tv Bloomberg Daybreak Asia Bloomberg September 25, 2017 7:00pm-9:00pm EDT
>> it is 7:00 a.m. in hong kong. i am yvonne man. welcome to "daybreak asia." with aeads a -- tech selloff. gold selling above $1300. brent crude jumps to a two-year high as turkey threatens -- bloomberg's global headquarters, i am betty liu in new york, where it is just after 7:00 p.m. on this monday. elsewhere, this just breaking, the latest republican attempts to replace obamacare is dead in the water after susan combs
joins those voting against the bill. drama turnsip another page with apple urged to jump ship and change sides. there is a sickness going around. no, it is not what i had over the weekend, which was the flu. really took the market's down today, the big tech shares, but it lifted another portion of the markets. i want to pull up a chart for you guy. -- you guys. g #btv 4698. it shows small caps, which has been the laggards all throughout the year, now starting to see some life, some of the life fangg out of the
stocks. yvonne: a different kind of flu. i am glad your feeling better, betty. some of these stocks that have suffered the most this year doing quite well. safety trade dragging things lower. those demand concerns over the iphone 8, certainly weighing on the whole sector overall. not a good lead up to asia shares this morning. kiwi, we are continuing to see weakness after that surprise in the new zealand election outcome. despite the weakness we have seen, we are seeing an upside sci 200rd 200 -- futures. that could be good for some of the minors and energy stocks
through the aussie not going anywhere against the dollar. 225, gettingkkei fresh two-year highs after news of the snap election, $18 billion plan coming from shinzo abe as well and his proposal. we will see if that continues here today. below dollar-yen breaking 112 once again. this war of words with north korea hitting a fever pitch, really. a fever pitch indeed. the war worth contributing to the jitters in the market. rocks selling off after north korea ramped up the war of words. let us first play it out for you. >> since the u.s. has made a haveration of war, we will every right to make countermeasures, including the right to shoot down the united .tates strategic bombers even if they do not come into our airspace.
betty: now, i want to get to su keenan. the rotation into small caps, as you mentioned. if we going to the close, you will see we closed off the load. a big drop off the top. little catalyst to push the market higher. that is why we saw the fang stocks take a big dip. let us go into the bloomberg. what took a big hit with apple and the iphone disappointment suppliers.ing the we have been talking about the weak demand for the iphone 8. the suppliers taking a dip, as you see here. typically, the suppliers are a leading indicator. this is the tale wedding the dog because we have seen -- the tail wagging the dog. let us go into some of the big movers of the day. a hit.l see tech take
netflix, one of the fang stocks, showing typical drops for the grouping. up some 10% on a $2 billion deal to buy a european company. it wants to expand into europe. it brought a lion's automotive group for two billion dollars. going back into the bloomberg one more time, one of the interesting aspects of the market as it focuses on president trump, later this week unveiling plans for the tax reform, keeping hope alive. the s&p 500's most text companies rallied after the debt limit was reached. it is expected they will do well if there is positive news on a plan that benefits them. yvonne: the big moves we mentioned with oil as well as gold both moving higher, but for different reasons, though geopolitical he related. let us start with oil. print soaring to a two-year
high. su: we have gold on north korea and oil moving on the turkish threat. a conflict in turkey where there is independent elections taking place in turkey has threatened to halt kurdish oil through a pipeline if there is any kind of interruption, so a lot of traders bracing for possible disruption, which is bullish. we are seeing a lot of the hedge fund bulls jump into oil. the net long as the highest in month, and one veteran said turkey has now created a new geopolitical hotspots in the mideast that is likely to support prices going forward. gold, ite a look at closed above 1300. there are some that believe we 1400 in theld at next year. there is a big conference in denver with a lot of analysts making bullish projections. reason to pile in.
betty: back to you. risk-off.ah, first word news with emma chandra in new york. emma: north korea says president trump's comments amount to a declaration of war, and it has the right to shoot down american warplanes. the foreign minister spoke in new york after the pentagon sent fighters and a b-1 bomber close to be divided peninsula. washington denies clearing war, insists his country has the right to defend itself and all options are on the table. >> the united states will target the -- emma: h.r. mcmaster has run through scenarios to how the crisis can be resolved. he admitted some are "uglier" than others. he said there was no precision strike that could solve the problem and while washington hopes to avoid military action, that cannot be ruled out and says a conflict is likely to
lead to a devastating attack on seoul. wilbur ross and his team have enjoyed a warm welcome in beijing and started trade talks between the world's two biggest economies. escalating tensions with north korea. he will go on to hong kong, been called -- bangkok, and said initial talks are going well. the ecb president mario draghi says the euro area will continue to get as much stimulus as it needs to read this as policymakers discuss the future of their bond buying program. he presented an upbeat picture and highlighted uncertainty inflation and stressed there was no preset for the bank's balance sheet. depends on the instrument policymakers are using and the state of the global economy. global news, powered by more than 2700 journalists and analysts in more than 20 countries, i am emma chandra --
more than 120 countries. i am and it' emma chandra. the republican plan to repeal and placement of obamacare is that after susan collins became the third senator to officially say she would vote against it. the congressional budget office says the graham cassidy proposal would reduce by millions a number of people with insurance while cutting the budget deficit by at least $133 billion. joining us now from washington is bloomberg's kevin wyatt. good to see you. first, it was rand paul. john mccain. susan collins being the unlucky number three i guess to say they will not support the bill. what ultimately led her to say no? >> it is interesting. the statement should put that was really quite strong. it made it clear she was never close to being a yes on this. this was a bill that came out. they made a bunch of last-minute changes over the weekend, sweetening the pot and throwing
a lot more money towards maine and alaska, where lisa murkowski , another holdout, is from. she said "it probably made it worse for me. this bill was the wrong direction from the other repeal bills. she made it pretty clear she really was not anywhere close to being a yes on this. we also know that mccain was nowhere near being a yes on this. his objections were to the procedure and the rush to get this thing through without sort of going through the usual steps. and rand paul came at it from the conservative side. rand paul wanted something that was going to be very, very different. moving one direction to satisfy one of them, you have to move pretty far, and you will lose a lot of people on the other end. they could not figure out how to get 50 senators on board with this. been athis has seven-year promised by the republicans to repeal obamacare. looks like they are just not going to be able to get it done. what does -- where does that leave the republican party?
