Skip to main content

tv   Bloomberg Daybreak Europe  Bloomberg  March 26, 2019 1:00am-2:30am EDT

1:00 am
♪ yousef: this is bloomberg daybreak: asia. digest thetors recession signals from treasuries. emerging-market assets pace, more tumult and new warning signs that volatility is back, with turkey leading a flash flood of risk. shows theresa may lose control. she admits she doesn't have the votes for her bill. the commons will not decide. qatari investors are not happy with the potentially possible impact of the merger of commerzbank and deutsche mark on their holdings.
1:01 am
♪ yousef: it is 9:00 a.m. across amyris, 5:00 a.m. in london. i am yousef gamal el-din in dubai. in the united states, we dipped the u.s. 10 year for the first time since december 2017. we're looking at the biggest two-day slide since january. pressure remains. we have a bit more appetite for risk. investors are getting over the pessimism was thought of the wet two trading sessions and have seen that reflected in the s&p 500 futures, about .3% higher. it was a tough trading session overnight in the u.s. with some of the tech names, including apple. we will get into that shortly, but first, i want to show you a
1:02 am
couple of important things. samsung came out with a profit warning. he also had an important development in terms of japan. bouncing back and bouncing back with vigor and strength. the japanese nikkei up 2.2%, leading the gains. also indonesia. a disparity,of under pressure, don .5%. joining us from more context is eleanor creagh from our studio in sydney. thank you for coming on the show. let us get straight to it. your initial reaction to this concern, this anxiety around the inversion of the curve and what that could tell us of what to going forward, on economic growth? eleanor: it is important to note that following the yield curve inversion, the economy on average will peak around 16 months later and the equity markets as well will week about
1:03 am
five months before. so the longevity of that time frame is maybe particularly useful for investors right now. we are seeing that we need to see a more persistent in version of the yield curve and of greater magnitude as well. we need to see the yield curve inversion going up to maybe 15-25 basis points, before we sound the alarm signaled that a recession is imminent and inevitable. so i think for investors looking at the yield curve now, it is more of a flashing alert signal rather than an overt alert signal. yousef: folks at richardson gmp made the point that less time around the curve inverted, you saw a rally in u.s. stocks to the tune of 26%, in 2006. is that something you crafted out as well for a possible scenario that this is the last will row and you might as well
1:04 am
join the party for the very end? eleanor: it could play out that way. but the fact that we have seen global equity markets come so far off those december lows, we are seeing that a lot of that a, due to -- accommodative monetary policy is really helping, and optimism on trade, we haven't seen the trade deal come to light yet, that has dimmed pricing and has been the rest of edition of the rallies we have seen since the december lows. i think potential he the reaction we saw in markets last week to the federal reserve's latest dovish turn really cemented that fact. we are now entering a new paradigm in this next quarter where maybe bad news will actually bit bad news again. we do have this accommodative and ify policy heist in
1:05 am
fundamentals continue to deteriorate, the equity markets will not continue to in order that and will set up and take notice, and that means we probably cannot of -- cannot afford a correction in the could markets. yousef: overseas investors have been telling the chinese, we put together a chart here, you can of the on gtv , biggest single day selloff since the exchange opened in 2016. in hong kong. the last two times this selling happened, the shanghai gauge dropped 7%. thoughts on asian equity opportunities and on china, specifically? eleanor: i think for china specifically, the equity market presents somewhat of an opportunity this year
1:06 am
particularly given that we are seeing maybe a replication of what we saw was the first half of last year in u.s. equity markets where we are seeing a huge tax rebate coming through for the chinese domestic consumer that will continue to support chinese stocks as we did for the last part of last year in the u.s.. i think also we are reaching a point where chinese policymakers are trying to avert flow of hinese traders to her the the store the equity markets. there are limited options whereby domestic investors can put their funds, so it is important to know where policymakers are directing those flows to. that coupled with the stimulus from china could lead chinese markets to potentially outperform. yousef: eleanor, you are staying with us. marc a at saxo capital markets.
1:07 am
let's check in on the first world headlines with annabel. >> saudi arabia has condemned president trump's formal recognition of israel's sovereignty over the golan heights. the saudi press agency says the kingdom sees in area as syrian land. israel has occupied the golan heights since the 1960 76 day war. this is a flagrant violation of the united nations charter. president trump and key republicans want an investigation into the rose of the roots of- into them your inquiry and are asking for it the appointment of a special counsel to look into why the obama administration investigated the election of 2016 and whether it was an excuse to spy on the trump campaign. president xi jinping has witnessed the signing of billions of dollars of agreements in france including
1:08 am
an order for 300 planes from airbus. a320s, and for 290 s, a blow for boeing, 737 max family remains grounded around the world. u.s. transportation department is creating a special commission to look at how new aircraft designs are certified in response to the grounding of the 737 max family. they will evaluate how the f.a.a. oversees the process including the growing trend of using playmaker employees to oversee the designs. this comes into a criminal .nvestigation into the process venezuela has been hit by a fresh attack on its power grid days after a nationwide outage the government blamed on the u.s. with help from local political opposition.
