tv Bloomberg Markets Asia Bloomberg December 26, 2018 9:00pm-11:00pm EST
rishaad: what is the deal? yvonne: oil on the rebound. a white house economic advisers saying jerome powell's job is 100% safe. positioning, it seemed things were to oversold, hence the best date since 2009. the biggest daily point gain for the dow. oil, best rally since 2016. above $46, key for the market. take a look at japan, gains
north of 3%, green on the screen. the japanese yen, some strength today, just below 1.11. it could be dollar weakness, but should dollar index down .1%. down .1%. dollar chinese renminbi not doing a lot , although we got news that a u.s. team would be heading to beijing in early january. perhaps that could help when it comes to sentiment overall. take a look at what we saw when it came to the u.s. indices gaining 4.5% as we were on the brink of a bear market. 4.5% higher when it comes to most major indices, which rarely
happens. last time we saw all three bounceback was 2011, so some say the price action is unusual, perhaps some short covering given how bearish the market was leading to christmas. i want to mention chinese stocks are hired today. -- higher today. the shanghai composite seems to be finding support. we have dipped below that three times this year. the last one was on tober when we saw the -- was october when we saw regulators in the pboc trying to reassure the market. over the week there was speculation that there was state buying of large caps earlier this week and news they would replenish capital for chinese banks, the bank of china issuing
a perpetual bond. so for now that could be the line in the sand for beijing. let's get you caught up with the first word news. bloomberg has learned the u.s. and china will hold mid-level trade talks in early january. a u.s. delegation will travel to beijing in the week of january 7. the deputy u.s. trade representative and mid-level officials will lead the team. be the first face-to-face discussion since president trump and xi jinping agreed earlier this month. the partial government shutdown is heading for a sixth day with lawmakers that audits over the demand to fund a border wall. billion,dent wants $5 while democrats have proposed $1.3 billion for border security. nancy pelosi says the house will pass a bill to reopen the
government without money for a wall if this shutdown lasts past january 3. president trump with soldiers in iraq as his first visit to troops in a combat zone. he told reporters he has no plans to withdraw american troops from the country and may use it as a base for operations against adversaries. his visit comes as days after jim mattis was dismissed as defense secretary. three soldiers have been injured. and defense intercepted israeli missiles. a london-based groups of the orpons deal along to iran has a lot. it would be the first israeli strike on syria since president trump announced a pullout last week. governor kuroda says growing volatilitysks and are precisely the circumstances the call for sticking with
powerful and sustainable stimulus. in a speech in tokyo, he flagged of the trade war and a possible no-deal brexit as the cause of the uncertainty, but cautioned against too much pessimism. downside risks related to overseas economies have demanded further attention. what is required is to persistently pursue the current powerful monetary easing while managing the benefits and costs in a balanced manner. >> global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. i am kathleen hays. this is bloomberg. rising, then stocks biggest rally since 2009, the rally offering relief from the downturn. rishaad: how long will it last? let's ask our guest. that is the question.
>> how are you doing? rishaad: you are not answering the question. >> you saw the rebound in the u.s. lot, then comes back again. , my take isight now there are lots of policy risks ahead and on the table. what you can see in the u.s. and other commercial markets. from the hong kong side, trade what will happen month?ar, next we see lots of things happening next month. trade is january 7, it is a positive news they
are meeting. is that 90 days can solve all the problems? i don't think so. like cut off some of the trade deficit is ok. it can help. for others, intellectual property, i think we need more time, but they have opened a positive road. we need more time. this, the market will be quite responsive on these issues. another thing in january we have to be looking at it some of the chinese data coming out. , fourth quarter. you see the number is not quite good for the fourth quarter. it is affected by the trade for an slow down of economic activities.
yvonne: we saw that in the industrial profit for november. you think this is an inflection point for the market, this rebound overnight? not a time to buy? >> not a time to buy for the moment. now it goes down first, then we buy later. that is what i think. in the coming months, especially the first quarter, you can see lots of data out of china. to 2019, the in trade war's impact on the china data, we want to factor in that data. rishaad: are we going to be paying for the trade war next year?
the hard reality is people have been putting off investing. that will start showing through in the numbers in the latter part of next year. >> next year, which you should think about is how many policy risks are on the table before you enter the market. now, 25,000, 26,000 is cheap, maybe because the pe is lower than 10, but you want to buy at the cheaper tries and have to think of that -- price, you have to think about those risks behind it. now you have the holiday, and also there will be a meeting in march for chinese government, and all this but together, you have to think about if the market will go up and down, and then after the second quarter,
everything goes up, comes up. we have a lot of stimulus package in october this year. they may have a payoff in those months in the second quarter. quarter will come us may be inelping the first quarter, then the second half you can see the rebounds. we have to pay attention to all this and the policy risks behind it. yvonne: you are saying we can't find a bottom for the equity market and let's economy bottoms? >> it is actually a clear road for those policies. rishaad: i don't believe this. you are suggesting it is based on fundamentals? fundamentals, because i talked to some of the investors
recently. if there is no trade war, no policy risks behind china and the u.s., you are going back to 12 and 13 pe, that's around 33000 and the index. rishaad: their trading about nine times at the moment. >> why is it lower than 10 right now? because we cannot see clearly all the policy risks behind it. the outcome, what is that? yvonne: anyone buying in china, is it purely based on violation? valuations, if fundamental, valuations, plus one more thing. those policies you can see a really clear in the coming months or there are some positive things coming out about policy. china the last two months launches stimulus measures? the central government talks
about how to do it, very clearly, but the chinese stock market doesn't respond well. why? there's no fundamental data coming out telling us the market is going to the positive side, so when this happens, we need the data coming out to turn positive. second is all policy risks go down. those two things together would be helpful. i think we would see in the second half next year, first half is quiet because of the holidays and the data is quite things, and also behind it we don't know. so we should pay attention, but definitely for myself right now, ,ven at the end of this year 25,000, 26,000, but is at the lowest point? i don't think so. yvonne: benny, hold on.
