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tv   Best Of Bloomberg Markets Middle East  Bloomberg  June 30, 2017 7:00pm-8:01pm EDT

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♪ ♪ >> welcome to the best of bloomberg markets: middle east. the major stories driving headlines -- these applications from six mainly muslim countries are limited after a support -- supreme court victory for donald trump. ceo alanthe news with busoni.
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andrewrg's errands -- joins us. >> it was like the two sides are in theirenched positions. one thing the crisis has been good for is access for the media. we had a briefing by the saudi foreign minister. we have a briefing by the country foreign minister. we have really had a lot of access on both sides trying to understand the points of view. that is a good thing. the bad thing is it doesn't seem as though the two sides are actually talking to each other or even through the mediator, it looks like kuwait is active. ares not clear that those negotiations per se, more just touching bases. i agree with what you say, becoming entrenched and whenever they come out with the statement, it becomes very difficult to roll that back. you come and say that publicly.
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you commit yourself to that stance. as markets prepared to open, we haven't seen many things that we may be nearer to. like speaking of everybody making public statements and talking, we do have this ten-day deadline that was set. do we have any indication of what happens if qatar does not agree to this list of demands? ask that was one thing. on this list, most people we say this is a blue sky demand. you take a very exaggerated position and walked back from that. we haven't had anybody on the gcc side, and say this is a starting point, they insist that these are the demands that must be met. they say they have 10 days which will bring us to about monday. there was no word on what next steps may be.
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that is somewhat problematic fromse they basically went zero to 60 overnight in terms of severing land and air and sea ties with qatar. there isn't much left for them to do. where do you go now if on monday, qatar asked to comply with what your demands are and doesn't offer a way forward. what is the gcc to do? there aren't many options that bring this to critical stages. rice one of those critical stages could be military? >> i'm not sure i want to speculate on that, it is perhapsy -- you could enforce the blockade. you could seek to enforce that in some other ways, we haven't thatanybody publicly say
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that could come in. obviously, the longer that this drags on, you're bringing in other actors, your ring in iran and turkey's will have their own interests to defend. everybody is becoming entrenched in the positions they are. , thehing could go wrong risks are higher. aswrist -- the list is long, you said, how long is qatar prepared to withstand its grand -- ground? world's richest country, they can withstand a very long time. thatve had some reports looked at it as a banking sector and even if all the money was to stand up, wey can know that shipments are coming in, we can track the ships that are bringing in food for qatar. we have stories about how they
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are flying in cows, they are digging in for the long run, they consider this a siege. they're taking measures that they feel will protect the sovereignty. i think the idea is if we are caning to see how long they last, we will be waiting a long time. we have heard that it is a bit of a ghost town in the airports. it will hurt them but they do saved up for many days and they can last a wild for sure. -- last a while for sure. you have a senator in the u.s. saying that the u.s. could block arms sales. >> the u.s. can bring a lot of pressure to bear, they have the military base there. sidesas seemed to take with saudi arabia. tillerson has taken a more
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neutral approach. it extremely well. a lot of the comments he made have been very pragmatic, very middle-of-the-road and we can see the pressure he is exerting their. we are seeing some u.s. senators come in as well. i think the u.s. is stepping up its role and perhaps may be the one that can get these sides to come together. were they to comply with all of those demands completely, isolateld effectively saudi arabia. i think this is a ambient claim. tillerson asked the saudi's to spell out the demands of qatar. we are in the early part of a
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process to try to resolve this crisis. >> rex tillerson was saying that , unlessld be the base that is impossible to fulfill, does that even make sense? >> these are claims that they that walk back, it is some are great. it could be the basis for a negotiation. themselves,he bands i don't see qatar complying with . wife's there is nothing in the ?3 items that are reasonable >> it is difficult for them to do. shootinghat qatar is down al jazeera.
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qatar cannot afford to break its ties with iran. they share a very logical oil filled with them. these are designed to put additional pressure on qatar. discussion on moderating some of the content of al jazeera or moderating some of the connections between qatar and iran. that becomes a basis for discussion. since the isolation of qatar began, there has been a lot of that we could see north state actors strengthening their presence. the fact that if there was any willingness to continue negotiations with iran, it would have been more beneficial to have a neutral actor mediating in between. how well thought out you think this strategy to isolate qatar is?
