tv Bloomberg Markets Asia Bloomberg June 13, 2017 9:00pm-10:01pm EDT
,alt inflation raises questions investors want clarity about unwinding the balance sheet. attorney general jeff sessions saying claims he colluded with "an appalling and lie."able lik saudi arabia assisting there is no blockade of qatar. in light of interest rates going up, yields expected to rise as well. this is the alan greenspan conundrum, making another appearance in the treasury market, one that spells lower yields. cycle, theate hiking 10 year yield slipped,
mystifying the former chairman. and inflation appeared to mark a return to that conundrum, especially china, the biggest foreign haver of treasuries, so we money going into the treasury market keeping that rally going despite this environment where the cost of borrowing is going up. right, let's look at what is with 28 minutes before the start of the session in hong kong. here is sophie. the dusting off the tech route, limited impact in the market sanguine about the upcoming fed decision, but the dollar helping support asian currencies, led by the korean won, snapping a three day drop.
treasuries are keeping steady. market volatility has tumbled to a four-year low. a ship, retail sales, factory output, and fixed asset investment out of china in an hour. aussie shares climbing ahead of that. south korea, and improvement in the jobless rate to 3.6%, so the kospi is set for a new record. up .2%. oil the biggest casualty of the , crude trading just below $46 a barrel. brent also on the back foot, down .9%. ,ake a look at sovereign cds falling across the board. stocks and wellington
on the up despite that current account balance missing estimates this morning, and the nikkei 2250.4%, closer -- nikkei 225 up .4%. ahead of the china open, i want to show this chart, #31. we will hear from msci on whether on sure chinese stocks will be added to global indices after denied three times. investors are piling into a u.s. exchange traded fund invested into a-shares, about $138 million total assets. that is from less than $20 million in february. rishaad: right, in congress, the latest and first word news with paul allen.
thanks. attorney general jeff sessions has denied speaking to russian any interference with the twin 16 election campaign, calling suggestions of collusion and "appalling and lie."able he said while it appears russia did metal in the election come what he nothing but has read in the papers. >> i have no recollection of meeting are talking to the ambassador or any other russian officials. if any conversation occurred in passing during that reception, i do not remember it. anbanghinese insurer said the chairman can no longer perform his duties to personal reasons. he was detained on friday, although the note was later deleted. the report said the insurance regulator met staff on saturday,
but gave no details. recently scaled back an acquisition spree amid questions of ownership and financing. the new junior brexit minister is calling for the softest brexit possible when negotiations begin. steve akers spoke as prime minister may flew to paris to .eet french president macron the u.k. collection has profited speculation the country might seek to retain membership of the single market, which would involve the retention of the free movement of goods and labor. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you for that. is likelys rate hike to spark more questions than answers. economics and policy editor kathleen hays is looking
at this for us. it is really looking at the underlying details. why is that question becoming ever more important? >> it is a big deal to the bond market and the fed is no longer reinvesting all the proceeds from the balance sheet, then it will not be taking up supply in the bond market, pushing yields higher. then there is the complicated mix of if you are trying to reduce the balance sheet, that is less stimulative, so would that affect the number of rate hikes you do? the more people want answers to these questions. now, wirphours from is showing us that this is all but a done deal, the odds of the june rate hike. now, so this is what people are expecting.
if you ask me why, well, listen to the fed. unemployment is low, 4.4%, a 10 inflation has slumped, well, that is probably just transitory. who is onent foster board with rate hikes and removing stimulus put in place following the financial crisis things fed communications is problematic right now. the market doesn't believe the fed when it says what it is going to do. they need to communicate lette . believenot the markets the economy is different than the fed believes. it is because the markets have come to believe that fed will do this, but look how they behaved spread ort, so that diversions between market expectations and what the fed seems to want to be saying it is
partly a creature of the fed's challenges at communication and its desire to be highly discretionary. failure of the fed to fully spell out its balance sheet strategy, he says it has created a conundrum. how would this mixed together? you are hiking rates, but not doing anything on the balance sheet, so how does that affect of the path of policy? bloomberg, and editorial coming out urging the fed to spell out the balance sheet. it is time for the fed to let us know what it sees and figure it out so the markets can move ahead fully informed as to what the fed is speaking and what this path will look like. keenly awaiting those comments. maybe it will shake the treasury market at of its global slumber.
