manus: you are watching the best of bloomberg daybreak middle east. slide, breaking through the moving average. when might it stop? one of africa's longest serving leaders bows to public pressure not to seek reelection. crude climbs to a 2019 high on fresh industry data, and opec and the allies keep up the cuts. ♪ manus: saudi stocks extended

their losing streak to a fifth straight session monday, the longest run since december, leaving the gate a few points from crossing the average. although one of the 12 members fell. we have more with eric schwartz. eric: we are fully invested. we see opportunities in the gcc markets. our favorite countries continued to be saudi arabia and kuwait. we focus on banks in these countries. there are a couple of factors driving price movements at this point. one of the most important is the index inclusion, which will be playing out over the course of the next year. this thursday will be the first tranche of index inclusion for the ftse index.

so we expect to see a large amount of passive money coming into saudi arabia, kuwait, and other markets included. manus: you have drawn our attention to valuations. saudi banks relative to the em. you make the point we are trading at a healthy treatment. we can use any of -- and a number of valuation metrics. does that suggest the top end of the trading range? eric: it could well be. there are factors driving investment considerations to this point in time. if we look around the region, one of our favorite investment opportunities is in upper darby islamic bank. there, the shares traded seven, eight times pe, dividend yield of 6%. we have been following the stock for some time and are

comfortable with the nonmanagement. yousef: do you expect more emergence in the united arab error mets? -- emirates? they were saying the first abu dhabi bank could be more. is this a signal that there is plenty more to come? eric: i think the recent announcement with abu dhabi commercial bank will end the merger consolidation sector for some time. it will be years until we find another banking consolidation story into the market. manus: on the credits side, we talked to moody's shortly, but we want to get your take on credit in the region. what appeals at the moment? we have had moves on ammann, the qataris coming to the market. what stands out for you? eric: it's been quite interesting. as the central banks and the fed

ease to monetary conditions, we've seen a rush of issuers come to the market to take advantage of easier fundraiser an environment. we have seen how they come with their debut corporate issue. we've seen qatar, export banks. these are issues which investors have snatched up and been quick to invest in. with easier financial conditions, we expect the emirates charger to come into the market. we expect him on to come into the market, as well as bahrain. so issuers are taking advantage of investor appetite with easier conditions in the market. yousef: we've seen changes in the oil market. morgan stanley made some changes. we had deliberations between opec, non-opec. the meeting is in focus. getting of them in the last few days -- a bump in the last few days, the oil price.

is there upside? eric: we think there's more upside, but on the back of supply cuts or supply disruptions. saudi arabians base their budget on an $80 average oil price for the year, so i think we'll see them work in all manners to get the oil price to that level for the average of the year. manus: one of africa's largest serving leaders doubted to toular protests -- bowed popular pressure. he will not seek reelection. he wanted a fifth term, but mass protests persuaded him to abandon his campaign. we spoke with our managing editor of the middle east. >> if you see with the protesters are saying, because at first it was a protest about seeking a fifth term. then it moved, as we've seen with the movement, with leaders

slow to react, the demands over to what they were promising. it became more about deeper political change. a net we say i'm not going to seek -- and now we say i'm not going to seek a fifth term. is thisquestion is, going to be enough to placate protesters? the earlier indication is that no. >> good to see you this morning. walk us through the economic impacts. is it likely things will get worse before they get better, given that with previous arab episodes, they have typically come with slower economic growth and worsening balance of payment? a: we haven't seen anything go beyond the narrative you are suggesting here. on the other hand, if zero were to open up, you talk about people here who monitor the country, there is demand for about everything.

it is a closed market. imports are restricted. if present a huge opportunity. on the other hand, it's got a big oil wealth, but it's really slow in implementing reforms that will increase employment. of thingshat risk going at a control. we've seen that. it's something to keep an eye on. --,s: of next, the view of the view of moody's on brexit. this is bloomberg. ♪

manus: welcome back to the best of daybreak middle east. theresa may wanted changes to the brexit bill, raising expectations that the deal might pass on it. we talk with the eu mission president, the prime minister secured assurances on the irish

backstop, including that measure cannot be permanent. they get reaction from common ellis, chief credit officer. colin: i think this can be very close. if i had to bet on it today, given we haven't heard from the mp's, right now i would say she will fall just short. but it should be an awful lot closer than it was in january when she lost of a record margin by over 200 votes. these changes theresa may has achieved are all about appeasing the so-called european research groups, the r.g., which is the score of conservative mps -- this core of conservative mps that want to leave on start terms. will this win enough of those people around to compensate for some conservative mps to know don't like the deal at all and the majority of opposition mps who want to exit that's a bit closer to the eu implied by her

