tv Bloomberg Markets Middle East Bloomberg November 26, 2016 11:00pm-12:01am EST
>> morning and celebration -- mixed reactions as cubans at home and abroad come to terms with life after castro. saudi arabia breaks off talks oil non-opec producers amid plunges. and leaping toward oblivion. black friday just isn't what it used to be as online sales steal its thunder. it is 8 a.m. in dubai, 5:00 a.m. in london, and midday and hong kong.
this is bloomberg markets middle east. sinking amid a surge in the dollar. we have bearish options, take a look at this chart, bearish options hedging against a price drop, the most since july 2015. that is a 10% jump. bullish, contracts -- bullish contracts you see on the chart. donald trump's election when led to speculation that increased infrastructure spending will push interest rates fast. almost certain december rate hike approaching. the postelection rally continues
. three weeks of widespread gains. simultaneous highs at the end of last week. the s&p, doubt, and nasdaq all closing on friday to hit those record levels. here in the middle east, we are just under two hours away from the open of the emirates market in dubai and of the dobby. let's run you through how the market last closed across the region. we saw moves with stocks that are not necessarily responding to specific events or fundamentals. we will get more on that with our markets reporter. dubai closed 7/10 of 1% down. abu dhabi gained. checking on on the first word headlines around the world -- profits the chinese industrial companies accelerated last month . as prices recovered, industrial profits rose a fraction.
$89 billion, according to the national bureau of statistics. the recovery comes amid steady economic growth that in georgia -- that indoor the imposition of government rules in the premarket. traditions old u.s. of black friday moved closer to obsolescence this year as online shopping and discounts kept many customers at home. rose -- meanwhile, thatfrom research shows consumer visits to stores fell 1% from a year earlier. south korea saw one of its egotist public protests -- its biggest public protests in demandeds crowds park's arrest. rule makers considered
impeaching her over and influence peddling the scandal. police but the turnout at organizerst rally assert as many as one point 5 million took part and another 400,000 elsewhere in the country. fidel castro's death has drawn mixed reactions to my well cubans ponder a future without him. many cuban-americans hit the streets of miami and celebration. and the recent warming of relations between washington and havana may be at risk under president trump. michael joins us on the line from miami. michael, how would you describe fidel castro's legacy? it's really a tremendous legacy. some people view as good, a lot of people view as bad. you have to remember he took power in 1959, more than 60 years ago, leaving a revolution
and brought social change and all kinds of good to a very small country, but he quickly turned into a diehard communist and engineered an alliance with the soviet union against the united states and then went on to spread revolution to many of countries, or at least tried to. time, he endured many u.s. presidencies and he survived until the end, his revolution and away survived. androught tremendous misery diaspora youense see everyday in the streets of miami. mixed legacy, but you cannot deny this man had a tremendous impact on history the world will remember forever. michael, what kind of country has he left behind?
you have to remember he stepped down 10 years ago and ceded power to his brother raul. under the, raul, watch of his brother fidel, but largely on his own since formed the cuban economy, basically by putting control of the economy allies.s closest and he solidified control. and of course, the historic opening with the united states that president obama started years ago. he is leaving behind a country that is firmly communist in name , and there is little dissent that is really allowed, and actually in the last few rauls, growl has backed --
has backed down from some of the reforms he started under the agreement with president obama. it's really unclear where the isntry is going, but raul firmly in power, and the people around him are firmly in power, which means fidel for legacy of power continues. weley: michael, what can expect in cuba now that fidel is gone? michael: well, that is the huge question. think you have to remember that cubans are all suffering from the economic disadvantages they live under. it is very difficult to surviving cuba just as a normal person. people, from what i have learned, they just want a good life and they don't have it now. tremendous pressure to
improve the economy, but there's very little options right now. i think it is likely that fidel's passing is no big surprise to anybody. he was 90 and he was very sick. it is a symbolic change. it may have to change one way or another. that was bloomberg news's michael smith joining us on the line from miami. the other off to a bad start before it has even the gun -- even begun. saudi arabia pulled out. with our more bloomberg middle east energy reporter anthony dipaola. anthony, what are the key issues that are still unresolved here? issue is thekey main issue, and that is who is ?oing to cut wants it does not seem that opec is in
agreement with itself, which countries will reduce which amount. at your member algeria 32.5ed to reduce right million, 33 million barrels, without knowing who would cut that. hush -- how shall they deal and get it wrong on board with how much they would reduce or whether they would have a limit on their production. after it has been basically strangled by sanctions in terms of oil exports, those exports are about doubled from some of the levels they were during sanctions, and iran wants to keep going a little bit. we understand that they were looking at an accord that would reduce production, and opec wants non-opec members to cut as , to really boost to the prices little bit, bring down
