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tv   Trending Business  Bloomberg  June 8, 2016 9:00pm-10:01pm EDT

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♪ rishaad: it is thursday, the ninth of june. this is "trending business". i am rishaad salamat. ♪ we are going to be in beijing, sydney, and singapore. oil advancing, the longest run in six weeks. new wildfires prompting canadian producers to shut down once more. brewers make a dale moving dealr -- make a
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risk aversion, keeping japanese bank safe during the credit crisis. now they are some of the top lenders and energy. follow me on twitter @rishaadtv, include #trendingbusiness. breaking news south korea, a surprise interest rate cut coming through. now 25 aces points lower, 1.25%, defying analyst expectations they would stay pat. >> there you go. there we go. another cut there. it takes the number of rate cuts to about 700 across the world. we open lower.
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we have given back that. big surprise. similar looking chart. dollar on the way out, 1.4% from these levels. we are pushing to a one-year high. the new zealand central-bank sitting on rates. that is another story there. there is so much happening. were looking at four basic market stories. let me show you the open in malaysia and singapore. price action is consistent with expectations that rates will remain lower for longer. the bank of korea just supported that thesis. look at the weaker u.s. dollar, the dollar index is at one-month lows.
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equity markets are mixed right now. sovereign yields, that is the underlying current worth watching. let me get to my bond yields. we are either at near record lows or approaching record lows. 10 year bond yields, red is coming down. year, 5.5, six basis points. everything else is on the way down. quote wasast 1.25. south korea 10 year yield, that 1.7%, be a little lower,
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so roughly the same yield is the u.s. treasury. have a look at japan, -11. we get the bond auction and about two or three hours. jgb is yielding you double, 22 basis points underwater. there are a lot of moving parts. there is a lot of movement. investors continue to adjust and price in lower rates for longer. we did not expect the cost of borrowing in south korea to be moving there. korea cut interest rates to 1.25%. more data later on. figures are out, cpi
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expected to remain near a two-year high. let's get over to steve engle's. those inflation figures, china cpi holding steady this year, rising 2.3% year over year. months,the past three consumer prices have been rising , but it is worth noting that inflation is still below government full-year target. in may, prices may have eased just a bit. toomedian estimate is far .2% rise from a year ago. 2.5%, buto as high as other economists say just a 2% rise is more likely. of the largest components of cpi. the main reason for higher prices, pork prices rising 33.5% in april from a year ago and fresh festivals nearly 23
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percent, property prices are also on the rise, adding to inflationary pressures in china. according to bloomberg intelligence, food price inflation went from 9.2% in asil to 7.8% rise last month vegetable prices fell just a bit. turning to wholesale prices, the ppi, it has been in deep relation now for 50 consecutive months, more than four straight years. they will likely see that trend continue with prices falling has seen the trend easing of deflation, minus three point 2% would be the lowest deflation since november of 2014. firmer price the of crude oil, but also a run-up in steel prices nudged prices higher. we saw a rise in producer prices of 0.7%, the first back-to-back
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increase since late 2013. rishaad: thanks for that. a more detailed look at that story later in our program. tweed is your opinion @rishaadtv , include #trendingbusiness. the biggest deal in bring history seems closer. 's acquisition is nearing closure, at least in china. it's not the final hurdle for this merger, is it? us thates telling china's commerce ministry may attach some conditions to the deal, but no major objections. as soon as this month. there are two bank deals which include the marriage of ab inbev and sab miller. sab miller has to sell its stake in snow beer, which china
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resources offered $1.6 billion, so that gives china resources a boost in the country with 23% market share, a big piece of the pie. what chinese beer drinkers like, it is a fragmented market with so many local names in the mix, which is why local brewers tell china that they don't see a big impact with this merger. what sets this deal apart from some mergers that have failed this year is the willingness and aggression of those companies to divest some assets from the get go. gross,v selling miller, perrone. some hurdles remain. the deal has won approval and 12 jurisdictions. in the u.s. expects it to clear the deal soon. south africa has yet to give the blessing. rishaad: some other stories we
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are watching for you today, let's get a roundup. like: yes, shares trading this after it announced a string of management changes and a cuts at suzuki. the company admitted to using faulty mileage testing methods. be losing their bonuses from last year. some senior managers will see their bonuses cut in half. to prevent a recurrence, suzuki will promote a whistleblowing system and consolidate facilities. on the new ceo will be made after the annual shareholders meeting. that candidate will be one of the company's four existing directors. sony has been putting money into an internal startups. it has been seeing big profits from its holding in a little-known health care company. in m3 moreas risen
