tv Bloomberg Markets Middle East Bloomberg May 22, 2016 12:00am-1:01am EDT
i am manus cranny. one of the big themes we left last week, which opens the box of risk, where will the dollar goes? what are the most accurate forecasters is telling the market that this rally has left. we have the dollar marching higher, one of the most accurate forecasters out there is deutsche bank. the fed raising the specter of a june rate hike. june back on the table. butgreeing not to target, what you have here is the dollar rally beginning to turn. that is if japan is warning, still warning that the movements are one-sided and abruptly what does it mean? deutsche bank says it is just the beginning. they consider buying the dollar against the yuan, mexico, south korea. and there is movement in the markets as well in terms of positioning. we have gone from being net short for the first time a
number of years to being net neutral. that leaves a lasting potential to turn higher. what if the fed really went into full engagement? here is the market. i want to take you back to egypt, the tragedy obviously across the country and the market. and the egx dropping by 1.8% on close of business, volumes lower, tourism, i will talk to one of our managing editors about this, 40% lower since the russian air jet liner was dropped. the benchmark is tied to the u.s. dollar. though we had one devaluation. is there another on the way? egypt very much in a state of turmoil. they want more answers than they have questions. let us reflect back on the middle east markets that we saw on the close of business thursday. of course, what you have there is down 1.6%. dubai down the most in two weeks, the most since march do. 6/10 of 1%.wn
fivehabi down, that is day with declines down, the lowest since february. let me show you the lowest rate on friday. the fed, is the session back in play? this is the data you have. the s&p rallied last week, but we have had no record high for 253 days. no new high for 253 days. we have not seen that since 1995. and of course, the two previous rallies we had were 1984 and 1961. all to play for in what happens with the fed this week. trey galloway will join me to discuss that. in the meantime, we have the bloomberg first word news with tracy. tracy: thanks so much. greek prime minister alexis tsipras is breaking for a new vote on austerity measures,
lawmakers in athens will vote on a wide-ranging bill that includes measures on the taxation of diamonds to the transfer of real estate to a new privatization fund. meanwhile, european creditors remain at loggerheads with imf about how much debt relief greece will get. and finance chiefs from the world's biggest developed economies have reaffirmed a pledge do not deliberately weaken currencies after two days of talks in japan, highlighting risk from terrorism, the refugee crisis, and the potential brexit. but stopped short of a coordinate a plan to revive lagging economy. japan again referred to what he calls one-sided, abrupt, and speculative move on the again. ceo tim cook raise the possibility of manufacturing apple products, as well as developing apps, in india with a meeting with the prime minister. turkey is winding down his trip, as he reviews applications to
open retail stores in the country. apple has just 2% of smartphone sales in the world's fastest-growing market. and the u.s. and its partners in the iran nuclear talks are talking to european banks and businesses that newly legal trade with the islamic republic will not be punished. they said they will not stand in the way of lawful business and financial deals with iran. many european and asian banks are still reluctant to deal with iran because of remaining sanctions outside of the nuclear agreement. journalistsver 2400 i more than 150 news bureaus, am tracy. back to you. manus: let's return to one of our top stories. two automatic warning signals in the case of smoke in the cabin, just before it plunged into the mediterranean on thursday. it is only adding to the mystery of what happened to the airplane and the 66 passengers and crew?
