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

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♪ friday, the 10th of june. this is "trending business". .nd i am rishaad salamat ♪ rishaad: we will be visiting sydney and singapore this hour. ,he yen's continuing rise japan's biggest bank saying 100 to the dollar by the end of the year.
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thank of japan and other central , rates are a supernova, a policy set the backfire. follow me on twitter @rishaadtv, include #trendingbusiness. hong kong markets returning. shanghai still off. singapore and malaysia coming online. here's david. today might not be the perfect time to rejoin. declines across major markets. southeast asia markets getting a little bit of buying. , 120 point drop, a lot of talk, but watch that
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market. we will be all over that story if that drop continues. yend risk aversion, dollar, , yields at record lows. equity markets on the way down. the referendum in the u.k., so you can't blame fund managers from pulling back on these long positions. as promised, have a look at these bond yields. have a look at where the german 10 year is. we are pushing to extreme levels.
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also watch the currency markets, japanese yen 107. -yen. euro i will flesh out everything for you later. back to you. rishaad: indeed, the yen and that trading range. on news that as china group will buy a 20% stake in the airline, most of air new zealand stake, how much are they paying? $.33 per share, a healthy premium. wise, $232 million, a 20%
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stake. in new zealand, they are selling at a loss, paying $450 million at ahe stake, so selling loss. that tells you everything you need to know about why air new zealand wants out. it has then an underwhelming investment for them. they will retain the alliance , retaining a small irgin as well. , this is the second chinese thai up after the -- tie up after the alliance announced recently. rishaad: thanks a lot for that. old allen in sydney.
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irgin up 18%. he describes the policy as a "supernova that will eventually explode." strong words. he says we have come to the end of the bond market. of aconomy is at the end decade-long cycle that has led to negative rates. these low rates are promoting bubbles and punishing savers, banks, and insurance companies. gross says it is unsustainable. in 500yields lowest years of recorded history, $10 trillion, a supernova that will explode one day. expands,star dies, it
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well that may be what we see. crushed, 10 year and 20 year yields at a record low. others are near or at their all-time lows. sendingch for yielded investors into other government that as well. the u.s. 10 year pushed to the lowest level since february, a exitntial brags it -- brags giving opposed. we also have a strong yen, up 11% this year. bond investors are happy about that. it raises the expectation that the boj will continue its bond buying program.
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it is risk off. auctions of five year and 10 year drew the strongest bids, four times the amount of debt offered. some say the boj has pushed yields to a low. main lending unit of japan's as may thek may quit primary dealers that underwrite the nation's debt, a signal that hat yields might be distorted. thanks for that. right, we will have a look at, well, barack obama coming off the fence. that's right.
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president obama has endorsed hillary clinton to succeed him in the white house, trying to unify the party two days after clinton secured sufficient delegates for the democratic nomination. the president offered his videot through a online after meeting with bernie sanders. >> i know how hard this job can be. that's why i know hillary will be so good at it. in fact, i don't think there has ever been someone so qualified to hold this office. president obama has been enjoying approval ratings of more than 50% this year. he will be hitting the campaign trail with clinton next week. clinton said the endorsement is an "treat" and values his opinion. donald trump mocking the president's endorsement on twitter.
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donald trump speaking on the support of jack welch, saying he will be voting trump come november. thingtleblower is help the u.s. securities regulator in the investigation of deutsche bank. received inside information that allowed deutsche bank to inflate the value of lawns on his books. deutsche bank has tech line to comment. in a statement last month, they said they are cooperating with the sec. it said date losses have been recognized by the bank without saying when those losses were reported. it's not just the chinese, south korean firms are investing big in hotels, resorts, and office
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bettergs abroad to find returns overseas as local interest rates remain low. they target hawaii and san francisco. 4.3 billion dollars have been spent on overseas property purchases since 2000 six, including seven hotels over the past three years alone. at why awe're looking top energy exporter is not counting on oil to rally. what will russia do? bloomberg.com/asia is your destination. prices have been in a slump
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lately, while the world's biggest miner is not concerned. global uncertainty, chinese slowdown, we look at the outlook when "trending business" continues. ♪
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rishaad: now to misquote the clash, should we stay or should we go. stay or leave in the lead? union's biggest economy and the country with the s gest voice, where standing by with allie ounces chief economist. 23, and there will be repercussions across the region.
