Skip to main content

tv   Bloomberg Markets Middle East  Bloomberg  February 9, 2020 11:00pm-12:00am EST

11:00 pm
>> this is bloomberg daybreak: asia middle east. china sets aside $10 billion to control the coronavirus as deaths top 900. the world health organization -- past the briefly falls $50 a barrel mark. that as hopes for an extraordinary opec plus meeting feign. stocks falling for a third straight session. the arab world dallas back criticism of president trump's middle east peace plan, but it is calling for a palestinian
11:01 pm
base on the borders. we will have all of the details. it is 8:00 a.m. across the emirates. we have a situation where the head of the world health organization is saying we may only be seeing the tip of the iceberg and it comes to the corona virus. that is setting the stage for the markets. down half ofindex 1%. those losses have been accelerating. they are rallying because they are rallying because they're coming up with innovative ways to work around the coronavirus. the aussie dollar hovering around the lowest level since 2009. u.s. 10 year yields unchanged at 1.59.
11:02 pm
up -- futures taking up.res picking a few sessions it has been currently, we are down three tens of 1%. the folks at bernstein say the short-term outlook remains challenging and less there is an opec intervention. that is what they see as required to bring the martin -- bring the market back into balance. to give you a different perspective on emerging market foreign currencies. we have had a bit of a bounce back. we had a massive selloff over the last five trading sessions. in 6.993. let's check in on some of the other market action.
11:03 pm
our correspondent is joining us live from mumbai. >> good morning. we clearly are seeing volatility in global indices panning out for indian markets. sensexty and the registering the seventh day of straight losses. that is a lot of nervousness evident in these companies that have exposure to the chinese markets. that is a big sector which is leading the losses. the nifty banking index is also under pressure, down 4/10 of a percentage point. we see further weakness for the indian rupee, which is flat against the u.s. dollar at 71.3. >> let's check in on the first word headlines around the world. ireland is facing uncertainty after an election result that looks set to leave the two party
11:04 pm
structure in chaos. examples show a dead heat between the two candidates as well as a surge in support for another candidate. republican -- pete buttigieg appears to have sealed a victory in iowa after partyate's democratic released results from the disputed caucuses. he has 14 delegates compared to 12 from the sanders. the sanders campaign is demanding a partial re-canvas. the associated press say they cannot declare a winner because the results may not be fully accurate. therts from washington say trump administration plans to lower the amount of money to allocate for border wall
11:05 pm
construction. 2e white house bro request billion -- the white house will request $2 billion. it is set to reflect the fact that much of the cost has been met by shifting money from military resources. their world is dialing back criticism of president trump's middle east peace plan. no longer condemning the proposal directly. tunisia has circulated a resolution in partnership with indonesia. for thesizes respect palestinian land. british airways has set a record transatlantict crossing by a passenger plane. down inflight touched heathrow after leaving jfk for hours and 56 minutes earlier.
11:06 pm
a strong jetstream helped the move 1300 700 -- let's get back here top story. the global death toll from the coronavirus has reached nine hundred 10. the world health organization is voicing growing concern. the pboc is stepping up the efforts to support businesses hit by the outbreak. an.'s head to iv get us up to speed for how events are unfolding. >> more than 40,000 infected cases globally. both those numbers have surpassed what we sold during the 2003 sars epidemic. we have seen fresh cases over the weekend in the likes of singapore and japan.
11:07 pm
we heard of a handful of cases in france, spain and the u.k. this is after a british man apparently attended a conference in singapore and then went into contact with people at a french ski resort. this goes to show how challenging it is to contain does virus once it is carried around the world. we do see signs of stabilization when it comes to the number of confirmed cases. and only rose 8% saturday sunday. that is the lowest we have seen in terms of the pace. is concern that we are just hitting the tip of the iceberg. at least the numbers and pace of the infection is suggesting we could be heading a peak sometime soon. big of a deal are the latest efforts by the pboc to
11:08 pm
support businesses? a very multipronged approach. vonne: pretty targeted measures. now, chinake right is facing the worst case scenario that it has quickly become reality. if you look at last year's stress test for the yanks, they were forecasting a worst-case scenario that growth could be four point 5%. scenario, that ratio could rise fivefold. saying, weretings sick -- worst-case scenario, we by 800ee that rise billion dollars, already adding to the mountain of debt china is sitting on. we have seen more efforts from the pboc on monday, today.
