comment on the actual document request. rishaad: the commerce the permit also looking at another company. >> this was earlier in the year. department said it was going to ban u.s. exports. it would be difficult for them to export products to blacklisted countries. zte open negotiations with the u.s. government. one of the things that has done is replace its president. the negotiations between the two sides are still ongoing. rishaad: thank you very much indeed. india become a
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major player in the global smartphone market? ♪
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♪ >> from our studios in new york city, this is "charlie rose." charlie: mitch mcconnell is here. he is the u.s. senate majority leader. he has represented kentucky since 1984 and is now in his sixth term in office. mcconnell has been at the center of some of the hardest-fought political battles in recent history, from campaign finance to obamacare to the current clash over president obama's supreme court nominee. john mccain once said, "there are few things more daunting in politics than the determined opposition of mitch mcconnell." recently, mcconnell pledged his support for donald trump. sen. mcconnelli


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