tv Charlie Rose Bloomberg November 21, 2017 10:00pm-11:00pm EST
-- sacks staff that covered up the hack of data that compromise 53 million drivers. markinghina southern 50,000 passengers a year from beijing's new airport. we are up 10%. it's not the only thing up. it feels a little bit over excited maybe. nervous whenfeel you get markets like this. we talked about 30,000. have a look at this chart, 392. the absolute flood of money that has come through the stock connect, especially shenzhen. this chart yesterday, shanghai on top, shenzhen on the bottom. the best day since it opened up this time last year. at the moment, there we go, --5, looking at about nine
9.9 billion so far has been used. talking about the market street in hong kong and elsewhere in the asia-pacific. john woods joins us in a few minutes to talk about how to adjust your portfolio. equities still the place to be, but there are perhaps more tweaks needed. angie: joining us is the former the wto herest for in hong kong. it will be interesting to get tradeoughts as to how will possibly stimulate these moves in the equity space. let's take a look at the market. blackrock saying the potential
for asian stocks to move higher is there. -- gmm is the function on your terminal. here is a trading halt to tell you about. is notpaint participating in this rally we are seeing today because of a m&a.ion on it could be possible affirmation of a bid. check out what is happening, hong kong above 30,000. we are waiting to see whether or that recordbreach setback in october 30, 2007. that is definitely the first time we are seeing it above that 30,000 mark in a decade.
other notables of course the kospi, and the korean won, what that is doing to the currency, meaning it is going gangbusters here, jumping to its highest level in more than two years. let me show you what is going on here. it is passing the support level. hasre seeing that the won been one of the best performers this year, that and the thai baht. let's get into 568. take a look at korean won. the technical analysis fibonacci, the support level bouncing around that, but with the support level of 1100, it does show that it has room to move higher, and in fact according to an fx trader referring to activity in the
offshore market, investors are buying the won without questioning. we are seeing technical support for the thai baht. 615.is thai baht is the other big performer in the asian currency space this year. it is nearing that 50% you comparelevel if it to its slide from april 2013 to october 2015 lows. bouncing around that 50% fibonacci retracement. that is also a bullish signal. that is what is happening in the markets today. might become ait problem at some point for thailand which is a very export dependent economy.
let's get over to singapore for first word news. haslinda: uber being sued for itligence after revealing paid hackers to keep her breach secret. it compromise the names and email addresses and phone numbers of 50 million customers and licenses of 7 million riders. andchief security officer one of his deputies this week were fired for their roles in concealing the hack. symbol oblique enters the unknown after losing the only leader the country has ever known as robert mugabe resigned as president. he was the world's oldest head of state and had ruled zimbabwe since independence from britain 37 years ago. undert after eating place house arrest and fired by his own party. says whilen inflation should move up in the next year or so, it is not
certain the current low environment is transitory. new yorkan audience at university that the fed is reasonably close to goals, but tightening too fast could strand inflation below 2%. she had some advice for her successor. importantthe most things i learned as chair and thought it important to pass on his to keep an open mind. not to simply assume history is repeating itself. haslinda: reports from berlin say chancellor angela merkel is looking for another grand coalition with the spd that two of her three terms as chancellor. the spd leadership is wary of going back.
global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. angie: in hong kong, the benchmark index has hit a level not seen for 10 years, the hang seng above 30,000 has tencent extended its rally and chinese financials climbed. for more, mark cranfield. also notable is ping an insurance. its performance compared to tencent, they look and the neck. -- looking and neck. look no and neck. >> the pboc is doing the right things in managing the monetary policy come and we have the congress out of the way, so it is blue skies ahead for china and people want to get involved.
