tv Bloomberg Markets Middle East Bloomberg November 7, 2016 11:00pm-12:01am EST
profit slump. >> it is 4 a.m. london. i manus cranny in dubai. in hong kong.au welcome to bloomberg markets middle east. let's get right to it and check the markets at this hour. what we are seeing is just some anticipation of a hillary clinton when. this ahead of americans heading to the polls. we've got mumbai, the hang seng index all gaining. topics just fractionally higher as we do sees safety haven plays -- that's a little bit off. we are seeing a weaker yen. that does hold better for exporters. manus, what he watching? manus: angie, i am looking at trump --eak -- 41% for
what does it mean for mark's question mark what does it mean? you've got it on your terminal. let's go inside the bloomberg and have a look at how the rich benefit in terms of the moves. jeff bezos, he got $2.6 billion theerday as a result of relief rally. warren buffett $1.6 billion. bill gates got $1.5 billion. by .9 oforth climbed 1%. if you look at brexit, billionaires lost $400 billion on the chinese right. what do they get for you wanted going into the white house, a measly $37 billion, angie. i tell you what. being a billionaire is hard, hard work. let's look at the markets. about the relief rally. the s&p, the s&p broke trend -- this is the key thing. the s&p turned it around.
it broke the longest losing years.in 36 volatility drops. we are seeing these future boards showing a little bit of relief in terms of the futures, angie. we are just coming off those initial highs. we have the emirates on the local markets. abu dhabi opened at 10 a.m. local time. dubai, egypt, and qatar -- all to focus on today. you, they rose 1.5 percent, the highest since september. the rsi is at 70. just checking in on egypt there. we pop that in for a little bit of a difference. you have a nice move from egypt. of course, a big rally there. the seventh day, a stay in a row , led by the big banks. we have not seen that in a
month. look at that egyptian market go. onfell a little bit earlier the open market yesterday. angie? right, manus, thanks. we are focusing on china after trade. month of sluggish we have steven angle here to break down all of the numbers. what does it all mean? >> it means global demand is still weak and a weekend of you yuan has not benefited exporters. the numbers are lower than forecast by economists. oferts saw a bell curve 6.3%. 10% follow september's fall. seven straight months of export following now. we were expecting a fall of just
under 1%. imports, too, those have been in contraction now for 23 out of 24 consecutive months. it's improving, but were some expected in october. we have import still .4%. we were expecting -- we have imports still don't want .4 percent. this is bad news for manufacturers who are not getting a break from the weakened yuan against the dollar. their input is going up, wages are going up. steve, i'm just looking at the outflows. in october we drop -- i've got $3.12- three point -- trillion. is this going to pressurize were exit is of capital from china? because: yes, it could it could further prompt authorities in china to allow weaken further.
that would exacerbate the outflows. we saw the biggest draw down in reserve numbers yesterday, the biggest drawdown since january. but the numbers also indicate that the authorities have not been intervening as much to, you 's fall.em the yuan they are allowing it to continue to fall. it have the biggest monthly devaluation since august of 2015. exporthink if the scenario we are seeing now will continue, authorities will allow the yuan to continue to weaken. angie: all right, thank you for all of that. angie, let's get into the markets. we have a little bit of a rocket relief rally.
david, how is it looking for you. what is the big driver in these markets today? we have china and we have the u.s.. what one the top spot? -- what won the top spot? the u.s.,it has to be manus. you had some moves along the asset classes, but i think you really nailed it only had head where you basically said, monday was a stellar session across markets. we are still seeing a little of that. it's dissipating. momentum has really slowed down. the startwe approach of the open of the close. now i have three metrics here. people look at different things. this is what i have been following all morning. thee are the gauges across asia-pacific. we have seen yields come down a little bit from the spike yesterday. clinton win, 2%. trump when, 2.4%.
gold is pulling back a little bit. have a look at markets now. the second straight day -- new zealand is closed right now. best two days there. next up is australia and then you have the rest of asia. at this point, volumes are a bit low. are a little bit more concerned. that said, those bets are in. want to mention this rally across the commodity space in china. have a look. copper is leaving the game by the way. in shanghai, 2%. see all interesting to of these really come together. of course, all of the -- the real event is tonight. all bets are off. there you go, 44% for hillary, 41% for trump.
