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And israel as President Trump urgan his first foreign to since the election. Then there was all the buildup for the opec stocks with oil rising on speculation that the production curbs would be extended. Other prominent officials accompanied President Trump. The world is going to double in size in the next 15 years. There are plenty of opportunities and threats. Spent a lot of money and technology. We operate around the world. We help Companies Grow around the world. We are pretty comfortable in our future. Francine can you break down the units where you want to defend and where you want to grow . I want to grow everywhere. It is going to be harder in some areas because of our market share. Investment banking in certain areas may be harder to gain share, but that doesnt mean we cannot gain share in this country or that part of the world. We just know it is going to be harder. Francine what about fixed income, a lot of your competitors are trying to beef that . We have a good share there. It will be hard to gain. If you look at the number share, but if you look at that country in this country, we can do better around the world. A lot of it is going to go to technology. Competition is a good thing. I have met their never been worried about competition. Francine of course, as long as you are better than them. That is our goal. Francine we spoke in paris. What is the mood on regulation now, are you as confident for wall street . When you talk about regulation, the Trump Administration wants to deregulate certain things, and most of us think regulation has been holding back rub. It is heard all citizens of this country. Not just jpmorgan. I am optimistic of some regulatory reform. In a sense. Even my democratic friends understand that it makes sense about what can be done better to simplify the burdens of business and grow the economy. No one is asking for wholesale running out of regulation, but look at it in the light of day. Francine what do you make of glasssteagall, and it was talked about making a modern glasssteagall, which investors were confused about. Glasssteagall was not part of the prom. No one i know says that was part of the problem. Regulate smallou banks differently from bigger banks . That makes sense. I dont think that is when to stop our ability to compete. Francine would you be opposed to foreign acquisitions . We are not on the hunt to do anything right now, but i would not take it off the table down the road. Is there a region you want tobeef up or specific operations . There is no area we cannot grow organically. We can grow private bankers, corporate bankers, ranges in the u. S. , overseas. There may be acquisitions in technology and countries that make a lot of sense. They have to make a lot of sense for us to do it. Related,be thin tech payment related. Online self investing and online account opening. If you allow treasuries, you can buy and sell. We had someone do a foreign fx trade on their mobile phone. As long as the client is happy. Francine how much do you think business will be transacted on that . A lot. On the consumer side, it has already moved to mobile. Built a will be moving there bill pay will be moving there. Online say mobile, ipad, it is all the same to me. Francine how are the animal spirits in the u. S. And World Economy . Pretty good. Japan is growing more than in 15 years. Europe is doing well all things considered. America is still chugging along at 2 . That is all good. Even the imf, which is always worried, is now saying the world is going to grow faster than expected. Ausef coming up, rouhani won Historic Second term. He wants the world to know iran is open for business. This is bloomberg. Yousef welcome back to best of Bloomberg Markets middle east. President rouhani promised to reach across irans divide. This was dominated by arguments of widening inequality. He won a resounding victory as voters endorsed his efforts to steer iran out of isolation over the landmark nuclear deal. Think president rouhani during his second term is going to be much bolder in terms of economic reforms. The expectations of the people have been mounting, especially the core. I think he is going to put a lot of emphasis on creating jobs, focusing on economic growth, health care, environment, issues people care about. He is going to be a lot bolder and faster in terms of economic reforms. That may be the case. Bolder he wants to be and ambitions are good, but the reality of a burgeoning u. S. Saudi arabia alliance, and the Ballistic Missile program sanctions, which are different from the Nuclear Missile program, how does that put a halt on him . Despite what you mentioned, President Trumps Administration Just renewed the sanction relief, which is great. That means the Trump Administration is realizing with this nuclear deal in place it is a good deal. The alternative could be an outofcontrol situation like north korea. Do we have challenges ahead . Absolutely. Nobody would have thought that president rouhani could strike a deal within two years. I did not. Down thewed to bring nonnuclear related sanctions, which is a huge challenge, but if there is one thing that can achieve that, it is rouhani and his team. We have seen donald trump and his team criticize the deal. As much as he might have extended the sanctions related, that is still up for discussion. Terms of who is doing business here, the u. S. On the back foot, the clients you are speaking to, where are they coming from . The biggest beneficiary of this deal has been the europeans. European companies are backing it in a big way, automotive, construction, infrastructure, oil and gas, petrochemical, all the way to clean energies. The biggest beneficiary has been europe. There are a number of American Companies who have now obtained licenses and operate in iran. This happened