tv Bloomberg Daybreak Asia Bloomberg November 5, 2017 6:00pm-8:00pm EST
♪ >> it is 7:00 a.m. in hong kong, we are live from bloomberg's asian headquarters. welcome to "daybreak: asia." the top stories this monday, president trump faces the first of many meetings with north korea plan the agenda. he has made a clear warning to opponents to not challenge the united states. betty: and it is just after 6:00 p.m. on this sunday evening in new york. elsewhere, storm clouds over berkshire hathaway, mother nature rained on warren buffett's insurance-based parade in the last quarter. and saudi arabia's crackdown.
is world's 50th richest man among those detained. ♪ betty: while we are watching all of these geopolitical events, including more headlines coming out on north korea, let's focus back on the markets how investors are looking at how all these events playing into their own outlook on the u.s. and the world. i want to bring up this chart, 5080. it shows you how the three-year and tenure spread, or the five and 30 and two and 10, i should ,ay, trying to find out represented right at the end. you can look at it several ways, or maybe specifically two ways, ,hich is the bill gross way
which is the economy is much gloomier than perhaps with the numbers are showing some and there is not much more room to raise rates in the u.s. despite officials say. on the other hand, others say this is not about the u.s., the u.s. is doing just fine, it is about the rest of the world, which is falling apart, they are all coming here to buy the safety of u.s. treasuries, can get those yields up, they are basically two extensive right now, treasuries are, because the rest of the world still so uncertain. yvonne: certainly the case, especially with the boj, japanese investors got to look for yield elsewhere. they are heading to u.s. when it comes to treasury, china as well. we will continue to watch the yield curve. we have breaking lines coming through with earnings, as well. quarter income, it was a miss. 822 million singapore dollars, the estimate was for 1.1 4 billion singapore dollars.
what -- quite a sizable miss. we will watch those headlines. or talking about the allowances for credit and other losses, that came on -- came in at 815 million singapore dollars. betty: just quickly to remind of how we traded on friday in new york, we were mostly higher, driven by some pretty good numbers in the jobs market. i would not say stellar, that they continue to show improvement and a rebound from the prior report that showed the hurricane impacts. the nasdaq propelling higher, up 7/10 of 1%, and all of that. apple fever, the iphone x. oil prices, since we are so focused on saudi arabia, wti crude opening at about $55.97 per barrel. yvonne: that opec deal to extend those curves seems to be premature a dent. in asia-pacific, we are seeing downsizing when it comes to the
nasdaq 50. we are down when it comes to stocks, 5910 for the kiwi. we saw me dollar last week eking out a weekly gain. friday after jobs report. let's take a look at how things are faring in australia, the asx 200 much flat right now, we're seeing things trickle through. westpac earnings, maybe a headwind, coming up on the sulfide -- the soft side of the forecast. going nowhere for the currency. japan, coming back from the holiday, we are seeing equities, could be seeing an upside of about 100 points or so today. to be a good day out of tokyo, dollar-yen as president trump reps of his to japan, leaving tomorrow morning. betty: let's get to the first word news with paul allen. leaked documents from an
offshore firm reportedly showing wilbur ross still has a stake in a shipping company with ties to a russian businessmen under u.s. sanctions, and to president putin son-in-law. the holdings of its millions of dollars a year is 20 past for a giant russian energy company, whose owners include the oligarchs and presidents son-in-law. pboc's governor has renewed his warnings about the dangers of corporate debt, saying the financial system is becoming more vulnerable. onwrote on the banks website sunday, late in risks working and living, including some that were hidden, complex, sudden, contagious and hazardous, even as the overall health of the economy remains good. authorities in texas say more than 20 people have been killed and a mass shooting at a church. officials in sutherland springs south of san antonio said a man walks into the baptist service and opened fire. law enforcement officers told the associated press the gunmen
fled in a vehicle after the attack and was killed by either a self-inflicted wound or confrontation with police. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ president trump's first official tour of asia is in full swing today after a sunday --inated i gulf enemy in golf and a meet and greet. emperor, the the prime minister and later had a state dinner. stephen engle is joining us from tokyo. good to see you. golf is out of the way, it seems that the real business is happening. stephen: yesterday was more than -- more of an informal gathering. be making morel
serious negotiations, bilateral talks at the state guesthouse, you also meet with the emperor and empress before flying on to south korea we believe tomorrow morning. again, he is seeking to reassure, if you will, asian partners, the asian partners are seeking reassurance from donald trump that they will continue to have a security pointed given all of the noise coming out of north korea. on the economic and financial front, donald trump has long, including on the campaign trail and this merely first year as president, has been calling for freer, more fair and reciprocal trade. those were the comments he used at the beginning of the trip to japan. for more on that, i want to bring in our guest, the former vice minister of international affairs at japan's ministry of finance, currently president of the institute of international want to affairs.
thank you so much for joining us. this is the easy part for donald trump's trip. but there are contentious issues with japan, as well, one being rightlatively weak yen now, but also some of the agricultural tariffs and trade imbalance with the united states. where do you think they can find common ground? >> right now, but also some of the agricultural the united states,y people are talking about ounces of trade. -- about the balance of trade. many industries will have concerns, but so far we don't see any concrete quest -- requests at this moment. mr. trump is willing to say something not only for asia and japan, but for korea another asian countries. the people coming from the middle east in the united states, in that sense i think
trump has a big concern about trade with asia. war -- the economic >> not war, but competition. sometimes people will have more focus on the competition aspect. now we see both sides, coordination competition. that will be established by the americans and asian countries. stephen: the prime minister has been a lot of political capital can into no donald trump. what you think the number one thing the japanese want to get from this visit? having northare korea as mediation. asia and security in the relations between u.s. and japan is important. be discussed today. stephen: we have a story
broadcasting this morning saying that abe will convey to trump to strengthen japan's unilateral sanctions on the north, perhaps by expanding the scope of asset freezing. how much leverage to they have? >> we have a bigger relation with north korea in the economic sense. , and we cane room have some action. so far, i don't see any concrete information, just that the newspaper and the media says so. one of the sources are contingent on the trade front, and the $69 million trade deficit the united states has with japan is the value of the yen, it is now at 1410. will -- powellow over others at the fed, that changes the outlook? >> the yen is moving very
slowly. i don't think it is appropriate, but it would be comfortable for the members who are concerned. bethe chairman were to taylor, the market would expect a quick rise of interest rates. think more depreciation of the yen or dollar. i don't think it is going to change that much under mr. powell. i don't think there will be any big changes in the short run. stephen: the yen will not be a contentious issue for donald trump, it will be around 170? -- 117? >> there is a big depreciation
down to 125, i think that he would say something about the foreign exchange rate. now that we are in postelection with shinzo abe having more of a mandate, we monetary policy, but perhaps the boj will clarify its exit strategy, whatever that might be, ahead of the replacement for the end of kuroda's term. the euro is falling, and japan is lagging behind. --hink the timing [indiscernible] have to show some idea of
will be coming. before ae a long time negative interest rate. stephen: last question, as shinzo abe puts ford in his cabinet, the new asked budget, probably to pay for some of these social issues in japan he campaigned on, he also longer-term down the road once to change the constitution, wants to bolster the self-defense forces. what is the appetite in japan for the added cost and risk of a strengthened and a larger military? >> i think most of the japanese people, they are not that enthusiastic about being a military power. course, it is important to keep the peace, but so far, in there is the, missile base.
