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tv   Bloomberg Markets Middle East  Bloomberg  November 5, 2017 12:00am-1:00am EDT

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♪ yousef: headlines from saudi arabia, the crown prince's power play as he goes away with anotanother reshuffle and accuss some of his ministers of corruption. >> and trumps four. the president begins his trip to asia. is it his biggest diplomatic test to date? >> meanwhile, the american later is urging saudi arabia to lift saudi aramco on the new york stock exchange, saying he would
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very much appreciate what could be the largest ipo ever. and rising risks, pboc governor china's financial system is left significantly more vulnerable and calls for reform. yousef: it is bright and early in dubai. clock looking at some a.m. local time. welcome to "bloomberg markets: middle east." what a dramatic start to the we. >> the saudi crown prince appears to be melting something of a purge against several high-profile princes in the world family. yousef: the list, i keep having to look through it again. accused of everything from corruption to of using public funds, some very big names on the list. including a very well known as this man. -- businessman. looking at a lot of foreign officials. a lot to digest here from a market perspective. tracy: that is exactly right.
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it's bringing out executive editor for the middle east. with the obvious question, is this a power grab in anticorruption clothing? >> it's hard to not come to that conclusion. came first, before the reshuffle, before he changed the national guard. the national guard was kind of the last major power center that was not under the control of the crown prince himself. now really every lever of power inside saudi arabia is directly controlled by him and his allies. of course, we have no sense, no way of telling what these corruption charges specifically refer to, or whether the people are guilty. the fact that it includes senior princes, and the sweeping nature of this, is remarkable. and quite surprising. yousef: just for context, a
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political earthquake like, this possibly trumps what we saw over the summer back in june when everybody was already saying that the fact that he had the deputy crown prince moving to crown prince, it clears the way for the ultimate ascension of the throne. this is a much bigger deal. it hits so me different sectors. riad: exactly. the drama in the summer was over one person. hen as deputy crown prince, was the main power everyone was watching. he are he had a lot of the levers of power under him. the move was really just a confirmation of this power. , it's weeks away any resistance, anybody who could stand in his way in his ascension to power. tracy: we say in our story, taking over the national guard is not quite the same as, for instance, installing a new oil
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minister. but it has been associated with the former king. my question is, does this start to incite more risk within the royal family? riad: i would be guessing now. i don't know what is going on inside. , you probably have some princes in the royal family now wondering what does that mean for them, what is going on, is there any way to stop the crown prince if they so desire? there is also a strong current of support for him, especially from the younger side, the younger princes. he has installed some of the younger princes in positions of power in the region in a way that it was obvious even then that these are the future, they are going to take over from the more senior princes. yousef: i'm looking at the list again, a lot of notable businessman. group.d of the mbc
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another prominent businessman. these are household names in the kingdom. but also the economy minister, and this is key. does this mean we will see a shift in policy there, or is it a consolidation of existing ways of doing business? riad: i think the letter. economyr, who was the minister, was a key figure. the person who was talking to the media, laying out the privatization plans, the changes they are pushing forward. it is kind of morphing consolidation of what was -- kind of more of a consolidation of what was already there been a change in tact. , it is clearly being reinforced by this. tracy: one of the names on the list is familiar to people all around the world. he made some anti-trump remarks on twitter over the summer.
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how much does trump and his relationship with mbs and stirring things up in the middle east play into this decision? riad: i think it plays into the princes confidence, typically with regard to iran. is quite aggressive and anti-iranian. now it is old news, we have the prime minister resigning, blaming iran. managingoomberg's editor for the middle east and africa. thank you very much. let's going on in the region. let's take a look at how the u.s. markets closed on friday. it was 20 going on over there as well. we had the payroll report for september, saying that u.s. businesses added the most workers in your after recovering from the hurricanes. the jobless rate falling to the lowest since 2000. we still have the elusive wage growth. not really coming through.
