Of the biggest trade disputes in history. Tech earnings avalanche with microsoft, facebook, alibaba, alphabet, and amazon reporting. It is 8 00 a. M. Across the emirates. This is Bloomberg Markets middle east. I am yousef gamal eldin in dubai. Investors are betting on an expansion in corporate earnings. Asia up 8 this year. Let me show you the broader market. Let me give you a quick tour, asian equity session higher, led by the kospi. China down 1. 2 . To theto your attention Foreign Exchange space, the yen the study after the boj clarified comments on friday. Japan still getting its head around a stronger yen. Big moves in the swiss franc sanctions are expected from the united states, and in aussie dollar retreating from iron with losses in ore. , a squeeze concern on the supply side driving price gains. And showtch the board you the Energy Trades with brent crude specifically, still the years aslose in three hedge funds increase their bullish bets to a record high. Up. 10 year, we have marched , 2. 68 currently. The gold trade mostly unchanged. Stand out in emerging market has been dollarlira. Lets check in on first word headlines with debra mao. U. S. Trade representative Robert Lighthizer hopes a deal can be done to save nafta according to the republican chairman of the house ways and means trade subcommittee. The latest round of talks are due to wrap up in montreal later. But major issues still remain unresolved. A member of the ecbs governing bank mustid the in qe as soon as possible. It says the program has done what was anticipated and there is not a single reason for continuing with it. Last week, mario draghi said there were signs of rising inflation, but patience and persistence are still required. Shares in Kingdom Holdings soared by the 10 limit after the chairman was released from detention at the Ritz Carlton Hotel in riyadh. A senior Government Official told bloomberg the billionaire returned home saturday after reaching a settlement with authorities and will remain at the helm of his company. Among bankers has slipped. Sentiment at banks have worsened for seven of the last eight quarters. As aout of tendency brexit risk to londons dominance as a financial capital, and a third of banks say there is a high likelihood of Market Conditions worsening in the next six months. The leader of the u. K. Jeremyion labor party corbyn has rolled out a second referendum on brexit. He spoke to the bbc. What we asked for and demanded in parliament has been a meaningful vote in parliament at the end of it. Was happened with this bill it was an undemocratic power grab by the government. We are not asking for a second referendum. Thousands of russians protesting against Vladimir Putin. Barred fromeader taking part in the vote was dragged away and attained by police in moscow. He told his supporters via twitter, you are not coming out for me, but for your self and your future. The ikea founder has died at 91. His company grew out of a boyhood business. The bloomberg billionaires index estimated his worth at 58 billion. Ikea flatpack revolutionize the way furniture could be stored and shipped before being assembled at home by the customer. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. Am debra mao. This is bloomberg. Yousef thanks. Been quite a prize for u. S. Bond traders with the selloff in treasuries barking calls of a bear market. There could be more turbulence to come with President Trump state of the Union Address on tuesday, the latest fed rate decision, the last under janet yellen, due on wednesday, and u. S. Jobs data on friday. The market sees a less than 3 chance of a hike, but Goldman Sachs is expecting a slightly hawkish upgrade of the language. Ofs bring in the head equity strategy at Standard Chartered bank live at of singapore. Do you agree with goldman, is there a enough there enough of a shift to justify a change in the verbiage next week . There has beenk a significant change in the inflation outlook, however, i would agree in that there is a high probability that the day of a much more hawkish tone. Yousef what about the rise in 10 year bond yields we are seeing, 2. 68 as we speak . How much further does it go from here . You had u. S. Gdp numbers on friday that did not even meet expectations. I agree. I think that the bond market is beginning to look overstretched at the moment given the inflation backdrop, but what it is pricing in is the upgrade to the growth outlook. Fourthquarter gdp was light. The bond market is looking ahead, as is the equity market, and that is signaling to us that they are getting more confident on the outlook. It is the outlook for growth as opposed to inflation which creates a conundrum for the fed him a but on balance coming out more hawkish is appropriate, and effectively validating the rise and bond yields we are seen. Yousef we have put up on a aret to show how investors positioned and what they are expecting in terms of Interest Rate hikes for 2018 and be on. Our clients can pull this up on their bloomberg, even the march probability,94. 