the growth strategy is not complete yet. i think he will have more effort on realizing the. -- realizing that. stephen: thank you much for your time. , more full-day coverage of donald trump's first official day if you want to call it that, here in japan today. haidi: thank you so much -- yvonne: thank you so much. a great interview. we will continue discussing president comes -- president trump's asia trip throughout the day. next hour, equity strategists join us. yvonne: later on, special coverage of bloomberg markets of president trump and shinzo abe's joint press conference, that starts at 1:00 p.m. hong kong time. this is bloomberg. ♪
♪ that is right now a live shot of the sydney harbour, a great day to start the morning. asx barelye s&p budging at the moment. this is "daybreak: asia," i am betty liu in new york. yvonne: and i am yvonne man in hong kong. a crackdown barely budging at the moment. this in saudi arabia over the weekend. the crown prince had several people arrested, including one of the richest men in the world. it puts the crown prince on the cusp of the saudi throne at the age of 32. , hehe phone is tom petri has advised that the kingdom on its natural gas initiative. thank you so much for joining us. is this really about anticorruption or is it all political play?
tom: i think what it really represents is a bold set of moves to consolidate power. sense,s a little in that but it really gives a new meaning to the word printed -- preemptive action in saudi arabia. in the past, cautious building of a consensus has been the style, and this is anything but that. this is a very important move thecrown prince following dispatch of the last crown prince. it does represent, i think, concerns that there is limited time to make a lot of fairly radical changes, and there is obviously some undershirt, some pushback that he feels has to be dealt with. you can make the argument of removing the national guard, the minister, as
a power grab, white target -- white target prince all week -- alwaleed? tom: we will have to see how this plays out. that is a good question. my guess is because of the success of prince al will lead alwaleed, there is some symbolism in including him, i figured becomes a message to everybody else in the royal family that he is serious about wanting support on the programs he is putting forth. no better way than to surprise people with this kind of a roundup, if you will. does this give pause when it comes to foreign
investors and saudi arabia at the moment? tom: it might. i would say the real key here is going to be clear evidence that he successfully has consolidated power, and if he does that and there are not too many other surprises that come down, i don't know it will be that detrimental. in this part of the world, power gives respect, and lack of power does not. the failed coup in turkey is a good example where a lack of power did not carry the day. in this case, i think they are making progress on what they are planning for the ipo, but i also think it will be a little different than the first announced. betty: what you mean? thatthere have been hints in addition to what they might sell publicly, there might well be some kind of a deal involving
some other foreign countries. china has already indicated they have an interest in perhaps buying and making an equity investment. that would probably be separately negotiated from the ipo, i am guessing. if that is the case, it would be more of a hybrid ipo than a pure one. want to play view some comments we got earlier from emily hawthorne, a middle east, north africa analyst for stratford. this is what she said about the move either prince. >> there is a concern that they are shooting themselves in the and somewhat by creating stirring the waters of uncertainty themselves. i think he is taking the long view, and i think he is looking ahead and saying, i want to be sure that nobody's hands are in any cookie jars and i have from control and the buck stops with me. betty: it sounds a lot like that
she shares the view you just described. i am curious if the prince would not have done this without knowing that he has strong support from some he countries, including the u.s. tom: i think that is correct. i agree with that. i also agree with most of what she had to say. i would also say that, you know, there has been evidence over the last year even of some bs.osition to india's -- m mainly, there was evidence that some of the more senior numbers of the royal family had reservations about him when he was deputy crown prince. former displays the crown prince, that probably was escalated. inventingdited with the king against the shiite
leader, and has been pushed back and some of the shiite circles within the country on that decision. some really hard feelings. those are all part of this equation, but most importantly, changing out those three ministers was significant. i think that, and especially the naval officer and the national guard, he kissed the national guard has typically been the anti-coup force. he wanted to be sure they were boiled him. betty: just before we go, i have waleed.about prince al how much of an impact you think this will be on global markets when he has shares in companies like apple and citigroup? tom: i think it is too early in the process. we need to see how serious the detainment is.
certain communications value, if you will, and in the end, it seems to me the range of possibilities could be anywhere accusations to something quite a bit less, more like a new statement of loyalty and everybody agrees to go forward. it is too early to tell on that. betty: thank you. tom petrie on the crackdown in saudi arabia. you can get around of that story, and many more that you need to get your day going. subscribers can find on the terminals, also available on mobile on our out. --app. you can customize your settings so you only get the news . this is bloomberg.
