Ties and women rights. It is 8 00 a. M. A cross that emirates, 5 00 a. M. In london. This is Bloomberg Markets middle east. It is mid day in hong kong. Many markets across asia are closed at the moments. I am not sure if this is good news or bad news for the markets given that investors will have to go through so much ego. Not only out of the weekend, but those phenomenal trade numbers out of south korea this morning. Open,e markets that are you can open the go function on the bloomberg. The nikkei is now above 19,000. They are gaining momentum given that the yen is reversing earlier gains and losing against the dollar. More of a dollar story given that spending deal and the u. S. Congress. The asx 200 gaining for a seventh consecutive session. The fastest annual growth in prices in almost three years. Brent crude reversing earlier gains down 3 10 of 1 . Treasury yields are rebuilding in asian training. Debt markets are looking a little bit mixed. Some interesting, interesting moves in key Asset Classes shery. Just under two hours away from the opening. Let me show you the polls. I will pull it up on the bloomberg for you to take a closer look. Can see pressure on Consumer Staples and utilities like saudi arabia electricity. Materials up 2. 5 . Reporting earnings that beat expectation, partially own soaring 10 after swinging to a profit. Also, dubai stocks are near the lowest levels since december. Volumes are low across the board here. The average for a lot of these are it watch out for what is happening in egypt because Foreign Investors have dues reduced positions over there. Lets get you up to date with other Asset Classes. Brent crude what is up with wti . Will it hold . And what is happening with gold . Initially it had gain, now losing some ground. Jpmorgan gcc spread index over treasury. Tightening a bit at 3 . The South African rand, what we saw from sydney. Turkishamerica saying, lira versus the South African rand is rising Political Risk or this is the currency this weekend, 2. 4 . Lets check in on the first word headlines from around the world. Republicans and democrats have reached a deal that will prevent the u. S. Government from going to a halt. They have agreed to 1 trillion measures for all bodies in october. Trump downesident payment on boosting the military. The deal would mean the federal government shuts down after friday. The European Union will present a united front of her brexit after taking less than a minute to decide its stance in brussels. They are determined to stick together to persuade other nations from considering leaving the block. Itpresident reiterated that will not begin until sufficient progress has been made on the uks with drawls. Companies are said to have signed deals to help saudi arabias push towards digitalization. The agreement comes towards chancellors Angela Merkels visits to the kingdom. She discussed business with the king and raised the issue of refugees and womens rights. We are here in saudi arabia. With regard to my previous visit seven years ago, we can see considerable changes regarding the role of women. Or have been communal elections where women had Voting Rights and women talked about their experiences. There is the target to allow women to seek employment. Women reported about areas where they can act independently, but there are also restrictions, no questions. I am under the impression that this country is changing. Says it isington considering several options for north korea. Deeper sanctions to military actions. That followed the field failed Missile Launch and Rex Tillerson urged them to step up the pressure. The u. S. Time says the u. S. Will ,ay for the military defense despite President Trump saying seoul, korea should cover the cost. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Day on thes a quiet market with most closed for the may 1 labor day break. Lets get to the action, or to the little action out there. Usk, thank you for joining on this holiday. I was just saying earlier, i was not quite sure if it was a good thing or a bad thing but so many markets across asia are close. Gotuch it go ecodata we over the weekend and today. South korea, australia, anything that caught your eye . Debra i think the south korean data is a highlight mark the south korean data is a highlight. The region overall is good news. Farther down the line we will probably get more accusations of currency manipulators raised against korea with trade doing so well. That will be a concern. You might see the korean won appreciate. We are seeing little reaction in the market. Across markets, there is a slight positive tone because of with theess deal korean data. You have negative chinese data, but the Congress Deal is given a positive tone. The dollar is big and the yen is weakening. If you markets that are open are starting to rise a little bit. Also