tv Bloomberg Markets Asia Bloomberg January 31, 2018 8:00pm-9:00pm EST
rishaad: the end of an era as janet yellen chairs are last meeting. hold but signals there may be hikes in march. later, a $400 million charge in the u.s., analysts predicting a profit. and copy that -- xerox concedes defeat after more than 100 years , fujifilm taking control macron an $18 billion deal. i am rishaad salama in hong kong. haidi: i am haidi lun in sydney. also coming up, budget day in india. the government is walking a fiscal tight rope, maintain prudence or offer giveaways to
garner votes? this is bloomberg "markets: asia ." it is india budget day. really facing this choice, populist measures or fiscal prudence? a lot of focus on that over the next couple of hours. all of this happening as the backdrop of china looking at the smaller, private sector. a look at how they are going and growth so far. in terms of equities, looks like the start of february is better than the end of january at least. rishaad: absolutely. the end of january did not quite materialize as many predicted. looking at long-term rates, alan --enspan suggesting
we remember him for a rational exuberance. do we have a rational exuberance? markets, theian three-day selloff we got in the region. robust export growth from korea adding to the risk, although gains for the cosby -- for the kospi. also this morning a slew of manufacturing pmi surveys that indicated stronger across the region. that could bode well for this synchronized global growth. in taiwan, fourth-quarter gdp, growth jumped the most in almost three years. higher domestic spending adding to the resurgence. gaining .5% ahead of that. tech stocks in focus today as the hang seng reports this week. facebook set off anxiety over slowing user growth. ahead of apple's earnings, it has been on the rise. top players qualcomm and broadcom morning of slower sales
to suppliers and taiwan. those are going to be in focus. pulling up the board to check in on semiconductor holdings, which are due to report earnings today. quick check on stocks to watch. fujifilm chief among them, soaring the most since 2008 on the back of the xerox deal. sinceu falling the most 2014 after his third quarter miss prompted a cut to neutral. virgin australia sliding in sydney after credit suisse cut the stock to neutral amid prospects of the stake in the airline being sold to the balance sheet concerns. was continued for the hna group. let's check in on the wider market on the terminal. we are mostly seeing declines across the bond space. it is a mixed bag for currency so far as the dollar is steady following the selloff in the wake of hawkish fed rhetoric. the korean won is lighting about .25% despite the boost in the
trade figures this morning. overall, it is looking like a decent start for asian markets. haidi: decent, we will take it. let's get the first word news with stephen engle in hong kong. fbi director christopher wray is said to have told the white house he is against the release of a classified republican memo alleging bias at the bureau and justice department. he thinks it contains inaccurate information and a false narrative. the memo deals with the alleged russian meddling in the 2016 election and is being reviewed by the national security lawyers. while china's great firesale is ready to go. indebted guam right hna group is said to have told creditors and aims to sell $16 billion of assets to pay down debt and avoid a cash crunch. sources tell us 4/5 of those sales would come in the second quarter. hna already having admitted it faces a shortfall of almost $2.5
billion u.s. in the first three months. u.k. prime minister theresa may has hailed relations with china as a model for the country after brexit. she and the premier offered a bullish addition of the trade future between the countries, setting up a high-level panel to review commercial links. british exports to china are up 60% since 2010 and china is expected to be one of the biggest foreign investors in the u.k. by the end of the decade. >> in terms of the future for the relationship between the u.k. and china when we leave the european union, we have agreed to a joint review of trade and investment, which i think is a good step towards looking towards what our future trade relationship can be. when we have that freedom outside membership of the european union. sonal: -- stephen: president xi is calling on china to embrace big data and artificial intelligence to propel long-term growth.
