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tv   Bloomberg Daybreak Asia  Bloomberg  March 27, 2018 7:00pm-9:00pm EDT

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♪ yvonne: 7:00 a.m. here in hong kong. we are live from bloomberg's asian headquarters. i am yvonne man, this is "daybreak asia." declines after a tech selloff dragged wall street down. also renewed fears of the trade war. tesla falling the most in two years. doubts about its abilities to churn out the model three. betty: i am betty liu in new york. it is after 7:00 p.m. this tuesday. restricting investment in industries like technology. has led beijing --
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we will discuss the geopolitical implications. ♪ yvonne: more bad news to add on to risk aversion. breaking gdp numbers from south korea. the fourth quarter final numbers missing -- missing estimates. we are at 2.8% to wrap up 2017. we talked about how investment has slowed, a slump in the auto sector weighed on exports. perhaps this is more weakness than we perceived earlier. it is interesting, we're adding on to more bad news. yesterday we talked about how everything is a buy. these price swings could go either way. betty: even talk of tariffs has an impact on stock prices of companies.
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and exports, going forward. fourth-quarter gdp numbers adding on to the concerns not only in south korea, but elsewhere. watchinghe u.s., geopolitical tensions and trade tensions that continue to affect markets. let's pull up the boards on how we ended the day's trade. red, the popular color. the s&p and dow, down almost 2%. the nasdaq down almost 3%. the tech selloff led the downturn. that selling coming up fast and furious in the final hours. we saw bonds rallying yet again. safe haven buying going on among investors. a report the trump white house may crackdown on chinese tech avengers. that caused investors to hit the
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button.t the sell >> technical analysts will say, when you close on the low of the it tends toy close, be bearish the next day. a lot of the major institutional investors and hedge funds coming in on the final hour, and they seem to vote with this button. the dollar erased its earlier gains, bonds rose, pushing yields down on the 10 year. you had a lot of safe haven trades, not just bonds, and gold. also trading lower ahead of wednesday supply data, which is expected to be bearish. if we look at tech losses, it is the size, these drops really influence the market and the peak. -- bes
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tesla falling, on concerns of its model three. into ay had entered partnership with uber, that stock taking a big hit. twitter, the subject of shortselling by citroen. a shortselling term that says twitter is uninvestable at current levels. it believes it is most vulnerable of all the social media to regulatory scrutiny. mark zuckerberg feeling the heat, indicating hill of -- he will be testifying. no date set yet. it is down 16%, year to date. down in a big way since the scandal. that has investors on edge. let's go into the bloomberg, g #btv 611. the story come of tech selloff dragging u.s. stocks lower. we saw the s&p and dow coming off higher from the rebound.
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that quickly evaporated at the final hour. tech was the big story. early in the session, a headline. it managed to keep the group that the only did not close lower in the s&p 500. yvonne: let's talk about ge. it started early in the morning, a lot of chatter among investors warren buffett may have come to the rescue. there is still no confirmation. su: a lot of talk about ge rescued by warren buffett, who came to the rescue in 2008. it is a rough ride for ge investors. for the last 16 months, the stock has had a lot of pressure. inre has been a slow ramp up the turnaround promised by the ceo. there was inquiry into one of its portfolios. it jumped in a big way on
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speculation it has not confirmed efforts to reach out to both ge and warren buffett. berkshire hathaway revealed no comment. the wishful thinking may have something to do with the fact that back in 2008 during the financial crisis, buffett had rescued the company and was quoted earlier this year that he might invest in the company if the assets were "priced correctly. let's go into g #btv 284. it is called "mind the gap." the dowge going south, going higher. the exception, this latest trading session. that happened here was have a lot to do with whether there is speculation wall street has embraced, and has plausibility. yvonne: we will watch it ge wednesday for you guys, too.
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let's take a look at how things are looking in the region. we are extending declines. .7676n new zealand, down 6. .726 asx 200 down 0.3%. treasuries down at -20. the resilience we see in the aussie dollar -- so far we're holding steady at .7682. we are expecting a more than 2.5% drop on the nikkei 225. according to chicago futures, it is holding steady. not big movement with the dollar, despite trade concerns. the dollar yen still holding out 105.39. >> su mentioned facebook's remarkable losses, in the red again, as mark zuckerberg is
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expected to testify on capitol hill, with a time and date still under discussion, he has been the subject of criticism from republicans and democrats and lawmakers in the u.k. for the mishandled data scandal. while zuckerberg is expected to address congress, he has declined meeting in person in london. shinzo abe likely to meet with president trump on april 18 coordinate strategy on north korea. the nikkei says the two leaders will discuss the president's participate in talks with kim jong-un, said to happen at the end of may. kim jong-un will also meet with president moon. there are signs of a wrist -- rift emerging between the two big economies. germany willing to offer -- france is not want to make any such offer.
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with a little more than four weeks before the moratorium on steel and aluminum runs out, the e.u. is trying to identify a common approach to president trump. rio tinto agreeing to sell more than $4 billion of australian mines. on tuesday, rio agreed to sell its last coal mine for $2.25 adaron to emr capital and energy. oit will sell assets to glencore for $1.7 billion. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i am alisa parenti and this is bloomberg. yvonne: thank you. the trump administration contemplating using existing law or related to national emergencies to restrict chinese investment in sensitive technologies. planatest step in trump's to punish china for what the
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u.s. sees as violations of intellectual property rights. our correspondent is joining us. good to see you. a day ago we heard from peter navarro, the u.s. and china are at the negotiating table. and now this move from wilbur ross. what is going on? greg: that is right. we were hearing they were getting closer to potentially avoiding tariffs imposed last week. as part of those tariffs imposed over the threat of intellectual property, trump took another action, directing the treasury department to look at other sectors they could potentially shield from chinese acquisition. to administration is keen make sure china does not get a hold of sensitive technologies, that chinese companies do not acquire these technological assets, so that they do not get an edge in things like wireless technologies or semiconductors.
