tv Daybreak Asia Bloomberg August 7, 2016 7:00pm-9:01pm EDT
♪ it is just after 8:00 a.m. in tokyo, the start of a busy week in the asia-pacific, trade data as theina and japan first major markets open. this is "daybreak asia". ♪ it is more of the same, a bloomberg survey expects the boj to increase its stimulus program. china's of stability, reserves little changed as the pboc burns less cash.
plunges, profit potentially connected to lethal airbags. berkshire hathaway as income hits $5 billion in the second quarter. ♪ fromming to you live bloomberg asian headquarters. i am if on man. dbs second-quarter net estimated05 billion, $1.07 billion. we will see how shares react. check we do that, let's how things in the asia-pacific
are shaping up. new zealand following the traction in the u.s. jobs market , giving markets of a boost. a cut widely expected on thursday. trade balancethe expected, a soft open there, the aussie dollar at a three-week high. japan, boj release of the summary of opinions. stocks could see a boost, 200 points at the open. the yen at 102. look at what we can expect in the region. as you know, there was that big surprise, and the jobs report much better than estimated. that ended wall street on a positive note. with equity futures, you are seeing a slightly higher open.
the question will be is whether this jubilance will continue, especially when investors realize that the fed is likely to hike rates this year. change thet could position of some of these banks, particularly the boj. there will be a review of policy, caught many offguard. why is this so important? let's bring in david with some answers. what should we be looking out for? david: it was the only thing that surprised. a little bit of a background, they ordered a review of what they are doing. at the next meeting, third week of september, they will
presented to the board members. is let some time pass and then bloomberg did a 33 analysts from monday to thursday last week, asking them what do they expect from this. two thirds of them think that the boj will use these results as a way to introduce more stimulus. chance this could mean the opposite? they will say it is not working. we give up. that was posted to governor kuroda last week on tuesday. he said it is not likely this will lead to shrinking stimulus. yvonne: they have a lot of tools at their disposal. david: you have the negative rates.
chances are they won't get rid of that for august. an overwhelming majority of analysts think they will ditch , 28 out interest rates of the 33 think they will stick by that. some think they will take rates lower. they will need to comment on the limits of what they are doing at the moment, the bond buying program. that has been a cause for concern. line,k it is the third the cpi targets. people think they will keep the 2% inflation target, but will relax the time reference. they will say we will keep rates lower for longer and definitely. how far are they for a meeting that inflation target? david: they are very far. have a look at this graphic.
the last reading came in below 1%. we need to get to 2% over the next 12-24 months. yellow window is when they need to get there. the green line is the inflation target. the white line is where they are at the moment. we are quite far from that and time is ticking. >> thank you so much on the boj review. let's get first word news from paul allen in sydney. u.k. series fraud office opened an investigation into some consultants. airbus informed regulators and misstatementss of and omissions involving outside foundctors, which it through an internal inquiry. thailand votes to approve a new constitution the critics say
hands of the military backed government too much power. the election commission says the draft has been supported by 62% of voters. the leader says the results keep thailand on course for a full return to democracy. finished a review of last week $70 million hack. clients will lose 36% of deposits. in exchange, the exchange will open tokens. bitfinex will reopen in the next day or two. withdraws,rading, and deposits after the hack, sending bitcoin down 20%. japan's emperor will step down. sources told the national broadcaster that the imperial household will release the video of the emperor expanding his decision on monday afternoon.
planned toe emperor abdicate at some point. he is the 125th emperor and has rained since 1989. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. >> we are seeing further signs of stabilization and china with foreign exchanges little changed in july. the data comes ahead of july's e balance numbers. the pboc burning less of its toward, less intervention. >> that is according to a statement released by the saying it use less of its cash pile. reserves edge down by $4.1
billionto $3.2 . outflow pressures have ease, but take moves in foreign exchange currency hedging. kleine seen the pound the pound declined significantly. the dollar weakness aided the valuation. we reached out to commerzbank in singapore. the pboc may have intervened vote, but theit intervention was not significant enough to move reserves. >> what about the trade figures? stabilizationome as well, but still sluggish trade in china. is overall trade balance
$47.3 billion for the month, from $48.1 billion in june. experts will have fallen why a further 3.8%, and imports have fallen by 7% in july. it really shows we are seeing steady moves in terms of industrial output and retail sales, inflation lower, and the a boost, yuan giving particularly in terms of competitiveness. terms, wherean expecting trade up, exports down 1.1%, but it shows more stabilization, even though we are seeing sluggish demand for china trade. the early signs for career were not encouraging as well. thank you so much. let's get a recap of wall street, a record close on
friday, and look ahead to this week's important economic data. >> friday was all about the jobs nasdaq, because we have a nasdaq on its sixth straight weekly gain. you also have a story of tech strength. , seagate, up 20% ebay, biogen, in addition to apple, microsoft. there is your record nasdaq story. as for job gains, they exceeded all forecasts. boostingand gains, optimism on the economy. one fund manager says does this bring the fed back to the table on interest rates? not right now, but good news on the workforce. there is going to be fresh data this week. a lot of focus will be on retail
sales. the consumerabout and will we build on what has been a strong trend. , and ites likely rose would be a fourth straight gain on the heel of the strongest demand since late 2014, so it looks like the consumer is back on track. we are looking for confirmation. for earnings, we have valeant, struggling with debt and shortselling pressure. , some, deutsche telekom of the big names that investors will be focused on. >> also an exciting weekend, a box office blowout. >> do not bet against will smith, the suicide squad, a film that critics had panned before it hit the screen. records, $135 million plus.
