tv Bloomberg Markets Middle East Bloomberg March 30, 2017 12:00am-1:01am EDT
♪ yousef: into the unknown. brexit ripples through the market. teresa made pages a friendly divorce. david: the fed president once tightening. savior should be
for heights this year. yousef: turkey's biggest state-owned bank lines. the senior executive accused of sanction busting in iran. david: a presidency on the line for a big for control of the country's finances.
yousef: we have fresh economic indicators out of saudi arabia. in :00 a.m. across the emirates. in hong david ingles kong. closing up for the run stake. -- lunch break. traders will head back to the desks and 30 minutes. have a look at this chart. a lot of people talk about how solid the data has
been for china. look at the bond markets and what it has done in the past 10 spreads, you see the between the three-year. we are back to the lowest levels of this time last year. when i am in doubt, i tend to look at the bond markets. one of the best quarters we have seen in years across the asia-pacific. this takes me back to the story of 2016 and even 2006, where he
had people buying more into growth stocks than value. that switched, and what we are seeing now, 2017, look at that divergence. the people are placing more best on growth companies. that speaks to what the outlook is for the economy. that is a safer bet. yousef: plenty more to get through in this part of the world we are two hours away from the opening of the emirates market. this was the state of play. interesting moves. sliding to the upside .25 percent. weakness in telcos and real estate. saudi arabia the best performer of the day. on track for best performer this week in the region. pushing to buy higher.
outdoor properties, a top five property in the uae, crumbling over 6%. dragging down the broader index. a shift to some of the key asset classes. the inventory data, that painted a more bullish picture. we did see gains of up to 2% overnight. 1252 .40 at the moment. across 13 bazaar. now pushing onwards. 13.07. david: that is the currency story of the week. we will talk more about that later on in the show. we have the first word headlines. >> president trump has suffered another setback to impose a revised travel ban on six mostly muslim nations. judgead -- the honolulu they point to
discrimination. the justice department is expected to appeal the decision in san francisco, this in court that upheld the original band. a projected annual loss could double to $9 billion as they filed for bankruptcy. once the linchpin of the diversification plan has had a guys asterisk run. -- disastrous run. taking shares up to 2.6% right now. --the bank rub see bankruptcy filing by westinghouse is an important step to revive the company. toshiba totant for block overseas nuclear business. we are continuing to announce third-quarter earnings on april 11. >> westinghouse stem from the landing cost overruns. they triggered a $6 billion run
down and morgan stanley sees billions of more losses in the pipeline. demandow to tokyo to answers and a plan from toshiba. >> over 30 days we will evaluate all the data and make whatever decision we need to make. i'm here today to look the ceo of toshiba in the eye and work in a constructive way to get the work done. >> south africa is expected to leave its benchmark rate unchanged later thursday. economists see that main rate held at 7% and most predict it will stay there for the rest of the year. a week ago traders forecast a 35 basis point decrease in 2017. the prospect that the president will fire the finance minister said it tumbling. independence has
solidified position as front runner in the presidential election. endorsement key from the former socialist prime minister. they will vote on april 23. the best place to stop marianne look 10. global news. 24 hours a day. powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ david: thank you. the dreaded divorce notice. is goingean union through the six page document from the u.k. now comes the hard part. triggered years of contentious talks area we asked the time finance minister about to threats brexit poses
european union be in the markets. .> difficult let's not underestimate the different points of views and the fact that europe would take an easy stance. sometime will have to be devoted to transition measures which will be needed to allow for the new arrangement to work. oferwise there is a risk disruption of markets which cannot be underestimated. do you think europe will stick with one voice? will proceed under the leadership of the commission. europe will speak with one voice. reporter: how much does the u.k. need to pay? we heard different figures. >> in has not been discussed. this is not the real issue. the fact that we come down to an agreement which is as peaceful
and forward-looking as possible. we will then have to ask ourselves what will be europe after brexit is completed. this is the day? . reporter: what will it look like? will it stay together? will it be stronger? will it significantly weaken? >> this is a significant season for europe. i'm hopeful that europe will renovate itself deeply enough to answer the demand coming from european citizen which called for desegregation rather than integration. reporter: will it be easier to make the case are italy at the elections in france go in a way where you have a stronger franco german axis to push forward for the european project? >> if there is stronger support at the political level for the european logic, of wars and not just italy will benefit. it is not just about winning elections.
