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tv   Asia Edge  Bloomberg  December 7, 2014 10:00pm-11:01pm EST

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vonne. a surge for quantis. alan choice's critic. did he deserve to be hacked? it wasn't us. from colonial legacy to a global example. how singapore became one of the world's greatest economic start-ups. >> keeping my eye on the board. how do i describe this? a bit of a busier monday than usual. the markets are mixed. the volume in turnover still really holding way above a lot of these averages over the past 100 days or so. it has been data heavy. japan, of course, came out with disappointing g.d.p. this morning. sidney, over 1%. dominated by the rally in health care stocks. to a lesser extent, you have the moves in commodity prices. e, a little n or
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higher. finally, in china, trade data for november. record trade surplus there. 54.5 billion. just to put that in context, for south korea to put in -- perhaps south korea and china, that's about -- do the math. about eight, nine, or 10 months of the trade surplus in south korea. so what they do in 10 months, china does in one. the chinese benchmarks up 1.5% here. all continuing this world beating rally. best market across over 90 stock markets. you take that further, and look what's happening in shanghai. that's what's happening here. look like everything arguably with the exception of health care stocks. look at that. 8%. billion u.s. dollars was
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the turnover on friday. that's roughly the size of the new zealand economy. 13-13. so you have the big boys. hong kong, sidney. take a look at valuation. the bigger the stocks, the lower the price. that's where you could find your value there. again, 60%. about 15 short. that 2000 level. rally continues. 93. we'll see. we'll leave it there for now. back to you. >> banks struggling over an inquiry that they raised billions in capital to guard against future crises. we can get to paul allen in sidney. a pretty good reputation there. some say they are being singled out. others don't agree. what's going on there? >> the inquiry is a former boss
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of commonwealth bank in australia. he said there is no question of the strength of the australian banks, he just wants them stronger. he would like them to hold more capital to protect them in the event of a future crisis. a short time ago, he gave the events to discuss the inquiry a little more deeply. this is what he had to say. >> the inquiry believes that the capital rates of australian banks should be unquestionably strong. specifically, they should be ranked in the top 2025% of global banks. the major banks are currently some way between the global median and the 75th per sen ile -- percentile. >> any idea how much and when they will have to raise this capital? the regulator will hold talks with the banks. at the moment, they have to hold their capital ratio of 8.3%. the inquiry recommends that be
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sted -- lifted from 10% to 12.2%. that translates to about 15 billion dollars to $25 billion in extra capital the banks will have to race. >> so paul, what is the banks reaction to all of this? >> they haven't been happy about it. the details of this inquiry were, as usual, leaked out over the previous weeks and months. the -- they say every 1% in extra capital will have to to translate to 1.5 base points in the average home loan. that is called exaggerated. as for the markets, it looks like a lot of this news has been priced in with the banking stocks rising today. some of the smaller banks, the gaut, of some called vande
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they are welcoming this because they already have to have higher capitals, so they feel new rules will make the playing field a bill more level. >> thank you. paul allen in sidney. >> now let's look at this trade in china. up to a record high. the australian economy weakening. so another indication of what we've known for a while. the domestic side of things is, indeed, slow there in china? >> yeah, absolutely, rish. aven external growth issue that is not as strong as forecast, gi -- by also imports surprisingly contracted last month instead of growing. so export demand is not as high
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as expected, and domestic demand definitely not as strong as expected. comprehensive larry hu saying the chinese economy is generally weak with a fourth quarter hardly improving from the third. the official manufacturing p.m.i., of course, that we got on december 1 was the lowest in eight months, and now these trade numbers are reflecting that scenario. exports growing just 4.7%. that's the slowest since april. we were expecting growth of 8%. but of the 33 economists that we surveyed, rish, no one predicted growth of less than 5%. so we got 4.7%. the weakness fooling everyone. imports, as i said, fell 6.7%. we're sfecting a growth of 3.8%. again, not a single economist of the 33 that we've surveyed predicting falling imports last month. what did they do? they sell 6.7%.
