♪ "the best oftching bloomberg daybreak: middle east." >> the deadly coronavirus spreads. >> president trump announces his middle east peace plans but palestinians rejected the proposal, saying that jerusalem -- >> is the saudi led investor group about to buy a premier league soccer team, newcastle united? ♪ >> one story that dominated both global and regional markets this week, the deadly coronavirus. theuesday, the head of

world health organization visited beijing to assess china's response to the crisis. >> that came as a country reported more than 4.5 thousand cases and more than 100 fatalities. we got more. remember, was, off yesterday, so they are essentially catching up, not only to the declines in asia yesterday, but even the friday selloff on wall street. the korean markets have a lot of catching up to do, which explains why they are particularly hard-hit today. australia also underperforming. if you look just in the afternoon session here, we are seeing some signs of easing in the selling pressure. so the nikkei is off of it slows, only down about .6%. that is about half of its decline from earlier today. we are seeing chinese stock futures also coming back just a little bit. some interesting headlines

scrolling saying that china is telling brokerages to be rational in what they are telling investors. they are telling people, don't price in, you know, doomsday. china's foreign minister saying that china has the tools to win this war against the virus. there is a little bit of a sense of, you can see governments taking action here. you can see they understand the scale of the problem. that is providing some reassurance. >> i was going to follow up on that actually. the efforts are definitely picking up. the scale of the undertaking significant, but as you look to the comfort of global coordination, there is a reality of global economic disruption. is that what the market really needs to start factoring in? chris: you have got this situation where there is going to be a significant near-term

to growthnese growth, really across the globe if you think about the impact that chinese consumers have through tourism, or you think about the disruption to the global supply chain. so you have got this short-term impact, but then you have got the assumption that once the disease passes, there will be a rebound. a number of economists are saying, you know what? i am not going to change my full year 2020 projection for global growth or for even chinese growth at this point. i am just going to assume that we are going to see some growth shift from the first half into the second half. nobody really rushing to market down there full-year forecasts just yet -- markdown their full-year forecasts just yet. we don't know how big of an impact this will have. we are still a ways away from a peak in the number of infections, number of deaths

come unfortunately. until -- debts, unfortunate -- deaths, unfortunately. it will be guesswork. >> thank you very much, chris. our guest host-- this morning is simon ballard. we are really trying to grapple with the contagion and impact of this evolving story. i have seen the first number this morning from mint partners that chinese growth could be stunted by 100-200 basis points. talk me through the global impact of contraction in china growth in the first two quarters of this year if that's the scenario. simon: that is exactly the risk we are facing today. china. now adding we are looking for further

clarity as to whether they see as a relatively domestic, contained issue or whether it is a more global pathogen. 03, that back to 2002-20 triggered, as your previous speaker said, a serious downturn in economic activity in the region, especially in china, where it shaved just over 1% of chinese gdp. that was at a time when gdp in china still managed to increase 2003 from 7%into to 8%. we are now talking about moving into sub 6% gdp growth in china. we held at 6%, as per beijing's expectations. you shaved 1% off that now, and you are going into the 5% or the gdp if level on china's

this coronavirus continues to mutate and spread. >> the decline we have seen in the commodities space, where is that going to head? the folks at the markets live team put that question to our audience. question of the day coming through. coronavirus the related decline in commodities extend? is this something that will be as severe as we have seen in the past with some of these events? to focus one going the global growth forecast for 2020 staying intact? simon: i think people will still focus on the 2020 growth forecast overall. the news flow, the headlines and volatility we have seen in the markets in the next coming be key in terms of what happens in the bond market and what happens in the commodity market is probably a reflection of the overall risk-averse nature of investor sentiment. ,t is raining, it is pouring

but there is certainly no room for the old man to be snoring in the background. you have to be watching all the elements. of negative sort connotations coming from the who , if we continue to see this mutation, an expensive cases. 7 cases., we were at 200 we could soon be yet 8000 like we had in the sars scenario. that could drive risk aversion higher and that 10 year yield back towards a 1.50, 1.45 level. can we just take this a little bit further with central-bank reaction? we have seen the market reprice from the fed. we are not pricing 25 basis points. that was in the front of 2021.

