Skip to main content

tv   Bloomberg Daybreak Asia  Bloomberg  March 13, 2017 7:00pm-9:01pm EDT

7:00 pm
a big: brexit passes hurdle as parliament gives the prime minister approval to start the process. sayse white house discussions are underway for a presidential meeting next month. >> china's latest manhattan deal raises a few eyebrows. jared kushner would stand to make millions. >> toshiba wants to delaying tuesday's results because of expensive problems at westinghouse. >> we will be discussing xi
7:01 pm
jinping's potential meeting with donald trump and from tokyo and sydney, talking about toshiba as well as japanese companies dodging party. going to have all the market action ahead of the big said decision and taking a closer look at the trump family ties to a chinese company that the waldorf-astoria. this is daybreak asia coming to you from bloomberg's u.s. and asian headquarters. i'm betty liu in new york, where it is after 7:00 p.m. yvonne: it is just after 7:00 a.m. in hong kong. i am yvonne man. pretty quiet before the fed. we did get news out of the u.k.. the parliament finally giving the nod to theresa may to trigger article 50, so perhaps the markets could be seen the storm coming, but looks like a blizzard is heading your way first. betty: blizzards and impending storms on the horizon and in the market, but when the news came
7:02 pm
out that the bill had passed parliament, not a lot of reaction in the british pound. this is largely telegraphed an expected. we will see what happens when the process actually begins later in march, but as you mentioned, we are two days away from hearing what the fed is going to do about rates and also their outlook, so in the meantime, it is pretty quiet here in the u.s., but how about in asia? yvonne: time to kill before the fomc. we are going to look ahead to the china data coming out as well with retail sales and industrial production, but here is how it is looking right now in new zealand. it has been pretty quiet over there. session.eing flat the kiwi losing a little bit of steam, so maybe dollar strength trickling through. in thesee dollar change last session on wall street. we did hear from the assistant governor speaking in an assistant address.
7:03 pm
we are in a tight range of 7557. talks slightly positive at the open in sydney. trading sideways with no direction for dollar-yen. we are below. we are getting higher here than we saw yesterday, but it looks like it would be pretty slow going when it comes to the open in tokyo as well. look at an early what we expect in the region, but looking ahead brexit now, buddy. -- betty. betty: look ahead to brexiteer not only the said, but also europe is going to -- the prime giving minister theresa may that permission to launch the process and now it just needs the queen. the u.s. is closer to the first rate hike of 2017. let us discuss all of this with our global economics and policy editor kathleen hays, who has
7:04 pm
traveled down to the sea to cover this fed decision, but first, let us talk about theresa may and brexit, kathleen. kathleen: this is big news as the week gets underweight. to -- underway. opposition from the house of lords. they had to bring amendments that would have put, allowed them to put their stance on the brexit bill that theresa may presented according to the u.k. supreme court. it was the house of commons today that rejected the house of lords amendment. they said that -- they sent the bill back to the house of lords and it looks like the house of lords backed down very quickly, dropping the amendments and getting theresa may the green light. she can go ahead and start triggering brexit. the next step of course, actually, the queen will sign the bill. she gives her oral ascent, i should say. theresa may then -- her royal assent, i should say.
7:05 pm
theresa may then look at the lisbon treaty. the talk is that the last week of march will be the one. theresa may is able to start concentrating on negotiations with the european union, but now , to her flank, i guess, scotland, the scottish government, i guess the scottish government is part of the u.k., but it has its own first 1997, it was given back some rights to have its own governance when it comes to things like education and the justice system. they have a pretty feisty first minister and she has said she's going to seek a vote on independence from the u.k., so theresa may's plate is pretty full again. indeed, kathleen. brexit, could that mean the breakup of the u.k.? well, scotsxit.
7:06 pm
they had a voter couple of years thewhich did not pass, but mood has changed. there are people around the world who feel they want more independence and do not want to be told by others. sturgeonhat nicola said earlier today. agreement on the way ahead, the government has not moved even one inch in pursuit of compromise an agreement. our efforts are compromise have instead been that with a brick wall of intransigence. this is a very big deal for scotland. they don't want to go through with the brexit. they want to be part of the european union. they want to have some say in what is ago she added. was is what nicola sturgeon complaining about in the passage you heard from her speech earlier today.
7:07 pm
section 30, that is something they will be seeking as they go ahead with this and this happened as the dutch are ready to go with the polls on wednesday and an expression potentially of an of swell of populism. people want to throw over the established order and see if it is a tumultuous time for theresa may. this is a very important step. >> stalin really throwing the curveball for theresa may. all square, kathleen, the fed is a happy camper ahead of its meeting. why do you say so? >> from break up the harmony. the fed seems to be going steady with economists, with investors. we did a bloomberg survey, bloomberg news team, and here is what we found over march 7 and eighth, that now, the economists surveyed, the investors surveyed, are now on board. three rate hikes in 2017. march, june, and december, and the fed have predicted the three rate hikes back to september of 2016, but the markets just did
7:08 pm
not believe it. that is what they were saying. look at the bloomberg chart to kind of illustrate how this has changed. if you look at the yellow line. the white line goes up and now, you can see what people were expecting. you see two steps. andte hike in june, september. do you see three steps? the turquoise one, that is march. third one in december. the markets on board. we get renewed looks at the economy and they have their new dot plots. there was a narrow consensus in december around since officials looking for three rate hikes. it would be interesting to see if you get more on board, 8, 10, or more stepping up to that fourth rate hike. that would be something that gets the markets attention.
7:09 pm
we would have to update that this week. they do monitor the storm to see how the fed officials are really going to meet. it will be through, you know, a video conference. first word news with nina melendez. nina: bank of australia has been dropping more hints that it could further restrict mortgage lending. michelle bullock says the impact of measures taken two years ago are starting to wane. she spoke at a bloomberg event in sydney. no doubt there is actions addressed some of the risks. nevertheless, the early experience suggests that while the really zillions of both borrowers and lenders has no doubt improved, the effects on credit may fade over time. monitorontinuing to their ongoing effects and do more if needed. >> the choice of tillerson as secretary of state has been described as an fired by the us
7:10 pm
trillion foreign minister. julie bishop says the former exxon mobil boss will bring a refreshing change to u.s. policy because of his business background. comes after washington rejected media reports that tillerson was out of touch with his officials and shut out a president trump foreign policy discussions. nina: relations between turkey and the netherlands have sunk even further with the dutch ambassador being banned from entering the country. they have closed the airspace to dutch diplomats. angela merkel is weighing in following claims by president supportshat germany terrorism. she calls those comments "clearly absurd." a company owned by president trump's son-in-law stands to make $400 million from chinese investments in the manhattan office building at 666 fifth avenue. it would provide the parishioners the cash payout and
7:11 pm
equity stake in a new partnership. ng's links to chinese leaders has brought questions. in more than hundred 20 countries, i am nina menendez, and this is bloomberg. anchor: nina, thank you. big kicked off a pretty one. the fed rate decision on wednesday. joining us for a market wrap is abigail doolittle. abigail, there is not a whole lot of action for u.s. stocks ahead of the fed. abigail: true. we had the dow, s&p 500, and nasdaq trade unchanged in mixed fashion. about this orable what makes sense about this is the fact that there is a bit of a holding pattern when the
7:12 pm
investors expect the fed to raise rates. we have more information about brexit, that it could in fact start after that great conversation information that kathleen hays was just providing. we have other central bank meetings, so lots going on this week. notable earnings reports. ahead of that, wait and see action from investors. where we had distinct action was with mobilize, shares of the is really based car company surged 20% for their best day since august 2014 on the news the chipmaker intel signed mobileye. the want to get into driverless car and take on qualcomm. earlier today, intel's ceo did join bloomberg markets. let us listen to what he had to say. pretty positive comments there. >> the market had already priced in that. if you take a look at the price, it is a 35% premium to its current market value. you have to take a look at, it is growing at a
7:13 pm
significant rate and we think it will be a billion-dollar plus business. >> it sounds like this is a high-growth acquisition, mobileye by intel. positive stuff. less positive though, after the .ell, valeant lunging 9% bill ackman has sold the farm's entire stake of about 27 million shares. he had been along. you could say the pershing put has left valeant now. betty: absolutely now. what about other asset classes? they were flat as well. abigail: not a lot of action with gold, oil. the bloomberg dollar index. that is in contrast with what we saw last week for oil when oil had its worst week since before the election, so more of a holding pattern there. where we did see action, though, the 10 year yield up once again, 10 out of the last 11 sessions. back at 2.6%.
