tv Trending Business Bloomberg February 11, 2016 9:00pm-10:01pm EST
policymakers are not ready to act. do let us know what you think of our top stories. follow us on twitter. straight to the market action. a week that investors would rather forget, extending the global selloff. good morning. china has been closed all week for lunar new year. the selloff continuing. asian equities down 5%. equities extend their losses, down 4%, on track for its worst week since 2008.
the governor coming out today saying that markets are too risk-averse to reflect true fundamentals. investors are listening to that or not remains to be seen. extending australia that bear market territory. we haveand at levels not seen since october last year. korea down 1%. , extending those falls we saw yesterday. one bright spot has been that gold price, on the verge of a bull market. let's have a look at some of the gold players, particularly in hong kong. asian mining up by 5%, but it had been up by as much as 11% today. gain in best four-day
years. price has come off a little in asian trade today after that they can rally yesterday, where it was up right over 4%. there has been a lot of focus on the yen, continuing to strengthen. rishaad: thank you. the focus is intensifying on ank.n's central bri despite efforts, the japanese economy still can't escape a roller coaster cycle of expansion and contraction. we have the details. years and record monetary stimulus, japan faces the daunting possibility of going back to square one. the yen seeing is biggest two-week rally since the 1998 asian financial crisis. policymakers are starting to
act, at least fervently, in order to stop the surge. that thece minister government will respond to markets appropriately if needed. up movesaid that risk had spread excessively. range of calls to banks with questions on whether they plan to buy more yen. the boj has not intervened in currency markets since 2011, but an analyst says that intervention to defend a specific level would not go well with other countries, managing volatility could be, so the boj may have a case for a small amount of intervention. of negative rates will eventually spread to prices and the real economy. the economy has only
seesawed. forecast for fourth-quarter growth is dim, and the economy is expected to have shrunk and annualized to 0.7%. since 2013, we have seen the seven quarters, then shrink in the remaining four. the question is, what is next? corporations don't seem too thrilled about the future. panasonic,ding hitachi, they have now cut the profit forecast for the year. economists have raised the estimates for the likelihood that japan could fall into another recession in the next 12 months to the highest level since 2012. much.d: thank you very let's have a look at oil, west texas rebounding. we had a tumble to the lowest level in more than 12 years. we have a look at these ups and downs. >> what it comes down to is shrinking profits.
some of the oil refineries in the u.s. pulling back, and that ,as added to the supply glut pushing the price down to as low as $26 a barrel for march delivery. wti rebounding back at little bit now. ,mong the energy refiners gasoline suppliers in the midwest at the highest level since 1993. refining costs have also dropped. barrel.s $2.14 a midwest gasoline supplies are ever increasing. marginsnent refining are falling. more cuts, more crude going
to storage. there is a record amount of inventory. however, as prices are quite volatile, west texas rebounding of little bit, we are looking at action from opec. uae andminister for the an arabic language interview on sky news said everyone is ready to cooperate, and also said prices are not appropriate. we reported that been this way less oil minister has met with saudi arabia's oil minister to push the effort to cut production. manus whaler has -- venezuela has been hit hard by the falling oil prices. it has not been as resilient as saudi arabia. rishaad: thanks. we are looking at the conundrum
facing the governor of australia's central bank, among some of the other stories watching today. >> that's right. estrella still has the flexibility -- australia still has the flexibility to ease policy provided it helps the economy. the key question now is whether this recent bounce in financial turbulence will have a material negative affect, both in a stray and globally. stevens was speaking in his semi annual policy testimony. to bes he does not expect able to answer that question for some time. he also addressed china slowdown. he said the recent anxiety we have seen among investors is uncertainty over the intentions of chinese policymakers and also their ability to carry off the necessary economic transition for the country. the bank of australia holding interest rates at that record
low of 2%. the global outlook is starting to provide a contrast to the pickup in the economy. asia,ms of earnings in coming in as a mixed bag. atrd-quarter revenue southeast asia's largest telik, -- largest 32 point telecom operator at $3.2 billion. if you look at it in constant currency, that would have risen 6%. that acquisition also weighed on the quarter. full-yearg its outlook, expecting revenue in singapore to grow in the low single digits. of australian telco
