tv Bloomberg Daybreak Asia Bloomberg December 18, 2017 6:00pm-8:00pm EST
♪ stocks areific excited to gain on wall street amongst increasing optimism on u.s. tax cuts. >> will those cuts moved a step closer as senate republicans said they have the numbers with a former critic on board. the cme.n enjoying the cryptocurrency has been testing the move above $19,000. >> and dealing with debt. a former official says china should stop its obsession with the growth target and tackle a
much bigger problem. >> hello and welcome to daybreak asia. i'm in haidi lun. in newi'm betty liu york. some investors here watching the and saying is that a ticking time bomb that eventually will go so high that it only has one direction which is down. and big correction. so far, so good. i want to pull up a chart here. what is so fascinating, the vertical lines that you see represent days when all three indexes, the s&p, nasdaq and dow, reached records. take a look at how many of those days we have had in just the last four months of this year. we kind of took a break in the middle, and big gap but look at this as we continue to head towards the end of 2017. no doubt a big santa claus rally, right?
haidi: absolutely. you look at that. i know we get the occasional pullback but for the large part it is defying gravity. it feels with the momentum building intoit feels with the m building into tax, we will get something before christmas, that we are squeezing everything out of visible run before the end of the year. david got a note from saying we are so close, 8/10 of 1% from record highs when it comes to broader asian stocks as well. we are getting that carry through when it comes to the u.s. session. new zealand, trading is underway. that is despite we got consumer sentiment, a sharp decline. west bank singing it is below average and a reaction to the election and government change we had this year. still, picking up 1/10 of 1%. we had a bit of a decline in the dollar index against every currency, other than the ran.
take a look at the s&p here. the ax. we had futures sitting at highs. like it is close to the year to date high, up by 2/10 of 1%. the aussie-dollar. we have had consumer sentiment better than expected, picking up as well. that bodes very like it is close year to well in terms of the headwind over the budget deficit number projected in the economic and fiscal report. the aussie 10-year. we are also counting down to the open in japan and korea. the japanese yen holding pretty strong at 112, the nikkei futures outside of 25 points, building on that 1.5% gain we saw yesterday. record highs again when it comes to japanese stocks. betty: that is right. let's get to the first word news with jessica summers.
jessica: u.k. manufacturing has enjoyed another month of strong demands with orders staying at the hardest level in all three decades. jessica:the federation of britih industry factory index remains at 17, matching its best results since 1988. the brexit negotiations facing new hurdle with the eu saying britain will not expect a special deal. theresa may says every deal is the fact of unique. >> every trade agreement is actually between the parties concerned. there are similar elements, but they are so specific to the various countries concerns and that is what we will be looking for in our negotiations with the eu. jessica: south africa's ruling anc has elected its new leader after a bitter campaign to succeed the president. the 65-year-old union veteran was part of the previous scandal regime but managed to convince delegates.
he is also one of south africa's richest people. police killed 34 striking miners in 2012. the indian prime minister modi will retained power in his home state after an election seen as a bellwether. is leading 99 seats in the 182 seat legislator. it would be the parties lowest tally in more than two decades. modi tweeted that the results so the strong support of politics. the u.s. has vetoed a un security council resolution on the recognition of jerusalem has israel's capital, saying it was an insult that will never be forgotten. the other 14 members told that washington would kill the motion, but supporters what that the show the global opposition. ambassador nikki haley user first u.n. veto to block the resolution.
amb. haley: what we witnessed today in the security council is a insult. it will not be forgotten. it is one more example of the united nations doing more harm than good in addressing the israeli-palestinian today in thy council is a insult. conflict. today for the simple opt of deciding where to put our embassy, the united states was forced to defend its sovereignty. jessica: global news 24 hours a day powered by more than 2700 journalists and analysts. i'm jessica summers. this is bloomberg. let's take a closer look at this latest round of record highs on wall street. they started friday when lawmakers agreed on the shape of the tax cut. that continues for now. as we just heard, the big vote may be coming in the midweek. su keenan joining us now with the bullish kickoff. su: the buying is always on the anticipation.
it is certainly taking place now. s&p, forords for the the nasdaq. s&p, for the nasdaq. up from 30% year to date amazingly. the 2000 has had quite a run. the big movers of the day -- twitter, a brand-new high for the company. up 11%. biggest upgrade since october. connected to all the bitcoin mania. rami has been talking about how citron announced a short for the company. it is up almost 1000% year to date. intel, up on 50%. strong analysts comments as well. let's go to the bloomberg. if you want to follow on the bloomberg. what we have is the s&p 500 index in the white line heading to record and the blue is a 14 week low of strength index. a note pointing out that the
highest, the last of the s&p 500 and the relative strength gauge both peak at the same time was done twice. since the index, going all the way back to 1928. the fact you are seeing both rise here, they point out, is a bullish sign. they predict momentum as room to run. [laughter] haidi: we were talking about the tax vote, likely happening, and what it will mean for certain groups. we were joking about $300,000, the milestone, but a whole group of companies are looking to rally more and benefit from that. su: yeah, and it is amazing even though we know the tax reform is coming, we are seeing these stocks with room to run. a list of stocks of stocks that the accounting company came out with likely winners. if the tax reform bill actually gets approved and passes, they
think retailers are the most likely to win. e planet fitness is another company they have thrown in there. all of those had nice runs on the day alone in anticipation of the bills approval. we go to the bloomberg and this low tax cox.s this is the high tax index and a lower tax. these stocks really moved higher and it just shows you how much a role in this bold run that tax reform has. clearly tax reform is driving the market and continues to be the remain theme going into christmas. senate republicans seemingly having garnered enough support to pass this plan. susan collins now says she is on board. sen. collins: this legislation
will provide tax relief to working families, encourage the creation of jobs right here in america, and spur economic growth that will benefit all americans. joe joins us now with the latest from washington. getting closer to getting that on the desk of president trump before christmas. joe: right. the house will be voting on it tomorrow. there is not much mystery on which way it will go. then it goes over to the senate and they have 10 hours of debate they can take up with the bill. that will push the passage tuesday night, perhaps even wednesday. republican leaders insist they have the votes. there are a couple of questions but leaving nothing to chance, they have announced vice president mike pence will be postponing his trip to the middle east which he was supposed to leave on tuesday night after the vote.
