Transcripts For BLOOMBERG Bloomberg Markets Middle East 20170806

The signing of brazilian forward the nanar. This is Bloomberg Markets middle east. It is the first day of trading of the first full day of the new month. Lets get to some global macro peered the u. S. Jobs report on friday, that did take a lot of action we saw in u. S. Markets. Look at the dollar index, surging by the most in six weeks after what has basically been a month of dollar weakness. Was up three quarters of a percent following better than support,payrolls payrolls coming in at 209 thousand, versus 180,000 in estimates. The 10 year yield up about four basis points and investors have a hard think about what strong jobs growth means for u. S. Monetary policy. 77 ,ile, gold falling, down about nine dollars per ounce. That is its first weekly decline since early july. Take a look at the u. S. Equity markets. We saw betterthanexpected jobs report feeding into u. S. Stocks, s p 500 up almost 1 5 of a percent. The dow up a little up less than a third of a percent good lots of people thinking this was a goldilocks report, Strong Enough to show the u. S. Economy is on track with growth but not Strong Enough to change the trajectory for the federal reserve. Here in the middle east, we are a little away from the market open in about two hours. Take a look at some meaningful indicators for the gulf region. We have brent crude up over . 40 per barrel. Msci also getting an uplift from the dollar excuse me, the payrolls report despite the strongerthanexpected dollar. Jpmorgan gulf bond index spreads basically unchanged. People looking through that increase in oil prices so far. Take a look at what is happening in equity markets close to home. Down. 27 , ahabi little bit of a mixed day. It was dragged down by edits, which fell three point over 3 . Up 4 . Aring much better, the qatari index up. 40 thanks to a move from a Telecoms Company which said on thursday it is set is talks to buy some on international it did without a result. Ended without a result. Lets check on the first word headlines. The Un Security Council has imposed harsher sanctions on north korea in response to pyongyang testing of Intercontinental Ballistic Missiles last month. It to cut a Million Dollars a nation. The sitting Council Members agree to the penalties, which also includes a ban on new and expanded joint ventures with north korea. Iran is preparing for a fight over the u. S. Sanctions targeting its missile program, which were not negotiated as part of the accord. It is considering filing a complaint to the joint can joint commission overseeing the deal. The president reiterated his nations commitment to its obligations under the international deal, which gave the country sanctions relief. Israeli police have acknowledged for the first time publicly that a criminal investigation of Prime Minister Benjamin Netanyahu involves suspicion of robbery, fraud and breach of trust. Preventing gag order media on reporting about this. Doingahu denies all wrong and has labeled this a political hunt. Witch global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tracy . Tracy top did laments from the u. S. And north korea are set to face each other at a summit just days after the yuan hit pyongyang with harsh new sanctions because of its nuclear program. Secretary of state Rex Tillerson and his north korean counterpart will be in the same room this sunday, haslinda, what are we expecting . Tracy, this is one of the rare opportunities to engage with north korea. One of the few meetings north korea attends along with stakeholders in the Korean Missile appeared the u. S. , china, russia, japan and south korea. With tensions rising in the Korean Peninsula and pyongyang wanting to Ballistic Missiles in july alone, there is an urgent need to put a lid on north Koreas Nuclear weapons program. This is the chance for all of the leaders to talk about that. We heard from south korean leaders, the foreign minister, who said she is open to discussions with the north. The last time the two sides talk to each other was back in 2015. There has been great tension. Leaders just yesterday came out with a statement suggesting that north koreas missile launches were a great concern. They say north korea is disturbing the peace and prosperity not just in the region of the world. As was mentioned earlier, the yuan securities the Un Security Council has come out with action. Sanctions affecting exports of north korea, with about 1 billion. Will that work . This is the third set of sanctions in 18 months. Will they work . To australiase foreign minister this morning. Here is what she said. The sanctions in addition to those imposed in the past, but the message is clear, all members, that includes china, russia, are determined to prevent north korea from continuing done this dangerous and illegal path. We will see how effective they are. It has only just been announced. But we must maintain pressure on north korea to change its behavior. It is a risk to the region and a global threat. Tracy, you mentioned how Rex Tillerson will be in the same room as his north korean