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tv   Bloomberg Markets Asia  Bloomberg  December 28, 2016 9:00pm-10:01pm EST

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spade jumping the most in five years. trading underway in jakarta, the general trend to the downside. weakness across the board, new zealand the only bright spot in asia today. seeing australian market pullback from highs yesterday, and japanese stocks falling 1% on yen strength. banks and exporters leading that drop, and toshiba feeling the , sharestending the drop falling as much as 26% today, 74 after since 197
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having his ratings cut. a source saying a debt equity swap may be on the cards if the charges surpassed ¥400 billion. backhilippines pushing after yesterday's rally, the shanghai composite down .2%. given currency markets the weaker fixing from the pboc, a softer currency today, the yuan there. a stronger day for the yen against the dollar. that's dollar-yen up since november. trading below 117 as the
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greenback fell against most major currencies. in the oil space, continued weakness there, oil retreating from an 18 month high after industry data showed u.s. stockpiles in the u.s. rose last to of forecast showing inventories fell. we are close to what we are expecting from opec and other major oil producers next month when it comes to those promised output cuts. rishaad: thank you very much indeed for that. news,get to first word shery ahn. the bank of japan has released comments and opinions from its policy meeting that relate to the discussion before when one unidentified member admitting 2% inflation target remains a long way off. another opinion backed that up, saying japan is at a critical
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juncture to achieve its price goal. one member as optimistic, saying rising private consumption is evident. president-elect donald trump has accused the obama administration that the run-up is being hampered by inflammatory statements and roadblocks, abstention the u.s. on the united nations vote criticizing israel. relations between israel and the president obama's time in office comes to an end. john kerry says he's in the middle east is under threat as israel continues to build settlements in the occupied west bank. benjamin netanyahu it back, calling the comments unbalanced and saying the focus on settlements is ms. god. -- is misguided. thehe two state solution is
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only way to achieve a just and lasting peace. it is the only way to ensure israel's future as a jewish and democratic state. living in peace and security with its neighbors. israelis do not need to be lectured about the importance of peace by foreign leaders. israel's hand has been extended in peace to its neighbors from day one, from its very first day. we pray for peace. we work for it every day since then. south korea has cut outlook for 2017, blaming tepid domestic consumption and weak exports. the government expects expansion says6%, down from 3%, and it will maintain loose fiscal policy. state companies will be pressured to boost consumer and business sentiment.
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korea is struggling with record high youth unemployment and household debt. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: two japanese companies making headlines. dragging on for toshiba, but first, some rare akata,ite for tec shares soaring as a settlement nears. our automotive reporter joins us now. is it feasible to get to a deal here soon? is an important step on ta's path towards restructuring. it is key and important to potential bidders as they go into the final round of dude diligence. -- of due diligence.
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it is now aiming to name a finalist and put out a restructuring plan by the end of theh, so it looks like january to february timeframe is likely for takata to sort out those issues. rishaad: right, well, so, you know, takata says this report does not come from them. does this company have the financial capacity to pay up to $1 billion of penalties to the u.s. authorities? may not have that much but it has been reported that all the bidders have proposed to offer more than $1 billion and maybe up to $3 billion to pay out to the company, especially if takata doesn't have to pay the
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intlement fee to the doj advance, but over a span of several years, then that should not be a problem for takata, but the real problem is that billions of recall costs facing takata as well as automakers. takata has to decide with the automakers its own portion of the recall costs, and that is the real burden for takata as well as a final bitter. -- bidder. look at let's have a one company having a torrid time of it when it comes to the market, toshiba. don't get worse than this, wiping out all gains for this year and a matter of three days. 26%, the most
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since 1974. 20%aad: we had that fall yesterday? what happened in 1974 is what i want to know. we have seen credit ratings agencies lower their credit ratings for toshiba come all three saying that shareholders will suffer equity erosion. the downgrade reflects moody's deepening concerns over the sustainability of toshiba's near-term liquidity. it goes on to say the charge -- and toshiba being on the alert list would limit its ability to increase capital.
