tv Bloomberg Daybreak Asia Bloomberg May 31, 2017 7:00pm-9:01pm EDT
♪ betty: asia-pacific markets faith a mixed start after banks drag down wall street. treasuries and gold rose one dollar, oil dropping again. yvonne: president trump and climate change, biggest names in business say the u.s. will lose if he abandons paris. betty: germany pivots to asia, strengthen east-west ties and trade. yvonne: apple raises its voice to take on google and amazon.
a smart new home could be introduced to this month. we have world coverage on "daybreak asia," we will go to beijing for the morgan stanley china summit. towill speak exclusively chairman and ceo gorman. trick does apple have up its sleeve with this new home device? we will have details. this is "daybreak asia," from bloomberg's asian and american headquarters. yvonne: it is just after 7:00 a.m. here in hong kong. cpi breaking news from -- on the money. 2% for the month of may. a slight take up for the month of april. core cpi is one to watch. we have been hovering around that 2% level for much of this year. the core cpi, which excludes oil and agriculture coming in at 1.4%.
a little more tame it. you have to factor in the low base effect, low oil prices last year. prices should stay up for some time. on the domestic side, demand is subdued. should keep the bok on course to be accommodative. we will see how korea acts in an hours time. we start a new trading month in june. in new zealand, we're seeing things lower. the dollar stocks in the u.s. fell. .7074 softer u.s. data, the kiwi/ -- kiwi. we are expecting a slight fall from april. 76 -- .7426 from australia.
timid, indeed. that is an early look at the region this morning. wall street, we do not exactly sell in may. we are seeing the end of the month with a bit of red. betty: it would have been a much higher if not for the declines we saw in the last couple weeks. we did make up those losses and are ending higher for the month. there is more uncertainty than we started the month in the u.s. , given what we have seen out of washington and comments from the fed. we are not quite sure whose is saying onerd rate hike, others are saying
two. let's get to the first word news with courtney collins. agenda asalk to the vietnam's prime minister became the first southeast asian leader to meet president trump. vietnam is seen as a beneficiary for the transpacific ownership, and wants to sign bilateral agreements, now that the u.s. has abandoned the pact. trump is concerned over america's $32 billion trade deficit with the vietnam. mr. trump: we are in discussions with major topics, including trade, we have a major trade deficit with vietnam. that will hopefully balance out. >> china and the european union plan to commit to free trade and uphold the paris climate change pact. it was seen as a rejection of president trump's america first policy. they say he will pull u.s. out of the pack to this week after g7 leaders failed to win them over in italy last week.
chancellor merkel went so far is to say the u.s. is an unreliable partner. india's economy grew at the slowest pace since two years in the first quarter, dragged down by the high rupee notes. gdp expanded in the first three a fullof 28 -- percentage point below estimates. manufacturing and service sectors show signs of recovery. the offshore yuan jump to the most in four months. policymakers are supporting it. 0.8 percent, its highest since january. the yuan rallied the most in asia. -- itt squeeze is hurting confounds analyst with stronger fixing. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
i am courtney collins, this is bloomberg. streaming monthly advances. jpmorgan talking about trading revenue falling. joining us now is su keenan. banks are in the spotlight today. >> they were. real estate and others were up. you notice there was not a big change, there is a lack of volatility that j.p. morgan chase that is behind the volume being lower, 15% lower. theystreet journal saying are putting it up for sale. not getting the greatest bids. they reported them as lackluster. pilinge for sale and and. philip morris is down in the day after hitting a high for the year. these e-cigarettes are the new thing. one forecast, surging by 22%. philip morris is all in on that product. let's go into the bloomberg. if you are,
following at home, is on track for yet another monthly gain. we had only one negative month since president donald trump was elected. they are small boxes, you're not seeing big changes month-to-month. but those were all gains for the s&p. let's look at the bloomberg chart on gold. hedge funds are jumping in on the gold bets, which is a safe haven play. they are increasing long bets on gold in the most in almost a decade. that has a lot to do with political and other angst. new president, european difficulties, if stocks are high, their hedging with gold. yvonne: a lot of elections in europe we are looking ahead to, as well. in the spotlight, hewlett-packard moving lower after hours after posting a loss. su: this translates to thursday
trade. this is a big after hours story. businessackard's hurting because they are now in the cloud business, and they are up against amazon and google, and they are having trouble. $24 aoutlook is for share. analysts were expecting 32. you can see hewlett-packard enterprise has not had a bad year. it will be interesting to see how the full market on thursday received this news. disappointment on the profit outlook, that is the story. margins going forward will improve. costs associated with the spinoff will be worked out. president trump says he will make a decision on the paris climate change accord in the coming hours or days. we are still waiting for that announcement. his critics are turning up the
heat. let's go over the options with our reporter. he joins us live from washington. good to see you. elon musk tweeting out, threatening him to step down if they do exit this accord. what is on the president's mind at the moment? rbnz president trump -- reporter: president trump is hearing a lot from both sides. other corporate leaders who have supported the paris agreement have been vocal about wanting to stay in. so has his daughter, ivanovic on. -- hisex tillerson daughter, ivanka trump. also, rex tillerson. es,t we are hearing from aid is not to stay in it. top cohn informed u.s.'s
allies in europe it is likely the president would withdraw from the deal. we expected to play out over the next few days. betty: if he were to pull out of it, what is the number one reason for doing so? justin: for the president, his keystone, his guiding star, is american jobs. particularly the manufacturing and coal states that helped elevate him to a surprise win. this is an opportunity to lift regulations facing over the next decade and jumpstart some of those sectors. at the same time, a lot of advocates of the environmental deal say it is something that will help stem a new wave of innovative, green jobs. that is something he will have to balance. betty: justin, thank you so much. donald trump will be making that
decision in the coming days. in the meantime, big interviews ahead on bloomberg television. australian prime minister malcolm turnbull will be sitting down with our very own haidi lun for a one-on-one ahead of his trip for the shangri-la dialogue in singapore. that is at 7:30 if you're watching in sydney. yvonne: later on "daybreak asia ," our exclusive interview with james gorman live from the company's china summit in beijing. rbnz ♪
this is "daybreak asia," i am betty liu in new york. yvonne: i am yvonne man in hong kong. china's biggest developer ever grande has picked up more than $10 billion from selling hengda. will bepleted, hengda held by their real estate unit. betty: they claimed they undercut prices on washing machines. they filed a petition in the u.s. against samsung and lg, saying importers offer products at excessively low prices. the ceo described samsung lg as serial violators of u.s. trade laws. yvonne: air new zealand is rushing -- jumping. shares are up 4% in the index.
