tv Bloomberg Markets Middle East Bloomberg December 3, 2016 11:00pm-12:01am EST
♪ i tell you to vote in a constitutional referendum. the latest barometer on whether the wave of populism has made its way through europe. and nalking on turkey, erdoga accuses his foes of economic sabotage as the lira hits new low spirit and donald trump callingrotocol by taiwan. it is aid i am in -- it is 8 a.m. in dubai. week.e to another sunny
let's get you up to speed. we got the jobs data -- finally the key metric that was going to tell us where the u.s. economy was at. this is the very latest. 178,000 gain. let's pull up the chart on the bloomberg and get a better sense of where we are. 178,000. the market was looking for 180 thousand gain, slightly lower than the market had expected. also the unemployment rate, nine-year low. that's the bottom half of that chart. it was not all positive p review are looking at comments from the morgan chase, saying labor market is healthy, perhaps at or beyond capacity. for bank ofnomists america merrill lynch saying that the hourly wage declining among the unusual quirks and all
of this data. this will tell us more about where the fed is going to go beyond december because december is pretty much baked in if you look at the probabilities. how the u.s. markets closed. mixed picture across the board. the dow jones down a 10th of 1%, 1%.nasdaq up a 10th of a lot of this political anxiety, one of the key themes on our program today, and that jobs data, not really something to write home about. here in the middle east, we are two hours from the opening of the emirates market. you are looking at dubai, of a dobby, and plenty more. let's go through those market closes. -- you are looking at dubai, abu .habi saudi arabia up 1.3%. again, the five i think day returns, if you pull it up on your bloomberg, you are looking at a picture, not just the
energy banks, because those were the laggards. and that opec agreement is, of course, helping sentiment across .8%.oard, egypt up let's check headlines across the world. gan has president erdo accused his enemies of economic sabotage. he has encouraged turks to convert savings to lira even as the currency hits a record low. stem a run ono the laura that has followed more than any other emerging markets currency in the last month. fromtate-sponsored hackers iran are said to have planted malware into eight government entities including these saudi government monetary authority.
in a statement, the central bank said it systems have not been breached and it has continuous defense against cyber threats. south korea has filed a motion to impeach the president. it has the support of lawmakers from the three opposition parties and independents. parliament will vote next week. it needs 200 votes to pass an impeachment bill. hundreds of thousands of protesters have called for park to resign. she has been accused of allowing her friends to pressure some of south korea's biggest countries to donate to her foundation. president obama has blocked a chinese company from buying germany -- after security concerns put a hold on the stock. marks only be third time the white house has rejected an overseas buyer as a national security risk. xtron employs 100 people in
deploys ahere it about 20% of its sales. breaking protocol, president-elect donald trump spoke directly with the leader of taiwan. to get more perspective on this story, here is our type i bureau chief. it's just a phone call. what is china upset about here? taiwan isactually, one of china for core interests because it sees taiwan as a province of china. that is because of the civil war that happened basically at the end of the second world war that was never really resolved. china always raises the , if youth the u.s. don't interfere with our internal matters, and this time, donald trump local long-standing protocol of not having the top
taiwan of the u.s. and directly address each other. obviously there is a lot of contacts behind the scenes through intermediaries, but this time it was leader, or president-elect to president contact and that breaks several decades of tradition. it might break protocol, but at the end of the day, donald trump has been on the phone with quite a few heads of state around the world. do we know anything more about what these two talked about? the presidential office releases statement. both sides said it was a congratulatory phone call on his the tree in the united states thetion -- his victory in united states election. the other issues that came up were the importance of building a strong national defense, which is something that probably taiwan and trump both degree on,