it is about using the political mandate to change europe for the better. to go on with integration. this has been the success story of europe for 60 years. we're just fine -- sign a declaration. 27 countries agreed to sign on basic principle. let's translate those principles into policy actions and backs. that will be generating negative . not just in italy, but in other countries. let's not forget the temptation to leave europe is widely spread. hurtter: with that significant yield or the spread between italian and german yield? our without hurt financial institutions? markets are beginning to price political risk. would be a in france permanent risk to lure.
-- two europe. i expect that to be reflected also. thisf: let's widen conversation. let's bring in the global chief economist of a bank. great to have you back on the program. let's start off with the brexit story. finally a trigger. the countdown is on. i put this chart. this is what has been happening with data points versus expectation. you can see what a run it has been. that is your green pass in the top right. in this going to end the honeymoon. are the realities of brexit going to materialize? >> i do not think it will and this moment of positivity. yesterday we got the new quarterly following up from welcome to the jungle. the theme is very strong animal spirits at the moment. the riskhe fact that
is incredibly high. that it hassurprise been triggered. it was signaled in advance. we know that they will be year -- leaving the european union. there are still a lot of risks out there. political risk is still highly elevated. to stall has failed the economy or markets. this will probably continue to be the case over the coming few months. the risks of trade wars would be much more significant. let's see how their relationship between the u.s. and china evolves. let's see how the negotiations go ahead with britain and the european union. one surprise that has come out of the woodwork that we already know about is the scottish independence movement. how closely should we be watching that?
function that can change the trajectory of these talks? >> we should be watching that closely. that thete clear europeans, although they are upset that britain is leaving, they do not want to trigger too much trouble domestically in great britain. england encouraged the scottish to go ahead with independent, the europeans might be creating problems for themselves later on. it is important, if we do see another referendum, and if it in support of independence, it would be a very significant event, it would not change the global outlook. but it would be having a huge impact on financial markets, especially the u.k. and
particularly the pound sterling. if we go back to the previous referendum, we kept ignoring it until weeks before the event. then markets realize that this to be very close and could be serious. the markets only began to react then. we have something very similar happening this time around as well. david: great point. i want to ask if the market is getting this thing right? that -- after that, we have big interviews coming up. have a look at the agenda for today. after 4:00 we will be joined by the chairman of lloyds. after that we will be hearing from the chairman of ever core out of new york. frenchhat, we have the ambassador to the u.s. out of new york. stay tuned for those big interviews. effortsp, i would only
yousef: fed officials have said more rate hikes this year. but if the boston president has his way, it will be more than that. he said the benchmark rate might need to be raised 4 times in 2017. >>4 is much more gradual. 4 four in one year would be much less and coming out of a recession. we were raising it every single meeting, twice as fast or it relative to that, this is much more gradual. i view over the course of this year as being gradual. we've been very gradual up to now.
