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tv   Bloomberg Real Yield  Bloomberg  March 24, 2019 1:00am-1:30am EDT

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yousef: middle east. fear on the trading floor. bond yields collapsed. concerns arise over the health of the economy. waiting for the mueller report, the u.s. attorney general is reviewing the release of the investigation into russia's election interference. ukip or mr. theresa may's cabinet is in open revolt as more ministers back parliament taking control of the brexit process. mike pompeo defense president trump's recent call to fully recognize israeli sovereignty over the golan heights. ♪
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yousef: 5:00 a.m. in london, this is daybreak middle east. i'm yousef gamal el-din in dubai. a slowdown sending a shiver through financial assets around the world. let's recap what happened. yields on 10 year treasuries slipping below three months for the first time since 2007. yes, the yield curve inverted two years before the recession that began in 2008, really cost quite a bit of nervousness across bond space. stocks under pressure, biggest drop since january. they lost a tense of 1% for the week. materials and financials leading the benchmark lower. commodities under pressure on what this means for the demand side of the equation.
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some of the losses led by oil and gas, oil following the most in three weeks, wti and brent. on cable, traders facing the risk of another vote on theresa may's brexit plan this week with prospect of a no deal continuing to hang over. let's check in on the first word headlines and cross out to desley humphrey. good morning. desley: thanks, yousef. u.s. attorney general william barr is reviewing the investigation report summative by robert mueller. barr is said to be determining how to explain the special counsel's findings to congress as early as today. he submitted the secret document on friday evening, testing an investigation into whether president trump or those around him conspired in russia's interference in the 2016 presidential election. theresa may's cabinet is reportedly in open revolt against the prime minister and wants an interim leader to complete the process.
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according to the sunday times, six senior ministers want the deputy david lymington to take the job until there's a former collection -- formal election. they are said to be ready to confront her in the cabinet friday and face massive resignation. chinese vice premier will lead a delegation on the third of april. it will come close on the heels of a trip to beijing by steven mnuchin and trade representative robert lighthizer. the details delivered saturday about the timing of the visit will offer a new hint of optimism as talks on the trade agreement between the two worlds biggest economies continue. chinese president xi jinping recruited italy's populist government into the global belt and road development project. the two countries signed a memorandum of understanding in
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rome, sealing runs participation. rome is the first g7 nation to volunteer for a role in the program. chinese and a telling companies signed a 10 agreements, potentially worth as much as $23 billion. israeli prime minister benjamin netanyahu denied profiting from state contracts to buy submarines from a german conglomerate. in other interview to a television channel, he called the claims from a political rival blood libel. netanyahu held and accompanied conglomerate.he he insists he reported the holding and shares, then selling them and paid the appropriate tax on the gains. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. i'm desley humphrey. this is bloomberg. yousef: thank you very much for
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that. let's get into some of the big market stories as we kick off the week. the soft german manufacturing data sparked concerns over global growth friday, running selloff on u.s. equities. below zero,chmark, negative dollar advance to get currencies well on three-month, 10 year treasury yields for the first time since 2007. i alluded to this earlier. i fear a world economy is heading for the recession. joining us now is the chief portfolio manager. many ways investors may be looking at this, saying we've got president. -- precedent. are you a believer in that scenario? guest: i think the market has gotten ahead of itself since the end of january. we had the imf downgrade in growth in january and the market turned dovish in january.
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i think we're seeing a transition phase. they are coming to grips with global slowdown, focused from the imf. it seems the sugar high of easing and dovish easing from the fed and the ecb is it felt any longer in the global equity market which is causing compression in equity and asset values. yousef: we'll get into valuations. i want to get your sort of reaction to what the fed has been doing the last few days. we had the first public reaction from the fed official. mr. kashkari put out a tweet. "we see wage growth and net productivity above 2%, i will continue to see slack in the labor market if it is close to or below target and there is still slack, no need to tap the
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brakes." is the fed making a mistake? saed: i think the fed made a mistake in january. he's been dovish against for quite a while. i think what the fed did in january, pivoting that sharply from a hawkish stance to a dovish stance is throwing the markets off. this is why we're seeing volatile moves in fixed income and equities. the market has gotten used to it from the fed, gentle way of communicating, now they are seeing generation. yousef: the valuation story, which you just mentioned, as well, it's got traders quite split in terms of, yes, by historical standards, arguably, you'd be -- book values are going to be quite stretched. earnings values, same thing. but in a wider context, it might be an opportunity to buy. which side are you on?