deal? yousef: there is quite a bit of damage done to the u.k. economy. if they can gets pushed down the road, to use the description again, is the damage going to accelerate? how are you looking at it from a credit perspective? colin: uncertainties are never a good thing. know investors will delay making the purchases. but if you avoid a no deal brexit, a choice to rejoice -- reject theresa may's deal, reject no deal, and buying more time. that process will be less damaging than the u.k. crashing out without a deal. we've already seen negative effects and we published an updated scenario that said, relative to our base case, which is they come to a deal, you

could see as much as 4% gdp fall off the u.k. economy over the long-term in the event of no deal. that's really what matters for us. when we're talking about credit ratings, we are really talking about short-term disruptions. it's more about medium-term prospects. note, we wrote an article. 5%resa may's gdp can produce in the next two years. but your point on the credit side, public revenue can drop by nearly 2%. and therein lies the issue for you. colin: our sovereign approach encompasses a long-range approach. after the 2016 vote, when we took time to see what impact as it was happening, we talked about physical strength to revenues, deficits. we also talked about

institutional strength. one thing that really matters for large, developed economies that have low trend growth rates is the ability of policymakers to get things done to avoid credit issues arising. in the past, we have had a high score. it has come under pressure and we have advised test revised that down a little bit. yousef: how has it found the balance? uncertainty from brexit and the process, how do you find the talents between austerity and stimulus? clearly, the ecb things economic activity is lagging. a new reality check we got last week. perhaps time for an update. there relative to 2007, are only three euro area countries that have lowered debt to gdp ratios. we've seen public debt rise substantially. as part of that, we know

institutional fragility's in the euro area still persist. we've seen three solid defaults. we should never forget that. the reason we have different credit ratings for different countries in europe is reflective of the fact their individual situations, individual debt positions are quite considerable. manus: what does it take to take broader europe into recession, germany is slightly and let with it. what does it take to knock us over the edge? what is it your most worried about on recession watch for europe? colin: given where we are for europe, probably wouldn't take that much, just a normal cyclical downside shock might be enough to push europe technically into recession. i think again, to stand back and think about it from a credit perspective, we don't focus on

those short-term cyclical developments. it told us rather something about differing economies of different countries. that would be of more concern. yousef: let's cross back to this part of the world. we had action taken on oman, in line with some of your peers in terms of reducing the rating. thought ofr topline what you think of what oman is doing and what it needs to do to get back in the game. colin: we downgraded oman a week ago. it was just on the cusp of investment grade down to outside investment grade. the key driver for that was the fact without fiscal consolidation, the money government, was likely to prove even more difficult given its social and economic objectives. when you think the government is probably going to run financial balance deficits of around 10% gdp, the external deficit is

there at about 9.5% gdp. there are some real challenges to correct the debt dynamics here and to address the fiscal weakness we see inherent in the economy. and we are less confident that is going to play out going forward. manus: the latest on payrolls numbers was a surprise. the u.s. economy added 20,000 jobs in february, the fewest since september 2017. however, wage gains indicated a tightening labor market. >> wages rise more than they half at any time for a long, longtime. wages are going up the first time in many years. i talked about it during the campaign. for over 20 years. i'm happy about that. manus: markets weren't so happy with all the benchmarks slighting on the back of the numbers. we have more with tommy malik, investors for the bank of singapore. >> there really are two camps

year. the first camp is mentioning the beginning of something more serious, referring to oecd numbers, dropping the global growth from 3.5% to 3.3%. they are planning to imf mild -- numbers, pointing to ecb saying they are bringing growth down, and they are saying these are clear signs there will be 20,000 jobs added. we need to be worried. this might be the start of something serious. on the other hand, i'm of the latter group which says you can't look at one jobs report. mind you, the jobs report from last month is about 311,000 jobs added in january. if you do an average, that comes to 806 jobs the average of less three months, pretty robust. the wage growth has been very solid and robust. the unemployment number shot down.

that could be because we have some of the employees in the labor force again. there are a couple of steps you have to be careful for. one is the people that have part-time jobs looking for full-time jobs or some just looking for a job. that dropped, which is very significant, down to 7.3%. manus: what we're trying to do is take all the data. we have to look at the breakevens. the breakevens are rising. wages the strongest since 2009 on a year on year basis. economic supplies are chopping. this is the debate. let's look at the two-year breakevens. that is beginning to push higher. can i use wages to infer there's latent inflation pressure? ali: i think we would think so. inadvertently. and if you look at the beige book findings this year, a lot

of the district banks are saying they are feeling wage growth pressure. we are seeing robust wage growth. i don't know how the fed will tackle that with average inflation target they have. that's the issue i have. how do you extrapolate from the data we got friday into what the fed is or isn't going to do in 2019 and beyond? where do you make the link? ali: i think the data is pushing towards higher inflation is what i feel. however, patience is the mantra for 2019. manus: the one thing is the dollar. it's interesting. the dollar still has the least ugly mark and it sort of is mirror mirror on the wall. it is the dollar for the moment. ali: this is something i might put my hand up and say we