the possibility that will be going into wednesday. he is going to stick around. once that is done, it will be going to president trump's desk for signing and enactment into law. might be finally putting that tax reform package to rest with a nice little bow before christmas. there is more messy stuff to come. is it possible we might see a government shutdown on saturday? joe: it sure is. they have a lot to pack in before they leave town. there is a big debate over doing a continued resolution, stopgap measure to keep the government funding. breakthrough ane big little while ago. house republicans announced they have got a substantial package, $81 billion for disaster aid for texas, florida, puerto rico and the wildfires in california. that will be attached to the
stopgap measure and that will be a sweetener that will attract a lot of votes. there are a few other issues that have to be resolved perhaps in the senate but this gives us a step in the right direction in terms of getting that passed before the funding runs out midnight on friday. betty: let's turn to president trump national security agenda he outlined today. what do you think the reaction will be from china for instance which he labeled as a strategic competitor? joe: the language in the strategic document itself was a little bit tougher than what trump said in his speech. he did add that russia and china, which he labeled as the two main competitors and rivals to the u.s., are also potential partners. wrangled by the language of the strategic competitor. former president george w. bush used that term in the campaign.
the chinese braised some objections and it was sort of dropped from official documentation when he got into office. althoughe tough talk, it is not surprising from what he said during the campaign. he has still got to go through toh some of his other steps get china's cooperation on north korea. haidi: that is certainly something that continues to hang over -- betty: haidi? haidi: all good. thank you so much for that, joe. our congress editor, taking a look at the latest when it comes to tax reform. we are inching closer to get some of the opponents on the bill back onside. we are taking a look at the u.s. budget with the rockefeller foundation president. he joins us in about a half-hour. betty: colliers international andrew joins us to talk about
haidi: we are counting down the asia's first major markets opening this morning. we know sydney had a very boring day when it comes to trading. nikkei futures showing a very strong upside, 60 points at the open. the headwind for record highs from the s&p 500 and nasdaq getting towards the end of the year but no momentum being lost for this bull run. asian stocks, 8/10 of 1% away from our very own record highs in this part of the world. i'm haidi lun in sydney. betty: i am betty liu in europe. records being broken left and right. as the republican tax plan is set to let on president trump's desk this week, critics are noting last-minute additional
clauses. some provisions including the 37%corporate tax rate, a earners,l rate for top and expanding tax breaks for real estate investors. it slipped right in at the end. of want to bring in ray, a earn, and expanding tax breaks for real estate former tax counsel and special advisor for tax reform at the house ways and means committee. at the very end, did you think we would get here? ray: it was a very long road. personally, i always thought we were going to get here but i am an eternal optimist. i'm not surprised but the ending of the stories, that are always surprises on how you get to the finish line. betty: the ending is often the beginning. we will see how these tax cuts and provisions, how they really impact the economy. within this package, are you satisfied with this package?
do you think it will really boost corporate america? ray: it is a package that is over 1000 pages, so it has got a lot of moving parts in it. it is very complicated on the business side. you might argue complicity was not one of the outcomes on the business side. when you look at the fundamental structure with the corporate rate reduction, it is all about making significant adjustments to the incentives that our current tax system provides. that the end of the day, those two pieces alone, corporate rate reduction as well as the changes to the international tax code, will change behavior. it may take a while to see it. it will happen over the long-term rather than the immediate term but i think we will see impacts felt from this tax bill. betty: speaking with an airline ceo other day who said he was very happy with this tax reform package because his industry typically pays higher taxes than
tech companies. who can find all sorts of ways to lower the actual taxes that they pay. is this going to help level the playing field? ray: that should be a primary ways to lower the actual taxes that theyobjective. any tax reform bill is just leveling the playing field. the playing field comes in different forms, whether it is across different industries, whether it is u.s. versus foreign companies. a lot of attention was paid to that in this tax bill. we do have our own unique legislative process year and i think there are some hits and misses in this bill when it comes to leveling the playing field. it is such a big bill that even with an industry, in tech, the companies we talked to, get mixed reactions overall to the bill. what is interesting about this tax bill is it is not a pure tax cut. it is a net tax cut but that means there are a lot of tax increases embedded in this bill in particular areas. every company will have to spend a lot of time modeling all of those pieces together to kind of
c with a end up at the end of the day. haidi: a lot of the analysts we the been speaking to see impossibleness on the corporate side. on the individual side, and a lot of them have been the skeptical if it will result in any inflation or growth pressure because of the brackets it is targeting. do you think it is much of a game changer and implications on the individual side? ray: it is probably somewhat less of a game changer on the individual side. there are big changes on the individual side. the elimination of the state and local tax reduction for the most part. the rates in the brackets look similar to what we have now. the top rate would go down and little bit, but compared to prior plans, rather modest. a lot of the itemized did options on the table. yeah, they did trent a little bit here and there. the mortgage rate deduction went down to $750. on the individual side, perhaps
the most significant side is the doubling of standard deductions. over 90% of taxpayers don't have to worry about the itemized deductions. i think that was probably worth doing the whole package. of course, the entire individual side of the bill is temporary. sunset, notled at after 10 years, but after 10 years which was done at the end of the process. these folks in members of congress who will be talking about this eight years from now like they did back in 2012 with the bush 2001 tax cuts. haidi: you mention it is not a pure tax plan. there are actually increases. 'svies has said this -- moody has said this is a long-term negative for the u.s. economy. do you think it is fiscally responsible? ray: from the standpoint of fiscal responsibility, i think
there has been a lot of discussion about the impacts of tax reform that go beyond the conventional analysis. yes, officially, it loses $1.5 trillion in revenue, but if you look at some of the policies would they certainly increase economic growth and therefore increase revenue. i think the fun thing about this whole exercise going forward is we will put thoery to practice -- theory to practice. we will see what a 21% tax cut yearly does for the economy. betty: right now, markets -- we are seeing the stock market rally based on anticipation of the benefits of tax reform. when are we likely to see some results, some real impact? ray: it is hard to say. what is interesting about this tax bill is how immediate it comes into effect. provisions will take effect as
soon as january 1. there is not a lot of phasing in in this bill. and a lot of things hit right away. the corporate tax cut, surprisingly to people like me, goes immediately to 35% to 21% overnight. that will accelerate whatever the impacts are of this bill and i think we will see some short-term reactions, but probably we will see longer-term reactions as people kind of start the process what a 21% tax as alloks like, as well the million other things that this bill has in it. betty: that is right. it makes for good bedtime reading. , expert on taxch reform. you can get a roundup of that story to get your day going on today's edition of daybreak. bloomberg subscribers can go on their terminal. it is also available on the bloomberg anywhere app. you can also customize your settings so you only get news on
betty: this is daybreak asia. i'm betty liu. sydney.'m haidi lun in walt disney is expected to consider internal candidates to lead espn after president john skipper quit unexpectedly. a search is already underway and an outside candidate is possible. skipper resigned after admitting to an addiction problem. he has led espn since 2012. disney has outlined a 90 day timetable to find a successor. betty: china has opened a review of toshiba's since 2012. disney has outlined a 90 day timetable to find a successor. flash memory chip sales saying a concern of the role. toshiba may have to offer assurances that the final deal will not hurt competition.
