tv Bloomberg Markets Middle East Bloomberg October 5, 2016 12:00am-1:01am EDT
♪ yousef: attack and defense. the vice presidential debate proves every bit as combative between the meeting between trump and clinton. angie: the imf as to the gloom surrounding turkey's growth forecast. yousef: stocks and bonds fall talks, plus new speculation of a hike this year. week: and less than a
after the controversial 9/11 bill, saudi arabia go searching for american cash. yousef: it is a clock a.m. a.m., i'vet is 8:00 yousef gamal el-din in dubai. angie: welcome to "bloomberg markets: middle east." it is a bit of a mixed market in the asian session. one thing we are watching is that -- yousef: it has been a remarkable few hours. i set up my bloomberg alert so at certain ranges it really rings an alarm. when we saw gold fall between $1300, let's take a look at the situation. and 10 year u.s. treasury's. you can see how they are moving in different directions. the instinct thing -- this is the first time that old goes -- gold300 june 24 area
goes under $1300 and's june 24. the thinking here being that it would force an increase, or a bigger increase, later on. talk as wellb factor again and playing a major role. gold. still about 20% on hase is a perfect from that pummeled gold. in the fourth corner, the bloomberg median estimate is now it $1330 announce. what is going on in your neck of the woods? yousef: let's check up -- angie: let's check out the state of play in markets. there was a surprise move out of the r.b.i. yesterday, despite some really great growth at 7%, still cutting rates. modi of people saying that
is definitely getting what he wanted. higher.up a third of 1% when you take a look at the rest of merging -- emerging asia, we are seeing equities drop. how about in the middle east? anotherhere, it is just two hours away from the emirates market, dubai, and abu dhabi. this was the state of affairs yesterday. you're looking at dubai, slightly lower there. abu dhabi up 3/10 of 1%. bear in mind we are keeping a close eye on what has been the worst performing market in the region, saudi arabia. there,seeing a rebound 8/10 of 1%, driven by telco stocks after the announcement of what will happen with the unified license. their readiness games at 10%. egypt continuing gains as well on expectation of that devaluation. we will follow that story threat
this. let's taken on the headlines throughout the world. there will be a sale of the egyptian business as it continues to narrow its focus on the u.k. and u.s.. it will probably be for -- finished by the end of this year. they may be worth more than $500 million. barclays sold half of its stake in barclays africa last year. famed bonded vendor says bondche bank stoking -- investors says that if this goes on long enough, lenders will go bankrupt. deutsche has lost almost half of its market value. an executive has apologized to australian parliamentarians. thehe second head of
country's big for lenders to take a grilling for by financial advice to customers. while their profits are largely rate is less than 1% of what the bank makes. htc building google's is similar to foxconn's role billing the iphone. google also showed a $79 vr headset that dramatically undercuts the price of htc's advice -- device. journalists and analysts of more than 50 countries. this is bloomberg. the vice presidential candidates were quick to go on the attack as they went head to head in their first and only debate. pence hit out at hillary
clinton's e-mail controversy and the u.s.'s role in syria. >> i think he is a very fitting running mate for hillary clinton, because in the wake of the season where american families are struggling in this economy under the weight of higher taxes and obamacare and and a stifling avalanche of regulation coming out of this administration, hillary and tim kaine want more of the same. clinton, myhillary wife and i, we trust her with the most important in our life. we have a son deployed with the marine corps right now. we trust hillary clinton as commander-in-chief. the thought of commit -- the thought of donald trump as commander-in-chief scares us to death. angie: our correspondent watched the debate in virginia and is still there now. what are we hearing? who did better?
