tv Bloomberg Daybreak Asia Bloomberg July 31, 2017 7:00pm-9:00pm EDT
in the more turmoil white house after just 10 days on the job. scaramucci is out. anchor: that is right. the turmoil and uncertainty in washington is hitting the dollar . the biggest retreat since january. yvonne: anchor: the fed number two says anchor: the lack of direction it's hurting growth in the u.s. and abroad. screw onhina turns a inquisitive companies. anbang is told to sell up and
bring the money home. anchor: this is daybreak asia, coming to you from u.s. and asian headquarters. i am betty liu, where it is just after 7:00 p.m. yvonne: i am yvonne man. breaking news out of south korea. a beat on all fronts for the month of july. the core cpi coming in at 1.8% year on year. the headline figure above the 2% target for the bok. the0 basis points from previous month. the month on month numbers, kicking up a little bit after we saw moderation in the second half. we will see if the bok will react to any of this. it might be staying on hold for some time. betty: indeed. we will be watching for any movement here on the inflation
as we mentioned. askingf central bankers about inflation these days. in the market,e a lot of the questions are really around washington. when does the turmoil stop? when does the turnover stop? that weighs on markets. up 50ped along and ended points. the nasdaq also lower. we are waiting for some big tech earnings including out from apple. nothe meantime, that is giving you much lift in asia. yvonne: it has been a stellar month when it comes to asian stocks. thatll certainly weigh on dollar. two-year lows for the bloomberg dollar spot. pretty much flat right now. movement in the kiwi lower in the last half hour after we
leadersopposition labor are stepping down. to australia, a big day. 80 since before the rba meeting. the aussie long, think of iron ore futures. the spot price rose 7% overnight. are seeingan, we equities futures heading lower. we are down 15 points, flat at the open given the moods we have seen in dollar-yen. the euro hit 118 against the dollar after court inflation did beat expectations. 130.51. betty: first word news with nina melendez. nina: china is said to be raising the heat after asking anbang insurance to sell its
assets abroad. they want to bring proceeds back home. those assets include the waldorf astoria, bought by anbang in 2014. anbang responded, saying it has no plans to sell assets and all operations are normal. india is set to reject shanghai's proposed $1.3 billion takeover of a company which would have been china's biggest ever acquisition. lawmakers are said to have -- achieving companies have yet to be informed. india and china are locked in a territorial standoff in the himalayas, and the decision may see beijing respond. a proposal to merge the cable provider with sprint was rebuffed. it is said to be considering a plan to buy charter outright. softbank shares gained more than
2% in tokyo, giving it a market value of 89 billion. hong kong sods biggest monthly advance since january with chinese investors piling into stock as liquidity tightens on the mainland. the hang seng extended the rise to more than 6% and india's got it steepest gains. global news, 24 hours a day, powered by 2700 journalists and analysts in 120 countries. i am nina melendez. this is bloomberg. yvonne: mina, thank you. the new white house medications director has received a blunt message. "you're fired." anthony scaramucci with only 10 days in the job he forecoming to "a mutual agreement with chief of staff john kelly." joe, can you say you are surprised by this? yes, i would say it is a
little surprising how quickly it came. only 10een in the job days, and he came in much heralded and with quite a bit of day, while hevery was there, until thursday, he was out in front of the public, in front of the media, talking about the trump agenda and what he was going to do. was thursday when he was published by the new yorker magazine, a profanity-laced tirade attacking both reince priebus and chief strategist steve bannon. that was apparently a bridge too far. on the day that the new white house chief of staff arrived, within a matter of hours, he was out. >> what is this about sean spicer staying on? joe: i think it is just rumor that sean spicer perhaps has
helped push along by the showing up at the white house. he was still technically employed there. he has not been scheduled to until a leave his job couple of weeks from now, but he was at the white house today, not answering questions, but giving smiles to reporters. at the moment, we have got a press secretary in sarah sanders. she is in that job. there is an open position for white house medications director. via linkedin. [laughter] betty: so given all this drama we are seeing, is any work getting done? is anything going to be delayed? what is getting done? by thisll so distracted drama. was secretary mnuchin
talking about tax reform and the plans to get it passed through congress this year. and the administration imposed sanctions on the president of venezuela, so there are things going on, but this could be looked at as a day one experience. it is the first day for john as chief of job staff of staff. he send a very strong message by almostanthony scaramucci immediately upon taking office, anderson's a very strong signal -- and it sends a strong signal that there will be order and he will be in charge. sende: it certainly does that strong signal. do not mess with the general. thank you so much, joe. let us take a closer look on what is going on at the white house and what that could mean
for policy going forward. mitch, i know you analyze a lot about -- your clients are asking how ithe policies and will affect their businesses. when you saw the drama unfold with scaramucci, did you get client phone calls? is this on people's radar outside of the present washington? guest: i got a text that said "scaramucci out." [laughter] guest: you know what is amazing to me, is i cannot believe the market is shaking all of this off. for years, watching business television, the slightest pickup some place called the market into turmoil. the market is ignoring it like it is white noise. betty: it kind of is becoming white noise. areh: some of these things very sensational. you would have thought these would cause the market go into a tailspin, but when it happens every day, maybe we coined a
phrase here -- it is white noise. they are looking laundromat policy. there is some disappointment in the capital market. the impatience for that is going to start to accelerate when congress gets back from their august vacation. if the president does not call them back. it reminds me of school kids running around the yard. when they get back, they will look for action. what is going on is you have this seesaw -- sticking with my metaphor -- and you think about what happens when you are on the peter taught her and someone -- the t eeter-toter and someone gets off. that is what is really causing all the problems. betty: when you look at what is happening with the dollar, you
believe the tax reform is not going to happen. the dollar is just sinking. stock investors seem to be shrugging this off. yvonne: -- mitch: the shrinking dollar is actually good for corporate through thewe are second quarter earnings season with double-digit gains again for the first quarter. we are up of 11 plus in the second quarter. we will see big names coming up the rest of the week. the fact of the matter is, the market sees all of those positive fundamental sides and they are shaking these things off, but companies, you got to the point about our clients, companies were investing that there would have tax rates going down to the corporate level. if that does not happen and companies behaviors change and earnings shift as a result, that could be a tailspin.