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the company's main banks will discuss financial support, including possible debt-to-equity swaps. this is following the statement that toshiba made about its westinghouse unit and charges related to that because toshiba of $78d it had a charge million. now it will be more. the total has not been finalized, but probably in the billions and would affect earnings. putting tissue offer this latest trading week. rishaad: absolutely shocking. still to come, the bank of japan revealing one member's dissent over the shape of governor kuroda's yield curve. details from tokyo on that. positive outlook for emerging asia, that is next. ♪
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a quick check of the business flash headlines, presidente of japan's vegas advertising agency to quit, taking responsibility for the suicide of an employee who were excessive hours. he will go after the tokyo labor bureau said it would referred them to prosecutors. has been barred from logging more than 65 hours per month and overtime, down from 70. , the hut, taco bell, kfc company continues to sell franchises as a part of a plan to boost growth. re-franchise in turkey, a quipping and recruiting the best restaurant operators. yum brands increasing ownership
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by 98% by the end of 2018. says it must cut costs to maintain profit margins. none of the big five has more than the 15% share. by cargo planse to expand overseas, raising 1.4 billion dollars in its ipo this year, the first chinese package company to list in the night states. fitch ratings saying economic activity and the asia-pacific will broadly hold up well next year as markets are hit rise sluggish world trade. great to see you. give us an idea of your thinking there. emerging asia will hold up well in growth relative to peers , but there are risks on the horizon stemming from political outside and within the
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region, and interest rates that are tightening financing conditions and putting pressure on the dollar and downward pressure on asian currencies. a lot of this is speculation, because we do not know what will happen in the white house. lot ofe is a uncertainty, but the trump administration plans to boost infrastructure spending, cut taxes, so we are expecting a widening of the fiscal deficit. the fed has just raised interest rates, and the signal is that more rate hikes are in the pipeline for 2017, penciling in two rate hikes, but there could be more if reflationary policy results in a pickup in core inflation. rishaad: trade is the real issue as well as we get more protectionism, so how does that work out in your forecast? something else in the mix, is
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trade with the u.s. as important as it was 15 years ago? trade hasgional become more important, but many countries are heavily dependent on the u.s. as an export market. tighteroncerned about trade policy, protectionism, and outright reversal of globalization given politics in the u.s. and europe and the impact on the asia region. there is a risk of a trade war with china, which could have dramatic spillover. in asiarging markets have room to expand further, countries building infrastructure, unleashing reforms to unlock some of their is whyal growth, so that emerging asian growth will hold up in 2017, domestic demand overtaking the weakness from the trade environment. was one this year
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notable for china and its stimulus program and investment spending. the chances of a hard landing in china are far less than this time last year, so that must be a good thing for the region does a whole. >> stability is good coming out of china. are relatively confident that a hard landing will be avoided in 2017. growth is coming down. we have growth at 6.7% and 2017, declining next year, but we are concerned that the policy settings in china continue to over long-term macro stability, so the financial and are continuing to grow, but the risks over the medium term in china whether it can achieve that soft landing and whether it can balance towards domestic demand and a smooth way. rishaad: when we look at these
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countries, all the best intentions in the world get undone and scattered by politics quite often, don't they? it could be the worst enemy for this part of the world. what about political risks? right, we have talked about the external political risks with globalization, the reverse, the risk of protectionism and trade wars, but there is a lot of local political risks. we have the impeachment of the president and korea, the lingering scandals in malaysia db, political transition with the passing of the king in thailand, and even in indonesia, protests in jakarta around election of the governor. we are concerned about
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governance issues in the philippines and the directions of these areo all hot spots that need to be watched. we still have geopolitical tensions in the south china sea, so this adds an additional risk and a headwind to growth for the region that we will be watching closely and 2017. india, narendra modi swimming along nicely and tell the monetization program he put into place. how do you see that working out? it was unexpected, i and uncertainty. it is likely to have a short term impact on growth. we have shaved a half point off of india's gdp growth, but still at 6.9 percent, still the fastest country in terms of growth in the region. over the longer term, this will pass and the point of this was to bring in revenue for the government by bringing in the
