tv Charlie Rose Bloomberg February 9, 2017 6:00pm-7:01pm EST
>> stocks rising to records the dollar jumping, treasury falling. trump promising a tax plan he calls phenomenal. >> trying to sell the benefits of the alliance to a long-time skeptic. >> there he is arriving at andrews air force base. no trump bump for twitter. shares tumbling after the outlook for revenue and profits fall short. >> economists expect a surge in china's january exports. we'll preview the friday figures. >> this is "daybreak asia" come tog you live from bloomberg's
asian headquarters. i'm betty lue from new york where it is after 6:00 p.m. >> it is just after 7:00 a.m. here in hong kong. i'm yvonne man. happy friday. the bulls really came out to work on a snow day. i'm glad you made it as well. >> record day on wall street. here in asia the big focus is going to be the trump-abe meeting as we see his plane touch down in maryland. >> you know, as garfield reynolds our reporter there in asia aptly pointed out what the markets want is no news. they don't want anything market moving coming out of this. they want this to be a nice, smooth meeting. let's just get it over with and hope both sides come away even more friendly than they are already. those are live pictures of shinsue abe the prime minister landing at andrews air force base where he will be holding all day talks tomorrow with trump and then, yvonne, heading over to palm beach for a little golfing. >> maybe a little warm weather there to ease up all the
pressure the markets are honing in on right now. they'll be talking about trade, possibly the currency as well. as well as how they'll benefit this decades-long alliance. there's been a lot of talk since their first meeting after the election and since then quite a bit has happened. the u.s. withdrew from t.p.p. he's also labeled japan a currency manipulator. we'll continue to watch all that going through here but first things, let's talk more about that meeting, betty. >> that's right. as you just saw, right, president trump and as we were just talking about getting set to welcome the prime minister and as we saw with the pictures just landing at andrews air force base. bloomberg's deputy white house editor mike dorning joining us for more. mike, tell us more about the prospects for the meeting between the two. mike: well, it's really a getting to know you session. they'll be talking about contentious issues but i wouldn't expect to see a specific agreement coming out of this.
they'll be talking about the whole gamut of issues, north korea and the commitment the u.s. has to the alliance with japan. >> and there has been some controversy, right, about this meeting and also about abe heading down to palm beach. >> mike: well, the controversy is not i don't think that big a deal in the u.s. there's been a little bit of controversy because they're going to go down to president trump's personal property. however, the president has said a gift will simply make of the fee for the room for the prime minister. in many ways it is kind of a very good environment for a world leader to get to know president trump. on the one hand you have the business meetings at the white house and at the same time in the same trip you are having a more informal day at the golf course at one of the president's prize properties, so the president can kind of show off his wares to the prime
minister. >> you know, i know trade is a big issue but the currency talks as well. we've heard from japanese officials saying they are hoping abe can avoid the issue and push it further along the g-20 but the white house has also backed away from the accusation that japan is manipulating it again it seems. mike: well, what has happened is the president hasn't backed away from this. it is sort of sometimes hard to know what the lower level officials, how well read in they are. however, we've been told by a white house official that the currency manipulation is, quote-unquote, not going to be on the top of trump's list. it suggests at least the people around trump would rather this summit not focus on that. and, as you know, it's been a contentious issue when trump's spoken about this. the japanese have pushed back very hard on this allegation that the japanese are manipulating their currency.
>> and, mike, here in asia especially the markets as well really responding to this letter that trump sent to the chinese president. do you think china is going to figure into some of these talks today? mike: absolutely. that will be front and center in these relations and these talks both in an economic sense, in the broader trade atmosphere with china, and, also, in the security area. i mean, when you have these territorial disputes over islands, that'll definitely be a subject of these talks. as will the overall japan-u.s. alliance, which is a key, key underpinning of the security of japan in relation to china. >> all right, mike. thank you. mike dorning there in washington for us and of course we are keeping our eye as we are waiting for prime minister shinzo abe to emerge at any moment from his airplane. in the meantime, a stock closing at record highs with the dollar gaining, treasurys falling after president trump
saying his tax plan would be phenomenal. joining us now to recap all the action is our guest. no details yet. that was enough to fuel the market. >> the market has been uncertain about the details. they like certainty. they know they'll get details and along with the jobs data we'll get to was enough in strong earnings to push us into intraday and of course the records. a lot of green. let's get to the numbers. teflon announcing a new model 3 -- tesla announcing a new model 3 sedan. iron stock forecasting earnings growth. it says if trump can follow through with his promises they'll scream a lot higher. but twitter was the big disappointment down double digits. let's go into the bloomberg. how bad was it? cory johnson will be along with more details but in terms of the size of moves on earnings, it was a big move. quarterly revenue and profit missing, surprising given this is the medium of choice it seems of the new president. anyway, we'll have more just after this.
