tv Bloombergs Studio 1.0 Bloomberg November 24, 2018 11:00pm-11:30pm EST
dubai says it will stick with the kingdom through thick and thin as it grapples with the fallout of the jamal khashoggi affair. ♪ it is 8:00 a.m. across the emirates. this is "bloomberg daybreak: middle east." i am manus cranny in dubai. yousef: i am yousef gamal el-din. loyola has dropped 50% since october. since has dropped 50% october. you look at how the kingdom is working through the jamal khashoggi killing, pushing ahead with key objectives. one is to add more value to every arrow it produces, adding
more refining capacity, to meet local demand and to compete with the u.s. and eu in terms of oil product exports. the other thing is the summit here, this is the heart of the saudi arabian oil industry, looking at how to deepen supply chains. we have the big names coming through, schlumberger, halliburton, so a lot to look for two in the coming hours admits -- amidst a global backdrop. manus: when you talk about the oil market, a couple of great columns. three people at the g20 will drive the oil price, mohammad bin salman, putin, and trump. they produce more than 15% of
opec. when it comes to fear and loathing in the market, volatility is the word you used. forers are paying more downside protection on the oil market than when oil was trading at $47. let's talk about the markets. a board for our viewers. s&p 500 down .6%, the second correction. it was the third worst thanksgiving week since 1939. the pe has dropped 17%. is that a value proposition, or are there bigger risks to come? bitcoin, 24% it dropped last week. $700 billion wiped out. the market value of all cryptocurrencies has been demolished.
billion, down from $835 billion. was that a bubble? good morning. how are you? yousef: yeah, well, you look at u.s. treasuries. i want to look at the oil selloff and the treasury curve. it was mixed. limited movement on the 10 year. the seven year saw a lower move in friday trade. cable, this is how it closed. it found the footing at 1.28. recommended going rate of 1.32. they saw a deal and dissenting mp's backing it. we will get into that later on in the show. manus: let's get to first word
headlines. trump and xi jinping have indicated they are ready for a meeting at g20 in argentina. engaged ineen escalating trade wars that is starting to have greater impact on financial markets and global growth. to make a china wants deal very badly after his administration placed tariffs on $200 billion worth of chinese goods. police in paris have used tear gas and water cannons to disperse protesters on saturday. officers were mobilized to come of8000 protesters the second weekend of demonstrations sparked by rising fuel prices. movemente yellow vest it has morphed into of wider protests against emmanuel macron's government.
the deadliest wildfire in california history is nearly out. at least 84 people lost their lives. more than 560 people are still listed as missing. say many of them may be safe and not realize they are on the list. the fire of a stated the city of paradise come in destroying more than 13,000 homes. a former head of saudi overligence has cast doubt the credibility of any cia report that incriminate mohammad bin salman in the murder of jamal khashoggi. several news organizations reported the agency concluded the crown prince ordered the assassination. saudi arabia says the cia has proved wrong before, including iraq and weapons of mass destruction. removal is likely
to lead to changes in the world's largest auto alliance. he was arrested over allegations of financial misconduct. nissan will try to create a more equitable partnership with renault. the french automaker has more interest in nissan than nissan has in renault. , it has been 17 months in the making, and barring any last-ditch, the u.k. and eu will of agreed to terms of brexit at a special summit. theresa may packed down yesterday after an 11th-hour crash against spain over gibraltar. we have more from brussels. >> theresa may finally has her brexit deal. agreed to a.k. have
future relationship between the two sides that would see a trade area that has deep ties and cooperation. the eu talks about equivalence of financial services in the u.k. time, there are some concessions that could help atresa may get those voted parliament. they have to the backstop as a separation between northern ireland and ireland. both sides are determined to never use those and find a way out of it. , and is also migration theresa may can argue this is taking control of borders and free movement of people as part of brexit. the eu question is leaders are expected to sign off. then, it will go to the u.k. parliament to decide whether they kill the deal or seal it.
the question is whether theresa may has the numbers to do this. through, itot get is a nightmare scenario for the u.k. prime minister as the brexit process and the timeline could be called into question. in today's sunday telegraph, theresa may said it will be a deal that is in our national interest, one that works for our whole country and all our people, whether you voted leave or remain. let's bring in the cio and head of investment management. great to have you with me. boris johnson, we just printed the story. boris johnson is saying the brakes of plan at the moment is the equipment to the titanic heading towards a doom. this is almost the worst of all
scenarios, and iceberg waiting to happen. you come down on the debate? to spanish thanks blessings, there is an agreement. two,r two bank, here -- here comes the hard part, theresa may in parliament. they will not be happy. a deal will take place. it is probably not priced in by the market. yousef: where are we when it comes to the markets? westpac were saying 1.32 could be the next target over the weekend. where do you see it going now that they have made progress in the but still with the house of commons? >> there are many steps ahead. to look at what is the market pricing, you need to look at
long exposures short domestic u.k. place, which are still doing well. on, theis trade is market is pressing on. with some reversal in terms of the trade, and obviously the other way to look at it is the myo-pound, which finally move, and some pound strength. your ace -- manus: your base case is we don't end up with a hard brexit. that has consequences for the boe. the market at the moment i my by my reckoning is only pricing in two hikes over the next three years. ,f your base case plays out with the boe need to be more aggressive? powder inpt some dry
case of not a deal happening. if the deal happens, they have some leeway. this will need to take place in the global picture. the monetary policy, there is a big question. either there is more global weakness coming in and they might say state dovish. -- say state dovish, as is expected by the market. yousef: where does that leave us when it comes to the key risks? strong u.k.'s story, but you have global sentiment as well. givens a breakthrough, the noise from around the world in the last three to four months. this is why i include this story in the global picture. the key lesson is the world economy is transitioning from
quantitative easing to quantitative tightening. we have the u.s. doing well, but the rest of the world weaker. more of thatto see story developing going forward? manus: we talk about brexit here, but there are risks for europe. what is the biggest risk? brexit, italy, or global trade wars? roll it around and give your choice. >> these three risks are happening together. italy is still there. it might take some time. in france also, pressure coming. oniffs have had impact europe. we need to see improvement in these three factors. those we will get into bigger factor shortly. you stay with us. still ahead, standing by
manus: let's check the business flash headlines. plans to boost profit by $6.8 billion over the next eight years by streaming operations. bloomberg has learned the automaker will be spending more to develop and manufacture of electric cars, cut costs, increase the efficiency, and the try to make more money from new businesses such as digital offerings.