southeast asia's largest lender record for quarter profits that missed estimates. this overshadowed gains interest. net income from the three monsters of denver fell. compared to the median forecast of $835 million. this is the last of singapore's big banks to report earnings. betty: shares in westpac are down over 2% in sydney trade as the banks earnings rose. cash profit grew 3%, almost 6.2 billion u.s. dollars. the interest margin fell to 2.09% from 2.13% while the debt charges dropped by almost one quarter to $652 million. they will pay a final dividend of 94 aussie since -- cents per share. ceos of softbank and
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no one else lets you do that. see how much you can save. choose by the gig or unlimited. xfinity mobile. a new kind of network designed to save you money. call, visit or go to xfinitymobile.com. ♪ >> not a good way to start the a.m. in hong kong, rain in the forecast this afternoon. 30 minutes away from asia's first major market opening. betty: pretty terrible weather in new york, cap even to the skyline at all. pretty dramatic footage. it is 6:30 p.m. sunday evening here, very faulty -- foggy. markets up quite a day on friday, particularly on the back of apple shares. i am betty liu in new york. yvonne: i am yvonne man in hong kong. now to the first word news with
paul allen. saudi arabia's crackdown on princes, ministers and officials have put is mohammed within touching distance of the throne at the age of 32. since 2015, he is lost an unprecedented shakeup of the saudi economy and society to wean the kingdom on oil. among those charged is a prominent businessman. president trump faces a busy day in tokyo, he meets with the emperor, meets with shinzo abe and has a state dinner. he will have supplicant visits the seoul and beijing. permissions is a ground invasion of the north will be the only way to destroy the north nuclear weapons. the toppled catalan
leader has surrendered in belgium. an figures are now under arrest. -- tooktook lace in the place in the basque region, which had its own separatist movement for many years. they may not be able to cut interest rates if the brexit deal is worse than expected. he said the decision to leave the eu's already hitting supply and trimming the pace of expansion. he said wrecks it a fundamental structural change, meaning u.k. can probably only grow about 1.5% per year without stoking inflation. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yvonne: thank you. a new league of law firm documents putting the spotlight on ties between president trump's administration and high-level officials in russia. according to the new york times, the so-called aircraft papers say commerce secretary wilbur
ross has a stake in a shipping country -- shipping company with stakes in russia. joining us with details from washington is ross krasny. this is not exactly straightforward. tell us first how is wilbur ross connected with this company? it is not a direct investment, is it? ros: that is absolutely right. wilbur ross, the commerce secretary has an extensive list of investments he did before he joined the trump administration, he invested some of them, and it turns out he has an investment in a shipping company that does some business with another russian company, oil and gas topany, that has ties entities close to vladimir putin, including some that may be related to food -- related to vladimir putin. the commerce secretary has said
there's something to this, that ross does not know the people involved and it is a bit of a red herring. definitely wilbur ross is a man with some complicated is the stealing spirit betty: -- complicated business dealings. betty: i was going to say, he made it a thing before he took the position of commerce secretary to cut ties so we would not have conflict of interest. could this have been some sort of oversight, or maybe it is small enough it did not seem like it was something he had to disclose? ros: it is possible. i don't think the reporting we have seen so far, and we haven't seen the many thousands of documents backing up this claim. that is all a little bit unclear. had he overlooked, i think that is unlikely, but it is possible it wasn't something he felt he needed to disclose.
this is coming at a time when the president is here in asia. domestically, he has been in gold with the russian meddling scandal, particularly with the indictments of paul manafort last week. does this have applications for the republican tax plan in washington, d.c.? ros: that's an interesting question, it may be too early to tell. we heard some tricks of the republican tax plan very fast out of the block to say let's wait and see what comes out of the paradise papers, let's take a look at offshore tax havens. there have been a lot of big household names, companies mentioned in the reporting so far, apple, 90, -- nike. i think you have seen the typical critics come out and say, we need to put the brakes on and take a closer look. i don't think that is likely to be particularly embraced by
republicans, and it is unclear to us whether it will have any impact from a tax plan that is full steam ahead on capitol hill. yvonne: good point. thank you. trump is in asia, we have been talking about that and the saudi crackdown that this in some shop we -- shockwaves through the markets. 20 to digest. -- plenty to digest. japan is coming back from the holiday, as well. support inhave a job the u.s. to react to. when you look at the opening in tokyo, we are anticipating a rise at the open and futures. this is the yen keeping steady near a one-week low. we have apart from trump's trichet and -- trumps visit and aresaudi purge, there
things that can move the bond market and treasuries as well. yvonne: trumps trip to asia is to be kept in mind. we also want to look ahead to monday, because the dynamic in discussions in asia will be about north korea. >> that would be higher in the agenda, one would imagine. we have blacklisting of north korean business and -- businesses have that visit. markets could open slightly lower, other catalysts could figure it as well. we cannot forget to mention that in tokyo, the banks earnings report is softbank today. signal policyould continuation under the crown prince? consolidateee mbs his power. he has been evaluating the
capping of oil output. we've seen a crude editing -- ging higher. when you look at the breakdown in sydney, while producers are leading the right, 1.7% here. we are fighting support from the outlook of saudi policy continuation. as the sox -- aussie stocks are rising for the second day. are a laggard. westpac is the biggest drag after its earnings, the ceo said the financial industry outlook has become or challenging with me customers holding back because of government policy uncertainty. we have the likes of k2 asset management as well as commodity companies that will drive things for aussie stocks. those two segments are the biggest weight in terms of the cartridges to the benchmark. your money to put
work in the aussie sure market, they're waiting for the pullback. you can see that on the chart right here, the asx 200 flashing over signals committee continues to do that today. about 12% in up dollar terms, that's about a 50% rise in the s&p 500. 15% rise in the s&p 500. it's looking more attractive since about 2009. the show market is one of the worst developed markets in the world so far, it might be some opportunity here as it heads toward the 6000 mark. we have some red flags regarding the city share market. betty: thank you so much. u.s. employers, one of the biggest hiring sprees in a year. we kick off with earnings, president trump's trip to asia.