rishaad: we are back. consumption is a key growth driver for investment next year and the new economy will enhance global competitiveness in china according to one analyst. tonne: let's bring in benny tell us about the consumption side. there has been this divergence between staples and discretionary.
how are you feeling it for 2019? still the high-growth on the high in consumption on the new economy. out andg back not to go retail to buy things. .hey go on the website to buy you see the numbers for retail sales online is quite good still , more than 20% growth every year. this will be helpful for the middle class people rising up right now. for that be helpful type of consumption to push the economy. for the last three years, you consolidation of the retail market in china. you take out the traditional one, but in something online. -- put something in online. , there will be a stimulus for the whole economy. you will see lots of things like
food, whatever, you use online consumption. tencent is too many things already. there are lots of things for companies to search for the high side. rishaad: give us names. think one it is a good idea because china on the geographic site is quite big. -- side is quite big. you can check out conditions online first. in can grab your medicines another place. that would be helpful. all those things will be helpful for you. it will be helpful for people
who want to read on the website online. yvonne: all of these ipos you mentioned, either very close to or not below their ipo price, so is it a matter of these companies need to grow into their valuations? valuations are too high and people have too much expectation. the new economy is china has one -- 1.3ion people, a big billion people, a big market. actually the ipo price is too high come up that the people have two much expectations for the future. the adjustments and corrections help us to choose the best one in the market. which one would be likely to be the winner? that would be helpful to be more rational to buy those stocks, -- thethan the one year highest price is the best, but now low price at the same time,
the future. rishaad: let's get to carmakers. discretionary,er i guess, but nothing to do with the new economy. there are some traditional stocks like the consumption stock still doing well in china. most important thing is the products inside. we have china in some of the tier one, tier two cities, loss of retail shops in the markets. cities thatin those the city is developing in the first stage. they have to go to the traditional one, like retail
shopping center to buy. those will be helpful for transitional retail stores that have existed for some time. another thing you see is traditional retail stocks in line with online. that means the stores in the shopping center and then you have online at the same time. international retail stores launching this approach. it let's the people understand what kind of products you sell, reading your ipad and then just go down to take a look first. that is quite helpful. yvonne: you are looking at some infrastructure stocks as well, some more of a policy bet. 2018 is a critical year for infrastructure stocks. before september, there are lots of projects approved already.
he never see the investment number go up or down. why? very simple. municipal bonds you cannot launch at that time. projectfrastructure needs lots of capital. relaxer september, they the municipal bonds launch and the government put some of the stimulus initiatives for this, actually push them to make investments. why this is good for infrastructure is fixed investments is a good way to secure economic growth first. second, the job market, people get jobs. rishaad: benny, that is all we have time for. we could talk for ages. in a little while, we will be talking about what the ipo
rishaad: taking a look at japanese shares rallying for a second day. climbing more than 3%, the biggest advance in how many years? yvonne: two years. the daimlerchrysler ceo thinks the worst is over as long as the economy a boy slipping into recession. rishaad: let's get to our japan economy reporter now. we have the second biggest rogue reach in japan warning against undue pessimism. i guess it is not good for its business, but give us an idea what it sees? said, it is a qualified statement. japan'sessentially
stock market will be fine as long as there is no global recession next year, 3.5% growth, so stocks will be fine, but he does mention several things. also, the japanese economic fundamentals seem solid, nothing flashing red signs. like his calls are justified given the nikkei and the topix of here to be reading themselves of -- getting rid of their christmas losses. yvonne: after we entered a bear market this week. japan and korea both face headwinds next year from the foreign and domestic side tell us about those. , bothm the foreign aside japan and south korea, the trade war between u.s. and china, we
don't know what will happen in january, whether that will take place were things implode further from here. if there is a resolution of trade tensions, given that japan and south korea are both export-driven countries, it will have an effect on both economies. domestically on south korea side, there is a slow down in job growth and south korea. on japan's side, jobs are growing, but there is a lack of workers in japan so that means constraints and production and japan's a service industry, where there is a massive lack of labor. howher thing next year is the sales tax in japan is going hikeay out, the sales tax will play out in october. if japan does not handle this well, it would mean the economy
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order now and save big. for a limited time, get $150 off - and free shipping too. just go to buyleesa.com today. you need this bed. yvonne: 9:29 p.m. in new york. let's get to first word headlines. expressingrump confidence in stephen mnuchin and the federal reserve, moving to calm markets. he called mnuchin talented and smart and that the fed will "get it pretty soon" after raising rates to fast. the fed chairman's job is safe. his job is not in jeopardy. the pboc advisor says
replenishing capital of chinese banks is key to boosting lending growth and supporting the economy and told a newspaper that allowing banks to issue perpetual bonds will encourage lending and lower risks. it plans to sell bonds worth as much as $5.8 billion in the first such issuance from a chinese lender. president trump's bid to get countries to contribute to the united nations is coming up short. washington's refusal to pay more than a quarter of the budget is creating a $220 million shortfall. the u.s. is still the top contributor, paying more than $10 billion a year. says he hasin witnessed the final test of a hypersonic warhead to can overcome existing and future defenses. russian officials said the vehicle called avant-garde can carry conventional and nuclear weapons and move past defenses. is one of several weapons
touted in the annual state of the nation speech. insider buying surged to an eight year high as the s&p 500 teetered on the brink of a bear market. corporate of executives acquiring shares of their own companies doubled in the past few months, signaling a vote of confidence in stocks. rally intaged a 10% each of the next two quarters. global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. the latest when it comes to your markets. following through with this u.s. equity rally. we are seeing the momentum and buying coming back in a big way the most green on the screen when it comes to equities. up bykkei still leading, 4%, the biggest move since november 10, 2016.