some of the oversupply in the market and cut out the stockpiles really weighing on prices. arabia'se see saudi step back from tamara from eating. we see a little jostling. this mexicanto be standoff. who needs to be brought on board to get a deal done? the second aspect of it is this deal between opec and non-opec that did not go ahead. basically, the saudis want to bring russia on board with cuts and potentially some other non-opec members to help with this reduction. now the russians have, for a agreeime said opec has to to those cuts. then they will come on board and discuss. come back again on monday and talk about these cuts and try to iron out these disagreements or the -- or these s with opec and they will
bring russia and the non-opec countries on board. time is getting tight this week. desley: the meeting is november 30. what is going to happen. what needs to happen. -- what needs to happen? would beideally they able to agree on who is going to cut what and how much so the ministers could decide on that. committee, we saw the not taking that decision and saying that they would leave it for the memory -- for the ministries to decide on november 30. they need more work on the quotas and the cuts before the ministers do meet, so we will need to see more movement on the ministers to have a decision ready when they come in, and then we have this aspect
of the non-opec. when will be non-opec and the ministers meet so they can agree whether countries like russia and perhaps other producers to take production off the market? that still remains to be seen in thehink that hangs balance of the decision in itself. we are still trying to see the divisions of those reductions. -- desley: we have a full team covering that. anthony dipaola, thank you for the update to review can get much more on those in all of these meetings on our digital destination. you will find in-depth reports and market data from the region. plus some a you can watch all of the reports, interviews, and special content only available online. later in the show, we will look online shopping seems to have stolen the black friday thunder this year. coming up next, we will ask gary
desley: welcome back. you're watching bloomberg markets middle east. live from dubai, i'm does lee humphrey.- desley president like donald trump had a toughly worded statement following the death of fidel castro, while president barack obama offered condolences to the castro family, trump said "fidel's castor -- fidel castro's legacy is one of firing squads, unimaginable poverty, of fundamental human rights." for more on the future of
u.s.-cuba relations, let's bring in gary dugan, the chief investment officer for emirates in bd. gary, thank you for joining us. it's more of a symbolic event significant geopolitical event because he had handed over to his brother. talk us through how long his shadow has actually been. >> i think he removed himself from public life roundabout year ago. he clearly had not been as heavily involved in the last 5, 6 years. reform programr with the west, and you know, i think there will be a break with therest and the hope is will be a softer diplomacy with the two sides. but donald trump's comments this morning clearly are not the most clever. some thought that the
passing off fidel castro would thehe watershed moment for relations with the u.s. to improve. is cuba on the fast track to capitalism? be. don't think it wants to i think the model it does not want to follow is when the berlin wall came down and the eastern european countries, the elite took much of the money. clearly they moved to capitalism but the sheriff that capitalism really went to very few people. i think they are very much more circumspect about it. the companies have taken from public ownership into semiprivate ownership, and has gone by the cooperative route, where everyone is there to benefit, rather than there being just an elite at the top of political life. desley: how is that being received by the everyday person? >> i think it is being received as a positive. we don't have this group just ripping the country that is just wealth and it is being shared
more broadly. the reforms generally got a very positive tone in the country to rid their the opening of the country, but maybe not as much as the grand capitalists would want. desley: we have that quote from donald trump. is the biggest risk to cuba a trump presidency? we saw obama extends the olive branch and begin those talks him a even a visit to cuba. card fora big risk cuba from progress? >> not necessarily. i think the difficulty we have assessing is obama is the very, very soft side of diplomacy, and trump really isn't. but if you look at what putin thinks about politicians, he is obviously looking for a hard man. if you take all of this together, yes, this is the rhetoric we might have expected from trump, but is not necessarily the way his going to in gauge with cuba. cuba is geopolitically very important. he would not the russians to
move in and take a stronger hand in terms of the missiles and issues with seen in the past. speaking of enterprises and worker cooperatives, from an investment opportunity, what strategy would you take when looking at the likes of investing in cuba. >> a frustrating one. there isn't a framework for it. the bond market is fractional. we really do not have great access to cuba at present. desley: ok, gary dugan. to do as, what more the turkish lira's rebound prevent -- proves short-lived? this is bloomberg. ♪