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than 50% according to data compiled by bloomberg. increased byng has $1 billion over the past 12 months alone. it was a web portal used by doctors in japan, china, and the u.s.. sign medical studies, drug information, network with each other. the company based in tokyo said it plans to increase its investment in health care startups in japan and abroad. is one of the big movers and the session today, sky network television shares looking like this, close to session highs, up by 18% after vodafone new zealand agrees to a merger with the country's largest pay-tv provider. vodafone, operator,
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will on a significant percentage of the entity. revenue has barely budged in the past queue -- few years. pay-tv leader is facing increasing competition from internet entertainment companies like netflix. thanks. more do, on today's edition of powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. -- "trending business". ♪
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.> it is 9:13 a.m. in hong kong these of the stories making headlines. donald trump has distanced himself from fund-raising. to major injust
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events to help republicans raise cash, saying he will rely on his tv presence and star power to generate free media. a has narrowed his search for running mate, including some of his former campaign rivals. ls on theal philippines to engage in direct negotiations. the filing of the case said down dialogue and harmed relations. violatesays the case agreements between the two countries. the door to talks remains open. is sticking with maria sharapova despite her two-year ban for drugs. had suspended ties after she was provisionally banned in march for failing a test. she had been using a drug for years and did not notice it had been put on the banned list. nike says sharp over did not intentionally break the rules
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and is appealing her band and so is resuming her relationship. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am yvonne man. markets closed in hong kong and china and taiwan. next guest, what are the key and reaction to that surprise cut and interest rates by south korea. great to see you. , surprise cut coming through one out of 18 economists were predicting it. >> yeah, very much so. going through the brief notes , debthe central bank restructuring, but it's interesting to see central banks aren't that synchronize, are they?
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new zealand central bank today has kept rates on hold, concerns on property price inflation. probably on as trajectory to cut rates in august. we are seeing central banks being active and trying to support growth, so it is an interesting move in korea. somethingeah, this is you comes to bank of england, ad, most likely to be on hiking cycle. everybody else cutting, so we globalt come out of that financial crisis of 2008 properly, have we? hasn't been the traction that central banks would have been expecting given the policies they've implemented. example. a great
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we forecast 1.5 percent for arroyo, and mario draghi and the ecb are doing all they can to approve things from the depreciating currency. it does seem to be almost uniform outside the united states that consumer demand continues to be one of those key missing links along with business investment, and that is the case in australia despite the fact that we have seen interest rates fall from 5% to 1.75% last month. rishaad: let's talk about the mantra of go sell in may and go away. with june subject to so much event risks, not the least of which is britain voting to get out of the european union. it could be full of surprises. >> yeah, very much so. turned out to be a
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better month than anybody anticipated. we are seeing a lot in the polls on brexit. the biggest risk is around brexit. polls, you might have thought that markets would have been de-risking more, but the ftse is up a couple of percent this year, currency is around fair value. -- sterlingling would have been discounted if there was a chance of a in eggs at. -- exit. i'm worried that we might actually see is surprised that markets aren't accounting for and you will see some risk all trades. if the uk's stays in the european union, that is null and void. of those tough decisions for investors whether to stand on the sideline or move to cash as a risk aversion play.
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rishaad: there seems to be a level of indifference, but they are pretty blasé thinking that when somebody walks into that polling booth they will say stay, not leave. i think it is a tough one to call. years,e last couple of the polls have not necessarily always been accurate to the extent of the outcomes, the scottish referendum is a good example as is the british general election. looking for other indicators in regards to how these polls are giving us some direction. both sides feel there is a strong case one way or the other. if the u.k.cautious decided to eggs at the european union. it would still take quite a number of years for that process , but it is not the total into the world. your trade will continue across borders.
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given theo europe distance will august the remain in place, but the employment that is a key question voters will have to answer at the polls. rishaad: great talking to you. have a good one. brexit and thet bank of korea's decision to cut rates as well. energy taking a hit from oil. we will tell you who. that is ahead. ♪
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rishaad: you are back with .trending business" japanese banks are known for their risk aversion and that spare them the worst of the credit now they have grown into some of the world's biggest energy lenders. let's find out more about this.