the market is already beginning to price central-bank action. does that come across your timeline in terms of the fed, in terms of the pboc if there is the mutation in numbers to the scale of a real global pandemic? simon: that is a huge if. the timing has been made all the more difficult by the fact that we have the fomc on wednesday, the bank of england on thursday. the futures market was looking for that additional 25 basis point cut to come in in 2021 because of the risk aversion nature of market sentiment at the moment. depending on the news flow of the next 24 hours, i really do not think the fed will cut this month. they have suggested and stated previously that they are comfortable with the level of accommodation and it would need a meaningful event to trigger a move in rates from where they are today. for the time being, the

coronavirus does not seem to be that meaningful event in order to trigger the fed. certainly, it is bringing more dovish rhetoric into the marketplace now than we had earlier this month even. the coronavirus outbreak weighed investor appetite for riskier assets in the middle east. we have more with the head of institutions at demand securities. >> we are still sensing some sort of fear in the region, specifically in the uae. to be more specific, in dubai. react toeen investors the international sentiment and fear worldwide caused by the coronavirus. ds is raisingike all profits on the year. they are 0.5% above what the year has begun with. we are still waiting to see.

everybody is coming up with more concerns. the death rate has been increasing. investors locally and even businesses in the region are concerned about how things are going to turn around postcrisis, post that issue with the disease. we will have to wait and see how the whole issue will be dealt with. emerging-market futures saw the biggest drop in 10 years. our markets relative to that, one could say moderately unscathed. we have run through. a whole set of numbers when you break that down -- a whole set of numbers. when you break that down, a slight increase in npl. net interest margin also under pressure. clear, theyvery came up with a huge headline

yesterday. 44% year on year increase in net profits. later on, you go on with the article and press release and it gives you all 1%. >> that's called media communications. what did you make of it? so 44% to 1%? >> 1% if we exclude the network international transaction. let's be realistic. the transactions that take place affects financials. investors looking at 1% net profit change is not as effective and will not attract investors the same way 44% would, clearly. the other point that drew our attention with the financials, mostly all companies that announced earnings and results for the fourth quarter or the year actually disclosed the -- they would be

distributing to investors. some investors might have taken that in a negative way. they might have had concerns. when we look at that, it is a nbd.ous move by emirates they have been used to distributing 40% over the past year. we would be assuming that they are looking at some sort of a special dividend or something in addition to that, given the network international transactions. there are different views on that, but we are going to be taking the positive side. >> let's just have a look. we have got fab. >> coming through with fiscal operating year income. 22.5,rket was looking for so that is a marginal miss on the fiscal year operating income. they are also proposing a dividend or share. >> it is interesting. if we draw that differential between the guidance that

guidance in left, income, and the profit. it is a nice beat. your first take. it is a bit of a hotseat to be in, but first take. >> whatever i just heard from you guys sounds very interesting, sounds in line. we are not expecting something fabulous from the banking sector in the uae, especially after turning 19. >> for us -- after 2019. >> for us, it is a very comfortable red headline. that's not too far from the estimate. when we look at the dividend distribution, we are not just looking at the figure. people sometimes take percentages. whether they will announce anything. it is mainly all about the

dividend distribution for the banking sector. >> they are proposing a dividend 2019.are, 74 fils for fab? were you on her note did mention some saudi plays, in fairness. >> the surprising thing in saudi was the earnings. they most probably came in line with the expectations, but it surprises us. they are only the fourth quarter results. they all came declining from their previous, the same period of the previous year. they are still in a phase where they are still trying to cope with the situation going around globally. it is oil prices, the main

player. that as do not see something negative. we still see the potential in the saudi markets. and probably the banking sector will pick up at some other point. >> let me follow up on the oil question. we heard from the saudis. overnight, we heard from the united arab emirates as well, underscoring that there is no reason to overreact to what they see as a very aggressive repricing in the energy market. maybe it is time to prepare downside,erable given the pressure that there is. >> there is always a panic attack. some things -- something always freaks out investors. we are so driven -- we are sort of oversupplied at this time, given that opec agreed to cut down on production in december. >> the chairman of libya's national oil corporation warns

about the impact of -- gripping the country. this is bloomberg. ♪

♪ >> welcome back to the "best of bloomberg daybreak: middle east." the chairman of libya's national oil corporation says this week the country's oil output could be days away from coming to a complete halt. we sat down with annmarie hordern and started by discussing the blockade against the country. i would have loved to sit here with chatham house. more -- have give a brief, maybe five

minutes, i said we succeed in 2019 to have good production, good revenue. some -- and we launched or finished the deal qatar. tart -- with this is a setback for our plans to sustain the production. i am here in london to discuss with my partners. we will share with them what the next step we can do. >> what about long-term production? what does all of this due to .hat -- do to that >> our engineers and technicians

