tv Bloomberg Daybreak Asia Bloomberg November 5, 2018 6:00pm-8:00pm EST
>> a very good morning. i'm here in singapore. where global leaders and business executives are gathering to seek solutions for critical challenges facing the global economy. >> and good evening from bloomberg's globaled me quarters in new york -- global headquarters in new york. >> and i'm in hong kong. elcome to day break asia . >> our top stories this tuesday. u.s. stocks rose towards the end of the session. with berkshire hathaway powering the gains. investors are hunting for
bargains. but the mood may not carry over to asia markets. the most expensive midterm campaign in history heads to a finish with all five braced for a power split on capitol hill. >> let's get a quick check of the markets ended on this first trading session of the week here in the u.s. of course ahead of the midterm elections on tuesday, investors had a lot to weigh, especially as trade tensions between the u.s. and china continue to brew. we also have some tech stocks sinking as we heard a report that apple may not be boosting iphone production. the nasdaq fell. although the news on berkshire hathaway buying its own shares did power the s&p 500, which ained .6% while the dow gained .8%. the energy sector was another stock -- we saw some stocks from the energy sector gaining
ground as of course we have iranian sanctions coming into play in the u.s. but all of that as w.t.i. saw some volatility. we had also heard about some temp rare waivers for some countries that could be buying uranium through including china, which is the biggest buyer of uranium oil. let's see how all of this will translate into markets in asia. >> a cautious tone may be struck as we are waiting for the u.s. midterms and after that it is the federate decision on thursday. kicking things off in sydney, we are seeing a gain of .1%. of course we have a few catalysts at play. for example, we do have chinese vice president at bloomberg's economic forum in singapore. this comes after xi struck out at america's first -- trump's america first policies. we had it said that it will continue to use saudi money for
investments. toyota, miss beneficiaryy, they are reporting today -- miss bitchy, they are reporting today. we will be keeping an eye on apple suppliers as the tech giant is not seeming to boost iphone production. we have south korea's balance of payments due. japanese household spending expected to have slowed in september and philippine consumer prices are moderated to 6.6%. later this morning we are waiting for the r.b.a. rate decision. not expected to do much. stick to its key rate at 1.5%. >> thank you. let's now get the news. >> thanks. the u.k. cabinet meets later tuesday but sources say teresa may won't ask ministers to approve the terms of a brexit deal with brussels. we're told the prime minister will offer an update on two weeks of midlevel technical talks. that's with the two sides pushing back at reports. the e.u. is refusing to call a summit until it's sure it
wouldn't be a waste of time. e.u. finance ministers met in brussels and italy's rule breaking budget was top of the agenda. the spending plan breaches eurozone regulations and the government was given two weeks to offer changes. the finance minister said to be ready to cooperate with the commission. he's also determined to reduce italy's debt ratio and brussels insists there's no decision on potential penalties. >> if the idea is that we already have macon decisions, it's -- made decisions, it's fake news, the wrong idea. while walking step in step in the spirit of dialogue, but of course, according to the rules and the rules are quite precise, we need make sure that -- [inaudible] -- and we have to make sure also that the structural deficit is reduced. >> alibaba co-founder has again decried the escalating trade war, telling china's import
expo that it's a senseless fight and a stupid thing. last month he warned the stock could last dwokeds and he said it's pointless targeting chinese products because it's becoming a major buyer of foreign goods. he says services and the internet are powering growth, not old-school manufacturing. and the lion air plain that crashed in indonesia last week had faulty air speed readings during its last four flights. investigators have searched the flight's data recorder and want boeing and u.s. aviation authorities to confirm the issue doesn't effect the global fleet of 737 planes. the not clear why the pilots on three flights were able to handle the air speed problem while last week's crew could not. global news 24 hours a day on air and on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. this is bloomberg. ♪ >> thank you. the 2018 midterm elections have
become the most expensive and the most closely watched in memory. and they're all about one person who's not on the ballot -- president trump. let's cross over to our washington reporter who is now in new york and joining us in the studio. great to have you with us. in the final hours of campaigning, we're seeing president trump in indiana this hour, also missouri later in the evening. he's been really busy. what should we be watching out for as we head into the midterms? >> that's right. president trump is on an exhaustive last-minute sweep through several states that are key states for the senate and senate control. as you said, he's in indiana at the moment and then will travel on to mumplete both are home to senate -- missouri. both are home to senate races where the democrat currently holds a seat but president trump won those states in 2016. and republicans believe that they have a shot of potentially picking up one or both of those seats. president trump has been focusing his campaign rallies on states where the senate control is in play. as opposed to potentially
competitive house districts which the white house is large -- has largely given up on the idea of keeping the house for the republicans. the key thing to watch in the upcoming election will be turnout. that will largely dictate where the house goes, where the senate goes, and if they do indeed split control. >> of course he's also been focusing on stoking fears about immigration. especially when it comes to the migrant caravan right now traveling through mexico. we know that his 2020 election campaign funded this ad that's been seen as racist. why? >> that's correct. president trump has been focusing on the divisive issue of immigration. in this leadup into the election. he thinks that this will resonate with his voters. his campaign ran an ad that focuses on the migrant caravan, but it was yanked from nbc, fox news and facebook. and cnn declined to air it at all. calling the ad racist. it's no surprise that president trump has turned to the theme
of immigration. he campaigned on it in his initial presidential election. and in these recent weeks he's made certain policy moves centered on immigration, saying, for instance, that he would of course try and remove birth right citizenship through executive order. if that was even possible to do at all. again, he sees this resonating with his base, a way to turn out his own voters. but it does risk alienating certain swings voters in key competitive house races. >> of course swing voters have been key in those massive elections where you see a waive of -- in terms of the results. what about iranian sanctions? because they also came into play today. we know that president trump has been very vocal about being against iran nuclear deal, pulling out the u.s. what punishments could companies potentially face if they go against these sanctions? >> that's right. today the u.s. administration announcing it was reimposing sanctions on iranian companies, banks and oil.
