tv Bloomberg Daybreak Australia Bloomberg September 1, 2019 6:00pm-7:00pm EDT
paul: welcome to daybreak australia. i am kathleen hays. here in new york. paul: here are the top stories we are covering and the next hours. the on slips as new tariffs kick in. stock futures indicate a mixed start. hong kong started another weekend of violence. argentina and crisis. capital controls trying to
become free once again on the edge of default. kathleen: let's look at how u.s. stocks ended on friday on wall street. as a matter of fact, they have opened down nearly a percent. let's just bounded off. not too surprising. much was expected to happen. , they small moves within a 10th of a percent in either direction. a couple big things happened. fell tosumer sentiment its lowest level since 2016. if consumer sentiment slips? markets were expecting to
have 110p and they billion on all kinds of import to the u.s. and on top of that, over the weekend, as expected, china's purchasing managers in august.ing again so many things are adding up to what the bloomberg news team says it could be a volatile month for stocks again. for august, it was the first klein since may. argentina, hong kong protests, it will be a test for equity markets around the world. paul: let's check in on the first word news. hurricane dorian has made landfall in the bahamas as the strongest storm ever recorded there. torrential main and windows dusting.
whether experts say much of the bahamas is expected to be devastated and it might need at least 10 years to rebuild. eastern next affect seaboard from florida to north carolina. kathleen: argentina has imposed capital control. pushing the country to the edge of default. institutions will need official authorization to buy dollars. paul: south korean exploits extend their slump as tensions with japan and the uncertainty of the trade war. outbound shipments fell earlier and a ninth consecutive month of declines. falling just over 4%. trade data serves as a
barometer of global demand. kathleen: the italian prime minister -- prime minister says he intends to present a new government by wednesday at the latest among growing tensions. markets were unsettled when luigi dimaio threatened to force a new election it is policy demands are not met. they have called on party leaders to stop arguing and start governing. 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. this is bloomberg. tariffst trump's new has come into effect and it is the latest step up that is hurting the global economy. china promised its own retaliatory. highlighting more weakness in the domestic economy.
where are we? we have more proof on both sides of this or that it is turning both economies. what do you expect next? escalation. sharp as he said, we saw the u.s. side putting tariffs on about $110 billion, including things like shoes, textiles and technology components like the apple watch. tariffs willd of be imposed on the 15th, targeting about $160 billion worth of tiny imports. you effectively have all of the imports hit by tariffs. they retaliated one minute after the u.s. imposed their own tariffs. they put their tariffs on soybean, beef, chicken and they could be delaying some for u.s.
autos as well imported. that is in terms of september 1 retaliatory tariffs. a lot of people are coming out saying this is terrible news for us. jp morgan coming out and saying thisindividual household, will cost them by the end of the dollars.t 1000 u.s. thepain is being felt by corporate sector but also the individual households as well. china have felt in strongly indeed. they are looking to those negotiations that trump says might happen later in september. over the weekend, we added
more data. it is a mixed bag. it could have been worse. it could have been worse. it could have rebounded from the july numbers, so the service side of the economy is starting to accelerate. it was more the purchasing index that caught people's attention. four straight months of contraction. it comes on the back of these early indicators suggesting that the slowdown in china does continue, even if there was a bright spot, the sentiment that has improved. terms of pmi numbers, we saw a slow and a contraction in employment as well, but for be concerning to officials.
you have had attempts to reduce haveost of credit and you had an additional package of measures, but bloomberg benomics says there needs to more support from the central bank and finance minister in china. tom mackenzie, thank you for joining us. more disruptions expected across hong kong. it followed increasingly violent clashes between protesters and police. let's get to stephen engle. quite incredible scenes over the weekend. would you say that this was the most violent weekend of protests so far? >> we can probably say that. they had increasingly gotten
more confrontational. saturday, everybody saw the video that has gone around the skirmishes of the where they went into subway stations with black clad police coming aboard the train and rounding up some of the weresters who they alleged in the violent protest saturday night around the police headquarters that led to a giant bonfire. set by one of the barricades. it did get a bit out of control. the water cannons came out and the teargas came out. they were using blue dye to identify protesters, but their gorilla like tactics, they will often find changes of clothing stashed away in the subway stations. the police chasing them down through the stations.
