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tv   Trending Business  Bloomberg  August 17, 2016 9:00pm-10:01pm EDT

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♪ it is thursday, august the 18th. i am rishaad salamat. this is "trending business". ♪ sydney and beijing, just some ports of our call. no relief in sight, exports declining in japan more than anticipated in july. imports also falling heavily. quite a different story at
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quarter profits beating estimates. let us know what you think of our stories. follow me on twitter @rishaadtv, use #trendingbusiness. market action. david: the picture looking like this. stocks under pressure, limited upside to markets. , aan getting sold off function of dollar-yen strengthening. that is where we are at the moment. looking at all these external headwinds for the country, it is easy to understand why $60 billion have been pulled out of this market. it doesn't stop there, so we will continue to track this. china, jobs out of
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out of australia, philippines gdp print. the yen complicating matters on the trade front on the heels of second-quarter gdp missing the mark, the economy struggling despite the massive monetary and fiscal stimulus in place. it is an ugly set of numbers, isn't it? pretty woeful data from japan, exports struggling, imports as well. ,xports for july falling 14% the 10th month of contraction. the worst fall in seven years. overseas shipments to the u.s. falling of 11.8%. , down 6.5%. the eu
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down 12.7%, the fifth month of declines. we started the year with the yen at 120. we are now almost breaking 99. warning ofporters the strong currency crimping profits and weighing on demand. sayingrgan securities the week july numbers were down to sluggish demand rather than the yen effect. take a look at imports, contracted for a 19th straight months, 24.7% decline. this was the biggest fall since october 2009. billion, japan trade surplus booming. this comes on the back of an economy reporting flat growth, weakness and domestic
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consumption, leaving the government with fewer drivers for growth. meeting, under increasing pressure to ease more and do more. rishaad: we get back to the currency picture. let's find out more. thed: we are looking at yen. , i amolid, very clear calling this the road to perdition for abenomics. is a function of a safe haven demand, and a reversal of trade flows, lots of demand for u.s. dollars in japan. clearly we are hitting the psychologically important 100 level. where do we go from here? let me just adjust this. here we go. thank you. have a look, first support would
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be the low two days ago, which is there, august 16, 99.50. below that the post-brexit low. i will adjust this very quickly for you. look at where we fell 99.02.00, 90 9.0 some emotive as saying the dollar is cheap and might spur demand in japan. intervention might be enough to support, the bank says, but down side risks abound. that is where the path of least resistance is. you have that. natural inclination
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of markets to get into the yen when things are uncertain, and you have trade flows where people by u.s. dollars. that said, you look at the non-confidence from equity wfii is the function.e have a look at asia. the only market substantially that has managed to push away foreign money, $60 billion of net portfolio outflows. s you that some people have given up on the japanese equity markets at least for now. rishaad: we will be keeping tabs on lenovo with the hong kong open.
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blockbuster numbers. first profit beating expectations handily. what was behind it all? juliette: it was driven by lenovo's new motorola smartphone model. demand for those outstripping weakness in lenovo's personal computer sales. first-quarter net income rose one hundred 73 million dollars, the market looking for $111 million. overall sales down 6.2% to $10 billion, also a beat. earnings per share beating $.16 per around share. have a look at some business units in detail. first-quarter mobile revenue narrowed, down 6%, $1.71 billion. pc sales down a further 7% to under $7 billion.
