tv Bloomberg Markets Asia Bloomberg July 9, 2017 9:00pm-12:00am EDT
rishaad: i am rishaad salamat. on g 20 up with strong words trade and climate change. ivanka trump stepping into the spot light, critics asking why she was allowed to sit in for her father. raised eyebrows there. also this hour, the latest inflation numbers from china, early indications of more stability in the economy. this is "bloomberg markets: asia." ♪
rishaad: kicking things off with , getting those numbers. how this hass us all turned around in recent months. , the factory gate price number we did have, and well, expecting the same level at the moment. the government crackdown on risky lending. restocking inventories, and that would mean they do that despite the recent upswing as well. 5.5%, cpi coming out. holding steady, that
stabilization story that beijing wants to push for this year. we will look at import prices and the impact of technology, whether that is keeping inflation and wage growth far away. asia, singapore, malaysia, and taiwan coming online. asian shares tracking wall street. japanese stocks and shares in sydney leading gains. tokyo rising the most in three weeks despite the disappointing core machine orders data this morning. the yen trading near a two-month low, although now deepening losses, 114.18 right now. kospi higher,
consumer stocks dropping over 1%. on korean won building gains, up .3% against the dollar. yieldsre, aussie pond continuing to drop, tracking what we saw with u.s. treasury's , the 10 year yield for the u.s. trading around 2.39% here it , oilng at commodities making gains, although we did see a drop on friday, so newer crude a low $45. a fairly decent start this monday, but bearish signals are looming. 183 five illustrating how asian shares have fallen below the 50 day moving average, the line in pink on this chart. this after its worst week cents march. march.e broadly, tech heavyweights contributed the most to the
region's selloff. some sons resilience could foreshadow a continued rise in asian tech shares. marketart shows you its cap against apple in the bottom panel right here. valuationng that could be low, especially in light of revenue topping apple. some sons revenue steadily on the up in the white line, while apple has been fluctuating, and heads up when it comes to trading in hong kong. at what we a look have in the session so far this monday. rishaad: thank you very much indeed for that. right, let's get to first word news headlines and joined paul allen. paul: thanks. japanese prime minister shinzo abe has seen the approval rating
for his cabinet slight to the lowest level ever. a survey shows the rating falling to 31.9% from 39 point 8% a month ago, the lowest since shinzo abe took office in 2012. the biggest reason given for not supporting the premise or was a lack of trust in shinzo abe as a person. president trump's eldest son has confirmed meeting the russian lawyer with kremlin ties. in a statement, donald trump junior says jared kushner and then campaign manager paul manafort also attended the meeting. trumpw york times says junior agreed to the meeting on the hope of finding damaging information about hillary clinton. iraq says it has liberated the northern city of mosul from islamic state three years after its fall. troops and u.s. backed kurdish fighters launched an offensive eight months ago.
muzzle was where the islamic state leader proclaimed the group's intention to found a pan-middle east caliphate in 2014. republican party's hopes of repealing and replacing the rocks with passage of any plan before the august congressional recess in doubt and rival factions pulling an opposite directions. bill cassidy declared the plan a nonstarter, while ted cruz proposed allowing insurers to offer cheaper plans with less coverage. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks. the g-20 wraps up with most the nations pulling together to fight protectionism, but president trump cut a lonely figure at the meeting in hamburg when he came to the issue of climate change. the g 20 meeting in hamburg
was a weekend full of confrontation that yielded little in terms of results. protesters gathered, 100,000 demonstrators confronting 20,000 hamburg police officers, but in the end, limited local stores was set cars ablaze, and through molotov cocktails. president trump confronted vladimir putin on the alleged hacking of the 2016 election. angela merkel and emmanuel macron confronted putin on the ukraine, and shinzo abe confronted president xi jinping on north korea. only one bilateral meeting yielded tangible results. trump agreed on a cease-fire in syria, but how long will that last? president received a lot of criticism for allowing yvonne could trump to sit in his chair during g-20 meetings. the biggest confrontation was trade, where they agreed to fight protectionism, but
allowed members to use defense mechanisms where they see fit. the g-20 one now demand more transparency when it comes to steal subsidies and try to fight dumping and bottom barrel prices. when it comes to climate change, there was always going to be an issue because the u.s. pulled out of the paris climate accord come a but the other 19 members said there is no turning back. our next guest organize the first g-20 summit in washington in 2008, and economic affairs advisor and sherpa for george w. bush. daniel, thank you for joining us. well, g 19 plus one at the end of the day in your view. the united states certainly entered the summit in a different posture than it has pically entered g-20
summits. the united states comes in with a robust agenda on trade, climate, financial and regulatory development, and here it was on the back foot on two critical issues, trade and climate. rishaad: right, and what about when hesage, perhaps had his daughter sit in on one of the conferences as well? has beeni think a lot made of that. i'm not aware of any instance where the relative of a leader had substituted for the leader at the table, but it is not unusual for a minister to substitute for a leader, but if we can come back to trade and emerged.two things in fact, the pledge on protectionism looks very much like prior pledges with the added emphasis and recognition
use states may of course trade defense measures to deal with unfairly traded goods. the other focal point in the discussion was excess capacity in steel and other commodities. excess capacity is a real problem which the leaders have come to grips with. the principal actor in this regard is china but the united weakenedme in and a position because of the threat of unilateral action to restrict steel imports. the real news was on the periphery, and that is the deal that was announced between the eu and japan, where they reached a free-trade agreement in principle, and the market access the eu will now enjoy in japan was precisely the market access u.s. exporters would have enjoyed in japan under tpp, so
this underscores what happens when the united states takes itself out of the trade liberalization game. >> i think the operative word when you talk about a free-trade agreement with japan by the eu notthat in principle, it is a done deal, so how much is politicking going into this, setting out as free traders against the attacks mr. donald trump? >> certainly there was some political messaging in fault, but that is to be expected. theact, i think certainly critical market access elements of that free trade agreement have been agreed. the turfok at reduction schedules on both sides that have been agreed, the agricultural commodity trade, and a number of other things. yes, the vexing issue of the investment court has yet to be
resolved, but it would understate the accomplishments to say this was all just words. much has been accomplished in that free trade agreement. given the lead up to g-20 expectations and north korea fact dominate events, the that north korea did not make it into the final communiqué, what you make of that? i do find that somewhat interesting. north korea figured prominently in the bilateral's between president trump and president xi jinping, president trump and president putin, as well as prime minister shinzo abe, so north korea was a significant element of discussion bilaterally.
not makerised it did its way into the declaration as traditionally leaders feel that global problems require global solutions, and a united front at the main global table. haidi: stay with us. plenty more to talk about as we look at the outcome of the g-20 meeting, as well as where china and u.s. relations sit at the moment. coming up next, why the great china reflation story is not looking so crash on after all. cpi and ppi numbers in about 20 minutes. this is bloomberg. ♪
peddling concerning the ex-president. jay y. lee looking at being the in jailder of samsung on corruption and bribery atrges, refusing to testify the president's trial at the moment. the south korean ex-president will not be attending court today, being blamed on health issues. as soon as we get more, we will bring it to you. continue our conversation. follower ofas a these meetings, in your view, what was achieved, if anything, and what about previous meetings? where have we moved to in previous meetings, and how far have we moved in this one? think there were a couple of positive steps.
if you look at the section of the declaration on overcapacity and you see the commitment that is overcapacity on steel and other commodities and the commitment to report by august and make policy recommendations i november, that is very important. reasons, one,two coming to grips with a real problem in the global economy, but also an effort by other leaders to forestall unilateral action by the united states on restricting steel imports. that is number one. number two on climate come at united states obviously went in with a weakened position because it had announced its withdrawal from the paris accord. that was unfortunate, and frankly retrograde. nonetheless come the leaders did a good job of finding common ground where they could, but not papering over differences.
