It is 8 00 a. M. In dubai. This is markets middle east. To keep there was a lot us busy. We had big economic data. Lets look to how u. S. Equity markets closed. Jobs report. The s p 500 index rallied off the back of the better than expected payroll. Close0 reaching a record and the nasdaq and dow jones, gains. Jones up lack the the other big story was what happened in commodities. We saw french Oil Prices Rebound along with a bloomberg commodities index. Boy, did they take a sliding down. , oil iser the rebound back where it was before opec announced production cuts. Downloomberg dollar index almost 0. 5 despite the jobs report. This isrony in all of this part of the world has not really had a chance to react in this volatility we have been seeing as this part of the world under two hours away from the obligor of the in terms of what happened, we pull out the index and slap on the mrr gold function to see which companies have performed well. 8. 2 . In are seeing health care saudi arabia, one of the worst performing shares. Will we saw a little bit more activity in this part of the world. 10 higher, the most since late january. Lets cross the border. Some of the other asset classes. Kicking up a little bit. They have been swinging backandforth. Those are ending up that trading days slightly higher and easier, rather. Keeping an eye on some of the emerging markets and the South African rand down. Continued pressure in south africa in terms of the operating environment. In the lyric at 3. 5 4 . Lets check in on the first word headlines. Thank you. French voters head to the polls and the final round of the french elections today. After last minute to us in my ns. Last minute in macro his team said his hackers released fake and real documents. Radio willrg tv and bring special coverage of the french president ial election runoff results once polls closed from 9 00 p. M. In dubai. Exchange reserve increased for a third month as stricter controls and easing currency pressures to the money from slowed and the company. Sees that holdings rose by 20 billion to end april under three point 3 trillion. Slightly more than estimated by economist surveyed by bloomberg. The u. S. Is working to complete tens of billions of dollars in existing arms at deal ahead of President Trump to visit. The president is expected to meet with a group of Muslim Leaders to discuss was to combat extremism. His tour will include a visit to israel to further strengthen ties between the nation and discuss the peace process. Minister said the country will go along with whatever opec the size and a key meeting this month. I had of the may 25 meeting a head of the may 20 for the meeting, he said all indications are members want an extension of the production curve. He also expressed oil to the to do at 55 a barrel. Crude has lost all of its gains since they agree to cut output in november. The president of the San Francisco fed said he stands for his call for three or four rate hikes. Said the economy is operating above potential. 211 thousand new jobs in april of the jobless rate fell to 4. 4 . Data we haveic been seeing in the last few months is consistent with a steadily improving economy and economy that is in good shape and maybe beyond maximum in terms of sustainable level. And indicators are moving in the right direction. Day,global news 24 hours a global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. Opec is set to meet to decide whether to extend Oil Production cuts beyond in june. Iran is indicating a will comply with whatever opec decides but toe none opec producers that line . Thank you for joining us. I wanted to start with a drop in oil prices we have seen over the past week or so. I have seen people talking about the fundamental tension between opec and the shell industry and people talking about technical factors and a rumor about one hedge fund liquidating positions. What to do think the catalyst was for the move lower . Thehe first thing to say is inventory levels have been stubbornly high despite the cut over the past five months. That speaks to both demand issues and a supply issues. Thehe demand aside, gasoline has been lackluster in the last two months and also you which broke out about the chinese authorities trying to clamp down on credit creation which resulted in a general selloff. Places the demand. On the supplyside side of about show producers, half a Million Barrels added into the market over the last five months. While at the is not significant in terms of the overwrought package the opec presented, and the margin, it makes a difference one inventories are not moving as they are expected to do. Bothrankly, compliance within opec and nonopec of the fivemonth period has not been complete. There are supply and demand issues. Nonetheless, talking to to your point about hedge funds, the market has been caught off guard. Liquidationssome and i expect that to the team to the early part of this week. For the market to stabilize and rebound. You mentioned positioning. If you look at the latest data, some moneymakers making bets on 40 a barrel. Before we started the show, i was reading the note from goldman and they said they think oil prices will rebound. Do you agree with that assessment . Tarek fadlallah i think i do. Generally, increasing the view of a 100 oil is something of the past, 80 is also the past. Gradually, recalibrating expectations of oil prices. I think that towards the end of the year, we will get a decent pickup and i expect 55 to 60 range. I put up a chart for the latest u. S. Oil and another uptick. The lines in a blue as they build. And the reference line, do wti price in yellow. Also looking at the gadfly columnist, the big question in the oil market is, whether not opecs will extend or not. Baked