tv Bloomberg Daybreak Asia Bloomberg July 25, 2017 7:00pm-9:00pm EDT
♪ >> positive earnings and rising confidence push wall street higher. to records, in fact to read the asia-pacific is expected to build on that permit yvonne: -- permit. yvonne: u.s. inventories said to have fallen sharply. >> g.m. warning of a downturn in the second half of this year, slashing production to bring inventory back in line. yvonne: the senate salutes john mccain after his health scare.
he warns republican leaders he will not support their health care bill. >> this is "daybreak asia," live from bloomberg's u.s. and asian headquarters. i am ramy inocencio in new york, where it is just after 7:00 p.m. yvonne: i am yvonne man in hong kong. that nailbiting vote just past. we can start talking about what is next for health care. -- the reason we are seeing records again. ramy: especially for the s&p 500 as well as the nasdaq, hitting records. the dow hit intraday records. into the want to go bloomberg terminal and show you what is happening in terms of earnings. this is the spx function. 143 of 500 securities have reported. it will be interesting to see if we can continue that trend. we will talk about that in a
little bit. yvonne: the equity market story is one to watch. the bond market, we saw big moves as well. take a look at that. it was ahead of the fed. with german bund yields, up six 0.57.points to we also saw yields on the u.s. treasury's up aces -- eight basis points. this will be key for the boj to watch as they are set to announce the long and today. and not exactly joining the party on this equity rally. we did see trade numbers blowing up at surplus, which was quite positive. take a look at the kiwi, we see it marginally higher. other dovish comments coming out from the governor. .7422 for the kiwi right now.
australia, a big speech coming from philip lowe. before that, that aussie rally could mean a bit of a danger here at the head of inflation data out today. the 3% jump in oil today, one to watch. and a greater than expected drop $48.s. prices, and brent back up to $50. in japan, a weaker yen story that should help with the nikkei 225. unchanged for futures, but we could see modest gains. 111.87. look atking up closer what happened in u.s. equities today, they gained for the first time in four days. as it takes up steam, we will get a recap with su keenan. talk to us about all the green we are seeing. >> we talk about surprises with the chart at the top of the show and surprises on the wind side
and the loss side. up byw definitely pumped the fact we had a lot of big winners. let's go into some of the big movers to take a look at those. a big deal in terms korse michael coors -- takeover. seagate, a big story for the nasdaq 200. the ceo is going to be moved out, bumped up to chairman. storage has shipped away. it is weighing on their outlook. mcdonald's boosted customer traffic, turn the store around big-time. a big pop to the stock, which was already up 20% going into this session. let's look at the bloomberg g #btv 7081. the nasdaq filled with tech
stocks broke its winning streak. seagate had plunged. google disappointed, that was down. and facebook, which we will be reporting wednesday, was down ahead of those earnings. that broke a 12 day winning streak. such a longd winning streak since 2013. yvonne: we are really in the thick of earnings seasons. caterpillar another one to watch. surging due in part to large sales in china. in ae will get to wynn second. caterpillar is so important in that it is considered a bellwether. they make big construction equipment and construction has been booming in china. that was a sweet spot for sales. let's take a look at the things in the 2015 earnings outlook. the stock was up almost 6%.
let's talk about one analyst was saying, that they are getting back to normal. revenue returning faster than cost. it promoted the third best performance in the dow in the year so far. let's talk about the not so muted reaction to wynn 's numbers afternn's the bell. even though there has been a big rebound in macau, the palace beat estimates. the earnings did come up short. the adjusted earnings. that had to do with a profit shortfall in the macau resort. again, the strong recovery underway in macau. but the industry revenue has rebounded. this was clouded a little but the china's -- chinese -- theents attempts to profit rose to 118 a share but
missed the average we were looking for. we will see how that plays out. and how will play out in hong kong, as well. we will have more macau earnings. first word news now with nina melendez. >> u.s. commerce secretary wilbur ross st saideel is among is among histeel priorities. he also said nafta was out of date and needed an urgent revamp. on china, ross said the two sides were the early stages of trade talks. was proof that came to pass, and that was good. there was a more difficult phase, because there are trickier, bigger issues, more deep-seated issues. it is a work in progress. >> president trump tweeted of a
new chapter for u.s. ties as british trade a secretary continued talks in washington. after brexit, the u.k. will be free to negotiate deals around the world. he said 700,000 american jobs are supported by trade with britain. trump attacked the european union's transatlantic trade and calls for it to drop barriers to commerce. >> the conditions we set in the we are notandards, members of the european union, neither are we banned from the united dates. it is an hour mutual interest. >> raising forecast on growth in china. that gives policymakers reason to curb excessive borrowing. by 6.7% from a year ago, and 6.6% in the next period, according to the median of a bloomberg survey. these are 1/10 of 1% higher than
a month ago. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am nina melendez. this is bloomberg. yvonne: republican efforts to repeal obamacare have cleared one hurdle. lawmakers finally agreed to begin floor debate on a bill to overhaul health care. it was a razor thin victory, mike, vice president providing the tie-breaking vote. we are joined now from washington. joe, good to see you. if you asked about this a week ago, they would not have even imagined this could happen. the big question is, what is next? we are not sure what we will be voting on. morning. yes, it is still unclear what they will be voting on. in any event, the senators are facing a long week in washington. the next steps will be for them to begin considering amendments
to an existing piece of legislation, which will essentially be wiped clean. the senatenell, majority leader, still expects to get a final vote by friday. to do that, he will have senators in there probably all night thursday in through friday morning, voting on multiple amendments, as they are offered both by democrats and republicans. it is unclear they could get a final piece of legislation done. several republican vendors who voted to proceed today said it did not necessarily mean they would vote for the final legislation, unless it has all their concerns addressed. yvonne: perhaps the most heartfelt moment during that session was senator john mccain making his appearance after recovering from brain surgery and urging for bipartisanship. will that be enough to sway the conservatives or democrats in at least the issue of health care? joe: i think that that will last