andrew barton is our management editor and government reporter in the region. he joins me now. andrew, many more questions are being raised now than we have answers at this stage. but the debate that engulfs us is that whether it is terrorism or mechanical failure. that is the hub of this issue. andrew: the issue is to find out what brought the plane down. and you obviously corrective outons, once you figure what happens, but from the point of view, it does not matter. egyptism or accident, just cannot seem to catch a break. they had the arab spring, the cast of followed arab spring, the downing of the plane over the sinai peninsula. this is a country that is in a balance of payments crisis. it relied on the generosity of golf highlights. you know, they are retrenching. they're cutting back, and that is ended. and the egypt in a very precarious position. manus: give me some context
around that. you mentioned the potential of balance issues. tourism is the lifeblood, and has been the lifeblood, for the economy. just give us some context around that. andrew: tourism accounts for 5% of the workforce, directly employed by tourism. you said in your opening segment, down 40% year on year. this is a country that is absolutely vital for egypt to get a grip on this for tourism. what the government did to try and bring investors back in, they devalued the pound. they promised exchange rate flex ability. and they raise interest rates. investors praise the move. but i did not come in with any money yet. so what egypt does not seem to be up against is a break, a window when the government comes through with these plans. manus: there is also rebalancing. i showed the u.s. dollar, but the market is already being quite aggressive and presumption of what happens next on the pound. they are already moving. andrew: yeah, you are seeing
pressure in the market. we saw the stock market on thursday down by about 2%. we will see what today brings. but basically, there is pressure on every front, from investor perspective in egypt. the government seems to be scrambling little bit to get ahead of the curve. just bad luck. the country cannot seem to get a break. manus: andrew barton, thank you very much. managing editor, joining us with the latest on the egyptian airplane. now, let us get to my next guest. he is an aviation consulting, mark barton, the ceo, on the phone from new delhi. thank you so much for joining us this morning on this story. main pieces that we in theen to understand last few hours, it is understood there are a number of warning signals, smoke in the cabin. and the second seems to be that the debris being found thus far,
over a wide geography, and very small pieces. what you make of the latest pieces of information that we have? mark: morning, thanks for having me today. what is coming up clear is that we are looking at a cockpit fire and the fire on board the aircraft, which we have seen events and issues of this come up before. let us not forget, swiss air had a cockpit fire similar because it was heated. that is the important thing. we need to focus now and wait for the investigation process to get started. i think what is critical is, as you rightly say, tourism is going to be a key economic driver for egypt. and unless we look at a stable airline, we are not going to get anywhere. so yeah, i think all the focus now shifts to the investigation. and leaders are starting to put trypieces of the puzzle,
to figure out what is going on. and to address this event, and stop future ones from happening. course, it is going to raise the specter of regulation. let us talk about the details we do have. 6:20 a.m. there was acknowledgment of local fire, electrical equipment and actually failed. and we are saying in our reporting that it is too long a period of communication, but too short of communication from this distance, for a traditional fire. would you concur with that analysis? mark: yeah, i would. in the sense that we also picked up reports from greek aircraft control that stated there were movements to stabilize the flight. so we are looking at the pilots, some point in time, taking cockpit corrective actions and stable the descent.
it is too early. we are just speculating. i think a lot of the focus shifts on the global investigation, because we just cannot afford to have airplanes catching fire. and if that is the case, something needs to be done with suppressing fire on board. now, in the past, we have seen cockpit fire suppression systems. suppression systems in the aircraft, they are on board, technology that can suppress the fire. so obviously, something is not working out here. or maybe we seem to see something that will happen in the industry before. let us not forget that egyptair is a star alliance member airline. i don't think they're going to be cutting corners it comes to maintenance. but what i do feel is that this becomes a global investigation, and airbus along with the faa have to get involved with this. manus: given that this airplane