1:09 am
government critics and experts say an aging power grid was the problem. . the venezuelan self-proclaimed leader, juan guaidó, says half the country is once again without electricity. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ yousef: thank you very much for that. let's get a snapchat of what is ahead. we will be speaking to one the capital chairman, fadi ghandour, on where he thinks theresa may goes next. but first, parliament takes over brexit. we break down the implications, next. this is bloomberg. ♪
1:10 am
1:11 am
yousef: let's get you a quick recap of regional equity markets. mostly a positive nature. dubai closing up .6%.
1:12 am
emaar properties, the bellwether, helping drive up gains. union properties as well. news of a potential merger -- it just to stocks saw a little bit of profit taking, down about 1.2%. let's look at dp world, one of the biggest regions region, not clear what drove the move, but in the past, dp world strongly correlated to confidence in global trade and economic growth outlooks. thes talk about brexit, drama now sees theresa may losing control of the process after can't reading, after conceding that she doesn't have the votes to drive her twice-defeated deal through parliament. the commons voted 329-302 to take power away from the prime minister over what happens next.
1:13 am
potential options now include keeping the u.k. inside the e.u. customs union, a second referendum, or even counseling brexit out right. eleanor, as you look at the new scenarios that have come back on the table another she has lost , which of this process do you see as the most likely? what are you banking on? eleanor: it is hard to predict at this stage. we are in a situation where parliament needs to show what their majority is. we have seen that most of these options have been presented to parliament in one way or another previously and we don't have a majority for what parliament once. one of the reasons we are back again at this impasse four days before the original deadline was meant to be laid bare, much 29. i think really that we have -- march 29.
1:14 am
to prevailationality in british government at this stage would be misguided. expecting a majority consensus to come out of these series of indicative votes would be misguided as well. this neverentially, ending circle we are seeing these as closer to the general election. unfortunately, what that means from brexit is a significantly longer delay than we are looking at at the moment. for traders looking at. serious directional move in sterling to be unveiled in the week ahead, they will probably be disappointed. brexhaustion, in a simple term. if you look at the markets liv feed, they still have energy to explore these scenarios in more detail. they're asking an important question -- what assets are going to rise on a hard brexit?
1:15 am
what is your take? eleanor: i think certainly if we saw a hard brexit scenario, but is not our best case at the moment, but we would obviously see a negative reaction in the u.k. currency. that would lead to a large uptick in inflation in the u.k. you definitely want to belong inflation in the u.k.. i think we would also see an initial selloff of the 5100 index and then probably have investors coming in and a cherry picking opportunity where some of the companies within the ftse index have a majority of their earnings forced over's particularly in the mining, the oil and pharmaceutical sectors. they would benefit from the weaker sterling and potentially be avoiding the economic consequences unfolding in the u.k. it could present opportunities for investors in a hard brexit scenario. yousef: we talked about what is
1:16 am
happening in the u.k.. an earlier discussion about the fed and some of the implications of the yield curve inversion. do you see high potential for strong returns, even outside of those particular conversations? is it in the fx space? is it in the aussie dollar, where one might find that possibility? i think at the moment certainly the australian dollar is presenting an opportunity for investors. we are facing a situation where the australian can't find gravity. it is propped up by strong commodity prices, trade optimism and the chinese yuan's strength. but i think it is only a matter until the domestic outlook starts to weigh on the aussie dollar. the labor market at the moment has been the key pillar of strength holding up the rba's optimistic bias that they will rates.d to cut interest
1:17 am
but if we continue to see the housing market soft and and a downturn in a residential construction, we will see an uptick in unemployment in australia. that will mean that pillar of strength within the domestic economy that the rba are looking to strongly will start to crumble and it will be inevitable that the rba will capitulate. it is only a time before the $.70ie dollar breaks that level. yousef: as emerging markets is it timeworld, -- to make a broader shift and a broader adjustment as to what to expect in the coming months from global markets? certainly. i think we have a lot of this dovish payment priced into global markets -- dovish p
1:18 am
ivot priced into the market and beare advising investors to focusing on a yields, and focusing on high-quality and balance sheet strength, given were very late in this economic cycle. we would certainly be steering clear from cyclical sectors within the equity markets, and also from cyclical economies. yousef: eleanor, it is a real pleasure having you on the program. market strategist at saxon capital, from sydney. up next controversial week for israel, with airstrikes in zion golan heights,nd we find out how it might affect the upcoming elections. there's a lot to take in. this is bloomberg. ♪
1:19 am
1:20 am
1:21 am
yousef: time for a quick check on the latest business flash headlines. annabelle. annabelle:. thanks, yousef apple has unveiled a range of new multimedia services including a rival to netflix called apple tv+ which will feature original content. news also launched a magazine service, a video gaming platform and a new credit card in partnership with goldman sachs and mastercard to make it easier to play for all the new monthly buy-ins. introduce tos to the new switch control models. one is expected to be for avid gamers and the other is expected to be a cheaper alternative for casual gamers. in june. be launched high-profile lawyer michael
1:22 am
avenatti says he is confidence he will be cleared he -- he is confident he will be cleared of of nike,f extortion and visiting money from our bank.s and defrauding a speaking in new york after being released on a $300,000 bond, he says he is fighting all charges. >> highly confident that when all of the evidence is laid bare in connection with these cases, when it is all known, when due process occurs, there i will be fully exonerated and justice will be done. >> that is your bloomberg business flash. yousef? yousef: thank you. let's get back to israel. it has carried out dozens of air strikes on gaza including a raid that destroyed the house of a hamas leader in response to a rocket strikes that hit a home israel.
