Destroy of day: Heart East & Africa 03/20/2024

This is Bloomberg Daybreak, Middle Eastand Africa. Our top stories this morning.It's decision day for the Fed with bond traders positioning for the central bankto dial back its rate cut projections. In Asia, stocks rise after US equitiestouched fresh record highs. U.S.Secretary of State Antony Blinken is back in the Middle East.This week's trip is his sixth since October as tensions in Israel continue.Plus, the Johannesburg Stock exchange. Africa's biggest says its IPO IPOdrought is finally easing. We'll bring you our interview with theCEO shortly.

It's just gone.8 a.m. across the Emirates.This event in Dubai. Welcome to Fat Day.It's all eyes on the dot plot. Later, will it be more hawkish?And will markets care? Let's check in on these markets as weawait that decision. We'll bring you analysis throughout theprogram. You've got the MSCI Asia Pacific Indexin the green this morning after a positive close on Wall Street yesterdaypropelled by the Magnificent Seven. The MSCI Asia-Pacific Index, I shouldnote, is excluding Japan.

That's taking a day off.I wish I could take a day off after every big decision.But there you go. You've got futures stateside pointing toa lower opening today as they are in Europe.And if we flip the board to the cross asset picture, you did see Treasuryspushing higher yesterday thanks to this strong 20 year auction.No cash Treasuries trading, as I say, until 11 a.m.Dubai time because Japan is closed. But meanwhile, you've got the dollarpretty steady having climbed for a fourth day.How much would a dovish Powell press a.

Knock the greenback you have to ask.You've got Brent trading at $87 a barrel, so edging lower after a two dayrally. But how high could it go on?Fed coach Jeff Curry tells us past 90. And we'll bring you the latest fromCeraweek in Houston later in the show. Just finally, a check on Bitcoin.$62,000 is where we trade, taking a beating and well off the highs we'veseen of late. But let's check in on how Asia marketsare faring. Of course, it is a big day with the BOJyesterday for Japan. April Hong is on standby in ourSingapore studio table.

Hey, Lizzie, big day for the DOJyesterday, but it's also a big day ahead of that Fed count down, really watchingto see what we're going to get from the most influential central bank in theworld that's going to be of consequence for Asian equities.So far, you're seeing a bit of a bump up and it's thanks to what we saw on thetech side of things on Wall Street. Similar picture, the likes of Tencent,for example, they report earnings today. They're you know, there's some optimismbeing priced in. That stock is also higher.But we did get the Chinese loan prime rate left unchanged as expected afterthe PBOC left the MLF unchanged last.

Week.For the bond markets, that doesn't seem to matter.It's really about that expectation of further easing of the speculation goingforward. Yields just keep dropping unchanged atthe moment, but still at that 228 five level.Now let's put the board I want to recap what we getting out of Japan.Of course, it was that historic rate decision and then way to not letting onvery much. The takeaway for markets was that it'sgoing to be keeping things accommodative.Any tightening or normalization is going.

To be very gradual.So equities market pointing to a gain at the open based on the futures we'reseeing, the bond futures pull back a little.Yen, of course, that one is the weakest level against the greenback sinceNovember last year. So it's really going to be shifting thefocus to the Fed. And indeed, we will continue that focusnow. Thanks, April, for that update on Asianmarkets. The Fed decision very much in focus.It's expected to hold rates today. So all eyes on the dot plot and whetherwe might get a surprise on the balance.

Sheet as well.The press conference also in Focus. Let's now bring in Mary Nicolet for someanalysis. Mary, what are you expecting today?Yeah. The big thing is going to be on how howthe shift in the plots take place. Do we get that shift from 3 to 2?Obviously, if we do, then we're going to see a hawkish response from the market.Although a lot of bond traders are already skewed for a more hawkishoutcome from the Fed. So really the big risk for the market isif the Fed comes out a lot more dovish than expected and they could do so,especially in the press conference.

So let's say they shift that dot plotfrom three hikes, three cuts to two cuts, then all of a sudden you're goingto see the markets respond and then of course, you'll see a let's say, a moredovish press conference from Powell keeping the optionality open that heneeds if he needs to cut, especially if the data deteriorates further.Yeah, because some were surprised by Powell's comment that the Fed's not farfrom the level of confidence they need on inflation to start lowering rates.If you do get a dovish Powell today, how big could the market reaction be?Yeah. Given how the market is skewed currentlyin terms of very much focused on a bear,.

A much more hawkish fed, the rally couldbe quite big where you can see not only pressure on the dollar, but also yieldscan start drifting a lot lower than we would we would have expected from fromsuch a surprise. So right now, I think the focus willcontinue to be the continue to be on how his comments project because again, asas he mentioned just a few weeks ago to Congress that they don't need theinflation targeting the target going back to 2%.They just need to see disinflationary pressures continue.And as long as that does happen over the next few months, we could see ourselvesa lot closer to the rate cut.

So there's no way that the that FedChair Powell is going to close the door on any cuts sooner rather than later orjust or even put a time frame on it. All right.Mary Nicola from our M Live team, great to have you on.And you can check out the live blog at MLive.Go on the terminal. Let's continue this conversation.We'll bring in Lucy Baldwin, Citi's global head of research.Lucy joining us from Hong Kong. You're looking at this dot plot two, ifit's more hawkish. Do you expect that the stock marketcould just shrug it off, actually as a.

Sign that the economy is growing in theeyes of the Fed? Yes, it's a big question indeed.I mean, our view really is that we are going to see today a difficultenvironment for the Fed to give comfort that they are going to do as many cutsas has previously been expected by the market.Now, that said, our core view is that you do still get 125 basis points ofcuts this year, which is different to consensus.Our view is the economy is pretty hot. There's been a big debate around whetherthe data so far this year is a red herring or a red flag.But I think that data is going to make.

It very difficult for them to signal,you know, a cut before June. So I think the moves we've seendo correspond to that difficulty, that this last mile of inflation isincredibly difficult to get back down. It is proving to be pretty sticky.I like it. Bringing those.A contrarian call to wake us up in the morning.Lucy, Good stuff. Let's focus on the balance sheet aswell. How much more do you think that the Fedcan shrink its asset portfolio before potential market disruptions like we sawwith the repo market blow up in 2019?.

Well, as you say, there's been a numberof different disruptions around the world as it pertains to the balancesheet. And as we know, US debt seems to begrowing by about $1,000,000,000,000 every hundred days or so.And like many of these things, it's not an issue till the moment it becomes anissue. So right now, markets are justincredibly focused on rates coming down and obviously on the boom.So we don't think there's a major problem with U.S.debt. But obviously, as we press towards thesecond half of the year and look to the.

Election, everybody's going to bewondering what happens. Given the two candidates that we've gotcoming up and the likelihood of wanting some kind of fiscal stimulus again,albeit much less than we would have seen over the course of the last few years.Yeah, I maybe want to come back to the election, but let's just stick on thistheme because in terms of the stock market rally, you're pretty bullish.You think that the S&P could go as high as 5700 by the end of this year.What's it going to take to make that happen?Well, as you say, despite our cautionary view only on the economy in the secondhalf, we do still see a blue sky.

Scenario of 5700.It is a bit of a Goldilocks scenario. So you really do need to see for that tomaterialize that soft landing and something like two or three cuts andobviously that the US ten year to come down lower is really what we'd need tosee for that as well as that earnings progression.There's an awful lot resting on the CapEx boom for sure given tech is now20% of earnings, about 30% of the index and has been more than half of theperformance we've seen. There is a lot of pressure for it tocontinue, but it's going to take a long time for us to know whether the CapExthat's going to be spent is being spent.

Productively.So we definitely say to people, even those concerned of a bubble emerging,you'd want to participate in that. You'd want to own some of that exposureand I think broadens out beyond the obvious, i.e.names you'd want to own that as well as probably having a barbell strategy justin case and owning some value in certain parts of the world too, alongside that.Well, Is this the sort of justification you need when you have in videoannouncing it's Blackwell Blackwell platform yesterday?Does that kind of give you the justification for the unabated AIenthusiasm we're seeing in markets?.

Well, we are pretty bullish on the sortof semi cap equipment space in particular.So it was great to see in video commenting on the new generation ofchips yesterday. And for us, we do think that that chipwill that race for the world's most critical technology is going to continueas obviously China looks to become self-sufficient and self-reliant in thatspace. And obviously the US looks to also takeback more capacity and build more capacity itself.We do see at that very high end of the semiconductor industry a tremendous racefor that dominance.

For now.The US obviously has a clear advantage and we've seen video in that designspace as a clear dominance within its own market as well.And we do think that's going to take some some beating, but we do thinkthat's a very compelling space to own for investors for the next few years.If we could just look back to yesterday, Lucy, of course, we had the Bank ofJapan decision. You weren't expecting the BOJ to hiketill April, but now that they have. Do you think that's one and done for2024? Well, we do think there is now going tobe this normalization.

