60 billion euros . Kushner says he does not want to jump the gun on any announcement about relocating the u. S. Embassy to jerusalem. This is Bloomberg Markets middle east. I am Tracy Alloway in dubai. Tracy most of the action still firmly in that u. S. Camp off the back of u. S. Tax reform coming down to the wire late friday night. The first opportunity a lot of markets are getting to react. The s p 500 futures picking up this morning, the bloomberg dollar index up, and 10 year yields up for basis points, almost completely reversing the fall we had seen friday during that big risk off day. Sentiment attached stronger. That u. S. Move beginning to feed through into that region. Lets look at how things are faring closer to the middle east. Wti crude the vti falling. Markets in dubai and abu dhabi were close, but saudi arabia is index up off of the rally and Oil Prices Last week. That was the biggest gain for the tadawul in two months. 0. 5 , bank up stocks leading gains after International Reserves in foreign currency liquidity improved in october despite the blockade. To debra for the first word headlines. It is crunch time for brexit talks. Debra theresa may will have lunch with Jeanclaude Juncker later on the day the eu has set is the final deadline for concessions if she wants talks to move on to trade by year end. Senior british official has told bloomberg that the role of the European Court of justice in enforcing the rights of citizens has emerged as the greatest obstacle and negotiations. The confederation of british industry says the u. K. Economies lukewarm growth will continue for some time and may even weaken in coming years. 1. 5 bi sees expansion of and 1. 3 in 2019, the worst annual performance since 2009 when the economy shrank. It also says Downside Risks are high as they are assuming brexit goes smoothly. Nicolas maduro says the nation will create its own petrol currency backed by reserves and , gold, and diamonds and will allow venezuela to advance towards a new reforms for social and economic development. The currency is currently in freefall. The imf sees the economy shrinking 12 this year and en inflation rising 230 . To go long expected as china still market tightens. Citibank says it expects sustained growth and commodities next year, but warns around chinese policy and the economy, and downward pressure on oil prices in the second half of next year and 2019. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Tracy lets get back to our top democrat on the Senate JudiciaryCommittee Says the investigation into links between the Trump Campaign and russia suggests a potential case of obstructing justice is developing against the president. Tonne feinstein spoke Bloomberg News after Michael Flynn pleaded guilty to lying to the fbi. I think what we are beginning to see is the putting together of this case of obstruction of justice in the four indictments and pleas that have taken place and some of the comments being made. I see it in the hyper frenetic attitude of the white house the comments every day, the continual tweets. Tracy lets get more on that story with jodie snyder. We just listen to those comments. How big of a problem is is going to be for the Trump Administration obstruction of justice is pretty serious. That, it wouldto be very serious. Diane feinstein the top democrat on the Senate Judiciary committee does carry a lot of and her opinion is interesting, but it does not Mean Congress will do anything and that there will be hearings. If there were, that would move things along. She has some interesting arguments coming that the president and saying that he basically saying mr. Flynn was lying and that was why he had to fire him, because he was lying to the Vice President and the fbi, in her view shows the president new of the falsehood, then the president fired the fbi director james comey who was investigating whether there was russian collusion, so she is putting those things together. An interesting argument and the seems to indicate that there may be requests by democrats for there to be some hearings on this on capitol hill. Hand, senate other republicans did manage to pass a tax reform bill. It was pretty close, coming down to the wire. The first major legislative , how with antially contrast with the russia investigation . If they get tax reform through, that is a big win, something investors and wall street wanted. They still have a few hurdles and have to reconcile this bill. That will be entirely easy. It will be a big victory if they get it. This weekend, which should then ill about a victory lap getting it through the senate, we had the president s tweets and the mueller investigations indictment of mr. Flynn, so there was what a bit of contrast and it took some of the shine and of that victory in the senate. Through,et this reconciling this in the house and senate and send the tax bill to the president s desk, that is a definite legislative when an something the republicans in congress and the Trump Administration badly want. Thank you so much for walking us through the latest in u. S. Politics. Lets cross over to singapore and bring in the chief economist of research at dbs bank. Thank you for coming on. Chart to start with a that goes to the heart of what we have seen in terms of u. S. Tax reform. This is 