Skip to main content

tv   Bloomberg Daybreak Asia  Bloomberg  September 17, 2017 7:00pm-9:00pm EDT

7:00 pm
♪ >> asia-pacific markets signaling a positive open has traders shrug off the impact of a hurricane and geopolitics. >> north korea topping the agenda is world leaders gather at united nations. kim jong-un says he will achieve his nuclear ambitions. >> japan and may have a snap election, voters approving the handling of the missile threat. >> ahead of the united nations general assembly, we get the view from j.p. morgan.
7:01 pm
♪ >> hello and welcome to "daybreak asia." interesting to see you in singapore now. you are all over the place. the markets are all going in one direction. by oneinto the trade hour, pointing to a higher open. but show the board where we ended up on friday. another record run. the s&p above that 2500 level. the dow and nasdaq higher. that is the picture in asia right now. focus onabout the central banks with the boj and the fed going into that fed
7:02 pm
meeting, still under 50% on expectations of a move in rates. the focus is on the details of this balance sheet unwind. thing is interesting we are focusing on geopolitics. ,e have campaigning in germany reports that there might be a snap election in japan. kiwi dollar,d, the that will be tethered to the outcome of this weekend's election. it is to tie to call. we are counting down to the open in australia and korea. aussie futures up 16 points. dollar holding onto gains of $.80. in japan, a public holiday today, a chance for markets to them over the political
7:03 pm
uncertainties and the impact of north korea. let's get to first word news with tom mackenzie. the international energy agency says a lack of new investment in oil production is stoking tighter supply and unstable prices. outlook for capacity will sort exploration as demand growth shrinks. increase inekly london last week, rising more than 5% to the u.k. has lowered its threat level from critical to severe with a second person arrested in friday's terror attack. detained-old man was after a teenager was arrested in dover. at least 30 people injured friday by a homemade bomb on a train in west london. it was the uk's fifth attack this year, claimed by so-called islamic state. marches on with
7:04 pm
the u.k. playing out plans for security cooperation with the eu. theresa may's government will publish proposals for a treaty on evidence sharing, extraditions, and arrests. the prime minister is due to update her vision on friday. the european commission vice president says cooperation is vital. >> we should be in this mode of cooperation. we need to do this. the british people have spoken. the u.k. would leave the european union am a but let's agree to do as little harm as possible. this serves the interests of all citizens in the u.k. and the european union better than anything else. reports from japan said the prime minister may call a snap election next month to take it and to javale weak opposition and growing support for his handling of the north korea crisis. nhk say he is increasingly
7:05 pm
go to theto polls despite recent scandals. an announcement may come by the end of september with the vote itself on october 29. reports from china say beijing will hold workers responsible for banning pollution. the band will apply to road and housing work as well as demolition. the winter brings beijing's worst pollution as inefficient heating systems send smoke into the air. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> north korea will top the agenda. world leaders gathering in the united nations this week. i'll bloomberg editor joins us again from washington. been highlyump has
7:06 pm
critical of the united nations as he prepares to address the assembly for the first time. a lot of foreign leaders have not met trump and this is their first-hand look at him, so what can we expect? >> that is right. to g20nt trump has been and g7 summits, but this is a big stage. at the spend four days yuan general assembly, which is longer than his predecessors george bush and barack obama, so he has a lot of meetings planned with africa, middle east, asia on north korea, and plenty to talk about. the centerpiece of his time will be tuesday's address to the full united nations general assembly, talking about an eagerly anticipated speech. >> i heard it being described as speed dating for foreign leaders, but not exactly as a
7:07 pm
pleasant experience. what usually comes out of this? might we expect anything to come out of this week and the discussions between the president and other leaders? >> one of the things trump is expected to talk about is his for the unitedms nations. he has been critical and would like to see reforms, , cost awareness, so i think he will be prodding on that front. united nations ambassador nikki haley has pretty good relations with senior leadership at the united nations, so trump could get some real traction there. nikki haley is one of the leaders who has actually seen donald trump's speech and said on friday that the speech slaps the right people, hugs the right people, and comes out strongly in the end.
7:08 pm
it is always good to know who to slap and win, and apparently trump has that under control. >> i think i can take a wild guess at who will get slapped. what are we expecting in terms of will there be more overtures towards trying to get china to do more? high think it is unclear if that will calm in the actual speech on tuesday, or perhaps in the meetings on the sidelines, and trump is expected to meet with the leaders of japan and south korea later in the week. china's leader will not be at the general assembly this week, so there may not be specific overtures, but we do know that on friday that china's ambassador to the u.s. spoke to reporters and basically ask the u.s. to knock it off with the rhetoric against north korea, so it is unclear at this point what pressure of the u.s. will be
7:09 pm
putting on china this week. the more he can get the international community on its side, the more china will have to be aware of that. in a separate piece of news, some uncertainty over whether the u.s. and the standing on the paris climate change accord. >> some interesting comments out of montréal saturday from the eu climate minister suggesting that the u.s. had signaled a change in its approach. what we have gotten out of the white house and certainly from rex tillerson today is that there is no change. the u.s. has always said even though trump has threatened to pull out of paris, that if the conditions are right that they will stay in if negotiations can go on within the accord. it is if you look at nafta, the ,.s. has threatened to pull out
7:10 pm
but is really renegotiating the agreement, and ultimately it seems that is what may happen with paris, but according to the administration, no change. >> thank you so much for that. we are waiting on this high profile s by donald trump this week, his first to the united nations general assembly. it will be interesting when it comes to fx with the fed and boj giving its take on dollar in particular and how geopolitical tensions will play out later this hour. >> up next, we speak to j.p. morgan about interest rates 10 years after the financial crisis. this is bloomberg. ♪
7:11 pm
7:12 pm
♪ down toe counting
7:13 pm
asia's first major market open this morning. be interesting with japan closed today for trading. a big week for central banks and political uncertainty. >> as unlikely to be the dominant theme in trade. as you mentioned and as we talked about a moment ago, a leaders gathering for the united nations general assembly this week. to toporea is expected the agenda among leaders here. let's discuss the impact of geopolitics on markets and possible monetary policy. is joining us bright and early in singapore, where he is delivering a speech on the financial markets 10 years after the financial crisis. let's look forward before we look back, this weekend and the
7:14 pm
impact of these geopolitical tensions, particularly in asia as we speak. the almostu make of resilience we saw in the markets with the latest north korean headlines? do expect that to continue? do expect anything out of this week's general assembly? crisis hash korean been with us for a while. it reached new heights recently. will be at the center of conversations. too many countries are influenced by it directly, and it requires a joint analysis and assessment by these countries, so it is in this regard that the meetings at the united nations provide an opportunity, but wherever you go in asia, north
7:15 pm
korea is at center stage. is at center stage, but do come it will be central or to be central to economic forecasts? that the extent economic analysis being put on the table in the formation of policies looks at the overall picture, there is no question that it is an additional source of uncertainty. not clear in which direction it will impact policies, but the environment is now less tranquil, there is no question about it. >> it certainly is less tranquil, certainly people look at this as a question whether it should change the fed rate hike path. we believe we will hear from the fed an outline or detailed plan
7:16 pm
on their balance sheet reduction. you have been on the record toing the risks is greater delay raising rates than it is to start doing it. what do you hope to see out of the fed meeting? the important thing is charting the way. it is not a decision of a specific month, but charting the way. it will be very important that the fed continues to clarify it intends to launch the normalization process. has twoalization dimensions. first, interest rates are too low for too long and it will be healthy for markets and the economy if rates start to go up in a very gradual way, but not as a one step, but a strategy. secondly, of course an indication about the balance sheet.
