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tv   Bloomberg Markets Asia  Bloomberg  March 13, 2018 8:00pm-11:00pm EDT

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8:00 a.m. in hong kong. welcome. the top stories this wednesday, a stake up at -- shakeup at state. rex tillerson is fired after with the president on iran. futures across the region are lower. mobilem bloomberg's headquarters in new york, i am eddy loop. president trump once -- betty liu. president trump wants terrorist. -- tariffs.
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polls in to the pennsylvania. everything suggests it is going to be a close race. yvonne: we have been talking about these trade tensions. more friction with reports president trump might be slapping tariffs on china. we have reviewed numbers and catalytic what that could be. take a look at this. i guess this is a worst-case scenario. costss. has raised import by 10%. we are looking at a trade war that could cost for $70 billion -- $470 billion to read that could cost half a percentage of
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growth. to the equivalent economy of thailand. these are one step closer to something that could trigger a scenario like that. continuing to cooperate when it comes to north korea. you have to connect the dots. to put thena pressure on. that is a start chart. rex tillerson is out, mike pompeo is in. let's look at how we are faring in the market open. >> we are seeing out to the start of trade. stocks sliding.
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the index is down. a slight pickup in the yen. check out s&p futures. kicking off their session wednesday. several things you have laid out. we have pompeo being added to the trump lineup. up.ssible summit shaping plus reporting sought the clear -- south korea's moon may discuss an end to the korean war. as a voteowth as well against china. we did get core machine orders growing faster.
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a 5% gain.ed to plus, in the january boj meeting, we learned most members not surprisingly believe it appropriate to pursue powerful easing. i will check in on some japanese stocks. we are seeing those stocks gaining ground this morning. shift we are seeing at the white house administration. automakers on the radar. let's switch the board to check tourismul --, seoul, stocks. korean cosmetic maker sliding over. eye on korean
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carriers, korean air. quite a few things to keep an eye on. betty: thank you so much. quite a few themes to keep an eye on. let's get to the first word news. >> president trump has upended his foreign-policy team by firing rex tillerson and proposing to replace him with mike pompeo. the president announced his decision on twitter, several hours before he called tillerson. she told reporters he and his secretary of state had disagreed over key issues including the iran nuclear deal. president trump is in california to drum up support for his border wall. this as he persuades congress to find the money. he inspected eight wall prototypes. the plan is facing resistance from democrat and skepticism from some.
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he continues to insist mexico will ultimately pay for it. heat, is turning up the saying theresa may is ignoring the harsh realities of the split. accept -- there are reports of u.k. concessions with reporting she will back down on open borders. brussels says she needs to pick up the pace. there ish day passes, increasing urgency to negotiate this withdrawal. of the negotiations means the european union, united kingdom, have to act with pragmatism. >> the oecd says the global economy will grow close to 4%, raising its previous forecast.
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the writer outcome comes with a caveat. the threat of retaliation by china on tariffs, the eu and others. trade protection remains a key risk. global news, 24 hours a day, powered by more than 2700 journalists. this is bloomberg. polls are officially closed in the special election areennsylvania where voters selecting a new congressman in the 18th district. there are implications for the balance of power in november. kevin, the polls have just closed. give us the latest. >> the polls have just closed. this is the democratic , trying to turn this
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district to the democrats. $10 million in the district that -- lamb casting himself as the charismatic new leader. from theg himself leadership. he is someone running as a census candidate. opening within the last hour, this place is packed. they are seizing on what they hope is momentum. they have been actively trying to mobilize efforts of the progressive grassroots, trying teste this as a potential run for the midterm election. what are the results going to tell us about the
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results of the midterm elections? will it be critical? it looks like we may have lost kevin, the sound. we are going to try to get him back online. meanwhile, washington is turning up the trade heat. president trump said to be tariffs.or steep what do we know so far about what might come? in fact, the question you just put about the midterm this ties into what we are seeing in terms of these tariffs. echo in my ear,
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by the way we are hearing from , sources saying the trump administration was resented with tariffs by the trade representative, something of a china hot. president trump turned around and said the value is not large enough. come back with more. he told his aides he would be tariffs.ff on the this follows the investigation into intellectual property where they allege china has been abusing the ip. this would be there push back, signing off on tariffs. 100 different products. medications equipment. very broad iteris we are talking about. much more of an economic impact. a concern for china. notable, the
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moderates tone taken by china's policymakers around these tensions. not want you to exacerbate them. we know china has hinted it could take totally measure is parade it has been playing those down. the question comes as to when china will feel compelled to act. whether it needs to push back. certainly, they would likely have a material impact. this affectcould drive to turn china into a powerhouse? goodthink that is a really point. there are a couple things to consider. has laid out a plan.
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heavily investing that. it is the domestic agenda as well. there is a potential clash, tensions between the desire by the president and his team to insert greater coming a stte party control over a broad range of society. private enterprises as well. in the changesat in the last few weeks. greatergreater party controls. they want to have this innovation. the other tension comes when they look abroad. greater party controls. they want to have this innovation. the other tension comes when they look abroad. a lot of the expertise they are going to need from the u.s. and europe. it looks like those walls are being drawn up. you have a deal that was next. and then the europeans looking at setting up a committee to restrict foreign investment over german concerns. those are some of the tensions that play as china looks to upgrade. to come on this
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story. tom mackenzie, our china correspondent. kevin is back online with us. sorry about the sound problems. let's continue on with the impact of the pennsylvania elections. they going to be indicators of where the midterm elections will go in november? democrats are hoping should conor lamb win, it will foreshadow the midterm elections. already, republicans force it -- sources saying the republican is not the best candidate. this is a conservative portion of pennsylvania. should a democrat actually win this, it would be quite remarkable.
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top circuits for both candidates heading into the district. president trump campaigning here. son alsodent's campaigning, and former vice president joe biden campaigning for democrats. el country. a state that has voted republican for a president since 1988. it was a key state for candidate trump. goes.all of this they might reconsider whether or not they are going to run in the midterm. there is a big push of momentum behind progressives.
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>> switching gears, on rex tillerson, the shocking development he was fired by a tweet. we could see the writing on the wall. the paris climate deal, charlottesville. what took so long? was on the wall. according to sources, the frustration palpable between president trump and rex tillerson. that development. a former congressman set to replace secretary tillerson, i spoke with a source close to him. the director has different experience from someone like tillerson. we all know brought the private sector experience with him. ultimately, president trump decided he wants a new type of diplomat in place as they begin
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tough talks with north korea. they say they are ready and prepared to meet with kim jong on by may. ofbrings with him a sense the intelligence community. that community experience is as he takeselop over the state department. on the flip side, there has been intense criticism of secretary tillerson from the community for not filling diplomatic posts around the world. they feel that made the trump administration's job more difficult. thank you. joining us from near pittsburgh to talk more about the latest election. breaking news, when it comes to
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noble group. a tradingy seeking halt. we are still not sure with the details are on this announcement. as we have been reporting, they did announce not to pay a coupon. the clock is ticking on this maturity which does not have a grace time. six days from now as they try to read some sort of deal. plenty to look ahead to. we will continue to see and follow those lines. in the meantime, the nuts and bolts of president trump's trade tariffs. latest earnings.
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big changes to china's financial regulation. his take in just a moment. this is bloomberg.
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china is giving its central bank the power to write the rules. banking and in the insurance industries. we are joined by the chief economist at anz. callsve been getting about this. we hear that figure is perhaps better because china has more problems. how is this going to work? >> people are trying to combine -- and the idea is
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to align the policy consistencies. the policy measures. that has very often been involved in the shadow banking sector. is tok the whole idea combine and align the policy. >> greater transparency. it is interesting. there are a lot of market implications. talk about the insurance industry in general. a largertfolios make up amount of gdp. are they going to be more of a national service? kind of the default when it -- are they going to be stepping up to help? ensureidea is to financial stability. thate very nature,
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insurance companies are taking deposits. the products that have been launched in the markets are taking the money from the depositor, and the insurance protection component may be minimal. the idea is to follow the practice of countries such as australia. the two sectors, one is banking. the other is insurance. >> we talked about how different the pboc is now. what is going to be the biggest challenge coming from the new governor? be more micromanaged in terms of function, regulating credit allocation rather than an aggregate money supply. stage, as a super
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regulator, is to launch and execute measures. balance on one hand, trying to use monetary policy to support growth. ensuring financial stability. despite all these changes, you have a lot of china naysayers. particularly hedge fund managers. a houston oflike cards -- house of cards. saying china is most at risk for a banking crisis. are these going to ease any of these concerns? >> this is what the government wants to do. controlled that growth. when he gave a speech, i think the main goal is to control
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the growth of debt. my interpretation is to control it to a steady-state. is what the government is trying to do. combine regulators to improve the effectiveness. >> we are so focused on the next governor of the pboc. what are the other appointments that we need to watch out for? that might have, perhaps not as big an impact but an impact? trying to get to grips with the financial risk? i'm expecting a key appointment in terms of who is going to chair the financial stability and development communities. this is a key position. a lot of talk about whether that will be the same person. i'm not concerned who was actually taking over. to chair the
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committee. body is theting financial stability community. who is going to chair this will have the biggest bit of the overall policy of china. >> thank you for breaking it all down. china economist. plenty more to come here. this is bloomberg.
