Decade. Yousef it is 8 00 across the emirates. This is Bloomberg Markets middle east. David just past midday in hong kong. When you look at the markets, i would describe it as a tepid start. It is fairly mixed out there. Bull or bear, you can make the case. Bond markets, a consistent theme. Yields are up across the region. Ore prices in china following the fixing after their prices entered the their market into the weekend, yousef. Yousef i am watching some key gainsssets, crude holding after spiking after news of the military strike in syria. It is considering and opec extension. There is a downside with drilling rigs in the United States currently up again. Level. Key technical south african, a 10 year yield. This is the first day that the bonds are carrying junk grades, First Time Since 2000. It is two hours away from the start of trading in this part of the world. We will be kicking off with dubai and abu dhabi. Dubai losing 0. 3 . Volumes 30 ng weaker. Some strength when it comes to telcos and consumers. The weakness came in the Consumer Discretionary story. Let me break this down for you. The worst performer in this part of the world. , industrials, financials, materials down. Were relatively unscathed Consumer Discretionarys. This is a reaction that is not factoring the decision by the Egyptian Government to implement the threemonth state of emergency. This was their reaction when actual news of the attack materialized. Lets check in on the first world headline. The United States has denied any plans for a regime change in north korea. Several warships were scheduled sail north. They will safeguard u. S. Interests in the area. Russia is strengthening its presence in the eastern mediterranean. Headed for the syrian coast. A new poll suggests the far left candidate melenchon is gaining ground with two weeks of campaigning left. 13 survey gives him support, head of francois fillon. Macron and Marine Le Pen are tied. Odrigo duterte is in the middle east this week. Deals in saudink arabia and qatar. The philippines are looking to establish a banking presence in the region. Day innews 24 hours a more than 120 countries. This is bloomberg. Yousef lets get back to one of our top stories. Egypt has declared a state of emergency after two bombings killed more than 40 people on sunday. Presidency see says the measures president sisi says the measures are to protect the country. Who we are doing this only to protect our country. Yousef the attacks on the christian minority are the biggest since the president was elected in 2014. Story. Et more on this this is a major setback for this government and it comes in a few months from the last attack. Ask, we might as well what is the president aiming to , appearing a minimum firm. Analysts say that there is little that can be achieved on the ground. Nai withhis tried in sa little success. Defeating it takes several years. The thread is whether this is a oroff outside of sinai whether we will see more attacks like this. That would indicate that the Islamic State is expanding beyond the confines of northern sinai and then you can start to worry about targeting major tourist targets. To futuren it comes Economic Policy, now we know that the three months of emergency has been declared. What are the implications . Eighththere risk is Economic Policy takes a backseat. They signed the imf Loan Agreement and there are measures that should be taken under this agreement. There are more tough decisions that should be taken. Nowng these attacks right while egyptians are suffering from inflation, will the government think, lets delay these decisions . This is something that people will be watching out for. Justf historically, not in egypt, states for emergencies do not go down well with foreign capital. Guest precisely. Gainshas been reaping the from the imf accord. You have foreign inflows in equities, foreigners purchasing egyptian debt. The next stage should be fdi. Would you say, should i approach the country or not . Is of the key indicators, it monday. Foreigners are back in the stock market. Are they going to see opportunity to go in . Things are ok. Well foreigners participate this week in local currency options . That would give us an indication on where the sentiment is. Yousef great to have you on the program. He get a roundup of our top stories here. This is for our bloomberg subscribers on your terminal. It is basically everything you need to know. It is available on our bloomberg cap. Berg app. Coming up on the program, saudi arabia says sound says no new taxes. Yousef the florida meeting between President Trump and xi jinping. This is bloomberg. Yousef this is Bloomberg Markets middle east. I am yousef gamal eldin in dubai. The leaders of the two largest economies in the world had their first facetoface meeting even with her talk overshadowed by the u. S. Missile. Trike in syria our chinese correspondent has been following this for us. Your first takeaway is, it seems like they like each other . And outstanding relationship is what President Donald Trump said about xi jinping, with him saying that he formed a working relationship and a friendship with trump. Some very warm words from both of these leaders. Upt is seen as a win leading to this summer despite the barbs from the u. S. Toward china, regarding trade and taiwan. A resetting to some degree of the relationship. The hard work starts now. They will have to work through issues going forward. From the chinese perspective, this happened during a crucial political transition. It was important that president xi jinping showed that he could handle donald trump. Somebodya bit from from Albright Stonebridge on what this means. 