Transcripts For BLOOMBERG Bloomberg Daybreak Asia 20170808

Entertainment. This is daybreak asia i am in new york where it is just after 7 00. It was an extraordinary jolt for u. S. Markets. 10 days of record gains when it comes to the dow. S p also seeing record high. It shouldnt have taken very much for that jump to happen for volatility to jump. Withrprising it came strong rhetoric from President Trump. It is hard to discern what that rhetoric means. Does fire and fury from President Trump, what does it translate into in washington . It jolted the markets and caused us to fall to session lows. But we seem to have come back a bit, closing lower still. It was the initial fall that rattled the markets. Going to be focused on china Inflation Numbers here. Haidi thats right. Not to much overreaction when it comes to the aussie dollar. Look how it is setting up given a fairly volatile session. Lower sessions today. The kiwi dollar for a second day was the worst performer of the g10 currencies. No expectations of a rate change but certainly some weakness on the inflation outlook. Up just about four points. Earnings beating expectations. Headlines over Money Laundering and terrorist financing. The allegations are overshadowing that. This is how we are looking at of the tokyo open. The bestperforming g10 overnight. That is looking to more on the get first word news. Raimi Australias Commonwealth Bank reported an eighth Straight Record fullyear cash profit. Of 36llion on revenue billion with a Net Interest Margin of 2. 11 . Is not only earnings that will be on investors minds today. The bank is facing allegations breaching Money Laundering and terrorist financing laws more than 50,000 times. Disney is dumping its deal with netflix to begin streaming its own entertainment and espn sports concent directed consumers. Shares tumbled after hours following a rare drop in revenue and profit. Estimate analysts. Ceo bob iger said disneys Online Service will begin in 2019, calling it an incredible opportunity. My guess is they will look at this more as a threat than anything else. It is not intended to be that. We are reacting to marketplace conditions and we are taking advantage of the quality of our brand, the passion for the product we create, antitechnology that enables us to reach consumers directly. Imi jacob zuma survived a motion of noconfidence with critics saying they missed a chance to stake a stand on corruption. Lawmakers voted against him but he won comfortably, 198177. His time in office has seen scandals that have weighed on Investor Confidence in said the economy into recession. Opec says three leading members are now committed to production limits after talks in abu dhabi. Russia and kuwait say iraq coming uae come and kazakhstan after failing to comply with a deal earlier have now come on board. Malaysia it was also at the meeting and maybe same pledge. Oil prices have declined more than 10 this year on concerns curves will fail to drain the global glut. A new reports is Chinese Companies will spend at least 1. 5 trillion overseas in the next decade, a rise of 70 over 10 years. And it says official policies are encouraging firms to take a stake in advance tech. National concert he global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Betty lets get more on the s p. Stocks dropping the most in a month after President Trump threatened fire and theory against north korea on reports that kim jonguns regime now has the technology to deliver Nuclear Warheads. We have more details on the markets that were rattled by these comments. We should point out the market was on a path to yet another record high. You see there was a lot of red. It doesnt take much when the volume is this low going into the summer doldrums to move the market. We talked so much about how s moved the market. This jolted the market but i think the market assed it as rhetoric. Up 21 and change. They push back on the discounters which investors have been waiting to hear. They have been undercut by heavy discounts. Ralph lauren a perfect example. You will another see another ralph lauren in the months discount in the months to come. Hurts also reversing his trend. But it was down ahead of its earnings as was avis because the rentacar industry is under some much pressure for a number of Different Reasons and you see that reflected in the trade. Lets go quickly to the bloomberg. We talk about volatility we had an intraday spike on trump comments but we also have a trend. Topline is longterm vix index trend from 1990 to 2016. A lot of the big moves were on the righthand side. If you look below, the vix or 2017 is just starting to come off a low. If there is more rhetoric you will see that come off in a good way. This morning, the response from the north korean media. Lets get back to earnings. This is the Online Travel service priceline, and disney extended trading for Different Reasons. Where you seeing with disney . Su we heard the crux of what disney is saying. They disappointed in revenue for the first time and made major changes. You can see the stock is down after hours. Really interesting to see how this plays out wednesday because it is a mix of news. They are clearly revamping in terms of ending the pact with netflix and creating their own rival service where they will now have movie streaming and espn streaming on their own service. That will start in about 2018. They did have a decline in cable and come. Espn was a big come cable income. Espn was a big contributor. Also netflix has been down as much as 2. 5 in extended trading in reaction to the news. Priceline also a disappointment terms of outlook numbers. Back to you. Haidi as we have been reporting , we saw that spike in volatility overnight. That was likely due to comments from President Trump who is adopted some of the linguistic style of north korea saying the country will face fire and fury the world has never seen. These comments coming after japan and the Washington Post said pyongyang had made Nuclear Weapons small enough to fit on an icbm. Imateofficials est north korea has 60 viable nukes. North korea best not make any more threats to the u. S. They will we met with fire and fury like the world has never seen. Threateningvery beyond a normal statement. Betty pretty dramatic and forceful comments. For more on north korea and the response, rob levin steam is joining us. Joining us from washington. What you think the president meant by fire and fury against north korea . Rob that sort of the Million Dollar question. Conventionala military attack or to see me a Nuclear Attack . Was he saying just if he threatens he will do something, or if they actually do something . I think we have seen a lot from President Trump, a statement that is not quite clear. It is very emotional and not clear exactly what he did mean. Betty it is very unclear. Does it box the u. S. Into a optionshere diplomatic are not on the table or minimized in favor of military action . Rob i think there is a real danger of that. That is why president s engaging in this kind of rhetoric is pretty rare. You president obama got a lot of trouble with the socalled red line on syria the net boxed in and what he didnt do it he was criticized. If you do this, im going to do this. If you do not do it you you wrote the credibility of the president. Erode theroad credibility of the president. China has done this in the past to get what it wants. Does actually have leverage it can use in what more can do . Rob it does have some leverage economically. Thats the real pressure point. I have to say, i was in the Intelligence Community for a long time in one thing we said we never understood without north korea makes decisions. How they are receiving information and out decisions are being made decisions at the top. Is not clear how much leverage the chinese actually have. Whether or not the north korean regime will respond to pressure they are prepared to starve and murder its own people doubt thinking twice. Im not sure how much leverage that gives china. Haidi we were talking earlier about the latest rhetoric from north korea this morning talking about a preemptive attack, saying this will end miserably. Does this take us one step closer to a military option . To say thatuctant because everyone in the u. S. And all the senior generals around President Trump know what the consequences of a military option could be. We could get fullscale war on the korean peninsula. No matter what happens that would be so devastating to south korea. I think they will look for off ramps and ways to get beyond this but it certainly does increase the tension. We dont really understand how the North Koreans will react to this. Haidi thats right. Its that uncertainty that really creates a difficult situation when it comes to what we are watching with the story. Thank you so much for that. We will continue to bring you more on this story no doubt. We have plenty ahead on bloomberg. Alibaba