Tepid response is causing World Leaders to revert in droves. Yousef 8 00 a. M. , this is Bloomberg Markets middle east, im yousef gamal eldin in dubai. Just gone midday, entering the lunch break for markets. China has been on for 30 minutes. We have a few things to mention today, fairly busy. At some point in the afternoon, we might get the new credit data out of china, Industrial Production due out of japan. It comes out of your part of the world. Have a look at markets right now as we continue to see recovery across the broader market. I think the difference between what we saw yesterday and today with japan is now very much in the mix, very much on the shoulders of the regional benchmark. Up,night wall street was certainly an extension of what we are seeing across the asiapacific. The other thing i want to mention is when you look at the currency market, dollaryen you thereally tells whole picture that there is not a lot of appetite for safeties and for safe havens. The aussie dollar is down the corridor as is the kiwi daughter. Move, theook at the weaker dollar might not be helping. Itis a big story really tells you what has been happening, people loading up ahead of the speculative the speculation that we might see capacity get taken out of the system and i believe you are talking about that in a moment. Lets have a look at sovereign ands yields are up futures are also reacting, moving up in line across the cash markets in the asiapacific. Yousef one of the key questions is whats happening with volatility. It was down at one point, and then of course whats happening in the commodities space, brent crude holding on to gains. We are looking ahead to whats happening with u. S. Inventories, a survey suggesting a draw down last week, recovering from falling oil demand out of china. These Exchange Currencies kicked in, this is getting into the fourth day of declines for the middle. Narrowing atre 13. 31, and the south African High Court will rule tuesday on the central bank, a very sensitive issue. Away from the opening of the emirates market, we have plenty of earnings to kick through in terms of the broader equity pulse. The index is great for mid and Largecap Companies and we put it out. It is a broadly negative pictures, the volumes are picking up below the threemonth average, all indices were lower with the exception of kuwait,s him of the Consumer Staples down by stocks with downside pressure. Key ideas in the trades and Bigger Companies reporting a bellwether and important benchmark about how investors feel about this part of the world. Lets get a check on the first word headlines with the flavor with debra mao. Debra the reserve bank of australia says gdp growth remains on track for 3 in 2018 and 2019, but worries remain about high debt and low inflation. Minutes from the rbas august 1 meeting show concerns that forecast concerns could be current device willing household debt, at a record 190 of income. Housing market also needs careful monitoring. And intel Ceo Brian Krzanich has become thie third ceo to quit President Trumps panel of Business Leaders. He says the divided Political Climate is causing serious harm to critical issues. Earlier, the merck ceo and under saying theyps down, are obliged to stand against intolerance and extremism, and leaders must reject bigotry. South korean president mon has urged kim jongun to cease provocation, saying seoul will do anything to avoid another war. Earlier, the top u. S. General was talking of diplomacy is the best way out, at the u. S. Defense secretary later warned that conflicts could escalate quickly if american territory was attacked. President trump spoke to shinzo abe, agreeing that north korea must not be allowed to launch more missiles. We are monitoring it very closely with china. I commend President Trumps commitment to the security of the u. S. And its allies. The president and i agree it is critical to cooperate closely with china, russia, and the International Community to dete north korear from launching an attack. At the same time, we will remain vigilant and use our Missile Defense system to safeguard the nation. North koreanile, state television says kim jong on has been briefed on a potential strike plan. Kim has said he would release details of the attack by the middle of the month, but the news report may offer a way out of the current standoff. It said he would continue to watch the upcoming u. S. And south Korean Military drills, making no mention of a possible missile strike. And yemens central bank is reportedly floating its currency to narrow the difference in the official of last Market Exchange rate. The bank will abandon the current rate. On dollar can by about 370 the market. They have been struggling with a cash crunch due to a civil war that has flared into a regional conflict. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. Im debra mao. This is bloomberg. Yousef thanks. Asian equities are rallying as fears of a war received, boosting stocks across the region. With markmore cudmore, i want to start with the latest about whats going on with the ceo of intel, the third person to resign within 12 hours. The bigger story here is the impact it has had on the president s credibility and reforms when it comes to the fiscal program. How does this affect the broader trade story . I think this is definitely a blow for trump. One of the main pillars he has had to rely on is business experience, the one thing that has not been knocked at any point during the last eight months, however several Business Leaders are turning on him which is putting pressure on other Business Leaders to pull out and undermines his most reliable pillar of strength. He has already struggled this year which makes it more likely that he might put emphasis on getting Foreign Policy victories. This is a tense time in Foreign Policy and it might make markets nervous. So far we are seeing very little sign of it. David in fact we did see a sizable move, half of 1 . Watchu are saying euroyen why . Euroyen is in the most stretched positioning. We know this dollar short is a verybut there long dollar position against the yen. Its an extreme divergence of the major currencies, seen as one of the most major crosses and that is why this has been a consensus trade of this whole euro recovery growth story, there has been very little pullback in that narrative and the same with yen weakness. It would cause the most pain and spillover, the euroyen pair. It is not quite regaining the high which makes us a little more cautious to follow the overall moves. That is what we are seeing classessset where havent rallied very hard. Credit spread has only narrowed a little bit back of the massive whitening we saw last week. Some assets are not david mark, nice to see you. A macro strategist. Speaking of credit and for more on the story we are joined by mark read based in hong kong. Thanks for coming on. Thanks for having me. David i want to start with north korea it is compelling to talk about, the prospect of nuclear armageddon. But when you come to the markets, does it matter . I think it does matter but it is not the biggest risk for market. The our best case uncertain status quo continues. If that happens it is not such a bad case. We have seen the much bigger risk as being Central Bank Normalization. You could say that the uncertain geoPolitical Climate pushed back then normalization and it could be a positive for markets. Yousef before we get into the meat of the central bank conversation, another note on the resignation from the president cost council and coming up to key decisions. As much as some might shrug it off, the bond market is pricing in a different story. Dive into the bloomberg with me this is your threemonth auction yield, the highest rate since 2008. How worried are you with the president s credibility coming under fire that something is going to go wrong with these negotiations . Definitely been a factor to consider. I would put it in the same bucket as north korea, the strong base case that everything will be ok. But definitely something to watch and it is another one of the reasons i think investors should be more nervous than they are. I want to bring up which speaks to, are we overextended, putting too much weight on the story. The cost to insure south korean debt is more expensive compared to five years. When you look at Something Like this, have we baked in too much fear . I will look at that chart and i will think, its understandable, given that the focus of the world is on north korea. But i look at the chart and i say, in reality, that move isnt a huge move. I look at the chart and think it is understandable, but we dont see it going too much higher from here. Yousef mark, hold that thought. You are staying with us. We are getting breaking lines on the bloomberg that we have got to get to, one is from union properties, with a sizable loss. Secondquarter loss coming in at 2. 20 9 billion terms. This is involved in the uae they have had a rough year as they changed out 18 . The way for more context to break down why the loss was this one of the stocks listed on the Dubai Exchange coming in low side at 25. 5 million. Lets get you a preview of whats to come on Bloomberg Markets we talked the developer of the worlds tallest building. The company itself is seeing lofty earnings expectations. We crunched the numbers, and much more, with the numbers we just got. David but up next, we will be asking our guest why he prefers Asian Corporate bonds over u. S. And european jets. This is bloomberg. Yousef this is Bloomberg Markets middle east, on yousef gamal eldin. David and im david ingles in hong kong. With us to discuss the top trade is a fixed income analyst who is now you were previously constructive recently turned cautious. Ultimately, we are close to Central Bank Normalization. We think valuations are stretched and investors arent getting compensated at this point when the normalization process is almost upon us. David