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the treasury department is looking at these it to potentially shield them. s alreadyasn't cfiu doing that? why is the administration looking at ways beyond that? cfiu is inre right, place, but it is more of as case-by-case system. they want a broader approach to shielding american industries. they are looking at a obscure 1977 law, for an extraordinary threat, they can declare a state of emergency. is a state of emergency is declared, trump could block transactions or seize assets. it would be a much broader, rather than case-by-case where a chinese company wants to acquire an american one. betty: this is yet another bold move on the part of the administration. to we expect action from
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congress -- to lawmakers want to do anything? greg: that remains to be seen. congress has shown interest in taking on china over trade. broad tariffs announcement, they said they support narrow action against china, who they also see as abusing trade with the u.s. lawmakers have a voiced support for taking on china. there are two bills to beef up cfius in the house and senate. the senate's number two republican is the lead sponsor, which would give cfius more dth.ths -- brea but looking at that and -- looking at that national emergency law is one on the table. betty: thank you so much, on the latest moves out against china. coming up on "daybreak asia," we discussed trade in geopolitics,
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kim jong-un visiting aging. yvonne: region atlantic gives us a take on the tech rout on wall street. this is bloomberg. ♪
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♪ ."ity: this is "daybreak asia am betty liu in new york. yvonne: i am yvonne man in hong kong. selloff,s of a hawkish trade tensions today, a stunning rally in the u.s. treasury. and a slowdown ahead. let's get the kathleen hays with a look at more. it is interesting, the moves that we saw, that 2.8% on the 10 year, we broke below that. agoleen: a few weeks
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everyone was poised, braced, further 3%. what a turn of events. you would think the fed would hike at least two more times. this is not good for bonds. we have seen this stunning rally in the last 24 hours. let's take a look at g #btv 523. you will see the path of the 10 year note yield. this line is the 50 day moving average. this drop in trading today in new york is a big move. revenue up to 2.95%. you can see it break below the 50 day moving average. that is a impressive signal that may be the 10 year note instead of feeding the bears is on the side of the bulls. bill gross tweeted out, recommended shortening short-term german bunds and said the u.s. economy is slowing, may be only one more rate hike. there is a bullish view from
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bill gross, that maybe it does not have enough steam. trade tensions renewing again. a safety haven helps u.s. treasuries, but it also feels the sense of an economic slowdown instead of pickup. that is why people are looking at the flattening in the yield curve. let's look at g #btv 5126. this is a history of yield curves. the red marks are concessions. when it goes up, times are good. when it slows down and gets slow -- slows down, people get nervous. if it did invert, a much stronger signal of a coming recession. when it comes to recession costs, what we are seeing is, yes, by 2020, the tax cuts will be fading. cuts, offer the tax
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recession. you look at this yield curve and have to wonder what is going on. betty: you really do. thank you, kathleen hays. wall street closing lower on the back of that selloff in tech shares. investors worried about president trump cracking down on chinese investment in sensitive u.s. technologies. bonds surging on a demand for safe havens. let's discuss this with andy capron. good to see you again. let's jump off of what kathleen was saying. do you think what is happening with the flattening of the yield curve indicates troubles ahead and we may see a recession? andy: is certainly shows they are worried in the economy. what we see is an imbalance. low unemployment rates, but no material wage growth. when will we see more people coming into the labor force?
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people need to have something to look forward to. i think the economy is going to power through this. but there is finally a chink in the armor for the goldilocks economy. we have a boisterous president, likes to open his mouth, it is starting to create a few problems. pending trade war, maybe we are in a trade war of this time. the tech selloff spooked the market today. what did you make of it? it centers on facebook. i realize nvidia had its own deal with self driving cars. facebook has two problems. one is valuation. it has a high valuation and cannot afford bad news, because long-term investors have begun to sell. it is material and things are not looking as rosy. facebook's other problem is a
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business model. they are in the advertising business. users are not willing to pay a fair price for what you offer them. they are willing to sell you their eyeballs instead. problem with modern media like facebook, google, it is based on trust, and facebook has broken that implicit agreement with its users. i do not think many users will leave facebook as a result, but if you look at the users considering which social media should i be on, a gives them one extra reason to not be on facebook. my secrets are not really secret anymore. yvonne: what do you make of the market psychology+ one day we are up, -- the market psychology? one day we are up, one day we are down. the fundamentals have changed? andy: what is missing is the fundamentals. what has been the case for this entire recovery, since 2009,
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every move up in the stock market has been driven by solid earnings announcements. we have had a gap in that. we have not had material earnings for a couple weeks. we are a couple weeks away from next quarter's earnings season. next quarter will be critical for continuing to keep this stockmarket aloft. i believe it will be good. i believe it will have a few surprises. one, on the back of tax cuts. many businesses cop -- paying that statutory rate will come out in the wash and make it less expensive. the other thing that will happen, we will see more confidence from corporate ceo's. the economy is still strong. we have had weaker data points recently, but most of what has happened recently is not data, but just shaken confidence. we have not had a steady drumbeat of positive news.
