tv Bloomberg Daybreak Asia Bloomberg December 6, 2016 7:00pm-8:01pm EST
less. >> the big banks are busy. >> this is the second hour of "daybreak asia. i'm yvonne man. good to see you for the second hour of daybreak. a recap of what has been happening on wall street. markets up across the board. the trouble rally trembles on with telecoms the biggest gainers. a sense of relief in the market. let's go to the market board with david ingles. the absence of macro drivers, we have the ecb tomorrow, markets at least this
year have tended to move up. now is the story right across markets. you look at what is happening. been trying to push these new highs on the dow jones, two point short of the record. we are looking at gains. we asked a lot of people why, a lot of money in the system. gains across these three markets. australia, up ahead of the gdp report, going to be a very busy kind of data released this wednesday. on top of that, you have trade out of malaysia. trade out of taiwan. the rate decision out of india. you look at the forecast, the foreignone, china, reserves report. a lot of people looking at that in terms of whether or not they really intervene and how much they have to spend to smooth out
these violent flows in the fx space. currencies, nothing much. this is what happened tuesday. the euro, dollar-yen, interesting note from analysts. going tore we are not get a lot a movant in dollar-yen up until say the holidays. a lot of central-bank decisions. when you look at liquidity, that might lead to some price action. we are looking to be set at 4 four 115. the 10 year, highest since february. these two, reports of a tie up. they say there are not the source of that report. nothing to report at the moment. up 3% on the back of this
tweet from donald trump. i believe you will be chatting about why and what happened here. yvonne: we will watch one that does happen. he has met donald trump in new york. mr. trump: he has agreed to invest $50 billion in the united states and 50,000 jobs. i want to thank him. >> thank you very much. been coverings this story. make boldo predictions about the future. investment ins an the u.s. and donald trump. toward startups and
new companies. bloomberg companies have said it will not go toward m&a. the money will come from a $100 billion tech fund which he is raising money for, along with the saudi arabian government which has a commitment to that tech fund. a prettydent elect, positive footing with donald trump. he wouldd he said never do this had we not quote won the election. this is what he said, had to say after the meeting with trump. i would like to celebrate his presidential job. i said, this is great. the u.s. will become great
again. maybe the keyword is deregulation. masayoshison bought t-mobile back in 2013. they were not keen on the competition issue there. the trump administration as seen as more likely to give the green light. even though he has not been inaugurated yet, we saw it close higher. we are seeing the pre-ripples. let's go back to the technology fund. what are the details? some of the money is coming from
japan, some from saudi arabia. they are trying to get money elsewhere. rosalind: that is exactly right. you have 45 billion dollars out of $100 billion coming from the saudi arabian government. $25 billion is coming from masayoshi son. the rest is coming from other investors. close to tying up the $100 billion figure. he said he planted to be the biggest investor and technology over the next decade. he has invested in a lot of tech companies, such as alibaba and yahoo!. out a0, he laid three-year plan which involves something like 5000 investments, to give his unborn successors a foot ahead. he is definitely laying out plans far into the future,
beyond on your and my lifetimes possibly. ramy: softbank is up, about 4%. the biggest jump since november 10. thank you very much for that. let's get the first word news now. elect trump has tied his guns on a new target, air force one. he says the order with boeing should be ridiculous -- is ridiculous. it says reduced requirements would mean a lower price tag. president saysn he is prepared to resign in april over the undue influence scandal that has embroiled some of the biggest companies in the country. she agreed to accept the outcome of an impeachment vote in friday. while ad be suspended
court rules on the constitutionality of the move. battleyear design patent between apple and samsung still is not over after a ruling from the supreme court. thes ordering a review of $399 million fine for copying aspects of the iphone. apple may not be entitled to the entire profit. rio tinto group chief executive told bloomberg television he is it interested in expanding the er's diamond business. rio tinto controls one mine in australia and another in canada. have more.love to
we have continued to refine the portfolio. 1.3ave only disposed billion dollars of assets. those are not fire sales. focus to make sure we have only world-class assets. >> global news, powered by more than 2600 journalists and analysts. this is bloomberg. the flight of the yen from china is starting to boost funding costs. our chinag in correspondent, tracking this story out of beijing. what is the latest? >> what we know is money market rates have been rising as a result of the pboc trying to pull back on the liquidity and credit binge they have been on.
