tv Bloomberg Markets Middle East Bloomberg January 10, 2017 11:00pm-12:01am EST
it is midday and hong kong. welcome to bloomberg markets: middle east. an overnight session in the u.s. , stocks unchanged. financials among the key gainers . i'm looking at the indicators for the futures. what are you watching in your part of the world? beene u.s. may not have unchained but the momentum in asia especially for emerging markets. the benchmark index rebounding for a second consecutive sessions but what is interesting is that it is approaching that key technical level which could signal caused. take a look at my bloomberg. this is showing the emerging markets index, standing on the
cusp of entering a bearish trading pattern. that is when the moving average, the line in pink, that would be falling below that 200 day average which is in yellow. the index entered into a bear market the last time this happened. be careful with emerging markets. we have seen that run-up in the past year. in this part of the world we are two hours away from the opening of the emirates market. here is how the trading day closed. volumes are strengthening in dubai. some of the earnings are beginning to trickle in. some downside pressure in saudi arabia.
$4.3 billion agreement. conceit.be inexpensive the parent of apple supply reported its first annual decline. year onhe markets worst record. sales fall 2.8%. it is the first fall that it has had since it listed in 1991. u.s. prosecutors have charged three traders of the rigging of interests of currency rates. they used it to coordinate epic benchmarks by sharing potential customer information.
they would have to be extradited if they don't surrender voluntarily. pick for second jefffense attorney -- sessions accused to recuse himself for investigation into hillary clinton females in the clinton foundation. sessions faced questions about his views on immigration, terrorism and civil rights. coveredve the world each day and every day with journalists around the world. let's get back to our top story print president obama has made an emotional farewell speech in his adopted home city telling chicago it has been an honor to serve. he says america is better than it was.
his campaign slogan saying yes we can, yes we did. he warned against attacks. >> america is exceptional. not that our nation has been flawless fo from the start. we have shown the capacity to change and make life better for those who have fallen. successortten obama's who will take possession of the white house in 10 days time. trump's news came out about reports of his connections against russia. bring us up to speed. >> basically mr. trump was not talking about obama's farewell on twitter although a lot of people were.
basically he is talking about this witchhunt revolving around fake news. so this harkens back to when donald trump and president obama and a group of senators were briefed by intel agencies saying that this is unfair fight intelligence -- unverified intelligence that the russian government had compounded damaging and financial information on the president-elect according to a person familiar with the situation. off of that mr. trump as he always does and will want to do in this case is pushing back saying this is unverified. this does have ramifications over the next few weeks as we head into his inauguration. a of people saying this is mere -- more fear mongering saying
this is another bunch of lies and people saying this information coming unfair fight from a reddish intelligence official that this did indeed come together from russia trying to sway u.s. policy towards russia. hise're looking forward to first press conference since his election. what is on his agenda? >> we have been looking ahead to this specific press conference coming up on wednesday. this is pushed back from mid-december when donald trump was supposed to talk about his business interest and how he will handle it around the world. about $3.6 billion of assets held in 20 countries around the world and what he does could have ramifications
with regard to those interests. he said he would put his two sons in charge of all of his assets and he would make no new business deals during his time in the white house. was moreying he preoccupied with stacking up his cabinet. now we have this look forward to tomorrow. he did point out he is not mandated by law to do anything with his business interests but to put ethical questions to rest that is what he's going to talk about. >> thank you. the turkish lira -- it has
fallen to a record low against the dollar. let's look at that. investors.sage from tell us what is behind this plunge. >> the real problem for turkey is it has one of the worst external debt programs in emerging markets. corporate has to keep chasing the mood by buying dollars against turkey. normally when the currency is it starts increasing as it falls. >> i put this up on the chart. that there might be more trouble ahead. we did see the selloff. you can see even at the current this specificer
metric. what are they trying to do about it? .hey are quite handcuffed there is not much they can do, is there? >> ultimately the game is going to play at the same. the central bank will be forced into an emergency rate hike. at the moment they are being constrained because president erdogan is trying to stop them from doing that. would crimp on growth and affect a large debt pile. they need to stop the currency falling and that is going to require a large rate hike. >> what has the feedback then from the analysts? they called it wrong last time around. where do they stand now?
