tv Bloomberg Daybreak Asia Bloomberg April 24, 2019 7:00pm-9:00pm EDT
paul: good morning, i am paul allen in sydney. shery: i am shery ahn. sophie: i'm sophie kamaruddin theory welcome to daybreak asia. paul: asia looks set for a mixed start after wall street pulled back from a record. the dollar extends its rally. i mixed bag of results for tesla, investors weighing new losses and in the -- facebook
jumping after our -- after hours. shery: breaking news out of ,outh korea, the south korea growing 1.8%. this is the slowest growth since the third quarter -- first quarter 2009. looking at the adjusted gdp, the economy contracted, 0.3% instead growing 0.3% as it was expected. quarter onon of 0.3% quarter, that means it was the worst growth since fourth quarter 2008. a contraction of 0.3%. so much so that the numbers are leading the south korean finance minister to host an emergency meeting on this gdp report. year on year, first quarter gdp
, growing 1.8%. significant slowdown from 3.1% in the previous order and contraction when it comes to quarter on quarter basis. we have seen significant weakness especially with the government clamping down on the real estate market. we have seen frontloading of government investment with their budget for 2019 increasing 10% from last year. still not enough for the first quarter gdp numbers to come in, contracting. the worst number since a fourth quarter of 2008. your on year, the slowest growth since the third quarter of 2009. let's get a market reaction right away with sophie kamaruddin. seeing not much in the way of reaction but we
are indicating further weakness for the korean won after it tumbled to the weakest level since july 2017. the korean won is the worst performing currency year to date, down 3% against the dollar. even the government -- the gdp report will certainly add to those concerns. looking at futures, the start of cash trade in an hours time. nudging slightly higher after stocks pulled back on wall street with a barrage of earnings. sk hynix with results from south korea. looking at the kospi extending declines with soft tech earnings. from japan we have the likes of nintendo and nomura reporting today. japanese futures edging higher while the yen is rebounding while waiting on the policy decision. let's get to first word
news. >> it will be impossible for the iranian exports to zero and they will sell around the world. less countries are buying iranian crude without facing sanctions. said he wouldnt consider negotiations with washington but talks would have to be held in mutual respect. his foreign minister attacked the trump administration during a speech at the u.n. is alsonited states punishing those who's week to fulfill the multilateral negotiations which call for normalization of economic relations with iran. this is the first time in the history of the noted nations a permanent member of the security council punishes countries for observing the security council. unheard of.
reporter: sri lanka is shaking up top-level security after officials failed to act on intelligence warnings before the easter sunday bombings that killed 350 people. the defense secretary and police chief have been told to resign with the president saying he will take stern action against anyone who fails to share security information. kim jong-un meets president putin and vladivostok later. -- in vladivostok later. russia is unlikely to say or do anything that might irritate washington. it is expected to offer diplomatic support. kim said it will be the starting point to new cooperation, but officials won't sign agreements or make statements after their talks. andal news 24 hours a day oc on twitter. powered by more than 2700 journalists and analysts in more than 120 countries. dollar's rally
uneconomic data drowned the spot -- grabbed the spotlight in u.s. trading while the s&p slipped. earnings were promising. su keenan has more. it is all about results. earnings hitting high season. 80% of the s&p 500 companies reported so far, beating their earnings but analysts pointing out they are beating managed lower earnings, facebook one example. let's go to the markets caps on. you notice the dollar rising to a four-month high. notice you see weakness in the energy-related stocks as well as the under lying commodity. we will get to that reason. let's go to the big movers with have to do with earnings. at&t and caterpillar both sliding after earnings notably
caterpillar saying that their market share in china likely to be a bit lower. that impacted the prices down, 3%. boeing even though they slashed or admitted they scrapped the forward outlook, they rose on the higher earnings, even though the jet continues to be a problem for them going forward. higheranadarko screaming by almost will percent. they are in a bidding war. saudi aramco offering to buy the oil company public and they seek to break up a proposed takeover by chevron. drama. this could take the stock higher. pricing in optimism is what this is called that relate to different sectors, performing at the big start of the earnings season. the yellow line is technology. this one is consumer. let's go to the after hours and
acknowledge -- technology is the one screaming higher. facebook, microsoft, tesla moving higher as these after our conference calls and details are being digested. have been getting more details on the three big tech names you mentioned, making big moves in extended trading. tell us about that. let's start with facebook. i am blown away on a number of fronts. but look at this. it is better than a percent, reaching its highest since july. -- 8%, reaching its highest since july. there were challenges for the stock with regulatory pressure and privacy concerns. dent in theut a advertising revenue. they set aside $3 billion related to the ftc inquiry but revenue was better than expected
, 26%, underscoring the strength of the company. they reached 1.5 billion users a day. billion a month was better than expected. gain ort, 73% earnings revenue gain for as your, -- azure, their cloud company, blew away estimates. commercial demand and get there were business deals that put that company and a great place. is the stock that has been fluctuating between gains and losses after hours. now it is virtually flat. earnings were expected to be .gly everyone expected a loss but no one expected it to be this big. i was twice -- it was twice as big as expected. it was more than twice the analyst estimate of 130, which
is a record drop in quarterly. the inquiry into the ceo and other things as one analyst said, it wasn't one reason we had a loss but all of them together was staggering. you didn't have the ceo -- you did have the ceo reiterating his bow to return to profitability. ow to return to profitability. shery: looking at another stock that we have been tracking, boeing shares slightly higher despite missing estimates for the second time in five years and abandoning its 2019 forecast , all turbulence caused by the max 8 crisis. we have this reporter now from dallas, texas. it has been six weeks since the grounding. what have we heard about it return? -- its return? reporter: boeing's racing to get
this back into the skies and deliver this to customers. that is clearly the top job from what we have learned on their conference call. overstated how important that is. they said they finished their flight testing last week of the new software update that is going to go into the airplane. the next step would be for u.s. regulators to approve that. part of that will be a variety of other nations that will also need to approve that. right now boeing is working to get this through the regulatory process around the world. timetablehas this going to affect earnings going forward because we are ending up with more questions than answers. >> we did. out theboeing threw forecast for the year because the abilitynow -- to predict what will happen is reliant upon the future of the max and whether, when it gets
back into service and how it does, and for boeing it is -- the cash comes from this max mind. with no deliveries there is not a lot of money coming in. shery: one of the biggest risks for boeing is more regulatory scrutiny. what do we know about the 737 max 8 investigation? arein: the investigations ongoing, preliminary reports are out, but it will take the full report before everybody understands what happened. before that happens, boeing needs to get regulators and airlines around the world comfortable that this can fly safely. they are betting everything on the software update. they are hoping that the u.s. and their conversations around the world, everybody gets on the same page great we spoke -- the same page great we spoke with the ceo of american airlines and he said it needs to be a
lockstep operation where all of 50 airlinesators, around the world, are comfortable everyone can fly at the same time and present a united front to customers in this regard. all right, bloomberg news aviation reporter justin bachman in dallas, thank you. we are diving deeper into earnings including facebook, whose ad business shows no signs of slowing down. shery: tesla posts a quarterly dissipate -- quarterly deficit twice. this is bloomberg. ♪
>> i don't have a crystal ball, but my impression is that demand is quite solid, strong. discuss tesla demand and the road to profitability. we have a veteran author analyst who is a prolific reviewer of new models for her website. you consider yourself in your own words a tesla realist. this result was delayed interestingly, a metaphor for most things tesla and a mixed bag as well. what stood out for you? >> a couple things. the cash burn rate it wasn't entirely unexpected because they had a large over $900 million payment they had to make. cash, a lot of money but not when you are making the investments tesla is making.