it is not just the pboc that has led to this rise. outflow.yuan we have a couple of charts that illustrate this. the fourth shows the outflows. of the yuann that flowed out in the month of november, the 13th consecutive month. they expect the outflows to continue. most were down to foreigners moving money abroad. by the end of the year, that was more domestic households and corporate as well. that takes us to the money market rates, the second chart. it shows a drop off in activity in the repo market. seventh day benchmark has edged up. this is because the pboc has been trying to drain liquidity. that takes us to our third and
final chart, the corporate bonds and yields. result ofighs as a the high-tech conditions in the money markets. question, at what level and how many more corporate defaults are we likely to get as a result of these costs? test readings are out today. what is on radar? tom: we don't have an exact timing but we do expect the survey points to a drop of $60nd $2 billion u.s. -- billion u.s. that of course points to the fact that policy makers here are burning through more of those reserves to pop up the yo
uan. we know they are going to make it more difficult for these megamergers. they are making it more difficult to move yuan offshore. complex terrain policymakers are having to navigate. difficult and competing interests. ramy: definitely pushing ahead those outflows. tom mackenzie, thank you very much. still ahead, airbnb seeks to make its presence felt in china. but can it fair better than uber did? alreadymarkets have priced in a fed rate hike next week. what our expectations beyond that? we will discuss that. ♪
latest headlines. pressure,has raised family patriarch for overstepping his powers. he says the group has overstepped its corporate guidelines. try is no longer on the payroll. randall&t boss stephenson has defended its deal for time warner cable. in his testimony to a senate antitrust committee, he says the combination will disrupt pay-tv models. he says the deal will allow faster development of content online. biggestgoogle is the corporate buyer of clean energy. it expects to run its whole company on wind and solar by
next year. it aims to buy enough clean power to meet or exceed needs at its data centers. the fall and oil prices has accelerated the program. australia seeing its economy contract for the first time in five years. the gdp to your coming through. great to have you here. investors, they were burnt by the exit. slightly burned by donald trump winning the presidency. with italy, we took the right approach. how do you engage the reaction we have seen? josh: let's hope it is not, three strikes, you are out.
it shows the change occurring in markets and positioning going on. it is a shot across the bow. i think it is likely to continue. yvonne: what have we learned when it comes to pricing in geopolitical risk? talking about italy, germany and france. these elections. how do you square all that? real question is proper geopolitical risk, things that are badly expected are if you think about these events, everyone had taken a position. predicted the outcome, they did not predict the way the market would react. people are so were grossly positioned for some of these negatives, the market can work in the opposite direction even if it comes true. yvonne: it seems as if you are
taking a cautious approach. you mentioned cyclicals, but you have to be selective. the coupling we have seen when it comes to cyclicals, it may have been driven by this surge in yields we see globally. once that stabilizes, what do you think that means for this run for assets? josh: it doesn't always go in one direction. i think it comes back to the point, we have had a 35 b year bull run in bonds. are we going to see a change in that direction? the common belief is we cannot see inflation again. yields cannot change direction. if people start to question that, it is going to change the way people allocate their assets. is thatjapan and china,
going to be the play for 2017? how much momentum is behind some of these bull markets? josh: it will take time. a 35 year market trend, if it is going to change, it will take people time to change their minds. i think it will take time and be a bit of a cautious approach. i think there are going to be opportunities and people are going to be more selective. some of the cyclical assets have run very hard to read some of them, the fundamentals are not going to change. it is about to get about the changes going on, changes in attitude towards pollution in china. what it will mean not just for the type of assets but but the ty of commodities. ramy: in terms of specific stocks, what you think might be a jump in terms of that?
