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tv   Daybreak Asia  Bloomberg  August 21, 2016 7:00pm-9:01pm EDT

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♪ >> grade expectations, a hike still on the cards this year. struggling, but shrugging it off , surging prices and the rising middle class. , governore new boss of the rbi.
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"daybreak asia". yvonne: good morning. dovish boj, stanley fischer with an upbeat view of the u.s. economy. valor getting a boost. betty: for some, no surprise. for others, it came out of the blue that he would say this economy is strong enough for one rate hike. it is pretty much priced into the markets right now. yvonne: certainly so. this is ahead of what janet yellen will say. --he echo what he said in will she echo what he said? kiwi-dollar, dollar strength,
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weakening at $.72. counting down to the open in australia, japan, and korea. japan, we can't forget about governor kuroda, helping to send the yen lower. what does that all mean? we will see throughout the week. how will this play out on wall street. boj,: a final note on the it seems like it is so far away and tell next meeting. who knows where this exchange rate will go? that boj meeting cannot come soon enough. on the flipside, whether the fed will raise rates later this year. the big thing we are watching deal is this $14 billion
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between pfizer and medivation. according to people close to the agreement who have spoken to bloomberg, this could be announced as early as monday. we have a deal worth $14 billion for medivation, a cancer-focused biotech company. look at how pfizer has been doing, they beat their earnings projection, new branded treatments, including cancer drugs to boost revenue. , theyuiring medivation will acquire its blockbuster prostate cancer treatment. closed with a market they wish and of $11.1 billion -- a market valuation of $11.1
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billion. in the mix, were but many analysts believe this would be a big win for pfizer. from pfizer or medivation, but it is expected to be announced on monday. thesek to us about comments. >> it is coming out of the blue, but grabbing the headlines. saying we are close to fed targets and sees economic growth picking up down the road. or signaling that a 2016 rate hike is possible, even though the market is pricing the rate hike into next year. well this set the table for janet yellen who speaks later this week or whether at allows her to moderate? nextll have more and the
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half hour. janet yellenpect to speak on friday, but what else with the market be focused on? >> there are a number of economic reports. two big pieces of data out have to do it housing and durable goods. say the housing market is still on solid footing , sales of single-family homes at an eight year high. havele goods orders advanced in july. if you look at the chart we , that white line on top is the interest rate that has been coming down on the 30 year. is sales. it has really taken off as the number has come down. in terms of earnings, a couple , product -- tronic
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prade, still some numbers to move the market. >> thank you so much. let's get to first word news. welcome back. >> great to be back. has swapped the financial a lister or for a trusty technocrat. the deputy governor will succeed the current governor as the government seeks credibility with international investors. he has helped to drive the biggest reforms in the r.b.i. 81 year history, including setting a target for inflation and leaning up debt ridden banks. saw a 10% jump in profits, lifted by a recovery in the market. net income rose to $800 million, 5% lower than estimated. nke has won the second half
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may be more challenging amid an ownership struggle. the management has been under pressure. afterlans to raise agreeing to resume shipments from three fields. reserves are operated by the state-run northern oil company, but the pipeline is controlled by the government. exports were halted after a payment dispute in march. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: let's go to our top story in the asia-pacific. results in australia, the last of the big iron ore miners due to report. blue scope steele is out with an impressive result.
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do?did they 160%, that's how much profit was up, three hundred $59 million, so a good result. they let us know in july that something special was in the works. they signal profit would be up. up aroundhealthy leg the middle of july, 17% gain and the stock price there. that is not only boosting profit, but turnaround in the steel prices helping them along. net debt, $778 million. the first half of 2017 will be good as well, signaling an increase of 50%. a three cent dividend, and were still waiting on fortis q. sque.rti
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,> we will be watching here u.s. second-quarter gdp numbers later this week, which will give us another idea on the economy. however, some question as to whether gdp is still the most relevant measure of growth. get to gdp as a yardstick, i'm curious of what you make of the comments. somethingeminding of that is lost sometimes in the noise. in terms of an claimant, the fed is close to its target. a reminded us there is not lot of difference in the inflation targets. >> the numbers are still consistent. number, very specific
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why is this not the most accurate yardstick? gdp is starting to get a bit long in the tooth. it traces its origins to the depression. look at all the changes in the world economy since then. the rise of services, the transformational power of technology and the relative decline in manufacturing. a lot has gone on since the depression. >> what are people doing then? is on globally and for example, we have a conference in germany this week that is devoted to the components of gdp, and is there a better way to get something. firms in india, latin america, devising their own indexes based on things like construction, auto sales, consumption, build your own model. peoplethere are still who are clinging to the old gdp. what is the risk to them? get hung up are we
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from a policy perspective on trying to replicate growth rates from decades past, 3%, 2%. in the 1990's, 4%, 5%. if you go back to the 1990's, you could buy a cd and pay anything up to $20. paying for spotify premium, a fraction of that. you can stream whatever you want. how do you get a handle on this? >> how do you get a handle? some people have arguments for keeping this type of old model for gdp, right? >> there is an argument that you leave with the person you came to the dance with. many agencies have a legislative mandate to publish data on a range of things. then the question is, look, at least every country publishes a gdp number. if you are going to do away with
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it, fine. should everybody do our with it at once? that's tough. the key point of the article is that the hunt is on now more than ever. there ia sense that ts is an imperfect yardstick. >> it's like a salad bar. different types of ingredients and dressings as well with that. thank you so much. ahead, vowing to crackdown on tax cheating. we will hear from the indian finance minister. still ony fischer is the table for hikes this year. we will discuss the implications this is bloomberg. ♪ throughout this this is bloomberg. ♪ hour.
