tv Bloomberg Markets Asia Bloomberg July 16, 2019 10:00pm-11:01pm EDT
welcome to the second hour of the program. good morning to you. good evening if you are joining us out of the united states. the story in the equity market. it's very quiet. volume is quite light. we are getting a little bit more price action in the currency markets. let's show what we are seeing on the gmm. it's the cost be that is seeing a big hit to these tread headlines -- trade headlines. president trump threatening to impose more tariffs on china. no let up in sight. foreigners following a mining these geopolitical tensions. we are seeing green on the apex 200. read across the board when it comes to asia today. of thelar was one strongest sessions we saw yesterday given the strong u.s. retail sales we got overnight. it's a mixed bag when it comes
to asia fx today. 68823 as we speak. let's show what we are watching when it comes across assets. the u.s. tenure after powell's talk in paris. it did not change much. the rate cut in july is a done deal. we are seeing this gradual trend where yields are rising back a -- slightly here once again. u.s. futures not doing a lot. the singapore dollar, that will be an interesting one to watch given that terrible picture we saw out of trade and exports from singapore. we mentioned how bad it was. mostly driven by those electronic exports which saw more than 30% drop for the month. we are watching the pound as well. 124 here. it was pretty quiet yesterday. we saw the biggest fall and
lowest in 27 months now. it seems like the market is now contending with this new government. how are they going to deal with these brexit situations now with the eu? it looks like further pain to the pound. david: 12351 is your next low to watch. argument to make an for the dollar to fall if these things keep happening with sterling. we will talk about another currency at some point. have a look at this chart. it is mild out there. watch your currency space here. yvonne: first word news. selina wang in beijing for us. >> thanks. jerome powell says the central bank is always monitoring any threats to growth. he will act as appropriate. rising, uncertainty is in trade and global growth. his comments echo his testimony
earlier this month to support the case for lowering interest rates. singapore continues to reel from the trade war. exports plummeted in june. their second biggest decline since the financial crisis. non-oil shipments contracted 17.3% from a year ago. as thetwice as bad bluebird survey. singapore's economy took a short drop in the second quarter. premier has openly admitted the economy is facing increasing downward pressure. he says the government will do whatever is required. he points to a range of challenges as global loaf -- growth weakens. he says the government will continue to use prudent monetary and fiscal policy. south korea is urging japan to negotiate over its block on tech exports.
despite the government saying there's nothing to discuss. the spat threatens to spiral further out of control with so saying it will resist the ban and tokyo threatening further action if any japanese assets are affected. both sides say mutual trust has been badly damaged. the house of representatives has voted to condemn president trump for tweets about four democrats that told them to go back to the countries they originally came from. the vote back to resolution that condemns that comment as racist and said they legitimized and increased fear and hatred of new a parikh in's and people of color. trump said his tweets were not racist and called it a democrat funding. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: recent optimism that trade talks were headed back on track have been jolted by
president trump threatening extra tariffs if things don't go to plan. we have a long way to go as far as tariffs were china is concerned. we have another $325 million that we can put a tariff on if we want. we are talking to china about a deal. i wish they didn't break the deal that we had. yvonne: in congress, lawmakers want to prevent the president from using huawei in these trade talks. let's start with the threat that we heard from president trump. i feel it we ask this every time. is this political posturing or how serious is this threat? >> i think it's a reminder of the stakes on the table. times to caution a lot of , a lot of traders seem to want to roundup optimism until this is done or round down pessimism.
you can't really round here. you do have to take that careful measure that says, there is a threat out there. it has to factor into things. is, anotherasically 25% tariffs on the rest of everything that china exports to the united states. that's a threat that a lot of people have put to the side, especially after the optimism that came out of the g20 meeting in osaka. again,s reminding people you saw the market reaction to it this morning, that there is that threat that is there. there is that overhanging consequence. i will say, there is a thing that you can look for, in actual sign coming forward. we reported earlier. stephen mnuchin and bob lighthizer is likely to have a call with their beijing counterparts later this week and
may have a trip to beijing to have some more talks. if that actually happens, you might be able to see that there is positivity coming on here in the trade talks. look for that conversation in the result of that. -- and the results for that. david: what triggered this latest comment? what was he upset about? >> i think it's a day that ends in y. he likes to remind people that he has a strong hand here or he perceives he does. the stuff between the u.s. and china is in a done deal. speculationt of that this was now on some sort of glide path just because trump and xi agreed to college truth. it's not necessarily. there's a lot of hard stuff to go. the president was taking the opportunity to remind the world that he feels like he has a strong hand here, there's more to do.
