tv Bloomberg Markets Asia Bloomberg May 24, 2018 9:00pm-11:00pm EDT
jong-un-invited, president trump saying the u.s. military ready for everything. 109, goldhe yen, seeing its biggest gain in four weeks, and oil down after russia won't consider supply kurtzman they meet next month. i am rishaad salamat in hong kongi am rishaad salamat,. haidi: i am haidi lun. , oleg deripaska's regulatio resignation.
this is "bloomberg markets: asia." rishaad: looking at markets trading, waiting for the open, singapore and malaysia coming on. , .25% down,e upside a move towards safe haven assets . gold on the way up, oil down for different reasons. that's what we have the moment. let's have a look at japan. off with 7625 stocks on the way up, 144 lower. we wake up to a new reality, the leadership called off for now.
conciliatory remarks from the north korean side, saying they will continue and a summit will happen, so a a greatptimism, but not deal of risk aversion despite the pickups in the yen. seeing a little upside. and futures mildly positive. overnight, initial losses on the summit cancellation, but clawing back gains to end marginally lower. i look ahead to the start of trading in india as well, pretty measured, i guess, picture out there. let's get you to first word news with paul allen. >> the eu says any u.s. plan to slap tariffs on auto imports would violate wto rules. brussels is assessing the call
for restrictions, but says cars are no threat to national security. washington will decide whether to impose duties on steel and aluminum. the eu hopes to find a solution. wto, would be against the and it is difficult to imagine it would create any sort of threat to the national security, so it is difficult to understand, but we have now just read what has been said and there is a long journey. sayse governor mark carney his often criticized policy guidance is more important than ever as brexit enters its final phase. he used his speech to explain why his methods work. he spoke after his deputy told bloomberg the bank does not have a communication problem, although forecasting has become more difficult since the brexit vote. rusal has said oleg deripaska
has resigned effective immediately. the russian aluminum giant is trying to persuade washington to lift sanctions. toal may not be able continue operations. hasu.s. justice department opened a criminal investigation into whether traders have been manipulating the price of bitcoin and other digital currencies. the inquiry is looking at legal -- illegal actions that could move prices. extended declines after bloomberg reported the investigation. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. our top story, north
korea saying it was surprised by donald trump's decision to cancel the meeting between himself and kim jong-un, but the country is willing to meet united states at any time. our correspondent has been all over this. what has been made of this development? >> i think the chances of a summit are exactly the same today right now as we speak that they were yesterday. the fact of donald trump has canceled his something the news media and all of his here will talk nonstop about, but the chances of a summit happening, maybe not june 12 in singapore, but it's some pointer just as likely today as yesterday. happening, that is megaphone diplomacy from both sides, and this is an old tactic from the north koreans, ramp up the tension to get maximum concessions ahead of the summit. rishaad: he equaled his bluff. >> donald trump did.
he said you would do that, i will cancel before you have a chance. tohaad: do we ratchet back 2017 and the hostilities at that point, rocket man? >> this is that megaphone diplomacy. that as anll use opportunity to gain their concessions from the north koreans as well. the threat from maximum economic pressure has always been there and can continue to ramp up. perhaps kim jong-un is on his back heels saying we need a reprieve from sanctions and want the summit with donald trump. now we are getting statements that were different than the last week. rishaad: they are conciliatory, aren't they? does this lessen the impact of north korea saying they had dismantle the nuclear testing cycle was that just good pictures? >> it was going to be a show
anyway because they can move nuclear testing to a different remote mountainside. these are the pictures we are group ofhen a select international media were invited to the korean peninsula to the nuclear testing site where they conducted those nuclear tests. they imploded the tunnels where the different tests took place, but many people had said these imploded andostly caved in on themselves anyway after the last test. rishaad: no independent verification. >> no independent verification. this was for show, and donald trump has perhaps trumped this show, because this is a side story to donald trump's cancellation of the summit. steve, watch and wait, right?
today we don't know anymore than what we knew yesterday. us is a long time korea watcher. he has also director of career .com.-- korearisk was it surprising that it was trump who made the decision? >> it was surprising. i'm not sure whether it is the final decision or not. he is known to be a person who walked away from negotiations in the past just to get that are conditions and more concessions. maybe it is just a diplomatic game. it is too early to know, but speaking about his decision, it was surprising because it was funny to see how americans, or to be more precise come a trump's administration, how they have been using the north
tactics, bombastic statements, threats. today, thennged threats again, then suddenly .ancellation a cancellation can be canceled. well, it looks like that donald doing it likebly north koreans have been for decades. haidi: is this bluff or dangerous in terms of gamesmanship. >> i would say it is quite dangerous. if it is intended to be a diplomatic trick to increase pressure and squeeze more current concessions from north
korea, we are still facing a probability that things will not work out as intended and we go back to win the korean peninsula came close to a possible, large-scale, serious war, closer than any point in the last 25 years at least. some militarybe preparations here last year. ,f it is not a diplomatic trick they will seat mounting tensions. if it is a diplomatic trick, it can go the wrong way. president trump is playing a really dangerous game, and if it does not work out, many people can die, nothing nice about it. has donald trump really called kim jong-un's bluff on this? well, what has happened.