11:09 pm
the review process for loan application. those to be released within two days. ann from hongonne m kong. let get more perspective from hans. quite a big of the workforce is trying to get back into a normal routine in china. quite a bit of the economy is still off-line. epicenterch is at the of the coronavirus, that is not insignificant. it is the seventh largest province. thatmeone were to tell you the markets are in one word -- in one world and economic reality is in another world, would you agree with that? >> absolutely.
11:10 pm
we have seen this for quite some time even before the virus broke out. risk assets are priced according to what the central bank is doing. china, it has injected 2 trillion yuan over the past four weeks. these are the quiddity injections that would lift all asset prices. at the same time, you see bond yields coming down, which is an indication global growth is slowing. virus obviously has an impact on that. we can clearly see bonds are trading based on fundamentals. risk assets are based on liquidity. >> what about measures from the pboc? a couplefrom yvonne minutes ago, and other set of measures to support businesses. going into this, arguably a lot
11:11 pm
healthier than some of the other countries of similar size. a lot more vulnerable as well. overextension perhaps here? deleveraging the has to take a backseat. today, growth is the concern, nothing else. they will do everything and anything they can. to injecttry liquidity into the system and make funds available for the real economy. whether that has an impact on the real economy remains to be seen. it seems clear it has an impact on financial assets. yields endlower bond up in higher equity prices. >> what is going to be the perspective your for the market to wake up and start pricing in the kind of economic disruption that is underway in china? with the declining bond
11:12 pm
yields, that reflects fundamentals. theidity reflects itself in equity prices. most stocks have gone through the roof. drives risk assets. bonds more or less reflect fundamentals. to what extent this situation will have an impact on economic growth, nobody knows. a growth slows to four and half or 4%, it is hard to say. should i worry that the chinese are going to live up to their commitments? looking at the situation now and the people we have been speaking to, the chinese have a lot to deal with. hans: that is right. in order to reach purchased
11:13 pm
targets of american goods, they will need a booming economy. i think the reaction by the americans has been muted. need moresaid, they time. larry kudlow came out and said, they will need more time. clearly, it delays the whole agreement in terms of the timetable. you telling clients in terms of asset allocation? have you shifted any of your recommendations? know, -- no, we have told ar clients -- it is maybe counterintuitive move, but long team -- long-term bond yields can go lower. keep your exposure to equities because the fed is continuing its interventions in the repo
11:14 pm
market probably through spring. equity prices will be well supported. equities,t to be in they would educate exposure. utility stocks or stocks that would benefit from policy measures such as aerospace and defense. we are going to see fiscal stimulus measures in the united states. a lot of this will go to the military. and other thing we like is cybersecurity, which is an ongoing theme. >> we still have a lot to get to. hans stays with us. a member you can explore some of the up-to-date coverage on the coronavirus story by running vrus go on your bloombsbury. specificee some of the companies, how they might be exposed.
11:15 pm
this is bloomberg. ♪
11:16 pm
11:17 pm
>> let's look in on natural gas. simon joins us. simone: good morning. it was the hottest january on record. that is part of what is sending natural gas prices past -- to some of their lowest prices on record. gas at seasonable lows we have not seen since 1990. in the white, we have our asian lng spot prices also falling dramatically to record lows in fact. the question is, not just the weather, but how much impact the coronavirus is having on this market overall. that may give you some facts and
11:18 pm
figures. about twoprovide thirds of china supply. also -- hubei province, the center of this outbreak is not account for a huge amount of the natural gas use, nor does the transport sector. analysts are saying that should refuse utility companies imports of natural gas, blaming coronavirus, this would lead to another leg down for that market. i want to leave you with a look at about -- a look at how equity markets figured. looking downwhat about 5%. our biggest loser was -- a pretty negative picture across the board. for that.ank you
11:19 pm
let's get back to another developing story. jay powell confesses it is hard economystand china's and the coronavirus has made --t exponentially different especially difficult. it is something he cannot afford to miss this week. it will have a knock on impact for the rest of the world. let's get back to our discussion with hans. what do you expect from the chairman going into these deliberations? what kind of tone does he need to strike? will have to account the correct of the coronavirus. the chinese economy is 19% of the global economy. , that3 when we had sars number was 8%.
