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tv   Bloomberg Daybreak Australia  Bloomberg  October 8, 2018 6:00pm-7:00pm EDT

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>> welcome to daybreak australia. >> i'm at bloomberg's world headquarters in new york. >> we are counting down the asia major market opens. >> the stories we're covering n the next hour. investors hunted for bargains and tech fell on renewed tensions with china. the divisiont won't show -- the u.s. was accused of escalating
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tensions and meddling in china's affairs. alphabet found a security ghitch on google back in march but kept it quiet over concerns bout privacy failures. >> we'll start with a quick look at how markets closed in the u.s. session. the dow and s&p 500 clawing back some of the earlier losses with the dow gaining 0.2% while the s&p 500 ended slack. of course we have some bargain hunting as haidi mentioned. utility stocks and consumer shares down, investors piled on to those sectors. we also had no clear direction coming from the bond market given that we saw some respite we the bond markets which saw as the columbus day holiday nears in the u.s. tech did plunge amid heightened tensions between china and the u.s. the nasdaq falling 0.7 the
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lowest level since august 4. suffice it to say a very volatile few sessions the fear gauge gaining for a third consecutive session now finishing above that 15 level mark. let's see how all of this will translate in asia. >> that is not going to help with the asian stocks looking set to extend losses. today we have south korean markets closed for a holiday but japanese investors will be playing catchup after the long weekend. there are some earnings on the docket. in australia we'll get a check on business and consumer confidence and also watching minors after most opened the week with steep losses and now in wellington stocks are falling for a seventh consecutive session. the longest losing streak since
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2015. the yen edging back toward 113. >> thank you so much for that. let's get you to first alert news in new york. >> thanks, haidi, the trump administration is said to be concerned about the depreciating yen. that is with the treasury department debating whether to name china a currency manipulator. the yuan has fallen 9% in the last six months by speculation china as deliberately weakened it as trade tensions escalated. we're told the treasuries secretary led the white house ressure to confront beijing. oil fell to a one-week low in new york on signs that disruption caused by sanctions on iran may not be as bad as feared. futures declined almost 2% on monday after approaching a four-year high last week. however, iran takes a different view. the oil minister is warning that global markets face a severe shortage in the coming months and rising prices show
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supply is already tight. there was a software glitch found in google back in march that could have exposed data of about half a million users. "the wall street journal" says there was concern it might trigger a backlash from regulators already critical of facebook's privacy failures. shares closed 1% down after an earlier drop into their lowest internet price since july 5. north korea is being accused of trying to steal at least a billion dollars by hacking banks around the world over the last four years. cyber security firm fire eye says the group has infiltrated about 16 organizations in 11 countries including the u.s. it has already stolen more than $100 million. fire eye says the hackers managed to evade heavily defended servers at their targets. global news 24 hours a day on air and on twitter powered by more than 2700 journalists and
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analysts in more than 120 countries. this is bloomberg. >> thank you. taking a deeper dive into the u.s. market we saw stocks battle back from earlier losses. tech takes a hit and a big soar to a four-month high. no head winds coming from the bond markets, columbus day holidays. >> we will see the big focus on that as we open on tuesday. looked like bargain hunters went for utility shares, consumer shares beaten up. tech, however, really took a beating. let's go to the market snap shot. you'll see the dollar was higher against most peers. the bond market again unchanged as the market was closed. notice the semiconductor index, one of the areas, high momentum stocks that took hits and that is off the low of the session. the vix is soaring to a four-month high, really a focal point. let's go to the bloomberg. g.t.v. is where you find our library of stocks. this is called the vix super
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spike. is it in the making? it's a theory we could see really the vix take off from here as it has in several areas where we see this wedge of complacency, then a big spike, of bearish volatility. it happened each time and a lot of strategists say we're starting to see it set up here. it's a question of when. let's go take a look at some of the stocks that were really on the move. software stocks were under pressure. new analyst remarks about weakness in square and paypal, a lot of the mobile pay stocks under pressure. and conagra very interesting. there is a no doubt on how during the trade woes and trade tensions this's been an incomplete -- an increase with a lot of investors flocking to packaged food stocks. let's look at the fang trade which is also a trade heavily favored by the hedge funds. u.b.s. put out a note a lot of
