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tv   Trending Business  Bloomberg  October 8, 2015 10:00pm-11:01pm EDT

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-- suing pimcolk for driving him out, saying that he was toppled by a plot driven by greed and lust for power. he wants hundreds of millions in compensation. rishaad.e on twitter, @ don't forget the hashtag as well. following the spike in crude final daysook at the of trade of the week. and what a week. >> yes, we are seeing some great gains coming through from energy hasalso mining, crude raised 10% so far in october. we are also seeing zinc at a 2 week high, on the backs of report that glencore is going to cut. you can see the overall index is
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lifting up white 1.6%. and led by those gains going through from those energy players. i switch out over 6% today thanked to that rally in the crude prices. the firmer metal prices playing into the commodity market. the lead players all mainly all energy players. worley parson looking good at almost 7%. a little bit of a pickup coming in in the shanghai market of my 4/10th of 1%. let's get a quick check on that oil price. of course, it rallied strongly in a new york and hit the 50 u.s. dollars a barrel mark. we are seeing a flat pickups at 4/10th of 1%. that rally ended will price helped out today. the markets in the region up seven of the past--
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rishaad: back to our top story. trailing, a buy just about my percent. let's find out what is going wrong. bloomberg news managing editor is with us. peter, where do we start here? peter: rish, it's a good question. fast retailing has been one of the great success stories out of japan historically. its unique chain has been very successful around the world. yesterday's report was a rough one. the reporting earnings for the last fiscal year they came below analyst expectations. the next fiscal year that was also quite a bit short of what analysts had been expecting. part of the problem is in the u.s., as you referred to. they have what the chairman called low brand name recognition in the country.
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they don't have the kind of presence in the u.s. that they do in japan. they have been losing money there. he says he wants to turn things around and get the chain profitable in the u.s.. he is nothing, if not ambitious. he has set very ambitious sales growth goals for the company. he wants to get sales to 5 trillion yen, about $50 billion by 2020, would be an vicious. a lot of that growth would come from the china market, for the company is looking to add about 100 stores per year. so china economy is slowing, there is a challenge in determining whether they will be able to add that many stores and still get the kind of customers in the stores that they have been able to do so far. we had an interview with him recently, where he said he's going to stick by that goal. they are going to continue to add 100 stores per year in china. that is the big growth market. they are also adding in europe and the u.s., but china is what will drive growth. that will determine if they hit
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those projections were not. --projections or not. rishaad: the world bank president saying developing countries have to get serious about structural reforms. kim yonuncan telling -- g kim saying there is no drop in commodity prices in the future. >> looking the situation in japan, they take their military policy 28 2% inflation rate. -- looking at their monetary policy in japan, they take it to a to percent inflation rate. it helps keep inflation down. right now supply is very high. they react to the low commodity prices are producing more. -- by producing more. we don't see the end anytime in the near futures. that creates more headwinds for latin america, and for many emerging market countries. >> you say they are linked to commodities, commodity prices --
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we don't see them going anywhere fast, or at least not on the upside. how concerned are you that a small policy missteps, of easily from the fed, --obviously from the fed, will hurt global growth? jim: we heard from today that the capital emerging markets are the largest we have seen in a most 30 years. that is a big worry. the rise is going to happen sooner or later. we know that borrowing costs are going to go up even more. they are already high. we hear from our clients that capital, which used to be very easy to access-- that shift is not happening now. slowing.for capital is we can still provide 15 your money at 2-3%, which is a great deal for developing countries.