>> okay. and oil and the role of goldman sachs here talking about the bullish view on opec production cuts. su: goldman's view is you'll see a real shift to a supply deficit within the first half of 2017. a rather bold pronouncement given we got near records here in the u.s. alone. if we go to the bloomberg once again what we'll see here is the gray underneath showing the buildup in u.s. supply t's near records. light blue line has dropped toward the right-hand side of the graph and that is opec production. as it drops, goldman believes that is going to control price. let's take a look at the price chart. because while oil has fallen off, it is now back above 52 and that is taking us back to where we were in november. betty: su, quickly let's talk about the u.s. jobless claims numbers. it showed fresh signs of improving labor markets. su: absolutely. this was a surprise statistic.
let's take a look at what the numbers were. lowest unemployment since november. lowest unemployment claims. jobless claims fell by 12,000. that's much more than anyone estimated. it's a nice little reassuring piece of data that shows the labor market indeed improving. quickly, on the earnings, the reason the earnings report is giving a bump not just fundamental reasons if we look at dunkin donuts which was up almost 8% and locked in a 4% gain. there are a lot of technical signals out there positive for stocks like this. you see the blue boxes. that's where the short term and longer term moving averages intersect. that tends to be a bullish sign. it's called a golden cross. for dunkin' one of the big performers today there is an indication it goes higher from here. >> thank you. now let's get to the first word news. >> thanks so much. first up nissan says it'll seek to rein in car rebates in the
u.s. after posting a third consecutive drop in operating profit. the company spends the most of japanese auto makers on u.s. discounts. it maintained its profit outlike while competitors have aised their earnings forecast. >> we sell more cars and trucks compared with industry average. however, the ratio is now reversing and we will focus on producing more profitable trucks. the rise in incentives is just temporary. >> singapore has unveiled strategies to drive growth after what it calls a dark shift away from globalization. a committee led by the finance and trade ministers says free and open markets remain vital for the nation and the global economy. 2/3 of singapore's g.d.p. is generated by external demands and the committee warned rising protectionism will hurt all countries, particularly small, open ones. we'll discuss this further when
sing moraes minister for trade and industry joins ruesch later n bloomberg market asia. the philippines central bank has opted to hold fire on an interest rate hike even in the face of rising inflation. the central bank kept benchmark rates at a record low 3% as predicted by all 17 economists surveyed by bloomberg. it is still expected to be among the first in asia to raise rates this year with consumer prices rising in january at the fastest pace in more than two years. breaking news, back to yvonne. >> thank you. let's look at the live pictures now out of the joint base andrews in maryland. you are seeing, about to see here shinzo abe, the japanese prime minister, set to come out of the plane to meet with president trump here today in the u.s. for that anticipated meeting. a lot that is really being held
up here with the market. a wait-and-see mode yesterday as we looked for details of what was going to come out of this meeting. but trade issues here, betty, obviously front and center. also with currency manipulation. it seems like the white house at least has softened the tone when it comes to attacking that type of policy. as we talked to mike earlier about this, there is still the uncertainty on what trump can say during this weekend. betty: there is but certainly more friendly terms, right, between trump and abe than trump and other asian leaders, yvonne. and, clearly, the u.s. president is rolling out the red carpet for shinzo abe. needs one ally and a very significant ally in asia particularly as he tries to talk even more tough against china, so a very significant meeting between the two. yvonne: they talk about this delicate dance. he has to maintain this
relationship with the u.s. but he also has to try to please the companies and the japanese people back home because a lot is really holding on when it comes to the auto sector here. donald trump has brought the whole industry under fire here with those tweets. there he is. the prime minister shinzo abe coming down the steps right now. as he joins at joint base andrews in maryland. betty: and the flashes of light going off. perfect picture opportunity there. more breaking news, yvonne, as this is happening the appeals court is keeping the u.s. doors open during the immigration fight. this is all i have right now. the ruling is expected to of course be at any moment we are expected to get the ruling here. it's not clear to me what this headline is exactly saying other than that they're keeping the u.s. doors open during this immigration fight. so, again, this is the ruling
in san francisco pushing this case closer to the supreme court. so it looks like, guys, producers, give me a little more direction here. the appeals court keeping the u.s. doors open. it may be a setback here in this legal fight. indeed, it looks like trump has been dealt a setback in this legal fight over the travel ban. so, again, the headline coming through. looks as if the appeals court is siding with the state. the states here in this immigration fight. but of course this is not the end, yvonne, to this case at all. this would automatically -- or as many legal analysts have said, automatically head straight to the supreme court in this fight. yvonne: we knew either way this would lead up to that level. so we'll continue to watch those lines coming out from the san francisco appeals court. meantime, let's talk about twitter here right now. twitter shares fell the most in nearly four months after revenue growth slowed to just 1%.
