tv Bloomberg Daybreak Asia Bloomberg December 7, 2017 6:00pm-8:00pm EST
and ask how to get a $200 prepaid card when you buy any new samsung device with xfinity mobile. a new kind of network designed to save you money. click, call or visit today. >> asia-pacific markets said to extend the rallies on wall street. >> sterling is climbing. signs that the u.k. and ireland are close to a border deal. brexit talks continuing in brussels. >> bitcoin continues to defy warnings of a bubble and tops $16,000 on a wild thursday right. a thursdayrsday -- spending bill. how paul speaker ryan -- house
speaker paul ryan had to quell a revolt. from bloomberg's global headquarters, miami new york. cannot in the new york we are just past 6:00 p.m.. not a huge rally in stocks but all the major indexes in green. we have the s&p, also up one third. the nasdaq gaining just over 0.5%. the joy from the u.s. not being spread to new zealand as they have been training for a couple hours. the kiwi dollar, little change against the greenback. we are up a couple points at the moment but it is hard to get the
idea so early because we have the staggered open in australia with stocks trading in alphabetical order. the aussie dollar unchanging. it did take a bit of a pounding this week with weaker than expected gdp and trade data. if we take a look at japanese futures, trades are out of chicago very slightly higher. nikkei futures also looking a little bit healthier. the japanese yen strengthening against the dollar. let's get the first word news. >> thank you paul. erupted across palestinian territory in response to president trump's recognition of jerusalem as the capital of israel. his decision came despite warnings from middle eastern that itand u.s. allies would set the stage for renewed violence. the hamas leader called for a renewed -- though it is not
clear if there is a popular appetite for a third uprising against israel. ae democratic senator seen as presidential candidate is quitting congress over alleged sexual abuse. more than half of al franken e-cig him a credit colleagues demanded he step down to make lear that the mistreatment of women is unacceptable. -- clear that the mistreatment of women is unacceptable. frank and was the latest person to be brought down by a culture that increasingly makes clear there is zero-tolerance. sen. franken: i of all people am aware there is some irony in the fact that i am leaving while a man who has bragged on tape about his history of sexual assault sits in the oval office, and a man who has repeatedly preyed on young girls campaigns for the senate with the full support of his party. reports from moscow
say north korea is calling for dialogue with the united states. sergey lavrov spoke with rex tillerson thursday and said russia is ready to act as an intermediary. they also said kim jong on is keen to raise the stakes in the nuclear standoff before any potential negotiation. are expected to continue all night in brussels as the so-called deadline of deadlines looms. they are trying to reach a compromise on the status of the irish border after the split. says progress is being made although the u.k. won't confirm that any deal is near. they declined to say if prime minister theresa may will go to brussels. as the yuan remains relatively stable. foreignd's largest currency stockpile climbed just
over $10 billion to $3.12 trillion. better sentiment around china's currency has helped rebuild the holding which fell below $3 trillion in january for the first time since 2011. global news powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. kathleen: let's get to the stock market. the final tax bill while the dollar advance for a third day the solidvanced for second month. the rise inee stocks and in the calling of the anxiety. losing streak,ts green across the screen. you have a lot of stocks that are higher. there is a little bit red there to talk about. stock.a major spotlight
announced 12,000 layoffs. it has to do with the slowing down of the power industry. it does indicate a serious slowdown. getting attention because of a bizarre and he did fight they are having. for $200on the hook million in an insurance default deal that many are watching. meanwhile shake shack getting a positive upgrade. is onestanley said this of the biggest growth rates in all the fast food industry. they have great look shakes and hamburgers. they are spreading across the country like hotcakes. to g #btv 360.
the retailers have had a very thatunoff in the rollover would benefit from the tax reform. you can see they have started to drop below their key support level which is something to keep an eye on. they drove a 12 day rally right through monday. it has historically clung to that, the fact that it has come down some say is worth watching. >> su keenan, thank you for the wrap up. translate to this a reasonably positive start on the asx. the u.s. congress is set to pass a bill to avoid a government shutdown. for now it provides funding
through december 22. joining us now is the bloomberg congress editor job subject. -- joe sobchak. it takes us through three days to christmas. not much of victory. >> it is in one sense that they were able to come together and agree to get this done. it does to for a lot of big decisions, things -- there are some big disagreements on. primarily the caps on defense spending and the domestic programs, some legislation that would stabilize the obamacare market which is tied into the tax market as well. that was one of the promises made to susan collins to get her support. they have a lot of work to do and even then they will be deferring it until january when they will come back and try to hash out a fiscal plan for the entire government for the rest of the year. >> as you say, it does provide a
bit of breathing space to continue that focus. how are replaced in terms of reconciling the senate and house versions of the bill? >> they are still working on it just before we came into the studio. saying the tax writers they are fairly confident we have settle the issue on corporate taxes at 20%. that may still be a little bit influx. there is a push to raise that to 22% to pay for other parts of the tax package that they want to pass. are on the issues margin. they are not fundamental, but they have to get everything together to satisfy all of the factions, particularly in the house where there are more concerns about deficits and spending. kathleen: i have to ask you about the elephant in the room. al franken steps down. roy moore still running in alabama.
what are you hearing from both sides of the aisle? are the republicans realizing there will be another democrat in the senate? i'm curious how this is being thought about and where the pressures are. >> i think that this actually creates some degree of pressure on the republicans. the democrats have ousted two other members who have been accused of some form of sexual misconduct or harassment in franken and john conyers. they are already starting to ask, what about roy moore? what about blake farenthold, the republican from texas who settled a sexual harassment suit? it will give the democrats some leverage to raise those issues without having to hide behind the fact that they have numbers. it could be that there will be others along the way that will have to deal with those things. >> we thank you for joining us
from washington. joining us from hong kong, the executive vice president and chief economist for -- i want to start on the tax plan and what the republicans are shepherding through congress. , but many people have said, no matter what president trump may hope for and tell us that there will be very little hiring. many of them have said, tax cuts , we will pass them onto the shareholders, we will buyback stocks and pay dividend. what will it do for the economy and particularly for the labor component and the wages? >> that is a good point. great to see this tax cut happening, but the question is, will it add more to economic growth? we created good momentum in the
last couple quarters because of the rapid growth of the economy. at this point in time, adding another tax cut, giving stimulus to the economy in the business cycle at this stage, that will not and a lot of growth, but it is true that it is welcome, given the fact that there are people on the sideline who want to enter the labor market and that is why we are fairly optimistic that we will see good numbers coming in. unemployment may also go lower. kathleen: you see that coming from the momentum in the economy rather than the tax cut. i ran into marty feldstein. economistrespected last week. we talked about this as we were leaving.
