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tv   Bloomberg Markets Asia  Bloomberg  September 20, 2017 9:30pm-10:00pm EDT

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the boj plans to deal with the surprise hawkish statement from the fed overnight, still on hold for that december rate hike. three more next year despite sluggish inflation when it comes to the u.s. market, really treading water. taiwan and philippines coming out with central-bank decisions today. let's get it over to mainland markets hitting underway. sophie. what islet's look at going on. a mixed session so far when it comes to the equity space in asia. barely large caps budging. the hang seng falling for a second day this week. when it comes to the currency space, dollar strength continuing to dominate the theme there with the relief rally held at some sort of renaissance for the dollar of sorts. the in mind markets remain most bearish on the dollar since early 2013. we have the offshore yuan
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continuing to spike what the onshore rate this up .1%. this after the weakest faxing from the pboc since september. dollar strength, that perhaps could reveal the line in the sand for the pboc when it comes to the yuan and how far they let could signaleat its comforts on. policymakers have supported the yuan, its rise this year, after its worse annual loss in two decades. as you can see from this chart, the pullback in the onshore yuan , the read is the pboc thinks the rally has gone too far. i want to look at with the hang seng. we have a mixed bag. ly votto, gaining 1.6%. givene automakers lifted plans to liberalize the electric
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vehicle market there. after topping 20,000 for a third day wednesday, some weakness coming through on the hang seng, given that drops among tech players as well as banks. i want to show you what's going this after tencent bought a 5% stake in the investment bank and the two have agreed to partner on financial services. we do have another bank on the radar. , fosun international sold 600 million dollars of shares at the low end of the range. after a consortium bought about $600 million worth. not a bad day for that developer. david: thank you. manila, trading their despite
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the government being closed. let's get you an update of first word news with paul allen. paul: thanks. the fed has announced the era,ning of the end of an saying it will start to shrink gigantic balance sheet. it left rates unexpected and said policymakers expect another hike before the end of the year. janet yellen sees the economy strengthening with a healthy labor market, rising inflation, but the inflation undershoot is a ministry. poll gave the national party a lead. while saturday's election date in new zealand for voters to vote early, data showed second-quarter growth right on estimates, .8%. dampening hard on
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management as they seek a rare fourth term. turkish president says any decision on his country's eu membership is for brussels to make. tensions have risen since last year's failed military coup with some german politicians publicly calling for talks to be scrapped. speaking to bloomberg, he said turkey would not back away. i say that those who are in the position to make the decision are them. let them close the door to us, and we will make a decision easily. we are not all that interested. what they want is for turkey to run away from the eu. no, we never ran away. let it be them to run away. let them make that decision. our decision is easy. snap election in japan is expected to mean a substantial delay in new casinos. shinzo all they had been planning to introduce a bill by the end of the year, but an official told us that will be put off until next summer.
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forecaster 25 billion dollars in potential revenue from japanese casinos, making it one of the most lucrative opportunity for casinos in years. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. i am paul allen. haidi: thanks for that. president trump said he made a decision on whether the u.s. will say in the iran nuclear deal, but has declined to say what the decision is. terryllerson agreed that ron is in technical compliance, but claims it has "defaulted on expectations." jodysnyder is here . trump has not revealed his decision externally. why not? >> partly because this is the speech at the u.n. this week, and the president at the same time he is calling the iran deal and embarrassment, and clearly
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there is some serious rethinking about that in his administration. nations and united other countries to help with north korea, so it may be the timing is not great to come out and say to allies like france that very much want to stay in the iran deal that they are thinking of leaving it or trying to have congress take action where it is unpopular and congress at the same time they are seeking that help on north korea. a grouphis was decision. you have six other nations part of this deal. do you have any idea what they are thinking? have they put out any statements regarding what we heard? >> we heard from france. the president in his speech said trying to undo the deal would have great consequences and that it was a good deal and should go .orward we have heard from iran and the