desley: welcome back. you're watching bloomberg markets middle east, live from dubai. hrey.desley hump the central bank decision to onl to have a rate hike friday did not stop the lira's slide for long. to gary dugan, the cio for emirates nbd. gary, it was the first rate hike in three years, most economists not expecting a rate rise. what is this do for the central credibility and investor sentiment? >> it's not that helpful. i think people expected some signal this was to come, particularly when the market view was so far away from what
the central market ended up doing. but to be honest, in the wherenment we're in now, central banks across the world are under pressure, it's a sensible measure by the central bank of turkey. i do not think it will do damage longer-term to the credibility of the central bank. desley: do you expect more moves? gary: i think they will react to what is put before them. i think we will see further increase in interest rates. desley: the central bank thesion came along with talks about during -- joining the european union. how these talks impact the decision-making process? gary: it doesn't make it easy. this is a geopolitical process. it did not make sense for the europeans to vote that through. turkey is too important. significantry
population on the border of central asia and europe, and europe has a long legacy. i never would have expected erdogan to have risen to the level of control he has over turkey have there been better relationships with turkey a few years ago. but they rejected the eu or the eu has rejected them. our turkey's vulnerabilities mostly internal or external? fair, i would just say both. europe needs turkey. turkey needs europe. if you don't get that engagement, turkey will turn to other countries, particularly russia, to get some support. if turkey is seen as a maverick, it is too important and geopolitically sensitive, and particularly on this issue of immigrants -- immigrants are pouring into turkey. there were suggesting that they
would open the borders. that would create massive problems for countries like france and germany. is also a verya crucial gauge of the success or failure of the strategies for the central bank and the government and the policies they are implementing. we are hearing predictions the lira is going to end the year at 3.65. what is your rough take of where the lira is going to be going? gary: i'm not so sure it's going to be different from today. if it changes, it will be because they open the borders or there's another big challenge for emerging markets because the fed talked about a very aggressive rate rise through 2017. i'm not sure it will be entirely about turkey. it will be the international dimension of fed policy as well. how are you playing the
turkey card as far as investment strategy? we have generally avoided it. it is too risky. we are probably not where it looks interesting to investors yet. desley: let's go to egypt. it really has been a frustration for investors. we spoke with the finance minister, and he confirmed that he has some serious ambitions for a bond sale. >> we were planning to do it by november, but there has been well until it he since the election has taken place, maybe the change in philosophy of how andeconomy will run basically the time of the president-elect, so there has been some volatility in the market. that is the egyptian finance minister. he is looking at a figure billion and $6
billion to tap the bond market. was signal does that send for investors? positive one. we have all been waiting for a big reset, particularly on the currency in egypt, before taking i would say tentative steps into the egyptian asset markets. we have seen hundreds of millions of dollars going into the country, not just from the imf, but private money as well. and quite frankly in our own business of private wealth management, we are getting phone calls asking us about egypt. i hope they can do it before the end of the year. it will send a very positive signal to 2017. gary dugan, we will get back to you in just a little while. coming up, physical stores lost out to virtual ones. this is bloomberg. seeing is believing, and that's why
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desley: the top stories on bloomberg markets middle east. many americans took to the after newssaturday of fidel castro's death. the father of the cuban revolution that prompted many to leave the island, leaving behind homes and family members. president-elect donald trump is but two of one for the partly due to the support of cuban-american voters who are obama'swith president
rapprochement with cuba. and black friday moved closer to obsolescence as online shopping earlier discounts kept many customers at home. online sales on thanksgiving and black friday rose 18% to 5.25 billion dollars according to adobe systems. consumer visits to physical stores on those seed of days fell 1% from a year earlier. india fell central bank has lenders to curtail surging liquidity in the banking system. lenders have accumulated about 5 trillion rupees after prime band 500narendra modi and 1000 -- 500 and 20,000 rupee notes.
there is a temporary cash reserve ratio to absorb some unused cash. it lets take a look at what is in store for stocks in the easte east with the middle market reporter felipe. deal looks unlikely. what should we be seeing in the region today and the rest of the week? going to beis is interesting. we have the dow increasing over 4% last week, and that was expectingpeople were we would see a deal in vienna this week. the markets are closed on friday and that is when we saw a big slump in oil prices. there is going to be a reaction. basically they are a racing many of the gains we saw last week.