the other thing is the low delivery this quarter is 63,000 units am a but maintaining their , throughout the course of 2018. that seems like a sustainable rate to catch up to. month 40,000 units are they would have to do. i am concerned about some of their projections as always. shery: listen to what elon musk had to say. a rapid increase in our logistics operation and half of global deliveries in the final 10 days of 21. the logistical operations, i have seen some tough ones. shery: it is difficult.
how much does this tell you about the challenges tesla operations phase worldwide. -- worldwide? >> they faced challenges because of the scaling up to meet the demand that he talks about. they take out the traditional dealership network, so they don't have that support system for sales and service. now they are ramping up to meet these projections, they are running in two significant barriers -- into significant barriers of time, distance, satisfying this demand. to scale things quickly. really some of the solutions are one offs. they will send a car out to service your car stuck on the side of the road. l.a., itl in transports one car at a time. it is not really feasible.
but i also feel like i need to be realistic about some of his expectations. about when he reintroduced a lower entry price for the model x and model s cars? rebecca: he was lower for a hot minute. they did a lot of flip-flopping over the first of the best course in the first quarter with pricing their vehicles and also retail strategy. they were going to close all of the stores that only go online until they ran into the fact they have leases on their retail space and it was far too expensive to cancel those. i just feel like it is a company that is in turmoil. it has been in turmoil but also doesn't seem like wall street really cares because their stock continues to maintain a high level even though it is down 20%
this year. of the themes from tesla is always about a look to the future. not the set of problems here. they say look at the robo taxi. how realistic are these goals? rebecca: the robo taxi announcement was there was going to be one million south -- self driving things on the road by 2020 which i calculate is 88 monday's from when he made the announcement. unbelievably aggressive. generally we consider waymo. they are the leader in autonomous driving and they are not close to it. there is a lot of shiny objects because now they are opening up an insurance company. i would like to see them concentrate on meeting their goals of today. that is not who elon musk is and
not why he is where he is today. i admire his ongoing provision, but i also would like to see some success today. some control over the balance sheets in particular. shery: thank you. -- paul: thank you. that is the founder of rebeccadrives.com. you can get a roundup of stories you need to know on today's edition of daybreak. bloomberg subscribers, go to dayb . also available on the bloomberg anywhere app. you can customize settings so you only get news on industries and assets you care about. this is bloomberg. ♪ this is bloomberg. ♪
at 1.37 trillion won. that is a big estimate -- miss from the estimate of 1.5 trillion won. they sought growth quarter on quarter falling, also the fallingselling price 27%. same thing for the average selling price down to present in this group. ath net income, they came in 1.1 trillion one, slightly higher than estimates. sales higher than estimates coming in at 6.7 7,000,000,000,001. the operating profit if missed, 1.3 7,000,000,000,001. won.3 7 trillion theysts expect recovery in second half with healthy demand from pc's but with texas
instruments for example, they have a better second quarter forecast by the second time they have been hinting which of industry will not recover as soon as they expect. you we conceive wally chip prices. when it comes to south korea exports for the first 20 days, we saw in the chip sector it fell 25% year on year. missing estimates. shake -- facebook jumping in late trade after better than expected first-quarter revenue, regal --g swilling legal costs and privacy concerns. let's look at all of this with bloomberg intelligence senior analyst jitendra waral. it seems that the overall picture first facebook -- picture for facebook looks strong. have they moved past negative headlines? jitendra: if you look at fundamental growth, it was a strong growth almost on every
metric. facebook's future growth is dependent on stories. stories advertising pricing is lower than [indiscernible] but they did manage this transition well. that is instilling confidence into their ability to drive revenues going forward. ftc findsd that, the it is a big number. is a strong.rowth the market will overlook that like it did for google. see twogation analysts things. one is probably a settlement is near, indicating that. it is not settled yet or not resolved yet, but that is likely the outcome. and what comes after, if facebook has to accept the new degree that comes out of it, it might not be disruptive to facebook as we may think. the ftcthe take on
situation. the revenue numbers were healthy but with the bigger picture, the markets are becoming saturated. the developing markets, not as lucrative. how sustainable is this revenue growth in the long-term? jitendra: if you look at expectations are the second half of the year, in light of what new avenues of revenue will come on board, there are a couple things that will work in their favor. one is comparisons that become easier. expectations are lower. they are bringing users together so that could open more across the stories platforms. they are piloting and pushing instagram's e-commerce efforts. have partnered with paypal to check out on instagram and things like that. you will see things in the fourth quarter.