about as long as most pleas for bipartisanship have lasted in the past. mccain is quite a figure in the senate. he came here as a special flight, as he is recovering from the brain surgery. but he did vote to go ahead and repeal -- proceed. he is one that said it did not necessarily mean he would vote for whatever legislation comes along. he did make an appeal for democrats. i do not know that they would be able to get that unless they start over again. ramy: mitch mcconnell is aiming for a final vote by the end of this week. to that, what type of legislation is the most likely to come out? they are looking at what is called a skinny obamacare repeal. that would pluck a few
provisions out of the existing law that most conservatives are objecting to. the individual mandate requiring people to buy insurance, and requiring businesses to provide insurance, as well as attacks on medical devices. that does not leave much of a piece of legislation. but it would at least be an accomplishment. it does not end there, it still has to go back to the house for the vote. ramy: a lot of wrangling for the next week and beyond. thank you very much. plenty of big conversations ahead on bloomberg tv. lynch next hour, merrill joins us to discuss the new positive asia outlook. yvonne: odyssey asset management, we will get their view on what to expect from the fed's latest meeting. ramy: plus, if you're up for late-night -- night stack, we're joined on the back of the latest result at 11:10 p.m. in hong
yvonne: we are counting you down to asia's first major market open. a cloudy picture outside the imperial palace in tokyo. points.utures up 130 the dollar seeing strength, but still hovering around 111.86, against the dollar. i am yvonne man in hong kong. ramy: and i am ramy inocencio in new york. let's head to the car market. they beat estimates, but it was not all good news. general motors warned the second half will be tougher for both -- both protection and earnings -- production and earnings. we will key end with a senior
nds.com as well as edmu chief analyst. let's unpack what is been happening with gm. as we were talking in the last hour, not a robust picture. is there any positive we can take apart from this. the risks on the truck side are not unforeseen. redesigning vehicles and plants, taking down production, building inventory -- not something surprising in that sent -- sense. you could spin it as good news, this may finally give gm stock a bit of a stress test where it has not been getting a whole lot of credit for performing well in a plateaued market. perhaps at the seasonally adjusted rate or sales come down a bit and they can still prove the earning power, the market
will look at them more favorably. a little more positivity. jessica, where we headed into the future, generally, for the auto industry? pop into the terminal, g #btv 7913. the green here are auto sales. we can see they are at a low around 2014, 2015. more of the same, jessica, as i move into the second half? jessica: it should pick up a little. we have high inventories across the board. even suvs, which have sold well across the past few years. because of the high inventory, automakers will have to increase incentives. usually summer is the time to do it. people want to buy cars. between now and october is a big-time. and also from black friday on. november 1 to the end of the year we could see strong sales.
if the incentives are there, it could take up a little bit. if not, we will see more of the same. yvonne: a lot more of the same. kevin, if gm is focusing on relying mostly on the north american market where you have reached the peak auto and we are past that, can it continue on this momentum of record earnings? kevin: i think it is the plateau or slight incline. 2015 was a record year, as was 2016. even a mild pullback is still at historically high levels. the thing you also have to consider is that while the market has plateaued and moved awn 2% your today, there is mixed shift from carter truck that has been dramatic. even on a relatively flat market, the shift has been to higher revenue contribution and profit contribution, from trucks to cars. ramy: jessica, you touched on
incentives. i want to point out that some folks say the current incentive rates are unsustainable. do you think those are unsustainable? or do think the consumer could benefit more? i would say they could probably get more favorable. but automakers will have to start pulling back. especially with lease deals. lease deals per month. i think automakers will have to head to their risks there. in the short-term, they still have the potential to grow. for consumers, it will be a good time to buy a car. ramy: what carmakers are best a crisisd to weather or a downturn? pointed out, kevin this year is edging to where we
think it will be in the u.s. year,, a 17 million unit that is still the fourth best in u.s. history. a lot of the automakers will do better. it is less of an automaker versus automaker game. it is more of a car versus light truck game. the light truck divisions are doing well and the car divisions are tanking. there is a good part in a bad part of the business. think there is light in that tunnel. ahead: kevin, as we look to ford, will it be a similar story to what we saw with gm? they are more dependent on the fleet sales and a lot of focus on the new ceo. fleet penetration is much higher than what general motors is. the inventory levels are more manageable than where gm is. ands retooling factories
inventory to prepare for downtime. ford was through that when they redesign the f-150 in aluminum. ford is in a better position for supply versus demand. where the risks lie for ford is north of america, exposure to the european market, south american market, where gm is starting to pull back from those regions. yvonne: kevin come i want to talk about the news from germany. allegations that daimler, bmw, and of have allegedly colluded when it comes to technology. do we know that magnitude of this scandal yet, if in fact these allegations are true? kevin: the fine can be as high as 10% of global revenue, which for a company like volkswagen, is significant. been some rules that
say, if you come forward with these things and provide evidence for the investigation, they are more lenient on it. if volkswagen is the company that tipped off the e.u., there may be a lower fine. companies, with some air-conditioning and cooling companies. this is with regards to the diesel emissions. it goes back into companies, t'. with some help from the investigators, the fines will not be as great as 10% global revenue. coming off the fines they paid for the cheating emissions scandal, it could still be hard and the reputation, as well. ramy: we have to leave it there. thank you very much. do not miss our interview with daybreak at 7:30 p.m. tonight, if you are watching in hong kong.
breaking news we want to tell you about. uber ceo shortlist is said to include hpe's meg whitman. they are also narrowing the list to fewer than six candidates. uber is saying to expect a ceo appointment within the next six weeks. yvonne: interesting. meg issman for hp saying really committed to hewlett-packard enterprises and wants to get her work done. course, a leadership vacuum in uber they need to fill. but this could be the first step. you can get a roundup of stories to get your day going in today's edition of daybreak. on youryb terminal. it is also available on the mobile app. customize settings to get the news and assets you care about. this is bloomberg.