taking a quick look at the labor market. because we saw the revisions in august and september, much less of an impact from the hurricanes on the job market, it puts us on solid footing. the friday jobs report also showed us that manufacturing has become a jobs machine. in the last few months, u.s. factories about it the most workers 2013. it is sort of in the rearview mirror, but some important data points to look at, the jobless rate falling to 1.4%, down a 10th of a point from september, the lowest the u.s. economy has seen since december 2000. what that gives president trump is another writing point, prove he says his policies are bearing fruit. we also heard from gary cohn, there is a bit of a way to gain stall here, but that could be an
argument for why tax reform is needed. >> the job number is noisy, it is still pretty good numbers. we are down to 4.1% unemployment, and when you look at the number, down 1% for the year, we are bringing a lot of people into the workforce. su: let's go to the bloomberg one more time. the job recovery, this is a very strong data point the fed will look out, 5060. u.s. payrolls jumped in october as the hurricane impacted worker return. you can see the solid numbers here. this yellow box, solid blue line upward, economy at about 260,000 jobs rebounding. that sets us up for a lot of other data we will see this coming week. as you mentioned, consumer sentiment will be front and center, also we have resident trump's visit to tokyo and seoul. su: that michigan number, a very
big number we will look at as we head into the tail end of the week. the expectation, at least for november, is that it will probably have cooled from earlier, from about a 13 year high. there are still lofty optimism about the economy and personal finances. that report, as i said, that comes out on friday, will wrap up what is a relatively light week for economic data in the u.s., which also focused on job openings in timber. we are expecting a big spotlight inbe on the ongoing trip asia by president, accompanied by secretary of state rex tillerson. he's meeting from has a state for japan, korea, and the philippines. a terms of earnings, we have slew of earnings, disney first and foremost, also toyota, dfw. be disney, the earnings will
coming out just as it returned to the box office big screen ragnarok."or: this is a big franchise for the company. microsoft releasing the xbox one next. games are set to run better on the console. we are seeing increasing focus on game consoles as a driver of earnings for such companies. intel, one of the stocks in the spotlight for the coming .eek according to barron's analysts are saying it could return 25% or more over the next year as the stock is still cheap. they are citing recent acquisitions including the purchase of mobile eye, which makes driver assistance, which could help the chip stock further boost its price. that is a decent looking chart for intel, a company that had been revenue challenged for many quarters. back to you. yvonne: the battle of the
♪ towe are counting down asia's first major market opening this morning. we are seeing futures pretty korea,at right now and they are taking a breather on this monday morning, especially the likes of new zealand, shares are down about 151%. brighterking writer -- given that we were on friday -- off on friday. this is "daybreak: asia." betty: some was blocking our shot there. [laughter] betty: that is live television for you. mother nature took aim at
berkshire hathaway in the third quarter, national disasters including hurricanes hitting warren buffett insurance focus conglomerate heart, dragging down earnings by almost $2 million and overshadowing positive results elsewhere. let's discuss this. always good to have you. we had a berkshire hathaway shareholder on earlier, he was saying it was not a great quarter for berkshire hathaway shareholders, but given what we saw with the natural disasters, it was expected. is that the general view? >> yes, that is certainly one way to look at this. it is not like these storms spare really anyone in the insurance industry, they were widespread, they hit the markets where there are huge amounts of exposure. i think investors would have been surprised if the number had
been significantly smaller for berkshire hathaway. it was a big number, it was just hard to get past that when you look at the quarterly numbers, it was really the driver. betty: it was a driver. but it is on top of some disappointments, as well, right? not being able to get certain deals done. other parts of the business not growing like gangbusters. not a great quarter, not really a great year for berkshire hathaway. the: yes, if you look at results for the other operating businesses like the railroad, the electric utilities, they were up a little bit, basically flat. i think one of the key numbers that investors are looking at these days is the cash level at which are happily. -- level at berkshire hathaway, it was well over $1 billion at the third quarter, they've had some trouble finding a really big deal, a way to put some of
the cash to work. that is really the thing that has set them apart over the last many years, the possibility to find a great investment or a company to buy that really helps push the earnings higher over the long haul. betty: where would be an opportunity then? unilever, the truckstop chain flying j. are there opportunities? noah: yes, that is what is so interesting about berkshire hathaway, they don't limit themselves to one industry. thinkk it is realistic to he could help his partners do another deal in the consumer goods space, but we could also see something in a totally new area. two years ago, he spent $37
billion to buy a manufacturer precision castparts, really important in the aerospace industry but not a lot of people knew about it. that is what is interesting about berkshire hathaway, and what shareholders are excited about is they are waiting on the edge of their seats to see where warren buffett finds value next. it doesn't necessarily have to be an acquisition, it could be an investment. he made a lot of money investing in bank of america in 2011 when its shares were getting pummeled. that turned out to be a great investment shareholders. yvonne: great to get your perspective. us. joining you can find in-depth analysis on bloomberg radio, you can also or atad the radio app, bloomberg radio.com.
♪ ," ihis is "daybreak: asia am yvonne man in hong kong. betty: and i am bailey the new york. a quick check of the headlines. ventures to its your fruits unit at a share swap. the move will consolidate food and drink businesses into one company and depreciate them from other interests, which run from mass transit to power plants. shares will list on the philippine stock exchange. wille: japanese regulators inspect me something key of a checking on the inspection scandal. nissan has suspended production of cars domestically and is recalling more than one million vehicles from doing action --
vehicles for new inspection. could slow plants that relied on uncertified inspectors. betty: we've been told chinese regulators are investigating an internet company for suspected fraud involving in 2010 ipo, allegations could result as -- -- de in the listing listing. yvonne: we are seeing live from the doj's september policy meeting crossing the bloomberg right now. last meeting,he the previous one. we are seeing the minutes, many members agree cpi will be rising toward 2%, we are far from the inflation target, which spurred the boj to push back or at least trim the inflation forecast in
the near term for 2017 and 2018. according to some members, this will prompt firms to hike prices. thisve been talking about lack or elusive wage pressure we see all of the globe, but japan in particular, that is a key focus given how tight the labor market is there. betty: one boj member question if the yield curve is accommodative enough. that is also in the minutes. speaking of asia, president trump has started his five nation tour of asia with a warning against military challenge of to the u.s. economic allen says will also be on his mind. chart of what you need to know. ramy: i want to do a quick overview to make sure everybody knows where we were -- where we are for the next 11 days. this is 4834.
we know mr. trump is in japan for the next couple of days. he will be going to south korea, where no doubt north korea will continue to be looming large. afterwards, he moved to china, he will reciprocate the meeting he had with xi. the unum rounding -- vietnam, the penultimate visit, then the philippines, where he is supposed to meet their president after a lot of that can fourth -- a lot of back and forth. were also expecting mr. trump to possibly be meeting with president vladimir putin of russia on the sidelines. over to one big bone of contention, this is talking about the trade deficits that are happening with companies on the list. also, 327 billion in 2016, vietnam and south korea.
four of the five companies he will be visiting are in the top 10 of deficit. look at how big the deficit is relative to japan's trade and u.s. trade. the blue bars here, $11.5 billion is where the u.s. imports to japan stand in terms of money, but $6 billion is for japan is. we will be talking about the deficit. the gulf inakes, green. yvonne: they will certainly get aty issues.ing -- me to forget, we cap coverage of the joint press conference, midnight out of new york. andill have president trump shinzo abe live. up, and analyst joins us from us euro we continue to follow president trump's visit in asia. this is bloomberg.
