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tv   Bloomberg Markets Middle East  Bloomberg  September 18, 2016 12:00am-1:01am EDT

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an explosion in new york leaves 25 people injured. police say the blast was, quote, "an intentional act." russia calls for emergency un security council meeting after us-led strikeng a killed 60 syrian troops. opec delays a key meeting as it puts all of its efforts into securing a deal to limit crude output.
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it's 8:00 a.m. in dubai, 5:00 a.m. in london. i'm yousef gamal el-din. welcome to a huge week ahead for regional markets. the federal reserve making a big decision on interest rates. the bank of japan also in focus. we have some data that has come out from the u.s. treasury, which shows how the holdings of u.s. treasury has evolved. the latest figure -- i will pull this up on the bloomberg to get additional perspective. you can see the downward trend has been continuing. 17.4% since march, the latest figure at $96.5 billion. i've highlighted the redline. that's since 2016. as much as that number is not systemic to be used -- the u.s. treasury market, the sustained unwinding of u.s. treasuries is
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notable as the country faces a budget shortfall and prepares to issue its first sovereign bond. that's expected to happen in the coming weeks. also coming up on the program, the head of the world's largest advertising agency tells us what he thinks will happen if donald trump wins the u.s. election. >> i think what will happen is there will be uncertainty and, therefore, markets and the dollar will be rocky, if that was to happen, certainly in the short term. what happens in the medium to long term, one doesn't know. yousef: the full interview with martin sorrell coming your way in just a short while. let's get you up to speed with how u.s. markets closed over all. a lower picture. the s&p 500 down 2/5 of 1%. mixed signals from the u.s. economy. on the one hand, you had signs
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of stronger growth in terms of the country meeting its consumer confidence figures. posted -- those figures came in at the lower level while the inflation numbers were the ones moving closer to the targets. in the middle east, we are just under two hours away from the opening of the emirates markets dubai -- emirates markets, dubai, and abu dhabi, for the first time coming back since the e break -- eid break. a lower picture in the emerging market space. dubai down 1%. gfh financial, selling its remaining stake in leeds united football club. egypt down 1.6%, the lowest since june 26, concerns about the economy. would suspendklm flights to egypt because of the currency situation in the country. in turkey on friday, it was a
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similar picture. again, following some of the trends in global markets, especially emerging markets. down 1.3%. let's check in on the "first word" headlines from around the world. here's tracy. tracy: the un security council scheduled an emergency meeting late saturday to discuss a u.s. airstrike that, russia says, killed 62 syrian government troops battling islamic state. u.s. military command says the strike targeting a nice his position was called off once coalition -- targeting an isis position was called off once coalition forces realized it might target civilians. >> we are investigating the incident. if it is determined we did indeed strike syrian military personnel, that was not our intention. and we, of course, regret the loss of life. and russians are heading
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to the polls for the first elementary election since allegations of vote rigging in 2011 sparked the biggest protest of vladimir putin's rule. changes see the return of single member constituencies for half of the duma's 450 seats, while new restrictions limit access of observers to monitor the vote. and china's holdings of u.s. debt have fallen to more than a three-year low as beijing tries to shore up the yuan. china is still the biggest u.s. foreign creditor, but it's treasury holdings --its treasury holdings fell to just $1.2 t rillion in july. japan held on to the second spot, and saudi arabia came in third, despite its treasury holdings falling for six straight months. s&p downgraded nigeria further
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into junk territory amid low oil prices and severe shortages of foreign exchange. that downgrade comes just as africa's most populous nation prepares to issue its first eurobond since 2013. at nigeria five levels below investment grade, in line with kurdistan and angola. the outlook was changed rum negative to stable -- changed f rom negative to stable. global news, 24 hours a day, 2600 journalists and analysts in more than 120 countries. yousef: 25 people have been injured after an explosion in the new york city neighborhood of chelsea. a bloomberg news reporter joins us now on the phone from new york. what have police said about the incident? >> hi, yousef. the latest we have is mayor bill de blasio gave a speech a little bit ago. he described the event as intentional, but there is no evidence so far of teorism.