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why did we not know about this earlier? changed is not the exposure it self. the banks have always had the exposure they have read what has changed is the way they disclose it. banks have felt it necessary to come out and expand the industry. this comes closer to the disclosure we get in the united states. oftly this was because investor demand, pushing the what to tell more about the real exposure is. when california union banks reported results, we were surprised by the size of their exposure. the need of japan felt to come clean with investors and
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tell us how much they are .xposed to the energy market could this mean? how could this translate into losses? the japanese banks are forecasting lower profits this year. a lot of that is down to negative interest rates. month,ey reported last that credit cost had also jump to related to the energy exposure, but we do have that in perspective. banks areree japanese big banks, and the oil exposure come if you look at the relative size to these egg japanese banks, it's only 5%, 6%, 7% of their total exposure. it is something we need to keep our eye on going forward. right, let's have a
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look at some other stories making headlines. a letter writing campaign for valeant pharmaceutical's to adopt generally accepted accounting principles. the sec had been challenging them over using their own adjusted numbers. under standard accounting, it cut its profit forecast, sending shares plunging as much as 21%, adding to the huge losses this company is seeing. area and the huffington empire,g her media po said to be a lifestyle platform with contributions from celebrities. it will provide wellness consulting services to companies. the adaptation of war cap to
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raking it in, $46 million on opening day, the biggest debut on the mainland this year. the film is based on an online game with the devoted fan base in china, but it may not generate the same buzz in the u.s., predicting it will only make $22 million on its debut stateside. public holidays in china, taiwan, and hong kong. the nikkei off by 9/10 of 1%. off ofetting a lift that surprise rate cut. quick word as to austrian new zealand, there we go, the new zealand market up, deciding not to cut interest rates. markethoping that equity
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along by that in action there. sydney down by one third of 1%. the latest inflation numbers coming out. we will have us live to you when "trending business" returns. ♪
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rishaad: a look at our top weakening,e won lowering the key rate to 1.2 per 5% -- 1.25%. the key jumping to a 12 month high as the reserve they new zealand held its key rate steady. yen strength weighing on japanese shares, all signs that ed will hold fire on a
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rate rise. oils fourth day of gains helping those aussie energy stocks. chinese regulators getting involved, could be about to drop the last obstacle to the acquisition of sab miller by ab inbev. local burrs reporting the ministry do not object to the takeover. data out ofortant the chinese economy, inflation numbers coming through. 2% in below expectations, may. we were expecting 2.2%. ,his follows the three months 2.3%, so inflation has firmed on the back of rising food prices and rising property prices, but looks as though it is coming
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back down to 2%. vegetable prices were coming off , bloomberg intelligence said the food price index had come cpi, 9.2 percent in april on the back of weaker vegetable prices. quark continues to be fairly expensive. pork prices in april were up continues topork be fairly expensive. upk prices in april were more than 33%. it is easing. -2.8%, we were expecting minus three point 2%, so that is easing. we are getting closer to producer prices ending that long for plus year streak of deflation. the higher oil price environment , andng or bolstering ppi
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also steal price, speculative flows in the steel price have been helping to end that deflationary trend. to recap, cpi inflation at 2% in may, below expectations. better as we are getting towards ending deflation, -2.8% in may. rishaad: our next guest thinks elevated inflation will cap the space for monetary easing. the key take away is probably that ppi number. -2.8%, but if you drill down, it is up month on month by .5%. steve mentioned that was probably down to this rise in oil prices. month on month is higher. i want to get your view as to
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whether some of the structural reforms are playing out and helping that figure. >> ok. sure. deflation in may and also expect that ppi deflation will ease towards the end of this year. part of the reason is because of rising commodity market globally china'sher reason is rising demand, because we have parties seen that on the demands side we have policy stimulus to demandabilize or boost in china's economy, so as a prices,we see that oil energy prices, and metal prices have seen rises. the ppi deflation is likely to ease at the end of this year, and this will help to improve the company's profitability and
