tv Bloomberg Daybreak Asia Bloomberg May 21, 2018 7:00pm-9:00pm EDT
>> 7:00 a.m. in hong kong. i'm yvonne man. "daybreak: asia." we are looking mixed ahead of the open. yen and gold are tumbling. the dollar is on the retreat. west texas crude climb into its highest since 2014. betty: i'm betty liu in new york, just after 7 p.m. the white house sees momentum building in talks with china this week. any plotting a new strategy, three-year move away from hardware and into more lucrative areas. ♪
betty: we are always watching the markets so closely, one big investor, or other investors like to watch is warren buffett. i wanted to pull up the chart, which i found some interesting. finally warren buffett has fangn on the thing ride -- ride. one stock doing well for him. apple shares, as we know warren buffett has shooed away from tech stocks, but he finally got on the bandwagon. he got onto apple, and they share rise of apple, the rally of apple shares, they have been his more traditional stocks like coca-cola. he has always said, that he has tried to buy stocks of companies
he understands, that is why he likes coke, but not doing well for him these days. yvonne: it is interesting. it has really turned the sentiment around the fangs in particular. we saw a boost when it comes to equities. look at the volumes, still pretty low and we are talking about people not really rushing to buy. you take a look at turkey, italy, em's, those will be problem spots when you take a look at how things will be faring for asia. withast the trade truce the china is helping sentiment. betty: it has helped. take a look at the markets and how they closed, it was a walking back of trade tensions. points, s&pup 300 and nasdaq in the green.
maybe looking at a higher open in asia. yvonne: we are set up to be mixed. equities, new zealand is flat at the moment. take a look at sydney futures, going the other direction. and korea is closed. this is how futures were going a couple hours ago, going the other direction, but pretty much flat. so lackluster right now. the dollar rally coming off of a bit -- off a bit, but the 110.r-yen around and the oil rally is boosting 7587.urrency to 75.87 -- . and it is the lira here, new lows on speculation that the turkish monetary policy could be to lose to guard against the double-digit inflation that could be happening in the forefront.
take a look at the bond markets, 3.06 fors unchanged at the treasuries. most action has been in europe, italy bonds getting pummeled. yields the highest in 14 months. 16 basis points higher when it comes to the 10 year in italy as the geopolitical risks seep back into the front lines with the new coalition government. no trading and south korea. hong kong markets are also closed, observing buddha's birthday holiday. now first word news. alisa parenti with more. alisa: the white house says momentum is building with china, as the two sides look at cutting the trade deficit. steve mnuchin says a tentative framework has been reached after the visit of beijing's tight financial advisor, although -- top financial advisor, although china has not committed to a
specific figure. washington remains optimistic. >> a lot of momentum from the framework. and as i said, secretary ross will be going over there to look at the different amount of purchases and the tariffs on production, so i do not see any pause at all. i would say there is more momentum. alisa: the u.s. ramping up pressure on venezuela following a sham election. they are banning purchases of debt owed to the government. trading in venezuela grinding to a halt as investors digested the order. the u.s. is ready put sanctions on the oil industry, which are under active review. >> we may will see a freefall of the production from venezuela, both in terms of the amount of oil and the quality of the oil. that may mean it is one of the major risks for the oil market
in the next months to come. 'sisa: as mentioned, italy borrowing costs surging as the parties attempt to form a government. the country punished with the administration seemingly prepared to boost spending without regard for the european union rules. that means a note maturing if every 2028 now yields 10 basis points more than a euro denominated sovereign from indonesia due for months later. democracy protesters in thailand planning to march to the government house on tuesday on the fourth anniversary of the military coup. it is seen as the most direct challenge yet to the ruling government which has repeatedly promised elections come up it remains in power. economic growth had a five-year high last quarter, beating all estimates as a food output added to the gains enough private consumption. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries.
parenti. this is bloomberg. yvonne: thank you. a closer look at the market close. easing concerns about trade wars and tariffs, helping commodities and bond yields, the s&p snapping the two-day losing streak. betty: the doubt up -- dow up as high as 300 points. >> the news of a deal, at least a substantial deal between the u.s. and china, tamping down the trade war for now. as was strategist said it, it was the tough talk of sanctions that really influence the market. it clearly made a difference. what we had was green across the screen, the dollar weaker. and a lot of the safe haven plays were actually giving back earlier gains. we will get to the surge in crude in a minute. let's go to the big movers in stocks. real investory of
excitement about some of these stocks. boeing has returned to prominence, up 23% and one of the leaders again, as it was last year. and chesapeake energy, a reflection of the huge surge in oil prices. a lot of social media around chesapeake, saying as long as oil is up chesapeake bay is a cash cow. some of the short positions in chesapeake also being covered here. and world wrestling getting a huge boost from fox, which it said it will air its smack down show, which is popular here. and going into the bloomberg, onward and upward is what the chart on treasuries is called. you can find it in our library. and it is about the treasury issuance, the blue upward grade, adding pressure to higher yields. five-year and a seven-year 2010. the largest since
they have broken support levels. again, the big focus is on the bonds. and this big issuance is adding to the pressure for higher yields. betty: isn't like everyone, or more people calling for the 4% on the 10 year now. with commodities, it looks like we have averted a trade war for now, really helping commodities. but plenty of geopolitical risk with oil prices. su: venezuela adding to the bullish pressure. and we are looking at a weaker dollar. take a look at the chart, up 20% year to date on crude, that is mainly traded in new york and is widely used in the u.s. the today chart, you get a piece of the action where you see how it really took off going late in the day. fresh highs we have not seen since 2014.
