tv Bloomberg Markets Middle East Bloomberg November 3, 2016 12:00am-1:01am EDT
stocks to currencies, the u.s. election is that can mac. >> 8:00 across the emirates, 4:00 in london. past noon.kong, just welcome to the bloomberg markets middle east. watching the rate hike probability. the fed coming out. no action but all words. as kathleen hays said, it is about the direction of where they are going. take a look and you can see the spike as the markets watch this rate hike probability. all signs point to december holding off as many say is the right thing to do ahead of the election because who knows what is going to happen on november 9
and how markets will react. so, that is what we are watching. and then they just jump in really quick. --really is about that risk mumbai trading for almost 20 minutes and you can see the sea of red across the board as asian markets take that -- i think you can say money off the table on the sidelines perhaps no waiting for that u.s. election decision japan by the way is shown for culture day. .ll right manus, this is the lead that we got from the u.s. right now you know as we have said, after the fed decision we didn't see a selloff as well that again it is really kind of reflecting what a lot of people globally are
feeling ahead of the u.s. election. manus, how about you? that, i love [indiscernible] said there is no way to federer going to move. in the two have the probability at 80%. let's talk about politics. have a look at this. .e have a lovely chart for you hillary's lead is fading. slim majority, slim pickings. the market is way ahead appeared in the market is their redline on this. the market suggests that her potential to win is fading more aggressively. know what? we are going to talk about much more of this with our guest. after every election if you go rate --johnson, 90 days there was a one-week rally.
marketsama, the continue to rally after a selloff. there is still a lot of to play with the fed in pa. all to play for six days to roll until we get the real results angie? angie: absolutely right. let's go to david ingles right now because he can give us insight on what the markets are thinking right now. david: before i get to the equity market, look at the dollar and yen. this sums up the mood. japan is closed. i mean just breaking below that psychological level. taking us back to levels of last month just like that. we went from there to here in less than 48 hours. they're really just again sums
up this sort of risk aversion in the markets today. the absenceactly -- of any sort of risky trading at the moment. ahead of the crucial court decision over the u.k. on how to proceed. one trader telling us that there .s a bunch of by soft orders in other words, if we do break above that company expect a slingshot up. before i get to the asian markets, a quick indication of how the mood has changed. it is a one-week luck at how these have change in what has been falling are these yields. .onds are getting purchased what is really going up -- the vix, the nikkei 225, 22%.
just calling them the -- that you get the idea. the cost of protection is going up and equity markets are looking like this. japan is closed. we're pretty much seeing a decline across the board -- just across the board. way before iy the go poised to enter a technical correction. would we be without technical corrections? it is just centered two hours away from the start of trading in the emirates. the bell will ring. yesterday, they were down one half of 1%. we are going to get the pm eyes from around the region. how is saudi holding up? all lies all focus of course moving from the fed's -- let's kick back.
the federal reserve -- left rates unchanged. but, the, six days -- fomc did give a subtle nod toward the december hike. the fed seems to have settled on a hike for december. >> if they didn't hike in part because of the brexit but i think a rate hike is in the cards for december. it is not a slamdunk. this is a committee that will be hiking in december. >> our next guest says that will be their last chance. alicia garcia herrera is an economist. 2016 asnny because in they raise the rates and we saw theyyrations in the market
communicated that we would see at least for this year. we have seen zero. is there a risk we will not see normalization. >> there is no longer a risk. i cannot agree more. it has taken too long and the fed will lose its remaining credibility if it does not hike. we had enough. the market is expecting a hike. morning. i have the front cover of daybreak. that is me at the bottom. you have in your notes that we are looking for three rate hikes next year. you talk about credibility. the market says the terminal rate will be 1%. is that really possible?
possible.to be we expect more inflation coming. it is going to be basically three rate hikes for the sake of not having to hold an economy although frankly janet yellen seems to say if it is hot we do -- asnd in that is where you rightly point out, i think they should hike. to avoid and overheated economy. i just cannot see why they wouldn't hike three times next year. that put at risk by the results after november 8? >> of course something might happen. we had seen that nothing is
certain until we go to the election. even if trump were to win, there is no reason for them not to hike. these are the underlying conditions. >> what if he does impose a tariff? . >> i do not think that if theyation is at risk have time for hikes, that would come only after. he will start moving also that he has to he would have to set -- inconsistencies -- approval. so i just think that the fed will hike no matter what happens.
