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tv   First Up With Angie Lau  Bloomberg  July 6, 2015 7:00pm-8:01pm EDT

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♪ angie: u.s. traded chinese stocks plunge the most in four years. greece keeps the bank closed. credible proposals and germany says time is rapidly running out. oil tumbles again amid growing concern about economic stability in europe and asia. welcome to first up. i'm angie lau live from bloomberg's asian headquarters. in's checking on markets
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asia at the top of the morning for us. it is pretty much flat at the start of this session. new zealand dollar spot continues to weaken as greece votes no. we cap density openings in australia, japan and korea. let's go over to japan. ofe than 2% down after 61% greek voters voted against the latest that deal. whether or not greece and tsipras will get the deal done ahead of the meeting later. futures pointing to a higher open. a little optimism as it is stepping down. the dollar-yen is slightly weakening off the safety haven. stocks china, chinese traded in the u.s. have plunged the most in four years.
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here.e got juliette this fall is a red flag for investor confidence. juliette: it is. we are seeing the central bank in china trying to do everything it can to stop these $3.2 trillion routes we have seen in chinese equities. we are still seeing the shanghai very able in the u.s. having a big fall as well. what we are seeing are those small stocks falling. were down byanies around 12% on the shanghai composite yesterday. you can really see over the last month, we have had those really big dips coming through in the overall index. the biggest u.s. chinese traded fund was down 2.5% overnight in new york. that is extending its losses to june 12 by around 22%.
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the bloomberg u.s. china equity we track was down 5.1%. that is a really big drop we are seeing coming through. we can see this is a bit of a red flag for confidence coming through in overall mainland stocks. angie: a red flag for china. what else can the government do? iette: we are seeing new measures coming through from the bank of china. a suspension of i videos, support -- a suspension of ipos, brokering money back into the system. pumped through liquidity from china securities finance core and even this does not lift finance confidence. they are worried about the savings of all these chinese investors and he wants to shore up confidence to make sure there
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is not political unrest. angie: we saw the extension here. te: eight shares following the route in chinese mainland. and really impacting the index overnight. we saw it have its biggest drop since november 2011, more than three years overnight. yesterday, rather. again, we really saw those smaller tech companies impact those. we are really seeing those companies trying to shore up confidence in having a big fall. at one point, the index fell more than 1000 points, closing around 800. incredible 3% drop. angie: 2.5 hours before the start of the session here in hong kong. let's see if it is another nerve-racking day. thank you. checking other headlines -- china has nominated its former road -- world bank representative to head up the infrastructure bank.
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ithe is currently secretary-general working to head up the aiib. he is also the former supervisory chairman of the wealth fund. iib is due to start operations by the end of this year. falling to levels not seen before it was pegged to the u.s. dollar 10 years ago. an investigation into the prime minister's finances is among the factors driving the decline. it is facing allegations that he misused millions of dollars in funds linked to the debt ridden state investment firm. since fivee most months amid concerns of economic stability -- instability in europe and asia. west texas crude is at 52.88. brent is looking like this.
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7% down. our other top story -- eurozone leaders talk about the greek referendum. alexis tsipras saying his hand has been strengthened by the vote by germany and france have both signaled their patience is rapidly running out. we are joined with the very latest. >> that is a charitable term at this stage. the patient's level is very thing because there is not a lot of tolerance for negotiating because they have negotiated for the past five months. angela merkel speaking at the palace in france alongside the french president saying the latest deal we offered was very generous. at some point, greece has the bear responsibility. this comes as merkel tells
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alexis tsipras time is running out because financial collapse is near. the banks are running out of cash. they are set to stay closed until tomorrow and the ecb is not necessarily increasing its emergency liquidity assistance. it is making it more difficult in some ways. let's listen to what angela merkel had to say on monday in paris ahead of today's all-important emergency summit. time is running out. such proposals need to be made this week in order to resolve the situation as it is now. the principal leading up to this as the french president said, a very european principle. and wed it is solidarity have shown much solidarity with greece. our last offer in the negotiations was a very generous offer. in these times of challenges,
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europe can only keep strong and stand together if every country assumes was possibility -- responsibility. hard-linel taking a which is an indication their patients has run out -- patienc has run oute. alexis tsipras needs to prove he can get the deal as has been requested. he has political capital as a result of this referendum, but some analysts are saying it might not be as much political capital as he thinks or the government thinks. nonetheless, it was a decisive victory for alexis tsipras, but does it fall on deaf ears? angie: political capital is one thing, actual capital is another. greek banks are running out of money. near in dire straits, paralysis here. the ecb seems to be taking a hard-line.
