Gazas ruler rebrand as the isisrael says the manifesto not worth the paper it is written on. It is 7 00 a. M. Here. 5 00 in london. This is Bloomberg Markets. Shery ahn in hong kong, it is midday. You have lost a good interviews coming up. Tell us about them. This is the heart of saudi arabia. A lot of excitement around the country in terms of it opening up to Foreign Investment, making some of the big changes. Vision 2030 has been part of that and tries to wean itself off its dependency on oil. Happeningt what is with foreign participation in the stock markets. That has not picked up as much as expected. Bond,ok at demand in the two very different stories but ultimately what we will be doing is continuing to talk to the movers and shakers on the ground on the sidelines to get a better sense of where the story goes and how investors can of further tap the opportunities. For now it looks like a pretty optimistic today for investors in the market. Take a look at the function on the bloomberg and you can see most equity markets are back here in asia. They are gaining ground. We had a cpi on year of missing estimates, accelerating to 1. 9 via just briefly topping its previous record. When it comes to the currency market all in the green. We are seeing tech currencies gaining. Whenever earnings out of Tech Companies in the u. S. Respondent sentiment firmly there. The bond market, u. S. Treasuries continue to fall. I have to say they are clawing back some of the earlier losses. Australias bond market in the red head of the policy decision coming up in 30 minutes. Yousef equity future just glancing at them. In terms of what is happening in this part of the world, they have more and more corporate earnings. On the imac function, a breakdown. You will see strength in particular sectors. Properties as well, Consumer Discretionary stocks. Txt entertainment as well. There were downsides from financials and industrials. Volumes were up a notch compared to the last trading day. A quick note on egypt, the risk crude down to a onemonth low. Rising gasoline inventories being weighed against the declining inventory. High, april 7. Chinas Steel Industry steadying there. Tightening once again over treasuries and south africa relatively resilient in this equation as the Political Risk continues to be important. The first wordet headlines from around the world. Trump has told bloomberg he is actively considering breaking up wall street banks, reviving a discussion of a depression era loss of consumer and Investment Banking. He may raise the gas tax and be willing to meet kim jongun. The ministration has reported a 21st century version of the glasssteagall law. President trump we are looking at that. Were going to look at that. Were looking at it right now. Be verynk is going to seriously changed so the banks can go back to loaning money. President trump said he would be willing to meet kim jongun under the right circumstances. He said it could happen at an appropriate time although his press secretary said conditions are clearly not right at the moment. North korea has become the most urgent foreignpolicy issue facing the president during his first 100 days in the white house. The Palestinian Group hamas is trying to rebrand itself and has called for the destruction of israel. The islamic nationalist movement rather than the branch of the muslim brotherhood. A more pragmatic program to designed to end years of isolation. This is what we believe. Hamas is against all kinds of radicalism or religious intolerance. We underline that hamas believes the conflict is not a conflict against jews because of judaism. Hamas is not fighting against jews because they are jews. Hamas is fighting the zionist occupiers. The more moderate comments as misrepresentations saying the groups actions are still dedicated to war with israel and the manifesto is not worth the paper it is written on. Egypt has yet to get any reaction. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries i am deborah now, this is bloomberg. Thanks for that. Arab session coming through with a 1. 5 billion euro. This is a company that has been undergoing radical transformation. Crazy volatility. Lets cross back to the Saudi Arabian story. Very interesting what is happening here. Latest news coming from the billionaire. This is the family that runs the nations biggest conglomerates. The Financial Advisor for the shale the sale of some of its assets. International but they managed 5. 1 of Credit Suisse group as well. Lets get more perspective on what is happening in the ipo markets. The ceo for jpmorgan. Thank you very much for joining us on the show. We have seen since the beginning of the year, which companies considering ipos. This development, put some context for us to those of you not ipo developments. We are excited about the prospects of more ipos not only in saudi but in the broader region. We obviously have the government agenda off trying to privatize companies and create a private sector. Also the private sector is going to wants to take advantage of what is undoubtedly an increase of investment amount in the next two years. What big role are you playing in this . Will you do the same . We dont talk much about deals we are working on until they really are out in the public. I think we have been here for eight years. Think bank of saudi arabia has been here for many, many