tv Bloomberg Markets Asia Bloomberg August 27, 2017 9:00pm-12:00am EDT
trust this bird's words. tripadvisor. the latest reviews. the lowest prices. ♪ in hong kong,a.m. 9:00 in the evening in new york city. i am rishaad salamat. ,ber picking dara khosrowshahi persistent losses and a tarnished brand. on,son hole, central banks well, diversion paths. sydney. am haidi lun in changing channels, cbs agreeing to buy 10 network, saving the struggling broadcaster from collapse. this is "bloomberg markets: asia." ♪
rishaad: right, well, banks reporting out of china this week. note onjust seen a nonperforming loans. people keeping an eye on that. this is an alarm bell for the amount of debt they are caring. showing what 9438, is happening. out of all of them, it is agricultural bank of china which is the worst. it's nonperforming loans seemingly worse. all will be revealed this week, the big four out with earnings and indeed these numbers as well. haidi: absolutely. a lot to digest when it comes to the asian open. we are getting the washer from jackson hole, more what wasn't
said by janet yellen and mario draghi, the latter refraining from commenting on monetary policy or the strength of the euro. the dollar lower on the account of janet yellen sounding more dovish than expected. we had saber rattling out of north korea, and the big calendar when it comes to macro data. friday, and china pmi rounding out that picture when it comes to the chinese economy. we are 30 minutes away from the open in china and hong kong. let's get it over to sophie. this monday looking at a risk off session. asian currencies gaining ground on dollar weakness. the jump in the pound and the euro easing this morning as well. at dollar yen trading 109.17, and cold trading 1293,
given the risk off mood. the korean won extending gains, since julythe lowest 20 seven, but the hong kong dollar has dropped the most since july 3. in the commodities space, oil and gas markets and focus given the impact of harvey, now being ascertained. new york crude below $48, while brent on the front foot. gasoline futures jumping on with 6% there. hole, janet yellen not divulging much when it came to detail surrounding the outlook for monetary policy, mario draghi sending the euro higher. governor kuroda talking about the yield curve control strategy performing well, meaning the boj might not need to purchase as many jgb's. year out for jgb's, the 10 yield losing .4 basis points there.
while markets are getting online, check out the regional the back foot.on energy higher by .7%, but technology shares down .4% along with his questioners stocks. samsung.t. space, losing over 1%, falling for a second day, this following the verdict ford jay y. lee on friday. i want to take a look at some specific movers. check out qantas airways falling over 5% after it made changes to its executive team come the stock losing the most since june 2016, and korean defense stocks on the move amid a report the country may deploy the remaining thaad missile launchers this weekend. toshiba rising on reports it is close to completing the sale of its chip unit to a coalition including western digital, kkr, and incj, so trading at a june
high so far this morning. rishaad: thank you. counting the costs and t exas. early estimates on the strongest storm to hit the united states and 13 years say the costs could top $24 billion. that combines the effect of the labortorm harvey, market, the power grid, transportation, and other elements. least two killed at people and caused unprecedented flooding in texas. ceo said to be the current expedia boss, 48-year-old iranian-born dara khosrowshahi, sources telling bloomberg that meg whitman was not selected, while the general electric chairman jeffrey immelt withdrew due to a conflict of board level. theomes after
removal of travis kalanick. the united states still once talks with north korea despite what it calls the provocative firing of three short-range missiles. rex tillerson said washington would maintain its pressure, working with china and other allies to move pyongyang towards potential negotiations. the launches came soon after tillerson have praised north korea for showing restraint. beginning this is the of this cigna we have been looking for that they are ready to restrain their level of restrainand a ready to their provocative actions, and that perhaps we are seeing our pathway to sometime in the near future having some dialogue. to see more on their part, but i want to acknowledge the steps they have taken thus far.
haslinda: china factory output and investment slowed, but the economy still shows resilience. profity maintained a surge, rising 16.5%, giving policymakers room to tackle excess capacity ahead of the party congress this fall. we will have another check thursday when the official manufacturing gauge is released. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you. fed chair janet yellen and ecb hadident mario draghi little to say on monetary policy and their respective economies at jackson hole, but governor haruhiko kuroda sent a definite message on where boj policy is going next in an exclusive interview with kathleen hays. what did governor kuroda tell you? we were fortunate here at bloomberg television that
governor kuroda agreed to sit down with me. he gave no official speeches or g-three, and we got to hear from governor kuroda, and he was talking about policy, which neither janet yellen or mario draghi did. what is important and connecting the dots among the three central banks, if anything the fed is tightening come the ecb seems ready to do it, so you think maybe the boj feels with inflation starting to rise of bed and growth looking better that it would be time to move. me by the things said to governor kuroda is that 4% was good in the second quarter, however it will not last. or 2%, pull back to 1.5% and our inflation rate at 0.5% is far below. sub online, he will not follow
their direction. line, we will not follow their direction. >> we are carefully watching the ecb and fed, but our monetary policy is for the japanese economy, and since our rate is below target, whatever the ecb or federal reserve to in the coming months, we have to address the situation by our monetary policy. >> let me underscore that. we have to this diminutive policy for some time. dovish? wavering a matter how much stronger the economy is right now and where other central banks are heading. according to governor kuroda they will maintain what some are calling extraordinary stimulus. rishaad: is that it? does that mean the status quo continues, accommodative monetary policy for the foreseeable future?
absolutely. all these unprecedented tools, yield curve control, using bond your purchases to keep your 10 year government bond at 0%, something that was invented under haruhiko kuroda, who has been an innovative policymaker. he said yield curve control despite the boj buying so many bonds and that if they keep doing it they could own the whole market, he said it has functioned well and the more and the amount outstanding they own, the easier it is to maintain this yield curve control with these purchases they make. a big picture criticism was a university professor, a former boj board member, because people are getting used to being able to borrow at low rates, it would delay structural reforms. thatople start to think
such a low interest rate environment and the current exchange rate will stay forever. so rather than speeding up because the boj will start to taper someday, they may speed up the structural reform, but everybody is laid off and people think the current situation will continue forever. this is a growing concern in japan. is one voice making this criticism for a while. people arees, concerned about the boj distorting the japanese stock market. governor kuroda says he does not need to increase the program, that it has reduced risk premium and encouraged business investment and more, so another and all seems on the same path for now. rishaad: let's shift it back to janet yellen and mario draghi, what was the key message there? >> i'm not sure.
i know one thing for sure, they did not talk about monetary policy because they don't know what they are going to do or they don't want to be dependent on anyone statement? instead they focused on regulation. janet yellen does not want a big role back. who does? she took trump, so a stand on that. woulddraghi also said it be a dangerous time to roll it back, but did say an answer to a question after his speech, we are not seeing a self sustained inflation rise, so we have to be patient. monetary accommodation is still warranted. this is important because mario draghi is not yet signaling he is eager to stop the tapering. is still watching inflation. that raises a big question about when he and the ecb will signal that and move in that direction. thank you.
♪ rishaad: you are back with bloomberg markets. i am rishaad salamat in hong kong. haidi: a quick check of the business flash headlines. cbs has agreed to buy 10 network , beating out a rival bid led by lachlan murdoch. business and assets and provide immediate financial support to keep it running and refinance existing debt.
it went into voluntary receivership way down by costs and shrinking advertising revenue. the hong kong listed holding company of h and a reported 6.8 million dollars. totalving its net debt to capital at 2.9%, down from 11% in december. include a $1.72 a share cash offer. after ashares higher broad agreement was reached with western digital on the sale of toshiba's chip unit. thanontract is worth more $18 billion and will be signed by the end of august by a coalition that includes western, incj, and kkr. now, leaders of the world's most powerful central banks have been defending posts
crisis reforms in jackson hole, touching on the consequences of populist waves that have shuffled the political order in the united states and europe. now is the chief asia-pacific economist at societe generale. what is your chief takeaway? >> for me, number one that the central bankers did not want to talk about near-term policy moves, which i think suggests they are likely debating what is going on, and that is taking place in public in terms of the fed, where you have a cacophony of views. i also thought it was striking some of the key comments mario draghi made and janet yellen made were directly in contrast an opposite to some of the policy measures that president trump once to take. rishaad: it depends on when he talked.
