tv Bloomberg Markets Middle East Bloomberg January 31, 2017 11:00pm-12:01am EST
>> welcome to bloomberg markets, middle east. we are seeing asian stocks falling for a second consecutive session. the dollar rebounding slightly. the optimism we saw earlier after trump's election victory is starting to fade. the dollar is trading near the lowest levels since november. >> a lot of it is about the u.s. dollar. about where the economy is going . take a look at this chart. it is specifically showing we january retrenchment in which leaves us with optimism below -- above pre-election. the initial drive higher was off
of the back of the promise of fiscal spending but the reality .s the line in yellow following the market was looking for 112.8. what is needed now to sustain these kinds of levels is more clarity about fiscal policy. everything depends on the pace of income acceleration to a larger extent than any optimism about the economy. >> expectations may be coming down. what is interesting is the move between oil and the dollar. take a look at my chart. that oil and the dollar are moving in opposite directions. near the list, a strong dollar typically reduces appeal of investments in oil.
we may now be saying that once again, the markets return to what we saw before. we are seeing trading again in the middle east and a couple of hours. what are you watching? >> 10:00 a.m. local time. it is becoming a proxy for a global sentiment. we did see stewart capital by king that trend. down 1% mo watch what is happening in the kingdom of saudi arabia. we see major pressure on financials. let's crossover briefly. the market, authorities offering
little details putting pressure on kuwaiti stocks. that is out from the bank's previous estimates of 6.5%. >> china's official factory gauge started the new year on a robust note. estimates,ating topping expectations with a rating of 52.46. they will transition to neutral settings with the trump led white house. donald trump has named his pick for the supreme court. the nomination is being seen as triggering a showdown with democrats in the senate.
>> this is not a step i take lightly. it is necessary to defend the people of this city, state, and country. >> the brexit secretary david davis said any rejection of the timetable would destroy public trust in politicians. theresa may hope to start divorce talks on her own initiative. corporate news, apple on the way of an extended trading. sales rising 3.3%, to four point billion dollars -- $4.1 billion.
the company was surprised by the strength of the iphone 7 plus, sales in china dropped 12% in forecasts this quarter that fell short of the wall street thinking. we have 2600 journalists operating in 120 countries. focus now shifting to the federal reserve and whether president trump will overshadow its policy meeting. kathleen, what he has done so far, will that influence the fed? this.as thinking about the consumer comments report. saw consumer confidence rise. we saw businesses getting more confident. assumption, cut
taxes, you are going to start the economy higher. we realize how much more complex this is. it is taxes. the tax code itself. it is regulation. it is trade. jump into the bloomberg with me. bloomberg intelligence measure of economic uncertainty, it spiked up in 2009 and came back down. you can see it rising pretty quickly again after donald trump gets elected. we see that that is on the rise. uncertainty is a factor at the fed meeting. , some maynote consider a dovish tote. expected ahanges bloomberg intelligence. going to be waiting to see more economic numbers and see what donald trump could
actually accomplish, especially with the congress. >> the governor was cautiously optimistic on inflation. defending the exchange rate policy. what caught your attention in the comments? >> a couple of days. defending the exchange rate policy. let's start with the exchange rate policy. we know the same day donald trump said that the yen is too weak, countries are taking advantage of this and it is unfair, lots of questions from reporters late yesterday in particularng about the exchange rate policy. , here is what he said. >> the bank of japan policy is not aimed for the stability of
the currency market. the are several factors that impact it and i don't think the interest rate gap between the u.s. and japan is the only reason for the dollar-yen rate movement. much more direct comments today from key officials. saysoreign-exchange chief the comments were wide of the mark. were inaccurate and currency tension is rising. wages, thelation, economic environment is right for wages to start rising and that could be a key factor boosting inflation for him. only halfway toward the inflation goal, they also see what happens in the weeks and months ahead. >> kathleen is joining us live.
trainingi may be slightly up. let's get more. >> it is a mixed picture. vietnam thatn and close this wednesday. the reason we are seeing a second day of weakness led by oil and gas, taking a look at what is going on we did start the day with a weaker dollar. with the greenback rebounding, the yen is back up. raising earlyics its losses -- earlier losses. in sydney, utilities supporting it happened percent.
