tv Bloomberg Daybreak Australia Bloomberg June 5, 2018 6:00pm-7:00pm EDT
not dump nafta, but would prefer bilateral deals. >> i am haidi lun. this is "bloomberg daybreak: australia." >> good morning. york.6:00 p.m. in new imy inoce. we will be looking at the action on wall street and how it will play into your asia-pacific trading day. we did see stocks sputter out. , mayord of the day caution be uncerty, a miht ly in the red, the s&p slightly in the green, the nasdaq hitting another record, up .4%. a lot of it was movement in the tech space. twitter up 5%, replacing monsanto on the s&p later this week. to buy funds forced
twitter today. from the rally friday into monday sputtering out today. let's look at yields. there was some flight into safety. year down by one basis point, the two-year down by two. because thein italy new populist government has said it will embark on a radical agenda. that will cause a little flight from italy. by 25 the two-year rise basis points there. we are getting some lines from tesla. let's look at the share price. that is up 1.5%. the news crossing the bloomberg terminal right now. to approve theed
reelection of three board members. there was a question on whether any of those would be replaced. they shot down the proposal to have an independent chairman. it is quite likely according to elon musk of that they will reach 5000 cars each week by the end of june. investors have been wondering whether production could get there, possibly by the end of this year, so that's why we are seeing tesla shares up in after hours trading. we will continue and get more headlines. i will stop talking. over to you. no terribly controversial statements from elon musk just yet. let's look at how we are shaping up in asia. it comes to the global stock rally. a lot of event risks coming up next. trade withure on this back-and-forth between
beijing and washington. trading at that level. gdp day. the aussie dollar holding at that level on the back of that decision from the rba. we are expecting a pickup for the second quarter. the numbers today looking at net exportd household spending, looking to be major contributors. we saw crude, a tale of two stories, continuing to divert. wti rising for the first time in four sessions. its lowest in almost a month. the u.s. government has quietly been asking opec to increase crude output by one million barrels a day to fix the soaring gasoline price situation in the u.s.. takean sachs sanyo will
3-4 months for new supply to hit the market. the commodities index lifted by copper prices, breaking $7,000 a ton for the hfeighest cbruary od industrial unrest concerns. recovery from the bloomberg agricultural index. we had that decline across sugar, cocoa, and wheat. really helped by this report that china is open to buying some commodities and gasnd , the tariffiffs position is stepped down by washington. let's get first word news with jessica summers. house has now confirmed the location for next week's summit between president trump and kim jong-un at a hotel in singapore starting
tuesday at 9:00 a.m. hosting track record of top meetings and good security and long-standing ties with north korea. white house says president dump does not plan to nafta, but is considering bilateral deals with canada and mexico. kudlow said the president would prefer to negotiate separately despite nafta partners repeating commitment to a three-way trade accord. reachedors have agreement on nine of 30 issues under discussion. the world's bank's warning global growth set to slow over the next two years. that as central banks raise rates. the economy will expand 3.1% this year, 3% in 2019. the report sayswill slow
in 2020 as the world's economy approaches fall output and trade and investment growth weighing. the ecb to anticipate a pivotal discussion at next week's meeting and could produce a public announcement of when i s to wind down qe. it is likely to treat the gathering and lafayette as an down bondy to ramp buying. the bank has declined to comment. global news 24 hours a day on air and on tic-toc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. haidi: thank you. australian prosetors have laid criminal charges against the former local ahead of citigroup and deutsche bank. we have more on these. what are the charges? >> we go back to 2015, august,
worth $2.5ion shares billion, and how underwriters disposed of the 25 million shares they so cap as part of that sale. a key piece of evidence is video that shows the banks discuing how to offload these and minimize the hit to the anz share price. it just deals with july 2015 and the end of september. you can see it dipped 7.5% around the end of july to the middle of august, which was the biggest drop at the me in seven says that sounds like cartel conduct, so the banks charged, some individuals, steven roberts, the former country head of city of australia, to employees of the bank as well. anz group the
treasurer charged as well. understand all of these folks denying any wrongdoing, so how are they defending themselves? >> that's right. deutsche bank putting out a statement after accc announced the charges, saying former staff did behave lawfully and the employees are well regarded and have the full support of the bank. citigroup called this an unparalleled for rate and to capital markets by prosecutors, and it said there is a technical area and if there are legal issues to be cleared up, they need to be clear that. the penalties are hefty. $10 million for the banks, three times profit gained, individuals, could be up to 10 years in jail. the trial set to begin on july 3. ramy: thank you for that update.
