tv Bloomberg Markets Asia Bloomberg August 12, 2020 10:00pm-12:00am EDT
out results, only its overseas interests may be hit, with a milder impact on its other operations. haslinda: apples top iphone supplier says of the days of china as the world's top factory are over. high precision will increasingly move production to southeast asia. a check on the markets. asia is extending the global rally after u.s. shares briefly touched a record. we had tech leading the gains. investors banking on further stimulus. the msci asia pacific index is up .6%. the 2020 losses wiped out almost $6 trillion of market value. the s&p is still down 9% below its all-time high. we are tracking dollar-yen at 106.73. dollar yen is trading at the
upper 106 level before u.s. retail sales and trade talks are planned for the weekend. we are seeing dollar weakness in recent days. gold futures at $1946. it is above $1900, a wild ride for the metal after surging 30% this year. we saw the plunge below $1900 tuesday. gold is still an of the best-performing commodities of 2020. 66.22.. 10 year yield at let's flip the page and look at where we are in terms of the chinese shares ahead of a slew of data for july on friday, including industrial production and retail sales. the csi 300 is in negative territory, down .4%. the yuan is at 6.93. the hang seng is getting some gains. center, infront and negative territory right now even as it the highest estimate. tencent also played down the trump administration as we check
been. ban -- wechat the kospi is up on a 52-week high. look at southeast asia, this is asia's worst performer this year, correctly up .5%. it may rise to between 6500 to 7000 this year, driven by pretty much the government stimulus package and expansionary policy. equities also more attractive, 7.1% earnings yield at current levels. and we have the benchmark in malaysia currently up .6%. looks like it is risk-on for southeast asian markets, yvonne. asian stocks are basically recouping losses for this year. you have to wonder what is next as well, because we are not seeing this as a very sincebased rally so far the lows of mid-march. let's get to your first word
news. china says it will table president trump's and on we chat and tictoc when the two sides review the phase one trade deal this week. the virtual meeting is under discussion with white house economic aid larry kudlow saying the deal is working well so far. however, china's agreed purchases of u.s. goods are behind schedule. . iphone supplier says the days of china as the world's top factory are over. they taipei-based supplier says it plans to split supplies away from the mainland and will increasingly move to southeast asia. a proportion of iphone manufacturing outside china has risen to 30% since june. the ceo of the company says china will increasingly give up its title as the world's top production line. talks remain stalled in washington. house speaker nancy pelosi says
she rebuffed treasury secretary stephen mnuchin because the white house has not budged from his demand for smaller relief. he says it was she who will not compromise. pelosi says democrats will come down $1 trillion, if the evan: and will raise the ceiling by that same amount. worsening relations between new delhi in beijing now see state owned indian owned majors declining to hire chinese tankers to ship oil-related products. sources say china-flagged vessels are being banned to export down the line products. most tankers that india hires are flagged in liberia, panama and malicious, with only limited use the smaller shares -- tius with only limited use of chinese ships. haslinda: this company posted a 44% jump in net income, back to
buy an exceptional gain on the investments earlier this year. olam international reorganized early this year. joining us exclusively is the cofounder and ceo, sonny verghese. you talked about how you navigated the uncertainties. give us a sense of how covid-19 has impact of the business, how it has maybe impact of the supply chain. been threee have major impacts from covid-19 in our business. the first one is a demand shock. it was an impact on our portfolio. [indiscernible] for the -- hasd also reverted.
but 85% of our portfolio is stable. we have also had supply shocks with an impact in our business. that is mainly about logistics bottlenecks, as a result of not being able to come and manned the post, that is another issue. some producers struggled to find an outlet, so those are the supply shocks. the final shock and impact has been the financial market accelerants which were very pronounced in february and march, as a result of the massive fiscal and monetary , market and fiscal
monetary policy coming together in an unprecedented way, unprecedented speed and magnitude. havecial markets stabilized and come back with some kind of policy -- [indiscernible] pandemic has changed people's habits because they had to stay home a lot. i am wondering, what do you see in terms of demand for coffee and chocolate. are people consuming more? how is it impacting your business? basic there are two sources of demand for coffee. costa coffee, people are not being ever to go out and be in restaurants and cafés. but coffee consumption has increased. next, there is a version of demand as a result of at-home
consumption demand. demand for chocolate and cocoa products has rebounded quite well. the has been a little bit of phasing off the last couple of months, largely on account of lockdowns. restocking of economies at different stages of restocking, which has infected a little bit. 40% of the demand is at-home consumption. both china and india. are huge markets. you would see an impact of the. this, at thef beginning of the year, we set ourselves three priorities. the first was that we needed to navigate out of covid much stronger. we focused on protecting our
people, on meeting our customers' demand, on keeping the supply chains open, maintaining financial strength, and all of this would have done really well. the second priority was institution of a -- and delivering of financial goals and strategic goals of 2020. we have grown revenues by 70%. volume by 5%. and reported earnings by 44%. hadfinal prior to that we was the reorganization of the company. of the first time we are reporting first-half results along a newly organized operating --. -- operating groups. yvonne: you mentioned
how things are slowly returning to normal. i wanted to ask about the supply chain risks. there were concerns earlier about labor shortages, farmers that were scared to travel to farms and work. did you witness supply disruptions in parts of africa and south america? can you maybe give me a number in terms of the damage you have seen? sunny: agricultural production and farming systems, there has been a significant supply chain shock, particularly in fresh produce which is vegetables, but also in terms of fresh livestock, because many of the processing facilities, about stock houses and abattoirs, all had to shut down as a result of covid, and therefore, farmers had to stop their produce. across most parts of the world. the supply chains are beginning to heal, and logistics is beginning to heal.
