tv Bloomberg Markets Asia Bloomberg December 20, 2016 8:00pm-10:01pm EST
♪ rishaad: 8:00 p.m. in new york city. from bloomberg headquarters in hong kong, this is "bloomberg markets: asia." ♪ rishaad: the asia-pacific built on wall street new highs as markets display increasing resilience to geopolitical events. >> malaysia will not introduce capital controls, despite the financial crisis. rishaad: a deal to buy back
diesel will diesel will cost $1 billion. >> the curriculum in thailand -- rice now acceptable as payment for tuition. rishaad: and we have the yuan fix coming up in a few minutes. be unimpeded in your progress. amongting more bearish expectations that it will weaken even harder. -- even further, to beyond seven per dollar. it is moving that forecast ahead of that somewhat trump and titrate talk. -- and titrate talk. rishaad: anti-liquidity playing into this bearish sentiment with regards to the yuan. we will see what happens given the dollar strength overnight. haidi: we are 30 minutes away
from the opening in hong kong markets. singapore, taiwan, malaysia, all coming online. let's go to the markets. >> it is interesting really. seven 15ith the note, by the end of next year. the drop will be slowed by china coming in with capital controls to win outflow. that said, one month forward, we are already at seven. it is not up yen weakness. dow jones within striking distance of 20,000. have a look at some of these indices. japan off its highs today's, 4/10th of 1%. australia's asx 200 -- let me get that short, because we blew past the top of a few months
ago. it takes us back to august 2016, a 17 month high for this index. not bad. the nikkei 225, have a look at this. that is scary, isn't it? that is when the election took place. that is 11 out of the last 12 days or so. the nikkei is not as high as the dow jones, roughly around 81 and 82. we are pushing 81 last i checked. signal to some. raises a rally giving the in dollar yen. jeffries was out with an interesting note -- if you want outlook, ifjob, it pans out, they are saying
rule of thumb low pe with companies with very high fixed costs that percentage. the thinking, when the economy improves, you can generate more profit without the proportion increasing variable cost. a complex. those at high cost of the moment, you do well. interesting note coming from jeffries. it will get more interesting when we get 15 -- get fixing out of the pboc. that sprint is widening between the u.s. and japan, close to a six year high. , roughly math -- 2.56 2.5%. as rish and haidi pointing out, this is what we will look with
this morning. and of course brazil and then the seat. there we go. up into the holidays. guys? haidi: thanks for that david. rishaad: we are looking at closer ties in moscow and ankara. that is our first word have -- word headline. >> russia and turkey cooperate in the war on syria, as the murdered investor was flown home. moscow and baccarat say they will not allow ties to be broken by the killing, linked to the bombing of aleppo. turkey sunni muslim groups fighting president assad. russia says the rebels are islamic extremists. hunte have stepped up the for the driver who attacked christmas shoppers in berlin. an initial suspect was released without charge.
inquiries failed to prove the pakistani refugee committed any crime. they followed him as he left the scene, but admitted they do not have an interrupted view of him, and there is no recording of him in the truck. may saynister theresa the country may face a transition phase to ease its exit from the european union. she says that will give the government time to adjust to new relationships outside of the bloc. the minister set up an 18 month timetable for brexit, which could be derailed on parliamentary approval. pm may: we want to get this arrangement in place so that people can move on to the new relationship they will have the united kingdom. i think there is a willingness to take this on on that basis. haidi: malaysia says it will not introduce capital control to it to the lowest since the 1998 financial crisis.
capital outflows since the election of donald trump and more fed rate hikes in 2017. the second finance minister told bloomberg he does not see capital controls as a necessary requirement. there are no more rules or option to talk about capital control. i don't call it crisis. day inal news 24 hours a more than 120 countries. this is bloomberg. ♪ about on that last story the malaysian ringgit, all of these emerging malaysian currencies getting battered by this trump trade. rishaad: you have a joint, you?'t -- chart, haven't haidi: you have a look at where
the remit sold towards levels -- ringgit fell towards levels we have not seen since the crisis. tantrum you temper sort of see when it comes to em currencies. rishaad: this could be a game changer for the fed and 2017. this has indications for this part of the world. our central-bank washer -- watcher is with us. the trump administration is the biggest question mark. >> you are just looking at the malaysian ringgit. that move was spurred by the trumponomicsrmp -- 2017, butate hikes in
also suggests that tablet in philippines will hold key rates steady, even though they are fears now.p-flation weaker currencies are behind that. they can't type to fight inflation. it is all tied together. let us go to the federal reserve. it is trump through the fed to southeast asia where we see the impact. a piece today saying that the fed may have to hike more because the trump impact would, in a time where unemployment is low, we to high inflation. -- lead to high inflation. a tilt on the consensus. jump into this with me, world interest rate projections.
go to the left side, june 14 is the last time the rate hike rises above 50. markets do not see the market moving at. bloomberg intelligence sees only 2 interest rate hikes next year. they say boosting the dollar will hold gdp back a bit. london sees 4 rate hikes, benchmark treasury at 4%. the views are all over the map right now. rishaad: what about japan? how does donald trump play into the narrative? yesterday they did not do anything with the qe program. >> we have gone from trump-onomics to trump-flation. and that is great for the boj.
that is one reason that a survey suggests they will not ease more. nothing will happen when governor kuroda steps down as the head of the boj. this chart talks about the global impact. particularly the spread between tenure u.s. treasury and tenured jgb's. treasuries rallied and pushed the yield up. it is not so much the jgb. the question for the boj, if this selloff of treasuries continues, with will they do to maintain yield curve control, and prevent it from moving higher? haidi: we have already seen the trump effect when it comes to yield. how much further do we see this playing out for global bond markets?
