tv Bloomberg Daybreak Asia Bloomberg December 11, 2016 6:00pm-8:01pm EST
♪ >> doing the deal, oil producers agree to historic reduction cuts with saudi arabia willing to do quote, whatever it takes. >> a changing of the guard in new zealand. ill english is to be the new prime minister. >> decades of diplomacy may be changed with donald trump saying the one china policy must be tied to trade. >> the president-elect pick for secretary of state may stumble ties to the kremlin.
>> this is "daybreak asia." i am ramy inocencio in new york. we're just at 6:00 p.m. >> it's just after 7:00 a.m. in hong kong. i am yvonne mayor. the fed in focus this week. the december rate hike, beaten this idea to death by now. what is janet yellen going to say when it comes to future hikes? we have a deal in vienna once again. past 24 hours or so, non-opec members came to a deal, the first in 15 years. nymex crude was up by 1.3 percent on friday. we are seeing it sky rocket right now in the early hours of trading, up 4% or so. we're expecting to see this potentially climb and be fairly volatile as we move ahead through the trading day. >> things kicking off in the region, that trump bull market, bringing new light on wall street on friday. new zealand, pretty much flat
right now. erasing early gains in stocks after bill english confirmed new zealand's prime minister in the last half hour, the kiwi dollar 7120 right now. australia, touching the oil producers today. the saudi surprise. oil ministers willingaustralia,l producers today. the saudi to cut even more than what he committed to in november. stocks flat right now. expecting machine orders, producer credits, prices later on this hour. forecast for its upside surprise, thanks to yen retreats. retreats. take a look at the dollar-yen right now, spot 45. down 15% against the dollar since the election. now that fair very high, looks like we could be set to break past 19,000 on the nikkei today. opec has been the big news this morning. independent producers in 15 years. oil producers met in vienna and agreed to reduce output by 1.2
million barrels a day. signaled it is ready to cut production more than expected, promising a reduction of 450,000 barrels a day. russia and other non-opec nations pledged to cut production by 558,000 barrels a day from january. i have to say that the situation is different as we go country by country. i was very pleasantly surprised to see so many countries respond to the invitation. haveof the countries you joined, and it's very important to say they join voluntarily so no one is going to force them to reduce production, it's their own will. most of these countries will be taking active measures to reduce production and that's very important. ande wanted to contribute,
as much is that reality of the transformation of mexico was also accounted for. so, this is also part of the process of and as much is production decline that we have experienced over the last 10 years, and what we -- to a managed process, klein. -- climb. >> let's bring our energy markets editor in to talk about this more. good morning. non-opec producers agreed to cut production over the weekend. saudi arabia had a separate announcement as well. take us through what happened here. >> hi, yvonne. quite significant news over the weekend. non-opec producers agreed to cut production by 558,000 barrels a day. this is led by russia, they will cut output by 300,000 barrels a day. you have countries like mexico and catholic stance or part of this agreement trade immediately after this was announced, saudi arabia's oil minister got up and
said saudi arabia was willing to go beyond the cuts they agreed to november 30 in vienna. a, clearly there is commitment by saudi arabia and these other countries to really get supply and demand back into balance. this shows over the weekend, it's the first agreement between opec and non-opec reducers in about 15 years to scale back production. you have a coordinated effort by some of the world's largest producers, including saudi arabia, russia, iran, and iraq, a lot ofside geopolitical differences to cut back on production and get supply and demand act into -- and demand back into balance. ramy: what are the a lot of geopolitical differences to cut back on production and get supply and demand act into -- rs deal, and does this balance the market? ison: in the short-term it quite bullish, we are seeing prices rise this morning. there are a couple risks. the first is compliance. opec has said they will cut production in the past, and
oftentimes they don't cut as much as they say they will cut. their own members cheat. this extends to beyond opec. in 2001, russia committed to cutting but the next year they boosted production. we will have to see how committed they are to compliance, and if the countries cut back as much as they say they will cut. the second risk for this deal is really global inventories. are still at record levels. in the u.s., inventories at about 400 86 million barrels. that's about 25% higher than the five-year average. before you get the market really balancing, you will have to have refineries work through this global glut and get the inventories down, and then you might have a more balanced market. but the refineries will have to work through that before you get to that point. clark, a quick check of what is happening in terms of oil trade up 5% in london trading. in -- aaron clark in
tokyo, thank you very much for that. presidentsouth korea facing new accusations after being impeached by lawmakers. she is said to have colluded with the former aides to force out a company executive. he claims will influence her position after she leaves office and loses her immunity from prosecution. she is saidlawmakers impeached n friday. the bank for international settlements says china has helped prop up global lending this year, with you on trading continuing to expand outside asia. its latest report says the yuan turnover has approximately doubled every three years over the past decade and a half. and more of it is being used for financial purposes instead of trade. the bis says chinese banks are now the 10th largest in the world. india's boardroom drama now sees ofaccuastion a breach
governance and failing to distance himself from companies owned by his family. the allegations, head of extraordinary meetings, where each are appealing for support. tata's market value has fallen more than $16 billion since mistry was toppled on october 24. ecade one chinad policy may change with president-elect donald trump saying nobody can dictate to whom he talks. the surface after beijing protested at the tycoon taking a call from a taiwanese leader. trump has threatened to ban china and impose tariffs on imported goods. last week it was said china would now have to play by the rules. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ramy? ramy: thanks. president-elect donald trump has dropped his strongest -- about his pick for secretary of state. that person could be exxon mobil
ceo rex tillerson. mr. trump has called him quote, a world-class player. our reporter joins us on the line from washington. tillerson'ss -- candidacy is already facing pushback's. >> this is true, the candidacy is facing pushback. tillerson has been the ceo of exxon mobil for the last decade or so. is not exactly what i would call a favorite of the democratic already -- party. they are concerned with the fact that he is a nontraditional pick, and the sense that he leads an oil company, he has not served in government with her, and there's concern about the fact that he has close business ties with vladimir putin of russia, not exactly seen as an ally of the united states, although trump has said he would like to have closer ties with russia. and the fact that they said you