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of course, the investigation is still ongoing. yousef: does this look like an isolated event or is this part of something bigger? concern whenas the the bomb first went off around 8:30 new york time. of course, earlier this morning, there was an explosive device that went off in a trashcan in a small town on the jersey shore. there were, of course, mean it immediateourse, concerns that the events could have been linked. so far, nothing on that from the authorities. yousef: what went we -- what have we heard from president obama and the two candidates trying to succeed him? how will this impact the election? caleb: the white house has been updated as additional info is be made available by the authorities here on the ground. the clinton campaign has said that she has been informed of the incident, after she gave a speech.
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is theof course, exception. 45 minutes after the explosion, he described it as a bomb. that came well before any announcements from authorities. ,ousef: from what you've seen the guidance seen from officials for people on the ground in the vicinity? remissyeah, so, i'd be to describe it as anything but tranquil at this point. they had a series of accordance -- of cordons a different lengths away from the incident, which occurred on 23rd between 6th avenue and 7th avenue. we have been able to get right up on 7th avenue, about half a block from the explosion. a lot of service vehicles still going in. bureau ofm the alcohol and tobacco and firearms
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and police. there are reports of phone and security as well. but everybody -- there are reports of homeland security as well. everyone is looking pretty calm and tranquil right now. yousef: that's caleb melby, our reporter on the ground in new york city. he will continue to keep a close eye on this developing story. still to come, how long will the good times last for the gulf airlines? we take a look at whether they can keep up with demand. but also, opec makes an all-out push to secure a deal to limit production. stay tuned. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. i'm yousef gamal el-din in dubai. opec may be delaying a special committee meeting ahead of the crucial supply talks in out area later this month. sources say the meeting has been indefinitely postponed and the
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cartel wants to focus on ceiling -- sealing an output agreement. anthony, how are the prospects changing for any sort of deal to come out of the algeria meeting? anthony: the signals are really conflicting, so it's really hard to make any definite prognostication about what's going to happen there. we see some people coming out and saying there needs to be a deal. we hear different discussions coming out about what kind of deal could be reached. but we also had some of the opec secretary-general making some comments over the weekend, in that the meeting would be for discussion, not for decision. earlier this month, we had the saudi arabian oil minister saying that he didn't think there was need for a freeze right now. so, these would -- these kind of commons would tend to point against a freeze or any kind of supply agreement coming out of there. what we would need to see, according to the way the market is shaping up now, we would need to see supply coming out of the
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market to bring that supply and demand back into balance, rather than just a freeze. many say that a freeze wouldn't be enough anyway. yousef: i'm looking at the numbers. yousef:it just doesn't add up. the commentary points to an increase from the opec supply side of the equation. what can we expect in the coming months, given that rhetoric? if anything, that's going to put downside pressure on prices. anthony: exactly. the outlook is that opec will continue to increase production. iaea pulled back on its forecast for demand through the end of the year, a negative sign for prices. in comparison with that increase in production. there are different aspects of that within opec. there is the possibility of the supply coming back in libya and nigeria. here in the gulf, we've also got iran, which has big plans to ramp up. that will require investment to come to the market.
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we've seen them making more comments this weekend about trying to attract investment in the coming months. it's going to take them longer to bring that supply on. that will be an overhang. we've also got iraq, which is trying to increase as well. yousef: we've been talking so much about supply. let's dig a bit deeper into the demand side of the equation. what's the projection? is there any hope that it could absorb some of that excess capacity if it keeps coming online? iea scaled back its forecast by about 100,000 barrels per day through the year. with opec increasing -- continuing to increase production, it really depends now what kind of some of the u.s. producers, the shale producers do. they've been taking supply off this year. there is the prospect as they bring some rigs back online that they could increase production next year. we've got the potential for increases on both sides, with
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that demand outlook still looking a little bit shaky. as growth continues in the big demand markets like india and china, but maybe not at the same pace that it had done before, when we saw prices rising up into the $100 per barrel levels. that demand is perhaps not there to support oil at that level anymore. that's why we've seen it down at $50 or below in recent months. yousef: great having you on the program, anthony dipaola. let's take a closer look at the energy sector. we've been going a little bit deeper into these comments from some of the opec members. the latest news according to sources there, the secretary-general has been trying to push some sort of consensus. what is your read into all of this? is this really heading to something tangible -- tangible in algiers? >> i don't think so. we had a lot of talk that has
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helped push up the oil market in the last couple weeks. opec has done this -- this is the third time so far this year. but every other comment or action you get from the producers runs contrary to it. the latest i've been seeing is that libya, too, now wants only talk about freezing its own production once it gets back to what opec was -- output was before the civil war started. over one million barrels per day of output coming from libya. when you talk about a freeze, what kind of freeze you are talking about, when you talk about almost 2 million barrels per day of opec production that could be coming back online -- yousef: what's this setting up to become? according to you, they are saying -- setting up for failure in algiers. with everybody arguing they need to pump even further, the uprising in the case of libya -- this is a most guaranteed -- this is almost guaranteed not to work out.