haven't exactly gotten right. manus: goldman sachs got it wrong, as well. ali: we've been calling for a weaker dollar for quite a bit. it just hasn't panned out that way. that's because really, there's no currency that yields that in a g10 currency. we notice era bank is still attracted to the u.s. deal, touching closer to 3%. manus: up next, crude climbs. fresh industry data. can it keep the pressure on cuts? this is bloomberg. ♪

manus: welcome back to the best of daybreak middle east. crude regains momentum after reports showed a drop in u.s. feel supply. oil rallied more than 25% so far this year in new york as opec

and allies show commitment to their deal to reduce production as output in venezuela declined. we got more with the managing director from frontier markets at merrill lynch international. guest: for the year, we are still going with $70. we expect oil will rally into the summer. we think a number of factors will see the oil market tighten in the coming months. and as a result, as we head into the summer, we should see oil prices to have a seven handle, maybe even higher depending on a number of other factors. but as things stand, we are looking at $17. that's a $72 average from today onward. manus: we have a look at volatility. it brought me back to oil volatility. market.the oil daily trading range is tight. we've had a lot of moments. but it seems to be what happens

at the next market can be a trigger if they go for deeper, longer cuts, or even just longer cuts. is that the tipping point? hootan: i think it could well be. but look, we are expecting opec production to be down 1.6 million barrels a day year on year from 2019. we are expecting supply growth. the market is going to move into deficit. that's going to come around summertime. if the cuts are deeper than what we are expecting, and ultimately we see the market and a bigger deficit, than there is scope for oil prices to be higher than we are expecting. but let's wait and see. absolutely, the next opec meeting can be a trigger point. yousef: we are getting online here. company, petrochemical arabian petrochemical, a little bit of movement in the petrochemical side.

a look at the sectors performing best so far this year, petrochemicals and material plays are not there at all. we put the graphic together, tells the story. this is a story of consumer services. story of banks, food and beverage story. is it time to move away from some of these crowded trades, maybe get creative with some of the underplayed sectors? hootan: hey, our call earlier this year, we went more negative on the petrochemicals and downgraded names, focus on two in particular. we downgraded the balance of the main names, primarily because of the headwinds for demand in the sector. and because we felt we had seen a peek in -- peak in some of the margins. as a result, we moved to a negative stance. that's been right. if we look through q1 earnings, petrochemical sector was a disappointing one, 30% year on

year decline in earnings overall. if you look at banks with all of them reported, 10 of them beating expectations and overall earnings up 15% year on year. what do we think about year for the balance of the year? we stick with the banks. there is a lot more in terms of volume momentum, more long growth than people thought. maybe more margin expansion coming through despite the fed taking a more dovish tone. we still believe there is scope for further margin expansion. manus: are there any headwinds in that story? one of our writers is questioning the profitable trajectory. in other words, a replication of 2019 what we saw in 2018. questioning the profitability outlook. you don't see those headwinds dropping into lower single digits? seean: i don't think we'll

the level of growth in 2019 we saw in 2018, but i think the key in 2019 is we're going to see a shift away from margin expansion to volume growth. there will be some expansion because of the delayed repricing of loans. but i think the focus now is on volumes, and we do see scope for points to grow and that's where we might be out of consensus. but certainly, discussions with management teams and looking at having had discussions with the ministry of finance, looking at the plans for the saudi government are, we'd be very surprised if we don't finally see pent-up demand for loan growth to start showing itself, particularly in the second half of this year. it moves from margins to volumes, but we think there's a growth story. manus: up next, fresh research shows global growth is at its weakest since the financial crisis. is it time to panic? this is bloomberg. ♪

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manus: welcome back to the best of daybreak middle east. research showed the global growth at its weakest is the financial crisis a decade ago. a new gdp tracker put expansion at just 2.1% on a quarter on quarter basis. that's sharply down from 4% in the middle of 2018. the oecd added to the sour note, saying momentum in the u.s., u.k., canada, and euro area is slowing. although there are signs china is stabilizing. tracy and yousef got more with a senior market analyst. guest: having think a lot of

this will come down to the interpretation by the attorney general as to whether he can change his previous legal advice about the lack of safety on the previous backstop measures. the forex markets and investors in general have had itchy trigger figures to buy sterling on no news is good news sort of situation. the technical picture does look good. resistance.ong we do come through to a third vote with and ask for extension. the market will still buy sterling. if by some chance, prime minister may gets the approval of parliament tonight and there are no more votes, which is, i think still quite difficult. but if she did, i expect sterling to resolve substantially higher very quickly. ofsef: jeff, another piece

context on the sterling and cable trade, gtv for our clients. risk reversals hitting a 10 week low. what exactly would you recommend to clients, then, going into the tuesday vote? well understand there are multiple scenarios. but if you had to advocate one, what would it be? having the reason it has come back to a more neutral position was because risk reversals themselves were strongly favoring downside up until yesterday, as implying investors were buying puts to hedge against potential bad news. withay i see it right now, this deal coming back to parliament today, i think it will be difficult for sterling to drop below the 131 level at the moment. they're not saying there is no deal.