for the last four months, north koreans who need the summit, and the recent statement once again supported it. north koreans have been cooperative, nice, and sweet, but they discovered once they did concessions, the american side began to increase the expectingssentially libya-style unconditional surrender of the nuclear facilities, so over the last 10 days or so north korean government has decided to show ace, to make tough statements where they said north koreans would expect something in exchange, otherwise summit probably will not happen. just a way to balance, i would say, so it was not a bluff
on the north korean side. ofer a couple of months being unbelievably cooperated, they decided to indicate they would not surrender unconditionally, that they will demand something. summit cancellation by the american side was essentially explained away as a reaction to this relatively tough statements , which by the north korean standards are not that tough. hehaad: one question would over the last six months or thereabouts it does seem diplomacy strengthened the hand jong-un. he has almost become respectable and the way he has presented himself, almost statesmanlike. where does he go from here? >> north koreans will try to basically save the day, try to salvage the summit, but it practically means that they will
have to do even more concessions. if it happens come maybe we will still have the summit. if it does not happen, i would expect north koreans to negotiate with china, because chinese support is vital. tell the chinese that the americans are irrational and don't want to accept the compromise, which would be quite favorable for the isrican side, if china persuaded and relations are not very good, china can change its current abandon its tough approach to north korea and can review trade and assistance to north korea. they can even make some hence saying basically if north korea is attacked, it can rely on chinese support. treatyally china has
obligations to assist north korea in war. , it goes under the chinese protection and the american pressure will become useless, but if it happens, the north korean government will have to make serious concessions, not to the united states, but china. it is a big question, which country is more dangers from the point of view of the north korean government. probably sometimes they are more afraid of china than the united states, but if the crisis continues, north koreans will have no choice but to go to china to ask for protection and they will probably get it, but for a pretty high price. do you think it is likely they will reach a compromise on denuclearization? say as i haved said it is probably not the end
of the summit story. it is quite possible once again that they are dealing with a diplomatic trek, that president trump has decided to do, according to some stories, done many time when negotiating with partners or who ever in the past. he walks away from the negotiations just to get even more concessions from the other side. it hasn't worked in the real estate business, but whether it will work in international diplomacy, we will see. it is likely we will see a summit, but right now north koreans will have to agree to more concessions including the definition of denuclearization. fullykoreans will never and completely surrender their nuclear weapons. it is not going to happen. seconds, yesthree or no maybe, due beijing and moscow want to keep the status
quo? >> yes. yes yes. rishaad: thank you so much. coming up next, long-term market implications of this trump-kim meeting cancellation. standard chartered joins us in a moment. haidi: trade tensions between the u.s. and china, credit suisse thinks they are not going away anytime soon. this is bloomberg. ♪ is bloomberg. ♪
implications in the medium or short-term with regards to this? summit knee-jerk reactions with risk assets and cold overnight, but bigger picture, nothing has really changed. it is just posturing about trying to get the best negotiating tactics when negotiations to take place rather than anything else. not a material indicator for what will happen in financial markets over the next few months. resonatetrade tensions more on the market amongst investors? >> yeah, absolutely. trade tensions have been front and center, but trade tensions more important. we have seen the china tensions for some time. they seem to be moving towards a transitory agreement they are. we focus now on automobiles, a
much rigor issue in the west at least, and that would be more challenging. again, at a conference last week somebody was saying the best thing to do is ignore tweets. it is difficult to do with a lot of noise coming from the white house at the moment, that we are fearful of when that noise becomes more significant. remain, it will probably the noise and risk on for us as far as asset markets are concerned over the next 6-12 months. haidi: steve, you guys are braver than the average bear when it comes to where this emerging markets a lot goes. this chart looking at more declines in the lira. the central bank didn't do anything to stem the bleeding in the longer term, but the rest of the emerging markets has managed to defy the worst of this a lot. what does that take about the resilience of emerging markets now?
>> what we are seeing in our opinion is we are seeing idiosyncratic risks, argentina primarily, then turkey afterwards. i suppose what we like from what we see, there are several things out there. we don't believe the dollar rally will extend too much further. we are approaching key resistance and came off that overnight, so that is a positive for emerging markets. reserves, theyx are higher in asia than they were 10 years ago. those countries that are seeing stress are acknowledging those stresses and trying to take actions to address them, so argentina. they made a mistake with the 150 basis point rate cut. they have addressed that. even turkey, that 300 basis point rate hike, but they are
also planning to travel to the u.k. to meet with investors as well. we have had some good comments from the president there. environment does seem to be pulling back from the brink and we think this is a good time to add to emerging-market assets. trading afternite being suspended yesterday after a short seller's report questioning accountancy practices and saying it is overvalued. 8.8% premarket after that. talk aboutt to samsonite per se, but i want to talk about the role of short-sellers and what he make of them and whether they are ethical or not, very quickly. >> it depends. you have different people doing it in different ways. generally there is nothing wrong with shortselling. it adds to market liquidity and tries to keep the market honest to some degree, so having that liquidity is important for markets.
be a fine line between market manipulation, taking a position then releasing a report. that is something that is forbidden and the banking community. we need to being more cognitive of and need some governance and regulation around. i met short-sellers reports, not just short-sellers. let's take what we have coming up. this summit collapsed taking place as kim jong-un and donald trump will not meet for the time being on june 12 in singapore. this is bloomberg. ♪ this is bloomberg. ♪
while samsung said it should only pay $28 million. rishaad: representatives voting zte as part of the annual defense policy bill and passed overwhelmingly. headband federal agencies from using the tech and from renewing contracts with vendors that work with the company. haidi: china's biggest tech company says the industry must tackle user concerns about privacy and the risks posed by rapid advances in technology. the calmness party requires tencent and other social media companies to monitor users and guidelines. tencent denies it helps the government eavesdrop on its subscribers. are counting down to the start of the trading day in hong kong and shanghai. this is the position at the moment on the way down for
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.
rishaad: a glorious day in hong kong. start ofiting for the the last trading day of the week. a lot of factors in play as they have been all week. tensionscs and trade are the alpha. that summit being canceled by donald trump himself. stocks taking a hit in europe. we will look at those with the open in hong kong and china. donald trump considers more levees there. the turkish lira has been the resuming that slide
as investors try to make head or this rate hike designed to stem the blood flow from it and whether it was enough. economic policies of the populist administration affecting the euro's performance. oil on the way down. it is the market open. >> slightly lower on the benchmark. the dollar catching a bid. goldman sachs with a note cutting their targets to varying degrees for chinese brokers. when you look at the metrics of the markets, turnover, margin, financing, it does seem they need to dial down expectations. as you can see a gap lower on the hsi, slightly weaker dollar-china. slightly weaker on the csi 300. h-shares down and falling as we
speak, heading towards 12,000. from the pboc,y a down day across the region, down .25%. korea taking the news in stride it. we opened lower on the kospi and are headed back. the kospi has been higher in recent days, but hasn't budged above that five-year average. there is your 10 year yield. we are a little stronger to the south korean currency. let's have a look at the broader market. malaysia one to watch after four days of sharp declines. 19 points to the upside. new zealand, .5% there. hong kong, the dollar has been bid. dollar-yen up.
