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tv   Bloomberg Markets Asia  Bloomberg  February 25, 2018 8:00pm-11:00pm EST

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rishaad: asia-pacific markets are extending a two-week global rally. investors turning to central-bank policies. jay powell prepares his speech on capitol hill. winning the party, allowing him to stay in office indefinitely. haidi: blue skirts on fire today is earnings come in ahead of targets. himself, o the man
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mark vassella. this is bloomberg markets asia. ♪ .ishaad: that rally continuing we have treasuries and focus. goldman sachs making the call about what could happen if .ields go up to 4.5% looking unlikely at the moment. but who knows. jay powell, two testimonies on capitol hill. highly cognizant of global markets. he would be aware of the significance and scrutiny over these separate days of testimony. up fory report, setting janet yellen 2.0. he will be want to be treading carefully given the web saw sessions we have had over the past few weeks.
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over withtrong hand yesterday pushing its 50-day price action on the friday session. where watching the opening in hong kong. got a barrage of japanese numbers coming out this week. how are we tracking so far? sophie: we have stocks across the board gaining ground at the tie ask -- the taiex. we are looking for yellen 2.0 from jay powell. hovering around 1.07 against that backdrop. we have stocks in tokyo led higher by electronics, telcos seeing the biggest boost. topix has its -- best weekly gain.
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taipei, there second monthly drop. welcoming the first new central bank governor in 20 years. the big theme today is the steel sector following reports that onmp is considering tariffs steel and aluminum imports, potentially 24% global tariff. posco in seoul gaining ground. could have the biggest impact on south korea, china, but the direct effect will be manageable due to small volumes. i would like to have a casio as well, gaining ground, the most after goldman sachs raised it
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from buy to neutral. it's an attractive opportunity. rishaad: let's get a little bit more the possibility or perhaps just a hint on some sort of detente on the korean peninsula p.m. stephen: north korea is -- and it's a. stephen: north korea is said to be in touch with the united .tates stood near ivanka, they do not appear to talk. the north did say ties should develop along with john chang's relationship with washington. that tpp trump thought is not a good idea for america, but the u.s. could return if better -- if a better deal is on the table.
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the allayed -- the remaining 11 members are expected to sign the deal in chile next week. there are no indications that new terms for the u.s. are under discussions. theael mccormick is to be next deputy minister. he will succeed barnaby joyce. the sex scandal that led to the joyce's resignation has hit the coalition. the opposition labor party has 54%. we will all work together because that is what professional party members do. i would like to thank all the party members. -- i want tosure make sure that everyone knows. we have a huge challenge ahead of us.
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stephen: china's drug to cool the property market continues to work with home prices rising and fewer cities in january. housing climbed in 52 of 70 to 57 andmpared december -- in december. the government is ramping up rental supply. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm stephen engle. this is bloomberg. ♪ haidi: thanks for that. china is repealing term limits that would allow xi jinping to rule indefinitely. what does this tell us about president xi's strengthened his admission? it certainly reinforces the idea that has been around for some time, the president xi is determined to extend his term,
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beyond the end of 2022. in terms of the power that he has, he has the confidence to effectively put a final nail in the coffin of collective leadership, a system that was set up along with the transition totem under deng xiaoping try to ensure china did not go through the chaotic leadership it did under mao zedong when so much power was concentrated in one man's hand. the fact that we are moving squarely away from that indicates the power the has 20 centralized system of government, closer to a one-man will system in china. he is already the head of the military, already the head of the party, the most powerful position. the change around the presidency allows him to have this triangular, trio of leadership stakes or hold or leadership stakes that allow him to push through his agenda. inre wasn't a surprise
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around thethere was timing, that it was so early on in the second term of his presidency. the party congress in october, there were no obvious nominees to take over for president xi at the end of his second term. withad: it is surprising the timing, so early in the second term. is there anything else we can really look for that would perhaps -- tell us why it happened now? >> certainly, state media is saying there is need for stability, for continuity, particularly as china moves to its ambitious to be a mildly prosperous society between 2022 and 2025. of course, we will get a clear
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indication of some of the personnel appointments that will happen in the next few days and weeks in china. we had a 200 senior made it -- senior members where we are likely to see new heads of the pbo see and the regulators -- pbo see -- pboc and the regulators. we are expecting those nominations likely to be announced at the national people's congress that starts on monday march 5. that will go on for 10 days. it is an annual parliamentary meeting that will rubberstamp some of these announcements. that is when we will get slightly more clarity on who president xi and his team will be appointing to these key leadership positions and tackling financial risk. does he have one eye on vladimir putin's career? >> some analysts have a talking about the fact that president xi
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may be looking north of the border at president putin. number of meetings that they have had, essentially, that was the system that xi was emulating. of course, it is a different scenario. china is a stronger country economically and militarily, but it is a system that seems to be favor atn putin's least. history would suggest that countries don't do too well if you have a leader for life. there are many examples of countries that have come out better as a result of a system like that. rishaad: tom mckenzie, china correspondent. still ahead, home prices all the way up in fewer chinese cities last month. pricel be taking the
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pulse later in the show. will's weekxt, we with mark vassella. that interview out of sydney next. this is bloomberg. ♪
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rishaad: back to bloomberg markets. let's get a quick check of the latest business/headlines. germany says the $9 billion stake in daimler is within regulations and no need to invoke foreign trade, an investment rule. he wants to cooperate on electric vehicles and a shift to electric power. it is the largest investment by a chinese company in an overseas of -- automaker. have daimler in a
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deal with another deal -- in a deal with china. they will invest about $2 billion in a plan to make a range of mercedes vehicles. however, it does not specify where it will be built. of japan says out hong hai and sharp -- putting together a $30 million plan for auto parts, including an operation to reduce and sell in-vehicle cameras. it is not clear when the venture might start. largest steel maker is extending its share buyback by another $150 million.
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let's bring in mark vassella. great to have you. let me get straight to the point in terms of this potential 24% tariff on steel imports that president trump is mulling. is it as good as it gets when it comes to your earnings when you are looking a down the barrel at a tariff like this or are you hoping for an exemption after the prime ministers visit last week? >> thanks. it is great for us to have half.r strong we are very pleased. u.s. in thein the section 232, it is unclear what the outcome is. but if we look at the bluescope portfolio and the investment in north america, the tariff scenario would be a positive for bluescope. that's a mention there are some risk to our australian exports.
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overall, under the arrangement we have seen so far, the recommendations, it would be a net positive for bluescope. haidi: let's talk about your business. markets potentially going to make some pressure going forward? >> and it's always a very competitive market in north america. we are a significant producer in ohio. it is a very competitive market. we have fantastic products. we have a great operator up there. but it is always competitive, irrespective of the economic cycle. had thesehina has winter output curves. this is perhaps the bellwether for steel prices right now. what do you see and what does it
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tell you about the state of play in the economy? the way we look at china is usually two components. there's no question there's been some structural adjustment with production capacity in china. depending on what reports you look at, more than 100 million tons of capacity has been taken out of the market. that's a good thing. environment and also for the global steel environment. we have seen a structural change in china, no question about that. the second component is the cyclical downturn that occurs in the winter months. we aren't sure yet as to what level of volume that will return to. but certainly, there are the two components we are witnessing in china. we have seen a structural change and we wait and see what happens as that economy comes out of the winter and that seasonality or cyclical component comes back online. rishaad: the cyclicality of it
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would mean that perhaps you see further weakness in the winter as well. regard you envisage with to the profitability of china's steel mills looking ahead? do you see a sharp decline there? i think the latest statistics show, with a structural changes, the profitability of the chinese steel makers has improved dramatically. and a strong domestic economy as well. all the data that i read would suggest that the structural changes that have occurred inside that economy have been good for the chinese still makers. haidi: i want to get back to this thing of trade tensions, punitive tariffs considered by the u.s. administration. i want you to explain a little bit about how this is a net positive what is your base case scenario at the moment, given we don't know if there are assurances that australia
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received at the g 20 last year? and the potential changes in the global steel trade? and terms of the commitment we put our case not just as an exporter, but a local manufacturer in the u.s. we have 3000 people employed, nearly $3 billion worth of assets enough -- in a mecca. -- in america. we put our case to the u.s. president. to the we believe we have had a fair hearing and supported well by the australian government. we believe we have been able to argue our case. from our perspective, in terms of our portfolio, we make about 2 million tons of steel out of northstar. so any impact of prices are spreads would impact business positively. and terms of global steel flows,
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clearly, if the americans or the american industries want to put the barrier up, then that still must flow somewhere else. that is important for us to pursue a strong anti-dumping regime in australia. we don't expect any favors, but what we do expect as we are able to trade fairly and freely in australia. dislocated in one region, we will have to find another market to go to. haidi: the uncertainties, when it comes to terrorists and global check, does that heighten the impetus in the argument for more acquisitions? i know you have flagged growth in that way. we flagged is we have put stability with our balance sheet and the strength of our organization. to think about what opportunities there are to go,
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we have a list of internal organic growth opportunities come a particular opportunities, particularly asian business, gaining market share in those areas. and north america, with the full acquisition of the northstar assets back in october 2015, we now have a great base there as well. the two areas that we continue to look for growth will be the asian region and the north american region. rishaad: so that marks your priorities. the way to do it is some mn day and some organic growth as well &a and some- m organic growth as well. what will it look like? >> we have growth in asia that looks very attractive. we have a great base. we continue to build the capacity as volume grows.