would want someone who has served in government before. yvonne: it seems there could be trouble when it comes to winning that confirmation, if that will be the choice for the president-elect. who else has been considered for the role? has narrowed his list down, according to my sources, to tillerson at the top of the list right now trump has suggested he's probably -- is also considering senator bob corker of tennessee, the chairman of the foreign relations committee. he's also been considering mitt romney, the republicans' 2012 nominee for president. he's had a rocky relationship called him trump, essentially a con man and lots of other negative things last year when trump was running for president. romney brings a lot of experience to the job, and he is respected reasonably
well by democrats that he would have a better shot at getting in than rex tillerson. republicans do control the senate. they need 50 votes for confirmation. yvonne: trump and tweeted out, stay tuned when asked if -- when it comes to that secretary of state pick. there are two major deals in the works as we enter a new trading week. one is a historic agreement between boeing and iran. the other is in the media space. su keenan is taking a look on these deals. because it has a lot to do with rupert murdoch expanding his horizon. reporter: the deal would allow fox to buy the part of s tv, the u.k. pay for tv channel that it doesn't already own and many would say that murdoch has been long wanting to have full control of sky, and it was
always a question of when, not if. that overhe the time the weekend, 21st century fox and sky executives work to nail down the deal, preliminary version of it was announced friday. 85-year-old media baron and his son, who is heavily involved in fox in the u.s., said to be very closely involved in negotiations over the weekend and the key issue apparently in these final details that are being nailed down is whether to make an outright bid for sky, or what is called a scheme of arrangement. that is a different kind of structure deal that does involve the u.k. courts but also might make it easier to win over the smaller shareholders who may not want to sell. according to reports on the u.k., there are many that may be resistant to the move. again, that's the key issue here, if you look at the stock,
toy for century fox. -- 21st century fox. it has been moving higher in keynt weeks, and again, the issue is whether they will go with the straight ahead bid or whether they will go with a structured arrangement. from 27% inshot up london on friday. we could have a deal nailed down by mid-week. ramy: let's get to that talk about the boeing and iran deal. the first of its kind since 1979. a generation here. looking at the lens of the u.s. corporation with the rise of the trump white house, one political potential turmoil here. $16.6 billion deal, the first time boeing will be iran if it goes
through in 40 years pretty will force congress and president-elect donald trump to balance their priorities with u.s. jobs. and anudes 50's, 737's, other 15 779's. that is according to the company. they will be delivered over 10 years pretty if you look at boeing shares, they are of better than 80% year to date. they rallied in recent weeks. one analyst says boeing can't compete with airbus if they can't sell to places like iran and china. how this plays out in the weeks to come will be key for the company. korea'sill ahead, south national assembly votes to impeach president park geun-hye. what happens next. week aheadlus, the big and economic data as we count down to the fed decision. new numbers out of japan, china, and korea. this is bloomberg. ♪
ramy: you are watching "daybreak asia." .vonne: i'm yvonne man regular nonstop flights will begin between perth and london in march 2018. the 17 hour journey will be the first direct connection ever flown between australia and europe. qantas will use the boeing dreamliner on the route. the carrier will receive its first 787's next year in hopes they may also allow direct services from eastern australia to dallas or chicago. ramy: emergent rain is set to join the world's biggest a limitedlliance on basis as it tries to expand operations after being taken over by its creditor. the company says it will share vessel space for 3 years with the 2m group, including maersk and mediterranean shipping. yvonne: limited
basis as it tries to expand operations after being taken casino stocks rebounded in the u.s. after cash withdrawal limits imposed on macau atm's were not as harsh as expected. mainland atm cards will only be able to take out 5000 at a time, the equivalent of 620 six dollars. the move designed to restrict currency outflows from china. >> it was a massive overreaction in the hong kong listed stocks. there was a bit of a lack of context of what the chinese government is trying to accomplish. ramy: the federal reserve expected to raise rates again on wednesday but it is the only central bank moving among several meeting this week. let's get insight with alicia garcia carrero. good to see you. let's talk about the fed, because that is in focus moving ahead. it looks like there is confidence reigning supreme. let's hop to the terminal and i will show everyone the probability of a rate hike here basically is 100% for this
meeting, 94% saying it could be a rise of 25. do you agree -- if the u.s. economy ready? reporter: the u.s. economy is right for a raise. it has been right for years. of course nobody else will be moving immediately. i think it we change the tone for central banks next year, so we should see less -- as we have seen this year and central banks start into hike. as a reaction to weaker currencies in the run-up to the fed hike. there's one concern that you might have for the u.s. economy, what might that be? reporter: my concern for the u.s. economy is basically increasing long-term rates not
related to growth, and related also to to inflation, the fact that it might be harder than we think to finance fiscal expenditure package. and that is by no means certain, but it's likely. would be a very different world. that is number one for the u.s. economy today. yvonne: talking about china, you are saying growth will remain miraculously stable. justw exports, cpi, ppi blow out of the water. it seems the economy is on a better footing right now short-term, good for dealing with debt, the long-term, people say consumption could take a back step when it comes to being a key driver for growth. reporter: they have done everything they could for growth.
affect long-term consumer decisions, as well as private investment. it's government driven growth model, more than even investment driven. it's really government driven. that's why it will be there, but it will be costly. it's not only about leverage, but outflows. we see they have realized that training the outflows -- draining the outflows do matter. they basically change the money supply. they see what the money supply can do for them in terms of growth. that is why they can't be known. their constraint for the medium-term is any money they flag into the economy might not actually work.
yvonne: given what the fed could do on wednesday, what is this mean for em asia and central banks in the region? is this wave of monetary easing over? i think the way for easiness over in the region, ncertain even korea is u because we could see pressures, even notuld be ok having the -- i think it's over. pboc is a different animal because of the controls. it's not so much about how they can be linked from the fed, but how costly that might be. capital controls are very costly for an economy. they absolutely dislocate the way in which capital is allocated. that is again very costly.