subsidiary so profit rise over 9%. a dual listing for saudi aramco in return for extra investment. it along sideed saudi exchange in return for investments. that is according to people familiar with the matter. the proposal was made earlier this year, but no decision has been taken. this could make it one of the biggest companies in the world. that people who are familiar with the matter that thatronco is considering -- that are bronco is considering could raise $5 billion to $10 billion. thats made it clear reserves are not for sale. 16% of china's
foreign oil, it's largest supplier in 2014. the chinese president visited riyadh last month. rishaad: we'll take a break and come back. india dismissing wild claims about the country's banking system. mumbai toding over to find out what he is saying to reassure investors. the yen stores. -- sewers. ars.oresd ♪
tokyo is wisdom tree japan chief executive. havethe soaring yen, we things down 5% today. have the wheels finally come off? >> look, we have clearly a big crash test for abenomics going on here. this comes at a time when global markets, this is not just risk but fear on, fear that policy makers have become impotent and cannot act anymore, and that is making markets very attractive for anybody who is a fundamental investor. rishaad: let me tell you something. lines saying
negative interest rates won't have a large effect on people's lives. saying that the negative rate is clearly having an effect. what kind of affect is he talking about? , the reality is that you do have long-term interest , comingorrowing rates down strongly, so there are spillover effects, long-term. markets right now, the problem is that the earnings estimates are still too high. the consensus is looking for earnings to grow by about 10% over the next 12 months, with dollar-yen trading around 1.12. basically corporate profits and 10%by between 5% over the next 12 months, that is the right out look and what the
market is discounting now. havead: corporate earnings not translated into higher wages, which is something that abenomics was about, one could argue. >> look, the whole point about you going from rising profits, porate sector doing better, you know, we were just about at the takeoff point when basically the global crisis hit. japan one mistake the government made is that they are debating the tax increase for 2017 in parliament right now , rather than focusing on the good stuff they are doing with the cut and corporate taxes and supplementary budget for 2016. all we are discussing is the consumption tax hike in 2000 17 gaza markets look at that and
say we will have a slowdown. rishaad: it is a political football, is it not, that sales tax hike? do you think it would be totally inappropriate -- to be instituting it? want to beain, you pragmatic. the hope was that the prime minister and his team were pragmatists, not ideologues. ,apan has a big budget deficit therefore you must hike taxes at all costs, absolutely not. know thet he as we japanese economy, whether the consumer side, business-investment spending side, still fragile, and now that you have this global turmoil, definitely going to fall back into deflation, and discussing a tax increase at that point in time is absurd. ok.aad: let's talk about the investment horizon in japan, the steep falls in equity markets,
reflected across the world right now. you are talking about new valuation realities. what are you referring to here? look, consensus expectations are for earnings to grow by about 10% over the next 12 months. that is unrealistic given the strength in the yen and the slowdown in the domestic economy and in the global economy that we are seeing. i reckon that with sales growth slowing from 3% last year to thend 2% over 2016, and dollar-yen averaging around 1.12, you end up with corporate profits declining by 10%, and that is exactly what the market discounting machine is trying to come to grips with now. rishaad: how close is it to actually coming to that realization? it is interesting. i actually think that we are now entering overshoot territory. markets,r on in global
and basically japan is being hit , where this fear on everybody just focuses on their home currency. you have japanese institutional managers repatriating their overseas assets because the word about the united states, china, europe, so people want to stay home, so you have a double whammy here. equityk at the japanese markets, basically trading now close to record low they wish and parameters, even if you assume earnings are going to be declining over the next 12 months, so slowly but surely one should start to tip into the market. yes, but it is time to buy is what you're suggesting, and you also say we are in overshoot territory, markets tend to overshoot, but give us an idea of where we are now with japan itself. how much work has to
be done fiscally rather than monetarily? to havenk that you need the coordination. you don't have to have the technocrats on the financial, physical side, pushing in one direction, while the bank of japan clearly wants to be proactive, once to be a ahead of the game, did introduce a big surprise with negative interest rates. policy needs to be corrugated is thend that prime minister needs to show his leadership on the economy. it has been a while since we heard prime minister of the the fact thatbout economics is a top priority. that is what needs to happen sooner rather than later. rishaad: great talking to you. wisdom tree japan chief executive there. >> the stories making headlines. says world powers have agreed to a nationwide cease-fire in syria next week.