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the smart money has been victims of the recent declines. notice these are one-week declines. s&p 500 taking a very bad hit last week. even so only down by about a percent. look at the size of the losses over the past week and you can see why hedge nunds these momentum stocks have really been -- why hedge funds in these momentum stocks have really been unwinding. that is part of the sell-off we're seeing they say. >> and yields back in the spotlight on tuesday as bond trading resumes after the columbus day holiday. two etf's betting against the bond market and tell us the bears continue to see this rout continuing. >> we definitely saw a rise in these. these trade very much like stocks but they are tied to the bond market and they work inversely so they rise with yields. let's take a look at one of two, t.b.f. and t.b.t. thefment work in different ways but are viewed as bets against the bond market. as we've seen, the yields on
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the 10-year, seven-year, and 30-year also rise. these things have really been on a tear. >> we are seeing oil. >> very quickly, let me get to you, su. oil under pressure but not so much for natural gas. what is the story here? >> first to natural gas. a big spike. in fact, 18% year to date rise. we're almost at a bull market for natural gas because of the forecast for very chilly weather particularly in the midwest. let's go right to the nat gas chart if we can. big spike there. these are the energy futures. you can see oil and brent taking a bit of a breather but natural gas really taking off. it was up better than 4% the regular session. you're seeing after hours trading there. we go to the intraday or multi day chart. there you see the last three months has really taken a gain. oil, different story. a lot of it as we heard in first word has to do with the fact there is much of a less concern about the iranian oil being taken off the market so
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we're seeing prices a bit under pressure. >> obviously we also saw the move in the yen as well on haven demand. this obviously as we continue to see the u.s.-china tensions continue to escalate. the secretary of state visited beijing doing very little to quell u.s.-china tensions and met the prime minister who accused washington of escalating the trade spat, interfering with taiwan affairs, and meddling in china's internal affairs as ell. >> we have great concerns. i look forward to the opportunity to address each of those today. this is an incredibly important elationship. >> tom, it looks like it could cut the tension with a knife in that room. >> yeah. look, for chinese diplomacy this was a testy exchange
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between the foreign minister whose famous for his ruffled brow and his scowl and mike pompeo. a whole host of issues. mike pompeo was here in beijing as part of the asia visit. this asia talk to try and shore up and move toward a disarmament agreement with north korea and of course ensure the pressure is maintained on that country until and when and if it denuclearizes. of course he started off in pyongyang and then went to seoul to debrief his south korean counterparts and then moved over to beijing. he had potentially been expecting to meet with president xi ping. that did not happen seen as something of a snub and then of course this exchange with the foreign minister. there is a whole host of issues beyond the north korea issue that beijing is concerned about. it is not just trade. it is also taiwan and what beijing sees as moves by washington to increase its diplomatic clout with that island as beijing sees it and also the south china sea where the u.s. military has been stepping up its pressure on
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chinese claims of south china sea and some of the island building there as well as issues around human rights as well. there are all these issues beijing is concerned about. it sees some in the circles of power here are concerned that washington is in fact trying to curtail china on a broad number of issues. of course this could lead to a lack of cooperation on the north korea issue, beijing central to ensuring there is pressure maintained on king jong un's regime, both the north koreans and u.s. say for the moment they are cooperating on this issue. >> but it wasn't really a great time to have this meeting was it? i mean, it was the day when china stocks became the world's worst performers. we're talking about financial stability, the economic slowdown in china. it doesn't really give the chinese a lot of leverage when it comes to out lasting the u.s. on this trade war. >> certainly if you look at the markets and you look at the trade data the economic data, then it looks like the u.s. is
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in the ascend ensy for the moment at least. as you say the csi 300 closing down about 4.3% yesterday. you had foreign investors using that hong kong link withdrawing about $1.4 billion or selling off about $1.4 billion worth of stocks. the foreign investors have been the ones holding the can because the domestic investors have long since fled the domestic equities. the national team did not come into play. traders here saying that was a concern and fed into some of the sell-off as well yesterday. and then you've got the pressure on the u.n. down about 0.78%. there are questions now on whether beijing will defend or the pboc will defend the 6.9 line so the yuan again squarely in focus. it seems for the moment if thought trump's perspective is potentially looking at china as being in a vulnerable position right now given what we're seeing in equities and with the currency. >> thank you. we'll have more on the chinese economy and also the yuan later.
