tv Bloomberg Markets Asia Bloomberg March 14, 2017 11:00pm-12:01am EDT
theft of personal information. worth --ed to pose its worst results in years. rising cost blamed as the reason for that. shery: so much to look forward to. we have to break down the speech. pre--fomcve the speech. >> we are in final position. there was another market to watch at the close of the day, not tied to this fed positioning. it is the markets in india, and absolute frenzy. let me get started. i will join you later. have a look at this. for our bloomberg clients, this is live , pictures coming out of that press conference. very rare, out of beijing.
these are questions from the press. we will recap those with tom begins -- tom mackenzie in beijing. live on your bloomberg. will flesh out all the data for you. i am watching this very closely. the indian market's frenzy yesterday. this is the inverted dollar biggest jump in 18 months. do we see a day two to this? nowunderlying thinking is these are consolidated, they can put that in pursuit unpopular perform measures and hopefully unlock constraints to growth. that is the rupee over the last 12 months. there is your search right there. axis.s a conventional y
this is your twelve-month rupee. last i checked, we are pointing to gains at about 45 minutes from now. in the meantime, let's get it to paul allen with the first word news. >> president trump's choice as trade negotiations, china high on the list of things the u.s. should worry about. speaking at the confirmation hearing on capitol hill he said it is not clear if china was manipulating its currency. he is waiting for a treasury department review next month. lighthizer said president trump will shake things up. time ieen now on the leave, you will say, bob, you were right. he really is going to change the paradigm on china. i believe you will change the paradigm on china. if you look at our problems, china is right there.
>> secretary of state rex tillerson arrives in japan wednesday for three nation tour of asia which includes the trump administration's policy agenda. tensions rise over north korea and the potential u.s. protectionism. on friday andoul beijing on the weekend, where he will discuss a summit. south korea's former president will be summoned by prosecutors next week. park geun-hye will be question on march 23 in the widening discussion of corruption between government and big business. reports say she will cooperate with the inquiry. us they aretelling planning to issue indictments related -- related to the hack attacks of yahoo!. four people are indicted. person was-- one
arrested today in canada, the rest are in russia. yahoosatened to derail -- yahoo!'s web operations. i am paul allen, this is bloomberg. shery: the focus right now on chinese premier li keqiang. want a beijing does not trade war with the u.s. as he wraps up the national people's congress in beijing. david: he says he is optimistic at times but acknowledges there are disagreements. cannot do anything about that. tom mackenzie joins us live from tiananmen square. what else has li been focusing on here? as you touched on there, the first question to from your -- premier li was on ties and
trade. the relation about their difficult points, we expect to move forward. we expect the relationship to improve. but the phone call between the two presidents where trump said he would support the one china policy, that laid a foundation on which they could build it now. he was also asked on the trade side about a potential trade war. he made the point of saying, u.s. companies will be hardest hit if there is a trade war. we know policymakers have drawn up a list of retaliatory measures that they would take, should tariffs be imposed. he was also asked about financial risks. top of moved toward the the agenda during the national people's congress. policymakers say the focus will be on weighing in those financial lists. li was asked, he said there are systemic problems, but we are acutely focused on any that may arise.
he also said, there are problems internationally. he was alluding to what is happening in europe, brexit, and the anti--- or that protectionist sentiment that is whipped up around those political of ends and what you see with president trump. bloomberg'sasked by beijing bureau chief about china's role in terms of globalization, and being a champion of free trade. he said he and china would continue to open up the economy here to foreign investors. shery: when it comes to domestic politics, local leaders seemed keen to avoid the spotlight. we had the communist party reshuffle coming up in a couple months. what do we know so far? it is been interesting to see just how orchestrated this event has been.