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can't say these trade negotiations are done anytime soon. this may take days or weeks. the fundamentals, i have to get back to that. financial conditions are tightening, so how do you rebalance the second quarter? are you a buyer in this market? andy: i am a buyer in this irket, and the biggest thing am a buyer of our infrastructure companies that transport oil and gas. they have been hit by several years of really bad news. more recently hit by a court ruling that would limit the amount of corporate income taxes they could claim back from their contractors. it has been an asset class in transition. the biggest problem is that it is weird. they are structured as limited partnerships, a corporate structure in the u.s. that issues unique tax reform.
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does not make sense to a lot of investors, institutions, and they are abandoning that structure. into a more traditional corporation as we know it. it is creating an opportunity, because now they can say, look at this. i have stable, safe assets yielding 8%. there is nowhere else in the world i can find that. betty: i want you to hear this sound bite about the impact on the market. the u.s. and european economies are doing well. the only thing that will change a lot of that is geopolitical issues. you would not have thought a month ago we would have a trade war. that is why the market had the issues. youink what you will find, happen in ministration constantly doing different things in the market is
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constantly being surprised, and that is not good. betty: do you agree geopolitical tensions are the only thing that could derail this? andy: the market hates surprises and trump has a whole bag of them. i do agree geopolitical tensions could help to destabilize the market, but i do not think we will have a trade war. tohink trump is using this getting what he wants in little bilateral trade deals. we saw that with a steel and aluminum. by the time details were announced, it turned out most of our trading partners were not affected. i think china will be interesting. even if trump wants to make this a trade war, he will be pushing on a string. china and the u.s. are the two biggest economies. america's are the biggest consumers, china, the world's biggest savers. remain, we will have a trade deficit with china. it will cause cultural changes
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in both, and will take a generation or more. roundup ofcan get a that story and many more in this addition of daybreak. bloomberg subscribers go to dayb on your terminal. it is also available on mobile. this is bloomberg. ♪
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♪ a quick check of the latest is this flash headlines. tesla fell the most in almost two years on growing doubts it can meet its production target for the model three. they were supposed to be making 975 models a week, well short of the 2500. u.s. investigators are investigating into a crash of a tesla. jumping 22 points in march, the biggest gain since september.
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rates have been surging in the repo market, which bondholders use. it has erased the advantage of borrowing in the u.s. dollar, this means banks now need to borrow domestically, adding to outward pressure. this is bloomberg. ♪ retail.
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♪ yvonne: 7:30 a.m. wednesday in hong kong. we are looking ahead to trade tensions, seem to be escalating once again, and tech. betty: 7:30 p.m. tuesday evening in new york, where markets closed lower, led by the tech selloff, as you heard our other guest mention. where facebook goes, tech goes, these days. i am betty liu in new york. yvonne: i am yvonne man in hong kong. of china's top banks posted better-than-expected profit growth for 2017 as the
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strengthening economy curbs bad loans and the governments tech loans boost margins. in another bank reported a 5% gain. all three lenders beat analyst estimates. qantas wants to have a direct service to chicago. they are taking delivery of four more airliners and want to raise their game in the u.s. they have announced a melbourne-san francisco route, and are evaluating a brisbane -chicago flight. they are confident service could begin at the end of the year. the trump administration considering a crackdown on u.s. investment in technology. they are revoking a law for national emergencies. the treasury is identifying
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sectors in which chinese companies would be barred, such as chips and 5g. any restrictions would be another attempt to punish beijing for a perceived theft. a compensation package worth more than $43 million, it includes $12 million in cash, to replace rewards he forfeited. and the stock options valued at $60 million. -- 70-year-old duperreault took over. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. we are counting down to the market open in tokyo and seoul. let's get the latest with sophie kamaruddin. yesterday's rebound was a little too good to be true. what are you watching today? concernst looks like
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eased over trade may have been premature. the u.s. clampdown on potential chinese investment. we do have latest numbers regarding kim jong-un's visit to china, reportedly on the 28th. that is something to consider for traders. when it comes to the eco-agenda, next notable items are policy decisions, and india's fiscal deficit. immediate concerns will be on asian tech shares, after the worst selloff in thing stocks in years. pulling up the board to check on how the session is playing out. aussie shares already dragged lower by the sector. the nikkei and kospi could see losses at the open. samsung in the spotlight. they came under pressure tuesday as investors look at what it means.
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betty: thank you so much, sophie kamaruddin on the markets. we have breaking news on this apparent kim jong-un visit. it seems to have been confirmed. china says kim jong-un had visited china march 25 to 28, and met with president xi. arriving andng-un departing on that train after meeting with china's president, xi jinping. we have been talking with stephen engle over the past few days, we probably would not get confirmation until after this visit. it looks like that is the case. yvonne: it goes to show the improvement in their relations between china and north korea. is getting pyongyang serious about improving relations with the rest of the world, especially ahead of that
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summit with president trump in may. betty: making a tour with his counterparts. rio tinto officially out of the a billion dollar deal to sell its remaining mines in the past week. paul allen with more on the story of rio tinto. they reached the end of a long road here. that is right, it has been about five years in the making. it came to an end this week with an agreement to sell the kestrel project in queensland to a private equity firm, emr capital. project.lion for that it follows a deal where hail creek and valencia were sold to glencore. glencore had an appetite for some of rio tinto's coal appetites. they also got hunter valley assets.
