tv Bloomberg Daybreak Asia Bloomberg June 4, 2017 7:00pm-9:01pm EDT
7:00 pm
♪ >> sterling falling, markets nervous after weekend attacks in london. the u.k. hasays tolerated extremists for too long. the world bank still sees growth maintaining its forecast for this year and next. australia takes aim at course of , nations banding together if they are pushed around. >> warren buffett launches this
7:01 pm
year's auction, raising money for homeless in san francisco. >> this is "bloomberg markets: asia." we are live from bloomberg's u.s. and asian headquarters. it is just after 7:00 a.m. in hong kong. some breaking news crossing the bloomberg. south korea current account balance coming in, shrinking for dollars, a9 billion dramatic drawdown from may, close to $6 billion, also revised down to $5.7 billion. that surplus is widening as well , close to $11.9 billion. there are signs the south korean economy is doing well. exports rising coming inflation picking up, so we will see how korea reacts in about one hour. those meantime,
7:02 pm
devastating attacks in london over the weekend, days away from the u.k. election, so we will see how this will impact the outcome. will terror dominate what happens on thursday. bull in thed to be a market knowing so much uncertainty lies ahead. check out equities futures, how they are trading right now, this is the market close on friday. the futures right now are , ading a little bit lower touch lower, not a lot of volume on a sunday evening. it is an indication of the bearish sentiment. rally after that jobs report. it was quite disappointing in the number, but as we have seen sometimes bad news is good news s because itet bull
7:03 pm
means the fed might not be hiking rates as fast as expected, and june is kind of a tossup right now. continue to watch those lines from fed officials saying inflation is worrisome in the second half and what will happen there could still be a big question. let's see how markets in the asia-pacific are trading on this monday morning. no trading in new zealand as they celebrate the queen's birthday. we are counting down to the open in australia. futures saying a gain of 10 points on the asx 200. $47.70 for wti. rick accounts in the u.s. climb for a 20th week. rig counts in the u.s.
7:04 pm
climb for a 20th week. we may have choppiness with that leg lower on dollar-yen on friday after that u.s. jobs report. 110.47 right now on the yen. milestones,enty of another record high for the hang seng and the kospi. can markets keep calm and carry on, betty? week,comey testimony this and the ecb meeting. >> that's right. a lot on the agenda. let's sort out with first word news. the australian prime minister has warned the china that its regional neighbors will not be pushed around. speaking at the shangri-la summit in singapore, he said smaller nations could band together. >> a course of finer would find its neighbors resenting demands
7:05 pm
to seed autonomy and strategic space and look to counterweight beijing's power by bolstering alliances and partnerships between themselves and especially with united states. the world bank has maintained its outlook for the global economy, forecasting a modest despite monetary policy and rising protectionism. it sees expansion of 2.7% this year, rising to 2.9% next year. confidencecking up, is improving, and financing conditions remain benign. inna's biggest coal miner talks about a merger. the negotiations are at an early stage and may not proceed. the hong kong listed units of the state own company said they will be noted of significant matters while subsidiaries have requested a trading halt. foxconn chairman says apple and
7:06 pm
amazon are supporting his pursuit of toshiba's flash chip memory unit. the two have offered financial .upport for the bid the foxconn boss has confirmed his interest in buying the unit. the japanese authorities want a domestic bidder to step forward to prevent the technology from going abroad. toshiba struggling nuclear unit has reached a deal to end a two-week lockout at its plant in new hampshire. westinghouse has agreed a three-year contract with the boilermakers union that will run through 2020, covering 172 employees who will return to work on monday. no details of the agreement have been released. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. .> thanks so much
7:07 pm
we have big interviews coming up. we will be joined exclusively by jamie dimon. >> that is one to watch. our top story, a claim of responsibility for the terror attack in london. the rampagell from on london bridge stands at seven with dozens more injured. let's get the latest live from london right now. the third terrorist attack in london in three months, bring us up to date, what more do we know? state in the last hour has claimed responsibility for the attack, campaigning suspended for a second time in that election, a truce brokered by theresa may as she addressed
7:08 pm
the country from downing street saying, enough is enough, extremism has been tolerated for too long. seeking more wide-ranging powers to tackle extremism. thatis significant is frequency, three attacks in the many months, two of them in london. if it affects the election remains to be seen. office, irive to the heard new york senator chuck schumer say there is no imminent threat here in new york, from what he can tell, but i imagine in major cities across the world that there are heightened alerts . what is the situation in london right now? on thee is a focus iconic bridges targeting pedestrians, but the amount of armed police, a show of force we have not seen in london in decades. an unusual sight for a
7:09 pm
city where police typically don't carry weapons. continues, 12ion arrested, for property searched come although police say they are increasingly confident that three men who were shot dead at the scene are the only perpetrators of the attack. 21 are in critical condition in hospital. perspective,ort london bridge station remains closed. it is a key transport hub bringing in commuters from across the southeast of the country. you so much. keeping us up-to-date to date on the latest after the london attack. president trump reacted swiftly to these attacks, tweeting out in burst after burst what is going on there and london, but also how that might affect his agenda here. we are in washington, what are
7:10 pm
the -- what is trump likely to do in reaction to this? , about thetweet out executive order, the travel ban which is right now mired in the courts. might this get that travel ban a boost? trump said in a tweet theerday that we need courts to give us back our rights. that is not up to him to say. the decision will rest with the supreme court, and on that, action will start next week. so far the courts have been pretty non-friendly to trump's travel ban. the one court declared it was something that was steeped in animus and targeted towards a specific group. i don't think the supreme court will be swayed by trumps of jawboning, but it is something
7:11 pm
that plays well with his supporters, and certainly there is a lot of concern across the board about security. will be one issue, but i think all eyes will be on james comey's testimony this week as well, mixed signals from the white house whether they will invoke executive privilege. could that be an uphill battle for the president? what are we hearing on the latest for that? like executive privilege would be hard to argue in this case. it is hard to argue that the white house should keep the deliberations between trump and comey secret when trump himself talked about his discussions with comey in a television interview, and again on twitter, so his use of social media can be a problem for him. another possible thing the white house could do would be to try to pressure the senate intelligence committee to cancel or postpone the hearing.