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sales in the data center business an increase of 1%, just over $1 billion. that unit reporting a loss of $31 million. makerrld's biggest pc introduced new motorola handsets and stepped up investments and cloud computing and ai. smartt say the upcoming with augmented reality capabilities may help to continue to revive its consumer business. thatalyst wrote in a note a believe that there is a path for lenovo to achieve margin expansion and earnings growth. lenovo shares fell ahead of the earnings result during wednesday's trading, down 1.7%, year to date down over 30%. anr functiont the on bloomberg, 12th buys, six
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sells. thank you for that. let's have a look at some other stories we are keeping tabs on. paul allen has a roundup with earnings in sydney. in amp way down by its life insurance division. the insurance and financial services provider will pay a $.14 per share dividend. delivered net profit of 426 million australian dollars, in line with expectations. higher market activity was
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driven by secondary capital raisings. it will pay a final dividend of $.99. it is the first set of results under new ceo dominic stevens. treasury wine, revenue grew and all export markets. the purchase of the wine distribution business will drive low single digit growth and 2017 and pay a 12 sent dividend. origin energy, full-year earnings falling 41%. a net loss of almost $590 million, weighed down by week energy prices. origin will pay no dividend and cost estimate of its lng plant to $26 billion. that are some of the results we
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have had from australia this morning. rishaad: right. to the could strengthen mid-90's before easing off, and perhaps even a sizable bounce. on boj get to take policy and how to play the markets. looking at emerging markets opportunities. this is bloomberg. ♪
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rishaad: you are back with "trending business". emerging markets stocks may be losing steam. our next to guess says emerging markets offer the greatest value. usually london, but today joins us from singapore. let's start things off with the
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basis of your thinking here. first of all, we are in an environment of extremely compressed global developed market bond yields. two thirds of the japanese bond market offers negative yields, more than 50% of all debt in the eurozone are offering negative yield. 5%rging markets bond yields, for foreign currency denominated debt, 6% for local currency, they will look very attractive. ok, so it is a broad church. where do you look in particular? what countries and what sort of debt is best? in this environment, you are looking for high yield, particularly where we feel fed hikes will be extremely gradual, if it all. comfortable with where
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current market pricing is at the moment. you want to be looking for countries such as brazil, russia, indonesia. if you look at brazil, on the local debt market, you can get too close to 11% for yield. if our expectations are correct for bond yields going forward, you can be looking at double digit returns when you account for yield compression and the pickup in kerry. rishaad: you say the pickup and carry, but what if the currency goes in the other direction as well? do you recommend hedging? hedgingn't recommend for countries where the yield curves are relatively flat or inverted, of which brazil is one. heart of the reason we are comfortable with brazilian local debt is that we are comfortable with the currency. deficit hasaccount
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gone from 4% of gdp to closer to 1% by the end of the year. the political landscape has changed. we expect the impeachment of doma rue saif to finalized within the next month. - of doma ruth saif we would not recommend hedging in the case of brazil or russia or indonesia. in all three countries, we are comfortable with foreign currency denominated debt as well where you don't have currency risks. rishaad: you believe the are better than most people think, right? just about a yields story and a hunt for yield. tooamentals have received much negative press over the past few years. balancesok at external on the current accounts size, we have seen a significant improvement on average in
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emerging markets over the last few years. despite emerging markets having suffered one of the worst trade shocks of the last fee years due , even a lotl prices of exporting countries have remained surprisingly stable, so we are relatively comfortable with the fundamentals. the one area of weakness remains growth. particularly in a context where china is expected to continue to , i think it will be difficult to see a sharp pickup in emerging market growth. nevertheless, it is interesting to note some of the green shoots we are seeing. the latest manufacturing pmi numbers for july are showing us being in expansionary territory across emerging markets for the first time since 2015. the july numbers capture the first full month after brexit
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rishaad:. rishaad:what happens -- rishaad: what happens when the fed raises rates? how does that change the landscape? >> we had thin asking that question since 2013. then extremely cautious, extremely gradual. we don't necessarily inc. the ed has reached the end of its tightening cycle -- the in the -- the fed the path of rate hikes will be gradual, including emerging markets, to be able to absorb the shock. at how emerging market assets, including on the currency side, react to increases in u.s. rates, we are seeing an increasingly less negative response from emerging .arket fx
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that bodes quite well for the asset classes well. rishaad: great talking to you. right. got to take a break, but catch our exclusive interview with the boss of china's biggest office , we will hear from soho china. this is bloomberg. ♪
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rishaad: you are act with backnding business" -- with "trending business". 10 send coming out with good numbers. coming out with good numbers.
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at soho china, a massive 340 4% surge in first-half profits. first-halfge in profits. company has been riding a wave of asset sales. >> we are taking advantage of the current market. a lot of instance to touche institutions are holding cash. what are you going to be funds?ith those bonds -- >> we will pay special dividends. >> fascinating.