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we'll have the outloop from c.b.a. as the currency nears an all-time low. plus they say it's not worried about china and the trade war has had no impact on its business whatsoever. we'll interview the c.e.o. coming along later. this is bloomberg. ♪
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>> we are counting down to the start of trading in cid any. this is what the future is showing. not much. the sun is out in sydney after a few days of rain and drizzle but a down side of about 0.3% when trading begins this morning. of course we had the u.s. stocks managing to claw back from steeper declines but tech still seeing the bulk of the losses. >> we weren't expecting it to revert into positive. but we saw big losses in the morning session. the lowest levels since august. but yet the dow and s&p 500 did
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manage to end in the green. i am shery ahn in new york. >> you're watching daybreak australia. china's currency tumbled the most in two months on monday and the trump administration is said to be concerned about the depreciation. the treasury department debating whether or not to name china as a currency manipulator once again. joining us now is the commonwealth bank of australia's senior strategist. great to have you. i want to start off looking at how we started off the week obviously china coming back from holidays. we knew there would be catchup both in the currency markets as well as equities but take a look at this chart in the gtv library. we have the weakest showing since may, 2017 and a lot of this tends to reflect what dollar strength is doing. but have we entered a new kind of era for yuan depreciation where some of the more subtle market measures aren't going to sport currency anymore? >> haidi, i think it is important to understand the
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chinese policy makers haven't at least judging from their policy action acted to try and reverse the down trend or accelerate the down trend in the chinese currency. i've been trying to do -- they've been trying to do the opposite and curtail or at least limit the down side in the chinese currency by either placing it a little lower than the previous day. this is what they were doing prior to the week-long holiday. but also if you look at the china currency reserve they've been relatively stable. certainly not consistent with chinese policy makers attempting to deliberately weaken the chinese currency. >> they have been -- although, you know, president trump serble has. the currency weakness is only helpful in small doses. it is getting to the point where it is becoming problematic and you'll see more aggressive intervention. >> we're not seeing aggressive intervention from china. certainly a weaker currency is probably welcome for china, for
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china considering that their economy is slowing. but you also have these other big factors that are driving chinese currency lower namely a lower current account deficit, surplus, surplus and strength now to just 0.4 or 0.3% of g.d.p. that is a significant decline from the surplus of almost 2% a couple years ago. at the same time you have this, the dollar strength as well that is weakening it not just simply largely against the u.s. dollar. this theme of broad u.s. dollar strength is an ongoing issue especially with these ongoing trade tensions and the pickup in financial market volatility in emerging markets. >> we are now seeing the treasury saying that the u.s. is concerned about china's currency depreciation. of course they always say they're concerned. as haidi just mentioned president trump also talking about china manipulating its currency and, yet, when it
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comes to their semiannual report they never label them a currency manipulator. are you by any chance positioning against the potential change now that we are going to see the report again this sunday, october 14? >> well, the data doesn't suggest that the -- that china is about to be labeled a currency manipulator because they don't meet the three criteria to be labeled as such. the only criteria they meet is essentially this big trade deficit with the u.s. but otherwise they have a small current account surplus certainly not as big as what is implied in the treasury, or what is expected to be labeled a currency manipulator. and also they haven't been intervening in the direction, in either direction whether it's to buy or to sell, to try and deliberately guide the currency either lower or higher, which is again one of the other criteria for the treasury to consider a country a currency manipulator.