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check ofet's get a your markets. japan, australia, leading. there is rumblings the white house is weighing on sentiment.
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trade concerns with the u.s. reportedly set to slap tariffs on chinese imports. certainly trade. betty: we discuss the surprise shakeup in china -- washington, that is next.
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>> beautiful wednesday out in singapore. half an hour away from the opening of trading. concerns, morph coming from the u.s. to china. i'm yvonne man. betty: they have been calling it rexit. let's get to the first word news now. >> thank you. reports from washington say pushdent trump intends to ahead with trade and investment restrictions on china. sources that he
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has told the cabinet he wants tariffs on a broad range of products. other sources add he has been giving a package of tariffs worth $30 billion a year, but he wants more. reports from tokyo say japan is exploring the possibility of talks between shinzo abe and others. the government has been forced to review the policy. president moon and kim may discuss formally ending the korean war. foreign minister lover of -- the foreign minister rejected the claims, saying russia had nothing to do with the attack. the u.k. has been rallying support for punitive measures against russia which could
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include diplomats being expelled. to google users are expected find users from those publications appearing higher and their news results -- search results. it is part of google's efforts to find and retain paying readers. we are also told they plan to offer more details at an event in new york on march 20. global news, 24 hours a day. this is bloomberg. yvonne: thank you. for the latest, we have sophie kamaruddin. looked at these inflation numbers in the u.s., just right, but we are more focused on the geopolitical tensions. withade tensions, along geopolitics.
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shares lower. all segments very much in the thanks toright spot retailing. otherwise, stocks under pressure. also, they said they did not order documents. i want to highlight something from credit suisse. the boj seeing tapering, the yen continues to strengthen. gdp does come from manufacturing. we did see a pickup in january. let's check in on defense-related stocks. one highlight, small caps supplier jumping. rising 15%. they get half of the revenue.
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, they are falling. board.witch the the worst performer on the index this morning. snapping a today rise. the company has been sued in the u.s. over products manufactured. there is an ongoing doj probe. the stoxx sliding over 1%. the february inflation scare has turned into a march sigh of relief. kathleen hays here with a recap.
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coming in right with estimates. no big acceleration. nothing to be nervous about. cpi comes out. oh my goodness. the numbers got bigger faster. a closely watched report. let's look at the numbers. if we look at the monthly change, for example, up 0.2%. in january. decelerating a little bit. year over year, the cpi up 2.2%. inittle bit faster than 2.1% january. looking pretty tame. what you can also add, the fed's key inflation may shares -- measures, running respectively.
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fed target is 2%. you do not see alarm bells going off. the last big inflation report before the fed meats. if i was one of those nervous everybody is going to say to calm down. it seems like the march meeting is pretty much a done deal. what are we likely to hear from jay powell? ->> it is going to be his first presser. after the fed announces what is going to be there -- probably their first rate hike of 2018. also, the dot. taking a look to what the debate is about. here's the 2018 consensus, around three rate hikes. dots.are six
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it is not a very wide consensus. the debate is, look at the cpi. you do not need to step on the brakes. versus, tax cuts are going to kick in. wages will start rising. an interesting question, what does that mean for the bond market? however, interestingly, the 30 year bond auction. report saw after the cpi was a pretty decent result. it came at a lower price.
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line, we are seeing a flatter yield curve. where thee wonder bond market is now. have we seen this run-up in yields? the signal for three rate hikes, i think the bond market brees another sigh of relief -- b reathes another sigh of relief. yvonne: let's return to our top story, president trump firing rex tillerson on twitter. we have seen monk pompeo, the replacement here. cia director. more of a trade hawk. how likely is this to change
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international relations? >> the thinking is he will be more of an america firster and also a loyal foot soldier. that they had a different mindset. he respects mr. pompeo. it seems like he will be tough, particularly with tariffs. north korea is seen as going along with the president trump wants. initialerson, after an honeymoon, wanted to do his own work on the world stage. seesresident in some ways the role of cabinet members as doing what he wants. >> do we see a different
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onategy from mike pompeo north korea versus rex tillerson? long. tillerson wanted a time of engagement. he said there should be backdoor channels. he was still in the face of calling the north korean leader every time he got a chance, rocket man. mr. tillerson said, let's try this. president trump said, let's do this. pompeo, at this point, is seen as going along with that. he needs to be confirmed by the senate. to be interesting what they do in the meantime. >> could be some hurdles. >> the timing is interesting. this meeting is supposed to
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occur relatively soon. we have a lot of other things on the world stage. tariffs going forward. it is an interesting time to be without a secretary of state. >> there is a pattern here with president trump. someone and then bring someone else in who he believes he can trust. do you get a sense pompeo is here for the longer term? is he kind of a temporary measure? >> who knows. the president likes things shifting. ompeo is seen as being loyal. that is a requirement for these kinds of jobs. he is a 54-year-old former -- congressman from
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kansas. he has given him his daily intelligence briefing almost every day. they formed a bond that way. his comments have been in keeping with what the president wants. loyal.een as being has not shaken the boat too much. loyalty is important to the president. news,y on some of the this broadcom qualcomm deal being scuppered. $30 billion in tariffs imposed on the chinese. when you think president trump is trying to do? he is coming out with some stronger measures against the chinese. what do you think his strategy is? >> this is something he
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campaigned on, being tough on china. he has called them out on all kinds of things including currency. during the first year, did not do a lot on china. his visits were cordial. to say how much he respected the chinese leader. up in things heat washington, he is going the other way. trying to get tough on china and doing it in an america first way. this is hewing to that playbook. it is thought the white house, the cabinet is going to be much more hawkish. we will see how the markets react. betty: thank you so much. don't forget, our interactive function. catch up on into the interviews in the past two bank hours.
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become part of the usversation by sending instant messages during our us instant messages during our shows. check it out at tv . this is bloomberg. us instant messages during our shows. check it out at tv . this is bloomberg. ♪
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yvonne: this is "daybreak asia." a hong kong company seeing sales rise more than 10%. includeets of brand milwaukee. we have the ceo. seems like a good routine we have going on. what are you learning about consumers with these results? certainly some still results. llar results.
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consumer sentiment. we are finding the reaction to our products is fantastic. we are optimistic about the future. we have so many new products coming in. we believe it is going to be an exciting time. betty: would you say this is happening despite the macroeconomic picture? >> the environment has been pretty strong. we are seeing great economic environments. even in the asian theater. the economic environment is great. we are outgrowing the market.
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your after year. our vision is to outgrow the market. we do that at a premium price. up.gross margin has been the innovative products are very much in demand. to hearwe continue these trade frictions escalate. half passing on higher prices to consumers. --there a way >> we cannot quantify it. five -- we can move it
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to the u.s. come faster than our competitors. we are not settling on price. we are settling because we have innovative products. we have to figure out what the tariff environment will be. >> we have seen tariffs in place. we have five factories. we can manufacture in europe as well as asia. we cannot plan based on rumor. crystal-clear environment, we will have a plan.
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it will be very positive for the company. we have seen not just these governments, even europe, the they are interfering when it comes to investment. you can talk about this latest deal. do you see this as a kind of new normal? the world is getting more de-globalized? >> i think the environment around the world has changed in the last 30 years. there are always different geopolitical issues. that is why we focus on things we can control. we can control the number of products we launched each year. we are very good at that. our results prove that. are we concerned about all these things? we are focused on it. concerned, we think
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we can control our destiny no matter what happens. >> a real quick question. the housing market. your power tools are used. what sort of direction are you seeing in housing? is a relatively small part of our demand in the u.s.. we serve over 35 further goals. there are so many and user groups that have nothing to do with housing. investors have to understand that. we see housing strong. it is not that significant. we are much more focused on the industrial construction arena. group is exploding in terms of demand and activity.