once the markets believe the tailspin is happening, you will see people rotating out of equities. at what point does the market start to care? we have been talking about how the trump trades have been priced out. is that not even part of the market anymore? something investors are not looking at? mitch: investors really like the fundamentals. they like that. a lot of those beats were on the top line revenue and the bottom line as well. when you see that revenue gain the publiclygh traded companies, then all of a sudden, they are saying maybe there is something to this, and it is not a trump rally, but a matter that the companies are more prosperous. so maybe any kind of policy that we get out of the trump administration could be a likely bonus or add on to what we are seeing right now. it seems like the trump
administration needs some type of win right now. what is the low hanging fruit? is there any right now when it comes to deregulation? mitch: they are also interconnected, you have the innocent bystanders say "why don't they just repatriate this cash overseas, bring it back, amnesty?"th a tax thatroblem is, they need to deal with the congressional budget office on tattoo form. they have the 3.8% income tax that is part of the obamacare package. so of these things are interconnected. infrastructure sounds great and it is a truly bipartisan thing. i do not think there is not an elected official that does not agree that you need to invest in infrastructure, but the problem is paying for it. betty: it is interesting. mnuchin look at steve at a conference, he is saying "look, it is passed or fail.
tax reform is going to pass. we will succeed." when you want something like that, do you believe him? mitch: i am personally confident that something is going to happen with tax reform because i think that also -- betty: tax cuts? more than tax cuts? everyone can agree on tax cuts. mitch: tax reform is such a hard thing to do. it has not been done since 1986. remember what happened after the tattoo format of 1986? the savings-and-loan crisis happened, so tax reform is complicated. tax cuts are easy. the promise made with tax reform -- the question is, if it is tax cut plus, will it get sold by the white house, but congress, to the electorate as reform? if we do something like a wholesale lowering of the corporate tax rate or having another rate, that is new. it is changing the tax bracket down to four or three.
that would be reform, so i think there will be a lot of wordsmithing going from rates to reform, but it does not matter. companies want. companies want to see the corporate tax rate lowered. entities taxed at a lower rate, not the individual members. if that doesn't happen, there will be a big broken promise. betty: we will continue, mitch, in a moment to talk more about the economic numbers coming out. what are investors focused on? and the jobs report, again, yvonne. [laughter] yvonne: plus, the building blocks for investing in gcw. the manager joins us in this hour as well. this is bloomberg. ♪
betty: this is daybreak asia. i am betty liu in new york. yvonne: i am yvonne man in hong kong. monday, home sales numbers. tuesday, we have the latest personal consumption expenditure, which is the fed's preferred gauge for inflation. on friday, we will have the july jobs report as well. let us bring in mitch. i want to throw in auto sales, which comes in on tuesday. what are we most focused on and what do you think the fed is looking at now? it seems the report does not have as much importance of late. mitch: the fed may not be focused on it, but the jobs number is certainly. even though i got the jobs number wrong on this very show a it is interesting in and of itself, the jobs report is not political, but highly politicized. , ifink the jobs number strong, will find its way into the headlines. it will find its way into the headlines.
i will go into my forecast that i got wrong before and say the jobs -- it will have a two in front of it. it will not be 2000, but 200,000 plus. said it would, i have a two in front of it, but it was 138,000. betty: you were to rosie. -- too rosy. mitch: i am a half-full guy. betty: we are not going to see a whole lot coming to the rest of the year, but what do you make of this right now? we see this rise in the sum subprime lending. mitch: that is something that does scare me. the auto numbers, it is funny you mentioned going into the sales., home the biggest issue in the housing market is the lack of inventory. in the housing market, --
we have not seen the incentives coming from the manufacturers and in between folks to really drive auto sales with members coming out tomorrow. the use cars sales are going up , but the volume of subprime is very high. that is fueled by the appetite is secure paper that collateralized by the subprime loans because of the interest rates being so low. fixed income investors are chasing yields. they may not be as good. they can pick off the slice if they like. we are seeing default rates that are higher than they were before the financial crisis. should have everybody's indiana up if they remember. intenna upa
if they remember. years, growthght has been too low, 2% or lower. been a great time for financial markets, and people have invested. we will do things great for the average american. anchor: what do you think that could be with the fed on tightening path? mitch: maybe they titans lower. that could be something. just rates go up and that will hurt the housing market a little bit and the automatic a little bit. maybe they slowed down or ease the tightening. the question is, inflation. that is the thing they are looking at and not seeing. the other thing that is interesting, if you listen to some of the fed governors across the country, what they want to do is get rates up so they have the ability to lower them in the future if they need to. they were hoping we would have enough economic growth have some
room and really have not gotten that. maybe we will see another bump road, buting down the the promise of tax reform is the real catalyst that everybody is hanging on. >> what happens if we are here by december and we do not have tax reform passed? where are we? will have a lot of disappointment in the capital markets. a lot of disappointment from investors around the globe. betty: what does that mean? what does that look like then? mitch: a correction in the market, because the rotation has been towards u.s. equities, and one of the things that is helping the markets is that this is still the most stable capital markets on the planet, so the more instability you have around the globe, the more you see investors rotating around u.s. dollar denominated assets.