which candidate bested whom? we definitely are hearing from both campaigns that each campaign is claiming victory. both campaigns are able to do a little of what they wanted to. mike pence was able to prosecute the case against hillary clinton donald trump was not able to last week. he was able to bring up the clinton foundation, the e-mails, or record as secretary of state and the fact that she does not represent change to washington. , what he wasaine trying to do is to revive all the things that donald trump has offended several different groups of people, including mexican immigrants, muslims, women. he brought up a lot of donald trump's past statements, and tried to get his opponent to defend them. each cap is trying to claim victory. we saw a poll that came out right after the debate that showed a slight victory for pence changing the narrative
somewhat and donald trump's favor. yousef: in the grand scheme of things, will this debate have any impact on the election result? historically, we don't normally see vice presidential debates having a major impact. you have to remember that in five days, there will be another presidential debate. that will dominate headlines going forward. this was a minor change, and it will impact headlines for the next few days. we are not likely to see many voters change their mind based on this debate. most people vote on the top of the ticket, which is the presidential candidate. they'll be picking between donald trump and hillary clinton. this debate will not do much to change people's minds. for the next few days, it will be something we are talking about until we see donald trump and hillary clinton face-off again on sunday. yousef: thank you so much for joining us there from virginia. going to turkey, where the imf has downcast it's forecast for
the u.s. economy this year. it has warned that political discontent could threaten global growth area this is part of its comments on several countries. the fund became the latest agency to upgrade its outlook for the u.k., saint it has proved more resilient than expected following the brexit vote in the summer. the pound needs to wake and further to sustain the british economy. situation is., the quite uncertain. they have a very learned -- very large current account deficit. it is unlikely they can sustain the blows of an word investment that has allowed them to run that deficit. there needs to be on adjustment of the exchange rate. we are saying that start to happen. as the reality of the brexit sinks in, as it has been this week, the currency is depreciating further. it could depreciate further still. imf also added to
the gloomy outlook for the turkish economy. it wasn't alone. the turkish government also reduced its own forecast. our economy and politics reporter joins us now from on kara -- ankara. talk us through the details here. >> as you said, the turkish government made a revision to some of its key economic forecast next year. this was in response to 2016thing that happened in , which was a chaotic year for turkey. everything from terrorist russias to us that with sia, and theth rus failedilitary up attempt back in july. now, one of the key things to be
seen here is the fact that the turkish government does announce an updated three year economic program every year, and it usually announces small tweaks and revisions in near-term forecasts. what happened yesterday was that there were massive revisions to everything, every single economic forecast. most important like him and gdp growth forecast. importantly, the gdp growth forecast. they do not pick that they expect the economy to grow by just over 3%, down from its .revious forecast of 4.5% also, that is bad news for accounttrade and balance in general come if you look at the details of what they announced yesterday. nations around this part
of the world have been battling economic downturns from terrorist activity. what will it take to get the economy back on track? >> the government's message was loud and clear yesterday -- it is going to ramp up public spending, especially on what it says will be major investment in underdeveloped areas of the country. if you look at the details of what they announced yesterday, it looks like the turkish government will not be able to run a primary budget surplus until at least 2019. that may not sound too unfamiliar. a lot of countries are running deficits. tinyurkey to not run a budget surplus is commnot a thing. they have been running a surplus for at least a decade.