it has always been a tightly managed piece of political theater. every now and then in years past you had a comment made here, or someone talking to someone else, tothings that may allude what is happening behind the scenes in terms of political reshuffling. that has not happened this year, everyone has been on script. that ties in nicely to president xi jinping as he looks to reshuffle the top leadership and shore up his support. from the policy makers and delegates, we have not heard anyone trying to take the limelight. we did not have a were people 2012 when one was criticized by premier,. who was jailed for corruption same scripton the so far. but it is a big political year for china with that party coming up in november. shery: tom mackenzie joining us
from tiananmen square. the other big story is that the white house has confirmed details of president trump's 2005 tax returns. that follows earlier media reports. awaited details on that. ramy inocencio has the details. take us through the figures, how much and when. it, $38e face of million is a takeaway in terms of donald trump's tax returns for the year 2005. this is coming out of two papers off of his 1040 form. million, there was a $150 million in income that year. he also wrote down $103 million. if you put together what he paid and what he made, that comes to an effective tax rate of 24%.
our bloomberg correspondent tweeted a photo of both of his tax returns. basically, this is a general overview of things. if he returned his entire tax for the year it would be longer than this. msnbc came out with this a couple minutes ago. the white house preemptively said that these numbers were correct. the white house in a statement said, mr. trump paid $30 million, even after taking into account large-scale depreciation for construction on an income of $150 million, as well as paying tens of millions of dollars in other taxes for excise and employment taxes. they are saying this is illegally published and proves just back, that he did pay his taxes. they are saying it was illegal
to publish but experts are saying, it actually is not. it turns out all this was gotten, in a journalist's mailbox. very old school here. this was not illegally gotten. shery: i also found it interesting they tried to preempt that. there has been keen interest. no presidential nominee in the past 40 years has kept their tax returns a secret. what is been the reaction so far? you're talking everything to the watergate era, president nixon in the 1970's when he decided he did not want to and then did it a year later. he had to pay back taxes. in terms of the reaction, not so much on the twitter account. one person with the trump name the was talking and reacting is donald trump junior. let's take a look at what he had to say here.
he said thank you, rachel maddow, proving to your trump-hating followers how realdonaldtrump is, and that he paid about $40 million in taxes. the american people might be a little more interested in satisfied here because a recent americans want donald trump to release his taxes. shery: these are 2005, right? ramy: -- david: ramy inocencio with the latest on donald trump's tax releases. equities, we have a decent bid when it comes to commodities. more details from juliette. zealande seeing new leading the declines in the asia pacific region, down 1/10 of 1%. weakness on the asx 200.
the nikkei is down one third of 1% in japan. volatility coming back through in today's markets. the nikkei gauge of volatility is high 44 consecutive session. currencies, wet are seeing the japanese yen, 114 changing. that was one of the major currencies to be rising against the dollar earlier in the session. we are seeing gains from the new won as well.orean looking at these commodity prices, look at that 5.3% gain in iron ore, we saw a huge jump in that commodity yesterday. crude oil rebounded after that 2.7% slump that we saw during the new york session. this is the one day chart after
the oil price rebounding after the big slump we saw on the report out of saudi arabia, really hitting that crude oil price. one of the keys for investors, we await the fed. we see the oil contract really weaknessrol and cause coming through, as we expect from those energy players and airlines under pressure as we await the specific numbers. for that.nk you we will continue to discuss the fed the decision. says the central banks may be misguided when it comes to assessment of the u.s. labor market. secretary of state rex tillerson meets -- they examine the challenges they are facing in the region. ♪
david: welcome back, this is "bloomberg markets: asia." shery: our next guest says he sees three fed rate hikes this year. an investment filing strategist joins us in the studio. it seems to be a done deal when it comes to market expectations right now. dot on thehe bloomberg. it may tell a different story when it comes to the pace of the rate hikes. if you see it might bloomberg, you can see market-implied expectations and blue are in the same place as the last meeting in red. not as hawkish about the rate hike as the fed dissipates think, in green. players saying there is a greater chance it will raise the medium forecast for the funds rate. think what is going to
happen, the labor markets will pick up. they will not tighten. this is a very important point. 37% of americans who could work, do not work. that is very important. be labor markets, there will more people getting jobs, but that does not necessarily mean just because the unemployment rate goes down, does not mean the labor markets are getting tighter because the labor force participation rate is very low. it is only 63%. david: absolutely, we have a graphic that shows this. you are saying because the economy, the recovery was quite slow and things are picking up, people are going to come back into the workforce. what i would say, most of what led to this decline in labor participation rate is demographic. even if the economy does improve, you would be hard-pressed to find workers coming back in. enzio: it depends on what end of
the stick. talk grandly about infrastructure spending. i would say, who is going to do the job? it will certainly not be the white-collar americans. we will have to guess what, mexicans? but he is decided to keep them out. david: what does that do to rate inflation? enzio: i do not think it will do a lot because productivity will remain strong in america, with those a brilliant minds in california. successful multinationals abroad producing more goods. the supply curve has become infinite. if you need to produce more, you can bring in more from abroad because the trade is so free these days. nexus of labor markets, that is anakin a stick -- anachronistic.