kevin: they were facing a procedural deadline of september 30. they have roughly that course and so they are going to end of the period unable to deliver on his promise, which not only is something republicans have been promising, but also president trump had been promising in his campaign and ever since he took office. now, it is not entirely dead. it could come back. they are going to leave room for themselves when they go towards preparing for a tax overhaul effort next year. they will leave room to include health aspects to that, which could include a repeal measure. but the same problem that theented them from getting 50 stand, and getting the 50 on patches is going to be very, very hard, as we have seen here. of trying to tackle health care as part of a tax thing is they make a difficult taxing even harder and maybe impossible. in theory, they can come back at it, but it is a pretty high bar to do that.
question is left "do they do anything to stabilize the individual insurance market?" to fix the problems they talk about in obamacare? or do they kind of just let it with her away in some -- wither away? there has been some talk in the stabilization measure that has essentially been declared dead. maybe those come back next week. never count anything out of washington. kevin whitelaw, our editor in washington. you can get a round up of that story and many more you need to know to get your day going in today's edition of daybreak. the berg subscribers tended to dayb on the terminals. it is available on mobile and the bloomberg anywhere app. you can customize your settings so you get the news on the industries and assets you care about. this is bloomberg. ♪
asia's first major market open this point. japan's futures heading lower, 4%. .1 -- down the snapood news from election. the nikkei 225 hitting the fresh two-year high. it will be interesting open in tokyo. i am in hong kong. the north korean intentions giving winds to administer shinzo abe. he is betting he can crush a weak opposition in next month's election. he plans to dissolve parliament more than one year early, calling the vote a test of confidence on his stance in north korea and effort to boost the economy. stephen engle joining us now for more, and kind of a big gamble for prime minister abe. there are a lot of things at play. there is the opposition, which is in disarray, and the ¥2
trillion stimulus package that shinzo abe announced yesterday in meetings with his economic advisory committee and the parliament, which has to approve it. that includes free take care and school for children. of whatludes a period he called intense investment spurred by government spending between now and 2020. there is already going to be a lot of investment because of the summer games that are going to happen in 2020, so that is on top of it. he has taken a gamble. he is betting the opposition is in disarray and the public, the voting public, like his stance on north korea. the numbers have been more favorable for the coalition partner. they are just thinking that the timing is good right now. he is what you have to do a lot of explaining because other polls have indicated that people and nottioning necessarily to favorable for him calling a snap election more than one year before he had to.
he's going to have some explain to do. -- explaining to do. yvonne: i have the approval and disapproval gap for abe's cabinet. g #btv 6054. we have seen covered in the month of september after the cronyism scandals, the tokyo election where he suffered this defeat. is this too risky of a gamble for shinzo abe, because i cannot help but make a parallel. she is now the new leader of the opposition party that has been created. >> do not underestimate the power of populism. he is extremely popular in tokyo. absurd that does not have a national base. that is one reason why they are calling the snap election now. the for this new party can get a national base. but these things can happen and turn quite quickly. and keep in mind that basically
underpinning this stimulus package is that they will hike consumption tax from 8% to 10%. history.n that has been absolute disastrous for the japanese economy. >> basically saying that this is a go in 2018 in a way? stephen: they have to pay for it somehow, right? i lived in japan in the mid-1990's. in 1990 six, the enemy was doing pretty well, bouncing back from the initial popping of the bubble, and then they hiked consumption tax from 3% to 5% in april of 1997. that is 20 years of deflation, ?ight 20 years in and out of recession. then, they did it again. 5% to 8% in 2014. we went into a reception as well. we have six straight quarters of expansion, so it is betting again. it is a big gamble. >> let us have more on this.
the ceo joining us from tokyo this morning. always great to have you. abe isalked about how tying this package with the revenues generated from the sales tax increase in 2019. that is quite a big gamble here. they are making that pledged so early on. very, verybeen focused on boosting productivity and supporting females, you know, particularly single women, into the workforce. .5% oftrillion, about gdp, that sort of spending package targeting housewife, that had been expected beforehand. now, clearly, there is a tangible element. it is going to serve to buy some votes, particularly from japanese women.
>> will the spending be large enough to offset the negative impact from the sales tax 10%?ase from 8% to we know what happens every time that we see these hikes. japan goes into a recession. >> wait a minute. the sales tax hike, you know, is going to happen in october, 2019. now, we are barely in october 2017, so that is a long way away. that is a lot of water that is through all and flow tokyo bay before that actually happens. is that thet targeted spending on education, on female support, it is a good thing, because not only will it support economic growth in 2018 next year, but it will boost the potential growth rate of japan, so despite all the political tactics with the election coming up, it is actually great economic policy.
betty: i want to pull up a chart because it really seems like the japanese economy, while there is still a lot that needs to be done, humming along at this point at this point. the index is headed as you can see for a two-year high, and it seems like, you know, not only is there wind at the back of abe, but also in the stock market. this move by abe, you think it has any risk in sort of upsetting the apple cart here? >> it is interesting. you are exactly right. this is not about fiscal spending in the old style where really there was insufficient demand by the private sector propped up by a government spending. sectorave a private recovery that is genuine that does have legs. you have in the nature recovering nicely and japanese companies like canon corporation, for the first time in decades, building a new
factory here in japan, so the private economy is actually doing well. what abe is doing now with this ¥2 trillion is really very specific, targeted social policy to actually get the participation rates of females. and to approve the powers of the young generation. betty: i have been reading some of these articles about japan and sort of how the average japanese person feels. howany ways, it mirrors americans feel. we know the economy is doing well, but it just does not feel like it. might be said in japan as well. so even though numbers really growth, itarters of is expansionary. it does not feel like it among the average japanese. why is that? >> it is actually interesting. there is a poll done but the cabinet office that is asking people "are you happy?"