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>> of gloomy monday morning in
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, the as nikkei futures japanese market the first to open in asia. nikkei futures showing a slight tilt to the downside. in the u.s., we closed on a not muchcline as well, momentum pushing into asia. >> nomura holdings looking for bankers in the u.s. following a round of cost cuts. eliminating jobs and shutting business and the europe's and america's to save $700 million and stem six years of losses. reviving hiring after the biggest pretext -- pretax profit abroad. >> electronics said to be in final talks to a u.s. chipmaker
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for $3 billion. the deal could be reached this investors offered a friday's market close, a value of just over $2 billion. >> chinese tourists headed to japan, 730,000 flew in last month. women and40% were their 20's and 30's, and local businesses have seen a change in shopping patterns. they are buying cosmetics, medicine, but less demand for electronics, as the quality of chinese made products has improved. interesting. >> that is very interesting. i imagine luxury items as well. get a reminder of how things ended up on wall street, a little bit lower, so the second worst week since june,
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but not a lot to be alarmed about. it seems like this market is still intact. let's look at key events this week in asia and the u.s. friday, but an on lot of eyes on that. gdp, andread on u.s. housing numbers in the u.s.. janet yellen's address at jackson hole, wyoming. chiefg us is the economist at the bank of singapore. what is going to be key for us to watch this week that is on your radar? >> we are watching the guidance out of the fed. we have had three heavyweight fed speakers reminding us that a rate hike this year a be possible. you have janet yellen at the end of this week, so markets will be
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looking for any clues in terms of the short-term or long-term framework of of fed policy. that will be top of the list of this week. be a a lot of data this week that may either support or undermine that trajectory, right? sales, existing home sales, chicago pmi data, the second reading on gdp. you expect any surprises on that front? >> the housing numbers have been hard to read. you feel they should be stronger. they have been ok, but below long-term average levels. ofs seems to be a problem getting housing backup, so there is room for positive surprises there. the other problem is that it is not clear what is driving fed policy. the economy seems fine. they are close to their and collation target and in prime and target, but still hesitant to be raising rates, even from
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the very low levels. any color that janet yellen will the on the framework, on decision-making process, i think the market will be looking at that more than the incremental data releases. >> why do think fischer came out with this comment? >> it is a bit of a puzzle. back, they prepped the markets for a rate hike, then you one bad jobs number and they all rent for the hills. result, it is hard to understand what it is that is motivating policy. thenumbers look terrific at moment, but it does not give you the confidence they will go in september or december. lack ofthere is a predictability to it. >> how is that being priced in asia right now? what our markets in asia ready for?
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markets are pricing in nothing happening. rateare pricing in to hikes over the next two and a half years. >> you mean globally? globally, but volatility is very low. asian currencies are solid. nobody is expecting anything from the fed. i think the fed needs to do something about that message, because that does not seem to be their intention. outcome of the last year, that people don't believe the guidance they are offering. >> could that have a beneficial bearing on the yen? i suppose it could if people start to believe that the fed is more serious than they thought they would be. maybe it will pull them away from this level. there will not come from anything happening in japan in the next month.
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a month boj meeting is away, and their ability to give guidance is close to zero because of the very poor transparency we have had over the past couple of years, so nobody is going to believe any guidance the boj offers. you really do need the fed to be a little bit more aggressive if that's going to happen. isit seems like that month farther and farther away and we see where the yen is going right now. what is your take on governor kuroda's markets over the weekend? sufficient chance of boj easing more in september. how surprising is that? i think a lot of markets are pricing that in, right? ofthere has been a lot discussion about what will happen after this policy review. there are fears they will cut back on some things, but i think there looking for ways to make policy more effective. formula not magic
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hidden in the boj basement, so people are dubious they will be able to do anything substantial and dubious that we have been here before. kuroda has misled the markets in the past, so they will be hesitant to trade off of any guidance he is offering. >> we will leave it there. thank you so much. thank you so much. up next, india names a new governor at the rbi. we will meet him next. this is bloomberg. ♪
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>> breaking news. fortescue out. $984 million for the full year net, a big beat.
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the estimate was $910 million. decline, down 17% to $7 billion. due to the iron ore prices that have been lower as china demand slows. they were positioned at the lowest end of a global cost curve. we will see how fortescue trades. the outgoing governor of the reserve bank of india, urjit
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as a technocrat and will continue the policies. he seems to take all the boxes for investors. >> he is an insider. he helped india's economy to grow in the last couple of years or so. he cleaned up bad loans, stabilize currency volatility. these are among the areas that investors are looking at. it does signal confidence in him that the government once to continue these policies. it signals they want to continue
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and that india will make the focus on macroeconomic stability. they are both inflation hawks, so how would that way on markets? >> they have got a bit of a .arget, 4% that is plus or minus two percentage points. helped a goal that patel to set himself. when it comes to currency, the total returns from the rupee has outpaced every other emerging markets currency except for the argentinian peso. they are waiting to see more details on his views. government bond yields and swap rates will probably rise. >> a quick reminder, the olympics are over, for now.
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tore is a party and rio celebrate the games. race, andon the medal
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>> pretty gloomy morning here. just 30 minutes away from the first major market opening in the region. >> we just got through some rain here. in fact we're still getting through it, as you can see, on a sunday evening here in new york, 7:30 p.m. just passing that as well. markets closed lower on friday. and we're set for not much of a gain this coming morning.
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> you're watching daybreak asia. now, shery. >> thank you. fieser is set to be nearing a deal to buy u.s. biobiotech kpping for $14 billion. sources say an agreement could be announced on monday. fieser is expected to pay a premium of about 30%. they have been relying on new brand treatments including cancer drugs to boost revenue. the fed number two stanley fisher has signaled that a 2016 rate hike is still on the table. speaking at the aspen institute in colorado fisher said the u.s. economy is close to meeting the fed's goals and he expects growth to pick up in the coming quarters. his remarks come just days before janet yellen speaks in wyoming. singapore prime minister was briefly taken ill while
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delivering his national day address. he had been speaking for more than two hours when he abruptly stopped and had to be helped by medics. rehurned to finish his speech. he became unwell due to heat and dehydration but had not suffered a stroke. >> thank you so much. the fed's number two we've been talking about it today may have set is the stage for more volatility in the currency markets. last week the dollar was up one day and then down another as traders weighed signs that policy makers were divided on when to raise interest rates. so kathleen is watching all of these developments. did stanley fisher clarify the fed's stance now? >> well, he certainly pointed us in the direction of yes the federal reserve does want to raise interest rates this year.
