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tv   Trending Business  Bloomberg  April 13, 2016 9:00pm-10:01pm EDT

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♪ is thursday, the of april. i am rishaad salamat. this is "trending business". ♪ right, visiting singapore, sydney, and tokyo this hour. pacific stocks extending its rally. the singapore dollar following the most in five months.
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the economy stagnated in the first quarter. the bank of japan governor remains totally confident his policies will work. told hiskuroda audience that there are many ways for further action. do let us know what you think. follow me @rishaadtv, include #trendingbusiness. greater china markets under way and half of power. singapore giving its verdict. here's david. david: when we do get that open and hong kong, we will see gains. let me take you around the world. marketsstellar gains, are closed. look what happened in u.s. 500ets, 1% gain for the s&p , levels last seen early december.
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brazil was up 2.2%, reflecting the rally across emerging markets, equities, and currencies. asia, where looking at green. japan, 2%. malaysia sing some downside. the equity markets in malaysia have not been playing ball. let's see what happens there. oil pulling back slightly. coming out of the central bank there, but the currency has seen a sharp move. aiwan underrating and overrating chinese, j.p. morgan.
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if we get to 132, we completely a race losses this year. event, 30 year bond auction out of tokyo, and chances are it will move the market. rishaad: thanks, david. having a look at the singapore dollar on the way down. the monetary authority unexpectedly eased policy to shore up growth. our eased asia correspondent joins us. good morning. how is the currency doing? >> not well. falling the most since november. falling against most major currencies. the morning, the first time gone to neutral outside a recession, which says a lot about its growth outlook.
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of 7% last year, the biggest drop since 1997. if you look ahead, the pain will not stop there. that is the sense we are getting in the market, economic and political shocks from china, plus prospects of higher u.s. rates, will weigh on the singapore dollar in the months ahead. gdp numbers were flat in the first quarter, stagnant growth, services down, expectations of business closures, and failing bank loans. singapore has been under a lot of pressure, feeling the effects of a global downturn. shut thenesses were open in december as well as february. bank loans have declined every
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month since october, the longest in 16 years for declines. bracing for a very tough year ahead. rishaad: thanks for that indeed. the boj hasnt of been defending its stimulus program, saying it will eventually work. governor kuroda was speaking in new york. what else did he have to say? >> talking up central-bank policies, and this comes as one abe's advisers is calling for support. he doesn't see a technical limit for now. he underlines that the central bank want hesitate to add stimulus as necessary. quantity, quality, and interest
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rates. some japan watchers see the boj as running out of ways, but governor kuroda says there are many ways for further actions. inflation is not a choice between monetary policy or growth strategy, both are necessary. in this context, the government initiative to enhance japan's is of vitalwth importance. addressnor kuroda also negative interest rates and the impact on banks. cutaid negative rates don't profitsofits -- bank excessively. he says it is not aimed at the currency markets and is not the cause of the yen's gains. thanks indeed for that.
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we will have a detailed look at that story later in the program. tweet us your thoughts at @rishaadtv, include #trendingbusiness. the u.s. banks earning season, let's have a look at that, as well as some other stories. good day for j.p. morgan, shares jumping more than 4% in new york, the best performer on the dow after reported earnings that beat estimates. $5.5 billion, while revenue was $24 billion. first-quarter profits got a boost from trading in march, lower compensation and legal costs, and strengthen retail banking. trading revenue declined less than expected, and a bank said a slump in january and february eased in march. j.p. morgan could see regulatory challenges ahead. u.s. regulators announced that the bank as well as four other
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institutions had failed to credibly show how it could go bankrupt without bringing down the rest of the financial system. the banks have until october to revise their living wills. another failure would have real forcingl consequences, them to hold more capital or face of the restrictions. sources are telling us that senior staff is being cut at .apan's biggest brokerage it has not been profitable and its overseas businesses since 2010 and is planning to close operations in europe, cutting senior management jobs in high yields and asset-backed yields divisions. it plans to shut down its equity sales and research. but saided to comment, it would get details when it reports earnings on april 27. global investment banks are also
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cutting thousands of jobs. struggling investment fund says it may be the victim of it $3.5 billion fraud. aat is if payments into sovereign wealth fund never reached their destination. authorities from switzerland to the u.s. and singapore are trying to determine if some of the billions of dollars that were raised were siphoned out inappropriately. 1mdb amassed more than $12.9 billion of debt over six years. story, awell, another filing mayke merger include real profits. have a look at it on
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bloomberg.com/asia. japanese researchers want to teach artificial intelligence how to read. japan and latin america switching positions. we will talk to the director of quantitative research win "trending business" continues in two. ♪