You obviously had a very strong set ofinflation data coming through from Japan in terms of the wage negotiations overspring. And we do think that sort of slow andsteady normalization is now set to continue.Again, with our view on the Fed for those cuts in the second half of thisyear, it will be difficult to see material hikes from the Bank of Japan.But we do think you're going to see that normalization slow and steady, whichgives us a lot of confidence, actually, that the equity market looks still veryattractive here given the corporate reform agenda, very strong earningsgrowth coming through and a pretty.

Compelling valuation still relative tothe rest of the world. So we would still say you can party likeit's 1989 with Japan Equities for now. You weren't here in 1989.Let's just finally talk about elections. You mentioned the political risk, amarkets underpricing the geopolitical and political risk that will be bubblingalong in the background this year. Well, I think there are a number ofrisks for markets this year. Inflation is obviously one of them.And I think one of the risks that's perhaps less well understood there isthat risk that at some point do people worry about hikes even coming back fromthe Fed if you can't get inflation close.

Enough back to two 2%?Obviously, that's not really in anybody's minds.Now, the recession risk I talked about is pretty much off the table.And then, as you say, very rightly, the third risk that markets aren't reallyyet focusing on is election risk and that broader sort of new world order andgeopolitics. And I think obviously both candidateshave have been, you know, our incumbents.It's Trump 2.8 or Biden 2.0. And so there's a lot of debate aroundwhat does that mean for global trade and and the sort of the forward patternthere.

So I think you're not really going tosee markets start to price that until we move back towards the sort of secondhalf of this year. But for us, we would look at somethinglike the dollar as a way of playing that We do think you'll likely see somedollar strength coming back as you go back into the second half of this year.Okay, so complacency, but perhaps justifiable complacency.Lucy Baldwin, Citi Global head of research.Great to have you on the program. Thank you.Now, we have talked about the Fed decision coming up, but there's plentymore on the docket today.

It's a busy one.We've got UK CPI data at 7 a.m. UK time.That's 11 a.m. Dubai time.And of course, it's going to be absolutely crucial for the Bank ofEngland decision, but not really likely to persuade the MPC to give us moredetails on the future path for rate cuts when it meets tomorrow.It's expected to add to the evidence this figure that inflation is on asteady path back to the 2% target. Economists see a drop from 4% to 3.5%,and that would be driven by food, core goods and services.But it's not just the UK that's dropping.

In inflation print.We've also got South Africa CPI at 12 p.m.Dubai time. Most economists reckon it will haveticked up in February. Bloomberg Economics, however, sees aslight drop down to 5.2% and that would be thanks to a fall in food prices.We're also going to hear from the ECB president, Christine Lagarde.Then on Thursday, we are going to have a bonanza of central bank decisions.We've got at 4 p.m. Dubai time, as I say, the BOA beexpected to hold rates as well. Keeping an eye, though, on whether thevote split is more dovish this time.

Do we lose Jonathan Haskel from thehiking come? Then at 3 p.m.Dubai time we get Turkey's decision expected to hold the one week repo rateat 45%, but continuing to tighten reserve requirements and bankingregulations. There we get a norges Bank decision at 1p.m. Dubai time.They're expected as well to hold borrowing costs.So the focus is on the outlook for when the start same story as everywhere else.But most economists don't see that coming sooner than the third quarter.And then we have the S and B deciding at.

12:30 p.m.Dubai time, they're expected to hold at 1.75%.It's more of a holding party than a pivot party for now.But still ahead, we're going to discuss the outlook for oil and why Mufg expectsTurkey's central bank to hold. That's up later in the hour.But first, the US secretary of state, Antony Blinken, is going to make hissixth visit to the Middle East since the Israel-Hamas war broke out in October.We'll have more on that story next. This is Bloomberg. Welcome back to Bloomberg Daybreak,Middle East and Africa.

I'm Lady Bird and in Dubai now, the USSecretary of State, Antony Blinken, is making his sixth visit to the MiddleEast since the Israel-Hamas war broke out with stops in Saudi Arabia andEgypt. On the docket, the top U.S.diplomat has called on Israel to let more aid into Gaza, saying the situationis worse than Sudan and Afghanistan. Let's get more from Bloomberg's StuartLivingston. WALLACE Now.Stuart, with Blinken calling for more aid, could you just give us some contexton how this compares to other crises in terms of humanitarian aid?Yeah, I mean, the numbers are pretty.

Horrific.So thinking about Sudan, it's something like 80% of the population in need ofaid. Afghanistan at 70%.But as he said yesterday, Gaza, it's 100%.You know, there's virtually no one that is well-supplied.So they're all terrible crises. And in some respects, this is the worstbecause it's going to be the toughest to get the aid in.So you can fly stuff into Sudan and Afghanistan.You just can't do that. As you've seen, they've basically had toresort to air drops.

You've got a few trucks coming in fromthe south, but there's no grand plan that's going to materialize any timesoon to get the kind of the volume you need to solve the situation or at leastalleviate it. And you would want it to have eyes onthe situation, reporting it. But is there any hope that journalistswill be able to enter Gaza? Not anytime soon.And I mean, you know, as Blinken pointed out, there are some good reasons forthat, which is that it is an unbelievably dangerous area to operatein. And we know that, you know, lots ofjournalists have already been killed in.

This conflict.So we know that there are some embeds goingin with the IDF. But again, it's on a very limitedcapacity. They can only see what the IDF wants toshow them. And again, obviously, the IDF is goingto be very cautious about taking too many press in because you really don'twant a delegation of journalists killed. Yeah, you might as well watch an IDFmade social media video in that case. And then just in terms of therelationship between the US and Israel, you've got the the Israeli delegationheaded to Washington.

Is the feud easing?I think that I think but I think they're trying to improve the optics, which isnot all the same thing as saying things are improving.I mean, fundamentally, you have two opposing positions that I think arealmost irreconcilable. So they are trying to dial back therhetoric and you can understand why they would want to do that.There's not much to be gained. You know, they've kind of said what theywant to say. We know Netanyahu is sending adelegation to Washington to listen to the US proposals for how you couldtackle Hamas problems in Rafah without a.

Ground assault.But again, he has said very explicitly, again and again and as recently asyesterday, he thinks that is the only option to deal with us.But what are you hearing? Is there any chance that this push intoRafah won't go ahead? Based on everything that's been said sofar? No, I think what what the best we canhope for is probably a delay. So, in other words, you can put enoughpressure on Israel to do something about the civilian population in Rafah.And again, that's well over a million people.Again, no one's come up with a very.

Concrete plan for how you deal withthat. But I think fundamentally we're sort ofin a delay situation rather than scrapping it completely.But you never know. You know, maybe that delegation inWashington has something like that they can work with and we don't end up inthat position clear. That's what everyone for.But right now, it's not looking great. Yeah, a bleak situation in terms of thesituation for people in Gaza. But buying Biden time as wellpolitically because of the attacks from the left in the US.Stuart Livingston Wallace, thank you for.

That update on the situation in theMiddle East. Let's take a look at some of the othercorporate stories that we're looking at today in the region.Saudi Arabia is reported to be planning a massive push into artificialintelligence. The New York Times says the kingdom isconsidering a fund of about $40 billion, which could make it among the biggestplayers in the sector. Representatives of a Saudi publicinvestment fund have also reportedly discussed a potential partnership withAndreessen Horowitz and other financiers as well.Borse Dubai is set to sell roughly a.

Third of its stake in US exchangeoperator Nasdaq raising as much as $1.6 billion.The Middle Eastern Company will be left owning just over 10% of Nasdaq and willdrop down to become its second largest shareholder.The boss, Dubai CEO, says the firm will continue to be a long term shareholderin the tech exchange. We've got lots more ahead, so stay withus. This is Bloomberg Daybreak, Middle Eastand Africa. Industry is well-capitalized, has goodliquidity. Believe me, from last year to this year,people shored up their liquidity across.

The industry.Commercial real estate is a slow burn. It's a classic burn.In other words, if you go back in the late eighties and early nineties, we hada rolling commercial real estate recession.And so there will be difficulties and we work in that.But, you know, the the trading attitude, which is these assets got to move at aprice tomorrow morning isn't the way the banking system works and frankly that'sthe value of the bank is just we work with clients, we figure out what the youknow, you take a building, you figure out what the ultimate end state rentalrolls will provide, you refinance it.

Sometimes that wipes out the equity,sometimes that doesn't work. Careful in how we underwrite as anindustry. You know, the top 30 banks go throughthe stress test, which has a a in effect.It says, wait a second, if you're out underwriting outs in a bad way, thatwill you have to put up the capital approval rate before you even get thechance to prove it right. So, in other words, of capitalrequirements reflect your underwriting today, even though recession may nevercome and it reflects your underwriting commitments under scenario wherecommercial real estate dropped by 30 or.