this is following when president trump removed the u.s. from the iranian nuclear accord. the u.s. administration, led by secretary of state mike pompeo, did warn companies they would face penalties if they tried to evade these sanctions. the u.s. has a history of cracking down on companies that do evade iranian sanctions and heavy fines could be possible for many companies. so a stark warning there as president trump continues to pursue his campaign of maximum pressure against iran. which he made at the center of his foreign policy. >> great to have you with us. thank you. washington reporter greg sullivan. of course don't miss our special election night coverage on bloomberg tv and radio. david westen will lead our all-star team, bringing you complete results, analysis and market reaction. that starts at 7:00 p.m. eastern tuesday night, 8:00 a.m. wednesday morning in hong kong. to discuss these oil sanctions against iran, of course we know that eight countries have been given temp rare wavers -- temporary waivers to continue purchasing iranian oil,
including china, the biggest buyer of iranian exports. talk a little bit about the oil reaction on the price. because it was really interesting that we saw oil rallying at first. but then lose ground and now fall for six consecutive sessions. >> yeah. by the end of the day we're at a seven-month low which is significant because you saw oil rise to a four-year high just last month when it was first announced these sanctions were going to come in. we look at the one-week chart alone and you'll see, as she mentioned, it has been a steady slide. over several sections. and there had been speculation that trump would ultimately undercut the sanctions as they were imposed by giving these waivers and that is what has led a lot of the hedge funds to sort of cut their bullish bets and that has been reflected in the price of oil. let's go quickly into the bloomberg gtv where you can find our library of charts. note the blue is the opec crude oil production output. iran, one of the biggest producers. but you'll notice here, the
exports have been declining. there's less of a fear that we'll see a lot of oil off the market. and that has also led to the fact that gasoline has come down. check out the gasoline chart. this was one of president trump's desires, as we head into the midterms, because it is a big election factor. how much the price of gasoline costs when you go to fill up your car. he mentioned that in his tweets, he mentioned that in a demand to bring the price of oil down. nd so he's essentially and so he's essentially gotten what he expected to get. and again, the smart money on the street was anticipating the teeth in these sanctions would be reduced. we're also going into an increase in u.s. production. the inventory data will be out on wednesday. there's a view that will show a rise in u.s. production which reduces these concerns about oil being off the market. >> on the broader markets we have a mixed picture. we sawtek sinking but then the s&p 500 and the dow gaining ground. what led these moves?
>> berkshire hathaway of course had a big buyback that gave a big shot in the arm to the bulls but we saw many executives also buying back shares. let's go to the bloomberg real quick because volatility is a big issue as we head into the election. you'll notice blue is 2018. this is the vix. it has been trending up. but yellow and white are prior vix movements, right ahead of midterms. you notice they came down right after the election. a lot of strategists say you're going to see the volatility come way down, after there's more certainty from the election. let's go into the market snapshot, if will you. the dollar pulling back a bit and you definitely saw movement in bonds but notice the nasdaq 100. that was where the weaknesses were. down 10% in the nasdaq 100 since august. a semiconductor index also taking a big hit. that's where all the chip stocks are located. has a lot to do with apple. let's look at the big movers. apple tops the list.
a report that they are not going to boost production on the iphone hurt a lot of the suppliers and the chip stocks. activision blizzard also down a new game that people seem to hate. in fact there's a campaign to suspend the game. and so that resulted in a down turn. quickly after hours, we have pandora, which is an online radio company, they actually saw a big pop in the stock on a beating of the street on subscriber revenues and a narrowing of the loss that was expected. >> thank you. at l ahead, we'll be back the bloomberg new economy for numb singapore. -- in -- forum in singapore. we'll talk strategy among global tensions. first we'll assess what's happening in the chinese economy. this is bloomberg. ♪
>> welcome back. president xi took a sideswipe at the trump administration's trade policy, using strong language to reject the law of the jungle and winner take all strategy. he stopped short of naming president trump or the u.s. in his speech. our correspondent is at the event in shanghai. did we get anything new on china opening up the markets or eeting u.s. demands? >> we got a little bit of new information about china's place to open up its markets. in fact, you have a sense that the president was slightly exasperated. he said many times that they will not close the door to increased foreign investments. we will continue to open that door. he talked about the desire to continue to cut taxes on some goods. and he talked about the measures to continue to protect
intellectual property. but in terms of steps, policies announced by president xi to address the core issues that go to the heart of the trade complaints out of washington, no. we really didn't get very much. we didn't get very much on state subsidies or the role of the state-owned enterprises. so i'd be surprised if this moves the needle in any significant way in terms of reducing those trade tensions. of course how the trump administration reads this speech is going to be important. and whether or not that changes the calculus of the trump administration leading up to this g-20 in buenos aires is going to be key as well. that is a meeting that both the chinese are looking to and of course those in the u.s. but there is a view alternatively here that in fact what we got from that speech yesterday was a highlight of the divisions between these two sides. and that there's going to be either a need for the u.s. to accept that china's taking a gradual approach to reform and opening with a greater role for the states, and that it's going to have to play the u.s. -- the role of a tug boat to a tanker or it's going to have to force
the issue by effectively creating a collision with the chinese tanker to ensure that they or force them to push through radical reforms that so far we haven't seen. >> very strong views coming out of that conference, that expo there. so what else is on the agenda for today? >> we've heard from the likes of jack yesterday. it was interesting to hear from the alibaba founder saying that the trade war was senseless. we've got a number of meetings later today in terms of the state-owned enterprises. meetings between some of the big giants in the chemical sector, the agricultural sector with some of their western counterparts, state-owned enterprises again at the heart of the complaint here's and the role they have. president xi wants to see strong, more powerful state-owned enterprises that rubs against what the west wants to see. we're going to have signing ceremonies from the u.k. of course the brits desperate to bend over backwards to get some kind of deal in the future. with the chinese as they look to the risks and uncertainty of their post-brexit future.
we're also going to get a meeting around supply chains and shipping. that is important as executives at companies around the world reassess their supply chains in light of this trade war. and we're going to hear from the c.e.o. of alibaba, talking about imports and exports. alibaba going to have a big shopping extravaganza at end of next week. seal get a sense of how that company has been impacted by the trade war. a lot more on the agenda here in shanghai. >> we're gearing up for singles day. thank you very much. in just over an hour, chinese vice president will give the keynote address in singapore to kick off the inaugural bloomberg new economy forum. for now, let's head over to haidi who is standing by with ur next guest. >> it's going to be really interesting to see whether qishan has more to add give than we heard from president xi yesterday. he hit out at what he called the jungle winner takes all policy of the u.s. and other countries as he opened up
china's import-export in shanghai. we're going to talk more about this worsening trade situation. scott kennedy is our next guest. deputy director and at the center for strategic and international studies here at the bloomberg new economy forum here. great to have you here. we were just talking, was that a missed opportunity? what else could he have said that would have kind of been colored as more of a set of concessions for the u.s. >> certainly a missed opportunity if we had expected him to say a lot more. but waiting for xi to make a lot of new promises on trade is like from the play. he's not a liberal. we're never going to see huge promises. if he had, he would have said a lot more about not just reducing tariffs but about opening market access for investors and services. the great fire wall. he would have talked about a lot of different specifics that the united states and others have been complaining about. he didn't. and so now everyone's eyes are
going to be focused on the g-20, something -- what are they going it say in argentina? -- going to say in argentina? missed opportunity but you shouldn't have expected a lot in the first place. >> is it a signal that beijing is keen to dig its heels? >> it's at a minimum a signal that he's saving all of his chips for trump, for that bilateral negotiation. he's not going to give up anything in advance to that. more likely, though, we're going to see the two sides continue to dig in their heels. both sides think they have the upperhand. for the president, even though he signaled -- trump, even though he signaled it's possible they want a deal, there's no monster benefit to him economically or politically to do so. so i think they're going to continue to do to this dance. all of us will continue to watch. >> maybe he doesn't want to give him anything that he can use before the midterms. >> yes. trump also wanted to continue to ratchet up the pressure and look tough op the campaign trail -- on the campaign trail because of today's election.
