tv Bloomberg Daybreak Australia Bloomberg March 13, 2019 6:00pm-7:00pm EDT
haidi: welcome to daybreak australia. i am haidi stroud-watts. shery: i am shery ahn. sophie: i am sophie kamaruddin. we are counting down to asia's major market open. ♪ haidi: here are the top stories. sterling surges as the house of commons votes against a no deal brexit. theresa may will be seeking a two-month expansion. of $60 billions as they change course on calls
for the boeing max. and trump warning china he could walk away from a deal he doesn't like. looking -- let's look at how markets closed, stocks gaining ground for a third consecutive session. the s&p 500 touching a four-month high, every sector in the green and index above the crucial 2800 level we had investor sentiment being held by positive eco-data, orders for business equipment rebounding in the month of january, the most in six months. producer prices rose less than expected. boeing gained ground. the dow gaining .6%. we have positive sentiment from the fact the u.k. parliament rejected a no deal brexit. u.s. futures unchanged, but let's see how sentiment is shaping up in asia. the roller coaster ride continues, futures hinting at gains in the region after asian
stocks tumbled midweek. the nikkei 225 set to recover all of wednesday's losses after is resilience of investors being tested with suffering and economic data -- data disappointed across the region. we will closely watch what it means for the second largest economy and trading partners. looking at the aussie dollar ahead of the release, it is steady after recovering overnight with the kiwi after both fell as much as .5% wednesday. after the bond rally, keeping an eye on yields as the three and 10 year yield are at september 2016 lows. slowing economic indicators signal prospects of a rate cut in australia. the board for a quick check on the british pound, back in the 133 zone as the u.k. voted to avoid a no deal brexit.
it was the biggest advance since april 2017, adding to this year's gains. haidi: thank you. let's get you to first word news with selina wang. reporter: sterling surged and started to come back as the house voted against a no deal brexit. this opens the way for the split to be delayed as the government tries to find an orderly divorce. parliament will vote on thursday whether to postpone brexit which is over two weeks away. theresa may is expected to ask that you for a two month -- the e.u. for a two-month extension. >> there will need to be a longer extension. it would allow the united kingdom to hold european parliament elections. i -- [indiscernible] i do not think that would be the right outcome.
reporter: the european union adopted contingency measures in the case of a no deal brexit. it covers air, sea and road traffic. leaders say they regret the u.k.'s failure to back the bill barnier said there would be no more discussions. >> the discussion on article 50 is done and dusted. we have the withdrawal agreement. it is fair. reporter: the former governor of the reserve bank of india said the ecb and japan are running out of ammunition in event of another downturn. he said while the u.s. and china have room to cut rates, tokyo and frankfurt have done as much quantitative easing as they can. he said he will have to look for other policy solutions to give economies a boost. >> the ecb and the bank of
japan, they are already at negative interest rates. as far as qe goes, they have do what they could. whatever a modest affected has had, it is pretty much out there. there is little ammunition in the central bank tank. my guess is we need to look for other instruments in those countries. reporter: the philippines at the risk of posting its worst expansion in eight years with a delayed budget cutting growth targets for this year and next. 4.9%said gdp could expand at best. that would be the slowest since 2011. he added growth would be above 6% if the budget goes through. global news 24 hours a day, on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am selina wang. this is bloomberg. shery: u.s. aviation regulators have reversed course and are grounding the boeing 737 max.
it follows moves from other regulators and airlines around the world following a deadly crash in ethiopia, the second in five months for the plane. this reporter covers aviation safety. was this inevitable given how isolated the faa had become? some might argue that the faa said they were waiting for hard data. until today, there was almost nothing known about the crash in ethiopia. the black boxes had remained in ethiopia. they had not been analyzed. what happened today, we got a look at new satellite tracking data that showed a precise path for the flight. it was similar to the unusual and distinctive path the lion air plane took in indonesia.