kathleen: bank of america-merrill lynch came up with in october survey. it shows that trump is having a impact. the rise of populism -- it started with brexit, donald trump -- italy voted down there referendum. what is next? politics isulism in no what is keeping traders and investors up at night rather than anything else. i have been watching bond markets and central banks for many years. it has been sometime since we have seen something like this. central banks seem to be more of the tail. the dog that is watching them is donald trump. his fiscal policy changes are potentially very different. certainly what investors have responded to. we are going into 2017 with
again that seems like it has changed. -- a game that seems like it has changed. haidi: still to come, the head of united airlines explains how he is dealing with the mainland's growing demand for air travel. rishaad: demanding action from the fed, believing, would you believe it, 4 rate hikes? tom joins us next. ♪
about the same as it was before. that is the moment out of the people's bank of china. hasi: struggling shipping signed a deal to sell stake in long beach to partner msc. the agreement means that hanjin is at the end of its sale of key assets following august bankruptcy. the central court approved the sale of pension stake -- hanji n's stake. msc already owns the other 46% of the stake. the infant formula maker stock price collapse after concerns about gels in -- about sales in china. the stock last traded in sydney on december 9, without a market value of $470 million.
haidi: moving from handsets to software. turning pressure was to sense -- was $0.02. the profit margin was 70% of revenue, the highest ever. ceo john chen says blackberry can do even better. >> a normal growing software company can definitely do better than 70%, yes. it will take us a while to get there, but we can do it. ♪ rishaad: looking at what happened with the asian session record closeer a on the dow. haidi: equities pushing higher, the nikkei not just paring losses, but falling up 1%. what to expect in 2017?
thomas mercy joins us from sydney. what are you looking for in the next three months as we get trump taking the presidency, presumably giving us more details about what this rally has been built on? >> this will be a particularly interesting time. on january 20 we will have an inaugural speech. to the extent that mr. trump talks in a statesmanlike way and talks about geopolitical issues will affect markets. markets are comfortable with one line and tweet type responses. mr. trump has surrounded himself with exceptional cabinet people. what we are saying to clients, getting that both houses will be controlled by the republicans, the likelihood of cabinet appointments being passed is quite strong.
4shaad: tom, you're going for rate hikes, which is way out of the market consensus. heidi's question about what we are looking at, the most is currency levels. the degree to which the u.s. dollar strengthens will dictate how much the fed can do in terms of tightening. yours interesting watching correspondent with a graphical expectations on u.s. rates before and after the election the conclusion by your correspondent was that increases in global bond yields are occurring because of nationalism globally. i don't agree at all. globally rate increases are occurring because of an expectation of fiscally inspired infrastructure spending. history tells us it is inflationary. nationalism may be a byproduct. it is growth inspired.
rates are rising for a good reason, not a bad reason. the market trajectory we have seen for the past few weeks will continue, a strong u.s. dollar, as you say, to 4 rate hikes, are we going to see these temperatures terms like we yuaneeing in the ringget, into 2017? thomas: this is the issue which i find most confronting and confusing. we have seen the ringget, the yuan, emerging currencies weakening in wake of the u.s. dollar. emerging-market currencies are normally dictated by commodity flows. they are commodity exporters, normally being good news for
those countries, not bad news. my confidence in the fed increasing rates 4 times in 2017 is premised on the u.s. dollar that levels out, not one that continues to rise as it has since the truck election. -- trump election. rishaad: so it levels off as you say. what about european data? i think european growth is a byproduct of u.s. growth and u.s. trade. the position of the euro against the u.s. dollar is encouraging for european exporters, just as the export of the yen is encouraging for japan. currencies aren't going to move in such a wild way. u.s. and for structure built will occur only after legislation is passed and cleaning takes place/
-- and planning takes place. that is a 2018-2019 bill. this flow has been extraordinary and probably overdone. haidi: unfortunately we have had geopolitics front and center. and for that reason, you're saying don't write off gold. thomas: we are saying that emphatically. gold has weakened because the u.s. dollar has strengthened. gold has two purposes. it is an alternative currency and a geopolitical hedge. what we have seen in europe and in turkey in the past couple days, the need for geopolitical buffers and portfolios is there with a vengeance. we need to have golden exposure. if it is not included, it needs to be. it is important. tina just a moment, volkswagen reaches another
haidi: volkswagen reached another deal in its emissions cheating scandal. costpa estimates this will about $1 billion. a $1lkswagen has reached billion agreement to fix or porsche83,000 vw aud or diesel vehicles related to its emissions cheating scandal in 2015. they were allegedly equipped with devices that violate the u.s. clean air act. 2009 tocles are from
2012 will have that buyback option. to 2016hicles from 2014 will more likely be fixed in accordance with environmental rules. those are estimated to be about 60,000. from that $1 billion cost, $225 million will go to funding pollution mitigation gases. another will combine zero emission vehicles. the drg says it does not -- the doj says this does not solve civil penalties and, liabilities. that is still pending. vw in a statement said "we are committed to earning back the trust of all of our shoulders, and thank our customers for their patientce.' investors push vw shares higher. in germany, shares rose 9/10 of 1%. is the biggest
haidi: this is "bloomberg markets: asia." rishaad: we are just about to have the start of the session in hong kong and shanghai. a day where we see games. -- see gains. the dow and nasdaq with record highs. haidi: asia and japan particularly pushing high. we did have a slightly weaker yuan fix. rishaad: nothing to write home about. [laughter] haidi: it just continues to push toward the seven handle, which analysts say will reach 5 by next quarter. handle, we have the 7.2
but it is looking quite crowded, the production. let's get to the start of the session of shanghai, shenzhen, and hong kong. put yourselfve to out there. i will show you what the floors are saying. hong kong, shanghai, and philippines joining what is a fairly consistent move up across the asia-pacific, with the exception of taiwan. volume is not quite there as you approach the holidays. as you walk the street of hong kong, it is a bit quiet already. australia just topped its 17 month high. japan 6% up. 1%g kong, one third of yesterday. it almost entered into a
technical correction. we are seeing a bounceback. some fairly critical levels this index is hitting. apart from this, everything has gone up. nikkei, australia, south korea, even new zealand. that said, that is a 10% drop. so-calledr a academic technical correction. have a look at this bloomberg chart. it shows much more than the index level. you have the 200 day moving average. it fell below that at the close yesterday. when it comes to momentum, the bottom of the chart, the lower handle shows a bounceback about 31. 694 that isat cnh, the year to date charge.
