tv Bloomberg Daybreak Asia Bloomberg April 11, 2017 7:00pm-9:01pm EDT
♪ >> futures point to a mixed day in the pacific. the yen reaches 110 as investors prepare. united, one of the losers on wall street, struggling to contain the damage from a passenger's forcible removal. -- its very survival is uncertain because of the westinghouse lawsuit. >> increasing confidence china will not be branded a manipulator. we will hear from blackstone.
we have world coverage on daybreak asia, we will be live in hong kong, tokyo, and cindy -- sydney. we will also follow the latest scandal in dallas atwe will alst scandal in dallas at united. [no audio] >> i am a ramy inocencio in new york where it is just past 7:00 p.m. a.m. in just after 7:00 hong kong, i am shery ahn. i believe you have breaking news for us? looking a south korean unemployment just crossing the bloomberg terminal, 3.7% is what we are getting for the month of march. that was against a prior reading in february of 4%. we are seeing good news in terms of the unemployment rate kicking down. february's 4%.
looking to be in the median since 3.4% in january and a high of 4%. we will see how that goes when the day progresses. >> a big problem in south korea being unemployment among young people. that will be a key thing to watch out for. let's take a look at what the markets are doing. trading in asia has happened in new zealand, the market is in the red. just a reversing force, down 4/10 of 1%. the kiwi dollar has not done much in the last session, not doing much now. asian futures right now were mostly in the red. futures gaining 3/10 of 1%. asx 200 gained the last three sessions. thethe aussie dollar has barely
moved to this week but we do have unemployment numbers [no audio] that yen is now below the key technical level of 110 is at 110 .68. not surprising since we see haven demand across global markets. that is what we can expect in the region thisthat is what we n the region this morning. [no audio] >> there are safe havens in terms of the s&p 500, down 1/10 of 1%. interestingly, the north korean issue, those are coming into play right here and we are seeing those demands move into investor mood. united airlines is struggling to contain damage over its forcible removal of the passenger you probably saw that viral video. the initial efforts a damage
control have so far fallen flat. we have been following this from dallas. united's ceo has issued multiple statements about this incident. he have to keep coming out and saying more, why is he doing this? >> he does, the reason is because the first two statements from the ceo were ones that the general public felt were really flat in terms of a tone deaf approach to what the problem was. later this afternoon in the u.s. a issued what could be called formal, traditional apology and said this kind of mistreatment is not appropriate in that united will be looking into this incident and will get back to everyone by the end of the month. >> when initial video came out, we are seeing it here, we can see it is a man of asian descent. initially they thought he was chinese. according to a local louisville paper, he is a vietnamese citizen, a vietnamese doctor in
the u.s. what are the ramifications in terms of passengers in asia? at least for china i know united claims it has the most nonstop flights from the u.s. to china. there is a blowback here. very potential blowback here because the chinese population feels that united was discriminating somehow against this passenger, that can be a severe problem. united also has the most nonstop flights to china from the u.s., among u.s. carriers. big problema real because in terms of going to secondary chinese cities, united really has that market right now, along with chinese carriers. when it comes to chinese competition, they have more service than the others. that was the top trending story on weibo. that is china's social media. people are trying to figure out
if this was illegal. could we see a lawsuit coming out of this? i think it is probable you will see a lawsuit. there is a statement this afternoon from two law firms in chicago that say they are representing him in that he released a statement through those firms and wanted to thank people for their support. they also said he is in the hospital. i think that because we have these attorneys on the case now, it is likely they are talking about some kind of action related to this but we do not know at this point. do passengersen lose their seats when a flight is overbooked? is this a normal occurrence? or is this more something that happens at united? guest: no, it is a normal course of business. pretty much every area -- every u.s. airline is doing this because of the massive issue,
when people book a flight but they cannot make the flight. so what airlines do, and it is well within the laws and regulations, they developed more tickets for the flight that may have seen. they have good historical data on how many people will be no shows for the flight. if they do need seats, they generally get volunteers by giving compensation for future flights. right, youthat price will find enough volunteers to take care of whatever problem you may have. case, it may be that the compensation was not enough to get adequate number of seats they needed. shery: thank you so much for telling this story from dallas. let's get the first word news with rosalind chin. >> one of president trump's advisers says the u.s. is unlikely to brand china a currency manipulator. there will be a report.
blackstone's ceo doubts they will be criticized over the yuan . the administration is backing away from the rhetoric. they may not be able to survive is a growing concern over the offers for their units. delayed third-quarter earnings that were not approved by auditors. they had a loss of $5 billion and negative equity of $2 billion. toshiba could be delisted. >> we are processing the selection of those that wish to purchase our flash memory business. theng into consideration various cost-cutting measures we are taking, including the value of our memory business, we think we will have enough of a financial foundation. claims they have had their first quarterly growth in five years.
of 63 millions dollars are up from $59 million from a previous period. but sales fell 2.4% in the third quarter. to offset aough decline in consumer demand. u.s.ts from japan say the agreed to brief tokyo before taking military action against north korea. discuss thend tokyo recent missile launchers. u.s. movingto the to the area -- they said they would hold america responsible. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. ramy: stock market volatility appears to be making a comeback. this is trading at levels not seen since right before the election of president trump. november 8, five months ago.