prettyere excited about australia this morning, especially when it comes to the pmi prints. We had inflation data out this morning. Why were you excited . Australianxtra pmi data was the second highest print in almost five years. It was a great number. There was not enough people around paying attention to the markets to care. I think they will say this is a strong number. You saw melbourne inflation data and that was very high. It is hard to see the rba being devilish over the next couple of much. That said, still base expectations for the rba, they will not be hiking oil cut. Yousef i am looking at some of the initial details on this latest fiscal package. Donald trump and being able to point at a 15 billion boost for the pentagon. He got 1. 5 billion in border security, that he cannot use that for actually building that wall. In terms of moves of Asset Classes, we have not seen a lot of euphoria off the back of this, but what kind of impact is it having . Think we will see a proper reaction later today. This is overall good news. Avoiding the shutdown. That was not guaranteed to happen quickly. It is an expansionary budget and it was not the threat that was the cut threatened by the republicans. Trump has not got the border wall, but he will focus on the things that went his way. Overall, i think markets will take his agreement very positively. That should provide a good mood. More in the u. S. Session. U. K. Sessions are on holiday. I think we will wait for the u. S. Sessions before we follow through on a bit of a dollar bid. We will see yields go higher and equity go higher. U. S. F we talked about the dollar, what about some of the other currencies, some of the majors. . Is a very good observation. Another big thing was the news that the hardline stance taken by the eu ministers and the point that they agreed. He u. K. Was hoping there would be in ascension in the u. K. Banks, which maybe they could exploit in negotiations and get people on their sides. The fact that eu leaders were unanimous, it does not bode well for the u. K. Sterling had a good run in the last few months. There is still a large short position in the markets. After a big long run higher, i think people will see that news over the weekend as a reason for some of the shortterm sterling to take exposure. We will see sterling further under pressure today. It has room to run. Even though it is made for, do you buy into sell in may and go away . Is that something we should be doing strategically . Lot a focus ata the moment. I am worried about emergingmarket currency. Emerging markets have been one of the resilient points in the last few months and been very strong. Inflowss been excess into emerging markets and a lot of money coming out of the developed markets to go into emerging markets. They worry me from a because they have that reg negative seasonality. On u. S. Stocks it is a lot harder to call. Very binary on a technical basis. If we pull back further, people will get excited about a double top and that might fuel more selling. The other way to look at it, it yields have not gone higher. It is not a strongest we hoped. There is not too much signs of inflation. Global growth is good. We are seeing really good earnings season. We are seeing tax stocks driving the tech stocks driving the market. We do a quick accelerated move higher. We are quite binary and stocks and this could decide the future for may. Yousef always goods begin to you. That is mark the macro strategist. You can follow more on the story and many other of the day trading on our markets live blog here it that is on your bloomberg. You can pull it up i put that appear on bloombergs he could see the latest addition here. This 1 trillion spending bill if this could be the biggest catalyst for movements in japanese equities. Analysis forional some of the guests and key commentators. Lets give you a preview of what is still to come on the program. The head of equities, why he is increasing saudi stocks. The fed meets again this week heard we will discuss the likely outcome and the impact on japanese markets with think of America Merrill lynch. This is bloomberg. Yousef this is Bloomberg Markets middle east. I am in dubai. Shery i am shery ahn in hong kong. Policy unchanged and the markets are expecting similar decisions from the fed in the next couple of days. A look at the likely fx of the currency and equity markets in light of those meetings and high intentions in korea. Equity strategist at bank of America Merrill lynch. Today. Ou for joining us i think the big news for markets is coming out of the u. S. With Congress Just agreeing on a tentative spending deal. Theaw some consolidation in japanese equity markets over the past few months. Will this be a game changer . This mornings news in itself would not probably change the but from here, the dollaryen and japanese equity should arise gain based on divergence and that are Economic Data for the current quota. , the market is watching the north korean situation quite closely. That is one big risk for the moment. We are now seeing the dollaryen gaining ground on the news out of the congress in the u. S. If you took it take a look at the bloomberg, you can see the dollaryen is getting close to resistance of around 111. 