tv Charlie Rose Bloomberg November 20, 2017 10:00pm-11:00pm EST
is ready for a new election. america,d coming to guangzhou plans to offer its flagship brand, though there might be an issue with the name. man, oh, man. that risk aversion, how long did that last? just a few seconds. twoa is up the most in years. something is happening in china, though it is hard to understand what it is. angie: you can market investor sentiment, to the end of the year or two chinese regulators. all of it is pretty much in play now. let's look across the board. a sea of green when it comes to chinese equities and also, the broader equity market as well. gmm is your bloomberg function on your terminal. gmm and right now we are seeking china in play, and hong kong in play as well, climbing
1% higher. japanese markets climbing as well on that weaker yen. ee those taxv reform concerns have been put on hold. the german coalition talks that have disappeared into thin air, that has been pushed to the wayside and this is what we are seeing right now. inso remarkable is that sydney, it is gaining as well. i also want to show you the shanghai market because we are seeing some recovery there, but not here. it continues to fall here. this is a story we are continuing to watch because a couple of days ago, the news agency flagged this stock specifically. this is something that a state run agency rarely does. so, when it does, it does it with the editorial power of
china and what they said was, the valuations are way too high. the shanghai stock exchange is in the yellow. see kweichow moutai climbing along with that, surpassing the shanghai composite at some point and the concern was that perhaps some of these big staples on the shanghai composite -- if the valuations are too frothy, perhaps this could bring instability of market. we got word late yesterday that the shanghai stop exchange added fuel to the fire. the research note might mislead investors and kweichow moutai actually coming out with its own listing, saying -- or rather, with its own market note. the stock market exchange saying, valuations are very high and investors should be cautious. something else we are watching, bitcoin. all right. i was going to buy a bitcoin.
a lot of you guys were thinking about bitcoin. then you were thinking about how frothy it was. $8,085.72. it is as but here's an interesting chart here. 711, and this is a note from morgan stanley. this is from its global head of interest rate strategist. you can liken the trend of u.s. treasuries to bitcoin. what he figures, and this is what we are seeing, the bitcoin price is in the yellow and we're seeing that yield spread between two and 430. he's saying, guys, long story short, just buy into the dip.
he recommends adding to bets that the dip will continue to narrow and that trend is as strong as the trend that is driving bitcoin as a safety haven play, as you can see right now. when it comes to currency, this is also what we're watching. the u.s. dollar paring back its advances, especially after the euro. to get arkel trying coalition together. those talks essentially call-up collapsing with angela merkel saying she would rather go back to the electorate, go for another vote and get more of that political capital that she did not have to begin with. so, let's see what happened there. you can see that drop. now, we see the whipsaw back up. the u.s. dollar paring back the
euro recovery and that is what we are seeing across the market. angie.thank you there, there is big news out of the fed and somebody who will not be there anymore. for that, here's steve engle. janet yellen confirm she believed will leave the fed once a successor is sworn in. the term of governors does not end until january of 2024. this leaves president trump with additional spot to fill on the seven person board. she was the vice chair from 2010 to 2014. before that she was the head of the san francisco fed. well, the united states is designating north korea a state sponsor of terrorism, opening the door to further sanctions and isolating kim jong un's regime. there, but was
removed by president obama a couple years ago. pyongyang was on the earlier list, but was removed by george w. bush to salvage a nuclear deal. planneds it's takeover of time warner is a vertical merger. .s. justice says it would greatly harm american consumers. at&t's boss says any agreement requiring the sale of cnn is a nonstarter. >> despite our disagreements, we have offered concrete and substantial solutions and as we head to court, we will continue to offer solutions that would allow this transaction to close. rishaad: "the washington post" is reporting that eight women have accused charlie rose of making unwanted sexual advances towards them. rose has apologized for what he termed his inappropriate