china is the world's latest market for semi conductors and building its domestic industry. hynix as part of the capital group buying toshiba's operation. haidi: china has ordered its biggest energy explore to cut its natural gas to help ease shortages as winter begins. beijing has been scrambling to secure more gas for residential use as part of a plan to tackle revolution -- pollution. switchingata shows residential uses to guess has pushed demand up 19%. betty: the former pboc economist says the bank should stop it focus on growth and tackling debt. that story is up next. this is bloomberg. ♪ is this a phone?
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>> we are 30 minutes away from the first major market open and all of the signs point to another stellar day. it is not that far off from the wreck and highs and we are tracking another session in u.s. markets -- from the record highs and we are tracking another session in the u.s. markets with the latest numbers out of japan,'s poor, and korea and it points to a great deal of exuberance. clear skies ahead
and it looks gorgeous. in new york, it is a little bearable.ut o >> you are watching daybreak. let's get you caught up with the news. >> there has been an address of security with the -- he warned the world that any nation that trades prosperity for security sacrifices both and mentioned north korea and said that china and russia are rivals ad potential partners to stop
change of allows the real estate businesses to take advantage of a new tax break. the beneficiaries lame the bill will not help financially. china is said to be ending subsidies for electric cars and other vehicles. the plan may be implement it in the new year. china is the biggest electric car market in the world and our sources say that carmakers will still be entitled to central government funds. in the duty as a market referee. they say that the arbiter of regulations has the last two years and a new warning set the
companies can ignore rules that .re illegally finding him global news powered by journalists and countries all over the world. >> thank you so much for that. tokyorket opens now in and we are looking to continue the games with the tax bill reclaim and the topix 26-year high. a cue from the u.s. it boosts the s&p 500 to new highs.
several strategists are keeping the faith with the outlook and there is a global tech selloff and we had financials leading the gains and the biggest contributors from mid-november. the nikkei and the kospi are looking to open hire with the prospect of passage of the tax bill. the investigation into the project widened. they told the commission they had fitted on the project and the offices had been searched in the wake of the news and --
how was the session shipping up so far? >> there was a bright spot that it was taking up 1.2 percent and could give a boost to the aussie shares. you take a look at the equity ofers and you get the likes evolution mining up to date and you have the retail food group down after the net profit update and the car sales losing ground today.
>> all right. let's talk about a favorite topic these days. bitcoin futures have had 24 hours and they are on the up again. get a little bit of what is happening here with the bloomberg chart. >> it is not a surprise that we are heading up. just a couple of days on the down. let's take a look at the past 24 hours with bitcoin and other futures up and running all stop and white line is bitcoin you can see it rising. it is up 7% since friday trading. let's take a look at the futures in yellow and you can see that it is trading at the highest
and you canutures story with volatility over the last 24 hours and the with asiae rising trading and rising again with those coming online. in terms of a premium, i want to talk about that and we are withg the premium fall inefficiencies in the market and there is a premium to purchase or trade in bit coin or futures. me take a look at the premium there is the relative anders with futures trading
say to get out of this and go long into the futures. we need tohe charts look at right now as we talk about bitcoin. >> it is getting a lot of attention and our institutional investors are looking for the next big thing. there are those who say we do not talk about bitcoin enough here. 18,000 is the price overnight and we aren't seeing the forest for the trees with this, at the moment? >> i don't know. we are analyzing minute details of a speculative tool that is a decentralized ponzi scheme. it is a bubble that is inflating
and it is useless. you see the inefficiencies in the futures market and it is not efficient for this. blockchain is amazing technology. is going to change the world and revolutionize industries. bitcoin to speculative tool. it will go higher and cause pain .ost of i hate talking about it i think it will cause a massive transfer of wealth and ruin a lot of people. i don't like talking about it. >> here you are. >> you guys throw me these questions. there are more exciting things happening. i think that emerging markets are where the action is. we see this in chile and india. capital cannot be put into
bitcoin yet. what they are looking at is financial assets in emerging markets. >> do you think that we are not going to talk about that coin? we are going to have cryptocurrency in the future. blockchain is important. i would be surprised if bitcoin is what we have in the future host up the -- future. currency -- bitcoin doesn't have a new basic value. ultimately, those that work will be ones that are backed by a government. i think it will retain some value as a religion that has believers, but i think the value will be lower. i think it will go higher first
and i think an attempt to short is crazy. africas talk about south with a massive move. is this sustainable? >> i think the narrative has changed and i think it should not be underestimated. will benant narrative in real yields and i think it will go very far. the economy still looks terrible and growth is sluggish. unemployment heads to 30% of the population and there is economic fundamentals that arms good. because of the election risks are much
worse and there will be lots of volatility and investors will chase yields. in the short-term, it will be very volatile in both directions. >> thank you. pushes for asident plan to shrink the debt burden at a cow france. one of the steps to the goal is to drop the gdp target and focus on unemployment. we have our policy editor here with more. about what is said. >> we know the gdp target and he that it is time to let this should lookthe pboc at unemployment as a better way to go about this. this has to do with the debt and
why it has gotten big. linesn see all of these that are the amount of aggregate financing and it is growing a little bit slower. going where itl you keepe and will having to make lots of debt at a level like that? has encouraged people to boost investment and led to thessive borrowing and services get more important and something like 6% for gdp would be fine to keep the government stable. why is this hard? sometimes, government officials get measured on how much they
contribute to those targets. there has been a believe that this has led to a distortion of economic data. by wednesday, one the work conference wraps up, he says we could get some idea. --y think they should talk they should drop the target altogether. >> the inflation target is being debated more. that andysident said spoke to match and i want to give you a key sentence. the absence of the increasing inflation, it could hold down the chance of -- the bond market tells us that
the odds of recession increase and because of the rate hike, the yield curve has been flattening in response and he thinks that the preemptive right hikes are going to backfire. the odds of that happening do not seem so strong. so many people say it will boost growth and inflation and get more rate hikes. het is the reason why continues to be a dove. the consensus seems to be more rate hikes. sticking to his guns. chuck schumer says that passing funding will lead nowhere and lead to a government shutdown.
