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tv   Trending Business  Bloomberg  August 4, 2016 9:00pm-10:01pm EDT

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♪ rishaad: it is friday, august the fifth. i am rishaad salamat. this is "trending business". ♪ we will take you to beijing, tokyo, and singapore. asian markets flat at the moment. brent crude holding above $44 a barrel. up,in australia on the way
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expanding capacity in china. ahead, the yen takes the bite out of .erformance a lot to digest. the reserve bank of australia and half an hour. at what is ahead with that jobs report in the u.s. of risk events, , databa, jobs report coming out the last 30 minutes or so. philippines inflation numbers, 1.9% year on year. we were looking at a 2.1 estimate. just about flat from the month before. percent inflation out of
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acceleration an that goes back to april 2015, but still below the 2% to 4% range. at least we have inflation there. we are looking at gains are across asia. we are looking at 30% lighter than usual when you compare to what we are used to seeing this time of day. a third of 1% higher for contracts and singapore. earnings in focus in japan. shares of toyota, we will talk about that. announcing a buyback, 1.4
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percent of shares, as well as an upgrade from a brokerage. the other big market story is the bond market, yields falling for obvious reasons. level, 10e lowest year .6%. we did a survey on where analyst think this yield will be. .9%, so forecast is take out those revision pencils. u.s. 10 year flat at the moment, 1.5%. basiss tenure down one point. 1.9% for the aussie 10 year. trading is cautious ahead of the jobs report later on. rishaad: virgin australia 2%ning altitude, up by
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despite a forecast of a loss. people are taking some hard from this. $440 million impairment charge for restructuring, losing old aircraft. this is something we saw qantas result, a hugear impairment, then the market went up. rishaad: we saw them down a little bit worri. perhaps a rotation in the sector. 80s.about the a3 at an ceo was speaking event, saying they will continue to push them out. there is a decision on the 787's imminent, they may introduce a
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perth to london route. people not really able to absorb a380s. thank you very much indeed. toyota gaining in the session it isafter saying expecting a 37% plunge in earnings. let's get to tokyo. the yen hit toyota harder than its peers? impactta has an outsize due to the fact that it builds so many more vehicles than it peers. they also have more overseas sales, so when you see over the yen, aree years a weak
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boon to earnings, but as the yen has strengthened, it is taking a bite out of operating profit. let's hear what they had to say about this. canur production systems respond to rapid currency fluctuations. typically we would procure components and be more flexible introducing models in different locations such as japan, the u.s., or elsewhere in asia. >> he said they tried to use some flexibility to recover from this, but there is only so much you can do when you have 3 millionto keeping
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units of production in japan. for all the talk of flexibility, there is only so much you can do at this point. rishaad: how are they coping with these currency challenges? >> toyota responded to the brexit decision by internally embarking on a cost reduction campaign and taking extreme measures in their headquarters. some of the elevators are disabled. , seeminglyallest inconsequential cost, toyota is taking aim at that. the are also going after shinzo abe administration and calling for action. this past week, we saw the and the japanfle
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auto manufacturers association has asked that the cabinet to take action as a result of the risks that have been associated with the brexit result earlier this year. yen, not only strengthen, but all over the place. this is something that they talked about yesterday as being troublesome, that it is difficult to plan your business when currency is fluctuating all over the place. rishaad: great talking to you. right, a quick look at some other stories. company ise beer seeing flat sales. yes, kirin with the lowest sales forecast in five years citing rising competition and weak demand. it has cut its sales target by 1.7%.
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its overall sales forecast 3% to just over $20 billion, below estimates. n has restructured its money-losing operations in brazil. they are facing competition at home. 65% of revenue comes from home country. shares have been falling in tokyo on the news. they are flat year to date, up by just 1%. the bank of japan continues to pull out all the stops to revive the ailing economy, doubling its etf purchases to reach its new target. 690 $7 million of exchange traded funds were purchased on thursday. that is less than july's daily purchase rate. it shows the central bank is opting to increase the daily amount rather than how often it buys etf's.
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the boj needs to accelerate the pace after saying last week it byld boost annual buying more than $59 billion. goldman sachs has been asked to explain by new york's top banking regulator regarding its work for 1mdb. a letter ask for a meeting with officials at goldman sachs by the end of the month. they want updated information due diligence for three offers it underwrote. oning on disclosures, data transactions, and documents on coupon and interest payments. goldman sachs is not being accused of wrongdoing, but has been under intense security for its links with 1mdb.