in the last three or four months. It is true that a lot of Companies Still shy away because of the fear of the staff that snapback and banking issues. The trend is for more companies to come and have a presence either direct or through a third party. We have worked with a number of interesting companies, even American Companies. Briefly, in terms of the asian influence, who is leading the charge . It is china. Our trade with china has surpassed the 60 billion mark. When i came to iran 12 years ago, this was less than 5 billion. It has multiplied tenfold in a decade. Mou forident signed an it to increase to 600 billion. China is the largest trade partner of iran and the biggest investor in iran. They signed a 2 billion rail deal to connect with russia via highspeed trains. The koreans and japanese are coming back to the market. India is considering iran as a strategic trade partner, industrial partner. They are investing in a strategic port in the southeast of iran. On best of Bloomberg Markets middle east, more on iran, including with mark mobius. This is bloomberg. Theef welcome back to best of Bloomberg Markets middle east. Isk mobius says he optimistic about iran, and not simply because of the elections. Has anou know, iran interesting Capital Market for us and other investors. Romneys election is not going to change things very much. As you know, the Supreme Leader was not enamored with him, was not really in favor of him getting that win. I dont think you will see immediate change in iran. We will have to wait longer. The good news with donald trump coming here is there may be more states andn the gulf the imposition of the value added tax will bring these countries together in terms of their financial wellbeing. Things are looking better in the region in that sense. Lets talk about emerging markets more generally. The rally in e. M. Has been stunning since the u. S. Election. A lot of people thought that would not happen. What has been driving it . Mark a few things are driving it. Before january 2016, there was under performance in emerging markets. You have lots of institutions that are underweight emerging markets. They realize this is not a good thing. Then you have the realization that emergingmarket policies had gone down too far. So you have rheumatic recovery of these currencies. There is also a feeling that the u. S. Dollar will get weaker against the euro and other currencies. The emerging markets story is still intact. The average growth is more than double that of developed countries. The valuations are cheaper than u. S. Markets. All these put together begin to move people in the right direction, toward more emerging markets weight. Onsef a rate hike is still the schedule for next month. Ing jobs and a lot hear from the latest minutes. What was your take away . There are two things to focus on, one is labor data has been strong coming out of the u. S. It is robust. If you look at the wage growth coming out, that has been a little less strong than we would like to see. That has not been keeping up. The second thing i would like to focus on is the commentary coming out of the fed, which has been very much in line with what we would expect, very much in line with another rate hike. There is a lot of talk about how you are seeing the hard data coming in weaker than expected. Soccer data is still strong. There is some concern there. It does not deviate us from our expectation of a rate hike. There is june and a second one in september. It is interesting to see what has happened to volatility. We saw this huge spike last week. Now we have come down to those lows we were seeing before. If our viewers take a look at this chart, they will see a spike in the vix, euro stocks, and fx volatility. Now that has come back down. Will a reduction in the Balance Sheet trigger another one of these spice . Spikes . I am not convinced that it would. If you look at the implied ability probability of rate hike, it is pretty much priced in now. There is an expectation of a june rate hike in the high 90s, and september as well. I am not convinced that the vix would respond strongly to an increase in base rates. Astounding is quite the way the vix has been behaving when we have such clear geopolitical risks on the rise. Luckily, it has been resilient. Bmi said that the minutes showed mildly dovish indicators. This is where we are with the Balance Sheet. That is theeft, holdings of the federal reserve. On the right is when they will be maturing. How do you expect the fed to navigate this winding down of the Balance Sheet . Get moreuld hopefully indication of what their plans are in the june meeting. The indications already are that the fed is comfortable with winding down starting this year. We would expect it to be a gradual process at first, and as long as the Market Reaction is stable, we would expect it to accelerate. Yousef lets talk about what is happening in egypt the country has gotten an endorsement from the International Monetary fund. Egypt is excepting 3 billion of international bonds. What does this mean for the currency markets . This caught most analysts and experts by surprise. Ultimately, when the Central Bank Moves with the kind of scale that we saw this week, you would expect the currency to reflect that a little more than it has. We have built up a chart to showcase what is happening with the egyptian pound. You will remember it was the bestperforming currency at the beginning, and this is compared to the blue line, the msci emerging markets currency next. This is not an exciting story since march. What is where is this resilience coming from that it can even withstand a move like we saw from the central bank . A cannot be freely floating at this stage. That is the key takeaway. It does not make sense for a 200 rates, a modest one, we could argue about expectations and what happens. This is