shery: after the fed rate hikes we saw u.s. treasuries gaining. how do position government securities? are you one of those that think 10 year yield will top 3% soon? enzio: i am trying to go higher. -- they willl more sell more of these market -- sell more of these mortgage-backed securities. cause a tantrum going forward and push the prices down and the yields up on the mortgage-backed securities. that means you have more and pushinging on up the 10 year yields above three. david: if we do expect the yields to go up, there is a strong core correlation. one of your under the radar quotes -- it is hard to imagine
those two to exist. how is it possible? enzio: i am looking at an either/or. either stronger growth or higher if you accept that paradigm, market imports will keep rising, commodity prices will keep rising, that will make people even more attractive into emerging markets that will increase the prices. this has gone up very shortly. the r.b.i., getting the markets to curb those gains. investment strategies limited, joining us in our discussion. david: before that, we are taking to the skies. skies.nt
looking at live pictures from beijing. he is talking about the economy, and south korea. look atconomy, when you 6.5%, he says it is not low. employment is the foundation of economic growth. when you look at the growth target, 6.5%, that assumes they will be able to ensure employment. to put that into context, when you start cutting capacity from these old-school sectors, cement making, where do you find places in the economy to fit those workers into? when you have millions of people coming out of the old industries
you have to find employment elsewhere because it comes down to this stability mechanism. shery: and stability when it comes to the regional tensions we are seeing. li now saying he seeks he's on the korean peninsula and dialogue to solve the problem, and that he is against nuclear weapons. this has been a key issue between china and south korean relations because after north korea fired ballistic missiles last week we saw south korea and deploying an antimissile system that china considers a threat to its own security. this will be key for china going forward in dealing with geopolitical tensions in the northeast asia region. david: we will be getting the latest lines on the bloomberg terminal. shery: we have cafe pacific with -- full-year results in half an hour. it has been a tough year for the
carrier. david: the forecast this time around is not pretty. the weakest results in eight years, coming in at $58 million for 2016. scrapped itsay second outlook. fell.ofit sell -- we could be looking at pretty nasty numbers. -- there ismpanies competition from mainland china, less people traveling, and increasing costs, eroding the earnings. yields are in area, money earned for flying up passenger one kilometer. >> the biggest problem, we have
seen throughout the region with the yields going lower. they wille of cathay, be doubly hard hit on yields because they are relying on transit traffic. [no audio] he is not too happy with that. if you look at the bloomberg, you can see there are no buys whatsoever. see the share price rising over the last six months or so. it is reflecting analysts' 12 month target price, which is lower this -- lower than the shares are being sold that.