looking at looking to tap into the tourism boom in china. Chris smith will be joining us. Later u. S. What is going on at disney at the todays earnings report. A Media Consultant will be joining us and about half an hour. This is bloomberg. Haidi this is daybreak asia. 87 of companies in the s p have reported but we are not done yet. Has been onis week media and retail as we saw with cbs and disney. Fox leads 20th century tomorrow followed by macy and kohls and jcpenney. Before we get to the specific sector, talk about north korea. Tanked onis market the news but it wasnt like a was a 300 point drop. What did you make of this spike in the vix . Has beenst, the market setting up for something of a nearterm correction for a while. We had been accumulating this body of evidence suggesting we are running on fumes. Things like not confirming the rise and large caps. Dow doing better than the s p. Lookingrunning on fumes for an excuse to correct and this seems to have provided us with a good excuse. The question is how long does it indoor. The market does it endure. The market has been conditioned to take a shortterm gut check than thein a negative next day come in and basically perceive it is all past. Confounded at the markets drop on north korea but they do not really drop on the failure of health care reform. Why . What are they picking and choosing . Gina there is so much uncertainty with respect to north korea. Is a shock because it is unexpected and we dont know how to price it. With health care that has been so much backandforth and frankly, whether or not we repeal health care, consumers will still demand healthcare services. Its a matter of whether or not they will demand it through medicare and medicaid into the ultimate payer is. When you have this big geopolitical conflict potential, its much more difficult to price. Haidi it is fascinating because looking into the domestic policy agenda all the uncertainties related to that from outside from asia, i think that looks a lot more uncertain. You see more lurkers it is interesting the perception. We have been talking a lot about how a lot of the vix rally being pushed higher by a robust earnings season. But you pointed out they had been beaten, but only on the back of low expectations. Gina that is with respect to mediate and retail specifically. When you look at this week, this is the weakest part of earnings season. Immediate and Retail Company expectations has an lowered over the last several months that they are now beating those expectations. When you look at the entire s p 500 the story is actually analysts held expectations and companies beadles expectations. When you look at beat those expectations. Its been a very good earnings season and it will continue to be. But this week specifically, retail and media are weak spots and you have to take the shortterm with a grain of salt. Haidi staying with that, what did you make of disney . This latest shakeup. Gina frankly, this is a consequence of what is happening throughout the entire can we near what is happening with retail and the competition with retailers, media and tech providers, what is happening with advertisers as they look for sources of revenue growth. Will be traditional tv consumer or is it going to be the internet . I think there is this very big shakeup across Consumer Discretionary whether it is goods or Service Companies and competition with Technology Providers who are nibbling at the consumer space at a faster pace than i think most people had expected. Haidi thank you so much. Were not done yet with earnings season, so perhaps some surprises around the corner again. Next, speaking of possible surprises, widely expected to show stability but the trade numbers yesterday, we were expecting them to come through a lot more positive than they did. We be speaking to the chief asian economist to see if anything can upset apple. Is bloomberg. I am betty lou in new york. Haidi and i am haidi lun. Seeingrg estimates are uptick. A slight lets go back to yesterday we had the miss. Is a suggestion if we get a weaker inflation reading today that these kinds of robust recovery in china study as she goes resilient going into the Party Congress likely some kinks in the armor . Guest i think the chinese economy is too resilient. Some kind of moderation. To policy stance because now they are implementing a monetary policy. Policy will kind of entice buyers in the second half of the year. Betty what visibility do you have into what exactly is happening with the Deleveraging Campaign . As of the a lot of things in china the policy has coming down hard. Pushing through quickly. You see the violent reaction in the system in the markets the nickel back. At what point are we in the crackdown in the camp and campaign to deliver . Xia their careful in implementing the crackdown in the financial market. Because they dont want to cause further financial turmoil in the financial market. They dont want to cause financial troubles. Finetuningbeen their case of pace. They are going to continue to do these sort of things to facilitate the financial leveraging. They will control the pace. They will follow the strategy of two steps forward and one step back. Betty one thing that has been quite confounding is the chinese currency. What has been hard about keeping control of that. Not just the outflows but also the weaker dollar has been really causing confounded not just with the chinese but with a buzz of currencies including the japanese yen. Have you think the weaker dollar is going to play into this inflation and economic story for china . Xia thats a very good question. I think the very good performance of the chinese yuan dollarto the u. S. If you look at u. S. Dollars performance against other currencies they have been weakening again. Easier forits chinese authorities to retain the ability of the chinese yen. Looking forward i think maybe if the u. S. Dollar can rebound in the second half of the year that could bring additional downward pressure on the Chinese Exchange rates. Certainly thats a longerterm. Shorterterm, keeping things stable. You mentioned a few risks on the horizon for china, at least a bigger risks. By housing bubble burst, shadow banking, local Government Debt overhang. And currency and what we are seeing against the weakening dollar. Think out of those factors will be the biggest risk for chinas outlook . Would like to say the shadow banking activities. Authorities have taken matters to tackle this issue. Size of thist the shadow Banking Sector in china, it is quite big. I think it will take time for china to diffuse this shadow banking risk. It will take time. Along the way there will be other financial turmoil, other financial uncertainties. Chinese authorities need to watch out. Betty thank you so much for joining us. Asian chief economist in hong kong. Much more ahead. Profit by theord bank could be facing hefty fines, qs of financing reaching who knew that phones would start doing everything . Entertaining us, getting us back on track and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing xfinity mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save when you choose by the gig or unlimited. Call or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network, designed to save you money. Sydney. Ts 9 30 a. M. In that is not sydney. What a beautiful evening it is in new york. Not long now until we get the first major market open in asia. Betty thats right. It was a pretty crappy rain yesterday that gave way to nicer weather today. Not so nice and the markets. At the endt surprise of the session from President Trump on north korea. Watchingu are daybreak asia. Lets get you caught up with first word news. Aimi a draft report from 13 federal u. S. Agencies directly contradicts President Trumps own dismissal of Climate Change and says the country is already feeling the negative effects with a stark increased of heat waves, torrential storms and other extreme weather over the past four decades. President has publicly expressed doubt that Global Warming is manmade and has no consequences. It seems to be literally taking the place of the current parliament. Delegates met in the Legislature Buildings to begin the drop of rewriting the constitution, intensifying a campaign that sent Opposition Leaders into hiding. President nicolas maduros of the body supersedes all other institutions and will strip legal immunity from his critics. Malaysia has launched an inquiry into a Foreign Exchange lawsuit at the central bank getting back to more than two decades ago. Critics say the investigation is a political flowing to discredit him after he set up a new party in toppling the current premise or next year. The inquiry will determine how much nissan is to pay almost 100 million to settle claims of tiedmic loss in the u. S. To takatas faulty airbags. It will replace devices and reimburse drivers for outofpocket costs. It follows a settlement worth 