tv Bloomberg Daybreak Asia Bloomberg December 12, 2016 7:00pm-9:01pm EST
i work 12 hours a day, 13 hours a day. i was the happiest i had ever been. and you know, he spent six weeks sculpture, obviously that is a beautiful kind of freedom. anchor: asia-pacific markets are poised to fall following the worst day for chinese stocks in june. opec moves production next month despite agreeing to historic cuts. no one wants to lose their market share. donald trump names and other goldman exec to his team but postpones news of how he handles his empire as president. considering joining soft things softbank's fund.
this is the second hour of "bloomberg daybreak: asia." i am yvonne man in hong kong. p.m. in just after 7:00 new york. i am a betty liu. andre watching the fed move what that means for the markets afterwards. let us join -- joining us is su keenan. before we talk about the fed, what caused the stock slide today? nervousness in the market? and away.the oil up you saw financials move lower. they have been a big leader if you look at the board. su: we hit a record for the dow. there is a pause in the cause. big movers and you can see the divide of financials on the downside. pfizer had a dividend announcement and exxon among the
winners. as go in the bloomberg because if you want to look at the big picture of how the market was doing last year with the economic surprises in the white at the top, you will see toward the end of the year economic surprises were negative. bad news. the market was in top shape. economic surprises moving higher as well as the market and that is rising almost to kiss the fed at its meeting on wednesday. they are expecting and embracing this rate hike that is planned. anchor: apparently, they are. let us talk about this oil rally. it looks like the markets believe these output cuts are real. notyes, you are seeing that only in the highest for the oil price, but volatility dropping in a very big way. dropping, the lowest since june 2015. what you are seeing here is a white line that is the
volatility gauge for oil. see how that has dropped particularly toward the right-hand side of the screen as the price has gone higher. the that tells us is that path is clear for prices to go higher. go quickly to the chart of oil for the last few weeks and you will see it has been on a tear. in fact, it goes much higher from here, and what is unique about the news that came out from many traders that expected the agreement between the non-opec members, it is the saudi members that juiced the gains. oil, whetherers of they be opec, the russians, whether it is the oil and gas industry and the united states, you all had enough, and so, will pay $60 a barrel within 30 days. su: he believes we will see $75 oil next year. here is what is key from traders
on the new york trading floor for oil. they believe the fact the saudis ruled in with a statement shows they are serious, unlikely to bail, and that is what gives this decree or accord to cut real power. anchor: traders now talking about trump's twitter risk, which is something we have to look into as well. this time, his post was targeting lockheed martin. su: the argument here from twitter posts by trump is that the fighter jets are way too expensive. take a look at what it did to the stocks. kaboom. this is exactly what happened with boeing, took a hit when trump started tweeting about costs of air force one. his concern about boeing jets is that the costs are in the billions and they have jets at 35 programs that is at the center of events. he says the costs are out of control.
what is that look like in terms of the defense group? take a look at the stalks. they were all lower in a big way. trump is promising that we are stocks. -- the they were all lower in a big way. anchor: take a look at how things are looking at the market opened in asia. we saw yesterday, the wind get knocked out of that opec oil driven rally. we have downward pressure coming through from a lower open on wall street. wedi: that is the pressure are seeing playing through in the early market open. we already have that lower start. japan now joining in. five down.225 it really is down to that stronger yen. we have the dollar index falling its most in g 10 as well as emerging market currency. the japanese currency is
weighing on exporters in particular. take a look at the top losers. we are seeing currency sensitive stocks moving. elsewhere around the region, the kospi looking flat at the moment. some declined yesterday, but this has been one of the better performing markets in this region over the past couple of weeks, so on these expectations, the political turmoil, impeachment process will actually produce some rejuvenation when it comes to the government in south korea. quick look at some of the movers. it comes ramp up when to oil producers and refiners. same, those stocks give back today. origin down. we are seeing some of the miners continuing to extend those declines despite a flat recovery in oil. finally, qantas coming under pressure despite launching the superlong flight to london. down by 2.9%.
first word news with paul allen, joining us from sydney. tradedhina has filed oil organization complaint against the united states and the european union. beijing wants its two biggest trading -- probes on chinese unions. they should be using domestic prices in the dispute, saying third country model testing duties on chinese imports artificially inflated. the european union will figure out how it will conduct brexit negotiations with the u.k. meet on thursday without british prime minister theresa may to discuss the strategy once she triggers article 50 of the lisbon treaty. the draft statement seen by bloomberg say the draft statement will be excluded. hong kong's outgoing financial chief at john saying says he will make -- tseng.
