Than trump as it gains a foothold in the Global Energy market. Its 8 00 a. M. Across emirates, 4 00 a. M. In london. Welcome to bloomberg markets. Im in hong kong where it has just gone midday. We are seeing the asia regional benchmark falling for the first time this week. You can see right now a bit of a mixed picture. The nikkei is trading on the downside after we saw that game against the u. S. Dollar although the dollar index is gaining right now against the yuan. The be ok leaving its key Rate Decision unchanged. We also heard from the governor theres a low possibility the u. S. Will name korea a currency manipulator. This is a snapshot of what is happening across markets in asia , but it has more to do with the amongd more uncertainty investors. Especially the terminology. Fairly soon is how they described the possibility of further rate hikes. Lets see how the market is looking at all of this. Very interesting. What youre looking at here is how the market was positioned hikedime around the fed rates in december. Three weeks out from the ,ecision, that Straight Line thats 100 , the expectation for the rate hike. If you look at the blue line, aat is the expectation for march hike. We are back down here a little bit over 33 . Very different set up and lead up than what we had back in december. This part of the world, we are edited of hours away from the opening of the emirates market. What a day it was. A lot of upside pressure in dubai, up 2. 4 . Idolizing key terms of the recapitalization plan by the end of march. s leading gains. We did see weakness in property stocks as well. Egypt, we are seeing Foreign Investors taking profits, following the index down a little over 2 . Headlinesow taken on from around the world. President donald trump delaying the release of his revamped immigration plan until next week. Official terms said the new executive order would be announced this week. Causedginal plan confusion or u. S. Air force, triggered protests, and was blocked in the courts. Treasury secretary Steve Mnuchin dollar jirgas confidence in the u. S. Economy and its appreciation over the longterm is a good thing. Gains in theent dollar to support for donald trump who said before winning the election that he favored a weaker currency. Independent french president candidate Emmanuel Macron has agreed to an alliance with his rival. Polls show Marine Le Pen leading. I believe that if he wants to for french politics, he should abstain from being a candidate. He represents only for the time being 5 or 6 . Alreadythe situation is complete and i dont believe it will be very positive to have another candidate. South koreas centralbank left its Interest Rate unchanged for an eightmonth. The be ok holding the sevento purchase rate at a record low, pretty much widely expected, though. Meanwhile, the economy looked to be improving. The scandal surrounding the continues. Weve got the world covered, the world of business, that is. 2600 journalists and more than 120 countries. Thanks. The minutes of the last fed meeting show members anticipate raising Interest Rates fairly soon in light of an improving economy and the possibility of higher inflation. Joining me to talk more about this is our Global Economy editor Kathleen Hays. Lets jump into these minutes. Far from really a nugget of information. What struck you . He get 15 or 16 pages of carefully written minutes. Theres not a sentence, not a putse that the people who these notes, these minutes together do not choose very, very carefully. Thats why there was so much focus on this one sentence. Many participants that means probably more than half of the people, the fed officials at the meeting expressed the view it might be appropriate to raise the federal funds rate again fairly soon those are the words that made all the difference. Mean . Does that more than one beneficial including Dennis Lockhart last ,eek and i interviewed him also, it is a live march meeting. Live does not mean the fed walks through that door that is now open to a march high, but it means the fed is thinking about it, looking at it, and that is what is so important. J powell, a governor at the board for the fed in washington speaking in new york today said all these same things, but he added that he does not see the economy overheating. He still sees some slack in the labor market. He said one thing the fed can do it can be patient, so seeming to say to me hes going to watch the data between now and the march 15 meeting and again, get some strong data, get a big consensus, maybe the fed moves, but maybe they dont. Markets are on notice now that the fed is thinking about it. Am curious about the market reaction. What took the biggest hit . The reaction was muted generally. There was hope it would deliver Something Different than the statement said last month. The reaction was slightly dovish. You saw the yield come off of it and the dollar get hit slightly, so the slightly dovish interpretation and then markets are aware that march is possible but not probable. In fact, very improbable. Very hard to get enough of a pricing in for the fed to deliver in march i think at this stage. What struck me was the opinions on the back of these fed minutes, we see a shift downward in terms of expectations for a rate hike in march, but the reality is there are contrarians out there and those who say that the market is ms. Pricing this, like mohamed elerian. Exactly. Im so glad we are pulling our world Interest Rate projection page up on the bloomberg. We are looking at the odds of a hike. They are only about one in three for march. You have to get to me before you see anything above 50. Most say june is more likely and importantly, Bloomberg Intelligence is saying the same thing because they are waiting for trump to take what he will actually do. Not get a sense of urgency from the fed minutes, and finally, they say