the best-case scenario for me is that there will be quite uncertain and fairly prolonged recovery, to go back to the people. of course, we have a good scenario. we saw the very welcome news vaccine singapore, the early-stage trials. they have given some guidance but by the end of the year, -- that by the end of the year, we will have the result of those trials. so if there is a vaccine which comes out and is made available and accessible and affordable to larger segments of the go with thewe will good scenario. but there is also the downside and ugly scenario from our best-case scenario, where the -- where we are going to go back lending the climbing theding th
steps. that is the more likely scenario. the logistics problems in the supply chain are beginning to heal. although they are not utilized at full capacity, there isn't the same situation that we saw in march and april where the lockdowns were at their peak and we saw people having to damp down their produce as a result of the disruption. that i think is behind us yvonne: ok. singapore, we have seen a lot of scandals regarding commodities traders. one of them we saw about undisclosed losses. we saw the collapse of noble as well. do you see any shift in changes from banks and regulators in the lion city, and does it affect olam international in anyway?
some banks and institutions will be more cautious about how they are lending and who they are lending to. i think blockchain technologies now allow for better conferencing and -- at a , theactional level provenance of the transactions now being at a much different in higher-level. i would expect all those innovations to be adopted by financial institutions, to prevent these kinds of issues that you have referenced to proppin popping up. the quality of the leadership tom and management team, make sure they are able to do business honestly and with integrity. change the going to
fundamental foundations to separate the wheat from the chaff. the companies that are doing the right thing, the right management systems, will continue to prosper. those who do not will face those consequences. theremportantly, i think is now technology that will allow us to make sure the integrity of transactions are better than we have had in the past. all of these episodes you alluded to will provide a catalyst for financial institutions and regulators to step in, to make sure that the system changes. haslinda: are you saying that liquidity will not be impacted? because we are seeing the likes operationsding its in terms of commodity trade finance, abn amro and others
doing the same? sunny: at the beginning of the crisis, in march, we had financial market disruptions. or was not available, u.s. dollar liquidity was a problem, interest rates went up, the premium for high-yield bonds and investment-grade bonds exploded to its highest level, so we had significant financial market accelerants that were at its peak at the time. that with the considered fiscals of government monetary support has -- therefore, markets are functioning. the other important issue is for companies will always have access to these markets. we got arst half, loan.
we tapped into the bond market in japan. we went into the market with an issuance for ¥25 billion. given the demand, we increased it to ¥39 billion. we did a european -- four -- in the u.s.. so good companies, the markets are still liquid and accessible. what we have to address is the lack of access to finance for companies that are probably not of that same quality. there i think government policy and regulators are doing what they can to make sure that this segment can also access direct markets without as many
seen.ulties as we have yvonne: sunny, we will be that there but thank you so much for joining us, olam international cofounder and ceo sunny verghese showing us. ahead, goals volatile rise continues, as it extends a series of wild swings. later this hour, we get the outlook from independent fund manager, swiss asia capital, which focuses on investment in the metals sector. haslinda: tencent shrugs off the wechat, beating estimates next to a pandemic-induced surge in sales and profit. we go over the top and bottom lines next. this is bloomberg. ♪
haslinda: they did not elaborate on what beijing hope to achieve. yvonne: meanwhile, tencent is trying to reassure investors that a ban on wechat would have only a modest impact on the company. 's second-quarter results beat the highest of estimates, with revenue growing at the fastest years, thanks to the internet use surge of the pandemic. the focus of the earnings we saw last night was on what tencent's response was to this u.s ba withn the company really don't playing those risks. >> yes, they said it would only have a minimal impact on tencent's business, because
basically everything goes -- but china is bigger than its separate products. if trump really agrees with tencent, so we will not see pull out ofke apple china's mobile app stores, starbucks, walmart and other consumer giants can keep doing their business with tencent within china, whether we are about advertising or transactions. the language in the executive enough, sof is vague
we will have to wait for the official definition from the white house to see if tencent's reading is accurate. yvonne: take us through some of the highlights of the acute numbers. >> so the second-quarter results were quite good. they beat the market expectations. if we look into different segments, online demand and revenue grew the fastest since 2017. social networking revenue. increased, growing the fastest in two years. advertising, even wechat controverted a lot to tencent's social advertising revenue, but traditional revenue contracted
platformscent's ad both because of the micro economy downturns and also because of competition -- because of macro economy downturns and also because of competition. longer-term, we will have to see how the traffic will impact tencent business. yvonne: thank you, our reporter with the latest on tencent. more earnings to tell you about. gold mining company has reported a profit in the full year through june 30, at just over 300 million aussie dollar's, as investors saw it safe haven from coronavirus destruction. wass revenue from its mines just over $3 billion. despite that, the company says
production will be lower this year. triggered by low energy prices and the impact of the coronavirus, this company made a met loss of -- in that loss of just $4 billion. underlying profit. billion.t $303 treasury wine estates has taken . hit with net profit down 21% the former wine division of foster's says a challenging u.s. market affected the results, but while looking at some asset sales there, it sees positive signs of a recovery in china. treasury wine estates scrapped guidance for the year. we will be hearing from the ceo in the next hour. mosty pacific rose the
after a newspaper tweeted that hong kong might restart transfer flights to the mainland. shares are reversing today. cap the reported a 1.3 billion u.s. dollar loss for the first half as the coronavirus brought travel to a standstill. 72%,nger revenue tumbled with the carrier having an average of just 500 passengers a day in april and may. haslinda: asia is gaining momentum on the back of gains in the u.s.. we saw u.s. stocks briefly touch any record. here in asia, shares are recovering from 2020 losses. less than 20% of those stocks are higher year to date, suggesting perhaps that the rally has not been all that broad-based. msci asia pacific index is up .7%. the csi 300 index is now in positive territory, it has been swinging between gains and losses. investors have turned cautious
on chinese tech shares in particular, after trump's tiktok and wechat bans. but to households are putting more of their money into investment products at the fastest pace since 2015. heavy chinexych .ndex, best-performing it briefly dipped below 2600, before closing down 2%. let's check on some of the movers. we have tencent front and center yet again, beating its highest estimates, currently, though, trading lower by .7%. we have tencent downplaying the b saying that it will only be moderately impactedan. it claimed the most in a most 12 years yesterday ahead of those numbers, reported a $1.3 billion
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yvonne: it is 10:29 a.m. in hong kong and shanghai, 10:29 p.m. in new york. here are your first word headlines. the united kingdom economy slumps into its worst recession record. data shows the decline this year is the steepest among european nations, with brexit adding to the coronavirus fallout. gdp plunged more than 20% in the second quarter, the most since records began in 1955, and roughly doubled the falls seen in germany and the u.s.. job losses are also in the rise.