you have never seen on august open for a film at this level. comicns that warner bros. book hero movie has legs, and an important release because they are trying to expand on these economic heroes. >> the movie list gets longer and longer i want to watch. thank you so much. australia's treasurer is warning of risks to the nation's top credit rating. we will talk about the implication on markets. >> here from an economist who says there is more easing in the pipeline at global central banks. details, next. this is bloomberg. ♪
billion acquisition of jet.com. sources tell bloomberg that walmart once the founder to head the online division as part of the deal. the acquisition would help walmart challenge amazon by tapping into proprietary technology and customer data. i spokesman denied a report saying it is planning a bid of $9 billion. the owner of holiday in and crown plaza properties has been the subject of takeover speculation for a while. expectations are low for china lottery sites after shares sold short reaching the highs level ever. speculation that the company when theeft out
government allows some lotteries services to resume after being halted over corruption investigations. sharesan formally in were shorted as the stock plunged 11%. -- more than 4.1 million in shares were shorted as the stock plunged 11%. >> joining us from sydney is the chief australian new zealand economist at capital economics. we are looking for quite of few decisions from new zealand as well. up? week, how are we set what is the biggest thing you are watching for? think it will be a lot of market reaction to the u.s. payroll figures released on friday as the market starts to reconsider the possibility that the fed could raise interest rates before the end of the year. china on trade, which i think
will show the chinese economy is doing just ok, not terribly good, not terribly bad. the reserve bank of new zealand will cut interest rates to a record low of 2% and suggest it will have to reduce rates further. so i think that is one more central bank around the world that will be loosening policy. easing seems to be the theme of the year so far. i want to focus on the boj. we heard about the review and expectations from the economists that we will see further stimulus, but i want to pull up this chart which shows you how much stimulus is not working in japan. on the white line how much further and how much a gura japan's balance sheet has gotten as it continues to buy bonds and how much the dollar-yen rate, the yen has continued to strengthen here. this is inverted, how it has
strengthened, the blue line. clearly this trend is not working and has not since last year. what is japan going to do? i think there are two things you can do. the first is to loosen policy further by extending the size of the asset purchases, and we think that will happen in the september policy meeting. the key point is that it is not just enough to do something. you had to do more than the markets expect, and the boj disappointed expectations recently, so it has to go further, and that will weaken the yen and get the economy a bit more of a boost and help inflation out here in the second thing is i think the u.s. fed will come to the rescue and help the bank of japan out eventually by raising interest rates faster than the market expects in
america, and that will help weaken the yen further, perhaps quite significantly. could do is help itself in the near term and then wait for the fed to help out in the long-term. >> even the anticipation, here faste u.s., treasuries are falling when you take into account currency hedges, fast falling into negative territory themselves. >> i think the markets have sanguineeen a bit too on how high the fed will move interest rates next year. i don't think the fed will increase rates in september. i think december is more likely. next year could be a completely different situation, where we don't have these global shocks from china. we don't have the global shocks from europe, and the u.s. economy is doing much better, and next year, u.s. inflation will start to rise quite rapidly
, so next year could be completely different where the federal bank raises rates four times, taking the rate up to 1.5%. that would be a big surprise to the market and result in the u.s. dollar strengthening and a weakening in exchange rates of other countries, such as japan, australia, new zealand, and europe as well. yvonne: you mentioned about this dollar strength. as we got china fx reserves coming out, despite the major moves, the currency is relatively stable. do you think the pboc is showing signs of maturing here, it's regime, andf its fx can they continue on this type of policy and direction? >> i think the pboc has not really covered in itself and
glory over the last year or so, especially due to its currency regime. it has essentially moved from saying it was going to keep the trade weighted index stable, which hasn't happened. at the moment, the markets have not paid too much attention to that, but it might not be too long before the market start to realize this and question the bank of china's policy. i think of that will mean that there will be more outflows from china, and the will probably mean the people's bank has to step up its intervention. will't think the renminbi weaken remarkably, perhaps to seven dollars by next year, but the sense to me is that china has really got a very clear communication on what it is doing with its currency. think a triple --
is going to happen due to the credit risks, so what other tools does the pboc have now? >> i don't think it needs to do anything quite at the moment. the economy seems to have stabilized a little bit. growth is no longer slowing lastdly, as we all feared year. it is not accelerating rapidly. it just seems to be stabilizing between 4.5% and 5% on an annual basis, so that takes some of the pressure off policy makers in china to do anything, and you can see that because they are shifting more to worrying about medium-term risks. what the pboc will probably do is sit pretty at the moment, and the economy to do its own thing, and only when sometime next year policy stimulus is put into place and starts to fade, then it might start to have to
♪ >> this is "daybreak asia". warningeconomists are that cuts to our strays cash rate losing impact. let's bring in paul allen from sydney right now. the rba worrying about this loss of effect. the governorlarly who will take over the top job after september. he said lowering the cash rate loses effectiveness when you get close to 1%. we saw an example last week when the thanks failed to pass on the
full impact of the cut and raised rates on deposits to protect margins and capital. >> what are the economists saying here? paul: they are quite scathing. i take this one, he takes the prize. he says i believe zero measurable impact will come from the latest cut. another says risk markets expect the reserve bank to cut every time there is a weak cpi read. the reserveexpects bank to look towards unconventional methods that have been flagged in the past, asset purchases and direct intervention on the currency markets. >> is there any sign the government might start reforms? paul: no. although the treasurer reiterated over the weekend that the risk to australia's triple a rating if they don't reform.