6250, the reaction in the u. S. Treasury 30 year yields versus the russell 2000 index, one of the indices most exposed to tax reform. The three red lines are when trump won the election, a launched his tax reform proposal, and when the house passed its version of the bill. How much of this is priced into the market, either the bond market or equities, were do you stand . It depends on what comes out of reconciliation. If there is a tendency to give up on loophole closing measures and a final gambit to close the deal, then the cost turns out to be bigger than what it was a week ago, then of course i can see the bond Market Selling off, 10 year yields itching to go higher and the equity market will probably rally, but the bifurcation between stocks and bonds will become more stark in my view. You oni want to press that bond market point, the joint committee on taxation saying this will at 1 trillion worth of debt to the u. S. Budget. What does that mean for the bond markets . If we were having this conversation in the 1990s, i can imagine there would be quite a few bond vigilantes who would not like this. Correct. The context is different. Stagnation and the low productivity and low growth future, adding that the cost of debt is historically low, probably makes some sense, but what you get from the tax cut . Does it add to growth come a or just add to debt without growth . Theyre the market will be divided. Companies that benefit directly onl see their shares rally expectations of margins widening or more cash flow, but that is only part of the picture. The bond market in general want find much room for comfort out of the tax cuts in the pipeline. Economist, ae an lot of critics calling the tax reform bill trickledown economics and that has negative connotations for a lot of people. Where do you stand on tax reform and trickle down economics and the benefit for legitimacy of trickle down economics is a theory . The latter isink widespread and people really dont buy it. There is a simple way to think about it. When you give a poor person a tax cut, they will probably use it to spend or invest. When you give it to a very rich person, it does not make that much difference for them. That means the rich people have lower margins than the poor person. It has more impact if it is aimed towards the poor than the wealthy. Most republican and democrats would agree it is mainly aimed to big business and the wealthy. It could have been better in terms of its a potential impact on the economy. Im not giving away my personal view, but im given the what the consensus would be, that this tax cut is good for some companies, but for the overall economy, the effects will be highly ambiguous. Im going to try to get your personal view off air. You stay with us. Still ahead, a big day for brexit. Theresa may heads to brussels for what could be the most expensive lunch in history. We will explain why later. Bonanza a centralbank next week with rate decisions from the fed, boe, and ecb as they move towards tightening. Will stock prices retreat from the record highs . This is bloomberg. Tracy this is Bloomberg Markets middle east. Am Tracy Alloway in dubai buying at the first 67 billion, creating a health care and retail giant with interest in insurance and the corner pharmacy. Share, a a 29 premium. Walt disney has renewed discussions over acquiring a 21st centuryart of foxs media assets. Disney joins Companies Including comcast looking to buy a piece of the Murdoch Familys empire. Include thens film studio and sky. Facebook is to boost its u. K. Workforce and joins a number of Large Companies doubling down on their presence and london despite brexit uncertainty. That is your Bloomberg Business flash. The bank for International Settlements has question whether stocks are not too expensive, saying they look frothy. Warnings have become more frequent as the worlds Central Banks move towards tighter monetary policy. Next week is also a big one with rate decisions from the fed, eoe, and ecb expected. Still with us is the chief bank. Ist at dbs thank you for sticking with us. Affectivelybis asset valuations, but the pace of tightening has been relatively slow. How do you square that discrepancy . It is their job. I think they have done a good and centralally banks are probably focusing too on inflation and missing the Bigger Picture risks. The points are very well taken by Central Banks around the world, which is why the boe has deployed a slew of measures to cool down markets. Stock markets are very tricky. I cant think of any centralbank that has targeted prices and managed to do it without bringing the whole sector down. So you have to be careful with what you do with these warnings. Bis toeasy for that th be vigilant, but its another thing to do something about it. , whetherthe economy the u. S. , eu come or japan, doing fairly well, inflation still at bay and wage growth still a day. Circumstances, they will start focusing only on asset markets, i dont think they are expecting that. The Central Banks would do what they have always done, which is be very cautious. Tracy Central Banks will be Central Banks. Points to is bis the loosening financial conditions compared to the rates rising in the u. S. Clearly, thews it green bars are loosening financial conditions, again coming