Economic forum in davos. Yousef it is eight a. M. In dubai, 5 00 a. M. In london. I am yousef gamal eldin. I am Tracy Alloway. Theres a lot going on. What are you looking at, yousef . I am looking at indicators for this massive week ahead with the inauguration of donald trump and much, much more. We are looking at the 10year for the yield climbing fourth straight week. It could possibly be telling us a bigger story. This is the chart you should be on yourup pulling up bloomberg heard this is the correlation between the 10your paper and the s p 500 going back over a decade. Paulsen, the chief investment strategist at Wells Capital management cited the 52week relation on the top panel between the s p 500 and the treasury yield and the correlation in the past month that stocks and bonds started falling together. T has happened three times that is in those boxes since 1990 nine. That could be a key indicator of what is to come in the u. S. Stock market. What are you watching . Yousef, i love that you looked at that chart. This is a relatively rare occurrence. You think the bond selloff has not been as severe as it could be because equities have been rising in tandem and that has offset losses. If both are falling together, thats a potential problem. Speaking of equities, lets look at how the u. S. Market closed on friday. We had the s p and the dow, both struggling to reach the intraday highs. Take a look at the nasdaq. That was the real winner on friday. The nasdaq composite setting in alltime intraday trading high, again, off the back of the stocks. Of those bang amazon, google, you seen them roaring back. Yousef, what are things doing in the middle east . Yousef this part of the world is just under two hours away from the opening of the emirates market. Time, moreal earnings are expected to trickle in. This is how the trading day shift up. Outside pressure from bluechip stocks. Look at what is happening in abu of 1 . Up 2 5 speculation around those bank stocks, possible mergers and acquisitions. Owl tadawul bouncing back. Egypt, record highs. Warning investors to look out for the key currency crosses as well. The egyptian Pound Holding relatively steady. The u. S. Dollar benchmark for down. Art of the world, the turkish lira, a remarkable rebound after the comments we got from the turkish president and the South African ran there. Lets check in on the world. Kicking off with the sunday times, the u. K. Prime minister will outline lands for a hard brexit on london on tuesday. Outline plans for hard brexit in london on tuesday. Mays speech will be closely watched by markets and currency traders who could see her comments as a trigger to sell the pound, which is fallen to its lowest level against the dollar since october. Its biggestas seen weekly decline as traders look for a key to production cuts. Saudi arabia has reduced output to less than 10 billion barrels a day. Its difficult to verify that information. The uae has said it would stick to the original plan on cuts, but not oh with what was agreed with by opec in november. Chinas Foreign Ministry has said its one china policy is not negotiable, just a day after donald trump hinted at a reset old u. S. China relations. He was quoted by the wall would journal saying he only commit to the one china policy is china makes progress on trade and currency issues. Thea urged, jumped consider High Sensitivity with which it regards the taiwan issue. Sources say the president elect is not sending an official representative to davos, because it would betray his populist fueled movements to have a representative at the gathering. However one of his advisers is attending the conference in an unofficial capacity. Isnese president xi jumping attending along with a contingent of chinese executives lets return to the u. S. And investors are getting larry, waiting for details of Donald Trumps planned stimulus efforts. Wary. Vestors are getting start with the u. S. Dollar. This was probably the biggest of all of the trump trades. If youve got u. S. Stimulus, if you thought stimulus would pick up, the consensus was going to go along on the dollar. Yet we have seen it weaken. Is this all down to disappointment following trumps presser on wednesday . Certainly, i think that played a role, and one of the big things eu cannot talk about the dollar without talking about the treasury yields and what yield rates are doing , youf the big things cannot talk about the dollar without talking about the treasury yields and what yield rates are doing. You had a very successful u. S. , auction a lot of demand for the u. S. Dollar denominated assets. The demand differentials relative to the rest of the world are narrowing after that your it and that will take some steam out of the u. S. Dollar. I question whether it is trump or more the fundamentals moving on that side. To come the steam seems out of that trade and a lot of it is down to the fact that it is pretty clear trump is a mixed bag now. Its not all positive. Pressure really driving the dollar, now its more uncertainty, its more unclear whether this package will boost growth as much as people hoped for in the early weeks following the election. Luke, still a lot of confusion. A bloomberg editorial makes it clear that trumps tweets shows why his conflicts of interest never can and never will be reigned in. Then we see our picks for the administration, they do not agree with the president elect, including on key sensitive issues like trade and the u. S. Relationship with russia. How is that going to play into this week . Uke one thing that might further that picture this year, this week, these are incoming fiscal policy makers that clearly do not agree and on the other side, were going to have monastery Monetary Policy makers who