part of this could happen today, maybe tomorrow there will be a continuation and we have to remember that saudi is a market basically driven by retail investors. every piece of that news tends to disseminate pessimism among investors. desley: we saw interesting moves in the stock markets through the dsm and i would be markets. we have: sure, recently seen many names in the markets that are not responding to fundamentals or technical levels that would explain why we are seeing so many chart moves. construction company based in dubai, the stocks jumped 13% on wednesday and they declined 3% on thursday.
there is some rumor or speculation among retail investors as well, everyone just jump on a name, and they retract. they basically expect this to happen for a few more days. so he would not be surprised if we see today and tomorrow some very sharp moves with names that are not traditionally traded or typically do not have very high volumes on trade. our reporter there for bloomberg markets. checking in on the first word headlines from around the world -- the shenzhen hong kong stock connect is due to start on december 5. regulators announced the start during the yuan's biggest decline since august running 15. theill further open up
mainland markets. debt moved closer to junk after fitch changed its outlook to negative from stable. such warned that continued political instability could result in a downgrade. south africa's next test comes itsriday when s&p publishes report. bloomberg news has learned that --o area finance ministers this is said to be part of a debt relief plan and aimed to protect athens from future interest rate increases. but it could leave the bank with securities that are more difficult to trade. black friday is not the blockbuster one day shopping
event it used to be. the growth of online customer -- commerce continues to outpace traditional brick and mortar stores. but the ceo of target continues to be optimistic. just but we want to make sure it is really easy for guests to shop our brand anywhere they want. yesterday was a really big digital day for us. it was the biggest day in our company history. analysts say that u.s. department stores need to invest to make their physical locations more appealing. >> if we want customers to come to physical stores, they need to be great physical stores. we are making investments. grandmother'sour department store. people want to go because they want to be there. the former chairman and ceo of bloomingdale's says that stores need to rethink how they interact with customers.
>> i really do believe the department store model is broken. that does not mean it cannot be fixed. i also believe on the other side of the spectrum, people need to --in the markets sometimes it's not just to buy, it's not just to purchase something. there's a social interaction to it. desley: davidowitz end associates -- davidowitz and associates chairman told mike mckee that only the strong will survive. friday is notck nearly as significant as it used to be. however, because of what happened in this election and the market going crazy and hitting new highs, i think that is going to affect retail very positively going into this holiday season. with 42% on
spending. this run on the market will affect retail sales in a positive way and that is something that the election has done. talk to me about why we still even do black friday. does it make sense offering all of these discounts because you're not really luring anyone to your shops? >> we are in a battle for market share. in america we have three times the amount of square foot per person than any other country. three times more than japan, three times more than canada. we are going to close tens of thousands of more stores. we will close malls. we will have a massive real estate problem. the fastest-growing area is online. it makes absolutely no sense. in the battle for market share -- and that is what we are --
you go in and only the strong survive and that is what is going on. francine: you think that black friday makes it sense. blanket discounts, do you have to replenish your stock in time for christmas? it works. the way look. in an over stored environment, everybody sells the same thing. guess what? the only difference is price. if the only difference is price, where do you go? this is not rocket science. at so retailing is in a very tough space. who is the strong? who survives? who is in trouble? the department stores are in the worst space. we have sears. we have kmart. we have negatives almost across the board in the entire department store sector.
list. down the whole and are almost all bad those are the specialty stores in malls. the real estate sector, we have $50 billion of debt coming due. that will be a major problem. the banks are very aware of what is going on. some of those reits are a little scary. look at them very carefully. now we have great stuff. cosmetics. dollar tree. we've got good stuff going on, too. desley: that was the enthusiastic and awesome howard of it of its talking with francine lacqua and mike mckee.
desley: welcome back. you're watching bloomberg markets middle east. live from dubai, i am deathly humphrey. amazon is said to be in talks to buy a dubai-based retailer for $1 billion. the e-commerce giant is considering a bid for the entire business, giving it a footprint in the high-growth middle east market. .com had initially planned to sell a stake of 30%. commented.pany is
turkey's surprised rate hike failed to stop the slide in the lira. the currency resumed declines within 75 minutes of the central bank announcement showing it is the u.s.nerable to bond yields and the outcome of next month's fed rates decision. the lira currently offers the worst carrier returns in emerging markets. an opec nations will reach agreement at this week's meeting in vienna. to taketalks are due place, but were canceled after saudi arabia pulled out. they called an internal meeting to resolve their own differences, including whether iran and iraq will cut production. discuss the task ahead with our guest from arabia monitor, the chief economist. florence, great to see again.