in andmuch what the market is expecting. And also going to raise the game, will they take more oil, can they do that . Tarek fadlallah its probable they will agree to extend the cuts. I think over the midterm, that will have an effect. While you see the account going up and the output increasing. If opec maintains this latest cut, it is very difficult for the show producers to bridget the gap. I would expect industries to be affected in the midterm. Yousef what it means for saudi just embarked on this reform process and a couple of weeks ago, they do a uturn restore bonuses and say well for made more progress we expect we can afford to. Oil, is it move in turning everything on its head again . Tarek fadlallah not yet. 46. Ntly, if it stays at these levels, concerns will be raised about the prospects for austerity measures across of the region. For now, this a shortterm moving oil prices and ive like to wait a week or two. Made a great point, the extension of the opec agreement is pretty much baked in. Given that the agreement does not seem to us had the desired effect, we can all agree double what else can opec do at this point . Tarek fadlallah they need to persist with this policy. The inventory level has been stubbornly high. ,t some point we maintain cuts maybe the additional barrels that can add into the market. A natural adjustment. Thats what the oil analysts are suggesting and i do not agree with that. Some breaking the hitting bloomberg from Dubai Investment am one of the larger group. Firstquarter revenues, net income at 200 said to 5 million durham 200 said 5 million germs. Million. Id to 5 275 million. Less get you a preview of what else is to come. Affectedook at how the economic sanctions have been in iran ahead of key elections. Our guest will join us for that. Tracy employment rate rebounded more than expected. This is bloomberg. The president is pleased we are growing jobs. He is very pleased that our unemployment levels are at 10 plus year lows. Those are good numbers for him. Wage growth is relatively sluggish. Yes, consistent with the fed hiking but not consistent with economic takeoff. Americans are in pain. If that is full employment, as that would not be true. A disconnect with the past and the economist models will do not understand things going on outside of the city. Still with us still with us isk fadlallah. [no audio] comments andng at review from Goldman Sachs and increasing their odds of a june fed hike. ,hen it comes down to the core are we seeing signals of a labor market that is overheating . Tarek fadlallah not yet. Nonetheless, various fed governors have discussed recently, we are at full employment and that has had implications for the economy. Theres a reason why the labor statistics are the most closely watched because workforce, an increase in wages and consumption all tied into the data. I think it speaks to the likelihood of increasing rates. Of the we pulled function to show how expectations are clearing up for the up, the decision. This is based on the osi, probabilities on Interest Rate swaps and how that is changed from a week earlier, remarkable that change. Have you changed your position as when we will see the fed hike . Tarek fadlallah not at all. We have been hawkish on Interest Rates based on those strong labor markets. Remember, we generated, rather the United States to generated 107 day thousand jobs per month 178,000 jobs per month. That is a decent number. The Unemployment Rate at 4 , a really low number. Perhaps a june hike and maybe one or two more before the end of the year. The fed is sanguine. Rates are going up. Tracy let me play devils advocate. If we think oil prices will stay relatively mutated and without the missing wage growth as was pointed out the clip, could they give the fed room to avoid hiking or at least to not hike in june . I think june is baked in. Whether we have one or two more will depend on what you mentioned. Room for them to be more dovish in the second half. I still believe they will hike twice more. The reason for that is the Global Economy is doing better than it was months past. The other thing is to consider they will start quantitative tightening by selling off a rather not renewing their purchases of asset purchases toward the end of the year. That might mitigate the need to raise Interest Rates in december. De facto tightening. On that note, let me widen out the discussion. We saw the lower commodity price last week and concerns about china and the fed looking to raise rates. Have been watching markets and those were the trio of war was thats part of a huge selloff around last year. This time, we have u. S. Equities and the emerging market rally, what is going on . Tarek fadlallah the trump effect. A lot of optimism and belief in the fact trump will deliver on his economic agenda. We saw a small victory on the health care last week and that into greater credibility in terms of investors willing to believe he will go on and deliver the economic agenda which includes Infrastructure Spending and tax cuts and repatriation of hundreds of billions of dollars potentially by american corporations from overseas back into the u. S. Economy. Yousef in terms of the commodity complex, if you broke the broke it individually, you are selling off for different reasons. The fact that theyre all selling off and you spoke to it, does it also tell a story about concerns with a demand . Concerns about Global Economic momentum . I think chinah is at the were if you look elsewhere, difficult to find significant weakness in any of the major economies. Doing reasonably well for state europe is increasing its momentum, growth momentum. Japan is doing reasonably well. It is difficult to find a major economy or part of the world which will