>> true. speech, iti in his was about fostering the dynamic global economy, and specific warning against protectionism. as we know, president trump takes a dim view on free trade and free trade agreements. similarly, janet yellen spoke about financial regulation and why she did not say we cannot absolutely change anything. she certainly reiterated that the system had become much more resilient. haidi: i thought this argument as to why mario draghi did not even vaguely refer to the strength of the euro is interesting. does it suggest his messaging to the market is that the stronger is justified by a stronger level of growth in the eurozone and he needs that to justify tapering? is that why you will continue to see the argument that the euro continues to go back to levels
we have not seen since pre-qe? >> it is likely. it is much more a dollars story than it is a euro story. there are two sides to it. i think it has something to do with the setting. around the world, you show me a central banker who would like a stronger exchange rate, they are far and few between. fed or the rba or the this stage, with inflation globally so low, well in most places low, there is little interest in a strong currency. rishaad: wait a second. he says the euro is strong. at these levels, then it and it indicates the upcoming strong enough to withstand it. >> we will see. i would not be surprised that
they will be looking at projections at the next ecb meeting, and with a stronger will it is likely they reduce the inflation forecast, but raise the growth forecasts. the economy has been much more dynamic no matter what the exchange rate is. kuroda pouring cold water on the recent optimism for japanese growth, does that surprise you? >> i would not put it in those terms. patentlyhings that are self obvious. the japanese economy cannot maintain annualized quarterly growth rates of 4%. i don't think anybody would disagree with that. the economy grew 2.1% year on year, and i don't think that is sustainable, but what is clear is the japanese economy does look to grow above its potential growth rate, which the boj puts its your .8%.
it will continue to exceed that. we already have a labor market that is tight as a drum, so it is clear economy can grow that quickly, but it is a good pace. rishaad: that is what surprised everybody without 4% rate. as we can discussing, this is a goldilocks situation. so what if they don't get 2%? at least they got some information, right? japan isflation in particularly poor and far away from what the central bank is targeting, but it is true the economy is not only growing quite strongly, but in the second quarter, it was growing in a diversified fashion, stronger consumption and a continuation of a significant pickup in business. that is really important. rishaad: always a pleasure.
♪ you has given news ceo, and he is expedia's dara khosrowshahi. i'll bloomberg tech editor has more details. what does this mean for uber? it is a new chapter. the new ceo comes from expedia. he is 48 years old, born in iran. he made his name working for berry diller, the hollywood mogul turned internet entrepreneur. he began working in expedia 12 years ago and help the company
grow as the default place to get your online travel booked. before that, he worked at allen and company, an investment banker there. deals.berry diller doing the travelp some of services, including travelocity, so he has made headlines for his compensation. diller with hollywood-style compensation, and dara khosrowshahi received some of the biggest pay packages around. he received $50 million a year and was a highest-paid ceo in the u.s. in 2015 at $95 million. they want him to come into uber and calm the waters and get back to business again. rishaad: he has a lot on his plate, hasn't he there, peter? >> he does. for many years, they were focused on the potential right
hailing not only in the u.s., but beyond the u.s., but recently they have run into troubles, controversies around the internal actions of some people, travis kalanick stepping aside. there have been conflicts between benchmark in some early investors, and they needed an experienced hand to come in and get the company on track and rebuild the management team. they need to focus on business opportunity and move beyond the controversy. rishaad: nice one, peter. while where on the subject, let's look at expedia, which dara khosrowshahi has been in charge of since 2005. have the beginning, shares seriously outperform the nasdaq come up around 550%. the nasdaq itself with a gain of 200% at that point. it has certainly outperformed
♪ rishaad: there we go. the storm warning continues until 11:00 in hong kong. 9:39 here as we count your down to the start of the trading day. we have the u.s. treasury issuing $132 billion in notes and bills later today. retail sales numbers wednesday. hong kong with retail on tuesday. it is that all-important jobs report, nonfarm payrolls on friday, the most important data with second week quarter revisions to gdp for the united states as well wednesday. haidi: making up for a quiet
calendar when it comes to last week. just getting a reaction to the u.s. dollar index, falling to that 2.5 year low on the back of these comments from janet yellen suggesting it will be a more dovish path, not commenting on monetary policy, not suggesting financial stability will take precedence over rising prices. fixing ating the yuan the strongest level since 2016 as reflection of that weaker dollar as well. let's get it over to sophie with the open up markets. sophie: markets mixed. .4%re seeing a gain of over , adding to the gains on friday. the hang seng is up .3% after rising for a fourth session, so
despite the gloomy weather and on theng, the hang seng up. the hong kong dollar falling, the biggest drop since july 3. still trading at january 2016 low. as you pointed out, or stronger fixing for the yuan from the pboc. the onshore rate just below that 64 handle, and the offshore yuan is set for a ninth straight day of gains. moving inn what is hong kong, energy shares leading the gains, up .8%, most sectors in the green. just utility seeing slight losses there. when it comes to the energy space, moves and the like of cnooc. i'll pull up the board to show you those players. sinopec also moving this morning. afteres were cut to hold its results, moving on change right now.
aac tech jumping, set to close at a record high. and call options surging for the stock. jeffries,upgrade from morgan stanley, and cc ic. after a jump in earnings and announcing a special dividend. checking on chinese stocks listed in hong kong, falling after great results. great wall shares were raised at j.p. morgan, so some early action and hong kong's morning. rishaad: thank you. let's move it along and get over to singapore and have a look at first word news. somebody coming out in defense of regulation. fed chair janet yellen's speech at jackson hole was her broadest defense yet for
the response to the financial crisis. she said any rollback of post-crisis reform should be modest because they make the system stronger and more resilient. her remarks could put her at odds with the trump administration, which issued a treasury report that called for significant changes. the united states is barring the trade of new debt issued by venezuela and its state-owned oil company and american markets. washington is blocking dealing an existing bonds owed i venezuela's public sector. to cut offtempt funding to the regime of president nicolas maduro. stephen mnuchin said the move was in response to venezuela's attacks on democracy and the rule of law. >> on the economic front, our plan has to continue to turn up the heat on the venezuelan government. these specific actions we have tried to balance things that
don't hurt the venezuelan people. haslinda: president trump renewed his pledge to build a border wall and mexico equally forcefully said, no chance. the president posted success of tweets that the u.s. may have to nafta and repeated his campaign pledge to make mexico pay for the wall. he did not elaborate on how that would happen, but the white house previously suggested a 20% tax on imports from mexico. the bank of venetian sees easing ahead -- rank of indonesia sees easing ahead. the cpi could slow to cheaper oil and i lack of regulated price increases rather than weak demand. the central bank lowered its key rate last week by .25% after six cuts last year failed to boost growth. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg.
rishaad: the world's biggest oil refiner sinopec trading lower, .5 percent, this after posting a in first-half profit, down to stronger earnings from its chemicals business. tom mackenzie joins us from beijing. you have to say this is down to downstream operations. tom: clearly. the oil price around $53 a barrel, up 30% from last year, is a key part of positive results broadly across the three major energy producers in china. sinopec enjoying the others reporting last week was stronger earnings. it is the best profit we have seen in the first half for sinopec and since 2014, net income of $4.2 billion. in terms of the different units of the businesses, the chemicals
side saw some strong numbers, profits up 26% because the prices around the chemicals products that sinopec produces have been stronger. 6% outstripping the negatives from the refining parts of the business, profit down around 10%. so it is the chemicals unit in sinopec that has driven the first half profit, and that stronger crude price. the refining part of the business takes in that crude price as the main input, so that is a drag, but it is the chemicals numbers supporting. a strong set of earnings for china's oil and gas sector overall. that's right. petrochina and cnooc last week. petrochina came out with profits of around $1.9 billion for the first half. as we've reported, they gave those out in total, all of those
profits, as dividends. cnooc also beating estimates. giants, three energy there is a trend in terms of crude output, which is reducing, but natural gas production is picking up strongly, and we have seen that from sinopec as well as of their production up around 8%, but crude production down 5.3% in the first half, and we have seen this push driven by this central and provisional governments for more use of natural gas, particularly trying to get rid of coal and switch out with natural gas used, and we are seeing that come through in these numbers from all three egg energy companies and it is expected that trend will continue, crude output continuing to produce into the second half of this year. sinopec paid out a small dividend per share. interesting as well as we talk about the debt of these state-owned companies, their
financing costs were down 70%. at $2.5spending came in billion for the first half, sinopec expecting strong demand for oil and petrochemicals in expect chinalf and to be solid and stable, and that will drive demand going forward. haidi: thank you so much for that. 's biggestuhiko kuroda monetary policy innovations has been targeting 10 year government bond yields at 0%, and his critics said the program is not sustainable and needs to be modified, but the governor told bloomberg that the program is working quite well. >> the so-called yield curve control we introduced last september has been working quite well despite wide fluctuations it of long-term interest rates in europe and the united states. 10-year jgb's have been
fairly flat around 0%. in that sense, yield curve control has then well manage. thesecond point, of course path of monetary easing is always through lower real interest rates. wentitative targets as qe four years ago to reduce interest rates substantially. of ourer four years experience, we found that it may be better to directly target long-term interest rates instead
of the amount of the purchase. we switched from quantitative to interest-rate targets are yield curve control. as i said, it has worked quite well. uniqueuite in terms of because no central bank has ever made such commitment, but as i said, this is kind of a logical adopt to theqe to new situation, and i think the yield curve is maintained through this control. rishaad: the boj governor haruhiko kuroda speaking exclusively with kathleen hays. drowning unders america's stronger storm for years.