2.1 billion.use we have a budget for this. even the normal budget will not be received as normal due to the crisis. are scared this shutdown will last longer and then they have no more money or reserves in oil to supply. --?hat about they were supposed to come in. they did, even with the blockade? libya is losing production. i am sure you have seen the oil market. we are below $60 per barrel on brent in the wake of this coronavirus. what do you think opec should do? >> good question. the prices went up, ok, for a

while. one million was lost just like this really. then i think because of the ioblem in china right now, think this is effectively the prices of oil. if this crisis continues, i am sure the price will go up. >> if the libya crisis continues? >> yes. to use a blockade, a tool to have your right, this will encourage others i think to do it. will encourage not only libya, maybe other states can do the same in the future if they feel they have any type of problem. maybe they have a problem with the west, so they could stop the production of lng, oil, gas, whatever, any kind of fuel.

this is a very dangerous oilg --t to be usin using oil as a bargaining chip. >> do you see more geopolitical tensions this year? >> i think so. [indiscernible] i think this is affecting the peace and security of the mediterranean. manus: next, saudi led investor group about to buy a premier league soccer team, newcastle united. this is bloomberg. ♪

♪ manus: welcome back to the "best of bloomberg daybreak: middle east." saudi led investor group is in talks to buy newcastle united. the soccer team provides 340 million pounds. we got the details on sunday. >> what will be on the price tag that you mentioned? we are talking an investor group. amanda stably is the founder of pcp partners. she would take 10% with her private wealth. also taking 10% are the billionaire ruben brothers, property tycoons. saudi investment fund would presumably take about 80% or essentially the rest of the transaction. this all according to a report from the "wall street journal." the report indicates this is not finalized.

this could materialize in days or weeks but also still fall apart, so devil in the details. manus: she's done deals in the past in the region. how likely is this to go through? staveley and her will take a portion of it. amanda staveley is part of this deal is really interesting because she has been connect with possible deals really since this asset came up .or sale back in mid-2017 they have been trying to sell this for a long time. he is one of the most hated figures in u.k. sports because fans are not happy with how newcastle has done. in fact, we saw signs he might want to get rid of this as early as 2008, a year after he bought it.

newcastle united has been for sale publicly since mid-2017. he initially wanted about 400 million pounds for the team, but has since sort of compromised, scaled-back has asked -- his expectations. this number coming over that. one thing i would note about this versus some other previous onential deals, including that happened late last year that was led by pete kenyon, had a rockefeller capital management from the u.s. cap -- potentially about. -- potentially involved. you have seen people struggling to come up with the kind of assets needed. pif, 340 million pounds for them

not as huge as it might be for some private investors from elsewhere. yousef: next, president trump announces his middle east peace plan. the palestinians rejected the proposal, saying jerusalem is not for sale. this is bloomberg. ♪ when it comes to using data, everyone is different.

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♪ yousef: president trump this week announced the plan for middle east peace that he says n-win" solution to make israel and the middle east safer. it leaves jerusalem as the undivided capital. it was met with strong opposition from palestinian leaders. president trump: president abbas, i want you to know that if you choose the path to peace, america and many other countries, we will be there to help you in so many different ways. we will be there at every step of the way. yousef: the son-in-law and senior advisor to president

trump was part of the policy discussion. he spoke to bloomberg's kevin cirilli. >> trump has built the capital with israel. he has shown the is reality -- of the israeli people that he cares -- he has shown the israeli people that he cares about their issues. this creates a framework for the palestinian leadership. i don't know if they will sees it or not. if they truly want to have a state and all the things they have spoken about for years and aspire for, it's time to come to the table. if they have issues with certain parts of the plan, said at the table, negotiate. if you don't like one of the terms, change the term, but there is a lot of flexibility they could have if they come to the table. >> there is a four-year implementation period for the plan? >> yes. the palestinian people have been suffering for a long time. i will also say that the palestinian leadership claims to want statehood, but in order to

