Well, Inflation Numbers out of china and a half hour good theyre looking at factory gain numbers good numbers. They were negative for so long until september, when they turned positive. Looking at 5. 6 growth when it comes to prices from leaving the factory gate. Consumer prices. 7721, it is the China National bureau of statistics, updated with the latest read at consumer inflation. We are looking at what is happening with that. We have 1. 5 increase expected on the cpi, that is the consensus. What were witnessing is negativity when it comes to food. Were notesenting just by the National Bureau of statistics, thats the turquoise line, but the food tracker on the white line. 1. 5 level of deflation when it comes to food prices. Have a higher click. Clip, nearly 3 plus inflation. Getting taiwan, malaysia and nepal not singapore, they have a national holiday. As take a look at what is going on. Investors in singapore probably happy it is a holiday because when you take a look at the Asset Classes and the pain coming through from wall street. Japanese stocks leading the drop down overthe 1. 375 . This as a mckay brexit vote 110 level. The nikkei breaks the 110 level. Impervious here is set to fall for a second straight day. Down. San is bond deals are climbing, volatility has jumped. Stocks are bucking the trend, and getting about 4 10 of a percent. Let higher by property and national stocks, but the aussie dollar is falling to a threeweek low. Stocks are trading at 7868 u. S. Are waiting on the fix for from the pbs seat when it comes to the auction rate. There is market chatter about whether china will widen the yu ans trading. We have the inflation data that was spoken of at the bottom of the hour out of china. Higher Commodity Prices are expected to push up Producer Prices for the first time in five months. You have seen the rally in aluminum, copper, iron ore must deal, gold. Im getting about a third of a percent to date. Check out the gauge of metals, you have seen them rise over the course of the year. Julyrally over 4 in alone, clocking a second monthly gain. Gauge of materials is highest since may, 2015. Aluminum is leading the rally. That 2000rough metric ton level for the First Time Since 2014. It looks like the rally in metal is helping aussie stocks, for example. Rishaad they give a much. Lets turn to first word headlines. There are political problems the say the least. Trouble and strife in pretoria. President fricas survived in motion of noconfidence and iran weakened by 1. 5 . Critics say he missed a chance to take a stand against corruption. More than two dozen lawmakers voted against the president but he survived, 198177. He has been rife with scandals and policy missteps and the economy has been in recession. The new controversial Constitutional Assembly and venezuela seems to be taken the flames of the opposition. They held an initial meeting inside the legislative building to stop the job of rewriting the constitution. 17 latin american countries that they will refuse to recognize any position taken by the new body, saying it is a defeat for democracy. Malaysia has launched an inquiry into billions of dollars into Foreign Exchange losses in its central bank that dates back to the 1990s, but critics say it is just a political ploy to discredit someone to they set up a new discredit someone. A report from 13 federal u. S. Agencies to record contradicts President Trumps dismissal of climate change. It says the country is already feeling the negative effects with the stock increase in heat wave, torrential storms and other extreme weather good weather. The resident has publicly expressed doubts that local warming is manmade and will have negative consequences. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Trump hasresident adopted the linguistic style of north korea, saying that they will face fire and fury like the world has never seen if they continue to threaten the United States. This is after the Washington Post said pyongyang has made Nuclear Weapons small enough to fit onto icbms. They are considering an attack on the u. S. Military base in long guam. North korea better not make any more threats against the United States. They will be met with fire and fury like the world has never seen. Threatening,ery beyond a normal state. Rishaad here was more is our editor. Dramatic efforts involving so at theuntries and moment not working quite as they ought to. It is hard to know what to make of this should this. As john mccain said, it is classic trump. He is using overstated rhetoric to describe the threat. Meeting overstated rhetoric was overstated rhetoric, in other words. Daniel exactly. It is really hard to say at this point. We just finished up a Regional Security meeting in manila where the chinese bear, the russians were there, they signed on to the latest yuan sanctions. There is a lot of diplomacy going on behind the scenes to get north korea back to the table. Rishaad china and russia involved with that. What about politics and how that plays out in the u. S. And capitol hill . Any action apart from john mccain . Bipartisan reaction saying this kind of rhetoric if it is not backed up, it appears that commanderinchief is not willing to go in there right away, it weakens