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tv   Bloomberg Daybreak Asia  Bloomberg  July 26, 2017 7:00pm-9:00pm EDT

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♪ >> no change in policy, but unwinding should start relatively soon. it will be announced in september. yvonne: treasuries rose, the dollar fell. oil surged through an eight week high. >> foxconn confirms a $10 billion investment in wisconsin. they say it is a win-win situation. yvonne: facebook is jumping, lifted by strong mobile ads driving revenue faster paced than its social media rivals.
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," i am is "daybreak asia kathleen hays in new york where it is after 7:00 p.m. yvonne: it is just after 7:00 a.m. here in hong kong. we will break down some gdp numbers. in line with estimates. but, slowing from the first quarter. these are preliminary, 2.7% year on year, in terms of the quarter on quarter. we are seeing growth at 0.6%. the is slightly off from 1.1% growth we saw in the previous quarter. the first quarter was about robust investment. that seems to be continuing on. the second quarter, still could be a lot of risks with trade tensions in the u.s. and china. we will see how president moon, how is budget and how this plays out. bok optimistic on
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the hike front. kathleen: yes, they are in it for the long haul. one of the biggest challenges korea, president moon changing the composition of export-leding from growth, which he has argued on the campaign trail. and, in office, he want something more income-driven. he wants to raise jobs and taxes. it is a lot to do, but a lot of enthusiasm for him right now in his country. let's get to our top story. fed signals its balance sheet reduction to kick off in september. the market reaction is interesting on a lot of different friends. strategists said there was not that reaction. the stock market, let's take a look at the close. unchanged. we see how the s&p gave away early gains. it ended the way it began.
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they are getting better at telegraphing their message. some would say yes, it is not expected they would change rates. let's look at the two-year treasuries. that is where you see there was a reaction. bonds rose, yields fell. look at the bloomberg spot index at lower in the year. there we go, we see the dollar. and oil moving lower after hours. but it was added in a week high, due to low supplies. let's go to the bloomberg. this gets to the meat of the matter. they are taking higher. the yellow and blue lines are the five year and 10 year bonds. you can see that moving one way and the two-year moving in the opposite direction. say chair janet yellen did
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there was uncertainty and how inflation will respond, that they are tightening. how will they tighten when inflation is going near their target? they do not quite have the answer yet. this chart will be one to watch. yvonne: we have breaking news out of ocbc. singapore banks kicking off their earnings front. it was a beat when it comes to the net income numbers. $1.08 billion dollars, singapore dollars. taking a look at a little bit more of the breakdown, we are seeing when it comes to the net interest income at $1.35 billion. and the nonperforming loans ratio at 1.3%. we will continue to dive into these but it looks like a beat when it comes to the net income lines. here is how the rest of the region is playing out. in new zealand, a slower day.
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whiplash we saw in wall street overnight. we are looking positive for the nzx 50, up about 11 points. the kiwi, the dollar doldrums boosting it. .7522 for the qb. -- kiwi. 7966, very close to hitting .80 territory for the aussie dollar. 1%.200 up 9/10 of japan's dollar-yen a downer for stocks, but plenty of earnings out from japan. including nintendo came out yesterday quite positive. we will see if the nikkei to do five that 20,000 level. let's get the first word news with courtney collins.
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>> lackluster growth in the u.k. is undermining the bank of england. expansion in the last quarter was a modest 3/10 of 1%, compounding with the office of national statistics. they called it a notable slowdown. construction was a drag and suggested the economy's resilient since the brexit vote has weakened. there could be a rate hike next week. theresa may has lost another brexit ally. her director of strategy has quit, leaving her without the two anchors to leave the european union. wilkinsrture of chris means may has lost her top advisers in the aftermath of the general election. her co-chief of staff resigned after the conservatives lost to their parliamentary majority. efforts to end the gulf crisis are said to have met an impasse. the saudi-a block once more
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concessions from qatar. bahrain, and others have yet to respond to response from the u.s. and u.k. to launch negotiations with doha. qatar has offered to begin talks is it -- if its sovereignty is respected. the talks began june 5. foxconn has confirmed plans for the u.s., $5 billion to build a manufacturing plant in wisconsin, the home state of house speaker paul ryan. it is expected to be completed by 2020 and employ 3000 people initially. they will make the announcement. say, thisconfident to win strategy.
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president, with you, the vice solidlyt, the speaker, we are confident many american supporters will be a great success. >> global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. let's look at the politics behind picking wisconsin as the site of foxconn's first u.s. plant. joe, let's talk more about this development. we have been talking about the states in the running or contenders were all these swing states. very much politically driven with this choice to pick wisconsin. let's talk about how big of a win this is for president trump. joe: it is quite a big win. it is a considerable number of jobs, going to wisconsin, not
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only a swing state, but also a state that the republican party has been peeling away from democrats in the national elections. he gets to keep a promise from his campaign, which was to bring companies back to the united states and restore american manufacturing. it will be put right in house speaker paul ryan's district. it is also home to reince priebus. wisconsin governor scott walker has been a backer of trump and his offering the company about $3 billion in incentives to put the plants there. yvonne: it is interesting to hear from the foxconn german saying this is a win-win-win for everyone involved. what led foxconn to go to the u.s.? we have heard this ever since trump won the election.
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he said look, if i was not elected, he would not have made this investment. joe: it was not taking a little credit, it was taking all the credit. once the company gets those, they get political goodwill. foxconn could have been facing tariffs. tomp has been threatening punish come -- companies that manufacture overseas. they get a base here. they will not necessarily be supplying apple. but they will get another market for the u.s.. politicalis a lot of goodwill for a company with the president wanting to make a good impression. there was a lot of controversy around incentives that are given to foreign companies are domestic companies, to move from one location to another. thealso have to wonder,
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cost to the u.s. or that state. -- other question is, how do how much does donald trump hope this will grab the news away from other storylines he would rather not have focused on? joe: it gives him a good news story to talk about. he can talk about jobs, growth in u.s. manufacturing. as far as tax incentives go, this has been going on a long time. southern states were grabbing companies out of northern states, where they had unionized workforces and were offering tax incentives to move down there with lower wage workers. about howften carping much it costs to bring these companies and. but it is not stopped any state or local government from trying to offer them up. if there is an ultimate growth of 13,000 jobs, i would guess the people of wisconsin would
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call that a fairly decent deal. kathleen: i guess they would. we have seen a lot of success with this model, enticing japanese automakers to come and look in the fall. we will see how it goes in the fall. thank you for joining us from washington. we want to talk you about big guests coming up on bloomberg. we look at the imax china ceo. he will join us here in new york at 8:40 eastern. yvonne: still ahead, we will resultsamsung's latest with an analyst. those results should be coming in any minute now. kathleen: a big story today, we itk about the fed unwinding allen she timetables. u.s. chase and others. this is bloomberg. ♪ allen she timetables. u.s. chase and others.
