Market is on edge as he stoked speculation on who will head the fed. Yousef 5 00 a. M. And london in london. I am yousef gamal eldin in dubai. Rishaad i am Rishaad Salamat in hong kong. Hong kong stocks coming back online. Is earning release. Its earning release. Beating estimates. Something you flagged up, new money, yousef, right . Yousef exactly. Net new money, reversing what has been an outflow in the prior period. In terms of the other asset prices we are watching, before we get to that, a reminder that the finance director joined us in half an hour to discuss the results to be able to flush out some of the details. A lot of the questions around of the buybacks. A lot of variables here. To an into that. Also, to return to some of the market themes, which continues to hover above 60 per barrel. Confidence in the opec agreement been extended. Futures underperforming gold still. A little bit of upside at 16. 78. The u. S. Treasury is currently bonding for the benchmark index and the eurodollar trade extending a little bit of gains over the last few minutes around seemsf the anxieties and to be contained when it comes to the standoff between the Catalonian Independence movement and the Central Government in madrid. Let me show you what is going on in this part of the world. When it comes to dp world, dive into the bloomberg. Its improving Credit Rating has helped its bond outperform. Dp world is a company that operates 80 terminals across 100 countries think along the lines of everything from china to ecuador. They are less dependent on crude oil prices than some of the regional companies. They benefited from the pickup. What you are looking up is dp world paper 2037 that has handed investors 21 in terms of returns this year as of friday. The six councils. Take a look at the first word headlines from around the world. The finance minister of indonesia says the country may do business with j. P. Morgan chase. He told bloomberg that any future business cooperation between them will be based on what she calls trust and respect. She did not give a timeframe for lifting restrictions which were imposed last year after the bank issued a negative assessment of the stock market. Theident trump has stoked fire of speculation about the next fed chair by tweeting a video, saying his decision will come within days. Theces tell bloomberg president is leaning towards jaipal to succeed janet yellen, although john taylor remains in the race. The president has said he will make his preference known before he leaves for asia on friday. The president has only least a flurry of tweets attacking Hillary Clinton and the democrats. A grand jury has approved the first charges in the russia inquiry. The indictments are sealed and it is not clear who is implicated. It is reported the first arrest could come on monday. The president tweeted what he called phony collusion and accused the democrats of a witchhunt. Demonstrators gathered in barcelona as separatist lawmakers rejected madrids declaration of control. Mariano rajoy has dissolved the Catalan Parliament and put the at ministration in the hands of his deputy, and call elections. The next test comes on monday government workers decide whether to heed calls to strike in favor of independence. Is said to have asked asian suppliers to double capacity because of stronger than expected demand for the upcoming iphone x. U. S. On fridayhe and available stock apparently sold out in six minutes. Han high rose as much as 3. 6 while csm see gains 2. 5 to extend a record. Local news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am debra mao. This is bloomberg. Yousef speculation over who will be the next fed chair when janet yellen term is up in february continues, part of when President Trump was elected. President trump may be offthecuff remarks official. His big decision is coming this week. You look at what markets are doing. 81 c Jerome Powell as the u. S. Pick. Ents top it could be factored into the asset prices. Get more with Kathleen Hays who joined us from tokyo. Kathleen, what exactly has trump been saying. . Kathleen it is not just what he has been saying. It is what he went out of his way to say over the weekend by putting together an instagram video, tweeting it out to his 41 million followers on twitter, very nicely produced and professional. It alreadyr what said. He is getting ready to announce his fed choice this week. Let us listen to the president. Pres. Trump i will be announcing it sometime next week, a person who hopefully will do a fantastic job. And i have somebody very specific in mind. I think everybody will be very impressed. He does not tell us exactly who this person will be. Our White House Team in washington over the weekend got another scoop. Three people familiar with the matter said President Trump is jaying towards jaipal, powell. Let us take a look at the candidates. Jerome powell is a member of the Federal Reserve board of governors. He has been up the boards in 2012. Formerly, he was a banker, there successfully. Washington in the Treasury Department under republican administrations. That is very important to President Trump that the next fed chair be republican unlike janet yellen, who is a democrat. Our Bloomberg News team also reporting that to donald trump, polished. Med very she is not in the right party. John taylor is a dyed in the wool republican. He is creator of a rule. Powell looks like the one so far in the lead. Amongst all this, rishaad amongst others, we have the matter of an fomc meeting, which is completely overshadowed. It can Say Something important, cant they . Kathleen it certainly can, that policy statement, a carefully written five or six paragraph the fed puts out. There is no press conference at this meeting, and that is the number one reason why fed funds suggests zero chance of any kind of fed move. That is the chance of the hike in december. What i think is going to be very interesting, if you read the policy statement, look at the wording on the economy and inflation. We have a strong gdp report for the Third Quarter that came out on friday despite the fact there are two big hurricanes. We are expecting to get a good, healthy payroll support, a bounceback from the hurricane. On monday, hours from now in the u. S. , we are going to get the income and spending report that contains the fed paschi inflation indicator, the pce core deflator. You know as well as i do that the fed target is 2 . The consensus at the fed, which is going to make that decision in december, not whoever is leading the fed next believe that a Labour Market ultimately has to boost wages, and ultimately, that is going to boost inflation. That is what they want to move in december. It will be interesting to see the closer we get this new fed chair, a new fed vice chair, three more seats on the board of the extent to which President Trump is going to be able to change the complexion