tv Bloomberg Technology Bloomberg September 6, 2018 11:00pm-12:00am EDT
there is strength and curiously, it's in china. marketsook at emerging slumping to the near age. we are in a bear market as contagion spreads the route the developing world. tom: i'm tom mackenzie in beijing. i will china respond to another blow from china? -- from president trump? david: will they use the currency as a weapon? formal that simply be a byproduct if and when we approach that? last 60 minutes of trade and hong kong, we are approaching a lunch break which coincides with the end of the public common period. that's the line in the sand. anything can happen. they may announce something. they may not announced something. we flesh into the details. as far as equities, this is the
picture. down for a seventh straight session. the biggest weekly drop going back to march. we talked about that. in terms of where the money is going, uncertainty there. we're seeing assets bid up. southeast is a bond yields continue to push up. part of that might be these acute stories. inflation in the philippines, currency an issue in indonesia. equity futures pushing down. with the exception of china equity market. we'll talk more about where we go with that. nfci 300 quite cheap. let's change this along. have a look at this one. obviously, chinese currency very much in focus. what we noticed the from overnight into this morning, 9:00 a.m., 30 modest before the cash market opened, up before 24 basis points. what we're looking at here is
one month forward points. in a lot of ways, you can almost intercut this as perhaps china looking to add an anchor to the currency in case things kick off later on. across the short, it's a bit hi gh. is it going to be worth the wait? we'll see. paul allen is with us in sydney with an update on our first word news. paul: the south korean envoys who met with kim jong-un said he wants to remove nuclear weapons during president trump's first term. officials say he told them he would accept measures to curtail the nuclear program and wants to bring the korean war to an end. president responded with an optimistic tweet that the state 's muchent says there to remain done.
departures and 12 arrivals are scheduled for today, thank you joe says international flight -- kyoto says international flights will return tomorrow. campaigning begins today at for the leadership of japan's liberal democratic party, with shinzo abe odds on to win. almost 90% of lawmakers support giving him a third term. only a fraction back his challenger. is on september 30, with abe on course to become the longest serving prime minister. twitter has suspended alex jones and his account. he says the content he posted wednesday violates the company's abuse and harassment policies.
led to the speculation that led into abusive behavior. facebook and youtube also took contact -- content from the right-winger. global news 24 hours a day on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. are just under an hour away from what could be a very dramatic escalation here in this trade war between the chinese and the americans. the white house says there's a possibility president trump will move ahead with tariffs, an additional $200 billion on chinese imports. for more on the story, we are joined onset by jodie snyder. in beijing, tom mackenzie. not, peopleine, or will still be working in washington. that expires in an hours time. should we expect this to kick in?
>> not necessarily in an hours time, but the president will likely be making a statement in the business day in washington. see these rollout in phases. groups,d business particularly those representing retailers, and also tech companies come out and say the , wouldund, a huge round not only hurt consumers, but it would hurt the economy and innovation. tech companies were making the case this were not allow them to innovate the way they have been able to in the past. we will see whether the president listens to those. what he may do is say he might roll these out and maybe give some time for there to be some session with chinese negotiators. so far there have not been any talks and president trump said
it was not the right time to talk. david: almost looks strong, but cushioned the impact ahead of midterms. tom, let me bring you in. in terms of a response from china, what options are we talking about at this point? just with what was said, china said they want to get to the negotiating table. they want to resolve this through talks. we should expect them to calibrate their response to whatever we see from the u.s. we saw that with the first three $4 billion worth of goods and $60 billion, and china matched both of those. in terms of what china has said, it will target $60 billion with of u.s. scripps. we're not sure what level, but they will be targeting niche consumer goods. they are trying to insulate their consumers from too much of an impact in terms of retaliatory measures.
