japan will go. a runaway housing market poses a challenge to china. the boom may push money overseas, putting pressure on the yuan. i bet on a dummy trump presidency. donald trump's presidency. why they could take the shine off gold. david: i'm watching what is happening in the markets. have a look at the asia-pacific. volumes are quite thin. some of these moves are getting exacerbated by what is not happening when it comes to that metric of the market. s&p futures just turned negative. 60% stocksoking at across the asia-pacific on the way down. 20% on the way up, the rest unchanged at the moment. as we move into midday, where looking at session lows right
now across asia-pacific. second straight day of the benchmark. let's flip asset classes and look at currencies. the dollar regaining earlier ground that at lost. the aussie dollar on the back foot here. dollar-yen just under 101 for the most part this morning. have a look at sterling. 129.81. very near the three handle, the turkish lira on the back of the downgrade from moody's. angie: thanks. oil paring its biggest drop in more than two months with saudi arabia's offer to cut production, opening the door to a future opec deal. major producers meet and out your on wednesday with some hope that they will reach a deal on freezing output in the near future. what has saudi arabia offered here? according to the algerian
energy minister, saudi arabia will cut output by 500,000 barrels per day, back to january levels when there were pumping 10.2 million barrels. in august, 10.6 9 million, which was a record, and we have this huge glut coming through. we have a chart on the bloomberg , and it will show you the monthly changes in opec production, the blue bars, as well as the percentage of capacity of production that opec is at. more than 800,000 barrels are flooding the market this month extra. algeria once the group to cut collective output by one million barrels per day. russia is pumping at an all-time high. libya and nigeria have also resume production, so the new saudi arabia could be cutting production is very welcome, but different to what saudi arabia themselves that on friday when we saw that 4% plunge in the brent price. angie: the market does not
believe there is going to be a freeze. what is the likelihood of an agreement here? >> bloomberg spoke to 23 analysts in the industry, 21 think a deal is unlikely. we spoke to the head of commodities at citigroup, and he said it would be difficult to tell if a phrase would be credible or doable. minister an energy lot more bullish on a potential deal, and he says the situation is worse than when ministers last met in june, and this time there's going to be a new partner at the table. let's have a listen. iran was not present. i ran will be president and -- i ran- present in be present in algeria. the difference is that everyone will be here. >> with iran at the table, perhaps they will come to some kind of agreement. angie: may be.
if the analyst we surveyed a bloomberg are correct, it does not look like it will happen this time, but is there still some sense we will get a free steel at the end of the year? >> opec members are hopeful of this because this will be informal talks on wednesday and now cheers, but they have the formal meeting in november, so hopeful there could be a resolution there. algeria's energy minister said opec is not losing credibility. he says it is like a phoenix rising from the ashes. is hopeful that members will come to some kind of freezeout put agreement by the end of the year. angie: ok, hoping and waiting. thank you so much for that. china sky high house prices may present the latest challenge to the yuan. we have our bloomberg chief economics asia correspondence here. inthe thinking is that again china's top to your house prices, a 25% gain in u.s.
dollar terms. u.s. prices have only risen 5%, so if you want value for money or more bank for your buck, you will say i will not buy a flat market, i will put the money into the u.s. instead. when the money puts pressure on the one, it's because it is pouring out of china. that is the thinking behind this. property have seen the curve in china and other nations that have seen this money flow from chinese investors into real estate markets, vancouver, new zealand, australia, canada, so are we going to see more curbs put into place globally and domestically? example.ver is a great house prices are coming off a little bit there now. more.l see the balancing act as they do not want to kill off economic recovery. it is it so important to keep
the economy taking over, but they don't want to run away freight train they can't control. at the moment, we are looking at a runaway freight train. that is the balance they need to play here. angie: is this a test of policymakers credibility here? >> 100%. they let it inflate all the way, then had a struggle to get ahead on the -- to get a hand on it. it are they going to deflate ? that is the big challenge they are facing. angie: absolutely. thanks. appreciate it. back to markets right now, an interesting day what else are we watching? david: i'm watching the philippines. the market is underperforming. it is a down day across the asia-pacific, down .9%. have a look at the currency. the reason i bring this up is that it has breached that low in january.