it was quite chaotic. we are at the airport express station in hong kong because on sunday, it was more of a civil action, a call for disruption. they want to take the message back home. the overriding message to travelers is, this might be one day of inconvenience to you, but this is our future and evolution of our time. they want to cause as much civic disruption as possible. moreare calling for general strikes today and tomorrow. anyone involved in this to deal with concretely is you have a group of young protesters who have very firm goals that they do not want to give up. you have a hong kong government that has been unable to do much and china on the other side. think the chinese just
want to let this play out and hope it goes away? big conundrum. it seems like i am on this wash, rinse and repeat story because it does not get any better. dialogue,ng to have but only when the violence comes down, but then the protesters say, you are not conceding to any of our demand, you are not talking to the right people and peaceful marches have not gotten as anywhere. this has been a smaller, more extreme part of the protests. who will give in first? all the while, it gets even more radical and direct. where we cannot seem to have any side backing down, that is why
, higherhave more stakes. we have more disruptions planned and many of the protesters are upset. a lot of the protesters have used the local subway to flee from the police and it is a mess. stephen engle in hong kong, summing up basically there. we will have more reaction later this morning. u.s. futures are down as the latest tit-for-tat tariffs kick in. let's get over to selina wang. >> 20 to a mixed open. they are still reeling from that volatile august. it looks like it could continue into september.
all of the indexes were down in august. down about 4%. -- weakhat week data data showing contraction in the world's second-largest economy. taking a quick look at the yen. the tariffs, no sign of escalation abating. the u.s.hening against dollar with continued risks of a succession -- recession looming. biggie -- busy schedule for the first day of trading in september. we have markets that are closed. that data that we are expecting to show contraction for the fourth consecutive month in a row. to come, with new
paul: we had counting down to the semiopen on this beautiful spring monday morning in sydney. it is monday with futures pointing down about 110 -- .1%. it looks like we are heading for a fairly peaceful open. i'm paul allen in sydney. kathleen: that peaceful opening lies what we might be seeing in the markets today. you are watching daybreak australia. i am talking about the latest round of tariffs.
still, no deal insight for the world's two largest economies locked in a trade war. the former u.s. ambassador, forming u.s. commerce secretary and heas legal advisor is joining us from seattle. we are so happy to have you on the show. where are we now? both sides, just like a real warrior. they are digging in with both sides knowing that they need a victory. what do you see now? -- nore are no more winners in this trade war. report indicated, even the new york fed and financial institutions have said that tariffs already in place on chinese goods, american
households would be paying an extra thousand dollars per year. latest rounde this of tariffs will go into effect. several will come in december 15 , but did not forget that the president has said that once put into effect of the last year will be going up an extra 5% point by october. right now, this will really hurt consumers. everything that they are buying from china, clothing, shoes and electronics. it is hurting businesses. kathleen: the other side would what are the better trade deals? war is what the pro trade side says.