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>> i think it reflects a lot of frustration on the part of saudi arabia and the uae toward qatar. how well thought out it was, i think that is a very good a short given that while after president trump was tweeting his support for qatar's isolation, his secretary of state was trying to calm the situation down, i think that some of the pressure that the saudi's and the uae have put on qatar, i think i have overreached. i think they are starting to means for this unity its campaign against the islamic state. what options does qatar have at the moment? do they have legal recourse
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against the demands? legal question, it is a question of who their friends and allies are. tohink the qataris will look turkey and iran to demonstrate to saudi that there approaches catherine dr. -- counterproductive. lie on a goodwill relationship with the u.s.. it is trying to find a negotiated solution. >> good thing that you talk about the u.s.. in saudi arabia, we have a new clown prince, given who is calling the shots in washington and who is calling the shots in saudi arabia, when it comes to the gulf markets, is it a russian of not if but when tensions break out with iran?
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>> i think we are heading in that direction. certainly on the part of saudi arabia. you see all u.s. allies are placing pressure on the u.s. to push back what they see as expanding iranian influence. in the trump administration, much more so than the obama administration. you have the greater agreement with respect to that. a greateru will see cornet effort by the u.s. and some of its allies to push back against iran and the different places where it is in yemen or iraq or even is. or the gulf itself, they feel that the influence has spread and gone unchallenged in recent years. >> president trump won a partial victory to impose a travel ban
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on six muslim majority countries. details are next, this is bloomberg. ♪
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♪ the best ofack to bloomberg markets: middle east. >> for people to be allowed to come to the u.s. from the six countries, they have to show a bona fide reason that they have a relationship with the u.s.. it has to be something like an appointment offer they accepted, admission to a u.s. university, a family relationship, they are not allowed to have any of those things as a way to get to the u.s.. of course, that will be tricky to sort out in less than 72 hours. this will take effect.
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all my securities as they have some time to try to work it out. said scholars we talked to it will be very interesting to see how they apply this. wife's i believe this time around, -- the core issue has been solved. are we going to wait for that? tell me more about that. >> the supreme court said that we are not done. we are not going to -- we are going to look at this. we are going to rule on whether you are allowed to do this in the short run, they did this. they said we will defy the law -- larger issue with event. three justices said they would be willing to accept people ban. you are to have part of this same people ban. -- you are also saying -- having the same people say the full
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vent. it is not a muslim ban, it is not the whole thing. it was pointed out there. whole is a decision that would be made to be in october. it is not a total ban but the doors are in the open. >> it will not be received very well. countries thatse travel to the united states as early as possible, a number of them would probably be in the next 72 hours before the ban comes to pull of fact. at the same time, a number of -- some of the
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terrorist activities have originated in those countries. that causes concern to those who think united states is being very biased. at theou take a look decision from the u.s. supreme court, three conservative justices said that there would have been a reinstated hold that. we have two more justices favoring some sort of compromise. ist does not mean a full ban just a matter of time, how should these countries prepare? >> it is possible, at the same justiceshink those have not really supported a full ban. to have to think about the --erest of the united states
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do i have to think about the interest of the united states? the united states is supposed to come up with a verb. >> up next on the best of east,erg markets middle one show producers has he can make profit even if oil falls to mid $20 per barrel. how the numbers add up on that claim, this is bloomberg. ♪
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♪ let's welcome back to the best of bloomberg markets middle east, week oil prices do not worry too -- seem to worry shale producers in the u.s.. said to hold 25 years worth of oil reserves.
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our energy reporter joined us for more. >> the basin is a little bit different than a lot of other oil basins because it has so many different layers underneath it back and make oil. if you are drilling from the top, you can drill one straight holddown and then multiple -- they are trying to figure out exactly how mentally -- many. you can really lower the cost of drilling well produce a more oil. that gets you to the $20 range. >> i have to ask you, how does this affect opec? take a look at this powerhouse, the yellow line is the total opec rule -- crude oil production. you can see that output, it is at $43 way past, even
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per barrel which according to wood mackenzie is currently the breakeven price per barrel. >> the big thing is that opec is banking on natural declines from oil wells all around the world happening as investment drops in oil. that, along with their cut, rebalancing the supply. they don't think he can produce very much oil. toy think the world these produce another five or 10 million barrels per day total. they think that all of shale can only do about half that. upy think reduction can go 2.5 million barrels to as much as 10 million barrels per day. that would bridge that gap. if that is true, then opec plans to cut oil, keep this applies down, it might be foiled by the u.s..