724 is what that is pricing in. we have a few trading debuts across chinese markets on the mainland and here in hong kong. i don't have to tell you which ones are trading on the mainland. a bit more rational move. not surprising. every single listing since the summer has done potentially that. that.d: david, thanks for haidi: boring. just to sum it up. [laughter] rishaad: let's get our first word headlines. >> wall street closed on new highs. the dow closed at one fraction below 30,000, while gold nears a 10 month low. nike after-hours
better-than-expected results, not losing ground to sporting rivals. fedex slumped after profits fell short of estimates due to increasing costs. elian's chief economic advisor says the trumpet rally is not just about his domestic policy. the u.s. has a better chance of injury if the president elect can coax nations to embrace reforms. he also cautioned against overlooking the threat to global markets. rishaad: we have priced in no policy mistakes. we have priced in no accidents. then we have ignored political issues. part of the reasons the markets are reacting so well is that we are getting a political disruption in the u.s. that seems to be positive. we are going to unleash congressional action on key issues. you're also getting political
disruptions elsewhere that are not to positive. haidi: much of northeastern china is covered by thick smog, forcing authorities to cancel flights, force those off the roads and stay indoors. this is on the highest alert of the china allusion system. greenpeace says have a billion people are affected, 15 times above internationally accepted danger levels. a group of scientists in the u.s. have set up an anonymous oceanicat the administration to report interference from climate change deniers. scientists are during each recently concerned. recently employees were asked which works on climate projects. news in more than 120 countries, this is bloomberg. ♪ haidi: with china's efforts to
doinghe yuan's decline is little to sway the bears. rishaad: tell us about this. there is a lot of stress. just how bad are things to get? the bears are out on a charge. forhe bears have been quiet 2 or 3 months. i think the jack-in-the-box was donald trump's surprising victory. the difference in for 2 or 3 months. january this year and the difference now is that in january, there was little weight of protecting what would happen. predicting what would happen. trade suggests that the yuan has more to fall. handledng to see a 7.0
by the first quarter? robin: he forecast from analysts is for the currency to drop to 7 in the first quarter of 2017. 0.7% awayeady about from that as we speak. the currency is down 6.6%. that is the most since china unified market rates in 1994. things are not looking very good. even on the bond market, there was a rout happening. that is the biggest since we compiled china bond data in 2006. in normal circumstances, whether is financial stress, bonds usually do well. at this time, it is looking pretty dire. haidi: there is talk about what pboc does.
is what we are seeing is it keeping it from falling it even further? robin: that is a good point. we have seen over the past inber of years pboc stpes to twist the market one way or the other. however this time when the pboc -- sometimesket they are trying to tweak the fixing. this time around, investors are not seeing that clearly as a 1 or 2 even in the short month term. it is not having much of an effect. that is concerning. haidi: i still get a lot of negative feedback, this is china depreciating its currency. how much is this a dollar story? robin: at this moment it is not
china trying to weaken its currency. it is mainly driven by the dollar. seeing china trying to control depreciation of the currency. the weaker currency helps them as world's largest exporters. i think it is more dollar driven, also the risk for donald trump's first to impose a 45% tariff on chinese export, brand china a currency manipulator. i think it is more that at the moment. rishaad: japan finding itself in a sweet spot as the young continues its -- the yen continues its slide. japan said to have another boost on the fiscal side. seeing a more
optimistic forecast for the japanese economy. the cabinet upgrading their forecast to gross domestic product of the 6% exterior. now we have the third supplementary budget for fiscal 2016, and finance minister saying that will total more than $14 billion. of course we have the main budget, totally $825 billion. a mother increased of .8%. -- modest increase of zero point percent. rishaad: with japan getting a boost, what did the governor have to say about that? shery: the wind is at japan's back, kuroda sees potential growing by "quite a bit." a dramatic slump in the japanese
yen. he does not think that is excessively low. take a listen. >> the foreign exchange market reflects the strong dollar, not the week yen. the dollar is also strong against many other currencies. i don't consider that the yen level is weak. it is similar to where it was in february. shery: kuroda saying that the yen will be aweak factor in prices, but not boj is far from its inflation target of 2%. boj has had some challenges. yearthe boj keeping the 10 yield market at 10%, it will feel the pressure. take a look at this graph. boj has gradually increased its holdings of bonds in the last few years, but may be difficult to persuade the other owners of
what is left to give up their holdings. this will be a key challenge for the bank of japan. rishaad: let's get to this boardroom drama taking place in indiana -- in india. haidi: a lawsuit against the conglomerate. rishaad: tensions ratchet up between the mystery and its former employers. what is mistry doing now? a sudden removal of tata sons. this was filed at the national law tribunal. mistry's side has not commented on the lawsuit. earlier he said he would take a fight for better transparency, and to the conglomerate to court, shifting the focus from himself. he said it is not about his position, more about