drag the Global Economy down this year. China is the unknown and will wait to see. Yousef always great to have you. Tarek fadlallah from moura. We will look at the Upcoming Elections in iran and how they can affect International Sanctions and the countrys engagement with the west is just ahead. This is bloomberg. Yousef this is Bloomberg Markets middle east. Accord isress nuclear a major talking part Irans Nuclear accord is a major talking point i had of the election. Storyget more on that from ramsey, a partner at dla hyper. So much to talk about when it comes to trump and iran. Has aw the Administration Deadline coming up where they will have to decide to stick with the iran deal by extending waivers the hauled sanctions on its economy. Where do see it going and what will they consider . Sanctions,ers on the to be friends with you, is not something i am watching very closely. It is a technicality. A legislative action that has been happening for the past year with very little fanfare. With the Trump Administration coming in and thats been a lot of focus on those. I think that the Trump Administration will extend those waivers with very little fanfare but they will keep up the rhetoric and the key is what else do they do . Veto sanctions out of congress . Undermine the jcp eight for a risk and Business Climate and so theres a lot of things that the Trump Administration can do to or supportede jcpa beyond the waivers. In terms of what to watch out for going forward, shakec events, that may of things, the elections in iran, how much of a factor is it and what else are you watching . Ramsey the elections are important, but there always important regardless of trumps position. But, i think critically, you madeseen trump has announcement of a visit abroad. We needed to watch out for the boeing and airbus deal, what happens with those is a barometer and litmus test. Those companies are in constant communication with the u. S. Government and gives us a bit of insight into what the thinking is on the part of the department of treasury and sanctions. Obviously, there is a lot of inctions, legislative congress. Always sanctions legislative and the u. S. Congress. There was always president obama to counterweight and veto. Atyou see sanctions wind their way through congress, what the Administration Says at as it comes through is important. Tracy if we see the Trump Administration to reimpose sentient, what would be the mechanism and which industries do think would be most affected . Ramsey finance is critical. Even the slightest of movement by the Trump Administration on the financial channels, banking channels could have a really adverse effect and reverse some games will sing with the Nuclear Agreement because that is sensitive to the sanctions. Petroleum industry is something the Trump Administration might whatter but you asked me mechanisms we might see, the key is europe, russia and china, i dont think will follow the Trump Administration. That is where the Trump Administration, i believe, is thinking what can we do without these other partners support . Antiterrorism sanctions is a big one. Yousef in terms of companies, oil and Gas Companies have been looking closely at the lucrative , possible agreements. How are they going to navigate . When it could they sign or do they need to wait to after the elections . Ramsey a year ago, all the oil and Gas Companies were going carbon and big european to iran and big european corporations. My view is that was a lot of talking and memorandums of understanding and now the investment is hitting the ground and i him seemed much more nervousness and the market i am seeing much more nervousness in the market as you saw the big news stories about delegations visiting. Certainly, folks are going to be watching the elections but that is always a concern either on the Trump Administration and forward view of the nuclear deal and what will come out of it. Tracy ramsey jurdi joining us on yousef ramsey jurdi joining us on set. President trump heading to the middle east and what is on his agenda. This is bloomberg. The shows about to start how do i look . Like a bald penguin. [ laughing ] show me the Billboard Music awards. Show me top artist. Show me the top hot 100 artist. They give awards for being hot and 100 years old . Well take 2 [ laughing ] xfinity x1 gives you exclusive access to the best of the Billboard Music awards just by using your voice. The Billboard Music awards. Sunday, may 21st eight seven central only on abc. Bloomberg markets middle east. Irans will minister says of the nation expects 80 billion in full assessment in oil investment. The petrochemical well attract another 40 billion. The nations Deputy Oil Minister will wait until after the election to sign it to deal with the tall. Totall. Kept itsl ratings have rating for turkey. Turkeys general Government Debt is expected to be about 26 of gdp in the next three years. Declined inxports april. The export was a 95. 5 Million Barrels compared to 105 million in march. That equates to an average of 3. 2 5 Million Barrels a day during the month. 3. 27ld at an average of in april. The Syrian Opposition has raised concerns over a planned for you irano join a plan for to join with turkey and russia to make opposition say sevens in the nation. They say they want guarantees that the ceasefire zones will be enforced. U. S. Secretary of state Rex Tillerson and Russian Foreign minister Sergey Lavrov discusses the deescalation efforts in syria following talks in a stock in astana. Global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. This is bloomberg. Pakistan is looking to boost its economy to reach a record 70 growth. Is also asking the bank to boost its annual loan program. The Prime Minister spoke to us at the conference in you,. In yokohama. The highest growth has been 4. 