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>> they may think that shale can pump that much oil. the market is squarely focused and.s. production inventory. let me show you a chart that spells it out, it is a little lighthearted. advise of what wti has done, you can see that every wednesday, when the inventory data comes out, oil seems to take a significantly -- wednesday is the oil markets these very time of the week. what are the chances that we break out of this downward spiral in price? so long as investors and traders seem to be squarely focused on this u.s. inventory and production story? >> it is a great point. a lot of the banks and analysts are coming around to your way of thinking. for the longest time, opec and oil producers, they benefited on this lack of transparency in the oil market.
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nobody knows exactly what global production, what global demand, where supplies are everywhere in the world. is the mosthe u.s. transparent market in the world as far as data. fastest growing production, it is the last place in the world that supplies are going to draw down. saudi arabia says that everywhere else in the world except for the u.s. is -- crew supplies are drawing down. people want to see it in the only transparent market available and it is not happening in the u.s.. it is a catch-22, opec used to do -- benefit from this. they are not be squarely hurt by it. >> i know you used to be in houston, you know that the shale story is as much a story about capital markets and lose finance conditions as anything else, what are the chances? give us some color on what the finance picture looks like for shale drillers, are investors ready to put their money in
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these companies? drifting oil prices toward $40 per barrel? this was right after the financial crisis hit the u.s., people were -- they had cut rates to next to nothing. people were looking for any way to get a return on investment, they are really happy to give money to show producers, even though the technology was not all that proven. needed hundred dollars oil to be able to make a profit on it. we are hearing from analysts and companies is that has flipped around. the technology has improved so much. they have been able to cut costs that is in the 20's, 30's, ports, that is, investors are looking at less as the only place they can get any kind of return. this is not very risky for them.
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>> the best of bloomberg markets, middle east, we talked to the ceo
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>> welcome back to "best of bloomberg markets: middle east." dubai based nglomerate is buying retail arabia. you heard it first on bloomberg with a ceo. the, ideal is one of, would say landmark deal when it gets too retail in this part of the world. it's definitely a very important stepping stone. so, we're very happy to have close to deal with retail a rabia. we have a lot of respect for what they have done and we think, we're happy to welcome them into our family and we think they are going to be a great addition to the great fantastic business.
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much youu disclose how are willing to pay for this fantastic steppingstone in your strategy? >> well, you know, we have agreed not to disclose the number. regarding the transaction. so, we'll keep it to that. >> we are hearing around $500 million. last month, when we had you hearing you are denying to us that this was going to happen. but let me ask you, how much dry powder do you still have available after this deal for more m&a going into the future? >> enough. >> all right. >> so, does that mean you're actually looking into more? >> yes, we are looking into a number of acquisitions,a as i said previously. we are looking at expanding digitalprint, not just but also physical that will enhance our position as well as add value to our customers
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across the region. we really believe that, with some in organic growth that will come to top the great organic growth we had in the past two decades, we be able to create more moments for every day which is a division -- >> are you thinking more about -- technology? >> well, we announced last month a delivery company. we are looking at some other stuff, some in technology, some in other added value services. we think we will continue to look at it as well as expanding our retail business. >> since we're on the topic of hypermarkets and supermarkets, you do have stores in qatar. i am wondering if you can give us some color of what you're seeing following the blockade of the country. >> i'm afraid i can't add much
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color to what you are covering. we have business in qatar. we continue to monitor the situation. we are open for business. i would say, as ususal. usual. it is not as a day to day as it used to be, but actually, things are still working. >> expands on that point, not as day-to-day as it used to be. up, slowingcking down, is it more difficult to get goods in and out of the country? >> it's too early, because there have been reactions. there has been an effort to continue to have supply coming to the country, a lot of areas supply is coming compared to what used to come by sea. this being said, it is steadily situation we are monitoring, it's definitely a situation that is going to evolve. we will see how it will go. >> how about money? have you felt any pressure when you are trying to move money between qatar and the uae?
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>> you know, we are a local retailer. we haven't seen so far anything that's worth mentioning on that front. arehat about supply routes, they becoming more expensive? >> there has been an effort to -- to get more supply coming from, i mean, through air. and this is something that has been working when it gets to food and grocery related supplies. so, for the time being, things are working. there has been a readjustment and we are working to a circus tent -- to a certain extent. >> let's jump over to saudi arabia. are you still planning to develop malls? >> yes, absolutely. we are very excited about that. >> give us some color on consumer an sentiment.