the u. S. In the longterm. That is mainly than the reaction from lawmakers in the u. S. , from former defense officials. The question is, how much closer are we to war . Is not really any signs of the ground and military buildup is occurring or an attack is imminent. This kind of rhetoric is just that for the moment. Rhetoric. Rishaad at the moment. The secretary of state in asia is saying that north korea wants to feel secure and more prosperous. China agrees. Past practice has been for them to up the ante and perhaps the rewarded with something be rewarded with something. Are there carrots to come . Was thei think that case. When obama came in, he wanted to stop the cycle and adopt a policy of strategic patience. We are not going to get north korea those carrots. Over time, he has developed her Nuclear Capabilities to the extent where he is almost assuredly able to hit the United States with a nuclear tipped icbm in the near future. That is a must a given right now. The question is, how do you move forward without . With that . He made clear he is not give up his Nuclear Weapons in the Washington Post came out with a report saying the u. S. Is saying he can now put the Nuclear Bombs on those missiles. The program is much more advanced. Rishaad you can put them on, but do they survive reentry . There are hurdles across. Daniel yes, but all the indications are is going to persist with this program that he feels like, i need these weapons to deter u. S. Invasion. Rishaad it is his chief bargaining chip. What is this leave the denizens of south korea . What do they do in terms of technical self . Detecting themselves . The threaded the you threat against the u. S. And its allies versus against south korea and tokyo. There been this trimming comments from the u. S. That they are willing to sacrifice tokyo and south korea as well as members not hit as long as denver is not hit. Japane more calls within and south korea, that we need to take more responsibility for our own defense. Theres a bit of nervousness based on the rhetoric. And been facing the threat for years. Ive always been in range. Rishaad thank you so much for that. Still ahead, no happily ever netflix, disney and why their relationship is coming to an end. Showingg reports are rising profits. We speak about exposure to the moneylaundering scandal. This is bloomberg. Rishaad you are back with bloomberg markets, we are checking in with the latest headlines. R is trying to unload its car leasing program. They think it is unsustainable and should be moved to a smaller unit in the company. It provides cheaper cost to drivers and had losses of about 500 per vehicle. Confirmed, but it is reported is closer to 900 per car. Of china, ae might company is looking at expanding. They say they are opportunities elsewhere. Said to have sufficient funds and are not looking to raise any more money. Legal experts say an engineer fired by google for criticizing his diverse the policy will struggle to make a case for unfair dismissal. He is saying he is exploring all legal remedies after he was fired over a 3000 word memo that suggested women may be less suited to tech jobs. Bank of australia reporting and it Consecutive Year of profit, it is then overshadowed by a modern Money Laundering scandal. It may be a scandal too far. We are joined by tribeca. Nvestment partners what do you make of this . The numbers are robust to say the least. Very much in line with market , Net Interest Margin pretty solid, a little bit of revenue growth, cost and line. You could say the impact of higher capital charges, so increasing risk assets to regulatory changes has put down pressure, and there is more that the come. They introduced the discount, which will elect will let but raise more capital, overall more solid resort resulted. It looks pretty solid. On. Ing to argue the numbers are up there. Rishaad how does it compare with the other banks . Sean it has always been a little more expensive. It has a higher rate of shareholding in its history and trades at a premium. It had a stronger growth track record to time, it has happily been a bit better at arbitrage and capital. Frankly, with this latest scandal on the back of common short and others in history, you still have a reasonably uncertain and unquantifiable weve not seen how that will lay out. Dent will be big enough to their financial stability. Dont take with the bank that is more expensive. At the end of the day, they do the same thing. More ise a little bit this exposure, which is not getting the same sort of asulatory scrutiny Residential Mortgages are. Theyre tilting the portfolio towards those. Rishaad what about allegations of financial crimes that the lender breached moneylaundering in terrorist financing laws, more than 50,000 times . That is surely playing out badly at the moment. We have seen executives stripped of their bonuses. How does this actually play in australia . Sean it certainly doesnt look good. Clearly nothing deliberate there, 50,000 is a lot of transactions, but huge number of transactions occur. I think what really goes to is the culture at cba, where it has had scandals now. I dont think anybody would say they are not doing a good job with the profit line, that the Senior Management probably