and the fed. Body. It is a the fed chair leads it. We will see what happens this week. Who are you guys betting on . That is my secret, kathleen, and i am sure it is yousefs as well. [laughter] Kathleen Hays. Let us have a look at how all of this is working out and dovetailing into markets. Let us get a Bloomberg Markets macro strategist, mark cudmore in singapore. Absolutely. These risk events mean this week that there is a it does not matter who the fed chair is. The fact is that there is a premium price for the rate curve for there being john taylor as a pick. The whole point is even if john taylor is picked, he is probably a hawkish choice. That means the kursk should probably flatten as investors would fear that perhaps his hiking might be premature. Even if john taylor is trump nominee, you could actually see initial headline initial headl, you could see the 10 year yield fall even more under john taylors nominee than you would see under powell or yellen. All three of them, 10 year yield might come softer this week. We have the fomc meeting. With a rate hike for december over 85 price, how can they possibly surprise obviously . They never want to become it. Therefore, they have already got an approach. If it surprises at all, it will be a dovish surprise. Overall this week, markets are set up for treasury yields to come lower if anything at all. Rishaad it is definitely a frightening week to take a big bet one way or the other, and i do not want to get carried away by this story. What else is on your radar that you would say watch out for this, this could be in the priced . I think tying into the whole treasury story, we could have reasons to get another bid for treasuries in terms of of what we might get. Be creating will more uncertainty in the u. S. Another negative. We have trump traveling to asia again this week and real potential for some tweets to come out on unfair trade or north korea. Several events might also lead to treasuries getting a bid this week. News risk catalyst on the side rather than the data site is set up to bigger for treasuries, lower treasury yields. Data might provide a different story, one certain print does not change the story. There is a strong employment market, but i do not think that is going to change. The new stories are skewed for yields. Rishaad thank you so much for that, mark cudmore. Well hear what mark has to say at mliv. Us from president joins singapore. What is your take on all of this . You know, i think the fed noting is going to be pulling any surprises. The fed is not going to move. Is going to hold its hands. You have got trump talking about cutting taxes. That is going to hold the feds hands until it gets better handle on what is happening with u. S. Tax reform. The fed is going to hike recently as you discussed the fomcn the program, policy meeting is very important to provide a clue as to whether the fed is hawkish or dovish going forward. We seem more rate hikes. Three more in 2018. Well see either way. Let us talk more about powellgo and about specifically, leaning on the dovish side of the conversation. That mean he would lean against the 2018 dogma . You know, i think jerome fedll will probably have policy with janet yellen. It is clear that he prefers an approach. Three rate hikes in 2018 is relatively gradual. Powell will be in positive for the equity and bond does, andcause if he it will give it a hawkish slant. That is not good news for bond markets. But is still positive for equities. On some of big question mark. Big question mark. Yousef we will get into some more of your views. On the program, we speak to the on theo, ian mckay, outlook, the challenges, and the opportunities, ahead. Rishaad coming up, the big Party Meeting in government bonds. The market risks on mainland. This is bloomberg. Yousef this is Bloomberg Markets middle east. I am yousef gamal eldin yousef gamal eldin in dubai. Click lines hitting the straight too get the key part of this conversation. We are looking at an announcement that the uae expects to issue its First Nuclear plant license next year, initially understanding there was a delay that initially said they would invest some 192 billion in renewables. After this delay, a confirmation about where his is going and this is going and a license of the Second Nuclear plant. Rishaad breaking news coming through from pakistan. State television pointing to a court order that the former finance minister, in fact, the finance minister has been there is an arrest warrant out for him. No reason given as to why. He is in london due to ill the court has issued his bailable warrant for. Is arrest the countrys finance minister. The earliest stages of chinas Economic Data suggests sentiment is more positive than that of the real economy. Our next guest says hsbc. From not veryow, we are positive on china shortterm. Neither are we negative. There are reasons to be modestly popular with china. Clearly, a grip of power. I think he is going to push for two things. One, reforms. China needs reforms in terms of bringing down the huge that level. On top of that, i think it is quite clear, in terms of his focus. He is going to focus on headline numbers, delivering strong growth figures. He wants more even distribution power, and with him in because he has consolidated his power, give him a push through more significant changes with china. China wants to be a big part of the international community. Imf. Chinan the wants to be an international player, a global powerhouse, and that means we will see International Investors having more and more opportunities as china opens up its markets. Rishaad what about yousef what about the fact you have u. S. Monetary policy tightening . Historically, that added a lot of stress, not just to china, but to the broader emergingmarket story. That has not happened this time around. Were just getting warmed up here. Could there be more stress as the fed is more serious with its plan . Vasu i think as long as the fed is well telegraphed, it prepares the markets ahead of time, communicates its intentions, and puts into practice those intentions, the markets are not as they be at spooked were in the 1990s and 1980s. The game has changed. The federal is about communication. It is critical. Job in has done a good terms of communication. Let us hope the next fed chief does a good job in terms of communication as well. Gradually inase 2018. It is hard to say. Inflation picks up clearly. It is something me explain that, let a caveat purity emerging markets are a lot better than they were many years ago. Many of them have bolstered their Balance Sheet. China is a huge reserve. The same thing of stress as we saw when the fed hiked rates as in the past. Rishaad always a pleasure seeing you. A bank. Sident at coming up, asking this question, whether the recent spike in oil prices ignited turnaround. We will speak with a guest. That is next. This