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rishaad: you are back with "trending business". holding ons clouds the horizon and has issued a warning about rising debt and weakening growth. we have more from new york. the sound of alarm from the international monetary fund. it is warning of a possible spiral of falling growth in part because emerging markets are hurting. the imf says fiscal deficits are expected to be bigger than
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during the global financial crisis. some of the reasons include low oil prices for countries that depend on oil for their of economies, a cooling in investor sentiment, and rising geopolitical tensions that make people nervous. it is not all fear coming from the imf. there is some hope, and that could be from china and more stimulus. take a listen. >> countries around the world face very different challenges. no one-size-fits-all. so all countries will have two follow growth-friendly fiscal policies. all countries will have to build , butient public finances all countries would have to pursue smart fiscal policies. that is, fiscal policies that are well adapted to the
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particular circumstances of the country. >> it's not just emerging markets that has problems. the imf is says developed well, --re as developed economies are as well. for example, like in japan, the imf once developed countries to ramp up government spending or to cut taxes to encourage consumer spending. in particular, the i'm of pointed to japan, saying it should increase stimulus to balance out the raising of its consumption tax. would be ad brexit shock to europe and the rest of the world. looking ahead, we will see what comes out this week as policymakers meet and washington, d.c. for the spring meeting of the imf and world bank. well, fund managers have been getting out of japan
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at a significant rate. where is the money going now? great to see you. getting out of japan and going to latin america? that is the trend you are seeing. >> that is what we are seeing. our views are shaped by the flows and allocations we track from 70,000 mutual funds and eds. the end ofince january, foreign investors are flowing out of japan and somewhere else. the local investors are remaining in japan, but that foreign investor flow has been enough to drive japan to the bottom of our regional strategy index. , latin americae has moved to the top of that index. we have seen historically significant positive inflows into latin america, led by brazil, but supported by almost
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any other country in latin america right now. rishaad: is that because brazil had gone down so much given the political crisis we have been seeing, which is seemingly coming to a head now? offlows are an indication the man, so the sentiment in brazil right now is more positive than it has been. we have the prospect of real change about to occur there. is that enough to bring the region from the bottom up? maybe not. rishaad: it would certainly give the region notice. >> if you were a fun major and had made that allocation in january, you have been richly rewarded for that move. rishaad: the money leaving japan is precipitated by them going into negative rates. >> japan has been a quantitative easing play for the last two and a half years. athink right now we are in low.
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we are not sure how much we will get, if we get anything at all. i think foreign investors, the ones most liquid, are voting with their feet right now. rishaad: the market has gone up a fair amount as well. were not going to get more juice here, let's get it where we can. >> i think they are. latin america is one opportunity. the sentiment has increased significantly there. so, yes, we has seen significant outflows from japan. rishaad: what about emerging asia? is there money going there as well? we've had a lot of people talk move into emerging markets from developed markets. 2015 did not treat emerging markets well. we saw that trend shift three weeks ago. up about 3-4oved
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weeks ago. where is it going? emerging markets, etf's, latin american regional funds. i think investors are a little bit nervous. the fund allocation data is showing these investors are boarding china and asia in general. rishaad: why do avoid -- you avoid china? >> not a lot of confidence there. at the end of the day, were measuring sentiment and demand as shown by the dollar amount moving in and out of etf's and funds. what were finding is regional funds are underweight china, and have been so for quite some time. that trend has been accelerating past few the
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months. rishaad: how is europe these days? top of a was at the regional strategy index going into december and early january, so in terms of flows into they were doing quite well, but that has slowed down. they haven't gone phone negative yet, but they have leveled off at the moment. rishaad: and the u.s. itself currently? it does seem like maybe we do have some momentum building up when it comes to the economy? >> we do. it is axing number two behind latin america now. -- it is actually number two behind latin america now. rishaad: thank you so much for joining us. at some of theok stories making headlines around the world. the chairman of south korea's
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ruling party has resigned after failing to win a majority in parliament, confounding pre-election predictions of big gains. seatsrty should claim 122 in the 300 member nationalist assembly. the party failed to sway voters and the country has seen unemployment and slumping exports. citizensf taiwanese deported to china have arrived in beijing. they were arrested on suspicion of wire fraud and phone sc ams. taiwan demands that they be returned, but beijing rejects that, saying it has jurisdiction over the island. world's highest profile cri matches must be
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the other three matches in mumbai. the water shortage is so severe that hospitals have had to cancel operations. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. right, coming up, the commodity trader noble says it is making changes to boost its bottom line. we have an exclusive interview with its ceo right after this. ♪
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rishaad: you are back with "trending business". i am rishaad salamat. but 2016 hasicnic, been a rough year so far for noble group. his credit rating was cut to junk as it struggled with the commodities route.
