tv Bloomberg Markets Asia Bloomberg September 8, 2019 10:00pm-12:00am EDT
rishaad: a diffident start to this week. trade war concerns. trade data out of china. digesting that. payroll data being perceived by some signs of weakness and others is nothing to worry about. you are seeing bond yields are lower again. some bad data out of the u.s. and china. trade data over the weekend. exports declined. potentially good news with the rrr cut. rishaad: aussie market pretty much flat. nikkei up .4%. some of the losses we had last
week. export side of things helping things on the nikkei. the hang seng, another week of protests weighing on sentiment. shanghai moving to the upside. hopefully more on the way to support what is going on in china. let's look at some of the moves out there. the aussie 10 year, huge rally, last week in bonds. the selloff taking place. -- a rally taken place. five basis points. platinum features, this is interesting. much further up on platinum. that was down to this prediction you would see a nine -- he would see an increase. crude, unchanged.
saudi arabia minister being replaced by one of the kings sons. that uncertainty is lifting up. gold heading higher. going in opposite directions. that's all we have. the yields in australia are adjusting lower to the bad data out of the weekend from china. clear that they will support the economy is the trade war intensifies. taking a bigger than expected hit. should i expect more from central banks? >> unless you expect the chinese economy to suddenly stand up again, you expect the trade war to end tomorrow and take all the pressure of exports, i think you can expect more stimulus from
the pboc. sending lots of signals. they have already unleashed more stimulus with the cut in their rrr. points -- 50 basis point is what they have done so far. let's look at a chart. i picked out three rates which make this clear. 50 basis point is the purple line across the bottom. 8%. you can see there is room to move in terms of lowering rates. bloomberg explict -- economics expect other 50 basis points cut in the rrr by the end of this year. what is going on? look at china's exports. china's exports falling 1% in
august. imports down 5.6%. shipments to the u.s. down 16%. the chinese have a lot of tools they can see. medium-term lending facilities. they conserve manipulate that. for the time being, it does seem like full speed ahead. it seems that the drop in exports will rise 3%. yvonne: more the jobs report regarding friday. looks like the fed will have to ease more via rate cuts. --t are the jobs report show what did the jobs report show? kathleen: you could argue, the federal reserve, what their try to figure out is growth.
how much is the trade war creating uncertainty and weighing on spending? what is it doing to the economy? what we saw is a slow in hiring. what you will see is white bars. the last one was 130,000. supposed to be 160,000 for the second month in a row. out the temporary workers hired, 25,000 in august. private services, a very strong number was up only 96,000. a steady downturn. the blue line is one of the strong signs. unemployment at a 50 year low. wages the reasons why have fallen 3.2 you -- 3.2%. when jay powell spoke in zurich on friday, the takeaway was he sees moderate growth, strong labor markets. he expects inflation to rise
toward targets. he is watching for a global slowdown. traders come away from this trading on a 25 basis point cap. cut. jay powell secretary 350 basis point cut anymore. this will not be a fed watching week. we are watching the ecb meeting on thursday. will super mario run to the rescue again, cutting his key rate even more negative and starting to purchase bonds again? this will be a big focus. rishaad: thanks, kathleen there. over to brett mcgonigal. he said this trading for was a war of words. nothing more. you're standing by that. >> if you look at what has -- if you look at what is going on, nothing has changed. lots of threats.
we always seem to get back to the table. there always needs to be some glimmer of hope. rishaad: and then they -- those -- they dash those hopes. brett: i think we are getting toward the end. you have had the steady back-and-forth. the thing i take open is the rmb has depreciated 10%. -- hope in his the rmb has depreciated 10%. this should be the biggest lightning rod for donald trump. a weaker currency is not what he would want to see out of china. it would influence all of these things he thinks about. he has not said much. the currency has been allowed to move. he has not made that the reason why he is going away from the table. i think there is a silver lining in that. there is exhaustion at this
point. i don't think this is a five-year thing. we are getting close to the end. david: to think the pboc has done a good job of telling us the currency should be where it is? they were obsessing toward seven. it crossed, we obsessed for two seconds, and i said, it should be here. and we went, ok. it should. brett: many headlines said it wasn't trading through seven. we thought that was the invisible line in the sand. i didn't think it would go through. i was wrong. i think it's orderly. taking it in stride. the headlines are less important than the sentiment. peopletiment seems like are looking for something more to happen. i think both economies needed. there is a way to cooperate. there is a way for cooler heads to prevail. for the u.s. to back off of all
of this tough talk and the way they are going about it culturally. i think we get there sooner rather than later. you are starting to see things come back into the fray. things that pushed back into the may deal. characters now wrapping up points. yvonne: we saw the stepping up of monetary figure -- stimulus with the rrr cut. with themit mean using the rmb as a hedging tool? brett: the pboc has done an amazing job of gradually talking to the point where they are. the form -- they inform the market, it is pragmatic. they tell people what to expect and they deliver on it. they are unlikely fed. charadewas a political
back-and-forth with trump. the pboc has guided people to this point. with the april 20 inclusion of this, you have another tool the world can look at. i don't to get the coincidence of when they are setting the date. you are going to have the fed speak in the next day. it, the toolsat are being used properly. rrr, nobody has on -- reserve requirements in the world. you are at 13%. wheredoes it normalize? was it at three 2008? i'm not worried about the tools the pboc has. i think they are plenty of tools. i think they are committed getting properly with the market. the market can react to that. as opposed to some of their u.s. counterparts. yvonne: let's get to the first word news from su keenan.