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asia.": chase has promoted a record number of women to managing director. for the bank.ions wall street has been under fire for a lack of diversity in its upper ranks. last week, j.p. morgan announced a management reshuffle the would put a number of women in place to potentially succeed jamie dimon as ceo. president trump is said to have indicated u.s. support for an assault on the libyan capital. sources say he spoke to a militia leader and back to the drive to topple the current
government. a call with a national security said he is less under the impression of u.s. support for an attack. a white house spokesman said the description of the call is inaccurate. one week after the indonesian election, the nation remains divided, with both candidates claiming victory and the authorities issuing a public warning against displays of frustration. the president is said to hold onto a healthy lead, but his arrival said pollsters indicate he won the vote. counting continues, with the final result not expected until late may. a chinese app maker has won a victory in india, with a court overturning the ban on its video sharing platform. available.l now be it has been growing concern that
tictoc could expose children to pornography and other disturbing content. are holding as yard sale fit for a king or a queen. they are auctioning off in extravagant collection of furniture and artifacts, many of which once belonged to european monarchs. expected -- is expected to net $13 million. top of the bill is a set of cabinets commissioned 300 years ago. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. paul: thanks for a much. let's turn to japan. week of the golden holiday, was in the lineup? david: nintendo report -- sophie: nintendo reporting revenue expected to increase to
$2.1 million operating profits as software sales grow. also today, guidance will be very much in focus for nintendo, witha partnership coupled a strong software lineup for 2019 and the software maker expected to exceed sales targets. yahoo japan could up a rate -- could announce a fifth straight increase in operating profit. it is looking for a 22% decline, which is more optimistic than the company's own guidance, with a plunge in operating profits. after announcing a $1 billion cost-cutting plan earlier this month, number i is expected to post a rebound with net incomes rising 31%, especially with business segment improving.
number of likely to post the first annual loss in a decade. shery: thank you so much. a european banker kicked off with a strong performance, particularly in this troubled trading business. we spoke to the ceo after today's release. >> we are pleased with his performance. we are pleased with our people. the global markets have been intense criticism and pressure. for a closer look at what is ahead for the european bank, we're joined by dan rigo in san francisco. what were the main drivers of these results? >> it was something of a surprise. these strong results and trading revenue was down, but it was down for less than expected. decline trading revenue was much better than at wall street banks that we heard about
last week and the week before. a surprise net income for that unit. it was encouraging investors today, pushing up the stock price by more than 4% before it leveled off a bit and some of the gains forgiven back. also, the wealth management unit had strong results, net income and revenue decline that was not as bad as expected. the ceo, as we saw a moment ago, built up that unit as a hedge against volatile trading results. it seems a cap strategy is paying off. as i said, the shares, which were up initially, came back down. most of the gains forgiven back by wednesday. results werenking not that great. executives, well they
expressed optimism about the rest of the year, were not able to give a solid forecast. they didn't give a review of what they expect and that may have spooked some investors. paul: we have more banks reporting in coming days. what are we watching out for their? ubs is coming up thursday. friday, we have joint bank, then next week, a whole slew on results. again, it is trading revenue that everybody will be watching for. expected,e declines are they going to be deeper than expected? banks are already reeling a little bit in europe. the market routes at the end of last year led some banks to cut some operations, led some other banks to readjust targets. is -- one ceo said it
has been one of the worst quarters in recent memory. are they going to have to readjust their targets again? shery: what about deutsche bank? it has had its share of issues. banks in general are under pressure, that is totally true for that bank. they have been trying to turn around their operations for what seems like years. many turnaround plans have failed, and the bank is in talks with commerzbank on a possible merger with the german government, who is encouraging that. others have emerged, trying to get a piece of commerzbank. when a report earnings friday, we may get more information about the proposed merger. we will be watching that. paul: bloomberg news finance editor in san francisco. thanks for joining us.
after talks in paris, rome and three and a, the japanese prime top eur is meeting officials in brussels thursday. we're joined from tokyo. what is expected when he meets with those leaders? time for is always the japanese prime minister's to heit europe, and this time is also stopping in the u.s. and canada. trade will be the most important theme at every stop. he will be meeting eu leaders later today. japan and the eu have a free-trade agreement, which came into effect this year. what they also share in common is upcoming trade talks with the u.s.. have lucrative car exports to the u.s., which
have been criticized by donald trump, and they're very anxious to protect those from sanctions. they will no doubt be trying to show a common friend on the benefits of free trade, and perhaps compare notes on how to deal with these talks. that we are expecting the prime minister to convey when he meets with president trump? >> right. japan's own bilateral talks with the u.s. started last week. the second round will take place today in washington and the arrives inay, abe washington for talks with donald trump. with the u.s. wants out of japan in the short-term is access to its agriculture markets. the situation that u.s. me farmers find themselves in is that they are losing market share countries that fall under the transpacific partnership. the pan asian trade deal that the u.s. has rejected.
that is what the u.s. wants. what it is prepared to offer in return is less clear, if it is anything at all. given that donald trump has often referred to the need for a balanced trade relationship, it is hard to see how farm products, which have low monetary value, could make much of a dent in the $60 billion trade deficit. shery: thank you so much, our government reporter joining us from tokyo. we will be back in tokyo in a governor kuroda will be having a press conference today. he is expected to release his latest inflation forecast. this is bloomberg. ♪
shery: we're counting down to asia's first major market open this morning. ofan futures higher by 2/10 1%. we are expecting the doj policy decision to come out anytime now. of 48 surveyed said they will remain unchanged. japan has been holding at its lowest level. "bloomberg daybreak: asia." i'm shery on in new york. paul: i am paul allen in sydney. we will come as no surprise that the bank of japan cut its inflation forecast today. it will raise more questions, with cpi fairly -- barely on the way to the target, despite years of intense stimulus. go economics and policy editor kathleen hays is in tokyo for us. it is deja vu for did -- for governor kuroda today. it certainly seems
that way. tookber, when he first over the bank of japan governorship in 2013, he was confident that inflation would be up to the 2% target. here we are in 2019, still a long way away. the bank of japan wrapping up the two day meeting. the decision will come around noon tokyo time, maybe a little earlier. a couple big things expected, with the biggest, what will they do with their forecast? four times a year, the boj comes out with a monetary report. they have an opportunity to change their outlook. thate figured able reduce by certain amount and watch growth. -- retailen retails sales mix up next. they get hit fairly hard in the first quarter, compared to fourth quarter.
