I am tracy alloway. This is Bloomberg Markets middle east. It was a very eventful day for the markets. Lets take a look at what happened in the u. S. And europe. Lots of drama, not just in europe but in not just in markets but in washington, d. C. Markets had initially rallied off the back of news that key trump advisor steve bannon wasnt leaving the white house feud nevertheless, we finish down for the day. The dow jones was the big loser. I guess if you are thinking about economic nationalism, you have to be getting about stocks and the dow jones. Take a look at the europe stoxx 600, still flooding after the terrorist attacks in barcelona. Index isee the dollar down about one third of a percent on friday. That helped knock gold futures down oh so slightly. The big news and commodities has to be the metals rally. Zinc was up. Crude up 3. 3 on friday. Bullsnews for oil finally cured we are about two hours away from the opening of the emirates markets good markets. Lets take a look at how they close last week. Look at the dubai index and abu dhabi index. Dubai closing at up and abu dhabi down about 1 10. 1 by a move in their national bank. We will talk about the qatari big picture later. Lets focus on saudi stocks. They had a pretty big day. 70 on thursday, driven by the banks. S we will get you more on that. First, lets get your first word headlines from around the world. President trump has praised protesters who demonstrated against a White Nationalist rally in boston. An estimated 15,000 people turned out to oppose conservatives who gathered for what they called a free speech rally. In a speech, the president said he wanted to applaud those speaking out against the country and hate and protests are a form of healing. The president was criticized for his response to a protest in charlottesville, virginia last week. Lawmakers raised questions about potential conflicts of interest with with carlealings icahn. Critics have asked officials to investigate his work. Has approved a Share Buyback after its ceo quit. Software makere the company voted to repurchase as many as 113 million shares to improve returns for stakeholders. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Treasury secretary Steven Mnuchin has pushed back against suggestions he resigned from Donald Trumps cabinet that questions remain about trumps ability to retain his team and focus on the economic agenda. Nick burns says trump needs to rely more on the remaining members of his team. We can be optimistic but we know the president is a wildcard. He needs to rely more on cabinet secretary who can reduce better results for him. To here ats get over water, president of Financial Insights and has a specialty of discerning the market mood as it relates to political offense. Thank you for staying up late to political events. Thank you for staying up late for us. I want to talk about the ban and move. Bannon move. Some people think it is good for trump, it might get them back on course, some people see it as yet more chaos. How are you viewing the news . Peter typically departures from the Trump White House have marked lows in the approval of the president. On that basis, this should be a positive sign. But the markets were very mixed about this on friday, as you mentioned. The Morning Headlines suggested that Steve Bannons departure was bullish, but by the end of the day, the bloom had fallen off the rose. Tracy peter, you mention the market reaction. One thing that has been moving has to be the dollar. If you look at the chart i prepared, it is the bloomberg versus trumpsx Approval Rating. You can see the dollar has been tracking the rise in his disApproval Ratings, but recently it seems to be strengthening as america grows more sour on the president. Some people say that is because the greenback is taking on its ageold role as a safe haven in times of political turmoil. In terms of the dollar, how should we be doing the latest news from the white house . Peter i think were in a very interesting juncture, because on the one hand, as you point out, both the dollar and u. S. Treasury yield have followed president trumps Approval Rating in lockstep. This is one of those points we are in for a dramatic move, the question is which direction. The major low many people are talking about in terms of marking a bottom in some confidence, in donald trump confidence, much like during the campaign, then we ise in see a dramatic r the dollar, yields, equity markets. The risk, and i think this is a question with the markets as they ended on friday, is what if this is not be low but the beginning of a more dramatic cascade . There i think the risk is potentially to the downside or the dollar, the markets and yields. This is a very difficult spot to judge which way we are going. What intel you is based on whatment, the direction i can tell you is based on sentiment, the direction will be up or down. Racy two very different paths. In terms of market narrative, almost of time last year after trump won the presidency, we sell the market left onto the narrative he would be the president who brought in infrastructure spending, fiscal stimulus, really boost economic growth. Assuming that does not happen, what sort of president ial nares do you think markets will seize on president ial narrative do you think markets will