♪ >> this is "bloomberg daybreak: middle east." our top stories this morning. >> the u.s. government shutdown becomes the longest in the modern era. now entering its 23rd day with no end in sight, how long will it last, and what impact will it have on the economy? >> ministers are said to be urging theresa may to seek help from her archrival, jeremy corbyn. he says that if parliament kills her brexit deal this week, there should be a general election. 20's percent since the december low. the omani energy minister and ceo are confident the rebound will hold. we hear from both of them this

morning. >> the test would be whether we can keep 60's during this low demand period for the next eight weeks. >> meanwhile, rising oil prices have helped qatari stocks to a two-year high. investors now await earnings season. ♪ >> just gone 8:00 a.m. across the emirates. i manus cranny and i would dotty. >> i'm yousef gamal el-din in dubai. you have plenty lines up there, manus. >> we have, indeed. look at the price of oil, back above $60 per barrel. we have two huge voices calling

that the market is going to bottom, and we will hear from both of them. the bears seem to have cleared out of the way, slashing their short bets. this is the lineup we have for you today. with with thenterview ceo to dealing with adnoc. we also hear from the oman energy minister, and i will be joined live by the uae energy minister in his first interview of the day. car,ter, if you are in the please get here on car, please get here on time. >> absolutely. the drop in energy rattled the close of the s&p 500 on friday. you saw some of the key moves and asset classes around the world, mounting concerns about the ongoing government shutdown, balancing out the strength we saw in carmakers following optimistic earnings forecasts from general motors. one of the best g10 performers is mounting speculation that brexit will be postponed, cable looking at its fourth straight

week of gains, the best run in nearly a year. bank of america says there no shortage of inconsistency in the u.s. rates market, in that interest rates have declined to level suggesting potential growth is much slower than expected. brent crude at 60.48. watch out for u.s. crude inventories and rig data. let's check in on the picture around the world and toss it to christine burke. >> thank you. 10 the thousands of yellow vest protesters rallied around the country again on saturday. the movement is trying to rebuild momentum after declining turnout in recent weeks. the ninth weekend of demonstrations come days before the president launches a national debate intended to dispel the anger from the reason violent protests without derailing the reforms he insists the country needs. senior british ministers are said to be urging theresa may to seek help from her archrival, socialist jeremy corbyn, if

parliament kills her brexit deal this week. sources tell bloomberg a group of pro-european ministers want her to invite the opposition party leader to meet her for negotiations in the hope of agreeing on a joint plan. premier will visit washington at the end of the month for further trade talks, a sign there has been more progress in ending the dispute. between the two countries bloomberg has learned he will meet with treasury secretary steven mnuchin and robert lighthizer. tokyo, carlos ghosn has been indicted a second time over allegations of financial crimes. he's accused of transferring personal investment losses to nissan and underreporting his compensation. he has been in jail for almost two months in his lawyers say they will apply for bail. 18-year-old saudi woman who fled the country and said she feared death is deported back home, arriving in canada which is offering her asylum. the nation's foreign minister

hailed her as a very brave new canadian as she arrived at toronto's airport. her situation has highlighted the cause of women's rights in saudi arabia, were several women abuse by their families have been caught trying to seek asylum abroad in recent years. a divorce attorney has told bloomberg that the high-stakes -- will be handled as quickly as an amazon delivery. the founder of the online shopping giant has a net worth of $137 billion, according to the bloomberg billionaires index. a couple intends to part as friends, and mckenzie could become the world's richest woman. and there's good and bad news for spacex. promises tocompany be a busy 2019 by blasting a rocket carrying 10 satellites into orbit. however sources have told bloomberg that the firm plans to cut about 10% of its workforce. representatives of the companies did not return calls or emails. global news, 24 hours a day and

at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm christine burke. this is bloomberg. >> thanks. let's get back to our top story, the ongoing u.s. government shutdown, becoming the lost in the modern era as it stretches and today 23, no end in sight. 300,000 federal workers missed their paychecks last week, in negotiations of border wall funding are at a standstill. overnight, the president tweeted the following. "democrats should come back to washington and work to end the shutdown, while at the same time ending the horrible humanitarian crisis on our southern border. i am at the white house waiting for you." let's hear from some additional insight, a long list of guests. >> we need a couple more weeks for that to happen. right now the economic impact is too small. a couple more weeks, and it depends on what trump does next.

