tv Bloomberg Daybreak Australia Bloomberg September 23, 2018 6:00pm-7:00pm EDT
haidi: welcome to daybreak australia. rishaad: we are -- shery: we are counting down to the major market opens. haidi: here are the top stories we are covering in the next hour. china cancels trade talks with new tariffs hours away. president trump is promising more punishment. a knockout blow and wins the race for sky. we take a look at reasons behind the s&p decision to upgrade australia.
shery: let's get a quick check of the markets on friday. it was mixed on the last trading day of the week. look at the dow, which gained .3%. the s&p 500 was down with financial zantac. it was the busiest u.s. stock trading day since february. it was quarterly expiration of options and futures, also known as quadruple. the nasdaq was weighed down by half a percent, given weakness stocksin apple and other on the nasdaq. let's look at markets out of asia. haidi: we are looking at a mix and lower set up despite the s&p as you say within an inch of the all-time high. kind of liquidity as well, lack of direction. we had a number of close markets across the region.
japan, south korea, china markets and taiwan closed. sri lanka also closed. equinox holiday. we have close to home new zealand stocks are trading. not inspected to change but maybe a dovish tone from the central bank and a rate cut that could be on the table. with the kiwi dollar and aussie dollar, we saw quite a selloff on the back of the bearish turn in the trade development. the news out on saturday china called off the trade negotiations. no compromises really. short-term possibility with relationships between washington and beijing. a lower set up with the open of trading despite finishing up in the friday session, higher half a percent. let's get to first word news with haslinda amin. sidesteppedec has
president trump's demand for lower oil prices, saying it will boost production only of customers ask. the saudi oil minister said the cartel would continue to pump crude to meet demand. opec and its allies plan will an extra one million barrels a day to fill the collapse of that as well and sanctions on iran. the trump administration -- on venezuela and sanctions on iran. the trump administration once investigations on social media companies -- wants investigations on social media companies. haverities can see if they violated antitrust laws. it also addresses competition and potential buyers. dell technologies is reported to be interviewing banks for a traditional ipo as backup to another plan with investor
resistance. a $21 billioning buyout of its tracking stock which some say over values the company. a traditional ipo has been under investigation since january. japan has successfully landed to drones on an asteroid study the origins of the solar system. they were flown to the asteroid on a spacecraft. they move around by jumping 50 meters at a time because rolling is difficult. german moon or a that moon lander soon. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am haslinda amin. this is bloomberg. haidi: thank you.
breaking news crossing bloomberg, tiger woods has won his first pga tournament in five years, more than five years in atlanta. a bit of a milestone in his comeback story. let's get back to our top story, dominating market sentiment for another week. the u.s. and china hours away from new tariffs. no improvement with relations. washington is ratcheting up the rhetoric around trade wars with secretary of state mark -- mike pompeo say the u.s. is in it to win it. >> the trade war has been going on for years. here is what is different in this administration. to callxtent one wants it a trade war, we are determined to win it. haidi: china called off planned talks. , as the clock strikes
midnight in washington on monday, we get the new tariffs coming through. we expect beijing to respond quickly. what happens from here? rosalind: doesn't seem like anything will happen in the near term. it will have no sign of the u.s. backing down and china canceled a trade mission to the united states this week. they will not come until the midterm elections. that is only six weeks away. maybe not the end of the world, but president trump has signaled numerous times that beyond the $200 billion in tariffs this week, he is prepared to go to covering267 billion, all of china's exports to the u.s. you had an interesting clip from mike pompeo saying we did not start this, we joined it, and we are going to win.