there is plenty on the minds of investors to keep you occupied. we have the data out of china and of course, elections. here with a little bit of guidance to read the tea leaves, our global chief economist at standard chartered. let's start with the china data. disappointing. as the world have a problem because we have the sense of relief in the pm my -- or we are, with the reality of the trade that? -- the trade debt? >> i think the world is not a happy place at the moment and chinese that is more receptive to the state of the world then china itself permit we have incredibly weak growth in the global economy and you're a freer, it's doing steadily worse, not doing any better. you have growth rates you would expect in a crisis, only this time it is low growth without a crisis. the other question is
this, and i just put it to our reporter in hong kong. have a look. this is the flow of capital, right? this is the flow of capital in china. when you see data like that, does that cause you an extra level of concern? >> no, it doesn't. surplus huge trade still, despite weaker exports. savings very's from ratio. at the same time, china has created a lot of overcapacity. so, inevitably, you are going to see chinese investors, chinese companies, chinese households looking for investment opportunities outside china. my think this is something we need to be getting used to it. and i think it is going to continue. this is the next phase of china's globalization.
manus: stay with energy and myself. we have a lot to get through. the chief economist at standard chartered. there is another a whole world out there. a very good morning. you.od morning to indeed, a whole new world. investigation into the influence peddling scandal. choi was formally arrested last week on charges of attempted fraud and abuse of power. the head of opec says russia is on board with the order to limit crude production. -- says thateral coordination with non-opec producers will help bring the market back into balance.
>> we have offered, we remain committed. been painstakingly put together and we are committed to its implementation. >> year-end bonuses for wall street bankers are expected to shrink, but maybe not as much as initially feared. the incomes may fall as much as 10% from last year. the improvement comes after the biggest investment banks reported a second straight quarter of fixed-income trading gains. with day two of the british prime minister theresa may's of india not going to plan as she overed with narendra modi immigration rules.
may says she was willing to look at some aspects of a visa process if modi helps speed up the terms of indian nationals living illegally in britain. global news 24 hours a day. i'm haidi lun. this is bloomberg. angie: still to come this hour u.s.ing vulnerable to the election results. plus, what will a clinton or trump presidency mean for the fed? or analysis next. this is bloomberg. ♪
let's go to kathleen hays in new york. a hillary clinton they treat looks to be good for stocks, bad for bonds. why? kathleen: it has nothing to do with politics and every thing to do with uncertainty. the market is pretty much pricing and a clinton victory, a market analyst making that point. reporterloomberg news who posted a terrific guide to the elections, what to watch him a you can find that on lumber.com. clinton is a status quo candidate. she is not going to really rock the boat. on the other hand, donald trump would be a big surprise. he would create a lot of uncertainty in financial markets. has u.s. and global investors rushing to the safety of treasuries. a flight to quality, as we call it. on the other has u.s. and global
hand, hillary clinton is expected to boost the fed right -- the fed hike in december chances because she will not create a lot of market turmoil. let's go to this chart. what you can see as you look at this is the world interest-rate it shows you the audits all be december hike are at 80%. very interesting to keep an eye on. one of the most successful bond managers in the country is saying hillary clinton will lead to a higher bond yield. he sees that at 6.2% next year because she will keep the cap open to three interest rate increases in 2017. manus: kathleen, thank you for staying up so late for us euro and the middle east show. it's an exciting 24 hours. when it comes to policy and the fed. we have an unemployment rate just under 5% -- who is going to
do more? who is going to promise more? kathleen: from a jobs point, if either one is successful, it can make a difference. donald trump says his tax cut plan will create 25 million jobs over the next week five years, have an average growth rate in the u.s. of 3.5%, but hillary clinton is also looking to create jobs -- 100 day jobs plan, infrastructure spending, investing in manufacturing, anding red tape restrictions on small business. let's show you how we might need stimulation for small business in the u.s. 16 labor market indicators and here put in there by janet yellen and her staff at the fed to read what you see is the big dive with the great recession. some recovery, but leveling out. even with that leveling out, the
founder of high frequency economics of the candidates will not make much difference in the short-term, and in the mean term -- in the meantime, the fed will because that fed rate hike is coming. pushing it tobly say whether it will be more or less growth as we move forward. we are still bringing down the unemployment rate. that means we have some cause to think the fed will be tightening. kathleen: manus, just in case you were lying awake wondering that a trump when could mean the exit of janet yellen. don't worry. her term does not officially end until february 2018 and a president can only remove a fed chair for a cause. it's very difficult to meet that standard. presidents do not take it lightly. even if donald trump wins, her job is probably secure for now. kathleen, it's going to