he wants china to live up to commitments that he feels they've made. frankly, also to get going on other things. the president has said he's dissatisfied with the pace of chinese agricultural imports, as one example. from his farmer political base. i think that's one indication that the u.s. would like to see more from china on. yvonne: from beijing's perspective, the one big threat that they want relieved is with huawei and this band. i'm wondering what we saw with congress overnight and they are barring the removal of huawei from trump's technological backless. we'll beijing ever get their way in this? >> i think it's a really interesting point. that's the thing that has come from a separate angle, it's a national security concern. there's a bipartisan concern in
congress that the president is willing to use huawei at the very end of the trade talks. he said in osaka, that would be at the end. he would be willing to use it as an ultimate bargaining chip at the end
but possibly resolve it. introductiona bill , bipartisan, you have people like marco rubio and mitt romney who want to basically say, you need to get congress approval before you do anything like that. it would limit president trump's ability to do that. ,f this bill moves forward there's not yet an indication that there's going -- they are going to take it out. it's a thing that people need to watch closely for. david: thank you for wrapping everything for us. meanwhile, economies around the world beginning to feel the pinch.
it showing up in the numbers. have a look at this bloomberg chart. singapore released a sign that things are not rosy at all. export numbers, the yellow for the
hand-in-hand drop across asia is exporting powerhouses. the biggest drop since 2014. while all of this is happening, economies continue to hurt. do i expect asian fx to continue to suffer? >> i think we are getting to that. for most of july, asian fx have had a good run. a lot of the of session was with the fed cutting rates. session --ion -- of
obsession was with the fed cutting rates. as trade tensions ratchet higher, the risk is that some of that would be backed by that and asian currencies could start wobbling again. we trade numbers in themselves may not trigger excessive weakness in asian currencies because the view would be a forward-looking one. whether risk here is u.s. and china clash again and things become undone. yvonne: we seem to have gotten that once again with president trump's latest threat. our mliv question of the day paints a picture here. perhaps you can help us out. how will markets react? how will the data reactive trump announces increased tariff on china -- tariffs on china? >> i mean, i'm going to start off by venturing and sticking my
neck out a little bit here. yvonne: sure. >> we are very concerned about how president trump is going to take this forward. we are all assessing over whether or not he's going to make a deal. maybe china has just raise the bar. the paper they released set out terms and conditions under which they would negotiate. that really raises the bar. one of the key issues would be around industrial policy. that means to actually strike a comprehensive deal on the one that will not be called out by the other lawmakers in the u.s., you would need the u.s. actually removing conditions on transfer of technology and things like that. the only person willing to do that is trump. they areth huawei, curtailing his powers. the ability to get a deal done becomes suspect. our way of looking at it is,
everything headed into 2020, maybe president trump wants to play a tough hand. that means we think the trade tensions will ratchet higher again. things will start unraveling for a lot of the trade related currencies in asia. the first hit would come through the korean won. this will be the hardest hit. you get a second wave of generalized conversion that hit indonesia. no one is immune. david: we have the bank of korea tomorrow, bank indonesia at the end of the month. we have the bank of japan. are there any candidates among those that might actually move? the consensus is they won't. in korea's case, don't they need a weaker currency? want to be a blessing in disguise for korean industries? the korean won weakens 10% from current levels. i'm here, for once i will be
more interesting. david: you are always interesting. yvonne: [laughter] we think be ok will cut rates. k will cut rates. due to japan korea tensions. that will see the korean won coming off a little bit. cognizantorea is very and sensitive to a tweeting trump. ,t's not just about u.s. china it's on currencies as well. who is to say the korean won is exempt? we have seen the euro at the receiving end. they will become listened and sensitive to it. we think it will cut rates. the biggest frustration here will be for the boj because trade tensions bring the yen higher. there's little more they can do to eke out further yen weakness
with monetary policy. yvonne: we enjoy you sticking your neck out. >> always. yvonne: head of economic and strategy, staying with us. facebook's crypto plans are trolled by senators from both parties who discuss whether star isar -- libre'a's fading. david: we will put that question to our guest tuesdays with us. this is bloomberg. -- guest who stays with us. this is bloomberg. ♪