it did so on friday, but we are firmly above 48 against the u.s. dollar, which takes the currency to the weakest level in seven years. 2009 was the last time we were at these levels for the peso. a lot of outflows, 22 straight days into friday. that will be the longest stretch on record. date astill up year to far as inflows are concerned, but you can't ignore a spike like this. a lot of factors going into this. just keep your eye on this market. we are also following other stocks across the region. in hong kong, casinos leading declines. credit squeeze coming out with -- credit suisse downgrading these two stocks for different reasons. wynn macau down 2%. , that's playing out quite
nicely, up 25%. flip the board, south korea, these two are related when you talk about hanjin shipping and hyundai merchant. hyundai merchant now considering perhaps purchasing some of the ships of hanjin shipping. a lot of that comes down to the banks. now the banks can't get repaid, so they're going to hyundai merchant. you can read about the story on the website. hyundai motor, workers going on the first full on strike in 12 years. hereet 10 must every year -- you get one almost every year here. we've been talking about central-bank policy with our guests today, including the former vice finance minister of yen,, also known as mr. eisuke sakakibara. he says the shift towards yield
curves by governor haruhiko kuroda is appropriate. , thence he took over easing of monetary policy has worked. it has led to the depreciation of the currency and substantially increased equity plays. that positive impact of easing is now coming to the final stage, but so far, his performance has been quite good. central bankers will remain in the spotlight this week with governor kuroda speaking this afternoon and fed officials commenting this week could we ask jp asset management what we should expect. >> there has been so much confusion over policy for the last nine months, anything that pointed towards particularly the fed lining up the market for a rate hike come later in the year will be very much welcomed.
we have seen september pass with out too much market turbulence. so anything that goes towards particularly from janet yellen indicating they are on pace for a rate hike in december in our view would be very much welcome in terms of adding to that stability. standard chartered says growth in asia is outperforming the rest of the world, but there are still threats out there, including central banks. you certainly do still have some event risks to watch for, most of which could these surrounding whether or not the anotheroing to deliver hike in december or a not the u.s. presidential election, opinion polls will be swinging more in favor of being uncertain on exactly who will be the next president, but central-bank policy for now we believe is pretty much getting out of the way. in our view, even the fed will be doing that, but that will
only be later that we get more confirmation of that. in the meantime, the markets will be able to climb the wall of worry in being able to do with a lot of those challenges. angie: that is the word on central banks. coming up later this hour, city group raises the odds of a trumpet victory, but warns it could cause goal to lose luster. short break, and emerging-market stocks post weekly advance in two months. we will ask how long these gains can continue. this is bloomberg. ♪
have had their own outlooks upgraded as resource prices make a comeback. shipping sinking again amid reports that 40 of its 97 ships at sea have unloaded. hyundai merchant is looking at hanjin shipping's assets. they have asked hyundai if it wants to acquire ships. merchant says it is considering all measures to bolster its business. checking shares, hyundai merchant climbing 6.5%. from ships to automobiles, hyundai motor is tumbling as workers stage there first full-scale strike in 12 years. staff also take partial action for the rest of the week. last month, the unions rejected a tentative wage deal which
might affect hyundai's efforts to reverse 10 consecutive quarters of falling profit. this was the first time that unionized workers had voted down a pay deal. get back to what's happening in the markets, emerging stocks posting their biggest weekly gain in two months, that as investors resume buying and bet on central banks. joining us this morning, andrew sullivan. you are taking a look at the flows, and much of it is asia leading the way. think people within asia are slightly happier with the outlook because the accommodative policy we are seeing out of china. investor's of view, it is difficult. they want to stay with liquidity , because getting out and getting in stocks is difficult. angie: the selloff in the equity market, investors while initially jubilant are nervous
again, why? >> we are running into the end of the quarter. the fed has not changed policy. there is little reason for funds to change their position. you are seeing a little pullback from that. going into the next quarter, the presidential election, rather like rags it, too close to call, so maybe a lot of money is looking to sit on the sidelines until we get clarity. aree: interesting that we seeing very light volumes throughout the morning ahead of that big donald trump-hillary clinton face-off. pundits are saying this will be crucial because they are so close, and i suspect it will be like brexit. could make a big difference one way or the other, depending on which one comes out on top, or it might just be that the state's quote is maintained, and that probably will worry the markets as to having no more