the participation in turns of volumes, as you are mentioning earlier, the connect between hong kong between shanghai and shenzhen volumes are picking up. retail investors in the hong kong market as well. everything is pointing to people wanting to get on with this china story, tech companies, insurance companies, it is across the board. david: every time we get moves like this and everyone fills -- feels giddy, it makes one wonder whether are not the market is getting ahead of itself. what is the conversation within your team on the risk rally right now and whether it is getting overheated short-term question mark -- short-term? >> there is always a chance it gets over done in the short-term and we have seen a few corrections this year. we were discussing the yield curve this morning, people looking at the flattening of the yield curve, the flattest it has
been for several years, but still has a long way to go. typically u.s. recessions occur curve the time that the goes negative, and it is still a long way before the u.s. curve yes, it is ay, so sign that maybe we are getting towards in game, that the in game can take a long time to play out, so we could be looking at months, may be more than a year, before we get to a negative yield curve. during that time, it is quite good for equity markets. angie: in the fx pace with a weak u.s. dollar supporting the won and thai baht, these are two export driven nations. that can't be a good feeling for south korean officials taking a look at their export business and going, well, a stronger won might crimp demand here. >> it's true. game.a relative if you look at the performance
but all asianwon, currencies are relatively strong. the issues for korea in particular would be if the currency gets to strong against the japanese yen and to strong against the chinese won. more so than the u.s. dollar. if people look at where they are historically against other asian currencies, it will give you a good idea about how far it has gone. waye is probably still some to go, but you can expect that authorities in korea and other countries will probably become a bit more regular in the way they get their message that their currencies are becoming uncomfortable in relation to their export markets. thank you so much for coming on the program out of singapore. more on this story and all the undertones across trading in our markets live blog at mliv . you can get a market run down in
one click with commentary analysis from expert editors. hour, still ahead this will 2018 get off to a flying start for china southern? we will get the outlook in our exclusive interview with the carriers vice chairman. david: can the rally really last? hear from credit suisse in just a moment. stay with us. this is bloomberg. ♪
risky cash loans and raising concern that lenders could be subject to for the restrictions. record $51 has a million and products linked to lehman brothers. fended have its licenses as penalty for failures of internal controls and sales practices over sales and products before the 2008 bankruptcy. jp morgan failed to do background screenings on 95% of nonregistered employees for more than eight years. the regulatory authority says up until may this year, four people wouldrked in the unit have otherwise been disqualified because of criminal convictions. speaking of conviction, what is your conviction when it comes to this rally?
david: john woods is here, he is from credit suisse. you look at hong kong and the amount of money from china, the names getting picked up, it feels a lot like the first half of 2015 and we know what happened in june. help me feel secure. i think if there is a contrary and bone in your body, you would be shaking right now. and the underpinning of this rally is based on growth and earnings. these are important drivers. the technical aspect you highlighted is absolutely right. in the third quarters this year, we saw outflows from asian $9 billion, order to date, we have seen inflows of $2 billion. earnings are improving. we're expecting earnings this ,ear up 15% to 20% this year
similar to next year. in that environment with growth and export-driven growth particularly rebounding, it is hard to be bearish. people aret that just moving money around the board here, causing yield curves in the u.s. to flatten? a lot of people say this will hit the real economy. >> i think the yield curve story is probably more to do with the relatives i you of u.s. rates than say japanese, british, or european. as yields are more attractive than other core government bond yields in developed markets come and almost naturally that attracts an awful lot of flow into the back end of the curve which is causing this flattening i. are talking about it
don't think the flattening is a reflection of risky economic conditions as i've flattening you curve normally would be. icksicularly as it t towards the 0% mark. it was just below 1% this morning. on the liquidity side, there is liquidity seeking growth and earnings coming towards emerging markets in general and asia in particular, largely on the earnings story. i don't think that will end any time soon. the u.s. is also a growth and earnings story and we have seen corporates revising higher guidance for next year, which is a positive relative story, but asian looks particularly attractive given that it has underperformed develop market since 2011. on a valuation based come markets here are looking quite attractive. -- a: the so-called em joke. no one got it. southeast asia reemerged as a
growth story. malaysia, philippines, so in and so forth. when does that show up and earnings? >> i think they are beginning to show up. the market itself got somewhat ahead of itself, asian markets in general, 30% of 40% in the case of china 50%. multiple expansion rather than earnings-driven expansion. the market was anticipating these markets going higher in the course ahead, and that is now happening. expecting aessarily huge amount of price appreciation given the market was expecting this and anticipating these earnings coming through come up and in general, this is a positive earnings story and a good growth story. one final point as well, globally inflation is looking pretty benign. this suggests that central banks will maintain attractive liquidity conditions going
