tv Bloomberg Markets Asia Bloomberg December 29, 2019 10:00pm-12:00am EST
a white house security aides say he may have done. we will get the latest. this is bloomberg markets asia. haslinda: two days until the end of the trading year. what a decade it has been. we are right back where we began this year. investors say equities are significantly overbought. indicators suggesting perhaps it is time for some kind of correction. taking a look at the asia currently 131.16, some suggest maybe we have to keep a watch on the potential a -- the korean peninsula to see whether kim jong-un would provide a surprise during christmas. that didn't happen but that
doesn't mean he won't go through with it over the next couple weeks. taking a look at where the nikkei is, ending the year lower by 0.5%. the nikkei recovered 50% of its slide since its record in 2009. goldman among those expecting some kind of lift for japanese stocks in the coming year. fromys japan will benefit a global economic recovery. let's turn the page and look at where we are in terms of currencies. we know it has been a quiet volatility at a five year low. if history is any guide, the , it ishe currency to buy a favorable month and it has risen seven out of the last 10 years. the hong kong dollar, it may be six months of the protest, the hong kong dollar said to have its strongest month in 16 years.
this is how it is looking at this point. david: since 2000 three, that was the last time we saw a gain of this magnitude for the hong kong currency. we are looking ahead to the open in india, it was quite a steep gain we had friday although i should point out, depending on which index you look at, all yams were substantially lighter than usual on the benchmark. nifty futures pointing to a lower start. 7130 nine is your level. taking a step back, quite a year, the last few trading sessions for the year for india and we hit record after record during a year when the economy is not doing quite well which tells you, this chart takes you back to 1990 on both benchmarks, the nifty and the sensex.
we are 0.3% from the record high. doesn't seem we will get it today but one can hope. it seems inflow, the dollar drops story is playing into this market. we will get to the open later on. paul allen is with us in sydney with an update on the first word news. paul: president trump is facing criticism from political opponents and some supporters for reach leading a social media post that names the alleged whistleblower. the complaint from the whistleblower triggered the inquiry that led to impeachment. there are laws protecting whistleblowers from retaliation. house aides has kim jong-un may have reconsidered his so called christmas gift to the u.s. thanks to diplomacy efforts of president trump. north korea suggested a gift would be forthcoming after
demanding additional concessions as part of a stalled nuclear talk. national security advisor robert o'brien says the u.s. is ready to respond should kim fire additional long-range missiles. the philippines disaster response agency says at least 41 people are known to have been killed by a typhoon that hit the country christmas eve. dozens more are missing and injured and the agency says the damage to local crops and infrastructure totals near $20 million. the typhoon was the 21st cyclone to hit the country this year. -- fraudulent labels on products that they said was made locally. chinese manufacturers are trying to bypass u.s. tariffs. the department is investigating local firms that set up operations to import chinese accessories and export to the u.s. and europe. china's top lawmaking body approved changes to the
company's security law easing listing rules and stiffening penalties for violations. the revisions affect from march 1, and they specify deposited very receipts -- depository receipts and stocks and corporate bonds. news 24 hours per day, powered by 2700 journalists and analysts, this is bloomberg. haslinda: let's go back to markets and what to watch. let's bring in mark cranfield. a new loanopting pricing regime. what does that mean now and for the longer-term? positive move. these incremental moves have been bringing down interest rates across different structures, but there is a big gap between loan rates and main market rates and increasing the pboc, the china pricing what's to be more driven by the real world so what happens in the money market is where we see
day-to-day reactions. well over 100 basis point between the lending rates and money markets so there is room for the spread to come down. it will benefit all chinese companies. there is a 20 basis point gap between the old rate and the one they are proposing and that may come down further over time. looking further ahead, it probably starts to mean good companies can borrow at better rates but poorer companies will have to pay up. they will have to pay a wider margin to get money. supply and demand lending will take hold and it is not good for weaker companies. david: that is how it should work, right? a credit officer looking at your loan book. there is that, there is improving data on the chinese economy, trade seems to have taken a backseat, and with that in mind, which assets will benefit most in early 2020? >> if we do see the pickup in
, like somets analysts are expecting in the first part of next year, that will be good for the equity sector in china, particularly the companies that are most exposed to foreign business. you would expect to see the big caps in china doing well and some of the smaller companies as well. probably a good start for china equities and if they are doing well, that is usually positive for asian equities. as we said, in the credit space, initially it will probably be good for the larger companies in asia so you might see the credit rally continue. bond markets in general, a bit sideways because the fed is seen as being on hold for most of next year so not much to say about fixed income. it will be skewed towards equities and commodities as well, a strong finish to 2019 across the commodity complex. that may continue particularly when you have assets like copper , which are tied to the
direction of the chinese economy. that may extend a bit further. as for foreign exchange, probably a little slower but you can see this skewed towards a weaker dollar towards the years and. that may continue into the first part of next year. mark, thank you. you can follow this story and the day cost trade -- and the days trade. scroll up, scroll down and get commentary from mark and his team and analysis. find out what is affecting your investments. charging up tesla its china expansion plans. can the company stand out in this wide field of competition? haslinda: next, is there a new glimmer of hope in trade talks between the u.s. and china? we will break down the latest between washington and beijing. this is bloomberg. ♪
david: welcome to the show. you are watching bloomberg markets. beijing and washington working on a final -- the final details of the trade deal. isenior chinese diplomats china will honor its commitments,'s -- reminding the u.s. to make sure it follows there's. china joined by our executive editor. we need to talk about phase 2? >> i think it is a little early yet. everything looks good, on track for a signing in washington with ambassador lighthizer, but the ink hasn't been put to paper yet and if we do talk about phase two, there is a lot of difficult questions on the table. hard to say if that will come to fruition.
if we don't want to jump the gun now, there is still risk, right? possible.g is we have seen lots of twists and turns in the trade war. had a of now, we conversation between president trump and president xi on the 20th of december. everything looks on track. the ambassador and his remarks did raise the issue of taiwan and also there is hong kong and the situation in shin jump -- the situation and the bills winding their way through congress. those at an element of uncertainty, but -- add an element of uncertainty, but it looks like we will get a phase one deal. haslinda: and that is good enough. thank you for that. let's bring in our guest, the head of india and south east
asia economics at oxford economics. lots of optimism but has that been priced into the market? >> that is true, the market is anticipating a positive outcome. the outcome came out better than expectations but as used -- as you just said it is not a done deal. president trump has a tendency thingsrise, and these could flip flop. assuming this deal get sealed on tests to have a lot of take in terms of china actually importing [indiscernible] and a lotto importing of tensions to be resolved. it is one day at a time. david: -- some signshere are of stabilization in china's economy but it is on a deceleration path. when you look at the come -- a 2020, you are sure growth will stabilize. what assumptions are you making?
