Transcripts For BLOOMBERG Bloomberg Markets Asia 20170222

President Loretta Mester. Minutes away from the open in china and hong kong a meandering day when it comes to the asian markets. Comingrecord closes through from wall street as they played catch up after the president s day holiday. Singapore, taiwan, and asia coming online. Sophie, how are we looking . Sophie lets look at the risk radar. About have gold up high 0. 1 in the dollar waning somewhat. Some strength back in the nikkei 225. Toshiba was up 7. 5 . Maintainingots be tuesdays climb. The asx 200 turning positive after opening weaker this taiwan, theyver in 0. 5 highernline at today. Tsmc may be throwing its hat into the ring for a toshiba chip set sail. We are hearing that from the singapore straits times. Earnings very much in focus. That is what is giving investors hesitation. About 70 of companies in the msci asiapacific index have recorded result in half of them have beat expectations. Haidi be very much a very mixed bag. You are seeing uncertainty as to where this rally goes from here. Regulators are said to be working on new rules for the industry whicht has become worth trillions of dollars. What is this about . They are telling us that chinas centralbank, the csr be, and also the regulators for the inking and insurance sector are working together to draw new rules on Asset Management products. Putting businesses and moneys into china asset products, with a total of about 8. 7 trillion according to csrc estimates. Once these news really want to say is there are no government guarantees on Wealth Management products. This is trying to dispel a popular perception that the issuing banks or the government will be the ones who are guaranteeing what is happening. Issues with any Wealth Management products. It includes Financial Institutions setting to need 10 fees for management. They are also banned from investing proceeds from Asset Profits from beneficiaries linked to assets. These are all still under discuss iion. There is only a pie to new issues. The move will lead to higher liquidity and higher costs fires. Costs this is higher to buyers. First this is not the time authorities have tried to rein in the sect there. Have beenthere several made in the last years but this remains a popular area. It is no secret why. Wealth management products offer between 3 5 , which is more than what they would get from putting their money in the bank. If we look at the red flags, about 66 of what wealth funds have been put in bonds, but they have been tumbling. Struggling,ay be including the mining sector, and they are not including on bank allergies. They are funneling channel to riskier borrowers who pay higher Interest Rates but we also see wealthier investors invest in each other and that decreases competition. It seems we have been here before in the last 10 years before. Banking analysts say the stock of chinese banks on balance funds of Asset Management grew 73 last month. Warning bells being sounded. Haidi it is a familiar refrain. It will be interesting to see how the Asset Management firms do in the shanghai, shenzhen, and taiwan open. Haslinda the Trump Administration has issued memos issuing a sweeping crackdown on on undocumented in the gross undocumented immigrants. People to bewe removed those even thought dangerous. The document outlines the state dhs to prevent the southern border, prevent illegal immigration, and to repatriate Illegal Immigrants swiftly and humanely. Says thatphilip lowe solid performance in the labor market allows them to hold up under rate hikes. He would like to see the economy grow more quickly, adding that a slight growth in rate growth will help meet targets. Unemployment is rising. The stronger case would be a return to inflation to meet the target. We have been satisfied that the labor market is headed in the right direction, if not as quickly as we would like. Haslinda the bank of england governor is not providing specific governance of rate past february. Mark carney said it could be faster or slower than the market is suppressed. Of theexpress criticism boes response of the brexit referendum. John williams says we should run a historically low Interest Rate to continue. He says the low rate world will be sustained as an aging population and lagging productivity hold down growth. Banks init harder for wealthy countries to prevent recessions. Im Haslinda Amin. This is bloomberg. Haidi thanks. Still ahead, we are going to speak to one of asias best rated strategist why he is over china and why japan is nowhere in near as bad as anyone thanks. Increasing harshness from the fed bank. Hawkishness from the fed bank. Stick with us. Haidi a quick check of the headlines. As it announces is it is buying back as many as 120 millionths shares. Of abouthe repurchase 8. 5 percent of outstanding stock started on wednesday. Hanshins bankruptcy has set up a series of repayments. A creditor has asked a u. S. Federal judge to bypass the south korean court. The credit will be judged overseas. Hanjin has argued that does notean law provide relief that should be provided. Sheldon adelson could spend up to 10 million on a casino there. The Las Vegas Sands chairman says he envisions a Record Number of slot machines and focusing on convention tourism. Include saddens, sands, wynn, and others. The oil company has discussed a ing interested parties into saudi arabia to sell shares. It could reduce the economys alliance on hydrocarbon. Haidi the cleveland fed president Loretta Mester said she would be comfortable with a federal bank raising rates. It is our pleasure to welcome her. It is a pleasure to have you. Three weeks out from the next policy meeting, we are seeing this jump when it comes to what the market is expecting. Function bring up the of what tracks this Interest Rate expectations. We have gone close to 40 on what the fed on futures is planning for next march. Would you be comfortable with a move in march . The talk is always dependent. What would you need to see between now and then to be comfortable with a hike . View is that if the economy continues progressing along the or casts that i have been saying, i think the data has been coming in, i would be comfortable with rates higher. No one is thinking we have to race rate. Ly in rates. Adual uptick that is consistent with where we are progressing on our goals. We are basically at full marketent at what politic can do in labor markets and inflation has been moving towards our 2 goal. My forecast is we will continue moving up over time. I would be comfortable with Interest Rates moving up. I want to hear discussion at the meeting. I want to get data at the now and the march meeting. Different participants are going to have different views of the economy. With is there a concern core inflation as well as cpi inflation that we will see an odd seasonality come through . Is there an argument that you might want to wait longer, particularly as the followthrough from the take up in sentiment since we have seen in the election has not played out yet . Loretta even despite the sentiment, if you look at where we are relative to our goals, i think the economy is moving closer to our inflation. I look to the media outlook and the data is consistent with that outlook read of i have a gradual path of Interest Rates over time. It is not that important from a macro perspective, but you do have to say that you are making a lot of progress. You dont want to delay too long because you will be behind. I dont believe we are behind the curve yet but i believe that keep delaying, we could get behind. It is important because we want this to last. We wont want to do something that we delay too long and inflationary pressures build up. We dont want to have to raise raise Interest Rates that can put us there. I think the path ands up with a better outcome overall with a better length of expansion. Haidi how many rate hikes are you penciling in back in december . From then until now, have you quarterlyhange during projections going into that march meeting . Loretta again, we will be going into the meeting and putting in new forecasts. Thatrecast is basically growth is a bit above trend. 