the key takeaway. Yousef where does that leave us and the direction of the egyptian pound . It should be strengthening over time. If you look at the process underway, and the scale at which rates have been rising overall, there is clearly still some level of bond shortage [indiscernible] , which is the only explanation for why there is where the currency is right now. With the fact that egypt did raise the rates, when the markets were not expecting it at all. The markets were not expecting it because they did not see a need for egypt to raise rates, but the fact that they did reflects their commitment to the imf program. That sense a positive signal as well. Packageuch does the imf actually help egypt . It does face other challenges that it needs to deal with. Is one of those cases where every little helps. Egypts financial position, its reserves have improved. They are going in the right direction. Reminder, these little updates that you get from the imf are helpful. You cannot have one side of the picture without the other. You need to see the reform process move forward as well. You need to see inflation come down. These things need to move hand in hand or egypts overall position to improve. It is not just about the imf package or the reforms on its own. Lets turn the conversation to saudi arabia. We just heard that they are expecting passive inflows equivalent to 2. 5 times Current Holdings by Foreign Investors ahead of this msci emerging markets category conclusion. Where do you think valuations are in saudi arabia . Some put it at a premium to pms and at close to historical highs . Is this a sign to move . Valuations by our reckoning are not near alltime highs. They are pretty much neutral. The longterm average in saudi arabia is the skewed from when you had half the listings that you do now, even after the impact of the Global Dental crisis. Ofis a premium to the rest the region, but that has been the norm for saudi arabia. Yousef briefly, your closing thoughts on the United Arab Emirates probably markets . Abu dhabi prices have come off a little bit. They will be launching a batch of new sales. In dubai, prices are bottoming out. Are this yearns to see that Inflection Point in retail prices. We should end the year with prices flat or maybe slightly up. This should be the year were prices stabilize. That should set the stage for recovery in real estate prices over the next couple of years in the runup to expo 2020. Yousef next, President Trump signed deals worth billions of dollars in riyadh. That is ahead. This is bloomberg. These days families want to be connected 24 7. Thats why at comcast, were always working to make our services more reliable. With technology that can update itself. And advanced Fiber Network infrastructure. New, more Reliable Equipment for your home. And a new culture built around customer service. It all adds up to our most Reliable Network ever. One that keeps you connected to what matters most. Yousef welcome back to best of Bloomberg Markets middle east. Saudi arabia welcomed President Trump with deals worth tens of millions of dollars. It was his First Official visit to the kingdom. Bloomberg White House Correspondent Kevin Cirilli was traveling with the president. Kevin it was a glowing reception as resident President Trump met with leaders of the kingdom during a very much celebratory dinner. I spoke with one saudibased ceo at the forum yesterday that told me this is a president who campaigned with bruising rhetoric against the muslim community, but now they are hopeful will govern in a different way and they view a lot of and desist on emphasis on President Trumps visit make it the first visit to saudi arabia. I also interviewed wilbur ross to get perspective about just how much of a historic day it was for President Trump to be meeting with ceos and Business Leaders here in saudi arabia. Take a listen to what he had to say to me. Wilbur ross someone is going to a conference the goals here. And all of these contracts. I cannot imagine another business that is good for the United States and the common kingdom. Tevin coleman there has been a bevy of controversy back home. Has that impacted the president s first trip . Wilbur absolutely not secretary ross absolutely not. Isis making a place that better for businesses and citizens. He will keep doing that. Kevin yesterday at this forum, i spoke with prominent Business Leaders, all of whom told me they are hoping the more than hundreds of billions of dollars 300 billion in total will help revitalize not just the saudi economy and culture, but also u. S. Is mrs. Back home. Prominent businesses like knowing, Lockheed Martin businesses back home. Prominent businesses like boeing, Lockheed Martin. From there any indication the trump side what they think they will have to give saudi arabia in return . And nationale security protection. That is the Common Ground the nations feel they can Work Together on in combating terrorism, particularly as it pertains to the cyberspace. We heard at a press conference yesterday with u. S. Secretary of state Rex Tillerson and his counterpart from the kingdom. This is an administration for eager to turn the page from the firestorm of controversy it is facing a coma after the followup from the firing of former fbi director james comey and potential collusion with russian officials. That investigation is very much ongoing. Increasingly facing pressure from republicans within his own political party. Will the group enter into New Territory . The status oft is Consumer Sentiment at this part of the world . Welcome back, great to see you. Last time we spoke, you told me about the shift in Consumer Sentiment or consumer behavior. I want you to tell me how that evolved since we spoke in february. Are you seeing Consumer Sentiment still under pressure . Under pressure. , it isok at performance actually