7:17 pm
again, it is something not done overnight, but it is a journey, in that journey is starting not only because of the fact we have in in the unconventional territory for so long, but because being there has been successful come already more than a decade. all the conditions have to be in place for normalization, and they have been fulfilled. we have very healthy labor ,arkets, unemployment is low economic activity in terms of trade has recovered, and even inflation is in the medium-term in the of direction, so it is high time for the fed to move and lead the way. don't forget the fed is an important player in the global economy. across the atlantic, the ecb, it will help them also. >> i'm sure you have heard this
7:18 pm
opinion many times when you say something like this, which is what is the rush? what is the rush? that dated this not necessarily point to a aggressive hiking by any means. still verys uncertain, the past still uncertain in the u.s., so what is that rush? >> that is a very good question. all the focus of discussion has been is the economy robust enough to sustain a hike or series of hikes. i would say it is important to allen's the question with the counter question, which are of their which happen to the economy because of normalization? i believe there are, primarily in the financial markets. negative real interest rates all over, do encourage activities in
7:19 pm
the financial markets. fromre diverting resources investing in plants and equipment to buybacks and financial market activities, to encourage leverage, increasing vulnerability, thereby you are creating vulnerability in the financial markets, which is so important. one of the lessons from the significant financial crisis about a decade ago is that normally the real economy is more robust, and if it is changing, it is changing gradually and we have an opportunity to fine tune it as we move along. financial markets are impatient, hasas we increase leverage, we are neglecting the health of the financial industry, we may pay for it. i believe the financial industry today is healthier than what it was a decade ago.
7:20 pm
we have much more capital and the banking system, less leverage, more liquidity. ofre is a healthier range regulation and supervision, and by the way, deregulation of redundant regulations would be healthy, and i believe one of the efforts that should be now with the trump administration should be a very controlled and present deregulation to eliminate some of the constraints that have affected business sectors ability to invest and to grow. we need jobs. in order to have jobs, you need investment. to have investment, you need a clear horizon, and that is what we are talking about. resources from the financial markets to the real economy. >> you speak about vulnerabilities and systemic
7:21 pm
risk, i'm curious to get your views on china. they have been trying to deleverage. it seems one step forward, a couple of steps back. how do you view the systemic risks in the chinese financial system and where the banks go from here? importants the most economic partner of the united states. it is the most important trading partner of most countries of the world, and its financial sector is clearly something to watch for. there are some issues in china that have to do a shadow banking, but there is no question that we need to bring china much more to the center stage of the economic dialogue. we have seen china's trade expanding significantly, and as a result, all of the skirmishes that may use the language of trade war should be removed from
7:22 pm
the table, and we really need to think about this as a partnership. regard, the exchange of views about the health of the financial industry is important. i know the chinese authorities are focusing on it very much, but in order to have a healthy dialogue, you need to have cooperation, and china and the relations with china, not only geopolitical, but the economic and financial come is central. increasing the, trade, and economy are overlapping. we had the u.s. president essentially threatening to stop trading with countries that have anything to do with north korea. what do you see as the biggest risk going into the end of the year? is it a policy misstep when it comes to monetary policy, or i missed that when it comes to geopolitics and how that flows
7:23 pm
into damaging global trade? we define our objective, a resumption of sustainable economic growth, the key to it is the real economy, the private sector, and the government, investment in infrastructure, tax reform, deregulation. these are the issues. monetary policy has done everything it could do. it provided time to the policymakers to do other things, but the other things need to be done. skirmishes are a big negative. i would not use ever the language of trade or, but rather if anything, trade negotiations. it is a mistake to removed from the table bilateral trade agreements. i think in the modern economy, bilateral relations are important, but not the whole
7:24 pm
story. is the name of the game, especially as we go into the united nations meetings. it means geopolitics, ju economics, geo finance. >> back on monetary policy moving away from trade policy, i want to bring up a chart to put ,his into contacts -- contacts 4010. is remarkable is how much qe3 costs the fed, and how much of the balance sheet spiked up with this large quantitative surge from the fed. given how big the balance sheet is now, how do you think janet yellen and company should detail the reduction in the balance sheet without railing markets? what did they need to say to make sure they don't cause
7:25 pm
another taper tantrum in the treasury markets? they needed to be very clear about their strategy, less clear about the specific dates, but about the strategy. saying that the time for normalization starts when they believe the economy is sufficiently robust, and frankly, they have delayed it for so long that nobody will suspect that they are imprudent. if the fed decides that it is time to raise interest rates, to start dealing with the balance sheet, it will be good news rather than bad news. it will be good news if the fed assesses the economy is strong. and frankly, the rest of the -- the taper tantrum that happened in the past is not because the economy was not ready, but because the communication was clumsy, and i
7:26 pm
believe those lessons have been learned, so i think it is a speech not about what will happen in december but what will happen in 2018 and onwards. once the trajectory is set and once the long-term compass is calibrated, the trajectory will be healthy for the markets. >> what we don't know is what wepens beyond 2018, meaning don't know who will be in the fed chair seat. said before it is obvious eight should be janet yellen, but the likelihood is that it won't the am but we don't know yet. president trump could appoint anyone. the fact that her term is coming to an end, do think that has any bearing on how janet yellen and company plan out this balance sheet reduction? not because the beauty of about the fed is that