40% instantaneously, instantaneously.So there's a effect on that on the industry, which is much moreconservative building and much more middle of the road building, which hasprobably slowed down the capital provision to some of these companies.But on the other hand, is not a bad thing when you get to this point.So we feel very good. Does that mean banks might fail?There's been thousands of banks have failed across the last 30 or 40 years.That's what happens. Business models change.But on the other hand, the the quality of the banking system is strong.Bank of America chairman and CEO Brian.

Moynihan, speaking exclusively toBloomberg Surveillance will have plenty more ahead.This is Bloomberg. This is Bloomberg Daybreak, Middle Eastand Africa. Our top stories this morning.It's decision day for the Fed with bond traders positioning for the central bankto dial back its rate cut projections. In Asia, stocks rise after US equitiestouched fresh record highs. U.S.Secretary of State Antony Blinken is back in the Middle East.This week's trip is his sixth since October as tensions in Israel continue.Plus, the Johannesburg Stock exchange.

Africa's biggest says its IPO drought isfinally easing. We'll bring you our interview with theCEO shortly. A very good morning.It's just gone. 8:30 a.m.across the Emirates. I'm going to leave it in Dubai.Welcome to Fed Day. It is all eyes on the dot plot today.Will it be more hawkish? And will the market care if we check inon equities as they're faring currently? Japan is closed after the BOJ decision,so if you strip that out, the MSCI Asia-Pacific index higher a quarter of apercent.

Getting a boost from last night's closeon Wall Street, which was boosted by the the Magnificent Seven.But as we look ahead to the Wall Street open.Futures pointing to a lower opening as they are in Europe.If we flip over to the cross asset picture, you did see Treasurys pushinghigher yesterday thanks to a strong 20 year auction, but no cash Treasuriestrading till 11 a.m. Dubai time because, as I say, Japan isclosed. The dollar is currently pretty steady,having climbed for a fourth day. But how much would a dovish Powell Pressaffect the greenback?.

That's a question to ask.Brent trading at $87 a barrel, so edging lower after a two day rally.How high could it go on Fed cuts. Jeff Caruso's past 90 and we'll bringyou the latest later in the program from Ceraweek in Houston.Just finally, Bitcoin taking a beating now below the $62,000 mark, well off thehighs that we've seen of late. But let's broaden out now.Let's go to Asia. Several Hong is waiting for us inSingapore. April, what's happening where you are.Yeah. Lizzy, we see that gain slightly on themix, see p j and that is helped along by.

What we're seeing on South Koreanstocks, particularly Samsung Electronics, as it gains by the most insix months. And this is in turn from a report thatNvidia is looking to buy its high bandwidth memory chips.So that's that chip maker sprinkling a bit of that fairy dust onto his SouthKorean counterpart. Let's flip the board and take a lookvery quickly what we're seeing across assets in China as well, because, ofcourse, we had that loan prime rate left unchanged today.This was as expected after the PBOC did the same last week.But you get the sense that for Chinese.

Equities we might have seen the bottom,the CSI 300 and Hang Seng running slightly higher today.The bonds earlier were extending the gains that stalling a little now, butoverall it looks like a bit of an improvement.Lizzie. All right, Avril Hong, we thank you forthat update. Now, oil is going to rise above theconsensus view of 70 to $90 if the Fed cuts rates in the coming months.That's the view of Carlyle Group, Carlyle Group's Jeff Currie, and hespoke to Bloomberg on why he's bullish on oil and copper.The US is running a 6% fiscal deficit.

The largest deficit ever ran history ina peacetime non recessionary environment.Think about this. If they do it in a recession, it'sbecause of providing, let's say, unemployment insurance.They're doing it full employment, red hot economy, and they're turbochargingan environment that is already being stressed.That's why Bitcoin and commodities are the two best performing asset classesout there. Well, let's get another view on that andwe can bring in Ehsan Coman, who's head of commodities, ESG and research at MFT.Welcome to the program, Ehsan.

Could oil break past $90 a barrel?If we have more Fed cuts this year? Thank you for having me.Absolutely. We certainly agree with Jeff's view thatI think, you know, we still remain tactically bullish.I think in terms of the recent advance, of course, there's been more incrementalthan remarkable. But with Brent now close to 90, then 80,I think the complex is increasingly primed to test the 90 handle.And I think Fed rate cuts will be the next key cut.This, of course, where we are right now, opec+ key risk to downside.It may conclude that further upward.

Moves may help as some of the long termreasons you demand for its own barrels. So we would flag OPEC's risks in termsof bringing more balance in the market, in terms of reclaiming some of the lostmarket share by raising some of its production in the coming months ahead.Okay, but with an eye on the dot plot later, how much would the Fed have tocut this year to get oil to $90 a barrel?So, Lizzie, I think, you know, when we look back in time, I think historicallycrude oil has been very well positioned going into as well as after Fed cuts,which of course, is further reinforced right now with the complex constitutingvery tight micro fundamentals, which is,.

Of course, market deficits.That's been reinforced by the backwardation in terms of the futurescurve. Now, I think today's set up, Lizzie, forus is strikingly reminiscent of the soft landing episode of 9596.The Fed is only, what, 75 basis points. Back then.Amid a mid-cycle adjustment, Brent Oil and the commodities complex rallied byno less than 25% and 20% respectively now.I think with that in mind, we certainly hold conviction that today's environmentdoes signify classic late cycle commodity price rally.And I think we look to be long energy.

And broader precious metals indeed, witha historically strong gains when it comes to, you know, coming into and outof the first initial Fed cut. Thinking about the supply side as well.I'm sure you've had your ear to the CERAWEEK conference that's beenhappening in Houston. What have been the standout highlightsso far for you? Yeah, it's been a very interesting,complex, I think, in terms of trying to navigate this energy trilemma ofso-called affordability, security and sustainability in terms of adjusting ayou know, adjusting or the transition to net zero has been the key theme.I think big oil has come into the.

Context of, you know, very buoyed by theconfluence of steadily rising oil prices, supporting their record earningswith easing pressure from ESG activism. And, of course, no immediate signs ofpeak oil. So I think with that in mind, it's beencertainly strong in terms of the big oil story.Now, I think for us in terms of, you know, investments into green energy.Of course, they have been growing quite significantly, but for us, they stillremain too nascent, easy for green CapEx alone to drive global growth.So certainly I think that carbon intensive investment is needed to reallytry to minimize that structural.

Underinvestment that's been going on fornearly a decade now. Okay, so underinvestment a real problemboth for clean and fossil fuel energy. Let's just come back to central banksbecause we have got a bonanza of central bank decisions tomorrow, not just theFed today. Turkey on the docket.What are the chances of a surprise hike and what would that signal to you?Yeah, it's a key risk, I think, for us, the base case is still for a hawkishhold from the central bank of Turkey. I think, of course, it may look tocontinue to gauge its impact of additional quantitative andmacroprudential tightening that it's.

Been doing for the last few months.Of course, been a lot of pressure on inflation, ethics and reserves acrossthe country. Now, I think critically for us, it's notso much the decision which we think it was like to be on hold at 45, but it'sthe signal that comes out. Post-Meeting statement.Now, I think for us, our base case is that an April rate hike is certainly onthe table and I think we look for that in terms of the post-meeting statementfor that to come out once once that announcement is released.Well, that's interesting. So where is the ceiling for the policyrate and when do you see the easing.

Beginning?Yeah, I mean, it's a great point, I think, for us in terms of inflationdynamics, Lizzie, you know, it really has is showing no meaningfulimprovements in recent months. Of course, it's been more than eightmonths since the appointment of a new economic management team.Very, very strong in terms of reinforcing that investor sentiment,that monetary tightening is continuing. But for us, two key reasons why we thinkthat, you know, inflation dynamics haven't really showed significantrecovery. One is the real interest rates remaindeeply negative.

And two, monetary tightening has reallynot been accompanied by fiscal tightening, particularly on the morerestrictive incomes policy. So for us, I think trying to get to thecentral bank's estimate of a 36% year end target for inflation is veryunlikely. We look for it to be closer to 50% andfor us to be a base case, a hike of another 250 basis points in the Aprilmeeting, taking taking the one weekly both to 7047 and a half percent.Okay, That's your outlook for Turkey. Hasan Koma and head of Commodities, ESGand research at Mufg. We thank you for shedding some light ona central bank that's perhaps forgotten.

In the shadow of the Fed of the BOJ, butnot here on Bloomberg Daybreak, Middle East and Africa.Now let's go to one of our top interviews.The Philippines president, Ferdinand Marcos Junior thinks that GDP growthcould hit 8% during his term. He's been speaking exclusively toBloomberg's Haslinda Amin about the economy and he also touched on interestrates and inflation. Howmuch of that much of the policies that we that we've taken on are really due tospur growth? That's part of the most that's the mostimportant part because it is only growth.

That will pull us out of this, themorass that was left after the pandemic. Even in terms of interest, even in termsof debt ratios, even in terms of unemployment, in terms of inflation, itreally is growth. That seems to be the key.Is it sustainable if we continue down this road, if we defend all of thethings that we are doing? I believe it is.I believe it is. If we are also agile in terms ofresponding to the shocks that come up, come upfrom other from from the outside. To put it that way,shocks that we cannot control or can.