in decision-makers private equity and corporate america have been gathering here for the bloomberg invest summit. take a listen to their thoughts on the investment outlook. >> you can't ignore the far east. china, 6%, seeing in six point 5% growth despite the financial deleveraging that has occurred, and tremendous growth in the consumer sector happening there come the opportunities in tech and health care, they can't he ignored, so you will see real opportunity there. >> we should start looking at china equities as the sin stocks, where from a governments it is really something where allocators should be asking themselves whether it is something they should own. less understood opportunities are in north asia
in korea and japan, probably among the cheapest violations among the economies today. in our business, the ability to drive fundamental operational improvement and margin improvement in these countries. so japan is one of our top priorities globally in terms of the buyout market. ramy: some interesting insight into where to get opportunity. let's bring in peggy collins, who leads the u.s. news bloomberg investment team. it has been a long day for you. you have been covering this or the whole day in new york. where do you see in terms of topline the opportunity around the world? >> one of the biggest themes was asia in terms of where private equity managers see growth, but people also see growth in the markets. there were cautious voices amongst those here today as well.
blackstone's global head of private equity said the markets are expensive everywhere. he found it hard to pick out a single country where you should buy their. -- there. one of the copresidents of kkr korea some of the best places. japan came up several times today as one of the places in the world where people are looking. haidi: another theme from the summit, at a lot of these events this year, talking about artificial intelligence and how that fits into things. tell us about u heard about how he can play out in the sector. >> that's right. asset managers, hedge fund managers with us as well today, and they are seeing artificial intelligence and quantitative strategy as key to the growth for the future, but there is this debate about how you can incorporate computer-driven strategies and where the opportunities for human intelligence still are.
man group is a giant hedge fund headquartered in london and one of the leaders in quantitative said today their cio there are some places where humans are really key to the trading process, for example, doing due diligence on loans and corporate bonds, for example. ramy: one other thing just ended, the panel on cryptocurrency. what was the takeaway there? bitcoin has been up $15,000, now $8,000. >> it has had a wild ride. interestingly, he said he still believes in digital currency and the future for it. he said regulators have been caught flat-footed with the volatility, but he sees them catching up and that is a healthy thing. the regulators will start to step in, put guardrails around the trading, but also long-term
wise, there is tremendous growth from his point of view. haidi: thank you so much. peggy collins for us. bhp, saiding news on of its received valuing shale unit up to $9 billion, bp ron amone bidders of the unit. these are the first round bids. andation between $7 billion $9 billion. shell is partnering with blackstone. they came in may. chevron with another. bp is pursuing them alone. we will wait to hear more on those details. to receive $10 billion as bidding for the entire unit proceeds to a second round, 13 billion dollars expected if it sells the assets piecemeal. still ahead, aiming to raise the
haidi: the clouds are clearing , wednesday morning in sydney. we are counting down to the open of trading in australia. futures mildly positive, global stocks taking a breather from that equity rally overnight. tech was the standout in the overnight session. am ramy inocencio in new york. you are watching "bloomberg daybreak: australia." stocks splattered, the s&p 500