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that was not enough however, to knock sentiment when it comes to stocks. the s&p 500 reaching a record. meanwhile, the vix at an all-time low. bloomberg u.s. dollar recovering. take a look at brent, $62 per barrel. yousef: the vix continues to surprise. in focus, gold, relatively unchanged for the most part. you look at the cftc data from late friday on futures and options, money managers have cut their bullish positions on gold as of the friday close, down 7/10 1%. mind, we are in the fifth weekly gain for nickel. the electric car story will increase the demand for nickel. euro-dollar down.
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-- of 1.8%.and at it was one of the poorest performing emerging-market currencies. let's check on the first word headlines. trump has urged list arabia to lift -- to aramco on the new york stock exchange. he tweeted he would very much appreciated and it was important to the united states. a person familiar with aramco says the message came out of the blue for the company. the move raises the political state -- stakes in what would be the largest initial public offering ever. china's financial system is getting significantly more vulnerable to two higher leverage, according to the pboc governor. in a lengthy article on the central bank website, he said risks are cheerleading, including some that are hitting, complex, sudden, contagious and contagious -- and contagious.
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lebanese prime minister has unexpectedly resigned. in a televised speech from saudi arabia, he said he fears for his life and accused iran for the stabilizing his country and the region. this raises the prospect of a renewed political partition between iran and saudi arabia in lebanon. the n president has called on -- the catalan president has called on groups before the election. he tweeted that it is the moment for all democrats to unite. elections have been called for december 21 in a bid to help pressure on the separatists by forcing them to choose whether to take part. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. i'm deadly humphrey. this is bloomberg. yousef: thank you.
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our other topt story, president trump has arrived in japan for the start of a 12 day, five country trip. it is the largest far east itinerary for an american leader in a generation, and arguably resents -- presents diplomatic tests. stephen engle joins us. run us through some of the key angles to this visit. obviously it will be a packed schedule. there are some angles to this. at the top of the pyramid is the korean peninsula and north korea. ind of reassuring the allies north asia, including japan and south korea, his next on tuesday, that the united states will have its back. also, trade is a big issue. the united states runs trade deficits with all five of the nations he will be stopping on in this whirlwind tour of the region. fair and reciprocal trade is
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what donald trump wants for the united states with his asian trading partners, and also once again, to send a message to pyongyang that north korea's nuclear and missile program will not be tolerated. ,e has already spoken to troops and has set in japan that their north korea approach is not going to be like past approaches like past presidents, and he is already ramped up rhetoric to a speech to troops here in japan. let me read a little bit of it, you can kind of get the tone. he says, we dominate the sky, we dominate the sea, the land, we dominate the space. regime,no dictator, no no leader should ever underestimate american resolve. a speech to the troops, he is rallying them, but he is not backing down from the rhetoric that has been shaking the nerves of allies in asia. trump is clearly
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navigating a tricky situation when it comes to north korea, but in general, there is a theory he has had that are luck when it comes to connecting with leaders in asia. some people with, shall we say, , likely national bents the philippines and india. have you seen any sense of that coming through? it is still early going, but we did get a sense of that from his comments to the press on air force one on the flight from hawaii here, when he chinaked on his views on and the new mandate, if you will, his strength in power base after the party congress. trump trade it back onto himself and said, i am a strong man, as well. he relates to strong men, and here in asia.