he was told to surrender his passport. he moved to england last year saying he wanted to be closer to his children. rishaad: a jury in the u.s. tried three former nomura bond traders. they began deliberating after a month-long trial of the former traders. the three are accused of lying to customers about the prices of mortgage-backed securities. spoken publicly about plans for building a self driving car. ceo tim cook described autonomous vehicles as "core technology" that he views as critical. we see it as the mother of all ai projects. it is probably one of the most difficult ai projects actually so autonomy is something that is incredibly exciting for us, but we will see
where it takes us. we are not saying from a product ,oint of view what we will do but we are being straightforward that it is a core technology that we view as for important. well, the markets are almost 100% sure that there will be a rate increase this week, traders are looking for information about plans to unwind the balance sheet. thank you for coming in. deal, and then of course as is always the case, we look at the statement and wonder about rate hikes in the balance sheet this year. >> definitely. believer that there will be a rate hike in june and maybe the end of the year, so
that big question will be the timing because inflation to be subdued across the board and in the markets, and regarding the a clearnce sheet, indication of when the fed is starting to scale down the balance sheet that we do not have any clear information about the plan and how they are going to proceed in terms of pace and in terms of conditions. that we get more clarity in september at the meeting. been priced inas with the equity markets currently and the bond market as well because we have this conundrum there where yields are going down and prices are going where we have this so-called alan greenspan conundrum. >> the market is probably a bit complacent regarding rates in
the pace of action when you look at the forward curve. for 2017 and 2018, this has been clearly supportive for risk assets, emerging market assets, but also equities. or broadof inflation revision in terms of fed communication could drag down market sentiment. rishaad: i'm going to bring up the chart, #9186, showing this conundrum, where interest rates have been going up at the same time we have yields going down. in previous happens times when we had a wall of money that went into treasuries, and then the price goes up. could this be down to chinese money coming in as well?
questionsthe biggest is the lack of safe haven assets among financial markets. this is why a lot of investors including foreign investors have stuck to u.s. treasuries, and that could be a risk given that higher rates in the u.s. could notly trigger some kind of necessarily so much a market correction in the u.s. because we think the u.s. economy is on a solid footing in terms of economic momentum, but cracks and some other places, including emerging markets as well. -- butinue to be emerging-market equities, for instance come up at any kind of market sentiment is a wake-up call regarding the pace of action and also inflation could
vigorously and could be a director markets. haidi: it is hard to imagine that given the sleepy state just about everywhere. we are seeing, were basically everything has rally at the same time, but you have the fomc decision, a weird situation where volatility for treasury markets are so low, a four-year low, do expect any commentary on the balance sheet unwind and where we go from here to shakeup volatility when it comes to the bond markets? >> i think that is very clear and at the forefront of the fed concern, to avoid any repetition of the taper tantrum. signals been a warning that too much communication or
two of aggressive communication from the fed would be a market trigger a follow to duty. i think that -- trigger of volatility. when the u.s. economy is on a rather robust footing or pace of she will starty mentioning the fact that later in the year that the fed will start to decrease or scale down its balance sheet, but we do not expect too much detail about that, and i think it would be the first foot in the water regarding the official communication about the balance sheet. are also nota, we seeing signs of real inflation. give athink that will window for central banks to hold, or in that case of australia, a lot more voices saying the next move will have
to be a cut? that central banks .re slow-moving animals it is not because inflation is subdued, butre san could be a risk of being caught by a further pickup in inflation. that is clearly an indication that underlying inflationary forces are clearly softer than initially thought, but in terms policy, core inflation is likely to continue and the on.oss 2017 if you look at labor markets, they are getting tighter and tighter. u6, and output gaps, we
for theter conditions productivity sector, so all these factors will play out at some point and push-up inflation. rishaad: thank you so much. breaking news. hours after we had the chief executive of uber technologies travis kalanick say he will take an indefinite leave of absence ofm the company because increasing pressure over sexual harassment allegations and concern about the corporate culture there, an uber board member is resigning. this is according to the new york times after he made a disparaging remark about women at an uber meeting that took place on tuesday as well. this is according to people with knowledge of the matter according to the new york times. it seems like more trouble being heaped on and questions being
haidi: the u.s. attorney general jeff sessions has emphatically denied having improper meetings with the russians as he addressed the senate intelligence committee. a strong rebuke from sessions. >> that's right. everything we expected in terms of pushing back against allegations, but accusations of window, secret in you -- innuendo, and obstruction of justice. sharp words mr.
