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tv   Trending Business  Bloomberg  August 1, 2016 9:00pm-10:01pm EDT

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>> it is typhoon tuesday. business."ending we will be taking you to singapore and tokyo this hour. asia-pacific markets brought down by the oil slump. crude hovers around $40.
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table nextins on the month with the labor market gaining strength. follow me on twitter. do not forget to include the #trendingbusiness. china getting underway in about 30 minutes. david looking at what is going on with the markets. david: hong kong canceling the morning trade session. morning session has been canceled. we will get you the updates on what happens in the afternoon session. equity markets looking like
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this, a lot of these markets are trading just above or at zero. a significant risk day. fiscal stimulus coming out of japan. .ositioning ahead of that when you look at japan, coming off flows of the day. -- off flows of the day. -- off lows of the day. easing, you get a decent bed across some attractive -- decent bid across some attractive sectors. more than the equity markets, have a look at what is happening across yields. we are hitting record lows. the 10-year, there we go, there is your yield. down about four basis points.
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the aussie dollar, a little bit on the back foot right now. --, look atity of this graphic. -- have a look at this graphic. the highest level going back to about a year and a half, 76% the rbs will cut. we could be in for a surprise. have a look at some of these currencies we have been tracking since yesterday. in andll of money coming buying up everything across the emerging markets. bonds, equities, currencies. git is very closely
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tied to oil. emerging markets, look at stocks, one year high valuation. governmente japanese to talk about the economy discussions getting underway. prime minister abe promising details of a stimulus package. what do we know so far? we just had a few lines from the leader of the junior coalition party and tokyo saying we are looking at this package. of budget in the form measures. the estimate is that it will boost gdp by one and 3/10 of 1%.
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we have had one extra budget a year. recessions, ax deflationary mindset is very hard to shake. a $150orted we would get cash handout for individuals on low income. $104 billion on infrastructure spending. helpinge same amount of small japanese companies deal with the fallout from the brexit. to put more money into infrastructure investment. ,etter port facilities accelerated construction of this train line. saying howtractors
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much of this money will go toward new spending? the bulk of it going toward financing and other loans? the money that goes into public works spending likely to have some sort of positive boost for the economy in the short term, but the growth may not be sustainable. deregulation. it is the third arrow we keep talking about. rishaad: this does not fix the headache for the exporters. haidi: what a headache it has been. 16% the yen against the dollar. onhave seen this waiting japanese exporters. panasonic saying the decline in
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profit was due to the stronger yen. spot that allght they -- that abe finds himself in. the volatility through brexit, the slowdown in china as well. he is trying to get domestic demand up again. you have corporate and households in japan hoarding cash. thing, thenteresting timing. 1990, youast -- since would only get an extra budget being announced in the second half. the fact that the government is doing this so early on really does tell the story of perhaps how weak they see the economy going and how desperate they are to do something that will have a major effect.
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rishaad: we are looking at west texas crude trading at the $40 mark right now. why now? we talked about the possibility of there being a glut. demand is very high in the u.s. >> seasonal strong period is summertime in the u.s. it is that familiar story. it is a glut of gasoline and diesel supply. the seasonalt period, the highest in two decades. it is not eating into the glut as fast as many expected. a little bit of weight in the market at the moment. rishaad: they will be revising their estimates. what are they saying about the prospects?
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>> we have goldman who said recently, sticking to their forecast that prices will move between 45 and 50 through mid-2017. they are forecasting a modest deficit between supply and demand. they are sticking to their guns at the moment. the biggest risk is the end of that seasonal demand. period.d labor day is the end of it. how it moves from there is the question. rishaad: thank you so much. we have to move to some of the other stories. another fed president putting the prospect of a rate hike back , keeping that on the table. call fromthat is the robert kaplan, the dallas fed president.
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speaking to our china correspondent in beijing, he said u.s. gdp could be revised and there are two more jobs report for the next fed meeting. he also reckons brexit will have a negative affect on u.s. growth. the september meeting will still very much be live. >> we will have to see how events unfold. it is too soon to jump to conclusions on that and i have banker, you central have got to be patient and we have time to make a judgment between now and the september meeting. to job reports between now -- two job reports between now and then. the billionaires campaign for hong kong's biggest ever privatization deal is
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getting a mention. -- the not from the influential shareholder comes days after rival also endorsed the deal. in may, the cinema line said it would buy legendary entertainment. on monday, they said market conditions had changed and the deal would not be in the best interest of minority shareholders. the chinese firm says it is going private in a deal worth more than a billion dollars. the world's biggest solar panel maker will pay a premium to its holders. ordinary shareholders will receive 23.3 cents.