extending that 12-week high. let's bring in steve friedman, bnp paribas asset management's senior economist and held various positions at the new york fed. i want to get your initial reaction to the neither here nor there looking at the dow and the s&p, forget the nasdaq right now. think i wanted to say the past few days, i told you so. the jobs pomp was not going to go far. your reaction. >>ts are thinking about the next steps fro overall, think about the equity market over recent weeks, it has performed fairly well. theheorce quarterre was a soft patch, a little weakness, in the u.s. economy, but indicators of planned business investment remain high. capex was relatively strong. household spending has been firm. by all mea the u.s. economy is on sound footing and
investors appreciated the fed will be gradual in raising rates. ramy: off of that there have been people saying there are four by fours for this year and next year in terms of rate hikes. you are three by three, is that right? >> three more this year. ramy: explain that. >> sure. the fed is in a difficult situation having to think about the extent to which they should accommodate fiscal stimulus. if they raise rates aggressively to counter fiscal stimulus, they risk throwing the economy into recession in a couple of years. if they accommodate too much the fiscal stimulus, inflation could rise ad. they are trying to square the circle. they are continuing to raise rates gradually and get to neutral policy by the end of this year. , three moret 2.5%
rate hikes come and take policy into restrictive territory. ramy: you are more hawkish than bullard, who was saying they are already and neutral there. i want to bring up this chart about where business leaders stand. this just came out today. ceos are slightly less optimistic about the u.s. economy. that you can see on the right-hand side of your screen, slipping from a record high. how optimistic are you? people are saying that especially with trade tariffs, possible trade war, capital d come down and that could impact overall growth. >> those are all good points. when we look at these types of indicators, i would point out they are at very elevated, healthy levels in .2 solid economic activity going forward, but there are risks, and trade is one of them.
how pervasive do tariffs become? is it just limited to steel and aluminum? will it expand to $50 billion in tariffs on china? i think it will get to that stage. that should be fairly limited in terms of its impact on the economy, but there can be second round of fax were businesses feel like it is a less certain environment. there are reasons for concern about tariffs. the administration has talked about an additional $100 billion on china, automobile import tariffs as well, so it is a question of that uncertainty going through the next stage of tariffs with china and in general about the economy. haidi: if you look at the ,nflationary impact of tariffs depending on how you look at it, how does that inform policymaking? >> the impact on inflation will be relatively small.
it is not a tremendous impact if it is limited to steel and aluminum come even if it expands to $50illion of goods from china. i think we are talking no more inflationary impact. of inhink the concern is less the near term about upward pressure on inflation, but more what is the impact on business confidence and spending and hiring decisions. haidi: i want to throw up a quick chart comparing cross asset volat across stocks, bonds, and fx. wellee it is all correlated and a spike up in bondary when we had that on t e market volatility. does this tell you that markets are less resilient, some fragility across the rest of this year? ini would expect we will be
a slightly more volatile environment in the year ahead given rate increases by the fed, even if it is rigel and well telegraphed, and elections, trade war risks, and events in europe. together and investors have become more cautious when it comes to risk-taking. in a: are we in april prolonged environment with the u.s. dollar and the fundamentals have not changed much. >> when i look at the dollar and think about the stance of monetary policy are broad, we are in a stage where the u.s. is far along in its own hiking cycle. years, the ecb-2 and boj making changes, withdrawing accommodation. that is an environment in which we could see further dollar weakness. haidi: thank you for joining us. bnp paribas asset management senior economist in new york.
ramy: welcome back. i am ramy inocencio in new york. of theo a quick check business flash headlines right now. added six chinese banks for its upcoming hong kong listing come expected to be the world's biggest ipo in almost four years. tell us they include bank of china international and icbc, who will act as global coordinators.