building up defenses, and how to develop economic strength, economic development. and lastly, the president here, hoped to that he would support or the u.s. would support taiwan's international space and international dissipation which is a big problem for people here because are not't -- they internationally recognized. the cap or dissipate in global organizations. -- they cannot participate in global organizations. yousef: is it too early to extrapolate from that phone call and what it means for the broader, bigger picture between china and the united states? yeah, probably. i don't think -- it even china in their statement were slightly more tempered and they said, he is still doing his homework and is not totally indicative of what future policy will be like. i think that is the reaction
from this end as well. obviously, china and taiwan are in a bad position because those ties are slightly more pro-independence, and it remains to be seen whether china will step up the pressure on taiwan. all right, we will leave it there and see it all unfold. us in taiwan.ing italians heading to the polls to vote on a cellular minister matteo renzi fell constitutional reform. francine lacqua filed this for us. they will vote on constitutional reforms, whether the senate needs to be curved what theower it has, people and the markets are noticing, matteo renzi has staked his own political future on the outcome of a referendum. he wants a yes to the referendum. he has said repeatedly if there
is a no vote he will step down. what does this mean? had 63 governments in the last 17 years. itmatteo renzi steps down, may mean more political risk or instability, which investors do not want. the other issue, how to deal with the banks. there are big banks trying to raise capital. our investors going to shy away from subscribing to that capital increase, and what does it mean for those smaller banks? is there a rescue plan if the government is distracted or if we have a technocratic government for the next several months? these are all questions investors will way, they. front slave month -- francine lacqua, italy. meanwhile, christine lagarde says italy needs reform itsrdless of the outcome of referendum. the imf managing director said
substantial changes are necessary to reinvigorate italy pro growth, including measures to address problems in the banking sector. lagarde: a lot means to be done, irrespective of the referendum. even if there is a vote in the italian senate is sort of -- the power is reduced, it needs to be done on the banking sector as we know. me show you how the market is currently taking all of this. one great way to get a closer read is to spread between italian government bonds, is onr paper, and this your bloomberg. what we have done, we have the deranged that goes back to december 2015. this gives us a good idea of where we are at. you can see that spike at the end of october with increased anxiety at the end of the referendum. you can see the spread narrowing quite a bit weary of investors
are less concerned than they were three weeks ago, you can see, on the basis of that. it's more interesting if you widen out the range further. you will see even on the longer-term basis it is still relatively low. let's take a look at what is still to come on the program. the turkish lira has lost more value than any currency in the past month and president erdogan calls that economic sabotage. we will run through the implications across asset classes. but first, a former saudi minister skeptical on opec for all deal to cut production. we will discuss that with two energy experts. yes, two energy expert. stay tuned. this is bloomberg. ♪
biggest gain after opec approved is for supply cut in 10 years. millie's more from her energy reporter. anthony to follow has the details. anthony, now that the deal is done in indiana, is that going to be smooth sailing going forward, is it? bigony: no, there's another component, that is the non-opec producers potentially joining in . there is a meeting going back to december. there is still meeting to be held with non-opec members and states. mainly russia. they should be on board for cut. other countries like oman said they would be willing. mexico, cause external, they are trained to bring production on in those companies -- countries. so, we will really be looking to see who steps up to the plate for these non-opec countries and
agrees to cut alongside the group and that will allow us to gauge what impact it is going to a markets into next year. we will see how big those cuts are going to be across the market there, youssef. fragility andthe the long road, the long path for opec to come to this agreement, what are these smaller stones that could really derail it? anthony: as you mentioned earlier, we are talking about the saudi oil minister who said -- that is one issue, will be members stick to the production quotas that they agreed to in vienna last week? there were also countries that were exempted. we will see how nigeria and libya are able to come back into the market and greece -- and increase their production.