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so i don't think the treasury will label china a currency manipulator next week. >> let's take a look directly at the dollar. we are seeing positioning according to this gtv chart for our bloomberg subscribers dollar bulls have trimmed longs. we are now seeing that fall right there on the green bars of course the strength of the dollar right there. we saw a moderate u.s. wage growth sort of putting a lid on dollar strength. what is going to happen with the economic slowdown the i.m.f. is expected to down grade global growth forecasts. >> that's right. so the i.m.f. in a couple hours expected to lower to cut their global economic growth outlook. that tends to be fairly supportive of the dollar. the dollar tends to do well when global economic activity slows down because it tends to out perform mostly against the commodity sensitive currencies. so this could potentially be another supportive factor of the dollar but the big, underlying support for the dollar again remains this theme of relative monetary policy
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especially between the fed and other major central banks that continue to support this strength in the dollar. so if we do see faster inflation later this week especially on the core c.p.i. inflation front this could potentially lead to a bit of an upward revision to rate expectations and favor of a stronger u.s. dollar. >> the one pairing with divergence trade tends to break down is dollar/yen. we saw it overnight. if we continue to get a lack of a circuit breaker when it comes to trade tensions and now geo political tensions, you know, the benign weakness for the yen to be over? >> you what are mentioning is absolutely right. the yen is ultimately the safe haven currency. if things really start to get ugly on the geo political front --. >> no one is buying gold. >> that's right. and the yen, because of its large current account surplus, net foreign asset position, the yen tends to benefit when you
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have this period of high risk and aversion of pickup and financial market stress whether -- also from a geo political perspective. the yen will continue to do well in this environment. now once we reach a period of calm the relative monetary policy divergents between the bank of japan and the fed will reavert themselves and con tony: weigh on the japanese currency. >> the dollar falling to the lowest over two and a half years. is there further weakness particularly if we continue to see weakness in the yuan? >> i think certainly if we start to continue to see some dollar strength between now and year end, there is potentially scope for the dollar to under shoot. but we need to see -- we're still constructive on the australian dollar and expect it to trade closer to 72 cents by year end largely because we are still of the view the r.b.a. will raise rates in november next year. that is not fully discounted by
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the markets. we're still relatively constructive on the global growth outlook though the i.m.f. will probably down grade global economic activity for 2019 and 2020. the global growth outlook is still constructive because monetary policy settings are loose and fiscal policy settings are about to turn more stimulative. this is supportive of australia's terms of trade and finally australia has a pretty positive balance of payments backdrop. they have a small current account surplus of 2.9% of g.d.p. which is entirely financed and more than financed by these long-term net stable foreign direct investment flows to australia. this is a sign that underlying demand for australia's currency is relatively robust and supportive of the australian dollar in our view. >> thank you so much for your time. commonwealth bank of australia, senior strategist. of course you can get the story you need to know to get your day going in today's edition of daybreak, bloomberg subscribers
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go to db go on your terminals. also available on mobile in the bloomberg anywhere app. you can also customize your setting so you only get the news on industries and assets that you care about. this is bloomberg. ♪
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shery: you're watching daybreak australia. let's get a quick check of the business headlines. volkswagen is said to be close to hiring advisers for an ipo of its heavy truck division. say citigroup, deutsche bank, goldman saks, and jpmorgan may be named global coordinators for the offering. bloomberg intelligence says the truck business has a value of more than $33 billion. the recently rebranded unit would use the funds to challenge market leaders daimler and volvo. haidi: google has decided not to compete with the pentagon's cloud computing contract saying it may conflict with its
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corporate values. the project involves moving huge amounts of defense department data to a commercially operated cloud system. the contract is valued at up to $10 billion and bids are due on friday. earlier this year google declined to renew a pentagon deal on artificial intelligence. >> jaguar land rover is planning to close its u.k. plant for two weeks after china triggered a sales slump and the company says it will align supply to reflect changing global demand. sales in china plummeted 46% last month leaving the total year to date orders down 4%. customers awaiting cars won't be affected and workers will still get paid during the shutdown. >> coming up next on "daybreak australia" more worries for google after admitting it hit a privacy floor in its plus social network for more than six months. details just ahead thfment is bloomberg. ♪ ♪
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>> it is 9:30 a.m. in sydney where markets open in 30 minutes, futures indicating a little down side when we get into trading proper. asian stocks on track for their seventh decline in as many days as we continue to get the trade tension head winds, a sell-off continuing in the u.s. in the tech sector as well. shery: i'm shery ahn in new york. you're watching bloomberg daybreak australia. >> already strained u.s.-china relations have taken a turn for the worst. secretary of state mike pompeo cited fundamental disagreements during talks with the foreign minister in beijing. he was this to brief china on
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his short trip to north korea but the minister accused washington of interfering and meddling in china's internal affairs. beijing has confirmed the former interpol president is under investigation for bribery and other violations. the announcement comes more than a week after he was detained on arrival from china to france. the president xi's anticorruption drive has swept up more than 1.5 million officials over the last six years. meng was one of the key figures tasked with tracking down suspects. festival season has brought some welcome relief for the world's second largest gold market. imports into india are said to have more than doubled for a second straight month in september. sources close to the data say inbound shipments for almost 94 metric tons up from 43 1/2 tons in the same month yesterday. imports also doubled in august year on year to 92 tons.