the ftse also up. china, csi 300, also rallying today. some speculation from traders that we got some buying from boost the market. shanghai composite around that level that has been a key support level. the hang seng up by 170 points. and the back of dollar weakness. rishaad: marginal weakness against majors ready flat. the yen is 1.11 at the moment. it is being supported. let's look at what else is out there. the hang seng off the highs of the day. it is time to talk ipos. in 2018, proceeds from the top 10 share offerings totaled $9.8 billion, up more than 130% from the previous will.
total proceeds and 2019 are expected to reach $26 billion. with our into all this guest. walk us through the court and the opportunism -- the report and the opportunism you feel for next year, even that we have had such declines in markets. process for the world this year is up 6.6%. basis, it iswide getting higher and higher. it all depends on the different , and for export-oriented countries, it made be the trade war expecting the company, but overall, we stillthe equity market is important for the fundraising of those companies for development. we think next year is bullish in terms of worldwide ipos. yvonne: you mentioned getting
that financing. it seems like financing has tightened. that forces companies to go to the public markets. ,s there a russian out to list or is it better to delay? a rush to list, or is a better to delay? >> a lot of companies are rushing out to get money from investors for the pocket becomes indeed. some of the people will not be willing to sell their stock at a loss, so that is why. rishaad: the question i was going to ask is, is the liquidity there to support such a rush of ipos? it is a mixed bag with these ipos. >> i think this is a scary situation. if everyone loses money, why not
wait until shares bottom, then by their stock, so why rush? sometimes those people, some people are more aggressive and may continue to buy the stock, but the symptom of having higher pressure on the ipo is coming out, and some of my clients need to cut the plans for the ipo size. some companies dropped from $8 billion to $3 billion, so this is a scary moment. yvonne: lower violations and fundraising targets. >> and the percentages the same. yvonne: what about cross-border ipos? do you see this trade war if it lingers next year that chinese firms are going to be elsewhere? as, thenot see that trade for started earlier this coming youhis year
can see around 34% of profits from the nyse being chinese companies. see theal, i do not trade war caused a lot of companies to hate the u.s. market, when they see the market is still attractive. kong, stellar year for ipos. it is reclaiming two crowns. >> number and also -- first of good,etting not that dropped significantly, and with a lot of pressure from the government to slow down the ipo approval. on the other side, the u.s. is doing the same as last year, but hong kong, as i mentioned, because of those ipos coming to
xiaomi, china tower, and that helps us a lot. in july and that we turned around and become much better than the first year. around 18% of ipos are coming in the second half of the year. yvonne: it has been something we have not seen in hong kong ever, mostly these banks that lists, so it seems there is a sea change. rishaad: even on christmas eve, two companies coming to market. yvonne: the biopharma stocks. attack about launching aboard in shanghai next year? how will that impact hong kong? >> if they do the tech companies , it will be competition for the hong kong market. we have the same pool of companies, deciding to go there or here. it is difficult to go to both.
is some pressure. they are looking for some companies that may not be big, quicken the path by using the registration system to predict their timing. the most important weapon of hong kong seems to become powerful without shanghai. i think that policy needs a lot of time, in particular to decide who should be the responsible person for approving it, and also the market itself has some pressure that we can see a-shares have some pressure, but there is still competition there. yvonne: how long do think this ipo window can stay open in hong kong if you're talking about volatility, the shanghai tech board, do we have six months, a year for companies to list? window will be just open and close open and close periodically, in particular if
the company is more realistic and evaluation, it is not difficult to find investors in hong kong. some of them have a lot of networks and some have invested in this unicorn. substantial have a increase in property management industry ipos on the horizon, moving away from the tech side, why? what does it tell us about the property market? >> first of all, property too hot.o hot -- for these companies, the valuation is good compared to the traditional property industry. sometimes you need a discount on the value of the portfolio before they can give you a premium. this is a good cash flow company with high-growth. if they develop more property projects, that's why they are
dominant. it is driving why so many companies want to come public. and they get a lot of money can support a management company to go public. yvonne: what excites you next year on the pipeline? are you looking at other sectors? >> i'm looking for pharmaceuticals, always my favorite, and some other companies like the fintech. although some of the big names may not go public soon, but we still believe there will be some that comeompanies out. even some of the high-tech companies may come out. yvonne: always great to have you. hong kong getting that number one spot again when it comes to ipos this year. coming up, india showing signs
rishaad: you are back with bloomberg markets and business flash headlines. s sayingbil and hes work will continue after venezuelan navy halted efforts. they called the venezuelan move aggressive, exporting 45% of the news deepwater discovery, with with having 25% and hess 30%. it has been on track for its were sent you performance since 1981. yvonne: generating improved possibility in cash flow, putting a raise in the
background for tesla. the company has turned the corner on model three production and demand look strong in 2019 and beyond. shareholders have endured swings exceeding 20% in either direction amid concern about elon musk's behavior and tweeting. rishaad: that gap closing a major new york store next month, a three-story location at 685 fifth avenue. the chief executive saying last month that gap may close hundreds of underperforming stores and the value of some flagship locations was being scrutinized. stocksrising with most on wednesday, but have lost a quarter of their value this year. showing signs of overcoming a cash crunch with an activity indicator measuring animal spirits moving two notches up in november. rishaad: let's get more on this as we get over to our southeast asia economy reporter. which indicator saw an uptick?
