tv Bloomberg Markets Middle East Bloomberg February 24, 2018 11:00pm-12:00am EST
year. should they be able to do so without hurting the market? markets can be of big day for foreign investment ambitions. >> 4:00 a.m. in london. this is bloomberg markets. >> i manus cranny will stop >> good to be here. manus: a couple thoughts. worn buffet. he has 116 billion dollars. what are your eye over the weekend? >> we are seeing more of a backlash. more commentary from president donald trump. he is looking and thinking back to what that wto director general said in january. he said the risks of a trade war are looming. they never come from where you expect them to. >> going back to buffet, his profit is all about the tax
break he had. that is something he was a bit shaky on. he has $116 billion in cash. well companies produce cash? it is all about railroads. he says he is in the mood to do a huge deal. >> 20. let's look at the uss and classes. manus: we rose in the afternoon. 1.6 percent.hed up we had a two week selloff. investors are back. they brought in nearly 60 billion dollars. be careful, after these spikes up to 40. typically you could see double bottom stocks. there is an important tactic here. could be signaling.
200.ing under i went for two's rather than tense because two-your paper is more insightful. at a nine-year high they are looking which according to schwab. thanks let's look at some of the other classes. starting with wti. american supplies to rain. we have the key oil field in libya. termsadding one more in of u.s. targeting crew. closing at 1.25% higher. watch out for gold. i stronger dollar. down a quarter of one percent. in the currency space, that was off the back of an inflation report that put pressure on for tighter policies. and the emerging marketplace stuck out.
planning a cabinet shuffle already. --seemed >> they want to stay away from any possibility. count thehave to bricks. let's look at the headlines from around the world. >> the un security council has unanimously approved a resolution demanding a 30-day cease-fire across syria. it calls for allowing aid deliveries and medical evacuation. it had been delayed for several days. a syrian government bombing campaign in damascus has killed people in one week. former trump campaign aide rick gates pleaded guilty to federal conspiracy. he had initially said he was not
guilty when he was first indicted by special counsel robert mueller. brexit isision for not based on reality. the president of the union says britain is still apparently wanting to have its cake and eat it too. this comes after theresa may and talk cap net members are agreed basisp it on a voluntary after britain leaves of the block and the transition. president trump can impose a global tariff of 20 portraits imports andteel imports. duties at these levels would meet or exceed the most severe to the presented president. saudi arabia says that crude output agreed by opec will is
next year without hurting the market. global producers facing out as market rebalances and inventory shrinks. the oil minister says his country has no plans to cut. >> the ministers of opec, especially this year, is really as a member.egypt the opec organization, we are happy to have it happen. we will see how it goes. we are interested. it will definitely happen but we cannot tell when. first upgrade for global ratings since 2006 after it bumped up from triple b minus
two bb plus. and the biggest energy export maker after the three years of junk. it reflects a track record that has allowed the russian economy to adjust to lower commodity international sanctions. global news 24 hours a day powered by more than 2700 journalists and analysts and more than 120 countries. this is bloomberg. christ let's talk about u.s. stock. jumped on friday. that ratesonfident will raise. the economy picks up steam. the fences semiannual report indicated officials saw the labor market at or above full employment. >> meanwhile, warren buffett has used a widely read letter to asking tohathaway
stick with the simpler strategy. he said, there is simply no can fall.w far stocks even if you're borrowing is notl and position is immediately threatened. your mind may become rattled by the scary headlines. an unsettled mind will not make for good decisions. >> let's bring in the director of economic research at the gulf research a center. he joins us live from riyadh. what are your key takeaways from the fed report? as you look ahead to testimony would youowell, what say, this is something you need to watch out for. --ggs i think we need to see >> i think we need to see whether wages will creep up. that is an important indicator.
growth is not coming necessarily from wages. there is a debate on whether growth is going to be there. my guess is that rates will go up. the big concern is what will happen to the dollar. with the dollar continue to weaken in this phase several reassessment. where the u.s. in economy followed protectionism that will apply during the presidency of donald trump? as wea bit of concern move forward, especially when the u.s. looks around its neighborhood. >> good morning. ,hen we look at the story wilbur ross produced the document to much her law. will you see that? people saying, we can deal with paris but we cannot deal with a trade.
