tv Bloomberg Daybreak Australia Bloomberg February 26, 2017 5:00pm-6:01pm EST
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>> happy monday from sydney, just past 9:00. this is daybreak australia, we are an hour away from the open here of asia's first major market. >> another trading week, you're going to see a week of record highs in the u.s.. it is after 5:00 here on sunday evening in new york. i am betty lou. that is in the question heidi, as we get further and further to record highs in the u.s. markets, volatility is coming lower and lower. it is a puzzle here. we are at the peak in the markets, but investors do not seem worried if you look at volatility indexes. to betuld not want against hitting record highs, even with the track record, but we have quite a bit of risks. we have president trump speaking to congress for the first time this week, that will be a key event in terms of getting these policies -- policy indicators we are looking for in the markets.
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in asia we are setting for a negative open this monday morning. we have new zealand's trading under way there. , the kiwi dollar not moving much. australia, we have futures for the assets as well, and opens here in sydney and tokyo. we have five out of the six sessions and australia trading lower. take a look at these patterns, we are close to a bearish -- potential bearish technical indicator. hold of 6/10 of 1%, crude falling after gains, we saw that inventory report from the united states. iron or continuing to decline --iron or first word news nowe. . >> the european commission is unlikely to prove do -- approve
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its merger with deutsche first. they will not commit to investing as requested by competition watchdogs. mcs is an electronics trading stock form for european bonds. this would create europe's dominant trading offer. and theaker to casa u.s. justice department are said to have nominated a veteran lawyer to run a fund to compensate customers over there potentially lethal products. this will be discussed by a court in detroit today, where to may have hitkata the danger of its airbags for 17 -- 15 years. u.s. governors have been told that millions of americans could health coverage under plans to replace obamacare. gained20 million people
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coverage under the affordable health care act, that channels billions of dollars to the state. president trump wants nobody to lose coverage. the south korean constitutional court hold it final hearing monday on the impeachment of their president. a scandal of undue influence involving her confidants and some of korea's biggest companies. she will not attend the court decide whetherst her impeachment is illegal. they checked a verdict within two weeks. the independent presidential candidate has won a third endorsement in the week, after saying -- he is against the favorite to win the upcoming election. macron is challenging the prime minister in the second round, with the far right leader expecting to win the first ballot. news 24 hours a day powered by more than 2600
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journalists and analysts in more than 120 countries. this is bloomberg. what's take a look at what is on the agenda in australia. still a bit left and earnings season. >> you will miss me reading out these numbers every morning. [laughter] a few more to go, to be 23%, 844 million australian dollars, strong result for qe. , 300 95developer million for the half, and short dividend of $.33 there. we will have no present from the ,ustralian bureau of statistics up to be estimated -- estimated to be up. haidi: that investors giving a vote of confidence -- the investors giving a vote of confidence. >> a good result as well.
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last year we have been looking at figures, we cut net debt by almost a third. also carried out $9 billion in bond repayments greeted there could be more of that coming. if we take a look at cma data, free insuring bonds against nonpayment is hard, 25 basis points in 2015, 210 basis points . it is good they did that now, the good signs in terms of iron ore price may not last, but it is up at the moment. governor phil low on friday saying, that price will,. story in thengoing coppermine in chile, now in its third week running trade it is been revealed, they quit a month before that strike. >> it felt quite steeply, not
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surprising. the union knew they would go on strike. the targets for january out of that mine, 102,000 tons. the end of the producing a little over 77,000 tons, the januaryrly with 20 16 outputs, 92,700 tons. these come from the chilean corporate commission. bhp would not comment on the numbers, but they said in a conference call that there was a go slow before the strike. the latest there, the union says it has a contingency fund and will deal with a credit union to pay its members for up to two months. the union digging in for the long haul. .hp is hoping to restart talks the key sticking point is getting us gallatin crew access -- a skeleton crew access to the mine. betty: thanks so much. china ready to allow more
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companies, 18 months after regulators clamped down. now you can ipo there. we have more with the story. what happened, why this change of heart in china? >> the china securities chination has said that is ready for what they called, appropriately larger supplies of ipo's after a stronger than expected recovery from the 2016 market route, when we lost something like $5 trillion in the markets. the chairman says that the entry of new companies has increased market liquidity and attracts additional capital, and increases confidence of the entire society's strength. previous factors of slowing or suspending ipo's have proven not good, and dismiss concerns that multiple shares can depress the market. he is saying that is not the case. he also said ipo cuts could not face long-term issues.
