tv Bloomberg Markets Asia Bloomberg November 2, 2017 9:00pm-10:00pm EDT
will for the first tax revamp in three decades. rishaad: alibaba sales rising 61%, adding $250 billion in market value this year alone. haidi: trade, security, and north korea, president trump's agenda as he packs his bags for asia. rishaad: i'm sure he's packing his bags right now. regiontries in the asian , having a look at what is going on. i want to get to the fulcrum of why he is visiting. it has always been about trade. 4775.s chart there we go. that is the problem here. japan, south korea, taiwan, philippines amongst others and one of the concerns is the trade imbalance.
the red indicates how bad the deficit is with china, growing and growing since 1997. looking at south korea and yellow, it has not gotten that much larger. right, that's a look at some of the challenges. he wants fair trade, that is what he is saying, for the u.s. not to have such a huge deficit. good trade,trade, better trade is the way it has been framed. we will be watching for that. also a look at nonfarm payroll numbers due out friday, the next data point the market is focused on. the fed leadership mystery finally solved. 30 minutes from the open in china and hong kong.
a mixed into to the week. >> yeah. it does feel tired, right? it is friday. australia is the market showing a bit of life. you're also looking at taiwan. apple suppliers, we are following them closely. are the big three in taiwan, plus the parts supplier at the bottom. was it was narrative a good quarter for apple, and the guidance ahead beating expectations thanks to the iphone x. we will follow this group of stocks opening in hong kong later on. broadly speaking, here we go. level --7 is your 10,817 as your level.
we are close to that high. to close atable 827-year high. , a lot of people are calling it a dovish hike for mark carney. it is about the guidance ahead and how he has outlined the risks for the economy. cable was trading at 133 before that, and were closer to 130 at the moment. that move down has taken sterling to this point right here where you have a convergence between the 100 day moving average, the trendline also coming in, and this retracement level if you take the top before the brexit vote and the bottom. a critical level. that is something to watch.
, australia region the only market showing life. the dollar being offered up against theot aussie dollar which seems to have weakened on the back of the retail number. it is part of the broader u.k.'s story where you have yields overnight moving down substantially. fittinglyr dropee the biggest following the brexit vote. rishaad: thanks a lot for that. let's get to first word news. the ongoing saga at 1mdb, questioned.s
former executives have been questioned. the bank is said not to be the focus. goldman raised $6 million for the 1mdb. claim most ofrs it was diverted by high-level officials. house republicans have begun rolling out proposals for tax reform, something president trump says will be a christmas present for america. paul ryan pledged fast action saying he senses ironclad political will to revamp the tax code. the plan includes cutti 20%,orporate tax rate to and 12% levies on offshore cash. hours withd after holiday forecasts exceeding estimates. the company expects robust demand for the iphone x, it's most important new product in years. apple says the device will push overall sales to a record of $84
billion to $87 billion in the final quarter. the previous high was 70 aliens dollars in 2016. -- $70 billion in 2015. alibaba is powering ahead after year.g $250 billion this sales rose 61% through september , the fastest since listing in 2014. allie palma is diversifying -- alibaba is a diversifying. the stock is up almost 90% in the last year. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thanks for that. the market reaction has been muted after president trump hisirmed jerome powell is pick to succeed janet yellen. to kathleen over
hays for a deep grief. this is the worst kept secret -- kathleen hays 48 d brief. this is kind of the worst cap secret. >> it's funny how that works. you are right. this was so well telegraphed. nuances ofto the trump leaning towards jerome powell and tell he has decided. powells of jerome himself, he brings a lot of quality to the table. when he spoke today and talked about coming to the fed and the importance of what the fed does, he talked first about the strength of the economy and understanding the role of the central bank and how important it is to american lives. he mentioned policy independence . it is interesting he has said
this since he is a republican picked by a republican. in confirmation hearings he might get asked about that. powell is known as a consensus builder and has expertise in capital markets and banking and is seen following in janet yellen's footsteps. i asked dennis lockhart, former president of the atlanta fed, who came to the fed with a long career in banking and became a voter policymaker and did well at his time at the atlanta fed, i asked him if he will follow in janet yellen's footsteps even with inflation so far from target. here is what dennis lockhart said. dataflation and inflation are very much i think in the minds of the policymakers. time, i think jerome powell and the fomc for the most part would like to continue with the removal of stimulus and
monetary accommodation. faces thatome powell senate banking committee, he will get questions about that. janet yellen's term is up february three. the senate banking committee has to get this done in the next couple of months. heare meantime, we will what the white house has to say about the next fed vice chairman. haidi: the boe raising its key rate for the first time in a decade. they did it and sterling fell. i guess the statement was responsible for that. why? >> the most dovish rate hike in history is what people are saying. they kept the key rate on a seven-to vote, raising it by 25 basis points. mark carney the head of the bank