he says the company needs to make -- the country needs to make better use of markets and resources and improve the economy to enhance competitiveness. president xi told the congress in october that advanced technology should be embedded in the real economy to improve governance. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm stephen engle. this is bloomberg. haidi: the fed cap its key rate unchanged for janet yellen yellen's last meeting, but continued to pave the way for a hike in march when jay powell takes over. let's get over to kathleen hays to read the fed's policy t leaves. look at the market reaction and some narratives around it. was it a hawkish statement? kathleen: interesting because the bond market did pullback. an hour after the statement was released, midafternoon new york, the 10 year yield was back to where it had been, just over
2.7. the 30 year bond was up about a half a point. there was a lot of that can fourth. look at the keywords. you see a fed that seems to be getting more convinced it is on the path toward rate hikes in 2018. the committee expects that economic conditions will evolve in a manner that will were at gradual increases. it is the exact same sentence before, but they added "further," underscoring that we are moving in the direction of more hikes. in terms of other words, they had said gdp growth was solid. now they are applying the word solid to jobs, consumer spending, business investment. they took out any reference to hurricane effects. tweaks to inflation that people are most focused on. in the policy statement, the fed said in the january meeting that they expect inflation's will move up this year. that is the top of this list.
in december, they had seen it remaining below 2%. they made a positive change. measures of labor compensation, like wages, have moved up. bloomberg on television a couple hours ago, former president of the federal reserve bank of richmond, says this is key. >> concerned about the possibility that inflation would not move up the target over the last several months has i think been one of the things holding the fed back. i don't mean to imply the fed is going to go for broke and raise rates aggressively, but what this means and signals is that there seems to be a greater comfort level that inflation will rise to target, which means rates will begin to move up. kathleen: al broadus and the former president dennis lockhart also saying they are looking for three hikes, but a lot more inflation, a lamar growth that could move it to four rate
hikes. rishaad: what is the fed watching as we head toward that march meeting? what data points? is it just a situation where they feel they have to normalize monetary policy above everything else? kathleen: it is almost like this is asymmetric. it is time to normalize. if there is a recession, they want to have rim to move rates down and stimulate the economy. they are going to be watching inflation, jobs closely. with the markets watching, it is like a slamdunk. world interest rate predictions on your bloomberg, we're going to see the march hike. the odds are about 96%, about as close to 100 as he will get. they are convinced. friday, the big jobs report will be released. we are expecting to see healthy gains. a big focus is going to be on what wages do. let's look at #btv 899. i like this chart because it puts into historical perspective
the year-over-year increases for the wages of hourly production workers. look at the far left-hand side. in the 70's, averaging 8% year-over-year. 90's, over 4%, now just over 2%. are we going to see more improvement? the fed sees early signs, so that will be closely watched. no mention about fiscal things like tax cuts and infrastructure spending. all of that will be closely watched in the weeks and months ahead. there,: kathleen hays our global policy editor. joining us now, the global ceo at deutsche bank. welcome, christian. what are you making of all this? >> talk about more inflation or normalization of inflation is good news. the fed always talks about the conundrum why inflation is so low. i think we have an idea, because things are changing. to go back to normal is important.
however, it is important to watch what happens with the bond market. our yields rising too fast? we don't think there are too fast, but they are rising. there could be a year where you see negative returns. rishaad: we have got the chart, 1527 on the terminal. it is showing that returns on the bond market are some of the worst we have seen since 2009. guruse got the bond saying there is no value in treasuries right now. on top of that, alan greenspan saying look forward to long-term rates continuing to wrap up. >> we are not saying this is going very fast and high. however, when you look at the strategy, last year we said give credit to the bond market. this year is different, put a light on fixed income. for government bonds in some develop markets -- could be treasuries -- in europe, could
be negative return, the first in many years. you need to reposition the portfolio. a short duration, which many have done before, but also thinking of alternatives to the bond side. haidi: i want to get your views on the dollar, because deutsche bank's global head of fx put out this note defending the bearish view on the dollar. i want to bring up this chart, #btv 1057. the dollar continues to lose traction, changing its position to neutral from bullish. where do you see this going? i know you guys are constructive when it comes to emerging-market assets. this has been a good story for em so far. at what point does dollar weakness become a negative? >> i think there is a lot of momentum for a weaker dollar at this point. i'm not sure that is always the case down the road, especially if you see what happens in the u.s. what does it mean for emerging markets?