straightf flying on a climb out of the airport, it was going up and down and up and down. that is what we saw here. there is a piece of new evidence they found at the scene. they don't know exactly what it is but this evidence also suggests it could be linked to this accident in lion air. in the lion air accident one of the things that was implicated was a new system on the boeing plane that automatically puts the plane into a dive. that is at least according to the faa what drove it today. buti: there was criticism if they weren't going to ground the plane they could move to recommend to suspended that. what happens now from the perspective of the faa? >> you will have a lot of moving pieces. scurry togoing to
figure out their planes, but the the investigation. they need to find out what happened on the ethiopia plane. they need to look at the black if in fact itee was the same thing. even the suspicion is growing that it is linked, i want to add the head of the faa told us they are still not close to saying it is the same thing. there is a lot of data to look at. shery: what does this mean for boeing, the company and the travelers? for travelers the disruptions will not be too extreme. this is a new plane. they have only been delivering them for less than two years.
in the u.s., it represents less than 3% of the fleet. that is not insignificant but it is not like tends of thousands of people will be left -- like tens of thousands of people will be left stranded every day. boeing has to figure out how to get this plane back in the air so there is an engineering decision here. we also have a public relations situation -- they also have a public relations situation. how can they convince people all of their planes are safe? having seen the boeing about six grounded years ago, it is amazing how quickly they can get back going and people forget this once they get the plane up and safe. haidi: we had to refresh ourselves with issues over the
shery: back to brexit, with you make -- u.k. lawmakers voting against a no deal split, the decision opens the door to a brexit delay and rewriting of the terms of the divorce. they will vote thursday on seeking a delay to the march 29 departure. dream -- theresa may said an extension would be a mistake. >> there will need to be a longer extension to article 50 bear this would require the united kingdom to hold european parliament elections.
>> [indiscernible] i do not think that would be the right outcome. shery: joining us now is a dartmouth professor of economics and contributing editor. he is a former member of the bank of england's monetary policy committee. we know they don't want a no deal brexit. we know they didn't want the revised one or the first one. do we know at this point what they actually do want? do we have any more clues from two years ago? meny: you have asked meek -- this question before. shery: i know. danny: the answer is that you played this tape which she failed to get her deal through. she failed to get her deal
through the parliament twice. they have rejected a no deal and have been thinking about voting on an extension until june. let's -- what is coming? no idea. they haven't unable to do anything in 2.5 years and we have no idea what kind of deal they could negotiate between now and june. so this is kicking the can down the road. nobody has the faintest idea. the other thing, they have no may'soning government, government told ministers they have to vote for these. they haven't got a functioning government. they don't really know what they are doing. they have no idea what to do about ireland, and the e.u. says we will give you an extension, but you have got to tell us what you will do during the period
of extension and may has no idea. the good thing is the market thinks a softer brexit is coming. ditheringnk that this means something that is really bad is being taken off the table. -- go on. will see shery: is it a good thing for the economy? you are talking about the markets and the pound but it is an extension of uncertainty. we could see a bad time with the economy recovering in the u.k., no? danny: it is a great question. the obvious thing is a slowing u.k. economy. we got data showing industrial production has gone negative, construction negative, gdp and services slowing, and the big deal is business investment has been falling for the last three quarters in a row.
from yesterday or today or you will hear in the next few months will tell you things got better. the big deal is in the -- businesses have said it is a circus. we hate uncertainty. businesses are packing up and leaving and going to europe. a big japanese pharmaceutical that arrived five years ago said we have had enough. we are going to amsterdam. right,certainty, you are this is not resolved -- has not resolved any of the uncertainty. i was as uncertain as you asked -- as when you asked me three months ago. the government has no idea, the markets no idea and this is saying, why would i invest anything? the big worry is that and the car plants are saying this is a disaster. nissan, honda, ford and others.