sessions had with the senator from oregon when senator wyden -- hehim why he was recused himself from the fbi investigation here. mr. sessions pretty much snapped. >> they are none. there are none. i can tell you that for absolute certainty. innuendo beingt leaked about me, and i don't appreciate it. there are none, no reasons as to why he recused himself. the he explained that because of a doj rule saying if someone has been involved in the campaign, they cannot be involved in an investigation. he said he never spoke with russian officials, but said he did not remember speaking with the russian ambassador during an april 2016 reception.
he also said russian collusion suggestions regarding him were "appalling and detestable lies," and said that even though he recused himself from the russian investigation, it was still within his purview to sign off on the comey firing. still a lot more to come in the days and months ahead. rishaad: thank you for that. i look at markets, this is what we have towards the start of the session in hong kong. , atpremarket auction period slight gain, .25%. ok, and futures contracts flat to start the trading day. up, anbang intrigue, why
rishaad: quite a different scene then yesterday, a tropical storm. 50 seconds away from the open in the territory. i am coming to from bloomberg's asia headquarters. seeing markets breathing a sigh of relief, wondering when this tech tantrum was going to stop, whether it was a blip or crack in the bull market. we seem to have the answer now.
let's get over to sophie taking a look at the recovery rally in asian markets as we are awaiting crucial chinese economic data, but shanghai and hong kong opening now. sophie: we do have shanghai down .2%pening weaker, after adding .4% tuesday. seng rising, led by consumer stocks. we do have the pboc daily fixing the yuan slightly, the offshore yuan gaining for the first time in five sessions as the pboc unlikely to track fed policy. i want to check on early movers in hong kong. 's chairman said to be unfit for the job due to personal reasons.
rising 11%. rishaad: thank you for that. i look at what has been happening in the gulf. let's get first word news courtesy of paul allen. saudi arabia insists there is no blockade of qatar and will provide any food and medicine needed. allforeign minister said qatar's ports and airports remain open. saudi arabian closed the soul land border and let other countries to cut off diplomatic links over the country support for terrorism. >> the ports are open, the airports are open. we have denied them use of sovereign airspace. this is our right. for qatari airways and
qatari owned aircraft, not anyone else. there is no blockade on seaports. they can move goods in and out whenever they want, so technically not a blockade. paul: an american student jailed in north korea has been freed and medevac out of the country. his parents say he has been in a coma since march last year when he was convicted for acting against the secretive nation. said hisrson department has secured his release of the direction of president trump. pyongyang confirmed the news but gave no more details. bill gross has repeated his warning that markets are threatened by low interest rates, aging populations, and global warming. , thes are near u.s. highs economy expected to grow 2%, extending what some are calling secular stagnation.
bysaid "don't be mesmerized blue skies because markets are increasingly at risk." australian consumer confidence 96.2alling, the reading of is down from may. the survey found confidence anz.nged by rival franklin templeton says a worsening market may force the rba to cut rates early next year. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. one of china's most a quiz city of company says its chairman has stepped aside for "personal reasons." the news from anbang insurance follows at attention by authorities on june 9.