certainly emerging markets have profited from the weaker dollar. the situation compared to other cycles where we saw a weaker dollar is different. stronger if you look at earnings in the company's, if you look at the economy. i think they are a bit more immune from that point of view. if that changes, it is not that bad for emerging markets. we still like emerging markets. within them, we still prefer asia above latin america. arei: in terms of where we in the calls for emerging markets, how much more do you think we have got to run? you talk about distinguishing three sectors, but the selloff over the past week has been pretty wholesale. >> that's true. sectors,o distinguish but if you look at how emerging markets evolved over the last years, it was a lot of commodity driven market. we call this year the new emerging-market because it is much more tech oriented.
that is why we like asia more. if you look in terms of earnings , if you compare evaluations to where they have been in contrast to develop markets, there is more room to grow. they are not cheap, but there is still some upside left in the cycle. rishaad: christian, stick around if you would, lots we want to talk about. christian nolting, global ceo of deutsche bank wealth management. still ahead, we break down earnings from some of the biggest names in the game. haidi: next, we run through what is expected from the indian budget and the potential obstacles ahead. this is bloomberg. ♪
must decide between fiscal prudence and giveaways to get more votes. >> it is going to be a balancing act for the government as it presents its penultimate budget before elections in 2019. the finance minister will have to walk a tightrope, trying to manage budget deficits on one hand and take populist measures and spend money where needed on the other. the budget is likely to focus on two kiera goes -- two key areas. one is agriculture. they are going to a crisis of agriculture and spending money. second is creating jobs. india is also going through a phase of jobless growth. expect the government to announce a large jobs program or incentivize private hiring. india inc. has been clamoring for a cut in the corporate tax rate. the finance manager announced a gradual reduction in tax to 25% and removing all exemptions. captains of industry will be expecting the finance minister
to walk the talk and deliver. the financial markets in india have been trading at record highs. little to complain things to domestic liquidity. on analysis is not palpable reports of the introduction of capital gains on long-term equity investments. that would be taken as a short-term negative. expect the budget to have a populist stance with a clear eye on elections in 2019. bloomberg news, boom by -- mumbai. rishaad: with us is christian nolting still, global ceo deutsche bank wealth management. what are you looking for in this budget? how would it move the dial with regards to your investment strategy and the way you look at india as an investment? >> we are positive on india, so budget is a very important topic. elections next year are very important as well. rishaad: they probably play into this budget no doubt. >> i agree. you would see some areas where
you get some votes. there will be a lot more focus on the rural areas. that could be through infrastructure spending. areas but the rural also have growth creating infrastructure spending, which is a topic not only for india, but globally. second thing is if you introduce new taxes, that could be a short-term negative for the market. however, longer-term we are still positive for india. we have seen a very decent year. there is probably more room to go if you see further investments. india is now growing probably faster than china, though it is a close call. still some upside, so we are positive on india. haidi: i want to throw out this chart, which goes to the crux of what we are looking at in terms of the budget, #btv 1013. the india deficit. we are looking at how far beyond 3% this gets pushed.
the median estimate at bloomberg is 3.5%. do you think this will be a short-term thing where you get back to fiscal discipline year and subsequent years? given we have had so much volatility, do you expect more in that space? >> i think this trend would probably continue. if you are one year ahead of the elections, if you look at the past, deficit spending is going higher. you saw that in election years, the deficit was higher to give positive signals to garner votes. i would not be surprised to see that again. on the bond side, it is a global phenomenon. you see inflation rising in india and other parts of the world. we have seen indian yields rising quite a bit, probably more to come. we also don't expect a massive spike in yields, which would be negative for the bond market and equity market. i don't expect that to happen. deficit spending, probably more to come the next 18 months. rishaad: this is it.