counterpart. This is the first time they are meeting. Everybody is watching the body language to see what it means or future relationships. Tillerson has set himself he wants to engage, he wants to have talks with north korea at some point, that not yet. Tracy. I would love to be a fly on the wall for that meeting. Thank you so much. Dive into help investors arguing that geopolitical risk. We have the independent Research Analyst from hg research. We are talking about north korea here. A have seen markets shrug off laundry list of the geopolitical concerns. Is there any indication so far that korea will be different . Markets have been very resilient when it comes to political risks. In this case, north korea and china are very much connected because the u. S. Expects china and in on north korea, the view of the United States, china has not done enough. That means there is a heightened possibility of a trade war between the United States and china. That becomes relevant for financial markets. You will have retaliation and archives of unintended consequences. Tracy it is interesting you bring that up. I was reading a note from david wu at back of America Merrill lynch, he says investors are not pricing the potential risks of a showdown between u. S. And china over north korea. He is recommending people start buying the japanese yen as a relative safe haven. Is it time to think about safe haven plays . Hans you could argue that. Marketse a lot of other that it is a risk environment. Triggered by Central Bank Buying and so forth. However, when it comes to hedges against political or geopolitical risk, i prefer investments in gold rather than yen. Tracy a goldbug with us. Keep that thought. We will be discussing that more on the show. We are also going to be getting a outlook for the gold Real Estate Market with a head of research as well as a look at the latest developments in the longrunning saga over dana gas. Find out why the countrys islamic bondholders may end up owing the company millions. This is bloomberg. I am getting more and more worried but hopefully history will assert itself. Tracy that was Mohamed Elerian on the economy. Fridays jobs report gave some indication of healthy outlook for the u. S. U. S. Employers added jobs in the line in july. It is matching a 16 year low. Ets go back to hans as i mentioned, we have had some lackluster u. S. Economic data earlier in the week, but the jobs report looked solid. How are you reading all of the numbers weve heard weve seen over the past week . Hans the economy is in a soft patch. We are seeing indicators. However, the jobs report, at least the headline number, was positive. , the laboruraging Participation Rate has gone up and Unemployment Rate is down to 4. 3 . That is encouraging. But if you look at further details in the report, our conclusion is it will not move the digital move the needle for the fed because you basically have a huge draw and parttime jobs and decline in fulltime jobs and you also have the medium duration of unemployment that has gone up. Job security is not there. The bottom line is waiting for will probably not materialize. The bottom line is, the fed will not move its rate in any direction from this report. To show theted numbers on a chart for our viewers. If you look at the bottom panel, you can see the u. S. Unemployment rate matching the 16 year low it reached in may. Quite a big improvement, although as you mentioned, there is some complexity in the numbers. When it comes to the fed and the notion of full employment, had you think the u. S. Central Bank Actually cares about full employment versus the other half of its mandate, which is of course, inflation . Inflation has been quite low in recent years. Hans looking at the phillips curve, it has flattened. It is becoming evident the correlation between inflation and the labor market has broken down, or is not what it used to be in previous cycles. That is a dilemma, he comes because we are waiting for inflation and it is not going to happen, many Deflationary Forces are at work. Also you have automation, companies that dont have to higher more people and pay higher wages. We are seeing inflation being stopped where it is now. That actually creates an opportunity for Treasury Bonds third that is something we would look at. Roomed does not have much for policy here. Tracy waiting for the dow, i like that. Godot, i liker that. If we are going through something of a soft patch, why national theres a dismal track record, lets go back to the dotcom bubble, and the housing bubble in 2007. Every time it did not end well. If youre going down that path, there could be some justification to hike rates, but we think will be very careful. The december rate hike is probably off. The earliest we could see is december, and in the meantime, it will start quantitative tightening, reducing the balance sheet. To central it comes banks, we have jackson hole coming up relatively shortly. What are you on the lookout when it comes to jackson hole, the annual sort of gathering of policy makers and central bankers . To see to what extent the European Central bank or the