president trump has no chance of a new nuclear deal if he is reelected in november. foreign minister mohammed javad zarif of iran dismissed claims agreement, saying it would require a total reversal of u.s. policy trump said last week he expects a breakthrough with iran if you were to win. he also said the u.s. would have to compensate iran for the damage caused by sanctions. democratic presidential ticket joe biden and kamala harris made their debut as a white house team, saying that november's election will shape america for years to come. biden says harris knows how to make hard calls, and will energize the female black community. harris is african-american and asian american. their appearance was scaled down from traditional introductions because of the coronavirus, with an audience entirely of journalists, and campaign staff. haslinda: let's do a quick check on the markets. patience stocks are building on gains on the back of the u.s. --
asian stocks are building on gains on the back of the u.s. hitting new highs briefly. futures are pointing to a flat open. 3369. the s&p has seen a rally. a positive outcome. fiscal policy that will continue to support the economy. the bloomberg dollar index, .1%, 1177.ing, about down for a second day. showing just how widespread negative sentiment is for the greenback's prospect. look at where we are in terms of commodities. is front and center. it has been quite a ride for the yellow metal, surging 30% year to date. we are seeing wild swings. on tuesday it fell below 1900. it is currently above that level, at 1946.
still one of the best-performing commodities of 2020. silver, of course, known as the devils metal, wild swing for silver, volatility surging, driving the deepest discount since 2008 for the etf tracking the metal. and. 42.58.k crude is down yvonne: let's make sense of this roller coaster ride we are seeing for gold investors. the mental hit a record on friday before falling below $1900. u.s. bond yields are rising now and prices have also rebounded after the rout but they remain quite volatile right now. look at the gold volatility over the past month, it jumped the highest since april. let's get more insight on where gold will be going. european and sewers asia capital ceo juerg kiener joins us. it is just above the 1900 level.
where do we go from here? year pop i think we have --juerg: we have retested the breakout now. shorter risk of the downside particularly going into the next delivery months, in two weeks. sellingll have to start metals and i don't think they have the metals to deliver. so the gold will make new highs in very short period. yvonne: what do you think was a catalyst for the selloff? was it simply a technical move or was it something else? juerg: what we have seen is actually aggressive increases by the chicago mercantile exchange that was the trigger. about 2 billion ounces of silver being sold into the market.
they are basically being sold through paper contracts. there is virtually no physical available to deliver. i think that shows how the markets are, driven basically by increased margins, as well by people who want to have the metal lower to bring some stability to the markets. haslinda: you talk about gold getting to new highs. what highs are we looking at? 3000, 5000, even higher? j the think it is a --juerg: it is a process. the breakout level here has been roughly 1920.
putting a date on that is going to be difficult. say within the next 12 months, i think we probably be around 3000. i would not be surprised if it is much quicker. haslinda: having said that, we are seeing gold very susceptible to large corrections -- 10%, 20%. we saw that in 2011 and 2016. is that the trajectory gold will take going forward even as it goes higher? juerg: if you look at the labeling to 70's, day-to-day volatility the last few weeks was $100. 40%et's call it a 30% to the basement today we had about half that. between 2008 in 2011, we had about seven setbacks to the tune of about 7% to 12% single-day corrections. that is what you're going to have. you will have really sharp
corrections on the way down and then reclaiming. if everybody varies. [indiscernible] yvonne: which makes correlations very important now with it comes to gold. do you look at the inverse relationship with the dollar and yields? what will be the determining factor with dollar and gold moving forward? juerg: you have $200 billion in debt. 60% of that has a zero interest rate. basically you are giving money for zero return. in the u.s. you have a small yield. for gold, you have over 2% yields. at the peak about two weeks ago, it was 2.7%. you have a positive carry trade in gold.