they're going to increase spending to put growth back on track. angie: thank you so much for that. let's get the latest from the markets right now. shery ahn is here for that. >> another mcstay for asia. it is for 20 between gains and losses all day. the nikkei is surging today, up 6/10 of 1% as we see a weaker yen there. a weaker yuan is not helping things. seng didsaying -- hang trade in the morning. one of the hottest markets in asia right now. a minor there in australia being hit. we're talking about gold miners tothe price of gold plunged the lowest in three months --
four months, since june. also, the biggest loss and more than three years. we're falling more than seven tens of 1%. -- zijin mining also losing just under 3%. losing ground for a fifth consecutive session. analyst tell us just before the fomc meeting in december, we're going to see the dollar surged again and emerging-market currencies. angie? you can get more on that and the rest of the day's news and our digital destination, tailor-made for the middle east. there he will find index reports and market data from the region. thus, you can watch all about reports, interviews, and special
are we going to see further deterioration down the line? >> it is hard to say the worst is behind us. i think we have had 12 consecutive months of sub 50 readings for the pmi. another soft month. debt reflects uncertainty about the outlook in particular to the exchange rate, concerns about dollar shortages, increase.o the vat i think that probably contributed to some of the on settlement -- on settlement -- unsettlement in the month of september. also highlighted on that chart is the devaluation from earlier this year. how do you expect the central bank to move? clearly there is an
expectation that there will be an event around the imf accord being approved, and then following that, perhaps on adjustment by the central bank and the currency exchange rates. we think there could be some sort of adjustment in coming weeks, when you get clarification that the pledge from the imf for funds is coming through. yousef: what is realistic in your point of view? it is hard to pin an actual level on the rate. you would suspect that it would fall somewhere between the current rate of around 8.8 and that 13 area, maybe around 11 or 12? those of the numbers you hear most frequently. >> let's go over to saudi arabia for a minute. you're saying austerity measures taking effect in of those numbers, are we? we are seeing reactions from investors in the equity market their, the worst performer in the middle east.
is the government struggling to find the right balance between cutting back on spending and trying to maintain economic growth? i would say that the effects of some of those have not been reflected fully yet in the pmi readings. there has been a softer reading in the month of said number. if you look at it, it is a robust reading. also compared to other countries who have pmi readings. we and the third quarter, going into the fourth quarter, there would be adjustments in salaries and bonuses taken into account that would put a little more downward pressure on active -- activity. yousef: the chief of the doha has says that saudi arabia not been as aggressive as it should be in cutting back on spending and you agree? >> i think we will have to wait
city announcements regarding the bond issue. they have ways of financing them as well, talking about privatization's as well. is an ongoing systematic process around a variety of reforms, and the bond issue is part of that. yousef: you're sticking around. we'll have more with tim fox in a moment. we will get his take on the wider global economy, with new ,orecast from the world bank and continuing scrutiny of monetary policy. we will get you the full, station. this is bloomberg. ♪\
support attaining our 2% inflation target sustainably, symmetrically, and sooner, rather than later. >> i think one of the challenges that the fed has had, and which he has understood very well to they communicate defense policies, and the impact that it has on emerging markets. we definitely moved into a very challenging environment policyhe very strong response to the global financial crisis. is thatlem with that slow growth can feed on itself and perpetuate itself, so we really need a policy punch to get us moving again. some views there on the fed and central banks around the world and what they should be doing to bolster growth. let's begin a conversation with tim fox from emirates nbd --
mbb. last time we talked about the fed come you said they needed to hike rates sooner rather than later. november, unlikely with the election there. december? >> i think december is the certainty month in terms of -- but it is later than we would have hoped. i think you are seeing some of the frustration any comments from fed officials who actually voted for a rate hike in september. woulds indicating she support a rate hike in november as a possibility. politics probably gets in the way of a november move, which makes a december move more likely. the risk of that is it is also continuing to be strong. we know from this year that you annot get -- that you can get one-month negative blowout on data which subsequently gets revised.
you don't know it at that time, and it causes a reaction against making an adjustment on rates. i think there is a risk for holding out for longer. the would've been better doing it in september and getting it over and getting more confidence into the markets. yousef: to what extent does this depend on what happens externally, in terms of chinese economic growth, or how the ease of -- or how the ecb moves or the boj? >> consideration, yes. i think as the year has proceeded, probably less of a consideration than the start of the year, when it was sort of an all-consuming issue of adjustments and rates. the china issue was a big issue. data from china has been improving, stabilizing. the eurozone obviously silly concern. raising its forecast for
the eurozone yesterday, but you can still have reasonable doubts about whether that will be sustained. a partct that also plays and events thinking. i do not think it is as big of part of it as it was in the beginning of the year. yousef: i would build and let you go without getting your view on oil. you predicted that opec would not reason. they did come to an agreement. is it going to hold, and is it going to make much of a difference? thee still don't know what nature of the freeze is in terms of who is going to contribute to it. the production cuts, where are they going to come from, and where will they -- and when will they start and howard -- and however they going to last? these are questions that still need to be answered. the markets are trading on the expectation of the optimism that it will be followed up with action. i think there is a symbolic change that the deal does represent, which is that opec is looking at the price as opposed
asked mikeepeatedly pence to defend trumps action. and often turned the criticism back against clinton. the next presidential debate is on sunday, monday here in asia. the imf increased its expectations were inflation in turkey. it is done half of 1%, with 3.4% in 2017. is at 8.4% this year, down from 10% in previous outlook. the turkish government also decreased its own forecasts. a bank is likely to wind down bond purchases before substance quantitative easing.