do not quite agree. Quite dovish been as a fed governor and janet yellen speaking this week. I think there will be conflict between policy makers, both on the fiscal and the monetary side. I think that really speaks to people arent sure that anything is going to get done much on the fiscal side and that if the stuff it gets done, its certainly not all going to because the night as the entrenched sentiment in markets right now. Awasef all right, luke k there, joining us from new york. Lets widen out the context. Joining us, the ceo and the i o of the duets grew. Great to have you back on the program. Are going into this week with so many expectation in terms of what to expect. What about your call in terms of what it means for the middle strategythere a trump for the middle east you have perhaps thought about . To look at it from several angles. The first angle is the geopolitical one. From my perspective, trump would be positive for the region because of the renewed relationship with russia. That would mean less tension for the region and renewed Investor Confidence as well. One thing we are worried about is the strength of the dollar, but i think that trade is behind us now. A stronger dollar means this economy is slightly less competitive when you look at the hospitality sector and more as a services platform. Less in particular is competitive, but i think that trade is behind us now. I, it is Tracy Alloway in hong kong. Lets go back to the markets angle on trump. If we see the trump trade run out of steam in particular the strong dollar start to weekend what does that mean . On one hand, the lower dollar could be good. On the other hand, if animal spirits start to decline in the market, that could be bad, right . I from the dollar perspective, i have to agree with you. We need a slightly weaker dollar for the region. The cost base for many of the companies here and the economy in general even the public finances are all spending in dollars, so a weaker dollar would probably make this region much more competitive and the companies here will probably expend their margins with a weaker dollar. I think we are already there. Now you are absolutely right when you say a stronger dollar means a stronger u. S. Economy, and good for equities. In my opinion, 2017 would be still a very good year for theties, but probably dollar trade is behind us. Im very positive for the rest of the year. Yousef what about liquidity . There is a case to be made a lot of Foreign Investors are holding on to see how this new administration is going to shape up in the first couple of weeks. Do you expect more inflows in this part of the world, funds putting more work more money to work in countries like saudi arabia and the United Arab Emirates . Hedi i think preelection, the uncertainty was very high and people were wary to put more risk in their portfolio. Today, i think the picture is getting clearer and clearer. I do not expected to be 100 clear and investors come all at but to the equity market, we have seen the risk on trade starting to build up. And the region as well is coming back. Preelection, i think the appetite was nobody wanted to have anything to do with the region, but now people are understanding the impact could be positive, which was not the concern of the trade of the time. Yousef we will see how long that lasts given the volatility. Will stay with us. We have more to get through, perhaps the calls for saudi arabia with some of the earnings out and sectors which sectors might benefit in the First Quarter of 2017. Show, and later in the the production pledge. How opec is once again underscored certain he and why the organization secretarygeneral is ill searching for stability area but next, we will have more with his take on what is ahead for this region. As use of just mentioned, we do have a earnings upon us. This is bloomberg. Tracy welcome back. You are watching Bloomberg Markets middle east. Im Tracy Alloway, in hong kong for a change. Yousef and i am yousef gamal still in sunny dubai. Lets get back to our conversation on the markets with cio ben mlouka, the ceo and of duet grew. I have full depth the mrr function i have pulled up the mrr function here. About thiscool thing function, it reflects the new level to classification of the saudis. You can see a few additions here. The story this really tells is the story of struggle the year today, a lot of the sectors on the downside the only exception insurance and the reits as well. What are you putting your money in . What are you telling clients to invest in . Yeah, sure, sure. What you want to focus on are the medium to longterm plays your it i think we talked last are about health care. Health care is very interesting to read we had a decent correction last year. Now we are seeing the implementation of the privatization of the sector. This sector will go from troy 5 to 35 percent, will be represented in the private sector. 