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about the numbers, revenue. decided to dost the share office product, it was a new phenomenon that came together with the shared economy. uber, homesxis like we were looking at what is the share office. around and thought share office will probably work in china. opened one center in beijing and one center and shanghai a year and a half ago to test the market and how people respond. encouraged by the warm welcome by the market, so todecided three months later
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do it and all of our buildings. established 16 centers, 16,000 seats in pretty much every district of beijing and shanghai. that mayave learned is be some of the multinationals or fortune 500 companies would always have some of their staff and colleagues who are on the road and need short-term office, and some of the freelancers might need an office. this is like a community of freelancers. you know what? none of those companies came and none of the freelancers came. just the style. who are the people coming into the offices?
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they turn out to be the high-growth internet companies. rishaad: zhang xin on daybreak asia. speaking to a dominant player on this edition of high flyers. property guru has 14 million users. how technology plays an increasingly important role. >> in the future, people will do all searching online and view using online virtual reality to look at properties. they will probably book of the viewing online. go into the house through some , by thesmart device property through crowd financing. technology will play a very important role. more at you can catch
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6:00 p.m. hong kong time, 8:00 p.m. in sydney. , this is thekorea equity position when it comes to them. it is about the yen a breaching that 100 level, strengthening to 99.50. under 99i 225 16,006 99 0,006 under 99.86. x, down by one third of 1%. auction, aremarket gain of 1%. the futures contract reflect the a strong start to the session in
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hong kong. china property prices, bringing you them as soon as they cross the terminal. this is bloomberg. ♪
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♪ rishaad: we have the yen climbing back through 100, the second time that has happened. the dollar faltering, the fed minutes revealed divisions over a rate hike. strategist at morgan stanley bank of america see the yen extending this year's 20% increase. weighing yen strength on stocks, exports fell for a 10th straight month in july.
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weighing, falling almost 25%, a trade surplus of $5.2 billion. lenovo shares set to drop, up 4% premarket. cost cuts and demand for new motorola handsets. it's upcoming smartphone may also help to rid knife lenovo's consumer business. revive lenovo's consumer business. what we have in sydney? unemploymentian to 5.7len unexpectedly in july. the market had been expecting 5.8%.
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26,200 jobs created. at full-time employment, 45,400 full-time jobs lost, the difference came from part-time jobs, up 71,600. inevitable questions about the quality of employment being created in australia will be asked to. the participation rate held steady at 64 .9%, but look at the aussie dollar, climbing strongly in the wake of these results. it is not surprising to see this one move the aussie dollar. surprise,s of july a unemployment rate falling to 5.7%, but most gains from part-time jobs. rishaad: this number is just impossible to predict. breaking news from china, latest property prices, tom mckenzie in
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beijing, some signs of stability. is the july line china new home prices rose month on month in fewer cities, july versus june. the month on month price rises were up and 51 cities that the national bureau of statistics tracks. to june, that number was 55, so fewer price rises in fewer cities in china than june. then, year on year, prices rising and 58 cities year on year. this is not including affordable homes. existingt shanghai, home prices up 2%. prices rosejuly, 1.6% month on month. marginal gains, but second-tier
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among the becoming cities that have impose curbs on properties trying to rein in prices. it more difficult to people to put down a deposit, increasing the amount of deposits to slow price rises in second-tier cities. that follows on from measures in places like shanghai and shenzhen. between a divergence first and second-tier cities and third and fourth tier cities, where there is often a glut of properties. we have seen the money supply data that came through for july coming in at 10.2%, lower than expectations, new home loans expected to be a part of that, coming off according to analysts , so that no doubt feeding into
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these numbers we are getting on house prices here in china. looking at the developers, despite a marginal slow down, there are still opportunity, but eagerly for developers focused on first-tier cities, and developers here in china have lower valuations than they have historically, and some of them pay out healthy dividends, so there is still in best or interest in china's developers, depending on where they are position. demand in the top cities is there, but slightly lower in july, fewer cities seeing price rises than in june. ,ishaad: we will get reaction also, aussie jobs data, but most in the year,
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lenovo up 4% at the moment. let's have a look at home prices and how they are playing out. 1%.d: we are up a 10th of ys have pickupla since the data came out. , 12%hai, new home prices increase from last year. that is more than 10 times the yield instead of the u.s. 10 year. not apples to apples. 31 out of 27, so a split between the two. , aussier piece of data jobs, notoriously unpredictable and hard to forecast. a little spike in the aussie up .50%up .25% -- rather.