the lunatics appear to have taken over the asylum. the u.k. doesn't appear to have a functioning government and i can't answer your question about what is coming. but theresa may not only has no idea what is coming but also no idea what is coming tomorrow. haidi: she spoke about a second referendum. sensiblethink that is and potentially a serious possibility, but let's think about when that might be area that could be later than june, a vote tomorrow, to push the delay back. it would have to be later. the question you ask yourself is , what would be on the referendum? what is yes and no? yes would be, would you like to take this deal we haven't sorted out yet but it can't be the one that has been voted on in the
last two months. that is against remaining perhaps. be, referendum looks to likely, but we have no idea what the question would even be because there is no deal. the deal they had was rejected yesterday and we have no idea whether -- what a new deal will look like. ireland continues to be a major issue. i am sorry to keep saying i don't know but this is really the situation that this incompetent government has created. maybe it will get resolved. maybe someone will be a statesman and say, we will sort this out. in a couple of weeks you will ask me the same question and i will give the same answer. haidi: we believe brexit for now and get back to you in a few minutes time to talk about the other topic, trade.
haidi: this is bloomberg. emilychnology anchor chang here. let's take a look at global stories. emily: thank you. spotify is calling for apple to be investigated by a you antitrust regulators on how it runs its streaming services -- e.u. antitrust regulators on how it runs its streaming services. with apple music, the claims come days after elizabeth warren called to break up apple, facebook and other big tech companies. court documents show larry page feared he would lose control of google in 2011 and delivered
what one director called a failed threat to quit. the documents indicate he was concerned sergey brin and eric special stop sell enough to dilute their lock on decisions. -- 2011. huawei has been dealt a blow by german intelligence saying it is not worthy to work with. they talked about past security events part of the reason for this review and it would be difficult to ally with a company that cooperates with its natural -- national secret. german intelligence is pushing for huawei to be kept out of five g. that is what we are watching. shery: online travel stocks boeinging amid the crisis with more countries announcing bans on the planes. china's biggest online travel company is up over 53% this year
so far. let's bring in this guest. to start things off, give us your take about what the long-term ramifications could be from the ongoing boeing saga. will this affect the travel market? >> the government is putting the people's lives first. we will welcome that action. so when things like this happen, when there is tsunami in japan, earthquake in [indiscernible] or las vegas shooting, our team within a few minutes will reach out to all of the passengers, contacted them, have hotel partners opened shelters to provide protection and fly them back to their home country right away. we haves situation, measures to protect our customers. shery: you are facing external
challenges from a slowing chinese economy. we are continuing to see signs of that globally. of domestic sales air ticket sales account for about half. are you seeing in fact? jane: in the last right where we were bullish on china's economy for a couple of years -- reasons. is 800 pergdp person. in the u.s. it is 40,000 per capita. the urbanization in china is very low at 40% to 50% versus usa is 80%. the further is chinese companies family spent lots of investment in their children for education. that is the investment into the future. for the next 10 years we believe china will grow, leading the way
for economic growth. ctrip is well-positioned for that. emily: you have $9.1 billion in cash saved up. could you use that to make acquisitions? jane: we earmark our cash carefully. the first priority is secure enough cash for operations. we have enough resources to extend our business within china and outside of china. the second thing is we also reserve some for potential investment but very carefully. the third one, when we have beitional cash, then it will used to buy back our shares at the right price and return the value to shareholders. emily: how concerned are you from rising competition with alibaba and others, given the
broader slow down and u.s.-china trade tensions? jane: our growth strategy is clear in terms of domestic markets. we are dominant, but still china is growing so fast, the high-speed railway, given the opportunity this gives us the opportunity to penetrate into second and third tier cities and whether they are excited about it. sent people to the rest of the world creating jobs for every country's that's receiving chinese customers. what more can you do for growth? jane: we already use a lot of technology. ai, bots to eliminate unnecessary steps, to increase efficiency. going forward as our skill is becoming bigger, the margins
should have a nice pickup. shery: thank you for joining us. ctrip ceo jane son, thank you. -- sun, thank you. haidi: don't miss bloomberg technology at 8:00 a.m. in sydney, 5:00 p.m. in new york. coming up on daybreak australia, looking at the next big batch of data from china, we have domestic activity indicators out later today. will the government' attempts to boosts investment be reflected in the numbers? this is bloomberg. ♪ this is bloomberg. ♪ this isn't just any moving day.