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informal economy into the official tax net. we are skeptical it will work the way it was designed, but let's give them the benefit of the doubt, and it has not changed our medium out term for india. rishaad: thank you. have a fantastic new year. coming up, investors welcoming reports that kate spade may be going on sale. details are on the way. ♪
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u.s. markets ended lower, that the luxury bags sector was a bright spot in the wednesday session. 23% rise on reports of a sale. though u.s. markets closed in the red on wednesday, the luxury back sector was a
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lone bright spot. kate's fade rally 23 percent on reports it is looking for a suitor. the reason is that kate spade is working with an investment bank contacted several possible suitors. there has been an ongoing desire for consolidation in the industry as investors are eager for something to happen. shares,up are bought and now piled on the pressure saying that kate spain would make a great acquisition candidate for the lifestyle accessories category. we strongly suggest the board consider this option as public equity investors have all but given up on the kate spade story. as for possible buyers, that .ncludes coach and michael kors they have been looking for acquisitions. both companies rose on the news.
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other possible suitors is the owner of calvin klein. meantime, mizuho securities says it could hit $21-$23 per share in any acquisition. at $17.86 alose share. macau has been trying to reinvent itself with a hollywood themed resort and a half sized ifo lower. it may be bearing fruit. -- a half sized ifo power. -- i fall tower what we are seeing in the latest numbers from a cow is that overnight visitors, more than one night, have risen 10%.
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same-dayme time, visitors, gamblers, has dropped 10%, so there has been a shift towards people coming for tourism related activities. they are moving past just gaming in macau. is, is: the question macau recovering. .t has had a horrible downturn are we seeing any green shoots of recovery? >> analysts are expecting game % inecover and rise 7 2017. this recovery will be pushed by ordinary, middle-class consumers, tourists, and less of the high rollers from china,
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which took a big drop two years ago when the anticorruption campaign began. the is what macau and casino zone focusing on now, families, people with kids, grandparents, looking at macau as an overall tourist destination and not just a one-day casino trip. rishaad: can macau become a tourist destination and be known for something besides casinos? yes, i think that is what the macau government of authorities and the casinos hope, which is why they have poured money into , theing the eiffel tower hollywood themed casinos, rides, and the model here is las vegas. and las vegas is from non-gaming related activities, so las vegas is seen place for concerts, shows,
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parties, but macau is very far away from that. while that is the model, they do still have a long way to go. rishaad: thank you so much for that. macau, the future in deed where it has come from as well. it's a day where we are seeing shanghai,hong kong, japan all headed in the same , no positivity from the u.s. with equities they are falling back. yen strengthened earlier, and a volatile year for these financial markets here and asian equities currently there not playing ball with the bulls. japanese shares heading for their biggest drop in more than a month or thereabouts. a look at the all strain market, the benchmark dropping from the highest level we have seen there since august 2015, so trading thin across the globe. up next on bloomberg markets,
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fintech, the industry profitsngly looks for by cutting costs. ♪
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kong.is 1029 in hong i am rosalind chin with first word headlines. the plunge continues for a third day, shares wiping out all games for to sheep 2016. the stock was up 80% going into christmas break, however news of a write-down in the billions poll the rug. the company is worth less than profitsperating downgraded by rating agencies. china is downplaying trade growth targets, deciding not to announce one for a second year. the minister of commerce declined to set a target for trade in 2017, something that
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indicates beijing is less obsessive about fixed goals. xi will accept growth below 6.5%. oil has slid from an 18 month high on reports that stockpiles in the u.s. have risen. him in cuts will reduce the global glut, but have strengthened sense opec and non-opec producers agreed to curb output. the actress debbie reynolds has died at the age of 84. she passed away on wednesday in los angeles, a day after her daughter, carrie fisher. the stress of his sister's death was too much for his mother, who suffered a stroke. debbie reynolds start alongside gene kelly and was nominated for