be a fascinating toy for hours. kathleen hays with the very suppose, the run for the next 34 hours. global chief economist at standard chartered and we just heard from alan greenspan, everyone is chipping in. thanks for staying with us. here we go. does assume trump we win. the margin is very small. from a fiscal point of view, and economic when of you, will a trump fiscal plan potentially be more aggressive than hillary's? depends. -- >> it it depends who wins the senate and the house. there are many uncertainties. it does not just depend on who the president is. it depends on whether the president can pass through a fiscal stimulus to congress. that's another uncertain
outcome. i think hillary clinton's fiscal stimulus -- while smaller and absolute size -- would be more effective in generating growth. trump's fiscal stimulus is mostly targeted toward reducing the tax rate for the top earners . the actual impact on economic growth would be fairly negligible. theou are at the top and of income distribution, you are already spending what you want. if you have more disposable income, you are more likely to park it somewhere. angie: so, if you do think it's going to be the antiestablishment win, how do you set up global economic growth if you think that is going to have an impact, and what you think central banks outside the fed will be forced to have to do? a shock if have donald trump wins, because the markets clearly expect a clinton
presidency. then we should expect, at least for some time, significant volatility in financial markets, and that would affect monetary policy. and i think it would end up affecting the federal reserve. we will see if the fed takes into consideration global financial conditions as well as domestic financial conditions when it comes to monetary policy. i think the u.s. is experiencing disappointing growth in 2016. let's not forget that year to is at 1.2% only. we're not that far from a recession. and let's not forget that the world economy is also disappointing. i think irrespective of who the winner is, i think interest rates will be low in the united states and the rest of the world for white some time. even if the fed does hike in december of this year. quite some time.
manus: welcome back. you are watching bloomberg. i manus cranny in dubai. angie: i'm angie lau in hong kong. toyota will report second quarter earnings after the bell. let's go to our editor for more. david, what will investors be focusing on this afternoon? isid: the bottom line number analysts expect about a 39% decline in quarterly net income. it's a big drop.
there will be a lot of focus on whether they meet or beat that target. there is some talk they could be in line to be that target because the yen has been a little bit weaker than originally forecast. there has been some upbeat sentiment in analyst reports. there is a since it could be upbeat. that is what the market is expecting. there is focus on that. at sales forecast, looking something on the order of a decline -- they will be watching that. it's a very important number. big drop withy some of the rivals. insan reported a 20% drop japan. it will be interesting to see how toyota does with that number as well. they are more exposed -- toyota is more exposed to japan the nissan is. also, where they leave the
forecast right now, -- david, can i jump in? this is the perennial issue for all the producers. are they going to hedge more or just hope the yen goes to 100 10, 120? is there hope or reality? dave: hope, pray? there's not a lot -- you said it exactly right. there's not a lot you can do. toyota is -- they are talking a cost cuts. research and development. they are going for those kinds of efficiencies. cost cuts are a big focus in the face of the stronger yen, but there's not a heck of a lot they can do. decisions where they produce cars, this take five years to implement. manus: dave, let's see where
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it's: it is -- haidi: kong.in hong the next president of the united states is likely to be known for hours. hillary clinton ended her campaign with a high note with a massive crowd at philadelphia's independence hall. jump wrapped up his campaign in new hampshire, saying he would take effect the white house and deliver a once-in-a-lifetime change. depreciation pressures on the nation's currency as the u.n. .ell -- yuan
beijing has a trade surplus of $49.1 billion. the yuan has stolen since august of last year, but has failed to provide a sustained boost to experts. chinese drivers are rushing out engine carsll before an expected price rise in train 17. a tax cut expires at the end of the year. month. local% last carmakers among the biggest winners from that surge in demand. the u.k. official in charge of brexit is coming under pressure to provide more details. members of the opposition are calling on him to elaborate the official strategy as he prepares to start negotiations with the eu. the pressure has been compounded by last week fell high court ruling that parliament must approve the brexit process. global history for hours a day