two generations recently. i would be very careful. japan is not america. japan is not europe. genuine traction in the labor market. you see good increases in the participation rate, and there is a new middle class that is beginning to rise because the younger generation, the people and 30's, they are getting better job with full-time job creation now accelerating. so i think, you know, what abe is doing with the election, there is a bit of a feel-good factor that has crept into the system. this is a tactical election. years to get another four while the opposition parties affectively are in disarray. betty: we are going to come back with you to talk more about global central banks, not just japan. plenty more to come on "daybreak asia." this is bloomberg. ♪
yvonne: kkr is said to be trying to convince apple to ditch the race forwon the toshiba/memory business. instead, private equity firm its own bid.o join in king joins us now from san francisco. i thought this deal was said and done. we have been covering it for almost the whole year now. a new twist. why do you think kkr is trying to move apple? >> it has been announced but it has not been signed yet, so we are waiting on the final closing, the final conclusion of this. re will likely be an approval process. -- has gone to apple and said "if you're not sure about
the bid and you think there is phil, you know, room for you to cut a better deal, why don't you come work with us and let us see what we can do about it?" yvonne: how likely is kkr going to succeed? is apple really looking to jump ship? ian: we don't know. if we needed that, obviously, you would have seen it in our stories, and we would have been able to give you a much stronger position. what we think is going on behind the scenes is apple does not care too much about which group it is in. these chips matter to apple. cost for it.e this is one of the things that makes the iphone profitable or less profitable or really profitable is the price it pays for these chips. what we really think is motivation is to basically secure a long-term supply agreement that is favorable for it. >> and how western digital plays and all this as well. ian, great to have you.
yvonne: 7:30 a.m. tuesday in hong kong. 20 minutes away from asia's first major market open. betty. betty: it is definitely still summer here, it feels like, even though it is not technically summer. seven 1:30 p.m. monday. it is like a heatwave in new york. where markets closed down. pretty cool for the bulls today. i am betty liu in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia." first word news with emma chandra. a toa: shinzo abe is hoping crush a weak opposition after calling a snap election. the margin of victory -- he will
of the all moment this week with the likely election date. he is hoping to benefit from a strong start for north korea. you fun and $18 billion stimulus package. local and international opposition and gone ahead with the referendum on independence. they led the way in what was a nonbinding exercise. iran, andurkey, others, call for the referendum to be dropped. turkey has threatened military action through the e.u.'s chief brexit negotiator says he wants further clarity on concessions offered last week by the u.k. before the block agrees to start talking trade. prime minister theresa may has helped to break the stalemate with her florence's speech, offering to pay what was owed transitionalo-year period. michel barnier says he still
means more details. >> the european union is keen and eager to understand better how the government will the prime minister's speech into negotiating positions. he has raised more than $1.6 billion in a stock sale ahead of the planned merger with qatar. agreed to combine the steel businesses to tackle overcapacity. the joint venture will be equally owned by both parties. it is expected to go through next year. global news, 24 hours a day, powered by more than 2700 journalists and analysts in 100 20 countries -- in more than 120 countries. yvonne: thank you. let us get more on what we should be watching us trading gets underway in injure. there was a latest war of words
between the u.s., north korea, and the foreign minister talking about how trump's comments with a declaration of war. the market reaction, not panic selling. the wind outcking of their sales. what is happening in japan in particular. see it climb below that 112 level. looking at the futures on the nikkei 225, you have contacts pointing lower -- contracts pointing lower. it prompted the unwinding of yen short. we have seen a steady trimming, although the pace has slowed in the past few weeks. even with today's downturn in the scene, the nikkei 225 is still on course for its best month this year. ien it comes to the topix, want to show you be #btv 76, trading a two-year high. given the broad weakness we have seen amid prospects of the snap election, which helped nudged the topix closer to the key
level. carmakers have been among the biggest contributors. if we take a look back at theory last year, after upper house elections, pulling up g #btv 108, we did see a rally for japanese stocks for the day of the vote, marking the bottom edge from this chart. in terms of what sparked further gains, that is probably going to come down to how the dollar-yen fares. around the 200 day moving average. g #btv 45. in ou should see 115 sight, that could help spur gains. if the dollar-yen hits 120, prepare for a 10 to 15% jump in japanese equities. >> you have to buy a japanese equities at that point. betty: speaking of this rally, the hang seng's advances being
put to the test. sophie: hong kong stocks have dropped for the past three days, at it closely watched-technical level. averagea 50 day moving that we are watching very closely, the line in red on this chart. when it last fell below this level in april and july, it dropped for no more than two days before rebounding. hold, the index failed to fo further selling could be had. pretty much the biggest drag of the benchmarks. yvonne: sophie, thank you so much. sophie kamaruddin on the markets. the federal reserve inflation debate continues today. another inflation dove pushing back against the hawkish majority view that u.s. inflation will rise fast enough to justify another rate hike. kathleen hays here with more, and we have got now a fed
president doin dueling over inflation. kathleen: it is not surprising you have a couple of perennial does standing out -- doves standing out from the consensus. earlier of course, we saw bill dudley. he thinks this weakness in inflation will be temporary and he is starting to see effects from things like changes in mobile phone contracts. he helped push the year-over-year rate down. fedpresident of the chicago , also customarily a dove. bill dudley.d with he is not convinced the inflation leak is transitory. he wants to see a clear inflation signal. now, this evening, in the u.s., we have minneapolis fed
president neel kashkari, also very dovish. saying he does not see a need for rate hikes. you are talking about a town hall meeting. he is in the same position now. let us listen. the was the only person in room voting against the interest rate increases. economy, i do the not see any signs the economy is close to overheating. i do not see inflation taking off. i see no need to tap the brakes. but it is a vote. >> i want to real quickly show #btv 5083., i want you to be the judge. would you be voting for higher rates now? that is the flood inflation target. the pce inflation index, the core that takes up food and energy. they are a long way from target. they are giving the signal. the likes of bill dudley very influential voter, says he
thinks it will happen in the median term. we heard janet yellen speak tomorrow and we can assume it she said last week is that she still sees a rate hike in her site. betty: we heard also from mario draghi overnight, and he, like evans, was a little bit cautious when it comes to removing stimulus. not giving any signal that he is ready to go full speed ahead on reducing the bond purchases in the euro area just yet. he did promise to maintain needed stimulus as the economy goes into recovery, but he warned the danger of hasty policy decision-making that could halt recovery. us listen to mario draghi. speaking to the european parliament. >> we will decide later this year on a recalibration of our instruments that maintains the support. monetary