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b is underat 1md investigation by at least four countries so far. at when we are looking china sneezes, these will be the first countries to catch a cold. a very good read at we will be speaking to the head of bmw and asia as they get set to show off a glimpse of the future in singapore. which markets in asia fidelity's favorites. this is bloomberg. ♪
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right, having a look at sterling falling by the most in more than four weeks after the boe cut interest rates. it was not a big surprise.
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this is the first cut since march 2009. the boe raising its asset or just target for the first time in four years. this is part of stimulus to boost the u.k. economy after the brexit vote. >> the decision to leave the european union marks a regime change. in some of the adjustments to takenew reality, many will time and prove difficult, but the u.k. can handle change. the senior investment director for fidelity international, what can the boe do to mitigate brexit? do not know what the relationship will be with the european union ultimately. ofthe full spectrum
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possibilities is still there, isn't it? a gentle divorce to something much harder line, so difficult to know what the endgame would look like. what they've done so far is sensible, everything we could have expected, cut interest rates, increase asset purchase program, everything you would expect to see. it would not surprise me to see a bit of fiscal stimulus. can -- ishat austerity off the cards? >> i don't know. we will have to wait and see what they do in terms of stimulus. i suspect it is more off the cards than it was before. we will see a stimulative package of fiscal measures to go with this. i think they are doing everything they can to make sure u.k. economy gets through this transition. at the end of the day, it is the uncertainty that is bad, people
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deferring investment decisions. rishaad: people aren't hiring. making ae holding off long-term decision, buying a house. bad news, sorly the sooner we find out what is going on, the better. this frame your investment strategy in this part of the world? >> it does. everything the boe has done and central banks everywhere are doing are still supportive of risk assets. think will happen as result of what the boe did is that risk assets will go up and emerging-market equities are included in that basket. we are still positive about the outlook for some of our asian equities in the region. china, indonesia, india, philippines growing far faster than anywhere else in the world with by that a reasonable. an interest rate
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cut, which drives down yields everywhere. people are looking for a bit of juice, aren't they? is that what you are doing as well? hungry for yield. >> that is the message and what investors want. rishaad: everybody is doing that. can stillt is you find pockets where you can get substantially better yields, yields are all about the income you get relative to the risk you take, and that's all about doing research, but equity income as an asset class still looks attractive. you have blue-chip u.s. equities yielding more than bonds, so why would you invest in their bonds. a blue-chip company is highly unlikely to go bankrupt, so they do look attractive. low interest rates and reasonable dividends are supportive of equity prices. rishaad: you're looking india,
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china, indonesia -- out of those, are they the most attractive? you don't see malaysia or thailand there. >> it is partly because they are growing faster than the others, so those are the four fastest-growing economies in the region and among the fastest in the world. they are large. they have good reform-based consumption stories going on. they are taking all the boxes. on top of that, we find good quality companies there that our portfolio managers can invest in that have good management, sensible stories, and goodbye you asians. we find them quite for tal investment destinations. for all of those reasons, we are overrate those four. rishaad: what about china? >> including china. the picture is mixed, and indeed our potent folio management attitude to china is mixed.
