tv Bloomberg Daybreak Australia Bloomberg August 2, 2018 6:00pm-7:01pm EDT
>> and china says tariffs hurt everyone. it islo from sydney where just past 8:00 a.m. this is daybreak australia. >> just past 6:00 p.m. here in new york. we will bext hour, looking at how the action on wall street will play into your asia-pacific day. it was a happy friday depending on which actor you are in in u.s. equity stakes, particularly technology. as we mentioned at the top, apple hits the one dollar trillion marker, beating amazon and google out to the date -- .ate -- gate it has been a long slog. weight into the continuing saga between washington and beijing. you really saw that in
the slump in emerging markets, currencies as well as equities. just want to bring you one line coming through at the moment. it's household appliances in japan. according to a report in the nikkei, they relocated production of broad. that came up in southeast asia as well. they will stop making refrigerators in a socket into osaka in019 as -- in fiscal 2019 is part of a realignment. that feeding into reporting on the nikkei at the moment. haidi: let's get a quick reminder of how u.s. docs ended today. -- stocks ended today. the nasdaq up high 1.25%. that is thanks to apple.
there was a list effect with effect with faang as well. flip up the boards. i want to take you for a look on what happening with the bond market. you can see the 10 year flirting with the 3% range. some folks are saying we could see 3.15% or higher. been inhigh as it has about two months after the doe went ahead with its actions. interestingly, the 10-year and the 30 year -- we don't look at that so much, but if that gets to 1%, bloomberg news is reporting we could see a lot of money come out of the bond markets elsewhere around the world. $2.4 trillion.t
a lot of investors might not be able to say no to that temptation. if that happens, we will have to see a lot of roiling in the markets globally. haidi: we are going to take a look at reaction in a moment. take a look at this set up for friday in australia, asia, and new zealand. just getting underway. the kiwi dollar trading at 67.40 . the aussie dollar falling. we did have a broadly high u.s. dollar against every g10 currency except the yen. we are continuing to watch the chinese yuan, given that we have nte whening of the a
it comes to rhetoric between washington and beijing. beijing saying they would not respond to blackmailing efforts from washington. the other story, a new all-time .ow we saw a massive move in all turkish assets, including the 10 year bond jumping 89 basis points, just shy of 29%. taking a look at a little bit of upside for oil after a few days of declines. haidi: let's get back into technology. apple has made wall street history following a strong earnings report. the iphone maker has been the market.s. company with a cap over one dollar trillion. the significance of apple -- one 1 trillion.
representative of how ubiquitous the company has become and how much money they make. is it affecting them internally? not so much, but it is an historical marker and it is important to talk about. >> looking ahead, where do they go from here? >> they are working on incorporating more services into their devices, whether that is new mac computers, iphones, i watches. they are going to strengthen the ecosystem and try to get people to upgrade their phones every 2-3 years, sell more services and keep creating revenue streams for the company. termsht future ahead in of additional services even though growth has stalled to about 1%-2% a year.
power technology reporter in san francisco talking about the apple.ne achievement for let's get you to first word news with jenna. >> commerce secretary wilbur ross is signaling more trade pain for china. he told fox news the administration would create a is harder fore it china to continue bad practices than to reform. asia has responded in kind -- beijing has responded in kind, saying this will also hurt american companies. >> the u.s. is trying to put pressure on china, but we don't think such an approach will work. china is ready to talk to anyone who is ready to talk to us, including the u.s., but this kind of dialogue has to take place on the basis of mutual respect and equality.
>> saudi arabia has cut pricing it createsrigs as supply to meet demand. -- it is dollar point one dollar 20 above -- 1.20 the mark. a bipartisan group of senators has introduced legislation to impose new sanctions on russia for allegedly interfering in u.s. elections area the -- elections. report onequires a president vladimir putin's assets and net worth. the fbi director says he is closely watching russia's attempts to meddle in this year's midterms. influence nexis is spanning fbi field offices across the country.
