tv Bloomberg Daybreak Asia Bloomberg October 22, 2017 7:00pm-9:00pm EDT
it is just past 7:00 p.m. sunday. janet yellen defending her time in office as the race narrows to three. messagenistration has a to those who trade with iran, "you do so at your own risk." ♪ >> no surprises. we tend to think japanese elections are a snooze fest, but marketse year and the get it right this time. >> pretty much what we would expect. the yen weakening, down .3%,
continuing on with easy monetary policy through abenomics. we will take a look at the knock on effect for the next 3-4 years. time to bringect in our next guest. she is a former boj policy board member and voted against the negative interest rate policy back in 2016. thank you so much. your initial reaction to this election? some were saying this was a victory by default. a lot of divisive issues leading up to sunday. was this election about nothing? >> it was already anticipated and no surprise, but this abeumption tax hike, decided to do it has scheduled,
but will change the allocation to children and education. this timing to increase the consumption tax hike is two years ahead, but still too early to discuss. willnk a lot of households not be able to feel how much this affects the living standard and so on. >> still far away. there was an assumption that the , that he would be focusing on constitutional reform more so than the economy. do you see it that way? >> i think so, yes. people are also paying attention to this potential revision of the constitution. there is also north korea and
the geopolitical risks, so people feel it is time to with thehat we can do existing constitution. also, the existence of the self-defense forces. is illegal,visit but let's make it legal. >> it will be using more political capital on revising article nine at the cost of reforms? he has pledged we will see more structural reforms, but his record shows he has not been committed to that. will he delivered this time around? >> he says he is still committed to economic policies, but other people believe he is more interested in revising the constitution. this is important for the ldp. this is why the ldp was formed
to begin with. abenomicssee refreshed, boj policies intact, but let's talk about the long-term prospects of japan's growth. there is the issue of ballooning debt. shinzo abe has pushed back balancing the budget to 2020. what risk does that have longer-term for japan? are we getting closer to some kind of debt crisis? >> the possibility of a debt crisis will not happen soon because if we look at long-term lownal yield, it is very compared to nominal gdp growth. that, the japanese debt is temporarily sustainable. because this debt is accumulating and there is an is increasingthat
, so the government has to tackle this. for the moment, thanks to the boj low interest rate policy, i think people do not find it important to deal with fiscal consolidation. >> what does that mean for the bond market? if we see fiscal policy from shinzo abe, the fed unwinding its balance sheet. i guess the assumption is yields will rise and the boj will have to keep the 10 year yield at 0%. how much longer can they give that stimulus. >> the amount of holdings accounts for 40% of long-term jgb outstanding. eventually the boj has to stop doing this, but this moment as long as the boj continues to equivalent long-term
jgb's, there is still sufficient demand from domestic institutions, so there is demand for that. maintaining the yield around 0% is possible for the time being, but if the government continues to increase the debt and you have an aging society, people don't consume. you just have saving. then i think that time when the interest rate goes up, it would be unlikely to be sustainable. by postponing fiscal consolidation, it would damage the japanese economy. >> you see the boj keeping the yield of 0% distorting markets. on the government side, even with this spending bill and diverting revenue from this
consumption sales tax, shinzo abe is putting those revenues towards education, not so much in terms of reducing the debt heard in in japan, so who is driving the debate on fiscal discipline now? >> and think it is partly because japanese people get used to the extremely low interest rate environment, so people do not see the impact from the boj policy. because it is low interest rate, people forget about it. in other european countries, fluctuating every day and being responsive to what the government is doing, then people may be aware that we have to stabilize yields and so on.
this isorget undermining fiscal discipline. that is one major side effect of the boj policy. centristre seen as a within the boj. do you think governor kuroda deserves a second term next year? >> it is difficult to say on the one hand. to the bojroda came sync he could achieve 2% in two years. he said there is no correlation theeen aging issues and rate of inflation. even if he takes another five years, a lot of people don't see the possibility of achieving 2%. why are weso, then doing this current policy? on the other hand, it is clear this policy contributed to the wider interest differential with
united states and lead to higher japanese stock prices and the exchange rate. large companies are very happy. it isthis position difficult for the boj to change its policy. >> difficult to have a regime tonge so to speak you'd -- speak. we are seeing a potential regime change at the fed. president trump making this announcement soon. who is right for that pick and does it matter for the boj whether it is jerome powell or john taylor? >> whoever becomes the chairman at the fed, this person will not change policy. it is decided by many people, and it is already starting with the status quo and trying to do new policies later. know --a lot of members >> who would you like to be the
fed chair? >> i respect mr. taylor and mr. powell. they are all good. person, is the new think i would like this person to do some gradual monetary easing. i think the japanese people feel they will benefit a lot if there will be a person like mr. taylor who tends to be more hawkish and starts to accelerate this pace of federal fund interest hikes. widen the interest differential between the united states and japan and will lead to a further depreciation in the yen. some people think this will have a positive impact on japanese stocks and large companies. that is good news for japan. >> we will have to see when the big announcement is made. thank you. we appreciate your time. ramy: we will have some high
profile guests further on bloomberg television. first, a former u.s. state department official with expense covering japan. daniel rush with holt from the asia society. russellss -- daniel from the asia society. don't miss it. let's get a check of the market action right now in asia. .1%, but thed, up kiwi is down .25% against the dollar. we got the stronger dollar on friday off corporate tax reform in terms of a bipartisan deal in the senate. there are immigration concerns in new zealand. .25%, and theup aussie dollar just about flat. we are counting down to the open
in japan and korea futures trade in chicago, up .75%. no surprise. because of the reelection of the ldp in japan. weakerlar and the yen against the u.s. dollar. also no surprise because of continued monetary easing. let's get to first word news now. >> catalonia's separatist leader says spain's control is reminiscent of the franco dictatorship. the government has invoked part of the constitution that removes catalonian autonomy. a.m. localntil 10:00 time monday to make their position on independence clear. the spanish authorities are expected to remove him from office. ministerealand prime believes in the principles of free trade and has indicated
support for the tpp and will clamp down on foreign speculation. youngestw zealand's prime minister. she won power three months after taking control of her party. tillersonof state rex calling on european allies to support new u.s. sanctions on iran, saying countries do business with tehran do so at their own risk. new alliance a between iraq and saudi arabia to counter iran's growing influence in the region. the south china morning post said as many as five members of china's pollack year old standing committee may change when the communist party congress in's this week. the new lineup for the committee will be revealed on wednesday with only president xi jinping and the premier staying on. the chief banking regulator may be named the next pboc governor.
