Twitter. Class i am across the emirates, 4 00 a. M. In london 8 00 a. M. Across the emirates. Welcome to Bloomberg Markets middle east. Claim seeing the regional index gaining slightly. A mixed picture. Investors trying to gauge a response after the fed left its key benchmark rate unchanged. Lacking clear direction at the moment. Yousef a pause for reflection in many of these asset classes. F1c offering little surprised in its statement. Of this chart gives you better expected these markets getting a lot twitchier. I pulled some strings to get you this number. 3 key indices. Fcx isity in global high, in white. Look how low that is compared to other indices. The bond index volatility. Keep an eye on these spreads with the rising Political Risk in the mainland continent. We are seeing volatility with the dollar index. Although volatility has been subdued after the fed rate. This chart will give you some clue to the direction of the dollar. Another explanation for the shoddy performance of the u. S. Dollar is that shorter treasury yields, the fiveyear inflation index treasury has been more subdued than longer data. Which one do you follow is the big question. Followaying you have to with whatever suits your portfolio. Check of theet a asian markets. All of this volatility being felt across asian markets. 7 1re seeing nikkei down 1 0th of. Of 1 . Th the housing index is down 6 10th of 1 . Regional benchmark in the green, gaining 0. 1 . Under two hours away from opening of trading in the middle east. Yousef two hours away, dubai and abu dhabi 10 00 a. M. Local time. Let me show you the moves that mattered in the last trading day. S o 1 f. S up 3 10th important to point out some of these financials putting pressures on the abu dhabi index, specifically the National Bank of abu dhabi losing 5 after those results. Putting pressure on banks and energy stocks. Utilities offering strength in terms of positive sentiment. Egypt extending losses. Quite a downturn, down 7 10 of 1 . With the turkish lira, we got a factorst the underlying faced geoPolitical Risks and rising global Interest Rates very much in place. All of this with turkish shares at a 20 month high. Lets check with the first word headlines from around. The white house says it is putting everyone on notice for posting Ballistic Missiles. Michael flynn says tehrans actions were in defiance of the Security Council resolution passed after the 20 team deal. The 2013 deal. That is disputed by the eu witnessedtrump has the swearing in of former exxon Ceo Rex Tillerson as secretary of state. Vote saul centers split among saw lawmakers split among party lines. Some saying that tillersons business connections allow him to make decisions abroad. President , id as served their interest and will always represent the interest of all of the American People at all times. The bill to take the u. K. Out of the European Union has passed its first test in parliament with lawmakers agree to allow the Prime Minister to start negotiations by the end of march. Ut proeutheresa may, b lawmakers want that should not be warned that should not be mistaken for unconditional support. Global news 24 hours at powered by 2600 analysts in more than 120 countries. This is bloomberg. The Federal Reserve gave a nod to the rising confidence generated by President Trump at its first meeting of the year, but offered few hints about rate hikes. Policy baton passes to the bank of england. The Bloomberg School of economics Kathleen Hays has been watching what the fed is saying. The fed made one small sentence to indicate it is watching what has happened since donald trump was elected. One of the most obvious signs to businesses and consumers, his intentions to cut taxes and spending. He moved quickly on trying to. Lets remind everybody that the key rate is unchanged. Increased until the end of this summer. The fed can send signals if it wants to. Measures of consumer and Business Sentiment have improved of late. On consumer confidence. The middle line is the main index. Of top line, expectations the future leading the pack. Donald trump is having an impact. Bloomberg intelligence wraps this up, saying the fed chose not to rock the boat. They dont want to send any premature signals of any change. They are getting ready to hike later in the year. Yousef with a slave that strategy aside for the moment. Le tus leave that strategy aside for the moment. We havent heard more on the u. S. Dollar strength. You are explicitly something that donald trump wants, a Strong Economy but a weak dollar. Lets look at the isf manufacturing index. Funds were strong, there was a bit of a selloff. Purchasing managers climbed to 56. The market pmi is also climbing. We see this steady improvement in manufacturing. The dollar may take some time to bite. The u. S. Is not an export dependent economy. Import helps with a check on inflation. Watchers saying expect economic surprises could lead the fed to hike its key rate in march. Many are not thinking about that at all, but waiting for june. We got an update on adp employment. 