7:14 pm
interestingly, the 10 year yield is in a holding pattern of sorts, too. basically trading between 2.3% and 2.6%. when we hop into the bloomberg #btb 673a look at g nine, this shows that stocks and commodities rallied. bloomberg dollar index right in play as well. commodities have started to diverge, so the question here, betty and yvonne, is whether we are seeing a split here for reflation trade. >> may be. all right, abigail doolittle on the markets. still ahead, toshiba delaying a turning result yet again over its nuclear liability. the company's president to explain what this is about. forex tillerson gets ready asia. talks of a meeting between donald trump and xi jinping. this is bloomberg. ♪
7:15 pm
7:16 pm
7:17 pm
betty: this is "bloomberg daybreak: asia," and then betty liu in new york. due to reporta is later on tuesday, but wants to delay that d to theu evaluation of its westinghouse nuclear unit. etoshiba has extended its reporting timeline by one month after a chaotic preliminary earnings release in february. it would book a write-down of more than $6 billion at westinghouse. the company's president is expected to hold a news conference later to explain the situation. finding buyers for the cloud services company according to people familiar with the matter. shares in the florida-based company have risen over 30% in the last year, valuing citrix and more than $13 billion during that valuation and said to be putting off many potential buyers. isnne: goldman sachs redesigning its trading hub in downtown manhattan, tearing down walls between money managers to
7:18 pm
foster what it says will be a better investment performance. around 500 employees currently scattered across three levels will now sit on one floor, shoulder to shoulder. they: let us get now on potential meeting between president and xi jinping. perhaps as early as next month. big goal here is north korea. >> right. between all the attention between china and of course donald trump administration given all its grievances about china coming into the presidency, it looks like the one thing that could get them to meet face-to-face would be north korea. now, both china and the u.s. have said that a meeting at the presidential level is in the works. they areer said working on dates and an agenda, the purpose of which is to diffuse tensions over north korea and the recent appointment of the missile defense system in very korea, which china is
7:19 pm
upset about. it could happen in april. * rosalind: this meeting is likely to be one of the subjects that rex tillerson will be talking about on one of his trip to china, part of his asia trip, which is happening later this week. they have made sure north korea is up the forefront. he released the four missiles last week. there was a missile test in february. last year, 24 ballistic missiles fired. all these issues need to be addressed, and would increase the urgency now as both the u.s. and china. absolutely. how are things in south korea looking now? they have been shaken in recent weeks with china's retaliation. so how is that relationship going? rosalind: china related stocks has been a little bit better. that is perhaps over rex
7:20 pm
tillerson's coming visit and ties with china becoming a little bit better, but also partly related to the house of -- ousting of president park geun-hye. more specific stocks going up. inflows into south korea really accelerating yesterday as well as on friday, and north korea probably one of the issues there that are driving sentiment there as well. yvonne: thank you so much, muslim chin. still ahead, -- rosalind chin. still ahead, crude in trouble. the latest with younger research. he says inflation is likely to be a game changer. that is next. this is bloomberg. ♪
7:21 pm
7:22 pm
yvonne: this is "bloomberg daybreak: asia," i'm yvonne man
7:23 pm
in hong kong. betty: i'm betty liu in new york. our next guest said too many people are bearish on bond and inflation is coming. he joins us now from chicago. jim, let us tackle the fed. are we going 3, 4, or five times this year? >> i think we are going to go one this week, for absolute sure. the fed is going to want to probably push towards three or four three as long as financial markets cooperate with the fed, and what i mean by that, is if we had a 10% correction in the stock market, that might stall the fed off, but without that, i think we probably go three or four rate hikes this year. five might be pushing it. >> do you think we will? it feels like the markets are getting tired here. do you see a 10% correction? about oncet one every 12 to 14 months, and it has been 13 months since the
7:24 pm
last one, so from a calendar, we thinke for one, so i that, combined with the valuation, combined with what we have called the soft data come all the surveys are showing that everybody expects great things. we could set ourselves up for disappointment, and yes, i think that probably between now and the fall, i would not be surprised at all if we were to get a 10% correction. >> ok. let us talk about bond yields for a moment and inflation, jim. betty: you're seeing yields spiking up because of these fed productions. let us pullout this chart on inflation. looking at wage inflation, which, you know, does not look all that intimidating, i guess you could say. i guess you could say cpi up, but wage inflation is rather mute appeared what you say inflation could be a game changer here? a verye fed has got accommodative policy. markets are going higher because they believe that interest rates
7:25 pm
are going up because the economy is getting better. but if we were to get inflation, it would force the fed -- we talked about it a second ago -- five rate hikes, getting more aggressive. the fed would be forced to be more aggressive. then, you could get back into a 1980's, 1990's style. the reason rates are going up is fear of inflation and that hurts the stock market. we have not had that in 20 years and that is why inflation could be a game changer. if it starts to come in, the reason rates are rising becomes a bad thing. we now think it is a good thing. betty: we do. yield on the 10 year, over 3% for sure? um, yes, with a big "but" in the middle of it. everybody thinks that. we have got this gigantic short in the bond market right now. everybody is positioned for 3% yield and everybody makes money, goes to 3% yield, and what i have learned is that usually,
7:26 pm
the market will move to the level of most confusion, so i suspect, between now and summer, first, we go to 2.25%. we go back down and has everyone's conviction about going higher, and then, the second half of the year into 2018, you get that move. i know a lot of accountants say, yeah, i agree with that. wait until summer, and wait until you feel the pain of being wrong on that position until he , or slightly lower. that will be the test point for the exuberance about inflation, and then it climbs the proverbial wall of worry as it goes back up to 3%. betty: that wall of worry, it is a next risk in commodities. you talk about the trouble with oil. them falling out of this range. yvonne: we continue to see opec cuts. you us crude supplies continued rise. you see the net positions also
7:27 pm
continue to rise. so that boost from opec, has it run its course that? -- course now? jim: the opec guys had their meeting in houston and they really blew themselves up in this meeting, because between them and all the fractures coming out and saying we have got all this technological efficiency we could make money at $30, and that we are going to continue to see demand for oil, it really crushed the oil market because it sounds like they are going to keep producing and producing and producing, and no one is going to back off. yes, opec might back off, but the swing producers of the united states, they have got efficiencies but are they can make money in the low 40's and they will keep reducing right now as we move forward from here and that will be a big problem for oil. oil is somewhat similar to the bond story. everybody is low on oil. everybody things oil is going to go up, and then it kind of got overdone, and now, we are seeing them pull back. the pullback in oil is not quite -- has not quite run its course
7:28 pm