♪ ramy: you are watching "daybreak asia," i am ramy inocencio in new york. yvonne: i am yvonne man in hong kong. profits beat estimates as india's largest wireless carrier invested in up price war with reliance. income declined to $57 million. slashed prices up reliance offered free calls for life. and there was an introductory period that ended on april 1. ramy: china's largest developer expecting profits to have tripled from a year ago. and fourth on third tier cities has paid off, as
beijing has curbs on cities to rein in prices. third -- profits have surged more than 250% this year. perpetual securities will have boosted profits. yvonne: they have abandoned a plan to build a $27 billion terminal in canada, blaming changing market conditions. the project won government approval after opposition by environmentalists. committed toins gas assets in canada along with its partners. ramy: handing majority ownership tothe flagship miem -- mine indonesia, as long as the price is right. they want to ensure market value for any development of grasberg.
morning in hong kong. a live look outside of the harbor. hoping for no rain, fingers crossed. ramy: it is 7:30 p.m. tuesday here in new york, where markets closed up against the major indices. the s&p 500 reaching a major high, as well as the nasdaq. the dow hit an intraday high, but could not hold that. it still closed in the green. i am remy innocence you in new york. yvonne: i am yvonne man in hong kong. you are watching "daybreak asia ." senateamatic day in the
saw mike pence cast a tie-break vote to allow debate on health care legislation to proceed. however, it is still not certain if it will go to a vote. senator john mccain returned to apply both sides -- to applause by both sides. he said he will not support the latest version of the republican bill. taking a greater role in financial regulation. they will step up supervision of institutions, a job that previously fell to the china banking administration. the bank also says it will pursue monetary policies to keep money growing at an appropriate pace. the two new boj board members say it is too early to talk about the program because inflation remains far below target. replaced board members who lost faith in governor kuroda's strategy.
they underlined the view that japan may be behind its peers in unwinding stimulus. raise three point $5 billion in its first visit to the international bond market in more than three years. they are trying to move on from a debt crisis that forced them to have multiple bailouts. they are selling 5-year note at a yield of 4.6% after tightening terms twice from its initial target of almost 4.9%. lastg up a little short order, failing to cap -- capitalize. wynn palace resorts topped estimates, but down in trades. macau is seeing a strong recovery with casino revenue rising in the second corner. the city generate 64% of revenue from wynn resorts. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. melendez.a this is bloomberg.
yvonne: we are counting down to some of the major market opens in the asia-pacific. let's get the latest with adam haigh in sydney. good to see you. great work with you and your team on the survey you have conducted with three investors and strategist, asking them what they saw or when they would see the end of this bull run in stocks and bonds. most said, late 2018. what will lead up to that? adam: good morning, yvonne. the bull market going into its last phase. a key takeaway, the median estimate is looking at the last quarter of next year for the start of the bear market and the s&p 500. this has been a really good bull run it has gone on for a long time. it is the second longest bull market in u.s. history. the main concern now from the survey participants is the worry around central-bank policy and
of exit from these years unprecedented stimulus from some of the big major central banks. wast of this action coordinated going in and a lot of investors are worried about a messy unwind on these balance [no audio] ramy: it looks like we have just lost adam haigh. let's continue on right here and head over to the federal reserve. the federal reserve heading into the second day of its two day policy meeting with traders, betting it will not hike its key interest rates, speculating it could make an announcement on its $4.5 trillion balance sheet. kathleen hays is here with a look. there is news that donald trump saying he might actually reappoint janet yellen to a second term. kathleen: i am not surprised.
we did learn recently that gary cohn, former president and ceo of goldman sachs, now head of the national economic council, which makes him the chief advisor to donald trump, was considered the front runner. in an interview with the wall street journal, donald trump said the other contender was janet yellen. some are wondering if the donald trump might take a look at her track record, her caution on raising rates, concerns about the labor market. he does have a reason to think about it, re-appointing her when her term is up in 2018. we are the middle of a two-day meeting. no rate change is forecasted. it is the balance sheet in forecast. why no rate change? let's take a look at g #btv 7564 . key measures are running
at 1.4% with a target of 2%. plateaued above 2.6%, 2.5%, 2.4%. they have a flattened out, even though employment is falling. the phillips curve is flat, maybe even broken. that is why a lot of traders are saying, no interest-rate increase expected until march of next year. still thinks team there is a chance for a december hike. what people are looking for, including bloomberg intelligence, is a possibility at the end of the meeting, the fed will announce a date for when it will roll off the proceeds of its balance sheet. tony morris from bank of america -merrill lynch, where he is head of economics, had this to say about this very matter -- >> the focus is making space for them to manage this balance
sheet process. by the use of the word soon, we think there will not be a surprise. they wanted to be as smooth as possible. but they just want to make some for the balance sheet normalization to begin. over time, that will have a significant impact on the treasury market. bloomberg intelligence pointing out they see the fed slowing down on rate hikes because of the shortfall in inflation. what the fed wants to do is divorce its interest rate moves from reducing the balance sheet. this is another reason they see the possibility the fed will put that interest-rate increase to one side, but show the market the balance sheet rolloff at the beginning of shrinkage will proceed independent of the kind of things that determine interest rate changes. balance sheet, that is just grewlizing something that very big during the great
recession and financial crisis. that unwinding of the balance she could be a substitution for fed rate hikes. let's look over to central banks in the asian pacific. we have aussie inflation numbers coming, which will be preceded by a speech by philip lowe. we see the aussie in turbulence heading up. kathleen: high drama after interesting remarks from the deputy governor. -- also, the rba minutes. mr. lowe will be speaking about monetary policy. central bankers are wondering, how come the market is stronger? talking about the neutral ray come out where it no longer affects growth or inflation at that level. what does that mean? -- the rba says it is above.
inflation, they are looking at the key rate. it puts people on guard because job growth and hiring has been picking up in australia. 8743. pull up g #btv going nowhere, it has stalled at a record low. this white line is down to 1.9%. the white line is the cpi -- alt 2.1%. the wages are not. does that mean you will stall out? rate at 1.5%. key the june cpi at 9:30 hong kong time, 10:30 sydney time. let's look at a year-over-year basis. the cpi i just showed you a 2.1% in june is supposed to go to 2.2%. another measure, the trend to 1.8%hat could get weaker,
versus 1.9%. bloomberg intelligence thanks the headline cpi will fall below 2%. one other thing i have to show you that is g #btv 6910. we say,the reason why maybe we do not have to worry about inflation continuing to rise. we are looking at that cpi once again, 2.1%. but look at what commodity prices have done. they moved up sharply and have started to head down in australia. reason whyther people think may be cpi is not a worry for the reserve bank of australia, and why they will not -- philip lowe will not be doing anything to disturb the markets or get ready for eventual tightening once he speaks today. yvonne: seems like he could be in line with what his colleagues spoke about this week, as well. governor,boj deputy he is under radar. what is expected after his speech?