>> you're here to talk about one of your panels. the role of the state on china's economy. that's one of the long-term crit sisms of the chinese economy. is it really so different when you compare to the other subsidized system elsewhere in the world? asking it ealistic to change? >> i think you're right. the chinese are right. they're not the first ones to have the state intervene in the economy. what is different is china, state-owned enterprises, are larger than anyone else's. the amount of money going into the economy and china's scale. so china's supporting industry is electric cars or commercial aircraft or a.i., that's having a global effect on everyone. and sometimes china's bets are good. and it helps the global economy. but when they make bad bets, those market distortions hurt everybody else. so it just raises the responsibility that china has to fulfill when it's making
those choices and so it's not that it doesn't need to or that it shouldn't intervene at all in the economy. it needs to do more responsibly and it would be good if it followed the rules when it was doing so. >> is it exporting these bad decisions? >> to some extent tent. you see a lot of interest around the world in the china model. with the belten road they are actually engaging in investments abroad and giving folks ideas of how they can have their governments play a greater role in the economy. and again, a lot of that is needed. americans and others in europe, in asia, are not telling china that they don't want it to be successful, that they don't want it to have more high-tech. it's how they go about it. with as little disruption to the global economy as possible. >> you don't see it as a progression, an ideological battle that's going on? >> in some ways it's an ideological battle about what role of the state should be, how deeply entrenched should the state be in the economy,
whose job should it be to pick winners? markets or governments? and then when you make a mistake, who pays? should it be the governments that pay or the companies that pay? we are having this major conversation about what the role of the state and the economy should be right now. because of china's size. it's long overdue. we're obviously going about it in a haphazard way which is broiling -- royaling markets, making everyone uncomfortable and creating a lot of sun certainty, but we need the de-- uncertainty, but we need the debate. >> everyone has a view on what the state of economic monetary policy is in beijing. whether it's true deleveraging or releveraging into other parts of the economy at the moment. >> sure. ertainly post-2015 stock market bubble collapse, and china really got serious with deleveraging. they slowed down the release of wealth management products and things like that. now it's because of the trade
war, the way the business cycle is, they look like they're now restimulating. but they don't want to give up totally on deleveraging and changing the way -- the goal of making the economy operate more efficiently. but this is a contest. between the external environment which is changing one negatively and their goals on financial institutions. >> do you realistically see a circuit breaker in the trade war? >> i think what's possible, and it would be consistent with both sides' interest, could they get to the g-20 and say, we won't reachet things up further? will we create a pathway for conversation? i think that's as good as we can get this year. and maybe 2019 will be the year of serious negotiations. but that's the best we can hope for. we shouldn't hope for some announcement at the g-20 which really is the full package that lets everyone breathe a sigh of relief and enjoy a good christmas. i still think christmas this year is going to be waiting for what might happen next year without continued downward
spiral. >> is this a new cold war? at least kind of a boring war of attrition that we're setting up for? >> it could be. when you listen to folks in my neighborhood, in drks or in beijing, you hear a lot of -- in d.c. or in beijing, you hear a lot of this talk of things that could go wrong. as the chinese say and a lot of americans say, there are lots of common interests. but we do need to better align our policies so that they're more complimentary, that we do follow the rules. and we need to work on the global institutions that support that. which is part of the conversation that we're going to have the next couple of days here in singapore. >> the other interesting thing to me is how some middle economies are going to be forced to choose. will they be forced to choose? >> certainly the hard liners on both sides are saying pick sides. as we've heard from folks in geneva, pick your lane. tell us who you want to be with. companies, governments, don't want to.
we will see down the road -- maybe g-20 will be kind of a turning point. where companies are trying to decide where their future investments are going to be. can they continue to count on china's -- china as part of their global supply chain or do they need to maybe go to plan b and maybe in 2019 plan b will become plan a if they don't work things out? that's why we're -- this is really a genuine crossroads. we say we're at a crossroads in u.s.-china relations every six months for the last 30 years, but i really think we're at a big one right now. >> thanks. lots to talk about over the next couple of days. best of luck for all of those conversations. scott kennedy joining me here in singapore. of course at the bloomberg new economy forum. a lot of these fascinating conversations. not just conversations and dialogue, but really seeking to try to find solutions to questions that we have over the changing global power die a number take we've just been talking about. the -- dynamic that we've just been talking about. lots more to come from singapore.
>> 130k a.m. in sydney. markets have been training for -- 10:30 a.m. in sydney. markets have been trading for about 30 minutes. the r.b.a. rate decision in just a few hours. cash rate target expected to be unchanged at 1.5%. here in new york it's 6:30 p.m. s&p futures looking like this. we're up a little bit. of course we had some upside for the s&p 500 and the dow, although textiles have been under pressure. the nasdaq futures under pressure as well. i'm in new york. you're watching "daybreak: asia." let's get the news. >> the trump administration is warning companies and countries
around the world that dodging sanctions on iran will hurt. secretary of state mike pompeo promised defying the measures would be far more painful than withdrawing from iran. the u.s. has imposed penalties on 700 individuals, banks, shippers and companies tied to iran's energy and financial industries. >> the iranian regime has a choice it. can do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble. we hope a new agreement with iran is possible. but until iran makes changes in the 12 ways that i listed in may, we will be relentless in exerting pressure on the regime. >> president trump's been on the road and on twitter urging supporters to get out and vote republican. the most expensive midterm campaign in heftry heads to the finish line. markets are bracing for the democrats to potentially win the house while the g.o.p. retains the senate. that could dramatically alter
the second half of trump's term. the outcome may hinge on what could be a larger than normal turnout. amazon may pick two locations for its new headquarters. that's according to the "wall street journal." it cites a source saying a single location could lack significant talent. amazon may also want to avoid criticism that its arrival in a new town could be overwhelming. it plans to invest $5 billion in the second headquarters and hire up to 50,000 people. it's considering 20 cities in the u.s. and canada. a decision is due by year end. china's top corporate bond underwriter says funding conditions for the private sector may improve. that's thanks to easing measures from policymakers. bank of china says by a scombring is shifting from -- beijing is shifting from derisking the financial system to supporting the real economy. the bank sees debt defaults falling next year. that's as authorities asked to assist funding by private companies. and lego has won an
intellectual property suit in china -- a court agreed that local chps copied bricks and figures. the judge ruled that the four defendants must cease production immediately and pay lego around $650,000 in damages. lego won two earlier victories in china last year, securing recognition of its logo and its name in the mainland. global news 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. a check of how markets in asia are trading. australia, new zealand, the only two markets that are trading. they're higher. we'll see how they're faring right now. >> attention in australia may be focused on the melbourne cup. punch goers on the defensive saying it's time to saddle up and strap in. on this race day we're seeing
aussie stocks gain ground. led higher by real estate and consumer staples. but discretionary seeing some weakness coming through. stock movers in sydney, we have the likes of instatech gaining ground. and treasury wine rising after being raised. morgan stanley in a recent note saying that treasurey's sell offon chinese, those have been overdone. also want to highlight lincoln administration rising with c.b.a. both are in a group of morgan tanley's p.e. arm. turning our attention now to japan, with about half of companies having reported the c's. you can see the picture is looking bleak. earnings are set for the worst quarter since 2016. as you can see, by the decline in these orange bars, we do have earnings per share
aligning estimates by about 6%. the s&p says that the biggest culprit here, that is china, a slowing china, as analysts have not accounted for lower capital investment in chip manufacturing, as well as in factory automation. but s&p says after that sharp selloff that we saw in october, the results already look to be priced in. >> that's pretty interesting because we also heard that the weaker japanese yen could help those corporate earnings out of japan. thank you so much. in australia, of course, it's rrment b. -- r.b.a. decision day on tuesday. the central bank looked set for a meeting without a policy change. however, investors will be watching for other signals as falling home prices put pressure on household spending. our bloomberg editor is here to set the stage for us. will the r.b.a. ever change policy at this point? >> you wonder sometimes, don't you. they haven't done anything in two years now, since 2016.