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zeb: the ecb restricting access to emergency cash, emergency loans. making it harder for those banks to get that. there are questions on whether or not the liquidity assistance which is propping up the banking system will stay unchanged. that is the key issue. the greek lenders experiencing a cash drip. the bank customers are getting $66 a day, that is the limit. the discussion of capital controls will be on the agenda. this is having a serious impact on the greece population who are really suffering under very difficult conditions. we will see how this plays out. the ecb does not want to front run politics, so they have to let the political process play canin brussels before they begin to modify their policies because they could punish greece as well. they will wait for the leaders later today. angie: let's see what happens.
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thank you. let's get more on what happened on u.s. markets. oliver is joining us from new york. we saw its start in asia. we were the first markets to respond to the greek vote and then extended to europe. how did market to do in wall street? oliver: maybe not quite as the climate affect as one might have thought from the referendum vote. the move in china was the big equity mover. the u.s., it did have an affect. we saw a risk off trade. strength in straight trash in treasuries, the u.s. dollar -- strength in u.s. treasuries and the u.s. dollar. it was not quite as widespread in terms of magnitude. i think a lot of that is because last monday there was a big surprise when folks found out the greek government were going to dig in their heels and extend
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this thing in longer. an almost 2% drop down last monday. today's gains were pretty small. if you actually get down to the inner workings of the market, it is pretty interesting because some of these trades might surprise you. 2000 caps on the russell were about a 10th of a point down compared to the s&p which was about 4/10 of a point. typically those are risk on trade but they did better today because we saw some strength in the u.s. dollar. this is not terribly horrible news for stocks in the u.s. what we have seen is if you look historically at the market, it does pretty good during these periods of stress and turmoil in greece. a lot of that comes back to the fact the u.s. really cares about domestic issues and we might see that playoff this week. we will certainly have plenty of room to have stocks getting
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energy. angie: let's see if they get reenergized because there is a lot of stuff happening around the globe. thank you, oliver. the wrapup on wall street. you can get more on today's top stories on bloomberg business, bringing together the best of bloomberg news and new digital content on one address. also on, we are watching the iran nuclear talks on the verge of another missed deadline in vienna. what are the implications? plus, the plea from rich russians to elon musk -- sell us your cars. we will see if he does. check it out. next, uncertainty in greece -- how should investors react to prolonged crisis as negotiations enter a new chapter? we will discuss that and a lot more when we return. ♪
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angie: checking some of the stories making headlines -- a deal on iran's nuclear program is within reach as talks continue to extend. ministers from the five permanent un security council members plus germany won an agreement to have an inspection. the latest deadline for a deal expires later today. at least 12 people were killed when an iraqi air force plane inadvertently dropped a bomb on a baghdad neighborhood. the accident was caused by technical fault on the russian-made jet. at least 25 other people were wounded. the plane was returning to base from northern iraq where the military is fighting the islamic state. thai custom officials have seized 250 kilos of ivory hidden in crates being shipped from africa to asia. they say that shipments of about 130 tusks and other fragments
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was found from congo after the ship. $300,000 and was destined for laos. it is the 11th such seizure in thailand this year. grumbling confidence in the economic stability as u.s. and china will hit oil hard. west texas crude down, falling the most in five months. this really took its toll on energy shares. transocean one of the biggest decliners, falling more than 4%. this is what happened as these energy companies drag down markets as a whole. the s&p 500 down 4/10 of a percent. the dow close down a quarter of a percent. let's get more with mark, he is chief investment strategist, and jenny. very good to see you. greek voters said no. -- itms that other things
