And abroad. One man sees warning signs. This is Bloomberg Markets middle east. I am in dubai. Shery im in hong kong. A off seeing a bit of optimist town in asia. We have asia oil continuing to gain. We have positive data out of japan. The gmm go function on the bloomberg. Many markets are in the green. Look at the hang seng index up. 4 . It is pausing three days of declines. Japanese nikkei is also up. Topics is also up. We are also seeing the kiwi dollar gain half a percent. We have inflation data reaching the Central Banks targets for the first time in more than five years. Wti up. 6 . Sovereign debt markets are in the red. Note, thed fiveyear yield is up 3. 5 basis points. This part of the world we are under two hours away from the opening of the emirates market. Here is the pulse of the equity action. We pulled this, up for you on one of our favorite functions. Emf function. Is really popular and breaks it down nicely. Real estate is up. 7 . You have some Consumer Staples doing well as well. On the weak side of this equation, you have utilities under pressure. Energy stocks and industrials as well. The overall picture you saw kuwait being the weakest link, down 1. 4 . Qatar underperforming as well. Radar, here are some other assets where watching. Youre looking at crude rating at 53. It is up. 6 . Bondsries at tcc tightening a little bit. Turkish 10year yield still strong. No worries there about any political uncertainty. On chains. 27 will be in the zar. Shery lets get it checked of the first word headlines. The u. K. Election campaign is underway. The house of commons boated overwhelmingly to support theresa mays call for a snap vote in june. 13 inkers voted 522 guest meaninging conservatives have a 23 point lead in the pub polls. It is seen as a one issue campaign, u. K. s departure from the eu. Rex tillerson said the 2015 iran deal delays their nuclear ambitions. I can checked iran has the potential to travel the same path as north korea. He says the nuclear deal ignored in rants other threats, hostility to israel, and hamas. Ministration has no intention of passing the buck to a future administration on iraq and evidence is clear, irans rocket actions threaten the United States, the region, and the world. Defense secretary jim manus says the u. S. Since mattis says the u. S. Wants to see a strong saudi arabia. He says the Trump Administration is weighing increased support for the saudi led coalition. He criticized iran for what he calls its destabilizing influence. Everywhere you look, if there is trouble in the region, you find iran. Right now what we are seeing is the nations in the region and others elsewhere trying to checkmate iran and the amount of disruption and instability they can cause. The fed number two is to paint a picture of a global economy. In a speech wednesday Stanley Fischer will say the removal of accommodations will be driven by growth and other nations will likely benefit. The fed signals to more hikes this year and that it intends to start tricking its 4. 5 trillion Balance Sheet. Global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Shery thank you. Texas crude is below 51 a barrel after slumping the most in six weeks. It is still gaining ground,. 4 , but still below that mark. Expanding u. S. Crude production and countering stockpiles. Opec secretary enrile spoke with a bloomberg reporter in abu dhabi. He said opec is moving closer to rebalancing the global glut. Much more encouraging. It will grow every month gradually. Overcomeof countries the challenges they might have faced. Yousef tracy also talk to the uae oil ministers. Rebalancing is a process. It takes one time to brother stocks. It is going to take a long time for the stocks to deliver. The next critical day is may 25. That is when they will decide whether or not they will extend the production cuts that they started in january. Shery lets continue that conversation on oil and bring in the head of an equities agency. Overalllk about this negative sentiment in the energy market. It seems to me on all around lack of confidence. Will this slight uptick in prices help counter that . Longterms a bigger story which is about supply, not demand. We got so used over the last 2030 years, that the idea we could watch the oil price and get a gauge on demand. The u. S. Shale revolution it has been about supply. If you ask opec, are you in control of the oil price, they will say yes. They believe they can regulate supply. The real issue is asking the shale producers in the u. S. They are the producer now. That is the big longterm issue for the oil markets and Oil Producers in particular. That is why we are at this. Shery what is the level we are seeing production being cranked up or down . Is 50 a barrel the new congressional . It depends on how the market is trading. There is genuine hedging by consumers and producers of oil. It becomes a very technical market. It is a proper commodities market. It is always telling us about the demand and supply. What is happening now is that, in the old days when you wanted to shut down an oilproducing platform in the gulf of mexico, it was a very big expensive longterm job. It was much slower to respond. As we see with shale, they can almost turn a switch. That is a big problem for people who are used to slow response versus Rapid Response time. Look at the data out there and the fact that u. S. Oil production is as strong as it is. Maybe opec has this all wrong. Maybe going into this next meeting the aged think bigger and think more aggressively. , not extend the agreement just extended, increase it. Is that going to be an option . With any of that is the free rider. The people that say, you be the big producer, then it will rise a little bit. We will keep pumping as much as we can. The real story you have the as. , then you have russia the second after saudi producer. Is it part of opec . Will it respond . There are also issues in the background that have been going on about the budget restraints on all of these big oilproducing countries who are big social expenditures