and one? -- why? >> thank you for having me. the one that stands out as new orders, new orders picked up the number. as a result, these indicators moved to the strongest reading. the most important change according to the liquidity indicator, you mentioned liquidity, and that indicator fell off the cliff in september. that is higher from the weak us rating in october, so that is the biggest change. to answer the question, why, go ahead. why?e: tell us what was of policy measures and reason behind this that stoked these improvements? not so much about policy measures as it is because of softer crude prices. softer crude prices help to
narrow the trade gap for india and should help stabilize the rupee, one of the worst performing currencies in asia. intervening toen stabilize the currency, and that was one of the reasons for the tide liquidity conditions. with the trade cap narrowing, -- gap narrowing, that situation is improving. rishaad: what does this mean for the overall indian economy? >> it is still not out of the woods yet, because consumer sentiment is still subdued and consumption accounts for 60% of gdp, so a survey showed consumer sentiment is still subdued. it should change going forward. we are approaching an election year. on a hostment/taxes of goods and services -- cut taxes on a host of goods and
services that should help consumption. we will keep attracting keep updating these animal spirits. yvonne: thank you. our south asia economy reporter joining us there. the openunting down to of the session in india. our bloomberg reporter is standing by in mumbai. what are you watching today? outt the top i'm watching for the non-banking financial companies and the housing finance companies, because the representative of some of these larger companies have met the prime minister, seeking a relaxation in terms of lending norms. we know some of these companies have been under pressure, especially after defaults from has led to, which some liquidity crunch in the markets. they are seeking some easing with respect to norms, and that should help the sector in
general as we move into january. rishaad: tell me about what is going on with aluminum and the industry as a whole for the market? what updates are there? >> so we have seen a lot of volatility in aluminum prices in india. at this time, production exceeds consumption, which there is a need to support prices. the ministry is considering hiking import duty in aluminum, and the move is in order to support aluminum prices, and we are expecting some amount of positive moves domestically. yvonne: thank you. joining us with the latest out of mumbai. we are lookingow when it comes to brought markets. companies, rusal
soaring on news the chairman is resigning on a deal with the u.s., part of this deal was part of the deal with the u.s. to lift sanctions against the company. investors liking that news. holdings, shares down close to 18%, the most in three years. that prompted the shares to be suspended from 9:30 onwards to ending on the release of an announcement in relation to a clarification of media reports. that is according to the company and a filing to the stock exchange. that stock halted for now am a but quite a plunge. positivity have across the board. biggest rally in the u.s. equities since 2009 offering a bit of relief.
there we go. particularly for the nikkei, off the highs for the day, but the .75%, evenring ahead though it is lunch at the moment. it is a wretched downturn for december. let's look elsewhere, kuala lumpur, jakarta, manila, manila to the upside, only just come at looking at this as we get a bit of optimism returning, but how long can it actually last? more on the markets in the next hour. yvonne: we will speak to one guest about how he sees 2019 shaping up. stay with us. this is bloomberg. ♪
♪ is time for our battle of the charts. chris and matt pitting their best charts against each other. may the best gentleman win. rishaad: you can run that function at the bottom your screen to view those charts. chris, let's go to you first. >> sure thing. askeden hear the question about who is going to fund u.s. deficits and borrowing. where is the demand going to
come for all the massive supply and growing supply of u.s. treasuries? the answer is to be found right here in this chart. of answer is reminiscent line bill murray had from the atballs."vie "meet all it just doesn't matter. it just doesn't matter. u.s. treasuryhe market has expanded by $3.5 trillion since early 2014, yet yields are where they were back then, and it hasn't been foreigners filing in. foreign shares of u.s. treasury holdings have declined by several percentage points over that time. in there isot put the federal reserve has also east on its holdings of treasuries -- eased on its holdings of treasuries.
so supply concerns for the u.s. treasury market does not matter. yvonne: just don't worry about it. rishaad: ok. matt? quite one to follow for you. you are on. >> it is tough, but i will bring it back to the equity market, if you will. the volatility and equities over december will keep going, as this chart shows. the implied rate for the january 2020 fed fund futures have 2.4%.d to at the start of the month, it was implying one hike. we have seen the fed cut their fedexcup their earnings forecast on a slowdown in trade, and that has implications for the global economy. that is despite projections for two hikes in 2019. that was revised down in december, but still up.
equity markets need to price in that wider gap. this bully as continues, get ready for while ride in 2019. rishaad: that is a good one. that one has predictive qualities. chris, with your chart, does it have any predictive qualities? it seems to me it doesn't matter , and that is the predictive quality of it. >> don't short treasuries. that is the message there. yvonne: yeah? rishaad: there you go. yvonne: yields continue to go down. .ishaad: i will give it to matt sorry, chris, my apologies. thank you so much, guys. i would have gone with chris. rishaad: you would say that now, wouldn't you? yvonne: it was a very good chart. it doesn't matter. to gtv ers had
to interact with the charts. you can browse those recent charts. if you want to save those charts for your future reference as well. rishaad: let's look at the trade position at the moment with asia-pacific on an upward trajectory. japan leading the charge, even though we have to wait half an hour for the lunch break the end. point 75%, and hang seng off the highs of the day. yvonne: most of the party in tokyo. southeast asian markets not exactly as fiber and given what we saw with the hang seng and the shanghai markets. pretty muted, but malaysian stocks up .6%. ♪ stocks up .6%. ♪
yvonne: we are entering the last hour of the morning session here in hong kong. it has been quite a day for the markets. an incredible move overnight for the u.s.. japan we've been talking about, the highlight here today, we will see how things play through thelunch break, and japanese yen, we are seeing quite a bit of strength here. it may not be sustainable, given negative correlation usually tends to stick when it comes to the japanese market. now that we have seen oil price surge the most in two years, there was hope that perhaps russia and opec plus will do a little bit more of what it takes to have oil jump back in a big way overnight.