efforts to win more advertising have yet to pay off. let's bring in bloomberg's cory johnson in san francisco right now. of course, the twitter earnings are really looking -- go ahead? >> on the immigration story to give awe little context here, what is going on is happening right here in san francisco. and interestingly, that was an appeal of a washington state decision, a federal court judge. the appeals court here in san francisco has decided to maintain the stay of the order, which is what this is all about. so what we expect now is the case to move from here in san francisco to the supreme court. we expect the trump administration to appeal the ruling that just took place here in san francisco and then to move that appeal to the supreme court, specifically to justice kennedy to look at that appeal and see if he would overturn that suspension of the executive order for president trump. so this will most likely move to a new venue and we'll see if
the appeal does come from president trump, from the trump justice department and therefore move the battle to the supreme court. >> cory, wasn't it expected that if trump walked that we could automatically get an appeal from his side? in fact they may have already prepared that brief in anticipation, right? cory: yeah. so i think the expectation is exactly what you said, betty. if the president and the white house lost that they would appeal the supreme court. interestingly there was some speculation if the other side lost, if the states lost they might not appeal this one. they might appeal the order in boston because it was more narrowly considered. so they might have better likelihood of overturning the appeal or appealing the institution of the ban that happened in new england rather than the one here. this one looks like it has gone in favor of the states.
there is a business issue here too. we had over a hundred companies here in california, sill convalley, technology companies in particular siding with the washington state court saying this ban was bad for business. it was bad for the economy. it was going to hurt the economy of the united states and they wanted this ban overturned. so this is a very big business issue. this isn't just about international human rights. now this is -- the ball is in the court of the white house and the trump administration to see if they want to appeal this decision that took place moments ago here in san francisco. >> very significant. as you mentioned, cory, extremely important for sill convalley. cory johnson in san francisco. i want to get to our supreme court reporter with more on the breaking headlines. so, greg, of course the question now is, what happens next here? greg: well, i would certainly expect the trump administration to go to the supreme court. probably very quickly. they will ask the supreme court to do what the ninth circuit wouldn't do and put a hold on this lower court order that's blocking the policy.
they'll have to get the support of five of the eight justices to make that happen. >> greg, you know, the case before the supreme court, though, this appeal would go to justice kennedy who is part of the ninth circuit. what do we expect to come out of that if it does lead to that? greg: justice kennedy gets all emergency applications from the west coast so they would go to him first. he could act on it on his own. in a big case like this it is much more common for the justice to refer to the full court. that's what i would expect justice kennedy to do in this situation. so then you end up in the situation i was talking about where they will need five of the eight justices and that means getting at least one of the justices from what we think of as the liberal wing of the court. >> greg, just talk about how bag setback is this for the trump administration right now? what kind of effect and response do we expect from them?