and the oil price is a problem for them. Production,our oil have you deal with the budget . Had to deal they with, the incentive to cheat. Yousef we spoke about how the market is not convinced of 60 oil. The me point out this fabulous article. The next catalyst could be the extension of the opec agreement. When i we looking at if this agreement is not as impressive as some market observers would like it to be . We seem to have a range here 4555. The traders are working with that. If you fail to hit an agreement, to break downhard to the bottom of that range. I do not see it breaking out of the bottom of that range because nobody believes opec controls the oil price anymore. This is a longterm story. The other thing that is worth mentioning is gas. The u. S. Is exporting gas. We see after oil is starting in the guest markets as well. It is all connected. It is all energy and power it is all connected. We are seeing disruptions in those markets. We are also looking at the other side of things, consumers. Prices are falling for consumers. Yousef hold that thought. We will continue the discussion shortly. Heres a preview of what is still to come. Up. T quarter profits how business is faring in the quarter as Oil Prices Continue to wobble. Shery plus we will ask whether President Trump has the right cools best tools for the u. S. Economy. Some top Asset Managers raise red flags. This is bloomberg. I believe there is a 51 probability that the 10 year treasury could go up 2 . Why, because the believe there is greater uncertainty. Yousef that was the head of the Worlds Largest asset manager, blackrock. He is saying it is because of the uncertainty out there. He also says that the warning signs are getting darker. For both the world and the u. S. Economy. Also in that interview he mentioned a pullback in car sales, a slowdown in m a activity. All indications that uncertainty is rising. Morgan member also raised red flags over the u. S. Economy. Lets continue this economy. Lets continue this question. The yield expectations out there, look at the bloomberg, you can see the Inflation Expectations continue to fall. Im looking at the one year to fiveyear score signals. And what that might mean for treasury yields as they fall to their lowest level since january. This does not bode well for treasury yields, does it . A 51 chance. At the beginning of the year there is great consensus that there would be a reflation trade. Everyone got very excited. Then everybody created an economic scenario to pursue that, tax cuts etc. It was only two months ago people were running around telling me it would hit three. I think they can go below to come of these are mechanical. What happens is people position for it, then there is an awful lot of market mechanics. We should not lose sight of the ,act that if you are in europe the want to be holding other bond than the german bonds right now ahead of the election . There is a flight to safety or quality here. It is people buying u. S. Treasury bonds as a form of a safe haven. The darkening prospect that you just described actually slower u. S. Car sales, that is tightening Monetary Policy. It is what we would expect to happen if we have an environment where we describe on cheap money. If we raise the price of money, we would expect those things to slow down. I would not be negative about that, i would say this is what we ought to be expecting. Shery when youre trying to find opportunities in this sort of environment, i see the notes that you go to europe. I want to put this in a little picture for the viewers on the bloomberg. You can see it is not uncommon to hear that, bargains in europe , when compared to the u. S. , putting the value between u. S. And european equities. The discount for europe on a four p basis is near its biggest since 2009. How confident are you on these cheaper european stocks . , what we would be saying particularly on the bond side of it, but there are companies that will prosper whatever happened to the euro itself or whatever happens as a result of the elections. These companies can prosper in the broader Hostile Economic and thats environment, they are. Do they not want to touch anything european . There are those two. But it is very much about focusing on is this a company that is locally focused or is it globally focused . That is where we look in particular. We think there are great opportunities there, but they are very stock specific. On the flipside is in asia. Similar issues in asia. American equities and american bonds are the expensive and of their range. Ae rest of the world is at much more attractive evaluation level. Is a good start. Yousef i want to take you up on what you said about the 10 year yield. Bank of america said it is not pricing in the tax cuts presenting compelling opportunities. Then i look at a note from Capital Economics and they are underscoring that this could be the next big thing and if the tech specs do come through, youre looking at a 3 marked by the and of the year. Are you on board with that . This is tactics for bond traders, im not a bond trader. Im looking at it for what is it telling me about the broader wellbeing. I was never a big buyer into the great reflation trade. Like we are talking about before the break, there are technical advances which are driving down prices. We have a structural disinflation of the world. I do not believe in inflation, i do not believe that demand will exceed supply unless we get a real panic. However, i dont believe in a collapsing world either. When i see these big swings from a bond traders perspective, i say this is noise and i will leave this to you. It is about peoples risk premium. Fine for me, that is where i think fair value should be. That is where i see the world position from an economic point of view, not a trading point of view. Yousef you do not see the world collapsing, that is a starting point. What is another trade . What is another way to navigate these waters with higher geopolitical risks . We are sitting in asia and we do have a bias towards asia. A year ago everybody said china was going to collapse. That turned out to be another highpriced oil high profile, high noise things. Opportunities in china connecting with the rest of the world be a asia. It can be the infrastructure opportunities, the shift to the Chinese Consumer away from the old economy for the new economy. It is coming through in all of the clean energy. Lots and lots of companies have benefited from the back that you have a 17 trillion economy. It is engaging with the rest of the world. It is easy from our point of view. Asia has 30 of the worlds dividends. 