is bloomberg. Yousef thirdquarter earnings coming in hard and fast. They have been mixed and they have not given us a clearer view of how the economy is holding up with lower oil prices. Nd the painful reform process let us face reality. Among the corporates, have had to deal with and adapt to this new reality. Let us take a closer look at the figures. Our guest, the ceo at renaissance capital. Thank you for being with us. I want to jump into the bloomberg for us to get a pulse of what is going on with earnings as the quarter progresses. This is the areanies have reported we seeing a negative sales surprise on average. Positive earnings surprise. You can easily flip to the growth cap right here. See it . He we have growth so far . The answer is no for sales growth, yes for earnings growth. Your topline ideas or takeaways released bellwether answers yesterday. We expected results not to be that strong. At the beginning, mixed results. Consensussically the was a bit, i dont want to say behind the curve, but too pessimistic about the results. It is mainly on high oil prices. We have seen up oil prices picking up for a while. We should have expected stronger results. Overall, the earnings have been some kind of mixed. Yousef we talked excitement in last week. Sectors cement stocks, one example. Is there a rationale, a logical rationale, for people to be positioning themselves for something that is so far out . Ahmed the market was hungry for positive news is what happened. We have not seen very Strong Performance in the market for a while now. All of a sudden, you have basically the future initiative, the new city, which naturally, you look at infrastructure and Construction Companies and retail investors, and that is when we have seen this. Yousef in terms of the direction of oil prices, because that is part and parcel really of the story, we might see a relaxation in the fiscal plan to be stimulate the economy. Whether you see Oil Prices Going where did you see Oil Prices Going . Bloomberg intelligence says 84 a barrel is what they really need. Ahmed from my side, they voice reggie bute reductive they reluctanceto be in forecasting prices. Whether saudi can cope with 60 or 80, i think saudi has done the right measures to cope with the crude oil prices. Yousef how does the United Arab Emirates fit into the way you look at the gulf from an investment . Perspective ahmed uae has not caught much attention because the results have not been that strong, but they have not been weak. If you look at emirates in was basically nonoperational because of lower impairments compared to the last quarter, and that is why you see that. It was not really operational. That said, you have catalyst which have basically been the flavor of the month for investors, because you have a ipo of the developing business, which is going to have a lot of value for shareholders. Ramy yousef we still want to get some of the other views as well. The ceo fair some capital is sticking around. Let us get you a preview of what we are going to talk about. Its estimates with a Third Straight revenue game with iain mackay. This is bloomberg. Who knew that phones would start doing everything . Entertaining us, getting us back on track, and finding us dates. Phones really have changed. So why hasnt the way we pay for them . Introducing Xfinity Mobile. You only pay for data and can easily switch between pay per gig and unlimited. No one else lets you do that. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit or go to xfinitymobile. Com. Rishaad it is 8 30 a. M. In dubai. We are just minutes away from the market opened here in the emirates, dubai, and upper darby. Indicese asking whether will extend their record levels, looking at u. S. Equity futures, all key three parameters called lower. Let us check in on the first word headlines from around the world with debra mao. Hsbc shares jumped in hong kong as they reported a third consecutive rise in quarterly revenue. Adjusted revenue rose more than beating thellion, average estimate of 12. 7 billion. The results come after john flint was named earlier this month to succeed ceo stuart gulliver. Have agreedtucker to accelerate the pace of change at the bank. The finance minister of indonesia says the country may soon lift a ban on doing business with j. P. Morgan chase. Any future business cooperation between them will be based on what she calls trust and respect. She did not give a timeframe for restrictions imposed last year after the bank issued a negative assessment of the tour card to stock market the jakarta stock market. President trump has released a flurry of tweets attacking Hillary Clinton and the democrats at a grand jury has approved a first charges in the russia inquiry. The indictments are sealed it is not clear who is implicated. It is reported the first arrest could come on monday. The president tweeted against what he called phony collusion and accused the democrats of a witchhunt. Gathered demonstrators in barcelona as separatist lawmakers rejected emerge rids proclamation of control. Mariano rajoy has dissolved the Catalan Parliament and put the evisceration in the hounds of his hands of his deputy. The next test comes later on monday when Catalan Government workers decide to heed calls to strike in favor of independence. Askedple is said to have asian suppliers to double capacity because of strongerthanexpected demand for the upcoming iphone x. The device went on preorder in the u. S. On friday and available stocks apparently sold out in six minutes. Foxconns flagship rose as much as 3. 6 . News 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. I am debra mao. This is bloomberg. Hsbc coming in now with earnings beating their own estimates in thirdquarter figures. We are going to go through them all with the hsbc finance officer joining us. Ood gains here tell us about them. Iain happy with these numbers. Good momentum into the Third Quarter. Quarterseen quarter for corne revenues up. Adjusted before tax, improving by 8 yearoveryear. Good, long growth, building the revenue. Consistent control across the piece. We continue to maintain a Strong Capital position overall for a sheet that is liquid and benefiting from rate increases through the fed. Overall thirdquarter reasonably happy with where we are in very focused on closing out 2017 and delivering the targets. Reasonably happy with the progress we made with the Third Quarter. Rishaad geographically speaking, how is it going that way . Wheres the growth coming from . Iain certainly, the lions share coming from eurasian businesses. That is a drive to a significant degree. With the investments benefits of that investment coming through commercial banking and Global Banking markets businesses, all of which grew revenues yearoveryear for the Third Quarter and yearoveryear, ninemonth twoyear basis. Overall, the focus for asian businesses is to continue