guidance. angie: it is critical. hillary clinton has given up a double point lead here. clambered back. he has all the momentum in his corner. >> yes, people are worried that he sometimes tends to run away with himself, which could undermine the good work he has done. a lot of people have probably looked at his team. he has changed his team a number of times. the latest team has key people in key posts, which is in urging. people are still worried about the fact that he is not known to leave it to his delegates. while there is good staff there, it still comes down to the top. angie: he has ted cruz in his corner right now. whether he has the markets in his corner, that is a different story, but it seems we are waiting for some sort of catalyst, central banks are geopolitical something. are waitingally, we
for the central banks to start raising rates. we have had so much fed guidance that they would like to raise rates, but they haven't quite had the gumption to do it, but that is what the markets wants to see realistically. think about it. in japan, if you are a pensioner, you will not spend your money when you're getting nothing back. once you start getting money back, japanese pensioners with the biggest tourists in the world come up with that is when they were getting a return on their money. angie: also the yen was very strong as well, so when a long way. be getting some income coming through. it has been an interesting experiment, but it hasn't really worked. angie: what about putting a freeze on that 10 year yield curve. the that help tensioners and banks? -- does that help pensioners and banks? >> it comes down to an academic
argument. can you manipulate the yield curve to influence the economy? it used to be you looked to the yield curve to decide what the economy was doing. as he interest rates don't work, i don't think manipulating the yield curve will have much effect. angie: it is hard to do that when fundamentals don't comply with. -- don't comply. ofin asia, there are a lot retail investors. whether stocks go up and down and they are getting interest on their money. angie: what about oil? >> we are still seeing that in an oversupply situation. that is not good for the general economy. angie: do you think they will go for a deal? >> at the end of the day, i don't think so because too many countries want the money. iran needs that cash. the priceia once higher because it was to squeeze out the minorities.
sudan and nigeria need the money. there are so many vested interests. angie: let's pick up this conversation when we get the rest of the group in and about 20 minutes from now. thank you so much for that. next, the cutbacks in asia's banking sector claims more casualties. we will take a look at the latest names to wield the ax. details just ahead. this is bloomberg. ♪
drop-off in dealmaking in asia. investments, the $11 billion hedge fund, it looks like there will be closing down their trading desk in singapore. they have about 10 employees in singapore, some of those in the quantitative research side of the business. sometimes those quantitative traits have been outperforming human-based trades, so people familiar with the situation saying they will keep that. they will focus on the quantitative research right now, and overall globally, tudor last month cut 50% of its workforce. has seend industry some of the highest redemption levels since right after the global financial crisis in 2009. we saw $2 billion pulled out of tudor funds this year alone. bit of ams to be a shakeup as far as where to
allocate people right now. angie: what about goldman sachs? what are they doing? from a with the situations and goldman sachs could be cutting 25% of its investment banking jobs in asia japan, including hong kong. 75 jobs cut before the end of the year because of the slump in dealmaking across asia, but again according to bloomberg ranking, goldman sachs has had a drop-off. they were number two in equity issuance last year, down to number 11 this year according to bloomberg rankings. japan offerings have declined 29%. they were also involved in the 1mdb fiasco in malaysia. piee: not only is the shrinking, there's share of the pie is also shrinking as rivals gear up. what we have always heard is that the fees just aren't paid
pay out, expected to the same for international firms by asian clients as they would. been seeing that as well. if we go back to the tudor story, they have been having to trim their fees because of what we have just been talking about. i would assume goldman sachs as well. angie: what about other banks now? people take a look at goldman sachs, really a stalwart of the industry. ubs has already announced senior management cutbacks in asia-pacific this year. also with job cuts in asia this year, but it is not all to the downside. we have had some other hedge also set uphave some units in singapore this