bank of japan or bank of england is willing to normalizing their policies. There, had qe forever and at some point they have to normalize policy. Any u. S. , you have economy further ahead in the cycle, so it will stay low there. What youre going to see is what other Central Banks are going to do. Tracy i know you cycles a pretty short nowadays, but i remember two years ago, we had mario draghi stealing the show at jackson hole. He gave a speech that ended up eating the forerunner to the on buying Program Announced by the ecb later. Do you expect a repeat of that performance from him . Hans it is hard to say. The Bond Buying Program will be down down. The european economy is doing quite well. It is growing better, faster than the u. S. Economy. Base tohas a bigger tighten policy than the fed does. We might see an announcement or hint of that direction, the move toward policy normalization taking up speed. Tracy very briefly, we did have some news from the bank of england last week as well, cutting their broke there growth forecast because of brexit uncertainty. Can we assume the deal we assume the boe will avoid dampening u. K. Economic growth . They have very little room to move because brexit create so much uncertainty. We dont know if it will be hard or soft, but these are Ready Companies are already positioning themselves. We think that the bank of england will have no choice but leaving Interest Rates untouched. Policy tightening is difficult to justify. Ans. Y thank you, h independent research consultant. Coming up, we were just speaking about the weaker forecast for the u. K. Economy. We will be discussing the outlook for the u. K. Property market and also talking about what the recent highrise fire we saw in dubai actually means for safety concerns in the gulf and Construction Industry here. We will have more, next. This is bloomberg. Tracy this is Bloomberg Markets middle east. I am tracy alloway. Aibased another highways dubai faced another highrise fire on friday. The second place in two years. Firefighters put out the flames within a few hours and no serious injuries were reported. Moreer, the fire raises questions about safety in the gulf. Lets get more from a head of research about what this might mean for the dubai property market. Second fire in the same building . This makes me a little nervous. Good morning. It is a little unusual to see a fire in the same building again. I guess we have to remind ourselves that we live in a city that is a vertical city, skyscrapers are under construction throughout dubai. We have had fires in the past and seen his safety regulations brought into force, especially when it comes to fireproof cladding. We have to see what the investigations yield as to what actually caused the fire. Releasing are report called brexit, one year london Real Estate Market. Walk us through what is driving the decline. We have a lot of factors influencing the london market. We are a year on from the referendum and it had an impact on demand for residential property. It is also important to remind ourselves that since the Great Recession in 2007, 2008, we were in a protracted growth cycle. Nothing took place to slow down the rapid rise of house prices in london. All the referendum did was accelerate a much anticipated slowdown. Tracy a cyclical slowdown. Probably cyclical, very difficult to predict. We have other underlying issues such as affordability in london, in one central london, you have average prices the top 3 million pounds, 70 times higher than in the than average incomes in the city. Tracy lets talk about Foreign Investment. This is something of interest to many viewers in the gulf region. How does the Political Uncertainty caused by brexit get offset by the value of the falling pound . Faisal you are right, the falling pound was probably one of the biggest casualties of the brexit referendum result. Sterling, we were looking at a 70 discount versus the dollar, 17 discount versus the dollar. We must member there are bigger factors in play in this part of the world. Conflicts in the middle east, the qatari diplomatic crisis, slowdown in the chinese economy, the u. S. Economy showing slowing growth, as well. Thinking about things on that macro level, little infighting in the u. K. Is small fish compared to some of the bigger things going on in the world. Tracy i wanted to press you on the qatar situation specifically. It could go either way. Dont hand, maybe qataris have as much to spend on foreign property, but on the other hand, maybe they want to buy more property in london as a hedge for what is going on regionally. We see going . You haveatari, as really said, have played a huge part in investment in london. They have a huge portfolio. In the months since the diplomatic crisis broke out, we have not seen a surge in qatari investment in london or u. K. Property market. It is continuing as normal, quite a nine in terms of demand. Nign in terms of demand. At a pick we will see any kneejerk reactions. Tracy we started out discussing the fire in dubai. I want to segue to the tragic enfelle saw at the gr tower recently. Emptyis added