so there risk of a trade war and 2018? need tonk what we assess is whether the united states trade policy will be matching. washing machines, other goods, taking them into consideration. when there is protectionism, which is a very different sort of thing when you have a generalized protectionism that describes u.s. trade policy, which is the opposite of what the u.s. has been doing for the last 17 years, that is fundamentally changing the way the world looks at the u.s.. the weakening dollar is partly a reflection of what the world sees as an aftermarket against
this protectionism rhetoric we have seen donald trump and the administration whispering. >> how concerned should i be? i could argue the rhetoric was sharp before. we have the elections coming up. might be a little bit more domestic. that is a platform they came at power with. >> good question. it boils down to jobs and growth. that is how u.s. president will be assessed. this one has been on the ticket for america first. growth and jobs is an important. the president will have to show he has been doing something on that front. protectionism will creep up. the experts he collected around him to support him on that have fled.
you have a talent pool that is thin to support these themes for president trump but i believe he will need to continue to support his base, which is a base that has been using the rhetoric and protectionism. >> we thank you. thank you for joining us from riyadh this morning. still on the show, opec entry. us they minister tells could join the cartel but not before 2019. >> a big day for saudi arabia. we have details next. this is bloomberg. ♪
and giving up control of the management business which looks following6 million allegations of money and the health care fund has been misused. halting commitments for capital organization complete. that is your bloomberg business flash. let's talk about saudi arabia. they will find out next month if it will be included in the index for emerging-market countries. they said back in september they would soon meet the criteria to be promoted from unclassified to a secondary market. inclusion would help saudi arabia attract more money from foreign investment. we will bring in someone from the gulf research center.
what is your assessment as to whether or saudi arabia will be able to lock in progress over the next few months. >> that is a good question. i think this is the year of saudi arabia for the stock market. this is the year everybody has been waiting a for. i think they will be included in the index this year. there is certainty at least from my part. this is what i hear from a lot of the investors, if not the majority of the investors arabia to search and see what there is an opportunities and equities. i think this is going to happen. ftse is going to announce in march is debated. but i think 2018 is the year. i think the stock market will go
upward from here on. >> they are going to meet on march six. the advisory council is scheduled to deliver on march 28. i want to read you a piece that was in the papers over the weekend. reform and about vision 2030. in on the entertainment side of the saudi economy, it looks like thertainment will be one of big drivers. the kind of accelerator you are hearing of in that industry, is that five-year, 10-year readdressing the growth issues and saudi arabia? and employment? where is it going to come from? >> i think entertainment is a key sector of growth. thanve heard and seen more 2000, 5008 events have taken place in 2017.
many more are planned for 2018. i think this is more of a medium-term play but we have already seen what is happening in saudi arabia to entertainment. just in front of the bloomberg office, there is a whole new area of entertainment being displayed and used by the authority. this is where the private sector comes in. the private sector will be the leader in the next few years. that is where you will see growth. i think we are in a reform age. i think saudi arabia is using it to showcase the changes that up and brought to the kingdom. some of theing at flows. you can look at the saudi arabia index. increased by 28%. the highest it has been. you can see some of the positioning. i want to get back to when it
comes to the social part of this conversation. as the company opens up and as it becomes more liberal, there is a risk. a risk of a backlash. how high would you say is that risk? >> i think the back flash element is very low. are in, whether they their 50's or 20's realizes the country has to change. i do not think the country will push back and allowed of reforms. this is the only way for saudi arabia. i believe with corporate and citizens are aware this is the only way for saudi arabia to push ahead, through reform. it has to be re-adjusted. that is a key element. to reprioritize. we are seeing that, especially on the fiscal front. that is very positive.
saudi arabia's doing everything they can. within the emerging market, saudi arabia is unique in doing everything it can on the reform wave. it is the only country that has a commitment and strength to apply this fantastic reform wave over the medium term. flows intok at the saudi arabia. 30 million-$40 million expected. director of research joining us there. join the club. egypt's foreign minister tells us about the likelihood of signing up to opec. this is bloomberg. ♪
on as a member of opec. just not yet. >> we were invited and the beginning. in order to join the non-opec producing countries, for the fact we are a net importer. cuttingot at this stage production. however, we are supporting. this was very clear and my speech at the opec opening meeting when i was talking about our complete and full support of solidarity to the efforts that was done in order to really balance the supply-demand. we did what we need. have as a producing company
and faced some challenges lack of investment due to the low prices. want to seee do not this again. yes, we are net importers. we would like to have a balanced, fair price between producers and consumers. our presence with the veryof opec, non-opec, was important. we will continue to participate. i think the day will come. therelow colleagues, excellencies, the ministers of opec, especially this year, now the president, his excellency, is really after having egypt as a member and the opec organization is something we are really happy to have happen.