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iranian president, who basically new, andump a rogue said any attempt to undo the deal, that they would not violate the deal, but any attempt to undo it would be serious and have serious consequences, so it's not going to be popular to do it, especially because the agency certifyingas been that is that iran has been in compliance, so it is a complicated issue for the u.s.. every 90 days they have two certified to congress that the country is in compliance. if the administration decides not to do that on october 15, that opens the door for congress to reimpose sanctions, but if other countries see it in compliance, it is a complicated issue. david: october 15. >> just a few weeks. david: two weeks after
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halloween. thank you for that update there. to food andtics food basket. inflation might be on the way up. the price for staple foods in the asia-pacific have seen as significant rise in recent months. i don't mean to stereotype food, but when you look at radish prices, it has jumped 71%. when you look at india, tomatoes and onions has more than doubled . to get more context on what this means for monetary policy, we bring in our chief asia economics correspondent. i wonder if policymakers are looking at these food prices, and do they need to be worried? it would make for an expensive omelette. past cycles, the view this time around is transitory
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and confined to pockets. we know asia is vulnerable to swings in food prices, and that has an outsize impact on consumer inflation. when you look at south korea and toan, people are pointing the impact it has had. there is a feeling that once those impacts wash through the system, we are not looking at a food inflation cycle we have seen in the past. this is a transitory one that should pass. david: we have a chart which shows this may be could be a one-off. this is india. this is 5128 on the bloomberg. we have an index on tomatoes and onions, would you believe. there we go. the right side of the screen is what we are looking at. one off, maybe. is it more spread out across the region? is this just food items we are talking about? confined, but having an outsized impact. in india, food prices make up
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almost half come and 75% of households consume tomatoes. deal overnsiderable there. in general terms, it is not a pan-regional story. in southeast asia, prices have remained subdued. indonesia is a good example, prices going back. taiwan falling. there is no evidence of a widespread breakout. it is more pockets of the region in particular products that are noticeable, but not enough to trigger any alarms. haidi: are central banks looking , food prices, i need prices, or is it remaining the fed is the biggest risk factor? >> probably the fed over squid. we saw last night there were too many bright points on the balance side of things. the reason that matters for asia is because it would it does for
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the dollar. it puts pressure on currencies in asia. strong dollar makes barring more expensive and puts pressure on central banks to defend their currencies and economies. the bigger picture remains that if you wanted to get a pan-regional omelette out of india, korea, and japan and eggs from beijing, that is not the biggest worry. the biggest worry is the fed and the global backdrop. haidi: i think that's all the food puns i can take. bloomberg's top ranked forecaster. we ask where the currency is headed after the party congress and into next year. this is bloomberg. ♪
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♪ haidi: this is "bloomberg markets: asia." i am haidi lun in singapore. david: i am david ingles in hong
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kong. a quick check of the business flash headlines. ge's cost-cutting plan targeting a high profile area, corporate jets. the new ceo john flannery is eliminating $2 billion by the end of next year. starting now, flights on executive planes will be scaled back and replaced by charter. he wants to increase earnings and reversed the biggest stock slide on the dow. haidi: an indian binding $2lionaire plans to spend billion on anglo-american shares, 9% of the company. investment and he does not intend to launch a takeover bid. stake started build a 12% . it has been benefiting from recovery in commodity prices. david: the next story is full of irony. $.99 only has hired guggenheim partners to structure $1 billion of debt, becoming the latest
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retailer to admit problems. $.99 only has struggled to compete against rising online rivals. the bonds have been trading at distress levels for about two years now. china has set fixing the since september 1. the next guest is a top ranked forecaster. he joins us now from shanghai. this chart.row up it tells the story of what has been going on for most of this year, the weakness in the greenback, and that is reflected in the fixings and the trajectory of the currency, but as the dollar has flattened movements and the index has flattened, the yuan has continued to depreciate, so what is going on in terms of what is
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driving the momentum? >> sure. looking at 670. so further depreciation in the yuan versus dollar. the main thing is the dollar strength. just as the fed came out yesterday. we think they will hike in december. that strengthens the dollar and makes the yuan weaker. as far as the yuan fixing, we are seeing a neutral fixing. we have not seen by us to weaken the yuan deliberately, which we have seen in the past. so far, it is still a dollars story to us. isdi: we know that stability the name of the game going into the 19th party congress. analysts are saying after the consolidation of power that the president is going to put into full effect this not thening, which has implemented.
