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00:00♪ > > THIS IS "BLOOMBERG DAYBREAK MIDDLE EAST." TOP STORIES THIS MORNING, CHINA SAYS PARTS OF THE FIRST PHASE OF A TRADE DEAL WITH THE U.S. ARE BASICALLY COMPLETED, AND FRESH TARIFFS MAY NOW BE POSTPONED. BORIS JOHNSON CALLS FOR A DECEMBER ELECTION, BUT JEREMY CORBYN SAID HE WOULD ONLY BACK IT IF A NO DEAL BREXIT IS OFF THE TABLE. OIL ENJOYS THE BEST WEEKLY GAINS IN A MONTH, AS THE U.S. ENERGY SECRETARY SAYS GLOBAL MARKETS HAVE A READY SUPPLY OF CRUDE AND AMERICA BOOSTS PRODUCTION AND OUT PORTS -- EXPORTS. AND THE CHAIRMAN OF ONE OF DUBAI'S LARGEST PRIVATE DEVELOPERS IS URGING A COMPLETE HALT TO ALL NEW HOME CONSTRUCTIONS TO HELP REDUCE THE PROPERTY GLUT. OUR EXCLUSIVE INTERVIEW THIS HOUR. ♪ MANUS: IT HAS JUST GONE 8:00 A.M. ACROSS THE EMIRATES. THIS IS "DAYBREAK MIDDLE EAST," I'M MANUS CRANNY IN DUBAI. WE ARE TRAPPED IN A NEVER ENDING STORY OF BREXIT LIMBO, AND THE POUND GAVE BACK A LITTLE MOMENTUM, AFTER GOING UP 6% OVER THREE WEEKS. BACK 1.3% OVER FIVE DAYS. YOU SAW A READJUSTMENT OF RISK. ALLIANZ WANTS TO SELL THE RALLIES, UBS IS TACTICALLY OVERWEIGHT BUT TRIMMING POUND BETS. THEY SAY STERLING REMAINS CHEAP, NOT THROWING IN THE TOWEL YET. A LITTLE BIT OF PROCRASTINATION BY THE HOUSE OF PARLIAMENT. NO SHOCKING NEWS. STOCKPILES DROP IN THE FIRST TIME IN FIVE WEEKS, ON A GLIDE PATH TO PHASE ONE OF A TRADE DEAL ON THE AGENDA. CHINA AND THE USA BOTH NEED A WIN, SOUNDS LIKE THEY ARE MAKING THE RIGHT NOISES ON BOTH SIDES. DESLEY HUMPHREY IS WITH THE TEAM FOR FIRST WORD NEWS. DESLEY: NEWSWEEK IS REPORTING THE LEADER OF THE ISLAMIC STATE MILITANT GROUP HAS BEEN KILLED IN A RAID BY THE U.S. MILITARY. THE NEWS COMES AS PRESIDENT TRUMP SAYS HE WILL MAKE A MAJOR STATEMENT THIS MORNING. THE PRESIDENT TWEETED SOMETHING "VERY BIG" HAPPENED WITHOUT ELABORATING. PG & E HAS STARTED TO SHUT OFF POWER TO AN ESTIMATED 2.8 MILLION CALIFORNIANS, IN THE LARGEST DELIBERATE BLACKOUT IN THE STATE EVER. THE BANKRUPT UTILITY GIANT IS TURNING OUT THE LIGHTS TO 940,000 BUSINESSES AND HOMES ACROSS NORTHERN CALIFORNIA AS IT TRIES TO KEEP POWERLINES FROM IGNITING WILDFIRES DURING THE STRONGEST WIND STORMS IN YEARS. PRESIDENT TRUMP IS EXTENDING SOME TRADE PREFERENCES FOR THAILAND OVER CONCERNS ABOUT WORKER RIGHTS, ADDING TO THE OBSTACLES FACING THE EXPORT-RELIANT NATION'S GROWING ECONOMY. THE MOVE AFFECTS $1.3 BILLION IN TRADE, AND WILL TAKE EFFECT IN SIX MONTHS. THE DEMOCRATIC UNION PARTY LEADER HAS THREATENED TO FRUSTRATE BORIS JOHNSON'S EFFORTS TO PUSH A BREXIT DEAL, SAYING THAT HER PARTY WOULD CONTINUE TO OPPOSE IT IN PARLIAMENT. JOHNSON SAID HE WOULD SEEK AN ELECTION ON NOVEMBER -- SUMMER 12, BUT FOR THAT -- DECEMBER 12, BUT FOR THAT HE WOULD NEED TO THERE'S A PARLIAMENT AND LABOUR HAS PROMISED TO BLOCK THE VOTE. THE GERMAN SOCIAL DEMOCRATIC PARTY'S WIN BOOSTS THE CHANCES OF ANGELA MERKEL'S COALITION SURVIVING. HE AND HIS RUNNING MATE WILL FACE A LEFTIST COUPLE OF GOVERNMENT CRITICS IN A NOVEMBER RUNOFF. THE VINTAGE GREEN CARDIGAN THAT KURT COBAIN WORE FOR HIS ICONIC PERFORMANCE ON "MTV UNPLUGGED" SOLD FOR $340,000, MAKING IT THE MOST EXPENSIVE SWEATER AUCTION OF ALL TIME. IT IS UNWASHED AND STILL MARKED WITH CIGARETTE STAINS. THE AUCTION ALSO INCLUDED A HANDWRITTEN POEM BY TUPAC SHAKUR AND A GUITAR USED BY PRINCE. GLOBAL NEWS 24 HOURS A DAY, ON AIR AND AT TICTOC ON TWITTER, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN OVER 120 COUNTRIES. I'M DESLEY HUMPHREY. THIS IS BLOOMBERG. MANUS: THANK YOU VERY MUCH. MORE TRADE OPTIMISM BUOYING SENTIMENT. CHINA SAYS PARTS OF THE FIRST PHASE OF A DEAL WITH THE U.S. ARE BASICALLY COMPLETE, WITH THE SIDES REACHING CONSENSUS ON STANDARDS USED BY AGRICULTURAL REGULATORS. THE BEIJING COMMENTS FOLLOW POSITIVE RHETORIC BY THE WHITE HOUSE. > > WE ARE DOING VERY WELL WITH CHINA, VERY GOOD WITH THE FARMERS. THE FARMERS WILL DO BETTER MAYBE THAN ANYBODY, BUT EVERYBODY IS DOING WELL. CHINA WANTS TO MAKE A DEAL. THEY WOULD LIKE TO SEE REDUCTIONS IN TARIFFS, WOULD LIKE TO SEE SOME TARIFFS THAT ARE SCHEDULED TO GO ON, WOULD LIKE TO SEE THEM NOT GO ON, BUT WHAT, YOU KNOW IT, THEY REALLY WANT TO MAKE A DEAL. MANUS: POLICYMAKERS ARE WIDELY EXPECTED TO CUT. TRADERS ARE WARMING TO THE IDEA IT MIGHT BE THE LAST RATE CUT FOR SOME TIME. FED FUTURES SHOW THE ODDS OF A DECEMBER MOVE HAVE FALLEN FROM NEAR CERTAINTY TO JUST 28%. TIM FOX FROM EMIRATES MBD, MY GUEST HOST THIS MORNING. WE ARE ON A GLIDE PATH ACCORDING TO MR. NAVARRO TO MAKE A DEAL IN CHILE, BUT AS AN ECONOMIST, EXECUTING PHASE ONE STILL WOULD LEAVE US WITH A MOUNTAIN TO CLIMB, AND I WANT TO SHOW YOU GLOBAL TRADE VOLUMES. THIS SHOWS THE THREE-MONTH UNDERLYING CASCADING GF DOWN, THE ORANGE LINE, PHASE ONE. WOULD IT BE ENOUGH TO SHIFT THIS MOMENTUM IN GLOBAL TRADE VOLUME? > > WELL, THE REMOVAL OF TARIFFS WILL BE AN ENCOURAGEMENT I THINK THE MARKETS, AND TRADE WOULD PROBABLY GET SOME SORT OF A BOOST. BUT IT IS TOO EARLY TO SAY HOW MUCH. I THINK THE CORE ISSUE IS UNDERLYING THE TRADE DISPUTES, OVER INDUSTRIAL SUBSIDIES AND TECHNOLOGY TRANSFERS, INTELLECTUAL PROPERTY. WE HAVE NOT HAD MUCH CLARITY AS TO WHETHER THESE HAVE BEEN ADDRESSED. SO TAKING OFF TARIFFS, BOOSTING AGRICULTURAL IMPORTS, THAT SEEMS LIKE WINDOWDRESSING COMPARED TO THE BIGGER ISSUES THAT REALLY STILL EXIST. MANUS: THEY HAVE SAID IN REGARDS TO THE YUAN, THERE WOULD BE A BASICALLY STABLE, THAT'S THE PHRASE USED, A BASICALLY STABLE YUAN CAN REGARD TO A BASKET OF CURRENCIES. NOBODY EXPECTS THIS TO BE A 1985 ACCORD, BUT HOW IMPORTANT IS THIS? TIM: I THINK IT AGAIN SPEAKS TO A DESIRE TO HAVE STABILITY, IN TERMS OF THE TARIFFS, THE MEASURES TAKEN AGAINST EACH OTHER, AND NOT TO THREATEN ANYMORE RESPONSES BY EXCHANGE RATE DEPRECIATION, BUT IT DOESN'T SPEAK TO THE CORE ISSUES UNDERLYING THE TRADE DISPUTE. MANUS: MANY PEOPLE HAVE SAID THE POLICY RESPONSE FROM CHINA, THE RISK IS THEY GO FOR MORE POLICY RESPONSE. WHAT HAVE YOU MADE OF THE POLICY RESPONSES OF CHINA? TIM:R ABILITY --THEIR ABILITY TO RESPOND HAS BEEN LIMITED AS THEIR ECONOMY HAS BEEN AFFECTED BY THE SLOWDOWN IN GLOBAL GROWTH. CHINESE GROWTH THIS QUARTER, 6%, WORSE THAN EXPECTED. I THINK THAT SHOWS THE CHINESE AND THEIR ABILITY TO RESPOND IS MUCH LESS PRONOUNCED, BECAUSE OF INTEREST RATES. THE FISCAL STIMULUS THEY HAVE BEEN ABLE TO PRODUCE HAS NOT NECESSARILY GIVEN THEM THAT MUCH ROOM. MANUS: LET'S GO TO THE FED. THE MARKET IS PRESUMING OCTOBER IS A DONE DEAL. WHAT IS THE RISK THIS IS THE END OF THE MID-CYCLE ADJUSTMENT? DO YOU FEEL THAT'S THE CORRECT WAY TO LOOK AT THE CYCLE? TIM: IT IS WORTH NOTING, A MONTH AGO, THE MARKETS