♪ >> it is; 30 a.m. in hong kong -- 7:30 a.m.. >> i don't want to make you jealous, but it was absolutely picture-perfect sunday. 7:30 evening here in new york. you can see clear sky, no clouds in sight. enjoying the weekend for sure. betty: i am betty liu. rishaad: -- yvonne: i am yvonne man. let's go to juliet. juliette: the bank of japan instigator expected increasing
in stimulus programs. the analyst said increase is likely and they could maintain negative rates despite opposition from commercial lenders. the boj review is presented to board members when they meet next month. puta's capital outflow foreign exchange rates at $4.32 trillion. -- figurehe bigger unexpectedly rose $10 billion. numbers are more in line with analyst estimates. asian index futures signaling gains at the start of the week. a fresh friday at record high. they are extending to and qe after u.s. stocks vaulted. now $42 -- crude oil in a $42 a barrel.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. betty: let's look at how the asian markets are shaping up. haidi lun is looking at all of that. we couldn't bump on the strong u.s. jobs figure. that will turn quickly to china, right? haidi: those ons were big on friday. the close on wall street will trickle through to the asian session. we are looking ahead to the china data deluge blitz we are getting started today with these trade numbers. we are expected to see imports and exports continuing to climb, but at a slower pace than the previous month. of china'sbilization fx reserves, that will lend a little bit of stability, positive sentiment going into that data release. we are also getting this week, once again passed trade numbers, key inflation data. we have consumer inflation, and
the likes of credit growth. that will give us an indication of how much money the government is pumping into the june 10 lending and keeping them open and contributing to the global stabilization we have seen. we are also getting the rest of the mystic activity indicated. -- domestic activity indicated. a huge week when it comes to the chinese data. rishaad: but it -- yvonne: but it is not just chinese data that will set the mood for the week. ,aidi: with things like passes we had a big we get the boe, starting to digest the boj what they have and have not done. we have had to rank she we stocks, up 0.1% right now. -- kiwi stocks. there is another rate cut from on thursday.y
and this is the last meeting with the reverend roger at the helm. there is inflation coming under control. the central bank in the philippines also meeting this week. on top of china, taiwan exports after the markets those today. that will paint a better picture of what the region is looking at in terms of recovery we have not been seeing. up someand you pulled of these stocks. any in particular we are watching today? haidi: we are watching gold stocks. they took a bit of a beating on the back of strong dollar, the prospect of a rate hike, that we had not been expecting by the end of this year. we will see downside pressure on the australian stocks. they had been very well to date with the passport gold in four decades. yvonne: troubled airbag maker
takata said stocks tumbled by a third and they could face billions of dollars related to the faulty products. nowave a man from tokyo very what to the earnings tell us about the immense financial challenges faced by takata? >> this is a case of sort of good news, bad news and worse news. with takata, the good news is the company did have a profitable quarter a little over ¥2 billion. that is not a whole lot. the bad news being, they did take a charge during the quarter and this one time charge related brought theircost profit down by 33% from a year earlier. the worst news is that we are still in this situation of, the vast amount of liabilities that his company faces related to its airbag cost are still still,nted for and
takata is in a situation where they say it is not possible for them to really give a sort of reputable estimate of how much this is going to cost them. not only are there legal costs, but up to this point, we have had automakers fronting the vast majority of the cost replacing these airbags it, and we are going to be in a situation where there may be a negotiation between the carmakers and takata over who actually funds the cost in the end, whether not takata will have to pay that back. >> quite big questions over what the cause of these ruptures are. and takata did hire an investigator to look into this. they did receive a report. what did they say about that? >> that is a really significant development. on friday along with the report of earnings, they said they ronived a report from the
hoffer institute, a german researcher looking into the root cause of why these rupture the way they do. it has taken quite a long time. it is highly anticipated. we don't have a firm idea of what is in the report, but takata has received it. and they can move forward with beginning this process of negotiation between the carmakers with regards to who is going to pay for what. if the automakers want to play hardball with takata and really forced the company to pay for a substantial amount of these recalls, takata is in real trouble. if the carmakers want takata to stay in business because this is such a consolidated industry for airbags, there could be a situation where they say, we are going to sort of excuse this and move on. real quickly, what is next for takata and air makers? craig: the negotiations are
crucial. not only for takata to avoid massive losses, but to either survive and really the company is in a situation where it needs to find a buyer. there needs to be resolution on this of what the company owes to carmakers in order for them to really credibly make a case for outside companies to be interested in making bids. betty: thank you so much. craig from tokyo. let's head to the fed now. christmas in july, that is how bloomberg intelligence sees it. some u.s. job numbers came in at a forecast reading 255,000. kathleen hays is looking at this. does this change things? reporter: it may be a live meeting, and the fed would like to raise ratings. they would like to normalize, but there may not be enough data
on the table yet. 255,000, beating the forecast of 280,000. 24,000 in may, a big relief for the fed. in terms of world interest rate projections jumping into the bloomberg, the chart does show by the end of the year, odds are up to 47%. we could see a rate hike back down to 35%. there is definitely movement. it is likely one of the reasons people are convinced is because we have seen a big to between payroll and gdp. lately been growing 1% where the jobs report in the last two months were very strong. as the fed revives, we can also see, have seen the diversions between gdp and payrolls, which is keeping the rate hike bets even stronger. >> why is there such a big
divergence between jobs and gdp? kathleen: productivity is one of the reasons. growth, laborc force size and productivity. companies have been hiring and not investing. that slows down productivity. we have also seen, look at the past three years. more services jobs than manufacturing jobs. services jobs don't have much. productivity is lower. if your business picks up and you had a restaurant, you don't add a new bar but a new bartender. that adds to the trend of weak investment, week business spending. and that x the consumer more important. -- that makes the consumer more important. 1.2% increase in gdp last time, the biggest private investment drop in seven years.