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they need the evidence, they need the data, they need backup to do that. these were prepared remarks. these are not just stanley fisher talking to roberters off the cuff. so it was a definitely well-thought-out speech. so you just heard the fed is close to its targets. why is that important? that's one of the prerec sits for being ready to raise rates. in this speech he says he expects consumer spending to continue labor markets to be strong and we'll see more business investment. business investment has been weak for three quarters in a row. jobs growth remarkably resilient and he said consumer prices are within hailing distance of the fed's 2% target. let's go pick up a chart. it's very simple. it's personal consumption expenditures. that's the core price index. that's what the fed is watching. so stanley fisher says it's within hailing distance of 2%.
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fair enough. but it looks to me like it's following a trend it's had before. it goes up, down, up, all the way to the left-hand side of your chart. it's not clear that inflation exactly moving higher. so all the more weight on janet yellen when she opens the proceedings at the symposium on friday, typically the fed chair speaks to lay the groundwork but more and more his speech has become a vehicle for the fed chair to deliver a strong message if he or she wants to. >> why would it seem that he is taking some of the thunder away from janet yellen? >> or maybe just paving the way so markets have a sense of what janet might say on friday. we know we have a lot of confusing signals. that's one of the things he may be trying to show where they may be coming down. remember last week they said a september rate hike is possible. on every fed meeting. john williams from san
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francisco, september's in play. one, even two rate increases could be possible this year. is the fed maybe trying to way the markets? because the markets just don't seem to believe that anything is going to happen in 2016. jump in now. let's take a look at where world interest rate projections. now as of friday, for september one in five. that was not in the cards. even after all the other fed speakers said september is possible and even for the whole year odds are barely better than one out of two. >> it was a big weekend for central bank. surprise certainly, especially from the governor who wrote, seems to have opened the door to more easing next month? >> i might just start isn't it interesting that september 21 is the day of the fed meeting bank of japan meeting, and my daughter's birthday. it's a big, big day for the markets. so let's take a look at what the governor said when he spoke to the newspaper. just came out on saturday over the weekend.
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he said there's a sufficient chance of easing when the bank of japan meets. and they will be wrapping up their quantitative easing assessment which he said a few weeks ago. do you want to continue? if it's needed? they won't hesitate to act. they do have tools. he even said there's room to take those negative interest rates even more negative. now, in terms of inflation, also this friday a very important report out in japan, consumer prices. you can see here whether you look at the headline or the core it's moving in the wrong direction. of course the yen is not helping that price of imports getting even cheaper but the forecast is for 0.4% down on the headline and the core year over year. so japan still fighting this not only disinflation but deflation perhaps. that's why the governor is still so determined to go more.
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he has to. >> stepping up the rhetoric a little bit beyond what he usually says, which i thought ws very interesting. thank you so much. obviously as kathy mentioned a lot this monday. let's see how asia markets are shaping up so far. what's up? >> top of mine currencies we just talked. have a look at the dollar yen at the moment. sum up what's been happening across currency markets. 100 spot. the reason i bring this up is that it's generally been weaker. so we've seen a weaker open. since the cutoff about an hour-and-a-half, 90 minutes back we're seeing a little strength come back. 2010 0 spot 44. what j.p. morgan said is 95/96 is what you want to watch out before the meeting late next month. if we hit this level at around before that time expect them, there's a chance that the government the finance ministry
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will come in and intervene. also, similar one opened weaker, a little stronger since about 30 minutes back closer to 76. we've been stuck between 76 and 77 for the most part of august so just watch out for this as well. generally again have a look at some of these as well. because what we've seen is really dollar strength. so basically our starting point here is we're coming up fairly steep gap down into this morning. so you want to watch out for as well. any steep adjustment coming out later on, coming out in a week. of course idr, indnetion currency coming off a surprise move of bank indonesia last week to stay put on its seven-day. >> ok. as far as the equity markets though are concerned, what are we likely to look like? >> we will likely open flat. have a look at some of the futures. let me look at my map.
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when markets opened up. these three markets open in about 30 minutes. doesn't get more exciting than that. 6 points.wn gap a slightly weaker open, maybe a tenth of 1% if we are lucky. and of course japan is bracing for two typhoons today and one earthquake that just happened 5.1 magnitude. run of the mill morning. >> just run of the mill. ok. maybe gets more interesting when you look at specific stocks. >> absolutely. i think we just broke, earnings were out. that opening in 21 minutes. in south korea, looking at samsung record day high close and we're also wauching renaissance here confirming that earlier report that is the buyout in the u.s. is one of the growth options the company is looking at.
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last close of course for all three, all three open up in 21 minutes from now. >> watching the open. thank you so much. on theation market. specifically indonesia is returning finance minister has vowed to crack down on tax cheating. the former world bank managing directer is overseeing an amnesty program designed to boost tax programs by at least $12 billion. she says it's inexcusable for indonesia to have one of the lowest tax collection rates in this region. >> by constitution the government has the power to collect taxes. by constitution the people have to pay taxes. >> but there was a shortfall last year. >> and that's why we see, there's a shortfall which can be explained by this price, by the weakening of the global trade. there is a shortfall. which can cannot be explained by that. which is our ability to
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collect. which is due to efficiency, effectiveness, corruption. >> what would be your message to those that might be evading taxes or those continuing in corrupt practices? >> indonesia has the right to do business. we are improving ourselves. but if you are not in compliance i'm going to take serious action domestically swlings internationally. i think it's about time for indonesia to have this compliance level of all parties. it is not acceptable of -- for a country like indonesia to have a tax ratio that is very low. this is not because we are poor. this is not because we don't have a business peoples. but it's because both sides, the taxpayer as well as for us as a government is not being able to establish the good relationship based on trust, confidence, and credibility. so i am going to do my homework
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but i also expect all the business people to also do their homework. >> how much tax reform do you think you can get done? >> for example, the realing of bank accounts or credit card trance actions, you need bank secrecy laws changed. you need to get the legislature on board. but unfortunately, a lot of national and also regional legislatures have been the one whose have been the target of these corruption probes and even arrested. >> this is more like a chicken and egg. always vulnerable with this low trust perception of everything. and that is exactly the biggest and the toughest job. >> that was indonesia's returning finance minister talking to our very own steven engle. next the battle for control china's leading developer. the politics behind the struggle next. this is bloomberg.