5 a low probability for this weeks meeting them up its still a jampacked week. What will drive the u. S. Dollar from here, which some would say has already been oversold unless you believe in a fundamental historical inflection point. It be the state of the union, the fed . I think the fed is likely to lead things. Last week was unbelievable for the dollar with comments coming from Steven Mnuchin and donald trump at davos. People are likely to focus on is with the ecb and boj holding pat and given the upward trajectory for u. S. Rates , is the sharp decline in the u. S. Dollar warranted . Ultimately i think it is inflation differentials and real yields that matter. In a moderately weaker dollar, but last week was unprecedented. We have probably overshot somewhat in the shortterm them a so even with hawkish i thinkry from the fed, we could see the dollar recover a little bit following the recent decline. Yousef all of this is not keeping you away from the u. S. Equities play. How are you positioning yourself there, and how much further does this rally have to go in 2018 before we see a correction . We ourselves as i mentioned at Standard Chartered are of the feud the dollar is likely to trend weaker in 2018, and we believe emerging markets are where the real opportunity lies. A weak dollar has been very good news for emerging markets and creates an improvement in the overall liquidity environment, particularly given Central Banks dont want to see the currency strengthen too much. We will get into your calls for asia in a minute, but u. S. Remains a core holding. More context on whether youre looking to increase exposure, keep it as it is, or reduce exposure . Pat on our hold exposure to the u. S. In line with the benchmark. We think we are in a light cycle environment and margins will struggle to get further into high territories, so we are highlighting our sector views, and specifically in 2018, we think the leadership will go to the bank sector and technology will play second fiddle to that. We still think technology will gain in 2018 them about we believe the Financial Sector will be the best performer in the year ahead. Once you to give me some color ahead of the state of the union from donald trump. We had the u. S. Tax cuts, gave equities a boost, depending on what company you are talking about, but could this Infrastructure Spending plan or a bigger project the a second leg for stimulus for a lot of these trades . Be cautious on the ability of congress and trump to achieve his goals in terms of infrastructure. Ofhink there will be a lot resistance and more focus on the deficit going forward. The tax cuts in some way it drives to the heart of the republican agenda, but i think the Infrastructure Spending bill , greater focus on who will pay for that and that will be much tougher. Yousef we still have a lot to talk about. Clive mcdonnell from singapore. Here is a preview, nearly 3 trillion worth of Companies Report earnings this week. We preview the numbers in detail later. Should startb tapering as soon as possible, when the murmur may turn into a ror. This is bloomberg. Yousef this is Bloomberg Markets middle east. Are live on bloomberg tv and radio. I am yousef gamal eldin in dubai. A recap of the action, the news around the release of the chairman of Kingdom Holdings. Expectations from investors that there was a lot of value that could be unlocked with more transparency and the anticorruption probe. Was up onlydawul. 5 . We will get you the clear numbers later on. I want to talk about what else is happening in the region. Dubai was down, driven by property developers. Not so much this time around, 1. 8 , but it has been a down side for the index, and qatar down. 5 . Lets get you a check of the business flash headlines. The regions largest listed company has missed earnings. Fourth quarter profit at the saudi Chemicals Firm plunge 14 as a result of planned turnarounds. The Company Reported impairments million reals. As part in a agreement addressing american complaints about unfair state help, American Carrier say the deal is a victory in one of the biggest trade disputes and u. S. History. Airways hasatar benefited from 17 billion in government aid over 10 years. To billionaire brothers in india ,ccused of diversion, siphoning and digression of assets by a new yorkbased investor. The lenderthat diverted loans from the publicly traded Financial Services firm to help them with a personal. Ebt load of 1. 