73. That would be the moving day average. The second resistance would be 116. 30 nine. That would be at the 100 Day Moving Average. North korea is still there. How long can this dollaryen gain be sustained in light of, not just north korea but other risk factors . When it comes to north korea, it is a little bit difficult for the japanese yen to price in. There is no timeline of a possible event. Possible outcomes can very quite significantly. This is a traditional risk. Anyhe market price is in measure on japan, the japanese yen can actually sell off. Actuallyinvestors can fly to u. S. Trader reese. U. S. Traderies. Beyond on north korea, i think the French Election risk is being priced out. I think the market expectation is the u. S. Tax reform basically nonexistent at the moment. From here, from the policy and data perspective, issue point to hire dollaryen. Yousef lets go into more detail in terms of what is happening with north korea and how the yen is or is not reacting to developments. This security is same the concerns over north korea will restrain the yen from weakening. It is alleviating pressure on the japanese currency. How much of a geoPolitical Risk rhenium is into this trade . Though it is a little bit difficult to measure the exact extent, so far, i think the japanese yen market is reacting to north korea by strengthening. Settles korea risks down, i can see dollaryen rising towards 113. Foress we just have to wait this event to play out one way or the other. The guys at Goldman Sachs, they have raise the odds of a rate hike in june to 70 from 60 . Are youde of the fence on, and which kind of impact will that have on japanese currency . Shusuke a think the fed will. Old in june instead, they will hike in september and december. Definitely, it is a close call. When it comes to the feds policy, i think the markets look reasonable. I think the market is a little bit too pessimistic about 2018. Get recovering in u. S. Growth from a firstquarter gdp print, the market should read price what the prospects for the fed hike in 2018. Talked about japan, we are seeing a tighter and tighter labor market under deflation and there was always a negative correlation between equities and the yen. With a pick up in wage growth changed this dynamic . Change this dynamic . Shusuke definitely. Are so tightly correlated because japanese yen has been the primary currency and the currency market. We could expect low rates and low inflation forever. If japans demographics is turning more inflationary instead of deflationary we should see pickups in wage growth and the prospects for blgs policy normalization should improve heading into 2018. If that happens, we could see normalization in correlation, or even reversal in correlation. You could even by japanese equity without hedging currency. Dont expect the boj to say anything of policy normalization. At least for now they are not talking exit strategies. Thank you for joining us. He is the equity strategist at bank of america in bank of America Merrill lynch. Get get your goat go onay going by going to your terminals. It is available on the bloomberg anywhere cap. You can customize your settings so you only get news on the assets that you care about. Yousef still to come on Bloomberg Markets middle east. To extend or not to extend . Prices continue to fall. At 49. 29,olding similar picture for brent. That is next. This is bloomberg. Yousef you are watching bloomberg. I am in dubai. Ahn in hongshery kong. Italian airline is set to be interested in alitalia. They said they could by 51 of the new bankrupt National Carrier with investments from alitalia as partners. 49 owned. At the same time proper airways is finalizing approaches of a stake in meridian on a meridiana. Yousef the process is in its early stages and the report provides no details about the evaluation or shares. It is currently owned by a 6040 flip by two funds and run separately by saudi base equity firms. Oil output rebounded to more than 700,000 barrels a day. That is the biggest day out the biggest deal resumes pumping. It is now producing about to under 15,000 barrels a day. Also resumed pumping for after being idle for two years. Libyas oil output has africas biggest reserves. Is beginning been new month lower at 52 a barrel. 49. 