> you are watching the best of bloomberg day break middle east. >> oil let's a new 2019 high as opec and allies agree to extend their production cuts. but is there tension in the russian alliance? t.f.'s spoke us the on saudi equities have been piling up money, placing kingdom high in the global rankings. and the federal reserve stuns economists and investors with an even more dovish tone than expected. race hawkeyes are off the table for this year. cato next move be a rate cut?

[captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org >> welcome to the best of bloomberg day break middle east. oil is hitting a year to date high. after opec on its partners committed to production curves until less june. independent producers were meeting, and i was joined on tuesday. >> not exactly on the naughty list in terms of not come applying, but they are exempt due to external factors that re hurting their country's production. two are venezuela and iran because of u.s. sanction. i spoke to the national oil company chairman as well as their minister. we spoke about what they are doing to boost their production. one of the big things is that they are really bread and butter oil field just came back

into play early march. this was after it was ok pilet for three months by armed militia. take a listen to what he had to say. our production now is enhanced. before two weeks, the reduction was around 900,000 barrels a day. now it is in range of 1.2 million barrels a day production. >> what about the outlook for the future. do you think you are going to get it up to the heights of like 19.6? >> we are optimistic on the utlike for 2019. we have many areas to increase production for oil and gas. we are not going to neglect the gas. this year we have a fantastic program for gas, and our production of gas is better

compared to last year. ur production is going well. we have plans in the second quarter, we are going to increase gas production. our plans are ambitious and to increase production. >> you said the country plans to refurbish pipeline to reach that 1.6 million barrels a day. are you going to be working with the pipeline networks and refurbish then? >> we have been working heavily on the infrastructure. unfortunately, we have many oil .ield outages the embargo in libya lasted a long time. now we are want to make

rehabilitation of this oil field and also for the infrastructure, starting with the service facility and pipeline, tanks. storage tanks, most of the storage capacity is unfortunately out of operation due to the war for last seven years. so we have a pln for rehabilitation. it was damaged by the yifle ttack in 2017. >> i want to ask you about the shara field. that is your bread and butter of output. when do you think that will reach its maximum capacity before the disruptions and the looting? >> we have started working very hard to increase production.

we are at 260,000 barrels a day. our normal is around 315 barrels a day. . r staff is working with this yesterday we exempted from the no fly zone so they can go and make the maintenance required. unfortunately, many wells were .amaged by sabotage actions >> the security situation there, are you happy with it at that field? >> i think we are more happy now. sight. no militia in they are not going to admit any civilian to the field. no militia will be entering field. that is exactly what we want. our staff is happy.

we have to review all of this. we are making our own ssessment on the security. so far we are happy, yes. >> so far -- >> we hope to have the same -- we have our own security plan. we will make like green zones in the area, which include making sand barriers and controls. for enhance everything. >> that was the chairman of the national oil company. another thing that was very important here was the fact that we decided to scrap this april meeting. they are just going to have a juneau peck meeting. many are saying are the russians are the ones asking

for the april meeting. they didn't think there was enough time given concerns in the market. it was a bit of a consensus from the kingdom given they were open to potentially extending these cuts as soon as april. it reminds me of what was said in december, which is that putin is the global energy zahra. >> i have more on oil and the wider middle east markets with our guest. >> opec currently in 2019, they have most of the power. in terms of also us supply. there is a lot of constraint in . that is taking a toll on pressuring the stock or pressuring oil prices internationally and globally. so supply is limited, and they have most of the control. so i think for the time being they are in control of the game. >> again, as is their wont, they are the biggest player.

they have done the heavy lifting. he reduces exports. he really is showing leadership in terms of the game. that to me is what is giving a real support to the market. >> i agree 100%. when you give that kind of initiative, most of the players on the ground, they start following suit. >> they do indeed. let's pivot to the equity story. we have inclusion as one of the big events that happens. we will talk more to our stocks reporter about that in a moment. do you think there could be a tail wind as well from the china share adjustment happening at the same time. what do you mean? some people are saying head wind, and you are witching it as a tale wind. >> how we look at it from our perspective is slightly different to how the market is looking at it. today what we see from that rebalancing hopefully will

increase china he is percentage on an overall perspective. that should take away from the olcation coming through the region. at the same time you are having this sauberty inclusion, which is bringing a loe of influence. we saw yesterday the market in saudi broke new highs. that is exciting. with that play, you have a region that is actually very under priced. you think that is continuing? you are sawgrass sauberty is under priced or region? >> i was very clear. the region is under priced. that the is tale wind. with the inflows coming in, it makes the region up whether we like it or not. that gives you access not only to saudi but all the regional markets in the area that give you very low multiples and very strong dividend distribution.

you saw what happened with annex. as soon as the foreign ownership limit opened, the stock just threw. that is why. because theo international investors were standing in line for a very long time. >> where is the strongest dividend yield that you can pick up? >> banking. >> until now it is the banking. >> and you are seeing a very interesting thing that we haven't seen a long time. the banking sector after distribution is actually closing the gap of the distribution very quickly. if you saw yesterday the spike that happened, you saw that that coverage was very exciting. we haven't seen this in the past. he usually expect to close up that gap, but thatics around two or three months, not the next day of the distribution. that shows you the strength of the banking sector and the spotlight on it. >> where is the strength in terms of dividend throw? is it u.a.e. or saudi banks?