it was the consumer that helped the economy grow, 4.2%. betty: this is why retail sales will be important. kathleen: you have the jobs report in the back pocket, now retail sales. july retail sales is being seen 0.6%.0.4% versus june, but july, july is the first month of the third quarter. we had to weak numbers in just over 1% for gdp. what will the fed think if they see retail sales slowing down, gdp off,hird quarter or maybe if it picks up, they are more confident. hourly earnings, average hourly earnings up 2.6% year-over-year. people do have money. if they keep spending, we will have decent gdp. yvonne: thank you so much. kathleen hays. stocks and currencies in
♪ yvonne: you are watching daybreak asia. betty: a quick check of the latest business flash headlines at this hour. singapore is facing a wave of default. the bank of singapore says cheaper oil good raise risk in the global energy sector. yvonne: a billion dollars worth of bond payments through 2018, at a quarter of it is due this year. this oil company cost a shock when it released at liquidation plans. is operating under judicial management.
prime minister modi sales tax victory may have, the right time. expert one of the first emerging-market exchange rates -- first choices for emerging-market exchange rates. they cleared the largest hurdle to creation of a nationwide goods and services lending. hasy: a former bond trader won a court hearing. he sued after he was sacked last year. he said his bosses made him a scapegoat in several failed trades. a spokesman for the bank said it is disappointed with that judgment. emerging-market stocks and currencies rose to the highest south asian height stocks taking the lead globally after brazil. our next guest talks about how .ong this rally can last ar
we have been talking about this jobs a sector came out on friday. of that cancel out the bad gdp figure we got for the second quarter, and does it change the big picture for e.m.? reporter: i think it does mitigate that gdp number. it is often very volatile. sometimes it it is better to stand back and look at fundamental data and not see if the jobs report is strong, not just in the headlines. we are seeing accelerating wage numbers coming through as well. overall, quite positive. the key implication is for emerging markets, comes that second piece of inflation. if we see that taking off more dramatically at the moment it is now 2.6%, well below the 3% threshold, but if it moves above, that will be challenging. the fed good hike interest rates . the markets are anticipating
that at the moment. that is a risk for emerging markets to look out for going forward. betty: we have seen emerging this long winning streak since october. does that mean they will stop it in its tracks? how long will he continue? steve: the global equity was getting more concerned about the 12 month. we may see+++
performances in the next month or so, but 12 month, we are concerned. we are getting more concerned generally. we have seen commodity prices being a lot of focus on the recent weakness in oil. our view on oil is pretty construct over the next six to 12 months. i will be good for emerging-market assets in general. -- that will be good for emerging-market assets in general. we do believe a.m. is a long-term underperformance, relative to developed markets. it is coming to an end. so where exactly then? is it basically by etf? steve: we do have strong in the preamble you mentioned. india remains one of the top picks productivity market perspective. we think we are in a structural ngbating story -- re-rati story. more stimulus from the central bank over time. we will see the implementation being hugely positive from foreign investment perspective as well. a lot of policies for india. second in the line would be korea, where dressing demand story is likely to pick up somewhat. india would top the rank in terms of the profile.
yvonne: what is the fed, though? we are seeing the growing concerts this -- consensus the fed will raise rates at least once this year, whether september and december we do not know. what does that mean for emerging assets? steve: first you look at the probability of a rate hike, ,ricing with 25 basis points 25% probability rate hike in the next three months or so. markets really not biting that in. if it gets forced back, yield is lower. that could extend into the strong performance. as long as it is not seen as derailment of the u.s. economy, but that would probably be positive. that has been the trend over the past two to three years where expectations have been pushed further and further back from a rate hike expectation perspective. we are probably getting closer
to the end of that cycle. we may see surprises from inflation and therefore from interest rates in the next six to 12 months. watching that. a lot hangs on when the fed will raise interest rates. chief interest manager at address charter. and now we are looking at japan. david ingles has the numbers. david: it is just coming up. we are looking at current account balance for june. a little lower than expectations, half a level from the prior month, ¥974 billion. that is roughly 100, so you get the dollar amount. fairly high, it has been dropping for two or three months, but that is the level. we are still waiting for the figure on trade balance. we are looking for the number in two 770on of 750
billion japanese yen. u.s.ly 700 billion dollars. about -- theed trend has been falling, but look at that on the longer-term, i am not sure clear this is on your tv, but this is on its way up. let me just do a little bit of an adjustment here, tweaking on my bloomberg. we are looking for a summary of opinions from the latest boj meeting. i don't see -- here we go. we have the summary of opinions, one line so far, one boj member saying additional easing is needed to prepare for jobs. nothing surprising. one more member sees uncertainty, things need to be elevated. i want to give some context on what this is. we are looking at three types of releases apart for monetary policy statement.
you have the minutes from the meeting, the quarterly monetary policy stadium -- statement, and then the bullet points that sort of helps improve transparency or what took place during this latest meeting, late july. so far, nothing surprising, but we repeat what we got. uncertainty likely to remain elevated. the boj should conduct review. if it was to achieve the cpi goal. we were just talking about that at the top of this hour where the review is ongoing. we will present it to the board for the next meeting in september, and that is what analysts are saying will lead two more stimulus from the boj. >> it is good to get that context. not surprising, but reiterating what the boj is watching. , warren buffett decision with new manufacturers paying off. we look at the latest results in his company berkshire hathaway. ♪
betty: you are watching daybreak asia. yvonne: we are a few minutes away from the open in japan, korea and australia. we will have balance figures for the month of june from japan. print billion yen. -- ¥763 billion. there is a trade surplus, coming in a little narrower than expected but wider than the previous month. and we have the policy statement coming out. some member saying the ¥6 trillion purchase of etf, one person concerned that this is excessive. it will be harder for them to exit, talking about ways to
bring up on that 2% inflation target. it continues to look at policy options. betty: they are kind of stock in many ways -- stuck in many ways. we'll try to get inflation going , which they have not been able to. profits at warren buffett's berkshire hathaway up to $25 billion. here to break down the numbers, so give us a break down on what is the bottom line. >> a lot of the new manufacturing, you take this manufacturing and services unit, those climbed 14%. let's take a look at the overall numbers. , 5 billionned income of just over 4 billion a year ago. income from manufacturing really big. operating earnings were a bit of a miss. they had $2803 last year.