the euro area economy needs to complete a transition to a new balance growth trajectory with sustained conditions of price stability. draghi said he is getting more confident inflation will rise. uncertainty stemming from volatility. european inflation, #btv 7192. these are the two measures to watch most closely. this is headline inflation. 2% right up there. that is where they are supposed to be a long way from target. when theyg, that is are expected to decide when and to what extent they are going to start reducing their bond purchases as early as next year. >> central-bank divergence. more confidence on inflation, but a very different picture on japan. haruhiko kuroda says japan's too earlyion is far
to talk about exiting stimulus. still with us in tokyo. course, we still see inflation at 0.5% in japan. interesting to get your take on this announcement of a snap election and this $18 billion stimulus package coming out from shinzo abe. does that have implications for now that this is tied to the sales tax hike? no, i do not think there is significant implication in the sense that we are going to have going to japan that is stay rocksolid. governor kuroda made it very clear inflation target is very far away. there is room for the boj to do more, and they have done a wonderful thing. targeting the yield curve
with targeting the 10 year bond yield. basically around zero. as a result of that, you see japanese monetary policy. the japanese yield curve being very supportive for a weaker yen going forward. we expected to hear from jl and as well. what do you want to hear from her today? >> the thing you want to hear she isllen number one is confident the financial system is actually stable and the financial system is actually capable of coping with some of the deregulation that the white house, that the treasury is trying to propose to ease some of the credit constraints in the region all u.s. economies. personally, i am not that focused on the inflation debate. i am focused on the tension between the federal reserve and the treasury on the proposed changesry deregulation
in finance because i think if there's regulatory changes go ahead, that would be much, much more important than the inflation outlook. yvonne: so we should not worry about inflation, but more about what happens in the white house and maybe less so about monetary policy? >> i think that that is exactly right. you always need to worry about inflation, but the federal reserve, that is their job, and they are doing a fantastic job. for all intents and purposes, there is no smoking gun here. will you actually get responsible government out of the white house, out of congress in the sense of proper fiscal management? implemented?as be can the deregulatory agenda for the financials be implemented? if those things go ahead, that will tip the balance for the federal reserve. so many questions here. so many wanted to the market in
the u.s. and globally. i want to pull up a chart here that i think is quite interesting. we have this chart for a while, g #btv 5149, and even though we have been so awash in liquidity , thee fed, their role contribution to stimulus has been declining. their assets are in percentage of the total assets on the boj, ecb, boe, and the fed. they have been declining over the last several years. that that, are you certain you have a new era with the fed? they are going to pull back on the stimulus. that is not going to be quite as disruptive as some had feared in the beginning. i think, you know, it is clear the federal has started the adjustment process.
the interesting thing is you do not just focus on what the fed is doing. it you need to focus on what the private sector is doing. the fed withdrawing liquidity will have no problem if you do get wage and income growth, which means there is a savings in the financial sector that can be put to use to actually offset the balance sheet contraction. the private sector balance sheet -- betty: you are absolutely right. question is have a got the timing right? >> in my opinion, they absolutely do. sheets the balance recession or the fear of a balance sheet recession is well documented. there is 1000 analysts and phd's looking at this. i would be much more worried
about north korea, for example, with real shock into the system, or the u.s. fiscal situation engendering another new shop we do not think about right now. >> thank you so much. always great to see you. and much more ahead. we are -- facebook under fire. the social media giant thomases sweeping changes as its ads are scrutinized by robert mueller. we will talk to david kirkpatrick on many issues running facebook including what is going on with their whatsapp in china. this is bloomberg. ♪
facebook's whatsapp messaging service, or messaging app. beijing has been cracking down on tech and social media platforms ahead of its communist party congress next month. we are discussing all of this and the impatience of this with economy founder and ceo and bloomberg can to beating editor david kirkpatrick. bloomberg contributing editor, david kirkpatrick. we know how much mark zuckerberg .- he learned chinese he wants to get into the chinese market. do you read anything more into some of the problems going on with whatsapp in the last 24-48 hours? do you read anything more into this other than china trying to be extra cautious head of this party congress? david: they are being extra cautious ahead of the congress and a lot of things that extend offline. i think the real question is whether they intend to continue cracking down on services like andsapp that are encrypted
they cannot listen in on. it is clear they are cleaning things up for the time being. whether it has anything specific to do with facebook, i frankly doubt it. whether it would deter zuckerberg from trying to get into china. we keep trying to get into china and determine that. >> we are talking to our colleagues, stephen engle and tom mackenzie. it could possibly just be some type of test run. where do we go for hear from zuckerberg? how can he convinced china to reenter into the market? the lastsupposed to be remaining facebook service that could be used in the mainland. david: it does not do him a whole lot of good that whatsapp is working there considering they do not make any money off of whatsapp. in order for him to succeed in china, he has to figure out how to get a service that generate some revenue. .t has more social impact
that is what he wants. unfortunately for him, he will never succeed at-bat unless he agrees to give the chinese government some form of back door. i highly doubt that he would do that. even if he were willing to go to the chinese market, his users in other countries would be highly disturbed that he did that. and also, the demand would arise in turkey and a lot of other places. betty: i want to get back to another issue that has been dogging facebook. they are pretty on fire. there is a lot. putting out fires on other fronts. something about the russian meddling during the 2016 elections and facebook saying that they are going to turn over all of the evidence that they run by the ad campaigns these russian parties. they are going to turn over the 3000 plus ad campaigns over to congress. how bold of a step do you think
that is in facebook trying to be more transparent here, and what exactly is going on on their platform? they cannot be an agnostic platform? david: zuckerberg did a facebook live session last thursday in which he addressed some of these questions and acknowledged they no longer can be an agnostic platform and they need to implement a wide range of protective actions and to hire a lot of people to watch this stuff more carefully and do more software into the cold human oversight because it is a country wherery there are more democratic elections. this is the tip of an iceberg thisacebook to be sharing data with congress for sure. there will be more such oversight coming down the road. betty: tell me what you think that might be, because it only from that can stop that right now is some sort of regulation coming out from either a
regulatory agency or congress. congress does not know how to regulate facebook and even facebook does not know what kind of regulation they most fear. these are services that have presence that to really figure out where you come at them to debate, their global services. hard timey has a having the impact they need to have. they tried to shut these services down. people can go around these things. we are probably at the beginning of a multi-your, possibly multi-decade sort of dance between not just facebook, but on the energy giants, google and amazon particularly. you have to figure out what is the proper relationship between the two. how much services need to let government see what they are doing and prevent bad things from happening?