he is not as confident as he has been, but with second half of the year, he will have a stronger chinese economy and a stronger japanese economy. we will be watching what he says about oil prices and the consumption tax hikes, october. a lot on the list. the press conference will be all the action, with the biggest heat is put on governor kuroda. shery: do stay with us. bank ofus from tokyo is america merrill lynch head of japan economics. we might not see a big move coming from the boj, but it seems that more and more expect the bank of japan's next policy move to be more easing. does that make sense to you? we continue to see the side effects of easy money, like the real estate market heating up. our view is that the bank of japan is probably stuck in limbo, at least through fiscal 2019. they are not in a position to
accelerate policy, but i think the hurdle for additional easing, especially involving rate cuts or increases in risk asset, is pretty high. reason it has ratcheted up, going into march, is because, the global data was pretty weak and you had a pretty increases turn by some big central banks, including the fed. then, there is some early signs of stabilization in china. the dollar yen is quite stable, and i think the boj stance right now is that they would like to wait a little bit more for evidence of the second-half recovery it is counting on. it does not want to use it right now. of waiting, it feels a griffin waiting forever to reach this 2% inflation target. the consensus is that the timeframe for that keeps getting pushed out.
why can't the bank of japan just walk away from it, or does that send the wrong message? >> i think it does raise the wrong message. idea is to shift inflation expectations. one of the reasons why inflation has been so slow to pick up is because there is a strong entrenched price norm that the boj is trying to move. unfortunately, it could take a long time to do that. looking at inflation expectations, boj is counting on a high pressure economy to tighten labor markets and change price setting behavior among businesses. they are starting to see early signs of this shift happening. i don't think they are about to give up anytime yet. yesterday, i had the pleasure of interviewing hero she was an oddly, the vice minister for international
affairs at the ministry of finance in the early to mid 2000's. boj, heuestion of the said that at the point where the european central bank start shifting their stance on the 2% inflation target, the fed is having a big review this year, and their full policy mechanism, that is the point where the boj will have the open doors to do that. it is a global phenomenon that has troubled central banks. what do you think about that? think in the best case, the discussion is about tolerating overshoot for inflation. i think a review and a more dovish fed puts the boj in a more difficult position, because it already has committed to overshooting 2% inflation as part of its guidance. whether central
bankers have the tools to do so. i think it puts the boj and a more difficult possession. -- position. shery: it is probable that we might hear from the boj that we are expecting growth to recover in the second half, given that the global economy seems to be picking up on the back of stronger growth at a china. is that going to be the case for japan? can they get the benefits of the chinese economy growing and rebounding and stabilizing anytime soon? i think on the external recovery, which are absolutely right, the bank of japan is praying for. it will take a little bit of time. we only just started to see signs of stabilization out of china. for that to feed through to japanese manufacturing activity, i think it will still take a couple extra months and this is a summer story at best. i think that is the story right now.
i think that is what governor kuroda will stress. another thing that will discourage them from moving is that we have the longest postwar market shutdown coming up, so this is not the time to rock the boat for the bank of japan. paul: are we going to be looking back on these days and thinking, japan was a global case study on how you manage an aging population? i think now the conversation is about whether we are seeing the same types of challenges in the eurozone. the bank of japan is certainly not alone in facing low inflation challenges and the difficulty of getting traction with inflation and growth, with monetary policy alone. shery: thank you so much for joining us. bank of america merrill lynch and policy editor having his in tokyo. if you missed any part of this
paul: saudi energy minister says he sees no immediate action on the oil markets, signaling a cautious response to the united states decision to say in sanctions on iran. he spoke that the finance sector in riyadh. >> i don't see the need to do .nything immediately we are talking to our customers, watching inventories. talking tog to be
other producers, as i mentioned in my statement. weeks, we will have the monitoring committee and many ministers have already reached out to me and i reached out to a number of them yesterday after putting out our statement. we're all in dialogue. we will decide what we are going to do beyond june. i think the sentiment in general is that we as oil producers should never lift our hands off the wheel. global markets in general and oil markets in particular are , and we have to always keep our hands on the wheel and keep supply and demand closely matched so that we don't end up in any severe shortages and we'll not get caught up where we got surprised in the fourth quarter last year with
inventory built. in the meantime, we will not leave our customers and i think we can balance all of those. we will do the job, but make sure that global oil markets are balanced and make sure that oil,mers who want iranian they know which number to dial and no we will be there. shery: now, a quick check on the latest business flash headlines. nissan looks like the two miss its profit target, earning less than its partner in the first time in a decade. it struggled to revive its fortunes among fallout from the troubles surrounding carlos ghosn. operating officer were slashed down from $4 billion. owners ofchinese lycra are said to be ready for a potential ipo in the u.s. they bought the company from its
u.s. owners in january. it is already working with goldman sachs in a bid to raise $500 million of share sales, which could happen this year. the deal was the latest in a string of overseas acquisitions in attempts to become the -- of china. in theimpressive results mining minute failed to see his concern about the outlook for other operations. quarter sales beat estimates, but inventories are growing and caterpillar warns of aggressive competition from rivals in china. and south korea come back online and south korea come back online the top of the hour. australia away on public holiday. sophie has the latest. sophie: new zealand also off-line today. , withs have a mixed start optimism potentially and declines here adding to concerns
around exports. we have futures higher, despite the pullback we saw in wall street overnight. the yen trading around a four-month low. when it comes to stocks that we have, profit guidance we have missed. trade tensions weighing on the equipment. asian machinery makers have a disappointing outlook from caterpillar and asia's second-biggest maker of mining equipment. plenty to weigh on investors, with samsung delivering a second quarter of falling profit growth. chip prices continued to slide among weak demand from smartphone makers and data centers. these results, coupled with korean gdp growth will likely raise red flags over the economic outfit -- outlook.