greg: you know, it is a significant setback. not just because of how important this policy is and how big this dispute has become. this is a 3-0 decision. there were two democratic appoint ease, one republican appointee on this panel. judge clifton the republican appointee sound'd little more supportive of the administration during the arguments. now, taking a quick look at the decision it doesn't, you know, say that this policy is unconstitutional. it does say that the three judges say that it's likely that it did violate at least the constitution and at least some aspects namely with those people who have been in the country previously, that their due process violation rights may have been violated. the court did not get to -- did not say anything about the allegation that this is a religious discrimination as well. but, you please, in terms of the magnitude of this whole
thing it is a pretty big setback for the administration. >> greg, i just want to bring in some pictures we have from the ninth circuit court of ppeals in san francisco. obviously a lot of reporters and press waiting outside. just explain to us, though, if this does go to the supreme court, which of course is widely expected, who takes that on? who takes that on? greg: you mean which justices? >> exactly. which justice takes this on? greg: well, we're talking earlier, it goes to justice kennedy, who is -- who is sort of in the center right of the court but i would expect him to refer it to the full eight-member court because that's what justices typically do in this situation like this. now, one thing that, just to watch out for, is they might ask for much as they did at the ninth circuit the administration could ask for what is known as an administrative stay, which would be even before you decide whether you're going to
reinstate the policy, temporarily reinstate the policy while you decide whether to reinstate it for longer term. so we may get like two stages of action at the supreme court in the next couple days. it depends on what the trump administration asks the court to do. >> okay. hang on, greg. i want to bring back cory johnson in san francisco. cory, how do you think sill convalley, other than obviously those who -- silicon valley, other than those who signed on to support the, you know, support the states, how do you think they'll react to this? what exactly is going to be the impact? cory: well, look, silicon valley relies a lot on immigrants and immigration. there are so many important companies in silicon valley that were founded not just by immigrants but by refugees from war-torn countries whether steve jobs the son of a syrian immigrant, or, you know, andy grove who fled the holocaust to come here and start intel. and companies like google, you
know, one of the google cofounders, his family fled soviet union. so it's really an important part of the fabric of silicon valley. but i think that this battle, you know, greg talked about the significance of this battle and what kind of setback this is for the trump administration. if we were to take them at face value, this is something that they wanted this temporary ban is a big setback. i think there is also an arm within the white house that seems to really embrace conflict and seems to really like to get people riled up about certain things so they can say, we were fighting for this thing. we'll give you a fight. as opposed to, we're trying to get this thing done. so in as much as they wanted to say, we're fighting for this thing. look at all these people fighting against us. this is proof that we're fighting on the other side. they got that. and the uproar about this, to certain people within the white house who wanted to say that the media is against them and want to say liberal mesh is against them, now they can say
california is against them, the ninth circuit is against them. they're getting that fight and able to carry that argument back to their supporters. i don't think they're completely miserable about the way this has been handled and the way this has been played out in the public over the course of the last week or so. i don't think they're really that upset some of these people about the protests, themselves. >> greg, you know, the trump administration says they will fight back. how long of a time line are we talking about here and how long could this legal battle continue to unfold? greg: well, it could be many months in terms of the full egal battle. it is going on at various levels. this one has to do with a temporary restraining order designed to last at most for a couple weeks. meanwhile, while this is happening and this is going to go up to the supreme court and that'll happen in a matter of days, there is another stage of the fight that is going on at the federal district court in seattle for a longer term order
halting the ban and that is called a preliminary injunction. that would last a, you know, could potentially last for several months so, again, we've got several stages of this fight. we're going to see something at the supreme court probably in a atter of a few days. and we may continue to see this fought out at the lower court level and return to the supreme court for an even bigger fight. >> it may indeed. you know, greg, i want to take a little step back. was there any kind of indication that this is the way this ruling was going to come out just before this was issued? greg: well, the court gave us a heads up that it was coming. obviously we all heard the arguments a couple days ago. you please, i think from that argument most people who listened to it thought they seemed to be leaning toward the states maybe not unanimously the way it came out. this is generally pretty consistent with what we heard.
i do think if there is anything i look at that i'm surprised about here, it's that judge clifton, who, again, seemed like he was somewhat favoring the administration, he was very skeptical of the religious discrimination aspects of this case. but he's onboard with this order and so he agrees that at least for now the ban should not be in effect. and that is, you know, donald trump has been attacking the juan uribe. donald trump has been attacking the judiciary. now it's three and including the district judge where this case started two republican appointed judges who have ruled against him at least on a temporary basis. >> i'm glad you brought thaup. not that any of what we've heard over the last 24 hours on what, you know, justice gore satch said about donald trump's comments being disheartening and, you know, there's just
en an unprecedented comments or news around the judicial system. what do you make of that? not that that would have influenced the outcome of this but what do you make of all that context in reference to this immigration case? greg: well, i think that every single member of the federal judiciary has taken note of what the president said. they are, even where they -- even if they disagree strongly about, you know, how to interpret the constitution, they're pretty much unanimous in their view that judicial independence is really important. they're willing to take criticism from the executive ranch. but they also fiercely defend their right to say what the law is which is what the supreme court has been doing for the past two centuries. it may not change the rulings but they are very cognizant of how, whatever they say and do in this case, is going to be,
you know, talked about and received and perhaps twisted in he world at large. >> now that we see the legal battle seems to be prolonged, now that the trump administration seems to want to fight and continue on to reinstate the travel ban what does it mean for trump's other policies? the markets hope for some type of pro growth, spending, all these things we're focusing on, hasn't quite delivered yet. do those all just take a back foot now? cory: i think what this really points out is how there really is another side to every argument. i'm not -- what i'm saying is some of the policies that the president has spoken very vokely about cut against other ideas he spoke about. this is supposed to be a pro growth, pro business president but you have businesses of
every stripe coming out against this move in immigration. you have the judge in washington saying, this is an antieconomic -- a dangerous move economically. it is going to hurt business. it's going to hurt economic growth. economic growth and pro business is exactly the central plank of donald trump's presidential campaign. and yet you have this immigration policy that both big businesses, small businesses, and the federal courts now are looking at this and saying this hurts business t doesn't help business. when we start to think about some of the other aspects of the proposed policies or even imagined policies of president trump, whether infrastructure repatriation, all of those things are double edged swords. >> cory, thank you. cory johnson, greg stohr, thank you for staying with us on this breaking news. yvonne, just want to mention i've had my donald trump twitter page up and i've been refreshing every few seconds waiting for him to say something about this, you know, what is his reaction.