need to look at themselves in terms of the coulter in the organization because her the culture in the organization. There a lot of questions around executive administration that is unclear. It really depends on how it plays out. Rishaad lets get to the strategy at the moment. Where are you without . Fantastic run up for stocks in this part of the world, decadelong highs. Is it sustainable . Sean the sustainable as long as banks are prepared to prayer to pump money into it. That depends on the economic conditions, its hard to go bankrupt when money is free. Will support earnings. That valuation support from liquidity flows and low Interest Rates is a bit of a goldilocks area for the markets. We continue to see markets grind higher. Rishaad or is it a goldilocks scenario, is what it was trying to get out . As long as they do this, there is a body of thought out there that this will create further financial imbalances and they could lead to more trouble. Sean definitely they are falling into that camp, as well. Hard to identify them because when things are going well, money is flowing, it all looks like it is under control. You can be certain that 10 years into an economic expansion with record low Interest Rates and free money, there are distortions setting up an asset prices, you can see that across some of the extremes of the equity markets, bond market, credit markets, Property Markets around the world. This makes markets and economies vulnerable to normalization. Any shift higher in inflation, the Central Banks have started to normalize policy, and the longer they take to do this, the further we risk of setting up the next financial crisis. , ithe current pace i think is probably years before we get back to normal policy and whether further imbalances are set up. Rishaad great talking to you. Up, the obscure chinese stock that has been out trading jpmorgan. We will have more and our freemarket check, on the way. This is bloomberg. Rishaad you are back with bloomberg markets. Hong kong jumping by more than 9 last week. It is enjoying is that off. We have the earnings coming out today. What will investors specifically be looking for . Where having wharf earnings today after market close. The core business, the Property Development is this, investors will be looking at whether the company will have any update on review. On its review. In march, management said they were exploring a separate listing for some of its investment properties. But it has been six months right now and we still dont have much information on that. We dont know what kind of plan or the timetable. Rishaad what do we actually know . Moxy we know they are exploring various options and among those ions, one possible way is in hong kong. Inther city and times square another. They will set up these shopping malls. Another company pays the dividends. That is one possibility. 30 is a places at the end of the day. Thanks. Getting to the start of the trading day in hong kong. Minutes away. This is what the free market looks like, seeing the hang seng 34, 95 to points in the free market. This stock is probably a name that doesnt jump to mind if youre trying to find out which is the most traded stock in the world. Iss is it, and the reason it unknown at the moment is because shares of this relatively obscure maker of graphite is trading with the big boys, as a war. It was the 11th most traded common stock in the world. It has a market cap of eight have billion. Eight and a half billion. In exceeded jpmorgan chase. They came within striking distance of the number of chief shares traded and microsoft. Ngdae you have it, fa carbon. Coming up, will inflation drive we will look at prices in china, next. Looking across a fairly damp Cheung Kong Hong kong. 9 29 a. M. As the countdown to the start of the session. From bloombergs asia headquarters. Were looking at political tensions that sent volatility up sharply from new york to tokyo after President Trump said that any further threats coming from pyongyang would be met with fire and fury. And then of course, there are claims that the north has managed to miniaturize a nuclear device. Within sightes are of alltime highs, we have asian equities traded at level that have not been seen in 10 years. Were looking at fridays inflation rate at of the United States, which and give an idea of what is going on in the path for normalization of monetary policy. Inflation, itrice should be about to come out of china. Looking at ppi, 5. 6 , also looking at Consumer Price index, looking at numbers there, 1. 5 or thereabouts. Do we have that yet . No. But we have australias homelands coming out youd out. Own valuesng home rose monthtomonth. Investors rose 1. 6 in june. June homeowner approvals rising. Thats more than anticipated by the economists, who were looking at 1. 5 . On the lookout for the cpi numbers. Net ve we dont have a have them yet. Playing the waiting game on those Inflation Numbers. You pointed out we saw a lower number will resolve the australian june home owners data. It was rising along with financials, which is keeping the ap x 200 up half a percent. But the rest of equity benchmarks in asia on the board here, making the drop over 1. 