Rest ofx index, and the asia. When you get yields up in the u. S. , money coming out of the bond markets that is still relatively positive for u. S. Stocks. Look at go to japan to this reflation trade, you have a weaker yen that might benefit equities. A positive correlation there as well. When you take japan out of the equation in asia, this positive correlation disappears a must completely. A misconception that when you have people coming in and trading, inflation coming to the system, that does not benefit asian equities. The other thing i want to point out on this chart is that the correlation of the last two weeks has started to come down on the s p and topix index. There is money coming back into emerging asia and about to turn positive, so has the tide turned . There is your chart there. 6753 on your bloomberg. Rosalind chin has first word news. Rosalind toshiba has confirmed it will miss a second earnings deadline and wants to delay the report until april 11. The company says it needs more time to assess its Westinghouse Nuclear unit. Whenba plunged at the open it confirmed it was seeking the delay, shares down 8 . If the application is rejected, it has eight days to file or face the risk of being delisted. Reports from dbs in taiwan say the former president has been indicted of the leak of information. Over thevestigated leaking of documents by the prosecutor general. The incident came after his failed attempt to topple the legislative speaker. His office was marred by scandals, including the death of a military conscript and claims of plagiarism. The scotians are underway for a possible meeting between President Trump and his chinese counterpart next month. It will beouse says on the agenda during Rex Tillersons trip to china this week. This comes amid rising tension in asia over north koreas missile launches and beijings anger at the south korean deployment of a u. S. Missile defense the system. Of australiaank says regulators are prepared to do more to sell house prices. There could be further restrictions on mortgage lending has the initial it are fading over time. Home prices have been skyrocketing. Sydney surged by the facets annual pace in 14 years. Is some thinking to be done about how Monetary Policy considerations should factor into Financial Stability issues and the role macro policies play in addressing and risk in a lower Interest Rate environment. Rosalind global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. I am rosalind chin. Thank you. The chinese economy has shown further signs of improvement. ,he latest data, factory output picking up in february. Retail sales not ideal if you look at forecast and compare that. s chief asian economist enda curran joins me now. It clearly missed forecasts, and questions the rebalancing under but when you look the bonnet, a couple of things, auto sales fell. There was the removal of a tax subsidy to encourage purchasing. We have to factor in softer pci, so softer as a result. When you look at the components, furniture, electronics, cosmetics, cosmetics, they are doing quite well. So even though the headline retail sales number is lower, i dont think we are at the press the panic button stage. David not at all. I think we have a bloomberg chart that shows that. It is simple. It is the retail sales index on our bloomberg. Below 10 , but 9. 5 , i mean, a lot of countries would kill for this growth rate when it comes to people shopping. The more encouraging piece of data is factory output. Was an encouraging set of numbers. If you look at private investment, that is especially noteworthy because the government has been trying to get the private sector spending. They have been struggling. That trend is slowly turning around, and that is important for the government to take pressure off and ease up on spending. As i mentioned earlier, yes, it is positive, early stages in day trend, so still early days. David it plays into the ppi data we saw last week. You will see more Companies Investing because it brings pricing power. You have these margins as well. Absolutely. Again, the debate is cpi is a great story, but how long can it last . Is it on the back of real the baser reflecting effect as Commodity Prices have come back from their lows . That we dont know yet. David we have to wait 34 months if it is demand or base effect. Enda curran on the latest data out of china. Lets turn our attention to the u. K. , a step closer to quitting the European Union as parliament gave the primus to permission to begin talks. The first rate hike of 2017 could come tonight as policymakers prepare to meet. We will discuss all of that with kathleen hays. To start with the do cake, the house of commons came through for theresa may . They certainly did. The u. K. Supreme court told theresa may that you have to get parliament on board and have a say on triggering brexit. The house of commons approved the draft bill to do just this come about the unelected house of lords put on their own and maintenance. The house of commons acting on a request by the government to look at this and rejected did just that. They pushed that version aside and are sticking with their own version. The house of lords got quickly on board, so now theresa may can go ahead and move. She has not won the brexit war, but she has won a muchneeded battle. Her, the queen will give royal