are more signs of economic gloom in japan. second-quarter gdp gdp expanded less than initially supported. this business investment was revised lower. the reading of 120% has been lowered 1.3% to consumer spending. consumer spending has supported growth this year. a double whammy of the trade war and japan's own trade dispute with the u.s. has cast a shadow over any positives. more than 120 domestic flights have been canceled in tokyo after a typhoon hit in the early hours monday morning. bullet train service was disrupted as the cyclone passed through the concho region before heading back over the pacific ocean. almost one million homes lost power when it made landfall. that march the 15th time of the season so far. off to apple. its top supplier foxconn have
confirmed the report that he violated chinese labor laws in the making of iphones. says they usedch to many temporary workers. temporary staff made up 50% of the workforce last month. maximumlaw stimulate a of 10%. -- stipulates a maximum of 10%. it may impose potential import tariffs on french goods in response to a french digital tariff. it was on the back of what was believed to be an agreement of the g7. digital tech giants such as amazon, facebook and google are affected by this. g7sident macron said that that he and president trump had reached a deal. global news 24 hours a day on air and on @tictoc on twitter, powered by more than 2700 journalists and analysts in more david:0 countries.
traffic continuing, folks going to work. that wereons nearby closed on sunday, every open. including the one with -- that was set on fire. that was alongside the big rally they saw as of the u.s. consulate. tens of thousands participated. a push for the u.s. congress to consider the hong kong human rights and democracy act when they resume the fall session this week. we have more potentially later this week and weekend. we have seen the hong kong government take issue with the ongoing protests. senior officials say we could be seen the point of no return. >> there were threat -- more concessions need to come. there is no end in sight. we probably have reached that
point of no return. we will go for it. we have nothing to lose. is our last chance to get some reform. from that point of young people feeling despair, we saw schoolchildren form human chains across a few districts in hong just up theally road from here around seymour road. there also calls to boycott classes later this week, alongside a rally on the 15th. one of the more wealthier neighborhoods on hong kong island for human chain to be formed. they have also applied for a premature -- to hold a rally on friday. rishaad: have we heard anything from the administration or carrie lam? on sunday, we had a
statement from the hong kong government. regretoke of the --arding the reintroduction they say there should be no foreign legislators that should interfere with hong kong. germany's chancellor angela merkel is visiting china this weekend, and raise the issue of hong kong. -- raised the issue of hong kong. hungary government condemned what they saw as illegal behavior with -- of radical protesters. they didn't address the behavior of police. david: sophie live from -- for us. brett still here with us.
what is the market blind spot? if there is no forum for the two sides to sit and speak about where they are, and it's just an emotional escalation that keeps going, i think you get to an inflection point where the whole driving forces had been lost. the fate and goodwill has been taken off the table. the blind spot is, if carrie lam needs to address and have a forum for the protesters to at least put something on the table. i know there's a bunch of stuff circulating. i don't think going to the u.s. consulate will help in any way. it's not a u.s. issue. trump should not be weighing in on this. this is a hong kong-china issue. i worry about a lot of politics being put into it from outside sources and everyone forgetting where it started and what they wanted out of it. that's the problem when you let
emotions escalate. sometimes the message gets lost. it's doing real damage. i ran into someone yesterday. he says it's hurting local retailers. down 19 percent. this is being reported across the city. brett: and the violence. the fires put in! --! . in -- an exclamation ponit. the media has -- point. the media has a part to play in this. it's always easy to show things when there has a wow factor. it's not happening all over. those are minutes of time that get captured and blown into bigger situations.
i think you do have people that don't understand that this is very centralized. it is a fear factor. there was nobody at the airport when i got the plane yesterday. nobody. what is bad for business ultimately becomes bad for everything else. i hope there is some rational thoughts that can prevail. i hope everyone can step back and come to the table with something that doesn't drag into another 14 weeks. unfortunately, i think we could be at an inflection point. that opportunity may be -- maybe going by the wayside. thank you, brett. more ahead. his hong kong facing a brain drain? we will ask those questions to david webb. he will be here to discuss the ongoing turmoil and what he thinks the outlook for these
rishaad: you are back with "bloomberg markets," as we look at the business flash headlines. 777x x -- delayed its after the cargo door failed inspection. already been pushed back to 2020 because of problems with his general electric engine. boeing is under global scrutiny after the grounded 737 max. david: british airways has canceled hundreds of flights ahead of the airlines first pilot strike in decades. they have canceled most of its 850 daily flights on monday.
the disruption will mainly affect heathrow and gatwick. escape asrgely flights are operated by pa city flyer. yvonne: he told reporters he is ready to take responsibility for scandals involving the arrest of former chairman carlos ghosn. playing --t accept plain that he and other executive's were paid more than they were entitled. andiscussed the pay issue talked about plans for a successor. rishaad: let's have a look at what is going on out there. nissan, what's going on is taking its toll. other reports regarding nissan. a list of possible replacements according to the financial times.
out with a report on the findings of a carlos ghosn probe which may well be given to the board today. that, let's talk about a major schizophrenia drug in japan that the not meet its primary endpoint. this company is unchanged. it cut its four-year outlook. japan airlines on the way up despite the typhoon hitting. the canceled 40 flights. softbank on the way down as we have questions around we work's valuation. david: at least 90 flights so far. the path of that typhoon here. it's hitting tokyo. the other one is headed for korea. this is juliet, headed toward singapore.