of england mentioned brexit worries, gdp growth below potential, weak productivity, and said it is time to pull back looking at inflation. let's listen to what the boe said earlier today. >> with unemployment at a 42 year low, inflation above target, and growth just above its new lower speed limit, the time has come to ease our foot a little off the accelerator. that will help to bring inflation back towards its 2% target while still supporting jobs and growth. btvet's jump right into 4025 and see a really simple chart that makes the point so clearly. inflation in the u.k. is 3% year over year come up far above the 2% target because of a weak pound. that is a tricky version of high
inflation to be hiking rates against. that is another reason why they feel like mark carney went into this reluctantly. only signaledhey to more rate hikes until 2020, so that seemed like a dovish stance and why the pound did what it did. i'd love this story on bloomberg.com as well. what the world look like the last time the boe raised rates. was one week old. george w. bush was president of the united states. did not of england announce rate increases on twitter. just to put this into historical perspective for you. rishaad: and i will find out who is number one. thanks a lot for that. kathleen hays joining us from tokyo. coming up, jerome powell's appointment may have been largely priced in come a but how soon until he is in that chair?
♪ you are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: i am haidi lun in sydney. the committee overseeing hong kong's financial sector is to question the architect of plans for dual class shares. lawmakers want to understand how exchanges will balance investor safeguards with the goal of attracting new economy companies. a full report is expected by the end of the year. chinese shares in companies fell after regulators are considering a crackdown on
the industry over claims of excessive interest rates. regulators may shut the firms that may have violated laws. this sector has grown since a 2016 crackdown on p or to pure finance. haidi: reliance communications a billionaire is facing a bond coupon deadline after halting payments to lenders. $9.75terest payment of million is the latest test for it has beenas facing setbacks and announced the collapse of its merger plans with a rival. about a coming up, how joint venture? we have our hong kong stock watch next. hey look at the implications of the new fed chair, tax reform in the u.s. and beyond with merrill lynch. this is bloomberg.
♪ i am haidi lun in sydney. this is "bloomberg markets: asia." haidi: i am rishaad salamat in hong kong. let's go to singapore. ,ank of america merrill lynch jerome powell probably the worst kept secret in living memory, and tax reform, 400 page document heavy on things, like on others come is that were the focus is at the moment? >> absolutely. the commonality between the fed and this tax bill will be buying on the rumor and potentially selling on the fact. there is a lot riding on this tax bill and a lot of pessimism
built into this tax bill, but the dollar should get supported by buying on the rumor that something could eventually be done, so that will have to be the commonality between the two. rishaad: you are looking at the front end of the yield curve to steepen, which would necessitate some flattening. what would that tell us? >> basically when we are looking at the twos and fives, we think we flattened too much, it is difficult to disentangle everything. there is concern that taylor could lead the fed, so now that jerome powell has come in maybe it can take out some bearishness at the front end. 80% to 90%bout probability as assigned to a hismber hike, so a lot of
priced in near-term. let's see how the non-arm payrolls come out tonight. we are looking at 330,000 on the headline number. wages.oking at 0.3 on i think is we go forward there is some room for the front end to get some bullish steepening. then criticisms from everyone, including lloyd blankfein, saying this is a tax overthat is stimulative at a time the economy doesn't need it. not dollar negative in the medium or longer-term if it is passed? >> you have to look at it in the medium to long-term, yes, and that is the clear distinction people make with reagan's tax
reform plan which came at a time when the unemployment rate was much higher. you could actually at this time add inflationary pressure. near-term what it does is push up nominal yields and raise the term premium and raise real yields and that helps to push the dollar higher. there is a strong correlation particularly with asian currencies on the 10 year yield with a stronger dollar against asian currencies. so i get it. we will be watching how the congressional budget office scores this plan. you can only run up to $1.5 trillion in cumulative destined over 10 years, so that will be important. debt over 10 years, so that will be important. haidi: jerome powell was finally
announced in this celebrity apprentice comes to an end. he is seen as a continuity candidate. he spoke about this commitment to the dual mandate. this is chart 4905, the inflation target under janet yellen, then ben bernanke over here, and alan greenspan. clearly janet yellen has done well to engender tightness in the labor market, starting to feed through to wages, but stability has been the missing component. you have expectations that a fed under a new governor might take a different look at inflation and whether the inflation target is relevant or necessary given how all the other metrics and to be doing quite well. that his pretty tough. when we look to the fed compared to other central banks, it's a tool mandate is unique when you compared to the ecb.