>> we consider u. affirm e. as the most constructive. but saudi has a lot of potential as well. obviously it is a big economy. the economy is doing well. that trickles down into the banking sector and supports the overall system. so the dividend distribution from the wanging sector in saudi is going to remain strong for 2019. when you look at what happened in 2019, the banking sector was the spotlight whether we like it or not. >> up next, markets have been loving the dovish tilt from the central bank. could the feds start tightening again this year? a big debate. this is bloomberg.

>> welcome back to the best of day break middle east. global central banks may have taken a dovish tilt this year. but the form other fed

president william dudley said this week that he thinks tightening could be back on the table later in the year. >> the economy picks up speed again as i expect will happen, and inflation starts to drift higher, then the fed will be back in play as early as the second half of this year. >> i have more with monday carmax chief economist at abu dhabi commercial bank. >> i think there is a difference between what the markets are pricing in, a small rate cut in 12 months time, versus the consensus of economists of one further rate hike in 2019, albeit in the second half of the year. we do think that the overall tone of tomorrow's meeting will remain dovish. we expect some revisions in the projections with the median dots as well as the economic projections. but i think the fed remains very data dependent. at the moment it has been a very mixed picture, but there has been one-off factors, whether it is the government shut-down or weather

conditions. but we do believe that the economy will provide enough space to pull one further rate hike this year. >> ok, so one further rate hike this year on the data. it is a beautiful chart. it is a thing of beauty. i have you at a disadvantage. i can see it. it is the lowest level since 1988. are we sleep walking into, i suppose, risk that you could get an event that really moves these markets? i just get the feeling that this repressed volatility is folly at the moment. what do you make of repressed volatility? >> well, absolutely. i think there is a lot of urban certainty, which is also why central banks are in a very watch and wait mode. we are seeing globe growth slogan a number of risk factors. but we do believe that a number

of governments around the world, china, et cetera, are looking to support growth. we expect other large emerging market economies such as india to have further cuts. so at the moment markets are being sorts of quite complacent, we do think that the fact that governments and central banks are looking to support growth, will be positive, and we see some stabilization to some pick up in growth as we move forward. >> it is interesting. maybe we have all reached too far on the down sides on our expectations for global growth. is it that we need absolutely a solid china/u.s. trade deal to, s it were re-establish the global economy? >> i think that will be a key factor. there has been positive talks, but the signing of the deal with the two.

s has been delayed going forward. so at the moment markets are expecting it, but they are not really pricing it in. and also, even though the chinese policy makers gave quite a strong signal of both fiscal loosening and some targeted monetary loosening. i think global markets will want to look at signs of how that will really be played out and inject the into the combhi. i think another area that will be quite interesting to watch is the eurozone. that has been one of the key areas that has economic weakness, has been a front-runner of the global slow-down. but we really see initial signs of stabilization in the eurozone, and i think if that develops further and we feel that the worst is behind us, that will always be very positive. >> and let's just carry forward on that view on the eurozone, because brecksilt is perhaps a risk -- brecksilt is perhaps a

underspoken about in terms of its impact on europe. >> absolutely. i think even though why we are not going to have the third meaningful vote, the end of the week will be very critical where european members will come together and decide the degree of the extension. and of course we don't believe that really it is in their interests to not grant and extension. exit from the e.u. is not something that would be wanted on either side by the majority. so we do think it will have to be a large meaningful extension. but again it really comes back to the question of what will be done now? we have had over two years of very little movement. we don't want a situation where this continues indefinitely as

well. >> up next, president trump is continuing to sound optimistic about trade talks. but is china pushing back at the american demand? this is bloomberg. loomberg.

