tv Bloomberg Markets Asia Bloomberg April 8, 2019 10:00pm-11:00pm EDT
there is the old adage, the markets take uncertainty. they cannot live with that uncertainty either. at the moment we are quiet, but a lot of things we have to sort out. we do not have that certainty yet, but it is the start. david: if you are not up for the year, the things that are issues should not be issues, but if you are 40% for the year -- rishaad: no known unknowns. [laughter] haidi: there is not much to talk about in the market today, so we are babbling a bit. zero .2%.ower by expecting the imf possibly to downgrade once again when it comes to the global economy. that report coming on later today. of the highssome after u.s. stocks have been on a tear.
asia as well rallying on those six-month highs. csx two negative at now 0.2%. a little more about how tax cuts are coming to the consumer, whether it is food, medicine, textiles. taipei is one to watch year. flatter on the benchmark, but trade data was actually pretty good. better than what economists were stressing. exports were still in negative territory, but much better than four counts. -- forecasts. nikkei 225 also down 0.2%. then currencies up, japanese yen also weighing on stocks. crude back to the five-month highs. wti. for brent crude just below $71.
we were just speaking to that of yesterday. there his forecast is for $75 for brent at the end of the year. those libya tensions, iran sanction waivers. weeks away from president trump making that. steel, that is one to watch. up another 2%. already rallied more than 2% this month. a rally we have seen in iron ore. down.ore futures for ore look at the dollar trade . we are in a hard place for where the greenback goes. divided by these two differing forces. the dovish fed should be meaning butrate will weaken,
protectionist trade policies make the dollar more safety haven currency. global risk as well. we have been stuck in this range for some time. su keenan has the latest from new york. we start with the u.s. proposing to hit airbus with the tariffs. this in a countermeasure to what it calls harm caused by e.u. aircraft subsidies. 15 years after washington first complained to the wto airbus was benefiting from billions of dollars in illegal subsidies. countersued by them e.u. last month. more than $300 billion in taxing centers to boeing were unlawful. thes. judge has barred trump administration from forcing central americans seeking asylum to wait in mexico for months or years while their applications are processed. setbackng is the latest for president trump as he
attempts to curb immigration. his policies have been repeatedly stymied by judges since he took office. "full"ays the u.s. is and can no longer have more immigrants come in. heads into a tuesday with leading parties neck. jewish settlements in the west bank on the agenda. prime minister netanyahu facing a top challenge from former military chief benny gantz. hesays if he is reelected, will extend israel he 70 over parts of the west bank better home to jewish settlements. jack dorsey received his first salary payment after resuming the ceo role four years ago. cents, the 140 original character number for tweets.
the filing said it is a testament to his commitment to the platform's long-term potential. 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. i am su keenan. this is bloomberg. thank you. let zero in on several assets. we're looking at the bloomberg dollar index. back. -- take a step 1200 several times. is the seventh time lucky? not really. goldman sachs up to five month highs in oil. second quarter brent in the forecasts. 72.5 per barrel at this point in time. rishaad: let's have a look at fixed income. cycle kickingt off tuesday. blackrock, world's biggest money
manager, rarely if ever ignored, cooling toward u.s. bonds. not confident the federal reserve will be cutting interest rates. let's get to wes goodman. what is going on? >> regarding the federal reserve, yeah, i think the calls are coming for the fed to stop cutting interest rates. it has stopped hiking and calls beyond those from president trump for the central bank to start cutting. starts or not the fed cutting it is on hold. that has sparked a rush for yields, global rush for yield. society bonds. tencent came to market last week. a well-known chinese property developer came to market yesterday.
