tv Bloomberg Daybreak Australia Bloomberg April 23, 2017 6:00pm-7:01pm EDT
♪ haidi: france vote for change with macron and le pen taking the train -- the establishment has been rejected. the euro reading the highest level since november with the election threatening to shape french and european politics for years to come. haidi: another australian energy asset goes abroad. they have got official approval. julie: -- betty: steve mnuchin says the imf is too conservative.
hello from sydney where it is past 8:00 a.m.. we are two hours away from the open of asia's first major market, reacting with the remarkable developments in the french elections. betty: that is right, setting up the runoff election in a few weeks. it is just after 6:00 p.m. in new york. we will be looking at how all the action on wall street is going to play into the asia-pacific trading day. the top story today, we mentioned and time zero, immigrant leader marine le pen is against the untested emmanuel macron for the presidency of france. earning20% with macron 22%. withois fillon came third another up forth.
the markets, quite a dramatic day. gaininghere was lots of out of different scenarios, what would be worst to the market, manageable. how would you describe this result? >> i would say it is manageable for the market, especially the reaction from the euro, reaching a five-month high against the u.s. dollar. remember results are still being counted, so we could see emmanuel macron taking in further space from marine le pen. we are waiting from those final results. we have le pen at 24%, macron at 22%, and the results are still being counted. we could see emmanuel macron edging ahead of marine le pen. the crucial second round of voting in two weeks' time. betty: what can change in the markets in those few weeks? pen'sre looking's -- le
chances for the runoff? reporter: it is fairly clear marine le pen will be facing an uphill battle from here on in. she is a very divisive figure in french politics, and even though she may have a hard-core of supporters, 22% or 23% of the french electorate, it will be difficult for her to reach across party lines and party divides. remember a lot of the defeated havedential candidates come out this evening to say they support emmanuel macron in the second round of voting. " -- that includes francois fillon. mmand, thecludes ha socialist candidate. so marine le pen facing an uphill battle. we also had a snap survey from the likes of opinion pollster,
and they are predicting emmanuel macron, if the second round would take place today, and emmanuel macron we get 62% and the pen would get 38%. marine le pen is in with a challenge from here on in. how do we view this outcome? you have both establishment parties out of the first round voting, but it is also a vote against populism. [please stand by] votingreporter: the establishmt politicians here in france and also the wider eurozone and the european union are drawing a sigh of relief this evening. this is probably the best result they could have hoped for out of this election with emmanuel macron being the favorite. this is a clear break in the
past with traditional parties or the candidates from the parties , the firsted out election round. it is either or here. haidi: all right, thank you so much. tracking that extended -- extraordinary count of the first round of french elections from paris. let's look at the markets reacting. asian markets are the first to actually react to this. let's go over to sophie who is watching these. a bit of pressure off the euro, certainly, watching the again in the asian session. session.n in the asian sophie: the nightmare scenario is not unveiling, marine le pen, it is not taking place. take a look at the euro-dollar cross, we see the early gains, now 108. 109.37.it was
that is five points high for this here, but it is still up 1.5%. don't see these gains holding. for an indication of how it may continue, take a look at the options market share. with reversals, this plunged to the latest we saw in 2011, this on the geopolitical risk surrounding the french election. we are anticipating the winding of errors positions taking a look at things playing out. these as the markets have priced in the positive outcome in the second round. same for the euro-again. yen toup as much as 3% yen. this is the main cross in early trading. the gain was mostly given by the yen. when you go before the french
bonds trade, what's the reaction on monday. the german 10-year yield spread widesttest since 2012 -- since 2012. haidi: i love that risk reversal. be keeping you up-to-date from france and all of the market reaction on bloomberg. let's look at what we are watching in the australian session today. had thisoliday, but we going through last week. we have another asset. >> yes, back in march, showtime [please stand by] approved withbeen