looking at your notes, you like Asian Corporate why asia . Ultimately we want more defensive asset class so we like high grade over highyield. Ultimately it comes back to who are the main holders of the bonds and what has happened over the past few years is they are more and more health by asian buyers and insurance companies. We think the base will be stickier than the holdovers. Call ono you have a treasuries over corporates . That yield spread is at a sevenyear low stop i think it comes down to there is a place for both. If you get centralbank normalizations there are risks to government bonds and to credit. Investors should invest in better quality Corporate Bonds it may widen over a. Of over a period of market volatility. Yousef just to get back to the Central Bank Normalization i know you have strong views on that. We had some commentary from the head of new york lets take a look. We continue to monitor Growth Trends with further strengthening in the labor market, which we think will push inflation back toward our objective of 2 . Yousef if you look at the actual data, it is getting harder and harder to subscribe to a few were that 2 target will be at. What is your take and does it affect your outlook as to when and how the fed will proceed in terms of normalization . I hear comments like that and say this is a fed that wants to hike rates and normalize. More and more Central Banks around the world are starting to focus on the risks of inflated asset prices and in that environment i think the path to normalization is probably lower than the market is currently factoring in. Yousef whats going on in terms of the lack of it in the u. S. And the firmness of inflation in the eurozone is seeping into the buns treasury which continues to converge which is bad news for the dollar. That spread see going and what are the broader implications for market . Its a good question. Fed has probably been more explicit in terms of plans for tightening. The ecb is still a bit of an unknown. Ultimately we do see some ecb normalization and i guess the timing is the milliondollar question. At the moment we are probably around fair value but i do think the trajectory for bund yields and treasury yields is upwards from here. David if there is anything that everyone can agree on does this force the large money out of japan or do we see spreads widen . There is anyhink outside in the boj following normalization. But we do see more portfolio rotation from japanese investors offshore investment. We dont necessarily think it is enough to make up for Balance Sheet tapering elsewhere in the world. David three more meetings with the fed coming up. Is either going to be december or early next year. I think this is a fed that does want to normalize and it is lower than most People Factor in. David they have wanted it since may, 2013 when they first said taper. Thank you, good to see you, fixed income analyst. Coming up, trading blows. The warning of action as President Trump damages economic ties. Bl this is bloomberg. Yousef this is bloomberg, im yousef gamal eldin. David and im david ingles. President trump has taken the first step toward investigating china over intellectual property violations. Storyget more on this with our chief asia economics correspondent. Let us start with the basics what is the key complaint . These complaints are quite and with companies and governments around the world they feel they arent giving a level playing yield in china that you have to share your technology and knowhow with your partners and the feeling is it leads to problems down the line with piracy, ip theft, the like. Sour taste in the mouth and it has been a longheld complaint but when you listen to chambers of commerce around the world they complain that dealing with china they get what they go global. Yousef there is a view that this doesnt go far enough, that when ithalfhearted move comes to the ongoing tensions between china and the u. S. What are the chances of an actual investigation here . Well, you have to assume the evidence is quite visible and companies have been saying this for a long time. There was already a study saying that the u. S. Economy is losing as much as 225 billion a year to counterfeiting and piracy and the rest. Lost 600ny says they billion. One would assume that the evidence is there which raises the question of whether or not the political judgment is there to pull the trigger on this kind of investigation. Found it mightre trigger a retaliatory response from china which complicates things with north korea and general u. S. Trade relations. We arent there yet, but tensions remain. Ousef what are the precedents . The precedent is the legislation from 1974, we had a significant trade tensions in japan and the u. S. , we had significant tensions with japan as well when tariffs were exchanged and ultimately a trade resolution was reached. Frontis a view on the ip that there are grounds for the u. S. To push hard as there is a legitimate case to be