25 to 35 , will be represented in the private sector. In the shortterm, the momentum building is on the receivable side. As you probably know, the government has been holding back foraying its receivables some time. There is a bit of a liquidity squeeze in the healthcare sector. That backlog is clearing. We see a little momentum and sentiment building and health care. I would definitely focus on that. Mainnk its one of the beneficiaries and that will play out over the next 12 to 18 months. Yeah, healthcare services, three point 6 so far this year. Which other Industry Group which you point out that might be a key beneficiary in the months to come, off the back of this rebound in sentiment, which thely has in misaligned by has been misaligned by the rebound in oil prices . Hedi petrochemicals might be a very good place to be in. Why is that . It is clear the government will not go into capping subsidies or changing the feedstock for the saudihemical companies in , and you will expect the oil prices to recover. Of expect the margin Petrochemical Companies will keep growing over the next 12 to 18 months. Its a very good place to begin growg to read it still very attractive with the netnet close to zero and also there he interesting picks very interesting expansion in the u. S. And they will be able to monetize higher margins thanks to Higher Energy prices globally. I, away from the specific sector stories, one of the heavy themes for saudi stocks is its bid to enter emerging markets status. We have seen that shift the announcement the last week or the week before. What would emerging markets status mean for saudi arabia and stocks . What would it mean for inflows, and what would it mean for sentiment . Isi definitely the momentum the link for an upgrade to emerging markets. You mentioned the settlements issue, and i think it is a key issue. For now, the settlement cycle is plus zero, and that does not work for most Government Investors and locators. Step tothat is a key emerging markets status. We are in discussion with the regulator on a regular basis and we know the momentum is moving up and they are very serious it. T it, to achieve we think probably early 2018. In terms of inflows, that means a lot. The saudi arabia and market is very deep and liquidity is high. It will have a significant weights. We expect very strong positive inflows, but also active inflows. For now, if you think of saudi with the emerging markets, it is really an off index bet for everybody. They dont have to be invested there and achieving that status would mean every single global have saudiould arabia on their radar screen, which is not been the case in the past. Yousef hold that thought. We are getting breaking news on the bloomberg. This is earnings from bank muscat. It does have international operations. We will get a bit of a sense of how the financials in this part of the world will hold up with the latest earnings that, bank muscat coming in net when it 76. 6 million rials. You are looking at operating profit a little growth there, 242. 1 rials. 72. 9 million rials. That hasn institution not moved much in the last few trading sessions. Down at about 2 5 of 1 , and among analysts, this is an interesting play as well. We are seeing the five buys out bank muscat. Hedi benng back our reporte mlouka. He is still with us. You have a contrarian play as well beyond financials, the play in tunisia. Talk to me about that. Why should we be leaving in liquidity and the transparency and the maturity of stocks like bank muscat, saudi arabia, uae, and be looking at tunisia . Hedi you are absolutely right. Tunisia is a much smaller market here in what is going on there is interesting. You have a political transition which is coming to an end now. Very positive outcome. At the same time, the security situation has improved dramatically, and finally, if you listen to yesterdays speech on the sixth anniversary of the revolution, it is an economic revolution that is about to start now. Governments role in the i cans going to be see that the living situation thisthe banks will restart year. We are very positive on tunisia. We are looking at its. Obviously, as you mentioned in the beginning, yousef, it is a reduced size market. The definitely a country that investors should be watching in the region. I, always a pleasure to have you on the program. Io ofis hedi , ceo and c the duet group. Nintendos latest game console under loans investors. Will it be game over for the device before it has even begun . That is next. This is bloomberg. Welcome back. You are watching Bloomberg Markets middle east. I am yousef gamal eldin. Nintendo had a wobbly start. It is more expensive than Sony Playstation 4 and microsoft exports one Microsoft Xbox one. Reporter nintendos unveiling of the switch. We finally got our hands on experience. Im playing zelda, the biggest lost title. The system launches march 3. This is probably the most important title. I have the joycom. Youryou have the game on tv, it does not feel that different from, lets say, Sony Playstation. I think the controller is a little bit smaller, but it is quite similar. This is where the switch is quite unique. Lets a you want to go outside. If you want to play this game, if you want to keep playing it, you take these controllers out you can take them off like keep and then you can playing in this state. You can see, i am still controlling the guy here link , and then if you want to go jo ide you take the ypad, you pick it up and immediately it is the exact same game. There is no delay. This is the real innovation of the nintendo switch. This is what i think nintendo is hoping to do where people will play the same game on the tv and on the go when you are commuting, on the airplane and so on. It goes on sale march 3 or about 300. At and again, this is all that. Yousef that was Bloomberg News reporter eugene tomorrow. Still to come, the latest from this is bloomberg. Yousef is a 30 a. M. Here in dubai. This is Bloomberg Markets middle east tracy . Lets check in on the first rolled headlines from around the world. Spacex returns to the skies on saturday. Sincerst flight september. He first stage touchdown spacex hopes to launch 2024 rockets this year. Government isrman planning to find social media theets if they do not calm hate speech. Angela merkels government hopes the move will help counter movements continuing to gain support around europe. Cy a chinese billionaire slump inl at the its property business. He has been acquiring a number of hollywood assets. He is looking to lift his entertainment unit by 2020. Takada has admitted