closer to 109. have a look at the euro, moving in on that 117 handle. other things to consider. we will talk about oil later on. it does seem based on the commentary that has come out of st. petersburg that they might tilt towards easing the cuts. we will see what happens. other things to follow, we are tracking a second straight weekly decline across markets in the asia-pacific. a breakout that happened two weeks back was a fake out if you look at the technicals. , 20% as we speak, over two days. 10% yesterday, then trading suspended. it resumed today and we are down 8%. that is the biggest two-day drop going back to the listing in
2011. the headline says everything else. this torun gtv on follow on samsonite. there is your consensus rating. a lot of falla. there is your head -- a lot of volume. there is your headline. the markets selling first, then listening later on. rusal to consider. lots of stock movers in hong kong. haidi: thank you so much for that. , lots toof rusal consider there with the billionaire founder oleg deripaska having resigned effective immediately. follows most of the board as the company tries to persuade washington to lift the sanctions. let's get it over to shanghai.
yesterday there was a question around oleg deripaska's plans. was it expected and does it bode well for sanctions being lifted? >> yes. it was sort of expected because oleg deripaska signaled earlier he would not be seeking reelection to the board of rusal . he stepped down as head of his holding company. it was a bit of a surprise yesterday when you have this flurry of resignations from the board, including the ceo. i was surprised not to see oleg deripaska name there. , leaving the management of the company that he has been synonymous with for the best part of 20 years. as to whether that is enough for the u.s., i think the answer is almost certainly no.
they are demanding he relinquish control of the company. he continues to be the majority owner. martin, is this what the u.s. is looking for? will it be enough? say, it is uncertain. possibility given the nature of the administration. there could be some leeway, but the u.s. has demanded so far that oleg deripaska give up his stake, and he has to do that really within the next few 23,hs, because from october the sanctions will come in full force and cut rusal off from dollar markets. it will stop them from being able to trade in most parts of the world. as rusal said yesterday, some
banks have stop doing business with rusal. they said the affect of sanctions if they are imposed would be grandma for the company. grim for the company. what impact c this have on the alumina market itself? rishaad: what impact could this have on the aluminum market itself? >> when news of sanctions first came out, rusal is a significant producer, may be percent of world output. that is a huge chunk of production. disappear, ito would mean major changes to the aluminum market. ahead,tions don't go
then you are back to talking about much less exciting things around supply and demand in china. rishaad: thanks, martin. over to seoul, korea, the unification ministry holding a news conference, saying they will continue to keep on with their efforts to keep a dialogue going with the north. this after that historic meeting taking place between the two leaders there, kim jong-un and president moon. that is what is coming through as we had donald trump canceling that summit with kim jong-un. the north koreans saying they are still open for talks anytime , and they were quite complementary about trump-style solution to all of this. this is the scene at the unification ministry in seoul, korea. as northe trump model korea referred to it, so almost a little flattery coming through
this morning, not the aggressive response of people were looking for. we will continue to watch and wait. you are looking at live pictures of the unification ministry briefing. ,e heard from japan as well saying they would be working in cooperation with the south korea and the u.s. on what happens next. it is reiterating the importance of progressing these issues on nuclear weapons, missiles, and the inductees issue as well. bloomberg subscribers can continue to watch that on live find a diary entries and any events you may have missed out on earlier. let's get to first word news with paul allen. >> north korea has shut down its main nuclear weapons test site in the presence of foreign media , but not independent inspectors. the move was announced as a
natural step after the weapons program was declared complete. south korea and the u.s. as adjuster of good faith, although arms control experts that it would not impede the ability to make new weapons. the irano salvage nuclear deal pickup indiana on friday, where officials meet for the first time without u.s. diplomats. other countries would discuss the economic incentives around needs to keep their work in place and will consider the verification activities of the iaea, which reported that iran is sticking to its commitments. sources inside on enforcement say harvey weinstein is expected to surrender to authorities friday to face criminal charges of sexual assault. two officials tell us the case involves allegations by a former actress who was one of the first to accuse harvey weinstein. the precise charges are not yet clear. a grand jury has been hearing evidence for weeks.