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and new york governor andrew cuomo says a stretch limo involved in a crash that killed 20 people had failed a state inspection and should not have been on the road. he says the car was checked by the transportation department last month and didn't pass. the governor also says the drafere didn't have the appropriate -- driver didn't have the appropriate license for the vehicle and the limo had been rebuilt in a way that violated federal law. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> jessica, thank you. of course asia markets took a hit for a sixth consecutive session just continuing to fall. chinese markets were battered. let's see how everything that's happened here in the u.s. with stock markets ending mixed are going to affect the markets here. >> shery, after six weeks we
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cob staring down a seventh straight day of declines for asian stocks and china will remain the focal point of attention after the slump we saw on monday especially as we are seeing signs that china and the u.s. are heading toward a confrontation. when you take a look at what is happening when it comes to sectors that overnight tech slump is not boding well for the region and the i.t. heavy kospi will be sitting this one out with the markets on holiday but the japanese investors will be playing catchup after the long weekend on the data docket for them current account balance due out at about 7:50 a.m. hong kong time. when it comes to what is happening in australia as we count down to the open of markets in sydney in about a half hour we have some stocks in the spotlight. that is c.b.a. on the radar as the bank says it is taking further action to improve its wealth, business. we're also keeping an eye on ramsey health care after its french subsidiary raised the offer by 20% for a swedish health care services provider. rio tinto is brushing off the
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drama in the aluminum market as supply concerns world price,000 year. rio say they have enough of the aluminum ingredients. haidi, shery? >> thank you so much for that, sophia, in kuala lumpur for us today. let's get more on what we should be watching as trading gets under way in asia. bloomberg's cross asset reporter is with us. japan coming back online after presumably exercising and doing their health activities yesterday and treasuries resuming after columbus day. what is asia bracing for? >> i think asia is bracing for a lot of uncertainty. japan is certainly coming back to a lot of uncertainty this week. you had the china reserve requirement cut yesterday that was not very good for the yuan. it plunged to its lowest since march last year and didn't help stocks as well. there was a heavy sell-off there. and of course wuven the main things is what treasury yields are going to do. the yield closed on friday, the 10-year u.s. treasury yield
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just above 3.2%. and we've got a chart that shows increased volatility in the bond market. and not only that, you high school have increased volatility in -- you also have increased volatility in the equities market with the vix trading around its highest since july. plus you have all this stuff coming out of europe with italy, you know, bond yields there soaring again. so a lot for investors to digest as this week progresses as japan returns. >> we've seen investors foreign and domestic dumping chinese stocks as fast as their legs will carry them. we talk about the trade story but what is really the confluence of factors that are scaring them away? >> that's right. it was the worst october start for chinese stocks in a decade after that week-long holiday. it is the tensions between china and the u.s. as well as a lot weaker economic data. for example 1.4 billion of shares through exchange links
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with hong kong on monday and that was just short of a record in february. you know, the stocks that were most hit were the large caps. these are stocks that almost doubled in value last year. so the trade tensions, you know, that we've seen as well as concerns about the chinese economy with what's going on with the u.s., that's what was behind that. we'll see how that pans out today. >> even that couldn't help sentiment yesterday. thank you so much. don't forget you can check out our gtv library for some of the charts referred to just there on gtv go on the bloomberg terminal. shery: thanks, haidi. here in the u.s. after one of the most contentious confirmation battles in history supreme court justice brett kavanaugh is already set to start hearing his first cases. president trump now says that sexual assault claims against kavanaugh were fabricated and a hoax set up by the democrats.