Have very little influence over, if any.So that's that will be the key. It's a six year term.Do you think you can get to 8% within the six years that you're in office?Sure. Why not?You know, there's no we plan. We always plan for the ideal.We don't plan for a mediocre result. We plan for a very good result.And as I said, we just have to adjust along the way as we as wecontinue to to transform the economy. But, yes, I think it is I think it isdoable. Several banks are currently in focusbecause of interest rates in the.

Philippines.Rates are at, I think, 17 year highs. How much room is there for you to cutrates or under the BSP to cut rates? We're still battling inflation.Inflation is still our biggest problem. And when you when you separate coreinflation to inflation, that involves agri product, for example,you can see that the core inflation, we're doing rather well in terms ofcontrolling it. But again, these these shocks that keepcoming in, but still not quite the time to cut rates because inflation is stillsticking low.Perhaps we look at it almost every every.

Week to see if it's time to to to bringdown the rates. We are not yet there and the peso at athree month high. Are you comfortable with the peso andits reverse because it's an indication of the strength of the economy?There is a downside to it for the Philippines because of our overseasworkers where the dollar is worth a little less than it normally would be.But I see it as an affirmation that the economy has grown stronger,and that is one of those obvious tests. And the dollar, I mean, of course,because it's a relative, it's a relative measure, the dollar has notdepreciated.

So if we areif our the value of the person is increasing, then that is a goodindication that, again, the economy has gained strength.Fantastic interview by the Philippines president Ferdinand marcos Jr speakingexclusively to Bloomberg. Interesting.Elsewhere in the conversation, he said that the Philippines standing up toChina in the South China Sea is not meant to poke the bear.Great interview from Haslinda Amin. We've got plenty more still ahead foryou, so stay with us. This is Bloomberg Daybreak, Middle Eastand Africa.

Welcome back to Bloomberg Daybreak,Middle East and Africa. I'm Elizabeth Arden in Dubai.Let's turn our focus now to the political turmoil in Senegal.The president, Macky Sall, is defending his decision to delay the country'selections. He insists democracy and itsinstitutions remain intact. Well, for more on this, we've gotBloomberg's Dario Ganga joining us from Kigali, Ontario.Given the political instability that we've seen, how is Macky Sall justifyingthis delay to the elections? Well, he begins by acknowledging thatit's been a rough couple of weeks and.

Months in Senegal because he decided topostpone the election not by a month or two, by ten months.And he said that his main goal was to ensure continuity of peace and stabilityin the country and ensure that by the time Senegal was going to the ballot,everybody was satisfied with the number of candidates.However, this decision did not lead to the desired results that he had intendedfor, which so many Senegalese took to the streets to protest this decision.Clash of the Police. The government even took it as far aslimiting communication by cutting off Internet access and leading to thismoment.

Senegal was seen as one of the moststable countries in West Africa, a beacon of democracy.And his critics have accused him of attempting a constitutional coup.Luckily, the Constitutional Council stepped in and ordered President MackySall to set an election date before he leaves office, according to theConstitution. We've also seen him extend an olivebranch through the political amnesty bill that pardoned all politicaloffenses in Senegal and released opposition leaders like Fire and OusmaneSonko. So when we do finally get this election,what are the other candidates offering?.

Well, we have two leading contenders,Fire and Amar Deuba, and both of them a day at night.Their policy is very different from each other.Amar Jabbar, who's the big success of President Macky Sall, worked in hisgovernment as a prime minister. And so we are likely to see a continuityof policies from the previous administration, which is good forinvestors. He intends to create jobs, bolsteragriculture, and expand the country's infrastructure.On the other hand, he is a firebrand. He wants to, one, renegotiate the oiland gas contracts with companies like.

BP, Kosmos Energy and Endeavour Mining.And President Macky Sall says that these contracts can be improved by, butchanging them will be very drastic and will rattle investors.Okay. Well, we'll await that election.Bloomberg's Ontario, Hungary. Thank you.Senegal's reputation, as you say, as a beacon of democracy under threat.Now, let's move elsewhere in the region. The Johannesburg Stock Exchange, thebiggest in Africa, is slowly turning the tide from a wave of delistings, withcompanies once again considering IPOs. Speaking to Bloomberg, the JSE CEOdiscusses that shift in sentiment.

We have actually seen a shift in thetide of listings over the last six months.We see quite, quite encouraging green shoots there, a couple of themes, anumber of unbundling and also a number of international listed entities fromthe London Stock Exchange and the Nasdaq looking to delist, particularly in theresources and also in the property sector, the way in which Amazon andother partnerships will enable us to encourage flows on our market is thatfirstly, our technology will modernize. We'll also be able to reduce the pricingof trading. And in the other products, aside fromour back office system, we're able to.

Introduce new global markets like thecarbon market, which we intend to make a Pan-African solution, which wouldconnect with global markets. We're also looking to to expand ourprivate markets onto the continent. And this would also expand the amount ofcapital that circulates between South Africa and its African neighbors.How soon is the expectation for that? And you mentioned two companies from theNasdaq and the London Stock Exchange potentially listing.I mean, is that expected for 2024? Yes, that is expected for 2024.So across resources, vanadium Resource and Marula Mining haveall announced a it's in the public.

Domain, a potential to lift secondarylist on the JSE. Do you expect even bigger companies totry to come to the JSE, or is this sort of where you're you're at for right now?Yes, Jennifer.We we have a history of a large number of dual listed companies.BHP Billiton, for example, opted to delist from the London Stock Exchangeand retained its dual listing on the JSE with its primary listing on the ASX.We have more than 50% of our listed entities, our global large giants.We fully expect as the sentiment and the market starts turning.During the downturn, it was cheaper to.

Raise debt than equity.As inflation has increased, rates have increased.It's now becoming a lot more attractive to raise equity rather than date.So we are seeing a bit of a shift. Macroeconomic conditions, both globallyand locally, need to need to provide a level of stability and clarity.Any uncertainty, of course, is not good for IPO environments. Welcome back to Bloomberg Daybreak,Middle East and Africa. I'm Lizzie Bowden in Dubai.Now Hong Kong's fast tracked new domestic security law is promptingwarnings from the US, the EU and the UK.

Critics say the global finance hub's newlaw could censor open discussion. For more, let's bring in our Asiagovernment and economy correspondent Rebecca Chang Wilkins in Hong Kong.Rebecca, why has Hong Kong moved to pass this legislation so quickly?Yes, this has moved through the Hong Kong legislative system incredibly fast.11 days, which is the shortest period since the handover back since 1997.And I think in part, this legislation, domestic national security lawlegislation, is mandated by the basic law itself.So the Hong Kong government has long been obliged to roll this out.There has always faced protests and and.

Opposition to this since the crackdownon political opposition, both in terms of within the Legislative Council butalso more broadly across the city, that has essentially allow the government toenact this and roll this through very, very rapidly.And we have seen also some pressure from Beijing to get this done.It is really the last major piece of national security legislation.I think Beijing has been most sort of explicit that Hong Kong needs to pushthrough its system. Okay.Bloomberg's Rebecca Chung Wilkins We'll have to leave it there because we havegot some breaking news.

Thanks for that story.The news is that China is we are seeing the US weighing sanctioning Huawei'ssecretive Chinese chip network. So this is from our reporter MackenzieHawkins. The Biden administration consideringblacklisting a number of Chinese chip makers linked to Huawei.It marks another escalation in US pressure on Huawei, which let's notforget, is a Chinese national champion. And it's been making technologicalbreakthroughs despite the existing sanctions.Like the smartphone processor that it made last year that many in Washingtonhad thought was beyond its capabilities.

You had Jefferies last week saying thatthis sort of move would be easy to implement and justify.And you've got the US also pressing allies like the Netherlands, Germany,South Korea, Japan, to tighten their restrictions on Chinese semiconductortech. So this breaking headline across thetable now while we're talking tech, there's a great opinion piece on theterminal by Shuli Ren on Cathie Wood. Remember, of course, she offloaded invideo in early 2023 and TSMC in late February.She's been sounding the alarm on chip stocks, which resonates with people whoworry that we're nearing another dot com.

Burst.But she hasn't been proved right quite yet.We'll have plenty more, I'm sure, on that story in the next hour.Bloomberg Daybreak. Middle East and Africa.Jennifer's episode, she is going to join me from Johannesburg.So stay with us as we look at U.S. equity futures pointing to a loweropening on Wall Street. More ahead.This is Bloomberg. This is Bloomberg Daybreak, Middle Eastand Africa. Our top stories this morning.It's decision day for the Fed with bond.