sergeipoke after meeting lavrov in munich. it's not clear whether all groups in the conflict will agree to a truce or how long it will last. kerry said a unanimous decision was made to excel or break -- to accelerate the supply of aid immediately. dozens of people have appeared in court in hong kong over violent protests at lunar new year. 37 suspects accused of taking part in a riot, a rare charge that carries a sentence of 10 years in prison. violence erupted when police cracked down in calderon. police fired warning shots. one officer was left unconscious in the fighting. and miramonte leader will get police protection for the first time. a man posted an online death threat and a picture of himself with an automatic rifle.
he warned he would kill her if she attempted to change the rules. there are reports that she has been discussing the presidency with the head of the army. over 2000 400 journalists in 150 bureaus around the journal -- world, this is bloomberg news. comead: coming out indonesia, 7% growth target. he talks exclusively to bloomberg. that is next. ♪
7% growth? >> it is ambitious. that he has had a rough start to his presidency come up in controversy all investment policies, squabbles among his ministries, he says he has put in place the right moves. his cutting of red tape. can get your business started in two weeks instead of 200 days. he has also boosted infrastructure. the boost has an effect on growth. growth picked up to more than 5% in the fourth quarter, exceeding estimates by economists. though he is optimistic about infrastructure, there are , more than 40 projects out of the 300 slated have been delayed, and this a rail project, a
high-speed project, with china. questioning if that 7% target can be achieved. we caught up with him and south he was inspecting a toll road project. this is what he had to say. i still have four years to achieve that. if infrastructure is developed, manufacturing growing, and tourism promoted well, then the growth will be good by the fourth or fifth year. rishaad: this all begs the question, what is he doing to attract foreign investment. you know what, the government opened up 49 sectors just yesterday to foreign investment. storage, toll road
projects, also the retail sector, but when you speak to investors, they say the move is not far enough, not wide enough. they are still looking for more from the government. when pose that question to jokowi, he says there will be other moves. take a listen. >> this is just a first round. it will be a second and a third. you will see the result of each step. for now, 29 sectors will be open to foreign investors. >> challenges remain for the president. rishaad: thanks. for us.in jakarta coming up next, down, up, and down again, why some are saying japan's economy really is a roller coaster. ♪
intensifying speculation that the bank of japan may intervene to weaken the currency. recent movements and the yen havean "rough -- the yen then "rough." the uae minister saying that oprah -- opec is ready cooperate on output. shipments are set to rise by 410,000 barrels a day this month. toanese traders heading lunch after 5% declines in the morning session. we have the latest from what >> is going on out there. >>it is not great. h frank fored lunc those traders in japan. extending those losses, the worst week since 2008. big falls coming through.
generally you can see there has been a lot of heavy selling. steelmakers under pressure, comingcompanies under pressure as well. hsbc extending six-year declines. some pickup coming through the casinos. have wynn resorts coming through with its numbers. shares trading higher. across the rest of the region, apart from a pickup in malaysia and singapore after the selloff yesterday, it is widespread selling. this global bear market intensifying. that their extending market territory reached earlier this week. new zealand at levels we have
not seen since october. a lot of pressure on equities today. rishaad: thank you very much. getting back to our top story. pressure building in japan. we've been hearing about stocks and how they continued to fall and the yen continues to soar ahead of the growth number on monday. happened? what are people expecting happen in the last quarter of last year? we will know for sure when we get the gdp report on monday, but all the initial signs are really bad on exports, tumbling in december, slump particularly bad. consumer spending was not great. capital spending was not great. when you have an economy as dependent on exports as japan, and the rest of the world is struggling as much as it is, you don't stand a chance. rishaad: does this mean we will
get more out of the boj, more stimulus, or for the negative interest rates -- or further negative interest rates? >> the governor has been in parliament all morning saying that he is ready to deploy more stimulus if it becomes necessary, that he won't hesitate to provide additional action, so it is becoming more and more possible given where markets are right now. has come the prime minister haslso, the prime minister been a parliament speaking about the yen, so this is something all the policy makers and are watching closely. that yenwhat about strength this quarter? how is it likely to play out? i think this is something that exporters are really worried about her it you have to remember that this has not been a slow, gradual strengthening.
it has happened all of a sudden over the last two weeks, and it is not something that companies have been planning for, so that is what is scaring investors and potentially destabilizing. rishaad: thank you very much indeed. let's take a look at china and possible entry into the msci global indices. that move could be in jeopardy if investors lose confidence in how policymakers handle the market volatility that we have been seeing. we look at the subjective vetting process. >> that is a big if. that what they're basically saying is that it is not necessary the market volatility or the worsening slowdown in china that will have a bearing on the assessment for --na's entry into in this into msci.