2 , whichate is about is a bit higher than the median in the sct. My forecast has inflation moving back to 2 over the next year and a half and my Unemployment Rate is below. My long run Unemployment Rate is median, buthan the i have Unemployment Rates going down from here. That forecast is basically similar to what i see going forward. There is uncertainty around all forecast. When you think about forecasting, there are a lot of things that can happen. Shocks can happen to the economy. What we want to do is focus on the median path and also understand their arrest. I think this is a time where there are uncertainties about the fiscal side and all of seat and policy side of things. We always have to keep a focus on things, price ability, and maximum employment. Haidi i would like to pick up on what you said. There is an added layer of uncertainty which will come through from the administration on policy. Are you uncomfortable looking at why we have seen this rally in the stock arc it . Did it happen because of the Trump Victory or in spite of it . Are you uncomfortable making these assumptions in the absence of more details on what fiscal and economic policies are going to look like . Loretta the devil is in the details on the fiscal policy in terms of the timing of the impact, the size of the impact. There is uncertainty around that package. We always have uncertainties out there. There are uncertainties in the international economies. There is uncertainty about international banks. To, given the uncertainties we have to think about what is appropriate policy. This, weironment like may see more changes in our forecast and an associated policy pass than what we have seen in the past years, but i think that is good in that we want policy to take into account economic conditions. We want to face policy on that provided outlook. That certainty becomes resolved. We will react in terms of our outlook and set policy given the outlook. I dont think just because there is uncertainty does not mean we should he doing anything. I think we need to be basing our policy on sound economic Monetary Policy principles and how we react to sound information. We want to be systematic about looking at the data, seeing if we need to revise our forecast, and setting policy consistently based on the outlook. I want to hear what my colleagues see how the economy is. Haidi is there a concern with you gradual approach that may get caught behind the curve, that inflation could get out of control . The new president s rhetoric has translated into action. The things he is promised a great deal he has tried to put into policy in the first few weeks. Makes good on this massive infrastructure fiscals ending plan, will this force the fed to move more quickly . When you get caught in the back . Loretta we are not behind the curve yet in my opinion. That is why we have to be willing to take into account the environment and part of the environment is going to be what the fiscal pass gige package is going to look like. I dont think we need fiscal spending for that point. There are fiscal points that could be raising productivity growth and in new u. S. It has been week for many years. It could give packages that could help reach rain workers who have lost their jobs because of globalization or technological change, allow them to build up skills that the modern economy is looking for. Those would be productive things but generally take quite a while to play out. It will matter in terms of what does the package look like. There is a lot of positive sentiment when it comes to business and the consume and are consumer surveys are positive. Earlier the positive sentiment has not translated to action. That have been some signs it is time to do some investing. We will see how the economy plays out. We will have to assess the package when we get more details and about what those impacts will be and we have to be nimble about it in being willing to change our policy path if the economy is evolving differently than we anticipate. Haidi if you get the steady as she goes pick up as we have the last few months, how many hikes would you be comfortable with this year . Loretta i have built in my forecast a it stronger path than the median because i see the economy as a bit stronger. When you think about that, if we put error bands around that forecast, unemployment, and the path associated, the bands around the forecasts are much dispersionshese around the fmr see. Forecasts andment by the public sector. Things play out differently than you might anticipate. We might have to be able to accept that. The economic stateoftheart models, which model will be the best predictor given that time and conditions, we dont know that. We have to not be put off by uncertainty, but taking into account in part of the environment we live in. Beginning, asthe the economy continues on the anticipate, i would be higher with the comfortable Interest Rate. Loretta are you comfortable where the job block haidi are you comfortable where the job outlook is that at the moment . I know you are in australia. It looks as seeing struck. Is that how would gets when it comes to the u. S. . Loretta wages have been moving up gradually. Some part of the labor Market Conditions that are quite good. Growth seen employment in its solid conditions. The equilibrium point is lower than it was in the past and that is reflect the in the demographics of the u. S. There are some call a rarities in the labor market. Not just from the great recession, but before that and the globalization, where some jobs are not economical in the u. S. Those things have changed our labor markets. I think it the hooves the what the bestnk way is to train workers, educational programs, so workers who lost their jobs can transition into jobs that will the in demand in the future. There are a number of individual programs going on that could help do that. We should spend more effort about what the right ways of doing that. It needs to be defended on skill set, labor. Sophie at 36 , the Market Pricing probe hike, would you be comfortable moving next month . Loretta again, i think the market is always going to have some probability of what the fed they think is going to do. Our job is to be as transparent about the rationale for our policy path. We never want to surprise the markets. I think most people when they inc. About the u. S. Economy see it on a good and sound footing. Fed is tor job in the base our policy on the media run theook, be particular for rationale as we can be, that the summer projections is a good tool to explain to the public. Haidi we will have to leave it there. What you are looking at is shaping up to be a positive way in hong kong and chen chen is set to open in under a minutes time. We do have china january Property Prices about to come to bloomberg. We are expecting the trajectory of the property bubble that saw prices soaring as much as 26 and chen jin and shanghai. That price is slowing as authorities have been putting through these curves, mortgage tightening, raining in some the excess of lying when it comes to the property market. We are looking to see if we can get these numbers across the bloomberg, but it is interesting. There is a note from intelligence that said regardless of what happens to markets, fundamental property demand from china will do that is going to have a widespread effect. We saw a rise last year of about 25 , that same heavy level. It has been a pretty patchy