>> president trump is continue to go sound optimistic about trade talks. yet some u.s. officials, they were this week said to be concerned about china pushing back on various american demands. i have more with steve king. honorary professor at the university college of london. >> trump is, as usual, pushing that he can bring about a success that nobody else could bring about. the fatal florida in the strategy is the american dollar, courtesy of being the international reserve currency is at least 30% over the value it should be toe makes its

manufacturing sector viable, and he is trying to compete with china. no matter what, there is going to be a trade deficit, and we are going to go back to trade talks with china and retaliatory tariffs. >> with a dollar value like that, jaw boning alone is not going to necessarily bring it down, is it? >> that is right. it is a one-sided way. they did a bilateral trade approach that trump is taking is going to continue failing. as longs the dollar remains inflated, it is going to be impossible to get manufacturing back to a point to be competitive with places like china, south korea and even vietnam. to my way of thinking, the only real breaking point here is countries getting sick of the way in which trump has weaponized the american machine ply of international trade. you have turkey on one side and china and russia on the other, along with europe as well talking about devising another

currency exchange system apart from the american dollar. that to me -- this could be a break point in this particular year because finally that monopoly mirk has is starting to be broken. >> is there anything good to come from weaponizing trade. was there a need for w.t.o. to change? was there a need of perhaps a reconsideration of the bilateral trade between them, or is it just hyperbole? >> well, it is not hyperbole in the sense that the china has established the free afraid zone in 1981 and 1982. it was to get american capital as quickly as possible. they did it brilliantly. they are almost on a level pegging with america.

the only thing they can't do is submicro manufacturing. it suits china to go to free trade because they have already built up under the protection policies they have used for the previous 30 years. i don't think president trump realizes that. >> what about the yuan? we hear a great deal of trying to reach for a stability. is that possible? can you have a stabilized yuan post a trade deal? >> i don't think so. again, the japanese had the same story with the yen, which started at 360 and has moved much higher over the american dollar over time until they fell into the property double trap in 1990. it is the yen on steroids if you look at how their credit system is driven. their rate of industrialization is far faster than japan's. so they have themselves caught up where they can't keep that

currency undervalued, and they are getting pressure pushing it up. this may be a breaking point. it is hard to say of course because we are making predictions about the future. china is so big that it can no longer play the small game on the international stage and get away with it. trump has given them a wake-up call about that. trump himself of course needs wake-up calls. >> i haven't enjoyed a conversation as much in a long time. you really are rolling and enjoying this. let's get one more out of you. what about brexit? teresa may, can she last? line up the show? >> it is going to be delayed. i am pretty certain of that. in fact, what she should have done is take the vice she is given in an editorial back in march of 2016 saying all you should do is put a norway plus on the table and say that is

the deal and say we will renegotiate in seven years time. instead, she said if you don't do it, you get the brussels run around. each person will say you have to see that person and you will go nowhere. on s classic incompetence her part. think about the own goals she has scored. she called an election when the to r party was trying caught rise jeremy. she managed a huge gap in her vor for a hung election with jeremy. then she has to be allied wit the d.u.p. it has been a total mess. i think it is a case of delay and leave it off and leave it to the spanish and french. >> up next, the federal reserve

stuns economists and investors with an even more dovish tone than expected. rate hawkeyes are off the table for this year, but could the next move be a cut? you.

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manus: welcome back. the federal reserve stubbed this week with an even more dovish tone that was expected, taking any chance of rate hikes off the table this year will leaving the door open to a cut. >> we do not see data coming in that suggests we should move in either direction. they suggest we should remain patient and let the situation clarify itself. when the time comes, we will act appropriately. manus: the dollar sank along with treasury yields. and they signaled a swift end to the balance sheet contraction. i got more with our bloomberg a guest fromst and

tribeca investment partners. >> there is plenty of room here. the data has started to look forward -- poorer. the chancee chance the fed regrets sounding as hawkish as they did, so they are doing catch up with themselves. but now they are saying they need more time to assess and will give ourselves the rest of the year to do that. if by the end of the year, the danger is starting to show a softer economy, inflation is already coming down, the global economy is certainly weakening. all of those things are falling into place and the fed will be patting itself on the back saying we did a good job, that pause was the right decision and hold rates was right thing to do. of course, they questioned question you were alluding to earlier is whether they are looking to next year, seeing if they might even want to lower interest rates at that point.