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a lot of rhetoric, but not implementation. you are saying debt will be the cornerstone of what drives economic growth in china. wills, there is talk he start deleveraging, slow down the economy, and implement reforms. the last 4.5 years come up have not seen any of that. it is hard to turn 180 degrees and reduce the level of debt going forward. we think he would prefer it the economy to be doing well, and that means that level will go up. view, weowth point of think growth will surprise to the upside going into next year. david: you are bloomberg's top ranked yuan forecaster for the second quarter. tell us how you do it. this is a currency that is not driven by market forces. talk us through the forensic thinking that determines where this one goes. >> sure. we do have two big inputs. one is how we feel about the
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dollar and the fed. that will always be of they drive her, but the other one is pboc policy preference. we use the fixing to do that. .oday is a good example since the dollar strengthened, they would weaken the yuan more, but it came in line with consensus compared to our models. that shows us the pboc has a neutral policy. they would rather move relative to the dollar. what we had three months back, there was a deliberate effort for cny to strengthen versus the dollar. we saw that in our model. the pboc was setting the cny stronger, and that gives us the policy direction. it's not what they say. it is what they do that we follow. david: that is what my ex-girlfriend in college told me. it's not what you do, but how you say things. help us understand your model further. we have the countercyclical
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factor in place for a few months. do we have a better idea of what the countercyclical factor is? >> we still think that is a moving target. they had ahought countercyclical factor in the forecast in the fixing. it's just that they never said it. now it is a deliberate effort to show they do manipulate the currency based on a policy stance. we look at how the dollar moves relative to cny over the last 24 hours throughout the night, then should've just relative to that. sometimes it moves more or less, and that's where the countercyclical model comes in, and that shows us the policy preference for the pboc on the currency. haidi: what you are saying is this countercyclical mechanism is actually more transparency about how less transparent it is? yes, that's a good way to put
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it. in the end, the authority still it, and that is what the countercyclical factor does. it is a level of manipulation. they want to manipulate at 50% or 10% today come and that's what we are trying to figure out with the model. that will show us the currency direction. david: what is fair value at this point? value is close to about 1% of gdp. relatively is still fair value at this level. that is why it makes it more of a cyclical story. longer aurrency is no 2-5-year bet, it is a six-month that in terms of how the economy moves cyclically versus the u.s.
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economy and global economy, so with the two-way volatility that authorities want to implement. aght now we are in depreciation phase, but next year, we think the chinese economy will pick up more and that will make the yuan stronger next year. david: is that what the market is not seeing? forex is closer to 6.90. you are thinking 6.30 next year. what is the market missing here after mar? >> the thing is about control. the bond market is opening up. the equity market is opening up. in order to attract foreign flows, you would like to see a strengthening currency. the second thing is trying to open up the capital accounts again. a open things up, you need stable or strengthening currency, and that allows you to liberalize. will be that next year. that's why we see cny at 6.30 by
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the end of next year. david: thank you for coming on the show. up, a i could help cure diseases and prevent natural disasters. that is the view of softbank ceo. that is next. this is bloomberg. ♪
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♪ david: this is "bloomberg markets: asia." we are getting a few lines coming out, waiting for this announcement. google is said to be buying part htc. this includes employees working
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on pixel and to focus on branded phone operations. we are still getting a few more lines on that and will keep you updated your softbank chairman mesh he or spoke about tech innovation, wealth, and his thoughts about alibaba's jack ma. years, the innovation of the microprocessor using mike microprocessor as a face to create internet, that has changed the lives of almost everybody on the earth, but going forward, i think it is six celebrating even more. >> early in your career, you were a technology innovator. in 2000, you lost $70 billion of net worth. what did it feel like to lose $70 billion of net worth in one year?
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[inaudible] it was a crash. it really was a crash. somehow at the bottom of the five my actually read spirit of fighting. actually, it was good. and that was the softbank chairman and ceo speaking of the global business form moderated by david rubenstein. hour, thein the next boj policy decision, fidelity international in 10 minutes from now. to update our viewers. some lines out of htc. htc near this $1 billion engineering team sale to google. google buying part of that team and design team as well. htc focusing on branded phone
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operations. shares are still suspended inter-day. they start trading, we will update that of the bit more later on. this is bloomberg. ♪
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♪ from our studios in new york city, this is "charlie rose." leaders from around the world gather today for the second second united states general assembly. in the most anticipated speech, president trump addressed global forum for the first time. he threatened to totally to shore and called iran a rope nation. the unitedrump: states has done very well since election day last november 8. the stock market is at an all-time high, a record.


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