>> live pictures out of san francisco at 3:30 in the afternoon. right now we are just seeing here outside the courts, appeals court here in san francisco after they kept the u.s. doors open during the immigration fight. quite a big setback here for the trump administration, betty. >> yes. widely expected that the trump administration is going to directly appeal this decision up to the supreme court. it is 6:30 p.m. thursday here in new york. and markets close on a brighter note. also on trump. based on his revelation that his tax reform plan is imminent in a few weeks. i'm betty lue here in new york. >> plenty of news here this morning. i'm yvonne man in hong kong. you're watching "daybreak
asia." >> thanks so much, yvonne. as you and betty were just talking about a san francisco based appeals court has rejected the trump administration's request to reinstate the president's travel ban. it means the u.s. will remain open to refugees and visa holders from seven muslim majority countries. and the biggest legal setback yet for the new president. the ruling increases a likelihood that the administration will ask the supreme court to step into a case that is testing trump's executive power. japan's prime minister will meet with president trump on friday. shinzo abe landed in the u.s. earlier this hour and will be look tog reinforce a decades old alliance rattled by trump's tough talk. the president has withdrawn from the t.p.p. and criticized tokyo for what he called unfair business pract sis, currency manipulation, and not paying nough for u.s. security.
he said the central bank shouldn't be in any rush to raise interest rates next month. he says uncertainties over trump's policies is clouding the economic outlook. there is roughly a one in four chance of a rate hike. bullard isn't a voting member of the commit thee year but says the risk means the low rate regime should remain. >> therefore a relatively low policy rate would be appropriate going forward. >> and twitter shares tumbled after quarterly revenue and profit outlook missed analysts' estimates. shares closed down 12% the most in almost four months. the social network is having trouble luring advertisers and use torse the platform. it only added 2 million active users in the fourth quarter. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries.
this is bloomberg. >> thank you. we have breaking news now out of this division from the appeals court to keep the u.s. doors open during the immigration fight. the justice department now speaking out saying they will be reviewing the immigration decision and considering options. let's bring back cory johnson to talk a little bit more about this. concerning options what are some things that the justice department needs to look into now, now that we do have this decision from the appeals court? >> interesting as greg just mentioned the appeals court did not say anything apparently. i haven't finished reading the order yet specifically about the religious aspect. business was mentioned a lot but also the religious aspect, the notion these were predominantly muslim countries that were subject to the ban. some of the bans temporary. the ban for syria was not temporary. and the notion that that weighed into it. that didn't seem to play a part in the court's decision here. i think it is relevant because you have a former new york city
mayor rudolph guiliani adviser to president trump did an interview over the weekend saying president trump asked him how to legally craft a muslim ban. now, guiliani said this may not be that, but the suggestion there in the words from president trump on the campaign trail suggest that he is looking to do exactly that, have a muslim ban, not just a ban on people from certain countries but it was also related to religion. the supreme court might not have grounds to review that aspect of this hold on the presidential order in what the district court has given them. and therefore we'll also see if the justice department, now that four judges have looked at this particular order, and all agreed that the president was out of bounds with this, that in fact maybe the justice department won't appeal this. maybe this is as far as this is going to go. they've gotten the attention of this issue that they wanted and they're going to move on. this was after all for every country but syria merely a temporary ban. >> yeah.