having increasing costs for the economy. how long can that go? that is the question. life will be harder for the pboc with the hike. no doubt about it. yvonne: great to have you here. up next, leadership change in new zealand as john key steps down. a look at what is on the agenda for new prime minister bill english. this is bloomberg. ♪
ramy: you're watching "daybreak asia." i'm ramy inocencio in new york. in hongi'm yvonne man kong. bill english elected unopposed as leading of the -- leader of the governing national party. the finance minister was endorsed by outgoing leader john key. paul allen is joining us live from sydney right now. know that english works
for a closely with john key. how different is a bill english government going to be? there's that respect, going to be a lot of continuity. john key effectively anointed ill english as his successor and john key is so popular, it was unlikely the party would go against him. we saw the other two contenders in the race dropping out pretty early on. bill english says there will be change, most likely a cabinet reshuffle which will come before christmas. in that brief shuffle, it's likely stephen joyce will be the new finance minister. you see bill english in the press conference a short time ago. he took a wide variety of questions, including on new andand becoming a public, new zealand's position on the world stage. here is what bill english had to say. >> we are a small country. because of the increasing international recognition of our open to trade come
political stability, you're not having to deal with some of the difficult issues other countries are, i think we can have a bit more influence. bill english will face if you problems as this new primean -- new zealand minister. there is a growing divide between rich and poor in new zealand. stories in the local media of people having to live in garages and cars. ramy? ramy: he's just been sworn in, but he will be facing election in the next 6 to 12 months. paul: yesterday good odds. the government is still popular although historically the odds are stacked against him. there's generally a case of voter fatigue there, and no government which has changed its leader has gone on to win the election. 2017 will be an interesting race.
yvonne: good morning. it is 7:30 a.m. monday here in hong kong. chief executive will not seek a second term. what a shocking development there. it is 7:30 p.m. on a sunday in new york. as a little bit of snowfall happening this evening. we are watching later this week for the fed to meet at its december meeting. -- i'm ramyting inocencio in new york. yvonne: i'm yvonne man in hong
kong. you are watching "daybreak asia ." now to first word news with shery ahn. reporter: oil surging after opec and independent producers agreed to reduce output by 1.2 million barrels a day. isdi arabia signaled it ready to cut more than expected, promising a reduction of 450,000 barrels a day. non-opec nations including russia pledged to lower production by 558,000 barrels a day from january. be real cuts, and countries are committed. reporter: president-elect donald trump says he's very close to naming his secretary of state, dropping heavy hints that it could be the exxon mobil ceo. a source tells us that trump has not yet formerly -- formally offered rex tillerson the job but is likely to do so.
from boths opposition sides of the i'll because of his decades long ties to former putin. we are told rupert murdoch and his son are deeply involved in discussions with fox wanting to that he doesn't already own. sources say fox won the final deal by wednesday this week grading tokyo has officially launched their 2020 olympic a groundbreaking ceremony for the centerpiece of the event. the new national stadium will be built on the site of the one and isr the 1964 game, expected to be finished by november 2019. wasoriginal stadium design ballooned above $2 billion. the new stadium is put at $1.5 billion.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: shery, thanks. a reporter has the open for us so far. you would not usually have this level of certainty. has there ever been a more certain fed meeting we are going into this week? it is all about the oil patches, all about that opec, non-opec member meeting over the weekend that really rocked the market. saudi arabia having its whatever it takes moment, signaling it is ready to cut oil production even more than what it already pledged. you can see this playing out in these energy heavy markets. new zealand pretty flat at the moment. the new prime minister bill english is concerned. we have new home numbers coming through that fell when it comes to other numbers arising and it
comes to the median cost of homes in new zealand. that will be something for the new prime minister to deal with. i want to show you one of the losers when it comes to the earlier session. it is about energy. the top gainers are these oil producers, domestic oil suppliers. origin energy up by 3.5%. some of these explorers up by 2.6%. you can see that really carrying through, oil prices surge from 15% since the end of november, when that first supply deal was flagged by opec. really the big gainers when it comes to the australian session. conversely, we have these all that certain fed tightening trajectory. trade, risk appetite still continuing. we are seeing investors fleeing gold funds, gold etf's and quite a rapid price. the at the lowest since
very 20 straight days of contraction when it comes to assets. you can see these are the biggest loser so far. these are the top losers when it comes to the asx. this ist a quick check, what we are seeing. this is what is going to continue driving risk appetite in the session, up 5% when it comes to wti, getting close to $55 a barrel and brent looking at gains of 5%. yvonne? yvonne: thank you. it is that saudi surprise. it isarabia has signaled ready to cut oil production more than expected, that surprise announcement came after russia and other non-opec countries promised to reduce output from january. in a bloomberg exclusive, alexander novak said political support was critical in getting the deal through.
although a very important role has been played by the ministers, but i think the key role should be given to our , and what is mr. putin's role in the deal, who has been very important for the deal to be done. having this political support which i just spoke about, this have significantly helped us to build a very trustful relationship with our partners from opec, and from non-opec countries, especially from the country of saudi arabia. >> are these non-opec cuts genuine? >> i have to say that the situation is different. very pleasantly surprised to see so many countries respond to the invitation by opec and russia to participate and help stabilize the markets.
it's very important to say the countries joined voluntarily, so no one will force them to reduce production. most of these countries will be taking active measures to reduce production, and that is important. getho's going to make up to 600,000 barrels a day target? >> it's important to understand that we are not dogmatic. day was notels per the only possible result for us. there would be different decline basis, and i think most likely would be able to achieve higher than the 560 which we have spoken about was not the only possible result for us. today. another key thing which i would like to highlight is the agreement is open for others to join. at this time there are 11 countries here, but maybe others will join.