533 million for other automakers back in may. To cut his potentially lethal airbags are linked to at least 17 deaths around the world. Company owned by one of president putins internet advisors aims to raise the equivalent of 100 million to help russian entrepreneurs challenge china in bitcoin mining. Russian minor coin is asking investors to use bitcoin to buy new tokens which will global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Haidi lets get a bit more on what should be watching when trade gets underway in asia. Adam with us. It is very much a day about geopolitics. Is it time we start seeing a relaxing reaction to south korean stocks . Adam south korea has been a standout performer we also enough volatility even ahead of what happened in the last 24 hours. The socalled teflon market. You have been throwing things at it and it has been shrugging it off and investors spitted up. Now feels it is changing. Look at the pmis from july. They showed a contraction. Volatility has been to a tough picture with the violations getting pushed pretty high already. The bestperforming market in asia alongside india. People are already asking a lot of earnings. Given this earnings season they had been doing pretty well. But now they are really testing Foreign Investors at this point given the ratcheting up of tensions with the u. S. Haidi indeed. Blessed tensions in the retail world in the u. S. Building against amazon. But it is more than amazon right . Adam it is. Of course the struggle for american retail is not a new story. What is interesting is the of market banks and where this is showing up and it is really across the board. As we saw in july jobs numbers, this is the first time u. S. Retail shed jobs on an annual basis since 2010 which is significant. Chart,can see in this what of the most liquid ways of trading u. S. Retailers has been picking up. Its always been pretty high but we just saw an uptick. This is all part of a secular shift as well as more cyclical factors weighing down on consumption in the u. S. Places like the junk bond market we have seen yield on highyield retail really come up relative to the broader market. And of course, the longterm secular trend and the rise of retailers relative to the Domestic Department stores. That continues to be a big pressure point. Lots of different places across Asset Classes really showing. Betty thank you. Sydney, Mortgage Rate hikes health the bank rise in annual profits, 7. 8 billion. The eighth Consecutive Year of record profit. Costs drop and 13 . Thats good news. But the cba is facing big challenges elsewhere. Stripped ofave been their shortterm bonuses this year after australias Money Laundering authority accused it of more than 50,000 breaches of antilaundering rules. Want to bring in david fick ling on this. David, strong gross numbers, but can they be enough to get past this controversy . David i think thats the interesting thing about Commonwealth Bank. They have been dogged with various scandals for the better part of five years. When you look back on those five years they have never stopped growing. Inthe big four banks australia they have taken the lion share of new deposits despite a constant drumbeat of the scandals. You see that here. 2. 1 5 still very strong. Markets, 1. 7erest , well above that. Load grown up. In any sense, most of that seems to be like Running Water off a dogs back. Di we saw cbo punish the executives. These think that goes far enough . David i think the fact they stripped them of benefits they see it as Something Different to the other scandals. Those bonuses, the ceo, his bonus was about 1. 5 million. For most executives its about 20 of their total enumeration. They take it seriously. At the same time they say the have a the executives response for the reputation of the group as a whole. Thats really the problem. We have had many of these scandals over the past five years around financial plenty division. Manipulation of the Bank Bill Swap rate. And also going back to the financial crisis over margin loans to customers to invest in their on product or collapsed financial advisor. Theres a run of the things these things. All of it starts to speak with a problem with the corporate culture. Tomanagement is responsible reputation, that stock has never been lower than it is now. Haidi you wonder if it is just the latest in a buildup of issues. Lier we were talking about that will change things. David absolutely. The other thing to bear in mind about antiMoney Laundering, it is a real basic thing you have to get right as a bank. Its not just an issue of ricky tatian. S an issue issue very serious fines for breach of Money Laundering regulations. This is not a grey area. Its a bright red line. Thats the real problem. Haidi thank you. Record profits for cbo. Next, disneys which is off on netflix. We will ask if the new streaming services can handle the competition. This is bloomberg. This is daybreak asia. Disney reported a rare drop in revenue last quarter. It is also announced it is dumping a deal with netflix to begin streaming its own entertainment and sports directly to consumers. Chairman and ceo bob iger told us it was a strategic shift. My guess is distributors will look at this more as a threat than anything else. Is not intended to be that. Are we are doing is we reacting to marketplace conditions and taking advantage of the quality of our brand, the passion of the product we create , and the technology that enables us to reach tumors directly. You look at disneys business, except for the parts, virtually all them reach the consumer through thirdparty conservators. Bigboxverything from retailers to Motion Picture theaters and i could go on. This is an opportunity for us to reach the consumer directly and that is important step for the company in terms of growth. Help me understand this correctly. If i sign up for the app as soon as it is available early 2018, is that right . Bob yes. Espnt i wont get all of unless i have authenticated to my Cable Provider . Bob that is correct. The abilityve you to buy access to another 10,000 events, and it should be very userfriendly as far as we can tell. Maybe you i guess could predict that he will be able to watch the linear channels in a similar fashion but we dont have plans to do that right now. We will watch the marketplace and see how it evolves. Is this beginning of the end for the bundle . Bob i think that is available bit too strong. I dont think its the beginning of the end it all. New entrance to the marketplace offer consumers options. First of all it is still highly profitable. Second i think it is still a very good consumer proposition. There have been incursions on hulu being youtube, a couple. We are an owner of hulu so we know about that. Theres more competition to reach consumers with multi channel services. I dont think this is necessarily the beginning of the end that is a continued shift in Consumer Behavior and the Opportunity Technology provides. Betty that was bob iger speaking to david westin. Lets break down the results. Big moves coming out from disney with former Horizon Media Senior Vice President of research brad adgate. Good to see you again, its been a while. The whole time we had been talking for years, a monumental change in the media world. As we were talking about, disney thrown down a gauntlet with netflix, saying they are going to take back the control of their movie rights and start their own services. Is this the beginning of further moves like this from some of these Cable Operators . Brad yeah, i think so. Amc have partnered with comcast to offer an a la carte service. Netflix was a real threat to disney because netflix, one of the specialties they were doing where family content. I think that disney, that has always been one of their core products. I think netflix was a threat to that. I think pulling out of it and going off and there own and having espn with an a la carte ago when weears were talking about cord cutting, the one achilles heel the head was sports. People could not get live sports. They could not get espn, Regional Sports networks. Now youre starting to see that wall cracking. Kindgoing down this route, of bypassing Cable Operators and Satellite Companies who get a lot of money from them each year, it is just the way things have been going to last few years. Its occurring very rapidly. Betty disney first but who else you think could follow suit . Brad eventually all of them. It. Is doing it, fx is doing those Networks Just have great content. You think of ad supported Cable Networks that have mustsee content and critically acclaimed dramas, those two have a great library. They are offering it commercialfree. They offer a back library for a few extra dollars. Consumers want a la carte service. Three quarters of respondents just want to pay for the 20 or so networks they watch every month. The average home gets about 200. This is possible that discovery could do this with their acquisition, they could go off on an a la carte service. They have about 20 of all cable viewing right now with the combined companies and five of the 15 most watched Cable Networks. That might be a company once the merger is complete, could be prime for this kind of service to consumers. Netflix on the other end, do you see this being a big blow . Can you hear us . Brad now i can. Do you see this being a big blow to netflix . Brad to an extent but they are so focused on original content these days. The number of titles they have is now about 5000 a month. They are spending a lot of money. Next espn, netflix spends more money on content than any other provider. They spend about 6 billion. Espn is over 7 million. They are going down that route. They are also focusing on global. I think this was a watershed moment. 