do we know? there have been rumors circulating for quite some time now. that's right. we have had rumors for weeks if not months about this. has been on this aggressive buying spree since 2014. in 2004, and a decade later, spent almost $2 billion buying the waldorf a a -- a story of astoria. there was a report the chairman had been taken away, but then that was deleted. thee was a statement that chairman is no longer able to perform his duties and is
stepping aside for personal reasons. this is in the context of a crackdown on risk-taking by insurance companies and conglomerates. in focusnbang has been by authorities and regulators to use insurance policies to fund acquisitions, also concerns about it's ok corporate structure. case inhigh profile this push against risk-taking. fosun andhe heads of another securities company disappeared. this has happened before. extremely surprising to many china watchers, but significant that anbang has tentacles that spread far and wide. think churchill referred to russia as a country that is a mystery wrapped in an enigma, it is a bit like this
with anbang, isn't it? it is an apt analogy. the chairman is married to the ,randdaughter of deng xiaoping the leader until 1989 and continues to exert influence in china until the early 1990's. reports from the new york times suggests that the company is ,'s wife, andby woo family members. they expressed interest in pullingcompanies before out. in 2016, they spent $6.5 billion buying u.s. strategic hotels and resorts and made a bid for starwood hotels, $14 billion, putting them in a bidding war with marriott hotels, then pulled out mysteriously of that. andre waiting for anbang
the authorities to speak as fore may be implications its partnerships internationally, and that is what we will be focusing on in the weeks ahead. rishaad: thank you very much. taking bullish bets on china's equities market as they await the msci decision on whether a-shares will be added to benchmark indices. tell me a little bit about what is going on. we have been here before, haven't we? >> three times before. to moretioning now has narrow because msci has narrowed the number of stocks it can be added to its indices. on tuesday, june 20, we will a decision wednesday early hours hong kong time. kong -- isted in hong
rishaad: let's bring it up. .tf's, all etf's >> kong andsted in hong focusing on large cap's, 169 companies, all large cap's come a-shares. on the right-hand side, it is mainly the difference between bullish and bearish options as negative. that is quite rare. rishaad: what does that tell us? >> if you want to protect against -- if you have any significant position in think the fund will gain, it is more expensive to do that than protect against losses. beforeals a bullish bias the decision we here next week. rishaad: there you go. that is their thinking anyway. two things, one, have the
issues msci had issues with been resolved? secondly, do expect massive inflows as a result of a positive decision? >> that is what some investors are saying. this is why they are positioning before the decision, not only that these shares will gain, but we will get inflows into the funds. is less ambitious than it has been in the previous three years, so goldman sachs is saying there is a 60% chance we have been here before, but burned before. remember the 2015 high and low of the market, $15 trillion wiped out, so you don't want to be too strong on the wrong side of the bed. haidi: that's right. you never know when it comes to chinese markets, do you? need ofp, in
haidi: this is "bloomberg markets: asia." i am haidi then in sydney. rishaad: i am rishaad salamat in hong kong. ,he in the oven era for coal falling by a record last year with china burning the least in six years. to levels noted seen since the 1970's as economies are shifting to clean trump, although president wants to revive the coal industry in the united states. haidi: carlyle group expects us
s to raise $5 billion to six pay and dollars for a buyout fund, aiming to close the new fund in the second half. competition has increased in asia with sovereign wealth funds, pension funds, and large corporations joining the fray. rishaad: indonesia has reached a settlement with google over a long running tax dispute. documents show it paid just $390,000. but nol has been struck, details were provided. haidi: some news crossing the bloomberg breaking at the moment. group has entered voluntary
aministration, saying voluntary administrator has been named. renegotiatingntly with fox and cbs programming. they are looking at the potential sale or recapitalization of the group. just confirming that. these operations will continue and business will carry on as much, but confirming this. we have been bracing for this since shares were put in a trading halt yesterday. right, the row over atlantic crossed the as both sides try to garner support in washington. the uae ambassador says qatar should not be allowed to finance extremist groups.