behavior. cbs news has suspended him, while pbs halted his ta lkshow. bloomberg has also suspended the show from bloomberg television and radio. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. i'm stephen engle. this is bloomberg. are recovering from some of the recent losses, traders putting a lot of these concerns aside that have pounded the risk on trade. we have more sanctions in south korea. of course, the other thing we want to mention, the australian central bank is signaling less confidence when it comes to the outlook on wages. angie: we've got geopolitical jitters, some european jitters. we have got all of that and more insight. scott reynolds joins us now from
sydney. what's the reaction been to those rba minutes? scott: well, the reaction to the rba minutes has been up and down. it was already heading for its worst three months this year. .75s barely clinging to u.s. cents this year. when the rba came out with his minutes now, they sounded less optimistic than they have been, that the turnaround they expect will not come anytime soon. they sounded more resigned then they have been for quite some time, but they will be holding interest rates. that gels weird with the markets that are pricing in for the first time since at least 2000 that the cash rate will be below the fed rate in a year. reason to a good
expect continuing australian dollar weakness. david: i am guessing, when i look at the spread, as you mentioned, the managing yield premium that you pointed out on your blog. you came out with an estimate of, what was it, .65 cents? garfield: yeah. david: that is a realistic target to get to. that is certainly possible. morertainly feels plausible than the consensus forecast for about .80 cents, i think, which from here look like a very tough ask indeed. as i also wrote on the blog going forward from that, australia has a key role in the world economy. it is a developed market, but plays a lot of the time like a emerging-market. so, if the aussi is looking this
weak, and this is the reason behind it, that has got to give some pause to those who expect global growth going forward and who expect the asian stock markets can build on what has been their best rally since 2008. angie: you wrote in your blog that there will be some news about a rally reversal. why? i mean,: well, because, we had the strong selloff, of the previous last week, and a strong selloff partly on tax reform concerns, partly on what was saudi arabia playing at. it was the feeling that the market was due for a correction. we had that and then there was a very strong turnaround, especially in asia, on friday. a lot of people were like, that's it. it's done. we can get back to bidding
stocks up endlessly. instead, all of that turned around. now we are in a situation where no matter how good the rally might be, it might need to be sustained for a while. otherwise, everybody will be nervous and also, time of year. a lot of people are sitting on some pretty fat returns. this could be a good time to say, i am going to take those and come back next year. garfield: david: -- david: yeah, why not? frankly, garfield, a lot of people are getting nervous out there. you are up what, 35% on the year? how could we expect we will have the same returns next year? we've got to leave it there, though. that's the game changer, isn't it. garfield reynolds, you can follow more of today's trading on our market's live blog. you can check that all the market rundown and analysis.
they rejected the approach earlier this month, saying it was too low. they remain full a deal and have received positive feedback. are talking about h ere. their offering higher interest down below to. they are struggling with debt, doubling the payment to 2.6 percentage points. hna has three more loans due in the first half of next year. angie: the world's largest jeweler reported first-half numbers on thursday. operating margins are third. a rise in chinese shoppers visiting hong kong allowed a sales to exceed the current increase of 5% after falling to
a record low last year. david: of course, big news coming into this week. germany is facing new uncertainty with the possibility of mo elections afterr angela merkel ruled out a minority government. what will be the implications of this? not happen,g did obviously. i did not come to an agreement over the weekend. it is obviously a negative. we all have a tendency to over extrapolate. is it a problem. it is a domestic problem, but not a european union problem. the difference is not whether they will leave europe or renegotiate europe. this is not a nexus then shall issue. it is very much, at the core of , something allowing a payment
price. it's fairly simple. that is the issue. it is not an issue for the german state. we want germany back. i know, it sounds racist, but that's what happens if you do something like that. angie: that is the domestic issue, but you cannot deny that germany is the only voice that matters when it comes to the european union. in play. germany is the main guy in the room and if they cannot figure it out internally-domestically, they will be handcuffed on the foreign stage if they don't have any kind of leadership voice coming out of germany for the rest of the union.