♪ haidi: this is "bloomberg markets: asia." i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong, looking at the business flash headlines. china's state owned air lines slowing expansion to focus on the domestic market. china eastern and china southern added international seats for the first half, but less than half the rate from it year ago. investors watching domestic yields wind carries are out with earnings this week come expecting 28% profit just for china eastern. haidi: the latest index in australia does not track stocks, bonds, or currencies. assess an algorithm to
the tone of the rba governor's words. they see if rate statements show any clear bias and the results correlate positively with rate moves and show it may be finally turning hawkish. another u.s. retailer filed for bankruptcy as americans turned away in favor of online shopping. it sought court protection in delaware with a plan to close retail locations. the perfume chain said it is planning to increase its e-commerce business and emerge from bankruptcy as a private company. have soughtailers bankruptcy protection in the united states this year. haidi: gasoline surged to the highest in two years and oil holding steady. datesane harvey in and refining centers along the texas coast. joining us from singapore is
wayne gordon, executive director of commodities and fx at ubs wealth management. it is always difficult. math, immediate after awful natural events. do you seeing it as an enduring one when it comes to oil prices? >> i think certainly some of the issues around gasoline and refinery production will be enduring, at least the next month. the oil production side is more difficult to assess right now. the total of losses continues to rise. we were thinking we had 1.2 million barrels of refining capacity shut down. now it looks like it is closer to 2 million barrels per day. on the crude production side, it looks as if it could be around
300,000 to 400,000 barrels of oil which is currently off-line or production is off-line, mainly in those shale basins affected in the lower part of texas. haidi: we have been talking about oil and gasoline and the impact on those sectors, but across commodities, agricultural betor, it will presumably impacted by shipments going in and out, everything from cotton to soybeans. yeah, look, this probably isn't sensitive place not just for oil and gas, but for import -export of energy and agricultural commodities. for contin, the impact is probably less so, at least short-term, because at the end of the marketing year, so we
move into a greater restocking phase as we go into november -december, so we have a buffer there. for wheat, we are moving towards the peak period of exports of the winter season, so we would expect greater impact at least on global markets. and on soybeans, it is similar to that of cotton. towards the end of the marketing year, a lot of restocking has been done. exports have been strong year to date. for crops likeus soybeans and also for cotton will be largely on the production situation, and that tends to not be located in the southern parts of the u.s., but more focused on the midwest or the upper part of the united states, so the market will continue to focus on yields and yield expectations, but particularly for things like
winter wheat, this could provide some upside to global prices. want to sound't , but should we all become farmers if we want to be rich in our dotage? >> i am a farmer, rish, so i have a slight by us. i say yes. everybody should become farmers. the interesting thing about agricultural is that product to the gains have been equally strong as the pickup in demand across many commodities. across the major commodities, thesecorn, soybeans, commodities have high stock levels, if not in the case of soybeans, if recent crops are anything to go by, the production will be strong. expect corn, so we
surpluses for another year. agricultural prices in real terms have been fairly depressed for a couple of years. really we need to start to see either production being curtailed a little bit in the lower producing regions or higher cost producing regions, or we have not had a global drought in quite some time in the sense we have not had a drought in the u.s. or in brazil , and that is probably really you couldmoment where actually see a pickup in these agricultural prices specifically. rishaad: i want to get back to oil. when you go back to the times of hurricane andrew, katrina, what ever, you saw huge price action on the oil market. why don't we get that anymore?
why are people sanguine about this? if you look at 20 days, we are down 4%. about ank it is more lot of these storms and the impact they have on prices tends to be the trajectory of where the storms end up, either where it land falls or the trajectory of the storm through the gulf. this time around, and bhp made a statement over the weekend, we have noticed that its facilities in the gulf continue to operate while some of those facilities onshore, that being the shale production part, has been shuttered in, so it seems as though the storm as it went through the gulf mr. dickey installations, which we saw in some of the other storms where it ran right through them. also we have to remember that the growth and oil production in the last few years has been
largely focused on shale oil production onshore in the united states, so you get in relative ,erms production has started the growth site has started to move towards shale and this storm did not go to the middle of a lot of the large rigs and oil offshore production facilities. that being said, we have seen significant action on the spreads. have seen wti relative to brent fall sharply. has we come out the other side that is wherent, we will see a lot of the action as refiners come back online in the u.s. i would expect that spread between wti and brent or the premium brent gets over the bti to close up again, so that is where we should be looking for
the action. gasoline side, gasoline prices have ripped on news of this storm, and broadly speaking, demand has been strong, so we see that is where the price action will be. rishaad: wayne, great to see you as ever. wayne gordon, ubs wealth management. coming out, jay y. lee, what next for south korea's family-run corporate giants? ♪
conglomerate leader. rishaad: they asked for 12. >> they went midway to send a message, but at the same time, it is not that much time. any sentence of more than three years cannot the suspended -- cannot be suspended. one management group saying the government will push harder if the economic conditions improve. global investors saying it sends a strong message. does show the government is better than in some other places, japan for example. theasset manager saying one case one have an impact on reform. it is a milestone along the way to actually getting some change, to loosening the grip of conglomerates and south korea. grip has been long
entrenched, and they are huge employers in an economy that is export-led, and that is important to consider when trying to bring about a lot of change. where does this vertically samsung? downme some shares slightly -- samsung shares down slightly today. that may not be a reaction to jay y. lee. there is something to say for the long-term prospects for some sign -- samsung. fitschen s&p do not see long-term impact, but those see risks short-term. point -- haidi: huge implications there.
pathon the monetary policy , but first take a look at this chart. the biggest move in the euro we saw out of jackson hole. speaking, five hours after mario draghi having his turn. is a simple u.s. dollar technical. is where we saw the euro at the start of qe. post jackson hole, that is where we are headed to levels not seen since before the start of quantitative easing at 1.25. we saw that in the euro against the greenback to eight 2.5 year high. some market participants really
seeing that as an impulse and endorsement of the strength of the euro. it reflects a level of economic resilience in the eurozone and does that mean tapering? we heard in the last hour, is this more of a u.s. dollar weakness story? 2.5 year lows after janet yellen sounded more dovish. >> we do have a lot of people at the moment. against that, we have a change in what people are doing and going into. a lot of people becoming more bullish on the greenback. perhaps being taken off the table to some extent. anyway, a session is getting underway. let's find out what is going on market wise this weekend. >> a mixed session so far. we did have the benchmark at a fresh presence of friday.
asian stocks are set for a second day. chinese shares leaving. behind about 1.1% so far. trading at the strongest level since december 2015. hans saying on the up. saying -- a -- hanseng up. the currencies base, we have the of 9.11.e up, one being led by the advance we are seeing from the taiwanese dollar. a stronger fix from the pboc. dollar assets could be a boon for em stocks and commodities. korea stocks are under pressure today. has concern over
external uncertainties. the central bank is set aside on a policy rate on august 31. keep an eye on the market, a 10 year-year-old is edging closer. market has become resilient to cut in bond purchases. we are seeing base metals under pressure here. aluminum siding. we do have copper futures now on the up in shanghai. a big focus is on the energy markets here. diverging as harvey is being assessed. 6%, u.s.jumping capacity has been taken off-line. radar,t this on the hotel shows -- shares are falling. this is a group sets rumors about the chairman, they are
groundless. the dollar bond dropping to a july it low amid the latest speculation. anchor: travis kalanick's replacement is very much taking up the front pages of the business press. let's find out what is going on. uber's next ceo is set to be the current expedia boss. theces are telling that longtime favorite was not selected while jeff withdrew of a conflict. of travis, it says it will confirm the new ceo after informing staff. the strongest storm to hit the united states in 13 years, the costs could cost $24 billion.
