tv Bloomberg Daybreak Asia Bloomberg December 20, 2016 7:00pm-8:01pm EST
sparked by a drive for transparency. yvonne: this is the second hour of "a break asia." betty: it is just after 7:00 p.m. in new york. we have been talking quite a bit about this rally in the u.s., particularly the dow hitting another record. not quite 20,000, but we are close to hitting that. one interesting aspect about this rally is how much it has also helped japan. the donald trump policies we have been hearing have been beneficial for the year and instability for the japanese economy. got the nodertainly from the governor, saying a lot of the strength is because of the dollar. china, stocks falling to a
six-week low. let's get to the market opens here in tokyo and seoul real quick. been a divergence of fortunes between say japan and hong kong. above 70.t come away what is interesting, the yen, i'm talking about governor kuroda, is it too weak? no, it is not too weak. that set up dollar-yen. have a look at equity markets right now. the path of least resistance. inrd straight gains australia. when all hope was
lost we would regain 18,000 this year, we blew past that. now we are talking about maybe getting to 20,000 by the end of the year. 500 points away. but at this pace, we will likely get there. momentum indicator. 225.ikkei look at that, shooting past the 70 level. highest level going back 3.5 years. to many, that is a sales signal. you have not seen a lot of selling out of japan because of the move up and dollar-yen. happeningk at what is in the currency markets. just to give you the levels of where we are. basically flat against the dollar. compared to this time yesterday, still stronger. some of the other currencies we are watching closely. 715 is the forecast for
uan.ar yo betty: back here in the u.s., stocks rallying. the dow closing at a record. su keenan has been watching the action. su: financial stocks a big part of that. look at the close, a lot of green. it we go into the big movers, tesla got has left -- getting a big jump on the petition. which was up ahead of earnings, actually foul. into the snapshot. will is higher, 52. a big rally from 2008 to 2016.
just this year, we are seeing a total change in global stock and bond markets. if you go back to the financial crisis in 2008, we are up 90 trillion. there is your momentum story. it took a while to double but we are moving now. the chart saying about whether the rally has legs? ? su: it is the question. most analysts believe we are going to go higher. a big rebound in the white, which is financial confidence. it means conditions are good for financials. the blue line is the s&p index. the soaring right now. that sets us up for what we are seeing in the dow. the rally in stocks, certainly has moved higher as we have had a decline in volatility.
let's look at what could be a caution flag. that is whether the s&p 500 stalled out. look at the low line on the top. on the top.ne it indicates we could have a contrarian indicator. it could mean we could stall, even though we are near all-time records and have been hitting them since the election. earnings after the b ell, how does it do? about beating the street on profit. , the currency change in the china region, up 17%. that quells a lot of qui critics. this very about closely watched futures order. excluding, again
currency translations. far less than the gain expected. let's get to the first word news. nina: russia and turkey say they will cooperate on ending the war in syria as the body of the ambassador was flown home. ankara say and they will not allow ties to be torn part. berlin police have stepped up the hunt for the truck driver who attacked christmas shoppers in berlin. an initial suspect was released without charge. he is a 22-year-old pakistani refugee. witnesses claimed they followed him as they left the scene but said they did not have an
uninterrupted view of him. the prime minister of the u.k. theresa may says the country may enter a transition phase to ease the departure from the eu. the prime minister has set up an 18 month timetable for the brexit. this do want to make arrangement, get this arrangement in place so people can move on to the new relationship they will have with the united kingdom. i think there is a willingness it on thatdertake basis. nina: much of northeastern china smog,ered by thick forcing authorities to cancel flights and warning people to stay indoors. beijing and other cities are under a red alert. greenpeace says almost half a billion people are affected, with air quality 16 times above
the internationally accepted danger level. global news, 24 hours again, powered by journalists and analysts. yvonne: thanks. has filed ahairman lawsuit against the conglomerate. been tracking this boardroom saga. it is developing from a boardroom saga to the courtroom. -- heda: filing a lawsuit filed and according to a statement. he did not have any comments to make. he said earlier he was going to take his fight for that are transparency. india's biggest conglomerate, to the courtroom.
trying to work out what that might be. part of that is the legal part of it. he did not give any more details on what the other details might be for him. he did say he will contest allegations. deep animosity. another person took over as interim chairman. it has been nearly two months ago. there has been a lot of public fighting between the two. search tell us about the for the new chairman. or what about the search? they are leaving the charge, along with four other prominent indian businessmen. they formed a panel to try to replace him. they did kind of score a little bit of a victory.