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noble chief executive spoke exclusively with us about his recovery plan. >> the markets are difficult. is behind us is just not realistic. come in every day, do her job, focus on the business, and deliver results. the markets and our investors will judge us. >> what you looking to do? had three core principles of our strategy, and they haven't changed for the last three years. corporate support number one was to refocus the firm back on its core competence. our core competence for the last moving physical commodities from the producer to the consumer and manage the market risk a, credit risk a, and operation risk. we do that well. were we don't do as well is as a steel producer or power producer, so the first strategy
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was to refocus on that. if you look act five years, 45% of our asset base was in mining and a culture -- and agriculture. today it is 2%. the second was to diversify to more consumer related commodities. andn needs to be smaller nimble, how would you get there? are you where you want to be? >> i think we are where we want to be. we have gone back to being asset light. we are focused on our oil business, power and gas business, so we have a balance between industrial commodities and consumer commodities, and third we are more geographically diverse. five years ago, 42% in china. today, the u.s.'s largest in china, so we have a much more diversified business, so those of the three core strategies. >> you said the elephant in the room is financing for noble. where are you in this? the dealst talk about
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that were working on until they are done. what i can say is over the last 13 months that our core stakeholders, banks, shareholders, interact with us every single day, they understand the balance sheet and business has continued, and they are supportive. that is an indication of how the financing is going. rishaad: the noble ceo speaking exclusively with bloomberg. in other news, chinese buyers hungry for real estate in canada. the chinese property search engines saying inquiries about canadian homes have surged by 130%. has sent property prices in canada to a record and shows mainland investors are still moving money abroad to besides beijing's clampdown on capital flight.
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the new zealand carrier said it was thinking of selling at stake , singapore air faces virgin decision. coming up, a market roundup and more. ♪
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a look at our top stories, the global stock rally rolling a line in the asia-pacific, the regional benchmark unknown track, extending gains. jp morgan's earnings topped estimates. some assets fall. singapore dollar dropping after the monetary authority said it will no longer seek currency appreciation. singapore's economy was stagnant , thee fourth quarter
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services side shrank, and bank loans decline. the boj governor saying japanese financial markets would have then worse off without negative interest rate policy. governor kuroda has been speaking in new york ahead of the spring meeting. he says while the inflation trend is improving, he won't hesitate to add stimulus in three dimensions, quantity, quality, and interest rates. breaking news, the latest employment figures crossing. let's get straight to paul allen. have we as you just surprised as we almost inevitably do? the unemployment figures have delivered another surprise, 5.7%, much better than 5.9% addicted by the market, and an improvement from february results. if we break the numbers down,
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jobs created. created,rt times participation holding a 64.9%. the expectation had been that it would improve to 65%, but holding steady there. dollar, it hashe improved slightly on the back of those results. to recap, unemployment for march better than expected, 5.7%. rishaad: thanks for that. that's get some reaction when it comes to markets. have a look at the aussie dollar.
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paul was talking about that slight improvement. let's wait for this to get into the markets. the headline number beat expectations. median, thehe highest estimate was 40,000. if you break it down, it was down to part-time work being created. markets, asx 200 was on the way out before the report came out. a very heavy session today. credit data out of china at some point today over the next 2-3 days, according to the schedule. now, have a look at this.
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equity markets looking like this across the region. we are up, extending this global rally. have a look at what is happening in hong kong, 1.4%, the seventh today in a row that we are looking at gains in hong kong. two reasons, first, the last time we saw a string of wins this long, it was last year during the frenzy that to the index up to 28,000, if i remember correctly. we are still way short of that at the moment. theseas pushed a lot of shares 25%. i would imagine at the moment more than that. you take the index, the portion of stocks or members of the index are overbought. something to keep your eye on. j.p. morgan out with their new strategy. china,e overweighting under waiting different parts of taiwan.
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the risk premium they say is falling as the fx reserve stabilize, and also looking at the real economy, high eps growth companies. 1.4% hang seng. overall, we are very close to completely reversing all the losses for 2016. known in chinese investment circle simply as the king, armed with $500 billion in state money, it has been unknown, at least until now. have had this disrobing of the king, i suppose. >> we are peeling back the robe to see what their investment strategies are. were getting these new mandatory disclosure rules that are for the chinese companies in their annual reports, and we can see where their shareholdings are.