6 billion they categorically deny the allegations. That was your bloombergs news flash. Lets get back to the big market teams. A member of the Ecb Governing Council said the bank must into qeas soon as possible end as soon as possible. They say the program has done what anticipated and there is no reason to continue with it. Mario draghi last week said there were signs of rising from inflation, but persistence and patience is still required. Clive mcdonnell is with us from singapore. Help us digest these comments from the ecb member in terms of guidance. I would not describe it has a surprise. The Dutch Central Bank is joining the German Central Bank in pushing for an end to qe. Mariota draghi highlighted the year old area is no longer in recovery mode. Now it is in expansion mode. The one catch here is inflation. Mario draghi mentioned there are some signs of inflation out inflation isobally the dog that has yet to bark. Compelling clear and reasons for a complete removal of qe beyond the already flagged run down through october this year in my mind. At what point does the strength of the eurodollar become an issue for the ecb . It is definitely a backstop in terms of pushing up inflation. I think it is clearly a big issue and something the ecb governors have highlighted as a concern. Ast week, we saw quite violent reaction from the ecb to the comments from Steven Mnuchin , which were somewhat givenedented comi concerns about the start of a currency war. The impact of that strong euro has already made itself affected by the underperformance of the euro area equity markets compared to the u. S. It is a concern for us and likely to be a concern for the ecb that it is holding down import prices, but i believe we have overshot too much in the near term. Yousef i am looking at what the dollaryen trade is doing. I mentioned how the feedback from investors has been that japan inc. Is still getting its head around the stronger currency. Where do you see the boj in 2018 . Are they going to tangibly addressed the expectations of the market they might shift away a little bit from policies of the past . Is the question on everybodys lips, but the boj and governor kuroda have been at pains to point out there wont be any change in boj policy away from yield curve control. Governor kuroda came out and said categorically that this does not represent a change in policy. , is there ahe ecb clear and present danger of inflation . The answer continues to be no. Is the doglobally that has yet to bark, so for the areasimilar to the euro from a corporate point of view, we believe there is a broadening of drivers for the corporate sector that can alleviate some of the strengthen the local currency, but definitely a concern for policymakers in both geographies. Into somewant to get of your key calls. I know they are centered around asia exjapan, but perhaps you can tell me what you think of the rally we have seen in the last few weeks, especially the china ashare euphoria. It is remarkable. Last year we saw gains of 24 in the index, but the underpinnings of this are quite solid. As opposed to looking at the gains in the headline index or violations, which are of limited use, i know the real driver of those flows from southern china, the socalled stock connect southbound flows, which have doubled your to date on a weekly basis. That is the primary factor lifting up that index, and until we see signs of weakness in those southbound flows, i remain a bull on china shares listed in hong kong. Yousef you are also a bull when it comes to e. M. Credit. If the some of your ideas on fixed income for asia. Give us some of your ideas on fixed income for asia. We have cut back a little bit on our asia dollar credit exposure. Asia dollar credit is heavily weighted towards chinese real estate developers. Significant gains in that space over the past six months. Are lower spreads than the emerging markets space, so our preference is for emerging market dollar, emerging market local currency bonds. Yousef we will leave it there and see how those calls play out. , thank you for joining us. Lets get you up to speed on what is up next. It is a tech earnings avalanche microsoft,ith facebook, alibaba, alphabet, and amazon all reporting. We look ahead next. This is bloomberg. Yousef tech stocks face a big week, better known as fang, facebook, alphabet, netflix, google. We take a look at what exactly we are looking out for. First, facebook, revenue and 52 me of 42 , revenue up fortinet income, but ad revenue in focus. The interesting thing here is you are looking at the white cars, the price per ad white bars, the price per ad. That is rising, so that is a good thing. Even though that is falling, the more expensive ads might compensate for that. That is something to look forward to. This is amazon. Out with ang estimate of 37 in terms of revenue. That could be the best growth since 2009. We are looking at better than expected holiday sales that will have oakley a knock on effect. Will have a knock on effect. We will also be looking at Amazon Web Services become a growing higher in terms of 10 revenue there. The orange is retail subscription services, prime members contribute in to 5 revenue. We will see how high and how far possible later this week. Finally, apple. If you have an apple phone, all eyes looking at that. Iphonesooking at 3164, year on year revenue growth. You can see it has only been growing in the low single digits. Concern, huge especially when we are hearing reports of falling demand for the new iphone. These are the bloomberg charts you need to know. You have microsoft and google happening later this week, a very take week in tech earnings. Coming up next, shares in Kingdom Holdings surge of swallowing the release of the chairman. Meanwhile, the latest that of saudi data that paints a mixed action for the economy. Where exactly is this economy at . We will break it down for you next. Dont go away. 