we have heard that from others officials briefing reporters friday, that they know trump is aware of the short-term possible pain for u.s. consumers as more and more types of products are swept into this trade war. he sees it as possible short-term pain for long-term gain. trump's view is if he does nothing, the situation gets worse. i would say maybe wait for a few weeks until after the election. depending on what happens, if democrats seize control of congress, there could be a shift in the stands. rune is something that is by the executive branch. shery: there seems to be no talks or negotiations in the government, but china wants to talk to the american people
directly. we are hearing they are releasing and add in iowa. -- an ad in iowa. ros: the sunday edition of the des moines register, full-page advertising supplement or news advertising supplement talking about the benefits of free trade, happy times resident she has had in iowa in the past, been there at least twice, really taking this directly to the u.s. voters and small businesses in the state of iowa. not particularly a swing state. i don't know there are a lot of thatessional races in iowa democrats could control, but it tactic byting and sly the chinese government. haidi: we know that president xi has often talked about his days he spent in iowa.
special connection. wanting to shift to the brett kavanaugh drama. are we going to get another hearing? ros: we are. we are getting a public hearing from christine blasey ford, the accuser, 10:00 a.m. thursday morning. set your clock. kavanaugh and forward will be testifying. it is an open hearing. the drama is going to be high. a lot of concern from christine's team about who will testify and who will not. heard from the senate judiciary they are the ones setting the agenda. they will do it the way they want to. it could be one of the high drama days in u.s. government
for decades really. haidi: thank you so much. shery: ros krasny with the latest out of d.c. comcast has run -- won the race for sky, knocking out a $39 billion blow, and 20th century fox. a special one-off auction. seems comcast really meant business with this offer. fox byomcast outfoxed pledging 10% more than what fox was saying. versus 15.75pounds from fox. this was a strategy thing saying we will blow you out of the you and make sure we lock this in. comcast in the orange line, definitely saying we have got this. you can come and get us, but we
know fox has let go of this bid. the comcast ceo came out smiling. he said this is a great day for his company, saying sky is a wonderful company with a great platform. we are talking about europe. also digital aspects of that, tremendous brand and management team. also for roberts who is 59 years old, this comes after a string of m&a setbacks tied to him trying to buy the stake from fox. now we know fox is selling those to disney. finally there is a win in his corner. investors are not really sure whether this is a win for them depending on where you stand. taking a look at comcast shares year to date, it has fallen 5%. if you look at fox shares, it is date. year to
24% most recently. you can see the bully and, the lions, the-- bul happiness from investors getting that buy in if you are investing in fox. ? at does comcast get i mentioned they get stuff out of the debt of europe, the u.k., ireland, italy. we are seeing this possible new empire that spans from western united states, california all the way to western europe, germany. roberts says this is going to be the leading global television and internet giant possibly in the world with total customers and base of 52 million people. haidi: what is to be done to bring this vision to life?
regulation, itof seems that is nothing that is of concern. back in june, they got e.u. approval for this. what they need to do come monday, comcast needs to go to the public market and start buying shares in sky and get to the 50% and higher level so they fox,rest control from taking control of it there. the deadline is october 11. we have something like 2.5 weeks . looking at sky, independent directors have already recommended accepting comcast's offer. sky is probably the biggest winner here. 72%.the past one year, up haidi: thank you so much. still ahead, s&p global ratings joins us talking about australia
shery: breaking news on the bloomberg. gotten --ain has $17.80 each. that was put in the top of the indicated range they had, $17, hong kong dollars and $.80 each. it was saying it would raise of the net $7.7 billion hong kong into the hong kong-euro. is 5.6un -- haidilao times subscribed now saying trading is beginning september 26. this week their ipo has raised the net hong kong dollars of
$7.2 billion in their hong kong ipo. their popular freeseas is -- services are having that hot pot chain has paid off. they are at the top of the indicated range of $17 hong kong. let's get business flash headlights -- headlines. a new round of tariffs, no seen -- no sign either side will blink. our next guest says these are priced in by the markets. joining us is kapstream capital managing director raymond lee. we are seeing the 10 year yield top 3% in the u.s., but we are not seeing the stock reaction like we saw earlier this year. is this some time -- sign of positivity and resilience? raymond: thank you for having me