what is it going to take? in fact, the head of the reserve bank of australia saying in early september that open to another hike, but it's some way off. so let's go into our bloomberg library. because right now the r.b.a. is caught between inflation, which is the blue bars over here, you see that, it's down below the bottom of their target range, just below 2%. even though g.d.p. has accelerated to 3.3% heading toward their 2018 target, they're still a ways away and inflation not really picking up all that much. yes, there's an inbe debted household -- an indebted household. they're grapping with higher home prices. businesses want to invest but they've been holding back a bit. there's all kinds of reasons for them so hold steadyy. let's go to japan and kuroda gave a speech in the last 24 hours hinting at policy normalization. how about that. prices in the economy are
improve. what he said was that japan's no longer where it's in a situation where it's best to be decisively implementing a large scale policy to overcome deflation, even though they need to stick with their stimulus program. he acknowledged that it's hurting banks. all the things we were talking about before the policy meeting, they didn't change anything. he didn't signal any changes. even though there were a lot of stories speculating they might. maybe there still is something afoot. maybe we'll see something in january. we'll see how house spending out of japan, philippines inflation later today, that's supposed to ease a bit but not enough to change any idea that the -- [inaudible] -- is still going to have to raise its key rate again. >> monetary policy here in the u.s., could we see any changes with the fed depending on what happens in the u.s. midterms on tuesday? >> first of all, feds watching this pretty closely i'm sure partly because this is a middle class tax cut being bandied about.
what if republicans do hold control of both houses, even though that's not expected. the fed meeting could be overshadowed by the midterm elections. i want to jump into another chart. we're looking from our bloomberg library at wage growth versus unemployment. and they're both more positive than they have been in a long time. you've got unemployment, here's where you see it. it's down -- yellow line's down to 3.7%. we've got average hourly earnings finally above 3%, rising 3.1%. will this favor republicans? people are still betting on, including bloomberg economics, that we're going to see the democrats take control of the house. what could this mean for the fed? who could it mean for donald trump? particularly for the president, a shift in power like this could lead to gridlock. because then you've got democrats controlling the house, you've got republicans controlling the senate. what could president trump get through then, like a tax cut? tax cut 2.0, don't count on it. could it open the door more investigations around the white house?
that too. and bottom line, bloomberg economics saying for sure it's going to shape the outline, how president trump's next two years are going to look. how much he can actually get done. the fed's been doubtful that the first round of tax cuts would carry over much into 2019 and beyond. more tax cuts obviously i think as you asked earlier of chuck lieberman from advisors capital management, could it mean more rate hikes, chuck said yes. that's one of the conclusions people jumped to pretty quickly. no change expected but maybe some signals for dose -- december. >> thank you so much for that. our bloomberg global economics and policy editor. and as kathleen was telling us, of course what happens with the midterms will also determine what happens to the markets. we're about 24 hours away from the u.s. midterms. polls suggesting democrats will recapture the house of representatives. but republicans will keep the senate. now, a split congress could mean policy gridlock, but that doesn't necessarily mean opportunity grinds to a halt
too. we have that story. which sectors in the market should we be watching? >> in terms of getting a boost, pharmaceuticals, biotech, as well as banks, could be finding some support if not at least staying away from harm. let's go into pharma first and to my first bloomberg terminal. this is in your gtv library. the large cap buyout -- biotech which is in blue and the pharma stocks which are in white, you can see that they are cheaper than the s&p 500 all this year. that is in yellow. you can see it's been cheaper ever since 2016. now, the reason that we might see this pop, though, is because we know that donald trump has been threatening big pharma with price controls on its medication. if there is gridlock, as we're expecting, with the house, then this could be a positive event for those companies. also, if the democrats actually sweep congress, though, there might be some negative there. because there could be this fear trade. because the democrats might actually try to push ahead with some kind of medicare
pharmaceuticals, medicare here being the operative word in that implies there would be lower priced drugs out there on the market. in terms of the companies that might take a hit, let's go ahead and look at, for example, biogeneral as well as amgen here. we can see amgen year to date up a little bit. you see between september and october, when donald trump really started to call in and say, i'm going to start looking at these drug prices, we can see the stock there for amgen as well as biogen also take a hit you can see there from september. and actually for the year down by about 5%. let's go into banks. because i mentioned that earlier. pop back into the bloomberg terminal here because at least with banks, there might not be any harm coming from this. the reason for this is because donald trump has already put his regulators in place. saying they're still going to push those proposals to moderate what they say is the existing regime, a.k.a. this is what the obama administration put in.
so for their part they're overall positive. and height capital markets is saying that if the g.o.p. actually keeps the house, anything that would be passed in the legislation -- i'm sorry, if the democrats take the house, anything that passes there could still and very well probably will die in the senate. >> sure. tech has taken a beaten lately. what happens to them if we see a split congress? >> i think the beating actually continues unfortunately for tech investors here. this is what analysts are saying at least. the reason for this is because in terms of all the negativity out there, from election hacking to social media issues, to the facebook, cambridge analytica scandal, these things aren't going away regardless of who controls the house, as well as the senate. pop again into the bloomberg terminal and i want to show that you we've been seeing the negativity on the fangs here. that is in blue. and this may continue. this is at its narrowest actually, with the s&p 500.
this is really making out interestingly to be, can we actually say the bipartisan word, bipartisan issue here, in this polarized congress? a california democrat is saying there needs to be an internet bill of rights for citizens. and a south dakota representative saying that clearly self-regulation isn't efficient. so they're going to need to go in for themselves. finally, the industrials are one other sector that could see some headwinds here. the trade war, we've been talking about that, won't go away. rising commodity costs are still going to stay with us. goldman sachs says that there's only 25% chance of an infrastructure spending package. i raise infrastructure because this was formerly a bipartisan issue. donald trump is saying -- >> long ago. i can't even remember. >> maybe i shouldn't even say that word anymore because it seems like it's sort of long gone. but if the democrats sweep congress, guess what, they probably aren't going to do
anything about compromise here. they're going to probe donald trump and try to do everything they can to undo what he's done over the past few years. >> thank you. coming up next, more from the bloomberg new economy forum in singapore. future map management partner and international relations commenttary parag khanna talking strategy and why he ceases the dawn of a new asian system -- sees the dawn of a new asian system. this is bloomberg. ♪
>> we're live. over the next two days focusing on just that with our next guest saying that having become used to america first or make america great again, the world should actually be preparing for asia first. parring a khanna is the best selling author -- parring aa is a best sell -- parag khanna is a best selling author.