to my powered by twin 600 journalists and analysts in more than 120 countries. i'm haidi lun, this is the work. manus: welcome back. 1 here in dubai. you are watching bloomberg. i'm manus cranny. things are calm ahead of the potential storm? david: i think a lot of the big bets came in yesterday. it is at the session highs at the moment. i will show you what that looks like it just a moment. let me get started with this. this is one of the plots we have been tracking in the market. china,'re talking about the commodity market there, something interesting. that is the stock price of china's biggest coal producers. priced in china on the exchanges the past nineover
weeks or so. you look at these charts, look at these tables, there's always one contract that seems to be gangbusters, if you will. we have rubber, copper, iron ore. those first two, are contracts from the shanghai futures exchange. day,ou know, every single the past nine weeks or so has seen prices go up. in fact, i was talking about coal prices in china have not declined, have not gone down for a month, over a month. that seems to be pointing a lot of attention to perhaps speculation might be starting to really creep up in there. apart from the bigger picture. strengthening a little bit. it's back up now. for the most part, it's a good day. of course, we have the
elections. session highs at the moment. two straight days of gains. we are up almost 1%. markets will be shot in a few minutes. there are 30 minutes left. as the sun sets, overly these gains's day. and we have the opening of polls over at the u.s.. -- hopefully these gains stay. manus: david, i am channeling disney you are. all whole new world. thus possibly what we can be looking at. popularity can be a curse. to currencies -- two currencies are learning that the hard way. globalund favor with investors, but now exposure is making the most notable to the u.s. election and the federal reserve's next move. we have more on this tory from singapore. this story from singapore. it's great to see -- when i look at this, there is this push and pull, isn't there? there is this roller coaster,
there is this roller coaster, there is this roller coaster of money that has gone into some of these gm currencies. talk me through the risks associated with some of this? -- roller coaster of money that has gone into some of these em currencies. >> you are right, manus. we have seen a trickling of sovereign bonds. so many markets are held by foreigners. that has created risks at times when we have big shocks. we could be looking at out close from the market. angie: how do you think the currencies would react to a to a trumpll react presidency? >> well, i expect it could be some obligatory actions in asia. if you look back at what happen
ed in previous external shocks, we saw a big one in malaysia and indonesia back in may 2013 when was goingrst flag it to wind down quantitative easing. outflows before the repair. it dropped $.21 that year. so, if trump does manage to pull off an upset, i think you could see some severe reactions at most two currencies. -- it dropped 21% that year. soie: all right, thank you much for that, andrew james, coming to us live from singapore. shares in commonwealth bank, after a net -- after in aquarter --nings looks like this,
after it announced first-quarter earnings looks like this, down. how are the shares being impacted question rickshaws but it was pretty flat, angie, for the first -- how are the shares being impacted? it was pretty flat, angie. they were struggling with the same problems as their three major competitors in terms of falling interest margins and bad debts. keep it in proportion. .18% of total loans. here,mportant to note this is really at trading uptick. the financial year runs through june. it's just a snapshot of where they are at. it's not results. the market really pounding them again. commonwealth bank recovering to .8 percent. manus: paul, it's always
interesting to me coming down from london, stopping off your in the middle east, looking of the banks. we have had a good reporting season. overall, how would you put the complexion on it? when i report your news in london, we're talking about a property market. are they concerned about the property and the risks associated -- what is driving the themes of risk and reward in the banks? : the banks are heavily exposed to the domestic property market. that is the case. but they are being required to hold more capital to guard against future shocks. that is why you're seeing these results. the big four banks have and collectively made to raise $20 to guard themital against any future crises down the track. there have been measures to
protect them. it's also worth noting be property prices here are largely an east coast phenomena. you could reduce it down to sydney and melbourne. or are some rural towns in australia showing some pretty sharp corrections and property prices. overall the banks producing pretty steady results. steady. we like that word. paul, thank you very much for being with angie and myself. analysts are divided on whether opec will be able to push ahead this month. chairman of the libya's state owned oil company. that's next. this is bloomberg. ♪
dubai. checking on your latest bloomberg business flash headlines. he was in revenue will be made by the end of the year -- the promise came by the saudi prince. the king is babbling of living budget deficit because of lower oil prices. a 71%r crude will see slump in 2016. angie: authorities say aramco is halting shipments to egypt indefinitely. they warned they would suspend the supply of refined product, but it was not clear at the time how long the freeze could last. that will force egypt to buy fuel at higher costs from global markets just as they try to stabilize the economy.