40 of peoples equities holdings. If you want cash and one yields, come here. Yousef shery that is good buys for some investors looking for new opportunities. Thank you for joining us. Head of farming thing equities asia. If you miss that asia interview, you can find that at tv. The u. S. Administration talks tough on iran. They say iran is complying with the nuclear deal. We will have the latest Rex Tillerson comments next. This is bloomberg. Shery youre watching bloomberg. Im in hong kong. Yousef im in dubai. Lets cross to the top stories. The u. S. Has announced their review of their policy on iran. Rex tillerson says the 2015 deal delays Irans Nuclear weapon ambitions. They could follow the same path as north korea. A reporter joins us for more. An interesting clarification from this u. S. Administration. First this review whether sanctions are compliant, then this outburst saying that this is not what we are aiming for. Reporter the interesting thing is that tuesday the state Department Certified that iran is complying with the nuclear deal. That goes against the whole Trump Administrations line on iran, which is like they which is they do not like the deal. Tillerson came out and wanted to clarify which they have to do by law every 90 days, that it is not the position of the Trump Administration. They still think it is a bad deal. They think it is too focused on the nuclear and of it, and they want more sanctions on other things that they criticize iran four. Shery does this review mean anything . There are some people saying the , everydirector administration does not know what to do, they abuse things. I polished language there. Reporter that is a strong view. I dont know if theres any truth to that. We do know that trump has been consistent about the iran issue. He has consistently said that the narrow focus on the Nuclear Issue does not work. Congress, the republicans have consistently criticized the fact that someis temporary of these agreements are temporary and they will run out in 1015 years. Trump has said and tillerson has made it clear that they want to focus more and look at whether the sponsorship of terrorism or destabilizing other countries is something they need to have sanctions on. Functione pulled up a where you can see who would be most at stake for further sanctions. You have china, the uae, and india the top three trade artist. The United States nowhere near the top 15. In terms of where this u. S. Administration is orienting itself, it was to underscore that bond was saudi arabia. Thats what those visits are about our day our day arent they . They felt like they were left alone by the obama administration. They go much more commonality with trump. That is the thing that links them together. In terms of the trade flows, absolutely. The u. S. Has not been a Major Trading partner in iran for a while now. I think that is an important point. If they want to add new sanctions, the sanctions that were listed were the international sanctions. They have the support of the europeans, the russians come the chinese. They might not have that support now. Yousef we have to leave it there. Still plenty of come to come on the program. Well talk about doha banks firstquarter awnings. This is bloomberg. These are the first word headlines from around the world. The fed says the u. S. Economy continued growing at a modest to moderate pace in recent reads. Consumer spending was mixed. Of automobilesde were softer. It paints a picture of an economy maintaining itself. Abenomics has received a welcome boost. Expectationsashing in march. Shipments overseas rose for a fourth consecutive month. Import surged 16 . The trade surplus was 5. 6 billion. Emirates is cutting back service to five u. S. Cities due to weak demand. From the laptop bans on some airports. Benefitlines stands to from the cutbacks. They have been asking the government to act on their complaints of unfair competition. The turkish electoral board has of allegedlls irregularities of last weekends election. Critics say it should go to the top court. European courts of human rights is necessary. The criticism has gone to the president telling him to learn your place. The man president obama put in charge of the recovery after the financial isis says he sees waning commitment to reform and at preventing another meltdown. He says doddfrank and other regulations have not damaged markets. The former fed chair also urged the central bank not to rely on it role to set policy. I dont think you can compress it all in a role. You can have rules and test judgment against the rules, but i dont think you will run Monetary Policy that will do any good. Global news. 24 hours a day. Powered by more than 2600 journalists and analysts in more than 120 countries. This is bloomberg. Shery thank you. Treasuries are gaining in asia. Still mostly a risk on day. Many markets in asia in the green now. Lets get the details. Risk one day. Asian markets are in the green today. New zealand is one of the biggest lacquers, down. 4 . Inflation coming through and accelerating faster than expected. A big rise in the kiwi. New zealand stocks off by. 4 . The copy is up. 4 . Is gaining ground. The shanghai composite has had a tough week. A little bit more eyeing coming back in. If you look at the singapore iron ore, it is falling today after a rebound yesterday. Done or 3. 84 . I also want to show you what we are looking at in terms of the overall iron ore chinas future contract. This is a