because we have a lot of people bullish. yvonne: next stop, low 40's for oil. one to watch. jim bianco, president and founder of
7:29 pm
7:30 pm
>> it is 7:30 a.m., tuesday, on a gloomy and damp hong kong, 30 minutes away from asia's major market open. betty: it looks like a beautiful, calm night. it is going to look very different tomorrow, yvonne. 7:30 p.m. monday evening here in new york. thousands, over 5000 flights canceled just based on this impending snowstorm in the northeast. we are just saying how audit was to have a snowstorm in march. it is terrible. on betty liu new york. yvonne: and i am yvonne man in hong kong. you are watching "bloomberg daybreak: asia." first word news with nina melinda. nina. nina: hong kong is ever closer
7:31 pm
to triggering brexit. britain is ever closer to triggering brexit. it has now passed the house of lords as well and just needs royal approval.- now, a key regulator has backed the plan. the proposal is a modern take on a depression era law and would require firms to partition investment banking into separate billing companies. president trump first raised the issue on the campaign trail and still supports it. what of the east coast is raising for blizzards as you were talking about, forcing a state of emergency in new york and new jersey. forecasters are predicting up to 20 inches of snow, and thousands of light are canceled. public offices and schools are closed. the storm is leaving public
7:32 pm
transport systems with reduced services. storm warnings from late the night to tuesday evening for much of the northeast. in malaysia, no one has claimed the body of north korean leader half-brother, kim jong-nam. pyongyang rejects that. north korea refuses to confirm the relationship with kim jong un and husband economic -- and has been demanding the body back. am inhan 120 countries, i a, and this is bloomberg. i am nina melendez, and this is bloomberg. anchor: mina, thank you. we are told it is having a hard time putting the numbers together amid the $6 billion write-down at westinghouse. this as david --
7:33 pm
why us exactly the reason for this delay in the earnings release? not quite the case that we do not know the numbers. we have got a pretty good picture of the numbers last month when toshiba put out their preliminary numbers. that is important. david: one particular number that is worth looking at, -199 million yen. 191 billion more than the assets, and that is taken pretty seriously in japan. it is sometimes called a balance sheet insolvency. it does not mean the company will be roundup but in japan, you have about two years after your auditors sign off on negative net assets like that before you have to be delisted. of course, the auditors have not signed off yet. being delayeds is is because they are trying to buy a little bit of time to work out what they are going to do to
7:34 pm
dig themselves out of the hole. >> how are the problems at westinghouse feeding into this? david: westinghouse is essential to it. the big driver of negative net right down to the westinghouse nuclear business, more than the at 10 ¥40 billion they paid for it back in 2006. than the 640 billion yen that they pay for it back in 2006. the falling cost of removals is making -- renewables is making -- the safety requirements you need on these 81,000 stations they are hoping to build has made them ever less economic, so really, that business has got
7:35 pm
some big problems. there is a further liability buried in ¥793 billion, guarantee they provide to some of the u.s. customary of these -- customers of these new plants. if they do not build them, they have to pay that out as well. there is big liabilities buried in that business. anchor: will bankruptcy actually solve the problem? most companies are reconsidering selling the majority stake in the memory chip business. david: exactly. that is according to some of the reports that we have been seeing . one of the suggestions would be chapter 11. an important thing to consider here is if you have ever been on the outside of chapter 11 process, it looks like a sort of magical process that makes liability disappear. if you have been on the inside, that is clearly not what happens. the courts are there to help the creditors and if the it isolders, toshiba, -- the shareholders that they're all the pain. there has been some discussion that they might perhaps selloff
7:36 pm
the servicing part of the business am is behind the building bit of the business. no buyer is going to accept the liabilities. toshiba is going to have to shoulder it it self. the chip servicing business is the most likely one to be sold or partly sold to solve toshiba's problems. the thing to bear in mind is that companies in these sorts of walls do not solve their problems by selling off their bad businesses. they ultimately have to solve them by selling off their good ones. anchor: all right, we will have to see how the state goes with david fickling joining us. how the asian markets are shaping up on this tuesday morning. here is sophie kamaruddin. sophie: wondering if this could be the call before the storm in more ways -- calm before the storm and more ways than one. u.s. stocks ended flat and the dollar has seen trading in a tight race.
7:37 pm
we did get a bump in treasury yields being pushed to the highest level. we saw the aussie tenure rate track that earlier. -- 10 year rate track that earlier. everyone' conviction will be tested this summers. let us check in on the asian futures board. we are looking at a higher open tokyo andro, -- in hong kong. traders are likely to turn their attention to chinese data and/or output and retail sales for year-to-date numbers. they could be looking for signs of stabilization to keep the reflation trade coming along. commodities prices have been helping that. let us take a look at the commodities space. we are looking at a steadier aussie dollar given the rally in iron ore, steel, and coal. the pound holding most of its gains here.
7:38 pm
we saw the u.k. parliament given theresa may the green might to trigger >> -- green light to trigger brexit. some of theite risks we are seeing potentially this week. traders are showing little concern around this potential turbulence. let us check out the chart on giveerminal, #btv 6750, to you a sense of the home. japanese equities are rallying amid the lowest volatility since november and that is relative to price swings in u.s. stocks. volatility on the nikkei 225 suck 16% last -- sunk 16% last week. lastly, i just want to check in with what is going on with the commodities space. we did have kuwait saying it wants to extend the opec deal beyond june, becoming the first opec number to call for this developed the global oil market.
7:39 pm
barclays has been saying a continuation is right dependent. we have crude trading at the lowest level since november as u.s. drillers are seen boosting their activity. looking at gold, it is down .1%. volatility is the lowest since 2014. astly, iron or rising from four-week low. based metals have been leading the rise in the bloomberg commodity index. sophie kamaruddin with your check. a $4 billion deal between new york-based kushner companies. that name sounds familiar? company linked to president trump taj's son-in-law and senior advisor staff to make a lot of money. ramy inocencio has more and we are talking hundred million dollars worth. 10% of that poor billion dollars total deal here. $4n you look at it come -- billion deal here. it is unusually favorable for kushner companies.
7:40 pm
480 million dollars. that is the cash payout we are talking about here if the deal comes to fruition. 80%, and mentioned. that is going to be the mortgage cut that kushner companies is paying for the tower. 007 is when they bought it. they really did get hammered. they almost neared insolvency on this. they are trying to get back even more. the other number, 20%, kushner companies will get a 20% stake in the retail aspect of the tower. does comen this deal through, it would also value the deal at about $2.8 billion. this is significant because it would be a record for any single manhattan building out there right now. about 10 years ago, when kushner brothers -- kushner companies first bought this, they bought it for $1.6 billion. it would be the most again if this deal to go ahead.