had flown to five destinations within 24 hours, 13 years old, is that typical? give me a sense of what a typical capacity of an airplane like this would be? it has flown as far as eritrea, done quite a few trips and this 24 hour period. is that normal? mark: well, it is. we are looking at a typical flight going around, and i would be concerned if the aircraft, in one of the airfields, which it did not, and they obviously have the chart security back over, the air force in egypt, i'm not really concerned. i don't think that brings up a doubt. but again, we need to focus and rule that out with the investigation process. but all in all, i think this just boils down to something more link to operational and technical, as opposed to looking at a third-party. there have been lots of reports coming out on terror, you know,
being the angle coming in. but i think if you actually look at what caused the fire. ceo from newarton, delhi, thank you for joining us. with the very latest there. today,s of this show bloomberg markets middle east, we are going to be focused on the all states that have foreign capital. we understand saudi arabia will come to the bottom market. all of that to play for on bloomberg markets middle east. and after this very short break, we are going to look selectively into emerging market equities. find out where to put your money. joining us ono bloomberg markets middle east. ♪
bloomberg markets middle east. now, time for some of the big market moves. we had the g7 over the weekend. we have had jack lew really warning the world that we are not on the brink of a recession. the japanese, they may have agreed not to get involved in a currency war. but they are saying the movement is one-sided. david is the chief investment officer for swiss wealth management. he joins us now. we of the meantime, course will be able to bring those views to you. let us do you up to speed with some of the markets in the middle east. hours ago one tilde star start of the trading day. on thursday, we had a particularly tough ride. the dubai financial markets were down over 1.68%. abreu dobby was down over 1.76%. we had some material stress in terms of the equity market. it was the morning after the
fed, of course the day we saw egypt fall into crisis, as a result of that, you saw some quite dramatic moves in the middle eastern markets. let us to show you how saudi, bahrain, and kuwait actually finished the day. turn the boards across. kuwait down 1.4%. of course, i was in kuwait on thursday, speaking to the finance minister, the oil minister, and of course the deputy prime minister talking about what is going on in the bond markets. and the oil markets, $50 oil was something they could indeed live with. ok, good to go. let us talk about these markets. get a bit of context around us. joining me now is david pinkerton, chief investment officer of a private bank. great to have you with its. s. let us step four. we had the g7, and the
interpretation was to stay away from fx wars. jack lew really warning the market we are not on the brink of a recession. have you look at the economics? clearlyhe fed is thinking we are not in risk of a recession. a want to raise rates. we think they're looking backwards at the data. the markets, on the other hand, are forward-looking they are quite concerned about that. if you have kind of the yield curve getting inverted, that is a good and reliable indication of a recession. we are 7.5 years of a bowl equity market, and profit margins do not expand forever and ever, there is a possibility of a recession on the horizon the within the next -- manus: a global recession, u.s., chinese? david: all sorts of geopolitical risk factors out there. you have the china hard landing scenario, the brexit if you come of strength. all of these issues are giving
investors quite a bit of anxiety. that is reflected in the equity volatility. manus: i'm going to show you a chart here, if we committee bring up what is my monitor year, the fix is ratcheting higher. america,of ratcheting higher, jpmorgan is saying, if i look in this, april volatility, people are saying it is low, but we are up 25% on average. bond market, fx, equities, a warning light? david: absolutely, almost everything is proving difficulty. gold is backing off, a traditional safe haven. with the process of a rate rise, gold is under pressure. but the dollar strength is one of the key threats to global economic acceleration. manus: now the fed of course warned on the strength of the dollar, on a number of occasions, the big story we have
this morning, i don't know where the fed is this morning but you can do the data count on the dollar, deutsche bank is saying the dollar is rallying. a small rally, which i showed the top of the hour, it has less. and will go further. how many hikes do you think they will get in? will that drive the dollar? david: clearly, the dollar is the preferred investment in a risk environment. that is what be the beneficiary of that. in terms of wind of the fed hike? you know, we have the next meeting. and shortly thereafter, we have a brexit decision. prudence would suggest that the fed might deep for or wait until that global anxiety about brexit becomes after-the-fact. manus: i think the fed are getting him then. you have the u.s. elections in november. this window really begins to squash. this is the chart i showed at the start of the show, dollar rally, deutsche bank's view.