there has been this adage of india, which has been through the last few decades. india has a great future in 10 years time. this is the problem, isn't it? >> we have always heard this. i think if you compare the cycle where india is to china, i think we have seen india with some change in policy -- rishaad: have the structural changes necessarily been put in place? >> i think more needs to happen. overall, from an investor perspective, india is very positive and i don't think that will change over the next months. even looking to the election, more reforms are promised and there will be more spending, which short-term would be good for growth. if you look at returns, last year was very decent. we like emerging markets, we like asia. there is a case for india, no doubt. rishaad: it was a pleasure.
last time we talked was just after brexit. come again soon. ceo of deutsche bank wealth management. more coverage of the indian budget on bloomberg, including the finance minister's full speech at 1:00 p.m. hong kong, midnight eastern time. also catch up with our interviews, use our interactive function on tv . you can also become part of the conversation by using the instant message function on bloomberg during our programming. this is for bloomberg subscribers only. i recommend it. it is tv . ♪
across the asia-pacific at the moment. they would not mind seeing gains across the board. [indiscernible] up witht you caught some of the other headlines and stories we're tracking. fujifilm shares have taken off in tokyo after news of its xerox takeover. the deal creates an $18 billion company with xerox shareholders to get a cash dividend of $9.80 a share. it marks the end of independence for a company whose roots go back to the start of the 20th century. its copiers became so ubiquitous that xerox became a verb, but asian rivals eventually eroded its market position. rishaad: japan's banks are on the move up in tokyo after posting high profits despite falling lending incomes.
they are taking advantage of the countries stock rally. to $2.1 from 23% billion, achieved its four-year profit gold with a quarter to spare. another posting a 9% profit jump to $1.5 billion. haidi: india's second-largest private bank missed profit forecasts. it's revisions for bad loans rose and treasury income fell. at $259me dropped million, coming in well below the expected $307 million. the ceo wants to boost the balance sheet by raising provisions and recovering dues from delinquent borrowers. change to little before the results announcement. rishaad: coming up, having a look at what is in store for luxury watchmakers. is it time for them to get smart? we are talking to a chief
rishaad: 9:29 a.m. beijing and hong kong, counting down to the start of the session in greater china. what are we looking at? tailwind from the late rally in the u.s., repelling equities to their best start for a year since 1997. janet yellen ended her dovish term with a bit of a hawkish town. alan greenspan warning of longer-term yields going up for treasuries. we have the indian budget later. in a short while, a purchasing manager a day after the official one missed. haidi: getting more buoyancy
when it comes to the markets and sentiment. a news story when it comes to trade flows? we have had disappointments and misses this week. china's pmi was not bad. private comes out in 15 minutes. south korea had a real beat when it comes to exports kicking into gear at the start of the year, 22% for january. that indicates we could see a stronger global demand, that there is legs when it comes to be synchronized global growth story that has been propelling exuberance on the market. let's get to sophie for a look at the open to see if these markets are going to be joining and continuing the recovery mode we are in. sophie: not much in the way of exuberance when you take a look at the mood in shenzhen. marginally lower. shanghai stocks marginally higher, the large-cap gains -- large-cap gauge about .1%.
shanghai stocks are not looking to gain ground too much as we wait on the pmi data and about 15 minutes. great wall a-shares have suspended trading in shenzhen to date. in hong kong, the mood looking more optimistic. hang seng gaining .2%. h shares extending the rise on wednesday, up .4%. in hong in on lenovo kong, and the spotlight after posting a surprise third-quarter loss on rising expenses and tax charges. the stock snapping a four day drop. the ceo not seeing the mobile business breaking even in the second half, looming large over lenovo. other movers, this one falling by the daily limit for a second consecutive session. a steel company gaining ground in hong kong. in china, another company is climbing.
leading thecks are advance on the hang seng, along with i.t. credit suisse see further stocking, retail landlords in particular seemed to benefit from the rising net wealth affected the region with rents likely to erase the second half of the year. credit suisse is cautioning that you should be more cautious due to rising interest rate risks. taking a look at the laggards, power assets leading the decliners, down over 1%. taking a look at the composite, telcos and energy stocks lead sectors higher along with property players. keeping them dry on the consumer space, under pressure today. about pricingned and fair competition during a meeting on wednesday. those stocks dragging down. i.t. under pressure in shanghai. rishaad: thanks, sophie.