this chart is called rally at the back, the five-year prices that are out facing -- that are outpacing the gains. a lot of attention given to the $80 oil, but the pace at which they are rising further out on the curve is where the bullish bets are being played into that indicates that long-term the price direction is looking higher. back to you. betty: thank you. su joining us from new york. yvonne: president trump's former strategists steve bannon has hit out at steven mnuchin for his role in the trade talks with truce anddemning the saying it does away with recent beijing. with greg, this administration has backed away from the threat of the trade war right now, so what is the strategy moving forward? greg: it does look like they
have backed away from the trade war, at least for now. we heard the administration was not going to impose the broad swath of tariffs. everybody was questioning whether there would be a trade war, but for now the administration today seemed to sound and optimistic note. howy kudlow discussing china was open to, or could potentially be open to american financial companies, companies setting up asset management companies in china to manage bad debt. and talking about potentially doubling, or almost doubling the purchase of american farm exports. so it looks like there is movement in the right direction. again, we heard from steve mnuchin, the treasury secretary, that the trade war is on hold for now, which not everybody is happy about. yvonne: no, not everyone is happy about it and maybe not everybody believes it is on hold for long. the trump administration also
laid out in approach to iran. mike pompeo outlining some of the more details in his speech. what exactly did he say it what was the reaction? greg: mike pompeo today delivered a speech, kind of outlining iran moving away from the accord. thatsted 12 requirements they would need to meet. among those, it was halting their enrichment program, allowing nuclear inspectors to go everywhere in the country, and into their ballistic missile program. now, this is pretty tough talk characteristic of the nationalist approach to the administration, you are either with us or against us approach they have taken the former policy. -- foreign policy. not everybody was happy to hear it. iran kind of saying it was
unacceptable, but even the eu foreign-policy chief had said that the speech did not really the accordaving would make europe any safer, some extractions to the speech. reactionhat about the on china? china playing a may be bigger role than we imagined with korea and china and trade talks. obviously china is a key player here and the trevor minister to has linked korea issues. seen that the trade war seems to have been suspended. we also know that china played a huge role in whether a deal succeeds or fails with north korea. we know that kim jong-un has met twice with china in recent months, which the president of he haswe know that
talked by phone with president trump to discuss the deal. china has a huge, huge interest in this. they have long sought for this dialogue so that they could avoid war on the border, but they also do not want to north korea being pulled too far into america's orbit, so they will be keeping a look at this. again, we have seen donald trump linking the two to trade and a north korea, so a lot of interest. yvonne: indeed. thank you so much. greg sullivan, bloomberg washington correspondent. new energy finance critics runaway sales of electric vehicles later this hour, so we was the how the auto industry is changing. yvonne: up next, investors are upbeat over easing trade tensions with china. we look at this with hose a ra -- jose rasco next. this is bloomberg. ♪
the major market open this morning in asia. japan features looking a little bit negative. don a 10th of a percent. dollar yen at the moment, given the fact we just saw the best quarter for dollar-yen since 2016, but some of the rsi's saying the trade may have been overbought, holding around the 110 this morning. yvonne: this is daybreak asia. betty: i'm betty liu in new york. u.s., surging in the cheering the talks with u.s. and china. despite the recent tension. i want to bring in jose rasco. thank you for joining us. are you trading at all or investing at all, based on are week in a trade war or not with china? scenario best kiss that's best case scenario would
be cooler heads prevail. clearly, china is in the middle of this secular boom that will last another 10-20 years before they are back to the level to where they want to be in terms of growth and per capita income, so we will see this or these generations fluctuate, but the key thing is we need each other. it is a very inclusive world today and to have a trade war makes no sense. betty: ok, so when you wake up every morning, what would you say is the top issue on your mind, treasury yields, economic growth, is it earnings, what is it? jose: uncertainty in markets. with the the fundamentals are solid in the u.s., we are comfortable with the u.s. economy, and comfortable with asia, selectively. betty: what do you mean? jose: you do not want to buy the home market. we see areas of concern, the same is true for the other areas in emerging-market spaces. it is a barbell approach. so my big concern is
uncertainty. the fundamentals are there for both sides of the equation, we need to remove the uncertainty. betty: in em asia, where the biggest opportunities? jose: some of the monster economies, china, india as well. if you look at china, anything from technology to demographics, to the government being a slight negative, but you look at the explosion of the middle class, it is a cyclical and secular opportunity for us. yvonne: jose, when it comes to em space you looking at positioning more than fundamentals, given the fact that some of these countries really rely on foreign funds now, do you think em is more exposed than 10 years ago? jose: that is an interesting point. in what sense more exposed? yvonne: i am talking about just how much the buildup in em debt we have seen, also with the foreign portfolios investment in
em, it has already exceeded reserves. so is em still at risk? jose: you have seen a rise in corporate credit and debt, but that is not just an em story, so you want to be in the places where you will see the growth, people who can't pay off the debt they are taking on. nobody is growing faster than the emerging markets, with a real focus on china and india. if you look at the structure alone, we see tremendous opportunity to grow and produce revenues and help pay off some of that debt. yvonne: of course. talk about the em currencies. we have a chart that highlights what we have seen, the negative correlation between the dollar em rise we have seen against currencies, strong at the moment. should we continue to expect a further breakout of the dollar? jose: we do not see a big rise in the dollar from here, it is more trading range oriented from our perspective. the rescue have is you could see
some economies like turkey and others, where you could see deterioration in terms of the fundamentals. that could result in some downward pressure on currencies, but over all, no, we think that em currencies are fairly valued for the most part. betty: what happens when the dust settles, at what point do we look at these central banks and say they are behind the curve? jose: that is a great point. we saw that in mexico, in argentina. so we will see more of that. ratesd began to raise slowly and they are moving to remove the accommodation, both at the short end in terms of raising rates, and at the long end, in terms of reducing the size of the balance sheet. no question, central banks will have to respond or see further pressure on their currencies. we think they will manage that tension, as it were, and the opportunity for growth is where we want to be, especially in emerging markets asia. betty: back here in the u.s.,
what do you think of the earnings season so far? jose: we were looking about 10% or 12% then tax reform came through, then people talking 15%, and we got 26%. get anything approximating the 20% growth rate for the full calendar year, equities are looking pretty attractive. we were at 19 times forward earnings in december, in january, now at 17 times. betty: so it is a buy opportunity. jose: interesting to say the least. betty: why do you think the numbers have reflected -- what is the market is reflected these numbers? jose: we have seen the tension, whether it is war, trade tensions, the iran situation, all of this uncertainty. and we saw it in the trade today, where people saw some resolution of the uncertainty and the markets took off. betty: right. before we go, oil prices, will that be a headwind for the