1:23 am
meanwhile, president trump recognizes israeli sovereignty over the golan heights. a decision saudi arabia has condemned as a violation of a u.n. charter. >> i am taking historic. action to promote israel's ability to defend itself and really to have a very powerful, very strong national security, which they are entitled to have. in a moment, i will sign a presidential proclamation recognizing israel's sovereign right over the golan heights. yousef: the declaration is seen as a boost to prime minister netanyahu two weeks before the election. story, our has the middle east and africa editor. both sides are preparing for a confrontation that the rhetoric in the messaging has some new ones in it, doesn't it? riad: i think there are both preparing for the worst, but it does seem that both sides are not interested in an escalation. on the one hand, netanyahu needs
1:24 am
to appear strong. he has two weeks until an election. on the other, he doesn't want to and mesh israel in a war -- sh israel in a war so close to the election because it could end up in significant losses. in hamas, there is a? over what is going on. hamas are clearly not interested in escalation. it is not something they can win. there's also a question mark over why the rockets haven't fired. hamas is blaming the weather, saying it was in error. i think right now israel is not buying it. yousef: if you look at the announcement from the u.s. president, how significant is it historically? over the years, past administrations tried to sidestep this issue, right? riad: in the past years, the u.s. has been consistent in saying that golan is occupied
1:25 am
territory. recognition that the golan heights are officially still syrian territory. that hascountry claimed otherwise is israel itself. the u.s. are major players in this, the biggest supporters of israel. without u.s. support, israel would be in a much weaker position, so it is significant. but nobody else is going to go along with this and it remains to be seen just how much it actually really matters down the line. yousef: how will this play out domestically in israel where we are heading up to an election and mr. netanyahu has been involved in quite a few dramatic standoffs with the other branches of government. the ed: he has. he is under investigation for corruption charges as well, so that is weighing on his election campaign. the issue of gaza is hard to
1:26 am
tell right now, but there is suspicion that this will not play well with the israeli electorate. the feeling is that this is the second time hamas has said they have made a mistake in firing a have to take will responsibility for not doing anything about it in the eyes of electorate. and he has a strong opposition the leaders of opposition, three of them are former israeli generals. so they have the security card in their hand to play, and they have come out with some pretty strong stuff on what they would do, which is to assassinate hamas leaders. so yes, he is in a difficult position. it is a very tight election. i think he was hoping the announcement by trump would give boost. that remains to be seen, there is doubt because of. yousef: the other issues
1:27 am
weighing on him. yousef: thank you very much for those insights, always great to have you on the show. east and africa executive editor, riad hamade. let's get back to the markets, we had two trading sessions today and friday that were quite negative across asset classes and now, you are seeing a rally in treasuries sending benchmark 2.4%, briefly below moving ahead to the biggest two-day slide in january. the u.s. 10 year yield at the moment at 2.44. the fed might have to cut interest rates later this year, stepping away from the nervousness of what it will happen with economic growth, helping risk appetite. driving stocks are gains on the msci asia-pacific index. losses, witheading apple slumping after the announcement of their new video streaming service.
1:28 am
risk appetite also reflected in the aussie dollar trade as well. qatari investors and deutsche bank are said to have concerns over the merger with commerzbank. we will have the latest. this is bloomberg. ♪ g. ♪ you.
1:29 am
all of you. how you live, what you love. that's what inspired us to create america's most advanced internet. internet that puts you in charge. that protects what's important. it handles everything, and reaches everywhere. this is beyond wifi, this is xfi. simple. easy. awesome. xfinity, the future of awesome.
1:30 am
♪ yousef: it is 1:30 a.m. in new york. this is a live shot of midtown. notbloomberg dollar index quite recouping the losses, currently weaker, up about 1%. u.s. features a bit higher as on the energy conflicts, reflecting the broader appetite of risk-taking in the asian session. and citi raising their brent crude forecast for 2019 to $70 a barrel.