25. Tracy joins us live from abu dhabi. Looking at some of the pricing over the last few trading sessions, the base case argues for an extension of this opec agreement. It is interesting to see the price action going into that base case. We have had what seems to be a growing recognition that opec might not have that much power when it comes to affecting oil supply. That is because it has not solved the dilemma of collection action. Every time they managed to affect the price rise, we see u. S. Shale rebound. Yousef i know you have been watching the data. On friday we had another nine rigs added taking the total up to 697. That is a 30 rise just this year. Still a pretty impressive rebound in u. S. Shale. We are seeing some of the pessimist about the opec Production Cut in the positioning data that we got on friday. The latest eta showing money manager cut their bullish sets on crude by 21 after three weeks of rises. Certainly some questions floating around in the oil markets right now. When it comeslly to the prices of lower oil on offthat will affect economies including the uae. I know you just talked with the secretarygeneral of dubais executive council, what is he saying . Tracy almost every golf economy is trying to diversify its economy right now. The blue parent frame the blueprint has to be divide. Dubai had less oil relative to other countries, so they managed to transform their company quickly. Even now they have growing competition with other companies. Take a listen of the interview i have with the secretarygeneral for the executive council of dubai. Launched our we investor strategy. Formats that we built around the strength that we have. Our strength in customs, our strengthen maritime areas. Overall the strength of services that we provide in dubai. Strategicl our investing in terms of the industrial sides work around those areas. Is 12 30 in hong kong, 8 30 in dubai. These are the first word headlines from around the world. Led ars after the u. S. Campaign against the taliban, afghanistan is reporting a Record Number thats. It rose to 11,418 last year, the highest level since the United Nation begin keeping a tally in 2009. The reality test for the trump administration. It reviews its military strategy in afghanistan. Imf is in cairo reviewing egypts 12 billion loan with the debate on how best to curb inflation to top the agenda. Ministryalk to finance and Bank Officials with the schedule to and on may 11. On saturday, finance ministers said he expects to see the next of one and a quarter billion dollars by june. Iran says it reports no structural problems and requires a 3 billion deal with boeing. Involved 37 37 planes. The Developers Say the have already being granted for boeing in previous deals for iran air. World soccer is facing another alleged Corruption Scandal with the council residing his position. Is involved in a bribery case in the u. S. Court where an american citizen has pleaded guilty to wire fraud and bribery of 1 million. Most of the money came from kuwait and was used to buy influence. Dayal news 24 hours a powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Many markets trading across asia this morning. We do have the labor day holiday. For those markets that are we are seeing the nikkei above the 19,000 mark. Seeing tech firms leading the gains. The japanese yen is continuing to decline against the dollar for three consecutive days. It is a Dollar Strength story. We do have that deal out of the u. S. Congress. The asx 200 gaining for seven consecutive sessions. Utility and consumer starks are leading stocks are those gains. The aussie dollars are not doing much unchanged of the Central Bank Decision out on tuesday. Yousef, right now not a lot of market trading, but a lot for investors to suggest when they come back tomorrow. A lot of you data out of china, south korea and australia. Yousef we did have that spending bill out of the united states. Lets top more about this part of the world. The gulf corporate has been publishing their firstquarter numbers. Take a look at saudi arabia. Ea function. G this is the earnings analysis, it gives a lovely break down of what has been happening. Green andpasses of red here with your basic material seeing sales on the left and earnings surprises on the right. Movement ine consumer goods and health care. Earnings surprises have been positive urine we are 40 out of 170 of companies that positive earnings, we are 40 out of 170s 170 of companies that have reported. I was looking through some of your notes a couple of hours ago, you were making the argument that the corporate story in saudi arabia has not bottomed out yet. We do not think that the corporate earnings put together in the First Quarter, a lot of it came in mind that our expectations. Particularly on the Retail Sector where earnings were showing weakness. Bottoming. Nt to say i think the most recent announcement of restoring the benefits was announced six months ago was that fundamental change in the Retail Sector. There