market in terms of seeing some of these smaller cities losing excess inventory of apartments were the major cities are seeing a massive jump when it comes to housing prices. Also going to be interesting to see how the chinese stocks behave when it comes to the property sector. They have been hitting near alltime lows when it comes to valuations for some of these top chinese builders in hong kong. We are still waiting for some of the numbers to come through when it comes to the china Property Prices. Beijing, we had that coming through. Declines in regard to these major markets. Home prices across the major cities rising and 45 cities month on month versus 46 in december. Still that trend where the property markets continue to fall, but not as much as we have seen in the previous three months. Lets get a reaction in terms of that hong kong, shenzhen, and shanghai open. Sophie we did see about 45 cities there, so that potentially is a fourth month of lower price gains for the chinese property market. Take you look at the weighty Chinese Market is relying is reacting. Down a 10th of a percent there. On the hung sing index, of about 1 3 of 1 . Lets take a look at what is going on with some of the property stocks listed in hong kong. Andave Country Garden china and ever gone day outperforming and evergrande outperforming, possibly because they were able to hit most of the targets earlier in the year. A drop in we have home sales for 2016. Did see anvestment very steep rise in price gains over the course of 2015. It was hit particularly hard by cooling measures to rein in those rising prices. Gaugetake a look at this of mainland property stocks. This tracks 22 of the stocks. We have seen that rise over the course of the first two months of 2017. But bullet that chart for you. The equity evaluations are at a near record low, which means they could be looking potentially cheap. Forrally could extend another three or four months. On tier one updates whengh tier three cities it comes to those price movements, we will have to see where that shapes up for property developers. Haidi thats right. We will have to see, because we have had calls from goldman and citibank saying, at these valuations, they are a bargain. New home prices in january falling just 1 10 of 1 month on month. Should just year on your gang of 8. 4 , falling half a percent month on month. We are seeing a cooling of that trend continuing. Beijing existing home prices january up, so that the still seeing price rise when it comes to competitive to the previous month. It will be very interesting to see how some of the third, fourth, fifth tier cities come out of all of this. We have seen this to speed market when it comes to Property Prices in china. We will get you more details and analysis as it becomes available. Lets get the first word news now. Fedinda the cleveland president says uncertainty of a fiscal policy under the new u. S. Administration should not stop the bank from raising rates. We were told if you ago that u. S. Gdp growth is above trends, and employment is forecasted to fall him and inflation should be at 2 within the next 12 to 18 months. She says a gradual path of rate hikes will lead to a better overall outcome. Is currently trading at trending higher after opec says it will trim production. Members will continue to reduce stockpiles. In an exclusive interview with bloomberg news, he said the markets are facing other headwinds. We are in a volatile market. I think the markets are willing to go up, but you could see impacts, potentially. Libya coming back to the market. Will all the countri be compliant . Policy is to continue to lower. Haslinda you can watch more of at 12xclusive interview p. M. Hong kong time, and 3 00 p. M. Sydney. Verizon is getting a 350 million discount on its acquisition of yahoos Internet Properties under Security Breaches at the web company. Is expected to close in the second quarter. Izon and what maintains and what remains of yahoo after any legalill handle repercussions. The republican gaining points, he hiredumbled when his wife and children of public salaries. Here makes the front runner for aprils first round. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Im has Haslinda Amin. This is bloomberg. Haidi thanks for that. At the marketook in australia that has turned up. Fortescue down by just short of 2 . We had a bigger than expected dividend. The numbers look pretty good. This is a pretty volatile stock. It is. Huge fair, it did have a runup in the two days prior to the announcement. Probably a lot of this got priced in. It was a great result. 1. 22 billion. They maintained an interim dividend, a big jump from the . 12 a year ago. With fortescue, it is always a question of what is happening with the debt. It has been paid out quite aggressively. The costs also coming down impressively to 13 per ton. That is a very low cost producing you have there. Fortescue always at the mercy of iron ore prices. Haidi thats right. There has also been the oil rebound story, when it comes to other earnings coming out today. Reporter we have seen the story a few times the past few days. Year, aversal from last 26 million profit. Woodsideidend from . 49, and the company saying is considering the option of but still would start shares off at about half a percent. I will talk about woolworths briefly, doing well, up almost 3 at the moment. A dividend of . 34 in sales. Haidi we are seeing consumer stocks leading higher. Thank you for that report. Continuing ann earnest here. , we speak to a guest who says japans Economic Situation isnt as bad as the mandatory as the Monetary Policy would suggest. This is bloomberg. Cleveland fed president hasnt ruled out a march rate hike area speaking earlier from singapore, she told me she doesnt want to delay too long. Lets get a reaction from our executive reporter of Global Economics from washington. You heard the interview. What was your take on what she had to say . Not too hung up on the voting. You can be influential and not a voter. And be a voter and not where the center of gravity is. Loretta mester delivered a message that her squarely where she is, which is the center of gravity on the committee. We are not going to rush and march, but if you leave it too long, you start to get to the issue that John Williams raised earlier this month, the arithmetic can start to catch up with you. To actd we dont need precipitously. Some people probably read that as meaning, she didnt take march off the table, but didnt put it on, i on, either. You want to delay too long, because you will be behind. I dont believe were behind the curve yet, but if we continue to make our press on our goals and keep delaying, we would potentially get behind. Why is that important . Its important because we want expansion to last. Again, what we are seeing there is someone who is ready much in the center of gravity where the committee is. Not just on her record since shes been at the cleveland fed and the member of the fmoc fomc. A good reading on the center of gravity is how i see it. No rush to march, but if we are still having this conversation in june, maybe we want to mix things up a bit. Haidi no rush. It ise talking about how still just a 36 expectation when it comes to fed futures. It has jumped recently, but historically, that wouldnt be enough for the fed to move. Would you be surprised if we had a hike in march . Reporter i wouldnt be because,y surprised first of all, the market is not the policy decision. Is reflective of what people think the policy decision needs to be. We got a couple of weeks to go. We do have another jobs report between now and then. To get back to the point of voting, Loretta Mester said this herself. We got a couple of weeks to go. What is equally as important is, what is the feeling in the room . The is the