7:27 pm
it is a long horizon institution. the fact that the terms of governors are staggered so you don't ever have a big change within one month or even within one year, so there is continuity. i think the fed as an institution does look at the longer horizon. when i spoke about janet yellen, it is a generic concept of the characteristics of a chair portion of the fed -- chairperson of the fed. the chairperson of the fed needs to be experienced, professional, professional and professional. that is the name of the game. >> and professional. >> indeed. the fed's credibility has brought us to where we are here in spite of the political uncertainty. >> jacob, thank you for joining
7:28 pm
us from singapore. jacob frankel of j.p. morgan. asnext, a look at currencies the fed take center stage this week. ♪
7:29 pm
7:30 pm
♪ >> is 9:30 a.m. on monday. this is the start of a beautiful week. this is the sydney opera house you are looking at. this is the first major market open is sydney. we are looking at some upside when it comes to trading for the nasdaq. upside indeed. it is 7:30 p.m. on sunday. this is the look at the empire state building. they are shrugging off some of his geopolitical tensions. you can see their closing 2500 points for the first time. i am betty liu, in new york. there is a big week of
7:31 pm
events. you have to wonder what the next drivers are for the next leg in that rally. hiding them, coming to you from singapore. alert daybreak news with tom mackenzie. tom: north korea has shown pictures of its latest missile test, bowing to a tree it nuclear aims. kim jong-un claims the plan is near completion and will create what would be an equilibrium of real force with u.s. and south korea. president trump will meet world leaders this week, having said all options, including force are on the table. the new zealand dollar are a clear barometer of what the markets fear. it has fallen whenever opinion polls show the opposition ahead have risen -- and risen when surveys put the government in the league. average polls -- in the lead. the support of
7:32 pm
smaller parties to form a government. equifax says it is firing its chief officers 109 -- 100reach of million customers information. itss suing equifax for abysmal handling of the situation. u.s. regulators are a step closer to recording 1.3 million of the board's most popular suv. mounting reports of exhaustion leaking into the cabin. the tsa has taking an interim 2011 andard between this year. on its website, the regulator says it has upgraded to an engineering analysis. one of 27 hundred complaints. global news, 24 hours a day, powered by more than 2700 journalists and analysts in
7:33 pm
within a 120 countries, this is bloomberg. in asia, with sophie on the data front. what is the picture leading up to the data release. sophie: we have the latest home sales data indicating that china possible to the property market have to be working, especially in bigger cities when there are stricter rules. we do have august home sales coming in. we had chinese developers jumping last week. you can see that on #btv. country garden, on dummy to new records. far outperforming divisional benchmark. and analyst says from a fundamental deal, the property market appears to remain resilient despite these intensive terms.
7:34 pm
are in line with the government and for the property market, implying that future curbs will not be as tight as what we have seen. monthly sales could be shaping theseely, for example, rebounded in early september. >> there are some interesting from the chinese loan data that was published before the weekend, what is catching analysts attention there? >> some chinese households are loading up on short-term debt. ift is the yellow portion you take a look at this last part, denoting what happened for august, you can see that short-term debt. long-term debt, the portion in blue remain stable. the short-term loan probably
7:35 pm
includes mortgages disguised as consumer credit. these are down payment ratios. the fact that household borrowing account for increasing shared total bank lending indicate a difficulty in the rating in the housing sector. in the first eight months of this year, that almost tripled but they were doing the same. in 2016. we have to keep in mind that the pledged to reduce new credit flowing into the property market. this could signal a little bit of undercarriage when it comes to that picture, betty. betty: thank you sophie. reports from japan say prime is trying tozo abe take advantage of weak opposition. also, the growing public support
7:36 pm
of his handling of the north korean crisis. stephen engle is following all of this and while he has the wind at his back, he is going to make this gamble. it is all about timing when you call a snap election. >> he doesn't have to call an election until the end of 2018. there is a little wind at his back right now. perhaps the north korea chamber rattling is working to his favor. he has been working hard and lobbying hard to revise the constitution in japan. suggests thatge two thirds of respondents of japanese voters approve of the harder line shinzo abe has taken to north korea. is in asition right now bit of disarray. the democratic party, their leader resigned. have a new leader, key members of that party have resigned with
7:37 pm
his new leader coming in. disarray that. shinzo abeouble for is a bit more forgotten as he considers calling a snap election, parliament resumes on september 28 and other media reported that there could be a snap election as early as october 29. >> how much of a gamble with you be taking if he was to call a snap election? what is the biggest risk? >> the risk is you lose. you take around that. history books are littered with politicians making the wrong gamble and of course, the ldp and the coalition partners could lose their two thirds majority. that would be a devastating miscalculation obviously. then you have to keep in mind there is a new party that has come up led by the tokyo the first female
7:38 pm
governor of tokyo. she is running this new party that has hammered on the lvt. there is to calculations, either go early with the snap election and that would prevent this new party from getting a national base, otherwise you can also wait a little longer for that party to get some national strength. it is going to be a timing gamble. >> it will be a timing gamble. things are really getting interesting when it comes to global politics. assets have boosted the yen in gold. the strongest correlation when it comes to the dollar and yen at these two decades ago, the rally is fading, trade is becoming to north korea and focusing on the fed, joining in dubai.