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an all square in the and single molly brown. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. rishaad: this is "bloomberg markets: asia". i am rishaad salamat. let's see what's going on as we head towards the japanese lunch break. sophie: thanks. as we go into lunch break, the nikkei 225 lower by 1%, as yen strength pushes down on exporters. the top story is toshiba, a third day lower. elsewhere in the region, green in new zealand. indonesia pulling through higher, and vietnam coming online stronger, but a pullback in australian shares, looking lower by .1%. rising for a fourth day,
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helping mining stocks gain. in the commodities space, we are seeing a retreat in oil prices coming back from the 18 month high we saw yesterday, so brent lower -- trading .2% lower. gold as i mentioned earlier, gaining for a fourth day come in the longest stretch of gain since november as investors are looking to haven assets as they price in rising concerns over donald trump's presidency. 8% year to date, but has lost as the dollar climbs after donald trump's win. in the raw materials space, is set as that space for the first annual decline since 2010. copper down currently at .4%.
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some stocks in focus, toshiba asending losses, plunging the company's rating was cut by s&p and moody's earlier today, shares falling as much as 26%. sumitomo mitsui falling 4.6% today. they are seen to have the highest capital exposure to toshiba, according to analysts. in the other direction, takata gaining 16.5% on news that a settlement may be underway regarding the airbag debacle. the company saying it is not the source of the report that it is theing settlements with u.s. department of justice related to its faulty airbag, saying there is no decision made and nothing that requires shares surging to
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the daily limit after that wall street journal report. that is asia today. very muchhank you indeed, right, let's have a look at china as it drops its target for trade growth, the second year they have done this, and all according to the state media reporting that authorities are downplaying this goal and the whole motion of goals. sherry and has the details. whole notion of growth targets, and it is interesting because the ministry just ended this key annual conference without a target for 2017, and they did not set a target for 2016 either, but what is interesting is how local state media is interpreting this move with the shanghai security news saying this is probably because policymakers are backing away from growth-excessive growth targets. it is not surprising given how much uncertainty we have seen over the global outlook for growth. been's trade has
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weakening, declining a little bit, and a lot of volatility, the blue line is imports -- exports, in fact. imports are in the white line. there is a lot of volatility, so now policymakers are backing away from specific targets and this one high level officials saying that abandoning a target is more appropriate for conditions under the new normal. fromis a huge department tradition that started earlier this year. whichd: we do have a yuan has been weakening gradually. now that should be supported here, particularly the export site, but then again we have a global economy that has not been firing on all cylinders. shery: we are seeing the weakening yuan help exports, and global demand being a key issue. if you look at the yuan, it is strengthening right now because of the last session it closed at
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the lowest level since may 2008, the fix almost unchanged, slightly on the downside, but now reports coming out with the pboc denying that it broke the seven handle, breaking that nexte perhaps sometime month is donald trump takes over the white house. we could see it continuing to search. volatilityere is here, and how does that play into the whole financial system and affect things? , capitalweakening yuan outflows, destabilizing for the financial system, and now one high level officials saying that the pboc should ease. of course the pboc has been trying to carry out this balancing act between providing liquidity and avoiding these,
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fueling these asset bubbles, and now the china banking regulatory commission officials saying that china's requirement for how much cash banks must hold in reserves, we are talking about a triple-art. he is saying that is high right now and should be reduced at an appropriate time. sinceiple-r has been 17% february. we are going to see another cut to 16 point 5%, but not until the fourth quarter of next year. muchad: thank you very indeed for that. right, we move from china to japan, with the boj releasing a summary of opinions. we are looking at all of this. the last meeting of the year, how did the board think that things are going? bank that hasal
