Interview: Asia Pacific Region
>> it’s 912:00 a.m. in sydney and it will be cloudy day, warm with lengthy, sunny periods throughout the day. isolated showers expected in the west with high temperatures reaching 26 degrees celsius. this is “bloomberg live” from hong kong. in world news, u.s. military investigators say the strike on a u.s. military base in mosul was the work of a suicide bomber. ron madison has that story from tokyo.
>> good morning. that blast left at least 22 people dead, including 13 u.s. soldiers and five u.s. civilians. air force general richard myers told reporters there were no remnants of a rocket or explosives found, indicating the work is that of a suicide bomber. leaflets are being associated with the group claiming responsibility for the attack. a day after the blast, a curfew of 9:00 p.m. to 5:00 a.m. is imposed on the city. saudi arabia recalls its ambassador to libya over what it claims was a libyan plot to kill the saudi crown prince. the press reports the country’s foreign minister was made following reports of an alleged assassination bid to kill crown prince saudi arabia john hefner―abdullah abeastbound. the “new york times” reported that moammar qaddafi sought to punish the prince. new york city says gay marriage violates rights. the judge is hearing argument it’s validity of the state’s initiative to banned gay marriage. a ruling in favor of san francisco would make california the second state after massachusetts to legalize gay marriages. the state supreme court stopped the practice in march without addressing the constitutionality of the california law. russia has test fired an intercontinental ballistic missile. the missile, which nato identifies as ss-18 satan was launched from a silo on wednesday, successfully hitting its target 3700 miles away. the associated press reports that the launch was to extend the lifetime of the aging weapons. military officials have said russia would keep arnold schwarzenegger―its arsenal for another number of years.
>> that’s the look at world news. back to you.
>> shares of fannie mae, largest source of money for the u.s. mortgage industry, rose after the company ousted chief executive officer franklin reigns and timothy howard, chief financial officer. bob bowden has more on the story from new york.
>> the main issue for fannie mae will be to become adequately capitalized by the june 2005 deadline when the companies agreed to to meet on the subject of capital requirements with the office of federal housing enterprise and oversight. investors also say the process of restoring the company’s credibility will be a tougher challenge.
>> this is a company that’s going to take a $9 billion or so charge. it’s going to have to deal with accessing the capital market . and it’s going to have to tell a story and it’s been discredited and a great source of its finances have come in the debt side from foreigners who are puzzled by this behavior. this is a c.e.o. and a team that did road shows in foreign countries saying, trust us, look at our story. and now they’re fully discredited. i think there’s more trubleds ahead for fannie.
>> fannie mae’s profit restatement could be larger than the $9 billion it cited. bert ely, critic of fannie mae, estimates the company’s shortfall is closer to $13 billion. he says fannie mae may need to shrink its balance sheet and reduce capital requirements, temporarily suspend its dividend, now close to 3%, and possibly sell preferred stock to raise capital. one of fannie mae’s largest shareholders is david dreman of dreman value management and is pleased with the changes underway. while up today, fannie mae shares are down year to date, down 4% as you see on that chart. in the future, shareholders can only hope fannie mae will perform like philip morris -- freddie mac, which had its own problems before ousting three top executives. cathy, back to you in hong kong.
>> thanks for that, bob. coming up, the yen rises for the first day this week against the dollar and euro. we’ll ask a currency strategist in sydney whether the last week of the year is a good time to buy yen.