years. We expect them to play a pivotal role not only in the m a, but financing. Doubled theirst fees in the middle east last year. Where do you expect the bright spots to be this year . I think debt has always been a big driver of opportunity for banks. We will see a similar year to last year in terms of volumes. Weve already seen very keen market deals as the saudi arabia deal. Inmate will be quite buoyant. Looking to pick up efficiencies. Booming it was not needed and now people are looking for the efficiency. Domestic investors are looking to expand and diversify. Have a growing interest in investing in the region. We want to talk about the sales in the next few minutes but lets talk a little more about saudi arabia. There is an announcement of privatizing government assets. Do you expect to see more on that front . What about corporate earnings out of the economy . It is crystallizing quite clearly. We have heard quite a lot of names mentioned whether it is the grain silos, a lot of Infrastructure Projects will be privatized. That is very buoyant. Have regular results but very international. Investors are looking for a baseline with respect to oil and consumer behavior. That is gradually becoming clear. Earnings happens the perfectibility will become much better. It has been workable to see the recovery in those rates. We put this on the bloomberg, how that compares as well. In terms of what that means for the banks, research after research after researching the last three weeks in the amount of sentiment toward banks have been short nothing short of markable. How much more momentum can we expect . Hashe position of the bank improved dramatically and you see that reflected. In incredibly healthy cap stash sector as much as 17 . Outstanding job in keeping these banks focused on the mystic market. Thatnk that is a sector once the economy starts to grow again, they will benefit from that. I think people do very well. Yousef plenty to get through. There is a key inside right there. Will be back with jpmorgan ceo. Now, our viewers can get a roundup of the stories they need to know to get their day going and that is on todays edition of daybreak. It is also developed best available on mobile. You can also customize your settings. So you only get news on the industries and assets that you care about. Hourg up in the next half we break the latest decision and the reaction from a bond market veteran. Ultralongts on the bond floated by Steve Mnuchin. More with the ceo, the outlook for m a in the region. This is bloomberg. Yousef this is Bloomberg Markets medleys. Sophie signing a deal with a units of air india for tenant regional jets. Dubai Aerospace Enterprise provide 10visas to aircrafts to the delivery for the remainder of this year. The twin engine turboprops will be used to grow alliances as part of indias plan to boost regional error access. Libyas 1. 5 ilion dollar loss begins in london. Six months after the similar suit against Goldman Sachs was thrown out. Fighting to recoup billions of dollars lost on deals souring during the Global Financial crisis. Intimidating them into entering 2. 1 billion. Meeting bhp shareholders are doing a major overhaul. Bhp and the of Investment Team including the head of the office are laying out their planned changes to other shareholders including spinning off bhps oil assets and combining in sydney and london in one base in australia. Theef lets get back to guests. He is the ceo for the middle east africa and turkey. Story, unless the the government here has been able to stimulate investor influence in saudi classes. Story, we put the this up on our charts for additional contact. In terms of the net floor and where the that is not authorities would like it to be even though they were hoping as of late fall last year when they started making some of these changes that was going to stimulate. What is going to be the next catalyst . What is Holding Investors that . I agree. Out of sync with what we would expect for the largest economy in the world. Im quite convinced it is going to happen. The liberalization of the market in terms of accessibility. I think they are getting there. It is why the msci inclusion is very much talked about. We dont necessarily have to wait for the inclusion to see foreign interests in the market. I think a lot of investors when judge other situations where markets include the msci, the buying started a year well ahead. Im very hopeful those two factors will drive interest in yousef in terms of capital market, do you expect 2017 to be a better year than 2016 and how many mandates have you secured so far . It is the easiest to do. It is also the easiest to buy. You want to get your money back at the end. Thats why we see unbelievable demand. For 23en in this market years. Ive not seen that sort of demand. It underscores the demand is there for this country. I think they will have to continue to borrow but as the deficit decline, the volumes will come up. Would expect it to trail off a little bit. The catalyst for many of these sales was the crash in oil price. With the oil price stabilizing around 50 per barrel, will we see the necessity wane for some of these . Yeah. Most have expressed the desire to close deficits. Countries, they are not the day. They will be able to close those gaps. I think therefore the need to borrow will naturally diminish. The corporate