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. Yousef we are 90 minutes away from the market open here in the emirates. News, bankng earnings coming in with net income for the year that missed the lowest estimates, the fiscal income of 2. 05. The estimate was for 2. 1 6 billion. You are looking at impairments of 1. 49 alien. Fivetock is trading at times the estimated earnings per share. To others outred there. Lets take a look at the first word headlines around the world. U. S. Trade representative is hopeful that a deal can be done to save nafta. Thats according to the republican chairman of the house ways and mean subcommittee. The latest round of talks is set to wrap up in montreal later. Democrats say major issues are still unresolved. A number of the Ecbs Governing Council said the bank must and q must end qe as soon as possible. They say the bank has done they say it has done what was anticipated and there is not a reason to end it. They say patience and persistence are still required. Confidence in london bankers have fallen to the lowest level since the financial crisis. Nine out of 10 financial terms one third see a high likelihood of Market Conditions worsening in the next six months. The leader of the u. K. Opposition labor party, jeremy corbyn, has ruled out backing a second referendum on brexit. He spoke to the bbcs andrew marr. Corbyn what we asked for and demanded in parliament was a meaningful vote at the end of it. What happened with this bill was, it was it was an undemocratic power grab by the government. Braveusands of russians subzero temperatures to protest Vladimir Putin, who is seeking to prolong his nearly 2 is nearly two decade long rule. Alexi navalny was arrested at the protests. The ikea founder Ingvar Kamprad has died at the age of 91. This company grew out of a business selling pencils and beef from a bicycle. 58orth was estimated at billion. Ikea revolutionized the way furniture and other items could be stored and shipped before being assembled at home by the customer. Im debra mao. This is bloomberg. Over to Sophie Kamaruddin for a look at todays market action. The best month since march of 2016 with the kospi moving toward an alltime high. Hcfc is one of the best performers. 0. 6 dney, gains of about amid optimism about commodities outlook, or their earnings. Ahead of the chinese earnings season in late february, cicc has lifted the target to 16,000. S, they are piling into energy and banking stocks. Could offset the rise in chemical companies. Lets take a look at one of these players. A record high in tokyo following its earnings. It is rising with other japanese stocks and exposure to cryptocurrencies. Wynn macau is slipping in hong kong. A last look now at asian currencies. The dollar is rebounding, tracking that rise in treasury yields. The Malaysian Ringgit is snapping a sixday rally but the thai baht is stronger for a ninth straight session. Trading at auan is october, 2015 high. Lets talk about whats been happening with some of the saudi data, specifically from the Saudi Monetary Authority. Before we get into that and lay the groundwork for you. In terms of the data that we , it shows point of sales are recovering. Sectorims on the private is the way that the Saudi Monetary Authority describes loans to the private sector. Loans to the private sector are coming down. Cities one of two each particular data point. The private sector, the public sector, which of course have also been moving. I want to cross over and talk a little bit about another story out of asia that is really important. , they areldings looking to expand in emerging markets. Told bloomberg that now is not the time for more am and m a. R more we will get back to the saudi conversation in a minute. India, which hikes almost four years in a row, including this year. Plus, we are increasing we are increasing the budget to train people. We are investing in factories and so forth. Are you going to raise wages again in 2018 . By more than 3 . Yes, we are working on it. Let me explain a bit. That includes training people. We have to prepare for the age of the 100yearold. That means they have to be healthy, which means that they are very much motivated. You want to keep employing Older Workers . Yes, after 65. They have to see their future after 65 years old. You said burden can be the worlds whiskey. What is the fastestgrowing market for bourbon right now . Japan. Anderms of growth, asean some parts of europe. How fast can you expand sales in china . We are expanding little by little, just 10 to 12 yearbyyear. We are almost nothing. We are very much committed. What is involved in