quantitative easing will continue until next march or beyond if necessary. it is the bottom of the hour here in hong kong. 12:30. i imagine allow. yousef: it's a: 30 in dubai. >> we're going to cut it up to the start of european trade. let's talk a little bit about the story that and you just mentioned there around the ecb, because the bond market has moved. we have had some comments on it, so it is clearly capturing the imagination among those operating in the bond spear. the european central bank will likely wind down bond purchases before the resolution of quantitative easing. it could do it in the steps of 10 billion euros a month. that is according to ecb officials working for bloomberg
on the subject. they say a formal consensus has grown up among officials at the ecb. the asset line will have to be tapered what the final decisions have been made. when it will and/or exactly how it will end. they have not excluded the possibility that quantitative easing could be extended beyond the end date in march of what he 17. -- march of 2017. when the end comes, there will -- there will be a consensus that there will be a tapering of the program and full. -- in full. october 20 is the next policy meeting. markets have been moving on this. treasuries also want to move. what is the latest on the brexit conversation?
is theresa may trying to refocus the discussion a little bit? anna: absolutely. theresa may is going to speak later on today. she is going to be delivering another speech to the conservative party conference in birmingham. she is going to be switching focus, not talking quite so much about exit. this is going to be -- so much about brexit. she wants to be the champion of british is -- britain's struggling working class. as investors are becoming increasingly concerned about whether we are going to see some hard brexit, which could mean think -- which could mean coming out of the single market, no accommodation, no moving of the will of the financial services industry. -- city u.k. has been
warning about the extensive job losses. 10 billion pounds in tax revenue are also at risk. there is a lot of talk still about exit, a lot of concern about a hard brexit. may very much was to move the agenda on to talk about other things. the shift in tone coming from shows that theresa may is trying to hope is more on "ordinary" britain. also come interesting conversation to be had about where the bank of england goes next. we have a public speech from a bank of a glib policies be --
englandker -- a bank of policymaker. the u.k. economy will not be too bad in the year i had. we'll get more clues on where the bank of england takes the u.k. economy is moving in the short and long-term. india's new central bank governor surprise with an interest rate mark with his first reading in charge. there was a unanimous vote to/the benchmark rate to 6.5%. we have a reporter in mumbai. it was a surprise. most people thought it would remain pat. >> exactly. economists were split, but there was a majority seeing that it would stay put. first of all, for the first time we have this collective decision-making. a lot of economies expected
there -- they would air on the side of caution. we have inflation that is barely starting to ease. we have one month of reading, and a lot of uncertainty of what is on the horizon. india has one of the highest inflation rates in the region. a lot of economies expected them to wait for more data be or making this decision. -- before making this decision. angie: are we seeing a shift away from the former governor, who is seen as hawkish and free speaking? >> definitely. that's how it sounded in the press conference. they were very comfortable with the media, taking time to play the decision. yesterday, we had a central bank governor who cut the press conference short after 15 minutes. not only that, all of the framework that was put into place giving intermediate targets for inflation, all that
seems to be lost. .he 4% inflation target we have arranged in india from 2% to 6%. it'd been made clear that they wanted to reach the mark bite march 2018. march 2018. they want to encourage people to save. to 1.25 has been loaded percent, with no indication that this reading is firm. angie: thank you for that. let's check in on the first word headlines from around the world. -- ae's a push that company is considering a push into japan after the crisis.