when they are on sale, that stock is, you know, 5% cheaper than it was. it gives the investor a little cushion. they do not care as much of the remains on a multiple basis. it is going to have to be something that is in the headlines that is not the white noise, as i said earlier, that is in the headlines every day. betty: we have been talking about the political turmoil in d.c. at what point does that affect gdp, do you think? mitch: if everybody is shrugging it off -- and one of the things i was thinking about earlier with the housing market and talking about the fed -- that used to be the thing that every wasle month, everyone focusing on home sales in the fed was using that as a big barometer. housing is such a big part of gdp growth in the past and booms, and it is chugging along.
the consumers, the big-ticket story in terms of gdp growth, netthe consumer needs, after-tax income, continue to spend. i was talking to convenience oriented food, and he said one of the biggest days of the peoples the day in which get the tax refund checks. -- that is how the consumer operates. that is what is driving our economy. they are looking for the individual taxpayers -- they are looking for net after-tax disposable income that will drive gdp. we saw good numbers this quarter, but to get to the three treasuryat the secretary is talking about, we are going to have to have tax rate reduction. betty: thanks so much for joining us. partner at pwc. we have great interview the head
betty: 7:30 a.m. tuesday. foggy outside this morning. 30 minutes away from asia's first major market opens. york,7:30 p.m. in new where markets closed mixed, but quite a nice evening here in new york. i am betty lou. lou.am betty yvonne: first word news with nina melendez. south korean inflation narrowly beat estimates for july with consumer prices rising 2.2% from a year ago. .2%.pi was up
it was the biggest gainer on monday against the struggling u.s. dollar. investors await trade dollars coming out at the top of the hour. china has denied it is not doing .nough it's u.n. ambassador rice said washington and pyongyang has responsibility of reducing tensions. the ambassador told them that china and russia are working on a new roadmap to implement resolutions. president trump's communication director has been fired 10 days into the job. says anthonyse scaramucci has been removed in order to give new chief of staff john kelly the ability to build his own team. last week, scaramucci profanely decide trying to previous and steve bannon. sources close to the president say that did not help.
it is freezing any assets owned by venezuela's nicolas maduro that are subject to jurisdictions following the vote on the writing of the constitution. steven mnuchin announces the the vote asunces legitimate. the opposition boycotted the election. global and his, 24 hours a day, powered by more than 2700 in morests and analysts than 120 countries. i am nina melendez. this is bloomberg. anchor: u.s. stocks slumping on monday despite the strong performance we have seen. the s&p posting its fourth straight monthly gain. it is the end of this month that has caught our attention. for a recap, let us get su keenan here on wall street today. we have seen record broken after record broken. a mixed close. still blocking and again. giving back a lot of the earlier gains. it was a volatile session. 10% the normal.
we are getting into the slow days of august. amazon showing weakness. we have talked about how these disappointed or disappointing investors if they do not crush it with the numbers. we have apple and tesla to come. discovery down a rather large amount. $11.9 billion deal. they navigate the tv terrain a lot better. charter up on a big vote of confidence. not only the consolidation of the sector, but there is more the combo would get some approval from fcc. it is interesting, if you go into the bloomberg, g #btv 8478. you look at apple again, and this is the big, looming report. it is really -- has really taken
over the s&p 500. you can see on the top, the blue line shows the price versus the s&p. is very high. on the bottom, the opera waiting in the index, which is also very high, which tells us, as you know, if there is any disappointment in the apple earnings, it can affect not only consumer sentiment only stocks, but the bullish sentiment on tech momentum stocks, and impact these major indexes. betty: what about the bulls in the bears ahead of tesla and those apple results? su: what is very interesting, and not necessarily predictive, but let us go back into the bloomberg. a very popular investment called qq's. right,look far to the you will see the most weekly
outflows, investors selling out of this instrument since november 2007. that was the very tail end of thateak of the bull run in period. it does not necessarily mean we will see a big selloff, but it does tell us perhaps that some investors are concerned about that and hedging their bets. let us go into one more chart. btv #84208. and what that will show us is that we are long overdue by this chart for a 5% drop. it shows you how long we have gone without a drop of more than 5%. look at that long run between the yellow circle and where we are now, and since we have gone so many days without any kind of pullback of substance, there are many that argue that we are due for one. atnne: let us take a look the two stocks. we have had moves.
pandora is one. the fall from grace for snap. su: a big fall from grace for snap. , 17 earlier in the year. hit a high on march 3 of 27. look at it now. that is a two date chart. you can see the dramatic drop-off for the start of the monday session. it manages to erase the earlier losses. it is only being done 1%. the important thing is that walk-off, a lot are saying this is noise until they report numbers on august 10 and so, many are staying tuned for that. look at the after-hours action with pandora. it got a huge pop of 8%. it has fallen off a bit. pandora is the online radio are resettinghey their strategy after a
tumultuous start of the year. they have had terrific competition from music vehicles. they forecast third-quarter sales of the hundred 70,000,002 385. of three and 70 million to 385 million. they have been concerned about the company's growth. onnne: let us get more now what we should be watching as trading gets underway in asia. adam haigh joining us from sydney. adam, good to see you. a big question we keep asking is growth? the topline it seems u.s. companies have this on their sales forecast and are getting hit the most. morning, yvonne. as we have been hearing from our colleague su keenan, at this point in the earnings season, investors are trying to get a feel for what some of the
biggest themes are, and it is interesting to see the dichotomy to install price performance on companies that are beating on the profit numbers and those that are missing, but also those missing on the sales numbers. certainly on the earnings releases, it is all about the big hits. on the chart, it is more than a 3% decline on the days that companies miss on the sales numbers, halfway through the earnings season in the u.s.. it shows you the level of expectation investors have for revenues and companies they will. we need to see numbers coming in or beating otherwise. if they fall short of expectations, their stocks get sold off. later today in asia, we have plenty of other big companies. we have them reporting later this week. earnings continues to be the big theme and big driver. those micro fundamentals.