i think with the fed on hold there is a rush for yield. we see bottle works showing up in the market. you mentioned it, aramco. we are continuing to see the book increase on this one area tot is -- that has managed pull down yields. have a look at our bloomberg chart. this,sting thing about the pricing might come in at how much the saudi government borrowed, if not below when it hits the market. investors buying into when they buy aramco debt? it is linked to the sovereign, so it is very safe. it is the world's most profitable company. i am not sure it is a bet on aning oil prices, but it is
eight knowledge meant that the way they make their money is by pumping crude. avestors seem to be assigning very safe kind of yield level to that. wes, thank you, live out of singapore. you can follow all of his work. our markets live at team. mark cranfield and the rest of the gang. really figureo out what is going on, especially today where frankly, there is nothing happening in this market. rishaad: we will talk to karen, karen lam, senior advisor at t.cked up -- picte perhaps we can start by talking about aramco. can we not?
it is the story of the day. david: we do not know how big it will become, but what does it tell you about the appetite? karen: great question. it tells us a lot about the investor appetite. we have seen strong markets. popular nature of the issue is a testament to that. rishaad: this is not the end of this. who else will be looking at this closely? karen: the nicest nature of this issue and the popularity of a new issue -- rishaad: aramco is a special case. karen: it is. not just a play on oil is you were mentioning earlier. it speaks to a wide variety of fixed corporate bond investments. what is the case for it? karen: in general, emerging
market credit is not just on asia or china, but global in nature. middle east and saudi arabia are part of this and investors are becoming more comfortable. the other side to that argument, you have tencent, should we talk about oversupply keeping the spreads wide? karen: not necessarily. so for this year over $100 billion of new issuance up until a couple days ago. this has been met with equal demand. the fed will continue to tighten thely, but we are not at point where we are particularly worried about this. yvonne: high yield outperformed investment-grade for much of this year. of the moret out riskier types of assets and
maybe toward better quality names? demandi think there is for high yield the high investment-grade. want the mostors high-yield lower quality names. again new deal is a testament to the fact investors are also coming in. country'sow does a economic and financial condition in form you about this market in particular? country'soes a nonperforming ratio, on bank vouchers, play into this? question.eresting i focus on emerging-market corporate bonds. companies issuing bonds in emerging markets. what you need to see here is it doesthe macro side, not necessarily represent what is happening on the company level. you need to do your bottom-up research and take it on a company by company basis. rishaad: the nonperforming loan
issue, does that inform you in any way? it could be a variety of debt. karen: it does. it depends what it is made up of. is it just corporates, a particular sector? you have to investigate on an individual basis. at what theyou look china banking and insurance regulatory agencies -- the rate was 1.38% as of the end of last year. province,t the hainan half of the commercial banks have ratios above 5%. a dozen above 20% and several above 40%. that does not sit well with those stats, does it? that was in the last year, too. karen: by looking at these statistics you see the widespread. that is why we caution investors. take it on an individual basis, really investigate and terms of and earningsl's
to make an informed decision. yvonne: what about em currencies ? right now they are saying they look a little fragile. on this easing path. is em safe? karen: when you look at em currencies within the context of emerging-market corporate bonds, you have to look at how the currency impacts individual alance sheets. a depreciating local currency is actually good for your cash sheet. david: do we do dollar or em? we make our decision based on -- karen: maybe i am a little biased. it is all hard currency denominated. that is the area of focus. david: what is cheap? a lot of these things are very interesting now. karen: perhaps uprising to
theain investors, we find highest value in highest rated investment-grade companies. a lot of those can be found in asia. that is the tilt we have in our portfolios now. rishaad: country specific? karen: within the investment grade space, names we like our in china. also malaysia and korea. maybe toward the high-yield side, certain indonesian ones. yvonne: given the dollar issuance we have seen, is this a bet not just on oil with aramco, but the fed staying dovish and the dollar staying strong, or at least at these levels? is that the right call to make when it comes to the greenback? karen: yes. that happens with a more dovish stance by the fed. investors are still searching for yield.