have statehood, you have to show you are capable of statehood. >> what do you mean by that? >> there are not too many states that when they don't get what they want, they call for days of rage. if they want to get diplomacy, they get in a room, talk about their differences, and find a solution. and a lot of the leaders are rich, their friends and families are rich, but the money has not trickling down to the people. over time, they have created these illogical constructs hoping that they would never solve it to keep it in place. we have now made them the most real offer they ever had and we will finally smoke out whether they are serious about peace or like profiting off the status quo. >> is the u.s. trying to build a relationship with president abbas' successor? in the sense that it would appear there is a new generation that potentially could take

leadership? >> the policy of the administration is to deal with the elected leader. abas is in the 16th year of 4-year term, so i would not say it is a vibrant democracy. there is no human rights, a freedom of press, property rights. it is a complicated place. to say they are ready for statehood is a big leap. we have outlined the criteria we think are necessary in order for there to be a state. we have lined up an economic plan by studying economic successes, where $50 billion could be invested, along with making reforms necessary, like having property rights. the opportunity is available for them. by putting this idea out, this will show the rest of the world that israel is serious about peace. america's closeness with israel is a good thing because it gets israel to make compromises that

they have never made before. in addition, it outlines something for the palestinian people who maybe have lost hope over the years by being like to that there is a pathway to peace. >> when i was in the white house covering the remarks by president trump, he mentioned boris johnson. he said he got a phone call about this plan. is the u.k. on board with this? who are some of the u.s. allies on board with this plan? >> we have kept this planet very iet.t -- plan very qu there has been no leaks. the fact that we have had no leaks has been great. there are some partners and allies that we trust. we have had a lot of discussions over the past couple of years. borisdealing with the

johnson when he was the foreign minister and he had a great enthusiasm and understanding of this. we dealt with his foreign secretary and a lot of people on his team and they have given us a lot of feedback to make this better. i hope they will put out supportive statements to encourage both parties to negotiate. we have a lot of other countries in europe and the middle east that we have been talking with. a lot of concepts in this plan are concepts people have been pushing for further long time. >> what about the jordanians? >> i think they would greatly benefit from seeing this plan through. right now, there street gets riled up by all the extremists. i think of their economy would greatly benefit -- i think their economy would greatly benefit. if you look at this conflict, you have two separate conflicts that have been conflated together. you have a conflict between the israelis and palestinians, which is a territorial and security dispute. you need to have a security regime that works and figure out where to draw the line.

the next dispute is between israel and the islamic world. that is something that is based on the mosque. one thing we have accomplished today is israel is affirming the role of the king of jordan. in addition to that, what is happening is, we have made it the anti-muslim from throughout the world who wants to come and pray at the mosque and visit can it so that have made muslim from-- any throughout the world wants to come and prep mosque and visit and visit the mosque can do so. >> saudi arabia has proven itself to be vitally important ally in the middle east for the

united states, regardless of who is in the white house. i am curious what role you foresee them playing here. king of saudi arabia and the crown prince have been strong supporters of the palestinian cause and palestinian people for a very long time. they have supported them financially, they are the custodians of the important sites. may have pushed us very hard to say that it is very critical that there is a state for the palestinian people, they need to have independence. they understand security threats. they have their own threats right now. i think they are sympathetic to israel's security situation with gaza. saudis don't have any issues . with the israelis israel -- with the israelis. israel is hated by errani, the saudis are hated by -- hated

are hatedhe saudis by iran. they will like it a lot of concepts that are in this plan. i do think they will see it isn't saudi arabia's interest to have this conflict ended. this conflict is held onto by a lot of the radicals. the existence of this conflict is distorted by extremists to radicalize people. saudi arabia would like to see that end. >> there have been headlines about the jeff bezos phone hacking. has that impacted negotiations? >> there is always distractions in government with all different things. what are america's interests? what are the objectives we are trying to accomplish? we stay focused on the actions and relationships necessary in order to the. -- to do that. > we kno what america's priorities ar -- we know what

