tv Bloomberg Daybreak Australia Bloomberg July 30, 2017 6:00pm-7:00pm EDT
past 8:00 a.m. this is daybreak australia. this is the start of the brand-new trading week. betty: it is another week, after 6:00 p.m. sunday evening in new york. a beautiful summer day today, right before the week gets off. i suspect it has been rocky in washington. we will see if the repeal of health care, the ouster of reince priebus, the russia sanctions, russia hitting back, all of it will rock the u.s. market. onsaw an interesting close friday. let's remind you. the gdp numbers were a little bit less than what economists had estimated. disappointment on the top line gdp number. you can see the stock of the s&p down slightly, the dow still ending up 33 points, the nasdaq taking a hit.
tech shares ending unchanged. we have a lot of data points to pmior asia, including china , manufacturing pmi, and services pmi numbers. haidi: that is right, that will be the key data point we are watching today and going through the rest of this week, certainly the implications in the australian market. look at how things are faring in the early asian session, the kiwi dollar 70 5.09. the u.s. dollar index resuming declines against all of the peers except for the swiss franc. we saw the biggest decline in the friday session in a month, 24 points to the outside when it came to asx futures. the aussie dollar shy of opening $.80. we will speak to someone in a few minutes, saying it could be
sneaky. the policy meeting gets underway this week as well. a quick check on commodities, gold had been up in the session, up 0.1%. crude 49.98 when it came to wti. oil with the best week of the year with renewed hopes that they are rebalancing, that opec and its partners are committed to the curbs output. it is up 0.7%. let's get you caught up with first word news. good morning. security has been ramped up at major airports across australia after a counterterrorism operation is claimed to have boiled a plot to bring down a plane. -- foiled a plot. the prime minister said passengers should expect some
delays at screening points. the threat letter -- level has not changed. house republican leaders say it is a plan for a border tax that will make it likely they can overhaul the u.s. tax code by year end. paul ryan rejected raising taxes on wealthy americans, saying it would keep it at the 33% rate. steve bannon is said to back raising the rate to 44% to pay for middle-class tax cuts. venezuela, a contentious vote on remaking the constitution. violence spread across the country. members of the president opponents saying he wants to curtail democracy. much euro has faced -- president maduro has faced much criticism. saudi arabia and its allies agree to the demands against
qatar, saying they must all be met before the country's diplomatic isolation can end. norain said there can be compromise until dough half stops supporting extremist groups -- doha stops supporting extremist groups. this includes the closure of the al jazeera tv network. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i haslinda amin, this is bloomberg. ♪ development out of china, russia to bring you from the weekend. moscow is expelling hundreds of u.s. diplomats. pyongyang testfired yet another second icbm. ramy inocencio has the latest. let's start with russia. ramy: this is tit-for-tat basically. a near. congress given
unanimous vote, russia is retaliating. they are saying if you throw sanctions at us, we will broker diplomats out. -- throw your diplomats out. that would take the number down number which is the same of russian diplomat in the united states, democratizing. but looking at what mr. putin has been saying, he said we waited for a long time, nourished the hope that after donald trump was elected the mother would be a change. it seems -- there would be a change. it seems it is not that way. russia retaliation, it is about time. long,s retaliation is long overdue. if the u.s. side decides to , we will move further answer, we will respond in kind. we will mirror this. we will retaliate. ramy: also saying they could do
more, but mr. putin say he does not want to do anything just yet. he wants to wait to see what could happen. while russia has a range of possible options, sensitive for the american side, it could hurt international relations. i don't think we should do that. he said he will consider other options. the take away is that relations are still getting just a little frost year. -- frostier. haidi: also potentially beijing and washington because we had pyongyang firing another icbm and donald trump launching a fresh round of tweets. he is disappointed in china. ramy: north korea is sending out another missile, donald trump is sending tweets. let's show what those were. if you are on the bloomberg, go tweet.rump
he said, we let them make billions of dollars, they do nothing for north korea. china could easily solve the problem. if you go to the bloomberg terminal, in terms of what is happening with trade with north ectr function. china is on the right, $6 billion in 2016. quarter on quarter, first billionof 2017, 1 $.3 falling from the fourth quarter of 2016, $4.8 billion. looking ahead, china's reaction to north korea and donald trump, xi jinping saying they want to speed up military modernization. they are looking afford -- i had to the full party congress in five years and the possible leadership shuffle to project strength before that happens. haidi: very interesting, donald trump kind of correlate trade with geopolitics, security, very
interesting. thank you for that. a busy weekend on the geopolitics patch. today, thisustralia is a possible lifeline. u.s. loans are down in the they are trying a nondisclosure agreement, looking at some ugly reading. it has been a tough time for the shareholders after slumming down to $.17. they have the usual problems freeway broadcasters have, the rising cost of content, competition with online platforms. we have lachlan murdoch, some of the major shareholders, talking -- wanting a bid to take over. we don't have parliament sitting again until august. that is a guaranteed the law change be made. so 10's fate is in the balance.