is also a change in some of the banks on saudi arabia that have gone to the side of the retail books. I think our view during the cut, the cuts were announced in october, to race in december, and it will take some time before you see the real impact of that. And also the consequences of that. Our view then was not that the earnings have not bottomed out yet. Yousef despite week fundamentals, you have been increasing your exposure to saudi arabia to medicate those risk. What are the sectors you are bullish about, in light of this transformation story, or the 80 transformation story . Increasing exposure to saudi arabia started towards the end of the First Quarter, early second quarter. Well ahead of the recent announcement. Not that we were seeing that coming, but i think that there was headline risks in the sense that saudi is implementing, or cyclesng to implement towards the end of april. Newsre preparing for that in aramcos ipo. Saudi government making repeated announcements that they were paying on time. Saudi government tapping the debt market. There were a lot of headlines that would spur positive sentiment on the retail levels. That is the headline risk we us toeeing that forced increase exposure in saudi arabia. Our picture remained more defensive, health care and some of the bentz banks we continue to like your it like. Shery you mentioned aramco. How will the ipo of saudi aramco play into the kingdoms airports to support the oil climbed . Oil climb . In my opinion, the ipo of aramco is something that is huge for the economy. All eyes are on that. I think the progress of that will be important, and people are watching it closely. Are notprices today helping, that is why you see increased talk about extending glututs to try out the that is out there. We still have some time. I think saudi arabia and its allies will put their weight behind supporting oil prices and increasing oil prices. It is in the best in test interest of saudi arabia is it plays the biggest part of the biggest valuable in aramcos valuation. It comes to businesses across saudi arabia, the cost of doing business seems to be increasing. What do you expect in terms of subsidies being kept by the government, as well as the increasing taxes . How will that play into the business dynamic on the ground . Ali i think the cuts that were verynced it were basically sensitive. That is eating into peoples pockets. I think that is what people are very sensitive to. Increasing the tariffs on utilities or removing subsidies on utilities, gas, i think that does not impact everyone the same way. It impacts certain people, but not everybody. You have mitigating factors you add mitigating factors to that. When your annual income takes a hit, there is nothing you can do. Restoring that is helping the Retail Sector. Boost the sentiment among retail investors. I think increasing taxes was evident, and it was going to come. I think we are just starting that game and we should see more taxes in the future. Yousef Abu Dhabi Bank ceo has been speaking saying he expects more uae bank mergers. Line,ave another key looking at senior positions. On the basis of that, when you look at the saudi market, potential for m a in light of this Economic Transformation story, which ones are the big contenders . Which ones standout . The Banking Sector is one that could see some consolidation across the gcc. If you look at met most Banking Sectors, they never cross the one or two banks. In terms of loan books. Then you go to tier two and tier three banks and the market is more fragmented. There iscan see a case for consolidation among tier two and tier three banks. Something was announced on the lines of that in saudi arabia bank, to see consolidations. You could see some coming in the uae, it the gcc generally speaking. Yousef where do you see capital inflows going from here . Ultimately the saudi stock market is trying to open up to Foreign Investors. If you look at demand for saudi bonds, there has been a lot of appetite. It has outweighed supply. When you look at the stoxx, that is a different story. It has been slow to gain momentum. Will that change, or what will be the catalyst . Is it the ipo of saudi aramco . Think the inclusion of saudi arabia into the e. M. Index is definitely a game changer, not only for saudi, and it would change the landscape of the equity markets in the region. I think the big change would be, if you look at saudi arabia, you need to make some assumptions if saudi comes around 4 , add to that 2 between qatar, the gcc is a 6 weight or it that is when you weight. That is when you see a permanent allocation or a permanent part in the folder as opposed to being a trade. This is been a valuation trade relative to e. M. You will not be able to neglect it, which is the case now. A lot of people overlook uae and qatar being under 2 . Once you are at five or 6 , you cannot ignore that. You could be at 3 and like it, but you could be at seven or 8 if you are bullish. Reclaiming a permanent part in a global em portfolio is a game changer for this region. Ali from the investment bank. Please stick around because we want to continue that conversation. We will take a little bit deeper into the regions First Quarter number. We will be back in two minutes. This is bloomberg. Yousef you are watching bloomberg, i am yousef in dubai. I am shery ahn in hong kong. A quick check of the latest business headlines. Abu dhabi commercial banks he estimates with an 8 jump in firstquarter profits. Earnings were boosted by gains in islamic financing and tighter controls over spending. They set aside less to cover with the kleins of the uae economy in revival mode your it before results were released, Abu Dhabi Commercial Bank had of 11t recommendations buys, three holds and one sail. 5 afterrofits fell the Logistics Firm saw a rise for a scheme. Its revenue rose 7 of them by growth in the asiapacific. That currency fluctuation in key markets, it took a toll on revenue according to an ecommerce section. Securitye uaes Commodity Authority says it is changes as dubai listing union property. The regular dinner has receipt the regulator has received three letters denying those. Been suspended on thursday amid heavy speculation about the structure of its board. Bank is stillment with us. Lets talk about some of the big markets outside of saudi arabia, one of them being the united arab emirates. The correlation between oil prices and saudi stocks could be up for a given. We look at correlations between to buy stocks and oil, interesting moves. I will pulled us up on the bloomberg. Correlation finder put into the stock index. It is app. 71, quite a strong and positive correlation. Oil pricesres how are affecting sentiment way beyond saudi borders comic even for economies that are trying to make the case that they are diversified from the oil. Can dubai really carve out its own rules when you look at these . Overtime, it would. In the last 10 years to buy has illustrated more than one way. Numbers for the growth and other sect tours that we are completely moving away sectors that we are moving away from oil. There is sufficient data to support that. As time goes by you will see more of that. Though oil that, still plays a big role on investor sentiment. These markets go back and remind they remainat dominated by retail investors. Do not forget abu dhabi, which is still oilthat reliant. Overall, the state remains oil reliant. Dubai is a pocket that is diversifying away from there. In addition to that you see a lot of flow from neighboring gcc investors into to buy. Terms of asset allocations, you are hugely overweight. When it comes to the united arab emirates, you are starting to get positive on that. Ali in 2016 we stayed away from for too long. I think the provisions on the sme sector was something that we were monitoring fairy closely. It was on the rise. The First Quarter results i the bank came to our surprise. They came a lot better than we expected. That is why a gave us the comfort that the problem is gone, or provisioning might not be there and it is well contained. Now that banks can focus on other parts of the business, that is where we see potential growth in banks. Shery lets talk about qatar. It has a relatively high disposable income. You would think it would be a positive for the retail sect or. Sect or. Sector. Ali we remain selective in qatar, in relation of high disposable income. We continue to still like some of the banks, but not all of them. The reason why we are under dids thear, trade in the First Quarter poses some predict will money flow. There is always weakness. We are trying to avoid that we can weakness and that justifies part of the underweight. Overall, i think qatar, in terms of theon, in terms vision translating into earnings growth, i think we are still far away from that. I think the picture is not at least in our minds are in the once we nobody understand the strength we can position ourselves. Shery what about kuwait, because we are hearing from the kuwaiti government that there is some intention to remove some of those subsidies . When it comes to a Retail Sector in kuwait, will that have an impact . Ali i dont really think so. The kuwaiti Retail Sector is robust, strong, it has huge disposable income. Removing some of the subsidies on pumping gas, or be it on some of the utilities, i think it would not cause a dent, or a sizable dent in that disposable income. You will see the Retail Sector continues to do well. Yousef we will leave it there, good seeing you this morning. Sorry there shery. Trying to get to the countdown of the start of the trade. Shery we do have to get to the markets opening in the emirates. Yousef i