good. It is a positive sentiment that is building up and we have seen that coming through. Yousef youve also made it clear that you are looking to fuel growth through acquisitions, what are you looking at the moment . Alain we continue to look at opportunities that actually add value to our lifestyle ecosystem you present to our customers. Is a real solution to any problem. They are doing tremendously well and we are happy to have invested in them and that was about 10 days ago. We continue ecommerce, digital is important to us. I think the walmart view news this morning is ushering in a new normal. In the future Going Forward, this is how business is going to look like. Its going to be offline, online yousef coming up on best of Bloomberg Markets middle east, implications of the opec restrictions. We will hear from the Saudi Energy Minister who warned that the kingdom will not act as a safety net to read this is bloomberg. Yousef welcome back to best of Bloomberg Markets middle east. At the opec meeting, Bloomberg News spoke to the saudi oil minister. I have not spoken or heard of any country that is against the extension, per se. Everybody wants the extension because we can realize we have not achieved our objective of being of bringing global inder inventories to the average. Francine are you concerned the market is already pricing the cuts in . Lid i am not looking for a specific price. We are looking at clarity for the market that we are steady as we go, committed to getting inventories to the fiveyear average. Opec and nonopec working together, i think that should encourage investment. Claritytive clearly is on where the markets are going so that people invest. Pricesss concerned on over the next 12 months than i am at the end of this decade when supplies may be short, demand will be approaching 100 Million Barrels and we have the annual decline that has taken place. Unless we invest and we overcome this decline with new, significant capacity coming in, we will face a shortage. In saudi arabia, we dont want the market to be squeezed. Francine i understand you are not targeting a price, but i have been covering opec for a must two decades and shale producers are now part of the equation. Lets say the cut does not have the effect you want longer term, would you think of overpumping so the price goes down and you squeeze americans out . Lid we never overpumping to squeeze anybody out. I think supply and demand need to balance and we have said that saudi arabia has capacity, opec will do what is necessary. We feel that the Market Structure was off a few years ago with the divergence between supply and demand and any opec action in 2014 would not have done the job in terms of cutting. With the restructuring of supply demand trajectories that the place over the last few years, opec is now able to calibrate opec fromth park with partners from outside to bring supply balance together and bring inventories down and clarity for investment. Yousef coming up next on best of Bloomberg Markets middle east, claims that fear of iran may bring arab nations together. We will discuss the invitations of that. This is bloomberg. Yousef welcome back to the best of Bloomberg Markets middle east. the u. S. And saudi arabia signed deals worth hundreds of millions of dollars and raise the pressure on iran. Trump explicitly called for the Global Community to isolate iran. We discussed this with we discussed this. With i think it is highly positive possible for the equity markets, we have seen them falling off and ignoring a lot of positive news coming out of saudi. Part of that is the oil deal we expect. Signs for that are getting very strong and we see an extension into 2018 because the supply will be exceeding until next year where we saw the latest figures. Bilateral deals are positive as well with close to 300 billion in deals being announced. This will fuel the real gdp growth we will see in saudi. Manufacturing bids, but also health care is one of the growth sectors. Also, we saw last week the article 4 coming out of ims clearly stating they dont need to have a balanced budget in the and saudi can moderate fiscal conservation Going Forward, which is very much in line with our view and also a reversal of the curves on the bonuses. We are trying to see the and news probably by the middle of next week. I think these are going to be very powerful for saudi market. List ofead us a laundry good news for the saudi market. Let me play devils advocate. What about the rhetoric we have seen against iran . Is the potential there for that to escalate into something more and what would that mean for investors . Do you think they are even considering a geopolitical risk premium in the market right now . They have always been, but i think risk is less than obviously before. Reformist being reelected. I briefly you saw the confrontation with conservatives in the Election Campaign and he is trying to reconcile the country. I think that is important to get his political backing. Theres a lot of things that have to come through. He hasnt seen benefits from sanctions being lifted. Real gdp growth looks very high, but that is only driven by oil isduction going up debt only driven by Oil Production going up. That is the key to it. From the imfments over the weekend about saudi arabia and the budget balance no longer necessary given low debt and a strong asset base. In terms of what this means for the liquidity situation, i know you have been following the story closely and looking at the data and scouring through the numbers. Where does the story go from here . When is liquidity going to improve even further question mark even further . We think it will probably be tightening a little bit, but most of it has been addressed. By the end of the year probably higher cyber rates. That changes on the u. S. Military Monetary Policy and hinges on the