energyrst paragraph on security and climate change identifies a number of areas where leaders and countries can work together to chart a lower carbon future through sustainable energy programs, innovation, and technology. the parties did take note of the united states decision to withdraw from paris, and the united states and factor dropped the footnote to a number of other reports saying it was reconsidering its position on climate, but could not join the substance of those discussion papers on climate. leadersess, i think the did right to focus first on the areas where cooperation was possible, while of course taking note of the rather unfortunate u.s. decision. dissectingave been this narrative of the united
states in the age of trump withdrawing from global leadership, the vacuum left, and does it get filled by beijing or paris? how do you see the story continuing to be written over the weekend? weekend did lend some support for that narrative the united states -- that narrative. the united states post-world war ii helped to construct an international order built around the rule of law, multilateralism, democracy, respect for human rights, trade theralization, so you see institutions, the un security and it is noto, unfair to say that president trump has expressed skepticism about these institutions and
about a continued leadership role for the united states. thatnot think however vacuum if you wish to call it that will be filled by china. china has said some encouraging things, for example that president xi jinping at the world economic forum in davos stated the commitment of china to an open economy, democratic principles, is very much in doubt, so i don't think that china will fill that void. be filled,d is to and hopefully filled only toporarily, we need to look president emmanuel macron, chancellor merkel, and others to help lead the way. haidi: what about economically? one thing beijing would be relying on is one belt, one road, it would be aiib. >> yes, but there is a view that
arebelt, one road and aiib vehicles for china to export its overcapacity. china's words and rhetoric have yet to be matched by true trade liberalization internally come up true relaxing of investment restrictions, by a true in embrace of the nondiscrimination think china has a ways to go in order to have domestic reform match its promising rhetoric. haidi: thank you so much for that, great insights from daniel price, the organizer of the first g 20 in washington in 2008. coming up, asian shipping stocks getting a boost after cosco buys orient overseas.
♪ are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: we are counting down to the open of markets in china and hong kong. taking a look at the hong kong premarket session, this is how we are shaping up. a good session on wall street overnight from a strong nonfarm payroll numbers, and of the week ahead when it comes to fed speak with janet yellen testifying to details ofooking for the unwinding of the balance sheet and the rate hike trajectory as well. we have seen a nice boost in in koreastocks listing
and japan on account of the of orientcosco overseas. take a look at that. 24%. ering to buy orient overseas. this would push the cosco group into the rankings as the third largest shipping line. are offering a 31% premium on the last closing price. the family has accepted that offer, and getting good comments from analysts, jeffries saying this is an attractive offer given that container shipping is just starting to recover. a wave ofen consolidation culminating negatively with the bankruptcy of hentgen shipping -- hanjin
shipping. rishaad: cathay pacific had its first full-year loss last year since 2008. it will take full ownership of a cargo joint venture called air hong kong. friday,in a filing on 60% of that era hong kong. it will be buying the remaining 40% from its partner in that joint venture, which is a freight forwarder of dhl and turn it into a fully owned subsidiary. the share price has had a good year, 20% up after a torrid time of it reporting that full-year loss. right, what we have got coming up, looking and trying to find out why the indian rupee has
here in hong kong as we start the trading day in a matter of seconds. well, taking a look at what we machine orders out of japan, big disappointment there, 3.6% down month on month, a decline of .6% year on year, way below estimates. janet yellen semiannual ,estimony to congress this week looking for guidance on what will happen with u.s. interest rates, and loads of data releases from the fed.
we are looking for cpi and ppi and china due out in a matter of seconds. inflation story front and center. if we get that beat, that would validate what the fed has been saying, that weakness in the economy is down to transitory factors. we are getting some statements when it comes to monetary policy from the fed governor, so lots of red speak for investors to be focused on, particularly key week's action in the fixed income space. we will see if there is that knock on effect when it comes to fx markets and equities. we are just waiting on these china, to come out of cpi and ppi, expecting to hold stable.
let's go to sophie for a quick look at markets. while we are anticipating a steady print for cpi and ppi, chinese stocks on the back foot, down .3% on the mainland, but the hang seng gaining .2%. property companies leading gainers on that benchmark. the honk sign snapping a two-day drop. snapping -- hang seng a two-day drop. i want to show you several chinese consumer stocks given the inflation watch we are on. the liquor maker has posted a 24% yearly increase in first-half profits. flipping the board to check on shipping stocks after cosco offered to buy orient overseas cosco up 6%, an,
orient overseas, surging the most in eight years. mitsui osk jumping, leading stocks higher. taipei,n adding 1.2% in so a nice list given that cosco -oriented combo there. heads up to trading in hong kong , shares of several companies suspended today. one company will make an announcement regarding a substantial acquisition, while hasre land's trading halt to do with a possible privatization. just getting the inflation data. bang in line%,
with estimates come no change from the month before. the estimates for consumer price , so steady as% she goes, stable when it comes to that. that is the picture out of china when it comes to inflation, showing that inventory buildup is taking place in some of that overhang when it comes to the producer price number as well. let's find out what is going on and joined paul allen. g-20 wound up with the u.s. further out of step than ever with its international peers. president trump flew home having been lectured on trade by china and france and receive platitudes, but little more, a north korea. the starkest difference was on climate. the g-20 called the accord irreversible. trump has pulled the u.s. out of the agreement. the president returned to
washington, saying it is time to work with russia and announced a joint cybersecurity unit with putin, drawing protests from both parties, and even the president's own secretary of with russia would not change until russia lived up to its commitments. president putin says he things president trump accepted his denial of meddling in last year's election. rex tillerson blue to ukraine to bolster support. after talks, he called on russia to exercise its influence over separatists fighting ukrainian forces in the east. trump tweeted he did not discuss ukraine-related sanctions during friday's meeting with putin at the g-20. in a diplomatic embarrassment, the president's press secretary labeled president xi jinping as the leader of taiwan. a transcript referred to president xi jinping as president of the republic of china, which is the official
name of the island beijing considers a rogue prime friends. he is actually president of the people's republic of china. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: asian nations have come out on top of a bloomberg survey of emerging-market currencies looking at currency resilience in the second half of this year, and the indian rupee, and the indonesian rupiah took first and third place. our reporter now joins us from singapore. david? when is quite interesting change happens in just a few years. remember the taper tram from -- taper tantrum. the reason why,
and there are a variety of factors. risks,l the geopolitical it is relatively immune compared to the mexican peso are the turkish lira. the local economies are performing quite well and .eserves have been built up if you look at the rupiah alone, there are about 350 million in reserves, so they have enhanced. overall, you're looking at strong favoritism towards them. the carry trade has always been bothular trade, and with currencies having high yielding bonds, they are attracted from that perspective. we are seeing vast inflows into the bond sector this year, supporting the currency. should this global bond reversal if you want to call it continue, what is the knock on effect going into fx and equities, but in particular here in asia? >> it depends on the pace of the
bond reversal really. we are seeing bonds move, but u.s. yields are still well off slowt highs, so it is a grind. as long as it is a slow move, i think the rupee will be attractive as will the rupiah. if the pace of acceleration turns up come it will affect all the currencies in asia because the carry trade is popular. the rupee and rupiah, as you look at them on a chart, both have been stable over the last few months. still keepill an eye on some of those currencies that are vulnerable. thank you. reacceleration, wages still stuck in low gear, so the question is will janet yellen acknowledged this diversions being a roadblock for inflation and further rate hikes
or the unwinding of the balance sheet? over to kathleen hays with more analysis. good news, not so good news in that jobs report, right? >> let's start with the good news, u.s. payrolls had a nice rebound in june after quite a deceleration in may. u.s.oks like the way the labor department measures jobs created at the companies, small companies, etc. is done in such a way that may be in may did not capture a surge of typical , peopleor summer jobs taking advantage of the added hiring then. 8348, and into btv you can see the white line, the jump of 222,000 jobs in june on the far right-hand side of your from 152,000 the
month before. the turquoise line is the three-month moving average. cases, there is choppy knows, but the trend is starting to move higher. even in the level of jobs created now, economists point and an be going lower, apartment did go up to 4.4% -- and unemployment did go up to 4.4%. peopled number of looking for jobs found jobs, so slack in the economy is being reduced, but not so much to boost inflation yet. rosege hourly earnings .1%. they have been stuck around 2.5%, 2.6% for months. one analyst says this will catch up with the fed and may be that roadblock we were talking about. >> at the moment, the fed is
still displaying this belief, almost a religious belief, in the phillips curve, namely as the unemployment comes down, wage growth will accelerate, but the longer it takes, the longer wage growth stays down here, the more problems the fed will have. gauge fed's key inflation rose briefly above its 2% is now 1.4%, steadily the seller rating. there is a big distance now between that level and the target. doesnalyst also said he not think there will be a december rate hike. he thinks there will be no more rate hikes because of the risk that if the fed moves now that they will cement inflation expectations at low levels. fed also putting out that monetary report ahead of janet yellen's testimony, the
semiannual testimony. they used to be called the humphrey hawkins. >> it certainly did. put itto lawmakers that together the fed. jobs are growing. inflation is the problem. the minutes released five days early, the first time the fed has done this. typically they give that to the house and senate, but they wanted people to have time to absorb this 56-page document. the fed expects the economy to and that will justify gradual rate hikes. we have heard that before. they expect to reduce the balance sheet, but did not give us a date. she will be testifying to the house on wednesday and the senate on thursday, same monetary policy report, usually the same prepared testimony.