seize on . Peter one of continued chaos. This has been a mirage of opportunity, and what you have is a very divided america socially, politically and potentially economically, between the haves and havenots. Rally, and relief that is what i see it as, particularly among republican voters, that is really at risk. Either we see some solidity come back into confidence and greater partisanship or, reader bipartisanship, or there is a risk this becomes risk this starts to unravel in every one of those dimensions. Tracy Interesting Times indeed. We are living in them. Take you for staying up late with us. , president of Financial Insights. Later, we turn to india where there is trouble at the top of a big company. Imfosys shares are plunging. Who is top dog among the worlds Central Banks . Of the summithead at jackson hole. This is bloomberg. Looking ahead to next week, we have top central bankers gathering at the Federal Reserve annual summit in jackson hole, wyoming. Our bloomberg columnist and Economic Advisor weighing in on who will matter the most. Yellen . Aghi or janet from a market perspective, i will be paying more pidgeon chill paying more attention to mario draghi. The fed is looking to borrow on the concept of a beautiful normalization. I dont think they are going to want to shake that process. I dont expect janet yellen as chair of the fed to be saying anything. I think she will focus on Financial Stability and not monetary policy. Very different situation for mario draghi at the ecb. They are about to embark on a tapering process. They will have to explain how they will do that. The economy there is more fragile than the u. S. From a structural perspective. I think that mario draghi comments will have much more information content at this stage then janet yellen. Take those comments we anticipate and put them together with the accounts we got this week. How much did they take away from what draghi might be saying . Theyre saying theyre nothing evidence of inflation and the strength of the euro. Does that takes some of the thunder away from him . No, i think if anything, it shows the dye lemma there a dilemma they are in. Strong currency is like a hot potato in the global economy, no one wants it. If you end up with it, it is a problem. It undermines your competitiveness, it is a headwind to growth and it depresses inflation and a time when you were not getting the inflation you want. At the same time, mario draghi has to respond to other things he is seen in the economy and politically. If anything, what you saw from the minutes yesterday, very much increased certainly my interest in what he will be seeing. Lets talk about what they will ultimately do and what your best cases for them at the moment. At some point in the next couple of months, and what we understand from recent reporting is they want to hold off on the decision. The current pace set to end at the end of the year. What then . Less qe will be gradual. You will see Central Banks being more cautious and airing and erring on it being a more dovish. As central bankers are trying to soft land this plane they are in , their instrument panels are giving them very strange readings. They are trying to figure out which instrument panels to trust. If you are in that environment, you are ultra cautious. Thats what you will see from Central Banks. Around the globe. On to get your thoughts on the Federal Reserve. We have this spread. The ecb drew a line in the set line in the sand on the fx market. Yellen is a stronger dollar short. Needs a stronger dollar story. Was said to be the market, and they did. This is a very confused Federal Reserve according to the minutes. I think they will hold up to the end of the year. Maybe longer. Should we be paying more attention to the recent comments from mr. Dudley . I think the fed will not assert itself on markets for a while. I think theyre comfortable with the notion there will be a high in a hike in december, not september. They will wait and get information and react. On the qb side, they will try to side, they the qe will try to make the Balance Sheet as boring as they can. They dont want to make news, they just want to monitor developments and holdout for the possibility of a december hike. Was mohammed boringn talking about a spread. Anding us is the director fund manager at the national investor. Lets start with some of the currency discussion we just heard. We have seen some recent softness in the dollar. You would think that would be a good thing for middle eastern economies, because not only does it ease pressure on currency pegs, but it boosts the price of oil. The dollarseen how has related to the economy, especially if you look at the east, where tourism has slowed down, especially from the emergingmarket countries, dollar has reduced the number of tourists coming from those countries. Weaker dollar, a it will dudley impact price it will definitely impact price. And plus, on a tour is in fact, because the economy, especially in the gc, are focusing on revenues. It is one of the pillars for those economies. Want to ask about that but first i want to dig into the oil price. This chart is 1355. You can see there is tightness in the oil market structure, in particular, octobernovember brent spread. Even if we havent seen the price surging, we have had a fairly dramatic tightening in the forward structure. I think that is the highest it has been in three years at least. You mentioned some of the middle eastern economies seeking to diversify revenues. We did see some budget figures out of saudi arabia last week showing that the Second Quarter budget gap their road to about 46. 