this has been something that ratan tata had been pushing for. it was something of a surprise. that didn't open up a lot of speculation as to what his next move might he. we see it is the filing of this lawsuit. tata units taking a bit of a hit since the saga began unfolding. tata was under pressure, saying they could lose the right to use the tata brand. he made it easier for stepping down himself. yvonne: thank you so much. thatng ahead, we speak to asian development bank about the outlook for china and 2017.
betty: this is daybreak asia. a quick check of the latest business flash headlines. a struggling shipping company -- is agreement means hanjin nearing the end of liquidation of key assets. the central court approved the sale of the 54 percent stake in the operation. msc already owns the other 46%. blackberry has boosted its fiscal earnings outlook. was two per share
cents, compared with analyst estimates of a one cent per share lost. the ceo says blackberry can do even better. normal, growing software company could deftly do better than 70%. it could do it. the southwest airlines website has crashed. there is no idea when it might be fixed. passengers have to check-in using kiosks or counters. southwest's router and a backup server also failed in july. asian futures signaling gains. investors look past geopolitical
events to the prospect of faster u.s. economic growth. let's wrap up the week. great to have you. we talked about the rally happening before. donald trump was elected. it seems like the focus is shifting away from one fueled by liquidity to one about economics and the economy. will it be enough to keep this rally going? >> i think it will be enough to keep the rally going. as we look at the u.s. economy, we did see one that was improving already. it was not blockbuster growth, it was steady growth. the labor market was very tight. we are seeing wages start to increase. we were pointed toward a market that was going to do ok in a year ahead.
we would caution the rally we were seeing does bring forward some of the returns we expected next year. we do see earnings growth coming through. we think the rebounding commodity price takes away the drag. while the dollar has gone up, we don't expected to go up a huge amount more. furtheret can deliver in 2017. yvonne: can stronger growth in the u.s. actually lifted growth in asia? when it comes to trump's policies, protectionist views, a lot of asian nations are more reliant on chinese demand, not so much the u.s. is a very valid point. the market has reacted to a lot of promise in what donald trump has said. how much infrastructure will ,ome through and how much trade
protectionism may be enacted. the time frames are much longer 2017we might see in and are more of a 2018 story. ingn we look at emerg markets before trump won the election, we saw them favorably. fundamentally, a much better position than last time. supporting all of that for us is the fact that valuations look relatively attractive compared to developed markets. commodity prices are moving higher. those are all positives about why markets could perform. we are cognizant that they are higher dollar, higher rates. it is a case of, let's wait and
see what happens after january the new president. how many of those plans materialize. for thingsre looking that provide value in the market. strong you mentioned dollar, rate hikes coming out of the u.s., has hit china. stocks, bonds,o and currencies. the bond market in particular, we are seeing a flattening yield curve. does this signal we could see more pain to calm when it comes to bond markets and possibly, a reaction to the rest of the asset classes? lookst you are seeing good. it has been about the stability they see in the chinese economy. in november economic data we got to point toward the stabilization, whether it be
through investment spending or retail sales. that will feeds through into 2017. the economy is slowing. it had picked up. there will be a slowing in that growth story. storythe retail sales fading out. moreary policy will be neutral. the immediate threat from china is reduced. would slower growth suggest perhaps a flatter yield curve. yvonne: you mentioned things will be clearer when donald trump officially takes office. find shortly after the policies do not pan out. not as much to the extent we thought. is there a way to hedge yourself against an ugly unwind?
haseah the big question is markets moved too far? you have seen a little bit of that coming out over the possibly last week, where people are digging deeper into what tax reform might actually mean. i think it is a case for a pause in markets as they try to digest what is happening. i don't think you will see a serious unwind. a global economy improving, gdp growth around the world, does support equity markets. we expect inflation to come through in 2017. it was already starting to build up prior to the election. positive -- there is a case for a
"daybreak asia." betty: volkswagen has reached em another major deal in its issions cheating scandal. the u.s. epa expects the new deal to cost nearly $1 billion. >> this deal involves a combination of right back's, or repairs, depending on how old the vehicles are. back to 2009 and go through this year. all vehicles have been alleged
to have been equipped with defeat devices to beat emissions tests. for older vehicles, maybe 20,000 or so that will have a buyback option. havewagen doesn't really the ability to actually repair those models. there are newer vehicles, 60,000 or so. ll be fixed to comply with environmental rules. it about the $1 billion cost. let's break those up. chunksns shop -- comes down to a fund for takeonmental damage, to down nitrogen related gases from pollution. another $25 million is going to buy in zero emissions vehicles. there is a lot pending because
the doj came out saying, while settle some of the omissions aspects, there are civil penalties as well as criminal liabilities and consumer claims. volkswagen is putting forward a positive phase, saying we are committed to turning back the trust of stakeholders and thanking customers for a lot of patients. patience. yvonne: vw saying this is one important step forward for the company. >> we saw the stock price pick up a little bit in terms of u.s. adr, about 0.25%. in germany, up 0.9%. take a look at where the stock was, relative to the scandal hit. it is down on the order of 22% since the start of 2015.