7:12 pm
i would say that is a long shot too. to james comey is due to speak twice on thursday, publicly, then in a private hearing, and it could be pretty explosive. >> absolutely. we will have to watch for that one. ahead. continue our look coming up next, ever core isi joins us live from washington, d.c. and a moment. >> later this hour, the pound slumping on the london attacks. we look at the currency outlook with goldman sachs. this is bloomberg. ♪
7:14 pm
7:15 pm
this is "daybreak asia." >> plenty for u.s. lawmakers to , congress back in session. chief among them will be testimony from james comey about the russian investigation. let's bring in terry haines, the senior political analysis at evercore isi, a senior adviser in congress. i know we had some trouble getting you on skype tonight. first off, there is so much for the market to digest, the james comey hearing, the jobs report from friday, and dodd-frank coming back in congress. what will be top of mind for investors? >> good morning. good evening. is that it will be
7:16 pm
fundamentally whether the trump continueation can to push on tax reform and where the republicans in congress are willing to do that. dominate, and anything that is a distraction slowness, whether the of the affordable care act, repeal and replace, the james comey testimony, anything else, it does tend to detract and distract from that, but there will be plenty going on. >> we have the world bank report just issued a few hours ago, and in that report, the world bank did not factor in things like tax reform or infrastructure spending. do you think that is the world bank's way of saying we don't think this will happen? >> i can't put myself in the shoes of the world bank with any
7:17 pm
authority, but let me try. i think what they are saying is we don't know whether this will ite off yet, and we think if doesn't come off, it is wiser not to included, but we still have today tax reform in the united states happening in a window between the end of 2017, november, december, and the first or second quarter of 2018, and i think that will continue, but if the affordable care act reform bogs down, it may take a lot of the legislative oxygen out. only have so much political capital to start your presidency, right? something else that might be are as a diminishing chance multiple rate hikes this year. i want to pull up a chart, #9107 on our bloomberg terminal, which the chances of a
7:18 pm
september rate hike now are less than 30%. do you expect that to continue to fall, the chance? we think it is too soon to say frankly. are on track for june, but there is a lot of concern about the economic path ford certainly. with a few months left to go, we think it is anybody's guess. we have said that we think that the fed is still on track for ise hikes, but whether it september or not, i think it is too soon to say right now. were just speaking about this comey testimony, the back-and-forth from the white house and whether the president will invoke executive privilege. will puthat this
7:19 pm
result on the russian investigation, but what message with that send? >> i don't think that would send a very good message. i must say that i think it is very unlikely that will happen. what you have got is a situation thee the former director of fbi is testifying. he has 30 talked a great deal to former fbi director mueller come the special counsel, so he has some idea what he will say. testimony has been coordinated with the special counsel to some extent. i find it very unlikely that executive privilege will be invoked here. if that was going to be the case, i think it would have already been done, but fundamentally, you will do something like that, it does not enhance the perception that you are being truthful, no matter who you are, so that would be a
7:20 pm
drastic step, and yet another reason why it is unlikely. me about the shakeup in washington right now that may be emerging in the white house. we saw the resignation of the communications director last week. you have h.r. mcmaster writing a show james madison in a went through a lot of effort to drive that idea home, but then you have this paris accord, you have steve bannon, a big victory for him. he think is the most influence on the president at the moment? thatthink stories like generally are far overblown. extent isto some using the individuals in the white house, and the white house people are using the press to trying to get their own versions of stories out. what you have in this are fairly bold
7:21 pm
efforts on a lot of different whens simultaneously, and you have that, you are always going to have some internal jockeying in the white house. i think this is largely that. the president gets frustrated with one or another members of his team and let's that off more publicly than past presidents? sure i do. do i think there will be consequences? no, i don't. any white house needs to hold down both flanks to move on all these fronts. >> one less question on the james comey hearing. testifying as ad whe private citizen. i'm assuming there is nothing
7:22 pm
that holds them back from giving the full story. do you think we will get something from james comey that is going to be seriously damaging to the president, even havee point as democrats been talking about, rising to the level of impeachment? >> i think that is highly unlikely. he goes back to an earlier point i made. -- it goes back to an earlier point i made. the special counsel is there for a lot of reasons, and one of them is to get to the bottom of a lot of this stuff. do --st thing you want to i have done a lot of high-profile investigations -- but what you don't do is you don't let a witness go out and locktential witness -- and too much of their story down to early. that generally does not happen.
7:23 pm
i think what james comey is likely to do -- and you can see a little bit of this in the united states -- i think what james comey is likely to do is to talk a little bit about his thoseews on things, but who expect some kind of romana clough tell-all are likely to be disappointed. >> thank you for joining us. this senior political strategists and head of political analysis at evercore isi. you can find our interactive tv function at tv . you can watch us live and see previous interviews like this one. you can dive into any securities or bloomberg functions we talk about and become part of the conversation by sending us instant messages during our shows. this is for bloomberg
7:26 pm
"> this is "daybreak asia. toyota has confirmed it sold all its holdings in tesla. the company confirms the end of their collaboration for the time being. toyota bought a stake in 2010 to relationship. >> spacex has taken a step towards affordable spaceflight, sending a recycled rocket to the space station. the capsule was lifted into orbit in florida. supplied aly
7:27 pm
laboratory in 2014. elon musk tweeted, reused rockets, good. that is how it is for cars and planes. >> girl power all around. for one of brothers, wonder woman taking top spot at the weekend. cost $149 million, earned more than $100 million on its debut. warner bros. has been banking on wonder woman after its two previous leases were panned by the critics. i have to watch that one. >> yes. >> we are counting down to the open in japan and korea. trade infutures and chicago, a 1.6% rally for the nikkei 22 five, losing some steam in tokyo, down 45 points
7:30 pm
yvonne: 7:30 a.m. monday. you can see the rain pounding. we are minutes away from the first major market open. betty: i will take that over cold weather. 7:30 sunday evening in new york. showers all day. the markets are ending as we saw on friday at a higher note after the disappointing jobs report. i am betty lou in new york. yvonne: i am yvonne man in hong kong. but the shery ahn. shery: theresa may will seek new anti-terror powers if he wins in this week's elections.
