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tv   Asia Edge  Bloomberg  April 10, 2016 11:00pm-12:01am EDT

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a tale of two countries. crude rebounding from its lowest in more than 12 years. bank -- angie: world bank sees easing. table, the u.s. wants the south china sea discussed at the g7 summit. investigation, and inquiry by britain's fraud office. david: i am keeping my eye on what is happening with your money. weak start to the trading week. the good news we are off the lows of the day. we are seeing a lot of weakness across markets across the
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region. three days of fairly solid gains wednesday through friday. lots of people -- lots of data released this morning. machine orders fell just over 9%. in japan, forecasts were for a 12% drop. inflation out of china -- roughly unchanged. oil, open the above 40. so, the last 10 minutes or about 40.20 10. 42 .18. go with brent, let me wrap things up with the japanese yen, the main talking point across markets. high was 108
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wheres a two-year look at we are. your police in my trickle. eerily symmetrical. 17-118.te is 17 rishaad: the yen has hit a new intraday low. the longest winning streak since before abenomics was implemented. it is confusing and confounding a lot of currency strategists. we should be looking at this, some say, the way of bond investor would. >> economic fundamentals of japan do not lend itself to the
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idea of currency strength. concerns, volatility economic data better than expected. we are looking at the bond market. we are looking at how u.s. bond yields compared. after the boj went into negative rates, the japanese bonds fell negative as well. if you look at real yields, it is a picture of why we are seeing a surge in the currency. looking a lot more attractive in japan compared to what we are seeing in the u.s. we have seen the end up about 11% this year, the best performer. if you take this theory, we could see better upside to come.
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rishaad: how much pain are they prepared to tolerate? haidi: they are prepared to take a little bit more. an intervention coming through 100.the yen falls below we are still quite far from that. there is no international support for intervention at this stage -- not even close. the yen is nearing a value at the moment. we have had married rhetoric coming -- varied rhetoric coming through from officials. moves will not be
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tolerated. the other thing is japan's top bond forecaster has revised his , which was still in place as of early last week. he expects the bank of japan to make a further easing move at the end of april. this is taking place in the form of further etf buying. he does not see further cuts into negative territory. rishaad: thank you very much. a lot of people talking about the japanese yen. in if weers may step get to 105. 105 will be a very, very important level. the chance of intervention will rise materially. the level corresponds to the
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calculation of purchasing power parity. below that level, japan can justify the intervention. how damaging the strength of the yen is to the overall economy. >> it will have a very significant impact on the economic agenda and on financial markets, including the equity market, moving in lockstep over the past couple of years. yen weakness being positive for the japanese equity market. yen strength is hurting at the moment. it has shaken a lot of people's confidence in abenomics. we all believe this is temporary, but what is going to push and weaker -- push it weaker, people are struggling with that. rishaad: will the yen be a topic
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of discussion when the group meet in japan next month? expect the yen to be a particular topic. aboutpanese have concerns the yen, but i am not sure that other countries do. the yen is very much on the cheap side. angie: consumer prices rose again in china on the back of surging food costs. correspondent joins us from beijing. 2.3% was the march number for the consumer price index. that was below the forecast of 2.4% and it was in line with the
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2.3% number that we got in february. focus ofes really the this. they are up 7.6% year on year. pork and vegetable prices have played into that in a big way. in the firstp 60% quarter. still in the negative, down 4.3% in march versus 4.9% in february. that is a significant easing of those pressures. that will feed in to better corporate profits in the longer run and the pay down of debt as well. going back to the food priced, this is less of an issue, more about supply shocks rather than demand. analysts saying for the central government, the focus and a key
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concern is on deflation rather than inflation. the pboc may have its finger paused for future easing. commerzbank says they expect a rate cut in the second quarter of this year. might have to do something after gdp data scheduled later this week. we get the gdp data on friday. the forecast, 6.7% for the first quarter. that will be online with the government's target for the 2016 , 6.5 and 7%. we have heard from fidelity international, you need to break down the gdp number for china into a provincial basis.
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provinces -- some provinces came in with a gdp around a .9%. -- 8.9%. this could be a tale of two china's. look at it a on the provincial basis to get a clearer idea. we will get those gdp numbers on friday. lots of data to be looking at as we head into the week. angie: good point. thank you for that, tom. the world bank says east asia can weather the global slowdown. only marginally. growth in developing east asia and pacific countries will hold up through china's economic transition. lender cut its forecast for the
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region today. the world bank left its prediction unchanged at 6.7%. hour, wehan half an will be speaking to the world bank chief economist for east asia. you do not want to miss the interview just after 11:30. rishaad: a look at some of the other stories. we have tax cuts driving car sales in china. 7.8%, 2 million vehicles. rising demand in the first quarter for china's auto sector on track for 6% annual sales increase. the bank of east india -- the bank of east asia down. the hong kong lender has been targeted.