>> this is daybreak. trump prompts concern that the u.s. is retreating from traditional leadership roles and distancing itself from international institutions. let's go to our chief international correspondent with the latest. we have been talking about this narrative since the election results. what are you hearing? will harm soft power and humanitarian crises around the world. we know the people in four
countries face this every single day and would put all of this into perspective this morning. it is good to have you with us. what impact will this shift in policy have? >> the administration has been clear about retreat from global commitments under republican and democratic governments since world war ii to lead the world in this humanitarian effort to .erve those in need it was george w. bush who created an effort to save ves and president clinton saved millions. obama put in place agricultural i think that these
policies are a threat to the global aspiration to achieve sustainable development and and the extreme poverty on our planet. at risk? the most are largely, there risks with people around the world who live in extreme poverty and a vast majority of them do not have access to electricity. simpleon a year die of diseases and all of these are easily prevented. when we make sure that kids are educated, it creates a pathway to growth and prosperity and i would note that the 40% of the
children who live in those conditions still live in asia and it is not just an african challenge. it is a global challenge. the rest of the world needs to hold hands to solve poverty. >> how much will soft power be the policyime when is gaining and expanding the foothold? >> i think that this is a step iskwards for power and it thisbility to demonstrate thattment and i would note the american people are resilient and america is lucky
to have a culture of philanthropy around the world structures the smart of public and private partnerships make a huge difference for millions around the world. >> can they filled the gap? >> absolutely not. this out stretches the american can passopy and it legislation in a bipartisan way at a tough time in american politics to fight hunger through agricultural research and and these are all
priorities that the foundation also perseus in partnership with governments year in asia and around the world. >> how should the rich use these foundations? >> there are 10,000 foundations in asia and the structure of philanthropy is relatively new. allowe launched a fund to philanthropists to come together and solve big problems and educate millions to bring power and electricity to families to reduce child mortality and look at solving problems with community health in africa and around the world to bring new strategies to allow the poorest to lift themselves out of poverty in a way that we have
haidi: asia-pacific stocks set extend the gains among increasing optimism about u.s. tax cuts. betty: senate republicans say they have the numbers. former critic is now on board. haidi: president trump addresses national security, saying rivals are challenging u.s. influence. he says china is a strategic competitor, and hitting the brakes -- betty: and hitting the brakes may delay an $80 billion line.
this is the second hour of "daybreak asia." i'm betty liu at bloomberg's global headquarters in new york. haidi: i'm haidi lun in sydney. we may be getting closer and season,o the festive and christmas, that break for traders, but no letting -- going on holidays when it comes to this equity rally we are seeing. up, from bitcoin to the s&p, to nasdaq, seeing another record high overnight. what is interesting, driving all of this, tax cuts getting done before christmas. the ambition is to get it signed off before holidays. in this equity rally that we are seeing, the trump valley, the reflation trade, we have seen higher tax companies. a pretty slow first half of the year. that is where things start
getting interesting. they just started to gain. we see another one higher when it comes to these higher tax the tax cuts including the likes of berkshire hathaway. that was another milestone, crossing $300,000 for that class institutionally-held share. not bad for a stock bought for $750 per share. just 4,000,000% gain. betty: nothing compared to the 7000% gain we have seen in bitcoin. as you said, it looks like the sentiment around tax reform, effecting many companies. more, some of the old world industries, i guess you might call them. berkshire hathaway is part of railroads, manufacturers, banking shares. they are all part of worship have the way. you have seen the drive towards $300,000 level, and kudos to
warren, who has always refused to split the stock to make it more affordable. he designed class b shares to do that. he wanted to hold onto the premium class a shares. nothing could get more premium than a $300,000 stock price. let's get to the first word news with jessica summers. jessica. jessica: president trump has addressed securities, saying the u.s. will pursue what he called a muscular foreign policy under america first. world that "any nation that ends up trading at prosperity for security will end up losing both." he mentioned north korea and described china and russia as rivals and potential partners. late edition that would provide a multimillion dollar windfall to property owners such as president trump. businesseseal estate
to take advantage of any tax break. the beneficiaries include a president who claims the bill will not help him financially. mike pence is said to have delayed of this in case a tie-breaking vote is needed. the tokyo stock exchange is being capped. numeral rising capital says the tse must act as arbiter. verizon warns that if it does not, companies will ignore rules binding.not legally japan exchange is an assessment of the situation is wrong. china, 60 be planning local subsidies for electric cars and energy vehicles. the ministry of financing is to phase out -- implemented be in the mont in the new year. china is the biggest electric car market in the new world and they are entitled to central government funds. preparing anis
expansionary budget for next year. the media has released an assessment of 2017, saying the deficit narrowed to 8.9% of gdp, more or less in line with economists forecasts. it would be the first time for the deficit to fall below 10%. global news, 24 hours per day, at powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. markets feeling the festive cheer, it seems, taking the strong leave from wall street and looking like we are going to clock in regional records of our own. the camera read in. these major markets join the fray. sophie: fingers crossed we can hit the fresh highs. check out what is going on at the nikkei 225.