what could influence that is how china handles or intervenes or responds to policy to the slow down into the market turmoil that we have seen. a number ofady seen fun president moves by authorities in china, including stake sales by major ill-timed circuit breaker they introduced at the beginning of the year, two days in a row of it tripping within minutes, and then they with that circuit breaker, sending shockwaves or nonconfidence. the shift in currency policy as well, devaluing in august, then defending it to the hilt since then. rishaad: what about these comments you should me earlier? sebastian from the msci saying that if international investors come to us and say the way the government has acted is completely crazy and we don't want that, then maybe we can
consider negative. rishaad: maybe consider. >> may consider a negative for the classification. and then he hedged that statement in the next quote. i enlarge the changes we are seeing in china with the policies and set intervention are clearly going in the right direction and we are pleased to see them. from our perspective for the time being, perhaps that is the operative sentence, nothing has changed." ,ishaad: if nothing has changed i think it's april you were telling me when they make this decision. again actively consulting investors in early april. today, he also says that they have not received any negative input yet on china from those institutional investors, so right now it is a nonstory. those institutional investors were to come to us and say they
don't like those policy intervention moves, then that would be a negative classification. to relax some of those quote to rules, but have they gone far enough? rishaad: right, checking on other stories we are following for you. morgan stanley to strike a deal in the role it played in the 2008 crisis, paying $3.2 billion after admitting it sold fraudulent securities. that includes $2.6 billion previously disclosed. morgan, as already reach such an agreement, and goldman sachs is likely to follow pursuit. singtel profits missed estimates.
>> a new operator who probably won't have the same network coverage. we can gain customers by reducing prices and looking at how best to respond. just meeting prices down is not good for the sustainability of the industry. look at let's take a the mining giant, rio tinto, just up a fraction. it was down. they say they may cut dividends by 50%. it is part of the commodities slumped her that will try to/profits by more than a half. rio tinto hoping the move strengthens finances and maintains the company's credit raining after a possible downgrade. >> we are on the front foot, taking proactive response and prudent action to reduce our costs, reduce capital, and
revise or dividend policy. this is a sensible step we are taking here to protect long-term value to shareholders. rishaad: let's bring in bloomberg's david stringer. what is the mood in the company like right now? as you heard, his message is that they are getting out on the front foot with a raft of further spending cuts, after cutting capital expenditure and operating costs. itsnnounced a change to dividend policy, a progressive policy of maintaining or increasing dividends each year. i think investors will cheer over what that means about the outlook on the commodity sector from the second-biggest mining company, clearly the fact that
they have taken these actions to bolster their balance sheet suggests that the outlook is a great, that we may have further to go in the price route, decimate in many mining companies, sending a bleak signal for 2016. said he does not see any revival for prices without action on the demand side. china is the biggest consumer of commodities. we know the story there about weaker growth. no sign of any calvary on the horizon for commodities. if rio tinto's boss sees larger rivals, with that present acquisition opportunities, not for just them, the likes of these other big plays as well. does. i guess that is the other side of the equation. for the likes of rio tinto and
bhp billiton, they have better, than many competitors to what sam walsh is saying is that he has a list of assets that he would like to own. many of them are in the hands of larger rivals, but he is expecting some of those companies will start to feel the pressure through 2016. when they do, he will be ready to swoop as opportunities present themselves. it all depends him what we see in the market if prices continue to tumble and pressure some of the biggest mining companies. will those top quality assets need to be sold? if they are, rio tinto is saying they are ready and waiting. rishaad: we've got bhp billiton later this month, what are we expecting as they set up their plans to also cope with what has been going on in the commodities complex? surprise, more bad news.