you have to a power job 100% the question is, is it the all clear now to buy? it's always hindsight, isn't it? rishaad: indian futures, what are the indications, the session is about 45 minutes away. against the 104% year yield, pretty much unchanged. quite a lot of the balance, they've been shrugging off a political stalemate in congress. let's get the first word news with debra mao. >> the partial u.s. government
shutdown is heading for six day with the white house and lawmakers to let odds over president trump's demand to fund the boardwalk. the president wants $5 billion for the wall, while democrats point $3osed one billion for border security. nancy pelosi said the house will pass the bill to reopen the government without money for a last paste shutdown january 3. president trump met with u.s. shoulder -- u.s. soldiers in iraq. he told reporters he has no plans to withdraw american troops from the country and may use it as a base for regional operations against adversaries. syria's military says israel he extracts hit an ammunition depot near damascus, injuring three soldiers. but afenses intercepted london-based monitoring group belonging to coast
iran or has the law were struck. bollah were struck. growing overseas economic risk in recent market volatility are the kind of circumstances from stimulus. possible notet a of brexit. he cautioned against two much pessimism. recently, downside risk is mainly related to overseas economies that demand further attention. in this somewhat collocated situation, what is required is to persistently pursue the current powerful monetary easing while measuring both the benefits and the cost in a balance manner. china securities journal was told that allowing banks to
issue perpetual bonds will encourage lending and lower risk. bank of to sell perpetual bonds worth as much as $5.8 billion, said to be the first such issuance from chinese lender. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm debra mao. this is bloomberg. u.s. government delegation is set to travel to beijing early next month for trade talks with chinese officials. a sign that the world's two largest economies are making progress in cooling tension following the 90 day tariff truthagreed to between president trump and xi. rishaad: what can we see our expect from this meeting? >> i think we can definitely expect to see statements come out of the meeting, whether they are coherent with each other at how substantial they are
obviously remains to be seen. iq said, they're just it -- does seem to be progress coming out of beijing. there is a concerted effort to implement what was agreed to in argentina. the scene them resume buying that,oil and on top of governments are putting in place open up the economy and markets more. you mentioned some conciliatory announcements from china. the u.s. has not exactly come through with an all in branch, you could say. what is the sentiment look like for both sides right now? >> despite all that is happening on the chinese site, both are going into the talks with a high degree of uncertainty. there's always the risk that the u.s. will move the goalposts and demand more than china is willing to give them. the are negotiating with
unpredictable counterparty, so there's a chance things will change in expectations might be different on both sides. ,vonne: thank you, sharon beijing's bureau chief with the latest. jim mccafferty is our guest for the next hour, joining us here in hong kong. it's always great to have you. like it's aeem trade fight anymore, would you agree? , what do about the fed you think this headline actually means? jim: i think it is really dominated by personalities and the market now is less but theed -- unpredictability of where we are only means that 2019 is
five days away, and anything could happen between now and the beginning of next year. i think right now what we saw that from aows valuation point of view, u.s. stocks are not expensive on fundamentals and therefore investors are probably seeing some good value. rishaad: we talked about the trade war, do we see the material impact of it in 2019? if you look to the first calendar quarter of next year, i suspect that we downgrades coming through for a lot of companies where we are with china, hong kong, korea, etc. the market attaches a p/e ratio to future earnings growth which
is probably coming under pressure. that explains the recent weaknesses and equity markets. there comes a point when things get to a valuation benchmark. i guess the investor focus for next year will be on things like that rate the fact hikes we see nature will probably be less than three months ago. from that perspective, the cast was become more valuable. i suspect that rational investors will see through all this noise in the market probably stabilizes in the second quarter next year and we probably have positive outcomes for 2019. yvonne: can u.s. market still rally if we had this manufacturing data coming out -- somews manufacturing of the u.s. firms are starting to feel the bite of the trade war. the underlying story shows the economy is slowing down. >> i think we have known for some time that growth rates were
unsustainable longer-term. here we have an issue because trump is a policy maker, but so is the federal reserve. the federal reserve's has a stability ofdate, inflation. that takes priority over growth, and right now you have that tussle between the two different vehicles. the economy can carry on growing in perpetuity. from that perspective, the stock market is going to get more efficient at valuing companies at different phases of the cycle. rishaad: that's it, isn't it? how much is then baked in? is it really something already being factored in, or people aware of that, or are they fearing the worst? jim: i think it is being
factored in. i think the market is ahead of the fact that earnings that we see on all the different metrics , those forecasts are probably too high. therefore a lot of what we've seen in the last three or four months has been the market anticipating lower earnings coming through. this is manufactured by the trade war and by trump's policies. he likes when the stock market is strong. from a policy makers point of view, they will be thinking about things that don't to stimulate the economy or popular support amongst the electorate we have in the u.s., but support mechanisms for the stock market itself. jim mccafferty there with us from nomura.