kathleen: it could be interesting, because he is the deputy governor. last week they had to push out the date when they saw their key cpi number getting barely to the 2% target. in other words, stimulus will stay in place for the indefinite future. he is also considered one of the more dovish members on the policy board. everyone will be waiting to see what he says when he speaks, whatever questions he might answer, that might flesh that out. we have the june boj minutes yesterday and they were discussing whether or not they need to start discussing exit publicly. these are the things we will be listening for closely when mr. nakaso speaks later today. yvonne: they said basically, we should not talk about talking. [laughter] yvonne: kathleen hays, thank you. we speak to the president of one of thailand's biggest energy
♪ ramy: we are counting down to asia's first major market open this morning. japan futures up 2/3 of 1%. getting a cue from the u.s. trading day. s&p hitting a new record. you are watching "daybreak asia ," i am ramy inocencio in new york. yvonne: i am yvonne man in new york. companiesies -- thai investing overseas. andsuch company is bcpg, owner of clean energy projects, with growing ambitions abroad. let's ring in haslinda amin from singapore.
it is not a company we often discuss. why now? smallda: one calls bcpg the beautiful. small because it was only founded two years ago. beautiful because of its expansion plans. because of that, investors are so excited, they boosted its stocks 60% since its ipo back in september. that is less than a year ago. the energy index is up 13% in the same period. you can see the excitement. ceos get more from the bcpg joining us this morning. good to have you with us. what investors are excited about is your investment in indonesia. million anda $300 you say that will happen very soon. how soon? >> you can say that.
assets in our portfolio are starting to realize their earnings this year, onward. that. happy to do it is a big move, a big springboard for us to become very unique korean power. we are different. we have been called a korean technology company. we are starting from solar. we have green energy. you have been very aggressive in the m&a space. which markets for bcpg? bundit: during the past one or
two years, we have been away from home. that gives you a look at our today portfolio. 2/3 is overseas, outside thailand. i think it is time to go back home. solar,looking at operating hours. if we move to wind, eight hours. and geo solar, 24 hours. we have tried to give a firmer capacity. how about biomass in thailand? i think we have a very high , for things that make sense to the country. we have an agricultural base.
a lot of things can be disrupted. haslinda: would you need to raise our secure more loans? right now you are sitting on only $300 million of cash. if there are plans of acquisition in store, do you need more money? bundit: i think that we made a five-year plan and we still have room to grow. weh our investment capacity, can almost double our values. fundraising can be done, because we have room. capital injections are not in my mind. because: i am curious you say you are a pure, green play. so all projects have to be 100% green. the asian infrastructure
investment bank, said it would support only green projects. would that be an option for you? green moneyink all comes to this sector. in europe, especially the u.k. [indiscernible] this funding is our option. as a support and opportunities to grow the company. about the timelk to look at thailand for your .urther amended. -- m&a but it is up 7% in your today. doesn't it make you -- make sense to secure overseas? will have growth in
thailand, of course. also outside thailand. capacity,bout having things like green energy and geothermal. what i just said about thailand, that would be a type of growth. it will take time to build the capacity. maybe one or two years. office. list in my haslinda: talking about acquisitions, that true story is increasingly important in that energy space. is this something you are looking at? group, we have mining in south america.
[indiscernible] how we are going , i would probably say no. batteries could be a smart solution. we will put those in our solution. haslinda: you have big ambitions, but you also say the challenge is regulation, government policies. the issue really is tapping into the national grid. how are you overcoming that problem? isdit: the whole industry changing from a conventional way to a smarter way. [indiscernible]
prosumer.mer to you can sell it to the grid. but today, weekend start easily to have your own private grid, micro-grid. it is not related to the policy maker. we stay away from the national grid, you can do that. resident community --hospital or university this requires a policy maker. i talked to my guys, we have to restructure the whole process. haslinda: and that is what they call it the internet of energy. we thank you for your assessment.
ramy, back to you. ramy: thank you very much, speaking with the president of bcpg. one feature on the bloomberg is our interactive tv function. you can find it at tv . you can watch us live in see previous interviews and dive into any securities or bloomberg functions we talk about. thecan become part of conversation by sending us instant messages during our shows. this is for subscribers only. this is bloomberg. ♪
version of the many in britain after amazon said it would expand its new london headquarters. deutsche bank said shifting staff and funds in frankfurt, and a new jet in vienna. wealthiestorld's two men united in the venture. bill gates and jeff bezos in a trucking logistics start up, convoy, based in seattle. it matches shipping orders to available truckers. it is raised in new funding through gates' investments. bezos had invested earlier. s has: the tesla model received a top rating among luxury sedans after updating software for emergency braking. in april, the magazine downgraded the carbide two points after tesla took months
to a quick the vehicles with the feature. s aboves rate the model lexus and audi. there were 16 cars tested. ramy: plenty more to come with asia's first major market three minutes away. yvonne: let's get the latest with sophie kamaruddin for the opened in sydney, tokyo, and seoul. >> earnings could keep global stockpiling coming along in asia. in sydney, we are seeing a gain of aussie inflation data and the rba governor's speech. mining stocks down under, given the surge in prices and the caterpillar drive. flipping the board to see what other stocks to watch, on earnings, nintendo is up to bat. mitsubishi back in the black. pacific misting its estimates.