delivering that strong offering of services and products and improving the overall digital capabilities and the ability of customers to access the mobile arpps. That has reflected the numbers in the marketplace this morning. Asia, hugely important for us. Businesses further a field from hong kong and singapore, malaysia, and across the asian market. Very happy with progress in that part of the world. Rishaad it looks like a couple of years ago, about the private bank side of things, is it out of the woods in your view . Iain it has largely completed its repositioning. The ceo has been hard at work over the course of the last two years, really shaping the portfolio to better match that of our other three businesses. We have got a lot of, if you like, synergies between our private banks, retail bank, wealth management, commercial bank, and markets. They have largely completed the repositioning and we really see that in terms of the composition of our assets under management, lines to our key market. Assets under management continue to improve. We will see that coming to the revenues in the overall profitability of that business in the coming quarters. Rishaad tell me something. They are depositing Income Growth. How do you sustain that . That will be a challenge here looking ahead. We have got an incredibly strong, a very Strong Deposit base across each of the markets in which we operate. We very much stick to a principal of building our deposit base. Our ratioflected in over 70 this quarter. A significant part of that is denominated in u. S. Dollars. As the fed moves its retire, we see the benefit coming through liability and spreads for the business. To the extent the fed or for that matter, other Central Bank Authorities move the policy rates up, and where we have been deposits in those currencies, for example, sterling, the euro, to complement the dollar, we will continue to see benefits coming through. The other important factor is yearoveryear, we continue to grow the deposit base yearoveryear by 2 , so just maintaining that balance within our Balance Sheet is extremely important. Rishaad absolutely. We have a lot of money that you have, and we come to where you exit some of the businesses around the world and in the of those each targeting share buybacks, 5. 5 billion over this year, 2 billion in the second half of this year. Where are you with that currently . . By that of that completed. We expect to complete that by the end of this year, and that will then complement the previous ive actually did in 2016 and earlier in 2017. So with that 2 billion completing, well have brings me to the position with the dividend. Im having a look at the yield. Pretty good. 5 . Is that sustainable longerterm . Iain absolutely. The dividend are very much related to the profitability of the business. As you have seen, the profitability of the group has continued to improve. That has been informed by our ability to grow revenues across our key markets. Across the control business whilst continuing to invest in the digital, mobile, and Service Capabilities within the business, so we have got a pretty solid he quit and coming through, improving our return equity. We have not attained the target 2017, butthe end of we are getting there and making good progress, and we expect to hit that threshold and progress from there. Is an annualview dividend of . 51 per share, certainly sustainable undercurrent operating conditions. Rishaad tell me about the plans for the middle east looking ahead and what your strongest and weakest parts are that you need to address . Iain middle East North Africa and businesses have continued to perform well for us and maintained a very Strong Performance in 2017, very much in line with what we accomplished in 2016. We are a well diversified business across that part of the world with operations in the emirates come across egypt, across saudi. We have good bounds in the portfolios. We have been very adept at strainsng to different economically within that environment, so we are happy with what the team has done in the middle east and north african operations over the course of the last few years and maintain a strong focus in that part of the world. Rishaad absolutely. And with the news we have got of the foreign reserves falling rapidly and saudi arabia, looking at the are you, how much making provisions for that . You are bound to be under some pressure when those things cook in kick in. Iain the majority of our business is conducted through an affiliate of which we own 40 . Very stable over the last several quarters. Several years, for that matter. Clearly, the economic performers that the government is implement aren saudi, we all think, headed very much in the right direction, but recognize it will take some time to implement those reforms, and this is not different for us in terms of the diversity of geographies in which we operate to adapt to different operating conditions. So far, that business continues to operate very stably, Strong Customer base, good profitability coming through. Very much one of those that we keep it close eye on. Rishaad a return on equity is still well below 10 , just shy of the 8 mark. How do you revive that . Successfulen very with other things like the t ratios, etc. , but how do you get your r. O. E. Above 10 . Iain look, i think if you look at where we are this year versus t year, for the ninemonth we are 8. 2 for the ninemonth ending in september 2017. That is pretty good progress, i think, on that trajectory to hit that initial threshold of 10 return equity that we set out. Taking the actions around continuing to invest and growing the revenues for the business, and continuing to deliver significant cost savings by the end of this year. We will deliver 6 billion of annualized cost savings to a range of different initiatives around improving Technology Digitalization and simply process streamlining and simplification across the business. It is very much focused on the deployment of our capital. Assets,ng on those since we lost that in 2015, we have taken more than 300 billion of riskweighted assets and either redeployed those more profitably with our customers around the world or have seen some of that return to shareholders. Were not quite there yet. Rishaad let us talk a little bit about the ceo. Ou said he remains committed revenues versus costs. You want to be positive. You are not there for the quarter, but are you going to do it . Because you do have to spend money to feel the expansion. Iain we made significant investments through the Third Quarter like most other quarters for that matter. And have resulted in somewhat negative use for the Third Quarter. That is really what we focused on, a yearbyyear basis, being able to deliver Revenue Growth slightly ahead of cost growth. In, is really what draws me being ahead of the cost rate of growth, and delivering some operating leverage. Good