economy and the markets? jose: for markets in general, the oil prices are not necessarily a bad thing, the higher prices. 25 years ago, oil prices that high were a bad thing, because we consumed a lot per capita, but today the consumer consumes less oil per capita than 25 years ago. the heartland of the country is doing very well with higher oil prices. so it is a slight negative for the consumer, but a positive for the american economy. betty: thank you so much, jose rasco. now, we have much more ahead. bloomberg users can interact with some of the charts you just saw, you can access them on tv , browse a recent chart or catch up on key analysis, and to save the charts for future reference. this is bloomberg. ♪
yvonne: this is "daybreak asia." i'm yvonne man in hong kong. the latest business flash headlines. cefc has defaulted on more than $3 million of bonds due on monday. shanghai international group warned a week ago it may not be able to repay and the founder and chairman stepped down amid an investigation into the company's financial troubles. that is the fourth default' in china onshore bond markets. and seeking to refinance half $1 billion of debt, clearing a list of maturities until 2020. the toymaker selling bonds, adding onto an offering originally sold in december. it will retire all 2.35% notes due next year and extend maturities to 2025. mattel has been hit by the failure of toys arrest, one of their key retailers. betty: a top indonesian coal
mine already in dispute with noble group says they are looking to cancel their supply contract over the controversial debt restructuring plan. jakarta-based -- says they are handing control the creditors, allowing it to a know the deal completely. noble's ability to retain contracts and trading deals is crucial to its hopes of dealing with more than $3 billion of debt. >> tesla hopes to bring a letter cars to the mass market, hit by an unfavorable review from one of america's leading consumer magazines. consumer reports will not recommend the model 3 because of poor braking distances and unwieldy controls. it says the stopping distance, 60 miles per hour, 36 meters is far worse than any contemporary car tested. next, the new ceo and a plan for the future, how sony is looking to reinvent itself. this is bloomberg. ♪ mom, dad, can we talk?
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>> 7:30 a.m. tuesday in hong kong. a holiday in the city. a steamy morning. 75% humidity. betty: pretty warm today, 7:30 monday evening in new york. a nice shape up in the market. >> you are watching "daybreak asia." >> mike pompeo has told iran to halt an iranian enhancement and give independent inspectors access to the country or face
the toughest u.s. sanctions in history. he gave a list of a sick requirements that tehran must meet if he is to avoid punishment. theecision to abandon iran deal. >> this doesn't change the course from the unproductive path that has chosen to the one that joins the league of nations. thee will wind up being strongest sanctions in history when we are complete. >> president rouhani says it is unacceptable for the u.s. to dictate to the world and scoffs as a man working for years in the spy game now working in government. u.s. government is a sham.
the white house chief of staff john kelly has set up to meet congressional leaders, the fbi and the justice department to review classified information related to the russia investigation. it isn't clear what documents will be made available. the decision comes one day after trump demanded deep doj will investigate whether his campaign was infiltrated by opponents and bloomberg has been told that china is planning to scrap all limits on the number of children a family can have. this would be a historic and to a policy that scoured countless .uman rights issues with a rapidly aging population and 30 million more men than women, they shifted to a two child policy in 2015. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. check us out on tictoc on twitter.
this is bloomberg. ♪ breaking news coming through from sony. they agreed to acquire emi music publishing. this deal will be about 1.9 alien dollars. sony will buy 60% of the country -- of the company. the is an hour away from the midterm plan that we are what theyom the ceo, can actually shift away from two more software and services. when it comesions to merging the movies and music industry to one unit. that is one to watch here. we will watch them as we count down to the three-year plan. here out ofer salvo sony, that plan moving more into content and subscriptions, for instance. this plays into that.
we are counting down to the open in tokyo and sydney. south korea and hong kong are off-line for the holiday. there is little in the way of distract. what are you watching today? comment from a china regarding the trade truths, another thing we are watching is the china central scrapping the family planning policies as early as this year. sony may want to boost the romantic music division with emi because of that. this decision will do much to change the trend of declining words with factors like young chinese not wanting to have kids because of the costs or the fact that there are less fertile women in the country. watcht comes to stocks to on the back of this, there are some stocks on the radar. milk powder makers and maternity and childcare
stocks may likely move. so checking in on the future, we are set for a higher open. check out stocks in wellington. with leadingd advances over 1% for the two day drop there. yvonne: there are a lot of questions about how expensive it is to raise a child in china these days but the broader market we see a meltdown in italian debt. still loyal when it comes to turkey. a shadow on asia today? be gettings will punished. given the concerns over the incoming government's fiscal plan area take a look at this chart that i want to highlight. for italy have searched which has pushed up the italian 10 year yield. the line in white is about indonesia. for developed countries to be
paying a higher premium over and emerging-market counterpart isn't great but this is one of the most battered markets. ouch for italy. betty: thank you so much. sticking tokers are their guns with only gradual rate hikes and what is still questioning whether hikes are needed. kathleen hays has the latest. let's start with the lonesome dove. kathleen: he has been dovish for quite some time that it is interesting to see what he is focusing on. some say that inflation is rising and they are ready to keep raising rates. neel kashkari was doing a session in indianapolis and one of the big things he brought out was his concern with the flattening yield curve. let's listen. >> 8:00 has been flat for the
past few years and we are not flat yet and we are not inverted yet but we could be. we could flatten the yield curve. it really depends what happens to the longing of the curve. that is what i will be paying attention to to get a sense of whether we are overdoing it or coming close. that will give us an indication on where neutral is. betty: a picture says a thousand .ords this talks about the flattening frenzy we have seen. the white line is the spread 10 year.wo year to down 49 basis points. not as flat as it was. but you can look at the trend. five-30.look at the that is around 27 basis points. if you get two more hikes or three more hikes at 75 basis points then some fed officials li say youashkari
could get a flat curve that inverts. the other thing he is saying is not risen.have still problem yet,'t a let the economy grow. plenty of time to hydrate if we need to. this seems to be a long way from consensus. kathleen: patrick harker, the president of philly, spoke today as did the president of atlanta and pat barker said that he sees to hikes but maybe three if inflation accelerates. he says it will go up at least 2% but maybe as high as 2.5%. no rush to raise rates. he said, and yet to neutral. see how it plays out. -- biggest risks for had four fed policy are trade and what happens with immigration policy.