it is one of the highest asset classes out there. rishaad: good stuff, thank you. assetlam from pictet management. traditional letters in hong kong face one of the biggest challenges it yet. bankinge virtual licenses. what are they, what do they do and why have them? washington turns up the heat on trade. its proposal to slap tariffs on airbus. this is bloomberg. ♪ this is bloomberg. ♪
proposal? this is nothing new, slapping tariffs on airbus. airbus no doubt will retaliate and say boeing gets subsidies from its defense plans the u.s. government has. historyhere is a long of dispute between airbus and boeing, but the new thing today is that the u.s. government has threatened about $11 billion worth of retaliatory penalties on european goods. there is a broad sector here. british stilton and french roquefort cheeses and wines and other fun things. the main headline is airbus planes. the u.s. is upset about a number of things, among them a subsidies they say airbus has used to get there fancier planes off the ground. there is a wto dispute ongoing because of course there is.
sometime in late summer there will be some line that comes out that says this is how big the actual amount is. the u.s. will take that as guidance. in the meantime the u.s. put forward $11 billion worth of product lines and said, this is what we are coming for, let's make a deal. david: talk to us about timing. is it a coincidence when we are talking about the boeing issue? the otherng my doctor day, there is a measles issue in hong kong, will it spread to other products? think this is out of the same playbook you saw in china. the usn china are in advanced negotiations now after having gone tit-for-tat at the start. this is a similar playbook. i do not have enough reporting to say whether or not this is anything more than face value. giant believer in
geopolitical risk. tend to not think these things are done by lucky roles of dice. here we are. the timing comes after a horrible round of news from boeing. and indeed, people have been flying some of their newest crashes.ter two it could not have come at a better time for boeing. the threat is out there. airbus in europe when they wake up will have to respond to this. rishaad: there has not been any response from airbus or the european union. as you say, it is far too early now. tensions being ratcheted up between brussels and beijing on trade, haven't way? derek: yeah. wheres a multipolar world
everyone is concerned about their own trade flows and individual trade deficits and who is helping who and who is cheating who. we are sitting around pointing fingers at each other, but it does get really real really quickly when you threaten to slap tariffs on a major line. in the global aviation marketplace you have a limited number of players. boeing and airbus are the big two. they have been rivals a long time across every single one of their airline product lines. a move like this is a clear shot across the bow. -- there is more to this beyond the airbus plane, but when europe wakes up, when that market wakes up, it will be interesting to see what happens to airbus, the euro and the dollar. as you know, geopolitical risks in notnd not -- prices
better news for brokerage at home. softbank named nomura as the lead underwriter for what may be the country's biggest bond yield ever. $4.5 billion. rishaad: tesla followed up a disappointing deliveries report the u.s.g back across as they move the ordering process online. staff have been let go in chicago, new york and tampa. they declined to say where they fell and how many have been affected. the company wants to save money as it ramps up production. david: cutting more than 4000 jobs in germany. eliminating 12,000 positions around the world. to raise profitability after the $63 billion deal. and may be politically sensitive as labor protection is strong there.
yvonne: let's look at other movers out of china. watching some of these big automakers. seeing a turnaround when it comes to the march numbers. percent.up to point at those march vehicle sales up 16.8% on year. newsstock flying today on the parents gree group will be selling a stake of the company. gree electric resume to sharing. that stock up 10%. stock, sayinghe there is potential to gain more market share as there is a rollout in 5g. take a look at sony. that is the big one after we they according to reuters, are planning to increase their stake into the company after the
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♪ >> 10:29 a.m. in hong kong, 10:29 p.m. in new york. u.k., wherethe lawmakers have voted to prevent a no deal brexit, as they will to delay the upcoming divorce. are said to be close to an agreement ahead of a critical summit in brussels on wednesday. sources say a compromise is building between france, which is skeptical about extending the membership, and other leaders, who think theresa may should have a year to push a deal through parliament. india's prime minister, narendra modi, is pledging to spend almost $1.5 trillion on
infrastructure as he launches the party election manifesto. he wants to double rural income by 2022, in food gdp shares boosted. india's 250 million farmers are a key lock for the opposition congress party. former indonesian general -- is dismissing independent opinion polls and claiming he is on course to win next week's election. the presidenthat has a current double-digit lead, but the opposition says he will take more than 60% of the vote if an election were held today. polls suggest about 10% of indonesia's eligible voters remain undecided. presidentrida, trump's mar-a-lago resort had
breached security, the suspect held in jail until his bail hearing. arrested march 30 for illegally entering the region and lying to a secret service agent. a lawyer says there are in explanations for the allegations against her. prosecutors say she could be formally indicted this week. 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. i'm su keenan. this is bloomberg. >> thank you so much. we are looking at oil. speak,off its high as we 64.43, coming on the back of more dollar weakness, escalating the underlying story. u.s.-iran sanctions could help maintain. >> let's get our energy editor in tokyo. does this rally have legs?