that combines the effects of tropical storm harvey on the labor market, the margaret, other elements that support u.s. oil and gas. harvey has killed at least two people and caused unprecedented flooding in texas. drifting back towards the gulf of mexico and could intensify again. heavy rain continues to lash hong kong after a a second partial storm. of 90 kilometers per hour and gusts over 100. issuing the highest level storm warning in five years. states still wants talks with north korea despite what it calls provocative firing of the three short-range missiles you rex tillerson said it washington will maintain pressure working with china and other allies to potential
negotiations. praising north korea for showing restraint. >> we hope this is the beginning of this signal we have been looking for that they are ready to restrain their level of tensions, their provocative acts and perhaps we are seeing our pathway sometime having some dialogue. we need to see more on their part area i want to acknowledge the steps they've taken so far. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries this is bloomberg. more with theget major storm in texas. refineriesrged as are shut down. singapore,now from
he used to be based in houston. how vital is this part of the country to the global energy industry? >> it tough to overstate how important it is. the largest petrochemical complex in the world, corpus christi and south texas has become a major hub for u.s. oil exports which are now going everywhere in the world. the eagle furred, this south texas shale patch which has sprung up in the last five years is right there. all of this stuff is right along the path aware harvey is inundated with rain and massive floods. a really large chunk of the world energy infrastructure right now is either out of condition -- out of commission or under stress. where do we stand when it comes to oil and gas infrastructure at the moment? >> right now we have a quarter of the oil and gas reduction in
shutulf of mexico has been in. refineries in corpus christi and houston that total more than 10% of the total refinery in america, to million barrels a day, are off-line. third, one half-million barrels of their oil production and 3 billion cubic feet a day of gas production. half the daily output there normally, shut in. of are having lots production off-line. even more demand off-line with these refineries going down. that is why you see gasoline prices spike and u.s. oil sink because there is less refineries to buy the oil and produce gasoline that needs to go in cars. you were in houston reporting from there. what are they saying about the weather, how long is it expected
to last? it could take another turn for the worst. >> it gets horrifying. i look back at my friends pictures from over the weekend and everybody's streets are flooded area water is coming to people's houses already. there are no more highways, there are just rivers at this point. it has been nice seeing people out there helping friends and neighbors but we have a couple more days of rain coming and as you referred to, it is possible this storm goes back out over the gulf and finds more moist air to re-energize it and hit again. it is pretty scary looking for right now. ahead, china's industrial profits. why the rate of growth is the slowest in three months. the exclusive interview with the bank of japan governor. following thee same path as the fed or the ecb.
your back with bloomberg markets. i'm in sydney. the bank of japan has concerned -- confirmed it will maintain the policy for some time. the ecb has for the exit, speaking exclusively to so far belowa target that he has no choice but to carry on. >> the u.s. inflation rate is close to 2%. be inflation rate may somewhat far away from 2%. we are up 1%. and price situation in the u.s. is much much better than the situation in japan.
but far away from the 2% target. i think some time we have to continue this extremely important result. watching how the ecb are doing. our policies for the japanese economy. whatever ecb or eurozone do in the coming months we have to address the situation by our monetary policy. speaking to our very own kathleen hays, well, from our tokyo studio is a chief marketing economist. thank you very much for joining us. what do you make of his comments?
essentially he was saying steady as we go. more of the same. no idea when it is going to end. it cannot go on forever. that japan's economy is in very good shape. looking back, the beginning of this year, the japan economy has been driven by external demand. now domestic demand is very strong with a private investments. in very good shape. increase has been subdued and full-time workers wage have been increasing less than 1% so far. that is the point for the inflation to go up to 2% which is targeted by the doj. we've been commenting on the program about this being arguably a goldilocks scenario.
you have some inflation, very good growth. very tight labor market. do we need a weaker yen than this to make it sustainable? >> i don't think so. it looks like japan's economy growth has become more domestic-driven, as long as the yen stays at the current level it does not really depreciate from this point onward. i think that japan's economy should be supported by the domestic demand. really bigabor is issue in japan which has driven wage increases and the private investment. i believe that domestic strength should be sustainable. growth which japan achieved in the second quarter cannot be sustained because it is too high for japan to grow sustainably.
i believe that japan should be able to achieve around 2% growth for this fiscal year. heidi: i want to interrupt this chat which illustrates the issue plaguing the bank of japan. you can see major central banks around the world, here in australia, new zealand, you name it, struggling to find inflation. we have spoken to analysts who say that you need to see yen,ficant weakness in the towards 1.30 otherwise it is technically impossible to get to the 2% inflation target the cause the huge imports of energy >> food that japan has area -- has. >> i think japan's inflation rate is likely to go up less
than 1%, maybe 0.8%. that is because the wage increase has been subdued as we talked before. i can also say the additional monetary policy stimulus is not really insight. -- in sight. the doj is faced with a dilemma where raising interest rates and lowering interest rates are both difficult. if you raise interest rates, people will say that the boj abandoned the idea of 2% inflation. it may lead to the yen appreciating situation. that is going to be quite bad for the financial industries profitability's. current policy should be maintained for a prolonged
period. >> what does this mean for japanese equities because we have seen this kind of the correlation between the again and performance of japanese stocksm= which has not been the usual half area --. will be see that revert -- path. will we see that converge again? >> begin is likely to depreciate over time because of what is going to happen in the u.s. and the euro. japan'sther hand, economy is in very good shape and that is really supported by the higher corporate credibility. year, they surprised us on the upside and we believe that is because japanese companies have gained more power for price control. to lift thebe able
equity prices over time towards the end of this year. >> at the end of the day here, what is really going to be the game thatet go -- will stop this monetary policy. would it be them running out of bonds to buy? or would it be signs of inflation that we are not going to get. when is -- which is going to come first? >> japan has switched his monetary policy to curve control policy. i think the boj should be able to keep the current interest rate for 10 year bond yields and with even less purchase of that bond. jgb issue has actually gone.
japan should keep this monetary policy framework and that should continue to help the economy at the time the u.s. and your area will grow at a pretty good pace. >> the steepness of a bond yield curve tends to indicate the health of that economy. --you move the aged manipulative this so it was steep, does that mean you can actually build it and they will come as it were? >> well, that is a good question. this framework is a new framework for the world. actually --japan is this framework, it is going to
adjust on an ongoing basis. keeping the long-term interest rate has been successful so far as you know from september last year. it should be successful over the thiscouple of years to framework is in place for a very long time to that should help or even higher than the potential rate of growth. >> thank you so much for that. from nomura securities. we have the 10 year yield at the 0.0, 9%, effectively 0%. movement shares into the upside. now let's tell you what you can watch exclusively.
to refinance existing debt. breaking down by high costs and shrinking advertising revenue. reported first cut profit of 8.6 million u.s. dollars compared to a loss of almost 11 million per year earlier. net debt-to-total couple was 2.9% as of june 30th. 1.72 four logistics companies. toshiba shares have been higher in the asian session. agreement.ed an than $18act worth more billion by the end of august includesalition that toshiba at 1% at the moment.