sector will replace some of that supply. You also talked about m as this year earlier. Where will people of business come from within the region when it comes to m a activity . I think it is broadbased. When oil was at 100 and it was growing 5 , people were very much focused on taking advantage of the opportunity. Now with the oil at 50, growth in the low 12 , people have to find different ways to grow and diversify. M a is a way to eke out toiciency but they need expand their footprints. I think we will see in words m a. I think it was a good example of investors internationally wanting to take advantage of the opportunities that this region provides. Think he so much for your time mark stick around. Were coming back to you. Coming up, a problem of plenty. What cant opec due to boost prices as u. S. Drillers pump up the volume . We discussed that next. This is bloomberg. Anchor most markets across asia kicking off their trading week in the green. Juliet has the details. Coming through across the asia pac region, markets coming after online online after yesterdays holiday. The hong kong stocks and Mainland China stocks. A 2015 hig rising to amidst the rally we have seen in most asia pac markets. By. 9 ,the gains getting very close close to the previous record high. The ftse looking very strong. Is a littlemarket weaker down by. 5 . A look at the market you are seeing a lot of these emerging markets currencies continue on their recent rally. Peso rallying very strongly and the south korean of lawn leading these gains in asia despite all the concerns about geopolitical tensions. I want to show you another currency, one of the major ones. That is the aussie dollar. We await the rba decision. No change expected to the 1. 5 rate. Testould see the aussie that moving average of . 76 if we see hawkish commentary coming through. Thanks. Trading lower. Softer in concerns about where this is all going to go from the opec of view. What is happening with the saudi economy, we saw this uturn in some of the fiscal austerity measures. Jpmorgan for the middle east, africa, and turkey. Thesey your thoughts and changes. The reversal and some of the measures. Was it necessary given that he just started on these measures . What is it going to do to the saudi Economic Movement . Madefeel that a lot i been on reducing the fiscal deficits. We will see that this year. Broad package including cutting some of the allowances, introducing fees. I see it as more calibration of some of these things. Not everything works necessarily the way you expected. It may not generate revenue you expect. We should not take on this month to save they are changing course. It is a calibration. As far as i can see and the results of the First Quarter suggests we are well on our way to reduce the deficit meaningfully. How will the ipo of saudi aramco play into saudi arabias efforts to support the oil prices . Were seeing opec is extending cuts when they meet in may. I think the ipo of saudi aramco has a lot of benefits. Im not sure it will impact oil. Whatrtainly will display is in Unbelievable Company to the world and crystallize the enormous wealth in this country. We always look at the financial reserves but this is the other big reserve they have. Underscore how wealthy and well endowed this country is. Were looking to the opec meeting and the extent of possible extension. When you look at global inventories, where the price is right now, where is your base case . For me, oil is a story about american innovation. When we look back a few years ago we saw the cost of producing was much higher and it really showcased americas ability to innovate. It has driven the cost of producing in the u. S. Down as low as 30 but on average around 45. We think that will form. But because of the inventories you refer to we do not think it will go much higher. The 4555 ranges our best guess. Covering the middle east, africa, and turkey. Thank you very much for joining us this morning. We have been looking ahead and will be covering the policy decision. This is bloomberg. Shery ahn the cash rate policy decision. In sydney for the latest. Reporter im sure you want the police bit surprised when i tell you they kept the cash rate on hold. Waiting on a few lines and dropping out. Unchanged policy consistent with Economic Growth is the line we should all be remember familiar with. It makes an appearance in pretty much every statements. The same Australian Dollar would couple made cupcake it and the inconsistent with meeting the target overtime. The gradual further increases underlying inflation. That is important as well. , we are past month seeing the inflation rate creep back into the target band of 23 . Only does it 2. 1 . The aussie dollar now, the bank also mentioned. Not a great deal change. Trading at 75. 4 right now. Is premature old headlines we have from the reserve bank of australia. More will be dropping over the next few minutes. Remainste change unchanged at 1. 5. Shery ahn think he so much for giving us the latest on the rate decision. The managing director of kapstream, thank you so much for talking to us. Not surprised whatsoever when it comes to the cash rate being kept study. We are hearing that the policy unchanging is consistent with meetings meeting the target overtime. Inflation numbers of course in recent days. ,iven what the rba is facing Inflation Numbers but also having to maintain growth when the housing boom continues, what are some of the key things we need to be watching out for in the coming days . Thanks for having me. I dont think it was any surprise at all that they left rates unchanged. The last time they moved rates was in august 2016 so they have been on hold for almost nine months at 1. 