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it takes us back to levels this time yesterday. the big earnings that investors are reacting to an hong kong, and that's why markets in hong kong are up. have a look at tencent, heaviest weighted stock in hong kong, three point 6%, it was up as much as 6% at one point, record earnings for the company. in fact, this should make tencent china's largest internet company. i'm doing some rough math in my head, but that should put $.10 head far as market cap is concerned. ping up 3%. quite a beat for lenovo. up overall, like this come apart from hong kong of course.
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are looking at mostly downward pressure, especially in japan with a stronger yen playing a part. there we go. pacific earnings yesterday disappointing as well. top of the hour, philippines gdp, flat at the moment. rishaad: singtel buying shares 41 $.8ndian telecom billion. this forf a deal is the china and indian mobile markets? >> singtel estimates that all told this gives them access to about 380 million users. they are also pointing to how fast growing these markets are. these are markets where there
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are hundreds of millions of users shifting to smartphone use . that generally pushes update to use and is a profitable deal for carriers in those markets. will this contribute to price competition? >> that seems like a lightly outcome. they have been engaged in a prolonged price for. you have a number of carriers in that market, very low margins, a battle of attrition. bharti to do is globalize the company so they have assets across south asia, singapore, africa, and it means they will rely less on
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short-term profitability in the indian market. they can play a longer game there and cut prices a bit more and outlast a new rivals, so it is likely to do that. rishaad: thank you very much indeed. right. a look at some of their stories with opec's achieved saying a freeze in production is likely when the cartel meets next month in algiers. leading members are already pumping flat out. reachedment can now be as members are approaching maximum capacity. 800,000 barrels a day, increased by next year, so it would have been better before, but it is never too late, so they will probably do it this time and it will be good psychologically for the market. all the conditions are set for
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an agreement. the boj may be reaching limits of its stimulus as the country's biggest bank close to running out of government on's they can sell. -- government bonds they can sell. toughf japan may have a time to find sellers close to their collateral level, many diversifying to limit losses in case interest rates rise. south korea's environment ministry widening an investigation to all foreign car brands. 23 brands will be investigated on suspicion of fabricating emissions test results. the environment ministry has already banned the sale of models. china hitting out at australia, saying the decision to block the sale is protectionist.
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the move would hurt incentives for corporate investment. they rejected attempts to buy ausgrid for national security reasons. right. up next, analyzing the latest austrian job numbers. also, what is next for the yen? this is bloomberg. ♪
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rishaad: employment data out of 13 minutes ago, 26,000 jobs added in july. what does it mean for interest rates? for joining us today.
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it let's have a look at this number in more detail. it surprised again, and in fact, it is surprising that it is surprising. >> good point. you have to look at the devil in the detail. a big drop in full-time employment and a big rise in part-time employment. behind that good figure is a flip around from full-time jobs two part-time jobs, hence the market reaction has been muted. this data series is in doubt in general. has hadau of statistics a lot of problems with the labor force statistics. the credibility on some of the data series has to be put in doubt. if you are creating that many part-time jobs, i guess the ocean in a economy is not doing quite as well as
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thought. i guess the rba will look at that and realize it is not great news. people are saying they have been trying to push the currency down, and it is not working and demand for australian dollars is high given the carry. i think that's where we have been looking at where the aussie 78-80, wem here, could see a crack up in the mid-80's. a look atet's take what happened with the fed, another message coming through after that weaker inflation number. are getting a lot of fed presidents from various districts contradicting each other. what picture for you has emerged
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from all this? >> i think if you look at the minutes, it was clear that they have no urgency around hiking thes, despite the comments previous day saying september is still on the books. we don't think so. we don't think 2016 is on the books for a rate hike. theou look at the minutes, majority said they feel inflation is in check and despite the increase in it is not impacting prices, and therefore no urgency to hike prices. rishaad: right. the rba does not see an appreciation of the aussie wantr, and tokyo don't further appreciation for the yen, but you say there will be more. corneredk they will be in terms of intervention and
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being able to move the yen back down or depreciate it. that mid 90's,s and therefore you will be watching boj to see what they can do. it really is impacting them. i don't see a big change in direction for the yen. we think the dollar indexes reaching the bottom of its range. the dollar has fallen 5% over the course of this year. what, 95 or well, thereabouts and then a sizable bounce? what kind of timeframe are we looking at? underht now we are just 100 and we will see movement around there, but if we get a break out towards 95, we will see intervention, action, and based on the technical levels, you will see buying on
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speculation. rishaad: let's look at volatility. how is that faring at the moment? we have been in the doldrums with boy them thin. -- with the volume thin. thehinese stock market on 24th, the world was over last august. this august, we are getting a normal summertime run in terms of volatility. it is quite low in relative terms. it does not necessarily suggest things will change over night, but with volatility this low for this long, it is an opportunity to buy rather than sell. rishaad: how about equities versus bonds? equitiese looking at for yield and bonds for price appreciation. it is a topsy-turvy world. >> it is indeed.