an,y say by against the yu south korea, these emerging markets trades. i heard what you said about the bond market and version, but in terms of the dollar story, the fed, battling against turning the dollar higher. david: no, they don't. it really kind of hurts the global champions within the u.s.. an that is probably why some of the small cap companies that have exposure exquisitely to the u.s. economy probably outperform the global companies that are basically struggling to grow earnings because of this dollar strength. manus: where do you want to be positioned geographically? what often goes on in my mind, the word you used was about recession. you see, that fills me with dread. we have been pulling money out of equities, the sec had the audit over the weekend, the data suggesting larger amounts being
pulled out of equity markets, are your clients pulling out? david: at this point, in general, we are looking for this pendulum to shift in favor of emerging markets. and the thing that is interesting to us, they are no longer a homogenous group. used to have the bricks, and they all behaved in the same way. now they are converging. we have currencies that are depreciating rather significantly. india, brazil, all equity markets have been performing well. and our paradigm for looking for opportunities in the emerging markets is the first look for this massive currency depreciation. then we look for the underlying fundamentals. one of the particular markets we think has great upside is indonesia. they have the fourth largest population in the world. they have some great export partners. and they have decreased over the
last 12 months. manus: there is the function, if you want to understand emerging-market currencies, there you go. that is the performance on the bloomberg over the past year. david pinkerton stays with it. a lot more to get through. thank you for being with me. ceo of balkan back. we are live in dubai, 8:23 a.m. here. 5:23 if you're waking up early in london. you're watching bloomberg markets middle east. ♪
with this kind of credit rating, even though we just had a warning flash over from mood y's, what does that say to you? david: they are trying to diversify liquidity on oil. that is obvious. one of the issues quite interesting, anytime you're taking a company public, you want to have good numbers to support that offering. so to us, that would suggest they have some pressure, some financial reporting pressure, to continue to produce. and this is a larger issue with oil. you have a number of nations which basically have sanctions for many, many years are coming on. you have iran and iraq producing because they need the cash flow. and the same with saudi. so the only place really curtailing production is the united states, where the bond market is basically said, don't sort of drill on economic wells anymore. the u.s. is basically shutting wells, but the rest of the world
seems to continue to produce. so the supply and demand balance is a little bit better than before. but in order for oil to kind of hold a sustainable appreciation, weeding real growth in the emerging markets. if you look at demand growth in the emerging market, it is basically stagnant because of aging populations and efficiency. the real demand growth has to come from emerging markets. doesn't comeat through, you think we top out at $50? david: exactly. we don't think we will ever go back up to $100 unless there is a geopolitical issue, which no one hopes for, but basically with the demand and supply, we are within trading range. manus: caught in the corner, thank you very much for joining us. you come back in and see if. that is david pinkerton, chief investment officer at falcon bank. coming up, issues in saudi
manus: smoked in the cabin, the flight data shows a series of alarms on the egyptair flight 804, minutes before it disappeared from radar. the egypt government is set to expand the taken a new right-wing coalition member. we are live in tel aviv with the latest. new month for oil, canadian producers are getting back to work as the fire threat eases. the july contract starts trading monday morning. and it is sunday morning, 8:30 in dubai. you are watching your destination for the trading week, it is bloomberg markets
middle east. you are welcome. i am joined by anne-marie in london. great to have you with us today. so, let us set the agenda. i read the first headline. it is about egypt. is that would to be the number one topic of agenda tomorrow when everybody hits the floor? anne-marie: yeah, that is right. eu foreign ministers are meeting in brussels. it is technically not on the agenda. what is our syria, libya, russia. but the air flight will top the talks. the latest we heard from the french accident investigators saying the automatic radio messages about smoke in the front portion of the cabin, moments before contact was lost. for ministers gathering in brussels, this is likely what we are waiting for. any news and headlines waiting about what could happen about the flight. officials have not yet said exactly what the cause of this was manus. and the merkel
is in turkey. --angela merkel is in turkey. a tenuous time, isn't this? anne-marie: that is right. he arrived this evening. she is officially therefore the u.n. but it is really about turkey, saving the refugee deal. the relations between the , threatening to scrap the deal if the eu does not allow free flow visa free travel into the eu. but angela merkel needs this deal. showing the influx of refugees has dropped for a fifth consecutive month in april. april is key, down the lowest in two years. and this deal was struck in march. and with relations really souring, she does go there and make sure that they can keep this deal on the table with turkey. anne-marie, i do not
know. spread polls, telegraph polls, i am in the middle east. but i will get poorer if i vote for brexit. it seems. top.arie: yes, brexit is this marks one month until the vote on the referendum. we heard from the treasury on friday. george osborne saying that, the home price in london, will drop 80% in britain leaves the eu. immediately after that report came out, the lead cap contested it. he is not done yet. this is the last week for the treasury to make a mark, the last it effort starting on friday, we have that period, basically the government self-imposed curfew on what they can and cannot say. saw bright and
early on sunday, prime and mr. david cameron said the shopping list of food and drink can go up as much as 120 pounds a year if britain were to leave the eu. on the agenda,p we will see lots of reports and analysis out of the government before that self-imposed restriction starts on friday. manus: well, anne-marie, all to play for. it must be true. better than my daily mail. anne-marie joining us every week on bloomberg markets middle east. great to have you this morning. let us shift attention back to saudi arabia. the bottom markets, the first international continuance for foreign financing, the reason to plug the debt. great to have you with the. when are they planning to come to the market? >> well, the information we have on record for some government officials is that by september they come to the market.