he needs beijing to formally accept his resignation. current chief executive says he will not seek a second term, citing family reasons. >> the principles of one country , hong kong people administering hong kong, autonomy has been susceptible and that hong kong continues to be prosperous and stable. i think all of you are concerned about whether i would run for chief executive or not. as i have said before, whether i is a run were not run serious and solemn matter. i shall think through this in the coming days and make an announcement was ready. donald trump has nominated another goldman sachs executive to his administration. veteran, garyear
cohn. recentce that in lea decoratin recent decades -- it will help coordinate trump's program. powered by more than 2600 journalists and analysts in more than 120 countriesg. i ama paul allen. this is bloomberg. -- countries. i am paul allen. this is bloomberg. >> let us go straight to washington and bloomberg politics reporter kevin. said he was busy with the transition and that is why he is delaying this. is there anything more to this? >> up with a question to the senior tom transition sources that i spoke with earlier today and what they told me is that would beuncement
coming sometime in january of ahead of the inauguration on january 20, however, it does, at a time when he is facing mounting criticism, bipartisan criticism on capitol hill to release some sort of arrangement for how he will coordinate or not coordinate with his business while he is in the white house, so clearly, today, his team saying he needs a bit more time, that he wants to really think this through, before releasing that plan, but a delay is a delay and he is postponing. >> he has been very quick to take certain actions ahead of ascension to becoming the president, official president of the united they. his -- the united states. is it surprising he is delaying this? >> i think what we are going to have to wait and see is whether or not he follows through. i think if he does release the
plan, he will receive criticism regardless, but if he does release the plan, he needs to do it before and on duration, and should he follow through with that, i do think anybody will delete them -- really remember that he delayed for two weeks. everybody as well as outside counsel, he is taking a lot of advice on this one. anchor: kevin cirilli joining us on bloomberg politics. thank you for your perspective on this with donald trump delaying his plans to announce how he's going to handle his empire once he takes office. tuesday will bring us another gauge on the health of the chinese economy as we head towards the end of the year with a triple dose of data. he will be breaking that data down for us in just about two hours time. what can we expect here? >> a study stable picture is stable are -- a steady,
picture is what we are expecting. we are talking about industrial production, retail sales, and fixed asset production. we have seen were they come from from 2013. this is a fairly steady decline in the data points. it had leveled off in the last few months and we are taking that to continue. tom: retail sales a key gauge. industrial production is expected to come in at 6.1%, the third month. factoring into that of course, the commodity prices and demand for those prices. fixed asset investment expected to come up a .3% second month in a row. those will be interesting when 3% second month in a row. those will be interesting. the more positive manufacturing picture, the inflationary improvements we have seen
beating consumer prices the first time in five years. something of a positive for china's factory sector. all of this is laying a foundation. goldman sachs economists thing that this gives the pboc grounding on financial risks they expect them to focus, and become more hawkish. that seems to be the consensus that there will be stable economic data that gives policymakers more of a platform to tackle those risks in the property sector. yvonne: tom, thank you so much. tom mackenzie in beijing. still ahead, escalating his fight and seeking more than $5 billion in damages. betty: plus, kevin anderson of state street global tells us why he finds emerging-market debts still attractive. this is bloomberg. ♪
--hor: this is park geun-hye this is they make asia. i'm betty liu. yvonne: i am yvonne man. a company wants to buy 50 million shares of a motor company. this comes as the consultancy repairs to hold its agm on tuesday. it is the first of such meetings. betweenders will choose tata and -- betty: korea's business newspapers as hanjin shipping is likely to be liquidated. the accounting firm in charge of due diligence will recommend that option to a seoul court. the value of the company is estimated at $1.5 billion. hanjin shares trading down
almost 7%. hong kong has arrested 29 current and former staff of five financial institutions for obtaining customer cetacean to market personal loans. the agency says the operation began last week and it led to the arrest. it does not name the institutions involved, but for f themre banks -- four o are banks. the investigation continues. >> markets here. asian stocks look to follow wall street and retreat as the oil rally loses steam. the most.ocks sinking old rebound at a 10 month low. kevin anderson, head of asian pacific investment. good to see you. tell us the recent moves we have seen overnight. ands just mostly on fed
really started to finalize these positioning the head of the fomc decision? what do you make of it? kevin: we have the fed coming up this week. we think we will see a hike and it would be a huge surprise if we did not. an additional surprise over the weekend was the non-opec oil producing companies signing that accord. an additional piece of volatility and news into the macro picture. anchor: china, we have seen quite a brutal day on monday. dollar renminbi one month implied volatility. i dated back to 2011 when we saw the different circles here. first circle, five years ago and then august of 2015 during the u.n. evaluation and market turmoil in january that followed. there we are in a very far right circle. we are not close to the panic we saw, but what does this signal to you, kevin? kevin: a couple of things going on. firstly, there is a slow in the
overall internationalize asian of the internationalize -- internationalization of the rmb. we are getting to the end of the euro period and getting into a period where there may be lower liquidity. it may be not without those environments, we would see an increase involved, certainly. to dropshose have led in stocks when you take a look at not just china, but the u.s. as well. so far, wall street seems unhinged at this, not affected. we saw stress in shanghai, but what does this mean? will this change quickly as we see more rhetoric from donald trump and beijing hitting back? kevin: there are two big players in this. policy changes in the u.s. may take place, and during a period of transition, we might see the largest risk of the policy and hence greater volatility.
the chinese policymakers earlier this year gained a certain amount of credibility through their gentle movements in the currency, so that is perhaps why we are not seeing the same reaction in the global markets at the moment. anchor: speaking about the markets, kevin, i wanted to pull up a chart we had on the bloomberg about global markets overall, and you see such a big ofvergence now in terms stocks and people taking their money essentially out of bonds and putting it straight into the equity markets. you can see just how much the bloomberg world stockmarket has just skyrocketed since november, and i wonder, is that momentum going to continue to 2017, or are we going to get some reprieve in the bond market? kevin: well, we are still under
way to the u.s. treasury market. we had been for some time. if we look at a snapshot a year ago from now, u.s. treasuries are not that far away from 12 months ago. hikingk the fed is on a cycle next week and also twice next year. there is room for treasuries to selloff, but i think some of this immediate momentum may dissipate. anchor: kevin, if you were to give us one contrary and thought for 2017, what would that be -- thought for 2017, what would that be? kevin: we might see return inflation in 2017 and inflation that is unanticipated. anchor: all right, so perhaps that will rear its head finally. kevin anderson, head of investment trade asia-pacific at state street advisors. we'll tell you what it stands to
asia": this is "daybreak i am yvonne man in hong kong. betty: i am betty liu in new york. apple may contribute as much as one billion dollars. but i like a lot, but it is only 1%, hoping to gain insight into new technology. let us get more from ramy inocencio. >> i'm seeing it as a search for innovation for apple. a lot of critics have said that maybe they have run out of ideas. on the other hand, there is a search for ability in terms of revenue and profit. probably, a mix of both of those things. ramy: let us go i into the profit stabilit first. we have to look at apple's reliance on the iphone because two out of every three dollars it makes is from the iphone.
