tv Bloomberg Daybreak Asia Bloomberg July 9, 2017 7:00pm-9:00pm EDT
♪ >> asia-pacific markets signal gains has strong u.s. jobs data reinforces optimism. payroll numbers bolster confidence, but wages still flat. more for the fed to ponder. >> trump hails of the g-20 as a major success, but he is increasingly isolated on trade. the white house appears to have forgotten which country xi jinping is leader of.
we will wrap up the weekend action from g-20. returns,sident trump how his health care reit forms are faring in congress -- health care reforms are faring in congress -- not well. >> we are coming to you live from hong kong. we are the first ones to debut it, pretty spoiled here at "daybreak asia." is looking great. can't wait to see how you will enjoy it. a new toy for you. it is just after 7:00 p.m. on fridayumbers looked good, a goldilocks scenario, but it does not stop investors from fretting about
the bond market, treasuries, when rates will hike and we will get more clues this week from janet yellen in front of congress. >> whether she will put more fuel into this on route. the equities markets bouncing. we will see if asia reacts the same way. we are starting off the week on one month lows. we will see if there is a bit of caution. you see how things are kicking off. happening, new zealand flat, as well as the kiwi. , china inflation lowers out later on, wti for the week, so well below $45 after u.s. drilling offset larger than expected drop in stockpiles. are slightly higher after that drawdown of 1% on
friday on the asx 200. given the frosty relations in not a lot going on there. dollar-yen back to that two-month high, breaking above 114 as the boj stepped in and went unlimited with fixed income operations to stop the rise in jgb yields, the 10 year yield now lower, also expecting machine orders and current account numbers this hour, but futures slightly positive this morning. the big question is how governor kuroda will keep going with this yield curve control given the forces out of the central bank hocks. -- hawks. that tiltstill see from the fed given the jobs report. up on friday with stocks, all three majors were up , in fact, technology was the , followed byr for
consumer discretionary and industrials, the dow adding 100 points, and the nasdaq up over 1%. we will continue to watch that, but let's get to first word news. wound up in hamburger with the u.s. further out of step than ever. receiptt trump platitudes, but little more on north korea. the g-20 final statement called the 2015 harris a court reversible -- paris climate accord not reversible. president trump says it is time to work with russia and discussed a joint cybersecurity unit. even the president's own secretary state said relations with moscow would not change until russia lived up to its commitments. president putin thinks trump
accepted his denial of meddling in last year's election. secretary of state tillerson this is ukraine to reassert support two days after the meeting between trump and putin. tillerson called on russia to exercise its influence over separatists fighting in the eased. trump tweeted on sunday that he did not discuss ukraine-related sanctions during the meeting. in a diplomatic embarrassment, president trump's press secretary appears to have mislabeled president xi jinping as the leader of taiwan. he referred to him as the president of the republic of china. president of the people's republic of china. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you.
on wall street will take on significance given the bond rout in the last few weeks. is this a route or a repricing of risk? su keenan has a look at the week ahead. >> we are seeing an interesting pattern. the stronger than number on friday had a lot to do with the question for the monday trading session. 1445, stocks and tandem, then in white and blue boxes lower, who is bonds. stocks up, bonds lower on friday, but the last time you saw both selloff was 2013. comeiday, more widespread asia to europe joining the u.s. in being more hawkish. let's listen to bill gross, the widely followed bond king, who
says it is not a route. this rather strong jobs report from the standpoint of jobs, not necessarily from wages, which is what yellen considers, the fed has one hike left in the year, and that's probably december. the end of the year is the expectation. -- btv1771, let's take 1771, let's look at how the jobs numbers hit the tape. line, thehe top blue number of people not in the for us coming back into employment, and that is a significant data point that has people focused on headline job creation and that it speak strongly to the economy and shows the fed is on track for
tightening as bill gross mentioned. there is also janet yellen semi-annual report to congress, first the house, then the senate, but what can we expect in terms of guidance from the chair? .> as always, she is vague let's take a look at the video. followed bylosely economists, particularly those in the bond market. it is expected to maintain a hawkish tone. she generally gives the latest monetary report. we will have a couple of economic pieces of data out, particularly retail sales come expected to come in stronger in june, and cpi, that likely rose according to economists. the earnings reports continue, big banks, j.p. morgan chase, wells fargo, citigroup, all in the spotlight as we kick off
trading in a couple of hours on wall street. >> thank you. the g 20 wrapped up with both nations pulling together to fight protectionism, but president trump cut a lonely figure at the meeting in hamburg when it came to climate change. >> the g 20 meeting in hamburg was a weekend full of confrontation that yielded little in terms of results. demonstrators gathered to confront 20,000 police officers, but in the end, looted local stores, set cars ablaze, and through molotov cocktails. meanwhile, president trump confronted president putin on the alleged hacking of the 2016 election. angela merkel and emmanuel macron confronted putin on the situation in ukraine. only one bilateral meeting yielded tangible results between putin and trump, who agreed on a
cease-fire in syria, but how long will that last? president trump received a lot of criticism for letting his sit in hisanka chair of the g-20 meeting. the biggest conversation was around to trade where they agreed to fight protectionism but allowed members to use tray defense mechanisms where they see fit, which is basically the same thing. the g-20 will demand more transparency when it comes to steal subsidies and try to fight dumping. also when it comes to climate change, there was always going to be an issue because the u.s. has recently pulled out of the paris climate accord. the other g-20 member said there is no turning act. -- turning back. >> those were some of the issues tackled during the g-20. u.s.-japan-south korea promising to apply maximum
pressure to counter north korea's nuclear threat. saw, the g-20 failed to produce a unanimous statement condemning the action. north korea did not even make it into the communiqué at the end. i want to bring in mark fitzpatrick, who knows a lot about relations with north korea and does a lot of studying on nuclear policy programs around the world. he joins us now from washington. mark, i want to read you a tweet from donald as he left hamburg, "i am leaving hamburg for washington and the white house, just left china's president xi, where we had an xm meeting on trade and north korea." he says he had an excellent meeting on trade and north korea. we know how the white house has been on this. how can it be an excellent meeting if it did not really even come up during the g-20? >> that is a good question.