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yvonne: this is "daybreak asia,"
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i am yvonne man in hong kong. kathleen: i am kathleen hays in new york. we take another look at the federal reserve's decision today to not change very much, but to reinforce market expectations for an important move they are now planning on making this year. ufj of tokyo, mitsubishi, economist chris rupkey joined us in studio. your notes seemed underwhelmed. you said they just changed three little words. it is true. they suggested this year. are have confirmed they going to start doing the balance sheet unwind even at a time when a lot of people are looking askance at inflation and saying, you're making a move that can make a difference. and inflation is getting weaker. chris: even someone in that dovish camp with concern they
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are not meeting their inflation objective like lael brainard, she is on -- she is comfortable with the unwind. do they need to keep raising rates as aggressively three times a year, if that is aggressive. do they need to continue with the rate hikes because it is not at 2%? do not forget, the unwind is something running silently in the background. but we do not know. kathleen: our bloomberg intelligence team had a very important point this week about why they want to do that now. if they start unwinding the balance sheet, $4.5 trillion when there is doubt about the momentum, it underscores what you said. we are doing balance sheet normalization like a technical operation. it is not a policy operation. it won't affect the economy inflation. is that what that means? chris: that is part of it.
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we are confused. what does the qe do? was it the announcement they made that boosted? or is at the liquidity, the $4.5 trillion balance sheet, is that keeping yields down and stimulating the economy today? i would argue it is doing little, it is dead money, excess reserves of banks, and they can withdraw it quietly, silently. but we are not sure. they have never done in unwind. yvonne: we talked about how the fed it seems to divorce rate hikes with the balance sheet unwind. can they continue to divorce the data with the balance sheet unwind? can it stay in autopilot default mode as inflation continues to go the other way? chris: it depends what you think about the slowdown in inflation. inflation has been slower for four months now. we're not sure what that means.
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some policymakers think that slowdown in inflation might mean a slowing of the economy. if it is a slowing of the economy, maybe they should go slower. inflation moves for a very idiosyncratic reasons. i have to look up that word again. we are not sure it does what it does. it does not mean that lower inflation we are seeing currently, that there is anything wrong or that we will go into a downturn. yvonne: even the language in the statement -- we saw two changes. they dropped the word "recently" and "somewhat." transitory factors are more long-lasting than she first saw? i would take relatively soon as she told congress before -- it sounds like september.
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there are no two ways about it. maybe it is wise to go slow. take awaytakes -- some of these mortgage-backed securities. maybe that is keeping mortgage yields down. it is cheaper to buy a house, finance it, due to those purchases. maybe they want to go slow. kathleen: what is interesting to me, is we are talking about -- maybe it is a serious consideration. i am chart crazy tonight. the first one is 2985. look at this changing direction. some people would say, the whole reason you have the move up to 2% in the turquoise line, have to do with oil prices. oil prices come down, it was not necessarily stronger momentum. 64,we look at g #btv 75
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earnings have plateaued at 2.5%. is the reason the fed raises rates to fight inflation so we do not get out of control? if it is out of control, why raise rates? chris: that is a good argument. but we are at the long -- we are at the wrong level of rates. if they are tightening policy, there is no inflation, maybe it is not wise to tighten policy. the fed funds rate has to go above 3% to slow the economy. 1.25%y raise rates from to 1.5% -- that is a big misunderstanding. they're withdrawing, it will not slow the economy. the rates have to go to 3%, put them there today. [laughter] yvonne: what about financial conditions? -- is thateks ago
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dialed back now? by,s: i am always struck what did they say? what is the point of monetary policy? it is to improve conditions. stock market is up 10%. i do not think there is a role for monetary policy to play at this stage, when the expansion starts your nine in july. it is too long. they need to normalize rates. kathleen: succession, donald trump told the wall street journal, gary cohn -- guess what, it is janet yellen. what you put the odds on that janet yellen might stick around? like: didn't the president comey as fbi director for a while? i wanted to see regime change at the fed, maybe these other
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rules-based people like taylor or others would raise rates more quickly. yellen is a low rates person, that is why donald likes her. ironically, she is holding the fort to three rate hikes this 2019 where some of these said governors and residents -- presidents around the country do not want to raise rates because inflation is too low. yellen is closer to being a hawk, i could almost embrace her. kathleen: you want to embrace her as a hawk, trump wants to embrace her as a dove. she is quite a nice lady. chris: she has done a good job. kathleen: thank you for joining us. you can get a roundup of the stories to get your day going in today's edition of "daybreak asia." subscribers go to dayb in your terminals. you can customize your settings
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to only get news on the industries and assets you care about. this is bloomberg. ♪
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♪ this is-- kathleen: "daybreak asia," i am kathleen hays in new york. yvonne: facebook jumped after growth field by continued strength in mobile video ads. they have more than 2 billion monthly active users. it is driving revenue at a faster pace than its rivals. let's bring in sarah frier journey has from san francisco to break down the numbers. inot of roller coasters extended trading. it jumped to an all-time high. sarah: it was incredible. what sparked it was mark zuckerberg saying he wants to move faster in terms of monetizing those apps facebook has.
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they both have more than one billion users. i am talking about whatsapp and messenger. once he said he wanted to move faster to make money off of them, the market loved it. the rest of the call was investors with questions about what that would look like. >> what would that look like? they have not disclosed much when it comes to instagram and video ads. big continue to be two drivers of the company. sarah: for these other apps, it will not be like we are used to from facebook. it will not be the in-feed advertising. it will be a different kind of peoples --uilt upon business, built upon people's relationships with chat businesses. whatsapp is building out its
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business team. the company was very optimistic. zuckerberg said he potentially sees these chat apps doing better than apps in china and asia that are very popular. then he reframed his remarks later. he saw people got a little too excited. he said we are thinking about this over the very long-term, we are more excited in terms of the benefit for our business with our investments in video. kathleen: what are the analysts saying? trees don't grow to the sky, but facebook is looking that way. what about income in the next two quarters? sarah: they have warned that revenue growth will slow. in their main application, they are not going to increase the ad load anymore than they have. the new applications like
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instagram will provide new inventory. kathleen: sarah frier, thank you for joining us on facebook's blowout earnings. why signals these days families want to be connected 24/7. that's why at comcast we're continuing to make our services more reliable than ever. like technology that can update itself. an advanced fiber-network infrustructure. new, more reliable equipment for your home. and a new culture built around customer service.