gold is basically nobody else's liability, when the most everything else in the market is summitting else's liability. in an environment where nobody knows which companies will remain afloat, and other time when central bankers are basically confetti creators like there's no tomorrow, you are bailing out with money that we don't have, so gold is the watchmen against government and central bankers which have been hijacking the financial system in trying to stabilize it in an environment where stability is hard to get. gnu have economies like singapore shrinking 40%, the uk, ?0%, and you have all this debt how are we going to service the debt? how are we going to pay the debt and restructure? anchor thatability comes back into any persons portfolio as a tail risk management. we also have a lot of
questions about where inflation goes. we saw some signs of life in the u.s. inflation numbers yesterday. we are seeing breakevens kind of go up but treasury yields lagging behind. is there a case to buy gold as a hedge for inflation now? how do you see it? juerg: down the road, probably yes but it may be early days. the government already told you on the treasury side, three years now we are . it could be five years. seeing inhas already the foot element. you will see that pretty soon -- inflation is already being seen in the food element and i think you will see it pretty soon in every element, because supply chains are falling apart. the first part is inflation. the second part i think we are going to see coming out, the demand cycle comes back in an environment where supplies actually falling.
nobody is really looking at how many companies are going belly up. that means you will take supply out. on the governments moving from monetary spending to fiscal spending, it will go into infrastructure, it will get into military buildup, self protection, it will get in almost anything. keep themoney to economy going, that is what we're going to do. so the fiscal spending will create inflation, basically. haslinda: we did not get to silver. maybe next time. you're can are, since asia capital md and chief investment officer. officials are criticizing washington's response, saying that the failure to cap the pandemic are undermining u.s. recovery. . boston spread president is among those drawing an unflattering comparison to the experience in other regions. resident isfed among those drawing of uttering
comparison to be experiencing other regions. >> i think it would be an appropriate time to have forward guidance. at this stage of recession and the pandemic, the forward guidance probably is on a monthly helpful. there is -- is only mildly helpful. interest rates are quite low. , i thinknvironment people are already assuming it is going to be quite some time before interest rates rise again. so while it might the marginally helpful, i would actually say that our lending facilities and some of our facilities being new york fed are providing more support, getting friends to individuals and businesses. >> talk about lending programs, chairman powell emphasizes that spend. can land and not is that the wrong prescription for the economy right now? your lending programs have not seen a lot of take up? >> no, but they have been
effective in a lot of respects. the announcement of our willingness to buy corporate securities quickly pushed those interest rates down. as a result, we do need to buy very much to cause the market reactions were announced. they would say credit conditions are much better than they were in march or april because of the federal reserve's actions. i think that has been an important stimulus to the economy. in terms of spending, that has policy.from fiscal the u.s. economy also benefited from the very quick and very bynificant stimulus provided both providing better unemployment benefits, broader unemployment benefits, checks to low-income individuals. all those have been very helpful in preventing, particularly low income individuals, from continuing to make spending decisions over the course of the spring and into the summer. but i think many of those programs have ended the end of july.
the pandemic has not ended. the unemployed rate is still above 10%. we need stimulus and fiscal policy to continue. that has been critically important. that congress come up with some agreement to continue to provide support. >> have you modeled the impact of the end of fiscal stimulus? >> my personal forecast is that some form of additional stimulus is going to occur. it would be bad news book for my forecast and for the economy if we don't do any additional stimulus. >> you supervised the main street program, perhaps the most controversial. according to your figures come at a tender 6 million in loans in the system, but it is a program that could do $600 billion in loans. do modifications need to be made to the main street program? >> we have made quite a few modifications we have. the initial term sheet, we came out with the revised term sheet and it was derived once again to make the program broader and
more accessible to a wider range of small businesses. we also opened it up to the nonprofit sector. while we are not liable on that part, banks are perfectly able to start negotiations with the nonprofits. as you know, it takes a long time to actually negotiate a bank loan. it does not surprise me that it would start gradual and pick up over time. that is exactly what we are seeing. one reason we're seeing a lot of lending coming primarily from big-size banks than banks is they are more flexible and able to adopt. with respect to -- able to adapt. the goal is to make sure the this is that actually need it, that were credit worthy in february, that had their cash flow disrupted and are likely to be viable after the pandemic is over, are able to get the cash for financing. we are seeing a pickup in that activity. moreect as banks become
familiar with the program, we will continue to see increases. yvonne: boston fed president, eric rosengren. coming up, we will talk about them apple supplier out with earnings, also saying that china's days as the factory of the world are over, and it is moving more capacity to work southeast asia. details next. this is bloomberg. ♪ ♪
haslinda: key supplier hon hai, is moving its production capacity out of china. it says china's days as the world's factory are done. asian tech reporter debbie wi joins us from taipei. how do you see the future of manufacturing playing out as ties between the us and china worsen? >> the chairman said yesterday that the china's days of the held's factory are over, sees a future center linesman fracturing model that will splinter. india, south east asia and america will each have their own manufacturing ecosystems. debbie, what has foxconn
done so far in terms of shifting production out of china? >> he said yesterday that they have raised production capacity junef china from 25% last to the current level of 30%. his company says will continue to boost manufacturing capabilities outside of china. it has been adding investments in countries like india. foxconn is potentially helping apple, its biggest customer, grow a presence in the world's second most populous country. he did say he does think india will replaced china as the world's fa. yvonne: tell us more about the earnings. we did see a bounceback in terms of profit after we saw a dismal first quarter.
seems like they are benefiting a little bit from apple as well. what do we hear in terms of the outlook and from their customers? debby: hon hai second-quarter results beat estimates. largely thanks to a global up gotrs snapping dislike met books and ipads to keep themselves connected. but i think investors are probably worried that third-quarter sales will decline by double-digit as companies provided the outlook yesterday. that has a lot to do with apple delaying its new iphone launch to october of this year. we can see hon hai shares are currently done about 2%. investors are little bit concerned. haslinda: asia tech reporter, debby wu in taipei.