>> this is the value of the dollar. a 12 year high. what does it do to the dollar? what does trump do for the dollar. >> what if trump wins? the first thing we expect is the dollar at position. that depends on how the economy reacts to trump basically. -- theesses it up enough first -- the first instance -- you are right that the dollar is
strong but frankly it can be stronger. look at gdp data. the u.s. economy today is probably the highest in terms of value. -- ofey are becoming a sectors if you have then you can have strong exchange rate. [indiscernible] >> when you look at what is happening in emerging markets, right now, it is risk off people are just nervous -- >> but that is a different story meeting the dollar can be very strong. your thatis risk off is a will only make the dollar stronger. we know that. and at some point that will be too much and the markets will react to that but we are not there yet. we're not there yet. >> well, stay with us. we're going to discuss more
about as you said globalization under attack. let's check in offers world headlines. g wall investors await the next interest rate hikes policy has quietly tightened in china. they have about a steady increase in money market rates andqueeze liquidity policymakers have started to tighten selectively because they do not want to tap the rate so hard that growth is to insert. a rates have been on hold for more than a year now. shares in when that hell looking like this, downside there after the company's u.s. parent miss analyst experts in first quarter. the resort fell to list that in revenue in the cow despite the city recording three months of growth. wasrevenue from one macau
$518 billion down 12%. alibaba's september revenues jumped 55%. the fifth straight time it has beaten estimates. they were the star performer with 130% and the fledging enterprise almost breaking evening however in -- operating estimates and it was only low growth -- buyers and mobile losers. -- mobile users. facebook tumbled this by recording a -- reporting a quarter that blue expectations. it was the fourth straight quarter of more than 50% revenue growth. .hares falling the trend is unlikely to continue predicting slowing revenue and higher cost here. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries i am haidi lun this is bloomberg. ♪
>> still ahead, students seeing a high-frequency future leaves banks and their way for trouble for wall street recruiters a little bit later by next up the latest addition on the growth i've for the uae and center video when emirates nbd releases their pmi survey daily break the data across the bloomberg terminal right now after this short -- ♪
reading since april. looking at the non-oil-producing private sector, this is employment. that is the uae and that is disappointing. , 53.2 pmi, down from september. you are looking at the lowest reading on record. this is a record low reading in saudi arabia. new orders also falling. , the lowestalling since april. when it comes to saudi and they a material seeing drift lower, record lows for those country. pimm fox will be with us from emirates nbd to run us through the headlines.
let's shift here is talk about the u.k. it is almost the beginning of super thursday. the bank of england will release meetingcy decision, minutes, and their economic forecast. we expect a unanimous vote to keep the elements of the policy on hold and we then -- we expect them to upgrade the gdp and inflation forecast. let's bring alicia garcia herrero back into our conversation with angie lau. when we look at mark carney, the possibility of more rate cuts seems to have dissipated. how high is inflation going to go? estimate.ur i cannot think of anybody decrease.a rate
with the deficit, the u.k. is importing inflation. they are going to overshoot the target. -- they see how the doe don't seem to need any support. basically placed or keeping rates as they are. that is what we see. i would love to be a contrarian but it is not there. >> what about global inflation? >> i think it is a great question. .e are seeing things happening
labor has moved up aggressively. that is a sign of something, yeah? the cost of capital globally should be higher. why should it be higher if we do not see a growth coming out? measure of nominal growth. inflation is going to be a surprise for us. >> i find the iron a beautiful. it takes trump getting into the white house for any rally in the sterling. do you concur? >> i love that one. brexit aremp and different issues. we can argue that they come from dissatisfaction with globalization and search for
basicallyut brexit is impossible to change. it seems the government is going to go ahead. trump would be like something had happened in something people are unhappy with. these are different issues. brexitre worried about then what might happen to the u.s. with trump. institutions could cushion that event impressively. we are not there. we are not ready for the brexit in europe. you can see what has happened since, nothing good >> thank you for joining us in hong kong. that was alicia garcia herrero.
>> welcome back to bloomberg. biggest iron nor miners are warning that prices will decline just as they begin spending up to $8 billion on new mines. david stringer is in melbourne to explain. why do they need to invest so much? >> it is something of a surprise given what they say about prices. feeding chinese demand simply
ofns that some of the minds run by the largest iron ore anducers have exhausted need replacing and analysts calculate at 170 million tons of iron ore capacity will need replacing and that carries with it a bill of about $8 billion. some large investment decisions coming up. and, quite quickly coming on the horizon. the fourth-largest producer said it will decide within the next six months on whether to fund a replacement mind for one of its operations. those decisions are coming into view quickly. that is at a time when some of the biggest producers have a bullish outlook. >> let's talk about that. where do they need a price to be
to justify it? two of the top producers, bhp and rio tinto alcan have a similar bleak outlook. they have talked about the price rally we have seen not being sustainable. also, they say it could be as long as a decade before the market is back into balance. a lot of these companies are looking at new expansion but are now weighing out the investments to keep production where it is. that is the dilemma they are wrestling with. >> thank you very much. bank in reform.