people could be talking about the next recession around the corner, but at the time being, they are doing everything they can to justify a long pause. it gets some of us off their backs, sending a very clear message. hikes this year, get over talking about it. it was perhaps the most manifest in asia. i did the yuan a little earlier, that's any high. you are seeing em currencies rocketing up. where is the biggest reaction? these currencies are certainly taking the lead. it is not too surprising, because there are few asian central banks that will be happy to see this extended fed cause. there are countries -- cause -- pause. there are countries that would not mind considering a rate cut of their own, india has already

done one. the window is starting to open for these asian central banks to seriously consider even cutting rates ahead of the fed. it is an unusual circumstance, but the conditions are falling into place. from an investor's point of view, this is a double wedding. if money for -- wendy -- whammy. the currency could start to appreciate and feed into the equity market. it is a nice, positive cycle. it will take time to play out because the fed is not promising a rate cut themselves. it is a brave central bank which goes ahead of the fed. central banks are lining up, and in the second half, we could see a few central banks lowering rates even before major countries do so themselves. manus: it is interesting when we look at how the curve has reacted in the united states. great to have you with me this

morning, our mliv strategist mark in hong kong. joining us is the portfolio manager at tribeca investment partners. good to see you this morning. tracy and i were using is that the fed have dubbed the doubts -- doved the doves. would you agree? dovish,s certainly very compared to the market expectations. i would agree with that. look, the dovish tone was not a surprise given what other central banks have been saying. and the global data has been pretty weak over the last 12-18 months. we are expecting the dovish tone , but that was a downgrade of the dot plot and was more dovish than markets expected. that is why we see a negative response to the downgrades.

with the fed rates study fed rate does support asset prices. so think about what has outperformed, the valuation will be supportive. on that front, it is good news for the equity market once they get over that downgrade. says heresident trump will keep tariffs on china until he is sure aging is complying with any trade deal. -- and expectations that the two countries will agree to roll back duties as part of a lasting truce to the trade war. tracy and mike got more with the vice chair for asia-pacific j.p. morgan chase at the bloomberg invest asia summit. time, you canake see there is a lot of back and forth. somely, there are deep-seated structural issues which remain unresolved.

if you look at the global economy, china being the largest exporter in the world, it depends on the strength of the global economy to power its growth. in 2019, we will see slowing growth. in europe, growth has been diminished and the u.s. growth is softening. so chinese exports will definitely see some headwinds. however, leadership has realized this and are doing everything possible to boost domestic consumption. actually, this year, 2019, we're looking at 6.2% growth and 25% of growth is coming from domestic, personal consumption. this is a sea change from 10 years ago when exports were the number one growth driver. >> i want to ask you about what authorities are doing, but before i do, you sat at a panel that talked -- said of the economic cold war was overblown.

they need to avoid a confrontation, how do they do that? >> china and the u.s. are in a competitive relationship. competition is not a bad thing, it makes nations and companies and industries much more efficient. but competition is different from confrontation. i think the west needs to continue to engage in china as the country continues to rise as an economic superpower. containment does not help. there is a huge difference between competition and confrontation, engagement and containment. >> indeed. you have mentioned what authorities are doing to stimulate the economy. that has helped spur a massive remedy when it comes to chinese equity. is that the reason we are such a big rise in chinese stocks, or is there something else going on? >> economic factors play a role in the rally. i think there is another reason,

the big shift in investor sentiment the chinese stock market was in the doldrums for three years. this year, the market has risen about 27%, referring to the shanghai composite index. so chinese leadership has long realized that we need a market to perform to be a fund-raising avenue for deserving companies. also, this would help resolve china's long-standing debt issue. reached at the beginning of this year and investors are seeing recovering earnings prospect. -- prospects. there are also seeing the chinese economy recover in the second half of this year. so the confluence of government stimulus, and chinese leadership spurring development, and recovery in investment -- investor sentiment has driven this massive rally.

potsed to take a little because valuations are no longer asset classes, as in january of this year. going forward, we will see more market opening. investors are likely to come into invest in the asian market. global industries will include china and give them a larger waiting in bonds as well. plusarket is open, government measures will work together to help the market reach a more, kind of a change in terms of structure and more institutional capacity. next, on the edge of a note yield, theresa may shops the eu by asking for a short extension. -- shocks the eu by asking for a short extension. that's next, this is bloomberg. ♪

manus: welcome back to the "best

of bloomberg: middle east." on thursday, the european union is considering an unscheduled meeting to decide whether to grant a brexit extension. sterling fell as donald tusk said it is up to theresa may to drive her deal through. while france said the eu needs guarantees before any extension is granted. >> today, i have risen to donald tusk, president of the european council, to request a short extension of article 50 up to the 30th of june to give mps the time to make a final choice. >> the question remains open as to the duration of such an extension. proposal ofer may's creates af june series of questions of legal and political measure. leaders will discuss this tomorrow.