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michael heiser joining us this morning on your final stop of the asia tour. who stands to lose the most materialize? small,chances are not but we have to take them into account. the loser will be the british economy itself because of the uncertainty combined. no one knows what will the trade relationship be with the changen union, what will in great britain after the exit. all this is unclear. staggering as are far as some studies are concerned. a one-year recession and job losses. will that happen? slow growth and a lack of investment in the
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u.k., whether there is a recession, it depends on the world economy. so i would not be too dramatic on that, but there will be an element of and certainty. investors will stand on the sidelines. who will invest in the city if f they will enter the big domestic market in the european union, so that will be some reluctance and wait and see mode. george soros says it should it happen, it will be the end of the eu. like to object. i don't think this will unravel the eu. there are no countries that would think about moving out of the eu. germany would not do that. it is the biggest payer into the budget, but it would never contemplate moving out.
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we think the integration in the eu is practically without alternatives given the forces of globalization, given all the problems and challenges we are facing. we need to move together. that is the view in germany. smaller countries will not move out, even the critical ones like hungary. >> if the market under underestimating risk, the ftse europeanforming counterparts as well as its counterpart in japan. remarkable, ite agree. obviously markets are optimistic that the british people will vote remain and be per medic. that is my view as well. end, they do decide on
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pragmatic reasons. my hope is that they do decide to remain. become such an all-encompassing issue in the u.k. that many people will go to the ballots, and that is important for the remain camp. >> fed concerns on the other pointing to a 20% possibility of a rate increase in july. goldman sachs says that 40% chance in july with the possibility of another increase. your take on it. >> i would part with goldman sachs on that issue. >> the monthly data are volatile. the july forecast for a hike depends on whether the labor market shows better data in the until then. i expect to do so, so i would argue the fed can look for new arguments all the time to
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postpone the hike. the economy is doing all right. the inflation is trending up. in theot at 2% yet definition of the fed, but things are going in the right direction. t, will wait until after brexi but it won't be looking at the election campaign and finding new reasons for postponing. >> the u.s. is looking all right. japan is not looking all right. 100 say the yen will go to by the end of the year. now?can the boj do the fed is in the driver's seat. at the fed moves, the dollar will strengthen and some of the problems of the yen will be lessened. the lesson of japan is
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that these monetary policies don't influence the economy and the way you might expect. clear sign that trying to pump up economies with monetary policy and fiscal deficit spending has run its course. it does not work anymore. they should be looking for structural reforms. countries have committed to the fact that they won't devalue their currencies, but with the global economy looking weak and muted, do you see some of them may decide to devalue currencies to boost growth? do itope they don't deliberately. the policy pursued by the ecb does weaken the euro. goal as the ecb says of its policy, but is an influential transmission mechanism.
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if anything is working, it is the exchange rate, so i think this is a dangerous instrument. and countriescies can use it. this is not a currency war. we should refrain from that. it that basicto conditions for growth in the economies are improved. this is what you might call supply-side reform. i have heard that in many countries, and china, supply-side reform is a big buzzword. i think this is the right way of thinking. >> we thank you for your insights. lots of risk in the global economy right now. rishaad: thank you very much indeed for that. the stories making headlines around the world. rexiteader of the eggb campaign, boris johnson, was debating ahead of the june 23 vote.