they are not saying negotiations have broken down. parliament once some sort of deal and some sort of form. for now, sterling is quite safe above that level and the danger, so to speak, or the more likely resolution is that it is going to move higher. if we did have an extension to the deal, i'm not sure if that would achieve everything because the eu has put their foot down and we could be in this position in three months time. for now, sentiment is strongly positive. manus: the latest data out of china added more weight to signals economic slowdown deepened the first two months of the year. industrial output rose 5.3% a year earlier, the worst start since 2009. retail sales came in line with expectations and growth was slowest since at least 2012. tracy and i got more with shane

oliver and head of investment strategy and chief economist. shane: one would think it would be, but don't forget the margin that deal has declined over time. you might think if we keep going like this, parliamentarians will feel they have no choice but to support it. i would think it is a risky strategy. dividends lynch said the lunatics are back in control. that seems to be a good description of what is going on. what we saw overnight or the vote we saw to avoid a no deal brexit wasn't a decisive one. it was a binding decision and of course, the margin was w, never wererro than i would've expected. my base case, it's either going to be a soft brexit or no brexit at all. i have low probability on a no deal brexit. last nights parliamentary vote

increased the chance of a no deal brexit. it's quite easy for the u.k. to stumble down that path. tracy: shane, i was reading a note this morning from nomura. thead the headline: "what brexit saw that means for asia." and the answer to that question was pretty much nothing, except if we get a hard brexit. is the brexit drama essentially a sideshow for global markets? shane: yes, it is, and i think it is an entertaining sideshow. it gives me a laugh every morning. these guys are really stepping things up from the get-go, starting to put five years ago. the british -- 2.5 years ago. that lie has cost them ever since. it's costing them immensely because businesses are making decisions on the back of these individuals. this is not the way to go.

it's mainly an issue for the u.k. if we have a hard brexit, it will not the u.k. into recession, but maybe it knocks .5% off eurozone growth. not great, but not disastrous. the u.k. is not a member of the eurozone. if they were, it would be a bigger issue. if you were down here in asia where i am, it's not having a huge impact on markets as i see it. it's a bit of a sideshow. the big issues are the u.s. china trade deal, eurozone economic growth -- is it finally picking up? and of course china. second quarter is what happens in the u.k., but it's not a big issue in asia. manus: we dig into some of those bigger issues in a moment. i don't think people liking up in the u.k. is one of those laughing matters. goldman sachs reckons there's a dividend to be had in

eurosterling. it's quite a german this call. they're saying durable -- eurosterling can rally to a tenure high. closer unions, single market memberships. i think that's quite a stunning call given where eurosterling is at the moment. shane: i would agree. there's lots of risks around that. we don't even know we're going to get this deal. i think it would be dangerous to bet on that at the moment. there's also the fallout. deal,f they do work out a uncertainty will continue for several years over sometime before the work out something sustainable long-term, which i think will also weigh on the british pound to some degree. i would be skeptical about how much the pound can rally. if you look at probability, you would have to say there's a

massive downside if they don't come up with a deal. manus: up next, u.s. regulators jetd boeing's top selling in a major blow to the country. more on the details and speak to aviation analysts. this is bloomberg. ♪

manus: welcome back to the best of daybreak middle east. aviation regulators changed course and decided to ground the boeing 737 max 8 and max 9. the u.s. was the last domino to fall. the countries and carriers across the world ordered a ban after the disaster. tracy and i got more with stephen engle, and travel and aviation analyst at air traffic.

argument, was this a mistake? that is the perpetual debate. the faa, unlike 40 plus other countries and aviation regulators, did not ground the plane as quickly as they did. china, the first one coming out of the gate on monday to ground the whole fleet of 737's surveying the china market. but the faa, a day after saying this airplane has continued airworthiness, we had a bit of a reversal because of new evidence. satellite flight tracking data, combined with newly discovered evidence from the ethiopian air crash suggests parallels between edo been crash and mynheer crash that many -- why an air crash that many speculated that boeing and -- held off. safety is priority. this is what faa chief said.