can't: when you say, you deny -- i say, yes. i can deny. they are not quarreling about the role of germany in the european union. forther words, if germany , and or four months angela is coalition caretaker, that is very good. , we have brexit. brexit is a dog's dinner because of the british, not because of angela. brexit is going to stay where it is, not because of the germans. angie: i'm just going to pull up this chart that i talked about earlier on the show. oh,use, ok, so you can say,
it is just a domestic issue. look at these moves in the euro. yes, you saw the recovery, but now it is back down to where it dropped right after those coalition talks collapsed. went fromo, the euro 18 to 17. yes, it's uncertainty and yes, it's not very nice that you have the biggest european country groping around in this environment. we are forgetting a much more important issue, the catalonian independence. no, no, no. we are obsessed now that the germans might have an article government. yes, it is uncertain, but look at the good news. frenchopean union, the said loudly, the dutch said the -- and thee pen it's sen
spaniards send in the police. a coalition government in germany? ok. david: i am looking at bunds, for example. they barely budged. the economy is in its the shape in years. andrew: i do want to be stupid and say, it is not a problem. but i want to understand it is a problem for home and for what. -- it's a problem for whom and for what? well, now, angela, if she goes for an election, she might become theresa may, in which case it will become a minority coalition. or she might even have to go. angie: all right, talking about
conversation with andrew fre ris. he's still with us in the studio. you and i were having an animated conversation during the break. angie: and i just stood there. david: something our viewers would perhaps, like to chime in on. you are polling what donald trump is doing int the u.s. andrew: he is a reverse robin hood, taking from the poor and giving to the rich. i love it. every single analysis i have seen points out that those to benefit are those with higher
incomes and the corporates. the corporates are not necessarily owned by huge me ga-wealthy companies. it's not as simple as that. it's very elegant -- sorry, part elegant. i'm being facetious. part of the bill is going back to killing the obamacare. i thought that was finished. no, it isn't. it is removing the fine for those who don't have insurance. within a few years, many americans don't have insurance that all. yay, great stuff. the middle america that elected get just -- g to angie: at the end of the day, a lot of people have been pricing
the tax reforms, regardless of the criticism and it being a good thing. where do you see the u.s. dollar going? andrew: the u.s. dollar will continue to support it. the fed has done four hikes so far, and i think we will be pushing it if we forecast more than two hikes in the course of 2018. for example, we just had the rba. and the aussi dollar, it used to be a classical play against the u.s. dollar with high interest rates. the fed is likely to increase. that's ane extra reason why the u.s. dollar will be stronger. david: within the equity space in 2018, where do i place my money? andrew: this is where i am concerned because the markets are significantly overvalued. however, if i going to put my
money into equities, i would stick with smaller markets. the small cap is a little bit tricky. caps are value peaking. micro-peaking. it's a little bit boring to do. let's say, stick to the big asians, as opposed to the capitalization. angie: yeah. andrew: and that means taiwan, singaporeiland, and to some extent. angie: we will bring you back. andre: i will stick my head out
club --the $500 million $500 billion club, the world's sixth biggest company by market cap. giants, 21st tech century, so the tech giants are driving the economy when it comes to the global sentiment. consent in the red -- 10 sent in the red haidi: it is david: have a look at mine. everything you need to know. tencent.king at 10 have a look at the volume, 200%.
a lot of buying pressure on the stock. of 4.93. reading perfect score is five, so still bullish despite it being expensive. .hat is tencent sophie is standing by. sophie: thank you to tencent helping the hang seng and tech shares across the region. tocent has been central maintaining the world-beating rally. ozzie stocks remain the underdogs. , that lacks continuing for shares on sluggish eps growth. pressure.is under the rba fretting over wage
growth, prompting bets they will hold off on raising rates while the fed hikes. the yield premium at the narrowest since december 2000. in tokyo comes stocks rebounding, let higher by exporters as the yen holds on to losses. selling pressure from foreign funds may mean that optimism prevails. let higher byghai financials. hereof those key movers among the biggest contributors as china's shanghai new asset management rules helping out the big boys come although hurting smaller banks. a day of swings for kweichow moutai. looking to find
some favor in shanghai. ,he last word on chinese bonds declining as policymakers tighten controls of financial markets and the pb oc has pared its cash injection, pushing the 10 year yield to the 4% mark. let's get first word news with stephen ingles. german chancellor angela merkel would rather face a new election than run a minority negotiationss broke down with the pro-business free democrats. angela merkel said she would prefer to go back to the electorate in an attempt to govern without a majority or clear mandate. i have no plans for a minority government at the moment, so we have to wait. a new election is one way, and a minority government is another. that would be something to be thought of very carefully.
i don't want to say never, but i am skeptical and i think new elections would be a better way. the ecb expected to make small adjustments to policy guidance next year rather than a major change. euro area officials tell us it should be consistent with the gradual withdrawal from stimulus , and merrier drug he has made it clear that for veterans will be a key policy tool and says the exits from qe remains on track. the economic expansion remains solid and broad-based across countries and sectors in the euro area, many supported by domestic demand. recentng to the estimate, real gdp growth has continued in the third quarter at the rate of 2.5% year on year. >> wealthy people in saudi fencing theirg
assets in case the corruption crackdown titans. people who are not currently implicated are asking banks and legal firms how to protect their wealth. the luxury apartment on the peak in hong kong has become asia's most expensive by area. a none identified by your paid $148 million on monday for two adjacent flats at number eight mount nicholson. 17,000 dollars per foot. hong kong is set for a mild correction in its red-hot property market. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: i told them not to film, but that being said it is out in the public.
from one bubble to another, let's talk about china. it continues to open up its economy to the world. overseasion to let companies move in and have more control in joint ventures, but risk remain in the form of the country's debt pile. >> even the pb oc is worried about maintaining stability in the market. let's bring in our chief economist in beijing. you are forecasting death of 327% of gdp in 2022. how did you get that number, and secondly what is the economic environment in which that exists? it is a bit of a complicated calculation. there are a bunch of moving .arts we have to think about the composition of gdp in terms of industry and services.