paul: i am paul allen in sydney, were asia's major markets have just opened. shery: good evening from new york. i am shery on in new york. sophie: i'm sophie kamaruddin asia. welcome to the break asia. paul: our top stories this thursday, asia looks set for a mixed start after a pullback from a record. has extended a run to a four-month high. south korean gdp shrank for the most in a decade as exports take
their toll. shery: new questions for tesla. ofn musk promised an era profits, but the company lost almost half $1 billion through march. arezealand illustrated closed for the day. let's get to the market action in japan and south korea. sophie: in tokyo, we're seeing diversions for the nikkei and topics losing ground by a 10th of 1%, while the yen is holding at around a four-month low as we count down to the boj policy decisions. rate decisions from indonesia and earnings on track with the reporting fromdo tokyo. let's check in on the mood from south korea. after that of 1% miss in gdp numbers for the first quarter. the 10 year yield looking to percent, potentially given that report and the korean won losing ground. let's get a closer look at that
slide. as we are seeing, that collapse in business investment not looking good for economic activity. no bright spots in the gdp report, as well as investment after curving week underlying fundamentals, which has put pressure on the korean won. done more than 3% against the greenback's so far. trading at lows we are not seen since july 2017. if i could quickly pull up the board, we can see that stock under pressure in tokyo after week profit outlook offsetting the fourth quarter gain that we got for profit and recovery in orders, which suggests the worst is over. slowing capital spending is clouding the horizon. iran is under pressure. a profit guidance missed with trade tensions weighing on equipment and the smartphone industry, plus brexit uncertainties are impacting earnings in the next fiscal year. i like to highlight nissan, off
by 1% this morning. if i could just pull that up broke like, seeing the stock under pressure this morning. after a cut in profit projections, again putting the company on course to miss earnings goals for the first time in a decade. very quickly, kanaan on the move , after reporting a 48% drop in operating income on camera sales. let's take a look at sk hynix on -- investors may be seeing beyond the last report we got coming in with a disappointment, missing estimates at 1.3 7,000,000,000,001 41 $.2 billion. weaker chip isis have weighed on earnings. looking ahead, rim demand is
recovering from the second quarter. instruments has a more sanguine view, casting doubt on a chip rebound. thanks ramage. let's get to the first word news. iran says it will be impossible for the u.s./iranian to zero.ts that is after the u.s. senate what review waivers that let countries by iranian crude without facing sanctions. iran's president said he will consider negotiations with washington, but talks would have to be held in mutual respect. his foreign minister attacked the trump administration during a speech. >> the united states is also punishing those who seek to fulfill their multilateral obligations under security whichl resolution 2231,
calls for normalization of economic relations with iran. time that afirst permanent member of the security council punishes companies -- countries for observing a resolution. unheard of. is shaking up top-level security after officials failed to act on intelligence warnings of terror attacks before the easter sunday bombings. the defense secretary and national police chief have been told to resign, with the president saying he will take stern action against anyone who fails to share security information. one week after the indonesian election, the nation remains deeply divided, with both candidates claiming victory and authorities issuing a public warning against displays of frustration. the president is set to hold a but the rival says
polls indicate he won the debate. counting continues, with final results not expected before late may. kim jong-un meets president putin, -- president seeking a standoff with the united states. russia is unlikely to do anything that might irritate washington and may offered a medic support. startingit will be the point for new cooperation, but officials say they will not make statements until after their talks. global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: thank you. this hour, waiting for the finance chief to hold an emergency meeting after india's economy shrank the most in a decade or it let's bring in our chief agent economic correspondent. we know that the government has been spending a lot in order to support the economy.
their budget for 2019 up 10% from the original numbers last year. why isn't all of this whole thing? >> it is certainly a wake-up call, is the global economy picking up?, is it over the worst we have one of the key all others going through a very rough patch. it is mostly down to a slump in the technology sector has exports of semiconductors have a slowdown in china and we go global demand. it is also feeling into slower domestic business. all of that combined is weighing on economic growth. mood among the official sector that things could pick up in coming months. looking at these numbers this morning, it looks a they have a bit to go yet. paul: they certainly do. bank of korea and the government both taking this
seriously, holding emergency. ? what sort of policy response might anticipate >> it is interesting, because $6y have already announced billion, there is a view that that won't be enough. that is just going to offset the slowdown we're seeing. the feeling you may need to be more on the fiscal side may come down to the official response. on the monetary side, the over their growth forecasts. it certainly puts to an end talks of rate hikes, if there was any remaining and made raise the specter of losing. it all comes back to what view we take and where the economy will be six months from now. will business investment pick up as the global cycle improves and if the technology sector gets back on track. they may be willing to abide their time and wait, depending on what happens with the chinese story. shery: thank you so much for that. bloomberg's chief asia economic correspondent in hong kong. the other big story, the boj's
policy decision. the central bank wrapped up its meeting with one big question hanging over the outcome. what can governor kuroda say about his failure to hit the 2% inflation target? kathleen hays is at the boj. how long can governor kuroda stick to his guns on inflation? we shall see. right now, we can certainly say that when governor kuroda came into office in 2013, he was genuinely confident that with stronger growth and rising wages, japan could get that 2% target firmly under its belt within a couple of years. undoubtedly, behind me is the bank of japan building. yesterday, they have been talking about this. there is expectation it will cut their forecast of it. not surprising given one to you in this chart. you can see the white line.
that is the main point to look at. headline cpi minus fresh fruit prices still not getting to and maintaining 1%. the yellow line is the overall number. 0.5% year-over-year. 0.4% year-over-year. maybe the recent increase in energy prices will boost that, but for now we're stuck on the fact that whatever measuring look at, they are a long way from 2%. there is a sense that they could cut that forecast, looking out to 2021 to something below 1.8%. they could also trim gdp forecasts. heard the not shocking but unfortunate number coming out of south korea, mentioning chips and trade. governor kuroda is confident about the global economy picking up once a trade war is the result and brexit uncertainty is behind everyone. there is still a big question hanging there.