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this is how we heal. cancer treatment centers of america. appointments available now. ♪ kong is 10:29 a.m. in hong and shanghai, 10: between 9 p.m. in new york. i'm su keenan with the first word headlines. the latest on brexit. insisting he wants a brexit deal, but eu officials are increasingly doubtful. negotiations have been taking place twice a week since he entered downing street, and while london says the talks are constructive, one eu official called them farcical. a third said they are only there to boost his reelection prospects. moving on. president trump's tweets are
being given serious analysis by j.p. morgan chase. the bank created an index to gauge the impact of each trump tweet on u.s. interest rates. index is named after his famously mysterious covfefe tw eet, and suggests that the messages are having a statistically significant imbalance, particularly the tweets about the fed. mining towns across the country are leaving the recovery in property markets as record low interest rates and rules for bank lending are supporting demand. lead postedstralian a 71% jump in average home prices in the past year while another town jumped 42%.
sydney and melbourne also saw a rise in demand. abiding by limits on uranium enrichment in the 2015 nuclear accord, creating a new challenge amid rising tensions in the u.s. the islamic republic is pushing to develop a breach of the time frame agreement in the deal. they have scaled back their compliance since president trump abandoned the agreement last year. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. we had a downgrade in hong kong for the first time since 1995 with political turmoil raising doubts about the government. bloomberg says it will tarnish the territories reputation.
it has little impact on the economic outlook. rationale.ve their >> we are not saying that we think the one country, to systems framework is in jeopardy. we are not saying the basic law is in jeopardy. but this is a huge test that is also impacting national perceptions of hong kong's rule system,its governance and the future dynamism instability of its environment. >> and here is how the ratings look now compared to everyone else. bad, not all that relatively speaking. linkages, it does merit the negative outlook, hong kong in line. france, macau, kuwait. big headlines. >> the point is that because
there's more of this integration, because they have to match that credit rating, the gdp could headal to zero and in terms of the budget surplus that could also collapse to zero. it's interesting to hear him talk about how it is not really about reserves. when you were talking integration, it is hard to put a gauge on it. they took a lot of time to downgrade, on how they are going to measure this in the future of hong kong overall. ofit is not about the lack resources, financial resources. 40% of fiscal reserves to gdp. let's get more from the activist investor and founder of website.com. good morning. >> good morning. >> carrie lam gave into one last
week, and then we had the protests over the week and but it seems it only got worse. the extradition bill is now history. if she had made that concession then things may not have gotten as bad as they have. the bigger issue with the democratic deficit in hong kong. we still have a chief executive and the legislature which is elected by tycoons through corporate voting. if it had not been for the people marching on the streets, the executive and the legislature would have passed that legislation, and that points to the bigger issue, that all of the policies made by the government come from an unelected government and the people are wising up to that now. that is why they are still coming out and protesting, tens of thousands of people came out right next to your building and marched up the road, calling on the u.s., congress to pass
legislation and supervise the human rights and democracy protest in hong kong. i think some people held back from that because they thought it wasn't entirely helpful, but the bigger issue i think will pull out hundreds of thousands of people in october, the next likely big margin hong kong over the democracy issue. the government needs to make the choice -- and i wrote about this last week, basically either to democraticngful progress -- and i suggested a way that could be done with local legislation, or to crack down and to impose draconian blockation to communication platforms that protesters are using on the internet, putting a great firewall beyond china and around hong kong and imposing other potential restrictions on
assembly, detention without trial. perhaps much longer jail sentences or participating in public assemblies without approval and so on. it would dramatically change the way of life in hong kong. there would be inverse mccarthyism, where people would be screened out unless they were supporters of the communist party and they don't get promoted or penalized within their job. >> is it really realistic to press for all five of these demands? i understand a police inquiry, that is the best the government can do moving forward, but when it comes to universal suffrage? genuine democracy was never in the cards for hong kong. >> it was promised is the ultimate goal from 2007 onwards and its emily hasn't happened. it would be easy to grant an independent inquiry into on whetherthods
there was any dark hand coordinating as some people claim, but that is a sideshow. policing and violence isn't the point -- the question is what you can do to make people feel they've chosen their government and the simplest thing you can do is to abolish corporate voting in the functional constituencies. that is how the tycoons with beijing can be controlled. retailing,otels, many controlled by the same with multiple subsidiaries and that's the pact we have with beijing, which is no longer workable. that would give you hundreds of thousands of new voters. >> that is not one of their demands.