HAD A 30% TO 40% CHANCE OF A MOVE IN OCTOBER, AND THAT CATAPULTED HIGHER ON THE BACK OF SOME VERY BAD DATA . WE SAW A MANUFACTURING SLUMP. THEN, THE RISK HAD GONE UP TO 70%, 80%, 90%. THE CHANCES ARE THAT MIGHT HAPPEN AGAIN. CERTAINLY RIGHT NOW THE MARKETS DON'T EXPECT A MOVE IN DECEMBER, BUT IF WE SEE DATA THAT CONTINUES TO SHOW WEAKNESS IN THE MANUFACTURING SECTOR, EVEN THE SERVICE SECTOR, YOU COULD SEE THOSE EXPECTATIONS CHANGE ON A DIME. MANUS: TALKING ABOUT 1998, WHEN YOU HAD A MIDCYCLE INDICATION FROM THE FED, WE ARE DONE, ALMOST WASHING THEIR HANDS. HOW DANGEROUS OF A POLICY WITHOUT BE, IF THEY INTIMATED THAT? TIM: THEY ARE TRYING TO INTIMATE THAT THEY ARE NOT ALWAYS GOING TO FOLLOW THE MARKETS, THAT THEY WILL BE ABLE TO RESIST AT SOME POINT. BUT SO FAR THEY HAVE FOLLOWED THE MARKETS. MANUS: THEY HAVEN'T REALLY BEEN ABLE TO DO THAT, HAVE THEY? TIM: THE ECONOMY HAS GIVEN THEM PERHAPS REASON TO CUT INTEREST RATES THIS MONTH. OUR SENSE IS IT COULD BE WORTHWHILE WAITING, RATHER THAN NECESSARILY GOING THIS WEEK, BUT IT DOES SEEM AS IF WITH THE NEXT CHANCE, THE FED IS LIKELY TO FOLLOW SUIT. MANUS: TIM FOX STAYS WITH ME AS GUEST HOST. STILL AHEAD, SPEAKING TO U.S. ENERGY SECRETARY RICK PERRY, WHO SAYS ENERGY MARKETS HAVE A READY SUPPLY OF CRUDE AND THE U.S. IS LOOKING TO BOOST OUTPUTS. UP NEXT, BREXIT'S TWISTS AND TURNS AS DUP LEADER ARLENE JOHNSON WARNS -- ARLENE FOSTER WARNS SHE WON'T BACK BORIS MANUS: A QUICK CHECK ON THE LATEST BUSINESS FLASH HEADLINES WITH DEADLY HUMPHREY -- DES LEY HUMPHREY. DESLEY: LVMH, THE FRENCH ARM OF LOUIS VUITTON, IS EXPLORING A TAKEOVER OF TIFFANY TO EXPAND IN U.S. JEWELRY MARKETS ACCORDING TO PEOPLE FAMILIAR WITH THE MATTER. TIFFANY SCHEIER'S AR -- S HARES ARE UP 22% THIS YEAR. LVMH HAS A MARKET CAPITALIZATION OF ABOUT $215 BILLION. BARCLAYS INVESTMENT BANK OUTPERFORMED PEERS ON WALL STREET, WITH REVENUE FROM FIXED INCOME AND EQUITIES TRADING HIGHER, BUT THEY WARN LOW RATES AND THE U.K.'S BREXIT-HIT ECONOMY WILL MAKE IT TOUGHER NEXT YEAR. SHARES IN THE WORLD'S LARGEST BEER MAKER PLUNGED. AB INVEV PLUNGED -- SLUMPED AFTER REPORTING THIRD-QUARTER REVENUE THAT MISSED FORECASTS. THE COMPANY WARNED FUTURE PROFIT GROWTH WILL BE MORE MODERATE. A DROP IN BEER SHIPMENTS TO THE U.S. AND CHINA TOOK THE FIZZ OUT OF QUARTERLY PROFIT GROWTH. THAT'S YOUR BLOOMBERG BUSINESS FLASH. MANUS: THE DEMOCRATIC UNION PARTY LEADER ARLENE FOSTER PLEDGED TO FRUSTRATE BORIS JOHNSON'S PLANS TO PUSH A BREXIT DEAL THROUGH, WARNING THAT HER PARTY WILL OPPOSE THE ACCORD IN PARLIAMENT. JOHNSON SAYS HE WILL SEEK AN ELECTION ON DECEMBER 12. BUT TO HOLD IT, HE NEEDS THE SUPPORT OF TWO THIRDS OF PARLIAMENT, AND THE OPPOSITION LABOUR PARTY HAS SAID IT WILL BLOCK IT. TIM FOX, MY GUEST HOST, CHIEF ECONOMIST AT EMIRATES MBD. WE'RE IN BREXIT LIMBO, WHATEVER PHRASE YOU CHOOSE. MY QUESTION IS THIS. HOW LIKELY, LABOUR SAYS UNLESS YOU HAVE BREXIT OFF THE TABLE, WE WILL NOT SUPPORT THIS. IS THERE A RISK WE GET A DECEMBER 12 ELECTION? DESLEY: THE --TIM: I THINK THE E.U. IS NOT GOING TO ANNOUNCE HOW FAR THE EXTENSION WILL BE GIVEN TO THE U.K. UNTIL TUESDAY, SO THE VOTE ON DECEMBER 12TH IS PROBABLY UNLIKELY TO SUCCEED AHEAD OF AN ANNOUNCEMENT FROM THE E.U. PERHAPS THAT MIGHT CHANGE, ONCE THE EXTENSION IS GUARANTEED. BUT FOR THE TIME BEING, IT SEEMS UNLIKELY THE 12TH OF DECEMBER WILL GET SUPPORT, NOT ONLY FROM LABOUR, BUT FROM SOME CONSERVATIVES WITHIN BORIS JOHNSON'S OWN PARTY. MANUS: WHAT ABOUT BORIS JOHNSON'S THREAT TO ALMOST ZOMBIFY PARLIAMENT? IN OTHER WORDS, IF YOU DON'T GIVE ME AN ELECTION, I'LL CANCEL THE BUDGET AND I WILL JUST KEEP COMING BACK HERE AND ASKING AND ASKING. TIM: AT SOME POINT, THE SIDES WILL GIVE WAY AND THERE WILL BE AN ELECITON, I THINK MORE -- ELECTION, I THINK MORE AT THE NEW YEAR, BUT FOR THE TIME IT SERVES THE OPPOSITION'S PURPOSE IS TO KEEP FRUSTRATING THE PRIME MINISTER AND THE GOVERNMENT. MANUS: LET'S TRANSLATE RHETORIC INTO RISK. ONE-WEEK VOLATILITY DROPPING VERSUS THE THREE MONTH VOLATILITY, SO WHAT YOU HAVE GOT HERE IS, THERE IS A BELIEF IN THE FX MARKET THAT WE WILL GET SOME KIND OF SO LATE -- SOLI DIFICATION, BUT IS IT TOO SOON TO GO LONG STERLING? TIM: I THINK IN THE SHORT TERM, THERE IS A BIT OF LIMBO. STERLING HAS RALLIED 6%, IN THREE WEEKS. I THINK FOR THE TIME BEING, YOU SORT OF SIT BACK AND TREAD WATER. WITH THE POSSIBILITY OR PROBABILITY OF A NEW DEADLINE IN JANUARY, I THINK THE FOCUS IS GOING TO BE INTO THE NEW YEAR AS TO WHEN BREXIT WILL ACTUALLY HAPPEN. IN THAT PERIOD, YOU WILL SEE STERLING RALLY PROBABLY QUITE STRONGLY ONCE BREXIT HAS BEEN ACHIEVED. MANUS: THE TORIES ARE 10 POINTS AHEAD IN THE POLLS. BORIS GOING TO THE COUNTRY WITH A STRUCTURE VOTED IN PRINCIPLE WITH A DEAL IS STRONGER THAN WHAT LABOUR IS APPROACHING WITH, RIGHT? TIM: THAT IS WHY THEY WANT TO SLOW THEM DOWN, DON'T WANT THE MOMENTUM TO CONTINUE. AN ELECTION WITH A DEAL IN THE BAG WOULD PUT THINGS IN THE GOVERNMENT'S HAND. MANUS: THEY WANT TO PICK THE DEAL APART. TIM: THEY WANT TO FRUSTRATE THE DEAL APART AND PLAY THE LONG GAME, BECAUSE IN THE SHORT-TERM TERM THEY AREN'T GOING TO WIN. MANUS: TIM FOX, EMIRATES MBD GROUP CHIEF ECONOMIST. YOU CAN CATCH US LIVE AND GRAB ALL OUR INTERVIEWS AS YOU WISH, AT YOUR TIME OF CHOOSING. THE BLOOMBERG FUNCTION. JOIN THE CONVERSATION WITH YOU AND MYSELF -- TIM AND MYSELF. ♪ ♪ MANUS: ONE OF DUBAI'S LARGEST PRIVATE DEVELOPERS IS URGING A COMPLETE STOP TO ALL NEW HOME CONSTRUCTIONS FOR ONE TO TWO YEARS TO REDUCE THE CITY'S PROPERTY GLUT. SPEAKING EXCLUSIVELY TO MY COHOST YOUSEF GAMAL EL-DIN, DAMAC'S CHAIRMAN WARNED THE RESULTS COULD BE DISASTROUS FOR THE ECONOMY AND THE GOVERNMENT. > > WORLD-CLASS INFRASTRUCTURE. ONE OF THE SAFEST CITIES. YOU HAVE TO LIVE HERE TO UNDERSTAND HOW SAFE IT IS. THEN, YOU COME TO THE GOVERNMENT THAT IS VERY PRO-BUSINESS, VERY ACTIVE ON BUSINESS, AND THE LIFESTYLE, EVERY RELIGION, EVERY SECTOR CAN LIVE IN THE CITY AND DO WHAT THEY WANT, ALL OF THAT. SO THE CITY HAS VERY STRONG FUNDAMENTALS TO GROW, AND THE GROWTH OF THE CITY COULD BECOME 10 TIMES MORE THAN IT IS. > > BUT AT THE MOMENT IT IS NOT ENOUGH TO FILL THE SUPPLY COMING IN. > > I UNDERSTAND. THE CITY HAS AN AMAZING LEADER, WHO HAS BUILT THE CITY WORKING DAY AND NIGHT, AND HE IS WORKING TO TAKE IT FURTHER. TO HAVE, IT TICKS ALL THE BOXES OF THE MOST SUCCESSFUL, MOST AMAZING CITY IN THE WORLD, AND IT COMPETED VERY QUICKLY WITH SINGAPORE, HONG KONG IN A SHORT TIME. > > SO WHY ARE WE HAVING THIS PROBLEM? > > TODAY, WE HAVE A BOMB EXPLODING, OUR CURRENCY FELL, DEMONSTRATIONS IN THE STREET, WE DON'T HAVE ANY OF THAT. WHAT IS HAPPENING IS SIMPLE. WE HAD