today, they are expected to cut the gdp forecast. not the current forecast, but maybe give some indication down the road that they realize attack longer than i thought. paul: what else might we expect of this meeting? the recent financial stability report acknowledged that real estate lending has picked up. if you keep rates low enough, central banks start worrying about financial stability. what will he say? that will give us some clues how much he is weighing the balance and the cost of keeping stimulus in place for so long. oil prices will be an issue. what that does for inflation, and the consumption tax hike is due for october, unless there is a crisis, according to the prime minister. concerned that that
could be a negative for the economy. the former vice minister of former at the like the federal reserve, like the central bank, they start re-examining their 2% targets, which they have such a hard time hitting. governor kuroda was asked about, couldn't they just drop it? he said, it is the global standard. i don't want to hurt expectations. otherew is that once central banks start questioning, that may open the door. me that hesting to is asking these questions of the press conference. thanks for keeping an eye on the bank of japan. let's get back to sophie for more on the movers. hitachi have
construction gaining ground. despite warnings of a profit slump of 30%, among concerns of demand. the machinery maker says revenue from new x-rays used in mining will see a search of 40% on demand. it looks to be a bright spot as other players are hoping for. we'll see if come out soon reinforces that came on friday. living to check in on hitachi chemicals, jumping to a january 2018 high, rising. it is looking to sell its chemical unit that could be worth up to ¥700 billion. lien on the move after posting an operating loss that was wider than expected. investments need to continue aggressively while there are bets on new technology. seen weighing on profitability until new services can be monetized. global trading volumes under
pressure. stocks down 3.4% so far this morning. breaking news out of south korea, we are hearing from the bank of korea official speaking on the first quarter gdp reports, saying that there's no need to be too pessimistic on the economy yet. we have seen first quarter gdp at 120% year on year growth. the slowest since 2009. the bank of korea official also say the latest forecast downgrade was reflected -- reflected their first quarter gdp numbers. they heldat when their key rate steady at 1.75% last quarter, it had reduced their 2019 growth forecast to 2.5%. that official now saying that first quarter gdp numbers have been reflected on the forecast downgrade. he is saying there is no need to be too pessimistic on the
economy yet. this of course coming after year on year growth for the first quarter slowed the most since 2009. quarter on quarter reveals a contraction of 0.3% for the first quarter, the worst number since the fourth quarter 2008. officials speaking at the moment. paul. news fromave breaking deutsche bank commerce bank. talks hitting a few stumbling blocks according to a report in the wall street journal. over have got bogged down a number of questions ranging from lack of investor support to labor unions. wall street journal not naming any sources. talks between torture and commerce banks are in the sixth week. the sources say a deal is still possible. just recapping the talks for now on that merger getting a bit
paul: the dollars rally grabbed the spotlight in trading, up next, we should expect the currency trading -- to straighten much more. joining us now, head of equities research for asia. we got the dollar at a four-month high. where do you see it heading from your? view, weur point of think the dollar where it is is
probably just right. obviously, since the fed has taken 75 basis points out of guidance for rates, it would be hard to see it strengthening too much. as you mentioned, we are at a four-month high, but that is a lot to do with other are in sees being, rather than specific dollar strength. we think we wouldn't expect to see it too much higher now. to a i just want to get couple of tech stories we had today. we just had sk hynix reports and disappointing numbers. texas instruments are week and mixed signals on guidance from both about where we are, in terms of semiconductor cycles to where do you put us in a broad sense? we are not super bullish on sundays at the moment. it has been some interesting changes, or i guess developments
. for example, finally, the lawsuit between qualcomm and apple getting settled. that could create a new dynamic within the sector. also, the next big driver of chip demand is likely to be related to 5g, and we're still early in the story. we think it is a bit too early to get bullish on chip stocks, although of course it is all about valuation. as we get to the current situation, weighing down on stocks, we could look at a value perspective for chips. shery: we are headed towards golden week holidays in japan. it will be a quiet time there. this coming at a time when japan has been under pressure. how are we looking in terms of valuations?
years, ite last few has be the rate by about one third. on an absolute and relative basis, versus the u.s., japan looks extremely cheap. of course, that has been the situation for most of the last two years. as you mentioned, we are heading into a long golden week, 10 days off. that, we areof getting the beginning of fourth-quarter earnings from japanese corporate's, which also include initial guidance from 2014, which is usually extremely conservative. thepoint of view, we like japan story, we like the valuation story. it has been a laggard over last year and this year. japan isr in mind that
a market where you can have two years of nothing happening, then a lot of performance within a six-month. eriod, as a six-month p if the market is a coiled spring. there is a possibility that that is a scenario for the next couple quarters. like the rest of asia, earnings peaked in the fourth quarter, so a bottom to the earnings story to appreciate that undervaluation of talked about. shery: was the case in china? we have seen incredible strength, and all of a sudden, seeing more pressure for stocks. this chart on the bloomberg showing how large caps work, heading toward the resistance line from the peak of 2016 stock bubbles to last year's high in january, but again, we're under pressure with concerns beijing
will pullback stimulus. how attractive of these stocks? we are up significantly this year, similar to the case we described in japan, the markets started to recover at the same time as earnings were peaking. we don't have support for what is driving the market. we have a couple of sentiment issues, which are more positive this year than last year. nextoks like, over the months, we would get a resolution on the trade side, which the market is trading on as well. have seen the increase in weightings in asia. that is positive for fund flows and sentiment. in response to be external pressure on trade, we have had policy andcrease its that has had an impact on the economy. the gdp number was strong for the first quarter.
we don't want to see that removed to quickly. between a balancing when the trade issues get resolved and the lead time ahead of that happening. and removal of the stimulatory policies, which we think are helping the market at the moment. head of equity research for asia, thanks for much for joining us. plenty more to come on "bloomberg daybreak: asia." this is bloomberg. ♪
fall, but not such a big one. --s largest accounting firm it's largest firm, accounting for paul: 16% of sales. result in the mining unit failed to suit concern about the outlook for other operations. first-quarter sales and profit beat estimates, but in the trees are growing. aggressive warns of competition from rivals in china. shery: chevron says it is confident it's takeover of another company will be completed, despite another offering $38 billion. the 20% premium -- premium to be agreement. if it wins out, that will be its biggest ever deal and the largest purchase of an oil producer anywhere in four years. it will also require the company to pay a $1 billion mcafee to chevron.