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♪ 8:00 a.m. in hong kong. we are live from bloomberg's asia headquarters. i am yvonne man. japan, president trump the first of many meetings with north korea high on the agenda. a clear message, warning opponents not to challenge the united states on land, sea, or air. >> i am betty liu in new york. it is just after 7:00 p.m. sunday. saturday arabia's night of the long knives, the world's 50th richest man detained. new warnings about that in
china. the pboc governor says the system is more vulnerable. ♪ >> take a look at president , alsos trip to asia implications of this saudi shakeup over the weekend with the crown prince of detaining several business leaders, officials, and princes in this anticorruption crackdown. yes, this could be a power grab, but what does this mean for those business leaders targeted? we still don't know why they have been charged, but it could on theing a damper investment climate in saudi arabia and could have implications for the oil markets. this is chart 5083. we are seeing brent net longs
and jumping to a record high. been baked in on opec and whether they can extend output curves, but the jury is still out whether this could be a game changer for the region and the bulls out there. they are not liking the political uncertainty in the region. countriesnds on how like iran react to something like this, but so far, oil trade is not having a big impact. andtill in the early stages might be too early to tell what the real implications are. let's get more on all the news around the world with paul allen. say: reports from the u.s. the new york fed president l dudley is close to announcing retirement. and cites several sources says the announcement could come
in the next few days. downy is set to step before his term in january 19. such a move would raise questions about policy under jerome powell. showd documents reportedly wilbur ross retains a stake in a shipping company with ties to a russian businessman and president putin's son-in-law .ppeare saysommerce department ross did not know of its relationship with the kremlin. the pboc governor has renewed warnings about the dangers of corporate, saying the financial system is significantly more vulnerable. he saidlate saturday, it latent risks were accumulating, including some that were "hidden, complex, some ."ntagious and hazardous
the texas governor says 26 people have been killed in a mass shooting in a church, the worst incident in the state's history. south of santonio say a man walked into the baptist service and opened fire. a law enforcement officers said the gunmen fled and was killed by a self-inflicted wound or during confrontation with police. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. let's look at how markets are kicking off the trading week with sophie kamaruddin. we have donald trump's visit and the saudi crackdown and economic data points. quarter current account balance due today. indonesia gdp as well. this morning, we got the boj september meeting minutes. japan is back from a three day weekend. the nikkei 225 extending gains,
while the yen slides further below 114. trump-abe talks will be closely monitored. the dollar's rise could be demands details on the free trade deal with japan. assets, the kospi as north korea plays on traders minds and earnings. swinging tos are losses, down .1%. that 6000 point level would be the first time since 2008. financials are dragging on the aussie sharemarket. westpac falling after its earnings miss. energy producers tracking higher in sydney and tokyo. ground amid gaining the saudi purge. that could be a game changer.
traders are scratching their heads because it could mean policy continuation given the crown prince has back those output cap's. trading at $52, new york crude around $56. we are on earnings watch. these stocksu how are moving. softbank in focus along with some borrow due to report earnings. nissan and mazda looking weaker this morning after earnings came in below consensus. int look at s k telecom seoul, korea. in focus after third-quarter operating profit missed the lowest estimate. the stock is unchanged today. keep an eye on that. the kospi deepening its losses, down .2%. >> thank you. president trump's first official moving into full
swing after a meeting greed with u.s. troops. a busy day in tokyo, holding talks with shinzo abe, meeting the emperor, and later a state dinner. steve, what are the headlines so far? morning, donald trump visiting the imperial palace and visiting with the emperor and empress, then he goes into bilateral meetings with the japanese. will be talking about north korea and the security situation in north asia and what is the trump vision of a post-tpt -- tpp trade scenario for the region as a whole. discussions about japan-u.s. negotiations on trade agreements following tpp. north korea will dominate. we are hearing from nhk that shinzo abe will convey a plan
for japan to strengthen the unilateral sanctions on north korea, and that includes increased or expanded scope of asset freezes against north korea. button issue a hot with the elections completed a couple of weeks ago. on a platformning providing a security blanket along with the united states against the threat from north korea. donald trump likes to think of himself as a strong man. this is what he had to say to u.s. troops in western tokyo when he landed yesterday. , no dictator, no regime, and no nation, should -- undermating ever estimate ever american resolve. every once in a while in the past they underestimated us, it was not pleasant for them, was it? not pleasant.
donald trump's national security adviser h.r. mcmaster said trump was not going to tone down his rhetoric. he's going to keep up the same kind of statements, and he lived up to promise yesterday. seen in japaneing and asia versus last time? well, again, he has to reassure somewhere he neighbors wary neighbors and others that he is not necessarily pivoting away from asia. with some sort of post-tpp plan for the region. there were some americans who in tokyo,sterday saying they want a more
representative president and ethics back in the white house. it was a small protest, but something donald trump might see in other places, except for perhaps in beijing. so much.you our chief north asia correspondent in tokyo. the trail of president trump in japan. joining us for more analysis of japan is the goldman sachs vice chair and chief japan equities strategist. it is interesting, trump is in and asia, but in japan at a time when born investors have a bigger appetite for japanese equities. this is chart 4858. it looks like foreign buying right towards the in here, these green bars, spike really in the last several months. in fact, picking up pace in the last several weeks with foreign buying in japanese stocks. why is that? >> i think a couple of reasons.
