tv Bloomberg Markets Asia Bloomberg March 12, 2019 10:00pm-11:00pm EDT
a bit yo-yo-like. ,he theme is emerging today david, tell us. david: no inflation in the world. more proof of that, a little bit in india but g10 yields have been pushing closer to zero. ,> the bond traders pricing in the slower growth picture we have seen globally. when it comes to equities, we are drifting lower today after what we saw when it came to yesterday on the news that perhaps we are getting closer to some type of deal between the u.s. and china. we heard from lighthizer saying tariffs are on the table. perhaps that throws cold water into the rally. we are seeing a positive global equities rally. the nikkei down 1.3% in tokyo. singapore as well, australia
pretty much the same story. talking about the dollar, firmer this morning but the likes of the aussie selling off a little bit. a bit of risk aversion headed into the safeties area japanese yen, 111.19. volatility has been in the pound . as we talked about the prime minister, rejected with her brexit vote. less buta little bit still quite a humiliating defeat. we will see how this plays out. she mentioned the possibility of a second referendum. the pound ease off some of the losses we saw overnight. it goes to show, take a look at the gees 10 space year to date. the pound is one of the top to out performers among the majors this year. kicking the can down the road, a net positive for the pound. if you take a look at the
positioning, net shorts are overwhelming here at the moment negotiationsrade get more painful, perhaps those short squeezes are going to fade eventually. what we have been seeing when it comes to the china rally, we are flattening out a little, stalling on the china rally but we have seen chinese benchmarks put hong kong in the dust a bit. bad,kong not doing that either. we have rebounded a little, but taking a look at shenzhen. time, wed for some have seen the hang seng cheaper than the shanghai composite. we will see if that is a valuation kind of play but for now, hong kong put in the dust a little. rishaad: keeping a close eye on boeing. stephen engle is here with a look at what we will discuss later this hour. we will dig into aviation regulators around the world grounding the 737 max
series. rishaad: with one notable exception. faa.en: the there seems to be mounting opposition to their assessment that the data doesn't link the accidents we have seen. we will dig deeper in this hour. 3 -- david: stephen engle will be back. we will discuss boeing and other topics with our guest, fred, ceo of airport authority joining us. stay tuned. rishaad: first word news headlines with ramy inocencio. ramy: the u.s.'s top trade negotiations as the u.s. must keep the option of tariffs on china to make sure beijing sticks to trade agreements. robert lighthizer said the u.s. must have the ability to impose higher duties to counter potential violations of the deal. >> we have to have real progress
and maintain the right to be able to, whatever happens to the current deal, violations of the agreement and that is the core. if we don't do that, none of it makes a difference. ramy: indonesian inflation is subdued, posing a potential dilemma going into the election. most politicians might cheer but pushing up debt for india. this raises the possibility of a rate cut which would give the economy and modi a boost. the chrysler building could be reborn as a hotel after its latest change of ownership goes through. the tower is being bought by a $151ny from austria for million, significantly less than $800 million the abu dhabi investment counsel paid in 2008. they would consider renovating
the building into the hotel when the deal is complete. cardinal george pell has been sentenced to six years in prison for sexually assaulting choirboys. the 77-year-old was given a period.l -- non-parole he is the most senior official in the catholic church to be convicted of child sex abuse. his lawyers have appealed the verdict. comel news 24 hours a day on air and on tictoc on twitter, in more than 120 countries. this is bloomberg. british lawmakers will vote wednesday on whether to leave the eu without a deal after rejecting prime minister theresa may's latest plan. may taking a revised deal to mps, hoping new language on the so-called irish backstop would win them over. clear, voting
against leaving without a deal and for an extension does not solve the problem we face. eu, the eu will want to know what deals we need to make such an extension. this house will have to answer that question. hoarse theresa may. let's discuss the implications. our reporters are with us in singapore and london. it is 992 days since the brexit referendum. it doesn't seem we are any closer to a deal. next?s >> now the focus turns to a vote tomorrow. this is on whether we should rule out no brexit. if that passes, there may be another vote on extending brexit later in the week. mps are likely to back that one. the attorney general says the extension seems inevitable but
of course we need the permission of the eu as well. donald asks says he wants to know how long british -- britain wants to extend and the reasons. this doesn't solve all the problems of brexit. this is a short-term approach. the overarching issues remain unanswered. there could be a chance of another no deal cliff edge if brexit is extended because that adds a few months or years onto the clock. the other thing to note, all of of intention,ts just because parliament says we don't want a no deal doesn't mean it is not going to happen. that is a default position we are facing. marchhing changes come 29, britain will crash out of the eu regardless of the meangement, and that could havoc for business. you have companies reaching boiling points, lobbying groups coming out with fiery language saying enough is enough very of the british chambers of commerce
saying businesses have been .ailed over and over again these guys are exhausted by this process because you have all this uncertainty that has been escalating. it has put a lid on growth and none of that is good for business. tell me about sterling and what it is pricing. it seems like people are looking at discounting the possibility of a no deal and britain crashing out of the eu. >> one of your charts earlier showed the pound is the best-performing currency this year. it is up almost 3%. so traders in the pound must like something going on. i think what they like, most of all, is this sense of gridlock or stagnation. whatever form brexit takes, it will create uncertainties and changes for businesses that they may not be ready for.