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it is also growing like crazy in europe. >> how confident are you we will see a bill before the elections question mark >> i can tell you the u.s. is in need of infrastructure investment. we are positioned to capitalize on it. we have so many specific products on the way. our new product schedule, you would say this is an infrastructure support company. the infrastructure is in need of repair. to happen. is exciting time for us. >> thank you, we appreciate your time. the ceo, breaking down earnings. exclusively with steve
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schwarzman on u.s. china relations. geopolitics. the scholars program. 9:00 a.m. in sydney. this is bloomberg.
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yvonne: this is "daybreak asia." betty: a quick check of the
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business flash headlines. itsnk has been said to fix money laundering program after regulators found what they called significant deficiencies. c failed to comply with the act. they have been given 60 days to offer written plans for improving control. group isina hna selling a stake in hilton to pay down debt. at the close, the stock has risen strongly from the price paid about a year ago. they have sold properties in london, sydney, and hong kong. >> hearing of more change in tesla.
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he had been at tesla for about five years. her departure follows that of chief accounting officer for personal reasons. -- salesof former go lyft.eft to join yvonne: we have china data coming through. industrial production. that is the next catalyst. we have been weighed down by the chaos of wall street and more so the white house. sudden departure here. ,e are seeing the nikkei pressure. all those concerns about
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trade wars, that continues to the other asian markets set to open. singapore, for instance. malaysia. let's pull up the boards, how those futures are trading. index futures, up 0.5%. futures showing decline as well as more futures, a loss. following from the decline we saw here in the u.s.. another programming note, don't bloomberg's interview. tune in for that. this is bloomberg. ♪ retail.
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♪ is re the secretary of , thexit, -- rexit secretary of state fired. asia-pacificin the , a weak lead out of new york. broadcom abandoning its pursuit of qualcomm. we are expecting a formal announcement later today. i am haidi lun in sydney. wants steepuse tariffs on a range of chinese imports, plus restrictions when
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it comes to investing in the u.s. this is "bloomberg markets: asia." ♪ david: what is up? a good morning to our viewers across the asia-pacific. good evening to the east coast. let's look across markets as we head into the open in china, ftse futures declines, risk off session. don't forget we have this lackluster auction last night on 30 year treasuries. the inflation report, yields tracking lower as we make our way into the open in china. haidi: in the meantime in washington, the white house
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edition of the apprentice continues with the latest scalp being rex tillerson, finding out he lost his job via twitter. we get into potentially leadership talks between korea, the two koreas and the united states. goldilocks inflation continuing, the u.s. looking ahead to this key set of china numbers distorted by the lunar new year of fact. let's look at how all these forces are coming into play. .ophie: drama in trump land the politics of a tougher trade stance unnerving markets. asia tracking losses on wall street. ,e are seeing the yen soften looking at that 107 level.
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for reactionoking in chipmakers and taiwan is broadcom says it is abandoning its bid for qualcomm. this has there could be implications for m&a opportunity ha. in singapore, the index losing ground. been suspended in a race to secure a rescue deal. that is for noble group. steel falling with other korean stocks. the u.s. has imposed a tariff on hyundai fixed to steal plates. this is has south korea is seeking exemptions from trump's tariffs. given therism stocks
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elements. they may discuss the clearing and into the korean war. investors will be looking for clarity with soul, korea's relationship with beijing. capsin tokyo, small defensive, one stock rising. kobe steel adding 1% in tokyo after saying the company has been sued in the u.s. related to its auto products manufacturing. david: thank you. risk off there. lines out of japan, the prime minister speaking, apologizing and striving with the finance minister to rebuild the ministry of finance. we will get you an update when we have more information. in the meantime come an update of your first word news. the eu is turning up the heat
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on the u.k., saying prime minister may is ignoring the harsh realities of the imminent split here at brussels said she still does not accept the u.k. it won't win access to part of the block issue want play by the rules. there are reports of u.k. to --sions, with mason may said to lay down request for open borders. passes, there is increasing urgency to negotiate this withdraw in the pressing fashion. , the united union kingdom have to act with certain pragmatism and transparency. reports from tokyo say japan is exploring the possibility of talks between prime minister shinzo abe and kim jong-un. the government has been forced to review its policy on north korea and light of president trump's decision to meet kim,
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the summit. cam mayt moon and discuss formally ending the korean war when the meat. reports from washington say president trump intends to push ahead with trade and investment restrictions on china. white house sources say he told his cabinet he wants tariffs on a broad range of products and curbs on chinese companies looking to invest in the u.s.. sources add he has been given a package of tariffs were $30 billion year, but once more. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. i and haslinda amin -- am haslinda amin. this is bloomberg. haidi: president trump has appended his foreign-policy team by firing secretary of state rex tillerson, proposing to replace them with the cia director mike
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pompeo, coming as we await the results of an election in pennsylvania. our correspondent joins us now from pennsylvania. the vote in a moment, but let's start off with the reshuffle. the breaking point was on iran. , it was largely predictable. for quite some time secretary of state rex tillerson was embattled and controversy with president trump. ultimately president trump deciding he would rather have a new team as he heads into talks with north korea. director mike pompeo brings a huge set of experience that differentiates from rex tillerson, who was brought from the private sector and brought that experience with him. i talked to a source close to mike pompeo who said his time in the house and close ties
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to the intelligence committee will -- community will help him as he extends that experience into the international sphere. this comes at a time when the state department it has been heavily criticized for not building key staff positions around the world, making it more difficult for the administration to build relationships throughout the world has result of those empty spots. rex tillerson have a lot of criticism in terms of the lack of policy -- foreign-policy experience when he came into the role. muchmike pompeo bring as to the role if in fact confirmed? >> according to the source i spoke with connected to director mike pompeo and has worked with him in the past, this is someone who has worked very hard to establish a close personal relationship with president trump. that differentiates from secretary of state tillerson.
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this is somebody who had a rocky relationship with president trump. in fact, the top news last week out of the state department when the south korean diplomatic official at the white house announcing that north korea was interested in meeting with president trump, secretary tillerson was traveling abroad and had to into his trip to come back for that development. aat was seen in washington as sign of increasing tension between secretary tillerson and president trump. this is a reset of sorts. there are rumblings and washington, d.c. that there could be more on the way. i guarantee you that political watchers within the republican party and administration are monitoring the results of this special election in southwestern pennsylvania tonight. you,: i was about to ask what will these results tell us about the midterm election coming up? we are expecting these results in the time now. have closed.olls
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with 19% of the vote reported, the democrat is ahead with 57.9% of the vote. these are preliminary numbers. according to the geography of the democratic challenger is outperforming hillary clinton in the same areas from the 2016 presidential cycle. district that candidate donald trump by more than 20 percentage points. it was largely part of the reason he was able to carry pennsylvania. that is a state that has not gone republican in a presidential election since 1988. top surrogates from both candidates, donald trump himself, as well as donald trump junior, vice president joe biden. republicans pouring in more than $10 million into the state. political watchers say this
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could be a bellwether. this is a deeply conservative district and the democrat is learning -- running as a centrist democrat. david: good work there. we will be waiting for results there when we do get them. at this point i want to bring in our guest this hour with bny mellon asia-pacific. this is david's first tv interview since taking the role. thank you for coming on. we have to start with what is happening in washington. last year it would have been easy to brush it off and say global markets would have been fine, conditions were more easy am a but now more co-relation coming into the markets since gary cohn step down. how do you navigate this? >> good morning. thank you for having me in the studio. at changes taking
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place in the administration and policies of a change is becoming one constant. at be why in mellon -- bny oflon, we have a 234 history changing, adapting, and innovating to service our clients them a so taking a long-term view tells us we will continue to wait and see how these things play out. david: how do you navigate these conditions? yes, longer-term, but equally a lot of the policy that may be put in place over the next 12 months might affect the long-term view. and not just because of what is happening in washington feared you have the fed -- washington. you have the fed hiking 3-4 times. >> the big picture is what are the risks on the horizon. ,ou mentioned inflation interest rates. the cpi report confirmed the direction of the fed and the fact we are getting to the fed target in terms of inflation.