what you're say something that we're missing the point here. focusing on washington and beijing, we're missing the real power dynamic that's changing as a result of this trade war. >> that's right. the global economy has multiple anchors and it's not just the united states and china and therefore the trade war is not just the united states and china. in fact, china's largest trading partners are other asian countries and neighbors. if you add up its trade with japan, south korea, australia, india, russia and so forth, that's more trade than it does with the united states. china's second largest set of trade partners is collectively europe. the european union. >> i want to bring up this map. closely correlated. >> let's have a look at that. what you see is that europe's trade with asia is about 1.6 trillion dollars a year or so. that's more than the transatlantic trade relationship. which has been the pillar of the world economy since the end of world war ii. and europe's trade with asia is greater than asia's trade with,
of course, north america. so again, for china, number one is what it can do with its own trading partners. how can offset the trade war, for example, by increasing trade with its neighbors. and that's what we've been seeing happening in the diplomat sifment you can see the trilateral meeting that just took place between china, south korea and japan. to increasingly intensify and liberalize their trade. and let's remember that japan and south korea have surpluses over china. so for them that's a good thing. they have to invest a lot more in innovation and stay more competitive as china moves up the value chain. but it's a good thing for them to be able to intensify their trade. and substitute for the u.s. for every set of tariffs that the u.s. put on chinese goods, and the reciprocal tariffs that china puts on american goods, europeans are moving into that picture and saying, we can be more competitive versus american exports now into asia. and asians are doing the same thing. so what is happening right now is what i call permanent substitution. we're focused so much on -- >> i was going to ask you, how easy is it to dismantle or unwind that? >> we talk about the deep linkages of supply chains but
investment and trade are more fungible than ever before, as more and more countries can provide similar quality and categories of goods. so when i say permanent substitution what i mean, is take for example energy. china had been a rapidly growing importer of american oil and in june of this year, 2018, it basically just stopped because oil is fungible on the global markets. you can get it from somewhere else. that's ok for american oil exporters, it goes on the market. what about the soybean exporters and technology goods? if you look at the high-tech industry, the z.t. episode for the u.s., from the trump administration's point of vureks it was a way of saying we're going to funnish -- punish china, they're doing too much i.p. theft. -- >> we seem to have lost the connection there to parag khanna. we're in singapore at the bloomberg new economic forum. we'll get you back as soon as we can. we'll be there with more. this is bloomberg. ♪
>> let's get a quick check of the latest business headlines. ferrari came up slightly short in the third quarter as profit missed expectations by 1.5%. adjusted pretax net was buffeted by euro dollar strength and the mix saw higher sales of its entry level car. ferrari's pivoting to a business plan that sees more limited edition cars that can top $1 million euros. their supercar carries a price tag of $2 million. b.h.p. had to derail a runaway iron-ore train that traveled almost 100 kilometers without a driver. it's now halted all train operations in the region and says it's working with local authorities to find out what happened. b.h.p. says the driver stopped to investigate a problem when the train moved off. it was heading out before being
brought off the line by b.h.p.'s remote operation center. airbus' new so-called whisper jet was launched with great fanfare but local residents say it's annoyingly loud. swiss air promised people living around the airport that the a-220 would be 50% quieter than older planes. however, critics say the jet's twin engines emit a strange howl as it comes in to land and the airport's noise hotline has een swamped by complaints. in just over an hour, the chinese vice president will give the keynote address in singapore to kick off the inaugural bloomberg new economy forum. for now, let's head to -- over to haidi who is standing by with our next guest. >> yeah. great to be but with you guys.
we're talking about supply chains. this is an idea that they're going to be dismantled. you said there's more flexibility than we give it credit for. >> exactly. we've seen asia economies move up the value chain quickly. china getting the attention for that. what that means therefore is that the goods, the imports in high-tech areas like semiconductors and so forth where chinese companies have been dependent on american suppliers, they're now going to start to focus on getting those components from taiwan, from south korea, japan. which in fact provides 70% of china's high-tech imports. the u.s. doesn't. so what's going happen is permanent substitution. china is going to say american exports are unreliable. therefore let's start to focus on getting those goods from trade partners who we have more leverage over and who are in even geographically more approximate. the logical conclusion from permanent substitution with the u.s. through europe or other asians is in fact decoupling. decoupling is a term we used to use a lot but it was premature.
you're start to starting to see it now when you look at the volume of intraasian trade. i mean all the way from the west asian gulf's energy exporters to the high-tech economies in northeast asia. the asianization you might call it of this geography is the big story. and that's going to be very bad news for countries like the u.s. who are not part of the trans-pacific partnership. because that's going to mean it's going to be harder to access those markets. >> but china, the end goal is vertical integration. >> it is. but that's because its role model has always been japan. we know that japan has been doing that for decades. however, there is still a robust volume of trade between the three northeast asian powers, south korea, japan and china, that's going to continue very strongly, i think. an again, that's why they're liberalizing their own trade. so the broader asian decoupling is going to take place. it's going to be good for china in terms of its self-reliance. which it obviously aspires to. by way of becoming more vertically integrated. but it's also going to be good
for south korean, taiwanese and japanese companies that are going to be able to take over the market share that american companies have had. >> you also talk very quickly about connectivity and integration as being a major theme. on the one hand you have things like aaib and on the other end, populism. is that threatening that for asia? >> it depends what part of the world you're looking at. in the united states and u.k. it's about trump, brexit, international populism, borders. but if you look at asia, belten road is one of many examples of how asia is opening its borders, bringing down barriers, harm onizing customs, liberalizing trade, there's about 25 trade liberalization agreements under way within, between asian countries right now. aiib is going to promote cross-border investment and investment is really the precursor to growing trade. so the massively increasing volume of trade and investment between asian economies that will unfold is very, very
significant. i think of it as the globalization story of the 21st century. it really is. >> 20 seconds. it's not about ideology this trade war, but it is about who's going to stay top dog? >> exactly. however, let's remember, top dog is relative. it's a material thing that you can measure. for china, it's other asian trade partners are its number one. europe is number two. for china, america's actually number three. that's something i hope the trump administration starts to understand. >> thank you so much for joining us. lots more to talk about. we could talk about this forever. parring a khanna -- parag khanna touching on lots of themes that can ree and seeking solutions -- that are key and seeking solutions. you can catch it all live, watch all of the panels and conversations ate live go. that's your function on the terminal. we'll also be picking up on this conversation over the next hour. so do stay with us. a key venture capitalist spent a long time in china, owes of china now, but still very much
market. apple suppliers are in focus after reports it is bringing back on asian partners. the most expensive midterm race in history heads to a finish with all five braced for power slips on capitol hill. things could be turning in asia. u.s. futures are pushing higher. asian markets pushing into the green in early trading. modest gains are seen across major benchmarks in the region. the nikkei 225 adding. the dollar-yen is trading. the cost be also advancing. has resumed. consume and stocks are gaining ground. we are seeing like trading out the melbourne cup is kicking off on tuesday. we can down to the u.s.