president trump seems to use the thatexcellent for anything was not an absolute disaster. i expect president xi said words that sounded good, but what actions did he promise? did he promise to put real pressure on north korea? no, that is highly doubtful. >> then you have other members nikki party, including haley, who said a little bit later on another network that the white house will now look at trade relations with china to put more pressure on them. they keep saying these sorts of things, but it some point, want they need to follow this up with real action in order to make it look like it is not empty threats? >> they are trying to persuade china to put pressure on north korea, and would pressure on china have that effect?
probably not. chinag a trade squeeze on is a double-edged sword, and china knows that, so i don't think china feels particularly threatened by any such statements. for china to put real pressure on north korea would require the united states to actually give something to china, not the absence of pressure, but something that china would like, and one of those things that china wants is for the united states to engage in talks with ,orth korea, so the question is did the discussion with xi jinping get into that area at all? did get out ofe the g-20, was trump changing his tone when it came to relations with china, which contrasted with what he had been tweeting,
the talks were excellent, and honor to know xi jinping, so was progress made when a comes to relations between the u.s. and china? the relations aren't that bad. they hit it off pretty well at mar-a-lago in april. has tweetedtrump some expressions of discontent and frustration, but as some reporters have heard members of the administration say, don't pay attention to donald trump's tweets. pay attention to statements that are well crafted by secretary of state rex tillerson. the united states has taken was not happyina with, the announcement of an arm sales package to taiwan, the freedom of navigation exercise in the south pacific, said the united states is trying to do something to show that they are not pushovers with china. >> hang on.
this is "daybreak asia." >> let's return to the g-20 with iiss's executive director. talking about the g-20 overall, we did get a communiqué, but it was split on various issues, trade, climate change. what trumpink achieved here as a win? >> i think president trump is claiming that it is a victory. there is not a lot of substance behind that claim, but the bar was set very low. just maintaining some corum in itself might be a victory. this was a dismal g-20 summit. the absence of unity on the key
issue of climate change is what will color this g-20 summit and why it will go down as a failure. >> talking about climate change in particular, there was a deadlock over the issue. president later saying his country's ratification of the accord may not be justified or in doubt given the fact that the u.s. is retreating from this record. is this the beginning of some kind of contagion when it comes to the fallout from this deal? >> this in fact could be. when the world's greatest economy, the largest power, pulls out, it can't help but have a ripple effect. all of the other 19 members of the g-20 said they would proceed and the paris of treaty,
president emanuel macron said they would be holding a two-year anniversary meeting in paris, but peru friel players like turkey, -- it's not that thepheral -- when they see united states refusing to honor its commitment, they asked why should they. this has a big impact on the ability of the world to stem the warming that is endangering the future of our children and grandchildren. >> why don't we play part of what president macron said when he mentioned the u.s. separating itself from the rest of the world. hang on a moment. disagreement is a with president trump, and i said it publicly because there is nothing to hide. not being said, it does
prevent us from cooperating in many fields, and particularly terrorism, strategic interests. see eye toge extent eye and have cooperation. >> when you have one big country like the u.s. not on board with make the 19, does that u.s. less significant or make the g-20 less significant? >> it makes the united states less significant. the g-20 significance is a byproduct of the big story here, which is u.s. isolation. some were calling this summit the g 19 summit, all the other states agreeing on something, but the united states isolated. pulling out ofes tpp, the other ways in which president trump's isolationist arelses have played out really putting the united states in a corner by it self. >> when you say isolated, does that have actual economic
impact? >> certainly in the trade area in asia. china is picking up the pieces. china is coming in and already has got most of the nations of the region in line with its asian development bank, so the united states is really seating giving the field to china, and it would take a while before this place out in actual trade statistics, but it is a bad trend we are embarking on. don trade.two in there were some compromises, including the communiqué, steel overcapacity. does this by some time for global leaders in addressing this issue or does it prompt the u.s. to propose these tariffs or quotas when it comes to steel imports? >> it by some time. one of thebe
deliverables that trump got from the g-20 summit, the commitment on the part of others to see america's perspective on the steel issue, so he is claiming that a victory, and in some ways it was. >> does that lead to some type of looming trade war then? not callwar, i would it a looming trade war. in the competition, the united states may have more difficulty, because when it can't lead with the respect and reputation that it has in the past, you will have repercussions in other ways. thele won't be listening to united states as much come even when it has a good tale to tell. >> great to get your perspective on all of this. you can get a roundup of the stories you need to know to get
won approval to start mass production of its regional jet, with the first five due to be delivered by the end of the year. the plane has a maximum range of 3700 kilometers and competes with other jet makers. orders from 19 asian airliners, but still needs approval to operate in the u.s. and europe. >> klm air france says the turnaround is gathering strength with rising bookings than the return of tourists from asia and the united states. the group is still recovering the collapse in travel following terrorist attacks. seen ticket prices declined by half and demand surge. affected theel has mood in the business come and it is good. there is optimism. we do feel it for our business summer we see for this
kong. here's our first word news. the biggest reason given for not supporting prime minister abe was a lack of trust in him as a person. the republican party's hopes of repealing and replacing the affordable care act has hit the rocks come with passage of any plan in doubt. bill cassidyator declared the leadership plan a nonstarter. son has eldest confirmed meeting with a russian leader with kremlin ties during the campaign. donald trump junior says jared kushner and then campaign manager paul manafort also attended the meeting at trump tower. says theyork times"
did the meeting in hopes of learning damaging information about hillary clinton. iraq says it is has liberated the northern city of mosul from the islamic state three years after its fall alerted the world to the group's strength. the offensive was launched eight months ago. where the group's leader announced his intention to create a caliphate. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ yvonne: more on what we should be watching as trading gets underway in asia. we are joined by bloomberg's global markets aeditor adam haigh. we did see that blowup number when it came to the headline job gains, but wage growth is still stagnant. cool labor, not too market, is that going to be a further boost for equity gains? ,eporter: by the looks of it
the selloff we are seeing in bonds is rolling through to asia. australia in 10 years is selling off this morning. is a continuation of that statement -- of that theme we have had. investors being prepared to just put all their eggs in the global economy and continued earnings expansion we are seeing across the world. if you look at the u.s., often the earnings numbers are being downgraded at this point in the year, but they are holding up relatively well for the s&p 500. it is that against the concern in the bond market that is driving the selloff of a more hawkish tilt we have got from central bankers recently. theme ase of that same we start the week off in asia. we will probably see more small gains in asian equities as we roll through from friday. really the week is all about that janet yellen testimony.