2 . We do have hong kong joining the downtrend. Falling about 4 10 of a percent. Shares in china, csi 300 falling one third of a percent as they hold a twoday advance. Without the strongest from the pboc when it comes to the yuan, the most in week. We have seen the offshore yuan trading around 670. It broke the level on tuesday for the First Time Since october. Now it is just little change following the stronger pitch from the pboc. I want to show you what is moving on the hang seng appeared we have hang seng. Most sectors are in the red. Gauges at have a percent. We are seeing the drop all square, theyre all sitting gains when it comes to that segment. Heads up, want hotel shares are hotelded from wanda shares are suspended from trading. In hongwharf holdings kong exchange. Shares are falling ahead of the numbers. The stock was upgraded to hold, but a chipmaker is following after estimates. And in staples up defensive mode today. Lets get to the first word news headlines. That,ere not going to do because we have breaking news coming out of china concerning inflation. Can you what looking at what were going to do. Line, 545 year on year. Gauge prices, 5 percent. Tom is in beijing. No big surprises as you mentioned. The cpi number coming in at 1. 4 . Pretty much in line with the june number of 1. 5. These are your on your numbers. Ppi is most interesting to many economists. And inming up at 5. 5 london with the june number. No big surprises are concerns. Inflation, gate people have been looking at that. Indicators suggest that they would be relative there would be relative strength in the prices, because we have seen things like oil and metal presses picking up and seen relatively Strong Demand the massively and externally. Weve seen the continue got to cut back on excess capacity. This number is a positive for particular the corporate syrian interns corporate in terms of their balance sheets. With what thee estimates had expected youd the pboc for 2017 is targeting 3 for core consumer inflation, thats a future about food and fuel. We are fairly shy of that. Bloomberg intelligence, our analysts are forecasting 120 by the end of the year. 1. 8 by the and of the year. These numbers are unlikely to change the stance of the pboc, which is focused on the Deleveraging Campaign that has , push thet few months money market rates. It seems there is a bit of a cap on those as we head toward this big political event, the Party Congress, economic stability is key. Its unlikely these Inflation Numbers, where the prices will push the pboc off its course or lead to major changes. We saw yesterday some poor prices port prices. The july number, there have been expectations good prices would be slightly week. Well have to dig into that. Im looking at food inflation, month on month, down 0. 1 in july. Over the years, food inflation was down 1. 1 year on year. Best coming from a relatively high base last year. Theand the food numbers, food prices relatively high in 2016. Its coming up high base. We cap in Producer Prices, 5 , premuch and line the estimate, and the cpi at 1. 4 , also pretty much in line the estimates. Just a smidgen below what we saw in june, unlikely to cause major concern or change of policy here in china. Were going to drill down into that and see what the impact is, the food inflation or disinflation as a were it work. Also the government trying to get rid of excess capacity and how is playing out. Lets look at the first word news headlines. Softbank is nearing a billiondollar investment in an online retailer of sports apparel. In suggest they are looking to take on adidas, nike and under armour. Was work with may still baseball and other sports. The deal would reserve value to about 4. 5 billion. Opec says three leading members are now committed to producing limits after talks in abu dhabi, rush and quite say that iraq and has extent have earlier this year. They have come on board. Declined have oil prices have declined more than 10 this year. That kind drain the global glut. U. S. , tied tohe the airbags. They will speed up the replacement of the devices and reimburse drivers for outofpocket cost. Was 5. 3 million. Fullas the diligently airbags are linked to at the 17 deaths around the world. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Rishaad thanks. Disney apparently switching office deal with netflix so it can stream its own entertainment and sport content direct consumers. The chief executive says the service will begin in 2019 and calls it an incredible opportunity. Reveals is just is distributors will look at this as more of a threat than anything else but it is not intended to do that. Are reacting to marketplace conditions and are taking advantage of the quality of our brand, the passion of the product we create and the technology that enables us to reach consumers directly. Rishaad lets go to tokyo and join our media editor. Netflix shares falling on this news. What has investors worried . Disney has been darling of investors for decades. Bob iger has done a fantastic job ringing up profits bringing up profits. If you are a bloomberg, take a look at their annual earnings and you will see it has marched up consistently. Is because they have built a winning formula of the parks and hit movies. They have hollywood numbers, they know how to