year. it is not all going in one direction. angie: thank you for that. sony's magnificent seven, let's go to the movies. topping the u.s. box office in its debut weekend, taking in $35 million. the remake of the successful steve mcqueen western earned a mostly positive reviews, beating warner bros. animated film stork, which earned $21 million. the wind is a boost for sony, which has faced falling market share. in 2016, it is fifth among the six major phone companies. real-lifeovies to across the region in the markets, let's check in on trading across the region for you very quickly right now in sydney. some losses. in fact, it is a beautiful day there, but a sea of red across the region here. we see a, korea participate in selloff,al asian stock
stories thisp hour, oil has rebounded to pair its biggest drop in two months after report saudi arabia has offered to cut output. ministerian industry said saudi arabia would reduce production to january levels when it pumped 10 point 2 million barrels a day, 500,000 barrels fewer than in the month of august. opec members and russia gather on wednesday with algeria calling for a collective cut of one million barrels a day. china's rocketing property prices may present the latest challenge to the yuan. the royal bank of scotland says the housing boom could force investors to look for cheaper
alternatives overseas. it comes as beijing posts curbs to cool demand. ratings companies warning about contagion risks among china's smaller lenders as interbank support increases. moody's said wholesale funds accounted for 34% of small and medium-sized bank financing as of the end of june. one lender, shanghai development, has seen short term barring and repurchase agreement surged 25%. global news 24 hours a day powered by over 2600 journalists and analysts in more than 120 countries. this is bloomberg. let's get the latest from the markets right now. for that we go to david. right, we are watching the currency markets. it is one of those times where separate what is dollar strength and weakness of the other. we are following two currencies. let's start with the chinese renminbi, the latest fixing
coming out. overnight,ike in the the longer you go, basically falling. up about .96 basis points. trading at ainbi discount to the spot price on shore. this is a two-year chart by the way. a bank,ing note out of from mid-october to december, expect downward pressure to intensify as the markets start to price in the fed moving in december. the other currency i am watching , the philippine peso back to a seven-year low. equity markets, the damage right now. basically looking at the
kleins across the board. keep in mind that volumes are also quite thin to begin with. very haven't -- heavy data week as well. coming out ofch the boj governor, more clarity on what they plan to do it that yield curve. angie: the boj may be preparing -- life post yvonne man the boj may be preparing for life post-kuroda. we have bloomberg asia, managing joining us now live from tokyo right now. we are really still digesting the boj's decision to control that yield curve. will it work? well, most economists that follow the boj closely would say that monetary policy was already doing pretty much all it could
to push inflation towards that very distant 2% target. already doing pretty much all it could to try to get japan out of this pattern of contraction and been therehat has for a long time. governor kuroda did it shipped to japan at least out of continual deflation, but most economists would tell you that they don't see 2% inflation from this latest recipe simply because monetary policy is doing all he can. angie: i mean that's the thing, right? there really is some question about even governor kuroda's leadership here. he is more than halfway through nowhere close to where he said that the target would be. where does he go from here? well, he cancer certainly
change the yield curve target that they now have in place, but what he did do was to put the boj on a much more sustainable by shifting away from the government bond purchases, which at some point they would have to shift away from because the rate at which they were going, they would run out of government bonds to buy within a few years, so by shifting away from that a moving towards the yield curve targeting approach, he set the central bank up for continual easing for the long-term. reflation usiehard aren't happy about not stepping on the stimulus trigger even further, and so it is a question as to whether he would be real point it at this point, something we will have to keep an eye on an report out over the
coming year and a half. angie: if it is not him, any idea who might succeed him and what the policy might be? >> that is a good question. ultimately, we have been reporting earlier today that isme minister shinzo abe likely to be an office for some time, perhaps as long as 2020 or longer, so the key question will be what do the aids around the prime minister feel about succession? there is the possibility that they look at the deputy governor, who is very much feud is a moderate. there are more radical options even, so it would depend importantly about the sway of the advisors around prime minister shinzo abe. angie: thank you so much for that. let's check other headlines.