expanding the footprint . Were going to ecommerce, for example, because that is the whole story in china, as well as the offbrands. It has been cointreau years since it has been four years since suntory bought jim being. Jim beam. In terms of overcoming cultural differences, we launched a collaborative product , gin. They are doing fine. , we want to goe to more emerging markets like , whatever happens with nafta, and india. The reason i ask is because the liquor industry keeps consolidating. Ust this week we were checking in our radar. I think we are better. Bourbon, we are a key leader in the markets. Theant to be equipped with aftermarket skill set. That is what we are doing in terms of integrating beam and suntory. We have to be hugely successful, then we can go into the m a. If there is one thing you could have in the suntory portfolio and dont have yet, what is that . Tequila. The suntory ceo speaking in davos. I got a bit too excited when i showed you that chart in terms of what was happening. The right time to talk about it is now. We still have the chart for you to pull up. Im going to get straight to the business. What are your Key Takeaways from this latest daily of figures latest deluge of figures overnight . I cannot hear you very well. Yousef i was trying to get your insight on the Economic Data we got overnight from the kingdom, showing mixed signals. On the one hand, we had the recovery coming through in terms of point of sales transactions. What does that tell us about the strength or weakness of saudi consumers . The weakness of consumption was expected. The other side, even the borrowing and the growth and earning, because of the spike of Interest Rates, the declining of borrowing will have to return to 1 . We are expecting that the new to 978, pluspike the investment of 83 billion reality, that might motivate and push investment in borrowing in the private sector. 2017, there were so many debts being paid out, almost 8 to 10 of the Government Spending has been paid in pew in q4. I cant consider it as a benchmark, the number. We have to watch and monitor q1. How is the private sector going to react . We have to watch and monitor the private sector in 2018. Yousef you are saying, we should wait a little bit, see the key data. We dont understand exactly what settlement was reached, but he is out and the anticorruption probe is being wound down. They are telling me that theres a lot of value to be unlocked. The anticorruption probe also had a negative impact on sentiment. How much of an impact is there in saudi equities, maybe even regional equities, or how much damage has been done . Say i cant say there was much damage. Duringket procured december and january, especially when oil has increased. The government only needs about 57 to maintain 492 oil revenue. The chairman of some company, it affected those stocks but not the whole market. You, but later on, the market becomes selective. Later, it has become clear that. He companies could operate on the other side, the government, actually, part of thetlement government, they are going to take care of those assets. They want them to appreciate because, in the longterm, they are going to liquidate it. 2018, we expect it will become it will be collected. Sef you are some of the about market calls shortly. Heres what is coming up as well. We will talk about the great bitcoin burglary. Plans to punish the Japanese Exchange which let hackers take off with half 1 billion worth of coins. Yousef they miss their latest earnings. The Chemicals Firm plunged 19 . A reduction in sales of a result of plant turnarounds. Of about 625 million riyals. Shares are under pressure and they really put a bit of a cloud in the last saudi trading session. Your insights from the latest figures with what is the regions largest Trading Company . Sabic, there was a third factor. You had mentioned two. One of them was the shutdown of some sites. The other site, you have mentioned the steel or the mining. The Steel Production has been affected with local demand. We are seeing the local demand is declining, which is affecting the prices of equity. There was another factor. The surge in oil prices. We know that the oil price increased more than the downstream product. Between upstream and downstream can affect the margins. Thet look to q4 shutdown, the volatility of oil markets, even q3, the earning have searched to 5. 9. We cant consider it as a benchmark. They could not help them in q4 when they do some shutdowns. Notnd q4, i think, does represent the reality. 5. 9. In between 3. 