>> this is daybreak asia with the first word headlines. south korean finance officials are holding an emergency meeting after gdp shrank the most in a decade. first-quarter figures shrank 3/10 of 1% from the previous three months, missing estimates for a similar sized gain. the bank of korea has reduced its 2019 growth forecast and the government has rallied confidence for an additional budget. premier says he is willing to build stronger ties with the imf. they met ahead of the second international forum. he says china will continue to
deepen reform and expand measures to open up its economy. he also met president xi jinping ahead of the forum, which ends later thursday. president trump is said to have indicated this support for an assault on the libyan capital. sources say he spoke to a militia leader and backed the drive to topple a u.n. backed government. john bolton is also said to have left the impression that u.s. support for an attack in a white house spokesman says the description is inaccurate. global news 24 hours a day --global news 24 hours a day over the air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. claim that we have ended an era of sustainable profit turns out to be immature.
a record drop in quality deliveries. editor.ing in our are these results shocking or just a surprise? >> i am going to go with shock. if you look at the top line number or the profit figure, it is only a surprise, because the company had said that sales fell , that was previously announced. not necessarily shocking that they lost more than analysts had expected. when you start looking at the overall case that was made, this is the things that he said in more importantly did say, it develops into a shock. here, you talk about a plummet in deliveries. that was written off to logistical difficulties. carmaking, especially talking about a technologically been scarlet this, it is a very big item. there was no clear-cut strategy for avoiding those kinds of
problems in the future. there was a promise to bring deliveries back up in the next quarter, but no clear-cut strategy to make sure that this didn't happen, let alone accepting the blame. it is a must like it was an act of god, the logistical challenges of selling cars outside the u.s.. you look at things like deliveries of a model s and model x, is our mainstay cars that are profitable when they can sell them. those dropped off the map, down 56% on a sequential basis from the previous quarter. it is not a question of meeting deliveries, it is also a question of demand. that is the story that has been developing protest the. demand is weakening as those subsidies have for the vehicles. those are big challenges that the company faces that all point to cash. now, and we crunch must begin talking about that. talking aboutegan
that, his comments were not heartening. shery: linda we expect them to return to profitability? is another the thing they signal that would probably be another quarter of loss the following quarter and they are saying possibly the third quarter a return to black. stage, it is very hard to give credibility to their projections. have been wrong so many times. if you look at where the stock is trading, it is not of 100 times earnings, so still very much an aspirational stock. not a carmaking stock. carmakers trade around nine times earnings. this is way beyond that, so truly a moonshot for investors. to think that this reservoir of goodwill for musk and his project is starting to run thin, given this kind of presentation. it has been said about other things, but the bright future for tesla lies in the future, and it may always. bloomberg asia companies
editor, thanks for joining us. let's get a market check now. sophie: it has been a busy morning so far with gdp reports the main event. steady declines off a 10th of 1%. 22 -- the korean won is on the retreat. lows.g in january, 2017 asia's worst-performing currency, down 4% against the dollar. soothe nerves, looking at the downgrade reflected in the first-quarter numbers. that is not soothing nerves just yet. hynixng in on stocks, sk earnings in the spotlight. the stock gained ground despite the worst profit drop since 2012. weaken,ces continue to but they are seeing the silver lining, anticipating the prices will help boost demand.
i also want to highlight samson biologics, falling in the first quarter. cal corp. gaining ground, rising on its results. first-quarter operating income has maintained its guidance, as well as a buyback of ¥50 million. shery: but stood to china. global leaders are gathering for president xi jinping's second belt and road for them. our beijing bayer chief, what are we expecting today? >> the forum kicks off today. they will have small sessions informs posted by various government organizations here in beijing. starting at 9:00, we'll have a session which will include a financing panel hosted by the
pboc, which will include a short speech by the governor. the minister of commerce is hosting several conferences and throughout the day, will have more rivals. 37 heads of state here. a huge project that xi jinping has put his whole might behind. kickoffnd one will officially tomorrow. what is -- paul: what is so different about the forum this time around? >> i'm sure that you are aware, there has been international criticism and controversy over the initiative. people are concerned that china might be pulling countries into a debt trap as a way to spread its political influence throughout the globe. taken steps to a that, at least on the surface. it is putting in place more stringent measures, making it more specific what projects are
referred to with the belt and road label. as of now, the changes we have reported on seeing cosmetic. it remains to be seen whether it will be more structural and whether it will satisfy critics. beijing bureau chief, thanks for joining us. paul: not just the boj making decisions. the same story in indonesia. the central bank expected to keep the benchmark on hold. policy makers may be cutting rates as soon as the indonesian president boost the economy. we have the details. today?e the key factors a couple of key factors that remain that always have, the current account deficit. this was a focus on the sixth aggressive rate hikes last year. you can see the results.
this is one of the best performers in asia to date. the central bank can see that it's job is getting done there. the external factors are weighing on bank of indonesia and your hearing more people call for a rate cut. trade tensions weighing on the economy. uncertainties in the global growth outlook. china, even as it is recovering out of the first quarter level, still waits on the region's economy. all these factors will be in view in the big element in the stabilitye election and election factors here. we are awaiting the official results. we expect the incumbent to have won reelection, however we're forl in a period waiting the results. we'll have to see how the central bank gauges the atmosphere around that. in addition, the president has
called for a boost to jobs. a big issue for his administration. reelection, we will be looking to see how the central bank handles that atmosphere and whether they were cut rates sooner than later to accommodate this push. are there any wildcards we should be watching out for? >> in addition to elections, which is an interesting thing to watch, how do they balance as an they addresshow do the election atmosphere, the political atmosphere around this and around their decisions. that will be one thing i will be interested in. mechanicsn, just the of how they would issue accommodation. , when we emphasize spoke earlier this month, the governor was reluctant in terms of reversing the aggressive tightening they undertook last year. the most aggressive central bank in the region.
it was not anything they wanted to reverse immediately read some of these calls may be preemptive from economists and others seeing a cut later this year or this quarter. what we heard from governor perry was that was too soon. any signs of a wooden a dress the interest rates, but maybe otherould make some measures that would allow for accommodations would be and that isto me something central banks throughout asia have been exploring. just different ways to curb lending, to adjust the economy in different ways that are not as aggressive and blunt as interest rates. shery: thank you so much. michelle there in singapore. coming up, we look ahead to number is earning reports due later thursday. this is bloomberg. sday. this is bloomberg.