7:31 pm
she said there has been too much tolerance of extremism in the u.k. it left seven people dead and 21 critically ill. the campaign has been suspended for a second time. it was halted after the manchester attack as well. they are trying to counter the growing threat of terrorism, linked to the so-called islamic state militant group, the need terrorist activity was high on the dialogue at the shangri-la singapore dialogue. tradering commodity noble pieces another tough -- faces another tough day after its shares plunged working percent friday. -- 14% friday. they wanted to extend their credit facility to the end of the year. the listing in singapore, shares
7:32 pm
are at the lowest in 17 years. the oecd said quotas for promoting women is something japan could consider. gives shinzo abe the credit for trying to raise the status of women in the workforce, but more needs to be done especially in the private sector. japan's business culture is traditionally male-dominated, but the labor shortage needs more workers. global news 24 hours a day, powered by more than 2600 -- 2700 journalists and analysts in more than 120 countries, this is bloomberg. yvonne: let's get what we should be watching out for. the latest on bloomberg markets from adam haigh. are the london terror attack and the u.s. jobs numbers from friday. pretty quiet elliptically speaking on the pound, but --
7:33 pm
relatively speaking on the pound, but how is asia reacting? adam: remember it is still early for the pound trading in asia, volumes are pretty light. let's see how the day develops with london waking up. relatively muted at the moment, markets telling us they are looking for probably a majority on thursday. we do have a big week coming up with the rba decision in australia. we have r.b.i. later in the week. there is plenty going on. we are keeping an eye on the mexican peso as well. there is a state election that might have ramifications for the election last -- next year.
7:34 pm
there is plenty to get heads around, but not much sentiment here.ve risk on we saw stocks closing at a record on friday. now we see $10 trillion with equities in the last 12 months, so investors are taking a breath after the huge gain we saw in japan. yen probably weighing on the tokyo open. betty: we have seen the nikkei 225, adam, punch through the 20,000 level. it keeps adding onto those gains, but u.s. investors are not impressed with this. why aren't they jumping in? adam: yeah, that is right. if we bring up the bloomberg terminal chart, we can see how investors are happy to be involved in dollar terms. the dollar index is doing
7:35 pm
relatively well. there is a reluctance of foreign investors, particularly americans, to get involved. a few things at goldman sachs, making interesting points. the first is saying reform is hasng a bit of a backseat not been as prolific as they expected or wanted it to be. they are pulling people back. they are betting that will ratchet up over the next few years. over the second sign these long years of inflation are getting behind us in japan, no one is saying inflation is nowhere near the target of the boj. but little signs incrementally us here.rket showing that is all more fuel to the fire for the bulls for the japanese economic market going forward. usu.s. foreign investors still
7:36 pm
sticking in elsewhere like europe, more of focus from goldman sachs. they can have focused on people wanting to lift a european equity out of occasions. japanese allocations are being left behind. betty: adam haigh with a look at the asian markets and the news and how it affects the week ahead. one of the big pieces of news we saw on friday was the disappointing u.s. jobs report. that is reason to review the fed's rate hike. year, 2% on the 10 possible. economics and policy editor kathleen hays with more. let's talk about the london terror attack's and when that might have an impact on the economy, around the world but also rate hikes. if we got an outcome,
7:37 pm
if the london terror attack's unsettled the u.k. electric -- electorate to an extent that theresa may said it was in jeopardy, many say no because she has got a background fighting security. vote was -- the federal reserve said before that, we will hold back. anybody is talking about that yet. we will see what happens. has alreadyorbyn been trading barbs. looking at the jobs report, you could say it is basically strong footing, but let's look at the numbers. 138, --oll fell short, 138,000. looking at this chart, april and may were all revised lower.
7:38 pm
so the white line which goes up until we got to this may report. now it is not looking quite as strong as it was. you are seeing the pink line, the three-month moving average, it is over. they are losing momentum in the market. but what about the unemployment rate? it fell 4.3%. wages will rise, and that reserve will say yes but we need the rest -- the rate hikes two more times. paychecks year-over-year 2.5%, ..6% monthly basis, 0.2% look at this chart, btv 189. we see unemployment going down, average hourly earnings coming up, then leveling off. they are boosting momentum as well.
7:39 pm
on friday,ews said looks like u.s. jobs markets was losing its mojo. this is something they can say, jobs are not going fast enough for us to keep moving. we will see inflation rising, mark one is a question where the economy is now for the june meeting but also july. yvonne: what does this mean for the fed? is there a downtown half? yearond yields and the 10 -- kathleen: we had the rally in the treasury market friday, the dollar weakened, but the jobs report did not change. interestingn at the projections, you see upper 89.7%, 90%orner, hikebility that will be a
7:40 pm
in less than two weeks. the odds for the september meeting look like one in three. the market is doubting when you get past the june meeting, you will see anything. noteng about the 10 year yield, when you look at the ,hart, not a lot between now 3.15%, going down, and imagine when they are talking about hiking three times that bonds could still be rallying. they said on friday they think it is appropriate the fed is on track for more rate hikes, probably some weakness in the economy to change their lines. a lot coming up perhaps. political risk from the u.k. as well as the u.s. is that a big driver? kathleen: they have got to keep their eye where we were talking about.
7:41 pm
the election uncertainty, the london terror attack, a new level of debate and attention. people will think what happened with brexit? is it possible to have market volatility stemming from before or after? don't forget for james comey testifying to the senate on thursday. reports to the white house, the executive privilege, prevent, he from testifying, they say it will not happen. but it is not just about the fed. it is about the reserve bank of india, australia, and thursday, two mario draghi hint about bond purchases to make a conservative fight? that is the big question. the fed meeting taking a big backseat.
7:42 pm
they may have other central banks to watch. this is important. yvonne: mario draghi could fuel the fire. thank you. and keep rolling up bloomberg. we will have exclusive interviews. that is after 11:00. five minutes past 1:00 in sydney. a lot to ask. what will the bear market need for china? this is bloomberg. ♪
7:44 pm
7:45 pm
, including the london attack. that is in the investors' thoughts this morning. i'm betty liu in new york. in hongi am yvonne man kong. let's look at currencies. it will be a great time for geopolitics. the pound continues to slide this morning. it is still quiet. it will be a great time for the dollar could strengthen about 10% against the yen and the euro, and there will be rate hikes two more times says our next guest. great to have you. let's start with the pound given the attack in london. , and you canhart see it in the week by week basis. we saw the pound bounceback after the weakest year week.