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the second half of this year in our view. is that that improvement down to cyclical factors or structural ones here? i think that part of the reason is the policy's side is still quite accommodative and supportive to the economy, so we are likely to get demand, especially for some base metals and key commodities to rise in the coming year -- coming months. rishaad: right, well, let's have a look at this. what does it mean for policy makers, the pboc, how with a look at these numbers? >> sure. we think the pboc will likely more, and the cpi inflation is likely to continue
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to edge up in the second quarter this year given that food prices will likely take some time to generate more supplies. that means that the meat price will likely peak in the next 3-6 months. we think that the rising leaveson, cpi inflation, little room for further monetary policy easing, and we also noted that the research bureau put out revising cpierday inflation forecasts for the whole year, so we think cpi wasation for 2016 significantly higher than the rating in 2015, so we don't expect to see further benchmark interest rate cuts from the pboc given the rising cpi inflation component. absolutely, 2% as such
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a benign figure for last month. you in your weekly shop, how do you see prices going up? food is getting more and more expensive. compared to year the april number, 7.4 percent. it is getting more expensive for households, isn't it? >> exactly. prices, theg food vegetable prices, likely to fall to a more normal level in the near term, but the meat price will continue to add out, mainly driven by the pork price given the imbalance of supply and thend dynamics, and also rising housing prices will leak through to the rent prices. likely support
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cpi inflation in the coming months. rishaad: there are signs of stability there. where would you characterize where we are with the chinese economy? would you say that it is stabilizing overall? price level will likely to continue to edge up in the second quarter, but the overall growth momentum will likely stabilize at a relatively weak level. any quickee turnarounds in growth momentum's, but given rising food prices, we think cpi inflation is likely to edge higher in the coming months and limit the room for further monetary policy easing, but the fiscal policy will likely be more expansionary to support investment growth in china's economy. rishaad: thank you very much indeed.
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let's look at the reaction. happening with the chinese markets because they are closed. let's look at who else is reacting. there is a lot happening in the markets before the inflation numbers came out, the reserve bank of new zealand, commodities there, and china food inflation, not exactly the best type of inflation or have especially in beijing and you're thinking about social stability and all these things. let me sake way into the broader u.s.dities space, a weaker dollar. were still getting some inflation across these near term for one., so copper brent prices at the moment, $52.77. have a look at where we are --
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let me search for my crude. let me bring it up for you. u.s. crude, $51.60, the highest level in 11 months. this is the near's contract for u.s. crude. , so with a three-week high just about across the , the week u.s.ce dollar is the common denominator , a one-month low for the dollar index. that isr big story alluded to is the bank of korea. unexpectedly cutting rates. it is a bit unique the situation in korea because if they did not move now, the general expectation was that they would have moved any way during the next meeting. they frontloaded that. we are seeing a lift when it comes to the equity markets there.
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the bond markets, that is interesting, yields touched a record low, then came back out -- up to 169 basis points. chinese markets are shut, so only manila is opening up at this time, down the 10th of 1%. cash markets in china, hong kong, and taiwan are shut for the dragon boat festival. rishaad: thanks, david. some other stories we are following. tony blair expects the country to stay in europe, but admits the referendum will be a close call. he defended david cameron's conduct in the remain campaign. said the issue has grabbed voters attention and people know it is a decision with long-lasting implications. >> i do believe we will have a big turnout for this.
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i believe do understand this decision will have seismic consequences. i can't believe that people will shuffle this one off. i think we will get a higher turnout than a general election. rishaad: european central to stimulate to the corporate debt market, buying bonds from biggest companies, saying the bank has bought notes from many companies. than 900pending more billion dollars on government bonds since march of last year, pushing yields to record lows. owners of lexus vehicles made between 2014 and this year should visit dealers to fix an issue that can disable satnav, audio, and climate control systems. toyota says the systems can
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be knocked out by whether services. decisions, decisions, the rb nz, regional interest rate policy is next. ♪
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it has been a big day for central banks around the world. of korea lowered the of rate to 1.25% on concerns pressure on the economy. one of 18 economists surveyed addicted the cut. let's get over to sydney.