246,000, up from the estimate of 160,000. That is the kind of thing that will make Bond Investors nervous and cheer on equity investors. Great to have you on the program. Lets dig into the raw numbers. Bloomberg intelligence forecasting the next rate hike at the f1c meeting. Where do you stand now that you have had time to digest this is just statement . We are similar. We think the next rate hike is june. I think the risk is rising that it could be march. Similar,ment very although as you just noted, consumers stressed that consumer Business Confidence is rising. There is a disconnect with Business Sentiment is outstripping the kind of Court Activity data. Of core activity data. Activity data catches up, the fed will have to change. Small Business Confidence is strong. They are large players in the economy. Certainly we are forecasting 2005000 jobs to be createda t n omura. Another thing that could add to the move is if the dollar keeps weakening. That would keep further pressure on prices. Sheri you talk about this improved sentiment. Sentiment can be very fleeting. Will this translate into tangible Consumer Spending by people and businesses . Sure. I think that is the big question economists are waiting to see. It is not just in the u. S. Seeings well, which are confidence rising. Hand, fiscal stimulus in the u. S. The fish on the other hand, it could hold Business Sentiment longer. Think this child report friday will be a big litmus test. If it is on the strong side, the market will start to say hey, this optimism is starting to feed through into real spending. Shery i want to talk to you about the upcoming boe policy decision. Do stick around. Coming up later in the show, we speak to a National Investor about how earnings out of the regions Top Companies will impact markets. This is. Bloomberg. Shery welcome back to Bloomberg Markets middle east live on Bloomberg Radio and television. Yousef lets jump straight back into the sea. In terms of market action, juliet has the better view. That such a great view. Not such a great view. We are still awaiting the u. S. Drops report, and the bank of england meeting today. We have seen the dollar weakness drive sentiment. Cba in australia saying the dollar is on the offensive. Hong kong playing catchup to the global selloff when it was closed for the lunar new year. China closed for the remainder of the week. The nikkei pushed down 7 10 of 1 . Not a lot of conviction in equity markets. A lot of weakness in commodity players. Australia is down. Singapore is also a player. India has turned negative. Commodityuick look at and dollar spot index. Crude coming under pressure in the futures market after a 2 rally during wednesdays session. Dollar under pressure. Gold snapping the recent downward trend, resuming a rally. Thatis one of the points we are seeing safe havens back in play. Lets continue our conversation with the chief economist for asia x japan at nomura. One of the biggest movers is the korean yuan. We saw south koreas inflation levels of the highest in more than four years. How does this complicate matters for the bank of korea . The economy there is not doing great. Rob that is very true. Inflation surprised me on the upside. I would add that the main driver is commodity prices, which is more costpush inflation. It is not because the economy is growing strongly. Domestic demand is very weak. For korea, outside mexico, it is one of the most exposed emerging markets to trumps America First policies. There are also domestic politics. It is certainly not the case that the bank of korea should think about raising rates at this moment. If anything later this year, we could see a rate cut. Shery rob, you mention in your notes that india is vulnerable to President Trumps economic policies. Explained to us why. Rob all of asia is exposed. Through exposed more the immigration tightening restrictions, which could affect its services sector. Israll, within asia, india one of the ones least affected. Was impressed with the budget that came out overnight. An important state election coming up. Thee were concerns that government might go for a populist budget because of the demonetization of the economy. Yet they stuck to a pretty prudent budget. It shows they are in for the long haul. They want to avoid boombust cycles. They want higher sustainable growth. I was encouraged by policy in india. Yousef let me pick up on what he said about donald trump. The ecpr function, just to run you through the obvious contenders in terms of trade growth china, canada, mexico, your trump 3. Your top 3. Then you get strong asian representation. Isolating mexico in this conversation is perhaps missing the Bigger Picture, is that asia will be a lot more exposed and more vulnerable. Yousef. Olutely to takee house has yet aim at asia. The reality is if you want to reduce the u. S. Trade deficit, the bigger fish to fry are in asia. The u. S. Trade deficit with china is almost six times bigger than that with mexico. The other critical thing in asia is the supply chain. So much of chinas exports to the u. S. Have high valueadded content from japan, korea, taiwan, singapore, malaysia there will be ricocheted effects. Asia is very exposed to any trade protectionism. Asking, Client Survey is there a link between trade protectionism and Foreign Policy in terms of negotiation . 46 of respondents said definitely yes, 41 said probably yes. There could be an intersection between geoPolitical Risks and straight protectionism in asia. Yousef if we think about this in a zero sum way, whenever there is a loser, there is going to be a winner. Who stands to gain from all of this in asia . Move toward America First policies overall in asia, not that much gain. Overall, the only economy we thought could gain is russia. Ems will lose. America first could mean em last. You a preview of what is to come on the program find out how i chinese oil trader is contribute to the shakeup of global supply. We are live in singapore with that story with all the details. This is bloomberg. Shery welcome back. You are watching bloomberg. Yousef lets get a quick check of the latest business flash headlines. The offer to the Baby Food Bank or at 60. 