he -- long longhouse housing boom is buckling. the average home price fell 3.4% in april from a year earlier, the seventh straight month of declines. 2017, sydneys properties were gaining 16% a year. deutsche bank sees the downturn only as mildly negative for the dollar. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. thanks for that. coming up, trading hitting turbulence as president trump turns his attention to automobile imports. we look at the follow in the implications next. this is bloomberg. ♪ loomberg. ♪
rishaad: this is "bloomberg markets: asia." in hong kong, i am rishaad salamat. haidi: i am haidi lun in sydney. chancellor merkel has warned backlash overtial vic investments in europe. both sides pledged to defend global institutions. tom mackenzie joins us for more. is he likely to heed angela merkel's warning? >> at some point, they might
have to. what she was pointing out is there are already moves in france, germany, and other nations looking to ramp up the scrutiny of chinese dealmaking in europe, particularly around technology, a concern echoed by washington. billions invested $320 in terms of asset purchases and investments in the european union, well above the u.s. what she was saying is in sectors where china leads in terms of technology, if they don't start to reciprocate and open up markets in those sectors and create a level playing field , they should expect further constraints in the european union. that was a warning from chancellor merkel to their chinese counterparts. companies and their investments are still welcome in
china. some german companies have faced , but continued open market access was part of the chinese plan. another priority for chancellor merkel was to ensure both sides sung the praises of global, multilateral institutions, free and fair trade am a but also to press the chinese for support on what she is doing in terms of the iran nuclear accord. there are meetings going ahead in vn that issue, and it seems she is getting china's backing on that issue. another issue that chancellor germanfaced is ensuring companies don't get squeezed by this agreement between the u.s. and china when it comes to the increase in imports as china says it will try to reduce its surplus with the u.s. a concern for german policymakers and businesses. she is currently in southern
china where she will be visiting a siemens factory as she wraps up her visit today. rishaad: tell me about these , tariffs being reduced on consumer goods. what do you know? what we are being told is that china is looking to reduce tariffs on sectors are products like cosmetics, food, and health care products. be imposedf cuts may as early as july 1. towards the end of last year, china cut taxes on 200 different products. we have been told the number of products will be higher this time around, but they are deciding the exact details and products and will put them to the state council to sign off. china would say this is part of a long-term plan to increase competition and choices in the
market, but it is a double-edged the sword. the other side is that it potentially benefit these negotiations with the u.s. and eases some u.s. concerns and goes some ways to reduce the surplus, so we will watch for more details. they are likely to be imposed before july 1. rishaad: nice one. tom mackenzie there in beijing. let's quickly have a look at what has been going on elsewhere , taking a look at how investors should get used to these trade disputes or wars between washington and beijing as a new economic model. our guest from credit suisse is with me now. you are saying there will be trade wars every year. think the situation is like the late 1990's, in which every
u.s., some kind of serious trade negotiations surrounding intellectual property rights, trade imbalances, etc. ok, inend of the day, the 1990's, every year, some agreement was made. ploy in that was also a some way to get into that david as well on the part of beijing. into the wto as well on the part of beijing. >> you could save the wto was part of a grand bargain. , at that timetime the multinationals were much more supported on china than now regarding intellectual property rights, etc. from this point onwards you'll
probably see more and more. rishaad: has donald trump changed things? with this have happened under previous u.s. administrations? >> i think the underlying conditions are there already. trump played the game in an unorthodox manner. that started a process, but the bottom line is even if trump is no longer in office, i think the next administration will more or less all of the same plan. haidi: does this have the potential to be longer-term structurally positive for china? the criticism, structural rebalancing, reforms, they are issues beijing has been grappling with any way that arguably need to be done anyway. >> i tend to agree if you believe the free market at the end of the day brings economic and if it's to everybody. near-term you could say no
matter the economy or capital markets, they will face more uncertainty. rishaad: i want to throw up a quick chart on u.s. markets. i want to get your gauge on how market psychology is dealing with geopolitical tensions and volatility. the red circle is when the news broke about this summit in singapore being canceled. ip. saw that inevitable d does this tell you that investors are starting to get used to this new kind of normal? >> i think so. the chart tells the situation. 1990's, the hong kong market more or less behaved the same way. anything bad that happened u.s.en the china and
politically, the market reacts. then it seems to take into account this seems to be the new normal, then it starts to adjust itself. if we drawof the day on our experiences before, trade to learn how to be a negative scenario, otherwise the impact on markets is more volatility, but the fundamental direction of the stock market is driven by the domestic macroeconomy and the cycle. haidi: can't forget about fundamentals. pleasure to have you on. deutsche bank announces job cuts, as change in strategy. investors don't feel like it is enough. that is next. this is bloomberg. ♪ erg. ♪
haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: in hong kong, i am rishaad salamat. shares for tos the lowest in 20 months. it has left us wondering if it is too little, too late. 10% of all staff will be losing their jobs. ramy inocencio is with me for more. >> clearly we see investors are not happy when looking at the share price grid too little, too late? we will see. it fell 2.8%. with regard to the job cuts come the number is 7000. there could be even higher job
reportedly deutsche bank is trying to get themselves a little wiggle room here. with regards to keeping damage control, the new ceo who started on april 8 -- rishaad: he has hit the ground running, hasn't he? >> he has. he's trying to keep everyone happy. >> let me stay quite clearly, ladies and gentlemen, we are committed to our corporate and investment and we are staying international. we are active in more than 60 countries. that is the way it is going to stay. sayingt of analysts are this is not enough. who advises institutional banks says they need to know more strategy, need more clarity on this before moving forward. job losses,these
adjusted costs a deutsche bank sill fall to 22 billion euro next year. creating longer-term value and growth is a bigger challenge, right? long running challenge, at least from 2006. hop into the bloomberg terminal. revenue, one looks at the reason for shareholder angst. if you were negative for revenue for the past four quarters, you would not be happy. i will switch to the next one, the return on equity. deutsche bank is the only one that is negative. hsbc and blue, bank of america and purple, all positive. overng at the 10 year ceos, they have all been negative except one. right now it is down 9.6% since he started in the past month or so. haidi: thank you so much for that. coming up, more on korea.
anna: president trump canceling on kim jong-un saying the united dates military is ready for anything. north korea says it still wants to talk. tearing earlier losses, the yen weakening to 110 while gold sees its biggest gain in weeks. back in-- rusal spotlight. the resignation may bring sanctions to the end. i am in hong kong. guy: and i am haidi lun in city. apple in half a million -- billion dollars out of samsung.