7:46 pm
we saw the high? politics or the political environment shifted sharply and significantly in the u.k. terriblethe relative events, but i think it is fair to say we had a significant , a bign post-brexit adjustment in the value of the became toohe markets pessimistic about the medium term. we had a reversal of that and the post trump trade and assets as well. and i think that is likely to continue as long as mrs. may win the election.
7:47 pm
she is much closer than it looked couple of weeks ago. that thes there a risk polls are wrong once again? we saw brexit, and we continue to learn hard lessons after what has happened in the u.k. how much do you expect the conservatives need to have further pound to stay at these levels? -- for the pound to stay at these levels? philip: i don't think you can put a number on the number of seats. if you get this number, the pound won't go down. what is really driving down is the postelection, the idea the economy is adjusting itself pretty successfully to the idea that brexit will really happen. postelection it will be clear what the next step in the
7:48 pm
process will be, and it will coming inthe numbers where inflation will be low and the ecb holds, then the euro will find it hold to maintain currency. so in that environment, the pound will do better. it will be subject to what we think is a strong dollar. betty: strong dollar, you mentioned here. what about jobs? we see the bond market that is unconvinced about what can happen next when it comes to the dollar as well. the yield, the u.s. 10 year fell. take for theing to greenback to go higher? philip: i think if you step back from the kind of day-to-day numbers, the time we had postelection in the u.s. was one
7:49 pm
where we had a huge rising confidence, market policy, reflation, bond yields currency. the trade has been reversed. reversal has to do with softer numbers but also where the market was positioned. i would suggest we would get the fed moving three times this year , that the labor market numbers, they were a bit of a miss, but the falling unemployment, they start low, the forecast for the end of the year, financial is easier. betty: it all sounds reasonable, except you did see the chances of a rate hike in september go down quite significantly at the
7:50 pm
jobs report. we have seen the last 12 months the dollar being led or being highly correlated with where yields are following. the yield are ahead of the number. despite the reasonable reasons for why the number should notrse course, it should seem like the patterns match that. think about how to invest your money today versus the last couple of months, you did write. the dollar has moved along with the yield. just because they moved lower doesn't mean they will keep moving lower. i would think certainly with the fed moving this month and the underlying macro has been strong, people recover quickly. you talked about slowing momentum in the labor market and picking up the u.s. economy
7:51 pm
through unemployment. andlonger-term rising yield inflation is a great chance to put the trade on given the relative factor to november levels. betty: thank you so much, philip asian fixed head of income at goldman sachs, longer-term outlook on currency. you can get a roundup of stories you need to know with this edition of daybreak. you can go to dayb on the terminal. you can also customize your settings so you only get the news on the industries and assets you care about. this is bloomberg. ♪
7:54 pm
group isecond-largest looking to tie up utility payment apps as the fixed income share of the e payment market. they are looking for a fifth of india's estimated $6 billion payment market by the end of next year. they want to offer support validating will be quick -- mobi kwik at around $13 million. betty: the region's biggest real estate deal. logicorp has things in the you cannot kingdom already -- united kingdom. warren buffett is about to start an annual private lunch auction to raise money for a homeless charity in san francisco. it starts at 7:00 pacific, 7:30 hitshong kong. the big
7:55 pm
come near the end. million, tying the record set in 2012. sinceaised $24 million 2000. plenty of big stories this week, covering them here on daybreak asia. we have china, india, pakistan gathered for the shanghai cooperation organization summit. a look at the friction, these will become old members of the strained relations -- full members of the group amid strained relations. slowing to 1.4% on the quarter, down 4.1%. the expansion almost to forecast
7:56 pm
from 4.1% to 1.7%. you see resilience that the australian economy has had for some time. they are putting recessions since the 1990's. the last with china trade, but seen the recession in multiple occasions the one to watch is the commodity index. how will that way on gdp as well? you see investment in but not enough when it comes to spending, that growth reading hampered -- being hampered. betty: it is almost like you are in australia, looking over your shoulder and saying, when is that recession coming? we are watching apple with the developers conference in california tuesday. it will unveil updates to the operating system and announce
7:57 pm
arrival to the oma -- amazon home assistant. it could be the first time where apple develops hardware, a new mac laptop perhaps. a snap election dominated by brexit and london terror attack's. powers may wants extra for terror attacks. themy corbyn has narrowed lead. what are the issues that voters are worried about with brexit, health care, raising asylum, economy? immigration and asylum is related to terrorism or antiterrorism policies, but it has not shown up that much. taking a look at this next chart , it shows you after the 22,hester attack on may
7:58 pm
8:00 pm
♪ >> asia-pacific markets head for a makes you start, the yen holds hile sterling falls. >> noble may be one of the days losers after shares tumbled become of the stock at a 17 year low. >> theresa may will seek new anti-terror powers, saying extremism has been tolerated for too long. the agendam topping
8:01 pm
at the shangri-la security conference, leader saying it is that main threat to 2017. >> this is the second hour of "daybreak asia" live from bloomberg's asia headquarters. >> it is just after 8:00 p.m. in new york. the markets in asia digesting the child's report on friday, theh was less robust -- and jobs report on friday, which was less robust than expected. let's see how the aftermath of the attacks will play out, but there is a lot of the events on the agenda, washington and asia. james madison rex tillerson are visiting different countries in the region. the marketioned moves on the pound, sliding, but still relatively quiet. in the meantime, breaking news attractingh korea,
8:02 pm
11.2 trillion won on a budget to boost to jobs on the back of president moon jae-in promising to do so. the kospi, but first let's get to first word news. hasinda: malcolm turnbull warned china its regional neighbors will not be pushed around. speaking at the shangri-la summit, he said smaller nations could and together in the face of a bully. china would find its neighbors resenting demands they seed autonomy and strategic space. counterweight beijing powers by bolstering alliances and partnerships between themselves and especially with united states. the world bank has maintained its outlook for the global
8:03 pm
economy, forecasting i modest figure despite rising protectionism. it sees expansion of 2.7%, rising to 2.9% next. picking says trade is up and confidence improving, and financing conditions remain benign. anda's biggest coal miner state-ownedargest companies are in merger talks and have been notified of significant matters while subsidiaries listed in shanghai have requested a trading halt. the foxconn chairman says apple and amazon are supporting his pursuit of toshiba's memory chip unit. the two have also offered financial support for the bid. it is the first time the foxconn