we will depend on the acumen of the senators and house representatives to do their job and have her tell us what we want to hear. let's have a look at world interest rate projections, wirp . we want to hear these expectations are justified. follow that cursor, 16%. in december, the odds are almost 52%, but that is not very strong conviction yet either. have a number of speakers, john williams in sydney 24 hours from now. he has been a hawk. lael brainard, she is speaking at the newark fed conference on tuesday. it is a balance sheet conference. she has to sayt
rishaad: you are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. the latest business flash headlines. boostys hiring to investment in market operations in japan a year after it shut its cash equity business and cut 120 jobs. andlans to hire 10 bankers
sense that this fiscal year to advise on mergers and sell investment products. amongst is ranked 14th advisors in japan according to bloomberg data. pan-european stock exchange is $2.3 billion available for acquisitions and seeks to double in size and diversify. in amsterdam, brussels, paris, and lisbon, it once to capitalize on the post-brexit world. it says major transactions are possible despite the failure of deutsche's pursuit of lse. >> if you want to make money into business with the company's , the pool of savings in this group of 27 countries, 19 using the same single currency, then you have to be located in that part of the world.
chinese plane maker has one regional approval to start production. the plan has a maximum range of 3700 kilometers and competes with other jet manufacturers. orders from 19 asian airlines, but still needs approval to operate in the u.s. and europe. rishaad: inflation data out of china short while ago. thes analyze it with one of top forecasters. thank you for joining us. bang in line, steady as she goes? >> that's right. we are still seeing prices continue to go down and the pickup in nonfarm prices.
we should expect the inflation to stay between 1% and 2%. i guess it is hard to move about 2%. we do have a flat situation in china in the past few weeks. that may have some upside risks, think there will be a significant impact on china's cpi for now. can we: the thing is look at the data and say what the administration is concerned about, given that we have the big party congress later this year, so how far will people be distracted as we run into that? >> i think for this year, the key concern is not the economic growth. if we look at the data, we are on track to achieve 6.5%
growth. most think china could do better . one of the key concerns this year will be the policy risks and the potential political risks ahead of the party congress. agenda is really about containing financial risks, for example, financial deleveraging, therefore we will expect more volatility in the markets because we won't have a tug-of-war of war between the pboc and the financial and theions deleveraging campaign, so that will be a key focus for this year about the potential policy risks for china. this friday, we will have a big conference, financial work conference. they will talk about how we coordinate policy among the different regulators. that will be an important conference for this week.
what will be china's target? what is the framework for the financial deleveraging for china? this structural, almost a paradigm shift, the lack of inflation and wage growth globally, you make an interesting example about how it is playing out in china. you have strong car sales, but falling petrol prices. is this something the authorities can do anything about? that is something new, to allow policymakers to ask people like us. to mention the petrol consumption, this is interesting data we saw for the past few weeks. in april, we see the decline of petrol consumption despite
stronger car sales. the also may be due to technological changes in china. have a lot of technological changes, popular topic in china is about the sharing economy, so you can take the bicycle, the sharing bicycle, so that may have some impact on the fuel consumption in general, which means the prices may defy expectations as of this is something new for policymakers. i think we are seeing the early changes regarding how technological changes impact inflation. this tug-of-war between the markets, who wins? the pboc still? >> i think there is no clear winner right now.
we are seeing the financial deleveraging starting to take affect. at growth slowing down, which is good news for policymakers. it is still too early for them to lower her card against the potential financial leverage. that's why we saw for the past 12 trading days that the pboc has suspended open market operations. we should expect the situation words,inue, but in other i feel like the pboc has been doing better in terms of the daily liquidity management, so this will give them confidence to remain prudent and on a tightening bias. i guess we should expect more volatility to continue in the second and fourth quarter. haidi: it is always prudent, isn't it? thank you so much.
haidi: mongolia set to get a new president to be sworn in this morning. >> declaring victory also of the democratic party as president for the next four years. one of the wealthiest and most famous individuals and mongolia and one widespread admiration for his achievements. a 14 meter high statue of kangas con outside the capital.
, positioning it outside the capital. the ruling party holds a huge majority in parliament and he has picked himself as the man to keep the party and check. while he may have to abandon extravagant promises, he maintains a pledge to create jobs and tackle mongolia's wealth cgap. chord withn struck a those hoping for a larger slice of mongolians wealth. he insists he will welcome foreign investment has long as the mongolian people benefit. what has beener described as the longest and uglies presidential campaign. rishaad: right, markets in the
rashaad: 2 p.m. in hong kong, 2 --shipping charts as cosco makes a pitch for a deal that would create the largest container line the world and investors seem to like it. i'm haidi: in sydney, president hamburg hand by -- in considered a great success but others saying it was more like g19 plus one. this is "bloomberg markets: asia
." ♪ ♪ haidi: we are digesting that the latest inflation numbers out of china, producer prices and consumer prices holding steady. lacking when it comes to that indicator compared to producer prices coming in at 1.5%, consumer price index u sing expectations, and pti ck. take a look at this chart, we rter,aiting on loan sta loans expectingne new to show that pickup. with all the talk about the
economicing campaign, stability is key for fishing and there's quite a bit of money flashing through the system. how much is that this sustained growth as a result of credit thing at high levels. a lot of new slow coming in through the u.s. as well. we are watching the fed again. rashaad: semiannual testimony to congress. elter ofe a sw economic data, ppi, u.s. retail sales. when it comes to equity markets in this part of the world, a sense of positivity out there. a good start this monday to the trading week, chinese stocks are joining the prices swinging to marshall gains -- partial coming in and cpi
according to estimates. .ang seng kospi up,e sharesk says korean could rise. doubled .6in tokyo percent. we saw tokyo leading gainers at .7 percent. it was not disappointed when it came to that core machine order number appeared on investors in tokyo are shrugging that off. japanese shares higher for the first time in three sessions. there are some of the signs amid that data that orders from
manufacturers continued to pick up here to that could be a potential positive. taking look at the japanese 10 year yield, just a little under one basic point. boj's attempt to control the yield curve. it is leading gainer in the region but we have the percent.n down .2 yuan tradinge stronger against the dollar, .round 680 it is set to strengthen for a second day against the greenback. rashaad: let's find out what is going on with the first word
news. the g-20 wound up in hamburg with the u.s. further out of step than ever with the international group. mr. trump went home having been lectured on trade by china and france and having received little more than platitudes for north korea. trump has doubled the u.s. out of the paris agreement. the president returned to washington saying it is time to work with russia and he discussed a joint cybersecurity unit with president clinton. that led to protests from both parties. --the president returned to washington saying it is time to work with russia and he discussed a joint cybersecurity unit with president putin. secretary of state tillerson visited ukraine to reaffirm u.s. support two days after the first
meeting between president trump and putin. on sunday that he did not discuss ukraine related sanctions during his meeting with putin at the g20. mr. trump's press secretary has mislabeled xi jinping as the leader of taiwan. xi asanscript referred to the president of the republic of china, which is the name of the island xi considers a broker public. xi if the president of the people's republic of china. this is bloomberg. ♪ producer prices holding up in june, demand in the economy could remain robust in the face of regulatory curve.