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they like going to capital markets because it's quick and easy, new conditions. we are going to see a lot of had went, especially in access to capital. -- a lot of headwind. developing countries need to get serious. >> structural reform? jim: yes, several levels. the need to make sure public spending is as efficient as possible. important to invest in health and education, but they need to get more for their money. productivity is a huge issue. archives of things they can do to improve their business environment. they are going to be compared across the board. those who get capital are the ones most likely, in terms of making the reforms. small entre nous was, even large entrepreneurs don't have access to this captial. we need to make sure that the financial sector in this country is a bit stronger than what it looks like now. jim yog
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other stories we are watching today. here is david with a roundup. it's all about the cofounder of pimco. david: let's start with that. it's been a year since he left pimco. most idealot the parting of ways. it has come to this. he is suing the firm he cofounded and helped build. i believe it's a 20 page complaint filed thursday in a california state court. he cites a few things -- wrongful termination, and a breach of good faith and fair dealing. in other words, were in plain english, he says the firm and some executives, who he describes as unethical and improper, try to push them to go home with his bonus. he says with this 20% share of pimco's profits. pimco has responded with its
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spokesperson, who said that the lawsuit has no merit in the firm's legal team will respond in court. he says it's not about the money, it's about his reputational and how history will remember him. he is seeking hundreds of billions of dollars, which is attorney says he plans on giving way to charity if he wins the case. for personalarkets computers. nothing new, but we have fresh data that continues to support that field. shipments fell 7.7% in the third quarter. just under 74 million units. we have another set of data, also reporting a drop. you can visualize how quickly this segment of the market is actually thinking. the reason given by gartner was due to slower desktop sales. and a stronger dollar that is pushed up prices on a project that obviously has shrinking demand.
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thevo built up its share, lead market share. you have hb and number three you have dell -- you have hp and then at number three you have dell, shares continuing to fall. apple, and little bit of an increase in their market share at 7.6%. let's stay in tech, but let's have a look at netflix. they have actually raised the price of its most popular streaming package in places like the u.s., canada, and latin america. this is a similar move the company took early this year. for customers in those places that i mentioned, the service when i'll set you back $9.99 a month. for existing customers, if you've actually signed up, the price hike will not take effect immediately. there is a grace period. it varies before the price adjustment takes effect. this as are pointing to
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that customers won't switch just because it costs $12 more a year. it's what economists call relatively inelastic demand. networks has added new zealand and japan this year. hong kong and singapore next year. shares up 6% in new york session. demand is relatively elastic. rish, back to you. rishaad: another story, why china is leaving a billionaire out in the cold. have a look at it on japan inc serious about auditing. the research that investors may not want to hear. coming up next, if you bad men. vw's u.s. chief says the cheating was not a corporate
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decision, only a few engineers. next on "trending business."
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rishaad: volkswagen's u.s. chief saying fixing all the cars in the scandal will take years. the company did not make a corporate decision to cheat the system it says, but was done by a few engineers in germany. the vw chairman says dieselgate could threaten the company's very existence. is there a chance the biggest carmaker could go out of business? enjoying us via web via whofornia is michael dunn, helps carmakers enter the asian markets. thank you so much for joining us. let's start off with that very point, can volkswagen survive? chael: this is not a blow to
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volkswagen globally, but maybe a beginning of the end for volkswagen in the u.s. vw is struggled here for two decades, it pinned all its hope on the new "clean" diesel, as it called it. it has turned into a disaster. if diesel goes away, volkswagen will be forced likely to leave the u.s. market. rishaad: similarly, the audi scandal and the unwanted acceleration in the 1980's. can this parallel be drawn? michael: yes, it took them years to recover from that debacle. the good news for volkswagen is that the u.s. is only a small share of the total mobile sales. china is the big moneymaker for them, almost 40% of global sales. they don't sell any diesels there. they are still in good shape in china, in fair shape in europe and south america. rishaad: we talk about dieselgate, or vw-gates, as it's being penned on twitter. how did this software work?
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how did it cheat the system? can you explain that for people who may not know? michael: in layman's terms, all vehicles will go through testing at the u.s. epa. theyg that testing period, will measure how much emissions from the back of any car. in volkswagen's case, they cleverly inserted a software system, they call it "defeat de vice," which during the testing would register lower emissions then in reality the driver would experience on the road once he has bought the car. for the period of testing, they managed to find a way to shortcut the system and show a lower emissions than they actually should have recorded. rishaad: michael, when you take your car for servicing, quite often they take the emissions then. how today for the system then? -- how did they fool the system then?
