tv First Up With Angie Lau Bloomberg August 24, 2015 7:00pm-8:01pm EDT
let's get to it. checking in on markets in asia right now. 2.5 percent down. the new zealand dollar spot dropping the most in 30 years yesterday. right now, at 64 u.s. cents. we are also counted down to the opens in australia, japan, and asia. let's get over to japan. checking futures in chicago, below that 18,000 mark. it is going to be another down day today in asia. the dollar yen slightly weakening. strongest in 10 years. as we brace for another busy day on asia markets, wall street has
provided no refuge from the global stock. &p fell. the recovery did not last and it sank. let's get more with joseph. run us through the action. 3.9% decline in the s&p 500. its takes into 11% off of high. that is the definition of a correction, more than 10%. we are in a corrective phase. there is also a going on in the dow jones and nasdaq. there is nowhere to hide in u.s. equities right now. all three major indexes are weighed down. this really stands from a little global worry over china's ability to spend the depreciation of the currency and
proving to people they have this thing and check, they will be able to keep their economy was in the reigns. that has spread to europe, asia, and made its way to the u.s. that is really the big story there. angie: nowhere to run, nowhere to hide. what are the big movers? joe: it is tough to pick one that was particularly that. publicly traded copper per user was down most in the s&p 500 today. metal was down to a multiyear low. on the bankside, citigroup and j.p. morgan looking pretty 5.2%., down at least that ties into the rate hike situation. people were expecting a big windfall for banks.
that was on the nose particularly bullish for them. now it is probably pushed up to december if not later. the arts have absolutely changed after this route. as you indicated, what does this mean for the impending fed rate hike? a lot of people that did that september rise. that's are off now. joe: september is no longer on the table. it'll be extremely surprising if the fed were to move in. september would be the earliest they would do anything. right now, probably 46% of a december rate hike, down from 61%. it is the preferred outcome out of the two. it is down 15 percentage points from where it was friday. definitely have seen the effects of the global turmoil. we actually had someone yesterday, the chief investment officer doug ramsey, he said as
soon as we get a correction, we could definitely know the eminent rate hike. that is an extreme view. that remains to be seen. we were down big today. who knows if the bleeding will stop. he mentioned the asia and markets down in early trading so it should be interesting. angie: that is what we are doing right now. thank you for bringing us all of the market action on wall street. asia is waking up to that turmoil that happened overnight. what a day for wall street. and look forward now to what we are watching today with global markets. david joins us. it is turmoil, indeed. david: it is. district was actually looking a little busy. there were a lot of people in the street. a lot of these traders got out
of little earlier because of this continuing bloodbath we see in the markets. it doesn't look good. you talked about new zealand earlier. dropping the most yesterday in 30 years. david: it is something we haven't seen in a long time. chicago new futures down. that is also down to the japanese yen. show the yen against the euro against the dollar. we went as low as 116 at one point overnight. suddenly, we are back to levels of last january. japan down 5% on the yield. let's have a look at australia.