bostic also sees an inflation overshoot but it is ok, two more rate hikes. the yield curve is presently on all of our minds, he said. and he is a fed voter this year. everyone has a voice at the meeting coming up in june but the voters are the ones we see driving it. yvonne: it is interesting we see such a division within the fomc. what is the market pricing in at the moment? kathleen: the bond market, depending on where you look, is inching ever more closely to a hawkish fed. not that they aren't fully on board with three rate hikes. i want to show you one more chart. this is what you are looking at, your dollar future contract expires at the end of the year, december 2018, and those of the contract spreads between december of next year. this reflects tightening expectations. it has broken through a range
that dates back to 2015. now, long market says two rate hike increases that a month ago they will barely pricing in one. so not flat and on board with the most hawkish people for the fomc but the bond market does say that maybe they will move a little more to get tighter policy than they thought a month ago. yvonne: kathleen hays there, joining us from new york. following breaking news we just had from sony. the company is buying out emi music publishing for $1.9 $1.9 billion. they will pivot into the lucrative entertainment and subscriptions. let's go to tokyo now with ray stevenson. tell us more about the deal with emi? how does this fit into the three-year plan of the new ceo?
ray: it is a perfect fit when you think about it. we knew the emi deal had been in the works for a while. so in and of itself isn't a surprise. but the timing is interesting. lesse about to hear in than a while from sony's new ceo about his land for growth. and essentially what he will be talking a lot about is on content and services. sony underwent a five-year turnaround under the last see up -- the last ceo where it transferred from all the traditional hardware -- televisions and gadgets -- they were all kind of turned into businesses that were much less of a focus for the company. now the question is growth. yoshida, ast -- and
a new ceo, growth will definitely be a part. betty: it does make sense with what you outlined as the strategy at how is emi going to underscore this plan? reed: yes. emi is a music library. sony has always been a music since the acquisition of columbia more than two decades ago. with is part and parcel its movie business. and the interesting thing is whether sony will figure out some sort of way to package them into a product or put them into other products. the higher grow margin content and services business. so this is really adding a bit of firepower before it lays out how it will turn that into cash flow. betty: all right. reed stevenson, thank you.
asia."this is "daybreak yvonne: the coming years are expected to bring a tectonic auto industry with electric vehicles on track to change the future of driving. that is the report from bloomberg energy finance. they predict that by 2040, 50 5% of all new car sales will be battery-powered. china will be in the driver seat for the next decade. we have this flagship report. >> i am electrified by this. the champion of sustainability as with all of the reports about
global warming, this is positive news. china, the top headline is that by the year electric of all new vehicles will be brought by by peoplewill be off in china. this is huge and outstrips everything happening in bloomberg. hop into the bloomberg terminal. this is in the gtb library and i want you to focus on the blue bars. that is china. china's new sales from 2015 and we see it bump here from 2020-2025. then it fades a little bit. bomb of 50%,iggest up as much as 55% in 2022 and continuing through 2025. it does start to fade through 2040 but in terms of a country level, 28% is where we are at
when we hit the year 2040. relative to the other colors, yellow is europe, united states in white, green is the rest of the world. that has a lot to catch up there. but relative to the economic will, the chinese consumers will be the ones to power this ahead. this face is a lot of support from beijing officials who are saying new regulation to longer-range vehicles get more tax incentives and there are license plates. more charging stations as well. which has always in a bottleneck around the world. one thing is that if you don't have a charging station, at least you have a better lithium-ion every. and you also have a falling price for that.
because hopping back into the bloomberg terminal, i will show you the fall in battery prices here. again, the gtb library. we look at this through 2021 and 2022, it falls to $121 for 1000 kilometers up to 2030 where it becomes $70 u.s. which is amazing and is why they put this out. for all of the ed around they world -- around the world will be part of the fleet globally. to ramyhank you so much inocencio. you can keep up to date on the bloomberg terminal and get commentary and long-term forecasts. go.ck that out at bnef
-- companies like tent and music and entertainment -- the value has jumped in the secondary market more than $20 billion according to data compiled by equity. they carry music and streaming apps and investors want to know when it's going to go public. robert, good to have you with us. i have seen some reports. if we count the number of ipos that are expected to come out in the next 6-12 months, it is $60 billion coming into the market? a huge amount is going to hit the market. we have seen an enormous amount thenvestor appetite in space. we focus on companies before ipo, think spotify and dropbox. we traded these before they went ipo.
for marketk to us color and to trade those names. betty: to see where they are pricing. but what is going on here? is it fomo? fear of missing out? you are going public so i need to go public too? a year ago, many of them were not going public and were able to raise money in the private market. they still can. i would also say that this opens it up to invest in public markets to put dissipate in the growth stories. not all investors globally are currently trading pre-ipo so there are motivations for why companies do that. talk morewant to about what we have been seeing with mid chinese tech companies that listed this year and last year in hong kong. this chart highlights the performance we have seen and -- thesehese thoughts
stocks are well below the price that we saw and the initial lows from the initial ipos. why do you think that is? down to valuations and some of these companies were priced too high? robert: in the u.s. you see stories that are not great. blue apron is one of them. and then you see companies that have great ipo follow-on performances. sign anddoc you others. you have to pay close attention to the filings. i don't think you can draw out a theme that late stage pre-ipo companies are necessarily overvalued. forne: doesn't bode well the likes of xiaomi or tencent music? i think it does.