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yvonne: why is rio tinto getting out of coal? is this about climate change or are they bowing out because they cannot compete? i am sure they would like to say it is about climate change. we have sovereign wealth funds like from norway no longer getting involved in coal. i think the church of england has a cap of 10% on: coaltments. -- 10% on investments. there is a desire from rio tinto to focus on some of the more productive assets. there will be focus on iron ore and copper, aluminum. that ishe world, yeah, not a bad spin, is it? [laughter] yvonne: that is a good spin, for sure. we have been talking about
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volatility rippling through commodities after trump followthrough on trade tariffs against china. expecting another jump in u.s. thee production to weigh on price of oil. ramy inocencio has the charts we need to know. >> there is a lot of volatility out there. analysts think there could be a lot of weakness. take it the -- take a look at the bloomberg commodities index. down 3.7%. almost to the date, it hit the high it did in 2015. if you push that back a couple 3.9% this would be down by since its high for 2018. let's flip up the board. i want to show you what is happening with one of the commodities. this is oil, g #btv 7148. the blue is what i what you to focus on first. this is u.s. crude stockpiles.
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we are expecting this to rise when the eia comes out with a data in the u.s. would rise bys one more bar, four out of five weeks in a row. we are trying to see what opec is doing with its curbs. opec has been falling with curbs still in effect. brent,ce of oil, wti and has been wavering because of what happened with the u.s. crude stockpiles. if there is any indication what is happening, the american petroleum institute came out with its own number today, 5.3 million barrels. the eia estimate -- there is a huge difference. let's flip up the board. as we head into that eia data, nymex crude is on the $66 handle. brent crude trading higher at the $70 handle or so.
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this volatility will be clearing up hopefully in the next 24 hours. that is one commodity of three i want to talk about. let's look at what is happening in the iron ore space, g #btv 415. the question here is whether the price will be going further from where it is now. $63.10 pert is that metric ton. thought, thethe middle price may drop between $55 and $60 by these years and. barclays is saying it could fall to $50. the blue line represents chinese iron ore ports of inventory -- up, up. this is a record in the inventory. looking at consumption in yellow, that is on the decline. let's flip this one more time, looking to copper.
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copper is a good economic barometer for global health. g #btv 117. here in blue is what you want to take a look at. this is the copper price. this is seeing its first quarter on quarter decline, ever since the second quarter of 2016, before donald trump's win in the white house. markets, economies rise when trump it did win the white house. it is not just benefiting from his rise, but losing from the fall we are seeing in terms of trade tariffs. we are looking at this possible more weakness in the future. weaknessy right here, possibility moving in at the year's end for oil, iron or, copper. betty: thank you so much, ramy inocencio. traincretive north korean
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leading for beijing -- from beijing. the north korean leader had met with china's president xi. we will be talking more about this visit. this is bloomberg. ♪
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♪ ."ity: this is "daybreak asia am betty liu in new york. yvonne: i am yvonne man. kim jong-un did indeed traveled to beijing. stephen engle is following developments out of tokyo. infinally get some clarity this mysterious trip. what do we know happened? stephen: [laughter] know, according to the news industries, kim jong-un did go to china, apparently from
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march 25 to 28. indid meet with president xi beijing. presidenth the vice as well as a senior diplomat, among others. there are interesting headlines passing across the bloomberg made an, saying kim informal visit to china between march 25 and 28. it was not a state visit. korean tiesa-north will not change, and they need to have regular talks, willing to hold dialogue with the u.s. north korea telling china they are willing to have dialogue with the united states. also we are learning kim jong-un's wife traveled with him on train to that visit. xi says he is willing to keep regular contact with kim.
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china sticking to denuclearization. china pressing hard on that issue, that denuclearization is the ultimate goal. what is the meaning of this visit? ahead of the donald trump planned summit by the end of may, china does not want to be left out of this process. is seeking advice from beijing on just how to talk with the united states and donald trump. betty: what do we know in terms of this timing? when is a summit between trump and kim going to happen? what we need to watch out for? stephen: we don't know the exact date. trump has said he would like to meet kim. he has accepted the invitation to meet him. sometime before the end of may. while xi jinping and kim jong-un
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had their three day powwow, a day of april 28, when shinzo abe, the japanese, and donald trump, will meet. also, moon jae-in, the south korean president, is due to meet at the demilitarized zone separating the two korea's sometime in early april. there are key dates, early april, moon and kim. april 18, ab and trumpe. and trump.may -- abe and and of may, kim jong-un and trump. reva goujon, we are going to talk about russia in a moment. i wanted to come off of what stephen engle was talking about,
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this meeting between kim jong-un and president xi. how do you think it will set the tone for the meeting between trump and kim? been anxiousas about getting left out of that dialogue. is that yourst fear could see a grand bargain between the u.s. and north korea that would drive toward korean reunification under an american would beumbrella, that a long-term strategic containment policy against china. china needs to edge into those talks. it successfully did so. north korea is careful. it has a history of playing the countries off of each other. it cap china at arms length. buts not seeking advice, trying to make sure it can play the two off of each other but still not let the chinese in. china has had contingency plans of its own. it has regime changes of its
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own. they need to maintain that obfuscation as a first line of defense. betty: who needed this meeting more? them for said that this was an informal meeting. who needed this more, north korea or china? anxious,hink they were but north korea was playing this carefully. is there a slim chance for a grand bargain? sure. but we see the military threat from the u.s. gaining credibility, you see that with the insertion of war hawks like pompeo. north korea needs to drag of this dialogue as long as it can and still try to narrow the u.s.' military options, if it can end up crossing the nuclear finish line. betty: as much as the white house was surprised by this
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meeting, would you read into the fact it seemed the u.s. was left out of this, put in the dark, ahead of this meeting? is there anything to read into this, especially in anticipation of the meeting between the two coup leaders? reva: i do not think it should be surprising. it is not like pyongyang to clue in the u.s. or south korea. they are playing a careful game. there is a lot at stake between the u.s. and north korea directly. the u.s. is trying to read these moves, but i think it still wants to see if they can achieve denuclearization. that is something that can take course over several years and there is a lot of room for north korea to manipulate within that timeline. it is paying attention to the threat of military action increasing on part of the united states. yvonne: you mentioned the denuclearization, how serious do