A VERY GOOD MARKET THAT PEAKED IN 2016-17, WHICH IS NORMAL, THE PROPERTY MARKET IS CYCLICAL. IN FIVE YEARS, WE'LL SEE SL OWDOWN, AND WE'RE HAVING A NICE, SLOW, SMOOTH LANDING, WHICH IS HEALTHY. IN 2018, WE STARTED HAVING A SLOWDOWN, THEN SOME OF THE BIG BOYS IN TOWN STARTED DUMPING SUPPLY, AND CREATING ONE OF THE MOST RIDICULOUS THINGS FOR THE CITY, THE PAYMENT PLANS. THE PAYMENT PLAN IS NO GOOD FOR THE CONSUMER, AND PURELY ENCOURAGES SPECULATION AND HAS A DISASTROUS RESULT. > > WHAT HAS THE COMMITTEE DONE SO FAR? WHAT CAN THEY CHANGE? > > I DO NOT KNOW WHAT THE COMMITTEE HAS DONE. I'M NOT PART OF THE COMMITTEE. THEY HAVE A MANDATE. I'M SURE THEY ARE WORKING ON IT, SURE THEY HAVE A PLAN. IF THEY ASK ME, AND THEY DO ASK ME, MY ANSWER IS TO STOP THE SUPPLY. NOT FOREVER. FOR A YEAR, FOR 18 MONTHS. ALL THE DEVELOPERS IN THE LAST 12 MONTHS HAVE REDUCED SUPPLY BY 80%. WE'VE REDUCED IT. SOME TO ALMOST ZERO. ROBERT SECTOR, THEY HAVE STOPPED IT -- PRIVATE SECTOR, THEY HAVE STOPPED IT. THE OTHERS HAVE STOPPED OR REDUCED BY 80%, BUT ONE COMPANY KEEPS DUMPING AND DUMPING AND DUMPING. > > IF THAT CONTINUES, THIS HAS NOW REACHED A CRITICAL LEVEL, AS FAR AS YOUR CONCERN, THIS IS AN EMERGENCY FROM A DUBAI PERSPECTIVE. > > 100%, I AGREE. WE ARE ENTERING A CROSSROADS. EITHER WE FIX THE PROBLEM AND WE CAN GROW FROM HERE, NOT TOMORROW BUT MAYBE IN 24 MONTHS, 30 MONTHS. IF WE DON'T, WE WILL SEE DISASTER. THIS WILL IMPACT THE BANKING SYSTEM. > > ALLOW ME TO FOLLOW UP, ON HOW DEMAC IS DEALING WITH -- DAMAC IS DEALING WITH THE CURRENT SITUATION? > > W THIS YEAR, WE HAD ONE LAUNCH, NEXT YEAR ONE LAUNCH. WE HAVE CURBED NEW PRODUCTS, HAVE NOT BOUGHT ANY LANDS, WE REDUCED OUR LAND BUYING. WE HAVE ENOUGH LAND BANKED. I THINK WE LEARN FROM 2008 AND 2009, AND LOOK AT IT AS MANAGEMENT AND AS A BOARD, AND DECIDED WE WILL NOT BUY A BIG PIECE OF LAND, AND WE'RE RUNNING OUR BUSINESS VERY WELL. > > EVIDENCE TO THE PAIN, THE STOCK PRICE OF DAMAC, DOWN TO THE LOWEST LEVEL SINCE ABOUT 2014. HOW ARE YOU TURNING THAT AROUND, GIVEN THE CHALLENGES IN THE MARKET? > > MY JOB IS TO PERFORM. I CANNOT DRAW THE STOCK MARKET, WHICH IS A SUBJECT OF SENTIMENT, OF GEOPOLITICAL ISSUES, OF WHAT THE WHOLE MARKET IS DOING. BUT AN EXAMPLE, WE WILL BE DELIVERING THIS YEAR 4000 UNITS, NEXT YEAR 6000 UNITS. I'M DELIVERY FOCUSED. WE WILL NOT DO MANY LAUNCHES, BUT WILL FOCUS ON SELLING WHAT PRODUCTS WE HAVE. OUR FINANCIAL POSITION TODAY IS VERY STRONG. WE HAVE MORE THAN $700 MILLION OF CASH IN THE COMPANY, AND OUR BOND, ONE WAS DUE LAST PARIL, WE PAID IT -- APRIL, WE PAID IT FULLY AND ON TIME. THE NEXT BOND, IN 2022, I CAN PAY THEM NEXT MAY. WE HAVE THE MONEY TO PAY THAT TWO YEARS AHEAD OF TIME. THE COMPANY FINANCES ARE SOLID. THE ONLY THING, WE CANNOT GIVE DIVIDENDS BECAUSE PROFITABILITY IS DOWN. I WANT TO KEEP THE CASH IN THE COMPANY, AND THE MOST IMPORTANT THING FOR ME IS TO PAY THE BONDS AHEAD OF TIME. MANUS: WARNING ABOUT THE CONSEQUENCES FOR THE PROPERTY MARKET. SOME BREAKING NEWS FROM THE U.S.. THERE HAS BEEN A RAID ON THE ISLAMIC STATE IN SYRIA AND WE UNDERSTAND THE CHIEF, ABU BAR KR AL-BAGHDADI HAS BEEN KILLED IN SYRIA. NEWSWEEK BROKE THE NEWS THE U.S. KILLED THE ISIS LEADER, AND WE ALSO NOW HAVE THAT THIS WAS A TARGETED RAID IMPLEMENTED FROM THE U.S.. WE ARE WAITING FOR THE PRESIDENT OF THE UNITED STATES, WHO WE UNDERSTAND WILL MAKE SOME COMMENTS, WE PRESUME ON THESE EVENTS. AS WE HEAR FROM THE PRESIDENT, WE WILL BRING THAT TO YOU LIVE. TO THE MARKETS. IT IS SUNDAY, BUT THAT DOESN'T STOP OUR ENTHUSIASM FOR UNDERSTANDING WHAT HAPPENED IN MARKETS. ON A GLIDE PATH TO CHILE, THE WORDS OF MR. NAVARRO. THE S & P 500 ON AN INTRADAY BASIS, ABOVE 3000. HOW INVESTED ARE THE MARKET PARTICIPANTS? WE'RE IN LIMBO. WILL WE GET A DECEMBER ELECTION? THE TORIES ARE AHEAD BY 10 POINTS IN THE POLLS. WHAT WILL THE LABOUR SPONSOR BE? WE WILL TALK A LITTLE BIT OF OIL AND MARKETS. WE SPEAK TO THE U.S. ENERGY SECRETARY, RICK PERRY, RIGHT MANUS: JUST AFTER 8:30 A.M. BREAKING NEWS FROM THE U.S., THERE HAS BEEN A RAID WE UNDERSTAND ON THE ISLAMIC STATE CHIEF, A AL-BAGHDADI HAS BEEN KILLED IN SYRIA. WE HAD THAT FROM NEWSWEEK, AND BLOOMBERG HAS CONFIRMED THIS WAS A TARGETED ATTACK IN A SYRIA, AND A RAID HAS TAKEN OUT THE LEADER OF ISIS. WE ARE WAITING FOR THE PRESIDENT OF THE UNITED STATES TO GIVE HIS REACTION. WE UNDERSTAND HE WILL MAKE A STATEMENT A LITTLE LATER IN THE MORNING. AS WE GET THAT, WE WILL BRING THAT TO YOU. LET ME WELCOME TO THE SHOW ONE GENTLEMAN WITH ACCESS TO THE PRESIDENT, A VETERAN OF POLITICS, THE U.S. ENERGY SECRETARY RICK PERRY. GOOD MORNING. HOW ARE YOU? SEC. PERRY: LIFE IS GOOD, I AM IN DUBAI. MANUS: THE SUN ALWAYS SHINES. CAN WE START WITH THIS BREAKING NEWS? WE UNDERSTAND THERE HAS BEEN A U.S. RATE TARGETING ISLAMIC STATE CHIEF AL-BAGHDADI, AND HAS BEEN KILLED. WHAT DOES THIS SAY TO THE WORLD ABOUT U.S. INTENTIONS WITH REGARD TO ISIS? SEC. PERRY: THE INTENTION IS VERY CLEAR. I WOULD SUGGEST, IT'S PROBABLY THAT THE UNITED STATES SPECIAL FORCES IN SOME FORM OR FASHION, AND THEY ARE RELENTLESS. IF YOU ARE GOING TO ATTACK OUR ALLIES, IF YOU WILL BE ENGAGED IN TERRORISM, YOU MAY BE ABLE TO WITHSTAND IT FOR A WHILE, BUT AT THE END OF THE DAY, YOU WILL BE FOUND, YOU WILL BE HUNTED DOWN AND ELIMINATED. MANUS: IS THIS ALSO OBVIOUSLY THE U.S. AND TURKEY AT THE MOMENT HAVE A RATHER FEBRILE PEACE BETWEEN THEM AT THE MOMENT, FAIR TO SAY. IS THIS A WARNING SHOT TO ERDOA GAN ABOUT WHAT COULD HAPPEN IF THERE'S ANY BREAKAGE BETWEEN THE U.S. AND TURKEY? SEC. PERRY: I THINK THAT'S PART OF A MESSAGE SENT THERE. THE OTHER PART, IF YOU ARE GOING TO ENGAGE IN TERRORISTIC ACTIVITIES, THERE'S GOING TO BE A PRICE TO PAY. YOU CAN RUN, BUT YOU CANNOT HIDE FOR VERY LONG. MANUS: HAVE YOU SPOKEN TO PRESIDENT TRUMP ABOUT HIS APPROACH WITH ERDOGAN? SEC. PERRY: I HAVE NOT. MANUS: LET'S TALK ABOUT PART OF THE REASON WHY YOU ARE IN DUBAI. YOU TALKED ABOUT GAS, SECURITY AND AI. YOU TALKED ABOUT SENDING MORE GAS TO SAUDI AND UAE. THE UAE WANTS TO BE GAS INDEPENDENT BY 2030, AND SO DOES SAUDI ARABIA. DO YOU WANT TO SELL MORE GAS? CAN YOU EXPECT A LIFT IN SETTLEMENT -- IT MEANS TO THE REGION, OR IS IT ABOUT THE REGION INVESTING IN U.S. INFRASTRUCTURE? SEC. PERRY: ALL OF THE ABOVE. THE FACT IS, WE HAVE ALREADY SENT 11 SHIPMENTS TO THE UAE OVER THE LAST THREE YEARS, AND WE WILL CONTINUE TO MAKE THAT AVAILABLE. GAS IS A TRANSITIONAL FUEL. IT HAS BEEN. IT ALWAYS WILL BE, I SHOULD SAY FOR THE NEXT 30 YEARS, AS WE TRANSITION TO SOMETHING ELSE, WHETHER THAT IS RENEWABLES, SMALL MODULAR REACTORS. BUT ALL OF THOSE ARE ON THE TABLE AS WELL. THE CONVERSATIONS