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shares of not recovered with company profits. trina was done by years of losses. rishaad: thank you very much. we will be talking to europe's biggest hotel operator for plants in the asian -- for plans and the asia-pacific. shinzo abe's most -- much-anticipated stimulus package. ♪
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rishaad: let's check back on the market. thank you for joining us. let's start with the big show in
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town. suggesting the solution out of japan is a binary one. you do not like it as an asset class. maybe not the whole thing. the issue for us, there are two issues. they are all so correlated. the yen trade is the same as the nikkei trade, which is not helpful. the only thing we are sure of, japanese assets are unlikely to stay where they are. that, the yenet strengthens massively. getting rewarded for the risk you are taking, we do not think so. even when you have got
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$270 billion plus as a stimulus package on the cards, that is not helping the yen. when i say helping, i mean weakening. surprise?oming as a anticipated. on its own, it is a good thing. it is not something we have seen policymakers use much of post 2008 world. is it coming as a surprise to policymakers? that is why we see the yen react the way it is. unless they do something that comes as a big surprise to market, it is tough to see what would move the yen in the opposite direction. rishaad: a weaker dollar is one thing which has been responsible
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for the strength of the yen. supposing we get more bullish, hawkish words out of the fed, that could change as well. >> absolutely. that could help in the short-term. if we get some more hawkish language out of the fed, we could see a bit of a bump to the u.s. dollar. dovish.ions are quite unjustifiably so. that would help in the short term. it does come down to beyond that how markets -- the yen also perceived in the box of the safe haven assets. there is a risk that will work against the yen once again. take a look should at stocks on a selective basis and mary that to getting rid of
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rid ofy back to getting some of the -- >> absolutely. we have done a little bit more constructive on gold. we firmly see it as a hedge against unexpected outcomes. we hope we do not need to use it. we do believe gold is in a higher range. as we have seen the bouts of volatility, that is only think gold will come into its own and prove its worth in the broader market. more and more, it does hold a place in well constructed investment allocation.
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rishaad: what will it take to break out of that range? you are advising people to buy more gold at the bottom of that range. at holdings toward the bottom -- add holdings toward the bottom of the range. a weaker dollar has been a trigger. post brexit, it was a demand for safe havens that drew gold much higher. the conversation we are having around the fed, labor market, it is wage growth. that has been one relationship to push goal higher -- gold higher as well. adding abe happy
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modest holding rishaad:. seeing:are you still investors pouring into these gold etf's? if so, why? into acan see it flows wide range of gold related assets. with the equity and the bond markets. ultimately, the way of implementing the same thing. what is interesting, on one hand, you see demand for the commodity itself. in the equity and bond sectors, you are seeing selective examples of deleveraging. now that is a very different story. but that is looking equally interesting. selectivedings very on how we do that. rishaad: great talking to you, as ever. let's check on the latest
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headlines. investors giving a cool reception to elon musk. slumping.both company he said the combined company would be a clean energy giant. ,icrosoft making a surge offering $20 billion of bonds to linkedin.its stake in moody's given the funds a triple-a rating. negative rate policy,
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while the group slows shale -- slows sales. singapore's prime minister talking about the transpacific partnership on his trip to the united states. this is bloomberg. ♪
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rishaad: you are back with "trending business." singapore's prime minister has joint an house.roup at the white the tpp will be on the menu with the controversial trade deal bogged down in several countries. countrye is the fifth to be granted a state dinner there. >> fifth asian country.
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i just want to highlight how rare it is for president obama to host a state dinner. so far, just 12. versus president johnson, who hosted 74 -- 54. singapore is a big ally of the u.s. dinner, and ins knowledge and's -- acknowledgment of singapore's importance. agenda, tpp, transpacific partnership, which singapore is a member of. singapore has said tpp is vital to u.s. engagement in asia. it is a litmus test for washington. political parties in the u.s. will focus on the bigger
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picture. tpp without substance to the american rebalance -- what add substance -- would add substance to the american rebalance in asia. rishaad: this state visit is pretty timely. why? >> it comes at a time when the u.s. is seeing growing protectionist tendencies. it would not be surprising for him to drive home the message of how important globalization is. presidential candidates have made public their opposition to the tpp. the u.s., which has been an advocate of open trade, is now taking a different tone. it is worrying for the rest of the world. rishaad: thank you for that.
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up, the latest aussie trade data. ♪
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crude selling off, that waiting on asian stocks. japanese shares decline. regional benchmarks slipping oil a one-year high as u.s. hovers around the $40 a barrel mark. morning trading in hong kong has been suspended because of a typhoon.