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you think pyongyang is when it comes to improving relations with china and the rest of the world? they talked about how they are willing to denuclearize, but how far they willing to go? made big,h korea has showing moves in past negotiations. it blew up its own cooling reactor to show good faith in talks. we could see big concessions like that now. i think the most important fundamental change is that the u.s. willingness to engage in dialogue with north korea. whether the u.s. has to resign itself to a containment policy, if the talks fail, or a legitimate do nuclear station -- denuclearization cap, it is essential. we are in a new paradigm of nuclear proliferation among what had been nuclear robes. --
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rogues. china is a signatory to the armistice that ended the korean war. move fromre to replacing the armistice with a peace accord, beijing would have to be party to that. they are eager to be party to that. if there is an opening with north korea, china is the best for that economic rehabilitation. china possiblys has used this to gain leverage on d.c. since we have these trade tensions. we are seeing a more coordinator response when it comes to russia. allies, wep has told will exclude you from steel and aluminum tariffs if you help us target china on ip. does that strategy worked? reva: i see those two as pretty distinct. what we see on russia is this long-standing tension between
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russia, getting along -- lot of play over the poisoning, fake news, the e.u. starting to take a stance on that in solidarity, and the u.s. is going along with that. when it comes to china and trade frictions, this is something that plays into the u.s.' econom ic nationalist strategy. they are keeping that distinct from the issues of north korea and others. nothing should be surprising so far from this administration. they were telegraphing these big tariffs moves. china overs to whack the head with big, show we moves, section 232 and trade tariffs. and they would bring china to the table on the u.s.' terms. that is where we are currently. betty: speaking of russia, we saw nato saying the alliance,
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they will install seven staff after the nerve attack. they said russia is underestimating the unity of the alliance. i wanted to have you listen to what he said. >> the way we have responded, the unity we have shown, both when implementing the war,cement since the cold [indiscernible] with our sources and the fact of years of reducing investments, we are now increasing defense investments. i do not think russia expected that. betty: pressure has denied any link to this attack, but they have also said, we will respond in a very tough manner. are they going to, is this going to escalate? reva: within the diplomatic
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tit-for-tat expulsions and sanctions, that is where you can see escalation. but it is important to put the statements into context. we have seen a lot of pressure on the e.u., we have seen a lot of divisions emerge. we have seen nato in then the crisis, commitment, over divisions, and what the nato mission is. this is an issue you can see a lot of countries rally behind for relatively rope -- low-cost. e.u. countries other than the u.k. that have expelled is four. it was in some ways a token gesture, but to show we will stand in solidarity with the u.k.. it is important for symbolic reasons. a number of countries will be careful with their economic relationship with russia as well as their security relationship. i do not expect that the change much. betty: thank you for that
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perspective, reva goujon for stratfor, a global intelligence firm. do not forget our interactive tv us live, tv watch dive into securities or bloomberg functions we talk about. this is bloomberg. ♪
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♪ ."tty: this is "daybreak asia i am betty liu in new york. yvonne: i am yvonne man in hong kong. losses in japan futures. day,uld be thing and ugly a 2% drop on the nikkei 225, possibly. betty: we were red across the board, tech shares leading the way.
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more bad news on the trade front. the u.s. slapping on more restrictions on chinese investments and chinese companies. that continues to be an overhang for the markets. this is bloomberg. ♪
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>> 8:00 a.m. in hong kong. i am yvonne man. stories, reviewing -- renewing fears of a trade war correct tesla -- trade war. tesla, the big loser. growing doubts about its ability to churn out the model three. onty: just after 8:00 p.m. tuesday evening. to restrict investment in sensitive industries. making headlines
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as we look at art as an alternative investment. yvonne: we are going to talk about these price swings. geopolitics and trade at center. the confirmation kim jong-un did go to beijing to meet with president xci. betty: these trade tensions are the predominant overhang in the market. you can't talk about u.s. and north korea without including china. china does not want to be left out in any upcoming negotiations. certainly that trip was to solidify china very much is in the game. not enough to reassure the markets for now.
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the latest with sophie kamaruddin. >> check out what is happening on the nikkei. sliding. seoul, losing 1% get rid aussie shares resuming losses. making itself felt in asia. we have a few things at play. m jung-un'ssingdo visit to china. the yen barely budging. near 105,ollar-yen that is making the external environment positive. that is hard to shake. the market will be focused on doj operations. the will be buying bonds in
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25 year segment. it could be a busy day for asian bond traders. keep an eye on the function which tracks world bond markets. it could be a time for portfolio managers to hold above 2.8%. aussie bond yields, falling beyond the curve. we have seen treasury -- tech shares losing 1.9%. korean investors may be thrown a bone with details of the trade pack to be rolled out soon. sarah sanders would be the first since trump took office, and it may have ruffled feathers. managing to avoid the steel tariffs, although the import
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quota is in place. previously listed tariffs on korean car exports, those will not be imposed but they will impose tariffs to pick up trucks from korea. keep an eye on korean auto stocks. turmoil, also facebook, 10 year treasury yields low the moving editors -- average. takeaways from this rally in bonds? the 10 year below 2.8%. >> in a lot of ways, it is about time. stocks have been showing a lot of nervousness. were stuck like dears in the headlights. free.ey have roque and
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they have started to move. that feels right, considering what is going on. one of the big questions that theto be for everybody is fed offer, as it were, is still there. the fed reducing its balance sheet. there might be limits on how strongly bonds can rally and that is also a concern. one of the issues has been the funding outlook. borrowing costs across the board. betty: interesting to see the moves in the currency markets. the dollar, the best level in two weeks. what is the outlook on the dollar amid these trade worries?