what is going on here? >> a big focus on geopolitical events, trump tweeting out aggressive remarks about with or without china's help, we will continue following these aggressive approaches. it is not really helping any tensions, geopolitically. not a big drop, but clearly, the rally momentum has grown. 11 industry groups in the s&p lowered. earnings is underscored here. n's email outlook, when out to the country that forced him to hold a conference call, their numbers are disappointing. sears, a big jump up from 11%. one of the big investors talking about the company not having viability. but bankruptcy rumors have been set aside for now and investors are jumping in. it is a real turnaround.
also you saw a small company talk big on a $1.6 billion deal for rigs. let's hop into the bloomberg. gold was on the rise up again as the state haven's demand increased. an important moving day average was strong for the commodity. but a lot of it had to do with insecurity over geopolitical tensions. gold is very attractive right now. overtock market was a ride the last few months, but gold is back. back, it seems oil is rising $53 a barrel. what is it, geo little -- geopolitical tensions? those tended to be supportive of oil, but a lot has to do with opec, which is stabilized prices. we were up above the three
dollars for a while now. that is the oil back on an upward path. released, the saudi's are all in for supporting a continuation of this oil output accord. it helps lift prices. opec players will be meeting in vienna in mame. ahead of the big inventory report, i will go to the bloomberg one more time. you can see inventories declining a bit. home, can play along at you can see the major buildup and oil that has been falling off as rough -- as refineries are drying off on supplied. beckett also be supportive of higher prices. but there is always a surprise and the numbers and that will be a big focus. wednesday shery: thank you.
daybreak asia, i am ramy inocencio in new york. shery: i am shery ahn in hong kong. toyota warning the u.s. auto market has peaked and will shrink this year, despite unprecedented incentives to attract buyers. the u.s. sales president bob carter says it may fall from 17.5year's record, million. toyota discounts are at the highest level ever after they declined in the first three months this year. ramy: yahoo! is being sued in
the u.s. for allegedly failing to keep the promises they made to chinese dissidents in 2007. that includes financial and humanitarian efforts. they said they help the chinese government find dissidents, who were later jailed. yahoo! declined to comment on those allegations. are expecting inflation data from china in two hours. in march,up slightly rising 1% on the year. economists we spoke to found it down to 7.5% last month, from 7.8% in february. pulled down in part because of falling commodity prices. our next guest is known for his views on chinese markets, he is a chief strategist. he anticipated 2015, boom and bust in stocks. always great to see you. we have seen chinese markets
have rebounded well since the devaluation back then. to get ine right time and jump into the markets, or is it too late? guest: probably not. it has risen quite a bit, especially the hong kong market. are usinggn investors hong kong, putting money in china. what we are seeing is the tpi, which, that data will be released today, that is peaking. but it is still pretty weak. that tells us demand is pretty weak. time, ite same produces margins that are squeezed. now, it is for rising for a couple of months. much of the good news is that it has been priced in. with geopolitics and tensions rising, it would be difficult to be bullish on asian markets, including china. comes to least when it
different scenes within the chinese stock market, would you say there are bargains out there? we have a chart on the bloomberg us chief financial firms. they are training at the biggest discount since 2004 two both the msci china as well as their asian peers. would you say that could get into the chinese fans, or could that leverage and tighten concerns? guest: the chinese banks always shift. even so, it has been underperforming for many years. they have underperformed because it is such a large index component. having said that, the yield is good on those companies. growth economic stabilized and the chinese economy did not crash.
i would say that regulation is tighter, liquidity will be tighter as well. i would wait. shery: i want to jump in, you talked about the economy. the fact is, gdp data is not always very reliable. we have a chart showing premier , what followed him -- what numbers he follows. railways, electricity consumption, bank lending, that is the line in blue. they seem pretty high compared to the actual gdp numbers. which one do you prefer as a better picture of the chinese economy? would still look at what the economy is actually doing. for example, we know the numbers
we will see today, and later the gdp numbers. i think it has somehow lost its relevance. the growth is not surging back. the strength of the li keqiang index is that some liquidity's are picking up. prices higher commodity and many of the cicc's are enjoying a larger margin and the profit is coming back. specifically, if we did get into the opportunities for investment, where are you looking to? now i think we will stay defensive and look at the lower data. everything was from late december last year. there was a good rally. much of the good news has been priced in.
going for a bigger upside, we cannot see. but because of geopolitical concerns and tighter liquidity within the chinese market, it is time to get defensive on some of the lower based defenses. the: i want to hop into terminal and talk valuations with you. are valuations to hide? the yellowing at line. we are currently below average, what are your thoughts on valuations? guest: there have been plenty of times at pe, i would not say it is cheap. the u.s. index, it is about 23 times, not exactly cheap. what youto consider have to undertake and the potential upside is not that
great. the valuation is looking better than 2015 when the stock market was in a bubble. there are plenty of times i would not call it cheap. ramy: always great to speak with you, chief strategist at bocom international. a top trump adviser says the u.s. is unlikely to brand china a currency manipulator. we will hear from blackstone chairman stephen schwarzman. ♪ ramy: welcome back, one of
president trump stop advisers says the white house is unlikely to label china a currency manipulator. blackstone founder and ceo stephen schwarzman also spoke about tax cuts. had aed if trump timetable to reveal his plans on fiscal reforms. stephen: i am not sure, it is complicated. if the numbers were easy, someone would have printed it and sent it to you.