despite the benchmark rate going up. What do you make of that. Fed effectively tightened monetary conditions at this point in the cycle . I think the flattening that is taking place in the bond market, no matter what we see at the narrow end about pushing up rates, the dollar doesnt rally and the 10 year does not selloff is a sharp, so this flattening of the yield curve, and this is becoming a global phenomenon. The central bank cap hike in a sustained manner, and even the term premiums with the long end of the curve should be pushed up. The fixed income market is saying i dont buy this here it expand and has been going on for a long time. You can hike once or twice, but you will stop there and maybe have to think about cutting rates, so that is the big tension between what the bond market is saying and what the fed and the equity markets are saying, which is the expansion continues, there is froth, and monetary conditions should unlike the boj, the fed does not target the long end of the curve, so if the buyers are still there on the long end, there is only so much you can do as far as financial conditions are concerned with the toolbox that most centralbank set have at their disposal. Tracy we will see if trumps tax reform does what the fed has not been able to in pushing up the yields and the dollar. Conditions,inancial how much have they played into the environment there . Traditionally emerging markets in asia have done well when we have this was conditions. Have that those loose conditions. You have to be careful about not conflating those factors together, but on a cyclical basis, we have had easing that push down yields and there is a search for yield and asian assets have benefited. ,here is the structural factor western capital is keen on deploying itself towards asia. Perspective, there could be cyclical hick ups next year as rates drank going got in the u. S. Money a huge wall of heading your way. Up next, could a fight in brussels costs the u. K. And theresa may 60 billion euros . Her big lunch with Jeanclaude Juncker next. This is bloomberg. Tracy this is Bloomberg Markets middle east. I am Tracy Alloway. Europe, wherer to theresa may could be sitting down to the most expensive lunch in history as she dines with Jeanclaude Juncker in brussels on the day the eu has set for the final deadline for her to come up with concessions if she wants brexit talks to move on to trade by the year end. The europeans are demanding britain pays 60 billion euros to cover its commitment to the block. Still with this is the chief economist for Group Research at dbs bank. We know theresa may is having this highstakes lunch. If she wants those trade talks to progress by year end, how crucial will this be to the brexit crossice it process . Lets frame where she is at right now. She needs to settle an internal development. There is a lot going on as form has the internal political dynamic, therefore it is not clear what she can offer. This is the heart of the matter today. Can she convinced her counterparts in europe that she is a stable force within the u. K. And conservative party and that whatever she has to say will be the rule of the land going forward. That is a tough task. Tough task indeed. Im looking at a bank of america howill lynch note called brexit stole christmas and says even if progress is made, the u. K. Might not get a big economic bounce. In terms of the u. K. Economy, what is your forecast . Hard for us to be excited abouti the u. K. Outlook given all the uncertainty. Withined the infighting the tories continues come and there is always the question about whether this government survives and there is a hard brexit lurking around the corner , business is understandably will remain very cautious about the plan capital to the u. K. Come so you get a boost from Global Demand given that it is a good time for the global cycle and the eu is firing on all cylinders, even japan is looking good, china is not slowing that much. A tradeat the u. K. Is dependent economy, that could keep growth within a 2 range, but i would not be surprised if the stalled Investment Climate ins up dragging things down further ins and dragging things down further and we get below 2 growth. Tracy how much does the sterling outlook play into the Economic Forecast for the u. K. . Normal circumstances, it would play a large role. You are a fairly open, trade oriented economy, and your exporters should be able to consolidate or gain market share on the back of a cheap pound, but do you have access to the eu, your largest trading partner . Can you sell things without tariffs and open borders the way it used to be . It is not clear. That way it will not expand because the pound is weaker. Tracy im sorry we have to leave it there. That was the chief economist and managing director of Group Research a dbs bank. We are at 90 minutes away from the open in the emirates. Lots of people coming back from a long fourday weekend. The index is up 0. 