i believe there are many like this. what is important is that the doors are open and the president has been made. and now we have a framework to act jointly. >> the saudi oil masters that he's willing to cut even more, maybe below 10 million barrels a day. will russia cut more than 300,000? >> at this moment we have signed months, the first stage which would last until the end of the first half. the framework allows us to extend the duration of the agreements. we will be monitoring very months,closely the effects of s agreement on the markets, complaints of countries, and we will be making a decision whether other cuts and extensions will be necessary upon completion. >> when this russia begin their curbing? >> that's the first stage of the cuts you would be able to see as early as january. i would like to see -- companies
are quite well aware of what they have to do. in considering this is a voluntary step by which these companies are taking because they understand all the benefits of this deal, and they understand the deal is there in place and they have agreed to it, and considering this, they already preparing for the costs which will take place starting in january. as we speak now, we are taking measures. russianat was the energy minister alexander novak speaking exclusively to our bloomberg reporter in vienna. let's head on over to china now. america's four-decade one china policy regarding the status of taiwan may be put to the test, with president-elect donald trump saying no one can tell him who to talk to. he says his attitude will depend on securing a better trade deal with beijing. our china correspondent joins us now. better -- ae a
major shift for washington and beijing. >> that's right, effectively threatening to better -- a major shift for washington and underline sino-us ties. what president-elect trump said on sunday was that he did not feel, do not understand why the u.s. has to be bound by the one china policy, and particularly in light of what he says -- sees as an unfair trade relationship with the country. as an unfair trade relationship with the country. the one china policy is something that was set up in the 1970's as a diplomatic protocol, and it was set up when richard diplomatichifting ties to beijing and effectively, it allowed the three parties, china, u.s., and taiwan to agree that there was one government recognized and one government the rolled over the mainland and taiwan. what they left unsaid was exactly which government that was. the allowed to space for a fragile lp, so for those four d ecades, trade picked up between the mainland and taiwan. we have seen the u.s. selling weapons to taiwan, and the
chinese saying they would resort to military action if taiwan ever declared de facto independence. trump suggesting that this agreement could be unwound. it comes after the controversial call that he had with taiwan's when --t on december 2, which of itself was protocol breaking. yvonne: since that call, we have not gotten too big of a response from china. it's been a muted protest from beijing. how will china react to this latest developer? >> the one china policy is nonnegotiable as far as china is concerned. we have seen a commentary piece in the "the global times" saying is a novice and he is being manipulated by conservative consultants. it is mixed messages that china is having to deal with. they have seen the potential wh- which of itself was protocol breaking. yvonne: since new ambassador to china being named, terry branstad, seen as a friend of china, and yet they hear these strong comments and trump
particularly as well as on things like trade and being labeled the currency manipulator, and now this questioning of the one china policy. yvonne: tom, thank you. tom joining us live from beijing. up next, more accusations are leveled at the korean president park geun-hye. what might happen when she leaves office and loses immunity from prosecution. this is bloomberg. ♪
yvonne: you're watching "daybreak asia." i'm yvonne man in hong kong. ramy: i'm ramy inocencio in new york. hundreds of thousands of people rallied on the streets of seoul, keeping up pressure on authorities to remove president park geun-hye. south korea's constitutional court has up to 6 months to decide on approving the lawmaker's decision to impeach her. oul on theom se concerns young koreans have
about their futures. reporter: for many people in south korea, the lawmakers move is apeach park geun-hye firm step in the changes they want to see in the country. as you can see, they have come out in numbers to make their voices heard. for many young people in south korea, it's particularly poignant. >> us younger generation have housing and workplace problems, among others. i came here to share my opinion onfor many young people in south korea, it's particularly this. reporter: unemployment among under 30 remains high, at twice the national rate. in february it hit a record of 12.5%. no wonder young people say they can't afford to get married or have children. younger koreans have found it difficult to progress.
>> the instability in government needs to be dealt with if we are ever going to get any reform momentum. young southr many koreans, those changes aren't happening fast enough. bloomberg, seoul. thene: a closer look at potential economic impact of all of this now. paul choi now, head of career research, joining us live from singapore. great to have you. about reformioned momentum. i want to get your take on this. the events of 2016 that we have seen in south korea, like the likes of samsung, now park's vote, is it enough
to shock the system now where we can actually be a catalyst for systemic reform? reporter: vote, is it enough to shock the system now where we can actually be a catalyst for systemic reform? reporter: yes, i think he can be enough shock. korea is a country that needs reform. we have one of the highest, fastest rise in inequality, and the wealth of the country is concentrated vote, is it enough to in several -- and the corporate's to much cash in the balance sheet, while the household have too much debt. lowests trading at evaluation around the world. what was clear throughout this whole event, the scandal, the candlelight protests, the impeachment is that people want change. they want to and the corruption and the collusion between political power, and inequality. for the next election, i think people will vote for a candidate that will bring change, and i think that's what they will do. and the reform doesn't come in line. it comes in steps.
korea had their first political reform in achieving democracy in asianand in 1998, during financial crisis, we have economic reform. i think this is the next reform. yvonne: do line. you really think this blurring the lines of business d politics in korea, could this -- actually find a cure now? what policies could be implemented under the new government? reporter: the opposition parties d in a lot of policy propose the legislature already. we are talking about dismantling the circle of ownership, and also strengthening the rights of the minority. it has already proposed in the legislature. we just need political power to push that through, to bring about improvement in corporate governance and better governance structure. yvonne: we have seen quite a relief rally leading up to this impeachment vote.
we see the cost be balancing their, leading up to her impeachment as the korean won -- uan does weaken. reporter: yes, i think this is a long-term positive for korea, although the economy might slow short-term. long-term, i think the money should be put in the companies that will see improvement in thatrate governance, and is ownership restructuring. we are positive on korea defense is a structural theme in increasing the export of weapons out of korea. ramy: on to politics here, it looks like the left-leaning ninja party could stand to benefit. what the main platforms and the people at the top in terms of potential successors, if they do gain? reporter: there are three
candidates on the party, among the top five. the first was a lieutenant during the row administration 10 years ago. gainingnd candidate is popularity as a leftist. he is the most vocal about criticizing the current government. i think one of the candidates in leading thearty is survey, so they are most likely to win. ramy: you say that the minjoo party is more pro-market than the conservatives. tell me more about that. the thing is that during the conservative, the done a lot ofave pricing control in a lot of the industries including insurance, and utilities.
while if you look at the path of administration, they had done a lot of economic liberalization, including the liberalization of korean effects, and allowing foreigners cks and thean sto companies doing m&a. and they have enacted more policies to improve corporate governance, and also they didn't meddle with the price control on a lot of these industries. paul choi, we will have to leave it there. thank you for your urinalysis as we look or to the future of the politics and economy in south korea -- your analysis as a look to the future of politics and economy in south korea. yvonne: machine orders for october, year over year figures
looking more gloomy. 5.6% drop in those machine orders straight in those machine orders strictly month on month looking much more positive, 4.1% rise in those machine orders straight this is a very key barometer when it comes to capital expenditure. we saw that drop of 3.3%. we were expecting this upside surprise for the fourth quarter given the yen reach previously th we have seen, that bolster the sentiment demand for capital goods. things like this, also a beep. month on month numbers are up, 0.4%. and the year on year figures, easing when it comes to the drop. down 2.2%. ppio see th enovember reversing the declines we saw previously. ahead to the japan open in just a few minutes time
ramy: you're watching "daybreak asia." time ramy inocencio in new york. yvonne: the federal reserve added to its final meeting the year, left little doubt over what it will do. an interest rate hike is fully expected. what might the central bank think for next year? our reporter is here to talk us through all of this. the markets around the basisare pricing in a 25 point hike, the first in a year this will be, 0.5%. the challenge now is for the fed
to signal to us where is it going in 2017. in september, in the fed's summary of economic projections, they were looking at the consensus for two hikes next year. let's jump in the bloomberg, dots go. second line from the left is 2017, 7 dots around that two-hik eforecast. at the bottom you see a couple more people signed no more hikes at the top. there is a very wide view in here. where does it leave us? this report is coming after the unemployment rate fell to 4.6%, a 9-year low. could the fed signal it is shifting its view any positive or negative way? what if it said, unemployment is falling?