and we have these other non-opec companies we are trying to bring into the fold. these are issues that still remain to be seen, how they impact the cuts are now those are implemented along the way and how the compliance goes. have those issues outstanding to see how that impacts the market. yousef: thanks, anthony. anthony dipaola, our man on anything related to energy. we are joined by a founding of morton fish consulting, and we have the ceo of an energy company. let's start with some of the key surprises out of this opec meeting. direct, saudi arabia taking on more than anyone expected? it was a stronger deal than anyone was expecting and yes, they are being very difficult in the lead up to this, raising numerous objections, has agreed to cut
quite significant one. there is no effective exemption of iran. for .6% is cutting almost exactly, so it is very evenly distributed. : i've pulled up this amazing function. opec go. it pulls it out on several charts as well. let me bring you into this conversation. is this cut deep enough to make a meaningful impact? yes, we have seen energy prices rise off the back of it. how sustainable is this? >> i don't think it is sustainable. two things are going to happen. there's a lot of oil in storage -- floating storage as well as a official storage. with these high prices and the flattening forward curve, some of that is going to come into
the market and apply pressure. secondly, christmas is coming early for the shale producers in north america. yousef: given that there are higher oil prices, you will give shale in the u.s. quite a significant floor. they will come back online. they will put more oil into this market. a coupleere are questions. the saudi's always reduce production out of the winter anyway because domestic demand is lower. in six months, production will have to go up again and the deal will come under strain then. the second question, as you say, shale comes back. will opec stick with these cuts? will it cap more? will it be forced to accept shale is coming more strongly than anticipated? we havemany analysts been speaking to on bloomberg television have told us again done, it, the deal is is compliance and execution. they put together a committee
and they are supposed to see that the agreement is stood by. are you optimistic given the track record from opec? to a veryt speak significant degree of compliance. are they going to be able to turn things around? >> it will be good if it happens -- yousef: do you think it will happen? al-naimi, held man is skeptical, and so i my. yousef: and you, robin? he may comments over the weekend, pointing out that u.s. shale will be production, tipping the balance against opec. market willnk the cheats, but not too much. everyone wants to cheat on their quotas. maybe it will be a cut of one million barrels per day or
something like that. if one member starts cheating, the deal falls apart and the saudi's will feel they have been taken for a ride. yousef: do you see a scenario where they increase the cuts after six months of the back of the initial data and adjust accordingly question mark along will this deal last question mark six months is the baseline and they reconvene? where does it go from here? >> six months to start with, potentially extending this for another six months, but there is a big but here. non-opec producers that are going to be part of this. is this deal really depending on their also cutting 600? putin has had a strong hand making this deal happen with iran, with iraq, also direct communication with the saudi's, starting with the beijing -- with the g-20 meeting earlier this year.
first it was going to be the ninth of december in doha. russians want this in moscow on december 10. what will happen at this meeting? what if there is no agreement at this meeting? hold those thoughts. we will pick up that conversation in a second. we will be getting more on the overall outlook. we suck what a bit of activity in friday's trays -- trade. we saw more conviction, dubbed g.i. up. this is bloomberg. ♪
robin mills. we have this gorgeous, beautiful chart. this shows you the latest figures from the baker hughes index. that uptick, take a look. the blue bars, and obviously the red are declines today. the yellow is a reference find it really shows you u.s. crude up with the swell, which is jumped accordingly. ,here does this go from here the u.s. shale story question mark some say, well, if you see gains until 2018, and then things will slow down because of the permits, what is your outlook? i think the u.s. shale oil story has just begun. it's still in its in a sea of this industry. this is going to expand tremendously. when you look at this chart here. .ne very important thing back in 2014, these rigs were
running 24 hours a day, seven days a week. that is not the case today. in addition to the increasing number of rigs coming in, there is a lot of slack in the system where, you know, rigs can be more heavily employed in the fields. the bottleneck is the hydraulic fracturing crews which means to be rebuilt and expanded and they need higher prices to do so. but generally speaking, i see shale in the united states, just a beginning. next couple years could add another one million barrels. --sef: let me jump in here we have a quote here -- she'll has proven to be resilient, only 1.3 million barrels compared to billion average of 10 through 2013. robin? we would be delighted to see a strong rebound in shale.