5 . Earlier,ntioned inflation slowly starting to creep up. It is at 2. 1 . The biggest concern Going Forward is going to be the low Interest Rates. Into theof that feeds Housing Market and how much of that do they start worrying about going into Investment Properties and housing booms . The banks look like they are making adjustments on their own. Think they are in a good spot i dont think they go anywhere in the next few months until the end of the year. The rba right now saying the growth in housing debt has outpaced the house income growth. There talking about the economy being little changed. Lets look at the rate differential. Hadralia has historically to offer higher Interest Rates to attract Foreign Investors. If you take a look at the bloomberg, our viewers can see the rate differential between the 10 year yield and the australia 10year has shrunk below 30. This is actually the tightest in 15 years. How much pressure will this put on the aussie dollar if Foreign Investors do not find the markets attractive . It is interesting. I think youre right. Australia pays a premium. 30 is the lowest end of where it should be. If you simply think about some point the target fed funds rate will get to 1. 5 . Vas 1. 5 . Inflation in both countries and the u. S. And australia is roughly 2. 3 . Then the question is how much liquidity premium you need to get paid on aussie bonds. Some are between 20 and 30 basis points. It is fair for the 10 the bonds against the u. S. The second question is the currency. 75ency has been steady, for the last few months. A weaker aussie dollar is not bad for the economy. It is good for experts. Exports. The rba does not have to do as much. Yousef quite a lot of news flow from the United States from donald trump considering breaking up wall street banks. Giving a push to efforts to revive, the depression era loss. I want to get your response. How seriously should we take this . Ofthere has been a loss information coming out of the u. S. Since Trump Took Office in november. The important things are going to be changes to regulation whether it is thinking, separating investment thinking versus commercial banking on the table. He is worried about the large banks that are there and too big to fail that can cause a problem for the economy. I dont think it is a bad idea to break Investment Banking and commercial banking because it is hard to take money and speculate with that money in pfizer markets. I think we are going to get some information on Corporate Taxes and restructuring in the Financial Sector in general which makes the fed it job easier. Now you have fiscal stimulus. What about the fiscal return reforms . Also of course, plan to tax change youroes that view on the u. S. Economic expectations . It does. I always thought the Central Banks do the heavy lifting. You did not get tailwind from the fiscal or government side. What youre hearing is if the record hoping congress and a republican executive office are able to pass any legislation whether it be infrastructure spending, Corporate Tax relief or individual tax relief, trade agreements, these things are all positive for the u. S. Economy and therefore i think the central bank does not need to do heavy lifting. Youre getting support from the government side as well. If you look at the last 35 months. The show markets have gone up. The fed has been able to raise rates by 25 basis points without a change in rates overall. Both sides are doing pretty well so you have to be positive for the u. S. In the u. S. Dollar. A further question on that point. If you take a look at the u. S. Economic data, if you take a look at the surprise index for the bloomberg. See the economic surprise index. For the first time we are seeing it go into negative territory. Is uglys could mean news out of the u. S. You saw a gdp for the Fourth Quarter slowing to the most in three years. We are getting jobs reports out there. How positive can you remain about hard data out of the u. S. When it is not only to do with sentiment and survey related data . Know Interest Rate policy is low in the u. S. Half the prices have gone up. The data has been mixed lately if you look at payroll numbers. Take a step back and look at on employment rates in the u. S. Historical lows. 4. 7 . You could almost argue full employment. Inflation, the other thing the fed deals with. It is well with in the bands. You need Economic Data to come through to justify where we are withart of the problem prices is i think we are hoping you will get something out of the administration and hopefully they can deliver. That is the problem you face today. To gain int continue asian trading. Treasury secretary mnuchin talking about those bonds. That do you stand on subject . Mnuchin saying they absolutely makes sense. My question would be will there be demand for them . Look, if you look at the 30 year treasury able yield around 3 . The benchmark treasury is 2. 3. Arrange on the 10 year treasury lately has been between 2. 30 and 2. 3 6 2. 