2017 is going to be a sensitive year for xi jinping. At the end of the year, he is going to be reselected to another term. He will make sure that he can consolidate power and minimize the chances of opposition. He is going to be quite conservative in what he wants to do. The summit is a part of the process. Reporter xi jinping invited donald trump to china and he accepted. This 100 day plan to figure out some trade strategy is forward, setting that aside, in terms of geopolitics, north korea is the elephant in the room. Reporter it is the number one tension for both countries. We saw some movements over the weekend. The u. S. Diverting one of their carrier fleets to what the. Orean peninsula Rex Tillerson said that north , but alsold heed saying they were not looking for a regime change. There is a gulf that remains between washington and aging in how to deal with pyongyang. The clock is say ticking because it seems the North Koreans are getting closer to having an Intercontinental Ballistic Missile capable of reaching the United States. They want to pressure china but we are waiting to see how these powers online. Yousef Tom Mackenzie live at a beijing. Lets bring in the head of ficc charter bank. You might be positive on the fact that there isnt a trade but you aremoment worried about north korea. Asian markets have a substandard track record of pricing. How much underpricing is there . When you look at the region, the asiapacific doesnt have a tremendous amount a history of geopolitical risk. The thought of that has been concentrated in other parts of the world. Korean equities offer the best historical example of how markets could behave. The real question is that it is coming at a time when volatility is already low. In asia, there is a lot of focus on improving export data. Will that remain just a shortterm reaction as has been the case . Couldnt last a little bit longer . That is the perspective we are trying to take. If it extends, what is the first move . Move would best that we would see some volatility come through. Lookno regard to where you , volatility looks low. The question is how do you take advantage of that . It is very difficult to time. We are more in the camp of investing. You can use market pullbacks to purchase assets. There are many more domesticallyoriented markets. Both goodronments are and bad. We are looking to be bargainhunting. What form does the bargainhunting come in . I have a bloomberg chart. Everyone likes china. Now. Just very expensive both on a current and projected basis, we are back to levels last seen several years ago. Guest if you look at the index level, it is a diverse mix of industries. China andeout the old focus much more on what we call the new china, technology, consumer driven. Spentality is valuations time at average. We are much more focused on which way earnings are going at the moment. Yousef you mentioned volatility. I put together a chart that tells the story. We have crusted with [indiscernible] slumbering and waking up to you see that upward slope . That tells the story. Ideas . E your top idea is to focus on the japanese yen in the Singapore Dollar against the u. S. Dollar. We have seen it trending sideways. April has always been a week or month for the u. S. Dollar. We would see any such move as an. Pportunity usually, we would see riskier currencies weakening and money flowing toward the japanese yen and the u. S. Dollar. That is the way we think about positioning it. That offers opportunities on its own. Yousef we are just getting warmed up. We look at the view on how the latest job numbers will affect fed policy. This is bloomberg. You are watching bloomberg. Yousef im yousef gamal eldin in dubai. You had the st. Louis fed president saying they should expect to percent growth in the United States. Expected lower than jobs report suggests the economy remains in slow growth mode. He says the situation is not as positive as the fed would like it to be. The economy is not as strong as we would like. 2 growth isnt as fast as we would like it to be but it is beenstent with what it has years andt 567 there is no indication of further weakness so i think we could allow the runoff to occur. David lets talk more. When you look at the jobs number we got, it is one of those reports where it is important to average things out. I have a chart that does that. Average doeshe seem in tact. Did the jobs report change anything for you . Guest not at all. We are more interested in 36 month trend. The labor market is pretty close to full employment. We would all like growth to be faster. The reality is, markets are close to full employment. It makes sense for the fed to ease up on the policy and continued tightening. We have a reaction in the cold space after the officialsrom the fed and the geopolitical risk. This chart tells the story aired this chart and tells the story. Yen, and oil. Where is this going . Geopolitical risk usually would favor oil. Maybe that isnt the case. Gold is still on an uptrend. We actually did quite a bit of work on this. Risk that affects supply, that is what you see a reaction in oil. Close, but not quite there that is where we are seeing reaction. The perception that there is oil is out there, but the demand growth hasnt gone away. Only thing that can limit gains is u. S. Shale production. We think the direction is going up. David im glad they yousef brought up im glad that yousef brought up the commodities. You also recommend selling on strength. What is that level of strength . Guest we think that is closer to 1300. Since the start of the year, we think gold is going to trade sideways. That offers you a number of opportunities. Unless we are seeing a massive will, we think the rain continue. That is a wide enough range. It should be treated as a Small Holding from a longterm Risk Management perspective. Briefly, is the opec extension enough to support the oil market . Oil. it may be less about we think it is about supplies. The demand growth is coming through. We do not think a decision will genetically alter the trend. Thank you for joining us