a foreign investment review board, but no other details yet. they are breaking interested on a sunday night. orword from chow tai fook another. unlike duet, which on friday the shareholders approved $7.4 billion takeover from the cash and. a lot of interest out of hong kong. betty: and the fourth finance ministers talked about iron ore. that is thanks to donald trump. how so? paul: it is. the man is in washington, that is how he made the remarks. he was talking about the extensiveand infrastructure plan donald trump has been talking about, saying the steel will have to come from somewhere, so the global demand we believe will continue to require significant export of australian on our -- iron ore. if you look at the private line,
it is taking a bit of a beating in the past month, as everybody expected 30%. aery $1 move in that means $1500 to the australian government's bottom line. we will have an estimate in the budget coming up next month. it will be interesting. betty: thank you so much. certainly interesting what they will say. let's get to first word news with ramy innocencio. ramy: the white house says it will offer up an outline of its tax reform plans this week with a specific not ready until june. donald trump told 28 million twitter followers big tax reform will be announced wednesday. the budget director mick mulvaney said they announced the principal but admitted the full plan will not be ready for a couple of months. u.s. treasury secretary steve mnuchin said the imf outlook for the economy is conservative as he repeated the administration's
goal of 3% growth or more. they said their growth of u.s. would be 2.3% this year, but mr. mnuchin says it will expand even faster. that will help the wider global economy. >> sustained u.s. economic growth is good for global growth . if we can grow the u.s. economy, that is not just good for the u.s. worker. that is good for international growth as well and creates opportunities. so that is what we are focused on. i think if we do a good job, it will carry over in the spillover. ramy: europe, the ecb may be willing to move towards a qe exit faster than we thought. no changes are talked about, but the respondents to bloomberg surveys say mario draghi will provide guidance in june, six months earlier than projected.
earlier he said it was not on agenda, but the strengthening euro zone economy is changing his strategy. saudi arabia has caught back the austerity program for state employees and sparked criticism from people accustomed to generous state handouts. they restored the perks for higher-than-expected revenue reducing the budget deficit. they had the biggest again. dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. i am really inocencio. haidi: coming up next, the in-depth discussion on the french elections. with be joined by a chief market strategist and someone else. this is bloomberg. ♪
we are counting down to the sydney open. we have the sydney futures opening higher after the results of the first of the two french elections. we are an hour and 45 minutes away from the sydney open. i am betty lou in new york. haidi: you are watching daybreak australia. we are seeing futures ahead of the citi open pretty much unchanged. one of the guests we are speaking to said we could be having quite a sanguine reaction . we last coast -- close with the up up 0.6%. it was a whipsaw kind of session -- [please stand by] early ballots in the
first round of the french election showing that the centrist marine -- emmanuel macron and marine le pen will reach the run off on may 7. joining us now is a man from deutsche bank, the chief economic economists. also in over his chris western. becausetart with you, you had play down the market reaction that we could be terms of the australian open and the tokyo open. has this scenario been avoided? >> yes, the worst case has. we are seeing some hedging, some short recovery coming through, volatility structures in europe has been unwound in oxford. i can continue going forward. we make the market for clients on the european index open, and drivingalling it a cap
60 points higher. it will be a good gain. by the nice pop we have seen on to s&p futures today. it is not the outcome -- was people have been positioned for it. we are going to set the values on those hedges as we go in the next couple of days. i think if you are in the market, you are expecting a micron -- emmanuel macron to win. betty: we have heard that many times. expectation of the front runner to win, only to be surprised by the actual result. read the tea leaves from today's election and whether investors really are reading this correctly. >> i think they are. there must be a sigh of relief. this has been a huge class to deal with for the investment in
the banks. many people wonder if the ecb has been holding back because of this uncertainty. we will find out on thursday if they will start to send more signals, more smoking clouds coming out saying we could be more relaxed about the political situation and worry more about big economic data. so the answer to your question is, investors should be relieved we did get this political question out of the way. betty: are you surprised? >> most investors look at this in a cynical way and talk about the different scenarios. but we are seeing right now is the positioning is coming off the worst scenario as you will, and then the risk reversal is coming back. more.e people buying we don't have significant insurance buying like most of last week. betty: right.