we have to think about how much credit is required to produce a unit on a sector basis, and then finally we have to put in an estimate of how good and effective china will be at writing off bad loans. all of those variables come to gather in this projection of 2022.o gdp at 327% in behind that is a an assumption by the policy choice which china's government will makes. china's government could choose to step back from its ambitious growth target and make more progress on deleveraging. our assumption is they will not do that. they will stick with the ambitious growth target, and that is why we will see debt continuing to rack up. a lot of the people we talked to here, debt to gdp history keep your japan for example, not a lot of people worried because it is
domestically owned. the problem with china is that relative to where it is in its development cycle, debt should not be that high come so what is the major implication for the economy there? >> you hit one of the key points, debt is a development instrument. if you want to move up the income ranks and pay for the infrastructure and industry necessary to develop, you need to borrow money, so the u.s., japan come a they have higher debt levels than china, but these are developed economies. the bank of china has already taken on a very high level of debt whilst still a lower middle income country. the question that raises is how easy is it going to be for china to continue accelerating up in income rankings. >> there is a lot that can happen between now and 2022.
what could push china into a more positive trajectory? >> i think that's right. there are a lot of assumptions baked into our arecast, and they could go in more positive direction for a more negative direction. a bunch of things which have been happening in the last few months and the last couple of weeks have suggested that maybe they could move in a more positive direction. firstly, the chinese government has succeeded in ramping up nominal growth. has accelerated. that means more corporate income and tax revenue and household income and more money to pay down debt. in the last couple of weeks, we have seen the government taking some dynamic steps to try to drive higher efficiency in the financial sector. david mentioned at the beginning of this segment, kicking open the door to the financial markets to foreign firms, moving aggressively to bring this wild
west asset management sector. the hope is this will mean a more efficient financial sector, more growth thing for less credit buck. if sustained, the government could cap credit at less than 300% of gdp in 2022. angie: we will leave it there. thank you for that. remain in china because its effort to rein in financial dangers faces the challenge, convincing individual investors that risk is real. in the last 13 years, the value of chinese asset management products have swelled from almost zero $215 trillion, in to $15cause -- trillion, in part because it is considered safe. david: there is never a good
time to put in place unpopular measures come that you are saying in your article that it is a bit more sensitive to do it like that. why? >> china's ten-year development bond yield hit 4%, psychologically important for bond investors, the highest level since october 2014. in the meantime, the chinese corporates are probably going to .ace deeper refinancing risks the chinese government is trying to clamp down on issuances in the corporate bond market, and the ipo market is not fully open come so wealth management products and that they were a major source of funding for a lot of corporates, 15 trillion yuan, so refinancing will be tricky when that benchmark bond yield is rising. in 2008, saw this sudden tightening of liquidity, the most respected, the most stable companies, so what could
happen here in china? week, anstance, last major port operator in northeast -- that borders north korea defaulted on its october 31 bond. sinking investor sentiment in the corporate bond market. if you look at the financials, it is a profitable company. they're operating margin was 15% for the first nine months of this year. the problem is they could not refinance fast enough. going forward, we may not only corporatesrofitable going into default, but also profitable ones that cannot get money fast enough. david: i'm guessing a good example would be property developers. in a previous life, i used to cover a lot of these things and market them as well.
you did have implicit guarantees on your rate of return and you are guaranteed this cash flow, right? be a problem for property stocks in terms of refinancing? >> over 10% of wealth management went into the property sector, and also the only privately placed wealth management products can invest in nonstandard assets, basically the property market, and the wealth management funds that you can sell to mom-and-pop shops, they cannot invest in those, so it will be a problem for them down the road. angie: a problem you are flagging now. thank you for that. that is on our radar. coming up -- angie david: flipping the switch on an electric vehicle deal. details next.