as sent, something she must do and will do, and this will allow theresa may to evoke article 50 and she is planning on doing that in the last week of march. What does it mean for the markets . Lots a step, but there is a going on, including the Scottish Independence vote. Bloomberg, you see a white line, net short pound, as on a weaker a short positions increased, the line goes down. The blue line is the british pound, the spot price, and it has leveled off. You can see there is still pressure, and as long as these comingns hangover brexit you can imagine some of that pressure will stay there, david. David absolutely. You touched on this point earlier. There is an added complication. Could brexit mean the breakup of the United Kingdom . If i am theresa may, im thinking why this . I just got this vote, and now the Scottish Independence vote is coming up again. The scottish are blaming theresa may for this as they reopen this question of referendum that happened a couple of years ago and did not pass, but now it might be different because the u. K. Is pushing to leave the eu. Off and becomeak their own nation again, then they can apply for membership in the eu. Nichola sturgeon spoke about this earlier, and one of scotlands complaints is that theresa may is not considering what they want, ignoring what they are trying to put on the table, at least thats what the first minister says. No u. K. Nly is there white agreement on the way ahead, but the u. K. Has not moved towards compromise and agreement. Our efforts to compromise have been met with a brick wall of intransigence. When from brexit and squat quickly to washington, d. C. , where i am now. I know you are concerned that the weather will keep fed officials from gathering. The fed wont tell us who is here. I think they all got here early. The snow is coming down. I will go to my hotel. , will see you tomorrow and we will know if the storm affected the fed or not. That remains to be seen. There,if they are not there is always face time for the fomc . Whatsapp . Time to check in on the markets with juliette saly. Juliette no snow here. Have a look at the pop on the kospi, on a tear since the Supreme Court upheld the impeachment of park geunhye. You have seen this big spike in asian bond yields, the treasury route continuing. They are at their highest level of the year, so all of this in an dissipation of the fed. The other big story is china data. We have seen a rigged pop on iron ore. Also, a move in the aussie dollar, a strong one in terms of data. Quite stronge movement in the aussie dollar when we had that movement or rba could trythe to curb this overheated Housing Market in sydney and melbourne. Then you had that Business Confidence and conditions number out of australia, which was thes, and you can see aussie dollar started to fall significantly. We then had china data coming through, so the aussie dollar moving in reaction to the china production data. 6. 3 percent, better than estimated, but you did have retail sales a miss. Having a look at the overall movement as the the yenll and strengthened. Some support from chinese equities. The region is flat, Energy Stocks leading the way, but a dip coming through in industrial and real estate stocks today. Is thisy of the day wait and see mode ahead of the fed. David holding pattern. Lots coming up on the program. Number twout the ipo writer in hong kong under investigation. Andre that, chinese growth how you can make money from all of this. We will see. This is bloomberg. Time for a quick check of the business flash headlines. Intel betting 15 billion on driverless cars. The deal would be the secondbiggest if it does go through. Mobile i makes chips for cameras. Sure some surged 29 in new york. L shares fell more than 2 . The market had already priced in a premium. Yes, which you have to look at is that it is growing at a significant rate. We think it will be a 1 billion plus business. Bhp billiton calls to in the strike. Says facetoface negotiations are the only way to resolve the issue. The company says it has no plans to extend the miners working day. The Hong Kong Securities operator is investigating the number two underwriter for ipos. Workents related to their on the proposed 2014 listing of a chinese company, which has since been scrapped, has been requested and regulators want to know whether Due Diligence was done. To talk about china, the growth story there. , six percent,er retail sales touching 10 . Joining us now is jeff lewis. Jeff, you have the data out of china. In fact, all the data unanimously not just in china has been positive. When you look at markets now and considering event risks out there, why do things seem so calm . Is this just a function of a lot overquidity that glosses the event risks. Its not just liquidity being strong, but the Economic Data has improved and we have seen an improvement in emerging markets looking at global cyclical factors. They have improved the last 45 haves was and now we further evidence that chinas Economic Stabilization will continue through the first half of this year. That is important for the emergingmarket asset class generally, so markets are up this year, emerging markets are in the lead, and that is warranted. David i want to point out this , 6753, and it gets to your point. At the correlation to this reflation trade between