is seeking $10 billion from the ipo to be hong kong's first with a weighted voting rights structure. charteredstandard wants to new of's for its asian operations to simplify its extensive network and bring costs down. 10 plan consolidates southeast asian countries in a single subsidiy as soon as next year. it's non-china north asian interests will be kept in hong kong, but lands are not final and they could also change. conservative billionaire david from histepping away business and empire because of health problems. his elder brothers charles is saddened by the news and will misss insight and contributions. he has been a primary leader of operation -- koc
sydney,:30 a.m. in where markets open in 90 minto . future ahead of that looking positive, .2% higher for the sydney open. i am haidi lun. ramy: i am ramy inocencio in new york. you are watching "bloomberg daybreauralia look at the firsts with jessica summers now. rackeda investors have the board, defeating a proposal to require in independent chairman. it approved the reelection of three directors. the board advised keeping elon musk as ceo as chairman. and others have
proposed the idea of an independent chairman amid claims targend the board had failed to oversee elon musk. nxp higher after reports zte signed an agreement. the reuters report also quotes the commerce department, saying an agreement has been signed. the chinese company has replaced top executives, and president trump said it can resume business if it paid the $1.3 billion fine. government has asked saudi arabia and opec producers to increase oil production by one million barrels a day as retail gasoline prices surge to their highest in more than three years. president trumpas publicly complained about the opec policy that boosted prices. it is highly unr
washington ask for a specific output hike. the international atomic energy drawn up a iran has tentative schedule for boosting production of uranium. the plan was outlined in a dayter submitted mon following the call for the nuclear industry to be ready for work. the iaea said iran is sticking to enrichment limits under the deal. pnce mohammed dhabi said officials have been instructed to draw up plans within 90 days that include provisions for creating at least 10,000 new jobs. 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 jessica summers. this is bloomberg. that. thank you for i quick update on the markets. trading in new zealand underway. take a look at how we are sitting at the start of the asian trading session. we are seeing a little gain when it comes to stocks. sydney futures looking more positive. we also have the aussie dollar holding at that level. the rba staying on hold as expected. we getd-quartep today expected to show a marginal pickup in growth is supported by exports and household spending seeing some strength as well. looking at dollar-yen ahead of the tokyo session, 109.86, sterling flat at 1.399. the 10 yield at 2.93. a whipsaw session overnight, but
generally u.s. stocks taking a sessi,eat in the just ending marginally higher. david stringer joins us now from melbourne. china ready to boost purchases of american goods, $25 billion a year. buy,are they planning to and is it enough of a concession that we can stop talking about a trade war? >> exactly. all focused on threats of a trade war. what we are hearing from china quantifying the amount they are willing to raise imports, helping president trump reduce that trade deficit. wenty examples of that if dive into the chart library. we can see some illustrations of that deficit. saying china has
indicated a willingness to oil, andre coal, food products, an extra $25 billion a year. the hope is that could avert that trade war. president trump is trying to impose tariffs of $50 billion on chinese products. china in response has threatened to retaliate by imposing tariffs airplanes, so a definite hope and expectation that moves like this could avert that crisis. ramy: on the optimistic side of is an unlikely band of millionaires in eastern china, and it has to do with janitors to factory workers who are now millionaires? >> look, that is absolutely right. it is a fantastic story. china sunny optical technology is the company, a company that makes lenses for smartphones, drones.
demand has rocketed in the last 10 years, so has the stock come , up 9500%. stock it allowed early employees from cleaners, chefs, factory floor workers, to take stakes in the company. that means it has created hundreds of millionaires in a small city in eastern china where the company is based. the one thing we don't know is how of thple are still in their jobs. ramy: or whether they know if they've actually come into this windfall. it is always sunny in china right now. ,ery quickly we will let you go we did have some headlines crossing bloomberg on the sale of bhp's shale unit. what is the latest there? >> first-roundids are in. people say bids have been submitted by bp, shell
partnering with blackstone, also chevron partnering with private equity. parts, bits for discrete but that poving forward very quickly. it should get around $10 billion or more as the process continues. beond round of bids will forthcoming in the next couple of weeks. it is a process bhp said could wrapped up by the end of the year. haidi: thank you so much for that. david stringer in melbourne. you can check out our library and some of the charts we have been bringing up there on gtv . larry cut lowe says president trump is not planning to qui nafta. -- larry kudlow says the president is not planning to quit nafta. he is contemplating a shift