that this lownced corporate tax rate will eventually entice overseas investors to the u.s.. they say if this works we will have to throw away all of the textbooks. he seems like a true believer. >> we will probably up our estimates for 2018 a bit by 0.1% over 0.2%. we will see an impact from tax cuts. there is an impact -- a income tax to this. overall this is just adding to stronger business confidence. compared to the momentum that is already there, the additional stimulus at this point in the business cycle is not as large as one would hope for. we are approaching the 3% growth rate and that creates fantastic momentum going into 2018.
i'm certainly not writing it off as another stimulus to the economy. >> it could be a bit of a drag to the economy. i've seen analysis that this will add $1.5 trillion to the national debt. had a deal between republicans and democrats to keep the deal open but there is another showdown on that looming. can you see a few spanners being thrown into the works? >> the question is, will it be in 2016 -- 2018? this stimulus will probably have some effect in 2018 or 2019 but after that the effect will be limited. let's not forget the trend growth of the united states is still around 2%. the real question is whether this test will strengthen the potential of the economy, strengthening the capacity. point wehink at this
can say that anything like this will happen. there are short-term risks, but something will get past and we will get a little bit of an impact on the u.s. economy. >> please state with us. we will come back for your thoughts on other topics as we asia andthoughts to the risks to the biggest economies. kathleen: third quarter gdp is due. will get reaction and insights. this is bloomberg. ♪
week stopgap funding bill. it will go to the president's office for ascension. that will keep the government running until december 22, three days before christmas. a little bit of can ticking going on there. we can expect debate on those topics to resume through 2018. let's get back to our guest. bob is still with us. we will turn our attention to emerging asian markets. the other side of the pacific seems to have you a little bit more concerned, particularly china. >> china has been performing better than what was expected last year. it is the change that is important here. there was a fair mother stimulus -based growth. the chinese government did not
want to the economy to slow too much in 2017. they will pay back a little bit for that. even though consumer growth will remain strong, the investment will get another hit or slowdown, the real estate market has to cool down and i think the -- it'll be al do smooth way without creating too much damage. somewhat weaker growth in china in 2018 but this is still one of the largest economies in the world. if they keep growing at this pace, it will be one of the most largest drivers of growth. paul: the real estate market in china has proved somewhat difficult to tame. >> there is nothing new there. the real estate market has always been difficult to tame. the government will struggle with that, there is no doubt about it. directing tohand,
the state owned enterprise -- that relationship is very strong. that is what the government can engineer a lot. in particular, given the fact that the president has strengthened his power position. the directions that come from the central government will be much more visible next year to smooth the economy to what we towarde long, soft fall a more sustainable but slower growth rate. kathleen: let's move to india. they have kept their key rate steady as was expected. the key advisor said they are holding back growth and should be cutting a bit, the vast majority seem to think, once you get past monetization, new taxes, bank recapitalization, the road is clear to fester growth. what do you see -- for faster growth. what do you see?
>> there are a couple important measures. economy,etization of direction, the goods and services index. those are good measures. the execution of importation has been somewhat messy. we are quite a bit slower than what we have been seeing before. in 2018 we will get a bit of a reward for that. belowstill a little bit where the government really wants to go. there is a lot of work to be done here. issues onsome tough the monetary side of the economy to keep that economy on track. we think there will be somewhat better growth in india in 2018 but perhaps a bit below expectations. growth is one of the fastest-growing economies in the region. kathleen: when we look more
broadly in asia there are many entries with healthy growth rates. have malaysia growing well, all kinds of growth. we also have the accumulation of household debt and overheated housing markets. you can look at australia and korea. is this going to be a year of smooth transition? are we going to end the year with these problems hey over the economies? >> the outlook for the rest of is innd other countries principle strong. that has a lot to do with the recovery of global trade. for the first time in five years it grew faster than global gdp. those open economies in southeast asia benefit hugely from that. from there we will see a positive impact.
it creates a risk for those qualities. >> thank you very much, the conference board executive vice president and chief economist. a little breaking news at the moment. look at the yen, weakening quite a bit down to the weakest in three weeks. we could see the yen move again, but there you have it. the japanese yen at its weakest in three weeks. coming up next, the power drain. the rise of renewals. details just ahead. this is bloomberg.
become the business has leaner as traditional fossil fuel customers turn increasingly to renewables. welcome. ge was amazing. it was stuck at a certain level and finally the board says, what's going on and they bring in mr. flannery and it has plunged and plunged. they have this big layoff and the stock barely moved. what will it take to get this back on track besides cutting workers? >> it did start going down the stock earlier this year and they made the ceo change. was the loanope would bring in new blood, but it really has not worked. i think part of it is the
recognition of how deep the problem they are facing are. it will take some big steps. this is one of them. he has to shows he can execute on some of these costs cut plans he has in place. paul: maybe you can clarify for me. that is a huge number of job cuts but a lot of them were not in the u.s. >> most of the cuts are coming from outside the united states. ge has not broken down exactly where all of the job reductions are going to be but quite a lot of them are going to be in europe. company, youglobal can imagine that they will be all over the place. most of them are outside the united states. coming up next, it has been a volatile 24 hours for bitcoin. up ahead we will take a look at the latest to rally.