forward, and i think this is generally supportive. angie: hi don't hear any contrary and bone -- i don't hear any contrary and bone -- contrarian bone here. if you take money off the table, 2018u risk losing more and or are you potential the smartest guy in the room? >> i am certainly not the smartest guy in the room, but i chinasuggest -- the market has given us returns of close to 50%. we are advising clients to become more selective. you cannot just buy in etf or index. angie: why? >> we are focusing on the banks. they have then under loved, but yet pay at an attractive dividend. price-to-book of
values is really quite high on the back of this improved economic outlook. if that were to happen, you would see a nice upswing in price performance. way we are managing and trying to adjust contrary and bones, buying more selective. being a little discriminatory and more selective. we want to tap into more. 20 more ahead with john woods credit suisse. this is bloomberg. ♪
problem for backers because they can't allocate more than 10%. are lucky they contract the funds as closely as they can come a but is that another reason to get out of index funds right now that involve these two stocks? >> it is a good question. the answer can be complicated, but when you tend to see a migration or regime change from a market which is simply driven in the expectation that the index will lift all ships, to a market that becomes more discriminatory, where individual securities tend to have a greater influence than simply an etf-driven exercise. that is an important decision to make. i think next year will become a lot more discreet in terms of successful trades. i think we will look at sectors,
subsectors, an individual companies more than this year. you tend to see in these environments volatility rising. you tend to see individual stocks outperforming. market optimum space rather than just being in a market where a rising tide lifts all ships. next year it will be much more important in that area. angie: are there easy wins for 2018? either easy losers to avoid? thinkk, if we were to that the fundamental drivers of growth and broad earnings were to change next year, absolutely there would be some discrimination we need to make, but if week if we get the sense that this year will be -- next year will be similar to this year, low inflation, reasonably lowng, moderate growth,
inflation, then it would be hard to make a call. talking to isare rotation. do expect to see meaningful rotation from one sector or space into another. typically that is a value-driven is betterhen there value elsewhere and there is that rotation, but the i.t. space is rich and likely to get richer in the coming year. angie: same with bitcoin apparently. what you think of bitcoin? possibly somewhat jurassic park good it is an accident waiting to happen. angie: what do you get asked about this? david: we are in a client meeting almost every time and there is a morbid fascination akin to a car crash. accident waiting to happen in the virtual currency space, not necessarily bitcoin.
is block chain technology the one that will move on to the next level. angie: which are saying is -- >> in terms of the gold rush, the winners were the ones who sold the shovels. that's not what they show you in hollywood movies, john. of course we are dealing in reality. thank you for that insight. you will probably still be asked about bitcoin at every meeting. >> almost every. angie: thank you so much for that. and that is john woods, cio of credit suisse asia-pacific. you can catch up with all of our interviews today using our interactive function tv . and getatch us live into the charts, securities, and bloomberg functions we bring up on our show. for the wtoonomist
david: you are watching bloomberg markets: asia. .> heady days ahead david: a lot of these guys are in precarious situations. you are faced with clients used to 20% returns. you have to temper those expectations but as good as we are we are not likely going to turn out the same kind of returns. a price chart.
it is a percentage return. 20% and we have a month ago. this hides the fact that you have underperformers. when you go to 2018, it makes you think, what is normal? when you look at the past 50 years, a good equity year is eight to 12%. >> let's not forget that the year started with talk of federal interest rate hikes, and concern that with the more expensive dollar, that will deplete liquidity from the intot as we hear qe turn qt all around the world. but we didn't get that from the boj and even the ecb is still being pressed to talk about
eventually when it is going to broaden that qt strategy. >> the party continues. it doesn't end at midnight. following all the market moves ahead of the lunch break. >> don't turn into pumpkins just yet. it is not totally to jump in with earnings. interestingly we have blackrock turning the i.t. space and stretch really wish and's while there are overweight chinese's box -- stocks. tokyo shares are rising for the second day. mark continuing to rise.
retail investors pile in along with institutional payer -- players. about 50 points shy of the all-time high. amid this appetite for risk, look at the currencies space, rate hike won has a next week. the question will be if we hear more hawkish tones from officials. dollar has moved from beyond 30 for the first time since september 8 while the exit can peso is slipping. the aussie just can't catch a break. yen, that is rising for a second day after yellen warned against rapid rate hikes. this shows you the rise we have been seeing in the two-year treasury yield.