it became clear to all parties that the track of the ethiopian airlines flight was very close to and behaved similar to the lion air flight. we have diverging opinions. we had former american airlines chairman on that said this was not necessarily warranted. then we had the former ntsb chairman. and he said it was a huge mistake. guest: the change in that buzz it -- budget to sell certification of its own aircraft. and since that time, you had the problem with the 787. and i you have the problems with this model. you know, certainly you can draw the dots and see that boeing has worked hard, lobbied hard to put themselves in control of their own destiny and they are not

doing a very good job on aviation safety. stephen: as jim hall is inferring, it begs the question, does the faa have enough oversight of boeing? manus: that is going to be a bigger question that will endure. stephen, very briefly, how much reputational damage for the faa and boeing? how much damage are we looking at? stephen: obviously, there is going to be some reputational damage, especially with boeing. very quickly, i'll mention about fixed ratings. still premature to take ratings actions, but most concerning will be a harsh scenario, including a systemic issue with the aircraft leading to lengthy groundings, material delays, oil cancellations, and negative public sentiment. now a harsh scenario such as this could weaken the credit profile of boeing if there's a coalition between the causes of

the two crashes. they say the situation could worsen lengthy groundings and delivery delays will ensue. so, this story's not going away. manus: no, certainly not. stephen engle with the latest in hong kong. let's dig deeper. we'll stick with travel and aviation theme. we brought and robert cocoon is, president and managing partner. good to see you this morning. more details will come to light. this investigation is at the start. you would say there has been an over abundance of caution. why would you say that? robert: speaking with a number of industry partners, there's been a lot of focus beyond the specific aircraft that technically, in terms of training, we have issue with the ofa pacific middle east with the lack of available pilots and

pilots that don't have sufficient hours to fly the airplane. before we zero in on the technical issues with the airplane, for example, in the u.s., there require 1500 hrs to fly for a new hire for a carrier. interesting this new information that came out of the crash site. but the fact remains we don't have deep black box data. it was putin for americans to pull the plug until we have -- prudent for americans to pull the plug until we have more data. tracy: i want to ask you about the speculation. some are drawing parallels with the a320 crash after airbus watched the aircraft. because of the anti-stall system in this particular plane, is this a flyby wire moment for boeing? robert: it could be but at this point, it's too speculative to

draw a conclusion. many years ago, it was the a320 at a paris air show and pilots were still learning how to use that. there were questions as to the amount of documentation by boeing and the training their pilots have been through. certainly very worrying at this stage. manus: look, reputation and action are inextricably linked. we're still in the stages of action for boeing. but we've seen post the lion air crash, saw them change some of their orders. is that the most critical issue in the next couple of weeks? pulled.s of boeing gets robert: interesting, boeing didn't show up to the air conference. this is a hugely successful aircraft platform. they've sold over 5000 of these with roughly 350 in commercial service.

there's a lot of money on the line. isther question, as well, what kind of hit are the airlines going to take? bjorn, the ceo- chairman of the region, they are going to go after boeing. the balance sheets are not in great shape. i think you're going to see additional carriers take early runs at going -- boeing for revenue costs. tracy: how much focus should be placed on the faa's certification process given this isn't the first time we've seen a plane from boeing have issues, the last example being the 787 and the battery problems? totally different problem, but some talking about the faa may be being too cozy to boeing at this point. robert: i don't think so. the faa has a tremendous track record in terms of safety oversight, home country for boeing. in the case of the dreamliner,

the japanese pulled the plug first because 24 of them were operated by ama and japan airlines. i think the americans and the faa had a good case, with the data they were seeing they had no issues with. carriers, for example air canada, and i have spoken with them a few nights ago, have deployed reams of data off their aircraft, not just in the course of standard flight operations, but to ensure safety. they have been offering their aircraft with no issues. the faa wanted to see hard data, hoping to see blackbox data soon. but this new satellite tracking data and some unspecified evidence on the ground is what did it. but they have full confidence the faa is in oversight dead body. manus: what did you make of the president getting involved in this announcement? robert: that's another subject altogether. president trump for smacking the

comment -- president trump making the comment that plans are getting too complicated. we go back to air france 447, which crashed off the coast of brazil. there was a flight deck crew that was not trained on how to recover from a stall. there was a regional airliner that crashed in new york state a number of years ago. in theory, bowling's new anti-stall technology is meant to do that. they've been talking to release automate awhich will response. but it is in early stages. many to get the data off the flight recorders before we go further. chairs in dubai soared the most in four years. find out what. this is bloomberg. ♪

manus: let's return to the oil markets now. prices reached the highest level of the year. brent hit $67 a barrel. the vti also rising. they haven't seen that high since november. one reason for the climb is u.s. stockpiles fell despite forecasters saying they would rise. i got more with our energy reporter. >> looking at the united states inventories, it's very march the markets expected -- very much the markets expected one thing and do the opposite. they fell by 8.6 million barrels and you have to look at the gasoline stockpiles. stockpiles for gasoline fell by more than 4 million barrels, the biggest drop since october. there's a lot of headwind out of that. then like you said, saudi arabia has been pushing this charge out of opec to cut output. and they been able to wrangle up russia to do the same, according

to bloomberg calculations, russia output has dropped by half of what they were supposed to be by the end of the month. they could make it and meet the target they set late last year. of course, saudi arabia has been cutting the most. they're also the biggest producer, but they been on a result to hit the targets and get their partners to do the same. manus: what do you think matters more to the market, the waivers from the united states of america are coming up for exploration. venezuela outage or iraqi production? i give you full public art menu. take your choice. stephen: it's like picking your favorite child. you can't do it. when you look at iran, and we talk to the analysts, iran is definitely a big producer. you saw what iran did. they put sanctions on iran last year.