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>> to futures right now. a lot of earnings ahead for you guys. here in new york. a quick check of the latest business headlines at this hour. japan airlines says it's canceled more than 130 domestic flights today because of the typhoon delays. storm is affecting the eastern part and is expected to make landfall in tokyo, in the tokyo area this morning. jal says more than 25,000 passengers had their travel plans affect bid the typhoon. rival ana has said it has canceled 96 domestic flights. >> uber has told investors it won't pay more than $2 million for its rival. said to oppose an acquisition at any price due to the regulatory scrutinies. it's reported that they unsuccessfully sought a sale at
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$9 billion. an investment from gm. uber has not made a former offer for lyft. >> imagine that. rmer chief executive is is pitching a sale last acted at the company before he leaves. ousted on friday but will remain an executive directer until september 13th. suggested selling part of paramount as a solution to its problems. one analyst says the ceo could lose more than $350 million this year. they said the deal for a 49% stake could fetch up to $4 billion. more news to tell you about chinese developer posted a 10% increase in first half despite the uncertainties surrounding its ownership. this takeover that we've seen going on since the beginning of last year. let's look at the struggle for
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control. managing directer. great to have you here. to talk about this very negative that we're asking from this shareholder fight for months now. what do you make of it? how is this different from just a typical hostile battle that we've seen? >> i just got back yesterday. easy to see it's a state versus private company. china resources, one of the hundred companies owned by the chinese government directly. and a very dynamic property company. so it looks like the state is taking over. china resources actually was started in 1930s in hong kong and it's considered one of the most sort of visionary, more free market oriented state-owned companies. the company had a lot of startup funding 20 years ago. so it's not so clear exactly what the dynamics are but it's more of a straight takeover battle. >> you were talking about, that
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you see in china, the entities. but do you think investors should have this battle? you've seen the first half earnings were, despite posting a 10% increase. the company itself has talked about how this is really starting to affect its operations. well, it is a very negative takeover battle. but a lot are even in the united states or europe. it's good for china in a sense you're having a very strong company and people wants to get their hands on it. it's considered one of the most dynamic propt developers in china. the problem is the rules are not very regulated. and some of the money coming in there is what they call shadow banking money and it's highly risky. so that's making a lot of investors nervous. >> particularly how they finance this deal or some of the stock purchases through these asset management plans. some you have done a lot of research on.
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this is not obviously an isolated case but it's hard to kind of gauge how rampant this type of practice is. >> there's tons of shadow banking money in china. i haven't seen too much used in takeover battles. in this case they got 13 million yuan and as far as they know they're raising it from private individuals 6-18% return. which means you're paying quite a bit for you money. also the rules are very unclear whether you're allowed to use this for a takeover battle. so from vanke's point of view, they're probably a little angry saying why are you hurting our business? >> what is the path of least resistance? >> nobody really knows. ecause parts bound on this mysterious group, nobody really know what is it is. and the source of capitol is unclear. so everybody's trying to scramble to figure out. and it's unclear how it's going
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to end up. >> for those watching the takeover battle from the outside here, i'm curious what are the lessons that we draw here on how chinese business operates, particularly vis-a-vis not just to each other but also with the government? >> well, i think it's actually a somewhat positive sign. it's confusing as it is. it's positive that state-run firms can start to do takeover battles and resuffle and reorganize assets. you want efficient use of capital in china. it's very messy but it is one example of that. the second thing is when you talk about state control of companies in china, it's not so clear that just because there's state ownership it doesn't mean they're doing the bidding of beijing. it means they're also doing stuff for themselves. so it's getting more competitive in china. i think that's a positive sign but it is very messy. >> thank you so much. andrew collier the managing directer on the battle for the company.
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up next the spending power of chinese tourists is redefining shopping in japan. in tokyo. that is next. this is bloomberg.
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i've. in dube >> just about the opening. >> we're seeing people start to talk about the specific beginning of some change in the region. we're seeing some analysts already pinpointing.
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>> the demand for oil continues to rise. > economies are growing. >> you are watching day break asia. >> a few minutes away from the opening in japan, korea, and australia. >> chinese phone makers, smart phone makers, said it's losing ground to lovely rivals domestically. however, research shows that second quarter smart phone shipment slumped 38% in china as they took on more of bigger market share. i asked them about the company's prospects at home and also abroad. >> so we are zooing a relatively flat year over year trajectory which has to do with supply chain.
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obviously we are a relatively young company. we've only been around for about six years in china and we're ramping up our supply chain. what's interesting is demand has never been as high as it is currently. we've seen like preorders or prebookings for some of our latest flagship devices at levels we've never seen before. our first flagship launch this year we had 16 million preregistrations for that device on day one which was the first sale. we more recently launched another device which again on the first day had 16 million preregistrations for the first sale. obviously, the challenge for us is to make sure that we work our supply chain to meet demands. and to meet demand much earlier in the life cycle of the product. so from a demand perspective our business has never been healthier in china. we just have to make o sure that our supply chain catches up. this is the most important if
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not the most important thing we have to work on as a company. >> so you really attribute sort of a slower growth or the flat growth as you describe it. really to a supplying chain problem and not because you're losing out to some of the domestic smart phone makers. >> that's right. we are seeing impressive demand for our products here in china but also in overseas markets especially in india. so from that perspective we are happy obviously with the progression of our brands, how consumers see us and the demand of our products. operations. al well, in the meantime let's talk about some visitors now. hitting japan and hitting in records in japan in the month of july. spending so much that there's a special word to describe their buying. explosive shopping. our tech reporter in tokyo.