♪ david: this is "bloomberg markets: asia." indian carmaker is open to a new of electric vehicle with ford to lessen air pollution. ford has announced plans for such a venture in china, and the plan for india is boosted by the government calling for all cars to be electric by 2030. our guest joins us now to talk about the story. the first question i have is what are these two already involved in at the moment in order for them to now say they are open to that venture moving ahead? >> two reasons. one, both of them have a history of working together. they partnered in the 1990's to bring the forward line of cars into india.
secondly, they acquired a company making electric cars in india. they have a small electric car which they sell commercially in 20.ia, the e it is working together earlier and the market potential they see in one of the biggest car markets in the world. what does the indian company bring to the table here? >> essentially they have already made a distribution network and are among the top three car companies. of carse a huge lineup come so it has a distribution network that ford can access right down to the village and rural area, and two, ford brings
best practices to the car market is sellingahindra electric cars commercially, it is not to the standards that possibly tesla and other chinese carmakers have, but essentially ofy have an understanding , and alsoic market ford can speed up the production lines and other aspects of carmaking. david: help us understand what the government's position is. the headlines over the last two weeks is that the air pollution where you are makes beijing seem like switzerland, and i guess that has skewed the government's attitude towards the transition to cleaner energy. >> that is true. what you have read in terms of the headlines out of delhi is much closer to reality than
possibly what you can expect. add to thatthat -- the government's efforts to boost electric vehicle usage. there are two things that are basically ancillary to this carmakersess of looking for other options to make electric cars in india. is low, younership are possibly leapfrogging into a aenario where there would be ramp-up and electric vehicle usage. is a naturaltion catalyst to use electric cars come and number two, the government is rapidly promoting the use of electric cars and converting the entire fleet of government cars into electric cars. , ay have put out a bid tender, for about 10,000 cars to
be purchased before march 30, so essentially are working in favor of manufactures looking at electric cars in india. let's stay on theme. its tiesking to deepen with fiat chrysler has the largest car market relaxes some regulations. angie: tom mackenzie is talking with the company's president, saying it is poised to inter-the u.s. market -- enter the u.s. market. >> we are aiming to enter in the u.s. market in 2019. this is a crucial move for guangzhou auto. hasinternationalization just taken off and we have laid the groundwork and carried forward car sales and service operations and 14 overseas countries this year.
entering the u.s. market will be a huge breakthrough for guangzhou auto, because if we path ofreach a grant globalization, establishing a brand in the u.s. and winning trust of american consumers will have a extraordinary symbolic significance to us. >> you obvously chose the name along time ago, well before donald trump became president, but he is a controversial figure to say the least. for your brande income or a drawback for your branding? >> we will definitely choose a name that american consumers are totally comfortable with. if american consumers think our model's name is to simmer to a certain president and therefore have mixed feelings about our products, we will then pick a new name. fiat chrysler is your joint venture partner in china. how much of april will they play
in your expansion into the u.s. market? >> we are very satisfied with our relationship and both of us are seeking to gradually in proof corporation to a new level. now shareholders of the two companies are discussing and exporting more channels and areas to deepen and extend the scope of our cooperation in the future. >> where do you see auto sales in 2018? >> i think two key factors are likely to affect car sales next year. one of them is the continuing improvement in the macroeconomic situation to provide strong support for the growth of car sales. the other factor is negative. the government is due to scrap a policy on a tax cut for purchasing small engine vehicles. next year sales should be around the same level as this year. we can expect growth of 5% in 2018. >> would you welcome any moves by the chinese government to lower trade barriers, to improve
the u.s.-china trade relationship, because he could help you when you are looking to the u.s. market? is that something you would be happy to see at this stage? value ofmber and total american cars exported to china are far more than those of chinese cars sold in the u.s. theet, therefore i hope governments of the two countries introduce more policies that will favor the auto industry development in both countries and more measures to encourage the carmakers in both nations to deepen collaboration and areas of technology, manufacturing, and sales. i am very optimistic about this and really looking forward to better policies. angie: that was the president of guangzhou automobile. focusing on what it means for the aviation industry, exclusive from the ceo. airbus has built a new
angie: let's get a quick check of the this is flash headlines. suvs fromg 24,000 volvo to form a fleet of self driving cars. they will be delivered from 2019-2021. it is the first major auto purchase by a ride hailer. uber will add its own sensors and software. ared: builders of the camry told to cut cost her face an uncertain future. angie: an indian tycoon has denounced charges against him as
baseless and fabricated as he continues his fight against extradition from the u.k. the billionaire is accused of fraud and accused with defunct kingfisher airlines. he has been living in self-imposed exile in london. david: that is just about it for us here. bloomberg markets: middle east is coming up at the top of the hour. what is in store for viewers today? tracy: we will be talking about u.s. tax reform, unless coming out with their s&p 500 targets for 2018. i saw one estimate for 3000 by the end of next year. we will talk about how the tax efforts play into those forecasts. saudi, robertts, gabi refusing to give up power,
♪ tracy: fed up, janet yellen confirmed she will leave once in, givenell is sworn president trump borescope to shape leadership for years to come. could germany be heading for a reelection rerun? angela merkel would rather face another vote rather than govern without a majority, the euro we can submit --