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the ultimate strongman, if you want to call him that, if kim jong-un. yousef: excellent reporting. stephen engle live out of tokyo. -- linesking nine hitting the bloomberg. an for the net income figure, 1.6 million for the third quarter. looking at third quarter revenue. the estimate was for 1.12. let me run you through some of the other lines coming through as part of the statement. they are saying all geographies and segments performed "for a " and they will continue to focus on expansion via partnerships. looking into some of the bloomberg and sigh, 28.3% return this year, compared to 14.1% for the dubai financial market transportation index. tracy: interesting numbers. head of research
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at in bg, there is plenty of us to get to good lives maybe start with payrolls in the u.s.. the number was ok, it did not match estimates, but that wage growth is not coming through. what does that mean for the feds think is that the lack of invasion -- of inflation is temporary? >> it's something that that has been grappling with for many months. i think one of the issues that some analysts have had with the appointment of jay powell as the new fed president next year is that he is not an economist, he ,as only benefit for five years does he have the ability to navigate the thread -- the fed through these waters? markete a tight labor and higher inflation, that is not seem to be holding true and
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has not for some time. 2018,k as we head into partly because of the low base for 2017, we should start to see the headline inflation number pick up. we feel there is room for the fed to continue to hide. -- two hike. but if the models they have been using are no local -- no longer reliable, they will have to find a new way to look at the economy. tracy: i loved the comment saying that the phillips curve is flat as kansas. that really describes it. you mentioned powell confirmed as the new said -- fed head. moving have difficulty things? been mostly down the line, what janet yellen has indicated, he is been behind that. athink his natural leaning slightly more hawkish. he is a republican and he has expressed some concerns about
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quantitative easing in the past. that might suggest he is more hawkish than a fed under yellen might be. yousef: the other big story is what is going on with the tax changes in the united states. this is affecting some of the s&p 500 companies, we have a chart. this is higher tax versus lower tax ratio. in spite of the recent updates, the highest taxed companies continue to underperform to their lowest tax peers. a very contentious issue. where do you stand on the debate? will it make much of it different to the current state of proposals? khatija: the proposals we have seen so far really look like they are going to help support middle income households. toprovide some boost consumption. on the corporate tax side, it really seems to be targeting forcing earnings, and companies to recapture a that. i think that is a positive. but i don't think it goes as far
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as trump wanted as far as the corporate tax rate and support for businesses and investment going for it. i think we will see some used to from the 2018 household cuts and corporate measures, but overall, if you're looking 10 years down the line, i'm not sure any growth is going to be sustained. i suspect the real outcome will be a bigger budget deficit. tracy: you are staying with us. later in the show, we're going to speak to the ceo of the emirates real estate investment trust about third quarter growth figures. yousef: of the latest pmi rings from the uae and saudi arabia, and egypt. we will break down the numbers. there are some surprises in there. this is bloomberg. ♪
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♪ yousef: this is "bloomberg markets: middle east," i'm yousef gamal el-din. tracy: and i am tracy alloway.
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let's get it check on the news. softbank's talks to merge with t-mobile have ended after months of negotiation you'd according to people familiar with the matter, the ceos cannot resolve how to share controlled -- combined control of the company. unlimited that the data plan will continue. apple briefly became america's first $900 billion company on friday, as its stores around the world were inundated with customers trying to buy the new iphone x. demand for the phone, which has a thousand dollars price tag, how to the company to report at least $84 billion in the christmas quarter. 3.7%, gained at least
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taking the market cap above $900 billion before slightly paring down. and you say businesses are calling for an end to the soap opera of brexit. the consideration of british industry practice and -- and the president drechsler will address -- tomorrow. he will criticize theresa may for her approach to brexit. that is your bloomberg business flash. yousef: thanks. some breaking lines hitting the bloomberg on pmi's 43 companies. 55.9, versus 65.1 in september. slightly stronger. 48.4. arabia,comes to saudi
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-- 55.5 in 55 point the prior month. i would like to start with uae by virtue of the fact we are here, and we are seeing growing pressures a little bit in the uae figures. tracy: although the headline numbers are showing really strong growth -- khatija: although the headline of us are showing really strong growth in output sectors, we're seeing in the rest of the service, a squeeze on margins for companies in the uae in particular. if we look at last month, 8% surveyed said they cut their selling prices, that is a huge number, a record for the series. it does point to margins being squeezed, having to work harder for new sales. at the same time, they're fine -- facing higher input costs. it will have an impact in terms of their ability to boost employment, because they are obviously not willing to spend
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more when their margins are under pressure, and really having to restructure a lot of the way they operate and find new efficiency. tracy: i curious, and terms of the headline, pmi recovering for the uae, do you see evidence it is being driven by companies maybe boosting inventory ahead of the vat? khatija: i'm not sure, but we have seen some interest regulation -- industry accumulation for the survey. from such that they are optimistic about demand over the next few months, and in anticipation of that, a are building up production inventory. materials they would be using to manufacture or supply whatever it is they are supplying. you can see those building up before they have to pay the 80, but it could be that they are expecting to ban to -- expecting demand to remain strong. yousef: in terms of the threat of saudi arabia, pmi relatively
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online from the previous month, 55.6 versus 55.5, but i want to look at the political story. serious arrests, arguably unprecedented in scale. how surprised were you when you heard the news, and more important, what does it mean for the way you look at saudi? khatija: i think everyone was a price with the news overnight come i don't think anyone was expecting quite that kind of reshuffle and crackdown, but certainly, if you look at how the economic story has played out over the last few months, we had a huge announcement of the construction of a new city a couple of weeks ago in saudi arabia, massive investment required by foreign companies. really what it is showing is the new leadership is committed to modernizing the economy and diversifying the economy and addressing the issue of overreliance on oil.