-- curbs. steady as she goes is the message? >> look at the positive headline number when you look at the ppi. as long as ppi stays positive, that is not a bad thing in terms of debt. we are a long way from being peak in february where we were eighten point percent. ,f you step off from the view it remains of that ppi is a decelerating for the rest of the year. years in fact, but tell me something, the lack of inflation on this ppi is not good news for central bankers
globally? >> they had been having china was one big chunk of the global reflation trade, china was indeed a source for global reflationary for some time. is, with the china reflation story fading, one of the last remaining lights policymakers were hoping for, we had to global growth are doing ok but we are not seeing inflation in the u.s., the eurozone or asia. the bullishng reflation rates beginning to fade. jus haidi: we saw fx reserves rising. is there a sense of the pboc has
finished intervening? clearly theynever, are in a moment, capital rules,s reinforce strict they also had a bit of luck on their side. the u.s. the dollar has weakened and that has helped in significantly. countryrd to leave the to support a significant project. nonetheless, i don't think we can say for sure that the pboc can step away from the yuan for sure. if the economy is still going forward, ppi is a bit of a warning, some might point to the 10 tatian for the policymakers to let the currency weaken, if we start going down that road again, we will still be resurrecting and money will not leave the country as quickly and
the policymakers will have to make sure the currency does not go too far. affect andvaluation they are being helped by the cheaper dollar. you cannot leave this scenario will last forever. haidi: the sense that we can just get bored to 2018, -- can 2018 to theward to party congress for a more accurate look at what the economy is doing. >> there is the feeling there is not going to be much done ahead of the conference. other than keeping stable. there is the view that once we get past congress, we will start to see some of these, let's remorse painful structural reforms start to run through -- reformsnful structural to run through. now, that, right
seems to be the course we're going to stay on. rashaad: thank you for that. taking you to the mongolian capital. this is in front of parliament. why are we here, well it is all about a new president. it is a contest between a couple of heavyweights on the political scene in mongolia but the mongolian democratic party won. khaltmaa battulga is being inaugurated now. former a man who is a judo champion. watchdogying he is a for the abuse of power for the ruling mongolian people's party.
he says he will bridge the , thousands of families disenfranchised in underdeveloped and rural areas. he may be the anti-oligarchy candidate but many critics have pointed to the fact that he is a business tycoon and remains one of the wealthiest men in mongolia. here in the square where the president of mongolia is being inaugurated. , a country that has a fairly torrid time of it. the mongolian stock exchange is it just flat. oming up, is the bond rout in favor, we're going to go into fixed income with like rock later in the program. haidi: we'll take a look at what is moving the fx masters, bank
group, the properties development giant said to sell projects and hotels to sunac for 63.2 billion yuan. these names have been coming under pressure when it comes to business is investing outside of their core property development business unit here very interesting development. wanda selling to another hotel development group sunac rashaad: let's get up to speed with the business flash headlines. is gatheringd
strength with rising bookings and a return of tourists. on they are still struggling to recover from the attack in the and paris, france. surged.class fees >> the mood is good, there is optimism and we do feel that for more people because coming from overseas. haidi: barclays is on a hiring spree to boost market operations in japan. just a year after a shut down its cash equity business and cut 120 jobs. they are hiring and bankers to advise on mergers and sell investment products. barclays with ranks 14th on in march.n m&a
had gotten a treatment for their production of the comac arj21 jet. it has a maximum range of 3000 kilometers. order from 19 asian airlines and still need to go to operate in the nine they and europe -- in the united states and europe. strategy at the bank of america merrill lynch joining us. what is going to be the big focus and don't only is going to be janet yellen again? >> unfortunately, i may have to tell you that because it has been an issue of interest rate markets, bond market driving a bit of the dollar.
over the past two weeks we have been seeing a steepening of the u.s. on terror and the aging --ves provide some rashaad: only about the bond rout, does that make people perhaps a bit more inclined to invest in u.s. treasuries that yields have gone up or do they wait and see what happens next? >> i think it does left a little bit of the desirability to invest in u.s. trade. what has been correlating very closely with asian currencies has been 10 year u.s. term premium and that has been a gauge of how much investors investing inm of bonds. the yield they require. obviously it has been negative negative.s. but that
discount that investors are willing to take has been reduced to other than that -- i would be watching tomorrow's bond auction in indonesia. they'll be a gauge if investors are willing to give them the higher term premium. that is another point where risk to invest inite bonds is important. it becomes more favorable for people to say i will invest in u.s. treasuries more, it is safer. clearly indonesia have a much higher yield. the risk premiums are invested adequately. the hcb andels that the federal reserve will be normalizing their policy. haidi: this sort of global repricing of monetary policy
expectations, is this a real turn or a little bit of a blip, even last week was not be levels of the treasury has this year? >> i would not put it in the context of 2013 in terms of the tantrum we had then. the fed and other central banks are not wanting to repeat that kind of mistake. our research has indicated if we billion of $390 weance sheets unwind, probably expect to see indonesian bond yields selloff by 20 basis points, other asian bond markets fell off by basis points. we are focusing on that balance sheet effect. if we growth potential further rate hikes that is why this week is also important because
markets are expecting 1.5 that hike next year. tightening,ct more that could add to the pressure. it seems we are in a one way and that willisk be to the detriment of asian currencies that are relied upon by foreign bond investment. euro-yen is another interesting one. we going to need mario draghi to calm things down again? >> he tried to walk it back only the other week. at the end of the day, what is driving this expectation are two things, one that the data has improved and even if he tried to walk it back at the end of the day, the economic data speaks to itself and these ultimately to the mandate of that the ecb and
the fed. this issue of trying to target financial condition, whether financial conditions are to los e and you run a risk of financial instability which is the foods you to move ahead of the -- behooves you to move ahread of the curb. it becomes hard for driving to walk it back -- draghi to walk it back. when they had an operation like they did on friday, it reinforces their credibility and higher.he euro-you hien haidi: we're going to have to leave it there a great to have ratesed on the cohead of
rashaad: g-20 wrapping up over the weekend in hamburg with the united states more upset than ever with the international community. exceptionalism, separatism or just isolationism? >> isolated, that is how america and donald trump what after this weekend. you have to emmanuel macron and angela merkel to realize it is politically expedient at home for them to appear to stand up to trump.
that works very well in the domestic markets. we did see donald trump was smiling, he seemed a lot more relaxed than he had been at past meetings, like the meeting of nato where he was actively shunned by other leaders. on areas of trade there is a huge gap and leaders are prepared not to talk about things that were going to be particularly controversial which allow them to leave the meeting without too many public disagreement. the next attempt decided they would not talk about the wall. theresa may decided she was not going to talk about free trade to be able to go ahead and have some semblance of unity with the donald trump. when you look at the final statement, there was nothing in there that indicated donald trump had gotten anything he wanted to. on north korea, there wasn't anything. the russian meeting really --
rashaad: dominated? >> yes it lasted about 2.5 hours. if you don't get anything out of it, you establish a rapport between world leaders so if there is a crisis they need to be done with, they know each other, that is what the g-20 achieved this time around. it was that opportunity for trump to meet many of the other leaders. haidi: ivanka trump, controversy? >> there is always a want of color going on around the meetings. there was the picture of melania trump at dinner with vladimir putin. devonte the trump set in at one african a meeting about with donald trump has ste pped out.