1:31 am
we go to annabelle for the headlines. annabelle: thanks, yousef. the brexit drama now sees theresa may losing control of parliament, after conceding she doesn't have the votes to drive her deal through parliament. the commons voted 329-302 to take power away from the prime minister over what happens next. options include a second referendum, keeping the u.k. inside the e.u. customs union, or even canceling brexit. and keyt trump republicans want an investigation into the root of the mueller inquiry, calling on the attorney general to appoint a new special counsel to examine why the obama administration decided to investigate russian interference in 2016, and whether it was an excuse to spy on the campaign. the president says the people behind the probe would be ." oked at president xi jinping has witnessed the signing of
1:32 am
billions of dollars of agreements in france including an order of 200 planes from airbus, worth $35 billion. the order is another blow for boeing, whose cash cow 737 max family remains grounded around the world after two crashes. the u.s. transportation department is creating a special commission to look into how new satisfiedesigns are in response to the grounding of the 737 max family. the body will review how the of.a. uses employees playmakers to certify designs. global news, 24 hours a day, on air and at tic-toc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. ♪ is juliette now with a
1:33 am
check on the markets. we aree: annabelle, bouncing back after the near 2% msciyesterday on the asia-pacific index, the biggest drop of 2019 so far. today it is up by 1%, led by in the are seeing nikkei index, up over 2%. we are seeing broad gains across most of the major markets we track. a slump ine has been mainland chinese players today. looking at the bond space, we are seeing yields recover in a lot of the notes, the 30-year japanese note yields are up 3.5 basis points. yields are also higher on the australian 2-year note. the 10-year note in the u.s. has recovered a little bit in terms belowlds after it fell 2.4% last night on monday for the first time since december, 2017. we have been watching the bond market closely after that yield
1:34 am
curve inversion. but things are looking brighter than they were at this time yesterday. yousef: juliette, every time i hear profit warnings from big tech companies i feel that there is imminent pain with chipmakers down the supply chain. what are you seeing at the moment? juliette: it is not looking that bad. samsung's supply chain, samsung shares themselves are under pressure but not as bad as earlier in the session, currently up .7% after this surprise warning from samsung, ahead of its first-quarter profits coming next week. analysts are saying, they are starting to trickle through the news and there are quite a few suppliers tracking higher. session, we have been looking at the likes of sk hynix being sold off by about a third percent.
1:35 am
taiwan semiconductor up 1%, the good. in japan looking samsung shares themselves are up 18% so far this year, so a lot of the weakness was probably factored in yesterday when samson had that 2% slump best samsung had that 2% slump. yousef: juliette saly, thank you. bank,talk about deutsche said to be facing resistance from qatari shareholders over there merger plans with commerzbank. the investors say they are concerned that their holdings would be diluted during the funding of the transaction. matthew martin joins us with more on this. matthew, give me a sense of why the qataris are stepping in again and blocking this transaction. qatari's have been investors in deutsche bank for about five years. in the past, they have been relatively supportive over what has been a significant time for deutsche bank. i think now they have gone to
1:36 am
the point where this deal is going to potentially that lead them even further and it is increasingly making the deutsche bank investment look like it was a bad deal. so the qatari opposition has added onto the mounting opposition to this deal.
1:37 am
1:38 am
that. bloomberg middle east finance reporter. we stay with the middle east and turn to saudi arabia, international investors are net buyers of 1.2 billion saudi ri z reals, the longest positive streak since april according to the latest figures. the saudi board express an additional passive amount of $10 billion and $11 billion from the msci inclusion later this year. we are joined by the chief strategy officer at held every capital in abu dhabi. -- we are joined by mohammed ali yasin, chief strategy officer at aldi debbie capital. capital.bbie
1:39 am
have seen this happen in the region before. saudi is the biggest story in the mena region, two point 8%. we have seen that inflows coming in, valuations, and we expect this to continue. event.gest inflow it would be the first of may, into the first structure of the msci, and the second one will be in august. so valuations are looking forward. places like the uae are trading 10-11. the kuwait also is another story we are looking at, they could be we are starting to
1:40 am
see foreign inflows to that market. the foreign inflows to the market are making the most in those markets, rather than the local investors at the moment. quite a fewad conversations on this set with other voices and to make the argument that the saudi consumer confidence numbers are making a comeback. how would you position around that? isn't it time to get into the consumer play? mohammed: we do believe that. damage onhe biggest the outflow of expatriates living in saudi arabia, that has probably bottomed out at the moment. the expectations even by saudi numbers are about 2.5 million people have left in the last three years. we don't think that is continuing going forward. we think there is strong local consumption and demand and he will grow going forward.
1:41 am
are notugh those stocks included as part of the msci or , we'reeign inflows looking at those numbers and we think that there could be some good pockets of opportunities in those markets. benefit fromcould the positive momentum on the rest of the market and that could take them up with them, too. yousef: you have been quite bullish or optimistic on the turnaround story in dubai. i know that not everybody agrees with you, it is a bit of a contrarian position to have. rerate, and rerate, and dubai stocks are still not really coming through and delivering -- we wait, we wait, we wait, and dubai stocks are still not delivering. what is happening? mohammed: last year to buy -- dubai close the limit negative. we are still positive.