i was listening at how warren buffett is looking at the stocks on the program. though if you think about where investors are paying attention, they pay attention particularly in technology, but increasingly into technology companies in china. months,o back 12-18 u.s. based investors were focused on the u.s. pre-ipo market. fast-forward to today and i spend a lot of my time in hong working with u.s. investors. because they are very focused on the chinese tech companies, given the population and cyclical and structural changes. there is a lot of growth to be had for the marketplace tech businesses. betty: tell us about the u.s. banks and what they are doing to woo the chinese tech ipos? robert: i can't speak to what the bankers are talking about. they come to us reg looking for information and color. come to us regularly
looking for information and color. tut if you look at tencen -- users.y have that tells you about the size of the market. it isn't escaping attention of u.s. investors. we see chinese regulators and officials pushing for the chinese tech companies to list at home through the cdr's. what impact will that have on the market? robert: near-term, u.s. market will lead the way. it is the deepest capital market in the world and the u.s. enjoys the strongest rule of law. adon't think that is near-term story. i think this is very good for both parts of the world to have businesses listing in each region. i think it is favorable for everyone. robert hilmer there from equity joining us. you can always revisit these charts we show you on the
yvonne: a quick check on headlines. wells fargo says it will -- lending for auto sales. they will polish public image. the ceo told bloomberg that some market still concern him including housing and the bank area may face important challenges. he also says they could have done things differently. >> what i can say is that there are lots of people -- there are lots of things we would have done differently over the last few years but over the last couple of years, the changes we're making in the company to make sure that customers are taking care of and that we are fixing anything rogan and that
we are building a better company by making these long-term decisions, we are absolutely going in the right direction. ge shares gain the most in a month. a deal valued at over $11 the ceosthat furthers efforts to streamline operations by selling at least $20 billion in assets by focusing on key markets such as aviation and energy. they may further reduce their dividends. has won thekstone battle for the hotel -- the hotel trust isn't giving up the fight. they had agreed to the cash offer but over an hour later, a fourth proposal is substantially superior. two thirds of shareholders need to approve lack stones offer. and coming up in the next hour
betty: it is 8:00 a.m. here in hong kong. welcome to "daybreak asia." specific markets look mixed despite a surge on wall street. the dollar on the retreat as well. crude climbs to the highest since november 2014. and i am in new york where it is just after 8:00 p.m. on this monday. the white house omentum holding with trade talks. a mixed reaction. thehyundai shelves the organization plan in what is seen as a domestic victory for
activist investors. yvonne: it looks like we are set for a mixed open here. a lot of questions remain, what it means when it comes to the dollar trade. we had the 2018 highs this week and last week. we have really broken the downward trend we saw for much of last year. take a look at the rsi indicator, it feels like the dollar-yen is feeling the overbought territory. but a lot are saying that it is dollar is like catching a knife in the moment. betty: it does feel like that. manyr we have heard from of our guest saying it looks like the emerging markets can withstand a strengthening dollar. although maybe less so in latin america.
goldve seen investors exit as the dollar has continued to strengthen. let's get to the first word news with paul allen. has told iranpeo to halt uranium enhancements and give independent inspectors access to the country or face the toughest sanctions in history. he gave a list of 12 a sick requirements that they ran must tehran must meet. this follows trump's decision to abandon the iran deal. >> the sting of sanctions will be painful if the regime does not change from the past it has chosen to one that rejoins the league of nations. these will indeed be a the strongest sanctions in history when we are complete. paul: it to a swift response
from tehran. says it isouhani unacceptable for the u.s. to dictate to the world and stocks -- and scoffed at a man from the spy game now as a top diplomat. saying that washington has dictated to its old interests. u.s. is ramping up the pressure on venezuela following an election decried as a sham. banning purchases of debt owed to the government including the oil company. trade ground to a halt on monday. setu.s. has already sanctions on the oil industry are under active review. >> we may well see a freefall of oil production from venezuela, both in terms of the amount of oil.nd the quality of
of the majore risks for the market in the next months to come. that liberty has been told china is planning to scrap all limits on the number of children a family can have as soon as this year. towould be an historic end the policy leading to human rights abuses. a rapidly aging population and 30 million more men than women, china shifted to a two child policy in 2015. global news, 24 hours a day. powered by our more than 2600 journalists and analysts, in more than 120 countries. this is bloomberg. ♪ yvonne: thank you. take a look at the market open in japan. slow going but an upside with equities. hong kong closed for buddha's birthday here. >> slow going. it is light. anduding thai exports
malaysia foreign reserves. take a look at the breakdown across markets that are open. day of gains but higher by industrials. but you have real estate stocks dragging on the topic, off by .1%. in sydney, set for a fourth day lower with telco and material stocks weighing on the benchmark. -- amonggton we see the best performer so far in the session. ground.zx 50 gaining watching what is going on but the treasuries market. little change with the market biding time before the fed dollar this week and the , with that stalling, we see the aussie looking study. along with the recovery in the iron ore futures. i want to put some stock themes on your radar. checking in on sony after announcing plans to buy emi
music. this marks the first major strategic move by the new ceo who will announce a three-year plan on tuesday. sony may want to boost the afteric music department china announcing the change in child allowed. we have an instant milk powder stock gaining ground and -- adding 3% this morning. the code thank you so much. -- betty: thank you so much. with chinade truth is being met by an american reaction. american farmers are breathing a sigh in relief. allhen engle is following of this. steve bannon came out and criticize trump on this. can you tell us the reaction?
there is no middle ground, either hope or despair. and that is what we are getting on both sides of the ground. the white house says they are seeing momentum. chuck grassley from iowa says it is a good thing for farmers. they are seeing the light at the end of the tunnel in the trade fight with china but we need a third-party perspective. -- from the cornell university says it is a brief de-escalation of tension, fundamental differences remain unresolved. are being very critical of trump and the white house. the concessions or backtracking. the truce is how the white house is putting it. has been sponsoring bills targeting companies like
zte and he says they are winning. pledging concessions they had already agreed to do. and a senior ranking democrat on the finance committee says that after the tough guy rhetoric from trumps white house, the administration is getting rolled on trade. you mentioned steve bannon, the former adviser, saying "donald trump change the dynamic with china. but in one weekend, steven mnuchin has given it away." so mixed reactions. the tradeu have issues with the geopolitics. how does the truce affect the singapore summit happening in a couple of weeks? this is the key strategic reason for the truce. trump administration needs to have china on board. not working on the sidelines, meeting with kim jong-un.