u.s. monetary policy rarely out of the minds of investors. part of our first word news today with stephen engle. sonal: absolutely -- stephen: absolutely right. the fed met for the first time -- the last time under yellen, keeping rates unchanged by setting the stage for rise. fomc says it expects conditions will evolve in a manner that warrants further gradual increases, adding the word further to previous statements. the fed said that the near-term risks to the economic outlook appear to be roughly balanced. boeing is being given more than $6.5 billion to continue managing u.s. missile defense. it is intended to shoot enemy rockets out of the sky. the contract extends through 2023 and brings its renumeration to $12.6 billion. critics say the system has destroyed less than half the target in the times it has been
tested, and since 2004, 3 for nine. u.s. oil production has climbed about 10 million barrels a day for the first time in four decades, an indication of the shift in global crude markets. it comes weeks after the international energy agency says the u.s. was poised for explosive growth in oil output. that would push it past saudi arabia and russia in 2018. wti rising toward $65 in new york. it is budget day in india, where the prime minister faces a difficult balancing act. he must way maintaining fiscal prudence against handing out cash to placate rural voters ahead of next year's election. the government wants to keep global investors and credit rating companies on its five. the key to that will be sticking to its goal of narrowing one of the largest budget deficits in asia. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm stephen engle. this is bloomberg.
haidi: thanks for that. the u.s. earnings. technology companies started with results for the recent quarter. facebook, microsoft, qualcomm. ramy inocencio joins us from new york. let's start off with facebook. what was the major headline? ramy: before we get to facebook, i want to say that looking at the after-hours share price of those three stocks, you would never have guessed that all three actually beat earnings as well as revenue. first, to facebook. right after they reported after hours, the stock fell by nearly 5%. it was hanging out there for maybe an hours so. after the earnings call started with mark zuckerberg, who was assuring guys that things would not be as bad as they thought, the share price decided to rise. it closed up by a little more
than 1%. investors were concerned about one big stat. they were concerned that the time that people spend on facebook dropped by 50 million hours in the quarter. the reason is because facebook has been accused of helping to push russia's propaganda, so they are trying to take a step back. mark zuckerberg himself said they are going to stop viral videos. they want quality over quantity, to push the good in usefulness for society. another negative was that for the first time in north america, the dau's actually dropped, the daily active user. we did have scott galloway on a couple hours ago. he is over at stern school of business. >> i saw this as an incredible beat. in the midst of all this noise, they are operating really well. ramy: he is always on the show, quite a list -- quite bullish,
as you can hear. on the call, mark zuckerberg said, don't worry, we're going to pull up from this. they decided investors would follow them. we did see the share price rise in after-hours trading. rishaad: qualcomm, top and bottom lines pretty good. it is the forecast that people got concerned about. ramy: right. it is looking ahead to the second quarter for them. for example, revenue was about 1.9% higher than the average analyst estimate for this quarter, but it is all about what is happening in the smartphone space looking ahead. there has been concern that demand is waning. we are seeing that in terms of the numbers. qualcomm projected sales will be on average about $5.2 billion. analysts expected that the revenue would be higher, $5.6
billion. qualcomm is also seeing an inventory buildup at apple and lower orders. it saw a drop in orders for its modem only products. after-hours shares settled down by about .6%. let's talk about microsoft. in earnings beat in revenue beat. this was probably the best out of the three. this all had to do with the crowd, as your cloud services almost doubled. they grew 97%. the cloud service is second only to amazon. cloud services really are not going to blow away anytime soon. because of the monumental growth, cloud services really -- we are seeing the early days. one shadow, if we are going to use these metaphors, there is a $13.8 billion tax charge that microsoft is said it would get hit by because of the white
house tax overhaul. besides this positivity, the net that microsoft had ended up being a loss. shares fell about 3%, but managed to pull back to the flat line. rishaad: ramy, thanks a lot. let's check lenovo, the unexpected loss in the share prices down about .5% with rising expenses and a $400 million tax charge. the second-biggest pc maker in the world. a disappointing quarter. the -- an economist has the story. tim, what is going on here? >> the bottom line number was blown out by a $400 million right off of tax-deferred assets. it is essentially them admitting they won't need to pay as much tax in the future. they did say one of the reasons is the tax change in the u.s. recently. i would caution investors to not