kong.is 11:29 in hong i am paul allen with the latest first word news. donald trump's taxes back in the news from 2005. he made $150 million and paid $38 million in taxes, which is an effective rate of 25%. it matches a document from msnbc. he took a write-down of $103 million of that year. the white house said it is illegal to steal and publish someone's tax returns. it willli keqiang says
face further friction as they try to open their economy. he has been speaking at the conclusion of the national people's congress. he expressed optimism about ties with the u.s. and the one china policy. beijing does not want a trade war and chinese investment created one million u.s. jobs last year. china-u.s. relations have despite theorward, twists and turns over past decades. i am optimistic about the future of this relationship, no matter who gets elected. the european union may force the u.k. to wait until june 4 brexit negotiations, despite prime minister theresa may saying she will trigger brexit this month. other members are looking at a meeting on june 20 to begin the two years of talks. may has been filling the agenda.
when she invokes article 50 the lisbon treaty, powershares to them e.u. we remain on track with the timetable i set out six months ago. i will return this house before the end of the month to notify when i have formally triggered article 50 and a process by which england will leave the european union. >> french presidential hopeful fillon has been charged with misuse of funds, casting doubt on his presence in the campaign. investigations he paid his wife and children to carry out for dishes jobs. he denies any wrongdoing and will meet judges later on wednesday. he also said he would withdraw if formally accused. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ david: one market we are
watching opens up in less than 15 markets, our markets in india. there was a frenzy yesterday. are.is context where we how important that rally was yesterday. we want to focus on the bottom panel. essentially, when you have the market up there in the top panel going in the same direction at the bottom, it confirms the strengthen the trend. the reason i bring it up now, indian stocks have been stuck in a tight race for five weeks. you could argue because of the downward sloping line. we were on the cusp of a downtrend starting to form. [no audio] we were on the cusp of a downtrend starting to form. it might be some relief for the equity markets. jump to theupee
highest level since 2013. the r.b.i. has a tricky situation in their hands. we saw expectation prices rising, beating estimates with a data last night. decisiong the r.b.i.'s and now last meeting to withdraw from their accommodative policies. david: when you look at markets right now, they do not care. futures in india pointing to another pop at the opener, 3/10 of 1%. to borrow a line from beauty and the beast, something sweet and something kind, if you will. are not enough and beauty and the beast analogies in the market. i am looking at the dollar ahead of the first meeting. that huge rally coming forward in tuesday's session, up one third of 1%. up a little,n come up 1/10 of 1% against the
dollar. have a look at the commodities-based markets. kiwi quite well supported. most getting momentum against the dollar. in terms of the overall movement on the asia pac region, similar to what we saw on wall street. caution coming through, but volatility is back. in the u.s. quite strong, the biggest jump on tuesday. volatility across asia quite strong. this is up one third of 1%. there was a 2.7% drop in crude oil. in hong kong and japan leading the market lower. , just little in the black real estate and telcos slightly in the black. we are waiting for cathay pacific take come up with its
numbers. up 1/2 of 1%. toshiba is a stock we are watching heavily. they had a press conference after the bell. the ceo saying his fate is in the hands of the company's board. the nikkei is saying toshiba will remain at its indexes, down 7/10 of 4%. that is the biggest jump we have seen in over a month from fortescue. a big rally coming through in that iron ore price. it is up by over 5% after jumping high by 4% in yesterday's session. a lot of support from those iron or miners. shery: thank you. across the markets we are seeing pre-fomc positioning.