5 billion reals. Most of that seem to be elated to a recovery in oil prices. Does this mean saudi is essentially still in oil story . Ali the government has been pushing for fiscal reforms. Fiscal reforms take a lot of time to take effect in the economy. , if you look at the number, the budget numbers, the nonoil revenues were disappointing. 17 , which for us is a bit expected, because the reforms are still the first step, those reforms. I believe we have to give saudi a bit of time, until next year at least to show those impacts. [indiscernible] the second half. I believe we need to some time , fore the whole picture saudi to diversify with nonoil. Tracy patience is the word of the day. Hold that thought, you are staying with us. Coming up, we will be looking for friends in faraway places. Qatars banks are urged to turn to overseas investors. This is bloomberg. Qatar is said to be advising its banks to Cap International investors instead of relying mainly on government running. Thats as the ongoing saudi led boycott puts pressure on liquidity and the central bank is meeting regularly with letters to discuss affording Credit Rating downgrades. Averting Credit Rating downgrades. I have to ask, qatar is telling its banks to tap the International Investors and mainly relying on government financing. Is this all about signaling that qatar still has friends outside of the country, or is it genuinely concerned about the pressure it is putting on its fx reserves. Reports tell us most of the people, they are depleted about depleting foreign reserves. Everything and qatar is becoming more expensive. Forrouting, the shipments the world cup, that is adding extra cost and time. ,s they run through the reserve the currency reserves, theyre worried about that depletion taking hold and becoming more of a problem further in the year. Really, it is mostly about ensuring they have access to funding from outside while the government continues to hold on to its cash. Tracy lets talk about the current liquidity situation. You can see behind us, i put up a chart of the Qatari Central Bank threemonth rate, the interbank lending rate for qatar at the moment. Since june, it has searched, but it came back a little bit. What are you hearing in terms of . The overall funding picture in terms of the overall funding picture . Qatars banking premuch going to asia, mostly. Theyre looking at how they can raise the funding. Loans private placement, come anyway they can get funding from outside the region. Gulf. Er, they lost the most of the region was a big Funding Source and suddenly they cannot go to saudi arabia, they cannot come to the uae for investment to sell bonds and so on. They have to work must harder to get much harder to get investors in the u. S. , asia and so on. Tracy im wondering what is your stance on qatari banks at this level. Are you a buyer . Ali if you look at the structure of the banking cap are, weve seen a lot of pressure on deposits, especially from the private and foreign deposits. Haveugh the cost of funds not shot up or increase the way we work the way we were inspecting, overall banks are looking for funds from the government. That have lefts the country from the gulf and Foreign Investors actually, they were compensated by government funds. At this point in time, i believe thes wait and see, because situation, in the shortterm, qatar was able to gain in the situation but i think on the longer term, the challenges are big. Do you think they would be able to get the amount of funding that one from asia, from the u. S. , from australia . Do you think they would have effective yields from that . Maybe some people are unfamiliar with the International Investors in this area. To selling government bonds International Investors is challenging across the board. Especially if you go and sell bonds, and everyone knows about the situation in the gulf. I think the challenges will be, cost of funding, which the government will be facing. Will be facing when issuing those bonds. Tracy we will have to leave it there. Have been talking about the latest on qatari banks. Thank you very much. We want to bring your attention to our interactive tv function. You can find it at tv. You can watch us live and see previous interviews and dive into any of the securities or bloomberg functions we have been talking about. You can also be part of the conversation by sending us instant messages during our shows. If you have strong opinions on qatari banks, if you are an investor willing to lend a hand and get some qatari Bank Financing out there, let us know. That function is for bloombergtechtv is for bloomberg subscribers only. You can check it out at tv. This is bloomberg. 