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our washington reporter is joining us now for the latest on this. we had heard senate majority leader mitch mcconnell saying that this whole drama is actually helping boost support for the gop, that the voters are on fire. what are we seeing? >> well, that's right. both parties are currently trying to make the case that this contentious and very dramatic confirmation fight is actually motivating their voters. as you said, we saw senate majority leader mitch mcconnell saying he is already seeing evidence of this and today house speaker paul ryan said that his base is absolutely animated. democrats are making a similar argument saying voters and especially this demographic of white, college educated suburban women are seeing this confirmation fight and being turned off and in return being driven to the polls. for democrats that is an important demographic they need to capture some of the key states, swing districts, to actually take back the house. on the other hand mcconnell may not be wrong. it is a different dynamic in
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the senate where democrats face a historically bad map and several of these senators had to take tough votes on kavanaugh and are running into tates that trump easily won in 2016. so could be a different dynamic and both parties may be correct this is energizing their base. >> of course, give us a picture of what we're headed toward in the u.s. midterms of course about a month to go. we know the consensus was that potentially the democrats could take over the house. not so much when it comes to the senate. what is the latest? >> they're stale month away and anything can happen in american politics especially electoral politics nowadays. the democrats need a net gain of 23 house seats to take back the house. it's potentially very do-able especially if their voters are energized to turn out in several of these key swing districts. on the senate side, it is definitely a harder map. 12 of the 13 competitive races are fought in states trump won
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and while democrats have opened up safe leads in defending some of those seats there is no doubt there are certainly threatened if not imperiled democrats running even if they do stand to pick up a seat in say nevada. harder math in the senate, possible, much harder. in the house it looks like they could be poise today get across the finish line there. >> greg, president trump met with his deputy attorney general rosenstein on monday. he was reportedly in danger of being fired a couple weeks ago. did anything come out of that meeting? greg: that is right. president trump met with rod rosenstein today. a white house spokesman said it was a 45-minute meeting in which they talked about border security, immigration, and general d.o.j. business. now, president trump earlier said that he had no plans to fire rosenstein but he emerged from the meeting calling it great. now it is important to remember rosenstein oversees the russia probe and trump has long criticized his attorney general jeff sessions for recusing
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himself from that but he told bloomberg news sessions is safe until november. maybe that is the same timeline for rosenstein. either way trump said they get along. >> a great deal of uncertainty and job security there it seems. greg, thank you so much for that. greg sullivan our washington reporter. as we mentioned earlier, rio tinto is one company not too concerned about the recent wild price swings when it comes to aluminum, the raw material used to make aluminum of course. its c.e.o. spoke exclusively to bloomberg television and said the company has enough to be balanced globally. we also asked him about his deal making plans particularly given the competition from china. >> we are still pushing. we've got an extension program in the u.s. and we have plenty of options and moving beyond that we're spending $200 million every year on exploration. do we need to do m & a in the context? no.
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however, we are very patient. >> i got to point out a chart that hillary just threw together for us, j.s. t shows net longs in copper. i think the market is looking -- i mean, this aspect more of the demand side than the supply side. we were very long, our hedge funds were very long throughout 2017 the beginning of this year. they dropped down to net shorts for a bit but now they've turned back around to net longs. i think they were concerned, hedge funds were, about the chinese economy and the trade war. and that, the effect of that on the demand side for copper. how do you feel about the trade war and the chinese economy right now considering how important that is for dr. copper as we always referred to it? >> that is a very good question. , the w, as far as china mining industry is very important. china accounts for more than 50% of all the trades we are doing now.