but the government has just recently signed a $10 billion sovereign loan with a group of international banks. and the feeling the banks are getting is that valuation will move quite quickly now. we could see the saudis and the market quite soon. work is underway on this program. and the market is very open and active at the moment. we see a lot of issuance out of the middle east. we could see the saudis sooner or later. manus: and the big question is, how much they intend to raise. the average dobby issue, the bid to cover ratio, that is what i call healthy. what kind of appetite do you think there will be? the budgetll, deficit this year is around $100 billion. they are raising $30 billion from local banks on the bond auctions to the local banks. loan, whichbillion was just side, still a $60 billion asset to fill.
the foreign reserves they hold, which we have seen written about recently, and the international bond sale, obviously you're not be able to print $60 billion. we are looking at something that is maybe between 0 billion, dipping the toe into the water, gauging the market appetite. the feedback from alone was the banks were very interested in this. investors were very keen on this. buying into the saudi arabia reform story. they should have a deal. manus: of course, will really want to know, i know sam potter wants to know this, i hope you have the answer. who has the mandate? go. people: well, what the -- the banks will arrange this loan, the feedback they have got is that you need to be in the loan to be on the bond. so there is a very wide spectrum of banks who are in there the
people, who have the big presence in saudi arabia, hsbc. a lot of transaction for them. jpmorgan as well. deutsche bank, these sorts of people that have very deep relationships with the saudi government. there were to be in a prime position. it also, the government is trying to build links with the banks and investors in china as well, maybe there could be a chinese bank in there to tap that potential. there is good to be a big group. you should expect to see quite a few names on the list. manus: matthew, thank you very much. matthew martin on middle east finances. the very latest out for saudi arabia. intentionally, coming to the bond markets. wening us now, of course, have a new face. but a regular face. it is tracy joining me. we also have the head of fixed income research at emirates. great to have you over here.
lovely to have you with us. first of all, have they joined the rfp? have you been asked to join in? any room? >> no. manus: where should the saudis go? will there be a good appetite for this kind of bond issuance when it comes? >> they have not done a bond for a long time. they are returning to the market after more than a decade. yes, i think there will be appetite for the bond. in terms of the they give it to, they will probably want to visit the internet market. to try to predict liquidity in the market. the chance is more american and european banks, than the local ones. tracy: irony. is there a risk with lots of gulf countries tapping the market, getting a supply issue that may be weighs on bond issuance.