the fed, as well, and that is essentially enough to shift the dial if we get some alteration to language coming from fed policymakers. it really continues to be a story of bonds selling off and equities just grinding higher. what about this warning from singapore's sovereign wealth fund, what are they saying? reporter: this is really interesting. this is a massive fund. the comments echo a lot of what we have been hearing and what has been a very big debate and financial markets in the first half of this year. that is all around the fact that , are investors to complacent? are they underpricing risk? they are saying that complacency is too high. people need to bring down the expectations for returns. they need to expect volatility to pick up at some point.
and of course, this all comes at a time where stocks are at record highs. gauges of volatility in the bond and equity markets are at or near multi-decade lows. meanwhile, political uncertainty is incredibly high. a lot of indexes of economic uncertainty are incredibly high, as well. those things just jar a lot of investors, including gic. they are making a very clear warning that investors need to have lower return target and expect an updated volatility. much, adamks so haigh. janet yellen was testifying before congress this week after the u.s. payroll grew by more than what one analyst had forecasted. salaries rose less than expected, 215 percentage points. -- 2.5 percentage points. joining us now from new york is josh right, the former new york fed market and policy analyst at
bloomberg's policy editor kathleen. what did you make of friday's number, which looks great on the headlines come up at the wage is just not there? does it tell you that the fed is still all systems go to keep hiking rates? guest: that is definitely the message. they will definitely be move forward with a reduction policy as early as later this month. there are signs of the report put out on friday that they want to reinforce the message that they are concerned about the balances of the financial system. one of the way they can affect that is to reduce their balance sheet. there's a hint that they are more likely to take action. betty: guessing this treasury market volatility as of late -- you have seen this treasury market volatility as of late. does that make them nervous? guest: the report does not suggest that.
there's an aspect of that they referred to as term premiums at the low end of the historical range. they have got to be thinking that they are best at that is an imbalance that they are treated to because of the large amount of holdings. there has been a significant selloff even in treasury bonds, but that has been more related so far to news coming out of europe. if you look at the announcement said may -- the announcements the fed made in the june meetings, i would take a lot of comfort from that. what if you are a said policy did work as an economist? you have been on the inside, and you keep saying that inflation is going to rise toward its target, and suddenly for three or four months it starts declining, even while unemployment gets lower and loader quest -- lower and lower? a white line that
is average hourly earnings stuck around 2.5%. unemployment is still low. you can look at this metric over here to see that 4.4%. againage coming down falls right in line with the fed re-inflation gauge. guest: one of the things we are seeing is that the fed is shifting from consumer price inflation to asset price inflation. that is why they are discussing term premiums. that is why that is still relevant from the friday report. the report that was written for congress was sending messages to the market as well, saying we are ready -- we see that there are grounds for taking action. reporter: would you are at the fed couple of the things you worked on was mortgage backed securities portion of the fed portfolio. that was before where we are now, with the $4.5 trillion. the consensus is they will make an announcement in september and move ahead.
is that a good substitute for fed tightening for the fed to start making that balance sheet reduction? or is it in the background? guest: they wanted to be technical. i was there in 2013 will we had the taper tantrum and they talked about reducing the pace, and just talking about the possibility led to a very large selloff in bonds. we haven't seen anything like that reaction since then. they feel a little bit more confident. betty: i want to collect the chart here that i want to pull up a chart here -- i want to pull up a chart here. we have seen the last several days it tightens. ends go up, but in the long a really aren't budget. yield curve flattens, what does that tell you? guest: this actually is one of
the reasons why people are talking about the possibility of a nerd -- of another conundrum. fear of the conundrum period is another reason for the fed to take action. although we don't talk about it a lot, i think they are going to pooh-pooh it. did want to avoid that. one way -- they want to avoid that. concerned that when they take policy action to raise rates, it is not transmitting out into the financial market. that third piece that is shaping their view of the world is the experience of the global financial crisis. what was the number one lesson? from the fed perspective, it was the transition mechanism. how do you see your transactions rippling out to the rest of the economy? the way to normalize that is to normalize your balance sheet. year,: we see the u.s. 10
the benchmark at .57, drawing back up in some of those yields when it comes to the european markets in particular. can you call this a route right now, are we seeing -- or are we seeing a bit of a repositioning? guest: it is certainly a repositioning. , and some that investors had to be concerned about. it is something i think central bankers are broadly to be concerned about since they seem to be conjured getting so much to it. from the fed perspective, i think they feel like they are getting a green light from the market. that is probably why will see more hinting from janet yellen later this week that they are ready to start moving forward and make an announcement. yvonne: great to have you, josh right -- josh wright. coming up, moscow's alleged meddling in the u.s. election
♪ yvonne: we are accounted down to asia's major market opening this morning. the dollar-yen sees a bit of weakness, just below 114 against the dollar. this is david -- this is "daybreak asia." let's return to one of the top stories we are following this morning. the g 20 summit over the weekend in germany, and hamburg. i want to bring in kyle wilson, developing -- the visiting fellow australian national university who specializes in russia and china relations. -- from us from camera
canberra. we saw this all-important meeting between president trump and president putin. on to play for our viewers some comments that russian president vladimir putin said over the 20.kend from the g >> as for personal relations, i think we have established them. i don't know how this sounds, but the way i see trump on tv is very different from the real person. he is absolutely straightforward. he perceives in an adequate manner, adequate height -- analyzes and answers questions quite quickly. betty: pretty fawning words on both sides from the russian president and from president trump. what did you make of this meeting, this over to hour-long meeting between the two? what might come out of that? fact that it was
two hours clearly is important. mr. putin has been in power for 17 years. we know now that he is really a formidable opponent. is highly intelligent, has a very good memory. he is very well briefed. he studied mr. trump very carefully. my view is that mr. trump is no match for him. we don't actually know much about trump's advice. on the american side, there seems to be a whole set of opinion. what does jared kushner advise mr. trump? what does the secretary of state advise? what does the secretary of defense advise? , oneutin scored a huge win of the biggest of his career, when mr. trump became president. it is quite clear he played some role in that. we are seeing the beginning of a relationship. very hard to predict how that relationship will evolve.
