Transcripts For BLOOMBERG Bloomberg Markets Asia 20170216

Two years. Massive bit ofa chinese index dropping in a few months. Last, theill they markets will open in less than 30 minutes. We will see what is going on is a gauge for what is happening here in hong kong and beyond. When you look at the market and be you might get surprisingly cautious. Talk on the street here, anecdotally of course, they are and of scratching their head and wondering why we are seeing this rally. There have been a changes in the market. Cement makers. Here is your share index that goes all the way back about 12 months. This is your relative strength index, this is the highest level , this was right before things came crashing down. This came back in april, i think i can show you that. This had a little bit of time, april. There we go. Months, next seven these lost close to a trillion u. S. Dollars. Still about 30 lower, that being said, this is about 79. 99 how close is the situation leading up to that . Do you see any parallels to that . There are a few. The other thing i want to show we only had then that shanghai stock. We do not have shenzhen. 6300 on the bloomberg. The crossover from coming to shanghai to shenzhen. We are right about here. We are at these levels back in april 2015. When you look at the volume of the market, we are not quite there yet. The other thing i want to point out, when you look at this function on the bloomberg. Lot of things. How much of an index is being sold, how this particular constituent is heading. With this track, we are looking at averages. I am using the hundreds. That way we can instantly track where stocks have been at that time. Ise 17 of this index, trading above is equally moving average. How does this compare . I will show you. We were roughly above 80, it is not quite there, it is not a people should be nervous. Thank you very much indeed. Year, asianord last is at the u. S. What are we talking about . We have depleted the reserves as a whole have a tweet . This was up to 4 trillion. This is another set of numbers . Yes this is a part of the fx board. You have fallen down to several trillion u. S. Dollars. That happened in 2016 for the year. It went upwards of 9 billion. That wasnt the first monthly uptick since may. The overall trend since the record fall of trimming u. S. Treasuries by the chinese in the united states, there have been 100 trillion dollars. This has been burning through their fx reserves, their war sincehas been happening 2014. This is done to a sixyear low. They have been trying to stem the client, with outflows coming from china. What we have seen now with this risk is the cost of borrowing is more costly for the government. We saw the 10 year yields, we saw it at 62 last year. I just creditors are questioning if this is the right thing to do. Japan has been the biggest creditor china was. They are trying to comprehend what the Trump Administration is going to be. Theyre trying to figure out if there is a bigger deficit or it they are trying to see it how they are going to rethink these things. They are at 0. 19 trillion. Number oneill the u. S. Predator. That number has fallen significantly. I was a little bit distracted. Whoe have a loyal viewer asked who is falling and rising. That is a very good point. We are going to turn to the punitive factor, with the assumption that just arrived in court. There is an arrest warrant hearing for the prosecutors. These are actually the images coming through. We are just try to get a handle on that. This was the first time the special prosecutor put out an arrest warrant which would have been unprecedented. The course have declined that special request citing their was not enough evidence to r. They have expanded the allegations to five different charges. There has been embezzling, perjury, forgery of some kind of document as well. There is also illegal documents. This is a massive corruption scandal, involving china. There is the influence peddling happening. A few very much. Thank you very much. Lets get a check of your first word headlines. Confirmednt trump has that they u. S. Is open to a middle east peace agreement. His comments of banded the two state solution which has been in place for more than a decade or it trump told the israeli pass Prime Minister that he is happy with whatever works. The Prime Minister says falling profits are a new challenge. He has credited a different kind of financial crisis. They have been speaking about a National Conference in europe. If they be most elected continue to suffer woefully. Investors are actively taking risks. Monthly unemployment is stalling. 5. 7 and haved to been remained unchanged at a percent rate there have been 5. 6 jobs in november. I was so you how it has been in the last six years. Global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. This is bloomberg. From singapore, we have seeing theit, we are lowest quarterly profit in two years. With regard to the oil industry. Right, none of them has been aown, there 600 million u. S. Dollars. A disappointing number, it also has to do with rising provisions. It comes at 87 . This is with the struggling oil and gas industry. To give you a perspective, consider the estimates, they oh quite a bit of money to the banks. This is slowing the singapore is not yet recovered. We hope that you would expect more volatility, the situation has stabilized within the year. That does not mean recovery though. This has a lot of banks grappling with this or it is a challenging environment. This month thing dbs is actually trading up. Estimates, that is probably because of nonperforming assets. Totaling 700 million. That is lower than what it has been in the past. This could exclusively be why they are getting up this morning. These banks have been trying to boost others, with the challenge of the energy industry. What has they been doing . One area is actually wealth management. Because of the rising number of wealthy people. They welcome more acquisitions, they would like to purchase more. There seems to be something in the asian wealth. It is also considering investments in asia. Could feature more than 300 million u. S. Dollars. , if you look at lookingdations they are at a cell. Thank you very much indeed for that. U. S. Foreign in policies. Bes demonstrators will turning out for the chaos in washington. How long will these good times last . This is bloomberg. Lets have a look at the local business flash headlines. We are told they may start talks with the business. They have seen mistakes start to fall off. They trys plunge after to bid a four nuclear power. These would see them up in the tokyo stock exchange. We have been hearing about verizon being close to a new deal for yahoo internet property. This is at a lower price. The companies have a great to 250 million discount rate the revelation of the hack into thousand 14 brought the price 1. 