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haidi: futures looking mildly optimistic. we have u.s. stocks edging higher for a third straight session. boeing managing to recruit some of their losses after the faa did a complete turnaround and of planes in theg u.s. as well. shery: it is 6:30 p.m. in new york. you are watching daybreak australia. >> concerns about the safety of
the boeing 737 max 8 and 9 have led airlines around the world to reconsider purchases. they will make a final decision when the cause of the ethiopian airlines crash is known. kenya airways says it may switch to the rival airbus. we have been told indonesia's lionair will do the same. the u.s. regulator has joined international recruits to ground the plane. issuing aning to be emergency order to ground the planes of the 747 max 8 and 9. >> indonesia says next month's election is already being targeted by hackers from china and russia in an attempt to disrupt the results.
there have been a wave of cyber strikes aimed at disrupting the process. will china and russia have dismissed allegations. officials are planning to test a type of cruise missiles that has been banned for more than 30 years. week, the trump administration withdrew from a treaty to test the employment of certain ground-based missiles after alleging that russia was violating the agreement. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. bloomberg. shery: let's get straight to the market action. sophie: japanese futures point to a gain of more than 1% of u.s. equity futures also picking up this morning.
over in sydney, we could see stocks snap a four-day decline. we are seeking a slight pickup in aussie bond yields this morning. bets are rising that the rba won't cut rates as ecb growth moderate. your --s up around ramps up around europe. jpmorgan has cut their forecast of the greenback against the euro sitting rate cycles may see japanification. it is backup above 113 this morning ahead of euro area. let's take a look at what we are watching as trading
goes underway in asia. the rally in e.m. looking pretty exuberant. they are one of the latest examples i think of people who are really trying to suggest that now the valuations are looking a little bit stretched after the rally. what we are starting to see is that emerging-market equities are beginning to lag their peers and the rest of the world, especially against u.s. equities. that is really the idea that the people of morgan stanley are looking at. they are saying that valuations have significantly tightened. they are saying it is a crowded trade with a lot of people who have jumped onto this move we have seen since the start of the fourth quarter in 2018. the sense that a lot of this optimism for the outlook for earnings growth is priced into the market at this point. they are getting incrementally
more cautious, just taking a little bit of money off the table. we are seeing huge flows in equities in many parts of the world, not just china over here, but also in other parts as well. it just means that some people have started to dial and back. back.l things certainly just a little bit of optimism being toned down. shery: we are also seeing volatility plunging. some money managers taking advantage of this. what is the latest? >> has been speaking to the , whatat janice henderson they are pointing out is that what you are seeing in volatility in euro-dollar, which is very low, we are down to five year levels on euro-dollar. we are not seeing the realization from the market that
you will get a pickup in volatility. he is very concerned by what the ecb is talking about on growth and the fact that they may have to start to expand the balance sheet again. he says this isn't priced into the market. what he is doing is buying options trades that will allow him to profit from a breakout and volatility. when euro-dollar start to move by significant margins again. she is also a hearing on this trait in treasuries as well. he twisted the fact that the move index, the treasury volatility is also at very low levels. he doesn't expect that to remain the case. some of these options trades he has put on will also benefit from a big breakout in treasury volatility. he sees this volatility and this will volatility really being not here to stay for much longer and his positions pretty well to profit if that does indeed materialize. shery: thank you so much for that.
you can find adam's charts on the gtb go library on your terminal. china's first batch of major indicators are expected to show that an investment recovery is ramping up. tomchina correspondent joins us from beijing. we didn't get those january numbers because of the lunar new year holiday. we are going to get this data dump. what should we focus on? tom: that is right, combining the january and february figures to try to wash out some of the lunar new year distortions. the expectations is that in terms of investment, which fell by record amounts in 2018, that is where to start to pick up because we have had greater bond issuance and more infrastructure spending and investment, particularly from state owned enterprises. retail sales are expected to be
in line with the month of december, around 8.2%. industrial production is expected to soften as well. trade tariffs are part of that as well. i can unpack some of this with a terminal chart going back to 2006 showing these data points. early really around the seventh 2015 where they start to slow. but again, bringing this slightly closer to where we are now. you look at fixed investments starting to fall off. in terms of the retail sales, a area you -- this is an expect some to fall off. that is certainly still one that will be in focus. in terms of industrial production, the major impact there seems to be the tariffs. maybe industrial production could start to pick up towards the second part of this year.