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it's going to be a hard landing. >> if the objective is to try and get prices to rise, the commentary you are seeing right now is not going to do that. for the opec countries, they have to play very, very long-term strategic games. if they are trying to capture and expand their share of global oil markets -- it could be that capture an extra 500,000 barrels per day, one million barrels per day. if they keep that going out to 2020, that will be critical for their economy. for the major producers, that is the overriding strategy, not just getting an extra $5 to $10 on the barrel. yousef: the other thing we are watching is the u.s. rate -- rig count, which appears to be stabilizing. the bars and blue is where the rig count -- bars in blue is where the rig count grew. red is where it shrank. still, it is an expansion and does add to the supply side of
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the equation. >> absolutely. this number is the one everyone wants to be going backwards, contracting. the expiration number, the rig count number is going up. if you look at where u.s. oil production has been over the summer, it has essentially stopped falling. those two elements combined when we go into the end of the year, into 2017, if prices hang around this $40 to $45 level, we could see oil production be pretty stable in the united states, if not mean a couple of increases. yousef: we've seen quite a bit of volatility in crude prices last week. where do you see it relatively stabilizing, ahead of his algiers meeting? is there any range? would you be able to pinpoint anything? ed: you are going to be stuck in this $40 to $45 range. that's one subset of a broader range we've been in for the last six months, where prices have flopped around between $40 to
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$50, hanging around $45 for most of it. going into the end of the year, those are the kind of price ranges we are going to be seeing for oil prices. yousef: the other commodity that's high on the agenda is gold. light of they in big monetary policy decisions we are looking ahead to. we have the federal reserve, the bank of japan. yousef: is this going to be an opportunity for gold investors? ed: quite the contrary to what gold -- oil has been doing, gold volatility has been pretty lax. once we got past the big brexit risk, gold markets took a leg up. they have not chopped around much. you do need one off risks like the potential for the fed to move. we are skeptical of this week will be the one that the fed is actually going to pull the trigger and try to raise rates. but, still, it's going to be based on some of these monetary policy decisions that provide
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any direction for gold going forward. yousef: what kind of range have you mapped out for gold? ed: i think gold going a little lower toward the end of the year, back below $1300. about silver? is there any chance to profit from a trade other than gold in terms of the precious metals contracts? ed: as you've seen throughout most of the year, silver has done very well this year. but it does have -- generally trend at a more volatile pace than gold. if one of the metals was going to fall faster, it would probably be silver rather than gold. yousef: and you are sticking around. quite a few things to get to. ed bell. we on the show also have plenty more in store for you. stay tuned. this is bloomberg. ♪
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up of thequick round
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main stories from around the middle east. faced with cargo rejections and tougher import rules, traders are refusing to do business with the world's biggest buyer of wheat. sources told us that egypt's state-run buyer received no offers during a sales process on friday. usually egypt gets more than 10 offers. it is the second failed tender since regulators reinstated a ban on a fungus in august. it is commonly found in wheat that is harmless in trace levels, but can be toxic in large amounts. a holdings group could be closing in on a deal for -- sky news is reporting keh could take a stake of up to 30%. the deal could be announced as soon as monday. wh ireland wasn't able to be reached for comment. a senior official at israel's finance ministry says the country can admit highly skilled foreign workers to address a
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labor shortage in the tech industry without diluting its jewish majority. the government is looking to ease restrictions on some foreign professionals as it prepares to slash corporate taxes for large tech companies. the reforms are part of israel's efforts to compete with countries such as ireland to lord multinationals -- to lure multinationals with steve tax cuts. -- with steep tax cuts. ed, again, let's bring the fed back into this conversation. what do you expect them to do? looking at the probability and the expectations chart here, 20% expecting a hike in this september meeting this week. where do you stand? of the view that september looks very difficult to come out and make a move this this particularly -- month, particularly after some of the comments we've seen from some of the senior fed officials the past few weeks.