they aim for more than triple revenue from japanese automakers to 300 and dollars by 2020. by 2020.illion they also want to expand. he did not say whether key safety -- wikileaks has marked its 10th anniversary from a desk with a message from founder julian assange. it says he will release material that could affect powerful organizations in three different states, as well as information about the u.s. election. boeing has thrown down the gotland to spacex, saying it intends to win the race to mars. gauntlet to spacex, saying it intends to win the race to mars. theng was responsible for first stage of the mighty saturn five, the most powerful rocket ever built.
global news, 24 hours a day, andred by journalists analysts in more than 120 countries. less than a week since the controversial 9/11 bill, saudi arabia is going looking for a american cash. congress denied the presidential veto, and allowed victims that families of the victims of 9/11 to sue saudi arabia. -- officers from the saudi regulators on the stock exchange our meeting regulators in new york. you can't help but ask did they get the timing wrong on this one? >> this is definitely a very delicate moment to be in new york. they will get all kinds of questions from investors about these are the market right now -- all about the saudi market right now. the saudi market entered earlier this week its second bear market
this we're -- this year. the trading index is close to the 2011 level right now. it is very very negative. there is no way you can hide it. they will have to talk about the 9/11 bill, which is something very big in the u.s.. in your conversations with investors, what have they been telling you about the implication of the bill being overturned on the back of the vote, basically allowing the victims of 9/11 to sue saudi arabia >> one of the consequent -- to sue saudi arabia? >> nobody knows how far this can it could bemaging to the relationship between two countries. investors don't like this big uncertainty that this whole situation is bringing to saudi markets.
challengehave a big and explaining and actually calming down investors. the saudi's are attempting to .ell their first dollar bonds jp morgan, which is organizing all of these meetings, is one of the tank coordinating the bond sale. banks coordinating the bond sale. this can get very big and serious for the saudi's. yousef: let's get some additional context. what is your take on what is happening in saudi arabia, the pervasive negative sentiment? think the kind of austerity measures that we have seen, the
kind of talk of these things cooling down or balancing out after two years of the drop in oil prices. some of the things that you have just talked about about the bonds, they were delayed earlier. my worry in saudi arabia is the micromanagement that the government is going to now, even interfere with banks because their lungs or salaries have been dropped. when you go to this level, i think these kind of pressures are not positive. these banks are supposedly public companies, private sector. they should be acting in the interest of their shareholders. they pumped in 20 billion liquidity.t to up
that is creating a snowball effect which is not positive at the moment. that is what i think we see in the market at the moment. the key question seems to be has the saudi government been too aggressive in its spending cuts i would quote from the latest bloomberg intelligent reports. unlikely to persist in the second half of the year as the kingdom makes further cuts in public spending. it also highlights the risk that it cries out private sector borrowing -- that it crowds out private sector borrowing an investment. all the talk before was talk about delays and projects, delays in payments. that had some kind of affect, but there was not any austerity. gccname of the game in the
is really what they call introduced increased efficiencies, which is reducing costs. , note a lot of mergers ju in public sectors, but in banks. not just in sovereign wealth funds, we now see it in government institutions with each other. i think that is what we will see for the rest of the year. it is difficult in such of an that in such an environment to talk about markets. the bigwe look at economic picture and the challenges for global markets there and stay tuned. this is bloomberg. ♪
the egyptian pound drops to a new low on the markets, trading at 14.05 to the dollar. weakest since bloomberg launched the weekly survey of -- in april of 2013. as they ares react trading is illegal. at delegation of german lawmakers in on kara -- ankara. the german team admitted that two-way relations are not good, but said both sides accepted that germany has the right to express a view. this came as germany dropped an investigation into a poem about president erdogan. angie: the head of the orion space agency is said he is