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more companies will be allowed to list. there has already been on uptick in the companies that are being approved in 2016, this is seen as a way of boosting support for the economy. china's key focus is stability to read a stable capital market is needed. they see ipo's is a way to help that. to that end of achieving stability, you've got approvals for more ipos, but they have also introduced new curb. rosalind: they were issued on secondary placement. it can no longer be more than 20% of the company's total shares. you have to see what the numbers look like. some rates six times as much money as others. it is a practice for companies
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offer small ipo's that will help them get approval faster. they go to private placement after that. the brakes are coming off in terms of ipo's. back to you. the balancing act, thank you for looking at that. looking ahead, warren buffett's redirect his long-term criticism of investments. will take a look at his annual letter to shareholders later. managing volatility in the bond market, what should traders be watching out for? this is bloomberg. ♪
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s&p futures -- sydney futures down 3/10 of 1%. i am betty lou in new york. you're watching daybreak australia, we do not have a positive set up at the moment. another record close for u.s. industries. business/headlines for you. go pro is looking for it was for a renewed partnership. slow salessuffered for rugged action cameras in its largest market under pressure from lower-cost rivals. the company disappointed with quarterly sales forecast for below analyst estimates. betty: samsung has released the new tablet targeting video gamers and professional, as they try to bounce back from the note seven debacle. the galaxy book was previewed at the mobile world conference in
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barcelona. samsung delayed the release of its latest smartphone, now expected to be revealed on march 29. haidi: a blast from the plat -- past. the company and for month has launched a range 3310. no kia this is a push to revive their inry days, part of a push the low-cost market. they are also related -- releasing two other phones. they will be released in the second quarter and will run google's android operating system. say, i amas going to having an early 2000 flash back looking at that video. [laughter] haidi: i will stop before we start showing our age. [laughter] , as will thetching rest of the markets, keeping a close eye on president trump. janet yellen speeches this week.
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we pay more attention to what is happening in french politics, that could fuel volatility in bond markets. with me as the managing director at cap stream capital. happy monday. we have seen a revival of risk in the markets this week. >> we are. the snp and dallas setting new record highs. --dow. >> we are not sure what trump's policies will be or if he will implement them, which we will find out tomorrow night when he does the state of the union. to 3010 tohave been 60 in the last three or four months. i think risk rally continues for longer than where we are today. haidi: last week we had to that record eight and the billion bombs out here in australia. that will continue. australia is one of the few countries with positive
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yields. australia, new zealand, u.k., and the u.s., most of europe is zero or negative, same with japan. corporate bonds are the same -- place to be.- best if you're in europe, can you agin giving money to someone and they give you less money in the future? weird situation to be in. bey: it has been weird, weird reality. we all seem to have accepted it so far in a bizarre way. dollar.o talk about the no one knows where this is going to be had. a lot of it depends on what --pens they are in the u.s. here in the u.s.. does that by time for australia, does that by time for other markets in asia? kumar: i think you have got to be bullish with the u.s. dollar. if you look at global economies, you would argue that the u.s. is well ahead on growth. not only do you get similar from
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monetary policy, but now with trump's policies if they implemented, you have tail end from the fiscal side. thus you have to push it up in long the and have to u.s. dollar. the question is, what other currencies are you shorting against the u.s. dollar? yen, becauseo and they are stimulatory in their policies. commodity prices are starting to go up, ozzy dollar starting to .o up i think against the majors, it has got to be the euro or yen. out the commodities story. how stable do expect that to be for australia in this coming year? kumar: i think after the big fall in commodity prices, it is not the issue of supply. they are not building new mines. demand is picking up. up thisp is coming week. what you have seen is a low-end and prices, now prices are taking up.