WE HAD YESTERDAY WITH THE LEADERSHIP IN THE EMIRATES WAS ABOUT LNG, BUT IT WAS ALSO ABOUT THE, THE CONCEPT OF LOOKING AT SMALL MODULAR REACTORS. UAE IS MAKING GREAT PROGRESS IN CIVIL NUCLEAR, BUILDING FOUR MAJOR PLANTS. BUT SMALL MODULAR REACTORS FOR SOME OF THE MORE RURAL AREAS MAY BE AN APPROACH. OBVIOUSLY, WHAT WE WILL BE LOOKING AT FROM THE STANDPOINT OF RENEWABLES, I WAS AT THE SOLAR PLANT YESTERDAY, A FABULOUS FACILITY OUT THERE, THAT'S DEVELOPING AND PRODUCING ELECTRICITY AT A VERY CHEAP RATE. THIS COUNTRY HAS GOT, I THINK THE ALL OF THE ABOVE STRATEGY THEY ARE USING IS THE RIGHT ONE. MANUS: LET'S CIRCLE BACK TO YOUR HOME AREA, SHALE IN TEXAS. I LOOKED AT A GOLDMAN SACHS REPORT YESTERDAY, THAT SAID OIL OUTPUT IN SHALE WILL DROP 30% NEXT YEAR. IS SHALE RUNNING INTO A BUFFER? IS THE RAMP-UP IN SHALE RUNNING OUT OF STEAM? SEC. PERRY: ASSOCIATED GAS IS PART OF THE ISSUE OUT THERE. NOT HAVING ALL THE INFRASTRUCTURE IN PLACE TO MOVE THE ASSOCIATED GAS, WHICH PUTS PRESSURE ON OIL AND MAKES FOR MORE EXPENSIVE PRODUCTION OF THAT OIL. SO AS WE IMPROVE OUR ABILITY TO REMOVE THAT ASSOCIATED GAS, I THINK YOU WILL SEE GOLDMAN'S ESTIMATES ARE MAY BE OFF A LITTLE BIT. MANUS: ELIZABETH WARREN SAYS SHE WANTS TO BAN FRACKING EVERYWHERE IF SHE GETS INTO OFFICE. HOW MUCH OF A THREAT IS THAT TO FRACKING, IF THIS IS THE KIND OF LANGUAGE THE DEMOCRATS ARE USING? SEC. PERRY: THE TECHNOLOGY IS I RREFUTABLE, FROM THE STANDPOINT OF IT WORKS. I THINK IT IS SAFE. IT'S ALLOWING THE WORLD TO HAVE ACCESS TO LNG, IN PARTICULAR, THAT THEY NEVER HAD BEFORE. THE MESSAGE THAT I HEAR, POLITICS ASIDE, HERE IS THE MESSAGE I HEAR IF I'M A EUROPEAN, IF I'M SOMEONE IN THE EMIRATES, THERE IS AN INDIVIDUAL, A GROUP OF INDIVIDUALS BASICALLY SAYING, WE WON'T ALLOW YOU ACCESS TO A FUEL THAT CAN FREE YOU POTENTIALLY FROM OTHER SOURCES OF GAS THAT MIGHT HAVE STRINGS ATTACHED. WE'LL MAKE YOUR ENERGY MORE EXPENSIVE. I'M NOT SURE THAT'S A REALLY GOOD MESSAGE TO TRY TO BE RUNNING IN A POLITICAL PROCESS WHERE PEOPLE ARE SUPPOSED TO LIKE WHAT YOU ARE SAYING. MANUS: IN TERMS OF STRUCTURE OF THE MARKET IN THE U.S., WE HAVE HAD THIS MAJOR FLOURISHING IN SHALE. IS CONSOLIDATION THE NEXT THING, TO UNBLOCK SOME BLOCKAGES IN TERMS OF SCALE? SEC. PERRY: LISTEN, THE MARKET ALWAYS ADDRESSES SUPPLY AND DEMAND, SO THERE WILL BE -- MANUS: DO YOU THINK CONSOLIDATION IS PART OF THAT? SEC. PERRY: IT HAS BEEN A PART OF THAT ALWAYS, WHEN YOU LOOK BACK AT PREVIOUS CYCLES, CONSOLIDATION ALWAYS HAPPENS. PEOPLE SAY, MY GOD, I CAN MAKE ALL THIS MONEY, DO ALL THESE THINGS. THEY GET IN, AND THEN GO MAYBE NOT AS EASY AS I THOUGHT. MANUS: A YEAR AGO, WE WERE GETTING READY TO GO TO OPEC, AND MR. TRUMP TWEETED HIS DISDAIN FOR WHAT OPEC WAS DOING. A YEAR LATER, GETTING READY TO GO TO OPEC AGAIN, ARE WE PUSHING UPHILL? THERE'S SO MUCH AMERICAN CRUDE HITTING THE MARKETS. SEC. PERRY: YOU KNOW, I DON'T HAVE A PROBLEM WITH THAT. THE POINT IS, THE WORLD HAS CHANGED, IT HAS BEEN TURNED ON ITS HEAD OVER THE LAST FIVE OR SIX YEARS. 15 YEARS AGO, THEY TOLD US WE FOUND ALL THE OIL AND GAS THERE WAS IN THE WORLD. NOW, WE ARE AWASH IF YOU WILL, AND THE UNITED STATES HAPPENS TO BE THE ONES WHO DEVELOPED AND PUT THE TECHNOLOGY INTO PLACE, AND WE ARE REAPING THE BENEFITS, THE WORLD IS REAPING THE BENEFITS OF THIS. CHEAP ENERGY IS A GOOD THING FOR THE WORLD. FINDING THE RIGHT BALANCE WHERE THOSE THAT PRODUCE IT CAN MAKE A GO OF IT, AND KEEPING IT AT PRICES THAT THE CONSUMER ENJOYS. MANUS: IF I LOOK AT THE CONSTRUCT OF OPEC, IT IS NOT BE CARTEL IT WAS IN THE 1970'S. THE SECRETARY-GENERAL SAYS HE HAS EXTENDED A FORMAL INVITATION TO THE U.S. IS, CAN YOU ENVISAGE AT ANY LEVEL THE U.S. PARTICIPATING OR CO-JOINING WITH OPEC PLUS, AT ANY LEVEL? SEC. PERRY: NOT REALLY. I DON'T THINK THAT'S PART OF THE FUTURE. MANUS: NOT PART OF YOUR DNA, TO GET CLOSER TO THE PRODUCERS, IF YOU ARE UP THERE? SEC. PERRY: HERE IS WHAT I THINK. THE U.S. BY AND LARGE IS A FREE MARKET, BASED ON A PREMARKET CONCEPT. AND JOINING FORCES WITH SOME OTHER COUNTRIES, SAYI WE WILLN -- SAYING WE WILL CONTROL THE PRICE, THAT'S A BITY ALIEN FOR MOST AMERICANS. MANUS: WHAT ABOUT THE ARAMCO IPO? A GLOBAL EVENT, IT HAS BEEN DELAYED, HAS BEEN STALLED, WE WILL FIND OUT MORE THIS WEEK. HOW IMPORTANT IS IT FOR SAUDI ARABIA TO GET THIS IPO, FROM A GLOBAL PERSPECTIVE? SEC. PERRY: LET ME SPEAK AS AN OBSERVER, NOT SOMEONE WHO HAS ANY INFORMATION THAT NOBODY ELSE HAS. THE IPO IS OBVIOUSLY IMPORTANT TO THE LEADERSHIP OF THE COUNTRY. THEY WANT TO SHOW THEIR LEADERSHIP, SHOW THEIR FUTURE VISION. WE WILL BE IN THE KINGDOM NEXT WEEK, TALKING ABOUT THE VISION OF THE CROWN PRINCE IN PARTICULAR, BUT THE LEADERSHIP OF THE COUNTRY. AND PART OF THAT, WHETHER IT IS BRINGING MANUFACTURING INTO THE KINGDOM, THEY'RE GOING TO HAVE TO HAVE THE INFRASTRUCTURE TO MA KE THAT A REALITY. THE IPO IS VERY IMPORTANT TO THAT. HOW IT IS PRICED AND WHAT IT WILL BRING IN, THAT'S YET TO BE SOLIDIFIED. MANUS: TO DO BUSINESS WITH THE KINGDOM AND IN THE KINGDOM, YOU HAVE TO BELIEVE CAPITOL HILL HAS MOVED ON FROM ITS BACKLASH OVER JAMAL KHASHOGGI. DO YOU GET THE SENSE THE BACKLASH OVER THE MURDER OF JAMAL KHASHOGGI HAS EASED OR DISSIPATED? SEC. PERRY: CERTAINLY, AS TIME GETS BETWEEN AN EVENT AND THE FUTURE, THAT, IT'S NOT TO SAY THERE'S BEEN A MASSIVE AMOUNT OF FORGIVENESS HERE. WHAT HAS HAPPENED, THE OLD CONCEPT OF TIME HEALS WOUNDS, I AS YOU GET FARTHER AWAY FROM THIS, LIFE GOES ON AND WE'RE NOT GOING TO HOLD THIS GRUDGE FOREVER. THERE'S STILL A GREAT DEAL OF CONSTERNATION AND QUESTIONS, BUT AS A GENERAL RULE IN LIFE, AS YOU GET TIME BETWEEN A HORRIFIC EVENT AND THE FUTURE, WE REALIZE THAT YOU'VE GOT TO MOVE ON. MANUS: RICK PERRY WILL JOIN US JUST AFTER THE SHORT BREAK, TO TALK ABOUT A WHOLE HOST OF ISSUES. ♪ MANUS: THE OUTGOING U.S. ENERGY SECRETARY RICK PERRY SAYS HE ASKED PRESIDENT TRUMP TO MAKE THE PHONE CALL AT THE CENTER OF THE IMPEACHMENT INQUIRY, BECAUSE IT WAS IMPORTANT TO THE COUNTRY'S ENERGY NEEDS AND HAD NOTHING TO DO WITH FORMER VICE PRESIDENT BIDEN OR HIS SON HUNTER. RICK PERRY, GOOD TO HAVE YOU WITH US THIS MORNING. YOU SAID YOU NEVER HEARD THE NAMES JOE OR HUNTER BIDEN SAID IN REFERENCE TO UKRAINE, NOT EVEN AT THE INAUGURATION, DIDN'T MENTION JOE BIDEN RUNNING FOR PRESIDENT? SEC. PERRY: DIDN'T COME UP IN ANY SENSE. I WILL NOT TELL YOU THAT JOE BIDEN'S NAME MIGHT NOT HAVE BEEN IN A CONVERSATION SOMEWHERE OUTSIDE THE PRESIDENT OF THE UNITED STATES, OUTSIDE OF UKRAINE. I MEAN, THIS GUY IS RUNNING FOR PRESIDENT, SO THE IDEA, -- MANUS: I WENT FOR THE BROAD SWEEP. SEC. PERRY: BUT FOR YOUR VIEWERS AND FOR THE GENERAL