delays it or kicks the can down the road i think from the point of view of the pound investor is good news. the latest readings i have heard there is anis that increased chance of a delay, and there is an increased chance of referendum that might make all this pound stuff go away. i think those are the things that would please pound traders the most. put that point to sebastian. should i consider that brexit might not actually eventually happen? >> there is still the remote option, theresa may mentioning it as something parliament may have to consider in the coming months. that is notable in parliament. take a listen. >> the house will have to answer that question. does it wish to revoke article 50? is a want to hold a second referendum?
-- does it want to hold a second referendum? it want to leave with a deal but not this deal? these are unenviable choices. thanks to the decision the house has made this evening, they are choices that must now be faced. david: passionate -- ers.assionate boos and che that may boost a people's vote. the threat of brexit was meant to get hardliners on board. that didn't work out. they clearly fear this deal more than they do another vote. they may be right to do so because may says herself she sees no evidence the people changed their minds so even if we get the second referendum we could end up with the british people saying, we still want brexit. how much does the
uncertainty hamstring the bank of england? we have a meeting next week. wes: i think the bank of england is on hold. has talked about the fog of brexit hanging over the u.k. economy creating all kinds of uncertainty for businesses. will it go through? in what form? the bank of england officials suggested and indicated that they are willing to raise interest rates and would like to raise interest rates but they won't until we have come i think they used the word a smooth brexit. we have everything in the world except a smooth wrecks it right now. u.k. 10 year bond yields are at 1.2%, quite low when you compare it to treasury yields which are about 2.6%. i think we can expect u.k. bond yields to stay low. david: thank you so much.
sebastian. speaking of low yields, the question of the day, funding yields in germany, if it falls below, what will that signal for us? we are headed towards 10 basis points, the only thing that separates those two at this point. chime in. ahead, hong kong airport is the world's biggest .- busiest cargo gateways the ceo of the airport authority of hong kong joins us later on. trade chief.s. warns talks with china could fail. how the footwear business is preparing for that scenario. it is bloomberg.
negotiations. robert lighthizer, the u.s. trade representative, says an agreement between the u.s. and china could be weeks away but there could be major issues that -- unresolved. he told the senate finance committee washington should keep the threat of terrorists open -- tariffs opened this -- to make sure aging lives up to a deal. lives up to a deal. >> we have to make sure we raise tariffs if there are violations and that is the core. if we do -- if we don't do that, none of it makes a difference. footwear,eople make they are not facing tariffs but our guest is concerned about the impact. joining me is the president and ceo of footwear distributors in the u.s. footwear isn't included but there have been investment plans
and moves. people are concerned about what happens. what is the damage being done lack of despite the tariffs? >> the uncertainty has been a challenge. we are in this environment where footwear is seeking other sourcing options even before the president took office, so when you take the uncertainty that comes with the tariff war and the potential for additional duties on our products, that drives a lot of business is crazy because they can't plan for it. we paid 3 billion dollars in duties per year anyway and we have 100% import penetration in the u.s. so we know the negative impact of duties. that into our markets is concerning. david: shoes aren't necessarily and -- inelastic demand. there is only so much you can pass on to consumers. is there a big portion of that
80% that have taken that cost themselves the auto matt: when you overlay the consumer price index on top of the fob price, as prices am afraid on board price that comes across the border rise and fall, those are passed on to the consumer. the margins are tight. most shoes sold in the u.s. are sold in mass retail marketplaces . those are price competitive marketplaces. we are concerned because we pay $3 billion in duties already, and that is a $7 billion hits to consumers on an $85 billion industry and we know the impact this has on consumers. we have avoided any tariffs to date and that is good news but our expectation is that that will hold. fingers crossed. but we are the ways in which duties don't do what they say they will do. we have moved manufacturing overseas and at the end of the day the consumer is left holding the bill.