global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yvonne: looking ahead, shinzo abe's election gamble has paid off, putting him on track to be japan's longest-serving leader, some potential policy changes this hour. defendsxt, janet yellen her policy as president trump weighs her future at the fed. this is bloomberg. ♪
but did we hear anything we don't know yet? under -- something is some things underscored. donald trump has had a short list of five people. is a fed governor, expert in banking. john taylor, stanford university economist author of the taylor rule. that is controversial. , jerome powell, and gary cohn. in this interview with fox, he said most people are saying it is down to two, mr. taylor mr. powell, and there are a couple of others. i would say i will make my
decision very shortly. i think we knew that. one of the interesting things he was asked about why don't you send them both to be the top position, fed chair and fed vice chairman. he said it is in my thinking. a couple of things are in my thinking too. stephen mnuchin is pushing for jay powell. michael pence is pushing for john taylor. in terms of who is in the lead with the market, let's look at btv 3203. this is jay powell. his chances are around 70% according to this heading site. kevin warsh is around 13%. janet yellen and john taylor are even. updated through thursday last week, october 19, the last survey result. i would be interested to see
after this interview trump gave, praising not only powell, but taylor and yellen, if that ships around at all. the thing about john taylor is that they see a bigger selloff in bonds with him than john thain -- jerome powell. thank you. kathleen hays joining us from new york. the fed is the only central bank in line for change. governor hinted that his time as head of monetary policy could be coming to an end pretty soon. let's get to tom mackenzie joining us live from beijing this morning. just the fed chair, we've been talking about governor kuroda. his term is up next april. now the pboc chair as well. tom: that's right.
he has been peppered with questions over the last few days about his potential retirement. what we have been told ahead of this party congress at the pboc is that, yes, indeed, the governor will be stepping down at some point between now and march of 2018. what they are struggling with his who will replace him. china, he is seen as a reformer. he has been in this position for 15 years, the longest-serving central bank governor in the g-20 group, the longest for china since the communist took over in 1949. there are a couple of contenders who have been flagged. the banking regulator is one. economic adviser to xi jinping is being looked at as well. governore is the vice of the pboc in contention. they are really struggling to find a person to take over.
these are big boots to fill. something ofeen as reformer and been in the post a very long time. the pboc sources telling us that the monetary policy stance of the central bank in china is unlikely to change in the short to medium term whoever takes over. liberalize the renminbi will continue and whoever has to take over will have to continue the deleveraging campaign. yvonne: can they continue with , but alsoming stance reports about a potential shakeup within the standing committee as we head into week two of the party congress. tom: that's right. tomorrow is when the party congress wraps up. when wey is the big day get unveiled for us the standing committee of the politburo, the
elite grouping of men, and they are all men. five of the seven top positions will change hands, and the anticorruption czar will step down. that was interesting as well. moreis about how much power xi jinping is able to align himself with and how many allies he can get into key positions. changes in the politburo itself in the central committee come as a wednesday is the big day to look for. ramy: tom mackenzie in beijing. some breaking news crossing the settling withis australia on the rigging case. anz is one of three banking australia,n westpac and national bank also involved. the allegations about traders looking to manipulate that swap rate, so crossing the bloomberg
♪ this is daybreak asia. we have some breaking news crossing the bloomberg on noble group. they will be selling their oil trading business to a u.s. holdings company. there were some frustrations leading up to this, saying this was a make or break deal for were, that there complicated issues before making this a done deal. noble group saying that lenders are moving forward. thessurance can be given on
outcome, but they have been talking about how crucial this deal is for the survival of noble group. now they have to deal with this $1 billion of debt they need to pay back. ramy: that's right. expecting a q3 total loss of $1.1 billion to $1.25 billion, reiterating the lines just dropping here. noble group saying talks with lenders are still moving forward and that noble group does also fromdjusted net loss continued operations of $50 million to $100 million, also saying talks are still ongoing, so we may see more lines drop out of this. yvonne: we will see how things fair. it seems like noble shares still and the trading halt. we will see how things fair when things open up. rex tillerson flies to the middle east to resolve the qatar
♪ 8:30 a.m. monday morning a noneventooks like now for the typhoon. the focus away from the major market open. very warm evening in new york, looking back on where the markets is on friday -- the markets closed on friday, they were all records, or denied high of the year of the doubt as an -- the dow the 39th. about, andto talk
especially in japan where you are. i ramy inocencio in new york. yvonne: i am yvonne man in tokyo. you are watching daybreak asia. the skies are clearing in tokyo. the skies are clearing for shinzo abe, his big gamble of calling the snap election at your early seems to be paying off. easy landslide win. what does this mean for his appetite for reform? ramy: that is right. we are seeing expected moves with futures in terms of the currency. the yen is weakening, last check down 0.3% against the dollar. we will see how this develops in the next three or four years as shinzo abe tries to consolidate his power. now rosalind chin. juliette: that dollar-yen weekend to its lowest in three months.
