Transcripts For BLOOMBERG Bloomberg Markets Middle East 2017

BLOOMBERG Bloomberg Markets Middle East August 22, 2017

Will they face unanimous opposition . Shery it is it 00 a. M. Across the emirates. This is Bloomberg Markets middle east. I am Tracy Alloway in dubai. Salamat. M rishaad we are seeing gains across the board looking at the gym and function we can see that Equity Industries are to the upside. What we do have our currencies in focus. I do want to discuss one market to watch out for and it is the karachi stock exchange. Down 2. 1 in the session on monday. That is taking it to near a 20 decline so far this year. That would indicate it is in the bear market. This is being compounded by the move into having emerging markets status, a lot of money got pulled out. It is a small fish in a big pond. But watch the stock. After comments made by donald trump where he singled out text on as a country that needed to get its house in order. That is one thing to keep an eye out for. The Prime Minister removed from office and there is a bit of uncertainty at the top. It is a day where screens are in the green. Tracy, tell me about the market mood and the oil price. Tracy lets start out with the macro picture, because we do have that trumps speech. Investors seem to be taking comfort from that. You look at crude, it is up about one third of a percent. That is not enough to recover the loss. It was down 2 of the close yesterday. Gold down. The jpmorgan gulf cooperation count, both bonds spread. Saudi arabia was in the market yesterday so we did have some fresh supply locally. Lets move on to the equity indexes. Tadawul up. Up two thirdsgypt of a percent. Qatari stocks down three quarters of a percent. Take a look at what is going on in oman. It is turning into an interesting story, up 80 points yesterday, pushed up by telecoms. Lots of people expecting a dividend payout. Lets check in on the first word headlines. Heres debra mao. Debra tracy, north korea says the United States will face revenge for ignoring demands to halt military exercises with the south. In first comments, state media says the presence of american officials means preparation for war. Pyongyang called it reckless saber rattling that could lead to hostility. During last years exercise, the north unleashed underwater. China has expressed the satisfaction with the us decision to investigate its intellectual property practices. It will respond if necessary. The ministry of commerce called the probing of responsible saying it ignores wto rules. China says the International Community and u. S. Industries will oppose the investigations. A Los Angeles Court has ordered Johnson Johnson to pay 417 million to a 62yearold woman who blames her Ovarian Cancer on talcum powder. The jury found the Company Liable for failing to warn the plaintiff over the risk. Johnson johnson faces more than 5000 claims in u. S. Courts and lost four out of five revis jury voted previous jury verdicts. Saudi arabias efforts to cut dependence on oil could start to bear fruit next year thanks to merrill lynch. The kingdoms nonoil revenue should surge by 21 billion in 2018 as fiscal reform starts to kick in. The gains will be driven a new value added tax, luxury tax and higher fees. Raise anbia looks to additional 200 billion a year from nonoil economy by 2020. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. Mao. Debra this is bloomberg. President trump has pledged openended u. S. Support for afghanistan saying that a hasty withdrawal would be the vacuum for terrorism. In a speech trump announced a shift in his policy on the u. S. s longestrunning conflict. He stressed that American Forces will stay in afghanistan for as long as it takes to bring the taliban to the negotiating table. Trump said he wanted to pull troops out but had changed his mind in order to ensure the u. S. Does not repeat the same mistakes in iraq. The vacuum we created a living too soon gave a safe haven prices to spread, to grow, recruit and launch attacks. Afghanistanpeat in the mistake our leaders made in iraq. Lets bring in jodie snyder. The president offering declined to offer the numbers. James mattis has a plan to boost americas presence in afghanistan by a half. The number is 4000 troops. He does seem to be taking a page from the defense secretarys playbook and the secretary of state also wanted this, wanted there to be an increase in troops. But to be advising and offering forcesnce to the afghani there. That is the plan. It is not that much of a change from the current policy. This a big policy from a big change from the campaign trail went canada trump came out and said we should get out of there. We spent way too much money and even some of his recent comments that were supported by steve bannon who has left the white house. It seems the forces within the cabinet have prevailed and have warned the president to take this kind of policy. Tracy it is tracy in the by in dubai. Remind us what the situation is like in afghanistan. Jodi it is not a good situation. As mattis said, we are not winning the war in afghanistan. Only 6 of the country there is a lot of insurgents. There is a problem with insurgents coming from pakistan. It is a very complicated situation. It has bedeviled the other two president s. The u. S. Has been in afghanistan since after 9 11. Both president s bush and obama had similar kinds of issues and it is a very tough situation. It has been increasingly up and down in recent months. Rishaad code. He both on one hand kind of backhanded comment to but then said we have to deal with insurers insurgents. Made that very clear. He also in terms of discussing pakistan for the large afghanistan situation said it is not a blank check and we are not want to be there forever. The shopko jodie snyder, and you very much. Three hours ago Donald Trumps address did little it was a focal point for investors fresh terrorist threats. Tensions between the United States and of korea. Lets bring in steve brice. He is chief