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it becomes difficult to trade the world's reserve currency when you don't know what is going on with global trade. there is confusion, what does donald trump hope to gain? more importantly, what will you gain? by the very aggressive tone he is taking towards china. the dollar you sell against the euro? you can't sell it against the yen. the yen is rallying. what about the aussie? the dollar has been flipping around all over the place. in general, the outlook is pretty poor. that accounts for a world of variations. the one thing we can see is more
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volatility. getting back to the stock side of things. there was a chart i wanted to bring up. which shows us the vix. it is a gauge of volatility in general. it is rising at the pace that has only been seen a couple times before. you see the two little circles. one was in 1998 when the russia default brought about the collapse of long-term capital management. the second, the european debt crisis. although the economic outlook ,till quite so grim as they did everybody has been taken by surprise to the sort of extent that is rare. it difficult to work out with the directions should
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be. dollar.-forth on the >> we have seen oil down after middle east tensions. all this talk about john bolton being a national security adviser. >> energy should be going on with efforts of china and everywhere to be more efficient and greener. plus the shale oil production story, that is structurally bearish. we have seen bullish moves. to reversals.
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scary.damentals can be seems like it was a matter of time it was going to join the club. our strategist joining us from sydney. let's get to first word news. >> chinese state media have confirmed north korean leader jong-un wasand -- in china. they also say he was willing to meet president trump and is willing to boost communication's. train has now left. news, he has been the subject of withering criticism from republicans and democrats.
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for the mishandled data scandal. he is expected to address congress. he has annoyed the house of commons by declining to appear in person. reports from tokyo say shinzo is likely to meet president trump. the nikkei says they will discuss the anticipated talks that are said to be happening. there are signs of a rift umerging between the e economies. germany is willing to offer concessions to the u.s.. france doesn't want the block to make any such offer. left, the eu is
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still trying to identify a common approach to president trump. and in commodities, rio tinto has quit coal with a bang, agreeing to sell $4 billion worth of australian mines. they agreed to sell their last $2.25or two point -- billion. global news, this is bloomberg. the trump administration is contemplating using a related to national emergencies to restrict chinese investment in sensitive technologies. it would be the latest step in the plan to punish china.
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our seniorer to editor joining us from singapore. beyond justing national security risks and the realms, what types of investments could be under the microscope? >> the trump administration is considering using a little used reserved for national to restrict chinese investments. this is in addition to some restrictions. it is part of the trump administration's look at china to restrict chinese investment. as part of what the administration sees as their violation of property rights.
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it would have an interesting affect. chinese investment has been down since trump took office. this would stand to further curtail this type of investment. it would be interesting to see what kind of changes there are going to be. tell us more about this emergency law. in the case of national emergencies. it is being viewed, some analysts see it as an attempt to curtail investment. the question is, what about existing laws? restrict foreign takeovers, sometimes prevent foreign takeovers, is something the trump administration has used with china and other
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takeovers in the past. others have used it as well. an unusual move by the trump administration. proposal by the trump administration. we will see whether it happens. there has been a lot of talk about what might be imposed but we have not seen those direct tariffs imposed yet. aluminum and steel tariffs, but with other countries. betty: there is also the bill to extend the power of the process. tell us more. >> that has been proposed on capitol hill that would basically toughen the restrictions. for a tougher process. treasury secretary himself says he will support this.
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internationalior editor with the latest news on china. art is growing in demand and it is hotter than ever in china. we are going to discuss that later. yvonne: up next, chinese banks have shown better than expected profits. ang joins us with his thoughts.
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this is "daybreak asia." yvonne: three of china's top banks have posted stronger than expected profit growth. boosts lendinggn margins. cbsee the reported a -- i
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posted a 3% rise. all three lenders beating estimates. victor weighing leads coverage. wang leads coverage. what do you make of this come back? visit a turn for the better -- is it a turn for the better? in most of the time, banking is not a bad business. if you take china banks as an example, every year they are doing a bigger size of business in terms of asset growth. growth, 3%, 4%, 5%. if we strip out the cyclical it is growingge,
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at 8-10%. we do believe the number will get better going forward. >> people have talked about how they are going to be easing some of those provisions. we are getting some headlines coming out. to what extent does that give the banks enough breathing room? could it have a big impact? i think it does not really change the operations that much. is a strong vote of confidence. establishment,he they have been cautious. .ne is consistency raising the requirements for capital. the other is pushing banks to raise provisions. time in thefirst past 13 or 14 years a regulator
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allowed banks to regulate the provision. the message is they are more or less confident the worst time is behind you. i want to talk about margins. higher rates helping as well. we are seeing these margins creep up ever so slowly. the one that stands out to me has been icy bc -- icbc. we have seen the highs in 2016 but they have come down substantially. we are at the turning point. the margin will go higher. the reason for the margin to shrink, there are several reasons. the majority of the assets and liabilities are related to the pboc benchmark rate.