to date in year local currency terms of japan's equity market until october was significantly lagging other markets, especially the rest of the developed market world. secondly, if you look at the fundamentals for japan, not just the macro environment where we are starting to see japan into the second largest expansion and post-world war ii history, but of the stock market, corporate earnings are hitting another record high. this is despite the fact that valuations are still relatively around 16 times pe relative to 18-19 plus and other markets around the world. that makes it japan appear a laggard, but also attractive from a fundamental view, so these are the two main reasons. >> did this pick up after the snap elections in the results of with shinzo obvious that
power even more? >> exactly. to the foreigners take sidelines in the summer when shinzo abe support was collapsing due to domestic submittedbut after he a landslide victory two weeks ago in the lower house elections , foreigners woke up and said maybe the prime minister will be around for a lot longer, and now it looks like he could be set to stay in his seat until 2021, which would be more stable leadership for the market of japan. about the power play we could see between president trump and shinzo abe, particularly after the prime minister coming off the election with a stronger mandate. if you look at the sticking points between the two nations, the yen as well and flow in trade, we have not seen significant changes when it comes to the currency and that u.s. trade deficit with japan
remains quite unfavorable for the u.s. according to the president. does shinzo abe had the political average to avoid these issues with the u.s.? he hass hard to say enough leverage to avoid the issues. they will be a subject of the discussion during trump's visit. as we other hand mentioned earlier, the dominant topic of discussion will be geopolitics and how to manage the north korean situation, so that is held up as the priority item on the bilateral agenda, not that trade takes a backseat, but trying to get japan and iher asian allies cooperation think will be a higher priority. i think it will be discussed, but i don't think it will be front and center. i think geopolitics will be front and center, but there will be background discussions about
it bilateral free trade agreement, which was discussed when vice president pence earlier visited. >> what about when it comes to shinzo abe's reforms? i guess we could talk about buybacks and dividends in the next segment come but will these take more of a backseat now that shinzo abe can be more focused on the geopolitical issues like north korea and revising the pacifist constitution? >> that certainly seems to be widely widespread or held view by a lot of observers. in mind we have to keep the fact that at the end of the day if japan wants to exercise ,ore relevance geopolitically particularly in the asia-pacific region, it will be hard if not impossible to do that if its economic sector is not thriving, profitable, competitive.
the overall reform agenda is inll absolutely crucial ensuring that growth continues to be stable and sustainable. toelieve they will continue be an evolution of governance in japan. it is obviously not the case that everybody has religion and they are converted to these new principles of governance, but both shareholders and domestic institutional investors in japan are reallyed up taking fiduciary responsibility very seriously for the first time i have seen in my 30 year career, so that is quite encouraging. were talking with the former vice minister of finance on our program, who was talking about the japanese and speaking about stability and above 1.20 you might start to hear more rumbling ,erhaps coming from the u.s.
but i am curious from your point of view, what are you pricing in? what is your outlook on the yen and how that is priced into the equity markets in japan? that goldman believes the fed will be tightening monetary policy faster than the current consensus on the street given our simultaneous assumption that the boj is likely to keep its current quantitative easing framework intact for the time being, obviously that will result in a widening of the u.s.-japan interest rate differential in favor of the u.s. dollar at the expense of the japanese yen, so we are expecting some yen weakness. i think the comments you just repeated from the vice minister ring true, which is it is not the case that everybody is an exporter in japan. think about consumers, importers. there are a lot of players in the economy that would suffer if
the yen did go to week to so finding that nice balance of the yen dollar exchange rate is ideal for the country, and therefore would guard against extreme yen weakness, not to mention the ramifications on the global trade agenda as we just discussed, vis-à-vis especially the u.s.-japan relationship. >> kathy, stay with us. joining us from goldman sachs. we will talk more about corporate governance in japan in the next segment. 9:00 a.m. in hong , we have our special guest. eastern forget midnight , the press conference of president trump pensions abe live, plus immediate market
>> this is "bloomberg markets: asia." i am betty liu in new york. rally, the equities boj reduces lying in october. we are still around to decade highs when it comes to the ne nikkei 225. kathy, thank you for sticking around. talking more about corporate mentioning you were about how the fundamental shift in how companies are rewarding shareholders returns and whatnot, but where are using this most evident right now? among the developed nations, japan is still the second lowest when it comes to dividends and share buybacks after south korea.
>> yes, so obviously the starting point was very low to begin with, which is precisely abe government in its overall agenda to stimulate growth said especially for publicly listed japanese corporations, there must be more he'd paid by the managements of these companies to the end owners, i.e. the shareholders, and so that is what sparked this whole train of governance reforms. codetioned the stewardship . the japanese government also promulgated a japanese corporate governance code. these are such dramatically different principles than what corporate japan was accustomed to since world war ii. in fullwere adopted form by some companies, but others very reluctantly just box ticking, but overall we are in
an environment where you don't pay sheet to shareholder value and r.o.e., then you will get punished by the stock market. that is a healthy move in the right direction. >> you certainly as you mentioned the next catalyst will be earnings on growth, which we will see come out from japan. are those companies using that kind of profit in terms of reinvestment. viewers,chart for our 5093. we see profits continuing to rally and capital investment going the opposite direction. this is the party of hope leading up to the election, what they campaigned on, a platform of tax-retained earnings. abeou see the administration with the appetite to adopt such a measure? that has been discussed in the administration, the idea of taxing retained earnings,
similar to what the south korean government did vis-à-vis corporates there. i don't think japan has found consensus on that matter. that, shinzo abe has suggested something along the lines of companies who raise wages for their employees by more than 3% that the government might consider tax incentives like a lower corporate tax rate for those companies that boost wages. by encouraging a higher labor is trying tome, it his to a consumption and a more virtuous cycle in the economy. beginning to see some green shoots of growth, not so much building new factories or capacity, which japan doesn't need to, but in the areas of labor productivity enhancing cap[factoryd, i.t. automation, roboticsex,, iot.
capex, factory automation, robotics, iot. to maintain the same level of output, they have to redouble efforts in boosting productivity. are seeingre we growth, but maybe not in the overall macro context. >> thank you so much. the vice chair and chief japan equity strategist for goldman sachs. much more ahead. one feature on the bloomberg we would like to bring to your attention is our interactive tv function at the tv . but seewatch us live, previous interviews, dive into securities or functions we talk part, and you can become of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
>> the latest business flash headlines. softbank boosting its stake in sprint after a collapse of merger talks with t-mobile. agreeltimately failed to how to share control of the combined operation. investors have welcome the prospect of the merger to cut costs and challenge at&t. logitech expects growth in china. we will see the mainland become the biggest market in 5-10 years. is targeting 10% to 12% growth for 2018 and to transform its product portfolio to cloud-enabled offerings. the ceo said the popularity of gaming is a key driver of development, with china leading the way. tonow we are starting develop products in china for china. it is early days for us. in-china,those
♪ singapore, a bit of an group gloomy day -- a bit of a gloomy day. i am yvonne man in hong kong. betty: kind of gloomy in new york as well. you are watching daybreak asia. let's get to first word news with paul allen. paul: thanks. saudi arabia's crackdown on princes, ministers, and aticials have put the prince a touching distance from the throne at the age of 32. he has launched a shakeup of the society to wean the nation offer oil. wasbillionaire prince included. he is a investor and companies
like twitter. president trump is in twitter desk in tokyo. he was talking with shinzo abe and going to an estate dinner. north korea will be high on the agenda. the ground invasion of the north would be the only way to locate the nuclear weapons, but critics say soeoul would already be under attack. this man is to be released on bail in belgium after issuing a warrant for his arrest. 15 people are in detention sparking independence supporters protesting. the country has had its own separatist movement for hundreds of years. mark carney said the bank of england may not be able to cut interest rates to boost growth if the u.k.'s brexit deal turns out to be worst than expected.