the thought of a would take a super majority in parliament. his coalition got two thirds of diet.ats in the dais -- case, his opponent got 310, 365 seats. the fledgling party got one of 50 seats. a powerful storm is expected to hit tokyo this morning after denting much of the country. it was affecting -- 100 kilometers per hour, category 2 system. it will weaken on landfall but will bring driving rain and floods. toyota has halted its production and hundreds of flights were canceled. u.k. international trade secretary liam fox says brexit will not be the fear many thought. britain's divorce from europe remains a possibility.
but he said such a scenario would be good depending on conditions of a wto. economists surveyed said there could be $35 billion stretching out remaining capacity as it waits for inflation to pick up. the bank will continue buying for nine months to take a program to what some officials see limited at 2.5 trillion euros. the ecb makes its next policy decision thursday. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ thank you. counting down to the open in tokyo and seoul, let's go to sophie kamaruddin and hong kong now. and with a look at the market reaction, those results coming from japan, as expected, could
this be a windfall for investors, or is it priced in? scarlet: looks like -- sophie: looks like the market is buying into this. we are seeing governor kuroda being extended as well. nikkei futures are working higher, extending the dock rally we saw friday with the nikkei 225 rising for a 14th straight day. and is likely to report those gains. the yen slipped to a three-month low on the back of abe's victory, and there could be downside momentum when this will be in sight. we have the election out of the way, and the dollar-yen will be more responsive to rising treasury yields and other dollar factors like the next veggies and tax reform. chiefht take -- next fed and tax reform. the dollar broke through the moving 100 day average. .ou can see that on btv 584
they might wait for longer on tax reform before piling back in. when you look at the green indicators, in the bottom pile, .his is a gauge of momentum it is starting to show green, so be on sunday, looks like the yen might be looking towards the dollar factors and how it could move forward. ramy: turning to australia, banks are in focus amid the money laundering case. anz settling in that case. sophie: let's take a look at the board to show you how the stocks are moving in sydney. you have a and said -- anz, west bank and others are on the rise. it has been adjourned for now. , trading at gains the strongest since may for, and there has been a settlement with the bank leaders from anz. when you look at the broader
benchmark, you have financials gaining 0.3%. but they are in a hold position, up 1.2%. its as focus reaffirmed plans to sell its new zealand operation. you have the asx 200 timing for straight ninth session, the longest since 2015. ramy: thank you very much. sophie kamaruddin in hong kong. now the trump administration is stepping up pressure on iran with a warning from rex tillerson. he is in the middle east attempting to ease the gulf standoff between saudi arabia and qatar. ros krasny joins us. what is the latest? ros: we had rex tillerson in the middle east. he tried to pressure saudi arabia. the officials have been restarting peace talks with qatar to end the standoff.
apparently he was rebuffed straight to his face. he had signaled an interview with bloomberg in washington last week that he did not expect to signal, but it is striking that he was given a thumbs down in a meeting with saudi officials. it is unclear where his media will go from here. responses there any from europe on rex tillerson's comments when it comes to calling back to the latest sanctions? when it comes to foreign-policy approach, is the u.s. becoming more isolated? abigail: that is a good question -- that is a good question, and time will tell. rex tillerson said today european companies should be careful about trading with iran, but a few days ago president trump said it would be ok for europe to trade with iran, trade
with iran in some ways. mixed messages out of the trump administration. not unusual. you know the administration has taken action against iran's revolutionary guard. they bedded terrorist organization -- vetted the terrorist organization, but there are blurry lines whether an entity you are trading with might be on the bandwidth or not. my be confusing -- might be confusing for companies trying to do business. ramy: let's look at the rest of this week with donald trump. corporate tax reform was on the agenda right in the senate. what can we expect? there is the head game of thrones. do you think -- fed game of thrones. will hear a final decision? ros: it is unknown if he will make up his mind. we heard some scuttlebutt that there could be an announcement as soon as today on the new fed
chairman. that has not happened, so really it could be any day. we have heard president trump will make up his mind before he leaves to asia which is early in november. in terms of the tax reform, processed and and mike pence were on a call with has republicans today urging them to get behind the senate bill passed late last week. to hearnk we can expect pence and trump hitting it hard and doing everything can to get that legislation moving and quickly. they have not given up hope on it being done by the end of the year. that seems uncertain, but that is definitely the timeline. ramy: wall street hoping that will come. ros krasny, thank you. all right, more on the election in japan and what shinzo abe's win could be for the korean peninsula. this is bloomberg. ♪
♪ ramy: counting down to the first major market open this morning. japan futures looking open higher by half a percent. they had been looking to open higher by 0.75 percent, but this is a strong open after shinzo abe's election and his coalition a twor coming in with thirds majority. we are waiting for the final whether he has reached a super majority. we are expecting continued monetary easing, and the japanese yen is weakening against the u.s. dollar by 0.3%. this is daybreak asia. i am ramy inocencio in new york. yvonne: i am yvonne man in tokyo. following what you mentioned with the election, prime minister shinzo abe's gamble may have won him a chance to leave
-- lead japan through 2021. they retain goto for his majority in the lower house in sunday's election. let's bring in stephen engle. he is joining in the tokyo coverage, live from the tokyo stock exchange. how does this set the scene for abe? win, andit was a big that was the headline of all the main morning newspapers here. basically the coalition and the l bt getting a big win. theow -- paisho is headline, and the prime minister will continue on. the big gamble paid off for shinzo abe as they will maintain the super majority in the lower house, and he can push forward with his alter monetary easing policies. we are seeing initial reaction stock exchange, futures
are higher. nikkei 225 already near the 20 year high since 1996. also the topix added 10 year highs, and seeing a further weakening of the yen versus the dollar, it weakening. -- 113.99 to1.13 the u.s. dollar as the abenomics policies continue. it was interesting because we had the big super typhoon as well hit tokyo overnight, lashing the windows of my hotel. we are getting the i am the haute -- the we are getting the eye of the storm now. the story with the election and the overwhelming mandate shinzo abe and the coalition party will maintain going forward. we certainly saw heavy
rain yesterday. is, what doeson this victory give him now? does this priority now on constitutional reform? stephen: i think going forward now the election results are kuroda,uch confirmed, whether he is going to maintain the central bank chief in april when his term expires, but also constitutional reform. this give shinzo abe the numbers to push forward with his efforts to revise the path of his constitution, his self-defense forces, to write into the constitution the abilities to take an offensive approach with defense forces. that would be a major change to this postwar constitution. it would also require a referendum, public referendum, on that matter. it will not happen overnight. it will be a lot of lobbying.