right now we think it's ok, but it is very political and dependent on what happens next. >> i think what should matter is treasuries. there is not i enough risk premium about the shutdown and all the political risk. >> the problem is it is difficult to isolate the impact of the shutdown, because essentially the period of time over which the government has shut down, there's been so much going on elsewhere within the u.s. policy sphere, within the economic sphere, and globally. >> meanwhile, jerome powell says the u.s. central bank can adjust interest rates as it waits to see how global risk impacts the domestic economy. we spoke to david rubenstein in washington, d.c. >> each individual participant on the fomc submits their individual projections four times per year. we did that in december, and to rate increases with the median. it was conditional on a very strong outlook for 2019, which

may still happen. the good thing is we are in a place where we can be patient and flexible and see what evolves. in the meantime we are waiting and watching. >> a snapshot of what was an insightful conversation. let's bring in the founder of -- welcome back to the program. we have built a chart to set the scene a little bit. clients can pull this up. this recession was predicted by the treasury spread, creeping higher. the government shutdown -- at what point does it become a factor in the way investors are pricing the risk? >> the shutdown itself has a relatively low economic cost. we are talking maybe $2 billion per week, which is not a big deal. is then issue, i think, functionality of the politics between the democrats and republicans. the next thing coming up as the debt ceiling. the deficit this year is running close to $1 trillion, so we want to get to the debt ceiling.

the next thing on the agenda that you will have confrontation on is whether or not you will get a discussion on the debt ceiling. the main issue right now is not so much the shutdown, but the dysfunctional politics and what it means about economic policy moving forward. if you look at the fed, the fed is writing, saying the signs might be going for a recession. you have many factors that are pointing in that direction. you have an inverted yield curve, which is suggesting that the market is expecting the fed not to raise rates during 2019, and may be to cut rates in the second half of 2019. the wait and see attitude of the fed i think is the appropriate one at the moment. we might still end up seeing a rise, it is looking unlikely. markets are saying let's look ahead, but we are starting to price in the recession, and i think recession is more likely

by the second half of 2019. very good morning to you. it's interesting you talk about debt. there's a couple points are guest talked about, the one of them about the u.s. is floating on an ocean of debt, and he is warning about corporate bond markets. do you think that is a big market risk? just look at some of the volatility and high-yield over the past five or six days, momentous moves. >> yes. well, let's look at the debt market. it's important because you have personal debt as well as government debt. if you look at personal debt, i.e. consumer and household debt, that's around $19 trillion. much of it is mortgage-backed, but you also have student loans, carloads, credit cards. with higher rates, we are seeing, particularly in the

mortgage market, the housing market is starting to turn down. look at housing stocks, house sales. those are getting impacted by the higher rates of the fed. on the debt side, if you look at the trigger, it could be student loans, it could be defaults on car loans. we are seeing default rates on 5.8%, highers at than the peak that we had in 2008. if you look at sovereign debt, the picture is even worse, because you've accumulated a large amount over a short period of time. over the trump administration, you are looking at an additional $2 trillion, and more is expected in 2019. so the markets are between two hard places. >> in terms of conviction calls, if you look at how the defenses have performed on the s&p 500,

we put this together -- they underperformed in the main index of the last few trading sessions. what are you telling clients in terms of exposure? >> in terms of the debt market? >> across asset classes. >> this is the time to go for cash. nothing looks very exciting. i would go for emerging markets, if anything. but cash would be king at the moment rather than equities. i would go very light on equities, and if anything i would go towards emerging markets. you have a little bit of leeway over the next month or two in terms of u.s. equities, but i think the pricing is going to be all of the downward side. >> thank you very much. we will keep that in mind, cash is king. he stays with us. still had on the show, we speak live with the uae energy minister in his first interview of the day. that's at 8:30 dubai time.

senior ministers are set to be urging theresa may to seek help from her archrival, jeremy corbyn. he says that if parliament kills her brexit deal this week, there should be a general election. this is bloomberg. ♪

♪ let's get you another quick check of the latest business flash headlines with christine burke. >> thanks. the cofounder of the chinese smartphone company xiaomi is shrugging off the shares slump that lost $16 million off its market value. he says he expects the advent of next generation wireless to boost sales. >> [speaking mandarin] >> 5g is coming very soon. at this point, the demand for smart phones is declining, but when 5g comes we

should expect to see it peak in the demand for smartphones. shareholders are suing google for approving and $90 million exit payment to an executive accused of misconduct. andy rubin was the creator of android mobile software. shareholders say he was allowed to resign after investigation found allegations of sexual assault to be credible. he also says google covered up similar misbehavior by other executives. google is not commenting. in general motors shares surged on friday after a surprise forecast. the company says that profitable growth this year, even as global auto sales level off. gm gave credit to a recent rout of cost cuts. bloomberg spoke with mary barra. >> we still have more work to do. we areend of last year, focused on this transformation to make sure general motors is strong, demonstrating that we can continue to deliver results. >> and that is your bloomberg

business flash. >> christine, thank you very much. senior british ministers are said to be urging theresa may to seek help from her archrival, socialist jeremy corbyn. parliament kills her brexit deal in a crunch vote this week, sources tell bloomberg a group of pro-european ministers want her to invite the labour party leader to meet her for negotiations and the help of agreeing. corbyn says there must be a general election if she loses the vote on tuesday. >> if the government cannot pass its most important legislation when there must be a general election at the earliest thattunity, a government cannot get its business through the house of commons is no government at all. our guest still with us.