♪ >> it is 10:29 a.m. in singapore. these of the first word headlines. the australian banking regulator to hold an inquiry at commonwealth bank has the poll out from a money laundering scandal widens. the banking system has been damaged and commonwealth bank has been hurt by issues that have affected its reputation. the inquiry will be conducted by an independent panel and is expected to last six months. tarring trade by venezuela and it stayed on oil company, also blocking dealing in existing bonds owned
by the venezuelan public sector. treasury secretary steven inchin and said the move was response to venezuela's attacks on democracy and the rule of law. on the economic front, i would say our plan has to ontinue to turn up the heat the venezuelan government, and the specific actions we have tried to balance things that don't hurt the venezuelan people. >> president trump has renewed his pledge to build a border wall and mexico equally forcefully says, no chance. posted successive tweet suggesting the u.s. may have to terminate nafta and repeated his pledge to make mexico pay for the wall. he did not a on how that would happen, but the white house has previously suggested a 20% tax on imports from mexico. bank indonesia sees room for
further easing ahead with inflation this year and next to remain manageable and possibly lower than expected. the cpi could slow due to cheaper oil and a lack of price increases rather than weak demand. the federal bank lowered key rates last week by .25% after six cuts last year failed to boost growth. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. haidi: thank you so much for that. asian markets a mixed start to the week, lower now here it japanese equities as it were, but a sense we have more on this week, looking what we got out of jackson hole, out of north korea, but also the calendar when it comes to data from china to the u.s., culminating in the key jobs report from the u.s. on friday. also revisions to gdp
closely watched, second-quarter u.s. gdp figures, seeing growth there. a lot going on in the bond market, 132 billion dollars of notes and bills to be sold off in a 90 minute session later today. with the jobs report tuesday and retail sales the following day. we are heading towards the lunchtime break and japan. sophie kamaruddin is having a look at a hang seng breaching 28,000. sophie: just breaking that level for the first time in two years. a day of gains there. chinese stocks leading the advance in asia. the nikkei 225 closing the morning session lower by .1%. we do have some saying it is too early for investors to turn bearish on the nikkei 225 despite six straight weeks of declines and they see the rise of bond yields and the
dollar-yen unlocking potential upside. for now, on the back foot. earnings in focus in hong kong and chinese markets today. 59% of hang seng listed companies have beaten estimates so far. hiv ensure starting on a cheerful note, rising over 1% today. 20% year to date surge in 2017 has pushed it to a two-year high. the technicals pointing to more gains for the h-share index. we also have the shanghai composite building on gains, breaking through 3300 friday. thanks are leading the advance for chinese stocks ahead of results due out from the big four later this week. line, the shanghai
composite, and the line in blue. analysts expect profits for banks to rise thanks to interest margins for chinese lenders. what is moving on the regional one stock gaining over 12%, leading gains after results. set for a fresh high today. evergrande in focus today with results due out later today. qantas falling over 6% today. rishaad: the economy in august showing growth will be steady, but diverting sentiment is emerging. correspondent is with me. >> it is a mixed picture. the chinese economy has stabilized and numbers have been ok, factory gate inflation has
held steady for the last three months at 5.5% growth, but the trend tends to be disinflation. early indicators that we can look at, the standard chartered confidence index, higher, rising to a four-month high in august. three key sub gauges inside that index, current performance, three-month expectations, and credit conditions, all more positive. the china satellite manufacturing index. ats uses satellite imagery industrial sites, more than 1000 in china, to see the activity there. it rose to 51.2% in august. a little bit more pessimism, world economic sales manager index declined, but still in positive territory. there is a quote from the ceo of world economics basically saying
the chinese economy is maintaining the recent level of momentum. however, sales managers are not optimistic activity will improve and staffing levels have shown no growth. so they are not firing. , the steel sentiment index prices have gone up. that is good for margins. this slippingment on optimism for continued strong sales with those higher prices. that index slipping. before we get to pmi this week, we have industrial profits for july. we have seen a sustained recovery when it comes to producer prices. has back on into the bottom line when it comes to chinese factories? >> industrial profits have been doing well. you have to look at that going forward. what does this mean for continued policy?
theirities can continue crack down on excessive debt levels and excess capacity given the profits are going strong. how sustainable are these measures? ppi inflation is coming off a little bit. there is rising real interest rates as well. 130.is a it shows the correlation, if you can have higher pricing power, the green bars there, the rising factory gate inflation, ppi, as it correlates to the blue line, industrial profits. you see higher margins and profitability with greater pricing power, however, we have had three straight months of moderating inflation, you can even call it disinflation. rishaad: nothing like what we saw four months and years.
the red bars going up. nice one. thank you very much indeed. rex tillerson says the united talks with push for north korea despite the firing of three missiles on friday. ,his is a muted reaction something of a contrast to this angry war of words and this rhetoric we have heard before. >> i think it is a proportional response given what north korea did. they shot three short range missiles. the u.s. has tended to have a muted response towards these things. as provocative as an icbm or nuclear tests. nevertheless, the last two tests were icbms. that could bring a nuclear weapons to the united states. the nine at states says this is a provocation against united
nation resolutions, but not as bad as it could have been and talks are still on the table. how effective is this u.s. pressure campaign to get pyongyang to the table? >> that remains to be seen. it is still early days. thinks will say we don't north korea is ready to come to the table because they want to make sure that they have everything they need with their nuclear program intact so that they cannot negotiated away. north korea wants to say we have and it is time you recognize us as a proper nuclear state in some capacity. in that sense, no one is clear if north korea wants to talk right now even though tillerson is pushing for that. rishaad: we will come to whether these u.s. sanctions are biting here, but there is another
aspect. rexwell advised is tillerson here? we have no assistant secretary of state for arms control, for east asia. on top of that, the united states does not have an ambassador to south korea. so how do they know what is going on on the ground? >> sanctions will take a bit of time to bite. we saw china finally implement some regulations that should get the latest round of sanctions to start taking effect on the ground. they are still providing oil and food to the regime, which keeps them alive, so that is still there. for tillerson, it is unclear. this is a wider problem in the state department. withad: they are dealing the afghan issue, there is no us is no assistant secretary of state for southeast asia, so there you go.
where rex events tillerson was low-key in the background, raising questions about the broader u.s. presence in asia, not to mention the ship incidents that have raised questions about u.s. military readiness. it all points to an weakens the credibility of these fire and fury threats. rishaad: thank you very much indeed. will congress a managed to increase the debt ceiling before october? we discussed that as we hunt for real yield. that is next. this is bloomberg. ♪
continue to be key issues for investors. our next guest sees the potential for congress to fail to raise the debt ceiling has the biggest concern. it is great to have you. i want to start off with this chart. this is 9433 on the bloomberg. rising markete value of bonds with negative or low yields in the market climbing. thatere a sense increasingly central bankers are running out of ammunition? is a scenario we have seen for quite a long time. it is a reflection of low growth, low inflation for the less an, and it is monetary issue than it is a fiscal and policy issue. haidi: do you have any particular takeaways out of jackson hole? not so much what was said as what was and said. >> there was not a lot said in
terms of monetary policy. it was more the rise of populism that was the big story at jackson hole. there is not a lot central bankers can do about the situation. and ecbh the fed talking about ending qe or at least tapering, it looks like they are trying to move the other way. convincing markets we are seeing growth and inflation and bond yields will rise. haidi: one of the potential interesting applications issue had a more dovish janet yellen speaking at jackson hole. there was this shot across the bow on financial deregulation. n will he have to be more dovish to get that top job? >> in theory, the head of the central bank is supposed to be politically neutral. the reality is that because you are appointed by the president that that is unlikely. the growth story in the u.s. is
good. it is not and inflationary story, not the wage gains that would lead to inflation, so who becomes the head of the central bank, rates will be low for a very long time. where is the juice and the bond market, corporate or sovereign, or you get a decent yield and appreciation in price in the future? >> what we look at when you look around the world and talk about negative rates, the best yielding story in financial markets today is australia, maybe new zealand, although there is a liquidity problem, and to some extent the u.s. in the but you can move away from solvents and high-grade investment in corporate sent pick up another 1%. ofput together a portfolio 5-7 maturity, corporate bonds, mostly in australia with the