transparency. his flight will strengthen. also pledging to go to a larger external forum. detailst give any more about what other principles there would be. there are some other ones. we will have to see what that will bring. 'se lawsuit shows mistry "deep animosity" towards the patriarch of tata sons. trying to consolidate what he sees more as governments, the order what has been going on. haidi: what about the search for the permanent new chairman? leading the charge
along with 4 other businessmen. they are trying to find a new german for tata -- new chairman for tata sons by the end of february. mistry resigned from the board of six earlier. they said he was a disruption on company boards. all of these hotels have taken a hit in the past month. at the end of october, in the red there. rishaad: it has not been a pleasing couple of months for shareholders. >> no, it has been difficult. a a lot of pressure put on them from both sides. sons also putting pressure if they continue
to let mistry stay on the board, they could lose the rights to the tata brand. just because it is designed from the board, does not mean it is all over. rishaad: thank you very much indeed. soar:, can united airlines above its rivals? we will speak to the head of its china operations next on bloomberg. ♪
on sales amid job losses in germany. amid the shopping season,amid the holiday as it was struggling since it was taken private through a leveraged buyout in 2005. increasing 5%-7%. haidi: southwest airline's website has crashed, blocking access to bookings and check ends. the problem affects all customers, and there is no idea when it might be fixed. customers have to check in using kiosks or checkout counters. the airline was hit with similar issues in october. field ackup server also in july. present a --ance this does present a challenge to
the global powers keeping up. is unprecedented. not everyone has multiple stock it if it many would do was half-price. >> it is an exciting story. china is the largest market for outbound travel in the world right now. we have seen a drastic growth to the usa from china over the past five years. this year it will grow at 17 or 18%. rishaad: that is phenomenal. walter: fabulous growth. time14, it was the first that the number of chinese visiting america surpassed the number of americans visiting china. absolute fantastic growth. that by theecast
year 2021, there will be 6 million outbound visitors from china. that is why we see growth from the market. rishaad: haidi's question is that these travelers want to connect in china. that must be posing a threat to you guys, even gulf carriers to some extent. walter: we don't look at it as a threat. the growth we have seen from chinese carriers is about outbound travel. to point.ng it point we are the largest airline between the united states and china. we have seen phenomenal growth. we are in a great position. haidi: global airlines according to the latest reports suggests this is the first time in six years we will see profit hit
because of oil prices. a conjunction in this region of -- contraction in this region of 15%. does that worry you? walter: for u.s. and global carriers, we are seeing a flattening out. forward toing improvements going forward. rishaad: what are yields like? yields are under pressure. did you reinstitute some of these fuel surcharges? walter: i think you will see that going forward. then some of these countries we already see these fuel surcharges coming back. they are automatically regulated by governments in asian markets. haidi: you have seen this bustling activity in aviation. i will potentially give rise to more alliances, organic growth. is that something united would
be looking at? walter: absolutely. rishaad: but difficult because of regulations and no open skies agreement. walter: china actually surpassedwalter: the u.s. is the largest travel market in the world a couple years ago. it continues to grow very well. we see business relationships between china and the usa. we see growing demand between the two countries. rishaad: how is the cargo market holding up? walter: cargo is doing well. rishaad: improvement from 2015? that was a nightmare, wasn't it? walter: this year it is much improved. rishaad: walter, for united airlines of greater china and korea. thank you. haidi: rice can now buy you a
haidi: a private university in thailand has begun accepting rice as payment for tuition fees. an unprecedented glut we have seen in the country. rishaad: this is to help those that have hit with low prices. how bad is this oversupply problem? >> it is a pretty major challenge. the state roughly has 8 million metric tons of rice stockpiled. that is equivalent to about 20% of global trade in rice. farming accounts 8% of the economy, but employs 60 million people. that is a quarter of the
population. if you have an oversupply and depressed rice prices, then you heard farm incomes. -- you hurt farm incomes. it is a challenge for the government and thailand. rishaad: what does the military government do to try and help these farmers out? things. number of the most immediate step was that the government unveiled a assistance program for farmers, worth more than $2 billion. another program to encourage farmers to keep rice stock on the market. they hope that will raise local prices and restore some of the lost farm incomes. the problem they also face is that we have a global glut in rice.
that is a global factor they have to fight against. longer-term, the government wants to encourage farmers to grow different types of crop. that is a work in progress. we have to see the politic they put in place. subsidies original were pretty disastrous. how do these current plans to rectify it played out politically? sunil: it is difficult to answer that. the answer is that considering a return to democracy, perhaps in 2018. over the past decade we have seen the northern forming heartlands have backed political leaders that the army ended up ousting. if we do end up with a return to democracy, the question is how those forces play out.