forecast that board and officials from the . Ivision of Monetary Affairs which way do they go . Haidi thanks for that. We are getting an analysis from the executive editor from washington. Our next guest is seeing positive signs what comes to japan and china. He says they are set to benefit from the Trump Administration potential retreat from globalization. He has been awarded by the likes of Institutional Investor and asian money as being the best strategist in asia. Great to have you. Thanks for joining us. I think its interesting you say, and japan, things are not as dire as markets would think that it is, and even the doj policy would suggest that it is. What makes you sound a little more bullish when it comes to japan . My point is simply that the japanese deflation problem back in 2002, 2000 three when the banks were finally cleaned up under the kazumi administration, and right now the labor market is as tight as it was in 1991 after the peak of the japanese bubble. The simple reality is the japanese economy is nothing like the as you might think from extreme nature of japanese Monetary Policy. Argue that theou entrenched things, the lack of spirit, the deflation reminder that has been there for a number of years, and the sheer demographics . How do you argue the positive sides of the sectors . Of those factors . Guest theres demographics are a big problem. Thats why japans trend growth rate is low. Thats why the bank of japan has the wrong inflation target, it should be 1 , not 2 . Is nothing to have slow growth when you have the demographic issues. In aot saying japan is boom, i am just saying the situation is nothing like as dire as you might think from the nature of the japanese Monetary Policy. The other positive point is the real estate markets have made good gains, the stock market has made good gains. We see growing evidence of Corporate Governance reform. I view the extreme monetary counterproductive. The lack of Interest Rates, the inability to make a return on increases risk amongst japanese savers. Similarly, the effort to do negative rates in japan this time last year backfired, not only in markets, but also backfired in terms of consumer psychology, Inflation Expectations fell. Rises weakness causes a rise in import cost and makes them more nervous. The doj and its current leadership has been counterproductive. Haidi i think its been baffling a lot of people, what to make of this reflation trade and where it goes from here. Is it happening on, or what is it in spite of . My correct in saying your view yet fedit hasnt through into actual investment . Guest no, but i think definitely the election of donald trump triggered a reflation trade and a bond riot. I think that made a lot of sense because there are all these aggressive policy proposals for aggressive tax cuts, fiscal stimulus. I think the interesting point right now which markets are wondering about is whether the Trump Administration is going to go with supporting this border border tax proposal, which is in the house of representatives, which would most dramatic u. S. Tax reform for decades. It would have big implications both for the u. S. And the global economy. Its a Trump Administration does support this border tax adjustment proposal, it will create expectations in the market of an investment cycle in ae u. S. , most particularly company with a proposal on the Corporate Tax amnesty to get this to . 5 trillion offshore trillion this 2. 5 offshore return. Quo, would be a quid pro you only get the tax break if you agree to invest in america. An environment with such policies announced or the market seeing such policies, i would expect the u. S. Dollar to rally again and u. S. Bond markets to set up again. In that environment, the japanese equity market will do very well because, and that environment, the yen will weaken fixuse of the boj trying to. Japanese financial stocks rally, and you have a lot of money. But a lot of ifs. What we need to find out right now is it Donald Trumps go withration going to this border tax proposal or not . He wants to do aggressive tax cuts. In my view, he is most likely to get the support of the republicans in congress, where is aggressive tack cuts aggressive tax cuts, the border tax reform will create an offsetting of revenue. If he does not support the border tax reform, i think he is less like the to get the support for the border cuts for the tax cuts. I think the two are connected. Haidi thank you for those views. Up fromfrom cls a clsa from us. This is bloomberg. Haidi a booming jobs market in china helped australian jobs offset weak results in brazil, mexico, and elsewhere in asia. Net profit dropped 69 percent, but its underlying profit looks more rosy, up 11 . The company is looking to capitalize on that result. China has been a good performer. Its been two steps forward, one steps back. Insee enormous potential china, but we do feel a big step requires the chinese to assist us to ensure we get that growth. Reporter you said you are in purchase the rest of the company. How soon do see that coming to commission . We are hoping it happens quickly rather than slowly. Haidi its been pretty controversial. Ist 18 per share offer undervaluing the company, particularly if you dont intend to issue dividends of the balance sheet. What do you have to say to that . It does look like you are facing an uphill battle to get that through at that number. The reality is, we are not buying the extra shares. Other people are buying the extra shares. This is a decision for the special committees. We are sort of outside that process due to the rules. Haidi in terms of the strategy, where do you intend to relist . Guest for a while, it probably makes sense to remain private. Focus on getting china on board to focus navigating a difficult market. Haidi how long would that period of time be . Its a little early to talk about. Haidi but you could be looking at potentially a hong kong or singapore listing . Something outside the u. S. Guest its not something we really considered at this stage. Haidi i want to talk about, you spoke about the timeframe for completion with this deal. It was said recently that there is headroom for acquisition and more reinvestment. What are these opportunities you are seeing . Guest we talked about two or three headings. Theres lots of people solving problems around our Current Space and we are very excited by. We have made quite a number of acquisitions and expect to make a lot more going forward. Also looking at education, expanding that through international markets. That was Andrew Bassett speaking to us. We are going to speak to icbc on its latest take on china Property Prices. It is almost 10 00 a. M. In hong kong, 1 00 p. M. In sydney, 9 00 p. M. In new york. I am haidi lun. This is Bloomberg Markets asia. The cleveland fed president tells us fiscal uncertainty is the reason for the central bank to hold off on a march hike. Homeng the brakes, china prices rise in the fewest cities and eight year as curbs take hold. A surprise 880 million Share Buyback. Lets begin with the fed and a clue march could be a possibility when it comes to a. Ate hike she cautioned against the central bank waiting too long to take action. To delay toowant long because then you will be behind. If we continue to make progress on goals and delaying, we could potentially get behind. We one expansion to last. Haidi she says she believes in the rate hike should be gradual and the fed does not want to surprise markets. We want the expansion to last. If we delay too long and inflationary pressures build up, we want to come up we dont want to feel we have to raise Interest Rates on a path that then could put at risk the expansion, so the gradual path actually ins up with a better out come over all. Haidi we will hear more later this hour, but for now lets look at the markets with sophie. Sophie it is a mixed picture in start,day after a softer and given the strength and the yen, one 13. 