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saed: this is the conventional way of thinking. but the idea we are approaching gross reduction story or global contraction in growth, asia, u.s., latin america, and europe, i think you're more bound to head towards fixed income in the short-term t equitieshan. merrillbank of america, lynch says the gains and stocks have been driven by buybacks, khalaf's, and purchases -- call offs, and purchases of single stocks. they are saying it's not a general recovery or increase in appetite. saed: we've seen buybacks. theme in equity markets the past year and a half. the asset versus corporate's. what you've seen is the fed comment on. this is not news from bank of america. i think what we should be
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conscious of, are we changing the trend of the market from rally,asing the equity more along the lines of growth reduction and equity reduction? yousef: saed, we still have a lot to get to. is the chief portfolio manager at ark. breaking lines into the bloomberg from one of the largest players in the oil and gas industry. sinopec coming through with a fiscal year revenue of 2.8 9 trillion yuan. you've got the fiscal your line of 63.1 billion yuan. that is coming through from the china petroleum and chemical corporation. they produce and trade pretty much all kinds of petrochemical products. so far this year, stocks up 16.6%. we'll wait and see whether we get any additional color from the company. still ahead, as apple gets ready
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to announce its video streaming service, we speak to the ceo of stars play. he is now worried, or more worried, about the increased saturation in this place. if another company is not looking at producing its own content. this is bloomberg. ♪
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yousef: let's get on of the quick check of the latest business flash headlines. prospect to desley humphrey. desley: thanks. turkey's banking and capital market regulators open separate investigations into jpmorgan. this after two analysts recommend investors go wrong against the dollar on a day where the lira lost 5%. the analyst cited a recent drop in the fx reserve for the move. turkey's central bank was forced to announce a tightening of monetary policy in a bid to stem vaguely was slump.
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in cook takes to the stage silicon valley on monday, where he is expected to unveil apples streaming video and new subscription. services the move is seen as apple's key push into transforming itself to a leading digital provider. the company may discuss a monthly videogame subscription. meanwhile, cook is encouraging china to keep opening up its economy. sales in china make up about a fifth of apple's revenue and the iphone maker is grappling with weaker demand and uncertainty over trade tension. cook has been a vocal opponent of the u.s. china trade war and cook said opening up is essential for global growth. tim: we encourage china to continue to open up. we see that is essential. not only for china to reach its full potential, but for the global economy to thrive.
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and that's your bloomberg business flash. yousef? yousef: thank you very much for that. inresa may's cabinet is ultimate revolt and once an interim leader to complete the brexit process. want deputyinisters david lymington to take the job until the former leadership election. they are readying to confront her on monday and threaten a mass resignation if she doesn't step down. just when you thought that there are enough problems for this administration to deal with, now it looks like an internal push to move her aside. have the stakes risen even further this week? saed: i think may really wants to call -- the problem is, they're standing in front of her. right now, it's a blame game
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through parliament and cabinet. may can't go back to the european union and european union wants a clear answer. she doesn't have one because no one is giving her one from parliament. she wants the votes so she can play the blame game with parliament. this is causing stress. nothing new from the table from her. yousef: what this case scenario are you looking at? every time we bring up these big pieces of paper and drawing boards and we start mapping out these charts, in terms of many different scenarios, which one do you think at the moment is likely? saed: we got our first extension. it's unlikely her deal passes as it goes to vote. if she just stepped down, we'll have an extension that exceeds the maker. we're probably looking for a new extension from a new leader, if they decide to go that route. hey will seek to
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find a new date with europe for an extension beyond make. -- beyond may. yousef: government bonds cause the attention of a few investors, 30 year yields dropping to the lowest level in two years. up on a u.k. government bonds are the best performers this year. is this too late to join india? what do you think? saed: what you see is the british government is running the show. the bank of england, they're ready to cut again if i hard brexit. it's a binary situation with a have a soft brexit or hard brexit. yousef: in terms of what this means for the currency, i know you been very close follower of the cable trade. at one point does it break out of the range for sterling, and at what point does it break out for the range for the euro? we put this up on a chart on gtv
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. whether theyian is remove uncertainty in the short-term. in the short-term now, as we approach this week, if we don't have a vote this week, we'll see confidence moving away from sterling again and sterling breaking down again. in terms of if we have an agreement, sterling could rally. in the absence of an agreement, absence of a stable path forward, it will lose ground. yousef: what about economic health? we had pmi figures. it was another shocker, perhaps a reality check to what is happening in terms of momentum, or not happening in europe. saed: well, it's not new. the market is looking for a global slowdown. now, europe is coming to sink with that. draghi once a slowdown coming.