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it all adds up to our most reliable network ever. one that keeps you connected to what matters most. yvonne: 27 degrees in hong kong,
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7:30 a.m. thursday. minutes away from asia's first major market open. beautiful out there. kathleen: it is. we had a beautiful day in new york. the heat has dropped outside. heat in the market has stayed. markets closed higher. they got some support from the fed. treasuries have a nice rally. those lower yield will help stocks down the road. i am kathleen hays in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia
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." >> the fed, as expected, left policy unchanged. but confirmed of the unwinding of the balance sheet will start relatively soon. the normalization would be a milestone in recovery program now in its ninth year. they say it signals the bank could announce the timing of unwinding at its next meeting, scheduled for september 19 and 20. the senate rejected a simple repeal of obamacare as the debate on health care proposals raises questions about the republicans' ability to pass any bill. it was similar to the one that passed congress in 2016 that was vetoed by president obama. the debate will culminate in an all-night vote that could feature dozens or hundreds of amendments. growth in south korea afloat in the second quarter as construction investment eased. itseconomy had been showing
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fastest expansion since 2015. gdp grew by 6/10 of 1%. however, analysts say the slowdown is due to a base affect from solid first-quarter performance, and that it should not be taken as a negative sign. ocbc has kicked off earnings season's or singapore banks. $796 u.s. dollars, more than analysts had been expecting. they said growth in its management and insurance operations. units inired barclays singapore and hong kong for under $230 million last year. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins. this is bloomberg. yvonne: we're counting down to major market opens in the asia-pacific.
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let's get to our global markets editor, adam haigh, joining us live from sydney. we saw the dollar back in the doldrums, stocks and bonds not acting too much overnight. how will asia wake up to all this? adam: good morning. the main message is around inflation, isn't it? those are the key takeaways. the move in the dollar was big. they pronounced moves to the upside. especially the aussie, the kiwi. a little bit of reassessment for global money managers as they work their way through the fed statement. it will mean slightly different things to different people, depending on their expectations for inflation. they may make slight tweaks around the edges. we will get back to company fundamentals. facebook is doing nicely in after-hours trading in the u.s.. we have heard the ocbc numbers
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growing in singapore. as london traders awake later in the day, we get plenty more from the european trading season. it is one of the biggest days in european markets. now that we are through this fed meeting, we get back to company fundamentals and allow stock investors to get back to what they are really good at. kathleen: let's broaden out this look at the macro factors. asia's worst-performing currency is the pes -- philippines peso. what is the prognosis? it is not a particularly rosy picture for the philippine peso. up,mber of factors stepping and the backdrop where other emerging currencies have been doing better. made tradet blowout
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numbers the latest in a long line. there continues to be the political turmoil. duterte has extended martial law down there. that fighting we are seeing just adds another level of uncertainty around economic growth. especially given what is going on in saudi arabia, with the therede into qatar, where are a number of filipino workers. those overseas filipino workers continue to be a key part of gdp. it is around 10% of gdp. or hint that may worsen reduce flows from overseas working into the philippines, puts added pressure on the currency. i leave you with a thought from other thoughts. of fixedwith the head
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incomes and currencies and he says what is going on in mindanao is more of a mute point. now that you have the current account deficit, what looks like the first annual current account deficit in 15 years for the philippines, it puts more pressure on the currency. haigh, thank you so much for wrapping it up in a nice, neat package. a massive day for earnings in europe and the u.s. companies worth around $3 trillion reporting. su keenan to tell us about the standoff. you have been talking about this all throughout the show. su: thursday was looking to be the peak of the seasons. wednesday -- let's go to the board. three very big earnings report, boeing blew it out. at&t come surprising with wireless subscriber increase. advanced micro devices, they
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beat the estimates, almost up 5%. they are really executing well. let's go into the boeing chart. you can really see the jump, up to 9% on the day. cash is still king. they have $4.5 billion in terms fueled flows that buybacks and dividends. boeing up some a 50%, year to date. let's go into the bloomberg at g #btv 7370. have see which companies led the earnings season. we have a chart called "we are the world." we typically go to tech and material stocks. but if you use the age of factor investing, a factor that stands out are companies with high international sales. the white line is international companies.
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look at how much higher they're performing than those that just have domestic sales in terms of the earnings report that have been hitting the table. they are running away with it. been talkingve about facebook, there have been after-hours movers. u.ypal, and the deal with bayo su: there will be strong trading on thursday. paypal surprising in terms of the numbers they posted. beating the projections. .44, that is an increase. investors seem to like that in after-hours trading. we go to another standout, las hotel,ands, their macau unlike wynn resorts, was strong. 's losses was sheldon
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adelson's gain. forecasts,arnings's again. then, there is a luxury goods maker. their profits also jumping. china leading the way in terms of the luxury industry rebound. strong sales in japan also helping fuel a very strong first half for the luxury maker. their profit jumped at the fastest pace since 2011. they showed double-digit gains in the second quarter. if you look at how this underscores the rebound in the luxury industry, it was two years ago the downturn began. in part, because of the crackdown on corruption. it has researched in china and that is translating to a strong autumn line for lvmh. yvonne: let's get it back to the fed. it may start winding back its $4.5 trillion balance sheet as
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early as september. let's get the dan maes, he writes about bloomberg economics. he is in hong kong this week. take a look at the fed statement. there were not a whole lot of changes. everyone has been focused on the word "somewhat," when it comes to changes. dan: they have been focused on the little changes. i was listening to kathleen's interview earlier. having dropped to the statement, he does know what he is talking about. it would probably be a mistake in this statement at a non-press conference to read too much into that. in the first paragraph to read of these paragraphs in the statement serves a specific function. the first paragraph typically describes what has happened in terms of public data. it is pretty benign stuff. it has attracted attention because there has been a lot of
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pandering about how come you have full employment, and not only is inflation not at 2%, it is receding from that point? people are looking for a language change on inflation. they saw that and thought, there it is. but as they said, maybe not. yvonne: a reaction from the bond and currency markets, he took the dovish part in stride. let's look at the balance sheet. there was a tweet about relatively soon versus the soon. dan: probably not. if it had just been soon, people would have said a slamdunk them it is happening in september. they have given themselves a little wiggle room. was used inoon testimony earlier this year. they are linking relatively to the debt ceiling issue in congress.
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may that is the case, maybe that is the intention. it is convenient for wiggle room. kathleen: it is interesting to me that the fed's argument, supported by the fed watchers, you have to normalize. the balance sheet is so big, rates have been so low for so long, it does not matter if we look at the following chart, they should move ahead. g #btv 7564, i will not show the looktion chart, but let's at low unemployment versus average hourly earnings. that is maybe behind the fact we have this chart, this turquoise line with unemployment down to about 4.4%. you measure unemployment and average earnings on this axis, you see they are stuck around 2.5%. what is your interpretation of the fed's determination to raise
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rates, reduce the balance sheet, at a time when the economy is only growing 2%, and inflation is showing no sign right now, no evidence, it is getting ready to really take off higher? models tell their them it is so. they tell them on balance of that, if you have full employment, eventually, something will kick in. this is not a uniquely u.s. phenomenon. it is one of the great mysteries of the developed world. in some instances, the developing world. the philips curve right now is not philipsing. we have had description -- discussions about the reserve bank of australia in the past few days. i get back to a comment that philip lowe made not long ago. he said workers of the world, lose your chains, arrived, and amanda something more.
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demand wage increases with inflation at this level. it is not often you hear marxist lines like that from a central banker. yvonne: we have breaking news from samsung. when it comes to the second quarter final numbers coming in, sales, 61 trillion won. that is slightly better than the preliminary numbers, up one trillion won. profit coming in net 14.7 trillion won. net income will be the won.10.08 trillion yet again, beating expectations on the second quarter. we will see the breakdown when it comes to cell phones, smart phones, and the recovery. these are the lines coming through.
