tv Bloomberg Markets Middle East Bloomberg December 13, 2020 11:00pm-12:01am EST
trump will be among the first to get a vaccine shot. on vaccine raises optimism recovery. productionto produce next year amid hopes of easing on u.s. sanctions. 8:00 a.m. across the emirates. it is your daily addition of daybreak middle east. welcome to the show. i am manus cranny. coalesces around a bipartisan deal. but by far it is to the sterling market this morning. we are going the extra mile. those are the words of the forest prime minister in a drawer -- joint statement. this -- downone this morning. we spoke to david blum earlier.
we are in the twilight zone for sterling. there is an 80% chance taking you to 140. he says do not wait for christmas. it is not going to end well. have a look at the oil markets because they have a very different narrative. this is the reflation nist trade you want to be involved in. cheapest reflation. rally in theathon oil market. rising from the ashes. demand is normalizing in europe and asia. it becomes self reinforcing. turnpersistent rally could opec plus conservative and that could be the drive on prices. has been tracking the currencies. good morning. juliette: we are seeing the
vaccine optimism across the u.s. adding to the risk-on tide in asia. the asia-pacific index up for a second session and holding onto -- anywhere 19 88 highs prime minister saying there could be a trouble bubble in australia by next year. positive read on the survey out of japan. holding on to 1991 highs. bit of a switch out of hong kong stocks. as we look at currency markets in asia, watching the strength in the offshore yuan. offshore yuanthe get to six to the dollar year. not is a level we would have seen since 1993. manus: thank you very much.
the very latest on currency stories. >> globally reported virus cases have topped 72 million with few signs of slowdowns. germany is being ordered into a hardluck down from wednesday with non-essential -- hard locked down wednesday >>? . tougher measures are inevitable. president trump is repeating his threat to veto a bill passed by congress. the white house has not offered any details. it passed the senate friday after earlier clearing the house. it includes moves to overhaul money laundering protection.
iran plans to double oil production next year amid optimism of easing u.s. sanctions. tehran aims to pump 4.5 million barrels a day and increase daily exports to more than 2 million barrels. iran sent a tanker to venezuela to load oil amid defiance of u.s. sanctions for both countries. called onan union china to allow a bloomberg news staffer who was detained last week to have access to a lawyer, medical care, and contact with her family. chinese citizen detained on suspicion of endangering national security. interests they say are fairly protected. global news 24 hours a day on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm dez lee humphrey. this is bloomberg.
another brexit deadline broken. boris johnson and ursula von der leyen have agreed to extend talks, giving negotiators another shot at closing a deal. >> very far apart on some key things. but we hoped we are going to keep talking to see what we can do. the u.k. will not be walking away from talks. people expect us to go the extra mile. it is responsible in this point in time to go the extra mile. mandated tordingly continue the chart and to see whether an agreement can be reached. even at this late stage. the pound reacted the founder and ceo --
going the extra mile and extending the talks, do you think that is moving from game a seriously optimistic initiative? guest: optimism. negotiating tactics are what they are. day arethe end of the interested. i am cautiously optimistic. manus: let's see the consideration going on in the marketplace. let's listen to david bloom. david: if you are playing brexit in the currency market, the best place to play it is against the dollar because that sends a sign. you do not wait for christmas to shed all the excess pounds. shed them now.
because this will not go well. that thesis on the pound, it will not end well. you say we get to 135. other people say 130, that it is undervalued. do you still think there are headwinds for the pound? hans: i think the 135 will be breached because easing technical announced that is exactly where the resistance is. if we actually do get a deal we could easily go up to 145. that is a binary outcome. if there is no deal it is possible you have the opposite. i am more on the optimistic side. if we have no deal, that brings into play the bank of england. probably a lot more aggressive easing of monetary policy. that is what we have to brace ourselves for. it is clearly a binary outcome.
that onet's extrapolate the no deal scenario. where would that take the bank of england to in terms of negative rates? would it be something they would do immediately, and to what level? hans: i would say sooner than later. you go negative, 25 basis points or something. that would mean the pound would go lower. but the real support in the pound above 120, maybe an outlier to 115. it will not be the end of the world but clearly the bank of england will ease monetary policy dramatically. manus: obviously what we are trying to assess is in the event of a deal or no deal. we put together some of the analysis. if we trade on wto, as you are looking at a collapse in growth over the next decade of around 8%.