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not aur standpoint it is surprise and points to a continued approach as has already been predicted, probably three interest rate grazes and slow and steady progress. to risk would the seeing aggressive stance in monetary we don'tg, which anticipate, but that could play out in the equity markets. we think at that -- this point that risk is pretty low. is resin inellon specific parts of the market. one of the things we have noticed is that episode 5-6 weeks ago, it has not quite come back yet. is that which you are seeing from your unique perch? >> unique perch is a good choice of words. bny mellon is essentially two main business lines, a large global manager of assets, the largest global servicer of assets. have a in that perch, we
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good view in terms of where we think the market may go. our direction and strategy is driven by where our clients want to see flow of capital. as we invest for the future and going forward or try to accommodate the needs of our clients and it is driven by what they see as future capital flows. haidi: at what stage in the late stage cycle do you think we are in at the moment? i'm wedding -- wondering what your into stage playbook looks stage playbook looks like. >> i'm not sure i could completely predict that. i think the big picture is what -- where are the markets we anticipate growth opportunity. sitting in asia-pacific, we see changes taking place in the veryt, and probably specific market opportunities presenting themselves as we see growing asset pools and the
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potential for a bit more liberalize flow of capital around the region. haidi: you started off with that thought, what are the top growth opportunities you see? if you take us out of all the , what still looks attractive? sitting in asia-pacific, i have to look within our own region as we look at attractive markets. if we remember the clients we our platform at bny mellon tend to be the world's largest asset owners and managers come as a naturally we would be looking at those markets with the again growing asset pools. thee asset pools across region could point is to market such as australia, where we see a continued increase in contribution to funds and a growing demographic of workers that will continue to drive higher levels of contribution. obviously we can look at china with a very large asset pool,
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third largest fixed income, predicted to become the will start to, we see more and more flow of capital from our clients into the marketplace. haidi: how accessible is that flow of capital? you have had this push across the region, high net worth individuals, and a lot will be concentrated in china. does the regulatory landscape ever changing as it is make you want to slow world when it comes to that market? -- slow roll when it comes to that market? >> when we think of china and the flow of capital, we think northbound capital flowing into ,he market, and southbound capital from chinese investors looking to move offshore. today the focus is to move that capital onshore, giving investors access to the chinese marketplace. quite convinced and
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confident that as we see internationalization in the chinese marketplace that there will be a higher level of demand for that capital to flow offshore as well. custodiangest global we are positioned to help capital coming out of that market. thed: the big news was chinese are saying we were open up the market, give foreign players a bigger equity stake in terms of their operations on the mainland. are you talking or engage with talks with any player in china on perhaps increasing your footprint there? nothing that is off the map in terms of opportunity or possibilities when it comes to china. >> what is realistic given your footprint? >> taking a long-term view and looking at what is best to service our clients, not necessarily the footprint in any particular market, but what do we need to do to accommodate
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client demand for access to that marketplace. yuan ideally any foreign is opened up to what are the revenue streams you want to china -- firm is opened up to that. what of the revenue streams you want to grow in china? >> it comes back to what are the opportunities in the market. we see regulatory change takes overnight,ecessarily so we will continue to take a long-term view and position ourselves appropriately. haidi: part of this opening up opportunity for foreign institutions to invest in chinese banks. with that be part of any sort of strategy, a stake in financial institutions or joint venture?
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with this expansion look like in china structurally? there areple truth is a lot of questions about what the opportunities are as we look at chinese expansion. i'm not sure investing in a local financial institution's number one on our priority list in the but our strategy will be driven by the clients we have on our platform today, and what our clients are looking for is access to the market as global asset owners, and probably stage two is looking at what of the chinese investors looking at in terms of attractive opportunities as they look to move capital offshore. haidi: david mentioned this earlier in terms of headcount. do you have a target, not just china, but across the region? where would be your key focus in terms of increasing your presence and headcount? >> once again i would not set targets by headcount. andan expand into a market all of the opportunities to
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service that market may not necessarily take place within that geography, so rather than setting targets on specific headcount numbers, i would rather look at setting markets -- numbers around where our clients want to move. i will not set a specific target to what we will achieve over the next year or two bank. david: any specific markets? you must have an interim target on how large you want to get in the asia-pacific? what would that be? >> if we look at the results of 2017, our results and asia-pacific were market leading in terms of our institution across the geographies, and the growth rate we saw in asia was quite strong, and our anticipation is that will continue to be the case, but what we build out an offer as a platform is a global platform, so to set targets within the region does not take a broader view of where our clients are
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and what they won from bny mellon. we could have asset owners in asia, but they are looking for access to markets outside of asia. we take a very broad and long-term view in terms of what our platform should look like across the whole enterprise. david: the other main talking point which started with cryptocurrencies last year with the underlying technology blockchain. ork about that and underlying technologies you are looking to put in place, the non-wealth management part of your business? is that a keep rarity? -- key priority? isinvesting in technology one of our top priorities. we are continuing to increase our investments in technology. all technologies emerging today. you asked specifically about blockchain. i look at blockchain as a fantastic technology looking for a problem to solve.
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it puts it in an interesting situation, but yes, we are better active looking at blockchain functionality and technology. we are utilizing elements of blockchain today in clear and services on our own resiliency them a so we see more opportunities to deploy fully across the enterprise am a but that is an area that has the be built out and mature over time. the been anything that has a price you in your new position? >> the surprise in the region is the fast differences from one market to another. it should not be a total surprise come a but the degree of difference in terms of market access or investor sentiment, it makes it a unique and interesting region to work in. hours flight time, not really come up but from where you put it, absolutely. david, thank you so much. chairman at bny mellon joining us for this exclusive chat.
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more interviews coming up tomorrow. we have the blackstone group stephen schwarzman joining us exclusively to discuss u.s. china relations, geopolitics, and the swordsman scholar program. that is coming up at 6:00 a.m. in hong kong, 6:00 p.m. in new york. mccain speaksael with justin trudeau to get his views on tariffs, nafta, the future of cross-border commerce with the u.s. to 6:30 hong kong time. this is bloomberg. ♪
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haidi: a quick check of the business flash headlines. centauriom india says suntory is in talks on
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a stake in abd, giving abd distribution bottling rights to select brands. group is selling at 25% stake in hilton vacations to pay debt. it offered 25 million shares after agreeing to remove a lockup that barred them from selling to 42019. the stock had risen strongly from the price paid about a year ago. its stake in cut deutsche bank and sold off properties across london, sydney, hong kong. let's -- lots to talk about when markets get underway on the chinese mainland. unsurprising early indications given a risk off session. .9% in your premarket auction on the hang seng. we were flat yesterday. futures on that contract down .8%. some data coming out in 30
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minutes out of the chinese mainland. retail sales, industrial production, and fixed assets investments. lots more to talk about here on "bloomberg markets: asia". stay with us. this is bloomberg. ♪
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david: there we go. that is a view serene here in hong kong. seconds away from the open of cash markets. indications pointing to a lower start, .4% roughly speaking. i just got a reminder today, march 14. when you look at the kleins across the region, .6% here it we will be look -- .6%. we will look at details and information out of china. a preview in a few moments from now.
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icbc, stocks we are watching. we will see how this conversation changes and a false and whether or not we see more chinese banks, more secondary offerings fallen that big announcement ag bank had. let's get you the open of the markets. here is sophie. green is down in china. we are looking at a potential holiday hangover dampening the mood for chinese investors in retail sales. those numbers typically beat estimates over the past six years. today on the back foot on mainland and hong kong. the shanghai composite fighting for a second straight day, and the hang seng snapping a four-day advance. h-shares sliding, led by health
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care and consumer staples stocks. let's look closer for the hang seng, i.t. stocks and consumer discretionary the biggest drag, falling over 1%. energy also on the back foot. we have macau casino operators the biggest drag on the hang , galaxy and sands china sliding in hong kong. fell on tuesday in the wake of china announcing the merger between the banking and insurance watchdog. credit suisse saying the mood is -- move is positive for the industry as better risk management and compliance could reduce irregularities, but maintaining its call on the overall sector. let's go to the board and check in on stocks i am watching. lenovo on the radar as the company could face headwinds from trump's plans to slap tariffs on $30 billion of chinese imports, which could include consumer electronics.
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isplendour, the top shareholder in the novo. icbc, the world's largest bank by assets. the bank has been ordered to fix money laundering safeguards deficienciescant were found at its new york operations. the top steelmaking city and china ordered new output cuts in the push for cleaner skies. those new restrictions could last through november 14, so chinese steel mills sliding. haidi: thank you so much for that. now turning up the trade heat on china with calling forump steep tariffs and investment restrictions.