66% there, followed by matt laptops and ipads. that is our foundation -- mac laptops and ipods. that is our foundation. revenue is falling quarter on quarter. take a look at the third quarter of 2016. you see the orange bar going down, that is the revenue. a 23% revenue drop on a shipment drop going down 15%. apple looking for the next big tech thing and its lineup. it might push the apple watch, of course, that has been out for a couple years or so. it got a reboot earlier this year. apple is the market leader with a 40% market share, but get this, last year, year on year, it had a 70% market share so we are looking at a 30 point drop their according to idc. garman's number two.
samsung is a number three. numbers could, from apple -- come up from apple. this contact list buying mode, but it is still a few years away. there is the apple core, but bloomberg ourselves has been reporting that we put the bosch on that -- the kabosh. o on that. they are looking for the next best thing. a lot of people are saying that is not it. $1 billion would be the front. we did see apple putting in more investments earlier this year. softbank, are we likely to see more? ramy: if they wanted to, they e more moneyould dol
out. look at how much they have here. that is $237 billion, so they could make their own technology fund if they wanted to. $1 billion, clearly a drop in the bucket. in may, they did invest and throughout $1 billion. in 2013, the last time they did something even more than that, was $3 billion for the hedge fund maker. uple, if it decides to ante could get some of its money back because the ceo said $50 billion of that 100 billion would go into u.s. investment. ramy.nk you so much, so much more ahead. hong kong's money market squeeze is sending a -- squeeze. >> take a look at markets trading in the asia-pacific. an hour ofter half
craig's it is a 11:30 a.m. in sydney. theave breaking news about monthly business survey, a slight improvement in confidence strife in theying australian economy. this is good news. to five ingot november, having dipped to four in previous months. we are in hong kong. a little bit of a perk there for sydney. betty: im betty liu in new york.
you are watching "daybreak asia." >> oh peg boosted production in november ahead of next month's collect of -- opec boosted production in november ahead of cuts.onth's total output is 38 million barrels per day. andysts expect opec independent producers to .ncrease output donald trump is said to be postponing until next month details of how he will handle business operations while at the white house. a news conference scheduled for thursday will be delayed because the president-elect's busy filling his administration first. trump has about 3.6 billion dollars in assets in over 500 companies. christine lagarde has told an
-- has told the tribunal that she acted in the public interest as french finance minister in 2007 when she did not try to block a public payout to a businessman. on will return to court tuesday. -- the last vessel searching for the missing malaysia airline has headed out. the area might hold the remains airplane and the people on board. local media say if the plane is not found in one of the trenches, the search will be called off in january or february. global news 24 hours a day powered by more than 2600 journalists and analysts. this is bloomberg.
asian's look at how the markets are shaping up this morning. >> we have headwinds coming through from the u.s. which close lower overnight. this is what we are seeing. in australia has managed to turn positive. zealand falling deeper into negative territory. they have pretty much erased their losses for 2016 as we go into the widely anticipated fed meeting where essentially, we are looking at uncertainty with the tightening of the rate hike. just taking a look at some of the movers, we are seeing some interesting moves when it comes to the japanese session. nintendo is down 2%.
universal studios and nintendo will be launching a theme park that will open in time for the japan 2020 games. company plans to spend about to develop a theme park. toshiba oh is a company that has internal scandals. the nikkei saying today that the tokyo stock exchange is considering keeping toshiba on their watch list. this is where controls are being reviewed. they are expected to make a decision by 2017. there are reports it may stay on their alone longer over concerns that internal controls have not been adequately improved.
the biggest decline when it ,omes to the australian session we have this story about chinese carriers putting quite a bit of pressure on fares from major airlines like want us, down about 2.5% today. betty: thank you. we have breaking news right now, president-elect donald trump, monitoring his twitter feed. trump tweeting, "i will be making my announcement of the next secretary of state tomorrow morning. he will be making the announcement of who will take that spot. there is lots of speculation that it is exxon ceo rick stiller, even though his appointment has come under rextiny and criticism --
tiller, even though his appointment has come under scrutiny and criticism by some. bond traders are waiting until wednesday -- not waiting until wednesday. they are pushing up yields in anticipation. so, now they are pushing up yields? likes this started months ago. in fact, as we get into the asian trading session, we are seeing a little bit of a bounce back. after monday in the u.s., it was fueled a lot by the rise in oil prices. you can see on the far right hand of your year note touched that level. that little red circle shows you this year, 1.3 2%, a record low. look at that move in bonds.