way fromr. putin going that meeting, i would feel pretty satisfied. he seems to have got a lot of what he wanted. betty: he did indeed. what is interesting is every u.s. president who has dealt saying, has started off with respect. you heard that from president obama, president bush, and others who all started off saying we respect him. he has done so much. there have been lots of words of praise at the beginning of the relationship. and all of our goal, as well -- angela merkel, as well. they all come out sorely disappointed in their relationship. is that pattern going to continue? can he be trusted here? trust isdon't think really an operative word in dealing either with mr. putin or mr. xi. who takehardheaded men
a hardheaded view of their own country's interests. what they are about is what happens on the ground, not expressions of trust. mr. putin really made a fool of george bush when bush said he looked into putin's eyes and understood his soul, and quite clearly he had. mr. -- he had not. mr. putin had an agenda. it is very much in his interest that he has in the white house now a president who is no match for him, who doesn't really understand him, who is experienced. it is very much in his interest to keep that president in the white house for as long as he can. we will just have to watch carefully how the russians play their game. we know what they want. mr. putin has said what he wants. he wants nato out of europe. he wants america out of europe. he sees no place in europe for america. he wants what he calls his legitimate sphere of influence. this is what he has in common with mr. xi. the u.s. tos
acquiesce in chinese privacy in east and north asia. let's watch how the game is played. we can be pretty sure that all the russian side, it will be played skillfully, but the trust will have nothing to do with it. yvonne: i thought it was very interesting, this cease-fire when it came to syria. do you expect that to hold, or is it smoke and mirrors right now is mark -- right now? guest: very hard to say because really, we don't know the degree to which the russians really control the syrians. i am no expert whatsoever on the middle east. these are highly complex matters. if mr. putin sees it in his interests to have that cease-fire hold, then i think it will hold. this is the first place of a commitment made by mr. putin to the united states. i think he will probably do all thisn to ensure that in
first instance, he is shown to be as good as word. i would have thought the chance is that the cease-fire will hold. betty: really quickly, you mentioned a few times that trump is no match for who -- no match for putin. what you say that? guest: mr. putin has shown himself over 17 years to be a formidable customer. he is very well briefed. we know that. i don't think he understands western countries very well, but that doesn't seem to matter. we know he has a terrific memory. we know he sizes up -- he is a martial artist who looks for weakness in his opponents and tries to exploit those weaknesses. mr. trump will need very, very good advice indeed to deal with mr. putin. he has a very good advisor in mr. rex tillerson, who has been dealing with the russians and personally with putin since 1999.
i would have thought he would give very well-informed advice. whether trump listens to that advice, i don't know, because we seem to get a cacophony of voices coming out of the white house. it is very hard to know to whom trump will listen. kyle, thank you so much. kyle wilson at australia national university center for european studies. yvonne: breaking news out of japan. machine orders a big miss here for the month of may. month on month falling 3.6% after a rise of 1.7% in the month of april. year on your figures quite 1%,d, just rising 6/10 of hoping for a jump of 7.16%. a lot of question marks here.
boj survey we got from the was the updated version, and they were revisiting these plans. this raises a lot of questions of the state of japan inc. at the moment. betty: i am looking at how the japanese yen, which we had seen weakening moments ago, now is strengthening slightly, interestingly enough, on these disappointing numbers you mentioned. we see dollar-yen falling closer below that 114 level. we will continue to see the reaction. it underscores just how hard it is to get japan inc. going. much more ahead. this is bloomberg. ♪
latest business flash headlines at this hour. barclays is on a hiring binge to boost investment in market operations in japan a year after it cut when hundred 20 jobs. 10plans to hire at least bankers and sales staff to advise on mergers and sell investment products. barclays is ranked 14th among advisors on mergers and acquisitions in japan according to bloomberg data. asked usuropean exchange euro net has about $2.3 billion available for acquisitions. the company operates markets in amsterdam, brussels, paris, and lisbon, and wants to capitalize on the brexit world. sansei major transactions in the industry are still possible despite the failure. >> i don't know how many jobs will come to the continent and to paris. i think a fundamental trend is starting. if you want to make money and do
business with the company's and this group of 27 countries, 19 of them using the same single currency, then you have to be located in that part of the world. sony's second reboot of the "spiderman" series lead the box office with its weekend debut. $170 million marks the studio's first number one opening of the year. "spider-man homecoming" is part of a production deal between marvel and sony's production unit, producing a much-needed hit for sony. plenty more still to come with asia's first major market opens moments away after some of those is winning japanese eagle numbers. -- japanese eco-numbers. yvonne: still looking quite positive given this u.s. jobs report.