groups reporting gains on budget day. we do have earnings in india. posting a drop in third-quarter net income. and oilindigo tumbling shares climbing. just to give you a flavor of what is ahead. it is budget day in india. show, then the largest bulk port in the middle east and south asia. we speak to the ceo about how rising protectionist rhetoric will affect business. >> first we talked to jpmorgan about the emerging market that could be vulnerable to the america first agenda. ♪
>> welcome back to bloomberg markets. >> let's get you a quick check of the latest headlines. income fromrecord operations abroad, $621 million. president trump's victory spurred demand for fixed income products. the first full year overseas profit in seven years. oil fields.selling shell wants 3.8 billion dollars for a half of its oil and gas taxes. they are selling a stake in it for 900 million.
>> under armour plunges the most after sales forecasts fell more than forecasted. it's the smallest annual gain since it went public. under armor is struggling to maintain growth that doubles every three years. take a look at the bloomberg data. it is the shortest stock. i just took a look at it on the s&p 500. >> the dollars rebounded triggered by president trump's claims other countries are devaluing currencies. let's discuss this. thank you for joining us. see aondering if we could dollar selloff if the fed doesn't come out and handled
tightening very soon given this strong dollar rhetoric coming out of the wine house. -- the white house. >> if you're looking at the way in which the u.s. elections affected emerging markets the initial reaction in november and december, they are priced in a significant increase as well as a u.s. treasury. that was a negative for emerging markets. right now we are in this limbo in which there is a fed policy on one hand but probably much bigger fiscal policy issues coming out of the u.s. and trade policy. what do they do with the adjustment tax? if you look around emerging markets at this point, there are
a couple of countries, brazil is goinga, everybody to be affected by what happened in the u.s.. this, what happens with the dollar will have a bigger impact on all emerging market countries barring russia and brazil which only has this story. >> i wonder where you stand on emerging market currencies becoming weaker. we are expecting them to weaken given these macro pressures. is that a net positive or net negative? >> the big question is what happens to the adjustment tax?
what does it do to the u.s. dollar? in principle, in theory, you should see risk to offset the taxes. the interim. weakness onace emerging markets. they are going to get benefited, this is a world of gray uncertainty rather than global growth. >> let me pick up on the fed conversation. p, you can see that the
probability doesn't really take in the majority of the expectations. oft is your outlook in terms the timing of those hikes? in terms of passive shrinkage on the balance sheet. the way we are looking at whatever expansion that can happen is unlikely to have a large effect. u.s. growth rate will remain at 2% level. depending on defending , for 2017 we
his most challenging fiscal plan ever. what should economists and investors be watching for? following the effects of the demonetization last year everyone expected economic growth to slow. we are looking into the announcement of some stocks in terms of corporate tax cut's. that would boost spending and allow the economy to grow fast. >> what about the political fallout in this web of relationships that spans across india. >> this is the fourth budget. a have seen this will be important budget.
definitely it will be an important budget. some are calling it a referendum on his policies. >> we will leave it there. thank you for that update. the finance minister will present india's budget a few hours from now. thank you for sneaking around. i want to show our client something on the bloomberg in terms of how they have been positioning themselves ahead of this decision. buyers of indian equity. me the demonetization experiment was a failure and should have never been started to begin with.
what is your take on the impact? what are we going to see in these numbers? demonetization will have to be broken down into the short-term and long-term. the next few quarters you are going to see demand slowing down. demand goes back up. people have largely focused on that. run the risk of actually disrupting supply chains within india. then you could actually see that spelling into inflation as well as hike currency count. we don't know how long it will take for the supply chains if they do get disrupted to come back.
there is a short-term of fact. everyone is focusing on it. that is something that will be there. we are more worried about the andly side impact medium-term affect not just on growth but on the currency count. runs asia's largest budget deficit. you can see it may not be any different this time. that has resulted in bigger deficits. the white line is the imf gdp. how will budgets sit with the
rate increases? you might argue that there has been some consolidation. asmay not be as much investors expected. if you add the speed and the central government there has been no fiscal consolidation at all. we take the official figures, you haven't managed to bring down the consolidated fiscal budget and that raises questions about the structure of indian public finances. >> we will have to leave it there. thank you.