one more thing on the table here, donald trump. economic uncertainty. the fed doesn't know how trump will actually turn out being able to turn policy. it is certainly a big question mark. ramy: do the latest economic reports we have been seeming -- seeing even matter to what the fed does in the future? reporter: if we look at consumer biggestt, friday, two-week sentiment jump since 2012. we want to look at 4941, another bloomberg chart. the top part showing that jump to the two-year high and 98. the bottom chart showing a gain of 10 points. it established that biggest two-month jump. people saw their best financial conditions for their personal situation in nearly 11 years, and they spontaneously -- a lot of the survey respondents, they are more positive now because of economic holene changes that
♪ yvonne: oil surges after opec and independent producers agreed to the first output cuts in 15 years. ramy: bill english is elected , but faces voters in the next 12 months. yvonne: donald trump saying the one-china policy must be fair to trade. ramy: boeing signs a historic deal with iran, the first of its
kind before the islamic revolution. yvonne: this is the second hour of "daybreak asia". i am yvonne man. ramy: it is just past 7:00 p.m. in new york. i am ramy inocencio. good to see you again. a recap of the markets from friday, up to record levels yet again on this trump rally, oil by 4.5 percent, 5% in the past hour. a lot of movement here. ministerhe saudi oil taking a page from mario draghi. deal,embers reached this he upped the ante and committed to more oil production cuts then he committed to in november, so that will be dominating markets on monday morning.
let's get to the market open now. haidi: we love a what ever it exuberance from the oil patch to broader equities. if you look at the open of these , the nikkei 225 opening 1%, futuresto indicating strength on the back of this boom. the kospi. up. a relief rally after that impeachment vote. saying it isrough, likely to be a short-term blip and will not have long-term impact on the stability of the financial system. the nikkei 225, japan machinery
orders gaining month on month. in australia, energy-heavy stock surging ahead. energy space up by 2.5% in early trade. let's look at some of the movers, a 5% jump in crude prices, as well as talks between opec and non-opec members, russia getting on board. saudi arabia saying they are willing to do more pledged, oil gaining 15% since that supply cut deal was announced, going from strength to strength. exporters and domestic producers up 5% in some cases. if you want to look at the losers, it is the gold space. etf's seeing massive outflows, 20 days of contraction.
5.6%.te down this is the milk manufacturer that jumped 130% in two months now falling after flagging weaker revenue from china. it has been suspended pending a market moving announcement. macquarrie also up, suggesting it is making a bid for 200 more planes. thank you very much. let's get to first word news. english has been formally named the new prime minister of new zealand. unopposed after two rivals withdrew from the race, and will have paul bennett as his deputy. inherits a party riding high
in the polls and has a solid economic platform to campaign on ahead of the general election. the south korean president park geun-hye facing new accusations after being impeached. she is said to have colluded .ith a former aide impeached park on friday, and the constitutional court has six months to rule on the decision. the bank for international settlements has said china has helped to prop up global lending , expanding outside asia. the yuan turnover has doubled every three years over the past decade and a half. is says chinese banks of the 10th largest lender in the world.
tokyo has officially launched the 2020 games. the new national stadium will be onet on the site of the used for the 1964 games and is expected to be finished i november 2019. the original design was dumped when the cost ballooned above $2 billion. the new stadium is still $1.5 billion. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ramy: thanks. back to opec, it sealed its first output cuts with independent producers in 15 years as oil ministers met in vienna and agreed to reduce output by 1.2 million barrels a day. saudi arabia promises a reduction of 450,000 barrels a day. russia and other non-opec members pledge to cut production
from this coming january. situationto say the is different as we go country by country, but i was surprised to see semi-countries respond to the invitation by opec and russia to participate in this deal to stabilize markets. most of the countries which joined, and it is important to say they joined voluntarily, and most of these countries will be taking measures to reduce production, and that is important. >> we wanted to contribute in as reality of the transformation of mexico was accounted for. so this is also part of the process of production decline that we have experienced over the last 10 years. to reduceve done is
through a managed process that is consistent with our targets. yvonne: let's bring in our energy reporter, ben sharples. ofhave not seen this level coordination between opec and non-opec members. >> 15 years since we saw opec and non-opec countries coordinate together in a coordinated cut, almost 1.8 million barrels a day. the most significant aspect is saudi arabia saying they made drop their output below 10 million barrels a day. bullish statement, and the market is reacting in that manner. ramy: what are the risks to this deal, and doesn't balance the market? >> there are two things we need to watch, compliance and how u.s. producers react. longroblem is we have this time until march when we know if
opec producers are complying. in the meantime, weekly data coming out of the u.s., so we continueif rig counts to climb and production climbs as well. there might be a short headwind on prices, but i don't think it will drop below $50. there is a floor under the market, and $50 or $55 looks like a comfortable range. ramy: brent crude up 4% at the moment. thanks. ok, well, president-elect donald trump is close to naming his secretary of state, dropping heavy hence it could be this guy. a source tells us that trump has theoffered rex tillerson job, but is likely to do so. >> tillotson faces opposition for his ties to russian president vladimir putin.
meantime, americas for decade one china policy may be put to the test with donald trump saying no one can tell him who to talk to. our china correspondent tom mackenzie joins us now. this could be a major shift for washington and beijing if this does go forward. tom: absolutely. this could undermine a cornerstone of sino-u.s. ties if donald trump was to act on this when he gets in the white house. he said he doesn't see why the u.s. needs to be bound by the one china policy, particularly if they don't have a decent trade deal with china. he feels the u.s. is being hard done with its trade relationships with china. when the u.s. switched diplomatic ties from taipei to beijing, three parties agreeing there was one government ruling the mainland and taiwan.