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when that starts, australia's economy looks bolder, and the ozzie dollar should benefit. it should be positive, the rba being on hold. i would assume the aussie dollar goes up. haidi: when it comes to this trump reflation trade is seen wavering. even though the dow has hit record closes, the highest since 1987, when we saw the crash. are we setting up for something like that if trump does not follow through? kumar: every time the stock market hits a new high in the last four or five years, you get corrections, somewhere between 5-10%. there are a few times where it is greater, 20%. it is an uptrend. the second thing i think is that earnings have beat estimates in the last few weeks, corporate earnings. if trump delivers something on corporate taxes, fiscal reform,
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infrastructure spending, anything, the fed does not need to be where they are. the dual mandate of the fed is already achieved. unemployment is 1.7 percent, inflation slightly above 2%. haidi: so if trump announces anything, that will be it for potentially rate hikes. kumar: i think so. before november 8, every time we walked into the door, we thought about two or three rate hikes, the fed delivered one. this time things have changed because of the fiscal stimulus. therefore the fed does not have to do the heavy lifting. there is seven fed meetings. if they raise two or three times, that does not seem unusual. even a fat farms get to one of the half percent by 2017 -- the end of 2017, it is historically low. there is a 40% chance and month -- march they will go. haidi: stay with us, we have lots to talk about.
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haidi: this is daybreak australia, i am heidi loon in sydney. betty: i'm betty lou in new york. palghat.ck with kumar let's widen our conversation. what is going on around the world, right? we have warren buffett, the annualing -- in his letter of the weekend, he told shareholders that america's best days are always ahead of it. i like this quote from him. " naysayers may prosper by
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marketing their gloomy forecast, but heaven help them if they act on the nonsense they peddle." buffet is always great for quotes. hearinghink, you keep about the big headwind right now is reflation, lots to be concerned about. are we talking ourselves up into this doom and gloom here? kumar: no. look, i am a bond investor. . think equity markets do well the reason i think equity iskets do well is, one earnings, to is market policy where it is easy. people are are one money, feeling confident. unemployment is historically low . the u.s., no matter how much rhetoric we get from the new government of the u.s., we do note that the republicans control the house and senate, and executive office for the next two years. they can pass reforms that will be beneficial for the u.s. economy.
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you have to be positive on the u.s., and positive -- the pace at which the equity markets are hitting new highs, every day you wake up, down 20,000 came and went. it bothers me, but not the direction. interesting what bothers the fed. as saw, particularly markets, let's pull up this chartier that shows a low level -- this chart here that shows low-level volatilities in the market. the idea that boring is back, it .s ok that it is a, market it seems to bother the fed, does it bother you? kumar: the case bothers me, but bothers me, but if i sit down and questioned the fed mandate,, the first one is keeping inflation than a band,
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two or 3%. last headline, it was 2.3%. and, unemployment. 4.7%, there is some underemployment in the u.s., the challenge for the fed 's 75 basis points a right level on the fed funds rate? if they will raise it, how much notice to give the market, even though they do not have the target, i think they do. haidi: you look at this high risk global environment we are in, and look up to the rest of this year. changes, policy potentially seismic upheavals in a number of different countries. you have the french presidential , policys -- elections uncertainty in the u.s.. how much risk is there that we are not pricing and for? kumar: think you get corrections along the way.
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i think you are right, most of the risk comes from europe. we already know with france, they will be a new government, italy will have a new government. brexit as well, we came into it saying they will not vote for it. now that it is over, we are worried about how they are going to get out of it. when the u.k. gets out of it it will be positive for the u.k. creed they will have bilateral trade agreements. u.s. is doing the same thing. not -- november 8 the elections came, to make the policies on trade. eventually he will go back to the trait -- table and have bilateral trade agreements. the big change for the world, now you are getting fiscal stimulus in the u.s., which you did not have before in the last 4-8 years. haidi: is it correct to say that you are of the camp that his bark is not worth his bite? kumar: yes. at some point you'll get bite, it will not all be bark. my concern is that at some point rates have to rise, it has been
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a low rate environment for 10 years. there will be a slow rise in rates, and he managed fed and will slowly raise interest rates , because the next downturn you get, the next policy measures that will not work, they need to reload the canon. if they don't, they will miss on their opportunity. opposite,t about the which is what we talked about inore, the fiscal stimulus the u.s., the fed may have to go quicker than they wanted. kumar: yeah. there are two risks, one is that you get the fiscal stimulus and therefore the fed feels it is behind the curve and has to go faster which i do not think is the camp we are, or as heidi pointed out that you have other issues, whether it is the new yorker french elections, that's derails any economic growth that you think you might get. therefore the fed doesn't go,
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9:30am in sydney, markets will open in 30 minutes. we have a lower outlook, futures down 3/10 of 1%. lower open in tokyo as well. highs being reached in the u.s.. heidiidi london sydney -- lun. haidi: in new york it is 5:30 p.m. get the first word news now. >> china will allow more companies to boost support for the economy.