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i feel like every time i go to tokyo, what is attracting chinese tourists to japan in such record numbers? >> actually, you are going to one of the big shopping areas in tokyo. you will see a lot of buses, chinese tourists hopping off and walking into department stores. and they're actually waiting like a long time in the store even 30 minutes before it opens. some department stores even have an official like floor for duty free for chinese tourists. so it's like a buying happening here. of course, chinese are part of -- a big part of the buying. and those sight seeing as well. so there's a route called golden route where they enter and then travel to do some
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sightseing and then go to mourntfugeie and then arrive in tokyo. so it's like a last stop of their destination and they buy things a lot here. >> we see the shopping power here in new york city as well chinese tourists but which sectors specifically are benefiting the most from tourism? > actually, the data is coming out from the government shows that most, 40% of the tourists from china are actually young women in their 20s or 30s. so that means they're interests , especially interested in cosmetic goods and trendy items as well. so this could be a good chance for cozz metic makers to take advantage of this. >> great. thank you so much. grace wong our technology
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reporter in tokyo. that is it for me. yvonne, it is tend of the day, the end of the weekend here in new york and you're setting up for your asian trade. >> those markets opening up in just
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♪ economy close to meeting fed's goal. lower-cost boost margins, fortescue is the best performer among australia's largest 100 companies. secede raghuram rajan as governor of the rbi. happy monday to you.
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let's get straight to the markets. asian markets closed flat on friday. what you watching? david: currencies. what we are seeing early is moderate dollar buying. let me explain. we are looking at the hawkish comments coming out of the fed. there was a cap down in asian fx on friday. we saw initial weakness, and now seeing that come back, dollar getting bought up. 76 point 03 is the level for the aussie dollar. we are pushing towards the lower end of that range at the moment. have a look at dollar-yen, similar chart. ,pen weaker, regained weakness but we are seeing weakness
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filter through into the japanese currency. 100.60 is your level. let's have a look at yields. negative0 year is at eight, so bond prices coming down early. the u.s. 10 year bond, very meaningful move, 1.60. have a look at this tweet from bill gross. point, growth says 1.59 is your cap. a hike for the fed would uncap that. open across three markets in
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line with what we were looking at as far as futures were concerned. .lat australia, flat kospi japan is bracing for two typhoons. south korea coming off a 13 month high for that market. three stocks we are following, fortescue up 1.4%. sees underlying profits for this current fiscal quarter compared to what they reported, up 50%. this, 2% up. it confirm this potential aschase of a u.s. chipmaker
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one option it is considering. the nikkei newspaper saying it was going to buy intersil. will goirmed that it through. something to watch for. yvonne: let's get to first word news. >> oil fell after iraq said it plans to raise exports by 5% in the coming days. this follows an agreement to resume shipments from three fields in kirkuk. they are run by the northern oil company, but controlled by the kurdistan regional government. checking crude, reversing seven ,ays of gains to fall today trading around $50.43 a barrel for brent crude oil. india has swapped a financial a .ister for urjit patel
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urjit patel will secede raghuram rajan. drive theped rajan's biggest reforms, setting of target for inflation and cleaning up that ridden banks. the singapore prime minister was taken ill while delivering his national day address. when heeen speaking abruptly stopped and had to be helped by medics. he returned one hour later to finish the speech. his office says he became unwell due to heat and dehydration, but had not suffered a stroke. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: pfizer said to be close to a $14 billion deal for u.s. biotech company medivation.
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sources say a deal could be announced on monday. we are following the latest on this story. what do we know? su: this will make a decent merger monday deal. pfizer has been doing well. date withp 8% year to branded treatments having to do with cancer. ist they gain in medivation a blockbuster cancer treatment already out there for prostate cancer. medivation is up 39% year to date. people close to the matter have , they say publicly they are near a deal. made it clear they had received interest from other companies in recent weeks. is highlyh firm $67.16 onosing at
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friday. that gives it a market valuation of $11.1 billion. pfizer again has been boosting its revenue from cancer related treatments and beat expectations in august. medivation by acquiring -- by acquiring medivation, this brings them in line with other cancer treatment companies. rejected aion deal french drugmaker's all couple of months back. a lot of anticipation for the monday announcement. it will take place, according to those close to the matter. yvonne: we also heard from stanley fischer, saying a rate hike for september may be under consideration. that will dominate markets this week. table for the
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janet yellen at the conference on friday. he is saying we are close to target. it has a lot to do with his strong and optimistic remarks on the labor markets. he sees the economic growth picking up and it will continue in subsequent quarters. he spoke in aspen, colorado. the question is to whether it upstages janet yellen or sets , this is whereer the feds thinking is going to be the source of speculation in the days leading up to her actual comments on friday. yvonne: her speech will be the big one, but before all that, what should the markets be watching this week? su: when we get into a fed-focusd week --
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week, we have data on housing and factory activity, and that will get the market focus. economists surveyed say the housing market is on strong footing, sigel family homes near eight-year highs, sales in existing homes near nine-year highs. bloomberg surveyed by expect durable goods orders to advance in july. we are at the tail ins of earnings, but we have medtronic out with numbers as will the fendi and prada. yvonne: more earnings to tell you about. by a wonka profit jumped recovery in the markets. the nation's largest residential developers saw a rise in income during an ownership battle.
