By november. Here, im yousef gamal eldin. Tracy im Tracy Alloway in dubai. In doha, give us updates of the situation. Remarkable, been the last 24 hours ultimately we are seeing a flurry of diplomatic activity. We are seeing to keep things that i want to point out that are fundamental to the story. Number one is lack of diplomatic progress. There is confusion coming out of the united states, Rex Tillerson trying to balance the situation prevail, theneads having donald trump come in and come down hard on qatar, saying they are a funder of terrorism at a high level. She qatar reaching out to allies like turkey and russia. We understand they have had a meeting, the two foreign ministers, calling for more corporation. Thats one side of that. The other side is the ongoing fallout in terms of the economy and credit ratings. In terms of is this and movement of people, as well. Plenty there. Tracy . Yousef definitely plenty to keep us there. One of the things keeping us there is the u. S. Markets. Lets look at how they close on friday. The s p 500 down point o 8 , driven by a fall in tech stocks. Down 1. 8 , pretty amazing. Thats all on the back of the same stocks. If you think the u. S. Economic rally has been driven by outside ines and a handful of stocks particular, facebook, amazon, netflix, all of those fell on friday. Take a look at the board and you can see all of them in the red off the back of the news. Lot of analysts are scratching their heads trying to figure out whether this means something for the wider rally. Use of . A lot of analysts coming out and questioning more valuations of the companies. In this part of the world, we have had interesting moves. Before you get to these specific stocks and development, just a few highlights and key assets. Barely defending the 40 level mark. Recovering a little bit in front a trade after the huge its like when the u. S. Inventories came in that made expectations happening as fast as expected. Also gold holding relatively steady. The u. K. Story has been isolated. We have not seen anything reflected in the u. S. Dollar weighing on trade. For gcc bonds, this is their short of 220 points and south african rand holding at 12. 95 against the u. S. Dollar. I promised you a bit of an overview in terms of the imac function of the breakdown of the last five trading days. In terms of specific stocks that outperformed, yes is was a week dominated by qatari stocks given no they rebounded 3 in thursdays trade. But it was also important to note that we have a few stocks outperforming here, like the groupiant, savola ultimately more transactions here. Tracy . Tracy yes indeed. Lets check in on the first word headlines from around the world now. Courtney u. S. Attorney general Jeff Sessions will testify to that Intelligence Committee about a legend meddling in the russian in the president ial election. He agreed to switch subjects. Congress saying it wasnt important to address the issue of russia following testimony of fbi director james comey last week. Opinion polls say almost half of u. K. Voters say theresa may should resign after her poor election performance. She vowed to stay on with Northern IrelandUnionist Party agreeing to work with her. The strength of that deal will be tested when Parliament Resumes this week. There are reports that foreign secretary parsed johnson will challenge made for the leadership although he says that trike. France goes to the polls to elect a parliament to determine how much president Emmanuel Macron will actually have. To just hesurvey will win a comfortable majority in the 577 seat national assembly, allowing him to push through his find to loosen frances strict labor laws and simple fight the tax system. Second round of voting is next sunday. The develop her of the worlds tallest tower is asked acted to complete an ipo by november. The properties says the share of the real estate unit will be similar to the size of its 2004 all ipo, which raised 1. 6 million. It was the biggest share sale in the past nine years. They hired goldman to manage the offer and may consider spinning off other units. In the future, i think we should look at entertainment, maybe hospitality as well. But we are not in a rush. We are a young company, so we just need to make sure we organize these divisions well and i think it is going that way. Courtney and germany is warning that the isolation of qatar can lead to war. Sigmar gabriel is saying the situation could deteriorate, but there is still a chance for resolution. Turkey is pushing ahead with their military base in qatar, saying its for the security of the gulf, not one specific country. They also say it must be resolved by the end of ramadan. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. You have the latest for us in doha. Yousef absolutely. Thanks, tracy. Lets go back to our saudi alliance. Reaching are doing is out to their allies and also walking into services of some lobbyists in washington who promote their case at these accusations are meaningless, baseless. From get some more mohammed here in doha as well. Is this part of the wider agreement . What else do they have planned in terms of trying to plead their case . You artie mentioned the general outline. They are getting some food, support,litary commitment from its or support in turkey, now you have international diplomacy. Reaching out to germany, going john ashcrofting to lobby for them in the u. S. And get rid of this accusation that qatar is not doing enough to solve it Terrorism Financing problems. If they can fix that, maybe they can convince President Trump to help ease the situation a bit more here in qatar. Muhammad, there is also arbitration happening elsewhere. They are seeking reparations afford damages that have been caused by the latest drive to isolate. Breakdown the story for us. Give us some numbers. Guest this was late last night. Qatar has had allegations against itself for abusing workers. But they are on the forefront of trying