the u. S. 10 year yields and asia without japan, it obviously. Enefits u. S. Stocks that correlation goes away when you take japan out. In higher rates, emergingmarket equity dont necessarily do well. Thats true. Emergingmarket rates tend to follow u. S. Longerterm yields, so our worry would not be so much the fed. I think the fed will continue to move gradually and cautiously and an incremental increase in the shortterm rates. The real risk would come from an increase in the real longterm bond yields, it in particular the fiveyear forward, the fiveyear real rate. That has moved up 100 basis points since summer last year. It is getting towards levels that are giving us concern, but not the 2013 shock levels yet. David i think you hit it on the head. Inflatione say this is really coming through, but the yields are flattening. What does that tell you . I think it tells us that we are not, we are still in a world where inflation will stay quite contained. We have a cyclical improvement in the Global Economy due to negative factors that have reversed over the last 18 months rather than strong, new positive factors, and there is still some capacity on a global level. Strong fiscalsee stimulus in the u. S. Can which would trigger a real inflation scare, that inflation will maintain itself well contain, and that means the threat from the u. S. 10 year treasury yield will be less than people expect. We see value in that when it tends to get to the top end of its current range. David what is the top in six months down the road . To bewould still look taking on exposure towards 3 . Will continue the conversation. There is so much to talk about. You like china, south korea, hong kong as well. We will see how this plays through. Before that, much more on the program. Most may be some of the unless stocks in hong kong, but they are some of the biggest gainers. What a disconnect good we will find out why, next. This is bloomberg. Kongs mostof hong beleaguered companies have been showing a rally when it comes to the stock market. Analysts see the shares heading downhill. ,ere to explain the disconnect why are these low rated stocks doing so well . Would expect the opposite to happen, but that is not the case so far this year. The king to strategists, one reason is perhaps when the economy is slow and there are it is highly Rating Companies that can deliver Earnings Growth despite headwinds, so they tend to outperform. When the economy turns positive, the laggards, the lower rated Companies Look like they can deliver earnings as well, and then stocks people werent interested in before might look cheap to some people. David it is money chasing what has fell you. You talk to and lets just about every day. What are they saying about this . We look at some stocks that have gained despite having sell ratings. , analysts have reiterated their positions. Cathay pacific, for example. It is up more than 10 come out performing the hang seng index, but a note this month said this rally is based on false optimism and once investors see the reality of earnings, then it will strip off that false hope. A similar story with singtel, but analysts have reiterated sell positions. David im guessing the trend is not expected to continue . If you go back a couple of years, the highly rated companies have been the out performers. Speaking to people, they say this is a shortterm market pattern, and it could be that people are looking for opportunities and trying to get into household names that have lagged, which are not the Analyst Consensus stocks. David great story there. The most unloved stocks feeling the love. So far, it has been the opposite. Lets check other markets across the region. Hong kong, we will talk you through what is happening in that market. Flat, 57 53 on the asx 200, down. Thats not bad. Homeless and even split when you look across that market. Lets look at how things in seoul are doing. A lot of inflows back into that market. It started late last week, continuing this morning. That market outperformed, including taiwan. Last 30 minutes of trade for the morning session, what are we doing on the hang seng index . 23,836, there we go. View for a lot of us who dont have the privilege of seeing the view from the top. We are looking at total you, the morning session come a few minutes until they rio pen minutes away from the reopened and the japanese capital. More next. This is bloomberg. Livestream your favorite sport at the airport. Binge dvrd shows while painting your toes. On demand laughs during long bubble baths. Tv everywhere is awesome. The allnew Xfinity Stream app. Xfinity. The future of awesome. It is 11 20 nine in hong kong, 12 29 in tokyo. The Justice Department once more time to verify President Trumps unsubstantiated claims that his predecessor tapped his phone. President obama denies the accusations, and intelligence officials from the time say they have no evidence it happened. Sean spicer backpedaled on the president s accusations, saying wiretapping could mean surveillance of any kind. Trump sent ripples through wall street by backing moves to separate Investment Banking from consumer lending, and now a key regulator has active plan. It is not quite the original law from the depression, but the partition intoo separate companies. Trump still supports it. Say thefrom seoul government has tentatively election for a new president will happen on may 9. Park geunhye was ousted on friday after her impeachment was ruled illegal by the constitutional court. The potential date must be discussed with National Election commissions and reported to the cabinet. Approve aexpected to special law to allow the emperor to step down. Last summer, the emperor made a tv address saying he was tired and worried he could not carry out his duties much longer. Emperor from the abdicating, but the special law will be introduced after lawmakers agreed to compromise on the wording. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. David thanks. Lets check in on markets in the region as sweet countdown to the fed today, and japan coming back online. Juliette we have seen the topix falling for the first time in four sessions. This is a Market Holding onto the december 2015 hi, so not much of a drop coming through. Some pickup in the chinese stocks listed in hong kong on the back of the china data, but retail players coming under pressure, and the hang seng flat. The asx also flat. Dividends flooding the market comes expected to trade in a tight range over the next few weeks. Still on a strong tear, up. 7 , all on the back of in the south korean political scene, so a rally from south korean stocks across the board. Samsung leading those gains in seoul, up by 1. 6 , reports that shifting to pursue this Holding Company as planned. China one of the ingards, below the mark terms of the data we got out this morning. Ore come upin iron over 4 , bhp billiton up by. 7 . Andre on fed watch centralbank watch, the boj meeting this week to i want to this chart on the bloomberg 6750, equities rallying, traders showing little concern over potential turbulence ahead, so a measure tracking expectations for the nikkei 225 stock index near its lowest level since november. You can see that represented thereby that yellow circle. This is a market that a lot of analysts say still has moved room to run. David thank you. Lets check in on shares of toshiba. It has not been a good morning. It has not been a good few months. 8 . That is not bad compared to the declines we have seen, but we are sub200 on shares of toshiba , the company missing a second deadline to report earnings. It is asking for a delay, now april 11, to assess losses from its Nuclear Armed and writedowns from that. On all things toshiba, i was looking through the headlines earlier, they are delaying it by a a few more weeks, but also saying they are not planning to revise their financial statements. It is no surprise. Toshiba has been a bit of a mess recently. It started in december when they warned about this potential writedown in the nuclear business. Before i get to the inner workings theyre coming yes indeed, the news today is that toshiba is seeking a second extension of its earnings reporting deadline now until april 11. Beneath that is essentially an investigation, and internal look into its westinghouse are nuclear business. Essentially, an auditor will sign off on some of the numbers related to that. Is that cost overruns in the construction of two Nuclear Reactors in the u. S. Caused a writedown of at least 6 billion. Toshiba then has to fill that hole and its balance sheet, so it has been scrambling to find buyers for its prize to chip business, trying to figure out the magnitude of the cost, and may even restructure or selloff the nuclear business, so there are lots of moving parts, and what we have seen today is sort of a manifestation in terms of coming up with numbers that can report to the market and to investors. David as you mentioned, what the auditors will agreed to, because one of the lines they came out earlier was the company saying the auditor did not think it would have a major impact. That takes me to the next question. Of numbersbeen a lot being thrown around, how large that writedown will be come that will determine how much money toshiba has to race. In of money are we talking about in terms of the possible writedown . Overdeed, it is a little ¥700 billion, somewhere in the 6. 3ark of 6. 2 billion to billion. That could spill over into breaching bank covenants. That does not seem to be the immediate issue at the moment, and essentially how toshiba accounts for that. Is have to recall that this a company that went through a major accounting scandal and 2015. In 2015. It was under investigation and had to restate earnings for profit padding, so there is not a lot of confidence among investors and regulators in japan over whether toshiba can get its act together. David of course the first step is putting it behind them. Always great to talk to you for the latest on to shiva. Yesterday, the latest brokerage to move on toshiba, goldman or neutral sell recommendation, target price 160. Right, lets move things along and look at this story in hong kong, security regulators investigating the number two underwriter of ipos in the city. Deals editorour right now. Give us the background. They are looking into whether Ccb International probably properly vetted this seafood supplier. They are trying to check whether they did the proper Due Diligence when bringing them for a listing. David are they becoming more active now . What is the signal to broader markets . The regulators made a lot of noise about increasing standards, the role in investor banks