that looks to be the biggest factor for investors here in asia this morning. let's get the latest with sophie kamaruddin. sophie: we are seeing futures they are, as well as across other major markets in asia, set to open higher this morning, tracking gains we saw on wall street. expects some trepidation giving the pressure we are seeing on bonds. keep in mind that asian stocks are starting off this week from a one-month low. keep an eye on how the yen trade this morning, as well. here are some stocks we are watching. over in seoul, korean air on focus after a raid on friday, allegedly accused of using company funds. this is the first crackdown as president moon gets tough on conglomerate. in tokyo, watch for mazda motor shares. six vehicles that are locally made are going to be recalled for airbag defect made by
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♪ >> asia-pacific markets signal small gains as strong u.s. jobs data reinforces optimism. >> payroll numbers bolster confidence, wages flat ahead of janet yellen's testimony this week. >> trump hails the g-20 as a major success, but increasingly isolated on trade and climate change. >> the white house appearing to which country
president xi jinping is leader of. ofthis is the second hour "daybreak asia" coming to live from bloomberg's u.s. and asia headquarters. >> bright and early on that new set. we just had that surprise drop in japan machinery orders. those numbers for equity futures, it looks like it was the jobs are for on friday that is continuing to bolster that confidence with the rally in the u.s., now spilling over into asia today. >> looks to be the case, not too hot, not too cold, so could raise the risk profile. let's look at the open with sophie kamaruddin. sophie: spillover from that friday advance. .6% despite25 up that miss and core machine orders for may.
caring some gains on the back of that data this morning. snapping a two day drop, and shares in sydney gaining .1% after sliding three days straight. miners after all strays deputy prime minister said he sees merit in the government taking an interest in oal. rising given the weaker dollar and encouraging chinese economic activity. of the the health chinese economy with the june inflation data this morning, both cpi and ppi forecast to remain steady. in the commodities space, looking fairly mixed, copper under pressure on supply-side
issues. aluminum sliding .2% as the market faces u.s. import tariffs. australia said to have an exemption. oil gaining, but holding $45 ass losses, below the u.s. added more rigs last week. in the bond space, aussie bonds continuing to all, tracking the drop in treasuries, u.s. 10 year yields have added 24 basis points over the last two weeks given the route in the bond space. asian stocks were already losing steam. btv 1635 point your terminal -- on your terminal. asian stocks losing steam, breaking the channel that has ,efined the trend for the index
indicating more downward momentum here. >> thank you so much on the markets. let's get to first word news now. g-20 wound up in hamburg with the u.s. further out of step than ever. trump received platitudes, but little more from north korea. the g-20 final statement calls the paris accord irreversible. trump has pulled the u.s. out of the agreement. the president returns to washington, saying it is time to work with russia and discussed a joint cybersecurity unit with president putin, drawing protests from both parties and even the u.s. secretary of state. president putin says he thinks trump accepted his denial of any
russian meddling in last year's election. secretary of state tillerson visited ukraine to reaffirm support. tillersons, rex called on russia to exercise its influence over forces in the east. trump tweeted on sunday that he did not discuss ukraine-related sanctions with putin at the g-20. trump's press secretary appears to have mislabeled xi jinping as the leader of taiwan. a transcript referred to him as the president of the republic of china, which is the official name that beijing considers a row across since -- considers a rogue province. jinping isi president of the people's republic of china. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries.
this is bloomberg. more on that u.s. jobs report, adding 222,000 jobs last month, a stronger increase than forecast, while the jobless rate low,to 4.4%, a 16 year showing the labor market should support continuing increases in consumer spending. wage gains disappointed again below forecast. joining us now is the global economic advisor for pimco. you are the first one to come in and expense what we can do here at bloomberg. great to have you. let's talk about the jobs report, a mixed bag, that beat on the payrolls, but wage growth quite stagnant. of structural issues and demographics? is more slack in the u.s. labor market than meets the eye. the unemployment rate is low,
,.4%, the previous month 4.3% but there is hidden slack and you can see that in the lack of wage pressures. this will have to concern the fed. displaying this religious belief in the phillips opponent comesan down, wage growth will accelerate, but the longer wage growth stays down here, the more problems the fed will have. >> you mentioned those indications of slack. 9067, thev underemployment is slightly higher to 8.6%, so some indication that slack does remain in the job market. is it going to be any indication for the fed to give some pause? there is still some dissent
among policymakers when it comes to inflation, and the fed seems to be overlooking some data points. fed has argued that the downtrend inflation over the last three months is temporary by severaln caused factors. this is pretty broad based. the turned down in inflation was down to fed thinking. they seem to be determined to hike rates one more time this year and start the balance sheet by as, but as time goes we see inflation below target as we get closer to year end, we think the fed will not hike ,ates one more time this year so it is the inflation data that will be decisive for fed action or nonaction. >> what about conditions as they continue to loosen? this focus on financial stability as of data?