yvonne: before i let you go, the other double or triple whammy for we saw, scrapping plans a new class of shares, the dual class shares issue. just days before his class-action -- this class-action lawsuit. shareholders have pushed against thia and actually lost. what is different this time? david: facebook already had a dual class shareholder structure. absolutely clear sole control. it would allow him to take his ,wnership down as low as 2% which still have full control of the company. we are very, concerned about that. thing had not been happening and some of the other concerns had not been bubbling up about facebook, probably he might have stuck it out and thought it and maybe
then able to defendant. -- be able to defend it. be with a want to securities lawyer for as long as a day, which is what was expected. was very bad timing and could have been hugely embarrassing given all the other things going on. the stock is up 30% since this all started. i can get a lot from my charities without the change. yvonne: david, always great to have you. david kirkpatrick. thank you. more to come on daybreak asia. this is bloomberg. ♪
we are talkings, about how it was vital for japan to achieve the 2% target, and actually saw momentum for the 2% goal maintained, so they are continuing to think that we are going to get a little bit higher here, maybe 1.5% in the next couple of months or so. of them saying a few are urging a bit of caution, sayings cpi will not reach 2% during that projection very period. betty: that is vital for the japanese economy. one boj members saying they mid tomake price goals long-term. this is from several months ago. seeing reaction in the japanese market, but interesting to know where the yen is trading right now. let us pull up my tap chart right here, which shows the movement in the end right now. we are pretty much right at the ,evel where we opened trade
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>> 8:00 a.m. here in hong kong. welcome to "bloomberg daybreak: asia." markets racing for a week start as north korea talks of war. havens search but goal settling about $1300. kurds threatens the iraqi . west texas at its highest since april. betty: it's just past 8:00 p.m. on monday. the minneapolis fed president -- neel kashkari said there's no need to touch the brakes. the latest minister -- minutes
of the bank of japan show some members losing confidence in it nation, saying 2% is a long-term goal. yvonne: safe to say it will be pretty risk off in that session we saw on wall street. and bankt's the apple stocks dragging things lower. suppliers in this part of the world could be hit once again on concerns on the iphone 8 demand. also you cannot ignore with going on with north korea, the foreign minister talking about war. betty: with so much uncertainty, i'm surprised this, the volatility index. let's take a quick look at it. certainly we are on levels here
that are quite low compared to what we have seen prior. we seem to be on the brink of war with north korea, we are not quite sure where tech shares are headed. so much uncertainty out there in the markets and the vix remaining quite calm. that will be one topic of conversation with her upcoming guests. how is that affecting their business? let's get to the first word news with paul allen in sydney. paul: delays republican bill to repeal and replace much of obamacare is dead after susan collins became the third gop senator to say she would vote against it. that's despite tweaks of the so-called graham-cassidy bill, funneling money to states with holdout senators, including maine. the latest failure by republicans to deliver on
promise they campaigned on for seven years. north korea says president trump made his, -- latest comments about a declaration of war and that it has the right to shoot down american warplanes. spoke ingn minister new york after the pentagon sent fighters and b-1 bombers close peninsula. washington denies declaring war but insists the country has a right to defend itself in that war option -- all options are on the table. click since the u.s. has made a declaration of war, we will have every right to make countermeasures, including the right to shoot down the united states strategic bombers, even if they do not come into our airspace. >> national security adviser h.r. mcmaster says the u.s. has run through four or five scenarios on how north korea could be resolved, and admitted summer of lear than others. there's no precision strike that could solve the problem and
while washington hopes to avoid military action, that cannot be ruled out. analysts a conflict is likely to lead to a devastating north korean attack on soul. commerce secretary said he and his team in joy to warm welcome in beijing at the start of trade talks between the world's two biggest economies. he met the premier at a time of strained relations over escalating tensions with north korea. saying initial talks all her well for president trump upcoming trip to china. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. allen.l this is bloomberg. let's look at the market open, geopolitical concerns, the drama in d.c., plenty of reasons it fell today. >> take a look at what's going on with the cost the next -- with the kospi.
on witht what's going the won, down .3% here. traders don't seem ready to turn their backs on the korean won just yet. retreating from four-year high hit on september 14. we do have the yen looking fairly steady, holding below 112. after climbing above 1300 overnight. and japanese stocks are losing ground, down about .3%. keep in mind the nikkei still headed for its best month in 2017 with the yen near a two month low against the dollar. state street asset management remains bullish on japanese ,tocks and they are the best
with increasing dividends and helping japan deliver consistently good earnings. not generating too much in the way of for you. i want to highlight what's going on in new zealand, stocks are sliding here and we do have the at itsst holding ground level here. trade deficit widened more than forecast in august is imports were at a three-year high. i want to highlight what's going still holding above the $52 a barrel mark. it has not been above that level since april. rent is trading at a two-year high. this as turkey threatens to shut down kurdish oil shipments through its territory. i want to show you this, it shows the bullish momentum for
brent could continue and were formation of a golden class pattern. it's when the 15 day moving redline is picking up above the green light on this chart here. we have not seen that since 2016. this is very much a buy signal. keep in mind that crude has gained more than 9% this month. gety: so we got to something up that shows him be hitting the top here in oil. on japan, the japanese prime minister betting he can crush a weak opposition it's election. he's calling the vote a test of confidence on his north korean stance and efforts to boost the economy. stephen engle joins us now for more. i'm curious, is the prime minister getting any blowback at
all for the timing of dissolving parliament? kyoton: absolutely, the news poll over the weekend said 64% of those responding who were not in favor of the snap election, even though other the rulingindicated coalition have increased their of theity on the back scandals and the splintering of the opposition democratic party and also abe's handling of the north of korean crisis. still, he has a lot of explaining to do why he is calling the election so soon. he doesn't have to call the election until the end of next year but he's doing so more than he in advance to take it vantage of the timing because of the disarray and the north korea boost in his popularity. also the rise of this new party which was officially formed formed by the popular governor of tokyo, a former
newscaster, i might add. it really swept some of the global elections in july, given a good lashing to the ldp. they want to do this timing out before she gets more national support. >> the party of hope is what they call it. is it really a shoo-in for the prime minister? given what we saw in the tokyo election just months ago. our people forgetting about these cronyism scandals? thingn: that's another she has hammered on as well. keep in mind the gender move as well in japan. she is garnering a lot of interest from the female voters. targeting families and working mothers, providing free preschool for kids aged 3-5, and low income households, kids up to two years oh can get free