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not achieved is only stated goal, 2% inflation, and in fact, inflation has been going backwards for the past 8-9 months, it seems to be saying the situation is pretty good. japan's economy is growing and has grown for the last three quarters. the yen has weaken, stocks have risen since the election of donald trump, so they see the u.s. economy strengthening with the possibility of more stimulus as well, so the boj's board seems to be happy with the way things are going at their final meeting last week. were there any changes to policy flagged here? the minutes from the november meeting came out earlier this that we saw the majority of board members saying that the boj should not be
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getting rid of the monetary base or the jgb purchase policy tool. that theydiscussion would move away from that and abandon that language. the majority of the board seem to be opposed to that move in november, and there is no mention for december. there is some discussion about how the yield curve controls should work, but as you saw in the vote, meeting last week, the majority of the board seems to be happy with the policy tools they have now and there is no indication from today or the minutes earlier this week that they are looking to change policy or change the wording of -- in the new year. rishaad: thank you very much indeed for that, joining us from tokyo. there having a look at
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world of technology and finance draw ever closer, some are best placed to become market leaders. we asked bloomberg intelligence what to look out for when it comes to find them to -- to financial technology, or fintech , in 2017. >> there is a fast-growing china internet segment. basecludes skills of user among user data and technology capable of analyzing and using the data. they have been in the investing sector for years. for new commerce and smaller players, so we think the market would likely consolidate further in the coming year. ♪ will take center stage in asia next year. investments will continue to
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focus on areas of online money transfers and de-payments. we expect more regional banks and internet companies to do more on research and applications. banks are among the key advocate or so the technology in the region. >> development in 2017, 3 key areas, how to improve distribution, product development, and how to engage the client more. the same concept is being applied to car insurance that is being applied to wearable technologies. mostly is the convergence of companies and tech companies theirg hands, using innovation power to come up with new products and underwriting them. up next, assessing the
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top threats to china in the year ahead. guest in ar from our moment about what is keeping him awake at night. ♪
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theaad: a quick check of latest business flash headlines. exxon mobil has made a natural gas discovery in new guinea where it is in a legal fight to ask bandits reserves. -- to expand its reserves. the size of the deposit has not been determined yet. the deal has been put on ice pending a shareholder vote. the focus on hybrids is paying off in europe. for a 40 is on track
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is set for-- toyota a 40% jump for hybrid sales. chinese video streaming service says it is in talks to raise 1.4 billion dollars from undisclosed investors through a private issuing of a stock, backed by the billionaire founder and sometimes described as china's netflix. shares were halted and will remain suspended during negotiations, but trade should resume within 10 days. arele around the world counting down to 2017, but the new year is looking rough for , spiking bond yields, the currency having its worst year since 1994. we ask about the
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challenges that china will face. fed ifproblem here is you look at the private sector, the are capital investment remains weak. the economy has stabilize, no question about it, but the stabilization has been caused by the public sector capital the fiscal so once stimulus has petered out over the course of next year, i am concerned that the growth will steadily, so i think the structural problems have not been result in china and i don't think the chinese government has really done a serious job in reforming the economy. that is the fundamental problem going forward to > how could you have substan -- in and compete with some of these behemoths seems like a full's errand. >> -- like a fools errand. >> you have to do some tough
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work. for example, the state monopolies are huge, enormously inefficient, not very profitable, they employ a lot of people come act more like government agencies instead of companies, so these companies have a monopolistic position in which suffocates small businesses. the problem is to break them up we require a lot of political capability and also you need a leader that has a really long vision for the economy. you want to know where the economy really wants to go. right now, i don't think the chinese government at the top level has a consensus of vision to pursue the job. that's why the whole thing is kind of a stalemate. >> is it because china is distracted by having to manage their currency depreciation? think in 2017, it will be a