make no mistake, the scope of this foreign influence threat is broad and deep. beat boeing in company to be the first to send astronauts into orbit. a flight is slated for the middle of the year. nasa awarded them a combined $6.8 billion in 2014 to revive america's a really -- ability to fly to the internationals they's spacen -- international station without buying space on a russian rocket. news 24 hours a day powered by more than 2700 overalists and analysts in 120 countries. this is bloomberg. haidi: he acknowledges that brings it -- >> it could change everything. kathleen hays is here with more
on the boe rate hike. of course, mark carney has so judicious and careful in his moves on monetary policy, tolerating a big rise in inflation above target. even though inflation is starting to come down, mark carney still sees rates coming down further than they are now. take a look at one of our gtd charts. -- go tv charts. you can get the picture of what happened in the last 24 hours for the bank of england. you can see the white line along the bottom. flat rates were down. core inflation down to 1.9%. headline still 2.4 percent above target. in fact, after this decision
that he is keeping rate hikes on the agenda even as brexit , the economy is growing, unemployment is low, wages will rise, and that is the reason for this. he told bloomberg television earlier today that the door is open and rate hikes could happen. >> important thing is this is the right decision for the economy given the track that it's on. obviously, there is a wide range of outcomes possible. we all hope that by the end of the year we will all be much better informed on which path to the u.k. andpath the eu are taking. >> with many options on the table, no deal about brexit, he hopes they will not see any more rate hikes by june of next year for the bank of england. did somenk of japan
policy tweaking this week. released athe boj surge in yields. that went to an 18 month high. how muchuestion was downward or upward flexibility they would be able to tolerate. >> this was a very interesting afternoon and the japanese bond market. they commented to the media later in the day to say the boj is ready to test the limit on the two year jgb. there was a week 10 year bond sale happening and it forced the boj to step back in. this gives you a sense of how investors stepped back and the boj stepped in. first of all, the bid to cover , with less demand, the
tail widened out the most in two years. bidding was aggressive. what is interesting is the boj has never stepped in to buy bonds during an auction. it goes to show how critical this has gotten. the boj has said they will respond promptly and appropriately. they short -- sure did that yesterday. counting theahead, cost. fred burstyn discusses the economic impact of the trump administration's tariffs. year: and up next, 10 treasury yields touched 3% again. can they move even higher? our guest tells us what he thinks about the japanese market. this is bloomberg. ♪
you are watching daybreak australia. -- u.s.tech markets markets, tech stocks lead to thanks to apple. su keenan is here with highlights. what we can talk about is how boeing 3m, dupont, all under pressure, but apple saved the day. look at that. all lot of green, especially in the nasdaq 100. oil up one dollar. again, it was a mix. of how a meastory culpa can really help a ceo. also some positive things to say and the perception is he acted like a ceo.
lower again on concerns that the exports are really going to be hurt under trump's regine. -- regime. let's take a look at apple. this happened right before noon. trillion dollar market cap. the first company to do it. we have seen others try. at one was briefly above a trillion and fell back during the financial crisis. three other companies right behind. $800 billion cap. can they get where apple has gone? we will see. ramy: we are talking about media and hamburgers, and insurance, all for different reasons. >> the big story is aig. they reported that their profit
is taking a hit. the ceo was on the conference call. on a largern a hit than expected underwriting loss and some of their investments. shake shack investors were nervous. let's go right to cbs. the network doing fine. questions about the ceo are the issue. under an internal probe after allegations from six women having some kind of harassment issues. will he go?, that is the question. second-quarter earnings grow -- grew. with shake shack, expansion is of concern at a time when growth is starting to slow. stocksthe most shorted on the street. a lot of bears waiting for it to drop. haidi: su keenan with a look at some of the movers. let's get more on the market.
joins us strategist from boston. great to have you. today's markets have been pretty putting shaking off or to the side these trade tensions. is the worry that things are escalating and there don't even seem to be talks about talks on the table at the moment? >> it does worry me a little bit. there is an awful lot of complacency out there and a feeling that it some point donald trump is going to back off. with the midterm elections coming up, i think everybody agrees he is not going to go fully into a trade war but back off before the midterm elections. the fact that we are starting to get close to that in august, if he is escalating these tensions, people are going to go uh oh and it could cause some problems. that in thes us
first term of a president they make sacrifices before the first midterms so they can get what they want the next time around. it was interesting hearing the comments from wilbur ross overnight saying it's more painful for china to stick to its guns than to reform the position the u.s. is trying to put the man. as an investor, how do you what isow do you trade popular, large caps versus small caps? is that something that can or will we see pressure in other parts of the market as well? >> tensions continue to rise. it is not priced in that they will continue much past labor day in the u.s. however, one of the ways you can happeningook at what
in utility stocks. they have been rallying quite nicely. same thing with consumer staples. things did not do well once at all. they got oversold. they did not do well in the first 45 months. rally.arkets continue to the same thing for the health care stocks. here is a group that is traditionally defensive. drug pricing has become less of the defensive play, but it has had a real nice rally lately. and health care etf's have had a nice series of lows and highs. if you want to pull money out of some highfliers and put it into something defensive, it evendn't hurt you too bad if the market rallies. there is a spirited debate
here on whether the trade war's will hurt the u.s. more or china. you can find this in the g tv library. where is your money? >> i believe that is true. the problem is the chinese are willing to take more pain. the president still has to go up for reelection. so does congress. the chinese are set for the next five years. nowpresident of china is basically a lifelong leader. they have more control over their population. even though they will get hurt more, they can with stand the pain a little more. if it comes to a head like that, i think they are saying we will win because they will inflict more pain on china. we talk about wilbur ross.