, indiana state owing oil majors have stopped hiring chinese tankers to ship crude and petroleum products in and out of the country. let's get more from our new delhi deputy bureau chief. tell us more, give us the latest details of this move from india. >> what we have learned from our sources is that the indian national oil companies, who are big importers of crude oil and other fuels and also export a world,things across the have decided they will not hire any chinese vessels, owned by chinese companies or carrying chinese flags. also planningare to ask oil traders and suppliers who supply shipments to india to not ring in chinese vessels into the country. of rowsns another area
between the two countries. haslinda: in terms of impact, what kind of impact are we ?xpected to see >> what we gather from the sources is that it is more symbolic that as of now because indian oil companies use a lot of vessels which carry flags like ma uritian-flagged vessels. but there is a danger that this might spill over to other areas were india has a lot of trade with china. this goal have seen from military clashes on the border to a tech battle and now even oil. things could escalate further between beijing and new delhi? it: what we have seen in the
last few months, this is the latest in a series of steps but prime minister modi and the government have taken to wean onia out of reliance china. india has banned the use of some 59 chinese apps and they have had goods purchased from china that were delayed at indian , disrupting relations between the two countries. don't forget china is a major trade partner of india. india imports about $70 billion worth of goods and services through china every year. it is heavily lopsided. . ofia exports less amount goods and services from china. -- to china. would have bigger ramifications on trade between
the two countries. that just check or about -- debjit chakraborty , from th new delhi. thank you for joining us. this company's revenue declined due to the coronavirus hit. the company reported 20% fewer rides than previously anticipated, but lyft is still maintaining its forecast for unadjusted profit or the end of next year. the quarterly loss excluding tax, interests and other losses, grew to $280 million. cisco slumped in late trade on a weak sales forecast, sign that corporate buyers are spending less in the coronavirus recession. the company expects revenue to fall 10% in its fiscal first quarter which ends in october. analysts have seen a decline of about 7%. the ceo aims to cut expenses by
$1 billion through job cuts and early retirement. uber is threatening to close its ride-hailing services in california if it loses its fight of the a state law that would classify drivers as employees. uber is contested legislation, and will ask voters to overturn it in november. it says the law would shut down the entire gig economy by raising costs. say a shutdownts is still a matter of last resort. haslinda: let's check on the movers in asia. it is a risk-on day. unicom, look at china posting a huge, huge move. currently up more than 20%. we have first-half revenue beating estimates. it also said it does not -- payingpayment interim dividend. tencent is currently down by about 1%.
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place, global banks strategy in hong kong. seeking to find a balance between rising pressure and china's growing influence. rishaad: treasuries surged the most in four years in china. we are joined by the chief executive this hour. haslinda: risk on in asia. this part of the world in positive territory, raising the losses for the year. rally is note broad-based. msci asia index up by 0.6%. china shares swinging into gains, higher by 0.2% ahead of data for july on friday including retail sales. the hang seng unchanged. , as mucheping a watch recommendinge, not
a payment of dividend. and the benchmark in the philippines up by 0.8%, rising for a fourth day. it may get to 7000 in government stimulus. expansionary policy, that benchmark up 0.8%. on wirecard executive data, we will bring you details. some of thesee other movers, the thailand stock exchange opening up, 1.2%. , a new a new cabinet finance minister. the country having arguably its worst ever economic crisis amid mounting antigovernment protests. slightly positive
start to the session. ounce.tures 1948 per a wild ride for gold. 2050 and climbing further before falling below the 1900 level. affected, nearly 65 basis points. robust inflation in the u.s., those numbers coming out yesterday. 0.6%. the survey was looking at half that level. cpi data out of india later on. 6.2% cpi level against the number for june, up 6%. stephen innes,
chief market strategist, axicorp . thank you for joining us. what is going on? equities up against the backdrop of terrible news overall. what gives? stephen: it is a risk on week filled with caveats. i'm surprised at how this market unfolded. it seems turning a blind eye to everything. equities have recovered all their pandemic losses even as the real economy is nowhere near achieving recovery. it is ridiculous and is hard to comment. stimulus and interest rates as far as the eye could see, forced by the fed. there is concern about markets recovering more aggressively than what had been forecasted.
there might be some tapping of the brakes, but they are flashing the red light suggesting the economy is struggling. forcy is on course september. rishaad: looking at inflation numbers yesterday, coming in twice what economists were expecting. suggestinggood news, inflation in the economy itself is showing there is economic activity picking up. cpr remainsh saying a made-up number. stephen: it really is. when you look at idiosyncratic moves out of the lockdown, month on month changes and idiosyncratic sectors have seen a bounce. inflation looks depressed. this is one of the concerns i have for monetary policy stoking
inflation. look at the decade by the bank of japan which has not been able to accelerate. i'm worried about this as market expectations are inflation getting built up too much. only time will tell. i cannot say with certainty. one would expect inflation to pick up, but until it happens, we will defer to the trend. a wild ride for gold. gold down to negative interest rates being at play in the bond market. fractals ofs seen pain, what do you mean by that? stephen: it is a crazy driven market because we were expecting a selloff because yields went up but not to the levels we have seen.