anita: i think that is very opportunistic for them to tap international markets. money, in that part the world, it is cheap. in japan, negative rates. in europe, negative rates. plenty of banks and plenty of money who wants to get involved because the returns being much higher. gs the that be question, nine years in germany before you get a positive rate. what is happening to me, are you seeing a proportion of people, colloquially calling it hot money, that money from japan and europe come here? is that picking up? anita: absolutely. look at the first quarter, we had $24 billion in lower bonds. in most of that came from japanese banks. there is a huge demand of international money coming in. if i look at the incentivizing balance sheets, meaning the foreign borrowing the banks and
organizations have done, it has increased market fold. tracy: who do you think the natural buyers for saudi arabia's bonds will be? anita: it is a sovereign, very rich with a lot of assets, under pressure, which means there will be a price for the bond. but in terms of the taking, it will be anybody from pension funds, hedge funds, looking at bank balance sheets, anybody i guess. manus: the whole world will bid for currency exposure, balancing the pension fund. r.have sidbo it is not all-encompassing, but it is rising. i talked to the kuwaiti finance minister on thursday. he said he is being very careful on what he does, tapping the international bond market and balancing that local requirement. there is definitely a ratcheting
higher in saibor. all the market showing liquidity constraint. would you agree? fallen, but at the same time the construction industry is doing well. a lot of industries are doing well. it is still there. liquidity in the system is tightening. yes. having said that, loan deposit ratio is a problem. ae.have 125% versus the u it has only gone up from say 75 basis points to now 110. to saibor has gone poster 110. so individual markets, depending on deposit growth and loan growth, have shown action in different situations. tracy: let us assume we get the bond sale from saudi arabia sometime after ramadan. how will they be judging
success? what will they need to see happen to come to the markets again? anita: i think pricing is a major factor. i'm sure they can get done, but everything has a price. if they are doing 200 basis points over five years, if we were to stick to the previous memories, 60 basis points, nothing to offer up. quite a different strain. manus: one of the charts shows the issues. typically, over 50% of the issue in malaysia. but when it comes to that, it is not just gcc. there are other nations in the issuance programs. indonesiafer gcc over or malaysia? is it dovish over corporate's? give me your take for the rest of 2016. anita: you have a look at it in two different ways. there is domestic currency,
close to 240 billion, most of it in malaysia. and then there is the dollar-denominated, about 97 million outstanding. and close to 50% is from gcc. they do not have a local currency the nominative market. so i wouldn't necessarily be thinking exactly which market, because it depends on what the product, currency, devaluation is. they have done that. do i like this? yes, i do. at the moment, if you look at the spread on gcc, 40% more than where was last year. that is a value to be found there. week inhe big news last the global search for yield was the news out of the fed fomc statement, under lively hawkish.
do you worry about the u.s. raising rates the local income market? anita: absolutely. fixed income is absolutely nothing to do with u.s. rates, but it is a big factor. having said that, the market moves a lot more on the analysis of the world than the santanders. if i look at what impact it will have, 25 basis points, and how the market will do that, i think the bulk of it will be compensated by tightening. so, overall price impact, yes, would be negative. but i am not much worried about the falling off scenario. manus: anita, thank you very much. head of fixed income. and tracy alloway. coming up, changes on the way for israel's government after benjamin netanyahu's defense minister quit. we go live in tel aviv,
manus: welcome back. you're watching bloomberg markets middle east. it is check out some of the stories making headlines around the world this sunday. u.s. officials say the taliban leader is believed to have been killed in a drone strike in a remote region near the pakistan border. the pentagon confirmed he was targeted in a strike approved by president obama. they said it was still studying result. he succeeded the long time television leader, whose death in 2013 was only confirmed last year. suggestingote today, a first ever victory for the far right freedom party. t, is adidate,, borbe national skeptic threaten to dismiss the coalition government if they failed to do a better job on the economy. and the ongoing migrant crisis, that would bring decades of austrian president's largely
playing a ceremonial role. volcanic irruption in weston indonesia has killed at least six villagers and injured several others. the mountain is in north sumatra, ashes as high as three kilometers into the sky. on the western slope, in nearby farming community, it has been dormant for nearly 400 years before erupting in 2010. it is one of around 120 volcanoes active in indonesia. north korea has offered what it calls working level military talks with the south, within the next few weeks. state media says the young yang's national defense minister made the offer yesterday in a letter to the south korean military. such talks to be held later this month or early june. and there has been no response, thus far, from seoul. journalists in