140 million global subscribers and over half are outside the United States. I think their focus is on other products and other services outside the u. S. That kidsis one thing programs do is that is that they watch them over and over and over again. Anyone that has a kid knows they are watching disney constantly. From that perspective i think that is a blow because of the family values they are putting out in programming to their customers. Haidi we know that kids are not necessarily looking for original, new programming. Netflixs focus on that has largely been on the risk they have 18 months to work out how to replace disney pixar titles. Do you think it is too late to start now . It 18 months we will see a difficult period for netflix. Brad i think so what they had been a very creative company. They have a Global Distribution list. They can see if they can acquire or produce their own original family content, which they had been doing to some degree, they could certainly ramp that up. They are certainly not shy about forget investing in production. Or they could just see what else is around the world with partners and see if that will work here in the u. S. Or somewhere else. Obviously disney is synonymous with family entertainment. But there could be other players out there or they could create their own. I think this is something that Companies Like netflix and hulu and amazon are really focusing on as a streaming service is to create something unique that you cant get anywhere else, and that helps maintain and even boosted scribers. Boost subscribers. We kind of see the underscoring of this aspect of the business is being a threat to the bottom line. That from an advertising perspective, we are going to see more dollars migrate to digital. We are seeing Companies Like facebook and out for that with youtube,phabet with they are going out there saying we are going to enter the online streaming video service. At some point they feel the billions there, 70 being spent each year on television and streaming video, maybe 11 billion advertising revenue. I think we are going to see a lot more Companies Like facebook and google and even snap and twitter in thi they are really going afters space. L their dollars here they think they can get. There are also younger viewers. The people who watch netflix tend to be younger than people who watch broadcast networks and advertisers will pay a premium for that. Google, facebook and others are working on a subscription and advertiser model. They had been very disruptive in other parts of media. I think at some point you are going to see a much more crowded field of services and is a lot of Growth Potential they are and i think those two companies which get about 60 of all digital ad revenue in the u. S. And 50 globally are going to be entering this phase feet first and that could be a real threat, provided its content is good. They certainly have the money to invest in the production of putting out something well done. It is already a very challenging industry. Thank you so much for that. Can get a roundup of the stories you need to know to get your day started with todays edition of a break. Daybreak. You can get the news just on the industries you care about. This is bloomberg. Quick check of the latest business flash headlines. Executives have told bloomberg the Company Plans to refinance a significant portion of 12 billion of borrowings that are due to mature over the next three years. It may include tapping the bond market. Reliances borrowings have ballooned since the group invested heavily in telecoms and chemicals. Haidi ralph lauren in michael kors both posted profits that Beat Estimates after moving away from deep discounting. Korss ceo said they are focused more on the product itself then finding the lowest price. They posted their biggest stock rally in 18 months. Betty plenty more still to come with asias first major market open moments away now. Haidi thats right. We have sophie watching the openings. It is a pretty old interesting set up. We had a spike in volatility overnight, politics front and center. How are we looking ahead of the asian open . Warnings of fire and fury could trickle into the Asian Session when it comes to anxiety but we have chinese inflation as well as more earnings that continue to metal rallies. Flipping the board when we we will check on Commonwealth Bank after posted an eighth Straight Year of record profits. Bridgestone, the tire maker will report earnings today. We have japan on the radar facing deeper losses, chewing the fat looking to add 4000 jobs globally. Discuss details of potential restructuring. Its also reportedly seeking a capital injection from foxconn. Thats a look at what we will be watching when trade gets underway. This is bloomberg. Whoooo. Youre searching for something. Like the perfect deal. On the perfect hotel. So wouldnt it be perfect if. There was a single site. Where you could find the. Right hotel for you at the best price . There is. Because tripadvisor now compares. Prices from over 200 booking. Sites. To save you up to 30 . On the hotel you want. Trust this birds words. Tripadvisor. The latest reviews. The lowest prices. Haidi the world bank enjoys and eighth year of record profit and analysts say it should survive the Money Laundering scandal. Betty disney missing estimates, shares slumping afterhours, also dumping networks dumping netflix. Haidi Google Engineer fired over diversity is exploring legal redress, but experts say it will be an uphill battle. Betty north korea raises the stakes, saying it can attack before a preemptive strike after President Trump warned of fire and fury. Haidi this is the second hour of daybreak asia. Im haidi lun in sydney. It is just gone 10 00 a. M. Betty just after 8 00 p. M. In new york. I am betty liu. Over the we mentioned last couple of hours, watching the increasing tensions between u. S. And north korea. As we get further into asia trade, we are watching Inflation Numbers from china. Might they change the stance for the China Central bank . Very unlikely but certainly a very keen eye on where these numbers come in in just about an hour and a half from now. Haidi thats right, not many factors encouraging the boc to do much tightening on the other than tightening other than the key fallacy key policy focus of deleveraging. We will get another disappointment today with inflation. In terms of market reaction, a bit of a negative set up in asia following a pretty interesting session on wall street with geopolitics taking focus. Lets get the open with sophie and take a look at how things are getting started. I am seeing a lot of red across the boards. Sophie the consternation we saw on wall street is transmitting through to the Asian Session. We do have haven buying happening, the yen trading about. 2 higher. It may move below that one can level. We also have gold picking up. We have equities under pressure. Major benchmarks in seoul, sydney, in tokyo looking to extend the drops we saw on tuesday. Pointinge this firm out the latest concerns around north korea could be seen as business as usual when it comes to south korean stocks. For now, falling about. 6 , the kospi. Out of south korea this morning, we did have the latest jobless rates improving to 3. 6 from what we saw in the previous months 3. 8 . That is something for investors to chew on. Ofne is taking a hit the won is taking a hit. The nikkei is down about one third of a percent, earnings very much on the radar. Nearly 200 companies have reported results thus far with about 75 delivering an upside surprise. We do have this rally continuing in base metals. That may perhaps be helping keep the asx 200 fairly steady. We also have australias june home loans do today. This morning, rba assistant governor said the concern is that household Balance Sheets are becoming stretched. He also commented on the aussie, saying its rise is mainly on the back of the declining greenback and that because it is not linked to commodity prices, that could hamper growth. Dawes the following about. 