we are interested to see how these developments play out as the week addresses. halfway through the u.s. earnings season, there is a clear picture emerging with the sales misses. yvonne: how does that compare to what is going on in europe where optimism over the rebound in stock is kind of being dented? betty, the stocks trade have been very popular and sixing out relatively well months or so ago, and those european stocks have then outperforming to some degree. that started to lag somewhat over the last few months, and largely, that is a result of lowered earnings revisions coming down, so analysts bringing down their expectations for profit in the future. if we compared to the u.s., in europe, we have only some 56% of companies beating profit expectations, and that is down from 66% on the previous quarter.
of course, the strong euro has had a lot to do with this, and people are be collaborating their expectations based on where the euro is trading right now, faster than i was six month ago, so that largely cannot explain that. i think, now, as worries about whether that has become too much of a crowded trade, buying european equities, we are still in the context of global equity portfolio managers wanting to allocate a bit more to europe. the recovery is broadening well. so we have seen a little bit of a debt of late. it will be interesting to see now. we have a couple of weeks still of big companies coming out. that could be the key as to how we go and keep pushing on from here. yvonne: adam haigh in sydney. we are going to talk about the prospects for those economies. former u.s. treasury coordinator for china with us for that. this is bloomberg. ♪
this is-- betty: daybreak asia i am betty liu in new york. yvonne: i am yvonne man in hong kong. an atmosphere of rising trade spats and geopolitical tensions among the group's asian members. some say the bricks have lost their appeal over the years. let us discuss their prospects formervid lavender, a coordinator and economist at the imf. great to see you. is it more than just a moniker now? what do you make of these? it seems they have more differences than any unified common thread these days. david: i think the concept of for investors is very important in highlighting how quickly economic and
political power is shifting from the developed world to emerging markets. i think bric, just like the fragile five, it was always a better acronym than any kind of new world order. these are very different economies. you have commodity importers and g7,rters and unlike the they are not military allies. you have thousands of troops facing off against each other in india and the chinese border. they are not all democracies. very different political systems and geopolitical interests. goes to show the growth trajectories of the four far and it brics so shows what you are saying here, g #btv 8568. you do see on the one side, the
top, where china and india were seeing growth rates of 6%. you take a look at the bottom side with russia and we are seeing growth of 0.5% and negative growth for brazil as well. it is interesting, in terms of investing in brakes in the past year -- in brics in the past year, we are hitting heavy inflow. reversalen an abrupt from the four-year slump we have seen from the block. you talk about brazil and the slowdown in china and even for russia, oil plummeting among these international sanctions. what has changed recently? david: i think you have had a lot of flows going into emerging markets, and i think the main reason is a lot of things that people were worried about at the beginning of the year, a big fiscal stimulus from the u.s., aggressive tightening by the federal reserve elections in europe, chinese hard landing, a
lot of these are falling by the into --and leading i think the issue for us is if you focus too much on the brics, you missed some of the best investment opportunities in emerging markets. betty: david, when do people just throw out the brics acronym? is it going to ever be thrown out and say, it was a good concept but the reality was less than what the ideal was? david: the one thing you can always be sure of in investing is there is always going to be another acronym, and i think the lesson for investors is when you think about emerging markets, it is not a homogeneous as it -- asset class. you have countries as diverse as
slovakia and senegal. you cannot throw money at an acronym or index. you have to be picky. betty: why do they keep coming up so? you have mexico and indonesia. do theseto tell me why keep popping up? david: because there is always going to be some analysts that is going to want to make their name coming up with the best acronym. that is not the way to find value as an investor. there is no magic acronym that will make you money. you have to roll up your sleeves and do the due diligence and take your countries carefully. yvonne: david, given the development we have seen in venezuela in the last couple of hours or so, these sanctions on ae president, it is reflection of the risks you can see in russia as well, the
reliance on oil and gas. does that factor -- is that a big factor in how you invest in e.m. ineneral -- in general? david: you have to pay attention to political risks. it is a tragic situation in venezuela right now. if we have learned any lessons right now, this year, is political risk is not just an emerging market issue. it is an issue, maybe a bigger issue, in developed markets. yvonne: you mention about not looking at acronym's, but what are some that are opportunities? those seem to be the frontier markets to watch out for these days. david: i think we like all three of them. particularly indonesia. it is amazing if you compare indonesia today to where it was when it was part of the fragile five in 2013.
the current account deficit is much smaller. inflation is way down. growth is up. foreign-exchange reserves are up and the outlook looks pretty bright. david, last time we talked to you, you were mentioning about the trouble in c. and how this could -- in d. and how this complaint to the trump administration and what they do abroad. do you see that the president and his administration will lash out a broad, and is china's a likely target? david: absolutely. increasingly worried that the administration's domestic agenda stalls in washington that he is going to turn to bashing foreigners, because that is the only thing you can get bipartisan agreement on in washington these days. anchor: before we go, we were talking -- getting back to these bric trade ministers meeting in
shanghai and what they might do to -- i don't want to say save the brics, but make them more relevant again. what could be done on the policy front jointly if there is even a possibility to make them more relevant again and become a more attractive market for investors? david: i think what the brics need to do is start forming a consensus. for example, take the imf for the world bank through the leadership of those institutions under aneither a american or european for decades. if the brics got together and told membership of the imf and world bank that it is time for new leadership, new blood from other regions, i think they would have a lot of success. anchor: david, thank you so much. david loevinger, managing director on the brakes. -- on the brakes. tom mackenzie will be in
shanghai, where the trade ministers are going to be meeting later. stay tuned for that and of course, you can get a roundup of the stories you need to know to get your day going in today's edition of daybreak. bloomberg subscribers, go to dayb on their terminals. it is available on mobile in the bloomberg anywhere app. you can customize your settings so you only get the news on the industries and assets that you care about. this is bloomberg. ♪
yvonne: this is daybreak asia asia. i am yvonne man in hong kong. betty: i am betty liu in new york. plunged your the car rental company said late friday it could not meet all the conditions to read team its 2019 -- it owns -- there is speculation that next week's earning report will be worse than expected.