could that be something the fed is making some policy mistake in and focusing on the sears more so than the economy? >> there is a risk. the fed is right to have drawn some lessons from the last cycle when they hiked rates to slowly 2004-2006 and pumped up a big credit bubble. that is one reason why they are determined to go ahead now, even though inflation is so low, but the risk is that they are cementing inflation expectations below target, looking at surveys are market-based measures like rake even inflation rates, they are very low and have turned down recently and are below their, so the fed in attempts to steer financial conditions and look at financial stability, that they cement inflation expectations below target and that may on them once we get the next downturn,
because the lower inflation is when the next downturn hits, the bigger risk we end up in a deflationary situation. >> i want to pull up another chart that illustrates everything you just discussed on wage pressures and what is going on in the employment market, and 1771, this line shows you why that participation rate goes up and the an opponent rate goes down, people not in the labor force are jumping in, aying to get employed, and number of people who are already not in the labor force and staying unemployed is going down and continues to go down, so yes, there you go. that explains what we have been talking about. when we talk about wage pressures, what is normal wage pressure for an economy like this? we know we are around 2%, but what is considered robust wage pressure right now? think you would have to
look at where you want in to be over the medium term. us 2%, so thatd is your price component of the wage pressures. the other factor that determines wage growth is productivity growth. product 2-d growth has been low over the last five years, averaging .5%. on an underlying basis, probably around 1%. , plus 2%d up those medium-term inflation, then you get to the normal pace of wage growth of 3%. currently on the most recent measures, we are at around 2.5%, so still falling .5% short. >> stay with us. we will talk much more with you. , pulling back, why
>> it is clear there would be discussions on trade and i am satisfied we were able to say market should be kept open. this is all about fighting protectionism and also unfair trade practices. took any event, france this position, that is free and fair trade, and i think this can be found in the final declaration, but a declaration as good as it may be does not the race the tensions that exist. >> we will take opportunities to
sign deals with old friends and new owners i held meetings with other world leaders and have been struck by their strong desire to forge new bilateral trade relationships with the u.k. after brexit. >> the u.s. president express his views on these subjects, on climate,pecially on very openly, and i think that everybody appreciated this fact. >> we have found the administration to be very responsive. we are working through issues we , so to work through softwood lumber is very important. we have had discussions around been a high has level engagement and we will work towards a productive solution. optimistic and pessimistic comments about trade and protectionism among the g-20
leaders at that summit in hamburg. i want to get back to our guest. inwe just saw their different comments from these world leaders, we need free trade. we need the u.s. a part of this, but understand they don't want to be a part of it, and that will have consequences. >> i think it will have consequences. this a g-20 was a show of no unity between the u.s. on one hand and the g 19 on the other hand, particularly on trade and climate, but it is clear that the u.s. is becoming more inward looking and this administration is not willing to take global leadership. on strikingused better deals, or as they call it areer trade deals, and we pretty close to the u.s. imposing steel tariffs on some countries, particularly on china, so the going will get
rough on the trade front. >> they haven't, even though the white house has threatened steel tariffs, but if they do and go on with other sanctions against china, is that going to help pricing pressures? >> i think it will. i think we will ultimately lose out from steel tariffs or other tariffs, the u.s. consumer, but the u.s. administration seems to be keen to go, and i would expect them to do it because this is one of the few policy fronts where the administration can do things without congress. health care reform, tax reform, you need congress for this year it on the trade front, the president can do it by executive the more likely it comes we get some protectionist action from the u.s. administration.
we don't expect a broad-based trade war, but you will see conflict in certain sectors. >> you mentioned congress. we are all watching janet yellen's testimony in front of congress this week. what are you expecting to hear from her? >> i think we will get a steady message. she will point out the economy is on a 2% growth trend, the labor market is good. i think she would downplay the downturn in the inflation data and emphasize that with unemployment as low as it is, we will eventually see wages rising , so the message is pretty much the same that we saw in the last fomc meeting, namely that they will start balance sheet runoff probably in september. i do not expect them to do it in july. they will probably not hike will in september, but
continue to send the message that it is quite likely we see another rate hike later this year. ofwe just heard that the era central bank stimulus is over. are we there yet? why do you think we see this coordinated response to reflation? what was your take on all that? reactionght the market was a little exaggerated. >> and after as well, right? >> but this was not a coordinated reaction by central banks. there is a synchronized global recovery and financial conditions are easy, so it makes sense to take the foot a little off the accelerator. i think markets overdid it in the reaction and the selloff was the nuancedven changes in their statements, but
what it does illustrate is that markets are still addicted to liquidity, and as soon as there is a hint central banks will retreat, markets to nervous, and this is the biggest risk markets are facing. if central banks proceed, but only move cautiously, i think there is a risk of more of people in the bond markets. we saw that on thursday in the last 38 hours. i want to throw one more chart btv 4826, the u.s. and german 10 year yields moving in tandem. 2.37%.. 10 year at the german yield breaking above that technical level of 0.5%.
do you see yields heading higher from here? >> what is interesting is that the leadership for the bond , the ecb, commons by the bank of canada, who may hike rates this week, and the boe, that sparked the bond market selloff, so the fed is no longer the leader in the bond market. what we have seen in the bond market is a move back into roughly the middle of the range, think of the u.s. 10 year, a to 2.60%..10% we are now back to the middle of the range. i think the rate will remain range found this year. i do not think we are seeing the beginning of a bond bear market. we are in the new neutral, where the neutral interest rate is ofh lower, so the yield
2.50% for the u.s. 10 year is about fair. we may see over shoots and under shoes, but 3% yields this year will be difficult to achieve. >> stay with us. plenty more to come. you can get a roundup of the stories you need to know to get onr day going at dayb your terminal. also on your smart phone and the whereerg anywhere app, you can customize your settings to get the news you care about. check it out. this is bloomberg. ♪
center of debate, but some saying it is dead to begin with. john mccain has come out today on u.s. national television saying he inks it will be dead. saying there is only a 50-50 chance of this coming to fruition this month before the august recess, as well as senator ted cruz, he is pitching a different proposal. he is pitching those proposal to let insurers sell skinny plans where there is less coverage and lower prices. donald trump has come out yet again on twitter. saying for years even as a civilian, i listened as republicans push the repeal and replace obamacare. now they finally have their chance. if they don't do anything within these 6-7 months, every president has come up with some kind of signature legislation.
the time when presidents are at their highest. it is interesting to see if this doesn't actually happen. friday,y, thursday, andirmation hearings, president trump will travel to paris for bastille day. >> thank you. 13 days until congress goes into their summer recess, and are not getting much progress in it comes to health care. what does this mean for the trump agenda? >> it is becoming increasingly very that it is very, difficult for the trump administration to get anything done on health reform, on taxes. health care reform, maybe only 50-50 that we get something, come toore they can congress, they have to get the budget for 2018 in place, and
there is the debt ceiling that is coming up, so that will keep congress busy after the august cuts arehich means only likely to happen in the first half of next year maybe. maybe that is not a bad thing. having a big fiscal stimulus is maybe not such a good idea because this could lead to over heating and forced the fed to hike interest rates more aggressively. the chances we won't see the debt ceiling lift it? >> the chances are very high that the debt ceiling will get lifted, but likely to happen last minute and something for september. it is unlikely it will not be lifted. congress has always done it, but always at the last minute.