haidi: you anticipated the markets very quickly given the outcome what it is shifting focus to the ecb, and you have more of a chance with a more hawkish mario draghi? i don't think that is necessarily going to be a significant change in draghi's language. i think the shift is to wednesday where we will hear something more from trump on fiscal measures and tax relief and some sort of tax reform humming through. that will be a myth in australia. we will see the key focus. but the ecb, it is removed some uncertainty. we have not got a confirmation emmanuel macron will win this. we have got to believe in the second round there are holes the suggest -- harris poll, 25% win. it should be accurate as well. we hope to see key candidates
endorse macron as well. but this removes risk for the ecb and inflation expectations have not really rolled over. but we areositive, not expecting significant change in the rhetoric from mario draghi, not expecting an outright stance. haidi: i want to say do where the polls. we are still traumatized. betty: we have learned our lesson. haidi: we were talking about the paris correspondent about this is the anti-establishment result and also anti-populism. how do you view this outcome? >> i think it should be mainly viewed from a scenario that people are now looking at this usual. it is business as europe will always be bumpy, and
this was one up on the road. it was not something with an outcome that was a central crisis, but we will now see at least the european political story fading into the background. i think this week the story will change to both wednesday, trump's tax plan and the announcement we will get, and friday, the potential of a government shutdown in the u.s., which so far continues to be an important issue. that may not have dramatic implications on gdp and inflation, but it is a political risk on the horizon this week. goty: it is like here we again, our wait, are we not going to shut the government down. we have had nightmares of it before. i want to pull up this chart for the viewers which shows euro-dollar volatility. that sort of cloud that on thers had seen before
very left side, you see how much volatility slides during brexit, with brexit.imilar we did not get there with the election, but we got close. after this, you expect it to be all clear in terms of nesting in europe? i don't say that is the case. we will get a nice rally in the equity markets. we are calling that up 40 points or so. the european markets have been .utperforming the u.s. anyway the french market has been outperforming the dax. this is a volatility story. if you look at what has happened, people have maintained the core equity exposures throughout the political situation, but they have paraded around the edges. they learned lessons through the u.s. elections and brexit and will hedge themselves by money buying volatility. so this will come to a much more
normal structure like with risk reversal. .here is still momentum the french markets aren't attractive place to be, but we are not out of the woods. italy is still a focus later this year. germany, it will be a well-publicized story, whether we get a negative outcome, i am skeptical, but in the short-term, the european equities will do what they have done the last couple of weeks, outperform the private developed equity markets. betty: and you want to point out the wirp, which is the futures. >> if you look at that, you will see there is a rate hike in the u.s. it is much more likely than the ecb, specifically with the screen shows, 50% by june. , therelook at your ar
is no rate hike. europe is coming out of this in a much stronger economic way, but it is much more existential. we have eliminated some of the risk we were worried about, but this tells you critically this how thenfluence into center thinks about things. if we had a much more dramatic event in the euro, that would have implications -- betty: are we getting ahead of ourselves? >> we still do to wait two weeks, but most investors agree today was more important than what we will see in two weeks' time. we still have to be's tuned -- stay tuned. haidi: and existential diminishing risk. i like that. thank you so much to both of you. we will continue discussing what comes next for france, the e.u.,
and global markets throughout the day. in the next hour, we are joined by one of australia's most rooted bond managers. and later, we will look at the latest investment opportunities given the developments in france's facilities. betty: we will talk oil and energy. a.m. sydney1:40 time, 9:40 in new york. ♪
end of the year with construction in december to end 2018. haidi: preparing for decades of pain as the internet disrupt the economy. he told a conference at the world must change education systems and establish how to work with robots in order to deal with automation and the internet economy. he hit out at traditional banking saying lending must be made available to more people. priced themarble has top of the targeted range. that means they should get as really as $2.3 billion, giving it of more than $11 billion. it is the largest for south korea, expecting to start trading in may. we will talk about net marble in a few minutes.