the question is over the next three, four years how much other non-opec production would have been lost? will shale make up for that. of course they have a much longer lead time then shale projects. i am quite optimistic that shale will bridge that gap. there are other concerns about the investment gap. yousef: we look ahead to the meeting on december 9, do you sign on, live up to their word? it's difficult to say. initial yes. we were talking about opec talking a good game. putin has been part of that. hand in this heavy process. look at the way that prices have
increased last week. some 30, for he percent without any cuts being made yet. -- some 30, pre-prison without any cuts being made yet. he is clearly made a lot of money for oil producers. and the country that benefits the most from this is russia, which has a very strained economy. robin, is russia going to come through? robin: russia has often talked to opec, never really followed through. maybe this is different because putin has put his personal weight behind it. they are supposed to cut 300,000 barrels a day, same as russia, azerbaijan,heard has asked on, mexico -- all of those are the downfall. yousef: we will have to leave it there. frisch.ills, morten enter as the occasion has
♪ 6:30 a.m. here in dubai. we are coming down to referendum results. china, complaints after president like donald trump ignored almost four decades of diplomatic protocol by directly speaking with the president of taiwan. beijing and garst authorities do it the so-called one china principle. -- encouraged authorities to adhere to the so-called one
china principle. it's unclear whether this good -- this could lead to a shift in u.s. policy. sources say ila governor terry branstad is to meet members of donald trump will transition team in new york in the coming week. branstad and he first met when the gop later made a trip to iowa in 1980 five. branstad did not rule out becoming ambassador, but said his focus is serving the people of iowa. italians will decide whether to back prime minister matteo renzi 's constitutional reform or not. he has promised to resign if he loses. there is a lot at stake. it is the third biggest economy in the euro region. it could put massive pressure on the banks. voting will begin in a few
hours. deciding will he between a nationalist and a liberal university economist and their election as well. the freedom party leader built his campaign on anxiety over immigration. green party candidate campaigned on liberty. -- turkey'sresident president says that his enemies are speculating on the stock market. let's get more detail on the story. his is not the time that erdogan is playing the blame game. how seriously should investors take his comments? he has been on fire verbally before.
right.re when anyone would call for an increase, for example he has been blaming -- how seriously should we take at this time? is very interest inc.. he said on the interest rate -- it is very interesting. he said on the interest-rate front, i know i'm alone, but i will keep fighting. indicate that he does not have more support from cabinet ministers or something like that. but this has damaged the central bank credibility in the eyes of rating agencies. on the note of anxiety, i brought up this great chart, which you can bring up on the bloomberg as well. stockg in mind certain values, it has fallen the most since april 20 oh nine, but that
is only happy story because the lira has lost 25% of its value. only half the story because the lira has lost 35% of its value. what is the outlook? what is the way forward for the economy? alaa: the turkish economy has been somewhat mixed. coup,ve the failed conflict in the southeast, other domestic turbulence, regional turbulence come and you have the therisk, and then you have low yield and the rest of the world, a story that had investors piling into structure debt. but now, now, with the fed primed it to raise rates and turmoil still playing out in turkey, and you see in the chart, in the lira, the investor anxiety over that, and i was analysts a and s&p couple weeks ago, and he said they believe the central bank
sooner or later may need to ramp up interest-rate over the next recalling how in 2014 they had to hold an emergency meeting at significantly raise borrowing costs. of course, this again a the present's wishes. there is a risk here that what we have turns into a self fulfilling prophecy. turkey what options does have, bearing in mind that monetary policy interest diverts far from what the government wants to do? alaa: very little. you speak to investors, and the predominant consensus, i would say is the central bank at some point would have to start raising interest rates to stem that slide in the lira. we saw that in 2014. if people continue believing
that, if they stop buying lira and selling their dollars, we might see that scenario again. yousef: always a great pleasure to have you on the program. giving us some perspective. cross over to christine lagarde. she says that italy needs reform, regardless of the referendum. she was speaking to bloomberg and said that substantial changes are necessary to reinvigorate italy fell growth. christine lagarde: we need to look at the italian economy, irrespective of the outcome of the referendum. i mean, so far we have really falls forecast, outcome asdetermined to what it was going to be and we see how wrong we were. we look at the italian economy