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when the market crash last year on june 12 and over the summer, we had a lot of state-mandated lying, and china securities finance is known colloquially in china as the king, because many copycat investors try to guess and anticipate where it that state-mandated money is going and try to catch the tailwind. those of the bulls. the bears on the other hand try not to bet against the state, so a lot of people have speculated to the health on what csf is doing. now we kind of know where it is investing. 500 billion dollars, armed by the state to invest. the biggest increases in the fourth quarter with these companies are top 10 holders in companies in china, so they are quite pervasive in the market now. bank of china was the biggest ,ncrease in the fourth quarter the stock has been a dog, but rose 2.2%.
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dog is my technical term. fuyao has been a dog as well, but in the quarter that the king invested, 24% up. basically they are going for banks, which is not too much of a surprise, even though they have been terrible performers. andstate-owned enterprises the big rail operator, consumer oriented companies. they have basically taking on big state owned companies. rishaad: is this state-mandated stock eyeing? where they go into penny stocks? >> where they could get much bigger returns or bigger losses
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as well. no, they are not, according to disclosures, going into penny stocks. they're looking at stocks with a return on equity. up 50%, that's double the shanghai composite average. they are looking at stocks with good valuations. pe is four times higher than that of the shanghai composite, so the not going into those riskier stocks. rishaad: thank you very much indeed. let's take a look at some other stories. bank of japan governor talking up policies to boost growth in new york a short while ago. governor kuroda says his country was short of its conflation target with its quantitative easing program, coming after one abe'sime minister advisers called for stronger action. >> let's take a look at this chart.
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we are looking at the topix against the yen. since abenomics was put in the place, what we see is the topix rising 80%. if you look closely at this year, where the yen has been strengthening, we see the impact on the topix right away. as the yen strengthened, gaining more than 10%, suggesting monetary policy isn't quite working as it should. it is supposed to fall after negative rates were introduced at the end of january. 2013, 2000 14, when it was boj stimulus, the yen did tumble. be some disconnect between what is supposed to be happening and what actually has been happening in reality.
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this index shows what this is sentiment is. in 2013, it is not entirely clear from the chart, but it flips above zero and remains there. that is partly the result of the weakening yen, but at the beginning of 2016, it has dipped quite substantially compared to , or have suggesting that confidence and abenomics is running out. thanks a lot for that. indeed, with the yen's recent rise expected to mean the biggest drop in corporate abenings since shinzo came to power. it is another problem here for abenomics? is, corporate earnings had been a bright spot for abenomics, defenders of the
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programs and policies had been able to point to that as some small sign of success, even as deflation continued, even as capital expenditure was slumping. they were able to point to those rising earnings as a sign that policy was on the right course. now that is off as well. as we've heard from your reporting, abenomics is going back to the drawing board, looking for additional stimulus, etc. the stronger currency undermines abenomics in several ways. the company's ability to invest in capital expenditure. that has been off, surveys show. it also increases deflation or makes deflation a bit stronger by lowering the prices of imports. all of this undermines abenomics and has the administration
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scrambling for new policy to get growth going again. rishaad: what do these exchange rates mean when it comes to earnings as this year progresses? >> well, one focus for investors will be earnings reports coming out in the coming weeks. companies will be reporting many of them fourth-quarter earnings, and in addition, making full-year forecasts for the current fiscal year. those are expected to be quite conservative. when japanese companies typically do is based their forecast on a very strong yen, projecting further strength ahead for the yen, meaning those forecasts will be significantly typicallybably even for many companies below what analysts are projecting. that creates downward pull long stock prices, then as we get into the second half, should the yen flatten out and there be less volatility in the currency, you would see the opposite effect where companies it would be beating their targets, and
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that would be a help for earnings as well. rishaad: thank you very much. joining us from tokyo. we have to take a break. in focus. sharp is this brand were saving? "trending business" examines that right after this break. ♪
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rishaad: right, we are back with a look at stories making headlines around the world. a qs russian has warplanes of staging a simulated attack on one of its destroyers in the baltic sea. the two su 24's of. unarmed, but buzzed the carrier 11 times, coming within nine meters. the destroyer was in international waters. 18 people were killed when a train collapsed at a construction site.
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the crane fell onto oh workers doma tory in the industrial -- workers, tory in the industrial city. the world's first brain implant has allowed a quadriplegic man to regain some use, allowing him to grasp objects. researchers say it is the first time a paralyzed person has regained movement just through their thoughts. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. drawn out pursuit and acquisition of sharp has obvious benefits for foxconn, such as access to sharks screen technology. is this a brand worth saving? thank you for coming on.