josh: if we look at what has happened over the last few months, surges in cold and iron or, we saw negative positioning and low levels of pricing. we saw a bit more interest come into those areas. i would see that movement in other areas that are impacted. things like steel prices, for example, these are areas that could be more interesting going forward. copper,ok at areas like that being an area getting more interest at the moment, it does fit within the same aspects. we don't have quite that same tension with cash relative to production. supply cuts are less likely. the we look at that i demand from the buildout of the china infrastructure grid, that is less likely to reignite in the same way. that is where you need to make tween whatations be
you have access to. ramy: i have to bring up oil. we have seen a lot of volatility off of the opec trade deal. what are your thoughts on where this is going? this could be a foundation for you. but maybe not if we see a default. josh: if we look at oil from the technical perspective, the top end of the range, there will be a bit of difficulty there. i prefer to go back to what we see from a fundamental perspective. the change we have had from the premise of the coil we were talking about a few years ago, we are seeing genuine demand, challenge to demand. s energy policy. for theicient standards transport fleet. fundamental changes. from a supply perspective, we have seen shale.
shale has a much faster cost out. from those perspectives, i think we should expect a lower trading range in oil and a bit more caps for the upside. always the possibility for a event or terrorist event, but over the long run, that is how we expect oil to play out. ramy: the head of asian equities . thank you very much for your time. still ahead, the looming trump presidency oils markets, the financial sector has new reasons for optimism. why a couple of banking boxes are getting -- thanking bosses are getting very bullish. ♪
su keenan has more on this. is this being driven by trump's policies? su: his policies are all about growth. sweetuts banks in the spot. let's hear what jp morgan has to say. ceo said trading revenue will be up at least 15%. than recent years or at least last year, indicating bank stocks have been surging on hopes trump policies will unleash business. looks like the last two boxes on the right are the most recent revenue. this is going to be even better than that.
let's go exactly into what the bank of america ceo had to say . 15% gains in trading revenue sounded about right. saying, look at the charts of the bank's performance. it is all about banks on fire since the election. bank of america up in a big way. jpmorgan, almost the same rise. what it means for jpmorgan's amond is you will see growth. onnne: what is the story insider trading? su: you could be liable even if you don't make money off of the sharing a tip. if you share or receive a tip but no trading or profit takes place, can you go to jail? the answer is yes.
ramy: breaking news from australia. it just released its third-quarter gdp figures. all allen has the latest from sydney. than it is much worse expected. a contraction of 0.5%. the market was expecting a smaller contraction. a big shock. gives us an annualized figure of 1.8%. take a look at the aussie dollar. it has stepped off a cliff. this was always going to be a backward looking number and we
expected some drag on growth after the balance of payments earlier this week showed net experts would be weighing on growth. the bank mentioned it yesterday when it held the cash rate at 1.5%, it expected weaker growth. this has probably outstripped their worst expectations. third-quarter gdp contraction in australia, 0.5%. i will take it from here. 0.5 percent down, that is quite a bit. we will focus more honestly a markets."n "bloomberg 9:40 in the evening for you folks in new york. lots of questions on growth here. we did see the rba keep things on hold. meanwhile, first word news.
is regaining some ground after slipping from 16 month highs. attention shifting to which non-opec producers will join russia in reducing output. the cartel is hoping nonmembers well agree to cut another 300,000 barrels a day. -- sincek the markets may has not been priced in. the opec deal has not been priced in. we should go pretty fast to 60 or 70 next year. tightening overseas investment. outboundmonitoring investment in sectors such as retail, hotels, and sports. they are especially interesting
in companies investing and non-core businesses. in non-core businesses. the currency in myanmar has fallen 10% against the dollar. an official has said he is trying to cover a very rough draft. -- drop. november is supposed to be a freezing month in the northern hemisphere but it has not. arctic ice has fallen to a new low. 300,000 square miles below 2006, a difference larger than the state of texas. see water was 40 degrees higher, preventing ice from forming.