made. But if that doesnt happen, china will retaliate and they have already been warning that they can retaliate, with not just american firms but both economy is getting hurt. David it really brings to mind thank you for that. Up, we are talking earnings. Standing tall. We will see whats next. I it is 7 30 in hong kong, have the latest first word headlines. President trump has finally denounced white supremacist for their role in the violence in charlottesville over the weekend as his administration tries to handle the fallout from his earlier more tepid, and. The president called raises an evil and those who call for violence are criminals and thugs. A 30yearold was killed when a man drove his car into a group of counterprotesters. Racism is evil and those who cause violence in game are criminals and dogs, including the kkk, neonazis, white supremacists, and other hate groups that are repugnant to everything we hold dear as americans. Debra new york fed president bill doubly says its reasonable to expect a timeline for tripping the Balance Sheet and the fomc meets next month. He also supports another rate hike if the u. S. Economy continues to grow. The comments signal optimism despite sluggish inflation that employment is growing and the economy is chugging along reasonably well. Statement and expected inflation is raising questions about the rate hike in india. Dpi rose 2. 4 from a year earlier, faster than the estimate from a Bloomberg Survey , but it is in line. Wholesale prices also rose, indicating building pressure. Issuewait plans to vendors for a solar power plant in the First Quarter of next year. A deadline has been set for companies to express interest. Part of a plan for renewables by 2030. Kuwait consumes 14 gigawatts of electricity per day, especially in the summer. Global news, 24 hours a day, powered by over 2700 journalists and analysts in more than 120 countries. Im debra mao, this is bloomberg. Simon thank you. Lets get the latest on the markets. With sophie to get a look at the markets, not a strong case to be made to get into markets at the moment. We are not out of the woods just yet. We are still seeing backandforth between pyongyang and d. C. But we are both falling over half a percent with asian stocks gaining for a second straight day, japanese stocks joining and the nikkei 225 adding to it. , if it consolidates, could be positive for japanese equities. In wellington, shares climbing 6 10 of 1 , the highest close since 2001. The kiwi dollar and aussie dollar are leaving g10 currencies higher. The aussies are still resilient despite the shift of focus to the household Balance Sheet in australia and concerns around the aussie dollar strength. And looking at the commodities space with the drop in gold, base metals are under pressure, steel falling, the lowest level in about two weeks in china. We are seeing the drop in aluminum, down. 6 . And looking at whats going on in oil, prices in oil are holding gains. Crude training brent crude gaining and we are seeing that play out when it comes to shares in the region, energy the only segment overnight. Yousef thanks. Lets stay with oil. Andy hall has closed his flagship hedge fund, the man who is better known as god, also the man who pocketed 100 million. Isn thing he is planning whats going on in terms of deteriorating outlook. I want to show you something in terms of another metric it is not whats happening with oil and, its whats happening lets jump into the bloomberg. It is how it is hovering back and forth with a contract more expensive and the key question is with demand at its peak whether this tightness can be maintained which is what a lot of traders will be looking for. David you know theres a saying do your best and god will do the rest. Now that god is giving up on us, lets point to the broader picture. There was a story yesterday, hedge funds giving up on oil because they didnt know which way it was going to go. There is this broader conundrum, because we are stuck in a range and the Hedge Fund Guys are very good at figuring out what to do. They are the last people you turn to that now i guess it is a new world. Yousef a new world for andy hall, thats for sure. Ofai, on the completely side the other side of the trade, they beat the most ambitious estimates. This is a huge story for this part of the world, it is the most valuable company on the Stock Exchange and for many a proxy of broader sentiment. We have more on the earnings and talk of another ipo what should we expect to hear from analysts and traders ahead of the open . As he said, this is a very important stock. This is the name everyone watched to try to get whats going on within the market which uae. Important for the cbn what we hear is that this is good in terms of margins. The bottom line was quite positive, surprising to most of those watching this stock, but at the same time revenues were lower than expected. The shifting focus to margins right now is quite important, especially because people