indeed. as we all just have right now only a review from the justice department at this moment. cory, just getting back to the business world, and particularly the world of silicon valley, it was only just a month or so ago that you had silicon valley crease -- c.e.o.'s, all those guys flying in to meet with trump and to try to work with the administration. has this issue made it almost toxic in a way for these silicon valley c.e.o.'s to work with the trump administration and to be as friendly as they want it to be, you know, a month or so ago? >> yeah. i was actually there in trump tower that morning or that afternoon when all of the c.e.o.'s were trucking in. i got there early in the morning to talk to the only news outlet any of those c.e.o.'s talked to, they talked to bloomberg, and what was
interesting was she was there early because it turns out she had some secret meetings to get herself on the transition team. also on the transition team a representative of i.b.m. they have huge business with the federal government and they of course want to get every opportunity they can to do that business. on the same way, huge pressure on companies, notably uber, employs so many immigrants as drivers for their service, so many of their customers depend on uber's drivers who come from all over the world. and there was a movement on twitter to get uber, to delete uber because of the involvement with the government and with the trump administration in particular. so a lot of pressure on some of those companies to take a stand here. indeed, you saw that from all kinds of companies, companies like microsoft, companies like facebook, and others. apple and many others signing on to protest the trump
administration's effort to keep these immigrants out of this country. >> okay. and, cory, we finally have heard from donald trump on his twitter. as i mentioned, i was refreshing it every few seconds. in all caps. shocking there, too. see you in court. the security of our nation is at stake. again, that is what donald trump has just tweeted out. see you in court. the security of our nation is at stake. cory: this -- i really think that within the white house, within the administration, there is a handful of people who probably really like this fight. they like this battle regardless of how it goes because they are able to say to their core base, the media is against us. the courts are against us. we're fighting for you. we're fighting against these people from these countries. we're trying to make america great again. we're trying to make america safe again. >> but, cory, the way you're saying that makes it sound like
a small group. some of the polls out there show that there has been a significant number of americans who have supported this executive order. cory: there are absolutely some people who support this executive order. we know 2.5 million more people voted against trump than for him but they are really appealing to that base and certainly this has warped up that base and you can see in some of the numbers that have come out. regardless of what happened in the court here in san francisco today that the -- just having that ballot, you see it happen in the meeting with the white house press corps, having that battle helps them prove their point and prove that they can have their alternative facts and their own alternative battles regardless of what so many companies in america are saying and what so many people in america are saying. the protests have been extraordinary. the fact that the c.e.o. of google was out at the san francisco airport protesting against this administration i think is really notable and we haven't seen much. we haven't seen corporate
america get behind political issues like this in any time that i can remember in my lifetime. betty, i'm old. >> you're not old, cory. what are you talking about? >> older than i was. i'm not blonde anymore. >> we're all getting gray hairs with all this breaking news. okay. david and goliath. tell us if there is any market reaction here to all of this. >> well, surprisingly there is not much reaction at the moment as you can see from the board behind me. it is basically where we were post cut off about a few hours back. having a look at gold for example there. 1227. biggest drop there in a few weeks. that being said it was a three-month high. just to extrapolate, what all of this may mean i guess for markets especially, the dollar especially when look at yields and even as far as i guess the potential what, changes to the aller's spectrum of options to