♪ just about 10:00 a.m. in hong kong and singapore, 9:00 p.m. in new york. i am haidi lun. rishaad: i am rishaad salamat from here in hong kong. this is "bloomberg markets: asia." ♪ markets display increasing resilience to geopolitics. rishaad: rejecting capital controls despite the ringgit's slumped to lows. haidi: china's efforts to prop
thehe yuan don't convince bears the currency is facing its biggest plunge since 1994. rishaad: tata's chairman saying his fall was sparked -- haidi: we are pushing higher in the asia-pacific. it chinese markets are getting an the action after declines, six-week lows, but tracking those gains from a wall street high. rishaad: .5% up on the shanghai composite. the yuan fixing not changing much since yesterday. we have seen moves against the euro particularly. let's get into markets in more detail. yes, when you wake up and look at this picture, record highs coming through, the dow close to that 20,000 level. seeing lying across the
asian region, nearly every market tracking higher. jakarta up .3%, shanghai up by .6%, and pick up in hong kong, .4%. the hang seng yesterday closed at a four-month low and chinese equities at that six-week low. we have had a lot of geopolitical risks, but today, most investors are buying into these equity markets, particularly into the year end. well supported, the yen fluctuation playing in, the nikkei up by .3%. australia's market trading at the highest level since august last year, some very strong support coming through from that australian market, which has been struggling to get above that 5600 level. the new zealand up by .7%, some solid support from southeast
asian markets. under significant pressure yesterday, but some buying coming through as well with investors looking past those risks. the yuan fix weaker, but the 6.9469, renminbi sundown .1%. not too muchyen, fluctuation, holding at 10 month lows, only up by .1% at the moment. that is one to watch, particularly as a lot of analysts say we could be seeing and end to this a dollar rally, the bull run being crowded at the moment. haidi: thank you for that. rishaad: right, let's get to first word news headlines. russia and turkey say they will cooperate on ending
the war in syria as the murdered body of their invested or is flown home. it was a defeat for turkey. russia says the rebels are islamic extremist. uplin police have stepped the hunt for a truck driver who attacked christmas shoppers in berlin. an initial suspect was released without charge. authorities failed to prove he committed any crime. they followed him as he left the scene, but did not have an uninterrupted view of him. much of northeastern china covered by smog, forcing authorities to cancel flights. beijing and other cities are under a red alert. almost half a billion people are quality inith air
beijing 15 times above internationally accepted danger levels. malaysia's fed will not introduce capital controls. the currency has been hit by capital outflows following the election of donald trump the expectation of more fed rate hikes. the second finance minister told bloomberg that he does not see capital controls as a necessary requirement. >> there is no more room for option when you talk about capital control in this part of asia. we will see through these turbulence. sophie: global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: donald trump selection looks like a game changer for the federal reserve next year.
u.s., not just the kathleen hays has been watching this for us in new york as we turn to the fed in 2017, the trump effect is the biggest unknown. what are people saying so far? >> they are saying we have seen a game change affecting how the game is being played in 2017. we are already seeing this in southeast asia. we were just looking at the malaysian ringgit, and capital outflows sparked concerns of inflation. these central banks in thailand and the philippines, now they have to hold rate steady even if they would like to have cut them to offset weakness in their economies. indonesia state pat last week. so you can see how donald trump
is affecting the world, but not just the fed raising rates because of their outlook in 2017, may a faster pace of rate hikes. the former vice chair of the federal reserve and an article published on tuesday said spending cuts -- tax cuts, spending increases at a time when unemployment is low could boost demand and a recent to speed up the pace of rate hikes. let's jump into the terminal, , left-hand side of your screen, the odds of the rate hike don't cross 50% until the june 14 meeting. the bond market does not see a fast move. the bloomberg intelligence team saying only two rate hikes in 2017. rates, stronger dollar, that will be a drag on but other see four rate
hikes next year and the treasury getting to 4%, but sees it back loaded in the second half of 2017. does donald trump, let's head to japan, what does it mean for governor kuroda and the bank of japan? >> it has a big impact. trump-inflation, that is for the bank of japan because it is boosting the dollar, weakening the yen. that could help exporters and the japanese economy. the challenge is for bond market yield curve control. ,et's look at one of our charts 3550 five, the blue line is the spread between the benchmark 10 ,ear treasury and 10 year jgb's but mainly because of this fight in u.s. yields from 1.85% before the election to 2.5% now. you can see at the far right,
that green is the 10 year jgb barely above zero. if u.s. treasury's keep arising in yields, falling in price, that will put a challenge to the bank of japan. how will they maintain that yield curve control for 2017? haidi: we have seen the fx of effects of the trump rally, but how will it play out in 2017? brexit,back, june 2016, then another surprise, donald trump elected president of the united states, promising big changes that affect the economy, and then of course the italian referendum, they voted against the establishment. there prime minister had to step down. a new survey, bank of america merrill lynch, rising populism is what is keeping traders up at
night. bond investors, the blue bar, december survey, compare that to the orange bar, populism and politics is their biggest concern. look at that rising past bond yields, the ecb not getting your right, evaporating liquidity in the markets, this is what is on the bond markets mind. it seems like that is a big focus for markets in 2017. haidi: thank you so much for that. no doubt 2017 will continue to be eventful with trump taking the white house. rishaad: right, well, let's move to cyrus mistry, the ousted a sons, he hast gone nuclear and filed a lawsuit against the conglomerate. haidi: this is ratcheting up tensions.
rosalind chin has been covering this saga for us. rosalind: he filed a case against his sudden removal as chairman of the conglomerate. it was filed at the national companies tribunal. 's office did not comment, but he said he would step up his fight and saying he would take his fight to the courts for better transparency. in october.s sacked rosalind: he says now it is about fighting for better transparency for toata sons, and now it's time to go to a platform, the legal side of it, and other parts he is keeping up his sleeve. the lawsuit does show cyrus mistry's deep animosity towards
ratan tata, the engineer of ousting cyrus mistry and who has taken over as interim chairman of tata sons while they search for another president. rishaad: they are looking for somebody to replace him. do they have anybody in mind? rosalind: ratan tata and four business leaders are searching, trying to get one in place sooner rather than later. their deadline is the end of february, but they were given a victory when cyrus mistry resigned from the board of six listed units. that is something they have been trying to get him to do for some time now. earlier in the week, he resigned, and that is part of that you can see how some of these units have been faring. hit, made a big
hit on shareholder value of tata sons. thes mistry said he left board due to a course of an aggressive stance of tata sons. if they continue to let cyrus mistry, then they could actually have the right to use the tata brand and loan guarantees taken away from them, so pressure being applied from tata sons. ratan tata saying cyrus mistry was an influence on the boards. cyrus mistry has been saying governance is the key issue, transparency. he accused the tata trust of undermining government. that is what he has been saying and what he says he wants to clean up. haidi: the drama continues in this boardroom soccer. rishaad: looking ahead, uber facing new regulations in taiwan .