8:04 pm
boss has confirmed his interest in buying the unit. the japanese want a domestic letter to step forward to prevent the technology from going abroad. toshiba struggling nuclear unit has reached a deal with workers to end a lockout at its plant in new hampshire. westinghouse has agreed a three-year contract with the boilermakers union running through may 2020, covering 170 two employees who will return to work on monday. no details have been released. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. let's look at the market open with sophie kamaruddin, a bit of a retreat when it comes to asian equities despite that lead from wall street up to that jobs report. sophie: looks like wall street was able to shrug off that
8:05 pm
-- that weaker jobs report. take a look at the nikkei 225, falling .25%, but still above the 20,000 mark, which the nikkei was able to push through on friday. take a look at all see share snapping a four-day rise. we do have the south korean kospi swinging between gains and losses. the currency space, the aussie andar down .2%, very much focuses week given we do have the policy decision and first quarter gdp data due out this week. saying the currency will remain firm given that weaker u.s. dollar. we are seeing a drop in the aussie despite what we are seeing in iron ore. let's switch to the commodities panel, iron ore up 2.4% in singapore. we also have bonds climbing, matching that move in
8:06 pm
treasuries. happenedtory is what in london. checking in on the ftse 100 futures. it is a crucial week for the u.k. as they go through june 8. a weaker start when trading kicks off in london. now with the pound, it did drop .3%, but now paring that loss, so all in all, it looks like he has been reasonably muted. it looks like it will be more influenced by the upcoming thursday poll. the larger andg conservative majority, the more positive that is for sterling. checking in on the yen near a two and a half week high as the dollar is weighed by the jobs report. 110.3 three for the moment, and that jobs report did spark a rally in treasuries, sending the atyear yield to 2.16%, now
8:07 pm
2.15 percent, and testing the cap we saw last in november, which could look like a potential reversal and indicating lower rates ahead. this as bond traders are buying up treasuries,'s give kisses him of a rate hike beyond june. -- demonstrating skepticism of a rate hike the on june. now, an update, a claim of responsibility for the terror attack we saw in london over the weekend, the death toll from saturday night's filings on london bridge stands at seven, dozens more injured. inare following events london. bring us up to date as to who is claiming responsibility. have learned islamic state has claimed responsibility for the attack. it seems the election campaign halted for a second time.
8:08 pm
theresa may address the nation from her downing street residence, talking about upping the rhetoric, trying to combat terrorism, saying extremism has been tolerated for too long, ,eeking new anti-terror laws having spent seven years as home secretary, it will be familiar to her. it is the third attack on british soil in less than three months. the impact on the election remains to be seen, but it will be at the forefront of voters minds on thursday. >> this all happens when ariana herde was performing during benefit concert, so i'm sure security was a big, big issue as well as the forefront of that whatrt and manchester, but is the security situation now? how different will things be around london and the u.k. monday morning? >> london bridge is still close.
8:09 pm
those iconic bridges, westminster bridge, so it seems the attackers are targeting pedestrians on those bridges. we are seeing an increase of armed police patrolling the streets. it is the biggest show of force in decades across the country. 12 people have been arrested in this ongoing investigation, four properties searched, although authority saying they are confident that the three shot dead at the scene were the only perpetrators. injured, treating the 48 wounded, 20 of whom are in critical condition. london bridge station is closed due to open a 5:00 a.m. monday morning for the commute. it is a major how for commuters coming into the city. thank you for your update their, joining us live from london. the markets are nervous with those weekend attacks.
8:10 pm
good morning to you. , we a look at the polls continue to see the tories and the conservatives that connect conservatives- and neck.t -- neck >> the message is somewhat not coming through on the nine at front of where the u.k. stands and how they need to unite to go forward so i think very believable at this point that the different senses only 1%. this recentink attack will impact the outcome of what happened? >> the unfortunate and fact is that ancillary events should not eat impacting the election as much as it is, but it is something we live with every day
8:11 pm
now, so when it is on the front of everybody's mind, yes, it is impactful and people tend to react to things that happen in the short time, so the campaign is something that is now secondary to the response and the fear. our markets prepared for this? it seems like after brexit underpricing the risk of polls being wrong, or even if we see a hung parliament, what could happen to the pound? u.k.,re is a divide, the then the eurozone. there is a lot of animosity from the euro side into the u.k. about the brexit issue, and there was some sort of idea that theresa may could rally the u.k. and be strong. theproblem now is that if eu senses any sort of weakness in the combination or the
8:12 pm
consolidation of power in the , i think those negotiations go against the u.k. and the leverage goes away, which will have a huge effect on the pound. see that affect on the pound over the weekend where we saw a drop significantly after these london attacks. i am curious what you think will be the impact of the markets if may loses. we have already lived through brexit, and we are still alive after brexit, so what happens if there is that chance that may loses this election? could it be less of an impact as we saw doing the brexit situation, or could it be more? it is probably more. i think may did have a strong hand in the negotiations. i think people were confident in her embodiment of the move forward and her ability to
8:13 pm
actually perform and execute on that. , someing in the new front lack of consolidation of power, and really a lack of understanding as to where the future actually lies with jeremy corbyn. the real issue comes down to the fact you have to reset again, and the reset is the thing that market doesn't like. uncertainty, and the market cannot interpret uncertainty. >> stay with this. you will be with those through out the half hour. don't miss a big interview coming up later on bloomberg. exclusively byed jamie dimon of jpmorgan at 12:00 p.m. in hong kong, a few hours away, 2:00 p.m. in sydney, and midnight if you are still watching from new york. this is bloomberg. ♪
8:16 pm
we had that disappointing jones-drew report fueling explosive u.s. treasury bond rally has a raised doubts about aggressively the fed can raise rates. water traders watching this week? -- what are traders watching this week? we know the headline number was a big mess. the headline number, the payrolls number fell short. the previous two months were revised lower as well. , jobs cameat #1977 in at a meager 138,000 in may. they were supposed to be closer to 180,000, a net loss of 66 house and over the two previous month. the three month moving averages losing momentum. jobs are growing, but the loss
8:17 pm