25 trading at 7895. I want to point out what is going on with the lumen. Its top spot in 2017 as the best commodity for the year with prices in london reaching 2000 for the First Time Since 2014. Oil continuing to decline, brent falling. 33 below that 52 a barrel mark. A look at the wcrs function on the terminal. We have the yen leading gains. The south african ram reversing losses after initially slumping with azuma surviving the ouster. But it could fall to 14 a dollar by the end of the year amid this political noise, according to Capital Economics economists. The aussie in last place falling. 2 . Betty thank you so much, Sophie Kamaruddin with a look at the markets. Lets get to the first word news with remy inocencio. President trump has adopted some of the linguistic style of north korea, saying the country will face fire and fury like the country has never seen if it continues the United States a continues to threaten the United States. Pyongyang says it has made Nuclear Warheads small enough to fit on Nuclear Warheads. North korea says it is considering an attack on the u. S. Military base in long. Pres. Trump north korea must not make any more threats to the United States. They will be met with fire and fury like the world has never seen. He has been very threatening, beyond a normal state. Ramy south africas president jacob zuma survived a motion of noconfidence in the currency weakened by as much as 1. 5 . Critics say the ruler missed a stance to take a stand against corruption. More than two dozen lawmakers did vote against the president , but he did survive 198177. His tenure has been rife with scandals and missteps that have weighed on Investor Confidence and set the economy into recession. Meantime, venezuelas controversial new Constitutional Assembly seems to literally be taking the place of the opposition led parliament. Delegates held their initial meeting inside the Legislature Building to start the job of rewriting their constitution. Sayatin american countries they will refuse to recognize any decision taken by the new body, saying it is a defeat for democracy. And malaysia has launched an inquiry into billions of dollars in foreignexchange losses added centralbank that dates back to the 1990s. That was when the Opposition Leader was Prime Minister. Critics say the probe is just a political ploy to discredit him. The 92yearold man set up a new party aimed at toppling the current Prime Minister in elections next year. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im remy inocencio. This is bloomberg. Haidi thank you so much for that. We are watching Commonwealth Bank shares of this in the open. Bank shares at the sydney open. Looking flat when it comes to the broader asx. Seeing a pop of 1. 25 . Yeard an eighth straight of profit up by 4. 6 last year. Lets get over to emily, the asia finance reporter. A nice set of revolt a nice set of results, a clean set of results from cba. Moving to the headlines and a little bit, but what was the driver . Megan not as much as we thought it was going to be. Cba is the nations largest Mortgage Lender that benefits from the continued strength of the market, which we have talked about before. Home loan volumes grow, business lending group, and it was careful with cost three allegedly solid and uncomplicated. We were looking for the bank to get more of a benefit, but he did not quite come through the way we had expected. I think some of that to do is with the fact that while they have been hiking rates for investors, they have been having to cut rates on occupiers to attract them, so it has not even out. Haidi one of the other interesting things is maybe offloading units to entertain interested parties. Emily australian banks in general has been getting out of Life Insurance businesses. There have been a number of scandals associated with them and they dont make that much money for the banks. It is the latest in a series of banks to do it. It has not given details about who the suitors are. There has been plenty of speculation in the local press and were just going to watch and wait. Most shareholders will probably back. Betty our Senior Executives remaining embroiled in this Money Laundering scandal. Talk to us about how much of a distraction this is. Is it going to last for months or even longer . Months is an absolute minimum. The First Court Hearing is scheduled for september, but considering the detailed allegations at stake and how complicated they are, it is hard to see this being settled quickly. The board said today they set up a special committee of four executives that will oversee the response. That is a way to ensure business as usual can carry on in the rest of the bank, but this is going to overshadow the bank for a considerable length of time. Betty thank you so much, emily cadman in sydney. Lets turn back to whats going on in Silicon Valley no, we are holding off on that story, haidi. Haidi really interesting, the backlash we have on social media from the firing of the google employee. But up next, marriott is teaming up with alibaba to tap into chinas tourism boom. We will be joined by the companys asiapacific president. Betty up next, find out why the yen may soon hit a century against the dollar. This is bloomberg. Betty good morning, this is daybreak asia. Im betty liu in new york. Haidi im haidi lun in sydney. Lets turn our attention to currencies, especially the yen, which was the best performer in the g10 space overnight as we saw safe haven demand flowing into currencies like the yen. Our next guest says september could be the yens month to shine as the u. S. Debt ceiling could weigh on the dollar. Nomura chief investment strategist joins us now. The dollar weakness story has been creating interesting scenarios for a number of asian currencies. When it comes to the yen, we had two very dovish sets of commentary from James Bullard and Neel Kashkari and were still waiting to hear from build that the later this week. Do you think a less hawkish fed and this debt situation in the u. S. Is going to create a lot of tailwind for the yen . Yeah, i expect the yen depreciates significantly maybe in september, but to us, the end of this year, i expect the yen may hit 100 against the u. S. Dollar. Betty do you think we could get there even sooner if we see a market depreciation in the u. S. Dollar . Yes, though of course in september, the u. S. [indiscernible] monetary policy, and also that the debt ceiling may be the concern in the market. Dovish may stand to hold and also the debt ceiling [indiscernible] trigger for athe further decline in the u. S. Dollar. The japanese yen at the moment is maybe undervalued among the major currencies so there may be a boom for the yen to appreciate. Betty you have the same policy divergence between the boj and what the fed is perceived to be doing. We getght come apart if the fed moving at a slower pace if inflation and wage growth does not come through the way they wanted to. As you point out, the yen is exposed at the moment, short positions for highs in january 2014. What are the implications when it comes to japanese income and equities . We have seen a deep correlation between yen weakness strength versus the impact on equities. Global investors and speculators consider that Japanese Monetary policy may be lagging behind the won and u. S. Modestope because of inflation in japan. Struggling to reset the 2 inflation rate. , the verye of that large short position of the japanese yen at the moment is hoping for the yen to depreciate. So far the yen has been just hovering around 110 also. Sooner or later, i suspect the Short Covering yen may occur and the dead could push up the yen a lot. , [indiscernible] the japanese stock market. I expect some adjustment of the stock market may occur. So far corporate profits in japan is doing quite ok, so that may support the stock market so the adjustment in the stock market in september could be rather moderate in japan. I want you to talk about that adjustment, though. Far do you and how think that adjustment would go . Appreciates the yen say by 10 , the stock market in japan tends to go more than 10 , normally around 15 . By this time, i rather suspect the appreciation of the yen by 10 may push down the japanese stock market by maybe less than 10 . 