♪ host: positive earnings and rising confidence push wall street to new highs. asia-pacific is expected to build on that. host: crude prices again about $40 in new york for the first time since june. u.s. inventories are said to have fallen sharply. the palace failing to capitalize on the casino recovery. host: and the bank of japan's new members say it is far too soon to discuss cutting stimulus. the bank is seen being years behind its global peers.
host: this is the second hour of "daybreak asia." i'm yvonne man in hong kong. ramy: i'm ramy inocencio. a quick recap of what happened in the u.s.. pretty much green across the board. the dow hitting an intraday high, still about 100 points, mostly because of the earnings train. mcdonald's and caterpillar being the bellwether there, pushing stocks to these records we are seeing. yvonne: it has been a mixed picture so far. yesterday we saw some positive signs as well. we saw stronger dollar yields moving higher, as well as the u.k.. we seem to be following that here today along with the opening in japan. it's go to sophie kamaruddin. rishaad: we are seeing -- sophie: we are seeing bonds
slide, and after germany posted improving business confidence, that is a two-year high from around that level. we have begin retreating for a second day, as is the korean yuan. the aussie is breaking for -- is bracing for a potential whiplash. aussie hovering near a 2.5 year high ahead of that. a lot of action going on the commodities. we have oil continuing to climb higher. this is the uae pledging more and there being a bigger than forecasted drop in u.s. inventory. still above the $50 a barrel mark. copper is leading the gains in base metals. the red metal charging to a two-year high based on that
softer dollar and brightening prospects when it comes to chinese demand. for your credit availability in china should boost -- free your credit availability in china should boost industries like construction. that is what gave caterpillar some sheer, rallying to a five-year high. it is set as does anyone increase in five years, largely first-- set to post its annual increased in five years. 3.8%, andining about dooome heavy rising -- and --eavy rising aboutan .2% .2%.oosan rising about
some skeptics are holding out on the likes of iron ore. it was correctly predicted and the glory that iron ore would -- byabout 4% by ky kumba's ceo. we take a look at the aussie at that two-year high and how overbought it is right now. rsi has been above 70 for eight straight days. the last time we saw a stretch like this dates back to seven years ago in 2010. keep in mind, back then was when they were hiking rates. we will see if the governor is going to do anything with this
currency later today. ramy: it will be interesting to see what happens. a lot of people has been saying that holding the rate at a neutral 3.5% is a little bit hawkish. it seems that some investors are trying to get in on this. we will see shortly how that plays out in australia. listed the first word news with paul allen in sydney. reporter: a dramatic day and the senate saw vice president mike pence cast a tie-break vote to allow debate on health care legislation to proceed. however, it is still not certain exactly which plan will ultimately go to a vote. senator john mccain returned to the chamber to applause from both sides raise after his brain cancer diagnosis. he warned he won't support the as is.version the boj has pushed
back in its forecast for 2% inflation, underlying the view that japan may be years behind its peers in unwinding stimulus. the pboc says it is taking a greater role in financial regulation. the central bank says it will step up its supervision of institutions that previously child to the china banking regulatory commission. the news confirms what bloomberg reported earlier this month, the bank also saying it will pursue prudence and new for monetary policies and keep money supply growing at an appropriate pace. economists are raising their forecasts on growth in china after first-half gdp beat estimates. that gives policymakers room to curb excessive borrowing. third-quarter gdp is now seen expanding by 6.7% from a year ago, and 6.6% in the next period according to a bloomberg survey. 10 of arecasts are 1/
percent higher than a year ago. global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm a paul allen. this is -- i'm paul allen. this is bloomberg. ♪ yvonne: a new bloomberg survey of investors and strategist critics a bull run in strategies may come to an end as early as next year. ofning us as the head asia-pacific and global emerging-market strategy at bank of america merrill lynch. -- alsonging an ho bringing in our editor in hong kong. i thought it was very interesting, the survey you and your team have brought together. ultimately, what do these 30 managers say is going to lead to the bears to take over? guest: it is a classic imagery of the punch bowl. ,ou think about central banks and they provide stimulus and liquidity with the analogy of a punch bowl for the party, and
then when things get a little to exuberant -- a little too exuberant, they think the punch bowl away. most strategists and investors we spoke with .2 central banks as the potential -- point tw central banks.o bankuropean central probably by the middle of next year. the boj is already tapering. they are buying fewer bonds than they were just a year or two ago. they going to be raising rates? probably not come a but they are providing less liquidity than they once were. yvonne: as much as the fed and officials want to talk about how to unwind the balance sheet, most people in this survey say
tightening is going to be messy. do you share that view? guest: if they do tighten, yeah. it is likely to be messy. they had one right height in december, possibly two or three next year. inthey have one rate hike december, possibly two or three next year. my view is very different. i don't see inflation anywhere in the world. every year we come in in january and say bond ratings are going to go up and have been wrong for pretty much 25 out of 30 years. i think the fed believes in the phillips curve. unemployment rates are low, therefore inflation should pick up. when i look at china, europe, markets,ia, emerging
or the u.s. commodity see inflation. -- or the u.s. itself, i don't see inflation. it is falling. it's been four months in a row now that it has been falling. i wonder if we would get two or three more declines. what are the justifications for tightening? i don't like the word normalization at all. an 18-year-old or 85-year-old, the number of pushes --of push-ups is different. yvonne: we're going to talk about your market strategy later, but chris, we have seen in this survey that people think that stocks as well as credit could actually end up going to a bear market around the same time. where is it most vulnerable? seems to be a lack of consensus on that front. reporter: we have a number of people pointing out that
valuations in stocks look pretty rich. the theme that really came across was about the bond market. people just feel that bond yields are too low. if you look at not just treasuries, but at emerging-market bonds, high yield premiums are pretty small historically. thatbody kind of agrees there is something out of whack here, but what is interesting was when we asked them what was the one thing that you plan to do to change your portfolio in coming months, almost nobody said they would get out of the bond market. they feel anxious about bond valuations and yields in premiums, but perhaps because they have been wrong for so many decades about the end of the bull run, they are actually not shifting out of bonds. guest: i find that really -- ramy: i find that really
interesting that they are still not going to let go. things,lip side of looking at equities and stocks, what could investors do? what might investors want to do in terms of shifting their portfolio? there are a couple of moves you talk about in your report. reporter: really there was a ide variety of things investors were saying they were going to change. i guess the most common response andparing back equities holding off until they start coming down a bit before going back in. another common theme was shifting away from u.s. equities toward europe, which is perceived to be behind in the cycle. , couple of people said japan japanese stocks, are not that high evaluation. but really it is kind of random amounts. one person said they were