>> there is a conversation now that the president has become a with the deficit ballooning to a 10 year high. you say that is not necessarily a negative. what are the misconceptions that the trump administration has about trade policy? matt: the administration backed themselves into a corner with the notion that the trade deficit is about thing. structurally the trade deficit is not a bad thing from our perspective. it is not a coincidence that we have a strong economy and the trade deficit is at a record. of allbringing in goods over the world. when wages are up, unemployment is low, full employment is in effect on the we see this as actually a positive sign for the industry. the day we have a trade surplus with china is not going to be a very good day for our economy. of china ining out terms of production, there is one other country, the u.s. trade deficit with vietnam has
deficit. be a greater that is one other place. this isn't just footwear, this is a whole gamut of things. there has been a move away from china, but china has become too expensive. this even prior to administration, labor shortages in the coastal provinces in the south part of the country was pushing us into places like vietnam. vietnam grabbed most of our market shares when it came to production. this is driven by the things i laid out. it is also driven by the potential for the transpacific partnership, which was torn up on day one of this administration. we are seeing the continuing movement to vietnam because of a lot of variables that are both trade related, because of the threat of potential tariffs, as well as the need -- rishaad: it accelerated the process. has. it china is it a 10 or 12 year low when it comes to providing shoes
to the marketplace at 69%. when i started this job at decade ago they were close to 90%, so we are diversifying as quickly as we can in vietnam has taken that on. david: what people don't talk about is, vietnam is not as big as china. is there enough capacity you go -- in a capacity? matt: i have heard for a decade that there is not enough capacity and they keep finding capacity. the other thing that people need to be aware, even if an american brand made in vietnam, vietnam will have access to the european market duty-free and the canadian market duty-free for the tpp 11 without the united states. u.s. brands and global there -- global brands are finding entry into other markets when it comes to vietnam because it is a platform not just for the u.s. but other markets. david: thank you.
company is streamlining decision with a single board to oversee the collaboration. to give newy want input to the whole organization. as i said, being more efficient and simple affiant -- simplifying the whole structure. two former goldman sachs bankers have been banned by the federal reserve for their roles in malaysia's missing billions scandal. they say the fed -- the pair allowed cash to be stolen from an investment fund. one of them has been -- leissner has been fined and pleaded guilty to conspiracy for money laundering. [indiscernible] chief executive. he is the front runner to
replace an executive who quit in january as the company headed towards collapse due to devastating wildfires. other figures could enter the race. >> checking some movers in asia up into the 3%e and easing off some of the gains already but it was a full-year profit that was beat. $1.5 billion buyback program has been announced. that stock up 1%. zte, the controlling shareholder planned to cut a stake in the company. they're switching the 1% stake to the csi 300 etf so that stock in hong kong and china today come a down significantly, about 4.6%. and a sports, getting closer to the offer for another sports company. their stock is up 2.4%.
continuing to see some trouble, earnings and losses ballooning. we saw j.p. morgan downgraded the stock to neutral with a price target of 55 at the moment but the worst is yet to come, some say, given the ipo lockup. it is set to expire last week. let's look at the boards. broadly speaking when it comes to the benchmarks, everything heading lower for the most part in asia today. nikkei 225 at lunch break down 1.3%, not much appetite for risk. not a lot of catalyst to alleviate the global growth concerns we have seen. we saw u.s. inflation, maybe it is still in play but we are china,ng key data from retail sales, fixed asset investments and the like. perhaps we are seeing a let of direction or catalyst to move things higher. csi 300 taking a breather and stock taking it
>> your first word headlines. uncertainty as the revised brexit proposal failed to defeat in the commons. sterling was under pressure. vote thisn expected wednesday. an attorney general says extension beyond march 29 is in inevitable. a second referendum may be one of the options available. the uae and nine countries are added to a blacklist of tax
havens. it includes now 15 jurisdictions. efforts toter its fight tax avoidance by multinationals and individuals. jeffrey gundlach has attacked president trump over the debt burden. he noted "the incredible increase in corporate and government erring, with federal -- borrowing come up with federal deficits only expected to grow." parents, university coaches and counselors charged in a criminal conspiracy that .ought to help applicants accused of paying bribes around $200,000 each.