investment strategist at Standard Chartered bank. What is going on . Steve pretty interesting time. We have seen equity markets over the past few weeks be a little bit on the soft side. I think people are still sitting on the sidelines time to figure out whether is whether this is going to develop into a more significant pullback. Think the next couple of weeks are going to be critical. You mentioned north korea being very important but we have a lot of central Bank Statements coming up this week. People will be looking for those looking to those for guidance. Rishaad jackson hole is Something Else we are looking forward to. What will you expect there . Inflation, the failure of developed country to get productivity gains. That is going to be an academic exercise. Steve it will be to some degree. E have seen significant moves the focus is going to be more on what the ecb and draghi says, rather than what is coming out of the fed members. The fed has been pretty comfortable with the situation. There is a bit of divergence and thinking. I divergence in thinking, but dont think that is a bad thing. We are seeing Growth Holding up, accelerating this year and inflation very benign. Seen aas europe, we have similar scenario develop, stronger growth upgrades coming from analysts, but inflation still benign. In a world where they have significant quantitative easing and pursuing quantitative easing beyond the 12 months is going to be increasingly challenging for them, so a timeline on when they expect to taper is the thing markets will try to interpret. Tracy steve, church alloway here. We do have these Tracy Alloway here. You have these talking points people have jackson hole which seems like currencies are really in focus. If you take a look at what is going on with the trump trade which was the upward movement yields and u. S. Bond u. S. Dollar, you can see the dollar has been weakening over the past few months but it seems to be regaining ground. Kind of a wildcard in that trump trade. Where do you see it going from here . Marginallyave passed but from pretty key support. If you look around the world, the dollar looks oversold. Positioning is pretty short. Extreme on other currencies such as the euro, the canadian dollar. Our view is we are going to see a little bit in the shortterm. That is probably healthy. We have seen the dollar weakened around a percent this year around 8 this year. Our view is he wont be too upset with the euro strength but he doesnt want to extend in the shortterm. That is why he is going to be defensive and playing down the move to tapering in laying down the move to tapering. Jessica steve brice from Standard Chartered, you are staying with us still to come, saudi arabia is driving its economy away from oil. There are still some big bumps in the road ahead. We are going to discuss the challenges. Flanking its exit from your shale. Youll be hearing from bhps chief executive. This is bloomberg. Rishaad bhp is looking to streamline ins business by getting out of its u. S. Shale business, something that investors have been the mining. Andrew mackenzie told us earlier about the sale and more about those assets acquired a 20 billion deal spree just six years ago. A prepared strategy is a small number of trades. We keep the yellow options there so we can proceed with a reasonable amount of pace, but for now we think a trade deal would work best. How quickly could you complete and a . Complete an exit . We know what our business is worth. We will continue to add to their value with our technology. On the other hand, we dont want to lack urgency, and that is why we have other options in the wings if sales look to complicated to execute. Because interesting monday we heard from total the French Energy giant. The agreed to buy the assets. U. S. Shale was not at the top of their wish list because it is too expensive. Do you agree . Abouthis concern you finding available buyers . Andrew we have sold some parts of our position over the last two years. This isnt something that has happened in a certain way. Half of the remaining half was already on the block. We put the whole on the block. There is a lot of trade that happened. What generally happens on the trade sale is people get proper engineers involved. They do proper assessments and they seem to go for what it is worth. It is often quite difficult to compare trades, because they are dealing with different types of acreage. Theyve got different prospect to the. Pectivity. We are talking to many parties. The exit was the impetus for these activist investors. Andrew we have been working toward this two years ago. We made it clear that when we looked around the world very limited opportunities to expand our business in oil. We felt that the margins and gas ld not be attractive to us margins in gas would not be attractive to us, and so we started pivoting back toward conventional oil and gas. That meant at the same time we were coupling we were cutting capital in shale, cutting the number of wells, we increased the convention of our oil. We have been able to announce some real successes. Tracy that was Andrew Mackenzie speaking with bloomberg. Steve brice rejoins is now. Bhp billiton clearly looking to sell its shale assets when the price is good that we also so total ceo on monday we also monday. L ceo on those excessive valuations what do they say about the trajectory of the oil price . Steve if you look at the possibility of shale, it certainly improves. That is why Oil Prices Fell dramatically over the past two or three years. Also we have seen more stabilization in recent times. Costs are starting to increase in the shale sector after productivity gains have cut those costs. Now we see a flaw in the oil price. Probably not going to dramatically higher too dramatically higher. Our view has been for a few months now that we see oil prices stabilize and gradually grind hard. I dont see anything in this announcement to change that. Rishaad you say flaw. At 65if youre looking a