1:42 am
it is not widespread, we have seen the bigger companies are the ones who are there and we still believe that emirates ndb, l and thet some fo turkish backstory out of the way, there is still a lot of value there. if it goes up, that will pull up the index. we have seen the pressure on dfm, because people are comparing quarter to quarter, although comparing q1 to q4, it looks better at the moment. fed cup that will billiard and the real estate story in 2019, with exposed -- we think that will pick up. and also, the real estate story, with exporters and 20, that could bring some recovery. over all, we still believe the story on dfm, and it is benefiting the some of the
1:43 am
foreign inflows will go into saudi after that msci inclusion in may and august and we may get some of that stopping in the uae. so we believe there is value there. yousef: how significant is the yield curve inversion from a regional perspective. i am thinking of the sibor and ibor rates, that dovish tone we are getting from the feds. mohammed: the 10 year treasury in a way affects the end of appetite for long-term lending and to of the fixed income moves, some of the corporate coming to the markets. the fact that that is going down at the moment and the fact that interest rates have stopped and people are now putting possibilities of it cut, i think w that will help the market in certain sectors. , some have a mortgage companies were actually borrow at cost, that could help them,
1:44 am
it could be useful for them. also, the dollar goes weaker later in the year, as we expect, that should be positive for making the uae a less expensive place to be an for real estate to be less costly. the believe it is a good story going forward. we might see qatar getting stronger in the second half of the year. for the companies borrowing, think it will be a positive move going forward. equity markets also have the pressure on yields, that will be there. yousef: levy -- in terms of the saw one analyst up in your forecast for brent at $70 a barrel. given what we are seeing in
1:45 am
venezuela and in terms of the global economy beginning to show signs of a more pronounced slowdown, what do you see? mohammed: if it wasn't for the exclusion that trump has given six countries on the oil importing from iran, we would have seen oil much higher already. the six month period will finish next month and maybe if it is not renewed for another six months, we think oil will continue on the ring to see it now. our view for the year would be oil a $70 average for 2019. if we don't get a renewal of those exemptions, we probably ,ill see oil go higher especially if we continue with production cuts. happyk producers will be for the second half of the year.
1:46 am
yousef: muhammad ali a scene, always great to catch up. coming up next, we speak to one of the region's biggest investors. of one theirman capital joins us next. this is bloomberg. capitalirman of wamda joins us next.
1:47 am
1:48 am
♪ yousef: financial-technology startups are likely to be on the rise of this year, helped by many government initiatives in the gulf. however, investment in the region remains low by global standards. one of the biggest players in the space is wamda capital. we are joined by the ceo and chairman of wamda capital, fadi ghandour. thank you for being here. what can be done to help move the region forward?
1:49 am
by global standards, it is still behind. is behind in terms of how you scale and how you build big as this is in the tech space. one thing is access to markets. market, if you talk of the middle east, the arab world, 350 million people, $2 trillion, $3 trillion economy. all the numbers makes sense, but it is so fragmented. if there is an open market where you can actually build a business and skillet very quickly in air -- scale it very quickly, in a regular did regulatedst in a market, that would work. the other issue is capital. there are more funds popping up, there is capital. the sovereign wealth funds are announcing new initiatives to invest the vix in saudi arabia.
1:50 am
-- the sovereign wealth funds are announcing new initiatives to invest in saudi arabia. these are true critical elements that would create the scale and attract people from outside the region that would say, ok, maybe we can invest in the early stages. i will also remind you that when size happens, when there is scale come in big foreign funds and strategic investors will come into the region. yousef: you back three companies are ultimately sold to global heavyweights. around the next unicorn the corner? what are you most excited about? fadi: you need to think of the region in terms of consumer logistics, e-commerce, all these things are convergent around the area. penetration -- all of these things are convergent around the phone.
1:51 am
in e-commerce or mobility, or logistics, in fintech, he will find that in years, the next unicorn, or the next sizable company. don't need to do terms in terms of unicorns, we need to be them in terms of businesses that can make a statement for their presence in the market. yousef: we had quite a bit of speculation around whether it is the right thing for some of these global companies to come in and buy local brands. i am thinking of amazon and uber , someone fromties their has said that they want to encourage competition. do you share that view? fadi: i have a lot of respect for him but i disagree with him. an open market and say, we want some protection
1:52 am
from competition. i think float we need to do as original investors, as influencers, is to invest more and bring more people to invest in the space. he is unique in being bold and a bold investor, a bold initiative taker in the region, but we need more of him in the region to believe in what he is doing so that the ecosystem builds and create its own company. the startups of this world can leist and compete and sca without necessarily selling to outsiders. but the fact that they do is a product of what market are about. it is about their investors and how they decide to the about it. but protection means the ability to produce products that are competitive and we are able to do that, so why protection? yousef: how big of a deal is in
1:53 am
-karim agreement? fadi: if it happens, it will be huge. kareem proved it can scale in region, it can maintain value and increase it, it can attack global investors like rocco 10 and most of early in my view, -- investors like rakutan. the biggest thing is for the first time you have big investors like sd ventures, you amda people like whew capital, ourselves, it is a statement that when you believe in companies from the region, you can make returns. em is a lot ofcare angel investors believed in it early on. the mckinsey grants, you will see original investors having
1:54 am