read too much into that change. what they are admitting his they are not going to make as much profit in the u.s. as they expected. this is a concern. this really indicates that profit going forward is not going to be the levels they expected, especially when you billion the $5 acquisition spree they went on a few years ago. the investor call is going on right now. they are saying everything is fine and dandy. i want to point out that the ceo -- the coo recently spoke to bloomberg this morning about half an hour ago and admitted that the mobile business will not turn profitable in the second half, which we are halfway through now, and they will still need a few more quarters. if you years ago, they said they would turn it around within six quarters. still not happening, so the mobile business is dragging down the company. haidi: we are seeing the drag
when it comes to mobile. there has been the issue of memory chip cost being hired. do you see the fundamentals being able to change? or now they are lagging a few years for structural turnaround? strugglingusiness is and there is not a lot happening now to give it momentum or upturn. there are some sectors, for example ar and vr, were supposed to give it a boost. gaming pcs are doing well for those in that niche. in the corporate and general consumer sector, not a lot to be excited about. some emerging markets perhaps. that is why the mobile business and data center, enterprise business, was supposed to help prop them up, but it is not coming through. structurally through the company , including these massive goodwill overhangs they have, i think there are problems through the company. is there actually a
lesson to be learned from hp? what are they doing right as opposed to lenovo? or am i barking up the wrong tree? >> hp is moving a lot more into services. dell has gone private, combined with other businesses. they are taking a much more integrated approach and focusing on software and services, which is what ibm did more than a decade ago. lenovo has struggled to go into that area. lenovo is still basically selling boxes, electronic boxes to consumers and corporate, to an extent. hp and others moved in another direction quite a long time ago. haidi: i want to switch tone completely when it comes to nintendo. we are getting lines through saying they intend to release mario kart march 2019. they are working on a super anime as well and a
mario kart smartphone app next year. it was a pretty positive period for nintendo. >> a great time for nintendo the last year. you mentioned a whole lot of reasons why nintendo may look good. you can't forget the switch console. this switch is doing better than expected. they raised estimates of how many they will sell, more in line with what analysts had been expecting. nintendo was being conservative, but now management has kept up with analysts. the thing to remember is there is not just one title or product looking good for nintendo. switch is the major standout, but they have a big bench of titles and characters and so forth. they are just going to keep tapping into that. some will be hits, some will be users -- losers, and it does not matter as long as they keep plugging away.
some of them will do very well and they will be able to keep the brand going further into the future and find new ways to milk that brand. rishaad: thanks for that, tim, tim colton in taipei. we have someone to talk about nintendo. he has a price target. he sees a lot of upside. he is going to be on in about an our. coming up, the latest round of pmi numbers just a few minutes away. going to see if they point to a broader story of slowing asia growth. this is bloomberg. ♪
unchanged from december. and rounds out the broader picture of the manufacturing gauge, the official manufacturing pmi we had yesterday, which is back a little bit, 51.3. nonmanufacturing gauge picking up more than expected. the pmi number does cover some of the private sector. in a sense, giving perhaps a better rating as to monetary policy passing through to the economy. we are going to stay with china and talk more about the bond markets. rishaad: it does look like it is paying off. essentially investors have been drawn to yield differentials. newfound stability for the currency, a crucial step to balancing capital flows. if they sustain, one would assume that some capital controls will go. individuals will be able to take
money out of the country. let's get to our asian assets managing editor. tell us the story. it is a success for the bond link. >> that's right. one of the big questions has been china has these massive financial markets. they have got this massive economy. but it is largely walled off from the rest of the world. as you say, they have been opening up the bond market, opening up the stock market ever so slightly over the past few years to let more and more foreign investors, in. what we are seeing is that since the opening of the connect with hong kong for foreign investors to be able to buy them onshore bonds, there has been a step up in inflows into china. $55 billion worth of foreign funds went into the chinese bond market last year. deutsche bank saw about 110 billion this year, doubling.