on your show. i think so. if you look at the announcements, trump putting on $200 billion of tariffs at 10%, that was about what the market expected. in terms of china's response, an additional $50 billion. because the market was pricing it, you saw equities rally last week. you also saw the u.s. 10 year at 3%. i did think the markets priced in. the outcome was better than what the market had thought you would see in yields and equities. shery: there doesn't seem to be much of a circuit raker. although chinese officials are saying we are putting aside the idea we get any talks until after midterm story is over, is that the risk event horizon? raymond: these talks will be after the midterms. tariffsthe 200 billion
will get people to talk. these are not small numbers anymore. half of the numbers are tariffs now. .hey will reach a compromise the solution has to be incremental and gradual. it is hard to solve decade-long trade agreements through changes overnight. you need to come up with a solution that can be phased in over time. potentially even longer if it is a war over power instead of a trade imbalance. i want to bring up this chart in the library. look at the role of the dollar because it has pulled back. we have not seen a correlating recovery in emerging-market stocks. more breathing space for currencies and stocks. this is painting a picture if you get the assumption, everything falls into place with the dollar right. the fed is on track to go this week. onbe another one this year
the table. what are your assumptions for the rest of the year? raymond: the greenback will continue to rally. we saw movement last week as a function of the trade with the yen. emerging markets, they are still in a lot of difficulty, turkey to fixned interest rates their economic solution, the market is positive. the u.s. dollar fell off a little bit. it is likely to hike one more time and a couple times next year. interest rate divergence will continue to play out and be supportive of the dollar going higher. shery: the interest rate differential is not reliable for ethics. how do you make sure you get the dollar call right? are you invested in currencies at this point? your point on to the u.s. dollar, you are right. the correlation can break down. we saw that early this year
where the u.s. dollar did not move. the coalition came back in the second and third quarter. we predicted it would be there on to the end of the year. with emerging-market currencies, we have not been involved recently. they are volatile. it is like catching falling knives and if you look at the peso, the turkish lira, they are very volatile. anyone who wants to get into em, i would advise them to do it and take a short amount of time. with the higher u.s. yield, telling us a story the world needs to be catching up with the u.s. strength. hope so.we what you want to see is emerging market fundamentals continue to get better over time. some of these reforms these countries go through, that can do these reforms fundamentally, you will see them go in the
right direction. haidi: if emerging markets are making people feel queasy are cautious, where you find the value? raymond: investments in the u.s.raymond: dollar space. two-year is very high right now. 10-year's 3.5%. you are not taking up too much. if you can get corporate bonds that trade at 150 basis points for the two-year, you can get investment-grade assets, which is not too bad. i like u.s. dollar corporate debt and high-grade. haidi: there was a surprisingly positive report with the macro .nvironment in australia the aussie dollar could actually outperform. we saw the s&p 500 change their trading. does that change your view? andond: it shows the aaa
negative outlook went from negative to positive to reflect the better fiscal budget situation. the aussie 10-year rates are one of the best. people are already buying that debt. it hasn't changed a lot. the key thing to focus on as most of us are showing is inflation in the kiwi. you will see the reserve bank start to be more positive. haidi: is the u.s. going to stay despite the divergence of the u.s. and the rest of the world even if we see another step in the trade war? raymond: i think so. if it becomes more serious, i would prefer other sit haven currencies like the yen. and with interest rates, it makes it -- put into developed markets to get that higher return with relatively low
volatility compared to other jurisdictions. haidi: the trade war is a sweetener for the dollar. appreciate your term. that's your time, setting up the start of the trading week. bloomberg users can interact with charts we just brought up. gtv . you can feature them on bloomberg tv, catch up with key analysand annotate -- an analysis and annotate. this is bloomberg. ♪ s is bloomberg. ♪
shery: welcome back. let's get a quick check of the business flash headlines. singapore airlines has the world's longest flight. it will operate a nonstop service to new york, 16,000 kilometers, 19 hours. seven are on order. the inaugural flight will be october 11. they will use the plane for direct flight to l.a. from
november. haidi: jaguar land rover is continuing -- considering changing its plans for brexit. another one is weighing a similar move, bmw, shutting down the oxford plant to accommodate the move from the e.u. that would affect 10,000 workers. they: porsche is to drop diesel versions of its cars. the demand for oil burning and theis declining, suv's account for 12% of global sales last year. sales were halted in february after there was an investigation into dw. -- vw.