60. If you think at some point the fed, given the Economic Data and the stimulus from the government comes through and they get to 1. 5 , you need to get paid a little bit more to own assets. 2. 30 seems fair to be slightly rich and 30 year treasuries at 3 seems slightly rich. A little bitpaid more so expect those to rise over the next few months. Yousef does that mean you agree, dont join the , itd paid the stampede can be blinded times. It is. People are talking about credits. You have a great credit under two sections. Saferve to think about companies, safer borrowers, banks, default risk is low. You have to worry about highyield or junk bonds. If you look at the highyield sector, things look expensive. They have had a big rally. Yields are not very high. Investments great is not that great but at least you get liquidity. We will tread very carefully into highyield. We do not own any highyield bonds today. Stick around because we want to talk more about the risk facing the global economy. Lets get other headlines across the world. Saudi arabias billionaire Alliance Family is said to have hired in advisor for the plant ipo. Some of his local assets. They run one of the biggest conglomerates. They have plans for a new asding company for as many 20 units set to be worth up to 5 billion. We are told that Company Shares will be listed on the stock exchange. First quarter profits Beat Estimates, surging 80 to 1. 4 billion. The company cited higher selling prices for the earnings. Company and plays an important part in the attempt to diversify the economy. Saudi arabia cutting oil prices for asian customers to fend off competition. Glowing prices by 40 percent, taking the discounts to five cents as a regional benchmark. Saudi arabia has seated market shares, iran, iraq by making deeper output cuts been promised prices too has raised the u. S. And europe. Falling in mumbai after sales dropped last month. The stock down 1. 2 . Commercial vehicle deliveries hit by a Supreme Court ruling on the emissions. Demands for more efficient engines which could not be met. China expects connection to pick up this month. The other wayoing right now with trading in japan. Rose to more sales than 150,000 units. Program, thethe u. S. Treasury secretary says Foreign Investment is welcome but not at the cost of National Security. Our interview with Steve Mnuchin is next. This is bloomberg. Shery ahn you are watching bloomberg. I am shery ahn in hong kong. Yousef im yousef in riyadh. The u. S. Secretary of treasury Steve Mnuchin says he was not intentionally restricting for investments. He told bloomberg that National Security interests would come first. The administration is solely focused on a tray it that is free and fair. We believe in free and fair trade and we are attacking things where it is not free and fair. Zero are charging someone and they are charging is 25 that is not free trade. You know that the benefits benefits go to the people who import as well as export. That is true but free and fair trade is reciprocal as well companies dothat or countries should do. It is about deals that should be fair in both directions. We want to make sure that u. S. Companies have every opportunity to export. We are focused on growing exports, not cutting imports. Our traded balance is too big. It hurts the american worker. That is something the american the president is working on. A currency minute later, do you think walking back from that has made your job easier . We had a very important meeting with the chinese. The president has made it very clear that the number one priority is to have them help with north korea. That is something they are doing. Figure job has become a a bigger factor than you expected . Im spending a lot of time on the sanctions programs. It is a very important part of everything we do. Speaking touchin our editor in chief at the global conference. ,ets continue our conversation turning our attention to the risk factors on the global markets. Thank you so much for sticking around. If you hear Steve Mnuchin talking about free and fair trade you cannot help but think about china. How much of that risk of protectionism of a trade war between china and the u. S. How much of it has faded would you say after the summit between the two president s and all of the steps the white house has taken so far or has not taken so far . I think the trade wars will get resolved and i think mnuchin is right. The Trump Administration is simply saying that countries that are exportdriven cannot continuously sell products into the u. S. They of naproxen with americans buying foreign products but they would also like u. S. Companies to be able to sell their products in Foreign Countries so they want a free and fair trade agreement. I think theyre going to have to renegotiate bilateral trade agreements between countries just to make it more fair. The currencies do play a big part so i think they will resolve it. It will take time but there are other geopolitical issues theyre having to take care of right now. One of those issues of course always being north korea. President trump saying he would not mind meeting with kim jongun. Giving this has been here for years and years, have you factored that in when it comes to recent provocations or is this not an issue for you . It is an issue for us but if you look at financial markets, this has been an issue that has been ongoing for some