this is "bloomberg markets: asia." a bit of a mixed picture this friday, the session in asia not all bad given we have had conciliatory remarks from north korea in the response to donald trump's decision overnight that the june 12 leaders summit with him and kim jong-un would not be happening in singapore. looking at how we are trading, as you would expect, the kospi trading lower by about .25%. the expectation the discount would narrow on the longer-term for geopolitical tensions is now in question. the nikkei 225 up a little bit. we had a safe haven play alongside gold when it comes to
chinese markets mainland and in hong kong. we are seeing some declines. gold up $113, indonesia coming online with gains. one third of 1%. singapore, seeing losses. trade tensions on top of everything else. down, but recovering. let's go to paul allen it sydney with the first word headlines. the european union says any u.s. plan to slap tariffs on auto imports would violate wto rules. brussels is still assessing president trump call for restrictions, but insist scars are no threat to national security. next month tof impose duties on steel and
aluminum and the eu still hopes to find a solution. >> it obviously would be against the wto and it is difficult to ofgine it to create any sort threat to the national security, so it is difficult to understand read what has said terry --. anna: mark carney says policy guidance is more important than ever as brexit and told its final stage. he reviewed the history of his comments and explained why his methods work. he spoke hours after his deputy told bloomberg the bank doesn't have a communication problem, although forecasting has become more difficult since the brexit vote. the u.s. justice department is said to have opened a criminal investigation into whether traders have been manipulating the price of the coin another digital currencies. -- bitcoin and other digital
currencies. bitcoin extended its declines after bloomberg reported the investigation. asal says the resignation director is effective immediately following thursday's departure of the ceo and most of the board as the russian aluminum giant tries to persuade washington to lift sanctions. they have warned it may not be able to continue operations -- beyond october 23rd, u.s. deadline for banks to and their contracts. global news 24 hours a day, on air and tic toc on twitter, powered by more than 2700 journalists and analysts in more .han 120 countries i'm paul allen, this is bloomberg. -- north korea saying it was surprised by donald trump's decision to cancel the summit between himself and kim jong-un. are willing to
meet at any time. and your moving story contention the last time we were on there was that you would be surprised if it goes ahead, not necessarily on june the 12th. stephen: i think the scenario has not changed from yesterday. the likelihood of it going forward with slim anyway if you keep in mind both sides want deliverables. the united states has continually talked about complete verifiable and reversible denuclearization. is kim jong-un going to accept that? they want it before they even talk about relaxation of any kind of sanctions or economic relief. going to sayun i'll come to the summit and agree? all the people we talked to say very unlikely. the interesting comments have come from south korea where moon jae-in has said i am perplexed like trump -- by trump.
he was just in washington. if the south koreans don't know what is going on, there is something wrong. where do we go next? is this just clever gamesmanship? do we go back to exchanging insults between the two leaders? is it all bluster or will finger might happen -- singapore just happen? stephen: unpredictability is the game going on. we should have expected something like this to have happened. donald trump says the military has always been there and still is. the maximum economic pressure has always been there and can still be ramped up. it all depends on how these two gentlemen use their bully pulpits, their megaphone diplomacy going forward but
already, we have heard from the the north koreans are at least willing to talk to the united states at any time and that they regret the u.s. cancellation but that they are open to it eventually talking. my money would be on the fact that they were probably -- will probably try to meet at some point. maybe not june 12, but at some point. fori: stephen engle there us with the latest. let's get more on the market reaction. to be fair, it has been pretty measured, particularly in asia. mark cudmore is in singapore. our mliv strategist. i am sure you are watching south korean assets, but how else are you seeing this play out? a fairly measured reaction by the end of u.s. trading and in asia. mark: absolutely. there was a knee-jerk reaction upon the headline carried we saw that in korean and df, korean
equities and the yen. overall, this is not much of an out -- market story. most investors were suspicious of june 12 and now it is canceled, many are suspicious it won't go ahead in the future. not much has changed in the game at all. it is not the big market story. other bigtoo many market teams dominating and this north korea thing is tithing us over until we get back to europe , which is at the forefront of markets this way -- week. for turkey and italy. rishaad: with that in mind, this singapore dollar being a spanish -- and the italian populist government roiling markets there. mark: absolutely. singapore is proving itself a haven in asia were a lot of peers are more volatile and getting hit on their deck can amongst emerging-market
contagion, but it will prove a little haven overall from investors fleeing out of european assets. what the italian government is attempting to do is worrying for the fate of europe. many investors worry they won't be able to implement the government plan but if they do, italy is heading toward an unsustainable situation fiscally and that means the euro is under threat. adding to that the fact that there are reports that rajoy may be subject to a no-confidence vote in spain. threat emphasizing the that a euro crisis trade is back on the radar for the second half of 2018 after being supposedly put to bed in the first half of 2017. rishaad: could you believe that since 2001 or thereabouts, we have had a turkish lira worth 1.6 against the dollar, and our 4.7. has it surprised you we haven't seen more action in this part of the world, indonesia
notwithstanding, from what has been happening with the emerging-market story in turkey? mark: that is a fair question. the big difference in emerging markets compared to 10 years ago is in the mid to thousands, all e.m. stories work roughly the same trade. they were based on the credit super cycle, the growth in china and the commodities super cycle. it meant they were correlated and trading on the same economic cycle. when there was a sneeze in america, all the em markets cop the cold. -- cost the cold. now they are more divergent. economic models are more resilient in economic debt. -- morentries are moral vulnerable than 10 years ago, others are safer. it is not uniform like 10 years ago and contagion gets stopped quicker. thank you so much, mark cudmore, our mliv strategist joining as out of singapore.
you can follow more of mark's thoughts on this story on our bloomberg at mliv . you can get a rundown in one click and there is on going commentary and analysis from bloomberg's expert editors. you can get what is affecting your investments right now. still ahead, i'll be talking about the biggest risks for emerging markets. when gordon joins us next. in pursuit of payment, hong kong witnesses a battle between payment, and we chat. this is bloomberg. ♪
denuclearization on the peninsula. i think the chances are high and the reason is both sides want this summit to occur. who wantsm who -- kim sanctions relief and legitimacy, and he doesn't want the united states to strike his military facilities and wants a counterbalance to the chinese. ul has some explaining to do because trump went in based on what moon jae-in had told him. they owe us an explanation, not the other way around. i thought the letter was deliberative and thoughtful carried it was strong, understated considering the nuclear showdown language we got from north korea overnight and he plainly let them know that the door was open if they wanted to reconsider. president trump's decision to cancel the summit with kim jong-un. we are joined by thomas byrne.