arabia denied the row amounted to a blockade. thank you for joining us. , and whatwe with this is the real motive behind saudi arabia, the you a e, brain -- , and saudihrain arabia getting together? >> three factors. first, a long-standing tension between qatar and its neighbors over qatar's support for the muslim brotherhood, the hosting of al jazeera, which has programming that criticized the saudis and other gulf leaders. that has been a long-running dispute. part of the problem is they have lost patience over that. there is another factor. , goodmaintains close relations with iran, and what we are seeing is a push by saudi,
uae, and other sunni players on expanding influence pushing back. president trump's visit to riyadh has given them something of a green light to put ,dditional pressure on qatar although the americans may not --e expected the m a roddy's them to accelerate to the levels they have. rishaad: what about president trump and his role in the crisis? did he get the green light to the saudis to initiate this action? what does he do about it, if anything? >> it's not clear. look, it appears that during president trump's visit to saudi that some agreement was reached, some green light was
given, placing pressure on qatar . it has been reported that they complain to the u.s. about this and given them some license to do something. what is not clear is whether the kinds of things they have done exceeds what the u.s. was anticipating. week, end of last secretary of state tillerson was urging all sides to step back from the escrow the eskimo tory steps they have taken. escalated steps they have taken. are seeing these contradictory signals from the trump administration, the president seemingly supporting the secretaryell of state has tried to scale back and calling for cooler heads to prevail. washington going to have to
come out with a cohesive stance on it? >> they will. they have a military base in qatar, an enormous facility that plays a critical role in strikes against islamic state in syria and iraq. afford thisnot conflict between saudi arabia, to get out of hand. haidi: the latest we heard from the qatari foreign minister is we don't know what they want and don't know how to respond. we have seen these tensions before. kuwaitisst, often the will step in to mediate and the qataris will agree to address , then thingsssues tend to calm down.
that it haserent is escalated to such a level that it has become more unpredictable. qatari royals popping up in egypt with the suggestion that they might be pushing for some kind of regime change. in the end, all sides will have to negotiate the outcome simply inause it is too important terms of the u.s. military network in the region. the u.s. will not shift its military base from qatar in the midst of the war against islamic state. it is potentially getting counterproductive, where they are pushing qatar into closer cooperation and in the hands of iran as some of the sanctions imposed on them. also createdn't it consternation and concern around the world that if you have a u.s. base on your soil such as
qatar that you will not be entitled to support from the u.s.? i'm talking other countries like south korea, greece, maybe even taiwan, it is under the umbrella of u.s. protection. think this relates more to president trump and his mercurial personality. concernsseem to be amongst american allies all over the world that being and hosting a u.s. ace does not necessarily protect you from president trump's attacks on twitter -- base does not necessarily protect you from president trump's attacks on twitter. rishaad: a conviction appeal has been dismissed by hong kong's top court, this billionaire who
rpg gameon fans, a new on the switch. this is not a surprise because the pokémon franchise has always been important for nintendo hardware and performed especially well on mobile devices. it will be interesting to see how it will play out on the hybrid device. announced a new installment of a franchise that dates back 16 years. there is also new content for the title that has carried the switch until now and is a welcome addition. e sports, they have tournaments and have announced a boxing game, but a third-party title is coming to the switch, a mix
between rc cars and soccer. there have been plenty of nintendo only properties, such as a game with yoshi, super mario, so a lot of fans are feeling pretty good about what out there for the switch going forward. haidi: switch, how has it been doing since its release? >> nintendo has a positive out look on the switch. they expect to sell 13 million units by march 2018. the real comparison is to the units.l wii, 101 million the markets seem to be fairly positive and nintendo shares are
♪ announcer: from our studios in new york city, this is "charlie rose." charlie: we begin in the middle east and with the gulf state. last week, five middle eastern states, egypt, saudi arabia, the united arab emirates, and yemen severed ties with qatar. the goal was to isolate the country politically and economically for its alleged support of terrorism. the standoff that the u.s. in a difficult position, since both sides are american allies, and the u.s. has 10,000 troops in qatar. the state department has offered a resolution but it has not been , accepted. joining us is sheikh hamad bin jaimin