something inlish that area, something has to be taken away from other people, to have the revenue to finance the tax cuts. there are a lot of different ideas, a lot of different people both on capitol hill as well as in the white house. they are all thinking about what the trade-offs are. deliberate,uch more toical approach, than trying pass health care and 17 days. >> you have spent time with the president more than once. do you come away from this meeting with a sense of optimism? we spoke to gary cohn and he said at the end of the calendar year for tax reform. do have a sense of optimism at the end of the calendar year we can have major progress on tax reform? steve: i think you will probably have something. it is just a handicap of knowing
how comprehensive and aggressive that would be, as opposed to just a tax cut. so we will see when we see. >> that is fair enough, that is certainly true. when area you care about is china, you have been there a lot, are really invested in china. do you know how things went with president xi? saturday is the deadline for labeling china a currency manipulator. you know how that will go on saturday? steve: i would doubt that that would happen. the meetings in florida, mar-a-lago, were good meetings. i was there for some of it. trumpent xi and president seemed to establish a pretty good relationship. that is important because there will be a lot of issues that
won't be easily decided, but need to be decided by both parties. i think the chinese have a perspective on this. they are aware this is important and it is important to the united states. there are other important things, like north korea. the two countries are inextricably bound. ultimately there needs to be tiebreakers in each of the two countries, delegated to the president of those countries, despite whatever system gets used to get to the final set of traits. individuals have a sense of trust and understanding each other better, in the chinese system that is important. as we haveem, learned, it is also important. ramy: that was blackstone founder and ceo stephen schwarzman. coming up, the fed is the key to
a.m. -- shery: it is 7:30 in hong kong. we are 30 minutes away from asia's first market open. ramy: it is 7:30 p.m. tuesday here in new york on a gorgeous, slightly cap -- slightly cloudy evening. markets closed about 1/10 of 1%. aboute been talking geopolitical risks around the world from north asia as well as area, most recently. senator john mccain and lindsey graham coming out saying they do support military action in syria. we have to see how that develops in the region. i am a ramy inocencio in new york. shery: i am shery ahn in new york area you are watching
"daybreak asia." let's get first word news. unitedakers want airlines to explain why they dragged a passenger off the plane into cargo. they are trying to contain damage after mobile phones videotaping it went viral. issued a second apology to describe what happened is truly horrific. they recovered somewhat by the close. saudi arabia may support extended oil terms into the second half of the year. riyadh is likely to support action to drain the glut further. it could affect iraq and iran. they want to reduce output by 1.2 billion barrels a day. the cartel is set to meet in vienna next month. turning to the central bank, shifting focus to borrowing costs for mid and low cost funds. now worthd a surge
$600 billion, which is more than any output of the malaysian do and other economies combined. of that, $466 billion are due this year. growing, that it is about to change for china's under pressure developers. a surge in property markets means they are noticing the first drop in leverage since the financial crisis. initially, they expected more positive ratings for chinese homebuyers this year. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. shery: we are counting down to some of the major markets open in the asian pacific. we have our editor here in sydney. what are we looking out for today? >> good morning.
we are probably looking more at china, where we will get pbi and cpi numbers. the economy depends so heavily. another stock we are watching is bid about $1.3 billion for australian spectrum. the stoxx have currently altered, they will find that position. ramy: we have to talk about safe havens because we are seeing those junk. gold rallying to a five-month high today. what about asian markets? yen is that a five-month high. a level we have not seen since november. that is driven by geopolitical tensions. in the u.s. rose at a
seven month high. we have to see how high that flight to safety occurs during our day in asia today. great, we have to leave it there, but thank you very much. back in the u.s., reflation skeptics and geopolitical tensions, driving u.s. yields to the lowest levels in the year. japan will be a different story as they wait to see if it moves from deflation to inflation, continuing. kathleen hays joins us in studio. >> let's start with japan, we have japan's tpi for the month of march. showed survey manufacturers are getting more upbeat on output prices. ppi is seen march rising 3.4%, year over year.
let's look at this simple chart. it has the headline ppi and cpi. this gives us a nice view of the trend. look how much producer and wholesale prices have come back. up to that 1% level, expected to rise to 1.4%. bloomberg intelligence sees 1.2%, but still, making headway. the governor spoke to the japanese parliament 24 hours ago, saying he sees inflation continue to rise in a virtuous circles of rise -- rising prices and wages. giving a very optimistic view. also yesterday in tokyo, and inflation-linked bond sale was the most massive since 2013. presumably in part that core cpi
will be expected to rise. also because the bank of japan will be buying more of these. kind of a supply and demand question. china's cpi and ppi are the big ones. ramy: they are doubting the reflation trade. it came as a jolt, right? is actually job openings and labor turnover, a survey that is done every month. more companies are saying we have a job for you, which is a sign of a stronger labor market. the hiring and the quit rates are down to this. you can get a depiction of all of these. what bloomberg intelligence says is, stand back. we are leveling out, it is a stable labor market. that may be one reason the minneapolis fed president who
predicted rising rates was not quite ready. because he isy looking at reflation and employment. >> reflation is coming below are target, around 1.8, a little below that 2% target. i think there is still slack in the job market. these are not in conflict. that is why at the last fomc meeting i voted against raising interest rates because i think we can do better. -- maybond market bait be channeling him. that was the forecast on march 15 and they raised the key rate. the fed says no, only a total of two. they are talking about reducing their balance sheet in the form of tightening. you will not have to raise rates as much as you thought. so manye are seeing
other things, not only in the fed but traders have to factor in. geopolitical tensions, the elections in europe. what about the flight to safety? kathleen: it is very big right now. whatever you want to say about doubting reflation and recalculating the fed, this is what you see in times like this. people buy government bonds and u.s. treasuries because they are safe, they are a refuge. north korea has warned of a nuclear strike. trump tweets that they will fix the problem with or without china. they have to says drop their support of syrian president bashar al-assad. these things are making investors around the world and nervous. and you have the french election, there is a four-way race. it will take place april 23. but there were circumstances where they would try to take france out of the euro currency, start a referendum, start
frexit. we have seen this reflected in european bond markets. let's jump into the bloomberg now. you see the spread between two year french and two-year german notes. 2013.at its widest since if you take a look at the -- i am sorry, 2012. it was the worst part of europe's debt crisis. many people do not think there will be anything like a move to take france out of the area no matter who wins. but it is a hedge to be selling the french and germans short. we see these things reflected in government bond markets. shery: thank you so much for that wrapup. down 17%rgy investment last quarter as the u.s. and china scale back.