trump has alluded to the fact that the chinese president is influencing kim jong-un. i had their second meeting and they, it was right before came out and said, we might not have a summit with donald trump. donald trump needs them working in cooperation to make sure this summit goes ahead. trump has the midterm elections to worry about. if they have failure on the north korea side and the trade side, that is a double negative for midterm elections. betty: they certainly are playing a role in this. we have an interesting story coming out of china. scrapping the family planning? it is significant because in 2015 they removed the one child policy and allowed families to have a second child but birth continue to decline. 2017 and the state council has said by 2030, those over 60 years of age, a quarter
of the population, they will be over 60 years old. that is not good math for the working population in china. beijingrnment in realizes that the one child policy was not worth it. there were a lot of social consequences and human rights abuses. while they may not acknowledge that, there were. so making a nationwide unlimited , independent fertility for independent families, to make their decision. it could come down by the fourth quarter of this year. after removing the one child policy, there were questions about whether it would work because raising a child in china is quite expensive. thank you stephen.
a cute front page to today's edition of daybreak. also available on your mobile. that is in the bloomberg anywhere app. hyundai motor group has canceled plans for an eight point $8 billion deal in an unprecedented victory for activist shareholders. the conglomerate had planned to structure units to pave the way for recession but that is on hold. let's bring in david mccomb joining us from tokyo. what are shareholders winning with this decision? david: management, the activist shareholder leading this fight, is asking for $11 billion in cash returned to shareholders. they want an increase in dividends and improving corporate governance. so there is a lot there. they did say they were going to
implement both sides but by rejecting this previous side, the expectation is that they will move towards the ideas that elliott was proposing. more broadly, it shows that the group is seeing that the future lies with shareholders and going along with the shareholder interest than the founding families interest. betty: will this be a one-off or a new trend? this does seem to be consistent with what has been happening more broadly. when thing to keep in mind is that elliott, they were turned after attempting to pull a similar move with the samsung group. incomplete defeat. because what they did succeed in doing was opening up a corruption investigation. it ended with the president being impeached. so that was a pretty big deal and it did seem to shift create morend
shareholder friendly policies at the corporation. going into this, the expectation wasthat the hyundai group going to be able to keep power within the group. they had created a play on that would have allowed them to maintain control of the entire group. they had a fairly complex plan that was going to spin out some of the spot phil -- some of the profitable enterprises with one group and combine them with another group and create the structure that would not give the biggest shareholders actual control of the company. the expectation is that they now will be holding to -- they now will be going to a holding company. that is what elliott had adjusted. one of the big differences here with the samsung -- the contrast with the samsung fight -- the proxy advisors came in on
elliott side this time. ,hey advised their shareholders the ones who look to them for advice, a advised them to vote against this hyundai proposal. in and wentaved along with the idea that they have to go back to the drawing board. and probably come up with something that looks more like a holding company area -- company. betty: thank you so much. that was dave mccombs. how sony is expected to give -- a change of direction. yvonne: a wild ride for markets. geopolitical risk and rising inflation. the rank of singapore ceo joins us to explain. this is bloomberg. ♪ is bloomberg. ♪
-- settle to calm a dispute. are not exactly receptive to what we saw in the wall street session. opening is very mixed on this tuesday morning. joining us now is james cheo. good to have you again here on the program. we are not seeing the feedthrough from the trade truce. why do you think that is? is it not a buying opportunity in the short term? james: i think markets are going to have a bouncy ride. this trade deal is in an early day. it is a cease-fire, it is not a peace treaty yet. it is unclear how china will import much more agriculture and energy over the next few years. i think there is some cautiousness among asian investors today.
but nevertheless, the headline news is positive or the next few days and weeks. volumes are still pretty low. we still haven't really tracked the january highs that we have seen. catalyst be the next for the further upside in equities? i think generally, the economy is still healthy and growth is coming in. companies are doing fairly well. but there are headwinds other than the u.s.-china trade. you have the dollar, a stronger dollar, rising bond yields. and that is creating uneasiness among asian investors. so there are limiting markets going higher but i have large i think -- but by and large, i think it should give some asian markets a lift in the weeks and months ahead. yvonne: you mentioned the
problem spots that we have been dealing with when it comes to em and the europe situation with italy hasn't settled. em rally,mes to the is this a game changer now that we have the dollar tracking yields higher? james: i don't think it is a game changer. when we observe this situation, it is specific to some countries. countries such as turkey and economic management. but the rising dollar environment, some of e.m. as a whole tends to suffer. but encouragingly, em asia is holding on fairly strong. and i don't get is a game changer in any way. the rising dollar can create opportunities in e.m.. and perhaps we still have to wait a little bit longer. opportunities are starting to open up.
and then the dollar rally continuously could go on, america has a twin deficit. and the rise in yields has to thatate, given the fact inflation is rising but it isn't a runaway inflation. someone said the dollar was abnormally low giving , so a morendamentals normalized dollar would be a rise of how much more from this level? it is difficult to give a number yet. but definitely in the short term, at least in the next few days, you can expect some dollar momentum given where bond yields are. but if you look further out ahead, the upside to bond yields , the limit, given that it isn't runaway inflation, inflation is just normalizing back to where
it should be given the current economic cycle. so from that perspective and the deficit at the u.s. is facing, the dollar upside may face -- in the weeks ahead. let's talk about the energy space. it illustrates the strengthening oil prices we have seen over the last several weeks. the white line here shows spot prices for brent oil which have continued to rise. if you look at the five-year it has really, remarkably shot up over the last weeks. priceing where the spot ends. and that underscores perhaps if you that we will see the energy -- dowhere the oil market you continue to think that is a tale or a headwind for the market?