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that led to record high trade surplus of 54.47 billion dollars, a record high. we were expecting about 44 billion. so, yes, rish, more evidence of what we've all known, and that's that this economy is having a hard time kicking into gear, even with the rate cuts we got a couple weeks ago or 10 days ago. not necessarily ok. there's a lag effect. what we're not seeing is any kind of a spill over into the real economy as of yet. >> steve, thank you. our commoo china correspondent in beijing. >> not the news they wanted before japan heads to the polls. japan's recession deeper than onlyly estimated. let's cross over to sherry ann live in tokyo. beautiful backdrop for you, but how bad are these numbers? >> yes, the numbers not
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reflecting the beautiful day we are having here in tokyo. we were a bit surprised, the 3% anese economy shrinking 1. in the first quarter. more than the initial reading last month of a contraction of 1.6%. none of the 44 economists surveyed by bloomberg thought the economy had shrunk this much. this showing the japanese committee deeper in -- economy deeper in recession. that's not going to help the prime minister heading into the election. >> quite a big blow for him there. what are some of the things he still needs to tackle -- abe needs to tackle before this election? >> there are many challenges for abe at this point. first of all, prices. prices rising only 0.9% in october when stripped of the effects of that april tax hike.
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well below the bank of japan's 2% inflation hike. now they may be forced to carry out more stimulus, and leading to the plunge of the currency. the yen trading at seven-year lows. now the weak yen a great thing for abenomics, but dealing with the challenges of a weak yen, that's a different story. we have smaller firms without overseas operations getting hit hard. so with signs that the economic recovery may shall faltering, abe delayed the planned tax hithe hike for next year by 18 months. net pan deputy chief cap secretary singh saying that will help the economy. let's listen in. well, the chief cabinet secretary saying that everyone
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can withstand the sales tax to be raised to 10% in 2.5 years, so it is good that abe is actually pushing for economic recovery now. economists saying that that will also boost the growth here in japan by 0.3 percentage points. yvonne. ou,ee von -- >> thank you, sherry. >> we have news there could be i happy holiday. news a japanese gamemaker is tripling its profits after million loss 93 last year. all thanks so l super smash brothers. north korea denying any involvement in the cyber-attack on sony pictures. they say they may have carried it out in a fit of, quote, righteous anger. edd ll -- e paralyze
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-- hackers have caused problems for sony for two weeks. >> the outlook increases a chance for a four-year profit for qantas. oomberg forecasters seeing losses for qanta. >> malaysia airline names the man they hope can turn around the ailing airline. >> first squap's latest g.d.p. figures may have surprised some, but not our next guest.
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>> big business and prime minister shinzo abe. recession deeper than estimated. >> 1.9% there. let's go to sunrise brokers. ben joining us this morning. ben, thank you so much. >> good morning. >> first of all, pretty shocking numbers there. your reaction? not so much, actually. >> no, but we were hoping for bigger numbers. we are looking at the markets, he g.d.p. yes, capital spending is off, but i still haven't completed how low the revision has occurred. minus 1.6 and mipeous 1.9. when you are talking about g.d.p., 30 basis points is a lot. >> it's billions. >> it's a big number, but the
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market doesn't seem to care. i think we are seeing a lack of increase in open interest. so the new players coming to the market now are, i guess, a lot fewer and farther between. i don't know how much -- what the voters are looking for. the guy they shove to the polls, i think they are looking to the market and their actual personal balance sheet more than anything else. >> we will spend more time on japan a little later on, but it wasn't the only issue. we have had so many works of fiction coming out of the stats department. hat do you make of them? >> it was obviously a large increase. it indicates to me that china's place as a workshop is very much intact.
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now, i think the imports were off significantly as well. conclude the consumer evolution into middle class is at risk. but we have known that anyway because the g.d.p. numbers have been revised down. i can't say japan g.d.p. numbers are bad and china's is great, so get in. again, we're looking at the stocks, rather than the actual data. >> were the exports the bigger surprise to you? what impact ta does that have in terms of on the aussie dollar, say? >> i think that's a good point. increase in imports is clearly beneficial. i think one of the things we haven't been able to deconstruct yet is how much of a decrease in commodity prices you would expect china to have. crude and any kind of asset you can get its hands on.
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they have invested heavily in the coal market. we are looking at strength and the constitutional amendmenting decrease in oil prices, of course, which you talked about. what's interesting for us is whether precious metal rs going to base. i say that regarding gold in particular. because the support for gold at minute again indicates more of middle class consumption and the kinds of things we expect chinese investors or china in general wants to accumulate. lesson the energy space and more on the precious metals. we want to find out and track how much is -- >> absolutely. again, you said -- just picking up on the stocks, not the data, and of course investors don't tend to look at the data either, generally speaking, given how you've seen the shanghai market.
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has it got legs? does this create a herd mentality? >> yes, it does have legs. we have seen a bull market in china. it looks like this. we think if -- >> some are saying it is going to go up double or something. >> i wouldn't dare challenge morgan stanley. they have significantly better resources than i have. but in any case, i agree with the run of this magnitude. china.e open market in the shanghai connecting was by and large disappointing, but it is still there. >> it is still there. >> it is going to happen. o, this is quite a squarey run -up. were it anywhere else, i don't want to say a developing market, but were it other than china, i think we would be reluctant to get on board.