incredible returns. and, stock options. --y have a very general less generous stock option. so i will be a critical process that is by the book, what entrepreneurship should be all about. the two founders and others are going to graduate now and probably go out and fueled the fuel the new te ch 2.0. there used to be yahoo!, another graduates.nd its yousef: the become a billionaire now as well? fadi: know, that doesn't matter. the most important thing for us will be the first big exit we see in the region. vc age in the region's five years now, and we
1:55 am
would start paying back our partners. it would show that if you invest in the region, he will be ever to make a substantial amount of quickly. yousef: where are you looking to invest in at the moment? fadi: fintech. because fintech is yet to be showing its face seriously in the region. again, there is a regulatory challenge. regulators understand it can't find a way for a regulatory regime that allows for fintech, just like the rest of the economically enabled world, so we will invest in fintech, in mobility, in e-commerce, in everything consumer, and in new technologies popping up in the region to disrupt slow-moving industries. yousef: any new funds you are planning? fadi: we are into our second fund now, like everyone else in the region. we are excited about new types
1:56 am
of investors we hadn't seen before. illhink this careem deal well whet the appetite of investors who have been sitting on the sidelines such as family whostors, smaller investors might say, why are we not participating in it? specifically the ones who did participate who are going to reap fantastic benefits. yousef: we talk a lot about divide, but you are involved across the region as well. where other bright spots for thatcing, for ecosystem can provide the kind of framework for growth? fart efficiency have to think of three or four areas in the region. the body remains a hotspot. dubaiins -- thoug
1:57 am
remains a hotspot. you have saudi arabia, the ecosystem in technology, there is a lot of young saudi tenant coming out and building businesses specifically in commerce and in mobility. you have huge talents in jordan, huge capabilities out of the companies. the jordanian government and world bank have a fund to invest in the local tech companies. is egypt.ng country egypt is coming out and its entrepreneurs in cairo are starting to show now. fadi done door, ceo and chairman of when the capital. thank you for coming. in h-shares is being led by japan, nikkei up just over 2%.
1:58 am
a gradual return of confidence after a tough two trading sessions. the as 10 years at 2.44, after dipping below the 2.4 level. that is it for this edition of the show. plenty more o ahead. this is bloomberg. ♪ want more from your entertainment experience?
1:59 am
just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome.
2:00 am
good morning from bloomberg european headquarters. seizing control. u.k. parliament takes control of the brexit process. will it break deadlock or deepening crisis? lands a massive deal from beijing as china's president makes a big statement in europe. and tepid tech. samsung warns first quarter results will fall short of estimates. apple underwhelmed investors with new services.
2:01 am
nejra: good morning, everyone. it is 6:00 a.m. in london. still all about that 10 year treasury yield. we are moving higher by four basis points today on a 244 handle. how much exacerbation of the move in that 10 year yield yesterday was due with short covering with the market feeding off itself? we are bouncing back today and seeing risk coming back elsewhere. the s&p 500 closed flat. we have seen bigger declines in europe and asia yesterday. s&p futures on the front foot along with euro stoxx 50 uterus -- euro stoxx 50 futures. retreatingng the yen against the dollar. the dollar higher by 0.2%. in terms of cable, we did see it move higher earlier when we got
2:02 am
this news about the indicative of votes with parliament taking control of the brexit process. now we are moving to the downside. the market trying to digest what this means for the brexit process. wti rebounding up 0.7%. that is part of the risk picture as well. some concern around supply in venezuela. let's check on the markets in asia. juliette saly has more. on the top line but a mixed picture below the surface. >> indeed. we are seeing weakness in chinese shares, but i solid rebound. the msci asia-pacific up after falling nearly 2% yesterday. japanese stocks are leading the charge, up by 2%. weakness in hong kong and china today and the kospi reversing losses.
2:03 am
it is up by 0.3%. let's see why the kospi was weaker. it is all about a profit warning coming through from samsung. some analysts saying it was not surprising it is starting to trickle through information to the market ahead of its earnings result. others were saying this is quite saying itom samsung, is starting to see weakness in its memory chip prices. samsung shares have rebounded somewhat. we have also been watching some of the other suppliers, the likes of disco in japan looking solid. some weakness still in the chinese equities market. nejra: thank you. another big defeat for the prime minister in the u.k.. theresa may's parliament has taken control of the brexit process. it will now put forward its own plan of how the u.s. -- the u.k. will exit the european union. called theresa
2:04 am
may's plan an abject failure. >> i would like to congratulate the house for taking control. the government's approach has been an abject failure. where does parliament go from here? bloomberg's european open anchor anna edwards joins us. we understand these indicative of votes are due to happen wednesday. they are nonbinding. what to they mean for the brexit process? see whereill have to this takes us. a number of avenues remain open. parliament moves to take back control, but so far they have taken control of the timetable. we will have to see whether parliament can come to any conclusion what to do with this new power. -- ittive of votes means seems to me and parliamentarians will be given a piece of paper with a lot of options -- asked
2:05 am
to vote on them, possibly to rank them. so that all the voting can be done in one go. as you say, this is not binding on the government. theresa may has said she will not be bound by what parliament said. she is disappointed by the defeat yesterday. an says it sets unpredictable precedent. the government lost 30 votes to the other side. nejra: where does this leave theresa may? she does still hope to bring a meaningful vote for a third time to parliament this week. absolutely. she said earlier in the day she hopes to bring that vote. she does not plan to do it today. she does not have the votes. that is what is interesting about this indicative vote process. on the one hand, you see this has comments seizing control.