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even though the data from the united states has been pretty good, pretty solid over the past six months, this fed has proven itself to be very cautious and wants to provide america with huge amounts of leeway and preparation before it pulls any kind of decision out of the hat. we do think that, hwile -- while we probably have one rate hike ahead of us this year, it is more likely to come toward the end of the year. yousef: you are looking at december? ed: certainly the december meeting looks more likely to us. yousef: we've been through this several times. the expectation keeps moving backwards. there is always some form of data that comes out that pushes the fed to delay or at least suggesting that they are still data dependent and still watching the numbers. could we be well into 2017 before they start hiking? ed: i think the risk is that, because they have been signaling so much that they want to push it later, toward the december
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meeting, they leave that much more time for some kind of risk to be happening. you have a very uncertain outcome with united date presidential election. does that pose a risk for what the fed once to do in december? -- the fed wants to do in december question mark you leave that much more time for the data to be a bit more sluggish. the kind of momentum we have been seeing at least through the third quarter has been pretty good, so it should carry us well into the end of the year. yousef: how is that going to play into the u.s. dollar? ed: we still think the dollar will be one of the better performing currencies among the majors this year. it is doing better against the pound, the yen, and the euro. banks, the bank of japan and the ecb, the pressure there is for some more kind of accommodative or easing policies to be initiated. the ecb held off on it a couple weeks ago. they also did not extend or expand their asset purchases. we think with the poor data we are seeing out of the eurozone,
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particularly industrial performance, they will have to be doing something to try to ramp up production and growth in inflation there. yousef: do you have any other picks in terms of commodities, a bit of a more contrarian play that might materialize before the end of the year? ed: before the end of the year, unfortunately, no. we are still in a sluggish phase. we have a lot of probably hysteria with the oil markets. it's been a volatile and choppy year. as we get into the end of the year, traces are going to be probably not too exciting towards the end of 2016. yousef: we will see how it all plays out. that is ed bell. still to come on the program, opening up, find out why wpp's martin sorrell says iran is a good investment. ♪
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yousef: the top stories on bloomberg markets --"bloomberg markets: middle east." authorities say 25 people were injured in an apparent explosion in the new york city neighborhood of chelsea. caused theear what explosion, which happened at about 8:30 on saturday night on west 23rd street. police have cordoned off the area, which is a major thoroughfare with many restaurants. a number of new york city subway routes have been affected by the incident. have delayed a
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team meeting scheduled for next week as it makes a big push for a deal to limit supply. later this month, sources tell as the economic commission board, which would have focused on long-term outlook, has pushed its meeting back to an unspecified date. opec's secretary general met with members in qatar, iran, and paris this month as he seeks to revive an agreement on supply. the un security council has scheduled an emergency meeting late saturday to discuss a u.s. airstrike that russia says killed 62 syrian government troops battling islamic state. u.s. military command says this strike targeting an isis position was called off once coalition forces were told it may have hit the syrian military. the attack came as russia and the u.s. clash over the implementation of the september 12 cease-fire agreement. --reak
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we are in a bit more action mode as they experience the works -- worst bond selloff since 2015. there could be more drama ahead of the bank of japan and the federal reserve meetings this week. bloomberg tracy alloway joins us more -- for more. -- bloomberg's tracy alloway joins us for more. tracy: we have a major central bank meeting almost every other day this month. next month, all eyes -- next week, all eyes will be on the boj and the fed. if you think about what's been happening during this bond market selloff, it started in japan. it started with concerns over the boj possibility -- boj's ability to continue its quantitative easing program and its willingness to do so. even if you look back at the beginning of the year, japanese government that was leading the rest of the developed market
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bond market. when you start to see at selloff in jbb's, it tends to filter gb's, it tends to filter through to the rest of the economy. yousef: according to the function of the bloomberg, it is still going to be something worth watching out for, especially for the bond market, isn't it? tracy: absolutely. there's an interesting dynamic happening within the fed. we have the battle of the doves versus the hawks. the thing they are fighting over is whether or not the fed feels comfortable with an inflation overshoot, going over its 2% target. we are getting very close to that point. the other interesting debate is how the fed balances its domestic needs, the domestic needs of the u.s. economy versus the rest of the world. we know when the fed tends to tighten interest rates that bodes very badly for emerging markets. we have a chart showing when the fed funds futures tend to move in the direction of the hike, that's usually bad for e.m.