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we will get the latest in a bit. they forecast record profits. we will see if they meet those expectations. second-quarter earnings minutes away. and, analysis from claire kim. this is bloomberg. ♪
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♪ kathleen: this is "daybreak asia ," i am kathleen hays in new york. yvonne: i am yvonne man in hong kong. more lines from sam song. a bit of a correction when it comes to the net income numbers for the second order, actually coming at 10.8 trillion won. trillionate was 9.75 won. the chip business coming in at 8.03 trillion won. i jump versus the first quarter.
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nearly four times more than what we saw a year ago. we can see how increasingly the presence of chips in the business for samsung, the mobile business coming in at 4.6 trillion won, slightly less than a year ago. it could be the note 7 scandal, a downtrend there. overall, the recovery has been substantial. about the display business, 1.7 trillion won. that is higher than we saw year ago. let's bring in claire kim. she is a securities analyst. she joins us live from seoul. what was your initial take on the second quarter for samsung? claire: [indiscernible]
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i expect the numbers will be higher than earnings, which was announced three weeks ago. the operating profit preliminary numbers were for 14 trillion korean won. .3 trillion.2 or won more. yvonne: we thought in terms of the breakdown, chips still seem to be the chart. -- star. it has been about this super cycle in chips prices. we know demand has been strong. how long can samsung stay in this sweet spot? claire: it can be continuing by the end of this year. the demand of the chip comes from [indiscernible]
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customers of samsung [indiscernible] they can buy their chip at a higher price. fast rising chip prices will rise by this year. when you look back to the note 7 recall come all the bad polyphony, people were saying, this is so good for apple. samsung hasn'tms shrugged this off. is their customer base that loyal, that happy? is it a good omen for the business, moving ahead? there is controversy on that issue.
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for this year, i expect there will be high competition between samsung note 8 and the new iphone. they have the stability of their hardware products. though samsung can increase their earnings from the smartphone business, the stronger inwill be the second half of this year. how do you look at their share prices -- by it, sell it, hold it, for investors looking ahead? claire: a six-month target share price. this, 2.8 trillion korean won.
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i try to put reality on this target price. for the recent three months, this company did not give up quickly. [indiscernible] as for them q2 earnings, samsung's electronic price can other quarters. yvonne: claire kim, thank you. to break down more samsung. they were mentioning the favorable chip conditions, samsung saying, expect that to continue. but the overall earnings may decline quarter on quarter. samsung. they were mentioning the favorable chipthey mention the e business and how they expect reduced profit contributions when it comes to the galaxy s8. not a big surprise, given the
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apple iphone, the 10th anniversary phone, will be launching in the fall. earnings have become primarily from the component sales in the second half. meanwhile, more breaking lines and earnings coming from sk telecom. it was upbeat on the top and bottom line. operating profit coming in at 4 23.3 billion won. we will have more when korea opens. this is bloomberg. ♪
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♪ yvonne: this is "daybreak asia ," i am yvonne man in hong kong. kathleen: i am kathleen hays in new york. nikkei news says japan display
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has asked creditors for money for their -- loan guarantees. restructuring may involve halting production in japan and china. sales in apples fell 10% in fiscal year 2017. yvonne: china's biggest publicly traded company rebounded. income may have risen to $1.6 billion compared to $78 million a year earlier. that was the worst profit since listing in 2017. costs and has cut will continue to keep a lid on expenditure. kathleen: japan's most popular messaging service topped estimates. to $130oared 82% million in three months through june. that smashed forecast of $52
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million. user growth narrows focus as they tried to fight facebook's whatsapp and messenger. yvonne: continuing to work with china's hna group, and is not --cerned at beijing's similar stakes and spinoffs at hotels. says they are worth about seven point half billion today. we are counting down as the trading in australia, japan, korea moments from now. a lot of earnings coming through in south korea. kathleen: we will take an in-depth look at samsung. there is a lot to talk about. samsung is going strong, isn't it? yvonne: it certainly is. eight trillion
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won. that was substantial between weise -- from what we saw a year ago, a quarter ago. this is bloomberg. ♪
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yvonne: a mixed start in the asia-pacific after the fed's dovish statement. the s&p 500 closed fractionally up. no change in policy, but unwinding to start relatively soon, janet yellen hinting at an announcement in september. samsung beat expectations. second-quarter net came in at equivalent of $9.6 billion. foxconn confirms a $10 billion investment in wisconsin. they say it is a win-win situation.
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this is the second hour of daybreak asia coming to you live from bloomberg's u.s. and asian headquarters. i'm yvonne man in hong kong. just after 8:00 a.m. kathleen: just after 8:00 p.m. in york. i'm kathleen hays. the fed changed a few words in , nottatement, nothing big to tank the dollar, hitting its lowest level in 14 months. it makes you wonder, what is going to happen when the fed starts reducing the balance sheet? if it does do one more interest rate increase this year. yvonne: things like they were focusing on the little tweaks. when it came to inflation, they dropped the word recently or somewhat. is that an indication that janet yellen is admitting transitory factors when it came to inflation are going to last a little longer? four straight months we have seen inflation go the other way. that could be a key question in asia. let's get the latest with juliette saly. whattte: i'm looking at
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the dow jones did overnight, a record high coming through once again. up by led by industrials 2.8%, consumer staples also getting a bounce and energy staples up by .5%, the same movement we had an energy space in asia yesterday. the positive start you would think you a little bounce to asian equities, but we also have the yen trading higher against the dollar. by nikkei has opened down .1%, but still holding above the 20,000 point level. south korea's cause the index leading gains in the region up by .4%. very mixed when it comes to asian currency so far against the dollar, because as kathleen mentioned, we did have the dollar fall to a 14 month low, but you are starting to see downside coming from a number of the commodity-based currencies. malaysian ringgit off by about .1%. copper is another one to watch today.
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it had a very strong rally. then we have the london contract also moving quite strongly. copper up by .1%, so look for some upside. australia's asx 200, pretty flat on the open, although only a few stops open at the moment. i also want to check out nintendo is doing. has not opened yet but up by 1.3% wednesday after we saw the first order profit coming through. nintendo will be one to watch today because it came through with a ¥16.2 billion first-quarter operating profit versus estimates of ¥10.6 billion. kathleen: thank you. now let's get the first word news with paul allen in sydney. paul: the fed has expected -- as expected see unchanged but confirmed unwinding of the balance sheet will start relatively soon. the start of normalization would be a milestone in a recovery program in his ninth year.