progress in that regard. You see it coming through, cost control. Thank you so much for joining us, iain mackay, early in the morning in london as well. Thank you, iain mackay, finance director at hsbc. Well, yousef, there we have it, positive when it comes to revenues versus cost, looking at dividend policy, which remains intact for the time being. Certainly, one where they are getting up to the 10 level in the next year or thereabouts, is the feeling i got from that. Ofsef there were a couple other key takeaways. One is of course, something Credit Suisse reminded us of, that hsbc is one of the most sensitive banks when it comes to rising rates, and he you address that in your compensation and you addressed that in your conversation. Benefits is how he describes it in terms of how the bank is what to do with that. , progresselements being made in asia, and as well in terms of at least Economic Reforms going in the right direction, is how he described it. She is younger hes headed in the right direction. Go look at the market check now with juliette saly. Juliette hsbc shares holding onto the gains, up 5. 5 in hong kong. You can see the weakness coming through in china. The csi 300 of stocks falling significantly, down by. 6 . The smallcap stocks that china is being hurt by what we are seeing in the bond market in china. You can see yield on the fiveyear up by almost 13 basis points. These concerns about deleveraging coming back to the forefront after we saw the 19th Party Congress wrap up. A lot of speculation that perhaps the market had been. Ropped up by beijing certainly not occurring to kickstart the trading week. Weakness in china. Elsewhere, a little bit of positivity coming through from some of those other markets, and particularly in taiwan. The apple supplies rally, a look at the movers in terms of index points. It is a lot of apple suppliers. Thee saying demand for iphone x, which comes to this week, is off the chart. You are seeing positivity coming through from players in korea. The kospi holding your the record high as well, and Energy Players getting a boost. Up by almost 4 . Let us have a look at hsbc shares coming through the Third Quarter number Beat Estimates, and you have seen hsbc hold on to gains, up by. 3 . Sinopec and petrochina will become through after the bell with numbers as well. Bloomberg expecting petrochinas revenue to increase in the Third Quarter things to the recovery in oil prices. Sinopec may come under a little bit of pressure in terms of its increasing to competition. Having a look at the broader picture, the Energy Sector looking pretty good in the i. T. N, and the rally with stocks. We are seeing health care, real estate coming under a little bit of pressure. The regional index is not really managing to hold on to those november 2007 highs. Yousef, rish. Yousef let us get you a preview. There is still plenty to come on this program. We will talk about the central banking rules for expatriates. Bahrain turns up the heat on its regional isolation. More on that and the egypt story, which is absolutely critical for a lot of foreign investors. Interesting government that. This is bloomberg. Rishaad let us talk about what is going on yousef let us talk about what is going on egypt. Some interesting metrics when it comes to what is going on with the central bank and its attempt to contain inflation. We are looking ahead to the meetings of the central bank. Are they going to be able to bring down inflation, raise rates, and what does that mean for somebody investing in egyptian Asset Classes . Our guests. S, we put this on the bloomberg for contacts for our clients. Btv 1920. Inflation coming down a little bit, still above 31. 6 of the last data point. We added the and smart deposit rate and the egyptian u. S. Ollar index rate the question i have for you is are they going to be successful in bringing down inflation below 30 before the end of the year. See subsidy cuts, inflation will stay around the 30 level. Next year, we expect inflation to go down significantly, but towards the end of this year, if we see more subsidy cost us, which i think we will, inflation will be around the same. Yousef you have quite a bit of a struggle because Commodity Prices are rallying across the board, and egypt, as a net importer, that is going to feed into these numbers. Ahmed that is the flip side. That is why im not very bullish. I dont think that is going to be the case. The central bank will use inflation to reduce rates, which is something the market is waiting for, a key catalyst for the market. The question is whether it will happen in november. Yousef what does that mean for how you trade egyptian Asset Classes . What are you telling clients . Ahmed let us look at the results, for example. Egyptian companies have been very successful. That goes back to the economy i always talk about, that consumers can absorb that. The company that did not manage to that fully to the full extent, to a large extent, was basically because of the high Interest Rates. The high Leverage Companies were not able to do so. When we actually look i am going to look 12 months ahead. Eventually, the Interest Rates will have to come down. We are seeing investors investing in relatively highly Leveraged Companies in egypt because they expect margins to improve. Yousef what are some of the key sectors to look out for . Ahmed i think the Consumer Sector has improved on the positive side. Yousef Consumer Spending power that is not supposed to be there . Ahmed theoretically. It has been there. It is very simple. Able to pass inflation. That is clear. Another sector we like a lot is tobacco, which has been one of our top picks. North of three new present upside, so actually something that we are very positive on. Yousef what about fixed income . That has been one of the top traits for the year. Ahmed this is the trade. If you look where the Central Government it is the highest yield, now yielding 14 on the dollar with a central Bank Guarantee that you can get your capital. Still stands out. How long is this trade going to last . It is a function of how long Interest Rates are going to stay high and how long the egyptian pound will stay cheap. We needed to remain cheap. And also what is going to happen with global factors. There is no other market in terms of yields for investors. That is why the trade is going to continue. Yousef always great having you on the program. The ceo for renaissance capital. Let us talk about them of the other calls as you get warmed up. Minutes away from the market opened in the emirates, and i am going to run you through some of the key lines, starting off with thirdquarter earnings that are coming through. We heard from emirates nbd, the secondlargest bank. Reported net income for the quarter that beat the highest analyst estimates, thirdquarter net came in at 2. 2 8 billion 2. 