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we wouldn't want to toss the coin. but that's not true. we do want to. a double-headed one. >> you have security regulators saying keep in mind, investors, these there are risks to these stocks. >> that's the thing, too, if the regulators say, guys, calm down, i have to say, why? it's like a tax on cigarettes. if it does, no one really pays attention to it. >> we will discuss japan coming up. asia edge" on the way. >> and a powerful typhoon bearing down on the philippines.
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>> no trading in the philippines today. government offices and schools are also closed in manila as a typhoon heads for the capital. let's go to our reporter in manila, cecillia maun on the line. good morning. we've been talking to you all morning. tell us, what's the latest there? >> hi. metro manila is bracing for hard winds and heavy rains. the storm has weakened from its super typhoon category, and this morning was downgraded to a tropical storm. still, the local weather bureau is warning of heavy rains and
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possible flooding. schools and government offices are closed, and there is no stock market. no bond or foreign exchange trading today. some numbers today. a super typhoon. more than a million people evacuated. probably one of the most massive evacuations in philippine history. philippine province without electricity, that's up it from about a dozen last night. nearly 200 flights have been canceled. about 40% of the nation's provinces are under storm signals. they are expecting the recovery of area with the strongest typhoon to hit land and skilled 6,000 people and left over 1,000 missing. the slow-moving typhoon is expected to leave on december 11. massive clean-up is ongoing.
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to make sure food and other basic necessities is reflenished. the ilia, you talk about complick impact of all of this. a lot of these cities have been slammed once by haiyan a year ago. what are we seeing here in terms of economic damages for the country? >> typhoon hyiyan slowed economic growth this year. the impact has been felt as late as the third quarter. initial reports estimates foreign damage of $350 million. we have yet to get more rors on damage and possible impact on the -- reports on damage examine possible impact on the economy. >> does this bring a stall in
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ecovery? >> i talked to the mayor, and the general sentiment was that people are just recovering from he effects of typhoon hiyan, another two super tie fortunes in a lifetime is too many for them. >> thank you for that report on the typhoon hagupit there. >> the government claiming the in has no jurisdiction south china sea. > the former security chief jo
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yung pang was expelled over the weekend. next would most likely be a closed door trial. this is because of allegations of leaking state secret. the government is saying higher emission rs necessary to support the economy. should richer countries -- india is the third biggest carbon emitter in the world. >> we have a sunny day at the imperial palace. what happens next in the afternoon when the reoverwhelm is coming? ♪
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>> stocks heading for a record 12 straight gains. >> a new boss assumes command of malaysia airlines. >> and changing the game. a special report on how atari revolutionized the industry. good morning to you. let's get the latest on the markets now. david, any reaction on the new trade figures? >> yes, trade figures, rate cuts.
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speculation there might be a cut in reserve requirements. p 30% over three months. the biggest stocks there and in shenjen. report winning 12 straight disof gains. 3,100 for that index. hard to imagine back in may or june we were at 2,000. looking at 12 days of gains. let me write it down fow for you. 10-12 we saw more than 1%. ok 1% gain for that index. it comes to a point where you look at the technical indicators. we're way in the upper range. we're way above the moving averages. we're looking at new brokerage accounts being opened on a regular basis. the weekly investor is back. what that usually means is they do this and they throw fundamentals out the window. ok, these are my notes.
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let's look at what's happening here. so a broker, just for example, we're looking at record valuation. over $103 billion on friday. there you go. service, 8%. let's get into that. what do we have there? haitong. 5%. 6%. securities up 6%. in fact, you look at how shares are doing here in hong kong. securities. shares up 8% here in hong kong. a bit of cash. you are looking at discounts, the discount because asia shares have actually been driven up.
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japan is considering raising tarriffs, both corporate and household thrifts. -- tariffs. our forecast here a net loss in terms of those results. e have qantas airways on a tear. 14%. we could be looking at the best first-half profit in years. up 14 pollster. not a bad day at the office. back to you. >> a new chief executive is expected to take the head of malaysia airlines. y malaysia's government is going to try to lead the turn-around. >> that's right. we're talking about the first foreigner to head malaysia airlines. his name is kristof muler.