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the housing market had a lot to do with this. it seems like it has been bouncing back. this could be a relief for vanke ? some analysts and shareholders, squabbles going on. thise to use clichés, but is the case of the good, the bad, and the ugly. the good is the first half results. the bad is the shareholder struggle. the ugly is the fallout from that and the contracted sales declined we are seeing in july. the good, first-half net income for china's largest residential homebuilder, up 10%. that is good. that is $804 million. 49% to 74.8p billion yuan. the long-term strategy that vanke is focusing on the middle
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class and key strategic regions in china. these results are setting the shareholder struggle that has emerged late last year and ran through the first half of this year. the stock was halted for six months after an of secure conglomerate emerged as the leading shareholder, biggest shareholder, which prompted the chairman of vanke to say their position is unwelcome. there has been a management revolt and outcry. yvonne: the president has talked about how the president is under mounting pressure. this ownership battle starting to hit their operations. the good, the ugly of the bad, and the ugly, because we are starting to affect operations. this squabble among management. you have three main stakeholders , at least three main stakeholders, all squabbling right now. july sales have started to
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decline. aberdeen asset management dumped its entire stake in vanke because of this certainty. sayingsident of vanke .anagement is under pressure you have one group, china resources key stakeholder, ever grant, rival developer -- ever grant -- management not happy with the situation. yvonne: i'm sure regulators are not happy either. . lot of moving parts still too, the best farming are strain company keeps the good times going. we are talking about fortescue's full-year profits rising threefold. , doty markets surge investors need to take stock
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after the rally. that is next. this is bloomberg. ♪
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yvonne: the latest business flash headlines. nomura holdings looking for bankers in the u.s. following cost cuts. been a limiting jobs and shutting businesses to save $700 million and stem six years of losses abroad. itser reviving hiring after egg's pretax profit abroad in seven years for the quarter ending on june 30. said to be in final talks to buy a u.s. chipmaker for $3 billion. the deal could be reached this month with renesas offering investors a premium. chinese tourist heading to japan
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in record numbers. more than 730,000 flew in last month alone. ine than 40% were women their 20's and 30's, and local businesses have seen a change in shopping patterns. chinese tourist bought cosmetics, medicine, but less demand for electronics as the quality of chinese products has improved. back to the markets, how things are panning out in the first few minutes of trading. tokyo looking strong, up by a fifth of 1% after governor kuroda said there could be boj easing in september. the kospi down .25%. the asx 200 flat. the training environment on this monday morning. great to have you.
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let's first talk about stanley fischer and his comments. you see this paving the way ahead of janet yellen's comments? i think we have to be careful. we have seen a couple of false fedts this year when some members went out and the market is complacent. also, the reaction in the currency markets tells me that they are waiting for janet yellen to make her comments. that shetation here is will not only save that risks have diminished, but make some reference perhaps to an upside risk in the economy. something like that would set the scene for december. yvonne: it seems like markets are pricing in too much dovishness right now. the fed on the other side, maybe being too hawkish.
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banks are how central performing, ecb, boj, they have not exactly far too many bullets here. is liquidity going to be enough to keep this rally going in asia? i think liquidity is a key component. had been bullish and overweight, but after more than 20% rally from the lows in february, it is time to review what the drivers are. they are turning around. we are seeing that and think it is sustainable, but it has clearly outpaced the earnings development. the other part is liquidity. thatitially thought valuations, not quite as attractive, but we looked at it in a historic comparison, but we
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compared it with u.s. yields or u.s. rates, asian yields, and also we have to consider that over the last two years, asian fallen 150tes have basis points, so your alternative to equities has become less attractive, and that is why we are underweight , and if you tight have an equity premium, it is still 5%, fairly lucrative compared to bonds. we are still overweight in asian equities. yvonne: interesting rotation in the asian markets. talking about the dollar, that will weigh on how things will look in the second half. should we bet on the greenback continuing to selloff or has the market take in a dovish fed? -- baked in a dovish fed? >> that seems to be the case.
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it seems that the market is not taking the other fed members to seriously. if yellen comes out and prepare's for a more serious hike, itof a december doesn't seem that it is priced in fully, so we do see in the short-term the dollar regaining strength against the yen, the euro. yvonne: bringing it back to the fed, we continue to see markets dovish about these comments. hawk,y a dove, one day a but we see some possible sharp divisions in the board. this is adding to a lot of uncertainty. during this environment, we's tend to see -- we tend to see risky assets not doing very well. the market wants clarity, they are recognizing that there is some divide among the members. that is why i think they want to
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hear from janet yellen herself. she is still perceived on the dovish side, so if she changes her signaling -- so far we have only have the board members -- but if she herself changes direction in the communication, that might be the trigger that has the currency market re-think, especially the currency market. yvonne: tell us more about aipac , mostly a re-rating in the region. where are you looking at right now? china.overweight's are china is an interesting story from a fundamental point of view, not so much from the macro. that keeps accelerating gradually, but the truth is that it keeps decelerating. that's where many portfolio managers only look. we detect interesting signals from the earnings side. if i look at the 10 msci major markets, china is the one that
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has done the most in the recent 18 months in terms of bringing down over investment. churn in earnings should be sustainable, even though admittedly it is not that rampant. if you're looking for a rapid earnings acceleration story, that would be india. we had outright falling earnings, so that has turned. we are close to 10% year on year. we like that market along with china. yvonne: you like india. i have to ask you about the new rbi governor. what do you think of urjit patel ? do you think this is a relief for markets in india? the first question, i think relatively speaking to the other candidates that were thrown into the debate, he is probably the more hawkish or even the most hawkish one.
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we should not forget that the framework, inflation rajan targeting framework that mr. -- inflation targeting that mr. rajan brought in, that is good news for the long-term. i think the markets were bracing for somebody coming in slightly less hawkish and a bit more dovish than mr. rajan. that is not the case. i would not be surprised to see a settling in india. longer-term, it is the right approach. yvonne: great stuff. we have to leave it there appeared thank you so much. up next, we continue to talk about the new xi jinping -- new rbi governor. we will talk more about urjit patel. this is bloomberg. ♪
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yvonne: the outgoing governor of
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the reserve bank of india made headlines with his outspokenness. his successor is the opposite. urjit patel is seen as a techno crowd --technocrat and likely to continue the policies of raghuram rajan. he is low profile and different from rajan. how will he impact markets? has put intoment place someone who will continue the policies of rajan. quieter, perhaps more conservative in his style, so perhaps more in line with prime minister modi's government. let's take a look at how the take this. there has been some nervousness in the run-up to the announcement. benchmark 10 year bond yields dropped to a seven-year low. 5% partlyurged
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because central banks have continued to boost stimulus. it has been gaining. there was some speculation that you next governor might be and bed to lower rates less centered on bad loans. this is one of the things that raghuram rajan was trying to achieve. with the appointment of urjit patel we have a hawk. than rajann more was. he helped rajan to set the inflation rate target in the first place, 4%. he will still drive through that policy. he has not been outspoken on his views on reviewing bank assets. expectations are for bond yields to rise. equities and declining in the coming weeks, but markets the coming frothy. bond markets are likely to see patel as a stronger proponent of
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inflation-center policy. yvonne: thank you. shopping, shift in what chinese tourists are buying when they visit japan. this is bloomberg. ♪
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yvonne: it is a 30 a.m. in singapore. half an hour away from the open of trading. you are watching "daybreak asia" . ♪ yvonne: let's get to first word news. >> thank you. pfizer nearing a deal to buy medivation for $14 billion. an agreement could be announced monday. pfizer is expected to pay a premium of 30% on the friday close.
