Takata. Ction, president putin pokes fun at washington. The bank of japan, that surprise from the boe with three members of the committee deciding they want to raise , nos far more hawkish change expected at the boj, but maybe more news and terms of their bond buying program. They have been buying longer dated bonds. 3059 shows you the shape of the curve, steepening significantly. Curve steepening does to suggest the economy is firing on all cylinders. It means banks can make more money as they buy longer dated and linda shortterm as well as higher Interest Rates. Thats a we have looking at the boj. Haidi putting an end to this jampacked week of centralbank policy. Equitiesmarket falling after the dollar strengthens. If it will bes bad when it comes to capital outflows from this part of the world. The bank of koreas suggesting it could tightening. I press conference from governor kuroda today whether the doj is ready to start thinking about an exit strategy. David is having look at the market for us. David yesterday was a sharp drop. Thinking of it, but making a public is another matter. , ae a look at equity markets strong dollar. Git. A look at the ring. 5 . Outh korean won that me shift to this. 1 . Taiwan. But techy selloff, heavy indices seeing the most pressure. Have a look at the bond markets in australia. Yields on the way up. Asia. S a breakdown of hynix down 1 . Softbank getting an upgrade from morningstar. Look. Racks the threeday there is the reflection of the postfed drop in yields. We are back to levels of two days ago. 2028 bonds were sold this morning, yield 2. 25 , given the strong jobs number, 2. 5 , there is your demand. Boj fromtory is the the statement and the press conference a few hours after that. Lets getight, well, back to sydney and first word News Headlines from paul allen. Has named ken mckenzie as chairman. He will take over on september 1, having joined the board last year as nonexecutive director. He said last year that he would not seek reelection. The hp is facing challenges from activist investors and slowing growth in china. Kata has been suspended in tokyo amid claims that may file for bankruptcy. It could seek protection in japan first, filing chapter 11 afterwards. Their products are linked to at least 17 deaths worldwide. Ofis in the process replacing 100 million airbags around the world. Holdings of u. S. Treasuries rose for a Third Straight month, the highest in six months as the yuan stabilizes. Beijings ownership arose by 4. 6 billion to just over 1 trillion. 2. 1 reduced its total to trillion, down from a month earlier. At the boe,emerged half of the policy committee dissenting. In its biggest division in six years, the Monetary Policy Committee Vote 53 to hold the key rate at. 25 . An uncertainacing time, real earnings falling, Consumer Spending weakening, and fallout from last weeks election. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad lets get back to one of our stories. Doj concluding its Board Meeting , not much expectation of any change in policy come instead a focus on governor kurodas words and whether there is any indication of an exit from the stimulus program. What a we looking at particular . Any idea how he extricate himself from this . That is right. No change in policy. All economist we surveyed agreed. Cycle has ended, and the question is how you move exit. S a nagn outright bondits purchases, ¥60 trillion or a little bit less this year, below the ¥80 trillion target. Governor kuroda explain this by explaining less upward pressure on bond yields allows the boj to cut on purchases as it manages be yield curve, so we will looking for elaboration on that analysis today when he holds his presser. Are there any key phrases that we will be looking for from governor kuroda about future policy . Word inperative japanese means premature. I can pretty much guarantee you he will use that phrase again. The question is will he qualify that by saying something it is premature, although at some point we will have to start discussing it. We will look for the qualification. We talked to the people at the boj who are in a position to the policye know board is intent on changing its style totions prepare the market for an eventual eggs it, so we wont look for any qualification that indicates governor kuroda wants to Start Talking about that strategy. Is japan getting closer to a place where it would make sense to Start Talking about an exit strategy. And bad is good news news. On the Macro Economy side, expansion, corporates looking good, Capital Spending plans suggests that will be an engine of growth this fiscal year. Pricesblem is are soft, well below the 2 inflation market come and Energy Markets recently wont help with that, and i guarantee you governor kuroda will talk about that as a factor weighing on prices here. He will talk about tightness in the labor market. Tight sinceeen this 1974, pushing up wages and spurring capex and laborsaving technology, so overall i think you will be upbeat. Haidi thank you for that. That is a big event for markets today as we round out a busy week when it comes to centralbank activity around the world. Some breaking news crossing the terminal, reaction from the thevist investors to appointment of ken mckenzie expected to take the role and september. Elliott saying it recommends mckenzie to nominate diverse director supporting the nominee