Traders positioning for the central bankto dial back its rate cut projections. In Asia, stocks rise after U.S.equities touched fresh record highs. U.S.Secretary of State Antony Blinken is back in the Middle East.This week's trip is his sixth since October as tensions in Israel continue.Plus, the Johannesburg Stock Exchange. Africa's biggest says its IPO drought isfinally easing. We're going to bring you our interviewwith the CEO shortly. It is just past 9 a.m.across the Emirates, 7 a.m. here in Johannesburg.I'm Jennifer's a.

And I'm Lizzy Bourdon in Dubai.Good morning. Welcome to Third Day.And it's all eyes on the dot plot today. Is it going to be more hawkish?Our market's going to care. We're going to bring you analysisthroughout the program. But first, let's check in on theseequity markets. You've got the MSCI Asia Pacific Indexflat to the upside. We've had to strip out Japan becausethey're having a day off. I wish I could have a day off, Jane,every time I've made a big decision. But there you are.You've got us and European futures.

Pointing to a lower opening.And if we flip the board over to the cross asset picture, Treasury yieldspretty steady. They did you did see the two yearpushing higher yesterday thanks to the 20 year auction.In fact, I should say that it is close until Japan because of Japan until 11a.m. Dubai time.But you have got futures currently steady.The dollar also pretty steady having climbed for a fourth day.Will we have a dovish Powell in the press conference later affecting thegreenback and then you've got Brent at.

$87 a barrel.We have had this two day rally, but now edging lower.How high could it go, though, on Fed cuts?We've been hearing from Jeff Curry saying that it could go past 90.And we'll bring you the latest from Sarah.We can Houston later in the program. Finally, Bitcoin there at $61,727, welloff the highs we've seen of late. So taking a bit of a beating.Jan, what are you watching? Well, Lizzie, I mean, I think the onlything we're watching today really is the Fed.And it's important to look at really.

This dot plot because that is of majorfocus, as you mentioned, with this FOMC meeting.If you take a look at this terminal chart, it's important to see where we'reat right now. At the last meeting, the Fed's outlookfor 2024 was three cuts, but that dovish pivot is getting called into question.As you can see right here, the market w as expecting more cuts earlier thisyear, but that shifted to pricing in just under three cuts, if you can see itat the very right side of the chart over the next nine months.Bloomberg Economics back in December projected three rate cuts for 2024.So all eyes will be on what we hear from.

The Fed.And just on that, you know, we're always taking a look at emerging markets.So as you mentioned, we are seeing a stronger dollar.That stronger dollar continues to insert some pain into emerging marketcurrencies. As you can see right now, the MSCI Indexfor AM currencies down again for a seventh day, extending their longestlosing streak since June. But all eyes will be on the Fed andreally how that impacts and spills over to the rest of the global markets.Let's stick on the global markets, though, and turn to markets in Asia,where Avril Hong is standing by our.

Singapore studio.Hey, Errol. Hey, Jen.Yeah? We're seeing a gauge of stocks excludingJapan, ticking slightly higher, helped along by some of the tech names, SamsungElectronics, among them climbing by the most in about six months after reportsand video is considering buying its high bandwidth memory chips.So you can see how the US chip maker, that power of it is really comingthrough. The other tech thing we're watching isdown 10,000 is expected to show double digit earnings per share growth.So says Bloomberg Intelligence, thanks.

In large part to the continued strengthin its short form videos. CSI 300 Hong saying see it back from thelunch break, not giving us that much direction.A bit of green, maybe adding to the signs that we see markets bottom of theboard, because as you know, it is fed day and we want to track what we'reseeing in effects as well. Pretty rangebound on the Korean one, theyen yesterday, we saw it already weakened to the level that we haven'tseen since November last year against the greenback.As we hear from a douglas boj in the face of what's expected to be a hawkishfederal reserve guys.

All right.Thank you, April Hong in Singapore. And let's continue our focus on the Fed,because it's likely going to avoid signaling an imminent rate cut this weekand staying focused on stopping inflation while keeping an eye on theslowly rising jobless rate. And for more, we can bring in our livestrategist Mark Cranfield. Mark, we were expecting a hold, but alleyes on the dot plot and possibly the balance sheet as well.What are you watching? Yeah.Not just that Powell as well. So it's really there's three bigscenarios for traders today.

Currency and bond traders, especiallyequity traders are in their own I well it's I don't really care what the Feddoes today. So the three big scenarios for currencyand bond traders are a very hawkish situation which would be the dot plot toreduce to only two rate cuts. And Jerome Powell does not push backduring his press conference. He pretty much goes with the flow.That's the most hawkish scenario. Somewhere in between is a dot plot is toreduce to two interest rate cuts. But Jerome Powell uses the pressconference to sound a bit dovish and modifies what you hear in the statement.Then the most dovish outcome of all is.

That the DOT plots are surprisingly leftthree rate cuts, and Jerome Powell gives dovish guidance during a pressconference. So there you are, three big scenariosdepending on which way it goes. We could see a lot of action, especiallyin the currency market dollar and is already pushing towards the recenthighs. Ministry of Finance is supposed to be onholiday, but they never really are because they're watching very closely.We could even get verbal intervention in New York tonight if dollar yen pushesabove 151 152 area. Mark, where are you anticipating to seethe most activity?.

I mean, how are markets positioningright now and how are you and just how are you reading into really what couldbe the response to what we hear today? Well, certainly currency wise, I mean,the dollar EM rate especially is driving so many things in the currency.Well, at the moment it's getting close to an average is pretty uncomfortablefor the Japanese authorities. So that will be a big focus today whereit ends up. And then in the Treasury market, peoplehave made the assumption they've really been betting that yields are going to goa little bit higher. The Fed is going to sound a bit morehawkish, not cut rates until way into.

The second half of the year, maybe Julyor later. Now, if there's something to modifythat, there's a lot of short positions which need to be squeezed out of theTreasury market. So somewhere between the US treasuriesand dollar yen, that's going to be the big swing factor today.And then if you want to go a little bit further, Euro yen just hit a 16 yearhigh today. So people also obviously got a lot ofinterest in what happens between the euro and the yen currency as well.Mark, I'm going cross-eyed with all these crosses.But thanks for staying across all the.

Possible scenarios for us.Bloomberg and Lives Mark Crowded Field. And we're going to continue our centralbanking conversation. Now we've got Morris Kravis, CIO forWealth Management, Emirates and Beatty with us in the studio.We're going to get to the Fed. Maurice, thanks for being with us.But let's start with the DOJ. What's your take?Was it a dovish hike? Is it going to be one and done?Yeah, most probably. I think that the most important thing isthat first they ended this monstrosity of negative interest rates and in theirtweet then did most of their.

Unconventional policies, with oneexception which is buying JGBs. So I think it's quite to them it's quitebullish because they seem is okay, we want this inflation to come back towell, target sustainably and sustainably for Japanese people is not two quarters.I mean, it's to us probably because we already saw some spikes in inflation in97, in 2014, above the target. It was very temporary.So they will take the time. I'm not sure they will hike one moretime this year, but what matters is that they will still they will keep on buyingJGBs. So at the end it's good for the Japaneseeconomy.

Well, Maurice, we were just talking toMark then about the dollar yen and really all eyes are on the dollar yenand what happens today? What is your expectation?And maybe since we're still talking about Japan also yen euro, I mean what'swhat are you thinking here. Make it super difficult to make anyprediction on currencies in general. I would say that on a on a bit sidepurchasing power parity basis, the yen is undervalued.There's no question that the dollar is probably a bit overvalued against theagainst everything, but I would certainly not make any short term callregarding currencies.

I think there was some positioning.People were expecting this outcome from the Bank ofJapan. They were over position and there was abit of a short covering there. So just to be clear on your expectationsfrom the Fed today, did last week's economic data out of the US change yourexpectations for the DOT plot today? We are extremely concerned, consistentin our expectation. We still expect three rate hikes thisyear. But when it comes to the FOMC, we weexpect some ambiguity because, you know, ambiguity is good.The French president said you only exit.

The ambiguity at your own detriment.So maybe that's what's going to happen. The ambiguity we expect is that firstapproach would be should reflect two hikes and not three.But we think that Powell will not push back against the start of the cuts.And in the middle of the year, we see no reason for him to push back because, asyou said, economic data is not that bright.And the the policy is going to be restrictive or probably a bit toorestrictive. So they should start, especially as theUS calendar in 2024 is complicated with the US election.So it's better to start at some point.

So that's what we expect and it wouldnot be bad. Yeah.Where does that leave Treasuries then, Maurice?Again that's I would take the the a bit surprising instant reaction thatyesterday in Japanese government bonds are to the to the decision because yousaw that the ten year in Japan went down and and I think it was linked topositioning and to some some surprise in the fact that they continue theirquantitative easing for bonds. I would personally expect the kind ofthe same if you are right on what will happen.I think it's.