that is based on the current market environment in the price of jet fuel. 525 millionnings of kiwi dollars. of $16 millione in the selling of a stake. first india, now china. german chancellor angela merkel met the senior leader, li keqiang, one day after meeting india's narendra modi. shifting global ties, catalyzed by donald trump in the white house. i see this as an unraveling of the u.s.'s pivot to asia under the barack obama administration. and the develop of europe's i sg of the own potential pivot to asia, at least the first couple steps. it goes without saying it is because a large part of what
donald trump has been saying. it is crystallized over the past week or so during his trip to europe, as well as to the g7. said the timesas when we could completely rely on others are now, to an extent, over. easy to see a swipe at the u.s. and united kingdom for brexit, as well as donald trump's moves here. we are seeing li keqiang meeting angela merkel in berlin. he was greeted with military honors. he was speaking at the annual china-germany meeting. that is been happening for 13 years. he is added to brussels on the heels of president trump, speaking at the 19th china-e.u. summit there. while change and climate change were at the top of the agenda, it is at the top of the agenda with li keqiang here.
interestingly, it is startling. it is a shared vision and shared value you think would be from europe as well as the united states. but we are talking about this with china and india. from the stuff i have been reading on background for ms. merkel, she is a strong transatlanticist. ngs arendering if it pa to say, united states, we are looking elsewhere, to asia. betty: i doubt a couple months ago she would think she would be thinking this way. on tuesdaymodi saying he would not leave paris for the climate deal, regardless of what the u.s. does. brussels and beijing saying they will start a new alliance to fight climate change. and merkel also talking about trade. it is a surprise where we were 12 months ago compared to where we are today.
trump drawcould see those global battle lines. let's stay with that story and the eastsomeone from asia institute, live from singapore. great to have you. this 70 year relationship the developed world has had since post-world war ii, essentially overturned in a matter of six months. is it over? >> actually, this is a very interesting moment to look at the relationship among the big powers. the transition is not over yet. after trump became u.s. president, all the big powers including china e.u., japan and other powers, are adjusting. the previous grand strategies are trying to find new partners inside the region and outside. chinae: what does an e.u.-
relationship mean for the u.s.? is the white house looking in this -- at this and worried? can china have it both ways and have a relationship with the u.s. and europe? this issue look at from the u.s. national interest perspective, yes, there should be worries about the recent development of the e.u.-china relations. if we look at it from the trump perspective, i do not know. his strategy is relatively nationalistic. an --lateral is bilateralism and inward looking. the e.u.-china interaction could to some extent, harm u.s. national interests, especially economic interests. we can see three economies are the world's largest economies.
the trade and investment among them are substantial and the byproduct of the global economy. yvonne: you mentioned america first, and the triangle relationship could be dangerous. what do you mean by that? trying -- trid of angular relationship is fragile. if you look at e.u. relations, there are long-standing disputes over subsidies, investments, human rights, and arms embargoes. there are signs showing that china-e.u. relationships fundamentally improve. there may be temporary compromises, but i do not see any substantive changes. you are exactly right.
there is a lot of tension between the you and china, particularly -- between the e.u. and china, particularly climate measures. it is a sore point between the chinese and the americans, too. given what we have just said there, maybe president trump sits in the white house and says, i am not that worried. chen: [laughter] actually, we need to see what kind of police li keqiang and the other leaders have for the summit. hase look at xi jinping with donald trump, it is a 100 day package, and we still do not know the details of this package. some say china made some compromises for opening up their markets and abolishing some restrictions over foreign investment. this time, i do not know if li
yvonne: this is "daybreak asia," i am yvonne man in hong kong. betty: i am betty lou in new york. our guest is talking about the e.u.-china summit and the reactions. i want to focus a little bit on the climate accord. this is an up -- an opportunity for the e.u. and china to reaffirm their stance and inclusion in this accord.
a lot of u.s. ceos have been telling trump today to stay in the paris climate accord. here is a tweet from elon musk, leading the charge among ceos, saying, i do not know which way paris will go but i have done potus thato advise we remain. he has really taken charge. if the the consequence u.s. decides not to stay? the consequence could be huge. if we look at this climate deal in paris, this is what the e.u., what china, and many other for climatelue politics in recent years. recordsthat historical -- [indiscernible] that really gave a big blow to
these politics. thing,u.s. does the same that will really make the international community angry. especially the european union. betty: doesn't jeopardize the it jeopardize the accord? chen: i do not think so. it does not need the participation of the u.s. -- as long as other members continue to support it, it will survive. betty: we're are always looking for the opportunity here. outside ofn, angering other countries, on the business side of it, will it perhaps help chinese companies who are in clean energy and investing? could that be a benefit or bonus for them? chen: i think so.