>> china's producer price gains held up in june with factory gate inflation at five point 5%. gained 1.5%,es just below forecasts. demand remains robust in the face of regulatory moves aimed at curbing excessive borrowing. and i see controls on construction could weigh on demand for raw materials. japanese prime minister shinzo approval rating for his like to its lowest ever. the survey showed the rating falling to 31.9 percent from
39.8% among the go. that is the lowest since he took office in 2012. the biggest reason given for not supporting the premise or was the lack of trust in shinzo abe as a person. president trump's eldest son has confirmed meeting a russian lawyer with kremlin ties. donald trump junior says jared kushner and then campaign manager paul manafort also attended the meeting at trump tower. the new york times said trump junior agreed to the meeting in hopes of finding damaging information about hillary clinton. iraq has liberated mosul from islamic state three years after its fall alerted the world to the groups threat. u.s. back kurdish fighters launched an offensive with iraqi troops eight months ago. it was where the islamic state leader proclaimed the intention to found the pan-middle east
caliphate. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: good day, good start to the trading week across the asia-pacific with solid gains in hong kong. tokyo headed for its lunch break. shanghai down a fraction. sophie has more on all this. check on equity benchmarks, gains across the region, the hang seng adding almost 1%. the nikkei set for its first rise in three days, and sydney shares poised to snap a three day drop. the advance in seoul, korea picking up, .4%, and gains on the chinese mainland up .1% as well. in the currency space, the rising, leaving asian
currencies higher, gaining for a second day, the onshore yuan stronger for the first time in six days, the yen deepening the dollar.4.18 to say the rise in 10 year yields falling at around 2.41%, now hovering around 2.39%. asian bonds remained under pressure. in the commodities space, steel leading the plunge, aluminum recovering from the days earlier losses, and oil moving higher almost 1%, although new york crude below $45 a barrel. , on tracknally weaker , dampening enthusiasm for
bullion. janet yellen on tap in her annual testimony to congress. korea and hawkish central banks are ratcheting up tensions for asian investors. dex with its worst-performing since march move but put in a gain of 14% plus. we have more on this from singapore. what are asian investors main concerns as we enter the second half of the year? as you said, asian stocks start and oppressive had a slight pullback last week. for the second half for, asian investors are concerned about geopolitical tensions.
it does not seem like world leaders made much progress at the g-20 in resolving north korean tensions. asian investors are concerned about more monetary tightening amid mixed economic data. monetarynot sure how tightening would reflect on the stock market. , btvad: i have a chart 1835. a lot of the positive sentiment when it comes to technology shares helping things along. his that necessary spillover what is happening with the asian tech sector as well? some of the sentiments feeding into the index in a wider context is it just goes below that 50 day moving average. 200 day movinghe average, but what are the concerns here? >> asian stocks seem to be
willing to take the lead from the u.s. stocks for the short term. technology stocks, asian investors are still quite optimistic about the long run investment because they still see demand for technology, and in general, asian technology stocks have cheaper valuations than the u.s., so the skepticism over u.s. tech stocks to not bleed into asia as much. haidi: thank you so much for that. let's get to one of the other stocks moving in a pretty big way and the session. orient overseas jumping as much as 24% in hong kong trade after a buyout offer of $6.3 billion from china's cosco. family.ned by a we know there has been
consolidation, but what prompted this? it is a combination of the continuing story about the shipping industry going into m&a. considering they have been in bad shape for so many years, it really prompted a lot of them to think size does matter, so that's why we have seen a lot of m&a over the last two years and what we saw yesterday with the deal between cosco and orient overseas. haidi: right, so the deal looks pretty much done, the family has agreed to the deal. what does the merged company look like? it becomes a major global player? >> it now becomes the world's third-largest after the likes of , so that will make it the world's third-largest and make it the biggest on the trade between asia and north america, which is
also a big market for the likes of cosco, so that will basically bring up the size of cosco much bigger in the global arena. rishaad: a lot of people have shipping after collapsed last year that there needs to be consolidation. this moveicant is when it comes to the global shipping industry? the shipping industry has, there were a lot of calls for m&a, and the industry was balking at the idea of any m&a for many years, but the hard time since the global financial crisis, a lot of people realize that having too many will not work for anybody, so hence why we have seen so many m&a's, china combining the two biggest,
and there is just one major player there and alcoa so we will see a lot of that consolidation. in japan, they have agreed to combine their container shipping industry, so i would not be surprised if we see more of this because sometimes being bigger is much better. rishaad: thank you so much for that. our interactive television function at on the bloomberg, you can watch us live and see previous interviews and dive into any of the securities we mention and become part of the conversation as well by just sending us instant messages during our shows. this is for bloomberg subscribers only. .o check it out, it is tv asia seeingtocks in
haidi: the u.s. treasury curve resume steepening, so will the selloff continue? joining us now is our guest for real yield. great to have you. that aek's selloff, was small correction or do you see this continuing if we get increasing hawkishness and a coordinated message from global central banks? >> i don't think this is the
start of anything big from a selloff perspective. there is some back often the yield driven by a combination of what we are seeing in terms of growth and normalization from a monetary policy perspective. we saw the fed in terms of normalization, and comments from the ecb covenanter in terms of deflationary impulses turning into inflationary impulses, so yields drift higher, but i don't think we will see a significant selloff given the global need for income. the boj is still staying put in terms of the policy. are watching the fed this week with janet yellen and her congressional testimony, and some other fed speakers as well. what are you looking for? that in conjunction with the key inflation print, how much does
that move the needle when it comes to treasuries? we are not looking for a lot from the testimony. in terms of the data, the most important part will be the inflation trajectory, whether they are in the camp of trajectoryn a robust or the trend downward. theuld argue that in fact ecb moves from here between now and the year in, having much more of an impact in the fed itself. we have been looking at euro-yen as a counterpoint to what is going on. is there a sense that mario almghi will have to c the markets a bit? >> to some extent, yes.
even though growth in europe is strong, information is weak and growing lower. point -- a 9.5% drop in euro, the inflation trajectory is very benign in europe. at this point, moving from a policy perspective is premature, even though i do think we will see the tapering from ecb going into year end next year. haidi: of course this bond rout we saw last week found its debtin a french government auction, that then spread into bunds. the bonds should be doing well simply given the prospects for the economy in europe. it did show the ecb is falling behind the curve? from an inflation perspective, i can not say the
ecb is falling behind the curve. verynflation remains benign in europe. honest, if i take a step back and look at the 22-25 basis points move we saw in the developed market, it is hard to call it a bond rout. this is just a small correction rather than a real route from a rates perspective. rishaad: if you want yield, where do you go? >> you still go to the parts of the markets where you find yield comes securitized products in the u.s., investment grade credit in the u.s. and asia. emerging asia is in a much better position today than what we experienced in 2013 that caused the taper tantrum and the moves at that point, so pockets are still attractive. you have to keep looking for that. well, of course we
have janet yellen speaking this week, but does that have an impact on what is happening here at the moment? how do you look at emerging-market debt currency? how popular is that with the clients you are talking to? very much in the discussions. we are seeing inflows in emerging-market that as an asset class to the course of the year, with a small turn in the last couple of weeks. looking at the strength of the emerging markets and emerging asia and other countries come in terms of the balance sheet, the investor positioning and the valuations, i think the emerging-market debt will stay in favor come although investors will get more selective between now and the end of the year. rishaad: how carefully our people and companies looking at ,redit denominated in dollars preferring their indigent is
currencies instead given the rising interest rate environment in the u.s.? >> if you think about the average borrowing in the dollar, it is one of the few the capital for the corporate sector. the emerging markets are bank driven markets from the debt side. on the local markets in most emerging countries with the exception of china, still relatively nascent and small, so a dollarmarkets from perspective continue to grow year on year and asia, which i think will go on. will have to see how bond connect changes all that. thank you for that. just having a look at the business flash headlines. singapore sovereign wealth fund gic says investors are being too
complacent about booming market executivehe chief says he is cautious about valuations being stretched and says policy uncertainty is high and economic imbalances are unresolved. the added level of uncertainty is "very high." euronext seeks to double in size and diversified. operates markets in amsterdam, brussels, paris, and lisbon, and wants to capitalize on the post-brexit world. some analysts a major transactions are still possible despite the deutsche failed pursuit of lse. >> i think the fundamental trend is starting. if you want to make money and do , theess with the company's