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. It is a 30 a. M. In dubai, 90 minutes away from the market open in the emirates. Lets take a look at the first word headlines. Could bege chairman the front runner to become the. Ext ceo of uber a vote of directors in support of the appointment is likely to happen within two weeks. It is said to other mail affected its male executives are being considered but other backing thiss are one. The government in barcelona said there is no imminent threat after five terrorist suspects were killed by proof killed by police and four were arrested. They are still hunting the 14 People Killed after driving into a crowd. Terrorists were planning a bigger attack but failed. The israeli Prime Minister will discuss the middle east with ondimir putin when they meet wednesday. Tel aviv has been concerned about irans role in the inct in syria with syria. The syrian president has tightened his grip on power. Taken major areas from syrian opposition. Around 20 people were killed when a train derailed in the northern indian in a northern indian state. Officials expect the death toll to rise. At least eight carriages derailed north of the capital. The trend was traveling toward a hindu holy city. In november, hundred 50 people were killed in a train accident. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Tracy now we will head over to a bloomberg exclusive. The ceo of folks the Property Partners says commercial real estate prices, which are currently hovering at record prices in the u. S. , arent sustainable even as chinese relators tighten overseas investment. We sat down in new york. Is the topsee Retail Investment opportunity in america, it is both acquiring highquality retail that we think is mispriced, that also acquiring some of the other retail that may be fit for other purposes. In some cases, it may be in a Smaller Center where there is too much retail space. It is too large for retail footprint. Weve been spending time on specific opportunities where we are shrugging the overall retail footprint but putting in higher productivity tenets. Tennants. Were putting alternate uses on the site, sometimes putting in multifamily apartments or geym yms or theaters. Eye for these ideas before. I have heard these ideas before. They sound like good ideas. Is this practical . Can you take a mall, the thing i grew up with a month and turn it into Something Else that is actually a community . Is it real . We are doing it now, it is happening. There are a number of examples. In california, we own a Shopping Center in suburban oakland. Very high immigration into that submarket, chronic housing shortage. We have a Retail Center that is too large for the site, and includes a couple of Department Stores. Were in the process of buying back those boxes from the permit fromnd converting the Department Stores and putting apartments on the mall. Not only will it make the site more attractive, it turns it into a community. Now it really is a live, work, play. Only where shoppers are looking to go, but when people think of residential and where they would like to live, the want to live in interesting places, somewhere they can go to get a coffee or get shopping done that is convenient without having a long commute. Tracy that was brookfield Property Partners ceo. Lets stick with the real estate theme. Joining us is managing partner and ceo at Investor Group overseas. Thank you for joining us today. Let me start with the top of that was just brought up in the brookfield interview. In the u. S. , theres kelly a lot of concern about there is clearly a lot of concern about what the capital outflows for china might mean for u. S. Property. Also concern europe and australia. The you have similar concerns in the gulf . And a believe so. Youve seen a lot of influx of i do not believe so. We have seen a lot of influx. Especially dubai, it is pain it has become a safe haven for a lot of investment. Were seeing a lot of investment coming from europe and the middle east. The market here in this part of the world is very stable going for it. Tracy i want to dig into the dubai Property Market in a moment. First, i am curious what other challenges you think could be affecting the gulf property sector. Anas pricing is a big challenge. We also have what we call the sustainable communities. Some major parts of the middle east, some cities, are becoming big, and moving from one place to another is a hassle. That is why the trend is to have a sustainable community, it doesnt have to be a gated community, but you have the residential, sport and satellite amenities that come along with the residential component. I truly believe the trend is pricing, what we also call payment terms. A lot of people are calling for more aggressive payment terms. The shouldnt happen at cost of the quality. I think the product will be great. Dont be excited about having a good payment term and you will get a shabby product of the and. Tracy what is driving the discounting behavior . More competition . Maybe foreigners leaving the area and they feel they have more bargaining power. What is it . See a lot of foreigners leaving. On the contrary. A lot of people are coming into the area. Dubai is becoming a safe haven for a lot of people, not only investment. The employment market is up. Yes, i would say the competition. I would not fit the market has been saturated so far, we still have ample space in the available market here in dubai. , youricing, competition know, the cost of tilting cost of building is getting a little lower. Tracy ample space in dubai. Is that does that