people might have jobs. say that is a price that you have to pay, a reward that you will get that is far the $1200 per household. >> they are companies from around the world and government that have legitimate and deep concerns about the economic and industrial policies of china. theirre not living up to obligations. off-limitskets are to foreign investment. here in america, virtually no restrictions. there is no dispute that we need to address this. the question is whether a trade war is the strategy. we are inflicting pain on american companies who have to
pay more for some of the inputs that they use in manufacturing. weather here in america or around the world, they are less competitive and they will not save as much. -- sell as much. electronics, laptop it is ipads to computers, they are all made in china. there is no dispute about the objective. is inflicting pain on american companies, workers and american consumers. i guess the question the strategy as well about forcing them into a loss of faith, particularly as the country comes down to the 70th anniversary on the first of
october, is this a fruitful approach to be taking during such a sensitive time? >> there is no good time to address these issues. have hadompanies long-standing concerns and it has reached the boiling point. i agree with the administration. many believe that this is the time that we need to address the issue. secretary has questioned the strategy, perhaps we should have been teaming up with allies to impose the same restrictions on chinese investment around the world that chinese impose in china. if microsoft and amazon need to have a chinese partner to do business in china, maybe some of bena's big companies should required to have partners when they do business in the u.s., eu
or other parts of the world. if sectors in china are to american and foreign companies, perhaps those sectors should be off-limits to chinese investment here. we need to get the attention of the chinese without resorting to this terrorist, which is a trade war where nobody wins. to return to that theme of the trade war, china appears to be digging in. already spokenas of a new law in march. d.c. that as an issue for 2020 and 2024 as well? >> it is hurting the economies of both countries. it may be good
politics for president trump because he can say he is being tough on the chinese, but they need an agreement because there will be long-lasting damage to chinese companies and american companies. once the supply chain is disrupted and they start buying things from vietnam and other parts of the world, it will be hard for them to ever go back to china. the same thing with american companies. chinay cannot sell into and chinese companies decide they are going to source their soybeans from brazil or start buying heavy manufacturing items from europe, they are probably going to continue those relationships, so it will be hard for american companies to capture that. what do you think needs to be done next on both sides? they thought they had a deal several months ago.
are they trying to wait it out and hope that president trump does not get reelected? what needs to change to get a deal? do you think that they will that theyny agreement did not stick to in the past? >> there were two deals announced by the white house that china had agreed to, only to have the president last minute repudiate those. one agreement was announced by secretary ross and a few days later the president said no, i am not accepting that deal. have almost the next day the president they know, i am not accepting that deal, so both sides have walked away from some deals. i do not think it would be quite the grand bargain that we were hoping for a few months ago. whatever deal is reached will
include significant purchases of additional u.s. products and services to address the trade deficit that president trump is so concerned about, but that is not as big of a deal. there will be fewer market opening. relaxhas already begun to saying that car companies do not need to have a chinese partner to enter into china. you will see more of that and i think they will try to make a commitment to reduce some of the wto rules contrary to that china provides some of their businesses. i think some of those will stay in effect as an enforcement mechanism to make sure that china follows through on their commitments. kathleen: i keep wanting to call you governor locke.
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paul: 8:30 here in sydney. peaches are ever so slightly skewed to the downside. i'm paul allen. kathleen: and i am kathleen hays. you are watching daybreak australian. we will get to the first word news now. latestesident trump's tariffs have come and a hit. goods ranging from footwear, including tech products.
160 billion dollars of imports, including laptops and cell phones will be targeted. trade talks are all on the agenda this month. the outlook is worse than last month, even before the latest tariffs. it felt to 49.5, of eating even worse than those seen in a survey. showed continuing and august. an improvement in business confidence is a sign that measures may be taking effect. hong kong is that for more deception after another weekend of violent clashes. 63 people were arrested as mass demonstrations spread throughout the city, including more targeted action to disrupt operations at the airport. protests are set to continue
monday and the operator said substations may not open because of damage caused during the clashes. angela merkel has managed to stem the rise of the far-right populace in two elections. the results will help to ease the pressure on the coalition, which suffered heavy losses earlier this year. 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 tom mackenzie this is bloomberg. after a weekend of all kinds of news, investors are watching from around the world. we will take a look with selena in beijing.na wang
>> i am taking a look at toyota that is looking at a pond after brexit. one of the company is willing from the effects. that company could have senior managers replace after the impending rescue comes in for that company, also taking a look which holdings corporation signed to acquire the business for $165 million. we want to look at commodities, looking at gold that had a 7% rally in august. it looks like that could be set to continue. advisors are forecasting that it mark, notthat $2000 just bolstered.