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what happens in north america we take as a case-by-case basis. .rganic growth is lower risk prices: what about looking ahead? we've gutted the market to a second-half. that is on the back of a strong macro economic environment in most of the regions we are operating in. we got a tweet 5% increase on our first half -- a 25% increase on our first half. we see a positive macro economic environment. haidi: thank you so much for joining us. -- bluescope managing director mark vassella. you can use our go function and dive into all the bloomberg
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functions we talk about. you can send us instant messages during our shows. this is for bloomberg subscribers only. .it out at tv
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♪ theaad: minutes away from starting day of the week. optimism.is julie -- gili up .90%. that.vity with regard to let's look at some of the profitability. prices going down in fewer
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cities in china. nevertheless, some of these are hong kong-related property stocks moving to the upside. we will also be looking at these home prices as well and the whole demographic challenge in china. haidi: what about valuations? they are looking more compelling. rishaad: when we look at what has been going on, we have a discount. let's have a look at this one. this is the price-to-book ratio of these properties. we also have sino land and new world development, all well below will book value. also on a price to book.
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, new world at 15.3. we have more on this property price market. china's trying to cool it.
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rishaad: looking at towards the paint -- the peak here in hong kong. looking at what traders and market participants have on their agenda at the moment, the big treasury yields are steady. the dollar likewise as well. powell.at jerome he will be speaking at both houses of congress this week. and also more on donald trump's steel tariffs and how they could play out and what they will involve as well.
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the regional bank of korea out with a rate decision tomorrow, and a slew of economic data coming out of japan. it is about house prices here in hong kong and beyond china -- and around china as well. the open is upon us. paul: not a bad start this morning. sophie: not a bad start this morning. stocks kong, you have building on a two-week event as a rebound continues for the hen .aying -- the hang seng ,he pressure is on for choco sinking by the daily limit in shanghai after trading resumes today. the stock was suspended from the -- from december 12.
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eaic motor also on the radar. great wall motor jumping in hong kong as well as in shanghai, signing an initial agreement with bmw to make electric minicars in china. when you look at hang seng, it is geely in pole position. chinese insurers are in spotlight. and ternarynsurance asset management in violation of foreign investment rules. the three insurers have one month to correct those breaches. great wall motor is leading the event on this index. we are keeping an eye on china minsheng banking as well. anxiety.n investor
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keep an eye on that stock. developers, chinese home prices rose and 52 cities in january, compared to 57 in december. tightening measures rolled out in at least 125 cities. tightening -- stocks tightening on the back of that. haidi: let's get to stephen engle in hong kong. repeal: china is set to existing term limits on the presidency to allow xi jinping to rule beyond 2023. the communist party's central committee says it wants to remove the provision, the only formal barrier for xi staying in power and definitely. -- in definitely. is urgingzi politicians on all sides to come bad all forms of violence ahead
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of next week's elections. speaking in rome, he said the clashes cast a shadow over the campaign, sparking unhappy memories of the 1970's and 1980's, when italy was scarred by politically motivated extremists. >> here to give a message against violence, all the type of violence. i'm really happy because today is a good day for roma, for all italy. a proposal for enrique pena nieto to visit the white house is said to have been postponed indefinitely. to officials declined -- two officials declined to comment on an article that claimed trunk were not -- trump
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agree that mexico would not be paying for the border wall. afters are to be reviewed a disruption could see libya's all overall output decline. opec allowed libya to increase oil production while other nations in the cartel and their toependent allies cut output drain the oil glut. here in the region, samsung grabbed the spotlight at the world congress in barcelona with the launch of the new galaxy s 9. the company is banking on augmentedike reality-based emoji's and stereo speakers to take on the iphone x. tom concerns of a possible slowdown of its components. m concerns of a possible slowdown of its components. global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm stephen engle. this is bloomberg. ♪ haidi: thank you for that.
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prices rising in january.ies in it climbed and 52 out of 70 cities monitored, compared with 57 in december. this report comes as property. developers get set to present their report. patrick, home price growth momentum has been softening in china's first-tier cities. are we expecting any loosening policy in 2018? patrick: yeah. especially for the first-tier , the property prices are softening a little bit. because the property rate is rising a little bit in january.
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also policies like rental housing is coming in. market softened a little bit, but i think [indiscernible] it is still tight in terms of policies. the market is quite resilient. hopefully, we could see more in march when policy will come out , especiallyghtening in the prime cities. haidi: it is a diversion -- a divergent picture. what are your expectations? how is the outlook when it comes to the lower tier cities? patrick: for the lower tier inventory also see
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[indiscernible] the opportunity. ago, only 14% [indiscernible] these things could still be .appening this year they are talking about a more aggressive target for this year. aboutd: what consolidation? we have seen a lot of underperformance by some of these companies. is it really open for all that
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m&a activity taking place? how does that work out. patrick: last year, we saw a couple of m&a happening. alsoundamental thing is we trying to increase their funding with a couple of .ifferent sources helps them to further expand their market share going forward with stronger funding this year. rishaad: please stick around. we will bring in nicole long, head of product -- nicole wong, head of property research. what about the property market, house prices in particular in china? what is your read through the latest data?
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nicole: a slowdown in prices is due to price caps. which means the prices are artificial to ask certain extent. best to a certain extent. in january, a lot of governments are lifting their price caps and cheaper areas -- in cheaper cities. afp seems to be slowing down. areas, where there are launches, they are going up. there's only one way for prices to go and that would be up. our forecast is up 6.2%, which will be a marginal slowdown from last year. rishaad: it's not as simple as it was in the previous times when we had a clampdown on house prices by central authorities and local governments. it has become more nuanced. this is price control mark 2,
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isn't it? nicole: in the process is always the depression of prices. you get really harsh policy that generates the price correction. then you have the crisis. they will have to save it. post-depression now -- now it is post-depression. housingalso availability. it's not just about prices. it is also about income. they are not there to suppress the prices. they are to support university graduates in their first three or four years so their income can catch up to the housing market prices. a multipronged approach for the chinese government. last year, we saw --
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this year, it went up a little bit and then coming down again. what is your take? nicole: it is back to square one after two months. performers have been the scale tires that produced growth. if we are looking into five years of price growth in china, which we are actually looking for a 10% price growth in the next five years, then the love -- developers are basically sitting on high visibility earnings growth, perhaps 35% per annum, for the next couple of years. looks like there will be a hit of catch-up for those names that got ignored last year.
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rishaad: we have developers like country garden raising money by issuing equity and convertible bonds over the last few months. you expect any further fundraising like this? patrick: yes. it is good for them. it is tightening a bit. we also see a couple of developers come into hong kong to raise their bonds. treasury bond yields could go further. them. bit challenging for if they don't raise it now, maybe six months later. then the funding costs will be higher. it's possible to see more. rishaad: let's move back and have a look at hong kong though.