rishaad: a quick check of the latest business flash headlines. stake in long its beach port terminal. is endingent means it the sale of key assets as it deals with liquidity following bankruptcy. no financial details have been released. msc already owns the other 46%. haidi: selling off almost $800 million of shares to unit, sold
at a 22% premium to tuesday's close in hong kong, and the proceeds used to replenish core capital. shares down and the rise for cosco. blackberry boosting earnings after a surprise third-quarter profit. we are looking at one cent per-share loss, total revenue , almost 70% of revenue, the highest ever. the chief executive that blackberry can do even better. growing software company could definitely do better than 70%, yes. it will take us a while to get there, but we can do it. continues tollar
trade at levels not seen since 2002, although we have seen gains being paired as 10 year treasury yields fall. shiftget more with the a fx strategist, great to have you with us in hong kong. this dollar strength story as we have been expecting at least three rate cuts if you listen to janet yellen, rate cuts i should say, but analysts saying up to four next year. is the dollar story a one-way bet? >> i think the market has gotten ahead of itself. our forecast is one-to rate hikes, closer towards the end of the year, so there is divergence in the market between expectations. expectations got ahead of themselves, let's face it. >> that tends to happen. if you look at the beginning of
the year, markets were looking for four rate hikes issue. rishaad: they are data dependent, right? depend on whatl donald's actual policies are. a case of better to travel than arrive, i guess, in this instance. exactly. markets will be waiting and seeing and looking for january 20. busyad: he will have a first day, all these things he has promised to do. how does this affect southeast asian currencies. many commentators are saying this is where the pain is being felt w. the southeast asian currencies or more bond driven, so they have been affected in terms of the u.s. rate hike. there is concern over the capital outflow scenario, and also politics, so that has been a bigger driver rishaad: we were
discussing the malaysian ringgit , lows not seen since 1998. they said this morning we will not bring in capital controls, but you should never say never, should you? used,ital controls can be so like you say, it is never say never. we see capital controls and other parts of asia as well. is needed to that bring markets to a stable state. indonesia,ysia, malaysia close to 40% foreign bond ownership, indonesia about the same, so are those the two currencies out of the three that second round, a third round of taper tantrum. positives for both of those currencies as well.
on the commodities side, if trump's policies bring about stronger growth in the u.s., more global growth, that is positive for commodities, and that will help offset the negative on those two currencies. rishaad: right, the yen. 117, is the dollar rallied petering out? >> clearly it has overshot. we were looking for 105. rishaad: 105? >> 115. it is interest rate differentials that has been driving dollar-yen at the moment, but there is a wild card for the yen, which is what happened to the risk scenario. the yen is still a risk haven currency, and we have not seen the selloff since trump got elected, so i think that will be something to watch in 2017. haidi: we have talked about how these china long bear trades have been getting crowded.
data expecting the seven handled to be breached by the first quarter. you have the conversion quota, outflows, is that going to continue? , we are lessan bearish than the rest of the market. one less reported story has been the data and china has been strengthening, and that is a different scenario compared to the beginning of 2016, where everybody was worried about outflows and depreciation. this time around, it is stronger driven by dollar strength. a clear riskis near term. if the dollar continues to strengthen, it is hard for them to push back. what we see in the traded basket is that it is rising. went trump was elected, we from below 94 to above 95, and it has weakened less.
rishaad: this is "bloomberg markets: asia". looking at nike now. haidi: the stock and jumping after posting second-quarter earnings better than estimates and allaying concerns about a slowdown. rishaad: su has this wrapup from new york. surged 4% ases they beat the street on earnings and profit, although they gave asked some of those gains as the futures number came in lighter than expected. on profits,e street
$.50 a share versus estimates of to 8.2share, sales up 6% billion dollars, also beating on revenue side, and revenue in the china area was up 17%. consumer demand and lower selling costs were what the company said helped to fuel the results, and critics warned that rivals were stealing share, but they were kept at bay by this report. the cfo said they are well positioned to carry forward momentum going into the end of the year and early next year. the futures number was released at the end of the conference call. some 2%, excluding currency changes versus an estimate of 5.3%, that came in as a disappointment, which may follow through in wednesday trading. federal express, the other big
company reporting after the bell, their shares reversed course and were down some four dollars as they disappointed on the earnings front. one of the things that definitely was fueling their decline is the fact that ground shipping costs are higher, the company said. adjusted earnings trailed estimates of $2.80 versus $2.91. the cfo said funding of the expansion of the network is expected to help going forward. the stock is up some 33% year to date. up, more about the yuan, the bears on the prowl despite china's attempts to comb the situation. rishaad: we've been talking about this quite a lot this morning, the options market suggesting the belief that the move downward for the yuan
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private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. el-erian says the u.s. can endure if it can convince other countries to embrace reforms. minister theresa may says the country may enter a transition phase to ease its departure. giveays that would businesses and government time to adjust to new trading relationships outside of the block.