president of china is playing with house money. we seem to be ratcheting up or in a way that i think the market is in pricing in as well as it should be. ratcheting upalso our bonds and yields, just looking at the u.s. 10 year flirting with 3%. how much further do you think this can go, especially with what happening with boj? >> 3.1% was the high we saw back in may. that's kind of the key level. the one thing is the positioning thatch for future traders rates shouldn't go a lot higher. however, as you mentioned and kathleen mentioned earlier, the yield on that is not only moving it's a sideways trend channel that has been in place for a year and a half. if the boj starts to lose control a little bit, that's not , but people are going to
start worrying about the bank of japan may be losing control. that's going to be a problem, i think, for global growth. the 10 year as -- 30s the 30 year as an year in whether investors will be pulling money out of the global market. --ember, bloomberg market bloomberg users can interact with charts featured on on keyrg tv, catch up analysis and save charts for future reference. this is bloomberg. ♪
at 345 hong kong dollars on thursday, the lowest in 10 months. 511,verage price target is almost 50% above current levels, even after several cuts and forecast last month. china's group is said to be analyzing options. of moread a book value than $7 billion at the end of has the potential to be among asian heirs biggest -- asian air plus biggest. and thengdom holdings media company rotonda have invested almost $270 million into a music streaming company. the proposed then abandoned an ipo in 2015 before raising $116
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.
in sydney. a.m. markets open for the final trading session of the week in just 90 minutes time. things looking up. ramy: in new york, it is 6:30 p.m., and you are watching daybreak australia. let's get to first word news. market cap making history. and almost three percent gain on thursday made it to the first american company to be worth a trillion dollars. four decades after steve jobs
and steve wozniak founded the company, apple beat amazon and google to the landmark. the bank of england raised rates, as expected, but some critics say it has jumped the gun. the benchmark rate is now the highest since 2009. further hikes may be needed to steer inflation. chamber ofr of the commerce as they should've waited until november. is thismportant thing is the right decision for the economy given the track it is on. obviously, there is a wide range of brexit outcomes possible. we hope that by the end of the much thatll all be are informed about the path we are taking. quick sources tell --
bloomberg hisl office is being sanitized to protect him against infection. he has been active on social media during his leave. be closelators could to rewriting the script in hollywood. antitrust officials may terminate a 70-year-old agreement that determines how movies are distributed. the deal stems from a 1948 case that dismantled the old system where studios also owned movie deals. the justice department fears smaller films find it harder to get wide distribution. news 24 hours a day powered by more than 2700 in oversts and analysts 120 countries. this is bloomberg. the chinese markets again
battered on thursday. is there any kind of indication we might see some stabilization? >> i think the key is that sentiment is so fragile in it's takingets that depressed valuations that are not enough to prop up the market at this point. ftse futuresfrom this morning like we might get a little bit of a rally. trade worriesng between the u.s. and china. there is quite a lot of incremental data that people are still concerned about. it does not speak to a sustained rebound. the p/e ratio on the shanghai composite is at a two-year low with the valuation discount.