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with the possibility of three rate hikes coming up, should people who want to buy property here feel nervous? nervous?h, feel rishaad: welker three rate hikes due to property prices in hong kong? it's the least affordable city in the world, isn't it? nicole: actually, nothing. three rate hikes and it is 75 bits more. the rate of purchasing power depreciation in holding cash is much faster than that. are new points to consider when rate hikes happen in the u.s. will strengthen, there will be inflows to mainland china from people who want to have slower nimby -- the renminbi. it is very different from 20 have ago when we didn't china. rishaad: so steady as she goes
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with property crisis is what you're saying? nicole: unless there is a real fear that holding assets will be a problem and people switch to holding cash. but we need a crisis there. rishaad: always a pleasure. head of property research at clsa. and our very own patrick wong. we are getting some of the comments through from the boj governor in his regular testimony in the japanese parliament, saying that essential easing is for reaching that 2% inflation target. the japanese economy meeting monetary easing, but that is expanding very smoothly. and the delay in reaching that 2% inflation target is returnable. no change when it comes to that
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messaging. kuroda is sticking around for another five years. we saw strength in dollar-yen. of course, we have had a bit of weakness in the money session, going into a week of just a whole lot of japanese numbers ranging from capital spending to household standing -- household spending. coming up, carmaker geely planting a flag in germany with a stake in daimler. we will discuss all the implications next. this is bloomberg. ♪
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♪ we are back. this is bloomberg markets in hong kong. toes --et's talk all autos. head of geely is on a world
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tour. steve, why would geely buy into daimler with volvo already under itself. has been on a buying spree. it bought malaysia's lotus cars. they are looking at a 9.7% stake into daimler. a lot of that is related to technology. there is a huge evolution going on in the auto industry where a lot of the cars are being electrified to meet some of the more stringent emissions standards approaching us very rapidly in 2020. this is one of the predominant reasons why they acquired a stake in daimler. the other is really technology -- other automotive technologies. as you know, china has been
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using the joint venture method to drive the shift or the importation of technology and that hasn't worked. i think china, and particular with geely, is making these acquisitions to bring a new technology into the industry here. really: does geely extract technology from daimler? of course, they were able to with volvo because they bought the company lock, stock, and barrel. steve: exactly. they have a stake in volvo, a majority stake in lotus cars. both of these acquisitions have a lot of technology-wrote -- technology related to light weighting of vehicles, electric vehicles, autonomous vehicles. extracting technology will be difficult.
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steve: it will be difficult for geely. germans have a high regard of their own technology. it is a much regarded technology. i don't think a 9.7% stake will get geely to acquire those technology. i think it is more of a real option for them. daimler is a predominant player globally. they have stretched out in many geographies. they are well-versed with a lot of the admissions standards and regulations around the globe. it is not a bad tie up. one thing we don't talk about a lot is we are focused on passenger cars. one thing the daimler has is -- and is very strong in is the commercial vehicle side. there is a huge shift in china right now where a lot of truck owners are upgrading their trucks to more premium -- medium to premium brands.
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the --where the value is the value of the stake is really at. externally story -- an extraordinary story. thank you. aming up, warren buffett is big winner from the recent u.s. tax overhaul. we will tell you how and why. ♪
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♪ rishaad: you are with bloomberg markets. i'm in hong kong. haidi: and i'm in sydney. berkshire hathaway reporting a record quarter. numbers.just about the always looking at the shareholder letter. randy: i think a lot of people
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are thinking about that more so data.he looking at the shareholder letter, it was one of the shortest in the past 20 years, coming in at about 16 pages. of course, warren buffett has been writing these for 50 years or more. we are definitely holding on to his every word. let's get to the numbers first. $65.3 billion is the net gain that berkshire hathaway told in just for the fourth quarter alone. take a look at the purple:. you can't miss it. it is -- take a look into the purple column. you can't miss it. profit is just half the story. the other half is what is happening with the windfall that berkshire hathaway is seeing from the u.s. tax overhaul. that's $29 billion. that's where we get the $65
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billion total net worth gain. the u.s. corporate tax rate fell to 21% from 35%. in addition to that, eps growth skyrocketed this past quarter. operating margin also rose by about 11%. that is the lowest since 2008 due to underwriting losses to earthquakes and fires. rishaad: warren buffett already expressing his frustration in mergers and acquisitions in this letter. the detail on his reason this time around for a lack of any major acquisitions -- i probably have an idea, but no one. ramy: the word is price. he says there is no sensible price out there for any possible m&a target. he did say he is on the lookout for a huge deal. you can see the lack of a
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sensible purchase price is what they are trying to find. he also said cheap debt is fueling m&a at other firms. berkshire,-- but at their taste for debt is very low. rishaad: nice. let's look at the headlines. starting with zte, hoping to get its strategy that with a new smart phone in barcelona. ae blade z9 is described as midline device. somellows the trend where manufacturers dropped last year's top and specs to this year's midrange models. netflix anding on
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who has forest you to -- has to pause itse spending. this is bloomberg. ♪
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♪ markets extended a two-week global rally. the yen retreating at head of a broader data out of japan. jerome powell preparing his speech on capitol hill. ever"oice of words "as all-important. north korea youth -- north korea uses the winter olympics in talks. in hong kong, i'm rishaad salon it. up, presidentming she winning the power game in china. the party is set to change the constitution to allow him to stay in office while
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indefinitely. this is "bloomberg markets: asia ." ♪ rishaad: looking at the trading day, we are seeing a moved to the upside. yield at they moment in focus. goldman sachs saying they could see a massive downturn for the equity markets. haidi: that is what we are seeing as we get into two days of congressional testimony from the incoming fed chair, jay powell. is the bond traders leaning out a little bit from the -- from the 3% we got last week.
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no one out there is saying we are going to end out the year at 4.5%. elsewhere, a barrage of numbers out of japan, everything from labor market data to retail spending to household spending. you have a big of korea central-bank decision as well. the highlight of the week will be on jerome powell. is the case. we will see whether this will be yelling 2.0. we have the bond looking study in asian stocks, edging how are you building on a two-week event. edging higher, building on a two-week event. checking out what is happening elsewhere, i want to look at what is happening with commodities, highlighting steel, rebound futures. they are jumping in shanghai. up 3.5%. this is amid speculation trump will go with the harshest
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tariffs recommended by the commerce department. we will watch whether there will be retaliatory rhetoric from china and south korea. you haverrency space, the won rising as korean exporters sell the dollar ahead of the meeting on tuesday. that is shifting gears, climbing on crude's latest comments that the economy is expanding smoothly. latest comments that the economy is expanding smoothly. momentum for the yen is staying strong. this shows you that asset managers are wagering on the gains with biggest bets on the currency since before kuroda was named the boj chief. that is contrasting with leverage short, the line in blue. recent rallies, funds further back from the position in a decade. i want to look at asia, checking in on the imap function.
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health care leading gains in the region, powered by consuming very -- consumer discretionary stocks. are climbing in shanghai, as well as in hong kong. geely becoming the biggest shareholder in daimler. seeing bluescope gaining ground on the back of its earnings update. rishaad: thanks very much, indeed. state. it is a one-party someone party it is a -- someone argue it is a one-man party. could it be a one-man country in the future? let's could be first word news. yvonne: existing term limits on the presidency to allow xi 2020ng to rule beyond three. the communist party central committee says it wants to remove a constitutional
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provision barring the head of our desk for more than two consecutive terms. -- from more than two consecutive terms. china's our desk for more drive to grow the property market continues. prices, excluding subsidized housing, climbed to 52 of -- compared with 57 in december. in five. unchanged the government is experimenting with ramping up rental supply while fine-tuning existing controls. north korea is said to hint at talks with the united states after a high-level delegation watched the end of the winter olympics in pyeongchang. the group included the head of the nuclear negotiators. although he set near of ivanka trump, they to did not appear to talk. global news 24 hours a day, powered by more than 2700
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journalists and analysts in more than 120 countries. i'm yvonne man. this is bloomberg. haidi: thanks for that. policy mess -- policymakers will be focusing on washington on tuesday. jay powell presents a fed report to congress. kathleen hays is here with a brief view. clearly, he will be very aware of how much scrutiny and market moving power he has. what are we expecting? reporter: any fed chair, that is 101. this is a 55 page monetary policy report, upon which he will basis testimony this coming week. days from now, in fact. it is interesting that, so far, we see the powell led fed is staying on the same course that janet yellen left behind her. the further rate increases, just
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like we saw in the recent policy statement and the minutes of the last meeting. what is interesting is that in more than -- in more ways than one, even though the fed says the economy is growing and inflation will rise, the u.s. economy is near or a little above full employment. show huge seem to concern that this is going to lead to a fast acceleration and inflation. it's look at one of the phrases from the report so you can see what i mean. report havingyers difficulty finding qualified workers, hiring continues. woulds labor shortages likely have brought about larger wage increases that have been evident to date. it seems they are putting a calming on the concern about accelerating inflation and how many hikes there would be busier. let's remember on february 27, tuesday in the u.s., that will be day one of jay powell's
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testimony to the house financial services committee. thenll take a day off, and on the thursday u.s., friday asia, he will testify to the senate banking committee. they will meet at least three his official statement, then answering endless question-and-answer. we will get through a lot with jay powell and what he sees about the economy and monetary policy. rishaad: there seems to be a lot of fed speakers on friday. i'm not sure if that was my imagination or not, but are they on board with what the fed monetary policy is actually saying? kathleen: part of what is going on is the monetary policy for all that you new york for fed officials presenting are in the audience, it was interesting. what i want to focus on is someplace i didn't go, but i president of the san francisco fed speaking. what does everybody want to hear? he says it makes sense to think
