The cryptocurrency pledges to less than half its december high. The number of u. S. Credit Card Companies puts the brakes on purchasing digital dollars. Yousef this is Bloomberg Markets middle east. Lets take a look at where u. S. Markets ended on friday. We saw a selloff on friday. Is because we had better than expected ecodata. Counterintuitive, but the u. S. Jobs report for january came in at 200,000 new jobs created that might. Byt was more than expected economists. We also saw a 2. 9 growth in earnings compared to a year earlier. It was the most since june 2009. Impact acrosse the markets. The dow jones is bearing the brunt of the market selloff. That ominous 666 points. The s p 500 index falling more than 2 . Meanwhile, take a look at what was going on in the bond markets. The yield on the u. S. 10year, touch 2. 8 5 at one point in the day. That was the first time it was released in about three years. Bloomberg dollar index is finally catching a little bit of a gain. Overall, you can see a theme emerging. It was one of people worried about that inflation risk, during the page increases are going to feed into u. S. Monetary policy and the federal hike sooner than participated. That hasnt happened since donald trump. We have this backdrop on the global markets. Lets take you to the board, with the emerging market index. A 3. 5 decline for the week, the most since may of 2016. There are riskier assets on speculation about what the fed is going to do in the longer term when it comes to rates. Down the stoxx 600 is 1. 4 , led by a mining decline. For crude oil. You have more rigs being deployed across the United States. That is according to the hughes index. Number 27s beautiful 65 rakes, and follows the additional the total number rigs, the highest since 2011. We have despite that we saw in the u. S. Dollar that we talked 1 . T, down 8 10 of this is the biggest weekly slide in two months. A remarkable decline in key Asset Classes. Lets get you a quick check of the business flash first word headlines. A driveby shooting in italy wounded six immigrants and a soured the election campaign. The Prime Minister condemned the attack. Been carried out by a rightwing sympathizer. The Northern League has been accused of fostering hate that led to the attack. The League Leader helped the government responsible. Tracy the Turkish Military is said to have suffered one of its deadliest days in its offensive of against Kurdish Militia in northern syria. Five soldiers were killed yesterday when their tank was hit. The casualties were part of operation all of branch, which turkey launched against the militia last month. U. S. Lawmakers are accusing House Republicans of being part and parcel of an organized effort to obstruct the investigation of Robert Mueller in the 2016 election. Allegingafter a memo bias in muellers probe was released. Calls the memo and american disgrace and says it vindicates him. Tracy the cryptocurrency hits a of bitcoin hits a low 7,000 on friday before closing just over eight and a half thousand. That is a little over half of what it was worth on december 18 and caps what it was bitcoin has been hurt by expectations, more government oversight, fears of price manipulation, and lingering concerns it is only another asset bubble. In a Rare Television interview, janet yellen told pbs that the trump that she wanted to stay on and made it clear to the Trump Administration. Jay powell be sworn as the new fed chair tomorrow. U. S. Stocks and bonds have been selling off hard on friday. Stronger than expected employment reports came out with signs of strengthening wage growth, increasing the likelihood of the Federal Reserve lifting rates next month. Here is how people have been reacting. Solid. Solid. Good news. A positive backdrop for the economy. Continue. Market will i would be surprised if the bond market didnt take this into account. Years, we have70 never seen the Unemployment Rate at 4 when the deficit spending is said to increase from 4 to 5 . Wages are gradually continuing to pick up as the Unemployment Rate comes down. There is evidence we are closing in on employment and this may be the site start of a more pronounced acceleration in wages. The rush to judgment on Hourly Earnings is too soon. It is pulled up by folks at the top end. We are excited to see the 2. 9 wage growth. We have been talking about that with you for the last year. The impetus for the tax plan was to create sustainable wage growth. It was missing for this country from this country for a long time. About a hotrns economy and what that means for the Federal Reserve. Whatever the fed it does is of supreme interest for us, because thatve a lot of countries have currencies that are pegged to the United States. Reaction whenthe it comes to be fed funds futures market. You can see that uptick. That is the Interest Rate increase from the fed, moving above 50 for every quarter of 2018 for the First Time Since last march. That is the market rushing to price in further rate increases from the fed off the back of that higherthanexpected wage growth in the concerns that will start feeding into u. S. Inflation. Whether this is a major corruption or symptomatic of something a lot bigger . The cio makes the point this is potentially of the end of an eightyear bull rally. Lets bring in our guest. The part of middle east research at credit suisse. Whethero talk about this is a healthy correction or whether we should prepare for a deeper slump . We believe this is healthy. Highlighting the