>> these are the first world headlines. federal reserve officials have given a nod to a rate hike while holding steady ahead of the election. -- fmo ceases it only needs before it hikes rates. release itsected to minutes later today. pmi figures are showing a slowing of growth. the pmi fell further into contraction in egypt.
and the uae are still showing expansion. the emirates had the pmi -- the lowest -- 53.3. as marketding volatility continues to be fed by uncertainty over opec. rose last suppliers week, the most on record. oil has retreated, triggered by the failure of opec nations. china has called for dialogue after warning shots were fired at fishing boats. a machine gun was used after the chinese boats tried to escape. they want to see a more aggressive policy.
also, they took $1.1 billion in restructuring the business. it had a profound impact on the cash earnings. estimates.edian down 18%. the dividend also less then the year previous. the market is shrugging it off. still doing pretty well toward the close. >> it is interesting to see when -- why hasn'tean been able to shake it off given that the chief executive shane elliott -- is that what is driving it?
>> it appears to be. often, australian banking stocks move counterintuitively. let's listen to what the ceo had to say. >> we are going through a to be better players. we have had a number of charges which have depressed our earnings. our underlying performance has been very good. the reduction in profits is a deliberate action to reposition for the future. >> we saw an example of that this week. there could be more to come. they suggested we could see life insurance advice.
>> thank you very much paul allen there. donald trump has a bit of an impact on the emerging markets. currencies including the peso have tumbled as polls suggest that we are into the final days. .ustin, great to see you i have got to disagree about the pace of volatility. there is the corporate borrowers in emerging markets. we are seeing default rates rise. talk to me about the debt story as well. >> the debt story is a longer-term story. is the growingen number of emerging market
corporate borrowers in recent years taking it vantage of this interest rate environment. there is plenty of demand for that. investors have been going deeper into the area. but we are now seeing is that the larger amount of debt is an evitable but you are going to get an increased number of defaults. insaw the situation venezuela that has tipped the scales. again, we are seeing growing debt. a lot of investors demanding that compared it is what you would expect. >> emerging-market stocks took a hammering yesterday. is this just about the u.s. election? prospects stage, the
of a clinton victory has been largely priced in by the market. anything to suggest that trump had momentum, you are going to see risk. >> i cannot let you out the ther without -- the peso -- base of the story -- >> the peso is a function of what he is saying about x seconds in general -- mexicans in general. you will see more and more of that if you hear more of this kind of thing. theyexican peso is trump-meter. we saw this with the selloff. volatility is spiking.
, where is the biggest collateral of damage to a trump presidency? onehe mexican peso is the where you see the largest effect. in terms of the asian markets that have a lot of deals at those u.s. companies -- companies that are most affected. >> thank you so much for that. we are going to talk about facebook right now. we have our tech reporter explaining what is concerning investors. >> facebook reported another quarter of record revenue and
earnings beat expectations. user growth was up. company is tearing through thatbilizing avenue -- growth might not last forever. starting next year, the company will no longer increase the advertisement load. they are going to not increase the frequency anymore and that will cause revenue to significantly slow. they will have to rely on other methods. that caused the stock to fall. comment wasncerning that they plan to increase capital expenditures significantly next year. next year is going to be even bigger as they focus on hiring
operator is future in asia on the growth of tourism from china . they are looking to double the number of hotels in the region .y 2020 completed its acquisition of starwood in september. qualcomm fell after sales forecasts were in line with estimates. the company is expecting a revenue of 5.7. analysts see it somewhere in the middle of that range. results reported strong in the fourth quarter. >> emirates nbd has released the latest report on the emirates, saudi arabia, and egypt.
uae. start with the we are looking at a six-month low. is rising.rate talk me through the numbers. >> the external side of the economy is suffering a little bit. external demand is under pressure. this is not surprising. seeing is a slower pace of growth and that is matched in saudi arabia. at the star, there was a pronounced dip in activity in the third quarter. what we are seeing is a slower pace of growth again as a consequence of a lot of the measures taken to ameliorate the weakness in oil prices. >> these are record lows. the lowest rating on new orders.
is this a scenario which gets worse yet go the deceleration is prevalent. >> there will be in packs into other parts of the region. in the uae, conservatives would travel to the uae -- consumers would travel to the uae. yes, we are looking at a softer pace of growth. the lowest pace in terms of activity. of the region, will probably be less pronounced. passports. couple of talk to me about brexit. is that impacting the tourism in uae?