health, jeremy corbyn ripped into theresa may's handling of brexit. >> months of running down the clock on a concerted campaign of black men, bullying, and bribery has failed to convince the house or the country that her deal is anything but a damaging, national failure and should be rejected. manus: tracy and i got more with rob aston -- aspen. is obviously a tricky question for the europeans and the u.k. there -- u.k.. it has been 1000 days since the referendum was taken to leave. earlier, i was talking about a loss of credibility at the fed level, and i think it is the same in may's government. the reality is i think that europeans will extend, but in my view, what really needs to happen is another referendum

needs to take place. i think that is the only way the government can move forward. the deal that they have with the european union is simply not good enough from the mp's standpoint, from the u.k. government standpoint. they cannot take the same deal to the mps for the third time. i think they need to look at another avenue, potentially doing a referendum and taking it from there. , what isdd one points interesting to me is that while the u.k. wants to leave, and would potentially be negative for sterling and so forth, i'm not particularly positive on the underlying euro area either. that is perhaps a question for another day, when you look at growth and the current construct of europe, i don't see that being sustainable. tracy: we want to ask you your opinion on the euro as well, but when it comes to reassessing the

no deal brexit risk, how does that actually play out in markets? downward movement in markets, a rereading of assets? rob: u.k. assets have generally come down in price over the last couple of. -- months. they have rallied nicely since december and there is still value in european equities. we do not have exposure to europe nor the u.k. at a technical level, we have strategic exposure. we are not particularly optimistic either, to be quite honest. we are not going to play this aggressively. i think it is a very difficult investment call to make to try and play how brexit will work out. brexit, have a hard that would be negative for the markets and certainly for sterling. manus: up next, boeings drama inquiry -- as it

emerges an inquiry begun before the latest crash. this is bloomberg. ♪

manus: welcome back to the "best of bloomberg: middle east." boeing has confirmed they are working on a software upgrade saying it should be released soon. meanwhile, shares tumbled as the approval process for the jet came under investigation. bloomberg was told the transportation department inquiry into boeing began before last week's fatal crash. we got more with our conglomerate, telephones, and media editor. an investigation will focus on because of a crash and try to come to grips at the regulatory level without prevent . -- prevent the next one.

in this case, we are talking about a subpoena to present evidence and a possible and alarming note is that they seem to be focusing and itapproval process raises the threat of ego -- of going horizontal. they are burrowing into the process of how this plane got approved to fly. manus: indeed, how to get there in the first place? given a boeing is releasing a software update soon, can we expect it to be flying again anytime soon? software update is one issue, the other is training of the pilots. you have to think that would take some time, especially given what has happened, they want to be very careful. be absolutelyt to certain to have tested that software update and make sure

the training is complete and comprehensive. it is hard to say how long it could be before those planes are flying. i wonder what the company means by soon. the software have soon, but what about the approval of that software, and what about the testing and training? it could be a bit of time before we see those planes flying again. saudi arabia is becoming popular amongst investors from london to new york. what are the most recent numbers showing us? i asked our middle east equities reporter. >> we know the index inclusion is the major topic. just looked at to etf's that actually track saudi stocks. one of them is traded in london, the other in new york. than,unds attracted more around $330 million this year. when we look at flows versus total assets, they are on top of

a global ranking for etf's so far in 2019. easy to seet is that investors are actually placing their bets through this market and funds that are not necessarily needed to go to react to trade and to play the index inclusion. when we hear there is a lot more to come when comes to inflows and returns to investors. fair to say both funds are delivering a little bit more than the to double index in react -- the tadawal index in riyadh. manus: one market that is on fire is egypt. volatility is still a little bit high. >> yes, every time we talked to fund managers here in the region or analysts, they say that egypt should be on top of the list or those looking at middle eastern markets. stories, reforms

are moving forward, you have some good names. but volatility is part of the game. had itsy, the index worst performance so far in 2019, and what we heard from an analyst on the ground is that they work related to a big name in the egyptian stock market. there is a deal with the main shareholder trying to buy out minority holders. this deal is still pending approval. , they mighttuck need a capital increase. all of this is just pessimism in the market and just a bad session. manus: what about the family of emaar? it is a big decision day at the boardroom in regards to the whole family. development emaar properties, a big company within the group, they all have their

boards meeting today and the topic is dividends. all three stocks have recovered considerably in the past five weeks, mostly after they delivered their earnings results for 2018. if there is any indication they are actually going to disperse dividends beyond what the market seexpecting, we should another leg. the rally stalled this week after u.s. officials were said to fear a pushback on trade negotiations between the two worlds -- two largest energy consumers. around 5% and rose earlier this week as opec and its allies agreed to a production cut until june. i got more with a senior economist in the pakistan region with standard chartered.