>> we have upgraded our china growth outlook slightly. they are not slipping below 6% yet. the can has been kicked down the road. china's [indiscernible] has been going up even while all this trade saga was unraveling. this seems like it is because growth would be much more downbeat than what has happened and they are readjusting expectations. in terms of the rest of the region benefiting from these improvements, what is really carrying the day for asia is domestic demand. with an abrupt -- ample macro policy space, that will help growth stabilize for the region. david: very nice to see you. the conditions have improved on the trade front. you look at sentiment in the markets as well. my question is, we went into
this year and what we saw was synchronized easing across the majority of central banks globally. is there a chance we need to talk now that at some point towards the latter part of next year, some of these banks might need to tilt hawkish a little? an interesting question. i don't think at this point a turn is talking about to the hawkish. i'm referring to this part of the world, you have seen upsets happening in terms of risk factors but i don't think so. inflation concerns remain quite muted and the only central bank that comes to mind which might consider hiking would be bank of thailand, because it struggles -- it is troubled by a strong say. domestic indicators growth will remain quite week, around 2.4% around 2020. i don't see this hiking.
what might not happen is further aggressive easing might not play out in many places. you mentioned thailand. what can the bank of thailand do and what should it do? can it as an economic policy pursue one that in many ways decreases the current accounts? structural,em is chronic underinvestment in thailand. that is partly the government's problem. it is not just the bank of thailand. the bank has tried to implement many things to rein in the baht, and it has appreciated, one of the best-performing currencies on the side of the region. unless they are able to take out that excess savings they have in the system and find ways to redistribute it, this isn't going to happen overnight, there will be more push for the
government in terms of easing bottlenecks so the money, allocation can happen. a stronger currency is something they will have to live with some of the central bank, and control the pace of appreciation but not necessarily reverse it. haslinda: what they can do is limited considering that the economy is sluggish, it is slowing. what will this wrong -- the do for gdp? >> they can't cut more because of elevated debt levels. they will do is hold the rate steady for the rest of the year. therel see these levels, is some fiscal stimulus announced and that will likely have the economy by early 2020. it has been approved by the government. that should support growth. the strong currency means even in the improvement in the external environment, thailand
is probably not in a fitting as much as the other part of the world. -- benefiting as much as the other parts of the world. haslinda: does it help the thailand is a member, a signatory of [indiscernible] accounts for 50% of the global population? >> it does. but it has been agreed in principle. .hese trade pacts are gigantic you had the reduction in import duties but they were part of aussie on -- they were a key part. , it is diluted, not what it was supposed to be. we won't really see a big impact. we will give it a medium-term perspective. david: since we are talking about trade, you have a full report, the economic forecast for the -- for vietnam.
growingut, the fastest economy across the region. a lot of inflows, supply chains moving there, are there any early signs that economy is overheating or facing capacity issues? remains still going to the fastest-growing economy but .t 6.6%, there is a slowdown we think there are issues in terms of lending conditions and with the central bank of vietnam not likely to lower rates and lending conditions are looking to stay [indiscernible] but maybe not overheating. there is not a strong case for rates andll down there is fiscal constraint, so going back to my initial point in terms of, where will the country perform? the countries with them -- the maximum macro policy space are
likely to see more growth. in vietnam, looking at the trade diversion and the external backdrop, domestic demand is going down and that could constrain growth in the coming year. indonesia, at the last meeting the bank of indonesia cap's -- kept its rates on hold for the first time in five months. does that show optimism? move shows they want to step in step with the fed. they were aggressive because, it has been ahead to the -- i had of the fed. last year they went out ahead of the fed and ended up raising rates and given what is happening on the consumer demand front, not seeing any domestic demand traction in indonesia. why are they hiking so much? can they afford it? the reversal has been swift. i think it is wise they have done this because at least
growth is stable, it is not falling off the cliff as it was in other places. they need to keep [indiscernible] in case we see renewed escalation in trade situations going forward. , a fairlyal question complicated situation. i will mention the country and you tell us what we need to keep an eye on. india. >> politics, social agenda, economics on the back burner. i think at this point, that summarizes it. we saw a shift in terms of the mandate of the government in the contested election, and true to stepped tomodi has the order of things he was elected on. it is surprising because given the state of the economy and the rampant concern around unemployment that happened when he was elected, analysts
expected him to change track and focus more on the economy but we haven't seen that happen yet. the upcoming budget since -- should see more fiscal stimulus in terms of income tax. grilli -- really, more of a situation playing out. in 2020, the key for india is that, do we see the government go back to what happened in the first and focus more on pushing economic reforms? how long are foreign investors going to be patient with the social agenda-political agenda of the government and not penalize india? toid: you will be around answer that next year. thank you so much. happy new year, happy new decade to you. a look at the u.s. dollar, we are headed up. really, it'sapse euro 8% on the bloomberg dollar
david: welcome back. a quick check of the business flash headlines, a big story out of singapore, two companies applying for a daigle -- a license toking attract tech firms in the financial sector. one company will own a 60% stake. the monetary authority of singapore plans [indiscernible] virtual banking licenses to boost competition. -- casinocan see no revenue is expected to continue plunging.