now, if we have a deal we still have covid to deal with. as you look at the growth prospects for the u.k., what is it going to mean for spending and fiscal largess in a no deal scenario? hans: it will be bigger, clearly. you will have to have more support for the economy. you mentioned covid. covid has priced pretty much everybody. i think the positive effects on the vaccine will only be felt about the middle of 2021. so there are 67 months to go until then. and of course for the global lockdowns like in the u.k. and the u.s., you potentially face a double-dip of negative first quarter of 2021. with all the effects of the lock down. if the market is willing to look across the valley, i think by
the second half of 2021, growth rates should pick up everywhere. emerging economies equal. manus: on that chart you have got the long-term hit from the pandemic at 3% and no deal, 2%. total brexit, 7%. so, brexit far outweighs anything to do with covid. more to come. this is bloomberg. ♪ s bloomberg. ♪ - [announcer] imagine having fuller, thicker,
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white house task force chief places are set to get the shots monday, calling it a d-day moment. a bipartisan group of u.s. lawmakers is said to unveil a $908 billion stimulus plan later today in washington. hans is the founder and ceo of -- this narrative is very bullish. we talked about the valley looking across the valley of risk in the first quarter. as it gets to the hinterlands of the upside. do you do that in equities? do you want to be longer to the west relative to the rest of the world, or de-want to look beyond the u.s. with the outlook for 2021? hans: i would like to look beyond the u.s.. you can have the continuation of the market in the u.s.
the fed will not allow any huge pullbacks to occur. buying the dip is still the name of the game. the more attractive option is the u.s., especially in asia. due to the weaker dollar you see a lot of capital inflows coming into asia. especially china. great scenario for asia and emerging markets under the circumstances. weaker dollar. a manus: so that dollar, the implosion of that dollar you think extends. reinvigoratehat emerging markets? thing you have identified. we have that riptide of this year. is it the dollar that drives the narrative of the e.m. flow? hans: it is a large part of it,
absolutely. the other part is more attractive valuations in the emerging market space. they are simply off the charts. you cannot justify it in the absence of a central bank that is willing to come in support the market, come in with assets and so on. from a valuation perspective, the u.s. is off the charts. in this particular case it doesn't matter much. everything is about what central banks are up to. as i said, emerging markets are more attractive from evaluation perspective. let's proceed with the central bank narrative. for somethingady in the form of operation twist. run me through the numbers and how the 2020 twist cocktail might look like. hans: i think the fed would like to flatten the yield curve.
you need to bring down yields at the long end of the curve, and that is what seems to be in the cards here. if you look at the holdings that the fed has in treasury bonds, we are talking about maturities of less than five years. so they could extend the maturity and i think something like operation twist would be in the cards here. which of course makes us still bullish for treasury bonds, 10 year bonds just under 1%. that has been the threshold. the other thing is inflation, although some people see inflation somehow on the --izon, we still think [indiscernible] sorry. your sound faded out. block thenarrative is gateway to a break of 1% on the 10-year paper.
now, you have quite a justifiable reasoning for behind why they do not want to see a break of 1%. in the form of tax. can you just codify the tax for me? the implication the break of 1% of 10 year government bond yields in america. hans: you can make a calculation of the total debt in the u.s. is about $80 trillion. total debt in the economy. if
activity in november partly because of a rising global number of coronavirus cases. new work was the lowest in five months. saw a decline in business output for the first time in six months. what really stood out to meet was sentiment about the next 12 months. that is now at a record low. so while we saw the employment picture stabilized somewhat, not contracting as much as it had in previous months, looking forward, the concern is if we see a setback for employment from here. that is crucial to the dubai economy. this may depend on the number of tourists that we see come to the emirates, whether it meets expectations were not. manus: we are certainly going to keep an eye on that. abu dhabiin the uae, outlining their plans to reopen to international tourists. who will be in line to visit and
one? -- and when? simone: some international tourists may be allowed to visit by early january. these would be visitors from countries that are on a select countries,e according to the department of culture and tourism. everyone from any other country not on that safe list, which will be updated every two weeks. any other countries, folks will have to quarantine for 14 days. but this is coming on the back of uae's approval for the vaccine. looks like it is really going to be pushed largely to the wider public. also being coordinated with a broader uae push for tourism. of dubai and the prime minister of uae tweeted about a new campaign for the emirates
called the most beautiful winter in the world, trying to double the country's domestic tourism. we'll see if they are successful on that. manus: yeah. i know a thing or two about vacationing. aboutgoing to get news slights between the uae and -- about flights between the uae and turkey. it can be seen in a number of different ways. what this is an incredibly important route, isn't it? simone: it is. we are balancing this positive news against some negative news we sought the end of the week, particularly the threat of u.s. sanctions. we did see news breaking late last week that washington is planning to sanction the country after it bought an air defense system from russia. these sanctions have long been expected but had not actually come to the fore.