what was the real reason that donald trump decided to cancel? read the letter, he focused on the hostility north korea recently expressed and that was, of course, the vice minister of foreign affairs, who made the statement if you don't want to talk, we can have the nuclear to nuclear showdown. mentioned theeo north koreans recently did not prepare enough. they weren't showing up to meetings and the necessary step -- preparation to have any diplomatic agreement or engagement didn't come together. perhaps the timetable was too short. so did donald trump up the ante and call kim jong-un's bluff? thomas: i wouldn't look at it that way. if you look at the statements
that secretary pompeo made to congress, he said he talked with kim jong-un on his easter visit to pyongyang for three hours and it was very clear, he thought kim jong-un understood the scope and intent of what america needed to enter into agreement. the libyaneeded was model, which was rapid dismantling, and the denuclearization of capabilities. the libyan model is implemented with one month -- within one month after the foreign minister to take that course of action. be -- where would beijing what would they be thinking at the moment? thomas: sorry, who? haidi: what would beijing be thinking? would they be relieved? thomas: with the north koreans be relieved or the americans? haidi: would china be relieved?
oh, china. i understand china is in favor of denuclearization and the chinese also realize they used this analogy where they were thinking the north koreans wanted denuclearization like you would prune a plant or snip back a weed but leave the roots in the ground. my understanding, the chinese like the americans and south korean thought denuclearization means ripping out the whole program from the roots, not trimming it back. is, china also values stability and maybe they thought a libyan model was very rapid denuclearization and would cause political problems in pyongyang. in terms of what the north korean leader has gotten out of it, he has had a pretty good run. in the past six months, he has gone from being an international pariah to almost a statesman,
this six months of diplomacy has done quite good for kim jong-un's global image. is remarkable the turnaround because a year ago, a little more than a year ago, he had apparently -- orders came from the top that kim jong-un in the airport. you had the north korean soldier defecting across the border and it was discovered he had all sorts of medical problems and that was, you had -- the typical script for kim jong-un and all of a sudden on january 1, he showed a different side. that created a lot of hope, perhaps unrealistic expectation that this problem could be solved very quickly. we often talk about denuclearization and what it means for respective sides. no one can come to an agreement of what it means. we had the reference to the libyan model, which sparked off
the iron of the north -- ire of the north and that was caused by the arab spring. the regional the nuclear and deal of getting rid of his weapons. it was something nothing to do --h demise gaddafi met his seven years later in the arab spring, following the overthrow in tunisia in january 2011, egypt in february of 2011, arab spring went to libya and at the end of the year, he was killed. it was the arab spring that did it and the arab spring, the primary causal factor of that was the lack of political voice and the corruption in all three countries. this is alsoch of a smart move given from all
accounts the state department under the trump administration still understaffed. do they simply need more time to prepare, as well? theas: the diplomats and foreign policy specialists and experts all say that there wasn't enough time or preparation to put together an agreement because the way -- i was even with members of congress in korea recently and they were saying that -- when we were telling -- dealing with gorbachev and the warsaw pact, we got agreements done but it took a lot of preparation by the staff of the state department and other agencies and the leader would walk in, tweak it and sign it, but there was a lot of work done before hand between reagan and gorbachev when the intermediate range missile agreement is reached and apparently, north korea wasn't ready for that. rishaad: great talking to you, tom byrne, professor at columbia
university. let's get to the here and now and look at stocks moving in the session in hong kong. we have these two, international ,own 12%, the short-sellers questioning some accounts in valuations. -- very careful as to what they read into the report. making headlines, up with shares the highest since april the 12th. upgraded and cautious on restructuring, but earnings stabilizing and it is looking as if this company is on a firm financial footing according to at least the reaction from investors. this is bloomberg. ♪
haidi: hey check of the business flash headlines. the house of representatives has as presidentsh zte trump faces pressure to not weaken sanctions. it was part of the policy bill passed overwhelmingly that ann's federal agencies from using zte tech and preventing the defense department from renewing contracts with vendors that work with them. biggest china's technology company says the industry must tackle user concerns about the privacy and risks posed by the rapid advances in technology. requiring tencent and other media services to enforce censorship guidelines, although tencent denies it eavesdrop on its one billion chat
subscribers. haidi: netflix briefly topped disney in market value in thursday trading, challenging for the title of most valuable media company. confidence, of-- 82%, surpassed comcast. the california jury has awarded apple more than half $1 billion in damages from samsung over their long-running dispute. apple had sawed $4 billion, while samsung argued it should pay 20 million for the infringement of five patents. peter elstrom, this has been a multitier saga and it is definitely not the end, is it? peter: it is not the end. it is important to remember how long this has been going on. it has been seven years so far.
the two giants continued to battle in the u.s. courts. apple is arguing samsung has infringed on certain designs, design patents and utility patents. samsung has denied the charges and said even if it did infringe on them, it shouldn't owe as much as that. there were many court battles samsungbut previously, had been ordered to pay about $1 billion in penalties. this went all the way up to the supreme court and got sent down to the federal court judge to re-examine the numbers. this time, they came back with the $539 million, so it is a win for apple, not quite as much money as they had asked for. , but itked $1 billion is more than samsung had originally intended to pay and that is for infringing on five dittmer -- different patents. three of them design patents, sue showed -- two of them utility. continue overll
whether this is the right number for penalties. haidi: what happens next, peter? some --ell, saying samsung has come out disagreeing with the ruling. -- even ifpute, what samsung infringed on these patents, what should the penalties be? should it be on all the sales samsung got from the products sold with these infringing patents, or should it only have to pay for particular components that infringed on the patents? that is the dispute we will see over the next few months and perhaps years. all right, peter elstrom in tokyo continuing to cover the story. our managing editor for asia technology. tokyo investors going off on their lunch break. this is how we are trading in japan. ,he nikkei 225 essentially flat paring earlier gains.