looking unstoppable when it comes to the japanese stock rally. the topix regaining the high. blackrock, they are maintaining the overweight calm. investors are still up the on japanese stocks are 2018. the yen is sticking in a narrow range. check out what is going to cause be, gaining .6%. the korean won below -- the dollar won could see 10.90 a by back below dollar. it is continuing to consolidate under the 100 day moving average following the oil domestic numbers that came in better than forecast for singapore. the rand continuing to move trading at a june high amid the vote bonanza that has helped for run to a three-year high.
about pro-market leadership. the aussie is little changed this morning. aussie bonds are on the back foot. the overnight in treasuries, given the u.s. tax optimism. take a closer look at what is going on with the topix, rising for a second day, let higher by utilities. we have tokyo gas and osaka gas rising by one person this morning. i.t. sucks tracking their u.s. peers to my higher financials gaining ground along with discretionary shares writing by .3%. when it comes to laggards, we have the energy sector under pressure along with staples. when it comes to equity movers, on theojima the worst topix today. pulling up the board to check on kojima and the japanese construction space. investigation into the $80 billion rail project widening.
told the commission it had colluded on bidding for the project. kojima sliding over 4%. kojima and shimizu confirmed they had been -- in the wake of that man is. keep an eye on the space, betty. betty: bucking the trend of gains, it seems, today. president trump speaking about national security earlier today. seeking to challenge u.s. under hisand interest america first approach to foreign policy. the president said he intends to erase america's $500 billion total trade gap. i want to bring in our bloomberg senior reporter, david. david, let's start with this strategic competitor label slapped on the china. what do you think the reaction is going to be? david: i think they did not
quite label china as a competitor. he did use the phrase and said u.s. was in strategic competition with other people, did not go quite so far as to label china as a strategic competitor. george w. bush did that at the beginning of his term, and china about it anded complained. the u.s. administration never used that term again in terms of china. what is interesting about this particular speech is he actually seems to have pulled his punches. the financial times yesterday was reporting he was going to label china an economic aggressor. we did not hear that either. what we do have is a speech that pretty much could have been clinton'sy hillary administration, according to some of the commentators. protecting the homeland, american prosperity, peace
through strength, advancing u.s. thatence, but it does say china is a competitor of the u.s.. get to see what that might actually mean in terms of direct action. betty: what direct action could there be from the administration? david: that's another thing. during trump's campaign, he talked about wanting to put punitive tariffs on china, maybe up to 40%, but nothing was outlined in this particular document. did not mention anything, even though there was some expectation and rumor that there were some tariffs that were being discussed in washington, but we have not seen any evidence of that. had to waitthing we and see what is going to come out of the administration on that particular level, betty. haidi: given that we are reading this as a more tempered take from donald trump, what kind of reaction are we expecting from
beijing? david: we will certainly get something by the end of the day because we will have the foreign industry meeting. yesterday, they declined to comment, although there was a pointed article in the global times. that was in response to the financial times report that they were going to label china and economic aggressor. mobile times want that's if there were going to be these sorts of steps taken by the united states, then the united states could probably look forward to a trade war, am a trade war would likely undo -- and the trade war what undo any accomplishments trump might have achieved in the first year of his first term. but as i say, we have not had that labeling from china, from the united days, so i think that china is probably going to let this one go at the moment, but stay tuned for the foreign ministry briefing later this afternoon. haidi: david, thank you so much for that.
haidi: this is "daybreak asia." i'm haidi lun in sydney. betty: i'm betty liu in new york. let's return to president trump's comments about china, particularly that it is a rival that wants to undermine american prosperity and influence. it may take more than an aggressive tone to change the complex relationship between the two dying economies. i want to discuss all of this with paul and our global policy and economics editor, kathleen hays.
paul, let's start with you. as david rightly pointed out, there were certain words missing in the actual statement from speak,nt trump, so to about strategic competitor and economic aggressor, but the tone overall in his statement or and was not thatay china is a strategic competitor. how do you think beijing will react to this? >> relations between china and the united dates have never been warm and fuzzy anyway. so this is not going to take beijing by surprise. beijing, i think, will play it cool because this is a rather unpredictable president. he uses words very differently from the way most people use words. is looking at the dictionary and says "competitor, aggressive, what does it mean?"
the devil is in the details. what exactly is the trump administration going to do? wait andgoing to take a look at that. betty: i want to play for you a snippet of what president trump said today. guys, let's play. pres. trump: we face rival powers. russia and china. that seek to challenge american influence, values, and wealth. we will attempt to build a great otherrship with those and countries, but in a manner that always protects our national interest. betty: so what do you think that means exactly, pauline? what are the actions the follow those words? pauline: actually, it does not seem to mean much at all. it sounds like something that that sounds very nice and very reassuring. we have got competitors, we have
people who challenge us. we will try to work with them. i really cannot tell from that what it means in terms of policy or practical measures. haidi: i'm just curious. fullve made it through a year under the trump administration. i think at the start of his term , there are a lot of expectations we will be on the brink of a trade war or worse between beijing and washington. we kind of encourage by how tempered he has been at certain points throughout the year. yes, because talking aggressively is one thing, but once you get down to action, you look at numbers, you look at relationships, you look at the facts that, for instance, the , ated states has a surplus trade surplus with agricultural
goods with china, then you have to be a little more nuanced in your approach, rather than use the nuclear option and kill everything in sight. encouraged, and also, there is another thing. it takes to bring to fight. china does not want a trade war. it is maneuvering itself very carefully to avoid that. there is a perception, i believe, in china, that a lot of things that trump does and says is playing to his base, his supporters. so, if china can help trump , then it will be in china's interest when it comes to the actual negotiations to get things that they do want that will not make the news.