shery: we are counting down to asia's first major market open this morning. nikkei futures down 4/10 of 1%. not surprising given the strength we have seen that japanese yen, breaking below 110. but now it remains unchanged. this is "daybreak asia," i am shery ahn in hong kong. ramy: i am ramy inocencio in new york. shares plunged as much as 20% in mumbai, the biggest decline since 2009. charge a higher tariffs to make up losses due to an increase in coal prices. higher tariffs could be allowed only if there were changed to indian laws. they closed 2% lower in mumbai.
shery: america's top auto dealer is not buying tesla. says the twoo relative company's value is less and making it value less than gm is inexplicable. he praised elon musk for creating a brand with a strong following. investment in clean energy fell 17% last quarter as he was in china scale back support. than $53 million was spent on projects including renewables, efficiency, and electrical cars. that is the lowest investment for the period since 2013. there were bright spots, including a sale share by tesla.
our next guest feels china is doing many things the u.s. can learn from in terms of clean energy by creating extraordinary job growth. ahave just tannenbaum, he has hedge fund based here in the -- new york. there was a followed 70% investment in china, we will talk about how china is doing better, but i want to get your first reaction on this news. >> i think it is really a non-event. the big story is what america can learn from china. china is dreaming big and they can move big with a lack of regulations. whereas we can dream big and regulations are a problem. a quick example, china announced putw weeks ago they would 153 billion dollars into clean energy and jobs and that will happen. contrast that when the president china landed here and senators
announced a bill that would kill our nation's best means for creating 10 million new jobs and $1 trillion of revenue in efficiency and clean energy. ramy: in terms of clean energy, i know efficiency and retrofitting are your focus is here in the u.s. you say you think the u.s. can learn from china from that perspective. what more? jeff: what you are seeing in china now, they are not only creating new jobs with energy, but they're starting to retrofit their old housing stock. the interesting thing is, we have our first real estate president in the united states. president trump is a real estate president. his advisers are real estate guys. the biggest job opportunity we have that would be of similar scale to china's is real estate. we have $30 trillion in real estate, the buildings are old, the technologies of great american companies have improved.
we can have probably one trillion dollars of revenue and millions of new jobs if we unlocked that real estate metric. ramy: around what kind of timeframe might this be able to happen? retrofitting can and should happen according to many people, china still has a lot of other things on its mind. 6.5 percent gdp growth, the lowest in decades. jeff: with china, the amazing thing is, when i read the numbers from them i thought it was a 20 year plan. they announced it is the next three to four years. they will be spending that much money on clean efficiency and energy in the next four years. the numbers are to the moon there. i would like to see us do something similar, without any cost to the taxpayers. with some techniques they have. shery: let's talk about china's clean energy investments. the first quarter they fell.
how much was that a reflection of falling capital for renewables? or how much of it was because of waning interest in the industry? bet, i dould have to not have the precise numbers, i think prices have come down recently. on solar panels, which is great long-term. that could have impacted quarter results. china will beis, spending more money on this stuff to benefit companies like see new, emerging players in china in the smart home and smart building sectors. they will be doing things that will surprise you. i think you will see the numbers come up a lot. shery: we were talking about regulations and what happens in china.
that almost every part of life is regulated. how does it complicate matters when it comes to investing in the industry? when we look in the u.s., it involves basic analysis of what are the laws? historically, you needed a regulatory framework to help the investment in clean energy in the u.s. the beauty of what has happened in the past five years is, the costs have come down so much, driven by chinese manufacturers, our years, we to f will not need subsidies in the u.s. when it comes to retrofitting homes, you need less regulations. you need this loan that senator cotton put forward to not happen. they want better disclosures, great.
but you have to get organizations like fhsa out of the way. in china i am less familiar with regulatory issues, but china has not suffered from a regulatory problem in clean energy. they dominate the market for manufacturing solar panels and more recently, wind turbines. ramy: it is interesting, china produces one of the biggest manufacturers of solar panels. coming off of the president xi and president trump summit, no deals came out. if you had one hope for clean energy between u.s. and china, what would you like to see? i think that would needs to happen, china has to be held to a higher standard, a truly market economy. they haveappened is, lost a lot of trade cases by
selling products below fixed cost. the problem for our nation, by the time those get adjudicated, our companies are out of business because china owns those industries. it has happened in wind turbines, and solar. we need a faster mechanism. we could slip a border tax much more quickly. but we need a better mechanism than what is currently in place with the world trade organization because the timetable is too long to fix the problem, and by the time penalties are paid, china may have to pay the penalty because they do not own the industries. thank you so much for joining us. we have breaking news out of machine-ordered come out month-to-month, growing after falling in the negatives by more than 3% in the previous month. showsary survey figure 3.6, so they did miss estimates.