we get to a point where more shale becomes economical and act as a cap on oil prices. what are people saying? i think there's a couple factors at play. yesterday,about 2.1% trading around $64 per barrel today. brent is right around $71 per barrel. i think there's a couple geopolitical factors driving the rally. is a conflict in libya. a bomb at thehad tripoli airport, which is raising a lot of concern that the conflict could escalate, and that could begin to impact libya's oil exports. it is opec's eighth largest producer, 1.8 million barrels per day, so clearly if those are impacted that could impact prices. he waser factor was president donald trump saying he plans to designate iran's
revolutionary guard a terrorist group, which does escalate tensions between the world's largest producers. we are seeing a lot of geopolitical events. >> and they have also built up a net bullish position for six straight weeks. they have bumped up their forecast for brent, 72.50 is what they are seeing for this quarter. in terms of where we go from here, what else is out there? of course people are going to watch this conflict in libya, and no one can predict what's going to happen, but there are larger contextual factors. we have the opec cuts, which began in january and are expected to last through the end of the year. opec and its allies -- saudi arabia and russia -- plan to meet in may. they will discuss whether they continue the production cuts through the second half of the
year. that is something everyone will watch to see what happens. in like you said, u.s. shale producers continue to produce record levels. u.s. production was at 12.2 million barrels per day last weekend, and they are continuing to export as well, with higher prices. they will probably try to boost exports. both those supply factors are two things people will be looking at going forward. >> all right. thank you. talkingn energy editor, a little bit more about this rally. we have been driven by production cuts by opec and allies. it has been deployed largely since we 17. >> this time the impact has been -- in an exclusive interview, we have the aramco chairman who told bloomberg that whether the market still needs these cuts. the 1.2 million was based on
certain other countries keeping their october level production, so i think we have to watch them, and you know who i am talking about. venezuela is still -- we need to find out what happened. hastions that the u.s. will be upovember for reconsideration by the administration. all these factors will impact the fundamentals. wasmately, the 1.2 balancing certain things for demand and supply. the longer we wait in the closer we are to june, the more informed our decision is. that is why we thought april was premature. certainly there was a desire by some not to make a decision in april and we acknowledged that this will probably be gun
jumping, so to speak. so i think we will meet here in the kingdom in may, only a few weeks away. that will be close enough to june and i invite you to come back. we will be more clear on where we need to go. looking forward to june. that was the energy minister of saudi arabia speaking exclusively with bloomberg. let's turn our attention and have a look at china and the eu. the premiere will be holding talks with officials in brussels later today at the annual eu-china summit. >> the meeting, as we were dealting earlier, will with mounting concerns regarding beijing's trade practices. what is beijing hoping to gain this time around, and likewise brussels? >> china is trying to make this a case that there are more areas