ongoing protests in hong kong with escalations set to continue. let's get more on what we should be watching. the tariffs coinciding with some >> data.ak it has been a little bit of a surprise just how much -- weak data. >> it has been a little bit of a surprise. there was a little bit of fighting in the market for this to happen. china, we data in have known for some time that the slowdown is occurring in china's manufacturing space. incremental news that has confirmed those. . on the trade front, the concern now is, where do you get a break
in this? where do you get the circuit breaker? end to theut an deterioration in the climate here. that is what markets are starting to struggle with now. a positivesee improvement in the situation playing out? markets in asia have already had a tough month. decline fora tough asian equities. indeed, all signs are that we get a pretty volatile start. there are a few speakers on the agenda this week. course, monday is labor day holiday in the u.s.. you will not have any cash equities trading in the u.s. and you might see a little more volatility because of that. it is a pretty tough start to
the week. kathleen: i'm so glad that you mentioned jerome powell because that is his last chance to speak publicly before issuing a decision. let's move on to japan. all kinds of reasons why we could be seeing this. what do you see as the main cause for this? i think this is an interesting phenomenon because over the course of most of the last 25 years, you have not seen what has happened. have reachedns about ¥1.4 trillion. you can see there on the chart, very unusual that you get over that zero line implied net short. what that does is it sets the
market up for a short squeeze should you get any news that could swing the dial either way. bulls argue that valuations in japanese equities in the mid-caps sector and even some exporters remain favorable in a world where people are prepared to pay for stable evaluations where the discount rate is on bonds. there is that argument for japanese equities, but people are reluctant to come on board. year really shows us that if we do get a little bit of incremental news on the trade front or out of the domestic japan economy, that might tip the dial in favor of a short-term rally. paul: you can check out our library for some of the chart that we have been talking about.
witheen: we will continue a look at the trade war from the white house view. retaliated. washington, what is the latest you are getting out of our bloomberg news flow? as far as we know, we heard from president trump when he left for camp david and when he arrived back that the talks are still on. that has not changed. we do not have a date or a time for the talks. we also do not know how high-level they would be. we did not hear from any of president trump's deputies this
weekend. on the talkone shows today to flesh out his comment at all. there seems to be doubt given washington's refusal to back down. other than that, president trump mostly stuck with his talking points. consternationch among the business community in the u.s.. talkingike the commerce about the impact of tariffs and president trump pushed back on he is diggingat in a little bit. in the meantime, what is the latest outlook for hurricane dorian turning into a powerful storm? >> a very powerful storm.
tois the most powerful storm hit yet magic and it is really of the bahamas. it is slowly making its way to the east coast and we still do not know where or whether it will make landfall in florida for points north. it could cause a lot of flooding and property damage. -- anes a bit of in insurance story. mar-a-lago is kind of in the sights of the storm and it is a big one. kathleen: i just want to ask you about the trump tweet on iran. >> interesting tweet. it looked like he was trying to embarrass them, talking about best wishes and an explosion at one of their missile launch
facilities. a lot of people looked at that image and it was clear related to the some of the commercial images that came out that there was a sense that he had seen this image in a classified intelligence briefing and cited to tweak it up for everybody to see. it does not seem to move the ball down the field in terms of meeting between president trump and iranian leaders. for thatot look anytime soon based on that latest taunting tweet. paul: thank you for joining us there. hoping to resolve a slump. the collapse of the currency was push to a new
default. philip sanders has the latest. what can you tell us about the capital controls? >> they are pretty wide-ranging. just buy dollar on the exchange market. if you are an individual, you cannot just sell your mutual fund and buy as many dollars as you want. there is a limit of $10,000 on that. there was an important point. the banks open and they will be open for more time than normal over the next few days so that people can go in there and take their money out and their dollars out. they cannot turn vast amounts of pesos into dollars. ,athleen: it is a global story
but how serious is the situation? what are the implications globally? >> it is certainly critical for argentina. they are running out of dollars. they lost $3 billion in two days. rate, it is just a matter of weeks for the run out of net reserves. part of this turn away from risk. people seriously got their fingers burned in argentina. three weeks ago, the fate of the country and the balance. now there is no question. it is already saying that it will delay the payment. people look at argentina and think twice about taking risk in the market. paul: there is a sense of deja
vu about why markets are so concerned about the presidency. >> yes. populous.ssentially mate was president until about 3.5 years ago. she imposed a load of policies that they did not like. capital controls, you could not get your money out of argentina at all. companies could not send their profits home at all. and the market is extremely concerned about them coming back into power. we will see how that works out this week. terrific report. chile. us from santiago, august was a volatile month.