4 billion. India isal bank of going to absorb five of its units, they said this could boost efficiency, the bank is expecting a cost saving move. Our next guest said that trump jumped into the dump. They had about 2 billion in management. With this be a good idea . Good day. Look, it is a challenging market. View is that many investors are not paying enough attention to the fact, they are benefits into the narrative. If you do not affect the other is all fake news. , you can can you. People and being very seeingative, we are these market prices. I would agree with that. The returns are potentially falling. From our perspective, that keep focus is capital. With this market it should be the preservation for capital. This is having very low volatility. They are testifying in congress, they are looking to see what is the feds fault. We are seeing the risk reward ratio taking some money off the table. Right. This is the concern that you mentioned before area i think this is going to grow on skepticism. Adage, are we in that. Is it in its last phase . I think it is divided. According to the bloomberg, the s p has also been reached. Some people are out liars. These outliers remind me of 2007 sachs was under 250. I increasingly feel that the prices are fairly valued. Especially when now is the time to have a look hard look at your portfolio. Get the narrative, that makes the tv and other headlines on twitter. The execution could relate derail the market. I know you are bringing a slightly pessimistic tone, you want to see a top can but thats conviction. This is a bigger dilemma for the fed. And for us in general. Grown tocall, that has 5. 5 trillion. With a fiscal stimulus trade and all of that, that could be unleashed, it may be difficult to control. And that issing potentially why the fed is behind this. Seeing the complexity of the why there are negative real rates are it it is going to be increasingly bitcoin. You must be worried about bitcoin. A lot of these are seeing cash. You are lamenting that you are worried and you are more optimistic. I think the biggest mistake is complacency. That in theave seen law volatility. Agree with mr. Trump or disagree, the one thing he made clear was he wanted to change the new world order. That has been built on the assumptions, a lot of this is being questioned. Outperforming, predominatelyr is owned in the portfolio. It is just now becoming more mainstream. That is why i think the risk reward ratio is very positive. Always a pleasure. Up next, profits soaring for the worlds biggest supplier of magnet mid magnate these we have breaking news, we have the possibility for Interest Rates. There he is. At the Cornell School of business. The predictions event, the Cornell College annual new york city predictions event. That is making some productions about china and the challenges, how it is growing rapidly. Is having a more stable growth this year. We are focusing on shortterm rates and policy, along with what is going on in regulations read we are trying to see what works and what doesnt. Banks havehow these been big enough to change their bad behavior. It is interesting to see how that falls into inflation. You can see that from the new york fed. York cornell new College Business meeting. Our first profit business meeting is giving up some of the there has beene some good numbers for the ghp. Take a look. Extra counterintuitive extra counterintuitive move, is interesting. We are seeing this in a couple of hours time. There have been a few changes to south africa. Lets take a look at those numbers. This feeds more than 100 for the same year earlier. Up rices our our cold prices are up. We are turning to the last hour or so. They are pretty bad. We can see how wednesdays announcement was looking at energy ventures, it is as much as you may expect. That is up 22 . That is an interesting dividend here. There is not a lot of money with these allergy programs getting theyhe ground or it so still intend for the ceo to reduce this below 9 billion. Thank you very much. Guests onve some big Bloomberg Television. Be talkingcourse with tail ceo. They said they have proven to be for your target. Lets we are back with Bloomberg Markets asia. What we saw is more for the u. S. Equity markets not translating to what they wanted in this part of the world. Moment, it was a bit of a mystery. Below predicted. The Unemployment Rate falling to 5. 7 . , sheis lower than expected that they did not have to have a fiscal lead. You are seeing this from the york. L reserve in new we have all of this going on at the moment. We just heard from Michael Price is worriedjumped he about making a trump dump. He is recommending gold which is up about three quarters. They are just about to start off their session this wednesday. Gold and the bond market are starting to get a bad look. The only thing that is actually showing up on the benchmark are the 6 10 of a 1 . It is very cautious across the asiapacific. Example, we for have not seen this so much since the election. This could be the case if you have stock there. They are weighing in on that. Earlier,ea was out they are 1 under water. This is definitely what we saw here. Banks getting back just have a look at that. There it is. That is the upside. Ofs is perhaps a little bit an idea. Specific stocks, what are we doing . It is an impairment that leg. At one billion dollars in an iron ore mine. 1176 a share. The bank of china, what are we saying here . They are 2 up. That is nine days have a it does not matter. It is a long streak since the theyl financial crisis, are up 2 . If it is on the bloomberg, i will tell you about it. You know when there is a lot going around. The stocks start to surge. On the bank of china, we are now looking at the highest in 19 months, this is getting more expensive. You can see that there is a across not just here but the chinese sector. That is also higher as well. Something to keep in mind. That is what it is. To first word news. Mattis said that he is committed to nature with the transatlantic community. Toalso told european allies make sure that the u. S. Will moderate the agreement. President trump described it as obsolete. There is a european minister of defense who said last week that is that it is a fair defense that they carry a proportional share of the necessary cost to defend the freedom. We should think that it is freedom we defend. Another one of trumps asinistrators has withdrawn his labor secretary nominee. This comes after having an undocumented health care and abuse allegations. Lets that a number of republicans oppose his nomination. They will like you forward and the assassination of kim jonguns brother. She was carrying travel a criminal,he was Officials Say he was poisoned with a chemical spray. The Third Largest cell phone marker has entered the competitive world. A term team of engineers are their early stages of design. Global news 24 hours a day powered by more than 2600 journalists and analysts, in more than 120 countries. This is bloomberg. Will, it is that, hell saying it may be unwise to wait for trade. She may be right. Cpi going to the increase. You have that pockets election. , how big of a concern is this for the fed. Quest for this one i think it is a little hard, because janet yellen did not seem too concerned about getting behind the curve. We have heard from the federal official, here is what the cpi did. This is a flag for anyone in the bond market. Is doublethe cpi this. This can be volatile. There will be higher auto prices. Some of these things are driven by demand, more of this is driven by inflation. I have to tell you all of the lines are ok. This is the yellow line, it is up 2. 