are playing in vetting applicants. They are saying you need to be doing your homework. David which should be part of what they are doing. Indeed, but theyre saying do more work before bringing companies to us to list. The securities and Futures Commission has not said anything particular about this case. They said they want banks to raise the level of Due Diligence, and they are looking at whether they had enough did day back up their Revenue Sources and show where everything came from . This specificfor case, what is so unusual about it . The Company Never conducted an ipo through the company approached the exchange about their plans to list. They submitted preliminary documentation, but they decided not to proceed. No investors were hurt, but they are still looking into this case. David absolutely. If you do eventually get listed the consequences could potentially be worse. David thanks. This is a story we are looking at in hong kong, regulators tightening the underwriting rules. One feature we would like to bring to your attention is our interactive tv function that you can find out tv. You can not only watch us live, interviews,look at charts, functions that we bring up on the show. That is me speaking with kathleen hays. You can also be part of the conversation, send us instant messages while we are live on tv. This is for bloomberg subscribers only. Heck it out at tv coming up, brexit moves closer, article 50 expected by the end of this month. It might have enormous implications for the union. We will talk more. This is bloomberg. Much the u. K. Economy is closer to the european mainland than america. So if the euro strengthens, that could be a catalyst for the to move more and the direction of its fundamental value. Itthe duration over which will take to implement brexit probably means we will not see any dramatic shifts in sentiment as a result. Has beenity data reasonably strong, and we have a basis for a more positive view on the area despite some of the political challenges, dutch elections, french elections, or brexit, so i dont think anything changes. Brexit in some form at some point. Nothe u. K. Markets have done badly during this uncertainty, far better than anybody i know would have predicted. If we add to that the fact that we now have it seems subject to parliament approving it on monday the government of authority to go ahead and issue article 50, i think people will say, bring it on. Lets move on. David those were some of the comments this morning on brexit. My guess join me now. Brexit, in some form at some point, what do you do with that information . Nothing. Much you caning do. We have seen better Economic Data and the forecasts have been revised up significantly, but that was because brexit was never going to have an immediate impact. It was always going to be in the future, and presumably a negative impact. David it has had a negative impact on the currency. Yes, and that is good in the sense that it increases britains export volume effects. People say it has been hollowed out, so the conditions are no longer satisfied and the diwali ration want improve the current account. There is a degree of truth and that, but it does put up see pi cpi, 3 in the u. K. , and the boe will have to think about tightening and removing some of that exceptional stimulation put in place last august. There are difficulties. With the boe tight before the ecb does . I think they will probably want to lay off to a would not go down well i think if they start tightening at this point. The ecb is in a situation where the inflation target is soon going to be reached, and the germans would be screaming to remove some of they are ready have in some way. Thats right. They have not been keen on it either come but i think mario draghi will not want to rock the boat with these elections coming inthis year, german election september or october, so policy on hold. Do the dutch elections matter to you . Everybody is talking about france, germany, but this is happening in 48 hours. What could happen . What could this lead to . It matters in that it is still a signpost as to what is happening in terms of of aism, in terms rebellion against them there elite and the International Push very little chance of forming a government coming because the netherlands political system is fragmented who would unite together, so it is no big threat to markets, but nevertheless let as no if populism is still alive and making progress. The dutch Prime Minister called these elections the quarterfinal when it comes to testing the appetite elsewhere. With that said, are you seeing increasing appetite . Are valuations looking attractive to you . Europe is Fertile Ground for stock pickers. The overall macro and political negatives and trends, and yet a lot of companies have actually their shareterms of price, but from stable cash flows and have businesses that may be selling outside, and these Companies Look particularly attractive to other theanies, so we have mergers and Acquisitions Team coming into play. Im not allowed to identify specific companies. Some financial institutions, Pharmaceuticals Going back to boe and Interest Rates, ok, inflation control, 2. 5 target. Thats what mark carney would have to do. He will be facing Inflation Higher than 2. 