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was less of a precipitous fall in u.s. markets as we saw in other markets. mark: most definitely. futures were down pretty hard last evening and it suggested a pretty ugly opening. instead, at one point we were up in the u.s. equity market. nevertheless, a rather manageable decline in equity prices considering the news. i think it is the consequence of investors beginning to look through this process and say ok, in the event negotiations could come to a solution, we will have a rally so why not be underinvested? at the same time, if the dissolved into where greek leaves the euro, 3/10 of 1% of global gdp, the economics spillover. it is a consequence looking at europe at the aggregate. business continues to improve. equities should respond favorably. angie: what don't we know about a possible greek contagion with
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an the borders of eu? risk i think the contagion is not so much economic from the standpoint of greece's economy or even in financial systems simply because i think so much of the money overnight -- over 90% is held in central banks and governments. a risk of a lehman is remote. i think the risk is you see spread in the populist movement that has been initiated that could lead to a more economically important country like spain for instance which has a party that is going to be part of a voting process later this year that could carry the same message to a country who's economy is 10% of the euro area gdp as opposed to less than 2% like greece is. angie: what is an investor to do? as we look at this landscape of uncertainty, is it time to buy in to the dip and look for those
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opportunities? mark: we are looking for those opportunities. i think markets will remain unsettled for the next couple of days as we hopefully get clarity on the negotiation process and there is word there might be some resolution or compromise that leads to nobody satisfaction, but at least puts a deal on the table. i would say put together your shopping list of things you want to own and/or not to be shaken out during this pullback which so far is less than 3% in the u.s. equities. expect the bull market to be derailed -- that is not the base keep. it would either hold or be buyers optimistically over the next week or so. angie: the other big story we are watching that could impact investor sentiment -- china's big route does not seem to be ending. mark: so far it has been idiosyncrasy. it was sponsored by the chinese
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equity market. now with the pullback being rather severe, you are seeing officials stepping in since they view the chinese equity market as a propagate for the global state. we will see how effective the policy initiatives are. we saw a rally in shanghai today that i think we will see some carryover because i think it is politically important for the market to hold its gains to some degree and hopefully even advance them further from here. a, we would be long chinese share equities given the fact it seems to be imperative for chinese officials that the market does respond favorably to their intervention. angie: it seems like a lot of investors are spooked. h shares down significantly yesterday. on wall china adr's
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street really reflected this mood. you are saying stick in there. why? mark: valuations are not excessive in the h or a share market. the domestically traded -- domicile company marketplace -- the price to earnings ratio is about 15:18 right now. hong konghares, shares of those domicile chinese companies, evaluation is closer to 10. while i think there is valuations support in the event we see continued evidence that sturdy ase economy is opposed to the celebrating -- decelerating that we know that is being targeted. i think we begin to see signs of that which we believe we will. that will help destabilize the equity market and re-attract investors. waye: ok, that is all the
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around back to the u.s. we have earnings coming up on wednesday. how do you think earnings season will reflect perhaps what a blip in the u.s. economy we saw in the first quarter? mark: first quarter earnings surprised, which they tend to do. the second quarter was down 4.5%. if you pull energy out of earnings estimates, it is more up around half percent. what will typically happen is as we move into earnings season, you will find out there will be enough earnings to pull those numbers upwards, perhaps with the s energy reading to be in the single digits which is not bad considering the pace of global economic activity and the head when we face in the u.s. of the stronger dollar. i think that will be enough to support u.s. equity prices as we get deeper into the second half.