50%s estimated to fall by -- 15% year on year. fallis following an 8% last month and a 3% drop the month before. pay $8.3ill reportedly million to each of its co-ceos if they are fired or leave the company. the chief legal officer would receive about $1.5 million under those conditions. that is the queue for stock of the hour. you are looking at green town service. haslinda: surging as much as 20% in trading in hong kong. a property developer agreed to take a 10% stake in the company, and investors can expect investments after this particular purchase. ,aking a look at anr, 19 buys
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haslinda: you are looking at live pictures of the lion city, almost 11:30 in singapore. a pretty cool morning, about 28 degrees celsius. looking at the sgi, up 0.1%, poised for its best year since 2017 in terms of dividend yield a trailingex, 4% on 12 month basis. looking at the movers, among the biggest gainers are these companies. these are blue-chip stocks. , let's get the first
word headlines with paul allen. china's central bank ordered lenders to adopt a new loan pricing regime for all credit next year. this marks an end to the previous benchmark and takes another step towards liberalizing the financial system. the pboc asked banks to use the new rates as the pricing reference for all loans from january while gradually converting existing loans for the new base for march and august. hong kong's economy is set to contract in the fourth quarter as the city reels from six months of violent social unrest. the financial secretary says it is inevitable that negative growth will continue and the government will be less flexible in using financial resources under an economic recession. democracy demonstrations are set to continue into the new year with lisa proving a rally on new year's day. rallyh police approving a on new year's day. with 900 50 homesfiresrned wit-
destroyed. the prime minister says will ber firefighters compensated for their efforts. >> as this is a very prolonged fire, this is putting additional demands on our firefighters in particular. it means the turnout and the callouts have been far more extensive than the previous years, and they are going above of thosexpected engaged in volunteer service. paul: the u.s. launched airstrikes in iraq and syria on bases that they say are being used by an iranian backed militia. mike pompeo says this follows attacks against coalition troops. they must respect the
right of sovereignty. >> we took a decisive response that makes clear what president trump has said for months, which is that we will not stand for standepublic to take a that puts american men and women in jeopardy. hours peral news 24 day, powered by more than 2700 journalists and analysts in 120 countries, i'm paul allen. this is bloomberg. top stories, our the milestone for elon musk and tesla, talking the chinese market. the company delivered its first china built cars as it accelerates a push in the world largest electronic vehicle market. model three over 15 sedans to company employees. they were assembled at the new multibillion-dollar plant in
shanghai, the first outside the united states. let's bring an automotive consultant in who joins us. pleasurequite a milestone for t. how do you think this specific model does it at that price point on the mainland? only 60 models being delivered, model threes, the key model for tesla in china in 2019, model three actually [indiscernible] china insla sales in 2019. david: we are getting -- >> basically -- >> david: go ahead. >> the motor industry is facing competition in the coming year. chinese companies,
guesseo, i [indiscernible] similars will launch electronic models. we saw similar prices to compete with model three. they want to compete with tesla in china. ,avid: i was going to mention tesla is producing with a month thousand cars per week in the shanghai plant. give us an idea, how big is the market for electric vehicles? on in any will basis? basis?nnual >> in 2019, we are seeing the markets decline a little. we estimate the total volume for this year will be somewhere to 1.21.1 million million units. 300,000, itce over
will be much smaller because over 70%-80% of the electronic vehicle market is dominated by low-cost vehicles in china. haslinda: what do you make of the timing of tesla's move in china, coming at a time when auto sales are declining and expected to accelerate in the coming year? >> tesla coming to china at the right time because if we are looking at the timing, when chinese companies approved the tesla project in 2018, it triggered a huge investment for the industry, from traditional carmakers. the tesla project approved mercedesn, bmw, announced a huge investment in china on ev sectors. triggersreally the key to keep the ev investment move
on ahmed the government subsidies -- amid the government subsidies. lots ofnd of next year, global brands will launch ev models in china, including the new ev plants in shanghai .aunched by volkswagen this model will be launched next year. tesla is coming to china at the they aree because if coming to china two or three years later, probably there will befor them. space forill be no them. are many there electric carmakers registered in china. it will be about survival of the fittest. will emerge? -- who will emerge? the new start up
companies like neil, i think -- like neo, i think they are one of the major competitive's -- competitors for tesla. performance inr not particularly well. we know in the first half of the year, they already lost 6 billion. look at their product. we do see some improvement. we see them ranked as number one in jd power costs -- in jd power, and they are able, 100 kilowatt ours package -- hours package to deliver to consumer the last quarter in 2020 but still that will enable the nio
to expand its driving range to up to 600 kilometers. we see the bigger launch, ec six, the suv to compete with , wel y. having said that still worry about the financial probably of nio, which delayed their product launch next year. people beingng of bullish on the chinese market, you have talked at length about gene.we spoke with >> we don't have a specific price target. we think it is worth more than the $77 billion market cap. the will be bumps in the road, china will be positive but this company has a bigger ambition beyond china and essentially
capitalizing on the 90 million vehicles sold every year and turning those into electric vehicles. david: gene mentioned you youhed on -- something touched on, everybody is looking at this market as a key party g -- key part of whatever strategy they have but it is very competitive. not everyone gets up ease of the pie. if you had to advise tesla, what would you tell them very briefly? tesla to have the right models is the key strategy. you can see the model three is the key driver, drivers drive .esla in china, over 70% the key models, the right price bands will be the key. think they need to think about their product
portfolio as we can see they are really not in the lineup to compete with tesla at the moment . they need to rethink about their portfolio. haslinda: what is the biggest risk for tesla in china? verythink they will face fierce competition for next year . as mentioned earlier, members of new start up companies, the traditional global carmakers will all offer ev's in china starting from next year, which means tesla has to compete in terms of the quality, the image and the price. the earlier they can launch the model three, the better. i can see them being the market leaders. i think the next thing is that they need to think about the localized supply chain.
as far as we know, they have an issue in terms of the supply in china at the moment. space.a: a crowded that begs the question whether there is a bubble brewing. zeng, thank you for your insight. still to come, kim jong-un may have reconsidered his so-called christmas gift to the u.s.. what could have brought about this change of heart. this is bloomberg. ♪
thanks to diplomacy efforts of president trump. north korea suggested earlier would quote-unquote gift be forthcoming after demanding additional concessions as part of the stalled nuclear talks. let's bring in our breaking news reporter who has been tracking the story. does this mean we will probably see talks revived? >> it can be interpreted in that way because earlier this month, topmber 16, when trump's envoy to korea came to korea, he made a very vocal call for talks for north korea to return to the table, saying the u.s. doesn't , in contrast to how north korea claims. he also asked north korea to refrain from making such provocations during the christmas season, highlighting that it is a very holy holiday season for america.