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said manys i've times, we believe saudi arabia is the right market. we're there he happy with the changes that are happening in saudi arabia and with a real effort that is ongoing for the addressingars in real issues. we have seen that the country of gone to, i think, a lot structural reforms, a lot of effort and more to come. that ises an investor there for a long a lot of confidence in the future of the country. arabia's future. we are going to continue our business in saudi arabia. we are going to top that with more developed. >> there's one more grocery store i shop atin abu dhabi. there's been speculation you might be interested in spinny's. is it true? >> i don't know. what i do know is you have to change your shopping habits. >> let's talk about what is
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happening back and debbie -- uae.u dabhi, in the retailers have been forced to slash prices. we, that is what we do, i would say and so far we have been managing to reserve our growth. very soon we'll be announcing our numbers. your revenue right now comes out of the uae, followed by saudi arabia, qatar. do you see any shift in this sort of structure? >> it will continue to be the case. we have a plan in quarter to make sure our revenue is continuing to be generated from depth and alsove
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sustainability and this is something we have been delivering against. be, iwill definitely would say, a readjustment in terms of some of the markets we are operating in that are specific to those markets. i expect maybe qatar will become less. that's possible, depending how the currency goes. but other than that, nothing substantive. are, of course, privately listed company. you won't give us a number four the deal you just announced. how are you actually funding it? debt, loans? >> the way we find ourselves, we are very public when it comes to our financials. we are privately listed but we have a disclosure that is actually more likely a public the listed company. the way we're funding it is to our current debt structure. as you know, we always announce when -- we enter a deal, and we tap into the market with conventional bonds. >> do you expect more issuance
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to finance this? >> this is fully funded, executed. opportunity to issue paper, we always make sure we never miss it. >> let's talk about the chinese economy. also, what is happening -- stephen engle joins us there. >> let's talk about the opportunities for foreign companies. we welcome in the ceo from the netherlands. thanks so much again for talking to us. so, what stood out to you as a foreign business person who does business here? 13% of your revenue or thereabouts comes from china. what stood out to you? >> the premier is stretching very much -- stressing very much the inclusive growth in the west. i mean, c hina has benefited quite a bit from globalization. international, trade. but in the west, and the united states, several european countries, the feeling is that
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the globalization has not been ofeficial for all parts population and there is roughly 30% in all countries who feel left behind. and those people vote in a particular way. as we've scene in the u.s. with brexit but also le pen in franc e. it is a kind of protectionism. and, china, of course, does not want u.s. to be protection is an want free trade and wto. dei'll play the -- get. -- vils' advocate. donald trump says they have not been playing by the rules, living up to the wto. europeans have been critical about market assets and not upholding some of the commitments they made. i know you are in china, so no one likes to criticize. what is your fair assessment of how china has progressed since 2001? thehina has been not always
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advocate for free trade. import barriers. let's look to how china developed over the last tw decadeso. and did its own thing in order to develop itself. but where it's now, it is in the interest of china but maybe in the interest for the entire world to have more free trade. if we all are with drawing on our own islands and protect and close our borders, etc., i think nobody will benefit. obviously, china -- and also early this year president xi advocated that also for the west, even with the feeling that some people left behind, closing the borders is not the answer. having a more inclusive growth in the western countries is the answers and that is what premier xi was saying today and also a message to us in the west to make our growth more inclusive and that is a task we have to fulfill. did not spend much time
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on climate change, but do think china is seizing this opportunity to take the global leading climate change? >> i do not know whether china will take the globally. i'm sure that china will take a lead. the end ofs year, 2017, china will put a price on carbon's with thousands of companies in china. or in many western countries are still struggling, s hould be put a price on carbon emissions? and china is going to do that. now partly also, out of self interest, they need to clean up but they will do it. >> let's talk about the china opportunities for your company. i believe in february you talked about, what, high single digit growth for 2017 for the global revenue, right? how are you looking at china? i saw the breakdown. 13% is china. 23% of revenue is asia. how do you see that growing? >> growing more than double digits. so, more than 10% growth in
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this first quarter. as i most likely look at this very moment, also, above 10%. so, china is offering a great opportunity for our company to grow. i mean, sustainable materials, health food ingredients, addressing climate change, bringing new innovation. it's all desired in china and we can bring those things to the market here and grow. urbanization is helping us. the more people are going to eat healthy, go to the store, buy their food, buy a car with our materials and buy our mysterious. we love this country. >> coming up on "best of bloomberg markets: middle east," qatarng offer from airways. it wants to buy a chunk of american allies. will it be a flight of fancy? more on that next. this is bloomberg. ♪
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>> welcome back to "with all due respect"." qatar airways is suggesting it might by 10% of america was rebuffed by the company with doug parker calling a puzzling at best and concerning it worse. david ficklin is here to explain qatar's strategy. david: related between big international airways, they resemble international diplomacy. an alliance with the marriage. this is not that different. we see it again and again.