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we think improving economic conditions and the fading macro economic risk bodes well for share prices. angie: we have to watch that strong u.s. dollar. if you get stronger still on the heels of europe. mark, we will leave it there. thank you for joining us out of pittsburgh. rejected next, greeks austerity on sunday, but what about those who voted in favor of it? we speak to those on the losing side of the referendum when we return. ♪
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angie: the majority of greeks may have said notes of the referendum but what about those that were in favor of it? [speaking greek] >> the referendum has caused questions. it was yes or no to europe. greek]inaking >> we believe in our opinions about the difficult days that we have to face in the future. [speaking greek] >> we hope that maybe we made it
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wrong. i have an open mind, always open mind, but also we have an opinion. the exactt know yet greek problems after the referendum. so, it is really difficult to say what has happened. weeks and -- next it will be really difficult. >> [speaking greek] ♪
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angie: it is 7:30 a.m. in hong kong. the sun is out and bright. here. of victoria harbour we are 30 minutes away from the opening of trading. on your tv and online, you are watching "first up." ♪ angie: the top stories this hour -- chinese adr's plunge the most despite the government measures of it shoring up the markets. the shanghai composition -- the index is down 27% since its peak
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on june 12. the three-week slide to enter a correction yesterday, falling the most since 2012. eurozone leaders meet today to discuss the next step on greece. chancellor merkel says time is running out following the referendum. greek pm alexis tsipras has been told he must come up with a credible plan this date in the euro -- to stay in the euro. they have until wednesday to stem cash resolve. fell the most in five months amid growing concerns in europe and asia. futures fell more than a percent in new york and more than 6% in london before pulling back. we have west texas crude trading at 52.76. 6.27%.s down for more, we're joined by
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brentladley. is there anything else worrying the markets and driving the price of oil? bradley: you have got concerns about greece and china. in addition to that, a potential deal over iran could be a major factor driving the terms of oil right now. some of the indications have been positive. a lot of people are anticipating a lot more supply in the market at a time where demand might be falling because of these factors. angie: is there a sense the prices could fall further? bradley: i think there is. forecasters have been split for a long time as oil has swung up and down in this down cycle so there are a lot of the opinions. there are people that believe these different things happening today could come together to hurt or push prices down in the future, especially towards the end of the year where you might
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see this apply in iran come --- the supply in iran come down. for a lot of people, the golden goose for oil is demand out of china. if there is turbulence in china, you will see concerns reflected in the oil price. angie: we will see if there is a deal from iran. how long would it take to for the market to see new supplies? bradley: six to 12 months. that is what we are seeing from some of the banks like the bank of america. an additional 400,000 barrels of supply but that is the first drop in the bucket. as you go on another two years, iran's goal is to double the amount of production they have right now. demand that with tepid and you have a big problem for oil. angie: ok, bradley olson, thank you for that wrap up.
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nowave breaking news right -- samsung releasing earnings. >> it looks like it is another miss for the second quarter in terms of earnings for samsung. the profit coming in at $6.9 trillion. this is yen. that is a mess. we are expecting a 7.2 trillion yen estimate. if you compare from the last year, the second quarter 2014 figures, they were expecting to stay flat but we are seeing a 4% drop in the operating profit. it is a slight improvement. a bigger improvement in the last four quarters. operating profit dropped for six quarters. in the first quarter, we saw net income all about 40%. we have not got the net income numbers yet. $48 trillion.00,0
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people were talking about the samsung galaxy' 6 and edge. they were supposed to be the bright spots. a couple of weeks ago when the economic daily reported -- not citing anybody from the company, but said they were expecting the sales were weaker in the month of june. 4.8 saw a big surge, trillion operating profits for the month of april and may, but june falling a little bit. it has seen a little turnaround and decline in sales, but we will see how this goes because they did start selling those 6 phones in april. they're also reports of 7 coming into the light in the second half but analysts recommendations -- 47 buys, 5 holds, and 3 sells.