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sydneyit is 8:30 a.m. in . markets open for trading. future is looking cap it, and it graypid, and it is a day. we will start off with weakness. a number of closed markets including chinese markets, japan, taiwan, south korea, sri lanka. i am haidi stroud-watts in sydney. shery: i am shery ahn. you are watching daybreak australia. let's get to first word news. china has called off
proposed trade talks for the new round of tit-for-tat tariffs hours away. $200 billion of chinese imports will be subject to duty from midnight eastern to noon in beijing. that is on top of the $50 billion currently hit. trump threatened to double if china retaliates. china said it will hit $110 billion of u.s. products around the same time. comcast won the bidding war for sky, beating 21st century fox and disney to expand its empire abroad. ,hey offered 10% more than fox in an auction overseen by british regulators. sky and is9% of expected to sell that. lawyers for the woman accusing the sky and is expected to sell one -- for then accusing brett kavanaugh of
sexual assault confirm she will testify on thursday. has been threatened over her claims but believes it is important for lawmakers to hear what she has to say. the white house continues to support kavanaugh, saying he needs to clear his name. hong kong has inaugurated a new line to china, dramatically lowering travel time but raising questions about beijing's line influence on the. it took eight years to build. it will carry 80,000 passengers a day to and from china. this covers 26 kilometers in 14 minutes, down from one hour currently. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am haslinda amin. this is bloomberg. haidi: let's take a look at
markets and how we are setting up for the week. a number of markets will be closed. liquidity issues and a lack of direction given the japanese markets will not be trading, nor will china, japan, celebrating the mid autumn holiday. traders in australia and new zealand are at work. it is looking like a difficult risk sentiment, hours away from the implementation of new tariffs between the u.s. and china. we see the downside with kiwi stocks. this has fallen and wellington trading after the ceo sold off her shares. the biggest one-day decline since may 2016. the biggest one to watch in terms of new zealand stocks. offralian dollar being sold for the yen as risk aversion returns. but see more of what to watch.
-- let's see more of what to watch. this story will be dominated by trade, hours away from the clock striking midnight. reporter: last week we saw the markets quite resilient with the latest tariffs announced. there was a view there was time for discussion, that try 5% was not going to be implemented. that gave both sides to -- time to come to the table. it will be very difficult this week with china backing away from the talks. that will bring the risk off sentiment back on. you already saw the aussie and the kiwi selloff this morning. and we have futures in hong kong and australia are lower. we had j.p. morgan come out over strategynd and say factoring in a space three of
these trade wars, in the event tariffs are imposed on all chinese goods, which will keep the chinese economy and especially the u.s. stock market . with china and japan out today, it is going to be fairly limited. zoom in ons australia, greatly affected by the u.s.-china trade war. the s&p has raised its outlook, now stable. give us a look why they have this vote of confidence on australia. andreea: that is right. on friday they raised the to stable. stable -- what it says it is confident the budget will return to surplus. most importantly that the nation will avoid a property crisis. we have got a chart from the gtv library showing the decline in
sydney property prices. another thing, it is not rattled by the revolving door of prime minister's we have seen in australia. we believe both sides are committed to returning the budget to surplus. and the assessment is very much in line with that of the central bank, the reserve bank of australia. the economy is going along nicely and waiting for the right time to raise interest rates, which the markets are not expecting probably for the next 12 months. haidi: our across asset reporter there. you can check out gtv library are some of the charts we show you on gtv on the terminal. on friday we reported raising australia's budget to stable from the negative label it had. the industry reaffirmed the aaa
sovereign credit rating. let's look at the recent hike this with anthony walker. some people might have been surprised that in an age of trade tensions and uncertainty and australia being one of the most vulnerable with regional and global trade, we had this upgrade. is a fairi think it question. it is important to remember why the negative outlook was put on the sovereign two years ago. it reflected more fiscal issues and concerns about credit growth and house prices could suddenly turn. what we see now with data and the fiscal balances, they see public news coming out so much that the government is pretty fourth surplus. we use a different number for our deficits. the whole of government, the states are undertaking record capital spending, $150 billion
over the next three years. without seeing the house price story play out, we are seeing an orderly unwind, house prices in sydney higher, melbourne decline but not sharp. that is why we moved it back to stable. haidi: is that sustainable? we believe so. the government and the opposition will at one stage get back to a surplus by the early 20 20's, and they think -- 2020's. the government hopes to turn the budget back to the black in 2020. is that your production? ours is slightly different. we believe they will get there by 2020. there could be some other news this year, but we look at the sovereign rating, we consider the deficits as well.