risk we see, a little bit of a pullback given the scale we have has occurred. This we think it is part of a healthy correction. We need to careful with what we invest in, but we remain exposed overall. A lot of the s p 500 index index targets for the entire year were met in the first week of january. We are seeing the selloff in stocks in tandem with the selloff and bonds. That can be painful for a lot of investors in particular. Does that worry you . Fahd the timing has worked out to be that way. It took quite a while for u. S. Treasuries to yield to levels we were expecting them, because we have seen inflation take a lot longer to pick up than we anticipated. The spread has definitely been affected by that. The movement in bonds was a bit more overdue than what we have seen in equities. The chart. s look at to your point, what is happening with the bond yields. That has risen since september. Where does the story go from here . Is 3 now the next target . What does it mean for equities . 3. 2 . E 3 , 3. 5 , you have to reevaluate the whole Asset Allocation . Fahd it doesnt change where we are. Scope could be 3 as we move into next year and progress over this year. Are going up, which is positive for equities. When you start to worry is when cutting, so right now you want to have it in the back of your mind you dont want to be too aggressively aretioned, or if you feeling nervous, take some protection, have some defensive there,nd their, in have that in the back of your mind. It is not yet at the level where you want to be exiting the equity space. Tracy is there a support lending in the rising bond yields . Improving, could be the cost of living rising because there is more demand. I dont see many people talking about that side. Fahd i agree. Were coming out of a tenure qe,od ten year period of maybe the have forgotten what a regular occurrence is. But we have managed to move out of that so far very smoothly. The market has gone from optimisticistic too about the prospects of fed tightening. We have a lot more to talk about. Heres a preview of what else is to come on the show. Holding out hope as an organization, despite the banks Third Straight annual loss. But we will get to look at her withview our interview john later on. Tracy and a mario draghi speech, a bank decision, and an Economic Forecast on thursday. We will be discussing all of that, next. This is bloomberg. Yousef we are live on bloomberg tv and radio. Quick looks take a at the latest business flash headlines. Yellen delivered a blow to banks. Americas largest she banned wells fargo from taking any action to boost total assets beyond their level at the end of 2017 without the permission of the fed. Consumers a number of vendor. T the it will be reduced from 400 million to 300 million. There is an offer for chrysler to recall vehicles to settle its lawsuit. The lawsuit includes the settlement includes steps the company must take to lower pollution and settle violations. Shares plunged on friday. Holiday sales of the thousand dollar iphone came in lower than expected. The also reports of declines of the average selling prices of iphones in the current quarter, suggesting the most expensive models arent as popular. That is your Bloomberg Business flash. Going tonvestors are be paying a lot of attention because we have the bank of england announcing its latest Rate Decision and inflation reports. To keep thexpected benchmark Interest Rate at 0. 5 . But updated forecast for growth and inflation may spur a rate hike. Economic forecasts were published this week. O area pmit the eur readings. We have the head of middle east research at credit suisse. I want to start with the chart, the 10yearting yield with what is going on in europe. The u. S. Isnt the only place in tightening mode. The ecb is reducing asset purchases. The bund is moving with the tenyear yeild. That rising relation is taking up to 4. 6 . How are you viewing europe at the moment . Fahd european equities, we remain of the view there is more positivity to come. We are seeing the pickup we have been waiting for for quite some time. If you look at the longterm wet of european equities, have seen a positive performance, but in terms of longterm trends, we have a bit further to go. You have to be careful about the exposure. That the rise in domestic demand and the straightening of the currency, Leicester City makes more sense. Domesticity makes more sense. 41 of analysts in a survey by bloomberg sees rates going up in may. Which side are you on . Grexit keeps moving forward and backwards every day. Brexit keeps moving forward and backwards every day. Fahd we have seen the pressure on sterling for some time. Tracy explain this. The sterling has been so resilient. Fahd it is a valuation game. With regard to the bond space, expectations come back and forth. Valuations have not been as down as they happen the currency space. Currency two see a deviations below fair value. To the 120e down level, we knew this is not going to sustain. It is so far out of the valuation range, there is no way it can sustain. Yousef how are you expecting the boe to move . With the air on the side of caution because of all the uncertainties that exist around the Brexit Process . Fahd yes. Tracy how are you looking at the rest of europe . Concernsnore all the we had about idiosyncratic political turmoil, we have the dutch elections, french elections, you wouldve performed incredibly well. In 2018, it feels like there is not a lot of Political Risk on the