now start considering. does the market need to start rethinking or continue rethinking the ability of donald trump to push through a lot of these economic promises and pledges now that we're starting to see a lot of these hurdles? i mean, that is just something to consider. again, to answer your question, betty, not really a lot of reaction at the moment. of course it was a day when the yields were up. we'll get an update of course when japan reopens later and the bond market may be starting to reflect all of the news flow. that said very quickly have a ook at futures in japan. australia is up for a fourth straight day. in the last 10 minutes or so actually added to the gains. we're looking at the nikkei to open north of 19,200. so immediate reaction, none. implications? we'll start talking about that perhaps in the next few hours. guys? >> we'll see if there is any talk of the yen during this abe-trump meeting. thank you. when it comes to verbal intervention donald trump's
trade policies, one big reason why the bank of mexico raised a key rate for a fourth straight meeting. soaring gas prices are also in place. what did the bank of mexico do and why? let's bring in our global policy and economics editor for more. >> hiking rates four meet andre agassi a row. yvonne, after the 50 basis point increase, the 6.25% by the bank of mexico, their key rate is now twice, double what it was just in december, 2015. just over a year what a big move. to put it in the bigger contempt with donald trump and his policies and the steps he is taking if nothing else it shows there are real costs, immediate impacts on many of just his intentions of what he wants to do certainly in mexico. we have seen it on the peso. the peso is down as much as 15% after the election. it has come back a bit, down 11%. look at the volatility. among the world's most traded
currencies this is the one that is most volatile the past few months. you can see the currency turbulence as we pull up this bloomberg chart from one of our terrific bloomberg news stories earlier today. top left, donald trump is elected, boom. peso falls nearly 17% to inauguration day the lowest, it rebounded a bit there. think about it. what is going on here is this currency weakness is exacerbating their inflation rise. they're raising rates. you know what? if donald trump renegotiates nafta, if donald trump goes ahead and builds a wall, if donald trump puts a border tax on all of those are things that could hit a very export-dependent mexican economy. you can see the bind the bank of mexico is in but look at the inflation they are facing and why they've taken a bit more hawkish stance today. we're going to look now and you'll see headline inflation. that is the white line and inflation expectations, the blue line, headline inflation spikes up. in fact the january number
4.72% year over year. biggest monthly increase in nearly 21 years. it is now well above the yellow line which is a 3% target. the other thing that's happening is all this stuff goes on with donald trump and the mexican government has had in mind a plan to boost gasoline prices. actually drop subsidies. if you're a mexican filling up your car at the pump to you it is a big move up in price. about 20%. people have been protesting this, etcetera, etcetera. bottom line, inflation is on the rise. donald trump and trade moves threaten the economy. the bank of japan -- i mean the bank of mexico has to keep raising rates. >> can the peso rebound? how important are trump's moves here on trade for mexico? >> another big story today on bloomberg, looking at juan carlos rosade the latin american economist in paris and he is the most accurate peso forecaster at the bloomberg news survey since the middle of 2016. he says that peso's next move
is actually going to be determined by who pays for the wall. here is his analysis. maybe you want to trade the peso on this. i don't know. best case, donald trump says okay. fine. the u.s. will pay to build the wall. the peso goes up by nearly 5% by year's end. a little worse though. he says no i'm going to pay for it by a 20% tax on mexico's exports. he talked about that. then the peso falls nearly 3%. the very worst though the much more complex border adjustment tax. then he says the peso will hit a record low of 22 to a dollar. so, again, not just the peso. this has big implications for mexico's economy, for its central bank. this is how donald trump's policies can affect the world immediately in such a strong way. >> all right. thank you so much. kathleen hays there on mexico. now, up next, more on the japanese prime minister's arrival in washington. that was moments ago right at the top of the hour. we'll take a look at what is on the agenda between abe and trump.
>> this is "daybreak asia." i'm yvonne man in hong kong. >> i'm betty liu here in new york. japan's prime minister has arrived in the u.s. ahead of a friday meeting with president trump. now, abe hopes to sell him on a job creation and investment package after the president accused tokyo of currency manipulation. let's talk more about this with e senior partner and head of abian at control risk. joining us live from singapore. great to have you. talk about a tough task ahead for mr. abe. he has his work cut out for him ever since the first meeting with trump after the election. the u.s. kind of left him at the altar when it came to t.p.p. he called japan a currency manipulator. do you think abe will be able to deliver? it is a very delicate dance his weekend.