independently and matteo renzi's decision to stay president of the council or not, and a lot needs to be done on the italian economy, irrespective of the referendum. even if there is a yes vote and the italian senate is sort of -- has power reduced, a lot needs to be done on the banking, on the banking sector. recapitalization is needed. strengthening of the books by dealing with the nonperforming loans stuck and some of these banks. a lot needs to be done on the productivity front. the italian economy needs a lot of reforms. >> there's another large country that you could say has needed a lot of reforms. -- for have that removal loans is now gone, a new generation of people coming in. do you think that fronts is more
likely to be reformed? -- that france is more likely to be reformed? christine lagarde: we at the imf -- >> speaking of the french people. [laughter] certainlylagarde: we view france that needs to continue seriously in the reforms of its economy. and whoever is elected comes next may will have to tackle head-on the need for structural .eforms the labor market has begun reform. product markets have begun. ok, we need a bit more than that. the economy needs more than that. and it has the benefit of this accommodating monetary policy,
which presumably is going to continue for a while. around 50.te -- theeuro is one of 5,106 to dollar. and you buy oil at a reasonably low price or barrel. the whole scenery, the whole landscape should be really favorable to those structural reforms. space,ed use of physical -- fiscal space can only be used appropriately to support these structural reform. it cannot be an invitation to just extend of expending. it means to be reorganizing and reshaped. showed françois conversing with margaret
thatcher. is he a big enough personality to be the margaret after of france? lagarde: what i know of is he is certainly a different term and -- a determined reformist spirit he is prudent, but i think -- i have seen him, you know, i have worked with him for four years. and he is certainly very lucid in terms of the diagnosis about the french economy. one who said i am the prime minister of a bankrupt country. which did not please very much the president then. just that he is running against a man who described france as cuba without the sunshine. lagarde: that's right. that's right. they will have to plan a vacation together. yousef: that was christine
lagarde speaking to john mikel it has been since since july, but if you look at the equity markets, it has all been developed this week. italy could decide for a moment -- italy to the sidebar moment, and have effect on saudi arabia's bank threatening already delicate relations. we look at the implications. stay tuned for the details. this is bloomberg. ♪ .
brexit. she will meet with leaders on amid criticism that the government is ill cared for negotiations to exit the european union. it will mark the first time that a prime minister from britain and a woman attends the meeting -- it should be interesting. up dubai's cp world teaming for the $3.2 billion joint venture. to be world well hold a stake in the unnamed company which will invest across the world, including asia and latin america. the company in québec will control the remainder of the venture. the national bank of egypt and started allowing claims to repatriate in quite some time -- we will get you that number shortly. the largest lender in each of said they made the move after the central bank further is
currency restrictions in an effort to bring back foreign avestors and revise struggling economy. -- revive a struggling economy. they met the needs of priority importers first. saudi arabia says it has been targeted by state-sponsored hackers. computer killing malware connected to tehran has been found in the systems of a governmental entities including the saudi arabian authority. within the last few minutes, noti arabia said it has been hacked and has measures in place for potential threats. we have talked through the specifics of what we know happened. >> we know there has been an attack. the saudi's have confirmed. we do not know exactly who. only the ministry systems have been impacted. essentially someone through a
cyber hand grenade -- someone a cyber hand grenade into the saudi institutions. that malware is linked to tehran, it has been used before. the remote more than 30,000 computers destroyed. apparently, ite did the same thing around this time around, destroying computers, making them inoperable. yousef: what is the scale and the extent of the damage. where are -- what is the scale and extent of the damage question mark where are we now? riad: if you are hitting eight institutions, it's a pretty large attack. there is no indication of how intense, how serious these attacks were. we have the impact on operations, the aviation authorities saying it impacted affairs,minister of
i.e. the operational side was not impacted. they are trying to minimize the impact of it. nevertheless, not necessarily all of the institutions were breached. some of these tax -- the attacks did not succeed. you have to think it was large-scale. yousef: they just struck a landmark agreement, iran and saudi arabia, as part of the opec deal. how likely is it we will see more of this going forward? look, it has been going on a while. i just mentioned the 20 12th attack on iran go. iran itself has been a victim of this as well, with the virus of .ttacking the nuclear facility globally, this kind of thing is going to increase. the opec deal, yes, there was a deal struck, but i think the saudi's and the iranians have always managed to keep the opec discussions separate from their