however, we will see how it goes. we are very interested. i'm so you are open to joining? >> it will definitely happen, but we cannot tell when. >> by the time each of joins opec the market could be a more stable place. saudi arabia says it sees currency easing next week. let's bring in our energy reporter anthony. this timeifferent around? it, there ise of nothing different in that statement. the deal in place right now runs through the end of the year. he is tryings that to assure the market does prices will stay in place. let's discuss it in june. el-folla theg from
biggest voice. he says the state cuts will stay in until next year. easingsee opec production, keeping cuts in next year are reporting to what the minister is saying. >> we have the president of opec in the room on thursday. he said we would get back to rebalance. stick with it. what could go wrong and upset -- road map?obe >> shell. able to produce at lower cost. the u.s. is on track to becoming the biggest crude producer and the world according to u.s. data. other things we do not know about yet are the economy. if inflation starts to see been, that could impact the economy. right now global close is on the rise -- growth is on the rise. >> thank you.
♪ yousef: we are 90 minutes away from the market open. dubai equities, while they were .nder pressure let's check in for you on the headlines from around the world. christine: the un security council has unanimously approved a resolution demanding a 30 days cease-fire in syria. called for an end to fighting without delay and will allow for medical evacuation. the motion was delayed for several days while they tried to get support from various key allies.
a syrian bombing campaign has killed some 500 people in one week. trump campaign eight rick gates has pled guilty to federal conspiracy and false statements charges. he initially said he was not guilty when first indicted by special counsel, who is probing the trump administration. time businessong associate paul manafort. the vision for brexit is not based on reality, according to eu president. they say they apparently want to have their cake and eat it too. it comes after theresa may and her cabinet members agreed to ask to keep the eu's regulations on a voluntary basis or key industry sectors. president trump could impose a global tariff of 24% on steel imports as well as a 10% duty on
aluminum imports. levels wouldse exceed the most severe of the three options. the commerce department recently presented these options to the president. saudi arabia said their crude output will ease next year without hurting the market. the oil minister believes they will phase out the cuts as the market rebalances and the inventory shrinks. meanwhile, egypt's oil minister says they have no current plans to join the global deal, but he does expect the nation to eventually become an opec member. >> as a member of this organization, which we are happy to have happened, we will have to see how it moves. will be open. the day will happen, but we cannot say when. russia had its first
upgrade in s&p global ratings since 2006 being bumped up from a triple b -280 plus. they're convincing the world's biggest energy exporter to invest after three years. they say it reflects a track record of policy which has allowed the russian economy to adjust to lower commodity prices and international sanctions. global news 24 hours a day. i am christine harvey, this is bloomberg. thank you. asked and he global raisings say their fiscal consolidation measures continue. high oil prices are reducing 's thinksnd the agency 13 middle east and north african their rates will be barring at $181 billion.
from domestic and international sources. that is up by 11 billion from 2017. let's bring in our guest on this. the head of research. s&p have this idea that sovereigns are going to be borrowing less. they will see billions. her rob, oil prices are rising. that is right. my view is different. i do not expect a decline in borrowing. if you look at the gcc, they thatrecognized the fact prices are at a low end is dampening economic activity. so how do they boost the economy. it is basically by adding some fiscal stimulus. governmente the
budgets this year are likely expansionary in the region. to fund those, i think they will rely more on continued borrowing. i think they will even reviewed the base of their assets. the environment is interesting at the moment. you have rising bond yields and oil prices. in some of those yields, what is standing out to you in the gulf? biggest concern this year is rising interest rates and that is the fundamental negative backdrop for the bond market. oil prices do affect the overall risk sentiment and affects the credit spread tightening. but a bulk of the credit spread tightening has already happened. so any further tightening will be marginal, and not enough to offset the interest rate rises in the u.s.. how much issuance are you expecting this year.