has emerged as the number one renewable power in this world in terms of solar power or wind power without participation or competition from the u.s., definitely the chinese companies could have a better edge over international competitors. considering establishing markets, it will have an impact on that. you herereat to have and get your perspective on this before the e.u.-china summit. sis --up, apple wants siri to become part of your household. this is bloomberg. ♪
yvonne: look at the clouds this morning. a pretty ominous day. a.m. thursday morning in hong kong. minutes away from the market open. it is like gotham city, almost. betty: it is like straight out of a movie. we have clear skies in new york. 7:30 p.m. wednesday. markets closed unchanged. tried to rally, but could not make it. i am betty liu in new york. yvonne: and i am yvonne man in hong kong. >> first up, u.s. commerce secretary wilbur ross says president trump never intended
to tear up nafta, but it requires a thorough revamp. he said the guiding principle would be to do no harm. he wants talks with congress by july because it will require approval on capitol hill. he says the window to change nafta remains open through next january. a malaysia airlines flight turned back to australia after a passenger tried to enter the cockpit. the flight landed safely in melbourne before midnight and the carrier has offered no further details. malaysian airlines is recovering from a fatal disasters back in 2014. disappeared, and another was shot down over ukraine. a woman linked to the scandal that toppled south korean leader park geun-hye dropped to repeal
against extradition from denmark. -- samsung paid $850,000 to buy her a horse. it is part of widespread corruption in korean circles. spacex is taking recycling to a new realm. space it self. the supply to the space station will include a cargo ship that has made the journey. -- they haven't refurbished it for thursday's launch. most of it has already been to space, including the frame. reused parts,ey but never to this extent. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am courtney collins, this is bloomberg. we will watch how the asian lenders fair today after banking shares were hit hard in
the u.s. during wednesday's trading session. it lets the latest out of bloomberg markets. adam haigh joining us live it from sydney. the headline we got overnight, trading revenue down 15% in the second quarter for jpmorgan. how does that play out for investment banks in the region? quite significant numbers. it should not be a surprise because it was widely understood that equity volatility was very low. the bond market and currency markets have been very low. it is taking a hit to investment bank's bottom line with that lack of trading fever around volatility. we will have a look at asian letters, including big chinese and hong kong. and of course, the big banks in japan. we are keeping a watch on those. equity markets, looking for a mixed start. not too many leads from the u.s. we had a good run from markets
of late, people reassessing positions as we dig in the first trading day of the month. interesting news in sterling. we watch every latest poll that comes out with theresa may's lead seemingly narrowing over corbyn's. a poll came out late wednesday night in london, not a huge move yet, but we will see how pound traders look at that the remainder of the session. betty: the gap between what is happening in the bond and stock markets, it worries bank of america merrill lynch. they are saying something has to give. what is their outlook? i will bring up this terminal chart here and have a look at the disparity in how these assets are performing. we had such a huge run-up in equities since november.
it is widely known. and the bond market has been interesting, as people have dialed back inflation or a expectations. merrill lynch folks are saying that historically, this can't last. something has to give. he is looking for three main points and expecting rates to get higher over the next few years. the first is, the price incentive to buyers are watching the market. they look to rein in the balance sheet and work toward further policy normalization. secondly, many foreign investors and foreign central banks are doing the same thing, looking to buy less of these bonds over the next few years. thirdly, pension funds are demanding high-yield on fixed income securities at the moment. something has to give here. besees most likely, that to
the bond market rather than the equity market. nothing in the equity market is pointing toward correction. they keep going back to valuations. uphistorical levels come does not look too stretched. betty: the latest beige book survey -- speaking of yields and what is going on in the economy because of that, seeing a moderate growth across the u.s.. it does raise warning flags as well. steve matthews has been going through the findings in the beige book. >> there were spotty reports across the country showing labor markets really getting tight. this is consistent with the fed's the view that they will need to raise interest rates in two weeks. if you read the beige book and are looking at incoming data, you would have to come to an agreement, with the what the oddst is coming to a 90% you will get a rate increase in two weeks.
those expectations are remaining intact. it addresses the tension between -- yes, you have a tightening labor market and unemployment at a decade low, but the preferred inflation gauge is not moving along, it is lowering. is the problem right now. --le growth is picking up for example, if you look at the atlanta said's gdp tracker, you could get 3.8% growth in the second quarter. concernresses the fed's at the meeting last month that they would not grow. inflation numbers have turned the exact opposite way. in are seeing a slowdown core inflation, excluding food and energy. it was down to 1.5% last month. that is really starting to worry some of the fed officials, such
as rob kaplan, who was out today and gave a speech. he seemed to be worried. that was very much on the minds brainard and james bullard, both key fed officials. if you are not getting a pickup in said inflation by the end of the year, and the fed has been forecasting 1.9% for the end of the year, if you do not see that happening, you have to wonder if they will continue through with a rate hikes after the june 1. the june 1 seems to be baked in. but after that, all bets are off. yvonne: that was our u.s. economy reporter, steve matthew, talking from atlanta. apple is said to have become -- begun a voice-activated speaker to rival google and amazon.
it could be introduced at a conference later this month. let's hear more from our consumer tech reporter in san francisco. market, good to see you. it is similar to the echo and google home speakers. is apple just playing catch-up, or is there anything new? mark: yes, they are playing catch-up. they will not be new to this game. theon popularized it with echo. apple is coming in with their own speaker. will they differentiate? yes, it will be plugged into the apple ecosystem. apple will have better speakers in their device, according to people familiar with the product. that is going to the key thing, if they can actually find a platform to link apple services.
-- services that tim cook once the push for as we see apples -- apple sales slow down. iphoneo matter how much sales are slowing, service sales are catapulting. they want to double revenues by 2020, 2021. doing a speaker will help them sell more apple music services. it is part of the effort. betty: how is google home doing? amazon was the first mover in this, on a -- on a max scale. most google home, the publicity was when they played advertisements for movies. from that perspective, the press has been negative. i do not think it has been doing great from a sales perspective, either. anyone who wants to choose between different speakers will take a hard look at the amazon product because of different devices. they have an old now that tells
you about your wardrobe and how you look, they have a bunch of smaller ones. to sell you a bunch of them and put them all over your house. if you're looking for one right now, you can choose between nose. apple will appeal to people who already have apple products like an iphone. sell tens of millions of those. imagine a small percentage of apple iphone users want to buy a speaker, it is the same page as the apple watch. what percentage will buy apple watches? we will see the same thing here. it will appeal to iphone fans. i ordered kiper tells through my amazon echo recently and it worked really well. it is great to shout out open -- me some papery towels." what is amazon going to do? what is jeff bezos'
countermeasure? see. we will seem -- put theiroal is to anxa voice service as ambient technology. selling fromw is their factories. they are selling lots of stuff during the holiday season. that is never going to change. the echo and alexa is the new conduit for people doing that. betty: thank you so much, interesting to see that. up next, shifting gears. chinese ridesharing service expands asia and beyond. this is bloomberg. ♪
yvonne: we are counting you down to asia's first major market this oh -- this morning. japan futures slightly higher today. the dollar yen holding onto strength we have seen in the last three sessions. capital spending numbers coming out in the next couple minutes. this is "daybreak asia," i am yvonne man in hong kong. betty: and i am betty liu in new york. expand to asto many as 200 cities by the end of this year. set its sights on singapore and has ambitions beyond asia. >> we are in a very good position for profitability and cash flow. i am not worried about profitability. especially in the near term. we are still trying to acquire more users, that is our focus
right now. >> you have some big name in investors, such as tencent. what is the current value? are you ready to give an estimate, a rough value of mobike right now? >> [indiscernible] >> are you looking for further funding? >> we are always open to new investors. [indiscernible] terms of the expansion plans, they have been rapid. you have a target by the end of in 90 cities. where you expect to be by the end of the year now? 150 to 250. we have more than 10 people in -- and in europe,
japan, the u.s. >> as you said, you have all these different investors and partners, notably foxconn and calgon. are you looking for further partnerships? is, we are using new technology. the field is so tentative. if we want to make a sustainable business, the only way is to use technology as much as possible. we want to expand to singapore, japan. the ed outreach to supply iot.