this had split the japanese public whether they want to take self-defense forces to a new level. this give shinzo abe a mantle of strength heading into next month meeting with donald trump, when he visits tokyo. this is a lot to discuss with north korea. this might have played a lot stronger in the election results. shinzo abe's tougher line on north korea and that he would like to take self-defense forces in response to any potential attack by the north koreans. in the last few months we have tests.hi icbm -- two ramy: that renewed strength that shinzo abe has, we will see that in the ramifications of the next few years. let's dig deeper into the with danielults now russell. he is diplomat in resident at the asian policy institute, joining us from taipei.
thank you for joining us. we are seeing this vote through the lens of national security versus abenomics. i want you to on package these results. -- unpackage these results. >> i think your correspondent got it right. what you see, the japanese public really soft a safe haven a safe haven in times of uncertainty. they have north korea on the global economy to worry about, unprecedented and different american presidency, and the rise of china. when they looked around, they felt comfortable with the democratic party. i think some of the voters were thinking ahead to the 2020 olympics and wanting a steady .and there certainly economically speaking, though the japanese economy remains sluggish, it is growing. there is a tightening employment market, and people feel largely
comfortable. at the end of the day, the issue was, there was no real alternative. the opposition was divided, confused. landing back where they started with shinzo abe made a lot of sense. it is also interesting, 51% said they did not want shinzo abe to stay in power, but here we are. looking ahead, mr. abe said he wanted to revive the japanese constitution from something that, from post-world war ii, has been pacifist. what do you think this has in terms of traction moving ahead? has a: i think that abe number of priorities i had. one of them -- ahead. one of them clearly is amending the constitution. i suspect that this is not a place where he will rush. he needs to step very
deliberately. there is distinction that has some meaning between revising the constitution and amending it. what is important to recognize is shinzo abe certainly at this tont is not proposing jettison article nine, what makes the peace constitution, renounces war and prohibits japanese military from taking offensive operations. what he has been talking about, -- of course he has pampered been pampered that he is in a pacifist party, what he has been talking about is making an amendment to the existing language of the institution on augmentation that would essentially legitimize the reality that there is a standing japanese military called the japan self-defense force. whether he feels he has got the
political backing to go half a inp further and to codify augmentation the idea that the can do moreitary than just defend japan if attacked, the so-called collective self-defense policy that his government has embraced, i think it will be something that is not yet determined. moreover, the idea of convening a constitutional referendum, something that presumably would have to happen if the diet succeeded in the first half of next year and actually adopting an amendment -- in actually adopting an amendment is interesting. you don't have to look any tother than the brexit vote know the best laid plans of thoughtful politicians can be
abandoned by referendum. [speaking simultaneously] ramy: i want to ask you, through the lens of this election and with north korea, shinzo abe of course has said everybody needs to come together to push north korea back. is there anything japan it self can do, or does it need to write itself through china? -- right its -- route itself through china? it can align itself with the united states. it is not a trivial matter that the president will be here november 5. bear in mind from there the u.s. president goes to seoul, korea, then to china. significant not only he is starting in japan, but clearly he will be carrying a unified message of the three allies on to china and seeking to enlist china in the collective effort
to apply that kind of pressure on north korea that would be sufficient to bring kim jong-un to the realization he is better off negotiating an end to his nuclear weapons been taking a bigger gamble on confrontation with the west. -- than taking a bigger gamble on confrontation with the west. it is my hope, i believe it is everyone in the u.s. government, that relations between tokyo and seoul will similarly improved, presenting a united front is a prerequisite for dealing effectively with north korea. north korea is a top priority not only for shinzo abe but for donald trump as well. yvonne: so how should president trump play this trip to asia? you mentioned the unified message, but there are questions whether he should even visit the demilitarized zone.