of agreement and disagreement, trying to do this as an olive branch, following up on the chinese president's visit to france. be a diplomatic overture, trying to minimize areas of concern. they are hoping 5g doesn't come up a lot, in huawei. but they also want to talk about areas where they have agreement, like on the wto, like on paris climate, like the nuclear agreement with iran. they are in a different position than the u.s., and they are trying to strengthen that. it's really not a coincidence that they are doing this even as there are trade tensions between the u.s. and some european countries. we just saw the u.s. saying they may go ahead and impose additional terrorists on $11 , thatn worth of eu goods
they may bring it to protect boeing. >>'s 5g likely to come up? and the belt and road initiative. >> 5g is the elephant in the room, right? but it was the elephant in the room with the chinese president's meeting with the french president, and it didn't come up. you'd think it would have come up, but they didn't talk much about it. belt and road is expected to come up, and there are some agreements that china is looking at signing with some european countries, so they will promote that. this is meant to be more diplomacy, trying to play down some of the areas of disagreement. we will see whether that happens, because there is still a lot of concern about china's intellectual property practices. >> no doubt we will be revisiting the
♪ back, you are watching "bloomberg markets." let's talk about banks. thanks in hong kong's are set to face one of their biggest challenges yet, this new breed of financial technology firms are estimated to have as much as 30% of the revenue. the monetary authority has granted a virtual banking --ense is over the course putting in the pipeline five more. they are partnering with the likes of standard chartered in hong kong. they plan to begin upgrading within the next 10 months. >> the key issue will be balancing speed to market with delivering functionality.
let's bring in the managing partner at castor hong kong and global business. welcome to the show. what is a virtual bank? >> a virtual bank is a new it givesty -- traditional banks quicker access to develop functionality. >> is a traditional banks, but it doesn't have to be. >> absolutely. what you will see is they have been granted a lot of reprieve within technology films and anks coming together for customer proposition which will be compelling in the market. point, compelling to the market, it is being fast and accurate. in this case you want to be first in the market but you have be able to provide something, right? >> this is the biggest,
probably, challenge for all the new entrants. they will have to develop a minimum viable credit. -- i thinkhe market that is why we see some of the bank of china, standard chartered, bringing that trust in brand with them, and that is compelling to the customer base. that will be critical to have a balance, how they develop a functionally rich offering in create stickiness. >> i saw a reporting that some of these virtual operators, even when it comes to standard chartered, they won't be able to access their customer bases unless there's prior consent, essentially they will have to build and get new people to buy into this. how much of a draw is there in hong kong in particular? my mom still goes to the physical branches, we still use
physical cash when it comes to taxis. it is very different across the border in china, where everyone can pay with their phone. is there that draw in hong kong? >> you look at the market and the current experience in hong kong, it's not particularly safe. a lot of clients are not particularly happy. therefore to have a new offering or something which is more appealing, tracking the older generation, or has to be something that is a compelling argument. how does this act as a springboard for the rest of asia? developing they been this banking system themselves? >> hong kong is a really well-regulated market and i think a lot of interest was developing in hong kong.