>> there is a consensus that turkey will be forced into a large rate hike. what may happen is they may do one hike of 50 basis points and then be forced to go again if that is not sufficient. >> we will leave it there. still to come, close to a deal in saudi arabia. carrier is in line for a deal. we will get you the full story. this is bloomberg.
markets: middle east. kong.ery ahn in hong >> let's cross over to the crude oil story. average volumes adds investors rising u.s. crude supply against the output cut's. will trade between a 50-50 five dollars. is it the rising supply with the eia revisions that we got or is it the production cut's from the opec side? i think both factors are impacting the moment. since the agreement we have had a lot of upside. the sentiment has definitely improved.
the reality is that with higher non-opecou bring in producers were not a part of this agreement who will look to benefit. i would not be so optimistic to say that supplies will rise this year because the price impact is not there yet. if oil prices do manage to creat creep up we will see more supply coming out of the u.s. which will counteract the decline from opec. you say high compliance with opec cut's are expected in the first half of this year but not beyond. why is that? >> that is historically the case. once the oil price starts to see it movingwill back up.
then the peripheral members will start to miss their targets and eventually we see these things breaking down. that is simply what we have seen throughout history. yousef: there has been discussion about how the monetary committee should operate in terms of making sure the agreement is executed correctly. focusve parts which say on the exports leaving the country. where do you see that going? becausealways difficult opec is not reporting directly from its own members. obviously it is always difficult. what should be encouraging is this, it isitoring
difficult to say which one is better. we see the oil coming in and out of different countries. i think probably if you want to the marketassurance, would be a better way of doing it. it is still not perfect information to say compliance is taking place. >> there is a lot of people out there who are skeptical. i can't say that i'm not one of them. the track record speaks to a 70% compliance. why is it going to work better this time? they all have an incentive to export more oil. compliance has always been
patchy in the past. probably 90% in the first half of the year and then losing out. there is always the opportunity not to be compliant that given the great efforts that took place it was a big struggle to get this agreement across the finish line. we had saudi arabia and iran. the saudi's actually gave in on this. there was a lot of effort made to get this across the line. i think they understand the market is going to be looking closely at them and that is why we see a higher degree of opec compliance. on the non-opec side we would be skeptical. monitoring the non-opec producers is more difficult. shery: it is not just about them. there is growing concern from
countries that were exempted from the deal, how will they affect prices? we don't believe the market is going to be balanced by this curve. our analysts are forecasting the market will be oversupplied by 400,000 barrels per day. they are not rebalancing the market. they are making it more balance but not rebalancing it. those exemptions are key to this. if you exit countries like iran and libya and nigeria have the potential to push the supply up that is going to negate a lot of the cut. this is going to keep a cap on the prices. i don't think the strategy was to lift the prices up. i think what they were trying to do was protect on the downside. that is what they have done. we have had absolute price
collapses. that is not taking place this year. i think they have done what they wanted to do to protect the markets on the downside. shery: i can't help but wonder if we are focusing too much on the supply side. how about the demand side. ,f we see higher crude prices they are going to get hits. we are seeing a stronger u.s. dollar. china is huge for the oil market. are right. china plays a key role. india and the north american markets. we are predicting healthy demand growth. we would expect oil demand at 1.2 barrels per day similar to last year. in 2015 it was even higher. we are not so anxious my demand side. that has been completely put off of the table. the demand growth on historical basis is very strong.
more.joins up with >> a little bit of show of force given the saber rattling from the incoming trump administration and the comments they have made and taiwan's president going through the united states. there has also been ramped up tension across the strait between china and taiwan. this was part of the regularly land exercises. carrier.has its one in the taiwan strait. sailing northward through the west side, media reports say that the air defense authorities
scrambled f-16 fighters and other planes. this is in addition to a number of other moves that the chinese have made recently including aroundstrategic bombers in the south china sea. , as many as six in the last week have flown around japan. there have been a number of different moves that could be a show of force as well taking office as well. chinese state media has said china would take revenge if the trump administration ever challenged that one china policy. it is interesting times indeed. .> we have increased activity what is the likelihood of china using some hard power to get its point across?
>> you never know. that is always the risk that we run. their claims to the south china sea is indisputable. military isu.s. continuing to do their regular exercises. i was out on the uss ronald reagan. we're seeing some footage here of where we are standing on the deck. shopping their spears in any way but always on the ready. building out a carrier force if you will. they have plans for others. it is inevitable that those ships will cross paths.