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he's from germany. he's credited for leading a carrier to profitablity. that's what the malaysia government is hoping he will do when he takes over malaysia airlines next year. some where between march and may is quh he's expected to start. they have seen passenger numbers fall after twin tragedies after the disappearance of -- and the shooting down in july over ukraine. >> reputation damage is what we're talking about here as well. now, how do you do that? hat's the big challenge. staffing is important. >> staffing a key issue. muler is expected to cut about 6,000 jobs to the carrier. the reason they chose him,
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according to their statement, is he is a noted turn-around xpert. >> they didn't really have a turn-around, did they? they ceased operating -- if such a bad experiments, never again. >> well, i've never flown sabina. >> i have. >> i'm sure you've been on board sabena planes. he's also worked at russell airlines. he has extensive experience starting at d.s.l., actually. his experience expands from passenger freight to airlines. as of september 15, shares of malaysia airline are delisted in asia. >> let's look at some corporate stories we are tracking today. mazda says it will recall over 330,000 vehicles sl the airbag
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recalls in the u.s. expand. the japanese automaker said they haven't decided on a nationwide action yet. mazda's competitor honda said it is considering a global recall due to faulty airlines. >> a driver accused of rain has arrested and remanneded into custody. the uber company said arrested suss penned suspended the -- it has ex -- stopped the account. chinese developer dalian wanda may raise up to $3.8 million. they are looking to sell a 15% stake. details on what
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here. ng has been saying they have denied attacking sony ictures hacking. >> they said they would mercilously destroy anyone that is tied with this picture. kim moon quoted the movie as a fascist. the movie, two actors are ired to as nature the leader of north korea. -- interesting
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choice of words. >> this film was produced -- this attack was clearly the righteous act of our sympathizers. the misfortune sony pictures experienced can only been seen as justified for its evil doings and actions. >> so the words "righteous deeds" and "evil doings of sony." >> how many -- >> risen 10-fold in the last week. 406,000 per day. >> an attack from the st. riegeous hotel in london is an unusual place for this to happen? >> a remote source. it can be traced back to there.
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whether it was in the public area of the hotel or one of the rooms, we don't know yet. also, they can pin it back to seoul. back last year they hit south korean banks. this time with cyber-security, it is an enormous jump up and massive concern because this is high-end security hacking. they began leaking confidentialally from sony, which includes 37,000 sony employees dating back to 2,000. this includes their salaries, addresses, contact details, also several hollywood stars, cluding the rocky star sylvester stallone. >> thank you.
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>> a note for 1,000 percentage g.d.p., singapore is a major turn-around story. it is one of the reasons why bloomberg business week has it one of the world's most successful economic start-ups. for more, haslinda it one of t i lived in singapore for two years when i was growing up, and i happen to agree, it's a great place to be. >> it is awesome, yvonne. sifpk pour's success is testimony to what vision ask a chief. let's face it, few thought it was possible for this little island to survive when it broke away from malaysia 35 years ago. but it more than just survived, it achieved lts goal of being a first class place. even in the early years, it opened its seaport, one of the
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busiest ports in the world today, was a free port from the beginning. it also attracted foreign capital, technology, talent, and that's because of tech concessions, a lack much corruption and red tape. today singapore is the easiest place to do business. it has been for seven consecutive years. it is the second most competitive country in the world. singapore has been disrupty. case in point, it is all respected. this country doesn't have a single drop of oil to its name. no oil in the reserve. yet, they produce 70% of the world's oil rigs. singapore is also asia's biggest oil trading hub. it has been able to invent and reinvent itself based on what the world needs, and the people have benefited. the people's per capita is higher than the u.s.
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it has the most number of millionaires per capita in the world. 1-6 householded here have a million in cash savings. quite a feat for a little country with no natural resources. >> yeah, --, that's great news for the lion city there. when you talk about singapore, there is careful government planning there. how does that work against the spirit of business and entrepreneurship? >> well, it hasn't, really. singapore is driven by carefully crafted policies, but back in 2001, the government commission and e.r.c., economic review committee, to see how it can encourage innovation. it needed entrepreneurs to ensure growth in the future. 10 years after that initiative, more than 20% of sinaporans said they will start a business in three years. that's double the number
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earlier. nearly a quaretter of those between 35 and 34 said they will plan to start their own business at some point. now government policies have not worked against the spirit of innovation, not in singapore. that's why we are now seeing disruptive companies in singapore like taxis which recently secured $250 million in funding from the bank. amin. you, haslinda if you want to find out more about the wrled's most successful economic start-up, ee a new issue of "bloomberg businessweek" which includes some other innovateors whose ideas have changed the world. >> coming up, more on how the latest data will play out as a balance this week.