scrutiny of properties and chelsea because of that fire. What you think that added scrutiny will have on Foreign Investment . Faisal it is difficult to say, a lot of the investment in kensington and chelsea is international investment. The government and of the recent doing everything they can to provide alternative accommodation to those they can to help the people have been made homeless. We need to leave that to the authorities i think, to decide how best to handle that. Tracy that was the head of bringing the latest not just in u. K. Property news but here in dubai. Coming up, my favorite story. Holders of dana gas as long as bonds could go from creditors to debtors. We look at the implications of his shaking the corporate sukuk market. That is ahead. This is bloomberg. We check our phones 85 times a day. So it only made sense to create a network that keeps up. Introducing xfinity mobile. It combines americas largest, most reliable 4g lte with the most wifi hotspots nationwide. Saving you money wherever you check your phone. Yeah, even there. See how much you can save when you choose by the gig or unlimited. Call, or go to xfinitymobile. Com. Xfinity mobile. Its a new kind of network designed to save you money. Youre watching Bloomberg Markets middle east, the Un Security Council has imposed toughest sanctions on north korea, which aim to cut 1 billion from the nations exports. The 15 Member Council agreed unanimously to penalties which ban exports of coal, iron, lead and seafood. The measures are in response to pyongyang testing to Intercontinental Ballistic Missiles last month the could target the United States. The u. S. Labor market hit its stride in july with a jobless rate falling to a 16 year low. Monthly wage growth picked up. Employers added 2009000 jobs while the an employment rate fell to 4. 3 . A chief Economic Advisor warns there is still a problem with wage growth in the united dates, with average Hourly Earnings just 3. 4 of in july. The fed will be tighter than otherwise. It will not move ahead of the data. The feds problem is recent data softignaled a prolonged patch. That is a concern and rightly so. U. S. Military officials have called off a search and rescue operation for three u. S. Marines missing of the east coast of australia. They were on board and osprey aircraft which crashed into the sea while trying to land on saturday. 26 on the out of aircraft were rescued. Osprey takes off like a helicopter flies like an aircraft and has been involved in a series of highprofile issues and several years. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tracy . Tracy thanks. Anddispute between dana gas islamic bondholders has a fresh twist. Companies believe investors may need to pay it depending on the outcome of the court battle. Islamic bondld market in june when they said that its sukuk does not comply with sharia law. Some are saying it is something trying to get out of its debt obligations. Putting us with more joining us with more, managing director of credit is. Some of what we have seen when it comes to this ongoing debt drama, take a look behind me, you can see what the price in inld of danas sukuk yield 17, the red line is when they said they no longer considers to of its islamic bond issues sharia compliant. I read the story that cannot on thursday that said dana gas thinks the debtors might of the money. Walk them walk us through what they could be thinking. There is a precedent for this. If you go back to one that defaulted in kuwait during the crisis, they also try to avoid the sukuk. Asinterest was seen n ideaous, there was a that if you avoided, all the interest that was paid, you have to refund that effectively. Judge, theent to the prehearing said you have to pay back the principal. But there might be a case for the interest. Unusual butmpletely i think we can take a bit of comfort that in this particular case, the u. K. Court has said we want to hear the whole thing. I think the u. K. Court probably will look at the terms of the agreement and the intentions of the parties. It is a bit of a long shot, but not completely, its not like a zero chance. Tracy i am curious. You mentioned the u. K. Court involvement. A set last month that the company should withdraw the court action and the whole thing should be done under u. K. Law, meaning the u. K. Would decide the sharia compliant of the bonds. Is that unusual . What can we expect . Theid the terms of agreement the fun the parties, and typically with sukuk, the sharia compliance element is not part of the agreement per se. Beginning of the transaction, you get your fact well, your sharia repaying, all of the parties agree it is compliant and you move toward good you move forward. Theyre not really sharia causes if you change in my later on. I think the court should look at the terms of the agreement and would probably enforce the terms of the agreement. That it is sharia complaint is not part of the agreement. In the uae, it mightve been a potential angle, i think of the u. K. They will probably get it probably look at it in terms of the overall obligation. Tracy the high court not going to