5 percent because of the added costs of imports and the devaluation of sterling. On it or not . T , his predecessor had to write a number of letters. Wanture mark carney wont to be doing that, so i would think the boe will be starting to remove the accommodation before too long. I think they will be in a position where they rishaad hiking will make a difference when it comes to inflation that a structural because of that whole move down in the pound. The move down in the pound is pretty much permanent, i think. You are right, it will feed through into higher costs and prices for a while. Economy is likely to slow, and less you see fiscal other policyome change coming in, but i dont think it means permanently higher inflation. It will depress Living Standards and retail sales and consumption. We had china data today be higherre will not inflation in china, cpi may rebound, but dpi peaked in february, so what is your take on this . It is a cyclical rebound. Ppi is being driven by Commodity Prices. The chinese economy has slowed. There is considerable excess capacity, so i would agree with that assessment. There is no threat to cpi, and the pboc said their comfort zone is 3 . David implicitly they are saying well raise rates above 3 come is that how you would interpret it, understand it . No, i would not go that far. Little they are a relaxed about inflation. I think 3 is the area where they may start to feel concern, but it is not a hard inflation target. It is just a comfort zone, a guide. David for our friends in beijing. The biggest risks to markets . Im sure everyone is waiting for the fed, but what is the big thing that would trigger this pullback or correction everyone has been forecasting . Not everybody, but long asew would be as the leading indicators, the doing well, the markets can hold up. I think the danger point is towards the end of the year. If at that point there is no clear timetable for the trump stimulus measures, if investors cannot see it coming with agreements in october on tax reform, then markets will be quite vulnerable around the middle of the year, but they are probably ok for the next 34 months. David they are very ok. They are very flat. Great talking to you. , family ties, i look at the deal that linked the family of President Trumps soninlaw and a Chinese Insurance Group and the bank. We will look at that deal next. This is bloomberg. David welcome back. A quick check of the business flash headlines. Hong kong security regulators investigating whether realtors selling overseas properties are Marketing Investments legally. The claim comes from one lawmaker helping investors who lost money in such a deals. Nearly 300 complaints were filed between 2014 and now, buyers and suspecting they were deceived while investing in property overseas. Saudi arabia and the Tokyo Stock Exchange are considering a study group for the sale of saudi aramco shares. Other projects include include a dedicated industrial sound in saudi arabia to attract Japanese Companies and workers. That there are surprising back inside the chinese social network. The stock has doubled 14 . 1 5 of shares were sold short this week, up from 6 in early november. The market value has doubled in the past year, making it close to its u. S. Tribal twitter. Working with Goldman Sachs to find buyers according to people familiar with the matter. Shares in the floridabased company have risen 30 , valuing citrix at a price that is putting off potential buyers. By president ed trumps soninlaw stands to make more than 400 Million Dollars from Chinese Investment in its Manhattan Office building. The transaction would provide a cash payout and an equity stake in a new partnership. More details here from ramy inocencio. Ramy in that 4 billion deal, Jared Kushner stands to get 400 million as of payout. The question about proximity to power, the deal would make on anbang insurance close to the family. The companies mortgage on its fifth avenue tower would be cut right 80 . Jared kushner would also get the option for a 20 stake. 2. 8ould value the tower at billion dollars, a record for a manhattan building. One new york really teedo your said it is an home run of a transaction. Has not been finalized and they have declined to identify investors. As for conflict of interest concerns come all parties involved said they have or will address them. The Kushner Company says Jared Kushner sold a stake in the tower to family members and the company has taken significant steps to avoid potential conflicts. As for the white house, it said mr. Kushner will recuse himself from any matter where his impartiality could be reasonably question. Says it is a highly Transparent Company and stands by requirements. A reminder, it did happen when anbang bought the waldorf astoria hotel. This deal is worth twice that. Lets have a look at markets open across the region. Hong kong, lunch break. Shanghai on lunch break. Markets doing that. , 23,918. Ighs japan and south korea, have a look, south korea doing this. Going the opposite direction, inflows into south korea. Australia and new zealand, there we go. More bond sales throughout budget. Kuwait becomes the latest gulf nation to its investors. It could bring in a billion dollars you anchor brexit could be launched this month. Another vote on independence. China factor activity remains strong. A potential partnership and tokyo
vimarsana.com © 2020. All Rights Reserved.