a year in december is a very gradual pace. as we get to full employment and close to the 2% inflation target, we do not need to make up more ground in that would indicate we have to raise rates a little bit more quickly make sure we do not overshoot you want to go very my own view is that the economy is strong enough to be joining -- growing fast enough. that would get us to the point where we still would have an unemployment rate more than likely. it would be below full employment at 4.7%. it would add 2% inflation. many forecasters are forecasting it will be a little bit of both. the total pce measures the focus. reporter: is the fed came to slow down gdp growth? his name to go from 2.5% to 1.5%? >> our goal is to hit the inflation and the unemployment rate. we have to hit the unemployment
rate that is sustainable over the long term. if it is possible for the economy to grow rapidly without tightening labor markets, that would be wonderful news. that would indicate the economy is being much more productive. a are not hurt -- had collective economy over the last couple of years. despite getting gdp growth around 2%, we have had a low unemployment rate over this. reflect the fact that this potential is lower than before because productivity is not been as strong. it will be wonderful news for the economy of we're going to ask but not eating to tightens labor market significantly to do it. david: let's bring our guests back in. thanks for sticking around. help me understand, i have this bloomberg chart which shows you that u.s. financial conditions have loosened in the past eight months.
i would have expected this to go the other way. why does this happen? reflectd expect this to the dollar increasing and higher yields, but it has gone the other way. the first time that this is happened. if you go back to 2004 hiking cycle, the debt was hiking significantly for a prolonged. of time the long-term yields were going down in the dollar was weakening and i was the time of the famous conundrum from alan greenspan. the savings from asia piling into the united states. this time we are seeing something slightly similar, but for very different reasons. i do not think there is another conundrum right now. asia theye savings in are not suppressing interest rates. it is expectation from the fed hiking cycle.
they see long-term interest rates staying very high for very long. long-term interest rates have not risen on the back of rick interest hikes. heard moments ago that there could be up to four hike this year. you are telling me during the break that this is an uncomfortable position and it will jump on any opportunity to hike rates so you can give itself more time and space to react done a lot, right? is to managereason unemployment and inflation. asre are two key variables the fed chairman said. the second reason is you want to have interest rates at the level that gives you options in the future. there will be a downturn at some point. reflationary relax
pressures at some point. they want to have interest rates high enough to cut in restimulated the economy. we are not as now. the economy is looking strong unemployment is looking healthy. on inflation is rising. this is a great opportunity for the bread two-interest rates and taken to a level they will be much more comfortable with. to give you do's numbers come onto the main case of the scenario, interest rates will be a 3%. under the stress scenario there will be a 2%. we are not there yet. yousef: interesting. which is expected in their forecast to reach 2.25 in 2017 and then further to two point 1 p.m. 2017. not because of fiscal stimulus, but because the fed has the track record of excessive zeal inviting inflation. we will continue our
yousef: let's day deeper into the saudi data. the fourth quarter year on year. this is the general authority on statistics. saudi arabia plans to transform its economy and reduce its reliance on oil. the consequence of that national transformation is the focus of our coverage of our last year. let's bring back mariota from standard chartered bank. but it is on the chart for additional perspective of where we have come from in the saudi gdp story. this goes back to 2011. pull it off on your bloomberg. the line in blue is the crude
price. it has taken a toll on economic growth in the kingdom. the imf cut its forecast early on in 2017. but this in context for us. this latest trend of 1.2%. >> it has been a period of low growth. i think 2017 will be very interesting. it will be difficult to assess. i think headline growth will remain the. although the business environment in saudi arabia will improve. it will feel faster, but when we see the headline growth figures, they will be quite low. that is because of the dependence of saudi arabia on oil price --. oil prices are going up, great resentment, great for investment, but at the same time, saudi arabia will be cutting production of oil. cutting oil production as part of the opec agreement. when it comes to real growth,
real headline growth, production is much more important than prices. the headline growth figures with a low because of the cut in production, but in actual fact the economy can be doing much better than what those figures would suggest. yousef: we have had quite a few skeptics. some have been skeptical about the execution risks. as you look to the efforts of the kingdom, what is your read on what they're doing right now. is it working? we'll was he the numbers get back up in the next year reduce? >> still the most important aspect will be the oil market .nd how oil prices adjust if we have oil prices adjusting higher than headline growth figures will across -- adjust positively. there is an execution risk.