you so what happens to the price of oil. it jumped up. if these waivers were to go away, you would see a similar reaction. now of course, when the united states put the waivers out, you sell price of oil slick. venezuela is not as big of a powerhouse as iran when it comes to providing oil and crude to buyers. venezuela has other problems. when you look at venezuela, even if sanctions were to dissipate or the u.s. were to change position, they've got a lot of internal strife analysts were saying it would not be able to meet production targets they have set and what they can do. there are different things happening at the moment, but perhaps iran should be aware the market is looking. manus: shares in the dubai-based aramex gained the most in four years on wednesday. a reporter brought us this story on thursday.

>> this is what many investors, mostly outside of dubai, are looking at. we do have confirmation australia post, which held about tradeold in a big block that was finalized this week. ofare talking now about 10% the stock that open through for new foreign investors to buy. this is a very popular name within foreigners. a lot of people tell us in evaluations for the stock are good. business fundamentals are on their side. they have a lot of exposure outside the u e and a diversified source when you look at different geographies. good name, good price, and i you have room for foreigners to buy. before this, there were close to the limit of 49% of finally notion. >> aramex delivering for investors.

i want to ask about the saudi benchmark. we saw a 1% rise. is it going to be up again this morning? it's very likely that yes, it will be up again. because we are on the verge of including saudi by ftse, which will happen by five different stages. and the closing price they will consider for the first phases of inclusion is today's closing price. we should see investors coming to this market. it's the smallest of the five trenches they are expecting to have in the next year, but still, some analysts and brokerages estimate around five million dollars that can be tied to this inclusion. it's a good day for saudi, probably some new investors coming. and the locals, probably very ready to sell to them. manus: what about the flows? we see this have to of money flow into saudi. is that slowing at all or is

that continuing? we have seen 10 consecutive weeks of inflows by foreign investors. they been buying on a constant basis and a lot parsing from now on, we should see those numbers pick up from the levels we are. we had about 8 billion saudi riyals that were bought by foreigners up to this point in the year. $20we are estimating around billion coming in the next phases of the inclusion by ftse and msci. probably, there's a lot more money expected to join this market. manus: remember, you can catch daybreak middle east every sunday to thursday morning right here on bloomberg television. that is 8:00 a.m. to buy time. join us then. this is bloomberg. ♪ this isn't just any moving day.

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>> good morning. bloomberg daybreak: europe and these are the top stories. theresa may keeps her brexit deal on life support as she wins the backing of parliament to seek a delay. china valve to continue with its current economic strategy and resist the tim to increase temptationasures -- to increase stimulus measures. ,> the rating agencies certainly have an eye on ge. we are in constant communication.

to communicate as transparently as we do with the equity markets. where we are and where we are headed. >> new zealand suffers one of the worst mass shootings. police say a significant number of people are dead after attacks at two mosques in christchurch. >> it is clear this is one of new zealand's darkest days. >> good morning and welcome to daybreak europe. 6:00 a.m. here in london. let me recap you some lines from ubs. toir legal provision rises $2.83 billion after french tax

fines. a headline about the legal 2.8 $3on rising to billion. .lso, ubs cutting total pay a couple of headlines to absorb from ubs. we will bring you more as we get them. u.s. equitiessaw whipsaw over headlines around trade. reports of a meeting between president trump and the chinese president could be delayed until april. futures firmer today. 10-year treasury yields, closing below to 65. down a basis point to read the dollar showing some strength. we hold on to those gains. let's look at what else we are looking at. a decision from the boj. a dimmer view on the economy.

cable dropped yesterday, even though teresa may won an extension in terms of the vote. lots of options on the table. we will get into it and discuss. crude, not doing much. markets.ck in on the juliette saly has more. >> a happy one for investors. the worst week for global stocks so far. we are on track for a gain of almost 2%. the first weekly win in march. 0.8%.kkei closing higher, the yen virtually unchanged after the policy decision. a lot of buying coming back. more announcements from premier li in terms of fiscal policy.

cospi in korea looking good. the rally in india continues. let's have a look at stocks. in the last couple of hours or so, we heard this news from the russian news agency. is going to decide whether to keep talking with the his moratoriumn on missile launch is an nuclear test. that has seen japanese defense stocks rise substantially. so-called peace talks in south korea, no surprise, they are falling. also out of hong kong, encouraging news for a couple of the casinos, getting their licenses in macau extended. the city expects they will get those extensions.