daycare from the government. the social side of it. various taxout the increases. down the road in 2019 day will hike the consumption tax from a percent to 10%. in years past when they done this, japan has gone into perio ds of recession. what's important right now is the social element to this election. >> there is actually a new middle class that is beginning to rise because the younger generation, the people in their 20's and 30's, they are getting better jobs with full-time job creation now accelerating. is doingk what abe with the election, there is a bit of a feel-good factor. this is a tactical election, trying to get another four years while the opposition party is
effectively in disarray. stephen: i mention the number of different poll suggesting he could win another mandate with that two thirds majority, maintaining that in the lower house. mostpoll is the interesting one from the japan times over the weekend. nearly 30%, about one third of the voters plan to vote ldp, but 42% of the respondents say they are undecided. that's a lot of wiggle room. before he would always use this delay of the sales tax for him in favor, and now it doesn't seem like he will have that kind of leverage. stephen: he wants a sales tax to pay for the stream you asked for the stimulus. he wants to have intense investment over the next three years, which tokyo will have already with the olympics. this is another sweetener to the people of japan, vote for us and
we will have more growth beyond the six straight quarters of economic growth. we'll have more on japan's efforts to revive the economy later in the show including one that boj governor says it's still too early to talk about ending the easing program. up next our exclusive interview with brian durkin on what's behind the boost in their trading volume. this is bloomberg. ♪
good to see you, welcome to hong kong. let's go straight to the question, we've been talking about this for much of this year, low volatility, where does it go in the next couple of months or so? yet you're seeing quite a bit of trading by. what is driving that right now? there is a tremendous amount of uncertainty in the geopolitical regime. cme group is very proud of having a wide array of diverse asset classes to respond to that uncertainty. currencies, metal, providing the tools our clients need to manage these risks during uncertain times. yvonne: will we see any pickup in volatility in the next few months? bryan: it's hard to predict over the next couple of months. it's an area of focus of growth in our company.
yvonne: what are your ambitions for cme group outside of the u.s.? he told people to use more of the electronic platform? what about in asia? bryan: i'm here to celebrate our 30th anniversary here in asia. after this visit today i will be in tokyo celebrating our first office in asia. asia represents a tremendous area of growth for us. we're seeing close to 3.5 million contracts of our total 6 million coming out of international efforts. asia represents close to 700,000 of those contracts. we have over 300 people located across and throughout asia, so were able to meet client demand. yvonne: where are you seeing the most demand right now and what are you doing in terms of driving are getting that demand in this part of the world? how do you beat out your rivals out there as well? energy ande proud of
the performance we been seeing in the past year or have -- year and a half or so. , and nowgit growth that were exporting crude oil globally, that's been a tremendous growth arena for us, particularly out of china. kong and south korea, all the quadrants of asia returning to art of eti contract we would interest rates as well as performing tremendously well in the region, as well as court -- foreign currencies and metals. to ask you about bitcoin because it is such a hot topic in asia and here as well. you started the bitcoin index, but you haven't started any derivative products related to that. when are going to see bitcoin futures at the cme group? bryan: that's a great question. i feel that bitcoin is very
nascent right now. you've indicated that we started an index that has created more transparency from a pricing perspective. however, we have a tendency to shift our focus toward digitizer nation itself, and looking at the technologies associated with it and how it might further complement our client needs. betty: what does that mean, exactly? don't see is going forward with a futures contract in the very near future. however, the straight through processing and capabilities associated with digitizer nation is an area of interest for us. upty: everyone is gearing for this in europe and also here. how might it affect your business? >> the u.s. has had a long history of the highly regulated in terms of an industry itself for cme group. we have gone through the experiences of dodd-frank and
from those experiences, we've been able to develop products and services that help the clients adjust to those regulations. with respect to -- you're seeing the europeans going through that transition themselves. it is incumbent on us to be closely connected to our clients, being a global organization, and helping them understand what may be changing on the horizon. theave certainly within u.s. in terms of our regulatory regime and we will just continue building upon that product base. these negotiations are just kicking off here and it doesn't seem like were getting a lot of clarity on whether it's a soft exit. does it matter at cme group? uncertainty, there is risk associated with it. we just continue to rely on building liquidity to make sure , marketsews comes out
and market participants are able to adapt and go to a market in the apple to manage the risk. yvonne: do see this dragging on for two years? is it going to come out favorably for the u.k. in any way? bryan: who is to tell? the news is changing by the day on that topic. at the end of the day, our focus is just making sure that both markets are vibrant and liquid in response to any news that make amount. commercializing market data has been a key focus alaska both years. what is cme doing to grow in that space right now? bryan: market data represents a significant business line for us. we have traditionally focused on the core data distribution. this past year we've been turner focus on the development of derived products. it's really utilizing pricing information to develop products that are not necessarily derivatives are reliant on
price from us. yvonne: would that include acquisitions? bryan: our focus really is on what we have today with our core. that is definitely value i'm challenging our team to further develop from a revenue perspective. yvonne: great to have you, thanks for joining us from the cme group. bryan: thank you so much. yvonne: our interactive tv function, you can find it by logging on that tv . you can see previous interviews and rewatch this interview we just had with brian darken. you can be part of the conversation -- with bryan durkin.
yvonne: this is "bloomberg daybreak: asia." a pushedter rejecting to sell us retail business, marathon petroleum has its eye on pipelines. looking to invest in lines running to the east coast. >> i believe the industry is going to continue to consolidate. as i just presented here today, where the third largest refiner, 100,000 barrels a day or so separates us from being the second-largest refiner. that is not what is important, it's what's the quality of the refining assets. i would say want to see more consolidation in the retail space and the bitstream space
and that's where we brought mark west in about 2.5 years ago. we made some other acquisitions of terminals and pipelines since then we've been very involved in the retail space. coastght all the east assets back in 2012. we've been very busy trying to , notct high-quality assets from a volume standpoint but from an earnings standpoint. throughts we acquired speedway a number of years ago, we've been able to -- those are performing way above our plan from both a synergy and profitability standpoint and they are doing fine. x you talked about your east coast assets. ofwith our acquisition markwest, we are now very big in natural gas liquids.