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we will see how things go but this is what we're looking at right now. operating profit a miss for the second quarter. angie: it looks like that is a problem for those fixes impacting samsung. the other stories we're following -- here's david. david: china may have overtaken the most promising market by the dropped to just under 3.5%. automakers are struggling in china. the economy and the stock market rout in contrast, u.s. makers are doing their best six months. american apparel says it is closing some stores and laying off workers to cut costs. it has not said how many stores or employees will be affected but it will save $30 million. the company warns despite the cost cuts, it might have to
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raise additional capital. it has more than 200 retail locations and a workforce of about 10,000. gopro has introduced a smaller and lighter camera as it hopes to maintain dominus -- dominance in the action photography market. it is a single button that turns the recording function on and off. unlike other models, there is no speed. it will cost about $400 and will go on sale this weekend in the u.s. that was a look at the top corporate stories. wish you could put a gopro on this one. another roller coaster ride for chinese shares on monday. the index snapping a three-day route. we have stephen in beijing this morning where we are getting a
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better picture of the financial fallout of this market correction. what about the political fallout? steve: yes, that is always a consideration, especially in beijing. the financial fallout we have seen -- $3.2 trillion of market value wiped away. we are seeing the pain on the individual investors, 80% of which make up the shanghai composite index. the political fallout is perhaps even more touchy because she's iping does not want to see this destabilizing force of a market coming unwound. that is a big concern. that is why we have seen a number of dips every single day. new measures to help prop up the market. keep in mind, these are the authorities in china that she really did -- cheerleadered
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it. they were really trying to stoke this rally. you can take credit for that but you have to take responsibility for the consequences of that. that is at hand of authorities right now. they don't necessarily want to be held accountable for wiping away the life savings of so many individual investors. that is why the political fallout could be quite sharp. i have a quote that is really quite distinct from the deputy dean of a university. he says this is a real testing moment for the leadership. they must rescue the market with all their means. the what if scenario could not be allowed. he goes on to say the evaporation of fortunes of more than 80 million individual investors would pose unthinkable social problems for this country. as someone who has covered china for a long time, any government
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i should say, does not like unthinkable social problems. trust me. angie: yeah, but it seems like everybody and their dog has money in the markets right now. there is a lot of skin in the game across the board. what is the word on the street? are more market boosting measures expected from the government? marketabsolutely, if the has not achieved its glory. if those latest measures have not created that backstop. you can probably expect most of the economists -- they have said more measures could be in the pipeline. keep in mind, the benchmark one-year lending rate is at 4.58%. it is a record low for china but it is still relatively high. they have room to cut lending rates. the triple r is fairly high. they can do that kind of monetary stimulus. there could he other
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transactions being cut. there could be stamp duties cut, other measures in the pipeline because of the political risk. i just arrived yesterday and i met up with some friends in beijing. that was the number one topic on everyone's mind at the dinner table last night -- of the stock market rally -- rout i should say. angie: absolutely. thank you for that. miss for samsung and the latest numbers. we will big into the results after this short break. stay with us. ♪
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angie: welcome back. checking headlines around the world -- beijing has confirmed its rejection of arbitration to resolve the long-standing feud over islands refuted by the philippines. an international tribunal starts later today to address china's argument that the arbitration does not have the authority to
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rule on the claim. beijing says they should discuss the dispute face-to-face. korea and the u.s. have a joint drill. nearly 2000 soldiers took part in the ten-day exercise which involves the building of facilities on the coast and the installation of fuel zones. it is meant to improve communications between the armies. football's governing body has banned an authority for seven years due to allegations of corruption. fifa says he has been suspended for breaking its code of ethics involving constitutionality. ban.ll appeal his let'srd earlier today,
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get more on the breaking news that samsung released a few minutes ago. we looking at preliminary second-quarter earnings. nicole is here. basically we have got samsung coming out with extraordinary products. everybody loved it, the critics loved it -- the s6 was supposed to be the rival to the apple iphone. what happened? samsung did come out with amazing products, one of the best products in the galaxy history. the touchscreen is one of the so, they did not expect the demand of the touchscreen. qualityd for high
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touchscreen is very low, so at the moment, they expect they can produce more to meet the demand. angie: here is the disappointment -- this was supposed to be the quarter where things turned around but we are seeing the seventh straight quarterly miss in a row. what can samsung do here? why can't they get out of this slump? anole: they are facing increasingly pressure. we expected it would decline because they tried to rationalize the end where they face increasing pressure from their rivals like lenovo. they have simplified the product line. there will be less products in those segments. volume is not able to be
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ramped up so quickly. that hurts them. but, they are still trying to shift strategies into developing markets. angie: when you are doing your research into what samsung is doing to fix this issue which essentially they have not made enough phones -- can they turn things around? nicole: i think samsung does have the foundation and the components of manufacturing. company, the display they do have the ability to make more. right now, they need to very --ckly -- the iphone 6 angie: it is coming out soon. they have to get ahead of the curve. no pun intended. should they bring back qualcomm?