be issuing any fatwas. Some people i spoke to said that they thought that dana would try to sweep some of this under the rug by offering a sweetened restructuring deal. You surprised that has not happened . Anlid i guess there is ongoing negotiation going on in both parties looking to get an advantage or to strengthen their position. Going from the position of effectively owing a lot of money and profits, they have come up with some arguments as to why things should change or why the restructuring should occur, and again, the u. K. Court did feel there was a reason to hear a full Court Hearing in september. They have improved their position from these negotiations from discussions. We have to see in september with the ultimate outcome is. Tracy at this juncture in time, after we see a company say again money. Tors only as this continues, does it increasingly look like a oneoff or does it Say Something about potential weaknesses in the overall islamic finance industry . Khalid there is an issue overall. There is a lot of complexity in these instruments, a lot of legal structuring and the principles of sharia are not necessarily universal, different parties have different ideas. I think there is an issue, but as mentioned at the outset, it is generally off the table when it comes to the financing and the transaction. The parties agree at the outset that everything is compliant and it should not be an issue. This case actually is a good landlocked case. If it goes well for the creditors, it will create more confidence in the sukuk market. If it goes badly for the creditors, it will probably damage the sukuk market going forward. Tracy ultimately, how do you see it playing out . Khalid i would expect the courts it is hard to say, that i would look to the court to be enforcing the terms of the agreement and the contract and the sharialooking at compliance element. But they have made good arguments so we will see what happens in september. Tracy in terms of overall sukuk issuance, it has not been a strong as some people may have hoped or expected. What you think that is and what is needed to really inshore lift off insurer lift off . Khalid we are the summer period, and i think the slowdown is not particularly unexpected. The timing of this Court Hearing in september is probably just the beginning of the last quarter. If you still dont see issuance in october time, i think you probably can see that as an issue. In thethe ruling goes right direction, you might have a backlog of issuance and you might see a bit of a flow coming through in the last quarter of the year. Tracy going back to dana, have you think investors or lenders will treat the Company Going forward . Khalid with caution, obviously could obviously. In these sorts of situations. I feel sometimes also the market has a short memory. If a few years after the case is settled, if they are back in the market with a good transaction, investors will be cautious, there is always money out there looking for yield. We will have to wait and see what happens. Tracy in terms of markets having short memories, we did just see iraq come back to the market after more than a decade of staying away. That bond issuance sold last week seven times oversubscribed. Or search for yield, whatever you want to call it. Stay with us, you will be discussing exactly that. We will talk about the iraq bond issue as well as the outlook for general gulf bonds. Before we do that, we have a future on the bloomberg we would like to bring to your attention. That is our interactive tv function. You can find it at tv. You will not only be able to watch us live, but see previous interviews and dive into any of the securities or bloomberg functions we talk about. You can also become part of the conversation by sending us instant messages during our shows. Please share your thoughts on islamic finance. I am interested in the debt drama. Im curious what others think about it. You can check that out at tv. This is bloomberg. Tracy this is Bloomberg Markets middle east. I am tracy alloway. Iraq is back in the debt market the first unsupported bond in more than a decade. The milestone for the country as it seeks to rebuild its economy after years of political and sectarian strife. Managingh us is a director. We talked about this briefly, but iraq comes back to the Market Selling about a billion dollars worth of debt, not backed by the u. S. Government. The issue is seven times oversubscribed. They tightened price guidance. Rom 7 to i think 6. 75 are you surprised . Khalid it is interesting they were planning it couple of years ago. I think at that time it was they were 11. 