7:41 pm
one new york realogy lawyer said this is a home run of a transaction. the deal is not finalized yet. they are still shopping for investors. >> this raises possible conflicts of interest here between kushner companies and on anba -- and anbang. there were some probes with the linking with anbang and beijing. barack obama decided on to say there after it was brought up. the u.s. or china, it seems like anything is unclear right now. as you can expect, there is a lot of defense going on which kushner companies, with the white house, as well as with anbang. with kushner, they are taking significant steps to avoid potential conflicts and they are going to continue to do so. the spokesman said there already
7:42 pm
is no positive interest in that mr. kushner has sold his stake in the tower to family members. critics are saying, look, kushner is too close to his family and is going to have to do more. the white house has said mr. kushner will recuse himself from any that is where his partiality is questioned. saidld said it -- anbang it abides by the law. this has some bearing on anbang's links with the white house dealing with in-laws. anchor: ramy inocencio joining us from new york. optimistic on china. that a strap be biased. we are going to hear from black rock of chinese equities, next. ♪
7:43 pm
7:44 pm
anchor: this is daybreak asia. i am yvonne man hong kong. check on thek
7:45 pm
latest business flash headlines at this hour. verizon suggesting a discount of more than $900 million for its purchase of yahoos internet assets after security breaches are murdered last year -- breaches emerged last year. killing off the deal before the price was reduced by $350 million to 4.5 billion dollars. the filing reveals the $3 million cash payout and nearly $20 million in equity for yahoo!'s ceo marissa mayer. yvonne: hong kong securities regulator is said to be twostigating the number writer of ipo's last year. ccb international's work on the proposed 2014 the sting of a chinese seafood supplier, which has since been scrapped, have been now requested. the regulator wanted to know whether due diligence was done. betty: bhp billiton has called for new talks later tuesday in month-longto end the
7:46 pm
strike. the unions declined to me last week but they say face-to-face negotiations are the only way to resolve the issue. union leaders are reviewing the invitation which includes an offer. yvonne: the national people's conference wraps up on wednesday with a big headline that growth target is at 6.5%. not all doom and gloom. let us bring in blackrock's head of equity. she is in the studio. i would like to take away from the npc. they have reined in their growth targets. zero downside risks, some beijing officials have said, but contrasts they had outlined as well. guest: i think the real focus from the mpc should not necessarily just be on the short term 2017 growth target. i think the growth is really a basic foundation upon which the policymakers want to use the common for a blood to really
7:47 pm
advance upon the reforms, so incrementally, we actually see the major focus or different areas for the npc coming from new agenda such as for example, corporate deleveraging for the first time, talking about expanding supply-side reform the on steel and coal to other sectors, talking about things like one belt, one road expansion, and reducing costs of doing business for the private sector for overall returns. probably theare key things a policy makers want to focus on in 2017 and beyond. anchor: we have seen a lot of these things before. can you still bet on deleveraging? helen: i think if you think about it, leveraging up has been a major problem and concern for the global community and never before has a policy maker mentioned that corporate deleveraging will be a priority. this is the first mention this year and this is not for the entiret economy. a much slower pace versus the four as nominal gdp it's up and credit growth targets are trimmed a little bit in terms of
7:48 pm
decelerating. the corporate is really the focus of the global concern, and the policymakers will probably still allow for some increments leveraging up on the government and household side. those do not really have as much concern given their very low starting point. anchor: it seems like all these contrary and user going to be more popular now when you take a look at the bullishness we have seen in china. analysts upgrading their stock targets for the year. throwing up a chart you requested, let talk about the earnings revisions have seen, at least for this time in 2017. it shows that, you know, in the beginning of the gear, they wanted them up and bring down the expectations, but you say now we have actually hit bottom out about 5% or so. why do you think so? helen: you can see that over the past few months, they have not been revised down further as we are entering in the new results season in march.
7:49 pm
this is a lagging a fact of what we have already seen in the economy since about 12 months ago, which is moving from a deflationary expectation into more of a reflationary expectation and by the way, this happened in china will be for trump election and whatever happened globally -- before trump's election and whatever happened globally. this is combined with much better than expected supply-side constraints. policymakers really pushed supply-side reforms. we have seen commodity prices, overall prices, gradually filtered onto the midstream. revenues wents in up, profitability is going to improve and a lot of the enterprises are moving from the 80% to 90% in the industry towards more sustainable levels now. anchor: with this economic rebound we have seen gathering more momentum, with the pboc, is there concern in the market the pboc may have to tighten more? a hawkishng to be shift?
7:50 pm
helen: the pboc is taking more of a prudent approach versus what we have seen in the previous years, which is more proactive. i think the market actually welcomes this because the market has had concerns regarding too loose monetary policy in the past years. a gradual deceleration in terms of credit growth will be welcomed by the market because it is viewed as something that is more sustainable and higher-quality. people want to see sustainable growth coming from the right sources rather than growth as perceived as not necessarily sustainable because it is still fueled by the same model as what we had seen in 2009. yvonne: for those who are critical for china's growth and not quite as bullish as you are, they say that the debt levels are a big problem and there continues to be more generation of this leverage. we have a chart that shows you the continual new
7:51 pm
credit that is being issued in china, so why do you think this debt -- what some call a crisis brewing in china -- why do you think this will be limited? i think it is very much a major issue that has taken many years to build up. by no means do i think it is going to be resolved quickly or in the next one to two years. it is going to take a very long time, but i think the policymakers are knowledge in this as a major issue, and a key policy priority for the first time that we have seen in many years. i think that is a step in the right direction, although execution would still remain quite tough, and we need to monitor whether it goes as smoothly as they would like, but i think what the policymakers have highlighted is what they would like to do is things like merging certain companies together. it is perhaps leaving out -- weeding out some zombie companies that should not survive over the medium to longer term. in addition to the normal course of moving credit slower,
7:52 pm
they also want to reduce some of the existing outstanding loans. >> as you say, it is good that they recognize this, but is becoming -- is it coming to late? -- too late? late than never. lester was already a move towards more government as well as more household leveraging up and less from the credit side, but this year, that will be really hammered in and kind of further cemented in terms of government policies, so we need to watch very carefully. the policymakers are obviously trying to gradually take some of the financial sector leverage out of the system in terms of what banks and insurance companies and other financial institutions are able to do in terms of investing and so on. it is combination of reforms that will be very important to watch as we continue to monitor china's development. anchor: helen, thank you so much for joining us. zhu.
7:53 pm
you can get your day going in today's edition of "daybreak." go to your terminals. it is available on mobile on the bloomberg anywhere app. you can customize your setting so you only get news on the industries and assets you care about. this is bloomberg. ♪
7:54 pm
7:55 pm
anchor: japan's prime minister say itn -- but critics is due to the ease of refinancing. let us bring in reynolds. isabel, good to see you. economists have been talking about japan's zombie companies for years now. are they still a problem for japan? >> right, i think what you first mentioned was one of the reasons it is still a problem. it is very convenient for many
7:56 pm
politicians including by mr. abe. that and sayto look how well i'm doing with regard to the economy but on the flipside of that, we can look at the reasons that is happening in the reasons are that in some cases at least, nonviable companies are being kept going by ridiculously easy financing and that is something that is hindering japan's ability to take advantage of their economic potential. resources are going the wrong way. we have people working for these firms when they could be working for a firm that is actually more viable. anchor: so the abe government has pledged to improve the situation how can this be done? the abeironically, government did swear they would try to raise the rate of business is going out of business and new business is ofng started, to really kind
7:57 pm
encourage entrepreneurship in japan, and that has not worked out. we are looking at somewhere around one third of developed to the banks it is and consultants to help out with the situation. anchor: isabel reynolds. much more ahead still to come with asia's first major market open, now just moments away. sophie kamaruddin has more on what to watch and right at the open in tokyo and in korea, sophie. sophie: you were just talking to isabel about bankruptcies in japan. it is a question about whether or not toshiba could be facing bankruptcy for westinghouse. last week, toshiba was saying we are going to meet our earnings reports deadlines. we are anticipating a delay and the president will hold a presser today to explain why there could be a delay in detail the outlook for westinghouse. also in focus, could be one of the beneficiaries for closer ties between japan and saudi arabia.