paul: 10:29 in hong kong, 12:29 in sydney. u.s.dent trump says the military is ready after canceling the summit with kim jong-un. he said it was a setback for north korea and the world, but warned america would act as required in the event of conflict on the peninsula. the president held onto the hope that the june 12 summit in singapore could happen or he and kim could meet in the future. north korea said it will talk any time. shut down itss main nuclear weapons test site in the presence of foreign media, but not independent inspectors. in john kuhn announced the move after his weapons program was declared complete. south korea and the u.s. had
declared -- interpreted as a gesture of good faith, though some experts said the decommissioning would not impede his ability to make new weapons. to salvage the iran nuclear deal pick up on friday in vienna where officials will meet for the first time without u.s. diplomats. russia, china, the u.k., france, and germany will discuss the economic incentives around keeping a cap in place. they will consider the verification activities of the iaea, which reported on thursday that iran is sticking to commitments. inside law-enforcement said disgraced harvey weinstein is expected to surrender to authorities later on friday to face criminal charges of sexual assault. two officials tell us the case involves allegations by a former act rests -- actress who was one of the first to accuse him. a grand jury has been hearing evidence for several weeks. housing boom is
buckling under the weight of tougher critical's, increasing supply, and subdued wage growth. sydney's average home prices fell 3.4% in april from year-earlier, a seventh month of declines. in 2017, sydni properties were gaining 16% a year. deutsche bank sees the downturn as mildly negative for the aussie dollar. global news 24 hours a day, on air and tic toc on twitter, powered by more than 2700 journalists and analysts in more .han 120 countries i'm paul allen, this is bloomberg. . emerging-market stocks and currencies leveling off. there have been fears of contagion from turkey and argentina. some of that has eased. investors thinking the problems with those economies are essentially of their own making. yeah, you can see evidence from this gt the -- g tv card, the slump in the lira and peso outweighing declines
among peers. looking at this fragile two chart on the bloomberg. if we are going to see contagion or if it is more isolated incidences in e.m. weakness depending on fundamentals. director of is the fx at ubs wealth management in singapore. there are two schools of thoughts. who think wee aren't just getting a repeat of taper tantrum, but more in line with the severity of the asian financial crisis and others say these are very isolated e.m.ences, so look at each by their characteristics and fundamentals. what do you think? i think your last statement is probably the correct one. ubs, we acknowledge that we are in the mid to late cycle of this
broader business cycle we have been in. when we look at emerging markets , the couple of fundamentals i think people need to focus on is the fact that growth is still doing very well, particularly we have seen china, even in the numbers weter gdp have seen coming out of europe and japan, we have seen some e.m. economies holding up very well and the second thing would be that earnings growth is still very strong. in asia in particular, we see low double-digit earnings growth around the 10, 11% this year and guidance after the reporting season has been very robust. butall, we stay risk on what we would tell investors, and have been telling investors for some time, given the stage we are in in the cycle, obviously volatility is back, volatility is largely normalized.
we expect this sort of situation to continue and people need to be not going into cash, but looking at their portfolios and doing some countercyclical type long-duration as u.s., for example. looking into commodities like gold. been picking up, commodities tend to perform well in the late part of the cycle, so looking at these commodities which can help hedge against inflation. rising inflation, rising rates, rising dollar -- on the last point, last week was the fifth straight week of gains for the u.s. dollar, the longest winning streak since 2015. is that coming to an end, because we have all been scratching our heads as to what has prompted this enthusiasm over usd all of a sudden? peter: -- wayne: one of the king
-- key things that shifted people back into the dollar was largely that the european growth story, while the u.s. growth story continued to be quite robust in the first quarter, european growth looked to fade out a little bit and that is concerning to some people. we saw some rotation back into the dollar. the fed was continuing to be on continuing to move forward in their hiking cycle, whereas inflation and growth disappointed in europe, and that raised questions around the ecb and the timing of the exit from qe. on a longer-term basis -- in the short term, we do see risks around the euro-u.s. dollar cross and the italian election result has raised those risks for us, but in the longer term, clearly the deficit situation in the u.s., the very large surplus in europe and also, we expect growth to rebound in the second
and third quarters, so we think people will eventually rotate back out of the u.s. dollar and into europe. we are still very bullish on the u.s.-euro dollar in the long-term. we see it trading up to the 125 to 1.30 on a 12 month basis. moment, it is prudent to these risksbout like the italian election, but longer term, we think the fundamentals mean a weaker dollar, stronger euro on a 12 month basis. and serendipitously, i have a chart that confirms this from allergy tv library. japanesehow we have tilltors -- declines out toward frenchve sovereign bonds in particular. that kind of goes to your point,
but surely the yield differential would make u.s. treasuries more attractive. i think that is fair, but how we look at it is longer-term, clearly the fiscal deficits play a greater role than the yield differential. if it wasn't for the yield differential between the u.s. and europe, and we would be forecasting a stronger euro dollar. we still believe the fundamentals of higher fiscal deficit, the potential for slowing of growth in the u.s. as we go into the backend of 2019 plays nicely into this story where we see long euro, short dollar is the structural view to hold. rishaad: i would counter that by playing devils advocate and zoneg data from the euro
has not been great. it has taken a turn for the worst in recent months. pmi,: look, the particularly in germany was weaker than expected in the latest reading. we don't think it is too much to be concerned about right now. we were to get another couple of readings of similar magnitude, then we would start to get more worried. overall, the reasons why europe was weak in the first quarter was largely correlated to some softer seasonal basis. we think those things start to run their course and may, june, july will start to reiterate our view that europe will start to strengthen again. gdp will be stronger. haidi: what is our top pick in asia, given investors don't know what to focus right now. there are a lot of themes playing out, geopolitics and trade, but ultimately, not very
investable? wayne: look, on the regional basis, we are long singapore equities. we are long china equities. we actually like this dynamic of the msci inclusion of asia coming up at the start of june, so we can see some upside over the next 12 months for asia and the earnings dynamics are still very strong. on a sector basis, we like the whereyclical type trades we are favorable on financials, commodity or material equities still have some way to run as commodity prices remain very firm. these late cyclical sectors, as well and not only that, but when clients are looking to diversify their portfolios, which we think is very important at this stage, we think these longer-term
secular trends such as robotics, sin tech, health care, people should look more seriously at including these things in their portfolio. the statements that moved oil prices overnight opecnergy ministers, ministers are still expecting to go into next month's meeting to talk about a nexus strategy. the you envision that happening, given there are venezuelan concerns, iranian concerns over supplies? wayne: i think one of the key issues that relate oil is firstly from an oil investors point of view, the curve is steeply in backwardation. there are gains to be had by owning oil on an index basis, but in the opec meeting, we expect they will start to lift production curbs -- not too much, but you could expect more oil out of saudi arabia as well
as russia and some of the other opec nations. ishink the key here venezuela and the situation there, if things continue to deteriorate at the pace that they are as we go into the summer, you could see venezuelan oil dropping out another half a million barrels. that would see oil move substantially higher from where we are carried we target $85 a barrel at ubs. of the iranthe loss sanctions by the u.s. will come to a total of somewhere between 200000 and 500,000 barrels a day, so consequently, saudi arabia -- who has been very compliant to the -- in fact overly compliant to the level of production agreed in november a couple of years ago -- we think the compliance will start to come down. even if saudi arabia produces more, russia produces a bit more, opec is still compliant
with the agreement done in november a couple of years ago. the market is tighter, demand remains pretty robust, we are below the five-year average for inventories. we think even with a bit more oil from opec, the oil market can hold up because of the risks in venezuela and the u.s. administration has come out quite hard in iran, we don't think that has fully played out yet. we still like to own oil here. rishaad: very quickly, top pick on the commodity side of thing for the yen? wayne: we like oil. role gains you get from owning oil on the curve are attractive. we also like to enjoy industrial metals. back, peoplecoming are going to look to real assets to hedge inflation, so we like the industrial metals and energy.