to help saudis, but radiance that are affected by these drastic measures of forcing them to leave countries and leave their jobs. To try and hire an International Law firm and figure out how to get reparations. Its part of the escalation and counter escalation we have been seeing over the last couple weeks. Tracy thanks so much, mohammed. Joining us nowits is control rk middle east consultant allison would. Intoe less than a week this spat, if spat is the right word. If anything, it is excavating seeing escalating and we are seeing people choosing sides in this discriminate. Helen to think this is going to go on for . Its hard to sayi think right now. We saw the turkish president say they would like it to be sold by ramadan, but we are seeing that really neither side shows any indication of backing down. Todis have continued pressure qatar with the measures they put in place. Qatar has felt it in their sovereign interest and they are unwilling to compromise. It leads into my next question, if we get an old election, who would back down . The list of demands in qatar is pretty likely. We will see a lot of diplomatic activity and a lot of people trying to figure out how to compromise. The qatar is going to be unwilling to back down on some of these points because it would really sort of represent capitulation in terms of Foreign Policy and they want to maintain their presence in the region and have opportunity to pursue their own interest. Itll be interesting to see what happens in the coming days. Notef allison, again, tangible element progress as it stands. If anything, tensions have increased. What could further escalation look like . I think you busy escalation in terms of pressure points or sanctions, i guess you could say put on qatar. Its a movement in the Financial Sector and businesses reconsidering relationships and contracts they have in qatar. We are still a ways away from any military conflict like the German Foreign minister alluded to over the weekend, but i do think its possible to see a sort of increasing tensions in terms of rhetoric and also, like i was saying, measures put in qatar. They have not reacted too much, but obviously any sort of statement in that regard would be a sign of rising tensions, as well. In terms of broader fallout, you mentioned some of the economic effects. We are seeing gas prices hit substantially after the vessels goingd course instead of going to the suez canal, going around south africa to avoid any possible scenarios of disruptions. Have you changed your view as to the possible impact on the Global Energy market . This is certainly something we are watching closely in terms of the lng markets. Any sort of changes will have an impact on the economics of their product and so, would have impacts on the global market. Qataris wills hold their market share over the coming weeks regardless of measures put in place. The longer this lasts and the longer they bankrolled these shipments, that will change their calculus. That one of the things fascinates me is the fact that ashcroft tored john be its lobbyist in washington. You and i remember that he was the attorney general under bush, who was best known for helping push through the patriot act. Ashcroftdoes this mean qatar is expecting some specific legislation or executive orders against it . Guest i dont think we see any signs of it yet, but there was talk in washington several weeks ago before the scott started for people starting to push for sanctions because of Terrorism Financing. They want to make sure it doesnt happened and the conversation doesnt aim momentum in the u. S. Also, they start to try and change their views in regards to financing and the role they play in the region. Whats the base case here . Escalation before resolution, or are there any tangible scenario where they can be a relatively swift resolution to the problem . Think right now what we are seeing is a standoff and this could continue over several weeks. Lspquickest route to the relation could be capitulation on the part of the qataris in receding to the demand saudis are making. But it will have a Lasting Impact on business. Businesses in the region will think more carefully about their , clausesain, contracts they have in place, who their shareholders are across lines, and reconsider their investment in qatar and gcc states. Tracy thank you so much for joining us, allison. Looking ahead on Bloomberg Markets middle east, catch our exclusive interview with the chairman of the heaviest weighted stock in dubai. Mohammed al of our discusses the companys upcoming ipo. But next, the latest from doha including the role played by iran in saudi arabia. We are joined by the Atlantic Councils amir have johnny. This is bloomberg. Tracy youre watching Bloomberg Markets middle east life from dubai, im Tracy Alloway. Yousef and im yousef gamal eldin in doha. Lets talk about geopolitical risk. We talked about qatar and the financial relations that are being tested to the core. Iran is another key player and the development out of their last week was the attack into iran that killed 17. Lets bring in our guest on the atlantic council. It morning. The bow fromf with iran to retaliate to avenge what happened in iran. What did you imagine it means for the winter gulf . Gulf wider gulf . What the attacks have done is given the government in iran a certain measure to convince their people what the e that their intervention in syria and iraq is necessary to prevent isis from coming and fighting this war within irans borders. Amir, in terms of support that iran is giving to qatar, is this an opportunity for them . Statements and reports from some of the News Agencies in iran for replacing food delivery stamps and cutting off saudi arabia. Reliable is this alliance between qatar and iran . Guest really, there is this talk about alliances is overblown. As your previous just mentioned the issue between the saudis and the, rotcs with qatar has less to do with iran and more