paul: it is 7:30 a.m. friday in hong kong we are 30 minutes away from asia's first major market open. p.m. thursday in new york, a lovely evening. i am kathleen hays in new york. paul: i am paul allen in sydney. let's get to the first word news. >> first up, washington has to dodge aed government shutdown though only for a couple weeks. house and follow the voting in favor of a bill to fund federal agencies through december 22.
had to quellryan conservatives who wanted a longer stopgap to avoid giving concessions to democrats. the bill goes to the white house for the president's signature. seb leader martin schulz urged -- spd leader martin schulz urged party member's to party lines. spd official city do not expect a form a coalition until march. bill gross has been warming about the damage that low interest rates caused to banks. writing an investment note he says there is little room for error and should a crisis arise the ability to offer protection would be impaired. the fed is expected to raise rates next week with more hikes in 2018.
margarita and pizza maker on the world heritage list. the agency says the art of pizza throwing is part of the intangible cultural heritage of humanity. italy has been campaigning for years for the award saying it involves know how passed down through generations. global news 24 hours a day. this is bloomberg. paul: i do worry about what it says about our civilization. we are counting down to the market opening in seoul. investors rekindling enthusiasm. today is a gdp update will it add to that? >> in a nutshell, they do remain
sound so one could argue that the correction we see in japanese stocks flies in the face of a booming economy which has strengthened for seven consecutive quarters. gdp figure ister expected to revise a 1.5% from 1.4%. the rally that began in september is a -- should kick on nikkei is2018 and the still up about 14%. in november it was up about 2% but japanese stocks are looking cheaper. checking on futures this morning. 113.ee the yen back above that could see japanese stocks opening higher this morning. japanese strategists remain optimistic. jpmorgan stanley saying japanese equities may head for a boom phase. kathleen: i heard that a lot in japan this year.
whaty shares climbing, but is moving aussie markets? about 0.5%.00 is up the second day of gains. energy chairs joining the party after their losses on thursday. stocksrgy -- we have icy on the back foot. you one mover in particular, the shares of the australian stock exchange asx falling nearly 2% after a downgrade at ubs. plan shiftsxchange to lock chain technology but no date has been given. analysts see the benefit from the adoption as being some time away. kathleen: thank you for the
update. bitcoin, seemingly unstoppable rise. $20,000 in new york and settled back to $16,000. the cryptocurrency is just 1500% this year. when it arrives at 1000% just days after debuting in the cboe. it may haverning been rushed. we go to the bloomberg chart we need to know, what is up? >> when looking at what happened with bitcoin, at least on coin base which is the biggest consumer facing exchange, it almost hit 20,000. 3041.t g #btv see this almost just to the 20,000 mark. right now we are trading at coin
base but look at the blue line, that is the x vt currency. you can see that it didn't trade at a premium of about $3000 when it was trading at the $20,000 level. people say that this is clearly people rushing in, trying to get in before what sam analysts are saying could be an even further rise. during u.s. trading it actually crashed for about half an hour. that caused trading to halt. on whetheruestion these exchanges can hold as we go to futures on sunday with the cboe. g #btv 6021. you see the general uptrend of the higher highs, versus the lows, which are not low at all. in the past day we were up by 20%, hitting near the 16,000
mark. we are at 1% higher but it is early hours in asia trading. generally we can see that while over the past few months, we can see ups and downs clearly am a there are more ups than downs right now. 6308.y g #btv i want to put this in the context of a normal safe haven we have been using for hundreds of years. this red line is that the flatline. that is the rise in gold over the past year up by 7.6%. we have been that bitcoin is up by nearly 1500% and it is trading at a premium, 13 times more expensive than gold. a lot of people are saying that gold is something we can rely on. can we rely on bitcoin? more coming soon. >> history will answer that
question. the remarkable rise merely reinforcing doubt. davies told bloomberg that he would counsel the formal american derivatives against making markets in the digital currency. >> am afraid that this is a rational exuberance. greenspan's famous phrase. he found that the market kept going up after he said it should stop. market.a very unusual this shows that we are not in a normal trading market. in the biggest rises you have some people trading in and out. we are in very unusual territory here. not sure that rational market analysis can it eliminate this. are the most qualified
person in the world to talk about derivatives in wall street. you made regulation work in the united kingdom. -- of cme and the cboe the american derivatives market make a formal market in this thing we are seeing on this chart now? >> i think i would counsel them not to at this point because i'm not quite sure that they know enough about what the underlying thing is about the nature of the supply and demand of the underlying asset. i think it would be risky to go in that direction now. there are futures and we understand that the cftt are looking at stress tests and limits for these contracts are given the green light. could futures put an end to bitcoin if it doesn't go well? i i suppose it could, but don't know how you would price of future at this point.
would be very difficult to adapt to this instrument. francine: if nothing happens with bitcoin, the underlying technology could be used in other ways. >> i think block chain is more interesting. some banks are a bit cautious it, but isecurity of think the idea of distributed transactions makes much cheaper and faster in real-time is a good one. .lock chain has life in it >> here is bloomberg gadfly columnist. tim, you are our technology columnist and bitcoin has -- it
combines some of the different things, technology and markets. steadilyd prompt it to -- couldsuddenly fall prompt it to suddenly fall? >> it keeps going up and up. it hit 10,000 not that long ago and now we will hit 20,000. there hasn't been a lot of money to be made from the downside. how do you make money when an asset falls? equities, if we want to make money's we shorted and we go out and do research. pronouncements. much abilitythat are someitcoin, there shorting opportunities but as we go to these futures markets which will be launching next week there may be more opportunities.