2:06 am
on the other, the result could be cummins gets control of the timetable, and that could be to convince the dup to come on board. if the dup comes on board, he could be persuaded to back the deal. the noises from the dup don't sound so positive. in the house yesterday we had wilson saying theresa may was using scare tactics against them. let's not lose sight of the fact there were many outcomes here, including a general election if the government goes back into a position of having to push the brexit conversation in a way that does not support the conservative party manifesto. that could still occur. anna edwards in
2:07 am
westminster. joining us now is james knightly, chief international economist at ing. also the head of rates and credit research at commerzbank is with us. thank you for being on the program. if we look at the eu side, the eu has shifted its tone on the prospect of a note yield brexit, saying it's getting likelier. is it? is.: i still don't think it all the options are on the table. theresa may is deal itself. the eu is obviously wanting to get the u.k. i think we are looking for a softer brexit, but the problem for the u.k. economy is this uncertainty is not going to go away anytime soon and that is going to keep investors on the back foot. consumers as well. it further delays any prospect. christoph, as long as
2:08 am
this uncertainty continues, is the prospect for the 10 year bund yield to go above zero and stay there a little bit difficulty apco -- difficult? >> i do not think brexit is the main reason for this we have seen of late. there is still the risk of a hard brexit, which is worth a few basis points, but at the same time, a softer brexit is also becoming increasingly likely. you have these extremes, and i would say bunds or european fixed income in general is trading more on the macro news we have got of late as well as potentially the fed news yield curve. thea: we are asking question on mliv, what assets will rise on a hard brexit? i understand you don't see that as the best case, but do joined
2:09 am
the debate as everyone kanaan ib+tv . what assets would rise on a hard brexit? if i believe in a hard brexit, all i want to own is 30 year bones. -- bunds. it is safe, it is euro denominated. that is clearly going to be the outperform or. -- outperformer. safe haven assets in general. nejra: cable does not seem to know what to do. it is slightly weaker right now. is the path of least resistance oncable still higher based what we discussed? christoph: i think so. guesssitive news, and i the most likely area we are going to get positive news would
2:10 am
be the u.k.. if we are heading towards a softer brexit, you would have to assume sterling should bounce on that. we still think that is the most likely scenario. if we can get through this, we will be looking for cable to push up. above 140. nejra: how would you be positioning around gilt? gilt, also torn between safe haven assets rallying basically as lower yield rates become more likely. overall, some re-steepening risk in the cards as the u.k. economy slows. we are seeing more outflows from u.k. assets in general. , even in a softer brexit
2:11 am
scenario, it will be very difficult i think to attract capital. james, your outlook for softer brexit, tell me how you think we get there from here. jame: it is difficult to reconcile softer brexit with the current conservative government as it stands. whether it could be that we get , as sort of candidate , but when candidate you have such hardline brexiteers waiting in the wing to take over, it is a challenge. markets are doubtful for now on the prospect. we think if we can get these boats coming through, a bit more clarity, and we start to see -- votesa vote -- these coming through a bit more clarity.
2:12 am
nejra: now let's get the bloomberg first word news. >> president trump's ally senator lindsey graham has called for a new special counsel investigation, this time to look probe into election meddling in 2016. the question he wants answered is, was it just an excuse to spy on the trump campaign? the president says those behind the pressure probe will be looked at. dozens of carried out airstrikes across the gaza strip. a tense day began with a rocket attack in the center of the country. the conflict has overshadowed trump's decision to recognize is really sell -- israeli sovereignty over the golan heights. netanyahu is facing a tough reelection battle. apple has announced its new tv a star-studded event
2:13 am
in california. the tech giants unveiled a content service called apple tv plus, saying it will revamp the app and provide access to outside channels. these include hbo, showtime, and stars. apple says pricing and availability will be announced later this year. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. nejra: thank you. coming up, president xi continues his european tour after placing a $35 billion order with airbus. we will discuss what lies ahead. when you are traveling to work, tune in to bleiberg radio. -- bloomberg radio. ♪
2:14 am
2:15 am
2:16 am
2:17 am
nejra: let's get a check on the markets. as we look at the msci asia pacific index, below the surface, japan outperforming to the upside. weakness in china. dollar-yen on the front foot. year yield moves higher by three basis points after dropping below 240 for the first time since december 2017. how much of that yesterday was to do with short covering? from concernsck around tension in venezuela. coming off50 futures highs from earlier, struggling for direction right now after we saw losses yesterday. let's get the bloomberg business flash.