we gathered 5.8 billion cubic feet were day and process 7.6 billion cubic feet or day. we do not have any pipelines all the way to the east coast. we've been looking at a number of opportunities. whether it's east coast or whether we have a pipeline that flows from the gulf coast to the midwest today, whether we turn that around and take natural gas liquids back to the gulf coast to be able to export. so we are very involved in attempting to see what would be the best profit opportunity. >> what about the laurel pipeline reversal? >> for years of talked about this makes sense. if you look at the midwest refining system, the first quarter in the fourth quarter are usually long both gasoline and distal list. the best -- distillate. you look at the poplin that flows from philadelphia back to
pittsburgh, midwest, midcontinent refineries are supplying the pittsburgh market, so the pittsburgh market has little long-haul barrels coming all the way from the east coast. what makes sense is to continue to move midwest barrels further to the east. why is that? you look at some of the crude supply that is needed to run the east coast refineries, it's coming from the midcontinent reducers -- reducers. -- midcontinent producers. we can refine those barrels here and deliver them to the consumer . at the end of the day, it is what is the best cost to the consumer. we can deliver those barrels to the consumer at a lower cost. coming up, differing views on inflation from fed officials as policymakers continue the race.
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yvonne: where just a half hour away from the open up the trading day. pretty sunny in the lion city. gorgeous there. i'm betty liu in new york. you're watching "bloomberg daybreak: asia." this get the first word news with paul allen in sydney. paul: the japanese prime minister's hoping to crush a weak opposition in next month's snap election. the victory margin may determine his own fate as ruling party leader. likely 22 is the election date. he's hoping to benefit from a strong start in north korea and plan to use a failed tax hike to
fund a stimulus package. kurds have defied local and international opposition and gone ahead with the referendum. the president led the way in what was a nonbinding exercise that won't bring immediate change. however, baghdad, turkey, iran and others call for the referendum to be dropped, saying it brings back regional instability. turkey has even threatened military action. the e.u. chief brexit negotiator wants clarity on concessions offered last by the u.k.. the prime minister theresa may had hoped to break the brexit stalemate with her florence speech, offering to pay what is owed and seek a two-year transition. some still want more details. >> their key to understand how
the u.k. government will translate the prime minister's for negotiations. >> new zealand's exports fell short of expectations in august, leading to a wider than expected trade deficit. shipments were $3.96 billion u.s. left deficits for the month of just under $900 million u.s., the widest in a year and the first since february. the kiwi fell on the figures before recovering slightly. thancrêpe has raised more $1.6 billion in the stock sale ahead of its planned steel merger. the two companies agreed to combine european steel businesses to create the second-largest producer. the joint venture will be equally owned by both parties. it's expected to go through early next year. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. allen.l
this is bloomberg. time to see how the asian markets are shaping up this morning. quite a bit of red when it comes to equities. let's get the latest with sophie. .t's risk off >> quite a bit going on there. investors are taking a cautious stance. in sydney we are seeing marginal gains in that market. we do have the yen holding steady and were seeing pressure for tokyo stocks, down .3% on the nikkei to 25. the kospi is sliding for a sixth straight day. the won is resuming losses for a third session. earlier we had paul discussed
the trade deficit widening in new zealand, so it has been a roller coaster ride for the kiwi dollar. deutsche bank says the aussie is looking to strong against a backdrop of some economy data and saying pricing is looking at excessive. consumer sentiment is the and thein the g10 space weekly confidence gauges slipping. selling bank is likely it against the emerging-market mobic -- emerging-market currency. i want to show uses stacks -- some stocks that are moving this morning. as 6.1%, that would've been the biggest drop since november, after about only one third of shares authorized in a buyback. it's a down day for asian and
suppliers amid disappointment over iphone eight orders. last friday, lg innot had its worst weeks sinceek 2014. serve asr seeing could a good time to bargain hunt but for today, it's pressure for asian apple supplier so far today. betty: not good for them at all. we've looked at some of the stocks on the move. continues aseserve a dove pushes back over the more hawkish view that u.s. prices will rise fast enough to justify another rate hike. kathleen hays is here with more on bank presidents in disagreement here. >> will hear from fed chair
janet yellen tomorrow. about neel kashkari, president of the federal reserve bank in minneapolis. he's been pretty dovish on policy. he says there's no rate hike so farwhile inflation is below target. let's hear what he told a town hall meeting earlier. >> there more unemployed people out there that are not counted andhe national statistics, people's expectations for inflation have been drifting lower. it's a complicated topic but both of those together i think or what is feeding the low inflation. which tells me the fed should be under no pressure to raise rates. we have time to let inflation climbed back to target. this yellow line is average hourly earnings, the
yearly rate at 2.5% now and the latest reading in august. measure down main 1.4 create we have the feds targeted 2%. neelan understand why kashkari is saying i don't see the momentum here, therefore i don't see inflation rising or a need to raise rates. bill dudley, he off among the days fed speakers. he sees fading inflation effects, in other words, the weaknesses transitory very he is echoing janet yellen. he went on -- she went on to endorse the view of possibly a december rate hike. charlie evans said, and all three of these people are thers, he is not convinced inflation will be transitory. he said the fed the fifth clear signal that it is on track and
gaining momentum to hike that key rate again. they are sticking to their guns. some inner policy divergence within the fed. externally, the fed majority is clearly still diverging from other banks in the world including the likes of boj. >> granted these are old, but let's just review what happened there. in the minutes we see that the majority there saw momentum toward the 2% inflation target, and it fact, the consensus agreed is vital to maintain that 2% target. some say maybe we should move it down, the majority said no. this is the meeting when they move the target date for heating the 2% target out to fiscal year
2019. let's go back and review some things the governor said in the speech late yesterday in osaka. he said low inflation clearly extremexits from stimulus are premature. he said companies raising prices -- will raise wages and that boosting inflation. he also said the boj is monitoring north korea, and the reaction to that to see how it affects their outlook is interesting that he is a technology this could certainly be affecting consumer and business confidence if north korean tensions continue to escalate, particularly if they are threatening japan. the ecb in the middle not of urging, but expected to do so soon. what does mario draghi say about
>> he basically said we will maintain all the stimulus we need in order to keep fueling the economic recovery. there will be plenty of stimulus. he also a knowledge is the economy is picking up. hasty decision-making can office recovery. it seems like he's still been a little cautious on how soon they removeke any steps to stimulus like buying fewer bonds. they're getting more confidence in a rising ecb, but rubber is going to hit the road potentially in 2026 when the ecb meets again. he seems to have said, that's when we will start talking about qe. to do on the it runs out at the end of the year. this is what people are waiting for. meanwhile i would say mario draghi is playing things very cautiously.