am bursting with energy here. We will take a look at the ongoing earnings that are trickling in. Keep an eye out for retail developers. That stock is down 15 for the year. Continues to outperform. This company is favored with analyst that sells the Company Sells office supplies. It is reporting the numbers this week, that stocks up 17 this year. Analysts have an average rating of a whole. It is one to watch out for, especially in light of the retail that we pointed to. Investors are giving a retail a boost on optimism. Now with Consumer Spending slightly up after the kings bonuses. Is last stock i am walking this one that has raised the Closing Retail to a buy. I want to talk about what is happening with brent crude because we have some fascinating key gauges. I put this up on the bloomberg. I have tried it this out. The 50 Day Moving Average. That purple line, that is your 200 Day Moving Average for wti, also a must read is the bloomberg gas colin. That its should worry is being shifted downstream and overseas. Opec has more work to do to get the market back into balance, at the very least we will need to extend it when it meets on may 25. More on that in the bloomberg asked line . Column. Ine shery this is bloomberg. Yousef you are watching bloomberg. I him yousef in dubai. Shery i am shery ahn in hong kong. As the fed policymakers prepare for the reading this week, they will be adjusting a firstquarter gdp report that was forecasted to be moving the key inflation gauge away from the 2 target. Our Global Economics editor is joining us now. Numberst quarter gdp out of the u. S. A slower pace of expansion in three years and the fed is expected to shrug it off, why . Thinkuess because they gdp history may be repeating itself. 0. 7 in the First Quarter of the numberhat was the forecast that that was steadily revised down over the three months the first three months of 2017. It could be their curse, rather the statistical anomalies of firstquarter gdps. A look at a picture of this i will show you now. The fararter gdp is right, you see the 0. 7 that was just registered. Far left is the First Quarter of 2016. Gdp was at 0. 8 . It climbs the second quarter. Third quarter gets up to 3. 5. Fourth quarter down to 2. 1. This has happened in 2015 and 2014. That is one reason the fed is saying that maybe we can look past it. Can they look past a week consumer . Consumers are closing their wallets in the First Quarter, spending up 0. 3 year point year your per year. It is the worst Fourth Quarter sitting since 2009. Sales were week for auto. Some people are saying that weather patterns, you had very add march weather, maybe that is the cause. I think that is the question for the fed to answer. Mention the feds key inflation rate comes out hours from now. He core pce it is supposed to go to 1. 6 yearoveryear. It has been running at 1. 8 , targeted at 2 . That is something for the bond market. Investors have a lot to digest in the next few hours. Yousef i want to dig deeper into what will be on the agenda. The economist say, we might get clarity on the longer term adjustment process in terms of the Balance Sheet reduction. What have you heard . Kathleen i think the Balance Sheet reduction is certainly an interesting and important question. You have to be confident in one more rate hike. Productionsst rate projections were put into bloomberg around 13 . In junior to get closer to 70 . What is interesting is the bond market outing that there will be anything beyond one more rate hike this year. Early on bloomberg television, jonathan from Goldman Sachs says the markets need to wise up because they are headed towards more hikes, that is plural. Everybody is skeptical they are skeptical about inflation, the economy, but the fed is not. I think they are going to have to keep pushing and they will raise rates. I dont think much will happen at the next meeting, but they will keep moving rates higher in the markets will have to believe them. Kathleen you got the jobs report on friday are at it was about 190 house and 190,000. The bank of australia keeping it at 1. 9 . The economy is still weak, on hold for the rbi. It will be a big one. That is Kathleen Hays joining us live out of tokyo. That is all be have for this edition of Bloomberg Markets middle east. The markets are open across asia in the green. We do have the top stories next. This is bloomberg. Yousef lets get you through some of the key stories. Pelicans and democrats have reached a deal that will prevent the u. S. Government grinding to a halt. 1. 1 trillion spending bill funds most federal bodies but rejects most of the wish list including money to build a wall on the u. S. Mexican border. It should keep the government open until september. May saying britain should be allowed to negotiate with the European Union. The same time discussing its departure. Europ