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tom mackenzie has been looking at the story. what to do we know? >> this was reporting done by politico. what they said was robert lighthizer, the u.s. trade representative, proposed trump a package worth $30 billion of tariffs on china, covering technology, toys, and furniture. trump turned around and said the value was not high enough. come back with more terrorists. apparently trump is prepared to sign off on these tariffs as early as next week. this follows the investigation into alleged intellectual property abuse by china, and this would be the response to that. it has been interesting here at the national people's congress in beijing on the the lines from policy makers and corporate leaders has been moderate. trade warto avoid a and will not do anything to exacerbate it, but china will
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protect its own interest. that has been the official line. what they are not playing up his the potential retaliatory measures. that has not been something in for size doing the national people's congress, but the question is whether china has drawn a line in the sand at which point it feels it has to respond. tariffs of this sort would impact the economy here and be more significant than the tariffs imposed on the metals sector you mentioned. david: we need good news. the hang seng down over 1%. hopefully we get that in the positive of chinese data in about 25 minutes. give us a sense of what to expect there. >> you may not get a lot of positivity. we are expecting retail sales to increase by 9.8% versus 10.2% we saw in january.
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if you strip out the february 2017 number for retail sales, that would be the first time it dipped below double-digit growth since the end of 2003. industrial production, expected to pick up 6.2% versus 6.6% in january. fixed asset investment is expected to rise 7% versus 7.2% in january. they will be looking to see how big of a role private fixed assets play versus state of enterprise assets. there will likely be lunar new year distortions to bear in mind when we look at these february numbers. we probably got those when we saw the pmi and export data them a so this will round out the picture more fully, but we won't get a more accurate picture really until march. it will give us an idea if some of the global demand in the u.s. and europe and the industrial and china. is here
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we expect that data around 10:00 hong kong time. david: hopefully we get us moving out of the elements from the lunar new year. let's get you an update of first word news with haslinda amin in singapore. has up endedtrump his foreign-policy team by firing rex tillerson and proposing to replace them with cia director mike pompeo. the president announced his decision on twitter before he called tillerson directly. that he andrters his secretary of state had disagreed over key issues, including the iran the nuclear deal. president trump is in california to drum up support for his border wall as he struggles to persuade congress to find the money. he inspected eight wall .rototypes south of san diego the plan is facing resistance from democrats and some republicans.
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the president wants $18 billion for the project and continues to insist that mexico will ultimately pay for it. microsoft's aat few fewer than 1% of gender discrimination complaints at the company were founded. data unsealed in a class-action lawsuit showed that the claims made by female staff, only one was upheld. ,icrosoft is fighting the suit arguing the allegations are based on individual circumstances and not indicative of systemic problems. a british dismissed ultimatum to come clean over the suspected chemical attack on a former spy in england. minister of pressure rejected the
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his daughter. the u.k. has been rallying support for punitive measures against russia, which includes this could include diplomats being expelled. lawmakers in singapore begin hearings on tough laws to combat so-called fake news. the government is debating introducing a similar robust approach as it has with the legal drugs. singapore has several laws to prevent the incitement of racial and religious discord, including legislation covering issues considered a threat to national security. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. . am haslinda amin this is bloomberg. david: let's get you an update on broadcom. the company has abandoned its pursuit after president trump block the deal. a managinged by editor for asian tech life out of tokyo. peter, i'm guessing this is the nail on the coffin for the transaction? the nail going into the coffin, that's right.
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this is not a huge surprise, of course. it was just yesterday that trump weighed in and said he would oppose this deal and one of the two companies to stop talking. sources are telling us that broadcom is ready to walk away from this deal probably tomorrow morning in the u.s., they will probably formally call off their pursuit of qualcomm. they have been going after this company with this hostile bid since november last year. they offered a high price and waged a proxy battle to win some board seats. people familiar with the matter who told us about the voting said it looks like radcom was going to get a majority of seats and they were going to take control of the board at qualcomm and give them the path to take over the company, but now they are walking away. haidi: they really don't have a choice, does he come of the ceo?
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-- does he, the ceo? few choices. companies can push back if they're getting opposition from the government like this. others have under similar circumstances in the but it would have been difficult to challenge this ruling. the ceo has been aggressive in is probablysitions consulted with lawyers and knows what his odds are at this point. the big question now for broadcom is where they are going to go from here. it is a company built through acquisition, buying other companies, reducing costs, increasing profits, and market cap has surged because of that. is he going to be able to find other deals to roll up the industry in make some acquisitions? so much for you that. it looks like this story is starting to wind up a little bit . coming up, fresh turmoil in
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washington, president trump firing his secretary of state why twitter, but how should markets be digesting the shakeup? we will be joined by the deep blue global investment chairman next. this is bloomberg. ♪
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haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. david: let's turn our attention to markets. inflation out of the u.s. , a fairly unimpressive treasuries,0 year mifid ii meets thursday next week. let's bring in our guest, tongli chairman of deepblue global investment. things have been challenged. where do you think that pricing
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is right now. >> fair pricing on the 10 year yield between 3.23% to 3.5%. 3.2%, il below would not be a buyer. i would stick to other inflation-protected securities. david: what you're saying is until we get to 3.2%, it is equities over bonds. at that point, you will see funds coming into treasuries out of equities? >> i think so. the valuation between stocks and bonds will be more balanced at 3.2%. 2018: the conditions for compared to 2017 are a bit more difficult from a market perspective, fed, geopolitics, and a lot of people have
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basically said this year could be the year bond and equity markets turn bearish. see any of that at all? >> not actually. i think people are scaring themselves. momentditions for such a andhe widening spread unforeseen leverage built into the system, either the financial market or real economy, but the leverage over all is moderate, especially credit sectors in the united states. levelctors leverage crisis,after the 2008 and barely cooked up after that. nowt is very moderate right and the public sectors leverage,
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it is in the hand of the fed in the global central banks, it is pretty high, but manageable and controllable. it is in the hand of the government. so i'm not concerned at the moment. haidi: sorry to jump in. everything that makes headlines tends to be chaos in washington. do you think the politics and geopolitics is just short-term marketplace -- market noise? >> i think so. a deeperhe u.s. wages trade war with china, if the trade dispute is managed as a current a deeper trade war with level, it is much negligible because they are talking about in posing attacks, a turf, on $60 billion of
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imports from china. that would account to 10% of the import and and export between the u.s. and for a and it accounts very small portion of gdp, so it is not a concerning thing. it will only create market noise at the current stage. haidi: you mentioned china, so wide-out we talk about that. we had the regulatory landscape shifting dramatically in china. you have the mergers of the insurance as well as the banking and securities regulators, a consolidation of power to the very top. what you make of all of it? it is a messy picture with lots of moving parts, but do think greater consolidation and this clampdown against leverage continuing coming is that a good thing for market participants?
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>> it is hard to say. it is good and bad. it is good long-term, but that will create short-term volatility. we have to focus on our edge as an investor and something that we can forecast. i would stick to my fundamental strategy rather than being short-term that trade war disputes and the geopolitical stuff. haidi: how do you position yourself for china? you have about 10% in chinese blue-chip etf's. is that strategy still suit you for 2018? >> yes, the file you wish and of chinese equities are still cheap. on top of that china is still in the early cycle of expansion, so that means the eps growth rate will pick up in the next 2-3
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years. david: if you are willing to tell us some of your trade secrets, and don't worry, no one is listening. what is one trade you are studying at the moment? uncertainty we have to live with, but what are you working on? >> i'm working on volatility. volatility is rising this year, but that when a change the general direction of the market. volatility is rising, on the other hand the return of assets will be lower than last year, so you have to make a better use of higher volatility to increase the yield of the entire portfolio. david: in terms of your funding currency i would imagine with the vix up, it will be more expensive. how do you find these trades -- fund these trades?
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>> the yen still percent a very unattractive cheap hedging to the portfolio managers, so yen will further appreciate. how are prior conversation, i mentioned the valuation of the yen is the cheapest in the world isnd also secondly the boj pulling back the qe volume and people are using long yen as a protection for the portfolio of risky assets. i still stick to long yen. haidi: what about the yuan? >> renminbi right now is a little overvalued. asia, the inclusion of msci will take effect this april, i think we are not going
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fxsee a fall in the yuan rate in the first half of the year. the second half of the year is more likely. haidi: always appreciate your time with us. globalhan, deepblue investment. there is one feature on the bloomberg we would like to draw your attention to. that is our interactive function. you can watch it at tv . of the dive into any securities or bloomberg functions we talk about. you can send us instant messages during our shows. this is for bloomberg subscribers only. check it out at tv . ♪
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david: this is "bloomberg markets: asia." i am haidi lun in sydney.