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tough year because the chinese central bank will have to deal with the fed, because the fed will definitely raise rates a couple of times, and under that circumstance, the chinese currency will be under downward pressure, so how will they do with that? are trying toy maintain control of interest rates and foreign exchange rates to have some capital mobility. this is the so-called impossible trinity, so ther you have to reform the system. you have to let one go. you cannot do both. think about the chinese economic system or economic policy, the only thing that actually is left at today is fiscal policy because they are boxed in on the monetary front, so that is why they are focusing on this fiscal side, and that is one thing that is very risky and
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of course you have to deal with the trump and hawkish trade policy towards china, and that is a key risk for chinese growth next year. we spoke about what would happen if we did see a border tax, and these were his comments. dollar,15% on the doesn't seem so ridiculous, right? forgetting about the dollar appreciation in the last few years. >> is that what we are in for with dollar-yuan? it is interesting to think about a trade war potential. if you think about the last time we had a trade war was in the lasts, and that was the time we had a full-blown trade war. at the time, we had a gold standard, so every time the u.s. raised theffs, it
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prices of every countries imports. that's why we had a trade contraction from one country to another. today, we have a different an interesting situation. 45% tariffsput up against chinese imports, they could manage a massive currency devaluation, let's say 40% for arguments sake. that would offset the impact of the tariffs, so all i am saying today is that we have a floating exchange rate system today around the world. that flexibility offsets a lot of potential damage to the economy, but you have to be careful on the markets, so if problem a trade policy between china and the united states, the currency will be the one that will make a lot of downward adjustment. >> as you are saying, political matter more than a economic matter. resident xi has consolidated his
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, is there any reason to expend that political capital to have true reform? xi jinping?ial asian >> yeah. >> he talked about supply site structuring come but you read what he really meant, it's a totally different thing from the supply side reform we understand, what we talk about supply side reform as a regulator system, cutting taxes, making a firm much more competitive, that's what we mean. the president is talking about is a strange thing, statement not believe, cutting oversupply, which is ok.
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that is the technical part of the supply side reform, but you're talking about a stringent statement not only, not supply side reform, that is totally something else, so all i am saying is that i do not personally think he has an idea of where he wants to take the economy to. right, coming up, japanese engineers working to keep aging robot rovers alive. ♪
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dog, theyhe robot were never the mainstream success hoped for, but when they went out of protection, a determined few are working to keep them alive. one of the hundred 50,000 aibo's sony sold. just made it to middle-age before the division was killed off and sony cutbacks. but more than a decade later, aibo still provides comfort to their devoted followers. love is much greater than when i first met
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him. he smiles back, runs to me when he finds me, and starts dancing. >> a former sony engineer divides a lifeline for the aging pets. >> we were first asked to fix aibo in 2013 when an elderly man said he wanted to bring his to an elderly home. if asked, we will do what it takes to get them fixed. of seven engineers can't work fast enough to get through the pile of more than 450 ailing aibo's. he is expanding and hiring more engineers. he is trialing another business into elderlyg aibo homes to offer robot therapy. when i say something, it responds. it is a very special feeling. it makes me feel happy. i have never seen anything like
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this before. i kind of like this. >> robots help you communicate with the world around you. i think this is the most important factor of robot therapy. >> although japan pioneered robot therapy, it's spread has been slow. rental services could be one step down the line to helping all dogs learn new tricks, and bringing happiness to a new audience. rishaad: ahead on "bloomberg update onsia", the the big stories of the day. we are joined by brett mcgonigal. that and more is on the way. ♪
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♪ >> from our studios in new york city, this is "charlie rose." charlie: bono is here. ms. earmarks -- this year marks the 40th anniversary of the rock band u2. u2 has sold more than 157 million records and 122 grammys. he is also known for his rockstar status and for his philanthropic work around the globe. u2 is celebrating its 10th anniversary with red. over the weekend, u2 made $100 million to fight aids and malaria. he recently returned from a trip to nigeria.

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