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britain's daily mail newspaper talksed -- reportedly in about making a bid for yahoo!. verizon and google are said to be among the potential bidders. angie: we will find out how -- became involved in a criminal investigation and the u.k. more when "asia edge" returns. ♪
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the stories making headlines around the world. an investigation is underway into a fire at a temple in
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southern india that killed more than 100 people. the complex was packed with children awaiting the start of a religious festival. when sparks from a pyrotechnics show ignited. it sent chunks of concrete flying about a kilometer away. myanmar has begun releasing the prisoners. the local media says around 60 students were freed by a court. they had been arrested a year ago after protests about education reform. the democracy leader announced a release program last week ahead of the new year celebration. spacex is celebrating a double dry up, a resumption of flights to the international space station and the first successful landing of its rocket on the
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platform. the booster defied strong winds to land on the barge and the atlantic. elon musk says it was an exciting moment and president obama tweeted his congratulations. this is bloomberg news. japanese stocks are extending two weeks of losses. say aboutthis abenomics. let's bring in victor. we can land the rocket on a floating barge, but abe cannot engineer growth. victor: it was never possible. the whole died -- the whole idea of abenomics was supposed to be monetary, fiscal, and structure.
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the only thing we got was monetary. lessmpact it's less and and less. the market believes abenomics has failed. nothing to do with machinery orders or anything else. from that perspective, can japan tolerate failure of abenomics? angie: are we going to see policy paralysis? viktor: it is going to be much stronger than 100. a deflationk into look 30 trap. the only way out of it is a massive fiscal stimulus. it is a mixture of the two. the central bank needs to start offering money for consumers to
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spend. rebates, vouchers, and chin support. -- pension supports. eventually, other countries will follow. the u.s. will follow. china will follow. the last one will be the eurozone. ultimately, the answer for everybody is the same. the government's must nationalize capital markets. angie: could we see a worse deal in japan had abenomics and kuroda not stepped in? is japan 100% to blame? >> no, it is not. there is no global growth. there is no global trade.
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.here is no global liquidity everybody is trying to steal growth from somebody else. china once a week dollar. eurozone wants a strong dollar. the u.s. does not want a strong dollar. it is a catch-22. they cannot be satisfied. all of those requirements cannot be satisfied. you cannot be simultaneously strong and weak. there is no growth, there is no trade. there is no recovery. if you had a different global outlook, japan could have looked differently. unfortunately, we are where we are. angie: we have to deal with the chips where they lay. what about interest rates? we heard from larry think. -- larry.
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>> russian roulette. you are loading the gun and hoping the bullet is not going to be in that particular chamber. negative interest rates are devastating. devastating for banks and insurance companies. angie: we are talking about an aging demographic, a timebomb in itself. >> not just in japan. the good news about japan, japan has a high productivity growth rate. thans a much higher rate the u.s., britain, the eurozone. robots. thank you for that.
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let's talk about china and all the rest will me get you back. the south china sea may be on g7 foreign the ministers meet in japan. ♪
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rishaad: you are watching "asia edge." the dispute over south china sea is on the agenda. it is a hit of the gc -- is the ahead of the g7 summit. they cannot be happy, beijing. >> they are not part of the g7, obviously. they will talk about all of the geopolitical issues within the g7 and beyond that. and that includes the tensions
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in the south china sea, which means their resistance to china's claims to more than 80% of those resource rich waters, which are also claimed by five other members. there will be a number of issues discussed throughout the rest of today. we had john kerry among the other foreign ministers laying wreaths this morning at the memorial in hiroshima. the highest-ranking official -- u.s. official having visited. precursor.g is a may 26 and may 27 is the g7 summit. they are trying to work out a presidential visit to that memorial.
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-- other issues, north korea japan's continual push. agenda: how high on the will the south china sea topic be? >> it has been put their by the japanese and the americans and it will be fairly high because it is one of the flashpoints in the region. china building an airstrip there, radar installations, laying claim with bricks and mortar's. the u.s. took it very seriously. the pentagon sending an aircraft carrier to the south china sea last month. china is not represented at these meetings. the foreign minister of beijing did meet with the british foreign secretary on saturday and mentioned that -- to not make this a big issue at the g7.
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rishaad: thank you for that. angie: let's check in on trading. over in australia, this is what it looks like. it is a 10th of 1% down, paring the losses after china reported its first gain in producer of 2013.nce september we are seeing regional broad selloff in korea. it has pared back from losses this morning. chinesehong kong, the producer prices. inhave inflation data coming . that is showing some signs of strength. kong, it is half a percent higher.