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a quick check of the business flash headlines. brazil preparing to retaliate against president trump's steel and aluminum tariffs and the potential tie up of boeing and embraer is at risk. the two plane makers have been in talks for months and local media reported a deal could be announced before the end of march. embraer falling more than 5% on the news. david: we are hearing of high-level changes at tesla. the corporate treasurer and president of finance has resigned to take up the role of cfo at another company. the departure follows that of the chief accounting officer for personal reasons, and the former global sales president john mcneil quick to join lyft. securing aswagen battery supplier vita $25 billion. the deal will pen the push into
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electric cars as tesla struggles with production issues on the mainstream model three. volkswagen says it will produce 16 factories to produce electric cars by 2022 and aims to turn by and he million the year 2025. david: lexus thinks it has found a way to catch mercedes in the high in boat business. the premium brand offers a that willuxury yacht carry 15 guess and carry a price tag similar to its peers. we are just four minutes and 30 seconds away from the release of data out of china. there we go. for retaile numbers sales, industrial production, and fixed asset investment.
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you are looking at a slight moderation from the last time we got that release. if that is anyme indication, it is a consistent theme across the chinese mainland. anyway, we will get you those numbers when they come out on your bloomberg terminal. hong kong and shanghai doing this, i risk off day across the region. , there is the chinese mainland results. watch thecontinued to abe government in japan. there looks to be some support within the party with shinzo abe apologizing to the people and distancing himself from the set of controversies. kospi lower.-
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risk off. we will get industrial production, retail sales, fixed asset numbers up next. this is bloomberg. ♪
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♪ 1:00 p.m. here in sydney. i am haidi lun. >> and i am david ingles. you are watching "bloomberg markets asia." ♪ david: markets in the asia-pacific on the slide this wednesday morning, the benchmark snapping a four day winning streak. trump firing the secretary of state after disagreements over iran. he learned of his fate via twitter. david: we are looking at new
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tensions in the white house. more tariffs on a range of chinese imports. -- investing in the u.s. haslinda: singapore investing in the same robust laws it has on illegal drugs. out on the money, let's get it over to tom with the details. tom: a bit of a mixed picture for the data points, beating in terms of the assets for february. marginally softer for retail sales. retail sales of february coming in at 9.7% increase, the survey had been for 9.8%. the number for january was 10.2%. industrial production beating the survey, 7.2%, strongly above
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what we saw in january. february, 7.2%. again, your today. fixed asset investment beating again, 7.9%. beating the surveyed expectation, a 7% pickup. the january number was 7.2%. february, 7.9% for fixed asset investment. both the numbers beating retail sales, coming in softer than expectations. significantly softer than january. the caveat, the lunar new year. a lot of people traveling, spending money on food items, for example. need to see march data to get a clearer picture how this plays out. it is interesting to see the retail sales number, marginally softer. the consumer, an increasingly important part of the economy.
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it is a strong beats. suggests demand for factory-produced goods remains solid. of fixed asset investment, always important to break down how much of the state is playing a role in this, versus the private sector. we did get softer pmi. strange trade numbers, with exports stronger-than-expected, imports a softer than expected. we are trying to get around out of chinese data for february. a stronger picture shows -- gives policymakers more of a window, trying to rein in debt and financial risks. that is something being discussed in the halls of power as china's parliament meets in beijing, the national people's congress. that meeting is continuing. moderate softening in growth is what bloomberg expects longer-term this year.
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are unlikely to concern policy makers in china too much of this stage. haslinda: unlikely to deviate from the overall narrative. slightly softer, but still resilient level of growth. is that the buffer that will be enough as beijing is looking to these wide spanning reforms. also with the trade tariffs not being off the table. that has to be the number one risk for china's economy thatthese trade tensions the trump administration seems intent on exacerbating. he is looking to impose tariffs above 30 billion u.s. dollars annually. like -- light-- products.posing it is a concern the u.s. will
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make it more difficult for china to invest in companies that are censored byo being the u.s. authorities. is a concern for trade headwinds -- it is a concern. are happening. there will be pressure within some rinks of the party to give a response, if a further tariffs are added by washington. this point, that demand growth we have seen in the western economy has propelled some exports in the industrial sector. we have to bear in mind, [indiscernible] and these pollution curbs having an impact as well. we saw a rebranding or retooling of the environmental ministry.
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expect the environment to remain a key priority. david: tom, thank you for that. tom mackenzie, live out of beijing. tom mentioned we are looking at potential cuts doubt putting capacity like steel. be external demand seems to behind the number, 7.2%. our guest, ubs chief chinese economist joins us. what is your guess behind this surprise number? >> it definitely beat market expectation. as we put january, february together, year on year it is more than 20% growth. that is very strong. also, investment has picked up, rather than decelerating, compared to december.
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these numbers are corroborated by strong imports in the risening of the year, and with commodity prices. construction activity seems to be robust and exports have picked up. the data -- david: does not seem to be consistent. can you tell us how this fits into the pmi we got? and pbi, which is only in the high threes right now? it is a yes and no question. year,e it is chinese new it is not sure they have done, and so on. the npc is done, what they said back then was, there were lots of orders of being put through the system,,
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none of which were executed -- system, none of which were executed. it should pick up. is that what you are getting from your research? tao wang: one thing we are looking at is the environmental -related production shots. -- shuts. they are supposed to run from november to march. we have not seen a negative impact. there is a little softening in december. probably likely in the first two months as well. does that mean underlying demand is so much stronger? it could pick up, it is possible, but we have to see the drivers -- property, infrastructure, investment, will that continuing demand continue to be strong? haslinda: what do you expect to
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come out of what has been tough talk on trade tariffs? are you imagining this will materialize into an actual downside? think the tariff from the u.s. is definitely a rising risk for china. the u.s. wills, not put a blanket tariff on a lot of chinese products, but they probably will target certain items that will win political points and put pressure on china. the macro impacts may be limited. but for certain industries, china seems to be taking market share from the u.s., we have to watch out. haslinda: what is your assessment so far? maybehave been headlines, we were under met -- underestimating these changes,
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new institutions, shifting of responsibilities, murders were announced yesterday, will translate to an practice. -- mergers were announced yesterday, will translate into practice. tao wang: particularly in the finance all sector -- financial sector, it contains shadow banking and so on. that is a positive. however in the short-term, a few months down the road, we would see more deleveraging. although this year in the first two months, we have seen a stronger-than-expected start to the year. thewe are a bit wary deleveraging will drive credit growth and therefore gdp growth slower for the rest of the year.