5 . To, it is rising. Line,look at the purple that is two and a half percent. That is over a year basis. There are the remaining lines. Line. E is the white this is that 2 , why are you worried . Raised their forecast year over year or it that would be hitting the target. Look at that mean for pce . Said that they would be making a hike more quickly this year. The was interesting, with market expectations, the world interestrate projections. You canook at the top, see the main hike. Down around 15 , that has been moved to 61 . I just know that press conference was at the meeting. I know people were getting fired up about this. We have these two things we are talking about, we were talking to janet yellen. Vice president going that is what i am saying. They are definitely downplaying thesef this, they say objectives it would be unwise to wait too long. Making gradual moves and going a little further. Is ae baseline forecast similar or 2016. There will be more pressure on the labor market. 2 t will be back towards our objective. Directory, weat move our policy negotiation. There you have it. Up. Aid the policy has gone that is an understatement, it is hard to factor single fiscal policy into the markets. Minute, we do know what will happen in his policies. Yes inflation is maybe heading at 2 . , theregoing into this was a lot of speculation about overshooting inflation. That is what i may suspect is happening now in the u. S. President when us that is getting ready to retire but he will give us more information about what is happening. Sayingw research is out that chinas economy may be insulated against american protectionism. We are joined by our chief , who has been quite a guest on this program. About made in china for china. Do with the growth model for china was. Down for the trend in recent important, is because if we are relying on all external demands, they want to be significant. Perhaps they have so that is not uniform, electronics. It is not also about value added. Make thate do not much money, china is going to validate that. I think there is a pretty significant thing happening. There have been cost of investment. They are trying to press their own margins. When you see Something Like this has illustrates what china as a basis for its own. It is a punitive goal, they are a long way off from this. They do not have enough to fill the gap left by the smokestack industry. These numbers are showing up for. Next, the banks are expected to be stressed more. We will look at that coming up. Check at the business headlines. This after they are trying to lower more indian customers. There are five indian cities that will give it access, with more growth. The german garrisons have had a partnership with lufthansa. Lufthansatell you, says they are open to cooperative with these jets. Here is customers in china kind of their. It is the second largest growth in seven years. Markets ish in helping to upload shipments. Are decisions to shape up as people are becoming more cautious about the food and drink they consume. There is this healthy or Product Portfolio even if 40 comes from guilt free products. Pepsicola earnings forecast has anded out on this estimate, warning of more economic challenges ahead. From this post loans and Energy Companies is a key factor of singapores bank. They are preparing for a further hit here. We have krissy langley who joins is the from of gas are going to end here . The ceo of ocd said that oil would need to be sustainable for a while before thing started to clear up. Ist is a way of saying there no end in sight. If you look at the very Technical Details about the kinds of hits they are earning. You have a lot to go. A lot of the loans that they have, they may still be at value. Those could default as well. The problem here is the collateral. A lot of these loans are going back on ships which have no use. They are being sold for scrap. The lateral value continues to seen as a Balance Sheet the bank sees. There is no easy way to you. What do you see next . That is the thing. It is all about the collateral now. Some of these have been bank is tryinghe to keep these companies afloat. They restructured them all. They said these loans are bad, but not so bad. ,hen those are also going bad you will have to see more provisions made for these loans. Money andks make more have hired divisions, the earnings are going to drop. Ocd missed estimates this week. You are probably going to see the same thing tomorrow, investors should expect more of the same throughout the rest of the new year. Ares that the message you essentially saying. On fortunately yes. Thank you very much. These contacts are investigating links between the u. S. And russia. They are calling the russia story nonsense. Ray leota has been following all of this. Speaking about twitter, he sent a tweet largely into the twitterverse. He actually link it to Hillary Clinton saying that she is still trying to bring up live up to her mistakes. The xina of angels have been in touch with his rate. Was happening with our National Security adviser . With those senior russian officials, they were talking. Bout white house aides fbi is now doing a separate investigation, to try to figure out who was involved in what they were talking about. They are trying to figure out also how early they were talking or it there was at least three or 40 who will be under the these three on your screen should also be aware of coming. At is Paul Manafort is the former camping chair. The exiledso president migliaccio topple. Gas, he is a with former Campaign Advisor and a longterm republican. Out of all of this news, you can who are lot of senators saying we need answers. Republicans what this is well, this is been a bipartisan effort as well. People are trying to get out from there, away from charles schumer, a senior republican. As well as Lindsey Graham and senator mccain. This white house is a month old, i swear to god. East, donalddle trump affects issues there. Fromgnals a major break major u. S. Policy. They call this the to spank solution. Perhaps donald trump would be happy for a one state solution. That both parties are would presumably they may