global news, 24 hours a day. this is bloomberg. yvonne: it is time to see how the asian markets are shaping up after the disappointing third-quarter gdp out of australia. let's go to david ingles for more. david: quite a horrible number out of australia. very quick reaction here, yields fell to 2.77%. when you look at the aussie falling, it recovered -- back to your equity market, that is the cash market. we are looking at, let me do it, my apologies. 74.30 is your level. the next level, 73. let me get my ink back. that is your low back on
december. how does it look over two days? where the rba goes from here, they said the exchange was a little bit too high. i'm curious what the rate swaps are doing. that does indicate a future action from the rba. have a look at the broader markets. speaking's, it is still an up arrow story. a lot of this comes back to what we are expecting from the ecb. the narrative from a month back when people talked about, are they going to taper? are they going to say something about tapering? when you look at what analysts expectedg, taper talk
from the ecb. that happens thursday night, 0.5% for the sx 200. let me check in on the japanese yen. of thes that because central bank decisions and the holiday, we are unlikely to see big moves in dollar-yen. in terms of stock watch, here in the u.s. at least, telecoms and financials got the biggest bond. anything similar on your side? david: how look at tpg telco. it is very much a local story. these three others, softbank. thet of this comes down to meeting between its founder and donald trump. it is taken from a previous pool of money softbank essentially said side. it loads well for the company.
bodes well forly the company. shares opened higher. watch for these bank stocks. there was a report out of the nikkei newspaper, both were discussing a capital tie up. right before the markets opened, they had a joint statement saying they are not the source of the report, although they are talking about perhaps a merger. chances are, given sort of i fors experience, watch out any announcement that may come later today. a look at australia, there we go. tpg telecom, this comes down to earnings. it is a company that makes car parts. diy kind of guy and you want to soup up your
car, they distribute some of the parts. them ingles on markets. we are going to get a preview. prime minister- modi's bill is putting pressure on an economy losing steam. it is down to the cash crunch. kathleen: the cash crunch convinces the reserve bank that this is the time to cut the key rate. when the governor was taking over, he surprised markets with a cut. economists 26 of 33 seeing a rate cut hours from now. let's take a look at the bloomberg chart that will show the movement in the key cash rate over the past several years.
look at the india 10 year bond yields. their benchmark is down may be as low or a little lower than the cash rate. traders saying, if we get a rate cut, that could rally even further. let's move on to that they question about the monetization -- de-monetization. 500,000 rupee notes out of circulation. disappointing of gdp growth. let's look at where we are at that. not so bad really, as we look at the chart. the white line is the measure, gdp. quarter. actually higher, but it was supposed to get to 7.5. the gda, another measure of growth in the indian economy.
it is pulling down a bit, 7.1%. you can see the de- monetization, it seems to have lost a bit of steam. 0.5 percentut a cut. yvonne: some economists say short-term, this could create chaos but long-term, it could be good. it is still early. people are trying to figure this out. this happened november 9. when we were focused on donald trump. that is when prime minister modi stepped up with this. this is a cash heavy economy. 80 percent of india's consumption is done in cash. itsman sachs has slashed
fourth-quarter gdp forecasts. it sees a fourth-quarter gdp of just 4%. compare that with our recent estimate, taken after the de- monetization was announced. this is hitting the farmers hard. saying, maybe it will not be so bad. let's take a look at another chart. what you are seeing is a 10% drop in economic activity overall. banking will be boosted. for private wealth, the wealthiest are those being forced to move their money into the light. people who are poor, the poorest people, are not affected by this.
the conjecture will wealthy people will use some of these two pay them fees through their accounts. a lot of bookings. retail sales. annette impact of only 0.2%, according to our team. year ending in march, 2017, will now grow by 7.5%. they were looking for 7.7%. not a big move. maybe we won't see much more rate cutting from the r.b.i.. not surprising, if you are on the monetary policy committee, you are doing the prudent thing which is to try to offset this, soften the impact and maybe they will just be happy if the economy does not slow down too much. yvonne: we will see without rba decision a couple of hours away. thank you. airbnb seems to have taken a lesson from uber's sudden retreat from china by adapting
slower and more local approach to gaining acceptance. what is airbnb doing differently? look.is a fascinating business school graduates, students for years to come are going to be look at these cases. china, theory in middle and final chapters are far from being written. uber's final chapter has been written. after spending two billion dollars rushing in, and then rushing out. they were going up against the big giants. up against an alibaba backed company. at the time who were fighting each other and then they merged and uber could not compete. what they did is they blocked from wers from access
chat. airbnb doing differently? onsy can learn less from uber but they are partnering with the right people. they are partnering with alibaba. also, they have embedded airbnb into wechat. today,portantly, as of they are storing their local servers, their data for china to comply in china with the potential . not a potential law, a national law coming out this summer where foreign tech companies have to allow their data to be viewed by the chinese government. ramy: what is the competitive landscape in china? who are they up against? going up against the big guys.