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they basically are being able to profit out the memory chip because they are making their own memory chip in their processes for their own s6. that is helping things. but, if they cannot get the product online and into the hands of consumers, could they be asking for other suppliers to help? nicole: right now, the constraint is on the curved screen. they are doing relatively ok. improvement in semi conductors. also, because they have their own chipset. they can make a lot of differentiation on that area. we need to see more from samsung. angie: i want to ask you a little more to expand outside of samsung. we have a chairman that has been hospitalized and his son has taken over in terms of the
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meetings and acquisitions and the like. how is this transition happening and how is it being guarded? nicole: i think the leadership transition does not help to make decisions quickly, especially in a company like this size. right now, i think internally for samsung they have to make decisions carefully because given the leadership transition. regarded son is highly as visionary, westernized and can bring in new culture into the company. however, it takes time for a new leader to join in and be able to get people to execute. angie: very quickly, the chables in korea, legendary for non-transparency. versus american companies, much
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more transparent about secessi n uccession. how does this feel for investors? nicole: what they need to do right now, something they can borrow from xiaomi, invite more international management into the company. for example, getting more authority for someone from china, india, from the u.s. -- making decisions happen in the international space. that helps to give investors confidence and the company confidence and being localized. understanding what the international market want. angie: a big job ahead of him as his father operates. -- recuperates. thank you. streak.p next, moving we will take a look at the prospects of one australian
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miner when we return. ♪
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angie: no turnaround inside for htc. they reported a record second-quarter loss. it was a little better than analysts forecast. it came in at $1 billion. the company's lowest quarterly revenue since 2009. one of the iconic sales of capitalism has fallen silent. look at that. the famous war of the trading pits. most future pits in chicago and new york will be closed for good. no more frenzied writing and selling of futures and commodities. businesses move to electronic trading. where s&p 500its
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futures and stocks are sold and traded will be open still. welcome to the stock exchange. we are taking a look at the openings and our reporters are here to look at what stocks. we go to zeb. i spent three years in chicago. it sounds like they are a bunch. zeb: did you ever get a headache? angie: it was great. the noise was energy. zeb: i would imagine some of the words were not fit for tv. angie: that is right. zeb: speaking of investing and security companies, luray as set securities, shares are up 10% year to date. the news today according to a
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newspaper is it will spend $444 million, almost a half billion dollars to invest in real estate. it is diversifying. in particular, fedex this reason facilities in the u.s. and german office space. it is quite a broad portfolio. angie: that sounds very profitable. zeb: lots of opportunity. angie: yvonne, it has been two weeks. yvonne: i might be a little rusty because i have been gone for a while. shares of an up 45%. this is the company that makes electric measuring equipment. meters,ant resistance automatic testing equivalents, you go to them. they have been doing very well. the us raise their profit forecast to 24%. they lifted the sales target . the analysts have said it is
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good to hold. we will see how things work out. angie: ok, she is back. david? david: i don't think it was a very strong case. [applause] [laughter] david: the iron ore price overnight. entering the bear market for the second time this year. profits were down 5% in the sale yesterday. i believe it is diplomacy. [laughter] angie: that is a look at the stock exchange. back in one hour. looking at the next hour of the show, samsung's flagship smartphone fails to win over consumers and the finances feel the effects. we will take a look at the numbers and get you the market reaction.
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we are counting down to the openings in korea, australia and japan. this is "first up." ♪
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heidi: i am heidi. mark: and i am mark halperin and with all due respect to clinton staffers, you missed an awesome opportunity for ring around the rosie. ♪ mark: on the show tonight, hillary's rope and christie's hope, but first the donald says nope. a feature story links statement from the donald, an unusual one. trump's statement simultaneously stands by what he said, but


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