calendar. Drama, italian election but investors dont seem that concerned yet. Are they making a mistake . Fahd we think there was a lot of concerns, but it has moved forward possibly. The recovery has come through well. We dont think the political concerns are the main areas area to be worried about. Maybe they are moving away from the more defensive names, moving more towards energy and well,rials, telecoms as thats pacific to the cycle happening in europe. Specific to the cycle happening in europe. To talk about Asset Classes in terms of your top call outside europe and the u. S. How should investors be positioning himself themselv es to capitalize . Tod you have that exposure equities, but you need to be exposed to the market, rather than to graphically. Geographically. You dont want to be exposed to the broad market in the u. S. , you want to be exposed to the areas that we think are going to be well served over the next few years. We are talking about super trends, themes that have a fiveyear horizon. The 65 year plus demographic, anxieties pushing back against globalization, helping a lot of national champions, pushing technology and the way it helps human beings and the way it is encroaching on a lot of sectors it was never in before. These areas are set for growth for a number of years. Tracy were going to have to leave it there. Fahd, we will get you back to talk about all the super trends at some point. Lets hope lets head over to the word world of investment banking. The lender posted a Third Straight annual lost. John cryan is holding out hope in believes both return 2018. Matt miller spoke to him about the turnaround plan. I am more confident this year. But i dont think annie bank what is his pate any bank would anticipate what happened. We seem to have gained some revenue share in the Fourth Quarter market shift. Maybe it says we are in this recovery phase. I think there has probably not been as good of a time to be in banking the three main economic blocks. The macroeconomic backdrop is marvelous. There are some drivers on the institutional side, particularly looking forward to euro rates, that will tried activity. Reasonse of the main you have to push those out is of 900u didnt dispose Million Euros in assets on time. John they dont really make much of a contribution, the businesses. Tt does the Asset Management ipo fall under that umbrella . You said you hope to get that done by the First Quarter in november. You were inre the securities world, you have to be careful about what you say. We have made great progress, but were not quite there yet. The markets are in great shape, as long as we take the first available window. Matt one of your colleagues says it wants to dispose of 16 billion assets in the first half. How have your conversations with hna been . Is that stake one of the first things you think you will sell . John i dont know. We never discuss it with them. It is a matter of public record. I dont know what their intentions are. A relationship with them is fine. Our relationship with them is fine. We have a great relationship on her boards. On our boards. Att when i talked to bankers in london and frankfurt, this was one of the things on the front of their minds. There was a lot talk about how you may have lost talent because of your previous were numeration models. Renumeration models. Are you paying to get the best and brightest on wall street . Year. We took a risk last it was measured. Were not being semantic. A lot of this is a must arithmetically driven. Almost arithmetically driven. The compensation world has changed. For our best people, we demonstrate we are paying markets by hiring as well as retaining. We do the best we can. We have to balance the interests and thetakeholders overall compensation for 2017 is always going to be better than 2016. We didnt award any individual awards. Matt and 2018 . John it has to be performance related if it does better. People didnt get paid in 2016. Side wee generous erred slightly on the generous side. But our credit business has had a good of a year as it ever had. We are investing in others. We talk about investing for the future. We have tried to strike the balance right. Yousef we will talk about the impact of rising bond yields in the u. S. And around the world. 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The Prime Minister condemned the attack, believed to up and carried out by a rightwing to have been carried out by a rightwing sympathizer. The Turkish Military is said to have suffered one of its deadliest days offensive against the Kurdish Militia. Five more soldiers were killed yesterday when their tank was hit. The casualties were part of operation olive branch, which turkey launched against the militia last month. Yousef democratic lawmakers in the United States are accusing house gop members of being part of an effort to obstruct Robert Muellers investigation into the 2016 election. A memo alleging bias in onllers probe was released friday, following approval from president trump. He tweeted this memo totally vindicates him, and calls it an american disgrace. Cryptocurrency hit a low of 7,600 on friday, before closing just over at eight point eight and a half thousand, less than half of what it was worth on december 18. Bitcoin has been hurt by expectations of more government , fears of price manipulation, and include concerns it is only another asset bubble. Janet yellen expressed disappointment at not giving a second term at the fed. Made it clearhe to the Trump Administr