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equities. the question is whether or not we keep this sort of global to taunt that investors -- global detente or whether the fed starts to feel uncomfortable on its inflation mandate in particular. yousef: in your view, what does this mean for investors? how does this come back to my money? tracy: we knew we were going to have that busy september month. i don't think anyone was expecting it to be quite as dramatic as it has been. it's difficult overstate how dramatic that bond selloff has been and its impact on the rest of the world. we seen equity volatility come back off the back of that. the vix is up. if you look at the bank of america financial stress, index it had -- stress index, it had one of its biggest moves this month. we've been complaining about the lack of all agility. august was incredibly -- of volatility. august was incredibly dull. is this the right kind of volatility you want coming back to the markets?
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investors take a goldilocks view when it comes to volatility. they don't want to much or too little -- they don't want too much or too little to we might be overshooting that middle ground. yousef: thanks for that. tracy alloway. let's check in on the "first word" headlines from around the world. >> the syrian consulate and the biggest refugee crisis since world war ii will dominate discussions when world leaders meet at the united nations starting monday. 135 heads of state and government and more than 50 ministers are expected to attend the session. syria remains on top of the agenda after an apparent airstrike by us-led forces on saturday placed the already tense cease-fire under pressure. in sevens gathered german cities on saturday to oppose trade agreements between the eu and the u.s. and canada.
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protesters argue the deals such as the transatlantic trade and investment partnership would favor industrialized agriculture, threaten thousands of jobs, and lead to lower food safety standards. organizers said more than 320,000 people turned out across the country. twitter is being sued by a shareholder over claims it misled investors on its prospects for growth. according to the lawsuit, the company has delivered -- hasn't the on its 2014 promises, which included using -- hitting 550 million users. it has only about 300 million monthly users as of june. the lawsuit is seeking class-action status and comes at a time when twitter is struggling to compete with the likes of snapchat and instagram. global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. has proved resilient
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to the fragile state of the u.s. economy, with shares nearing an all-time high. seismic globe it -- global events have not deterred the ceo from entering new markets, including the middle east. he spoke to bloomberg's haslinda amin about the potential in the region and, especially, iran. martin: we do not have an equity interest in iran yet, although we are trying to negotiate that. i attended a meeting with a there a senior member of the obama administration, who said, on behalf of another senior member, that they were trying to encourage u.s. firms. we are based in the u.k. u.s. firms to invest heavily in iran. what's happened in iran. , since the treaty was negotiated, since the nuclear standstill or withdrawal has been negotiated, there has been a lull in investment because the
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banking sections -- sanctions are still operative. it's difficult to clear that hurdle. the revolutionary guard is saying, why did we do this nuclear deal? we have limited our nuclear capability and we are not getting economic benefits. so, the extremists are saying to the moderates, you bungled this. so, what the u.s. administration wants is increase in investment activity in iran demonstrate to the iranian people, of which there are over 83 million, and more than 95% of them are illiterate. it's a highly -- are literate. it's a heavy educated -- a highly educated market. we have not had a market drop in from the sky of that size since vietnam. haslinda: what plans mike you have for iran? -- plans might you have for iran?