3 off the back of that tax reform. Brent not doing so well. A lot of people wont be impressed with that. Lets check in on first word headlines from around the world. Debra Dianne Feinstein says the investigation into alleged links between the Trump Campaign in a potential case of obstruction of justice is developing. Flynnoke after michael pleaded guilty to lying to the fbi. Beginning what we are to see is the putting together of extraction of justice. I think we see this in the indictments, the four indictments and pleas that have taken place in some of the comments being made. In the hyper frenetic attitude of the white house, the comments every day, the continual tweets. President trump has told his putter followers that the fbis reputation is intact ors and insists he never asked james comey stop investigating plan. Over the weekend he said there during the to hide transition. For brexit, time theresa will have lunch with Jeanclaude Juncker later on the day the eu has set as the final deadline for her to come up with concessions. Meanwhile, a british official has told bloomberg that the role of the European Court of justice has now emerged as the greatest obstacle in negotiations. The confederation of british industrys says the economys lukewarm growth will continue for some time and may weaken in coming years. The cbi sees expansion of 1. 5 in 2019, and one. 3 the worst annual performances 2009. It also said Downside Risks are high as they are assuming brexit goes smoothly. Maduro has announced dennis way that will create its own petrol currency backed by reserves in oil, gas, gold, and diamonds. He currency is in freefall says it will enable venezuela to advance new forms of financing. Economysees venezuelas shrinking 12 and inflation rising beyond 2300 . Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. It has been a manic monday across asia with asian stocks fluctuating. Look at u. S. Futures has investors weigh the implication of the u. S. Tax cuts, the dollar higher, so every asian currency underwater. The yen has had an impact on japanese equities, but look at the turnaround in south korea, up. 7 , apple suppliers entire onehit hard last week and the csi 300, a selloff and largecap stocks over the last couple of weeks, but a turnaround today significant and the hang seng being lifted as we see a turnaround in insurance players and tencent. All of this giving a boost, but there has been weakness elsewhere. The peso in the philippines off by 1 . Australias market looking flat. Going the samex way as the yen, off by. 3 . Having a look at the movers in the region. Korea, preferred shares, a big surge and options coming through on that stock. A few japanese suppliers doing well, looking strong. We did have a big upgrade. Olympus in japan had a downgrade from Goldman Sachs and is one of the worst performers, off by 4. 2 . A turnaround when you look at Sector Movement in the region. Energy stocks looking good, wti and brent holding. The materials players getting a boost of. 5 . Banks looking strong. Apart from that turnaround in tencent, still seeing weakness in other i. T. Stocks. Id. But out of those defensive healthcare stocks. A dump out of those defensive healthcare stocks. Keeping a strong eye on those moves in u. S. Equity futures. Tracy another manic monday in deed. Now i have that stuck in my head. In the region, yemens hutu rebels fired a Ballistic Missile at a Nuclear Power plant in abu united arabhe emirates has denied the show force happened. The duties have been bruised by the defection of former ala. Ident s lets get more. That Nuclear Bunker i have been building would finally come in handing. Im joking of course. This has everying happened but does come at a time of increased tension. And we did see the houthis fire a missile just last month, so the question is how serious should we take this . The claim they made last it shotaudi arabia says it down, so thats why everyone took this claim more seriously. They had already done it once. Aving seen no evidence and strong denial from the uae, you have to ruled it out. It shows the alliance of convenience the houthis is now on the back foot after three years, so they are trying to remain relevant and putting out these crazy statements to remind people they exist and you need to Pay Attention to them, but having swept down from the north , thathe help of sala alliance is coming apart and they are on the back foot. Back into a corner, will we see more or would this be the end of it . Overnight we saw a heavy fighting, so we may be entering a new phase of that conflict. Tracy the other news in the middle east is jared kushner. The 36 are old is charged with brokering peace in the middle east and giving some comments about how he will do that. Hes talking about a potential decision to move the u. S. Embassy in israel to jerusalem from tel aviv, but does not want to preempt an announcement from donald trump. Not steal he would the spotlight from his fatherinlaw. The u. S. Willunce recognize jerusalem as israels capital. We will be following it closely. In 1995, the u. S. Congress passed a law saying the embassy must move to jerusalem by 1999. U. S. President s have used waivers to postpone the decision. Trump has used it once. The question is what will he do and is this a gesture of goodwill to the israelis to get concessions, or is this pressure on the palestinians to say that time has run out . There have been a lot of meetings. We have that story over the weekend saying something was in the works, so we will be following it closely. Interesting stuff going on, not to mention the relationship with Rex Tillerson as well. The historical