it's much says delayed passenger plane may finally had to the states, possibly later today. the statement came after the mr j made a three-hour test flight on monday. customers are not expected to receive the plane before 2018 at the earliest, two years late. japan's largest advertising agency due to refund $2.3 million to customers having overcharged for internet ads. it has investigated transactions dating as far back as 2012 and found more than 100 clients, including toyota, were affected. shares took a hit as reports of billing discrepancies first emerged. entsu has since apologized. rating agencies are warning that smaller chinese lenders have
never been more reliant on each other for funding, and that is ramping up contagion risks. we have tom mackenzie taking a look into this for us right now. ratings agencies saying about these lenders? tom: moody's has been looking at the wholesale funds, including interbanked on the market, saying they now account for 34% of financing for small and medium-size bankston china. -- banks in china. it is a record. there is a case in point they point to which is the shanghai development anchored in the last three years, that bank has increased its short-term barbering by 75%. the other side of the equation is that third customer deposits have increased just 24% over the same time frame. it is a balance that some with
-- some would say is unhealthy. we have seen the authorities over the last year trying to keep the seven-day repo rate her 2.4%, so relatively low, as they try to increase liquidity and support the economy. the flip side is you see some liquidity going into bad loans and some of china's shadow banking, and if those product start to unravel, there could be significant problems. angie: i mean the latest news joins the warnings on the health of the chinese banking system. can we expect worse here? that's right. we heard from the bank of international settlements last week saying there were concerns about the growing risks in the chinese banking sector. we heard from s&p saying the risk of contagion is rising. moody's has said there is a risk of a liquidity crunch. anen all that, i spoke with
advisory body to central government and have some clout, and i asked him about the views on the health of china's banking system. take a listen. >> the slowdown of our economic growth, the downward pressure on the economy, this background is a macro trend. it will not change in the short-term, and amid the situation, our banking sector faces a lot of pressure. the bad loan rate is rising. profits are failing. this trend is very obvious. the people's bank of china are not blind to this. they have said that reducing short-term barbering and reducing that leverage is a short-term goal for them. we have seen today that in fact that they have drained the most funds in six months, $37 billion, so that his example and evidence they are on this and now trying to rein in some of this leverage. another thing is to remember that of course china has
something of a cushion in its savings rate, $22.3 trillion. angie: incredible. tom mackenzie, thank you so much for that. big night for donald trump and hillary clinton as they face off with each other in the first presidential debate on monday. and new survey shows that ohio, florida, and 12 other states are too close to call. battlegrounde are states. clinton has 198 of a tour college votes compared to trumps 165, 270 is the magic number needed to win. 46% toide, clinton leads 43%. bloomberg is broadcasting the debate live on twitter. gold may be in for a bumpy ride in the final
quarter with donald trump's chances of winning now at 40%. what exactly is citigroup saying? citigroup is saying that volatility in the global gold and forex markets will increase towards the end of the year because of the presidential election and also because of the possibility that the fed might hike rates in december. as you noted, citigroup says that the races tightening and they have increased their odds on a donald trump victory to 40% from 35% ahead of the debate this evening. angie: what are their price forecasts than for gold? right, all this has to be put in the context that gold is up 26% this year after three years islosses, so what citigroup saying is that base case scenario for the fourth quarter $120020 an ounce, up from
80 announced. if that all happens in comes together, you could see prices rising to $1425 in the fourth $1550 in 2017, almost $100 up from where we are today, which is $1335 an ounce. angie: what about the general view to wear gold is going? factoring in a possible donald trump presidency, but what about those rate hike's we are expecting from the fed as well? >> you have two schools of thought on gold. you have a bullish school that is a trump victory, very low negative interest rates globally. you have the possibility of asset bubbles going to unwind,
and that would be a great scenario to buy gold. those bulls include paul singer, david einhorn, big investors in the u.s.. on the other hand, you have a bearish outlook that comes down to rising u.s. bond yields, a strong u.s. dollar, and several rate hikes by the fed into thousand 17, so all that gives the fed a little bit of hope, so will be interesting to see how that plays out over the next year. angie: thanks for that. coming up, after the fed held off, our next guest says the u.s. elections on the next big thing for markets. that is just ahead. this is bloomberg. ♪
patrolling what it calls its air defense identification zone. the air forceed is open c capability. the japanese defense ministry says it scrambled a fighter jet to monitor the planes. it said there was no infringement of japanese airspace. the philippines in the u.s. have scheduled military exercises next month, days after the philippine president said his country does not need american forces in the south china sea. drillsoops will conduct from october 4-12. the philippine president has sent conflicting messages about the relationship with the u.s. japanese parliament returns after its summer recess, the tpp high on the agenda. vocal abe remains a supporter of the trade deal amid
growing resistance home and abroad. tpp wille feels the benefit the japanese economy and has said he will spare no effort to push it through. hillary clinton and donald trump are against the deal. , tpp?g me right now is not really a straightforward deal. it never has been. it has been teased out for such a long time now. there is a lot of opposition to it. free trade is one of thing, but a lot of people still worry about protectionism. >> what about china? >> that's always going to be the elephant in the room. other countries are then torn as to which way they should be going. china has opened up its own bank as well, so it is contesting on a lot of points here. it is very much on people's
doorsteps, where is the u.s. is still over the sea. trade is an increasingly less a proponent of global growth. does the tpp matter or is it relevant? it is a legacy for president obama, so he wants to get it through. a lot more people are keen to work with china and have a trade link going through there. it is doing what is in its own best interest. angie, let's talk about the next election, obama leaving a legacy, but we could have a president clinton or president trump. how does that play in terms of trade and the asian global economy? >> it is rather like brexit unfortunately. it will come too close to call.