It's good for bonds because actually Ithink that markets last week you know with these 20 to 30 basis pointsincrease in US Treasury yields have anticipated a lot and that may be a bitmore something to hawkish compared to what's going to happen.What's the sort of magic level when it comes to the ten year Treasury yield andwhat would disrupt the equities rally Might Wilson at Morgan Stanley says4.35%. Where are you?Oh, I think that's very good. No, I would say that the magic level forus to increase duration is probably 4.5%, and we may see that if we have aspike in inflation, which we do not.

Expect particularly, but currently weare a bit cautious on duration.Having said that, for stocks, the beauty of this year and that's one of the keypoints of our global investment outlook is the fact that we think that bonds andstock will be uncorrelated and that there is no as long as earnings theyreview and so far they do. We central banks having Lesley with lessimpact. We think that we have thediversification impact. So I don't think that it will derail theequity rally. Okay,Maurice, you and your team have made a.

Tactical asset changes to your tacticalasset allocation. Could anything change that?If we hear something from Powell later today that potentially will change whatthe outcome or what the makeup of your portfolio currently is?Well, we would. We've just made some changes.We have we consider that visibility is quite reasonable for the coming month,let's say, until the summer or so. We are not sure what lies beyond.But at this stage for growth, inflation and central banks, we think it's prettyclear. So we have added to equities and we havereduced the overweight on gold.

To put some really said we do so on theway to do to make a change. I mean, we would need a big surprise.And I don't think that the Chairman Powell will come with the idea of a hikeor something like that, which could be the big surprise.But no, we we we have no intention to change.We will more react to the price action. We would love to see a correction instocks, too. And probably that's the direction wehave. And again, 4.5% on the ten year we wouldincrease duration, but that's not what we expect.Now, Marius, before we let you go,.

Surprise me.What is your most contrarian call? Almost contrarian call.I'm sorry. We are very certainly not supercontrarian because as we like it like Japan in developed market equities orIndia in emerging market, this is a bit this is a bit in the consensus.Yeah, but where are the opportunities of theIndia theory? I know that is it's everyone's darling,it's the most expensive, but you have reasons for that.Should it be the demographics, the growth, the earnings, the quality of thecompanies?.

Yeah, definitely.We are neutral in China because it's too dangerous to be to be underweight, butit's a bit too bold to be overweight. So again, we are beating the consensusnow, but we are ready to move and to surprise you.All right. Playing it safe.Maurice Gravy, we thank you for coming on the show.CEO for Wealth Management, Emirates, and lovely to have you in the studio.Well, we've got a busy day on the docket.It's not just the Fed, Jen. We've also got back in my home town, theUK CPI data at 7 a.m.

London time.That's 11 a.m. UAE time.And it's going to be an important print, of course, for the Bank of Englanddecision tomorrow. The bank not expected to give moredetails on the future path of rate cuts when it meets, but this inflation printis expected to show that price growth is back on a steady path to the BS.2% target. Economists seeing a drop from 4% to3.5%, driven by food, core goods and services.But it's not just CPI in the UK. You've got some near where you are, Jan.Yeah.

Lizzie.I mean, it's it's a busy day for a central it's a busy week for centralbanks all over South Africa. CPI, we're waiting for that interestrate decision. And of course, we've been talking a lotin this region about how there's a bit of a divergence with African centralbanks versus what we've seen with developing markets.And a lot of what we heard, especially from the South African Central Bankgovernor, is that inflation is still sticky.And so the question is what will inflation show?Right now, the expectation for this year.

Is that it dropped to 5.4% in the firstyear, in the first quarter, excuse me, of 2024 from 5.7% previously.We got that in a survey on Tuesday. So the question is what will we getlater today and how will that impact the central bank when they meet next week?And then we're also waiting for the Bank of England and Turkey, as well as.Yes. So the view, as I say, expected to holdrates, though we shall keep an eye on the vote split.Will it be a little more dovish this time?Will Jonathan Haskel drop out of those voting to hike?As you say, we get Turkey deciding at 3.

P.m.Dubai time. They're expected to hold the one weekrepo rate as well at 45%, but continuing to tighten reserve requirements andbanking regulations on the side. Then at 1 p.m.Dubai Time, we get the Norges Bank decision.They're also expected to hold borrowing costs.So the focus instead on the outlook for when cuts are going to start and mosteconomists don't see sooner than the third quarter.And then just to mention the SNB to 12:30 p.m.Dubai time is the time of that decision.

They're expected, surprise, surprise, tohold as well at 1.75%. So a holding party.Jan, what happened to the pivot party? Well, don't speak too soon, Lizzie.There's still a lot out there look that we are waiting for.But still ahead right now, Senegalese President Macky Sall has defended hisdecision to delay elections that plunged the West African nation in to turmoil.We are going to talk about that. But up first, U.S.Secretary of State Antony Blinken will make his sixth visit to the Middle Eastsince the Israel-Hamas war broke out in October.More on that story next.

This is Bloomberg. Welcome back to Bloomberg Daybreak,Middle East and Africa. I'm Lizzy Burton in Dubai.Now US Secretary of State Antony Blinken is making his sixth visit to the MiddleEast since the Israel-Hamas war broke out.It stops in Saudi Arabia and Egypt on the agenda.The top US diplomat has called on Israel to let more aid into Gaza, saying thesituation is worse than Sudan and Afghanistan.Let's get more now from Bloomberg's Stuart Livingston Wallace, who joins mein the studio.

Stuart, you've got the Israelidelegation headed to Washington. It seems that the feud is easing.Is this just the diplomatic dance or is there actually hope for real change onthe ground? I think it is exactly that.It is the dance. And I think both sides have decided theyneed to tone down the rhetoric a little because it was getting quite ugly.And I would say, you know, quite shocking in some respects.You know, based on decades and decades of really rather cordial relationships,not to say they didn't have their disagreements, but it was always keptprivate.

And this really came out into the publicdomain. And I think that sort of gave everyonepause for thought, particularly from the American side.To some extent, they're trying to find what exactly is the leverage over Bibi.And I think they're really struggling to find it.You know, I don't think they have the option of withholding armaments orfunding or anything along those lines politically.But on the other hand, they have a presidential election coming up.We know there are some swing states, particularly Michigan, where this isgoing to be a big issue.

Do they really want to put Biden'sre-election at risk for the sake of this relationship?Right. And Stuart, I mean, how how are youassessing sort of how both of these leaders and I mean, Biden and Netanyahuare navigating this now that we are seeing them really sort of walk backthis what you call ugly sort of situation that the two had been in.So I think the next step, as we see it, is that, yes, Blinken will be back inthe region for his sixth visit. I think the expectation is that he willbe able to get a breakthrough, probably quite low, just based on five goals thatare not much happened.

And then the second leg of it is we havethis Israeli delegation, one going to Doha to continue these peace talks orthe ceasefire talks and in return for hostage releases.Again, the expectations there are quite low because Israel said very explicitlythat Hamas demands are completely untenable.And then a second Israeli delegation going to Washington during which USofficials will try and find some path where they can avoid a ground war.So quite what that will look like is is really hard to pinpoint.But basically what the U.S. is trying to avoid here is, you know,again, the death of great many.

Civilians.At the same time meeting Israel's goals of eliminating the Hamas leadership.Now, it's easy to get focused, distracted on the diplomatic story, Butof course, as you say, it's really about the humanitarian crisis that'shappening. I mentioned Sudan.I mentioned Afghanistan. Can you just spell out for our audiencewhy the humanitarian situation is so much more bleak in Gaza?It is. I mean, look, Blinken himself said andhe gave numbers along the lines of 80% of the Sudanese population requires aid.It's about 70% in Afghanistan.

In Gaza, it's pretty much 100%.And I think that's a function of not being able to get much in.So we know they've done some airdrops, you know, which really haven't had thatmuch impact. I mean, clearly better than nothing notproven. But at the same time, there is no grandscale solution yet. You know, we've got a floating dockcoming in a couple of months that's going to be able to get more volume in,but that's a couple of months. And meanwhile, you've got this U.N.back report talking about a much, much more urgent need than that and no clearsolution on the table for how you.

Massively increase that aid.Right from the U.N. 100% of the population is reportedly inneed of humanitarian assistance. Bloomberg.Stewart Livingston. Wallace Stewart, thanks so much forjoining us this morning on that. All right.Stick with us. There's plenty more still ahead.This is Bloomberg. Welcome back to Bloomberg Daybreak,Middle East and Africa. I'm Jennifer's ambassador inJohannesburg. With the focus firmly on the Fed today,Bank of America chairman and CEO Brian.

Moynihan gives us his take on the U.S.economy. Our team was predicting a recessionsomewhere early this year. It didn't.Then they took that off the table as we move through the year.And now they're predicting, you know, 2% plus growth for this quarter.So you've gone from negative to slightly positive 2%.That is returning to the mean return.It's not, you know, outsized growth. It's actually slowing down.So people can't forget we're going from a 4 to 5% growth rate to two and a halfpercent growth rate is slowing down.