the one thing we had from the aboutas this obsession the ability of the market to absorb a range of issues. how deep is the market at the moment? u.s.: the bond market spaces at 300 billion total outstanding. we saw billions worth of new issuance last year. i think now we will see something from 70 to $90 billion. if you take that out, and the overall deficits in the region, my overall estimate would be 70 to 90. is what doesestion that due to the corporate story as well? especially in the region where you have corporate's that are so closely .ied to government spending with a expansionary budget, what are your key calls when it comes to corporate bonds? guest: in terms of buying
corporate? it is a difficult environment for corporate. no doubt about that. is on aomy as a hold down. last year was probably the bottom, but it is weak at the moment. the corporate issue either comes from real estate, excluding the related oril and gas airline related. a lot of these kind of volatile investments. the ability based one i think will do reasonably well. i think we expect to see stability there. manus: one of the discussions, if you go a little bit broader. volatility is back in the volatility and equity market. there is this debate about a lower dollar and whether that turns around, and that is driving a lot of the flow.
at the top, you have those people who put their house in order. taiwan, south africa. on the guy side, you have turkey and argentina. year of putting your stuff in order. if you put your balances in order, you will be rewarded in these markets. guest: that is very true. the only thing i want to mention generally itrly -- will dominate the space. dollar limited bonds will definitely get more impacted. to local currency. i'm not saying they will remain unscathed, but the local currency will probably hold better than the dollar funds in the situation. yousef: we want to get some of the other calls.
there is a lawsuit over the company's marketing -- clean omissions marketing. there are claims that the company deceived customers by breaking a mission controls to perform differently when being tested than they do on the road. the billionaire founder of big john b lee has accumulated a and itorth $90 billion, marks the biggest investment in a global automobile -- automobile investor. the founder is to give up control of the fund management billions ofer dollars. it is reorganizing following allegations that money in their health care fund had been misused. a new commitment to their capital unit until reorganization is complete. that is your bloomberg business flash. thanks. let's talk about ecb president mario draghi who addresses us in
brussels tomorrow with two big problems on his mind. governor refused to step down amid primary allegations and police questioning. and then there will be the usual brexit conversation. theresa may prepares to outline her plan for a trade deal with the eu. you have a vote in germany and italy as well. in ourring back reporter. as you look ahead to a lot of these events i need to, i want to know what you are concerned about in terms of the possibility of a contagion beyond european borders. right now, investor confidence is so slippery that even if the -- even news not of consequence can destabilize. so i agree with you that this affect can be massive. but otherwise, i don't see any of these little developments out of europe having --
yousef: from the outside. guest: you are right. reacts the dollar market not to that equity market which reacts a lot to oil. fundamental risks in europe take time to translate for us. but this affect can obviously impact every markets. is thethe other dynamic bond market. want to have a look at this. this is the u.s. treasury delivering real yield relative to the bones, relative to japan. so the real yield argument is one that benefits the u.s.. is, the marketn has built up the most staggeringly short position in u.s. treasury's. that we areerned
just going to run out of steam? or does the real yield argument hold for you? guest: in the next the month -- six months i do see yield rising. are you a goldman sachs kind of lady? a 3% kind of lady? guest: let me put it this way, three to nine months i expected to rise. , i think the fact that this has been a very long economics spansion cycle and at back,tage, if it comes the economy may begin to slow a bit. the steam may go out by mid next year, then it needs to come down. then the yields will be stabilized. yousef: the other issue is inflation.
have jonathan setting the tone a little bit for what he expects going forward. it seems to me, the fed policymakers are little bit more comfortable targeting a rate like 2.25, but they can't take in public because of the dynamics of the fed. where is inflation going? guest: right now all factors point towards inflation. this protectionism obviously affects inflation. this new spending budget will increase inflation. the ongoing labor and unemployment will increase inflation because of wage growth. everything points to higher inflation in the u.s., but the fed has actually been talking about raising their target. now at 2%. they are thinking of raising it at 3%. yousef: how high can inflation go? it defense.
there is this theory from the treasury secretary on friday, that we could have wage inflation which does not necessarily deliver real inflation. and you know, we can grow the buffalo army but not necessarily expanded. someone else said to me hikes can slow the economy. are skeptical about the hike, and it seems to be a bit of a push and shove on the fed. we don't know what it is going to look and sound like? guest: know, but i see them as very neutral. but, guessing this is an art, not a science. japanrld has seen struggling with even 1% inflation for 20 years. on the other hand, you see egypt with 33% inflation. so inflation is a beast which is getting harder to tame. that, doing back to you have any views on egypt?