president's criticism of jay powell in the fed policy, and the rate hike, which is been out there for a while. -- he made that tweet it.t powell not getting in fact, on christmas day, this is what he tweeted, not quite so harsh, they are raising interest rates too fast because they think the economy is so good. i think they will get it pretty soon, i really do. i mean the fact that the economy is doing so well that they raise and that is a form of safety in a way. maybe a little change of tone here. then kevin hassett, the chief economic advisor was taking questions from reporters today and what a global report asked him, we've seen these indications that powell's job is safe, here is what kevin hassett said in response to is trump not
going to fire him. job is 100%hairman not in jeopardy by this president. >> let's say that maybe donald trump is going to back down a little bit. another question is, this self inflicted damage, the president doesn't want the stock market to go almost into a bear market, but the concerns about the impact on the economy, will it cause the fed to pause in their rate hikes? , former president of the fed isk fed said waiting to see if the stock market downturns as well and curbs consumption. decline, markets financial conditions tighten. the fed was raising rates and they were tightening. look at a a quick chart from our bloomberg ivory.
it shows just what i said, the screen mounds or when the fed a lot ofpurple line, easing financial conditions are suddenly lying down. we got some tightening, but it could be what the fed wants to arguee, but it may not quite as strongly for the path as the president like to see or is some economists expect it could. downad: so we have to shut as well, this is one of the big factors hoping to push the market into that pre-christmas downturn, but everyone went positive and saw the biggest rally since 2009. i guess the jury is out on whether it continues to play out. jury is evenbe the out on how big a concern it really is to the stock market. even though it has entered into
six days and the president says he will not relent until he gets funding for his border wall, and he needs $5 billion. here's what he told reporters on his way to visit u.s. troops. whatever it takes, we are going to have a wall. we are going to have safety. here are some bottom lines, republican house leaders say there will not be anything on friday. the new congress will begin on january 3. in the time, democrats house will be the majority, and nancy pelosi should have the speaker of the health. they will find a way quickly to pass their version of what they like, to bill to look get out of the shut down and get things running again. of course donald trump is saying it is nancy pelosi who is not cooperating.
a lot of people are saying, how much leverage is the president going to have at this point? one commentator said the 2020 election begins now and they are that that this is his view. rishaad: let's get back to jim mccafferty. what do you make of the situation, it could have economic ramifications. we will probably some material impact of the trade war in the next two months. have financial conditions going off and economic lift and wti on the way down. in capital goods orders also falling. pmihe positive side, good and personal consumption holding up. is the fed getting it right? jim: the fed has a number of
objectives. is it damaging the economy ultimately? jim: it depends on the metrics and traditional rhetoric, on both objectives it is doing ok. from a fed point of view, the stock market is quite an important influence on consumption activity. so much of u.s. wealth is held in stocks through individual pension plans. i think the value of the stock market is something the central banks around the world will pay more attention to in 2019. here in asia we have the bank of japan, a very active investor in japanese stocks. the swiss central bank also invest in stocks. the fed right now cannot buy stocks, it is prohibited is constitution.
but think all of these things will be watched by policymakers next year. yvonne: you think the fed is this couldndent and be something systemic that would feed into the economy? jim: absolutely. companies will be concerned about how to make those decision. it deteriorating, it and stall those decisions it will impact jobs, construction, and consumption. we talked about animal spirits before. better to spend a billion dollars of with prices going up. yvonne: jim mccafferty will stay with us. you can also catch up with all our interviews by using our interactive function, tv .
yvonne: a quick check of the latest business flash headlines. morgan stanley agreed to pay $10 million on allegations of fraud monitoring. regulatory authority says for more than five years the banks programey-laundering fell to a properly monitor tens of billions of dollars in transactions. morgan stanley nether -- neither admitted nor denied the allegations. ridiculous in the week ending december 19 top $66 billion, the biggest since 2008, the biggest for the investment added 25ven as traders
billion dollars to extract -- exchange traded funds. the ici sing it shows some investors are seeing market volatility as a buying opportunity. it ae: amazon calling record-breaking holiday season. more items have been ordered worldwide than ever before. sales of amazon devices are up significantly this holiday season compared to last year and more than one billion items shipped for free with prime. our bloomberg intelligence analyst doing some crystal ball gazing before the year winds up. who they think will dominate for asia's tech giants in the year ahead. >> we think the outlook is going to be challenging, after many years of breakneck growth in the industry. it will be driven by, nation factors.
the first is macroeconomics. that will affect some of the sectors, advertising, for example. business is going to be very challenging. there are signs of weakening. >> tencent is still the biggest internet company in china and is well loved by all retail investors. it probably will have some challenges in 2019 as well. the regulatory stance on online games remains. >> we believe foreign investors will spend more time focusing on this sector. >> i think companies that are
better positioned for 2019 are -- is companies could be better positioned for 2019. let's see how the hong kong and china markets are doing for the moment. we are positive heading into the lunch break and shanghai. we are off the highs of the day. yvonne: you see the biggest move in japan in particular. wonder is this some kind of shortcoming rally, is it a technical rebound given how extremely oversold some of the markets were. not going ahead with
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>> on debra mao with the first word headlines. falling in november for the first time in almost three years. compared with the 3.6% rise in october. chinese manufacturers are under pressure without the growing at the slowest in a decade in november. president trump has expressed confidence in treasury secretary stephen mnuchin and the federal reserve following markets -- reports he discussed firing the federal reserve president. he called him townsend and smart and said the fed will get it soon.