getting out of commodities, one person said. they were getting into commodities. -- said they were getting into commodities. is that the same view you share? you recently changed your view in terms of asia-pacific stocks. you were neutral in february, turning a little more bullish now. guest: what has changed my mind is three things. i was quite worried about the china tightening. i think that has stabilized now that the data is a lot clearer. 89% of countries have bmis in manufacturing surveys above 50. what has really changed is that inflation has fallen across the world. we have the lowest inflation in emerging markets in 20 years. we have huge current account surpluses. free cash flow is very strong. there is really no point being
elegantly neutral. we just need to be outright bullish. yvonne: liquidity, liquidity, liquidity. thank you for joining us for that survey. we will have more from the head of asia-pacific emerging markets from bank of america merrill lynch. coming up, predicting a looming crisis looking in the wrong direction. we hear from the investment firm's head of macro and asset allocations. this is bloomberg. ♪
asia-pacific and global emerging-market strategy. let's get to the semantics of this. you've been tactically neutral, but structurally bullish. now you are tactically bullish. explain this to me, and let's go further from there. we have been structurally bullish for over a year. every now and we get concerned when we think the sentiment has gone too far, too fast. some cited monetary policy. i was really concerned about the energy and materials sectors. that is what we didn't really like. we took a pause for breath. has changed really in the last three months is that inflation has dropped. that makes a huge difference. as i said earlier, i am not convinced with inflation falling around the world wide we are even having a discussion about central banks taking the punch. i know people are talking about it, but i am not sure why. ramy: let's go into the biggest
market we have to talk about with china, as well as its monetary and credit cycle indicators. explain to us why this is a great place to go. china was notably absent in the report in terms of risk factors. guest: how things have changed. if you think about earlier this goingr last year, it was to be an economic crisis, and none of that really happened at all. i really think the chinese policy authorities have been very smart in that they have tried to rein in some of these s in the insurance and wealth management products sectors, the local government sector. i think it is really good to rein in this excess speculation now, otherwise it will get really huge. one thing people forget about china, people complain about overinvestment and overcapacity,
too much loan growth. we know all those stories. i think that sector is getting smaller and smaller as the percentage of index and economy. index is about 30% technology. in the u.s. it is only 22%. when we talk about china, we are not talking about telecoms. we are talking about technology, and that is really it, and some consumer services. i think these are structural growth stories. they are penetration stories, scale stories. they keep surprising is positively with their earnings. i think there is a huge move towards market concentration in china, whether the soa sector or the private sector the sts so we soehe so -- the sector or the private sector. yvonne: i want to bring up a
chart that you like to follow here on bloomberg, the china monetary conditions index. it kind of goes to show what you are talking about. we didn't have that big when it comes to losing monetary conditions. we saw that tightening here throughout the early part of the year. now it seems like they have stabilize for the past two months. loan growth, we are still seeing a little bit of it. that should be a good boost for corporate profits. how confident can you be that this can actually last because china has pledged they can rein in the financial risk that has become this internal theme, and orders seem to be coming straight from the top from president xi jinping? they have likened this to a national security risk. guest: it is hard to say with any confidence what the successes. the best that's what the probability of success is -- what the probability of success is.
it is very difficult to even comprehend what is going on. it is very complicated now, where three years ago you could figure out what was going where. if a top-ranked analyst is finding it difficult to comprehend how messy things have become, i think there is an issue. at least they are trying to do something about it. and without the railing growth. obviously it is -- and without the railing -- and without derailing growth. yvonne: you are focusing more on the tech sector. i thought it was interesting. do you think in this space it has gotten a little crowded? are they just chasing growth and momentum, not really looking at the fundamentals and paying that premium? guest: yes and no. retail is not doing well at
all. when i talk about the tech sector, and talking about the internet sector primarily some of these firms that are getting larger. 25 hundred million subscribers, it is only a matter of time that you can make them by other stuff -- make them buy other stuff. look at the multiples in cointreau's -- in contrast with the growth prospect. i think they look reasonably valued to me. they look expensive for the last five years. yvonne: we talked to you in april and you mentioned india. on to ask how you are feeling about it now. level.that 10,000 we struggled to hold above that. we would have missed out on the 13%. guest: we're not going to get every target might -- every
market right. we are very process oriented. fanhave we not been a big of india, and why are we still not? number one it is very expensive. it doesn't matter as long as you're growing, but if you are at the tee times pe -- -- -- -- --. india has a massive premium and terms of multiples to the other markets we look at, and doesn't have the earnings power at all. think what has happened in india is that the prime minister won the massive majority, so there is this expectation that there is going to be a lot of reforms. the process is very good news. there's a lot of expectation that policy reforms will be passed. at some point we will begin to see the earnings power come through. we want to see the earnings power before we commit to it.
it is a very standard consensus. we look at the risk in a market like turkey that no one likes. yvonne: we still need to see those india earnings catch up. always great to have you here in our hong kong studio. one feature we like to bring to your attention is our interactive tv function at tv . you can also diverge into the previous interviews like the one we just it and into any of the securities and bloomberg functions we talked about, all on the right side of your screen. you can also save it to your own personal library. become part of the conversation. send us an and stiffness in if you have a question for our guests throughout the hour. .- e sure that send us this is bloomberg. ♪
ramy: mitsubishi motors returned to profit in the first quarter with net income of $206 million. that compares with $1.2 billion loss one year ago. first quarter sales climbed almost 3%, with sales in japan soaring 90% on the year before the fuel efficiency scandal. that left its four-year forecast unchanged. shares are on the move higher. india's largest wireless character -- largest wireless at 57 millioned dollars, exceeding the average forecast of $45 million among analysts we spoke to. reliance offered free calls for life on geo and free data for introductory periods. ramy: at the fed kicks off its two-day meeting, president trump gives a new hit about janet yellen's future.