the yellow line going over to the left-hand side of your .creen of course, donald trump's victory, the promised stimulus and tax cuts, possibility of more growth has helped fueled a selloff. and now assuming that we have the 25 base point hike on wednesday, what does that indicate for 2017 and 2018? that is what people are waiting to see. betty: why are investors finally believing the fed forecast for the economy? it looks like fiscal policy is going to push the economy forward. off, weead of selling are seeing bond traders falling in line. let's jump back into the
bloomberg. go to your bloomberg. dot, those are the 2018 numbers. at the september meeting, that is what bond traders thought the fed would do. it's a long way from the green median line. are getting much more in line with the feds. the undersecretary was on .loomberg television earlier he said it might be time for the fed to retire those dots. >> the hardest thing for the fed's they really don't know where they are going to be a year or two from now. they don't know how much the recovery is going to grow. they don't know how much the
trump administration is going to push. janet yellen has to pull back from guidance. she has to pull back from pretending she knows. she really doesn't know. >> he said forward guidance has done what it can do. if janet yellen signals anything like that. her opportunity will be the press conference on wednesday. betty: we might be talking about who the next secretary of state rights time tomorrow, but now, we are talking about gary cohen. does he have any applications to the fed question mark >> not. the federal reserve controls monetary policy. it was created by congress to do just that. the nec was created by executive order by bill clinton in 1993.
he wanted to bring bob ruben, then it goldman, into his administration, but lloyd bentsen was already secretary of state. give him a role in setting economic policy. he brought together all the department chiefs to figure out new banking policies, new tax policies. thing that gary cohen probably has a lot of background in. an economic think tank. from the white house perspective, trump perspective, gary is the guy who has started to do allng things kinds of things for the economy. >> what is going to happen to goldman if he goes to the white house? thank you so much. as the fed prepares to tighten in hongcost, shares kong are surging. keeping pressure on equities.
an hour awaybout from the open. what is the risk here? are seeing increasing funding costs. it could become more expensive for people to borrow. are talking about the three-month interbank rate in hong kong. crunch signals concern about a cash exit us. xit.xi cash flows,bouts of we have seen currency depreciating along with the rate. in january, the hong kong dollar plunging to a 28 year low. that is the blue line.
interest rates caused outflows from emerging markets in hong kong. go again?ere we should we start worrying about capital outflows? >> so far, we shouldn't be too worried. we are talking about implied volatility. the hong kong exchange rate isn't appreciating that much. not to mention that economies ,ay ok, if the u.s. goes ahead the rate cap with hong kong -- stillth hong kong will not be as huge or as wide. keep in mind we are getting more mainland investors coming into hedge weakness in their currency and by equity in hong kong homes. .> more breaking news
muddy waters coming out with their latest report saying they their first short , unitedanese company shares, saying the company constantly misses sales targets and is a highly aggressive boost.ing they are in free flow as of december night and shares are falling at this point as much as 5.5 percent. contente no immediate from muddy waters. more ahead. china taking a stance against the u.s. and the eu. why they think they are being ripped off. this is bloomberg. ♪
betty: this is daybreak asia. i am betty liu in new york. >> boeing shares rising in extended trading to $1.42 per share. they also set a new $14 billion buyback plan. long -- demand for there is winnowing demand for long-haul jets. the company said the changes want a fact the 2016 financial guidance. .iacom has named a new ceo he is a 20 year veteran of the company and has been acting chief executive since last month. viacom shares tumbled in new york after the red stones
withdrew their proposed deal with cbs. investing in a new airline venture in myanmar, the new carrier plans to start flights in 2018. they have a 49% stake in a local company. the japanese carrier is expanding abroad as more people take to the skies in developing economies. spending power among people in myanmar, especially in the new middle class, is growing. we want to service these customers. we want to contribute to myanmar's economic development. >> tension between beijing and washington is being ratcheted up another notch. stephen engle joins us now with more. this is such a long-standing issue. as we are already seeing, there
is retaliation over trump one china comment. trump's one china comment. >> given the timing, of course, after the one china comment, there is friction that this might be a bit of a tit for tat. the complaint from china came a day after the 50th 's evan intoof china the world trade organization. their camp -- add into the world trade organization. that prices of sanctions are being unfairly or artificially lifted against them. china wants all wto members to use to mastic pricing, not third country pricing in reflection of china's exports -- domestic
pricing, not third country pricing, in reflection of china's exports. betty: the statements coming out of the president-elect about the one child policy are the bedrock. when do these tit for tat jabs between china and the u.s. start to be a serious concern? >> we have been thinking about the one china policy for so long. and of course, taiwan's view on it. the 1992 consensus, they agreed there is only one china, even though they disagree on the definition of what that is. either trump knew exactly what he was doing or had no idea what he was doing, because china will not give on this issue. this is a core part of their relationship with the united states. the global times is out with
more criticism of donald trump, saying he is acting like a child in his ignorance of foreign policy. the one china policy cannot be bought and sold. david wu of bankamerica merrill said it's the number one wild card for 2017. >> this is my single biggest worry. i fear the u.s. and china could be on a collision course. again, it comes back to childlike innocence coming from donald trump. >> billionaire benny stein is issuecalated a decade old
with rio tinto over the rights to a mine. he claims rio tinto may have authorized a payment to a consultant who is also a friend of ginny's president -- new guinea's president. david, tell us more about this new development. >> good morning. israeli billionaire a letter to the chairman of rio tinto seeking billions in damages for what they say was a breach in their rights. look, in fact, a director told bloomberg news yesterday that the company could seek as much as $5 billion in damages. if the company does not receive a response which includes enough