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usingmain camp says it is the vote to enhance his credentials. warning of a bump in the road ahead, spending volatile and remains confident about the current year. global spending on i.t. has stalled. they have cut their forecast for 2016, .5% lower than last year. early financing for google and other tech companies,, bargains was 84. he left hewlett-packard to establish clan a perkins in 1972. the company invested in tech over the next two decades. it led to the silicon valley boom. powered by over 2400 journalists and 150 bureaus around the
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world, this is bloomberg news. building thet, family. tencent looking at another acquisition. we will tell you what that is next on "trending business". ♪
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rishaad: you are back with "trending business". tencent weighing up another maker of thethe clash of clans game, super cell. i don't know anything about this game. they are weighing whether they want to buy super cell. aty are valuing the company $9 billion. could fallnitial and apart or the violation figures
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could change depending on what they find out in due diligence. rishaad: does this deal makes sense? tencent, it does. mobile gaming is one of their fastest-growing sectors. they see it as the future. they make their own games and have a series of acquisitions and other mobile games and partner with other mobile game for clash ofll, so clans, it is that free to download game that makes money from virtual items. wme, a hollywood super agency also partnering with tencent. what is this all about? saw an opportunity to replicate the business model in theached a success u.s.. they are trying to introduce more sports and entertainment events in china. is branching out
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and trying to venture into sports and media and entertainment. rishaad: more declines taking place, minutes away from the official start of the trading day. pretty much in agreement, off by 2/10 of 1%. futures indicating slightly steeper fall back as well. that is the situation when it comes to the trading day and hong kong upon us in four minutes time. generally speaking, asian equities have been retreating ahead of event risk. right, we have to take a break. kong-singaporeng
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rivalry continues. a clear winner is emerging when it comes to being the most competitive place to do business. no prizes for guessing who won this particular rivalry. ♪
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♪ a look at our top stories, a week long rally grinds to a halt. asian stocks retreating amid a revival in the dollar. moderate growth would bolster risk assets, peeking ahead of next week's fed meeting and the looming european union referendum in the u.k.. do most competitive place to business, hong kong has emerged as the winner.
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it knocks the u.s. off the top spot. fell one place. president obama endorsing hillary clinton. in anered his support of online video after meeting bernie sanders. the president well if the campaign trail next week. the president's endorsement is treat" hillary clinton said. right, this is the market action. here is david. david: we are looking at fund flows, moderate fund flows, into fixed income. is a day where risk appetite is a bust. street,s from wall
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stronger dollar, slightly weaker yen. this is a two-day chart. we are pushing toward session highs on dollar-yen. undercurrentd, the is all about risk aversion. .50.d sterling, 144, we are right there at that midpoint where it has been trading. may, betweenrly 146 .70. that is your sweet spot so far. very tight range, and right back in the middle of that range. markets, two markets opening up, mainland china
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close, hong kong joining the fray. seng down. asia andkly, southeast the philippines. from the drop yesterday. south east asia flat so far. it has been a good week for emerging markets. warning we had that from bill gross. wellve another one here as , the air pollution situation in china could shrink the economy by 2.5%. how bad is it going to get? peoplepollution is that killer, but it is a productivity killer as well. the oecd saying air pollution alone could shrink the chinese
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by 2060, but if you are 20 years old right now, you will be living through that in your productive years. china has a goal, a target, that pledged to see the emissions peak up by 2030, so there will still be a lot more pollution going forward. pollution costs $21 billion in 2015 globally. is expected to go up eight fold by 2062 $176 billion. about sick leave for workers, damage to crops, and increasing health care costs rishaad:. that is the cost to growth, but if they want to clean this mess up, are there any estimates? there are probably not enough
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zeros. i remember talking to jim rogers a few months ago in he said that if you are in the pollution cleanup business, you would do just fine over the next couple of decades. we have a couple of reports this week. bloomberg-authored by plan to be saying china needs significant green financing to reach that target. another one co-authored by the paulson institute saying that china will have to investor hundred $80 billion a year. over how many years? >> exactly. who will pay for it. private capital has to take a larger role. thank you. some other stories we are following. jnk of tokyo mitsubishi you
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to launch their own virtual currency next year. able toholders will be exchange one coin for one yen using a smart phone app. india has rejected google, saying it would compromise national security. the decision was made after analysts have become wary of image capturing. uber has vowed that customers should be able to book rides up to 30 days in advance. the ride sharing's biggest u.s. and they have been testing a similar feature. uber dismissed the
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idea of booking a car in advance. winner for ther most competitive place to do business. i'm not going to crow about this, but tell me all about who won and who lost. it is deathly not singapore. ,ong kong tops the ranking knocking the u.s. off the number one spot. singapore, down from third to fourth place. many factors were taken into account for the ranking. the rankings are based on things opinion surveys of more than 5000 business people covering areas of economic performance, governance, business efficiency, as well as infrastructure.