they will be drastically reshaping that company next week, anglo-american. bhp has been warned that they need to take action on the dividend and the cost front to avoid a second ratings downgrade. investors will be watching both of those reports closely. rishaad: david stringer for us in melbourne. let's take a look at what's going on with the rally in gold. prices surging the most in seven years overnight. we have all this fear in the market at the moment. gold could see gains continue as it stakes out its claims as a cheap haven asset. david has a look at what is the best-performing commodity this year. >> head and shoulders above everything else. second inw you the line there, a great chart to end this report, but let me get this toe from the company
clients. it is saying fear is in control of the markets. this is where we are at the moment. let me show you why it is special, the move we have seen over the past few days. we connect the dots. , that is yourdown basic trend channel over the course of the last 18-20 months. what is special is this break out there. about $20 ang ounce more, so that is about -- $1259. this may just be the start of a longer-term rally, especially as volatility is expected to persist. fearrelation between cold,
, these other measures imply volatility, and this relation has solidified. this is the msci all country index, which fell into a bear market this morning. relation, your trading point, the start of the month when things go down in equities. if you do want to see what the , where do we go from here? we coulduggest that see more gains. traders are paying or willing to shell out more questions -- more cash. the most active optional antract was a march call at strike price of $1300. about $70 or so an
ounce short of that. that is basically what is expected. chart --ok at this i will run it for you. we just came out with a really great piece on gold. it talked about gold and silver. how much gold can you use to buy silver? right now, it has outperformed even silver. if i can does bring that up. that's a great chart right there. story, most since 2008. rishaad: nice one. thank you for that. a new window on the universe by proving a 100 year old theory. we have details on that. "trending business" back in a couple of minutes. ♪
>> the stories making headlines around the world. the number of victims from last week's earthquake, 87. the search continues for 35 people unaccounted for. the 6.4 magnitude tremor brought down an apartment complex, but cause limited damage elsewhere. architectser and two have been arrested, resulting in professional negligence resulting in death. south korea has evacuated its nationals in kaesong in the north. that is in response to a rocket launch as we can. those companies employ 54,000 north workers. they have tighten security along the border.
defense stocks surged on the news. the final occupiers of a nature reserve have surrendered to the fbi. they were the last holdouts of a the naturesees reserve in january. five of the group's leaders were arrested, and one was shot dead by agents. this is bloomberg news. if it was not obvious, einstein was right. scientists have proven one of his theories grooving the existence of gravitational waves. it should give astronomers a new way of looking at the universe. what exactly are they? ♪ say they detected for the first time ever signs of gravitational waves, a byproduct of seismic events in the universe, like the collision of
two black holes or a major star explosion, moving at the speed of light, these waves ripple out across the universe. afteriscovery comes decades of searching, and confirms the final prediction from our einstein's theory of general relativity, something the physicist put forward a hundred years ago. the discovery will help us to fully understand gravity, and even earn more about what happened in the big bang. rishaad: you can imagine social media and that twitter sphere exploding. what is that mean exactly? >> it's amazing, because you the globals see enthusiasm going across social media over a scientific discovery or a piece of news coming from the scientist. professors, academics, students, as well as your average buff weighing in and getting excited.
the chirping is the sound of two black holes colliding. gravitational waves don't actually make a sound, but that noise from that signature, that can be translated into an audio imprint, and that is the noise. rishaad: let's have a look at these quotes. president barack obama. >> politicians, business leaders , weighing in. let's bring the one up from the president. congratulations on to taking gravitational waves. this is a huge breakthrough and how we understand the universe. jeff bezos weighing in this well . expressing the sentimentality that #was started by a naturalist physicist at the
university of melbourne. that has taken off. videos on youtube, twitter, para scope, fine. periscope, vine. a lot of people chirping into the camera and putting it on the internet. rishaad: thank you. the reserve bank of india governor hitting back at claims that the country is drowning in bad debt. we will find out what this is all about when we head over to mumbai. ♪
rishaad: were going to get to indian central bank governor. he has dismissed claims that the country is awash with bad debt. what is he actually saying here? we've heard a lot of diversion voices on the bad news. theexample, we spoke with former chairman of india's largest bank. he says india is dismissing the efforts taken by banks to clean up talents sheets. probably hitting out at critics like cam and analysts raising concerns.
he ensures that the cleanup will continue. speak with all the biggest banks to get a handle on what has done -- has been done with the situation. total advances search to 14-year highs. the situation was reflected in the earnings of several of india's biggest banks. i want to talk specifically about sbi, which disappointed and less. year on year asset quality of the bad loan situation weekend on nonperforming assets, freezing nearly 95 basis points quarter on quarter.
it is likely that that situation is not going to ease any time soon. rishaad: thank you very much. that is it for this friday edition of "trending business". stay tuned for a friday edition of "asia edge". we will be looking at this global equities selloff and discuss that. that's coming up "asia edge" in, and your full market update. the yen soaring still. this is bloomberg. stay with us. ♪
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