yousef: it was one of the most popular places for investors. guest: egypt is a place that has a lot of positive things going for it. there is a positive outlook, the amount of money and capital going in has been positive. inflation is being tamed, rates are being cut which is again positive for the bond market. is a good story. manus: always good to get your thoughts. good to see you again. , head of fixed income research at emirates nbd. one of the federal cartel offices in germany. now the country's top antitrust regulator told bloomberg why he is stepping up to fight against the social media giants data harvesting.
we see that facebook collects the data of the user, not only on the original website. datae have also found that is collected when you are on any website where you can find a facebook like or share button. as a user, you may not even have to touch on these but. through analytic tools from third parties that facebook is able to follow you through the next wherever you move, even without a facebook account. we see that facebook is able to collect your data with regard to the time, website you have been visiting, how long you have been there, and other browser information. there is a lot of gathering by facebook of data outside of their website, and we are deeply most users and
consumers in germany are not aware of this. ins kind of collection connection with the fact that facebook is dominant, we see that as a breach of competition in germany. that data is monetized immediately for advertising, for commercials on the web. good point,ake a and your work is well-respected beyond germany, but you are setting this up in germany. facebook is a global company, a small part of their activity is in germany. whato you feel and to extent do you have the authority to go after a company like facebook and the consequences it could have beyond germany. as a competition lawyer, we because lucky position we have a whirlwind doctrine called the affects of doctrine.
it means any company worldwide that is doing business in a country has to respect the competition law in this respective country. of course, we can only speak for germany, but what we do count for germany. so if facebook or any other company, i am not talking about -- only facebook here. if they want to do business in germany, they have to abide by german competition law. yousef: let's get your preview. what is up next. the u.n. is to many a cease-fire in syria cap have any real impact? we have had reactions from the global leaders and we discuss that next. this is bloomberg.
after days of wrangling with syria's main ally russia. government bombings have killed 500 people in just one week. i let, the situation with syria is a complex net and web of influence of power and interests. how is that shifting now as the conversation goes to the security council? is not shifting. anything that you can see in into the be filtered competing interests of the u.s. and russia. you have russia as the main eight power in the un security council and that is why it took so long to be adopted and amended. this will draw some serious doubt over whether there will be in affected cease-fire or not.
yousef, you brought this to my attention when i walked through the door. this syrian memory hole is opening up a much bigger danger. there are many areas in that story that are reported or not, and rp's this morning forces on u.s. back forces and u.s. russian mercenary forces alone is like a non-barking dog. there are loopholes in this deal aren't there? some of the reports suggest that some groups will be exempt for that. that would allow the regime to basically bombed them. but again, it raises the question. how can you differentiate now, because it is a small area, will you do? will there be collateral damage? in the past, it was used as an excuse or was seen as an takes used to continue bombing and saying look we are bombing the bad guys, but then others get lost.
yousef: thank you very much for coming on and for that insight. let's see some breaking lines hitting the bloomberg from one of the heavyweight telcos in the uae. they are seeing revenue ratio in 2018 and are seeing slightly lower revenue growth in 2018. there also seeing 49 to 50% of a margin compared to 50.3% a year ago. you look to our analyst for a position on this. been down 3%, and it is interesting to put that in perspective with the other major telco in the uae and see how they pair up for the coming quarters. all i want to know is when do i get skype back and the ability to use my iphone? revenue growth will be lower in 2018. in terms of the rest of the agenda, what do we have? yousef: we have some busy
themes. we have this business in djibouti which has canceled a contract. the contract was for the raleigh container terminal, but djibouti says their decision to cancel was based on poor performance from dp world. at this bank which has had some news as well. in terms of their expected earnings later today, there might be some numbers from the likes of cut the and the arab national bank. it is all about trade with the tariffs from trump. also, nafta talks restart in mexico city. what will be the american position their? the latvian question will simply not go away. markets are going to testify on one conversation, jay powell testifies in front of the panel. he will discuss the fed semiannual monetary policy. the bellwether of the week is
i am jonathan with 30 minutes dedicated to fixed income. this is bloomberg "real yields." mnuchin sent a message to the market. don't worry about the debt or inflation. the market absorbs a month to a treasury of 10 year yield sticking to four-year highs and the federal reserve standing optimistic about growth, investors wait to hear from chairman powell. we begin with a big issue, a big week for treasury supply. >> this blowout in the deficit you will see will go from 3% to 5% by the end of this year.