225he case of the nikkei to now hovering around 20,000, so if the yen goes to 100, the nikkei 225 may fall to 18,000 or so. Betty i want to pull up a chart for our viewers, im sure a chart you have seen many times. It is 3433. It shows the correlation breaking down between the japanese currency and the dollar index. I have heard you talk about the drivecovering that could the japanese yen to this 100 level against the dollar, but outside of that, what do you think is the biggest driver right now for the japanese currency . Yen is, the japanese quite undervalued at the moment. Of the Exchange Rate between the u. S. Dollar and the yen is something around 100 or possibly 95 so there is much larger room for the yen to appreciate from here. In the case of the euro, the euro has been also undervalued, but because of the recent appreciation of the euro, it is less undervalued than before. Others see there is more room for the yen to appreciate from here. Betty thank you so much for joining us, nomura Asset Investments chief investment strategist. You can get a roundup of that story to get your day going in todays edition of daybreak. Bloomberg subscribers can go to dayb on your terminals. It is available on mobile and the bloomberg anywhere app. You can customize your settings so you only get news on the assets you care about. This is bloomberg. Betty this is daybreak asia. Im betty liu in new york. Haidi im haidi lun in sydney. A quick check of the latest business flash headlines. Disney is dumping its deal with netflix to begin streaming its own entertainment and espn sports content direct to consumers. Shares tumbled after hours following a rare drop in revenue and profits. Thirdquarter sales are unchanged at 14. 2 billion but on trailed but trailed analyst estimates. They say the disney Online Service will begin and by 19 and he calls it an incredible opportunity. My guess is the distributors will look at this probably more as a threat than anything else. It is not intended to be that. We are reacting to marketplace conditions and taking advantage of the quality of our brand, the passion in the product we create , and the technology that enables us to reach consumers directly. Trying to unload its costly american subprime car leasing program. Rces say it has included concluded that Exchange Leasing is unsustainable and should be sold or moved into a smaller unit within the company. Exchange provides cheaper cars to drivers at an estimated loss of 500 vehicle. Uber has confirmed that are closer to 9,000 per car. Taylor is looking at expanding asia. Kareem currently operates across north africa and as far east as pakistan, but its ceo says there are opportunities elsewhere. They declined to put a figure on deities investment but says they have sufficient funds and are not looking to raise more money. Kkr isthe buyout firm beefing up its air ambulance unit to strengthen his hand in health care. It is buying American Medical Response from envision health care for 2. 4 billion in cash. American medical will be combined with kkrs air medical group, a company that provides many that aircraft. Transport morell than 5 million patients a year across 46 states and washington, d. C. This is a big story googles firing of an engineer for criticizing diversity policies, was prompted sharp reaction. James damore, concerned he had been fired for perpetuating gender stereotypes. Mark bergen joining us now from San Francisco on this developing story. Mark, this is a story that continues to escalate, whether you are talking about the comments about women years ago to what is happening at uber and Venture Capital firms, and now google. Give us an idea of the fallout from this memo. Mark it has really touched a nerve here, an issue that has overtaken the new cycle and conversation in Silicon Valley. We saw the ceo of uber ousted over this issue. Google, the company has been known for housing a lot of variety of ideas and this memo this weekend circulated pretty widely inside the company and exploded online. The companys decision to fire an engineer, you saw the right wing conservative websites objecting to that. It is coming after google accusing it of policing free speech. Betty the social conservatives are up in arms over this action. But google is looking at it from a business dance as well because they are facing u. S. Government litigation from the department of labor about their pay and about their pay practices. What is the case here . Mark that is an ongoing case. The department of labor has claimed google has systematically underpaid women. Google has said they have not done that. They have argued theyre are not going to disclose their pay data. They the judge has given them a small victory on that. This case continues for google. It is one of a number of issues they face on the topic. As someone wrote a memo to employees last night, not addressing the firing of the engineer but talked about how the memo violates the code of contact conduct and talks about how the Company Builds products for millions of people and the engineer called out women as being biologically unable to compete with men in engineering. Pichai said that was not ok. Haidi this is a theme for Silicon Valley, lack of women and resistance to senior roles, engineering roles. What does that show about the progress that has been made or maybe lack of progress . Mark we just looking at the numbers from 2014, a year before pichai took over. Technical staff was 83 male that year, now 80 male. It is still predominantly white and male, these organizations. Pichai has made a concerted effort to address that, started a partnership with howard university, a historically black college. A lot of people are going to look into the company, it is one of the largest employers and has been a trend center. Is the Pivotal Moment for the company and the valley. Betty what about the women in Silicon Valley . Sheryl sandberg or meg whitman. What have they been saying about this . Mark Sheryl Sandberg addressed this without explicitly addressing it yesterday. She put a short Facebook Post that said, there is no biological difference among men and women when it comes to engineering, and we have a long way to go. So far there has not been a lot of women and that have come out at the higher executive levels. We saw megan smith, a former google executive, yesterday come out strongly against the memo and claiming there is she said on bloomberg tv there has been this pattern across the industry that has almost reached classaction level. Haidi mark, thank you so much for that. Mark bergen talking about this latest google controversy, gender issues and golfing Silicon Valley. In the meantime, lets take a look at the state of play early in the asian trading session. We had volatility spiking 11 in the wall street session. Particularly the tokyo session, nikkei 225 up by. 5 , yen as the outperform or overnight. Safe haven demand falling on the back of strong rhetoric from President Trump over north korea. The kospi is also seeing a downside of. 5 . Spikingseen volatility for that market with geopolitics taking hold. Here in australia, and upside,. 4 , financials including cba leading the charge. Haidi it is a 30 in hong kong, just about an hour out from the open of trading. Chinese markets are focused on Inflation Numbers out of the mainland. Are they going to show this the love resilience we have been talking about or perhaps disappoint expectations . Trade numbers missing the mark yesterday. Im haidi lun in sydney. Betty im betty liu in new york. You are watching daybreak asia. Lets get to the first word news with ramy inocencio. Ramy a draft report from 13 federal u. S. Agencies directly contradicts President Trumps dismissal of Climate Change. It says the country is already feeling the negative effects with a stark increase in heat waves, torrential storms, and other extreme weather over the past four decades. The president has publicly expressed doubt that public warming is that Global Warming is manmade and will have negative consequences. Opec says three leading members are committed to production limits after talks in open derby. Abu dhabi. They say russia, kuwait, and afghanistan had been failing to comply but have now come on board. Malaysia was also at the meeting and made the same pledge. Oil prices have declined more than 10 this year on concerns the curbs will fail to train drain the global glut. Nissan is to pay all muslim hundred Million Dollars to settle claims of Economic Loss in the u. S. Tied to takatas faulty airbags. The cash will speed up replacement and reimburse drivers matter pocket costs. The deal follows a settlement worth 533 million with four other automakers back in may. Takatas potentially lethal airbags are linked to at least 17 deaths around the world. A new report from lawford linklater says Chinese Companies will spend at least 1. 5 trillion overseas for the next decade, a rise of 70 over the last 10 years. It says official policies are encouraging firms to take a stake in advanced tech. Concerns about National Security contribute to the failure of 75 billion worth of outbound deals last year. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. I am remy inocencio. This is bloomberg. Haidi thanks for that. Lets take a look at how asian markets are shaping up. We are seeing Downside Pressure when it comes to tokyo stocks. The yen effect playing out. At least some upside when it comes to hear in australia. Sophie a little bright spot when it comes to australia because bearish was descending across most Asset Classes. We have the yen trading higher, edging closer to the 110 level, up. 25 . Gold trading near the 1263 level, up. 2 . Sinking to a threeweek low as tensions rise between the United States and north korea. Korean bond yields are rising. The fiveyear bond, the yield rising about 2. 