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am i concerned by the chinese economy at this point? the answer is absolutely no. we've got entry points into china. we sell iron other, aluminum, copper, and yes the chinese economy is slowing down. we know that. at the same time it is clear that the chinese government has decided to put more stimulus into the system especially in the context of the provincial level. today i look at the infrastructure line, are we concerned about china at this point? absolutely not. this has been no impact whatsoever on our business. ou saw, including the, between china and the u.s. and nafta --. >> no impact. i heard the same from the c.e.o. saying the same. no impact from the trade wars. i mean, what worries the boss of a big mining business at the start of this week? are this worries?
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>> i've got lots of worries every day. you know, we just need to make sure we improve every day. that we push our productivity agenda to the next level. if i step back --. >> what is the big threat? is it the global trade war? >> the answer is no. i think the real threat for us is really to make sure we are very resilient. we acknowledge uncertainty in the market place and just make shurge that our 40,000 people are working hard to build a resilient business which is about cost position, having the right product, the right relationship with our customers, and last but not least a strong balance sheet. >> rio tinto c.e.o. speaking exclusively to bloomberg. up next netflix further blurs the line between itself and the traditional hollywood studio. why the streaming giant is buying its own production facility. this is bloomberg.
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>> you're watching daybreak australia. >> as we mentioned earlier tech stocks were the biggest decliners in the u.s. monday session. the fangs all fell with facebook closing at its lowest in six months. the social media company unveiled a new video conferencing device called portal which is raising new concerns about consumer privacy. so this product coming at a very interesting time for facebook. >> interesting i think is one word to say. some other people might be saying inappropriate especially because of what's been happening with came bridge analytica earlier this year. our own consumer tech reporter was saying that maybe they should have waited until 2019 for all of this concern. some would say fear to blow over in terms of privacy but what you're seeing on the screen right now is what portal
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actually looks like. it is actually two form factors. this is one of them. it is facebook's first smart device and it's for video conferencing or video chatting for up to six people at a time. you can't do anything with phones right now but it does work as you might expect with facebook messenger. one interesting thing is you can say, hey portal in order to start a video chat. it actually works with alexa as well because facebook doesn't have its own proprietary system so you can also say hey alexa in order to do things more complicated for example searching the weather. anything that doesn't have to do with video chatting there. of course the main issue here s the privacy aspect and earlier the portal vice president was on bloomberg technology and actually spoke to this specifically with our own emily chang. >> privacy is parra mount and very important. the fact that we have to build the hardware and the software
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to really change the way people communicate allowed us actually to put privacy on every layer of the stock. >> now bloomberg news, our own reporting actually had a line that said that facebook is trying to make this as uncreepy as possible, haidi, and, you know, a lot of folks out there twitterssphere are saying they probably wouldn't buy this because of all the privacy issues reported here over the past year. haidi: maybe facebook isn't the only tech giant suffering from the trust deficit. we're talking about google. they apparently found a security glitch back in march but only told everyone about it on monday. we saw the reaction didn't we? >> that's right. alphabet shares fell to the lowest in three months. critics are saying this is particularly galling because they found out about the security flaw back in march. this was after a january probe into whether their systems could be compromised and they
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actually found this and decided not to say anything and only now are we hearing this. you can see on your screen there a blog post where they talked about this. this is being called a software glitch. about 500,000 users' personal data has been affected including names, e-mails, as well as ages and occupations. but an internal committee decided that they didn't need to disclose this because no bad actors were found to have used any of this information here. google itself came out from that blog post. saying that we cannot confirm which users were impacted by this bug but they did do a detailed analysis and did patch this up actually immediately. one noteworthy thing is google plus is now going to be shut down for consumers. not the business side but the consumer side over the next 10 months. the next step here is perhaps maybe an f.t.c. investigation. with that said, google itself
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is saying, well, even though 500,000 people were affected, you might also want to point out that not many people were actually really using it. >> thank you so much for that. we're staying with tech and netflix is in final talks to buy its first production studio. the new mexico facility used to make the likes of the avengers. netflix plans to create a thousand jobs and spend a billion dollars on production over the next 10 years. you know, netflix with all of its content creation ambitions was basically a production studio without its own studio and it is looking to change that. >> yeah. this is a small but very symbolic step. if you think of the biggest studios in hollywood, disney, warner brothers, universal, fox, they all have these lots that have been their home for decades now. netflix has leased a pretty large facility in downtown hollywood but it is two primary buildings, these large towers more like office facilities not production studios.