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bonds for capital and buy equities for yield instead of capital growth, so a big flip , bonds still relatively attractive because of accommodating policy and capital gains. conditions,erbought but if you are in equities, you are probably not selling them. we are not seeing any big breakouts and equities, but also no real reason to sell them at this stage. great to talk to you. let's have a quick look at the latest business flash headlines. up. income alla life in china pacific have forecast lower profits. says a number of factors are helping it to buck the trend. >> we have contributions from
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our insurance businesses, asset ourgement businesses, and revenue is very strong. grew 9%.ity these were key drivers driving the growth. cisco shares on the way down in the extended session, cutting 5500 jobs, 7% of its work force, the savings mccloud andn profi connected devices. hyundai motors president saying his company is in discussions with google about further partnerships. they are the most aggressive adopters of car play. shunned the move
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into autonomous or electric vehicles. let's have a look at what we have got on the way. airlines going above and beyond to attract foreigners with experience. we have details on the way. ♪
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rishaad: you are back with "trending business". its firsting non-convertible bond to sail in more than three years. the company is trying to repaint offer 3-10 it may years securities after posting a profit in its first quarter. from playstation and software sales, which doubled. said to be keen to
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merge sprint with t-mobile. softbank shares dropping the most in a month and tokyo. rocketing demand for air travel. that is the case in china. it doesn't mean carriers are running short of trained pilots. hire 100 a week for 20 years to meet demand, so they're offering skyhigh packages for foreigners with experience. we have the story in sydney. how much are they putting on the table here? enough to make you want to be a pilot is the short answer.
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the packages are well north of $300,000 a year. there are so many extras and time,on the table, over signing bonuses, contract completion bonuses. in some cases, the monthly foreign pilot in regional china can be almost $80,000, so handsome packages and way more than senior pilots are earning at u.s. airlines like delta. paying: why are they this much? what are they trying to do here? >> they are desperate for pilots. there is enormous demand for trained pilots because aviation in china is booming. the national fleet triple in just a decade, and the number of airlines has increased
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30% in the last five years, so have these brand-new planes a year or two old and not enough trained pilots to pilot them. particularly they are in need of captains. that's why they are looking all over the world, brazil, russia, and europe. where airlines have gone under or they have laid off pilots, these are prime areas for recruiters trying to find pilots for chinese airlines. rishaad: there has got to be a catch. >> there is. you are giving up a flying career to go to in some cases very remote parts of china to join an airline that has no history, no brand, and you are hanging your career on an , so you can get rich, but there are also or her
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stories about not getting paid, not getting bonuses, and getting laid off. rishaad: great to talk to you. we are moments away from the philippines latest growth numbers. we will have reaction from the new finance secretary. ♪
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>> our studios in new york city, this is "charlie rose." charile: we continue our coverage of the 2016 political campaign. hillary clinton was in philadelphia for a voter registration drive and donald trump was at a rally in isconsin and we want to talk about the trump campaign manager s an campaign. welcome to the broadcast. it is good to hear from you again, my friend. al


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