4 basis points. Korean cbs also near the widest points and year. Koreanity has jumped for stock as well, nearing 16 so far today. The kospi is on course for a second day of losses, down. 6 . We have materials and telcos when it comes to gainers, we have icn Energy Leading declines. We have the likes of posco and today we bring that space there, posco is trading at a threeyear high, this given the rally we are seeing in base metals. That is helping keep things afloat in sydney along with financials and real estate. Property stocks rising ahead of june home loan data and banks are being led higher by commonwealth after it posted an eighth Straight Yearly profit. Stocks are sliding today leaving laggard down about. 8 . Aside from the drop in oil prices, we do have power bosses in australia set to meet with the government to discuss what they might be prepared to do when it comes to lowering electricity prices, which are elevated right now. Companies that may attend include origin energy, agl, and energy australia. As haidi pointed out, so far today when it comes to major benchmarks, sydni holding the torch up about. 2 , the dow under. Betty thank you so much, Sophie Kamaruddin on the markets. In china, we are watching the Inflation Numbers. We are also watching another story. U. S. Authorities are set to rule on a chinese bid to buy the Chicago Stock Exchange with a decision from the fcc expected later today. Tom mackenzie joining us now from beijing. Who is trying to buy the exchange and why is there this controversy . Tom it is a chinese firm leading this bed. Interestingly, their business here is focused on real estate and Sewage Treatment plants. What they want to do with the exchange in chicago is use it to help Chinese Companies list in the u. S. Say think and their backers it would help breathe life into the Chicago Stock Exchange, which deals with volumes of less than. 5 of all trading volumes in the u. S. Of ipos int listings the u. S. Have been falling off over the last two decades, so proponents say it could help boost the number of ipos in the u. S. Detractors include a number of representatives in the house and President Trump himself, who hit out against this deal on the campaign trail. He has said what you are not going to be able to do is get visibility on the owners of the exchange if they take it over. There is also concerned that could become a place where you than six Chinese Companies listing in the u. S. , imposing a thread on u. S. Investors. The deal has been passed and signed by the committee for Foreign Investment in the u. S. Now it is the Securities Exchange commission to have their rolling. As you say, that is expected at the end of wednesday u. S. Time. Taking a look at the macro picture, expecting Inflation Numbers out of china today. Trade with the downside. What are you looking at for inflation . Tom the top line we are looking at is the Producer Prices. Expecting an increase of 5. 6 for july yearonyear. That would compared to 5. 5 for june. We have had some early indicators that suggest we are going to see some strength. Whether that is the pmi data showing input and output prices have picked up. We also have got oil and Metals Prices that have shown strength with continuing moves to cut back on excess capacity. That should support prices, the fact that demand has been relatively robust. If we do get higher Producer Prices, that is better for the corporates here, easier for them to pay off some of their debts. In terms of the Consumer Price index, we are expecting a pickup of 1. 5 , in line with last months numbers. In terms of how that fits into the pboc target for 2017 when it comes to Consumer Prices, they are targeting 3 , so it is well below that. Our inhouse economists at Bloomberg Intelligence are forecasting Consumer Prices will pick up by 1. 8 by the end of the year. Numbers get ppi and cpi later today, it is unlikely to move the dial on where the pboc stands. It is more likely to be focused on the Deleveraging Campaign. We have seen money market rates tick up, that we are not expecting major change on the back of it. It is the Producer Price number, 5. 60 estimate, that we are going to be looking at, 9 30 beijing time. Haidi looking ahead to that, Tom Mackenzie in beijing. Up next, marriotts mission to dominate tourism in china. We will be speaking live to the companys apex president. This is bloomberg. Haidi this is daybreak asia. Im haidi lun in sydney. Betty im betty liu in new york. Marriott international became the Biggest Hotel group in the world thanks to a merger with starwood, but ambitions dont end there. It is marrying his name and services with alibaba to tap into the tourism boom in china. Chinese travelers all around the world spending money. Craig smith is marriotts asiapacific president. He joins us first in hong kong. Thanks so much for joining us. We have heard some comments already from Arne Sorenson today, the ceo of Marriott International, on this deal. Describe for us a little bit, particularly as it relates to the asia business, how this is going to work between marriott and alibaba. You got the words right, it is a marriage. But let me start by saying it is a marriage of offline to online. That is the new acronym, o to o. We have taken the two companies, the best and brightest minds. You have 500 Million People on alibabas platform, marrying them with marriotts 100 million loyalty customers. You have got 125 million trips last year by Chinese Travelers. The largest percentage was to asia. The biggest benefit is asia, but it is going to benefit the country the company around the world. Betty much has been made about these chinese tourists, or just travelers themselves. They could be business travelers as well. How are they different than your other travelers and how are you changing the way you are giving them services to attract them to your hotels . We always think of travelers looking today for what they can get at home. Theyre looking for comfort, comfort food, tv shows in their language. The most important thing today that is different is digital wallets. They want to pay in their way. Imagine an American Traveler going to china and trying to pay with these up, mastercard, American Express and saying, we dont take it. Chinese travelers today are paying with alipay. Digital wallet is huge. United states, we have 112 billion transactions on the digital wallet. You think, that is huge. 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 have everything set so they can pay the way they want to, eat what they want to eat, travel the way they want to. Betty a couple of questions. Is this tie up an exclusive deal and how do you expect it will translate to earnings . The need part is it is not about the jvs profitability. It is about facilitating travel and filling up our hotels. The great thing about setting it up as a jv, we want to make sure we bring together the best and brightest minds of alibaba and from the hospitality industry. Ist it means Going Forward that we are focusing the teams on innovative experiences. Seven years ago, we never thought Chinese Travelers would be paying with digital wallet. We never saw them traveling to resort destinations like they are today. Never one source market for bali, the maldives, cook at, or Chinese Travelers. It is about anticipating their needs and making sure it is seamless. Haidi it is hard to categorize, isnt it . They are increasingly sophisticated and it is not like 10 or even five years ago where you could easily bundled together what the typical Chinese Traveler is. Do you have a vision of what that looks like now . Yeah, great question, because 510 years ago what we saw was someone walking into the airport with a flag, a group of people passing behind them with red hats. They were always traveling in groups. The Chinese Traveler is becoming braver today and more sophisticated and traveling individually. What theyre looking for is tailormade individual travel. They dont want to buy in a group. What this sets up as Planning Services for them, digital wallet, vip experiences, and the ability for them to do more. We are seeing this change from purchasing goods to purchasing experiences, especially with the Chinese Travelers. They have bought the expensive handbag, expensive watch. Today what they want our new experiences. Scuba diving, bungee jumping, go on a jungle tour. We are going to provide that together in a digital way and also offline way. Betty why did marriott and alibaba want to do this . Specifically why did marriott want to do this . Certainly pairing up with a very big name, but is some of this reaction to the airbnbs of the world . Of which there are several variations in asia . Know, it is really a proactive move on our part. We are looking at Chinese Travelers and saying, 125 million chinese traveled overseas last year. 700 million over the next five years. How do we capture that and make sure we become their preferred destination . Hotels,brands and 6200 we want to make sure they are staying with us anywhere in the world. We sat down and said, we need to make sure we are selling to the chinese the way the chinese want to buy them a. Who is the best at that, alibaba. We needed their expertise and knowhow, not just with digital but with Chinese Travelers. Betty could you have done this without starwood in your portfolio . I think we could have, but it made it more appealing for alibaba when they look at the size. There have been conversations between us and alibaba in the past. Though the starwood and marriott had very good relationships with alibaba prior to the merger and it has become stronger. I think it was more compelling for them when they saw our size and expertise. In the case of marriott, they are looking at 90 years of hospitality experience. They are looking from the other side, saying how do we get that information for travelers when they go outside china . Haidi appreciate your time, craig smith, Marriott International asiapacific president talking about the tie up between alibaba and marriott. ,orld time inc. Shares raising adjusted eps coming in a . 