all of this might change. what i find fascinating is that blue to the core tories are talking about reaching the cross the aisle in parliament to look for consensus on brexit. is that really that out of the realm of possibility in your thinking? >> generally, corbyn wants to become prime minister, that is why he's calling for a general election. it is unlikely that the tories will agree to that. at the same time, he lacks political courage. i woulde jeremy corbyn, be on the no accident -- i would have asked for a referendum, a new referendum. he missed that opportunity. there is the possibility that they could strike a deal, but what is the nature of the deal that they could strike? much of the labour party, the backbenchers, are against brexit, so what is it that

jeremy corbyn can offer theresa may that would reach some sort of consensus on moving forward? i just don't see how that could work. >> bloomberg did a survey on what the banks think ahead of the key vote. we put this together on the graphic, the best case for the pound after next week's vote is the least likely in the survey of 11 banks. or currency could job, plunged to its lowest point since the referendum in june, 2016. which scenario is the most likely? do you agree with the projections the survey is suggesting? >> the market would really like a new referendum, that is what the market wants. if you look at the economic costs, the economic costs of brexit are terrible for the u.k. so the market would like to see a new referendum. the other possibility that the markets would love is an extension, i.e. reaching out to eu and saying let's forget the

march, 2019 deadline and try to extend its maybe one more year. the eu i think is likely to accept that, because they don't want to know deal brexit. think the consensus between britain on the one side and the eu on the other would be for an extension. it is highly unlikely that at this late stage you are going to renegotiate the deal. certainly there is no appetite on the european side. the most likely outcome is probably an extension. whether or not that resolves the issue is a moot question. i doubt an extension would resolve it. what you would really need is courageous politicians and the u.k. to say our future is within the eu. i haven't seen any courage on behalf of those u.k. politicians to go out and say that. politicians is a very interesting combination. haven't seen much of it, myself.

when we talk about taking courage by the throat, valuations of the ftse 100 relative to europe are the but it iseight years, not going to literally stop. the world is not going to stop depending on the outcome of brexit. and that kind of a discount to europe, is there anything that would take you into u.k. equities? >> well, yes. the pricing is attractive, in the pricing of the pound is even attractive at the moment, but the real issue is going to be the long-term prospects for the u.k. economy. true, the u.k. has many things going for it. a relatively high level of productivity compared to the continent, so i think what you need to look at is not only brexit, but also whether or not the u.k. is able to reach it to its eu partners and say

want a new form of partnership, and forget the focus on brexit. so yes, i think the pricing is attractive. theink after the 15th, markets could rally fairly strongly. if you have an extension or if the indications are that they could go for a second referendum. so yes, -an upside for the pound -- >> we will discover just exactly what the permutations are for the u.k.. thank you so much for being our guest this morning. coming up on the show, oman's oil minister predicts that the oil rebound will hold this year. we will bring you our interview with him, next. this is bloomberg. ♪

♪ oman's oil minister is predicting that the latest oil

rebound will hold. he told me that the agreement between opec and its allies can sustain prices at least $60 per barrel. 1.2 million1. will go a long way in reducing the inventory level with many of us. especially at a low demand cycle, i believe december, january, february, there was less oil anyway, so the real test will calm in the second quarter, march and april, when we see the demand picking up and how effective these 1.2 million are going to be. >> that is going to be the critical moment. that will also come at a time when the waivers from the usa, we expect, will expire.

do you think that will put extra pressure on the supply side? >> well, we are committed as a side,to watch the supply and there was pressure in the last quarter of 2018 where decisions by big producers russia and saudi arabia, for example, and others, including and i think there's a commitment by all of us to make sure that there is no dent in the supply side, should there be a need. and if there is oversupply, we cut the fed as well. >> can i ask you to come back? we are at $60 at the moment. do you think the deal has been enough to sustain $60? >> i think yes, especially the reaction of the last week, where the price really moved from $65

to $60. the test will be whether we can keep $60 during this low demand period for the next eight weeks or so. >> how important is a china-u.s. trade deal for the demand side in terms of cost and demand? >> extremely important. there's a lot of psychology and markets, as you know, and one of the catalysts of the psychological thinking of the strength of oil markets is china-united states discussions on trade issues. there were rumors of good news, been rumors of bad news in the last few days, but i think this sudden increase from $55 to 65 partly is attributed to good news rumors, and yesterday i stations thatious

we are not doing very well. ♪

is 8:30 a.m. in dubai, 90 minutes away from the market open in the emirates. a quick note on how the bloomberg dollar index closed on friday, because it tricked its weekly lost. you had uncertainty about the prolonged shutdown of the u.s. and turkish troops being sent to the syrian border as u.s. troops prepare to leave. let's mount -- round out the picture with christine. christine. >> the u.s. government shutdown over