2:18 am
>> nintendo shares have climbed the most in almost eight months after the wall street journal reported plans to introduce new models of the switch. they could come as early as this summer. one model will have enhanced features. the journal says the other version is expected to be a cheaper alternative for casual players. samsung's surprise profit warning has not rattled investors. the world's biggest chipmaker says investments will fall short of estimates. this comes after apple cut its revenue outlook for the third time in almost two decades. deutsche bank is reportedly facing resistance with merger plans with commerzbank. top qatari shareholders are concerned they would dilute their holdings. the discontent among shareholders as to widening opposition.
2:19 am
that is your bloomberg business flash. president has brought his road initiative to europe, securing a memorandum of cooperation from the italian government. he was expecting a challenge in paris. italy and china signed a series of agreements. these triggered new tensions between the antiestablishment five-star movement and its right-wing coalition partner. sign, does not plan to though there was a deal with airbus securing an order from beijing. eu has beens the reshaping its strategy toward china, namely through screening foreign investors. last year eu governments agreed to weaken antitrust standards in a bid to pare back the threat from china. joining us from paris is maria
2:20 am
tadeo. macron once a -- more balanced deal. how political is this airbus deal? >> it is a huge deal. 35 billion euros, twice the amount macron promised last year. he made it clear yesterday europe is not just a target for acquisitions. european companies want access to the chinese market. you have the china angle to the story, such a huge contract for airbus is problematic for boeing. we know that trade story between china and the united states continues to unfold. there is no resolution to trade tensions. sending ae also political message. if you want us to be nice, you have to reciprocate. nejra: where does this leave
2:21 am
europe in terms of the global trade stage? >> here is the thing. europeans are not naive. there are serious concerns about chinese trade. allegations did not help the chinese government. the european commission will tell you they see china as a systemic rival to the eu. that is very tough language. at the same time, you see europe being squeezed both ways. president trump will tell you we don't get a fair deal from the eu, we don't see the eu as a friend until we get a more balanced approach. it is a difficult situation for the eu. one of the reasons why you have -- there arerance very serious questions when it comes to mergers and acquisitions.
2:22 am
thank you so much the bloomberg's maria tadeo. now, the significant part of the bond markets, the yield curve has inverted. race toht -- the decipher the messages on. treasury yield briefly dropped for the first time since december 2017. it has moved above again today. will growth reinvigorate risk assets or will a sputtering economy send them tumbling? james knightley and christoph reiger are still with us. earlier, we briefly talked about the 10 year bond yield -- bund yield. the value of negative yielding debt at the moment topping $10 trillion. choosingzbank, are you thread risk or duration risky atco -- or duration risk? christoph: duration risk is more
2:23 am
rewarding. concerns,de is growth which is keeping risky assets in check. pressing argument really for spread is that investors simply have to get yield. a lot of clients we talked to, they don't have to sell when yields fall below zero. a lot of them, they cannot reinvest once the bonds fall in negative territory. they need to go down the credit spectrum. down, iatility calms think in government space, peripheral paper will outperform. we see more inflows into the second class. we have been asking whether
2:24 am
investors are going to be seeking out more risk in this hunt for yield. is that what you are seeing for european credit? christoph: absolutely. if you look at the market deals haveast few weeks, we really moved into a sellers market again so that issues can the premium.down they see large oversubscription values. investors are scrambling to get to paper the have diff -- decent yields. as we analyze what the inversion of the three-month 10 year yield curve means and if it s as good a signal as it has been in the past, do you worry about the self-fulfilling prophecy of market? james: while we think metals are
2:25 am
in good shape, the longer the inverted yield curve persists, it makes it much more challenging for banks to make a profit. thanks in terms of their models start to worry about portfolios. that can lead to tighten credit conditions. that can be a self-fulfilling prophecy within the bond market. of thein terms self-fulfilling prophecy, do you worry the appetite for risk might cause bubbles to form? james: there is that concern we could get those issues as we see markets move in the direction. fundamentals in the u.s. are in good shape. it is driven by a lot of external noise as well. willmain hopeful the u.s. turn.
2:26 am
that concern does linger. the longer this yield curve stays inverted, the more challenging. nejra: looking at the 10 year yields dropping below 240, what does the move in the u.s. 10 year yield and the three-month 10 year curve mean for your strategy in europe? christoph: if the recession signal is the curve you point out, three-month versus 10 years has been the 100% track record for predicting recessions. this inverts more lastingly. given the latest comments overnight, when he said the fed should continue shifting duration to the front of the curve, we have seen quite a bit of steepening. interestas clearly and to keep the curve from inverting.
2:27 am
power.more thank you so much. this is bloomberg. ♪
2:28 am
2:29 am
2:30 am
nejra: markets in asia bouncing back from their worst drop of the year. we saw the asia-pacific index drop 2%. on a headline level, seeing gains. under the surface, a mixed picture. japan outperforming to the upside. let's get into the details. joining us in mumbai is niraj shah. here in london is dani burger. raj, it's the last leak of the -- week of the financial year for india. why are we not seeing rebalancing moves?

18 Views

info Stream Only

Uploaded by TV Archive on