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pfizer has been relying on new treatments, including cancer drugs, to boost revenue. 2016ey fischer signaled a rate is still on the table. speaking in colorado, fisher said the u.s. economy is close to meeting the fed's goals and expects growth to pick up and coming quarters. before janetdays yellen speaks at the policy gathering in wyoming. china vanke so a 10% jump in profits. million,e rose to $800 5% lower than estimated. has warned the second half will be challenging amid and ownership struggle. management has been under struggle. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. thank you so much.
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asian markets trying to find solid footing. let's get an update. what is happening? david: as you mentioned, we aren't. getting any sort of conviction. we are looking at a mixed picture. biomes are not quite there yet. -- volumes are not quite there yet. australia just about flat, open lower. ,outh korea bottoming out coming off a 13 month high. three and bottom at the moment. oil prices under pressure as the dollar strengthens early. i want to mention two bits of data that just came out in the last five minutes. exports,ea, august
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down about .3% year on year. imports down -- call it flat. let's see how this plays out for the full month. we are going for an 18 straight month of declines. taiwan, jobless rate out, 3.96%. forex markets, driving commodities, equity markets, the yen continues to weaken. we are looking at dollar strength broadly speaking. it does look like trade is on the thinner side. have a look at the aussie dollar, below $.76. the euro, also some weakness there. a few other things we are following. have a look at some other
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currencies we are tracking. ,ou saw the south korean won some weakness there. we talked about the export number. the mongolian currency, finally a bit after 24 straight days. we did get a bid on friday. that is the world's worst-performing currency. it will be interesting to see week fixing we will get from the pboc. the end the nation currency following the surprise move to keep the seven-day repo rate unchanged. weaker by a third of 1%. yvonne: thank you so much. shares of fortescue falling 1% on early trade. the iron ore miner says full-year net profit tripled. let's get over to paul allen in sydney. it looks like investors are not
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too excited about this news. , it isncredibly well hard to understand that market move, full-year net profit up 300%, more than that in fact to $984 million, also a beat. revenues down 17% to just over $7 billion. ,et debt has come down as well down $2.9 billion to $5.2 billion. it has been a big cost out story for fortescue, positioned at the lowest end of the cost curve. 2017 is expected to get lower forl, down to $13 per ton seeing a positive market outlook for 2017, production between 165-170,000,000 tons. a 12 sent dividend, up healthily from two cents a year ago.
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it is hard to understand why shares are off 1%. yvonne: we did see gains last week. profity taking a little this morning on the news. we did get earnings from bluescope steel reporting full-year earnings today, a strong result as well. full-year earnings for bluescope steel up 160%, $359 million. we knew this one was coming to shares spike 17% last month when bluescope steel indicated it had something impressive in the works. they have been crosscutting aggressively as well. they have lost 200 jobs at their steelworks. there is a three-year pay freeze as well. million, but8 things are looking good for 2017. 50%017, expected to come up
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, a three cent dividend, one of the better performers on the asx 200 this morning. yvonne: all right, thank you so much. live from sydney on aussie earnings. chinese visitors to japan hit a record in july. explosive shopping is the word now. tell us what is attracting chinese tourists to japan in such numbers. >> i was surprised. see the currency exchange environment, stronger yen this year, and the custom fees for products brought back into china has been rising since april, but still more tourists
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are coming and buying japan. i think it is a very positive news for japanese companies. yenne: certainly the strong , chinese tourists are not bothered by it. which is sectors are benefiting the most from these tourists? the japanese government data found that most tourists in japan these days are young women. it's like young women interested in cosmetic products and health supplements. data shows that there is more buying in cosmetic goods rather than heavier consumer
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, ortronics, rise cookers others. we have seen chinese tourists buying in japan for a long time now. have we seen that shopping trends have changed over the years? >> there are some changes taking place. that luxuryoticing in department stores do not sell as well as they used to. you don't buy any more those seats.okers or toilet that chineseng is electronics makers quality is improving. some of the tourists i interviewed on the streets said they were using chinese made electronic goods like
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air-conditioners or rice cookers, but when it comes to things that touch your skin, they still want to use japanese products because we are all asians and our skin conditions have similarities. very interesting change in consumer trends out of those chinese tourists. thank you so much. indonesia is returning finance ,inister, sri mulyani indrawati has vowed to crack down on tax cheating. they are overseeing an amnesty program designed to boost tax revenue this year by $12 billion. inexcusable toi have one of the lowest tax collection rates in the region. >> by constitution, the people
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have to pay tax. >> there was a shortfall last year. >> there is a shortfall which can be explained by price, by the weakening of global trade. the shortfall cannot be explained by our ability to collect. >> now that you are back, what would be your message to those who might be even dating taxes or those continuing in corrupt practices? >> indonesia likes to do the business. we are in proving ourselves. , thereare not complying will be action domestically and internationally. it is time for indonesia to have the compliance level of all parties. it is not acceptable for a country like indonesia to have a rate that is low. this is not because we are poor. this is not because we don't have business people.