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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. 30 -- 8:30 in singapore. >> you are watching "daybreak asia." let's get to the first word news now. rosalind: the japanese prime minister shinzo abe has seen his approval rating at its lowest ever. the survey shows the rating from 39.8% a.9% month ago, the lowest since he took office in 2012. the reason given was a lack of trust in shinzo abe as a person.
confirmed aump has meeting with the russian lawyer. said jaredp junior kushner and paul manafort also attended the meeting. the new york times says trump junior agreed to the meeting in the hope of finding damaging information about hillary clinton. iraq says it has liberated the northern city of mosul on the so-called islamic state three years after its fall alerted the world to the group's strength. an offensive was launched eight months ago. it is where the islamic state leader began the group's intention to found a pan-european caliphate. the hopes of repealing and replacing the aca has hit the rocks. factions are pulling in opposite directions. louisiana senator bill cassidy
declared the plan a nonstarter, suggestedcruz offering cheaper plans that provide less coverage. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> we are seeing lines from boj governor kuroda speaking at a branch managers meeting and a couple of minutes from now in tokyo. this is what we are getting. the boj will continue to adjust policy as needed and japan's financial system has remained stable. rising as the output gap improves, saying the economy is turning towards moderate newnsion, so not a lot of information from the boj, this after machine orders disappointed quite badly for may. let's look at how asian markets
are shaping up this morning. it is all about that jobs report. sophie: that up the tone from the report on friday trickling into the asian session here. .5%,, the nikkei 225 up gaining the most in three weeks despite disappointing core machine orders number. araiza .5% in sydney, although dropping given the weakness in the commodities space the gains in korea easing somewhat, the kospi up .1%, but the won around that 1150 mark. we do have the dollar again -- the dollar-yen trading at 114. bonds continued to slide,
although given the rba's determination not to join the hawkish chorus, that might provide some room for a breather, especially after the jump.basis point earlier, pimco mentioning we are not at the start of a bond bear market. i want to look at tokyo. that's a price monthly drop prompted the government to lower its outlook. machinery stocks adding over 1% along with electrical equipment makers helping the rise in industrials, up .8%, but the telco segment down 1.7%, the biggest drag in tokyo so far this morning. citigroup says profits for the telco will drop if this is the case. up marine segment in tokyo
kawasaki, and the nippon all gaining this morning. thank you so much. u.s. jobs growth reacceleration well wages remain in low gear. fed chair janet yellen will be acknowledging this as a roadblock for inflation when she testifies to congress this week. , gooden hays has a look news and good news with the jobs report. came in stronger than forecast, a nice rebound, gain in may. the labor department does a survey of is this is in the middle of the month on the 15th, is theably what happened summer hiring picked up after that point, and now we see it in
june. 8348, you can see how what is happening is the ,hite line, your basic numbers heading up and down, but now the trend is clearly upward again. two is the white line, hundred 22,000 jobs in june, up from 152,000 in may. it looks like at least for now that it is trending higher again. employment up .1%, still i low unemployment rate. low unemployment rate. people are saying because maybe there is more confidence, people on the sidelines are saying i will look for a job, helping to boost the employment rate. ironically, when things are better, you see that happening.
people are coming back into the labor force, average hourly earnings up just .1% comes stock at the level for months now. this is something i want to show 1771, this turquoise line shows you people coming out of the labor force, coming out and finding jobs, the number has risen to a record, the highest level for this kind of trend. the white line or people who are not in the labor force and lower and lower, so a good sign, but still a lot of slack keeping average hourly earnings where they are, but wages the turn of the fed? >> we also got the monetary policy report to congress ahead
of that testimony. it comes to when balance sheet normalization, but this focus again on financial markets. fedt is the first time the has done this, five days before janet yellen testifies, they want everyone to absorb this and study it. you see a lot of things in fed minutes and fed speeches. the fomc expects a stronger economy towards gradual rate hikes. they expect to reduce the balance sheet, but did not say when. -- when janet yellen testifies to congress, theyormer fed economist, are definitely going to tell us they are moving ahead. here is what josh said. >> they will definitely be moving forward with the balance sheet reduction policy. as early as later this month. a report on friday, they want to
reinforce the message that they are concerned about imbalances in the one they can affect that is to reduce their balance sheet. there is a hint there that they are more likely to take action. >> world interest rate projections, still pretty low, 16%, not too much conviction from markets and traders. december is when you have odds-on there, 52%. john williams in sydney tomorrow, lael brainard at a conference on thursday. we will have a lot of fed speak. we hearderesting that that the fed may not do the third rate hike and is concerned about inflation expectations cemented at a low level. getsll see if janet yellen
those questions about that particular point this weekend how she responds. >> thank you. shipper orient overseas has accepted a buyout offer from cosco, controlled by a family of former hong kong chief executives. a reporter has all the details from singapore this morning. what led to this deal? better will give cosco a footing in the international orienttaking over overseas, known for its credibility. ,osco is getting a good asset it is a company that is well received in the international world, and also the fact that
orient overseas has been well-managed, still able to make profit when others were making losses. it seems like a very good deal for costco. >> the deal was all but done, but what is this new company? what will it look like? >> it will become with the combination the world's third-largest, overtaking maersk cosco inso that puts the top three in the international world, and with will beination cosco able to dominate transpacific orientoutes with overseas, which has been an important market to other shipping lines. >> you talk about the significance of this global shift in the shipping sector. we have seen consolidation of ,ate, maersk restructuring