11:20 pm
he will clearly -- he will down his outlook. the up to mixtape -- the optimistic outlook was the economy is going to recover. the fed will have to realize it will have no choice but to lower interest rates again in the middle of the year and maybe again in -- maybe again later in the year. >> they are also trying to work out a new framework for the federal reserve. that review is slated to be completed by midyear. maybe an opportunity to give us a signal about where that could go? hans: i think what the fed is also concerned about is the lack of inflation. whether itsinflation is demographics, technology, the
11:21 pm
high debt levels. the fed is concerned. they are probably much more willing to look at the possibility of a rate cut now than a month ago. that is going to be the story we are going to hear. markets will probably like it. yousef: you talk about an equity market that you are fairly bullish about, but the reality is a lot of insiders have been selling their stock. corporate executives and officers have stepped up the shares of selling in their own companies. the ratio is nothing sort of astounding. if i am looking at this opportunity to go into u.s. equities, that is not a comforting signal. hans: absolutely not. i'm talking about the next two to maybe three months based on the low -- on the liquidity story. insider selling is much more
11:22 pm
than insider buying. yieldsid before, bond are much more indicative of economic fundamentals and equities. the bullishness has more to do phase thata blowoff can last as long as the fed is intervening in the repo market. that is not going to last forever. and then, reality sets in. you have to reevaluate the situation. yousef: something is completely off because you have all this injection of liquidity from various central banks around the world arguably spearheaded by the fed, but the inflation measures we use are not really capturing much of a change in terms of pricing pressures. part of a bigger review the fed needs to do here? the disinflation's
11:23 pm
are structural. demographics, technology. it is the debt levels. they work until they do not work. neither monetary policy or fiscal policy will have much of an impact on the economy. the impact is being felt in risk assets. that is the only inflation we have right now. the real economy -- we are seeing very little inflation. that is why bond yields will eventually go below lower. yousef: what is my biggest risk here? there iso 2020, probably nobody who expected the counter -- who expected the coronavirus to take the toll or come up with the ripple effect it has. what is my risk for central banks going all out with their
11:24 pm
liquidity injections from a portfolio management point of view? hans: that is plausible reasoning. i'm not saying the fed has to stop injecting liquidity in april. they go out and do a lot more. what the side effects will be is a different story. we have the fed, the people's bank of china, the ecb all doing the same thing. those banks that do less than the other will get a stronger currency. i think it will have an impact on currency exchange rates. another risk people are not talking about is the u.s. election in 2020. at the moment, markets are priced for the reelection of mr. trump, that if the democrats can offer a candidate further to the left, which may not be to the liking of wall street -- volatility based on politics go up. i'm certain about that trash --
11:25 pm
politics will go up. i am certain about that. yousef: still to come, we are tong to speaking jean-pierre. plenty more ahead. this is bloomberg.
11:26 pm
11:27 pm
yousef: it is 8:20 seven in dubai. the logistics giant aramex coming in with numbers for the quarter. atcal year net coming in 497.4 million durham's. ae market was looking for 523.6. the revenue line -- with the analyst had calculated was five point 23. a consensus from analyst. a little bit of pressure,
11:28 pm
downside of return potential for 44%. interesting to see whether there are any coronavirus considerations that flowed into that. that's get you a preview of what is up next. the saudi arabia index fell the pain of the oil slump.
11:29 pm
11:30 pm
yousef: brick live coming through on the bloomberg. airbnb investors have been trying to get their head around .ow much china activity airbnb is saying they are suspending all beijing --ck-in's until it is the first move. the last guidance was asking parts of china affected by the coronavirus to rearrange accommodation. they stopped short of warning customers. they are suspending all beijing --ck-in's until february 9 february 29.
11:31 pm
the world health organization is leading an international team of medical experts to china. more than 900 people have died. the number of cases have surpassed 40,000. more cases have been reported in singapore, japan and europe over the weekend. china is calling for more global support for medical supplies. defy nuclears to sanctions. had its run 500 has cost cut in half. itple -- state tv says reduces waste. you can hit targets 500 kilometers away at the fraction of the cost. the u.k. prime minister boris johnson is getting prepared to announce an infrastructure boost to the north of england.