>> we have a fairly productive you, forecasting around $74 a 83.el this year and next year to answer your question, it goes back to the demand side. , there was a019 question that demand was not faring as strongly as it did, particularly from countries like germany. but if you look at the recent january numbers, we think oil demand growth will be around 1.1 million barrels a day. that is pretty strong. forxpect opec to continue the first half of the year, there is potential for that deal to be extended into the second half as well. from a demand and supply perspective, we think the market will remain well supported this year. perspective,our last time, we were quite bullish on pakistan. we also caught up with the central bank governor and he talked about inflation.

he said that inflation is at one of the highest level since 2014 and talks about the central bank standing ready to use monetary after aggressive interest rate tightening. what does that say to you? >> first of all, on pakistan, we have the most not consensus and hawkish call on policy. with have been forecasted that the peak for the rate in this hiking cycle will be around 12.50%, and we are at 10.25 currently, so we think there is a significant way to go. on inflation, we agree with the assessment, forecasting around 7.8 percent average inflation for the current fiscal year that ends in june. but we think there is further oncee starting next year this program gets underway. obviously, the twin budget deficits, it is one of the classic headwinds, isn't it?

what you expect from his administration in regard to tackling this issue. tracy: we think the phone -- >> we think the focus in pakistan will be on stabilization. we have talked about monetary policy, but they will have to be a significant fiscal impulse that supports that. we will start to see those targets coming through as part of the agreement we think pakistan will reach with the imf. tous: let's hit it -- pivot egypt, some say there will be a slowdown, that is the base case bucking that trend according to you is the big three oil producers. what gives you confidence in their capacity to beat the rest of their peers? atit is simple, if you look these importers, they are at varying stages of the stabilization process. in turkey, growth has slowed, in

taken a few years ago and have started turning around from stabilization to higher growth. we think there is upside, particularly given the internal account stability egypt seems to have restored. manus: you are still going for more rate cuts your how much will that be backhanded, as it were? >> this is another area where risk is slightly off the market and that we expect these rate cuts might be delayed into the second half. we expect they might halt policy rates and another 400 basis points of cuts -- manus: is that just precaution? >> there are a couple of reasons. egypt is benefiting from the improved em sentiment, but there are a few steps to go. indexation inice april and the plans for the complete elimination of fuel subsidies for most products budget -- by june. manus: remember, you can catch

daybreak: middle east right here on bloomberg television at 8 a.m. dubai time. join us then, this is bloomberg. ♪

nejra: good morning from bloomberg headquarters in london. this is "bloomberg daybreak: europe." the eu gives theresa may an extra two weeks to get her brexit deal. will she end up back in brussels asking for more time? china as u.s. officials downplay a trade deal. uberomberg scoop says could choose the new york stock exchange for its ipo. it could be one of the biggest listings of all time.

good morning, everyone. welcome to daybreak europe let's get a look at these u.s. markets. the s&p 500 hitting a five month high. a delayed reaction equity rally. futures on the back foot. how much further could that rally go? the 10 year yield continues its decline down a basis point. we have had the lowest in more than a year on the 10 year yield. different moves across the yield curve. 253 is where we are there. globally, yields move lower as central banks turn dovish. year deeper into negative territory. inflation data out of japan. let's have a look at the dollar. we did see strength in yesterday's session.

pretty much flat on the dollar index. concerns the prospect of a no deal could be more of a risk, but now theresa may has been given two weeks to get her deal through parliament. does it mean the risk of no deal receding? cable is up. not a lot going on in oil. we are headed for a third week in gains. wti above 60 for the first time since october. 59 .94.ust below that yvonne man, great to have you with us. >> we are seeing a mixed bag the trading week. we are still poised to see a second weekly gain for asian stocks. there is not a lot of conviction. we are losing steam in this rally after that dovish tilt from the fed. 0.3%.eng still down

seven of the biggest large caps reported earnings in the last 24 hours. earnings very much and focus. it has been mixed. china a point where we are seeing a stall in this equity rally. large caps down 0.3%. analysts say we need fundamentals to catch up with sentiment to really get the rally on a firmer footing overall. let's show you some movers we are watching. tencent front and center. we saw the biggest slump in profit on record given that there is a freezing of gaming approvals in china. the stock is down 0.9%. china mobile down close to 2%. the stock actually yesterday dropped the most since october here on those earnings. there is a lack of clarity on 5g spending. that was a disappointment.

dividend was also a letdown for investors. profit.to saw a record talking about sino tech -- sinopec as well. petro china boosting spending. oil.dent xi urging the stock down 1%. nejra: thank you so much. breaking lines from credit suisse. theit suisse has boosted ceos compensation by 30%, delivering the first annual profit in four years as the bank's trading losses continue to overshadow progress in other areas. his pay rose to 12.7 million swiss francs according to the bank's compensation report. a large part is to compensate him for a pay cut.