debt ceiling and brexit remain unresolved. fomc participants have also raised concerns about a more prolonged shortfall in inflation below are 2% target. -- our 2% target. yvonne: sounds like a broken record a little bit. to support the case for lower rates. david: the fed continues to sound more dovish. u.s. retail sales exceeding expectations last month, underscoring steady growth. the value of retail purchases rose twice as fast as what economists were expecting. let's bring in our guest, still with us out of singapore. you are of the view that the rate cut that everyone is expecting is not yet a done deal. are you actually advising your clients to position for a hold? well, what we did is went out
of our way to say that the july rate cut is not a done deal. surely there are reasons to do it and reasons not to. view. out this my suspicion is, they are still going to do it. fate tends to be cruel. they will do it but it's going to essentially be an insurance cap. there's no room for a tailor cut at this point. the economy doesn't need it based on the current evidence. the fed has some reason to say, let's do an insurance cut. here's the deal. with insurance, you want to buy as early as possible. you want to do it preemptively. it's hard to push on a string after the data stopped turning south. donesis points will be even if the economic situation doesn't require for the fed to cut at this point.
we think 50 basis points is pushing it too far. they could -- the two more rate cuts that markets are pricing and, that is far from a done deal. everything else is going to depend on what trade outcomes are. this tree-lined projection of going into a sustained easing cycle, i think that is far from a done deal. yvonne: we just had this bank of america fund manager survey. are the mosts crowded trade for a second straight month. it probably worked back in june. it seems it has changed a bit now in july. is this likely a pain trade? >> i think it will be an evolving trade. the way markets want to look at it is, they will be quite happy holding the short end yields down. they are quite fixated that short deals will remain low.
the two years are pretty much where they need to be and could turn out to be more boring. the more aggressive could see more pain. markets would move onto starting to whether this would be a steepener or flatter. if data continues to be good and we ever to trade outcome, you will see a quick switch out into a steepening trade led by the longer and. that's what markets would increasingly focus on as how the yield curve evolves from here. david: rate differentials matter sometimes. in this case, which specific different torrential -- differential are you focused on? with e.m. asian currencies, we look for the 10 year yields.
that space tends to be more liquid in the em space. the 10 year yield differentials tend to benefit e.m.'s a lot more on the way down from the u.s. peace because this picks up by entering into the em space. the corollary to that is that we find a very quick steepener getting into play which we saw currencies suffering the worst. we are looking at the rupee, the pesto. if we get a flatter, good for them. if we get a steepener, that's not going to be good for them. the two-year differentials are quite nice in tracking out the dollar index against the majors. the sense is that even though there's a gap there, the downward bias to the yield gap in the two-year with the other majors suggests that the dollar is not going to rise in any rush. they are focusing and it's a
huge challenge for the ecb and the boj to pull out bigger stops. seen that have strengthen some of those em currencies like the rupee. will they give enough room for b.i. to cut this week? >> for us again, we think be i will cut this time. certainly gives them a lot more cushion, particularly if the fed will not be a one and done cut this year. justifiable reason is that indonesia inflation has been under control more than others in the region. they are playing the abstinence game for this year. i think they are on very solid footing to do the first rate cut. they feel justified in doing it. how many more will they follow up with? the default case seems to be one more later this year.
david: welcome back. four minutes until we head into the lunch break and japan. after that, the chinese take a break. have a look at where we are market wise. sterling, bouncing off of those lows. the three at the bottom are your three rate decisions this week. japan, south korea might cut tomorrow. indonesia as well. yvonne: watching some movers in particular.
i live on my own now! i've got xfinity, because i like to live life in the fast lane. unlike my parents. you rambling about xfinity again? you're so cute when you get excited... anyways... i've got their app right here, i can troubleshoot. i can schedule a time for them to call me back, it's great! you have our number programmed in? ya i don't even know your phone anymore... excuse me?! what? i don't know your phone number. aw well. he doesn't know our phone number! you have our fax number, obviously... today's xfinity service. simple. easy. awesome. i'll pass. yvonne: is 12:29 p.m. in sydney.