paul: august was quite the month. china let the yuan slipped to a decade low. of course, there was the trade war. august was a month to forget. atlas cim -- ca -- ceo. i want to quickly look in the rearview mirror and point out this chart on the bloomberg terminal. we saw multiple days of 1% swings or more on equity markets in both directions. a couple of questions here. how hard was it to trade that? do you expect the same for september? >> yes.
august was difficult to train. there was advantage that brought equity markets down to about 2%. was another august test and a sign of what is to come. september, volatility to stay as trying to struggle between the asset classes and where the value is, going forward. seeing global yields grinding ever lower. do you think we have more to come? have we hit the bottom? is the risk to the upside? a short-terme drivers, but structural that have between surpluses, we and trade balance surplus
based on the structural drive and demand, that is not going to go away. you could see yields pop up a little bit. they are indicating yield curves indicating that there is this demand. i still need those long bond. structurally lower over the next few months, but yields will pop up. been in this have business for nearly 30 years, but did you ever think you would be a world with a total of nearly $17 trillion worth of sovereign bonds? what is the signal for that? better buynce of i some now because yields will go even lower? after 30 years, it is a
little bit of everything. going through the past 10 years with a lot of innovative policy that stretches on the fiscal , there are scenarios where you should not be surprised. it will be higher going forward. at the end of the day, vast pensions require that hedge. there are a lot of co-contributions on the planet. income is not going to go away. they aree been low and expected to remain low going forward. it could have been going forward. fixed income will be the ultimate hedge for the equity asset class. that is why we should expect and
anticipate that the amount of negative yielding holdings will increase going forward. this really keeps you in business. at a time like this, you think yields are going to go even lower for structural reasons. what are you advising customers to do with their money? they probably have the lowest in the decade. in australia, we are going through earnings we calibration. it is still expensive since the turnaround. on the fixed income, up and down the capitalist structure. we are invested where we can. activee have been very is not listed. the debt is growing from
an investor base. have good long-term contracts like a hotel or a diverse fund. real trendsie see across the asset classes at the moment. a big day here in australia. the consensus is that we are not moving lower tomorrow. feeling is that it is just a matter of time. >> exactly. it is headed lower but between now and year and, expect rate cuts. very sympathetic to analysts calling for a target rate one year out. equity markets are pricing in future prices. it will reflect the lowest year
on year growth. this scenario is required. also to prepare for ongoing which australia has to deal with going forward. not perfect, but a part of that solution to stimulate growth even further. paul: joining us from melbourne day. you can watch us live and our interactive interviews. you can also dive into any of the securities were bloomberg functions that we talk about or become part of the conversation by sending us instant messages during the show. you can check it out at tv . this is bloomberg. ♪
kathleen: this is david australia. i am kathleen in new york. paul: i am paul allen in sydney. a slowdown in china. the trade war continues to put the brakes on. of 3 billiont dollars. twice the decline forecast in the survey. revenues fall in more than 2%. tesla with a tax break in china. reportedport minister the news that hussle would be exempt from a purchase tax that to delay -- typically hit carmakers. they helped to start production
at a new plant in shanghai before the end of the year. paul: french finance minister says he is furious the german rail infrastructure company has sold its locomotive company. they slammed european commission for allowing the sale saying that it should be supporting local businesses instead. bid on antitrust grounds. kathleen: car sales are hitting the brakes in india at the economy continues to slow. were down more than 20% and hyundai also suffered. factors have been to blame. plenty more still ahead in the next hour. we will have a full week of guess to talk about the trade
paul: good morning. i am paul allen in sydney. we are an hour away from the market open in australian, japan and south korea. from bloomberg will headquarters new york i'm kathleen hays. selina: i am selina wang. in hong kong. welcome to "daybreak: asia" paul: our top stories this monday new factories kick in stock futures fall and the yen gains as a traditional haven. hong kong suffers another