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they still cut them in 2014-2015. , have an impact on the margin. is china is atg the end of interest rate deregulation. some banks are feeling the pressure of higher costs. turningw, we are at a point. er's rights are recovering. they are meaningfully reducing the monetary supply. basically, we have strong demand for credit. is tightlye supply controlled. it helps banks have the ability to raise a long yield. betty: it seems like the conditions could be improving for these banks. fromell protected are they
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these external shocks we are seeing in the global market, and in particular, the last several weeks, focusing so much on this trade war? >> thank you for the question. operation,na bank's the main driver are these internal margin things instead of the global trade war. if you look at the banking operation. leveraged andly strong cyclical's nest. china -- cyclical business. if the quality is improving, and the margin is improving, i think the impact is way stronger
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compared to the tiny impact coming from the international trade. secondly, i want to emphasize, banking is a rather local business. there are a lot of international banks. their combined market share in china is single digit. large markets are dominated by the single names. yvonne: we were talking about the pboc, the new governor. regulation change? what is their relationship with him? be going forward? >> we are still in an early stage in terms of the regulatory structure. getly, we got the pboc to stronger.
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at the same time, the banking and insurance regulator combined to become the regulatory commission. let's wait and see the detailed rules. the overall trend has been clear. will turn the monetary supply in a controlled manner. the liability grows. it will be high single digits. it is almost mission impossible for any bank to magically grow their balance sheet size. long run, this could be beneficial. >> it is. if you look at china banks, earnings is never the disappointing part. it is always people's low confidence. people get disappointed. the business is becoming increasingly complicated.
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we think these things are improving and banks will be --yvonne: thank you. tv't forget our interactive function. check it out. this is bloomberg. ♪
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yvonne: ing's approval of the shakeup takes banking to 55% of senior creditors. separately, -- tesla fell the most in almost two years on doubts they
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will be able to meat production goals. shares were also hit by news regulators are conducting another investigation into a crash involving a tesla. this is bloomberg. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
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blue skies in the lion city. i'm yvonne man. betty: you are watching "daybreak asia let's get to the first word news. >> three of the top banks have posted better-than-expected profit growth. ecb -- icbc reported a 3% rise.
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another bank reported with a 5% gain. all three lenders beat estimates. qantas aims to follow its perth londonanother bank reported wit% gain. flight with a direct flight to chicago. the carrier is taking delivery of four more 787 dreamliner's. it has already announced a melbourne san francisco route. as well as links to seattle and dallas. qantas is optimistic the service could be again -- again by the end of this year. ? -- begin by the end of this year. -- we are being told the treasury is being working on a plan to identify sectors where they would be barred. would be another attempt to punish beijing for perceived theft. package worthtion
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more than $43 million was awarded after he took over last year. it includes $12 million in cash to replace funds he forfeited. it includes stock options by you'd at $16 million. he is the seventh ceo of aig. global news more than 24 hours a day. i am ramy inocencio. latest ont's get the the markets. the latest with sophie kamaruddin. a we have amid wa? -- midweek hump developing. the currency following -- falling the most against the aussie dollar. the times reported a solution to isost-brexit -- with ireland evident.
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let's switch the board out to check in on the bond space. i want to point out that. -- debt. in the commodities space, prices under pressure, falling for a third day. let's focus on what is happening in seoul. index lower with tech shares. indicating the weakness in tech shares. plus they have launched new -- new high-end smart phones were launched. steelmakers are the worst performing part of the kospi.
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perhaps as investors digested deal struck with the u.s. avoiding steel tariffs, which also come with an import quota, since sales in the u.s. account for 11% of total shipments. players gaining ground, climbing with some other stocks that have been exposed to issues with china. also rising, benefiting from good relationships. visits of kim jong-un's to china. betty: thank you so much. as you mentioned, china confirming kim jong-un on did indeed traveled to beijing and met president she. stephen engle following the developments. confirmed. trip what do we know exactly?
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getting a lot of statements not only from the state media of china but the north korean state media, confirming they did meet she jinping -- xi and kim jung-un. we assume he is back in north korea. china tends to announce these details, at least when they had visits from the father, after kim has returned. jong-un takeaway is kim toling xi he is committed denuclearization. and ready to held a summit with donald trump. proposals.
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how to repair the relationship between north korea and china. it was not elaborated what they were, other than they agreed to hold regular communications. apparently is satisfied with the consensus he was able to reach with xi. at the great talks hall of the people across the street from tiananmen square. this is being described as an informal visit from kim and kim's wife. banquet inthey had a the great hall of the people and attended and arts performance. i would guess they strategic rized on how to handle the summit with donald trump ending
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it states. china does not want to get left out in any potential deal. to be a fly on the wall in this meeting. when will the summit happen? are there certain key dates that could lead up to that? >> donald trump has said he would like to meet him after by theng the invitation end of may. that is the rough timeline. there are key dates. we know the south korean president is slated to meet kim at the demilitarized zone sometime in early april. we are learning shinzo abe, who does not want to be left out, will be meeting with donald trump to talk about north korean issues.