challenge will be within different geographies and i think they are waiting to the how hong kong will develop. i think they will probably take nine months before they can get into an operational service. otherk we will see regions quickly following and trying to learn the lessons of the kong, particularly adoption of the regulation and some of the other requirement. >> i'm sure lots of our viewers may be wondering, in terms of that switch for a virtual bank, what kind of jobs would be available? are we talking about sustained, traditional banks, or is it a different ballgame? >> certainly the virtual banks will have a workforce of the different mindset. they are looking to create and be innovative, they are looking to develop a culture and they want to be forward inking. who will beals
employed -- they will look for that fast-paced, the embrace of quick to market. >> you have the likes of hsbc saying we will still be doing our own digital services -- could it have a big hit on their profits? >> different banks are about different strategies. you need to fully understand the population. but i think each of the existing banks need to enhance and look at their strategies. this is all about trading competition in market, giving the client a better customer experience. ,> i have had people say to me it's not customer service, it's a customer asked periods. that's of course a double-edged sword. will this mean lots of virtual
banking licenses having to be granted across this part of the world? >> i certainly think there will it will depend on how successful the institutions will be in terms of their ability to gain market share. certainly the region will allow andfurther banks to join in fairly profitable in terms of the market share. i would absolutely expect that. >> all right. thank you for coming on the program. we will follow this space. let's get you a quick check of your latest business flash headlines. blackrock boss delivering annual notes to shareholders saying he wants to make the firm into one of the leading asset managers in china. he says it presents an enormous growth opportunity with asia expected to drive 50% of the organic growth in assets over
the next five years. earned a private operator license in china in 2017. >> credit suisse investors being urged to reject the compensation report after an unjustified pay rise for the ceo, tidjane thiam. there are questions of the rationale behind the hike, in the reasons it was made public. >> interest is seeking as much as $1.2 billion in an ipo that could value it lower than his last private valuation. it is offering 15 million shares at $15 a pop. back in 2017, the company raised money that gave it a total valuation above 12 million. >> we are counting down to the opening session in mumbai. let's get the latest with our
guest. we have been tracking the oil prices, but what is the setup like? you can expect a lot of pressure to build up with oil and gas. with what has been happening with oil, all the earned market crumbling, 8% to 10%. yesterday's session saw a week footing, and now the nifty is on the brink of breaking global levels. you can expect that on the back of what oil has been doing, brent crude is reflecting the and its in the currency was weakness across the board and the only pocket that held
ground -- there was a market selloff that happened in the trading session. downgraded -- does this come after the market and what is the rationale behind the change? it's a big downwind that's coming. the stock never has been doing has been a and it slightly more expensive stock. sales are down, straight to a cell. they had an earlier price that has dropped down to 1400 rupees, with weakness in the macroeconomic condition and bringing in more pressure. rising crude oil prices are expected to affect asian themes
♪ >> it's time now for the battle of the charts, and today we have our beijing bureau chief against join auster and they will put the best charts against each other and our viewers will be able to access them on the bloomberg with the function on the bottom of your screen. >> who are we going to start with? let's go to sharon, the honor is yours. charttoday i have a showing the spread between 30 year in five-year chinese government bonds. like you can see at the top of the chart the spread has been flattening and usually that flattening yield curve indicates
investors expect inflation to slow, but there is a roadblock that could be potentially coming up ahead. on thursday cpi data is due and economists expect it to quicken 2.3%, so there could be a roadblock up ahead and we may not the yield curve continue to flatten as it has. another thing to keep an eye on there might be a slightly more modest gain on that front, which means investors could demand more yields for the longest maturity. >> all right. so i have a chart that compares the stock performance this year with hedge funds and hedge funds are still well underperforming the stock market and we have been talking about
that for a couple months now but what is different is this rally has been on low liquidities though it has done things like short covering, buybacks -- investor participation hasn't been there much, and we have that pays it coming through the system, china starting to turn a corner, so we are likely to see investors have to start trying to make up some of the ground. that looks like there might be some room for a further rally, although volatility is also lower so you can make cheap hedges if you don't believe the .ally is stop >> >> this is tough. sure whether the yield curve argument applies to china, it is still a relatively new indicator. it applies to the u.s. -- i
mean, we will see. is interesting. draw, whatwas a would you have gone with? [laughter] >> i like joanna's. >> ok. thank you very much. are a bloomberg user, you can interact with the charts and go to the g tv function for the have a look at the recent charts we've been featuring, use them to catch up on the key analysis they bring to you, and you can save them for future reference. this is bloomberg. ♪ want more from your entertainment experience?
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♪ emily: i'm emily chang in san francisco and this is "bloomberg technology." pinterest kicks off its roadshow. valuation less than it fetched in its last valuation round. facebook, instagram, twitter, even more face possible fines over a u.k. band under a new law if they don't remove violent and hateful content. in what is so special about