compensation by the third of january, it intends to file a lawsuit. all of this relates to the ongoing issue for rio. alertedt month, rio authorities in the u.s., u.k., and australia after he carried out an internal inquiry into the 10.5 million dollar payment to a consultant acting for the company on that project. this is yet another issue related to what is proving to be quite up problematic prospect -- quite a problematic prospect for rio. >> they have been fairly measured in what they are saying publicly about these investigations. responded to this letter? >> yes, they have. resourcesaid if the -- if they do have a lawsuit,
the company will robustly defend itself. this point, they have been incredibly guarded about what has been said. obviously, the ongoing investigations the authorities -- the ceo wast on bloomberg and sticking to his script. he said the whole situation is challenging, but under his watch, the company will do the right thing in every territory it operates in. the cabin he has been pretty guarded up until now, but we are expecting -- company has been pre-guarded up until now, but we are expecting a response. >> much more ahead. the flood of cheap long-haul air fares out of china. we will assess the impact on other global carriers, next. this is bloomberg. ♪
airlines, and korean airlines, but spreading across europe and into north america as well. british airways, delta airlines, american airlines all affected by this flood of capacity, particularly across the pacific. great news if you are a .assenger , ifaps up to 50% of fares you're comparing china air, china southern, china eastern, legacy carriers, it does raise other questions about the longevity. >> i am sure everyone watching the report is checking those flights right now for the holidays. who essentially gets hurt then? >> we have had delta airlines
and american already point to excess capacity across the pacific. from las vegas into hong kong into other asian airports into , we have seen us. the question is, can they keep this up? we are not sure if chinese airlines can sustain this with pressure on yields already beginning to take it back. >> i can imagine they have to watch the oil prices per day closely. angus, thank you so much. that is it for us. plenty more still to come on bloomberg markets on bloomberg. ♪
equities. >> donald trump delaying his presidential business conference. launched aing has trade complaint and has concerns about his one china remarks. away from thetes open in hong kong. singapore just coming on line. how are the markets looking? >> we are looking at a pretty mixed picture, trending out a bit lower. we really had the wind taken out of the sails of the oil driven rally yesterday. bit.ulling back a still seeing gains in the session. ofare seeing that come out the equities market as well. of a modestle bit up.hen it comes to sydney
we are seeing weakness coming through from the nikkei 225. we have actually managed to come back from steeper losses we saw a earlier on. we do have the yen which is starting to weaken. that is giving a little headwind to the japanese exporters. still, japanese stocks have come back from their losses as we go into that fed meeting. things are looking pretty good when it comes to japanese equities. new zealand up. we're strength coming through from malaysia. data week in singapore. oil exports out of the end of the week. taiwan opening up. lots to do with some geopolitical concerns given the war of words between china and president-elect donald trump. the impeachment vote in south
korea going to the constitutional court for consideration. we are about it our away from the china numbers. ,atching the aussie dollar reaction to any china macro have seen resistance at around the 75 level. if he gets to 76, we can see it -- if it gets to 76, we can see it building. there is also a space that can poorly, particularly on fixed asset investments as well as industrial production. for a secondg session. gold staging a little bit of a recovery. money going into safe havens as oil rebounds. finally, weakness in the dollar index.
a lot of emerging-market currencies, including the yen , and we are heading to the 115 handle for the n. .- yen >> we will have another gauge of economy ashe chinese we come to the end of the year. tom, what are we looking at? are not expecting anything is going to derail china's economic stabilization. industrial production, retail sales and fixed assets are what we are focused on. we have a chart that shows their progress and data points since 2013. the economy overall has slowed in those of all dropped down. in the last few months, they have stabilized, and we can expect a continuation of that theme. production is expected to calm in at 6.1% for the third month in a row.
retail sales are expected to come in at 6.2 percent. fixed asset investment expected to come in at 8.3% for the second month in a row. it will be interesting to see how much public spending on fixed assets there is versus private spending. we got better than expected manufacturing data. and an improvement in the inflationary picture. fact, we are outstripping consumer prices for the first time in five years. details around what is turning out to be a stabilizing china heading into 2017. >> given this potentially more positive picture, what can we anticipate from beijing in 2017? economist ato an goldman sachs based in hong kong. expects a more hawkish
stance now that this more solid economic base and foundation is being weighed. that seems to be the consensus now, that with a stronger economy and that growth target likely to be met expects by thef the year, the policy makers will start to tackle the financial risks we talk about all the time in the corporate sector, the housing market, where we are already seeing curbs put in place. that seems to be the emphasis now. the economists we have spoken to, interestingly, bloomberg also spoke to a strategist in capital management who spent two decades in china. he said the risks of china's economy are being overplayed. more chance of financial crisis in the next decade then there was in the last decade. he thinks the housing market a bubble problem but is on strong foundation because of leverage here.
he also thinks there is a big problem with the banks and that goes against the views of many economists who think the chinese banks will need to be bailed out in the next few years. so, he paints a more positive picture of where china's economy lies. we will get more details and a couple of hours. about 53 minutes away, to be precise. our china correspondent. >> from china to the fed, which is expected to announce a rate hike on wednesday, but bond traders are already pushing up yields. route we areng the seeing in the bond market? >> it certainly has been dramatic. we are seeing a little bounce as asian trading gets underway. the latest factor is the rising oil prices. it's the highest level in 17 months. bonds ande enemy of
the latest thing that helps drive bonds dramatically lower. yield got up on an intraday basis just over 2.5 percent on monday. that is a run up from the red circle in the lower right-hand corner. july, an the 10 year in record low. a doubling of yields in six months. now let's go back to the left side of the screen. the yellow line will take you in that direction. that was the high-end july of 2007 going into the recession. just putting that in perspective, we are a long way away from there. now, of course, trump's plans to boost the economy are also weighing on the bond market. the question now is if the economy is going to pick up more, if it is changing, will that cause the feds to change.