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martin: we are talking to iranian firms. we think it is a significant opportunity. saudi arabia has been quite strong, despite all the question marks. despite the following will price. but it's very volatile -- despite the following oil -- the falling oil price. but it's very volatile. egypt is a very strong market for us and developing quite quickly. the next one billion consumers are not going to come from the u.s., middle-class consumers, not from the u.s. and western europe. they are going to come from asia, from latin america, from the middle east, and from europe. haslinda: britain seems to have escaped brexit for the moment. martin: you can't come to that conclusion. haslinda: in the short term. martin: a minimal period. haslinda: when you take a look at the markets -- wpp, which has 86%
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of its business outside the u.k., instantly does not win in dollar terms. in dollar $32 billion terms. haslinda: you benefited. martin: i don't think the country has benefited. i was a remainer. little good it did me. it's too early to tell. haslinda: can a recession be avoided? martin: the bank of england moved very smartly. i believe one of the reasons why whilstts, our own stats, we saw a little bit of softening in front of the brexit vote, july was a recovery. august was ok. not quite as strong as july. but, ok. certainly a little bit better than we saw in april, may, june. it's far too early. i think there will be a drip,
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drip effect. haslinda: brexit is one uncertainty. the other is the u.s. election. martin: a lot more uncertainty. haslinda: what if trump wins? martin: it's very difficult to figure out, because you don't know what he stands for. if hillary wins, hillary clinton, which i still think she will, although i think it will be tighter than people thought -- hillary has moved to the left in order to counter the support and popularity of bernie sanders, particularly to get the nomination. the question is, will hillary move back to the center, rather like her husband did in his administration, and be more center or centerleft than she appears to be? so, the answer to your question is the uncertainties are going to be very significant. and i would think if trump is elected, there will be some rocky times for the dollar.
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at the economic club of new york, he said he would lower corporate taxation from 35% to 15%. he said economic growth would be 3.5%. he said he went -- he went as far as saying he thinks it would be more than that. so, everything will be terrific, right? so, if you believe that, maybe in the medium to longer term it will be better. but we have to see. you can't come to any judgment. . yousef: coming up, will this smooth ride for gulf airlines continue? aboutl talk to a ceo whether he sees any turbulence ahead. this is bloomberg. ♪
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yousef: welcome back. you are watching bloomberg. i'm yousef gamal el-din in dubai. the summer holiday season is winding down, with july recording a jump of nearly 6% in
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aviation trail -- travel. bickering between the u.s. big three and gulf carriers. joining us for some perspective president.d also joining us is tracy alloway. let me kick things off with this report showing the middle east has reclaimed its position as the top region for passenger traffic growth. we are seeing 13.1% increase there. is this pace of expansion sustainable given the global macroeconomic headwinds? >> certainly, the four major connectors in the middle east are playing a major role in the aviation sector with the expansion and growth, because they have expanded -- invested greatly in this space and are .njoying the open sky policy
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quality., product they have a role to play. they are expanding tremendously. the pace of growth certainly will be challenged down the road because of several factors, first, the ability to expand into new routes or frequencies. other airlines are fighting that. the oil prices also impacting slower growth. yousef: all of this realistically puts pressure, massive pressure on the yields. the massive yields that they have had in the past, that is something that might not return . how are they going to deal with that? safwam: they are benefiting from low fuel prices. certainly they have to be more efficient. they have very efficient
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aircraft. operating cost is quite reasonable. but they will be challenged on the yield going forward, certainly. i think it's going to be good to know in the future if they will be able to maintain the yield or not. it will be challenging, certainly. tracy: you mentioned challenges on yields, the load factors. we saw a good example of that last week. klm is going to stop flying into egypt because of all of the fx trouble that country has had. how do carriers work through those sorts of challenges? what sort of leverage can they pull? wam: the carriers have to fly in the region. klm has their own regions. sometimes they share between air france and klm where they fly. the geopolitical issues in the middle east are an impact on some carriers.