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about three or four rate hikes this year. he says when he was asked about tightening in march, it seems there is a strong case for a rate hike in the near future. that sounds like march to me. he sees inflation rising as transitory factors stay. three or four rate hikes. just look at it again. it is the second point in from the left on your bloomberg. it is the consensus around three rate hikes. that is what they left us with in december of last year. the three higher dots are the ones already seeing four rate hikes busier. we won't know until march with they decide. i will be surprised of jay powell doesn't get questions about this. path, doesike further me faster? also the question of tax cuts, how much? we will see how he treads that
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path. many times these hearings can get very politicized. kathleen hays joining us from new york. the question remains, what are investors actually looking for from jerome powell's speech? that's good to singapore. participants,rket portfolio managers, traders, etc., analysts looking for? mark: one of the things they are looking for is to see whether they are actually right to have priced in three rate hikes already this year. maybe even move towards the fourth. if you look at this time last year, the fed was projecting three hikes. the market is only going for 1.5 hikes. there was a reluctance of people
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to price in those additional hikes. this time, thanks to the big jump we have seen in treasury yields, the market seems confident that we are going to get at least three hikes this year and are willing to put their money on the table. they are looking for him to endorse that. they may want to push ahead and go for a fourth hike. this is where we stand. any deviation from that, there is a chance for a decent market move. a lot of this is going to fall on getting the fed's preferred gauge of inflation. that data point this week. mark: yes. aboutrse, some concerns when the fed look that inflation points. people seem to have moved ahead from that and saying abb fed was already too far behind. -- saying maybe the fed was already too far behind. iter they start to kick in,
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could go up quickly. it is now about future expectations on inflation really been backward looking measures. any sign that mr. powell gives that he thinks inflation maybe is going to go further, we just saw a report at the end of last week saying the labor market has probably already gone beyond full employment, even now. jobse in territory where already, skilled workers are hard to find. the pressure on wages could get more serious in the coming months. the fed will be watching this closely. fetus feeding through more quickly into inflation. this will be a concern for bond investors and probably even for people in the equity market. how your yields or at least yields moving to quickly higher is not going to help the equity market. what are people really seeing about what is going on in china -- really saying about
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what is going on in china? for the markets, does this mean we have a pboc put? appear the chinese president is very concerned about stability and financial markets. we saw that going back to 2015. he didn't like big disruptions in equity markets. it of the things we will be watching is who he appoints as the pboc governor. that could come next week at the congress, which is being held in china. the next pboc head will need to be seen as a safe pair of hands. is likely to be an experienced economist, which is a good sign. someone who is familiar with the workings of monetary policy in china. these things would be a fine of stability and continuity. of stability sign and continuity. haidi: thank you very much.
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you can follow this story on our markets and the live blog on the bloomberg on mliv . can get a run down and analysis. find out exactly what is affecting your investments right now. ahead, samsung watching its latest flagship to take on apple's iphone x. later, we take a look, does it measure up? next, china paving the way for president xi jinping to rule indefinitely. that and more. this is bloomberg. ♪ ♪
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haidi: this is "bloomberg markets: asia." rishaad: in hong kong, i'm rishaad.
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the communist party is to repeal presidential term limits in china. allowns it could president xi jinping to rule bought go beyond 2023. beyond 2023. why now would you start talking about indefinitely ruling or putting it out there at the start of your second term as president? reporter: i think this move has been expected for some time. this isn't that surprising, but as you said, why now? the thinking right now is that this is basically clearing the decks of anyone that might have designs on competing for power. establishing who is the boss, who is going to rule, and as a previous guest noted, there remain valid concerns throughout the chinese regulatory structure about the stability of financial
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and economic markets in china. we have hna. that is probably almost 5% of gdp -- that's between two companies. gdp and assets between that and another company. is there concerns about the economic well-being and social well-being of china, which belies all of this ultimately, or suggest one man's thirst for power? christopher: it is probably a bit of both. one thing important to note is a lot of people are reading this as, this is expressing his strength of power. it probablyways, reveals the profound insecurity in his position. moved his friends and allies to the top of the power structure. he has created a lot of enemies over the past 18 hours or so. there has been rumblings and no
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one will out -- will come out directly inside they don't mike this, but even the global times editor, the chinese version of breitbart, has not exactly given a full throated endorsement to the decision. insecurityreveals that maybe there isn't as widespread support among the chinese power structure for him as many people believe. looking for absolute power, but on the flipside, how much of a risk as he's taking -- risk is he taking? if something goes wrong, there is only one man to blame. christopher: that is a good way of putting it. there is no one else for him to blame at this point. he is putting his people in charge of the china insurance committee mission -- insurance commission. there is going to be no one else to blame. things is you have to at least anticipate or think
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about that it is possible with the way they have been talking about the financial risks currently in projecting out over the next year to two years, they someotentially dissipating type of economic or financial problems, and they are preparing their forces to make sure there is no widespread discontent. i know exactly where your position -- where you are positioned in terms of china and deleveraging campaign. if we look at what happened on friday with anbang and the tweaks to the constitution and an unlimited lists term, there are two aspects of the same story. what does that tell you about what is going on beneath the surface and how serious are these systemic issues for him to be doing this? christopher: i think there are actually -- i think they are
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actually serious. if we look at anbang, the question is why the company and happen -- is why that didn't happen six months ago. there were forced to stop selling insurance products a year ago. their primary source of cash flow dropped by 98%. the bigger question is why didn't this happen a year ago? how this ties into the politics is that anbang has 30 million plus customers around china using rough numbers that are probably invested $10,000 per customer with the company. by chinese standards, that is not an insignificant number of customers or money. the real concern is beijing was that if the company announced we are insolvent, you would have 30 million people throughout china on the streets protesting i want my money back. that is the real risk. rishaad: that is the problem.
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effectively, for a year, you are creating a company, chapter 11 for a year without actually saying that. to be tooso going weak to fail, and on top of that, what happens after that? what about the scale of the losses? will we ever know? christopher: if you take a simple number, let's say 20%, $350hey have anywhere from -- $350 million in assets under management, it is not too much to think we are looking at a $750 billion right off. even by chinese standards, that is significant. that is what concerns them. because there were so much money flowing in. to give a size of the scope, in 2010, the company reported one billion in rmb in life insurance premiums. exceeded 14t number billion. that is a staggering growth rate.
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their investments weren't generating the cash flow to service policyholders. an investoru are who doesn't care about this shift away from collective leadership toward an absolute consolidation of power, would you be looking at this going, at least you will have policy consistency and eventually presidential but when it comes to the markets? christopher: i think that is a good way to think about it is we are essentially saying the creation of the pboc that -- if we look at the equity markets, real estate markets, look at companies facing trouble, we keep hearing about they want to andease market risk pricing they want companies to go bankrupt. what we see time again, especially if there is a retail consumer base, these companies are getting bailed out. stability,looking at i think it's a good way to think about it. if you are looking at it from a reformist elements, are we going
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to see these problems dealt with? i don't think the outlook is positive going forward. what do all these different moves, what picture is a painting for you? talking about the political news, economic news. christopher: first and foremost, we are looking at much -- at a much greater degree of centralization. there is no one else to blame. e's that have so been centralized. we have the private companies increasingly party run. we see party committees being at alibaba and tencent. we see them billing at companies. we see this degree of political centralization. it is increasingly difficult to even say china and market. rishaad: is centralizing these different assets of the economy on the basis of there being a lot of problems we are not seeing or is it a grab for power? christopher: i think both.
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rishaad: i was hoping you would go one way or the other. [laughter] christopher: that is a question. probably both. if we look at the china unicom joint venture they are doing with baidu, hourly baba, and tencent, it as a private partnership. bailing outy are china unicom going forward because they don't have the capital. at the same time, it is clear there is a degree of political centralization in the sense they are going to be censoring and baiduing the data that and alibaba and tencent have, much more than they have in the past. with anbang, is this the worst of it or just beginning? there is a good chance, and it is very difficult to say, but i think there is a good chance this is actually
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much more about the beginning than the end. one of the things prior to the anbang story was a bubbling of concern about hna. a lot of their companies are already technically in default. those two companies alone, you are looking at probably almost a half trillion dollars in total assets between those two companies. we could be looking at much bigger issues going forward. it is likely you're going to see beijing take a strong hand in addressing these issues. with anbang, they had been giving -- been given a death sentence a year ago. i don't think it is out of the room a possibility that stories will leak that the pboc was essentially dealing with this in a receivership set up. we are just now hearing about them taking the silver. -- taking this over. haidi: chris, always a pleasure.