2 8 billion dirhams. It Beat Estimates and rose to more. Positive for this company. And the stock phil has been down far this year, in line with the benchmark dubai index. Industry, the bellwether not just for saudi arabia, but all of the middle east, one of the largest petrochemical firms in the world, competing with the likes of dow chemical and basf, reporting sales for the Third Quarter that beef highest analyst estimates, so sales coming in at 39. 65 alien saudi 39. 6 5 billion saudi real. 5. 75 billion. And our cant capital has initiated coverage of tobacco with the targeted price of egyptian pound within a year. Eastern tobacco is one of the top tobacco plays in the Global Tobacco sphere. One hold, one cell. Three let us see what else is going on in markets. Our reporter joins us. What are you looking at specifically . As you said, 9 of the index, and it is a bellwether for the whole market there. Oil is trading at a very good level. And how much the whole market is influenced by sentiment regarding oil. So we hear from people that this should be a better session in riyadh today for stocks. We recognize volumes of trading in riyadh, even though we had so many announcements and there has been a lot of talk about Economic Growth in saudi, we see stocks are lagging behind. We see a few names that are expected to release earnings. There has been a lot of trade with big banks. Dubai, less mention. Emirates nbd is quite big. Dubai Financial Markets is in oman, moodys. A look at what is coming up in europe. Anna edwards is in london, and no doubt, hsbc thirdquarter earnings focus. We just talked to iain mackay, the finance director there. Anna the stock was higher than it is at the moment over in the hong kong sector, but will trading higher. We will keep an eye on that one and akzonobel, a company many people talked about your it up 70 talked about. Up 70 now. We will see if we get anything from akzonobel this morning. In terms of the politics, keeping a close eye on what is going on in spain. Rajoy in madrid seeking to gain increased control over the one of the breakaway region. We will be in spain for an update on that and u. K. Politics. How much room for maneuver does the chancellor in the u. K. Have ahead of the budget coming up in november . Yousef that is all we have for this edition of Bloomberg Markets middle east. Rishaad all the top stories coming from around the world. Bloomberg markets middle east bloomberg daybreak europe is coming your way next. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Anna a beat for hsbc, adjusted revenue rises to 13 billion. Bloomberg speaks to iain mackay. Overall Third Quarter reasonably happy with where we are and rochus on closing out 2017 and delivering the targets in 2015. Investors brace for the special prosecutor investigating meddling, man of the first charges today. For bonds. Week investors await a slew of market moving news out of the unit dates from the fed chair the tax legislation. Collisionalunyas course. They take to the streets. They reject madrid, taking control. We are in barcelona. Anna theyre very warm welcome. This is bloomberg daybreak europe, our flagship morning show. I am anna edwards. Manus i am manus cranny. Breaking news. It is about akzonobel, a redhot headline. They are in talks with exulta. It rallied 17 on friday with a big story on friday. How you protect yourself, anna . You buy to grow. That is possibly the strategy fractional bell. He had rejected the bid. Manus looking to consider m a. And we saw the excel to share price up in session. The company and that Warren Buffett is the shareholder in. As they moveesting to sell their Specialty Chemicals business for the netherlands business. Let us talk about nomura in the Banking Sector in japan. We have seen numbers coming through there. They are talking about the share buybacks. The revenue number at secondquarter revenue, 462 billion yen. The buy back up to 1. 8 of shares for ¥50 billion. We will keep an eye on the japanese banking story. Manus they talked about their overseas pretax profit, really up there. ¥881 million, dramatically less than it was last time. ¥851 million versus profit, ¥88. 4 billion versus 118. That is what we will keep an eye on across numerous trading. 666. 9, down ever so slightly. Let us talk about some of the big themes for the week, and what a week it is going to be. You have the bank of japan in play, the jobs report, and a potential tax bill. You have more out there than tom keene can throw at your average chart. We have got the dollar for you slightly better off for this morning, but the positioning, dollaryen positioning. The hedge funds are piling in. The dollar is going to take the brunt of any move by the fed to it if it is powell in charge or somebody else, but they have raised the dollaryen a 15 to have the highest level since 2007. That is your white line, of by 100,000 last week alone. Anna a little bit on the back foot, down about. 8 in the immediacy of tonights market. Session, equity overnight has been going on in asia, mixed session coming through in the asian session. China off its low, but it is down 1 on the shanghai composite. The real focus is on the data, andeason, jobs later on this week out of the united states. S p 500, we are expecting to see a bit of a move downward. That u. S. Jobs number. Will jerome how will be the front runner . The politics very much on the sidelines. Could it moved front and center . Manus other breaking News Headlines on novartis in the pharma sector. Bid for advanced exhilarated wraps, one of the closing deals. Joe just lastith week in terms of him handing over the bat on this. Could be one of the final deals he decides to do. A planned acquisition of advanced accelerator moving into the technology space, so it looks as if it is a 3. 9 billion deal. That is nearly 4 billion. Not an insubstantial deal. Anna taking out this business based in france, apparently. A first word news update. Here is juliette saly. Juliette pro spain demonstrators gathered in barcelona today. Mariano rajoy has dissolved the Catalan Parliament and put the administration and the hands of his deputy, and called elections on december 21. The next test comes later today when Catalan Government workers decide whether to heed calls to strike in favor of independence. In washington, President Trump has speculation about the Federal Reserve chair by tweeting a video that says his decision will come within days. According to three people, he is leaning towards nominating Jerome Howell to succeed janet yellen. Jerome powell to succeed janet yellen. The uns Nuclear Watchdog says iran is complying with the nuclear deal and is calling on all parties to abide by their obligation under the accord after President Trump refused to recertify the deal two weeks ago three washington imposed new sanctions on tehran. Iranian president ronnie last month rouhani rejected talks of the you engender i the u. N. General assembly. Presser sinceder overseeing a push for independence that has drawn the anger of baghdad and neighboring countries. As Parliament Debated his supporters forced their way into the building to protest against treatment. Global news, 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. We are seeing the regional index trying to hold on to those november 2007 highs. 