>> universal suffrage is one thing, perhaps the unacceptable demand right now. but within local legislation you could scrap corporate voting and give each worker a vote. in financial services there are only 600 voters, all companies with common shareholders. what about 41,000 licensed professionals? they have their license to manage people's money but are not trusted to vote for the legislature. if you look at the broader constituencies, the each have one vote, each lawyer and dr. but it is the corporate that is used to control the balance of power. iswhat has come to the fore the role of the tycoons in this territory. commentary, of the
and that is something which is very hard -- >> why with the tycoons voluntarily give up? the reason is the alternative is a draconian crackdown that would be deeply harmful to their economic interests. doing nothing is no longer a viable option, and they need to abolish corporate voting and the that through their legislators, a simple majority is needed to change the law to give up that influence in return for peace and tranquility, which is what really matters to them. question -- how will the dust settle? >> without meaningful steps in have moretion we will protests and eventually there will be a crackdown, either a paramilitary or military crackdown with help from beijing
or internally using emergency regulations ordinance to pass strict laws but even then they would need military insistence, otherwise people would just keep coming out. there is a choice to be made here. there is an unstable equilibrium to combine civil freedoms with no democracy. there is no other place i know of that really does that. it wasn't going to last that long. we have been looking for 22 years that despite big protests, there were things like national security legislation, national curriculum for school, that we have managed to quiet down, but it won't last forever. they need to choose do they want authoritarian rule or do they want to give hong kong a peaceful democracy and use that potentially is a reform model for china later on. put on yourk you to activist investor hat.
what strategy would you employ? >> i would avoid any company that is closely associated with the government, particularly through their controlling shareholders being on the executive council because they could be targeted for sanctions if there's a crackdown, international governments would start to look at sanctions like they did against russian oligarch's after the crimean annexation. companies were targeted because of controlling shareholder links to vladimir putin. i have always avoided state owned enterprises because they run for party rather than profit. you are buying a minority shareholding and a subsidiary of a giant state owned conglomerate. that's not a sustainable proposition in my view. those and focus on true private sector companies that have managed to stay away
royal highness and i think we are lucky to have someone with ,hat knowledge of the industry he would be for a great decision and maybe doesn't know, especially the corporation was working with us day and night to conclude this, so i don't think we are awareg someone who is not . >> he's often a man who has said he would do whatever it takes. do you think or would you know -- he will be more of the same and do whatever it takes.
when it comes to what we decide, this comes from the leadership of the country. it is not just the minister's decision to do whatever it takes. the leader's decision to do whatever it takes to balance and we are not expecting -- i think with the personality they are very decisive, they have a strong personality when it comes to the markets, and he understands the producerso all of the that it took to balance the market and i'm not expecting changes -- i think it will be a continuation of the good work. phrasehave used the
whatever is necessary to balance out markets -- what do you mean by that and are you lobbying for deeper cuts? more more to do conformity's or cuts, and then we will challenge this and debate it and after that debate --this is how the mechanics we will raise their recommendations. is -- if that recommendation makes sense that it will be taken. is there something that i'm aware of? no. in our asiang energy reporter. departure mean now for oil policies at opec?
>> we heard from some of the comrades and opec -- i think the policy won't really be changing according to the uae minister, but there's another train of thought according to analysts i've spoken to, it really had to do with the fact that he was able to bring it up to the 85 level, which has been around $60 per barrel. time, hee same introduced opec plus, ringing opec and russia together to cut and stabilize production. this was supposed to be a six-month experiment, a grand gesture between these enormous producers of oil. people are not exactly happening with the price of oil and people
think it was one of the reasons for his departure. it will not be an enormous shift, because the new minister, he is not new to oil. for a been in this space dozen years. he will be kind of following with this but it could be a stricter view on getting prices up higher to where it needs to be. same question, what does it mean for aramco? got a newve also , and they brought in someone new who doesn't exactly have a look on aramco. but according to reports he was against the ipo or pushed back on an ipo for aramco. now that you have a new person in place it will presumably be
smooth sailing and you could try to see prices of oil go higher so that when they do ipo they will get a better and bigger price. >> thank you you, our asian energy reporter joining us out of singapore. let's get a quick check of the business flash headlines. one of india's most famous yoga gurus has court approval for his takeover bid. he's a prominent figure in indian yoga and politics and his health care business has almost $1 billion of assets. it is part of a consortium offering more than $60 million for food company. shares slumped almost 50% this year. a work is reported to be lowering its ipo valuation even further. the parent intends to launch an investor roadshow this week. they are talking to underwriters about how to attract interest in a share sale. some investors are reportedly
morning, battle of the charts. we have our cross assets manager taking on mliv. you can go to your bloomberg to take a look at their charts. let's kick things off in singapore. >> hello. the great news is i can still say i am 29 years old because my birthday was in august, and to the markets, it is like august never happened at all. volatility levels back down to where they were in july. the stocks are back to where they were at the end of july, everything has come down and we have the european, a fed meeting, a buyback blackout that could put pressure on the markets, the trade talks in any back and forth coming up in the next few weeks. it looks like there could be a
little bit of pressure coming up but for right now markets have calmed down quite a lot. we will see if they can keep that up with so many things going on. >> august? what august? markets have made positive news flows. they arewill show that particularly well positioned given the strong signal that -- the white line is the inverted em credit spread. sectors the risk for the that has reduced significantly. stocks reaction in em has been nowhere near as aggressive as the tightening and credit spread that should have occurred. we had the pboc, the majority
weekendent, and this the ecb will restart the qe program and the fed is likely to deliver another rate cut. central banking stimulus will continue to keep trader sentiment buoyant in this means emerging stocks will continue to do well. time to pick a winner. all your chart told me was i shouldn't have come to work in august. isone who had a birthday probably still 12 years old. birthday, said, happy if that's a consolation. joanna, when is your birthday? >> august 13.