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that hong kong is more efficient, productive, and better at management practices. ing kong has also improved skill levels and immigration, so congratulations to hong kong. these cities have low taxes, really good , and easy to do business, so why singapore less competitive? imd, it saysto that it's not that singapore did something wrong, it's just hard to be on top of the list. one key difference between the two is singapore's restrictions on importing foreign labor. laborlicy of boosting costs discourage companies from being reliant on foreign labor, and it's not helping its competitors. the economy is under pressure,
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and the government said it will seek to tighten rules on hiring foreign professionals now. this all stems from voter unhappiness with greater competition for jobs, housing, and space on the island. now the cuts are leading to a labor shortage and a higher wage. some companies have moved to cheaper locations. rishaad: thank you very much. the race to be the most competitive city and the world there. copper prices are falling, but the world's biggest miner is not worried. "trending business" will be back in a couple of minutes. ♪
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kong.is 9:40 a.m. in hong these are the stories making headlines around the world. benjamin netanyahu has pledged to defeat palestinian militants following attacks in tel aviv.
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visiting the restaurant, he said israel would ultimately win. he called on palestinian leaders to condemn the attacks. israel held a special cabinet meeting to discuss response to the killings. bombings in baghdad have killed 31 people. the deadliest attack happened in the shia majority neighborhood by islamic state militants. they say they deliberately targeted shias. iraqis counterterrorism commanders have taken more neighborhoods in falluja after fears house-to-house fighting. it is the first time iragi forces have fully entered the city since it felt two years ago. -- fell two years ago.
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powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. rishaad: china imported more than 6 million tons of copper concentrate through the end of may, 34% more than a year ago. copper prices have been falling despite the demand pickup. bhp testing and distraction process that will lower costs and boost output and australia to meet unanticipated surge in demand. paul allen investigates. the world's largest mining company is running a giant chemistry experiment. slowly dripping into huge containers of crushed or, sulfuric acid, a seldom used method of copper extraction called heap leaching. is proud up an
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acid is dripped through it for a year. work began at the end of 2011 and won't end for another three years, but for bhp, the wait is worth it. the savings involved would unlock the potential of one its greatest assets. produced, the mine 125,000 tons of copper. if these trials are successful, that could be boosted to 450,000 tons. waye would like to find a to expand it and find a viable way, a cheaper way of processing the ore. we are certain a pretty confident we are headed in the right direction. is all positive. if you look at where copper ranks in terms of overall revenue, it is 25%.
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if they can produce copper at a cheaper rate, it has to come down to the bottom line. it reduces capital expenditure, operational expenditure, environmental issues as well, so overall it is positive. bhp is betting on a surgeon copper demand. the amount of copper for wind turbines and solar panels is up to 12 times more than traditional means of energy generation. rishaad: base metals have dan a tough place to be for the past few years, but there are signs that the worst could be behind is. great to see you. not suggesting that we will see a sharp and robust rebound here. perhaps it should be steady as it goes as we leave the bottom
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behind us? >> absolutely. think the key aspect as far as the days metals complex is concerned over the last few years as you highlighted is that we have been faced with a situation of declining prices. that situation has been tied in with an excess of supply over the previous decade. we saw significant capacity expansions, new mines brought on stream, often times not necessarily economic production needed a lot of that capacity to be sideline before we saw stability come back into the sector. prices have stabilized. when you look at the complex, differentiated out copper, , we have different performances pricewise over the last six months, but the key factor is for copper at least
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and probably nickel, we are looking at steady as she goes in terms of the price outlook for the remainder of 2016. for a commodity like zinc, much better supply-demand fundamentals, and that is reflected in commodity price graphs. we see a significant variance and how those base metals have performed within the overall complex. rishaad: would you say the mining industry has gone through or still in the process of rightsizing? that process is pretty much complete. the lasthe minors over two-three years, bhp and rio tinto primarily, they have downsized, but it takes the impact in terms of supply -- we talk about demand a lot, china and the demand side, but the