of ken mckenzie as new bhp chair, and calling on bhp, the company structure, saying it is calling on the company to put renewed focus on capital returns. To initiater bhp that review of its petroleum business, and this comes after a prolonged period of elliott putting in increasing pressure on bhp to try to rectify the situation. It said poor management decisions have resulted in 40 billion of lost value for the company, so we are seeing immediate pressure on this incoming chairman can mackenzie who was appointed a few hours prior, continuing pressure from Elliott Management to get bhp to oil or spin off its business and initiate a review of the petroleum business. Boj is not expected to surprise, but boe and alarm bells, centralbank policy, a very divisive meeting. Rishaad later, asias renewables heating up, chinas investment in green energy. This is bloomberg. Rishaad we are back. I am Rishaad Salamat in hong kong. Haidi i am haidi lun in sydney. Sources are telling us that jack tomay team up with softbank invest in ride hailing startup grab. It gets of the firepower to challenge uber in asia. Rishaad japans biggest bank facing dramatic headcounts, the worst for 20 years. Mitsubishi ufj may eliminate 10,000 staff, 7 of the workforce over a decade and comes against the background of low Interest Rates and intensifying competition to squeeze profits. Haidi nike cutting 2 of its workforce is competition stiffens. The company had 70,000 at the end of 2016, suggesting it could affect 1400 workers. Downtors sent the shares in the biggest intraday decline in almost a month. The bank of japans not expecting, any change, but we are looking for hints as to when there on toing program may start stop. No change expected, but had to get out of this . We have to what is the target. There has been a change in terms of the target no longer about the quantity of buying, but 10year jgb yields. We have to focus on this. Rishaad lets have a look at what is going on. Does he need these targets . It is his mandate to create inflation. Rishaad is in chasing the target and so elusive as to making it look redundant almost . That is part of the reason why we have seen a shift away from specific targeted bond buying quantity which has led to running out of bonds to buy. 3059, lets is have a look at this, guys. You see how the yield curve is fact and has steepened subsequently, so what he has been doing has worked. Objective, the sole he has achieved it, but now what happens . He likes to reinforce the fact that what he is doing, he thinks it is working. From here, more of the same. If we do get rising rates in the u. S. , we will see a weakening yen, which is good for corporate profits in the market, so that is store base case for japan. Sense of converging centralbank hawkishness, is that straight up negative for emergingmarket equities . If it is widespread come the likes of bank of koreas suggesting it could tighten soon. We are expecting the boj to exit thinking about nexan strategy, and also pretending that are economic fundamentals in that way. Headwind if wea have tightening policy, but should be seen in the context of emerging markets have done very well come up more than 20 , so softness the last couple of days should be expected. Also, you have to consider we are eight months into a profits recovery in asia, which has been the main driver of markets. Threat of anst the stronger dollar which is not likeialized, but we really the earnings story, which is the main driver of markets at the moment. Arguably we have this bizarre dynamic where everything is rallying and most people but that down to excess liquidity, liquidity in the low rate story. 9283 looks at these bloated Balance Sheets globally. Fed starting the to talk about what this unwinding looks like, and the pboc with 5 trillion on its well. E sheet as janet yellen says it is as interesting as watching paint dry, but there could be some market jitters still. It is a headwind. If we compare the taper tantrum come up many years ago now, at that time, it was a big surprise in the word came out about tapering and this is not what people were expecting. Now the fed has laid out what the roadmap looks like. With the boj, i dont think we are there yet, and somewhere down the line we will get a similar communication from the ecb, so definitely a headwind if conditions are getting tighter, improving it is an economy and earnings backdrop and will help in the soften the blow a little bit. Haidi stay with us. In just at more moment. This is bloomberg. Japan,the bank of awaiting that Monetary Policy decision on what has been a big week for global central banks. Market,ities in this the head of Equities Research for asia, thank you for hanging around. Record highs after record highs when it comes to global equities. Where are you finding value . I know you like emerging markets in terms of picking up good valuations there. We like equities globally than bonds. ,lobally, we like japan emerging markets, specifically asian emerging markets. We are more neutral on other developed markets such as europe and the u. S. In terms of sectors for japan, would you be avoiding currencysensitive stocks . Japan, we haveat record high earnings. We saw earnings bottom and fourth quarter, up 25 from their, but it is Consumer Discretionary and autos lagging in terms of earnings and performance. It has not been the place to