having seen north korean not having a long -- not having launched any missiles at all during the christmas season, it could beat -- be interpreted to theh korea responding to trump administration asking north korea to halt provocations during the christmas season. we are looking towards kim jong-un's new year's speech to see exactly where north korea will be had it in terms of talks with the u.s. adding onnorth korea the pressure. how has the u.s. responded? >> north korea, through its ,tate media, named donald trump mike pompeo, many high-level u.s. officials calling them out by name, saying they haven't been very sincere in terms of coming to talks and listening to what north korea has been
demanding, which has been lifting of sanctions. that is why the u.s. administration has rather brushed off these commentary about personal attacks towards the u.s. government, despite the u.s. constantly asking north korea to refrain from making such hostile remarks. bloomberg's breaking news reporter, thank you for that. in india markets have just opened. we will get right to mumbai. a reporter is standing by to take us through what to expect. 16% year tos, up date. what are you looking at? >> in india, gains in the equity markets have taken a lot of investors by surprise. a does seem there is continuation this morning
considering the benchmark advancing by another 0.2%. that is the case for the nifty banking index as well. the banking index is leading these gains as far as your benchmarks go. a quick word on the indian rupee, the jumps in the data, the reserve has riven to -- risen to $4.5 billion. that is a record. the indian rupee is flat at around 71.3. david: the central bank released their financial stability report for the year. with things more stable or less? -- where things more stable or less stable? >> not necessarily stable at all. there is concern that macro when it -- macroeconomic concerns and risks have risen in october, falling back even though the r.b.i. suggested they be
accommodating when it comes to monetary policy. household savings along with domestic growth still hasn't -- has been categorized as high risk and there has been a moderation in liquidity in indian markets as a whole. these are among the many haserns the r.b.i. mentioned on the financial stability report. we are going to continue to keep this, as well as the upcoming union budget. we will have a lot more information as to how a -- to go about this. david: thank you. great stuff. coming up, swiss -- a swiss asset manager is looking to double its assets. we hear from the company's managing partner. that is next. this is bloomberg. ♪
haslinda: let's do a quick check of the latest business flash headlines. the head of struggling chinese electric carmaker nio pledges to improve the company's finances as earnings are expected to show mounting losses. a new suv unveiled saturday is fueling demand amid a slowing ev market and competition from tesla. nio accumulated a deficit of almost $6 billion and shares 61% since its debut. 'sypt signed up on uber acquisition of a dubai-based ride hailer, as measures designed to keep the market competitive, including other companies being able to view uber's to encourage growth in the market. aou>> nearing the purchase of n
italian soccer club. the deal could be finalized by the end of the year. he is buying the club from the main shareholder. the team would be valued at 870 million u.s. dollars. shares of surged 9% in italian trading friday on the prospect of a deal. let's have a look at asia . swiss asset manager in the middle of an expansion, aiming to double its assets in asia in the next decade. wealth managers see an increasing number of the ultra rich in the region. we spoke with the managing partner there about which country they are partnering with. >> north asia i think, we are focusing on china and greater china overall.
i think even parallel, southeast asia out of singapore, these are two well-known hubs that should provide us for the next few years the platform for growth. >> you mention hong kong. it is an endorsement that it is expanding here. hong kong will be your hub for china in light of the protests and the economy, which is in a deep recession. does that put you off? to the country, we are currently investing more than we have ever invested and i think one has to be contrary and sometimes. in these moments, you need to show your commitment. >> this is a way of saying singapore will be the other hub for southeast asia, right? >> correct. >> have you seen any moves from hong kong towards singapore, which is what many are seeing? >> there is interest from
clients. we haven't -- we have seen is across the industry, and the movement of assets in any significant fashion. >> you talked about being committed to asia and you have been on a hiring spree. people out there say a call from foris the new status symbol private bankers. how many of these calls have you made in asia since the hiring increase in the region? >> this year in asia we added high double-digit headcounts. we are past the mark of 350 employees for the group. i think we will see in the years we are not just looking at the next quarter or the next 12 months. in the next five years, that is the plan we have come at a the headcount in the wealth management side. >> are you growing fast enough?
rivals are your dominant in this part of the world. are you comfortable with the pace of growth? >> we have historically grown slower. there were many regions in the world that we are competing for resources. i think we have made asia and our number one priority. i think we will see growth rates accelerating and since we are starting from a lower base, i think the growth rate will be significant in the years to come. >> in terms of ambition, what is the goal in asia? are in the top 20 wealth managers, probably towards the second half of the list and i think our ambition is to get into the top 10. it is not so much and ambition about size, but also about quality.
when we look at our client base and we generally tend to have ultrahigh net worth individuals, more than two thirds of our clients maintain a balance of $100 million or more, that is the segment we would like to target. bring in the investment expertise and the global reach we have come a we are present in close to 30 countries. tell me about your china strategy. what about getting a private banking license? do you plan to do something like that? you can partner with a chinese company. what is your preferred route." >> we have been looking at this market for 20 years and we have seen different evolutions. we are finally entering a chapter where this could be a successful onshore venture for a wealth manager. i think it is early for us, we would like to be kind of a late mover. >> typically there has been a jv
and you buy them out. is that something that would be on your -- >> probably not. this something we would like to do on our own. some of the jvs have been successful, some not so this new chapter where foreign players can own majority or the entire business, i think that is the prerequisite for us to look at this market in the next few years. he was speaking exclusively to bloomberg. a quick check of the markets, pretty flat across asia. this is on the back half of the index reaching its highest in 1.5 years. investors say equity is -- time forover-bought corrections. nikkei 225 ending the year down 0.6%. at this level, they are -- recovering 50% of its slide since 2009.
yousef: this is "bloomberg daybreak: middle east." a close withng to every major asset class a winner. we examine some of the years best performers and a look ahead to 2020. on bases of used by an iranian backed militia. we have the latest. milestone,es a major delivering its first batch of china built cars to its employees and multibillion-dollar plants in shanghai. and spending is set to surge in dubai ahead of world experts 2020. can the evans turnaround the fortune of the struggling emirates?