there will be more and more players out there who say it is time for it to go down. i have come up with stories to weave and tell the world about why it should fall. there needs to be some kind of money for the downside. it really hasn't existed yet. francine: it is interesting because the longer this goes on -- it is a bubble, but we have had bubbles in tech stocks and housing. the doesn't mean it is not a legitimate medium of trading are exchange. and this korea story -- it is so the prime minister has warned that cryptocurrency might corrupt the nation's youth. i remember back in the day when people said the game dungeons and dragons would corrupt youth. we don't always need to listen to politicians. i see the point that politicians are making. northwildly popular in
korea for cultural reasons. koreans have a big neighbor to the north where they are a little bit concerned about what could happen there, especially after recent escalations. putting currency or savings into something else, bitcoin fills that role very well. it is a very advanced technological nation. there are many reasons why you would expect a company like north korea to get on board. >> where is the interest in other block change technology? a good point. i think a lot of people are forgetting about the other block chain technologies. some analysis in the past week really showed that while bitcoin is going up multiple times -- in
my column i wrote 12 times. it is probably 20 times since them. over 1000 different coins, there are so many that we cannot keep track of them all. because bit point -- bitcoin is sucking up the oxygen we are not even noticing. on the flipside if we take a serum as an example, it is taking longer to double. if you look at how long it took in days from bitcoin and so on, it did so rather quickly. where is the theory of has -- so.thereum hasn't really done there is a long list in the next 10 to 12 currencies. moneyis more and more
coming in. bitcoin is the gateway for that. in many cases bitcoin is the tradable currency. do. exchanges will not it is a little harder to get in there. it is not getting the attention and doesn't seem to be as attractive as bitcoin itself. is tim carlton, the bloomberg gadfly columnist. japan has revised gdp figures. we will break that live and we will get a reaction from tokyo.
this is daybreak asia. i am paul allen in sydney. kathleen: i am kathleen hays in new york. we are moments away from the final reading of gdp for the third quarter. the figures are higher. the stronger path to consumer spending may be pushed upward suggesting the economy is stronger than thought. joining us from tokyo is the chief macro strategist at -- it is great to have you back on daybreak. what is your forecast? what is the biggest driver for the japanese economy? that gdp datak will be revised slightly upward. one asset is strong exports, but
we have seen -- capital spending and consumption. kathleen: consumption was doing well and then it pulled back a bit. what are you looking from the consumer? is there some potential adjustment in the numbers that could affect whether this number beats or falls below the forecast and expectation? guest: it is really difficult. it is kind of a change of the way of estimating the gdp data. but the cabinet office put more weight on the supply-side data. that could be read as an upward revision. kathleen: what about what this means for abe? for the prime minister. we talk about the boj all the time. it doesn't seem like there is more they can do. what should abe do now?
guest: first of all it is important to keep the continuity of the policy. we put more emphasis on gdp growth. that means the government puts more emphasis on inflation and real-time growth. and protect ability is very important. paul: i might interrupt you there. we have the third-quarter gdp revised numbers crossing the terminal. revised upwards to 0.6%. 2.5% annualized. that is a huge improvement on the 1.5% prior. private consumption is steady. spending, another impressive pump. 2.5% onalized rising to the back of these revised figures.
we are not seeing much reaction -- we seeing reasonable gains in the japanese yen, actually. i want to grab your reaction to these numbers. , the upwardlly revision turned out to be larger than expected. bit of a tricky number. we can have some repercussions in the fourth quarter. today's number seems to have confirmed that private business investment is -- trending in japan. kathleent a bit ago, was asking what this means for prime minister abe. i keep thinking about the same themes when we come back to japan. the idea of the third arrow. this is proving perpetually difficult. do you see that ever happening?
guest: it takes time for any government to bring a kind of deregulation to the economy. probably the market discipline needs to be patient. mobile environment is good. monetary policy is easing, fiscal policy is slightly expensive. hasably, prime minister abe added more time to bring deregulation to the economy. kathleen: when you look to the spring wage negotiation, governor kuroda has talked about this, a lot of people are looking at it. are the japanese people confident enough in growth? deflation is over, right? prices are rising slowly. the economy is growing. any closer to the point where
workers will say it is not just job security, we want bigger paychecks? guest: yeah. thatding the base salary, growth should be -- even next bring. it would be a little bit more hopeful that notices will be better next year after much better corporate profits. good news should be coming in the form of a bonus rather than base pay. kathleen: wherever it comes from, i'm sure people will be happy if they get it. thank you for joining us today. ourfor you, don't forget interactive tv function, tv . you can watch live interviews. it can dive into the securities are bloomberg functions that we talk about constantly. you can become part of the conversation by sending instant messages during our shows? for bloomberg subscribers, check
paul: i am paul allen in sydney. kathleen: i am kathleen hays in new york. mr. be a quick check of the latest business flash -- this will be a quick check of the latest business flash headlines. it will be impossible to close the deal by the self implode -- self-imposed deadline. if the deal is not completed by april 22, they can extend the deadline are either party can walk away. if a judge locks the deal, at&t must pay time warner a breakup fee. the san francisco-based syntax startup has raised money from an ipo on the australian exchange. they have a market by value of $225 million.
that is the largest tech ipo on the asx this year. ipo in australia was a viable alternative to seeking venture capital. kathleen: ford doing a deal with china signing alibaba as an electric vehicle major -- maker. they are looking for a capacity of 100,000 all electric passenger vehicles. production expected to start in september. separately, ford and alibaba have signed an agreement to cooperate on ai, cloud computing, and digital marketing. paul: there is a lot more coming up. first off, we will have an exclusive interview with morgan stanley's china ceo. kathleen: we will speak to bank , anderica, merrill lynch look ahead to key trade data in a few hours. a lot of hot topics coming up. this is bloomberg.