the decision to leave the e.u. is already hitting supply and trimming the pace of expansion. he said britain is in for structural change, meaning the u.k. can only grow 1.5% a year without stoking inflation. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. thank you. looking at the asian market this morning, let's see this with sophie kamaruddin. nikkei mixed bag, the going down and the cost be going up. -- the kospi going up. japan's trade surplus with the u.s., that will be on the agenda during abe's sitdown with trump. auto and machinery dominating exports to the u.s. in a year that has lost 26% against the ring back this year.
that has been a boon for japanese exporters, and it is still edging further above the 114 level, down 0.2%. looking at what is moving the dow in tokyo, carmakers looking mixed. is susan is -- isuzu is climbing on a report that it should grow 2%, but mazda is pretty sluggish, particularly to the united states in sales. holding aave sapporo three day rise after it was cut to neutral. o's san miguel where karen money and undergoes a share stock deal. authority group getting 3% -- asahi group getting 3%. a big earnings watch, softbank. the stock is sliding. the domestic rival kddi is among many to defeat.
the pressure on softbank after the sprint-t-mobile talks on saturday. and looking at furukawa electric , falling the most in tokyo after reporting annual sales that missed estimates. the macro and micro drivers in tokyo today. betty: thank you so much. pboc, they warn china's financial system is facing mounting risks due to high leverage. in an article published on the central bank website, the governor flag threats the economy, calling for deeper reform. sounds familiar. let's get with emma o'brien in beijing. we have heard these warnings before. what is different? reporter: taken altogether, it is becoming a priority of the pboc, and really a priority of the governor as he looks to be on the way out after 15 years at the helm. this is the second or third time
he has mentioned these risks and gone into a lot of detail. he has a quite lengthy article about this on the epson -- on the website. he called the situation hazardous, contagious, and a real concern, breaking it down to a number of levels. he is concerned about shadow banking and the debt levels overall. it really does signal this is something china is going to be taken seriously and could be seen as a valedictory letter from him if he is on the way out, that we can never be certain in china. to his successor, that this needs to be a priority. betty: is there any chance he might stay on? reporter: there is a chance. there are no hard and fast rules. he has been in place since 2002, and we got a surprise in 2013 when his position was up for renewal, and he did stay on.
this round of commentary we have seen, he has been very vocal which is unusual for a pboc governor. usually they are in the background and speaking a time -- a couple of times a year. yes pocono two or three times in the past months alone. perhaps it suggests he is laying the groundwork to his successor and setting up pretty worth these for the next term. yvonne: we had the big announcement from president trump last week with jay powell being the next federal chair. but with the pboc, it is left straightforward a process. how are we expecting this to actually play out? reporter: of course we could get an announcement at any time. that is the nature of china. things are kept closed. it could come out at any time. there are set meetings, one in december where we could get an indication of whether he will stay or go and who might replace
him. but early in the year on january, february with the national people's congress is that we expect to get a definitive response and decision on who will likely replace this man. betty: something to watch for. thank you so much, emma o'brien, emerging markets editor in beijing. oil is gaining after the weekend purge and saudi arabia that has seen 17 princes, ministers, and businessman taken into custody. among those arrested, the one who has the kingdom holding significant shareholder in citigroup, apple, news corporation. haverackdown could also implications for aramco. we have a reporter joining us. thank you for joining us. this is quite a surprising move hereby prince mohammed.
most of all, these arrests or detainment of fellow princes. let's talk about the first prince. he is being detained, we are not sure where. what does this mean for him and kingdom holding a majority thinker: first of all i mohammed bin some on was going was going to consolidate. this has been part of his death to the rise of the phone -- the throne. the purge is surprising, number of princes arrested and ministers that are implicated. i think the message is that be it the kingdom holding or other participants or private sector arabia, hes in saudi will require loyalty. that is the message in terms of the assets, the investments in
saudi arabia proper. betty: certainly demanding loyalty. so is this purge about amending loyalty and purging those who might oppose him, or is it about fighting those interruption? -- and corruption? reporter: it is difficult not to see the political dimension to the purge. anticorruption is definitely a new campaign, a new headline in saudi arabia, and is an effort tomohammad bin salman show himself as a popular figure who appears about the people. there is a political dimension to this. writtenon has been a just one person who had been removed is part of the national guard. that is a message to remove obstacles facing bin salman. the corruption is widespread and we will see more news of that. the message to other members of
the business community is you need to settle your disputes with the government, and you need to do it proactive. yvonne: at what point does this consolidation across the ground become too definitive to the region and could lead to instability? you could say he has destroyed the gcc. you look at egypt, yemen and lebanon after the resignation of the prime minister there. i think within saudi arabia proper, definitely the pace at which the reforms, changes, and discussions have been going on is very high. i think it has been going at full speed. it is destabilizing. the arrest instability is insignificant. i would not say a coup for open arrests in the family leading to dispute is likely, but it is a
realistic scenario. in terms of the region, the prince is more assertive and has caused problems across the region. it is an effort to rebalance the situation with iran. iran in the past two years has spread its influence in iraq and syria and become more powerful. it is not necessarily all destructive. in alliance with the uae and egypt, it is strong, it is an alliance that can be towards more stability over the long-term, but certainly with the short-term what we are seeing is taking risks. the big question for saudi arabia is if mohammad bin salman can modify and turned toward something more sustainable that involves compromises and really making deals. that is the way forward for saudi arabia beyond the short-term phase. yvonne: what about within the
ruling family itself? we were talking to a guest this morning who said this is a clear break from tradition where usually you see a consensus coming through from the royal family before they make any moves like this. could this lead to more upheaval? reporter: i think the old saudi arabia is overdone and something of the past. is notd bin salman abiding by these traditional rules. saudi arabia has been a ruled by-based society the royal family for decades, and he is changing that and finding the relationship between the ruling family and government. he is saying that members of the family no longer have immunity, not against corruption, not against anything. it is revolutionary by any measure, and is moving saudi arabia close to egypt in terms of power structure. decision is no
longer alive in saudi arabia. it is mohammad bin salman on making thebest decisions with advisors, but he does not see a situation or environment where all of the royal members meet and decide at the same time as one that is viable long-term. the more important message is also in terms of his tradition of revenues. i do not think mohammad bin salman is going to be necessarily winning the senior members of the royal family in the same way. on thei am curious personal front or the personality friend. it went -- the personality front. does that give you further clues what kind of a leader the prince is going to be, and how he is going to lead? reporter: i think it does. for one, he does not fear taking
risks. this was very risky by any measure, and it has been very competitive the number of arrests involved and detentions. it tells me mohammad bin salman wants to become king and he is willing to commit to risky moves as part of the process. i don't think this necessarily tells us that mohammad bin salman, how people behave in the future beyond the short-term. part of what he has to do or thinks he has to do short-term is break the power structure to really become the dominant and only decision-maker in saudi arabia, basically restructuring the kingdom. thisnk that long-term if policy and the pace of change remains constant, it would be negative for stability in the kingdom. or purge, iuption don't think it is necessarily positive or negative.