barclays analyst's predict stock will fall to nine dollars. yvonne: heineken outshone rivals in the first half with emerging africa-driving growth. the brewer to the crown of best performer from another. there is demand for tiger in vietnam. adjusted operating profit grew 6% to $2.1 billion. analysts had expected to billion dollars. to $2 billion. added more than $12 billion to his fortune this year. has $33.5 billion. $1.7 billion behind on bonnie -- ambani. i hope people realize that was
irony. [laughter] betty: speaking about someone who is not for it at all either is jeff bezos of amazon. really interesting story on the bloomberg i want to point our viewers to, which is donald trump talks about how much he ?entions -- right on amazon.ing the word amazon has been mentioned more often than donald trump or wages when it comes to things like earnings calls and corporate events. 1.8 thousand times in the last year. , asin just the last 30 days earnings season has gone under way. you can imagine why. amazon is now touching almost every part of the economy, it seems, and given that, they have become a big threat to almost
every other company out there. yvonne: it goes to show how big of a disruptor it is on every part of each factor in the economy, as you mentioned. i wonder if the fed is looking into this. we had early talks about amazon, given this acquisition of whole foods, how it could put a lid on prices and inflation as well. it is interesting not just on trump, which had in the last 30 againsty 32 mentions the amazon's 165 mentions, but wages as well. 22 mentions in just the past month. it makes you wonder how much will be seeping through with the fed minutes coming up in the next couple of months or so. betty: i think you raise a great point. the lack of pricing pressures brought on by a company like that is what is confounding the inflation picture and price picture here in the u.s.. plenty more still to come, not just on amazon, but on the first
major market opens that are moments away. yvonne: let us bring back sophie kamaruddin. she is watching the open. we have these korean trade numbers coming up any minute. sophie: a lot on that. we have the rba decision and r.b.i. as well along with the boe. take a look at futures in asia pointing toward a lower open. we are set to start august on the back foot. we also have the earnings trade continuing in asia. let me show you stocks to watch today. out of tokyo, watch for honda. sony is set to release its first-quarter numbers. watch for reaction to mitsui. it posted a 31% rise as fees grew. hyundai ise on by -- due to report. thist action potentially tuesday. that is a brief look at what we
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♪ yvonne: message from the white house just 10 years -- 10 days after he got the job. he was fired. the dollar expending its biggest treat since january. lack ofnumber do says a direction is hurting growth in the u.s. and iran. betty: china turns the screws on inquisitive companies. the bank told to sell and bring the money home.
yvonne: coming to you live from headquarters. 8:00: it is just after p.m. in new york. on're getting breaking news south korean export numbers. , much betterrising 19.5%. the estimate was for a rise of 15.9%. about 15.5%. that is pretty much in line and what they had estimated for a gain of 15%. given these numbers, we are seeing a trade balance of $10.6 billion. that is slightly more than what economists had estimated. the number that really sticks from this lower dollar that we have seen over the past month. this rise in exports of 19.5%.
well exceeding of what economists had said. it brings us back to those highs in terms of export growth from what we have seen akin april. quite a bit of a bounce back from what we saw from the past two previous months. we have reached that 2% target in korea. it is actually happening in seoul right now. 2.2% for the month of july. we are starting to see some of the unwind taking place. demand is still relatively subdued. likely to stay on hold, not going to do too much when it comes to some of these numbers. let's get to the action. sophie: quite a bit for investors and traders in korea today. resuming its drop for a second .ay, despite that beat we saw
a fairly robust trade number as well. take a look at the korean won. that is up 1/10 of 1%. later this morning, we do have the latest pmi read for south korea and japan index. we also have the china pmi read for july. when you take a look at what is going on for the most part in asia, we have a weak start. 1/10 ofaussie stocks up 1% there. keep in mind the regional gain in july,a which is helped along by the commodity price we have been observing. oil is holding gains after capping its greatest increase. we do have dollar weakness starting off this week. take a look at what is happening with the bb.
up 1/10 of 1% there. other agencies are on the back foot. morning gains so far. the euro is holding up. kiwi -- the party leader announced his resignation. the aussie is hovering around $.80. we have the rba policy do later today. that is the line we have seen in sydney on the back foot there. gets to fit of its sales from the united states. health care equities could be attracted in the median turn to
push beyond the two-year high. for now, we do have the aussie right around the $.80 level. let's get to the first word news. trump's: president director has been fired just days into the job. anthony scaramucci has been removed and been replaced by john kelly. criticized reince priebus. those comments did not help. continuing political drama is undermining growth in the u.s. and abroad. sally fisher says the lack of direction could cost companies
to delay investments. they have combined to keep interest rates low. treasury secretary -- >> the last eight years, growth has been too low. we are committed to get it to 3% or higher. it has been a great time for financial markets. people have invested. we are going to do things that are great for the average american. the first big bang to put a figure on brexit. move 1000 stocks in paris. maintain uninterrupted access to the market.