over the national people's congress, we have heard people trying to support enterprises and more special bond issuance to allow local governments to fund infrastructure. speaking of trade, are we getting much movement on how these talks are progressing? tom: we have heard from president trump again. he appears to be addressing the concerns here in china around sending president xi all the way over to mar-a-lago, only for president trump to back out at the last minute. they saw what happened in vietnam with kim jong-un. president trump saying, he could meet xi before a deal is finalized or after. adding some flexibility around this. from the chinese perspective, they see wilbur ross go in 2017 back to washington with what they thought was a deal only for trump to say no thank you, very much.
mnuchin went back to washington to thought they had a deal in president trump pulled out of it. they want to make sure the president is going to florida with a deal pretty much complete. it seems like more optimism. robert lighthizer saying there are still issues, particularly around enforcement and tariffs. human rights also not be a focus at all. and yet, we are seeing the u.s. hitting out of china over this. what have they said? is the annual human rights report that the state department puts out. mike pompeo saying that china was one of the worst offenders, and they were particularly singling out china's treatment of muslims in the region where, according to the un's and many others, up to one million muslims have been detained and what the chinese say are reeducation camps.
others say are effectively concentration camps. i spoke to the u.s. ambassador to china last week and i put this question to him and asked him whether or not pressure was increasing on china to address this issue. take a listen to what he had to say. >> i suspect it will, as long as you continue to have these detention of people that have not really committed any crime, they are picking detained -- being detained because of their religion or belief system. tom: it seems like this could be another flashpoint in the relationship between the u.s. and china. that attention of up to one million individuals there. the u.s. has hit out at this, the eu. this is a bipartisan issue in
washington. the likes of marco rubio pushing this and suggesting the u.s. should consider sanctions against china for the treatment of the muslim minority in china. the secretary of state saying that the u.s. will continue to work with countries if it is in their u.s. interest, even if they have human rights abuses going on. tom mackenzie in beijing with the latest. danny, thank you so much for sticking around with us. let's get your views on trade. what have we learned from hanoi? it seems very interesting that you have this very put together meeting of world leaders and it didn't end very well. do we risk that coming apart with a trump-xi meeting? the hanoi meeting clearly
is precedent for the follow-up meeting potentially at mar-a-lago. clearly, the chinese premier does not want to be in a situation where he comes to settle a deal he thinks has been signed, and then finds that trump walks away. obviously, that is a big concern here. see --, we would like to the world would like to see this deal coming to fruition, potentially, it might well even be a surprise and be a really big positive boost to markets. i certainly think that this talk about tariffs has damaged world trade. i think people have really forgotten one big thing, which is that the world economy moves. in cycles the american economy moves in cycles. thise time we get to june, is the longest running u.s. recovery effort. basically, recoveries start to
turn. we talked earlier about brexit. we are seeing this trade were coming at a time the u.s. economy is slowing. this global cycle has actually been hurt by the talk of trade wars. yes, maybe this will all get result, but potentially, if you like this whole process, we are seeing this slowing around the world. we are seeing slowing in china, the u.k., but perhaps the big when we haven't talked about is germany, which is obviously impacted by what happens in china. it is impacted by these trade wars. this global slowing is really important. a massive economy like germany has seen a big decline in industrial production. i think that is the worry that whether this momentum that is going from the trade war and the end of a long recovery is going to be able to be stopped by good news between china and the
united states. question,t is the big whether you get a good news trade deal from china and the u.s., whether that is going to be a short-term benefit to at least getting clarity to people making investment decisions. does it really reverse what in most cases is a cyclical or structural slowdown? danny: it's hard to see that it reverses it. what actuallyuse is coming is what is coming just that we are not going to implement these things that we threatened we were going to implement. it is not absolutely clear. you talk about the human rights abuses. are we going to see an opening of china to american products? what is the reaction in the united states going to be? what is congress going to say about it? we haven't really talked about that. i think there are big issues on the table, but the president's credibility, not only because he
walked away from the thing in there is aalso that set of democrats in congress, it is very hard for trump to actually get what he wants, as we have just seen with various things going on in the u.s. congress. i think we are in a really new world here and potentially, not an apparently as much control as he was in the past. presumably, the chinese premier that. haidi: to your point, the gtb on the bloomberg showing the economic slowdown. we can see that all of them have really undershot below expectations, especially when it comes to the numbers out of europe. given the global situation right now, how much hinges on chinese policymakers to come through with all of those tax cuts they have announced, their monetary policies, more rrr cuts, and what china can do.