year on year figures grew to 5.6% instead of the expected 1.5%. when it comes to producer price inflation, we see inflation accelerating and growing at 1.4%. that is accelerating from the previous month in february, in line with estimates. we have previews these numbers would be positive from the survey, showing there were positive signals on capital spending. machine orders did miss estimates. but year on year, they grew 5.6%. when it comes to output prices, we have indication from producers and manufacturers that they would come in positive. that is in line with estimates. it is important because it comes
retailers in japan are fighting tight purse strings for the consumers. shows they row only 0.1% while there was estimate for 0.7%. consumer spending is still quite week. retailers facing challenges like rising labor costs. they found it counterintuitive. with labor cost rises, they should have more money to spend. but it is mostly boosted by a yen and exporting sector. people buy a lot of stuff imported, so they do not feel like they have more money to spend. ramy: what is the outlook? there are a lot of companies
announcing earnings today. --y are the biggest retailer supermarket operator in japan. the analyst consensus is forecasting they will miss the company estimate of 7% growth in operating income. because they are still one of stillasons -- they are trying to transform and erase their operating margin. ramy: we will have to leave it there. looking forward to more outlook on japan's retailers. asia's first major market opens minutes away. shery: let's bring in david shouldto tell us what we watch out for the open in tokyo, hong kong, and sydney. >> you have a gold and toshiba front and center.
the company brings up the growing concern. openingooking at a 210 on toshiba. samsung electronics, this is for the s8f you looking at plus. 31,000 is the price target, more than a 10% drop. we are watching gold prices, alsoin the futures, 1275 predicted. dollar-yen below 110. we might get support from gold-mining stocks when you look at the open here. a big day today across the asia-pacific. a very telling day. -- onming out of china
saying it's very survival is uncertain because of the enormous losses at westinghouse. ramy: those earnings came without the auditors approval. the stock the largest mover on the nikkei 225. shery: this is the second hour of "daybreak: asia," coming to you from bloomberg's u.s. and asian headquarters. hong kong,ahn in where it is just past 8:00 a.m. ramy: an im ramy inocencio in new york. rex tillerson heads to moscow, when he has to say. some u.s. senator saying that in terms ofbe done syria and military might. i want to hop into the bloomberg terminal. i want to show you what is happening in terms of the safe havens. the white light at the top, that
is gold. gold bell at $12 75. a 12 month high. bottom, 10 year yield on the u.s. treasury, look at that. ..29% it was about the 2.3, 2.6 mark. havens maynto safe keep on going. shery: of course, given the fact that this is a shorter trading week because of the easter holidays, traders not getting too aggressive ahead of that. you mentioned the safe haven. take a look at the yen. you can see it is already breaching the 50%. the two day moving average spot 70. this is a key level to look out for. breaking.
we are seeing this risk off sentiment. emerging-market stocks will suffer. we are seeing elliott waves emerging over the index. we are told there is room for a .hort-term rebound further losses down the road. this is something to keep our eye out on. for a look at how trading has kicked off, here is david english. david: you have to consider oil. one third are from if you don't believe the oil story, it is hard to get into the index fund.
south korea on the way up. that index has been hammered. some support out of the mining stocks. above still holding 18,500. here, we are not seeing a selloff in the equities space. yes, we are off the highs we saw a few weeks back. we are getting a lot of hedges, but no one is clearing the positions in the equity market. it tells me there is cash lying on the sidelines for some time now. let's have a look. this is another version of what ramy was looking at earlier. gold is on the way up. this is really when we saw money coming back into havens. gold is blue. again-dollar, if you will, in purple. these are stocks.
we will not be seeing a selloff. week, 9996.t of the theh the, what happens with oil price. that is crude on the back of news that saudi make it behind this. let's have a look at this. this out pointing earlier. the key support level. we are looking at this very important keynote, this dollar-yen.on very close to session lows. we were as high as 75. treading water, if you will, on dollar-yen.
very quickly, let me wrap things up with this. yields have been cascading lower. here is the 10 year. we are sitting at 2.5% already. this is a spread of basis points. uneventful. shery: thank you very much. let's get to first word news with rosalind chin. a group of u.s. lawmakers what united airlines to explain exactly why they aagged a u.s. passenger off plane in chicago. the ceo has offered a second apology describing what happened as truly horrific. united fell more than 4% during the session, but recovered somewhat during the close. singer's hedgel
global news, 24 hours a day, powered by more than 2600 journalists in more than 120 countries. thank you. toshiba shares slumping after they warned they may not survive enormous losses at their westinghouse nuclear unit. the stock down two point 7%. the warning came after they had delayed third-quarter results. art asia technology managing editor has been tracking this. how bad is this? >> it is a very unusual step for a company to take and japan, like any other place. they had been trying to close the books in the december
quarter. they missed to deadlines. this was the third deadline for finally.g -- they said they were not able to get the auditors to sign off the statements, so they decided to do it themselves, and make the disclosure. it is a very unusual step. there was a press conference with reporters, including our own, where they felt they should give this information to reporters. in that, they cited the risk of .heir ability to continue this is stemming, of course, from the billions of losses from the westinghouse losses in the u.s. ramy: toshiba saying that they may not be able to continue. this is a disturbing line. i want to push you on this. are they for shadowing the end of the company? what do they mean by this? >> they are brazing risk because of the troubles in the balance sheet.