they have improved economic conditions, but not enough for a next it from deflation. it has not been sufficient to meet goals for inflation. is recommending structural reform. policies to boost wages. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. yvonne: two out of three of the japan megabanks have announced their results. interest andns and fees and incomes, shares have started trading in tokyo. of about 2%.istui
tell us the main factors for the lenders? markets: they had the doing exactly what they thought -- we thought they would do. it looks pretty good at 31%. it is 11% down. if you look a little deeper into these results, there is a lot going on in the background. down because it is worse than it looks. there were three saving graces for mizuho. they had a tax break benefit. portion ofn enormous their shareholdings. label,look at the profit they were down by over half this time around. it is that 22% of their full-year. they have a lot left to do this year to make their profit.
this other one was hit by trading. if they were still 31% up. income appeared to be up considerably. part of that was earnings that came from trust that they own. they will not tell exactly how much that is, what it appears to be a significant boost to their income. it is not underlying loan issue. the target looks too good. underlying this are still some issues. the japanese stock market rally. we did hit that 20,000 level.
what is the outlook for further gains? both made some gains on their equities. iny made some real progress selling down from those holdings. governor is pushing those banks to sell off these holdings is nice for the companies that they own, but it allows them to become complacent in the government. they're trying to push on with this to give them an opportunity to sell. they stress the fact that they have been negotiating with customers and got permission from their customers to sell. they do need to make progress on this. thank you.
we will continue to follow the earnings. up, but to be she reports later on along with honda and sony. hello kitty maker as well, after the close. betty: you can follow more on this story and the days trade on our market live blog. you can get a market run down in one click. there is commentary and analysis from expert editors. this is bloomberg. ♪
told to sell off and bring the money home. basically, beijing is telling them to pack up and make sure it to bring the money home. in the past year -- three years, they have been on a shopping trail. the expansion of china inc. has been turned into an attraction. beijing wants to stop those risky debt supported investments, especially from the political and as we get closer to the common need party -- communist party congress. this is where the major ones are. a total of $10 billion winning real estate, as well as financial service companies.
at nearly $2 billion when it was bought in 2014, it includes fifth avenue, which is where their headquarters are based. in san francisco look at that $1 billion in terms of assets. in europe and asia-pacific, there is $1.5 billion and a mortgage portfolio. $1 billion for life insurance over there. as for their reaction to beijing's order, the company has basically said it is not going to do anything. the quote here, at present, they -- to sell its assets. we are seeing the impact in assets. in the first half of 2016 versus 2017, 37% from 2016's first half
to 2017. down to $100 billion according to the latest bloomberg data. i want you to hop into the bloomberg terminal because all along. i want to check out this function. this is for cross-border mergers as well as acquisitions. year on year, you can see many countries are on track to be lower. let me make sure we actually have the countries listed. united states, $23.5 billion. the fall. 2016.wn since that was $79 billion. the bar chart. down to $24 billion so far. the record investment we have been seeing for takeovers, total around the world about $240 billion.
all the negatives here year on year. we can see that definitely pulling back. discuss all the indications. of course, a long time. bitow you signaled a little about this crackdown. it would not do too much about -- ahead of the party congress. reporter: i was talking about this issue with you. it is always great to be on with you. i am not surprised they are starting to move ahead on this. the debt has really stored. from the time at the beginning of the great recession, when it was 100 for the percent -- 150% gdp, it is rising. when you look at the shadow banking area, it is now in the area of $9 trillion. that is almost 80% of the gdp of
china. .hey would crackdown this is just the beginning. he has a long experience, including having run china construction bank. he said when he took the job he was going to clean up the banks and move as necessary. the move you are seeing with others is not surprising. this is just the beginning. the other thing that has been $1ting is china lost trillion in reserves over the last year from four to three. all of these things are coming and i think you will see more that after the 19th -- congress. it will takehink
place before the end of october. betty: hitting some of these , i do notthat are want to call them iconic, but they are well-known names that even u.s. investors know off hand. are they making an example of anbang? what message are they sending directly to the domestic companies in china? how much of a material effect will that have? reporter: i think you are exactly right. they are making an example. there chairman has certainly disappeared. we may next see him on criminal charges or something. there have been accusations of the selling of products, these insurance products, shadow banking type products that the people's bank of china and regulators, whether it be insurance regulator or the
.ecurities regulator they are not happy with it. tos is very much an example other chinese companies to clean up their act, right off their bad loans, and be very careful of what kind of foreign investments to get involved in. yvonne: how do you think hong respond?nbang should we have already seen some of them sell some of their theme parks and hotels. given? --nk they will give in? reporter: the companies will follow. the question is the matter of timing. , whenw head of the cbrc he says he is going to do something, he does it. he has the backing of the
president, without a doubt. yvonne: you are mentioning that rings could get more interesting after the people's party congress. there could be a squeeze in the banking system. what would that look alike -- look like? reporter: in addition to the ones i talked about with betty liu, you have the question of these zombie companies. the president has mentioned on several occasions over the last couple of years that he wants to clean them up. not much has been done in that area. we are talking about coal, steel, shipping, that kind of area. all of this will fit together and they will make the banks do several things. they will make them right off these loans, instead of just extending them. they will make them raise capital where necessary. great part ofs a
china, in the 1990's the size of the chinese economy was very much slower than it is today. in addition to doing what i mentioned, he had the banks rolloff a lot of these problems debts to the asset management companies, so they could sell them over time. of that.e will see all we have an overheated property sector for a long time in china. at the same time, i think what we are seeing in china is growth is starting to slow down. the 19th party congress is coming up. i do not think the president wants much more of a slowdown until he gets through picking the members of the standing committee of the bureau. that is the key issue right now.