7:58 pm
there are two meet with japanese officials today to talk about potential products there. pacific group taking a look at --
7:59 pm
8:00 pm
a big: brexit passes hurdle as parliament gives the prime minister approval to start the process. westinghouse ways on toshiba. tuesday's earnings report may be delayed amid some sorry looking numbers. the white house says discussions are underway with beijing for a presidential meeting next month. and intel makes a $15 billion bet on driverless cars, playing
8:01 pm
catch-up in a market seen as the next big thing. the second hour of daybreak asia live from bloomberg's u.s. and asia headquarters. i'm yvonne man in hong kong, just after 8:00 a.m. betty: just after 8:00 p.m. in new york. i am betty liu. it feels like deja vu waiting for the snowstorm. we are also waiting for a lot of news events to happen, in particular the fed meeting on wednesday, which we were talking ad nauseam about. we want to get this rate hike out of the way, which seems almost like a near certainty, and find out what is the fed thinking about future rate hikes? that is what is going to dominate the conversation going forward. yvonne: in the meantime, the only thing we can watch that is not trading in a tight range is the treasury yield on the 10 year up to 2.6%. let's take a look at how the market is taking it, pretty upbeat so far. look at the market open in tokyo and seoul with sophie.
8:02 pm
sophie: upbeat could be one way to describe what is happening in asia. we do have the kospi coming online about .5% higher. we are seeing a marginal drop for japanese shares. we are anticipating the fed meeting with the boj also set to hold its rate decision this week as well. given thatart really we saw u.s. stocks ending flat. as you noted, the dollar trading in a tight sheer, the bump in yields overnight. that is what we are looking at in the bond space. we do have the all the tenure rate as well as other yields across the curve tracking higher. let's take a closer look at what is moving on the nikkei 225. we do have what is going on in focus with toshiba, given that we are anticipating an earnings delay for that company. last week they were saying no worries, they will meet their target.
8:03 pm
take a look at what is moving in tokyo. energy leading the gain about 1.4%. telcos and property stocks leading the decline so far. energy very much in focus given that we have crude falling below one dollar a barrel. there is a question whether we will see opec extend its agreement into the second half of the year. we have kuwait being the first member say that should be the case. barclays saying it is all price dependent at the end of the day for opec. with oil below $50 a barrel, that might be the case. let's take a look at what is going on on the costly. pi.the kos there are a lot of issues with its neighbors to the north and china. today, the finance minister will be hosting a meeting to discuss not only those issues but also the u.s. rate decision. the finance minister had said its biggest issues are what the fed is going to say, not so much the impeachment of the
8:04 pm
president. we do have financials leading the gains on the kospi. that was the case on monday when we saw foreign inflows picking up showing there is resilience with korean stocks despite the tensions we are seeing domestically. that is just the sense of what is happening so far this morning. betty: thank you so much. news get to the first word with nina melendez in new york. between turkey and benevolence have sunk further with the dutch ambassador being banned from entering the country. on correct has also suspended high-level meetings and closed its airspace the dutch diplomats. chancellor merkel is weighing in following claims by president erdogan that germany supports terrorism. she called the comments "clearly absurd." a company owned by the family of president trump's son-in-law stands to make more than $400
8:05 pm
million from chinese investment in his manhattan office building at 666 fifth avenue. the plan for billion dollars transaction by anbang insurance would provide the kushner's with a cash payout and equity stake in a partnership. two chinese leaders have raised national security questions in the united states. the choice of tillerson as head of state has been described as inspired by the australian foreign minister. julie bishop said the former exxon mobil bath will bring a refreshing change the u.s. policy because of his background. her praise comes after washington rejected media reports that tillerson is out of touch with his officials and shut out from president trump's foreign-policy discussions. malaysia says no one has claimed the body of north korean leaders kim jong-un's half brother who was killed at kuala lumpur airport last month. authorities say he died after two women white a nerve agent on his face, although pyongyang rejects that.
8:06 pm
north korea refuses to confirm the relationship with kim jong-un and has been demanding the body back since day one. global news 24 hours a day, powered by more than 2600 reporters and analysts in more than 120 countries. i am nina melendez. this is bloomberg. the u.k. as we found out a few hours ago, another step closer to quitting the european union. the prime minister has permission to launch the process. the u.s. is closer to the first rate hike of 2017 as policymakers prepare to meet tomorrow. ournt to discuss this with global economics and policy editor kathleen hays. , iore we talk about brexit have to ask you an impromptu question about the winter storm. what is the members cannot get together physically? kathleen: so far, there is no reason to think they can't. they could certainly hold a videoconference. fed officials have had special meetings for that in the past.
8:07 pm
so much warning on this winter storm. i changed my plans last night when i realized it could be serious. i had planned to come to washington on tuesday. so far, no announcements from the fed. if they are like me, they i want to beded, at that meeting because kathleen hays is going to be covering it. just getting. so they probably are already here. betty: they probably are, so we can rest assured that is going to continue. , we have this bill that has passed and is going through a formality. -- this -- does this mean could this mean the breakup of the united kingdom as well? kathleen: let's put the pieces together. it is absolutely true. there was some high drama around this because the house of lords did not give theresa may a clean pass to move ahead and pass the bill so she could trigger brexit. parliament has to be on board,
8:08 pm
give her the green light. the other house, the house of lords, said they have a couple of amendments. so theresa and the government send it back to the house of commons. they passed it, so now the house of lords, they debated for a while, they came online, too. here are the next steps. the queen will give her royal assent for theresa may to go ahead and invoke article 50 of the lisbon treaty triggering brexit, getting the process going. this is likely toward the end of the month. in the hour or so since we have gotten this news, the times newspaper reporting in london that theresa may has been warned she will have to pass at least seven bills through parliament as part of the brexit process. they have obtained some documents that are reported as leaked documents, covering immigration, tax, culture, and more. it may be that parliament is not done putting roadblocks in theresa may's way just let --
8:09 pm
just yet. , ity: to go back to the fed seems like the ducks are in a row for the meeting. take a look at the market as well and what economists are saying. kathleen: think of all last year. the market really got it right. in 2016, the fed said they are going to do for rate hikes and that got whittled back to one. the market had never been on board with that many. 2017 is a different story. you can see it in a bloomberg story -- survey done march 7 and eight. some key findings are that now investors on board with the feds forecast for three 2017 rate hikes. march, june, and december is when they are supposed to occur. the fed predicted these three hikes in december. for the longest time, the market only saw one or two. let's take a look at a bloomberg chart now. what it shows you is a picture of how this changed.
8:10 pm
you can see the steps moving up. the yellow card shows you where the market expectations were dashed to hikes, june and december. two or three weeks, since so many fed officials signaled a may be appropriate to hike the rate in march, now you see the turquoise steps, three for 2017 instead of two, march, june, and december. as the fed gathers, let's hope they are gathering in washington, d.c. they could do a video conference. they will be debating, perhaps not so much the rate hike -- they have advertised is so strongly, if they step back, people say it would be a big loss of credibility. what they probably will debate is how much the economy is going to strengthen, how much higher inflation will go. we have talked lately about how ,ages have not pushed through markets have not pushed through accelerating wages. if that is the case, can't the fed go slowly? get stick with where was in
8:11 pm
december and a stick with the median of three hikes in 2017? when i am in the lockup with our fed team on wednesday, that is what we will be doing very quickly, counting the dots the fed is getting ready to release at 2:00 eastern on wednesday. yvonne: looking forward to that. looking ahead, intel hopes it is on a driverless road to riches. we will take a look later on. betty: up next, global property had a mixed when he 16. we will discuss the outlook with alistair elliott. this is bloomberg. ♪
8:12 pm
8:13 pm
yvonne: this is "bloomberg daybreak: asia." betty: a quick check of the latest business flash headlines at this hour.