6 and yousef that is an argument to be made. Ofthe wider story, in terms you mentioned the oil price. For your that mean outlook in terms of equity . Nowctually, i believe right you saw the meeting in oman last week. Numberthe opec cooperating together. From now to june, we expect that they might adapt they might adopt a new strategy. We believe production outside opec, especially shale oil. The second factor is the demand that, any effective gives us some confidence, that we believe oil prices according to the global estimated average, 63, i found it quite reasonable. Some have lifted the oil price expectation to 70, but i. Elieve 63 is reasonable of course, we had comments from the Ukrainian Oil minister saying 60 a barrel is a good price. Thank you for stopping the iranian oil minister. Thank you for stopping by. Shift gears to another asset class, another Crypto Exchange heist, this time in japan. Of digitaltocks currencies are mostly higher after coin check was hacked to the tune of almost 500 million. There have been calls for more oversight. Lets get more of this story. Asian Technology Editor has been tracking this closely. How are the crypto markets taking all of this . They are kind of taking it in stride as you saw there. Friday, news of that heist, or at least the disappearance of some coins from an exchange in tokyo, came up. Despite the sort of mind boggling figure they are holding up somewhat well, although, as we both know, the longer volatility that we have seen in about where we are now, 11,400, i wouldnt be surprised if there were more of that due to other factors or some sort of fallout on this incident. Yousef a tale risk with these cryptocurrencies. Whispersore and more of regulators at least looking at it. How are they likely to react to this latest development . Reed exactly. Part of the swings we saw in december were from south korean authorities threatening to ban trading in cryptocurrencies. This time around, coin check, the exchange in question, had not yet gained approval from the Financial Services agency to operate. What they had been doing is operating in sort of a gray zone where they had applied and were allowed to continue doing what they were doing. Pressure probably put could affects that other exchanges, and also globally. They are saying, what can we do to protect consumers who lose money in these kind of incidents. About anothertalk big story, nafta talks said a have taken a step forward with measures aimed to prevent corruption but there are concerned that the negotiations could drag on for months. Our correspondent is at the ifks in moscow and asked there were any causes for optimism. Officials say they think so but they cant be sure. After a week of what can 80 and and mexican officials described as productive what canadian and mexican officials described as productive. They met today here in montreal. He did not talk. He was very grimfaced as he walked in and out of the hotel. Members of the congressional delegation seemed a little more up the. Trimlican dave reichert, chairman of the ways and means subcommittee, said there had been a mood change and that people were optimistic. I asked a democrat, sander levin , what she thought about the ambassadors mood . Theres been a talk about whether the u. S. Could walk away from the talks. Did you get any per any impression from the ambassador . Think you would solve problems at this point by walking away. Behink there needs to continued work. I think that the u. S. Will continue to work. 11 says work love n says workk levi still needs to be done. 90 of chapters on telecommunications and Digital Commerce have been completed. Theres a feeling here that, at and mexicancanadian officials, that it is really up to the united states. We will hear from the ambassador tomorrow after another round of negotiations. Mckee at thes mike nafta talks in montreal. Lets get you ready for the trading day that is about to get underway. Here are some key ideas. Abreu down the commercial Bank Reported net income, 1. 8 below the estimate. Fourthquarter income, coming in at 1. 07. That is a mess on that front. We also had held are announcing a new ceo. se builder out of abu dhabi stocks have been under pressure the last year. Ongoing reactions to the fallout h prince ali bin tell all alwaleed bin talal. Especially after the kind of changes that the bank has been going through, what are we going to see on the balance sheet. We are just getting into the heart of the earnings season. Front, we have numbers out of spain. Ministers will be meeting in brussels, and there is a meeting between netanyahu and Vladimir Putin in moscow. There is a Deutsche Bank meeting , and a roadshow. Some ministers are expecting to be speaking at the Chatham House energy conference. There they have been speaking a lot lately. Quick check on the markets and where you are at. The msci asiapacific holding on to those gains, pushing further, higher. A little pressure still on commodities. A little bit of a downside on brent crude. 2. 68 for that 10year paper. How much higher can it really go . Thats all we have for this edition of Bloomberg Markets middle east are called the following is a paid presentation by the murad rapid lightening regimen. Guaranteed or your money back. Announcer coming up, see how women all across america are taking murads sevenday challenge. Fading age spots, sunspots and discoloration in as little as seven days. And now, you can too with our best offer ever