a group of scientists in the u.s. have set up an anonymous hotline for employees of the national as yannick and atmospheric administration to report political interference. with climate change deniers taking up key posts, scientists are growing concern. the energy department was asked which of its employees worked on climate change projects last week. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. haidi: this is "bloomberg markets: asia". i am haidi lun. rishaad: i am rishaad salamat. japan heading off for its lunch break. let's look at what else is going on, with the glass is certainly how full. juliette: yes it is. little bit more risk on
appetite than what we saw yesterday, on the back of that record rally on the dow jones index overnight. we have had these geopolitical risks, waning in terms of sentiment today, oil higher, gold unchanged. most markets are doing well, the exception is malaysia, flat, and taiwan down .1%. austria up by .6%, the highest level this year. finally of above that 5600 level and holding on. goodealand having a session, japan little bit higher, .2%. in rebound we are seeing chinese equities worth noting, touching that six-week low yesterday, a solid rebound today , andong kong -- hang seng hong kong coming off those for ur month lows. major movers, samsung in seoul, korea up over 5% in terms of
market cap. share pricebiggest gain since october, volume doubling, and trading volume doubling. a lot of support for that company, which makes those batteries, lithium battery technology. sydney airport has had to downgrade, down almost 6%, one of the worst performers on the asx 200, and solid support in casino stocks in hong kong, sands china leading the gains, but also support for galaxy and wynn. by .3%, a little stronger, so that dollar story playing out in terms of the gold price that had been trading at 10 month lows. rishaad: thank you for that. volkswagen has reached another deal in its emissions cheating scandal.
the u.s. environmental protection agency estimates the new agreement will cost $1 billion. rishaad: let's get to this report from ramy inocencio. a $1lkswagen has reached billion agreement to fix or buyback back 83,000 vw audi or porsche vehicles related to its cheating scandal in 2015. those vehicles were allegedly equipped with the fee devices to cheat emissions tests. 2009-2012 will have that buyback option, estimated to be 20,000 vehicles or so. as for newer vehicles from 2013-2016, those will be fixed to comply with environmental rules, estimated at 60,000 or so. costs,e billion dollar $225 million will go to funding
pollution mitigation of nitrogen-related gases, another $95 million to buy zero in missions vehicles him a but the doj says it does not solve other claims, civil penalties, consumer claims, criminal liabilities, and that is still pending. vw said "we are committed to earning back the trust of all of and thank ourrs customers and dealers for their patience as the process moves forward." investors push vw shares higher and trading. in germany, shares rose almost 9/10 of a percent. of note, vw is now the biggest company on the german exchange with over a quarter of all analysts saying sell. rishaad: china's efforts to prop thehe yuan don't convince bears, and the currency is set for its latest annual plunge since 1994. set to beginan
2017 the way it began 2016, under turmoil and stress. know the story, u.s. tightening is accelerating outflows from china, but this time around you have u.s. president-elect donald trump threatening to slap high tariffs on chinese imports, which could be a big blow to the chinese economy, and at the same time, the bond rout is stirring concern about financial market stability, and on new year's eve, china will not be enjoying that countdown, because the new year is when this annual conversion quoted to change yuan the foreign exchange, 50,000 dollar quota, and so this is some tricky times for the pboc. rishaad: in the past, we had the central bank steadying the market. there has been a lull in that. >> you can't say they are not
trying. if you look at the offshore yuan, rates are high to keep those yuan bears that debate. new curbs on mainlanders buying insurance in hong kong, and the money market rates which have been gradually rising in china have something to do with trying to defend the yuan, but the difference this time is that it is getting harder for china given the external circumstances to manage the depreciation of the yuan. haidi: thank you so much for that, talking the yuan. adb marking its 50th anniversary, and despite global uncertainty, the bank still sees stability for asia. b president told sherry on what he thinks is next for the region's biggest economy. transformation, a
new kind of model, including more consumption than investment , more service sector than manufacturing, so they are facing some challenges. investments, strong investments, so there will be some adjustments. i do think they will have a hard landing -- don't think they will have a hard landing. >> when you talk adjustments, let's talk next year, projected db, but given% by a a hawkish federal reserve in the u.s., does that mean an adjustment for you in your forecasts? , but is too early to tell 5.7% for next year, if we , taipei, china, singapore, and hong kong, it is
already 6.2%. has growth momentum depending on the regional demand from other countries, so i think we will keep having slow growth. >> how much of that growth momentum could be hampered by a soaring u.s. dollar? might soaring u.s. dollar have an impact on economies ofause of the higher burden dollar denominated debt, and also it can have some issues of flowing out of money which came to asia, but the change of doesn't matter much, but restrictions of a stronger american economy rather than weaker. the depreciation would give those countries more competitive
edge, so although i don't think the appreciation of the dollar would cause less trouble. you are talking about competitiveness when it comes to cheaper exports, but when it comes to loan financing, will some emerging economies in asia have problems if they repay you? without affect your operations? changesif the currency in value, it does not cause of so much trouble. calle adjusted to what we passive parity. another international organization that launched earlier this year, the china-led asian infrastructure investment bank, and there was a lot of talk over geopolitical rivalry between beijing and tokyo, tokyo , but youker of the adb
have co-financed a couple of projects, so tell us what is going on there and your relationship with aaid. adb, there is no rivalry. we are partners and we already co-financed two projects, and i , the formerident vice president of adb nine times in these two years, discussions about cofinancing and how to and what kindngs of operations, what's the difference, and in what way we can cooperate. we are partners. >> what form will cooperation take place. >> cofinancing of course, especially because we have a research department, 50 years of
experience working with , 50 years of experience working with countries. adb has a lot of knowledge about safeguard policies for social and environmental impacts. we can share so many things. >> biggest risk for 2017? difficult to identify one risk, but there are many challenges, and we should asp developed policies such open trade. also, how to manage possible conflicts in some of the regions. there are several issues in south asia and other places, so how to manage security and the safety of this region is very important. rishaad: the asian development bank president speaking to sherry and. haidi: uber facing growing opposition in taiwan, how will
rishaad: we are back with a quick check of the business flash headlines. india's biggest conglomerate will formally contest the lawsuit by the deposed chairman, cyrus mistry. he has been removed by the majority of directors. cyrus mistry resigned from the companies.x tata he said the suit is part of his campaign for more transparency. extending a share suspension as it negotiates with key suppliers after the infant formula maker's stock price collapsed on concerns that sales in china are slowing. this is the third time in 10 days that bellamy's has asked
for time to review its business. the companyed when had a market cap of $470 million. problem ise affecting all customers, and there's no idea when it might be fixed. passengers are told to check key to check inters -- at kiosks or at counters. uber encountering more problems. it is disappointed that new legislation in taiwan that charges fines on ridesharing operators. get over to's taipei and speak to uber's general manager. thank you for joining us. tell us where you stand with the latest legislation that has just been passed. >> the legislation first of all has not officially been passed.