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michael: there is speculation that customers didn't know, didn't know, and now volkswagen will have to recall all these 11 million cars globally, some will say "what is the upside for me?" i do want to do the upgrade. my car might perform lessw well than it used to. rishaad: how much will it cost them? michael: estimates in the range of 40-billion dollars -- 40-50,000,000,000 dollars. that includes lawsuits from the u.s., dealers upset, not to mention fines from the epa and california air resources board. imagine the impact on the brand antitrust among consumers. vw has to work very hard to win back that trust. rishaad: it takes decades to build a brand, but just hours to destroy one. michael, what about the responsibility here?
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we just had the u.s. chief saying, well, it was just a few engineers in a germany. do you buy that? michael: we are not likely to find any paper trail linking this scandal with the top leadership. we have seen this movie before. the ceo or leaders of the company will say, "let's having a vicious goal." -- an ambitious goal. once they put that objective in place, no one dares say "hyey boss, i can make it." because the boss will say "find a way. it's your responsibility." these of the way things laid out at volkswagen. apparently there was a directive from the top, and everyone understood to get there one way or another. rishaad: on the one hand, this has remained on the civil side of the law. is there a chance it enters the criminal side? michael: if there is deception,
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and there appears that there is, but volkswagen denies it. one thing volkswagen points out is that this is not in any way safety related. lives have not been put at risk. it's simply in impact on the environment. epa will determine the fines and whether or not to prosecute or to suggest to attorneys general. 29 states have already filed subpoenas against volkswagen. you can count on some form of criminal follow-up, whether or not it ends up with convictions is way too soon to tell. rishaad: great talking to you. guest joining us from san diego. headlines around the world. russia has denied pentagon claims of missiles fired at syria landing in iran. seaes in the caspian launched 11 targets and claims to have hit them all.
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u.s. defense officials say at least four went off. ofmention made of any them going astray. a new report from mst international says myanmar's repression of human rights leads up to the new election. myanmar's opposition is constitutionally barred from the presidency, but says she will lead the government in some form if her party wins next month. one of the most favorite players in world football is to stand trial for tax fraud. the decision on barcelona's player coming three days after the spanish prosecutor saying only his father would face charges. his father and son will answer three counts of tax evasion, which carry potential jane sentences -- jail sentences. of avoidingused
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four and a half million dollars of taxes between 2007-2009. another case of when football and money don't mix. blatter suspended by the organization. job?ants his fifa more on that when we return after this. ♪
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rishaad: football fans in this
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part of the world woke up to ofe stunning news -- three the most powerful figures in the game had been suspended as part of a widening corruption investigation. blatterlude seepp as well. two others as well. >> before that, when we talk about the former vice president of fifa. he was actually found guilty by the ethics committee. he has been banned for six years. well, he was found guilty. misconduct, infringing on rules involving with the reading process for the upcoming two cups. that is the gentlemen right there. all three have been suspended, or what they call, provisional bans for 90 days, the camera percent fifa -- they cannot
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represent fifa media. it takes effect right away. it can be extended by another 45 days. in the meantime, you have the president of the caf, the african football body, now asking as net -- now acting as president. and the person replacing mr. blatter in the meantime is his deputy, the head of the spanish football federation. acting: what about the fifa president? does he have any ambitions in regard to all of this? >> there is a statement on the fifa website, they tweeted it myself will "i not be a candidate for the position come february 20 6, 2016." which, by the way, some people
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have said it needs to be moved. rishaad: thank you very much. we can get to the social media reaction, but we will do it next time. time for rugby. listings in the world cup. champions in new zealand taking on the tonga indie we can round -- in the week in france. sunday going for a third win against the u.s., while argentina tackles namibia. italy played romania, and france faced ireland. the big matchup of the week is in cardiff. australia underlining their term in conventiona -- underlining their tournament credentials. wales will hope they can bring an end to 10 straight defeats
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against the wallabies. kicks off at 5:00 london time. we go to hong kong and shanghai. a look at what is going on in shanghai. upside. to the .72%. 225 with a possibility of a bust. why some are raising the alarm about chinese debt markets.