it was agreed to disagree as to which government that was, but for relations,e trade relations, between mainland and taiwan to grow. now though, donald trump is saying this is not necessarily sacrosanct and comes after that phone call he took from the taiwanese president, the closest any president in taiwan has gotten to official recognition in washington, so this is an area of concern from the chinese perspective, trump saying he wants to use this to get a better trade deal with china. trump has seems like backed down. how is beijing likely to react? to get official reaction to this latest comment from trump on the china relationship. we did see a comment in the state media calling donald trump
a novice and suggesting he was being manipulated by conservative forces, and saying he was fickle and may go back on his word. the one chinas policy is nonnegotiable from the beijing perspective. it is a redline for them. they have heard from trump on not only this, but also tariffs, labeling china a currency manipulator. a tactic their military buildup in the south china sea and for not working more closely with the u.s. on tackling the issue of north korea. on the other side of that is trump offering to put up an seensador to china who is by china as a friend of the country, so mixed messages and their policy makers having to work out which direction he will go in when he gets into the white house. yvonne: great to have you.
trump is being warned that jobs are at risk if he tries to curb chinese investment. wang set to become the largest theater owner once the reason deal is completed. reboundedsino stocks after cash withdrawal limits imposed on macau atms were not as harsh as expected. holders of cards will only be able to take out the equivalent of $626 at a time. however, the limit on withdraws remains the same at 10,000. the move is to restrict currency outflows from china. >> there was a massive overreaction in the hong kong listed stocks because i think
there was a lack of context of what the chinese government is trying to accomplish. yvonne: let's check in on the asian markets ahead of the fed meeting. joining us is mr. taylor at deutsche an asset management. we have talked about december a done deal, why aren't week when it comes to 2017 and 2018? are we seeing more market expectations for more rate hikes and the prospect of more fiscal stimulus? >> december is in the bag. we are looking for to bring more next year, and i expect they will be in the front half of the year. what the speed will depend on, how quickly we get the fiscal spending. yvonne: what will janet yellen signal? will there be guidance from her at the press conference?
fiscal policy remains to be that elephant in the room for the fed. >> she will be quite measured. she guided at the beginning of this year that they would do a couple of rate hikes, and they did not do that. there has never been a reason not to raise rates in the u.s. exct the external environment. tvonne: what about the do plot? will we see a tightening? >> that will be one to watch. more importantly, the u.s. dollar. you can see that in the bond markets as they widen a little bit, not terribly, but at little bit. it is how quickly the dollar appreciates. we have come quickly from 100 in the yen to 115. we have had the renminbi depreciate. so the pace will be the most
important point for emerging-market investors. yvonne: if we see a shift in the plot, it could it reignite the rally? >> it is interesting for emerging markets because you have strong dollar, also strong oil prices and strong commodities, china growth ok, so it is quite balanced. we would add to emerging-market assets after the second rate hike or another strong run in the dollar. it is a wait and see for emerging markets. yvonne: after the second hike policy, back into em. what other properties do you see in this region? >> china is not performing that well. emerging markets have underperformed developed markets by 10%, but the most significant thing in markets is this
rotation from growth into value. that inwas pointing out the european markets, we have gone from a seven-year high in cyclicals underperforming growth, and we have reversed that in the last five months. that is inside people's portfolios. the u.s. is looking much better than it was the day before trump was elected, what it will probably be played out in the dollar as opposed to the s&p, where we have limited returns from here. we are not expecting a correction. ramy: i want to go into commodities. you cut your oil price forecast to $50 a barrel. outwondering if that came before opec. we are seeing crude spike by 4% or so. tell me what your thoughts are on this? >> that is the forecast we had
before opec, but after trump. we reviewed our forecasts after the election. we are reasonably comfortable, but there is probably an upside in the short-term. a stronger dollar and rates going up, that we are comfortable there. in the short term, there will be havee on the news, but we two have compliance with it, and saudi is still producing 10.1 million barrels a day. we need to look at what the figures are in early january -- early february, to see if people are in compliance with what they are saying. ramy: to see if this has teeth are not to you are looking at earnings forecasts below-market. what sect yours are you looking ahead to to see if there is any benefit their -- sectors are you looking ahead to to see if there
is any benefit there? were minus five, the market was plus 12 at the beginning of the year, and the market is now roughly in line. next year, plus 13. we think that will come down. where we think it is too high is more in the americas, where mexican earnings, the consensus is 28%, unrealistic. ramy: we will have to leave it there. thank you so much for your time. the latest on negotiations for rupert's $14 billion bid to own europe's biggest pay-tv business. this is bloomberg. ♪
there are two major deals in the works, boeing and a run, and the other in the media space. su keenan has more. -- boeing and iran, and the other in the meeting space. su keenan has more. tv, $14 fox and sky billion deal that would involve fox buying 61% of sky, murdoch's media empire on two continents. many have said that for rupert murdoch, who is still involved with fox, that he has wanted forever to own all of sky, and it has been a question of when, not if. according to sources, both murdoch and his son were closely involved in negotiations this weekend.
a tentative deal was announced on friday, sky tv stock going up we, but the details are what were told took place over the weekend. executives are flying to london to continue to work on the deals. the key question according to those close to the matter is whether it will be an outright did or what is called a scheme of arrangement. has to do with the fact that in the u k, there may be difficulty getting shareholders of sky tv to buy into the deal. a scheme ofve arrangement, it may involve the courts, but get their shares more easy. we are told there may be some resistance. take a look at the stock charts. 21st century fox has been on the path of many media companies, a struggle, although a rise in the back half of the year.
