tv Bloomberg Markets Asia Bloomberg July 18, 2018 10:00pm-11:00pm EDT
trade concerns taking a backseat, looking at what the fed has been doing. it is u.s. earnings season. financial stocks are helped along by morgan stanley. it's about monetary policy. it's about fundamentals. indonesia looking at monetary policy as well. >> that reasonable lift in wall street. the regional index up for a second day. receive properties so are on a privatization deal. chinese stocks are halting a three-day drop. led higher by
financials, energy, and telcos. jumps.sie dollar 50,900 jobs for the month of june. the aussie hit a session high on the back of that data. rupiahlooking at the slip for a second session, this says the bank of indonesia is expected to hold rates after three rate hikes. rishaad: we have the pboc setting its daily reference for the yuan, suggesting officials are comfortable with the break of appreciation. >> good morning. -- we did withnt
pimco, the weakening of the yuan is a shock absorber. it's one way for a country to spur increased demand for its exports, to weaken its currency. that is important now more than ever for china because of president trump's trade tariffs. so a weakening of the yuan will be a shock absorber against those currency issues. rishaad: the bank of japan has been tinkering with the market here as well. they made reductions in the bond buying in a couple of places rather than the usual one. yeah, the bank of japan is -- remember, the bank of japan is buying a tremendous amount of government debt as part of its monetary easing program.
i think it is about 42% of the whole government debt market. even a shift in policy, it is looking for ways to trim back on its bond purchases. there is a rally in the bond market. long-term yields are low. from a basis point or two from the lowest in recent years. so it's an opportunity for the bank to trim back on his purchases. it is also a signal for the central bank or suggest that policymakers are comfortable that long-term yields will stay low, signaling there is still support even without the central bank buying the happening place for long-term bonds in japan. rishaad: is that what you are suggesting? the bond market no longer needs as much support from the central bank? yeah, i didn't mean to
suggest that the central bank will wrap up its bond purchases. they will still be buying. but it doesn't need as much. -- itntral bank not only has made these reductions in the past. but when it did that, it made a reduction in one section of the yield curve. today, it did a simultaneous reduction of two sections, so double what they usually do. so yeah, i think there is demand for long-term securities in japan. remember, the 10-year yield is pegged at about zero. so if you are looking at yields coming to look at the longer maturities on the yield curve. so it's a signal they are confident there will still be support for long-term bonds. rishaad: thank you so much.
you can follow him on the bloomberg. let's head now to beijing and have a look at what is happening first word news-wise. again, the white house making noises. tom: indeed. president trump has continued an attempt at damage control. he told cbs news he believes inks thehn threats are ongoing. he would not accuse the russian leader of lying. >> i don't want to get into whether or not he is lying. i can only say i have confidence in our intelligence agencies as currently constituted. i think the dan coats is excellent. i think gina is excellent get i think we have excellent people in the agencies. when they tell me something, it
means a lot. tom: president trump is putting more pressure on allies in europe. he has proposed to put terrorists on cars imported from the eu. the president said imported vehicles will be on top of the agenda. >> we said, if we don't negotiate something fair, we have tremendous retribution, which we don't want to use, but we have commended powers. we have to. including cars. cars is the big one. you know what we are about with respect to cars and tariffs on cars. trump's topnt economic advisers blaming china for delaying talks on the us leading trade war. as far as the administration is aware, president xi jinping does not want to make a deal and has
no intention on following through on agreements. theresa may has repeated that no deal is better than a bad deal when it comes to brexit. may faced lawmakers' questions. she admitted there would be no simple answer to the irish border. meanwhile, boris johnson told parliament he quit because of -- didderingng over brexit. global news 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm tom mackenzie. this is bloomberg. ♪ rishaad: still ahead, ruth sees ahead for container ships. next, a preview of indonesia's policy meeting.
shot: you are back with bloomberg markets. look at what is going on in jakarta. onking at what is going right now, a move to the month -- to the upside margin. there we go. bitindonesian rupiah just a stable. at whatan have a look is happening generally speaking. expected tobank maintain its hawkish stance. alice, what will be the thinking
when they get together and have the power of monetary policy? today, we are expecting bank indonesia to keep rates on hold. they are -- they last raised rates by 50 basis points. the rupiah is not falling as sharply as in the past. we did hear from the bank governor of the weekend. highlight that you are seeing capital inflows into the indonesian bond market which does imply hawkish monetary support the to currency. is it to that sentiment has turned and enough is enough at that stage?