we have seen mgm which is one of the ones rally substantially. clark's thank you so much. the u.k. prime minister has won a rare victory with the house of commons endorsing her plan. dealans her twice rejected remains in play. she is offering mps the chance or risk the split never happening at all. the eu wants to know exactly what the premised are thinks will change. jpmorgan ceo jamie dimon says the u.k. is unprepared for a hard brexit. think it would be a bad idea. not just the u.k., it is the eu. they did not repair for i call a hard brexit. a no deal brexit. a lot of things would change immediately. have a negative effect on the economy. >> joining us for more is our

bloomberg team. first to you. appreciate you braving the cold for us. what are the options on the table? >> good morning to you. the options fall into two camps. theresa may's deal itself. meaningful vote number three next week. activity taking place, jeremy coman -- jeremy korman -- rbyn and members of the conservative party. which one of those wins out next week? it has a bearing on how long may goes to ask for. she did have a better day in the house of commons, although the surreal nature of things continues. her secretary voting against her, having stood up to argue for her policy earlier. she did manage to fend off

amendments that would make life more difficult for her. around indicative voting, finding out what it is the house supports. -- within the party she relies on to support her. that is still a big task. will be attorney general be able to tweak his guidance further to persuade those members who have been holdouts to back theresa may? the message yesterday might be slightly supportive, trying to get the deal through. she has even promised she will have more controls for parliament. that is one thing that could encourage them to get on board. >> let's turn to you. will brussels give an extension and what might returns be? >> the request has been made and it looks unlikely member states

will veto for more time. very realill have questions they want to ask and get a clear answer from the prime minister to why delay and how long? most crucially, they will want to see a new strategy in the eyes of the eu. the negotiation is done. think premised or may could get it done is a cross party, but she needs to draw over headlines. a big question, the question -- the fact she thinks the deal could go through has raised eyebrows. whether to grant an extension or go for an extension, it is likely the eu will accept it to read how long is a big unknown. much.nk you so much appreciated.

joining us, ellen higgins. strategy. head of fx thank you for joining us. if the u.k. parliament votes to extend article 50, you could see cable rise. what is the market pricing? extension,d in an but we don't a how long it is going to be. the european side talking about something like a year. we are not entirely sure. the second question, what is the purpose of the extension. is it to prepare for hard brexit or allow more time for negotiation? they feel there is nothing left to negotiate. the deal is done from their perspective. time torhaps more negotiate. does remain undervalued. if we see a positive catalyst in terms of a move towards customs

unions, i would think cable can rally hard. >> undervalued you say for cable. through we cant show. does this mean you are long on the pound from here based on what you expect to happen? undervalued.s it has been shorted and we have had outflows. they tend to be unhedged. brexit, there is a delay. three so-called and possible scenarios. years, iter two becomes planned, clearly. the probability of a hard brexit is lower. some kind of deal. theresa may and something softer, that seems impossible. a second referendum, that seems impossible. three impossible scenarios but

one has to happen. us, likely some kind of deal happens. graduallybring confidence back into the u.k.. there will be a small pop in sterling. will come confidence back. you will see sterling rise. >> you think the third version, some version of theresa may's deal. does that get voted through? >> i would expect that after a delay. gone with two votes. i don't see what has really changed. i would assume some form of the deal will eventually pass. >> thank you both. staying with us. let's get the first word news with was luncheon. rosalind chin. the new zealand prime

minister says the country suffered one of its darkest days after a mass shooting in christchurch. the attacks on mosques have left an unknowing number of people dead. people say they have arrested three men and a woman. of those who would have been directly affected may be migrants to new zealand. they may be refugees here. they have chosen to make new zealand their home. it is their home. they are us. >> the u.s. senate has voted to block president trump's declaration of a national emergency to pay for a border wall with mexico. it sets up the first veto for the president. highlighting willingness from republicans to split with her president with 12 senators voting to cancel the emergency.

ppg has fired bill mclaughlin after he was charged in a wide-ranging college admissions scandal. it left the business focused on social good and founded a growth investing platform. global news, 24 hours a day, powered by more than 2700 journalists and analysts. this is bloomberg. >> thank you so much. toing up, general electric's ceo sets out his path for recovery for the country. this is bloomberg.