in nafta negotiations. his preference now, and he asked me to convey this, is to negotiate with mexico and canada separately. he prefers bilateral negotiations. joining us now is a former deputy u.s. trade representative. i want to bring up this chart to -- i don't have the chart at the moment, but you were talking about the discrepancy between the u.s. trade relationship with canada and mexico, a deficit on one side, a surplus on the other, so does it make sense to conduct bilateral trade negotiations? the revised nafta should remain between the three .ountries who are part of it it is the economic strength of north america that is at the heart of this. isusing on the trade deficit
really a false premise. we know that the deficit is not inherently a sign of a flawed trade agreement. it can be in some cases a sign of the need for improvement, but the collective nafta agreement has worked well, so it would be a mistake to break these into two separate bilateral negotiations. this is north america after all. it should be addressed in that context. haidi: how damaging is it to the ?lliances president trump has tendency to conflate trait with geopolitics and security. strategy, or is it potentially damaging in the long-term for these long-standing alliances? >> we know trade has a benefit for national security because it havegthens ties, but we
seen recently particularly in terms of the u.s. position, taxes against top allies in the area of steel and aluminum. national security is now being used as a u.s. scheme to take actions against canada and mexico and the eu and japan and others who are our closest , so can improve national security and economic strength, as we can also be used are seeing as a divisive lever that can hurt the economic as well as the strategic and onal security implicns of a group of trading partners. ramy: ambassador come in terms of -- sorry, in terms of the fi hurt. been saying the united states is ultimately going the biggest recipient of that pain. do you agree? if so, explain how that would happen. >> the use of tariffs is
something that should only be ustool of very last resort, if at that. effectively what it means is that wll increase taxes on american businesses and consumers. it is american businesses and consumers who i and large pay that price. by and large- who pay that price. if there is one, and there will be one from our allies on the 232 action on steel and aluminum. that means u.s. exporters are hurt in those markets, so it is a scorched earth policy. what would be a better approach would be for the u.s. to be completely aligned with our core u.k.s, mexico, canada, eu, , australia, and others to deal with the common challenge we face, which is largely driven by china and the very close to
market that china has and the mercantilistic policy china has. that is something that is beting us all, and we would better to address tt collectively than for the u.s. to do it alone, and particularly for the u.s. to do it well picking a fight with our core allies, which is what we are doing right now. that opportunity for collective talking, negotiation, is slipping. we have the headline confirming mexico is putting 20% tariffs on pork. a you feel that is is at where it is slipping from our grasp and we can't go back? better yet, what needs to be done to stop this? back, although it is becoming increasingly difficult to do that. tocan go back by trying
strike the best deal we can with china to avoid the imposition of these new taxes. we can by looking at the true nature of u.s. national security laws and no longer viewing canadian imports of american steel or u.s. imports of canadian steel as a threat. what is a threat to both of those countries is the massive export regime that china has that are filling the world with a lot of excess capacity, so we need to be smart and realize there are opportunities and that the markets will pay a price and consumers will pay a price if we don't find a way to solve real problems rather than creating false problems with the difficult offramp. ramy: we will be continuing to talk about this in the days and weeks to come. thank you for joining us. some breaking news right now
crossing the bloomberg terminal. , the company now saying it sees 4500-5000 employees too exited by the end of fiscalear 2019. in the meantime, most of the board has approved amending its fiscal plan on may 26. they also see pretax charges of $700 million. a in after hours trading up i little more than .4%. the news here, 4500-5000 employees to leave the company by the end of fiscal year 2019. next, cryptocurrency trading. we are talking about that with a platform that promises the world's best fraud prevention and anti-money laundering measures. this is bloomberg. ♪
>> the regulators had to get involved. they are doing what thesupposede the t thing, let's go after fraud and market manipulation. those of the first two things. it is a good thing. >> i believe the blockchain will ultimately create new business models. i think it will be helpful in the developing world where registries are not as established as they are here in more developed economi. ramy: just some of the voices from our bloomberg and fast conference in new york today talking about cryptocurrencies as well as blockchain. for more on blockchain, let's bring in a special guest on this. over to you. >> we saw optimism from the conference.