midterms. thursday insion on asia, we are counting down to the decision. we are likely to see the central bank hold pat. we will be hearing from the chinese vice president as he speaks in singapore after xi jinping hits back at president trump's trade policy. we will also focus on earnings. stocks did beat the highest estimates. they will continue using saudi money for investments. also on the radar we have toyota earnings and mitsubishi motors rounding up the big japanese auto results. apple bears watching. we have news the tech giant may not boost its xr production. we've had some data points this morning. japanese spending.
the first yearly drop in three months. the curry and surplus narrowing. that is kicking off the mood in asia. >> thank you. let's get to jessica summers. president trump has been on the road and on twitter urging supporters to get out and vote republican. the most expensive midterm campaign in history heads to the finish line. victim democrats could potentially win the house and the gop retain the senate. that could alter the second half of trump's term. the outcome could hinge on a larger than normal turnout. the trump administration is warning companies around the that dodging sanctions on iran will hurt. mike pompeo promise the measures would be far more painful than withdrawing from iran. the u.s. has imposed sanctions on individuals and companies.
turn fromime can do a its course of action and act like a normal country, or see its economy crumble. we hope a new agreement is possible. until iran makes changes in the ways i listed, we will be relentless in exerting pressure on the regime. china's bond underwriter says spending conditions may improve. that is thanks to easing measures from policymakers. injing is shifting from risk the financial system to supporting the economy. deployties actively support tools. the plane that crashed last week had faulty airspeed readings. investigators have searched the
flight data recorder. authorities have confirmed it does not affect the global fleet of the planes. it is not clear why the pilots on three flights were able to handle the airspeed problem and last week's crew could not. global news 24 hours a day on air and on twitter powered by 2700 journalists and analysts in 120 countries. i am jessica summers. this is bloomberg. >> president xi jinping to case sideswipe attook a the trump administration to reject the law of the jungle strategy. he stopped short of actually naming president trump or the u.s. in his speech. our correspondent is at the event in shanghai. some fiery rhetoric from president xi jinping. that is right.
taking aim at trump's america first policy. we did not get anything from the speech. anything that really moves the needle and guess the sides together and reduces friction. we spoke to businesses yesterday who did buy into this rhetoric aboutent xi outlined foreign investment and continuing to build out and innovative economy. companies are looking to take advantage of that. for those like the chamber of commerce that said they thought this was too timid. ,hey welcomed the europeans hoping to see a sped up trade deal between europe and china. they welcomed his comments around opening some sectors. they said it comes down to a timeframe, implementation. this word timid from the
chambers of commerce in terms of the approach to reform. we are not seeing the radical transformation we saw in the 1990's when the state took the axe. this has an impact on investment .n china for both the europeans and americans. companies are holding back on investing until they get clarity on the trade war and the opportunity. determination and desire from companies to see a level playing field. there are those who say the trajectory is clear for china. it will open up its markets. the problem for many is it is not fast enough. china is the second largest economy, expanding overseas. the desire from other companies in the west to get involved and have a level playing field is only heightened. we have yet to see policy issues that really addressed that. the oecd ranks china 59 out of
62 in terms of openness. president xi says he is going to buy more in the next 15 years. the europeans and u.s. companies unlikely to see any concrete policies out of the speech to address their concerns. >> thank you so much. tom mackenzie in shanghai. the vice president will give the keynote address in singapore. haidi who isgo to standing by. thank you so much for that. our next guest is a china veteran. a little bit of a stumble in the stock market this year. explaining the scale of that challenge is our next guest.
gary is a founding partner at the seattle-based venture partners and until recently based out of china. really great to have you here. this trade war is centered around technology and made in china. who is going to emerge victorious? what are the issues we are not talking about? >> i don't think this is a trade war. that is not how i think about it. i also think if i was in the trump administration i would focus on china 2025 as opposed to tariffs. i think the way venture capitalists think is we are not affected i what happens in the current trade dispute. the reason is we invest in china for china. the money we are investing is for the benefit of the chinese consumer, enterprise. if you gothing is
back to 2006, 90% of the money invested in risk, series a companies, that has come from u.s. dollars. there is not a healthy ecosystem in early-stage technology companies. our view right now is healthy. >> interesting you say it does not affect your approach. do the trade tensions affect the flow of money from chinese investment? there are fears it could be weaponize does part of this tit-for-tat. is largely u.s. dollars that have come into china. we have not a hesitancy on the behalf of the limited partners to invest. on the u.s. side, we have to be careful when we are investing. certain limited partners and the money from certain partners would fall under restrictions.
that is going to become a complexity for investors. >> where are you at with fundraising? >> we just launched in the fundraising. we should have the ability to close that next year. >> what are you planning to do with it? >> health care. we have a large health care practice in china. about 80 companies. we've had one company failed to return capital. we are leveraging that base and skill set to leave investments in the u.s. scandal, we were just talking to a guest saying izes the problems in china. is that changing? government is not addressing the trust deficit. that is an issue. there is no trust in the chinese capital markets. manymetimes comment americans do not feel donald trump is the president they
deserve. many people feel donald trump is the president the chinese deserve because china has gamed the system. some things need to change. many of the things we feel china would do for itself and to develop trust with the consumer. the biggest risk is when the chinese decide not to spend, there is no force that is going to make them spend money. the government needs to be aware of that. >> what is the next big thing, wave of innovation? ai? virtual reality? >> virtual-reality is not. if you look at mentions in the press, it is down 90%. almost every new technology goes through a 15 year cycle. it is more than a decade. ai is entering the second half
of that cycle. it is something everyone is focused on. the intersection of health care and technology, in the past drug development testing, everything was separate in its own universe. tack was on one side. a wayare converging in they never have before. that is exciting. everyone inis, china is hedging. you can apply that to the capital markets. the very social fabric. what does that mean for the future of china? >> we have never seen it before. a country that has created so much wealth. you have never seen the haveligentsia or elites one foot out the door and one foot in, trying to figure out which way to go. in brazil, people left. china had a huge wave come back in the 1990's.
this is different. i worry we have never seen a country succeed when a large percentage of its intellectual capital leaves. great., really i will let you go for now. gary rieschel joining us. currently focused on health care. a lot more coming up from singapore. we will be talking about some of these issues as well as innovation in tech. joins usf money tree next. >> and as we count down to the a company ceo joining us to talk cybersecurity. us is bloomberg. ♪.
intelligence committee says washington should look at the as the merger goes through. the deal needs approval from regulators amid signs the administration wants to make a harder for chinese firms to invest in u.s. tech. the sprint owner has ties to huawei. reportsares fell on the it is raining back production of the iphone xr. they have about 45 lines it initiallyhe 60 prepared. it is producing about 100,000 fewer xr's daily. it is not expected to receive any xr orders this holiday season. as the countdown to midterms enters its final hours, markets are holding their breath. how could the results affect
ems? .et's go to singapore we know a divided congress has supported risk assets. are we expecting to see the same outcome this time around? >> i think the historical precedents are not clear. we do not have a number of examples when the house moves to the democrats. which is the best case for the midterms tomorrow. what happens in the midterms is place aftertay in the initial volatility. there will be more reaction the normal. in two weeks we will follow the trends. that appears it will be for em strengths and dollars softness. i don't think the midterms will have a much of an impact as the hype.