this morning. Here is a preview of what is next. We would talk about the geopolitics surrounding syria. This is bloomberg. Rosalind these are the first world headlines. Egypt has declared a state of emergency after the suicide bombings at two coptic churches. The attacks have been claimed by the socalled Islamic State. It is the deadliest assault during president sisis three years in power. Irans oil minister has said that a proposed contract model will attract 80 billion in investment. Iraninister says the Petroleum Contract is being reviewed by authorities. In january, iran named 29 Foreign Companies that would be allowed to invest after years of sanctions. The leaders of the two biggest economies say that the talks were a success and they have built an outstanding relationship. Xi jinping said they have established a level of trust. They agreed on a plan to address the trade imbalance and President Trump accepted an invitation to visit china. The head of indonesias Insurance Agency says the countrys banks will likely face more nonperforming loans. Said that they havent seen the bottom yet. She said the problem will keep success. Growth under global news 24 hours a day in one to 20 countries. This is bloomberg. David lets get the latest on the markets on this monday. Juliet is standing by. Reporter we are seeing resilience coming through. Top looking at what is most in the region. Gains are coming through in 0. 7 percent. The nikkei being boosted by the fact that the yens weaker against the dollar for a third day. You have also seen some pickup in emerging markets. Is here the highest level in one month. When you look at the ramifications of the geopolitical news on asian just take that away and have a look at the losers in the region. You can see weakness coming through in south korea. You are seeing some weakness coming through in iron ore which has officially entered a bear market. There is a little bit of weakness coming through. What we are seeing is a lot of resilience. The Australian Government bonds and gold, some of the losers today. I want to show you this chart because we have seen Hong Kong Properties climbing to a sixmonth high. Home prices are at a record. Gdp growth is a long way away from that. Jpmorgan saying that home prices have reached their peak. David russia and iran reiterated their support for the Bashar Alassad government. Vladimir putin and hassan roddy called fornday and an investigation on the attack. Proves that todays world is not of regulations and unfortunately, there are countries from our own region that cheer the United States for its invasion. Your turn will come. Why are you hasty . Whitey you encourage the invader . Why do you approve of lawlessness . Yousef ministers are meeting in italy and syria could be high on the agenda. Lets get more on the story. The alliances and is part of the world being put to a test. What can we expect at the g7 meeting . Reporter some of the alliances have been reaffirmed. Iran and russia issued a joint statement. There was some tension between them before that. Right now, they are presented a united effort. On the other hand, you saw the honeymoon. Been. Period. Aw the honeymoon Rex Tillerson traveling to moscow on wednesday. It will be interesting to see if Vladimir Putin will grant him an audience. It is rattling dynamics and bringing russia and iran back together again on syria. David that is going to be interesting to see. This meeting, Rex Tillerson added to moscow. . Hat are we expecting their he may not even get an audience. Just the fact that he is going says something. He goes there in bolded ened by President Trumps decision. It sends signals that the u. S. Will not hesitate to take action , whether people agree with it or not. Again, it is a dynamic that we have seen. It is still a hallmark of the presidency so far, the unpredictability of his policy decisions. Thinking, what do we do next . Syria thinks, should we expect more attacks . But itrt money is on no throws everybody in a bit of an uncertain mood. David good reporting their. There. Now, we arehere and talking no new taxes until 2020 that is the message from the saudi arabia and finance minister. Saudi arabia has transformed its economy with reforms including things like taxation. Tax plan for 2018 will not be raised above 5 . Yousef . Yousef lets go deeper into the story. The kingdom will kickoff their roadshow this week. Chairmane now is the of thought a lot capital sidewalk capital [indiscernible] i want to talk about what is happening on the geopolitical front. It is putting those alliances to the test. What does it mean for saudi arabia . Guest what i have found is that the most discerning investors do not paint with a broad brush. What is happening in syria is a human catastrophe. When you look at the fundamentals of the companies operating, there is little impact. Kneef last time, we saw a jerk reaction. This time, not much of a reaction. You are saying it is because there is nothing to worry about . Ets go to the roadshow they are trying to sell the saudi story. Guest i think it is going to be oversubscribed. When you look at the last bond and 17. 5issued billion, it was hugely oversubscribed. A lot of people who are looking at saudi arabia and you mentioned of course that the auction might be oversubscribed. The imf saying that the economy isnt a good situation. Realizes thatgdom it continues to go through a tough patch but look at what they have done. All it takes is taking a look at the vision 2030. The plan to balance the budget. You realize there is a serious transformation going on. That transformation is coming with some serious economic pain. This is the chart we have created for you. You can see it has been declining. We also have the blue line as a reference point. Is theremore pain going to be before the saudi transformation story starts showing in the numbers .