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a hugere going to impose structural change, you will challenge the businesses that are already enjoying the benefits of the existing system. i think what the signals is that the crown prince is a strengthening his position, that will then allow him hopefully to continue with pushing forward reforms that are needed and themted -- and executing in a way to get the results he wants, and ultimately it will be a good thing for the economy, but clearly there is risk around that process and i think there is going to be a lot of noise. at the end of the day, it looks like he's moving in the right direction to achieve what he wants to achieve. tracy: in terms of the overall economic growth rate of the middle east, we have the imf releasing its outlook for the region last week. rose in the gcc is expected to come in at i think half a percentage point. have you feel about that estimate? a littlewe think it is conservative, our forecast is a little stronger. i think the headline number is misleading, because it will flex
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cuts to the oil production, and saudi arabia in particular, they are cutting by more than they agreed. that has really been waiting -- number. on the headline statistics, not as fast as last year, but i think it's something that is going to recover as we head into 2018. yousef: lovely having you on the program, as always. emirates.esearch at we have a busy week ahead, we want to make sure you are crossed that. here's some of the highlights. we are already discussing of donald trump, on his first presidential tour of asia, he has added an exit day to his five nation trip. issues you know about, north korean aggression, chinese activity in the south china sea will dominate discussions. tracy: on tuesday, mario draghi
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will speak on banking supervision at 10:00 a.m. local time in frankfurt, and on wednesday, the chief brexit negotiator and his u.k. theterpart resume talks on terms of britain's exit from the eu, and on friday, we will get another u.s. data point, consumer sentiment data is expected to have retreated after being at the highest level since 2004 last month. up next, we will speak to the ceo of the emirates real estate investment trusts about is their quarter growth figures. this is bloomberg. ♪
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♪ yousef: it is a: 30 a.m. in dubai, 7:30 in riyadh. news eventseries of over the last few hours, including the major political reshuffle in the kingdom with ministers being sacked and accused of corruption. it is a long list that includes this is been, as well. the last time we had a political reshuffle was over the summer, when the deputy crown prince became crown prince. will we get that level of endorsement again from investors? that's for waiting to find out later on in the day. let's get the first word headlines. >> saudi arabia's king salman has removed one of the world family's most prominent priests
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from his of ministerial role and arrested others in approach -- urge this came on the orders from an anticorruption committee headed by the crown prince. the changes announced yesterday included the placement of the economy minister and a new head for the powerful national guard. president trump has urged saudi arabia to list the oil giant aramco on the new york stock exchange. he tweeted he would very much it would beand important to the united states. a person familiar with aramco says the message came out of the this would be the largest initial public offering ever. china's financial system is getting significantly more vulnerable he -- vulnerable due to high leverage according to the pbc governor.