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they bought sharp. they have this prize. what does he do with it now? depends on what their strategy was initially when buying this brand. if they are hoping to create a brand that can compete with the or samsung, i think that will be a hard road. sharp is in developed markets, certainly in the u.s., a brand very much -- a sunset brand, so it has a customer base with over 65, diminishing income, where as samsung and apple are famous for the 13-year-old -- 30 ural generation and people with high disposable income. -- 30-year-old generation and people with high disposable income. rishaad: how do you do it then?
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toolsre are a number of and techniques you can use. to greatto get back products, and most importantly great customer experiences. this is the one thing we wrestle with a lot at the moment. sharp is now about what you do, not what you say. you cannot think that advertising will transform their fortunes. rishaad: i think you guys are talking go big, go home is not the strategy. >> there are a lot of ways you can play it. sharp is a japanese brand, and overese rands the world still have a good perception for quality electronics, particular the emerging markets. it may the a smart move to try to focus that brand on emerging markets. will be the future of
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consumer society. how do you position your self to do that? what are the mechanics to get to that and appealed to a younger audience, and more affluent audience? back to whatcomes you do, not what you say. sharp has to move the brand into categories that you and i would want to talk about. , littleesolution changes, upgrades to printer technology, that will not cut the mustard. you talk about wearables, virtual reality, cool, emerging technologies. they have to into the conversation with the consumer. rishaad: you are liking this to intel inside --
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inside, like that? do a lot of things at the moment, but what they are fantastic at is screen technology. if they double down on that, they become the supplier of choice and build a reputation around amazing screen technology. in different partner brands, like xiaomi and others. rishaad: looking ahead, it you are saying-- this is the company responsible for the first mechanical pencil. >> yeah. what is amazing about these guys , they have a huge history of innovation. one of the reasons they have oft their way, a number reasons, but primarily because they have moved away from that and forgotten how to innovate. they have not focused their attention on that type of work. that's going to be critical for
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them getting back to that. with theat will happen foxconn relationship and help them to do. rishaad: too many japanese brands in this consumer electronics space? everybody gets labeled as effectively the same. of japanese a lot brands, and one of the issues they face is the way that japanese society works. they have not been looking enough at the external world and different technologies and how they might appeal to new emerging consumers. rishaad: thank you. we have to move to what is going on in india. another city getting a new name. reaction to it has not exactly been positive. not the response you want. delhion the outskirts of and will now officially be
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named. the meaning is not change, but the state government chose to revert to the full version of ,he name from ancient sanskrit which is said to have been distorted over time. residents mock it as pointless and eight waste of time. this is not the only city which has changed its name over time. , so it bombay, bangalore has prompted commentary on social media. variouson saying things.
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another person mocking the name. thanks indeed. right, up next, artificial a boardence winning game is impressive enough, but nice -- meet the system that can understand japanese,. ♪
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rishaad: you are back with "trending business". artificial intelligence has come a long way. a tokyo startup is taking things to a new level.
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tell us a little bit more about this. >> what you often hear about is the front tears of artificial intelligence, but what we have here is a real-world application. identify japanese with 100% accuracy. japanese and chinese are notoriously difficult for optical character recognition. 1.2 meant hand coding million documents a year, which is why they turn to ai for a better solution. rishaad: i think i was reading about this. what makes is really interesting is that the engineers who built the software don't actually speak japanese themselves. how did that happen? >> that's right. i met them myself. they can barely string a
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sentence together. rely'sst people don't about deep learning is that domain expertise is not a requirement. with newer on networks, tell them what kind of output you desire, and they figure out what goes on in between. a team can then move on to medical records or traffic congestion problems with the same number of people. rishaad: so the question is, has artificial intelligence gone from hollywood sci-fi into a daily topic in the news. i think it is a new phase. we have cloud computing accessible to everyone. byls released for the public facebook and google. i would expect ai turning up in more on explicit -- unexpected
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places. rishaad: thank you for that. coming up in the next hour of on theng business", more political and economic relationship between australia and china. ♪
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♪ >> from our studios in new york city, this is "charlie rose." charlie: we begin with politics. house speaker paul ryan ruled out a 2016 presidential bid at a press conference today. the announcement comes after weeks of speculation he would accept the nomination at a contested republican convention. addressing the republican national committee, speaker ryan said delegates should choose someone who participated in the primaries. >> count me out. i simply believe that, if you want to be the nominee for our party, to be the president, you should acty

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