fiscal stimulus trump wants to pursue. That uncertainty has become bigger after recent events in the u. S. Over the last week. On the basis of those deals, is there a way to position yourself as an investor to make better use of those deals in terms of, perhaps, some of the Key Industries in the kingdom that you can get exposure to this big alliance . The biggest beneficiary is a ,onco, which is not aramco which is not yet listed. Credit growth the in the economy which was pretty lackluster the first few months of the year after pretty much. Nvoluntary growth last seen we think credit growth will pick up to about 5 by year end and probably accelerate from those levels. Do we think the Banking Sector is really the sector to play Going Forward and a key beneficiary of higher rates that will improve margins Going Forward. Yousef the central bank in egypt surprised the market with an Interest Rate hike. That is a dump by two percentage points. The imf had been whispering, had monetaryng that the policy might need to be changed to bring inflation back under control. This is all part of the wider agreement for the 12 billion support program that the imf agreed on with egypt. Lets get more perspective on this story. Is still with us. The mainstream thinking was the transmission mechanism of the central bank in egypt is broken. Why stifle credit, keep as is, focus on other measures for adjusting policy to be able to bring inflation back under control. You tell us you are not surprised, why . The case for rate hikes was increasing over the last few months particularly after the latest imf documents when they did the review. Reading between the lines, they said they had the right will to address high inflation. What is underestimated is Inflationary Pressure is still very high and we are still 1. 7 . This is still coinciding with over 20 analyzed inflation rates. You need strength in the currency and the way to do this is to attract even more inflows in the fx market. So far, we saw 6. 8 billion of inflows in the target is about 12 billion if you get to a 25 share of the Government Debt as we saw in the past. That is definitely an achievable target. Strength in the currency will take over in takeaway inflation. It is about the secondary effect of inflation. It is difficult to get way get rid of the inflationary levels when there are still high levels. Bonds asre considering they always have been trying to possibly address what looks like a dollar shortage in terms of where the Exchange Rate is today , is that a realistic level . Where do you see it going to as a result of what could be interpreted as a shortage of dollars and perhaps a bit of an artificial Exchange Rate . It is important to realize that only the end of june all restrictions will be lifted for under 100,000 and nonessential goods over 50,000. Will have to behind substantially be hiked substantially around the summertime. Coincides with 100 price hike just to keep subsidies on petrol stable and more needs to be done. Inflationary pressure will remain substantial Going Forward. That is why i think an obviously under the pressure of imf we describe the textbook answer to high Inflationary Pressure, the monastery Monetary Policy Committee Gave in to high Interest Rates. The gdp growth will be below structural growth and in egypt, we estimate 4. 8 . The output gap is around 13 or 14 . From that base, i think Going Forward we could see real gdp growth above the 5 and maybe 7 in the next few years if this is addressed properly. Going back to the inflation rate, a stunning 30 year on year now. I think there was the school of thought that said inflation away naturally in the Second Quarter or a little bit after because the impact the shock of the devaluation would ebb away. If you assume that is correct and you have the Interest Rate rise, is an inevitable it comes down . We think so. A lot of economists were expecting no rate hike. Assists are ready and to emphasis on that and it was easing already. Core inflation excluding foods was about 1. 1 . That accelerated from the previous month and that is why the Monetary Policy decided, in fact, to tighten. I think it is the right decision despite ramifications for credit growth and investments in the country, despite potential effect on real deep gdp growth. This is the anchoring of inflationary expectations that are absolutely key and beasley the target is now to have a 30 target by the end obviously the target is now to have a 30 target by the end of the year. You mentioned inflows that have been an amazing story for europe. We have seen billions of dollars rush into the country that could help the currency. Part of me cannot help thinking when you think about capital flows of that strength, you kind of think about hot money. Is there a downside to that money coming in that is likely to accelerate post Interest Rate hike . Yes. Honestly it is very volatile. Honestly, with Interest Rates this low, this is a very interesting carriage rate. If you dont expect fx exchange is an idealsen, it pickup you can achieve. Fx rate the x x could change maybe to 15 or 16 by the end of this year, that in inflationl curve compared to the current rate. Yousef that is it for this best of Bloomberg Markets middle east. A busy week for the region will be right here. Yousef. This is bloomberg. Jonathan coming up on bloomberg best, the stories that shake the week in business around the world. President trump taking meetings and making deals while back in washington his first budget makes way. That is something not being received too well on capitol hill. A lot of economists are crying foul. Jonathan opec agrees to extend its output cuts. They could do. H this buys them time to get more data. Jpmorgan jamie dimon and tim sloan open up about their businesses in exclusive interviews

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