daniel: i know there is some debate about that. having organized and accompanied president obama, vice president toen, other senior officials korea and the dmz, i understand it will be the secret service that has to make the call on where the president goes. i think what matters is what the president says when he is in korea, what he says when he is at the dmz. it is my view that study, consistent -- steady, consistent firm message of result is important to signal not only north korea but also our allies that america is steadfast. i will admit i am not of -- a fan of chip pounding. north korea likes that. it is not productive for us to try to match it. where this ties back to the
japanese elections is this. the united states and if it immensely from a strong, -- benefits immensely from a strong and capable japan that has a steady, unified political leadership. we have that now. in south korea after the turmoil of the impeachment of the former president park, we now have newly elected president moon jae-in, though he comes from the liberal end of the spectrum. kim jong-un has not give him the opportunity to do anything other than to align himself more firmly with the u.s. and japan. now we are going to see a newly strengthened xi jinping in china who is coming out of the 19th party congress for stronger than his immediate predecessors. so i would suggest that the elements are in place for a
collective and collaborative strategy that will really set some limits on north korea and bring kim jong-un ultimately to the point where he has got to make a tough decision between shifting to a negotiating track or putting his regime at real risk. ramy: we will leave it there, but we could continue this for a much younger time that we have. the former secretary of state, daniel russell. let's go ahead and take a look at this business news. business flash headlines, australia's regulator anz bank is settling over electors interest rate rating. the investment commission is processing anz, west bank, and more. they looked at the bill swap rate. they were scheduled to meet in melbourne federal court, but that has been adjourned for 48
hours. cisco systems is close to a deal to acquire software maker broadsoft which could be announced monday. they have a market value of $1.7 billion and have been working with jefferies group to seek suitors. serous, theight and cisco transaction has not been finalized. the details may change. and noble group is selling its oil trading business to the u.s. holding farm of vital. it was amid speculation of a deal. noble needs cash urgently. it says talks with lenders are moving forward. it also expects a report of loss in the third quarter. the stock has plunged more than 75% so far this year. bloomberg has been told volatility -- told fidelity investment held a emergency
staff meeting after two male claims of sexual harassment. brian hogan held a discussion with employees to stress the zero tolerance policy for inappropriate workplace conduct. philology -- fidelity once an outstanding workplace -- wants an outstanding workplace environment. yvonne: we will continue coverage of japan in the next hour, but the market impact and the reaction from japan will be key, because we are seeing dollar-yen heading to three-month highs, touching 114 since the first time of july early this year. and 10 past 8:00 hong kong time, we will be joined by the former bank of japan fisa finance minister. that is 10 past 8:00 in new york. and we will hear from one of the ramy: online brokerages. the is a former member of
♪ 9:00 a.m. in tokyo. welcome to our special coverage of the japan election on this monday morning. the yen weakens to the lowest in three months as abe sweeps to victory. keeps abenomics on the books and signals no change to the boj stimulus program. inocencio in new york. china renews its drive against overcapacity, telling steel plants there is no way back.
washington has a warning for countries trading with iran, you do so at your own risk. ♪ ramy: a busy day at of japan, at a highercting open, up .5% at last check. .3%currency weakening by not soshinzo abe's surprised election. it is just the magnitude. 7502, thek out btv nikkei on a winning streak. think it was 16 days in a row. we will see how this goes
throughout the course of the day. we haven't seen a streak like this since 1988. leaders, seemhe to be getting things right for the japan election, that landslide victory for shinzo abe . let's get the latest with sophie kamaruddin. for thea nice pop nikkei, gaining over 1%. the longest winning streak since 1988 here the nikkei 225 at the highest level since july 1996. some good summer vibes here. you have the dollar-yen hovering around 114. getting above that mark for the first time since july 11 two abenomics keeping the boj's
super easing policy and place, emphasizing the correlation between the yen and the 10 year yield since the boj introduced the yield curve control strategy. bank of tokyo mitsubishi sees dollar-yen rising to 115 as the 10 year rate rises to 2.4%. strongerr yen and the nikkei 225 the specter higher benchmark rates. umco leading gains. screen holdings down .5%. let's look at some key stocks. assan and toyota in focus they suspend operations at plants that could be affected by the incoming typhoon.
still gaining after the drop on friday for kobe steel. the company found another tainted product affecting one client. the story that keeps on giving. yvonne: it sure is. thank you. let's get more on the abe election and how it will affect investors. standing bye's is at the tokyo stock exchange, an exciting day, but is this all over done? there is an issue where things will be status quo after this win for shinzo abe. >> that's ok for the market, right? we have had six straight quarters of economic growth. is at levels we have not seen since 1996. the topix at a 10 year high.
both up significantly. by 221 points up on the back of that falling yen, the yen dollar at 114 point 08, a three month low against the dollar. that will give incentive for investors to buy into some of the export stocks. keep in mind today is not just an election story. super typhoon was affecting some of the election results. the counting still needs to be .eported also, we had toyota motor canceling shifts at their factory because of this super typhoon. other factories seeing some shift closures. canceling some domestic flights yesterday, so they were saying the impact on 20,000
passengers. some domestic issues with the typhoon, but the results for abenomics to continue. we are seeing further weakening of the yen and continuation of these economic policies, abenomics. the opposition in disarray right now with coalition partners. the ldp winning this super majority. i just flew in from paris. the night i left paris saturday i saw the party of hope leader was in paris. she was not even here for the election or as governor of tokyo. she wasn't here for this super typhoon. is interesting she was over there possibly anticipating election results. ,he magnitude of shinzo abe's what does that mean for his
mandate in terms of the consumption tax in the revision of japan's constitution? sell down tax is notumption slated to come into effect until 2019, so there is time to wait on that. the big two things facing shinzo abe now that he has numbers in the lower house and a strengthened mandate is the possible revision of the pacifist constitution, which will be a slow process as well, but with north korea rattling sabers and his seeming partnership with donald trump, he is likely to continue to push for this revision of the pacifist constitution, then closer as well in april, governor kuroda's term as the boj governor expires. ramy: thank you very much. , the fallout from
japan selections. enda curran.n what are the most significant implications? >> there has to be something of a green light for the massive economic stimulus program we have seen running in japan over the last few years. it will be green light for the boj to carry on with their massive asset purchasing program. of course a green light for shinzo abe to go ahead with a consumption tax increase. the point being he wants to raise tax to fund social programs like education. we may also start to hear more calls for greater urgency in pushing through structural reforms. those will be the key challenges going forward. we have seen
central-bank transitions from more than just the fed. that termuroda, expires in april. the pboc had signaling he will be retiring soon. thesere the risks of important transitions happening around the same time? >> on paper, we have a reshuffle of some of the world's biggest monetary authorities. south korea also in the mix. see a change in personnel with the fed and ecb andng in a new direction policy, it could lead to uncertainty and volatility that could the two questions over where the central asia banks will be going, more aggressive in tightening or not. likewise or japan, will and new chief move away from abenomics? these are unknowns.