it is 12: 20 9 p.m. in sydney. president trump said he may impose additional tariffs on china. he said the duties currently in place are having a positive impact on the u.s. economy and that more measures could follow. the two sides have been edging back towards trade talks with the u.s. team saying it may traveled to beijing if negotiations over the phone go well. aswe have a long way to go far as terrorists with china is concerned. we have another $325 million that we can put a tariff on if we want. we are talking to china about a
deal. i wish they didn't break the deal that we had. hasna: chinese premier openly admitted the economy is facing increasing downward pressure and says the government will do whatever is required. he pointed to a range of challenges as global growth weakens.-- he noted the rise of protectionism around the world. he says the government will --tinue to use it's the second time prosecutors have fought kim's arrest. the court rejected a first request in may. he has said the company's accounting methods are in line with international standards. bill gates has never ranked lower the number two in the seven-year history of the bloomberg billionaires index.
his run has ended with the rise --. shares rose to a record in paris, pushing the net worth to 107 point $6 billion. $107.6 billion. sluggish growth around the world needs to be addressed. david lipton has taken the reins after christine lagarde resigned. the fund is not predicting recession but that is important -- it's important to be cautious . he said central banks need to prepare to take more action if necessary. central banks have to keep an eye on the circumstances in their particular jurisdiction and try to keep their economies on the right trajectory to achieve their objectives. all need to be ready in case there is a significant slowdown to respond much more forcefully.
global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you so much. it's mid july. you walk out there in most parts , is very hot in hong kong. that's not going to stop us from talking about jackets. montclair, the puffer jacket maker ditched seasonal collections and launched its new collection everything a month. yvonne: that's after he transform the company from a ski wear brand that has seen better days into one of the world's top fashion labels. in this excerpt, he talks about how he redesigned montclair. ♪ in 2003, ruffini bought montclair.
a 50-year-old company on the brink of insolvency. sales were less than 50 million euros at the time. last year, turnover was 1.4 billion. >> people tell me that you are considered to be a master and grand rejuvenation. what did you do when you first moncler in 2003? how did you do it? >> honestly, nothing special. >> come on. >> i went there. i started working on the small things. started working on the product, the quality, the design, the ideas. neede end of the day, you a contemporary problem. this is the global puffer
jacket. this was his big idea. to take a piece of outerwear that was normally only used on the slopes when you are skiing and turn it into a luxury item. ♪ >> you develop this idea of the global down jacket. >> it was in tort and -- important to remain in these kinds of stores. to walk big potential into the street. that's why i started working on ways for performance in these kinds of things. yvonne: looking good in that puffer jacket. you have one, too. david: yeah. i need all the flattery i can get. that's airing tonight at 8:00 in sydney. coming up. david: we are talking back
yvonne: let's do a quick check of the latest business flash headlines. tesla has cut the price of the model three sedan in the u.s.. onpushed shares lower concern over whether the company can sustain sales with less support from incentives. it starts at $39,000. all vehicles shipped to china. a model three will still cause buyers there more than 50,000 books. kong ofhares in hong imax are down. the company is getting bigger in the chinese markets.