>> you don't look a day older than 25. >> let's take a look at what's coming up on the hong kong financial secretary, coming out with the latest line about the visitor arrivals in august, pretty bad numbers, falling 40% year on year. this is on the back of these protests in the ongoing political unrest we've seen for nearly four months now. the tourist numbers are dwindling. we will see how the mainland visitors took into that downfall. much more ahead at bloomberg markets: asia. this is bloomberg. ♪
♪ >> it is almost 11:00 in singapore, 8:30 a.m. in mumbai. i'm haslinda amin. >> i'm rishaad salamat. entering the last hour of the morning session, this is a look at our top stories. matching the longest winning streak in almost two months. the regional benchmark is at a six week high. >> markets are weighing pboc stimulus against some weak ego data, but still no flaws seen in the slowing mainland economy. afterle under scrutiny foxconn violated labor laws in china and the production of iphones. this is "bloomberg markets." ♪
>> asian stocks in shanghai at a six week high, the longest winning streak in about two months. he saw the pboc cutting the rrr rate, and some say it is enough to suggest that the pboc will continue to add stimulus if and when it is needed. export numbers were pretty weak .2%, csi upks up by , the hang seng pretty much flat. saw hong kong go to aa,
expecting no gdp growth. there afterre still carrie lam formally withdrew that bill, taking a look at where we are in terms of commodities. focus, there has been a change in terms of the energy minister in saudi arabia stop he has been replaced by a prince because of the sliding oil prices. atdi arabia needs them to be 85 to balance the budget whether or not the prince can get prices up. .5%,futures up by about some say the next stop is at 1600, although given where we are in terms of the stock market that could put a lid on gold prices. the u.s. dollar pretty much unchanged at this point in time. atlet's have a quick look what's going on with the indian trading day.
fromve some positivity friday. up in the nifty toward the end of last week, just about ending up in positive terrain. rupee, a very brief look, a slight bit of strength for the market. let's quickly take a look at the 10 year yield. shuttering to a halt. emerging markets are not much in is not proving to be attractive with the selloff taking place in regard to sovereign debt. keenan, whoer to su has the latest first word. >> thank you. let's start with the latest on brexit. u.k. prime minister boris
johnson is insisting he still wants a brexit deal rather than a hard split, but eu officials are increasingly doubtful. negotiations have been taking place twice a week since he first entered downing street and well london says the talks are constructive, one eu official called them farcical. another said they are useless in the third said they are only there to boost his reelection prospects. moving on, there are more signs of economic gloom in japan. is expected to be less than initially reported as growth in business investment was revised lower. the preliminary reading of 1.8% has been lowered to 1.3%. consumer spending has supported growth through a double whammy of the trade war and japan's own trade dispute with the u.s.. apple and its top supplier foxconn violated chinese labor
laws in the making of the iphone . a nonprofit advocacy group says they used to many temporary workers at one of the biggest iphone factories in china. temporary staff makes up about 50% of the workforce. chinese law stipulates a maximum of 10%. the u.s. is moving ahead with plans to investigate a digital tax on tech giants. there are potential import tariffs on wine and other goods in response. that's an apparent agreement at last month's g7 summit. huge techoncerns giants like amazon, facebook, and google. president macron said that he had president trump somehow reached a deal. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.
i'm su keenan. this is bloomberg. we had this surprise contraction last month, underscoring calls for policymakers to step up support for the economy, even after they reserved the rrr. tom mackenzie is in beijing. how was this news taken? wasn't all bad? -- was it all bad? >> they said it was bad across the board. you are looking at contraction in exports year on year, and the forecast had been that you would see growth in august and export , pointingss of 2.2% to weaker demand. thebad news for manufacturing sector is you have additional tariffs in the pipeline. this doesn't account for the
tariffs in september. there are additional ones in october, and december as well. then you look at china's major trading partners, and their pmi data suggests it is in contraction, and the external demand for chinese exports will continue to remain week. so yes, the pressure is still of the manufacturing sector in china's exporters, and our think iteconomists will just get worse from here toward the second half of the year. the pressure remains. >> tom, china has announced additional easing. what are the details? what do we know? the rrr --the cut to we expected it, and we should get the first cut on september 16. and then the commercial lenders will see a cut of about 1% in october and then again in november.
account for about 120 $6 billion of additional liquidity pumped into the system. toicymakers went to pains stress this is an example of them ramping up liquidity and radical easing. they said liquidity will remain stable because it is tax season and a lot of that will go toward paying off taxes but it is an attempt to make sure the private sector has access to the liquidity and credit it needs. going forward, a lot of economists think you will see additional measures, whether it , or indeed the lmo further tax cuts that have already seen a package trying to support consumption. additional measures are expected and policymakers could look to it going forward. >> our china correspondent in beijing, thank you so much.
we know those trade talks are due in october. our next guest doesn't think the u.s.-china trade deal is in the cards. that offers financial services and investment. theyal insights, meaning will continue to weaken and the fed will continue to be under pressure on trump to cut rates. >> when you look at how the trade negotiations are going, i think president trump essentially decides to go tough on china when he has to and he believes it will help his reelection campaign. he needs to provide the economy a boost. about what from tom say of stimulus in some perhaps 15 basis point cuts is
acceptable. >> when you look at this situation, market expectations are pricing in a 100 basis point no doubt nonfarm payrolls are on the weaker side, but the broader u.s. economy still appears to be growing. actually expect a recession in the cards. levels, we do think 50 basis points is all right but probably 100 is excessive. >> how does this all fall into place -- how it gets resolved is what everyone wants to know and that's the trillion dollar question. but how far apart in your view are the two sides, and is there really willingness on both
parties to do a deal? comments,look at the it appears that both sides are trying to get past their main constituents in the local population. whether or not the meeting goes ahead next month will be a big development. if you look at it from the have a side, you possible rate hikes that could possibly kick in in october. they might say you need to hold off on your rate hikes as an are abranch, but there whole bunch of other issues at china notexample living up to its end of the bargain. the country still seems to be relatively far apart. we need to see if a deal can be made.