rishaad: we are back, this is a business flash headline. deutsche bank seeing the stocks as the newmonth lows executive chief overhaul is looked too little too late. retrenching and costly areas and giving up the challenge wall street's big names. they are seeking to gain profitability and it ended up eroding. revenues, as well, ultimately confidence. workershe united auto are asking the u.s. federal labor board to investigate tesla over a tweet from elon musk. is nothingte there stopping workers from voting to collective eyes but he suggested they had to give up stock options to do so. the uaw is trying to unionize the assembly plant and says the
tweet is a threat to workers and a violation of the labor act. having an interesting time, reversing early losses after an expanded partnership with google, paring gains. be available across google services. paypal saying it is setting up the card linked to its venom of service. many see it as a way of computing with amazon. haidi: lenovo seeing a double-digit increase. company seeking to reverse years of declining growth. -- stock removed from stephen engle caught up with the ceo. i wouldn't call the were
damaging. arere disappointed, we aware over the last few years the environment has been challenging, our chair price dropped -- share price dropped, andseeing the momentum building that momentum. we believe the moment will continue and for us, the key is how to continue the momentum. when we go back to a reasonable level, i think we will -- i hope we will -- and i have to say , the key is how do we focus, generate profit. stephen: what a listing make sense -- what a listing make sense if the rules allow the? >> we are looking at the platform. lenovo's famous as a brand in
china. we look for opportunities as to whether we can have the opportunity for the chinese investor to invest in the stock. >> you are a chinese company, what has been the impact on the trade tensions between the countries and also, the collateral the -- damage from arezte scandal and if you guilty by association? >> lenovo is a global company. if you look at our business, china accounts for 40%. as a global a company, you need to comply. that is the cost of being a global company. i would say that if any country imposed certain rules, it has an impact. from a supply chain point of view, whether wish -- we should rearrange our supply chain. when you look at us, our supply chain in china and north america
, brazil, everywhere. it is a global company. when the external environment changes, you need to take actions to make sure you would be able to complete -- compete. rishaad: -- has kicked off a campaign to woo mainland shoppers. our banking reporters with us now. alipay achieving? has been may, alipay targeting chinese visitors. for their service in hong kong, but what they are trying to do now is get more local people to use their service and not just everywhere, you can see alipay in taxis in hong kong. quickly, how important is hong kong for alipay? >> just like any other developed
a very hong kong has western-style financial system and basically, everyone has more than one credit card in hong kong, which means that it is very convenient to make payments in hong kong and that is why it is important for alipay to test the water and see how much success they can possibly have elsewhere. alfred, thank you. bloomberg's finance reporter carried more to come on bloomberg, including the friday edition of battle of the charts. this is bloomberg. ♪
haidi: our final edition of battle of the charts. anders can get involved access those charts on the bloomberg using allergy tv function. it is at the bottom of our screen. rishaad: we have a look at the winning chart first from the gtv live. you would think the chinese economy is perhaps more attuned to what is happening.
happening. don't forget, a huge amount of trade take place as exemplified by angela merkel's visit to beijing this week. chinese and german ppi is shown here, showing how they match each other so closely. this goes back to september 2014. germany had this negative ppi picture, but a negative one for china. has the recovery stepped in, they have been in lockstep economically speaking and i was looking at this and this one grabbed my attention because i thought, this is a bit left field. there you go. >> a lovely correlation. you are chomping at the bit, go for it. >> ibm. when i saw that, i had used that earlier this week. -- anyways, my winning chart here is all about oil. factor isisk fire --
going to be determined more by the mercy of global politics and less so from global economy. looking at the blueline line, this is the production out of iran post-sanctions in 2015. the curbsite because had been in effect. in venezuela, that is yellow and not getting out of that with u.s. sanctions starting to take effect there. the bottom line according to lombard oda is that the oil price could rise in the coming weeks and the folks we have had in the past weeks have been saying they are in oil because they expected to rise higherl , mideast tensions on the boil. much more in terms of geopolitical risk than the economy. very solid chart there and i hate to ever go against my coanchor, but for the sheer that it isd the fact
your last day in hong kong for us, i will give it to ramy rish. rishaad: i congratulate him but as ever, in that great line from society that, in a demands success, all i can offer is failure. there we go. haidi: on that note, a happy friday to all bloomberg users. you can take a look at those and blouseg gtv go the charts we have used on tv. plenty more to come on bloomberg markets: asia. this is bloomberg. ♪
emily: i'm emily chang in san francisco and this is "bloomberg technology." coming up in the next hour, president trump cancels the summit with kim jong-un. and may order new tariffs on foreign cars, inflaming trade tensions as a result. we will discuss state of play with a former u.s. trade representative. plus, highlights from the the tech from paris as president macron gathers the biggest names in technology. we will hear from the head of