it's 8:00 a.m. across the emirates, this is "bloomberg daybreak: middle east." i am in dubai. added ton has been equities. investors picking up where we left off last week. s&p 500 can't hire at 2/10 of 1%. quite a bit of focus on what's happening in the currency space. arguably being move significant for the benchmark bloomberg dollar and the gtv for our clients in the initial perspective. the gains flipping for a third day. of the year and, but the markets lifting just put out a note saying don't fight the negative u.s. dollar flow. pairs and shey currencies of the dollar kiwi,
year-old and singapore dollar may be appear to be overextended in the short term. that change will not take place until the first or second week of january. let's get to some of the other markets with juliette saly in singapore. we are seeing a little bit of an overhaul happening with china. interest rates are sending stocks higher. as the second move the pboc has lessto try to get complicated, very complicated toolbox. after introducing the new loan prime rates, the pboc has ordered all banks to stop using allnd gradually convert existing loans to the new loan prime rate. basiss the redline at 20 points below the old benchmark, which we had seen previously. this basically lowers financing cost on new and existing loans across the system. it will give a bit of a boost to net income, particularly for
companies. mliv seeing some coming through for property stocks today. i want to swing over here. the r.b.i. relief says financial stability report of the year so far on friday. what exactly did the report revealed? a lot of concerns coming true. it seems at this point the markets are shrugging off the findings of the financial stimulus report. however, it does suggest that there has been a rise in risks with respect to the macroeconomic factors since october. secondly, the rbi has remained accommodative in terms of its monetary policy. it will revive growth. there is still a lot of concerns with respect to the economy. such as her stash household savings and domestic growth has been categorized as high risk. there has been more moderation
in liquidity since april until october. and more importantly, we are also looking at nonperforming over 2020,easing even though the rbi suggests the banking sector is resilient enough to take that. these are some of the concerns that are emerging from rbis financial stability report. .ousef: thank you for that juliette saly as well. let's check in on the first word headlines to get you the full picture with rosalind chin. rosalind: 837-year-old man has been arraigned for attempted murder after stabbing someone during a celebration of tonic on saturday night. anrew cuomo described it as act of domestic terrorism. againstt to unite anti-semitism after multiple incidents in the jewish community in recent weeks. president trump is facing
criticism from political opponents, and from reporters for retreating a social media post that named the alledge thetleblower triggered complaint that triggered his impeachment. it is breaking laws on protecting whistleblowers in the intelligence community's and informants having retaliation. the u.s. has launched air strikes in iraq and syria on bases near the border that they say are being used by an iranian backed militia. mike pompeo said there are repeated attacks against coalition troops. the president said iran must stop attacking u.s. coalition forces and expects sovereignty to prevent additional military action. a today, what we did was take decisive response that makes clear what president trump has said for months and months, which is that we will not stand for them to take action against the american when in women and put them in jeopardy.
roslyn: dubai's spending will surge next year as it prepares for world expo 2020. the government approves it on sunday. total expenses are expected to reach 18.1 billion dollars in 2020. up 17% from this year. the middle east commercial hub has gone through tough gears -- tough years. oil revenue dropped with prices down one third in 2014. and the all-important terror -- tourism industry struggling to grow. local news, 24 hours a day on air and powered by more than 2700 journalists and analysts in more than 120 countries. i am rosalind chin, this is bloomberg. in 2018, it seemed like every asset class was a loser. been the rivers with opportunities everywhere. billionairesiggest have come from unexpected corners of the markets. chris joins us from tokyo.
what is the review of the offbeat contract investment? chris: what we are seeing is, as you sometimes see in markets, out of yesterday's big he loser is today's big winner. the outstanding performance and equity markets this year has come from the likes of russia and greece. if you look at russia in recent years, besides geopolitical developments, they have had a currency crisis. they have had sanctions from the u.s. of negatives weighing on russian stocks. they have really gone gangbusters this year. however, with world prices stable, that has allowed the central bank to cut interest rates. that has helped to stabilize the economy, and things are looking a little bit more quiet on the geopolitical front.
russian stocks up about 44% this year. then you look at greece, we've got european central bank rate as a helpng greece the rest of the european economies. you have political stabilization there with a recent election returning a majority for one of greece's to all traditional parties. no more indication there. greece is going to be healing up the eurozone. greek stocks up 50%. yousef: chris, those are some of the out performers, but what does that tell us about what could do well in 2020? is it the traditional case of rotating out, inflated assets, or perhaps those that are not as richly valued? chris: we have certainly seen that theme already. you think about the major
markets, financial doing better. some guests this morning and asia talking about financials facing a better year. next year, small caps as well. you get outliers this year on the negative side. it could potentially be a greece or russia type story down the road. functionat the wei s on the bloomberg terminal, it shows you land stocks down about 20% this year. a lot of political unrest this year. a lot of questions about the economy. chile.could stabilize in could we see a rebound at some point? andexperiences of russia greece would suggest that it is not out of the realm of possibility. we have done a separate survey this past few weeks on the chinese bond market, which is increasingly open to global investors.
there, we see that the top pick is the riskiest part of the market. the local government financing vehicles that many have .redicted would see a default but still, we don't see that rubicon being crossed yet. they remain very popular in china's bond market. for that.ris, thanks that is our asian across asset manager. let's wind up a conversation and bring in ahead of applied research for aipac. he joins us for hours singapore studio. you look at the euphoria. that has now really taken hold in some of the risk assets. a little bit of soul-searching is called for. you share that kind of optimism going into 2020? >> i think the consensus is quite positive. we are not looking at any interest rate hikes anymore. we are looking at a stabilization of the economy
because of the trade deal. brexit is going to get done, we will finally get answers on how this works out. overall, the consensus estimates that more -- most portfolios are positive at this time. things could change very quickly. we had the beginning of fourth quarter of 2018. everybody's consensus was that we would get three interest rate hikes in 2019 albee got three cuts. everybody saw the tariffs jacked up and then we had this in the first quarter and fourth quarter. you have had whiplash with the geopolitics has happened in the past two years. it really shows that investors are getting used to that. they are getting used to working with it. even though uncertainty is up, volatility is down. as your call he just said, the list of overvalued asset is getting long. we are digging into russia, greece, we
very deep for value. speaking of digging, let's try to flesh out some of your key views. paper thatether a outlines where you're thinking is at. somewhat some of the nice countries and somewhat the naughty countries as we going to 2020, which ones are going to be the real standout, and where is the consensus and getting it wrong? of the things we started tracking about a year and a half ago was investor sentiment. --ave birth to these roots roof scores that we had to risk on, risk off type of environment. risk tolerance, we measure risk tolerance and risk aversion in the market at any one time. risk tolerance has been higher than risk aversion.