james: the rising oil price used to inflation and it may create fear that it will overshoot to some extent. in this sense it may create headwinds for market in general. but there are some subsectors that benefit from high yield oil prices. some of the e.m. economies and energy stocks. so there are factors that could benefit in that environment. betty: would you say that u.s.-china trade and way the wind blows will be a dominant theme for investors? that it is mostly where it will taked where markets will direction from over the next few days and weeks? james: at least in the short term. the u.s.-china reduction in this friction is actually driving markets to a certain extent. it creates a relief rally for asian assets. factor has once this
gone, you have to look at the fundamentals and i think the fundamentals will be the earnings of the companies. betty: james cheo, thank you so much. don't forget our interactive tv function. tv . you can watch us live and dive into any of the functions we talk about and you can become part of the conversation by sending us conversations through the shows. check it out on tv . this is bloomberg. ♪ ♪
yvonne: and i am in hong kong. a quick look at the headlines. wells fargo says it will -- lending for auto sales after deals with controversies and improving its public image. the bank faces important challenges. they also said the bank could have done things differently but is now moving on. can say is that there are lots of things i wish we would have done differently over the last few years but over the last couple of years, i think the changes we're making in the company to make sure that customers are taking care of and we fixing anything that was broken and that we are building a better company by making good, long-term decisions, we are absolutely going in the right direction. sony is buying 60% of emi music publishing for $9 billion. plansal comes as the ceo
to outline a three-year plan to give it away from gadgets to focus on gaming subscriptions. a makeshift for a company built on manufacturing prowess. yesterday -- they had record-breaking profit last year. on bond-- has defaulted that was due on monday. shanghai international group warned a week ago that it might not be able to repay as the founder and chairman stepped down amid an investigation into the company's financial trouble. this is the fourth default in the past month in the onshore bond market. betty: starbucks is revamping the customer service policy following outrage at the arrest of two black man in philadelphia last month. in the store or a patio or use the bathroom without buying anything.
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. every corporate office, warehouse and store
near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. >> 8:30 in sycamore. a beautiful morning. seems we have peaked around 13490 overnight. it seems the dollar rally seems to be petering out of it. i am yvonne mann in hong kong. let's get to the first word news with paul allen. paul: the white house says momentum is building as china and the u.s. reach an agreement. steve mnuchin says a tentative framework has been agreed.
although china has yet to commit to the specific figure, the two sides may yet impose tariffs but washington remains optimistic. >> a lot of momentum from this framework. they are going to go through the different commodity purchases. i do not see any pause all. i would say there is more momentum holding. paul: john kelly is to set up a meeting with congressional fbi and the justice department to review classified information related to the russian investigation. it is unclear what documents will be made available. the decision comes one day after president trump demanded the doj look into claims that the election campaign was infiltrated. italy's bothering costs are
surging as parties attempt to form a government. the nation is being punished in the bond market. a note maturing in february 2028 now yields 10 aces points more than a sovereign from indonesia due form of later. protesters in thailand are going to march on the fourth anniversary of the military coup. --iland's economic group hit growth hit a five-year high. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: time to see how the asian markets are shaping up.
enthusiastic -- enthusiasm. the dollar is stalling with treasury and head of fed meetings do this week. the ringgit is gaining ground setting up a nine day decline. given the higher oil prices, we may have a boost to the economy. i want to highlight what is going on with stocks in sydney. losses are up half a percent. banking stocks are the biggest drag. we have health scope leading losses when it comes to percentage declines sliding after seeing the takeover of the hostile operator. technology one falling over 5%
after announcing its results this morning. is gaining ground. yvonne: japan is doing its part to buy american and its first purchase has arrived. carrying gas tanker tons of natural gas from dominion energies. stephen joins us from tokyo. what does this mean for the u.s. japan trade deficit? is this going to have an impact or is it symbolic? stephen: i think the main takeaway is that it is symbolic. have ashort-term it will slight impact on the trade deficit between the u.s. and japan. when i was at the terminal yesterday south of tokyo, i was told by tokyo gas that they will likely trade the rest of the
cargo from october to europe from coast point. cove point.- that is in maryland. they can sell it at a competitive rate two different companies in europe who would be very happy to take the cargo. so perhaps it will not have a large impact on the japan u.s. trade deficit but it will help boost u.s. exports of energy. on that front, the future of gas exports is what? should we expect it to ramp up? stephen: exactly. this is the second export terminal to come online since the shale revolution began seven years ago. we have a few more projects coming online next year and the year after.
that will increase exports of oil. as the industry moves towards the next phase of lng am a they have to think, ok, where are we going with to export from? of investments for lng include a few in the united states. there are a lot of different areas that could increase export that what we are seeing from lng is the slow ramp-up of exports will increase over the next 10 years. betty: the other asian countries have increased their buying of u.s. energy. china is the latest. is this a political play the trump administration? stephen: i think there are two things happening. it makes sense to import american lng.
it does not always have contracts that are sent to the price of oil so gives them more flexibility. it could be cheaper because shale gas is cheap to produce. the company is saying, yes, we want u.s. oil, it is cost competitive. than the government in japan's case is saying, our company is doing this, we have a great relationship. and they take credit or they say this is benefiting the relationship. so it is not early political, there is an economic standpoint and benefit for the companies who play into the american energy dream going on right now. yvonne: we will leave it there. stephen, thank you for joining us from tokyo. china wants to keep its confidence in e.g. for another
decade according to a report from bloomberg's new energy finance. they will need to make inroads in china or risk being left in the rearview mirror. ramy.bring in ramy: this is interesting. the first terminal i want to show you is the growth we are seeing in terms of china's new ed sales. the topline data point is that by the year 2025, which would be right here, we will be seeing that 50% of all of the ev's that are sold in the world are coming from chinese purchases. 2025 to 2021, it is the entire chunk of that five-year span. the yellow bars represent europe. that is in the rage -- range of 18 to 19%.