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uber will retain a 20% stake in the merged company. sources telling us they would invest $1 billion in global operations as part of the agreement. that outpaces global shares by the most in almost a year. gaining, it is all pointed to signs of stability in the world's second-biggest economy. latestld be getting the june trade numbers out of australia. they should be crossing the bloomberg terminal. let's go to paul allen. paul: it is a miss for the month of june. the market had expected a $2 billion deficit.
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worse than what we had in may. we take a look at why exports 2%. fallen, imports rising interesting such a blowout. we will have a little more on these numbers later on. another number, building approvals for the month of june, down 2.9%. data. disappointing this will play into what the reserve bank of australia will be thinking today. the cash rate decision. it is not a done deal by any stretch of the imagination. paul: not at all. surveyed sayists we will have a cut.
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they are becoming more divided in their opinions. last week's cpi was not great. inflation in australia is the weakest in 17 years. it was not as bad as the one australia had back in may. there is the surging aussie dollar to consider. growth is still reasonably solid. plenty here for the rba to consider. rishaad: thank you very much for that. let's get reaction to that trade number out of australia. here is david. i will not stand here for tent it is very exciting. it has been on the way down. the currency markets, not just the bond markets, not just the
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swap. reaction, nothing really there. a little bit of a spike, there we go. index.look at the one-year high, by the way. flat.t the bond markets, we have the 10-year. there we go. 1.84%. that is basically at a record low. a lot of that has to do with the fed -- all of the easing happening across the world. let's have a look at the currencies in the region. the dollar-yen, that is the
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other big story. very range bound here as well. korea, a out of south weakness in the currency. missing expectations, below estimates, and 7%. one of the markets that has seen almost no inflation. markets looking like this, mostly lower. , we are on abea -watch. hong kong is closed because of the typhoon. we will still get the retail sales due out later in the afternoon. we will give you an update.
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a little bit of a pullback after six straight days of gains. rishaad: it has been seen by some as the decision to wave the white flag in china. we are talking uber. it could bring the company closer to an ipo. valued at 35ons million dollars. what brought about uber's decision to get out? uber puttingn as up the white flag? >> i think the thing with investors, they felt it was inevitable they would have to get out. it is the kind of market where winner take all. they only had about a 20 or 30% share of the market. when you're standing on the streets of beijing or somewhere
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in china and you are wanting to call a car, you will have to open up the one app that will have the most cars. didi were spending buckets of cash. executivesiving the the pressure to sign the deal and move on so they can focus on elsewhere in the world. focus on the turn to profitability. rishaad: it is a huge market, must be a tough pill for some of these uber investors to swallow. disappointment. the fact they got out now instead of waiting another couple of years allow them to
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negotiate and deal so they could sell. they could have just waited it out and burned uber to the ground and uber would've had to retreat without anything. in this case, the investors are not leaving empty-handed. they get a stake in didi. that could be very valuable going forward. they will be huge and one would expect that sometime in the future, they will ipo. if they turn profitable, that profit would flow back into uber and investors. they are not leaving empty-handed. this is a great outcome for shareholders. reminiscent of yahoo! and its investment in alibaba, but that is another matter.
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ubere any nearer to an ipo? >> i would think so. it should precipitate the timeline. we do not know exactly when they are planning to do it. give -- get a to next that at some point. they will be very keen to get an ipo going. the kind of thing that will that.itate as you turn to profitability, it is much easier to go to the markets and say, this is something you want to be part of. get in now. easier tods will be do and push up the valuation even higher. rishaad: thank you for that. the mergingber and of its china operations with
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didi. a mixture of disbelief and some anger. juliette: it seems like a lot of anger. we had on twitter a lot of journalists and analysts speculating this could happen a few weeks ago. there was this disbelief that they would actually tie up. if you have a chance to be alley and amazon-- alibaba at the same time, why wouldn't you? this is what we are seeing from users as well, quite angry about this. calling it a monopoly. a little bit more anger coming
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through from this user saying businessman are evil. the whole point of the deal is profitability. there has been a little bit of anger coming through on the chinese social media side. that.d: thank you for let's take a look at china's airlines. selling local currency bonds. exposure torn their the u.s. dollar. further yen weakness? >> it is, to some degree. it was also about a sector that was badly burned last year.