make him happy. About theking settlements in palestine, he says israel should hold back. New homes have begun construction. Lets begin. Quirks i like to see you hold back on comments. Like it is toond optimistic. That is the art of the deal. Used to probably not watch like that. Is other high button issue the concept of moving from israel to jerusalem. The Trump Administration said as far as moving goes, i love to see that happen. If it does move, it would be recognizing jerusalem as the capital. As it happens, 10 30 a. M. Eastern time, the senate is going to be looking at the u. S. Ambassadorship to israel. Go right up to you, who will have no problem with the camrys. The same car is a veteran hybrid , there is an unbelievable number. This is bloomberg. What has been a mainstay of the green card movement. It is a staple with chinese buyers. The sales have almost flat light in 2016, gary eric is with me. I cannot believe it. If you are watching in china, you but a pretty is in december. Congratulations, you bought a prius. China since may actually, they sold one car in may. They do not sell another car until december. Were sold 70 of cars in china, this is down from a priusar report read the has never been very popular in china. When to start. They are doing that badly, overall are they . Even with the criticism, theyre not that bad. People understand the role that if its in. Carry, it looks like it could do a little them were carrying her it the prius stands alone. I talked to the channels about saying the card is not look very pretty premium. It looks like it also has a Sticker Price that may be made for the same money. With china, you can get a suv for that price of the market. I understand why you may want to get a bigger car, people are more interested in suvs now. It is hard to figure out with a prius fits in. Is it any different because it is a hybrid that has not been sold correctly. I do think that is tell. We have a lot of interest in electric vehicles. You know, they are also syrian sharing granola. That isally the prius the cut that consumers have not warmed up to. Thank you for being on. There phonesaying company is not looking at their messages. This will be on the bloomberg and a little bit less than half an hour. We hope to entice more customers, the equity market is heading in a down direction. 10 00 a. M. In singapore, 1 00 p. M. In sydney, 9 00 in the evening in new york city. Coming toad salamat you live from bloombergs asian headquarters in hong kong. This is Bloomberg Markets asia. Telstra sliding the most in two years on sluggish growth outlook. We ask andrew penn about his plans for the second half. China notches or record selloff in treasuries, pboc burning reserves to prop up the yuan. U. S. Intelligence and at ei russiagate trump teams ties. The president says it is nonsense. The trading day is getting underway in jakarta at the moment when we are seeing equities under pressure and even as we have record highs, at least u. S. Equity markets on wall street. Turninge trump jump into the trump dump. Here is sophie. Sophie no help from wall street. , some brighta spots, jakarta, singapore, manila in the green. We did have that u. S. Economic so we are seeing that in the currency markets with the yen, now some strength. Exporters feeling the drag in japan. Japanese shares fluctuating, the nikkei 225. 7 , however, banks and insurers extending gains in tokyo. In china, some fluctuation there as well. Andre seeing the rally chinese hshows losing steam. As david pointed out all morning, there were some signals after the momentous rally we have been seeing in recent days. A quick check on the asx 200, down. 1 . News linesven the around that company, down 4. 4 looking at the currency market sorry, some equity movers first. We do have samsung rising for a second day. We are awaiting a Court Decision on the arrest of jay y. Lee. Bank of china trading at its highest level in the year and rio tinto pricing. 7 today. The minor is said to have pitched on a 1. 5 billion sale of its last remaining coal operations in australia, the worlds secondbiggest minor and said to have received unsolicited bids for those coal at sets coal assets. It has been devasting coal assets since 2015. Some currencies here, the aussie dollar, if i can pull that up real quick, given the mix to jobs data this morning, the aussie has been above . 77 since last night. We do have the korean won leading gains, at a threemonth high, strengthening 6 against the dollar this year. A last a check on the taiwanese dollar, stronger for a fourth day. This after fourthquarter gdp was revised upward, but a and said recommending to sell the currency but anz recommending to sell the currency. Rishaad thank you very much indeed for that. Sophie kamaruddin breaking news, direct investment in china, downside. 9. 2 fdi was inn nine point 9. 2 yuan terms. Foreign direct investment of 80. 1 billion yuan in january. Thats what we have at the moment right here crossing the bloomberg. Over to sydney. Haidi lun as having a look at first word news headlines. Haidi samsungs vice chairman jay why the has arise for a hearing on the prosecutors request that he be arrested on bribery charges. The first attempt to take him into custody was rejected due to lack of evidence. Another one of Trumps Administration picks has quit. Andrew puzder has withdrawn as the president s labor secretary nominee amid controversy of hiring an undocumented has temper your domestic housekeeper. He would have faced a tough fight as a number of republicans opposed his nomination. Moore surprises from austrias monthly job figures, unemployment falling despite a plunge and fulltime jobs, 5. 7 percent. Analysts had been looking forward to remain unchanged at 5. 8 . Jobsyment rose by 13,500 driven by a surgeon parttime positions. Australia saw the biggest decline in the last six years in the going down by more than 44,000. Largest bankas reported its lowest quarterly profit in two years, bad loan provisions doubled. Net income fell 9 to 643 million in the previous quarter, but missed at estimates. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad well, busy morning of earnings in australia. Firsthalf profits, shares lets up early gains good find out more and get over to paul allen for the details. Some good numbers for this bhp spinoff. They were meant to be actually, well, some of the not so great assets bhp had. Paul thats right. I remember before they spun off werebhp, some analysts uncharitable he calling it crapco. 9 million dollars, and a proven of 26 main dollars from year earlier, an interim dividend. Saideo will be talking stronger Commodity Prices underpins this significant improvement, certainly the coal price and manganese as well. Origin energy also out with numbers, how did they get on . Paul not so good. Expected, that 1. 