alice: 100 basis points is a fairly sizable move. they have been very clear with market signaling that they did care about the currency. the currency wars were causing concern. that is why they were enacting this monetary policy stance. if you look at the counterfactual's, they haven't moved rates by the end of june. it is reasonable to expect that the rupiah would be weaker today. it helps to tie it in the currency. rupiah to do slightly better than other asian currencies against the dollar going forward. was predicatedve by a lot of money leaving the country. the reasons why people were putting their money out have not changed that much. have they? >> it is true. growth has been fairly sluggish. seeing not necessarily
much evidence on the ground that that is changing. one thing that has changed in recent months is movement on trade tensions between the u.s. and china. we do think indonesia will be relatively unaffected by that compared to other asian countries. indonesia does possibly look more favorable now than it did in the past. certainly, there is not much anecdotal evidence yet that growth will pick up. one of the reasons indonesia will fare better is that they don't have the same supply chains that other countries have. talk about that and how effectively a trade were with the united states, not just against china, but asia and possibly asean in large part. alice: we have been looking closely at the impact with the u.s.-china trade were recently. there are a few cheat -- a few key channels to look at.
the first is, if the u.s. is directly levying tariffs on these countries, so far, indonesia has been relatively unscathed on that front. the second, if the u.s. doesn't september,ffs in then how will that slow growth in america and china and globally? we had downgraded global growth on the back of those tensions. a relatively is closed economy. it is less affected by that downgrade than others. we only downgraded indonesia by 20 basis points. we downgraded other open economies by a whole percentage point. other channels are like supply-chain realignment and whether or not indonesian suppliers could take up the role that chinese suppliers to
america do. again, indonesia is relatively insulated. rishaad: this does support the narrative that people are defensive orre domestically-focused, i should say, markets of those which are open. alice: yes. you tend to see the closed indonesia, tend to be highly weighted toward cyclical stocks. positions takek advantage of the domestic economy rather than the open economy. you are likely to find those in indonesia than like malaysia or
other economies. rishaad: you mentioned you downgraded the growth forecast for a couple of asean countries by a full percentage point. which ones? aggressiveones most and singapore, malaysia, japan. necessarily look to have a huge overlap in times of supplying the same goods as china does to america. it does not necessarily look like they can assume the market share that china might lose. one exception to that might be vietnam. it is a very open economy, but exports overlap easily with chinese ones. absorb that shock. rishaad: how do you think central bankers in asean are
isewing with jay powell i saying in congress? alice: our base case is the fed will keep raising rates with slightly less -- fewer hikes them before. -- fewer hikes than before. policymakersl, will be more concerned that they will have to tighten policy as well. that will be outweighed in most of the open economies by concerns about growth going forward. so policymakers in singapore and unchangedwe see them through 2019, even though we expect fall rate hikes from the fed. that in the philippines and done asia, the more closed economies, we do see they prefer for the rate increases because they have been seeing currency weakness.
rishaad: alice, a final question on dollar strength. does it continue? what is the impact on this part of the world? think dollar strength will continue against some of the southeast asian currencies. we have further weakness in the ringgit. credit growth has been very strong. the broadly speaking, the dollar has been very strong year-to-date. there's less room for to go against other currencies more broadly. rishaad: thank you. talking about indonesia, rate decisions and beyond. can watch live and dive into the bloomberg functions and be part of the conversation during our shows. this is for bloomberg subscribers only. have a look at tv .
rishaad: you are back with bloomberg markets. we have another unit of struggling hma groups struggling in its return to the markets. a six-month suspension has come to an end. india is set to be ready to inject billions of rupees into the economy in capital buffers of bad debt and poor profitability.
boeing god a several billion-dollar order from vietjet. networkexpand its route at home and includes training and technical assistance in vietnam. 2018 profitd its projection in what it calls a significant headman. -- significant headwind. the forecast as to concerns on commodities and the potential impacts of tariffs. tariffs making headlines in japan as well. tokyo's seemingly taking a tougher stance against american threats. in an exclusive interview, the japanese trade minister told us
washington can expect a stronger response if it goes ahead with car levees. japan won't take the same approach to handling u.s. tariffs on cars and auto parts that it did on steel and aluminum tariffs. the damage would be huge to not only the japanese economy but also to the u.s. and global economy. about 10% of japanese manufacturing comes from the auto sector. out of 9.7 million cars made by japanese manufacturers, 20% are exported to the u.s. the portion is far bigger for that in europe and south korea. the japanese auto industry has grated 1.5 million jobs in the u.s. those jobs will be in jeopardy if the 25% tariffs were to be imposed on japanese cars. >> would it be important for japan to work together with the eu in convincing the u.s.? eu are working together
on how to address the protectionist turn in u.s. policy. japan made a call to set up a meeting at the wto meeting last december. we have met three times since then and we have been making great progress. i believe we need to work more closely and dealing with auto tariffs. >> what is the intention of japan leading the large multilateral fda deal? what appeal do you intend to make to the trump administration? injapan's leadership free-trade deals are very important when protectionist movements are very strong. japan managed to make an agreement with the eu and we led the tpp 11 deals. it is important that the u.s. understand the value of multilateral trade agreements. confident that they
are separate agreement will be signed by the end of this year? >> trade negotiations are almost always not smooth until the very last moment. however, all the members are willing to some this up by the target date coming including china and india. date,ick -- target including china and india. rishaad: that is the japanese minister of the economy and trade. we are reaching the lunchtime break in tokyo. >> tech shares are gaining ground. mitsubishi and general electri., the upside from chip equipment makers is limited.