iron oar absolutely whacked. brent is now below 43. west texas at 38 u.s. dollars. down, down about 180 points. next up, hong kong and china. i don't know where china will go, that depends on what the government does. the biggest drop in eight years. futures down 2%. these were the guys listed in the u.s.. down 5.7%. -- some of the
tradings had a technical glitch. at levels where the impact is on the real economy. imports coming in gets more expensive, the debt burden becomes unsustainable. angie: what is it going to do to current account surplus? reserves? david: it is about a payment situation. seng didhat the hang yesterday. since octoberhest 2011. people are nervous. we're covering it. are we in a crisis? yvonne has been taking a look at
this. the currency is what we should be looking out for but if you look at the comparisons and and 97 crisis as well as the global financial crisis, we're nowhere near those levels. let's take a look at the first chart. that --encies for things could get messy, starting to hit the economy. malaysia the biggest loser year to date. 97, 60%.to we are nowhere even close. a very good way to put things in perspective. there is still the selloff. angie: you also have to consider the velocity of this trend. this one has been trending down for a while. yvonne: let's go to the next
chart. mention we see the volatility here overnight. this is 2007. nowhere near those levels. seng,take a look at hang the volatility was what really sparked a lot of and it yesterday. the fastest false since 1987. this plunged similar to what we saw about 30 years ago. momentum still very down but the volatility is about 39%. near where nowhere the global financial crisis was. we see not even half of that. angie: still the momentum is going a long way right now and that is the fear. thank you. you can get more on this and all
the days top stories at our digital destination. bringing together the best of bloomberg news all in one address for you. also on bloomberg.com, a divorce get one oilu k trader a 21 month prison sentence. if you're a fan of japanese whiskey, stock up now. onare will tell you why bloomberg.com. coming up, the search for stability. one possible safe haven in asia as the drought rolls on. stay with us. ♪
angie: lcs -- southeast asia is among those hardest hit. let's crossover to our southeast asia correspondent. how are the losses of stacking up? >> we are looking at huge losses and more expected to come. the jci down 20% from early april lost 9% in the five day through monday. take a look at this. have offloaded.
some say the cash out is not over. it is prompting the government to say it will focus on attracting investments to help p. malaysia was also sold off. stocks at a seven-year low. global funds have dropped. 17 year low, the worst performer in asia. concerns about the political scandal is adding to those concerns. angie: the philippines being singled out as a relative safe haven but even then come
equities at a seven-year low for . >> the philippines seen as a relative safe haven because of low levels of foreign investment. also because it is less loanable to weakening -- less vulnerable to weakening commodity prices. their most insulated from a slowing china and a possible rate hike. it is hard to think of a country less vulnerable. but stocks there still not spare. a seven-year low. they halted trading yesterday following what they said was a technical glitch. was speculation the hold was a deliberate move to stop the plunge. nowhere to run, nowhere to hide. angie: it is mustang sally. our theme song today. we are all waiting for that circuit breaker.
whether or not we get it today in asia is another story. koreanndoff on the peninsula is over for the time being. after marathon talks, the north state to lift its deadly of war in the south said they would halt propaganda protests. the two sides said they will resume reunions with families divided by the war and the north said they regretted the wounding of soldiers in the mine blast. a new anti-austerity party has been given three days to form a government in greece although the chances are put at virtually zero. is a break away from the party. eight and the center-right new democracy have until once ent aht to pres workable administration or graceful had to an early election. -- for greece will head to an
early election. a trail of damage across okinawa. gusts of 256tured kilometers per hour. trainports several bullet transits have been canceled. earlier, the storm crossed the philippines, leaving 19 people dead and 16 missing. about 20 major systems forecasted to hit the area this year. next, currencies continue to fly. the latest live from new york when "firstup" continues. don't go away. ♪
angie: live look at the end of the trading day. s&p 500 falling into a correction for the first time since 2011. as we wake up and asia, we get the handoff. wall street action is really giving a tell went to what will happen here. it looks like we are going to extend this global route for another day. the asia-pacific bracing for another dramatic day will start new zealand has already seen big losses and australia, japan, and korea will join the action and half an hour. hall alan watching things in sydney. paul, no relief in sight.