5 billion writedown was flagged by origin on wednesday, its joint venture project with conoco for looks. Conoco phillips. Down 28 , noofit interim dividend, but origin still confident they can get debt load 9 billion by the middle of this year, probably due to an ipo. , apparentlystra they have not been able to sell as many mobile headsets as they thought they would come and that has weighed on the numbers, hasnt it . Paul it has. Arecfo saying customers hanging onto phones longer than saw myated guilty, if he phone, he would be upset. Subscriptions as well. 5. 2 billion, a healthy number, but down 11. 8 on year. Guidance for the full year towards the bottom of the target range. You so much. K paul allen for us there. Some top leaders from the companys paul was mentioning throughout the day here on bloomberg. At the bottom of the hour, 10 30 am hong kong and singapore time, the chief executive of telstra. Time,00 a. M. , hong kong first oneo joining us bloomberg life from perth. Now chinas holdings of u. S. Treasuries fell by the most on record last year as beijing defended the yuan. We have been looking at the latest data, but we have more data, the ministry of finance gdp, gdpbout fdi and will rise 6. 5 this year. Only 6. 5 . You are getting a quicker than i am. Number also the fdi was worse, it was off by 9 . Forhe fdi environment Foreign Companies investing in china under pressure with the declining value of the yuan, but generally outward trend in the outbound flows hurting the Overall Investment climate for china, so yes, not just individuals, but Foreign Multinational Companies trying to get their money out. Rishaad it goes to what you said, they have been keeping the defend it, and running down treasuries. Absolutely 4 trillion in fx reserves a couple years ago, now below 3 trillion to defend the yuan. A lot of the biggest creditors reconsidering i would soon assume their approach to buying pressers treasuries given like late rising deficits under the Trump Administration, rising inflation, as well as Interest Rate hikes from the fed, so we saw china trimming its holdings of u. S. Lawns, notes, and bills for the full year, down 188. Illion yuan the pboc burning through that, but the top creditor of treasury holders, japan for a fifth consecutive month herring back its holdings. It is still number one at 9 trillion, but the fifth straight month and down by 31. 6 billion yearoveryear. Rishaad japan. Know . Want to i have the list of those who are adding. Rishaad you promised me last time. Areur loyal viewers who watching our two hour. Total Foreign Ownership did fall over all, six point one 5 trillion at the end of 2015, 6 byllion and total, so down 150 billion. After japan and china, can you guess . Ireland. 288. 2 billion. Theaad i think the u. K. Is third biggest creditor to the u. S. Overall anyway. Billion, seven down the list 2016. In december, ireland was the biggest net purchaser, 13 billion, then china 9. 2 billion. I have a lot of data. Rishaad im going to move on. On this isl to come Bloomberg Markets asia. We are headed to beijing. New questions about the Trump Administrations ties to russia. That is just ahead. U. S. Spy agencies and the fbi investigating context between the trump team and russia, the president slamming the story is nonsense. Ramy inocencio is with us from new york. Get us up to speed. Twitter, mentioned trump firing off six tweets about that nonsense. He was blaming Hillary Clinton, saying she is using it to cover her losing campaign. The fact of the matter of all this is that basically several russian officials are now known to have reached out and contacted frequent the Donald Trumps aides over the course of 2016 and in the run up to the white house race and the president ial election here. Off of that, u. S. Intelligence agencies including the fbi have started several investigations to find out who was talking and with whom they were talking to in russia, how early they were talking, as well as what discussions they were having and whether it had a Material Impact on who won the white house race in november. There are at least four people in focus right now who have active investigations going on. Michael flynn is one of them to do we know about him having resigned from the nsa position, but paul matt forte, carter page, and roger stone. Paul manafort is the former Trump Campaign chair, lobbing links to russia, as well as connections to the former ukrainian president. Energy deals,d including gazprom in moscow. Roger stone is a longtime republican operative. There have been calls in congress to say we need more answers. Fromis coming not just democrats, but from republicans, bipartisan calls now. Chuck schumer the ranking minority leader of the senate as well as Senate Republican john mccain as well as Lindsey Graham, all saying we need to the bottom of this. The Senate Intelligence committee is thing they can call witnesses as early as the end of this month to get to the bottom of this. There are three names that could be in focus, Michael Flynn, Paul Manafort, and sally yates. You remember her name because we talked about her a couple of weeks ago with regards to her as the acting attorney general who decided not to defend a trumps executive order on that immigration ban, but she did tell the white house in january that Michael Flynn could be blackmailed by the russians. Were not sure what happened with that information, but there are a lot of questions coming up and very few answers. Well, there is also israel. Prime minister Benjamin Netanyahu visiting trump at the white house, the president signaling that major break from u. S. Policy on the two state solution. Ramy from a two state solution to a one state solution, the possibility trump is open to, breaking with decades of u. S. Policy between israelis and the palestinians, ensconced in the 1974 yuan resolution. He said he would prefer a two state solution, but with think it easier, but would be happy if both parties were happened. More than 6000 settlements have been announced and disputed land. Mr. Trump told mr. Netanyahu to hold back on settlements for a little bit in order to work something out. There is the thorny topic of moving the u. S. Embassy and tel aviv to jerusalem. If the u. S. Did that, that would be defined know recognition that jerusalem is the capital of all of israel. Is also claimed by the palestinians there. The Senate Foreign Relations Committee will be looking at mr. Trumps pick for the and knownger ship to israel, as a conservative orthodox and has supported the jewish right and is known to have said looking for to working in israels internal capital. That would be jerusalem. Rishaad thank you. Ramy inocencio there. Janet yellen on capitol hill, saying again that it might be unwise to wait to raise Interest Rates. The latest cpi says she may be right. Kathleen hays is here with more. We were talking about this early, big jump, the biggest since 2013. This is a big concern now when we have not even thought about inflation for a while. Isnt it amazing . Maybe the world is truly normalizing and growth means inflation and Central Banks talk about raising rates to stop it rather than hope it moves up. The fed is leading the world Central Banks in this regard. Cpis talk about the january up 0. 