And in that, the restriction on economyaccomplishes purpose. Meanwhile, the consumer is veryresilient, and that's providing an anchor to windward that the Fed haslatitude that a lot of places don't have, that they can be whole, toorestrictive and let the economy really catch up.But they have to be mindful of the change at some point that consumerslowdown and they have slowed down their spending.And so last year have been 10% growth this year in the fall, 5%, and now it'sdown to 3 to 4%. They've got to be careful they don'tovershoot.

So this is the tension we're in rightnow, which is this resilient economy. And actually, as you said, Lisa,actually trying to bring inflation down. Four since the financial crisis to now,most central banks are trying to get inflation up.And so it's a completely different execution.And that's what we've got to get right. You're dominant in small businesslending. I'm just wondering just how muchconfidence there is out there still in corporate America at the lower level andthe small companies across this country. The American economy is the dominanteconomy in the world right now in terms.

Of activity and interest and investmentand lots of good trends for it. But on the other hand, why aren't theyusing the line so much? It's a little more costly there for you,a little more careful. And that's that's the tension we'regoing to have is trying to really figure out how this economy will perform.And, you know, four months ago, people worried about a recession, six monthsago, worried about recession. Now they're not.But now the question is, do they really want to invest heavily in it?And that's where you're seeing a little bit of tension here.So that was Bank of America chairman and.

CEO Brian Moynihan speaking there toBloomberg Surveillance, a special broadcast from the bank's headquartersin New York. As we look to equity futures pointing toa lower opening on Wall Street. Plenty more ahead.It's Fed day. This is Bloomberg. This is Bloomberg Daybreak, Middle Eastand Africa. Our top stories this morning.It's decision day for the Fed with bond traders positioning for the central bankto dial back its rate cut projections. In Asia, stocks rise after U.S.equities touched a fresh record highs.

US Secretary of State Antony Blinken isback in the Middle East. This week's trip is his sixth sinceOctober as tensions in Israel continue. Plus, the Johannesburg Stock Exchange.Africa's biggest says its IPO drought is finally easing.We'll bring you our interview with the CEO shortly.It is just past 9:30 a.m. across the Emirates, 7:30 a.m.here in Johannesburg. I'm Jennifer's ambassador to.And I'm Elizabeth Arden in Dubai. Good morning.It's bad day and it's all eyes on the dot plot and the presser and maybe asurprise on the balance sheet as well.

Are we going to see a more hawkish Fedtoday and are the markets going to care? We'll have analysis for you throughoutthe day as we head towards that decision.But let's check in on these markets. You've got the MSCI Asia-Pacific Indexflat to the upside, higher, a 10th of a percent.We've stripped out Japan because they're having a day off after that big day forthe Bank of Japan yesterday. But futures pointing to a lower openingstateside and in Europe as well. If we flip the board to the cross assetpicture, Treasuries taking a break as well, because as I say, Japan is closedat the moment.

But yesterday you did see treasuriespushing higher after a pretty strong 20 year bond auction.The dollar is pretty steady at this point as we await the Fed decision.If we hear a more dovish Powell, are we going to see an impact on the dollar?A question for later in the day, but Brent trading at $87 a barrel.We're in the middle of Syria week and we'll bring you our interview with JeffCurry later in the program. He says that Brent could go to $90 abarrel if you have the Fed cuts boosting the oil price.So we'll bring you that interview. Finally, Bitcoin $60,914 is where wetrade.

So taking an absolute beating and welloff the highs we've seen of late. John, what are you watching?Yeah, that's right. Bitcoin really moving there, Lizzy.Listen, let's go back to the Fed because it has Fed day, as you mentioned, andthe dot plot is of major focus. What we saw at the last at the lastmeeting, the Fed's outlook for 2024 was three cuts.But then that dovish pivot, of course, getting called into question, as you cansee from this terminal chart here, the market was also expecting more cutsearlier this year, but has shifted its pricing in three cuts as it shifted topricing in three cuts, just under three.

Cuts as likely over the next ninemonths. Bloomberg Economics projected three ratecuts for 2024 back in December. So we'll have to see what we get latertoday. But you were mentioning the dollarearlier there, Lizzie, the stronger dollar, although we are seeing asteadier dollar right now, still inflicting a bit of pain when we look atemerging market currencies right now, the EM index for emerging marketcurrencies are down right now. That's over the past eight days.Right now it's down about 8/10 of a percent, down for a seventh day rightnow, extending its longest losing streak.

Since June.But all eyes will be on what the Fed says today and how that trickles acrossthe global markets and currencies there. Let's, though, pivot to how markets inAsia are faring. Avery Hong is in our Singapore studio.Hey, Errol. Yeah.As we count down to the fair, let's recap what we are seeing on the monetaryfront in China as well. Chinese lenders opting to keep thingsunchanged on the loan prime rate. But if you take a look at the bondmarkets, that doesn't seem to matter. They're running along with thespeculation that we could see some.

Easing coming down the line, especiallygiven the concern surrounding the property sector.The property debt crisis is now entering a new era where we see all theseconcerns, given the record number of defaults and increasingly all thesedevelopers being taken to court and all this related to liquidation orders.So there is that sense that you're going to get support from the Chineseauthorities, and that seems to be what bond markets are running along with.Let's look at the board and take a look at the facts as we wait for the Fed.We're seeing it pretty rangebound on the U.N.and there's, you know, some corners of.

The market who believe that the PBOC hasvery clearly shown that line in the sand of 724, the onshore UN.And we got this the state owned banks are going to help to prop up therenminbi. So not seeing that much moves on onshoreoffshore yuan today. Of course, we'll be watching out forwhat the yen is going to do as we keep an eye on what's to come from the USCentral Bank. All right, April Hong in Singapore, wethank you for that update on Asia markets.And now we'll switch our focus to the political turmoil in Senegal.President Macky Sall is defending his.

Decision to delay the country'selections. He insists democracy and itsinstitutions remain intact. Let's find out why we moved on.Dario Ganga joins us from Kigali. Drew, we've got so much politicalinstability. How can Macky Sall justify delaying theelections? Well, he begins by acknowledging thatit's been a rough couple of weeks and months.If we factor in the political volatility that we've been seeing in Senegal.But he goes ahead to say that the reason why he decided to postpone the electionsnot by one month or two months, by ten.

Months was because he wanted Senegal tobe a peaceful, stable and just to be on that trajectory of growth.He wanted that by the time the country is going to the ballot box.The number of candidates reflect the political needs of the people ofSenegal. However, that did not achieve theintended meaning. We saw the people of Senegal head out tothe streets to protest this decision, saying it's unconstitutional.It led to clashes with the police and also a couple of arrests.And leading to this moment, Senegal was one of the most stable countries in WestAfrica and seen as a beacon of.

Democracy.And that is why critics of President Macky Sall.Tom, this move as an attempted constitutional coup and we saw theConstitutional Council step in and all the president, Macky Sall, to set anelection date before he leaves office as stipulated by the Constitution.And that's why on the 24th of March, Senegal will be heading to the ballot.Yeah, and Indira, it's hard to believe that's just a few days away.Listen, let's talk about the other candidates because there is a lot ofattention being paid to what these other candidates really offer.I mean, dig into some of these these.

Other people for us.Two frontrunners here. We have a matt Bai and we have a mattBai is epic success of President Macky Sall and his reign will be seen as acontinuation of the policies from the previous administration.He wants to focus on creating jobs, bolstering agriculture and expanding thenational infrastructure. On the other hand, fire is a firebrand.One of the first things that he wants to do is to renegotiate oil and gascontracts with companies like BP, Kosmos Energy and Endeavour Mining, somethingthat President Macky Sall says it's not a good indication this contract can beimproved over time.

But changing them all over again willrattle investors. Be that as it may, whoever takes officewill have an uphill task. Austerity measures at this point areinevitable because the debt of Senegal has moved from 40% to 70%.Yeah. All eyes on this election.Bloomberg's Indira Ganga, thank you so much for staying on top of this for usand joining us this morning. Let's turn to South Africa.The Johannesburg Stock Exchange, the biggest on the continent, says it'sslowly turning the tide from a wave of delistings, with companies once againconsidering IPOs.

The JSE CEO spoke with me about theshift in sentiment. Take a listen.We have actually seen a shift in the tide of listings over the last sixmonths. We see quite, quite encouraging greenshoots there, a couple of themes, a number of unbundling, and also a numberof international listed entities from the London Stock Exchange and the Nasdaqlooking to delist, particularly in the resources and also in the propertysector, the way in which Amazon and other partnerships will enable us toencourage flows on our market is that firstly, our technology will modernize.We'll also be able to reduce the pricing.

Of trading.And in the other products, aside from our back office system, we're able tointroduce new global markets like the carbon market, which we intend to make aPan-African solution, which would connect with global markets.We're also looking to to expand our private markets onto the continent.And this would also expand the amount of capital that circulates between SouthAfrica and its African neighbors. How soon is the expectation for that?And you mentioned two companies from the Nasdaq and the London Stock Exchangepotentially listing. I mean, is that expected for 2024?Yes, that is expected for 2024.