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the intraday high for the yen. we will get the latest on japan's reopening after this short break. ♪
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>> japanese shares are extending two weeks of losses after the yen broke through 108, the strongest since the boj's second round of quantitative easing began in 2014. machine orders dropped in february for the first time in three months. retreated slightly after breaking through $40 a barrel. concerns ease about a global glut. major producers league later this week to discuss a production freeze. on friday.d 6.6%
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the world bank says growth in developing asian economy will ease slightly this year. while countries from indonesia to china have benefited from policies, they still need to reduce their aversion to global risk. those are the headlines from bloomberg news. latest from the markets. china.let's start with that market seems to be the standout. have a look at that. it has been a while, a day like this, green across the board. we are up about 2%. you are looking at -- when you look at this group of stocks, your basic materials, talk about the overcapacity issues.
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we are seeing the likes of steelmakers leading the gains. basic resources, chemicals. we are looking at four straight months of a drop in producer prices. the other group of stock, brokerages. 4.5%. seeing the other market story today, dollar-yen. 107 .98. have a look at what that has done to the nikkei 225. a similar looking chart. 15,679.
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that is reopening in the lunch break. mostly risk off, with the exception of the chinese market. a few hours left of trade. the world bank expects easing, but sustained growth. forecasting growth at 6.3% this year compared to 6.5% last year. thank you very much for joining us. what are the headwinds we are facing right now? >> thank you very much. the headwinds we are facing are that of global economy still looks pretty gloomy. that is the bottom line. continuing economies
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to grow slowly, fairly broad slowdown across emerging markets, world trade not growing very fast, commodity prices remaining low. the big message is despite all of these headwinds, developing east asia and pacific has been pretty resilient and we expect it to continue to be resilient in terms of growth, looking ahead to 2016 and beyond. rishaad: we are seeing some when it comes to the u.s. economy. what is behind this? >> what is behind -- rishaad: precisely. >> what is behind it is the fact that -- it is a couple of things. china is still growing.
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it is still growing despite the slowdown in china. it is still a pretty gradual slow down and we project the slow down to continue to be gradual. china is continuing to grow and continues to be a source of demand in this region. evenof these economies among most of the major commodity exporters, the policies they followed have been prudent and they have managed to weather the storm thus far. weatheringo is not the storm? >> if you look at our projections going forward. largetlier among the
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economies is china -- is thailand. thailand growth rate will continue to be relatively low, certainly much lower than other large aussie on economies -- asean economies. -- this is a commodity importer. it is mainly because of lower demand from some of its major markets -- japan, in particular. it also points to some deeper structural problems. someecond is there are smaller commodity exporters -- mongolia is one that comes to mind -- that are having greater difficulty dealing with the
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current situation. rishaad: if we do see a sharp slowdown -- i am not saying there will be 1 -- how much is the rest of this really dependent -- is it the true motor of what is going on? >> i would not say it is the true motor because if you look at the export baskets of the major economies in the region other than china, they are still very dependent on high income economies. is chinaof the matter is the second largest economy in the world so it does play a huge role. link to a lot of the value chains that run through the region. in that regard, it is important.
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finally, it is an important source of investment in many of these economies, including some of the lower income once. income rishaad: let's talk about the structural problems for many of these developing nations as they gradually become richer. they need to make changes. i know some countries there is an others, perhaps not. >> that really is the question. it is a question on which we are very clear in our report. that has to be at the top -- among the top things on policymakers mines. policymakers' minds -- as aportant just to
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way of improving growth prospects in a difficult global environment. it is also a way of signaling -- ofility and signaling making markets feel more confident and that is the reason to move on this agenda. i remain optimistic that this relatively well managed and that is one of the reason for the resilience. i do think this longer view is needed. that is one of the reasons our report is tied to growing challenges. rishaad: great to talk to you.
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let's take a look at some other stories making headlines. is said to beered ready to sell $4.5 billion worth of assets in asia. is --s tell us the bank extended to indian companies. the other 3 billion covers assets across the rest of asia. the profit at product has fallen to its latest -- the profit at --rada hasfallen p fallen to its lowest in five years. it ismpany says uncomfortable to make any earnings projections this year.
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considering investing up to $20 million in the energy industry. importsrnment may boost of crude and natural gas. india currently buys about 350,000 barrels of iranian crude daily. identified audit lack of procedures and speciality steel. we have yvonne man taking a look at this all morning for us. yvonne: it looks like that is not going to happen because it is not going to be easy.