paul: we start off in new zealand where the market opened 90 minutes ago. it was not pretty at all, it immediately plunged 2.3% and has stayed there. reasons, theggest online accounting software firm, . -- that was hit in early trade. -- no surprise that the new zealand dollar is also slumping at its lowest point in nine years today. in terms of monetary policy, traders are already expecting the reserve bank of new zealand to cut rates again at the next
meeting in september down to 2.75%. it will be pretty much locked in. also depends on china as its number one trading partner. what are traders expecting when the offshore in market opens? -- the australian market opens? paul: it would fit the afx down below 5000 points. it was only down in april when we broke through the 6000 point level. the decline has been steep and pronounced. australian stocks lost $60 billion, the heaviest fall in 6.5 years. the dollar also off 2.2%. we do have a lot of analysts saying don't panic. earnings season has by no means been a disaster. if you look at these stocks were
broadly, it is trading at around 15 times earnings, about the long-term average. the rest ofneezes, the world catches the cold and all story and not immune to that. in terms of the rba, you certainly got a low australian dollar. hereso have traders pricing and the likelihood of another cut from the rba. most 75% of swaps traders believe it will be down by year end. us trillion dollar for all the -- a low australian dollar for all the wrong reasons. victims withhe this meltdown. been -- how bad
has it been in the last few hours> ? >> it has been a terrible day across the currency market. the global commodity currencies, those related to countries that deal with a lot of trade with china, have been hit today. the chinese stock market plunge has rattled those currencies. we saw the new zealand dollar dropped more than 8% today, the biggest move since the 1980's. we're talking really large magnitude. we also saw the australian dollar filed by the most it hasn't five -- it has in five years. we really see some very ugly moves across the asia commodity or agent currencies. also the commodity currencies today. angie: has any currency been spared here? >> the safe havens have certainly been spared today. as investors that rattled by
those moves across the chinese theyt and the asia market, flew to safety in the euro and yen and the swiss bank today. that helped to push the euro up to a seven-month high against the dollar and the yen at a seven-month high against the dollar as well. angie: currency fluctuations doing a doozy onset and other central banks out there. what does this all mean for them? >> the fed has to wait longer. what we have looked at in the markets today is a gradual ratcheting down of expectations of when the fed can raise rates. juneally, it started at and now weaker people talk about december and even march. market expectations have really come down with regard to the fed. today, we saw the probability of a fed rate hike in september at last week.rom 48%
in that short time, traders have reduced their expectations of the probability of a rate hike. is interesting today because we saw a speaker from the fed talking about the set rate hike he expects the fed to be able to raise this year but he made some important qualifications. he did mention the chinese market, oil market, and the strength of the dollar as potential complications. much forank you so covering all of those currencies for us. stay with us. we continue to watch this we continue to watch this
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wall street has offered no index as the s&p 500 day in years.rst stocks plunged almost 7% at the opens. itsidn't last, ending with first correction since 2011. investors heading toward the exit in japan. stocks plunged by the most in two years monday. led the decline. china is facing another difficult day after official intervention fails to prevent stocks come up under the most and who doesn't 7 -- since 2007. the hang seng china enterprises index fell to its lowest in more than a year.
some views there on the global selloff. bi guest bills need joins -- ll sneed joins us now. what was your reaction on this day? >> i have been in the investment business for 35 years and it is always kind of interesting when you get into what i call fast death markets. i mean they inflict severe pain quickly and i have always ry of slow be more wea death markets that fast death markets. angie: fast death --did a lot of people get margin calls today? run a fund with no leverage. the answer is probably yes.
i think we went into this correction with record high margin debt and i think there were 1002 hundred 49 stocks that made a new. traded0% of the stocks on the new york stock exchange were the lowest they have been for 52 weeks. there were -- more than likely there were a number of margin calls that kicked into gear. angie: long-term play, no leverage. is it time to try to pick up some bargains here? --that is what we did arguably it is first of all, you --e to ask yourself what where are we compared to where we were to work three weeks ago? rbobrice of our bo --
gasoline features as one dollar 47. one year ago, that was closer to $2.57. we are at the end of the peak summer driving season in the u.s. and we have gasoline futures that are similar to what they were in the winter last year when americans were paying less than two dollars per gallon. treasury the 10 year is down below 2%, which means 86 million millennials that have mostly not bought a house yet are going to have incredible mortgage rates offered to them for the next 12 months. there is all kinds of positives from this from a u.s. economic standpoint. the only negatives are those of us already own, and stocks have to market down but the 86 million millennials don't yet own a lot of common stock.