the president needs to sign this. as aess to say, i think we company are concerned with this development. these proposed fines are nearly $800,000, the highest amount anywhere in the world, and this not only affects our company in taiwan, but taiwan's landscape. potentially taiwan trying to position itself as a technological of, foreign atpanies might look this as a warning sign on whether to continue to increase investment in taiwan. i have been speaking with local entrepreneurs because they are not sure if the regulatory environment develops -- supports development and innovation. haidi: these fines have a chance to be debilitating. that is the upper limit for each driver potentially. uber as we know pays these fines
for drivers. how sustainable will that be going forward? uber'shat be the end of business model in taiwan if the bill does get signed off on by the president? >> we have continued to stand by riders and drivers as we deliver a good service to taiwan and provide an income opportunity. we still remain optimistic and that the president's overall goal and strategy for taiwan is to develop as asia's silicon valley. this bill runs counter to that strategy, and we hope she will come up with a more reasonable solution, and to be regulated, which is our goal as well. rishaad: how do you do it? how do you get that legislation change? how do you get her to change her mind and change the minds of people behind this legislation?
overall, people need to look at the current regulations and look at ride sharing regulations around the world. there have been over 100 cities around the world that have proper ridesharing regulations that a receivable -- reasonable and provide consumer choice, as well as protect driver interest. that's the principles of course, sure, but how do you get them to enact legislation which effectively at the moment stops eu being illegal in taiwan? -- stops you from being illegal in taiwan? the taiwanesehe tie we government and our company are ready to discuss. if we can agree on those principles, that in itself is the best start. haidi: this is not just
legislation we are talking about. one of your own people said that anything short of a full legislative overhaul and markets like this is like getting a monitor amazon. we need a dramatic change for you guys to be able to proceed. isi think the overall issue whether or not the taiwanese government wants to regulate companies like ourselves or others sharing economy companies or other new economy companies using the current rules and regulations, or whether or not there is room for improvement and room to create new regulations to better fit with these business models. that in itself is probably a in industrywide trend. the entire industry is looking for this. have been looking recently at these documents suggesting that uber as a company is on track to lose at least $3 billion this year, and a lot of this is being lost in
trying to push into new markets, the likes of taiwan. they lost the battle, if you will, when it comes to china. at what point does the company fly the white flag when it comes to the market you are in? speak for the overall company, but i can speak for taiwan. issue has never been business growth. we have over one million registered users and taiwan currently, tens of thousands of driver partners who are active on our platform. in the past three years, the growth has been amazing and people have been giving us good feedback about their transaction with the service here. it isiwan as a whole, more about actually whether or not the government wants to support this type of innovation and whether or not this government wants to continue to encourage innovation in technology in taiwan. rishaad: thank you very much for joining us there.
largest movie theater operator. rishaad: we have been watching this. this deal has been in the works for a long time. i thought it was done until i read this story. in november, we saw shareholders approving the deal. it was first announced in march for a 1.1 billion dollar all-cash, now valued at $1.2 billion. went to the department of justice for approval by agreeing to conditions. these are the sale of 15-23 theaters to giving up control of an advertising company, and the transfer of 24 eaters to screen vision. the best teachers here helping
to he's that. amc executives say they hope to seal the deal by the end of the year and looking to sell two theaters before the transaction closes. haidi: wang jianlin has been dropping some serious coin in his quest for dominance when it comes to hollywood. are we expecting more deals? sophie: earlier this year, spending $3.5 billion to buy legendary entertainment, and we do have wanda in talks to acquire a controlling stake in dick clark production. he said he would like to control one of hollywood's six major studios. ambitions, heal wants to own 20% of the global film market by 2020. rishaad: that's what you might call a lofty ambition. sophie: just a little bit. tencent and alibaba pictures looking to extend their reach
and to tap into the china fell market. a huge market. we can't forget "great wall". we will likely see more of this coming out as chinese companies look to hollywood. rishaad: thank you very much indeed. quick check of markets, on up a day, the dow closing at record highs again overnight, and that sentiment is flowing nicely when it comes to the asian session, hong kong up .4%, shanghai rebounding from yesterday's six-week low, and the push continues higher for the nikkei. rishaad: there you go. the taipei market flat. ,he straits times index singapore unchanged. up? what is coming
>> jampacked is right. malaysia'strols, currency slumping to the lowest level since 1998, one of the hardest hit and asia following donald trump surprise victory. we will bring you live for the latest. declining, buty capital controls part of the response strategy. this is yuan bears striking. we will talk about what lies ahead. tightening from the fed impacting currencies and right here and southeast asia central banks, what about their room to maneuver? we bring in hsbc. ♪
♪ >> from our studios in new york city, this is "charlie rose." charlie: "live by night" is the new film from ben affleck. it is based on the best-selling book by dennis lehane. it follows outlaw joe coghlan as he travels from the boston underground to the rum running world of teva, florida. joining me is ben affleck. the film also stars christmas sena, chris cooper, and sienna miller. i'm pleased to have all of them at the table. i'll start with the director, and star, and producer. he said you want this