47, the nikkei 225 back in the red, down. 25 , some , toshiba up over 10 around news lines proposed its chips stake sale. Rakuten surging on plans of a Share Buyback. Gains,pi extending trading the highest since july 2015, and chinese shares climbing and hong kong, hang seng up. 7 , new World Development and China Resources leading gains on the back of china Property Prices for january showing stabilization across the mainland with price basis 45, monthly versus 46 in december. Hsbc continuing to drop after slumping on its earnings miss we saw on tuesday. In the red following its jump when it led gains on the hang seng. Kunlun energy does see a slower expected recovery in the lng market. Some movers on the shanghai composite in the property space come in terms of the ratio there, 31 falling versus 23 risers. Some of the gainers, sorry, ats click out of that for second, century garden leading gains in that space, up almost 5 . Lets get the first word news now. Haslinda amin is in singapore. The Trump Administration issued memos outlining a sweeping crackdown on undocumented immigrants. The department of Homeland Security says the u. S. Will know longer accept categories for what it calls removable aliens from enforcement and allow swifter deportations without court hearings, and targets migrants charged with crimes or those thought to be dangerous. The memo regarding the executive order outlines the steps the dhs will take to secure the nation southern border, prevent further illegal immigration, and repatriate Illegal Immigrants swiftly, consistently, and humanely. Sheldon adelson says japan is the ultimate Business Opportunity and he could spend up to 10 billion on a casino there. The Las Vegas Sands chairman says he envisions an integrated resort boasting a Record Number of slot machines and focusing on convention tourism. Many operators have expressed interest in japan after leak legalizing casinos in december. Wells fargo sox four managers as it investigates the scandal. The head of its Consumer Credit card business and three other senior managers were confirmed to be fired. The bank did not specify what prompted the decision. Wells fargo has been reviewing how more than 2 million retail Bank Accounts were opened without customers permission. At 54 . 47 in new york after opec said it intends to achieve 100 compliance on the deal to trim production. Opec is confident members will continue to reduce stockpiles. In an exclusive interview with bloomberg news, totals ceo says the markets are facing other headwinds. We are in a volatile market. Yes, there is a positive trend, and i think the markets are willing but you have negative impacts potentially. The u. S. Shale oil increased, the be coming back to the market, will the country all be compliant or hide inventory . Continue lowero breakeven. Haslinda you can watch more of that exclusive interview with the total ceo at 12 00 p. M. Hong kong time. The 3 00 p. M. In sydney. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks. Bubbletial housing deflation, china home prices rose and fewer cities, 45 versus 46. Talk us through the numbers. Are the curbs taking hold . Well, i think this story for the numbers was really one of a creeping slow down. 45 cities still seeing month on month gains and prices, down in december, 46 but all you have to remember is that january is a blowout month for new credit. Huge amounts of new Mortgage Loans being issued in january, the bank started the new year with a banging, so the question really is come and not what happens to home sales in january, which will always be strong, but what happens in the months ahead, and our expectation is we see policy control starting to bite and a further slowdown. With om us every piece of data coming out, that distortion, what does it mean for the Growth Outlook . Not just thatt is contribution to gdp from property sales, but also around 40 other sectors to get affected as well. Thats right. It is hugely consequential. Driver a the main demand comes steel, cement, it affects everything from autos, home electronics, to furniture sales, so what happens in Property Managers for china, probably more than what donald trump does on export controls. Our expectation is that policy controls are going to white. We expect sales growth to trend lower in the months ahead, and we think that will drag investment down. We think that will be one of the factors lowering chinas gdp growth in 2017. Haidi thanks for that. More on these chinese Property Prices, what it means for developers and beatendown stocks of chinese developers. Speak to icbc and find out if real estate shows can maintain this trajectory. This is bloomberg. Haidi they quick check of the business closure headlines. Zon getting a 300 50 million discount on its acquisition of yahoo after Security Breaches. Now just under 4. 5 billion. Reliance geo will start charging for services from april 1, while extending some promotional officers to retain offers to retain customers. Market,ed into the topping 100 Million Subscriber since it began operations in september. Blackmore shares plunged to an 18 month low in sydney after firsthalf profit fell 41 . The Vitamin Supplement makers interim dividend drop to 1. 30 all strain. It is down 30 from year other. Said it would shift to more direct sales within china. To one of our top stories, chinas new home prices rising in 45 out of 70 cities in january, the fewest in a year, but a slower slow down if you will. Through thesetalk is the assistant Vice President in hong kong. Great to have you. What do you make of these numbers. Its a too early to say these curbs are working to identify this trend. This is the fourth straight month with lower prices. I think the curve is quite effective. This has been the trend since september. Also, the sales ploy them has , and the trend will go on, and even if there is some rebound on the prize, the government would do more to curb the price. What is going on is we expect the policy will go on. Becauset is interesting we have these curves having an impact when it comes to the developers stocks, 22 Major Chinese builders listed. We are looking at close to 2008 alltime lows, but goldmans saying it is time to by. I think that was to bring months ago, and it is true, the fiery ration is quite low, and ino what we have to look at the sector is the growth is no longer like 20082011. At that time, the Gross Margins were high, everyone had high growth, and when there is some business plan, it would recover quickly, but nowadays we can expect that kind of stimulus anymore, so maybe we can just intothree years. In the past few years, the fiery ration is quite close to the fiery ration in the past five years, so especially after the recent rerating. Investors may speculate on the mitigating policy, so there is some recover on the share price, but what we have now is the violation has almost come up to dontak last year, so i think the violation now is justifiable to go on. Haidi if you take a look exactly at what books are you means for some of these companies, in terms of Property Investment though, if you look at that sweet spot between clearly tier one cities, prices , talking about affordability, but then you have smaller cities, fourth tier, fifth tear cities seeing almost a glut of antiapartments, excess stock, so is there a sweet spot between which cities you like and where you might want to be taking up, where you think the bargains are at the moment . In terms of the physical market, we would like in 2007 some cities would have relatively stable sales fall you the victims would be on the tier two cities, especially last year or in two years time, the price goes up