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they do have a lease on a sound stage in hollywood. this is the first production facility netflix owns itself. which is a sign of just how much they're looking to make. i think if you were to ask the company one of the reasons that they need to own rather than just lease is so that they can be certain that they have access to this facility and be able to produce shows in new mexico which is very popular production right now. >> why new mexico? what goodies are they getting? >> tax incentives. as part of this announcement new mexico and the city of albuquerque both said they were going to give netflix some money about $14.5 million and new mexico already has fairly generous tax incentives to encourage different companies to produce in the state. netflix lrs making its show "godless" which just won some awards at the emmys in the state and will now use this facility to shoot some future shows like this science fiction show "chambers." >> it kind of creates i guess
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furthering this crisis for traditional film and tv production, right, as this idea of what netflix is gets ever more blurred. >> yeah. you have studios on the one hand leasing or, excuse me, licensing and selling shows to netflix but then they also have netflix trying to take their talent at the same time. so tbs, warner brothers, all these studios sell shows, make shows that netflix brands originals but netflix has also been on a spree over the past 12 to 18 months trying to sign some of the top producers in the tv business to make shows just for them. that is really the key to, and the next step of netflix becoming a studio is they need the talent to make the shows and they kneeled the space to shoot them. and they have taken a lot of steps toward that, in that direction over the past few months. >> so netflix missed on their second quarter subscriber target. they had a weak third quarter guidance. what are we expecting for the fourth quarter? >> well, the third quarter is
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what is coming up so we'll see how they do. they report in just a couple weeks. i believe they report on october 17. it's the fourth quarter that is typically netflix' biggest. the second and third are the lightest there in the middle of the year. the fourth quarter is when you have people at home for the holidays you just, you know, people getting subscriptions for christmas and so on and everybody is going to be looking to see how netflix is faring overseas. their growth in the u.s. has slowed down for many years. they still add a couple million people a year but they are looking to latin america, asia, and beyond for the next hundred million subscribers and it will be really telling whether they have a good third quarter or not because if they missed two quart inners a row people are going to be very nervous for them. >> thank you so much for that. with the latest on netflix. and of course if you missed ount any of the charts we showed you throughout the programming, gtv go is your function. you can browse through the charts.
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you can also save them for future reference. this is bloomberg. ♪ ♪
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>> welcome back. i'm shery ahn in new york. haidi: air watching daybreak australia. a quick check of the latest business clash headlines. a crucial deal to save the super jumbo is said to have stalled in a disagreement about engines. the 36 planes worth $16 billion hit a snag as the airline negotiates with the engine maker rolls royce on price and fuel efficiency. the parties have already missed one deadline which may delay the first deliveries in 2020 and could threaten the deal outright. >> tesla's troubles saw the stock fall for a fifth straight session dropping to the lowest level in more than 18 months. investors continue to pummel the company after an sec investigation. a subsequent elon musk tweet storm and unflattering
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comparison to lehman brothers. shares turned around in late trading but tesla has lost $10 billion of market cap in a week. >> in the meantime a chinese tesla wanna-be has hit the brakes as it battles investors over funding. production is halted in california while there is a ruling on two filings. there is an allegation that after an initial $800 million investment it failed to inject additional funds. that is almost it for daybreak australia this morning. trading in new zealand is under way. just a few minutes from the staggered open here in sydney. here is a quick update on the markets. a pretty sluggish open across asia because we had the huge plunge. chinese stocks keenly watched. aussie dollar trading at 70.76 after following to the two and a half-year low. we'll have jpmorgan's take on
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the chinese economy and the yuan. the senior ekist will be joining us in about 10 minutes. daybreak asia is next. ♪ ♪
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heidi: i am haidi in sydney. australian markets have just opened for tray. shery: i am shery anh. >> welcome to daybreak asia. shery: asian futures are lower following a mixed day on wall street. the rand continuing to stride. -- continuing to slide. the fangs fell, facebook clo


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