150 bureaus around the world, this is bloomberg news. contract, that happens in new york. that has burned a little bit of selling pressure. futures for the weeks ahead, still pointing higher. let us get to energy market reporters anthony. a little bit of fiddling around with the schematics of june, rolling into the next contract. the fundamental picture for oil, it falls back to what is happening on the supply side. it is a racket you are most hopeful for. >> supply is what everyone is looking at in the market. they want to see how many barrels will be continuing to come in the market. what might be slowing down. so a lot of focus will be here on the middle east on iraq and iran, which are countries that have big plans to expand. and the announcing that they might be slowing down coming into the later part of the year. and everybody is really watching
saudi, very bullish comments about their production, the ability to increase. really rocking them to see what they do on the production side, to try to keep winning market share and get new customers. manus: we spent the day on thursday with the kuwaiti oil minister. he says that we can live with $60 oil. but he sounds like he wants everybody on board, if there is good to be a freeze, otherwise it is market share. seems prettymment clear. if i want to freeze at this current level, everybody has to freeze and the current level. there are talks from other opec members, iran and iraq as we mentioned, when we get to iran's present in levels, we can get to sanction levels. manus: what the numbers, in terms of iraq, production. anthony: over 4 million barrels, experts from the south are at
3.3. if you add in the semiautonomous kurdish region, that is anywhere from 600,000 barrels a day, depending on the month. there is a lot of variability there in iraq about what is coming out. thater is a big factor, can impact the market as well. manus: anthony, thank you very much. our middle east energy report. now, switching our attention to israel. prime minister intranet yahoo! may expand the government -- benjamin netanyahu may expand the government, letting the right-wing party join. onberman will debate moishe friday. let us get to our middle east at a standing by, elliott, what about this move in terms of benjamin netanyahu? do you think it will happen? elliott: it certainly seems likely to happen today.
and i suppose, on the face of it, a very obvious reason why he is doing this. he has a majority in the governing coalition, anticipating he has to leave, facing a new party adding five seats, making a more stable government. and it will also mean that the day-to-day business of government itself will become nailbiting in terms of worrying about the numbers to push through various bits of legislation. there are reasons why we are seeing movements going on. there has been great tension between the x defense minister and benjamin netanyahu. it started a couple of months ago when palestinian soldiers stabbed a couple of israeli soldiers, then shot them dead in the head. he condemned that at the time. singh justice should be served. they are now being tried for manslaughter. and other coalition partners, including benjamin netanyahu, have come out for the soldier
himself, shown support for him. and there is a high level idf officer suggesting now the atmosphere in israel is similar to the atmosphere in germany in the 1930's. that did not go down well with benjamin netanyahu and much of the coalition. he defended the right of the office to defend himself. there has been growing tension. looks like this right-wing coalition is coming more right-wing, manus. manus: elliott gotkine, with the latest from tel aviv. coming up, the fed move the markets. last week, with the june rate hike looking more likely, what is work? only one place to find out. this lady, her name is janet yellen, and she speaks this week. who else is on the fed plate? ♪
middle east. it is just over one hour away from the start of the trading day in the region. but the fed moved the markets last week. how was that going to play out in markets over the next five days? tracy alloway is here with me. looking at the fed events. making for a very interesting week. two major fed governors set the minutes. tracy: you thought it was all over. you thought we had enough fed speak. it is not over. we get even more next week, starting off, we have st. louis fed president, one of the more hawkish voting members will be in beijing, giving a policy speech on monetary policy. that will be interesting, as we try to parse the impact of the dollar move, the fed raising rates on the international scene. powell have jerome
talking on thursday about the u.s. economy. we haveop it all off, janet yellen on friday giving a speech at harvard. we are not entirely sure what she will be saying. might not have to do with anything policy at all. manus: you get two voting members this week. the momentum is taking. if you look at work, the functiou are mentioning, still only 28% for jim. between theorce market and the fed. i have a chart, a two-year and this is as flat as it has been since 2007. that inversion intentionally could be very caveaty. for you, do you like the dollar story from deutsche bank? tracy: we see all the analyst talking about how the dollar rebound is only just getting started. it is crazy when you look back in march, how the dollar make