2911 lastar versus year. they are mainly an insurance company in terms of their portfolio. betty: this does raise the question whether warren buffett will buy back shares of berkshire. but this is a mixed quarter. su: there he much, because of the -- very much because as mentioned, the geico unit helps boost the prophet. but we saw the railroad and industry units, chemical had a bit of a bad quarter. and insurance is self-explanatory. they had that big wildfire in canada and other issues. in terms of the underwriting, insurance business is rebounded from a year ago, so they had gains of $227 million. betty: that is it from me here
let's see how asian markets are shaping up. we do have a couple lagging, but we are looking at a higher open. 225, one and a quarter of a percent straight out of the gate there. ,he lead from wall street expectations of what the fed will do coming through weighing on the yen. up a quarter of a percent, kiwi stocks extending gains. the rvy decision from anbnz.
that kiwi dollar giving scope for further easing. we are watching some gold miners, gold stumbling, potentially the end of this ,ally, the best in four decades a real ramp up in terms of those gold stocks. taking a look at what else we we are waiting for the korean markets to come online. currencies,curli dollar-yen, comments from the boj, policy documents. they are as a one to watch today. we do have data from china in the morning, starting off with a trade numbers, but also inflation numbers, activity trackers, retail sales, factory output.
we also have money supply giving us an indication of how lose these credit lending taps are turned on by banking ahead of that. they aussie dollar coming back to session lows, pretty flat at the moment. reserves, athose fx little stabilization when it comes to how much money china is having to spend to defend its fx hoard. in the asia off session after that stronger than expected jobs report from the u.s. that is expected to put down side pressure on the upside. energy, crude, iron ore putting on 2% overnight. were looking at the stocks from those miners today as top gainers. yvonne: the boj just released a
summary of opinions from its latest meeting. we break out what happen as markets open. a boost in shares in tokyo come but what are the summary of opinions have to say? david: this is a recap of what happened. ¥67 trillion etf buys would be excessive, making the exit harder at some point, and we are far away from that. more stimulus needed, the easing "harmonious" is the term that is used. the boj should reject this idea that there are things like policy limits or side effects. it should be more transparent and provide a more detailed explanation.
yvonne: so this comprehensive review they are planning on conducting in september, that could be adding easing. david: first, they disappointed. using thatple are review as a segue to introduce more easing. analysts,urvey, 33 two thirds think they will introduce more stimulus. think that one does not necessarily follow the other. two don't have an opinion. of easing that will come into play, will they take rates negative further? chances are they will not ditch a negative rate policy. when it comes to the inflation target, they have to talk about
how effective the policy has been to introduce something new. address concerns over stimulus limits. yvonne: they don't want to do that. yeah, don't create doubts that there are policy side effects. lastly, the time reference for the cpi target, either change, relax, or get rid of it. they don't expect inflation to rise until 2017 to 2%. david: right. year, 2017 is april next that is the window. , waye at .4% right now below 1%. have a look at this graphic. we are far away from that. we need to get to 2% by that time next year. at the moment, we will not get there. yvonne: one member saying they
should review what should be done to meet that goal. seems like they are keeping that intact for now. thank you so much. let's get to first word news. singapore'sofit at biggest bank fell 6% and the second quarter and missed estimates. net income dropped to $780 million, below predictions before losses were revealed related to swiber holdings. the amount of money singaporean banks have set aside is not enough. seriousays the u.k. fraud office has opened an investigation into bribery and corruption at some consultants. airbus informed agencies of what misstatements
and omissions in some applications found through an internal inquiry. hasoin trader bitfinex finished a review of the $70 million hackett, clients lose 36% of deposits. in compensation, the exchange will offer tokens that may redeem. ed. it will reopen limited functionality in the next day or two. stock trading. a proponent of electric vehicles. its 51% to dispose of stake in an auto supplier. it is in talks with companies outside japan, including chinese firms. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg.
yvonne: let's take a look at 3.8%, thisres rising after profits tumbled by a third in the face of billions of dollars related to its faulty product. we are live from tokyo now. we are seeing shares continue to rise, up 4% now. what does this tell us about its financial challenges? 's profit is down because of the yen's appreciation. ae company is forecasting full-year profit, but that is does not take into account the massive recall-related costs and costs related to ongoing losses. severeis still fading
financial challenges going forward, especially as clients are walking away from it. yvonne: we also got that report hired investigators, looking into wine airbags ruptured. what did the report had to say? did it give us any indication of the causes? and 10 automakers have hired third party investigators to look into why the airbags ruptured, but takata does not say much about what is in that reported received from the institute. for them tong time release the report, but that still is an important step forward, because that clears the way for takata to start discussions on how to split the costs. yvonne: we did not get much from
this report, so what is next for takata and its customers? >> the next step forward is to portion of costs with automakers, because automakers have so far paid the costs of front. that is important for takata to find its bidders and come up with a restructure plan, which it aims to conclude by autumn this year. yvonne: well, seems like investors are shrugging off these latest reports now. thank you so much. next guestour remains cautiously optimistic on asian stocks, but where are the best opportunities? we will ask j.p. morgan asset management. this is bloomberg. ♪
business flash headlines. japan displays tumbling after an operating loss of 34 million dollars, shares down 6.5%. company guidance was for a $10 million profit. shipments, stronger yen, and price declines are blamed. it may seek financial support from a top shareholder, icj. denies reports it is making a play for intercontinental hotels. a spokesman denied a report, saying it is planning a bid of $9 billion. the owner of holiday in and crown plaza has been the subject of takeover speculation. anbang tried to buy starwood, but withdrew its offer in march. expectations low for a chinese lottery site after the number of shares sold short reached the highest ever.