be come although that is a cheap sector of the market. The key for earnings amongst the where theywill be end up. Corporate japan is conservative in its estimates for the yen and therefore earnings Going Forward , so if we see the yen towards 114, that is a tailwind for currencysensitive sectors. Rishaad lets get to the i want toserve, sorry go to china actually. Msci possible inclusion next week, will they, wont they . What they are talking about is a baby step approach than last time. It seems likely we will get some introduction of china ashares. Well, does that through opportunities up for you . Is not an areaes we focus on for our clients. We look at it in the over all the Financial Markets in china, which is a positive story for china. The fed and any Investment Opportunities out of that statement by janet yellen which someone described as aggressively neutral . I think one of the implications for asia is if we do start to see rates go up in boju. S. And we have the putting tens at zero. That will be supportive for and alsoearnings therefore for the markets, so we think that is the way to play that in the asia context. Rishaad europe, the data has improved. Data has improved, markets have improved. It looks like were not close to death anymore. We have moved to a neutral position from an underweight , sotion over this year things are improving, but there are still big problems with the eurozone. These elections and political , maybe a market friendly alcon, and now we need to focus on the earnings picture. Ahead of discussions on restructuring, thank you so much. Woe for an bang, order to cut ties. That is on the way, next. 9 29 a. M. In hong kong and singapore as we count you down to the start of the trading day. Seeking bankruptcy detection next week, shares suspended in tokyo. What about china . Treasuries at sixmonth highs. The yuan fix at its weakest since may. Next week, ashares looked at why the msci committee. There has been disappointment before. Will there be disappointment again . I am Rishaad Salamat from bloombergs asia headquarters. Sydney. Am haidi lun in fourth time lucky for msci asia . governor kuroda and the boj decision over the next hour or so, not expected to tweet, but watching language. Get it over to david. 25 . T, hang seng the story of a cross currency markets, a strong u. S. Dollar. , but have ahere look at the kiwi dollar. Theme browse through function here, a strong dollar story. Back to levels for the pound this time yesterday. Aussie dollar leading the strength across the g10 space. Sterling, there we go,. 1 . All things equal, not big moves. Hang seng index, better by 19 points. 26,150 five was that resistance level we did not breakthrough. Tencent very much in focus. The boj are big story for the next few hours. On your terminal, the boj decision, this chart here at the bottom, one of the better charts on inflation that tells you how far the boj is from achieving their targets, and do we have to aboutr consider how we go the exit. You have the boj forecast not quite there. This is where the market thinks it will be, and that is where it is, very interesting. All things equal, the broader markets, no volumes. Back to you. Haidi nice way to get into the weekend. Lets get first word news with paul allen here in sydney. The number of People Killed in the london fire has risen to 17. Six bodies have so far been recovered from the 24 story tower and north kensington, while 11 have been located and cannot yet be removed. Has ordered a full Public Inquiry into the disaster that accusations mount that it might have been preventable. Calldent putin used his and tv show to poke fun at washington over meddling in the u. S. Election. Leaking ofes comeys discussions was strange, but was prepared to offer the same asylum deal he gave to edward snowden. He addressed the new sanctions. There is nothing surprising. In the senate of the united states, law has been proposed for the strengthening of these sanctions. Why . Nothing extraordinary is happening. Those new sanctions send russian stocks to their lowest in the year. A bipartisan deal expanded the penalties imposed on moscow in 2014 for its role in ukraine. The vote had minimal impact on the ruble and bonds little change since the start of the week. The u. S. Jury has convicted a to conspirea trader about bond prices. Another trader tyler peters was acquitted. He was convicted on eight counts with the jury deadlocked on the ninth count. Must now decide on a retrial on the unresolved charges. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad the pressure is building on chinas anbang insurance days after its chairman was the tainted. Tom mackenzie joins us from shanghai. Turnss in this ongoing saga, and the latest news according to the bloomberg hes quoting somebody saying this is a bit like somebody having both their legs broken. Is the future of anbang being called into doubt. Banks have been ordered to stop their dealings with the company. Separately at least six large banks have stopped selling policies for the company through the banking network, and as you touched on this follows the detention of the chairman of week ago. We have reports of that. It is part of an investigation that is expected to be wide and probe is acquisitions abroad as well as operations in china. This is a company that became well known in 2014 when it went on this asset buying spree of brought in europe, asia, and the u. S. , spending 13. 