think the banking regulators, security regulators, insurance regulators are all going to get a lot tougher. betty: i know you watch what is going on in china. even there has been so much chinese money coming into the u.s. and put into real estate, put into hotels, do you think this crackdown which is happening -- how much of an impact will that had here in the u.s.? reporter: it will have some sort of an impact. it is primarily real estate, but they have been keeping up the art markets worldwide. there will be a crackdown on all of that. , when heto tell people talked about the world, everyone looks at what the united states is doing and what is the you -- the eu doing? should be watching what china is doing after the 19th party congress. that is what i look at more than anything else. betty: good to see you as
always. this is visit number four for the year. we definitely have to have you right after the party congress. one feature we would like to bring to your attention is our interactive tv function. you can see previous interviews, dive into any of the bloomberg functions that we talk about. this is bloomberg. ♪
-- the profitm rose higher. posted earnings in line with estimates. about $160 million ahead of the forecast. panasonic is maintaining its forecast seeing growth in its auto related business increasing sale and profit. 10 by, 10 holds, and no cells. shares recovering somewhat after plunge more than 7% on monday as it -- results were released. an increase of 18%. they did not change any of its full-year forecast.
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yvonne: 29 degrees out. a beautiful morning compared to what we are staying in hong kong. betty: i am betty liu in your. -- in new york. you are watching "daybreak: asia." shipments were up 19.5% from a year ago against expectations of 16%. surplus. they narrowly beat estimates from july. rising 2.5%.
china could be raising the heat tocompanies by asking anbang sell its assets abroad. they want to bring the proceeds back home. anbang responded saying a currently has no plans to sell assets and that operations are normal. the leader of new zealand's opposition party has stepped down nelson -- less than two months from an election. 24% at thel to weekend, almost half the backing for the government -- governing national party. flame can applicants to get to the 2024 and 2028 games.
l.a. mayor said it is a landmark agreement which will kickstart his drive to make the city the healthiest in america. the 2028 proposal will now go before city council and the u.s. olympic committee later. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. 10 to see how the asian markets are shaping up so far. time to see how the asian markets are shaping up so far. gain.: july cap a monthly supporting that rise here. as u.s.e falling treasury yields edges closer to 2.3% area and the dollar is shaking off.
all the is rising above that 80 sent level. we are expecting a change from the rba. we do have the cost fee for reversing the earlier loss of 1/10 of 1%. they were best -- robust trade members that we got. we do have energy stocks gaining 2%, this as oil is holding trading above 50 barrels. they are hoping to maintain gains for the region. we do have chip makers dragging. downgraded toas market wage. this on recent company reports suggesting that yearly growth will plateau or decelerate in
coming months. taking a look at what is moving in tokyo. the me show you that right here. gainingthe nikkei 225 up one quarter of 1%. there are earnings aplenty. we have the likes of chemical surging almost 11% this morning after a 26% rise in the first quarter profits. --raging after an its first earnings beat that stock rising by 4% this morning. a quick check on mega bank stocks. three reports the results today. they have already announced first-quarter numbers.
sumitomo jumped 30%. zuho falling about 1% this morning. ministers meeting in shanghai today. the summit risks being overshadowed by geopolitical tensions. -- tome joins us from joins us now. tom: this is all about committing to trade liberalization. coordinating on things like i.t. and intelligent manufacturing. that is what we have heard from the chinese media. ago, the president laid out his own blueprints for
the nation that he hoped would lead to great integration. he wants hoped it would be a national priority. there are a number of tensions between many of these countries. there are divergent growth trajectories. china is very embedded in the global supply chain, whereas the likes of russia is still very dependent on commodities. thea claiming to be fastest-growing major economy. there are tensions about the amount of exports china is pushing into many of these countries and push back when it comes to protectionism in many of these nations. china is the largest trading partner for all four of the nations. from the other perspective, these countries come in terms of where china stands, are relatively small in trading size. that is what we're looking at
for the tensions around trading. countries like brazil, not sending its own trade minister at a lower level delegate because of the political chaos and political atrocities taking place in brazil. they want to get some kind of success at this meeting because we are heading into the leaders summit, also in china, in september. yvonne: you highlighted some of those tensions. we see one between china and india on their border. what is the risk that that will overshadow any progress? tom: we have seen interesting news last night broken by bloomberg, suggesting that india may well blocked a deal by the annese conglomerate to buy indian pharmaceutical company for 1.3 billion.
it now looks like that might very well be blocked. there are suggestions that may be linked to the political tensions you touched on. disagreeable -- serious disagreements between them since they fought that border war. we have not had any resolution on that. india was also concerned about what china is doing with its belgian road initiative. in the last six months has taken out 12 to trade trade cases against china. brazil is looking into chinese stealing. there are question marks there as well. action that has
hit sugar imports from brazil. there are a number of issues between these countries. they want to estimate progress -- the meeting in september. we are hoping to speak with the russian economy minister as well. 20 more to come. yvonne: quite a lot on the agenda there. rateg up, the latest rba decision. this is bloomberg. ♪
what to do next. kathleen hays here is a preview of the decision. 1.5%.en: a record low of rba.prise for the the target was 2% to 3%. that might open the door for a move. this take a look at function. keep an eye on this one. you can see the rate is down 1.5%. you can see how much the dollar has risen. a stronger dollar makes it harder to export and imports cost less. you do not want your inflation rate to fall. let's move on and take a look at a couple of things that might incline higher rates. they signaled growth might reach 3%. we have had gyrations in the aussie dollar around all sorts
of things. hiring momentum has picked up. the labor market looks strong. maybe things are overheating, continue to have rising house prices and rising debt to income ratio. those are the things that make you want to pull -- cool things off. the drama is probably around their policy statement about what they might say about the aussie dollar. are trying to talk it down a little bit because of that chart i just showed you. one thing they are expected to do is if they want to cool off the aussie dollar is to make it clear they do not have land to follow the fed in tightening. a willingness to start removing stimulus. -- more thing they will half have revised our numbers on growth and inflation. they have pulled back their
growth forecasts a little bit. it will stay in neutral for a long time. if you are not moving your key rate, it is what you are saying about what you are seeing. yvonne: that's right. bring in a senior economist. she joins us live this morning. great to have you. this roller coaster in the aussie. do think there are heading into this meeting a little differently this year? will he be much of the same? -- it be much of the same? they leave the cash rate unchanged at 1.5%. or is no doubt this is the most significant development in the board last met. it has been the appreciation of the aussie dollar. we had the governor and deputy governor in recent weeks signal
they probably prefer for it to be a little lower. their official communication has been very much around societies and appreciating exchange rate adjustment. behind-the-scenes, it is probably clear that they would .refer a slightly lower the question is whether they signaled that in today's statement or quarterly statement on friday. yvonne: you seem to have a little bit more of a bearish look on the aussie. that has not really weekend. what will? reporter: i think it is a combination of a number of factors. right now, there is no doubt that there are a number of supporting factors. it has brought a weakness in the u.s. dollar. that has been the dominant theme. the aussie u.s. cross is about five cents higher since the
board last met in early july. they are taking that aside. it is about 3% higher over the last month. we know, in particular, it has cited in favor of potential hikes in australia at some point and the commodity backdrop has been pretty supportive for the bulk commodities. it is up nearly 30% in the last month. they of trade look like have begun on a pretty decent note. there are a number of supporting factors here. that is consistent with the broader global backdrop. the aussie to come off from here we need a couple factors. we need clear confirmation from the bank that it is on hold for the perceivable future.