mean you see the prospect of expansion in dubai in terms of your own project . Anas yes, hopefully we will be launching a new project. Im supposed to launch this on your channel today and tomorrow. There is a big tower that will be made of a big tower. It will be in the cluster k area. Over 600ated cost is million. We have an estimation of investing in the dubai market between now and the end of 2018. We will be investing up to 2 2 million. Him tracy that is a lot. How are you raising that sort of money . We are part of a bigger group. We usually have will recall we sustained financial capability. We do not go into a project cannot handle. We just handed over to big projects. Like to invest in new projects. We dont even live in the market of dubai, that is why we have a major part of the investment remain investment to in the market. Tracy walk us through where and how you plan to the ploy that investment. 20 iswe believe approaching, and that makes the market in the arms of the world we believe 2020 is approaching and that puts the market in the eyes of the world. We have chosen certain locations. You have a location here in dubai. We have chosen a family oriented area with a lot of parks, and amenities, and we have a business area, where a lot of entrepreneurs are living there and would like to be a part of what we call the brand of dubai. Tracy hold that thought. I want to go back to the field interview on the subject of whether or not prices can continue to rise in the u. S. Lets take another listen. Were not seeing a slowdown. In terms of capital coming out of the region, and certainly not the impact on real estate prices. If you look at where transactions have been happening are the of 2017, prices still continuing to be strong in places like london and new york, and sometimes it is from asia, sometimes other regions. How is it possible you can take that much capital, that would flow out of the equation, and capital that was willing to purchase assets at high valuations, and not have a substantial impact on the market . That there are a lot of headlines around how much capitals coming out of asia. I think the reality is that it is broadbased. We are selling to european Institutional Investors, middle eastern Institutional Investors, chinese or asian investors were often part of the equation not the only capital. We do continue to see good fund flows out of those regions. How much longer do think that continues . There is not an infinite supply of sovereign or Institutional Capital for real estate. There has clearly been a shift, they are more interested in that Asset Classes than the used to be. Again, to use, the baseball analogy, we are at the beginning of a fundamental shift. This applies to Institutional Investors broadly, maybe sovereign, but also pension whos, insurance companies, have a lot of their Overall Investment in fixed income that earns low yield. We think for the foreseeable earn a will continue to low yield. Increasingly, they are moved that they are moving some of that into other allocations like real estate. Theyre just getting started. There is a lot more to go. Theres a lot of time left. Would you measure it in years or decades . Decades. This is a decade shift, very similar to the shift from fixed income to equities in the 1960s and 1970s. If that is true, does a lot of money happen going to real estate . What impact will have a valuation . People look at values right now and think they are pretty rich. I think everything is relative. Valuations are rich. The stock market is also very expensive today and fixedincome provides a low yield. The amount ofhave capital that we have in the global system today, those prices are well supported. There is good reason for. That haveprices gotten out of kilter with alternate investment. Tracy that was brian kingston, the ceo of brookfield. Lets get back to the ceo of invest group overseas. You just heard from the brookfield ceo saying there is toallure when it comes real estate investments. When it comes to properties in the gulf, walk us through what you are seeing in terms of investor demand right now. Anas i have always looked at real estate is a stable investment. We believe in investing in a dirt, to use the american term. Dirt never disappears. We believe the market here is stable, as i said, and dubai has become a safe haven with what around theppening region. There are some hot spots and the middle east, but dubai is a safe haven. Thats why the investment in real estate and the introduction and regulations has met the market more stable and secure for investment. You as an investment and i as a developer, both rights are preserved. When,w who does what and and got for bid there is a problem, you have a Government Agency to go to. , ourmade another security insurance policy for investors and developers. Tracy if i may, in terms of stability, have you seen any impact or knock on effect in terms of real estate appetite here in the gulf from the qatari situation . We do have qataris who needed to not thee country country, their place of residence, and had to leave. Has that affected sentiment . Anas i have not seen that. We were told the situation would be rectified soon, but on the shortterm impact, no we have not seen any real impact. We have been hearing that there are some serious