what they are saying is they have not been able to get to the bottom of how deep the whole is, specifically at westinghouse. they put westinghouse into bankruptcy last month. they still don't understand what the liabilities will be from that. there auditors took the unusual step of having an independent review inserted into the financial statements where for accountants from the firm emphasized this risk. they say they cannot get to the bottom of how much this will cost toshiba to complete several nuclear projects. also, they are in violation of certain loan covenants, and they don't know what the implications are for that. have been quiet supportive of the company. they have continue to extend loans to the company and any financial support the company needs. how will the tokyo stock exchange actually take this?
the fact that the auditors did not sign off on this. to the tsceach out and they say they will review this information. there are a number of different ways that toshiba shares could be delisted from the exchange. it is clear that they will be dropped from the first tier of the tokyo stock exchange. even the company has said that at this point. longer-term, it's unclear if it is delisted completely or moved up in the first tier. cells potentially creeping up after this news. we will have more on toshiba later in the show. research analyst joins us to discuss the company's future or even its survival. tory: first, a look ahead the inflation data coming from china later. this is bloomberg. ♪
ramy: this is "daybreak: asia." i am dreaming it you in your. shery: china's factory gate inflation likely taking a breather in march after soaring to the highest rate in february. we can chop this off to a moderation in price gains. >> what we saw in february, the rise and the six straight months of inflation after 4.5 years of deflation. of course, giving industrials in china more pricing power can alleviate the debt burden a little better and profitability. what we are expecting and march is a tapering off of that to 7.5%. still, hi, robust, but again, we have seen those commodity prices
come off in march. it does not necessarily translate yet into cpi. completelyuary, benign. 0.8%. in march, the survey is for 1%. we can bring up the inflation tracker, falling again in march, down 3.6%. february was down 2.6%. look at that, the five-year chart, off the charts. maybe the next guest will comment on why food is so cheap. shery: let's be quick donna now who is joining steve and me here. food priceentioning inflation. where in the cycle of the right now? >> i think pork features prominently. pork is currently in the down cycle. prices are
concerned, where you look at cpi prices, they have been modest. 3%is still well below the seating. for the month of march, as steven mnuchin, food prices were very soft. nonfood prices hollywood have been slightly somewhat stronger, hence the 1% expectation. >> go ahead, continue. concerned,i is commodity prices. still quiet firm. it is starting to fade. last couple of months we have seen a sequential pickup. ebb. starting to last couple of months we
combined with the fading, the .rimary driver of cpi normally then is tracking price is long and convoluted with excess capacity .ssues competitive pressures so they don't always pass it along. ppi, still but 9, 1 .8%. well within the comfort zone. what does this mean for possible tightening? fares, in the market
terms of serious, aggressive tightening, i.e., a rate hike, probably not this year. i think market concerns about a marginal tightening are completely valid. we think the regime will still focus on trying to push through financial to leverage. deleverage. shery: in that aspect, we are seeing market rates creep up. build rates are much lower than this time last year. although we are seeing -- take a look at that. seeing nominal rates in white, compared to the real yield in blue, the 10 year chinese debt. as i mentioned, will rates continue to creep up? >> the chart that you fight up highlights it perfectly. now nominal rates higher
x number of months. if you look at the real rate, still lower than where they were last year. given that the majority of corporate loans, bank loans priced up, benchmark rates have not changed. real rate still lower than where they were. i don't think the economy will be severely impacted. >> we know, on short, corporate defaults quadrupled last year. still a fairly low number. sustain inflation, how is that helping out industrials to pay down the debt? shery: profit margins doing good. the price rally has helped. if you have lowered it down, you're not the seller, qr the buyer, it is starting to come through and hurt somewhat. in that regard, it is not just
the industrial producers, but if you go further into the economy, supplies aresumer seeing it. ramy: i see you talk about disorderly shadow credit. can you tell us more about that? moment, as we talked about earlier, there is still an incremental monetary policy tightening. toernment regulates our keen tighten all sorts of financial regulations, including collateral requirements. there used by smaller financial institutions for funding purposes. as the tighter regulations kick in, it will restrain their ability to access credit as easily as the used to before,
which, although it is being done in a very cautious manner, the risk remains that if they tighten too much, it could trigger an event. if it happens in the shadow banking system, it will likely be messier than in the formal system. >> it seems that at least when corporate outflows, that has stabilize. how much of a problem is it that this was achieved by for bidding money to flow outside of the country rather than more exports china.rts within >> for the month of february, we saw slight inflows. we think it was likely an improvement in inflows and also output. reduction in
we are still seeing what is happening. definitely the number of months you need, the number of boxes you have to take is longer. you're also think more companies repatriate back home. helping.ngs are also >> we see a little beginning of the you one for sis the dollar. want toct that you continue to have downward pressure on the dollar? >> a lot of that will pivot on how the dollar moves. we are expecting around 2% to 3%
deflation. going forward, i think the regime will try to avoid any shock depreciation. not beyond 7.15 by the end of this year. >> if it does go that way it feeds into a higher ppi. >> yes, and we started to see this creeping through at the end of 2016. the dollar is down to 360. we do think that once the fed starts to hike again, you will see more strength. maybe it strengthens the dollar. all of this will play into the dollar and outflow pressures, how they evolve. shery: the treasury fx report, is that a concern? .> as that approaches
hermes holds about half of 1% of rio shares. ony say they are focusing diversity and climate change issues this year. shery: one of australia's ministers is fund focusing on bids for anz's wealth business. kilohertz says he may use bond equitiesbank loans, or to pay for the acquisition. ramy: time running out for the world's biggest ship maker. meet nextset to week. south korea's national pension
shery: it is a: 30 a.m. in singapore. a very dark day. we have gdp data with the central bank's policy decision coming out tomorrow. we are half an hour away from trading. i'm shery ahn in hong kong. ramy: i may mean innocence you in new york. you are watching "daybreak: asia." let's get first word news. >> toshiba says they may not be able to survive. the warning came as earnings were not approved by operators. they posted and earnings loss of
$5 billion. the earnings delay means that toshiba could be delisted. >> we are processing the selection of those who wish to purchase our flash memory business. taking into consideration the various cost-cutting measures we are taking, including the value of the memory business. we think we will have enough of a foundation. >> l'oreal may have attracted bids from 16 suitors for its beauty division. it has explored options for the body shop where profit has fallen for three years. the body representing automakers consumer sentiment recovers from last year's cash bell. says sales will
likely rise 9% to a new record. boost employees will help sales. german prosecutors say they those responsible for three explosions carrying -- of a bus carrying a soccer team. one player needed surgery on a broken wrist. final against monaco was postponed until wednesday. global news, 24 hours a day, powered by more than 2600 journalists in more than 120 countries. im rosalind chin. shery: this is bloomberg. shery:shery: thank you. theshery: asian stock markets look a little misxed. let's get more on how the markets are trading in the asia le.ific with david ing
david: this is normalized at about 100, going back to a few days. the yellow light is asia-pacific. it has been hovering around that level. i do want to point out, something we have seen consistently, oil prices moving up. be likely back in this role. gold on the way up. yencan see the japanese here. some moving back into safe havens, like gold. this takes you all the way back to the emotionally charged session that we saw during the u.s. elections. that is a session high.