to do with qatars relationship with other trend state actors in the gulf region and in the arab world. Irans relationship with qatar is primarily aced on the shared massive gas field which qatar qatarthe north doled, and calls subparts. Int relationship is measured that gas field. Iran will try to replace some of that relationship that saudi and the emirates is stepping back from and turkey will, as well. Took sent troops as you know. But i dont think that is sustainable longterm. This is not the divide thats between qatar and the uae and the emirates. Its not over iran. And kuwait has closer ties them qatar does. Saw President Trump doubling down on his criticism of qatar on friday, saying the country is a funder of terrorism at a very high level. How do you square the u. S. Qatari relationship right now, given that it is home to one of the u. S. Is biggest military bases . Guest President Trump has a tendency to be triggerhappy with his statements and he doesnt think through a lot of what he says. U. S. Position on qatar has always been complicated because as you mentioned, Central Command for many years is based out of qatar, and air base used for Forward Operations in syria and iraq, all over the region. 1020,000 servicemen and women serving in qatar. The u. S. Has always been careful of their criticism of qatar not to make it so publicly and to have it done to the state and defense department. Never has the president come out on twitter and criticized an ally. So many u. S. Troops are conducting operations. It doesnt really square. President trumps statements has put the u. S. Military and u. S. Diplomatic community in the gulf region in a bit of a bind. Tracy at a high level, how do you see this ultimately playing out . At the most dramatic end of the spectrum, i have seen some people trying an analogy to july of 1890, which was a month before iraq invaded kuwait. That seems like quite a dramatic analogy, but where do you see this going . Guest thats very dramatic and overblown. I dont see it involving and military operation. The military cant stomach that and the Energy Markets would be drastically profound. Uae and the saudis want is it hard to capitulate. Im not really sure what capitulation looks like it has qatar has made it very clear that it is not going to stop supporting islamist movements that they view as legitimate forms of resistance. U. S. Isther hand, the there, the u. S. Has this huge presence there in some ways, the u. S. Position is going to be awkward to. They want to make sure it doesnt get any bigger than it is. So i really view state like home on and kuwait quietly step in and diffuse this tension within the gcc. Staying up late for us in new york, thank you so much. Up in the show, losses are of course having up for qatari assets. We will take a look at economic consequences of thomas isolation and ask just how bad things could become. This is bloomberg. Yousef youre watching Bloomberg Markets middle east, im just a mugging in doha. Tracy and im Tracy Alloway in dubai. In stocks,n qatar bonds and currency forwards were blindsided with the unexpected Isolation Campaign by saudi arabia. What can we expect in the coming days . I want to start with the chart because a lot of people are speculating about whether we get some sort of financial sanctions right now, which could put pressure on qatari banks. If you look behind me, therefore and liabilities have been rising over the last year as well as Foreign Liabilities in terms of resident deposits. What kind of impact you expect to see on qatari banks . Guest the numbers tell us that you have about 150 of gdp in foreign debt, including the banks. Thats substantial. The other side is, you have to number we have a Sovereign Wealth Fund and foreign assets are well over 100 gdp. Shortterm what you see in the markets react is the immediate result of the sanctions. Theper you depreciation expected, you see outflows. The main question is, how long will these sanctions remain in place . Do you have a quick resolution or will it be extended . Spat,st time there was a it took eight months to resolve. This can be expensive for qatar because you have continuous outflows and potentially sovereign credit risk ratings will start declining. Thats a key point to pick up on. Its not just about qatar. There is rather spillover. What is the damage being done to sentiment for the gulf confirmation council. . To lock in for capital with the emerging market. Juneeview the decision on 20. Guest thats true. Lets put it this way. I dont think we will have qatari exit. Its not a qatari exit so far. We havent seen financial sanctions eating impose. But you are right to ask the question, will there be repercussions . The decision is an important one given the ipo. Saudi want to go in to the london lse and having a revision of msci and having a part of an emergency markets will be very positive for saudi aramco. A delay in that will be the not be helpful to the ipo. Tracy we will have to leave it there. We will have more coming up in a second, but next we will check the outlook for oil as crude ignores opecs fight for the market and we will also be discussing some of the latest news in terms of the ecb. Thats next. This is bloomberg. Alloway letscy take a look at the first word headlines. Saudi arabia reportedly doesnt see any need to tighten the crude oil degree. The minister thinks restrictions are not needed and that the market will stabilize in the next few months. The cartel and its allies agreed to extend the curb for the first three months of next year. South africa escape walltowall jump ratings with moodys downgrading the nation just one level to the lowest investment grade. Foreign and local currency great ratings stand with a negative outlook, meaning the next move would be to speculative grade. They cut their assessments of south africa to junk after the president fired finance minister. Police have arrested eight more people in connection with last weeks