speculation the company will be left out when chinese regulators allow some lottery services to resume after they were halted in march last year over corruption investigations. than four million shares were shorted after the stock plunged 11%. next guest says asia may surprise in the second-as china stabilizes. as china half stabilizes. i thought it was interesting when you mentioned markets are pricing zero inflation into perpetuity right now. we could see some inflation surprise, where and could that continue? good . i think asia has been dragged down the last few years.
earnings, linked to inflation. the strength of the u.s. dollar. emerging markets as a whole, commodity prices. if we do see inflation pickup in the u.s., that actually could lead to better pricing power. in fact, if we are seeing earnings in general and asia and the world, if you look at the last quarterly earnings, we are seeing more beats than disappointments, which frankly over the last few years has been the reverse. i think inflation is picking up a little bit globally, especially led by the u.s.. anythingt expecting significant, but that will lead to better pricing power yvonne: and help earnings in asia. and help in asia. yvonne: do we need to wait for more data? >> the numbers were good.
are increasing the probability of a rate hike this year. 2, 1, 0,, next year, let's think of the magnitude over the next 1-2 years. u.s. economy the is getting better, however we do not think it is off to the races, therefore we think interest rates will go up, but we don't expect it to be steep. let's not forget that asia has a significant export component to the u.s.. ete export sector will g gradually better. earnings will get better and valuations are still on the cheaper side. so if we get earnings better, valuations cheaper, u.s. picking up imports from this part of the world, better for equities and is part of the world. yvonne: what about for bond fixed income?
people talking about how the appetite for yield is pushing up these bonds, a marketsin credit spread right now. the ecb will be a backstop in all this? >> i think were talking about the credit and bond markets in asia. that has been favorably lately. wheneason for that is that you have a world that still has a low yield, there is a search for returns, and we have been seeing inflows into the asian bond market, which is favorable in terms of the forex market in asia as well. general, those flows into asia are good for this part of the world. is it a bubble? i would say not yet, but if
flows carry on strongly, it may create a bubble, but we are not there yet. yvonne: i think rba was clear about how they have reached the limits of monetary policy. they could not even pass on this cash rate, so in terms of transmission, it will be tough. are we expecting fiscal side to deliver now? policye look at a lot of now that has been talked about, there is focus again on fiscal policies. australia, for example, over the next few years, a significant amount of money will be spent on railway, road projects, fiscal stimulus. you're looking at more fiscal ,olicy now in southeast asia thailand, indonesia, where there are more infrastructure projects taking place. yes, i agree with you. i think we will see more fiscal
stimulus measure with easing monetary policy. yvonne: you like southeast asia as well, but what about fiscal policy in china. thehave the statement over weekend saying officials are calling for more proactive fiscal policy, but doesn't have room to expand given the fact that this fiscal deficit as some are misting higher than what the headline figures are suggesting? the aggregate at debt figures for china from a global context, it is not way out there. concern where we do see is the corporate debt market, so i think in terms of central government's to stimulate economies, we believe there is still the ability to do so if they wish so. if we look at the numbers from china right now, although we had some credit expansion in the first quarter and early second
quarter, that has now tailed off, but if we look at the numbers from china at the moment, it looks as if the economy is stabilizing somewhat. there is growth in the new economy. we look at the consumer sector, auto sales has been strong. we expect the numbers coming out to be ok over the next 1-2 weeks , so the need for china to do significant stimulus now is probably not so high. china stabilization will be the key thing for the second half. what sectors or markets are you focusing on? >> in terms of sectors, we like the technology side. two areas, the e-commerce story, but also particular hardware, especially hardware we believe in terms of the turning cycle, the whole upgrade in the handphone space into new technology areas. e-commerce, the growth in the
consumer market. those continue to grow very strongly. we also like domestic consumption plays, including domestic related banks, domestic exposure banks, not global. in terms of countries, we like .orea, taiwan exports will pick up, the cycle and technologies is helpful as well. indonesia looks interesting, thailand as well, and lastly india. a bitvaluations are expensive, but earnings growth is still 17%. india is moving ahead with reform. yvonne: i have to leave it there. joining us from j.p. morgan asset management. ratings warning, australia's treasurer says the country's
♪ yvonne: welcome back. you are watching "daybreak asia" . conomist warning cuts to australia's rates are losing impact. the reserve bank of australia worried about this, right? particular the deputy governor. he will take over the top job in september. he has said lowering the cash rate begins to lose effectiveness the closer you get to 1%. we saw a real world example right after last week's cash rate cut down to 1.5%. onlyig four banks here passed on have to cut to mortgage rate holders and raised rates for deposits, so that was a means to protect margins and
capital. it is already the law of diminishing returns when it comes to the cash rate. yvonne: pretty much the same story when it comes to central banks, so what are economist saying that the rba can do? paul: prize for calling a spade nomura the man two nomura. the reserve bank has no cut the last two times. weak orderlyo inflation numbers. are clearly thinking the
rba is telegraphing its moves in line with inflation numbers. yvonne: is there any signed in the government will take up the gauntlet and start reforms? unfortunate not come although the treasurer is well aware of the need for reform. talkingn local media about the aaa rating and the risk to it. in his words it will be difficult to retain that rating under current circumstances. he is referring to the need to get a jet savings through the parliament. that was part of the reason we had an early election and double dissolution, to clean out what was viewed as an obstructive senate. it really backfired spectacularly. of eight senators on the cross bench, there is now 11. the government has three fewer seats, so it has to work harder to get reforms through. scottas the context of
♪ is a 30 a.m. in singapore, half an hour away from the open of trading there. we will see how dbs trades after second quarter profit declined 6%. you are watching "daybreak asia" . ♪ let's get to first word news with paul allen. the top stories this hour, asian share markets have started higher with the regional benchmark rising. financial and materials shares
are leading in tokyo as the yen weakens. friday's stronger-than-expected jobs has boosted risk appetite and the dollar. gold lower, crude at $42 a barrel. boj instigates a review of policy today. a survey expects an increase in the stimulus program. two thirds of analysts say an increase is likely, three quarters see the bank retaining negative rates. the boj review will be presented to board members when they meet next month. shares in takata surged 4% despite a quarterly profit drop of 33%. in thewill restructure face of billions of dollars of potential costs related to faulty products. net income fell to $20 million, and the company booked a 34 million dollar charge related to lawsuits. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: christmas in july,