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fed watchers say the term relatively soon signals the bank could announce the timing of unwinding at its next meeting, scheduled for september 19 and 20. the senate rejected a simple repeal obamacare as the debate on health proposals raises questions about the republican'' ability to pass any bill. the amendment was similar to the affordable care act repeal that passed congress in 2015 and was vetoed by president obama. the debate will culminate in an all-night vote later this week that could feature dozens or even hundreds of amendments. the white house chief strategist is said to back funding middle-class tax cuts with a new top rate of 44% for those making more than $5 million a year. we are told it is not clear whether president trump would support such a move, which would be the highest rate in 30 years. the president says he wants to help the middle class, but analysis of the tax outline released in april shows it would mostly benefit high earners.
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lackluster growth in the u.k. is that theng the halt bank of england expansion in the last quarter was a modest .3%, compounding what the office for national statistics called a notable slowdown. production and construction were a drag and suggests the economy's resilience since the -- hasvote has weekend weakened, offering scant justification for a rate rise. foxconn has confirmed plans to invest in the u.s., setting aside $10 billion to build a manufacturing plant in wisconsin , the home state of house speaker paul ryan. it is expected to be completed by 2020 and employ about 3000 people initially. the foxconn chairman joined ryan, president trump, vice president pence, and wisconsin governor scott walker to make the announcement. >> we were invited in america. america does not have a
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single lcd factory to produce a system. we are going to change that. it starts today with this investment in wisconsin. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. yvonne: let's take a look at samsung, beating estimates in the last quarter. thanks to the new galaxy s8 and a surge in prices of chips. take a look at the stock right now, up close to 1% right now. let's get through these numbers with media intelligence and tech analyst. i guess it was chips that dominated. >> definitely. if you look at the operating profits for the division, on a year on year basis, it still has
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not gone back to what it was following the success of s7. even thoughs8 made a strong recovery, on a year on year basis, there was not that much growth. the company is going to have earnings, soon, but according to the company announcement, they don't expect any sequential recovery. they are planning to spend a lot on marketing. yvonne: you mentioned before that they spent so much when it comes to rigorous testing, marketing, which is going to crimp their margins. it is it -- is it a surprise they have not quite turned the corner on the note seven debacle? anthea: i guess the company knows very well what they need to revive the brand equity. they probably would worry less about operating profit in the near term. they have the luxury of tons of
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earnings coming from memory chips' rally. the focus definitely is to revive the brand and regain competitiveness ahead of the new iphone launch. could you talk to us a bit more about growth drivers for the second half of the year? before the earnings came out, there were a lot of stories about set to overtake intel as the biggest chipmaker in terms of revenue, said to have record profits, etc. are they still on track for those kinds of landmarks, those kinds of milestones? what is going to get them here by the end of the year? that the believe memory space, samsung is still very competitive. in fact, they are adding capacity. they announced that they will increase significantly this year. the new capacity that they add
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is not going to give them additional earnings this year yet, in the second half, but according to the future, memory prices would continue to be very strong in the second half. don't forget the fact that second half is seasonally very strong in terms of memory chip demand. looking at the guidance from its rivals, we do believe that samsung will continue to rise memory chip -- will continue to ride its memory chip rally and competitiveness will continue to increase, especially the focus more on memory chips but also on system processors. kathleen: if you want to keep shareholders happy, you can raise your dividend or do a share buyback. can we expect that? anthea: definitely. the company has announced to do a share buyback. we don't know the detail yet. they will give out the detail later in the earnings call.
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for sure they promise not to keep more than 7 trillion won in cash value. ,iven such a consensus result they have still a lot of cash remaining to pay. yvonne: thank you, joining us from bloomberg intelligence to break down the samsung earnings. we want to get more from singapore's markets, a global macro strategist joining us from the lion city. we have been talking about this em rally. it has not been driven by commodities, it is the tech story. if you take a look at earnings like samsung we have seen, do you think this rally can continue? know, if you even see what we have seen in the u.s. with attack, it keeps going -- t in the u.s. with theech. the momentum is there, the interest is there. we had blowout earnings with
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netflix up 17%. you dig into these numbers and it does look like there is more to come later in the year. for now, you have to stick with momentum. yvonne: take a look at the earnings so far. you mentioned about netflix. i think facebook was an anomaly. take a look at the likes of google. these beads were not good enough given the record runs we have seen. much about the durability of these rallies that possibly the momentum is waning? ini don't know really enough regards to what happened on google's perspective, but i think at the end of the day, sentiment is key and as long as volatility stays low, the market wants to grind higher. earnings become another side effect of what the market actually wants to do. no one is paying attention to valuation for quite a few years. until proved otherwise, i still
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think we continue to grind up higher. yvonne: step back a bit and talk to us about liquidity. when you talk about markets that don't pay attention to valuation , it is often because there is money sloshing around looking for someplace to go. we have been on nearly a 10 year path of global central banks putting money in the system. that may start to shift. it is like to ends of the spectrum, tech and central banks. is that going to make a difference at some point? >> i think it has to be, especially being a global macro guide. we are here with elevated valuations, extreme i think a little bit more of a well-run statement. it is not just in tech, but tech's most prominent. it is obviously from the loose money we have had in the system, unprecedented qe. it goes to show that structurally speaking, over the
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next two to three years as the fed starts to wind down the balance sheet as the ecb pulls away from more accommodating balance sheet, that that feedback goes through into equities and that lose money is not going to be around. there has to be some kind of overhang structurally. kathleen: thank you so much, you sit tight. we have more to talk to about since we've reached the question of central banks. we can really brought in this out with kay van-peterson. still ahead, big-screen ambitions in china, imax china's ceo joins us to discuss the company's latest earnings and outlook for next year. yvonne: that's right, our next hour in bloomberg markets, evans is in for the latest take on the fomc meeting. this is bloomberg. ♪
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yvonne: this is "daybreak: asia ."
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i'm yvonne man in hong kong. kathleen: i'm kathleen hays in new york. let's get to the latest on today's fed decision, central-bank holding steady on interest rates but making a much clearer -- making it much clearer the unwinding of the balance sheet could begin relatively soon, taken to mean something like september. we continue with kay van-peterson, the global macro strategist, who is joining us from singapore. fed -- your take on the they didn't say much, but the dollar got clobbered. what happened, why? >> absolutely. to be honest, i am just as shocked as a lot of people waking up early in asia. it does not really make sense to me when i read the statement. i don't see it at all as being dovish. for those arguing it is, i would ask why are u.s. 10 years selling above 230? why did they put in the steps relatively soon?