betty: it is a big week with earnings season in australia. what are a few things to watch? paul: a couple big things from the rba, the cash rate decision, the tuesday of the month. thinks the rba will hold at 1.5%, particularly now for a couple of things, future timing schedule obviously. some words on the currency, the aussie dollar nudging 80 u.s. census again. using language -- cents again. they want to go away from the mining boom. we could look for further language. at the end of the week on friday , the reserve bank releases its quarterly statement on monetary policy. there is plenty of other data as well. we have rio tinto first half earnings on wednesday, son court thursday and another on friday.
we will keep moving in australia. haidi: thanks for that. a lot on the agenda. more coming out on monday. the finance director speaking to us after the agency releases one report that they will buy back $2 million worth of shares. we are getting the latest on that at 2:30 p.m. in sydney time. still ahead, we are speaking to someone who said john kelly is the wrong pick for donald trump. and up next, the aussie dollar had a big loss. whether it has more room to run or it is time to sell. this is bloomberg. ♪
we are counting down to the sydney open. equity futures are showing a higher open, almost half a percent. that is despite the session from wall street on friday, closing with -- it looks like a balmy day in sydney, despite it being winter. haidi: there were people going swimming at the beach in the middle of winter. i'm haidi lun, you are watching daybreak australia. the australian dollar has enjoyed a riproaring july. it could be in a very difficult situation at the policy meeting. but go to the website senior strategist -- westside senior strategist. this could be a sticking point when it comes to the aussie -- do we expect further residual earnings from the rba, or is it going to work?
>> good question. we do expect they will raise the category of little bit. the danger in the wording from tuesday around the aussie dollar, they somewhat there quite relaxed. they don't think it is anything to really change. this latest rally over the past month, very steep rally from 76 to 80. only partly justified by higher commodity prices. the aussie is up as much 5%. we can justify that, but it is not whether it will work. it is difficult for them to have impact on the currency if they are willing to threaten the low interest rates. they could intervene in the market in emergencies, so unless you are willing to talk about a rate cut, it is difficult for the rba themselves to have any sustaining impact. that is the challenge for them.
haidi: we are going around in circles because we have a strong aussie dollar, it affects to tightening when it comes to the aussie rba, but also how much of ? is is a u.s. dollars story big part of it certainly is, but looking at trade in terms, with the aussie has risen to a two-year high, so it is not necessarily because of the u.s. dollar. they will be patient. they have made it clear they will wait for inflation to get back into the band. many times currencies have strengthened and reversed very quickly, so they will be hoping this is not the same rise. perhaps many others in the market, they will expecting the fed is still on course to raise rates in the coming months.