so we are past that ate mark to the dollar last week. we are little stronger than that this week, but that is the key indicator we are going to be watching. manus: thank you so much. big interview about those plans to reopen tourism for the region. joining us in about one hour to discuss that. he talked with us last time about the corridor to london. to the markets. we have not seen this evaluation on a price-to-earnings basis since 1999. no, that was not anything to do with prince, it had to do with the dotcom era when it went pop. what does it do to the analysis from the various people from wall street? it leaves them much divided. they have not got a clue.
but jp morgan says 20%. they are a lot smarter than i am, so i would not say they have not a clue. the other side of the coin is citigroup bank of america. a little bit more tempered. 3800. they say gains have already been priced in. that is a compilation of everything we have gathered here at bloomberg. looking at a 10% rally in the markets. one or two facts are important. today is d-day as the pfizer, biontech vaccine rolls out. that will take time and acceptance. when are you going to get to 80% herd immunity, as dr. fauci suggested we have to get to in the u.s.? that is the number one risk you have. the second is a coalescing of political minds around a
this is bloomberg daybreak middle east. our top stories, sterling rallies as a brexit talks are extended. british businesses plead for more time to adjust to a potential no deal divorce. its vaccinerts rollout as deaths near 300,000. president trump will be among the first to get a shot. abu dhabi plans to reopen for tourists month as it looks to recover from the pandemic. the capital will admit visitors from countries it seems safe.
vaccine news raises optimism for a recovery in the energy demand. oil wants to boots -- boost production next year. markets are moving. this morning the focus is on currency, as the dollar drops. what does it mean for the rest of the region? juliette saly is been looking at the risk factor from singapore. juliette: weaker dollar always great for the asian equity momentum. that is certainly what we are seeing. we have the expected deployment of the vaccine rolling out in the u.s. adding to the optimism. asian stocks higher for a second session, holding at records going back to january, 1988. the nikkei getting a boost from more signs of a rebound in the japanese economy. the town con december survey showing improvement. 1991 highs. topics at a two-year high. singapore powering ahead. one of the front runners in the region.
as wello watch the yuan because we have been looking at incredible strength coming through in the offshore currency. it has been strengthening the most since december 9. you can see the potential six to the dollar by this time next year due to the unrelenting pace of inflows. seenis a level we have not in about three decades. citi has quite a bullish call on chinese solar stocks. what are the details? juliette: we are seeing continued momentum into sustainable investing. this is a call that has lifted some solar and wind players. iti essentially saying they see added capacity of 75 gigawatts in solar and wind over the next decade. that target could be exceeded considering the ambitious capacity. they are looking at some big
companies in china, mostly state owned. saying they prefer equipment suppliers to some operators, reiterating their positive view on a number of companies. manus: thank you very much. if your breath was taken away last week by airbnb, let's get to india. the ipo, 156 times. 56 to 60 rupee. 88%.12.65 and change, up a poor performance rally compared to airbnb. but the initial share sale oversubscribed in just a few hours when the prescription was open. currently the service restaurant has 268 stores in india. out of those, eight our franchises.