really a lot, but in the cities, these are cities that were hot in the past two years, but also the policy was a more stringent one, a high down payment ratio for first home, second home, and will face theties biggest drop in sales volume in 2017. Also, the tier four cities, we may have to pick cities from ,ities, some may be doing well especially in some areas or beijing, but these are good regions. For those like the central and western part of china, we have to avoid them because entry i dont thinkand those situations will improve. When you pick on the property stocks, we have to take the region, or the larger one that would enjoy the nationwide inovery, but not pick those certain regions. On the second hand come i think we have to pick on those margins. We expect some have performed thee well and enjoyed Property Price recovery in the past few years, but i expect sufferingtill bem high volume, so they may doing well in the margin recovery. Much ofre you expecting a change in terms of the types of tightening policies we are seeing from chinese authorities . There has been targeted, or depending on which city you are talking about, do expect that to amp up in 2017 . I think they may fram up the policy may ramped up the policy, set a high hurdle for the second home buyer, or raise the mortgage rate. They can even introduce some new , like raise the tax rate what the government usually do before the market heats up. Right, thank you so much for that. We will have to see with that seasonality factor taken at what the next couple of months of chinese home data comes out with. Coming up, the owner of the live messaging app sees its shares surge after it announces an unexpected buyback. We would take you why they are doing it. This is bloomberg. Surgedshares in rakuten after announced plans for a 181 marine dollar buyback. 181 million buyback. They raised money by selling stock, now they are buying it back . That is exactly right. June 2016 is when they said they were going to sell, they raised shy of 2 billion in cash by selling stock, and now 20 months later, they are basically on doing that and buying the shares back. The stock is up today 10 on this news. I dont know what to tell you. If you look at the stock price actually, they sold shares when they were trading around ¥2000 per share, and yesterday before they announced, they were trading at ¥1000 or share, so they are basically selling high low, so a good deal. Or rakuten it is what it is, and thats what they have done. Ifdi it is what it is it you are a longterm investor, how would you be feeling right now . Well, i think they were probably realize a profit on this trade essentially. It is a trade against selling high and buying low, so from ,hat perspective of management they time did really well. In an interview overnight coinciding with this announcement, management talked about how undervalued the stock is. This is nothing unique for rakuten. Many ceos come out and try to talk up the stock price higher. Perspective,erm investors perspective, ok, fine, shares are low, so you will i them, fine, but in another way, when it gets to ¥2000, that means the company is overvalued because that is what management has said. They have set a range for themselves. It is a shortterm boost, but over the long term, it sets of. Eeling on the stock price i amazon ofn as the japan. It really has not done anything to exciting. I have been watching it for a couple of years. They got into car sharing and have not than anything with that. They paid 1 billion for a messaging app, but rakuten has kept its hands off that business, so they continued to have their local ecommerce business doing well in japan, but besides that, Delivery Services and stuff like that, but it seems focusing on the stock price and said, so you have to wonder what their Growth Prospects will really look like. It does not seem like they are investing too much and innovation. Haidi all right, we will have to watch and see. That surprise Share Buyback decision out of rakuten. Financial regulator said to be working on new rules for the Asset Management industry to rein in risks. We have been looking at the details. What is this all about . Banknda the China Central , the securities regulator, insurance regulators, they have all said by bloomberg sources we are told to be discussing new draft rules for the Wealth Management products offered in china. This is an area that chinese households and companies have been pouring money into. Chinas Asset Management products total 8. 7 trillion have of june 30, according to a csrc official. They want to make the rules clear, no guarantee from the government, because there is widespread that if you invest these things, the bank doing the issue, or ultimately the government, will be there to , butif it all goes sour they want to make this clear this is not the case, and they see this is key to reining in risks and excessive credit growth in china as of late. Arei in terms of what we hearing, what rules are being discussed right now . Rosalind nothing has been set yet, but the ares look like this, Financial Institutions need to set aside 10 of fees from managing client assets as reserves in case of potential risks. Investing the proceeds of Aston Management products and nonstandard loans, or from investing the proceeds into Beneficiary Rights linked to those assets. Be phased inl gradually and only applied to new issues. Analysts say the move will lead getting will lead to tighter liquidity and higher borrowing costs. Haidi this is not the first time chinese authorities have tried to do this. Rosalind they have been looking at this area with increasing alarm and the last few years because he continues to be very popular. 3 will get a yield of to 5 , so they will be popular. The problem is that there are red flags. 56 of Wealth Management products are invested in bonds, chinese Corporate Bonds have been tumbling. We are seeing more and more Wealth Management products investing in each other, which can be a particular problem if there is an issue. Haidi what a mess. Rosalind chin for us there. Fortescue metals shares dipping. We will find out why. This is bloomberg. Haslinda i am Haslinda Amin with first word headlines. Rba governor philip lowe says solid performance in australias labor market is allowing lizzie makers to hold off on a rate hike. He said he would like to see the economy grow more quickly, adding a slight pickup and wage growth would help meet inflation targets. If the Unemployment Rate is high and rising, it would be. Ossible for policy to pursue it today, we have been satisfied that labor markets are heading in the right direction, if not as quickly as we would like. Haslinda the boe governor is not providing any specific guidance on rates beyond february inflation reports. In testy exchanges, mark carney said rate hikes could be faster or slower than the market expects. Mark carney also expressed frustration about criticism of the boe policy response to the brexit referendum. In terms of the Financial Stability risks around the referendum, the bank did take some serious steps to mitigate those. If we had not done that, there wouldve been Macro Economic consequences, and it is important we did it. I think that we just have to accept that we are never going to get says he John Williams you should expect the runup historically no Interest Rates to continue. Writing in the Economic News later for the bank, he said the low rate world will be sustained as an aging population and lagging productivity pull down growth. Williams says those factors make it harder for some banks in wealthier countries to prevent recessions. The fomc meets in midmarch. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Haidi thanks for that. This is Bloomberg Markets asia. Im haidi lun. Lets look at how the markets are faring with sophie. A little bit more direction with this markets online, but still pretty lackluster though. Ruining thestrength party for japanese shares, the yen rebounding after dropping for two days, trading at 113. 36. Lets look at how thats playing out on the nikkei 225, shares in tokyo now falling about 2 10 of toshiba, the likes of exporters the way up, and Real Estate Companies weighing on shares in tokyo. We do have the hang seng up. 8 . Rising over 1 today. I want to look closer at some metals players, the likes of Mitsui Mining rising to a gainsear high, tracking in metal prices, the rebound in metals, bhp billiton and anglo american. Bhp is the worlds biggest miner and did ramp up its dividend more than expected after firsthalf profits rose more than sevenfold. There is an ongoing strike in c over itsng some doubt outlook. Fortescue slipping despite that surgeon firsthalf profit and a higher dividend. The seat you know saying it does have a positive market outlook. Prices are and usually high and he does not see a significant weakening. There are questions of whether or not the upside for the commodities rally has already been baked in. Thanks for that, sophie. One stock that is moving in the wrong direction are shares in fortescue metals, looking like this, down over 2 , despite the iron ore miner with a strong first set of results, including a strongerthanexpected dividend. The numbers are pretty good, but this is really a stock that tends to be volatile. Never a dull moment with fortescue. It had a big run up in the days leading to this result worried the market was expecting something special, and got a four fold increase in profit, 1. 22 billion, shipments ahead of guidance, guidance for the rest of 2017 reaffirmed, that interim dividend of . 20 was better than expected. Costs coming down. Fortescue will produce a time of 13 perbetween 12 and ton, one of the lowest cost producers in the world, debt now down to 4 billion, and mccoury group says tortoise you could be debt free in six months. A few years ago, it would have seemed like an impossibility. Haidi what a turnaround, but getting there. Energy prices the other dominant story, iron ore and commodities, but with that energy has benefited. Woodside, 868 million for the full year, big jump from a year earlier, 26 million, slim profit then, mainly hit by writedowns. A final dividend of . 49 per. 3 , but currently off pulling back from bigger losses earlier in the day. An Honorable Mention goes to war woolworth doing well. Sales have been improving, so the turnaround story continues. All there for a wrapup of earnings today. Some breaking news crossing the hasmberg, hong kong leader been jailed for 20 months for misconduct. That is all we know for the moment. We will try to get more details, but hong kongs former leader tsang to be jailed for 20 months. Prices surge come increase demand, profit rising above 3. 2 billion dollars, we spoke with Andrew Mackenzie and asked about the miners caution tone when it comes to this commodities rally. The caution is based on the fact that some prices are now higher than we would have expected them to be around now, particularly iron ore and coal. Although we are heavily invested in things like petroleum and copper, where we see price risk to the upside. It is an uncertain world out there. Where the quite sure Trump Administration is going to settle down and what that might mean for World Economic growth, by we are slightly alarmed all the sentiment around protectionism, because ultimately that will have a bad impact on world trade, and we are in a business of commodities that flourishes when the World Economy a grows, and the world trade is growing, and i dont think there are any questions about that. I want to highlight copper and iron ore. Iron ore prices, even you yourself are skeptical about a rally. How do you protect your cash flow . Have you hedge that . Well, we dont hedge it. The way we protect our cash flow is protect our margin. Have already driven our annual production costs slower, but believe we can drive them lower with things we have underway, so that is the best way we can protect that, but at the same time, our productivity and agenda will reduce our unit costs and increase for hims, so in that way even as prices are falling, we can look after our gross margin. Subitems overpriced. Copper is different. A note yesterday saying that they see a thousand dollars a ton or more before the end of the decade for copper. You see that kind of massive rally with the deficit is hitting us . May be not as quick as the end of the decade, but certainly into the next decade. The growth in demand for copper exceeds what we see as the new supply that will come on to match that certainly by 2020, and copper is one of those metals that even if china is moving into more of a consumption phase, it will want to use more, and some times that will use a copper wire, thats why our Investment Program is biased to adding copper production than iron ore production. Atlets talk crude, brent 57, your shale assets, now a good time to sell . I dont believe so. I think the price could go higher. Our shalel that with business we are working hard to drive down our costs, and by driving down costs at the same time as we see the price rising, we are getting ready probably. We are doing some experiments. We are fracking are uncompleted wells. I think we will start to put more rakes back as the price improves as the costs go down. I dont think we would get that kind of value if we were to rush to a sale right now. At least for our core assets, which we value very highly, but we also have a number of offshore conventional Petroleum Investments underway with bp and shell. We are investing in a big project in the gulf, and we won the competition to leave the First Foreign Company back into mexico to develop a field there, and in a week, i will go to mexico to sign that deal, and that is another investment we will make to grow our oil production. P ceo that was the bh Andrew Mackenzie. Staying ahead of the curve, we hear from Loretta Mester and why the bank should not wait too long before raising rates. This is bloomberg. Haidi a quick check of the latest business flash headlines. Uber Ceo Travis Kalanick has apologized after a former employee said she was harassed and discriminated against. Lack ofgized for a diversity and for not properly responding to complaints from employees. Tor has hired eric holder lead an investigation into the former employees allegations. Tatas new chairman has promised to improve capital application application and boost returns. He will have to bring back growth and revive the weaker units after four months of boardroom drama. Faced 17e group billion in writedowns in the coming years from five unprofitable units. Offeraramco could discounted shares as part of the worlds biggest ipo. Sources saying the oil company discussed allowing Retail Investors and saudi arabia to buy for less than through international exchanges. It plans to sell shares as part of efforts to set up the biggest Sovereign Wealth Fund and reduce reliance on carbon feels. Loretta mester has cautioned against the u. S. Central bank waiting too long to raise rates. Tosked her what she needs see before she is comfortable with any movement. That if theew is economy continues progressing along the forecasts i have been saying, i think the data has been consistent with that forecast, i would be comfortable with rates higher than they are going to be, but no one is thinking we have to raise rates. If you look at the summary of Economic Projections from the last version in december, it is a gradual increase in Interest Rates consistent with where we are progressing on our goals. So in my view, we are basically at full employment from the standpoint of what Monetary Policy