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we have a to your slowdown in the projections -- two-year slowdown in the projections. unfortunately, i don't think the problem is in europe. i think we're looking at asia. what we have now are the u.s. playing global central banks, the rest of the world, and leaving. yousef: so, how do you trade european currencies? have you trade some of the asian pears, as well? in light of what is happening with the slowdown. saed: i think from our side, we're looking at long dollar stores simply because we have that right now. we saw after the fed dollar soul off across the board, that was a very wrong with of the fed. we saw the european numbers came in. we saw the dollar gained value. what we see consistently is the dollar rally of it, the dollar up a bit and then making a good
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recovery. some will argue they are in range. but this has been the case the past two or three years, dollar rally across every currency. with the absence of em, we saw a tricky selloff friday. we saw all the em pears to carry all trades some of this -- selloff this week. there's been a filing into the carry trades this past week. absence ofre is an quite a few factors here. we had some of the research notes point this out. in terms of volatility being there in the markets at the volatility, lack of depends on what kind of asset class you're looking at. just give me your read on what's happening. saed: what you're seeing is the brexit story, the china story with u.s. trade negotiations, is causing asset management's to be on hold.
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we're not sure where brexit is going to go. what we're seeing in the past week is haven status and fixed income and dollar. in the case those things don't resolve soon, we'll see bets pair off back into dollar again. yousef: jpmorgan saying the trifecta for market is below average volatility, above average positioning, and above average valuations. it has been great touching base with you. thank you for stopping by. ok, let's give you a bit of a snapshot on what's coming up. we'll talk about the u.s. president. he is nominating the loyalist stephen more to the fed. the base could happen another rally at the central bank. our interview with moore is next. this is bloomberg. ♪
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yousef: president trump's said friday he is nominating former campaign adviser stephen more to be a governor of the fed. speaking to bloomberg, moore discussed the nomination and his view on powell and the central bank. >> he called and asked me to do it. you can't say no to the president, but i was really so -- i feel very privileged, frankly, to have this opportunity to do it. i'll have to go through the senate to be confirmed. it's a long road ahead, but he said i have full confidence in you and i worked with him in the campaign. a longtimeed, you're supporter of the president. as you say, you've got to be put through to be put into the role and accepted. do you worry that you might not be deemed independent? had an: no, i've always independent voice. people can look at my record and
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i consider myself a growth talk. so i think what i will really try to pursue and persuade the chairman of and work with the chairman to china to make sure america grows as fast as it can and wages rise and we have a long period of prosperity through sound monetary policy. trump has done a great job on tax reduction, deregulation. looks like we're going to get the trade deal done with china. if we have a sound monetary prices on top of that, we could have 3-4% growth for years. >> speaking of working with the chairman, you suggested chairman jay powell be fired and the rest of the federal reserve should be let go for monetary policy and confidence. you called the fed the swamp in washington. are you going to be able to work with these people? stephen: you know, that was probably written and a time of
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anger. everyone would now a knowledge what they -- acknowledge what they did with the rate increase in december was a substantial mistake and the fed has reversed that and change direction, with respect to the rate increases. so the, -- so look no, i've never actually met chairman powell, but i look forward to working with them. he can be a hero if we get monetary policy right. same time, we have strong progrowth measures on the fiscal side of the equation. i don't want to be disruptor. i want to be someone who can help chairman powell and the others on that board to stable pricedbest system we can for the country. >> you're not the only one who criticized chairman. the president has been critical. i'm wondering if he's putting you on the board to be a check on powell, to preserve the administration's priorities. stephen: the only thing he told
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me is to pursue policies that were good for the american economy and american worker. he always said in every conversation i had i care about wages. i want to make sure middle-class workers are doing better. i care about jobs. he didn't mention anything about differing with chairman powell one way or the other. >> what's your view on what the federal reserve's mandate is? the fed chair has spoken about the overarching goal of sustaining the economic expansion first, and in bringing up for employment and managing inflation. and youour view on that think it's at odds with what the fed is pursuing? stephen: look, i'm for growth. i think the potential for the u.s. economy is 3.5-4 percent long-term growth. not just the monetary side, but also on the fiscal and regulatory and budget side we could do that. way, don't know -- by the i'm new to this game, so i'm going to be on a steep learning
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curve myself about how the fed operates, how the reserve makes its decision. this is an exciting opportunity. it's hard to say what my role will be there, assuming i get confirmed by the senate. yousef: that was stephen moore on his nomination to the fed board with strong these. coming up, we talk about president trump again as he shows support for israeli sovereignty this time around over the golan heights. what's the reaction so far? we're going to break that down. there's also another strand to the story in terms of if the u.s. president closet interfering with an election just around the corner? we'll also get into regional market developments in dubai and the rest of the gulf. dramatic day for global markets on friday. how is it going to carry out into the week? this is bloomberg.
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yousef: 9:30 a.m. in dubai, 30 minutes away from the market open in emirates. hard week for dubai stocks, ending thursday lower after disappointment from emaar properties on this dividend. i will that change, give -- how will that change, given negative bids in global markets, with of the treasury curve yield inverting? check in on the first word headlines from around the world. cross back out to desley humphrey. desley? desley: thanks, yousef. u.s. attorney general william barr is reviewing the long-awaited investigation report submitted by robert mueller.


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