united technology has cleared the final hurdle to complete a deal with rockwell collins. china has signed off on the $23 billion agreement reached more than a year ago. investors are concerned the trade dispute between the u.s. and china would hold up the approval and take over. it gives united technologies scale and negotiating power to deal with boeing and airbus. the cryptocurrency crash shows no signs of letting up. fell 25%berg index last week, the worst five-day stretch since crypto mania peaked in january. that coin is trading at just over $4200. that is your business flash. those are the main stories. this week is either going to see a breakthrough or further breakdown of the u.s.-china relationship. president trump and sheesh and
paying are scheduled to meet on the sideline of the g20 summit in bonus areas. -- in argentina. they see it as a possible catalyst that could break the market out of its slump. the s&p slipped into correction territory friday, the third worst thanksgiving week performance since 1939. no, i was not around in 1939. neither was our guest. thank you for staying with us. the third worst week since 1939. the markets are battered and bruised. how critical is the g20 for signaling the smoke, the signals to markets this week? >> it is the number one fear by the markets. expectations getting into the g20 are low. i don't know if you have seen
the draft. it is anti-protectionist. our view is we could have a positive surprise on that side. trump and china want a deal to happen at some point. that will be positive for the market. yousef: to what extent is what is happening with trade more of a distraction from the real in interestncrease rates from the fed and whether get the nextl type. bps, lessricing 27 than where we were two weeks ago. how many rate hikes are you expecting in 2019? >> expectations are lower. our view is the fed will stay in autopilot mode until we get to
the neutral rate around 3%. the main point for them is the job market, which is strong, wage growth, above 3%. what willestion is happen in q1, midyear? hikes is too high, two is too low, so maybe three. s&p, thementioned the second correction this year. some are saying the markets are pricing in a recession. dropping 17% this year, the third biggest drop since 1991. is this a fell you opportunity? has the world changed that much since january for that kind of
demolition? 2017 was an exception, all boats being lifted. think the world has a subtle bear market, but we don't think so. but wein a correction, might see more correction because there is more economic , more economic volatility translating to market volatility. you are right. there is a nice reset in terms of earning expectations and valuations. some good terms going forward. yousef: we have the cio of pimco who will agree with your comments. slower growth, higher rates, a trade war, but it is pressuring
credit spreads. do you stay defensive in credit at the moment? yes, the worry in the markets is the widening of credit spreads is indicating more worries going for it. it needs to be closely monitored , especially supply coming to the market in the coming years. there are a lot of maturities coming, $500 billion of investment grade bonds that go to junk. spreads, they the are still low. it needs to be monitored closely. thanks for your thoughts on those markets. up next, emerging markets are showing signs of bottoming out. should investors stay cautious? this is bloomberg. ♪ ♪
manus: a falling oil prices, faltering dollar come and speculation the fed could soften its policy stance. however, deteriorating global growth driven by the u.s.-china trade war may hit the export-dependent economies hard. let's get more. rand, the ratean decision from them, raising rates for the first time since 2016. that is an interesting policy move. about the rest of em? are you still cautious? >> i am very cautious. we still have this g20 meeting between trump and xi jinping. .hat is an issue trade has been impacting
emerging markets all year. in a bearstocks are market and investors are cautious about their kerry returns. everybody will be watching all headlines, especially since we have been swinging between optimism and negativity with regards to trade. yousef: i have been looking at , and we have not seen those kinds of research for quite a while. what is on the agenda that could drive momentum in these plays? >> you have the commons by jerome powell. if investors are right-thinking his stance has softened, that could drive currencies, but it can be derailed by that meeting between president trump and xi jinping later in the week. , i realizein mind
that meeting between trump and but investorst, in the middle east will be watching for that meeting between president erdogan and mohammad bin salman. manus: the gathering of the g20, mohammad bin salman will be at the g20 as well. the demolition derby on oil, very briefly, which side are you on, some are saying oil is oversold them a quick call, how do you reckon? >> it is an overall positive. a lot of the import driven economies in emerging markets are the ones that are the most on edge really. i think oil prices will ultimately help emerging markets. manus: you have to make a call , great work by the team throughout the week on
looking at the dubai financial center area. it will be interesting to see how markets react to oil prices. we are off 30% since october. how will the oil world come together at the g20 and the later meeting in vienna? some other stories. manus. manus: let's get up to speed. , thenths in the making u.k. and the eu will agree the terms of brexit at a special summit after theresa may back to down