♪ singapore thisn morning -- 8:30 in singapore this morning. i'm yvonne man in hong kong haslinda: -- in hong kong. ramy: i'm remy inocencio a new york. let's get the first word news with paul allen in sydney. the uae is too deep in cut and oil production, reiterating it commitment to the opec attempt to balance the market. abu dhabi exports will fall 10% since september after saudi arabia criticized producers and said they must do more. the international energy agency
says the uae has only implemented 54% of its honest what hundred 39,000 barrel a day cut -- 139 barrels a day on barrels at -- 139,000 day cut. on china, wilbur ross says the two sides are the early stages of trade talks, but there is a long way to go. >> there was some low hanging fruit that came to pass. that was good. now it is a more difficult trade because now it is a trickier issue, bigger issues, more deep-seated issues. it is a work in progress. hp boss meg whitman is said to be on the shortlist to be the next ceo of uber. the ride hailing plans to name its next leader by september.
however, it be says she is committed to the company and plans to stay in place -- hpe says she is committed to the company and plans to stay in place. u.s. regulators have claimed jurisdiction over one of the hottest new areas of finance. initial offerings of digital currencies. the sec says issuers must register deals with the government and companies that raise money for digital assets must adhere to federal security laws. startups have raised hundreds of millions of dollars this year on so-called initial point offerings, or ico's. softbank interest in robots became clear when they built the first one with emotions. five years on, the company may be interested in another kind of robot. sources say softbank has built a near 5% stake in the roomba maker irobot. the committee has a market value of $2.4 billion.
global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ yvonne: had to see how the asian markets are shaping up so far on this morning. let's get to the latest with sophie kamaruddin. sophie: a busy wednesday when it comes to what could drive sentiment. we do have a asian stocks set to snap a two-day drop. the nikkei 225 of about -- nikkei 225 about -- nikkei 225 2/10 of a percent. given that the dollars funding support from that rise in treasury yields, that is putting some pressure on asian currencies like the one that's like the yuan and the yen -- like the yuan and the yen.
we have all the 30 year yield rising about eight basis points we have -- we have aussie 30 year yields rising about eight basis points. checking in on the dollar-yen rising for a second day ahead of the fed, that case of gains for this currency may accelerate if it breaks through the 200 day moving average of around 112.05. the gels from the fed's balance
record low. they haven't tightened in a year. i think some economists think it is a little bit of an overreaction. perhaps more substantial is the fact that jobs have been growing. is this something that you get some starting to incline at least getting off this low rate and beginning signaling some kind of move? let's take a look at the bloomberg chart. what you see is that you've got the inflation rate right now. we get a new reading and a couple of hours. 2.1% over here. wages have come down and flattened, haven't they? are they going to help push down inflation? there's that rate from the reserve bank of australia. , the minimumhand wage is rising, and teddy morris from bank of america merrill lynch in sydney says he thinks this could put some floor and upward pressure on wages and eventually inflation.
let's hear what he told us earlier. >> we are starting to see some wage growth, and at least a cause in the downturn of lower wages -- a pause in the downturn of lower wages. the minimum wage is going to be rising 3.3%. we saw hours worked rise as well. we will get the latest reading on australia's cpi abouter price index at 9:30 hong kong time, 10:30 in sydney. we are expecting to see 1/10 of a percent rise. maybe this is a sense of what someone like tiny morris would say. that's what tony morris would would what tony morris say. at 6910. look
here that inflation rate i just showed you. expected to go up a little bit to 2.2%. commodity prices, big move up. almost a high from 2007, 2008. they have come down. i think the other people on the other side of this forecast say there's still a lot of muted forces. do you actually see households getting more income and being able to spend more money, you probably don't have to worry about more inflation or a move, even a hint of a move, yet from the reserve bank of australia. ramy: inflation in focus there, but also in focus in the united states. front and center this month, fy mc meeting not expected to have any rate hike across the board, but the balance sheet is in focus here. reporter: they are expecting a big balance sheet announcement. before that we got this surprising news, "the wall street journal" reporting that donald trump says janet yellen
is still in the running to be replaced as fed chair. he's is gary cohn, former president of goldman sachs and now president of the economic council, we got the news he was a front runner. we don't know. she is very cautious on raising rates. the race for fed chair continues. what we know, however, is as the fed rest up its two-day meeting, no rate hike expected, but something on the balance sheet. why no rate hike, and how this influence discussions on the balance sheets? let's take a look at one more bloomberg chart. expectations are falling short in the u.s. 7564. the unemployment rate coming down. 4.4%.n see it is down to this is wages, stalled outcome
of just over 2.5%. unemployment so low, why doesn't inflation rise? why has it followed away from the target? that is probably a big reason why no rate harks -- no rate hikes seen until march of next year. they could give this announcement tomorrow that they are going to start the balance sheet. others say they will started in october. they might want to get the ball rolling so markets will be also said that when people are saying no right hikes because inflation has following from targets, if they announced their balance sheet now, it signals to the markets that this is going to be on autopilot. it has to do with the fed insisting the balance sheet got very large. we want to gradually shrink it. that is another thing a lot of
economists are saying they would or will accomplish by making an announcement tomorrow. talkingwe were just about inflation withering on the vine, which is kind of what you are talking about. speaking of inflation not reaching target, that some from the boj as well. deputy governor speaking later. what is expected there? reporter: they moved up the target date for when they could meet. 0.4%.2% target was some people are expecting that the deputy governor will make some statements about this whole question of sticking to it, behing out the target, the determined to get the japanese economy moving to that point. the governor at last week's press conference after the meeting were that announcement was made, expressed outright frustration that even with the economy is growing in japan, profits arising, wages are under growing. i think it is in -- wages aren't
growing. we are seeing this is more of a global phenomenon now. we will see what kind of comments he makes and if it gives us any more sense of what the bank of japan is doing and thinking, and what they may do next. yvonne: we mentioned earlier the minutes they came out from the june meeting, let's talk about not talking about exiting stimulus. more to come with that speech. still ahead, with struggles take advantage of recovery in the world's biggest casino market, health check on casino outlooks coming up. this is bloomberg. ♪
looking in the wrong direction. it's head of macro and asset allocation says the crisis has already happened, and for the world's second-biggest economy, the only way is up. >> our view is that china has already had its crash, per se. many people are worried about the debt load and that china is going to slow down. if you look at it in nominal terms, which is inflation-adjusted, we have already seen a crash. nominal gdp went from 25% to 6%. that is a massive fall off. that has rebounded about 100%, and now it is starting to settle in. ony economists have focused real gdp, which has slowed down, but in nominal terms of revenues, paying your people, profits for investors, we have already seen that. from our standpoint we would say it is more of a steady growth trajectory from here. the china bears are looking for a correction in all the wrong places. they are looking down the road.