>> and of course we have all which was the rrr cut an unknown known, what kind of feature is it really with regard to the chinese economy. how much do you think the trade position is responsible? >> trade is probably the major issue putting pressure on the chinese economy. you look at the export numbers, the pmi numbers. stands chinese policy appears to be interesting -- they continue with the sense that they will not provide broad range stimulus in this rrr cut has come after they just changed or linked the housing loan markets from the broader interest rate environment in china stop they are trying to provide targeted measures but
yet they don't want to over stimulate the housing market because it has been relatively strong. the concern is to avoid a property bubble and they should d-link the mortgage rate in china first. >> stick around with us. we have to tell you what we have coming up. chinan under scrutiny in for iphone labor law violations. we will look at the applications later in the program. >> and after protests in hong kong rachel and with an impact on the markets, if the solution isn't found soon. this is bloomberg. ♪
14th weekend of protests as chief executive carrie lam failed to placate the protesters. do the protests match the scale and intensity of recent weeks, and do you think perhaps the removal of that extradition bill from the list of five may have perhaps we get some of the resolved? >> it would not seem to be the case. when you saw that activity over the weekend, we had clashes around police stations and alongside these peaceful marches around the u.s. consulate there were pockets of small protesters that engaged in confrontation with police that deployed teargas to dispel the crowds. the hong kong government in a statement on sunday expressed regret over the protesters
seeking the support of the u.s. government and also condemned the illegal behavior of the radical protesters. we have entered three months of unrest and cannot deny that there been damage to the economy . in a blog post the finance it fell 40%id that hotels acrossnd several districts. on friday they downgraded the forecasts toith 0%. >> we are not saying that we think the one country to systems framework is in jeopardy -- you're not saying the basic law is in jeopardy, but this is a huge test. it is also impacting international perceptions of
hong kong's rule of law, its governance system, in the future dynamism instability of its business environment. >> earlier the show we had other who says the withdrawal of the extradition bill is simply not enough. word, pretty much impacting protesters at all. >> that would seem to be the several people including up the road, it was a wealthier district that participated in forming a human pamphlets,ributing and this weekend according to communications on telegram, -- given plan about
how many of how many hong kong's privilege reside there. the organizers of the 2 million strong rallies that took place in june have a work permit. weekend of protest is likely to be had. >> sophie kamaruddin, thank you. let's bring back our guest. it doesn't look like hong kong is paying the price. >> that's the big issue. the big question is how much will it last? obviously they have bad middle to longer term impact if the protests continue and no compromise is reached. country,uld leave the so this would be a long-term .ssue for hong kong sto
>> do you get many people asking about the situation and how the confidence of investing in hong kong has diminished? >> it is actually the contrary. some clients are asking whether the clients cherry picked yet they have corrected quite a bit. screens, i at the think it is probably the second cheapest market in asia. probably the cheapest market in asia. investorsome value by sniffing around to ask if this is the right time and i don't think they are overly concerned about the issues, although some have asked -- there are risks that the hong kong dollar could
eventually be devalued because there could be ongoing pressure against the hong kong dollar, which is different from previous crazies. but this is more of a prolonged pressure so possibly the authorities -- doall the uncertainty -- how you make money if you are keeping cash? the dollar rates are still around 2%. 10 year u.s. government bond yield -- that is how you keep things taking. overweight cash and underweight equities, 100% cash in the portfolio --\ >> >> ahead of portfolio management at real singapore. still to come, it is time for us
♪ the new segment, stock of the hour. david ingalls has a look at a company which some say could be a takeover target. more volume the normally. think that is the point -- it is a small market cap stock in the turnover is quite low so it tends to be undervalued. target, be a takeover and the company that might look to buy this -- according to the with the share price --
>> 7.50 on this. >> on the price target, correct. in terms of the offer might look a 40%-60%'s about the stock is had its best day in 10 years. >> thank you so much. let's do a quick check of the latest business flash headlines. boeing has suspended work on the new triple seven us after -- it exploded outward during a high pressure test on the ground . it had already been pushed back to 2020 because of problems with its general electric engines. british airways has canceled hundreds of flights ahead of the
airlines first pilot strike in decades. the weekend brought no progress and they say they have canceled 850 daily flights monday and tuesday. the disruption will mainly affect heathrow and jet wick. will resign as soon as his successor is found. he told reporters he's ready to take responsibility for scandals but won't accept blame for allegations that they were paid more than they were entitled to. let's have a look at what's going on with the chinese markets. we are seeing some gains across the board, investors getting a shot to the arm, even as we had weak economic data. it was the move to the lower bank reserve ratio which changed sentiment to the positive and
is to the other side. in effect what the central bank , reducingt the amount it to the lowest level since 2007. that is currently the position we have with other equity not so muchg kong because we've had 14 straight weekends of protests which has been eroding confidence in the hang seng which has been flitting between gains and losses. it looks like we will have a flat moved to the lunch break chinese markets about 3.5 minutes from now. that the of note is hong kong mall odors and casino operators are seeing their stock