kevin hassett also said trump would not fire fed chairman powell. 100%, the fed chairman's job is not in jeopardy. to getident trump's bid others to contribute to the united nations is coming up short. it's creating a $220 million shortfall. the u.s. is still the top contributor to the u.n., paying more than $10 billion a year. american colin o'grady has become the first person to travelers antarctica from coast-to-coast so low on unsupported and i and aided by wind. the 33-year-old pushed through a burst without sleep. he covered almost 5000 kilometers in 53 days, taking only one half-day to repair a ski. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more
than 120 countries. debra mao. this is bloomberg. rishaad: that's get to the markets, just getting some comments coming through from traders suggesting is the end of fear mongering after the stock surge. people suggesting that bargain hunters are back with a bang. yvonne: we saw that with the oil price rebound as well. it brings us back to a day ago before the christmas eve carnage , so we have not really recover that much overnight, but certainly we are seeing some oil stocks rallying with that jump in crude, up close to 3%. with the biggest advance in two years with u.s. stocks
jumping. andia signaling that opec its allies are willing to me to help manage the market. the search took the benchmark where it was -- above where it was before the selloff. rishaad: looking at the factors that were most important for trading overnight, i'm guessing it is about opec once again, or opec plus. >> it is opec and the market. the russian minister, energy minister said what they are looking at is potentially a meeting again before april, russia and opec, to discuss may be doing more action to cut production or two at a bottom to the oil price to help support the price. early in december they said they would cut by 1.2 and in barrels a day, but it did little to affect the price of oil and has been falling. oil has also been affected just
by the stock market. there has been a big drop in stock prices and an enormous rebound in stock prices in the united states. that is obviously playing into what is happening in the oil market as well. we saw a big job in three of the major indices in the united states. there is opec but also a lot of traders looking at what u.s. equities are doing as well. yvonne: you mentioned about the $1.2tations for opec, million may not cut it. is there magic number out there now that can sustain these price levels? >> that is what the market is really looking for. we know there is an oversupply that will emerge in 2019 because of the trade war with the united states and china as oil consuming countries see their
economy sort of shrink the amount of growth they expected previously. in terms of a magic number, bigger is always better when it comes to output cuts. four of the against major producers in the world, the opec producers in the world, increased production by 1.6 million barrels a day between may and october. just cutting by 1.2 barely get you down to that point, but i think the market expects a bigger cut from opec. seemagic number, we will where we go from here. rishaad: will this be sustainable, this positive market sentiment? a lot of folks in the market believe that the selloff over the last month maybe was a bit bigger than they thought. when you look at the indexes and where oil has gone, it has
dropped significantly, and there are some people in markets that may be under $50 was a bit much, although it is a psychological brent falling below $50 a barrel. maybe that selloff was a bit much and you could see it go up a bit more. maybe you could see oil in the $60 range in 2019. maybe we will be going back up there. i think there is expectation in the market that will continue rising but it depends on volatility in the stock market and what opec does going forward. ,vonne: thank you, steve joining us from singapore. yield seeing ad bit of a bump here. following what we see with the crude spike, we are now at 7.3% for the india 10 year yield. jim mccafferty is still with us.
we will bring you the question about this. jim: on a year basis it is down 19%. it's probably one of the better performers. the bounce we have seen in oil prices. rishaad: people want to go higher, but when it gets to a certain point, it starts hurting the global economy is that point where it brings it down. neutral oil price? over 100 and it is down to less than 50 in recent weeks. i think it has to be somewhere between those two extremes. rishaad: that's not really sticking your neck out, is it? jim: these countries, we need
oil imports and consumer goods, for example. korea and japan are big oil importers. traditionally, emerging market will benefit -- benefit from a declining oil price, but it's a halfway house in terms of what is right for the market. a key: is it going to be differentiator for next year? if go backk less, seven or eight years ago, the were veryin china material in terms of their portion of the index. that has changed. the stock market is less concerned about oil companies and more interested in manufacturing and consumption. and oil price drop
could be construed until about 10 years ago as effectively and interest rate cut. i think it is still important. be mindful that in a country like japan, it has no natural resources of its own and depends on oil to keep the come -- keep the country going. there are other parts of the stock market and the way consumers behave that means we are less reliant on oil than we were tenures ago. trade: first it was the and then it's the oil price that collapsed, and essentially everyone went into a spiral here. does that help released -- release the uncertainty at least? jim: we have kind of run out of things to blame. we could blame the central bank, the government, what it comes down to is confidence.
i think going back to what we discussed, analysts have yet to implement the downgrades that we expect we will see in 2019. once we get through the first quarter, earnings will be set and then they will become coming back to the market. notaad: gold this year has been shown as a haven asset. be mindful, most of the participants have a mandate to invest in equities. they don't have a choice. so much in fixed interest, so much in government bonds, and so much in equities. where in the equity market do you look for risk that tends to , for example, telcos.
that's where the money goes into until we have this uncertainty wavering. yvonne: you were talking about correlations with energy stocks versus energy prices. do you expect those correlations to get back intact for next year? from a could, but company specific point of view, aregs like stewardship being implement it in asia. first it was japan, then korea, then china. companies will try to differentiate for themselves. between shareholders come that is still a big factor. i see that coming through in 2019. rishaad: jim mccafferty there from nomura. cash of recovery from a crunch. animal spirits
yvonne: india showing signs of , up ining a cash crunch november from previous months. ,ishaad: what is it indicate and why? >> good morning from mumbai. this was compiled by bloomberg on a monthly basis. we look at the high-frequency indicators. they did not jump in the month of november from the previous month on the back of new orders and business activity.