least, it is a question given the period of stability and monetary policy for some time in asia. with china we know the pboc does lack the independence of its global peers. what can we expect the next leader might concern themselves with? looking ahead, what is the big question at the center? mentioned, we don't have the same transparency we have with the fed, so it is difficult to know what the process is, but on the basis that is coming up, one assumes that china policymakers want economic growth and stability and market stability too. they are looking for
policymakers on tackling the problems with growing debt in the country, keeping an eye on house prices, so it will be a mix of stability in the economy and keeping a lid on growing risks. no major changes i would think. enda curran, thank you very much as always. let's get first word news. the south china morning post says five members of china's politburo standing committee may change when the congress ends this week. the new lineup for the committee will be revealed wednesday. only president shenzhen ping and the premier will be staying on. the post said the chief banking regulator may be named the next pboc governor. anz bank is settling its case
over alleged interest rate rigging. the prosecutor alleged traders sought to manipulate the swap rate between 2010-2012. lawyers are scheduled to meet monday morning, but has been adjourned for 48 hours. catalonia separatist theaters says spain's control is reminiscent of the franco dictatorship. the leader has until monday to make his position on independence clear. the spanish authorities are expected to remove him from office.
ardern supports free trade and tpp. she won power three months after taking control of her party. rex tillerson is calling on european allies to support new u.s. sanctions on iran, saying countries doing business with tehran do so at their own risk. arabia and iraq alliance to counter iran's growing influence in the region as well. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: we continue our focus on shinzo abe's win in the japanese election throughout the show. ramy: up next, we are joined by japan's former vice finance
♪ i am ramy inocencio in new york. yvonne: the yen fell to its lowest in three months after a sweeping election victory in japan by the ruling coalition. get to our next guest, hiroshi watanabe. thank you for joining us. now, in dollar-yen right the nikkei at overbought levels. we have not reached those level since abenomics started. would you make of this so far?
reaction is in today's market. when confidence is given to the administration, the yen depreciated. the win will give a majority and congress, so another stable for years. next year he will be elected the years.n for three , he can have some better days to come. yvonne: you said it was crucial for him to continue this term
until 2021. there is also a debate about what can bring to the table new. is there anything he can bring that is fresh, or is the status of? want he would be fresh. unfortunately, there is no real discussion of economic policy. said we continue to promote abenomics. said to know to the. i think the impact of the new policy is getting smaller and smaller. in that case, we have to have a priorities he has to take on. the monetary policy has been thereg, but from now on
will be a shift in priority given to structural reform or consolidation. yvonne: what does that mean for the direction of the yen? there are a lot of things weighing on dollar-yen at the moment. greenback,about the not sure what will happen with the fed chair pick from the as well as this unwind of the balance sheet for the fed. where do we see the next 3-6 months? >> today may the reaction is the market will see the unexpected outcome today. thehat case there is possibility of verizon the yen. -- of a rise in the yen. even though the pace of interest rate rising maybe slow in the
united states, there is a direction. in that case, the market will have some natural tendency to seek a higher interest rate in the united states. that means more expensive dollars to come. and we won't break out of this range? we discussed volatility in the market, but for the last half year or more the movement of the market is limited in small areas. yvonne: you have in a critic of the boj. saidple of months ago, you they must and the obsession with reaching 2% inflation. what does a strong mandate from shinzo abe mean for governor kuroda? does he have a stronger mandate in terms of keeping the stimulus now?e
or could he be facing mounting pressures and 2019 to unwind qe? abe shouldwith mr. do is keep the japanese economy on the right track. no more the threat or coming back to deflation. this year, the japanese economy 1.5%ing to grow more than like the united states and the european union. policy comenetary it should be accommodative. mr. abe will put more pressure on governor kuroda to reach the 2% inflation rate. the economy is good and realding, so there is no threat of a slowdown in employment. side of abenomics
has been achieved, so maybe a shift to other areas. yvonne: like negative rates? >> maybe not necessarily. the interest rate is rising in the u.s. and europe. i think the monetary policy is getting smaller. sometimes the normalization is quite important. yvonne: we were speaking about the fiscal discipline there seems to be a lack of on the monetary side and the fiscal side in particular. can't put the economy on a sustainable trajectory when it comes to sustainable debt, is japan missing an opportunity to prevent a debt crisis in the future?