6 . Si 300 down the shanghai composite and have had its biggest intraday drop so far this year. We are seeing the bond rout continuing china as well. The nikkei fell slightly in late trade. Australia closing out higher by. 3 through the cosby in south korea is at a record high. Having a look at whats were watching, a lot of movement. Particularly apple suppliers saying demand for the iphone x is off the charts. Hsbc in hong kong coming off the days highs after its thirdquarter revenue Beat Estimates, up by. 4 . We are watching petrochina, which will come through with its results. Even margin main have continued to rise. Margin thanks to ebit may have continued to rise. The next dates of trading will bring a torrent of market moving and Market Making information to treasury traders President Trump is set to announced his fed chair nominee. Anna we also get an update on tax reform and the house will release legislation on wednesday. Friday, we will get october up a jobs report. Plenty of data and politics on the sidelines for the moment. That is talked to david owen, the chief economist at jefferies international. David, very good to see you, as always, bright and early monday morning. Let us talk about what we are expecting this week. We are going to get a slew of data and the favorite pce indicator of inflation, the top thert, and the strong jobs report, an astronomer on gdp. How much for you is this all about treasuries, and whether we stay over 2. 4 on the yield. Robustsigns of a recovery. Strong u. S. Economy. If that continues, through this week, then obviously, the market will prime itself for expecting more in the way of whoever is going to be fed chair. They will be raising rates further. You have this whole reinvestment point. Sort of how much outward pressure that will put on yields. Qe,are seeing in 2018, seamless flow out of the eurozone. That is something which the market itself has not focused on. Manus how much continuity does trump want to attain . Janet yellen and powell have never dissented. The betting on powell is 81 . Knows. It is almost like a reality tv show. Anna we do not know. Manus we do not know. Whoever we get, powell, possibly yellen, and leave the other out for the moment. It is going to be continuity, people who never dissented. It is going to be perhaps more likely more of the same. David absolutely. What donald trump would love to see is a strong u. S. Economy. He does want anyone who is going to tighten policy too much. Situationget into a where the u. S. Is growing robustly and the fed is raising rates, that is absolutely fine. Also, you need the fiscal side, some meaningful tax reforms. By the end of the day, the fed is well on its way to normalizing policy in the u. S. Anna we cannot rule out the idea that a hawk is appointed, but there have been so much reporting and set about this story, but looking at this from any economists perspective, which is a robust growth story, was the idea of a hawk, was that hard to justify for you . David not really. At the end of the day, you have tight money, monetary policy, i can see some what the rationale for that. We do not know exactly where Interest Rates should be trading. You can imagine where they got more than the markets were currently pricing. Manus there is of course another whole dimension to the u. S. Story, the first charges brought in the probe. They could be announcing President Trump took to twitter and attacked Hillary Clinton and the democrats. Schneiderider jodi. The application on these charges . This will be the first indictment in Robert Mueller s probe. There is some anticipation. We do not know much. We heard from some democrats and republicans on capitol hill saying they were not told in advance. The white house, the president tweeting the whole twitter storm over the weekend about this and talking about Hillary Clinton, talking about mueller being others,nd some including Chris Christie in new jersey saying, walking up, and saying navy mueller should leave, but this is really about the beginning of what could come closer to the president through that is what people are looking for, the initial indictment, probably not. Anna we are looking for how wide the fallout from this could be. It is incredibly difficult to think when we do not know who is going to be charged and with whats. Jodi that is and with what. Jodi thats right through this is a guessing game. Someone minor in the matter, several steps away from the white house, and that they would be in the very beginning, and we will see that this will kind of fallout, overcoming months and a year or so that there is a lot to be investigating. That is two grand jurys will be impaneled. With the fed announcement coming, it stands to be a very big week in washington through the president will be leaving washington at the end of the week and coming to asia. Manus thank you very much. You have got a lot of announcements to make before the week is out. Jodi schneider. Gavin joins the Bloomberg Team at 10 00 a. M. U. K. Time. Anna still with us, david owen. Know, apple, you lingering at the sideline because of this investigation. Is, we wonder whether this front and center. Is this material for the markets right now or more about tax . David i think it is more about tax on the fiscal side, what the fed does in reaction to that and to the fed chair is, and how strong the u. S. Economy is. Who knows. Things could change. You are any economist. Finding something that is relatively economic. Theyhe team did is stripped out trade and investment out of the Third Quarter ep numbers. The strongest in six months, 2014, but you strip out trade and inventories, and it is the slowest growth since 2016. So i waved a banner at 3 . Good for the world, good for america. Ae reality is, chuck in hurricane, and it is not as splendid as we thought. Is that a Fair Assessment . David at the end of the day, know,figures are, you recently volatile and so forth. You have a reasonably strong which has been going on for a very long time, and world trade also has been picking up. That is one of the key things that was lacking up until this year was world trade was incredibly weak. World trade has accelerated. Anna you mentioned about the slow transatlantic flows into treasuries. Where do we go on the treasury story . All these events taking place, we have moved up from what was above 2 in Early September on u. S. 10 years to 2. 