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american airlines a couple of us ago, qatar has states in iag. it's a fairly common thing. i suppose what they would want to do is hope to solve several problems at once. qatar is diplomatically in a spot, just as qatar airways is in a spot. you can solve several problems. you could try and break some of the unity of the u.s. airlines against gulf carries. you can get a voice in washington to talk about the visa restrictions that are a problems were gulf carriers and buff up the image of qatar a bit. >> is it going to work? david: ha! i suspect not. you saw those comments from doug parker. they are pretty tough. a potential major shareholder.
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misread the mood. american airlines does not attract -- want to attract a twitter thunderbolts from donald trump. it doesn't want to attract from its pilots union. growth.s benefiting from a we had some air traffic control privatization which is in the airlines wants. thos laptop and visa bans, are the same things that u.s. airlines want. >> coming up next on "with all due respect"," china has been pouring money into israel. we will take a look at where it has been going. this is bloomberg. ♪
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>> welcome back to>> "best of bloomberg markets: middle east." chinese investment into israel has jumped tenfold over the past year to a record $16.5 billion. a lot of that is sewing into the
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countries buzzing internet sector. see even more'll interest coming from china to israel. to me, it is almost a marriage made in heaven. israel which is great in deep tech, has a very small market. has always been trying to export its technology to the u.s. and the ewest. uge home market and given the dominance of alibaba, tencent, baidu, etc, there's a need to get even more ahead of the curve. on technology. right? so, the combination of markets and technology couldn't have been better. and the geopolitical situation is such that the israeli feel there and much at home with the chinese culture, and the government to government has a very nice friendship going on. >> why israel, the?
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why of all the different countries where there are lots of companies? why israel? >> if you look at mere statistics, israel has the largest r&d per capita in the world. if you look at the military on a per per capita basis, one of the highest in the world. it has actually innovative technology that are disruptive and change our daily lives. i don't know whether you know if the -- was first invented in israel. instant messaging was invented in israel. and you know, you have seen waves of technology like google maps. intel's acquisition of $15 billion of -- technology. ese are actually very relevant technologies. >> you have been the subject as chinese investment. >> from china, we have had
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multiple investors, financial investors and strategic investors. in china, we have the alibaba group. we also have a major shareholder in -- shanghai. >> of coures. -- of course. what is the value add and the difference of having investors from china versus elsewhere? >> china is a huge market for us. engine forearch e-commerce. some of the biggest e-commerce companies are in china. so, the chinese market itself as well as chinese companies iloring for the rest of the world. >> is it also because there are other areas where it may be hostile to chinese investment, the u.s. has gotten harder to invest, or to except foreign investment? is that why some of this money
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from china is looking at other markets? comment on the geopolitical situation between those two big nations, but i think between china and israel, there is no such thing as limits and for israeli companies to work in a joint venture situation in china to market their products, i think it is all very much something that can be done in a much more flexible way. and the two cultures are kind of some appear you may of heard the phrase that they call shanghai -- the jews in china. the similarities in terms of the focus on family and education and the work ethic makes it much easier for the two cultures to work together. so, language is different. and i think there is more learning in that respect, but other than that, i think there starsun and moon and
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aligned in that sense. >> that is it for this edition of "best of bloomberg markets: middle east." we will be back for the start of a new trading week on sunday at 8 a.m. on bloomberg television. this is bloomberg.
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>> coming up on "bloomberg best" the stories that shaped the week in business around the world. another global cyber attack causes havoc. most u.s. banks pass the fed's stress test. the gop delays a vote on health care. >> the euro and markets have reacted very strongly to a speech by draghi. sintra suggest that august the three is going to be a tricky meeting. >> italy's commtis billions to save two banks. the countries finance minister explains it. >> it is not a bailout.

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