apple's selloff because of reports of iphone production? will we see that impact the asian suppliers? >> absolutely. we will see it today in some of the supply chains. it is an apple story rather than a tech story. it will hit the individual companies. it is relevant to companies in taiwan. i don't think it will be much of a drag on the broader index. .here was a slight pullback that is irrelevant given the volatility we have seen. overall markets are in a consolidation phase. we have the new economic forum in singapore and the shanghai expo in china. all of those are big news events. i think after the u.s. presidential elections two years ago where people got
to seeoted, traders wait what the result is. it will then jump on the trend. >> already we saw president xi jinping come out with a strong rhetoric against president trump's america first policy. we know when trump mentions trade deals with china the uan had its biggest rally since 2007. how exposed is it to trade tensions? absolutely it is exposed. it is a good guide of sentiment. 19, the dayon june that trump said he was going to put tariffs on chinese goods and was ready to do more. that was the real acceleration of the trade war. that was when we saw the yuan pe
ak. it has traded pretty well. again yesterday. that shows a slight tick up in sentiment. there is a hope trump is going to follow through and reach a deal with china. a ploy toave been boost of the s&p. we'll have to see what the trump rhetoric is. it is important trade policy is a white house issue. it is largely bipartisan. the fact democrats were in favor of tariffs traditionally. i am not sure the midterms will sway trump too much. i do think it will matter. >> that is true. we will see what happens at the g20. we have the fed coming out with a decision this week in overshadowed by the midterm elections. anything we should be watching out for? >> i think you're right.
it is overshadowed. the interim meetings will get more important as they update. this is largely seen as a dead meeting. fed,ssues for the confirmation they are going to go ahead in december. we need to wonder about whether they will make an adjustment to the ioer rate. and we are seeing the fed run down their excess reserves, which may see them curtail the balance sheet earlier than expected. that is what some are speculating. we are looking for confirmation. we are going to get a little bit of guidance. we are not going to get any clarity. >> great talking to you. thank you. mark joining us from singapore. coming up, we returned to the new economy forum in bloomberg.
we are less than 24 hours away from the u.s. midterms. polls suggest the democrats will recapture the house of representatives. a split congress could mean policy gridlock. that does not mean opportunity grinds to a halt. ramy inocencio has the story. where can we find these opportunities? >> pharmaceuticals and banks gainers, or come out relatively unscathed. my first bloomberg terminal chart, the biotech sector. you can find this in the gt the library.
those sectors are in the blue. i want you to know you are theng it is underperforming s&p 500. it has been since 2016. this could see a pop because donald trump has been threatening big pharma with price controls on medications. if there is gridlock, the democrats coming in, this could be a boon for these sectors. if they sweep congress, that is an interesting story. then there could be a fear trade because the dems could push their medicare system system which means lower drug prices. let's take a look at some of the stocks that could be impacted. amgen, i'll agenda. they could be impacted. up ton see while amgen is more than 7%. you can see there has been a fall.
about 5%.down by another sector we should look at is the bank stocks. take a look at my second chart. since see a trump bump the election. the index has been outperforming the s&p 500 until earlier this year. it actually is now below the s&p 500. they say they are positive. it seems because trump's regulators, he is going to be putting proposals in. even if the house does go democrat, the senate is expected to be republican and they will kill anything the house tries to pass. >> thank you. the newhaidi at economy forum.
haidi? >> thank you. speech,introductory michael bloomberg, we are hearing from the chinese vice president wang qishan. he is speaking in mandarin at the new economy forum. this is a very powerful position. it is an honor to have him here. whene expecting assurances it comes to the state of the economy. the openness of the economy and the effort to open forward. let's take a listen to what he is saying. --the chinese have lifted i don't know what member i am. th man of i am the 100 beijing.
some relaxing opening remarks for you. the response to the points made by mr. bloomberg. now let me share some of my thoughts. it gives me pleasure to attend the first new economy forum. the economic landscape is undergoing profound changes. it has international implications and many uncertainties. both challenges and opportunities abound. we have come to a new historical crossroads. challenge of the
expanding world economic growth. over the past 20 years emerging economies have enjoyed robust development and become agents of global growth. in the to changes landscape. a structural problem of the world economy, and the momentum drivers have old yet to be replaced by new ones. challenge of the evolving demographics. the population has expanded. it is aging in some countries and regions. getting younger in others. it has resulted in a serious
imbalance with human needs exceeding the current capacity of resources. new problems created by population growth. we are facing the challenge of climate change. far-reachingg a impact on human survival and diseases,t, creating hunger, and natural disaster. conflicts.pted more such challenges are threatening the earth, the shared home of mankind. challengeo facing the technologicaland
advances. the new revolution is gaining momentum such as quantum information, and genetic technology. scientific discoveries have always been a double-edged sword, posing difficulties to social security and national sovereignty and order. we are facing the challenge of worsening development. as innovation has made the world smarter, multinational companies are extending their conditional change worldwide to maximize interest. improvedh moves have distribution, they have caused a diversion's between regions and industries.
they've increased tensions between capitals and borders, widening the income gap. we are facing the challenge of insufficient governance of the world. interests,increasing development of new technologies and profound evolutions of the international landscape. we are facing the challenge of rising populism and unilateralism. globalization has impacted traditional culture. splitapid changes have
some countries and societies. polarizing populism has manifested itself. policies against globalization and affected -- challenges that, have turned into opportunities. development of emerging economies has presented new drivers of markets. population and pollution and migration is promoting the redistribution of global resources. creating huge is advancements and opportunities. the progress of medicine and science is helping break new
andnd in medical services public health. new technologies are delivering more benefits to the society. new thinking and culture are giving us more inspiration for future development. education and new communication methods are enforcing more people into discussions of public issues. promoting the transformation of governance. people's knowledge of themselves and the world has expanded, leading to better lives through peaceful development through innovation. a more achievable objective for this generation than previous ones. society, weanging
need to think in historical, cultural, and philosophical terms. carry forward the wisdom of past generations who adopted more than thinking, the dynamic balance for a way forward. distinguished guests, the progress of mankind is accompanied by challenges and opportunities. what we need to do is follow the trend of the times, keep to the right direction and stay the course. development must be present to address the issues in the world. countries need to respect each , build consensus, and resolve disagreements.
efforts should be made at home to reform innovation to transform the growth model and improve income distribution so that the people can truly benefit from development. the tide is often accompanied by the undertow. , economiccountries globalization is a trend will move forward with twists and turns. anger are not the way to address the problems that have emerged in economic globalization nor will barriers help solve problems.
instead, they would only exacerbate global market turbulence. economic globalization is not a zero-sum game. in the face of challenges, it is essential to step up in consultation and cooperation by upholding international order. that is the only way to build an open world economy at the higher level. mentalitycts cold war . we believe with mutual respect and support we can make economic globalization open, inclusive, so that its benefits are shared by all. >> you are watching chinese vice president wang qishan giving comments at the new economy forum.