we should expect the chinese side to respond to to the u.s. in terms of the timeframe, in terms of the phasing in, and levels of tariffs, even if they can't match the total in some number of imports from the u.s., blow for blow, dollar for dollar. david: i understand you have been talking to some people. what has been the sort of sense, how is this all going to work? give us an understanding of what the mood is like. tom: the mood is pretty down ae, a result -- downbeat, result of a long drawn out a fair. policymakers are going to step up to support businesses. we seeing pledges to increase infrastructure spending and increase support of smaller enterprises. this expectation they will be set up after this, and that may
provide some relief. but certainly, there is also a view this is going to lead to significant changes among supply chains and business leaders focusing on that, focusing on potential investment support, with a direct that fire par. the u.s. and to europe and southeast asia region. david: we've got to talk about nafta. this time last week, we were expecting a conclusion to that. here are seven days after still talking about it. what is the latest? i: it doesn't look like there is a deal this week. will canada join? there are two sticking points. one is a dealbreaker for canada. arbitration panels in antidumping cases. the lack of that language almost derailed the first nafta deal. they wanted that in any other deal they got, and the u.s. or canada is going to need to point
gone that. they haven't resolved that. there is also issues to work out. the u.s. wants a deal with canada but said it might go without canada. the u.s. congress said that is not an option for them and many business leaders say that's a nonstarter, a bilateral agreement with just the u.s. and mexico rather than canada. there is pressure on both sides to get something done. there's a couple major sticking points. david: we are talking about japan now. what do we know about that? jodi: japan was in the tpp deal, which president trump ended, pulled the u.s. out of it right after he took office. and there's been a lot of talk about what would happen with japan in terms of of trade. japan has talked to europe. they are making other arrangements. but now there may be talk of formal talks with japan going on.
we'll have to see. the trump administration seems to be moving on multiple fronts. sometimes this stuff start and of mechanism. david: there's also domestic politics here. if you follow him on twitter, he's been busy trying to deal with the fallout of the new york times article. jodi: it's been a tough week for president trump. first of bob woodward's book, in which he talked to a lot of officials in the white house and came out with a portrait of him as, essentially, being untruthful and running a white puttingat was really people against him in his own white house. then this anonymous op-ed came out in the white house a day later, saying there are people plotting against the president. this is from the anonymous force, supposed to be an
administration official. this has been a lot of fallout. president trump came out strongly against the new york times article, saying this should be investigated for sabotage. unlikely to happen because you would really need there to be a clear breach of security clearance for that to happen. there was some national security discussion in that these, but probably nothing that would lead it to have a real federal investigation for something that serious. but the president clearly saying this is not based on any facts, and based that it was gutless that it was an anonymous source. heading back pretty hard, but it's been a tough week for the trumpet ministration. david: he's been very busy. you've been very busy. jodi schneider, thank you very much. tom mackenzie in beijing, our china correspondent. coming up, president trump's
david: this is bloomberg markets. i'm david and gless in hong kong. it has been a big victim of the trade tensions with the u.s. and currency,ook at the it give or take about 7% against the u.s. dollar. provoking accusations of manipulation from president trump. beijing has responded and promised not to use the currency as a trade war weapon but
veteran em investor market says there's a possibility and sees a further weakening if the dispute escalates. listen in. >> you are going to see the valuation. if you are in beijing and you one 25% tariff being put your goods going into america, the best defense would be to value by that amount. two are see as much as the dollar. it's not be on possibility. when you look at markets, asian stocks mostly down. bad,week has been really obviously ongoing concerns about trade, fed raising rates. let's bring in our first guest, eli lee. he joins us from singapore. thank you for coming on the program.
you've noted there is by you in asia stocks. there has been value for several months but nobody has taken vantage of that. using now is the right time to do that? eli: absolutely. i think there has been a record divergence in recent history between performance of em ndm, as evidenced in the credit market. the divergence in equity performance between u.s. equities in asia equities is now in a record high in the last 24 months. valuations in asia equities are fairly attractive, as well, both in pe and price-to-book basis, coming close to its averages. at this point in time, we believe the stabilization would be supportive of the chinese economy and support of of chinese assets. it looks like fairly attractive
risk reward is emerging and our view, and it could be time to start dipping toes into the water. david: right, but back to my earlier point, that would have been the case three months ago. if i listened to that advice, i would have lost a lot of money. what makes you think the sentiment improves? we see the flows reversed back into edm? eli: sure. now one catalyst would be the rupee at this point in time. it's coming close to the seventh and we figure it's more likely we will see stabilization at this level instead of further depreciation over the selling. we don't believe the chinese government is incentivized to see much more declines from your. three reasons. markets have traditionally been harboring of capital light.