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the negative story on china is debt. reliant onll then the stimulus package in the first half. the good stuff we has spoken about before, the transitions up theving further manufacturing curve, shifting to services, insurance, internet. rishaad: it is a crowded space again, isn't it? >> yes and no. on oure ourselves research and think we can find good companies in those areas more thanrisk is accounted for by the valuations, so you can get good companies at sensible prices still. rishaad: let's go to japan now. it has been dominating the trading week. and we got this lukewarm response. >> we did not get helicopter
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money. rishaad: we did more or less in some ways, all but name in fact. a boj member saying this is not helicopter money. >> it was certainly an expansion of quantitative easing. the trouble is that monetary stimulus seems to have stopped working, not generating inflation in japan, has not caused the yen to weaken in recent months, therefore the market has given up hope on pyramid to stimulus in japan. packages taking over from the last one and adding a bit. abenomics is working well in one area, and one area only, which is corporate governance. we have seen a fantastic improvement and the way japanese companies are running themselves. rishaad: still getting there. >> absolutely. packagee of the reform was designed to break this multi-decade deflationary
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mindset, and that we have not seen that. rishaad: how does one deal with that? it is a tough one, isn't it? have gone to negative interest rates and people are still saving money. is deeplyet entrenched in japan and it is hard to break it. we had this demographic headwind , unwilling to go very far in terms of labor market reforms or immigration reforms to deal with those demographic headwinds. it is hard to see them breaking out morehat with radical reform. good stuff. thank you very much. right, up next, china's ever grand real estate taking , details coming your way. ♪
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rishaad: this is "trending business". has eight for a steak and arrival embroiled in an ownership struggle. tom mackenzie is watching this for us. how significant is this. give us an idea of the players and how they are interacting or not interacting tom:. not interacting. it is a big deal because it involves two of china's largest real estate developers. bought shares through a subsidiary, making it the fourth largest shareholder. e's reason they gave was vank
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strong financial performance as china's largest developer. it is in the midst of an ownership battle with its largest shareholder, which has built up a 25% stake in the developer. it looks to some as though evergrande has joined the fray. they expect the battle to escalate as a result. have thewhat regulators had to say about this ownership dispute? tom: they are pretty anxious. management toke's into the dispute and criticize them for ignoring market stability and tarnishing image. has said it is the object
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of a hostile takeover. they won't have missed the tencent pop in a-shares yesterday when they hit their daily limit on the exchange following the news report about the share purchase. beenad: has evergrande making other acquisitions? yeah, they have been on something of a buying spree. the mostone of acquisition-hungry developers in china. year, they paid $500 million for a stake in a group. last year, they bought massmutual power and new assets. they are trying to expand their portfolio beyond property, and increased their stake in she ngjiing bank.
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this will focus attention on that battle for takeover. rishaad: tom mackenzie there. the reserve bank of australia the latest take on the aussie economy. we will bring that to you as soon as we get it. ♪
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♪ rishaad: a look at our top stories, asian pacific markets on the way out. it follows that the boa rate decision. crude holds above $44 a barrel. investors looking ahead to the latest u.s. jobs number, expecting it to return to this year's average. after australia gaining disappointing loss of $200
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million. the carrier says it is on track to meet savings target. qantas deferring delivery of superjumbo's, saying it would struggle to cope with them. the ceo is determined to press ahead with his turnaround plan. shares on the up in tokyo despite a 10% plunge in earnings as it grapples with the yen. billion off the income of the seven biggest carmakers. toyota taking a $2.3 billion hit. the companies have asked shinzo abe for help. lookinge where we are at the moment as the trading day kicks off in hong kong and shanghai. positive for the start of trade here. david: positive with thin volumes. help tosking for
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alleviate that move down. the reporting time between these march-april-june. the other thing i want to point out is we have a lot of inflation data. , have a lookppines at the moves today. ,tronger on the philippines $47. inflation of 1.9%, just below the central-bank target. rishaad: getting straight to the reserve bank of australia, quarterly statement being released. paul allen is all over this. paul: not a great deal of change. the reserve bank of austria saying inflation is likely to remain below 2%. remaining at 1.5% through december.
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also, the growth forecasts are to 3.5%similar to, 2.5% for gdp growth for the rest of 2016. if we look at the aussie dollar, it fell briefly in the wake of the release of this statement, but it has climbed back some of its gains. underlying cpi expected to remain quiet for the rest of the year at 1.5%. let's get more on that as shares rising stronger today even as it sees and earnings plunge, the strength of the yen responsible. bloomberg thinks toyota should be spending more. what is the rationale here? why du suggest that? do you suggest that? scale andda has the
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profitability to ride out rough patches. if you look at the world's yotaest companies, tou is on track. look at the biggest carmakers. the third most profitable on the operating margin level. $19 billion in net income last to thehat was equivalent rest of the japanese car industry plus the french car industry, plus a out chrysler, less kia. plus chrysler, i think this is a great opportunity over the coming years for carmakers to spend. industry is about to change in ways that are dramatic