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rishaad: driving the rebound when it comes to global equities after the birth best worst quarter in years, the biggest weekly gain since 2012, oil $51 -- $50 aose to barrel. many people think the federal reserve will raise rates this year. they said officials are feeling good about the u.s. economy, but concerns that china's slowing
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growth and spill over to other markets. strengthen the case for a hike next year. bill gross is suing the company he helped to build over his controversial departure last year, he claims what he calls a cabal of directors try to take his share of the profits. he says it is not about the money because he would give it away to charity. pimco says the lawsuit has no merit. japan heading into lunch break. here is a look at what has been moving the markets. >> we have seen a great pickup in oil and metal trading companies which has lifted sentiments any region. markets on track for their best weekly gain since 2012. we have seen about $2.5 trillion added to the value of global stocks this week. index on track for a gain of more than 8%.
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is showing it has been lifted by the energy players. shanghai of course has only been open two sessions this week, the continuing a more than 3% gain yesterday. japan looking strong despite that big fall we saw in retailing. that is the biggest drag in terms of market cap on the nikkei 225. over in australia, a pickup in the energy players lifting a market. seen this go we into equities, we have also seen money coming out of bonds and money going back into emerging market currencies. they are -- the ring it is on track for its biggest weekly gain since 1998. it is strengthening against the greenback, up by 2.5%.
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certainly a lot of money going back into emerging market currencies. commodity currencies and a traitor who called the fact that the aussie with rally on the back of that redounds coming through from chinese equities also saying that these commodity currency rally has led analyst at a&p n 70. one more look at the shanghai composite as it heads into its last hour before lunch, a number of stacks hitting that 10% daily limit risk. china's meltdown -- this time investors are fleeing to havens. they turned to the corporate bond market, is it really a situation where people jumped out of the frying pan into the fire. you are seeing warning lights right? >> were member equity market crashed two months ago, shares plunging 30% over a month. now we see signs of a bubble in china's bond market, including
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, a search andge investor leverage, and the deteriorating credit fundamentals. if you think the one-time leverage taken on by china's equity investors was scary, now the bond investors are taking on leverage to boost returns. rishaad: don't they have things in place to limit these? why have these valuations? >> good question, china has been pumping liquidity into the market. crashed,equity market that has been driving trillions of funds into the bond market that has been pushing on the yield and pushing up the bond prices to a six year high. the yield premium for top rated chinese corporate bonds over government bonds are less than one percentage point. that is not enough to cover is -- cover credit risk.
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especially when it is due to a slowing economy. happens tell me, what if this is a bubble. first b --ursts? rebound significantly, a lot of that money will go back to the equity market. that could cause massive deleveraging. that could lead to a plunge in bond prices. the would also mean that bond market is unstable, and a lot of companies that want a successful bond market to do that. if they cannot refinance borrowing. they would be pushed into default, that could be serious. anyone trying to price a corporate bonds must be having a head scratching time. thank you for joining us with the latest on what could be a corporate bond market bubble in china. more concerns about the country,
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alibaba's chairman is trying to reaffirm investors. that the youying markets desk e-commerce business is a fraction of alibaba's long-term strategy. he says worries are an overreaction. russia is possibly an unlikely savior for chinese e-commerce retailers. -- why areook at russians earning -- turning towards china here? today not want to go to west? >> there is that element, also the economy. the ripple has been in a tailspin. you have seen russians going more online, especially alibaba. in terms of traffic volume, alibaba traffic volume spiked 40%. also tapping into that area, opening their first