emmanuel and marine le pen prepare for aemmanuel and marinn prepare for a runoff. [please stand by] ♪ with xfinity x1... family time is awesome! show me the radio disney music awards. just say it and see it with the x1 voice remote. and you can catch up on all the rdma buzz... with artist interviews... past performances... and more! available now on xfinity on demand. xfinity the future of awesome. and to find out how to catch exclusive videos
♪ haidi: it is 8:30 a.m. in sydney. the markets open in 19 minutes time. futures have been flat all morning. i'm haidi lun in sydney. betty: i am betty live in new york. it is daybreak australia. let's get the first word news with remy innocencio. marine le pen is through to the second round of the french election with projections saying she took the biggest share of the opening round. figures from the interior ministry suggest she got about 22% of the vote with independent emmanuel macron ahead on 26%. surveys suggest he will win the second round. the euro touching its highest since november.
joe typhoon has won approval. -- >> time has come to free the french people of arrogant politicians and policies. candidatetiny and the of the people. >> i would like to say that i realized what my responsibility is, and i know full well what it means, and i will carry on with optimism, enthusiasm, the fate of the country and in europe. fook haswoni approval for alinta. they are best known for their jewelry stores but sources say it will pay 3 billion u.s. dollars for lent up. they follow the purchase of the australian power group. north korea may be suffering if you will suffer is.
unusually long lines are being seen for gas stations. prices are also said to be rising rapidly. they rely almost completely on china for fuel, and they have cut fuel under sanctions try to get the nuclear program to drop. exportsa's diesel fuel surged as commercial stockpiles drained to fill quotas. bloomberg estimates 460,000 barrels a day, up 31%. fuel exporters have to meet a certain amount of volumes before receiving new allotments. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. of -- i am remy innocencio. this is bloomberg. haidi: let's get a bit -- update
on the markets. we wait for the asian markets to react to the developments and the first -- provincial vote, we have qe stocks up, futures -- kiwi stocks up. the aussie dollar has been gaining 75.45 along with the kiwi dollar as well. and the one to watch when it thes to asian effects is yen. pressure is coming off of safe havens like jp wise. the pound is pretty flat. the u.s. 10 year is one to watch , suggesting we are days away from another u.s. government shutdown. potentially that could provide a follow-up on the treasury. we could see yield on the 10. -- 10-year falling. as trading gets underway in sydney, adam is with us.
there is only one top story, expecting asia to react to france. france. all about the euro against all the major currencies. that risk sentiment flow-through to equities. there is a good pop in the s&p 500. you should see magnitude moves of that kind of size i think across the asian equities. it is now all about not just the removal of that uncertainty of the first round but people pricing in emmanuel macron to go through and when the vote in may. that is a big if. investors are largely moving towards that scenario and reframing portfolios, adding to risk, giving that they have to expect that to happen for ron to defeat marine le pen. it should be an interesting start. betty: gold bonds are going all in.
they are increasing their wages on a further rally. where does that lead to positioning for both investors? reporter: if we blew into the -- jump into the bloomberg, can see the net position of gold in the keys here. they have been rising steadily, but they are back to levels we have not in since the back end of last year. that is all around the expectations for where inflation geopoliticalhere risk is. there is plenty of worry. it is forcing people to buy gold. it is a useful haven in asset portfolios that give you some hedge. uncertainty.itical the move this morning, gold selling off 1.2% last time i looked, that gives you some pause for thought given the short term positioning.