ambitiousia has an certification plan. it will be very complicated. it will be a multi-decade project to diversify this economy. david: it has been a while since we talked about this angle because prices haven't been expanding. what is the sweet spot for oil that keeps users happy? >> we are at it. we can still go a little bit higher and remain there. prices averaging $63 per bale -- barrel this year. that is good for the middle east and saudi arabia, it is good for asia because it gives pricing power back to asia and exporters. it is been very good for the united states because we are seeing a resumption in oil investment in places like texas. thes one of the reasons
>> these are the first word headlines from around the world. courtrean president is in as judges here arguments for her arrest. prosecution are seeking a more thing she abused her hours and accepted bribes for government favors. she might have destroyed evidence. she denies any wrongdoing. china looks to be planning a mega energy deal between is largest oil producers and power generator. the regulator has asked the mining giant to ignore it --
explore a merger. if the deal goes through, it would create a new entity with assets of more than 20 $40 billion. turkey has the american policy in syria and of rec lessons visit. later thursday. turkey has volunteered to fight if islamic state in syria the u.s. technologist kurdish forces there. u.s. state department is dropping its condition of improved human rights in bahrain for the sale of fighter jets to the country. the obama administration has delayed approving the deal without the requirements. the trump administration decision highlights the outreach to gulf allies who they want to partner with to fight terrorism
and iraq expansion. global news. 24 hours a day. powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. ♪ david: the overall benchmark across the region, they are .4%. off by what else is happening? bad, but all the highs of the days. you're seeing weakness coming through in the china market. it is down by 1%. also some of these emerging markets coming under pressure. weakness in japan weighing on the overall regional index in taking away from gains your seen in the commodities-based market area new zealand up half of 1%. estrella holding at a two-year high. probably not a surprise because you have dollar strength weakness across the currencies in asia. we are heading towards the end of what is been a great quarter for investors. a lot of profit-taking coming through in those markets.
if you have a look at gold you can see it is down by .3%. over the quarter, gold is up. also checking the contract, we are seeing forward support from energy players in the region. 50 barrel -- $50 a barrel mark. we have heard from cnc market saying there is probably a floor at $47 but certainly the u.s. contract's been up a tear. yousef: thanks. into the feud between south african president and his finance minister. that is affecting markets. speculation mounted that he would be fired. the expectations for the country's first rate hike in years it is been a to motorists rain -- week for the south african economy. great to see you again. this is the function i like to
pull up. this is on a five day basis. in calculating what has been the action this week. the lossesan leading in view of the weaker dollar as well. down for .6%. where do we go from here? >> look at the short over a 12 month aces. you would see it at the top. you can see how the sentiment has turned around for the past few days as dispute between the president and the finance minister has arrested again. where do we go from here? yesterday he attended the funeral of an anti-apartheid campaigner which he was applauded and applauded for calls for him to resign. you get the sense that the battle lines have been drawn than in past episodes. yes, it looks like it is reaching a conclusion.
the market will like that clearly, but after that it depends on the south african data. yousef: you mentioned the battle lines are being drawn, houses go to the next level? is there parliament involved? two other bodies have a say in this? >> he can do what he wants. if he does, then some other cabinet ministers or part of the civil service will decide to throw in their hat as well and create a split heading towards the december conference. that is going to on upset -- upset investors. it creates a uncertainty at a time when south africa has been doing pretty well. the inflation rate has been falling. that is why some people have been positioning for a rate cut up until this whole thing blew up again.
now all of those bets have been taken off the table. yousef: let's cross over to another emerging market. let's go to turkey. the shares of turkey's biggest state on bank saw a record like after a senior executive was arrested. they reported joins us from istanbul. tells about what happened here exactly. happens is on tuesday it emerged that the deputy ceo of this bank, the biggest state-run lender, he was detained at jfk airport. otherssations of helping to evade iranian sanctions. now the bank has been affected. a turkish gold trader was arrested in the u.s. as part of the same case. he is accused of running this gold smuggling ring.