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today, but the bias remains on easing. still given what we're seeing in auckland with high housing prices. we will get to that in a moment. it's probably one of the reasons that the rbn z decided to hold. -- rbnz decided to hold. check out the new zealand dollar. on an absolute tear. the reserve bank governor saying it is appropriate. here's what the governor had to say. >> monetary policy will continue to be accommodative. further easing may be required to ensure future average
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inflation settles near the middle of the target range. we will continue to watch closely the emerging economic data. the target range is between 1% to 3%, but new zealand a long way off. the last quarter was just .4%. rishaad: getting back to that property story. there are no signs of cooling down, is there? allot at all, despite that dominateom the media the moment. the house prices in may up 12.4%, auckland leading the charge. up 75% sincethere 2007, but it is a phenomenon that appears to be spreading. prices in hamilton are up
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26%, which is just extraordinary. i can't say there is a huge amount to recommend the town, zealand is of new fairly poor quality and the prices are i watering. -- eye watering. inflation is adding to financial stability concerns, but no signs of easing any time soon. thank you very much indeed. that is paul allen in sydney. thailand, all about interest rates. the imf urging them to cut because of the sluggish economy and the background of low inflation. the bank of thailand keeping rates unchanged for eight consecutive meetings, betting on government spending to lead to an economic recovery. does it look like they will heed the imf's call here? into theve to look
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crystal ball, but it is a tough call to make. a rate cut would provide limited support for the economy because the slowdown is partly due to global and domestic structural problems, low inflation due to the drop in oil, but sluggish demand also putting downward pressure on prices. that without further easing, inflation will remain below target for several years. falling consumer prices and downside risks warrant additional monetary accommodation. to grow at is poised its lowercase compared to other nations in southeast asia. contracted 1.5% in the first quarter. the next rate decision will be made at the end of the month. thailand has remained relatively resistant to shocks
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despite concerns from the imf. what is the issue really? >> you are right about that. thailand has been resilient. the currency as among the best performers in asia. its flexible currency in high national reserves has helped it to withstand the challenges, but the imf says the political environment and structural factors can undermine economic prospects. also be hindered by a rapidly aging population, relatively low education quality. thailand has yet to transition back to civilian rule. the imf predicts growth to be about 3% this year. you ask me if that is if it goes below 2.5% this year. rishaad: thank you for that. >> checking some stories making headlines.
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the indian prime minister has told congress that the u.s. is his country's indispensable partner. how faress shows relations have come since he took office two years ago. injurye u.s. refused him with human rights groups accusing him of not doing enough to stop religious rights when he was governor. , themomentous future complaints of the past are behind us and foundations of the future are firmly in place. choking smog has returned to beijing. hit 201quality index this morning, described a severely polluted. reading top 230 and
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parts of the city. the president says air and water pollution poses significant threat to the authority of the communist party. shut up shop and hong kong as demonstrators protested the decision to cancel a concert under pressure from chinese web users. they abandoned an event that was to feature pro-democracy singer who sparked an angry internet campaign on the mainland, triggering protests in hong kong. if this practice continues, they will not individualsth any who have disagreement with the chinese government, even though they're not involved in chinese
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politics. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. i am yvonne man. up,aad: well, coming greater china is off. which markets enjoyed the most downtime in the year. this is "trending business". ♪
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rishaad: welcome back. today.ot in action nikkei 225 down nine tens of 1%. a lot of factors weighing on that. in sydney, this is the situation there. off by 2/10asx 200 of 1%. south korea's surprise interest rate decision.
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new zealand keeping rates hat. -- pat. the singapore strait times index, up .5%. inflation remaining muted in china. china's market closed for the rest of the week for the dragon boat festival. it comes to trading holidays, how does china compare with the rest of the world? if we want the most holidays, we should stay right here. china has 17. we should stay right here. you do have this three-way tie china, japan, and taiwan, 17 trading holidays the year. japan, and taiwan.
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malaysia with 15. in hong kong, we only get 14 come but if you compare it to the u.s., only nine. only five public holidays there. you should not feel too bad. rishaad: the u.s. surprises me with nine. spain also has five. we are right on top where we are. you get this wide array of holidays. rishaad: japan has so many. haidi: children's day across a number of different markets. rishaad: coming of age day as well. lovely really. rishaad: yes, it is.
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an auction in london. we will look at that story. chinese inflation numbers coming up in a bit. that is next right here on bloomberg. ♪
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>> from our studios in new york city, this is charlie rose. charlie: she is the director of the cuban national center for sex education in havana and also a gay rights activist. her havana-based organization, campaign for effective aids prevention and lgbt rights. last month she led the largest day pride parade ever held in cuba. she is the daughter of raul castro. i had dinner with her in havana. i am pleased to welcome her to my table for the first time.


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