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. this is bloomberg. david: despite more than 40 groundinguthorities this 737 max come the faa sees no issues, even after two fatal crashes. with ourlet's get more guests. what are the latest developments? this his a fascinating story with tragic origins, these two accidents that claimed 346 lives over the last five months. it is a very complicated issue that the faa is reviewing. well,regulators are as
but it comes down to what the faa says is the data that does not link the two accidents, so there is no evidence right now to warrant a grounding of the 737 max series. regulators,on including the eu, they have grounded it until they are 100% sure this plane is safe to fly. we have fullsaying confidence in the safety of the 737 max, but other regulators, starting with china after that accident on the weekend, they want more assurances the plane is safe to fly. david: but started an avalanche of regulators. >> you are seeing the map of regulators and airlines taking unilateral action, instead of
the gold standard from the faa and playing off that. this is a dramatic departure from the norms we have seen in the past. all of this force the faa's hand? faa hastionally, the , andtionally done this other regulators follow their lead. we have seen a reversal of the traditional circumstances. stuff, who litigate this they say the faa does not have to pay any attention to what any other regulator is doing in the world. they have to act on whether they think there is substantial evidence to justify the grounding. it is more of a judgment call
than that would suggest. it is not some technical standard. is to decide whether there is substantial evidence to justify grounding. we have had the report for several months detailing the problems that led up to the lion air crash. your judgment about what evidence is balanced on the head of a pin. rishaad: david, it is not just these two incidents. there are federal record showing five complaints from five different airlines operating this aircraft. the pilot saying they have had problems with it, complained about the plane actually wanting to go down at critical moments during flight, i.e. takeoff. >> indeed, yes. there was this report from the
dallas morning news saying that thing. at the moment, the places where you can fly the plane are the u.s., canada, and the gulf. we are seeing passengers on social media concerned about this. again, unions for cabin crews are having concerns. it is not just a question of regulators outside the u.s. curious because i've read both your columns on the subject and find it fascinating. on the criticism dating back for many years, including the dreamliner sequence when the dreamliner was grounded for 123 days, some of the criticism of the faa approval process, perhaps freshening claims into service to quickly, or beholden to the suggestions from boeing.
even the ntsb was wary of the faa's knowledge of technological advances. in?does this play >> that is a consideration. you will hear people criticize too beholden to the manufacturers. don't forget about the airlines. they don't want the costs involved with the grounding. the faa has diligent people working for it, but they are making this judgment calls. there is big money on the table. the 737 max is not separate to 737, meaning it had a fast-track certification process that saved hundreds of millions of dollars that that type of certification would involve with the 787, but was
that too fast? what a more rigorous process turned up some of the issues we are looking at now? --id: paul salient points all salient points. thank you very much. coming up, more analysis on this issue, the airport authority ceo will join us to discuss the impacts of the grounding, plus his latest expansion strategy. this is bloomberg. ♪
authorities which operate airports will have to manage the effects of flight disruption. david: let's bring in the ceo of airport authority hong kong. you are therefore a cargo conference. any operational implications because of the grounding of this aircraft? civiltunately, has our aviation authority has explained , no 737 max is registered in hong kong. also, very few of the airlines flying to hong kong use 737 max. the impact on airport operations is minimum. ok, i don't want to dwell too much on this. show to talk the
about the trade conflict between the u.s. and china. how is that affecting the cargo business in hong kong, being the biggest cargo hub in the world? >> the uncertainty has impact ed care cargo in the whole region, and also on our airport, is fortunately, our business pretty much diversified. mainland chinese cargo only the accounts for 10% of our total cargo volume, so we believe then resolution of the trade tensions the between china , we believe this is something that can be contained. yvonne: given the trends and air cargo now, what is the airport authority doing to attract more airfreight to the city?
>> we do see several important changes in global trade patterns. the growing trend of e-commerce, we see that this is also driving the career and express air cargo business. is theond trend increasing globalization of the supply chain, which also drives a lot of our business at our airport. the third trend we are seeing is the rising demand of the high-value products in pharmaceutical, fresh food, telecommunication and electronic
products. in order to capture these opportunities, last year, we invited alibaba's logistic arm premiump a large logistics center at our airport. it will be 380,000 square meters of space focusing on e-commerce business. development,is new it will continue to attract more cargo to our airport. as part of our overall expansion plan, we are setting up a new shipment center at our airport, which will help to bring more high-end products into mainland china, especially the area. -- the greater bay area. david: i'm sure the other
airports are investing in the same things you are. are you seeing any capacity that should be coming to hong kong being diverted elsewhere? >> we work closely with our airports in the region. travelthe demand for air in the area is increasing rapidly. we believe that even with all the expansion plans the three major airports in the areas doing, it will not be able to satisfy, so there will be plenty for everybody. we have to make sure that we give passengers more choices in the future, and hopefully with this new greater bay area policy tomework, it will help improve areas that are making it
difficult for people to travel freely in the region. rishaad: let's move away from cargo. talk to me about the passenger strategy you have. in the old days, hong kong was the classic of, the entry into china itself. that has changed with so much competition for direct flights going in there. smokeat the smoke -- the -- he spoke model gone, and what have you replaced it with now? our totalar, passenger number is almost 75 million. foree continued demand passengers to use an efficient aviation hub like hong kong. our plan is to continue to expand to make sure we have enough capacity to meet future demands.