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international site in russia in june. rishaad: obviously, russia must be of growing importance for chinese e-commerce. give us an idea of that. >> if you look at the sectors that alibaba is trying to penetrate and russia it is apparel, bags, shoes. is playing their stronghold in consumer electronics. they are offering phones for $214, basically half the price of what samsung and iphone are charging. in terms of this year consumer volume in russia, it is one of the largest internet market in europe, 80 million online consumers. only one third of the penetration rate -- still a long way to go to reach that 90% e-commerce shopping potential. rishaad: what is the future? what are people suggesting it will look like? >> more and more we are seeing in terms of e-commerce parcels,
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the experts forecast for the first time this year, across the -- parcels will surpass those of domestic. china is the main reason behind that. in the past you have seen cities like moscow and st. petersburg where they were big into e-commerce, but more border towns are also moving online. you see the brick-and-mortar businesses in china also moving to this on my face. -- online space. rishaad: russian ambitions amongst other things. checking out some of the other stories, foreign lenders selling at least $14 billion worth of tank shares from china since 2012. the deutsche bank could be adding to that. a $3.5 billion stake. says they might employee drowns and submarines
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to capture beijing's growing influence. the asset might be sent to the neptune islands. the united states also said they are considering deploying warships the area. the italianf fashion group, valentino are said to be exploring a possible ipo. they might be offering as much as $2.25 billion. we are told as the -- a certain percent of becoming a could be sold next year. the owners could choose to keep it private, or perhaps sell to a trade buyer. yeah isaylor, then and sayscline in suits they're planning on cutting capital expenditure next year. the chief executive told my colleague angie lau that he remains committed to china and is raising his gain in japan. >> the slowdown or adjustment
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has come and particularly. china is a gradual adjustment. it is a consolidation of stores and location. starting nexttive year. we are here for the long run. >> would be devaluation of the yuan, perhaps your luxury consumer is going somewhere else to buy? this, surelylike the margin has been affected. surely it has an impact. i think it will be a temporary situation. next year will be a better year. angie: have you increase prices in china? >> no, absolutely not. there is to be a gradual adjustment prices. anything,ight now, if
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we will take some prices down. we might adjust prices up in europe. angie: are you expanding in china or contracting? >> we are consolidating in china. i think that we are going through an adjustment process in which we are moving some stores, we are opening some new stores in macau. i would not say so. angie: macau is also slowing down. there are other things that affect the market. it is moving from gaming more to entertainment business. i think it shows that there is some long-term positive prospects. angie: what is your outlook? >> i think hong kong will look strong and remain important, i believe for china and the world. angie: what does 2015 look like
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, but fornly zegna luxury retailers? >> after having been wrong with -- you have to admit a mistake. we have been to bullish, we have for 2016, more careful. maybe a smallplan increase. a single-digit increase. but you know, maybe i will plan some countries flattish. i prefer not to be to bullish. -- too bullish. we will not reduce our marketing. we want to sustain the brand and keep doing right things. ic 2016 as a year of gradual
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rebound. angie: he remained committed in china? committed,n very china is our number one market. we will keep investing in china even through a challenging time. thatad: get more on interview anytime anywhere on our website. or you can download bloomberg plus to your mobile tablet. it is available on android, apple, or windows operating systems. up next, booking -- bookkeeping scandals and companies. the trust deficit, wind "trending business" returns. ♪
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rishaad: you are back with "turning business." eight israelis were stabbed on thursday and two palestinians killed in a clash with police. the prime minister says israeli -- israel is in the middle of a cruel wave of terror, and thomas aggressive measures to restore order. under age 50ans are barred from the mosque. be a proposed international ban on lithium batteries on passenger planes in the united states. research shows that the batteries could cause explosions that could bring down a plane. lithium batteries power things like smartphones and toothbrushes. a proposed ban would not affect cargo freighters or other types of batteries. is being tipped for the nobel prize later today.