even that, sentiment is fragile. hoping for a little bit of support after what has been a tough week. ramy: with all the debate around policy settings this week, one thing that has gone under the radar is the country's shrinking labor market. i know you have looked at how playingst have advised this. it seems to be having mixed results so far. >> what this is is a great lesson in identifying some kind of schematic you see evolving in n economy or a market and applying that to a trade strategy or a thesis. mixed had very, very returns. there are labor shortages in japan. that has been a key theme for a while. chart.look at this it shows you the extent of the
disparities of returns you can get. 61% versusings up 10% or 11% on the broader market. marketsoomberg's global editor, thank you. don't forget to check out some of our cash check out our g tv libraries -- don't forget to check out our g tv library for some of the charts you just saw. money lenders are increasing -- money managers are increasing the pressure on banks. ruth, what is feeling this push? it is definitely a push into the lending space. two things are causing this phenomenon. the first is rising bank funding costs and the second is pressure ongulatory
australia's biggest lenders. signal forf like a them to potentially come in and step up lending to corporate. things could get more excessive for the bank to raise money. on the other hand, you have companies like metrics credit partners who point to the royal commission. come in andon to get business. if you are an australian company, this is a great time. what kind of deals are they trying to get? >> it's a good question. important that the banks are still the biggest players in this market. thee managers don't have same capital requirements. they don't have the same regulatory restrictions. they can come in and give you better terms for private equity.
important that they are not trying to take away the banking business. they are not turn to offer you a home loan or a transactional banking product. they are there to talk to corporate's and say here is 100 million dollars. give us our interest payments and pay us back when it is time. craig's thank you so much for that. rossrce secretary wilbur -- thank you so much for that. commerce secretary wilbur ross signaled there is pain ahead for china. both sides keep saying they are willing to talk. neither is backing down. >> no, that's right. ross madeecretary very explicit what has been mostly implied. was quite direct in his words
that the u.s. is ready and willing to go forward with this and that for the u.s., it will be merely a drop in the bucket. china is responding in kind, there is more than just an economic argument here. about theent talked dignity of the nation as well as the dignity of the people of china. ,here is willingness to talk but there is increasingly escalating rhetoric on both sides. one thing to keep in mind is that president trump has shown in the past that he is able to turn on a dime on these things should they make some progress in talks. he could be going from harsh rhetoric to full some praise as we saw with north korea. there is still the element that they could get to some place to
negotiate. it's interesting that donald trump still said xi jinping is a friend of his. the phrase was no pain, no gain. clearly, they might inflict a lot. >> their economy is different than the u.s.. they are warning this will trickle through the supply chain and raise prices for consumers. ,here is not a lot of sentiment at least in the administration, to back away. it is also the case in congress some enmity toward china and its trade practices. roomresident has some domestically to run with this until voters start feeling the pain from the cost. for more on trade, fred
joins us now from washington, d.c. he is a senior fellow and director emeritus at the peterson institute for international economics. thanks so much for joining us. one interesting thing here is that the u.s. is saying there is more pain ahead for china unless it changes its economic system. china isst as if trying to say hey, united states, you change your economic system and we can talk. it's almost laughable in a way. >> it's true there will be paying for china if the trade war heats up further. there is equal pain for the united states. the united states does not gain more than china. they lose about equally because china is retaliating dollar for dollar. pain andgoing to be
cost on both sides. the issue is how to get out of the spiral, how to negotiate .eductions in barriers it is certainly true that china -- important area errors barriers and trade distortion. there is a wide consensus in the united states that something needs to be done about it. aretrade war inter of hikes not the way to get that. on one side, reductions. on another side, retaliation. china has said they will retaliate, but really, every time the story comes up, it's always talk. why are we not seeing action yet? >> i think because there is not yet enough pain. there has been a lot of talk.
the amount of tariff increases so far has been mild. the u.s. has put tariffs on $36 billion of chinese trade in addition to steel, aluminum, and a couple other things. $14 million more coming shortly. but the big one, the additional $200 billion the president has threatened is still down the road. there's a lot to go through before that happens. the pain has not yet been great, but it is surely on the road unless something is done to head it off. a clear precedent with what happened last week between the united states and europe. in with anns came offer the president trump excepted. offered to start -- accepted. they offered to start eliminating tariffs. we have to see how that pans out
and how far it goes, but at least for now it has halted the slide to a trade war and put the momentum back in a positive direction, and that's all a good thing. my hope is that china will join the party. parallela will have a offer and be willing to talk impediments to technology transfer, intellectual property theft, subsidies and enterprises. if those are on the table, i think the administration would accept that and begin to move in a constructive direction like it is now doing with the europeans. fred, if you look at what happened with the eu as a possibility of setting up with other trade partners, is there any argument that china is very different? it's an ideological battle and a
?ifferent relationship >> that is of course true. the u.s. and europe are basically allies despite trump disruptions. the u.s. and china are locked in something of an existential global economic leadership. that has always historically led to conflict. on the other hand, the transactional or immediate implications are simpler. do we have a trade war or negotiations? it will be more difficult with china because it is a clash of balloons.economic way forave to find a those differences to exist in a global economy.