11:32 pm
sources say the plan will include spending on 5g networks in rural areas and investment on public transport. johnson will also give the green light to the much delayed fast rail line this week. the political fate of india's capital will be revealed on tuesday. 15 million voters are choosing 70 members said the legislative assembly. the prime minister faces an uphill struggle to reclaim the region. it is seen as another major test for the ballot box. baseballork mets empire is looking for another buyer after the deal with steve cohen fell through. we are told there will be no preconditions over ownership. meaning, any new buyer can take full control immediately. analysts say that can push the sell price and set a
11:33 pm
major-league record. let's check in on the market action. mark joins us from singapore. chinese stocks are having a bit of a hard time to stay above the flat line in the green zone. what is unfolding there? ark: they are having a bit of trouble trying to decide whether the pboc is more important for the moment or the slope return to work across china. even though the official lunar new year is over, not all companies are returning to work immediately. that is having some sort of impact on what is going to have been to the chinese economy. people know that the economic data is probably going to be weak for several weeks. the pboc is doing its best to maintain high levels of
11:34 pm
liquidity. that kind of conflict is really pushing equities around. for the time being, positive indicators are not overwhelming beyond negative indicators we are getting from the coronavirus. we just had a story on the bloomberg saying as many as 500,000 could be affected by the time it dies down. we still have not gotten to the point where investors are comfortable everything is priced in in terms of the negative side of the virus. we are seeing that player in the market needs. equities are down, but not as bad as they were when we started this morning. we will see that drift around for the next few days as the pboc tries to stimulate the economy, but not everyone is coming back to work immediately. yousef: we have quite a few central bankers speaking. jerome powell is one of them. what are you going to be looking for? has already powell
11:35 pm
indicated the virus is going to have an impact globally. one of the things we saw last year is the federal reserve did lower interest rates. a lot to do with how they saw the global economy developing. globalre concerned the economy was below par. it will not be too long before investors are looking at the u.s. fed once again to bailout the global economy. we may see some hints from jerome powell over the next couple of days as he addresses this people in washington. the fed is very uncomfortable with this situation. they are getting ready to move toward -- i am sure he will not declare that fed rate cuts are coming straightaway. the fed is getting more worried. they will be leaning towards a rate cut if the situation is
11:36 pm
getting worse in the near term. yousef: great catching up. let's stay with some of the market trends. saudi arabia's main index dropped yesterday. the coronavirus reduced demand for oil. are front and center for this. >> yes, it was a quite interesting move yesterday. there was a lot of pressure in the saudi market. oil had a tough performance last week. look at what aramco did throughout the session. the stock was down as much as 8.1%. it managed to recover that much. it closed near 2% up. it is not clear why the recovery happened. we heard before from analysts and strategists and investors
11:37 pm
that there could be support from those funds that are tied to the government. if that happened, it is not clear yet. it will be in foreign -- it will be important to see the performance of the stock because there is pressure on oil. the stock is trading much closer to the level of the ipo last year. yousef: when you look at the correlation finder on the bloomberg, historically, it has not been the tightest correlation. there are times where they start moving in lockstep. it is especially when prices are where they are now. would not be surprising to see the pressure becoming stronger because most of the bigger names in the saudi market have not suffered nearly as much as brent this year. when we talked to investors portfoliosging their
11:38 pm
in saudi, they say there is a shift toward some of the stronger mid-cap names. basically thatg camps, banks and telecoms. yousef: the last point i went to arabiaare names like air and sab. >> we have a few names interesting to watch. during the session today, we had aramex deliver numbers not as good as the market expected. the same for dfm. fixed stock exchange -- the stock exchange here in dubai. it gives us a good idea of the market right now. we have the first abu w bank could buy hsbc to sell from hold with a lower pt, price target, of 13. we do not know what is behind that trade, but it is a big name
11:39 pm
with a significant downgrade. yousef: that is our markets and equity specialists. bag criticismown of president trump's piece -- down criticism of president israeli and palestinian peace plane. what is this range of tone we are seeing? >> the arab countries wanted to state their position formally on the deal of the century advocated by trump to get to peace by the palestinians and israelis. the original draft was condemning president trump's. -- president trump. the perhaps we'll make it difficult for some of president trump's allies in the region to come along. newer language will allow them to state their positions and
11:40 pm
show their opposition to new outlines without having to confront a major way. yousef: what is the sequence going to look like? a major milestone within the bureaucracy. >> we are going to see the revolution -- the resolution presented on tuesday. the palestinian authority is expected to address the yuan -- the yuan security council that day and state the palestinian position, which will and maying of this plan present some other ideas. yousef: i was going to follow up on that because the palestinian position has been one of withdrawal and rejection. any chance it is going to celfin? >> it is very unlikely -- going to soften? >> it is very unlikely that is going to happen. we see a lot of opposition to