>> a look at the first word headlines from around the world. president obama has made a farewell speech telling chicago that it has been an honor to serve. he said america's better now than it was when he took office eight years ago and warned against personal attacks on social media but mentioned his successor once. also ended with his campaign slogan yes we can, yes we did. >> not that our nation has been flawless from the start but we have shown the capacity to change.
and make life better for those who have fallen. says the flagship of the chinese navy sailed through the identification zone on wednesday. they sailed north along the west side of the taiwan strait. the group has been carrying out marine combat drills since last week. investors have shrugged off turkey's central bank's plan to tackle currency markets. markets with the policymakers at odds with president are the ones plan for lower costs. biggest sporting tournament is getting even bigger. contest the team. up from the current 32.
they campaigned on expansion to replace that blatter. >> we have the world covered and 120 countries. u.s. prosecutors have charged three people conspiring to rig rates. some of the world's biggest banks. >> the three former currency traders charged in u.s. government indictment are all currently living in the united kingdom which suspended its investigation before the u.s. went forward in 2015 and lawyers signal they will fight the charges. formally traders are with j.p. morgan chase.
his attorney says he did nothing formally was no longer with that bank. and also no longer with that bank, the attorney for ashton argues the u.k. authorities cleared him in any investigation. the uk's's spend its investigation saying there was no evidence of wrongdoing. the attorney argues any legal advice or guidance by barclays did not relate to u.s. law. the charges carry a maximum penalty of up to 10 years in prison and there was a separate regulator that filed documents indicating usher and ram sean fined from be working in the industry. and the conspiracy as is being and out lasted between 2007
2013. all three traders met in online cartel chat rooms limited to specific euro-dollar trades and in that chat room they fixed prices. two of the world's biggest bond traders are warning rising treasury yields signal the end of the rally and that puts is up on a chart you can pull up on your bloomberg. what you're looking at is your bloomberg treasury. back to 1988. that is the bottom panel. great to have you back on the program. >> if philosophical debate about whether we're seeing equities
into bonds or where they are line to go, 3% as the last of this thing. >> i have been hearing a lot of this. we have not seen a lot of that. about the 2.6%lk yield. wheneverdefinitely there is uncertainty people would like to go to the bond. i think what people are saying is people are uncertain about where the future is going and in the u.s. economy. i think a lot of this has been going into those kind of bonds to protect. there is also we are seeing the market and equity market getting profits off the table. will discontinue i am not sure. sincek the trend now is 2008 and 2009 i don't think that
is going to stop. what is going to change is the pricing of those order to justifying the risk and reward. >> most people would say 2-3 hikes suggest the same thing. where do you stand? >> we believe three is most probable at the moment. administration are not comfortable in paying that u.s. debt. they hinted before when he was elected he was renegotiating how much they had which is a scary thought. if we add to it, oil probably will be higher.
that means it is going to be higher and there's going to be pressure on these interest rates. think definitely what we see now is people pulling out, waiting to see how it is going to happen. >> given that we are seeing china's prices gaining at the fastest pace in five years, how will that play in what you said? where treasuries are headed. >> i honestly think what we see today is the beginning of unmasked trade war if you want between the biggest economies in the world. china is not going to accept these threats that have been talked about. they are going to try the weakening of their currency.
financials. given how many rate hikes they are factoring and you think there is a time to get into financials or have we missed the boat? >> i don't think so. i think definitely it is the change of interest rates will increase immediately and affect banks in terms of their interest margin. that should mean pricing will make gross margins on their loans. at the same time we are in earnings season and the dividend distribution is driving the at the moment. banks of the leading stock. they are the ones wit who distribute more cash. you see a lot people still going there where some banks can be looking at years and getting your money in the next one or two months. >> thank you for that.
specific views about what you can expect. cost-cuttingth the with consolidation moves. how are they going to hold up? >> that is really all that centers in the losses that they have. basically what we found is the quality of those receivables are in question. although we see those are , fundamentally those moves are not justified.