they have to grow organically but also through m&a. they are in the process of buying a mid tier rival with about 100,000 listings, adding to the sunday 5000 listings airbnb china has now. forbiggest rival has 450,000. also the expedia affiliate. ar star they are starting slower and have more options. ramy: thank you. popping up all over, short term retail rentals are a growing concern. we speak to a provider with more than $1 billion of listings. the ceo of storefront joins us next. ♪
"daybreak asia appea." ramy: pop-up stores are an increasingly common in our cities. storefront works with thousands of clients including startups and global brands that include google and target, even rapper kanye west. let's discuss the changing face of retail. you are basically the airbnb of retail. how does this work? >> technically, yes we are the airbnb of retail space. we are a marketplace connecting brands. with spaces in london, paris, new york, and now hong kong. ofy: what is the process
finding a space out there? when i use airbnb, people put their homes up for rent. it just as easy as malls putting up these spaces? >> it was the biggest challenge and opportunity to read nobody believed it would be possible lurethe marketplace to brands to lease space as easily as a hotel room. you are able to book a space in two hours. emergedyou recently with a french a start up. can you quantify how big a market this can be? pop-up stores? can it ever be as big as airbnb? >> we are hoping it will be even bigger. why? because we are disrupting the commercial real estate base. we are getting the question quite a lot. we believe overall, the market
is around $21 billion. $7 billion in the u.s. guys are more focused on the business side of things which could be a little bit harder to scale, sometimes. you recently launched in hong kong in october. you are managing 4000 brands in europe as well as asia. who is using it? international brands that want to expand in asia? given -- we were hoping to bring u.s. brands to asia. we have seen a local scene of upcoming designers looking for some help in order to set up a pop-up store. it has been hard for european transparency in
terms of price. an easy way for them to target retail spaces. on top of that, we are providing insurance for each booking and making their lives easier. tell us about the physicalnce of a pop-up store, a brick and mortar store, when you have this surge in e-commerce. many of these brands just go to an alibaba website and can generate $17 billion in sales. square that when it comes to the rise in online sales? rise of online sales will never be perfect until they find a way to connect with their clients, their users, in the off-line world. we have seen even amazon aiming the next-up stores in
12 months. google set up a pop-up store in new york. even the almighty online players need physical space. retail what about the sector in hong kong, it has been gloomy. what is your outlook? >> we have seen a change of outlook from the landlords. storefrontthey feel is a fantastic tool for them to either bring visibility to their vacant space, make money, or also just save money by finding short-term tenants. was hard for us to convince them at the beginning. yvonne: great to have you here. the storefront ceo joining us. still to come, the potential extendsmpact if the ecb its bond buying program. ♪
reduced if not a limited. the market to a certain extent has begun to anticipate that. have 2 trillion or 3 trillion. yields have gone up by 30 or 40 basis points in the eurozone. almost as much as in the u.s. the real world is coming back to bear in terms of the central bank policies. in my view, and the central bankers view, maybe mario draghi's view. do you think italian referendum changes how mario draghi moves forward with policy? you suggested beforehand, whatever it takes in terms of potential negative reactions in bonds, aa tell you in
five or 10 basis point moment but not much. point,t important obviously, are the situations with the italian banks and the stands that the eu and ecb jointly take in terms of bailing them out. positive for the italian economy. it is a smooth over. lots ofhink covers up problems in italy and perhaps in other countries as well. nonperforming loans that cannot be dismissed and swept under the rug. yvonne: dallas bill gross speaking earlier. -- dallas bill gross speaking . -- that was bill gross
speaking earlier. i have a question about the gdp figures out of australia. third quarter, falling, contracting 0.5%. a 0.1%imate was for drop. quite a big mess. we did see economists revise down there forecast after that net export figure yesterday. a negative figure was a possibility. us for nowis it from but plenty more to come. we are counting down to several more market opens in asia. yvonne: this is bloomberg. ♪