barrel, that is going to be really tough to hit this year. Shalell do have that capacity globally, not just in the states. Obviously the focus is on the states. If we did get up there than the possibility of increasing wells is going to increase in bring that supply onstream pretty quickly. I totally agree. We dont see Oil Prices Going above 65. Rishaad steve, please stick around. Coming up, metal mania hitting the emerging markets. Currencies erupt with a rally in currencies. All of that next. Rishaad your back with bloomberg. Im her rishaad salamat. Tracy i am just alloway. Headlines. Ck of the Cathay Pacific is returning to airbus to upgrade. It is ordering 32 83 21 neil plains worth more than 4 billion on paper. Cathay is in the middle of an extensive buyback having reported its worst loss last week. The second half of the year will be challenging. Bloomberg has been told that Goldman Sachs is planning a revamp of its struggling commodities business. It is bringing in higher profile salespeople and traders while boosting pitches to top clients. We are told that 180 units have been under review for months during which time it posted its in 73 asrter and 73 a public company. Toshiba are seeking a compromise to end the dispute. Western ceo Stephen Milligan will go to japan for talks with counterparts in the ministry of trade. Toshiba may ask western to drop its opposition while milligan may try to make western a part of the consortium buying it. Rishaad geopolitical perils giving investors reasons to pull out of developing nation equity. Meanwhile markets are awaiting janet yellen. Lets bring in steve brice. He is from Standard Chartered in singapore. Before we get to exit hole, we already touched upon it. It has been quite notable in previous years, geopolitical events used to have quite a huge impact on trading. That has gone, why . Steve because people are now getting into a situation where they dont believe anything material is going to happen. Which is interesting which given who is in the white house. They dont seem to be the most predict bull of people. The most protectable of people. Be leadingt going to to confrontation. If you look at that most of the scenarios about what happened here, very high probability to know military intervention which is what people are fearful of. From that perspective, we can argue, whether it is neither take or a content whether it is naivete. People are taking it in stride. Tracy i am looking at some of the most recent Fund Flow Data and it shows funds posted their first net outflow in 21 weeks just last week. We have Credit Suisse telling investors that it is not too late to join the em rally party. Which is it . Is this a start of a downward trend . Are we still Getting Started . Steve i think the big picture is we are Getting Started it we have seen growth differential between em and bm. Where thatg period differential has been narrowing. Buts growing faster than bm a slower differential if you like. Bet reverse out is going to supporting emergingmarket assets. Bonds and equities over the course of the next 18 months. In the shorter term, the are risks. There are risks. We see any wobbles over the latter part of the summer intern into the beginning of autumn, that could hit emergingmarket assets and encourage better buying opportunities. The picture remains constructive him our perspective. Tracy one of the things we hear from em bowles is it is different in em because the em countries have effectively reduced their dollar liabilities. Thank you so much, steve brice. Have taxi times taxing times for saudi. How vat and other charges could net the kingdom billions in new revenue . This is bloomberg. Tracy look at that, beautiful in dubai. 45 degrees celsius is the perfect beach weather but i am going to prove him wrong. It is 8 30 a. M. In dubai. Lets get over to debra mao for the first word headlines. Debra tracy, bhp shares are gaining, up one and 3 10 of a percent after a plan to sell its u. S. Offshore assets. The worlds biggest miner has been under pressure has been under pressure to quit the shale business in america. The announcement came with fullyear underlying profit at 6. 7 billion, 600 million short of estimates. Andrew mckenzie told us he sees growing opportunities in china. Andrew right now, our outlook is probably a bit more optimistic than it was maybe a few months back people we see that our forms in china playing very well in terms of stimulating more demand. Also removing some high costs that creates an opportunity for us with our highquality product in the market. Shares aresurge surging in sydney, up 3 after first half profit increase. The owner of a 29 stake in a next on mobile led product in Papua New Guinea sees production between 29 29 million barrels. It has lowered its capex guidance between 350 and 400 million. Ron is aiming to stop iran is aiming to sign up i march. Plans to attract more outside investment in his new term and is paving the way to seal a Foreign Energy contract. He was reappointed on sunday, in charge of irans oil sources getting a vote of confidence from parliament. The u. S. Navy has ordered its entire global fleet to Halt Operations after two collisions at sea. Commanders have been told to take stock and identified weaknesses after the uss john mccain hit a tanker off of singapore. The crash came after the destroyer, uss fitzgerald, collided with a ship off the coast of japan. Senior officers were later demoted. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. I am debra mao. This is bloomberg. Kongad we have had hong and other markets very much at the four. It is green across the screens. Juliette you mentioned hong kong being on the lunch break. Have a look at this threeday chart on the hang seng index. A very strong rally coming through across the index. This as investors buy into a number of companies after some strong earnings paid we had tencent a couple of weeks ago with a very st

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