in 2017.s are expected what about 2018? what will the fed signal about rate hikes then? to the economy, when it comes to rate hikes, bey were skeptical, to diplomatic. >> skeptical to say the least. in fact, a year ago, the did not for rate hikes cause the bond market to sell off. they had a rally. now it looks like they're going to get that. the bond traders are starting to fall in line. derivatives traders are looking for more rate hikes than they were before. on the terminal, you can see the clusters of yellow dots. the 2017 rate hike. by 2018, 3 hikes. the green median line shows you
that. the bottom redline is what traders were looking for. they did not believe the green line. they said you are barely going to hike rates at all for the next two years. the purple line is very close now to wear the green line is. that's what traders are looking for. they have definitely come around. peter fisher was on bloomberg earlier. he was the executive vice president of the new york fed and a former treasury secretary -- under secretary. he thinks it might be time for janet yellen to send a signal. >> we really don't know where we are going to be a year or two from now. we don't know how much of this recovery is going to come through. we don't know how much on top of that the administration will put, congress will put. does janet yellen know she has to pull back from forward guidance? she has to pull back from pretending she knows what will happen 12 months from now when she really doesn't know.
>> peter fisher knows all about this. he says foreign guidance -- forward guidance has done what it can do for now. it is past its expiring date and time for the fed to step back. the fed cannot tell us with any certainty where it is going to be in 2017 or 2018. >> banks, kathleen. , kathleen. >> let's get over to sydney for the first word news. filed a wto complaint against the united states and european union. beijing wants its to trading partners to stop using example prices from other nations. beijing believes authorities should be using domestic prices. they say duties on chinese imports are artificially inflated.
the european union has not said how it will conduct brexit negotiations with the u.k. they will meet on thursday without theresa may to discuss strategy. a draft statement from bloomberg u.k. will be excluded from off future -- all future eu meetings. trump has postponed by a news conference scheduled for thursday about how he will handle his nest transitions while in the white house. billion ofbout $3.6 assets and $630 million in debt. donald trump has nominated another goldman sachs executive to his administration. he has picked gerry cohen to be his top economic policy and visor. -- advisor.
coh was a goldman -- cohn was a goldman sachs executive. global news 24 hours a day powered by more than 2600 journalists and analysts. this is bloomberg. >> nice work, paul allen. , getting into japan's top restaurant can be a challenge for foreigners. the company is promising to get your reservation -- for a price. a wealth manager is with us next. ♪
trading in singapore. take a look at how some of the markets in the region are tracking. take a look at what's going on in australia. the nikkei losing about .2%. way aheadshares up, of what the thinking was by analysts who expected a $14 billion buyback plan. boeing says it expects to produce fewer aircrafts. they have slowed alpa 25 planes a month. to company -- slowed output five planes a month. the yield on boeing at 3.5%. >> china life will pay $2.9
billion for 44% of the pipeline stick. the stake. -- stake. the chief executive is scrapping merger talks with cbs after 30 years with the company. sumner redstone and his have scrapped a proposed deal with cbs. on thes check back in markets. we are joined by the director of a wealth management company. we saw a reversal in the fortune of asian markets yesterday following the rally by oil.
what do you make of the fed decision? make of the markets moving ahead of the fed decision? >> there is clearly quite a bit of momentum. i think the markets in the short-term are ahead of themselves. we certainly expect to see markets down quite a bit. datau know, we have china coming up later today. to reinforce ae fairly stable outlook for china. china is holding at about a 6.7 percent-7% growth range. 6.5%-7% growth range. we are seeing oil going higher. it is probably going to key cap in the midterm as the u.s.
starts to ramp up production. the commentary out of saudi arabia has probably surprised most of the marketplace. think that is where we will see some more momentum on the oil price. let's talk about the fomc. essentially looking for what happens next. it's a done deal pretty much. going to get into a tizzy about the next rate hike. how many rate hikes are they're going to be in 2017? economists in the u.s. have been forecasting for some time a rate rise in december. that's probably coming up in a couple days time. that's a high probability. they have also been forecasting further rate to go
rises in 2000. if we start seeing inflation pickup as a result of higher oil , to become's. i don't think that is yet priced in -- two becomes three. i don't think that is yet priced in by the markets. right now, they cap out about 2%. there might be potential upside from there. we have seens what in this particular cycle. there has been a lot of discussion around the 10 year bond market selloff. again, from another perspective, the tenured -- 10 year bond yield was 2.2% at the beginning of the year. jump backeeing a real to where we were at the beginning of the year. should not be such a surprise.