that will lend support to the u.s. dollar. that is legitimate with the debate to which meeting it is going to be, september obviously the pricing is very close to zero there. if they want to start pricing, that would help the u.s. dollar. , the u.s.y near term dollar could make a bit of a comeback, we get some expectations for growth to be too downbeat by the index. the market is about 50-50 for year-end, the scope for the dollar to find support. thathe main sort of area we get too bullish on the u.s. dollar is september, october where you have political risk around government shutdown, debt ceiling. it is hard to see that being strong then. indeed.t is it is hard to see where the economy goes in some ways after the events happening in washington and how that will
affect the markets and the economy. , want to pull up a quick chart 7383, which shows how much the aussie dollar has risen despite the record low rates we are at. and as you noted, the sort of spiked we have seen in the last few weeks, you think that will settle and that we might see a retracement. have you been surprised how quickly the aussie dollar has run up? sean: a little bit. as a recent visitor to the u.s., i was not complaining about the problem for the rba as far as tourism and the outbound. there is the run-up. it looked very comfortable on those ranges. on our numbers it was fairly venued. if riskreminder
appetite is quite solid, we see strength in the asian currencies . many of them have been trading strongly. you still have inflows to the region, so there is that positive five around the region. around the region. australia is a proxy for asia and the u.s. it is responsive to u.s. dollar moves. betty: i want to ask you this question that has risen given the release of the neutral cash rate for the rba. what really is stimulative if 1.5% really actually is a stimulative rate, or should it be lower? where do you stand? sean: sean: this is a good question because the initial market reaction to the rba's discussion on the july minutes was, they are talking about
getting back to neutral. they are still 200 basis rights away, so they are inching towards it. the neutral rate has quite -- come down quite a bit, so the policy isn't so interesting. it is a difficult balancing act. 1.5% overll hold at the next couple of years and probably the end of 2018 and into maybe even 2019. we think they will be happy where they are now. we will keep an eye on the housing market as far as whether they see any scope for rate cuts. those will come down to the confirmed financial stability, how much debt australia is holding at the moment, and therefore they just are wary of adding fuel to the house fire. a has been a big problem here. -- that has been a big problem
here. haidi: i want to show you this chart, 2251, showing were the dollar is actually going in the u.s. forecast for the fourth quarter. there is a gap between $80 and $75 where the forecast is. we have people calling for $85. how much of that really relies on a hawkish, more aggressive fed, and how many people will sit on their hands for the rba? sean: i think so. i think that is a very striking divergence. the best case is still on the lower end, 73 we have had for a while. it relies on the u.s. dollar regaining strength. orhave a difficult few weeks couple of months at least for the u.s. dollar. but if the fed is on track, they are reducing their balance sheet from september, and if they
managed to muddle through the political races, political pressure from the debt ceiling in september, october and the fed is confident enough to raise rates by year end, it should be better for the u.s. dollar. much hinges on that, and calling it in commodity prices, supply catching up to the recent rally. if wes the best guess, are anywhere near the $73.74. right, thank you. though forget to check out the interactive tv function. -- don't forget to check out the interactive tv function. you can see previous interviews, dive into the securities are bloomberg functions like talked about. you can become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out.
♪ betty: good morning, i am betty liu in new york. are watching daybreak australia. a look at the business flash headlines. wells fargo has a new problem following fraudulent bank accounts, compromise consumers, now there is unwanted auto insurance. the bank may have charged half a million people for insurance they did not need. back in may, executive talked about changes, not about the insurance issue they had heard about from july last year. betty: this person has agreed to sell the assets of his hong kong telecoms business for 1.9 billion u.s. dollars. iceberg beat rival bidders including an pk partners which
had been preparing financing for an offering. they are selling to focus on new industry sectors including data centers. haidi: nomura's first quarter profit rose 20% at the stock rally. climbed to $13 million which was in the mid range of analysts estimates. the nikkei 225 talked 22,000 for the first time in several months. nomura is out 56%. the appetite for investment is surely on the rise, not only for stocks but demand for foreign bonds is increasing. with the macro economy turning more positive, i expect investment sentiment to improve even further. said a 2e sunday times --lion share dollar buyback
it is the first phase of a three-year program to run down the bank's stockpile of cash. a person in hong kong declined to comment. the $5.5he pretext for billion. haidi: we are continuing with the earnings, major was this week from the u.s. as well, including apple. we are looking at the open here in sydney. respite 0.4%, a bit of from the 1% plunge, the worst of the month friday. betty: and in tokyo, we are waiting for japan output numbers today or later on this morning. you can see holding steady for the japanese yen at 110.60 for the u.s. dollar, and awaiting a slew of bank earnings from japan. haidi: watch out for safe haven
>> it is 6:30 a.m. in sydney. the show of force in north korea, sending b-1 bombers across the country. they flew in from long in response to the latest launch i north korea. the icbm means the whole continental u.s. is now within range. russia is concerned about the launch and is ready to back new measures against pyongyang. russia has told the u.s. to reduce the number of embassy and consular staff across the country by 755 people by september 1 following the sanctions agreed to by congress.