elevatedhave these levels. at the movers in asia today. on solid earnings in hong kong. u.s.arrier foresees more reach in its future. quite a bit moving today. >> let's get to the first word news. >> former internet regulator is the first official investigated for corruption since the communist party congress lost last month.
beijing agency says -- corruption -- crackdown on corruption will not relent. robert lighthizer said there is no evidence that canada and mexico will seriously engage on renegotiating nafta. light heiser's -- robert lighthizer's statement says talks fell short of completing any section. claims progress on e-commerce and says some rounds of talks may be close before the next round. brexit canurope that only be passed if they agree to stop discussing a new trade deal. ava davis said it won't be possible to address the border between northern ireland and the republic or to finalize the divorce still until the terms of future trade relations are more clear. clear thatit is also
brexit may happen without a deal. >> it is possible, not probable that we don't get a deal. >> saudi arabia cut all shipments, the lowest since 2011 in september, but boosted 6.5ned products in a record million barrels of crude today. oil exports -- while keeping to the spirit of the agreement. global news to weigh four hours a day powered by more than 2700 journalists and analysts in more than 120 countries. >> we're watching the airline stocks here. look at this, air china is back to the highest level in nine
years. flights tospending to what they call unsatisfying operations. up for a 10th straight day, the longest streak since it was lifted. >> china's biggest airline says beijing's new airport will help it offer more international destinations and increase flights to the u.s.. expansion to america is a key part of the strategy. >> mackenzie is at the airport. he strength to tell us how china southern is trying to broaden its horizons. >> i am on the edge, the cold edge of this new airport being built about 1.5 hour south of beijing.
as you say we spoke exclusively to the president of china southern. he is very interested what is happening here because he is based in guangzhou. this airport here when it opens is going to give china southern -- it also was to expand cooperation with american stakees which bought a 3% in china southern this year. it is all about this airport. that 13 billion u.s. dollars on it. china southern will get a 40% stake in that is key because there has been a crunch in terms of capacity. >> it is not only the airport, it is a new strategy for china.
[inaudible] if the new airport finished, according to our calculations, i believe we can double the flights. least 240 or 250. china southern will account for -- i believe we will fly with a new airport. >> wenzhou is expanding its own airport, how much of an advantage is that going to the for china southern? the transit procedures are
very modern and convenient. we're theer .nly one carrier >> how would you depict the competitive pressures that airlines in china are facing now? >> bigger companies compete with international expanding plan. we are trying to finish the .lobal plan they have a much more challenging price, or a cheaper .rice
we have to be -- china has been incredibly successful is building its high-speed rail network and there was recently a note put out by morgan stanley analysts saying that investors were underpricing the impact of high-speed rail on the airline sector in china. do you agree? high-speede the effects ons have big the airlines. china's big hand, cake is growing bigger and bigger. we think the best way is international --
we want to open more international flights and avoid face-to-face conflict with high-speed railway. so we did that. >> the china southern president talking to me about the domestic conversation not just between the airlines, but also between the high-speed rail network built in china saying that is one reason white china southern -- china currently has roots that fly from china to l.a. and new york. he is very much focused on expanding to other cities in the u.s.. planes have about 250 flying from this airport. a key challenge for the other ande owned enterprises china and china eastern.
china's policymakers want the airport here, this one being built in guangzhou to be major hubs for the region funneling flights from southeast asia into europe and the u.s.. china has to go into international if it will beat those trains and automobiles. business leaders, international policymakers. we will be speaking exclusively with the program director who happens to be the former chief economist at the world trade organization. this is bloomberg. ♪
-- asia global dialogue forum. we are joined by the program director. patrick is the former chief economist for the wto. patrick a think this is possibly what we are talking about right nafta this global age of and free trade. all of these global trade agreements. they seem to be at risk of -- because politically it doesn't seem to be getting the kind of cohesiveness from the u.s. as it once was. is that a concern for 2018? i think it is a big concern. the narrative is very negative on trade. trade will go faster and 2017 that it has grown up for a decade.