>> 5-6 years ago, we missed a chance to have consolidation. to come totrying that. new revenue will be spent on some areas. yvonne: mostly on education and childcare, not so much reducing the debt burden, right? is not toginal idea spend on the consolidation, and also they will have another rise, butor the next you will have some discussions .
that will be the challenge to discuss in the coming days. yvonne: thank you. we appreciate your time. you, bring it back to ramy. ramy: you can get a roundup of the japanese elections and all the stories you need to get your on yourg at dayb terminal. it is also available on mobile in the bloomberg anywhere app you can customize your settings so you only get news on the industries and assets you care about. this is bloomberg. ♪
$1.7 billion and has been working with jefferies group to seek suitors. it attracted interest from to buy out firms. the cisco transaction has not then finalized and details may change. raise more than $1 billion in a hong kong ipo, an online publisher an e-book platform is offering shares at 48.55 hong kong dollars each. tencent plans to use the proceeds to expand its business by developing entertainment products derived from literary titles and potential acquisitions. rio tinto held talks with indonesian groups about a potential exit from its copper mine. rio is keen to sell its part of the joint venture. there is no guarantee that talks will advance or culminate in any deal here at freeport is in separate talks to reduce its holding in the mind.
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yvonne: 9:30 in tokyo this morning. m before the cal storm, waiting for the typhoon to make landfall. heavy rain and wind gusts last night. things looking better this morning. so far, so good. i am ramy inocencio in new york. >> the dollar-yen we can to its lowest in three months as shinzo abe retained his super majority in parliament here it an
official result show his coalition winning two thirds of the seats here at -- seats. the ldp and coalition partner won at least 310 of the 455 seats in play. the fledgling party of hope won 50 seats. a powerful storm expected to hit tokyo this morning. it is a category 2 system. it is projected to weaken as it makes landfall, but ring driving rain and floods. airlines have canceled hundreds secretary the u.k. liam fox says a hard brexit would not be best. despite progress last week, britain's divorce from europe without an agreement remains a possibility. fox said such a scenario would
mean britain being subject to the terms and conditions of the wto. cut monthly bond purchases to $35 billion next year as it waits for inflation to pick up. the federal bank will continue buying from nine months to just over 2.5 trillion euros. the ecb makes its next policy decision on thursday. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: time to see how asian markets are shaping up this morning. let's get the latest with sophie kamaruddin. sophie: a few things percolating this morning. bonds falling, stocks on the rise, and dollar strength continuing for a second session,
up .2%, dragging on currency markets. kiwi still under pressure under $.70, lower for a fourth straight session. check out gold, extending losses after falling. sliding .4%. the dollar-yen is back above 114 for the first time since july 11, so keep a close eye on u.s. 10 year yields. dollar-yene the nudge closer to that 115 handle. this picture is supporting japanese stocks. nikkei 225, 15th day of gains and the topix headed for an 11th straight day of gains, the strongest since july 2007. electronics and banks the strongest. shinzo abe offering political stability, a big plus for japanese stocks.
amid this optimism, the technicals for the nikkei 225 is tooing topix the rise far too fast. you can see that on 5601, the nikkei 225 the most overbought according to the relative strength index above that 87 level. a read of 70 is the signal for overheating in any benchmark. , leda look at the kospi higher by i.t. shares, rising for a second session. utilities have trimmed earlier gains, but continued to climb. plant operators are continuing to rise after president moon about turned on the building of reactors. in focus notuch only in japan, but south korea. ramy: thank you very much.
we will be watching embattled noble as well. the company is selling its oil unit to vitol group. our metalst's get to and mining editor. walk us through what we know now. >> this is a long awaited deal. it was announced early this morning. ofy will get cash proceeds $582 million from the sale of the unit to vitol. the will be worked out on basis of financial statements at the end of june 30. the gross consideration will be $1.4 billion. there is $800 million of indebtedness in the unit, so leaving them with $582 million. everything depends on what happens at the closure. ramy: the company just released
their third quarter numbers. ofy expect a total net loss $1.1 billion to $1.25 billion. they are trying to pay down these massive debt repayments. at this into perspective here. >> this is a real challenge for the company. this loss and they just announce in the third quarter follows a loss of $1.75 billion for the arend quarter, so they losing a lot of money at this point just at the time when they are trying to negotiate with creditors, so it will make it difficult going forward for them. bought a staythey of execution and we will see how the shares react when they open this morning. right, it seems like things are moving forward with thesale of the oil unit to gas and power unit was sold earlier this year, so what is the outlook.
what will be left of noble after all this? >> it is a good question. the heart of the business is the coal trading business and a ship. they are getting some financing from that from another trading group. if that shows profits and a lot of the trading and contracts will come due over the next few it must the future, but be difficult to do business and opened up new business at a time when they are negotiating with creditors. they have a revolving credit facility that comes up next year and bonds that mature next year through 2022, so it is a question of keeping those negotiations going with their creditors. yvonne: thank you. the latest on noble. china's top officials saying there war on smog long affect
the growth target of 6.5%. it will prevent shuttered or illegal steel plants from returning to markets, but won't stop the economy growing beyond $12 trillion this year. get more from tom mackenzie live from beijing this morning. these topics we talk about a lot, cutting back on overcapacity, the problems around pollution. the amount of steel produced was about 72 million tons in september, down from 75 million in august. this is part of a concerted effort to cut capacity, particularly in the northeast of the country with an aggressive set of curbs to improve the environment and cut in pollution, and that is impacting steel prices. we sell rebar prices at the highest level since 20 oh.