it is a mixed bag. if we see an end to the 20% cut by different royals, it will be positive for foreign investors. great to get your perspective, thank you for joining us. we can follow more on this three and the market live blog at the bloomberg. get a market run down in one click your there is commentary and analysis of bloomberg expert editors, and they are hoping in on this story with saudi arabia. and speaking of your investments, president trump is speaking to american and japanese is misleaders right now at the u.s. ambassadors residence in tokyo. some of the headlines coming out, nothing earth shattering, but saying trade with japan is not fair. it is not open. the u.s. has suffered trading deficits, they have to negotiate
♪ betty: this is daybreak asia. i am betty lou in new york. yvonne: i am yvonne man. softbank has to boost its stake in sprint with the collapse of merger talks with t-mobile. deutsche telekom failed to agree how to share control of the combined operation. we are joined by an analyst here in hong kong. we have been talking about how this is a real test of masayoshi s dealmaking skills, but
what is next for sprint and softbank? >> i am sure he has a lot of ideas. he did mention that they are open for options on the cable side, cable tv side, and there are still talks some of the cable companies, including the fourth largest company in the u.s., is trying to sell wireless services using sprint network. still believesnt that they have a very good spectrum, so they don't want to concede control because of that merger. i think the next move would be eyeing on cable companies. whether in partnership or whether they can really do another acquisition, before they try to take over a charter, but it is quite difficult. yvonne: can they go it alone? know sprint is not really
gaining much in terms of market share, revenue share, lawmaking. so they need a partner. if t-mobile does not work out, they have to go to content, which is the cable tv side. betty: softbank ironically is going to be reporting their results today. all of this is interesting timing. what is expected? planthink they do have a to talk about the next strategy. the ceo is very good at investors and laying down the long-term future of the company including technology funds that he has. so we can expect to hear a lot of q&a on that topic, and hopefully the topic -- the company will give more clear
singapore in 10 minutes' time. there was a miss on third quarter innings with income at 600 million u.s. dollars. it fell 20% below what the analysts were estimating. let's bring in the asia finance editor joining us with the details now. seems like this was a very different look compared to last week. what is behind this? dbs was theight, only of the singapore banks to miss during the turning season. in lists did not see this huge provision for bad loans dbs booked this quarter. a huge surprise in some ways because singapore banks have been struggling with bad loans for some time now. dbs in this time, they are putting a tough first in on this by saying these provisions are
from the remaining exposure to this sector. it will allow investors to focus on the positive side of their business area there were quite a few positive in the results. interest income rose, the loans are growing. also the wealth business improved as well. the ceo is warning investors to focus on that. yeart has been up 32% this , so it will be interesting to see how investors digest this result when they start trading in a few minutes. yvonne: they will try to put a positive spin on this. , asis this going to compare we have been talking about when , you seecbc, uob different results -- how will it compare with the global rivals? >> i think the overall trend for all three banks is probably pretty similar. despite the big miss today from
dbs, all three banks are struggling with exposure to the oil and gas sector. at the same time all three are seeing a pickup in poor results as we saw in the earnings season. all three banks showed a pickup in lending businesses, the fee businesses, trying to push the wealth management side. that is turning around as well. i think overall with the earnings season, has been a slight positive, but there are still clouds lingering. betty: how does this set up for the current quarter in the next year? what are the things to watch for the singapore banks? for anynuing to watch further exposure in the oil and gas sector and how quickly these gas -- these banks can shore up the loan books in a positive way and get rid of the underperforming loans and
continue to keep lending growing and continue to keep their businesses on a positive track as well. betty: thank you so much, the asia finance editor in tokyo. let's remind our viewers about these headlines coming out from president trump talking to japanese and american business leaders in tokyo. the tpp agreement, not the right idea, so defending that decision to agree -- leave it. optimistic about the economic partnership between the u.s. and japan, but did bring up the trade deficits with japan, saying they have to be renegotiated or negotiated. you saw the yen weakening on the back of these comments even though we have heard him mention these before. he is reiterating that position. anticipation leading up to this trip, whether he would keep more of an open mind
,hen it came to multilateralism will they buzz the likes of tpp, and with these comments, that really suggest that. right now trade with japan not fair, isn't open. he said there is a -- you want to fix trade but also suggests a friendly way. this relationship with all they and trump diplomatically seems to be an official. betty: indeed. -- beneficial. betty: we will see how this p.m.'s out. that is it from daybreak asia. market coverage continues. this is bloomberg. ♪ retail.
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♪ 9:00 a.m. in hong kong. 8:00 in new york sunday evening. i am rishaad salamat. putting tradep front and center in japan, saying it is neither open know nor fair. the world's 50th richest man is now in detention. haidi: i am haidi lun in sydney. asia,oming up, southeast the hind the numbers at dps with bloomberg intelligence. this is "bloomberg markets: asia." ♪