7:39 pm
great to have you on with us. it feels like we have been talking about the cycle of going risk off. just jump back into risk assets. there is almost a sweet spot that the japanese yen is in at the moment. it doesn't feel like policymakers should be concerned with excessive yen strength. think that certainly, when we go through that cycle of risk on, risk off, it looked like risk on-risk on. we did not see much of a market footprint at all. what the signals is that investors are not inclined to extrapolate that publication into any major flare up in terms of geopolitical tensions. with the focus on the yuan meetings this week and then later, the bilateral meetings between president trump and
7:40 pm
havingwe are going to be relatively suited -- subdued action. i think that present a constructive environment for risk and this is probably a factor that argues against more pronounced yen appreciation on that basis. interesting when it comes to the dollar, sterling and euro, you have the boe taking a hawkish tone. you have the cb not that far behind. the fed is staying the course when it comes to the end of the year. safeu think that it is a bet my comes to dollar weakness? >> i don't want to say that is a one-way bet. i think there probably speaking to two factors that can support the dollar. the market could to -- could
7:41 pm
move to pricing a more aggressive move from the feds, a steeper trajectory for u.s. rates. there could be momentum in terms of expectations for a move toward fiscal stimulus and tax reform in the u.s.. i think the latter factor is going to have to do the heavy lifting on any dollar strength for the time being because we know that the hurricanes are going to introduce a layer of uncertainty or the data in the u.s. over the next several months. i think it makes perfect sense that the market continues to price in a risk premium on that fed trajectory. i am among the skeptics in terms of any immediate progress on fiscal stimulus and i think that means that the dollar is going to weaken for the time being. the japanese yen would not be my favorite currency. i think the euro as you noted the british pound as well as a risk currencies should do well
7:42 pm
in this environment. the kiwi dollar has been in a really interesting trajectory leading up to the election. it has been a lot more exciting than anyone has expected earlier on. we would you see the kiwi? electionnly this seeing unprecedented focus in the market, we are seeing a lot of client questions on what the election means for the new zealand dollar. i find that gratifying as somebody who follows new zealand closely. i do think investors risk overemphasizing or overreacting to the moves we have seen in favor of labor over the past month and a half. that is to say that i don't think the election is actually going to mark a major change in policy. i don't think it will see a big break in currency policy or in the mandate. i think that the risk is going to strengthen after the election as investors risk being
7:43 pm
ofappointed with the degree progress. i think the bulk of concern is that a new government may serve to weaken the kiwi. i think that expectation may be misplaced. >> i'm curious, just getting back to the yen, the japanese yen and this news about abe calling for snap elections next month, how do you think the yen is going to trade in reaction to that? some analysts are saying this is going to be a field day. >> at think the tokyo election was probably instructive in this regard. we did see a weaker outcome for the lgt. thatnk what that shows is in terms of uncertainty or the
7:44 pm
layer of uncertainty this is adding to the market, this doesn't threaten by mr. abe's mandate. this is related to the moves in the u.s. dollar. the question approaching this potential snap election is whether or not it will be enough to bring market focus back to domestic factors. i don't believe that will be the case. will continue to trade as a potion of what moves in the u.s. dollar. >> a stronger yen it looks like. the g4he head of strategizing for asia.
7:45 pm
haidi, we are talking about bitcoin. #btv 404. we had some strong comments from jamie dimon who called this a complete fraud. actionsthat on top of from china to stop bitcoin trading. but how bitcoin has fallen, it is below a moving average. this is certainly on a trajectory down, in that you wonder how high bitcoin will go and now we will be saying hello will the guangzhou? go?ow low will bitcoin it is interesting, we have
7:46 pm
this report from the bank of international settlements, global central banks cannot ignore the bitcoin movement. we can see the pboc raining it in. it is the bank of japan and the fed and their son to recognize what goes on. it has to come down -- what goes up has to come down at some point. we are going to continue to talk about currencies and also cybersecurity issues after equifax, that they scandal there, we will talk about cybersecurity and how to protect your data. we will get more in just a moment, this is bloomberg. ♪
7:47 pm
7:48 pm
♪ >> we are counting down to
7:49 pm
asia's first major market open this morning. we are seeing a bit of upside when it comes to the start of the trading week. this is daybreak asia, a lot to get through. potential geopolitical concerns always, i am haidi lun in singapore. that is on top of the mind these days. creditbreach and reporting agency, at what backs was one of the biggest cyberattacks in history. this is over half of u.s. citizens here. this is new security i would just discuss this and more. biggestinclude the chinese tech companies like alibaba, by you and tencent, a founder and ceo of dvs. -- dds.
7:50 pm
thank you for joining us tonight. your main business is building data centers and out -- operating them for these big tech companies. --m curious from a dentist data point of view, when you saw the news of equifax and this data breach, how does that affect your business? what you do in reaction when you see something like this? from you get phone calls your clients when you see a big cybersecurity breach like this. when i started this business, we provided a data center service to all of the institutions, that is a high demanding customer. they are very critical. teaching our customers how to keep their systems secure.
7:51 pm
i think there are a couple of things that we do, nothing changed, that is how we do ourselves in the market. we have built up a very robust data center infrastructure. this is not just an asset, it is all reliant on this. >> not just the infrastructure but the operation. are your data centers mostly located in china? are you looking to build outside of your home market? >> currently, we're pretty fixed on chinese markets, the market is booming, we had a huge opportunity to build of our business. huge opportunity, what
7:52 pm
about here in the u.s.? it is a pretty well saturated market here. are you looking for opportunities to build data centers -- we know many of those are built in other markets outside of the u.s. but what about recruiting u.s. clients as well for your data centers? >> we have a lot of u.s. based which had a very big operation in china. a lot of the financial institutions are u.s. based. there is a global player. >> i am curious, after things , some say thery
7:53 pm
biggest problem is companies not investing ahead of time into cybersecurity. do think there is a different approach in china to how much that is valued? >> it is a global topic. data security from china is the same as the global. our customer is very heavy on data security. >> i had to say that first of all, china, a couple of years that it willcted be the key driver to drive the future. strategy.r key
7:54 pm
this strategy has worked pretty good. that is why we are in a very strong position in a china market. we believe the cloud will be the for the data center demand in the next 10 years. >> we have much more ahead on daybreak asia, this is bloomberg. ♪
7:55 pm
7:56 pm
♪ >> this is daybreak asia, i am betty lou in new york. >> i am haidi lun in singapore.
7:57 pm
journal street reporting that northrop grumman is nearing the purchase of this company. this is a deal that could be worth more than 7.5 billion dollars. a deal could be announced as soon as monday. it's sort over 50% over the past year. minutes, anst few australian board has ruled that cbs is free to vote on its over take. they already agreed to sell 10 to cbs. >> this is despite continuing opposition from partner -- western digital. resistanceces because the bank route now includes several competitors.