shares jumped in the u.s. as the announced plans to add more than 30 locations across the country. that's through a long time partner. imax currently has more than 600 theaters across the mainland china market with ticket sales up 26% this year despite a drop in overall moviegoing on the mainland. yvonne: apple is planning to fund original podcasts that would be exclusive to its own audio service. it is fending off competition from spotify. contacted media companies to discuss buying the exclusive rights to content. apple has yet to outline a great strategy. his podcast at accounts for 70% of listening for most podcast. david: united airlines is raising its profit forecast. the carrier says earnings will climb to at least $10.50 per share, up from $10 in the
previous production. united is improving its outlook less than a week after delta airlines boosted its own forecast, also citing robust demand. yvonne: we are watching the big banks in the u.s.. they continue to grab the earnings spotlight. goldman beat estimates on sales. wells fargo revenue was little changed. take a hithase will from lower interest rates. david: a lot of numbers to get through. what stands out to you, where do we start? ,> we have a trio of banks let's quickly go to a chart of how they traded on the day. you will notice jpmorgan and goldman sachs was up. wells fargo was down. everyone seems to be singing the rate cut blues. let's hear from mike mayo, a top banking analyst on one of the key issues. >> we think that other banks will give warnings and caution about net interest income that's
traditional lending revenues when they report over the next week and a half. we don't think jpmorgan is an exception. let's start with goldman sachs. the surprise there, goldman is the smallest in terms of its consumer business. it has the best equity trading revenue. that was really a surprise here. goldman's trading unit is the washt spot in that revenue 2.4 8 billion. the second-highest quarter in four years. for goldman in general, eps was $5.81 per share. that beats the estimate of $4.93. the ceo says he remains confident or optimistic on the global outlook but he actually talked about the resiliency of the global market. call,o was also on the talking about the investment banking revenue beat estimates. they believe there's a strong
pipeline and they are ramping up their consumer business. you'll note that the stoxx -- stock for goldman was up 29% at the most recent close. that's also a positive. , the bankn chase lowering its net interest income forecasts by 500 million. the ceo morning -- warning that the rate cut will have an impact on second-half interest income. to theings an end three-year streak of quarterly increases in their interest rate and comes. they did have a sunny outlook on the consumer, talking about the strength of the credit for some of their major clients. jpmorgan joining rivals including wells fargo that will cut the outlook for the traditional lending business. also saying, despite the worsening prospects for interest income, it will not affect jpmorgan chase's expansion and
investment plans. yvonne: you mentioned the big two. >> the rate cuts are going to take a toll. for wells fargo, they already have. one of the key interesting points for wells fargo, they had the lowest lending income since 2016. that's already having an effect. the revenue was little changed. that's a positive. some analysts say it expected the testified the expectation that we might see revenue decline for the bank. the net interest income dropping the lowest in three years. the net interest income, it's a hot topic now. it's a difference between what the bank charges borrowers and
what it pays out to customers. that's a key area. what's interesting is, they are lowering their guidance but they are talking about the strength of their consumer accounts. they continue to do business for consumers. they had that scandal going back over a year with these fake accounts. primary checking accounts were -- a yearom of earlier. investors hitting the cell button on some of their shares, concerned about how it will ride the lower lending growth for the major banks. yes.d: get -- thank you so much. let's switch our attention to facebook now. the company's past coming back to hanjin. they are trying to launch a virtual currency called libra.
facing a lot of tough questions from skeptical senators. yvonne: he tried to reassure them that facebook can be trusted with its users money. take a listen. >> we've made mistakes in the past. we have been working and are continuing to work really hard to get better. we've invested in a number of programs, notably on privacy and a number of other issues. yvonne: let's discuss all this now with senior research analyst at craig howland capital group. he joins us from minneapolis. thank you so much for joining us. given that exchange we saw in d.c., it seems like these lawmakers were more concerned about the whole trust factor here than the whole technical side of a cryptocurrency itself, whether it's nationals agree risks or when it comes to how it's all going to operate. given that tension we are seeing, can libra succeed?
>> good morning. thanks for having me on. clearly, the political side of the riskier is the bigger issue for facebook. i think the most important take away, regulators are not saying no. they are saying there's a high bar -- if they can get through the house to the senate without some of the proposed legislation that's going to get thrown out, they will have a chance. i think this continues to bear monitoring. continuing to pay attention to it. it has substantial implications for the financial system. the political risk on trusting facebook will be the biggest challenge theater. -- near-term. david: what's different about libra from the other projects we that werd on crypto have seen from others? probably it's because of
facebook that we are getting a lot of attention on this. is there anything apart from it being a facebook project that mirrors the attention? >> the scalability of facebook merits attention in and of itself. if he gains traction, it has potential to be a significant scale. is thaterence here because they are targeting a stable currency basket of other foreign currencies along with the u.s. dollar, the volatility of this should be substantially less than bitcoin. we've always talked about a lot of different projects in this market. we have not been bullish because of that factor. i will get paid in u.s. dollars for quite some time. i'm not looking to get the volatility of currency. if i'm looking for different use cases around the world, we could talk about that. i'm find to do transactions in something that will not cause me to potentially lose 50% of my money in a few days.