perspective, i love it. Joining us now is the head of middle east research at credit suisse. Areuestion to you is we talking about all these different Political Developments in the middle east, how are your clients approaching this question at the moment . Is there still a lot of nervousness over the region . Nervousness and uncertainty. You can see it in the trading volumes which have come under pressure. There are questions over whether now is the right time or not, so clearly it has impacted sentiment. Tracy there seems to be a consensus that when it comes to saudi arabia, the corruption crack down is probably bad in the shortterm, but good in the longterm if youre thinking about the ultimate outcome for the countrys economy. I think you fall into that camp. Definitely. Tracy what would make you more nervous about the longerterm outlook . Crackdown itself was to sustain for an extended time. The corruptionas crackdown is a positive move, but the longer it stays in place , the greater the overall uncertainty over where things are going and the overall side effects. Tracy we were talking about the Houthi Rebels being on the back foot. Square the reformist policy with the hawkish Foreign Policy and how are investors doing those two things. He clearly has a hawkish approach to governance, both domestically and abroad. One of the issues we did take with the corruption crackdown was the timing just a week after the davos in the desert, which at the time was fantastic in terms of attracting foreign interests and bringing up that interest from a lot of investors about what potential opportunities there are in saudi and within one week later we have a crackdown was so from a timing perspective it was not ideal, but when it comes to investor opportunities come up money always comes back. When you look at the long history of credit defense in the emerging markets space, latin america, asia, eastern europe, we have had plenty examples of this thing happening to him about money always comes back. Staying with us. We will talk more about saudi and of course oil coming up. Citibank says 2018 will begin with the bank and commodities. We will look at where they advise placing your bets, next. This is bloomberg. Tracy this is Bloomberg Markets middle east. I am Tracy Alloway in abu dhabi. Health lying at no for 67 buying at not aetna fourth 67 billion. Not is of 29 premium to the share price on october 25. Walt disney has renewed discussions over of acquiring a significant part of 21st century foxs media assets. Disney joins comcast looking to buy a piece of the Murdoch Family empire. Film said to include the studio and u. K. Sidelight provider sky. Facebook is said to hire 800 new staff in london, predominantly engineering roles over the next year and will bring the number of staff working for the social network to 2300. Facebook joins a number of Large Companies doubling down on their presence in london despite the brexit uncertainty. Notice your Bloomberg Business flash. Commodities set to start with of banning after citigroup advised to go long on in the First Quarter as china is tightening its Steel Industry to focus on quantity over quality. Rosy,tlook is not currently trading at 63 a barrel for brent with citigroup seeing weaker prices ahead. Our energy in markets reporter. We had that big opec meeting indiana. How is the decision to maintain cuts going to wind up impacting u. S. Shale i feel like i repeat this question on every single show . A lot of people had seen that ninemonth extension coming, so we have seen that earlier bump in prices, down a little today, but we have maintained over to 60 for brent and 60 per wti. It remains to see how opec itself reacts to this deal. One risk of cheating comes in youd comes in. Does that unwind the deal. Shale on the other side, how do they react a higher prices . You have saudi arabia taking the chair of the monitoring committee. With a crack the whip on those who dont comply . They came in with the deeper. Uts than required you saw the Saudi Energy Minister making trips to iraq, they sawing to people as not fully complying with the requirements. We also see libya and nigeria brought into the frameworks and they wont increase more than their peak, so that will create those limits for opec. Hold that taught. I want to bring in the head of middle east research at credit suisse. This is chart 6134. It shows Oil Volatility has been sliding off the back of that opec meeting. If you consider that opec is trying to set up floor under the price, but also the price movement, so they have some certainty around budgets and things like that, then this is a good outcome for the group. It is. The is reflection of what market was expecting as well. Tracy how does that play into the actual economy in the middle east . They are cutting production, celeste total revenue, but revenue per unit goes up because the price of oil goes up. Beene net impact has beneficial overall because we are seeing oil come back from terry low levels. Have seenpare what we last year and before, the impact on gdp has been net positive best far. Pricego forward, if oil stays where it is, then that impact will disappear. Meeting, a lothe of people were looking for that ninemonth extension, but also indications from opec about and exits strategy and how