your channeling funds are. the arrest brings us back home. everyone loves a good surprise. talk to us about why everyone was caught off by all of this? reporter: the reason it plunged 19% downrday -- yesterday was because the day -- theit emerged up story of the gold trader. his defense team had rudy giuliani. his role is not clear, but perhaps to intercede in the case. this had brought shares up 6% the day before. people were caught out. the surprise was that the
executive was never named in the original allegations in 2013. these were wide-ranging corruption allegations that encircled turkish government ministers, high-ranking businessman, and this was not one of those people. he was in new york for a roadshow. this was not a man on the run. thanks. yousef: great reporting. let's get more on the story. we are looking ahead to an april 16 referendum. this is just a small element of the turkey story. what are we focusing on here? battle lines are being drawn between the presidency and the central bank. >> it is not as dark as south africa, but it matters over the
past 12-18 months about how to manage costs in turkey a made an unpleasant economic backdrop. the story is all about the lira and inflation. as we go to the referendum on april 16, the president is desperate to keep the lira under control so there is not a continued sense among voters that inflation is running out of control. that the value of the money in their pocket is diminishing. he wants to keep that stable. that is really the key thing to watch as we head toward the boat. oil prices, and a good time for the turkish economy. when they were higher, there was the vulnerability in the emerging market space. >> it could not have come at a worse time. the political
situation, ties with the eu are it has the syria issue to deal with. it has terrorism incidents at home to deal with. the backdrop is not good. it is the economy that the president is looking at at this stage because he wants those votes. yousef: great to see this morning. david: let's have a look at the other stories we're tracking. let's get started with arab leaders. we have ended the one-day summit in jordan by re-endorsing a peace plan that was launched back in 2002. this move signals washington that a deal on the palestinian state must be made before israeli arab normalization can occur. not set hisump has
middle eastern policy, but he hinted that a two state solution is not the only option. egypt is planning a bond sale for the end of 2017 at the earliest. the sale was announced by the finance minister. is aiming to get the budget deficit to 9% of gdp. 104% of gdp byng the end of the fiscal year. there government is targeting fiscal growth of 4.6%. dow jones as companies are struggling to exit the nation, unable to sell stocks, or take the money out of the market. it might be looking at putting nigeria on its own index if these troubles continue. let's cross to abu dhabi. the emirates is investing in a big expansion.
shipping as they will be helping from another port. we see more and more interest to import industries to be situated within this zone. they will be offering other zones. that was the on without report ceo. hopingup, samsung is this bs go is now over. canada new phone bring customers and investors back into orbit? we have a look at what the phone might look like next. this is bloomberg. ♪
samsung now. they have a big launch coming up. the company is hoping to take back the number one spot on the global smartphone market. plans to lower back buyers after the debacle over the phone that was catching fire last year. those funds were withdrawn from the market. we are joined by a tech analyst to talk more about this. enough?going to do >> i think it is fascinating. i think a lot of people like the fact that they get a bigger screen side -- size but do not have to carry able to phone. the commission is going to take anit given that samsung made acquisition last year. their abilitysing
in terms of the virtual assistant. s8 a stronghe enough model to regain the customer confidence they have lost out on over the last year? >> just looking at the appearance without knowing whether the battery is good enough -- david: or doesn't get hot. [laughter] >> yeah. it seems like the reviews have been positive. it looks really pretty. panel seems to be the only available in the market. 8 isthough the iphone going to have a certain display, it is unlikely to be what the s8
offers. that meand that, does profit can recover strongly? because weto be seen are not sure how much the company is spending. the last phone was quite pricey. he will be the first one to test the s8. thanks for the insight. let's get to the head of private equity at an asset management company. let's get to read on what is happening in global technology. how can you capitalize on the smartphone wars that are in full swing? you see the extent of usage in the smartphones by individuals globally. to thege, if you compare