on the other side of the fall the we see hulic most since february. after is under pressure jeffrey said inbound sales may slow. consumer stocks are lower on the nikkei 225. the benchmark is set for a fifth day of advances. chip makers and textures are bound -- are among the biggest movers. the exports rise on year. with a 5th street month of single-digit expansion -- fifth straight month of single-digit be somen, there might
rishaad: it is 10:29 in hong kong and beijing. i'm tom mackenzie with the first word headline. jay powell has spoken out against trade tariffs saying they would be good for the economy. on his second day of testimony, he said he opposed protectionism and wouldn't want to see trade uncertainty offset economic momentum. he remained upbeat about the u.s. economy saying there is no indication a recession is imminent. google says it will appeal a record $5 billion antitrust fine imposed by the european union for the way it parts search and web browser apps onto android mobile devices. it is being told to change the way it operates and given until
mid-october to stop what brussels calls illegal practices. >> google has used android as a vehicle to cement its dominance as a search engine. they havetices, denied rivals a chance to innovate and to compete on the merits. they have denied european consumers of the benefit of effective competition in a very important mobile space. tom: reports from jerusalem is a israel has passed a controversial nationstate bill that allows the establishment of communities for jews only. critics fear the lawful rican deposition of israeli arabs by downgrading arabic from unofficial language to one with special status. the prime minister says the bill is vital to guaranteeing israel's existence.
tesla ceo elon musk is apologizing to a british diver helped rescue a football team packed -- trapped in a thailand case. called one of the rescuers a pedophile as the two swapped insults over the submarine offered. musk admits he spoke in anger. he ended by writing the fault is mine and mine alone. some people just can't help making money. in a week where he gained more than 3 million dollars to charity, he added $4 billion to his fortunes after berkshire hathaway listed buybacks. shares rose the most in almost seven years, listing -- lifting his fortunes to $83.5 billion. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 2700 countries. i am tom mackenzie, this is bloomberg. positive today,
generally speaking for equity markets in this part of the world. sophie: positive day, indeed. spi adding over 1% in singapore. we are seeing properties gaining ground, surging on a privatization deal. we also want to highlight chinese stocks. there helping a three-day drop. the yuan is extending losses. seeing shares in australia gaining .4%. oferial stocks given some the tariff outlook. also want to highlight the aussie dollar jumping, while using some of its advance. came in jobs data stronger than forecasted after contracting in may. we saw the aussie hit a session high on the back of that.
50,900 jobs added for the month of june. to add what is happening with the yen. we see it gaining ground. taking a look elsewhere, i want to highlight what is going on in korea. .1%. korean consumer stocks are under pressure and we are seeing that be the case as well for consumer shares. a last look at what is going on with the indonesian rupiah flipping ahead of bank indonesia's policy decision due out today. expected to hold after three rate hikes. rishaad: thanks for that. going to get you down to the world of shipping and beyond. a container ship is facing a gloomy order with the christmas season rising. shipments in what
is typically the industry's peak period. how are tariffs affecting shippers overall? are they yet? is it too early to say, and what are people suggesting could happen? early in this dispute that is going on right now. the first round of tariffs just increased this month. it is a bit early to say how this will affect in terms of volume. generally, before the second announced,riffs was they were expecting about 1.8 's, less than 1% of global traffic to be affected by this. if we go into the second round, we could see more stuff being disrupted. that is probably going to be bad news for the shipping industry as well. rishaad: absolutely. long-term impact, the shipping
industry is something that is being debated here. you have container shipping, various different types. it affects things in different ways, doesn't it? >> mm-hm. this will probably affect container shipping lines going forward because they are all about supply chain. we might see a lot of chinese companies may be thinking again about maybe putting production out of china, so that they can avoid tariff disputes like what we have now. that could change the way container shipping is done, given that there might be more point that they might have to go to. ofre could be a shift container shipping going forward in the near horizon, probably. rishaad: thank you very much, indeed. from the trade tensions can also be seen in aviation. aviation stocks under more
and more pressure here. ve, the airshow is coming to an end. there was a cloud of the trade tensions there. tell us about it. steve: i think it has been a great airshow again. there has been the undercurrent of trade tensions, but we have not seen that impact the new ordering. have all comeers out with strong quarters, and is probably more to be seen in the final day. the things in particular which we are seeing, there has been a loss of orders. the narrowbody bodied jets and regional jets have been strong. also cargo. there has been a renewed resurgence. say, those you marable bodies, they are in effect the cash cows for the major manufacturers there.