that's how bloomberg intelligence sees friday's u.s. job figures, 255,000. we have a look at this. all this move the needle at and suggest we could see a rate hike? been reading ave big sigh of relief after that report. 255,000 jobs, good news for the fed. is it shifting the odds of a rate hike? is it moving that dial? in terms of our projections, the odds of a rate hike this year, 46.7%, that had been down to 35%. has them not rushing to
raise rates is the fact that payrolls and gdp are diverging sharply. our team putart together on friday, the payrolls trend looks healthy, but gdp, there is a big gap. as long as the fed sees a gdp growing slowly, it may want to wait to raise the key rate. aonne: why is there such diversion between the jobs numbers and gdp? again, our intelligence team was looking at this and talking about how companies are confident enough to higher, but but privatehire, investment spending has been falling. another thing that seems so clear when you look at this is 2014, 2015, 2016, all the growth is in services jobs,
very little growth in manufacturing jobs. services, health care, restaurants, win your business increases, you don't necessarily buy more equipment here at you have to hire workers. that is what we are seeing there. if big gains in services jobs will translate into enough paychecks to boost the economy, but it is for sure that when , that'snt is weaker what we saw earlier this year, a gdp number that was 1.2%, investment spending had its biggest drop in seven years, consumer spending up 4.2%. be all about the consumer. retail sales will be very important to the fed as well as the market. sales on friday, that is the first month of the the first half group barely 1% of gdp. the fed would like to see another strong number strong
enough to push spending forward. of forecast is for a gain 0.4% on july retail sales, autos at 0.2%, but june was stronger. one note of encouragement among many is the fact that average hourly earnings were up more last month than the month before, rising 2.6%. paychecks are there, people will spend, or at least that is the hope that the federal reserve. ,vonne: live from new york strong jobs figure getting a boost here in asia, gains at the start of the trading week. we are looking at the early action so far. we are seeing this strong rally on this first trading day of the week on the back of that added clarity or conviction from the strong non-farms number that beat expectations, higher wage
growth as well, all feeding through to a stronger session in asia. the degree when we are talking about the japanese market. did nikkei 225 hitting session highs in terms of gains. we are seeing exporters surging by the stronger currency. surplusaight monthly for current accounts despite the value of the yen playing havoc when it comes to those translated exchange values of overseas income. elsewhere, sydney stocks gaining, up 7/10 of 1%. anotherting, expecting 25 basis point cut. up by .5%, stocks inflation trending below that 1%
bnz.% target of r the kospi also up. yvonne: the focus has shifted towards china, further signs of stabilization with fx little changed for july. this comes ahead of july trade balance figures. pboc is like the burning less cash. juliette: the pboc is defending its currency ahead of its inclusion in that basket in october, but also thanks to the dollar. all this thanks to geopolitical uncertainty, brexit vote, pushing the euro higher, dollar lower, inflows into the japanese yen.
that had an effect on capital outflows and easing the pressure there. to 3.2 trillion dollars in july, in line with estites. singapore,h out to saying that a boc may have intervened following the brexit vote, but it was not significant enough to have an impact on foreign reserves. at $2.3 trillion in july, in line with where they were in june, so stable there as well. yvonne: some stable figures on that trade balance. juliette: we should see stabilization, but are expecting to see trade remains sluggish, particularly exports. we are seeing demand weakened for china's exports following the brexit vote and geopolitical uncertainties in the south asian
china sea. down from june. exports will have fallen by 3.5% , imports down by 7% in july. industrial output and retail sales steady. inflation not doing anything, the weaker yuan boosting competitiveness as well. singapore'sit at biggest bank fell 6% in the last quarter, missing estimates. dbs group says provisions for the troubled energy services firm swiber holdings overshadowed gains in incomes. did swiber holdings way on the overall picture for dbs? >> it weighed a lot on sentiment. they were down for seven
straight days. that has not happened since april. you're talking about $150 million hit to earnings, which for dbs is not that much. more broadly, it the oil services sector is a source of some concern. as oil prices go, so will that sector. those exposures will start rolling up. yvonne: moody's sounding the alarm about these provisions, enough, so are not what is the outlook for dbs? >> it would depend on the oil price. if you look at the maturities of the bond market, oil and gas related maturities of $1 billion coming due through 2018. below $40 a barrel, the consensus is that those exposures will come into trouble and that will hit dbs and they might have to make additional provisions. yvonne: we will watch how dbs
trades at the start of the open and singapore. checking out stories making headlines, opec nations see little hope of resurrecting a global deal to freeze output. sources no plans to revive the agreement with the nonmembers after talks were aborted in april. the cartel will meet in algiers next month. saudi arabia insisted iran joined the pact. it rolled out a freeze until output reaches a pre-sanction level. chinese ships entered waters that japan claims. ministry summoned the chinese ambassador for the second time in three days. earlier, officials claimed 230 chinese fishing boats and six coast guard vessels were in the area. thailand votes to approve a new constitution that critics say
hands of military-backed government too much power and restricts civil rights. ae election commission says draft has been supported by 62% of voters. the leaders said the results keeps thailand on course for return to full democracy. the african national congress has had its worst election results since 1994. othervoters turned to parties, angry over a stalled economy, jobs, and a scandal surrounding president zuma. centerancial johannesburg and the industrial hub port elizabeth have been lost. next, the view of regional economist about the boj's next move, including the 2% inflation target and whether it may be delayed. this is bloomberg. ♪
♪ a quick look at what we are watching and asia over the next five days. tuesday, the end of an era in 's lastraghuram rajan meeting as governor. he boosted investor confidence in india. reports courtly earnings on wednesday. the stock had a roller coaster ride last week, rallying 16% following a two-day drop. this is the first set of earnings out of the new leadership. on thursday, the reserve bank of new zealand makes a decision. surveys expect a cut in benchmark rates by 25 basis points. another cut is expected in
november to take rates to 1.75%. on friday, the latest picture of china's economy when it releases retail and industrial production data for july. the previous month showed an increase for both. we will see if there is momentum ase in the slow transition well as recovery. let's head to japan, a survey has found economists expect the boj to increase its stimulus program. the majority think the central bank will stick with a negative rate and the 2% inflation target could change. tell us more about the release today. it is more of the same? >> sure, we had a survey this spokeg published that about the review of monetary policy coming up at the next meeting.