mainly located at the airport. the rest are owned by the company. so there you go. i love a whopper with cheese. ,urger king flying away flipping the burger king train. let's get to our regional equity markets reporter. he has been tracking the markets. saudi arabia says to sell a plot 830 million rials. what are the details? >> good morning. yes, that's a very interesting deal that was announced yesterday. they are selling this major plot in mecca for 830 million rials. that is interesting to compare this value with what they had in your books. indicating the value for
the same assets was about 160 million re-a. -- rial. used toeeds will be finance projects and also restructure existing loans. they have done a lot of restructuring this year. add this to the list. the stock was up 4.1%. it would be quite easy to see a next session of those gains in this session today. manus: another deal that could have --he markets, we they are in advanced talks to take over hitachi. particularly, possibly a big deal. filipe: that is correct. we had that story out over the weekend with colleagues in
sourcesbureaus joining to break this news. it is a major turkish conglomerate that is traded in istanbul. they are quite interesting. of course there is not been an agreement reached so far. but the transaction could be at around $500 million, according to reporters. been discussing different deals and structures that could actually conclude an outright purposes or forming a joint venture to buy the japanese company. this is one of the big household appliance makers in turkey, and shares have been quite ok this year. just last week they rose close 46%9%, and the stock is up just for 2020. manus: where are we on saudi
arabia? had several changing recommendations for a few saudi stocks overnight. let's start with hsbc food service. to reduce from hold, a major name for retailers in saudi. we also had a local broker raising mumbai to over week from neutral. also saudi, zinc saudi, to overrate from neutral. two big names within the telecom sector in the kingdom. finally we had ncb capital increasing their recommendation for extra to overrate from neutral. manus: thank you so much. humphrey is going to get us up to speed with the business flash headlines. desley: deutsche bank may move
some of its 46 hundred new york city staff elsewhere in the u.s., although there are no concrete plans yet. they are discussing how to let more employees work from home out of cities. said deutsche may cut its new york headcount by half in the next five years. however, she added that men would remain to a degree the bank's -- workers at an apple plant vandalized iphone assembly equipment in a dispute over unpaid wages and longer working hours. the economic times says video images exist, and police were needed to disperse the angry crowd. the plant is operated by a taiwan-based company. the incident is said to be have been caused by other workers entering the premises. elon musk told tesla workers demand is so high that production needs to increase as
much as possible the rest of the summer. he did not give specific numbers, but the company needs to deliver more than 181,000 cars in the last three months of the year to hits their annual target of half a million. s&p dow jones says it will remove apartment investment from its benchmark index to make way for tesla. super carmaker mclaren is planning to sell one third of its formula one unit to a consortium of u.s. investors. the group tries to fix its finances and fund future top-level auto sports. msp capital and others will invest almost $250 million into mclaren racing to acquire 15%, which will rise to 33% by the end of 2022. the deal would value the racing unit at three quarters of a billion dollars. those are your business flash headlines. manus: thank you very much. coming up, astrazeneca's post-covid future with a monster
acquisition and glad treatments for uncommon blood and immunological disorders to the portfolio of the u.k.-based drug maker. for more we are joined by rachel chang. good to have you with me. have they paid a heavy price in this? 45% premium. what we make of it? rachel: it is a big premium but it is not unusual in terms of these kinds of acquisitions for biotech companies that have ip that can be extraordinarily valuable. so it is not unusual, and in fact we know there are other people who were looking at them. do feelthe investors that premium was not big enough in terms of the growth the company could deliver to astrazeneca as their portfolio comes onto the market. manus: that is one of the lines in the story. they think possibly they will
hold out for $200 a share. let's just think about the reasoning behind this. covid vaccine development has not been all that profitable for the drugmaker. so this is really preparing for life beyond covid, isn't it? rachel: it really is. it is a reminder of the fact that people are seeing the hopeful end of the pandemic with the vaccine coming on board. from a pseudo-companies are back to taking a return into business as usual. thinking about the competitive field before the pandemic came. what they have to do to drive in this to get an edge massive industry. what we are seeing with astrazeneca is there vaccine has been ordered by many countries. they have committed to providing that vaccine at cost. it will not be a big profit driver. so they have to have their eyes on what is next.
it's clear that the priority is innovative drugs. it's driving profit by snapping that valuable ip. manus: we have to look at perhaps the motivation here as well. pushing against the idea that astrazeneca could be a takeover target. this is very much a defensive play, isn't it? rachel: there is that element as well. we have seen him over the last few years really tear down astrazeneca's focus. he called a halt to development programs that work too costly. he has pared down areas for the company to focus on the core areas of innovation, especially in oncology. like you said in the global pharmaceutical sphere, there are really only these top guys. offers, thetakeover latest with pfizer about six
years ago. astrazeneca wants to survive and be one of the biggest players, and that basically means take over others. eat or be eaten. manus: thank you so much. let's see how they trade on the opening. will alexian flush out another bidder? we will cover that trade for you. optimistic for the first time in three months. says positivity is misplaced. he says did not wait until christmas to shed your excess pine. david: it is very hard to believe an extension. ofseems as though the 31st december this year is a hard deadline. we thought it would be a couple hours it would be all over but
of course they are going to mile , which the french could not be happier about. that is in english expression, going extra mile. you can see how we have wormed our way into another delay, another delay. >> how much of the potential for a hard exit has been priced in? david: the sense of violence is back and sterling. it is very adjusting for the day traders going up and down, moving a lot. i do not think a deal is fully priced in. it, nobodyure behind even cares what is in it anymore, we just want a deal. the other thing boris is talking about is we will do an australian deal, which is great for your audience to know that that means it's code for no deal, because australia does not have a deal with the eu. boris likes to talk about the australia deal instead of saying no deal. >> how much is the uncertainty
weighing on the euro, and how much would it be good for that to weigh on the euro? how much longer will policymakers stay quiet on this one? david: that is a very good question and why it is best to look at sterling against the dollar. a hard brexit is worse for the u.k. about 65 million people instead of 400 million in europe. even if you took the population bad fore to one, it's the sterling and the euro. if you are playing brexit in the currency market, the best place to play it is against the dollar, because that sends a sign. shery: if we are playing brexit in asian currencies, where do you go? david: you were waxing lyrical about the renminbi earlier. so that looks pretty good. startsly if the renminbi to get it --
i do not think you have a revaluation of the renminbi on its own. if the renminbi gets stronger, and i think it will, it will take the big boys with, like the korean yuan. so that is a good play against sterling. for said, don't wait christmas to shed the excess pounds. shed them now, because this will not go well. but was great for a line. sex and violence back in sterling. david bloom there. nobody cares what is in the deal, just whether we get it. dollars. australian find out what it is. this is bloomberg. ♪
it's time for size and scope. every day we break down one superlative. today, 893 aussie dollars. here to explain is simone foxman. simone: this is the amount of money the average australian consumer expects to spend this christmas according to a finder survey. this includes 391 aussie dollars worth of gifts. here's the story.