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back then, the sector had a u.s. 80% and theyabout have been trying to trim that. in the last seven months, we have seen them selling around 16 billion u.s. dollars worth of local currency bonds, five times the amount we saw last year. this is the right approach, this deleveraging does need to happen even if the depreciation meets the selling off. it is still a preferential route than holding onto u.s. debt holdings. rishaad: the question is, why have these airlines built up so much dollar debt?
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>> they have to borrow dollars to pay for the aircraft. by vast majority of paid for u.s. dollars. at air china and china southern, if you look at u.s. dollar, gain or loss of around 5%, it translates into a gain or loss of around half a billion u.s. dollars for those airlines. if you look at air china, they will be cutting their u.s. to nami to debt -- denominated debt to around 60%. that is part of the deleveraging process. this is expected to expand even further. they are looking at 6300 purchases between now and over the next two decades worth around a trillion u.s. dollars.
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as long as they keep that to a minimum, that will be preferential. mackenzie in beijing. we have to take a break. operator,op hotel joining us next. ♪
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rishaad: a quick check of the latest business headlines. gold is fairly flat today. haven assets will probably rise should donald trump when the the u.s.idency -- win
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presidency. dealing -- i think valuations still have a long way to go. probably one step ahead of analysts and always will be. india may be a step closer to passing one of its biggest economic reforms. the national sales tax, the prime and assert lax -- the prime minister lacks the majority. it will be presented to lawmakers on wednesday. ibm is said to be in talks to buy rival systems in the latest bid. discussions are in the early
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stages. retailersy supplying with that software services that handle orders, payments, processing, and payroll. europe has been an increasingly strong draw from tourists -- with tourists from this part of the world. with these terror attacks in france and germany, travelers looking elsewhere for their holidays. >> the recent string of attacks have taken its toll on what is a hugely important sector for the european economy. requested andre it seems travelers are rethinking europe as a destination. , the companyberg
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is europe's biggest hotel operator. we have seen the impact already. 4%.rance, a drop of about how much visibility do you have? >> it is always hard to predict how long an incident like that will impact your business. it was recovering, that the set us backce again. it will affect the holiday months. >> france has been hit, but how about the rest of europe? pound. brexit a weak brussels got hit badly. so far, we have not felt the impact in germany.
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increase inan visitation because of the drop in the pound. >> asia-pacific, are you optimistic? we have 750 hotels and another 300 underdevelopment. we're the largest number of rooms. increasingfacing competition across different issues, the digital space, the likes of airbnb. how are you impacted? competitionalways out there. the online travel agents are more prevalent than ever and certainly more global.
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the whole rental market is growing. we need to be vigilant and competitive. we have invested heavily in digital and we recently made an acquisition. >> is it fair to say that the development has forced encore to change its strategy? >> if you are not changing your strategy and not -- you are in trouble. we recently acquired -- consolidation has been happening and we think it will continue. >> we have seen the company expand. you go from luxury hotels to the
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budget hotels. i cover the whole industry. how competitive are you and who are your competitors now? competitors are domestic -- our fiercest competitors of the domestic competitors. globally, we compete with the other international hotel companies. >> what kind of growth are you anticipating in the asia pac region? >> we will open close to 85 hotels. well over a hotel a week. the biggest growth is concentrating in china. indonesia, india also big growth markets for us. region, it isc
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growing. rishaad: thank you. break,other side of the a chinese app named after a fairytale is taking the retail world by storm. this is bloomberg. ♪
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rishaad: chinese consumers have been flocking to japan to buy reliableen as more than many chinese products. app learning how to tap into all things japanese. this app right now. daily, your basic
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skincare, and potato chips from japan. you can buy it in china with one click on your smart phone and it will be delivered to you within 3-5 days. it is quite convenient. will this cap be a one-hit wonder or does it represent a trend and shopping? >> exactly. it has been around for less than 10 months and has more than 1.8 million downloads.
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e-commerce, over the border, very popular. it is a growing market here. japanese government is forecasting the e-commerce markets from japan to china will million in2.3 between 19. 2019. it will more than double in size. it will be a huge potential market here. a lot of big players in the markets, such as alibaba and amazon, noticing this as well. its sitepan has opened for chinese shoppers to buy from japan. thank you.
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looking at the prospects of the yen ahead of the much-anticipated stimulus announcement. this is bloomberg. ♪
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>> from our studios in new york city, this is "charlie rose." charlie: we begin with politics. the democratic national convention came to an end on thursday. hillary clinton became the first female candidate for president by major political party. she criticized her opponent, donald trump's, temperament, and called for unity pretty joining me is megan murphy, the washington bureau chief for bloomberg. also john heilemann, the managing editor of bloomberg politics and cohost of "with all due respect."


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