8:14 pm
hong kong securities regulators said to be investigating the number two regulator of ipos in this the last year. documents relating to the work listing of a 2014 chinese seafood supplier, which had since been scrapped, have been requested. the regulator is thought to want to know whether due diligence was done. yvonne: cloud services company citrix is said to be working with goldman sachs to find buyers. shares in the florida-based company have risen almost 30% in the past year, valuing citrix at more than $13 billion. that is said to be putting off some potential buyers. betty: goldman sachs is redesigning its trading hub in downtown manhattan, tearing down walls between money managers to foster what it says will be a better investment performance. about 500 employees currently scattered across three levels will now sit on one floor. it is the biggest renovation since the building opened in 2009 and is designed to help workers better interact. yvonne: the global property
8:15 pm
markets saw a mixed year in 2016. our next guest says this year's spells more uncertainty and prices will remain under pressure. we are joined by alistair elliott, group chairman of knight frank, one of the top global property consultants. he joins us live from singapore. you say 2017 spells uncertainty. what is the biggest change a have seen in the past year and where do you see capital going? >> on the one hand, who would've thought 12 months ago we would have predicted the u.k. would leave the european union and donald trump would be president? i guess i would not be invited back. here i am, and it is not as bad as everyone anticipated. last year was full of uncertainty and this year looks like there will be uncertainty of equal measure. nonetheless, the markets have held up pretty well. ,es, there has been uncertainty
8:16 pm
but there has been activity. pricing in certain parts of the world has taken a hit, but trading is better than anybody would have forecast given the circumstances. yvonne: let's take it back to asia, alastair. i know you said in the past how asia dominates when it comes to where you are seeing things going. which is cities are you seeing the biggest investment in with property? >> the biggest cities within asia, we have seen fantastic growth in the residential markets in mainland china. and our index for the last 12 months, we have seen shanghai, beijing, and young joe all increased by 25+%. to balance the argument, we have seen much more challenging circumstances in the likes of taipei, tokyo, and deli in india. betty: i want to get your take on chinese buyers. we have seen these forex
8:17 pm
reserves rise for the first time in eight months. considering toy see if these new regulations and the crackdown on capital outflows actually taking a real bite. what does this mean for markets like sydney and melbourne, even hong kong, where we have seen a surge in buyers from the mainland? can china's buyers still be a big driver in the market now? >> if one goes back five or six thes, the chinese market -- ad buying chinese market hardly existed. we had several years of very significant growth of chinese influence. that is going to slow gently as these measures take place. nonetheless, we still expect the chinese market to be very prevalent, but joined by many other of the growing communities whose wealth is gathering around the world. we do an assessment every year as to how private wealth is increasing around the world. to thear, in contrast
8:18 pm
previous year, we have seen an uptick in the volume of people who have got private resources in excess of $30 million, and an increasing amount of that is, we believe beyond any doubt, going to find its way to the residential and commercial property markets around the world. well there may be a cooling now of chinese influence, we still expect that to have its place. we also expect it to be joined by a much broader raft of people looking for investment and diversification of their portfolio around the world. yvonne: i want to ask you about weang insurance and the deal have been talking about today, the $4 billion deal with the kushner companies. first of all, i am curious what you make of this deal by anbang insurance, which already owns the waldorf in new york city, but also whether other chinese companies might follow suit or use this as a model. >> i believe they will.
8:19 pm
we have been operating in the real estate markets around the pools ofere certain capital have been dominant for a long, long time. those pools of capital have now been joined by chinese investors of some real scale. the deal you have just described is hot on the heels of the announcement in the u.k. last , the chinesel company, made a commitment to exchange contracts on a billion dollars worth of real estate, big office building in the center of london. i'm sure that will continue. anchor: do you think it will go through, this deal will go through? >> i do. anchor: why? >> because i think there is a pent up demand. there is a pent up capital pool, and there are few opportunities of scale. if you look, there is a survey back in the u.k. published this
8:20 pm
weekend that tracks the 100 global investors and real estate. last year alone, they committed $300 billion more to actual box real estate, just short of $4 trillion. we expect that trend is going to continue going forward. property offers return, certainty, generally safety. in contrast to the equity markets, it provides a really viable alternative. if you're asking me, do i expect the trend in real estate investment to continue, i do. dressing chinese investors are going to be particularly drawn toward real estate as the pressure for diversification continues? i also believe we are going to see that trend continue. do you see regulators, the government in the u.s. are proving more of these deals by chinese investors? i think that is the question. how can't account for
8:21 pm
president trump's administration will view this investment and similar investments going forward. all i would say to governments around the world, as we have been observing for a long, long time now, globalization is here to stay, whether it is in general corporate activity or real estate. i believe governments have got to be incredibly careful if they start orchestrating a regime of tax were this encouragement of that investment, while also keeping the inevitable balance they need for inward capital to secure the long-term investment in their local economies. between taxingne andows and outflows discouraging them and stopping them altogether. the latter, i believe, would be
8:22 pm
a disaster. we are stay with us, going to continue our conversation after this break. i want to get your take on brexit and trump's policies. that was alistair elliott from knight frank. this is bloomberg. ♪
8:23 pm
8:24 pm
anchor: let's get back to our discussion was alistair elliott, group chairman of knight frank, one of the top global property consultancies. as you saw about an hour and a half ago, that bill went to the house of lords and we are going to go ahead with brexit in the u.k. you say this is actually adding to some clarity. what do you mean by this? >> look, since the build up to the european referendum last january, everybody has been saying, what if? we then had the referendum result and the u.k. electorate
8:25 pm
decided to leave europe. goingn had, what are we to do now, when his article 50 served? let's have some clarity. we now have that clarity. the u.k. markets have not done badly during this period of uncertainty, far better than anybody i know what have predicted. if we add to that the fact that we have now got, it seems, subject to parliament approval on monday, the government authority to issue article 50, i think people will say, bring it on, let's move on. we have got the clarity, now let's begin our dialogue with europe and see what it really means. anchor: so let's do some business, right? back here in the u.s., one of the top stories today has to do with the property markets, in particular shopping malls. i don't know if you have looked in the sector here, but it looks like there are hedge funds shorting the loans that are backing these malls that are slowly dying in the u.s.
8:26 pm
is this the next big short in the u.s.? >> i don't know the detail of the malls in question, and i don't know the detail of the retail market in certain parts of america. what i do know is the trend. the trend is that e-commerce is growing. statisticshe latest are the e-commerce represents about 7% of all retail trade and the predictions are that is going to double to near 14%, 15% by 2020. real estate is dynamic. we have to respond to these challenges. it does not mean disaster for real estate, it means change. selling properties, if that is what they become, if stopping shopping centers in certain parts of the country outlive their economic life, they have to be redeveloped. that is a challenge, on the one hand. the opportunity is what does you
8:27 pm
ling mean fortali the world of real estate? it means opportunities that will explode around the world. these companies and retailers, the disruptors, need different types of accommodation. the real estate fraternities around the world have got to stop weeping about the difficulties of the markets they are presented with and instead focus on the opportunities of creating a response to the massive demand and distribution around the world. anchor: as president donald trump awoken animal spirits in the real estate market than? >> president trump seems to have awoken a whole raft of spirits. he is a businessman. i think i take some heart from the fact that he knows the real estate world. hopefully for that reason, he will be a good partner in the real estate communities around the world.