>> hello to you. desley: this is the crystal ball gazing we are all doing at the moment. does it all matter? we have saudi's saying they are not going to talk tomorrow. we have iran, iraq on the sideline. >> it matters more in terms of the downside rather than the ,pside. if this doesn't happen we could see a slide in the price of oil. it could be miserable looking. if it does happen, i think the upside is actually limited. said that, the saudi's would like to see this happen. ,owever, it is clear differently from the enthusiasm they had demonstrated a couple months ago, they are now saying we are going to -- we are not going to shoulder the bulk of the burden. that is clear.
ball, other players play --t includes iraqi and iran unless the other players play ball, that includes iraqi iran, we are not going to do this. desley: what do we need -- what does the opec organization need to get everyone at the table for cuts and for the price to start ?o increase >> the differences are really technical, which is why i would not preclude a deal at this stage. capacitylmost at anyway. it is almost two agreed to limit current limits, etc.. iraq, the problems or technical. iraq has claimed for a while the opec overestimates its production, so the cuts are too
big. i think that the technical differences are small. and therefore it is still possible to have a deal maybe this week or next week. our, the upside is going to be very high and the worry is about the downside. china has not experienced a hard landing. there's not going to be a rapid takeoff either. that is part of the problem. desley: is the target to lofty and ambition? >> it isn't if everyone plays ball. the russians have indicated they would he likely to join the cuts, all those these would the
-- would be more supply limits of the capacity russia is at today rather than cuts. it looks magnanimous, but it's really just supply constraint the russians are happy to be at. it is feasible if everybody comes on board. it's not clear everyone is willing to share their bulk of the burden, however. this will be the fourth consecutive year that supply runs out of demand, causing lower prices again and you mentioned the downside. , and who will do be the winners and the losers? >> the winners will be the countries that have a draft in their diversification efforts. certainly the uae, dubai very prominently. there are many countries in the
region that still rely on big budgets. libya is in dire need of funds. war and needsng a a higher price and obviously saudi arabia, which is the largest economy in the region and continues to rely on a significant public expenditure pipeline. desley: we are fast approaching the end of 2016. what conversation will we be having this time next year about the oil price? >> i will see what my crystal ball says. i do not have a feeling that the oil price will be vastly different next year at this time. it is hard to say before we get to the opec meeting. biggest call for
tree 17? >> oil more or less where it is now, diversification efforts up in the region. but i have said on this show before overall, i think this is a healthy thing for the region. the belt-tightening needs to be done sooner rather than later. if this can be done, then why not? desley: thank you very much. the chief economist at arabian monitor. coming up, increased chances for inember said hike has set emerging markets into a tizzy. is there room for a fed surprise? this is number. -- this is bloomberg. ♪
>> that setback is largely because of structural change. you say 85% of your current he is no longer valid and that was a brave move ye. it all comes together like a jigsaw and now we have the picture. comes backk economy into the real economy, the one that has taxed and in government control, we will see substantially higher gdp, substantially bigger economy and more opportunities for the future. i think there is some pain to be the first quarter of next year we will see the equity market take off. did you see the impact
firsthand of the smaller denominations and talk -- being taken off? there was also the red tape cute you saw that firsthand. first wepenniless the go is there. i was using a few dollars. there is a profound feeling of helplessness which i can understand. you can imagine that across the havery, people just don't the small notes or access to a bank that they have had for decades. the feeling of the corporate's in particular were almost universally a positive move and something to go forward and india is building a tremendous story for the next decade. >> 2016, what to do you learn from this year? >> to be patient. if you keep trying to buy into the trends, you lose a lot of money. your biggest call for 2017?
>> that equity rally. i think if you want an equity like play, something that can play out of the first 12 months will be u.s. high-yield. >> thank you very much for your time. that is it for this edition of "bloomberg markets: middle east," we will be live at the same time tomorrow. this is bloomberg. ♪
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