he spoke about rising populism, the biggest change since the cold war, unilateralism threatening the global economy. he is emphasizing the changes of split countries and societies and the different development respected.d be not naming any particular country or leadership. the chinese vice president wang qishan giving his remarks at the bloomerg new economy forum. you can watch all of that speech and other panels on the terminal at live go. this is bloomberg. ♪
being a resolution to any kind of success in the u.s. and china. reiterating the same sentiment we have heard from xi jinping. you can continue to watch wang go on thech on live terminal. turning to japan. the country is interesting in tech. banksree japanese exemplify that. great to have you here. >> in japan no one thought you had to destroy the banks. the banks are very big. 24 smallest has about million account holders. ultimately any kind of disruption has to be top-down and bottom-up.
top-down, there are these strange things people do not want to use. bottom-up gets squashed. it started off as a bottom-up phenomenon with companies like financee and other companies putting out the services. the government jumped onto that. with the prime minister looking to revitalize the economy, the finance sector has been in focus. >> what is the biggest challenge? we talked about privacy and some of the issues. is it a lack of regulation or overregulation? >> in some ways it is a good thing and a bad thing behindions lag technology. too much at once you will squash innovation. regulation should and must catch space.he
there are many gaps in what should be regulated. in the financial space, access to financial data is difficult. companies like moneytree make it possible to share your data. there are people who may not be as trusted as moneytree. i think that is the area come the intersection of financial data and privacy that needs to be looked at. like the european union, the u.k., japan, there is a thing called open banking. many say, what is that? an interesting segue into explaining that. you have access to your data and you can share it with third parties. whether your bank would like to or not. it is up to you. who can you share it with. about an ipo as
annexes strategy. is that the case? >> no idea at the moment. it is not the same venture capital ecosystem as the u.s. is muchnt of time shorter. going to ipo for most companies is a later stage vc round in a way. >> what is next? is in australia. we started in japan. we have 2.5 million users. almost 20 financial institutions. open banking is taking its first steps. the government has been a big supporter of banking. some see this as more regulation. others see it as an opening of a floodgate. providing access to allow more innovation. innovation is not necessarily
good. progress is important. >> are you making money? >> personally? [laughter] moneytree is making money. we do not make money, make software to make money. we make money to make software. >> is that how you deploy fundraising? st companies take money from investors. companies like salesforce, all three japanese megabanks. we use that to build something that will generate value. >> what is the next big thing? >> for moneytree? or fintech? >> for you. someone with broad horizons. banking is taking its first steps. a lot of banks and software companies want to move faster. make data will
affordable and sure that with companies. .hat is the idea your information is valuable. it should be in your control. you should be able to benefit from it directly. you're not sure how your data is used and you get some free software. people would like to have a clearer and transparent deal with the company. about the expansion to australia. is that the beginning of more? >> absolutely. every open banking market is a region where moneytree can provide value. banksk with fintech and to extend that trust and also make sure it is done with the user in mind. >> what is your next priority geographically? just in japan and australia. is taking its first steps.
just getting the business and also the technology to a boeing -- to a point where it is well known. japan is further ahead than in australia. in australia and the government will have the first few banks on the platform. >> going back to the issue of privacy which has been the downfall of so many big tech names, is there a perfect balance between using user data and protecting users? >> i think there is. >> why can't these companies get it right? some of them do a better job than others. there is this thing called privacy by design. regulation is based on it. a company like moneytree has
been focused on that for a long time. privacybeen using the by design principle to guide how we develop services, how we developed the privacy stories so when people get a news service relating to, if you shared this, you get this benefit, we like to make it transparent. these are some of the principles that underlie how you can put the customer first. >> in your experience in bridging an economy like australia, what is the biggest difference between east and west when it comes to fintech? >> in the early days in japan, very collaborative. the banks and regulators were working together. really solve the benefit of innovation. in australia it was combative. some people wanted to destroy the banks. i think the rhetoric has died
down. it has become more of an ecosystem where the different players see the benefit of working together. japan has been ahead. even though japan is a little bit behind in the i.t. space, behind digital banking. in other ways in terms of regulation, providing support, japan is ahead. >> thank you for joining us. todayinating conversation and tomorrow. that was paul chapman, the cofounder of moneytree. we will continue to be live from singapore at the bloomerg new economy forum. we just finished listening to the keynote remarks from the chinese vice premier wang qishan . china is still willing to hold talks with the u.s. a lot more from singapore. this is bloomberg. ♪
studio. good to have you. let's talk about tomorrow. how vulnerable is the election to any sort of cyber attack? ,> one thing to keep in mind this time before the 2016 election, a lot of us said operational security is not good. it is not where it needs to be. i think we have done a better job across the board. at wicker, campaigns are using our product to protect their information. that gives us access to see everyone is using to factor authentication that is required. that is a big change. talking about the u.s. election system over a range of states and territories. how challenging is it to protect the smaller districts? >> it is a challenge.
you are right. everything is really controlled at the state and local level. we are trying to increase funding. that is a tough task. the i have seen is at higher level, the campaign committee level, you are seeing more investment. that is going to need to trickle down. mediahave seen social sites like facebook and twitter removing hundreds of fake political propaganda accounts. how much have they done? have they done enough? >> the private companies? they have done a lot. , talkingtant thing about state and local officials, they are running the voting machines. one of the reasons we are seeing it so quiet, our adversaries are in the winner's circle. it is the misinformation on top df those platforms that erode
trust. that is what they wanted. less than half of americans feel like voting is secure. andok my kid for a haircut got my car serviced. people were talking about, the elections are not secure. it is a meme. >> president trump talking about that, saying law enforcement has been notified to watch closely for any illegal voting which may take place. of course they will be subject to the maximum penalties allowed by law. even if we don't see actual hacking, disruption, how damaging is it this trust has been eroded? >> it is a big issue to tackle. people think every vote should count. when they don't believe that is the case, if this happens over a
multiple of election cycles, it could be damaging to our system. i think we have a lot of people motivated to do the right thing. people should be held accountable when they are misusing their vote. the internet is very young. we are just learning how to do this. >> voters, what should they watch for? first of all they should go to the polls tomorrow. that is one thing about trust that is damaging. don't become lazy and thing just because 50% of us don't think this is secure my vote does not count. you still have to exercise your right. there's all the things you would think about going to the polls like going to your email. if you see something crazy, don't do it. if you see someone doing something that is wrong, talk to an official. >> joel, thank you.
wickr ceo joel wallenstrom. day at thery busy bloomberg new economy forum. yeah, absolutely. more conversations. the important questions. also trying to seek solutions to leaders.makers, global we just heard from the chinese vice president wang qishan saying lateral is him is never is never thelism answer. you can watch all of the panels at live go. a lot more to come. this is bloomberg. ♪
♪ a.m. in hong kong and shanghai, welcome to "bloomberg markets: china open n." chinese vice president wang qishan has stated that the economy is going through its biggest change since the cold war. higher,s markets edge building on a late rally in new york, investors weigh the trade tensions and midterms. >> we are looking at sample facing pressure amid reports of an iphone production cut back. took it is an early loser. -- tokyo is an early loser. ♪