>> you're right. it is an important relationship, particularly important for japan. i think the charge about currency manipulation was kind of classic donald trump in terms of putting your counterparty off balance before a negotiation. japan has the second largest trade deficit of the united states after china but is a fifth of what china's is. and i think, you know, trump also wants more jobs, more investment. he is all about jobs and investment. i think what he is expecting from abe and the plan that you mentioned, japan, u.s. growth, employment initiative basically abe is coming with a gift basket, economic and jobs gift basket. that was part of the plan all along is we want to see more from you, japan, in investment in the united states. i think he is fulfilling that part of the visit if you will. >> i want to talk a little more about the trade surplus that japan does have. a chart for our viewers to see here, it does show the trade
balances with the u.s. as japan's second largest trade partner as you mentioned there. the trade surplus about $199 billion. auto really accounting for a big chunk of that. this is very much a structural issue, right? they can't solve this in one meeting alone. what type of bilateral trade agreement could come out of this to not hurt the japanese auto companies? dane: you're right. if you look at the auto trade imbalance it is particularly in balance in favor of japan. i think only about a half billion, 500 million of u.s. auto exports to japan and a significant, many multiples of that from japan and the united states so that is one of the biggest parts as you know the president tweeted about the toyota investment in mexico. there's already been a japanese company that has announced
they're not going to put a plant in mexico now, probably in the united states. that is already having some effect. the balance in autos is not going to change. what prime minister abe would very much like is to renew the japanese-u.s. portion of the t.p.p. in some form on a bilateral base ains probably the most important part, the valuable part of the t.p.p. in the united states was the japan part because it is essential lay mini free trade agreement with japan. prime minister wants that also because he wants to structurally reform the japanese economy. what he'll want to do is probably get president trump to move toward some form of bilateral agreement between the two and taking a lot of those elements of t.p.p. already negotiated. >> and part of t.p.p. the biggest issue also was the issue about currencies as well. it seems like the prime minister wants to avoid this issue all together this weekend, but do you think he'll have to cave in when it comes to the weak currency? is he going to have to tolerate
some yen strength just to improve relations internationally? dane: we'll see. that was the one area that they pushed back on. the prime minister pushed back on it. the bank of japan pushed back on it. and fundamentally, the japan value of the yen is determined by japan's monetary policy and market demand. right? so every country to some extent wants to drive their currency up or down for its own reasons. i'm sure that will be one of the negotiating topics over the weekend and over the coming year. but it's not as simple as it might seem from the current white house to simfully say you're manipulating your currency just like china is and therefore that is why we have an unfair trade relationship. >> dane, you know, the japanese say that they haven't intervened in the markets since 2011. how do they prove this though? how do they prove they're not
manipulating currency? what can they give? dane: well, i think they'll probably try to give a variety of things. not just on the currency side but as i said on the broader trade relationship as well. i think at the end of the day that's what the current white house wants to see is they want to see, if you read donald trump's book about how he negotiates you start with asking a lot and then you get to something that is kind of more reasonable but that's kind of his approach. i think this is a very clear example of that. you put them off balance and tell them you want a lot of concessions and at the end of the day negotiate down to something that is reasonable and both sides agree on. i think what japan gives will be a combination maybe of things on the tradeable goods side particularly more investment in the united states, more jobs in the united states, and then probably the other arguments will go away. >> all right. thank you so much. the senior partner and head of
ozian at control risks. as dane was talking more news coming out from japan. the p.t.i. numbers, producer prices coming in up 0.6%. that is actually much more than what, significantly more than what economists had estimated as a rise of 0.2%. that is for the month of january up 0.5% compared to expectations of no growth from economists surveyed. this doesn't represent the slowdown some expected from the stronger yen in the month of january so maybe brighter news on the japanese economy. we'll be back with much more on "daybreak asia." ♪
picture for the exports. >> yes. the an increase of 3.2% in the exports in the month of january compared to a fall of 6.2% in december. that would be the first pickup since march of 2016. there are a couple reasons why the forecasts are more optimistic. one is we saw the strong exports out of south korea, 11.2% increase there. that is something of a bellwether. the yuan is also lightly perhaps on effect, trading lower even if it has picked up against the u.s. dollar. we expect global demand to pick up. in terms of imports they are expected to tick up for the month of january up 10%. an increase of 3.1% for december. a couple caveats for these data points, coming from a low base, year on year numbers, and some seasonal affects as well because many workers here were taking time off for the chinese new year and feast wg their family rather than churning out iphones and toys for the u.s. market. >> tom, the risk for china's exporter is here in the u.s. though, right, president trump?
tom: absolutely. trump looms large. goldman saks has been crunching numbers on this. they say, look. if he imposes tariffs of say 10% that could translate into a 25% drop off in chinese exports which could translate into a all in g.d.p. of 1%. goldman saks saying what they need to do to reverse that is open up its markets and boost outgoing tourism. it says on the trade front as to take is likely retaliation actions if that tariff is imposed. in the near term they expect trump to target things like steel, machinery, and auto parts. those data points we expect around 10:00 a.m. beijing time. >> all right, tom. thank you so much. plenty more still to come with asia's first major market open now just moments away, yvonne. yvonne: absolutely. relatively sizable beat when it comes to the producer price ness japan. that will be interesting to see
♪ >> trump vows to take his travel ban fight to the supreme court after judges u.s. doors open to immigrants and refugees. the presidents of the security of the nation is at stake. we will have all the reaction from washington, san francisco and in the markets. also, shinzo abe prepares to meet the president, trying to sell the benefits of their alliance to longtime skeptics. twitter shares tumble after revenue fall short. ofs is the second hour yb