7 . Fromre expecting anywhere. 5 until 55. Underestimated. Our expansion of smes has not been made into sensible data. At the spring meetings of the the goal of this government under the leadership. As 7 to achieve a year on high. Growth would mean the main focus. 2013, pakistan was known as a unstable macro economy. We have turned around. Tracey yes or no from the 80 be adb . Twohere is a merger of the lines of the adb. One mission is to access more infrastructure and development needs. 2017, i want to get back to a discussion that my colleague in hong kong mentioned. You did not extend the Central Bank Governors term . What are the plans for the job . With inflation rising a 60 ratio. Ave in the last three years it has been single digits. Around6 percen around 6 . This year is going to be 4 . It has been given under the law and the responsibility is three months. Within three months, either we beoint somebody or they can anyone else. The Prime Minister will decide who will be next. Anybody can be appointed. Him . Uld you favor popular fornot be me to make any comments. Oubt whether he would be tracey that was pakistani finance minister speaking to our Global Economics and finance and or kathleen hays. President donald trump is heading to the middle east on a mission combating extremism. Great to have you back on the program. In terms of this visit, if i think back to president Barack Obamas first visit to the region, it was hailed as a possible game changer, what is this going to do to relations in the middle east. Dissected this for us. What are your expectations . The toughest nut to crack for any u. S. President has become seemingly the middle east. It is quite courageous of him to want to start out like this with having raised Expectations Quite high. It is clever he is narrowing down the mission to essentially combating extremism and not trying to solve problems. High up there on the list of priorities is the israelipalestinian problem. He has already indicated he can cut a deal. This will turn out to be a good acquaintance a trip. He will get to know the depth of the problem and their seriousness and it would be good if you make some friends along the way. Relations between the previous u. S. Administration and the region have been quite cold especially between the two main players. To what extent could this help we draw the map that help the middle east . You look at possible new deals with the kingdom of saudi arabia. A fresh page with egypt. Could this be a catalyst for a new way to look at politics in the middle east . I would not be overly optimistic about a new page being turned. I was commenting on Bloomberg Television when president obama made his speech in cairo when he won the nobel prize. The middle east has become much more challenging than it was eight years ago. Solving the problem in syria looks quite difficult. Implementation of safe zones is going to be key. I would not place any high thats on it for now. Tracey the argument i have seen is things are different because israel and the gulf arabs states have a common enemy in the form of extremism and iran. Donald trump it does not seem bound by the nation you have to and maybeds with iran that frees him up to please some israelarab states and at the same time. There are a lot of benefits from treating the problem with a clean slate. In the region, saudi arabia has been a traditional ally. If he found a way of leveraging that to bring the divergences closer, i think he could go quite far. In terms of the possible agreement and what that means, ultimately a new page and a new catalysts when you look at the region as a whole and look at the gulf specifically, what stands out here . What we are in the Commodity Markets with the price dropping once again, with a uturn on reforms in the kingdom, this is a real tension point once again. There is no way around just continuing. The opec deal will hopefully be renewed. In november last year i said i did not have any high expectations. Ishink that shale oil catching up quite quickly and has come back to the markets quite rapidly. You see net long positions trend in the hedge fund world. Those are the facts to contend with. With respect to reform in saudi arabia, i think this is not unconnected to the oil story. Oil has not been in the press and therefore different mechanisms for continuing the Reform Program which they will do different mechanisms have to be found. This was not a uturn. It is a consolidation of the Reform Program. Quite frankly that was a hard one to keep in the bonuses and the stimulus packages they are putting through those are important. Tracey i want to backtrack to iran. They have the president ial elections which is going to be a major story for markets looking at geopolitical risks. Antiiran all of this rhetoric coming out of the Trump Administration, how can that undermine rouhanis chance to get reelected . From covering the ron closely isiran closely, my sense this good reinforce rouhani. Rouhani are so worried about him losing support , that he could be under fire from all directions, the conservative groups in iran has fielded all these candidates to counter mr. Romney just mr. Mr. Rouhani. At a rallyinggood support against outside interference and outside threats. That is how the iranian population rallied around the Nuclear Program. When the country was severely under sanctions, that is with the Nuclear Program had support. He will is that probably squeeze through. Tracey you are staying with us. Coming up, we are going to be digging into the imf accord with egypt and look at the ability to rein in inflation. This is bloomberg. You are watching bloomberg fromts middle east live tracey dubai. Biggest