the swiss bank's overall bonus pool remains flat. let's turn to our top story. eu leaders have agreed to give theresa may an extra two weeks to work out what to do with brexit. have told the prime minister that if parliament does not endorse her deal, she will have april 12 to decide whether to leave with no deal or request a longer extension. government will have a choice of a deal, no deal, and longer extension, or revoking article 50. >> i hope we can all agree we are now at the moment of decision. i will make every effort to make sure we are able to leave with a deal to move our country forward. nejra: let's go to brussels where we can speak to anna

edwards. great to see you. walk us through the new timeline. anna: good morning. seven hours of conversation in brussels relating to the press conference as you just saw happening around midnight brussels time. the cliff edge next friday has gone. that is something the market is reacting to. gone is the 29th of march. may has an extra two weeks. april 12 is an important date to keep in mind. that is the date by which the u.k. must decide. she still plans to hold a meaningful vote next week. if you were able to get that through, we expect the u.k. would exit the european union on the 23rd -- 22nd of may, avoiding conflict with the european union parliamentary elections. if she fails, there are still questions, but the decision has to be made. leave with no deal or ask for a longer extension?

the

authorities.

confirming continued confidence in the ceo. swedbank has decided after the external investigation delivered its preliminary update relating to the named entities referred to swedbank by swedish broadcaster spt. we will keep an eye on that for you. a chief economist at northern trust and the fixed income portfolio manager at jp morgan, good to have you with us. we got a very copperheads of update on where we are with brexit negotiations. we saw the pound drop for the most since january. gilt yields are also falling. has the prospect of no deal increase at this point? >> the fact parliament voted on the possibility of a no deal brexit should be what the market

focuses on. the fact that the eu are willing to concede an extended timeline is positive. an additional extension given the current deal theresa may is going to put forward to a vote, it is hard to see what she can do to convince people in the short-term. what has increased is a higher likelihood of a longer extension. scenariohave a core where we expect a deal will be voted. >> is there a higher likelihood of a longer extension what you think will happen actually positive for sterling? as anna edwards pointed out, that brings up the risk theresa may might not still be in power. >> it seems very much like one cliff was replaced by another one. the cost of a longer delay, should that be the option, is going to be some detail on what the u.k. is going to approach the european union with.

it seems like the united kingdom still does not know exactly what it wants. it is having a trade war with itself. the thing we need to remember is the longer the delay, the more lasting damage to the united kingdom economy. the united kingdom is not seen as desirable. thea: how do you measure damage? >> i have been attracted by the bank of england calculation. it shows how much will be lost if you have different forms of the agreement, certainly the data in the financial community, of talented people moving back to the continent. will damage the long-term potential of the u.k. economy. gilt yields dropped by nine basis points yesterday. how do you view guilt at this point? would you be buying on the safe haven? would you be staying away?

may be shorting them. of thingsre a couple weighing on gilt yields. developments are on brexit, but beyond that, it is important to see what is happening. we had the fed a lot more dovish than markets expected. you had boj, ecb, all of them to being they are willing on hold for much longer, which is driving the investment community. , as we have-term brexit uncertainty, it will be hard to see a meaningful rise in gilt yields. we need to see that result for gilt yield prices to price higher. given the external backdrop operating it, i don't expect that to be a more significant repricing higher. yes: yesterday -- anna: --nejra: yesterday we heard from the boe gradual limited tightening is needed.

is it? >> they are going to have to hedge their bets. with all the people leaving the united kingdom, it makes the labor market tighter. they are seeing more pressure on inflation. mr. carney has been public about acknowledging the risks of a bad outcome with brexit and the damage that might do. they are in a difficult position. let's get the bloomberg first word news with debra mao in hong kong. debra: donald trump says it's time for the u.s. to recognize israeli sovereignty over the golan heights. it could prove decisive in swaying israeli voters. it is also likely to draw a rebuke from the international community, which has never recognized israel's sovereignty over the territory it captured in 1967. the trump administration has given approval to taiwan's request to buy more than 60 f-16

fighter jets. this is likely to provoke higher from china and could raise tensions in the trade dispute between washington and beijing. bloomberg has learned white house advisers encouraged taiwan to submit a request, which it did last month. the fed's inflation gauge has crept lower. the latest reading offers little evidence to back up the bank of japan's claim that upward price momentum remains intact. it faces questions about its commitment to 2% inflation. japan's manufacturing sector has also contracted for the second straight month. prime minister giuseppe conte is set to sign italy up for china's initiative. the memorandum will be the centerpiece of president xi jinping's visit to europe. it will make italy the first g-7 nation to sign up. european allies are warning about a threat to sovereignty. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries.