the days in u.s. market and over 62% abroad. sentiment has been higher in the markets that we have seen. we ended the year with a very barbell type of situation for markets. i inve for markets, was theu.k., sentiment most it has been since 2003-2004. the markets were up. there is a big diversion there. and we have the markets where people are still very bullish and positive, like the u.s.. markets -- developed even china made a nice list this year. just barely made it. the dichotomy of sentiment, but none of it explains why fourth quarter was so strong everywhere in terms of markets. we are living with this kind of inconsistency between the data in the way the markets are reflecting it. much of your
portfolio, or how much of a percentage are you telling clients, when it comes to their portfolios, to allocate to precious metals? they have been on the terror and in 2019. the chart tells that story. it's really outperforming all other metals. one of the best-performing commodities of the year. is that something that investors should add more to given the high valuations and equities and in fixed income, for example? one of the things is, we are not an investment advisor or an investment house. what we do is we advise investors on risk and quantitative analysis for their portfolio. they use their consensus using to build a portfolio for what is their best representation. we tell them, one of the assumptions that are underlying your assessment views?
really like precious metals, is that a defensive place for you, or is it a cyclical play. what we advise them to do is to create some stress and design some stress that has the core assumptions behind the reason why you are holding on to this metal in your portfolios and see if it still holds up. are no more fed rate hikes for a a while, maybe even some rate cuts. what if inflation starts to rise, how does that change her outlook for metals? how does that change your outlook for gold or anything else you have in your portfolio? with those.y around investors a guy better because they survived this year, which is a very volatile year in terms of geopolitics. it has been very successful in fact. it was not really much to do with any particular talent. you could've put all your money
in the all world index and come out with 25% at the end of the year. we will talk about some of the other calls that you have. let's get a bit of a snapshot of tesla rolls out its first china made vehicle in shanghai. we will have more on how elon musk is trying to win over customers in the world's largest car market. the next decade be a tough era for the bond market? we will discuss that. this is bloomberg. ♪
iranian proxy forces, including weapon storage facilities in control of patients. -- control locations. we are up about 27% so far this year among the top three commodities up 2019. wti and brent. let's get back to another top story in china, where the central bank ordered lenders to adopt the new loan price regime for all credits from next year. moving beyond the benchmark loan rate, that set the cost of oss the economy for decades. it has generated stimulus since the global crisis, and has suppressed yields around the world. the 2020 market is a tough era for bond markets. a condition that could fall away. the head of applied research. he is still with us from our singapore studio. the amount of negative yielding
debt in the system is beginning to abate, how sustainable is that? olivier: that is a good question. we thought we were done with agoral bank about 2-3 years when the fed started announcing tapering. now we are back into an environment where we thought we were going to get to see rate hikes on the fed last year. we got three rate cuts instead. what has happened is that, interest rate risk, which is very much alive right now week we have a situation where we -- a hugedepbt bubble debt bubble that as is at risk of inverting. it may or may not start to rise in tech. it is not able to be priced in to assets. all the investment grade bonds, the spread has narrowed this year, even though interest rate risk is higher. in the high-yield
apartment, which is more sensitive to credit risk and people's assumption of default risk, has risen. from the bond market we get the look, the economy is weak. if cash flows don't show up next the, if anything trips economy, nevermind the trade war being a little bit off right now. down and flow goes that would be a problem. central banks are all in negative interest rates. how will they help of the economy trips up? yousef: let's discuss this more. there was an editorial written in the last few hours. here is what was said on the topics of central banks going into the new year. a large scale retreat by central banks with lower rates, and accommodating balance sheet is higher forbar another round of significant monetary policy loosening, especially when it comes to the monetary stimulus in 2019.
it looks like the market could get surprise to the downside by a lack of action from the central bank. i think that is right. the data right now, which we know from the fed, the data suggest they should stay out of the game in 2020. there is no need either way. they have done everything they could, the economy is not that bad. we are talking about terrorist coming down, breaks coming off the global economy somewhat. as long as there is nothing to really change the economic outlook, central banks should stay out of the game in 2020. i think investors are fine with that. they are hoping we will see in earnings cycle rebound. we have had three or four consecutive quarters of negative earnings growth. they are hoping for that to change. but is a lot of hope. if we are wrong on this one there is a lot of downside. been greathas
touching base. thank you for coming in and sharing those views. head of applied research at apac. you can check out our interactive tv function at tv . you can watch us live and catch up with some of the past interviews. you can check out the bloomberg functions we talk about. you can join the conversation as well. you can take a look at some of these beautiful live shots from dubai as well. this is for bloomberg subscribers only. check it out at tv . this is bloomberg. ♪
wildfires continue to spread in southeast australia. temperatures are set to rise to 42 degrees celsius. a hundred and eight degrees fahrenheit. the blazes are threatening to close the main highway. everybody is a bit on edge. that's get to some of the other business flash stories with rosalind chin. rozlyn: tesla started delivering its first batch of china built cars, heading over 50 model 3 sedans at its new multibillion-dollar shanghai plant. china, which is the world's largest market. are not being delivered to customers yet but have been approved for a 10% purchase tax. egypt signed off on uber's ridesition of dubai-based hailer green. other measures are designed to keep the local market competitive. that includes other companies being able to view the trip data
in order to encourage growth in the market. uber announced its lands to buy it for just over $3 billion back in march. we work reportedly has to pay a $.3 million each to its code team if they are fired or leave the country -- company. he was fined $1.5 million under the same condition. the exit packet is for shareholders ahead of a $3 billion offer. that is your bloomberg business flash. yousef: thank you. let's get you a bit of a preview of what's coming up on the program. we will talk about the united states is a launch their sites in iraq and syria on bases that are being used by an a rainy impact militia. we have the latest on that. we circled back and get you an overview of the markets. u.s. futures by edging up after stocks in the friday mix. knocked off the fit straight week.