♪ kathleen: asia pacific markets are said to extend the rally from wall street. the yen fell to its weakest in three weeks. paul: bitcoins continues to defy talks of a bubble. washington avoids a shutdown. speaker paul ryan had to quell a conservative revolt. aul: japan and the week with positive news, growth slashed
expectations last quarter. a.m. here in sydney, i am paul allen. welcome to "daybreak asia." i am kathleen hays in new york where it is just past 7:00 p.m. paul: tokyo and seoul joining the action. sophie has the latest gdp update from japan. sophie: perhaps japanese investors can return their focus to the fundamentals. pulling up the board to show you the start of trading in tokyo. the nikkei 225 gaining ground, adding 0.7%. adding 0.25 -- 0.25%. third-quarter gdp revised upwards, smashing estimates up to 2.5%. this is driven by improving business spending. flipping the board to show trading in seoul. teh kospi up 0.33%.
more fun to manage her's taking up the call that small caps are where it is that in 2018, with health care on cosmetics the preferred flavor. keep an eye on the kosdaq. day,00 rising for a second up 0.5%, to the 5000 level. the stock was raised, leading gains for the index. energy shares on the up. gold stocks are under pressure in sydney. this as traders turned overwhelmingly bearish ahead of next week's fed decision on gold. gold prices have fallen below the 200 day moving average. you can see that on g #btv 3189. flipping to a four month low. they are headed for the biggest weekly drop since july.
not even stock volatility in geopolitics have excited the gold bowls. but, the first back-to-back yearly gain since 2012. we are ending the year on a quieter note. kathleen: thank you. japan's economy expanded in a revised 2.5% in the third quarter. for a gain ofates 1.5%. previously that number was reported at 1.4%. a big move higher. we are turning to our japan and korea managing editor, who was in tokyo, to get more information. do you have a few minutes to dig through this? investment wass revised a lot higher, not spending is still in negative territory. but it together for us. it together for us. >> everyone expected the numbers
to be revised higher, but not this high. the big driver was capital investment. we had a report from the finance ministry that showed companies continue to invest in ai, robots, automation, as they seek to improve efficiency and cope with the tight labor markets. i think that trend showed up in this latest report. kathleen: should we make much of this new method, brian? brian: we were looking for an impact. as you shall the data, we were unchanged. the key thing, the new method puts more emphasis on actual sales, less emphasis on the household survey, which tends to be volatile. i think what we will see eventually, record numbers of visitors to japan may be spending money.
we expect that to continue with the rugby world cup in 2019, the olympics in 2020. in theory, we should see better consumption numbers in quarters ahead. but we did not see at this time. it was a little bit of a surprise. stop using the words japan and deflation in the same sentence now? brian: that is a good question. it is fair to say japan is not in deflation now. we have had pretty consistent readings of plus inflation for this year. however, the government has not come out and said boldly the inflationary enemy is completely defeated. people in the market are starting to talk as if they think we are getting close. mr. kuroda from the boj recently hinted that something.
he talked about the reversal rate theory. which it says if you use excessive monetary stimulus for too long, thick enough counterproductive effects, by damaging financial systems. some in the market took that as a hint he is leaning toward an eventual normalization of policy. a lot of people saying in the second half of next year, we will see a higher yield curve target set by the boj. we will continue to watch that. it will be interesting to see what mr. kuroda says at his next policy board meeting on the 21st. paul: it will. what is the take away from -- for policymakers? good, things are looking we are at seven straight quarters of growth. we may see a reversal next quarter. the numbers were so high, you worry about the possible reverse effect. there is going to be pressure on continue pushing
ahead with the fiscal policy and restructuring and regulatory reform. a lot of emphasis now is on wages. we are looking ahead to the spring, wage negotiations, what we will see from companies in terms of commitments. the federation of trade unions have been conservative. basehave asked for a 2% wage hike and a 4% -- and a 2% bonus hike. thething we want to see, leading lights of corporate japan, toyota, come through in terms of commitments to things like wage hikes. paul: bloomberg's japan editor, brian fowler in tokyo. thank you for helping us analyze those encouraging gdp figures. let's get the first word news with courtney collins. >> washington has managed to dodge a government shutdown, although only for a couple weeks.
the senate followed the house in voting on a bill to allow federal -- to fund federal agencies through december 22. vote,yan had to quell a they wanted to avoid giving concessions to democrats. the bill goes to the white house for the president's signature. a democratic senator once seen as a potential democratic president is quitting congress over alleged sexual abuse. more than half of al franken's democratic colleagues asked him to step down to make clear that mistreatment of women is unacceptable. he is the latest high-profile man brought down by a shift in culture that increasingly treats sexual misconduct with zero-tolerance. i, of all people, am aware there is some irony in the fact that i am leaving, while a man who has bragged on tape about his history of sexual assault sits in the oval office.
and the man who has repeatedly preyed on young girls campaigns for the senate, with the full support of his party. >> china's foreign exchange reserves increase for attempt month in november, as the u.n. remains relatively stable. the largest foreign currency stockpile rose over $10 billion to $3.21 trillion. better capital controls have helped rebuild -- rebuild the holdings. clashes erupted across palestinian territory in response to president trump's recognition of jerusalem as the capital of israel. the decision came among the warnings from middle eastern leaders and u.s. allies, setting the stage for a nude violence. called for --er
called for an uprising. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. thanks, courtney. we're counting down to china's trade numbers for november. representative, will join us in about half an hour. kathleen: and, our exclusive interview with sun wei christianson, from the fortune global forum. this is bloomberg. ♪
everyone from president xi jinping on down has warned about the need to rein in leverage in china. what is gone little recognized, a group of companies has already done that. data compiled by bloomberg, nonlisted enterprises are in the best shape in over a decade. let's cross to the global foreign forum, where tom mackenzie is standing by with the head of morgan stanley's business. >> very pleased to say i am joined by sun wei christianson, the ceo. how well positioned our china's coffers for the deleveraging term? one of the advantages and important aspects of these leveraging policies is really to help the corporation improve their performance.