radio, it took 35 years for 50 million people to use their radio. the adoption of the smartphone was less than three years. you see that trend continue as people adapt to the type of technology and want everything on one particular device. david: i want to ask you, in terms of the evaluation, and there are stories that highlighted this debate and whether or not we are seeing bubbles, is jeff bezos. he is now number two richest in the world. is there any other way to play technology apart from looking at the big names? it seems like they are gobbling everything up in the markets are struggling to keep up how you value these massive companies. >> there is such a wall of private capital that these different types of companies are
staying private longer. in one sense, you're seeing private ipos instead of 10-12-15 years ago where a lot of technology companies offered ipos. that is not happening nowadays. these companies are staying private a lot longer. it is only when you get into significantly more sizable violations will they come to the ipo market. the challenge is the true evaluation. you have seen some marvelous examples recently. saw souq acquired by amazon. he saw another company itself or $2.5 billion last year. that does reinforce the theory that the values are there. yousef: part of your portfolio is searching for trends that are
going to disrupt connectivity and existing patterns of the way people do things. part of the technology powerhouse story, the u.s. aside, is china. how do you approach that market and what stands out to you? >> what stands out for me for china is in 2015 for the first one millionover supplied in china. that contrasted with the u.s. 587,000.e number was john is moving from made in china to designed in china type of environment. you can see the number of technology companies that are growing in china. yousef: we will leave it there. joining us live at it abu dhabi. let's get you a preview of what is still to come on the program. here's a quick look on the
yousef: you are watching bloomberg. european markets are set to open in a few hours. a reporter is standing by in london. trigger day is going to be driving the market story across european markets i would imagine. reporter: we did not get all that much reaction and asset classes yesterday. the pound was week in the early part of the week building up to the triggering that we saw in westminster -- actually in brussels yesterday. brexit means brexit. now we get to understand where that story goes. cost said there is no reason to attend this is a happy day. he said we miss you already to the u.k..
we learned about the tone of the negotiations on day one. they were more conciliatory than they had been previously. we know there is not an intent to keep the u.k. in the single market. she has said that before and she wants a bold and ambitious trade pact with the rest of europe. the big question is the sequencing. angela merkel suggesting that maybe they deal with divorce and then they get to the rest of the deal. hopefully soon she says. there is a little bit more on transition that we have learned. a lot coming up about brexit on day one. yousef: when i listen to the speech and in the eye observers, security was mentioned 11 times in the speech. what is behind that? reporter: this from the prime minister used to run the home office which is in charge of security in the u.k..
clearly an area she thinks she knows well. the u.k. this is the strong hand. the home secretary was talking about how this could mean that the u.k. is the largest contributor to the european police office -- body if you like. the europeane police and take information with us. that is not the plan at the moment, but it is being discussed. tourity is far too important start to bargain it against an economic agreement. it is not about nato and contributions there, this is about the european police story. ex civil servants giving a mixed message about this. one calling it not credible. yousef: thanks. all that and more on daybreak, my favorite show. here's what you should be watching out for. is goingtish bank news
to establish a program for an offshore purpose vehicle. the nominated in u.s. dollars. the amount is not to exceed $2 billion. exceed planning to not 1.5 billion. last week the stock was 3.3%. watch out for the megamerger of the two biggest banks. thursday marks the last day of trading for that before its combination to create the biggest financial institution in the country. again, some are not too sure about those evaluations. interesting research done that. dp world has been caught. then i put downside pressure on the stock. looking at u.s. equity futures, looks to be a good picture as it stands. david: same can be said when you look at asia. chinese stocks headed are the
grexit u.k. gives details of how the eu will be moved into u.k. law. the boston fed president r hikes in 2017 may be needed to protect the economy from overheating. anna: vanishing banking blues. the italy finance minister said banking problems have been solved. >> the problem with the banks is being solved in the sense that there are some critical points but now we're finding the solution within the