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david: what has the target been on gdp? the deleveraging willyou put that ta potential, not real trade war, but a potential trade war. think 6.5% is easily achievable given the structure of the economy now? tao wang: i think 6.5% is achievable. our forecast is for 6.6%. a bit of a downside risk potentially from trade war. growth,oment, u.s. european growth, global growth is strong. china will benefit from the recovery, compared to the impact to the u.s.. this is the baseline. if they put a blanket tariff on chinese product, that is a risk scenario. around 6.5% is attainable. the biggest risk is from china itself, if deleveraging is
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applied, government debt is seriously controlled. i think infrastructure investment will decelerate more sharply. perspective, don't look so much outside, look inside. thank you so much, ubs chief china economist. we have had some minutes to digest all of that. let's get it over to sophie to see what is moving and what is not. >> asian stocks falling, led lower by hong kong and japan. the nikkei 225 losing almost 1%. bonds climbing on that trump turmoil, adding to political risk, becoming a center stage focus in 2018. global manufacturing data may give investors pause. for example, while japan to deliver surprisingly strong the firsthere was
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quarter forecasting. lower than expected. industrial output beat estimates. chinese stocks continued to fall in the wake of the data. let's switch it out and check in on the currency market. i want to highlight what is happening with the aussie dollar. we are seeing the aussie rises 0.1%, coming off the session high it hit in the wake of that data. the u.s. dollar is on the defensive. i want to highlight what is going on in the commodities space, steel in particular. futures in shanghai extending losses. mind, a company has ordered a new -- take a look at this chart. that is arecovery, headwind to steal markets, as prices have been dragged lower
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by inventory set of search to an almost five-year high on the mainland. this is the blue collar on this chart. falling the most. also on the move, another company citing nearly 4%. we are keeping and i on defense players, as well. this one jumping 6.7% in tokyo. we are keeping an ion kobe steel as well. the company has been sued in the united states over its products. -- haidi: let's get first word news with yvonne in hong kong. >> president has upended's foreign-policy team by firing secretary of state rex tillerson
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and proposing to replace them with cia director mike pompeo. the president announced his decision on twitter several hours before he actually called tillerson directly. he told reporters they had disagreed over key issues, including the iran nuclear deal. reports in washington's a president trump intends to push ahead with trade restrictions and tariffs on china. totold his cabinet he wants have a broad range of products and on companies -- chinese companies looking to invest in the u.s. a package of tariffs were $30 billion a year. japan is exploring the possibility of a minister shinzo the possibility of a meeting between prime minister shinzo abe and kim jong-un. president moon and kim may
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discuss formally ending the korean war when they meet. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am yvonne man. this is bloomberg. ♪ haidi? haidi: what a trade would mean for chinese conglomerate. we go one-on-one with the ceo a little later on. of rextrump's firing tillerson, will it complicate plans when it comes to the north korea discussion? this is bloomberg. ♪
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♪ haidi: this is bloomberg markets asia. i am haidi lun in sydney. david: i am david ingles in hong kong. big news from the u.s., trump has fired secretary of state rex tillerson, proposing to replace them with of the current cia
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director, mike pompeo. joining us on set, jodi schneider, with of the implications for what this means on foreign policy. haidi: mike pompeo is viewed as a loyal trump supporter. intelligencerump's briefing every day since trump took office. that is what president trump wants apparently, in his cabinet members. he wants to make the decisions and have them carry it out. that is different from his predecessors, who delegate a lot of that function to the cabinet member. in this case, he wants someone who will carry out what he wants. he and mr. tillerson had split over north korea, over other issues, over tariffs. it seems mike pompeo will be closer to the president on these things. he is a bit of a trade hawk. and he will be a loyal footsoldier to the president. he still needs senate confirmation. dissent fromid of
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the white house slowly but steadily. in terms of the criticism rex tillerson attracted over his lack of foreign-policy experience, should we expect that from mike pompeo? jodi: he has only been in the cia job of the past year. he was a congressman before this. he was a conservative congressman from kansas. that will certainly come up. i think issues will come up about the cia, and maybe some things from their -- there. but also whether he will be up to the attack -- task. people who have been in congress do very well in confirmation hearings. haidi: thank you for that, jodi schneider. let's get back to our chief
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correspondent, kevin. what are the results, what did they tell us about the midterm elections and what to expect in november? isdi: -- kevin: this race close. democratb is the running against rick saccone. with 97% of the vote in, this race is net connect, conor lamb leading. but still very much too early to call. candidatedistrict donald trump carried by more than 20 percentage points in the last election cycle. it was instrumental in his ability to carry the state of pennsylvania, it turned red in a presidential cycle for the first time since 1988. i spoke with supporters of conor lamb, one in particular who voted for donald trump, and describes herself as a republican.
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that she says decency was one of the top concerns for her, as she looks of this administration. she was frustrated with rick saccone himself, the republican, someone she thought was to in line with his agenda. more than $10 million for the republicans, who largely out funded and outspend the democrats. cap sara gets for both have infiltrated the district. president trump himself campaigning here, as well as his son, donald trump, jr., and former vice president joe biden, a presidential run of his own. many view this as a bellwether. david: as you mentioned, it is too close to call.
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96%, 97% of the districts have reported results. should we expect something to come out, fairly clear, in the next hour or so? kevin: i don't want to predict anything. this is so incredibly close. there is a host of procedural hurdles which could be implement it, particularly with absentee ballots. i would be careful to predict exactly when we would get the results. regardless of who wins, or if we find out tomorrow or the days after, we will have to do this all over again. they could redistrict, and this will be redrawn. whoever wins or loses, we could see them run again in another district in a few short months. david: that takes place in november. thank you, kevin cirilli, live it for us at a pennsylvania. big interviews coming up over the next couple days.
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daybreak australia, tomorrow we have the blackstone group co-founder. steve schwarzman joined us exclusively to discuss u.s.-china relations, geo scholarship his program. michael mckee speaking to get his trudeau, views on paris, the status of nafta. given all the headlines we have had this week. that takes place 6:30 hong kong time. this is bloomberg. ♪
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♪ david: this is bloomberg markets asia, i am david ingles in hong kong. haidi: i am haidi lun in sydney. says thereom india is talk of buying allied metals
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and distillers. talks to center on the owner of jim beaver -- the owner of jim beam bourbon. giving them distribution rights. hnad: china's struggling group selling its 25% stake to help pay down some of its debt. helton agreed to remove a lockup. at the close, the stock had risen pretty strongly. the group has cut its stake in deutsche bank, and some of its properties in london, sydney and hong kong. one of the world's largest assets has been told to fix its own -- its money laundering program. failed toid icbc
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comply with the secrecy act and maintain adequate compliance. given 60 days to provide written plans for improving. this is bloomberg. ♪
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>> it is 10:29 in hong kong. china's factory output unexpectedly exhilarated, amid strong global demand. industrial production rose 7.2% in january and february from a year earlier, compared to 6.2% in a survey. retail sales, 9.7% up, missing estimates. president trump has been in california to drum up support for his border wall, persuading congress to find the money. he inspected eights prototypes in the desert south of san diego.
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it has pushed back from democrats and some republicans. he once $18 billion for the project and continues to insist mexico will pay for it. turning up the heat on the u.k., saying theresa may ignoring concessions but may will back down on open borders until 2021. she will lay out her vision next week, but brussels says she needs to pick up the pace. >> as each day passes, there is increasing urgency. the pressing nature means of the european union, the united kingdom, have to pass with pragmatism and transparency. >> the global economy will grow close to 4% next year. however, the brighter outlook
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comes with a caveat, following the u.s. decision on tariffs and the threat of retaliation by china. the european union and others. trade protectionism remains a key risk that would negatively affect confidence, investment and jobs. at microsoft say fewer than 1% of gender discrimination complaints of the company were founded. class action lawsuits shows almost 120,000 claims made by female staff between 2010 and 2016, only one was upheld. microsoft says allegations are based on individual circumstances, not indicative of systemic problems. russia has dismissed the british ultimatum to come clean over the suspected chemical attack of a foreign spy in england. sergey lavrov said it was nonsense, the attack on sergei ia.ipal and his daughter yulai
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-- russianglobal diplomat could be expelled. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. 0.6% down on them msci pacific. i would say the damage across other markets in the region -- let's get it to sophie. >> tokyo investors using the .unch make -- lunch break elsewhere we are seeing asian stocks follow a four day event. worrying about inflation, the changing of the guard at the u.s. state department, what that might mean for the trump trade agenda. they are assessing if this is a fair portrait of political
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uncertainty ahead. the new york times reporting more white house staff shifts could be pending this week. when you take a look at the damage report, shares in hong kong leading the region. hang seng index down by 1.25%. pulling up the board to show you sliding after being ordered by the fed to fix money laundering safeguards. mitsubishi among the biggest drags in japanese banking stocks. let's take a look at what is happening with the topix, japanese equities facing a cocktail of headwinds. g #btv 8069, shows the topix forming a so-called double bottom. the rebound in japanese stocks could be delayed. sophie, thank you.
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we will stay with japan in terms of how this and every other political storm seems to play out for japanese equity investors. they are in quite a situation because japanese shares should be thriving. profits are strong, yet japan is the worst-performing asian equity market this year. what is key? >> it has been such a difficult .lace to be involved in these first few months of the year, an onslaught, everything from trade war, worries about global inflation picking up, it has resulted in such a strengthening of the yen from where we started the year. that has meant all the fundamentals have been thrown out the window. ourselves howind japanese equities have performed relative to the rest of the market. this chart shows you the other developed markets. the topix and nikkei 225 are the only ones down on the year.
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as you mentioned, the economy is doing well. we see recovery. profit growth is happening like never before. you would expect these fundamentals to be an up peeling place -- to be an appealing place. they are affected by the geopolitical landscape this year. the yen strength is resulting in money being swept out. are those the two things i should be looking at -- a possible weakening in the yen and a possible dying down of political tensions? perhaps the two things that might rejuvenate investor trust in japan? adam: the bulls on that side of the argument would say, you can only do what you can control, you can only influence what is in your control. geopoliticalt,
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escalations can be forecast. on ouru can bank earnings expectations, expectations around at the japanese economy is developing under abe, with a loose monetary policy, that looks like it will continue on to kuroda's second term. if you are happy to take slightly discounted valuations, given how much equities have come off in the last six weeks, you can use that yen strength, geopolitical haven status, to buy into japanese equities, given the pullback. that is indeed what we have seen on our terminal. they like areas like japanese banks that have been unfairly sold off, and uncertain sectors within the japanese economy that get unfairly treated in times of these stressful levels for safe ravens. -- safe havens. david: thank you so much, adam.