here, we haveg had also a lot of discounting or reports of discounting taking place. we get the list price and never know what the discount is. there has been a lot of talk about much deeper discounts. numbers are all amongst the most secret in the industry. all orders will get significant discounts off the list price. i think at the moment, the manufacturers are relatively strong. the auto books are relatively long. they are not desperate for new orders. i don't think we will see the kind of discounting we once were when many captures or a little more desperate for orders. rishaad: certainly, and it has been really good for quite a few years now. what about the chinese manufacturers, did they have any joy? the chinese manufacturers
watched for them in the next few years. 199 is a coven aircraft flying with chinese carriers. i think that will add a competitor to what is pretty much a duopoly in the aircraft manufacturer space. rishaad: especially when it comes with embraer going with boeing. cargo has had a horrid time of it the last few years. the thing is that many up takes have decided not to be afraid or carriers. is it just created more capacity or is it a turn in more fundamentals? steve: great question. first of all, air cargo has always been growing. the problem has never been the demand side. i think with e-commerce, there is an increasing growth of things moving in small package, which helps airspace as well. the challenge has been the supply side.
more than half of the cargo does not travel on freighter aircraft, it travels in the belly of the passenger aircraft. the problem the cargo industry has had is that that belly space has actually been growing significantly faster. a triple seven passenger aircraft has a huge amount of freight capacity underneath it. as the passenger traffic has been growing so strongly, the belly capacity has been growing strongly as well. belly capacity is marginal cost. if the plane is leaving anyway, you may as well fill the space underneath it. it has been oversupply of belly has been dragging down the industry for many years. there has been a significant upturn in the last one year with strong pricing for cargo. that is leading through new orders coming in. reflection ofat a the incapacity from the freighter side of things that
has led to those bellies getting filled up? steve: yes. like everything, it is cyclical. i think what all cargo airlines are worried about now is that now,prices are high looking forward, we continue to see very strong passenger growth. there are lots of new orders coming in for passenger. however, many airlines are constant enough to put in some pretty significant trader orders -- freighter orders. particularly, you are seeing it from the express orders. that is driven by the e-commerce them. many traveling by packets meeting urgent freight, which might be common in more traditional supply chains. rishaad: wide-awake it to a story we have today, which is how airbus and boeing have both try to mask some of their buys and huge orders here as well. how far is this down to their concerns about this trade war?
boeing thats and obviously love to announce who is the order of those aircrafts. is that the orders are highly likely to be from the chinese carriers. the chinese industry continues to do very well. demand is strong. i expect we would be seeing new orders from the chinese carriers through this airshow. given the tensions of the mama, i think chinese carriers are holding back a bit and saying look, let's make sure we get all of the clearance internally. maybe see where things are headed with the trade war's before we reveal the orders. rishaad: the chinese guys have global ambitions. one of the going to realize them properly? steve: i think you have already started to see it. the chinese carriers, yes, they re haere -- there has been
significant domestic growth. all of the chinese carriers have invested significantly into quality products for the international customer and sales teams. they have opened tens of new destinations in the last year alone internationally. think the single largest driver of the growth for the chinese carriers has been the chinese starting to go abroad both for leisure and business. -- daily tosuch as significant out on business travel as well. i think at the moment, the chinese airlines are still doing more successfully than mystically then internationally, but internationally is whether growth ambitions are. rishaad: great talking to you. coming up, president trump has more to say about helsinki.
rishaad: we are back, this is bloomberg markets. having a great day over in singapore. we lost properties on the back of a privatization deal that bloomberg intelligence said the parent company picked the right time for the move with price at a 22% discount until the end of the first quarter. that stock rising over 24% in singapore. over on the chinese mainland, you have focus media jumping as alibaba affiliates are combining for an $8.7 billion deal. with a plan to raise their stake by as much as 5% in a years time.