hoping that talks with the administration will come when the time is right. allies could be --d to develop long-range the u.s. and its allies say the technology could be used to develop long-range missiles. yousef: let's turn now to some of the global ises. a lot of uncertainty out there in the markets. we have heard from some of the members of the federal reserve shifting expectations about when it interest rate hike might happen. where do you stand? believe thatstill it is in december probably. there has to be a hike this year in 2016. --ryone month, it seems that
i think the message could have been put earlier by saying that that -- ber all we are doing is pushing uncertainty, and that is not it -- that is not a good thing. that just adds to the level of things that are putting people off markets in general. that is why my worry for the markets is that you look around, whether it is the hard brexit that we heard yesterday, gold going down, and people are trying to find a safe place to put their money. yousef: speaking of deutsche bank, we heard from a bond investor who said this is an indication of the impact that made it -- that's negative rates have on banks. whats your read on that? >> i think it is a strong sign
that the banks that are the big ones, are not that solid. deutsche bank is supposed to be the bank of germany. if you have someone trying $814 billion balloon from the a $14ment of justice -- billion balloon from the department of justice, in my mind it shows that the financial sector in particular is weak. the liquidity of those banks is weak. some he was saying that maybe this could ripple into other banks. yousef: so what does the ecb do in a situation like this? >> i think the ecb will definitely want to lower the easing that is happening. increase the interest rate, they may have -- they may
not have to do anything. that would mean they have actually reduced their easing. definitely what the sign is is we are seeing a turning point when that happens at the end of november, december, there is a shift of what happens at the policy of central banks, and they have to go back now to increasing eights 22018. that is where my worry is -- 2018.sing rates to that is where my worry is. yousef: what is the managing director for abu dhabi security. aree: how low oil prices affecting middle east portfolios. this is bloomberg. ♪
too big to fail to the german chancellor's door. the rebounded deutsche stock continues. now more than 10% up from its record low hit last week. caroline hyde is in frankfurt. it seems optimism is being baked back into the share price now. hopech optimism bringing that the imf and world bank meetings at the end of the week. will they be able to strike a deal? a deal could befall cheaper than had in originally targeted by the department of justice. they did throughout the number of $14 billion. deutsche bank's market cap is just 16 billion euros.
forfully they can do a deal cheaper. hopefully they can stay in this. a lot of big names coming to support deutsche bank. you heard from the chemical giant in germany thing that they might actually buy into the stocks. heard jamie dimon from j.p. morgan, an industry rival, saying there was no reason why deutsche bank should not be able to weather the storm. heard jamie dimon from j.p.others say that this it happens when you have negative rates. --s stress on the banks very on the banks. cannotare saying if you whether this, maybe you should change your business model. angie: there are still signs of trust in the market as a whole coming from hf -- of stress in the market as a whole coming from deutsche. >> we could see that market cap pushed back down again.
we could see share prices tumble back down to the record lows. they need to see a deal with the doj. systemic risk here. you're seeing their risk of funding and dollars european. -- of funding in dollars european banks. for is not normal playing the industry. we are seeing stress in the funding market. we are seeing stress in the ecb. facility, we sought ecb's option dropping to the highest -- jumping to the highest in four years. we want to see a deal done for deutsche bank. itie: we're going to leave there. thank you so much. that is it for us on this edition of "bloomberg markets: middle east." ♪ yousef: we will have all the top stories from london. count on is next. this is bloomberg. ♪
europe set for a safe expansion, ecb officials tell bloomberg a central banks will gradually wind down bond purchases before the conclusion. bill gross shorts the duration in europe. bill: it would cause me to basically reversed positions in terms of being long, durations of being short. anna: chicago fed president charles evans says he expects a hike before the end of the year, but would like to see more explicit communication around the conditions that need to be met for future moves. and the imf upgrades the outlook for the u.k. this yeart