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it wave of new shares could depress trading but those concerns were dismissed. increasing ipo supply is quote, a mainstream view and has an welcomed by the market. a regulator also promised breakthroughs and market reforms. the ceo of the study stock exchange said, they're moving closer to msci emerging status. the told bloomberg, he sees increasing participation in the saudi market. they are set to host the ipo and then oil giant, which could be the world's biggest listing. representatives will lead investors in hong kong and singapore next month. >> a recent announcement by msci , all of that, we think will result in an msci in the near future. its 2016he bank cut
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bonus pool by almost 80% according to reports. according of the bank's 1000 staff will be affected, some key workers being offered a long-term incentives as a consolation. dr. told employees last month but bonuses would be reduced amid low interest rates and expenses. police and militia say the airport where the exhaled half-brother of north korea's leader was killed was safe of any toxins. results suggest a dx nerve agent killed him within 20 minutes. authorities want to question the north korean diplomat over the killing. pyongyang denies any role in the attack. hong kong's former financial teeth -- chief has been joined in qualifying for running for chief executive. the march 26 election comes amid
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concerns about how much china will yield for the vote. a secretary is seen as the front-runner, after she was reportedly endorsed by leaders in beijing. global news 24 hours a day powered by mother 2600 journalists and analysts in more than 120 countries. this is bloomberg. thanks. let's look at what we should be watching for trade in asia. adam is with us. far, what outlook so are you watching? adam: i this morning is a weaker open. that strength and again is holding firm, but no one wants to put any take bets for weaker from trump tomorrow in congress. currently, underestimated the gravity of how big of a speech this is. he has been trending moves in the dollar traded equities we have been seeing -- we have seen reflecting. when we get these details, the level of scrutiny will be the
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biggest i have seen on a president's speech for some time. betty: something interesting is happening in the treasuries market. what is it, why is it important? back on one day of treasuries trading last week, which you can see on this chart. it shows how much of an influence european politics has on the world's biggest bond market. relative to fed it we had last week, it is remarkable that a guy that lends his support to macron and the french presidential election this year could have a bigger move in treasuries than effective speaker or economic data that would normally affect people's views on interest rates. that shows the potential of how the european physical and -- fiscal plan ship can play into
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investors speaking and move the needle. betty: adam, thank you so much. donald trump's first speech to congress on tuesday, two janet onlen's next economic update monday -- friday, this week is jampacked, hopefully with guidance on big macro questions. here with us, kathleen hays. kathleen, has the treasury secretary given us any hints? kathleen: steve mnuchin had one interview, then another of the weekend where he got a headline and stories from that. basically, he had already said at weeks and that he is hoping to get a conference of tax reform plan on the table by august. some more things he touched on in this interview, but probably do give us a sense of the things donald trump will say. for example, you mentioned that
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donald trump made touch on tax reform. he also, looking at trump's fiscal plan, said that they are going to be focused on sustained long-term growth, not touching entitlements for now, not touching social security, going back on medicare. also saying a lower tax rate may not mean less revenues, because they believe in dynamic scoring, that it will boost the economy and boost spending. buys is important? let's jump into the bloomberg 3483, one of our #btv charts. what you are seeing is the white line, it u.s. percentage of gdp, and the blue line, nominal dollars of gdp. gdp can see our debt to ratio is up to 6%. it is flagged by international, -- economist as being a danger point. they say if you cut taxes and
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boost spending, you may not get any improvement of us really do some reforms. you have got to pay for those tax cuts somehow, betty. bloomberg intelligence calling this speech a de facto stick of the union event -- speech for donald trump. it will be interesting to see if he supports paul ryan in the house, he has a more conservative tax plan. they are saying, a lot of economist, it looks more and more like you will not get economic impact from donald trump's steps until 2018. another reason why when you look at adam's chart, you see the u.s. treasury down to 2.3%. growth has dissipated as people see how complicated this will be. betty: speaking about hearing speakerse have lots of this week. janet yellen and chicago making a speech on friday. bigleen: that will be the one for the week. but everybody wonders now, are you going to confirm -- we are