>> 12:30 here in hong kong. onhave south korean exports the way up lifting an economy up. .hipments gaining the most it was ahead of forecasts. imports also surging. production also on the up year on year in december. trump is saying japan and china play the money markets and leave the u.s. looking like a dummy.
cabinet secretary has called the president's comments totally inaccurate. and nintendo dropping to a five-month quarter earnings that topped estimates. the switch console is the for earner for the company. tweakalso promised to super mario run to boost its popularity. ,he kiwi dollar dropping back underway from an eight year low in the last quarter. .he jobless rate dropped the economists, 4.8%. with that election set to take place on the 23rd. 3600 journalists operating in 120 countries.
>> there may be more pain ahead for oil exporting countries. they lost $1 trillion of revenue in the worst market rally in a generation. some say they are not out of the woods just yet. oil prices are recovering. isn't this going to help? willl prices recovering help compared to the lows they had last year. we are in that mid 50's range now. less than half of what prices around 2010.r-year we have had two years averaging about 50 and we are still in that range. producershe oil expect it to be back up to 60. that is what we have heard.
there has been a lot of spending cut's. that is bringing those breakeven prices down. hurting andll running deficits at the moment. they are trying to see how they can stabilize prices now to shore up their finances while keeping their market share in place. >> the big shadow looming is the u.s. crude production. the chart tells the story of that. those are the u.s. crude inventories. we have crossed it of course with the benchmark. what is opec doing in light of this? the forecast compared to last , is opecrom last week
looking at accelerating it? how much of a problem is this? >> they are targeting those stockpiles. cut.menting a six-month opec is able to say we are taking production off of the market but holding out that production comes back on at the end of the year. that makes prices a little bit higher but does not give them much impetus to rise. that should take some storage off. you mentioned the u.s. supplies. . think we have more to come going up. rent the shale story is not over. shale is part of the supply equation going forward. we see administration in donald
trump and the united states that oil.vorable to allow for that could continued ramp up of u.s. oil. u.s. oil is here to stay. we have that whole supply demand equation that is going to balance out. >> thank you very much. the global trade environment is showing an uncertain time. let's take a closer look at the story. mark.g us now, fantastic having you on the program. context,r viewers some i have added the crude oil tankers.
in this case on the eastern here closer to dubai, what is your health check on global trade as we see a lot of these global companies jittering around the possibility of more protectionist policies and a closed world. >> we are curious what will happen. we see a lot of globalism in the markets and uncertainty. it will completely change the whole world trade and change the position in the world. >> talk to me about specific numbers. trumpmight be some new
administration fallout. you have fierce competition around this part of the world. what number are we looking at? >> we are very positive. we had a record year. growth.ouble-digit we will be growing in 2017. we have more which we think is very important. we have an innovation cluster in our free zone or read don't do very high tech innovations but we are trying to include the techniques that are there to build a new stable cluster.
they are trying to attract new business. >> you mentioned the flour mill. >> you always have to be first in line. it is a classic example of what happens if you don't diversify. we need to make sure we have different clusters and we have business and we are not depending on a commodity. >> you also signed in december an agreement, what does that do? do you see it playing a role in china's one road initiative?