8:28 pm
there is clearly going to be a lot of investment in america. we look forward to hearing how he develops his administration. anchor: we are going to leave it there, alistair elliott, group chairman of knight frank. this is bloomberg. ♪
8:29 pm
8:30 pm
8:30 in singapore, half an hour away from the open of trading. it looks to be a cloudy picture this morning. i'm yvonne man in hong kong. betty: i'm betty liu in new york. you are watching "bloomberg daybreak: asia. " let's get to the first word news. closer tou.k. is triggering brexit with theresa may winning parliaments approval to a vote article 50. she avoided a revolt by her own conservative party as the house of commons rejected amendments to the brexit bill. it has now passed the house of lords as well and just needs world approval. launch the process
8:31 pm
of leaving the european union possibly later this month. president trump sent ripples through wall street by backing a move to separate investment banking from consumer lending. a key regulator has backed the plan. it is not quite the original law from the depression era, but the idea would be for companies to partition investment banking in december and holding companies. president trump first raised the issue on the campaign trail and still supports it. much of the east coast is bracing for a blizzard, forcing a state of emergency in new york and new jersey. up to 20 inches of snow is forecast, canceling flights, closing offices and schools, and leaving public transport systems vastly reduced. the national weather service issued storm warnings for late monday night through tuesday evening for much of the northeast. toshiba plunged at the open on reports it wants to delay tuesday's earnings report due to the evaluation of its westinghouse nuclear unit. shares are falling on the news.
8:32 pm
toshiba has already delayed reporting once after chaotic preliminary earnings. it in specs it said to book a write-down of more than $6 billion at westinghouse. there may be a news conference later to explain the situation. global news 24 hours a day, powered by more than 2600 reporters and analysts in more than 120 countries. i am nina melendez. this is bloomberg. yvonne: time to see how the asian markets are shaping up so far. here is sophie kamaruddin. taking a closer look at tokyo, we do have the nikkei 225 posting a three-day advance though still love the -- is still above the 90,600 level. we are seeing the space rally even amid low volatility. taking a closer look at what is happening on the index, energy stocks leading the again while telco and for the state stocks are on the decline. leading the laggards, we do have the likes of toshiba on the
8:33 pm
decline. sorry, let me take a closer look at what is going on there. toshiba, as nina mentioned, we do have expectations it will be delaying its earnings report. toshiba shares dropping about 5.5% today. it has been struggling to get auditors to sign off on its filing. it is said to be applying for a one-month extension. if that should be rejected, it has until march 27 to submit earnings or face delisting. it is headed in the other direction. we do have mitsubishi rising about 7.5% after an arbitration court ruled that mhi is liable for breach of contract but it is only to pay a fraction of for a company having to shut down a nuclear plant five years ago due to unusual wear and tear of equipment supplied by mhi. mitsubishi is saying the
8:34 pm
decision will have a minimal impact on earnings. take a look at what is going on with korean stocks. kospi is emerging as the darling of investors in the emerging space. looking at how that has been playing out, we have the likes of samsung shares, a testament to that kind of resilience, samsung electronics rising about 4.3 points today. samsung fire also on the advance. certainly showing you that despite the issues domestically, the korean space is certainly looking attractive to investors at home and abroad. betty: thank you so much. ko let's return tosp those problems she mentioned of toshibai, where losses are in the billions because of its embattled u.s. nuclear unit, westinghouse.
8:35 pm
toshiba is considering selling the unit. asian players could be keen to buy. reed stevenson joining us for more on this. who may be interested in westinghouse? reed: there is a lot of companies out there, but as you would imagine with the nuclear business, there are a lot of issues. the supply chain for toshiba's nuclear unit originates in china, so chinese companies are a potential buyer. south korea already has deployed third-generation nuclear reactors, so they are also a natural fit. another possibility are mitsubishi heavy, which we mentioned earlier. the only issue there is issues over technology and compatibility, and so at the moment, it really does look like toshiba is going to remain stuck with its albatross, the nuclear
8:36 pm
business, around its neck, because there is no easy way you can selloff a nuclear business. on top of that, any buyer of this business is going to want to buy it without any associated liability, which are causing problems in the first place. at this point, we are still speculating, and i don't see how we are going to get a deal anytime soon. as you know, toshiba has a lot of other issues, namely involving how it is going to reconcile its earnings report, restore its balance sheet, and also manage the sale of its chips business. anchor: they are seeking to extend the deadline for its earnings results once again. we remember what happened the first time. it was quite chaotic. what is in store for today? they are ready have released the figure for the right down at $6 billion. what are they waiting for?
8:37 pm
last night,reported it does look like they're going to seek an extension. it could happen in one of two ways. sources have told us they're going to look for one extra a month. if that is granted by the financial authorities in tokyo, they will have an entire month to prepare their numbers and have their auditors sign off. is an, what they do get automatic a day extension, which would take us until march 27. unless it actually does report formal, audited earnings, toshiba will indeed face delisting, which on its own will cause a lot of chaos in terms of investors, index funds, etc. anchor: you mentioned the list of challenges ahead for toshiba. one of which was its balance sheet. what are they doing to restore their balance sheet right now? reed: one of the key points is how to fill up that whole
8:38 pm
created by the nuclear business, $6.2 billion worth. the likeliest candidate is their crown jewel, their memory chips business. your phone, my phone, and a bunch of other smart phones across the world all pretty much used toshiba technology to store data and apps, etc. that is a robust business, a bit cyclical, but attractive. one of the main moving parts here is whether they can line up buyers soon enough. the company has indicated they are looking to decide on a buyer by may or june, but really it comes down to an issue of whether that is going to be soon enough. anchor: always great to have you, reed stevenson live from tokyo. talking about what is in store for toshiba today. in the meantime, the rba is saying it is prepared to do more to slow australia's booming housing market.
8:39 pm
the central bank's assistant governor spoke at a bloomberg address in sydney this morning moderated by haidi lun. she joins us to talk more about what she had to say. how far did she said the bank might go on this? it was very interesting because it adds to the general subtle signals we have been getting from regulators that perhaps there is a willingness to do more. essentially the government is saying that australian regulators can do more to slow andhousing bill and rain in put in place further restrictions when it comes to markets lending. she says these macro prudential measures, the 10% growth cap's when it comes to investor loans put in place more than two years ago, they have been effective in slowing down the growth. as time passes, that may start to slow. essentially, she said we are still one step removed.
8:40 pm
she talked a lot about financial instability, send the point is to identify whether loans are being taken up and could eventually contribute to destabilizing for the economy. take a listen. >> there is no doubt the actions did address some of the risks. nevertheless, the early experience just that while the resilience of both borrowers and lenders has no doubt improved, the initial effects on credit and other indicators we use to assess risk may fade over time. we are continuing to monitor the ongoing effects and are prepared to do more if needed. with -- it fits in with the rba's general message, saying they could do better when it comes to these things. it comes against the backdrop of overheated home prices in cities like melbourne and sydney. in sydney, over 18% growth in prices in the first couple months of the year. the fastest pace in 14 years. the complication is in cities
8:41 pm
like perth and a smaller cities, house prices are still following. she did speak about the challenge of applying one monetary policy across a very patchy situation across the country. we have also heard from other global regulators, the oecd saying the housing market, if it does become a runaway situation that could contribute to financial instability going forward. the market itself is split on what it thinks the central bank and australia will do. goldman sachs seeing a rate hike by november, j.p. morgan chase saying a rate cut to get the rest of the economy going. we are still waiting to see what happens. the third camp just thinks housing prices will come down naturally and the bank will hold. anchor: it is certainly mixed on that front. trump u.s., we know where wants to take apart the elements of dodd-frank. did the assistant governor talk about deregulation?