7:58 pm
coming up on the next hour of daybreak asia, we will speak to the chief agent -- asia-pacific baader.ta -- klaus this is bloomberg. ♪
7:59 pm
8:00 pm
♪ today, but trading at their market signaling a positive open, shrugging off hurricanes and geopolitics. >> north korea topping the agenda as world leaders gather at the united nations. kim jong-un on saying he will achieve his nuclear ambitions. >> shinzo abe may call snap elections. it is a big week for central banks, led by the boj and the fed.
8:01 pm
sluggish inflation. >> this is the second hour of "daybreak asia" in new york. >> i haidi lun in singapore. central bank t convergence, japanese markets on public holiday. anything to get people to stop working in japan, i guess. we are well underway. and thenday evening, equities futures markets are open and pointing to a higher open. geopolitical tensions, futures up .1%, setting up for a higher open in the u.s., but let's get to first word news with paul allen. paul: the international energy
8:02 pm
agency says the lack of new isestment in oil production stoking tighter supply and unstable prices. the agency said output capacity will fall without new exploration as demand growth is seen to be shrinking over the next five years. thirdcrude saw its consecutive weekly increase and has risen 10% in a month. the u.k. has lowered its threat level to critical from severe attack on aor attrac london commuter train. a teenager was arrested in dover. 30 people were injured. it was the uk's fifth attack this year, claimed by so-called islamic state. on brexit soccer marches with the u.k. laying out plans for security cooperation with the eu. theresa may's government will
8:03 pm
publish proposals for a treaty to maintain links for evidence sharing, extradition, and arrests. she will update her vision on friday in florence. viceuropean commission presidents a corporation is vital. >> we should be in this mode of cooperation. we need to do this. the british people have spoken. the u.k. will leave the european union, but let's agree to do as little harm as possible. this service the interest of all citizens in the u.k. and eu better than anything else. paul: reports from japan say the prime minister may call a snap election next month to take advantage of a weak opposition and support for his handling of the north korea crisis. increasingly inclined to go to the polls despite recent scandals. an announcement may come by september with the vote on the
8:04 pm
29th. slack has closed a funding round with softbank's vision fund. at deal values the company $5 billion, up from $3.8 billion last time. is forays the cash operational flexibility, not for any particular use. the 500 $90of million it already raised. -- $590 million it already raised. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. you for that. as we saw friday, wall street markets pushing higher and higher, the s&p over 2500 for the first time. for as setting up reasonable start when it comes to the asian trading session. sophie is taking a look at how
8:05 pm
the week is starting for us. have the fed, the boj, and potentially geopolitics with trump speaking to the united nations general assembly. sophie: one would anticipate caution given those event risks. take a look at the flavor of the mood. gold and yen, both losing .3% this morning. thedollar rebounding after drop on friday after softer u.s. retail sales. losing ground. closer to the kospi that 2400 mark. the aussie market also up today. japanese markets on holiday, so no reaction to the potential of a stamp collection and trade data do today. china's august home price numbers due out 9:30 hong kong
8:06 pm
time. we have the offshore yuan falling for a second day. take a look at base metals, losing ground. copper posted its biggest weekly drop in six months. gold extending losses. we are seeing the strongest correlation with gold and yen. the yen has been losing ground against gigi 10 peers -- i guess to g10 peers. if a rebound happen, dollar-yen may rise to 115. the kiwi dollar in focus ahead of the election, a roller coaster ride of sorts given the aussie kiwi has been rising above the one year measure. win,if the opposition does the impact may be limited given drivers are immigration policy, trade, and monetary policy. >> a lot to watch.
8:07 pm
thank you. iran are top of the agenda as world leaders gather for the united nations general assembly, a week of top-level diplomacy and president trump's first address to the world body. jodi schneider joins us now. the world has not seen a president quite like mr. trump, so how will he be received at the united nations? will be interesting. everybody is waiting and watching. of discussionbit over the weekend about north korea, rex tillerson went on the sunday talk shows in a rare appearance. mr. trump still went ahead and lessome tweets that were than the talking points mr. tillerson and others had, so you never know what to ask from the u.s. president.
8:08 pm
one will expect them to talk about north korea and diplomatic efforts as well as perhaps some tough talk. on northten a mix korea in particular. >> outside of north korea, there is clarification needed by president trump on his america which should he has talked about quite a bit and has resulted in tensions with major trading partners. do you think we will get more clarity on what he means by america first? >> i am not so sure. in the past, he has made it a talking point on the campaign trail where it does well with helpase, where we will other countries, but only when it is to our advantage. in the past, he has made state ends about countries paying their own freight, including japan, where america helping to
8:09 pm
protect them. we may hear more on that this week. that there hearing is president will try to strike a diplomatic tone in speaking to the nine did nations, especially if he wants more help with north korea and further sanctions. sense ofre a dissonance coming through from the white house despite efforts to get on the same page? we also heard over the weekend that perhaps the u.s. stance on the paris climate accord may be not set in stone after all? been thoseve comments, but when you hear from the white house seeking to clarify, they say we have not changed our position on the paris climate accord. we are still not signing on and it has not changed, so hard to statementsrious any
8:10 pm
are that nothing has changed in that posture. >> thank you so much for that. looking ahead to president trump's first address to the united nations general assembly. looking ahead, china's latest property prices. we will speak to s&p global ratings on what to expect. central banksfor with the fed and boj deciding monetary policy. this is bloomberg. ♪
8:11 pm
8:12 pm
♪ i am haidi lun in singapore. >> we have a central-bank double-header this week as the fed and boj set policy. our global economics and policy
8:13 pm
editor kathleen hays is here with more. let's start with the fed and what will happen. >> not much. a lot on the balance sheet front. as for the rate hike front, the path is clouded by week inflation, and a retail sales report on friday weaker than forecast. it was not just because of hurricane harvey. retail sales fell 0.2%. more important, june and july were revised sharply lower. true, there were less selling days in car sales and household appliances because of harvey. notrtheless, something suggestive of retail sales and a consumer that will boost economy and the inflation. september rate hike is 0%. december is 47%. the big question is will be dot
8:14 pm
plots change and will the fed change its mind about how much a rate hike be needed next year. clear for the fed to announce the start of its balance sheet unwind. , the chairman of j.p. morgan international, was on the show a bit of go and said it is time for the fed to normalize on every front. is thethe focus has in economy robust enough to sustain a hike or a series of hikes? important tot is balance this question with the counter question, are their damages that happen to the economy because of delayed normalization? i believe there are. >> what he has been pounding the table about is the risk is not priced to stability or lack of inflation, the lack of financial