betty: we know that this is something that donald trump has talked about if you go back and look over the gears for a long time, the larger growing debt with china and other growing missions. i have a couple questions i want to ask you as i bring up a chart. it is #btv 7753. a just shows how we have had trade deficit that has continued to grow. that is -- china's trade surplus, our deficit. the u.s. is blue. exports continue to climb. imports are pretty much flat. they have expanded, but they have leveled off. china, as it tries to deleverage, is going to be depending all the heavier on exports, particularly to the u.s.. one thing i would like to add, david wu, for example, is the head of race and currencies at the of a merrill lynch. a and merrill lynch. he said the u.s. is going to get more aggressive and we were lulled to complacency last year,
but there will be fireworks in 2018. others have the same view of 2018 when it comes to u.s. and china trade relations. very complicated picture for the chinese. pauline: yes, it is. earlier, it is a very complicated picture because trade is not just one thing, one item. for instance, the trade relations and services -- everyone talks about the goods deficit. if you look at services, the united states -- it has been in the united states' favor. it is a matter of trade. what are you willing to give up in order to have something else? when this comes down to the nitty-gritty of negotiations, it is going to be a little more an all-out trade
war. i'm convinced china will do everything it can to prevent a trade war, so to speak. there will be negotiations, different takes, and china will try to play it so the united states will feel that it is getting some benefit from all of this. woulden: president trump feel the united states is getting a benefit if china were cooperating with what he wants to see, at least, when it comes to north korea using some leverage, influence. what would they have to see to do that? are they too worried about allowing the u.s. to build its influence closely on exporter if they do push back against south korea? what do the chinese want to hear? what is their bargaining position with the u.s. when it comes the stepping up and doing more to stop north korea or at least rein them in? pauline: actually come on north korea is a problem, not just for
the united dates, but for china, too. there is this rather unpredictable leader on your border. youre is supposed to be ally. he is doing all these things you don't want them to do. you are also constrained by the act that you can push dictatorship only so far. he is worried about getting kids out of our himself. if you push him to a point where he thinks he has got nothing to lose, then you have lost leverage. so, this is going to be quite a dance in the year to come. china will want the north koreans to do something sensible. but how they are going to do it is going to be difficult. kathleen: you have 400 plus officials gathering in beijing for their annual economic conference, and i'm curious. in your view, what is the
biggest risk for china? is it external, trade, north korea, or internal, this deleveraging process? pauline: actually, the problem for china is much longer term. though a the economy is structured, the way there are imbalances -- so if you look at next year or the year after, you can patch things up. you can patch it up there. if you look longer-term at the structural problems, and there have been many reports on that right people far more well-informed than i am, pointing to the structural problems china has come and longer-term, that is the real challenge for the leadership. >> all right. thank you so much. so great to have you and get some perspective. pauline and kathleen hays.
storyt a roundup of that and many more you need to know to get your day going in today's edition of daybreak. bloomberg subscribers can go to dayb on the terminal and on mobile. you can customize your settings so you only get the news on the industries and assets that you want, that you care about. this is bloomberg. ♪
haidi: a quick check of the latest business flash headlines. walt disney expected to consider internal candidates to lead espn. sources tell us the search is already underway. candidate is possible. skipper resigned after admitting an addiction problem. he has led espn since 2012 and has been with the network 20 years. disney outlined a 90 day timetable to find his successor. >> china has opened a review of
toshiba's flash memory chip sale. beijing says toshiba may have to offer assurances that the final deal won't hurt competition. china is the world's leading market for semiconductors. it is spending heavily to build its own domestic industry. china has ordered its biggest energy explorers to cut their use of natural gas to help ease shortages as winter starts. beijing has been scrambling to secure more gas for residential use as part of its plan to tackle pollution by cutting the burning of coal. official data shows that switching industrial and residential users to gas pushed demands up 19% during the first 10 months of 2017. dani enterprises to build the largest coal mine by itself. the two companies -- the decisione of
haidi: it is 8:30 in singapore, half an hour away from the opening of trading, when markets, online in singapore and across the rest of southeast asia. joining a positive session, getting a tail wind from wall street overnight. record highs for u.s. equities again. pretty close to a record highs in sydney. betty: i'm betty liu in new york. you are watching "a brick asia." "daybreak asia." >> orders at their highest level in three decades. the confederation of british industry factory indexes remains at 17, matching its best result
since 1988. the brexit negotiations face a new hurdle with the use thing britain cannot expect a special deal. theresa may said every deal is de facto unique. >> if anybody cares to think about it, every trade agreement is the agreement between the parties concerned. they have similar elements to them, but this effect to the various countries of concern, and that will be what we will be looking for in our negotiations with the e.u.. >> south africa's ruling anc has elected -- as its new leader after a bitter campaign to succeed president jacob zuma. the 65-year-old veteran was part of the previous scandal and regime that managed to convince delegates he has become a reformer. he is one of south africa's richest people. ers in killed 34 min 2012. the prime minister is poised to remain power in his home state
ahead of the national vote in 2019. in bjp has one or is leading the legislator. lowestuld be the party's tally in more than two decades. modi tweeted the results show strong support for the politics and good governance. has vetoed a un security council resolution on the recognition of jerusalem as its capital, saying it was an insult that won't be forgotten. the other 14 members of the w washington would resend the decision. supporters wanting to show the depth of opposition. nikki haley use her first u.n. veto to block the resolution. >> what we witnessed here today in the security council is an insult. it will not be forgotten. it is one more example of the united nation's doing more harm than good in addressing the israeli palestinian conflict. for the simple act of deciding where to put our embassy, the
united states was forced to defend its sovereignty. >> at least six people died when an amtrak train derailed as it crossed an overpass in washington state. train services have been suspended south of seattle. president trump tweeted that the accident strengthens his case for increased investment on infrastructure. the associated press says preliminary signs may have showed the train obstructed something. 20 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm jessica summers. this is bloomberg. haidi: thank you so much for that. breaking headlines crossing the bloomberg just now. some of these lines from the december 5 meeting. we are getting the minutes from that rba meeting where it held rates at a record low for a 16th consecutive month. a lot of focus on wage growth or the lack ferro, saying it appears to have stabilized in the september quarter.