the memories of what happened in an5 and 2016 are very fresh, opening this can of worms is likely the last thing they want to do at this point in time. second, trade talks between the u.s. and china are still ongoing. the line in the sand is a politically sensitive flesh point. the chinese would not want to believe as a currency. manipulator finally, there's a lot of dry powder in the arsenal that would be supportive. over the last few months, there's been a period of benign neglect on the part of the chinese government, more willing to let the market drives it toward lower levels. we are seeing increasing signs the chinese government is uncomfortable with excess of declines. factor ina cyclical the onshore.
againsten it come up the behavior and the increase reserve requirement in it. all these are fine. be on its lastld legs going forward. david: we brought a chart up at the top of the show. we'll bring it up again. deadline, the the currency is on its way up. some are pointing to stay on banks driving this up. when you look at the domestic economy, china usually response using a package of measures. you have to lend a little bit more. what you're saying this time around, the currency won't be part of it and case the economy goes down further. eli: absolutely. athink when you're looking
the chinese economy today, there has been signs the impact has started to bite into the economy. i think we think it is not too alarming. fiscal support on the monetary basis, lower interest rates or lower reserve requirements. that's this impression there's this export oriented machine. it is, but it's a function of a larger economy. most of the chinese gdp is domestic, above 80%. there is sufficient scope for the chinese government to boost domestic demand to offset the hip to trade to the near to midterm. i think to be clear, with think the agenda of the chinese government is not to celebrate in an, but to bring exclusive -- excess of slowdown in growth. in the longer term, this will
undermine the goodwill that has been done a controlling the credit bubble in the last 12 months or so. it's sensible at this point in time to prioritize against an aggressive slowdown in growth over a longer term management credit bubble situation in china. david: eli, your contrarian views are very interesting. you're calling for dollar trader -- dollar china to fall. you are expecting the fed to raise rates six more times between now and the end of next year. help us understand how those two things can actually coexist. : it is a function of fundamental valuations. i think over in the u.s., we see an inconsistency in the markets, thinking about gdp growth, unemployment rates, and finally inflation are going to trend going forward. i think the u.s. economy is
going above trend. we are looking at 2.8% growth this year, 2.4%. the unemployment rate continues to fall. it will go to a record low in this cycle of 3.5% by next year, but the fed and the market is looking at a fairly benign inflation forecast of 2.1%, 2.2%. in my view, it's inconsistent and it will be a fairly large up, in tempers flaring which will drive the fed to a faster pace of rate hikes that has been currently priced in markets. david: got to leave it there. thanks for coming on the program. have a good weekend. lee, head of investment strategy at the bank of singapore. gtv is a function that takes you to our charts library. do something like this. you can scroll up and scroll down, visit some of the things
david: you're watching bloomberg markets. i'm david in less. hyundai motors. down 1.1% after elliott management, resuming his push for change at the korean carmaker, in a letter to the company, called for the merger for some of the company's key units to bolster shareholder value and improve group structure. our sources say hyundai turned it down the invitation to discuss the proposal, citing possible breaches of local rules. geely is in talks with
about cooperating in hybrid gasoline electric engines technology. it would give toyota an outlet for a campaign to increase the popularity for hybrid vehicles such as the previous on chinese mainland. they took the number three position on the chinese markets, which we know is the world's largest. forchinese carmaker chairman mao's red flag limo, hiring the designer of the recent cars of rolls-royce. they want guiles taylor to revive its president president -- president earlier in munich. built the first -- and the red flag in the middle. that will be ingesting. we're heading into the lunch break, having a look at the damage. we are up in that market so far. hong kong, it's with noting we
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this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. >> it is 11:29 in hong kong. i am paul allen with first word headlines. china and the u.s. are counting down to potential new tariffs and we could see 25% duties on $200 billion worth of imports. the consultation. --ires midnight in beijing consultation period expires midnight in beijing. 4/10 of 1% could be knocked off global growth next year. wall street could take a hit as -- trump putsp new tariffs on china.