>> let's look at a perspective with china. we are expecting signs of a stabilization story, but you are saying it is not enough to offset the weakness in the broader economy. >> there are some concerns in elements of the chinese economy. there are concerns in the banking sector, on the possibility of a property bubble. we don't see those as much as concerns, but they are clearly in the background for us. we think the economy has been well-managed for the last year or so. we have seen 6.5%-7% growth. but the risks have the potential to be there. the authorities will create policies that stem those potential risks. we think it is a steady as she goes type of strategy by the authorities, not so much -- that is what we are forecasting going
>> let's return for a moment to the rate hike everyone is expecting this week. there is pressure on hong kong's currency and equities. what are the risks here? >> there are couple on the equity markets. it is becoming more expensive to borrow in order to buy stock. what this means is that the three-month interbank rate in hong kong has been surging for the past 10 days and is now on a 2009 hi. it is becoming more expensive
for people to fund their purchases. this credit crunch could be signaling concerns of cash outflows. in adsense, if you -- in essence , if you look in isolation, theer rates should support u.s. dollar. what we have seen in the past is cash outflows that come with higher u.s. interest rates and cash outflows from emerging markets like hong kong. that has led to the current depreciation, along with the jump in rates. the blueee in january, line right there, the hong kong dollar plunging along with a surge in the hibor rate. the yuan on the global market. about the here, what
capital outflow story? how does it play to that narrative? >> right now, we are seeing that these investors don't seem too concerned about it. you said it. huge inange rate is not itself. we are seeing that the exchange rate is holding against the greenback, not to mention that fine,ist's are saying ok, if the fed hikes rates twice next year, still the gap want be as big, so cash outflows won't be as huge. are hedging for currency weakness.
>> this is bloomberg markets asia. prices, ever oil since saudi arabia made their there has the story, been an absolute binge. >> teams like we are leaving behind the four number. >> -- seems like we are leaving behind the four number. >> he said he could see it going up to 60, but it might tough out there. that one.acious call
i think you have been highlighting this, that this is overbought terrain. this is the relative strength index, right? >> and we are seeing it head toward the 70 mark. >> redline there. green line is overselling. that is currently what we have. let's get to the market open here in hong kong. heidi? yesterday was a horrible day for the mail and markets. there was the worst acclaim we have seen in six months and brought back some of those concerns we had a year and a half ago, the great rise and fall of the chinese stock market, the summer of 2016. those emery's are still pretty fresh. it is not a great start.
-- memories are still pretty fresh. retail sales and industrial production, the domestic activity indicators needing a better picture of this stabilization. we have seen gains coming out of australia, .1 of 1%. it is turning to more of a mixed picture. as we speak the nikkei 225 has managed to get its have a -- head above water coming off those earlier losses. we were looking at some highs when it comes to tokyo earlier on. how about you two of 1%. the -- optimism that this
impeachment process is going to give the government a shot in the arm and get fiscal policy in particular back on the agenda. we can through from the straits times. oil is starting to retreat a little bit. pulling back from the 17 month highs that we saw last -- in the last session. we are starting to see quite a terms ofde -- move in that dollar index. wehave two days of losses are starting to see a little bit more weakness. oil is tracking like this, that exuberance that we saw the top of that oil rally.
this is to pending on whether we get unexpected weakness from this china numbers. dollar is positioned like this ahead of the china numbers. 75 has been that resistance level so it is safe that we could get a good number pushing toward 76. >> let's get you to sydney and get you the first word news. here's paul allen. -- they targeted a japanese firm with negative reports. thefirm muddy waters sees tokyo-based company falling. shares have per losses after a short pledge. and discussing investing in the $100 billion bank.
apple invested a billion in may. the biggest outlay since buying the music stream maker beats. she told the tribunal she acted in the public interest. not try to block the $300 million public payout. fores rejected her request a delay in the trial and she will return to court on tuesday. the mission will be a final sweep of deep ocean beans that might hold the remains of image 370 and the 239 people on board
that disappeared on march 8, 2014. local media say if the plane is not found in the trenches the search will be called off in january or february. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. aad: let's have a look at benny steinmetz, escalating a dispute over the rights to a mine in guinea. maylaims that rio tinto have authorized the payment. tell us more about this new development. it is the latest twist in what has been a running dispute. by mr.pany controlled
steinmetz, a billionaire. saying this is a breach of the rights to mind and iron ore deposit. the correspondent which was before action sets out the -- they do not receive a response that includes an offer of compensation from rio by january 3. it intends to file a lawsuit. the company could seek more than $5 billion in damages. all this relates to the ongoing issue. rao said it was -- alerted authorities in u.s. and australia and the u.k.. inquiry byout an
consultant acting for rio tinto on the project. it is facing the threat of legal .ction rishaad: rio has been measured on what it has to say on the investigation taking place. has the government understood -- how has the government responded to this? >> they certainly had. they said that should it filed a to defenden it plans robustly. we are expecting the company to dsupond more formally to the resources. rio has been measured on what it thoseublicly on aler
authorities. there are issues with related to the payment and guinea that are challenging. they are insisting that come they will do the right thing wherever it operates but not really commenting much on the substance of the inquiry or on when they will see results. >> is there a respect -- is there a role for rio tinto in the project in the future? >> the country -- company does not look like they will [indiscernible] exit in the decision to
october. it agreed to sell its holding in the project to its partner. was stripped of its rights by ginny and 2014. it has found evidence of corruption in a process to award rights, bsg has always tonight any wrongdoing. both of these companies embroiled in legal disputes and not without any prospect. >> david stringer out of melbourne. rishaad: beijing filing a complaint to the world trade organization. >> stephen engle joins us for more. we are seeing retaliation over his one china comment.