they will be content to wait until the second quarter. That would mean jim would be more likely. Mohammed said the odds of a hike are up to 50 or 60 . When he read the minutes, he sees the bond market underpricing the risk. About three weeks for us until. He fed can decide again, you have to watch inflation, retail sales, the jobs report, and maybe more fed speakers if they are really serious about making that move, giving us stronger signals than these minutes did today. Marketsre currency taking all of these developments that kathleen has told us about . The dollar index right now. Eeing a little bit of strength i think generally, you are asset pretty tired classes, particularly in currencies, but also rates. Rates have been in this range for a while. They threatened to break down for a while but never did. Short treasuries come along dollar have come out in the last couple of months. Kathleen mentioned trump plus speech next tuesday. I think that is critical now. If trump doesnt deliver something concrete and really in terms of a clear, detailed plan, that risk premium for march to get priced out entirely and you could see a capitulation in dollar yields. Thank you so much for joining us and also Kathleen Hays from new york. You can get a market rundown in 1click, and theres all the commentary and analysis from experts. You can find out what is affecting your investments right now. South africa toss finance minister tells us how he plans to keep the nations budget in check. We will also show you what is happening with volatility. This is bloomberg. Welcome back to Bloomberg Live on middle east bloomberg tv and radio. We are seeing asias regional benchmark falling for the first time this week, down. 1 . Lets get the details on how markets are trading across the region. It had to happen at some point. This rally had been going a little bit too hard, and of course, we had those fed minutes. ,e see the dollar, of course trading higher. Were still seeing Property Developers very much supported by these hopes we are seeing property curbs coming through from china, and of course, still very strong demand. In shanghai, you are seeing weakness to the tune of around strongd of course, effect on the nikkei. No surprise from the bank of. Orea of korea saying there is a very low possibility of the u. S. Naming korea a currency manipulator. Audit leisure is a stock that has been coming under pressure during todays session. We also had some disappointing numbers out of australia as well. That has weighed on the aussie dollar. A quick look at the yen because that is the main focus. In terms of currencies today, a. Ittle bit stronger i guess, a little bit of a retreat. A very strong rally we are seeing across asia. Thanks. Lets talk a little bit about south africa, specifically the budget statement. We did have that announcement and of course our interview with the finance minister who presented the statement that was designed to plug their revenue shortfall. Gordon has been at all its with president jacob zuma. This is key to the countrys finances. Forecast, by definition, is a forecast. You work out your expectations and work out the positive factors. We pointed out, jobs, commodity prices, and so on, and then you do the best possible prediction that you can. Economists are often condemned for not quite getting it right. As professionals, we have to keep our focus on our job and try to minimize the kind of disturbance that all these other and take a lot of encouragement from the kind of support we have from our own in the kind of people who appreciate the work thats just treasury does. There said in the speech, will always be distractions. You just have to ignore them. Secondly, for historical reasons, nothing to do with this country. Base. Narrow tax you have to do the best that you can buy not overtaxing the narrow base on the one hand but at the same time finding opportunities on the other hand. Our plan has probably the least number of exemptions in the world, so that is what makes it good. We will see how we can enhance and take a count. There were finance ministers before me and there will be finance ministers after me, so i do not think it is the individual that matters. It is the policy that matters. If we keep good policy, i think we will keep people happy. People come and go. We do not do things on our own, as i was explaining earlier in the morning. We made all the right choices, despite all the difficulties that we had. That was the South African finance minister. Let me show you what has been happening with the local currency. This this is your total return. This is in the emerging markets over about one month. Youre looking at leads from the peso, the lira. Ist is even more interesting when you switch the bottom left to volatility. Take a look at that. The South African rand with the highest volatility at the moment, just under 18. It has been one of those big movers in the currency market. Right now, though, the index gaining. 2 . Coming up next, how will higher Interest Rates in the u. S. Play out in the middle east . E asked the ceo this is bloomberg. Welcome back. You are watching bloomberg. Guest,s go to our next who will be eagerly watching how the markets at this point in the eagerly watch the possibility of raise rates in the United States. Great to have you back on the program. Last year, this was a verily a fairly straightforward play for you. Your argument was lower oil prices, you got more disruptions in markets, lower assets, so a lot to choose from. Now you have rebounding oil prices. Arguably, this makes things a little more complicated and we opened up this chart for you here, which shows the in thetion twin stocks price of brent crude oil. You can see we returned to a positive correlation in january, although taking a little bit of a breather. How does your Strategy Change with this rebound in