that would be more than half of the personnel and would lower the total to 455, the same number russia has in the u.s. president putin will refrain from further measures, but his administration said they will act if necessary. following the fake account scandal, wells fargo has cut 70 senior decade of positions. the number of regional spending will fall to 91 with many remaining on staff until further undecided. september, over accounts opened without customers' permission. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. amin, this is bloomberg. isty: the u.s. economy veering back on track as gdp rebounded, not enough for the
growth target but sufficient for the fed's move forward with policy tightening plans. kathleen hays with a look at this. what could be here? -- we hear? kathleen: russia will have some speakers, but this is a relief for the fed. with the big slowdown in the first quarter it happened in previous years, but we had not in the expected rebound in the second quarter. the seller news is that all that happened is gdp got back on a slow, steady path, because it quarter. in the second that was up from 1.2% in the second quarter. consumer spending picked up, leaving the gdp rebound. looking at 7965, a simple chart. it shows you in the far right hand, consumer spending was up 2.8% in the latest quarter from
1.9% in the first, that was revised down here. consumer spending is better. business investment healthy, trade and export also helped gdp. the second quarter, a shortage of lots. a lot of the good cannot be found. 1.9%, and thep fed is looking for 2.2% gdp growth, so they have to get 2.5% for the whole second half. we don't know if they can. the fed is on track for the balance sheet unwind, one more 27 -- 2017 rate hike. this should give the fed enough confidence and inflation -- maybe it will react celebrate to move ahead as and. for the federal reserve, that is what that means.
it is not a pure green light, but gives them confidence they are on the right track. haidi: the headline gdp we have been focusing on, we had another report on friday showing consumers growing less confident even though growth has been picking up. kathleen: we were expected to have a bigger jump in confidence from the university of michigan, one of the bigger surveys every month, may have had something to do with the fact donald trump and all of his plans and tax cuts and infrastructure spending are not coming through. there have been other issues at the white house, a big weekend for that. far from 3%. those are the numbers sell trump is talking about. -- donald trump is talking about. this is why i want to talk about this. it is interesting how the republicans and democrats are getting wider and wider and differences. looking at the university of michigan, they have done these
surveys after republicans and democrats, keeping track of what they say since 1980. sentiment for democrats 19.5. republicans 12.7. current conditions not much of a change. look at expectations for the economy. democrats are basically saying there sentiment, current conditions are ok read terrible for the future, look at the gap versus republicans. bringing this back to the fed, the bond king of the united it is said he thinks political uncertainty, not just inflation, waiting on the fed. this is what he said. >> i would say more political dependent that they bump rates up a quarter in december. but the fed is in a really sort of stinky box right now, or they are cornered or whatever you
want to call it. kathleen: domestic politics, geopolitics, certainly what has happened with north korea testing another long-range missile brings home the point dan fuss was talking about. maybe that is right, looking over their shoulder. it is right in front of them in terms of political issues. betty: the economics and central-bank calendar is packed with fed speakers. what are the highlights? kathleen: china kicking off the global pmi praise, a lot of managing directors including in 1, u.s., july 1 -- august tuesday in the u.s. manufacturing still expanding but not as much. auto sales are a big number, not just for auto sales but the global macro central-bank view, how are consumers doing? it is an important part of the
economy. friday, big jobs report that gives a clue about jobs and income, wage gauge which could feed into inflation. that is the fuel for consumer spending. we have a lot of investors, john williams from san francisco. the calendar is full. we have the rba bank of australia on tuesday, the bank of india a back -- expected to cut on wednesday, bank of england expected to cut the low outlook thursday. you are the there are talks on the policymaking, they are not ready to move. betty: it will be packed, thank you so much. that is going to affect the week ahead on wall street. we will also see another big round of earnings including apple and berkshire hathaway. auto sales. on su keenan here with more on wall street week ahead. su: action-packed week
especially for the bulls, apple and tesla. we have momentum stocks. let's take a look at the close, because we did not have stocks flying. it was next. -- mixed. let's go into the bloomberg because at least one major fund #btver brought up this, g -- when you look at the market cap and ratio against gdp ratio, you look at that. suggestingould be some kind of selloff ahead, caution flag. a lot of earnings if we look at particular names. a lot of them are bellwethers for the economy, berkshire, siemens, ing, pfizer. haidi: of course. you are talking about apple, that is the big one we are focusing on as well as
berkshire. what is the expectations? numbers,dition to the the numbers as always on the launch of the iphone 8, and there are not many rivals. let's go into the video if we can. netflix and facebook have been surging. we look at the bank stocks on the numbers they delivered, you have to crash them because google have been floundering -- google and amazon have been floundering. how they say they are doing were approaching iphones will or iphone 8, very important. going into the earnings, apple has reported they will expand in australia. they are looking at investments in solar and wind energy, the project there. that is interesting. we don't know if they will be bringing that up as well.