4 billion, 2 billion on the waldorfastoria hotel, but regulators have been looking into the Insurance Industry for about a year, concerned about the Financial Risks some of these companies pose, going will be on their core business using shortterm insurance policy funds to buy relatively illiquid assets abroad. , as is a company conglomerate, with web of interests that run deep in china domestically and internationally. Know it has these sprawling interests. How likely that it will impact the bottom line . If it seems very likely banks are frozen out from dealing with the company. Just last year, its life sold policies worth about 17 billion, double from the previous year. In april this year, revenue for those Life Insurance policies, premium revenue, fell 88 . For its Health Insurance unit, they fell 95 . The impact was happening in april because there had been falling out ofg favor with leadership, so some taking action around that. The company telling us they are still selling their products. We know they called a meeting and sources told us on wednesday to try to boost morale at the company. To illustrate, they claim on their website managed assets worth 290 billion or thereabouts. We know they have stakes in companies, real estate, realance, banking, vanke estate, and merchants bank, and many come up many more compass the reverberations could well be significant. As one expert said in the south China Morning post, this is a political step change because we are seeing someone married into the highest levels of the communist party, royalty effectively, marrying the grand daughter of deng xiaoping, being investigated, so there are political implications as the communist party and china do a reshuffle ahead of the Party Congress later this year. Thank you so much for that. We are still watching that story. A worsening situation therefore anbang. Has been suspended in the tokyo session amid claims it could be filing for bankruptcy next week. We are following this story. We have been talking about voesta and its various for a couple of years now. Why did it take so long to reach a deal . It involved 1516 carmakers, a massive recall, 100 million airbags, probably ¥1 trillion in total liabilities, so a massive crisis. Committee anding lead better has to negotiate with each carmaker. Interest by each carmaker are not always aligned, so they have to negotiate with each one in terms of the legal ramifications and continuity of their business. Founding family still controls more than half of the company shares. Key committee came along way to get to where they are today. Rishaad tell me about next steps did what happens next . According to our sources and other media reports, there will probably be a Board Meeting this month deciding on whether they are going to accept the buyer as well as the proposal put together by takatas steering , includingnd kss filing for bankruptcy in japan and the u. S. Havefter that, they will to down the other specifics of the agreement. The closing of the deal will take a few more months. Rishaad this is a u. S. Company here. What does this mean, a merger ss, what does it do to the industry as a whole . Kss is a u. S. Carmaker but his own by a chinese company. In japan and china, there could be synergies for takata and key safety systems. Presence, even bigger than takata, and china, does not have a lot of japanese carmakers as clients, so the two combining together number two world market share in terms of safety equipment, a big boost for kss foralso means big potential takata in terms of markets like china. Rishaad thank you very much indeed for that. But we have got coming up, the winds of change, chinas shift to Renewable Energy blowing cold out of the picture. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. Rishaad i am Rishaad Salamat in hong kong. And no one is expecting any surprise from the Japanese Central bank today. Another central bank has thrown a curve ball, boe members calling for a hike on the Monetary Policy committee. One professor who advises the Committee Members is perhaps they should wait longer before taking action. They should probably be sitting on the hands, as the majority were. The reality is the fall and the Exchange Rate has been driven by brexit, the economy appears to be flowing. Lets put this into context if you look at the q1 growth figure , the u. K. Is the slowest growing company in the g7 and the eu 28. We have falling real wages, and after they made the decision before it was announced, they got horrendous retail sales figures, so this reminds one of 2008. It was junejuly 2008 and i voted for a cut somebody else voted for a rate rise, and the majority voted for nothing, and the inflation was 5 , so the worry was the minority did not look through the short, sharp, shock of inflation and worry about the long dragging conditions coming from the economy, but the rate rise would be a huge error right now. Theres probably going to be a cut. Lets show people why. , the worst report in the year, and of course inflation surging, but inflation is acting as a tax on consumers. They can spend as much as much. This is 9336 Consumer Spending over all is falling for the First Time Since 2013. This is pretty bad. The reality was that boe made a cut in august expecting the consumer would pull back. Surprise was