13 last quarter compared with estimates of . 11. The president and ceo told us the company is focused on building new Revenue Streams. For us, the exciting announcement today is the Strategic Transformation program. We have put together a plan we are thrilled about that we believe and we are confident about in terms of growing this company and creating a growth trajectory over the next three to four years. We announced today we see 500 million to 600 million minimum over the next 300 years, Significant Growth trajectory. Your plan has both a revenue side and a cost side. You are cutting costs, 400 million . We have targeted 400 million. What is your total cost amount . About 2. 7 million. So that is a big chunk. How can you do that without undermining your brands . One is two thirds of the cost takeout is really related to operate more efficiently. Infrastructure, old systems that need upgrading, procurement, how we buy and purchasing power. That is a big piece. We dont think that really affect your daytoday business. The other big thing is finding new ways, reimagining how we build our product, particularly on the print side. How can we be more resourceful about how we go to market with our products . It is important to note that we are reinvesting for growth. A portion of these cost savings will go into the highgrowth areas. One thing is a lot of people dont know about this company, it is important for us to reiterate we have 1 billion of nonprint revenue, about 600 million of advertising and digital but another 300 million to 400 million that includes other digitally transacted business, events, television, video, and the like. We think this is a plan that is very doable, but also really exciting for this company as we transform into a new time next. A new time inc. You have been there for a few years in various capacities. This is not the first time somebody has tried to rebuild time inc. It has been done several times under time warner. Why is this time different . A couple things. The Management Team is an important point to note. We have an incredibly diverse team across all parts of media with proven track records. Historically at a company, the Management Teams have largely been from the publishing sector. That is important as we transform the company and build revenues in those new spaces. Ofthe last three years, 50 our Employee Base is new, so we have a new energy, a new culture of the company. We are really focused on building Revenue Streams beyond the additional revenues. For instance, one thing we have not leverage that this company is leveraging our digital our direct consumer relationships. We have 30 million active print subscribers, another 100 million on our file, 100 millionplus people every day that come to our site. We know a lot about these people. A lot of companies in this space , they dont have data on their customers, they have no idea who they are, where they live, their age, their gender. We have that and we are going to leverage that. Betty that was times ceo rich battista. One feature on the bloomberg we would like to bring to your attention is the interactive tv function. You can find it at tv. You cannot only watch us live by see previous interviews and dive into any securities or bloomberg functions we talk about. You can become part of the conversation by sending us instant messages during our shows. This is for bloomberg subscribers only so check it out at tv. Haidi this is daybreak asia. Im haidi lun in sydney. Betty im betty liu in new york. Disneys humbling and extended trade after a reported drop in revenue and profit last quarter. The Company Also Announced it is going to stop selling movies netflix and stream its own entertainment and sports programming to consumers. We have a report from new york. Reporter disney out with thirdquarter results, maybe not as bad as some may have expected. Revenues were basically flat yearoveryear, about 14. 24 billion. Profits were down a little, but not as bad as might be expected. Espn continues to drag as the Company Loses drivers, but the parks business very interesting, very Strong Quarter based on two fronts. The theme park in shanghai that opened a year ago, they dont have startup cost anymore. Lower startup parks for Shanghai Disney meant more profits for Shanghai Disney. As more and more visitors stream in the doors and opening costs are not there, the company saw profits. And in europe with european disney world having a Great Success for some special events there and strong attendance meant very strong profitability in the theme park division. In terms of operating margins, nothing at disney is as profitable as their entertainment business and nothing as profitable as their cable business. Espn continues to be a focus. Two surprises in the announcement of earnings. Number one, the bam ask technologically broadcast sporting events and spread it over the world, they own part of that asset, spending about a billion five to own that asset making disney more technologically capable of broadcasting sporting events. Secondarily, disney announcing an and at an end to their partnership with netflix. As of 2019, disney will no longer be getting new content, things like pixar movies, avenger movies, star wars movies , coming from disney but not going to netflix. What that means for netflix, we will see, but not good news. We will see what it means for disneys ability to capitalize on the fantastic content from star wars, pixar, marble, and the like. Cory johnson, here in new york. Betty that was cory johnson on disney. A quick check of the latest business headlines. Reliance industry executives have told bloomberg the Company Plans to refinance a significant portion of 12 billion of borrowing that are due to ensure over the next three years. Our sources say that may include tapping the bond market. Reliances are borrowing has bloomberg since tight 12 as the group invested in telecoms and petrochemicals. Haidi fashion houses ralph lauren and michael coors posted profits that Beat Estimates after moving away from deep discounting that squeezed earnings and eroded prestige. Michael coors ceo says shoppers have become more focused on the product rather than finding a low price. Thepanies focused Companies Posted their biggest rallies in 18 months. That is almost it for us on daybreak asia, time for a quick look at the next few hours. Clearly china front and center again today, but also politics you will be watching as well. Rishaad naturally, after the antiwas up after the ente was upped by donald trump. The numbers out in 30 minutes, looking at that with julia way. When it comes to inflation for last month. Ppi perhaps of more interest because of years of negativity showing inventory overhang and excess capacity. Has that been dealt with . Ppi figures may show them the increase of 5. 6 prices. A blockbuster set of earnings numbers, but there is a cloud behind them. We are going to be discussing that cloud with a professor from the university of canberra and a representative from tribeca. Also, have you ever heard of this maker of graphite electrodes . It is the most traded stock around the betty looking forward to it. Thats it for us. This is bloomberg. Got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Find your awesome with the Xfinity Stream app. Included with xfinity tv. More to stream to every screen. It is not 00 a. M. In hong kong. M rishaad sponsored rishaad salon beauty earnings are over shower by earning scandal. And north korea is threatening a preemptive strike on guam as President Trump warns of unprecedented fire and fury. This is bloomberg markets