savings in this group of 27 countries in 19 of them using this and single currency, then you have to be located in that part of the world. sony second reboot of the spiderman series top the north american boss market -- box office. it marks the first number one opening of the year for sony. it is part of a production deal with disney's mobile unit, giving sony a hit after a string of disappointments. sony also had the number three grossing film over the weekend with baby driver. haidi: i have not seen that one. rishaad: good foreigners help japan's immigration problem. -- could foreigners help japan's immigration problems? this is bloomberg. ♪
in of the biggest groups japan are people of korean origin. the numbers are not growing substantially. there has been an increase of chinese people, vietnam, indonesia, philippines, so overall, you'll find most the convenienceng in stores are from brazil, vietnam, or china. from asianmigrating countries because wages are higher and there are more opportunities. rishaad: what are the factors behind this worsening population decline there? is it all down to low birth rates? what about the fact of migration and disease arguably? >> there is some migration out
of japan. large numbers of japanese people live overseas, but the main reason for the shrinking haslation in japan -- japan one of the highest longevity rates in the world. , there were over 60,000 people in japan over 100. it is just the fact that birth rates in japan are low, and that means the birth rates of japanese citizens is very low, and that means the number of people overall is falling. right, there has to be are read through for the economy come also the labor market. what is the broader impact? everyone has been saying that the shrinking population will make the labor market tighter and drive up wages, increasing the spending power of workers,
and the labor market has definitely been getting tighter. jobe are more jobs than applicants, which is one sign there are less workers and companies need. what hasn't happened is that has not transferred through into wage gains for everyone, or for most people, so even though the market is tightening, that has sent transferred through two economic effects in terms of people getting more money and spending more. a lot of companies are using automation to make do or to compensate for the ability to find workers, so you're seeing big gains for countries like sat next, selling robots to companies that can replace stand in place of workers they are finding hard to .ind
thank you. a quick look at markets. the nikkei trading higher in the first half of the day. sydney, up .6%in . we are taking a look around southeast asia, the nikkei up .7% despite that awfulness on machinery orders. rishaad: right, singapore, a glorious day, up .5%, not bucking this trend, that lift up as well. not much for the markets to worry about there. .9%, and where are we now? indeed, exactly at that level still. right, coming up, angie and
david will take us through the big stories of the day so far. g-20 wraps things up and , but markets taking everything in stride, not a lot when it comes to market moving headlines, but a lot of familiar .anguage out of the g-20 perhaps when takeaway is angela merkel may have emerged as the winner there. ubsill talk about that, head of commodities talking about that, and looks like asian currencies are the popular kids on the block again. we will discuss what our latest survey shows investors are buying up. -- eyeing up. this is bloomberg. ♪
angie: i am angie lau. david: we are in the middle of the first trading session of the week. welcome to "bloomberg markets: asia." ♪ angie: hong kong leads the asia-pacific higher, lifted strong job numbers in the united states come investors increasingly confident in the global economy. a $6 billion for
orient overseas, both stocks jumping in hong kong. president trump the g-20 was a major success for america. taking power in mongolia, a special report. markets as a look at we start this monday. a look at gains in the asia-pacific. we are coming off the worst week for global markets, equities, bonds, combined losses of $1.2 trillion. hong kong up 1%. yes, you are seeing gains, but not convincing when you look at volumes. very lethargic is the best way .o describe what is happening thailand is close.
indonesia, trading glitch there. let's see how this plays out. have a look at the forex markets. the dollar is broadly weaker, except against the japanese yen. that is a two-month low. means, do we see yields back up? to 2.4%.10 year closer indonesia and in the asia thailand. there now north of $50 on dollar. if you look at the technicals on this one, we are near another
golden cross when you look at the 100 day average and 50 day moving average, close to overlapping. the other thing i want to mention is the rsi. be a bullish to sign on this currency. it does not help when you look at the trade deficit as it continues to be below zero. that is one currency we are watching. btv 1853, and last but not least, the dollar-yen, the boj says you'll stay where they are comes so we are watching for yield rate differentials. that is your white line. ps.rently 230 b as you can see, we are net errors here. -- net bearish here.
yent look further than dollar and the fed in the boj. angie: when you look at the guidance when it comes to yields, you want to look at the inflation story. i want to dive deeper into the , btv 1870, and it looks like we are past the peak, consumer prices 1.5% below expectations. , producerl blue ifces steady at 5.5%, but any central bankers were looking for an inflation banca to meet their targets of around 2%, these moderating price swings are not good news. to see that need increased much more than the 5.5% year over year increase that we saw in june, but china's
producer price gains did hold up in june, signaling that demand in the world's second-largest economy at least remains stable in the face of regulatory curbs, so that is some good news there. david: to get more on this good news, we have enda curran. key takeaway? stable? better? >> it is a good hand line. as it stays stable, company profits go in the right direction. bonnet, look under the this is down to a pickup in commodity prices as factories restocked and took advantage of cheaper prices. there is a sense that this is notsustainable and we are seeing it flow through to consumer prices. one analyst adjusting that china could be headed back towards zero ppi if not downright
deflation again. thai it shows it shows that it is still remaining dormant. that does not hold up well for china. >> no, it doesn't. china was a big part of the global reflation trade and central banks were hoping china could send out an impulse of price pressures that would ignite inflation. global growth is fine, but why hasn't inflation been growing as well. it looks like that is a diminishing prospect. in fact, china will be sending out softer prices that will weigh on the global inflation story. about fx reserves were up $3.2 billion, is that a headline? >> they are in something of a sweet spot. the capital controls, strict rules of moving money in another
country, are working well. that is taking pressure off the china is not having to intervene and spend their money as much. forward, the picture could change if on the domestic side of things they feel compelled to let the currency weekend and the external side is what happens with the dollar, so something of a sweet spot right now, but going for it, you could not say those risks have completely diminished. david: thank you. all things china. angie: now let's get first word news. rosalind: the g-20 wound up with the u.s. further out a step the never with its international peers. president trump received platitudes, but little more, north korea. the g-20 final statement called the 2016 paris climate accord irreversible.
the president return to washington, saying it is time to and that hessia discussed a joint cyber security unit with president putin. that drew protests from both saides as both sides relations would not change and to russia lived up to its commitments. secretary of state tillerson visited ukraine to reaffirmed u.s. support two days after the first meeting between president trump and putin. after talks, tillerson called on russia to exercise its it influence over separatist fighting ukrainian forces in the east. he did not discuss ukraine-related sanctions with putin at the g-20. in a diplomatic embarrassment, president trump's press secretary mislabeled president xi jinping as the leader of taiwan. the transcript of remarks referred to president xi jinping
as the president of the republic of china, which is the name for the island beijing considers a rogue province. jinping is actually the president of the people's republic of china. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. and update on this trading freeze. exchange, the stock now out with a statement commenting on the freeze, due to a technical issue. i think we are looking at equity and derivatives. angie: it started at 9:34 this morning. that is not good news for indonesia. exchangeesian stock rose due to a technical issue. we will bring up some more details when when it emerges. david: coming up, i tell you what we are talking about. the g-20 and how much was
angie: president trump cut a lonely figure in hamburg when he came to climate change. >> the g 20 was full of confrontation that yielded little in terms of results. 100,000,s, almost confronted the 20,000 hamburg police officers. , setlooted local stores cars ablaze, and through molotov cocktails. president trump confronted vladimir putin on the alleged hacking of the 2016 election.
angela merkel and emmanuel macron confronted putin on the ukraine, and president shinzo abe confronted xi jinping on north korea. only one meeting yielded tangible results, putin and trump agreed on a cease-fire in syria, but how long will that last? president trump received a lot of criticism for letting ivanka trumps it in his chair during g-20 meetings. the biggest confrontation was trade, where they agreed to fight protectionism, but allowed members to use tray defense --hanisms when they see fit use trade defense mechanisms when they see that. -- see fit. also when it comes to climate change, there was always going to be an issue because the u.s. has pulled out of the paris climate accord. saidther 19 g-20 members
there is no turning back. yep, lots of news on the weekend. let's bring in our guest for this hour. us and our brand-new studio. >> good morning. anything stand out for you from the g-20? you had the meeting between shinzo abe and xi jinping, good news, but other than that? >> people think about expectations first. the statements or water down across the board, but they do see some of the trade hawks, some sign that a level playing field is important, suggesting we are not there yet. there was some talk about the
steel industry and how to deal with overcapacity, and also not , so welcomehe wto to the age of bilateral trade talk. what is happening between europe and japan is what will happen. what has changed in china. angie: we still don't have a free liberalized trading? it seems like china is winning the rhetoric game. >> yes him a may be we are not there yet on some of the points you mentioned, but you don't want to have a fully liberalized renminbi in the first place. we still have issues with capital outflows, so managing that transition is very important. yes, we need to reduce the increase in leverage in the economy, fair enough, good point, but let's have that at a slows -- lopez.