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there also getting a quote can bef denuclearization resolved is south korea and the u.s. respond to our effort with goodwill, create an atmosphere of peace and stability, while taking progressive and synchronous measures. yvonne: a lot can happen from now until may. we will see how things go. of uncertainty as
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investors worry about a potential trade war. you are looking at more of the consumer stocks in china. these are the domestically driven stocks. listed.them are one of the ones i looked at, a liquor maker, more valuable than mcdonald's. these are not only consumed a lot, they become really hit. -- hip. >> not just the business elite. >>. no. that is one of the key things i wrote about. >> you mentioned made in china. it used to have negative connotations. it seems like millennials are not looking at the foreign brands anymore. suisset of it, credit
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did a survey. orbrands like cars, imports, say sports makers, people like the foreign brands. there were five areas including home appliances where they like homemade local companies. some of it is because they have got overseas and bought assets and moved up the quality chain. that is part of the reason. >> air wash washing machine. consumer appliance units. they have air wash washing machines which remove that smells. -- bad smells. >> speaking about home appliances, they have been heavy overseas. >> right. helped themely
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remove the made in china image. they moved up the quality chain. they have bought different assets. they have the local touches as well. >> thank you so much. winners and losers in this trade war. sources telling us there is a massive fire sale planned. what could be up for grabs. this is bloomberg. ♪
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>> this is daybreak asia. conglomerate cf energy is
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planning to sell its portfolio. tell us about the assets they are selling and what sort of the band there could be. >> good morning. there are a lot of high-profile properties. in manhattan. an office building in shanghai. we are still unsure whether the demand, regarding the factor a lot of properties have been locked in financial agreements, so that may trigger several equity transactions as well. >> how will these sales helped the company's financials? >> the company has been in a
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very tough position since the chairman and founder is being investigated by chinese government from the start and of this month. they are -- starting of this month. i think selling these properties might help them to get enough cash from the market. >> we are going to leave that there. thank you so much. our asian energy reporter. the latest check of the business flash headlines. were coal as much as $8.8 million. much as $8.8 billion. the case has been sent to a federal court in california to determine how much google to
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pay. wei has wally -- hueq announced a challenge to the iphone x. it features an edge to edge display. they have a third -- 11% of the market, trailing samsung and apple. 'slphabets' t's -- self driving unit is teaming up with others. ofy aim to have a fleet 20,000 ride hailers. the intention to buy the jaguar's indicates a total of 1.3 billion dollars. yvonne: asia will remain a
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favorite of investors, even if tensions grow into a trade war. it cannot be called a war just yet. >> i think it is too early to call. reports are emerging the u.s. and chinese governments are engaging in quiet negotiations. clearly, the u.s. has decided it prefers to have bilateral and the arrangements versus multilateral. this is something they have said they want to do and they are pursuing it. >> is there a way to explore options, given it is such an open economy? and the u.s. and china are the biggest trading partners? we areapore's fortunate, in the middle of a growth engine. whether in china, southeast asia, india. of course you have japan, australia, new zealand.
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they are pro-trade and doing well. >> we are seeing rising protectionism. like nafta on the brink of breaking down. is the reason to be concerned global trade may be taking a downturn? has toink every country watch carefully the developments. every country has to watch what the u.s. is doing. as we all know, the discussions around nafta center around the changes the u.s. wants to see. asia is not a participant in nafta. increasingly, trade, coming from within asia. cross-border of transactions. within asia. becoming a bigger and
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bigger component of the growth drivers in asia. there is nothing to stop the eu from establishing stronger trade relationships? i think there will be enough making sure it does not break down. verynk we have to watch carefully what is happening in washington dc. tax reforms, the tax package. many are digesting the implications. at how it may or may not want to change the supply chains around the world. trade policies the u.s. is pursuing will have implications. necessarilyk it is going to be a bad outcome.
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it could be better if there is a level playing field that satisfies the two major trading nations, the u.s. and china. singapores the economic element chairman. onwill speak to a ceo alternative investing in the art market.
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this is "daybreak asia." betty: i am betty liu. yvonne: there is growing demand for our as an alternative investment. a report says china has replaced the u.k. as the second largest source of art sales. guest is joining us. . thank you for joining us here. talk about the good start to the event. ning painting sold for $35 million in less than two bank hours. hours. >> we see that in the art market report.
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last year was a very strong year. china took about a fifth of the global art market sales in value. surpassing the u.k., just after the u.s.. have seen a bit of a slump when it comes to chinese demand. capital controls or political uncertainty. are you seeing things turn the corner? had our opening event yesterday evening. it was massively visited. you mentioned a record sale on the floor. that is an indication of how the market is reacting. we will see a strong year following 2017 being a strong year. up as anes art stack alternative investment question mark people tend to think it is like gold.
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bull case? >> i think the jury is out on whether or not it is an alternative investment. it talks of -- depends who you talk to. there is a lot of passion. a lot of that is a good earmark. is probably a good indication, when the market is strong, there are gains to be made. >> i am interested in the makeup of the buyers. are they different? do you see anything unique versus past years? as i was walking through our lounge, it is clear art basil eventsng has become the
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to attend. amountas a significant of visitors from the u.s. and europe. the event is now on the global calendar. that is a first. >> what he think that is? why do you think you are seeing more foreign buyers? many options here. why do you think they are heading to asia? >> the key markets, over the years have created their own personalities. about 50% of the art comes out of the region they are in and 50% is more global. by definition, as the markets are getting more and more interested in asian art, you collectorsobal art
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want to see what is going on. do you see a point -- go ahead. >> for example, as you might have seen, we announced last partnerare the founding of the taiwan art fair, to be opened in january. a strong commitment to the region. a good mirror of what is going on. flax thank you so much for joining us on investing in arts. marketingobal officer. a quick look at how they are set to open. currently, trading right now.
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right across the board. over 500i losing points. futures setting up for another dismal session as well. >> were talking about how we could see 1% or more losses -- we were talking about how we could see 1% or more losses. singapore looking a little better. we could be seeing downside with the trade escalations. curbing planning on this. stand by for bloomberg markets. ♪ retail.
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under pressure like never before. and it's connected technology that's moving companies forward fast. e-commerce. real time inventory. virtual changing rooms. that's why retailers rely on comcast business to deliver consistent network speed across multiple locations. every corporate office, warehouse and store near or far covered. leaving every competitor, threat and challenge outmaneuvered. comcast business outmaneuver.
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♪ markets asia pacific extending the overnight decline and there is fear of a trade war. china confirms kim jong-un was in beijing. says he supports nuclear innovation -- denuclearization. president trump considering restricting chinese investments as well. that is something we will be exploring. ♪


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