this is bloomberg. nejra: thank you. now coming up, lower for longer. bond yields are collapsing. that is next. when you are traveling to work, tune into bloomberg radio live on your mobile device or on dab digital radio in the london area. ♪

nejra: let's get a check on the markets. we are ending in the green the msci asia pacific index. but i mixedrisk on, picture below the first -- the surface. we had inflation data out. we have seen significant drops in new zealand and australia.

the 10 year yield in the u.s. down another basis point. we have at the lowest in more than a year. u.s. futures on the back foot. we did drop more than 1% yesterday hitting a five month high on u.s. equities. cable bounces back after dropping the most since january. has the prospect of a no deal increased or decreased with the eu giving theresa may a two-week extension. wti crude hovers around that $60 just below it. let's get the bloomberg business flash now. >> uber has picked the new york stock exchange for its ipo. it could take place in april and could value the company at as much as $120 billion. uber would only have to float 16% of its shares to make the top five listings of all time. telecom italia's feuding

shareholders are open to signing a compromise. bloomberg understands elliott management and vivendi are not holding direct negotiations, but an italian state lender is hoping to resolve differences. shareholders are set to vote on the request to remove five affiliates 10 directors from telecom italia's board. earnings miss one important metric. north american shale. -- world's largest company the home market for much of 2017 in early 2018. it outpaced expectations in each of its other regions. the prospect of a global easing cycle has spurred a rally in sovereign debt around the world. japan's 10 year yield is the lowest since 2016 as australia approaches a record low. treasuries hold near the lowest level in more than a year. yields underscoring the return to lower rates around the globe.

diana, with this move lower globally in yields, and the global stock of negative yielding debt the highest since mid-2017, where do you find yields in this environment? >> several places. i think whether you are looking at emerging markets or u.s. treasuries or corporate bond indices, there are opportunities for investors. the shift from the fed is quite a significant turn. they have been a headwind to markets for much of last year with the tightening cycle. additional tightening from the fed, whether that's rate hikes or the balance sheet reduction were starting to impact the financial conditions globally. i would expect investors to

start looking at markets where we have seen outflows in the coming years. parts of the u.s. markets, whether we are looking at u.s. investment greater u.s. high-yield or european high-yield markets as well, especially with growth rebounding. we will get more when the pmi's come out. about just on the point the possibility of growth rebounding, have we found the bottom? >> i don't want to declare the global expansion is over. it will celebrate its 10th birthday the summer. what central bank's are focused on are the risks we are going to struggle. it is clear from the chinese data their constriction of

credit as well as the trade war make them such an engine for global growth. are hummingwe -- whenever you are close to zero, the chances you will fall below are higher. everybody seems to be converging at a lower level. they thought they would be able to get growth to the norms we were used to. that would allow interest rates to get higher and balance sheets get lower. as growth stabilizes, central-bank's around the world the dry powder they may have to assess the next recession is very thin. secret is asian, which i know jp morgan has written

where is it? >> when you look at em fundamentals, they are in a better place than last year. are looking at em corporate's, they have been very focused on deleveraging. whether you have em central banks, they have been hiking rates in response to the fed. this turnaround means you expect the central bank's to become more domestically focused, looking at their growth environments, which is rebounding, but at a much lower level, and actually starting to reconsider whether high rates are justified. more expect to see confidence the fed is not going to be a headwind going forward. we see opportunities in several local markets. in hard currency debt there are

pockets of value within the sovereign space, particularly when we look at the high-yield markets which really got penalize last year, disproportionately so. we expect issuance to remain fairly low for the rest of the year. arguably emerging markets are in a better place than 12 months ago. nejra: do you agree? >> i think so, but it is varied. you speak about emerging markets, it tends -- depends which one you are talking about. turkey has a lot of debt. it has compromised central-bank independence. i'm not sure they have left the front pages permanently. nejra: you have made the point high-yield in emerging-market has a decent yield pickup diameter -- diana. approachingactually this? are you waiting on the sidelines for opportunities to buy on dips?

do you have strong convictions in particular areas? >> our strategy has been buying on dips. we spoke in december reiterating this was a market you wanted to buy. spreads are above 400. it's hard to get negative returns in a 12 month period. ish a shift in the fed there confidence in increasing exposure. we expect to see investment. there has been a net outflow. investors are under allocated. as we get conviction we have experienced a regime shift in the central banking shift, that money will come back. nejra: coming up, as president xi jinping offers a new era in relations with italy, whether

the rest of the west should welcome the partnership. tune in for bloomberg radio live on your mobile device. this is bloomberg. ♪

>> i hope we can all agree we are at the moment of decision. i will make every effort to ensure we are able to leave with a deal and move our country forward. best.have done our completes. >> i believe everyone must be and is aware this is an event of historic significance. we must proceed carefully. >> it is a democratic crisis. this crisis is british. in no way must we become stuck in this.