make those and crank them out year after year, hit movies. In theiranother gem collection that was consistently turning a profit. Then along comes rivals like netflix and people started cutting the cord on cable providers and that upset the apple cart. Disney is responding to that change. It is an aggressive move by them, and as you just heard bob iger say, it is a threat to its rivals and distributors it at the same time, it changes the whole industry, that whole profitable mix they had before. This is a threat, if you look at consistency, as we have been pulling operating margins and high 20 , now is looking like the low 20 because theyre going to have to pay more with the content they need. In particular, the sports. Espn is competing with people like amazon. Lions to get that content onto the network did there distributing it devoutly because they have to. The secret formula for profit was not a secret, but the formula had been so consistent and is now having to change because the industry is changing. Rishaad indeed it is changing. It is an industry constantly in flux. Are there any broad impacts for it . Dave there are. As you can see, netflix shares fell. , if knew this was coming not necessarily with disney, then all of the providers are potentially capable of doing this, pulling out. Thats why netflix hasnt spent so much money on developing its own content. Netflix knows that is for the future is. Its profit model where it provides content from other creators, that has a limited shelf life so they have to be shifting. The other networks are having to compete, as well, for cable wars fornd bidding sports rights, because thats where the real money is in this game. Rishaad absolutely. This is an upcoming industry shakeup. Who is the winner amongst all this, is there anybody that comes to mind . Once,for a while for the winner is the sports fans. All of this competition, it is basically going to make sports cheaper to watch. If you are a sports fan in particular that likes one sport, say you just have to see the premier league, that is public in a cost you a little bit less to watch that because of the competition, because so Many Networks are trying to establish themselves and these over the top players are trained to establish themselves and competing for the content and those individual viewers that might have in the past had to pay for an entire cable package just to see the one sport they like. That will be the winner in the first round. I think longerterm, disney is very well managed and wellrun, they have a content creation machine as well as distribution machine. I think this will work out for them longerterm, but they will take a hit on operating margin, at least that is how investors look at it for now. Rishaad thanks. Coming up, we will be discussing the economic data, those Inflation Numbers out of china with julia wang. Rishaad your back with bloomberg markets, and were breaking down the Inflation Numbers out of china. Julie wayne is in the studio with me. Just a tad low come a but really in line. What is your first takeaway . Julia exactly as you said, i it is not some thing should be too worried about because from food price inflation, we know that earlier this year we had a dramatic fall in vegetable prices. Two months ago, we had pork prices falling again. That could be a drag on cpi inflation for the rest of the year. Be veryoing to comfortably around 2 . People should be happy with this. Julia it is a sweet spot. The thing to focus on his what is on is what is going from the pbi, month on month, seen the contraction two months ago. After the restocking cycles, it is not really slowing so much as people had been theorizing. It is maybe stabilizing. Rishaad want to pick up this chart. 3415. What it is is showing ppi. We have ppi here, it has come in here today, 5. 5 , same as last month. And brent crude, you can see they act in tandem. We talked about excess capacity being cut, inventory, but it is more reactive to what is going on with those prices than anything else. You see lift up in terms of the price of oil and iron ore, you see lift up in the pbi. Julia yes. Theyre always so intertwined. But i think this month, that is exactly the reason why think month over month, pboc ppi would have been stabilizing, or looking at iron ore, oil, they would been stabilizing if not rising of it in jim. On the still side, i think we have bigger capacity costs this year. They promised to cut 15 Million Metric Tons this year. They are ahead of schedule. Governor we had a saying theyre going to limit the capacity during winter months, and also the regulatory side from environmental point of view. That capacity cut story will filter through to the pbi later this year. Rishaad tommy something else. Tell me something else. With regard to the whole idea of what is going on with trade, we have trade numbers yesterday, weaker on exports and imports. The import number was quite a big miss. Export wise was also a mess, but tell us what is going on domestically. Julia if you think about the economy in terms of momentum, the second half momentum will be softer. You can see that in the pmi as well. For us, the main point is whether the positive structural changes happening over the past six months, for