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it's 4:30 in the morning in london, the sun has yet to rise, the cable is off to a somber start. higher. a quarter of 1% some news at the u.k. council. the sector will provide 2.9 million pounds over two years to leave thermers that european union. let's get you a check of the first word headlines from around the world with rosalind chin. hundreds ofosalind: protesters have rally outside of the prime minister's house in beirut, calling for his designation, he was named prime minister earlier this month but has failed to win the backing of
the main sunni muslim groups. lebanon is facing the work economic crisis in decades. corruption has been gripping the country since october. hong kong's economy is set to contract in the fourth quarter as the city reels from six months of violent social unrest. the financial secretary said it is "inevitable that negative growth will continue, and that the government will be less flexible and financial supporters under an economic recession." they are said to continue into the new year with police having approved this on new year's day. in australia are expected to get worse this week, and midst rising temperature of the peak on new year's eve. more than 12 million acres of land have burned nationwide over the past few months, with nine people killed in more than 950 homes destroyed. the australian prime minister says volunteer firefighters are battling the bushfires and they
will be compensated for their efforts. >> this is a very prolonged fire. this is putting additional demands on our firefighters in particular. the callouts and turnouts have been far more extensive in the previous years: -- previous years. going well and above beyond what is expected of those involved in volunteer service. the philippines disaster response agency says at least 41 people are now known to have been killed by the typhoon that hit the country on christmas eve. dozens more people are still missing an injured. the agency says the damage to local crop infrastructure totaled a near $20 million. it was the 21st to hit the country this year. global news, 20 frowny today on air and at tictoc by bloomberg powered by more than 2700 journalists and analysts in more than 100 20 countries. this is bloomberg. now over to singapore for a check on the markets with juliette saly.
it is the second last trading day of the year. you are seeing the msci asia-pacific index try to hold onto those 18 month highs. things looking positive in the afternoon session and they were earlier today. 10 is market up by 1.2%. we were talking about that change to the very complicated talk in terms of interest rates from the pboc. japan and japanese market is lower by 6/10 of 1%. you have a stronger yen. we are about to the japanese markets go on holiday until next monday. bear in mind that we have had a very strong session for japanese equities over the course of the year. the best since 2017. market is up 30% on the year. hong kong market up 6/10 of 1%, despite the fact that we heard that the finance equity -- secretary has all ready indicated that weakening growth in hong kong is likely to continue. one of the top
performers in the meantime in the region is the hong kong listed property stock. you have not been picking up new real estate again, have you? juliette: i don't think i can afford it, but green town service group is up by 12%. the top performer when you look at the function on the bloomberg. the property developers that it came through to take a 10% stake in the company. services are surging the most on record there. we are hearing that they will also supply the companies before june 20, which is an increase to that 10% level. just quickly to the downside, i am seeing a move coming through in the hardware manufacturer in taipei. we are seeing volumes here it double in platteville attila the at 26%. it is the worst performer on the mrr function. thank you. let's get back to an important development in this part of the
world, united states has launched airstrikes on five bases in iraq and syria since they were being used by an iranian backed militia to carry out repeated attacks against coalition troops. did was take awe decisive response that makes clear what president trump has said for months and months, which is that we will not stand for them to take action on american men and women and put them in jeopardy. yousef: let's get more on this with our bloomberg government reporter. context, the of reason behind this latest move, is there any clear justification? >> it's a retaliation for friday attack that hit the military base or an american civilian contractor was killed. there had been talk of a lot of repeated attacks against military bases and places where american forces have been
stationed in iraq in the past two months. the new york times said 11 of them. that is basically a retaliation directly involving iranian proxies in iraq. that is the key point, it -- yousef: that is the key point, isn't it? the way they suspect the potential escalation, military escalation and what is already a very heated part of the world? zainab: no doubt. we look at a situation where the past years we saw americans and proxies supported by iran fight isis without confronting each other. this is now different and more it's aus because confrontation that we are hearing the death toll could be 19 and 25.etween
there are reports of 50 people injured among the fighters. some of them could be employed iran, that marks an escalation in the region where we saw in the past few months and as collation in the gulf. attacks on the tankers and the downing of the u.s. unmanned drone, or the solicited response from trump. experts say that miscalculation on the iranian side is expecting the american side may not retaliate for the attack on friday. yousef: here is the issue, we have a u.s. president, most of his 10 year he said he would like to disentangle himself from the region. this slated move has turned that on its head, has in it? zainab: exactly. that is why people are saying maybe iran overreached. expecting that trump may not take any serious response
against the demonstrations and the process is happening in iraq. it has provided iran with a lot of freedom and its proxies a lot -- freedom of movement. the u.s. is looking up at that with worry because they see the iranian class is only growing. his response today kind of poses the problem, what will be the response from the proxies? will they turn down the violence and the attacks, or will they escalate. that remains to be seen of how it carries out in 2020. .ousef: fantastic insight let's now turn to the regions markets and turn it -- bring in our markets and equities reporter. how is it in 2019 compared to peers global? it's not were a lot of fun managers would like it to be. of the benchmarks here in the region, especially if we look at the gulf, they are
all set to finish in a positive territory, which is fine. that does not mean it was a great year for most of them. if we look at the chart in our screen, we could see that kuwait is an outstanding performance. bahrain is a's few stocks going through the major transaction with kuwait's -- and that's the index inclusion story. they were the only two members that actually performed better than the msci e.m. index, which has a very good performance for 2019, on top of all of those good news for equities globally that we spoke about earlier in the show. 2018 was a very tough year for em stocks in general, for em assets in general. gulf stocks-- managed to weather that storm at a higher level.
they are coming from a higher basis but quite frustrating performance. yousef: we have a question , it's from earlier, which is something that you wanted to focus on around the dubai spending and its impact potentially at the open. filipe: that is an interesting index to talk about today. we saw dubai's index with it -- was in the middle of the positive territory for the year. that is good news, but that is mostly on top of emirates nbd and the performance of financial stocks. if we look at four x 2020, the government said they are increasing spending, the expectation for growth is at percente night of a from last year. -- 1/9 of a percent from last year. real estate companies and
developers here in the uae, mostly in dubai. indexwould just at the and tracks a, construction the development companies here in dubai, that index is down close to 10% compared to a positive performance of 10% for the index. so, this is a sector that is going through a very hard time right now. it is a third straight year of decline for this segment. any kind of improvement of the real economy, especially in major products here in the uae could lead to a recovery of stocks. yousef: a lot to think about. thank you for that. with some of the key lines of stocks around the world. dubai announces plans that we will see suspending surge ahead of the world -- spending surge ahead of the world expo 2020. 10 the world turn around the fortunes of the struggling emirates? this is bloomberg. ♪
trump isresident facing criticism from political opponents, even some supporters for re-tweeting a social media posts that name the alledge whistleblower whose complaint triggered the inquiry that resulted in his impeachment. our senior editor, can he actually do this from a legal perspective? one of the consequences that he could face any initial conversations you have had? this is another example for president donald trump what the difference between can and should. he?he mechanically, should that is a lie in place says whistleblower should be protected. the president's job is to do it. the law says the president shall ensure for the protection of whistleblowers. so, some legal experts at -- that bloomberg has
talked to said this could be a problem for president trump. have given the whistleblower and a protection because the very outing of the whistleblower is that this is they windperson and up being it -- a threat to them. certainly in this right-wing media universe for some time. when you get to the issue of whether or not he is going to face consequences for this, remember that presidents don't get slapped on the risk -- wrist. you have to go through a process you are going through with some of the impeachment things. there are any number of things that lawmakers could do. much of the criticism has not happened yet. they're just not -- they're just has not been too much. yousef: this person who retweeted, or whom the president
retweeted, who was it? what is the background there? i love this question because, it is not clear that it's a person. it's sort of this weird rabbit hole we will go down to. a second.me for the associated press did a deep dive into this account and it bears a lot of similarities to a bought account as to an anonymous name, the person's photos are stock photos. a tweet 70 plus times a day which is an extremely unusual volume for someone to be tweeting. and it bears a lot of hallmark. it's not actually clear that it's a real person that the president is read tweeting here. up right wingt talking points that are favorable to it. he got it and clicked it.