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in a lengthy article, he said it late in risks are accumulative, including some that are hidden, complex, contagious and hazardous. he also flagged the need for deeper reforms in the world's second-biggest economy. the lebanese prime minister has unexpectedly resigned. in a televised speech from saudi arabia, he said he fears for his life and accused iran and its proxies from -- four destabilizing his countries and the region. this run is -- this is when used the chance of a renewed confrontation between saudi arabia and iran. catalan president has: separatist goods to pull ahead -- to pull together head of the election. he tweeted that it is the moment for democrats to unite. the spanish prime minister has called for elections on december 21, and trying to force
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catalonian's whether to take part. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. back to you. yousef: thanks. let's talk about emirates. investmenteal estate throws posted a strong first order rose. 179%rofits jumped around for the quarter. let's get some more perspective as to where the story goes. the chairman joins us here. thanks for coming back for a chat. a lot of momentum in your net income line, how sustainable is this kind of double-digit growth? >> there are two parts in our net income, according -- our current trends and desired positions. this is a sustainable, 30%.
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the production is a testament of the future growth. properties. we have some they give us a stronger boost in our income. yousef: is it time to share profits with investors? what is your stand on dividends? ylvain: we are very close to doing it. we are obliged to increase our dividends, we have announced already a quarter ago that it will probably soon increasing our dividends. tracy: you mentioned in your statement you are pursuing opportunities in the current environment. it is an idea of what you're looking at. sylvain: looking at further schools and office buildings. we believe schools are very good, and gives us regular,
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long-term it income. -- long-term income. we are really at the bottom of the market for office buildings. tracy: give us some color in terms of what you're saying in rental income. a lot of people would assume, given the slowdown in oil income, some of the slowdown in your economy in the region, rental income would be falling. your results seem to suggest otherwise. sylvain: the rental income into by is very far from the peak, it is still quite sustainable. on top of this, we try to buy prime buildings, the link that has a big potential for appreciation. we also improve our buildings. companies are very cautious at if you have an office fitted out, you have a big advantage and can't increase your rent -- and can increase your rent. ,ousef: i want to pull this up
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you're stuck down 11.4% this year, underperforming the main market. theng said that come up road ahead, i look at what is happening around us and terms of the amount of supply coming on, are you concerned or anxious that that will pressure the market even more? last time we spoke, you said it has bottomed out at it does not look like it. tracy: good question. sylvain: we still think it is bottomed out. we're not really worried about supply in office and schools, there are very few supplying and offices, it is mostly the residential market. we are really quite optimistic about the future. tracy: recent general, that structure has come under pressure when interest rates are to rise. we are in a tightening cycle in the u.s., that comes through in the region by virtue of the dollar peg, how much is that feeding into your business and what we are seeing of the share price? sylvain: the share price is more
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due to the foreign investors, they are cautious about the region. lately, all of our qatar investors left is overnight, you can see that on the truck. that is something to recover. we believe the presser -- the pressure will return. we believe the momentum will return. our current rates, replaced.ll be yousef: where understand it could be at least $300 million? could you give a more precise number? sylvain: our current debt facility, it is a little more than $300 million, the sukuk will probably be about $350 million. we are testing the market at the moment, i cannot give you a final number, but the goal is to at least replace our current
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debt facilities. we have a very good sentiment from investors, a lot of them already came to us, our existing banks, said we are really -- we are willing to convert, so we are optimistic about this issue. tracy: who comes in to replace the qatari investors who left? sylvain: mostly local institutions. tracy: ceo and deputy chairman of emirates reit, thank you for joining us. demand -- the man who was arguably the most famous face of the greek financial crisis since even of he is a critic of the eurozone, he doesn't want to see it scrapped. the formal -- former greek finance minister discussed this with bloomberg. >> maybe we should not have created the euro. with the political
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institutions necessary, the federal budget necessary to have proper monitoring, but once you've created it, you cannot go back and say let's try again. i am a staunch critic of the eurozone but i believe the solution is not to disband it, but to fix it. the only way to fix it is by creating the common budget and the kind of new deal investment policy that will rebalance the micro economy. >> you have dealt with angela merkel him a who entered her term, you have dealt with other people, what to those two facts mean for the future of the european project? merkel's final term and short ller moving on. >> he moved on because he felt confident that the democratic party will be more like him than