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let's get a quick check of the latest business flash headlines. saya's insurance regulators three copies have violated foreign investment rules that china -- investment rules. it is not clear what their breaches were, but it has been given a month to correct them. germany says geely's stake in daimler is within regulations and no need to invoke foreign trade and investment rules. geely once to cooperate on electric vehicles. the deal makes the founder and chairman the leading shareholder. coming up, our next guest is not worried about the return of
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volatility. he will tell us why he sees opportunity in the current market situation. ♪
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i am yvonne man with the first word headlines. president trump says he thinks the transpacific partnership is not a good deal for america. will he reentered the possibility that america could return if new terms are put on the table? he was a harsh critic of the deal. there are no indications new terms for the u.s. are under discussion. is to beaccormack australia's next deputy prime minister. he will succeed barnaby joyce.
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the scandal that led to the resignation has led to a national coalition. a survey gives the come -- the government 46% support. the opposition labor party has 54%. sure people make --w i have a huge challenge ahead of me. we have a huge challenge ahead of us. yvonne: matteo renzi is urging politicians of all sides to combat all forms of violence ahead of next week in the elections after battles between for left and right activists. the clashes cast a shadow over the campaign, sparking unhappy memories of the 1970's and 1980's when italy was scarred by politically motivated extremists. >> i think it is important for
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everyone, not for a single party, to be here, to give a message against violence, against political violence, and all the time. today is a good day for a literally. -- for all italy. yvonne: exports from libya's terminal is said to be reviewed. the protest disruption could load the decline of output. -- could lower the decline of output. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. am yvonne man. this is bloomberg. investors seek 30 into setting up at the bank of korea
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policy decision. japanese economic data and two days of testimony for the incoming fed chair jay powell. bond markets on the edge of this. -- on the edge of their seats. we are seeing gains across the board for most markets. this is the yen on support of kuroda's latest session that powerful easing remains essential. we are seeing a drive in the material segment. carbon and think following the most on the nikkei 225. steel players also under pressure amid speculation that trump will look to enforce the harshest steeled paris on global exports. we are seeing a change of fortunes elsewhere.
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i want to highlight casio, which is jumping. we have been seeing swings for the hang seng. this is tech shares, finding ground today. real estate has been swinging following the latest home price data out of china. the consumer discretionary stocks are helping the hang seng stay afloat. last look is happening in seoul. we have the country rising 2/10 of 1%. rishaad: let's have a look at emerging markets. keep pace witho
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global demand. our reporter is here with us now to discuss the increase in spending. up as one of pick the missing pieces in the last two years. we have seen big industrialized and the feeling of it is becoming more broad-based. morgan stanley had an investment tracker picking up data out of , highest since 2011. with the amount of investing going on in the auto space with electric vehicles, the amount of work going on in uprooting smartphones, that is having an impact on tech oriented economies like taiwan, and so on. the boom has a little bit more
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to go. importanthy is this for economic growth? it is more complicated. enda: it is. it doesn't necessarily translate into what people think it would. higher corporate spending should necessarily flow to higher wages , but that is not necessarily so. the feeling it will -- the feeling is it will be an important piece in the jigsaw. sluggish productivity has been an albatross for several years. the feeling is better wages, better productivity, better longer-term for the economy. to sound cynical, but haven't we heard this before? is it all upside? daryl: we have. not all of the world is sharing in this. it is a nation recovery in parts
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of india. latin america has well behind the curve due to the recessions they have had. the u.s. trade relations with trading partners continues to hover over all the world's economy. the direction and pacing of the fed's monetary policy as well. what is happening underground right now, there is a feeling we are seeing solid signs that companies are spending more, which doesn't necessarily mean they will hit the target. and up being cycled with the rest of the global economy. that is a associated with higher interest rates, associated with ongoing trade set -- trade tensions. haidi: thank you so much. in the meantime, asian stocks are on the rise, taking a strong lead from the u.s. on friday. we are extending the two week
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rally when it comes to global stocks. u.s. monetary policy in focus this week with two appearances from the fed chairman, jay powell. that's a bring in daryl liew. interestingly, you don't put a when it comesity to this current rally we are seeing. you say it is more technical inflows driven rather than strong fundamentals. daryl: yes, because when you , you look at the data, there has been a lot of floating to equity markets in january. after you saw a correction and spiking up, you saw the money going out again in the first couple weeks of february. the concern is with the collapse of a couple of those fixed products, whether or not this will be the canary in the coal mine, so's to speak. whether or not you could have a secondary impact on other
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products within the financial space. this point.ous at that is not to say there are no opportunities in this market. there are still opportunities. we are waiting for jay powell, whether he is going to to plano.ellen he is aware of how much scrutiny and market moving power he has. let's pull up a chart. traders meanbond out from that 3% threshold as we get closer to the testimony. look at history as an example, you see the curve flattening effect. the longer and outperforms the shorter end. do we get to 3% and what happens beyond that? surely for 5% isn't a base case scenario. --surely 4.5% isn't a base case scenario. daryl: that is a big question at
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this point. how long will be long end of the curve? you know you will get three high, short end, possibly four. what happens at the long end? reaching the 3% a level the last couple of days, but it has pulled back. one of the factors to consider is the flow aspect. equity markets are a bit pricey. when it comes to investor sentiment, if we crossed the 3% handle on the 10 year treasury and we get closer to 2.5 percent, whether you get a flow out of equity markets into bond markets for the pension money risk-freeors, a asset, you could have a fall out of equities into bonds, which cap the overall rise in the long and bond. -- the long end bond.
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rishaad: what does it do to your own investment decisions? 3.5%, that could be dollar positive, and that would play out with your portfolio decisions. daryl: exactly. there are so many different moving parts. if we get closer to the 3.5 handle, it could be tempting to reduce the underweight fixed income. it has been underweight for quite a while. at 3.5, long and is that could be interesting. it could increase bond exposure in portfolios. go down a bit on the equity side. on the dollar side, that is a question mark.
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look at what is happening globally as well. ecb is probably going to announce some kind of unwind to the quantitative easing program. to possiblyhen lead further weakness in the dollar. what happens on the boj said? governor kuroda will get rubberstamped into a second five-year term. it looks like it will be status quo when it comes to the boj, but they have to start looking at looking at -- start looking at possibly unwinding. those will have driving affects on what happens to the dollar. rishaad: and it looks like they will be pretty much static with rates, looking at japan and also the european central bank. ultimately, it is about fundamentals, is it not? daryl: yes. to an extent. debt, youk at the
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have to look at what is happening on the inflation side. on the growth side, things are looking pretty robust in terms of global growth. you might numbers in europe is off a bit. -- they werete quite elevated numbers. with growth strong and inflationary pressures going to pick up, the big question is whether that will be good for wages or for commodities. probably what we will be looking at is more tightening, at least when it comes to monetary policy moving forward, and that might be driving risk assets as well. a me get your thoughts on the anbang fiasco. -- let me get your thoughts on the anbang the us go is this a litmus test as to whether the government can deal with these issues? daryl: that is a good question.
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whether you are privy to would happening the behind-the-scenes, but what we have been reading in the press and seeing happen, there has been a lot of push from the government for these big private conglomerates to divest. we have seen that with hna to a certain extent. it has been selling off assets to raise financing and cash. the question is whether the company starts to unwind these positions. it is likely they will. it is hard to determine whether there is systemic risk. or not the financial sector within china is exposed to these private conglomerates, but you can imagine the government probably is aware of what is happening and trying to control the fallout.
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it is probably one of the reasons they stepped into -- they stepped in. is a bit of pressure on asian bonds over the last week or so. could be a default. the question is whether they could selloff enough assets to stave off a potential risk of a collapse in one of these big conglomerates. haidi: a lot of pressure there. yl, always appreciate your time. daryl liew joining us. used the, north korea winter of the mix to hint at new talks with the west. what are the chances of that happening? this is bloomberg. christopher baldin♪ ♪
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haidi: this is "bloomberg markets: asia." tohaad: north korea is said
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hint at talks with the united states after a high level delegation at the end of the winter olympics. it comes ahead of kim jong-un's negotiations, but he stood near -- it comes ahead of dusty what what is going on? that thes. has said u.s. would be willing to consider talks they will wait and see. at the same time, the u.s. continues to insist that any , it haveld be paired to be compared with north korea agreeing to give up their nuclear program. it is unclear how serious the u.s. would be about the offer for talks. now that we have got the
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olympics done, was it a clear win? are we expecting any longevity when it comes to the goodwill that it -- that came out of it? question.evity is the from an optics standpoint, this looked good for the north and south. moon, who had campaigned on better relations with the north got them. they had a unified korean team marching under one olympic flag. it was it a successful -- it was a successful olympics. they had his sister there. it did look as though they were together, and this might be an olive branch that could go forward. whether the u.s. is going to participate is the question. president moon has to be careful. while he wants to have a better relationship with the north, he also has to be careful not to endanger his relationship with
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the trump administration, which continues to be weary about talks. wary about talks. haidi: what about the military exercises? jodi: they put them off for the olympics and the paralympics. those are not done until the end of march. observers are anticipating the exercises will occur in april. president moon once to make sure any deal about talks before then. it will be start, difficult for the north to offer that all of branch, and the north korean leader has said that. if the talks go forward, they will complicate things. haidi: thank you so much. jodi schneider. let's take a look at this new feature we want to bring to your attention.