7 billion, financed by cash and debt. Johnson shares have fallen 50 in their peak, by a resurgence in breastfeeding in china and elsewhere. Shery japans biggest Pharmaceutical Company beat quarter estimates. Its all revenue of 4. 1 billion in the three month end of december, as it got a boost of gastroenterology drugs. It raised its forecast to 403 million. Yousef volkswagen has agreed to pay 1. 2 billion to resolve u. S. Consumer claims of cheating emissions tests. The proposed settlement is with the federal trade commission and drivers of about 78,000 diesels. A spokesman buybacks liked to more than 23 billion. Crude oil buying spree is contribute in to that shakeup of supply flows around the world. Oil. E talking about china what makes middle east crude purchases so unusual . Oils recentina buying on the window is quite unusual. A chinese trader would usually procure crude on the spot market. In the month of january, we noticed they went on to this crude pricing platform. They are bidding for dubai on the window. That has led to dubai prices going up. These prices would then funnel into Oil Benchmarks that are used to price crude all over the world. Yousef give us more context in terms of the movement into this prices across the different regions. Have significant where they . They . Significant were this is a significant move by chinaoil. When they purchase middle eastern cargoes, the price of dubai right is compared to other benchmarks in the world. Rises compared to other benchmarks in the world. Dubai prices would rise against these benchmarks. That makes middle eastern oil more expensive than oil that comes from the Atlantic Basin into asia. Yousef i found fascinating in these numbers is that it tells a bigger story in terms of shifting trade funds trade flows of oil around the world. When we see the dubai price it princenst wti, fielder arbitrage window for arbitrage window opens. Yousef thank you for that, plenty more coming up. This is bloomberg. Andy is 12 30 in hong kong these are the first word headlines from around the world. Two down, one to go with fed decisions. Attention turns to the bank of england. Mark carney is not raising rates until 2019, but slowing inflation is prompting increasing bets that he may move next year. Mexico has begun a 90 day consultation with the Business Community before talks to caps off. To nasa. Talks will begin in may, and witho will seek tpp deals singapore and malaysia. It will discuss the effects of nafta over the past decade. Oil halted its gain is the biggest expansion of u. S. Stockpiles counter output russian. Inventory increased by 6. 5 Million Barrels to the highest levels since august, more than double analyst estimates. Oil fluctuated above 50 a barrel. Russia joined opec to cut supply. Australias Prime Minister has suspended his countrys relationship with its biggest ally after reports he was raided by President Trump over a Refugee Resettlement deal. On the void comments weekend phone call, but called the relationship strong. Trump has tweeted he will study deal onalls a dumb refugees struck by the Obama Administration. 2600 journalists in more than 120 countries. This is bloomberg. We have been talking about the feds latest policy statement. A very important decision, and gauge for new ones. It is proper that the fed is waiting for how President Trumps policies play out. There is a lot of focus on gdp growth that will come from fiscal stimulus, and less so the fed raising rate hikes. It is in line with that expectation that the fed will raise Interest Rates to 2017. The focus has shifted toward fiscal stimulus. Yousef no surprise janet yellen is taking a soft approach to the new administration. I guess she doesnt want to get involved in a political debate. She says ok, whatever he does delete to fiscal stimulus, we will see it in the data. But please dont speak out on the guy that probably wont to fire you. You. Nts to fire she is naturally a doveish person. Shery something that trumps policies could raise the deficit to three or 4 of gdp. In terms of fiscal policy, it means an increasing deficit, perhaps three to 4 of gdp depending on the Corporate Tax rate. Liquidity stock market has eased off its 2017 high after a world beating rally since the start of the year. An ongoing story. Lets welcome our next guest, senior vp of management at the National Investor. Thanks for coming on the program. For context, this chart tells the story. Our clients can pull it up on bloomberg. Take a look at that that is the rally in a matter of less than 60 days. At the bottom you can see the capital inflows. Those are the volumes at the bottom panel here. Tell me why anyone in their sane mind should be putting money into a market with rsi about 70. 70. Bove gc has arontier or better picture from a microeconomic perspective deficitpected budget around 10 . , oil prices at 53. This is getting a boost for the country. In addition, the bank has been very conservative. ,hey have been pushing banks which has been affecting the profitability of the banks. Many investors have not looked at kuwait. The sudden surge in volumes is a big question. Expectation ofhe frontier markets. We are expecting kuwait to search. What isto cross over to the engine of this part of the world, saudi arabia, the biggest stock market. This ea function is amazing. Out of out of 168 companies tht have reported. You will notice the many shades of red. The earnings site has been on the downside in the fourth quarter. What is your take on how the quarter has passed . Ali the results of the saudis were a bit lower than expectations overall. You have seen a huge rally in withast quarter with 70 saudis. On an expensive side at this point in time. Expensive scientists point in time. Expansiveupgrading marketo the emerging