emerging japanese container operations. you think we consider continue to see this m&a? >> the industry is saying there is more to come, so i would not be surprised to see more coming after this, but it is interesting to note that during the bad times that people realize that maybe it is better, and that is why this m&a has been driving the markets for the last two years or so. >> thank you. joining us there from singapore. up next, the latest consumer prices in china and what they may say about the economy. we will be joined by hsbc next to -- by hsbc next. this is bloomberg. ♪
new york. >> this morning, the latest data out of china as consumer prices are said to have edged up to 1.6% from 1.5% the previous month, food prices set to remain a drag. indications pointing to further stabilization. hsbc, julia wang. i want to throw up a chart real quick. we have seen this bounceback in btvfacturing in china, 1772. as it edges higher above 50 for manufacturing pmi, you see the movement with prices as well. we are seeing stabilization for the ppi, but could there be upside surprise? >> producer prices, you look at
input prices, which have not really increase as much or as quickly as headline activities, so that probably means producer prices in terms of momentum will be relatively soft, but on a whole year basis, the strength of activity overall is what matters, and it has surprised a lot of people on the upside, and our expectation is the manufacturing sector recovery continues and is led by not only external demand. there is debate whether the technology cycle is short-lived but it long it can last, is supported in china's case with domestic demand and is reflecting new sectors contribute into overall growth. we think that will be a 2-3 your story. >> you look at the inventory
cycle, from de-stocking to restocking, it seems to have run its course. when will that trickle in and hurt profit? this is when interest rates are starting to edge higher, repaying debt hitting tougher as well. >> as far as the manufacturing , i think the price indicators within the pmi for example are showing sequential moderation, but the bigger part of the manufacturing recovery story is not inventory, more the capex story. just seeing the beginning of it as profit except, business confidence except, things we have not seen over the past 4-5 years. we've seen private sector business investment coming back. this is why we expect this to
why here resilience and will have just fine tuning in the markets. >> how much of a drag are commodity prices? >> commodity prices on the whole have been a drag to china's inflation print this year, not only in the ppi, which tracks global commodity prices like oil very strongly, but also agricultural commodity prices as well, which is the food price basket, a drag on cpi headline inflation, so the surprise side story matters a lot for inflation, but for the longer run take sure, we look at demand, and we think the demand .ide recovery is sustainable disruption, wee
will see the demand side reasserting itself. not todifficult is it from a corporate profit side, but also loan repayment, how much, how difficult will that continue to be and how much is riding on making sure we get a good solid print later this morning? that if you take a 6-12 months story, you really see the turnaround and how massive it has been in headline inflation, a 10 percentage point move, so from this point onward, we expect cpi inflation to soften towards the year in, but quite a bigll get buffer in the real rate. interest rates have not moved
nearly as much as inflation has. the real rates have been following this year. so as you mentioned, that is why this time around come in the manufacturing recovery has been resilient to the pboc fine-tuning compared with 2016 and 2014, and it is hardly because of this turnaround in inflation, but behind that is the strength of the manufacturing recovery. could we see the pboc ramping up its deleveraging then? >> if you look at what they did slew of and april, a new policies and tighter liquidity conditions. the market had a concentrated selloff in various financial assets, now in june we are moving into relative calm as we look towards the conference ister this week, and th
takes away some institutionalization of the deleveraging policy the pboc has been pursuing for the past six months, so financial institutions and mainland china, it means they can take a breather for now, but most of them are prepared for stronger regulations to come. >> thank you so much. julia wang at hsbc. one feature on the bloomberg is the interactive tv function at tv . not only can you watch his life but see previous interviews and dive into securities and functions we talk about. you can also be part of the conversation. send us an instant message during our show. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
>> the latest business flash headlines. our clays on a hiring spree to boost market operations in japan a year after it shut it's cash equity business and cut 120 jobs. it plans to hire 10 tankers and sales staff this year to sell investment products. barclays represents 14 position in japan. the pan-european stock
exchange has two point $3 billion available for acquisitions as it seeks to double in size and diversified. the company operates in amsterdam, brussels, lisbon, and paris and wants to capitalize on the post-brexit world. major transactions are still possible despite the failed deutsche pursuit of lse. reboot of the spiderman series lead the box office with $117 million, the studios first number one open of the year. give sony homecoming a much needed hit after a string of disappointments. babyalso had the film of i driver. loves to talk about elon musk and tesla.
he tweeted recently about the model three, and a few hours ago, there you go. , beautiful, out sleek looking, black model three , the first glimpse everyone wants to know, $35,000 retail. >> it is interesting because his stock recently has not done well. with somen sold off concerns about whether or not they can meet the 500,000 model .hree car target can he produce enough batteries to fit in all these cars. equity anr, tesla you can see the analysts recommendations. s have gotten bigger and bigger and the buys smaller and
smaller, some more bearish, others point out that the stock has caught up with the average price target from analysts of $303. $313, even with that drop, so it could be bearishness or it has just met everyone's i expect haitians. -- everyone's expectations. down and millions to go. peek from elon musk himself. that is it from us here at "daybreak asia." rish, the ppi prices out of china. isn't it nice? ,ishaad: the factory gate price ,0 months of deflation changes
a search last time with five point 5%, nothing compared to the beginning of the year. looking for pretty much the same five point 5%. g-20 over with. >> it felt more like chi 19 versus one. rishaad: absolutely. yield, bond rout we saw last week. what next for treasuries and beyond from blackrock. >> looking forward to it. that is it for "daybreak asia." market coverage continues. this is bloomberg. ♪
rishaad: i am rishaad salamat. on g 20 up with strong words trade and climate change. ivanka trump stepping into the spot light, critics asking why she was allowed to sit in for her father. raised eyebrows there. also this hour, the latest inflation numbers from china, early indications of more stability in the economy. this is "bloomberg markets: asia." ♪
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