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♪ city,view of the lion it30 a.m. in singapore and is pretty risk on. fromargest increase coming resources yet to date and we have the index up, on its way for the best year since 2017. let's get the first word headlines with su keenan. >> thank you. let's start with the latest on brexit. u.k. prime minister boris johnson says he still wants a brexit deal rather than a hard split and officials are
increasingly doubtful. negotiations have occurred twice a week since johnson entered downing street and he says one eu official called them farcical. another said they are useless and another said they are only there to boost three election prospects. president trump's tweets, meanwhile, are being given serious analysis by j.p. morgan chase. they created an index to gauge the impact of each tweet on u.s. interest rates, particularly those on the fed. index wasled volfefe named after his mysterious suggesting that the president's messages are having a statistically significant impact on treasury yields. trump averaged around 10 tweets a day since the start of 2016. two hong kong now. operatorss and casino
fell on concerns that they will heard earnings. it declined almost 40% from a year earlier after some hotels some by ashan half much as 70%. holdings fell after police fired .ear gas we also have mining towns across australian breaking news, leading a recovery in the property markets, this as record low interest rates and easier rules for bank lending support demand. this as they hosted a 71% increase over the past 12 months while another town recorded a
jump of 42%. they also saw increasing demand. it is no longer abiding by limits on uranium enrichment under the 2016 nuclear accord, bringing a new challenge with europe and the u.s.. pushingmic republic is ahead with developing advanced centrifuges in a breach of the timeframe agreed to in the deal. been scaling back compliance ever since president trump abandoned the agreements last year. global news, 24 hours a day, on air and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm su keenan. this is bloomberg. >> all right. let's look at the major markets. to theust coming back trading desk as the lunch break ends, hang seng flirting with gains and losses much of the
morning as we digest this 14th street weekend of protests. we have seen a 40% fall in tourist arrivals which is spooking some of the investors in shopping malls and macau casino operators. the asx is flat and slightly positive -- let's quickly look at indian markets as we approach the start of the trading day. at the moment we are just withng at a slight advance regards to what we saw on friday. the rupee just came into play with just four pace at the moment. the yield on the 10 year is unchanged. >> lots to digest.
mark cranfield, let's talk about the youan. we also had weak export numbers. >> the pboc has made it fairly clear that they don't want too much volatility and they are certainly trying to modify the movement. but when you had the exports slip as they did, there's probably some frontloading because have to by early. the tendency will be for exports to be even softer, which will keep pressure on exports. then when you consider they are cutting rates as well, that makes it slightly cheaper and the incentive is to be on the negative side of the currency. in the short-term at least the currency can move quite a bit even though the fixings -- we actually saw the spot rate move closer so it is quite a gap
between where the offshore could go and trades will probably try to exploit that. mark, what about the rrr cut? it is one of those known unknowns. it was expected at the time that we would see an injection -- what is your reckoning? what is your take? >> if you take chinese stocks in over the past four weeks for inflows have been going from hong kong to china anyway. that was even before the confirmation of the rrr cuts. there's also some talk about the nlf rate lowering sometime this month. is central bank of china holding back from an official rate cut. but when you see we are likely to get the fed and ecb and possibly the bank of japan all using policy, it is edging
toward the point where even the pboc will probably want to join the club. that is all positive for mainland markets until we see what happens with the trade talks. there will probably be a couple weeks where markets can enjoy this but once we get to october the story could be different. >> are cranfield there, are bloomberg mliv strategist. thanks for joining us. and theall this data export and import numbers in china. >> it's a race, right? a lotn fairly weak data, of surprises on the negative side globally, and policymakers everywhere responding to that. weaknessms like the wherever you look is on the manufacturing side and it seems
like the consumer is holding up the economy. >> that's true in many markets. it is a pattern we often see at the beginning over a period of weakness, the whole consumer nexus tends to hold up better until it doesn't. seeink we also expect to weakening volatility with part of the economy that tends to hold up better with the service sector. >> does this trade war come at a good time? is it affected by cyclical factors? >> for instance, when we scrutinize the chinese trade data, everyone is very focused on the impact of the u.s. tariffs, but don't forget that 80% of chinese exports go to other countries, where we are facing that picture where
whatever is happening with u.s.-china relations we are witnessing a slow down in the global economy and global trade which is an even more important reason. >> weakness in china and in the u.s. -- i knowroll growth they said no recession in the u.s., but it is a worrying trend. yes. interactionave this between weakness in various parts of the world and if we look at the u.s. itself, we would still see a labor market that has been howling up so far and that is why we are not worried about a recession. but these downward pressures globally are also hurting the u.s. and it is not unreasonable
-- at least there is a probability that the u.s. will move into a recession next year. >> is there a tipping point number for the fed? >> giving a tipping point number in terms of -- >> jobs. >> well, i think the tipping point has already been reached in the sense that we expect another three interest rates cuts this year, september, october, december. fed has already set to budge. >> will that be enough? baseline, it is enough to avoid that recession, but we are also very cognizant of the fact -- the more everyone is talking about a recession, that by itself also increases the probability. happened,k at what