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this is our interactive tv function, you can find it at tv . diving into any securities or bloomberg functions we talk about and become part of the conversation by sending instant messages during our show. this is for bloomberg subscribers only. check it up. rishaad: how critical is the new galaxy s9 for samsung and will it take before i to apple? this is bloomberg. ♪ ♪
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haidi: samsung has launched its answer to the iphone x, called galaxy s9. our correspondent has been looking at the specifics. is this a game changer or just managing to keep pace with apple? reporter: that is exactly right. do with theeded to iphone x, they want to keep pace with that. perhaps they are saving the real firepower for down the road. there are reports they are working on a foldable screen model. right now, top of the line for samsung will be this s9, which was unveiled in barcelona. it features a better camera, more light enhancement, slow better and it has a
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aperture. it also has augmented reality-based emojis. stereo speakers. it is going to be more integrated with other samsung products, whether your computers or tv's. be morene is going to integrated. is this enough of a step up to get people to go cross-platform, to leave apple and come on to android and samsung, or is it just a baby step? rishaad: i don't know what you are talking about. this a global smartphone later? it is not doing well in every
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market. stephen: in china, these android phone makers almost commoditize the phone. they are driving the top five. you have other ones, chinese companies. in india, guess who is the number one in the latest fourth-quarter? a chinese company. four of the top five are chinese companies in india, including the number one, overtaking samsung. gohaad: big way for them to and to keep that. yes.en: [laughter] rishaad: thank you very much, indeed. steve engle there. zte hoping to get back on the
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strategic track with a new smart phone. v9 is described as a midrange device. some manufacturers adopt last year's top end specs and put them into this year's midrange models. sayi: reports out of japan hung high is striking out in a new direction. they arei news says putting together a $30 million plan for auto parts, including an operation to produce and sell in vehicle cameras. it is not clear when it will start. in the next hour, david ingles will be updating us with the big stories. david: two guests coming up. we will be speaking with ubs.
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there is another call on buying the singapore dollar versus the u.s. dollar. why.ll be asking two testimonies from jerome powell. david: yes. then, a ceo is coming on the show to talk about how they did during chinese new year. more coming up. ♪
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. . ♪
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>> -- haslinda: i'm haslinda amin. tradingnd we are ending on the china mainland. welcome to "bloomberg markets asia." david: markets across the asia-pacific extending a the euroglobal rally, weakness ahead. a barrage of data from japan. investors now turn to
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ae fed as jay powell prepares speech on capitol hill. his words could be all-important. david: president xi wins the power name in china. may stay in office forever. social media with support and criticism. and a goodwill tour of germany. the biggest shareholder in daimler. david: a lot of change there has , the changing ago of the guard when it comes to the auto industry. we have equities in the 120 six, roughly taking us halfway back. if you measure a picture trough, following the selloff a week and a half ago. a little bit of a reversal on dollaro-dollar and the
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that we saw on friday. the u.s. 10-year yield up one point to 86. the pricing around treasuries at the moment. has? aluminum and steel, david, because president trump is mulling whether or not he with paris on the two metals. will unclear if china retaliate on those tariffs. expect retaliation. all ofrepercussions in the commodities space. for now, let's get first word news from debra mao in hong kong. debs? >> hey ,has. the president of the bank of
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says he will continue his massive inflation plan until 2% is achieved. he says that continuing to push for it is appropriate for japan at the moment. he repeated that parliament and the government are in charge of fiscal policy. north korea has tented at talks with the united states after a high level delegation wants to be and of the winter olympics in pyeongchang. though the negotiator said near the president trump's daughter ivanka, the two did not appear to talk. president trump says he still thinks the transpacific partnership was not a good deal for america, although he reiterated the possibility the u.s. could return if better terms are on the table. the president has been a harsh
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critic of the tpp and withdrew a year ago. 11 members are expected to sign next week. chile there is no indication new terms for the u.s. are under discussion. same song has the launch of the new galaxy s nine. the company is based -- is it --g on augmented route augmented reality emoji's and a camera. there are about the ability of jail he to manage the company trouble. his legal i'm debra mao. this is bloomberg. haslinda: thank you so much for that. china is to repeal presidential term limits in a role that would allow president xi jumping to
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ruling definitely. our correspondent is in beijing. president xi's ambition is pretty clear. : as it is, the definitive way that this has been announced, it will likely be signed off in the next few days or weeks officially. it does deconstruct a system of collective leadership that was put in place in the late 1970's to avoid the kind of calamitous leadership we saw during some years of mao zedong for leadership and the succession plan that was put in place or the end of the 1970's. in fact, he warned against too much leadership, too much power in one man's hands, but that appears to be where we are headed now. with this decision, president xi is already the head of the party, the secretary-general, the most powerful, and now there are removed term limits on the
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presidency. so he could be looking to extend his role as president beyond 2022, 2023. this position was flagged at the party congress when there were no clear nominees to take over, but many have been watching the timing of this event. cast your mind back to preach 2012 when president xi took over saying he would be the reformer, essentially the likes of gorbachev. now he is being compared to president vladimir putin in russia. interesting terms like ineror she -- emperor xi china. david: the timing of this news is not surprising, given that you have the powers that be gathering soon. tom: i am not hearing you, so i
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will assume you asked a follow-up question. we are headed toward the national people's congress that starts on march 5. monday, march 5. it will go on for 10 days prior to that, the meeting of the central committee, the top 200 or so lawmakers here. at this time, president xi and his team will be picking people to take over in all likelihood a new head of the pboc, but also new heads of the regulatory agencies that oversee the intransitive banking sector. that is likely to be this week. that is likely to be announced when the parliament kicks off next week. some say there are risks that this will consolidate more power for president xi. we have heard from christopher bowling. he says that this could point to level of concern for president
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xi given his anticorruption campaign. >> in a lot of ways, it probably reveals profound insecurity in his position. he has clearly moved his friends and allies to the very top of the power structure. at the same time, he has created m: as of enemies. ofto christopher balding, of course, be downt xi has led to fold of officials, creating a lot of enemies, and that is potentially one way that he wants to stay in power because he has created so many enemies clearing up the corruption that has been endemic in china. looking ahead, there will be the decisions that the central committee meeting this week. the plot just click and. tom mackenzie for us out of beijing. coming up on the program, will take thes9 fight to the iphone x. that is later. next, bonds have
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been shaken and stirred. for treasuries, the new fed chair is in the limelight. this is bloomberg. ♪
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haslinda: this is "bloomberg markets asia." i'm haslinda amin. right, and i am david ingles. there will be the first report to congress monday, from jay powell. if it reachest the low level may be determined right how the new fed chair and handles the limelight. for more on that, we are joined -- all right, i believe we are having trouble, technical issues
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going to sydney. let's bring in our guest, harmut here with us in hong kong. good morning to you. very good to see you. all right, so, powell will take the spotlight this week. what i will be wondering is his take on inflation and whether or not he tells us something different from the bond markets already telling us. or do you think the pricing in the bond markets is shaky still? harmut: i think what we're watching, he has some homework to do. the spending is still fairly significant. so, yes, in march, there are new projections, also on inflation. towards, that would be interesting. one example, of course there
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would be this year, and the fed it self thinks it is next year. but any of these would be interesting to watch. bond markets, we do not necessarily think it will move the markets. we think that move has already happened. is it safe to assume that there's only an upside to the inflation argument? along inmulus coming an economy where there is a employment already? youut: i would agree with you. in all likelihood, it will, further. the real question is by how much? months,ver the next few a low base effect will come in that will affect the numbers. how do i look at those numbers and not get carried away? we actually, if you look
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at the quarterly trajectory, it might be a little front in terms of inflation. otherwise we look at the real wage numbers, but in the short-term, we are probably wemalizing, if you want, but think perhaps more important, in 2008, there was already a bit of a peak. that will be critical for markets to digest as well. we talk about 3, 3 and half, four, for a half, even. at what point will money shift? i think we look at it on a 10-year basis, a nominal basis. andave done some work inflation ties in on the 10-year. typically when they are both in u.s.,and certainly in the
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when those markets really tip -- when do the pe's tip? i do not think anyone is worried about their earnings. they look more at the ventilation of the market, pe. we have found historically the tipping point comes a lot later, typically five, 6% on the 10-year. we actually have quite a bit of offer. as long as the 10-year does not move too quickly, we think from a trend point of view, there is an upside for the market. speaking of a shift, how much of a shift do you see in central markets in asia are? the centralng to market, maybe come to japan first. we think that there could be unexplored opportunities for investors. japan is the last major central bank that has the ability to announce.