believe the real estate is encouraging and will show growth. many are trying to determine those projects and some made commitments to projects that we have canceled. which really are not fully covered. both companies have had to take a big hit by lowering their capital and using earnings from previous years of trying to cut those losses and the book value is weak for those. impairments,g the it is about 40 sales. you can pull it up on your bloomberg. what is your take on this? mohammeded to ask about the infrastructure spending given that we are talking about builders from the government side.
we are expecting the expo in dubai. >> we think there is definitely the light at the end of the tunnel for some of those contracting companies but we think those projects will be awarded towards the end of the year. the issue is these projects are usually over 4-5 years. the cash flow is minimal. these companies will need to fund a lot of those projects by going to the banks or sharing bonds if they can. unless there we some support from the government for some of those companies they will struggle. >> you have your builders. othert comes to the industries, what else might
surprise? youhat we are looking for cannot look at our markets and not look at banks. , we think thenks distribution is not going to be lost here. that should be good. i don't think telcos are going to surprise is that maybe some. especially they have increased the profits. movement would have helped them to do so. very focused on the back of the consolidated expectation. it was a pleasure having you on the program.
let's talk about airplanes. the airbus has won its first order of the year. the aircraft maker has a $4 billion deal in the u.s.. it is close to securing another in saudi arabia. live what all of the details. how many airplanes are they going to buy? >> we think they are going to buy more than 60 planes from airbus. this would basically be an upgrade to fly nasa's all airbus fleet. us more about the details of the plane order itself. >> we are basically looking at an order of new engine options. this is upgraded option of the classic a320.
it has seen such trouble in the region with the first customer of qatar airways. that loan they are looking for, in terms of how is that going to affect their order books? what are they looking to do with the fund? >> they're looking to raise this money to pay for income and plane deliveries. we are basically looking at dreamliner's.787 80's, the ones that are famous for the residents but come with a butler and luxurious services. 4 part and parcel of anybody
traveling around the world. yousef: also news from that carrier, a remarkable 24 hours. >> they are in the market to raise funds. they are talking to three banks in the region. those are currently ongoing. >> always a pleasure having you on the show. i have a weak spot for airplanes. when we looking at? shery: we will be talking about something else coming up. a spike what is driving in indian oil consumption. ♪
yousef: welcome back. you are watching bloomberg. a quick check of the latest business headlines. an addiction consumer price raise the most in december after the central bank abandon currency controls that triggered a swap in the pound. it is the highest since february 2005 according to bloomberg data indicating weaker demand for more expensive goods in a nation where half the population lives around the poverty line. on rinaan appeal vacation in cyprus is seen as unlikely. talks may become more open-ended and allow more time. if negotiators move closer on territories and the economy, they will tackle security. on that is the
main reason talks will be inconclusive. president obama has criticized israel's settlement add to aying it would worsening situation on the ground. he questioned the benefit of the prime minister benjamin netanyahu. jumped oil consumption 11% last year taking it to the highest on record as income spurred sales. let's get more from mumbai. more disposable income, more money to spend. tell us about the surge in oil. >> good morning. is gdp growing at a
considerate basis. that has given people more money . people buy more cars. there is a significant increase in road transport because diesel is cheaper. growthhings have huge and consumption of both. consumption.'s oil that is what we have seen in the last year which has been growth in oil consumption. it is growing by 12%. seenlso i diesel which has growth close to 6%. they have transferred.
the overall numbers are huge. yousef: what is driving consumption here? which fuels are the key drivers in the equation? this is gasoline and diesel. diesel is use mainly for commercial transport. people use ittent to pump water in oil diesel pumps. been growing.s people are buying a lot of cars. everyone wants to have mobility at their own hand and said of dealing with public transport. close to --
>> let me show you what is seen as a barometer. in terms of the technical after stabilizing around 122 we are focusing on a few stocks. , 3're looking at net profit million saudi reels. hascan see how the stock focused reporting aftermarket closed. price, alsotarget petrochemical. you are looking at tsa and the is all we haveat
>> it is 1:00 p.m. in hong kong. i am shery ahn with the update on the hot stories. donald trump took to twitter to denounce the report that russian intelligence has potentially damaging information on him, calling it take news. he is said to have been briefed by officials as an update on moscow's allegedly attempts to influence the election. president obama made an emotional farewell, saying america is better now than when he took off his eight years ago. obama warned against personal attacks and social media bubbles , but mentioned his successor only once. taiwan