yield a little over 3%. it is a pretty good yield environment, and that is what investors have to get used to today. rishaad: let's look at what is going on with u.s. rates. heidi is talking about the takeaways from jackson hole, but what about u.s. rates overall, will they be underperforming as the economy recovers? certainly markets are pricing in four fed rate hikes over the coming year. we believe that is a bit optimistic. i think the fed will struggle to hike rates over the coming year. in my mind, it is still a good opportunity for bonds. it is hard to see why rates can raise dramatically from where we are today given the lack of inflation. thei: you say two at of
three branches of government and the u.s. are essentially broken right now. right. is it seems to me that it will be hard for trump to get his policy reform agenda through. are we going to see reforms and tax policy? are we going to see infrastructure spending? are we going to see business deregulation? at this point, the probability of him getting something through congress is lower and lower, and now we have the looming debt ceiling crisis coming up, so in the short run it is hard to see why on yields are going higher? . haidi: were getting voices sang we will get easing in the first half of next year. >> i'm confident in saying the fed will not hike this year and that the rba will not hike over the next year. the aussie a economy has similar ,eadwinds to growth of the u.s. meaning less bargaining power for workers, meaning no wage inflation, which means no
inflation. they will have a hard time cutting given the housing market , at least at this point, but they have room to cut. if we see a deterioration in the global economy and that leads to deterioration domestically, they have room to cut. leadin cleaninginitely to easing for the rba. thank you very much. rishaad: breaking news from samsung electronics. jay y. lee sentenced to five years in jail. he is appealing that sentence. iss five-year jail sentence threatening a vacuum for one of the world's most viable companies. have this coming through, appealing. lee is
kong. haidi: i am haidi lun in sydney. the cleveland fed president says it is important to stay ahead of medium-term inflation risks lie continuing on a path of gradual rate hikes. she spoke with mike mckee at jackson hole. >> we have been doing this gradual reduction and accommodation for some time. that has been our strategy. i think that is still what the strategy should be given the outlook. may differ from our path, but we have been consistent on this strategy of looking at the economy and our , movingutlook preemptively in terms of we don't want to wait until our goals are met. we have learned over time that is not a good strategy. we have been gradually moving. gradual part is important. we are well below what other
rules might tell us where we would be at this point, so we have been patient and gradual, and i think it does well for the economy. >> do you think the pace has been appropriate? if we pick up, there is some concern come a financial stability concerns, assets, prices elevated. do? see any reason to move faster? >> these issues loom large when interest rates have been as low as they have for as long as they have been. there is some pricing in the equities markets that look different than the historical values. part of that is generated by earnings, but also because interest rates are low. we are focused on that. i don't think that is a i amficant risk, but taking that into account and that is another factor that feeds into my view that a gradual reduction in
accommodation is appropriate. europe you a role in forgetting rates higher's a you have a downturn? >> i never really understood that argument. tohink we should set policy aim at medium and longer run targets, inflation, maximum employment, and we should set the level of interest rates appropriate to that. i would not want to do harm today because of some anticipation of having to use our interest rate in the future. we want to set our path for hitting a longer run goals. >> do you see any reason you won't proceed with announcing the start of balance sheet reduction in september? >> we go into every meeting and look at what is happening in the moment around that, but i am in favor of starting on a plan we have communicated to the public. >> does the cleveland fed have
any estimation for what kind of reaction we will see with yields? might we get at the fact of tightening? inthere will be some impact financial markets, but it is such a gradual plan that if you look at the specifics of it that i don't anticipate a huge reaction that would last for a long time in terms of that. reduction a gradual that we have time to assess that. we will assess that as we go forward. fedaad: the cleveland president speaking to michael mckee and jackson hole. markets, whatberg are we watching? >> uber has a new ceo. they tell us his name is dara khosrowshahi. he is expedia's ceo. expedia has no comment. you want to tell your own people
first before you tell the world am a but he is a dark horse candidate. they had talked to meg whitman and jeffrey immelt, but this is a dark horse candidate that replaces the scandal-driven drama of uber's former ceo travis kalanick, so the question guyhether he is the right for the job and will he lead uber to where they need to go. we focus on market reaction out of jackson hole. we talked to one of our favorite guests. mario draghi, janet yellen, and governor kuroda, and commonwealth bank of australia could we talk about that and more, next. ♪
♪ >> it is almost 11:00 in hong kong. >> we are in the middle of the asian trading day. this is "bloomberg markets: asia." ♪ >> asian markets mixed. hong kong trading at a two-year high. surges.asoline vital parts of the gas and oil industry shutdown. angie: jackson hole confirms central banks on diverting paths. the boj governor speaks to bloomberg. shery: the new ceo in the
driving seat here it uber set to tok xp is dara khosrowshahi chart a course out of crisis. plotting the course when it comes to china, industrial 16.5% in july. i want to pull up this chart for you, follow along, shall we? on the bloomberg. the blue line is industrial maintaining the surge, underscoring the economy is resilient amid slowing factory output and investment. if you compare it to the bottom bar chart of ppi, you are seeing that inflationary story when it environment, but with that continue to boost the shanghai composite?
3300, surging past that. shery: we continue to see a surge in the session. the whole story of commodities surging, a lot of those miners seeing that surge. we do get more manufacturing data this week. on thursday, manufacturing pmi out of china. other private gauges have shown mixed indications to where that data is headed. let me take you what is moving -- through what is moving the markets. ,asoline futures are soaring almost near that 168 high earlier this year. to hurricane harvey, now downgraded to a tropical storm. has hit refiner syntaxes and is having an impact on gasoline futures. will we see them soar past this year's high? that is something we will keep an eye on.
another news flow, jackson hole, janet yellen not really talk much about markets. frothy as ofn late, but she talked about deregulation following the financial crisis. janet yellen points out that deregulation should not be completely unwound. ofare seeing a correlation volatility between equity markets and bond volatility. the movegainst estimate by merrill lynch. the correlation has not been this high since august 2011. we could see volatility in both asset classes at the same time. janet yellen did not mention anything on that. we were also looking forward to what mario draghi had to say about the euro. will he be ok with the strength continuing? he did not talk about that, but
mentioned caution ahead. you look at the gm and function, china's industrial profits rising, coming up. the csi 300 at the highest level since december 2015. we push higher the shanghai composite, also breaking that new record on friday. some downside pressure in commodities, not surprising given that we saw iron ore surged to a four-month high, retreating in the session. we are seeing the asx 200 pull back a little bit. the biggestials drag on the asx 200 for the equities market. the biggest lender, commonwealth of australia, facing widening scandal charges. we are seeing brent and crude oil, wti down, but brent gaining. the korean won surging.
a mixed picture when it comes to bond markets, but the news flow right now, what is happening in texas and the u.s., also what we heard from janet yellen and mario draghi from jackson hole. we will discuss that more, but it is the storm hitting taxes and possibly the u.s. economy. let's get the first word news with rosalind chin. rosalind: early estimates of the damage from tropical storm harvey indicates it could top $24 billion. that combines the effect on the labor market, power grid, transportation, and other elements in the heartland of u.s. oil and gas. harvey has killed two people and caused flooding in texas. back to the gulf of mexico and could intensify again. heavy rain continues to lash hong kong, macau, and the pearl delta. of the landfall west
gambling hub with sustained winds of 90 kilometers an hour. it forced hong kong to issue its highest level storm warning for the first time in five years. flights were canceled and the stock market was closed for the day. recent says japan's growth pace is probably not sustainable. jackson hole symposium, governor kuroda said policy thers would continue with unprecedented stimulus program for the foreseeable future and says the 2% inflation target can be achieved taliban urged patience. achieved, but urged patience. >> 4% is nice, but we don't think 4% can be sustained. andnd 2% growth is likely, this amount of growth, the inflation rate would gradually climb up towards 2%, but 2% inflation target must be
maintained and must be achieved. time. take we have to be patient. >> jay y. lee has reportedly appealed against the sentence of five years in prison. say on what grounds the appeal will be made. he was jailed for bribery, investment, and perjury, accused of funneling money to a friend of the former south korean president to curry favors. it is the harshest sentence high level korean figure. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. shery: uber has picked a new ceo in expedia's dara khosrowshahi. i have to get used to saying that. i'll bloomberg tech editor joins us with more details.