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also taking it easy on the qe's. we think probably towards the end of the use control that they have in place will be a bit boosted. means is a stronger yen. but i think even more, what we are telling our investors, the bank of japan, based on this, it's not so great for exporters, of course, but we have seen what it means. fromis derived central-bank policies. there are also opportunities on the banking side. an unusuallys large differential between earnings -- which i imagine are bond yield -- and government bond yields. at what point does that change react -- at what point is that change, does that call come reactive? 3% right now.ust
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we have done some analysis. when is the tipping point, when will we see weeks in the market. most of the time, it is negative. close to zero. in the current scenario, you it is intainly argue asia and markets still. haslinda: high-yield versus investment grade. what do you like in a volatile environment gekko david: we again, maybeo asia there are opportunities. what we have found is even when yields are rising, rising trends, when they are six months ahead in inflation, which we do not think we are, we still have that better buffer. , the high-yielding
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space is something we prefer right now. just looking at your cause, you are liking the dollar versus the usd. what is that? it is quite a common call now. we have heard quite a few of our guests saying the same thing. what is your take on that? there's the relatively broad-based continuation of weakness. interpreted have that it is very positive for the dollar. that? going to finance the government? and if nothing else changes in the world, we will just have more imports and not necessarily more exports. it is sort of a middle ground function between the other big
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currencies, some of the asia in, which we think are going to strengthen relative. in singapore, the inflation number is reasonable. they will actually have two levers. what are we looking at in terms of targets, 127? harmut: 127. david: one other thing to talk about -- i'm sure you follow all the moves in the big china conglomerates. we see the high profile crackdowns. i could be wrong -- until me if i am wrong here does should i be worried about a spill over into other part of the credit space in china? hna, they are hitting the market with yields of 9%, 10%.
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i would not see it so much as a negative. the way i would look at it, part of the bigger programs. safety leverage, but to put the cap on leverage perhaps. a bit ofso show muscle, how serious it is. from that point of view, if you want to argue for stocks and also bond markets, they are kind kind ofg the risk down, a positive aspect that can help the evaluation. , thanka: harmut issel you so much for your website. if you are a bloomberg subscriber, you can catch up with our interviews by using our interactive function. that's tv . you can also send messages to our team and our guests during the live show. do check it out. tv . this is bloomberg.
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haslinda: this is "bloomberg markets asia." i'm haslinda amin. right now, the founder of geely is currently on a goodwill after becoming the biggest shareholder in daimler. it's china's biggest investment in an automaker yet. -- we know that they have although under their belt. why would they go for a bigger stake in daimler? for me is not really about automotive. it's really for commercial vehicles. if you look at china, e-commerce
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thevity -- you look at recent flurry of tencent acquisitions and the ip shop. that's a good signal that there are logistic shipping activities on the rise and there's a greater need for commercial .ehicles in china alone, there's about a million heavy trucks sold. we're talking 300 to 400,000 u.s. it is a really big market. i think that tesla has recently launched a semi-heavy truck. julie is making a push into commercial vehicles. .aslinda: pretty ambitious pretty aggressive. will it be hard for geely to protect check from daimler?
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steve: p or talking about passenger vehicle tech, -- if you are talking about passenger vehicle tech, the germans are pretty good. tightly guarded trade secret among the germans. they want to maintain their brand reputation across the globe. so, i very highly doubt it's going to be easy for julie to extract that technology. -- for julie to extract that technology. point --o haslinda's is their technology to be had from those commercial vehicles? to make it simple, what commercial vehicle are they after specifically when it comes to daimler? chineseight now the commercial vehicle makers dominate the commercial market. ck are the omissions standards. if you look at the germans or
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the americans, you are looking 07 technology. in china, it is still 05. there's a lot of improvement that still needs to be made. but china car and truck buyers are upgrading. the logistic industry is growing. they are getting wealthier. from germany particularly are built for the long haul shipping. otherst is way julie and and others are interested. david: very good point. stephen a man. three companies have violated rules --nvestment we're looking at china life.
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it's not clear what the breaches were, but each have been given a those errors.ect" following a government takeover, of course. haslinda: stock could fall if hits0-year treasury yield 4.5% by the end of the year. the economy would likely have a shop down fall, although probably not a recession. shock downfall, although probably not a recession. a new launchs of -- they are putting together a $30 million plan for auto parts, an operation to produce and sell a vehicle, but it's not clear when the venture might launch. david is looking at the markets. pretty much an update for most
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of asia, and in china -- in asia, we have the hang seng up by 1%. let's see whether those gains can continue. this is bloomberg. ♪
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haslinda: 11:30 a.m. a pretty gloomy day. in the middle of a trading day. ahead of percent industrial production figures later today. p.m.hat's going to be at 1 local time. in hong kong, dave -- david: yeah, we are looking at gains across the major benchmarks in hong kong. we are fighting back from session lows at the moment, but the story is volume or the lack of it. i'm looking, shenzhen to hong
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to be- we are halfway taught in the absence of any sort of meaningful flow of funds from the chinese mainland, it's hard to get back up in a timely way. i'm haslinda amin in singapore. you're watching "bloomberg markets asia." let's get your first word headlines with debra mao. deb? china is set to repeal existing term limits on the presidency to allow she jumping to rule past 2023. they want to revise a constitutional provision barring the head of state for more than two consecutive terms in office, the only formal barrier to xi staying in power indefinitely. the move was first flagged at a party meeting in october. rising in fewer
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cities, new home prices state subsidized housing, climbed in 52 of 70 cities tracked. they were unchanged in five months. the government is expand renting -- experimenting with ramping up supply while fine-tuning existing retro troll -- rent control. ministerdeputy prime has been elected. the sex scandal that led to joyce's resignation has hit the liberal coalition. the opposition labor party has 54% approval. >> we are all going to work twice as hard. i want to thank each and every one of the national party members for the faithful they
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have shown in me. i want to make sure that people -- there is a huge challenge ahead of me. there is a huge challenge ahead of us. disruption in libya could see overall outputs decline after its recovery from the country's internal violence. decline.wed to them to global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm debra mao. this is bloomberg. david: let's look at shares. shares are to the upside. all roads lead to barcelona. haveng electronics revealed their new flagship, the
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galaxy s9. engle.th us, stephen steve, every time samsung comes out with a product, it's always the iphone killer, but not really. >> a lot of people say this is the critical launch for this company to her he keep in mind, samsung is doing pretty well. they're doing a lot of diseases. they have the memory chip. demand is pretty robust. in 2016.record profits the do have new leadership after the third quarter. they do have the scandal they are trying to emerge from. they are still emerging from the in 2016, bute record profits in 2017. now they have this new phone launching earlier in the year, perhaps 2 -- well, it is to take on the iphone x, and these are very similar phones. feature rich, yes, and actually cheaper. cheaper than the iphone, i
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should say. it has camera i grade -- upgrades. slow mo video. low light, the aperture is much faster. apple 1.8.sed to the the question is, is this enough of a move forward for the flagship handset to get people to abandon their apples and go to this platform? maybe down the road with the next one, because they are supposed to be in the works with a foldable screen and a really forward, if you will. a big question, steve. we talk about how samsung is a global leader in smartphones, but maybe not the case in china. what is it that we -- sorry, india rather than china. tephen: yeah, china and india are to do but the biggest market samsung wants to be part of.