again, this is a deal being nailed down. by wednesday, we would have a final deal. in the i see the pop shares and sky. you mentioned resistance, were talking about the boeing-iran now. with that face opposition? >> this will be interesting because it is the first time boeing will be selling jets to .ran in 40 years it will be a test for congress and donald trump, are they willing to reopen the market, and how does this balance against little necessity? 737s, firstludes 50 delivery 2018, and this will help boeing in the race against airbus. you.e: su keenan, thank
>> it is 8:30 singapore time. we are half an hour away from trading open. we are looking at the stocks rally here in asia this morning after this non-opec deal with opec. cuts, oil stocks bouncing as well, the nikkei up three point percent. i'm yvonne man. ramy: you are watching daybreak asia. let's get e first word news now with shery ahn. after oil is surging people will put down output by
1.2 million barrels a day. saudi arabia signaled they will cut more than expected, prompting the reduction of 40,000 barrels today. russia and other non-opec will fromown 58,000 barrels january. it is the first production curb in 15 years. , andat will be these cuts countries are optimistic. decades tieca's for one policy change make change with president-elect donald trump no one can dictate who he talks with. the tycoon took a phone call with taiwanese leader. he has threatened to impose tariffs on imported goods. last week he said china will have to play by the rules. japan jumps more than expected from the previous month with a
gain of more than 4%. it is the first such rise in three months. they were still down 5.5% from a year earlier. user versus jumped 4.4% on a monthly basis in november, where analysts have seen a slight fall. this person is accused of breach of governance, failing to distance himself from companies owned why his family. the allegation comes ahead of the meeting for the unit with the conglomerate. they are appealing for support. market value has fallen $16 billion since it was toppled october 24. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am shery ahn. this is bloomberg. thank you. the upside surprise in japan and the deal in vienna, that is
weighing on the markets today. let's go to heidi with more. haidi: there is only one story dominating the start of trading this week in asia. it is the oil story, just ripping into the future as we 6%. seen, wti, brent rising this is what we are seeing across the region, heavy markets in australia gaining. new zealand looking flat. we had bill english confirmed the new prime minister. the kiwi dollar is holding steady. we have housing prices coming through, they fell for new zealand, but that is something japan will have to address at some point. for the greatest gains, the nikkei 225 is extending the rally by 0.3%. pushinga weaker yen, 116 when it comes to dollar-yen. that is driving sentiment particularly when it comes to
consumer names, exporter names, with the leading gainers when it comes to tokyo. 0.25%.section highs, up we have some uncertainty following the impeachment vote. we have 180 days before the constitutional court will turn in his decision whether or not to support the proposal, but the s&p saying, this political uncertainty, unlikely to have significant impact in terms of the regimes of south korea. they tend to be fleeting. no surprises here, oil and gas are up. when it comes to australia, it is up close to 3% with the energy sector and health care and tech stocks. this is what we are seeing all along, a lot of strengthening financials and when it comes to health care and tech. i want to point out movers today, no surprises with the oil space seeing the most buying.
australia's oil stocks, energy, exporters like oil surge. fuji oil in tokyo session, it was up a little bit higher. we saw some strong gains, 7% or 8%, coming off of session highs by 0.7%. and this group, the australian insurance company, not a huge player, but xeric in its biggest deal of 2016 has offered a 14% premium to buy the stocks. that is the biggest gain for the highest, three years. new zealand has a new prime minister today with bill english, elected on opposed as leader of the governing national party. the bloomberg finance minister was endorsed -- we go back to paul allen in sydney. a sudden departure for him. as we move forward, how english
-- how different will the bill english renminbi? -- will be? paul: he is the continuity candidate, and he turned out to be the only candidate. john keith, sort of anointed him really. he stepped aside, other challenges dropped out quickly when it became obviously the bill english raise. he held a press conference and says there will be change. that was a reference to the limiting -- looming cabinet reshuffle. this person will no longer be the finance minister. stephen joyce is the hot pick to take over there. there is a wide variety of questions, including what new zealand's position on the global stage will be like with the departure of john keith. >> we are a small country. because of the international increasing recognition of the good economy, open to trade, political stability, we are not
having to deal with other issues countries are. we have a bit more influence in our positive forward thinking country. mintonou heard heidi housing for in new zealand, that is looking like it will be one of the central issues do sometime near the end of 2017. ramy: he was just elected. he will face another election in 12 months time, can he win that? paul: the government is still enormously popular, more than the opposition parties combined. it will be english's election to lose, but history is stacked against him. it has not been a four term government in new zealand since the 1960's. historically the party that replaced leaders while in government lose the next election. it does not look good for bill english in that, but his biggest handicap is he is not john keith
, who was tremendously popular and charismatic. 2017 is shaping up to be a pretty interesting contest. ramy: paul allen with the latest on the changing of the guard in new zealand. back here, the federal reserve goes into the final meeting with little doubt on what it will do with the interest rate hike, fully expected, but what will the central bank safer 2017? -- say for 2017? >> if you are a bond investor, and you are worried about yield, you want to know what signal they send for next year. the 25 basis rate hike is clear. bloomberg,into the d.o.t. s go. projections for september. we will get more of those on wednesday. for 2017, you see in the left-hand side of your screen --
thank you, seven policymakers are looking for two hikes next year. there weren't any at all before. and your the top, they are expecting five in 2017. the no consensus really and truly. let's put this into the perspective. in the latest jobs report, we saw the on employment rate, 4.6%, nine year low. will this accept the projections? they could think higher inflation, but that might be bad if it means more rate hikes. lower unemployment, maybe they will not worry about inflation, but everybody wants to know how this affects, will begin a higher funds rate profile in 2017? this could be the real moving aspect of this meeting. ramy: so the economic reports don't seem to impact what will happen this coming week, but
have it for next year. >> we will get retail sales this week, the bloomberg intelligence things we will see moderation, but on friday we saw heating up the university of michigan consumer sentiment. let's jump back to bloomberg now and look at our chart, 49-41. you see the consumer sentiment went to 98, 5 point jump. it is the highest in about two years. but the bottom line, more interesting, shows you had the biggest two-month jump since january 2012, and survey responded spontaneously said, according to the university of michigan, that they see positive policy impacts from the election. that just made a lot of uncertainty, but it is interesting how they weren't even asked about this, and that is what they said. yvonne: what about europe? --opean -- italian blanks
banks got clobbered on friday. will that show up in the fed decision? >> there is uncertainty if there will be mention of global turmoil, but this crisis has been simmering and boiling over this bank -- we will call it mps for short. they need 5 billion euros of capital to cover bad loans, and what happened on friday is the ecb supervisory board denied their request for more time. qatar is interested in coming up with the money. they need five more weeks. the ecb said no. that is where you saw share prices get hammered, and this is happening as new premier takes over. they want global financial conditions, looking like a spillover not yet, but it is something we will talk about from italy to china to latin america.