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as in they will be proceeding with a balance sheet implementation? to me it goes back to the very near term sentiment is king, and right now sentiment is so structurally bearish on the dollar despite having record shorts i have not seen since 2013. this to: let's broaden other currencies, other markets including emerging markets in asia. australia is not exactly an emerging market, but when philip lowe, the governor of the reserve bank of australia, it struck me that he talked about -- central banks can raise rates if they want to. it does not automatically mean anything for us. we don't automatically need to move in lockstep. we know he is referring to the federal reserve, but are there countries, currencies that are vulnerable? has everybody priced this in and a big deal -- and no big deal? is a great example,
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that we are not necessarily going to be hawkish when everyone is hawkish globally. we still hit $.80 on aussie. on the e.m. side, there is great benefits from this with the dollar weakness. i think we kind of have to wait and see the next catalyst. we have key u.s. gdp data this friday, everybody is are you talking about jackson hole even though that is four weeks away. with the euro making new highs passed the 11714 from 2015, you have to expect you may hear jitters out of the ecb about the euro being too high. was in tokyo last week covering the bank of japan meeting. far from even hinting they are leaning behind the fed, they made it clear -- we are going to keep easy policy as far as i can see. you have to look at the ecb. they seem pretty much like -- don't hurry us into pulling away
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from our quantitative easing bias. do think the fed is going to turn out to be the lone diver ger for a while? >> at least for now, yes. the fed could have made a copy/paste statement but they felt confident enough to put the relatively soon. it is very possible. it comes down to inflation. inflation is a new payroll number out in the u.s. we will have to see how pce does next tuesday, august 1, cpi on august 11. i think mario draghi just wants all the optionality he can. the last thing he needs is a repeat where they get less accommodative or more hawkish too soon and then have to reverse. kathleen: if they have to reverse, does that mean the euro could weaken? take a look at the dax as well. could it be a boost for that or
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is that correlation still a bit weak? >> i think it depends on what kind of timeline you are talking. to bed expect the dax quite weak when it opens up at 2:00 a.m. with the futures in asia given the big ramp up in the euro. structurally and technically speaking, medium to long-term, the euro is looking very strong. it looks like 118 is a given. we could move up to 120. i think the only thing that could reverse the euros strength given how weak and for the sentiment is on the u.s. dollar is some kind of rhetoric or guidance coming from ecb officials or even draghi himself. for now, it really looks like the path of least resistance continues to be to the upside. that is amazing because it has had almost 11.5% move your today from the lows, which for the most liquid currency out there is kind of unheard of in recent times. yvonne: we just did a survey
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this week talking about what would actually lead to some type of bear market when it comes to u.s. stocks or even the credit markets. global equities in general. consensus onack of what would be the likely trigger , central banks are the overarching thing. everyone thought tightening was going to get a bit messy. do we actually know what tapering could do when it comes to risky assets? seems like something the fed cannot get their mind around at the moment. >> i think it is a great question. let me answer that in two ways. everything i have seen that covers a balance sheet reduction is pretty blase and relaxed. i think a lot of the unintended consequences end up bigger. i think when they start tapering, even though they have been clear on the guidance, structurally speaking, it is going to be a bigger deal.
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i have the very contrary and view from the perspective of expecting u.s. tends to be much higher by the end of the year. the second point is, if you go back and rewind, qe from the beginning was supposed to be inflationary, supposed to cause companies to invest. it did the exact opposite. now quantitative tapering is supposed to be in theory deflationary and supposed to stop companies from investing. i think it will be the opposite. i think the tightening will end up causing inflation down the line and i think it will end up causing companies needing to take more risk. kathleen: you think tightening is going to cause inflation down the line? explain that dynamic to us. everybody thinks if the feds tighten, people won't invest as much, mortgages will rise, things will slow down. you can't just leave that one on the table. >> fair enough. the whole point is, it is just trying to flip what is considered conventional wisdom. if you think about it, when it is so easy to borrow, then you
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can turn around and financial engineer, buy back your chairs, shares, raise earnings to that point, or you don't have to invest so much because you can borrow debt cheaply. the bar is much lower to survive and you don't need to take as much risk. what i'm trying to say is, if you tighten, yes, there will be companies taken out that should not really exist that are still zombiefied, but you will be forced to take more risks. put, build plants, and that is the reverse catch-22 i think will be the unintended consequences of qt. yvonne: quickly, you mentioned yields could go much higher. what is your six month forecast for the tenure? >> -- for the 10-year? >> i think we break for the highs. i think we could make 3% by the end of the year, which is a big call.
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i think the risk is to the upside from my perspective. kathleen: always love a contrarian call. great to have you, kay van-peterson, global macro strategist joining us live from singapore. plenty more to come on "daybreak: asia." this is bloomberg ♪
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yvonne: this is "daybreak: asia ." kathleen: i'm kathleen hays in new york. yvonne: i'm yvonne man in hong kong. a quick check of the latest business flash headlines. japan's most popular messaging service topped estimates after handing office photo and camera business. vine's operating income soared $130 million in the three months through june, smashing forecast of $52 million thanks to the one time photo gain of $93 million. however, user growth has flagged as focus shifts to fight facebook's whatsapp and messenger.
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kathleen: the nintendo switch is becoming a money earner. profits topped estimates. operating profit was $145 million, beating forecasts of $95 million. currency gains helped to boost profit after the yen fell 10% against the euro. nintendo collected 25% of its revenue from europe. kicked offc has earnings season for singaporean banks. second-quarter income rose 22% to 796 u.s. dollars, 15% more than what analysts had been expecting. the companies saw growth in its management and insurance operations. ocbc acquired barclays wealth units in singapore and hong kong for just under $230 million last year. kathleen: struggling commodity trader noble group may be ending global ambitions after warning it may lose as much as $1.8 billion in the second quarter. singapore-listed company is shifting its focus back to coal and iron or in asia after agreeing to sell its gas business.