gold looks cheap on a correlated basis. we are looking at bitcoin and other assets. itter is a little j driven around the vaccine. we had a test of how the gold market will react to a vaccine. we learned a bit of a lesson. we got too far over our skis on gold. doctor, 10to your million people go to the doctor and receive the vaccine, then people start taking planes again. tod is something we have keep in concern. we will get a vaccine, i don't know how effective, but we will see when it comes into play. gold, -- we look at dual-purpose, a
it is driven by hopes of inflation rates. china's economy is recovering at a rapid pace. those industrial engines are starting to fire up. industrial data suggests we are having a global renaissance in manufacturing. this plays out for safe havens and industrial purposes. that is why the market likes silver. make of: what do you the moves into value? a start of something big or profit taking? stephen: that is a big question. and have a transition to make more headway. today, you look at the asian markets and people are starting to pack airlines into the equation.
that perception is here that people want to jump ahead. for as driven by the hope vaccine, that can be a game changer. to low rates forever, it will be an interesting dynamic the next three to six months because this level of risk has gone so far it becomes irrational when you look at it at any level. we will let you go. think it is really a had the good, we move on the euro predicated on the eu agreement. a growthl be differential move. for the euro to move higher, get above the 120 level, it will take stronger data and
researching trade flows globally. off.ll remain risk on-risk haslinda: stephen innes, chief market strategist, axicorp. now for the first word news. australia added four times as many jobs as expected in july, and where the virus is under withstandt appears to the damage from the lockdown in melbourne. national jobless rate stands at 7.5% and is expected to climb. talks remains stalled in washington with each side blaming the other. says speaker nancy pelosi treasuries equity stephen mnuchin because the white house has not budged for
smaller relief. he says she will not compromise. joe biden and kamala harris made their debut as a white house team, saying their administration will shape america for years to come. biden says he knows how to make hard calls. harris is african-american and asian-american. their appearance was scaled-down from normal introductions because of the coronavirus. another leading hong kong activist has been relieved on bail, saying she will not stop speaking out. she was held along with a media tycoon and others under china's sweeping national security law. she says her bail conditions include regular reports to police and a surrender of her
passport. worsening relations between new delhi and beijing, oil majors planning to hire chinese thinkers to ship oil and related products. china flagged vessels banned from bidding to import crude india. hiredhinkers the india are flagged in liberia, with only limited use. exclusived, our interview with tim ford, ceo, treasury wine estates. .e will talk about earnings and how china will come into play. rishaad: still no word on when the u.s. and china will discuss the phase one trade deal. we will have the latest on that.
rishaad: u.s. and chinese negotiators plan to discuss progress to the trade deal in the coming days as beijing pushes to widen the agenda to include president trump's crackdown on wechat and tiktok. how for full can these talks be given we do not -- how fruitful can these talks be? >> maybe they can be fruitful. we have had a trade war and those issues are the most copacetic. larry kudlow the chief economic advisor says the one area they are engaging on his trade, it is fine. it is the other issues, coronavirus, tech security, hong kong, taiwan.
tech security is a key one, not just huawei but tiktok and wechat after the executive orders to have those banned in the united states. the chinese want to wedge those into the upcoming virtual talks that will be happening later this week or next week. we do not have a date finalized. a of speculation about the phase one trade deal was cast open when trump on tuesday said the phase one trade deal means little because our view on china has changed so much over the last eight months. that is why we are curious on what can or will be discussed in these meetings, and whether tiktok and we chat will have more clarity. haslinda: tencent had better-than-expected numbers, and downplay -- >> sales rose 29%, the fastest
pace in two years. that income is higher than most estimates. all the analysts and reporters last night wanted to know about this ban on wechat and what impact it would have on tencent. tencent downplayed it. here is the cfo. >> the executive order is focused on wechat in the united states. gettingn the process of clarification from relevant parties in the u.s. >> the executives emphasized the distinction between wechat, the service used outside of china, including united states, and then the similar chinese app which is much bigger. order namedecutive
wechat, not the other one. as it stands, that is why tencent is trying to get clarity. for tencent, any ban would be on wechat overseas and not the service in china. they say it would have a narrow impact on its business. haslinda: our chief correspondent, stephen engle. u.s.-china conflict resolution, we will have more on that just ahead. this is bloomberg. ♪
better ties. >> i do not think it is healthy for the largest economies in the world to be in conflict. i think the phase one negotiations are still moving forward. china.l are trading with there is a lot of talk about the end of globalization and on manufacturing. they are a major producer not only of every household good you can name, but medical devices and generic drugs. we continue to import from china. as far as i know, the phase one trade negotiations are still ising along, but phase two off the table. my hope is that if there is a biden victory, we are able to
restore more normal relations with china, and the hostile relationship that exists now will diminish. biden has not been friendly towards china in his rhetoric either. relationshipf the between the u.s. and china is not clear. >> what signal the you look at two advisor clients to invest in china or not? i think china is going to be a major factor. government is stance, nationalistic as long as the government seems to be opposed to globalization, i think it is hard to make new
commitments in china. i do think their growth opportunities are there. i think we need to have more harmonious relationships with china before i am comfortable making new commitments there. think u.s. tech companies have fully appreciated the impact of a conflict between the united states and china? do you think investors in u.s. tech companies have fully appreciated the impact of u.s. tech companies being largely shut out of china? >> to some extent, but not to the full extent. i think u.s. tech companies are attractive. their earnings are growing. there is a degree of innovation taking place here, that is still very impressive. i did not like to see intel considering transferring
manufacturing operations to taiwan. i thought they were benefiting from having manufacturing and research and develop taking place in the united states. states shouldited be a manufacturer as well as an innovator. want to see that sidelined. nevertheless, i think creativity in technology in the united states is still ahead of where it is everywhere else in the world. china is making major advancements. they are putting more money into han wed technology t are, and it is making major strides. wien.d: that was byron
tencent hoping to reassure investors spooked i the wechat ban in the u.s. president trump threatening to shut the messaging app. the company tried to emphasize the difference between wechat that operates outside of china, and the one for domestic users. loss in the oil and gas assets triggered by low energy prices and the impact of the coronavirus. the company made a net loss of compared to an profit of $420 million the year before. taking a hit, net profit down 25%, over $310 million australian for the former wine
division seeing a challenging u.s. market. looking at some asset sales having a positive recovery signs in china. they scrapped their guidance list for the rest of the year. we will be on the subject of treasury wines, speaking to tim ford, and seeing whether he sees fromisks to his business australia's growing fractious relationship with china. haslinda: let's look at some of the movers. right now up 19%. out theicom beating mess, not recommending a payment of its interim dividend. tencent down 1.5%.