of momentum in the labor market is what you see there. unemployment hitting a 16 year low at 4.3%. taken as good news because the fed things that causes wages to rise. wages remain stagnant, the year over year did rise 2.6%, the monthly gain was 0.2%. that wage gain is not accelerating. softve had three months of inflation numbers, and the fed key inflation gauge, again, wages falling, wages not cooperating. the june hike is already seen as the run deal. deal.a done jump into the bloomberg could , upper left-hand corner june probability of a
8:18 pm
hike 90%. knows? 14, who what is in question is the september hike, odds around 27% right now. knows? we have a lot to numbers this summer between june and september, but if jobs continue to fall short of inflation, maybe that is when the fed has to shift gears. the president of the philadelphia fed says he still sees three hikes. on thethe onus will be numbers, but certainly not for the june hike. we should just get ready to sit back and relax and listen to what janet yellen has to say at her press conference. >> i want to bring in brett thisigal, you mentioned payroll data may not change june, but what about september? >> june is a good opportunity to
8:19 pm
take some of the chief money out of the system, but the data is not there to suggest any movement forward. the wage growth is what we are really after. this is unproductive growth, if you can call it that, because we are not seeing anything reinvested. we are not seeing wage growth put back into the economy. the fear is with a tight labor and youhat happens now can't get foreign employees and foreign people and high skilled labor is then at the moment, so you could be repricing the same jobs up higher just to scramble to grab people, and you have bad inflation coming in. >> what does it mean for the bond market. we were talking about this rally. it seems like a goldilocks scenario. we see that 10 year yield pretty
8:20 pm
much if operating, the gain since we saw from the election in november. are we heading below 2%? what is the next target to watch on the yield. >> i think the level proves to be the floor. 2.17 or something. late november, nobody forecast the tenure would be at this level, so it is a concern, how over there will be new stuff coming through the channels through the trump administration. read/write inthe the market, and then we can see some execution. if we see some execution on the trump the market for plots that are they have done it once. they are now taking a breather. we probably baseline here. >> i want to pull up a chart on the jobs market. #908 four, which shows you the ratio between underemployment
8:21 pm
and unemployment, and you can see that over the last several years since the crisis that that ratio had gone up and then accelerating, but in the last two years, it has gone nowhere. that is that conundrum, where is the wage growth. what is happening with labor participation. why are we not seeing more people into the labor market looking for work. on therethink is going exactly? what are your theories here? that labort thing is participation is going down. that is why we are seeing this conundrum with super low unemployment because of the -- participation rate. if you have low participation, the work force is not growing, and we are seeing pickup in certain parts. the issue is that take-up is
8:22 pm
below the level that impacts the market in a sense of reinvestment or retail participation from wage growth being put back into the economy, so i think the real issue comes laboro what does the force look like in the next six months to one year, and that unfortunately made be something that hinges on immigration, because the current skilled labor force in the u.s. is so out ahat if you predict year, you are at levels you have never seen a full employment if you continue that trend, but you haven't had anything substantial in a growth aspect and you are really behind the eight ball at that point. thet is hard to believe in immigration would make any difference from 6-12 months are rising, but the balance sheet, how you are factoring that into the mix because fed officials have been pretty clear that they are set to start this process of not reinvesting all the proceeds.
8:23 pm
we do see that $4.6 trillion balance sheet sometime in the second half of the year, surely next year, will that still happen? will that happen as much of the economy has not pick up and had effect of that into investment horizon? >> this is a political issue. does the fed start to normalize the balance sheet before 2018 when the trump regime comes in? i think there could be five spots available. proxiedthat they have this is that if they get halfway to the goal, so the cold is 40% and they get 1.5%, they will start to normalize. by the way things are looking, it does not look if they will do that before december although people say they could start doing it in september. i think if they start normalizing in september and that to taper if you will
8:24 pm
early, i think it is negative for the market and i think it since the market much lower. allow the newd to trump appointees to come into the board and then start to do it at that time. if you get rumblings around december, it is ok, but i think it largely is a 2018 event. anything substantial prior to that will have a negative impact on the market because then that is a political play. it is not necessarily an economic play. stay with us. we have lots more coming up, china in particular as well. bull when are a big it comes to chinese equities. this is bloomberg. ♪
8:26 pm
8:27 pm
analysis on china. i know you are bullish on china. we have had people who have said the day of reckoning is coming for china. reading thell be unwelcome rewards of all their fixed asset investments. what do you say to that? >> i clearly don't agree with that. that is the u.s. bear camp. i think we have had a substantial validation from the switch of old china economy to the new china economy. that. at drivers of the transition from an export economy to consumer-led economy and servicesbase through has been validated through the numbers, and i think we move a lot higher based on the world starting to grasp this is what is driving the pace of growth in china at this point. >> msci inclusion, will that
8:28 pm
8:29 pm
that's why at comcast, we're always working to make our services more reliable. with technology that can update itself. and advanced fiber network infrastructure. new, more reliable equipment for your home. and a new culture built around customer service. it all adds up to our most reliable network ever. one that keeps you connected to what matters most.
8:30 pm
>> 8:30 in singapore. half an hour away from the open of trading in the lion city. >> i am betty liu in new york. let's get to first word news now. u.k. prime minister theresa may will seek new powers if she wins this week's election. speaking after the attack in london, she said there has been too much tolerance of extremism in the u.k.. the attack left seven people dead, 12 people arrested. the election campaign has been
8:31 pm
suspended for a second time. it was also halted after the attack in manchester last month. defense officials calling for greater security cooperation to counter the growing threat of extremists linked to islamic state. the need to contain terrorist activity was high on the agenda at a three day summit in singapore. the meeting came with the philippines fighting militants and news of the terror attack in london. tradering commodities noble faces another tough day after its new york listed shares plunged almost 14% on friday. noble is trying to negotiate new covenants on its bank debt, allowing lenders to extend the key credit facility to the end of the year. noble's principal this thing is in singapore, where the shares are at lowest in 17 years. mandatory quotas for hiring and promoting women is something japan could consider.