equities could plunge 5% if the up to 25%tion poses on imports. ubs also said such a scenario has not been priced in. are threatening to block a nafta deal if they win control. of the house of representatives in the midterms. they say they may reject rewrites in canada and wage inflations for american workers. talks continue between u.s. and canada but president trump has threatened to push ahead with mexico on leave. moreshares are recovering off of colin kaepernick's ad campaign. they raised nearly $3 billion in market cap since the ad launched. publicity hashe cost them.
here's a dire warning of bleaching on the great barrier reef. queens land says it has positive updates. 2300 kilometers long, the first ecosystem to win the world heritage status. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. allen.ul this is bloomberg. >> you're watching "bloomberg markets: asia". i'm david in hong kong. fight between the two biggest world economy's about to bake -- make things here a little more expensive. could the trade war backfire? rachel chan is here with us out of shanghai. she is our consumer reporter.
rachel, you are probably in of one of the best positions to tell us this. chinese shoppers are may be shielded from higher prices. it is a bit counterintuitive. rachel: that's right. if you look at the items hate with more terrorists, tons of american consumer goods are on their and they come from china. the other way around, there is less impact on chinese consumers because chinese consumers don't rely on americans to make the goods for them. some of the stuff on the list is ards, silk, and things -- yachts, silk, and things that the chinese consumers probably will not face. david: just to pivot away from the consumer, there is
manufacturing capacity that might be look to -- looking to shift outside. maybe these companies will look at other places. southeast asia is one subregion that has been brought up. who might be the other winner in that part of the world? is where the pressures really come to bear in china because of lot of these manufacturers are already thinking about how they can shift out to their operations from china. they are also getting pressure from the american retailers that you set them asking can up a factory in vietnam, cambodia, bangladesh, and these are all asian destinations where the cost is lower and the terrorists won't be there. we are already seeing -- tariffs won't be there. we are already seeing this because of the cost pressure in china and what is happening with the trade war. acceleration of this
pressure to move to southeast asia and different parts of asia. there inchel, you are shanghai, not exactly a representative of the entire but give us aers sense of how it is affecting consumer sentiment. rachel: that's exactly right. chinese consumers might not see the price of the things they buy go up straight away, but it has been a big psychological impact just from the coverage of the trade war. that relentless headlines keep saying trump wants to block china's rise and single out china. there's a lot of talk on how this will keep going on. we already have businesses telling us there is that psychological impact to dampening consumer sentiment over here. last week, one company said they
were looking at the weaker second half in china and maybe because of the downturn and the sentiment that things will not be easy going forward. david: when it gets to that point, you have to start to get worried a little. rachel, thank you so much buried our concert -- much. rachel chang there. david, we saw the three acai -- csi 300 go down and reversed earlier gains in the morning sessions. as we await to see whether or not president trump will put further imposition on tariffs on $200 billion worth of goods is interesting to see the chart. this really shows you the divergence between u.s. and chinese tech stocks. the nasdaq 100 is the blue line and the china indexes the white line. you can see chinese tech stocks have been hit hard amongst all of the trade tensions.
tencent in hong kong is down over the course of this week. let's take a look at the markets. ofare seeing a little bit weakness coming through -- i should say a lot of weakness coming through. the australian market is down 9/10 of 1%. the strength you see in the japanese is weighing on the overall nikkei index. it has been mentioned in terms of president trump saying he could be targeted with tariffs. the earthquake is impacting as well. we are seeing the weakness in singapore and taiwan is well. the aussie dollar is under pressure and we have quite a bit of weakness coming through from the em currencies today as well. the hedge fund that caused of the selloff in january is now saying goodbye and blackrock is in on indonesian banks.