hina-caissa travel rising. we do have the company terminating its asset restructuring, citing changes in policy and market environment for the decision. , stocks are falling. the hotel is falling as much as 9%, also giving worry over tougher competition for its duty-free store business along with the recent inflow of tourists. now to thatng back helsinki meeting. damage control continuing at the white house after president trump's comments on russian meddling at that summit. he now says he holds vladimir putin personally responsible. who not accuse the russian
leader of lying. >> i can only say i do have confidence in our intelligence agencies as currently constituted. i think dan coats is excellent. i think gina is excellent. i think we have excellent people in the agencies. when they tell me something, it means a lot. president trump has said some confusing messages, to say the least about russia over the past few days. tries to put it all together for us. jodi: i will try. the latest is that during a cap and beating, a reporter asked president trump whether he thought russians were still targeting the u.s. and would target other elections. he appeared to say know that id not think they would.
rishaad: he was answering the previous question? jodi: right. he didn't mean know they wouldn't, and yet it is still unclear what his answer to the question was. it is also been a confounding week. in helsinki, he seemed to indicate that he didn't think that the u.s. have been targeted by the russians in the 2016 election, that he didn't necessarily agree with u.s. intelligence, intimate a lot of statements against u.s. intelligence officials while standing next to a russian president. he later tried to walk back some of those comments by saying that he misspoke and that he agreed with u.s. intelligence officials that there had been targeting of the u.s. during the 2016 election, but he did not entirely walk back his comments then nor his scathing criticism of robert mueller and his investigation.
there are really contradictory statements and it is unclear exactly where the president stands on his opinions about the kremlin, russian president in or about russians involvement in the 2016 or potentially any plans to target the upcoming election this midterm election. someone came out and said the president is entertaining the idea of letting russian authorities question of former ambassador to moscow. this is an ambassador that would've had diplomatic immunity in a position. unprecedented.be even the state department spokeswoman came out and said this is a very bad idea, a very bad precedent. russia wants is for what they have said they are willing to do is to allow, with them watching, their 11 officials who were indicted by a grand jury this week on tampering with the democratic party's email.
charges. the russia said well, you can interview our people, but only in exchange for us interviewing them of your people, including the former ambassador to moscow. again, it would be unprecedented. it looks like president trump will entertain it. no decision has been made as to whether that will be allowed. rishaad: there you go. that meeting has caused quite a few ripples. thank you so much for that. let's have a look at the business flash headlines. new york city approving a new o sharecing airbnb touche names and addresses of short-term rentals. -- they sayct hosts the law is designed to help the hotel industry.
ebay signaling it is losing momentum. sales will now be about $10.8 billion. they are predicting about $11 billion in april. ebay struggling in the face of amazon's relentless advances, also facing competition from brick-and-mortar stores. nba starred wayne wade has clinched a new deal in china, signing what has been described as a lifetime contract with a shoemaker. latest sportss footwear. financial details have not been released, although he has been with them since 2012. for breaking news wherever you are, bloomberg and twitter want tictoc by twitter, the first global network designed to social media. offering live video coverage. do jump on twitter and follow
who wants to go first? chris? chris: yes. i was inspired to make this chart by when i listened to one of the guests on the program aboutday who was talking this addiction to credit that major economies have, and was laying out his argument. was saying that he doesn't think that the federal reserve is going to be able to keep going with monetary tightening for much longer because there is access reliance on credit in the economy. statisticsith some to show that. what you see here in this chart is that consumer credit growth in the united states and
corporate lending growth in the united states have significantly outstripped the expansion of the economy since the global recovery began in 2010. this really speaks to an increasing reliance on debt, and ofentially the inability borrowers to withstand higher borrowing costs. what he also said was that credit growth was sliding down, which is not showing on the chart, if credit growth slows, economic growth does as well. mark? mark: for the last 10 months, the oil curve has been in backwardation. valuableects a real demand, immediate demand for oil. it also helps speculators because it means the effectively oil.aid to be long every time they roll contracts, they are earning money. backwardationoil
of the curve has collapsed in the last couple of weeks. this is removing a major support rally.oil my target showing that the backwardation has driven the rally the holy up and is now going to drive oil back down. this is going to be important in the next few weeks. chris, i'm going to have to give my apologies to you. i preferred mark's but not by much. thank you so much, guys. chris: the global economy is at stake. rishaad: oil is one of the most important components with in it, is it not? gtd go if you want to have a look at that. ♪
♪ emily: i am emily chang in san francisco and this is "bloomberg technology." google slapped with a $5 billion fine from eu antitrust enforcers who ordered the company to chase away its certain browser apps on android devices. commissionern margaret joins us ahead. plus, he is known for not holding back. we will hear from former