business activity showed quite a substantial increase and financial conditions have shown improvement. clearly the worst of the shadow banking crisis seems to be behind us and bank loan disbursement also saw an increase. clearly there is some improvement on that front. on consumer sentiment and consumer demand, there seems to be a drag on the economy. what has changed exactly, the policy measures that came into place that show these improvements? front, theiquidity central bank has been very proactive, injecting liquidity into the money markets. we saw the central bank revving up its operations and have assured markets it will continue andlying liquidity
increased purchases to 500 billion rupees 40 center and is indicated an equivalent amount for january. on the government side, there were some tax cuts over the suchnd and basically more the infrastructure anditive things like cement parts. the banks had to face lending cuts. is making ant concerted effort with the central banks to push roads ahead of your elections next year. frome: thank you so much mumbai there. we've been talking about indian markets is opening up. was what iso mumbai
moving today. >> we are seeing strength in the , advancingty markets by little less than 1%. a lot of the strength is coming on the back of the banking sector which is also advancing in trade. a strategy note from morgan stanley was released yesterday. expecting to see some improvement as we move into the first quarter of 2019 and a lot of negative based on the volatility, it has been priced in and we will all keep an eye on the alliances, earnings and recovery in earnings. and rate decisions will be the most important factors to watch out for in that should have influence on indian equity markets. about the other
banks out there? of hitsd a whole host from nonbanking financial met with thet prime minister and what they are seeking is it easing of regulations and norms, , andially after the crisis because of that we have seen a little bit of an uptick in some thise larger names at point. rishaad: thank you. jim mccafferty from nomura is still with us. people have been caught with his before, but is it for real this time?
you talk about animal spirits, and everyone i've worked within the last 10 years -- theyesponsible for have always been bullish. if you are very critical about , i look at the return in u.s. dollar terms of for this year and look at competing multiples. on dollar terms, the market has not done that well because a currency has been weak this year. the market is all about what is going to happen tomorrow. the earnings growth forecast for indian companies are up over 20% next your. if the growth does come through, then the market does look attractive. it's not a very cheap market. pe for india still very
much at a violation premium against any kind of upside is still limited. you have mentioned before it is still quite insulated for some of the macro lens that we have seen. >> there are two or three factors at work. looking at the domestic equity market, we are seeing domestic institutions are now driving trading activity in that market. back in 2010 when i came to asia, the indian market was dominated by the institutions. from the perspective of the external economy, if you think about what is going on with the region, the trade war for example, india's quite insulated from that. a lot of the stocks are very localized in terms of domestic demand. it is all driven by domestic activity. rishaad: why is that, this
historic high valuation? >> i think much of it is to do with the fact that the market in terms of representation is not represented to the whole market capitalization. markets, a at indian the ownerss held by of businesses who have yet to realize their equity stake in the market. the representation in the indices is doubtful. yvonne: elections next year, but let me for the markets next year? >> for india, it is in the context of the region. the chance of some sort of fiscal ineptitude could rear its ugly head ahead of that as
people try to boost things up to get the numbers out. >> we have had that in the past. the country still has some momentum. one of your representatives put out this growth metric and in the context of the region, i it.k they will look at yvonne: jim mccafferty joining us. the latest allegations against carlos ghosn. ♪
former boss, carlos ghosn, who remains in jail. rishaad: let's get over to david who has been following this saga. dave, what does being out on bail allow greg kelly to do? >> the most important thing it will allow him to do is meet much more freely with lawyers and counsel to start forming a defense against these allegations. he has repeated that he is innocent and he intends to fight this, and now he will have a much better prospect for doing that. also we had some health issues. he will be seeking medical attention for those and spending time with his lawyers. interestingly, one of the conditions for bail was that he is prohibited from meeting with individuals from nissan itself to discuss these issues, so that does limit him somewhat in that aspect, but he will be able to meet with his lawyers who have
been looking into these allegations very closely, and they will begin to formulate their defense. yvonne: and carlos ghosn remains in jail, but there are some fresh reports of new allegations against him. while quest through what they are. actually, it leaked out from the prosecutors that they were investigating some payments to a saudi individual who had allegedly, at one point helped carlos ghosn out of some investment losses or long him some money to compensate for some investment losses, and the allegation is then that he tapped into nissan money to repay him in some form. that allegation has been repeated now this week from one of our rival news agencies, reuters. there has been a pattern here of these forts of allegations leaking from the company itself,
citing unnamed company sources in which this sort of thing is it is out and then subject to much speculation because all we really have are these anonymous sources, sometimes the initial investigation comes from the prosecutor, but the allegation itself that he actually did make such a payment is only from nissan sources, not from the prosecutors. a statement tuesday clarifying cross sharing, is it germane? has anything changed? >> according to the company, nothing has changed. this was a formality that is required of companies every year to restate their corporate governance rules. but it drew attention because there are some very intense corporate governance questions regarding nissan, certainly including its stake in renault.
they own 15% of renault, worth about $2.8 billion at this point. however, they don't have voting rights for renault. if you are a nissan shareholder, that is an immediate corporate governance question right there. are shareholders getting their value for it? it is never too soon that some of the specific changes that were made to their corporate governance rules could potentially affect the decision on what to do with that stake. on the other hand, there are many broader issues that involve that stake and the alliance between the companies that probably means that corporate governance will not be the primary issue. yvonne: dave, we believe that there. some key events and data we are watching, a slew of data coming out of vietnam later on this afternoon. that's around 3:00 p.m. hong kong time. spain retail sales
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>> i'm brad stone in san francisco, in for emily chang. this is "bloomberg technology." coming up in the next hour, who had the best holidays? apparently amazon. they are reporting a record-breaking season. plus, billions of apps were downloaded in 2018. we will discuss what is fueling growth in the mobile market. we look back at one of the biggest stories of the year. the role that social media and
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