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real key factor is supplied. you don't get immediate impacts in terms of the price readjustment immediately. for those-3 years supply side cuts to feed through the market. that is the nature of the resource cycle. i think we are pretty much at the bottom in terms of where we are now. to see anxpect immediate robust improvement in the price of copper over 2016. it is of course of the key metal within the base metals complex, but we are certainly seeing the bottom, and that is providing confidence for the major miners for bhp and rio tinto in terms of development in mongolia. both minors have identified copper as the next metal in terms of the china economic story. we will see a shifting emphasis from iron orewhich accounts for 50% of bhp's earnings,
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probably 75% of rio tinto's earnings, and we will see an adjustment towards copper over the next 5-10 years. you mention the two p ands of mining, bh rio tinto, but what about share price, not particularly great. is there valued there are was go -- would you rather elsewhere in the mining space to find growth? very interesting question. if we have a look at performances of bhp and rio tinto from a share price , at the start of 2016, they were trading at their -- andlevel since primarily that was due to the fact that road companies are heavy lead -- heavily leveraged to the price of iron or, and iron ore has been on a steady
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decline. somewe have seen is recovery so far in 2016, and that has be offended -- has benefited bhp and rio tinto respectively. valuek there is better of there in terms independent players in the sector that are more exposed to commodity showing better price performance, commodities like lithium, and graphite. also seen significant improvements in the oil sector as well with the oil price performing very strongly and trading robustly around the $50 per barrel mark. rs have hade problems, a price waterhouse coopers report showed a ramp-up in capacity expansion over the ast decade had resulted in
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$53 billion write-down during calendar 2015. thank you so much for joining us. sorry to cut you short. , concerns about the state of the global economy, the action by many central banks to move interest rates into playing terrain, all out and highlighted by bill gross and george soros. as a result, we have seen a bond rally across the board feeding through with what is going on in japan. year yield falling below zero for the first time. yielding lesseld than zero. the 20 year remaining positive, but yielding to 10 sub 1%. tot 10 year yield falling minus 0.14%.
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that is the position at the moment as we had that negativity for these on the yields. right, coming up, disney and its multibillion-dollar themepark in shanghai. bob geiger says it is only the beginning. that is next. ♪
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disney's big plans for china, $5.5 billion themepark. it will start making disney branded movies on the mainland. bob iger revealed his plans. tell us more. of: we set down with the cto
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disney, bob iger, in the disney castle. about the chinese economy, competition in china, and he revealed their plans to develop movies in china. take a listen to what he said. ask him about the difficulty of setting this park up. take a listen to what he told us yesterday. bob: entering this market has its challenges, regulatory issues, and so in making a decision, we felt the best way to do it was with a themepark. theme parks are expensive. this one costs in the neighborhood of $5.5 billion, so it is a big that on a big market and represents not only our biggest entrance into this market, but the potential to deliver great growth for the company long-term. >> its opening when the government has this week focus
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on driving the consumer market. timing and good foresight on your part? you are building something for the ages, good or bad, so it is not about the economy today or the circumstance today. it's about what we see long-term. noble, ofs are a course, but it is that that on a market and the true believe in a market. interms of what is going on china that works to our advantage, clearly establishing a move from a manufacturing to a more service economy is very important. we benefit by that, but also contribute to it. one of the reasons we got permission to do this is the nature of the business, the number of jobs weaker rate in the service sector directly and indirectly. you might be looking
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for a joint venture partner to produce movies in china. is that something you can confirm? without getting into much details, we have a lot of development activity right now to make movies -- disney branded films -- in china. >> are you able to tell us what partners you have been looking at? not 100% because i'm certain what we have said publicly and what we haven't, but we are very far along on this process, including developing ideas, concepts four films and identifying talent to make those films. >> can you give us a more clarity on the timeline? bob: shortly. >> within the year? >> we won't have a movie released with any year, but within a year, we will have a
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movie in production, at least one. ♪ rishaad: investors growing cautious with the events coming up next week, fed rate decision and u.k. referendum on europe. we will talk about that in the next 60 minutes of "trending business". ♪
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. >> from our studios in new york city, this is charlie rose. >> good evening. i'm charles hunt. we begin tonight with politics. donald trump and hillary clinton are in some unforeseeable act will face off in the general election. clinton sewed up the nomination and last night won a big victory in california. he be the first woman of a major political party. >> it may be hard to see tonight but we are

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