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they have fallen back to number to a chineserket rival. this is one of the biggest issues in the android universe, if you will, the chinese handset xiaomi, lenovo. they are now taking four of the for smartphones in india. xiaomi supplanted samsung as number one in the fourth quarter, and if you look around the world, samsung is number one at 22%. apple's second, 15 percent, but then you have this chinese makers, xiaomi. they are definitely giving samsung a bit of a run. stephen engle, our chief north asia correspondent. thank you for the insight. in emerging markets look to be leaving the next wave of capital expenditure as they try to keep pace with global demand. that is being attributed to the
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production of smartphones thread let's bring in our chief asia correspondent. where are we seeing the spending increase? >> good morning, has. i was having a conversation just now with stephen. indeed, this is being driven by electric vehicles. what started with my colleague in japan is now spreading to other emerging markets. so you have your south koreas, y asia,iwans, others in india, indonesia. the point is it's becoming like the global growth stories. it is increased by company spending and broad-based. david: we have heard this all
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before, right? enda: we have. david: many times. the beauty pandian question is why is it important for economic growth -- the beauty pageant question is wise it important for economic growth? enda: third is the feeling that if you have more company investment it will lead to better productivity among workers. remember sluggish productivity -- then around the albatross around the global economy's net for some time. and that should lead to higher wages and higher wages, better everything -- consumption and healthy levels of inflation and the like. yeah, and of course, there's the cash. much, live you so for us in hong kong studios. possibly new tariffs
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on steel and steel imports into america. people talk about china, right? but when you look at the data, and here is some great stuff from our guys of bloomberg intelligence, china does not in terms in the top 10 of where the steel imports in the u.s. come from. it is number 11 if you are curious. the top 10, 70 7%. i would say if you are a marketer or your strategic industry press -- professor -- in any case, you're looking at rebounding steel prices. chinese mainland has really created that incentive not to export that anymore and perhaps keep most of that production, at the moment, invested. right.a: you are it begs the question -- -- where where were will tensions go? what will the implications be on the market? let's bring in our asia metals james ing editor
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singapore. james, when you look at the numbers so far, aluminum down, steel up, pretty mixed reaction. is there a disconnect? is a on the surface there may be a disconnect, but the expectations have been in the market for quite some time. i think the markets have had quite some time to get used to it. but china is the elephant in the room on this. china is much more important to be still market than these terrorists. china produces half of the world's steel. we had -- china is much more important to the still market than these tariffs. output will be crimped in china at a time when demand is picking up again in the spring. that is why the steel prices gone up. innocence that's much more important for the global still market than these tariffs. the tariffs are hugely important for u.s. steel producers and aluminum producers in the u.s.
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have done really well recently -- haslinda: talk about the trade war, the possible trade war and china's reaction. how will that play out? unknownhat is the question. what is trump going to do? that we have a story saying he could impose the stearate -- the available, it's possible that it could be targeted, perhaps aluminum, steel, we don't know. but yes, i totally agree, these tariffs could be the start of retaliation from china and other countries, and where do we go after that? it really is not clear. there could be an escalation, but we don't know yet. we will see. david: james, david here in hong kong. to your point, we want to bring up a chart so our viewers can understand what you are highlighting. when you're talking about the global picture of half of the exports or even production -- in
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this case, we are looking at china being responsible for half of the world's output, not necessarily exports. what do we need to focus on then? what part of the conversation should we be looking at? yes, first of all, that will have an impact. when trump does decide exactly what is going to happen on steel import tariffs, that will have an impact, especially on the u.s. market. the big question is what are we looking at now? i think we should be looking at whether steel producers will be looking at production even more to come back pollution. that will be the key thing. over the winter, we had pollution curbs. in shanghai, they were doing very well. this may be just the start. maybe other provinces are going output at ao curb
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doinghen china demand is really well. central command is really strong. james, lots to talk about, of course, more when this takes place. thanks for joining us, our asia metals and mining editor. still to come, we will have the open our markets three minutes away, and you know what -- unsurprisingly are looking at open.there at the the loss of strength there in acrossy and the dollar g10. the open in a few moments. this is bloomberg. ♪
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david: just seconds away from the open of the cash markets.
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back andtake a step look where indian equities have come from overall -- i would say they have been left behind. this recovery in asia and markets, asia in general, halfway back to the top. india not even a 10th. anyway, let's see how things opened. yes, dave, the regional index rally as well. they are adding to friday's gains and the rupee, that is gaining growth, -- gaining ground, i guess against the backdrop of dollar weakness. of course, there will be the gdp on to see if it will add pressure to the rba hike. now to the indian bank, this amid reports the government is considering a holding company for state ledgers. and bmp gaining ground, but the bank denied reports it has had
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other lenders for losses arising from fraud. and moody's -- so far the bnp -- pmis being treated as the fraud is being treated as an idiosyncratic issue. fraud. david: the steelmakers have been in focus. are we seeing any of that play out across india? have the check in on indian steel players. today moody's and a note saying the tariffs could have the greatest impact on india, as well as china and south korea. that it will be manageable due to small volumes and profitability in 2018 underpinned by demand as well is chinese capacity cuts. u.k. expectedthe
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to come out with rates tomorrow at -- the boj expected to come out with race tomorrow and mr. kuroda is seen as mr. reliable. sophie: yes, corroded reiterated persistent and powerful easing needs to remain target.hat 2% inflation it looks like asset managers a run money. i want to highlight this charge. as it managers have the biggest bet on the yen since before kuroda was named the boj chief. the yen's recent rallies, that is seeing leverage scaling back further from really sharp positions and they could have kuroda again coming out as mr. reliable today. thank you for that.
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chances gears somewhat, are you have to look to the east -- you always have to look to the east -- mumbai is number one when it comes to foreign salaries. $200,000 an average of . you have to live in mumbai. you have to live with the smog, the traffic. you need to be well compensated. it's not surprising. david, take a look at how ex-pats are compensated in mumbai. david: yes, i guess if you could put a price on your lungs. tos a similar conversation what we had in beijing. case youl average, in were wondering is $100,000. also,anghai, jakarta, hong kong, but has, back to your
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point -- do we have a live shot of mumbai? just to underline the point has and i were making. if you live in conditions like this every morning -- and it actually does look like a better day this morning -- hopefully you are getting more money. up on theming program, you cannot afford this one here. swiss watchmakers are talking luxury. we will check in with the prospects. this is bloomberg. ♪
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david: you are watching "bloomberg markets asia." i'm david ingles. haslinda: i'm haslinda amin.
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youtube has been forced to press pause on its own hollywood ambitions. they are holding the expenditures for the next seat of years, which questions causeses -- which companies to question their film strategy. right, let's continue our conversation in tech. strategyg to get its on track with the launch of a of them to get its strategy on track with the launch of a new smartphone. has many new features. specslows a trend of top going into this year's midrange models. well, the smash hit movie "black panther" has become thumbs to earnr
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at least $100,000 -- $100 million in its second week. --be his niekro own forecast it beat disney's own forecast to $400s it total million. have: swiss watchmakers started 2018 very strong with more growth than in five years, helped by demand in the asia-pacific. to illustrate that, let's look at our bloomberg chart. we will get it up and 3, 2, 1, and here's how it looks. whatillion swiss francs is we're looking at. let me highlight this. you will get a brief history of time. aere's the rebound, there's rebound right there. to talk more about the prospects of the watch company, we're
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joined on the set by the ceo of piguet, francois-henry bennahmias. nice to have you back. just to give our viewers a sense, there's more on the higher-end, less on the lower end priced watches. is this something to expect? yes, because the industry is far behind its true potential. if you think about it, if even 1% of the individuals are on the planet, you've got to think about roughly 70 million people. they, youread is so have to look at it half-full and not half empty. it this way --t how are your inventories? >> inventories are at the lowest level ever.
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salese almost doubled our . be watch industry is in great shape. we broke record after record every year. the last year. we're in pretty good shape. augement isslinda: is of the few -- audemars one of the few watch company still in the hands of the founding family. have you been approached? the board of directors has given a mission to those before me and also myself -- we want to to havendependent freedom. what we have been able to do for to dost year, we are able many things a lot faster than we were doing before. so -- to move forward --
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we are seeing a lot of m&a deals in the luxury space. have you been approached? we have seen a lot of m&a deals and so on and so forth. have you been approached? >> have i been approached to change and leave gekko -- leave? no, whether any companies have approach to buy a stake or even by the company? this loud been saying and clear -- do not come to us. we will not sell. laughs]a david: you alluded to the freedom this gives you. interestingly, one of the tweaks and your strategy over the next two years is you will start selling used watches. what is the wisdom behind that? >> it is very simple.
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the want interaction with brand. new and preowned. we are not reinventing the wheel. we are just adapting to what the market wants. are note consumers buying watches forever anymore. sometimes they do, but most of the time they buy a watch, they want to work for six months, a year, two years, and change to get something else. they want to be able to trade in their watches and say, you know what? i have those watches for 1, 2, 3 years and i will buy a new one. i think that that will be very serious for the years to come. interesting. we were not able to talk about the ap house. your opening tomorrow in hong kong. has? we area: and of course, taking a look at how stocks are
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headed in light of the ip numbers coming out later in the day, 1 p.m. local time -- 7.5% is expected for january. this is bloomberg. stay with us. ♪
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♪ week: stocks extends a two goldman saks warns markets could respond. china prepares to change a two term limit. world's second largest face decades understand its rule. >> cpi spikes as subsidy bit

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