So all risk resources,vanadium resource and Marula Mining have all announced a it's in the publicdomain, a potential to lift secondary list on the JSE.Do you expect even bigger companies to try to come to the JSE, or is this sortof where you're you're at for right now? Jennifer We we have a history of a largenumber of dual listed companies. BHP Billiton, for example, opted todelist from the London Stock Exchange and retained its dual listing on the JSEwith its primary listing on the ASX. We have more than 50% of our listedentities, our global large giants. We fully expect as the sentiment and themarket starts turning.

During the downturn it was cheaper torace death than equity. As inflation has increased, rates haveincreased. It's now becoming a lot more attractiveto raise equity rather than date. So we are seeing a bit of a shift.Macroeconomic conditions, both globally and locally, need to need to provide alevel of stability and clarity. Any uncertainty, of course, is not goodfor IPO environments. And that was the CEO of the JohannesburgStock Exchange, Layla Fourie, speaking with me.Johannesburg Stock Exchange, as we mentioned, of course, is the biggestexchange on the continent.

Important to take a look at what we'reseeing from the exchange yesterday, falling for a fourth day.Although, Layla, there was talking about some green shoots.And if we talk about the biggest contributors to the Lost Goldfieldsreally having a significant effect, Richemont also having a pretty a lot ofdownside yesterday. And that is, of course to coincide withRemgro. Remgro actually fell a 4.6%.Naspers also falling about 7/10 of a percent.Naspers contribute significantly to this exchange.So important to pay attention to that.

But as Leyla noted, they areanticipating more IPOs. For the past few years they've seen arecord number of delistings. So potentially this is the year where wesee more spin offs coming onto the exchange from the Nasdaq, from Europe aswell. We'll have to wait and see.But that is just a look at the Dow, the closures for some of the biggest forthat Johannesburg stock exchange yesterday.All right. Stick with us.There is plenty more still ahead. This is Bloomberg.

Welcome back to Bloomberg Daybreak,Middle East and Africa. I'm Jennifer's ambassador inJohannesburg. The president of the Philippines saysthe threat from Beijing's sweeping claims in the South China Sea isgrowing. But Ferdinand Marcos Jr told us hisgovernment's efforts to assert sovereignty in disputed areas are notmeant to start a conflict. We spoke exclusively to him.The threat has grown, and since the threat has grown, we must do more todefend our territory. And so maybe perhaps that's what thatis.

What we people people are seeing is amore robust defense of our of our territorial rights as recognized by theinternational community to international law through the UN clause.And we hew very close to that. We do not we do not live very with that.We have not instigated any kind of conflict.We have not instigated any kind of confrontation.The U.S. has weighed in.It constantly points to Article five of the Mutual Defense Agreement, which wassigned in 1951. It now says that it now extends to allarmed conflicts, armed attacks in all in.

Any area of the South China Sea.In practice, what exactly does that mean,that that's a incursion, for example, to occupy, which has already happened.But we're still trying to do to to keep itpeaceful. But you see, we are avoiding we avoid,as I said, we think about peace in the national interest.It is it does not serve any purpose to heighten tensions, to say, okay, I aminvoking now the mutual defense treaty and that I don't think anyone wants thatunless. It was a very difficult question here.Unless unless the.

The effects are such that it is is athreat, it is it will become an existential threat to the country,then I think it's very easy to say that that that would that would triggerthe the mutual defense treaty, the agreement between the United States andthe Philippines. How confident are you about U.S.support? How far do you think the U.S.would go to support the Philippines in the South China Sea thus far?We we can say that the United States has been very well, certainly verysupportive in every in every way. And and it has the United States hasreally shown that it takes very.

Seriously these agreements that we have.And so but it is dangerous for one to think in terms of when something goeswrong, we will run to Big Brother. That's not the way we treat it at all.We we we do this for ourselves. We do this because we feel that we haveto do it. And it's not at the behest of the UnitedStates. Mr.President, just to follow up on that. How confident are you the U.S.is willing to go to war with China over disputed reefs in the South China Sea?Oh, God. How far is the U.S.prepared to go?.

What are your top suggesting to you?Well, I really. I would like to take that take a stepback from that question is that that is precisely what we want to avoid.We want to do everything we possibly can together with our partners and allies,to avoid that situation, which is this is not this is not thepoking the bear, as it were. We are trying to do to do quite theopposite. We are trying to keep things at the at amanageable level to continue the dialogues, whatever theyare at every level. And we have initiated many of thosedialogues at the we have dialogues at.

The sub ministerial level, at theministerial level and at the executive level.And so I think that that's what we hope to continue becauseit would there are many volatilities in the area,in the region. So the Philippines saying it is notpoking the bear by standing up for itself against China in the South ChinaSea. Philippine President Ferdinand MarcosJunior speaking exclusively with Bloomberg's Haslinda Amin, who I mustsay was wearing fabulous shoes that I which is only appropriate for aninterview in Manila.

I'm sure you'd agree, Ted.But let's turn now to one of the year's most watched IPO's out of the US.It's on the docket for today. Reddit.Jen I lost much time on Reddit when I was a university student, but this is avery exciting IPO pricing today and trading tomorrow.Are you a Reddit user? You know, I'm not a Reddit user, but Ithink, you know, everybody who is a consumer of news knows what Reddit is,especially if we think about Wallstreetbets.And it's really interesting to digest sort of how Wallstreetbets is reallyfocusing in on this IPO because, you.

Know, they're actually taking a bit ofheat because, you know, they think this whole entire IPO is a bit interestingbecause, of course, you know, they are behind a lot of the meme stocks, butsaying that there's some criticism in terms of, you know, what, the CEO hasbeen paid and also Reddit's business structure.So it will be interesting to see how a lot of the Reddit users really commenton what this IPO does and what this company does next Lizzie.Yeah, it's the perfect point, because remember, these people who are theReddit users who the CEO wants to be owning the stock, 8% of the shares.They are the people who fueled the meme.

Stock frenzy.And some of them have already threatened to bet against the company.So this is risky for Reddit. It's going to be an interesting one, asyou say, because Reuters has said that the IPO is between four and five timesoversubscribed. So that suggests it's going to reach theprice target of 31 to $34 per share. We can be pretty optimistic perhapsabout this. But I've also been going through thehistory of Reddit since it got its start in 2005.I don't know if you saw this. Snoop Dogg was an early backer and someAltman were there for just a few days.

He's still a major shareholder.Yeah. I mean, the company had a number ofCEOs. Actually, it's a we have a reallyinteresting story on the Bloomberg just about sort of the history of thecompany, how it was one of the first Y Combinator companies, the course withAlexis Ohanian, Steve Huffman, as well, as you mentioned.Sam Altman. So there are a lot of names that we talkabout constantly today that are a part of this Reddit story.What will be interesting is, is what will the future be.And I'm really interested to see really.

How Wall Street bets comments on thisgoing forward. But we'll see that, as I say, pricingtoday, trading from tomorrow. We'll get across that IPO for you aswell as, of course, the Fed decision. Plenty more still ahead.This is Bloomberg. Welcome back to Bloomberg Daybreakmiddle east and Africa. I'm jennifer is up a soldier injohannesburg. Audi has just launched its delayedelectric model the q a6 e-tron. The CFO of the automaker of subsidiaryof Volkswagen says he's confident the new car will be a success, but remainscautious about the overall market for.

EVs this year.He spoke to Bloomberg's Oliver Crook. Take a listen.We are ramping up now the Q6. So the 2024 will not be a year of fullavailability. The car will be in the market in thesecond half of this year. So we are ramping up, but we are reallylooking forward and my personal opinion is it will be our most selling car inthe in the Bev segment. And because it's so modern, it's so upto date, it's really a great car. That's quite a forecast.And in the interim, I think we have some issues with the sort of profitabilityfor a lot of car makers this year.

Where do you see the margins bottomingout and when do you see that coming back for Audi?So this year, for 2024, we are a little bit more cautious.You know, there are a couple of challenges, the macroeconomicenvironment. I think competition also increased evenfurther. We have also some supply issues.We still have some supply issues. That's why we are a little bit morecautious. We expect our return on sales to bebetween eight and 10% at the moment. And our net cash flow to be between 2.5and €3.5 billion.

And if the margin is not going to comefrom the sort of demand side and for sort of the top end, are you looking tocut costs? Where are those savings going to comefrom? So we just initiated our performanceprogram 14 and we are working on both sides.We are working on the revenue side as well as on the cost side.On the revenue side, we are going to improve our mix and we are going toexploit volume chances wherever possible.On the other on the other side, we are also working on costs, especially rawmaterial costs, product costs, but we.

Are also keeping our fixed costs undercontrol. See you, Juergen Gettysburg of there,speaking to Bloomberg's Oliver Crook. You've got futures pointing to a loweropening on both sides of the Atlantic as we await the Fed decision.Tom Mackenzie's up next to take you through that.This is pulling back.

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