australia in particular, given the royal commission going through here, the scandal surrounding cba, therewhether tn technology is a value with a renewed look. from bring in blockbid australia, one of the first to receive legal approval to start these crypto operations under australia's new guidelines released in april. the ceo of the crypto trading platform joining us from melbourne. thank you for joining us this morning. we have been talking about the environments of the crypto univ seems like the bears have control in terms of bitcoin, still below $10,000, volume low. nos saying that coin is the last thing he plans to earn in a crisis. how are you dealing with the
aftermath of the euphoria now that it has died? >> good morning. what we are finding currently in the crypto currencys a bit of stabilization. surrounding the well-known bitcoin and other crypto currencies as well. what we are finding is that people are starting to research and understand what is the driving force behind what is known as bitcoin, blockchain, and it can help our industry. and while we may see volatility within the next couple of months , years, we do have to remember this is a new industry. every single player who comes to the field, such as blockbid or each large firms, will offer a solid platform to help stabilize what we see as currently the wild west out there. further along, we are
finding that everyone is becoming more knowledgeable with the platforms, rather than being part of the hype itself. >> given the findings out of the rail commission where you are, does this give a reminder that there is still credibility in the blockchain technology? how does this fit into your partnership with lexis-nexis? >> one of the concerns in the past for cryptocurrencies has been that it is used by bad actors, whether financing, even legal activities or fraudulent transactions, we are finding by partnering with leaders in our own industry providing bank-grade solutions, protocols, biometric identification, it is allowing us to provide legitimacy and transparency and accountability to what we feel is a stepping stone to what will
be a large market and the new wave of technology over the next at least a decade. >>, you're talking about these bad actors. we have seen behavior from money launders who use intermediaries to start these accounts. you can also buy verified accounts on websites these days. how can you ensure this fraudulent activity does not happen on your platform? >> this is where our partnership with lexis-nex risk a solution and the acquisition of threat metric has become crucial to the solid foundation on which blockbid will allow traders to trade. by combining digital and physical data and allowing ourselves to be able to use the selective solution provided by lexis-nexis risk solution, it
means we can provide enstitutional-grad compliance and regulators will understand we are heading in the right direction. model, a gatekeeper way to determine who is on our side by geolocation, t e by bio data, govern identifiers, and we are used to this already. through this process when we open bank accounts, when we go for home , sos, sign up for insurance why not bring the same type of institutional-grade security and compliance to the cryptocurrency market? inis a burgeoning industry its infancy come it takes great players and partnerships to form a solution that will set the bar high. it does also text structure, let's be honest. i have been covering
cryptocurrency, bitcoin, in the u.s. the big word. in congress, they are just starting to figure this out. yourmakes australia and region better equipped in the regulatory aspect? has taken this step to allow the industry to flourish, and they are listening to us, speaking to us on a day-to-day basis, working together with us to make sure that within this industry, not only is self-regulation needed, but the help they provide to us on a day-to-day basis allows them to shape what we feel could be leading the world globally. has its own country laws and its own regulatory oversight parties, and it is needed. every single industry needs regulatory oversight and needs to protect the consumers and withher, and by working
the regulatory bodies, we can determine it is allowing to step up the game, industry to flourish, and showing the way for the rest of the world. haidi: thank you for joining us. coo there.d conversations in australia about whether this kind of disruption needs to happen on the regulatory front, particularly with financial services with the royal commission. we have the charts to show you on bloomberg tv. you can save those charts for your future reference. this is bloomberg. ♪ this is bloomberg. ♪
australia." that is just about it. next, daybreak asia. we have some strong data from the u.s. aft report, i sm. job openings as well. fromll get more analysis wells fargo about this sweet spot in the u.s. economy right now. how sustainable is it? also, the outlook for the dollar. ramy: in 40 minutes, we will speak to eurasia group's director and talking about the nexus of national security as well as with trade. we will ask him how that will be impacting the u.s. and its allies. haidi: also talking about italian distressed debt and the opportunities presented. with a hongk
manus: it is 7:00 a.m. in hong kong. i am yvonne man. welcome to "daybreak asia." asia-pacific stocks look set for a mixed open. say nextnside the ecb week's meeting may discuss the end of stimulus. the bond through september. i am ramy inocencio in new york, where it is past 7:00 p.m. on tuesday. fight me mixed trade messages coming out of the white house. president trump will not jump nafta. he would prefer bilateral