we close lower here. 1350.gh was closer to you have gold and yellow and the gold stocks here in blue. if you look closer, only one stock in the index on the way .own follow to the back. this taking you all the way back to monday, tuesday. here we go. .he green line we are watching to see if markets follow suit. easy toeen really follow follow to the. bloomberg radio
saying, this could be a catalyst triggering further risk. ramy: follett to the and safe havens, the name of the game for today, possibly the rest of the week, and beyond. in japan, producer prices edged forward. some fresh data on the reflation trade. kathleen hays joins us. what is the tech awake -- take away here? kathleen: slowly but surely, japanese inflation edging higher. that is in line with the bloomberg survey. let's jump in now. nice bloomberg charts
. you can see how the white line, the ppi of 1.4%, up from the year before. how it has gotten up to 0.3. there is definitely some progress. the turquoiser line has to get to 2%, there is a ways to go. believed to rise. it was showed that manufacturers themselves are optimistic about prices. everyone getting a little more upbeat in japan. we will see how it goes. ramy: it is all about a doubling down on reflation here. >> this is quiet the rally. you have the benchmark down 2%.
the reflation trade that started donaldhe election of trump. up 2%.e the tenure now, some doubts. opening and labor survey. high.w a seven-month slowed down a bit. the labor market accelerate so that you have to worry about inflation holding steady. break even. that's agreement between what the fed is seeing on the economy and inflation and rate hikes is being reflected in another thaty about inflation holding steady. chart , 76-79. this is inflation measured by how much bonds are sold.
of 2017. the lowest the market disagrees. they think that the economy is not that strong and the fed has to raise three times. other part of this rally and bond is geopolitical tensions. you have tensions over north korea, what will happen there. donald trump tweeting that he will solve this problem. the secretary of state saying that russians have to drop their support for bashar al-assad in syria. and, all the uncertainty from the french elections. first round, april 23. this is another thing. it is safety. you want to go someplace where your money is safe. let's look ahead and see what is next for global bond markets. casting: you mentioned singapore. they will have a meeting. , reporting notns
expected. surprise last a week, mopping up liquidity. telogen's bloomberg a report simple receipt of the -- intelligence reports it will recede of bit -- the. brazil, very interesting. they are considering cutting their key rate by a full point. that is the biggest cut since 2009. in the americas, brazil to be watched closely as well. shery: thank you. next, facing a fury. united airline struggles to control the ♪ fallout from the pr disaster. this is bloomberg.
shery: this is "daybreak: asia." i am shery ahn in hong kong. ramy: a quick check of the latest business flash headlines. qantas has told agents in zimbabwe to stop selling tickets it was flights after said to be harder to move money out of the country. used theway has mostly u.s. dollar since its own currency became worthless years ago. shery: first quarter profit. less surge in demands from mercedes cars. climbs. 60%.t of mercedes jumped
mercedes also regained the luxury car crown last year. are prototype cars, by the way, i don't think they are real. robotrst locally designed . it says the bravo has been tested in the range of workplaces and claims it is up to 40% cheaper than its closest rival. back here in the united states, united airlines continues to face a storm, a really bad storm over a passenger being dragged off of a flight due to overbooking. you probably saw it. anger is global, led by china. firsts the latest on the attempt of apologies. they had a second attempt. >> yes, a second attempt.
we will see how that plays out. we are learning more about what some experts call a crisis , howement disaster, and this can impact united going forward given that the u.s.-china flight routes are some of the most lucrative for the industry. let's go to the videotape. this incident, this video of the passenger being pulled off the plane, which happened sunday has continued to gather momentum. unitedly, the ceo of issued a justification, almost, that this was a common policy on an overbooked flight. then, privately through in those in the industry, or at least with staff, it was reported that the passenger had been belligerent. that added to the thunderstorm. a china, they have created petition, believing that percent of the men was chinese.