angie: -- manus: citigroup has marked the return to market management by calling it "as dramatic as expected." the limited ask of short-sellers may not be in their reach. says iran and iraq are needed in any cap to cut off such a deal and make it credible. but both are seeking exemptions. angie: we have our tracy alloway at the upper got conference and she spoke with the chairman of libya's state oil company. >> the country has big potential. they are there to make infrastructure or they have some problems by a network. there is some urgency.
andee many confirmation promises to give us the money. means they are going to give us a lot of money. tracy is on the ground for us in abu dhabi. tracy, great to see you. great interview, by the way. in terms of the context of the conversation, what else was on his agenda question mark did he say anything about the prospect of a deal with opec? he did not say anything specifically about opec. he actually joked every time opec speaks the market goes down, so he did not want to go there exactly. he did mention that libya's production might be a little bit less because of recent problems. but that really underscores the
challenges with an opec production deal. libya has been ramping up production in recent months and i thought it was interesting. he mentioned the prospect of foreign investment. if you think that libya is getting an exemption from the potentially, the only thing standing in their way in terms of wrapping a production is and getting the funding to expand the business. if they secure outside business, we could see yet another pop in production levels. angie: what is the mood on the ground, tracy? sure. it's actually surprisingly optimistic given where oil prices are at the moment. that said, it's supposed to be a conference where oil and gas their latestplay wares and is turning into something of a mini opec meeting. the focus is firmly on what opec
is going to do. that is the conversation among oil ministers, ceo's. but there is some optimism. some -- most seem to agree that oil pricesn terms of is now behind them. the cost cutting is going to boost their property -- profitability even in the face of a longer time of low oil prices. it's not as bad as it could be. it feels like the industry has gotten over a little bit of the shock that came when oil first dropped. tracy, thanksht, for that. appreciate it. most asia markets are trading cautiously higher on signs that it hillary clinton will be donald trump to the white house. is it short-lived or just the beginning? --well, i guess right now [inaudible]
the conventional wisdom is that hillary is going to win and the markets are applauding that because there's a lot of unknown factors with donald trump right i was waiting for manus, but let's talk about the clinton victory here, because it seems to be priced in right now and a lot of people are anticipating it would be good for equities, bad for bonds. and what would a trump presidency actually mean for global investors like yourself? >> what is important for everyone to realize, if hillary does not sweep the house and the senate and the presidency, then you are going to have some red luck, regardless of who wins the presidency. the real effect is overseas and what that president does and the stance he takes in global
markets. the immediate reaction to a hillary victory is probably priced in. i think a trump victory, you're going to get a pretty heavy correction immediately, as everyone tries to figure out what comes next. longer-term, i don't think either candidate has a positive impact on the market. so, whatever happens in the next week or so. there's going to be a lot of volatility. i think the one thing that probably all americans hope for is it is not a contested election, which would really throw markets around the globe into a tailspin. manus: it's interesting, we have a report from j.p. morgan. want ale of it is "i recount go let's talk about the fed. i love what you like about this. -- i love what you have written about this. trump goes to the white house. nominationsence to
next year. has the fed really become that political? >> there's a lot of talk of a hillary victory meaning a rate rise in december. the fed is there to monitor the economy. and get monetary policy to a level that is sustainable and manageable. it's not a political entity. the problem really pecans what happens with the influence on the fed? -- the problem really becomes what happens with the influence on the fed? trump says he is going to dissolve the political part of the fed, and you would look to see yellen moving out. no what does that mean as it ianslates across the globe. don't think the u.s. economy in any way portends any sort of inflation. so i do not think we are in for