we are the first player to use solitaire. that is why we want to use new so we can improve the user experience and lower cost. we need global partners. -- we usein china u.s. google maps and they can work for candidates worldwide. also for the payment. in china we work with our payment. payment request mobile and credit card companies. wang, ceoat was davis of mobike. let's look at the offshore shy,nbi, about two cents
weaker than we saw at the close. but we saw bullishness seemingly in the yuan. chart.look at the the pboc is teaching a lesson to the yuan there's. basically, do not sure that renminbi. we saw a jump to its highest level in seven months, soaring as much as 1.1% on wednesday alone. the timing of this is very key. what they are willing to do is intervene in the market here to bring up those funding costs. look at the white. we're getting close to the level we saw during the august 15 valuation. not as much as we saw in january. but that squeezes helping to prop up the yuan on the offshore side of things. we talk about the timing. this is after that moody's downgrade. we are looking ahead to the fed rate hike as well. policymakers are worried about what will happen after that.
markets, we have analysts rushing to change their forecast. betty: they were investors on the wrong side of that trade. as you were saying, no surprise there. in have china deleveraging this massive deleveraging process. it is no surprising chinese currency strengthen. as we get closer toward the end of the year, we are likely to see that yuan continue to weaken, resume its weakening path. that will then raise the ire of trading partners, including the u.s. we have breaking news on first quarter japanese capital spending numbers, excluding software. up 5.2%. a more robust number than what economists expected, a 4.1%
gain. year on year, capital spending up 4.5%. that is exceeding economists estimates of a gain of more than 4% in the first quarter. company sales up 5.6%, profits up 26.6%. surprising these numbers, exceeding economist at -- estimates. some had thought that perhaps we would see a softer read. good news again, for the japanese economy. seems that businesses are putting money to work here. it was great like across the board. we saw outcome numbers yesterday, a strong rebound for the month of may. still shy of estimates, but we did see a bounce back after that slow month. it goes with the story of global demand. still quite strong. export growth continues to stabilize.
seeing industrial output trying to match and keep up with global demand as well as this capital spending story. betty: it looks like japan is slowly but surely getting footing and possibly making this come back. you can get a roundup of all the stories, including the analysis on capital spending numbers to get your day going in today's edition of daybreak. bloomberg subscribers go to dayb on your terminals. it is available on mobile in the bloomberg terminal app. customize your settings to get only the news that you care about. this is bloomberg. ♪
sales. the banking group has to prove -- improve its track record. -- they sold -- yvonne: mitsubishi may have to abandon one of its best-known models as it recovers from a fuel economy scandal. they plan to increase spending on research and development. thecompany has blamed scandal in part on overstretched engineers. the ceo says if it does not make a choice -- it will make a choice and keep up with environmental rules. >> whether we continue with a model depends on whether there was a market for such a vehicle. we need to decide if it is worth investing a huge amount of money and human resources to prioritize its development. betty: resource companies are taking a hit as iron ore prices
sink to a seven-month low. it is the metal's longest run of low prices. the worst performer on the london metal exchange so far this year. yvonne: the trump administration rules onng to relax drilling in the arctic. they are not sure how much oil is stored under the wildlife refuge in alaska. that would and president obama's limit on drilling in the reserve. they intend to use the land for its original purpose. some big interviews ahead on bloomberg television. later today, malcolm turnbull will be sitting down with our own haidi lun for a one-on-one ahead of his trip to the shangri-la dialogue in a singapore. that will be at 5:30 p.m. hong kong time.
7:30, if you are watching in sydney. yvonne: in a couple minutes on "daybreak asia," our exclusive gorman,w with james joining tom mackenzie live from the company's china summit in beijing. that is happening in 15 minutes. we are looking to a lot of data coming out of china. and aussie retail sales. beat onee that surprise the official numbers. let's pull up a chart. we have seen that we can a little bit. tightening cpi. 50.1 is what they are saying out of the prices gauge. to that line of contraction and expansion. we did see that stabilization. stabilization seems to be the key and what we are looking numbershinese economic
>> asia-pacific market space a mix start after banks dragged wall street down. treasuries and gold rose, oil and the dollar falls again. optimism is signs draining away. >> chancellor merkel continues germany's pivot to asia. asy champion global trade trump puts america first. >> top-level reaction to shift in world relations. james gorman is going to be joining us on bloomberg live in
a little bit. >> this is the second hour of daybreak asia. i'm neutron -- i'm in hong kong. betty: it is after 8 p.m. in new york. let's start off with some breaking economic news. trade numbersrean coming in at $5.9 billion, slightly below -- way below the economists survey estimate of $6.8 billion in the trade balance. export is what you want to watch. they mirror what we have seen in china. exports are slowing down to 13.4%. economistsow the 15%. -- the export number is what we are closely watching and how south korea is affected by the slowdown we have also seen
in china. yvonne: we know this is a very good show for what happens in china. the export figures and where we go from here. the official pmi did fall in the last two months or so. could be seeing as we have been talking, we have reached a peak when it comes to some of those reflation numbers. 18.2%, so perhaps that side of things looking better for south korea. let's get reaction. >> still early in the session for south korea. things look unchanged at the start. we could be moving towards an test a third day of gains. we are seeing a mix start for asia. we do have the nikkei 225's snapping a-- 225
lunch. given the handoff from wall street, we do have the dollar on a softer footing which puts treasuries and gold higher. oil regaining some ground. look at the space of --yuan, on -- year coming off the higher this morning here. it was not the biggest gain in 2017. that is what we saw back in january. things are once again looking like a positioning and liquidity squeeze. that will be very much at focus. that is the first time since august 2015.