presents the fed with flexibility. will be the powell chair, he has a border around him and it is difficult to shift people significantly up way from what has been a successful mandate for the past 20-30 years. the one distinction with powell is what he said about his concern about china corporate debt and the potential for disruption and financial stability and portfolio flows. that hopefully provides us with more concern that the fed will look to what the spillover effects for the rest of the world will be. rishaad: i'm talking boe mark arney, who some have called dovish hike, the pound took a beating on that.
what did you make of it, and what does sterling do next? >> you are quite right. we dropped to figures on cable and went below the 100 day moving average, so the market was disappointed because of the change in language and indicating a one and done approach. with headline inflation above target at 3%, they are making quite a call that base effects and headline inflation should go on the factying that the market is still pricing in upward trajectory to do the tightening for them, so the market was disappointed there, and clearly there are issues with brexit, so we feel sterling has downside and we like being long sterling volatility. rishaad: have a great weekend. we are counting you down to the open here in hong kong. let's look at the premarket
auction moving higher .3%. hang seng futures pretty much unchanged. that's what i have for the open markets. one stock we are watching a plan has ase joint venture to sell generic drugs in the world's second-biggest market for medicines. this is coming across from people familiar with the matter. manufacturer is known for its chinese version of viagra. the chairman said all this in an interview as well. we will have more later on with an exclusive interview with gang joe pharmaceuticals. that is coming up in about an hour or thereabouts. have tell you what we
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♪ 9:29 in hong kong. wheel.g kong observation we are counting you down to the start of the trading day. we have some clarity this morning. isknow who the fed chair now. jerome powell. we have more knowledge as to what the gop is planning tax wise in the u.s. the boe raised rates, sent the pound down. beating onom apple most metrics. it's goldman sachs says
scandal is 1mdb under investigation. all these things as weak wait for those payroll numbers out of the u.s. later. haidi: that's right. just rounding off a heck take week for market participants. maybe that's why we are seeing fatigue when it comes to the asian session. let's look at shanghai and hong kong in the early open. ,> the hong kong auctioned beijing coming out with a weather warning. alert, so getan those masks ready and hit the buy button. in the metals space, you have
supply-side reform cutting supply output into the winter to curb pollution, and watch steel prices. nickel got a bid midweek, but retraced into friday down. same story still. australia getting a bid .5%. philippines, new record high for that market here it the rest of the region -- market. the rest of the region so-so. have a look at the shanghai composite on your bloomberg. this is what the early indications look like. 754. the biggest a kleiner said biggest movers, but that is how things are leveling off. are down seven points on the shanghai composite at the open. have a look at hong kong. a few things to watch here in hong kong.
we are also looking at apple suppliers. cathay pacific down at the open. have a look at the big movers to the upside. tetra china seeing that rebound continue. apple with rosie guidance. have a look at the movers in hong kong and the chinese mainland. aac technologies 1% up. shenzhen listed suppliers of line get 50% of the bottom , topline revenue from apple. p.m. retail sales are due out from hong kong. we are looking for 1%. to shed someals
light on the relationship between the number of visitors who come to hong kong and where this goes. not much of a relationship there. it is about how much they spend. 1% is what we are expecting. that will see the rebound continue from the end of 2015. rishaad: thank you for that. we know it will be all change at the u.s. central bank, but what sort of change can we expect? let's get to first word news. as expected, jerome powell to be the next fed chairman, pledging to pursue the banks goals of stable prices and maximum employment while watching financial sector risks. he has been the fed governor as a 2012 and is seen continuity candidate.
his nomination is subject to senate confirmation. the federal reserve, we understand monetary policy decisions matter for american families and communities. i strongly share that sense of mission and am committed to making decisions with objectivity based on the best longable evidence in a standing tradition of monetary policy independence. >> the boe raised rates for the first time in a decade, yet expressed concern by indicating another increase is not imminent. monetary policy committee voted 7-22 lifted the ban benchmark rate. mark carney says the boe will do what is necessary. leading a global anticorruption drive to compel energy and mining companies to disclose the payments they make to government.