opportunities have certainly risen. it is against your risk appetite. thank you so much. let's bring in our second guest to talk exactly about where we are in the emerging markets. the progress asia capital founder is also live with us along with our next guest. thank you for coming on our program. >> think you for having me. -- thank you for having me. the concept of em contagion is in a lot of forms. where do you see the concept applies at this point in time and where do you think it is a bit of a stretch? talk of's a lot of contagion in the emerging markets. and if you take a step back
look at what has happened over the last 10 years in a macro you can see very low interest rates. what has happened is the search that, what hasin happened to people taking on a lot of leverage including investors and institutional investors. that leverage has manifested itself into emerging markets. what happened is, whenever there is any reason for any deals and geopolitical concerns, be it trade war talks, interest rates, this leverage needs to unwind and that is going to play into safety. incident, led by u.s. and china, is a prime
example of how this is affecting all emerging markets. over the last 10 years, emerging market indexes have not crossed the previous highest in 2007. barely crossed in 2017 and came back down. essentially, emerging markets are not that much. this contagion is part of the same, yeah. david: the big question is when the rotate? value is there if you look at price of earnings, what have you. --there anything near turn near-term that bite be the catalyst? is the process of deleveraging close to over? depend on theould
fed interest rate cycle. we have the coming fed meeting on september 27 so our senses essentially, there could be a period of turmoil depending on what is said and done. markets might find stability around that. there is definitely value in emerging markets. scale, you can certainly expect more stability in the markets. david: one market that managed to escape is the indian equity markets. andt too late to get in would you recommend i buy the
index or has it become more new wants now? indian market has done reasonably well and it is still up about 9% for the year. the currency is very weak and down about 11% for the year. they have not performed to well. domestically, there is a lot of very strong fund flows into their asset management industry. on a valuation business, the related torading near money growth. , in the run-upm to the general elections, we still expect the index to be up
by 78% -- seven to 8%. david: what has always wondered dividend yield in india is close to 1%. the five-year sovereign bond is at 8%. why has that money not shifted to fixed income? help us understand that. india, the way the nature of the market and some of the dividend policies are, generally has a very low being atpaying policy always one to 2%. thely because of considerations being pretty .trong between 15 and 20%
the public sector banks fallout of the market and that is the reason people are invested into the market and equities for the growth. -- theot really dividends are not looked upon easily in that sense. your concern is also valid in of interest rates rising. we do expect interest rates to stabilize around these levels. they have been rallying the last one year. we expect them to stabilize here. vikas, thank you so much for coming on the show. the ceo and founder of progress asia capital. where does one go after building an e-commerce giant?
>> you are watching bloomberg markets. i am here in hong kong. india is open and juliet is in singapore standing by. it appears she is wearing the red dress today. juliette: yes indeed. i like to dress in theme. indian markets are coming under pressure but we saw yesterday a rebound coming through, but today, it is down about 4/10 of 1%. having a look at the rupee which has been under pressure for seven sessions, looking fairly flat against the u.s. dollar,
but still looking like it could push close to the 72 level. continuing to hold at the record lows. that's as we continue to see the rupee of oil and also the on the overall indian economy starting to move. we have the r.b.i. auctioning 100 trillion -- u.s. fdan hearing the has issued observations coming through on some pharmaceuticals plant for inspections carried out earlier in august. we have seen quite a fall coming through on the stock down almost 5%. to watch,other stocks alan t technology -- l&t technology is searing -- seeing again. oil and natural gas is coming
under a little of pressure. it looks like we are seeing the indian market continue to add to the weakness across asian markets. they are on their longest losing streak since december. david: a gloomy week it has been. thank you. let's get you an update on your business flash headlines starting things off with softbank. masayoshi son is asking big banks to put the cash down if they want to keep them and what could be the biggest ipo. loans are being asked to be prepared for the other part of the conglomerate. use a verifier of age and identity of gamers playing on their platform.