>> there will be a further impact. we saw some data around the time of the brexit referendum that showed that u.k. travelers declined relatively sharply which is to some extent understandable. rate, youxchange would suspect that that would continue, that it would be harder for british tourists to make the case to go to a region which is dollar-based. budget, in terms of spending, the imf has given a report on saudi. , thee fiscal latitude ability to counterbalance this slow to -- >> what we are looking at is a fiscal measures being brought in spirit spending
is under pressure because of the oil pressures in terms of revenues. for the time being, the tendency will be to be relatively conservative. you might say that there needs to be some offset to try to boost growth. if oil prices continue to pick create the comfort to actually push out a little bit. >> i want to ask you about the markets right now. safety first. take a look at bonds. ahead ofall in demand the big day, november 8. how are you tabling that risk? doesn't come to the table with a deal, if the u.s.
gives us a black swan event, what does this mean for the region? >> all of these things need to come together to construct a negative scenario. is noices -- if there opec deal, the impact could be significant. if the election goes to donald trump, that would also upset a lot of assumptions about how the year is going to end. events.e all black swan at the moment, we have to get beyond the election and deal with these circumstances as they come. first of all, it is the event next week in the united states. all of these need to be taken in sequence. it looks as if the fed is ready
to move in december. contingent on all of these other elements holding steady and coming in as expected. >> nailbiting from the u.s., a sports update, the chicago cubs first world series win since 1908. they have one in game seven in the 10th inning, one of the most exciting games. a conclusion of the world series in a long time -- it went into extended time and the chicago but taking the world series it was a heck of a game as chicago and cleveland -- the chicago cubs did win the world series just moments ago.
so, there you go. talk about a black swan event. they are playing in cleveland. i think there is going to be a in clevelandaces but a lot of celebrating in chicago for sure. metaphorse a sports when it comes to the political races, regardless of what happens after november 8, there is still a sentiment that globalization is under attack, especially as we are rife with political intrigue into europe next year. >> i for the politics of 2017 are going to be important. large events in the austria,ope, italy,
and german and french elections. those political events and the add to agotiations all sense in which there could be a lot of instability. >> cyborg has dropped. and that has been a step forward in terms of liquidity. i have had conversations in terms of the peg. i just want to get your view. asimately, ultimately, vision 2030 takes old, these are not going to be robust. >> it is a matter of timing and when you make decisions, obviously not advisable to making adjustments to currencies when you are under pressure and duress. i do not anticipate there will be a suggestion of currency macro situations
and fiscal imbalances remain pronounced. these are things that will be addressed and discussed once the immediacy of pressure on regional markets comes to an end. >> you've also suggested that your best case scenario is oil goes higher. how high can we go? is this absolute that saudi will return to swing producer status? everything that we are reading a bloomberg is that the lead is going to be on the saudi people to take a majority of the cuts paired >> that would be our assumption. the average price will be around $55. our assumption going into the opec meeting this month is that saudi will be a swing producer in terms of contributing.
the board. take a look at morgan stanley. then these firms come over and they are starting to expand. we are talking about american firms as well as local firms such as grasshopper. take a look at this chart. much tradingu how has been rising. take a look at that. grilling to make up more than a 30% of trade. still behind the u.s. in europe where they are taking up a larger share. 66 percent in the united states. still, exponential growth. >> what is behind that growth? is it just more welcoming? is regulation different? is a mixedw, it
response among asian countries. you are seeing china cracking down on algorithmic trading after last year and you are also seeing singapore having a more positive view of algorithmic trading. the boom we are seeing is that as the banking sector cuts jobs, hsp firms are hiring more people as we have a more welcome mood in some parts of asia. in japan, more than 70% of orders on the stock exchange are hsp. .> thank you that is it for us on bloomberg markets middle east. it is a risk off day. we will pick up the baton. bloomberg technology is up next. in one hour, and edwards in
it is one p.m. in hong kong. i am angie lau with your top stories. the fomc says it only needs some further evidence, some further evidenced by inflation and employment are on track toward their goal. a decemberchance of hike. macau shares tumbling. 12% toenue fell about $518 million went macau's new $4.4 billion resort failed to give it a boost.