take a look at other currently. despite inflation, it could be facing mutual resistance at the may 25 high. looking at the pound it is holding onto losses. to 125 on auld fall negative economic picture. the yen is edging away from a two-week high. the aussie dollar is remaining under pressure. the currency is falling below $.70 at the aussie bond premium over treasuries. betty: thank you so much. let's get the first word news with paul allen. trade topped the agenda as vietnam's prime minister became the first southeast asian leader
to meet president trump. vietnam is seen as a beneficiary from the trends as of a partnership and wants to sign bilateral agreements now the u.s. has abandoned the pact. president trump dropped it office.ays of taking in discussionady on major topics including trade. we have a major trade deficit with vietnam what we will hopefully balance out. 4 -- >> china and the european union plan to commit to the trade and what is seen as a rejection of president trump's america first policy. the president will pull the u.s. out of the pact this week after g7 leaders failed to win him over in italy last week. chancellor merkel that so far as to suggest the u.s. has become an unreliable partner. at the economy grew slowest pace in more than two years in the first quarter,
dragged down by the ban on high denomination rupee notes. gdp expanded by 6.1% in the ofst three months in 2017, full percentage point below estimates. the offshore yuan jumps the most in four months in its speculation policy. china's surprised sovereign rating downgrade. the yuan has rallied the most in asia. the short squeeze is hurting banks. the pboc has confounded analysts with stronger fixings. the two strongest u.s. banks said revenue is set to fall at least 10% because tranquil markets are curbing demand. jp morgan and others slid. agreed sachs executive
trading remains subdued. jp morgan were the worst performance on the now. -- the dow. news in more than 120 countries, i am paul allen, this is bloomberg. >> some big interviews ahead on bloomberg television. , malcolm turnbull gives us a one-on-one interview i had of his trip to the shangri-la dialogue in singapore. signs of trade we see across the region. we will speak to our own haidi lun at 5:30 p.m. hong kong. nexen daybreak asia, our exclusive interview with morgan stanley's james gorman in beijing. this is bloomberg. ♪
yvonne: i am yvonne man in hong kong. a quick check of the headlines. ever graham says it raised nearly $6 billion in its latest sale of holdings in hung down real estate. when the deal is completed, it will be a must three quarters held by a real estate unit. southool is claiming it's korean rival is undercutting prices on washing machines. it says offers products that excessively low prices. describe samsung algae as serial violators of u.s. trade laws. afteraland is jumping earnings estimates by 10%. shares up 3%.
the carrier sees pretax earnings of at least 525 billion kiwi dollars. revised guidance include a pretax gain of nearly $16 million. china wants germany to help its new airliner win and airworthiness. there were talks with chancellor angela merkel. it intends to challenge building an airbus. air asia only flies airbus. bloomberg was told it would be foolish not to consider. going to be top of the agenda as the third annual morgan stanley summit in beijing. we are joined there now. beijing seems to be the center
of the trade universe these days. >> the gravity seems to be shifting this way. let me get straight to our next guest, exclusively speaking to bloomberg tv, james gorman, ceo of morgan stanley. where do you see the best opportunities for the second half in this region? >> i think there are so many at the moment. that is why we have our third annual china summits going on with investors from all over china. a tremendous opportunity. the growth in india is obviously something which is very exciting the last couple of years. ofre has been a real change tone and action in india and across the rest of asia. most economies growing 4% to 5%. indonesia is at the core of that. if we see not japan asia, a number of areas that are interesting. we have a huge business in
japan. finally we are seeing some life in the japanese economy. reporter: you noted in your first quarter results strength in the asian trading part of the business. what are you hearing from your asian clients? mr. gorman: right now people are trying to unravel the conundrum where globally the economic picture looks relatively robust. globally the geopolitical picture looks relatively unstable. how does one trade in that environment? all europe or the u.s., it is no different. reporter: when you look at china, are you satisfied with the pace of liberalization in capital markets here? mr. gorman: you have to stop and just how china's economy is doing. a lot of focus on the fact it has slowed down. i focus on the size of the economy. a $10 trillion economy,
the second largest in the world. the rest of the world would die at 3%, letwth rates alone 6%. the economy is still doing well. leadership changes come up at the end of this year. overall gdp growth is north of 6%. there has been liberalization with capital markets. inhas been very positive introducing capital flows in and out of china. more to be done, but good first steps. one thing that can change your business prospects, what would it be? mr. gorman: we have a joint venture with securities. we are increasing our ownership. from aly as selfishly perspective, the one thing would be to get a majority stake and have a fully fledged business in
china. reporter: what are you hearing from regulators? is there any suggestion there looking at changing the 50-50 jv structure? mr. gorman: i don't want to get ahead of it, that would not be fair. .e are in the path continues this market transparency,e these are things western corporations are looking for. probably a question of timing. mr. gorman: i think so. it is inexorable the opening up of markets has begun and it is hard to put that genie back in the bottle. reporter: part of the turnaround plan, you had this cost-cutting program. where are we in that? that was something we call the project streamline.
it was more common sense. there is complexity in our business. the number of data centers we have, things of that nature. we are well through the goals of that. we will continue to be disciplined. that -- that is just good housekeeping. reporter: you cut the headcount by about 25%. how did you manage that? it is a tough business and continues to be. it is probably the most volatile business any bank has. for us it was one of our smaller businesses. the balance sheet capital expense against what we saw, they were out of balance. movede a very aggressive at the end of 2015 to cut 25% of
the headcount. theid not anticipate revenue in the last couple quarters. over $1.5 billion. i don't put too much stock in that. more interested in how the business performs over the long-term. we will approve the concept of what we want in terms of rightsizing that business. reporter: and you have a template for other parts of the business. don't think so. every part of the business has its own economic drivers. are demonstrably driving economic performance. frankly having the best devices and the most important economic transaction in history is important. it is all about pricing distribution, capability experience.