8:15 pm
instability. it is time to normalize the balance sheet, but also pushing for rate hike sooner rather than later. about,e have talked japan is going to be more the odd man out with the rate hike path. >> you can't move when you have inflation so far from the 2% target. this is 79 42, a classic on bloomberg television. the white line is the boj core rate, nationwide cpi minus fresh food prices. from negativeent territory months ago, but 2% is the target. on the plus side, some wages are starting to rise, small and medium enterprises, as the labor market tightens. bloomberg intelligence arguing faster second-quarter gdp growth could push inflation to
8:16 pm
1% by september. the boj will update its inflation forecast for the next three years. will they have to cut 2017 as they did at the july meeting? we have two more central bank meetings in asia, philippines and indonesia. philippines expected to hold policy steady. indonesia expected to cut the key rate. >> that is not enough on the agenda, so what else are you watching? .> europe the pmi's are coming up, expected to be strong. the big german election on sunday will be a focus for the euro. hours from now, india will be releasing trade and current account data. the trade deficit is expected to look weaker on exports, stronger on imports. this is happening because of the but structural reforms
8:17 pm
costing growth now will boost growth later, and actually pave the way for more reserve bank of india rate cuts. we shall see. >> back on monetary policy this week. kathleen hays there in new york. societeus now is generale's asia pacific chief economist. this line that bloomberg intelligence came out with, not expecting much in terms of that rate trajectory this week, but more details as to what the balance sheet unwind looks like. this is a tightening of policy by largely and tested means. do you think we are underpricing the risks? >> we may. it is difficult to answer. it comes to what the market is discounting in terms of interest rates, we have futures and instruments that allow us to get what the markets are
8:18 pm
thinking. in terms of the balance sheet, we don't have that. i don't think markets are as incredulous of the fed's own plans when it comes to the balance sheet unwind, but we cannot be sure. now pretty much everybody does expect the fed will say we will start the program, probably october. although, nothing really runs off until the end of the month. that will give the fed some time before they consider a december rate hike to see how markets are reacting. i think friday's reaction to the retail sales number and weekend industrial output where the not take prices higher or yields lower was a bit of a warning that the market is focusing more on that now. throw up a quick chart, 4010. it gives a snapshot of where we
8:19 pm
have come from. this exceptional monetary policy, contortions from the fed and global central banks. it is extraordinary. the panels in red are recessions, and q1 in the turquoise, q2 in the yellow, and q3 in green. jacob frankel from j.p. morgan noting how expensive qe3 was. do you think we can get through this without a taper tantrum laying out for asian central banks? >> i think so. i think the chances are we will not have a huge tantrum. the fed told is clearly how they will do it. they will start slowly. is also important to understand we have other central
8:20 pm
banks still going the other direction. the boj this week is almost certain to maintain its a 0% interest target, which means they will have to buy more than there willecently if be global upward pressures on rates. ecb will probably also announcing that they will wind theythe rate at which expand their balance sheet. other central banks in the ,egion, central-bank of china taiwan meets this week, indonesia as well. all will maintain and accommodative policy posture. at the margin, it is becoming less so, suggesting the balance of risks to want yields is definitely to the upside. >> you mentioned other central banks, but i am focused on the pboc. fed could nothe
8:21 pm
have come at the worst time for china and the chinese central bank when they are trying to keep everything stable ahead of the party congress. think, let'sf you hope the fed gets a correct because i don't know -- does the pboc have the wherewithal to make sure there are no ripples in their own market in reaction to this balance sheet tightening ? did they have enough in the reserves right now that they can keep their market stable? >> i think we can be confident of that. were underinbi downward pressure at the moment, then there would be more nervousness in the pboc about the ripple effects. are in ament, we .ifferent position the pboc have been so astonishingly successful in
8:22 pm
reducing capital outflow and the currency strengthen so much that they took a few steps back because they felt the currency was getting too strong, so tighter monetary policy in the u.s. would be welcomed by the pboc. >> you are right. they did so much that it almost worked to perfectly for their currency. i'm glad you brought it up. before we go, how troubled do you think they are by the separation of the yuan? it is not a large putting athey are high premium at this stage before the big party congress on stability. they just want a goldilocks environment. they have a huge amount of tools to achieve that. even the pboc does not have everything under control. >> indeed.
8:23 pm
markets have that way of taking you by surprise. thank you so much. much more ahead, talking trump, ray dalio speaks out with his advice for the u.s. president, warning that populism is at its highest level since the eve of world war ii. this is bloomberg. ♪
8:24 pm
8:25 pm
♪ dalio isater says ray warning the world is on a precipice with populism at the highest level since the eve of world war ii. he told erik schatzker about the risks the fed must avoid at all costs. >> the most important thing is to make sure that we understand what the country's principles are that wind us together rather than those that divide us.
8:26 pm
that bind us together rather than those that divide us. to come up with the best collective decisions to bring the country together. i think the. eriod we are in reminds me of 1937, because it was after the 1920 9-1930isis, two, the equivalent of 2008-2009 , printed a lot of money, assets went up, and a large wealth gap created populism, analogous. the central bank tightens monetary policy, then we had a populism and a fall in the stock market. >> so we are at that precipice? , we cannot have
8:27 pm
tightening of monetary policy that is material. we have a very large wealth gap. top 2/10 of 1% of the population's wealth equals the bottom 90% of the population's wealth, and it is not just wealth. there is a polarity. a time where we have both of those things. economic have an downturn because socially of political we cannot stand that downturn. we would be at each other's throats. it is a threat to our system, so it is analogous that that conflict is analogous. that is fearful to me. when you ask what i would recommend the president of the united states to do, to try to deal with conflict and bring people together and not make one side of the battle with the other side and to try to have
8:28 pm
ways to get at the best decisions. that is what i would recommend the president do. bridgwater associates ray dalio speaking to erik schatzker. more to come. this is bloomberg. ♪
8:29 pm
8:30 pm
♪ is a: 30 in singapore. half an hour from the open of trading in the lion city. you are watching daybreak: asia. let's get to first word news with paul allen. north korea has shown pictures of its latest missile test, vowing to achieve its nuclear aims despite sanctions. state media says kim jong on claims the plan is near completion and will create what it said will be an equilibrium of real force between the u.s. and south korea. president trump will meet world leaders this week, setting all options are on the table.