it helps very much to improve the quality of assets for the financial institutions. i think they improved. it is good evidence of the result of this policy. it is very good to hear. tom: in terms of the deleveraging campaign looking to 2018, are you expecting additional measures to be imposed? sun wei: i think that will be a very likely scenario. we think the trend of over tightening is limited. the pace of deleveraging will be carried out at a measured pace. including the promulgation of a new regulations. likely haveey will a consultation. bang -- they will likely have a consultation period. thatis that route -- is
rout, that pressure on bonds, going to continue into next year? you are right, i think the stock market will continue to face pressure as a result of deleveraging. even though the government is very focused on this to avoid systemic risk, at the same time, we think in the longer run, the impact on the economy is manageable. meaneal interest rate will -- will maintain stable, amid the high ppi. tom: you're out -- your outlook on china, broadly? gdp, ourin terms of forecast is 6.8%. we will slow down to 6.5% next year.
the government is very focused on the quality instead of quantity. that,esult of infrastructure and housing will come down. but domestic consumption will pick up. domestic consumption will contribute likely 2/3 of the gdp next year, which is good news. and it will generate good moments as the global recovery will happen in 2018. tom: you have a conversations from the big corporate's about the big, state-owned enterprises. what is the ipo pipeline next year? news, thehe good pipeline for 2018 looks quite healthy, much like 2017. it is largely driven by the new economy sectors like technology, fintech, medicare, education, consumer sector.
forlso see some potentials billion.ons, above $1 we think the equity market in hong kong could also pick up. and the m&a market will be active. the m&a market, the government stemmed outflows. are you expecting the m&a activity to pick up again in 2018? sun wei: first of all, we think the control will remain in place this year and next year. with of that said, we do see transactions that look quite stable in the m&a market. because there is a strong demand on the corporate side. view, there is a good
strategic national -- rationale. the initiative will still get approved. [indiscernible] then there is food, property, those transactions will largely not be scheduled. tom: in terms of performance we have seen and rule changes in china in terms of foreign finances and their structure, what does it mean for morgan stanley? have you had conversations with your partner? are they willing to turn over a stake to morgan stanley? sun wei: we have been operating in china for 23 years, this is good news for us. team andild a strong have great partners. they are actually very supportive. they would like to have a morgan
stanley with the industry expertise and best market practices, to control the joint venture. we are already willing and able and waiting for the details. tom: so you are well-positioned? sun wei: i think so. tom: what does it mean for hiring -- will you add a headcount in china? sun wei: i think so. to do,at it enables you the new world, can morgan stanley push out into trading, as well? sun wei: the current regulations already enable us to expand. a certain track record is required. i think we are already in a position to do that if we decide it is the right time to do so. tom: are we getting closer to a point where we will see foreign investment banks operating in china that will be fully licensed here in china?
are we getting nearer to that stage? the new news we just got about this 51%, in three years we can go all the way to 100%. with that comfort, lots of support -- lots of firms [indiscernible] it is going to become a more competitive landscape because you have domestic players well-positioned, and a lot of interest from foreign players looking to increase that footprint. how do you position yourself in that environment? we are comfortable in the conversation, we are well-positioned. we have the right team, right strategy, right partners. the chinese markets are fertile land. tom: i know you are interested in the belt and road initiative.
it is something talked about a lot this year. i think there is still misunderstanding from investors about what this is. is it something investors are becoming more aware about or more interested in? what are you hearing from from your clients and policymakers? sun wei: the belt and wrote is for going abroad and going out. but at the same time, encompasses bringing in. meaning as china expands globally, it will or should open up domestically. this is not just about increased importation, but increased market sector opening up, the capital market and security firms. out, youets carried
should create more opportunities for multinationals and the firms like us in china. the second aspect of this, belt has a political objective. but people very much focus on china's ambition to influence. what they have not focused on also is economic diplomacy, as the policymaker had put it. this investment should have a very good rationale. this will be a good way to deploy the foreign reserves china has. -win-wincreate a win situation for everyone. the 60 plus countries part of the belt and road initiative
will improve china. but we should also improve the market. there will be more business as a result of this. tom: morgan stanley's china cbo for the aipac region, she is also on the fortune list of the world's most powerful women for the past 10 years. we are at the fortune global forum, fantastic to speak with sun wei christianson. kathleen: thank you, tom mackenzie. a fairly optimistic view from a woman of great influence. you can get a roundup of stories to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminals. it is also available on mobile in the bloomberg anywhere app. customize your settings to get information on the assets you care about. keep it right here. this is bloomberg. ♪
kathleen: bitcoin on fire, jumping 1500% this year. big people are warning the future trading may have been rushed. ramy: first to the chart behind me, g #btv 3101. we are talking about bitcoin hitting almost $20,000. that is on the exchange and known as going based -- coinbase. traders want to get into the action, going to the most consumer-forward exchange. that was a premium, $3000 relative to the market. about see that rising to $12,000. people just can't get away from this. my next chart, g #btv 6021. you can see the upward trend, the higher highs, but not lower lows. that said, there were calls a
possible manipulation from traders and analysts, saying there are not regulatory forces to make sure this is on the up and up. my last one, g #btv 6308. if you can't get into bitcoin you might get into gold. but gold is only up 7.6% year to date. we have talked about bitcoin up 1500% year to date. that said, gold is much more of a sure thing. but bitcoin, we are not sure. paul: thank you for that update on bitcoin. the story that keeps on giving. coming up, macau's casinos. they seem to meet making -- and seem to be making a comeback. this is bloomberg. ♪ retail.
under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store
near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver. paul: it is a: 30 a.m. in singapore, half an hour away from the treating there. i am paul allen in sydney. kathleen: i am kathleen hays in new york. you're watching "daybreak asia." paul: let's get the first word news with courtney collins. a bond veteran has been warning about the damage low interest savers,used a banks and and the fed is likely to because is about new hikes. he says there is little room for error, and should a crisis arise, the ability to offer a correction is impaired. more hikes seen through 2018.