talk alibaba, facebook, agricultural bank of china, these are huge transactions. you can't fake that. fixed income balance sheet , and headcount, compensation, all of those things have to be put against where we saw the revenue opportunity. we have 55,000 people. i'm sure on any given day there are ins and outs. i just got a gmail last night from our new summer interns. back in new york next week addressing them. we will be bringing in over 1000 associates full-time. we are constantly looking for talented people. the basic reshaping of the firm that has taken place over five to eight years is essentially done and we feel good about it. reporter: let me ask about some
of the trading activity we saw yesterday. they were saying there is now a weaker, softer environment. volume, trading revenue starting to weaken as well? mr. gorman: i think it would be hard to be an anomaly. we are all in the same markets, we have similar clients if not the same clients in some cases. the environment towards the end of the first quarter has bled into this quarter. how that plays out over the next 46 weeks remains to be seen. it isan environment where a very interesting environment. there is in our miss uncertainty which typically would breed tremendous volatility. it is not. it is this very passive perspective that investors have. is outweighingsk the upside risk so people are
not active. that can change very quickly. we have the u.k. elections coming up. we have things coming out of the white house every day. there are plenty of opportunities to trigger a turn in the trading. i think i saw some of our peers comments overnight. they are reflecting reality. reporter: about a lack of volatility and clients keeping cash on the sidelines. mr. gorman: lack of engagement. it is unusual. we are seeing very subdued activity. suddenly the political backdrop is quite uncertain. it is an unusual period. i'm not particularly troubled by it. i think our peers were just six variants in reality. reporter: i want to get some thoughts on politics later. around 11% a target by the end of the year. is that target on track?
10.5 percente were on the first quarter so i would say we are quite well on track. i don't expect every corner to hit on target. we want to demonstrate to our investors. equity, with very high equity. that is one of the best capitalize large banks in the world. -- could be generate a return and we believe we certainly could the first quarter. we are pretty comfortable with the outlook. reporter: sticking to this region as well, you have a partnership with mitsubishi. what is the progress on that and does it provide a template for other partnerships? mr. gorman: i have never been asked that before, because it is such a unique partnership.
it was a preferred investment they made and we converted that around 2012. on the back of that we created to joint venture structures in japan. one of the trading business and one in the advisory business. japan is the third largest economy in the world. a major presence in that market is a huge positive for morgan stanley. terms of replicating that you would have to say where else in the world are there economic opportunities of that size. where else can you not do it on your own easily say you would need a partner and could you structure that partnership with a very long-term player? the thing i love about mft is they are very patient long-term folks. we have tremendous relationships at the top of the house. be hard to replicate that.
reporter: about a synchronization to client base as well. banks don't necessarily play well with each other in sandboxes. have a leading financial , they own 22% of morgan stanley and have created these ventures in japan. it is pretty unique. i'm sure it has not happened before. culture all starts with and with trust. the head ceo is a very good friend of mine. we trust each other completely. reporter: switching focus to the market. mr. gorman: australia or the u.s.? reporter: i should say the u.s. how confident are you that trump and the administration can at skewed their plans? whether that is tax or for more
infrastructure spending? mr. gorman: everybody is adopting a sort of wait and see. i think part of explains the lack of activity. the administration came out with a very bold agenda -- repeal and replace obamacare. introduce major tax cuts, redo trade negotiations across nafta, china, the european union. change and thee implications for the u.s. encourage companies to bring jobs back to the u.s. rather than off shoring. is a world of legislative and legislative -- and regulatory change. newsurprisingly for a administration it has been tough sledding. i think the disappointment of the replacement to obamacare, the fact there was more work
done on the repeal than on the replace has set back the agenda little bit. for the broader economy, we hope the administration can hold some of this stuff together. we need progress on some of these legislative programs. reporter: are you concerned about the u.s. economy? mr. gorman: i am very encouraged about the u.s. economy. the dirty little secret is the u.s. economy is doing just fine. employmentlmost full , 4.6% unemployment. there is very little inflation. we are doing to rate increases and expects to more. consumer debt is a little high. local government deficits are under better control. the u.s. economy, if you look at it objectively, it is doing fine. not great, but fine.
our markets looking overvalued, u.s. stocks? mr. gorman: i don't think they are overvalued. they are trading relatively high, but look at the earnings. i think they're up 10% or 12%. markete to look at the reflecting the cash flows. they are suggestive of a growing economy. people are surprised the markets reach an all-time high. a goingition with economy, every day you should reach an all-time high. that is not a surprise that is an expected outcome. are we getting there because they have been inflated or are we getting there because of earnings expectations growing or because there is a lot of froth in the market.
right now, i don't see a tremendous upside without further confirmation. i don't see an overvalued market. reporter: any updates on your plans regarding brexit? mr. gorman: how can we be quick on that? we would need a half hour. we are disappointed brexit happened. we like the rule of law in the u.k.. we will do what we need to do when we get better clarity. james gorman, ceo of morgan stanley. yvonne: thank you so much. betty, speaking about what we were just talking about was i thought interesting, reflecting reality for the bank shares yesterday. not surprising. the guidance was a little lower than expected. they say it's not going to last. betty: that's right.
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delivers consistent network performance and speed across all your locations. hello, mr. deets. every branch running like headquarters. that's how you outmaneuver. >> 8030 a.m. in gloomy singapore. a half hour away from the open of trading in the lion city. >> quite gloomy, indeed. you are watching daybreak asia. let get to sophie kamaruddin who has more on how the asian markets are shaping up so far. ofhie: the data that was out south korea this morning, we want to start off what is happening with the kospi. after opening little changed. we do have energy stocks, the biggest drag amid softening oil prices on doubts over the efficacy of the opec output cut yield. financials are tracking on the drop that we saw in u.s. ranks. morning,t data this
13.4% rise in exports, that was respectable in the sense that asia's growth is doing ok. checking in on the nikkei 225, snapping a four-day drop to leave asian benchmarks higher. isa indicated the economy coming along nicely. taking a look at the sector breakdown, we have telcos swinging into the green but we have softbank on the back foot effort. the kyoto paper reported the government is going to be investigating discounts for smartphone and home internet packages. that is the day worst performer losing over 2.5%. let's take a look at some early movers in tokyo. pulling up the board to show you what is going on there. [inaudible] rising and nomura raised it to
buy. the latest earnings update, the utility company saying it will flex but consider share buybacks and that stock was raised to a buy at ubs. we had greek shares climbing. 40% above the 30 day average, 15% above the bloomberg one year price target. that is a look at some of the movers in tokyo. yvonne: let's get the first word news with paul allen. paul: the u.s. commerce secretary wilbur ross said president trump never intended to tear up nafta but it requires a thorough revamp. speaking in washington he said the guiding principle that will be "to do no harm." russ says he wants talks with congress by july has big changes will require approval on capitol hill. he also says the window to change nafta remains open through the -- to next generally.