neither side is a clear winner. there are pros and cons for both of them. a lot of people try putting into place, looks like quite a good team, where as may be the first round of people he put in were very scary. then again, nothing is settled, and that's the trouble. >> we often characterize it as a binary event. regardlesstend that of who wins, i think it will be even more politically volatile. the rhetoric is so strong, and sometimes very violent. offrom the markets point view, the thing that is both partiess that are talking about spending more money and putting money to work in the economy, building roads, so for the u.s. economy, it should be regarded as good. there's a lot of friction between the parties. >> i'm talking about questioning the legitimacy of the decision. >> it is a free country, you
know? it is up to them. they set the rules. they get to live with it, same as the uk debt. >> do you give a darn how they would act as president? >> not really. we are looking for who will make the least number of gaffes. had a guest to said it would be like brexit, spike, then over it. >> to a degree. a lot of people are putting emphasis on what will happen in the senate. that will probably be where more people will focus their attention. to,t of it will come down if he does put a good team in place, it might not be so bad. it is just the worry factor that people have. >> we saw last week that central banks were in action, the guild play continues. does that make markets like hong
kong in greater china interesting? >> it gives us more to play with. wereed to think they giving us a policy of guidance. now it seems to be a policy of confusion. there is far more arbitrage out there, but it is short term. the nimble players are the one doing quite well. the large funds, they will have and wait for the central bank to make changes before they change their investing attitude. >> i like your point here that we need to be raising rates, because there are so many people on retirement in the developed world. it is a freeze. basic.s very unfortunately, what we have seen over the last 7-8 years is an academic study, and now that the doj is going to try to control
the yield curve, always a reflection of what was happening in the economy, not something you steer, it has been to academic. at the end of the day, 70% of the investors in asia don't read this. they look at the interest rate, am i getting any money? if not, i'm going to say. companies don't borrow because money is cheap her. they burrow because they can do something with it, make something, sell something, and make profit. if they're not buying, it will not happen. >> how about oil? that kind of greases the wheel. china's oilem for is that a lot of it is offshore and expensive to get out of the ground. they have a lot of problems doing that. it will take them sometime before they become hugely profitable again.
sinopec is much easier, so it has options there. you're seeing a lot more on the chemical spreads. and they are being protected at the petrol pump. >> all right, thank you so much. we really appreciate it. next, lower prices or marketing blip, how samsung can win back trust after its battery fiasco. this is bloomberg. ♪
planes in an overhead bin. aviation regulator is advising people to not use samsung note phones on planes. this comes as samsung is trying to limit the fallout from its note seven battery fiasco. its the company relying on telecoms unit for half of its revenue, will it be forced to reduce the cost of handsets to win back trust? let's bring in our bloomberg gadfly, honest. does that work? >> it does work. we look at some companies that have done well by cutting the price to the bottom. people will buy because it is a great deal. is theyg about samsung are much more like apple in that they do have pricing power. not really comparing apple to samsung because they are different ecosystems. in the android ecosystem, samsung gets much more money per phone than anybody else in the
business, and does it consistently. why? people think it is worth the premium. angie: our investors worried about samsung? it.t doesn't look like ,t will cost them $2 billion 20% of the operating income for the smartphone business. if you look at shares over the last month or so since this crisis has happened, they felt, then rose again. angie: what would be the biggest mistake for samsung? >> i would argue cutting price. angie: it affirms that it is a bad product. >> it does. once you cut prices, it is difficult to build them up again. they have good pricing power, operating margins, operating income, so if they expense of experiencen sales -- a decline in sales, they will be able to keep up their margins. if they cut prices, they can't read bill that.