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him himself. that they will continue along the path of what i call the dogma of perfectly separable debts and banking losses. ossry euro debt or bank l belongs to one nation state, i think that is the future. angela merkel is and it's currently weakened leader at the moment, she has the form a government with a political party whose number one and maybe only promise to its electorate is that it will stop emmanuel , and havingtabling accepted by angela merkel, the proposition that leads us toward a common budget, which is a prerequisite. in other words, things are not looking very good, because the only leader in europe could make a difference, angela merkel, has been actively weekend i the last federal election in germany, and tried ller -- and even though
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the finance minister is out and has left a dark cloud over the ministry. yousef: still to come, a new study finds the uae dominating m&a activity. get a bit of a putting the figure the pulse of in terms of how businesses are holding up in dubai. this is bloomberg. ♪
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♪ yousef: this is "bloomberg markets: middle east," i am yousef gamal el-din. tracy: i'm tracy alloway. here is the bloomberg business flash. mergetbank's talks to sprint with t-mobile have ended after months of negotiations. according to people familiar with the matter, the ceos could
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not resolve how to share control of the combined companies. the news -- is investor hopes , and signalsger that unlimited data plans and heavy price discounting in u.s. carriers will continue. apple briefly became america's first $900 billion company on friday, as its stores around the world were inundated with customers trying to buy the new iphone x. the man for the handset, which has a $1000 price tag, let apple to predict retail sales of at least $84 billion in the business quarter. shares gained, with a market cap above 900 billion before slightly paring down. businesses are calling for an end to the so-called soap opera brexit. the confederation of industry president will appeal for a single, clear strategy in an address to the group's in a conference in london tomorrow. he is said to criticize theresa
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may for her brexit negotiations, which resume wednesday. that is your bloomberg is this flash. back to you. yousef: thank you. let's talk about baker and mckenzie, a reminder of one of the global heavyweights when it comes to the legal in the revenue they posted over the summer, up 5% compared to the previous year. the question is, what is going on in this part of the world, how much business are they generating and how much is it contribute to the bottom line globally? joining us is the baker mckenzie middle east -- welcome. give us a sense of much of a priority this region is, how much are you adding to the global bottom line for baker mckenzie? >> baker has chosen to merge and be market, the fact that they have chosen to add new offices recently emphasizes how do they look at this area. it is an important area for
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huge, it is an area seeing economic expansions, we're the same with saudi arabia and i think we will continue to focus in the region, not because we are here, but because we see potential for growth in the region which will continue. yousef: what is the toughest part about pursuing the kind of aggressive expansion? what are you struggling with? you have a regulatory conformity and unity do it has in the european union. habib: things are improving. here isthe main issue lowmarket is saturated with , and competition is sometimes good, because it allows the quality to be delivered, but in means people will strive for more work.
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in the process, a lot of undermining of prices, that is something we're seeing. tracy: a law firm complaining about fees, who would've thought? -- one of the challenges i might have thought of our geopolitical risks. her instance, the headlines out of saudi arabia this morning. does that kind of unexpected event dent the appetite for cross-border deals? can't just look at one particular country. when we look at the region, we have to see the whole block of the gcc, for example. although political stability is important issue, i think in the last 30, 35 years in the uae, despite having two wars in the region, we have seen stability which has been enhanced by the confidence of the foreign multinationals coming into the region.
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we are talking about industries, companies, foreign companies. instability is not a major issue in the region. and i think, if you talk for theple, about saudi arabia, vision 2030 and the major shift from an oil-based economy to a diversified economy is going to be huge not only for some reason saudi arabia but for companies working all over the region. for example, in the uae, we have what is called the saudi team, a saudi team of lawyers dedicated to work in saudi arabia. tracy: your saudi team, what are the opportunities you are seeing and saudi at the moment? consolidation is part of the economic transformation plan? from saudi national champions being told to be more acquisitive and make the name and the wider economy? habib: i think it is everything.