these are speculative. it will be interesting to see next week's data and see how those risk positions and the gold positions change in response to what we are seeing in france overnight and sunday. betty: thank you so much. adam haigh on how the markets are digesting this news. and what else will happen, this coming week including are we were are we not going to shut the government down? let's look at futures. they opened up in the last half hour. you can see on my screen a nice pop at the open. much of what we saw based on the euro also rising on this first election result. you can see we are rapidly coming down from the peak we saw at the open of the session. su keenan is here with the more on geopolitics, earnings, economic numbers. french politics may take a
back seat to u.s. politics. if congress is unable to path the spending bill or a stopgap measure, by thursday, by friday, the government shutdown, that would be the 100th day of president trump's new administration. there is a new topic taking place behind the scenes. it democrats do not want the border wall funded. republicans are saying if you don't fund the border wall, you will not have obamacare funded. so this really brings a lot of political infighting to a head. also watching if there is a spending bill passed, it does not contain president trump's key campaign process for the border wall. will he veto it? that is a question as well. the question and answer, it is not clear. the office of the management of
budget, saying national security is an issue, and if democrats do not fund the wall to put national security at risk. and setting ups, to be an intense week. the end of the week normally the white house correspondents dinner. this is the first time he will not be there. tough week indeed. betty: we also have economic numbers including gdp for the first quarter. expected to be pretty weak. su: typically we see the first quarter sort of stumble, but there are some issues here in particular with first-quarter gdp. if we look at the way the spending patterns of consumers, we know they bought fewer autos. we know the gdp is forecasted 1.4%. that is not where we want to be out of the gate. and another thing, orders for
u.s. global likely rose, so that is a mixed picture, but it will be watched given the questions about when the fed will move to raise rates again. a big week for earnings, it is all about tech. su: we have a lot from credit suisse and some of the banks, twitter, microsoft, at&t, talking about the merger. microsoft revenue is expected to rise despite the weak pc sales. we also have amazon and alphabet, google reporting. it should weigh heavily on the tech sector, how the companies are doing. haidi: thanks for that. su keenan, huge tech earnings to look forward to this week. up next, it is a showdown. andnuel member -- micron
♪ haidi: good morning. i'm haidi lun in sydney. you are watching daybreak australia. ohnese bike sharing service 50 visit expands to 200 countries this year. lacy bubbles in the fast expanding industry think they can survive. ofo has about 6 million bicycles and has raised a lot since its inception. the industry is in its infancy. >> i think there are definitely bubbles in the bike sharing market. there are three phases for the players to evolve.
fighting to put more bikes on the street, competing to make bikes easier to ride, and battling to have better maintenance. almost all the bike sharing companies are still in the first phase at the moment. that is why we see bubbles. pressure from hedge fund oasis management -- panasonic owns 50% and will offer ¥1200 per share for the rest of the company. it is a tender offer at $847 million. argued the original was undervalued by more than 50%. is leading thel box office for a second weekend. the eighth edition of the motor action franchise earned another $39 million, beating estimates. it set a global opening record, and two more are in the works.
disney's born in china, a documentary of pandas, opened at the highest with $5 million. betty: round one of the french election is over. comes in two weeks. what does this mean? joining ushleen hays from tokyo. she is covering the bank of japan, which meets on thursday. let's start with the ecb. we have interesting spots in the last half hour. we said this sort of takes away the clouds hanging over the ecb. to the results today help that? kathleen: had there been a big market reaction in the future, there would be. that could royal the markets -- roil the markets around the world.
if the ecb wants to do anything, it is not the time to act, but the ecb was not expected to make any kind of move on policy this thursday, and furthermore they have made it clear that if there is market reaction, the ecb has the tool to calm markets down ahead of the national bank of austria. we also have a member of the ecb made it clear, we have what it takes to get the job done if we need it. the ecb is going to focus on its main territory, which is the economy and inflation. there is question if the economy is doing well enough for mario draghi to give a hint that they will talk about the exit strategy. let's talk about the 1131, and you will see the gdp is rising in the euro area. inflation has picked up, but getting pretty close to the target of 2%, it pulled back a
.it with the ecb giving cover it just wants to hold things as they are now. and we won't know for another couple of weeks but the result is between macron and le pen. that would create more waves if le pen would win. the euro might have to react. haidi: so you are in tokyo, you are on kuroda watch. what are you expecting? change,: no big policy although it will be interesting to see where the monetary economy odyssey report. there will be subtle shifts in language. keeping -- see what is keeping the boj patient. that are expected to change the gdp for cost -- forecast. though it is gradually