>> you need to put everything in perspective. us thereing to have have been a number of cases between the u.s. and china and on eu to the wto and -- anti-dumping methodologies. coincidentally on the one day after the 50th anniversary of china's acceptance they made the practices ofut the using what is called surrogate country pricing for anti-dumping basically china wants the domestic prices to be used for
all the retail members on the anti-dumping. they say using third-party country pricing artificially raises tariffs on chinese products. we have talked to a number of people that say this is the concern. how generally the overall relationship is going to go forward. wu had this to say. >> i am pretty bullish about the world outlook except i think, i
fear the u.s. and china could be on a collision course. -- i wanted to redo this wanted to read you this quote. two important policies. child inump is like a his ignorance of foreign policy. someank you, giving us hint of what u.s.-china relations may look like. rishaad: what could be driving banks to invest in the $100 million investment fund. this is bloomberg. ♪
flash headlines. the accounting firm in charge of due diligence over the bank [indiscernible] id value is estimated at $1.5 billion. shares touched a record low on monday. .ow down 11.25% in seoul rishaad: jeff bezos has been a vocal critic of donald trump. he is attending wednesday's gathering of tech leaders called by the president-elect. elon musk and sherry sandberg and larry page will be there. may hope to find some common ground. >> there is a couple of things that are pretty important potential changes that we could see in the corporate finance arena for us.
the first is a shift on repatriation of foreign earnings and that is government permanent solution, not a tax holiday. we would be hit -- very happy with it. that would give us more about,lity and we talk it gives us flexibility across m&a and dividends, across buybacks. and then there is also tax reform. help -- cap had to and appleo have talks may contribute as much as $1 billion to the fund. we explain why apple might be interested. grexit could be the search for information and the other it could be the search for profit stability. likely it is both. according to one person familiar who wanted to be anonymous it would give apple and tim cook insight into up-and-coming technologies. we have to start with apples
huge reliance on the iphone first. 66% of its revenue comes from the device. that is two out of every three dollars that it makes. we have to look at iphone revenue. in the third quarter, that fell 23%. that as shipments fell 15%. apple does need to find the next big thing. that could be in part with the apple watch. a 40%a market leader with market share at least in the third quarter of 2016. on year, itr, year had a 70% market share. we are looking at a drop of 30 points according to idc. samsung is the number three. they are -- there is also apple pay expected to hit $200 billion in transactions by 2019 but that -- away.a few years a there is the apple car. we reported the company decided to scale back plans for that with hundreds of job cuts.
as for the possible investment of $1 billion, that would be a drop in the bucket of its cash on hand. look at the bloomberg terminal. apple has a huge cash pile. billion dollars. you remember in may, apple invested $1 billion in chinese -- a chinese right hailing company. the last it invested was in 2013 headphone maker beats. it does have a lot of money if it wanted to invest even more. as for the softbank vision fund, that is supposed to be up and running in 2017. the ceo said $50 billion or half of the fund would go back into u.s. investment. if apple decided to invest the money could go back into the country as it looks to continue to innovate and to profit. rishaad: our next guest was a
trader at goldman sachs. he set up table which allows members to get reservations in some of the most sought after restaurants in tokyo. thank you for joining us today. tell us how it works and how you found this idea and how you came up with the idea. guest: good morning, thanks for your time. it is a service for high-end and the best restaurants in japan. book the best restaurants with a few clicks and the idea came because i live in singapore for five years and i have some -- i was asked by friends about a japanese restaurant. sometimes it takes time or they cannot book. [indiscernible] i knew lots of the chefs and i
had lots of entertainment and i love eating. want to welcome foreigners. about 500 registered diners. what kind of plants do you have to expand as a market -- for the market you are eyeing? guest: we have [indiscernible] andwe will expand to kyodo we will try to expand to singapore or maybe sydney or hawaii in 2017. rishaad: i want to get a table in a particular restaurant and i have no way of getting it. you have already pre-booked tables and then you charge a $26 reservation fee, right? guest: that is correct. we prepare -- take it and list
it on the website. you can pay 26 bucks and your booking is confirmed. isthe cost management vertical here it would seem. -- critical here, it would seem. guest: [indiscernible] is, the the thing youability is based on you, are surely going to have more than you if you're going to scale this business up. guest: that is correct. for now [indiscernible] and talking to them by myself. if i expand to in asia i need more people. expand only in tokyo
i guess it gets much deeper than that. >> it certainly does. that is what they would like to do is get on with making money. power withng on to that hasg he can and unleashed this widening battle that stretches across the entire indian business establishment. we are talking about a company aat is diversified into number of key industries. it is a global company and you have got investors involved now. we have learned from our reporters, we have a number of scoops on this that citigroup and jpmorgan have both been recruited to come in on the side theust cyrus mistry on positions he is holding onto. you have investors who are involved as well.
they're going to be having big blocks of votes at these upcoming shareholders' meetings like the one that is agile do, this evening, is it time for -- tata consultancy business. the ouster of mistry is from allies there, that will be a good sign that he is on the way out. >> does this have the potential to spill outside india? >> it does. this is a global company and some of the conflicts that led to this in the first place are somewhat global in nature. for example, tata teleservices, unit of the conglomerate has a dispute going on with the biggest wireless tokyo. provider in over a payment
kong. rishaad: gary curran is being announced as donald trump's economic advisor. we are getting data come we are looking for retail sales -- for november,r the forecast was for 6.1%. rishaad: tom? the the standout number was retail sales coming in at 6.2% -- we saw 10% rise in retail fire -- sales in october. this 10.8% a showing that the chinese consumer remains relatively confident. we have that