some argue it's an indicator of a recession but the jury is -- what is your view on this, and given how much this bond market has been manipulating -- >> i think this is the crux of the matter. do we really believe those charts? in the seven of the eight previous recessions, what you see on the bond market was a pre-staging period of recession. don't think it is the same as the previous recessions. one thing about the current upturn we are seeing is that it has been fairly shallow so we don't really see an overheated
economy. if you look at friday's job have job growth and participation rates rising -- it looks like the economy is not that overheated and that is quite a bit of difference if you signals -- what it do we think the fed is going to raise rates by a few percentage points, which used to be this case, or do we have a supersensitive fed, which is very much willing to lower rates? we still don't think the yield curve is a perfect predictor for what will happen to the economy. >> how concerned are you, when you take a look -- more slowdowns or signs of a slowdown --oss the board, in europe
when you take a look at how it could impact asia, despite the fact that asian economies have stronger fundamentals. is the problem with the global world, where we are all dependent on each other in terms of demand for our exports. this global weakness took economists quite some time to agree on where the mobile weakness came from. initially, china was the main culprit and later it turned out there were a lot of others that had very weak demand trends. i would say the one thing we all agree on so far is that the u.s. has been resisting this weakness. if you look at u.s. domestic demand the key question is whether the u.s. will be able to continue to be that locomotive for the global economy. the economics head of asia.
have gained for the third straight session. start, it hasve once again breached the market and the traders are watching out and the range is 10,800 and on the downside it is also down about close to 20 in gain and they did witness -- down about .7%. back into thein negative territory. it is currently trading with cuts and india has been very volatile, back in the green now thetrading around 16.5, but indian rupee -- today is the fourth straight day where we are seeing it trading. s,tell me about equity
-- tell down earlier on us about why this stock is slowing. is a holding company of a small finance bank. deadline to lift on september 4, which applied to the reserve bank of india, asking for an extension. measure they have generation,the asking the bank not to open any new banks and that is why you are seeing them trade -- they did see a backlash and they make it an extension but that did not happen. focus after the bank announced that they will be writing to sell a 30% stake in the stock is not reacting too
much right now. >> thank you very much. us, the head of asia economics. india, consumer is really not holding up. in other countries we have seen consumers holding up in the manufacturing side not, which seems the other way around. the business side investment had been weak for quite some time and what's really hurting consumer has the also become more pessimistic. it started out with rural headwinds --eling
of course the financials do not help. squeeze,lking a credit and this is also having an impact on the consumer. -- it is verywth close to contraction territory with a population growing -- what do you say to that? >> it is probably a little unfair because it would still put india in the top three or four major economies globally. it is true that indian policymakers have high expectations and they hope to grow at 7% or 8%. it is more about does india have in place the reform pillars to keep its economy growing and we would say not yet.
>> the indian government announced measures to boost the economy, including some fiscal measures, yet presumably it is -- is your take on how effective the measures will be? released quitent a number of measures and a lot of them are around regulation. there was not a lot of fiscal beat in their, really because the government is constrained on the fiscal side. there is a lack of major fiscal sales tax cuts on cars and other fiscal measures, the fact that there has been very little action is disappointing.
is all happening against the strong dollar environment and there is u.s. denominated debt -- how much of a squeeze will it be going forward and how close are you watching the strong dollar when it comes to india versus what's happening with oil prices? >> there's a lot going on globally. if we talk about all these issues that have been hurting global growth -- it is good that you brought that up, the strong dollar tends to be a headwind for most emerging markets and financial weaker conditions and that is not good for emerging markets. we have that strong dollar still holding up.
and i would say overall that if we say go forward another six months and you see that things are probably getting better on the international front. thank you so much for joining us. he is head of asia economics india. . 5% growth rate coming up, breaking the law. apple and foxconn admit violating chinese labor regulations after being called out by a watchdog. details on the way. ♪
>> welcome back. asian supplier has confirmed that a violation of labor law, releasing findings and ahead of an apple event ahead of new smartphones. the executive editor peter elstrom joins us from tokyo. this is a lot to do with undercover investigations. how damaging is it for apple as well as foxconn? this is another black eye for the two companies and their labor practices. this is an issue they've been struggling with for many years, going back to a rash of suicides at the factory a few years ago. the two companies are overusing temporary workers, workers that don't have the permanent status and benefits he would get as a permanent worker like paid vacation, paid sick leave,
pension insurance, that sort of thing. found that the percentage of temporary workers at this factory in the biggest maker of iphones. companies are supposed to keep that number around 10%. summer surgeon a hiring practices, trying to ramp up production. the companies expected this working to- they are try to address the situation. they do have a responsibility. just another aside, is this one of those nontariff tariff
barriers in the trade war? address your first idea, apple has been dealing with these for a long time and they have an annual report looking at suppliers. when you have an outsourced are relyingel, you on them to treat their workers and handle the responsibilities they have well and in many cases we have seen apple struggle with and they say they give an update on how different suppliers are handling these kinds of issues. >> we don't have time for the second part of my question, but
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