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she became the face of inclusiveness last month by welcoming thousands of refugees from syria and elsewhere. meanwhile, pope francis is gaining support as a noted supporter of the poor. he opened the vatican to homeless people and demanded a greater dissolution of wealth to the needy. the peace prize will be awarded later today. oslo, as opposed to other prizes given away in stockholm. toshiba had an accounting scandal that shown a new like on government. it prompts questions on how seriously investors can trust the books. we have a partner at two gmt research and who has just published a book on auditing fraud. he says the japan ink does not take auditing seriously. it dovetails into the realm of corporate governments which we have had so many headlines from different japanese companies over the last two years. >> yes, i think japanese view it
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differently. they see corporate to be managed for the employees, then for the country, then for the shareholders coming low on the pecking order. transparency is usually lower. move to haveted to independent directors, which is jobs for the boys. we have yet to see anybody, any of the independent directors in japan, to be fair, pretty much the rest of asia and barely -- rarely the rest of the world complaint. -- complain. rishaad: what is the point if they cannot keep a check and balance -- in balance? >> i think because the regulators want to be seen doing something. there is very little evidence that minority shareholders can independent directors or sue independent directors to actually achieve nothing on behalf of shareholders. i don't understand the motivation. rishaad: is auditing has not
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been taken seriously, is your point, i guess the whole gamut is not being taken seriously either. >> correct. one of the things most maligned have largewhen you controlling shareholders, sometimes they go off the rails, in general, they are keen to preserve their wealth. they are keen to avoid heading out to much wealth to senior management. when i look at the u.s., i see lots of post entrepreneurial businesses where senior management is able to become intergenerationally wealthy. corporate governance is not just a china, japan, it is also the u.s. and europe. rishaad: is japan particularly bad? thanks to these reforms after the second world war, shareholders have been gelded.
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their ability to take out management is pretty limited. hostile takeovers are almost impossible to achieve. going along with the old japanese saying, the nail sticks up and gets whacked, there is little change that is not decided by embedded corporate management. consequently, shareholders have a short straw. rishaad: the carson bloke muddy waters looked at companies in china does this gristle the middle for a short seller? >> yes. lack of corporate governments create and the lack of the legal system creates is the ability for management to magic numbers create mystical stories. everyone is always interested in what the story is, how will it grow? what we do, which is looking at accounts and auditing. i view as managing a sewage
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system, no one cares until he goes wrong. -- it goes wrong. corporate governance is the same. when alibaba is growing at 50%, 15one cares if there are not independent shareholders, and no one can verify their account. when it all goes wrong, profits down great, everyone gets decisive. because -- rishaad: because it is not taken seriously, someone can say the books are not up to scratch, they have a valid point. >> absolutely. the biggest problem -- the problem we are facing is one of the companies we criticized has turned around and said they will take us to court. all of the conclusions we have drawn were taken from your published accounts. if you problem with those published accounts either restate them or answer our queries. if not, why are you publishing those accounts.
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clearly, people talk about account being misleading and short tellers misleading market, if you are taking data in the public domain and reinterpreting is airly, clearly there problem. rishaad: low auditing fees, what about that? >> we are aware in treat -- were intrigued -- first of all you see in china, and india particularly, some companies pay virtually nothing to get audited. lots of investors trumpet long and hard about how fundamental they are and how they check all of the numbers. who checks the numbers? there was an india company that pays 350 u.s. to get audited. it's $100 million worth of assets. now people see if i go to a big auditor they must know what they're doing. kpmg audits six airlines around asia. a are tiny ag on
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fraction of what they are for virgin airlines. they are similar businesses, computer systems that sort of thing, how can they be that different when they are done by the same nominal auditing company, it does not make sense. rishaad: i have to leave things there. very interesting point. next, bad loans in india and what the r.b.i. governor is doing about it. ♪
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rishaad: ratings agencies and india are playing down concerns against measures against take banks -- state banks. mumbai. to
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>> the reserve bank of india assured that prompt corrective action against the state owned bank on the back of rising nonperforming assets were a concern. ratings companies and agencies are playing down these concerns. they are saying it is not a sign that it could be worse going forward for banks. the reserve bank in fact is initiating action against banks this week which could limit the ability to pay bonuses or pay -- by assets. the framework was updated last year. according to a report from aberdeen it says that the exposure as far as public sector banks is worse than private sector banks. that is something we could see
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as earnings season kicks off. rishaad: thank you. that's it for this friday edition of "trending business." next, including a not so fast for unilateral -- uniglo. ♪ ♪
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john: i'm john heilemann. mark: and i'm mark halperin. and "with all due respect" to john boehner, you ain't going anywhere anytime soon. ♪ it's a big newsday on the show. red-hot focus groups, but first red-hot house republicans. kevin mccarthy is donezo. he will not be be house speaker. here is how he announced he was dropping out of the race to run a house of representatives this afternoon. >> i think i shopped some of


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