6 on a month over month forecasts. E one reason that surprised markets and caused a jump in bond yields. Gasoline prices boosted the headline. That often happens, but Commodity Prices and car prices rose too. Lets look at these elements. 6032. Core cpiour far right, now two. 3 . The overall cpi is 2. 5 . The fed targets the white and blue line. Pce and cpi. Trend, pcen the up surpassing that redline, the 2 target. ,hat is what is questioning this stir about more rate hikes and getting to that 2 . The boston fencing the fed may have to hike rates faster this year. Could that mean more than three hikes . That would surprise people. Look at what the market is saying. World interestrate rejections, wirp go. 40 approaching 50 , just over 50 now bets up to 61 after the cpi, so the market is gearing up for a may hike even though the fed does not have a press conference. Pull it off. Could that is the question. How concerned is the fed really . , thisd well, we have got is a semi annual testimony and janet yellen has signaled more rate hikes, so what is bill dudley signaling, gradual moves . Earlier,e talking people have different opinions on the federal open market committee, so people should not read too much into this. Chair asally the fed the most important vote saying mr. Dummy may be the second most important vote, gradual fed rate moves, the fed seen hiking rates further does not censor aggressive. Maybe because he said that Donald Trumps policies are not clear yet could listen to what bill dudley said. Expect fiscal stimulus out of this administration. That is another factor that probably over time will tilt the equation more toward the upside. On fiscal policy, it is hard to factor in your forecast at this point because we do not know what it is, how big it is, or when it will happen. Other than that, we have it completely nailed down. I love that. Dont you know how he may feel . , maybe trying to tone down market expectations. Im not sure. We will get more information on this later today on Bloomberg Television with fed pfister Stanley Fischer and dennis lockhart, president of the atlanta fed. Michael mckee and ive will have that interview with two big that officials. Rishaad thank you for that. Coming up, dbs lowest only profit in two years on the back of bad loans paid we will find out if worse could be on the way. Another Singapore Bank missing estimates. Another Singapore Bank missing estimates. Dbs declining, provisions for bad loans. Haslinda amin has been all over this. It is the oil industry hitting the Singapore Banks and pushing them to the lowest quarter profit in two years. Haslinda you bet. 9 , 643come down million. Analysts looking for 714 million, provisions up 87 , all ceo saidoomy, but dbs and parents this year will likely be similar to last year. This suggests provisions may have peaked and that may explain why dbs shares are trading up five point 8 despite disappointing numbers. , 800he big three banks million dollars, that is adding two other pressures like a slowing singapore economy, slowing lending growth. Volatility, more uncertainty, more distress. Dbs trading up. 8 . Rishaad thank you very much indeed for that. Haslinda amin joining us there from singapore. Right, coming up, we will hear from the chief executive of australias Biggest Phone Company after it admitted that there is room for improvement. That interview on the way with telstras chief executive officer andrew penn up next. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. It is 10 29 a. M. In beijing, 1 29 in sydney. James matas says the u. S. Remains fully committed to nato, calling it a fundamental bedrock of the transatlantic community. Europeanid he told allies to increase defense spending this year or the u. S. Will moderate its commitment. He is attending his first meeting of the alliance a month after trump described nato as obsolete. Minister ofropean defense said, it is a fair demand that all who benefit from the best defense in the world carry their proportionate share of the necessary costs to defend freedom, and we should never forget ultimately it is freedom we defend here at nato. Malaysian police have arrested a woman in connection with the apparent assassination of kim jongnam, the north korean leaders exiled halfbrother. Caring vietnamese travel documents. She was arrested at the kuala lumpur terminal. Officials believed he was a poisoned with a needle or chemical spray. Bloomberg has been told that rio tinto has asked on the investment of its last remaining coal operations in australia. Sources say it is pursuing a sale and queens land after receiving unsolicited approaches from potential buyers. We were told the asset could fetch as much as 1. 5 billion. Federal reserve reserve bank of new york presidencies rates being race gradually. William dudley says the economy and inflationow will move towards 2 target. We have some big interviews coming up on Bloomberg Television today. Stanley fischer joins bloomberg surveillance exclusively at seven 30 hong kong time, a loving 30 hong kong, 6 30 in new york. Bloomberg markets speaking with dennis lockhart. Catch that chat at 11 30 hong 10 30 new london, york. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad right, well, i am rishaad salamat. We can draw a line under the morning session in tokyo. Sophie. Theie lets check in with currency markets, some movements there. The onshore yuan strengthening by the most in a week as the dollar continues to slide, this after their release of chinas fdi data. The economic ministries said fbi fell to 80. 1 billion yuan. The median as trent was 1. 4 rise. Saying this is because of Lunar New Year and volatility for january is indicative of what will come for the year. Looking at the japanese yen today, if we take a look at what is going on with this currency, picking up pace after falling to a two week low on wednesday, traders pointing to declining treasury yields as being the catalyst here. This of the dollar falls against major currencies. Checking in on equity markets, hong kong stocks, the hang seng swinging between gains and losses as shares lose steam after surging 2 wednesday. The declinealks on stocks on the decline there. We do still have ranks in hong 1. 6 . N the up there, up sophie, thank you very. Sophie kamaruddin there. Turning 20, and while the mainstay of the u. S. Green car movement, it hasnt managed to get any following when it comes to chinese buyers. Almostf this hybrid flatlined in 2016. Lets get more with a look at one import in december. How many in the year . 