11:41 pm
this plan, which many see as a plan giving a green light to the israeli government to annex most of jerusalem, east jerusalem and the west bank. there was a moment the past couple of days where the speaker of parliament in kuwait publicly through the plant in the dustbin -- the plan in the dustbin to how strong opposition. andef: some strong signals emotions. thank you for the excellent reporting. up next, as the coronavirus continues to spread, we look at one of the sectors hardest hit by the outbreak. that is the aviation industry. this is bloomberg. ♪
11:42 pm
11:43 pm
yousef: we have some breaking
11:44 pm
news into the bloomberg. have a winner for the academy award for best picture. parasite becomes the first south korean comedy and first foreign the award.lm to win it is a tale of an unemployed family. it is a bit of a break from the tradition at a time when the academy is under fire for failing to diversify its rakes and awards. parasite winning the academy award for best picture. definitely worth checking out. it's check in on the indian market. how has the session evolved? add, i saw the movie a day before yesterday. pretty interesting as well. the markets are not shaping up in good fashion. not expected to either with the way markets are doing.
11:45 pm
index i want to focus on is the mental index. it is two pronged. on.coronavirus fears keep all of the components are coming off. the largest steel company in india came out with the results. the numbers were lower than estimated. backlash and the dragon index down. definitely not for the indian middle space. back to you. yousef: thank you for that. one of the sectors feeling the hit from the coronavirus's aviation. bloomberg spoke with the director general for the asia-pacific airlines. >> i was in hong kong at the time. if we look back at that experience, the duration was three to six months. decline. a sharp
11:46 pm
it was hard to imagine it bottoming out. at hindsight, we can see the recovery was equally as dramatic. within six months, the traffic was back to precrisis levels. whether this one will play the same way as unknown, but it is a reminder we need to be prepared. this industry is very resilient. just as we can cut capacity and adjust, we can to play capacity back into the marketplace. depends on the disease and outbreak, and it depends on public sentiment. rapidly, fear spreads confidence is restored by a similar social mechanism. we saw at that time a very quick recovery and full recovery. need to be prepared for that. we do not know. we will take guidance from the medical professionals who are monitoring closely not just daily developments, but modeling
11:47 pm
the likely trajectory. it depends on the success of the medical efforts to contain the outbreak. >> a lot of the conversation has been centered around consumption, pours him -- tourism, passengers. last year was a terrible year for freight. we had the phase one trade deal being signed. how much does this impact the freight side of the business seen we are starting to supply chains being affected? yes, and i went to mention asian airlines carrying a third of the global passenger traffic. it was a tough year for air cargo because of the trade disputes. asian airlines saw a fall in 5% of air cargo last year. we were expecting a modest
11:48 pm
upturn this year. in terms of the impact, supply chains have been disrupted. a lot of factories shut down for chinese new year. stagenot obvious at this the supply side of things. in terms of capacity, the cuts in passenger services takes a lot of freight capacity out of the marketplace. it may be necessary to -- to deploy additional freighter services. yousef: we also heard from the ceo of a brazilian aircraft maker. he told us the outbreak will not impact his company's revenue or supply chain yet. >> we do not have aircraft delivering to china in the first semester of 2020. we do not have tier one suppliers. we have tier two or sub-suppliers in china, but the guidance says -- we are not
11:49 pm
seeing any movement on what we expect to get out of china in terms of inventory for this year. in terms of sales, for sure, there is limited travel. when we think about travel going in and out of china right now, china equates and accounts for 16% of global travel. since the coronavirus has happened, 25% of the schedule has been brought down. what is going on on the ground is more extreme. 15% of operating flights have been canceled. the percentage may grow. there are a lot of folks not traveling not only in china but in southeast asia. we are hoping we get through this in the next few weeks. to thinkeven realistic the aerospace sector get back to growth in 2020? that had been the expectation. >> the governing body of airline
11:50 pm
growth of 4.2% a growth in 2020. as theyt, the pundits do a bottoms up analysis, looking at the travel, they are suggesting that could turn into a negative two or negative six or 8%. we simply do not know as we sit here today. it is fair to say pragmatically the growth of up to 5% in asia-pacific region is not going to happen in 2020. say this is worth 4.2 billion dollars. there is no number. can you put a number to it? billion -- that is the investment in cash that boeing will be paying the emory
11:51 pm
shareholders for the acquisition of 80% of aviation. separately, the aggregate investment we are looking at making if we decide to go forward, a decision will make in the fourth quarter. and what the do manufacturers would do, it is a multibillion-dollar number. it is not a number my board has any appetite to take. no tether prop. what is the business case for it? >> it is very robust. when we look at what we have seen thus far, the two incumbents, particularly ato or and the q4 hundred, which is owned by a company in canada. 50% of the market. that is an effective monopoly.