angie: that is the thing. maybe there is a little bit of time as well to consider which house they want to buy because the that seem to be fading away for september fed rate hike. >> that is right. the easy way to think about this is in the short run, the stock market takes a picture. in the long run, it weighs things. right now in the u.s., it is so incredibly compelling to buy a house compared to renting. that is true even of a very expensive residential real estate market like seattle that has a large number of college-educated people with high incomes. houses are way more expensive than the average but the rent is in manyp way over 30%, cases 40% or 50% of income. when you cap ataxic disability -- what we indicate is we looked
at a couple of things. we look at who could take the most advantage of the banks being depressed. we bought berkshire hathaway, the largest shareholder of wells fargo and bank of america and american express. we bought some american express under the theory that the world is not coming to an end and people will still charge thanks and have economic activity. probably the most controversial thing we did today was added to a relatively new position in the news corp. and news corp. does have assets in australia and people are scared to death of australia now because of what has gone on in china. angie: that is the thing, the circuit breaker in this global route has not been triggered. who will do it? you are watching us here in asia. how much of today's action in asia is going to influence how wall street opens tomorrow? >> it seems to be in a virtuous ous circle.nvirtu
you do lousy in the u.s. and asia gets it and europe gets hit and they seem to be running a negative feedback loop that not all things are the same for everyone. automakers probably sold a lot of cars -- when i was visiting china, we would go to the border across from hong kong and they were brand-new bmws and mercedes lined up like crazy at the border. i didn't see many us-made cars in that line. it looks to us like american investors are getting a haircut. they could go on for a wild but it is probably not an interruption of this secular bull market that virtually no one has loved anyway. see a we are not
correction since 2011 for the s&p 500. at the end of the day, is the now,for correction right is it warranted if you take a look at the fundamentals? >> that is the one thing that was noticeable today. there were a number of things. we are not market technicians or anything but as an observer of the market, 40% of stocks hit a 52-week low. the spooky trading where things --ld move all over the place those are all because of things that happened. people that have formally been positive would be on your shows on bloomberg and they would say things like this could go on for a long time. ucb professionals really start to get a comfortable. that is what this -- you see the
professionals start to get uncomfortable. angie: thank you for that. on the day, we are counting down to the opens in australia, japan, and korea and let's get to japan right now. 4.6% it down. futures inut chicago. ok. it is still pointing lower but the momentum has shifted. ends now off the low pointing -- and pointing to open about that 18,000 mark. it is weakening right now. that is an inverse of where it was. still very strong there. we will be watching when
australia opens in half an hour. the company reports its half-year earnings later today and analysts are predicting underlying profit will fall by nearly 50% because of the route and commodity presents. we had david stricker joining us live from melbourne. what should we be expecting? david: good morning. it clearly will be the place to look for any good news as investors are looking. we are expecting bhp to report underlying profit that fell as much as 43% according to the average. follows a wider trend. reports income had fallen 88% in the full year.
all of the miners are suffering on those worries about weaker demand growth in china. china the biggest consumer of metals to energy. that is driving down the price of commodities and we see that reflected in the bottom line. investors will also be interested to hear what bhp has to say./ berg sayan glasson last week china's economic performance in the first half caught his company by surprise. hear be interested to their take on the china situation not least because china accounts for a third of the company's revenue. angie: that is why the world will be watching this very closely. is bhp expected to book any impairments?