the fact that china wants to go slow, it is moving the right direction, it is thumbs up. btv 1797,s is rhetoric and perception go a long way when it comes to the bond market, and we are seeing a narrowing spread. with that aaaing rated onshore note you do think we will see a continuation here? >> what you see in the u.s. in terms of yields is they have gone up a fair bit, maybe 2.5%, 2.6, but we are not in an apartment where the economy is overheating, and with the fed good proactive, there is news. people know the economy is advancing, but with little price
pressure overall, there is no need for some of the longer dated bond yields. ppi isd news is the staying at 5.5, saying there is pricing power and demand is not spiralingrall into something uncontrollable. what is the line in the sand for you when it comes to ppi? there was a base effect to start the year, north of 7%, 5.5%, still margins still fairly good. at what point does it get worrying? celebratesnflation to 2% >> a number of 4% is probably a sweet spot.
for the time being, nothing to worry about from that angle. inflationary an perspective. there is still underlying demand. inflation is not just a function of oil. down, but there are thousands of prices trending higher the tell you aggregate demand is doing fine. the other factor is china will decelerate, but the deceleration is modest. 6.7 is really a modest deceleration. in southeast asia, we might get an acceleration in investment. comes toen when it china's wallet and fx reserves, and looking pretty good as well, right? 2296, aeck out the tv 3 trillion, aof
little higher than we saw in march, not as high as june 2014, but a lot of people argue that at the end of the day, you don't want to bet against the fed and china because they will spend their way out of issues and problems. >> even though we have seen stability in terms of fx reserves, we still look for some dollar, andinst the the rationale is very simple person the outflows are structural in nature. right now we look for stability. first of all, the dollar is weak. in an impairment with the dollar is weak, why should the cny climb so dramatically. not rates have gone up, just the longer end, but also the short end, so higher hedging is effectivelya managing some of these capital
, but long-term, still a decline ahead. david: the big story we are following this week, we talked about this rising bond yields. is there any difference between the start of the year and this time around with yields rising? we were talking about the same exact topic in january and february, but now you could argue the ecb is also hawkish. >> what is reflected is that it's not that much of an oil story. , prettycommodity story much one of the key drivers last year and this year, now a broader story, and it still tells us that the reflation trade is going on, and why should yields be so low? labor markets are improving across the world, and the market and ats inflationary risk
higher yield is nothing unusual, so i would not be worried. now having a shift in yields gives you overall confidence that the risk on trade is still there, and from that site you want to be pro risk come along equities, cautious on the bond story come up activity in europe or things have been priced in the first place. angie: sounds like a perfect place to pick up when we get back to you. we return and talk about his favorite fx trades, maybe and the commodities space? a lot more coming up. this is bloomberg. ♪
as a function of inflation. this is btv 1900 on your bloomberg. as you can see, this has bottomed out at 300 in may 2016. you would expect this to keep going up. activityd to see rate stabilize. andhis continues to go up then oil prices fall below $40 a barrel. we are looking at breakeven costs around $45 a barrel, so we are there. this will give you the right environment. the other thing to remember is just because rates go up does not mean production will go up at an equal pace. have drillsppen you go higher, and rates
then supply comes in faster. balanced, but we have not seen a deficit building theiciently to work off inventory. to get theant thinking behind your trade. we have janet yellen's comments, comments and critical data. 4.5 train dollars is going to go ofn, the speed and pace reducing that and bring it back to normalization, how does that affect your thinking when it comes to the u.s. dollar? the market has started thinking about quantitative tightening. you also look at further tightening taking place, another
25 basis points likely to materialize in the second half of the year. the question is september or december. we think it will come in september, so here an element of surprise, but then maybe that means nothing will happen in december. yellen wants to see retail sales numbers. we got everything she wanted from the labor market, so all good to go. what does it mean for the dollar. you might say that is good news bottoming out and reversing. we disagree. there is still some weakness in the dollar. a fed that is normalizing signals risk on and if the global economy is doing pretty well, then you still going to see the euro go higher. say a necessarily i would hike in september signals a
reversal in the trend. maybe it will slow the weakness, but not yet a reversal. story ifbe a different the u.s. economy were to come back meaningfully and things were to slow abruptly in europe, but that is not expected. david: we have to leave it there. thank you for coming in. look at yourhave a latest business flash headlines. he chinese plane maker has begun production with the first five due at the end of this year. the plane has a maximum range of 3700 kilometers and competes with other jet manufacturers. has 431 orders from 19 companies. turnaroundsays the
angie: it is 11:29 in hong kong. china's ppi gains held in june with factory gate inflation at 5.5%. can 1.5%, just below forecast. demand remains robust in the face of regulatory moves aimed at curbing excessive are ring. analysts say controls could weigh on demand. stocks halted trading because of a glitch. it was hoping to open in the last half hour.
the problem is affecting data feeds. the japanese prime minister has seen the approval rating for his cabinet slide to its lowest ever. the ratingshows falling to 31 point 9% from 39.8% a month ago. that is the lowest since shinzo abe took office in 2012. the biggest reason given was a lack of trust in shinzo abe as a person. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. sophie: a check on the markets, mostly and up the mood when it comes to asian stocks, the honk sign adding over 1%, snapping a two day -- the hang seng adding over 1%, snapping a two-day drop. chinese stocks have had a roller coaster ride today despite inflation data coming in as forecast. bonds under pressure, and the yen continuing to drop, trading
at 114. the boj has said it will continue to tweet policy as needed. taking a look at the sector breakdown, i.t. stocks leading gains, samsung, tencent, with telcos as the biggest drag. regional stocks cleaning up nicely this monday has more industry consolidation gets underway. orient overseas popping 19% and cosco up over 7% as they agree a deal. 26% on thes jumping c to of its deals with suna buy hotels and projects from wanda group for $9.3 billion, one of china's biggest property transactions. shares are suspended from trading today as the billionaire owner has been on a mega-buying
spree since 2011, and shares have surged 130%. bearingtel shares investor attention today, up now. important week for fed watchers here. we have janet yellen basically testifying, and we will look for guidance. how will they unwind that $4.5 sheet?n balance let's look into our bloomberg right now, btv 7665, this large body of yellow is the mortgage backed securities. is that the fed intends to start off slow with monthly reductions of six oh yeah and dollars of treasury debt, and $4 billion of mortgage act securities.
this is supposed to increase billiones that to $30 and $20 billion respectively, so if they are going to start in september, that is the question. david: do they have to be in the mortgage market as well? people are talking about which of the colors we just showed on the chart is first. when we talk about central eco .ve a look at mr. williams due to speak tomorrow, second line. following,ngs we are malaysia and the south korean central bank, both due out with their rate decisions. no change expected from those two central banks.
right, sunac china suspended agreeing to buy hotels and projects, $9.3 billion from dalian wanda group. thee: it would be one of largest property transactions, and the companies would have to collaborate elsewhere. is this a surprise? >> the size of the deal is a surprise. this is massive, $9 billion. is nott that it is sunac such a surprise because they have been so acquisitive, the most acquisitive chinese developers since the start of last year, big plans. david: how does it change the outlook, if any, for sunac?