has been front and center, its numbers the highest estimate. tencent playing down the trump administration's wechat ban. tencent down 1.5%. 4%.a mobile higher by on.sia it is risk rishaad: let's look at what is going on in chinese markets as we go into the lunch break. moving to the downside at the moment in thailand. msci asia-pacific index is clinging onto gains as we have seen the rally peter out at the moment. up nikkei was doing great, one point 9% as we went into the lunch break in tokyo. moment,markets at the essentially this trade deal and
rishaad: let's get the first word headlines, china saying it will table president trump's ban on wechat and tiktok. a virtual meeting is under discussion. the white house says the deal is working well. signs of the carrying over the coronavirus in tech security among other factors. iran says president trump has no chance of a new nuclear deal if he is reelected. his claim was dismissed of a new agreement saying it would require a total reversal. some said he expects a breakthrough if he were to win. government is warning of hard times ahead as the economy slump since two -- slumps into its worst recession
on record. brexit is adding to the coronavirus fallout. gdp plunging more than 20% in the second quarter, the most since records began in 1955, and double what was seen in germany and united states. apple -- they plan to split supply away from the mainland and will move to southeast asia. the proportion of iphones manufactured out of china is 30%, up from 25% june. haslinda: asia hanging onto gains, up 0.6%. nikkei leading the .urge in asia, up 2%
the hang seng under pressure, down 0.2%. tencent pretty much front and center, it's estimates are higher, and downplayed the trump administration's wechat ban. that is putting pressure on the hang seng in the kospi is higher by 0.9%. this is the best performer in asia this year. the benchmark in australia lower by 0.6%. dropping, stocks communication services was the .oorest performing sector 8% below expectations. the nifty is pointing to a higher open, up 0.3%. at 74.82.
set to getfe looks tougher for hong kong officials after sanctions by the u.s. banks are taking steps to comply with the restrictions to secure access to crucial dollar funding. steps were taken by other global banks to remain in compliance with the sanctions. steps are these chinese entities taking to fall into line with what the americans are doing? >> good morning. as you mentioned last week under an executive order from president trump, the u.s. sanctioned 11 chinese in hong kong officials including the chief executive carrie lam. this was not entirely a surprise for banks, they have been bracing for this for months. and large foreign lenders like bankingp have increased
clients in hong kong. most surprisingly, we are seeing for the state run chinese banks including the bank of china, china construction bank, they have turned cautious a new account for individuals, one has been suspended, and transactions have an added layer of compliance checks. some lenders have banned u.s. transactions. haslinda: why are they doing this? the hong kong authorities is lenders have no obligation to go the way the u.s. sanctions have gone. >> the issue is not about the hong kong regulator. to thebout access international financial market which is dominated by u.s. dollar transactions. the value of u.s. sanctions means risking crucial actions.
in 2012 for its oil financing dealings with iran , what that effectively did was suffocated cross-border business. chinese lenders have operations they have quite a lot of dollar funding, $1.1 trillion at the end of 2019. they cannot risk that kind of blowback from the u.s.. what does that say about china's approach to the standoff with the u.s.? >> i think the first thing, the banks have their own interests to consider. they have the funding to think about. they have their international networks to think about. they do not need to run afoul of u.s. sanctions. morgan chase noted in a recent
report that chinese officials sanctioned can easily obtain banking services from local do notd banks that still have dollar or u.s. businesses. this says something about the approach more recently from the chinese in general dealing with the u.s. despite all the activity, all the actions against chinese companies, the chinese continue to say their door remains open to talks. by sanctioning 11 americans, they stopped short of any senior american government officials on the list. that says the same thing, we remain open and want to calm things down. rishaad: our asian finance and managing editor. wines takingeasury a stomping. , ceo,xt guest is tim ford
a scrapped guidance for 2021. tim ford, ceo, treasury wine estates joins us from melbourne. what is enough recovery? me. thank you for having the recovery in china in june in particular, we have seen it over april, may, and june. the consumer demand has increased steadily over the 12 week period. in june we saw the increase to versuswth year on year the same time last year. that was a great sign, after , the business and consumption and demand in the china market for our brands has
continued strongly. you have the pandemic and worsening relations between china and australia. is that impacting the wine industry in any way? the tensions between china and australia? keep a closewe watch. withelations we have government agencies, and in china and australia as well. we have not seen any impact on our business or the wine in terms of problems with other customer owned businesses. from our point of view, we continue to invest in china, build our presence in china. we want to be the beverage of china and build the wine category. continue, andl
the consumers in china continue the demand. it is a great category. it is a worry if you read the press, but for us we will react to facts and when we see things happening in the market. the talk about possible asset sales, give us an update about spinoffs, where are you on that? tim: what we announced in april, we are undertaking a separate strategy which allows us to do the deep dive and reconstruct our business. and how can we best grow the portfolio?