and we will be getting the latest statistics from other data. how will that affect the market? .u: that will be a big number expansion is expected, 180,000 jobs. the jobless rate could be at a 16 year low, then in terms of other numbers, we have income that will be out. we have manufacturing. this will tell us how the industry is turning. in terms of other earnings, we have tesla at the end of the week, bmw, toyota. these reported earnings as well as automotive data out on sales. the question is, are the sales, the record sales from last year, sustainable? haidi: a big week ahead, things getting quieter after we get past the earnings from berkshire hathaway. , anothere getting it
key gauge from china's economy, hitting the lines in a little over two hours. tom mackenzie joins us now with a preview. what are you expecting to see the door tom: 9:00 local time is when we 51.5, that but compares to 51.7 in june. we have not seen a number above 51.7 since mid-2012. there are a number of reasons for optimism, it is hedging down from june but still firmly in the expansionary territory. we have seen the sales manager'' at a in july, that came in higher level in more than two years. we have metal prices. those are stronger to improve momentum as well. the manufacturing pmi number, we are getting the nonmanufacturing.
out 54.9, at came strong number. some of the components in the nonmanufacturing pmi, transportation, top financial businesses. we are seeing how much of a role they will play in the nonmanufacturing numbers. tomorrow we have the private survey. that will stay in line with the 50.4 number we got in june, so marginally over the expansionary territory. it is looking like stronger external demand and exports as well will keep that number in the positive side. 50 points expected, that is tomorrow. we are looking at the official number later this morning. betty: and ready to talk about china's overall growth trajectory in the second half with the deleveraging, what will this mean? tom: most economists seem to be
taken by surprise by the strength of the economy going into the second half. bloomberg intelligence expects momentum to continue. it has surprised some of them, but risks have been taken off the table for now, whether by the taxes on the auto sector, the caps on the property prices, no big shocks to the real estate market, and they have not seen the trade war that some feared would take place at three u.s. and china -- between the u.s. and china. and the huge -- bloomberg intelligence looks into this, there is a ratio of money, spending for total investment in china on infrastructure like roads and rail, the highest level since the financial crisis, since the financial crisis. exports are being stopped. pboc,licy maker is the they seem to put a cap on raising money market rates, and
that is giving them confidence. we will be getting official numbers around 9:00 a.m. on the pmi data. manufacturing and nonmanufacturing for china. haidi: thank you so much for that. tom mackenzie for us in beijing. john kelly starts a new job monday as the top need to president trump -- aide to president trump. does he have what it takes? this is bloomberg. ♪
less than seven months in the job. others say he will fail in his job. haidi: we are joined by al hunt in washington. you wrote this column, widely read. why do you think kelly, general kelly, is going to fail in this job? al: because of who he is working for, betty. could notnd betty succeed. he does not a chief of staff, he wants to be his own chief of staff. that is the first challenge. i have never seen as many warring factions in a white house as now. he is unpopular, and general kelly is a really highly andected marine general, ran homeland security. but this job, chief of staff is a consummate political job. , they baker, leon panetta understood political washington,
congress, the media, bureaucracy . that is not his expertise. that is what is required. betty: why do you think he picked him for this job? al: because he wanted to get rid of reince priebus and he has four stars on his chest, figuratively. donald trump likes that in the beginning. i am not sure he had a lot of options. kelly turned the job down several times before he accepted. betty: how do you think this will work with others in his party? many say with reince priebus leaving, that is looking at establishment republicans losing ground. are we going to start seeing more of the exodus? how will he play with steve bannon? what kind of machinations will happen? al: it is a good question, and they are multifaceted. there is the ban in faction --
bannon faction, there is the family, and also the we don't have much in common with rare ieceptions, and all of whom v for his attention. donald trump is not interested in policy, his tweets cause problems for governing. i don't see how he will change over the next six months. haidi: it has been a chaotic administration from the get-go. feel like the last week 10 days, things have started to unravel. what needs to be done as we said earlier to find someone who can put the white house in shape? ,l: that is up to donald trump and he shows no inclination to do that. being president is not a game show. it is not a celebrity show. it is tough. what unnerves a lot of people including republicans and really prominent republicans, who i
have heard from, and we have not had a crisis. how well prepared or unprepared will it be for that? there will be one, and how do i know? every president has one. haidi: you were a suitable candidate to take a role in the white house, a number of roles have not been filled, how cautious would you be in taking it? as you point out, there seems to be a president who rebels and s inliating -- revel humiliating people. al: i would never -- i will say no to an offer that will never be made. someere has to be delineation for what the president priority is. scaramucci, will he be in the wild for the rest of this year as last week?