this is likely to ease pressure on other steel producers around the world, whether europe or the u.s., because we are expecting fewer exports from china in 2018, the biggest steel producer in the world. these efforts to cut capacity and put these curbs in place when it comes to pollution are expected to continue and the ramped up over the winter months. yvonne: we have been hearing changesof leadership potentially from the standing committee this week from the party congress. you heard about the pboc governor speaking about early retirement after 15 years at the helm. here?isks are we in for are there more reformers who could come to the table? caveat isnk the key to say it is all based on
reporting and speculation. no one really knows what is going on behind the scenes and what is being stitched up in terms of new leadership positions. we have this report from the south china morning post saying the seven positions of the enemy politburo standing committee, five would be changing. also in that report they said that the anticorruption star would be stepping down -- czar would be stepping down. he is a key ally in support of .resident xi this is about president xi jinping getting his allies into position, not just the standing committee, but the politburo, to shore up his power base. questions overth the last few days about whether
the pboc governor would be stepping down. sources prior to the congress said he would be retiring at some point between now and march 2018. , includingof people the banking regulator and a key economic advisor to president xi jinping and the deputy governor of the pboc, but they can't put their finger on who will take over as the pboc governor. he has been in that position for 15 years, seen as something of a reformer. in terms of monetary policy and moves to liberalize the yuan and death, those policies are expected to stay on track to ever takes over. ramy: stability beyond whoever serves. thank you very much as always. up next, the nikkei 225 moves
♪ thehe ldp came away with the big win because it is pragmatic. at this stage, there is no alternative to that pragmatism. party needs to find a way to make that security equation work. >> the possibility of this debt crisis will happen very soon because at this moment if we yield, it isterm very low compared to nominal gdp growth.
the japanese debt is temporarily sustainable. will be the majority in the congress, so he will have a stable for years. next year, he will be elected ,as the chairman of the ldp both will end in 2021. yvonne: those are some of the views about the state of the japanese economy after this big win for shinzo abe on sunday. gains, theextending most overbought since abenomics took place five years ago. one oft to guest runs japan's major online brokerages. he is a former outside director of the tokyo stock exchange.
thank you for joining us in tokyo. looking at the nikkei, 21 year , is this a-yen windfall for investors? winning in the niftyatic party and the became smaller, which will smooth operations. if we think about naming the next boj governor, this new format, no one will oppose against the ldp's proposal, which is good for the market, for people to think about the boj continued easing. yvonne: which asset class to think we'll have the biggest reaction? will it continue to be stocks?
has been basically done. after the election was called, all the expectation was made. what happened yesterday was maybe a little bit more than people initially expected. the thing is being done already, so japanese stocks went up to the good level already. winne: with this solidifying shinzo abe as the longest-serving prime minister since world war ii, can we assume this will be a boost for abenomics? said, it will operate much smoother going forward. the execution of abenomics and all kinds of things will be better going forward to in --
ford. in the long run, the economy will be better, but that is different from today in tomorrow. expectations have been discounted by today, but going , 2-3rd in the long run years, i think the japanese market will be better. yvonne: on what grounds? more about the fundamentals? corporate earnings have been strong. six straight quarters of growth in japan. is that what will be driving the market? but eventually we do need reform. we need the regulation and reform. oftends to come with lots profits for some people, but this strong, new leadership can
change, can execute those reforms, which i hope would happen. yvonne: with the super majority, we could see constitutional reform that could be a priority for the prime minister now that he has solidified that to thirds majority in the lower house. what is your thought on that? they could be more about constitutional reform? of the market. i'm not a man of politics. i don't know. role is amongonal the japanese people. it is not easy. it is going to take time. topic, big issue, big but as regards the impacting the
-- omy are market, yvonne: he think japan could ?urvive a sales hike we have two years until implementation. >> we would do what we can do. a 10% consumption taxes very low. when you think about the japanese income tax compared to gdp come if it is very low. we need to raise taxes. people have been hiding this fact. party did talk about we do need to raise consumption tax. it is a fact. we need to and we can. quickly, your calls for equities and dollar-yen?
the environment is good. in the last month a lot of expectations have been discounted. i would stay around here for now. yvonne: how much to think what we are seeing in japan is not due to the domestic side of things when it comes to abenomics, but heavily dependent on what has been happening externally, whether where the fed will go, who the next fed chair will be? is that going to be a risk for japan for the next 3-5 years? >> not only japan. is aill be the next head big issue for the world. the quantitative easing or monetary policy is a huge thing for the market across the world. that the next federal
reserve chairman should be someone modest. , the successor for governor kuroda with this new , we will be looking for quantitative easing anyway. that kind of framework should framework forle equities. yvonne: could it be good for japan brokerages as well? we have heard about these powerhouses moving abroad for better returns. where do you see things moving forward? >> i think generally speaking it is good for broke which houses. lots of financial technology and all things happening, we need to change our services anyway. yvonne: thank you so much.
allegedly the traders sought to maneuver at the swap rate between 2010-20 fell. all parties were scheduled to meet come a but that has been adjourned for 48 hours. tesla has reached a deal to build a manufacturing plant in the city. the carmaker was close to an accord. last month, china was considering wholly owned electric vehicle businesses in free trade zones and not require joint ventures. bloomberg has been told fidelity investments held an emergency staff meeting last week after the departure of two male employees after claims of sexual harassment. the equity head held a discussion with employees to stresses your of tolerance policy. committed to it is
providing an outstanding work environment. that is almost it for us here on daybreak asia. time for a look at what is coming up. we are continuing our coverage of the japan election. you are doing it. centauri holdings president getting his take on what is coming out of this election. what is wrong for the opposition? i will ask him that question. does it change the face of corporate japan? that is in about 15 minutes or thereabouts. talking to some of those lawmakers is parliament itself. we are joined by two upper house ,awmakers in about 45 minutes then 45 minutes after that the
.apan upper house lawmaker does shinzo rb have further wiggle room to make of changes in the constitution and make it less peaceful. important data out of china. those house prices as well. that's what we have got on the way. yvonne: after we heard from president xi jinping about how home should be lived in, not speculative we bought. that is it for us. our market coverage continues next. this is bloomberg. ♪ is this a phone?
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