8:31 pm
the new zealand dollar is a barometer of what markets feel about next weekend's election. it has fallen when opinion polls show the opposition ahead and risen when the surveys put the government in the league. an average of polls puts the ruling national party and labor level. both are likely to need the support of smaller parties to form a government. says its chief information officer and security officer left falling the breach of 140 3 million customers personal information. the company released a detailed timeline of the hack, raising new questions about its response. the financial times says short seller carson block is suing equifax for what he calls its abysmal handling of the situation. u.s. regulators are a step closer to recalling 1.3 million affords most popular suv over mounting reports of exhaust fumes leaking in the cabin. step tohas taken the
8:32 pm
recall exporters between 2011 and this year. the regulator has upgraded the to an engineering analysis after receiving more than 2700 complaints. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you for that. let's look at asian markets. sophie is taking a look ahead of what will be a chockablock week. we have the boj and fed and geopolitics never far from lines. -- from minds. sophie: asian stocks continuing to climb, while yen and the gold on the retreat. we have a drop in base metals. mining stocks in sydney are among the leading laggards with telcos stocks.
8:33 pm
that is not enough to keep the aussie sharemarket down. set to snap a three day trial. tinto,to mention rio weighing the most in terms of index points, falling for a third straight day. last friday, rio announced the cfo is to retire by next september. look, a mixedr bag in sydney a for media stocks. industryanley says the overhaul is no magic wand. the key is that better media companies will emerge from the consolidation. analyzed eight combinations. have seven group falling over 2% this morning, the lowest level since july. news corp. gaining ground, was
8:34 pm
2%. a look at what is moving the dial in seoul, korea, the kospi up about .5% this monday, led higher by i.t. stocks and utility shares, up 1.2% there. te shopping the biggest drag after surging the most in a month on friday. hasad reports that lotte hired goldman sachs to oversee china operations. e sheltered several stores retaliation ofed chinese consumers. today on thette back foot. >> thank you. north korea says it will complete its nuclear program despite tighter united nations sanctions. kim jong-un says his final goal
8:35 pm
is to establish an equilibrium with the u.s. our bloomberg asia government reporter at large here and hong kong is here. it sounds threatening words from north korea. diplomatic options as we heard rex tillerson say today, are they still available? notwithstanding that language we get out of north korea, specialist in the sorts of threats, north korea is should it that actually do anything preemptive like attacking the united states or sending a missile near warm will turn out badly for north korea, so at this stage, the options are probably the only options on the table. we see the north korean regime has been able to resist
8:36 pm
, and while resisting sanctions, they have continued with missile and nuclear program , so i would say this into rex tillerson's words. professorke with a who studies nuclear deterrence it deal. he was saying that from his contacts in washington that he theearing it is not just state department, but also the pentagon, national security are all over the world trying to find ways to begin some sort of dialogue with north korea. perhaps there is the possibility the united nations this week in new york, there is the possibility of talks potentially with rex tillerson as well. >> it will be an important week for diplomacy. david, we hear about military options. that is what tillerson said today.
8:37 pm
we immediately think about a nuclear weapon. what are the military options? militaryhey talk about options, we think they are going to attack north korea with the nuclear weapon or try to destroy their nuclear silos. there are other things potentially on the table. trying to take out one of these missiles with the defense missile. that could be something they look at, or they could potentially be looking at trying to destroy one of the missile take off grounds, but even that could potentially trigger responses from the north koreans which aren't nuclear responses, but could be something else, the artillery option. there are the guns lined up there is also or this huge amount of chemical weapons available to kim jong-un , so when people talk about
8:38 pm
military options, they need to take into account the possibility there will be retaliation which is unacceptable for the u.s. military planners. the u.s. has been pushing for harsher complete oil sanctions. how with these even work? >> one of the things there is that there are some studies that show there are two things the north koreans can do to resist the sanctions. one is to reduce the amount of consumption by fear and say you are not allowed to drive your cars. secondly, they could start to put in place these technologies coal tou convert liquid fuel, a technique used by nazi germany and imperial japan and south africans during the 1980's.
8:39 pm
they would have to set up these programs, but they have the technology. bloomberg., if you want more detail. bloomberg.come -- , if you want more detail. the bottom line is that sanctions may not be the way to bring this regime to heal. >> you can read those stories on from japan, reports that shinzo oblique is considering a snap election as early as next month. abe isnzo considering a snap election as early as next month. exactly. there were a lot of scandals, corruption scandals, conflict of
8:40 pm
interest scandals, hitting his numbers badly. over thele launches past month, the nuclear tests, the missile fired over japan itself, have focused the japanese citizenry on security issues, and those tend to be shinzo abe's strength. he has seen his poll numbers rise in the meantime, so from his perspective, it is good politically. he seems to have recovered from the scandals and now might be the best time to call that election. >> who poses the biggest challenge? the biggest challenger is not even the main opposition party. they just picked a new leader and are divided over whether we should go right or left, so it is, the main opposition is not his biggest challenge. the biggest challenge seems to be the tokyo governor, who is very popular. she trounced him in tokyo elections.
8:41 pm
residents first was the name of her party. issued doesue not have a national base. so it it is more opportunity for shinzo abe. >> you can't help but see the similarity with make america first. though?the risk of is possibly calling it for next month, but why not wait until next year? what is the risk for that? >> he has been in office a long time. buying to become the longest serving japanese prime minister, so there could be fatigued. we saw that the scandals the sheer. the worry is that this north korea fears as people get used to it that some agreement is reached there. able too governor is
8:42 pm
take that time to expand nationally and create a national base that could really challenge , and alsoose things within his own party he faces trouble. japanstrong and has ruled for most of its history and he has challenges within the party. there is a leadership election late next year, so the closer we get to the outcome of the more his position will come under question, so that is why waiting might be riskier at this point. >> thank you so much. a snap election there in japan. up next, the latest property prices in china. they are expected to show cooling, but then why are chinese developer stocks continuing to rise? this is bloomberg. ♪
8:43 pm
8:44 pm
♪ >> i am betty liu in new york.