response to a social criticism of youngsters spending too much time in front of the screen. have -- i wouldn't say bounceback. they are around their lowest level in a year. years, jack went from english teacher to world-renowned business leader and china's richest man. he is laying the groundwork for a future after alibaba. the company he cofounded and turned into an e-commerce giant. our china correspondent set down his him to talk about prospect division. we have so much resources and so many talents. we have 600 million people using us almost every month. put those kinds of love, respect, responsibility
thisthe business model, giant, alibaba, could destroy many things. it could do good things and bad things. technology is cold, people say. you have to make the organization warm. >> are you succeeding? jack: 10 years ago, when i say we should put 0.2% of the total intoue of alibaba protecting the environment and education. at that time, nobody cared. now, we have such a big revenue and we have to do this. it is not 0.3% of the profit. it is the revenue. >> in terms of technology, how do you bring that to play to transform education? jack: everything we taught the students in the past 100 years
is about knowledge, science, industry. in the future, what we teach the kids is about innovation. creative, constructive. how can you do a machine that a machine cannot do? that is about education. i'm thinking all of the time about that. >> that would be a big focus for you. jack: yeah. and, a mentor to many young entrepreneurs. i don't call myself a business -- successful business professional, but i think i'm successful in life. i have gone through tough days in these could be very good for tough people. i'm not going to teach math, english, business. i'm going to teach him people how to face challenges. withen you communicate your counterparts in the west, can that bridge divides? jack: i hope so and it will. there is one thing we all have in common.
people in china, people in america, we all have the heart of love and respect, and trust. this is a common language we should have. the first technology revolution caused world war i. the second caused world war ii. we are now in the third. if we should have a war, the war should fight against poverty and disease. we should be together. we should find the common things we are working together. it is easy to complain. point, butto finger we got have somebody that says this is the problem and if we work together, it is opportunity for all of us. that is something that i hope i can do. >> you employ many women -- many more women than many other companies. how important is gender
equality? jack: so important. it is the competition of muscles in the last century. this entry is the competition of wisdom and experience, of care. we have more than 50% of employees at the company are women. secret sauces the of alibaba. we have a lot of women leaders. it's not the machine guns, it's the care. david: that was jack ma speaking to tom mackenzie. stay with us. this is bloomberg. ♪
of the consultation. -- consultation period. midnight eastern time is the deadline for the terrorists being imposed on china. this could be just a matter of time as the president indicated he will not be backing down. tom mackenzie is underground in beijing and, tom, the question is how much china responded -- responds. hit backa says it will with its own tariffs on $60 billion worth of u.s. goods. we can expect the rollout of the retalix area measures will be closely calibrated to the rollout we see from the u.s.. in terms of the corporate sentiment, and have -- i had a convert asian -- a conversation with someone who is sick of dealing with the dealmaking and he said the trade tariffs are overshadowing the business
sentiment now. he says companies are looking to shake up the supply chain but that is timely and costly. they are not convinced the measures that the chinese policymakers have outlined will necessarily be enough to support the businesses. who better to talk to in the next hour than the president and ceo of a footwear is to beat her and retailer of america. he will beginning us insight into the impacts of the sector if these are put into place. david: absolutely. he will be a good guest to have. after that, in the next hour, we're joined by the senior economist at texas asia to understand what the broader implications are and she will be joining us for the entire hour. if you have any questions, send them in and i will try to put them to her.
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limited time get 150 dollars off and free shipping too. sale prices are available right now. go to buyleesa.com today. you need this bed. >> it is 12 p.m. here in beijing, 2 p.m. in sydney, i am tom mackenzie. >> and i am david inglis, this is a special edition of "bloomberg markets". known int, it is a hong kong, and as tom mentioned, it is midnight on the u.s. eastern seaboard as the public consultation preps for the potential new tariffs is closed. the weight is now open for the u.s. to come in and slam duties on about 25% on $200 billion more of chinese imports. ♪ tom: and that