example, more machinery and electronic export, moving away from laborintensive goods, benefiting from the cap thats cycle. Whether the element the development can continue. I think yesterdays data, you can see the trend continuing. I think a positive trend is still there. Maybe a bit slower in terms of momentum, but that is my primary takeaway. Rishaad julia, the chinese economy you say it has momentum and that is continuing. Arthur clouds on the horizon . Are there called the horizon . We do have a president that seems to be allpowerful. Julia there are quite a lot of signals, even in the summer months, quite a lot of signals even now to give assistance of what to expect. After the Party Congress into next year. These things are, we have seen on the Property Market side, the newer policies on rental markets coming up, we have seen debt leveraging. I think that is going to be the main focus for the government. Rishaad how real is the debt leveraging in your view . How much of it as being generally brought down and how much is shifted onto other measures . Julia two points. Firstly, the focus has narrowed quite a bit this time around. Were not talking about fake vague, we are talking about specific debt leveraging. You know the government has been expanding on how to restructure the debt on the bank side, experimenting with all of the things that will play a role next year. From an economic perspective, the cost benefits calculations , the statistic is doable. The other point is, i think we should take hence on what theyre doing with the capacity cuts in the steel and coal sector. And limitation is toughening up, is not just language appeared capacities being cut. Surprising on the upside. Beingillingness is maybe underestimated at this point. I think it is a watch point for next year. Thatad one of the reasons inflation is at 5. 5 perhaps. Thank you. Coming up, is china the perfect host for marriott . We will hear from the hotel giants asiapacific president. Also, the tie up with alibaba. Rishaad you are back with bloomberg markets. Marriott international begin the Biggest Hotel group in the world thanks to merging with starwood. The ambitions dont into there. Partnering with alibaba. Craig smith says the focus will be on digital payments. It is the marriage of offline to online. That is the new acronym today. We take to companies and put them together, we have the best and brightest. We have 500 Million People on alibaba and we are marrying them with marriott loyalty customers. We have 125 million trips last year by chinese travelers. The largest percentage of those were to asia. This isest benefit to for asia, but it will benefit the company around the world. Much as been made about chinese travelers. These chinese tourists. They could be business travelers, as well. How are they different than other travelers and how are you changing perhaps you are giving them services to attract them to your hotel . We always sick of travelers looking today for what they can get it home. There looking for comfort food, looking for tv shows in their language. The most important thing i think today that is different is digital wallets. They want to pay in their way. Imagine an american going to china and trying to pay when they check out with American Express and they say we dont take it. Chinese travelers are paying lipay. Ll he pay a the United States, we had 112 billion transactions on the digital wallet. China last year had 5. 5 trillion. That is 50 times. Imagine chinese travelers traveling overseas and we want to make sure we are ready for them and we have everything set so they can pay the way they want to, they can eat what they want to eat and travel the way they want to. This tie up, is it an exclusive deal, and how do you expect it will translate to earnings . The neat part about it is it is not really about the profitability, it is about facilitating travel and filling of hotels. The great thing is it is set up as a jv, we want to make sure we bring together the best and rightist minds of alibaba and the hospitality industry. What it means Going Forward is we are focusing the teams on innovative experiences. Seven years ago, we never thought that chinese travelers would be paying with the digital wallet. We never saw them traveling to resort destinations like they are today. The number one source market for is chinese travelers. Its about anticipating their needs and making sure it is seamless. Marriotts asiapacific president speaking to us. , getting a look at the inflation data out of china, the much in line with expectations. Consumer prices up 1. 4 . We have a strategist joining us to discuss, also the Investment Opportunities but it comes to chinese markets. Announcer from our studios in new york city, this is charlie rose. Charlie Kurt Andersen is here. His new article how america lost its mind is the cover issue of the atlantic. His new article traces the history of todays assault on truth and fact, looking to the 1960s. He writes that the election of donald trump revealed a Critical Mass of americans have become untethered from reality. Here is how that happened. His article was adapted from the upcoming book, fantasyland how american went haywire. That will be published later this month