washington says the campaign is not fit with u.s. law. former trump campaign chairman hall manafort and his longtime business associate rick gates have asked a federal judge to release them from home arrests as they await trial. ofy say they pose no risk fleeing abroad and should be allowed to travel while preparing defenses. they are accused of money laundering, lying to the fbi, and other financial charges. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: the republicans have rolled out first details of their much anticipated tax reform plan. it would see the corporate tax 30% to 20%.m
the u.s. market is not seem to be impressed. another record, but only up .3%. has anything changed in asia this morning? >> no, unfortunately the dollar comes under pressure as well. the treasury market is closed because japan markets are closed. the main takeaway is that most of the details have party been leaked. the markets have had a lot of time to price this in. it is unclear how much will make it through to the final bill. -- is theake away his details seem to be that there will be less progrowth and a frontloaded in terms of a boost
to the u.s. economy that the market had initially hoped, thei therefore we saw a rally in treasury yields her the dollar. isunder pressure because of the treasury yields but the tax story has been strong -- in treasury yields. the dollar is under pressure because of the treasury yields come up the tax story has been strong. also, there is no time limit now thethe repatriation unlike and thattimeframe could be a strong boost to the dollar. now the chances of that will be diluted. it was not a big selloff, but markets have not and impressed and are looking to other factors now. haidi: it has been a hectic week. we have the fed chair nomination out of the way, so what will be
the next catalyst for traders? hours we willt 24 be looking at the nonfarm payrolls. the hurricane effect will factor into this one and markets are looking for more than 300,000 jobs to be created, but even if that mrs., traders will say that is the hurricane affected there. will beortant, markets looking at the data to see if it supports the fed hike theme. we also have trump's visit to asia starting this weekend. the main focus will be north korea and china's relation with the dem. onkets will also be focused whether trump will talk about the trade imbalances in this part of the region, especially with china. haidi: absolutely. trade tensions may be back on the agenda. thank you so much for that.
talk tech has we end this big week of earnings when it comes to some of these tech giants. alibaba was the success story, capping this years $250 billion stock rally with sales that smashed estimates. september quarter revenue grew 61%, soundly beating projections of 50%. when different divisions are broken down, it may not the making as much progress as the headline number suggests. let's take a look at the details. were the shares down after what looks like a stellar set of earnings? >> they looked like a stellar set of earnings and revenue did beat, but you have to look at how much it beat by. the beat was not that extraordinary. it was exceeded in the last few quarters by larger beats against
estimates, so it is really about alibaba managing expectations well, so having a large beat on revenue and net income is something we expect, so when thinks beat, the market they are ready thought that would happen. there are several issues to be aware of. alibaba increased its outlook for the year on sales, let it was more of an accounting theme where they are consolidating a logistics business into their earnings come which means the top line at the sales level is where it will be plugged in on their profit and loss sheet. there is nothing organic in this outlook for alibaba, so i thi a lot of investors realize that. ,he others as you pointed out and is weakness in the other businesses come specifically the entertainment business and the
innovation business, new areas they are looking into. they are not growing strongly the last two quarters, so there are a few areas where investors are a little bit cagey and taking a little profit. rishaad: what were the highlights or low lights for you of the earnings call? core commerce was strong. this is the bulk of the business and will be for quite a few years to come, but what is interesting is that there are three other businesses after that. cloud computing did do well, although alibaba has stopped telling us what their customer numbers are. in the most recent quarter, they decline to tell us how many customers they have for their cloud business. i don't know what is behind that. that is something they have
decided not to tell us anymore. going into the digital entertainment business, they are spending a lot of money on that. the growth of their and in the innovation initiatives area was slower. these are nimble businesses that should be growing quicker than , but the lasths two quarters the growth has been less than the major business. are still very large and they are burning a lot of money because they want to get these businesses going, but growth is tempered there, so that is something that investors need to look at over the next few quarters. rishaad: we should be looking out for this in the next few quarters. we have singles' day coming up. billion in volume on the last singles' day. they had $8 billion this time. somehow it does not stack up.
what should we be looking out for? >> alibaba's business model is not really driven by commissions. so $18 billion one year, 8 billion another year, there is not a one to one relationship. commission is only a small part of it. was a purely commission based business, the amount of revenue going to the platform would matter more. they are pushing customers up the chain and making sure they get exposure. that alibaban fact a few quarters ago stopped told peoplele and they are moving on from that metric. rishaad: always a pleasure. have a great weekend. coming up, president trump packing for his longest foreign yet.