australians have been stuck at home, they have been the beneficiaries of government stimulus, and they have not had much to spend on, so they're saving has gone through the roof. that is why now the economy is reopening, consumer confidence is at a 10 year record high. this has been a bonanza for local retailers. overall, finder believes they will get 17.3 billion aussie dollars worth of spending this holiday season. thisnk you can also take picture happening in australia and apply it around the world where you have all these consumers who were stuck indoors during the pandemic, now able to spend. maybe they will get out and start spending again once vaccines become more prevalent. country's can the consumer frenzy overcome the impact from the decline on tourism? it is a balancing act. what do we know of the numbers? simone: it is a balancing act,
but the domestic tourism picture is also very strong, and that will overcome a lot of the impact from an international perspective. so, we saw that 391 aussie spending on gifts. the average consumer in australia is expected to spend 352 aussie dollars on travel. so that is a big number as well. we have seen beneficiaries of this domestic spending fishing and camping superstore owner, , off-roadories vehicle retailers, they are all benefiting. all those names have doubled since march. even when you look at qantas, life is not so bad. the airline said earlier this month that the majority, 80$ of its -- 80% of its domestic travel will be back. they might be able to fix its balance sheet starting in june. even though you are seeing
almost no international flights until the second half of next year, with the potential exception of new zealand, because we might get a travel bubble there. even know we see very few international flights, clearly the aussie consumer is happy right now for those companies able to capture that are able to benefit from the domestic demand. manus: ok. thank you very much. it's that balancing act between lockdown and reality. but one reality, or certainly the fog of reality, is in brexit land. we are going to go the extra mile. a very british phrase despite the differences between the eu and the u.k. i want to take you to the land of volatility. because hedging yourself is the most expensive since 2016. we have ramped for nine days in a row. the longest move higher involved
in nearly two years. we have come back this morning, but where you are with a breach of 20. in other words, the highest level since 2019. we're in this expansion period. would it will yield, we do not know. as we heard from david bloom saying sex and violence is back in sterling. sterling up against the dollar, against the euro. the point ofat where nobody really cares what is in the deal. i do not know that one can necessarily say that, because of course every time you hear the prime minister of the u.k. talking about the australia style deal, it's means no deal at all. let me show you what is going on with burger king. i love a big whopper, especially with extra cheese. up 92%. this is a belter of an idea. 92%.ave burger king, up
ratio,bid to cover you're looking at demand for the initial equity. 156 times oversubscribed. with that in mind, what are you actually buying? you are buying a network of burger kings across india. only eight of them will be franchised. to give you a thee of the ipo's, 15% on recent debuts. there certainly is a premium. what premium would you pay u.s. equities? 22 times earnings. have not seen that since 199. -- since 1999. bit of a tricky year. you have a much more benevolent fed now. you have a grinding of political
will. deal, will it get through? does it have the political will? you are trading 22 times earnings ratio. we have not seen that in a long time. polemics if you will between j.p. morgan seeing a 20% upside in the market in the s&p 500 for next year, and 3800 for citi and bank of america. jp morgan says we are in nerve anna. i like nerve -- we're in nirvana. i like nirvana. this is something to keep an eye on. what manipulation will the fed delivered to the bond market. let's look at currency in the oil market. this potentially is where you see a reflation trade.
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