can do in labor markets, and inflation has been moving towards our 2 goal. We are not there yet, but my forecasts is we will continue to move up gradually over time, so i would be comfortable with Interest Rates moving up, but i want to hear the discussion as we get data between now and the march meeting, and i like to hear the discussion at the meeting because different participants have different views of the economy. Haidi is there a concern with core inflation and cpi inflation that we are seeing some seasonality coming through at this point, that you might want to wait longer, particularly as the followthrough from pickup in sentiment since the election has not played out yet . So even despite this sentiment, if you look at where economy ishink the moving closer on inflation, so again, i like to look at the outlook and whether the data is consistent with that outlook. In my outlook, i have a gradual upward path for Interest Rates over time. The meetings are not that important from a macro perspective, but you do have to say we have been making a lot of progress, and you dont want to delay too long, because then you will be behind. I do not believe we are behind the curve yet, but if we continue to make progress on our goals and delay, we would get that behind. Why is that important . Want the expansion to last. We dont want to delay too long and inflationary pressures do build up. We dont want to feel that we have to raise Interest Rates on a path that thin could put at risk the expansion, so again, actually ins up with a better outcome overall in terms of the length of the expansion. How many rate hikes are you pricing in a more or penciling in december . And from then to now, have you considered changing any part of the quarterly projections going into that march meeting . Be goingin, we will into the meeting and putting in new forecasts. My forecast is basically that trend. Is a bit above my trend rate is about 2 , a bit. Igher than the median my inflation forecast has inflation moving up gradually back to 2 over the next year, year and a half. , mymy Unemployment Rate long run Unemployment Rate is 5 , again, higher than the median, but i have the Unemployment Rate going down thathere come a so again, forecast is basically similar to what i see going forward. There is uncertainty around all forecasts. When you think about forecasting, there are a lot of things that can happen, shocks to the economy, and any Economic Forecast will have error boundaries around it. Is a particular time where there are some uncertainties about the fiscal side and policy side of things, but we build in what we can and have to wait to see how things play out. Again, always keeping focused on our goals of price stability and maximum employment. Haidi i would like to pick up on what you said. There is an added layer of uncertainty, which is what will the newough from administration on policy. Are you comfortable at looking why we are seeing this rally in the stock market. Has it happened because of the trump election victory or in spite of it . Do you feel comfortable making these assumptions in the absence of details as to what the fiscal and economic policies will look like . Is in theso the devil details on the fiscal policy, in terms of the timing of the impact, the size of the impact, so you are exactly right, there is uncertainty around the that package, but we always have uncertainties out there. In there uncertainties international economies. There is uncertainty about european banks. Are a lot of geopolitical uncertainties, but our job is given the uncertainties, we still have to make the forecast and decide what is appropriate policy. In an environment like this, we might see more changes in our forecasts than we might have seen over the past couple of years. Haidi that was the cleveland fed president rest of Loretta Mester speaking to me from singapore. We will look at why Sheldon Adelson says japan is the ultimate sure thing. This is bloomberg. A new poll says french president ial candidate fillon is back on track. N, gaininggged macro three points. His campaign stumbled when he was forced to apologize. Marine le pen remains the front runner for aprils firstround vote. Hanjins bankruptcies latest moves. The creditor once a judge to oversee the sale of the u. S. Terminal and container assets. Hanjin has argued that Bankruptcy Law does not allow creditors to pursue relief and south korea. Rakuten surging in tokyo after announcing it is buying back 120 million shares for up to 880 million. That is a significant discount from a share issue 20 months ago. Said it will repurchase 8. 5 of stock over the next 12 months. Shares have plunged 45 since the june 2015 issue. Sheldon adelson has identified japan is the ultimate Business Opportunity for integrated casino resorts. Chris, why is sans interested in japan right now . Ds interested in japan right now . Markets looking at the now. It has a big betting industry. He wanted to get casinos to. Apan and bring in tourism it has faltered early on. It was 23 years ago, and then all of a sudden it accelerated around the end of last year when a bill was passed, another bill will be passed by the end of this year, and with that, you have not just mr. Adelson, but lots of other big casinos coming here and ready to spend. According to mr. Adelsons estimates, at least as big as singapore, 6 billion, up to 10 billion. Haidi the other question i been as that it has topic of constant public debate, but why is japan alone casinos now . Well, one of the things is that it is to tap tourism. Power, hecame into was targeting 20 million tourists by the end of the decade, the time of the olympics. We have path to that and are up to 24 million last year. They have double that goal, and that will bring a lot of people into the economy. Years ago, japan would go overseas and were not getting a balance. Going overseas then coming into the country, and it was a drain. A weakening yen has helped to turn that around and this is seen as a way to boost the and if it can reach outside and bring people into the country, then it should help boost economy. Haidi chris, what are the drawbacks . What isobviously contentious now is addiction. The junior partner in the coalition at the moment along ldp has reservations on that. At the moment, there is a year before a second bill is passed, and they will try to work out what safeguards to put into addiction, ornt have it easy the presence from it. The people against the casinos, that is one of their biggest issues, how will you deal with this . I think we will see more debate on that in the coming month and how to make it friendly to the areas where they are built. ,aidi always a huge controversial issue there. Chris there and tokyo for us. Ahead on Bloomberg Markets, the big stories of the day and analysis. Seeing thate exuberance and asia filter through from wall street, but not at the same level. We will take you this next hour to the aviation festival in singapore. Rishaad salamat is there, and we have two big guests from we will talk to them about the aviation industry. Bonds, becausen pimco has flagged what could be a monster of 11 year bond issuance. The nextissect that in hour of Bloomberg Markets asia. This is bloomberg. From our studios in new york city, this is charlie rose. Charlie welcome to our broadcast. Tonight we spend the night with a man who has left his mark on the history of new york city. If donald trump is not in the news for a controversial new development, he may be in the gossip column with his latest relationship. Less than two years ago the trump empire was in trouble and some were quick to announce that the king had lost his crown. Donald trump, some say is out to prove them wrong. He is writing his third book, the art of the comeback. Donald trump is here and i am