>> last year, of the big chinese developers come they had the second highest leverage, so de-leverage was over 200%, getting out there, so the question will be how well they can digest the meal they have taken on. angie: it is all about the here come aroperty aggressive acquisition spree as you said by sunac. wanda giving this piece up? dalian is more interested in collecting rents as opposed to development, and hollywood is a big attraction, right? the entertainment business is more exciting. angie: the regulatory bodies in looked withind of
hesitation at wanda's acquisition when it comes to hollywood. it seems they are looking at these type of deals a little more closely, so in light of that, is it a smart thing for them to move away? >> that is hard to tell, but it seems like a well-established strategy. angie: all right, thank you so much for that. staying on deals, one stock we are following closely, orient overseas. after a buyout offer of osco.billion from c angie: this is a big family deal in more ways than one. our asian industrials reporter has more from singapore. what prompted this bid? >> you have to see that in the
last two years or so we have seen so many consolidations in the industry because it has been in bad shape for so many years since the global financial crisis. , this can't be sustained comes of the obvious answer was for a lot of these companies to consolidate, and orientaling over overseas is just one of those that we have seen over the last few years. it might looks as if all be but done. when you look at the merged entity and extrapolate this forward, how big with his company be in terms of rankings with the biggest container lines out there? acquisition, it co into the big
league, becoming number three in the global shipping container business. will become number one and shipping on the transpacific to the north america's, so this takeover is going to put cosco in a prominent role in the global market itself, and it really does bring them into number three in asia, which is also big in trade. it is very big exposure for cosco going forward. angie: does that shake up the industry somewhat? >> well, we have seen the industry already being shaken up because the industry has been going through losses since the financial crisis, and obviously they felt this cannot be sustained anymore. that's why we have seen costccp o and china shipping combining. we saw the collapse of hanjin
last year, so we will probably see more m&a going forward because the companies have realized that in this industry you can survive -- can't survive just taking a small piece of the pie. angie: you have to get bigger if you are to survive. thank you for that. coming up, looking ahead to the second half of the year, find out which are the most vulnerable and resent currencies in asia. david: that is coming up next. this is bloomberg. ♪
it plans to hire at least 10 bankers and sales staff to advise on m&a and sell investment products. 14th in the ranked country for the year ending in march according to bloomberg data. angie: the pan european stock has 2.3 euronext billion dollars available for acquisitions as it seeks to diversify. it operates in amsterdam, brussels, paris, and this food, and -- and lisbon, and wants to capitalize on the post-brexit world. i don't know how many jobs would come to the continent and how many jobs come to paris. trend is starting. if you want to make money and do ies inss with the compan then -- group,
then you have to be located in that part of the world. let's check in on the box office on the weekend. this is the second reboot from sony of the spiderman series, leading the north american box debut,in its weekend $117 million. it is the first number one opening for sony for the year. itgets sunny and much-needed after a string of disappointments. sony also have the number three film over the weekend with baby driver. angie: this sounds like a hollywood script, but president confirmeddest son has eating a russian lawyer with kremlin ties.
in his second state, donald trump junior saying he basically was hoping to get information to help with his father's campaign. david: we are joined now by jody snyder. she joins us in the studio now. how damaging were these reports? >> this is the first confirm meeting of a member of president trump's inner circle, and this happened weeks before he officially got the nomination, and is aconcerning turning point in that this now involves members of his family having confirmed meetings and hoping to get something out of them. it does not look like they got anything out of the meeting, but this coming amid the investigations and robert mueller's investigation into possible collusion with the russians in the election, certainly raising this to a new level. angie: what are the key
developments to watch for this week in washington? >> congress comes back. before they left for recess, they had hoped to pass the health care bill. that did not happen. the bill was pulled before there was a vote on it. now there is a dispute to between republicans on whether they want to go ahead with this particular bill. they are already having trouble with some members of their party to ask it, so the question -- to pass it, so the question is whether they can get this done before the august recess. senator himself put that at a 50-50 chance, which does not sound very likely. david: as you mentioned, we are coming up on that recess in a few more days. how important would it be for republicans and donald trump to get this through? >> they need a win. there has not been much legislative activity for the republicans, even though they
control both chambers of the congress and have the white win now and have a something to distract from investigations would be something important for the republicans. if they don't do it with the health care bill, which is looking challenging, it is unclear what these of major/in the -- major legislation they could move ford on. angie: we are still looking for something substantive out of washington. thank you for that. david: you used to see these things in the movies, but now you watch the news and get the plot. when you look at asian nations, they have come out on top. bloomberg did a survey covering emerging-market currencies looking at currency resilience in the second half here it the indian rupee and indonesian rupiah taking first and third place. angie: what else does the survey reveal? reporter is joining us
from singapore. are they and the into geopolitical risks here? certainly notare immune, but the survey revealed a variety of factors, including political risks and donald trump. immunere relatively compared to the peso are the turkish lira. if you think that is a big change from 2013 when we have the taper tantrum, those were the worst performing currencies, so you have seen a big turnaround in the last four years. some of that has to do with the quality of the economy, account deficits lower, inflation better. upgradedn recently got , so they have seen more inflows into the bond markets. india has been top performer , prime minister
modi's reform plans have been backed by the markets. got pass, so the market is happy with that direction and you are seeing large inflows into the indian bond market, supporting the rupee, and indonesian should see something similar going forward. david: despite those flows, and we know investors follow the money and yields, both indonesia and india have relatively high bond yields as well. >> absolutely. the carry trade is a big trade at the moment. low inflation, so real yields are attractive as well. two of the biggest winners have been rupiah, and rupee. higher, thats up could change, but that carry trade has been very popular because the rupee and rupiah
have been stable in terms of currency moves. what happens if we see bond reversal? >> that is a big question. is in the0 year yield middle of the trading range this year. you could see an outflow of funds. it is all a relative aces. indonesia is attractive, as is india. the idea those other countries will be impacted more than india and indonesia. right, absolutely, all about risk-rewards. have a look at markets right now getting underway, joining this broad-based party across the region. we don't see the same thing when
we look at volumes. we are on the way up. which is talked about the rupee, and there we go, some strength coming through in the indian currency at the open up markets there in mumbai. angie: looks like it is following the broader markets across the asia-pacific as well. coming up, a former wrestler said to become mongolia's next president. a special report next. this is bloomberg. ♪
this position, that is free and fair trade. i think this can be found in the final declaration, but a declaration as good as it may be does not the race tensions that exist. >> we will seize the exciting obtained to sign deals with old friends and new partners. i'll meetings with world leaders and was struck by their strong desire to forge ambitious bilateral trade relationships with the u.k. after brexit. >> the u.s. president expressed his views on the subject, on trade especially, on climate, very openly, and i think that everybody appreciated this fact. >> there is a high level of engagement. we found the administration to be very responsive. we are working through issues we need to work through. of course we have had discussions around steel, so it
has been a positive engagement and we will work towards productive solutions. some of the were key world leaders and policymakers reacting to the g 20 summit, all eyes and attention focused on donald trump. interesting he tweeted that it was a wonderful success, the g-20 was a wonderful success and carried out beautifully by chancellor angela merkel. there was also attention paid to his meeting with putin and what he got out of that, which supposedly was a cease-fire in syria. to save lives was one of his phrases there. he bring up the domestic security issues? you had xi jinping and shinzo abe, warming relations between those two, so a little off-topic , did not get a lot of attention, but the warming of
way, and goes a long of course the trade deal between japan and the eu helped things along. angie: mongolia has a new president, khaltmaa battulga sworn in. khaltmaa battulga claimed victory after winning half the ballots. will be president for the next four years. he is one of the wealthiest and most famous individuals in mongolia and one widespread admiration for his achievements. he commissioned a 14 meter high statue of genghis khan outside the capital. he assumes the presidency and that swirling allegations of
corruption from past business deals. puttmaa battulga has himself as the man to keep the party in check. while he may have to abandon extravagant promises such as paying off the debts of every citizen, he maintained a pledge to create jobs and tackle mongolia's wealth gap. courserying to chart a with those hoping for a greater slice of mongolia's natural resources. he insists he will welcome foreign investment as long as the mongolian people also benefit. relief thatespread the longest and some say ugly as presidential campaign is finally over. mongolians are ready for the biggest celebration of the year. from mongolia to the middle east, let's head there. bloomberg markets: middle east coming up at the top of the hour. david: yousef gamal el-din is
standing by. what you have for us today? plenty, as always. if you think about the key themes weighing on investors and , it involves tightening down the line and how fast that will happen, what will happen with those balance sheets, and as part of the wider look attion, we will how this changes the strategy going forward, in terms of well of what is happening geopolitically with north korea finally some data out of china, but also talking about this part of the world. we will discuss what is happening with qatari assets, relatively resilient, but also what is happening with the kingdom of saudi arabia, the elephant in the room. how do you trade that story?
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