the second strategy we have is to continue to expand our connectivity. at the end of the day, passengers want to see cheaper fares and more choices. by providing more connectivity, we hope to continue to be able to serve our passengers well. one other thing we are now doing, we want to deploy the latest technology to make sure passengers have an unparalleled airport experience when using our airport. yvonne: most people who go through our airports feel like there is a congestion problem. the expansion project underway, will that alleviate concerns? fortis more need to be done? -- or does more need to be done? >> we are waiting for the framework project to complete to
address the congestion problem at our airport. we are expanding terminal one. we are expanding the building, completing are the end of this year. renovating the entire terminal one. by the time we are finished with the runway expansion project, we are not just giving passengers a new runway or new terminal, but a new airport that will meet passenger demands for many years to come. rishaad: thank you very much indeed. just getting a bit of news from the wall street journal. send thepians want to black boxes to the u.k. to be investigated. let's get you to some of the business flash headlines.
the iphone going from bad to worse, one analyst affirmed his neutral rating and said multiple deviceuts did not stop from weakening. bloomberg data shows a fifth of 2018 revenue came from china, and the iphone making up 60%. david: we talk about going solar. for your to is going lunar. it is teaming up with the japanese aerospace agency to land a vehicle on the moons landscape. it can carry to action is for 10,000 miles. it would be sent ahead of a human expedition and drive to meet them on arrival. the maker of budweiser and still are 12 -- stella artois is backing a food start
up taking the proteins from spent grain. it is currently recycled into animal feed, but the company will turn it into a higher grade of product. it sounds ghastly. david: it might be a ghastly session when india is opening up tiered let's get a preview of the markets. our reporter is with us at of mumbai. reached 11,300 yesterday. is there more room to run, or do we test the downside again? party that has taken the index up, taking a pause today has the setup looks like a subdued start. move to 11,300 of the last six trading sessions. it has been 5% of.
4% from highs in the nifty once again. you have the numbers yesterday. the consumer price inflation numbers, both looked on the lower side, lower than expectations. currencies is that a nine week high. it looks like all market disciplines are ignoring crude spoilsportcould be a em with $67 a barrel for brent crude. the sentiment is strong, and most market participants expect this move to continue. yvonne: you have been watching the nifty bank index reach a new record high. it has been going guns blazing since october last year. our analysts expecting profit-taking now? >> not right now.
strongup looks extremely as a lot of strong hands have moved in. banks in the index already at record highs. two bank set lifetime highs. a lot of money and strong hands moving in. not so much for the public sector, but private sector banks leading the charge. the rsi index is showing a slightly overbought region for the banks. ♪ght now, the momentum keeps going. -- the momentum keeps going. rishaad: palladium of the weakening yen? find out which one will capture our hearts in the battle of the charts. that is next. this is bloomberg. ♪
>> ahead of friday's bank of japan meeting, i thought it would be interesting to look at dollar-yen. usually it moves in close step with the u.s. treasury yield premium over japan. when yields go up, dollar goes up. when yields go down, dollar goes down against the yen. that has not been happening this year. one main reason is the big rally in risk assets. stocks have done well globally the first two months of the year , but that rally is starting to peter out. the main thing weighing on the yen has lifted. meantime, we have seen the federal reserve shift to neutral mode. the boj has not done much of anything. if we get that message again on friday, then all of the stars are aligning for a yen rebound. rishaad: ok, martin.
i have a spread of a different kind the concerns internal combustion engines. the chart is the price of palladium used in catalytic converters used platinum, on alternative material used in material markets. palladium is that a record high, above $1500, and much more expensive now than platinum, as you can see by the lower part of the chart. it is that the whitest premium -- widest premium, and for carmakers that means there is an incentive to switch from palladium in the engines to platinum, and that happened in 2001, the start of the chart.
that led to years and years and prices forak palladium. that patches they are, the harder they will have to think about cutting palladium. david: martin, i will give it to you. martin for me. rishaad: chris, i voted for you, despite what i said. yvonne: tiebreaker. i think when it came to martin, i like the whole aspect of going platinum. i'm going to go for martin. sorry, chris. also because our producer annabel loves to talk about palladium as well. ♪