we see a pushing all the way to 40%. will probably stay around there. in the white, that is the united states, staying stagnant around 90% to 20%. the green is the rest of the world. still a long way to go with regards to what is happening with chinese european and u.s. ev sales. this is being predicated on regulations that are happening out of beijing which are very supportive in terms of sales. there are three license plates in cities for china and new regulations that are pushing .onger ranges for cars one other interesting thing is the falling price of lithium batteries. this is all in your library if you have access to that. -- $200are, 2017, $20
per kilowatt hour. 1000to go about kilometers. 2025, this is when we will start to see the inflection point below $100. that means $100 will get you 1000 kilometers, which is about half the price of today. already 80% below the 2010 levels. when it comes to ev investment, which companies should we be looking out for? remy: we are seeing a lot happening in europe. as you look at the bar chart, books raven grew -- full sweat wagen group.- volks it will be knows apprise we are seeing julie here, 41 billion over the next five years.
bottom, toyota still $10 billion, relative to the other car companies they are at the bottom of the pack. me recap and resurrect one of the charts we usually bring in terms of electric car demand. this is focusing on the year 2033. this is the inflection point in terms of when a electric vehicles and their sales will be sold more relative to the internal combustion engines out there. we can see that looking ahead, ..7 million cars sold this is really interesting.
betty, this is just the beginning. some very exciting stuff. betty: don't forget you can keep up with the reports on the terminal. subscribers get the most data sets and commentary and long-term forecasts. live pictures out of tokyo now. -- sony's new ceo is outlining his plans to take the company in a new direction. and announcing the acquisition of emi that they do not already own. ofwill have some thoughts advisors,. this is bloomberg. ♪
york. yvonne: i'm yvonne man in hong kong. sony is unveiling its three-year plan. this is coming off of the back of the news earlier that sony will buyout emi music publishing. take a look at the stock price. shares are falling, reacting to these three-year plans. let's talk more about raising the targets for their goals such as intellectual property. also when it comes to their chips division, and operating goal of ¥160 billion. a lot of lines coming through here. let's bring in our next guest, asymmetric advisors senior strategist. think you for joining us. looking at the news so far of
the three-year plan, what is your initial take? what he think shares are falling at the moment? take is that it is a very conservative number, just like their previous three-year plan, which ended operating profit just over ¥200 billion higher than what they had been targeting. these forecasts are very achievable. operating profit on the gains side to 160 or whatever that number was seems very small. modest as a target. so does the semiconductor business. but that is the way sony operates. they do not really put out very ,ifficult targets to beat certainly under the new regime, the management has been outperforming their targets.
this is likely to be the case this time. question is how is the new ceo going to undergo the new evolution. will be a place for growth when it comes to online content subscriptions at a time where hardware sales are declining? like about sony is there gaming network business. revenues in the games network has gone above ¥1 trillion which achievement.al they have 35 million subscribers for the playstation network. we think that will be the way forward for them to continue to expand. the margins on game downloads are fairly high. so the fact that sony is seeing
their game is downloading games directly, that is a possible trend and should continue. we are expecting sony to announce a new gaming hardware some time of the next month and a half in the e3 show in america . -- show inething america next months. the lifecycle of the ps4 currently. yvonne: how sustainable do you think is sony's content business? the playstation view accesses a -- of network cable changes the transition will
continue. i do not think it will be disruptive. i think the strategy will be pretty much the same. as far as tv content is concerned, we do not have as much high content -- high hopes for the tv content like playstation view. we do not really see that gaining much traction given the competition out there, like netflix and others. but we do see the gaming network itself to expand. so we see the core gaming network and the content on that to continue to proliferate. but we really do not see much hope for the tv services on the network. betty: what should they do with that?
as far as sony's own content is concerned, they are obviously becoming a little bit more active in buying their own film and general content. you saw they bought snoopy from peanuts. they are buying emi's music business. so they are bringing it all together and hopefully they will be more aggressive in terms of content acquisition. like disney has with marvel and lucasfilms and so forth. we would like to see some of that. but as far as bringing all the content from different distributors onto one platform, which is there gaming platform, i do not think that particular strategy will pay off in the long run. i think the gaming network will remain fairly intact and robust.
content on that network does not seem to be working at that moment. i cannot see that changing, given the competition out there. certainly there is a war for that content. you have to have deep pockets for that ip. i am curious about looking at the macro pat -- macro picture for sony. you mentioned more conservative details and that is in line with what we have seen from sony in the past. i'm wondering about the financial conditions, the stronger yen, how you think that might factor in to some of these conservative plans. movement for sony tends to be neutral. it is not as much of an export as one thinks, given the sony name. on the semiconductor side, they
could lose all their chips in japan, but all the gains business is dollar-based. as sensitive as some of the other big japanese text which do generally benefit from the weaker yen and get hurt by the stronger yen. so i do not the currency has much of a bearing to these conservative midterm plans, i , havingnk they do tend disappointed investors for years theyears, i think basically mapped out a fairly conservative forecast this year. so i think it is more conservative than a reflection of any major concerns regarding the currency. betty: we will leave it there, thank you so much.
daybreak: asia." coming up, let's bring in rishaad. what he watching? -- what are you watching? >> our guest is going to be telling us why it is simply not possible for china to close the billions they are promising at the moment. we will talk to him about the false promises being made by beijing. looking at what is happening with sony, what do they do next? what is this move away from gadgets? they do still need those. looking at the future under the new chief executive, we will look at that. yvonne: the targets they have
raised are quite conservative when it comes to sony. that is why the stock is down this morning. he he looked at the future of electric vehicles in china. and where the opportunities in china itself and trying to create a network and where you going to charge these vehicles? at what point does the infrastructure start to creek and who is it going -- and who is going to invest in it? before we had over two rishaad, a quick look at how the markets are trading right now. let's pull up japan's nikkei. japan shares are falling. lackluster details coming out from the ceo on their three-year plan.
asx is also down. look at what we are seeing when it comes to the dollar trade. we see it drifting lower and it will be interesting when it comes to that rest of asia markets opening. the future looks positive when it comes to singapore. malaysian stocks continue to see momentum building as they try to form a new government. a lot is going on when it comes to one ndb. betty: standby for bloomberg markets. this is bloomberg. ♪