confident of progress when it comes to jobs, inflation, and household debt. deleveraging in 2018. household consumption, a significant risk going into 2018. household balance sheets warrant careful monitoring. we are looking at the situation in australia where there is a slow wage growth creating something of a conundrum for the rbn concerns over systemic vulnerabilities in the financial system. moderate consumption likely to have continued in the fourth quarter. having more than 20 comes to further progress in the jobless rate and inflation coming through from there. the index data slightly lower than expected. also of note, talking about the chinese economy, the first quarters have been much stronger than expected, but seeing weaker growth going into next year, and saying commodity prices, while remaining quite high, looking at weakness come through there. also talking about spare
capacity in the labor market, expected to be observed gradually in the wage growth as a result to come through with the times. low wages, lack of inflation, still a focus for the rba and a number of other central banks globally. let's take a look at the reaction when it comes to the aussie with sophie kamaruddin. sophie: we are seeing that much in the way of reaction in the aussie dollar, pretty much flat, holding above the 76 handle. past sixsen in the sessions. there is the ongoing debate about the outlook for the currency given this vanishing yield premium for australia over the united states, and when it comes to the forecast for the currency, we have diverging views. havearge asset managers diverging views when it comes to whether or not it will break below $.70 in 2018, but for now, we are seeing it pretty much unchanged following the latest rba meeting minutes. let's take a look at the reaction.
the asx 200 is up .5%, rising for a second day. the benchmark index is set for the highest close since january. we will see whether or not we get that fresh move higher. we have telcos leading gains along with materials and energy stocks today. utilities under some pressure this morning. we do also have consumer stocks under pressure, but still maintaining some gain. taking a look at some movers, we have minors helping lead that sector higher. minor -- it could be a takeover target amid increased activity for australia. gilts. mind oracle retail food sliding after forecasting a lower net profit for the first half. fellowfalling with the
provider, which sees softer 2018 earnings amid lower occupancy levels. that is falling for a third day as we have harsher ones from the queensland regulator. it expects a more moderate final outcome for rising from the national commission. just some stocks to keep in mind when it comes to the aussie session, 130 members of the against the laggards so far this morning. betty. betty: a pretty good rally shaping up in australia. let's turn to japan. investigation into japan's construction industry is widening. there is concern that may delay the project. stephen is joining us. stephen, first of all, tell us about this ambitious plan. stephen: the project is the next devolution of the high-speed
rail here in japan. it levitates and goes the speed of a jet to get up to high-speed. for example, if you want to look at the united states, it would go from new york to san francisco in seven hours. it is very fast. the japanese companies and government are pushing to export it. betty: that is fast, and a major transformative project. andegan with one company has expanded rapidly from that. so, explain to us what happened here. stephen: right, so first, there were local government officials who were tipped that perhaps obayashi and other companies colluded in bidding for the deal. obayashi, its headquarters were searched as well as three other japanese construction companies, so there are four currently involved.
obayashi admitted they colluded for bids to japan's fair trade commission. on that did not comment report exactly. if they did come forward, they could get a not as large penalty and avoid some criminal charges against them. it is looking like the dominoes are falling in this case when it came to collusion to win contracts. haidi: what is the likely fallout from all of this? stephen: well, one of the biggest fallouts is these 4/5 of japan'sup entire construction industry. folks are going to lose faith in these companies, and they could get large fines slapped on them. if you are looking at the maglev project, this is a very complicated project. it is going to have to tunnel through mountains. technologyadvanced
that has not all been fully tested so it could push off this project, which is backed by the government, which premised are shinzo abe want to sell to the trump administration as part of an export package. this could have wide-ranging effects, not only for the construction industry, but from a foreign policy standpoint for the abe administration. it is going to reverberate across everything if there are big delays. haidi: all right, stephen, thank you so much for that. there for us in tokyo. it has been two years since china ended the one child policy, but the impacts them a graphically of those years could last for generations. the founder is also a renowned demographer in china. he says the policy errors reflect future innovation. going, right now, is going very well, because it till grouplarge population
because of the one child policy and restrictions in childbearing policies. then it will have a negative impact on china's future innovation capability. chinese government is making a first step to get rid of the one child policy, but that is not enough. there is still a lot of policy improvement -- room for improvement in that area. >> what actions specifically in terms of the policies could be taken to mitigate some of those challenges, do you think? >> obviously, get rid of all the restrictions of any childbearing restrictions. in the long run, that is not enough. like many other asian countries, without researching, you have a very low fertility rate, so just like many countries in the world, china needs to have a sort of pro-fertility policy. basically, give financial reward
and other kinds of benefits for families who want to have many children. >> there has been a big push for automation in china. you are seeing that with the pickup in the use of robotics and the robotics market. what role cannot play in offsetting some of the challenges? stephen: for routine jobs in robots and technology, it can really help. for innovation jobs, the human input is still very important, and also, there is skill. if you have a bigger, big consumer market, and the advantage of a bigger company in innovation is going to be huge. is the internet market largest in the world. --t fostered, nurtured, many the world-class internet companies. in the future, china will continue to leverage this to scale. that scale effect will be by thed or curtailed
past mistakes in the population policies. >> one debate that goes on in japan is immigration. is that something china may need to look at, is opening its doors to more immigration? thehat is something on table. before, china was such a big race. it will not have a big effect to solve its aging problem, and mike other entries. singapore can really leverage immigrations, but that's one small way of mitigating this problem. betty: again, that was james, renowned demographer in china, speaking to tom mackenzie. we are going to have much more ahead on tech companies. why ask why they say finding talent is the toughest task as they expand in asia. andrew joins us next. this is bloomberg. ♪