that is actually another weird thing. if you actually want to go look up surfer 77, which is the name of it, twitter does not display it right now because the account may or may not have been taken down, renamed or whatever else. go,ar as trump scandals this is on the more bizarre and complicated side of them. i think the essential truth here is that the president did reach we an account that purported to name the whistleblower and that is a serious escalation that a lot of republicans advised him not to make. yousef: thank you for running us through that. that is bloomberg senior editor out of singapore. let's talk about what's happening in dubai, spending is going to search net year -- next year. the government approved this budget yesterday. let's get more.
the numbers going to particular industries and sectors, what is the breakdown and allocation look like? >> yesterday the government did announce their budget allocation. -- 66.5 billion terms. 46%government has allocated of that expenditure towards the economy infrastructure and transport. this comes ahead as extra as you just said. expectingment is also them to disperse economic growth. as we know, dubai has been struggling with economic growth since the past four years and when oil processes -- oil prices dropped in the property prices dropped about a third. consumer prices are down, inflation is set to end this
year in the uae at about 2%. veryourism, which is a important sector in dubai has been stagnant for the past two years. dubai is the budget for next year or they are supposed to fuel some sort of economic growth in the city. property has been weak, business positions up and challenging. a lot of the traditional catalysts from the past have started to evaporate including capital flows from russia, iran and other key ones. run me through some of the other interesting bits that you found. announcementbudget , one interesting detail is that there is a 2 billion durham allocation that is river -- that is reserve. it will be specialized for expo 2020. is the first ever reserved that the d-up -- that the dubai has allocated. there is 30% allocated towards
educating and housing. 90% to security and the digital system. we need to bear in mind that a lot of economists and analysts are saying that expo 2020 should fuel dubai's economy, which is estimated to grow 3.2 percent next year, which is the highest in a few years. last year it was the slowest pace in 10 years, almost since 2009. some sectors should be improvement after expo, but even according to government estimates earlier this year, x oh -- expo provides a momentary boost to the economy and is not a long-term solution. thank you very much for that. let's now get to tesla, because that system delivered its first china built car. it's a major milestone as they
expand the world's largest electric vehicle market. let's get more from selina wang in beijing. what did we see at the event, and arguably, what does it symbolize more and viciously? -- more ambitiously? na: this was a momentous day per we saw the release of the first 15 vehicles from the factory. said that they would be delivering more to employees over the coming days, and that they would be delivered to their actual customers in january. this is tesla's first car manufacturing plan outside of the u.s. and its china's first fully owned factory owned by a foreign company. when it comes to the symbolism of this, it shows how quickly things have moved for tesla and china, and how they created this relationship with the chinese government. it has gone very quickly when it comes to securing the land and getting those necessary permits.
will also be included on a list of vehicles qualified for an exemption of a 10% local purchasing tax. be on how tesla rolls on and china, considering that they are china go global with other markets, including following up this production facility with one in europe. it will be how effectively they can truly go global. yousef: doing business in china is a challenge for many global behemoth out there. what is tesla going to have to deal with? faces thisla competition. you have global manufacturers that are china pushed deeper into china's electric vehicle market, the jews the world's largest you have the likes of bmw, mercedes-benz, audi. underhough they have been financial difficulty, they did roll out a new model of their electric vehicle, and have been
providing a variety of incentives. some analysts have also noted that the vocalization of suppliers for tesla has been rather slow in that these locally made cars from shanghai are not all sourced from china. they are still importing some of those supplies. over 2020, thep costs are expected to come down. in addition, you have this macro backdrop where sales have been in this unprecedented slump. in also have a slowdown sales of electric vehicles across the board because of the scaling back of the subsidies. despite all of these signs, the early lenders are showing that demand will be strong with those new car legislation tesla vehicles jumping 14 folding november. in november. yousef: here's what's coming up, bloomberg size and scope. today's number is 11%. find out why. this is bloomberg. ♪
yousef: it's time now for bloomberg size and scope. everyday we break breakdown one superlative from our coverage. today's number is 11%. here to explain his eric lam. eric: we are taking stock at the end of the year. one of the great performance this year has been commodities, with an 11% advance this year. that is on track for their best performance since 2016. we saw annual gains across a broad spectrum of commodities this year. from koppers to crude and things like wheat and soybeans. a variety of factors contributed to this. lately we have seen an end of the year surge thanks to the lowering tensions or trade tensions between the u.s. and china. we have also seen pronounced weakness in the u.s. dollar over the past month.
they have all contributed to a andt end of your rally almost a great year for commodities. yousef: thank you very much for that round up. that's bloomberg's cross after reporter eric lam what the lowdown in the commodities front. it's get back to the market action. liquidity remains a little bit higher. some of you may still be on holiday. some of you are back. the msci asia-pacific index is barely about the flat line. asian stocks initially drifted lower. we are still close to the highest level in a year and a half. there are not a lot of catalysts going to the end of 2019. rent at 68 dollars $.35 a barrel of 3/10 of 1%. an hourwhat we started ago. the focus is on the geopolitical tensions in the region with the latest u.s. airstrikes on iranian backed proxies in the region. s&p 500 futures are higher at the movement -- moment. at 1.8 eight.elds