8:45 pm
>> i am haidi lun in singapore. the latest business flash headlines. the wall street journal says that northrup grumman is atk orbital. the terms are not currently available. orbital has soared 50% over the past year. >> toshiba aiming to finalize the sale of its flash memory chip unit despite opposition from western digital. bain capital will be named the fire at a board meeting wednesday. the plan faces resistance because the group now include several western digital competitors, including seagate and others. free to vote on its
8:46 pm
own takeover proposal for the 10 network. has made a rival bid for the broadcaster. administrators had agreed to sell 10 to cbs. morning, china property price data for august. early signs point to a month of a slowdown. a rebound in share prices for major developers showed market confidence the deceleration will be moderate and controlled. us is the senior director of corporate ratings at s&p global ratings. like itt does not sound will be a lot of surprises in these numbers, just measures cooling down, the property market in particular in tier one cities? >> that's right. to one and selective tier two cities will continue to taper. more important, sales and investment into the sector still
8:47 pm
growing, which means demand and sustainability of the sector seems to be on solid ground. in addition, most developers are actually seeing good growth momentum with 12 of them revising their sales targets upward for 2017, which means they are confident about sales going well in 2017 as well. the onesoking for lagging behind, the ones concentrated in some cities with the tightest restrictions. a problem,pose especially when leverage continues to rise throughout the cycle. >> i want to pull up a chart for those not familiar with some of these developers and how much they are outperforming. this is 8935. it shows you the larger property inelopers and their they are white, blue, and yellow outperforming the msci
8:48 pm
asia-pacific index. really quite remarkable how much they have outperformed. why is that? why are they seeing more robust sales? despite a cooling property market with the exception of a few, why is this happening? >> a few factors, but easy to explain. is seeing better consolidation, larger players getting cheaper sources of funding. they are more diverse and the portfolios, meaning they can adjust sales speed depending on various cities and regions. they have better execution and cost saving. economies of scale are starting to show through in their performance. nonetheless, there is a risk there. these players are gathering a , which means the leverage is seemingly improving a little bit, that is on the
8:49 pm
back of earnings and profitability improvements rather than that decrease. interesting, you look ,t companies like ever grand the stock price rising starkly, and most on the back of gains in second, third, and fourth tier cities. this chart, 388 one on the terminal, shows the declines in the cooling when it comes to top-tier cities. growth 60%le digit on year at one point, but that has started to cool. is the market over if you look at all of the cities getting some semblance of balance, or are we still seeing overheating when it comes to smaller cities? >> actually for top tier cities, the supply is tight. these controls and restrictions less investable.
8:50 pm
for the smaller cities, it depends on which regions. they areost part, experiencing spillover demand from the major cities. if they have strong economic prospects, provincial capitals are nearby top-tier cities, they are faring well, but there is a difference between smaller cities where they are more remote with population outflow. those cities are performing less well. >> property has traditionally been an area of focus for policymakers in beijing. it is so tied to social stability and what they are keen to prevent in terms of risks. do expect a shift when it comes to measures for the sector? see policies already in place handling the sector or the overheating prices quite well as they continue to slowly taper. we don't expect dramatic changes
8:51 pm
in policy. we think the policy will be in place for a wild to make sure the overheating will be controlled for a longer time, but not in terms of the magnitude and newer policies coming in. they might control the capital flow. that has decreased and made it more expensive for developers to borrow, but we are not expecting anything major. probably going off what betty was talking about, do you see a hard landing for these over leverage to developers? do think there is a not stability when it comes to the financial system that it will be a soft landing or a gradual delivering -- deleveraging. >> for the most part, developers are experiencing good growth and well supported by the demand and well-managed. the ones, there are a select few we are concerned about where they have not picked up on this
8:52 pm
momentum, which means they will continue to lever of in order to service debt and to invest into more land. those are the ones we are more concerned about. >> always appreciate your insights. look at what else to you need to get your day the top a roundup of stories, particularly as we head into a new trading week. bloomberg subscribers can go to dayb . just get the news on the industries and asset classes you care about. this is bloomberg. ♪
8:53 pm
8:54 pm
♪ >> a quick check of the markets and play. a good start when it comes to sydney. , strong upside of .6% buying when it comes to financials, utilities, and consumer stocks. teflonl, korea, the kospi. some strong words from president , rex tillersonr saying military options remain on the table when it comes to north korea. climbingeing the kospi higher. singapore trading in just under
8:55 pm
15 minutes. we are seeing potentially a higher open, up .7%. i am haidi event in singapore. >> it is monday. i am betty liu in new york, a quick check of the business flash headlines. of 4as received offers billion all strain dollars for his wealth unit. -- australian dollars for its wealth unit. submit its by friday with an offer in the high 4 billion range. it's investing wealth arm includes life insurance and fund management. gsthasis in india's new tax. companies trying to file returns are facing problems such as an inability to correct errors, a lack of forms, plus software bugs.
8:56 pm
handle 3s supposed to billion invoices a month. of "it"r bros. remake top the north american box office again. consular said it took and $60 million, putting it in the top eight earning films of the year and marks a potential turning point for the movie business after the worst summer in a decade. up.ember sales are 39% i saw that movie over the weekend. theought it was one of worst or movies ever. i thought it was terrible. that is it for us. a quick look now at what is coming up. david has more. david: can't wait to see it after that commentary. if you are in the mood for a romantic comedy, it is probably
8:57 pm
the movie to see. there is data out of china. property prices coming out as the market opens. one of the aspects of that are land deals in government revenues picking up. withll discuss that story the head of the china research team at ubs and fred newman out of hsbc. to talk about south korea, north korea, and the united nations general assembly with james rooney next. this is bloomberg. ♪
8:58 pm
8:59 pm
so we need tablets installed... with the menu app ready to roll. in 12 weeks. yeah. ♪ ♪ the world of fast food is being changed by faster networks. ♪ ♪ data, applications, customer experience. ♪ ♪ which is why comcast business delivers consistent network performance and speed across all your locations. fast connections everywhere. that's how you outmaneuver.
9:00 pm
♪ david: it is 9:00 a.m. in hong kong. our top stories today, north korea, world leaders gather. kim jong-un says he will achieve nuclear ambitions. 's handling of the crisis approved, may call a snap election. weekoj and fed leads a big , but sluggish inflation means japan remains out of step with the others. this is "bloomberg markets: asia." ♪


info Stream Only

Uploaded by TV Archive on