rate rises. the global markets are very fragile. to put some political or economic validation in front of what is right for the markets, i think is really careless. genie out of the bottle? even if we do have the clinton ,residency, there is such anger as expressed by brexit, as expressed by how tight the race is in the u.s. elections, and as i said, could it be just the beginning, whether or not it is contested? >> it's definitely the beginning. u.s. politics has changed forever. the impact of social media, i don't think anyone truly understands what the polls are saying. no one knows what we should be looking at these days. the u.s. is bifurcated. there are two parties right now that do not see anything in the middle and they don't seem to want to work together. the system, i guess for good or
for bad, is set up where gridlock happens. that really has a negative effect on the rest of the world. if you are sitting in indiana and there is gridlock, not much changes in your life in the u.s., because you have a balance of power with clinton and the senate. if you look at the other side of the occasion, that president has a lot of influence overseas. do they engage globally? do they become the policeman of the world. do they reengage in the middle east. the trade pacts. all of these things a tremendous amount. as we look at the world getting smaller, the u.s. political race may have bigger implications globally if you have the gridlock that is probably going to happen. so that is dangerous. manus: let's jump in. we have live pictures coming through. this is in new hampshire. this is the start of what many people are going to say -- well, it is one of the most hotly
contested presidential elections. they are waiting for the voters to show up. there you go. they are closing the polls, 41% for clinton -- 44% for clinton, 41% for trump. the billionaires -- you used the word bifurcated there. i think this really exemplifies it. the rich get richer. bill gates, jeff bezos. gotis what the rich yesterday as a reward for clinton leading in the polls. it is nowhere near the risks you see with trump. american society is deeply divided. trump really help the middle class? >> i don't think the real help happens at his hands, per se. it happens with the fed and the balance of a monetary policy that should be more in line with
what the actual economy is suggesting. the monetary policy and this endless amount of cheap money in the system goes to your point. it actually only helps a few amount of people. the rich get richer. it does not trickle down. this is a careless policy. we have seen around the globe it is not working. it does not work anywhere if it is not balanced with infrastructure spending and that is really the job of the government. if we replace government with central bank because you get unlimited easing because that is what makes central bankers successful or do their job. if you put the government back in place and you run a balanced fiscal policy and to offset with monetary easing and then you actually upstart the economy with infrastructure spending, then you get this balance where i think it does help the middle class and a big way because jobs come into the fold then. angie: stay right there.
angie: we are back with bret mcgonigal from capital link international. all right, tell us what a trump presidency means for capital in asia. >> there is the flight to quality or to safety away from the u.s.. it happens because the election is not going to bring anything good to the u.s. markets. the u.s. market is extended. the economy is not performing well. we think any kind of rate rise in december really puts pressure on it. the logical spot is china. manus: let's stay with asia. everybody is saying it doesn't matter who gets then, they will be anti-trade. it will be in strength.
concurrent, agree? where will the yen go to? >> i think the yen has proven it is the dollar proxy. whichever way the dollar is going the yen is going the opposite way. that has been the real driver of the market. yen ist step from the can japan get momentum back in the market. trade is really undecided at this point. a week yen will rally the market. the momentum needs to get back in the market for the rally to be sustainable. i don't see that happening. angie: 30 seconds. what does it mean for middle east exposure question mark >> it is a political game. obama has withdrawn. there has been a lot of problems. there has been a lot of unrest. some sort of foreign policy that redirects back to the middle east could give some kind of calm to the region and is probably a good thing. i think either person engages there which is good. angie: bret mcgonigal. that does it for us on this
>> it is 1:00 p.m. here in hong kong and i'm angie lau. after an 18 month of a bitter and divisive campaign election day has arrived in the united states. midnight polls have opened, we're just seven voters are registered. global markets are betting on a hillary clinton win with stocks and the dollar higher. bloomberg gives her a three-point lead over from. -- over trump. despite the currency flipping almost 10% from the previous year.