mark, what is of the vote like within the market's life team here when it comes to the meeting? will it be dovish, hawkish? what does it mean for you? >> it is been a heated debate inside the team and across markets. will it be a dovish are hawkish hike? dove, it is not running away. growth while solid is not crazy high. has aederal committee history of being dovish. with of the recent fall in oil and commodities, there is reason to think it is a dovish hike. on the other side, the fed may maintain optimism the economy is growing. toy want to open the door four hikes via the dot plots. we slightly air on the side of the dovish hike. david: what about you? mark: i am personally on the
slightly dovish side. even though the fed may be slightly hawkish by raising the dot plot, they may interpret it as dovish. by the end of the week, yields will come slower and we will not make the big break and we will see treasuries rally again. but let's see what happens. shery: given the market expectations are virtually on the side of a rate hike, the communication here will be key. what do you expect to see? mark: i think it will be all about the dot plot. it will be a shock to the market if they do not hike rates. few people are considering the option. it is whether they say there is upside risk or balanced risk, whether they raise the dot plot and whether they mention the balance sheet. i do not think they will. the upside risk will be important and cause a spike in
yields short-term. on the dot plot we are expecting it to be raised up, but by how much? those are key issues going into the meeting. mark, thank you so much for joining us. you can follow more on this story and his comments, based trading on the blog on bloomberg. you can get a market run down and there is commentary and analysis from bloomberg's expert editors. you can find out what is affecting your investments right now. david: and do not forget our coverage of the fed, that starts at 1:00 p.m. new york time eastern on wednesday, 1:00 a.m. in hong kong, or 4:00 in sydney. shery: u.s. secretary of state rex tillerson arrives in japan wednesday for a three nation tour of asia. koreans grow over north
and the potential u.s. protectionist agenda. we will be following the visit. this is the new secretary of state's first big international test, isn't it steve? been to germany, mexico city, but this is the real debt -- real test. breaking., deal whether he can translate that to the diplomatic world is much different. especially when we talk about giving north korea back to the table. that will be front and center in tokyo, and in seoul and beijing over the weekend. we do not know much about rex tillerson as secretary of state. he is not bringing that traditional press corps on his airplane from washington to tokyo. he is breaking from protocol there.
that has raised some eyebrows. them a be able to ask couple questions at a joint press conference with his counterpart in tokyo. tomorrow he will meet with mr. abe before going on to seoul. japan is the united states most solid ally in asia. mr. tillerson, get your sleep, get over your jet lag. you go to seoul where there is a huge power vacuum after the impeachment of the president. he will be meeting with the acting president. we will talk about the prospects of the new president and what type of relationship they will take with pyeongchang. inording it effort to rein north korea's nuclear abilities. you mentioned coming up to beijing. at that is a big one.
beijing is pretty angry about the deployment of the antimissile shields. how thorny could this get? steve: it could, or he could be smoothed out. xi and mr. that mr. are lining up a summit in florida as early as next month. there will be smoothing out of relations there ahead of that, i would assume, this is mr. trump's key diplomat. we heard his comments in his confirmation hearing about china's militarization of the south china sea. that can be front and center of what mr. tillerson is talking to. does pale with what li keqiang was talking about at the national people's conference. it is no coincidence that the first issue li keqiang address at the key conference, a highly orchestrated affair, they wanted
to put this out there. the bedrock has been put in place about the one china policy, that the united states and beijing recognize. on board, itp is paves the way for dialogue building with mr. tillerson. lots of issue with the economic front. mr. trump has lingering in the background of potential for unitive it. china a currency manipulator, still out there. it is not hard of the secretaries remittance, but it is at the back of the relationship. david: i will pick up on your point. just picking up on what steve was pointing out, coming out of beijing, when it comes to the economy, li keqiang saying these talks can stop.
it is supportive of that view. country does face barriers when it comes to pushing forward these reforms. he mentioned when it comes to the government, the communist party must reform itself. medium to high-speed economic growth, china is committed to keeping that. when you look at job cuts expected to come because of the shift from old industry to new industry, they do not expect any big job cuts. i know economist that will disagree with that. shery: breaking news out of south korea, saying it south korea has set its presidential election for may 9. that is the last day from the deadline after the axe of a president park geun-hye. they do have to set up the presidential candidate. the main opposition democratic party is set for a primary.
shery: breaking news out of south korea, the axing -- the acting president will not run in the election. expectations were high. coverings in seoul that impeachment of park geun-hye, people were expecting him to bring the party into more unity but it looks like that is not happening. the presidential election will be held on may 9. , investmentnd david
strategist at private capital. we start with south korea's breaking news. to on thet i talked ground, they were pretty optimistic about the won, the equity markets more resilient than initially thought. this business works from the other side of the table, when fund managers go into emerging markets they tend to go for most of them. once the bandwagon starts, everyone else piled in. they take an independent view of the markets. once the rupee strengthens, everyone starts. >> i am always astonished by the emerging market in south korea. >> the democracy systems are perhaps evolving. just where it is in the neighborhood. can we refer to singapore as a developed market? >> we do. >> not a frontier market.