charge you need to know. >> we do have to take a look at where is the price of gold right now. under the $1300 line, characterized by the red line. the course ofr this month of september, it has been above this line for most of that time. the last time this happened was a year ago in september. the big question is whether this is or is not the new normal among strategists and analysts who are saying it could be because of the rhetoric coming out of both the united states as well as north korea. north korea most recently saying that president donald trump's recent comments about north korea amount to a declaration of war. potentiallye we are seeing firm footing for the $1300 of mark and possibly higher. we talked a lot about gold, but i want to put this in a
reference to what is happening with the japanese yen. the white line here is the japanese yen. even though it looks like it's going down, it's up about 4.5% here today. it beats by almost tripled percentage points, up by about 14.5%. there was a breakout in mid-may or so. if you are in investor and you are thinking about the yen, you might be thinking to reposition yourself in case this continues even higher as we are expecting. -- finalart here chart, all the ceos talking about where the gold prices going. what about their own share price for their companies? take a look at the purple line. mining, andrest australian miner, up by about 24% year to date.
look at glencore, down by about 4%. that they are is highg possibly there are costs hitting the share price as well as falling production. australian miners are raising output and that's what we're seeing in terms of a possible knock on effect. those are the three bloomberg terminal charts that you do need to know. we will see what happens over the next few days. betty: a lot of things happening from that gold form. joining us from sydney is jonathan barrett, who focuses not only on gold but commodities markets in general. we will get to oil in a moment. in terms of gold, we keep hearing this forecast, the chairman of the world gold seeing gainswe're
in the next few months. where are you on that? >> generally am going to be positive. maybe 1400. in my mind, we are still in that phase. and this is based on what exactly, jonathan? >> we looked at it from a technical side and salt a down trend from about 2011. we broke it two or three months as we are far concerned, as long as it is safer above that level, you got to be bullish. the nice thing is, where bullish for the metal. betty: the chairman of the gold
council also said we are at peak gold production right now. that seems to be the just of what we cap hearing in denver. do you agree with that? bryan: yes, i do. particularly in australia we are seeing a lot more construction coming online. when you look at the cast cost of production, it's still quite low. it is still quite profitable to actually do it. at the end of the day, more production. on the flipside, we are also more wood. thee seen it largely by weaker dollar as well. as we see more indications to the fed, they will start unwinding the balance sheet.
does that have any indication on where the dollar prices going to go and the gold price as well? i see the u.s. dollar continuing to weaken quite a bit. it's got to be supportive of the middle. when i look at the interest rates moving up in the states, i get a sense that inflationary concerns either are not here at the moment, they will start to emerge. thosek we will price price expectations and as a result, it will also support the metal. >> and iron ore entering into a bear market. do you think this is a temporary thing right now? there are all these concerns about environmental restrictions with china in the fourth quarter. >> a lot of analysts are starting to feel the other way. i feel that we have seen a
volatile year, no doubt about it. -- even though china starting to slowdown, they still need support for their infrastructure programs and as a result, the demand for iron ore will still be there. earliere saw this chart , where it looks like brent crude and heating this golden that 208ossing above moving average. in your view, you think we might outeading out or topping here in oil? i think we know there has been a trading range for such a long time. we always get excited when it's about to get up to the top side. isther it will break or not
another thing. everyone is quite comfortable in the world with these prices. it is at a nice, balanced area. i think it has a test for top to seet it will be nice her out there. much,: thank you very live from sydney. subscribers, go to your terminal. is also available on your mobile at the bloomberg anywhere app. they will customize your settings. make sure you check it out. this is bloomberg. ♪
yvonne: this is "bloomberg daybreak: asia." betty: a quick check of the latest business flash headlines. reducing a list of potential buyers of the oil business to just to now. noble announced the of its global oil operation back in july as part of a wider asset sale to help it survive. sources say the leading bid for the whole unit is a little under
a billion dollars. yvonne: japan has raised more than $11.5 billion, including the country's biggest public offering this century. a 2% discount to monday's closing price. investing two is help with hurricane irma. taiwan's high precision sincegatron have plunged the iphone eight and other gadgets were announced. , four aty market quarter of the index's total waiting. yvonne: reuters reporting yet another delay in a toshiba memory unit chip sale. apple has not agreed on key terms.
details of the issues involved are not clear. to be part of the consortium that one race with an $18 did. the boss, bruce springsteen with a lucrative new business. tickets for his upcoming broadway show are being offered .or $10,000 on stub hub even a cheap seat will cost $1400. nevermind that is says $75 on the ticket. seeing value at $15 billion. that is to attract the wall street guys into this business. >> $1400 for nosebleed seats, i don't know.
for brucepay that springsteen tickets? >> i don't know if anyone from the streets of l.a. would. be devalued from bank of america merrill lynch in about 10 minutes time. october 2019 is what they are thinking. we have abe, a serial delay her of that tax. about an hour after that, nicholas smith joins us so we can make out the boj minutes on top of that. what does it all mean for economics and the fiscal stimulus of the country? and what about the quantitative line we have going on because of bonds and other things by the
bank of japan. they were talking about the tightening of the housing regulations. >> who better to discuss this then and economist who will join us in about 45 minutes. there he is. that's what we've got. thank you so much, that's it from "bloomberg daybreak: asia." our market coverage continues next. this is bloomberg. ♪