5, and not interested in going ahead because they said it was too expensive. Have seen quite a good spread compression over the last couple of years. I think of light of it a lot of it is to do with all of this qualitative easing. It is really compressing spreads. It is interesting in this region. At the same time you have oil prices weakening and fundamentals weakening. The fed has also fallen. Be would expect weakening to associated with a widening of spreads, but it is the opposite. Tracy and supplies going up at the same time. All of the deficits khalid all of the deficits are putting paper into the market. I think it really is that search for yield. When you have zero or negative even, in europe, etc. All of these investors going into places were traditionally they would not have gone, and iraq is another observation, another point on the spectrum of emerging market investment. Tracy iraq, it is a silly by the story about the country recovering. Mosul. St won you dont buy that. Uke globalbal liquidity is having an impact. Supported here. Is a great time to borrow. You can borrow at 10 20, 30 years. Who knows what the uncertainty of the future is, who knows about oil . With Interest Rates and the cost of funding being relatively low it is probably a good time to borrow longterm because you dont know what is going to happen in the future. , precrisis debt to gdp was like 5 . It is now about 30 . The rating agencies figure it will head to 50 plus. That is a huge change over that time. At least in terms of debt service, the spread is relatively low. Tracy my colleagues were reporting last week that oman is planning to raise 2 billion in Additional Debt sales this year long. This brings me back to the supply point. Is there room for everyone in the gulf to issue enough . Khalid i think when youre looking at these yields of around 5. 5 percent, 6 , they are quite attractive yield your where you going to pick them up elsewhere . , to aretings agencies keeping them Investment Grade, and the third has pushed it into junk. We have Investment Grade credit giving you 5. 5 percent, 6 , 10, etc. , that is still an attractive level. I think international investors, despite the local fractures, are still comfortable with gulf credit. I think there is appetite for those yields. Tracy how much does the oil price feed into the bond story right now . It is a devilish sort could as prices decline, you need issue more, but it may be more difficult because investors start to worry about the fiscal outlook. Khalid if you look at the starting point, the debt to gdp levels in the region are quite low. There is some room for you start jeopardizing the Credit Profile to an extent that investors are worried. There is still a bit of headroom, whether it is one room, two years, all of the countries that have engaged in additional ways to raise revenue. There is an Inflection Point of the middle or their spending a lot of money to try and diversify in this to have hedge room. You get two years now, the gdp is really climbing, then you might see investors get worried, it just means they will charge more yield. I think there is definitely appetite. Probably what is more of an issue is of the u. S. And europe start to recover, if rates start rising there, a lot of liquidity here might start going back to other jurisdictions in europe and elsewhere. Tracy that leads perfectly to my next question, which is u. S. Monetary policy. The gulf got a little bit of a breather recently with the dollar being rather weak, but on friday beside recover somewhat. What is the prospect that fed tightening knocks demands for gulf issues, or treats problems, lets say, for things like the dollar peg . Khalid i think even with the expected type stored the end of the year and next your, youre looking at one and a half, 2 type of feel good gulf is type of yield. The gulf is still good on investment credit. They will try to push of the cost of it but it will not change enough that you have income investors who are very hungry for yield. The dynamical not change. In terms of the peg, it has the region very well, for decades. For international investors, the currency peg takes uncertainty of the table. At least now you are thinking macro, youre thinking political if you were to remove the peg, i think it would cause so much instability would prove a productive. I think it was for the next few years, there will be, the peg will be stable. Tracy investors have to start thinking about currency risk as well. In terms of liquidity conditions, does that mean things like the ecb, the doj, still really in the throes of stimulative monetary programs, that they are more important for the region and the fed . Khalid no, i think the fed is still the anchor, but while there is a lot of liquidity floating around, trillions of dollars, that is going to have a suppressive effect on regional spreads. You really would have to see a much greater climb in rates in other, more mature jurisdictions. But you might have an Inflection Point where liquidity starts to leave. I think for the next 1218 months, the region is still good. Tracy last question, can i get your outlook for supply . It doesnt look like it will be another recordbreaking year. Khalid while prices have recovered, they are sort of bouncing around, 45, 55. Apparently, inventories are starting to take a bit of a dent. I think the prospect of supply is still solid but not a record year, as you say. Tracy thank you so much for joining us now. We are going to take a quick break right now. First, we have some headlines actually. Agility secondquarter net rising to 12 . Excuse me, rising 12 . Toondquarter revenue rising revenue rising. We will have more on that story when we have it, coming up first, the recordbreaking transfer could bring more than just trophies to the qatari owners. We will look at the soft power push admits the diplomatic power dispute with neighbors. This is bloomberg. Tracy this is Bloomberg Markets middle east, i am tracy alloway. Lets take a quick roundup of some corporate stories right now. Toota and mazda have agreed join forces to build a 1. 