that's why this has potential implications of taking off versus other projects we seem like bitcoin. -- we've seen like bitcoin. yvonne: what can they do to actually convince these panels that this is a good idea? how should crypto itself be regulated? what needs to happen to get the green light? >> it's actually the regulators that will determine the green light. what they have to play on the political side of the equation is simply avoiding new legislation, given that you would need to get bipartisan support, clearly there's a lot of distrust of facebook at this point. the libra side of it, there's a war right now as far as the discussion goes. willoughby supported by a number of senators? that wouldll through block big tech from pushing this forward would be more of a
challenge, a bigger threshold. libra and facebook all need to make sure that they don't make anything -- any big political missteps. of dealinger of time with all the questions on the regulatory side, coming up with approvals and appropriate procedures to satisfy those concerns. facebook has the financial wherewithal and time to see this through. it has a chance. they just need to avoid the political land falls of legislation. the potentially see a launch at some point. it might take a while. it's a good possibility that it happens. interests or lobby groups would be against this? you mention political risk is bigger than regulatory risk. flesh it out for us. who does this disrupt? >> from a disruption standpoint, this most -- the most disruptive is other currencies around the world, clearly facebook wants to target providing access to the
digital ecosystem to the en banc around the world. certainly certain markets won't participate in that but it could help a lot of people. cash and other foreign currencies are probably some of the biggest attractions themselves. money remittance is an area that facebook has made very public that they want to target to lower the cost of transactions in the market. clearly, those particular areas could be of concern down the road as well. i think as far as other parts of it, some people have exaggerated the implications for the banking system and other rails and networks which actually could become from entry to what facebook is doing and not as much is a direction, -- a disruption, in my view. yvonne: thank you. we are counting down the opening of the session in india. less than an hour away.
divina come a what you watching -- divina, what are you watching? >> after yesterday, you've seen the breach on the upside. a lot started to unwind and trade yesterday. 1107 to be the next resistance level. the broader market move was encouraging. interesting link -- interestingly, this has been a doubt -- troubled bank because of a stress asset while -- watchlist. it will be interesting to see what they do and whether that watchlist expands. asset quality is a big concern. fundraising activities, that news cap the stock active yesterday. we have to watch out for yes bank very closely. david: thank you so much.
from seoul this morning. they have to pick their best charge against each other. david: check out their charts on the bloomberg library. off. kick things what are we talking about today? well, i'm going to introduce you guys to the new kid on the block for crude palm oil. if you look at the chart, you interesthat the open and aggregating trading volume for this contract has actually been rising ever since three months ago. it's up against fallacious which is the benchmark. we have another contract in china. -- that this has the
edge because it can, it has a longer trading our. they can provide cross market trading opportunities versus rivals in edible oil. palm oil is used in so many different products. it's used in ice cream and chocolate, biofuel and even shampoos. i think that the rise in open interest means it's a strong indicator of what the market size is going to be and what the influence is going to be. i think it shows that this .ontract is quite promising that's what the traders are also telling us. yvonne: new kid on the block. i like it. what if you got -- have you got? >> the chart i'm going to introduce today is about why record heating u.s. crude has more room to rise. the white line is s&p 500 index. the blue line is s&p 500 buyback
index. rally is00 index supported by company buybacks. the yellow line tracks blackrock share prices. the world's largest etf provider. etf, thefunds into higher share prices. the net rise in price actions shows there's a significant over performance of black couple -- blackrock over 500. here is that this positioning could reverse and there's greater potential for higher outside in the s&p 500 index. how about you judge? i keep getting all the time. david: that's a very good point.
it's a big flow of the market that you don't really see until you see it in the price. at the same time, i like how sharon is really bringing up an asset -- yvonne: not a lot of people are talking about it. david: not a lot of people understand. in that case, i will give it incrementally to share in for today. we can make up when you are back. congratulations. check it out, g tv on your library. yvonne: we have plenty more coming up. this is bloomberg. ♪
♪ emily: i am emily chang in san francisco. and this is "bloomberg technology." coming up in the next half hour, tech companies being grilled on capitol hill. grilled currency and antitrust. what can congress do to alter the course? plus, president trump has an eye on google. he wants the attorney general to look into peter thiel's allegation that google's work with china is "seemingly treasonous." should google be worried?
IN COLLECTIONSBloomberg TV Television Archive Television Archive News Search Service
Uploaded by TV Archive on