want to know what this ipo will be ipo in the biggest past few years. There is a lot of expectation of what this might actually bring in terms of dividends to toreholders, it is expected be one of the main reasons for people to watch the name. Yousef always good to get the key factoids. Lets get more context on whats happening in the broader properties sector. Companies and a few others reporting, the director joins us live from cairo. I know you have covered this company what was your take on the numbers . Happy we are quite however its a bit of a situation because numbers reported a loss, quite a substantial loss yeartoyear. Also there are great numbers with corporate profit so you have contractors reporting new tobers and real estate peers match the good numbers. Situation,tradictory but we are taking note of the fact that its actually down, the same case over the region it turns out later in the cash flows. Yousef what about the weaker u. S. Dollar . There have been whispers that it is helping support sentiment, bringing in more tourists, and helping properties. We dont expect any sentiment in the u. S. Dollar. You have to wait for the other currencies to appreciate beyond ended dubai has already seen good numbers in terms of tourism which is happens ind countries like egypt and turkey. Yousef we have some reporting from egypt, lets pick up on that. And how you looking for can Foreign Investors best play those ideas . Will we take a longterm stance on the stock market, you cant look at earnings from a quarterly perspective. The numbers have been quite ordinary until now we had some Big Developers who had good some numberswe had that were below expectations. It is impacted by seasonality although we see at phasing out in quarters ahead. Egypt is a more longterm perspective. Take a bet on consumer stocks and banks. We have the central bankers of egypts making a decision later on in the week. In,ation numbers came accelerated to the highest number in decades, arguably a disappointment for what the country is trying to do. What is the Monetary PolicyCommittee Going to do . Will we have a Monetary Policy meeting scheduled for this thursday so we expect that it will be kept on hold. You were right, inflation has doe up but it is mostly to with devalued local currency and austerity measures. It could go towards cutting rates because the local currency is below the central bank Monetary Policy rates, which is not something that you see usually. With thetly to do state of the market for the longterm. It could cut rates that we expect them to stick to the book. Yousef as you look at the wider region, what is your topic, briefly . We like a few stocks in the although we have a neutral view on real estate and contractors. We like air arabia, although they have sometimes been impacted by losses. But i think air arabia will do that from a longterm perspective, it is a lowcost like stocks that are not i think it will be from a longterm perspective. Simon thank you for joining us. Lets stay in the region because yourd an overwhelming vote rainy and lawmakers to raise spending on the missile program. It is being seen as a response to new sanctions imposed by donald trump. By is this latest move by to run is it meant to provoke him . I think you have to put things into perspective. Went to a wing of the revolutionary guard that is active in the region, in syria and iraq. This was one of the countries that helped them declare defeat on isis. U. S. , this may seem a provocation but for the there is a security concern as well because iran suffered its very first isis claimed attack back in june. Program, there are points of contention within the u. S. But from irans perspective it seems the u. S. Swinging strongly behind the regional rival of saudi arabia and calling for irans isolation. For iran it comes from a point of trying to assert itself, making sure that it is showing him kind of strong disgust. A quote sayingas that anybody who tries to harm with the accord harms themselves and their country. A very clear response. The efforts to undermine the agreement, what kind of impact is that having in iran . It is putting president rouhani in a tight spot because he was the person who advocated for the nuclear deal it happened under trumps creatingor but it is more of a climate of trust between iran and the western countries and the u. S. This was all based on rouhanis claim that active diplomacy can be beneficial to iran. But what we are seeing is that the u. S. Is trying to put additional pressure and perhaps try to stop companies from engaging in business with iran. Who dids the hardliners not really agree with this policy, the president is finding himself in a sensitive spot. Yousef always good to have you. Breaking lines hitting the bloomberg quickly, firsthalf million, this is a company that is saying it is not lawful and is in a current legal but ironically one of the bestperforming stocks on the abu dhabi index with the average production 6 