thecan see the drop when scandal was revealed. right now, we are on the order of 140 euros. interestingly, take a look at the 12 month target based on the anr. analyst recommendations. the green is for the buys, and they are basically even. we are seeing at least for the consensus point of view, this might not go anywhere. one interesting thing, volkswagen is the biggest company on the german exchange with over a quarter of analysts saying you should actually sell. subject to think about. yvonne: thanks. next, the boj faces a tough road ahead as it admits the current
say -- three worshipers were wounded when a gun man opened fire in the building. he later killed himself. are investigating the incident. a chief economic adviser says sustaining the trump rally is not just about implementing his economic policies. he cautioned against overlooking the threat to global markets. >> we have priced in no policy mistakes. we have priced in no market accidents. we have ignored all sorts of legal issues. our of the reason why the markets are reacting so well is because we are getting a
political disruption in the u.s. that seems to be positive. unleashoing to congressional action on key issues. you are also getting political disruptions elsewhere that are not so positive. of scientists have set up an anonymous hotline for employees to report political interference. with climate change deniers taking over, scientists are getting increasingly concerned. and this isndez, bloomberg. yvonne: time to see how that asian markets are shaping up. it seems like they are just writing higher. david: as they have been.
when 36 on the regional benchmark. 36 on the regional benchmark. we talked the high we saw in 2016, all the way back to august of last year. the nikkei 225, it has been buy, buy, buy. most stocks on their way up. it is very much a broad-based. you have a few stocks on the way down. we got an upgrade from hold to buy. other movers, panasonic will be buying out some of its units. a share swap. see, the share price movement, 16% roughly speaking. delistedo will be d
sometime next year. it is a positive day. talk us through what is happening in the bond markets. talk ins been a lot of japan following the comments from the boj. david: there has been renewed interest. wheny, what do they do yields start going up? they want to anchor the 10 year yield at zero. ust yields go up, it becomes unsustainable. in japan, we are still pushing lower. the spread is really widening. have a look at this bloomberg chart. these two, ifeen you well, there you go.
to 2010.ay back at some point, markets will not believe the boj can do it. that spread is just going to widen. it will be less practical to anchor that at zero. that is what we have seen. continue the conversation. with japan finding itself in a sweet spot, the bank of japan kept its monetary policy study as the economys about to get another boost. shery ahn joins us live from tokyo. the stimulus package passed in working its way through the economy. are we in for more? expecting awe are third supplemental budget. the finance minister saying that will total more than $14 billion. of course, we have the main budget in the next fiscal year
of 2017. that is going to total about a $825 billion.- it is about the supplemental budget. slump in the yen hugedy giving japan boost. shery: it seems japan has the wind at its back. the slumping yen and energy prices. he sees kuroda saying growth exceeding potential by quite a bit. he doesn't think the yen is excessively low. take a listen. foreign exchange market reflects the strong dollar, not yen.eek yen. -- weak
the dollar is also strong against many other currencies. i don't consider the yen level particularly weak. yeny: he also says the weak will be a factor in boosting crisis. although he ate knowledge is the boj is far from achieving its inflation target of 2.5%. is toosome saying it early for the boj to breathe a sigh of relief. shery: this is a problem with bond yields continuing to rise. the boj has faced a lot of speculation it was running out of on's to buy. basically, they shifted their focus in september to pegging the 10 year yield to 0%. they kept that target in their meeting. take a look at this graph. the boj has gradually increased
its holding of bonds, taking away from other market players such as banks and insurers. foray become more difficult them to persuade the current owners of what is left. the boj could be facing more difficulties ahead. of course, they also kept the target of increasing their holdings by ¥80 trillion. it is a bit early to breathe a sigh of relief. betty: the big decisions from the fed, the boj, they are behind us. we have more. as you mentioned, donald trump is the big unknown factor here. kathleen: he is making waves across the world. a former fed governor at the
fed, for 44 years, rose to position of vice-chairman. in a published piece today, says he sees a faster pace of hikes for the fed next year. inflation, all of this could move in that direction. the fed did raise its forecast hikes in 2017, to three. barely the consensus move. nevertheless, the markets see the fed moving rather slowly. screen,d side of the the middle of the year. , topping 50%.move that is not exactly rushing to move. intelligence says the fed will only move twice. they see the economy doing ok, but with the dollar getting stronger, that will be a bit of a headwind to growth. in london, four hikes in 2017.