we are headed to an economic cold war, a big breakdown of global interdependence, and political and military weakness. thank you for that. we are going to have to leave it there. we are getting some breaking news. at underperforming loans, a ratio of one point 7%, 1.5% on the year. you will be is reporting second-quarter earnings. is reporting second-quarter earnings. we are getting more details around that story. , the apple of silicon valley's eye. giant is now worth a
crossing theg news bloomberg terminal coming out of zimbabwe. zimbabweans have elected a president. ,e has won 2.4 6 million votes 50.8% of the votes cast, just over half of the finish line. his challenger came in with 44.2%. the latest out of zimbabwe's presidential election. the topet back to story. apple setting quite a milestone. it looked like last week the tech sector was in quite a massacre that you a disastrous showing by facebook. then came apple. afterhone giant surging
reports it has become the first publicly traded company with a market cap to top $1 trillion. holiday, you are on david, so thank you for coming on and spending time with us. let me start with what is a really broad question. [inaudible] it totook 15 years for get here, really. i was just checking, it wasn't until late in 2000 for the the stock broke out of the range of $200. basically, it is relentless product innovation combined with ordinary logistics and -- extraordinary logistics and execution on the part of tim cook. steve jobs got the ball rolling,
but you have to give tim cook credit for being able to have this many products that are this good and do it so consistently, and the results are showing it. is it going to be smooth sailing though? just about every company that is part of the global supply chain is concerned about trade tensions. craig said on think we can be smooth sailing -- >> i don't think we can be certain it will be smooth sailing. i suspect it will continue to build iphones that people want to five. .- to buy the fact that they assemble all their products in china is a cautionary fact we have to keep our eye on. it's not inconceivable apple could get caught up in the midst
of that. able toare they will be navigate it, but we don't know. ramy: we have been talking about how it's the era of and services. how do you see that playing out with so many competitors out there? >> they are still fundamentally company, but other business has been taking off amazingly well. certainly, apple music is neck as thek with spotify world's leading music streaming service. they are doing pretty well at building services. something at the scale of their hardware will take many, many years. ramy: one thing our columnist apple hashat
incredibly shrinking profit margins. to what degree should investors be concerned about this? >> it's true. if you compare apple to other techious, legendary companies, basically, all of companiescontent except for amazon, apple is a hardware maker and they are the ones that got to a trillion dollars first, but they have relatively low-margin's and they still make a heck of a profit. ramy: that they do. before i let you go, i want to ask you a question in the faang cyr. is it fair to lump everyone together? in the terminal here, the faang , almost running percent. we talk about faang, faang,
faang, but they are quite disparate. are.ey netflix is a much different company, partly because it has .xtraordinary evaluation amazon is a super different company than the others. i think increasingly the problems facebook experienced last week underscore this. we are probably going to be asking ourselves more going forward. pulled up these other companies as if they are all one big wave, but they are not. haidi: thanks as always. ramy: the stories you need to know to get your day going on today's edition of daybreak. bloomberg subscribers can get it on the terminal or the app. you can also customize it to only get the news on industries
ramy: welcome back. let's do a quick check of the latest is nest headlines. mitsubishi profit rose 9% in the first quarter. .hat's upholding gains trading climbed to 2.8 billion dollars through june. the bank is keeping its full-year target of $7.5 billion. gm rivals under pressure. a stimulus program in the margins. higher earnings at its flagship company in the first half, giving him a positive start after taking over for his famous father. net earnings up 13% in 16 months.
underlying profit increased when he percent to $1.5 billion u.s. oil anddia's biggest gas producers on net income rise 58 percent, reaching a four-year high. topped $895 million through june. below the average of $975 million expected in the bloomberg survey. that is just about it for daybreak australia this morning but we are staying with you for daybreak asia over the next two hours. there will be lots to talk about. we are talking trade. with we are speaking richard mcgregor in about 45 minutes time. thes telling us that chinese have figured trump out.
♪ haidi: it is 9:00 a.m. in sydney. an hour away from trading in the friday session. welcome to daybreak asia. raceillion, apple wins the to 13 digits. some say it could be worth twice as much. for decades after steve jobs and steve wozniak found this historic landmark. ramy: i am ramy inocencio where it is fast 7:00 -- it is past 7:00 on thursday in new york. check listed equities in new york, the dollar is higher and the yuan is pulling back.