reports from moscow say north korea is considering calling for dialogue with the united states. lavrov minister sergey spoke to rex tillerson on thursday and said russia is ready to act as an intermediary if any talks do happen. however, they said kim jong-un is keen to raise the stakes in a anyear standoff before negotiation. germany is a step closer to a new grand coalition with the social democrats saying it is how farploring chancellor merkel will go to accommodate their demands. schulz urgeartin them to end their reliance and and talks. spd officials do not expect to form a coalition until march. brexit talks said to continue all night in brussels, as the so-called deadline of deadlines loom's friday. the two sides are trying to reach a compromise on the status
of the irish border after the split, so talks can move on to trade. says progress is made, but the u.k. will not confirm any deal is near. they will not say of theresa may will go to brussels later. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. time to see how the asian markets are shaping up in far this morning. here is sophie kamaruddin. u.s. stocks led higher by japan. the nikkei 225 gaining over 2% as the yen is urging higher above the 113 level. we are seeing the korean won extend losses at a two-week low. it is set at a second week lower, while we do have korean bonds reaching a bid.
sinking 20 basis points right there. another basis point, the kiwi dollar down 0.1%. this, as aussie trades at a six month low, ahead of aussie traded up. -- trade data. up 0.2%. the kospi more calls for focus on the small-cap space, particularly in 2018. as the possibility of companies on the kospi is seen as waning somewhat. attire company extending losses after the pledge thursday. engineering raising some of yesterday's rise. samsung have a, falling a third day. ship elders have been falling in korea as analysts cut ratings. the government will announce steps to create a one trillion
won corporate restructuring fund in early 2018. know, korean shipbuilders have been under pressure for some time. kathleen: thank you. after two years of declining revenue, macau's casinos looking to make a comeback. what does 2018 have in store for that? our analyst joins us. you have learned so much about this industry. a comeback is one of the things it you are looking at, surprisingly led by vip gamblers. is this a trend we will see next year? >> you are right. vip is making a big come back. down to these high-end chinese gamblers coming to macau. we are seeing there are drivers that could potentially make that sustainable into next year. at the same time, it is not just the vip's, it is the new area of
macau drawing the crowd. nn palacehave the wy tonging more competition bring more elegant, luxury, high-end amenities to the services segment of the business. kathleen: this is happening in the context of a general asian surge. asian travelers in their own region. when there are so many people jumping on this bandwagon and driving the industry, broadly, for this particular the vip gambler segment, how important is it and is it sustainable? the vip gamblers are those that come in, stay in a hotel for free, and they wine and dine them. but they bet a lot, so they are the high revenue bringers. there are two parts.
you do have the china crackdown, the impact is starting to fade. we see people genuinely traveling more, spending more. it is part of their entertainment. on the flipside, junket operators, brokers that bring in high-end players to macau, they will need to restructure. that bull market is downsizing. which on the surface sounds negative, but is actually positive. we believe you are consolidating, having a handful of good junket operators bringing quality players to the casinos. these operators are trying to pursue and chase this market and this business. if you see the downsizing and consolidation as a positive thing, what are the potential risks that we are relying too much on the high-end gamblers? can operators manage that? margaret: when it comes down to the junket operators, a lot of
these operators are trying to build more. you have to be cautious and careful about how you want to approach that. that wholears back, area collapsed in a drag them down for two years. operators are learning to be smart about that. the risk that comes at this segment has evolved. it depends on how much people bet you read there is always the house win or not? riskchina's regulatory that is always looming in the background. time, you have to make sure from the operators's perspective that they are doing better. they are focusing on mass-market clientele. they are building out infrastructure, china to move people around and bring more people to macau and drive that traffic, which is really the
bulk of the profit generating business and help stabilize the revenue growth beyond 2018. paul: if we do look beyond 2018, we see potential asian markets. potential for japan to have casinos. are in australia we will have crown building on the waterfront. what will macau have to do to remain competitive? margaret: that is a great question. this part of the world, there was a lot of buzz. there is a lot of potential. more people are moving around. macau, all the operators are reinvesting in themselves. they are positive, in terms of the outlook in this particular market. there is demand in the future. you have fans reinventing and gutting out the older properties. an older property will be a london-themed resort.
that will elevate in terms of its stance in the middle of that strip. resorts, mgmo new that will debut late january. m for the backj half of the year. a lot of things coming down the pipeline, with additional amenities like conference rooms in retail and entertainment, even in galaxy and melco. what should investors be looking for, more broadly. what is the biggest risk to the outlook? if you think about the way the market is now, vip toves topline and you have find a balance. you have to offer amenities, services that cater to the full on what that depends
the market is like as you look beyond 2018 and further beyond. that is one thing we have to look for for each of the operators. is driving efficiency. if you look at tables in the market, it is cap and there are limitations. it is driving maximum profit tracking as we look into the future. kathleen: it is an attractive area for investment. intercontinental wants to build their presence in asia. -- hotel m&a is another question. -- topt: top and resorts end resorts are on this side. leading a lothen of this a growth. these big players like the
theyott, hilton and hyatt, want to pursue more presence in this part of the world. movingfset slower markets where you have more pressure on the supply side. this side of the world, you have one of the more higher generating markets that have strong gdp growth. india, china, high-growth markets that a lot of these big businesses want to be in. the future is with this travel demand. by 2030, we will have more than 60% of the middle class coming from this part of the world. they need to start capturing that business now, build the brand, attract loyal guests. he also have pressure from the airbnb's of the world. they need to be pushing their presence in this part of the world.