higher. Africa. Come, south they are awaiting that key ruling on the mandate of the central bank and we are live in johannesburg with more. This is bloomberg. Yousef a south African High Court will make a key ruling on tuesday which could change the central bank mandate from targeting inflation to focusing on the wellbeing of citizens. Lets get more with tony parker and. Counts byis definition what are we expecting to hear from this ruling today . Good morning. I think what we should expect is a close look at the central bank that itairing in mind is one of the only Central Banks globally that is majority owned by shareholders and is considered one of the strongest independent institutions within the country. I expect a close look at the value of keeping it independent. David david here in hong kong. I would imagine the reaction to the idea of changing is that the right word . Tweaking the mandate of the central bank could be a positive. Certainly Market Reaction to the proposal wasnt really positive and we saw the report a few weeks later to look at privatizing the bank which is now being backpedaled on. With theturbulent week vote of noconfidence so this is changing something considered to be the bastion of the economy has not been received well. This is an economy that is in recession and it is very important to see that the central bank will remain independent. Yousef when people hear central bank independence, they shrug. Its a very sensitive subject. In what sense is this politically motivated . We are looking at the leadership contest in december. This could be seen as a move by jacob zuma to push forward his move of radical Economic Transformation in the runup. It has been a turbulent time, and you have seen that there has this could be seen as a move i him to push forward. His supporters say that the central bank has seemed to be on ant to loan to back and itkowned businesses could be seen as quite a positive move by him although im not sure the markets would agree. Yousef excellent reporting. Live out of johannesburg. Lets show you another function on the bloomberg we like to get your attention to is getting more popular with clients. The key thing is that you will not only be able to watch us live but you will also see the previous interviews and dive into any of the functions we talk about. And then on the bottom left you can also reach out to us and send us western. This is bloomberg. David we are counting down to the open of markets, just over 60 minutes away. What are you looking at . Yousef we had a cascade of earnings already and telecom egypt, one of the bellwethers, the countrys fourth newest shows that meant income might decline with a slight rise at revenues compared to a year ago. Also, this Real Estate Developers offering all kinds of Residential Properties and they are expected to post with the estimate for 2. 30 6 billion egyptian pounds. 100 recommendation on the stock. Has been a controversial firm in terms of whats been happening firsthalf profits of 23 million versus the previous period. Revenue came in with strength at 22 million, production higher as well. In terms of some of the other corporates to watch, that includes the israeli bank, the largest bank in israel that caters to individual and corporate clients. 14. 7 billionenue, shekels. I am looking at how analysts are feeling about the stock. A kind of footprint that gives us a better impression about what is happening with the financials. Thats the story here. David just over an hour away, 9 00 a. M. In dubai, 1 00 p. M. Here in hong kong, close to 6 00 a. M. In london we have anna edwards is standing by in london with a preview of whats coming up. Early, approaching 6 00 in london. In terms of the agenda, picking up on the geopolitical themes you have been discussing, very relevant to europe. But, activist investment, brexit is also very important today. We have a paper being presented by the u. K. Government. Ahead of that, we heard from the department for exiting the European Union about what relationship they want to see, a little bit more detail. Gradually we get closer to what they want. For an association unspecified amount of time. We will discuss that later, and have the former u. K. Chancellor on programming later on to talk about it. We also have german gdp figures breaking at 7 00 u. K. Time, this as Angela Merkel goes to secure a fourth term as german chancellor. Yousef thanks. German gdp figures wrapping up. U. S. Equity futures called higher. Thats it for this edition. Got you outnumbered. The dinosaurs extinction. Dont listen to them. Not appropriate. Now im mashing these potatoes with my stick of butter. Why dont you sit over here. Find your awesome with the Xfinity Stream app. Included with xfinity tv. More to stream to every screen. Game on. A north korean strike on guam could escalate to or. Oto war. Escalate trumps backlash of comments following the charlottesville rallies. And stirring the pot. The investment management, surging in the