we saw this trickling in gradually having a bigger share of the market. foreign investors only have less than 2% of the entire chinese bond market. as the foreign inflows start picking up, then we can start looking forward to perhaps capital controls coming back down. if you are a major global fund manager, are you looking at the chinese bond market the way you would other major markets? we know policy decision-making is very much top-down. chris: that's right. in the back of people's minds, there are still some fundamental questions about the chinese bond market. you think about the yield differential and relative currency stability. those are attractions. on the other hand, i was just talking with somebody yesterday -- in the back of fund manager'' minds is what happened in 2015
with the stock market. you remember the enormous bust of the chinese stock market bubble. the response of authorities to suspend trading in a large swath of the chinese stock market. if they are prepared to take that kind of extreme step, if there is instability in the market, could there be similar type of reactions if chinese authorities are concerned about people pulling their money out? this will be a continuing question in fund managers' minds. thank you so much, chris. with smart watches gaining popularity, a luxury watchmaker is running out of time. who better to put that question to them the ceo of breitling? ♪
runsad: our next guest breitling, one of the key players in the swiss company market. company purchased by cbc partners. the first major swiss watchmaker owned by private equity. ceo georges kern is with us now. how is it changing with that ownership? >> it is great. we have a great growth brand, contrary to what everyone believes. we are not in a cost-saving situation. we want efficiency, but want to buildwe and grow, especially here in china. rishaad: how are you going to grow and how much? >> we will grow certainly double-digit, we have to. wantit is about investments, at having slightly smaller product, investing in boutiques, visibility, and marketing. haidi: is china your largest growth market? ,> it would certainly be
knowing that usa is now the number one market, followed by the u.k. and germany. but china is a growth market. it is today the biggest watch market in the world and i think we have great potential there. haidi: you spent 15 years at iwc turning the brand around. how do you plan to do that -- what do you plan to do with breitling? >> at the end of the day, it sounds easy. it is about having great products, good communication, building brand values. i think breitling is a very niche market with big palace watches, which is fantastic, and we will keep that, but we want to expand into more elegant watches, some with different style. we want to keep our price point, but within that price point, enlarging our offering and covering all segments. rishaad: how do you perceive all the smart watches on the market
now? competition or do you see them as being the market expanding and being bifurcated? >> we don't consider these smart watches competition. you throw smart watches away every six months because you have to update them. the model is changing. rishaad: would you make a smart watch? >> no. we do electronic watches for professionals, like the emergency, but smart watches is not our playground. haidi: i am going to be honest. breitling is not a brand that has appealed to me as a woman because there is a sense of a macho, masculine image. is there any plan to change that? >> yes, we will review our advertising campaign and launch a new campaign in three or four months. yes, we are going to update the image and it will be a very
unusual campaign, also targeting women. i am sure you will love it. rishaad: how are you going to going to the secondhand market you have announced? a lot of people are doing this now. >> the watch industry is the only industry of the luxury industry with no secondary market. what we need to do for reassurance for the client is that we as a brand a step in, and whenever a preowned watch is sold, it is also certified. we will work with partners on certified preowned watches. rishaad: would you acquire any other brands? >> that is a question we need to ask cbc. i'm going to concentrate to make breitling one of the biggest successes. rishaad: would you like to acquire other brands? >> i am always open for new challenges, of course. rishaad: you wouldn't you? thank you for coming on the market -- the program. chief executive of breitling, talking about the situation with
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