time. There is an uneasy calm in asian markets and markets are under the assumption that there will be a resolution and a peaceful resolution to the conflict in north korea. I think that is a fair assessment. We hope for equities sake that that is true. The markets are not worried about a full out war. That we the background are not aware they are working for a diplomatic solution to the market probably take them at their word for that. What are some trading ideas here . When you take all of these key variables into sitka consideration. Of what theink government is doing and the Central Banks are doing i would assume that you want to be long equity markets even though they have gone up quite a bit since november because you would expect the u. S. Economy to pick up. The u. S. Economy is better than most other economies. Onan and the ecb are still easy monetary policy. When it comes to fixed income markets, the fed will raise rates if not once, twice this year. The funds will be at 1. 5 by the end of the year without any major issues which mean which means Corporate Bonds and some income and survived the rate rises. Those are the big themes i would think Going Forward. How would you navigate an increase in geoPolitical Risk . There is an argument to be made that is more likely to increase in disgrace in term of the risks. What would you do . Usually the hard part of managing risks that are unknown and can happen at any given to buyis simply you have insurance. If you think there is going to be a war in north korea and it could get ugly you have to be long short data treasuries. You have to believe the fed will not raise rates. You have to be along the u. S. Dollar as a safe haven currency. Willing premium are you to pay for the insurance . What is the what if the geoPolitical Risk does not come true . This is something you normally have to do and the running yield of 3. 54 . We might spend. 5 buying insurance just in case. The risk stemming from the second round of the french elections, anything we should watch out for . No. The odds are roughly they are favor versus during the pen. Productions like this have been wrong before. It was wrong with brexit, elections in the u. S. If there is a possibility they could be wrong in france. Germany is going to have elections later on this year so there is political change happening in europe already. The onlytical change heavy lifting can be done by the central bank. I think may 7 will be a critical day we have to get through. Thank you so much for your time. The portfolio manager. Think you for joining us this morning. We will continue to talk about europe in fact and brexit with anna edwards in the next couple of minutes. This is bloomberg. Yousef you are watching Bloomberg Markets shery ahn coming down to the open in the emirates. What are the names youre watching . The bellwether, the giant behemoth. Reporting earnings after market slows yesterday. That will be the focus of the start of the day today. A fair time to digest some of those numbers. 5. 2 4 billion. 9,000,000,008 year ago, the petrochemical makers said in a statement he was looking for 5. 2. A beat on the sales. Coming in at 36. 9 5 billion. They are citing higher average selling prices. I frs, a adjustment on a consolidated Financial Statement basis. You look at how analysts felt, blessed told want to return 23. 7 . Return 23. 7 . Nths third mobile in oman. We heard they will be starting. T 1. 5 billion the suspicion opens may 15 and closes may 28. Finally, the first a bit of a bank coming under a very 12. 26 pershare. Rep termination on the basis of a fair value estimates. Anna edwards in london for the top story about markets in europe. Still shery ahn anna the general election on june the eighth adding extra focus here. Theresa may has been commenting after the newspaper reports in germany at the weekend. European Commission Left his meeting with theresa may in late april lets commence less convinced a deal could be done. The talks will not be easy. Trying to take us to her electoral advantage with the election of living. A key test this week of sentiment towards the conservative party and the other parties in the political fray in the u. K. Local elections this week. Oil in focus in london. Bp reporting earnings. Looking to see whether they Beat Estimates as many of the u. S. Majors did and other europeans. Exxon, chevron will be the estimates. We will see if we get a similar performance from bp. The real focus is can they maintain the dividend without increasing death . A real debt. The rest performer among europes oil majors this year despite the fact that they have been slashing Capital Expenditure to deal with lower oil prices. Anna edwards during us from london. Thank you so much. That is it for this edition. We are seeing asia mostly in the green right now. Yousef anna breaking of the banks. President trump says he is actively considering a revival of glasssteagall. We are looking at that. Some people want to go back to the old system, so we are going to look at that. We are looking at it right now. Doddfrank is going to be seriously changed, the banks can go back to loaning money. Manus racing for brexit. The british chambers of commerce calls for a frictionless future as the u. K. Prime minister alludes to the meeting with shot clock younger headed toward jeanclaude yunker. Anna frances final stretch