anomics trump deliver faster inflation. yvonne: interesting to see that. how much will trouble affect the overall bond markets? kathleen: and interesting survey. donaldot just trump. first it was exit, the u.k. voting to leave the european union. and then donald trump, and then of course, italy, the referendum. voting no on constitutional reform and the premised or had to step down. populism, that is what is most feared by bond investors around the world according to this survey.
let's take a look. what keeps you up at night? here is what it is if we look at this chart. the chart of the bank of japan. you can see how the trump election was a big game changer for the bond markets. we've got the rising yield curve, the spread between the 10 year. that is a factor. concerns rising for bond investors. compare october, the orange bar, to december. populism in politics is dwarfing everything else. the ecb not getting it right with their policy. this is a fascinating result. it seems to reflect what the world is feeling. politics for investors seems to be what is overshadowing the central banks. that is the dog that is wagging the tale. it seems they are being waived aved bydonald trump -- w
so word after the company agreed drugstores. adding write a drugstores will be transformative. it will make fred's the third-largest pharmacy chain in thu.s. stockholders will receive shares that value the company about 31% higher than it traded in august before reports. yvonne: sources say lenders to hiredcrew group have legal representation. torew has announced plans
move the brand to an offshore entity in the cayman islands. lenders are concerned that will take most of the value out of the parent company. the asian development bank is marking its 50th anniversary. despite global instability, the group still sees stability for asia. shares yvonne takehiko nakao what he thinks is next. more servicem on sector then manufacturing. they are facing challenges. investment after the global financial crisis. there are soon to be some adjustments.
>> you are talking about adjustments. let's talk about next year. given how we got a more hawkish federal reserve in the u.s., will that necessarily mean an adjustment for you as well? there can be an adjustment. it is too early to tally. countries like korea, china, singapore, and hong kong. it is already 6.2%. financialglobal crisis, asia has growth momentum depending on regional demand. i think we will keep having a very solid growth. shery: how much of that growth momentum could be hampered by a soaring u.s. dollar? >> a soaring u.s. dollar might have impact on economies because
denominatedurden of debt. it can also have some issues of flowing out of money which came to asia. doesn't matter much? -- thehese restrictions depreciation, giving the countries of more competitive edge. you are talking about competitiveness when it comes to cheaper exports, for example. loan financing, will some emerging companies re in asia have problems? >> even with the currency change and in value, it doesn't cause
so much trouble. over the years, it will be adjusted to what we call purchasing power parity. hery: another organization that launched earlier this year, the china led investment bank. tokyo being a big backer of the adp. you have already financed a couple of projects. tell us what is going on and also a little bit about your relationship with aaib. there is no rivalry between the two banks. we are partners and already co-financed two projects. t the president.
nine times in two years. the discussion is what kind of operations, what is the difference. in what ways we can cooperate. nd adp arethe aiib a concerned, we are partners. we can share a lot of knowledge. we have a research department. we have 50 years of experience working with countries. knowledgeso a lot of about safeguard policies for social and environmental issues. 2017. biggest risk for it is very difficult to zero in on one risk. there are many challenges and we should keep legal policies.
possible conflicts in some regions. asia and other places. how to manage security and safety is very important. betty: that was asian development bank president takehiko nakao speaking to shery ahn. malaysia says it will not toroduce capital controls stem the ringgit's dropped to his lowest levels since 1998. the second finance minister told bloomberg he does not see capital controls as a necessary requirement. room to talko more about capital control and pegging.
what is coming up over the next few hours on bloomberg. rishaad: if you are a greenback ull, it is a big ho ller for the dollar. we are seeing a lot of pressure on currencies because of the strength of the dollar. we will be discussing that in just over an hour or thereabouts. let's look at what else is going on. 10:40 hong kong and singapore time. united airlines in the united airlines'\ boss for china and korea joining us. undercut,anaging to
in providing you go through china, you can get to the rest of the world for a lower price. thailand university in accepting rice instead of cash. discussing that as well. a flavor of what we have on the way. holler for the dollar, thank you. nod authorities gave the for the merger of amc entertainment. timehas become a long issue. reporter: it was first announced back in march. all cash. blessing of u.s. after agreeing to a few conditions. this according to a court filing. the sale of 15-20 theaters. giving up control of a cinema
advertising company, and transferring theaters. evestitures are two preserve competition. they say they can close the deal by the end of the year. carmike in the bag, can we expect more deals? reporter: there are talks to acquire a controlling stake in dick clark productions. he does have aspirations to control one of the six major studios. alsoave alibaba pictures setting sights on hollywood.
it will be interesting to see how that trump china dynamic may play. betty: thank you so much. that is it from us. plenty more still to come. asia" isg markets: up next. yvonne: the big want to watch his china as well as hong kong. the yen continuing to depreciate. pressure on the bond market. more to come here with rish and haidi. this is bloomberg. ♪