economic influence, negative influence of what is going on in qatar. Tracy lets go back to your project. You are billing these as affordable luxury. This is a buzzword ive been hearing a lot lately. It seems like people are trying to target midmarket segment. What is the attraction of that segment, and do you see a possibility of maybe oversupply in that space . We can always build another looking him palace or buckingham palace. But who has that kind of time . Luxury is relative. Beautiful amenities, people finishing. That speaks to your heart and mind. Also to your pocket. We are not going to oversize or overpriced. The size of the apartment as was the finishing product will be speaking to the price we are putting out in the market. Luxury does not have to be spending a lot of money. It mean to put things together to look in a beautiful manner, a beautiful way, with quality products. Ceo, managing partner and we will have to leave it there. Thank you for joining us. I for 1 am looking forward to having my affordable palace. First, we will talk about the darkest hour. We look for the light in the Tech Industry ahead of the total solar a clips this week. This is bloomberg. On monday, people across the United States will be treated to a rare event, a total Solar Eclipse will cast millions into darkness temporarily. We took a look at how the Tech Industry is faring in the shadow of the moon. Thousands of people will be leading up to watch the first total Solar Eclipse in almost a century, visible only in america. Tech companies are offering ways to watch the spectacle like never before. Where i am, san francisco, it isnt the ideal place to see the total effect. To truly see that, you need to be on the path of totality, a 70 3000wide, 3000 wide long swath across the country. Pilots are chasing the darkness in retrofitted jet planes. They will capture the clearest images of the corona, as well as the first ever thermal images of mercury. For those of us not lucky enough to go supersonic, there are other ways to watch. Angle is partnering with Education Company to hand out 14,000 pairs of glasses to make it safe for children and teachers to watch. Because as nasa will remind you, it is dangerous to try to look at the eclipse through homemade lenses. Have any, you can get a taste through google pr. Of thes another side offense, amazon is waging a war on sellers trying to pass off that could damage the eyes of unsuspecting buyers. The company has issued an email warning. Another business feeling the bump, airbnb. 50,000 incoming gas along the path of totality. Incoming guests along the path of totality. Ertz is bringing in more cars. Hoping consumers reclaim precooler homes using nest. It will also test the nations power grid. The eclipse could knocked down 9000 megawatts of solar power, another energy to power 7 million enough energy to power 7 million homes. Power plants will have to pick up the slack during this onceinalifetime event. Tracy youre watching Bloomberg Markets middle east. Plenty more to come after the short break. Tracy welcome back. A sharehas approved buyback after its ceo quit amid tensions. Ed shares to plummet as much as 13 on friday, with investors losing 3. 5 billion. Our india tech reporter is here. What has gone wrong . Months, thepast few cofounder [indiscernible] publicly, question seven raised over the ceo. Have been raised over the ceo. That aeen allegations 2015 acquisition of an automation provider has been less than clean. All of this came to a head last week when he quit. He quit in a rush. Tracy in a rush indeed. It is a fascinating story. Im sure we will discuss it again with you. For now, we are looking forward to the story of new trading week here in the gulf. Running us to talk us through it is our equities reporter. Dowell. Art with the two onhad a pretty good they thursday. Most of that was a driven by action and some of the major banks. Walk us through what is happening. What other drivers . That exactly the point we should Pay Attention to this week. Banks inudi saudi are basically the best stocks you can invest in right now. It has been a while weve been talking about the volumes were low in saudi, it is summer in the middle east, a lot of people are gone. We had ramadan at the beginning of summer. We basically are seeing people back at their desk. America, Merrill Lynch and Deutsche Bank suggesting this as a buy recommendation. The biggest bank with the ank, and it could pull the entire index up. Tracy very quickly, if you had one stock to keep an eye on this week, what would it be . L rushdie. Al rashi. Tracy im sure we will discussing all the rest of the saudi stocks later what you this week. There is a lot to watch. Openber, as the markets today, you have them reacting to some of the drama we saw in the u. S. On friday. Interesting to see how that plays out. That is it for this edition of Bloomberg Markets middle east , we will be live again from the region at the same time tomorrow. Jonathan i am Jonathan Ferro with 30 minutes dedicated to fixed income. This is bloomberg real yield. Coming up, amazon joins the 1 trillion worth of bonds this year alone. White house volatility, gary cohn could quit. Counting down to jackson hole janet yellen and ecb president , mario draghi meet in wyoming. We begin with a big issue, a day