ramy: you are watching daybreak asia. i am ramy inocencio. yvonne: i am yvonne man in hong kong. merchant marine up 3.6 percent in seoul this morning after announcing it will join the biggest shipping alliance on a limited basis as they try to expand operations and are being taken over by its creditor. they will sell -- sure vessel space with the group which includes merits and mediterranean shipping. turneded approval, but it -- hyundai merchant said it would increase competitiveness. ramy: a japanese company is
looking abroad. they want to keep up with a soggy and curing -- asahi and k irin. anheuser-busch and the growing look while kirin has taken another very end myanmar's biggest beer company. yvonne: the disney mow -- animation mow on a has brought in $19a has brought million in the u.s. and canada. $16.5mas party generated million on its debut, but it was supposed to bring in $20 million. next week is the anticipated arrival of rogue one, a star wars story. ramy: saudi arabia is ready to cut oil production more than expected. the surprise announcement after russia and other non-opec countries reduce output this
coming january. a look with the energy minister, he said companies are taking measures to reduce production. >> the first stage of the cuts, you would be able to see [indiscernible] and i would like to see that we have already discussed this with the country, so companies are quite well aware of what they have to do. this is a voluntary step by which these companies are taking , because the other stance who will benefit of this deal, and they understand the deal if they are in place, and they agree to it. they are preparing for the cuts which will take place starting in january. as we speak now, they are taking measures, and it is already clear. >> how will that materialize, each company going to get a percentage of how to cut? >> i will stress once again companies have agreed voluntarily to this, and considering this, they are aware
of all of the terms. they would join, and this has been confirmed with my reasoning -- my meeting with company heads. go with the agreement reached by the ministers and do what is necessary. the production cuts will be split proportionally between companies. we will also create a monitoring committee voluntarily for the russian federation, which will be doing monitoring and compliance with the companies. the objective here would be, on a regular basis, the instrumentation and have methods to make sure the company can invest. i cannot stress this enough, companies are basically on a full basis correcting their investment problems, their glance within these agreements. >> staying with the russian
federation, rose nest has sold $11 billion to the qataris. what else do you see playing for the qataris bringing to the table beyond cash? >> overall, we are very positive on this deal. gone as planned with the ofe schedule, and it was one the biggest deals in russia and globally over the recent cut, so we view this as a very positive sign, bringing foreign investment and capital. >> what is a healthy oil price for russia? what are you targeting, and considering the deal is done today only because of non-opec members led by you and russia, would russia ever join opec? >> as far as prices are concerned, we tried to stay away from forecasting prices, because the markets are unpredictable
most of the time. i can tell you the current price as a is satisfactory to us country. russia is not a member of opec, and it does not have plans to join the cartel, but russia is ready to work with the corporation of opec countries. in today's deal and everything preceding it, plays a very solid foundation for such cooperation in the future. yvonne: that was the russian energy minister speaking to our own and reported -- our own reporter. this man is not seeking a second term in office. this decision paves the way for a new leader, the city torn by perceived interference by china. we have the china reporter at large, joining us. this was quite a shock on friday along with a lot of news we did get out of asia. the hang seng also paring
losses. why does this standout? reporter: he gave the reason because it won't -- the reason of his family. usually they use family when they discount altogether, but we have reports his daughter has been hospitalized for more than a month, and we know she is a troubled person. perhaps that is a real reason, reasondetracts from the -- i think he has lost support of beijing. why would he of lost the support of beijing? the elections, the pro-establishment side lost to the pro-democracy side. anger in hise handling of the independence movement in hong kong, or it could be, you know, what the lawmakers are doing on friday, the expected the election which was going to choose the next chief executive, highly stacked
with democrats. that might not be conducive to see why -- cy getting this campaign. to who might ahead actually run in his place, whoever it is will have a hard path to balance what is happening between beijing and hong kong and heal the rifts over the years. david: that is why popularity will be the main criteria for this. there are three criteria actually. the euro -- the ability to do this job, they want someone with popularity amongst hong kong people, tycoons, various sections in hong kong, and thirdly, royalty from beijing. you look at those three candidates perhaps who were out there, the president is number two in hong kong. she has shown her ability to be a public servant for decades. she is loyal to berlin --
reasoning. we have seen that as well. she is quite popular. that is also the case with john chaney. he could be another one. regina on the other hand, she has been, expected to announce her candidacy this week, maybe not quite so popular. ramy: looking ahead to what is happening in june next year, a lot of people definitely curious to see how that unfolds. and henson goes on a blockbuster hut to look at the film industry in china. that is next. this is bloomberg. ♪
ramy: you are watching "daybreak asia." for a quick look at what is coming up over the next few hours on bloomberg. what are you watching? rishaad: there is a spike in oil prices. do whatucers cannot they like in terms of bringing the price up, or they will do deeper cuts than we have already seen them announce. looking at that. meds possible the important decision, and the narrative situation -- switching likely in 2017. we have people discussing that. currencymerging market has been hit badly, but what
will they do next? we have a reporter joins us for that in 45 minutes from now. ramy: chinese companies make use of bankrolling quality -- holiday productions, but they will make their own. asia's internet company has worked with the top talents to increase the presence of chinese culture on the screen, specifically. we have more. why are they looking to hollywood for these acquisitions? reporter: like you said, they don't want to direct the chest above the script for hollywood, and acquisitions is one way to help with this. they are competing with alibaba, a $10 billion market by this time next year. china could be the largest movie market in the world. surpassing the u.s.. the company has said they are open to all kinds of acquisitions as long as the compliments their own resources. yvonne: tell us more of the
china version of indiana jones? lulu: you are referring to attend book series of novels about a treasure hunter. there is an element of mystery to it. onecompany has said this is of the things most likely for them to bring to a global audience. they are exploring a chinese tv and games. tencent has been a stronghold for family games, school island, those are the ones they have invested in. we should see this trend continue. yvonne: how open will the usb to this tencent hunt? lulu: that is a good question wanda, they are a part of this group of companies that are going into the u.s., and given the light of recent tensions between the two
countries, we are already starting to see bush back. lawmakers saying the u.s. needs to be more critical of chinese takeovers. that is something tencent will run into going forward. ramy: we will leave it there. lulu chen. that is it from us. plenty more still to come, bloomberg markets asia is up next. we are looking at several more markets opening. the price of crude right now, still up after the opec meeting, 4.5% wpi. yvonne: it is remarkable it is upping the ante with even more production cuts after non-opec will repeal in vienna. this will be the turn of the pile. we will watch that. bruce and soapy have more. ♪