a malaysia airlines flight turned back to australia after a passenger tried to enter the cockpit. back in28 landed melbourne. the carrier has offered no further details. malaysia airlines is recovering from two fatal and unexplained disasters in 2017 where a flight banished en route to beijing and mh 17 was shot down over ukraine. a woman linked to the scandal that toppled south korean leader hai has [inaudible] made headlines when it was revealed that samsung paid i -- $850,000 to buy her a horse. part of the widespread corruption in korean clinical and business circles. reports from japan say toshiba will not release or will delay the for your -- full-year results after its agm on june 28. nikkei news says continuing
issues can -- means earnings cannot be signed off. toshiba is trying to sidestep digital -- western digital's sale to the flash memory chip business. it is moving assets from the subsidiary back to the parent company. spacex is taking recycling to the final frontier. space itself. dragon cargore a ship that has made the journey. this capsule flew to the iss in toy 14. spacex has refurbished it for thursday's launch. most of it has been an space including the frame. spacex says it is always reusing parts but always -- not to this extent. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i am paul allen. this is bloomberg. president trump is deciding whether to dump the accord on climate change. the odds seem to be that he will
on wednesday. the president confirmed we will be getting a decision over the next few days. this.us up to speed on a lot of ceos has said do not do this. >> a lot of ceos including elon musk, apple as well as exxon. -- and saying this is not a good idea for businesses as well as the u.s. hitting us up to speed on the political side of things according to two people familiar with the matter, they are saying that donald trump is leaning pariss leaving the climate deal. according to one person familiar, they are saying that gary:, the economic advisor has told his counterparts in the eu nations that it is already happening, it is already going to happen and we have to prepare for it here. off of this, the white house said according to these people familiar saying that they are looking at a range of possible announcements based on whatever donald trump finally decides
here. one of those could be actual full exit. one of them could be a partial exit. it will depend on when this actually officially does come out from the white house. there are a couple of ways that the white house as well as the u.s. could exit. climate protection generally, one would be an exit from the paris accord which would occur by late 2020. this is on the time frame of three years or so. according to the deal, they have to wait until 2019. white house officials have to wait till 2019 and after another years time, only than they can pull out. it would be on the order of november of 2020. the other one would be faster in that would be something bigger, quitting the yuan framework for the convention on climate change. to put this into context, this was ratified unanimously by the u.s. senate in the 1990's and also signed by president george h.w. bush.
their public and president then as well. this would be turning u.s. climate change policy on its head from the past toy five years or so. interestingly according to sources, the white house itself is also seemingly split on the issue. we have a couple people in the top trump echelon saying you have to stay, you need to stay. included this are ivanka trump and secretary of state rex tillerson but on the other side of things, the apa head scott annan as well as steve are saying that the white house and donald trump should leave. as you were saying earlier, a lot of big business and the g7 minus trump last week was saying they need to stay in this and elon musk was seeing he would have no choice but to depart his own white house advisory council if donald trump pulled out of this and he said as much as he can say and it is in the hands of mr. trump.
yvonne: as we await the decision it is still being assessed. we have leaders from india and china, speaking with angela merkel to talk about climate change and free trade. is this the start of the new world order? >> in the past hour i was talking to betty about the u.s.'s pivot to asia during the barack obama administration and now with the pullout from the fromthis is a pivot away asia. but with that said, there is a space that is opening up for europe to make its own pivot to asia and as we are seeing here with the prime minister narendra modi going to europe on tuesday as well as the chinese prime minister in berlin and germany as you see with these pictures on wednesday, there is a world order that is giving space to asian leaders trying to take an
opportunity here. let's talk about what is mr. li.g with he will be speaking at the annual prime ministers meeting, that has been mr. happening fore past 13 years since 2004. there is more opportunity to be one here after donald trump's pullout and the issues he raised with the european union. -- mr. li goes to brussels for the summit and trade will be the top of the agenda. function set to germany. you can see that after if you look within, the netherlands and france are the top one and two trading partners but after that, it is china at $163 billion. beating the u.s. just by a hair.
the u.s. is $162 billion. climate change and free trade definitely would be on the agenda. just today, beijing in brussels so they would start this new alliance to fight climate change and to "leave the energy -- lead the energy transition to a low carbon economy." is. merkel and president x have talked about being the champions of free trade a year ago. you would not have thought this would be the most obvious of bedfellows but at davos a lot of the headlines there were jarring when xi was portrayed as the champion of free trade as well as of climate change. a lot of interesting things that are being hard on their side if not upside down, especially as mr. li and on back of the trip to europe. betty: we will be hearing more headlines on this topic.
meeting central bank the pace of easing. the political crisis threatens to end any plans for excel ration and rate cuts. let's get more from bloomberg's first douglas. -- bruce douglas. scandal going to affect reform plans? bruce: this is the $1 million question. an interesting statement that the central bank came out with when it made its decision to cut the benchmark interest rate by 100 basis points. it was full of the word uncertainty. it was repeated a handful of times. that is the watchword now for brazil. we do not know what is going to happen with these key reforms particularly on pension reform. that was to be debated before the scandal broke. the government is saying that it is business as usual and the reforms will go to a vote imminently. however, it was not clear even before the scandal whether they had enough support in congress to pass this measure.