70 in 2016, sold down from 700 the year before, so the car has never been particularly popular, but it was a poor year for sales for them. What thatust tell me actually means. It is not as though the company is doing badly elsewhere. The previous is still selling in japan and the u. S. They are also selling other models of hybrid, so they are selling corollas and camrys as hybrids, and those cars are still selling. Its not they dont one hybrids. They dont want the previous. Rishaad again, it is not as if this is a cheap car. That is the other aspect. You can buy other cars. The going price of a prius in 259,000 yuan. You can get an audi suv for that price. Understand why some chinese consumers when making that value judgment decide to go with the audi. Rishaad exactly. It may be more expensive longerterm. Right here at it is a bit of a sticker shock to buy a car for this price. Some analysts have said the car does not look attractive for a chinese consumer. Rishaad we talked about that. It is seemingly attractive elsewhere. Different strokes for different folks. What works in the u. S. Might not work for china. Rishaad thank you so much. Right, up next, despite having several former colleagues in the white house, one Goldman Sachs executive says that could work against the company. Weve speak to david solomon. Also, looking at andrew penn. Down as much 5 in sydney, the most in two years , of first half set of results that disappointed. To meet fullyear targets, the company said it must improve second half performance. Lets join telstras chief executive andrew penn. What went wrong . It is good to be on the show. It was down a little over 10 , but a number of factors in their. Firstly, our Home Business was in last years numbers, and not this years numbers. Ebida on ak at eve 2. 4 , so weis, up believe we are on target to perform guidance for the year, low to middle Single Digits ebitda price. Rishaad you said you have to put in a stonker of a second half, havent you . There are a number of reasons why the first half and second have heard different. I mentioned regulatory impacts, but we continue to add Strong Customer growth, 200,000 more mobile subscribers, 90,000 fixed subscribers, 322,000 telstra tvs, so there is momentum in the business. There is an increase competitive dynamic in the market crating headwinds, but we confirmed guidance and are confident that the second half will see as hit that low singledigit ebitda growth for the year. Rishaad i do want to pick you up on the National Broadband network, do you have to do cost taste with regards to that now . Costbased with regards to that now . Essentially, the government is renationalizing a part of this network, and as a consequence, affectively we lose about one quarter of our earnings over the next 34 years, and we are 20 into that, so going back to the early part of the conversation, we are improving our business against background of losing 25 of the profit, so one of the things we need to do is productivity, and in fact we achieve 2. 6 reduction in core fixed costs, ahead of our annual target, 2 per annum net to the bottom line. Rishaad that is it, isnt it . Faster program you have in place. How long does that last for . Product, every Company Knows that productivity is something you have to achieve every single day and is an ongoing effort, but we are putting extra for in over this time because one of the thing we have to do is remodel our business to be basically a read seller of the National Broadband network as opposed to what we are today, which is where we provide all the fixed line services. The other dynamic in the industry is Technology Innovation is rapidly changing, and it is changing the way people use their telecommunication services, so there is a lot of work in terms of productivity and work in investing and Technology Solutions to see how we can grow this business in the future. Rishaad so, what about your growth aspirations . Do you have further aspirations to grow . If you do, is asia still a key market and do you want to grow more here . Absolutely. If we look at our Network Application services business, things like Cloud Computing, cybersecurity services, where we are providing services to customers who are increasingly transmitting data and Data Analytics and need to manage that in the cloud and move that data around. That is telecommunications and technology opportunity, and we signed the number of big contracts in the last six months across the asiapacific region. We have our joint venture in china, the only Foreign Company with a license in china which simplistically means we can offer Cloud Services to International Companies in and out of china, so asia is very much a part of that and supporting business in becoming Technology Enabled is part of it as well. Rishaad well, from what you just said, it strikes me that you are looking at organic growth, so that brings me to the point of, is him in a no longer a growth factor for you guys . M a no longer a growth factor for you guys . We recently acquired a company and completed an integration ahead of planning in terms of delivering on the otheries, so if there are opportunities like that, we will be in the market for them. Bolt on capability acquisitions this year in Cloud Computing and services. In australia predominantly, but we are also looking internationally, so we will continue to be in the market for from an m a perspective, but we have to grow organically as well. Rishaad right, what about the dividend . Some have questioned whether you can maintain this dividend at the current rate. Can you ensure investors that you can . Look, i never make forecast in relation to the dividend, and i think you know, it is a question that we are to 3 a 2 billion billion headwind on earnings, and that is a function of a government policy decision, so that will happen over the next time and we have to focus on growing our mobile business, fixed services this is, Application Services his nose internationally and domestically, and in the longterm, that is what will determine what the dividend policy and decisions of the company are, and that is where we have to focus, but it is a competitive market and we have those economic headwinds to manage, but we continue to attract customers, return customers, gaining share in key sectors, so ultimately for the longterm, that is what is most important. On the a final question mobile side of things here, people have talked about it, and not just you guys, others talking about how there has been a slight lack of uptake when it comes to smartphones. Is that change when the iphone eight comes out . You think people are holding off for that . We are seeing, and you are right, it is an international trend. Typically customers around the world tend to get their mobile phones from a mobile plan with a company like telstra and at the end of the plan, they go out and renew the plan and get a new phone, but what we are seeing is that as customers get to the