they are quite a big deficit this year, rolling up record spending. shery: how concerned are you with fiscal generosity from the government that is trailing in public opinion on gold? anthony: we are not overly concerned. we think in the lead up to the election there will be more announcements, but they are committed to the return to surplus and any potential new policies or announcements will be offset by other revenue measures or savings. haidi: how much does dysfunctional leadership shenanigans in canberra where you, if specially the hint -- especially long-term policymaking? anthony: we have taken a view on
that. we believe the government in general is committed to returning the budget surplus. we have seen quite a few leadership changes. this is the fourth one since 2010, but the party politics remain the same. the new prime minister, he was the former treasurer. he is instrumental in this turnaround in the fiscal position. haidi: he may not be permitted to for long if we see a new change of government to a labor government. what that revise your outlook? we don't believe so at this stage. we will see what they do, but the opposition will stick to our rough motto, returning the budget to surplus by the 2020's.
shery: welcome back. i am shery ahn in new york. haidi: i am haidi stroud-watts. turning to oil and the question , it seemsrices go opec will not be moving in the direction president trump demanded last week. we have more on how the ministers managed to sidestep the urgent tweet from the president. say.elicately some would others say it was a snob. they are not -- snub. they are not going to immediately address the price of oil as trump asked last week.
you are looking at west texas intermediate, the oil used in the u.s.. it is up to $72, but check out brent oil nearing $80. that is what caused president trump last week to tweet out the opec monopoly must get prices down now. opec decided not to do that. saudi arabia and their allies signaled less urgency was needed and stopped short of promising extra volumes of crude. let's look at what the saudi energy minister said. their plan is to meet demand. the reason they didn't increase more is because customers are receiving all of the barrel they want. that is the message that appeared to come out of the meeting in algiers. the market is well supplied. in july and june, president trump put out his last tweet. he got an about-face.
there was a boost in production that pleased the president temporarily. it did not keep the price down. prices have gone higher. does opec have the willingness or ability to boost prices lower, and secondly, there is a question what president trump might do this coming week in terms of tweets about the price of oil. is atl market in general a vulnerable point in terms of direction. that will keep the focus on where oil goes with brent and here in the u.s., west texas intermediate. shery: joining us now from sydney is anz commodity strategist daniel hynes. great to have you with us. take why weg us her could have seen opec this time around not act on president trump's demands. what are your thoughts on what
has changed since then? there is many dynamics, but the underlying issues around aowing supply are certainly lot more difficult than people suspect. clearly russia has been increasing output recently, but within the opec group itself there is certainly difficulties around pushing or increasing the amount of crude requires good -- requires. -- required. there is difficulty run increasing output but they are of fine line around managing the market and expectations around demand as well. the trade war i suppose is cloudy that outlook -- has cloudy to that outlook -- cloudied that outlook.