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this discussion on this program will be a hot topic. probe inbegan this december after this internal audit which found inappropriate testing, staff falsifying .ertificates statementout with a over the weekend. they did stop the practices after the internal probe. the timing could not come at a worse time. the formal talks start as early as today in the u.k. that is deteriorating for
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conditions in the u.k. as well as europe. that could be a crisis in the steel industry. the government has been trying so hard to find a buyer for tata steel. is that will be on the table today. liberty might back out of the deal now. yvonne: it is not going to be easy. sensing some doubt as how they will go forward, if the government will fulfill the terms he requested. he wants more relief when it comes to high energy prices. how much it is going to cost to clean up the site, $1.4 billion. he was quoted over the week and
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saying, if we don't do it, fine. he feels very passionately about this deal. he wants to be able to make this shift. angie: watching this carefully. more and moreng expensive to buy things in china, especially when it comes to food. will policymakers keep interest rate on hold for a while? our group discussion is next. ♪
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>> these are the stories making top headlines around the world. north korea says it has successfully tested an engine.
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says it is monitoring the situation closely. washington said a new antimissile system would deftly be deployed in south korea. plans have been unveiled for a new tower in dubai which would cost $1 billion in would be even bigger than the world's tallest building. construction is scheduled to begin at the end of june. have 18tower will only to 20 floors available for shops or apartments. manny pacquiao says he has required -- retired from professional boxing and is ready to serve the people of the philippines. he is running for senate next month but his poll numbers have fallen after anti-gay slurs.
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>> where are you now? retired? >> going back to the philippines to spend my time with my family and to serve the people. is bloomberg news. angie: when are we going to get a ko here? when is the pboc going to breathe a sigh -- waiting to exhale? haveinese will say, we stabilized the situation, everything is good. they have not done anything.
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dudley, thet for circumstance of the remember the -- rmb would be completely different. an equilibrium of currencies? most of our clients would love to see that. it basically removes a great deal of uncertainty because foreign exchange market is the only market not fully controlled by central banks. you can manage to stabilize it. everything else just looks a little better. i cannot see how they will stabilize it because they all want different things. some want higher currencies. some want lower currencies.
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that is exactly the backdrop we had -- >> back then, it was much, much smaller. the markets were much smaller. transactions nothing like it was -- nothing like it is today. now, we are far more complicated than that. there is also the euro-dollar market that no one is discussing right now. be, the answer would pboc has no idea. and they cannot have an idea because it is beyond their control. >> do you see china's appetite growing? >> it could be, but at the end
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of the day, what they need to do is to lower the currency. >> by how much? >> it depends what happens with other countries. it is beyond their control. one thing they do control is domestic structure control. if you put aside domestic restructuring, the only thing you've got left is international. the only way you can drive it is to cut currency. ultimately, there will be more fiscal spending, lower currency, lower stimulus, lower rates. i still think interest rates will go to zero. it is like a small moving train right now >> you think china rates are going to zero?
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rishaad: that is what we were discussing earlier about japan. which country is going to be the first one? you combine very aggressive monetary fiscal policies together, stimulating consumption, stimulating investment, which one? china and the u.s. could be the next ones. rishaad: you are talking as though we are looking at armageddon. >> that is exactly what they are looking at. if you do not believe the china and india numbers, the growth rate is not 6.3%. rishaad: even if it is half that, it is not armageddon. >> as soon as you start looking
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below 4%, you destroy the middle class. the whole essence of emerging markets is middle-class creation. why have we got stabilization? the u.s. dollar is down. as soon as the u.s. dollar went down, commodities went up. surprise, surprise, cpi looked better. what did you expect to see? from my point of view, it all .omes down to the u.s. dollar the question is, how do you youup everybody to give reflation on a global basis? the only way to do it is low dollar, lots of liquidity, and coordinated fiscal policy. we are all going to be on the same page in the next 12 months
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or so. [laughter] as usual, you are the pigeon of despair. that is enough, really. great seeing you. dropped its case against apple in california, but the privacy battle is far from over. boundariesat the should be. ♪
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angie: the battle between apple and the fbi. serves all sorts of
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questions, what is excepted bowl and what is not -- what is acceptable and what is not? >> a challenge with cyber security, a lot of work to be done to establish a common approach internationally on what is acceptable cyber activity and what is clearly a threat to national security. we are at the very early stages and there is more work to be done. intelligence gathering, surveillance. by far the most valuable source of information is data. data can tell you a great deal about individuals who were threatening you. in an open society, we should be
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able to protect ourselves from people trying to exploit are our openness -- exploit very openness. the presumption should be privacy. the presumption is that we should go about our lives free of surveillance. it is also very dangerous to spaces,ompletely closed completely private spaces which are impenetrable. it may give people certain comforts. massive opportunities to the enemies of societies, whether they are criminals or terrorists or pedophiles. they know there is no chance of being detected.
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us.e: that is it for rishaad: i will be back
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