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thinking hard about hiking rates, or will it be more extensive, we are moving in the right direction, but no sense of urgency? let's look at just rate projections. interesting here that the bets, the odds now are seen at 40% at week's end -- at weeks and that was down to 30%. officials speaking this week. also i have the eco-calendar. let's look at u.s. highlights, starting hours from now. goods orders, will give us a sense of what manufacturing is doing. revised the controller -- quarter gdp up to get to -- going to get up to 2.1%. of the week, manufacturing, purchasing managers index, we closely watched. on wednesday the anecdotal compilation of data and analysis
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from all 12 district banks. the shirt with themselves and the public of what they are looking at for the economy in the united states as they get ready for their next big meeting. we have got major events and data points coming out of a giant europe. what will be key? kathleen: there will be a flood of purchasing index managers. china is a big one. also, later in the week china will convene its annual two sessions meeting, the annual gathering of china's top legislative body and political advisers. this is second only to the 19th national congress of the communist party in china, later this year. they will talk about full implementing the five-year plan. they will talk about the 6.5% growth target, which they are so far meeting. sought supply-side structural reforms, and globalization under threat, something that will be
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bandied about. and europe, i just want to mention that european inflation the be big, because headline number is almost at 2%ir, but their core is stuck at 0.9. the germans wants to see rates raised, but are worried about inflation. mario draghi saying we are not there yet, we will keep buying more bonds. it will be an interesting week for all of our listeners and viewers on bloomberg television. know you will stay on every development. warren buffett rose to shareholders at the blanks about something he is been highlighting for more than a decade, which involves hefty fees charged by hedge funds. from someone who joins us from hong kong. this might be the most anticipated investment letter of
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the year, what was the main take away? to -- youly, you want want to avoid the active fondest year. in this 29 page letter, five of them were devoted strictly to the passive argument. in that five pages he was saying that active investors were like, monkeys. he met only 10 successful active investors. the bottom line, go with the flow come passive funds. an ongoing one, and a $1 million 10 your bet. he challenged the u.s. as a firm to pick a set of heads -- hedge funds to compete with low-cost them guard s&p fund, they picked five. you can see the returns of the past nine years to the end of 2016. buffett's fund, 7.1%. if you throw in $1 million, you would get 220,000 and protege,
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but would get more in buffet's fund. you can see what has been happening across five of them, fund a, b, c, d, e. , 84 point 5%.p that takes everything down. ,lso, buffet being very playful i love this quote. he says, the number of smart people involved in running hedge funds but to a great extent their efforts are self neutralizing and their iq will not overcome the cost they impose on investors. they will have a low-cost index fund with federal returns. the end of this year. warren buffett looks on track. he says he will give any winnings to charity, for girls
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in his home state of omaha. betty: greatemonstration there on what it is like for index and manage funds. give us the latest on flows, what is the state of passive versus active? ramy: happen to the bloomberg. #btvis a great terminal, g 6132. the blue are the passive funds, actives are in yellow. you can see on the right, the blue highest it has been since 2009. the yellow coming off the top that it saw in 2015, 2016. that passage, trillions of dollars. we are seeing this big push into passives that looks to continue, betty. betty: thank you so much. we feature on the bloomberg would like to bring your attention to is our interactive
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tv function, you can find it at tv go. you will be able to watch his life and see previous interviews and stipend to any securities or bloomberg functions that we just talked about, including what ramy just talked about. you can send us instant messages during our shows, for bloomberg subscribers only. check it out at tv go. night betty, it is oscars . in three hours time from now, new vocal of story la la land leading the way with 14 nominations, tying the all-time record. amazon is the first online distributor to earn a best picture nomination, manchester by the sea, netflix scored just one. i want to put it out for us trillion nominees, including mel
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gibson's hex are rich picture, and lion. betty: his career seems to be coming back up, i don't know! who would've thought a few years ago, amazon would make an appearance at the oscars! there you go, the changing tides in video and how we watch. incredible. i just want to see who wears the best dress. [laughter] haidi: me too, betty. betty: go pro sees the bigger picture, tying up to boost its presence in china. that is next. this is bloomberg. ♪