see the nice to whatative is a reverse of another guy was doing a few hundred years ago. if you look at the maritime maps , you see they have an interconnection and this always is the country of amman, we do see that we will play a huge role. it has good relations with all different countries. >> who is setting up shop? what deals have you signed with counterparts around the world? example -- n
dubai.ed in it was quite difficult to obtain -- to get a room in dubai. this sounds on the short-term positive for a hotel owner. in the long-term it is not positive. i will look for another hotel and next time i won't come back here. actually we also need to make sure we have a 10% spare capacity. we want to have spare 10% capacity to attract new tenants and that is why we are going to attract those new customers. customers towith be our new tenants for new
reclaimed land. entrantsu attracting -- interest from iran? seen the economy recovering. there have been more tourists. iran is a very good example. it will be a challenge to attract the businesses. we are having very often meetings every week now. who areinvestors interested. we do benefit from extremely good foreign relations. see it will be very
>> the national bank of abu dhabi delivered estimates that met -- delivered numbers that met estimates. impairment allowances fell from almost 120 million. the board is promoting dividend of 45 to fill the share. >> egypt commercial international bank posted results that met expectations. the lender said the outlooks for 2017 remains ambiguous citing recent macroeconomic developments in the banking sector. >> russia and european officials have weighed in on iran's
missile launch after the u.s. announced and amended in emergency meeting of the security council. iran dide confirmed have a missile launch testing on january 29. and we unacceptable wanted to bring that and do it urgently. iran looking at these missile launches? what is the legal framework of whether it is or is not allowed to do that. have a military program which is a solid defense program. what is happening now is looking at the legal framework around that. it is important to know iran's missile program was not part of
the nuclear deal negotiated with european and u.s. countries. it is creating some issues. that is a resolution that calls on iran's and not be having activities relating to missiles that are able to carry nuclear weapons. iran is saying it does not have a nuclear weapons program and the wording is such that it is not legally binding. as far as iran is concerned, they are saying this they different program. we have the right to do that. it is seen as a provocative measure by others. >> this is coming at a time when president trump has vowed to scrap the 2015 nuclear accord that lifted sanctions, how
sensitive is this issue now? >> it is becoming sensitive because iran watchers will tell to this can give ammunition those who have been opposing that deal. republicans in the congress were staunchly opposed to that deal. president trump said that this is a bad deal that needs to be torn up or negotiated -- renegotiated. those who were back in the france,r russia and they are concerned that it is going to be upsetting that climate that was created after the nuclear deal in 2016. >> thank you for joining us.
a new tax policy proposed by president trump forcing the world's biggest buyout firm to reevaluate companies and what they are worth. they are already factoring potential changes into their decision-making. or concern no panic among our portfolio company ceos. we have businesses who do not engage significantly in selling goods manufactured abroad. there is no panic. i don't think it will change the way our companies transact. some things can be quite positive. lowering the corporate tax rate and leveling the playing field with other nations, i think long-term it will be positive for our portfolio companies.
>> what about the other tax reform? eliminating the deductibility of interest, for example. border the potential for just ability tax. we have the immediate expense of capital goods. what blackstone point of view becomes better as a of those policies? what becomes worse? >> that is a great question. we have done a lot of thinking. it is beginning to creep into our thinking. businesses that stand to benefit our export lead. capital intensive in some way. projects that can generate a high return on the dollars
invested because the tax depreciation will be a lot better. the government is trying to engineer a reward system for people investing in this country. , we businesses we buy engage in certain capex programs. it will be a benefit to export lead companies. the ability to have more favorable deductibility of the capex is positive for that. so, for the types of things we invest in it is a positive. things under more threat would be retailers that sell goods imported from abroad. business services and firms that
outsource employment to other countries. more is going to be a bit volatility around those companies. all right. let's get you a preview of what is still to come. apple's magnificent seven. sales help the tech giant back to growth must specifically the iphone 7 plus. we were surprised by the strength of those sales. ♪
presented after the passing of a member of congress. apple surged in apra -- after hours trade, beating estimates on first-quarter sales. carolyn has the details. >> it was a beat for the most valuable company in the world. iphone 7 plus was the killer product. demand outstripping supply for the new camera that was offered on this kit. the cfo showing they had surpassed even internal expectations. on the other side, the other products have slowed down. tv, includes ipods, apple the displays they sell. apple tv was difficult compared to the year before as it was a new product. that was brushed off by
investors. businessces set of the , the company saying they will revive the services business. you can have apple pay included in this. growth.store, with 40% they said this is now a standalone basis. service is still an area of growth for the business. perhaps the cloud is the silver lining. but thed forecast, reason was fx headwinds. they saw a ramp up in the u.s. dollar and this is likely to be a problem for apple.
you u.s. stocks we are watching in the trading day. we talked about the slew of bank earnings that came through. first-quarter numbers took a hit. , 980eak those figures down million in terms of expectation. impairments, versus 110 million in the prior periods. talking about the lingering effects of lower oil prices and tightening liquidity was resulted in higher funding and the cost of risk as well. buys and six11 holds on the stock.
>> it is 1:00 p.m. here in hong kong. china's official factory gate started the new year with a pmi of 51.34 january, narrowly beating estimates. services had a reading of 54.6. along with other private indicators, data suggests that chinese manufacturing remains robust. president donald trump has named ch as his picksu for the supreme court, triggering a showdown with democrats in the senate. the senate earlier postponed his latest executive order, the travel ban lawsuit.