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we are joined by a senior investment manager to talk more of whatw to make sense has been happening in the markets in tokyo. thank you so much for coming on the program. we will talk more a little bit later on. how thesealking about levels would be attractive. would you be a buyer at these levels? yes, we think japanese equities show considerable value, given the earnings growth of they demonstrate, the profit margins they exhibit, and the fact there are interesting cyclical sectors and the japanese stock market that show us a really good potential in ongoing growth of the global economy. david: how do we play that? we will throw in the negative factors. geopolitical
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stuff, and this will show up in a big way in the next set of results. can you put that together for us? your bullish view and the headwinds ahead? shaniel: i think it is really about selection and focusing on those really good areas of the japanese economy. yes, the stronger yen does reduce risk appetite. when you look at balance sheets. -- when you look at balance sheets, we think companies have 110 penciled in on their expectations. overall, earnings trends are positive. in terms of politics, we know this story has been around a while. we can't think about those in context of the fundamentals. we can't forecast of these issues, and think we as investors should look through them.
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yes, it will impact short-term sentiment. to this point of the yen being a lightning rod, drawing funds anytime there is geopolitical development, i want to pull up this chart, g #btv 24 6. you are looking at the dollar yen at 110. downward momentum, there is no support between 105 until you get to 100. is that a level where you see the inverse correlation come to play? shaniel: i think so. i think that would suggest there is much more risk aversion from the global financial community. indeed, it would correlate to something happening with the u.s. dollar becoming much weaker. we have seen the weakness of the u.s. dollar all of last year into this year.
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the global financial community opinion in terms of the fiscal situation in the united states and what we think about the credibility of the maintaineserve to inflation in the right place. we think communities are discounting the dollar because of this. if we see further weakening of the dollar, that will be reflected in the end. will worry international investors wanting to invest in japan. -nomics doneuroda all it can for the weakness in the yen? shaniel: what we have seen over the last few months, the jgb purchases or japanese government bond purchases by the bank of japan have started to wane because of yield curve control, they capped the jgb at 10 basis
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points. it has not risen to that level in recent months, hence, they have not supported -- provided support. they are supporting the stock market, but the overall liquidity they have been supplying, financial markets have fallen in recent months. global one of the areas investors in japan need to take heed of. do think there is a misunderstanding, then? just because they are buying less, their tapering? shaniel: yes, less buying is being interpreted as a stealth taper. this is about the credibility of the bank of japan. if yield curves did rise, they would come in substantially to protect that level of the yield curve. i think it is working for them in terms of credibility.
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but what it means is slightly less liquidity into the market. i think the minutes this morning did signal concern when it comes to how it is translating into the markets. .1%.said unlimited bids at how does this develop? what is the point when it becomes worrying? at the moment you said it is an old issue, not yet. matter: it will start to whether the individuals involved are starting to make policy decisions they stood on politics, rather than economics. that is what we have to worry about. there could be a shuffle in the trump team and whether that could change the policy framework in japan. until we know those kind of answers, we cannot assess the economic impact of such events. haidi: we are getting lines from
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the bank of japan governor kuroda. saying so far, the central bank to considerpoint exit details, as far as 2% growth. is this the same old story of, whatever it takes? we know they expect inflation to reach the 2% target next year. ourselves think that is a hard level to reach for them.
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i think they are reiterating what most people expect. i think they are saying they will be supportive and continue to enact the current policy, should they be under the 2% level of inflation. david: i don't think i have come across anyone who thinks they can reach the 2% target next year, which tells me they will have to do something more, change the goal post, or change the language from a short to longer-term goal. should we expect a surprise from the boj over the next 12 months? japan isthe bank of much of an enigma. we don't know what they will do. out with policies like yield curve control, that was different and unexpected. we know they will take slightly out of the boss -- out-of-the-box solutions. we will be watching closely, but trying to predict is quite hard. david: absolutely. it has dominated headlines across monetary policy headlines. thank you. coming up on the program, testing the waters when it comes to trade.
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we're asking a chinese conglomerate how president trump's tariffs will affect their business. this is bloomberg. ♪
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haidi: breaking news, finality about the noble group or reporting of a binding pact with of the final restructuring. getting some of these details, the group made up of ad hoc hedge fund participants, representing 46% of claims. saying they will get a new three-year, $600 million trade financing loan as part of the deal. implementation of the restructuring process taking place in the upcoming months. getting a facility as part of the pact as well. monday, the company saying they were close to final terms on the restructuring deal. in march, deadline
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they had missed the coupon payment on a 2022 bond that was due last friday. this was a drama three years in the making. the asian report into commodities trading house. getting more details as they become available. a final restructuring deal has been reached, according to noble growth. -- noble group. the company employs nearly across areas from production to agricultural technology and financial services. company isold me the very closely watching these trade tensions with the u.s. >> i can't comment on how my colleagues in china might look to position themselves. we have a fairly large trading
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operation, particularly in north america. we are instralia, regular communication with our colleagues. it is probably too early for us to say if this stage, but -- at this stage, but it is something we are alert to. we talked a long time about the emergence of the middle class. we are starting to see plateauing growth. but we know president xi jinping has a grand ambition in terms of alleviating poverty. how does that translate into growth expectations? how much more growth do expect china to have? >> that is a fantastic question. the statistics don't lie. the reality of the numbers today, only around 2%.
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the middle class on international standards in china is around 145 million people. interesting work projects that the middle class in china will be around 960 million people. in our view, they have only just started the journey. we see a significant impact on the region and world. and a very significant impact and opportunity for us and australia. as we think about what we do in australia and growth, being focused on opportunities in and china and the asian markets and helping to find growth. what product do you see having the most growth potential? time spent a lot of [indiscernible]
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exportingpartnership to china. there is a real focus on brand, the consumer. there is a migration of our business broadly. hope group'sas new ceo for australia and new zealand, nick dowling. the spike against fake news in singapore, why it takes a hard-line approach like it does on illicit drugs. this is bloomberg. ♪
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david: this is bloomberg markets asia. i am david ingles in hong kong. haidi: i am haidi lun in sydney. a hard-line approach to illicit drugs, singapore said to be tackling fake news in a similar fashion. planning newe roles that could affect facebook, apple and google. let's get more on this and why they are doing this with a jason, who joins us from singapore. why are they so concerned about fake news? i know they are concerned about news in general. >> [laughter] that is right, haidi. singapore has always been worried about what harm can be inflicted on society through
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malicious information. that is from a racial and religious harmony point of view. the view is that today, with new technologygy -- new enabling people to disseminate false information so quickly, they need to crack down hard on this, and nip and would be purveyor of false information in the bud. david: david here in hong kong. one would be tempted to say it might encroach upon freedom of speech in singapore. is this an attempt to restrict freedom of speech in the country? the minister that i spoke with yesterday was adamant that that was not the case. what singapore is trying to do is protect the integrity of information that we see and and that false information undermines democracy.
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what they argue they are trying to do is protect what we see and read online, to ensure what we see and read is actually true, and by doing this, they are strengthening democracy, strengthening free speech itself. david: what is the implication of business? companies out of singapore, should they be concerned? does it affect the way these companies do business in the lion city? jason: yes, i think they probably should be concerned. they are already expressing those concerns. a lobby group here that represents those big tech companies like google, facebook, apple, they are proposed to the inquiry beginning today. they proposed they be allowed to adopt a softer regulatory to stopping online
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falsehoods from spreading. the singapore government is a little suspicious of that. they are saying come out why has that not happened already? why haven't you implemented a self-regulatory model to stop the spread of fake news? perhaps the singapore government is open to how a self-regulatory model might work. but at the moment, i think they are leaning toward implementing thatf-regulatory regime, might involve new regulations they are not happy with. david: jason, thank you, live out of singapore. more updates on noble. this is bloomberg. ♪ mom, dad, can we talk?
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sure. what's up, son? i can't be your it guy anymore. what? you guys have xfinity. you can do this. what's a good wifi password, mom? you still have to visit us. i will. no. make that the password: "you_stillóhave_toóvisit_us." that's a good one. seems a bit long, but okay... set a memorable wifi password with xfinity my account. one more way comcast is working to fit into your life, not the other way around. retail. under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations.
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every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. alisa: i am alisa parenti in washington and you are watching "bloomberg technology." here's a check of your first word news. president trump is in california inspecting prototypes for his proposed border wall. he was asked which party was the hardest to climb. he said they want to break the flow of illegal immigration. >> delegating his responsibilities after the work they to deputy john sullivan. tillerson was fired today by president trump. life my return to private is a private citizen, as a proud american i am proud of the , opportunity i have had to serve my country.
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