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they have to live with that. i think the traffic in the middle east is exceeding 180 million passengers and yet to grow. i think the expectations are for slower growth. certainly in the middle east, the geopolitics issues could be another challenge for the airlines. slower growth the and geopolitical challenges stack up against actual aircraft orders that a lot of these companies have? some of them have a huge backlog of planes. about 1400re are aircraft in the middle east. over are 1000 aircraft -- 1000 aircraft ordered by the carriers, which represents around $128 billion worth of carrier prices. they have to rely on growth and opening new destinations,
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frequencies. and as i said earlier, the fourre -- major three or carriers now are buying into other airlines. for instance, emirates has this alliance with qantas, which is helping to channel more traffic between qantas and emirates. i think the others are trying to do different kinds of approach, by buying into other airlines to help broaden their traffic. yousef: has growth begins to moderate in the coming years -- as growth begins to moderate in the coming years, isn't it logical for gulf carriers to start consolidating and creating synergies? i realize there are political headwinds to a move like that. but from an economic perspective, does it make sense? safwan: i don't think consolidation is possible because of the different government ownership. yousef: i'm talking in particular in united arab
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emirates. even domestic consolidation, where you have that much capacity. safwan: personally, i doubt there will be consolidation, at least for the next couple of years, because i think of the different agenda and policies, because qatar, they want to promote qatar more than uae or kuwait, and vice versa. i think it's going to be difficult to consolidate. also, they are trying to launch -- local services will play a very important role going forward. they are creating a new market for low income passengers. there will be growth in that sector also. tracy: we can't let you go without asking about the long-running subsidy question, particularly in the uae. it went kind of quiet for a while, but we recently had news that the u.s. might hold informal talks with the uae and qatar as well what do you expect the outcome of those talks to be
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-- and qatar as well. what do you expect the outcome of those talks to be? safwan: i think they are probably less aggressive at the moment. u.s. politicians, i think they are not eager to pursue that aspect. it looks to me like it is not going to be something happening in the near future. yousef: the lower oil prices -- they have been a bit of a double-edged sword. yes, it means lower fuel prices for the aircraft, but it also means that you are sucking liquidity out of the system and the government budgets start declining. a lot of that money, especially oil and gas, has paid for the business and first class seats on a lot of these things. -- planes. where do you see oil going? what's a healthy range to be able to please both sides? safwan: the interest between operating cost of airlines, when they are enjoying low cost fuel,
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and the other economy of the region relying a lot on the oil business -- i think, going forward, the oil price during the next two years probably it will be between $45 and $60. who knows after that what will happen? but for the next two years, it's going to be soft. kuzbari that is safwan on what's going on in the aviation space. we will be live in new york for the latest on the apparent explosion. the police say it was an intentional act. you are looking at live pictures from new york. yeti -- this is bloomberg. ♪
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yousef: it is just before 1:00 a.m. in new york. you are looking at live pictures
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as ambulances are on scene. 29 people have been injured after an explosion in the new york city neighborhood of chelsea. it's not clear what caused the explosion, but police have cordoned off the area. a number of new york city subway routes have been affected. the presidential contenders were quick to address the incident. we will keep on that story for you. let's get some additional perspective now from -- actually, we are waiting for some additional live input from new york. until we get that, hillary clinton has called for the country to pray for the victims and said -- and has commented on that situation. let's get some perspective. the line is now good to go. caleb joins us from new york. what's the latest?
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caleb: the latest is, well, things have gotten quieter down on 23rd street. we are definitely seeing an escalation here on west 27th street between 7th avenue and 6th avenue. a warning went out to phones to stay away from windows in the area. we've seen an ambulance move in, increased presence of all the authorities that are here currently, after reports of a possible second suspicious package here on 27th. yousef: what do we know in terms of that suspicious package that was found on 27th? caleb: there's been some reports that it is a pressure cooker. it could either be junk -- it has not yet been determined whether it is junk or an explosive. we do know that it is being taken very seriously. sirens are on. lights are on. press has been asked to exit 20
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street to- exit 27th make room for official vehicles. yousef: we've heard from president obama and the two candidates trying to succeed him. how is the explosion being played out politically? how will this impact the election? caleb: security has been a big issue in this election. it's been a big part of mr. trump's campaingn. u.s. quick to comment after the first explosion on 23rd street, describing it as a bomb -- he after theto comment first explosion on 23rd street, describing it as a bomb. it is definitely going to increase talk of national security by both campaigns. yousef: we will leave it there. caleb melby, our reporter on the ground in new york city. that's it for this edition of "bloomberg markets: middle east." we will be live from this region again at the same time tomorrow. ♪
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