in end of the plan, they are extending on a data only bases in holding on to their phones for longer. So it will be interesting to see what happens this year. It is a big year with apple, their 10th anniversary, and you have google, which has had a successful launch with the pixel phone come a so there is a lot happening in the space. It will be interesting to see how it plays out, but there is an International Phenomenon at the moment where customers are hanging onto their phones for longer. Companies like telstra providing a service, it is like, it is not really an issue because we are providing the Connection Service rather than the phone itself it we happen to provide the phone as part of a planned, but our business economics are driven by the Services Side of it rather than the phone side of it. Rishaad right. Andy, thank you for joining us to do we look for to hearing from you and six months time with full your numbers. Andrew penn, chief executive of telstra. More Australian Companies out with the earnings in 15 minutes. By chiefe joined executive at south32, evil lucian mining chairman Evolution Mining chairman as well. Despite claims to the contrary, chinas economy may well be insulated against a potential blow from american protectionism. Chief asianre, our economics correspondent. What af this is based on frequent guest has been writing about. To be tradehere was tensions with china, chinas economy has reached a point of sophistic a sufficient domestic demand. They think that is changing and the reason to support their own factors outlined in america, so an interesting angle on the trading base. Rishaad it is about value added essentially, isnt it . Whylso goes to perhaps companies from outside of china find it difficult to make money there. There is a debate about how to make money by Foreign Companies because of restrictions on operations, the limitations on what they can do, and of course the general moreng that china could do combat Foreign Companies arent allowed to expand in china, so that is an ongoing debate. China is not that an emirate about allowing Foreign Companies. They want more made in china. Products we old associate with china. They are moving up the guy chain. The value chain. Rishaad it is almost impossible to lift everybody up the value chain with a population the size of that. It brings its own problem. The more sophisticated, the more expensive they are. They are increasingly paying their workers more and forcing cheaper Manufacturing Companies to move out of china into southeast asia. There is a risk of a bite off their own arm. Rishaad great stuff. Lets take about what we have come a on china as the country overhauled its tax regime last year in the hopes of stimulating the economy per we will find out how that plays out next. Is bloomberg. The china easing the tax burden on businesses to shift the economy towards innovation and consumptionfueled growth. We have to ask you. What is the big change . This is a big change. This is the biggest overhaul that has been done in 20 years, and it is he vaulting. We got some major details last year, and we will be looking for more coming out in the coming months. The biggest change was now all the companies are treated the same under the tax regime, so four Different Industries were brought in last year, property, construction, finance, and consumer, so those are a big part of the economy. Those four Different Industries allalso 4 5 of the total of business revenue, so this is a significant move announced last year. And this year, we will get a better look coming up next month when the National Peoples congress gathers in beijing and the new finance minister who just took office a few weeks ago hasnt spoken yet, so we will be looking for to hearing from him, and a key thing to know about him is that he previously was the chief of the tax administration, so bringing in a big tax expert to help with this overhaul. The question here is, what is still missing . This is a major overhaul, so we dont have all the details yet. We know the big picture, the broad policy goals. These have been set in place and enunciate clearly. How these things apply at an individual level has not been worked out, and the details will keep trickling out. One of the main things not quite services,s financial not something sketched out with a lot of detail yet, so that is something we are still looking for a little bit of clarity on. Another thing that is important that this does amount to a tax cut in some ways, so this creates winners and losers. One of the losers is local governments who will take a hit on this, and the Central Government has kind of indicated that they will be providing some help there, but we have not quite heard yet what will be the details of how the local government finances will be made whole for what they will be losing under the change in the tax regime. Rishaad well, thats the question, isnt it . Work, i suppose the idea, the economy benefits. Do we have any signs of that . Well, this is a big policy change, slowmoving. Be watching to see how it fits into the bigger, broader policy goal, that rebalancing of the economy towards consumers and services. Services a couple of years ago accounted for more than half of economic output ever. 52 , sor, closer to that is an important policy goal for the leadership and fits into that broad theme of that rebalancing of the economy towards key drivers growth. And the other thing to keep in mind is that this is also a the need to upgrade and innovate come also a major policy goal. Createshis does is it opportunities for companies that want to invest in Higher Quality production and putting their money to work for upgrading the process, so we will be getting a sense of how that plays out over the coming months. Rishaad joining us from beijing there. Well, we have dollar down, gold up, stocks mixed. Bloomberg markets continues in the next hour. We have some interesting conversations, gold, copper. , slightlyo of south32 disappointing when it comes to the interim dividend. So why are they conserving cash and where are they looking to deploy that money . Chairman of dEvolution Mining talking about gold. Copper as well, given supply concerns there. That is coming up. An interesting conversation on hedge funds in china, buying, shorting. Lots to talk about next. This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Al welcome to the program. Im al hunt filling in for charlie rose. We begin this evening with the resignation of national al welcome to the program. Secy advisor michael t flynn. Flynn had served on the job for 25 days. Fbi agents interviewed flynn in the first days about a conversation he held in december with the Russian Ambassador regarding sanctions levied against russia by the obama administration. Soon after the interview, acting attorney general sally yates told the white house she believed flynn had misled senior