is.t it flies last month and expects -- flagged last month. bhp has been the biggest gas and thisil and should bring its impairments on billiont to about $16 if it books that write-down expected today. angie: thank you for joining us. speaking to to be bhp chief executive this evening on bloomberg. that is coming up at 9:30 p.m. stay tuned for that. just ahead, under pressure. what our next guest says the selloff in copper could be temporary. "firstup" back after this short
angie: let's get back to the markets right now. u.s. stocks provided no refuge from the global route. the index finished 11% below its main high, finishing 3.9 percent lower. check out the u.s. dollar also hit its trading low. stocks. this is the trigger point, plunging the most since 2007. the shanghai composite be raising its gain for the entire year, ending the day 8.5% down. commodities decline continues. let's stay with commodities right now. jonathan there is chief
investment officer at a lead securities. battered and bruised. how are you feeling right now? a little sore? jonathan: we just have to take on what we can. angie: what are we going to get today? what do you think? jonathan: i think it will be more nervousness. what we will expect is a lot of volatility. we might even see some surprise announcements coming out of china in terms of stimulus. rocking and rolling is the name of the game today. the interesting thing will be how china reacts to the fall as well is how they react the leverage of china's corporate having the markets. panic, so willo
the investors and we will get another' slide. angie: let's break it down by commodity. crude below $40 a barrel, looking like it might go lower still. iran saying they will add at any cost. really, it is all about adding to the glut in the market. how is this going to affect investor sentiment here? remain quitewill negative. there are three driving factors i am looking at. leveraged opec countries will continue to produce the cash flow. you also have the end of the drivetime in the states where we see they'll. you have the fact that the u.s. will vote on whether to allow then to export the commodity. that structural glut in the oil market will remain.
>> i tell people to be cautious because i don't think china can come up that easily with a solution. they face a complicated situation and financial markets are not the first thing on their radar. that is why this market is trying to find its own level and clearing at a much lower level than expected. >> there is not a single catalyst for this. this is about concerns over china, global growth, about the fact the probability the hike is
already receding. and unless you believe the chinese economy is so bad that it is going to hold the global economy into another recession, i don't think it is likely we see a 20% correction on the s&p 500. beene catalyst has building for quite some time. it is a slowdown with respect to china. the fact they mismanaged their equity markets as bad as they the fact we just gave up last week. angie: those are the views on the global selloff therefrom some big market players. as we had to be japan open in a few minutes, futures in singapore pointing to a lower open but above that 18,000 mark so it is off the earlier low. dollar yen right now weakening
118.99.t is at let's continue our chat with jonathan. chief investment officer at arizona line security. let's talk about the china slowdown. china has a voracious appetite, consuming 40% of the global copper supply and also 50% of aluminum. if they are not hungry, if they are slowing down, if they are tightening their belt, what does this mean for commodities? jonathan: if you asked me that question about two weeks ago, i would probably say things are a little better. curve see restocking the and the copper market. we saw premiums start to rise.
that provides us with a healthy outlook to suggest the economy was consuming. things have changed and we have a little panic. we are now questioning gdp growth. i is coming in at 6.6% but think the markets will question whether that is an accurate figure. if we look at that and don't see any good economics, we will find that route will continue for the short-term. angie: it is a little counterintuitive with see it becoming out with earnings and the expectation it is going to re positive despite iron oa prices falling. what is the story there? jonathan: the interesting thing is they are still producing at record amounts. the fact of the matter is the cost is not what they want. theink once you get around buyer's, they will return to profit.
see the announcements as to what they will do with our cost-cutting, it does put bhp in a strong position. atanything, when i look china continuing, i think we see a bit of a bump in the road. give us another couple weeks and that will be over. perhaps minors that produces old as well. gold as well. things look shiny again for gold. last time we talked, we talked about gold. gold has been rediscovered again. jonathan: a bit of a recovery, which is good. result, if you just think about how much demand is out there. demandd that physical will come into the paper demand. at the end of the day, they are
producing and we are consuming. a raiseexpect to see pretty soon for gold. angie: it is all about those very targeted place. we believe it there. leave it -- we will there. thank you. market volatility of the day. regulators across asia are stepping in. india is taking a more laissez-faire approach. he says india is in a good position as low-inflation's will attract investors. >> the central bank is not a cheerleader for the economy. i did not mean the r.b.i. did
utmost to sees the economy do well. what is important for all of us is to see low-inflation. consequencee not that i can assure you the r.b.i. has no hesitancy. the japanese prime minister has acknowledged the global selloff is putting his 2% inflation target further out of reach. confidence even as it would show the inflation rate may turn negative. theier this month, he said