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is about to become a part of smart phones. this is being pushed to boost go pro's presence and sales and china. tell us more about this. >> it looks like it is a way for go pro to rebound its sliding sales. but at the three are charged of go pro, you can see three years ago it was considered a superstar stock on wall street. it is come down a long, long way. q the video, it was also seen as a media company, because people that used its action cameras, small cameras that can fit on a sports enthusiast, reposting these incredible videos. they thought this company was going nowhere but up. three years later they are having problems with sales. this quick cap, downloaded more than 12 million times in 2016 according to go pro, going into phones, putting a bright spot on possible global growth. and say it can boost sales they are hoping to reverse the
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sales slowdown. chart. the year to date we have to break away from that video. you can see that go pro has rebounded off the bottom, but still a long day -- way down from where it was, their latest sales forecast missed. haidi: this partnership with folate is interesting. is this about selling more cameras? su: yes, ultimately that is the goal. what's the partnership brings to raising brand recognition, getting people who whichuse this act -- app is a quick way to edit photos and videos on your phone, it might introduce them to these $300, $400 cameras. is china a big market for these there are so many cheaper price cameras in that region of the world, and also they say, the needle not likely
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to move that much given that asia is just a small part of the puzzle. take a look at the bloomberg chart, use of the white line on the top is u.s. sales rebounding , still far below their peak. the blue line on the bottom, asia-pacific, underline is europe. clearly, go pro thinks it is worth a push. haidi: some way to go to close that gap. su, fix for that. barcelona bets on china with the new football academy, we'll hear from the club's president -- president. this is bloomberg. ♪
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the club has 20 schools around the world. the new one will be the biggest. china wants to become a major player in the game. work on tied can imported foreign stars. >> it is normal. if a team wants to be successful, they need more talent. sometimes we tell to chinese clubs, do not forget about other academies. they are teaching values about their culture of the club. it is not always good to buy players from abroad to make a good team, you have to combine the own and hometowns with the talent you bring from abroad. i see some projects in china .hich are interesting
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also, some chinese investors are going to europe, investing in some stocks. >> barcelona has been dominant in the world of football for decades. they seem to have lost a little bit of edge recently. how much of an impact will discontent with your performance have on your business? >> i do not agree totally that are losing the power in our football. we do not have the best results, but we have to think that we are right now ready, going to play the finals in spain. this is one of the objectives. while they're still allies with -- bad results in the round, while we are still alive, how we our game, is different from
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other folks. we have to do some evolution, because all our rivals kno how to play to usw, so we have to make an evolution of how we play . i do not see this is a problem. >> you are a supporter of your club, does that worry you? >> we are worried from early. [laughter] the members of the board of the club coming still worry always, because of the future. we cannot always become the short term, we think on the long-term. it always worries us. , youkn king as a team know the valleys of our club are clear. it is very important, i think we have some of the best players in the world playing in barcelona. i am sure they will manage to
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continue the season. that was the president of barcelona's football club. that is almost it for daybreak australia this monday morning. at prettyking tempered open so far, but what are we looking at over the next couple of hours? >> watch out for china to pump out ipo's. i know you were talking about this, the companies -- the countries top security regulator allowing companies to list. has china from the corner now from what we saw in 2015? keep in mind they are not completely letting go. regulators this month announced two new curves when it came to additional funding by companies. stability remains a key objective this year for china. haidi: give and take when it comes to chinese regulators for
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sure. we will ask that question, how j.p. morgan asset management, and how kerry craig feels about chinese equities. he is not constructive on emergent -- emerging-market stocks. he says they're looking vulnerable. he says, as u.s. stocks hit record highs, what is it going to take to be that correction? e ll hear from him at 10 past 8:00 hong kong time. >> that is a big question, what is it going to take to get that correction? you mentioned the dollar, heidi. a manonomic president, -- of many assets including currency says, watch out for the dollar, it may fall considerably if we do not get a much-hyped from the fed -- a march hike from the fed. this seems to be something that is on top of minds for investors
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♪ >> keeping the faith, warren buffett helps shareholders invest light ahead, and naysayers calling a nonsense. rishaad: china opens the doors -- yvonne: china opens the doors to more ipos. betty: gopro sees a bigger picture, launching and editing app on smartphones. singapore listed noble growth, renewed questions i'm amid the --amid the tie up w
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