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noble is also seeking buyers for its global oil liquid business. yvonne: coming up next, a deal president trump says only happened since his election. why apple supplier foxconn is moving to the u.s. this is bloomberg. ♪
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yvonne: 8:30 in singapore, looking pretty hot. half an hour away from the open of trading there. i'm yvonne man in hong kong. kathleen: i'm kathleen hays in new york. you are watching "daybreak: asia ." let's get to the first word news with paul allen in sydney. may: prime minister theresa has lost another brexit ally, her director of strategy has quit, leaving her without the two authors of her vision to leave the eu at a critical time in her negotiations. the departure of chris wilkins means may has lost both of her top advisers in the aftermath of the election. resignshief of staff
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the day after the conservatives lost their parliamentary majority. efforts to end the gulf prices have said to reach an impasse amid signs the saudi led block wants more concessions from qatar. a source tells us saudi arabia, bahrain, egypt, and the uae have yet to respond to calls from the u.s. and u.k. to launch new greg negotiations. qatar has offered to begin talks with the saudi alliance if it's sovereignty is respected. the crisis began on june 5. russia is threatening to retaliate against new u.s. sanctions, saying they all but ruin the chance of improved east-west relations. the house of representatives overwhelmingly passed a bill strengthening measures against moscow for meddling in the election and supporting separatists in ukraine. the bill came less than three weeks after president trump and putin held meetings of the g20. an indonesian official says the agreedent and a man have on the terms of a new mining license. the energy administrator says
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the minor will be operated under a special license through 2021 with the company able to seek 210-year extensions. the two sides have been under dispute over terms with the company seeking a 51% share of the local unit. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. yvonne: thank you. time to see how the asian markets are shaping up so far. it has been quite busy. let's get the latest with jules right now. samsung really giving me kospi. recorde: we don't have highs, just off those, but you are seeing it up by .33%, pushing the regional index higher, back at levels we have not seen since december 2011 mainly due to the gains in the kospi. we do have the nikkei just a touch lower today down by .1% in response to the strength in the yen up by around .2%, pushing
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very close, just below the 110 level but with the 110 handle at the moment. the asx 200 up by around .1% in early trade in response to a rally we have seen in these global metals, particularly copper. the shanghai copper contract up another .7%. it is earnings season. we are getting a lot of numbers. let's have a look at some numbers we are watching in the asian session. nintendo on your screen if we could get that grafted,. -- that grafted come up. just off the highs of the morning. they came through with a very strong first-quarter number after the bell yesterday, first-quarter operating profit coming through as a big beat for the market. as you mentioned, samsung, second quarter profit topping estimates thanks to chips and the samsung essay found. ,ortescue metals in australia fourth-quarter shipments rose 3%
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above estimates. all of those earnings, solid boost for the asian session. i mention copper. this chart is in the library. copper trading at a two year high. we are seeing the materials index in australia slightly below where the level is. our strategists saying on the blog this morning that you could see more upside from both asx 200 and the materials index in australia. we have seen this big rally in metals across the globe. it does not look at this stage like the mining stocks have followed the rally. a little more upside according to the strategist. kathleen: thank you very much. let's turn now to apple supplier foxconn. it has finally picked wisconsin as the site of its first u.s. factory. the taiwanese company will receive an incentive package of billions of dollars to build a campus worth $10 billion. alex webb joins us from san thisisco to talk about how
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deal makes sense and who will benefit most. i think of wisconsin, i don't think of display panels, i think of cheese and football. this is the story for a lot of american states and regions, where they want to build a high-tech labor base, investment days, and this is a very important step. how much or what does wisconsin stand again? alex: it is really about the clinical calculations. there will of course be jobs, up to i think 10,000 jobs in the long-term, just over 3000 in the short-term. the fact is that in terms of pure economic or business-economic decisions, wisconsin does not make the best sense for foxconn. it is a swing state for the republicans, so there was a lot of pressure coming out of the administration, which encouraged foxconn to put the plant there. 43,000 votes, a
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very narrow margin. kathleen: what does this indicate if foxconn wants to curry favor with the president? what does that tell us about future deals or future cooperation between taiwan, other asian nations, and the u.s.? alex: there is a far bigger play , which is that foxconn, as you said, is the biggest maker of the iphone. apple does not make any product itself. it contracts out almost all of its products to contract manufacturers. one tiny plant they have in ireland m that makesacs. the iphone is very hard to make purely with robots. you need to have quite a lot of humans to screwed together the tiny screws which are essential for final assembly. in china, they have a vast supply chain, ecosystem built over the course of a decade. the plants that foxconn is going to build in the u.s. is not so
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labor-intensive. it is making lcd panels which can go into displays. ,t is a bit of a quid pro quo namely foxconn can say, we are bringing jobs to the u.s., please don't threaten iphones --tariffs,sts because it is more of a costly product to make in the u.s. kathleen: foxconn does manufacture quite a bit, they have a cozy relationship with china as well. does china ultimately lose out in all this? alex: no, it is securing chinese jobs, one could argue, because they are not moving labor-intensive manufacture of things like the iphone or xbox for amazon echo. they are not moving that away from china as long as there are riffs on imports to the u.s. in some ways, it is a situation where perhaps everybody wins. the trump administration gets its big poster child of a
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factory and can claim it is bringing jobs. foxconn is still able to build products in china, which really drives the profit. apple and amazon and microsoft, they are able to build these things with contract manufacturers at lower cost than they might be able to do in the u.s. yvonne: everybody get something. thank you, alex webb, joining us live from san francisco. let's talk about more earnings now. the casinos, las vegas sands, its new property in macau. casino operator revenue rose 19%, beating analysts estimates. it came a day after rival wynn resorts disappointed investors. let's bring in the gaming and list. -- gaming analyst. ,he vip segment supported wynn but given sands' reputation, how did a fair? >> let's take a step back and
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look at macau holistically. all operators are pursuing all ends of the market. you want to capture every segment of the business. there is growth all around. sands is making progress to capture the premium end of the business, gambling revenue was of35%, impressive because the new property that opened up as well as an overall lucky quarter, so the house won better in overall bets. they are making progress as well, offering premium rooms which they are renovated -- renovating, introducing bigger suites. that is going to attract more of the high-end market and compete better with wynn. at the end of the day, they are at an advantage when it comes to the mass market segment, which will continue to be its core profit driver. yvonne: they have reiterated they continue to focus on the mass-market. will that limit their growth? margaret: it is a funny question. they are on the stable side.
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it is understandable why they want to pursue this segment of the business. margins range from 25% to 90% with retail at the high-end. it is very suitable to capture that mass-market in terms of that appeal because it is centrally located, 13,000 rooms in the market, a full section of dining as well as malls. people expect to be entertained, so does have that appeal. at the same time, it is a segment that you can predict. china, -- it traces the china gdp growth generally. you also have overnight chinese travelers. it will be further accelerated in terms of growth when you have more infrastructure connecting to macau from china. kathleen: i'm not much of a gambler and i see you talking, i want to go. let's talk about a couple of other companies. what are you expecting there? , it is moreom elco
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of a vip premium story, and i think they will benefit in terms of revenue, games across the board. they also at the same time have this oldies that can compete on the premium and. you have mgm, which does not have a property yet. it is pretty much stable at this point, the older part of macau. you have another area where the growth is happening. mgm does not have one yet, not until the fourth quarter. kathleen: a quick question as we shipped to singapore -- as we shift to singapore. what was behind it? margaret: second highest ever since the opening, largely driven by the vips admit. it is -- vip segment. it is a volatile business, cannot really be productive as to whether it will go further ahead. it is changing commission structure, which i think is interesting when it comes to the vip segment.