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it is because both sides, the taxpayer as well as for us as the government, not being able to establish the good relations based on trust, confidence, and credibility. i am going to do my homework, but i expect other business people to do also their homework. >> how much tax reform do think you can get done? example, revealing bank accounts or credit cards transactions, you need bank secrecy laws changed. you need to get the legislature on board, but unfortunately national and regional legislators have been the ones targeted by these corruption probes and even arrested. >> this is more like the chicken and the egg. indonesia is always vulnerable with low trust perception on everything. that is exactly the biggest job. >> i would like to talk about gdp ratio,
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relatively low, but mandated by low after the asian financial crisis, at 3%. ducey room to scrap that and increasing fiscal spending because of the global macro environment is weak and the commodity cycle has gone down, which is so critical to the indonesian economy. can you scrap that 3%? are a indonesia, there lot of people voicing we need to do the countercyclical. indonesia is not in a contraction. we are not like russia or brazil. we are at 1.8%, even the third highest growth in the world. fiscal policye a that can improve the quality of spending. we have to improve the collection of the tax. it is not something you pour , andmoney, pump more money
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with that you expect that everything will float. that is not the situation in indonesia. i must say that we will look at all the possibilities and by now the law is very clear. think it is still well today. yvonne: that was indonesia is returning finance minister sri mulyani indrawati. "daybreakdonesia on asia" we will speak about the company's -- country's policy for overseas investors. ♪
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indonesia targeting growth of 5.3% in 2017. sluggish economic conditions and data suggest the
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country may be running out of ammunition. what can they rely on? several stimulus packages have been implemented. the jury is still out on whether they will work. sri mulyani indrawati says she won't clamp down on tax invaders. that she will clamp down on tax invaders. -- invaders the targets have been below what it aspires to have, 7% growth. five .2%oking at fiv this year, 5.3% next year. good to have you with us. central bank has cut its projection for the year and says
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that cut in government spending will impact growth. indonesia's seat itself having to review the growth target for this year and next? >> yes. we are ready have the target this year of 5.2%. next year will be 5.3%. the indo these to presidency, hopefully it will be 6% or beyond. >> there is a risk to that projection. that's why your ministry has been taxed -- tasks with extracting more investment. >> we cannot rely too much on the government budget in terms of promoting the growth, so what to speedrgeting now is up the infrastructure project, and on the other side, we are fundg to mobilize pension
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long-term financing, not only indonesia, but other parts of the equityto support financing of this infrastructure project in indonesia. >> can that work? you are tapping into the engine fun, about $20 billion, very small. >> from the beginning, it will be enough. what we are talking about is the total project, while they have support, and what we are targeting now is just equity financing. equity is around 50% of the total investment itself. taking the local long-term pension funding, but a pensioning out to fund in asia, europe, and south america. >> indonesia has implemented numerous stimulus packages, and they have yet to work.
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investment lagging, consumption lagging. >> if you look at our growth in the second quarter, the reason behind that is household consumption, median consumption is getting stronger, and the government spending is the other. investment is still lagging, but i think it will take time. whenever you talk about investment, there will be a lag .ime so far, our target on the stiffness packages to make sure investing in indonesia will be much easier, trying to improve all the business climate and everything, and more importantly, cutting all the red tape. we hope that more and more investors will come to indonesia. billiton,es of bhp from has been an exit
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indonesia because there is a rising wave of nationalism in the country. >> it is not correct. what the president has been doing his business. what the h billington has been doing is pure business. their growth is declining. there's not much hope regarding the price of commodities. been a strong business group in indonesia would like to acquire that gold-mining. end, they do a ruby-to-rupee deal. ruby-to-rupee this is pure business.
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for us, it is good. finally indonesian business group can acquire significant gold-mining in indonesia. >> you are the man behind the tax amnesty program implemented. will it work? 0.4% has beeny brought back to indonesia. can it work? >> it is the beginning. the tax amnesty is totally new in indonesia. waslast time we had amnesty in 1984. actually people are excited. i know people are lining up to get information and starting to register. we also note the big players will come in some time in the next month or in the next two months. much for youro
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assessment. there you have it. we have to wait and see whether that tax amnesty program will work. yvonne: thank you so much. up next, first-quarter earnings in japan saw the steepest plunge since 2011. the prospect for annual profits, are they about to get dimmer. that is next. this is bloomberg. ♪
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firms saw these steepest earnings plunge in five years in the quarter.
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things could be about to get worse. , a possible downgrade of future outlook -- downgrade, a possible in future outlook. is this a surprise given how much the yen has risen all year? certainly goes against what the aggregate forecasts have been showing, which is that company earnings would be expect it to rise this year, but if you break those forecasts down, you can see why that is a bit misleading. you mention, those forecasts were made before the terrible first quarter. the other point would be that the yen has strengthened more than a of these companies had forecast. shouldcoming weeks, we be expecting companies to be cutting their forecasts.
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companiesctor is that generally don't like to lower annual forecasts in the first quarter. they tend to like to do it at the first half. they have two quarters under their bill than a clear view of what the second half as likely to be like at that point, so that is likely when they will be cutting their forecasts, and we do expect to see that a lot in the coming weeks. priced anvestors have lot of this in, the nikkei down 30%. what is at stake if the picture gets worse? what is at stake is basically the economic policy of the country, what the boj will do. if earnings take a steep drop and there is a lot of cuts, that will add to the pressure to get something done in terms of even more monetary policy, and of course on shinzo abhi to take steps there. so far, we haven't had the results.
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yvonne: that's true. thank you so much. that is it for us here on "daybreak asia". "trending business" is up next. rishaad: we have already had the market opened australia, bluescope steel up there. executive the cheif and about an hour. the reserve bank of india appointing urjit patel to replace raghuram rajan. we will ask what he brings to the party. , that company and where it goes next. that is the next two hours. ♪
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♪ it is monday, the 22nd of august. this is "trending business". i am rishaad salamat. ♪ rishaad: right. live in tokyo and sydney this hour. fortescue,member for profit jumping threefold. vanke shrugging off a battle for control. the rbi


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