8:42 pm
haidi: i asked that to her, because given the interconnectedness of the global banking system, there is an argument that regulation needs to be global and consistent. she was not sanguine on this, but she did say we don't have any details. we have very little information about which parts of dodd-frank might be bullish, what is in the works. she did say what she has been hearing, regulations when it comes to small and medium-sized ranks, consumer agencies and their powers, they don't have specifics, but what she is hearing, a lot of it seems to be pretty u.s. centric. she does not think any change to the capital and liquidity rules will have much impact in australia. she does say she is not seeing a trend towards deregulation but that regulators are taking a cause. we have seen a lot of regulation over the past years since 2008,
8:43 pm
and now it is time to take a step back and assess effectiveness. anchor: thank you so much, haidi lun with the assistant rba governor. up next, made in manhattan. why eyebrows are being raised at a deal between president trump's son-in-law and a buyer from china. this is bloomberg. ♪
8:44 pm
8:45 pm
anchor: this is daybreak asia. i am betty lou in new york. yvonne: i am yvonne man in hong kong. let's get more on the potential meeting between president trump and xi jinping perhaps as early as next month. what more do we know about this potential meeting in april? issues andpite the tensions between the u.s. and china, the one thing that may get them to meet face-to-face at the presidential level is the
8:46 pm
rising concern about north korea and its nuclear ambitions. time, they have said talks are underway to get the presidential level meeting that could come as soon as april, just a few weeks from now. the white house press secretary has said they are working on dates and an agenda and the purpose of the meeting, among other things, but the main purpose will be to diffuse tensions around north korea and the recent deployment of the nuclear missile defense system in south korea. the presidential meeting is likely to be one of the areas that will be discussed by rex tillerson when he goes to china this week. he is going to go to china, japan, and south korea. we know that china is unhappy about the deployment of sad and south korea. it sees it as a threat to itself. but on trump has accused china of not doing enough in tempering north korea's nuclear ambitions.
8:47 pm
the u.s. admits a new strategy is needed regarding north korea's nuclear ambitions but no one can offer anything new or different. one point, when trump was on the campaign trail, he said he would be happy to talk to kim jong un on and share a hamburger with him. it does not look like they are keen on having talks at this point, which is something china would like. anchor: what about in south korea? how are things looking for companies with exposure to china? they were shaken up in recent weeks. rosalind: with china taking measures because of the deployment of sad. s in south korea, we know they have started rolling the missile defense system out, so's they are making a little bit of a recovery three -- recovery. also getting a bit of a boost after the president was ousted as the constitutional court upheld the impeachment that
8:48 pm
happened on friday, so we are seeing stocks recover after that as well. also the sentiment may be improving a little bit because of the coming visit by rex tillerson and perhaps on the perception that an incoming president maybe softer, take a softer approach toward north korea. anchor: thank you so much, rosalind chin there. ,taying on u.s.-china relations and developing $4 billion deal between china's anbang insurance and new york-based kushner companies. the company is linked to president trump's son-in-law and senior adviser, his last name, jared kushner, who stands to make a lot of money. ramy inocencio has more on this. we have been talking about this story all morning. tell us about the building that , 666 5th avenue. ramy: an inauspicious number.
8:49 pm
that.t go too much into isut this guy's graber, it not that tall, 41 floors were so, but it is in a good location in manhattan right across rockefeller center. it is exactly 10 minutes walk away. hollister is in their, the flagship stores. in 2006 when this was sold to kushner companies, you will remember that a couple of years later, the financial crisis. this caused a lot of turmoil for kushner companies. it is interesting to see the bounceback over the past 10 years. it gets kushner companies off the hook on their mortgage in terms of cutting that down by about 80% so they would only be on the hook for about 20%. look at what is happening on your screen. $400 million in terms of a cash payout, 10% of a $4 billion transaction. looking ahead, they have the opportunity to take a 20% stake in the towers retail space, much
8:50 pm
more profitable than the office space. i mentioned to some of the retailers there now. looking ahead, it seems they are keeping hush on what is going to be happening. the deal is not yet finalized, but kushner companies is talking with investors and lenders. one new york realty lawyer says this is a home run of a transaction. other people saying this is a sweetheart deal. anchor: we were talking to alistair elliott from knight frank and he said he thinks the deal could possibly go through as well. it does raise possible conflicts of interest. what are the companies saying about that? ramy: as you would expect, all the companies and the white house are saying there is no conflict of interest, or if there were, they are getting around it and addressing it. kushner companies is saying that have already taken significant steps to avoid any potential conflicts and they are going to continue to do so. the spokesman also said jared
8:51 pm
kushner sold his stake in the tower already to family members. critics are saying the optics are there. he is too close to the family, part of the family, and he needs to do more. the white house has said mr. kushner will recuse himself from any matter where his impartiality could being questioned. anbang insurance group also says they are transparent company and abide by the law. it is an interesting idea of optics when you see one of china's biggest insurers in business with in-laws of the first family. yvonne: getting that federal review is going to be key here. thank you. here is the roundup on the stories you need to know with today's edition of daybreak. ybgo onscribers, go to da your terminals and on your phone in a bloomberg anywhere at. cancan get a -- you customize your settings to get
8:52 pm
only news you care about. this is bloomberg. ♪
8:53 pm
anchor: intel is betting more than $15 billion under kilis cars. it plans to take -- on driverless cars. earlier, the intel ceo tells us the deal puts intel on the driver's seat for new car development. intelthink combining
8:54 pm
allows us to have a singular platform and to end for our customers, but more importantly, if you take a look at where driverless driving is going, the car manufacturers are today working on 2021 models, so you have to make a deal and build your platform today in order to be there in 2021 when the model start hitting the road. >> what has intel's approach been within the car? how might that change? in a largelready number of autonomous vehicles out there today. what this does is bring the best of both ends of the computing spectrum for driving together. think about it this way. the car will have two brains. that is vision brain going to take a sensor fusion, the radar, cameras, and combine that and build a view of the world. and there is another brain that intel currently plays in, which
8:55 pm
is going to take the information and drive the car. this puts those two brings together into one company and allows us to provide an end to end platform. >> you expect intel's other businesses to benefit from the autonomous car world? you talked in an email to your employees about data, how important it was in the world of data. >> you bet. there are going to be several flows of data in and out of the car. the first is simply the car seeing the world and adapting how it drives. that is what we call learning data. there will be a data center built by the car oems that will be developing their algorithms. there is another set of data that will come out of the car. you saw our investment earlier this year. that is really our venture towards building these precision maps, maps that have a lot more information than the maps of today. the third set is that these cars are going to be able to see the world as they drive.
8:56 pm
there's going to be visual data gathered, people on the streets and cars it is passing and all that visual information is going to be gathered and used in information models of what is going on. >> entries about the timing of this deal, not just because the lead time that automobiles require. for intel, at this stage in its growth and where we are in the global macro sense of technological change in spending. do you feel like you had to get ahead of competitors who might have looked? >> to be potential targets you bet -- potential targets? >> you bet. we knew this was a hot space, building this platform was important. largethis deal although is immediately accretive to earnings per share and free cash flow for the company. it is a good deal from that perspective as well. brian: that was intel ceo
8:57 pm
speaking on bloomberg markets. that is it for a sunday break a jet, but bloomberg markets: asia is coming up with rishaad and haidi lun. retail sales give us an idea of how the transition to a service-based economy is going, the objective is rebalancing. looking at investor production. this is more of the same, isn't it? how china has been growing, investment spending. we get reaction to those numbers when they come out in an hour. we also look at the view on chinese equities. and how clsa is coming along as well. ♪
8:58 pm
8:59 pm
9:00 pm
♪ it's 9 p.m. in new york, may day in sydney. i'm haidi lun. rishaad: i'm rishaad salamat coming to you from agent headquarters in hong kong. this is "bloomberg markets: asia." ♪ haidi: rishaad: brian witt a big hurdle as parliament gives a thele -- approval to start process. scotland wants another independence note.

18 Views

info Stream Only

Uploaded by TV Archive on