but it is getting on with its naturalization process. there is no doubt the currency is probably going to be using from a higher starting point. like the rba is facing the conundrum that many central banks are facing around the world. they have labor market picking up, wage growth is slow. not only has it not risen to let's just put it into perspective. while the key rates at one point have been down for a while, cpi briefly touched 2%. it is back down to 1.9%. how much of an issue is this for the rba?
reporter: this is very much a theme around the globe. more important than the headline cpi number is what coal inflation is doing in australia. at 1.8%. is running it is below the reserve target. given what some of the leading indicators are suggesting, that inflation is unlikely to be much above or anywhere near 2% for much of the next 12 months. we think it edges up a little but remains stuck around 2% for a lot of the next 12 to 18 months. there is a weakness in wage growth. wages running at a historically lopez. a common theme around the world, reflecting a number of factors. that is what keep --
getting through took quite low inflation. the mixed you think that rba should follow towards the removal of stimulus. we would argue that the low-inflation environment is one factor that suggests they should hit -- sit on hold for a while. they are tightening up financial conditions with lending rates and borrowing rates. taking some stimulus out of the economy. argue, ityou rightly looks like that stimulus -- it would be logical for that stimulus to stay in place in australia. even if it does, what are the chances we will see a real collapse in the housing market in australia? how big of a threat is that to the australia outlook? reporter: i think there has been a lot of focus on housing for
many years now. what we are quite comfortable with is the construction cycle remains very strong. the leading indicators tell us that should peak early this year in 2017. that will be a big support for the economy in terms of activity that is likely to wayne as the wane as the-- year unfolds. more importantly is what is happening on the prices side. we started to see moderation in east coast melbourne prices. there is a resilience. what we would like to see is the , suchying fundamentals that you should see a moderation in price growth, more in the single digit rather than double-digit. more consistent with income
levels and income growth. unless you see substantial orreases in lending rates unemployment rates, it is hard to see a substantial correction in house prices. there will be pockets of weakness. there is supply and certain pockets in sydney, melbourne. that, they suggest moderation, not collapse. kathleen: if there is one thing you could see pushing the rba off, what are you watching? reporter: what we need to see is a pickup. we know the labor market is in better shape. down 5.5ent rate is percent. we know there is excess capacity captured by the high levels. more thewe see, the
excess is absorbed and should flow through to wages growth. ofsome point, the week pace -- i think that is what would give the rba some confidence, the removal of some stimulus is appropriate. yvonne: thank you. think cap -- they keep kathleen hays. -- thank you kathleen hays. mobilevailable on your and bloomberg anywhere app. you can customize your settings. this is bloomberg. ♪
prices. the only price reduction starts august 1 -- fidelity price reduction starts august 1. yvonne: shares have surged after "spider-man homecoming." sony pictures tv is spending budget $43 million on a 95% stake in animate distributor funimation. buying script networks. they can leverage their programming to ensure inclusion in online tv services. channels have been striking as consumers drop subscriptions in favor of streaming video services. almost it for us
here on "daybreak: asia." we did see the official numbers. we are still seeing some substantial -- rishaad: there are seeing a little bit of depletion. that is something that will be considered in the markets and what of the inflammation's -- implications if you cannot keep staff. economic reform, that sort of thing will be weighing on markets. number with enterprises. xin is a medium-sized enterprise. rba, of course. lot of nothing
maybe. they have to talk about the aussie as well. michael is joining us to given at -- as an analysis on that. have you ever played this game called honor of king? yvonne: i hear women are very attuned to it. rishaad: they account for 54% of users of this game. usually mobile games were similar games are 35% or lower. there we have it. yvonne: that is it for us here at "daybreak: asia." this is bloomberg. ♪ who knew that phones would start doing everything?
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rishaad: 9 a.m. here in hong kong. 900 evening on monday. i rishaad salamat. foreignme to check out assets. insurers being asked to sell out and bring money home.more turnout -- turmoil in the white house . scaramucci is told you're fired. haidi: i'm haidi lun in sydney. coming up, the fed numbers taking up on the turmoil. the uncertainty and lush intent is harming growth in the u.s. and abroad. this is "bloomberg markets: asia." ♪