oil prices . Sure, great question. I think the fiscal cycle remains very much contractionary, which means that consumer demand will continue. The cost of doing business will go up, and as a result, corporate Profit Margins are going to be squeezed out. Its really important to note that our universe of investments is not just equities. Much deeper universe, and we invest across the capital structure. In terms of sectors and what you prefer because research has come out that made it clear pointing to this transitional transformation process currently under way and saudi arabia, and they say you should be looking at petrochemical and health care as well. Is that something you can get on board with . Sure. In terms of the distress opportunities, the big source of distress for us continues to be the construction a general contracting space, where essentially youre looking at corporates that are on the one hand directly exposed to the Fiscal Consolidation and on the way on the other hand are being starved of credit, so that continues to be the biggest focus for us. Were spending a lot of time particularly in the Health Care Space where we are working with hospital operators and service dire need of working Capital Solutions. We also look at the education space. Theres a lot of School Operators that have overextended themselves during the boom days and are now struggling to fill seats, so that is an area of focus for us, and more generally working with banks around identifying Capital Solutions for them as well. Some legislative and regulatory amendments are happening. Lets talk a little bit about those banks. In the uae, they have seen a lot phase ofs since the limitation. What are you seeing their . Nothing new, but the phase implementation for us is divergent priorities between stakeholders in the banking sector. On the one hand, you have regulators putting pressure on. He banks with that, they are being forced to rethink Business Models and kind of what their Product Offerings are, and on the other hand, you have shareholders who are still expecting higher dividends from the traditionally high dividend paying banking stocks, so what we have seen that create is a flight to safety in terms of how they are building their asset books today. All the banks are fiercely competing for the large blue chips, the gres, and they have almost abandoned entire segments. Thats what i want to ask. The flight to safety also means there are those startups and midsize businesses they get left behind. What is the problem their . The problem is exactly that. It is no longer welcome business for the banks. Strategybout the beyond saudi arabia and the uae . Any more exotic places . You have a very wide geographic footprint. Our universe is about 21 countries. Extends all the way from turkey down to south africa, from bahrain to morocco. Any picks in that space . There is no particular pick. Our investment process is quite rigorous and exhaustive. Were spending a lot of time right now in south africa, in turkey. There is a lot of distress. We will have to leave it there, and of course, we will have to follow up. Thanks for joining us. Still to come in the program, we will be talking to one of singapores biggest Property Developers on why it has seen a plunge in profit. Thats next. This is bloomberg. Kong, 8 30 inng dubai. These are some of the headlines from around the world. Nissan says the decision announced a short time ago was the recommendation and hell seek a renewal in june. Chinas Social Security fund has started buying hong kong equities in a bid to achieve higher returns. The firm has been Trading Hong Kong stocks for the fund. The benchmark age is among the top performers. Astronomers think they have discovered a system of sevensized planets orbiting a star, many of which could have liquid surface water and therefore possibly life, life as we know it. The planets are circling a dwarf star about 45 years from earth. Three fall in what is called the goldilocks zone where conditions like water and temperature make life theoretically possible. If we get a hint that finding a second earth is not just a matter of if but when. Protesters opposing the Dakota Access pipeline are setting fire to tense and buildings as the deadline passes for them to leave. About 20 others say they plan to stay. Environmental activists oppose President Trump building the with Energy Transfer partners. 2600 journalists in 120 countries, we have the Business World covered. You are watching bloomberg. Singapores secondlargest developer was out with earnings before the market opened today. How did they do . For the fourth quarter, profit was down 40 , but thats because of a one time boost a 2016. When you look at revenue, it was up almost 40 . Mind more homes, and never the challenging environment. It was pretty resilient. The executive chairman joins us today. Thank you for joining us. A rare opportunity. When you look at the resilience of you and your rival, is there a sense that the worst is over . I do not believe the worst is over, although i think it has slowed down. We do what is considered most important. We spoke to the minister last week, and he suggested demand has been resilient, so theres the propertyift cuts. Do you share this view, and has impacted your business . I think we have already countriesd to various including japan, china, australia, u. K. , and to some extent, u. S. We think it is going to last a little while more. On a newity is Initiative Like technology and ie way we do business, so feel that this is already laying the foundation for us. You said a while more. When do you see prices picking up . They have been down for the last three years. I think they had been down for more than the last three years. A lot of it depends on how much more we will supply. The developer will try to hold on as long as possible. At a certain point, they h