shery: let's get a quick check on the latest is in/headlines. china's most expensive stock continues its winning streak. a 32% rise in the first quarter net income for more than $1.6 billion. revenue growth of 24% beat guidance in preliminary estimates. that has the slowdown cooled demand for other luxury brands. paul: the chinese owners of lycra seem to be ready for an ipo in the u.s. it was bought from his u.s. owners in january and is working to raise $500 billion in a share sale that could happen this year. in a seewas the latest -- in a string of overseas acquisitions as it tends to become the lvmh of china. shery: nissan looks likely to miss its profit target, earning less than renault for the first
time in a decade. it has struggled to week cap its fortunes. they/preliminary operating profit to $2.8 billion, down from $4 billion. nomura is to report results this afternoon. sophia has been previewing what we are expecting. how is it holding up? paul: as we know, number what is on an ambitious plan to deliver cost savings as proof that it can turn earnings around. this situation for deutsche bank, which is grappling with efforts. given that challenges, both number and deutsche art trading at a steep discount as you see by this line on the chart. that compares to morgan stanley, anding at book value, at even keel after delivering on targets in the first quarter. as you can see in this terminal, operating market -- margin
improved. that is the line in orange. deutsche bank has fluctuated at sub 10% levels. that is the line in white. minas 29%, as you can see from the drop off here. even with numerous restructuring plans, analysts have been slow to raise earnings forecast. upgrades just starting to come through on the top half of this panel for the fiscal year. deutsche has seen cuts in forecast, well morgan stanley has climbed. looking ahead, numerous earnings outlook will hinge on whether its new plan can succeed and today's report will see how those plans are going. shery: we're now joined from tokyo by senior research analyst -- great to have you with us. what will be important to you today? >> basically, we're looking for
two things. , we regretted focus on actual eps, but we are focusing on operating eps. ,xcluding the one-time charges -- the market can foresee going forward. restrictions are leading to a 10% to klein, which means how they are going to do with those -- to be more specific, we are expecting a share buyback. that is exceeding market expectations. what about wholesale revenue, especially for overseas business? could we see them having bottomed out? at some u.s.k banks earnings, at least we have
the quarter in december. this is where we are expecting certain recoveries, but i think it is the case as well. the march quarter was not that easy. the quarter for the auto industry. we are expecting some recovery, but not a lot. earlier this month, we're hearing about numerous plans to cut costs both in the wholesale and retail arena. is this reform going to be enough to satisfy them, or is it too little, too late? >> let me start with the wholesale. last quarter, on and analyze basis, they were pretty much at the break even. they are talking about additional $1 billion of cost cutting, and thereby targeting
$1 billion profit before tax. reduction isn cost over profitability. it takes time. it may take a few years. whether oril side, not retail activities come back, but i am pleased that this is the first time in history that they are really serious about cost reduction and improvement in the resale side. -- retail side. it may take some time, but we think we can recover in a few years down the road. cutting costs is one thing, but how about growing revenue? what are the plans there? >> that is something we are still waiting for. about 10% reduction in risk assets. maybe a few percentage points of
declining revenues. they also talk about the relocation of resources. we are not sure how the new business platform structure is going to be. if the management could come up with an additional message with regards to the new business or , that would be a long-term positive, but i do think that is going to happen in the short-term basis. shery: we know that japanese banks have been under a lot of pressure, given the boj policies. they have been trying to enhance the revenue. how well has that worked? trend of thek at a retail assets under management, asset growth is pretty much -- unfortunately, the retail assets has been below expectation, which means that retail
customers -- from an industry perspective, a more profitable asset class. one of the challenges the industry will continue to broaden products, which generates a higher return. we hope that gets slightly higher fees from the customers. that is the case with the industry overall. shery: when you say from the industry, are we talking about large institutions? what happens to smaller banks? could we see more consolidation? the short answer is yes. given the fact that the local institutions have more limited revenue sources. for example, large institutions can go overseas, trying to grow their overseas resin of -- revenue. local institutions don't have access to those revenue sources. future ison for the
to seek the largest scale, which means vertical integration in the banking business is probably necessary. shery: thank you so much for joining us today. japan's financial services senior research analyst. breaking out of south korea, the finance minister is holding an emergency meeting after south korea released first quarter gdp numbers that were the weakest growth in a decade. the minister is saying that we're seeing some external conditions deteriorating more than expected. he is saying that the chip exports weakened significantly. we have that my comes to south korea's 20 day export numbers for this month, chip exports plunged 20% and even today, sk worst trapsg the
since 2012. he is also saying that south korea's gdp growth will improve in the second quarter for the whole of the second half of this year. they are still trying to it to their growth target. we know that the bank of korea reduce their 2019 growth forecast to 2.5%. a bank heard from official earlier today, saying that this contraction in the first quarter was taken into andunt when they lowered reduce the 2019 forecast. the finance minister of south korea holding an emergency meeting, saying there is downward risk to the economy and highlighting those chip exports that have weakened significantly in the first 20 days of this month. south korean ship exports fell 35% and just today, we had sk hynix posting the worst profit drop since 2012, as chip sales
fall. although sk hynix did note that there could be a rebound after expecting a chip demand recovery of 3% for the stock. any of theed out on interviews we showed you throughout the show, tv is your function. you can watch those conversations, also watch us live, and dive into any of the securities or bloomberg functions we talked about. become part of the conversation by sending us instant messages during our shows. this is for bloomberg subscribers only. this is bloomberg. ♪
paul: let's get a preview of what to watch later on this morning with sophie kammer. paul, we have plenty of earnings as we get closer to the busiest day of the chinese earnings season. very much the highlights for the liquor maker, posting a 32% rise in net income, continuing with a winning streak, with sales topping forecasts. the company has been able to avoid the slack we have observed in the chinese economy. this morning, we had a battery maker posting missed estimates for income, shrink 13%, indicating that what is facing the industry thanks to new
subsidy policies. securities on the radar, it may have benefited from higher brokerage fees. liftg continuing to rockets, but bloomberg intelligence expects strength in investments and value gains. watch, thisto company may benefit from stock market concerns. other news to watch includes air china profits supported by stable prices and easing headwinds. we will get numbers from action my energy later today. that is it from "bloomberg daybreak: asia." our markets coverage continues with the start of trading hong kong, shanghai, and shenzhen. stay tuned for china markets open. this is bloomberg. ♪ this is bloomberg. ♪
david: your father was in the agriculture business? i started out as a animal husbandry maker myself. >> i'm getting a phone call. >> [laughter] >> it is literally a robocop. i said in spanish, the next person to speak to me in english is fired. rishaad: you are trying to rapidly build 5g. >> it is conceivable we will move into a world without screens. >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright. ♪