m&a is a simple tool for them to get into a new market. one of the best deals over the last year, building a big presence in australia. a lot of potential in terms of leisure. more m&astart seeing in this industry, picking smaller, favorable players at a smaller valuation. thank you very much for your analysis. coming up, china's november trade data out later. the consensus forecast pointing to a slow down after last month. we get the view from bank of america's merrill lynch. this is bloomberg. ♪
i am kathleen hays in new york. paul: i am paul allen in sydney. foreign exchange reserves increased for 10th month in november, as the yuan remains relatively stable. the stockpile climbed over $10 trillion.o $3.12 here is malcolm scott in hong kong. what is the outlook as the interest rates in the world start raising? >> the great fear is that the wind down in the fx reserve is gone. it is very stable now. last month, valuation figures came into play. that helped the dollar value of china. but talk is of the fed tightening, what will that do to the differentials and the yuan. china has into that with a pretty significant yield gap
with the tenure curve. it is about 160 basis points of difference now between the 10 year treasury and tenure china bond. even if we do see the three fed rate hikes, it will take a while for that to a road back to a level where it could lead to yuan weakness. fxthat is the picture, reserves should fare well. paul: the main event is trade data. what is going on there? malcolm: moderation in the export numbers. a strong year, stronger than people thought at the start of the year. we are looking for exports to come minutes 5.3% in u.s. dollar terms, from a year earlier. on the import side, up 13%. next year could look different. we have forecasts from the economist saying next year import growth into china could be around the 5% level, from the
15% level or so this year. less of a growth boost to those key trading partners in asia like south korea and commodity exporters. kathleen: china is supposed to make that transition. inflation is an important question around the world. we get that data out of china tomorrow. some indication services are on the rise. maybe a good sign they are making that transition, not so much dependence on manufacturing experts, but more on domestic growth and products and services. malcolm: that is right, the pbi -- the pmi has given us a hint on where it will happen. the price components of the services look to be strengthening. that is at the same time the manufacturing pmi price
components seem to be moderating. put that together, we are expecting tomorrow for prices at the consumer level to still remain fairly moderate, well below the pboc's 3% cap. we are looking for 1.8%. at the ppi level, we are looking at 5.8%. that repatriation story coming back a little bit. but they have been underestimating this reading all year. we could see a high rate. malcolm, you stay there. we want you to join us in a discussion with helen qiao, chief economist for bank of america merrill lynch. i would like to ask you a broader question. malcolm did a terrific job laying out the forecast for these numbers. 2018, there are many, including at b of a -- at
b of a merrill lynch, that say things will be different between china and the u.s. even though president trump seemed to make friends with president xi, this year we could see more fireworks with regards to trade. because of that aspect, this will make a big deal for these numbers potentially, if this is what starts happening between the u.s. and china. helen: i am afraid that at the moment we are enjoying a relatively nice break in terms of trade conflict and risk. thereinto the new year, are suggestions and straight talk that there could be potentially more noise regarding the special 301 investigation. at the moment, china is enjoying tailwind from exporting, starting from march this year.
going into 2018 that could be potentially threatened by some kind of conflict in certain sectors at certain times a tween the two countries. in terms of this question of the global economy, where that will lead chinese exports, what do you see happening? are the chinese really making that transition now? will they say we will not be so concerned about what the global economy is doing because we are feeding the middle class, domestic consumer? are they really on that path now? helen: i think china has already been transforming the chinese economy significantly. if you look at the contrast between investment and consumption, that consumption has remained resilient, even at a time, when we have seen more
slow down. while that is ongoing we also see a very encouraging move toward a more service-based economy. i think china still remains a very important workshop globally. it is important to see more jobs are created by certain sectors, as policymakers are focused on supply-side reform. hopefully that implies, for and mininge metal sectors shed a few more jobs here and there. a lot more moved to the services sector, such as package delivery. from a jobs creation perspective that is changing china dramatically. implication, they are no longer under as much pressure to create as many jobs as before, given the service sectors are more labor intensive. paul: while we were waiting for
those trade numbers to drop, i wanted to get your thoughts on where chinese steel demand is heading. it has such an impact here in australia. helen: at the moment i would say the steel demand comes from three important sources, especially in terms of investment. the first, the manufacturing-related investments. the second, the property investment. the third, infrastructure. among the three, we will see more headwinds going into early 2018, in terms of where the momentum is going, because of two important reasons. number one, the financial conditions tightening we have seen in china. starting from a fourth quarter 2016, we have seen them moving ahead with the deleveraging efforts.
these have resulted in higher funding costs. and because of the quantitative quarter management, more companies are ending up with more funding difficulties. we are already at the tail of this deleveraging effort. that is going to weigh on investment for both manufacturing and infrastructure. secondly, the cooldown in the property market. that also affects investment. for a 35 billion dollars surplus, how will that play out next year? do you expect that to shrink? helen: going into 2018 what could happen, exports could face a little headwind. we arethe same time, expecting imports the slowdown more significantly, as we are seeing because of the cool down in the property market and financial conditions tightening, the investment side is probably going to weaken more visibly. goodsvestment or capital
are a big part of the china import. as that momentum slows, you will probably see this surplus being widened at a time china is slowing a bit. , bank of america merrill lynch economist, think you for joining us as we wait for those trade numbers for november. do not forget, interactive tv function tv . you can watch us live in catch up on past interviews and dive into securities or bloomberg functions we talk about. plus, become part of the conversation by sending us instant messages during our shows. this is for subscribers only. this is bloomberg. ♪
♪ kathleen: this is "daybreak asia ." i am kathleen hays in new york. paul: i am paul allen in sydney. we are almost done here on "daybreak asia." a quick look at what is coming up on "bloomberg markets." paving place, what you watching? bitcoin, i'm sure you have been talking about this quite a bit. we were almost a $20,000. we will get a sense of where this is going. is it too early or too late?
a lot to look forward to for the next few hours. daniel read comes on, a cio. thosel be reacting to stellar growth numbers out of japan. trade numbers out of china. and inflation data comes out on the weekend. economist, a senior coming 10 out -- 10 minutes after 10:00 a.m. hong kong time. a lot to look forward to. kathleen: that is it, our market coverage continues. paul: stand by for bloomberg markets. this is bloomberg. ♪ is this a phone?
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>> japan's long-running recovery picks up pace. corporate earnings smashing expectations. and deleveraging. the business world has already taken action. of course, we are following, well, bitcoin. have a look at the roller coaster here continuing to defy gravity. up $16,000. i'm david ingles in hong kong, and you are watching "bloomberg markets: asia."
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