to showing doubly risks for about 15 deadly risks for about 15 years. They will pay 1 million to settle the inquiry and the united states. The settlement with u. S. Regulators. Sources say the settlement may be announced by march. The Economic Forum is back on the agenda, the annual meeting starts this week. They will spend a large chunk of time talking about Climate Change. And how to profit from all of that. Skip you have decided to davos for dubai. Good choice. This tie back into anxieties around growth over the next year or two . Climate change has come back to the top of the agenda. Effortss to the companies are making in terms of energy use and promoting clean energy, in particular. , inerms of Global Growth terms of the uae, proactive in pushing forward and energy strategy. Targets, spanning different types of initiatives. Yousef we also have donald trump coming in with the u. S. Administration and that has sent shockwaves through global markets. What is the climate story around donald trump . Most people would have suggested it is bad news. Countriesve 188 already involved in the climate bill. We have the paris agreement. It mayhat trump not be such a bad thing. Tracy lets talk about green finance. Hsbc is quite keen on it. Bonds tom about green help promote environmentally friendly projects. There is some skepticism that this is a bit of a branding around some new debt products. How do you counter those accusations . Reasons why it has been so difficult over the years is about countries taking responsibility for their innovations and demonstrating how they will for their in missions and demonstrating how they will do it. Finance in terms of addressing the climate goals. Green bonds provide a natural way for corporations to show they are really taking climate seriously and thinking about how their future businesses and future economies. Tracy one of the interesting things you have picked up in your latest report is this idea of this social consequences of Climate Change. Social unrest has been a big theme for 2016. It has the potential to be another big thing for 2017. How big of a role Climate Change play in that . Zoe what we are seeing is an increased emphasis between social and conflict areas. If you think about economic norms today, extreme temperatures come to fruition, it it means some people lose their livelihoods. Things like health. It is becoming a greater focus in 2017. Yousef what about Global Investment in Renewable Energy . Hope on the horizon that it will increase or become more efficient in terms of displaying the capital . just because investment goes down, that is not necessarily bad. Get renewed installations. In terms of the scale of clean energy capacity, that is not such a bad thing. Expectorward, we would some to pick up. Yousef what will be next on the list for the industry to push it forward . Meetings here and meetings there. What is the next milestone . Over. Arket forces do take talks are important to keep momentum going. Investment initiative, as part of the paris agreement, the french government really taking it seriously. It is how investors are being transparent and demonstrating in demonstrating, they have to look more seriously at Renewable Energy. Tracy you are in uae for sustainability week this week. When people think of gulf countries, they do not necessarily think of Renewable Energy or sustainability for that matter. What role are the new Clean Energy Sources going to play in both economies . Zoe it is important to look at the development coming from the middle east. The uae has published a detailed plan on scaling up Renewable Energy. E can see leadership that is a real strength. Uptick for countries to meet their Renewable Energy , so if we take those terms into account, we have some growth to come in this region. Tracy thank you so much for not going to davos and coming to dubai instead. She is global head of climate for hsbc. We are keeping and i on those Oil Production cuts. We are keeping an eye on those Oil Production cuts. This is bloomberg. Yousef welcome back. I am Tracy Alloway in hong kong. From 70tatives countries will gather in paris on sunday for the latest round of middle east peace talks. Benjamin yet now you is boycotting Benjamin Netanyahu is boycotting the conference. He is concerned in the decision will be rushed to the yuan Security Council to the United NationsSecurity Council will be rushed through before trump takes office. Yousef egypt has cut its 017. Cast for 2 Economic Growth is expected to remain muted. Rose to 26 in december, the highest in 12 years. The central bank abandoned currency controls. Governmentturkish kept up the pressure on the central bank. Rate increases should not be policymakers first choice. The central bank finally gained traction in its efforts to prop up the currency. The currency surged in more than a year. Banks were expected to borrow at 10 . Has posted its biggest weekly decline as Traders Await proof. Joining us now is our Energy Markets reporter. Anthony, lets start with the main story. What is sowing doubts in the markets mind when it comes to opec adherents to the cuts . Anthony you mentioned it in the lead up about the opec dedication. Markets will be balancing two or three main things. One is whether opec will hold up the deal. As we see oil prices coming up, how will impact other supplies in the market . Another big issue is the stockpile, the overhang oil still in storage that has to come out of the market. That is going to be a factor weighing on the will price. Opec has says they are targeting cutting down production as well as exports so it takes some of that stored oil off the market and takes away the overhang so prices can rise to those levels were those opec countries feel more