8:32 pm
the organization's social policy chief gives shinzo abe credit for trying to raise the status of women in the workforce but says more needs to be done, especially in the private sector. japan's is his culture is traditionally male-dominated, but the labor shortage means it needs more workers. global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you. time to see how asian markets are shaping up. let's get the latest with sophie kamaruddin. sophie: there was a question whether the new k to 25 could power ahead given the performance to push it above 20,000 -- nikkei 225 could power ahead given the performance to 20,000.above to with the benchmark still above 20,000, japanese stocks still on a roll this year, but goldman sachs says it is getting harder
8:33 pm
for u.s. clients to get excited despite dollar returns outpacing what we see for u.s. stocks. investors remaining under way japan. with the labor squeeze ramping up, that could be seen as a megatrend for investments in the long run. taking a look at the kospi swinging between gains and losses after powering to a new high on friday. we do have health care and consumer discretionary stocks on the uptick. we did get south korea announcing additional fiscal stimulus measures with plans to add $10 billion to the budget to create 86,000 jobs. kospi and the won our an example of a double whammy trade, outperforming equities, outpacing the u.s., europe, and japan.
8:34 pm
stock that is capturing the story, samsung has outperformed apple despite the rough year it has had. shares of. -- shares are up as you can see from the white line here. we had the likes of rio tinto 4.5% givenmuch as that rise in may sales, of 8.8% for the month, and remix point jumping 12% on plans to distribute bitcoin to shareholders. thank you so much. sophie kamaruddin there as major markets are half an hour from getting underway. the shangri-la security conference of the weekend, defense officials urging cooperation to counter what they say is a growing threat to the region. i want to get to david tweed for more, quite a balance for many
8:35 pm
of the participants between looking for u.s. engagement and what u.s. policy is, and also wary of china taking too big of a role. of the key events was the tis,ess by secretary mat who tried to reassure the attendees that the united states intends to remain and gauge the --ion, but the thing is , butn engaged in asia donald trump is the president of the united states and people in asia are concerned about one donald trump believes, and does he believe in the rue-based order that so many people were talking about over the weekend. we have seen him withdrawing from the paris accord.
8:36 pm
we have seen him withdrawing from the big economic trade pact, the tpp, people constantly talking about that as evidence that they are uncertain about what donald trump is up to. just a week after he castigated his allies at nato. so a lot of people failed to be convinced by matters that the u.s. engagement is going to remain particularly when you look at what they're doing economically. and economics are important for security, the defense minister making the point that it is donald trump who pulled out of tpp, but china has the big economic initiative with its belt and road initiative, which he says washington backs because it could increase the trajectory of economic wrote in asia after these grand infrastructure projects are in place.
8:37 pm
asiaw does southeast intend to cope with this rising terrorism? so many events in london in the last 24 hours or so, but is there a role for china on the global stage? >> one of the things happening anthe moment is unprecedented cooperation between indonesia, malaysia, and the philippines to put together maritime patrols. area is being used as a core by terrorists returning from the middle east to gain access to the southern philippines, as we have seen with catastrophic results. the indonesian defense minister said he wanted to invite singapore, thailand, and other join, but when asked by a pla officer what role china could play, he was very standoffish and tried not to commit himself.
8:38 pm
there is quite a bit of suspicion about what china's intentions are when it wants to join the sorts of patrols, because they are worried there is a geopolitical motive. let's face it. has inhabited those islands and built structures on these reefs and used its own naval patrols to assert its sovereignty, so that is what they are suspicious about. they like china's economic efforts, but not so much the military. korea, it comes to north could that be the trigger on possibly u.s.-china relations erupting a bit here? i thought that was interesting the conference as well. >> there was someone who did say that if anyone out of central casting could lead to china and trap.s. into the so-called where you see a rising power confront an existing power that
8:39 pm
could potentially lead to war, then trump is the guy out of central casting to do that. there is concern that trump might do something reckless that could spark hostilities between aose countries, but for now lot of defense ministers say they do see in terms of running the military that there are grown-ups in the room and they are positive about the role the secretary james mattis can play. >> thank you. joining us live from singapore. the annual china summit today in beijing, jamie dimon addressing more than 2200 delegates on the outlook for the world's number two economy. j.p. morgan asian vice-chairman says it is entering a new era of global leadership. hand doesn the one have to protect its domestic interests, it's corporations. on the other hand, china also knows that it's companies need to go global, so china is so
8:40 pm
linked to the rest of the world these days, there is no way china can pull back from its long drive towards globalization. >> debt fueled growth is not an economic role model. that.all know the chinese economy has been charting a new course, but we have some concerns. china's debt to gdp is 280%. going forward, i would think at -- 19th party converse congress that the deleveraging process has to begin, especially among this state-owned enterprises. >> how about china opening up market access? they went to europe, li keqiang went to europe, but the europeans are wary of the chinese dumping into their market without reciprocal access back here. what kind of market access, and i know jp morgan wants better access on the securities front as you look for a new partner, what walls need to come down in
8:41 pm
china? industry isce front and center. the service industry of course includes financial services sector here it we would like china to open up banking, insurance and securities, also capital markets in general. >> are they going to do it? >> i think they are doing it one step at a time as everything in china is happening at a steady pace. nothing is going to happen overnight, but over the next 5-10 years, we believe chinese capital markets will be open to global institutions. is the pbocal sending when it adds what is reported to the counter cyclical factors into the daily fixing rate, which a lot of people say this is more control by authorities of the fluctuating yuan-dollar rate? how do you see it? >> the change in the daily fixing of the yuan is meant to
8:42 pm
refine the process of the daily fixing rate. >> refine and not add more control? not,ether it is control or i believe the leadership wants to weigh fluctuation. that was j.p. morgan speaking to stephen engle in beijing. the world bank forecasts a modest pickup in the global economy. the lead author joins us next with the reasons why. this is bloomberg. ♪
8:44 pm
8:45 pm
debt in china, that i am not of the few that you should just put the brakes on in a sudden way, because that will create more problems. china has to navigate a situation of growing out of its debt. i would anticipate you would see more rigorous controls following the 19th party congress. i would not want to underestimate these challenges. i am still positive about the economic prospects. >> what leads you to that confidence? >> i am spending a lot of time in the states at the moment, and you can hear some very negative opinions about china will blow up with some sort of debt bubble and banking crisis and so forth. i don't see that happening. it could happen, but it would require some policy mistakes that i don't think are going to happen. of course there will be bumps
8:46 pm
and issues, and there is the opportunity to get it badly wrong. i don't think chinese policymakers will. know theysee china, i are intervening in the currency markets, are they a manipulator? they have added this third factor, this countercyclical factor, in the daily fixing. this of economist saying is more control at a time when they are talking about liberalizing the exchange market. >> there is an element to which they are exerting a greater degree of control. i think the idea that you are either a manipulator or totally free foreign-exchange markets is a bit of an illusion. what china has done is strengthened its tools by which you can do that. i don't think it is manipulating the market. seehat opportunities do you with the belt and road, and how will it be paid for? >> the first question, i think
8:47 pm
one belt, one road is an interesting opportunity, particularly in a time when the u.s. appears to be stepping back from global leadership for china to exert its influence in a creative and different way. the question of how it all gets paid for is a very good question , because of course everybody else wants somebody else to pay for it. the reality is china is going to have to pay for a chunk of it because china is the initiator and single most powerful economic entity. >> again, stephen engle's withsive interview sands. to daybg subscribers go on their terminal.