11:52 pm
airbus owns 50% of atr. case, like the business those two incumbents are flying platforms that are 30 or 40 years old. they are allowed. they are noisy inside the cabin. they are burning i let more fuel than they need to. -- a lot more fuel than they need to. we have the capability to bring a destructive new app to the marketplace. we have been building turbo crops consistently. we know this technology. we know we can bring something special to the market. we have a couple more advisory boards. then, we bring our final recommendation to the board in q4. >> this jv is still pending regulatory approval. where are you with that? >> we have made good progress.
11:53 pm
there were 10 jurisdictions around the world. theave now secured nine of 10 antitrust approvals. capture without any conditions. john slattery. up next, for some of the democratic presidential hopefuls, the first primary is a chance to make up for a lackluster showing in iowa. we will tell you what you need to know about the key new hampshire primary. this is bloomberg. ♪
11:54 pm
11:55 pm
yousef: some more breaking news around the coronavirus developments. this time coming from japan. we understand the cruise is set to have 60 more virus infections. that is the tokyo broadcasting system. we are seeing a bit of a reaction in the s&p 500. there are now -- they are now moving from positive to
11:56 pm
negative. pete buttigieg appears to have sealed his victory in iowa after the democratic party released results from the disputed caucuses. attention shifts to the new hampshire primary, which takes place tomorrow night. >> we are going onto new hampshire victorious. >> people in new hampshire like picky iowa picks corn, we presidents. the numbers would seem to back up that claim. in 14 of the last 17 new hampshire primaries, the winners went on to be elected president. some democrats say this year maybe the results should come with an asterisk. vermont.nders is from elizabeth warren as from massachusetts. joe biden's allies point out that candidates from neighboring
11:57 pm
states have always done well in new hampshire. biden is downplaying expectations while going after sanders. >> he calls himself a democratic socialist. we are already seeing what donald trump going to do with that. >> as of the middle of last month, sanders had spent $3.6 million on tv in new hampshire. biden spent $5 million on ads in iowa. perhaps he is counting on the long-held belief that in new hampshire, you win votes in person and not on the air. a complication the front runners had not counted on -- had not counted on, pete buttigieg is now with them. >> we are calling out to everybody, progressives, moderates and forward thinking republicans to bring about a better day. the race could be decided by voters who are not even registered democrats. four years ago, three fourths of them went for sensors -- went
11:58 pm
for sanders. that turned a tight race with clinton into a landslide. yousef: let's check back in on the market action. quite a bit of downside coming through on the virus. this is bloomberg. ♪ hi! we're glad you came in, what's on your mind?
11:59 pm
can you help keep these guys protected online? easy, connect to the xfi gateway. what about internet speeds that keep up with my gaming? let's hook you up with the fastest internet from xfinity. what about wireless data options for the family? of course, you can customize and save. can you save me from this conversation? that we can't do, but come in and see what we can do. we're here to make life simple. easy. awesome. ask. shop. discover. at your local xfinity store today.
12:00 am
>> the following is a paid program. the opinions and views expressed do not reflect those of bloomberg lp, its affiliates or its employees. >> the following is a paid presentation brought to you by rare collectibles tv. ♪ >> our country was founded on life, liberty, and the pursuit of happiness. representing this idealism is our american eagle. the bald eagle was chosen in 1782 to represent the united states because of its long life, majestic looks, and great


info Stream Only

Uploaded by TV Archive on