oils company is looking to list in two or three ford exchanges but there may be opposition in the u. K. A trade body there said it will not list for saudi aramco. The group said to recover center should be the minimum freefloating level and aramco is no exception. Airline, it is after a net loss widens more than 15 of a billion dollars last quarter. That is worsted than some analysts expected. Turkish airline say domestic and International Traffic fell during the period. Tracey he hinted he would buy the smaller rival the price was right. Berlin would require regulatory approval. Has mounting losses. Airbuseasing three dozen planes into lufthansa as part of a turnaround effort. Yusef a delegation is in cairo to review the details of its 12 billion court with the country. Still with us is the chief economist and ceo of arabia monitor. As we look at this story, ultimately we have a big day coming up this week. Inflation figures are due and those will give us clues about whether the authorities and policymakers are doing a Strong Enough job in terms of trying to comment best combat. Combat. The last data point at 30. 9 . The top panel, that is where the central bank is currently winning. They have been steady since last year. What do you expect to be in the numbers . I think inflation has been a difficult beast to get a handle on in egypt and this all began aboveincreased rapidly the rates that egypt is comfortable with. Egypt has lived with doubledigit inflation for y ears. I would not be surprised if it ticked up a little further from here. And if we see further Interest Rates rises in any case. It might be that the worst of the inflation is behind us but that does not mean that Interest Rates will not rise any further because of the impact on the ground is still being heavily felt. The key parameter that they cannot touch is the bread subsidies. The bread subsidies cause a Serious Problems in 1977 when the imf described cutting subsidies. In terms of just looking at the numbers and demands for bread, both for human feeding and animal feeding in egypt. Are the authorities doing enough to stay in line with the requirements of the imf program . They are saying they would like to see the central bank make a move. Those subsidies you pointed out are going to be critical for the second disbursement possibly for the Second Quarter and beyond. Are they doing enough . They are probably doing all they can for the time being. What they will have to look at now is Interest Rate in terms of trying to harness inflation in the right direction. They will continue with subsidy cuts but it will not be e. G. It will not be easy. Attracting Foreign Investment is a key factor. That has started to come through after the currency liberalization. s has accelerated quite rapidly from a record low just a couple of years ago it has accelerated quite rapidly from a record low of just a couple of years ago and the question is will they be able to keep that high and have the degree of freedom they need on Interest Rates. Fti. Y you mentioned i have seen some people arguing that while the devaluation has been great in getting new capital into the country, it cannot do that must that much to boost egypts exports. The main industry is tourism and that is more affected by geopolitical issues rather than the actual currency. That is true. Tourism is an important export in egypt and a keeper currency is better for tourism and a cheaper currency is better for tourism. The geopolitical risk has been a constant problem. If you were to have this as a constant and have a cheaper currency instead of a more expensive currency, it would work better for the sector. More people are going back to it despite the problems. More people are going back to egypt. We know it from the region. A lot of tourists are going to egypt. It all helps and if the currencys cheaper rather than more expensive, it helps. Tracey quickly since we are on the subject of egyptian exports, one positive here has been the Energy Industry and the discovery of the new oil fields which should directly help boost to gdp. What else do you see on the horizon in terms of confidence for the overall egyptian economy . The egyptian labor force is a welleducated labor force. If investment comes in, new companies can be created. There is a lot of entrepreneurial spirit among those with university degrees. That is a bright light on the horizon for the egyptian economy. There is no magic formula. More direct Foreign Investment. Inflation and preferably in the currency as well. Yusef great having you on the program as always. Youre watching Bloomberg Markets middle east. Plenty coming up after a short break. Looking at one of the key trades as of the market in this part of the world gets its first real chance to react what we saw happening in the oil prices. This is Bloomberg Yusef lets take a quick look and see what is in focus when it comes to markets in the middle east. 2. 5net income coming in at 3 billion saudi riyals which is First Quarter interim dividend of one we all. Iyal. E r seven bytes, can hold and zero sales. Also watch out what is going on with Dubai Investments. At more than 75 million euros. 75 million euros. Currently underperforming the dubai index but they still see you in the stock with a current durhams. Two signed a billas with the company to back a Infrastructure Program in india. We have additional lines from Dubai Investment. The remainder of 2017 is positive. They are also finalizing plans for an Infrastructure Project in riyadh. That is all we have of this edition of Bloomberg Markets middle east. Tracey live from the region at the same time tomorrow. Yusef this is bloomberg. Announcer the following is a paid presentation for the bissell crosswave. [blue danube waltz]