betty: this is "daybreak asia." i'm betty liu in new york. haidi: i'm haidi lun in sydney. our next guest says a good location on the top of the list when discussing tech trends in asia, and looking across this region, china, india, and japan seem to offer the greatest potential over the next decade. joining us now is the is a research executive director. it is not all about tax incentives. >> sorry, it's all about? haidi: it is not all about tax incentives. >> absolutely not. it is not all about tax incentives. we carried out a major study largeg at the needs of technology sector occupiers across asia. i would say that we could group the conclusions from that over four headings. firstly, talent. they told us quite clearly that the greatest challenge for tech
companies is to acquire and retain talent. and india, wea think it is very important for tech companies to have exposure, not just because of the high-growth markets, but also particularly in the case of aina, because that's where lot of innovation is taking place. third, major trends would be cbd, central business district. we think tech companies need to move away perhaps from campuses on the city outskirts and back towards the cbd or cbd french in ringe in acquire -- fing order to acquire and retain talent. companiesechnology have particular scope to harness ai, to boost productivity, drive growth, drive returns. the start of this, when
you talked about china, it is such an interesting conundrum. you have some at innovation, some of the world's biggest companies. you have got this ever tightening regulatory censorship . government intervention, having someone from the communist party's it on your board for some of these companies. is that an aspect that concerns people that you talk to? stephen: -- >> i think the issue of access to information is of a real one, particularly for technology and media companies. it is an issue that they cannot ignore. is ae other hand, china great source of talent. one thing that was particularly interesting in the interviews that we carried out with technology companies is they told us china is the biggest source of talent in asia. they were more specific than that. they highlighted beijing in
north china as the biggest source of new talent, followed by shanghai in east china, followed by then lower -- bangalore. andever the constraints charges of doing business in china, it is a market that technology companies just cannot ignore. betty: it's interesting. it means a lot of the challenges you outline are certainly did challenges. tech companies here have as for, particularly the war talent. finding talent is always at the top of the list. i'm interested in the artificial intelligence side of it, the robotization of a lot of the tasks. a lot of people say that we'll hit asia first, where many of the low skilled jobs are. many of those industries or jobs, i should say, are going to get wiped out first in asia. replicablefar as
routine, potentially, yes. if you were to ask which sectors to adoptionnerable of artificial intelligence and robotics, the answer is probably manufacturing and agriculture. if you're looking at property, as we are in saying more generally what is artificial -- what does artificial intelligence mean? looking forward, we can look to three or four trends. that's not necessarily bad. firstly, the internet of things, which is closely related to artificial intelligence, will help officers to become greener, healthier, better places in which to work. offices, secondly, offices are likely to become smaller or at least more efficient in their use of space. thirdly, artificial intelligence opens up new avenues for technology companies, so industries,media
will become important sources of demand for new office space, particularly in city centers. in india,ready true where something like 50% to 60% newbie's office space comes from tech companies. we think you will see the tech sector emerging as a major source of demand across other major agencies as well. betty: what about financial services? we were talking about a story in the last few hours of daybreak australia, talking about macro traders and how they are having a down year this year, and in fact, many of them are worried about, essentially, their jobs just being replaced by algorithms, replaced by computers, and i am curious. a bigthat hong kong is at financial center, we know so much about how financial importants so big and
in asia, what about those jobs and the disruption in that industry? andrew: absolutely. our core scenario looking forward is that asian seabees continue to attract strong demand, including from the financial sector. if you look right now, demand from the financial sector is quite strong, and this reflects both strong financial markets, but also growth in new areas like simtech, financial technology. on the other hand, large financial organization from a commercial banks, large insurance companies, do have a significant number of routine and vocals goal -- replicable roles. to estimate the probability of this. we think there is a 20% probability looking into 2018 that investment property markets could be disrupted by signs of
acceleration in adoption of artificial intelligence in the financial sector, leading to replacement of human jobs and therefore to lower demand for space. thank you so much. very interesting report and research. andrew haskins, asia research executive director. ahead.h more don't forget our interactive tv function, tv . you can watch us live, interviews like what you just saw. catch up on the past interviews as well as dive into the securities and bloomberg functions we talk about. you could become part of the conversation. send usand s -- instant messages. check it out at tv . this is bloomberg. ♪
haidi: a quick check of the latest business flash headlines at this hour. buying and jd.com stake in china's largest online retailer for more than $860 million. the pair are taking a slice of this at a premium of 55% to their previous close. tencent more they significant in jd.com,. -- stake challenge to alibaba. they announced the purchase of 5% of the chain. haidi: china's group has sold its first property investment in sydney.
it was picked up by property link for $150 million, aussie. representing a 33% rise of what they paid in 2015. this comes after reports of selling a building in london. the group under official scrutiny following a global spending spree. betty: the ball electronics -- global electronics filed itkruptcy after the debt took. the company acknowledged more than one billion u.s. dollars in debt from the $2000 deal when it claimed chapter 11 protection in new york. it said its rising interest payment prevented them from expanding to meet amanda. -- meet demand. haidi: that is almost it is time to ring in rish -- bring in rish. rishaad: talking about the
lgt bank. lots getting on in this space in the moment. thatdia, sneaking through in the home state that should give impetus to the economic in place.gram he has he's looking at it from that perspective. on top of that result in south africa for the reforms as well, we have that all to discuss with thomas. looking at -- on top of that, look at aussie on rushing through all of -- asean rushing through all of that. betty: jampacked show ahead. that is it for "daybreak asia." our markets coverage continues with rish. stand by for "bloomberg markets." ♪ retail.
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