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that helps to widen profit margins overall for the market and four in particular las vegas sands. it will be interesting to see how they play off its competitor. kathleen: thank you for joining us tonight. we are going to continue to look at earnings from casinos. we are going to very special movie theaters. we are going to talk to imax china's cfo about its second quarter results. this is bloomberg. ♪
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yvonne: this is "daybreak: asia" i'm yvonne man in hong kong. kathleen: i'm kathleen hays in new york. imax missed expectations in the second quarter, revenue came in at 87 point $8 million, 2 million below average estimate. adjusted earnings per share matched forecasts of $.15. before the report, the stock had nine buys, five holds, and one
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cell. yvonne: imax china reported separately with income coming in at $16.5 million on revenue of $51.6 million. our concern about the implications of beijing scrutiny of its key business partner wanda. let's discuss this with imax china ceo jim athanasopoulos. welcome to the show. first of all, broadly speaking, imax earnings, what they did, and imax china's part within it. it is a huge market for imax. >> yes. it continues to be a huge market for imax. notwithstanding earnings, overall we are excited about a number of factors in china so far this year. we signed 83 do deals, 238 deals last year. signings leads to network growth. network growth is the foundation of our business. it sets the table for future leverage of box office and to take advantage of the movies when they come out. our customers have basically --
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are signing on and they have got a significant vote of confidence. studios are coming to us and we are doing many movies with them. we are very happy about the foundation and fundamentals of our business in terms of network growth. we are going to continue to do that, continue to persevere that way, and the box office will take care of itself. kathleen: give us a thumbnail sketch of your history, how long imax has been in china, what the growth has been like, and to what extent you tailor make your movies and more to the chinese filmgoer, watcher? >> a great question. we have been in china for a long time. our first theater opened in china in 2001. we saw a rapid expansion after "avatar" was released in 2010, the catalyst for the cinema sector in china. imax was synonymous with that film. we have been part of the organic growth of the market. china sitting at around 45,000
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screens so far. we are not just plugging and playing with our existing global strategy. we are definitely catering, doing chinese films. last year we did 10, now we are playing a film, a very popular movie. we are tailoring our programming schedule to local tastes, but we are not forgetting what is important, hollywood films, big blockbuster films that imax is known for. it is a delicate balance between the two. we will continue to forge ahead with chinese films in addition to hollywood films to take advantage of the big market. yvonne: it doesn't really feel like we are in this robust rebound some were expecting in china. last month we saw some pretty disappointing numbers again. your imax china stock has failed to record lows two weeks ago on concerns of poor box office. is it getting harder to find the blockbuster hit right now? some have criticized you missed out on some distribution rights
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on some key blockbuster hits this year. >> picking movies is always tough, but we have been quite successful up until now. 21 of the 26 weeks at we program films, we had the number one film. there was the time in the chinese new year, we only had one screen per complex, we picked one movie that did well, but there were three top grossing films at that time. we are learning and adjusting our programming schedule, tailoring it to take advantage of the maximum box office opportunity. overall, we have expanded quickly. we opened up 117 theaters last year, 36 so far this year. it is a new network, new built theaters, they take time to grow. what is important as we have repeat customers coming back to us that believe in imax, believe in the economic model, believe in the point of differentiation. that is important as we continue to move forward with new
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signings with existing clients that are happy with our business. as i said, we are going to take advantage, grow our foundation and network and take advantage of the films as they come. up until now, we have been very good at picking films overall based on the fact that six of the top 10 films this year have been imax formatted films in china. kathleen: at least half of the greens you are planning to add, 150 in total, are wanda films. i want to get your take on this given the wanda group has been under intense scrutiny when it comes to overseas investments, banks reportedly cutting funding. does that impact the business relationship you have? >> we have had a long-standing relationship with wanda. our first theaters were with them in 2007, they helped us grow and facilitate the market overall. we have not seen any slowdown in network growth with wanda. they have been an excellent customer, a very good partner.
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we have rolled out our theaters three years ahead of schedule with them under our original contract. this year, things seem to be business as usual in terms of growth with wanda overall. the things that are happening and people are reading about in the press, you have to remember we are dealing with wanda cinema locally in china making local investment decisions, building local cinemas and local shopping malls. it has nothing to do with overseas investments. it isil now, we feel business as usual with them. they're ahead of schedule and have been a great partner. we have not notice anything from a roll up perspective or operating perspective with them. yvonne: great to get your perspective and dig into the earnings. jim athanasopoulos, iraq ceo from new york. -- imax cfo from new york. mcdonald's is winning back customers. the golden arches saw an
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increase in diners in the u.s. last quarter. the ceo told bloomberg that speed and food quality are key to its overhaul plan. >> we begin to see results. all customers are visiting more often, the ultimate measure of the strength of the business. >> you said yesterday -- this is a direct quote --ould like you n order of importance these things all guests want some of. cheaper food, which you might describe as value. healthier ingredients. different menu options. tastier food. a better experience. what is most important? >> experiences key and one element of that is speed. things we will never get a pass on our value and speed, that is what all customers expect. as you say, customers are getting more demanding. they want to see us respond to the things that matter on their agenda. food quality is one of them. we have been investing in fresh
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beef for a quarter pounder patties, cage free eggs, removing antibiotics. when we invest in things that matter to customers, they respond positively. >> at the top, it is speed or value? >> you can't pick one, their fundamental parts of our dna. yvonne: that was mcdonald's ceo steve easterbrook talking to erik schatzker. one feature on the bloomberg is our interactive tv function. you can find it at tv . you cannot only watch us live but see previous interviews and dive into the securities and bloomberg functions we talk about constantly. you can become part of the conversation by sending instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪
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kathleen: this is "daybreak: asia." i'm kathleen hays in new york. yvonne: i'm yvonne man in hong kong. let's do a quick check of the latest business flash headlines. china's largest publicly traded oil and gas company says profit rebounded in the first half. petrochina says net income may have risen to about $1.6 billion compared to $78 million a year earlier. that was the company's worst profit since listing in 2000.
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petrochina has cut costs and says it will continue to keep a lid on expenditure. nikkei says japan has asked creditors for millions of dollars to finance its ongoing turnaround effort to provide loan guarantees. nikkei says the apple suppliers restructuring may involve halting production and cutting staff of plants in japan and china. shares have tumbled this year after sales to apple fell 10% in fiscal 2016. yvonne: hilton worldwide is continuing to work with china's hna group and is not concerned on beijing's crackdown on risk-taking overseas. hna bought 25% of hilton from blackstone in march and has similar stakes in park hotels and grand vacations for about $6.5 billion. the hilton ceo says the stakes are worth about $7.5 billion today. that is almost it for us here on "daybreak: asia." time for a quick look on the next few hours.
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david has been stepping in all week. it is going to be about the fed and how we have been obsessed with the tweaks in that statement. david: a little too much. in the absence of anything else, we try and decipher further the fed code. they dropped a few phrases, added a little, changed wording. we will be talking with evans of state street. he is our first guest in the next hour. what he is essentially saying is , should we be looking at the balance sheet policy and rate hike policy as two separate things? we will ask them what that means for rate strategy in asia. you look at perhaps two potential countries, japan, which we know is staying put. we know india may cut next week. do we get a spread there? or is that priced in? is there something else we are not seeing? the other thing is samsung. you talk about facebook. samsung, we have broken down the
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numbers for revenue stream. tracy of gartner research is joining us out of singapore to talk about personal technologies. how does ai fold into the new devices coming out? are we still seeing the same battlegrounds across the smartphones? bigger screens, better battery, that sort of thing. lots of things to talk about in the next hour on "bloomberg markets: asia." kathleen: "daybreak: asia that is it for." standby for "bloomberg markets." this is bloomberg ♪
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>> what was the strategy that you used? completely determined to recapture my parents' money that i had lost. >> how does somebody raise $5 billion in 24 hours? >> first come, first served. >> you have an image of a person that strikes fear in a lot of c.e.o.'s. >> some people are afraid from pault a call singer. >> it doesn't bother me anymore. >> if somebody invested with you the very beginning? >> $1

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