PUBLIC, HERE IS WHAT'S IMPORTANT. I WORKED IN UKRAINE. POROSHENKO CAME TO THE HEADQUARTERS OF DOE IN 2018. I WENT TO UKRAINE TO VISIT WITH HIM, WELL BEFORE THE ELECTION WAS OVER WITH. THE MESSAGE WAS ALWAYS THE SAME, WEE HETHER POROSHENKO OR ZELENSKYY. YOU HAVE TO HAVE THE RULE OF LAW, YOU HAVE TO HAVE TRANSPARENCY, THE SANCTITY OF CONTRACTS. YOU HAVE TO UNBUNDLE THIS NATIONAL GAS TRANSMISSION COMPANY, IF YOU WANT AMERICAN COMPANIES DO FEEL CONFIDENT THEY CAN COME, YOU HAVE TO GET RID OF THE CORRUPTION WE HEAR ABOUT DAY IN AND DAY OUT. THAT WAS THE MESSAGE, WITH BOTH. WE GOT COMFORTABLE PRESIDENT-ELECT ZELENSKYY, PRESIDENT ZELENSKYY, WAS CONFIDENT IN THAT. THEIR RELIANCE ON RUSSIAN GAS WAS VERY NEGATIVE FOR THE COUNTRY. WE WERE READY TO SIGN AN MOU WITH AN INTERCONNECTED FOR U.S. LNG TO COME IN THROUGH POLAND. THIS WAS A VERY POSITIVE STORY, FROM MY PERSPECTIVE. HAVING THE PRESIDENT CALL AND SAY, LOOK, WE UNDERSTAND YOU ARE DOING WHAT YOU SAID YOU WOULD DO ON THE CORRUPTION SIDE, LET'S GO FORWARD. MANUS: AND YOU HAVE SAID THAT TIME AND TIME AGAIN, BUT DO YOU FEEL SOMEHOW HUNG OUT TO DRY BY THE PRESIDENT? HE HAS SAID HE TOLD THE REPUBLICANS, THE JULY 25 CALL WITH THE UKRAINIAN PRESIDENT WAS YOUR IDEA. SEC. PERRY: I DON'T FEEL HUNG OUT TO DRY. IT HAS THE ADDED BENEFIT OF BEING TRUE. I DID CALL THE PRESIDENT AND SAID, MR. PRESIDENT, YOU NEED TO MAKE THIS CALL. EVERYBODY WANTS TO TALK TO THE PRESIDENT, TO BE IN THE WHITE HOUSE, THE PHOTO OP. MANUS: YOU DON'T FEEL HUNG OUT TO DRY? SEC. PERRY: NOT AT ALL. I AM DOING MY JOB, TO GO SELL AMERICAN LNG AROUND THE WORLD. UKRAINE WAS VERY IMPORTANT. I THINK WE HAVE THE OPPORTUNITY TO DO THAT STILL, AND THERE IS A DISTRACTION WITH ALL THIS GOING ON, I GET THAT, BUT THE POINT IS THAT THIS IS A REALLY IMPORTANT PART OF EUROPE, AND UKRAINE IS THE BUFFER. IF THE RUSSIANS HAVE THE ABILITY TO COME IN AND REALLY PUT THE SQUEEZE ON UKRAINE, IT COULD IMPACT THE REST OF EUROPE IN A NEGATIVE WAY. MANUS: DO YOU THINK HE'S GOING TO BE IMPEACHED? SEC. PERRY: NOT AT ALL. MANUS: WHAT MAKES YOU SO SURE? SEC. PERRY: BECAUSE I KNOW THE TRUTH, AND THE TRUTH IS THAT WE WERE WORKING TOWARDS GETTING ENERGY IN THE UKRAINE, AND NEVER, NOT ONCE DID I HEAR THE WORDS "BIDEN, " "BURISMA," "MILITARY AID." IF THERE ARE FOLKS WHO HEARD THAT GOING FORWARD, STAND AND GIVE YOUR TESTIMONY, BUT I HAVEN'T SEEN ANYTHING THAT TELLS ME THE PRESIDENT OF THE UNITED STATES HAS DONE ANYTHING TO EVEN APPROACH THE CONCEPT OF IMPEACHMENT. MANUS: YOU ALSO SAID YESTERDAY VERY CLEARLY THAT YOU WERE NOT PREPARED TO TESTIFY. WHAT NEEDS TO HAPPEN TO GET YOU TO AGREE TO TESTIFY? SEC. PERRY: THE FIRST THING, THE HOUSE NEEDS TO FOLLOW THEIR RULES AND DO WHAT THEIR RULES REQUIRE THEM TO DO. THEIR RULES ARE IN ESSENSE CE LAW, HERE IS HOW YOU CONDUCT AN IMPEACHMENT INQUIRY, AND WHAT THAT REQUIRES IS A PUBLIC VOTE. YOU ARE ASKING PEOPLE TO COME AND SAY HERE'S WHAT HAPPENED, BUT YOU AREN'T WILLING TO STAND UP AND SAY I AM FOR IMPEACHMENT? THAT ON ITS FACE TELLS YOU THERE IS A LOT OF POLITICS BEING PLAYED HERE. MANUS: CAN I ASK YOU ABOUT A TELEPHONE CALL? THEY SAY WILLIAM TAYLOR, ONE OF THE COUNTRY'S TOP DIPLOMATS, TESTIFIED ON JUNE 28 ON A CALL WITH AMBASSADOR VOLKER, VOLKER SAID HE PLANNED TO BE EXPLICIT WITH PRESIDENT ZELENSKYY, THAT PRESIDENT ZELENSKYY NEEDS A WHITE HOUSE MEETING, INCLUDING REFERENCE TO COOPERATION ON INVESTIGATION TO GET TO THE BOTTOM OF THINGS. WHAT IS YOUR INTERPRETATION OF THAT? SEC. PERRY: HERE IS MY INTERPRETATION OF IT. FROM THE FIRST CONVERSATION I EVER HAD WITH ANYONE, AS I WOULD BEING -- WAS BEING BROUGHT UP TO SPEED ON UKRAINE, POROSHENKO, THE PREVIOUS PRESIDENT COMING TO THE HEADQUARTERS OF THE DOE. THE ISSUE OF CORRUPTION, THE ISSUE OF OLIGARCHS AND THEIR EXTRAORDINARY IMPACT ON THAT COUNTRY, PARTICULARLY IN THIS NATURAL GAS MIDSTREAM COMPANY, THAT IS WHAT WE TALKED ABOUT, THAT IS WHAT I READ IN THAT. THIS COUNTRY HAD A MASSIVE AMOUNT OF CORRUPTION, AND THE NEW PRESIDENT WAS GOING TO HAVE TO DEAL WITH IT IN A WAY THAT CLEARLY STARTED ELIMINATING IT, AND THAT IS WHAT THE GUY RAN ON. MANUS: LET'S PIVOT TO IRAN. IN A RE-THINK YESTERDAY, YOU DESCRIBED -- RE-THINK YES -- BRIEFING YESTERDAY, YOU ASCRIBE THE ATTACKS ON ARAMCO TO IRAN. HAVE YOU GOT NEW EVIDENCE THAT CONFIRMS 100% IT WAS IRAN? SEC. PERRY: I DON'T NEED NEW EVIDENCE. THE PREVIOUS EVIDENCE CLEARLY SHOWED IT WAS IRAN. THIS IS NOT QUESTIONABLE. MANUS: WHEN YOU WOKE UP AND SAW THESE PICTURES, DID THE WORLD GET A REALITY CHECK IN TERMS OF WHAT COULD HAPPEN, IN TERMS OF TERRORIST, EXCUSE ME, IN TERMS OF ATTACKS ON OIL FACILITIES? 5% OF PRODUCTION, GONE. SEC. PERRY: I DIDN'T GET A REALITY CHECK. I KNEW THAT BEFORE I WENT TO SLEEP THAT NIGHT. MANUS: BUT DO YOU THINK ANYBODY REALLY BELIEVED THIS KIND OF THING WOULD HAPPEN? SEC. PERRY: YES. THE WORLD WE LIVE IN TODAY, I DO. IF YOU DON'T THINK THIS CAN HAPPEN, YOU ARE NOT LIVING IN THE WORLD OF REALITY. YOU NEED TO BE PREPARED FOR IT, NEED TO RECOGNIZE THAT THERE ARE INDIVIDUALS IN THE WORLD WILLING TO TAKE PRETTY EXTREME STEPS TO DISRUPT THE GLOBAL ECONOMY. MANUS: I SUPPOSE WHAT WE WANT TO KNOW IN OUR REGION, IS AMERICA DOING ENOUGH WITH SAUDI TO PROTECT SAUDI FROM THESE KIND OF ATTACKS? SEC. PERRY: I THINK SO. THE OTHER SIDE OF IT, I WAS A GOVERNOR FOR 14 YEARS, SO FROM TIME TO TIME YOU HAVE AN EVENT OCCUR, AND SOMEONE WILL ALWAYS STAND UP AND SAY THAT YOU DIDN'T DO ENOUGH. MANUS: DO YOU THINK AMERICA IS DOING ENOUGH? SEC. PERRY: I THINK AMERICA DOING ENOUGH. MANUS: SHOULD THEY DO MORE? WHAT IS MORE? SEC. PERRY: EXPLAIN TO ME WHAT MORE IS. SHOULD WE PUT, WELL, PUT TENS OF THOUSANDS OF TROOPS ALL AROUND A REFINERY, FOR -- IS THERE TECHNOLOGY THAT'S AVAILABLE? I WOULD SUGGEST TO YOU THAT THOSE CONVERSATIONS GOING ON ABOUT DEFENSIVE TECHNOLOGIES THAT MAKE SENSE, TO PUT THAT KIND OF EQUIPMENT INTO PLACE, AND WHERE IT WOULD BE PUT. OBVIOUSLY CLASSIFIED, BUT WE LIVE IN A VERY FLUID WORLD. SO, I SHOULD SAY, THE SAUDIS AND THE UNITED STATES, AND OTHER ALLIES OF SAUDI ARABIA, ARE IN CONVERSATIONS TODAY ABOUT HOW WE MAKE SURE THAT OUR OIL PRODUCTION IS AS SAFE AS IT CAN BE. YOU KNOW, WE HAVE THESE CONVERSATIONS DOMESTICALLY IN THE UNITED STATES ON CYBERSECURITY, ON HOW WE MAKE SURE OUR PIPELINES ARE BEING PROTECTED FROM A TERRORIST THREAT. MANUS: THE ONE THING THAT COMES TO MIND, THE PRESIDENT'S WORDS, IT IS TIME TO BRING THEM HOME, IN ANY OF THE MIDDLE EAST CONFLICT WE HAVE SEEN, A CLEAR MESSAGE. PEOPLE IN THIS REGION ARE WORRIED THAT THWEW IS A SLIPPING -- THERE IS A SLIPPING AWAY OF U.S. BACKING. ARE THEY WRONG, ARE THEY MISGUIDED IN THAT? SEC. PERRY: YES, IN THE SENSE OF IS AMERICA GOING TO WALK AWAY FROM THE MIDDLE EAST AND DUST THEIR HANDS OFF -- MANUS: DIDN'T THEY IN SYRIA? SEC. PERRY: NOT NECESSARILY. I'D ARGUE THE PREVIOUS TYPE OF APPROACH HAD NOT WORKED VERY WELL, SO THIS PRESIDENT SAID WE WILL TAKE AN UNCONVENTIONAL APPROACH TO THAT PART OF THE WORLD. JURY'S STILL OUT. I WILL LET THE CRITICS BE OUT THERE BRAYING AWAY, BUT WE ARE MAKING PROGRESS, I THINK. WHEN YOU THINK ABOUT AL-BAGHDADI, THE ELIMINATION OF SOME OF THE REAL PROBLEMS. THE PEACE THAT IS BREAKING OUT THERE AT THIS MOMENT. I HAPPEN TO THINK THAT'S MOVEMENT IN THE RIGHT DIRECTION. MANUS: SECRETARY PERRY, YOU WILL NOT BE -- AS AGGRESSIVELY NEXT YEAR. WHAT WILL BE THE TOP ISSUE IN THE 2020 ELECTION? MIDDLE EAST, OIL, THE DOLLAR? WHAT WILL DRIVE THIS ELECTION? IMPEACHMENT? TELL ME WHAT YOU THINK. SEC. PERRY: ALL OF THEM, WITH THE EXCEPTION OF IMPEACHMENT. MANUS: YOU DON'T THINK IMPEACHMENT -- SEC. PERRY: I DON'T. I THINK IT WILL BE THE RUSSIAN DOSSIER IN SIX MONTHS. IT WILL HAVE GONE AWAY. THE ECONOMY WILL BE WHAT DRIVES THIS. IF THE A MERICAN PEOPLE FEEL A JINGLE IN THEIR POCKETS, FEEL CONFIDENT ABOUT THE FUTURE, IF THEY HAVE A JOB, THAT'S WHAT'S GOING TO DRIVE THE ECONOMY, AND DRIVE THE ELECTION. MANUS: SECRETARY PERRY, THANK YOU VERY MUCH FOR BEING WITH US THIS MORNING. U.S. ENERGY SECRETARY RICK PERRY, WE WISH YOU WELL. HAVE A GOOD TIME. I WILL SEE YOU THROUGHOUT THE WEEK. THANK YOU FOR JOINING ME. MIDDLE EAST DISCOUNT CARRIER URGES ERA -- JAZEERA AIRWAYS SAYS THEY WILL LAUNCH FLIGHTS FROM LONDON TO KUWAIT. THEY ARE EVALUATING A POSSIBLE SWITCH TO A BOEING FLEET, DESPITE THE CONTROVERSY SURROUNDING THE 373 00 -- 737 MAX. HE SPOKE TO GUY JOHNSON. > > WE HAVE BEEN AN AIRBUS CUSTOMER FOR 14 YEARS AND THEY HAVE SERVED US WELL. I THINK THAT BOTH MANUFACTURERS MAKE AIRPLANES THAT ARE SUITABLE FOR OUR PURPOSES. BY 2021, WE EXPECT TO BE ABOUT 23 AIRPLANES, AND AT THAT TIME IT WOULD ALSO BE NECESSARY TO HAVE A FLEET REPLACEMENT STRATEGY IN PLACE, SO WE ARE DISCUSSING WITH BOTH MANUFACTURERS TO ORDER ABOUT 35 AIRPLANES, EIGHT FOR FLEET REPLACEMENT AND ALSO FOR SOME EXPANSION ON TOP OF THAT. I THINK FUNDAMENTALLY, THE FIRST STEP GIVES FOR BOEING TO SORT OUT ISSUES WITH THE MAX, AND WE ARE CONFIDENT BASED ON THE TRACK RECORD THAT THEY WILL EVENTUALLY SOLVE THAT. THEN, IT BOILS DOWN TO THE COMMERCIAL PART, ONCE THE SAFETY CONCERNS ARE ADDRESSED AND FIXES ARE DONE BY BOEING, I THINK WE WILL BE ENGAGING WITH BOTH OF THEM TO GET TO A SOLUTION ACCEPTABLE TO BOTH PARTIES. > > SO YOU DON'T HAVE ANY CONCERNS ABOUT THE SAFETY OF THE MAX? > > I DO AT THE MOMENT, BUT I AM ALSO CONFIDENT THEY WILL BE RESOLVED. MANUS: JUST AFTER 8:56 A.M. BREAKING NEWS THIS HOUR, THE U.S. TARGETED THE ISLAMIC STATE AND HAVE KILLED THE CHIEF, MR. AL-BAGHDADI, IN SYRIA, THE LATEST NEWS. WE CAUGHT UP WITH THE SECRETARY OF ENERGY RICK PERRY, WHO HAD CLEAR WARNINGS ABOUT ANYONE WHO TAKES THE U.S. TO TASK WILL BE HUNTED DOWN. AND THAT THE IMPEACHMENT ISSUE WILL GO AWAY IN SIX MONTHS. BUT THIS IS ABOUT TERRORISM. THE LATEST BREAKING HEADLINES, THE HEAD OF ISLAMIC STATE HAS BEEN KILLED BY THE U.S. IN A TARGETED RAID. WE WILL WAIT TO HEAR FROM THE PRESIDENT OF THE UNITED STATES RIGHT HERE ON BLOOMBERG. WAKING UP TO DAWN IN LONDON, AND THIS SUNDAY WHERE THE NEWSPAPERS WILL BE RIFE WITH WHAT HAPPENS NEXT IN THE BREXIT PROCESS. WILL THELABOUR PARTY DELIVER FOR AND ALLOW A DECEMBER 12 ELECTION, OR WILL THEY PROCRASTINATE, PREVARICATE AND CREATE AMBIGUITY AS LLOYD GEORGE DID MANY YEARS AGO? THIS IS BLOOMBERG. ♪ MANUS: THIS IS BLOOMBERG DAYBREAK MIDDLE EAST. OUR TOP STORIES THIS MORNING. CHINA SAYS PARTS OF THE FIRST PHASE OF A TRADE DEAL WITH THE U.S. IS BASICALLY COMPLETED. THE WHITE HOUSE SAYS TARIFFS MAY NOW BE PUT ON. -- POSTPONE. BORIS JOHNSON CALLS FOR A DECEMBER ELECTION. JEREMY CORBYN WILL ONLY BACK IT IS NO DEAL BREXIT IS OFF THE TABLE. AS THE ARAMCO IPO IS PUT ON HOLD AGAIN, SAUDI STOCKS ENTER THEIR BEST WEEK IN MORE THAN A MONTH. WE EXPLAIN WHY. THE CHAIRMAN OF ONE OF THE BUYS LARGEST PRIVATE DEVELOPERS IS URGING A COMPLETE HALT TO ALL NEW HOME CONSTRUCTION TO HELP REDUCE THE CITY'S GLUT. HERE ARE EXCLUSIVE INTERVIEW. -- HEAR OUR EXCLUSIVE INTERVIEW. ♪ MANUS: IT HAS JUST GONE 9:00 ACROSS THE EMIRATES. IT IS DAYBREAK MIDDLE EAST. WARM WELCOME TO THE SHOW THIS MORNING. WE ARE IN LIMBO. WILL WE GET A DECEMBER 12 ELECTION? LABOR LOOKS AS IF THEY WILL HOLD OUT. COULD THERE BE MORE PRESSURE COMING TO BEAR ON THE POUND THIS WEEK? WE SETTLED DOWN BY 1.21% LAST WEEK. WE BROKE THE OVERALL TREND. THEY SAY SELL THE RALLIES. UBS HAD A TACTICAL OVERWEIGHT POSITION. STERLING REMAINS CHEAP. I LEAVE IT TO THE WORDS OF BLACKROCK. IT'S LIKE A 1980'S POP SONG. NEVER-ENDING UNCERTAINTY. LET'S HAVE A LOOK AT THE OIL MARKETS. WE ARE GLIDING TO A DEAL. WHAT IS THAT GOING TO DO TO THE OIL MARKET? STOCKPILES DROPPED FOR THE FIRST TIME IN FIVE YEARS. A BIG WEEK FOR THE OIL MARKET. ALL HITTING THE TABLE THIS WEEK. OIL HAD A NICE RALLY LAST WEEK. LET'S GET YOUR FIRST WORD HEADLINES FROM AROUND THE WORLD. DESIREE HUMPHREY IS WITH ME RIGHT HERE ON THE GROUND. DESIREE: THANKS. THE LEADER OF THE ISLAMIC STATE MILITANT GROUP HAS BEEN TARGETED BY THE U.S. MILITARY IN SYRIA. HE HAS BEEN KILLED. THAT NEWS COMES AS PRESIDENT TRUMP SAYS HE'S GOING TO MAKE A MAJOR STATEMENT AT 9:00 WASHINGTON TIME TODAY. THE PRESIDENT TWEETED THAT SOMETHING VERY BIG JUST HAPPENED WITHOUT ELABORATING. PG & E HAS BEGUN SHUTTING OFF POWER TO AN ESTIMATED 2.8 MILLION CALIFORNIANS IN THE LARGEST AND LONGEST DELIVER IT BLACKOUT EVER. THE GIANT IS TURNING OFF THE LIGHTS FOR ABOUT 940,000 HOMES AND BUSINESSES ACROSS NORTHERN CALIFORNIA AS IT TRIES TO KEEP POWER LINES FROM IGNITING WILDFIRES DURING THE STRONGEST WINDSTORM IN YEARS. PRESIDENT TRUMP IS SUSPENDING SOME TRADE PREFERENCES TOWARD THAILAND OVER CONCERNS ABOUT WORKER RIGHTS. THAT'S ADDING TO THE OBSTACLES FACING THE EXPORT RELIANT NATIONS OWN ECONOMY. IT AFFECTS $1.3 BILLION IN TRADE PURCHASES AND WILL TAKE EFFECT IN SIX MONTHS. DEMOCRATIC UNIONIST PARTY LEADER HAS THREATENED TO FRUSTRATE BORIS JOHNSON'S EFFORTS TO PUSH HIS BREXIT DEAL THROUGH. SHE'S WARNING THE U.K. LEADER THAT HER PARTY WILL CONTINUE TO OPPOSE THE ACCORD IN PARLIAMENT. JOHNSON SAYS HE WILL SEEK AN ELECTION ON DECEMBER 12 BUT HE NEEDS THE SUPPORT OF TWO THIRDS OF MEMBERS OF PARLIAMENT AND THE OPPOSITION LABOR PARTY HAS SAID IT WILL BLOCK THE VOTE. GERMAN FINANCE MINISTER HAS SLASHED A FIRST-ROUND WIN FOR THE LEADERSHIP OF HIS SOCIAL DEMOCRATIC PARTY. THAT IS BOOSTING THE CHANCE OF SURVIVAL FOR ANGELA MERKEL'S COALITION. 