8:48 pm
8:49 pm
8:50 pm
july, but the company confirmed the end of their collaboration for the time being. toyota bought a stake in 2010. amidelationship soured culture clashes and recalls. >> china investment corp. has agreed to five blackstone's european logistics is is for $13.8 billion in the region's biggest ever real estate deal. across europe,es france, germany, and the united kingdom. it already own 6.4% of lack stone having made an investment 2007-2008. warren buffett about to start his annual private lunch option for a homeless charity in san francisco. get your bids in. it runs through friday. almostar's winner paid $3.5 million, tying the record
8:51 pm
setback in 2012. raised $24ett has million for the foundation since 2000. >> wonder woman has delivered of those forewarning brothers -- for warner bros.. cost 149 million dollars come up it took in $100 million on its debut. captain underpants came in at second, grossing $23 million. warner bros. has been banking on wonder woman after two previous releases were panned by the critics. the world bank maintaining its outlook for the global economy, forecasting a modest pickup. that is despite uncertainty about monetary policy and protectionism. it sees expansion of 2.7% this inr, rising to 2.9% next january. i want to bring in that lead author of the report joining us
8:52 pm
on the phone. no change here. in the outlook for the world bank, it seems like growth is on track. , why is thaturious despite all the turmoil we have economy.he global we might be seeing some even as early as is weak in the u.k., so why maintain the forecast? >> we maintain the forecast because a pickup in manufacturing and global trade. high, confidence is quite commodity prices are stabilizing, and sometimes no change is good. start the year with that growth number, then reduce that growth number midyear. that is what happened during the past four years. this time i think growth is firming and no change in a sense is good news. >> it seems to be good news for
8:53 pm
the investor, but the second half of this year is going to be very different, don't you think? we are going to have the people's congress in china. will basically get some determination whether president is going to get tax reform through. we will get a sense of how many rate hikes we will get from the fed. a lot can change in the next six months. >> you are right. that is why we think this is a fragile recovery. risks are still on the downside. there are many risks confronting the recovery, but let's don't forget the big story here. ,hen we look around the world advanced economies, growth is picking up in the u.s.. we are expecting higher growth area. euro we increased our growth forecast in japan. we think growth will be much harder this year than last year, so all in on, the bigger story
8:54 pm
with respect to growth is a good story despite all the risks you just mentioned. >> the global economy as you mentioned has down on firmer footing but we have seen significant potential changes when it comes to the world order , not to mention the economy are facing rising rates, shrinking balance sheets. pimco called it driving without a spare tire in this environment right now. do you think there are economic consequences to the shift in world order, the u.s. retreating from the global stage? whenever there are major political changes, we will see some consequences down the road, but so far what ever the changes you are thinking of having affected our global projections in a material way.
8:55 pm
we look at emerging-market economies, think of the seven largest it's, as a group, they thangrow faster this year they did last year, and this is the first time after six years in a row that these economies are registering global growth that iser year, and very important for emerging markets and developing economies. those are the economies we are closely following. >> you mentioned emerging markets. your take on china, are you still concern or are there concerns about a potential hard landing in china now that we do see this tightening going on in the markets? could it have a material impact on growth? >> so let me first say our growth projection for china has not changed. it is still 6.5% this year, next year it will slow to 6.3%.
8:56 pm
with respect to hard landing, i don't think we are worried about hard landing over the next 2-3 years. is that thek authorities are undertaking a wide range of measures, looking at the risks with respect to financial stability. has importantly, china fiscal and policy space to sopond if risks materialize, in a sense, china will continue its gradual slowdown. you're confident about that. >> great to get your perspective there. author of thead world bank economic prospects report joining us from washington, d.c. that is all for us here on "daybreak asia" and now i look at what's coming up on "bloomberg markets: asia." rishaad: standard chartered, looking into sterling, and the
8:57 pm
general election on thursday as well. >> do you think what has happened in the last 24 hours will impact the town? rishaad: we will seek your the pound has been beholden to where the conservative party's fortunes are. , robertat content simons will be a long. we won't have him interviewed by stephen engle's in beijing. irrepressible andy harris will be of the wrong -- will be a long. fed allall things things hong kong economy as well. >> thank you so much. that is it for "daybreak asia." this is bloomberg. ♪
9:00 pm
haidi: i am haidi lun in sydney. rishaad: i am rishaad salamat in hong kong. ♪ haidi: market are subdued at the beginning of the trading week, down because of u.s. job numbers in the terror attack in london. theresa may will seek new powers if she wins the election. she says extremism has been tolerated for too long. haidi:
61 Views
IN COLLECTIONS
Bloomberg TV Television Archive Television Archive News Search ServiceUploaded by TV Archive on