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as it has been in the past century. we have sales of electric cars rising 50%, 180% in china. we are seeing a dramatic move , evens self driving cars ford reckons fully autonomous cars will be on the road by 2020. you are seeing people like uber, who are rethinking the entire ownership model. toyota is cutting capital spending and r&d spending. spending fell for the first time since 2013 and the march quarter, and they are not improving much this quarter. to win the future, you have to spend money to get a technological advantage. rishaad: are there too many carmakers in japan? who is their biggest threat? that's true. there are too many carmakers in
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japan. is so much larger than the rest of the industry that its threat is not so much domestic as it is international. it is also not tesla. volkswagen.s both flag 'sey have long coveted toyota ground. for the second year running, they outpaced toyota. they spent 77% more on r&d. they had a $15 billion settlement to put the emissions scandal behind them. toyota needs to watch volkswagen and see what it is doing to stay ahead. rishaad: the u.s. jobs figures have been flip-flopping the last two months. economist having a look at july
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numbers, see them returning to their average. we are looking at what we might expect later. 180,000 jobs, that is what bloomberg media forecast friday when the u.s. bureau of labor statistics reports july nonfarm payrolls. the jobs number was hugely , then 287,000ade in june as hiring managers looked beyond global financial markets. 180 thousand four july becomes a reality, it would mean a return to near average monthly growth for the first half of this year. enough tobe strong change market expectations as well as the fed's rate hike path? bloomberg intelligence tells me, probably not. the july jobs report would have to come in somewhere between 225,002 250,000 jobs for the fed
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to start thinking about reassessing things. even that would not put september back into play for a rate hike. fed fund futures are pricing only a 16% of a hike next month. once 2% growth, but in the first half of the year, the economy has only averaged 1%. if we don't get to 2%, there is zero reason to be raising rates. the unemployment rate is forecast to fall to 4.8% after in june,to 4.9% happening as more people enter the labor market looking for jobs. the july jobs report comes out friday 8:30 a.m. wall street time. we will check on some other stories we are following. thailand voting on a new constitution that critics say
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restricts civil rights and offers the military government too much power. nextection is promised for year if past, but has not made it clear what will happen if rejected. it carries 10 year jail terms for what it calls misrepresenting the truth. has vowedh president to pursue the cleric he blames for last months failed coup. u.s. and thehe president of turkey says every assistance to his movement is a bullet fired against turkey. the turkish president called on washington to extradite the cleric. $33 billion worth of damage with less than 2% covered by andrance, 760 people died 800,000 buildings were destroyed
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by rising waters in the basin and northeast china. the scale of the floods was at a magnitude not seen for at least two decades. to the markets, having a look at what we're watching. rba policy statement what is going on? were just talking about inflation, the lack of it. we just heard what we are expecting from the jobs report, and some people are saying regardless of the number, the hurdle is quite high for the fed to hike rates. really about when everyone else is cutting and easing, we had more than 150 forms of easing from the start of last year. we are now close to 700 rate cuts since the global financial crisis. inflation or the lack of it, the coming in at one .9%. have a look at this graphic.
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the central bank has a target range, 2% to 4%, remaining below that range for 15 months. a lack ofxactly inflation. that is the inflation wrap so far. have a look at oil prices. -- $44, rather, on brent. a huge amount of shorts were built up before 2-3 days ago. that is leading to a rally in currencies like the ringgit. it is still asia's worst performing for the past month. we are looking at the slowest pay some growth in seven years. you have these investigations scandal.1mdb
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consensus is a further drop in oil prices. that is the consensus and read for dollar-ringgit. to mention, innt gm china out with earnings, a big drop of 19%. street rap, analysts have reiterated by or hold. a lot of people have been watching this. the stock collapsed 95% last week. up 112% this week so far. people are taking advantage of the short seller report driving the stock down. that has picked up about 112%. it is up a further 3.5% right now. let me wrap things up with what
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else we are watching. earnings continues to be a story in japan. out with first-quarter earnings, beat estimates. 1.47% of shares. rishaad: thank you very much indeed. coming up, art cars becoming smart devices on wheels? the managingwith director of bmw asia on the future of carmaking. ♪
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check of theick latest business flash headlines. atldwide air travel growing the slowest pace in five years as terrorism hurts demand. passenger numbers rose 3.5% in the first half, way down. suffering higher
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capacity, lower fares, and revenue down as well. u.s. airlines have declined 20% this year. agreeing to buy the baltic exchange for $100 million, shareholders offer the equivalent of $210 in cash for each share. baltic may sweeten the deal by giving shareholders a dividend of $25. theping rates have shaped course of falling commodities around the world. salesn go and mcdonald's growing by 27%. customer increase, 15%. chose to eat at its restaurants because of pokémon happy meals and a collaboration with pokemon go. also, celebrating macdonald 45th anniversary in japan.