22.7% OF THE BALLOTS. HE AND HIS RUNNING MATE WILL FACE CRITICS IN THE NOVEMBER RUNOFF. THE VINTAGE GREEN CARDIGAN KERKHOVE MORE -- KURT COBAIN MORE HAS SOLD FOR $334,000. THAT MAKES IT THE MOST EXPENSIVE SWEATER AUCTION OF ALL-TIME. THE GOVERNMENT IS UNWASHED AND STILL MARKED WITH CIGARETTE STAINS. THE AUCTION INCLUDED A HANDWRITTEN POEM BY TWO PARTICULAR AND A GUITAR USED BY PRINCE. GLOBAL NEWS 24 HOURS A DAY ON AIR AND AT TICTOC ON TWITTER, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. ♪ MANUS: THANK YOU. A LITTLE BIT OF BREAKING NEWS COMING FROM ONE OF THE HEAVYWEIGHTS ON THE SUMMIT. THIRD-QUARTER PROFITS. THE ESTIMATE, LEVY DOUBLE TECH. THIRD QUARTER PROFITS, 830 MILLION REALS. THE ESTIMATE WAS 2.1 9 BILLION. THIS IS A SIGNIFICANT MISS ON THE ACTUAL THIRD-QUARTER PROFIT. WAITING TO SEE IF THERE'S ANY -- SLIPPAGE AS WELL ON THE SALES FRONT. TO THAT EXTENT, WE WILL SEE HOW THIS STOCK OPENS A LITTLE BIT LATER TODAY. RELATIONS BETWEEN SABIC AND CLARION WORSENING, UNABLE TO AGREE ABOUT DEEPENING THEIR BOND BETWEEN THE TWO OF THEM. THESE ARE THE TOP LINE NUMBERS ON CLARION. WE WILL GET MORE OF A BREAKDOWN ON THAT AS THE MORNING GOES ALONG. POSSIBLY SOME SIGNIFICANT ITEMS IN THERE. AS WE GET MORE DETAIL, WE WILL BRING THAT TO YOU IN FULL. LET'S RETURN TO OUR TOP STORY ABOUT TRADE AND THE OPTIMISM THEREIN. IT WILL PUSH SENTIMENT IN TERMS OF THE MARKETS. CHINA SAYING PART ONE OF THE PHASE ONE DEAL HAS BEEN COMPLETED. THE TWO SIDES READ -- REACHED CONSENSUS. THE COMMENTS IN BEIJING FOLLOW POSITIVE RHETORIC STRUCK BY THE WHITE HOUSE. > > WE ARE DOING VERY WELL WITH CHINA. WE ARE GOOD WITH THE FARMERS. THE FARMERS WILL DO BETTER THAN ANYBODY. EVERYBODY IS DOING WELL. CHINA WANTS TO MAKE A DEAL. THEY WOULD LIKE TO SEE SOME REDUCTIONS IN TARIFFS. THEY WOULD LIKE TO SEE SOME TARIFFS THAT ARE SCHEDULED TO GO ON VERY SOON, THEY WOULD LIKE TO SEE THEM NOT GO ON. CHINA REALLY LETS YOU KNOW IT. THEY WANT TO MAKE A DEAL. MANUS: IT'S THAT WEEK. POLICYMAKERS ARE EXCITED TO CUT. TRADE IS WARMING TO THE IDEA THAT IT MAY BE THE LAST RATE REDUCTION FOR SOME TIME. THE ODDS OF A DECEMBER MOVE HAVE FALLEN FROM A NEAR CERTAINTY TO JUST 20%. BEST 28%. MY GUEST POST THIS MORNING. IT'S GOOD TO SEE YOU THIS MORNING. A LOT OF OPTIMISM. PHASE ONE OF A CHINESE DEAL. HOW IMPORTANT IS THIS FOR MARKET SENTIMENT? > > MARKETS ARE LOOKING FOR ANY PIECE OF GOOD NEWS. LET'S BE FAIR ABOUT WHAT THIS IS. THIS IS PHASE ONE. IT IS STILL VERBAL. LET'S CALL IT THE PALTRY TRADE DEAL. WHAT HAS BEEN AGREED IS MORE ON PRODUCTS BEING SOLD -- AG PRODUCTS BEING SOLD TO CHINA. THINGS LIKE POULTRY. COOKED POULTRY GET SOLD BACK FROM CHINA TO THE U.S.. THAT SUMS IT UP. IT IS ABOUT AGRICULTURAL PRODUCTS, WHICH IS WHAT TRUMPCARE IS ABOUT AT THE MOMENT. HE'S LOOKING AT THE ELECTIONS. ALL THE OTHER ISSUES, IP RIGHTS, SUBSIDIES, STATE-OWNED ENTERPRISES AND THEIR DOMINANCE OF THE CHINESE LANDSCAPE, ALL THOSE HAVE BEEN PUT INTO THE BACKGROUND. THE CHINESE ARE HAPPY. THEY WANT TO AVOID ANOTHER SET OF TARIFFS IN DECEMBER. EVERYBODY WOULD LIKE TO HAVE A PHOTO OPPORTUNITY NEXT MONTH IN CHILE. MANUS: IF PHASE ONE GOES THROUGH, WILL WE SEE A LOT OF CASH? THE YOU EXPECT A RAMPANT REATTACHMENT TO EQUITY MARKETS IF PHASE ONE GOES THROUGH? > > I THINK IT'S ALREADY IN THE PRICE. YOU DON'T HAVE A LOT TO LOOK FORWARD TO. YOU'VE ALREADY BEEN OVERLY OPTIMISTIC. NOW YOU HAVE A LITTLE BIT ON YOUR TABLE TO BE HAPPY ABOUT. THAT'S NOT THE BIG TRADE DEAL EVERYBODY WAS TALKING ABOUT. MANUS: I LOOKED AT SOME KOREAN DATA. JAPAN FACTORY ORDERS FELL TO THE WEAKEST LEVEL SINCE 2016. SOUTH KOREA HAS PUT IN THE WORST PERFORMANCE. LET'S LOOK AT IT IN THE DUE TO THE LIBRARY. IT IS THE WORST PERFORMANCE SINCE THE FINANCIAL CRISIS. THEY ARE WARNING THAT THIS IS ASCRIBED TO TRADE WARS. HOW MUCH MORE CAN MONETARY POLICY DO FROM CENTRAL BANKS TO REPAIR THE DAMAGE FROM TRADE WARS AND AND THE CYCLE -- AND THE CYCLE? > > THE SHORT ANSWER IS VERY LITTLE. WHAT WE ARE SEEING IN ASIA IS THE SUPPLY CHAIN OF CHINA SUFFERING BECAUSE OF THE TRADE DEALS. THAT INCLUDES SOUTH KOREA. THERE HAS BEEN SOME TRADE DIVERSION. SOME CHINESE COMPANIES ARE NOW USING SUBSIDIARIES IN VIETNAM, BANGLADESH, AND ELSEWHERE TO EXPORT TO THE UNITED STATES. THAT HAS NOT DELAYED THE EFFECTS OF THE DECLINE IN TRADE VOLUMES ON A GLOBAL BASIS. MANUS: I'M GOING TO INTERRUPT YOU THERE. WE WILL TURN TO THE CONVERSATION VERY SHORTLY. LET'S GO BACK TO THE SABIC SET OF RESULTS. THERE WAS QUITE A SHOCKING NUMBER THAT CAME THROUGH. THEY MISSED ON THE THOR QUARTER NUMBERS. -- THIRD-QUARTER NUMBERS. CHARGING 1.5 BILLION IN REGARDS TO THEIR PROVISION, THEIR INVESTMENT IN CLARION. THIS IS A VERY SIGNIFICANT MOMENT. IT WILL HAVE QUITE A SIGNIFICANT MARKET IMPACT TODAY, ONE WOULD IMAGINE. AS WE GET INDICATIONS ON HOW SABIC WILL OPEN. SORRY TO INTERRUPT YOU THERE. THAT IS WHAT IT IS BRINGING TO THE MARKETS. I WANT TO PIVOT TO LEBANON. YOU HAVE A LITTLE BIT OF HISTORY WITH LEBANON IN REGARDS TO YOUR ROLES AND ABILITY TO INTERPRET WHAT'S HAPPENING IN THE MARKET. 10 DAYS OF DISRUPTION , THE WORST-PERFORMING EQUITY MARKET IN THE WORLD. WHAT IS THE NEXT SHOE TO DROP IN THE FINANCIAL CONSIDERATION FOR LEBANON? YOU WRITE THAT THE FAULT IS SOMETHING YOU ARE LOOKING AT MUCH MORE AGGRESSIVELY. > > WHAT WE NEED TO LOOK AT -- MANUS: DEBT RESTRUCTURING, MY APOLOGIES. > > WHAT WE ARE LIKELY TO HAVE IS A DEBT FREE PROFILING. MANUS: WHAT DOES THAT MEAN? > > A LARGE NUMBER OF MATURITIES OVER THE NEXT YEARS, PARTICULARLY IN DOMESTIC CURRENCY. YOU REPACKAGE THEM INTO A NEW BOND WHICH GETS SUBSCRIBED BY THE CENTRAL BANK IN THE LOCAL BANKS WITH MATURITIES OVER 5, 7, AND 10 YEARS. THAT REMOVES LIQUIDITY PRESSURE OVER THE NEXT FEW YEARS. IT ALLOWS YOU TO UNDERTAKE FISCAL REFORM WHICH IS WHAT LEBANON NEEDS. MANUS: BOND OWNERS WILL HAVE TO TAKE A HAIRCUT? > > 90% OF THE DEBT IS HELD BY COMMERCIAL BANKS IN LEBANON AND THE CENTRAL BANK. LEAVE THE EURO BONDS AND EXTERNAL VISITORS -- INVESTORS ASIDE. DO IT IN TERMS OF LEBANESE CAP -- CURRENCY. YOU CAN MANAGE IT. WHAT YOU WANT TO AVOID IS A DEBT DEFAULT. A DEBT DEFAULT, GIVEN THAT 70% OF BANKS ASSETS ARE IN SOVEREIGN PAPER, YOU WANT TO AVOID A DEFAULT. THAT WOULD WIPE OUT THE EQUITIES OF THE LEBANESE BANKS. EVERYBODY WANTS TO AVOID THAT. IT WOULD BE A TRUE FINANCIAL MELTDOWN. LEBANON CANNOT AFFORD IT, GIVEN THE SIZE AND IMPORTANCE OF THE BANKING SECTOR. MANUS: WHAT ABOUT THE EURO BONDS? WHAT ABOUT THE DEBT DENOMINATED OUTSIDE THE BORDERS? > > THE EURO BONDS ARE LESS OF AN ISSUE. THEY ARE MATURING NEXT MONTH. IT CAN BE PAID OFF QUITE EASILY BY THE BANKS AGAIN. I'M NOT