those are critical russians because they affect the ability to govern -- questions because they affect the ability to govern. betty: speaking of getting things through congress, what a dramatic senate session with mccain giving that thumbs down. the most dramatic few seconds in the senate chamber for me and .ou as well in many, many years we could not get that revealed -- the thumbs down for mccain. they could not get this through. what does this mean not just for health care but also tax reform? al: steven spielberg could not have directed a scene that good. it was really remarkable. the grave old warrior, the american icon, giving the decisive vote. afflicted with brain cancer, coming on the floor where he served for some 30 years and
sticking it to the president who had folded him last year -- insulted him last year. i think there will be a tax cuts. there will not be any tax reform. tax reform is the tough stuff. if republicans do it by themselves in a partisan fashion, they could get a tax cut through, but they cannot get reforms. not much. tumultuousright, presidency and the start of a brand-new week. let's see what it has in store. thank you, al hunt joining us from d.c. you can get around up of the stories you need to know from this edition of daybreak. bloomberg subscribers can go to dayb on their terminal and anywhere app. you can customize your settings so you get the news on industries and assets you care about. this is bloomberg. ♪
♪ betty: good morning. i'm betty liu in new york. haidi: i am haidi lun in sydney. a quick check on the business flash headlines, china's biggest coal miner expects first half profit to double thanks to higher prices. comeua energy said than it -- the net income is $3.9 billion. that would exceed all of 2016, the first profit in four years. they began lowering output to raise prices. betty: toshiba has agreed to give western digital two weeks before posting any sale of the chip unit. they came from a hurried transaction. western digital has continued to agree to arbitration. toshiba still maintains there is
no transactional requirement to consult with them before selling. bros.' dunkirk held onto the top spot for the second weekend, collecting $28 million to take total receipts over $100 million. they held off the emoji movie, which sold $26 million of tickets and was universally hand by critics. -- panned by critics. it came from bad review and social media. yvonne and betty are up with daybreak asia next, for the next couple of hours. i want to get a preview of the data we are expecting in emoji. this is the world we live in now. yvonne: not much of a measure for that for me, but a lot of data, china pmi. and japan's production in the
next couple of minutes or so. we will see a rebound from month of june as we saw the slump in may. we have the first part of june, company production plans saw that bounce back as well, actual output. we will see how that plays. let's start with demand in europe. that should be helping japan in terms of supporting production exports. betty: a lot of data to come, and we have japan. earnings. bankina -- have japan earnings. in china, we have the pmi, the manufacturing and services numbers. that will keep our polls on where the china -- pulse on where the china economy is going for the second half of the year. we have the china economist in just the next hour. haidi: it will be very interesting when it comes to the bull market because we do have
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♪ >> the pressure mounts on the white house, russia orders hundreds of diplomatic staff to leave the country. >> what to do about north korea? wholeng-un claims the continental u.s. is within missile range. $50 onbriefly topped signs output curbs are having an effect. producers meet next week. >> the rally for crude to give markets a boost, waiting on new data from china.