that the consumer started to spend again and was not saving, but that could not go on for very long, then all of a sudden you see falling real wages, so i expect what you will see in q2, q3 is more falling consumption and a slowing economy, and if the bank were to raise rates, that would slow the economy further, and the worry for the markets is basically the u. K. Does not have a credible government right now, doesnt have a credible fiscal policy, i mean how could they pass anything in the parliament . So the responsibility rests on the central bank to calm the nerves, raising rates would be a big mistake. Thatad plenty more ahead. We are waiting for governor kuroda. This is bloomberg. Haidi this is Bloomberg Markets asia. I am haidi lun in sydney. Rishaad i am Rishaad Salamat in hong kong. A look at the latest business flash headlines. Stake,rie offloading at the biggest utility in washington state. Sale its 42 interest in its parent and a deal that could be worth 2 billion. T shareholders have no plans to sell they are stakes. Investbp and reliance to 6 billion to restart work in indian oil and gas reserves after a hiatus of eight years. The two companies are reviving the partnership after coming together in 2011. The reserves are situated in deep water off indias east coast. Rishaad a rebound could be on , shares falling 95 after defaulting on loans. Yingli expecting Panel Shipments to triple. Right, i look at what is going on. Bain capital set to partner and offer 19 billion for the toshiba chip business. And bain capital lobbying the japanese authorities. J in a bid and inc for toshiba. Of change are blowing across asian Energy Industries as an estimate and renewables takes off. Solar and wind power could start pushing coal and natural gas out of business by 2040 with china presenting the biggest opportunity. China is really taking the lead on this, isnt it . It really is. Our forecast shows over the next 20 years that china will be investing nearly 3 trillion in new power capacity, more than two thirds going towards renewables. Part of that investment will be going towards coal. It is surprising because even though analysis has indicated chinas investment and coal is beginning to slow down, but because wind and solar have not reached economic competitiveness, after 2020, china will build 75 gigawatts of coal. China is taking a leadership in the future of energy, but because of its sheer size, its going to be a large market for everything in energy really. Offaad it is a long way and there are a lot of externals to get over. Yes, in terms of the way china is investing into the can many ofs energy the policies we assume are a reflection of the current is this as usual, after 20, we assume that subsidies for wind and solar are removed, and even then wind and solar move through their Technology Investment of chinasjor part Energy Picture after 2020 five. The growth of coal eats away as an opportunity as part of chinas overall power sector. It will be interesting to see if the u. S. And china are able to expand the relationship and reduce the cost of gas in china, whether this changes gas as a part of chinas Energy Consumption in the future. Nowt now, coal right definitely dominates the future. Rishaad lets put this in context. We have a country of 1. 4 billion people. The amount of money china is spending is massive, but per capita it is a laggard, is it not . Its nowhere near europe when it comes to per capita spending. Is not asita spending much of an issue as the the gdp growth in terms of chinas contribution to the future. We actually expect chinese gdp ,o triple between now and 2040 but its Energy Intensity so that means4 , is overall economy is becoming more efficient because of the trillions of dollars the country is investing into Renewable Energy, slowly but surely transforming its energy profile. Our forecast also indicates that of primaryt 15 Energy Consumption in china will come from the renewables by 2030, 20 4 will come from is onbles, meaning china target to meet its goals that it contributed to the climate negotiations where it originally promised pay commissions before 2030. There are still a lot of challenges. Haidi i want to jump in and point out. Enthusiasm does not always go hand in hand with efficiency when it comes to chinese policy, the Energy Investment policy. Our we getting indications that policy wise it is a bit more balanced now . In terms of policy, one of the areas china has done the most in in the last couple of years and needs to do more on is controlling the future growth of coal in the country. Most recently over the last few months, the government has announced hundreds of gigawatts of projects for the canceled pipeline, therefore reducing the proportion of coal in the countrys future of energy. Haidi we have to leave it there. Thank you so much for that. Coming up, watching the boj. This is bloomberg. Announcer from our studios in new york city, this is charlie rose. Charlie we begin this evening with todays shooting in alexandria, virginia. Theressman a steve scalise, majority whip for the house of representatives is in Critical Condition after a gunman opened fire at the congressional baseball practice. People have been hospitalized. President trump confirmed that the shooter, 66yearold James Hodgkinson of illinois, was shot by police. He
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