this ceo search was plagued by infighting, som what does the end of the search mean for uber? can they move forward now?/ >> there has been tumult on the board at uber. there is a split between travis benchmark, one of his early investors, about how to proceed. travis losing his job, and now searching for this replacement. new xp dnc go, and's in as an unknown. he was competing against meg immelt, so also jeff he is a surprise pick come up but he does have a long track record at expedia, building up a strong online business. he has been a lieutenant to bury deller, who has been innovative in a number of different areas and is seen as a trusted
lieutenant, very successful, especially in gaining ground in that online space as that expanded so much. being brought into a much more high profile gig at this point. he is coming into a messy environment and will need to clean things up, not only with the board, but with investors. what will be the first test for the new ceo here? >> first of all, he needs to bring some calm to the boardroom after the high drama split between the different parties, but also rebuild the executive team. as the tamil hit uber over the past months, they lost many top executives. teameds to replace that quickly to get the people and place and build out all sorts of things from marketing to finance to other areas, and he needs to build trust with the employees who were recruited to work with travis and existing management
♪ let's get a check of the business flash headlines. buy 10 network, beating out a rival bid led by lachlan murdoch. the networks business and assets, providing immediate financial support to keep it running and refinance existing debt. 10 network went into voluntary receivership in june way down by
costs and shrinking advertising revenue. china's state-owned airline slowing expansion to focus on the domestic market. all three added international seats in the first half at less than half the pace of a year earlier. investors will be watching domestic yields when the carriers release earnings. 28% jump for china eastern. angie: investors were hoping sh would copy other companies. shery: we are seeing markets continue to fluctuate between gains and losses after two weeks of gains. to discuss what is happening in the markets, our next guest is
here. you are seeing low interest rates expanding for another two years or so. i was expecting to see two things out of jackson hole. one, will janet yellen talk down the markets? will mario draghi talk down the euro? both did not happen. --jackson hole tends to be shery: not all the time. >> that was four years ago. yellen spoke about the deregulation and place. is precious given that bankers have brought like there is no tomorrow. they are telling the banks,
don't you dare do something like we have done. it is fair interesting. shery: politically it was interesting. >> possibly i would have done the same. i'm not saying they should not have done quantitative expansion . the second part is mario draghi told us what we heard before. cap psy will raise, perhaps i will not. can show you with my fingers what an taking out of jackson hole. , and major central banks if somebody tells me what is the direction of interest rates, i will tell you flat, flat, or flat. willmeans janet yellen increase and mario draghi said perhaps not. shery: you missed a fourth option? this way. i will throw up a chart right
9433. >> really? shery: take a look. this is what we are talking about. the negative yield is climbing. one of our reporters at bloomberg news is saying that easing is not as crazy as it market watchers are wasting time debating tightening when in fact lower rates can just be as likely as the next move. that is the fourth option. which fourth option is way will janet yellen turnaround after raising interest rates four times? and she will say, i did it again tomorrow mistake. more: the speech sounded like a farewell speech to her colleagues. >> it could be. shery: the question will she stay on the fed? if not, who will come in right
now. the most likely candidate is gary cohn. he wants easier, dovish policy going for it, and in that case, dollar weakness. case of saying thank you very much that was a fantastic question and proceeding to answer my own question. is thatmore intriguing is out for a big fiscal loosening. again, he wants a big, fat deficit, which he plans to finance by cutting back on obamacare, which he can't. if he's going to stick to his big,se, then we are for a fat increase in the deficit, meaning an increased in interest rates, and at the same time the fed is increasing interest
rates. janet yellen does not want the game to be spoiled by fed rate increases and lose policy. gary cohn wants to see rates come down, but his boss wants to see them go up. where are we going to go, no change in interest rates. what: the problem is stanley fischer said, which is valuations in the equities markets does not follow through with fundamentals. i have a chart for that. dilemma that janet yellen faces if she stays on, gary cohn, whoever it is, stock prices rise as inflation falls. --people are not spending that is the fundamental story. the economy is 70% based on consumer spending. why is the equities market still moving?
that makes me absolutely mad. i'm matt, matt, matt. they want inflation. they got it. they don't see the prices of shoes, milk, babies underwear or whatever going up. no, they are not going up. who told you that by increasing the stock of money you will make the prices of shoes and milk go up? there is no reason. they had huge inflationary assets, everywhere, japanese, greeks, americans, they are seeing asset prices going up. shoes and milk. they were not get by increasing more money stock. shery: no more interest rate hikes coming from the u.s., or potentially they can't do it anymore? does that include a fed balance sheet normalization? >> i'm hearing the fed will
increase interest rates because they are concerned about flesh in. they are not getting the impression they want. shoes and milk, and that's why they are holding back. inflation andg financial assets. they have heard he got it. i don't need to see it. they have early got it. and you have negative real interest rates, you have inflation in financial assets. when bond yields are zero, prices of the bonds are quite high. that is financial asset inflation. the same with the s&p, one of the highest levels ever, so they got it. shery: tell us really what you think. stay with us and tell us what you think about asian equities, china investment, and all the rest. stay with us. ♪
♪ let's rejoin our discussion. economy ist global flat, the u.s. doing better than eu and japan. would you like? can i go now? angie: what you like about asia, what don't you like? >> i like that the smaller asian stock markets are all in u.s. dollar terms in singapore, taiwan, south korea, philippines , indonesia not really. definitely hong kong. they are all up 10% plus in u.s. dollar terms.
that's great. that's very nice. very diverse economies. crashong is a train waiting to happen, but we leave that aside. my spirit somebody says we can butcher money in the s&p or the nikkei, i will take you basically not. i would rather take the risk on something that is producing nearly double the value that these other guys are producing given that these are the guys who are significantly technically overvalued. angie: is in hong kong part of that equation? >> hong kong has three problems. it has three characteristics. the first means our interest rates are always there interest rates. the hong kong dollar has been ak, meaning what?
it is about to hit 85. the bell rings and interest rates go up. the stock market is doing extremely well because we have had real negative interest rates in the last six years and it looks as if we will continue to have them because the americans are not going to increase. when you count the hung saying index in hong kong, it is the same problems and the rest of the asian and he markets, the rally is very narrow. >> correct. driven by china primarily. shery: and also the tech stocks, a few stocks. if you look at the kospi, also exports. we are seeing a electronics exports surging as opposed to everything else. how problematic can this be? 58you are giving me questions to which i'm trying to get you one answer. shery: two.
>> let's forget about exports. --ort economies are not asian economies are not export driven. they are driven by a lot of things. i am including everybody. when we look at net exports to gdp and asian markets, invariably this is quite small, meaning in china for example, it can be as little as 1%. if the gdp grows 10% -- shery: what about the markets, exports driving stocks. >> they are doing nothing on gdp growth. to upsetant to get about exports. we would leave them aside. he will concentrate narrower lead to find in driven out of china. 100%. the chinese have impacted
monetary policy already. increaseof china has interest rates three times in the last year. they are not concerned about inflation, but are concerned about asset inflation. they took a big baseball bat and don'tat property market i know how many times on the head and it still won't lie down. i we all going to die? -- are we all going to die? of course not, but his or something that could go wrong. the property sector in china could go wrong. i'm not concerned about the leveraging because the banking system is owned by the government and if something goes drastically wrong, it will be a fiscal issue. that's it. shery: at least we are not going to die. thank you for talking with us. right, check of markets in asia. the benchmark index fluctuating
rosalind: this is the latest first word news. uber's next ceo said to be the current expedia boss. 48-year-old iranian-born dara khosrowshahi. sources telling bloomberg that meg whitman was not selected, immelt with a jury after a conflict at board level. uber says it will confirm the name of the new ceo after informing staff. china's factory output and investment slowed, but the economy shows resilience. the industryed maintained a profit surge in
july, rising 16.5%. that may give policymakers room to tackle excessive capacity this fall. we will have the official manufacturing gauge this thursday. the bank of and the nation sees room for further easing ahead with inflation this year and next to remain manageable and possibly lower than expected. officials say the cpi could cheaper oil and price increases rather than weak demand. the central bank lowered its key rate last week by 125% after six cuts last year failed to boost growth. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. sophie: the check of the markets. asian stocks gaining, led higher by chinese shares. for sydney, seoul, korea, and tokyo.
is shrugging off north korean whisks -- risks. the hong kong dollar is on the back foot. the bond space next as treasuries fall. commodities, base metals under pressure with iron ore, but gold at a high. brent and new york crude diverging. we are seeing nymex gas futures job has hurricane harvey impacts. , aacck on the hang seng tech jumping to a fresh eye. -- to a fresh high. chinese banks also jumping. reversing gains after beating estimates come of the best have your profit since 2014. the hsi rising for a fifth straight session. 59% of hung sign listed companies have beat estimates so
far this quarter. trading around 28,000. it has not done that in two years. sixth straight session for the hang seng index. you.: thank some of those stocks gaining ground in china are lenders. we did get first-half earnings and the days ahead. chinese banks,u the for big banks. their stocks have gained ground. outperform their smaller rivals, which was not the case earlier this year. .onsumer stocks leading gains financial seem to be the big winners in the last couple of sessions. ,ou can see the second panel h-shares also rallying. always,lem
nonperforming loans. angie: nonperforming loans is the key to this, whether or not we can see the banks and the underlying lift for the shanghai composite up of 3300 on friday after eight months below that level. is theting to note function for all bloomberg subscribers. bloomberg credit ratings trends function. take a look at this. it has upgraded 17, downgraded 14 chinese companies. line, it is the first up-down ratio since 2009. one. it was at they had to wait until this year , so that isove one looking at the credit worthiness of these banks and the larger
story of npl's. we are also looking at gasoline surging as hurricane harvey shuts more than 10% of america's fuel making capacity. our energy markets editor is tracking this for us. will be economic impact expand beyond the gulf coast region? >> i think that is one of the main questions. just to give you a status update. harvey made landfall friday. it was a category four hurricane, the strongest storm to hit the u.s. since 2004. , it has been downgraded to a tropical storm and the focus is on flooding. some areas have seen 60 centimeters of rainfall and could see another 60 over the next couple of days. two people have been confirmed dead, but that number is expected to rise as emergency crews get to some of the hardest hit areas.