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>> what's going on in japan? >> i think he's going to win. 6 he'll have carte plan much to do whatever he -- blanche to do whatever he wants. >> he's had carte blanche, and he hasn't done anything. >> this would remove that, record low voter turnout, but the market is going up, the everything ying off that they are selling. facilitating the increase of -- mace basically making it easy
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for these markets. >> we were very surprised by the call for the election, but it seems to be the right thing to do. he'll likely get an extra four years. the market is telling us the voters will give abe another four years. >> a lot of people are saying, why are we going to do this again? could there be a chance he doesn't have the majority? >> we think the market is a little optimistic about the potential risk. here isn't any risk priced in. so that would certainly be -- not quite catastrophic, but it ould catch a few people short.
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>> you never know what can happen. >> the yen, i mean, it keeps on getting weaker and weaker. is there a particular, you know, line that you draw to see that they will set up? bound to over-shoot on the down side. the trouble is as an equity strategist, fine if you make money on the way up, but you are losing it if the yen keeps on deappreciating. how do you hedge is it it? >> a couple ways. one, the knee can i is running a-- the nikkie is running ahead of the yen. nikkei actually ran 2% or 3% ahead of the yen. so it is actually catching up with the market. i think ages ago i came on and said the yen was 124.
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i think that's still valid. at 124 i think we will start to see a few more things happen, i think we will see more repatriation of yen. but the issue now, if you look at these that we looked at early year, if you look at gold, it is really about dollar strength rather than yen weakness. a right issue now. that's actually -- the timing of this will facilitate the expansion of the yen weakness. if we are short dollar-yen, i think a reasonable target is 124. >> is it reasonable to accuse the prime minister of over-promising and under delivering? >> absolutely not. but, you know, the point is, has he ever promised and then excuse after excuse, doing anything in japan is very
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difficult and time consuming if you want to set up a business or tchay, and certainly if you want to change the laws governing the business. there is a sensation that there a palbable camaraderie in japan since the earthquakes, since the natural disaster. you do get the impression that coroda e have supporting abe, even though they are not exactly on the same page. they are swinging for the fence yists, and i think by and large, it is like, screw it. >> he has been trying to do some arm twisting with some investors in japan. we have seen wages go up, but nowhere near as much as they ought to be. >> this is an interesting point where they are creating an environment where -- if you are
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-- stocks go up. you are likely to start taking more -- consuming more. we have been obsessed with this wage increase for the last year. it still hasn't come through yet. we will see the bonus come out. we heard exporters can pay more tax. they are returning more to the share holders rather than the workers. i think that has too balance out. arguably, the japanese workforce is much more tolerant r has a much greater spirit in enduring than, comparably, say workers in the u.s. or france or the u.k. so these guys will put up with a lot, but eventually, too, they are going to get sick of the wages the way they are. but last year was about share byebacks. now it is about dividend increases.
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>> i -- you have a buyback, you have dividends. of course, the hard part, is dividend-earned wages. >> you can't really step back from that. >> certainly not wages. wages are probably the hardest thing to reduce. in japan it has happened before. the wage cut has been acceptable in japan. they have done it many times. i think that's the longest, the wage increase. plabe they are holding back from using the leverage saying we'll make it. we'll increase dividends. we're looking to expand their return on equity. that will allow the -- them to put it on the list. now they need to expand that to the workers of course and increase quppings. -- i there is a bit of think a four-year mandate is
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probably going to be -- if they are talking to toyota. >> running out of time. thank you very much. >> a game-changer we are talking about. how this video machine revolutionized the gaming industry. details after this break.
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>> a masterpiece. it kickstarted the entire gaming industry four decades ago. >> remember playing that? >> yes. >> the big question is, when did atari know its video game as a game changer? "bloomberg businessweek" spoke
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to the creator. >> he came up with this thing. he said how come on a tv set you change when it goes up, hen you turn it the other way, the picture the picture goes down. he said, can we do if horizontally, too? he said, well, you can do it digitally. that. when i created >> al is a better engineer than i am, bhi far. nd get that on tv. al heard about this thing from magnavox, and i was scared. and i went it up to burlingame, and they had two or three. it didn't have sound or score. i looked around, and people were kind of having fun with it. >> it's new from magnavox! >> i wanted to tell al what i
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wanted to do, and i thought a would be ing game this ping-pong game. so we took a little information from general electric. >> you lied to me, norm. [laughter] >> i made a play for it. i didn't know it was a throw-away. i tried to make it speed up. >> we were playing it after work for hours. >> this game had never been seen in the wild before. instructions, there was nothing like it. i was dying to see how people would adapt to it, how quickly. they started having fun with t. sudden al gets the call, may, the machine is broken. he runs down there. it stopped working. had rned out, the coin box
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filled up so high, it was jammed with coins. we opened up the coin box, the quarters came out, i filled my pockets,
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