from a consumer point of view and growth opportunity perspective, as we have done that work, there are alternatives we are evaluating. there are other iterations that we continue to do the work on. as we go through this pandemic period and start to recover, that is a priority focus for us. we are not rushing to make a decision. it is underpinned by a desire to make sure we have the construct of our businesses and the operating model to help grow all the portfolios into the future. that is the premise behind it. i think you will be dramatically shaking the size of your u.s. is this, cutting it by about half. is that a prelude to get out altogether and have more
investment? tim: the first point, yes, is correct. that is the ambition for our u.s. business. we will not look to exit the u.s. business, that is the biggest wine market in the world from a consumption point of view. a premium wine market. our brands do well in that market. if you marry consumer demand , then we plangths to stay in the u.s. market. what we talk about in development and reshaping of the u.s. business, ensuring we have a focused portfolio, more premium brands and higher price points that give us the margin structure. the best strategy, or the exit strategy we are talking about are more around commercial wine below $10.
if we can divest those quickly, we will at the right price for value for our shareholders. we will shrink those over time the growth engine of the u.s. .usiness covid-19how has changed consumer behavior? is: consumer behavior escalating trends we are beginning to see in the market. shoppers are buying more through e-commerce channels. that was already happening and growing, but escalated very quickly. to medication through the channels, how we engage with consumers through those channels will be a big change for us, particularly our luxury brand.
opportunity and growth happening at the premium point. the other is around home consumption, people spend a lot more time at home. wine consumption continues to be strong. it is a different environment, and that is the challenge for us. we see the trends will continue to stick for a fair time. we are pivoting in the way we engage with consumers. ultimately with , how has in melbourne that affected your production
and supply chains? what have you had to do to keep things going? tim: we have been fortunate that we have been an essential service through this time from an industry perspective as a wine industry. that has helped us. had our vintage done, but we were hoping to make it through the vintage period. we had the protocols, hygiene requirements, so it was not as efficient as it has historically been, but it has not interrupted our supply chain. pleased that is the case. operations have not been impacted, which is fantastic. haslinda: what is it like for the labor force? , andere a lack of workers
also there is a lot of pressure from the unions to have the locals pick up the jobs? tim: inner situation we do not tap into that workforce as part of our vintage crews. we move our own employees through and have a casual workforce that comes in. generally in australia and new zealand, it is the same workforce to come back year on year. they are not necessarily travelers. we did not have the shortage some industries have had. final question for me, i will dialback to where we started. in china what is the demographic looking like? what price points are you selling the most wine at?
are you selling it in the major cities, and which ones? price to thefolio more premium price points in we have a large brand for a lot of that. broadly it is the more premium price points. consumers in more the category, and younger consumers which is fantastic. inare seeing a shift consumption in china, which we have not seen before as well. we are focusing our efforts through the digital mechanisms, that a strong with that demographic. very broad in growth across the consumers, and the traditional celebrations and the like, we
see they are coming back. consumers provides a wonderful opportunity. we introduce them to the wine category and our brains. ands.d our br rishaad: the indian open in about four minutes. we are looking at a flat start. looking forward to inflation numbers out of india later on. although so -- also looking at companies coming out with earnings as well. haslinda: still to come, second-quarter numbers for netease, and the growing mobile
how is this company faring against other internet giants? what about alibaba? the share price is doing quite well. 50% year to date. [indiscernible] company.a gaming of its revenue comes from mobile games. that is why it did well during the pandemic. as well as in the second quarter. revenue is expected to grow around 70% for the second quarter, in line with the first
quarter pace. focused on china, mostly chinese users. compared to others who have less geopoliticalhe tensions. streaming is one of their newer businesses. have a chance to challenge tencent on that front? it is expanding into other online content like education and music. newaw earlier this week songs forto license their own streaming content. has the deal, and
tencent signed exclusive deals with big global music labels including universal. some is licensed down to netease. agreements, its can reduce that call and have a bigger music library to compete on music streaming grounds. let's do a quick check on the business flash headlines. jump in profits -- a 30% jump in profits as investors sought safe havens from coronavirus disruptions. sales revenue from its five miners were short of estimates.
despite the rise in prices, it's production of gold will be lower this fiscal year. is threatening to close his ride-hailing services in california if it loses its fight over a state law that would force them to consider drivers as employees. uber says the law would shut down the entire gig economy by raising costs. sources say a shutdown is a matter of last resort. a rise of 5% after the long-awaited smartphone is now available for preorder. it will come with two screens. -- it will equipment $1400 andction of the
available to buy by september 10. rishaad: one of the big stories mondayweek, starting with a protest weapon in hong kong, the stock market. all jimmy ly's -- --is falling further, 23% going up slightly at the moment. at one point $.40 per share. $.42 is where it is trading at the moment. this is the big story we have been witnessing, a popular way for activists to show support for jimmy ly, after his arrest on monday. they were snapping his daily newspaper as well.
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