comfortable. Tracy anthony, speaking of production, what are the key benchmarks you think the market will be looking at when it comes to judging opec success . What new technology on that front . We have lots of satellites able to track exports leaving docs, tracking tankers . Anthony those satellite trackers will be looking at the ships and the vessels leaving various opec ports with crude oil. That is something we look at here at bloomberg, too. Seeing how full those ships are. We are seeing what is coming out of the ports plus what is planned and we are comparing that with the opec countries themselves are saying. Points those actual data and opec itself will have a meeting this month where they will review the cuts and numbers. The markets are watching those benchmarks. Yousef the nonopec elephant in the room is the united states. The red bar at the very end, the first decline in 11 weeks. This was an important indicator. The yellow is u. S. Crude output. In terms of how you establish benchmarks, you have the ongoing discussion it is an argument between members of opec, should we count the barrels as they come out of the ground or leave the country . What is the latest on that front . Anthony this is an issue on how those barrels affect the market. The countries we are in a warm part of the world and they use a lot more oil in the summer when they need to ramp up airconditioning. They generally use less oil in the winter months, which is now. There has been one argument, drawback that actual domestic demand and would allow them to continue to export the same amount of oil and keep up their market share. When you are talking about the stockpiles, that is where we u. S. , theem, in the kuwaiti minister speaking to us last week, they are looking at the exports and how much oil is going over to the market. It is an ongoing discussion on how they value that and how they monitor that. Saying, our rig count is down. Exactly why is brought up the chart. The goal is stability not higher prices. I talked to him at the Global Energy summit. Forward toooking theere we hope to see price achieved. Yousef todays meeting with some of the ministers, what did you discuss with the Monitoring Committee . Customary when we meet at various events, such as this Global Energy summit, we last met in december in vienna. Yousef i recall the conversation we had before this agreement came together and you are optimistic. If you look at the timeline, that has been achieved. The oil price has not moved as much as some of the opec members wanted. Is that why we see saudi arabia and out jerry a offering to cut algeria offering to cut . Decision weric reached in 2016 beginning with the algiers accord. Thing together 24 countries thing together 24 countries. You think more needs to be done . Is that why we are seeing the moves from saudi arabia and algeria . Committee members from , in order tories restore the stability. To control the stability and to be able to maintain the stability. Yousef that means an acceleration might be warranted . It is in progress. Sticking with oil, head of research, was also at the Energy Summit last week. We asked him what he sees in store for crude. Forhinks it will be a while supplies to level out. Even then tracy coming up, days to go before donald trump takes the helm at the white house. We will look for what his presidency will mean for emerging markets. This is bloomberg. Yousef breaking news, news about samsung. Prosecutors delaying the decision on the arrest warrant. He was released on friday morning after appearing at the prosecutors office. He was questioned for 22 hours in that Ongoing Investigation around bribery and the charges might include allegations up in puzzlement allegations of embezzlement. What exactly does that mean for emerging markets with Donald Trumps inauguration just days away . Justin, great to have you back. Interesting start for emerging markets. Moves, i have done emerging markets, different brackets, equity, commodities. Depending on what side of the trade you were on, you could have made a lot of money. We have seen gains in argentina and croatia. Withis going to happen now donald trump coming in . Everything depends on where we go from friday and the start of the trump administration. There are two things people are looking at. , the prospect of stimulus in the u. S. , would point to the world economy. If you listen to the voices on the ground, there seems to be more concern about trump what trump will mean for trade, trade agreements, and how that impacts on key trade partners the u. S. Asianome of the economies. Although, you have heard one or two people saying the kind of trump rhetoric has decreased to some degree so that is being seen as a positive. A lot of factors here and probably a lot of volatility going forward. Tracy always tempting to talk about emerging markets as a single entity. Where do you see the winners and the losers, specifically as we enter 2017 . Run,azil, a very good seems to be getting its act together. Cutting Interest Rates to get the economy going again. Russia has a positive feeling about it. That could be a positive going forward. On the downside, turkey seems to be one of the biggest risks because of the internal political problems and the facing atssues it is the moment. Asdman sachs says mexico such a big selloff. Much. Thank you so that is it for this edition of Bloomberg Markets middle east. The following is a paid program. Announcer the following is a paid advertisement for time lifes music collection. Mark goodman its the attitude. Its all right now, baby, its all right now mark goodman the killer guitars. American woman, stay away from me. American woman, mama, let me be mark goodman those unforgettable album covers. Come sail away,