4 . A lot of expectation on what can be delivered there and the u. S. Growth. Go . E does that explain more about the transatlantic story. David you have got the eurozone throwing off this monumental account. Any counterpart of that is debt outflows. There has to be a counterpart. We have seen this Asset Allocation switch out of the u. S. And into the u. K. Fixed income market. That is to help support the u. K. And in terms of the u. S. , keeping a cap on u. S. Treasury yields and spreads visavis bund yields, and japan as well. Same story. Current account surplus, central bank doing qe. That has found its way in. Anna that has continued to cap. If we see the dollar going up, then maybe that begins to change that dynamic, and maybe we have more of a sort of move up in the u. S. Treasury curve. Manus a lot more to discuss. If youre are traveling to work, you can tune into Bloomberg Radio on your device or dab digital radio. Live in barcelona at the moment and talking about the spanish reaction to the catalonian declaration of independence. Anna something we will touch on later in this hour of bloomberg television. Coming up, shares in japans thirdlargest lawmaker lost a third of their value in the past three weeks. This is bloomberg. Manus let us get you set up for the week ahead, and it is dominated by central bank decisions. Inc. Of japan expected to keep its framework unchanged, but may lower its inflation forecast. Anna fed policy makers are expected to keep their rates at a range of 1 to 1. 25 . Manus will he or wont he . Is he wa reliable . Anna hsbcs pivot to asia is bearing fruit. A rise in quarterly revenues. Adjusted revenue rose more than 2 to 13 billion, beating the average estimate. Manus we spoke with iain mackay about the result. The bank has largely completed its repositioning. The ceo and his team has been hard at work over the last two years. Really shaping the portfolio to better match that of our other three businesses. We have got a lot of, if you like, synergies between our private bank, retail bank, wealth management, commercial banks, and markets. The team have largely completed the repositioning. We have seen that in terms of the composition of our assets under management, aligned to our key markets. Managementts under continue to improve, we will see that coming through the revenues in the coming quarters. Manus tell me something. One of the reasons we are attributing your numbers at the moment is to deposit Income Growth here. How do you sustain that . That is going to be a challenge looking ahead. Iain look, we have got an incredibly strong very Strong Deposit base across each of the markets. We are building the base before lending. That is reflected in our asset to deposit ratio. Part of that is denominated in u. S. Dollars, so as the fed moves its rates higher, we see the benefit clearly coming through liability and liability spreads for the business. To the extent the fed, or other Central Bank Authorities, move policy rates up and where we could have significant deposits in this currencies, for example, sterling, the euro, to complement the dollar, we will continue to see benefits coming through. The other important factor is, yearoveryear, we continue to grow the deposit base. We grew that by 2 . So, maintaining that balance within our Balance Sheet, is extremely important. Rishaad absolutely. When we have a look at what is going on, i have come to where you exit some of the businesses around the world and indeed in the u. S. I think targeting share buybacks, 5. 5 billion dollars this year, 2 billion in the second half of this year. Where are you with that currently . Iain closing about 71 of the buyback completed. We expect to complete that by the end of this year, and that will then complement the previous buyback that we did in 2016 and earlier in 2017. With that 2 billion completing, we will have a total of 5. 5 billion over the last 18 months. Rishaad that brings me to the position with the dividend. I am having a look at the yield. Pretty good. 5 . Is that sustainable longerterm . Iain absolutely. Of course, the dividend is very much related to the overall profitability of the business and the profitability of the Group Overall has continued to thatve joint laterally, have been informed by our ability to grow revenues across key markets. Very strong cost control across the business whilst continuing to invest in the digital, mobile, product, and Service Capabilities within the business, so we have got a pretty solid the equation coming through, and we are improving our return equity to read have not quite attained the target of a 10 return on equity by the end of 2017, but we are getting there. We are making good progress. He certainly expect to hit the threshold and then progress from there. Anna that was hsbcs iain mackay speaking to bloomberg. The Global Growth story and the asian growth story is key. The bone story to that, loan story to that as he was describing to rish. David owen is still with us. The imf upgrading growth on various regions over the last few months or so. We have a good story that links the Global Growth story and the missing piece of the Global Growth jigsaw,. He says cap exit coming back. Capex is coming back. Are integralments to this because we have not seen investment spending picking up. Incredibly low. Central banks have been off of this and selling policy around what they believed to be a low level of rates. If we have a situation where , equilibriuming up real rates will be rising in central banks, not just the fed, will be thinking about raising rates. Not saying the ecb is there yet. I think it is not. It could be a game changer for trade. Manus let us have a look at this. Aluminum, copper, zinc the whole metal backdrop is supported not just by china. To inflation. Ard this is good news in many ways. David coming back to the eurozone, the eurozone is the biggest trading block globally. If the eurozone carries on that hasomentum an been another story which has not yet kicked in. Trade is very weak. If that changes, then the game is a game changer. Anna we will talk more about that in just a moment. David owen stays with us on the program. Up next, madrid and ours alone a are set up to madrid and barcelona are set to clash. How much control does madrid have . How much parallel realities are taking place in catalonia at the moment . We will have more. This is bloomberg. Retail. Under pressure like never before. And its connected technology thats moving companies forward fast. Ecommerce. Real time inventory. Virtual changing rooms. Thats why retailers rely on comcast business to deliver consistent Network Speed across multiple locations. Every corporate office, warehouse and store near or far covered. Leaving every competitor, threat and challenge outmaneuvered. Comcast business outmaneuver. There the emperors palace. We are looking at the market on the back of the fed and mr. Trump. Kobe steel. The beleaguered company. They are cutting their operating profits 6. 2 . Hey cut their plan dividends