danny: i think that is a really big deal. i think the other thing is that we have to think about in europe as well in the u.k., where you see this slowing. do we have faith that those fiscal authorities could do what is happening in china? could they do the fiscal loosening. the worry is that they can't. what is your going to do? is europe -- what is your up going to do? do?rope going to the other concern is are other countries going to be able to do anything to stop the slowing that is coming. is it going to do the tax cut things we are seeing the chinese doing? is china going to do it and will it be affected. elsewhere in the world, are we going to see fiscal authorities stepping up to the plate? the answer is probably not. shery: always great having your
haidi stroud-watts in sydney. i'm shery ahn in new york. u.s. stockpiles fell despite forecasts they would rise. bloomberg energy reporter rachel adams heard joins us now from houston. what does the drop in supply tell us about the state of the market right now? rachel: obviously, this kind of hit the market by surprise. we have opec cuts starting to take effect, having their impact
on the market. we also have sanctions in venezuela. in the u.s., something we have heard a lot is that maybe production is not going to be quite as strong as people expected. we are going to see record output. we saw the u.s. cut back its forecast for 2019 for the first time in six months. we are hearing a lot about how shale dealers are trying to rein in spending. we are also hearing that russia is about half way towards meeting its target under the opec plus current deal. there are only a few weeks left to make good on its deal. what is compliance looking like? rachel: i think that is a great question. isheard already that the iea forecasting in the long run but opec is quite to have a smaller role in the global market as the u.s. really takes control here.
shale is having a major impact, even though we are seeing decline rates come up in conversation pretty often here, people talking about well spacing and more operational issues. it is really going to be an issue of what the complaints looks like as we head into the next meeting. haidi: thank you so much for joining us. you can watch us live and see our past interviews using our interactive tv function at tv on the bloomberg. you can become part of the conversation as well and send instant messages during our show. this is for bloomberg subscribers only. this is bloomberg. ♪
the bank says it is still committed to the plan, but for now is focused on issues such as compensating customers. cba stock is up 1% this year compared to a 9% rise. apple is to face a new challenge to the ipad. walmart is planning to introduce an inexpensive child from a tablet under its own storebrand as part of a redesign of its electronics department. it would run android. its price in launch date have not been released. the tablet market has been declining for years due to the increased size and power of smartphones. lufthandsa is spending money to equally by between going in airbus. they fly one of the most complex
fleets in the world and plans to remove as many as seven aircraft models over the next five years in a bid to streamline operation. shery: volkswagen is canceling a stock sale of its trade, saying it needs to wait for a better market environment. vw seeking to raise $3 billion to $30e sale for a of up billion. let's take a look at the market opened in sydney. that is almost upon us. australian starts may start with a more positive footing after if or day decline. -- after a four-day decline.
flipping the board to check in on some stocks we are keeping an eye on, oil producers very much in focus with oil back in november highs. petroleumng an ion after the multibillion-dollar in australia might be at risk. we are also keeping an eye on sigma health care. this is on the back of the stock plunging 12% after rejecting api's offer. those are just some of the stocks we are keeping and i on at the start of cash trade -- eye on the start of cash trade. haidi: plenty more ahead on daybreak asia. >> we are going to have all of the action on daybreak asia, next. this is bloomberg. ♪
haidi: a very good morning. australian markets have just open for trade. sophie: welcome to daybreak: as ia. haidi: our top stories this thursday, sterling searched after the house of commons voted on a no deal brexit. review 737 orders worth nearly $60 billion as the faa changes course and grounds the ma