♪ this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. searching demand for cosmetics l'oreal struggles. revenue rose more than 5% to $7.1 billion. l'oreal saying china and hong kong helped the luxury division post double-digit growth. haidi: starbucks plunged after fourth-quarter sales missed estimates. sales rose 2% compared to the forecast of 3.2%.
missed forecasts in the home market, asia-pacific, europe, and the middle east. on target atshare $.55. rishaad: twitter is blaming an employee error for an 11-minute the activation of president trump's account. whenocial network let-up users saw a message saying that placed is not exist. some critics say twitter should and trump for violating its terms of service. president trump heads to asia friday for his first official trip to the region and rupee be visiting five countries over 10 days. is likely to dominate the agenda. let's bring in a visiting senior fellow at the national university of singapore's business school. he has a expert on international
trade. let's get a top level view. what are your expectations as he goes on this trip? in your notes you are talking about the need for coherence in foreign policy, does he have that? >> so far, no. america's allies in the region of really looking for some clarity and consistency when it comes to trade policy as well as policy around geopolitics. clearmp can articulate a message and keep from contradicting usually through twitter what some of his cabinet officials are saying, that would be a first step in the right direction. what we have seen in the past with bilateral meetings amongst allies, potentially more tense ,elationships like with beijing
when they meet there is positivity and support coming from president trump, but is there a sense it is not tying the entire picture together? that is really the issue. frameworks,lateral that is what companies and countries in asia are looking at. trump administration has shied away from that and are pushing bilateral agreements. you will have a sidebar meeting of the tpp 11 countries at the apec meeting that are keen on pushing for rules around 21st century trade, digital e-commerce, data privacy and security.
that is all there in the tpp language. they will push for that. the big question is will the trump administration budge a little bit and at least keep an open mind to multilateralism. rishaad: this necessitates the question with the united states hasing out of tpp, there been overt criticism from this part of the world of that the united states is abandoning asia, particularly east asia. how does he assuage that concern? >> if there is perhaps a ceditive sign here, i noti that peter navarro is not listed as a traveling member of the , and peter navarro is the chief architect of a very protectionist, very economic
nationalist trade policy from washington come a from the white house, so he is not making the trip. ,'m not sure what that means but that might be an indication the language will be toned down a little bit. we will have to wait and see. the other thing is let's wait and see what robert lighthizer says, any comments that come from him. he will be an observer in this sidebar tpp 11 meeting, so we have to wait and see. it is very difficult to predict anything that will come out of the trump white house. it has been very inconsistent. we just got this breaking news of the pboc conducting a 3.2% lending ,peration, a big number unchanged from the previous
operation. reverse repo they often put in each state. tpp.ng back to i want to bring this comment up essentially. what we have here is steve bannon saying this. i did actually quote him as well yesterday unfortunately. "to me the economic war with china is everything and we have to be maniacally focused on that. if we continue to lose it, we are five years away, 10 years at most, of hitting an inflection point from which we will never recover." what do you make of that? >> steve bannon represents a very extreme right fringe of even the populist movement. obviously i don't agree with that statement. china-u.s. relationship to your
politically, certainly vis-à-vis trade, is absolutely critical and is a very important relationship. the administration were moving towards a so-called trade war with china, and trump has already walked to that fact because that was part of the campaign language, but if it looks like the administration was heading down that road, there would be extremely hard , fromack from congress certainly the business community, chambers of commerce, which i think would really hamper trumps other political efforts in congress. so i think that is a lot of hyperbole and don't see that coming to fruition. rishaad: great talking to you. there is so much more we could have covered. great if you to join us. just having a look at what is
♪ let's do a quick look at the markets and playground the region on this friday's session. direction with japanese markets closed for culture day. .5%.y, a little upside that is despite a disappointing flat retail sales number four september. rishaad: looking at singapore as well. there we go. moving to the downside .3%. well, we are generally seeing a mixed bag. a bit rudderless so far.
♪ announcer: from our studios in new york city, this is "charlie rose." chare: we begin tonight with the cbs evening news and the developing story of the attack in lower manhattan yesterday. >> that attack left eight people dead and 12 injured, the driver wounded by the police officer was taken from the hospital to u.s. district court to face a judge. sayfullo saipov was in a wheelchair, handcuffed and shackled. the police say the attack had been in the works for a long time. l