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Listen Interview: Oil prices
welcome to “ live” from hong kong, i’m catherine yang. we’ll wrap up the trading day in new york and set the agenda for asia. our live guests include a currency market strategist to comment on the dollar’s latest drop against the yen and euro. a u.s. economist will tell you what the latest figures mean for the market and federal reserve. we’ll also hear from the general manager of rio―sanri owe, the company that brings you hello kitty. oil with its biggest drop in two weeks. the u.s. energy department reported a surprise increase of inventory. stockpiles of distillate fuels, including heating oil and diesel, rose 600,000 barrels last week. analysts expected supplies to fall. crude oil imports rose to 10.5 million barrels a day. traders say the downtrend is set to continue as the price rises and demand for heating oil slows. weather forecasters say temperatures in the northeastern u.s. will rise after christmas. the christmas rally continues on wall street. the fall in oil prices and a report showing the u.s. economy grew faster than expected in the third quarter boosted stocks. the dow rose .5%. the s&p and nasdaq closed higher by .3%. the commerce department revised third-quarter g.d.p. up to 4% from an estimated 3.9% last month. financial shares gained after fannie mae ousted two top executives yesterday. chief executive franklin raines and chief financial officer,j. timothy howard, quit under pressure. the resignations came after the company said it may have to restate profits by $9 billion. the s.e.c. havebeen investigating the company for accounting irregularities. we’ll have a special report on new york on reforming the mortgage industry with bob bowden. the 10-year note fell for the first day in three in line with lower oil prices and as u.s. stock market benchmarks reached three-year highs. traders say investors are not attracted to treasuries. yields are down 1% from the year’s high of 4.9%. the dollar slipped against the yen and euro in new york trading. the dollar fell to the 1.34 range against the euro and 103 range against the yen before bouncing back a bit. you’re looking at live market quotes on your screen. the dollar lost ground against the yen following yesterday’s trade report indicating japan’s exports accelerated at a faster-than-expected rate of 13.4%. that sent the yen higher on speculation exports will sustain japan’s economic recovery. also, minutes from a bank of japan meeting indicated central bank policymakers said the yen’s climb would not hurt corporate profits, an indication the bank won’t sell yen to weaken the currency. asian stocks rise in u.s. trading with gainers including two of japan’s largest automakers, toyota and nissan, after a u.s. government report confirmed the economy accelerated in the third quarter. crude oil futures with their biggest drop in two weeks yesterday. to learn what that may mean for trading in asian markets today, let’s go to david tweed, our stock market editor in melbourne today. how are asian markets likely to react to the drop in oil prices?
>> cathy, looking at the futures, it indicates that the markets will welcome the decline in oil futures price. nikkei futures are trading higher at the moment. i thought it might be useful to look at how asian markets have reacted since october 26, the day we saw crude oil reach its record this year. the oil prices have dropped 18%. but looking at the morgan stanley capital international asia-pacific index, during that period, it’s driven by 9% or 10% and the main gainers, the big gainers, have been financial stocks, material stocks, commodities stocks and also consumer staples so a lot of consumer stocks coming back as people have been betting that the higher oil price won’t work like a tax on the spending of consumers. all those three indexes are up more than 10% from that period since october 26, with the best performers in terms of index points, the ones driving the index, toyota motor, b.h.p. billiton down here in australia, of course mizuho financial. looking at the big percent annual gainers, fosters, australian wine company, posco, steel company and also rinker, an australian company that makes concrete blocks used in construction in the united% states where it gets 80% of its revenue. these are the stocks reacting to the drop in oil prices and improved outlook for economic growth there. cathy?
>> the australian stock market closed above 4,000 for the second day yesterday. how are australian stocks seen opening this morning?
>> we did close above that level, a psychological level, i might add. the futures are showing up around about two points. there are a few sectors that might dampen australian stocks at the moment. to mention them, looking at b.h.p., rio tinto and w.m.c. resources, all these companies are also producers of copper. and copper fell in new york, ending the longest rally since 1988. so you might see some of these prices coming off. also, remember, b.h.p. is also one of the biggest oil producers in australia and they may come out in reaction to the oil price overnight. back to you.
>> thanks, david. microsoft loses an antitrust case in europe. a decision by an e.u. court means microsoft must sell a version of windows without a music and video player. it requires microsoft to license proprietary information on rivals in europe. the e.u. says the order prevents microsoft from dominating rivals including real networks. for microsoft, the decision may limit its ability to add futures to windows and may hurt the company’s competitiveness in europe. shares of microsoft fell .3% in new york wednesday. bill gates holds more than $300 million in stock in warren buffett’s berkshire hathaway. a regulatory filing reveals the world’s richest man owns more than 3500 shares in the company owned by the world’s second richest man. the investment amounts to less than 1% of his net worth. gates was required to reveal his berkshire hathaway holdings after becoming a board member. the food and drug administration says that astrazeneca ads underplace risks of its cholesterol treatment, crestor. the f.d.a. wants the ad pulled. the reprimand comes five days after the f.d.a. called for a closer look at crestor because of its link to kidney damage in high doses. taiwan’s export orders probably crew at its fastest pace in november. rising demand for chips, flat-panel displays from those countries is lifting demand for taiwan’s exports. economists we surveyed expect the export orders rose 24% in november. hong kong and singapore report november inflation data today. hong kong consumer prices probably rose for the fifth month as the city’s recovery enabled restaurants and retailers to charge more. economists we surveyed expect hong kong’s consumer prices climbed .3% in november. in singapore, the inflation rate probably slowed due to falling food costs. consumer prices are reported this afternoon. in japan, markets are closed in observance of the emmer’s birthday. and investigators in a new direction regarding the attack on mosul.