they would come out of those cuts. Hear comments from the Russian Energy ministers saying they will review in june, so does that give enough certainty to the markets or does that add to uncertainty and you worry that cuts will in the in june or that they will announce that exit strategy . It gives balance flexibility to opec in the market. There has to, stage when production cuts will will be weaned off. It will not happen overnight. This kind of mechanism opens the door to such a move being made eventually. Tracy thats the conclusion of the extension take some focus on the Economic Reforms we have seen in the region . No, not at all, the Economic Reforms are still being focused on. For us what would concern us is , any saw any corrections sharp for the movements in the oil price. What we have been seeing is an uptrend and we have cut at action maintained controlled bubble as well, but investor positioning has been long on oil and gotten quite extended. You have already mentioned how he u. S. Shale will see increases as well, so for us you have a sharp correction or move on oil prices. It is a risk we are keeping an eye on. Tracy it is true we have seen the wti calendar reach its highest level. I was impressed i managed to look that up on the bloomberg. I thought i would mention that. That was her middle east Energy Reporter and head of middle east research at credit suisse. Lets look at some live pictures the bank ofwhere france governor is speaking alongside the boj governor kuroda. He says brexit was and remains bad news. We will see if theresa may agrees with him over that lunch in brussels. , we take a look at which stocks to watch as we prepare for the middle east market open. This is bloomberg. We are counting down to the market open in the emirates in just over an hour from now. , you come prepared with a gift, the gift of a chart. This is 6368. What does the show . Saudi,nt stocks in specifically in the southern part of the country. If you take a look at the two lines at the bottom, we are seeing to specific stocks that were close to 10 yesterday and we expect them to continue performance in this trend during this week basically because people are considering any indication that the war in yemen might be close to an end or a more positive outcome come at these are companies located close to the border between saudi and yemen and could a pickup inn product activitya in a pickup in product activity. This could be a very good bet for those investing in saudi markets. Are a lot of economists look at cement sales in the kingdom as a proxy for economic activity. Thes segue over to qatar, central bank saying foreign reserves had improved in october. Is some of that positive sentiment going to feed through into stocks . It is a piece of good news that could be positive for the market in general. We know banking stocks are important for the whole market. We have one of the biggest banks in the region, extremely sound and a very important stock for the Financial Sector in general. E have a busy week for qatar the gc summit is happening in kuwait this week. Qatar is participating. Any improvement in the political situation could be important stocks for stocks. And we have the msci announcing their decision regarding the use of the onshore or offshore fx rate for their calculation. Tracy the power of the benchmarks on display. We did have i am yousef gamal and david yousef closed yesterday. Topeople are still trying gather pace and try to play the market the way they can be joining the ipo are not. Here we have recent news tracy my favorite story. Prideple tend to themselves. They can participate in all the , so it is athe u. K. Very volatile stock and the , but is extremely complex we should see some activity for sure. Adnoc, what is going on with the ipo . We hear there is a lot of interest and demand for the ipo am especially from uae nationals. It is a unique thing in the market and could be a successful case. Mostly because it is characterized you cannot find a lot of exposure to the oil sector. Even though it is a unit of , soc, it is the first time we expect a good outcome for that tracy a huge thing for that. Markets. Huge thing for that was her middle east markets reporter and that is it for this edition of Bloomberg Markets middle east. Coming up, bloomberg technology. Is this a phone . Or a little internet machine . [ phone rings ] 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. Choose by the gig or unlimited. And ask how to get a 200 prepaid card when you buy any new samsung device with Xfinity Mobile. A new kind of network designed to save you money. Click, call or visit today. The following is a paid program. The opinions and views expressed do not reflect those of bloomberg, its affiliates, or its employees. Announcer the following is a paid presentation for the teeter, a natural, simple, inhome solution to back pain that has helped millions of people get real relief for over 35 years. If back pain has been keeping you from enjoying an active life, if youre missing out on time with family and doing the things you love, now theres an easy way to finally get the relief you need. With teeter. Teeter offers a gentle, fullbody stretch using gravity and your own body weight to target back pain at the source. You can elongate and decompress