the main focus right now in terms of the storm, people are concerned about drinking water getting contaminated and also electricity. you have about 300,000 people in southeast texas without power. at gasoline looking futures earlier in the program, soaring now because of the impact. what can we expect in terms of energy infrastructure? will there be a significant impact there? >> this storm strikes at the heart of america's energy industry. about 25% of production is off-line come and 10% of refining off-line. we saw that impact this morning with gasoline futures rising almost 7%, trading at the highest in two years, so the lack of refining capacity or the refinery outages are affecting prices, and we saw that mostly
in gasoline futures this morning. so much for you that update on tropical storm harvey and its impact on the u.s.. the world's biggest oil refiner sinopec posting a 40% jump in first-half profits, stronger earnings from its chemicals business. tom mackenzie joins us now from beijing with the details. another beat from a chinese giant. tom: that's right. not that you would know from the share price. 1.5 percentetween and 2% so far in trading. the best first half in terms of profit for sinopec since 2014. billion,e rose to $4.2 above the estimates we had had prior to results. a lot of this is down to the stronger crude price, up 30% from last year. sinopec owns old and expensive
oil fields, so the higher price helped. flipside, it has been a drag on the refining business. refining profit is down around 10%, but those were more than offset by the chemicals side of the business. the chemical units profit is of 26% on stronger pricing, so the chemicals unit and that strong crude price. angie: either way, this rounds out a strong set of first-half earnings for china's oil and gas sector. tom: it does. we have petrochina and cnooc out last week. petrochina paying $1.9 billion in dividends, all of its first-half profit, and cnooc also beating estimates and the forecasts. what we are seeing from the energy giants in china is a clear trend in terms of
production of crude, which is starting to fall off versus the production of natural gas. we saw that from sinopec as well. it's production of natural gas up 8%, but crude production down 5.3%. this is in the context of them pushed by the chinese government for factories to start using natural gas and offset some of the cold use, particularly -- coal use, particularly northern china. ,inopec when it comes to debt financing costs down 70%, so a positive. they say they expect to see continued strong demand for oil in the second half and chemical products. this is a result of what they say will be strong to stable economic growth in the second half. they think they will meet their full-year targets, or at least that is what it is looking like
♪ >> monetary policy is still accommodative. the path of normalization is gradual. we want to stay on that path because we are in a more normal economy. inflation is not a 2%, but we have to move policy before we get to goals otherwise we will be behind. >> he did leave the door open to if thefewer jgb's, but
market let's them get away with it, they will do it. is he is tyingay himself to this dovish math and saying we are here for the long-term. >> if there is an extremely low interest environment, people think such a low interest currentent and the exchange rate will stay forever, so rather than speeding up because the boj will taper someday, then they may speed up reform. what is happening is everybody is laid off and the situation will continue forever. that is the growing concern in japan. were some comments on central bank policies. let's zero in on japan. now saying the recent pace of growth in japan is probably unsustainable. in an exclusive interview with kathleen hays, haruhiko kuroda
said he would continue with accommodative policy for some time because the boj is far from its inflation target. rates are not pricing so far but in the u.s. and europe, inflation rates are close to their target. 2%, but inose to japan, the information is your .5%, far away from our 2% target. so there is some difference between u.s. and europe on one hand and japan on the other here at rates are not rising so fast, that is true, for japan but prices are not rising. here there is some kind of deflationary mindset, strong among business leaders, labor
union leaders, and they tended tend to be cautious and raising prices. what companies are doing his iny are heavily investing labor savings equipment and so thend so forth and changing business model to reduce labor content. by so doing, despite some wage noteases, labor costs have been rising so they are not required to raise prices. >> they are doing well. gdp growth of six quarters in a row. may be something has changed. as inflation matter so much? japanese households like inflation.
good, but i is don't think 4% growth can be sustained. growth we cand 2% and even in the ,ext fiscal year close to 2% maybe it is possible to attain, but 4% growth is somewhat unusual. this 1.5% to 2% growth can be sustained in the coming year. that is one point. the second point, yes, prices are not rising so far, but if we are satisfied with lower than 2% inflation, then maybe the economy will be faced with recession and so on and so
forth. impossible to address the situation with traditional monetary policy or reducing short-term interest rates. is as lowlation rate .05%, there is in the success of the two have some sort of policy -- is a necessity to have some sort of policy room. >> what do you mean by policy room? >> after the crisis, the federal reduce short-term interest rates by about 4%, but japanese short-term interest rates was already zero, so there is no way to address the traditional way of
monetary policy measures. resort to huge quantitative easing, asset purchase program. angie: that was the bank of japan governor haruhiko kuroda speaking with kathleen hays. commonwealth bank of australia trading near its lowest level in from anths, the fallout money laundering scandal widens. the austrian banking regulator is holding an inquiry into governance, culture, and accountability. shery: let's bring in our asian investing editor. securities regulator investigation, a lawsuit from the financial crimes agency, so how serious is this latest development? >> it is quite serious for commonwealth bank. they are now being investigated by the provincial regulator.
there is a securities it'stigation into whether licensing requirements around this. laws and facing a potential class action lawsuit. obviously they have a lot to deal with in terms of answering the legal side, but also what it is doing to the reputation. the chairwoman released a statement saying the bank welcomes the chance to improve. what if they find real inadequacies here? the regulator will be looking into governance, culture, and accountability. himterms of reference of have not been released yet, but they will be looking into things reporting lines,
whether the culture of the bank is transparent and open. questions were raised about whether the bank responded to warnings that its systems were being used by drug rings and potentially by terrorists to money. incidence where bank staff raise questions about the money, so the regulator will look into those. we already no that the ceo is going to step down by mid next year. whether this will draw in other executives and board members, starting to make recommendations about the way the bank runs itself, that is what we are looking for. shery: thank you so much. still ahead this hour -- angie: cbs agrees to buy the
♪ welcome back. check of the indian markets. coming back from a holiday gainingthe sensex ground after being back from that holiday. not arounds up, but that 10,000 level. the rupee is strengthening, coming back from that holiday, but the top performer on the sensex is infosys. it's cofounder has returned as nonexecutive chairman effective immediately. moree seeing shares rise than 4%, the highest level since
august 17. we are seeing the stock, it's performance has lagged. we saw the relative strength index falling, now back within the normal range. we are hearing that the board unanimously appointed the ceo. the stock gaining ground. angie: investors liking that, bringing back a familiar face. we are watching cbs and 10 network as well. cbs has agreed to buy this embattled austrian raul castro, beating out a bid led by key shareholder locklin murdoch. our bloomberg asian companies reporter joins us now. we heard lachlan murdoch and
bruce gordon were buying 10, so what happened since then? sayt is probably fair to they were seen as the front runners to buy 10. locklin murdoch and bruce gordon were guarantors to 10's debt and put together this plan to jointly by 10. that plan that was approved by regulators need a key legislation to get through australia's parliament because they have interest in other media platforms as well. that legislation is stalled in parliament. ,ith 10 burning cash every week receivers and needed a buyer. cbs is the largest creditor and already provides content to 10, so a pretty good deal for them in the end. shery: that is for sure, but will there be opposition to the plan? 10 network has been sustained in did from trading since it's
voluntary administration, and the question is will there be opposition here? right.'s it has been suspended since june and its shares sunk. the whole network was only worth 59 million austrian dollars in june. will there be opposition? there will be a creditors meeting as early as september to vote on this deal. cbs gettingo see blocked because they are the biggest creditor. commonwealth bank of australia want their money back and will get their money back, so the only people who could oppose bids,eal are the rival but they don't have enough votes this, soors to block unless they come up with another way to oppose this deal and bring it down, it is hard to see this being opposed. this a bigger deal for cbs or australia? >> there is probably something
in it for both sides. what it brings to cbs, a massive billion, 10were $26 now, butis just a min it does get an offshore platform for its video-on-demand service, and that's being rolled out to canada and australia, so it is a testing ground for that service. it knows 10 and is a provider of cbs content. those are all in cbs's favor. allowsk at australia, it the channel to survive another day and you can look forward to more australian tv content. you will look forward to a lot , and probably more
sports packages as well come provided not just on the terrestrial channel, but also video-on-demand service. austrians have a lot to choose from when it comes to those platforms, netflix included. shery: thank you so much for that. we will see you on tv. bloomberg markets: middle east coming up. yousef gamal el-din standing by. what you have today? we will continue to assess the fallout of tropical storm harvey, not just oil and i energy infrastructure but future economic growth. of thecutive director united overseas bank will run has through his thoughts when it comes to global monetary policies from the boj to the fed after comments on the weekend. we will also weigh in on some of
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