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cars becoming smart devices on wheels as technology companies work hand-in-hand with car manufacturers. bmw is one of the market leaders. asia is director of bmw joining us. this is a concept car behind you. tell us about it. >> good morning from singapore. this is our concept car. we strongly believe the future will be electric, autonomous, and cars will become mobile devices. you can see many of those features in this car already. rishaad: concept cars rarely make it into production, but elements of them do. what are the elements from this concept vehicle that will become mainstream and a few years and become standard on a bmw? i think you can see most of
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the elements in the car in the future production. can drive fully autonomous, which we will have available at the beginning of the next decade. other things like connectivity will give you information about the morning and so on. is startingrybody to get into this autonomous vehicle space. do you think it is perhaps getting a bit too crowded? it's like always, you have trends. we clearly want to lead the trends. we are putting in a lot of effort to make it happen. a lot of questions have to be answered to make it happen, but we are working with singapore together because singapore might
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be one of the ideal places to test it out in the future. rishaad: what is the business strategy? you say we will get autonomous cars at the beginning of the next decade. as we have incremental autonomy , but what is your vision like for the next 3-5 years? a lot connectivity will go into the car, and also battery technology will improve massively. and i8, andn our i3 now this technology is going more into our core brand, where you can see the hybrid technology moving into our core brands, which is then called ip erformance. rishaad: let's talk about the
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market and how you are doing. you manage southeast asia and china, but which is your strongest market currently and the one where you find a few headwinds? actually this part of still the fastest growing, and we predict the growth will continue. a lot of opportunities for businesses to make here. if you want me to pick some markets in the region, i would probably at the moment pick a vietnam. we have seen strong growth over the past three years in vietnam and it seems to be continuing, but we are also exploring new markets. we entered myanmar in 2014. this is not the volume market we the next 5-10 years as want to enter the markets early and establish our brand there. , what about hong
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kong, philippines, and other places? where are you getting the headwinds? these countries generally suffer from a lot of political changes in a very short time, so fluctuating development in those markets. you mention the philippines, the philippines has had very strong growth for a couple of years, and the same development we can see there as well, but we know that this region will have some up and down. we have seen it in the past, but we will go through them. rishaad: what about china? sure you are in conversations with your colleagues there. what are you making of what is happening and how is the slow down and packing what you have in mind? impacting what you have in
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mind? >> in china, we call it now the new normal, but we are still growing and china, so it is not double digit growth, but single digit. yesterday, the overall trade is 15%, so not too much depending on china in myanmar and trade relationships to the other parts of the world as well. rishaad: very quickly, what about cultural differences. customer inersus a this part of the world, are there differences and what they like in their vehicles compared to europe and the u.s.? >> partly. mean what you experience in asia is you have on the who focus
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entertainment system, and we also see more and more people moving into the cities, so therefore you spend more and more time in the car, and therefore we really concentrate on the connectivity of the car and make the car your office and your entertainment. rishaad: great talking to you. have a good win. bmw asia. up next, the road to rio has not been smooth. the opening ceremony hours away. it is 10:52 p.m. in the evening there in rio de janeiro. copacabana stadium in the foreground there. right, this is bloomberg. ♪
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over to let's get
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social media. rio, the look at olympic host the city. we have seen real anticipation ahead of the opening ceremony, which will be tomorrow morning our time. we do have live video of the stadium in rio de janeiro. the athletes who participated in the rehearsal were told you cannot put anything on social media. you think they listened? no. a lot of photographs were put on a snapchat account. supermodel in the opening ceremony, dancing, and portuguese influence. everyone getting excited about this opening ceremony.
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maybe the somber. i know this has been marred troubles and blunders. the austrian team calling the olympic village unlivable. the u.s. basketball team is staying on a cruise ship. are concerns about political uncertainty and the zika virus. rishaad: here we go. what are social media users saying about all this? juliette: there is excitement. countdown down to rio 2016 is trending. a street vendor says thinking about the olympics leaves me revolted. the politicians want to trick us into thinking things are great here, but they will see the filth and the money our leaders are stealing. interesting than the sports themselves. rishaad: lovely. thank you.
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thank you very much indeed. up next, going for gold in rio. hong kong's olympic committee will be telling us their ambitions for arguably the world's biggest sporting event. ♪
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>> from our studios in new york is "charlie rose." charlie: the new york police department's commissioner bill bratton is here. the new york times described him as the most widely recognized face who reshaped the image of what a policeman could be. he will step down. in september. chief james o'neill will succeed him. he began as a beat cop in boston and rose to lead the police department in boston, los angeles and new york. he is known for his aggressive


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