there is a question of time consistency. there are downsides with this kind of narrative. >> patrick, your thoughts. removing --me that that we are moving toward a new period that will be more bilateral. smaller groups coming together for agreements. does it seem to be the trend that is starting to form and is there anything wrong with that happening? think it is true that this has very much been the trend. in small groups, usually a little bit less diversity among the players in those small groups, but ultimately, these small groups can be very disruptive to global trade if they have become very diverse in
terms of how they approach trade. i suspect that somewhere down the line the wto will have to come back into its own if we are going to profit from trade then we have historically. angie: give us a specific example for how you see this being a headwind for global trade. guest: the question of a headwind for global trade may be the residual of other things that have less to do with trade relationships and more to do with what is happening in the global economy. there are cyclical and structural factors which affect trade. since global growth is on the rise, global trade will also respond similarly. i don't think that takes with the downside risks, particularly in the united states.
the traditional leader moving very much toward a bilateral approach and creating a bit of a vacuum. china is potentially there to fill it. i think we will have a difficult period, and i think that eventually, if this continues, we will start to see the downside risks kicking in. what we are looking at now is a happier picture with respect to global trade and will be threatened. isie: part of the criticism -- as to where we find ourselves today is the criticism and the premature inclusion of china into the wto. see in terms of your experience of working with china under your previous purview as the chief economist for wto that are possibly red flags?
>> i don't think there is any substance to the argument that china entered the wto from it surely -- prematurely. frictions. there is no doubt about it. some of those frictions will have to be worked out over time in one way or another and one of those is the degree to which the state turbines are influences trade flows in china. china is not alone in some of that. really makes it much sense to pinpoint china. you said china is at the root of the problem but i think there are lots of factors that create the problems we have, not the least of which is the shift in
economic influence. that is a process that can be difficult to manage. there when china entered the wto in 2001 and two weeks ago they made an announcement of opening up their banking and financial sector. a lot of people came up when they made the announcement and said china was too slow in doing so. the you think that is a fair assessment? guest: i think it is very hard to manage the macroeconomy in a straightforward way shifting from locally based in locally articulated financial sector to a global one. china moved a bit in that direction and then moved back. i think that there are two issues. is for the it
suppliers to have access to the chinese market. that is the point that will have to be arbitrated more in them immediate future than the question of the internationalization of the chinese economy through the monetary system. angie: what needs to happen to smooth out global trade if we are to continue these relationships that many say we have benefited from and others have criticized that has really cost us? i think that the united states needs to sit down with china. there is very little doubt that they have common interests. hard to get anything else to work on the global front. the atmospherics seem to be pretty good.
the nitty-gritty is somewhere i believe and it will stay that way as long as the united states is in the treaty. david: we have to leave it there but i appreciate you coming on the program. joining us live from the university of hong kong. angie: coming up on the road to a legal minefield. how burress it cover-up of a cyber hack has come back to haunt it.
it compromised 57 million customers and drivers and only this week that action was taken against security theft. angie: we scratching our heads here on this story. we have our asian tech editor. what do we know about this? this is a tech company. one of the giants in silicon valley. $100,000 to hackers. .uest: we are still digesting it this is a stunning revelation. uber has been breached previously. the way in which they essentially covered up internally what happened and then paid a ransom to hackers. this is coming at the tail end of a terrible year for the company.
they are struggling with cultural and endemic problems. that they have admitted revealingng rules and what is a pretty serious incident. this current transition phase the company is going through. ?hat has the new ceo said >> one could say he has fallen on his sword, he said over was wrong. he's not going to make any excuses. over is a big question what travis new exactly and what
role he played in this. that he washas said notified of a hack. that is an open question going forward. angie: and the beginning of a massive story of a massive breach over at over. we believe it there for now. david: tracy, give us a preview. >> we will be speaking with the global chief investment officer for ubs wealth management. he is responsible for the investment policy and strategy for 2 trillion's worth of assets. we saw the s&p 500 hitting another all-time high yesterday. went on a coaster.
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>> let's start with a check of your first word news. announced a new sanctions on north korea in the latest move aimed at isolating kim jong-un's regime. steven mnuchin says the penalties will impact shipping and transportation companies that have engaged in large-scale trade with north korea. former trump campaign officials paul manafort and rick gates will be a lot to travel for the thanksgiving holiday. a washington, d.c. judge granted separate requests from the two that they tell authorities when and where they are going and that they abstained from alcohol.