america's priorities are and we work hard every day to bring them forward. different subjects come up every day. president trump was elected by the people to make our economy strong and make our country safe. he is going to work through any issues that come up in order to accomplish that. >> quickly, two questions. i understand why this is so important. the folks outside of the beltway , outside of the washington bubble, why should they care about peace in the middle east? why is that important for america? >> great question. that's the question president trump asked in the beginning. what he has done very strategically over the last couple of years is, he has increased america's energy production tremendously. the historic reliance on the middle east for america had to do with it being on oil and gas supply to america. now, america is energy independent thanks to president trump's policies, which gives us

a lot of geostrategic flexibility and has also brought us a lot of prosperity. some of the plans to eliminate fossil fuels would be very detrimental to america. america's big interest in the middle east right now is to stop extremism. 9/11 happened because you had radicals who wanted to kill americans. we have this all over the world right now. the big fight that we have been doing is, how do we win the long-term ideological battle against extremism? you are never going to have a stable middle east which will allow people to focus on getting better jobs, improving their lives if you don't resolve this issue. this was happening in the 1920's. they had a clara cole was a custodian of the mosque -- a cleric who was a custodian of the mosque. he would say the mosque is in danger to stoke anti-semitism and all sorts of issues.

if we could establish that the mosque is safe, jerusalem is an open city, anyone through the world, if you want to come to jerusalem and pray, you are welcome, you can come safely. i think of that would be the greatest thing for humanity -- i think that would be the greatest thing for humanity. yousef: they knew ebay's -- the eu based -- pause again. we get into the earnings. this is bloomberg. ♪

♪ yousef: welcome back to the "best of bloomberg daybreak: middle east." emirates nbd this week sold a 1% stake in nmc health. the u.k. based hospital operator came under scrutiny from a muddy waters capital report. we got more. nmc yesterday fell about 4%, bringing its total loss to 24%

year to date. airates nbd makes this move couple weeks after the stock, and mc, comes under -- nmc, comes under scrutiny by muddy waters capital. a couple weeks after thethis shore the analyst tracking the stock said that this comes because of the company's accounts. nmc has replied to muddy waters by saying that the account is essentially-- is incorrect and that the scrutiny is unjustified, pretty much. the stock is still under a lot of pressure and we will have to track it tomorrow when it opens. manus: it has got to be said that emirates nbd the only institution to have divested themselves. you have investors having failed on the stock earlier. you have the former director and

the executive vice chairman also reducing their holdings as well. this all goes back, these are hints that they are inflated cash balances. there are a number of sellers on this stock. >> correct. something that we need to discuss as well is that a significant shareholder in nmc is the shetty family. two days ago, we heard about finablr stock. the owner has pledged more than half of the company's outstanding shares to pay for an investment they have made in 2016. that is, i would say, kind of unprecedented. more than half of the outstanding shares. it is a double whammy. since december, the family has lost more than $1.5 billion in

private wealth, which is very significant. manus: quite a significant hit. who else is on the slate? >> emirates nbd is expected to report either today or tomorrow. the uae andnks in dubai in general have been going through a positive story. they are kind of undervalued compared to beers -- peers. emirates nbd set to deliver the best net income since 2016. we also have fab reporting bik.rrow and sob back -- sa we are not expecting good results. -- sabic. we are not expecting good

results. we will come back to you with the results. manus: lovely. thank you very much. the latest on the stock report. ceo/ciot host is the of fim partners. emirates nbd dropping 1% of the company. nbd do you make of emirates dropping stock at this stage? >> look, let's put things into context. this was a small failed, right -- small fail, right. i don't look at it as a big event. it is coming on the back of a much bigger sale two weeks ago, credit selling a big stake worth roughly $500 million -- credit suisse selling a big stake worth roughly $500 million. is being pledged

to banks. manus: you have credit suisse exiting, emirates nbd selling. symbolism. the >> this stock dropped more than 60% from the peak. there are clear issues. muddy waters puts a lot of pressure on the stock in the report. manus: what is the market most worried about from the report? >> there's plenty of allegations in that report. many of them are known to the markets or irrelevant. all of these things are not good governance, etc., however, the market was aware of them. the real issue is we want to make sure that the cash balances are correct. the level percentage rejections that we are talking about are also correct, because that impacts the profitability of the firm, which is central for investors in nmc> when you -- nmc.