6 billion factory in the u. S. They will buy stakes in each other as part of the deal, we had a acquiring about 5 of the, which will in turn hold about a quarter of a percent of the bigger company. Corollaplan to produce compact cars and mazda crossovers in the shared facility from 2021. The shiite the fight between the sheep and Western Digital has escalated. Toshiba says they have no right to the plant, thing they are building the facility without participation of Western Digital. Western digital maintains it has the right to get supply under agreement it inherited. Whereturn to the gulf, toe are namars transfer paris center man is a milestone for the soccer club but also a political statement by its wealthy owner, qatar. It is the latest in a series of headline grabbing deals by qatar. More from alice shaheen. Walk us through the numbers to begin with. We have the headline numbers, Something Like 260 million. That is just the buyout clause. That is the clause so nobody can approach your player. In seeing, a need that i need to show everybody that life is normal despite the saudi boycott. This is the headline normal headline number, it excludes his wages,. Some reports put the total value of the deal as 600 billion. To put this in perspective, last year, Manchester United have to work the world record at over 100 million. That is more than double the previous deal. Tracy what you think qatar is trying to achieve . Alaa you can argue the deal has been making before. The same deal with the f16s from the u. S. And the italian navy warships, but it is being say, like is we proceeding normally despite the boycott. It has not stopped any of their International Business in qatar. It is seen as a political statement. Muchneeded publicity. That is how it is interpreted. We spoke to a few people in the sports business industry and they said there is no way this figure makes sense from it bernanke from a financial perspective. Anything thatnd has been done before. Simon i like the wake cooper over at the Financial Times put it. He said it was like a rich it is auying a call so, signaling effect, about soft power. Alaa exactly, this is been a hallmark of qatar for the past 20 years. It is a small country with immense wealth. It has zero networks to boost its influence. It has been supporting political theps in the region, to dismay of saudi arabia and uae, because the groups are not in the same camp with them. It has been known for flashy asset buying through the investment authority. Some of that is a stakes in Global Companies but some of that is also big real estate. Seen as a statement to build their soft power. It is what they are good at. Obviously sometimes it backfires. In this deal, we saw the potential as lolita in spain said, this violates fair play. Other countries are saying this will make the transfer market, that is already high, go even more crazy. It is not always working well for them. Tracy one assumes of it goes through, it means they dont have much at all. In terms of qatars asset buying abroad, does it always pay off . How we judge the success of those purchases if we are talking about soft power and reputation . Alaa the qa does not disclose is returns. We saw it came under the spotlight with the glencore a year or so ago when shares started plummeting and people were pointing the figure that qa investment did not work well. Then it recovered. It is difficult to put a number on it. Obviously, with the current crisis, people are wondering, if qatar needs the money and assets of tight end real estate, would that be a smart investment or not . If you tie that into the current context. We also know in terms of making a statement, qia has an Investment Program in the u. S. , two weeks ago we had a story where is actively pursuing these in the u. S. Tracy thank you so much for joining us. I just found out that you are actually a football writer in a previous life, which ahead no idea. We will have to bring it on to talk about this regularly. That is it for this edition of Bloomberg Markets middle east. We will be live from the region jonathan from new york city for our viewers worldwide, im Jonathan Ferro with 30 minutes dedicated to fixed income. This is bloomberg real yield. Jonathan coming up, the u. S. Payrolls report delivers. Jobs increase more than expected and unemployment drops to a 16 year low. Former fed chair Alan Greenspan says theres a bubble, but not in equities. Its in bonds. Hertz leaves investors flying blind. The auto Company Gives bond traders the silent treatment. We begin with a big issue. A solid jobs report in the United States. This is a very fine report