>> let's get a check on the markets. asian equities, recouping most

of recent losses. dollar-yen, doing nothing at all. a different view on the economy. s&p 500, closed flat. reports of a potential delay in the meeting between president trump and the chinese president. cable also unchanged. votethough parliament did to the extension. general electric jumped. the new ceo promised improvement in cash flow after a quote reset. the stock has gained, recovering tome of the loss, the wors annual loss since the 70's. >> if you think about the core of ge, it is aviation. it is renewables.

that rotating core, which has been the heart of general electric. our health care business, the health care systems business, gives us a lot of options in terms of what we do longer-term. really, it is more of a med tech than industrial play. >> we think about growth. global growth, economic. how sensitive is your plan? we are well into the cycle. we are looking for ge to see recovery. we are going to have a recession sooner or later. does your strategy was side that? -- survive that? >> we are making a lot of progress strengthening the balance sheet. aviation tends to be a business, given the way we are structured. certainly a very strong service business, immune to some of the

short cycle dynamics that could play out. the morere, one of resilient spaces. renewables on the back of the energy transition strong. power is more of a self-help story. i don't want to give the impression we think we are immune in terms of the cycle. in the next few years, we can power through that. >> if you end up in aviation, that is more of a long cycle business. diversify your portfolio? >> i don't pick we need to do that. there may be options to put another leg on the stool, if you will. we are a long way from having the right to think about that. first order of business, fix the balance sheet. strengthen businesses, particularly power. then we get of as a mode which i think of as the second phase where we are operating on a more normal basis. so in we can do what general

electric has done. play inerm, we will organic offense but that is out there. >> the general electric ceo speaking to bloomberg. allenget the thoughts of higgins. you hold ge bonds. would you be tempted to hold ge stock? >> no. withstanding improvements, the longer-term trend has been horrendous. you hear strengthening the balance sheet. this is a sweet spot for bondholders. strong underlying company and too much debt. premiumyields, still after the rally. for us, stay with the bonds. >> i have been reading some commentary you have had on the boeing story. the ge story. in the u.s.al index

has held up pretty well. are these 280 of seeing craddock stories? or could the industrials index come under pressure? >> it depends on the global economy. stories. idiosyncratic boeing is a one-off situation we are seeing. could say the industrials more generally stepping back is anticipating an improvement in the global economy. where do we go from here? slide into recession in the u.s.? or do we improve? our view is we improve. the industrial sector is discounting that. >> are we bottoming out in the global economy? to tell.rly we have seen the data from china but we have to what the march data looks like. it is interesting. my take is if you look at china, are much morests

bullish. they think we will see a little more weakness in the economy going into the second quarter. a little early to tell. we will know more by the end of march. >> you have moved us on to china. the national people's congress has wrapped up. the government has announced a number of key measures but say they will not involved -- engage in large-scale stimulus. they introduced a new law to maintain attractiveness with foreign investors. you changed your forecast on dollar see ny -- cny. it is a short-term call. the longer-term trend is clear. we should see a weaker chinese currency. we are moving toward a current account deficit. that combined with slowing growth and monetary easing will weigh.

one of the things i have been looking at, the narrative from china is one of wanting to open our markets toward foreign investment. assets and companies. one way of doing that is with a cheaper exchange rate. that is the key. it is a question of timing. for the moment, we should have reasonably stable exchange rates. weakening trends should be clear after. of stimulus to expect from china from here in terms of the rest of 2019? and the effectiveness of it? much per congress. they know they have a debt problem. a corporate debt problem in china and they are aware of that. the stimulus is going to come from a trade deal. question, trump will not like that. part of the trade deal is a stable currency.

it needs to be stable in the short run. if china were gains competitiveness, they will have a weaker currency, that is that going to work for a well. you can't expect stimulus because they know they have an underlying debt issue. and comesus is micro from the euphoria and relief from the chinese corporate sector. brought upd you trade. how egg a headwind for global equities is a delay in the u.s. china trade deal? saw in yesterday? a lot of people saying the markets have priced in a deal. how big a headwind is a trade deal delay, the one we have heard about? >> we have come a long way. i would be surprised if we really go down. ons has been a rally based

no inflows. a lot of investors have missed out. any weakness will be broad. modest weakness. we have come a long way. i think we will see a trade deal because there's too much to lose on both sides. further pop in equities. >> i want to come back to the point you are making about the yuan. showing theart here dollar has outperformed of the you one -- the uan. both of these are against a basket of currencies. you have argued the yuan is expensive. >> if you look at longer-term trends, the last 5-6 years, it is very expensive, no question. otherf you basic against competitor currencies, it comes across as pretty expensive. that is one of the reasons i am

not too bullish on the yuan. when something is expensive, it will take a lot to become more expensive. -- be itd become positive growth or inflation shock. it is expensive. i think the direction is clear from here. >> let me break you some headlines. i have got to break some headlines from new zealand. new zealand, the prime minister saying 40 people are dead in the shootings. this is just the coming through. two shootings with multiple fatalities at two mosques in christchurch. are inen and one women custody. police have warned people to avoid mosques anywhere in new zealand. saying the shootings were a

terrorist attack. these are the latest headlines coming through. they were carefully planned. more than 20 people seriously injured. this is bloomberg. ♪

you may have chosen us but we >> reject and condemn you. --the perpetrators of this >> that is the new zealand prime minister giving a news conference after these deadly attacks on two mosques in christchurch, new zealand. two shootings with multiple fatalities. we have heard 40 people are dead in those shootings. police saying three men and one woman in custody. >>