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, from ipo's to industries, telemetry, two hotels, everything is happening in saudi. it is survey from a low-level point, and you're talking about a large population and huge economic potentials. -- if you terms of could specify the business opportunity you are most excited about. you set the whole block is great, and yes, it is across business lines, but if you had to choose one country or one area of business that is really sticking out in office? habib: that is difficult when you're talking about a diversified economy. yousef: they are not all equal. are firms but there that will be working on ipo's,
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the aramco ipo is a big thing. you're talking about hospitality business. you're talking about new technologies. there are so many diversified activities that everyone will find a share. tracy: where are you diverting the most resources right now? habib: one of the issues that we are focused on is a new item, something we expect to be an item of growth, we are hiring a new partner who will be based in dubai to deal with tax. we are hosting a seminar in tax -- on tax in two weeks time in which we have participants, over 220 so far. tax is one issue. new technologies is another issue. we are seeing this, an area that has not been tapped before,
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something new to the region, something that even the government is focused on and trying to build more potential. yousef: good to see you this morning, the baker mckenzie middle east chairman. let's give you a preview of what is still to come on the show. we be talking about the ongoing impact on the latest moves out of saudi arabia. one of the most prominent princes has been removed, and several prominent businessman. this is bloomberg. ♪
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yousef: this is "bloomberg markets: middle east," i am yousef gamal el-din. tracy: i'm tracy alloway. king salman has removed one of the royal's most prominent princes and arrested several other worlds for corruption in a purge that clears his son's path to the throne in saudi arabia. let's get more from our director of economics for the gulf
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research foundation. he joins us live on the line from riyadh. but me start with a conceptual question. these are corruption charges, but the line between public funds and oil money has traditionally been murky, to say the least. these we evaluate whether allegations are true, and should we even attempt to bother at this point? >> i think it is a serious attempt, from what it seems right now, to look at corruption more effectively and try to purge and go after those who are most responsible. as awould take this serious step from the government side to look into this. yousef: in terms of some of the other activity in riyadh, ablest dismissal overnight flying over
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riyadh, how concerned are you about that development, how much does it distract from what the crown prince is trying to do in the kingdom? john: i think that whenever you being missile intercepted, there is some concern, but i think overall, the level of defense and security is extremely high. so things are back to normal, schools are open, most people have talked to our back to their normal behavior and doing. i don't think our daily lives will be disturbed going forward. it is part and parcel of incidents that could happen. in the past, missiles were ,ntercepted outside of riyadh this one happens to have been intercepted close to the city, if not inside the city, but still intercepted. i think the people feel secure overall about what is happening
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and what is yet to come. tracy: very quickly, how do you see this unfolding now? we've had two very interesting saudi stories in just a single day, what is next and what are the ramifications? john: i think that the main issue, i think you have two very different stories, the security defense issue, which is ongoing, and that will unfold, and then you have the economic reform type of changes, and i think these are very welcoming. the fact that the minister of economy was taken out is a good step forward given that the government is thinking how to reform and restructure through trial and error some of the policies, some of the policies were seen as being too hasty, too quick, too fast for the economy to adapt, and so steps were taken for a reshuffle to take place.
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-- in the larger discussion of corruption for the larger discussion of reform and change. tracy: we will have to leave it there. director of research for the gulf research center foundation. we were just talking about lots of news coming out in the region. what are you looking out in terms of market? yousef: we have the group rank returned on the two dow. this is what has happened since the summer, we get 5'5" percent in terms of gains after the new crown prince was confirmed. the dow has been down 6.6%. specific stocks that could be impacted by the reshuffle, think along the lines of kingdom holding company a company that has just installed a new ceo earlier this year. the prince will lead, he is part of the reshuffle. also in terms of the economy ministry, what will it do over
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there? the consensus is that they will stick with the current plan, but lots of questions remain and more needs to be answered. that is all for this edition of "bloomberg markets: middle east ." tracy: we will be live from the region again at the same time tomorrow. ♪ ♪
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jonathan: for our viewers worldwide, i am jonathan ferro. this is "bloomberg real yield." ♪ jonathan: coming up, unemployment hits a 17 year low, the wage growth stalls, disappointing inflation bulls. jay powell is set to take the reins of the federal reserve. and how republicans believe a tax bill could add $1.5 trillion to the deficit over the next decade. we begin with a big issue. unemployment grinding lower, wage growth stalling out. >> despite the summer being a

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