let's take a listen as to how one crisis expert described the response this morning on the u.s. daybreak show. from didn't get a response the ceo and the company. can you rate it for me? >> on a scale of one to 10, it was kind of negative one. i think it was the most tone deaf response i have seen to one of these types of issues ever. he used the term, "the reaccommodate." it took a bad situation and made it worse. at ake a look real quick bloomberg function that follows, or looks at, social media. function, if you have ever used it on the bloomberg. this shows that the company is
at the very top of its crisis. any questions? shery: if you follow this pr disaster on social media, it is not difficult to find other space forwhere customers is issued. will this have a lasting impact? >> that is the question. people are cutting up their united affiliated credit cards, a source of income for the company, and posting photos of them cutting up the cards. the other issues of loyalty is will people boycott the airline. that is certainly a message trending on social media. other issue is the ceo, oscar munoz. some are stunned by his initial response. he followed up, calling the
event horrific. there has been a paper in conducted -- kentucky, releasing information that the passenger removed was a 69-year-old doctor with a felony conviction and he is of vietnamese dissent. there are piece to be -- appears to be legal representation at this point, so it is possible that a lawsuit will result. there was a statement released by the passenger, through his attorney, that he is grateful for the outpouring of support throughout the world. it shows you the emotional attachment that many have to this story. i could clearly translate into towardsative sentiment united over the long call. another question? shery: that's exactly what i was talking about. the function that you mentioned, where you can find the top
trends. yes, united at the top there. you can see the newsreader activity sentiment. you can also follow that on twitter as well. munoz goes from savior to -- a top story right there, talking about the ceo being on the hot seat. thank you so much for updating us on that story on united and the ongoing pr disaster going on at the company. whyng up next, a look at toshiba should sell all of its chip business. this is bloomberg. ♪
ramy: this is "daybreak: asia." i am remy innocence you in your. shery: i'm shery ahn in hong kong. let's turn to our top story, the uncertain future for toshiba. gnome is ofat in westinghouse mean they may not be able to survive. newman. to mark the use of much for coming in this morning. how significant is the fact that they announced earnings, but it came without the approval of auditors? >> i think it is pretty
significant. this is the third month of delays for the company. it seems to be an ongoing chaos of the company that they cannot get the numbers together. whenthree months later, they finally get the numbers together, the auditor refused to sign off. now they are at the mercy of the regulators to report what has happened. the regulator is in its right to demand an auditor sign off with an eight days. that it probably will not happen yet, but it is a risk at the moment. shery: given that these are only the quarterly earnings, we still have the full your statement coming up. the possibility of lifting, or at least being removed from the first year of stock, that is real. >> another issue is shareholder equity is very negative now.
if it is negative, six months -- you have six months before you are downgraded, and 12 months before you are completely unlisted. that clock is already taking as of february and march. .ugust, they get downgraded that clock is already taking. ramy: i want to talk about your analyst call on this. before i do that, i want to hop into the bloomberg terminals to function of toshiba here. to the right, you can see the greens are at a low, through this chart here, the 12 month price target. the price now is to 23. talk to me about your call. underperformed. why? >> we have been underperformed
for a while. we were too early, or maybe too late, on the last round. ony had done well, based memory pricing, for a while. previous accounting scandals that they had, they had not been resolved. there was still skeletons in the closet. this whole westinghouse situation, there were red flags raised a while ago, and now they are coming to fruition. that is the main worry, now coming out. now, i think the full story is coming out. more probably valued into the share price. i do not think the story is completely finished yet. signing off,r not that is another red flag there. yeah, the story is not
finished yet. ramy: one of the bright spots is the chip business. people, companies, especially overseas are interested in buying that. a few suitors here. one you say would have the best synergy, why so? the bestnek's makes sense. it is a cash cow for them. hynix is relatively weak in flash.ash -- lan it would be a significant consolidation for the entire memory industry. the wrapup from micron.
i think this would be the next level ofe next consolidation, which would be very positive for the industry. that would be the strategic benefit for sk hynix. another strategic target could be western digital. government has made it clear that they do not want this to go to an overseas company. governmentnese obviously has a lot of say here. i think the number one issue is they don't want it to go to china. a chinese party, the first ambition would be to move jobs to china out of japan. japan does not want that. the u.s. and korea would be a little different. the u.s. and korea already has jobs. i don't think that would be so much a worry. i think all of these potentials
are on the table. japan and theith japanese entity is possible. in terms of enticing a japanese firm to potentially by, what with a need to do, what would toshiba need to do? what we took you need to do to what wouldhappen? -- tokyo need to do to make that happen? to entice the company to buy up to chivas chip business -- toshiba's chip business. >> i don't know the answer to that. we have seen a lot of to bring cases of this happening in japan. you had of peter. .t has been mixed success the japanese government has been able to pull these things together. i do not think the track record bodes well for this.
they can make it look good i think for the strategic. shery: thank you so much for joining us with a debrief on what is happening with toshiba. that is almost in for us here on "daybreak:ia." -- asia." heidi joining us, what are you watching? cpi expected to continue to be weak. ppi giving hints that the best is behind us. a senior economist from credit agriculture. this is bloomberg. ♪
♪ it is 9:00 a.m. in hong kong, i love :00 a.m. in sydney, 9:00 p.m. in new york. i am haidi lun. rishaad: i am rishaad salamat. this is "bloomberg markets: asia." ♪ asia-pacific stocks are mixed, the yen trades flat after its biggest jump since january. rishaad: toshiba among the losers after warning it faces an uncertain