it is even less clear now. uncertainty is the word at the moment. betty: what is the latest on the impeachment calls for the president? bruce: he has a number of calls parties and an influential legal association, the brazilian bar association. the key factor is that these requests need to be accepted by the house speaker and the house speaker is a very loyal ally of the president. far he has shown no indication he would be willing to consider one of these requests. the main threat the president faces is from a different angle. it is from the country plus top electoral court which is due to meet next week to discuss whether to invalidate the results of the last general election in 2014. chel [inaudible] was on the slate as the ice
betty: this is daybreak asia. yvonne: i am yvonne man in hong kong. tom mackenzie had a conversation with james gorman talking about china. he remained quite bullish when it came to prospects in the mainland. when it came to talking about increasing that state with -- 250% he said he was in the path of increasing that stake right now.
let's hear a little bit more about what he heard -- thought about the economy overall in china. mr. gorman: consumption has risen which is a important domestic driver. the leadership changes coming up toward the end of this year but leadership has been stable, consumption is increasing, gdp growth north of 6% and there has been liberalization of the capital market. is a pretty positive tone coming out from the morgan stanley chief. back here in the u.s., he was saying the dirty little secret here that the u.s. economy is doing quite well. we are at full employment. he mentioned that and noted littles less upside or upside and u.s. stocks. essentially on the equity side, it is priced in for bullish growth. yvonne: he called it the world legislative change coming out of the white house. said not issues and
surprising it has been tough for the new administration but he had a similar view to what larry fink had talked about overnight as well saying the equity markets are very dependent on the trump agenda. he also said there needs to be some kind of deliverance when it comes to white house strategy. investors are in a wait-and-see mode. we heard from james bullard saying washington has to start to deliver. betty: we are meeting where the rubber meets the road at least in the u.s. washington does have to start delivering and it does not look like there is much more upside here. as we have seen in the last few months or the last month of trade. it does not seem like there is much more upside until we get to move in washington. >> especially with that disappointment in replacing obamacare. a recent market rally is
encouraging a greater appetite for investment and it is planning to high -- hire more staff. entering the top 10 of asia's private banks. the ceo said there is a need for caution. speaking to our international correspondent for southeast asian, haslinda amin. >> clients are cautious but they are investing. haslinda: investing more? >> investment is increasing. this is where we continue to remind clients to be cautious. because the numbers, the economic numbers are not there yet. you can see positive data but the market has taken in more than that. optimisticvery outlook for the markets. haslinda: what do you see as the biggest risk in the market?
>> complacency. volatility is low. most people think the world is going to be, there are major political issues going on around the world. most people are very optimistic that we would be good to write we need tos out and continue to remind clients to remain cautious. not to have to high leverage. leverage is, can work both ways. we need to be very careful in using leverage. haslinda: is acquisition part of what wouldion plans, fit? businesslar [indiscernible] we are interested to continue to grow in the markets. i do not believe that [inaudible]
it has to be a regional business. clients are different in a different location. markets are different, so to may notlobal business, be prudent. given greater scrutiny and regulatory requirements, is there an need for your relationship managers to manage more for each client? >> my view is that each bank manage 500 million per banker. should what every banker strive to achieve. if you set that as your goal, you will be very selective who are the clients that you want to bank with. the clients that can grow with you, who are the clients that you want to invest your time and resources and growing the business to achieve that. the reason why is you cannot manage to many clients.
if you believe you need to invest, in a to understand the clients. you cannot possibly do that with more than [inaudible] clients. that is the maximum of time you can under -- you can spend to grow with a client. the ceo of the bank of singapore. on today's edition of daybreak. it is also available on mobile in the bloomberg anywhere app and you can customize your settings so you get the news on the industries and the assets that you care about. this is bloomberg. ♪
betty: this is a break asia. yvonne: we are checking the latest headlines. new york city has dealt a blow to wells fargo expanding the bank from -- banning the bank bankany business or the needs to improve its track record of lending in poor communities. sold unauthorized accounts and overcharged minority homebuyers with subprime origin -- mortgages. betty: mitsubishi motors may have to abandon one of its best-known models as it recovers from a fuel economy scandal. it is considering whether to
keep making the likes of the suv. it blamed the fuel scandal is part of the overstretched engineers and the ceo said if he does not make a choice in focus engineers, they will not keep up with the new environmental rules. >> whether we continue with the model depends on whether there is a market for such a vehicle. it is worthecide if investing the huge amount of money and human resources to prioritize its development. resources companies are taking a hit as iron ore prices sink to a seven-month low. it is the metal's longest run of monthly losses since the ever 2015. nickel trade ended at the lowest. nickel is the worst performer on the london exchange this year. the trump administration is planning to relax restrictions on drilling in the arctic to
open areas for expiration. interior secretary ryan zink wants to assess how much oil arctice stored under the national wildlife refuge. that would and president obama's limit on drilling in the national petroleum reserve. he intends to use the land for its original purpose. >> one feature we like to show off is the interactive tv function. let's go to tv . you can take a look at that james gorman interview we just had. just sat down with him with a great conversation. it can also watch us live. you can find a lot of the charts and securities or bloomberg functions we talk about here day in and day out. you can become part of the conversation. if you have messages or questions you want to ask our guests, go free to send us a question. this is for bloomberg' subscribers only. be sure to check us out on tv . time for a quick look at what is going on in the next few hours.
you have a lot of data coming out. rish: what is going on with the us trillion consumer? -- australian consumer? we had services and mortgages higher. and you have amazon coming in next year. how does that play in question mark -- play in? and in 45 minutes time it is indices.anagers >> we have been talking about that on our program. you were counting down to those numbers and the reaction. rish: absolutely. we havea preview and the official numbers out. we are looking at the disparity between the unofficial numbers and they official numbers we saw yesterday. state owned enterprises which is
the official number more skewed toward them, they showed more strength than the unofficial ones which reflect what is going on in the small and medium enterprises. after that we have gdp data out of india yesterday. from dbs will give her reaction. down for thes a year and what is it being blamed on? be long is this going to something to point out? we have the sales tax, how does that play out? that is bloomberg markets for the next two hours. ♪
♪ david: you started out, your father was a stockbroker. had you ever considered go into banking? jamie: i knew more of what i didn't want to do. i did not want to be a doctor or a lawyer. david: you had a lot of jobs, offered the ceo of home depot. jamie: it was a hell of a run. he fired me. jamie: i wear the jersey. i am not a hired gun. david: do you think the country is better off for having dodd-frank? jamie: the system is completely recovered. part of that is dodd-frank. david: you would never consider running for office, would you? >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way.