when you look at the reply of nmc, we did not get the full answer that is satisfactory to investors. the rest is less important my would say -- important, i would say. manus: they brought in a former u.s. federal judge as director. is the market convinced this is the right person to do this job? may be don't know enough about the -- maybe i don't know enough about the accounting background of the former u.s. federal judge. >> it will be a team doing it. i think for now, the little work done on this firm, this is a credible -- this is credible. ysnus: going back to the shett

placing stock in finablr. it is crossing the boundary lines of financing, isn't it? >> it is absolutely acceptable but also worrying. you are talking about a lot of leverage and the stock coming down on that leverage. people are worried that the same thing that happened with nmc will happen to finablr. we will actually see it over the next few days. that's why people are worried. manus: next, the fed stays on hold. jay powell paves the way for a possible shift in inflation strategy. this is bloomberg. ♪

♪ yousef: welcome back to the "best of bloomberg daybreak: middle east." the fed has left the key interest rate unchanged, as

expected. jerome powell signaled the central bank would pull out the stops to combat a disinflationary downdraft. i got more with the senior market analyst. >> i don't think that problem is a problem unique to the united states. we are struggling to get any signs of inflation anywhere in the world. although unemployment seems to be at record lows, nobody feels particularly secure in their jobs, and nobody seems to be getting a large pay raise. i think this is why we are not seeing this inflation coming through. it is worries about the future and jobs, and also a lack of wage increases. there has not been momentum to drive that spending. also, because we had such a huge overcapacity in manufacturing around the world, that consistently acts as a cap on rising prices for manufacturing goods, for example. yousef: so where do you expect

the rates to go from this point onwards? >> very good question. my answer to that in the short term is, it depends. virus situation escalates sharply and we start having a very noticeable impact on global growth, the fed may need to pivot to cut rates and to put monetary policy to work. they will not be alone there. assuming they get a hold of this situation and it passes, i believe the fed will remain on hold for the rest of the year. they have pretty much said that was their plan initially. u.s. data and u.s. unemployment are all at very good levels, so i believe that there is no real reason for the fed to be cutting rates in this situation. yousef: what they did do is increase the interest on excess reserves.

is that perhaps where the focus should be ready for global investors? >> i think it is more of an adjustment to bring it into the funds band. they are trying to build up banks' reserves as well because we keep getting funds these big short-term funding squeezes in the repo market. it could be a precursor to the fed starting to stop there short uying.ll i think that is the most likely place where we will see some movement from the fed, a reduction of that short-term ying.bu this will all depend on the effects that we see from the viral outbreak. yousef: seems like you want to call it quantitative easing, so we will leave it at that. in terms of the u.s. equity story, we have tesla knocking it out of the park with their numbers. you had apple impress as well,

on average beating expectations. is this a good point to get into u.s. stocks, despite the uncertainties from the coronavirus? >> i think it is a brave move at the moment. we saw the rally yesterday. ,ere we are back to flat again as external factors conspired to take the heat out of some very good results that came out today. microsoft. , for example. earnings season is going very strongly it appears in the united states, but external factors i think are starting to weigh on things. my thoughts are right now is that it is being extremely bullish on equities at this move.is perhaps a brave we can more than likely get better levels to reenter those markets in the next month or two . yousef: let's see if we can find you something that has better evaluations. the folks at morgan stanley say

u.k. shares are too cheap to ignore and put this together on a graphic. they are looking here at a normalization to the 10 year average, implying it 13% re-rating. in terms of pe, the ms yet u.k. trending debt trading at a 20% -- msnt to the msci world ci u.k. trading at a 20% discount to the msci world. >> for me, i think that u.k. assets have been extremely undervalued. with the sterling down at the levels they are, i think the u.k. is going to do much better than everybody, all the doomsday ers are post brexit. i agree with that thesis that there will be some wonderful opportunities in the united kingdom in the coming year. yousef: remember, you can catch

daybreak -- manus: remember, you can catch daybreak middle east every sunday through thursday. this is bloomberg. ♪

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