how do you think this north korea thing plays out? it has been an issue for the last two or three decades. we keep arriving at the same solutions. when you look at the problem through the prism of western or south korean lenses, no one is considered what the north really wants, what are they trying to say? >> i believe the north has come to the u.s., according to an editorial i read, says, if you talk to your military maneuvers we will back off on the nuclear bomb sites we are building and developing and playing with. as you say, it takes two to fight. what we have been given is the u.s. propaganda on this. >> we have seen this the last few decades.
diplomacy from north korea does not seem to die down, even when we have the sunshine policy with liberals trying to engage them. i am a sure if by giving them more that would result in north korea being more committed. >> especially with china's role. why would china be interested in a nuclear-free u.s. peninsula? and why would americans be happy with a nuclear rise chinese peninsula? it is like israel and the middle east, and incessant problem that never ends. >> that is why you are buying defense stocks now? [laughter] >> absolutely, yes. >> consumer staples, we like that. >> consumer cyclicals are in overblown story. the reason i say this, what we are witnessing is a global , akdrop from the day-to-day rebalancing of balance sheets a worldwide.
want to make healthier balance sheets at home again. just because you have a job in america does not mean you will go out and spend money helter-skelter. you will be saving more because you are getting so little on your interest rates you have to save even more just to have more money in the bank. it is not earning money off money. this is a redressing of the balance sheet to keep people away from, let's by the new car, the binge buying. a meal, keep have the heating going in new york city. >> we have breaking news, premier li says he will open the bond markets into hong kong. what do you think of that? a close between these dim sum bonds? >> i do not know a whole lot
about a lot of things, particularly these bonds. it is a typically chinese step in the right direction. that is all great. whether you will have immediate arbitrage, i doubt. >> why don't you like banking stocks? >> i think they are overvalued. i am not so sure these yields that go above 3% have to stay above that. i can see a lot of people deciding to go back into bonds when they decide the price is right. if i am correct, which is debatable, what you will find is that the fed it tightens too fast because of this misplaced story. the slowdown hits us faster than we think. i am thinking six to nine months down the road. >> that is why we see inflation expectations falling. we also see yield curves
climbing. >> slightly, yes. the wrong end would have to go up even more to make it attractive for banks to make more money. i think that story has been discounted in them markets. >> in japan that is what they are doing. >> yes, negative yields. >> the notion of the dot plot is based on the fact these are individual forecasts. miwe get personal changes, over thinking that we might get a change of the dot plot? >> what you are saying, yes, you will get a change. -- to not use forecasts be right. i may be correct for a change in my assessment that the inflation story, the demand story is overgrown. it is a cost-push story.
close. that being said, we are 500 points higher. shery: let's turn to politics. wednesday brings the latest test of nationalism at the ballot boxes. it is election day in the netherlands. of the geertm wilders has lost its lead. >> it has been divided and divisive. but the dutch go to the polls with a number of exit -- issues to reflect on. suchrexit and major issues as integration, immigration, and islam. will the dutch put a firewall on the role above populism in europe? if you do not like it here, then leave. that was the message from the prime minister. he went head-to-head this entire debate has moved to the right. fractionalized
landscape for politics. if you are expecting a quick allocation -- coalition, you better way. it takes 72 days to form a coalition. the netherlands decides, that gives me much more time to enjoy some coffee, some decent apple pie, and the delight of this city and country. lot hangs on the line of that election, including what happens to amsterdam as a financial hub after brexit. at least we know for now, some of japan's against lenders are increasing their presence there. david: when you look at overhead costs, one of the primary reasons he would move offices compared to london, you could cut your rental cost by relocating from london to amsterdam.