instead they should be looking in the rearview mirror. that the debt growth in china is going at an extraordinary rate, approaching probably 300% of gdp by 2018. a bigou are looking for growth slowdown if you run a business, dropping from 25% to 6%, that is a pretty significant falloff that has already occurred. reporter: this chart helps to illustrate the point. . china's nominal gdp. clearly -- here is china's nominal gdp. now it is beginning to stabilize. guest: that's why and europe you see better trends from the global economy. some of that is reflecting china coming off the bottom. we are not looking for a surge. we are just saying it is stabilizing at a lower level, and with the inflation coming back to the system, you will see that in the revenues of companies. reporter: let's talk about europe. one of the things i found most
intriguing in your research is the idea that according to one of your models, the european economy could grow faster than the u.s. economy in the not-too-distant future. guest: i was just in milan, berlin, and london. we also do a lot of quantitative work to see if there is a disconnect or a match. for the last year and a half come our quantitative models have been showing very strong growth. the single biggest factor in that is monetary policy. that is exactly what we saw in wasu.s. when janet yellen drafting monetary stimulus. it is just a huge impulse. what you are starting to see in europe right now is the monetary stimulus shifting to the cyclical economic areas like housing. you will see a little more lending, a little more improvement. i heard there is a mention of copper. those types of thing where it lists the economy. a baton handoff where monetary policy acts as an ignition switch in the fires lighting as a cyclical part of the economy.
right now we have a more constructive you on your -- constructive view on europe. i would say germany is the epicenter of that, a global player within a year or region -- within a euro region. they are benefiting the most. reporter: let's get a chart that helps illustrate this point, the idf and military -- the idea fundamentally that monetary policy is a headwind. guest: i think there are two forces at work. one is the ecb and the monetary stimulus. in this chart you just brought up, this is the government going from austerity to actually becoming a contributor to growth. it is pretty amazing. you had a 150 basis point to, now shifting all the way up to a positive. mathematically that would give you almost a 170 basis point lift just from the government not strangle holding.
ultimately overtime, you do have to pay your debts. you can't just have spending. i think they have eased off of the austerity, and that is also helping. kkr speaking on daybreak -- on "daybreak america." camethe new macau resort up a little short left corner, failing to capitalize on the casino recovery, the palace helped sales top estimates. let's get the latest from bloomberg intelligence analyst to give us more analysis here. what happened? reporter: in terms of revenue and profit, they didn't actually exceed expectations. --hink a lot of it reflects everything was penned on the rant of the new report. on both fronts in terms of this business, there were a lot of hurdles.
there's a still a lot of infrastructure hurdles. people can't get into the property to spend and enjoy their time there. that is one of the critical issues they are looking to deal with. they also had bad luck factor in the meaning that for find, but the house -- were fine, but the house lost a lot. it did take market revenue share. they are doing better in terms of capturing that revenue because of the ip and premium tilt. certainly on that front it has maintain relationships critical to that business. at the same time there's long-term drivers that drive a mass-market business, including taking away the hurdles from the infrastructure side and connecting the rest of the --perty to the peers in that
[inaudible] yvonne: your research really does show what led to this strong rebound, this vip business. you mentioned it could be sustainable is the junket business does improve. how likely is that? there's a lot of competition on the front. reporter: the junket business overall, there were hundreds out on the market. now his come down to a handful, the big critical ones. that is what is really shifting and driving more of that wealthy chinese gambler back into that market. when having a premium facility with high-end service in one of the nicest compared to rest of its peers, it is taking advantage of that. for that reason i think it has been upside in terms of capturing that wave and has secured that lead. [indiscernible]
ramy: margaret, how might this impact the rest of the peers? reporter: let's start with melco. it does have a greater be at the tilt. for that were -- greater vip tilt. for that reason i think it will have a greater residue boost for this quarter. best greater revenue boost for greater revenue boost for this quarter. it will be interesting to see how all collectively will go through the at the triggering best vip driven recovery in -- vip driven recovery in macau. survivors --rg
tough second half, with reduction in earnings between now and the end of the year. the company blames the temporary closure of some north american plants as they retool to make new trucks and suvs. some factories are cutting shifts as demand plunges. ramy: the tesla model s has regained consumer report top ratings among luxury sedans after updating software to restore automated emergency braking. in april the magazine downgraded the car by two points after tesla took months to equip new vehicles with the feature. two reports rate the model less ahead of the lexus, bmw, and audi models. they write 14 of 16 -- they beat 14 of 16 cars texas. -- cars tested. accusesmark zuckerberg elon musk of being negative and irresponsible by calling for regulation to produce that to prevent machines from becoming
smarter than humans -- prevent machines from becoming smarter than humans. he called his understanding of the subject "limited." time for a quick look at what is coming in the next two hours on bloomberg markets. double whammy, inflation out of and the aussie saying it is going to get destroyed. >> it depends on the data. we are coming off last week, where a lot of people have told us it was a misguided view in what the neutral rate met. aboutflation data coming two hours after the data comes out will justify whether or not that view was unjustified, so to speak. we are talking to shane oliver out of sydney on his thoughts, and the head of the fed. a lot of things to talk about. we have a lot of earnings coming
out early afternoon. -- a lotthe big brown'and of the big brands are coming out of the next several days. and of course, the fed. we've got to talk about it. ramy:. thanks very much. -- thanks very much. that is it for "daybreak asia." "bloomberg markets" begins in just a moment. this is bloomberg. ♪
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