ongoing rivalry in the region. right, we will leave it there. we will keep a close eye on the story as it develops. thank you for joining us on bloomberg markets middle east. to a to come, we speak branding expert about muslim consumers and how some of the world's biggest brands will have a change to engage in lucrative and fast-growing market. also how emerging markets of been performing and where that road could lead in light of federal reserve rate hikes. stay tuned. this is bloomberg. ♪
as haslinda amin spoke to a vice president of the rise of the muslim middle class and how global brands can engage with them. >> if we think about some of the really big, global trends, we millions of muslims, but they are particularly young. two thirds are under 30, and they are growing particularly in asia where they are 60% muslim and they are part of the rising economies. if you put all of those factors together and you are a global business thinking about where your opportunity and your brakes are going to come, the muslim consumer opportunity should be right at the top of your list. but they are not, are they? shelinda: they have huge amount of money to spend. and they are young. when you are thinking about where to invest your brand
are where you should be investing your money, both in product innovations, but also in communications. linda: -- has linda: -- haslinda: which are the companies that of the game? brandsa: we start to see that are either thinking about product innovation or introducing to medication. southeast asiaintroducing to me. southeast asia has a unique line designed for muslim women, not just muslim women, but those thinking about modest where. ear.odest w we are brands looking at shampoo. we see brands like apple and android. we have brands like filtering
the bonn think about designing for women in the middle east. brands are starting to think about, but consumers want more products and better communications and full engagement from these kind of global brands thinking about them. da: you talk about communications. what are you referring to question mark how should the global brand speak to the muslim consumer? labelda: don't just put a on a product. i do not want to think i am second-best. these young muslim consumers are saying we want the best of products, the best of brands designs. they are saying don't just muslims are concerned,
and -- a: isn't it true it goes beyond lifestyle products? , friends to, dating give as a sense of the potential for companies. to young when we talk muslims and we say, what does it mean to have a sharia compliant, muslim friendly brands, they say, this helps me live my life in the 21st century. it is across all brands. travel, music, we have boy bands and pop music. who am i seeing reflected back at me and what products are going to help me live a more wholesome lifestyle? this is about recreation, food, drinks. alale are things such as hsa wine and beer for this audience. but also thinking about where
products are produced and how they will be disposed of. in this they are leaving a wider consumer movement. they are saying halal is all well and good, but does this help me live a better life and make the world a better place? are people being paid fairly for their products? communications ethical and transparent question mark how are my going to dispose of this product? they are actually part of wider consumer groups thinking about the same things, but they are willing to push the vote out with the brown and say, you need to deliver this. yousef: all right, let's take a look and look at the events we are watching very, very closely. a monday, we will have the results of italy's referendum, of course. the projections are expected to indicate the winner by 1:00 a.m. local time, but the counting will not be finished until three a.m.
we are also looking at u.s. trade data on tuesday. forecasts show that the trade deficit probably widened in october, unless demand from overseas and a pickup in consumer goods. contrast to the employment data on friday. and an interesting decision where it is widely expected to cut the key rate by 25 basis points. finally on thursday, the ecb announces its long anticipated policy decisions and expected to pace of the current asset purchasing program. it will be fascinating to get additional context from mario draghi as to the modalities of the bond buying program. are they going to make any additional changes in light of the rise in yields we have seen in government bonds across the european mainland? it is important to get perspective amid this bond of drought the world is undergoing. on yourhold us up
bloomberg. this is a highlight. is the beginning of tapering. the second part -- look at that spiked with donald trump getting elected. investors betting on fiscal stimulus. investors betting on tax cuts. investors sing infrastructure spending that is likely to look at bond costs. it effectively confirmed with 100% probability the rate hike in december. 2.5, 2.75. -- thefrica also assessment of the foreign currency one level above junk. it did survive that review. and of course, we can pull up
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