we had the summary of opinions from the previous meeting, which took place at the end of july. that is a new format the boj has a part oft this year, their attempts to increase communication with the market and increase transparency. the report this morning gives a a short detail summary of opinions of policy board members, compiled by governor kuroda. some indication of what we might expect from the review next month. yvonne: i thought it was interesting, this summary of opinions, details out of boj policy as well as the minutes. what were some of the highlights you thought we got out of this report? meeting wheree the boj voted to enhance monetary easing, included the
expansion of etf purchases as well as changes to the u.s. dollar lending program. cameote at this meeting after the brexit vote. were expressing uncertainties after the brexit vote, what that means for the boj price target. one of the most interesting opinions that was expressed in the summary of opinions, one of the member said the review of policy must be conducted to review what the boj should do to meet 2% target as soon as possible. yvonne: i thought that was interesting as well. about this comprehensive review we are expecting next month. what are economists saying right now? segment, iop of the
said most of the economist we surveyed in our survey are expecting the review will make expansion of easing more likely. when the bank initially announced the review, there was some uncertainty in the market over whether this would be signal a retreat from easing or lead to more expansion, both governor kuroda and the deputy governor have expressed firmly that it will not mark any retreat or any shrinking from easing. review ofe expect the easing more likely in the future. the vast majority surveyed expect that the negative interest rate policy will be most of thebut also economists we surveyed expect boj will either change
again or possibly delete its reference to maintain its 2% inflation goal within two years. yvonne: all right, thank you so much. joining us live from tokyo. let's do a quick check of markets and play around the region. tokyo leading the gains in the asian region after friday's rally in the u.s., the s&p 500 record, helped by that payroll that did help the dollar booze quite a bit, so we are seeing the yen doing a bit of a backtrack this morning, shares up 2% on the nikkei 225. oil prices rising along with stocks, up 8/10 of 1%. this is what the kospi is looking at right now. up a third of 1%, gold falling.
flash headlines. singapore facing a wave of defaults. cheap oil could raise risks in the sector. oil-related companies phase $1 billion worth of bond payments through 2018, a quarter of that due by the end of this year. oil services company swiber , nowngs caused a shock operating under judicial management. hottest month for the indian rupee, the prime ministers sales tax entry may have come at the right time. isdman sachs says the rupee among the best for exchange rates. indian assets accelerating after prime minister modi cleared hurdles for a goods and services levy. a man sued after he was sacked last year, saying he was made a
scape goat. says itman for nomura is disappointed with the judgment. about,rnings to tell you profits at berkshire hathaway rose 25 percent to $5 billion in the second quarter. su keenan a breakdown of the numbers. >> warren buffett's berkshire hathaway posted numbers in a statement released on friday, net income $5 billion from $4.1 , a 25% jumpar ago in profit. in comes from manufacturing services and retailing with a heart of the prophet, climbing 14% to close at $1.5 billion. recent acquisitions really paid off, but the operating earnings is the story here, because it was amiss, 2803 per share versus 2911 estimate. of how berkshire
hathaway has performed, the shares are up 10%. that has to do with the fact that it's an insurance base of portfolio companies are under pressure. castparts,recision help to boost the bottom line. geico was a strong player, but a slump in earnings at railroad and energy units. insurance is businesses took a hit from the wildfires in canada. rivals, they did ok, rebounding in their insurance unit from a loss of $38 million and posting an underwriting gain of $227 million. in terms of book value, this was also a strong point for the company, rising to $160,000 a share. in other news, airbnb is raising $850 million.
that will value the company at $30 billion. for airbnb declined to comment and did not say who is making the investment. airbnb secured $1 billion in debt. walmart aims to close at $3 billion acquisition of jet.com as early as monday. sources tell bloomberg that walmart once the founder to head the company as part of the deal. the acquisition would help walmart challenge amazon light tapping into proprietary technology and customer data. critics, savaging from the suicide squad has broken box office records in north america, $135 million. it marks the biggest ever august weekend in theaters. warner bros. is developing a range of movies based on d.c. comics for release over the next four years.
i have to watch that one. that is it for us here on "daybreak asia". "trending business" is up next. china data, trade numbers expected to show declines. that should be out in the next hour. situation whenfx it comes to china, how it has fared post-brexit. australia's aaa rating could be in danger. we will have a look at the prospects for that. plus, olympic games getting underway. dal table inhe me a different way. ♪
♪ it is monday, the eighth of august. this is "trending business". i am rishaad salamat. ♪ we will be heading to tokyo, sydney, and singapore. asian-pacific markets rising after that strong jobs report from the u.s., their regional benchmark climbing 21%. signs of stability, china's foreign exchange reserves less in july.