you have concerns around demand. outlook.ery mixed that is why we are seeing producers hold back in any explicit sort of arrangements. shery: what are your demands for outlook? >> we will see relatively robust growth come through. certainly economic growth has started to peter out. we are starting to see a full thrill he. -- false rally. asian markets, we are seeing numbers strong come through. other than some sort of stipulation. we have had of fair stipulation so far but if we see that actually result in trade being active -- impacted, yes, the market could be impacted. demand will hold up well. haidi: the other thing was the projection that the u.s. shale
boom will continue into the 20 20's. those -- does that suggest a driver between the beauty i had cap -- brent? -- wti and brent? >> it is being driven by the emerging in the u.s. shale industry, talk about the infrastructure. there is an ongoing issue. in the short-term we have had other things like raising costs, availability of workers. it has produced in the shorter term. longer-term it is going to be the dynamic around how shale grows exponentially. broader commodities
index has been confounding. looking at copper, we had seven straight weeks of money managers .utting their long positions we saw a rebound last week, 5%. the bloomberg commodities index had its best week since april. that is despite the trade war. this cannot last. >> it has confounded a lot of skeptics. i have been talking about positive fundamentals for a while in both metals. seems to be investor sentiment betraying. slowly starting to turn around. the declines in stockpiles, itper in particular, i think is starting to weigh on the relatively bearish outlook. the trade conflict, the concerns around the impact it is having
on external driven demand out of china is starting to debate -- to abate. the policy measure in china will drive demand like copper and iron or. -- ore. shery: it is important to see where the dollar will stand. despite the fact we are seeing the 10 year yield rise past 3%, you see the spot index lose ground. really not moving in tandem with treasury yields as we have seen. when you are try to figure out where the dollar stands and how that will affect commodities, what do you look at? certainly over the past month or two it has been around the trade conflict. the has resulted in risk-averse moved to the u.s. dollar.
--prisingly we had not seen not take up the mantle as well. obviously economic data has been positive as well. that certainly has been supported. overall the risk-averse sort of train has played a big part. that will be in the shorter term i think the real driver of u.s. dollar as well. that is something we will focus on for commodity markets. it has been a significant headwind, the correlation between the u.s. dollar and commodities has been strong. prices arecommodity not going to recover until we do see the u.s. dollar weakening slightly. shery: thank you so much for your time. anz commodity strategist. you can get around of of the stories you need to get your day going.
haidi: i am haidi stroud-watts in sydney. shery: you are watching daybreak australia. let's get a quick check of the latest business flash headlines. crisis,y laundering lawmakers scribbling to prevent the credit rating from being dragged down. this led to the fall of the chief executive and several staff are under police investigation. they have admitted $230 billion flowed through the tiny estonian
unit between 2007 and 2013 and most of it should be treated as suspicious. hong kong airport set a record for flight movement. 2.5% tor volumes grew 6.8 million. passing to and from mainland china, japan and europe, recorded the most significant increases. rising 4%. nun took still the top spot, scooping up $46 million, but it faced a petition from a kid friendly fantasy film. house with the clock in its walls was number one in north america. --sident trump focused on this one took in $3 million despite small release. haidi: i have bad news.
a gender pay gap in australia is not getting much better. on the positive side it is getting more scrutiny in the headlines. to show companies how much they pay women and men. it would prohibit companies with more than 1000 employees -- it would give them the right to disclose how much they earn or not. theher report looked at stem industries and found young women are leaving because of the some instancesn was as much as 17 point $5,000 compared to what their male peers were getting pay art -- getting paid. it is not just about getting women in the forecast -- in the workforce but also getting an equal pay level. we have seen those moves in .apan as well with womenonmics
they tried to get more women in senior positions. it is lagging but shinzo abe has tried to raise awareness of women needed and the workforce. -- in the workforce. haidi: in australia we are getting more women in parliament which is something the liberal party has been coming under fire for with the most recent recognition -- resignation. very interesting, contentious topic. that is just about it for daybreak australia. trading in new zealand is getting underway. this is falling after the shares fell. a sea of red with indicated downside .3% into the start of trading in sydney. the kiwi and the aussie dollars are really the main i guess currencies being hurt by the latest turn in the trade story. shery: icg group, one of south korea's largest conglomerates, i