improving, and the gdp is doing just fine. kuroda said last week growing above trend. near inflation in japan according to the bloomberg intelligence team, but the 2% is so far away. let's june and the bloomberg and look at 7942. we have all kinds of japanese , now hereto look at 0.3%. if you look at the boj principal core measure 0.2, it is moving in the right direction. prices,ake out energy then is weaker territory. everybody is focused on the weakness of the yen. the oil prices is certainly a big factor as well. adam howson of the peterson institute maybe corrode his job has gotten easier -- kuroda's job has gotten easier. >> they have shifted now from worrying to have to reflate the
whole economy to now just worrying about inflation expectations. they have a limited job. -- kuroda and his colleagues, it is all they can handle as opposed to being responsible for the whole thing. and their main job is the economy and inflation, but they have got to keep an eye on trade news that comes out. the finance minister saying there is no guarantee japan will get as good a trade deal with the u.s. on a bilateral basis it would have gotten from the tpp. we will talk more about it later . su keenan is talking about the shutdown possibility. we have first quarter gdp as well. a lot to watch out for from japan. the alternative investment on china's biggest state-owned conglomerate said it is difficult to move overseas. the exclusive interview with the
♪ i am haidi lun in sydney. betty: i'm betty liu in new york. the head of chinese investment group citigroup said they are looking for overseas acquisitions and turning to offshore dollar funds. capital controls hamper their ability to finance deals. someone that spoke exclusively to tom mackenzie at the china entrepreneurs club annual summit. >> for many of the chinese players, they certainly are having issues now the foreign exchange control is a lot more stringent. i think the government is doing the right thing. the rationales i mentioned about people wanting to buy international companies, they
are in the recent euro. you see far more acquisitions not so much based on that. it was more based on capital markets, because that is why you see people bidding up the prices in the international markets. prices that ag local person will not pay. fors not a strong rationale wasting the foreign exchange rate reserve. we have the u.k. elections, german, french -- how much of that is factored into your strategy? how much of that is impacting the choices of chinese investors? >> we haven't really seen huge backlash against foreign investment. has notple, even brexit made much of a dent in foreign
investment. the british government still welcome foreign investment as well. see thatays, i don't happening in france or germany. so we are looking at those opportunities. what is important to us is probably in the u.s., but in the concernth or so, that has been eased somewhat. the potential of a trade war obviously is very, deeply comforting. tom: what would you say are the key risks for china's economy? >> the pace of deleveraging. i think of financial risk is in the system. that partially explains the rationale why china is now opening the capital market as quickly as investors would like to see. fundamentally, the system is not ready. , theere is leveraging
leveraging ratio is very you -- very high. china at this point, given the , chinaount of savings can clearly deal with it in the forecast, but the ratio should not be increasing anymore. tom: some of the banks are pulling back their funding or the products that they have been giving to external managers to manage, that that is being reduced now. are you seeing any impact? are you seeing risks of volatility? do see money being pulled back from outside the system back into the banking system to banks themselves. the bull market is clearly coming down. and so is stock market. so i do see an impact. whether that -- my view of that
is healthy, but there are many productslth managing that are invested in, nonstandard esoteric kind of products. whether -- when the day of reckoning comes for some of those products, the impact can be potentially even bigger. so i think that needs to be seen. tom: one of your companies in china is mcdonald's. are you looking for more opportunities in food and beverage? >> with the numbers, we lack behind, but with the perception by consumers, mcdonald's is viewed as a very strong brand. i think we just need to increase our presence. we are redoubling our effort in third year and forth -- tier and
forth tier cities. the city level, the county city level. those are the focus. citic speaking exclusively to tom mackenzie. that is almost it for daybreak australia, but yvonne and betty are next with daybreak asia. we will continue to unpack the what and extraordinary weekend it has been for the first round of voting in france. yvonne: absolutely, and asian markets are the first to be ought -- react. two candidates from parties, a mini earthquake in the political system in france. start is pro e.u., and contrast to le pen, anti-euro, far right. it seems like polls are suggesting that macron could be
winning. markets taken on a signal for risks. betty: we will continue that conversation. we will be speaking with anne anderson, the head of fixed income for ubs asset management. one of the most well-known in australia. she said she agrees this is a seismic shift in europe, but it also makes room for china here on the global stage. she will talk more about that view. that is right. we had one parisian professor saying it is more of a european or global election. it will be ramifications for china. we could see the investment fund manager. france and beijing, they have had a very high-profile investment relationship. they have collaborated on investing in britain. lots of eyes from beijing watching the outcome of the second round of voting. that is it for daybreak