TERRIBLY WORRIED ABOUT THAT. I'M WORRIED ABOUT A RUN ON THE BANKS NEXT WEEK, SIBLEY BECAUSE THEY HAVE BEEN CLOSED FOR 10 DAYS. MANUS: YOU EXPECT A RUN ON THE BANKS? > > YES. MANUS: NASSER STAYS WITH US. WE ARE TALKING TURKEY, IT HAS DONE IT AGAIN. ANOTHER JUMBLED RATE CUT. WE LOOK AT THE APPLICATIONS. UP NEXT, EXIT LAND. THE TWISTS, THE TERMS. -- TURNS. THIS IS BLOOMBERG. ♪ MANUS: DEMOCRATIC PARTY UNION LEADER HAS THREATENED TO FRUSTRATE BORIS JOHNSON'S EFFORTS. SHE'S WARNING THE YOU CAN LEADER THAT HER PARTY WILL CONTINUE TO OPPOSE PARLIAMENT. JOHNSON SAYS HE WILL SEEK AN ELECTION ON DECEMBER 12. TO HOLD IT, HE NEEDS THE SUPPORT OF TWO THIRDS OF THE MEMBERS OF THE BRITISH PARLIAMENT. THE OPPOSITION LABOR PARTY HAS SAID IT WILL BLOCK IT. MY GUEST HOUSE THIS MORNING. LOTS OF STORIES GOING AROUND. LABOR IS SET TO BLOCK DEMAND FOR DECEMBER 12. THEY THOUGHT WE WOULD GET AN ELECTION IN JANUARY IF THE EU EXTENDS. DO YOU CONCUR? > > I THINK THE EU WILL EXTEND, PROBABLY UNTIL THE END OF JANUARY. ANY ELECTION IN A HIGHLY POLARIZED PARLIAMENT AND COUNTRY IS UNLIKELY TO RESOLVE THE ISSUES. THE ONLY WAY FORWARD THAT I COULD SEE IS A REFERENDUM. THAT IS THE ELEPHANT OR CAMEL IN THE ROOM. MANUS: LABOR HAVE OFFERED THAT IF THEY GET INTO POWER. I DON'T KNOW IF THAT'S A REAL RISK. > > THAT'S BECAUSE LABOR WANTS TO GET INTO POWER. JEREMY CORBYN WANTS TO BE P.M.. YOU HAVE TO LOOK AT THE WIDER ISSUES. WHERE IS THE U.K. HEADING? IT HAS NOTHING TO DO WITH PARTY POLITICS. EVERYBODY IS STILL PLAYING PARTY POLITICS AT THE MOMENT INSTEAD OF LOOKING AT THE WIDER OUTCOMES , THE OUTCOME FOR THE U.K. ECONOMY MOVING FORWARD. MANUS: YOUR BASE CASE FOR 2020, A REFERENDUM? > > I EXPECT A REFERENDUM IN 2020. IF NOT EARLIER. MANUS: REFERENDUM RISK, WHAT DOES THAT DO TO STERLING? WE GIVE BACK 1.2%. WE GET BACK 1.2% LAST WEEK. WHAT DOES REFERENDUM DUE TO STERLING? > > ANY PROPOSAL OF REFERENDUM WOULD BE ALL THE VALUE OF U.K. ASSETS AS WELL AS STERLING. IT WOULD BE A BOOM FOR U.K. EQUITIES, ASSETS, AND PROPERTY. MANUS: YOU ARE WORKING ON THE ASSUMPTION THAT A REFERENDUM WOULD DELIVER US -- DELIVER A REMAIN OUTCOME, YES? > > I DO. MANUS: WHAT MAKES YOU SO SURE? > > THE NUMBERS WE NOW KNOW ABOUT THE U.K., THE ASSESSMENT OF U.K. BREXIT, ARE VERY CLEAR. EVERY SINGLE ASSESSMENT HAS SAID THAT THE U.K. WILL LOSE BETWEEN 2% AND 6%. THAT IS A MASSIVE DECLINE. THE PUBLIC IS NOW AWARE, PARTICULARLY YOUNG PEOPLE. YOUNG PEOPLE BACK THEN DID NOT VOTE. THERE'S A WHOLE WAVE OF YOUNG PEOPLE WHO ARE NOW MUCH MORE AWARE OF THE ISSUES, MORE LIKELY TO VOTE. THAT WILL BE THE SWING VOTE. THE TORIES AND THE EXETER'S HAVE DOMINATED BEFORE. YOUNG PEOPLE AND REMAINDERS WILL DOMINATE NOW. MANUS: DEMOGRAPHICS WILL DO THE DAMAGE, PERHAPS. THANK YOU SO MUCH FOR COMING TO BROAD CHURCH WITH US THIS MORNING. GO BACK TO TV < GO > . HIS COMMENTS ON LEBANON ARE RELEVANT. YOU CAN PICK UP NASSER'S COMMENTS THERE IN REGARD TO A BANK FROM -- RUN FOR LEBANON. MANY THINGS COVERED. DIVE INTO ALL THE FUNCTIONS WE USE. BECOME PART OF THE CONVERSATION ON TV < GO > . THIS IS BLOOMBERG. ♪ MANUS: DUBAI'S LARGEST PRIVATE DEVELOPERS ARE URGING A COMPLETE HALT TO ALL NEW HOME CONSTRUCTION TO HELP REDUCE THE CITY'S PROPERTY GLUT. SPEAKING EXCLUSIVELY TO YOUSEF, THE CHAIRMAN WARNS THAT RELENTLESS DEVELOPMENT COULD SPELL DISASTROUS RESULTS FOR DUBAI'S BANKS AND THE ECONOMY. > > IN, THERE IS NO CURRENCY RISK. THAT IS A BIG ADVANTAGE. WORLD-CLASS INFRASTRUCTURE. SAFETY, THE 1 -- ONE OF THE MOST SAFEST CITIES. YOU COME TO THE POLITICAL INSTABILITY. YOU COME TO THE GOVERNMENT WHICH IS VERY PRO-BUSINESS AND ACTIVE ON BUSINESS. YOU COME TO THE LIGHT TIME WHERE EVERY RELIGION AND SECTOR CAN LIVE IN THE CITY INTO WHATEVER THEY WANT. THE CITY HAS VERY STRONG FUNDAMENTALS TO GROW AND IS STILL THE GROWTH OF THE CITY CAN BECOME 10 TIMES MORE. YOUSEF: AT THE MOMENT, IT'S NOT ENOUGH. > > I UNDERSTAND THAT. THE CITY HAS AN AMAZING LEADER WHO HAS BUILT THE CITY, WORKING DAY AND NIGHT TO REACH WHERE IT IS. HE IS THE WORKING TO TAKE IT FURTHER. IT TAKES ALL THE -- TAKES ALL THE BOSSES -- T ICKS ALL THE BOXES FOR THE MOST AMAZING CITY IN THE WORLD. IT COMPETED VERY QUICKLY WITH SINGAPORE, HONG KONG IN A SHORT TIME. WHY ARE WE HAVING THIS PROBLEM? TODAY, A BOMB EXPLODED. THE THE CURRENCY FALL? DID WE HAVE A DEMONSTRATION IN THE STREET? WE DON'T HAVE ALL THOSE ISSUES. WHAT IS HAPPENING IS VERY SIMPLE. WE HAD A VERY GOOD MARKET. IT PEAKED IN 2017. PROPERTY MARKET IS CYCLICAL. YOU WILL SEE A GOOD FIVE YEARS, YOU WILL SEE A SLOWDOWN. WE ARE HAVING A NICE, SLOW, SOFT LANDING WHICH WAS HEALTHY AND GOOD. WHAT HAPPENED IN 2018, WE STARTED HAVING A SLOWDOWN. THEN SOME OF THE BIG BOYS IN TOWN STARTED DUMPING THE SUPPLY. AND CREATING ONE OF THE MOST RIDICULOUS THINGS FOR THE CITY. THE PAYMENT PLAN IS NOT GOOD. IT IS NOT GOOD FOR THE CONSUMER. IT IS PURELY ENCOURAGING SPECULATION AND HAS A DISASTROUS RESULT. YOUSEF: WHAT HAS THE COMMITTEE DONE SO FAR? WHAT CAN THEY CHANGE, FROM YOUR PERSPECTIVE? > > I DON'T KNOW WHAT THE COMMITTEE HAS DONE. I AM NOT PART OF THE COMMITTEE. THEY HAVE A MANDATE. I'M SURE THEY ARE WORKING ON IT. I'M SURE THEY HAVE A PLAN FOR IT. TO BE FAIR, IT HAS ONLY BEEN A FEW WEEKS. IT WILL TAKE SOME TIME TO SEE WHAT CAN BE DONE FOR THAT. IF THEY ASK ME, THEY DIDN'T ASK ME, MY ANSWER IS SIMPLE. STOP THE SUPPLY. NOT FOREVER. FOR A YEAR COME 18 MONTHS. ALMOST ALL THE DEVELOPERS IN THE LAST 12 MONTHS HAVE REDUCED SUPPLY BY 80%. WE HAVE REDUCED IT , DUBAI PROPERTY REDUCED IT, A LOT OF THE PRIVATE SECTOR HAS STOPPED IT. EVERY SINGLE DEVELOPER OTHER THAN AMR HAS STOPPED SUPPLY OR REDUCED IT 80%. ONE COMPANY KEEPS DUMPING AND DUMPING AND DUMPING. YOUSEF: IF THAT CONTINUES, THE CRISIS -- THIS HAS NOW REACHED A CRITICAL LEVEL. THIS IS NOW AN EMERGENCY. > > YES. 100% AGREE WITH YOU. NOW WE ARE ENTERING A CROSSROADS. EITHER WE FIX THIS PROBLEM AND CAN GROW FROM HERE, NOT TOMORROW BUT IN 24 MONTHS, IF WE DON'T, WE WILL SEE DISASTER. THIS WILL HAVE IMPACT ON THE BANKING SYSTEM. YOUSEF: ALLOW ME TO FOLLOW UP ON THAT. ARE YOU PLANNING TO SELL ANY ASSETS AT ALL? > > WE HAVE NO ISSUE FROM A FINANCIAL POINT OF VIEW. LAST YEAR, WE MADE TWO LAUNCHES. WE USED TO DO 20. THIS YEAR, WE MADE ONE LAUNCH. NEXT YEAR, WE WILL DO ONE. WE CURBED THE NEW PRODUCTS. WE HAVE NOT BOUGHT ANY LAND. WE REDUCED OUR LAND BUYING. WE HAVE ENOUGH LAND BANK. I THINK WE WILL LOOK AT THE SUBJECT AS MANAGEMENT AND A BOARD. WE DECIDED, WE WILL NOT BY EVERY PIECE OF LAND. WE WILL NOT DO MAJOR LAUNCHES. WE ARE RUNNING OUR BUSINESS VERY WELL. YOUSEF: EVIDENCE TO THE PAIN IS THE STOCK PRICE. IT IS DOWN AT THE LOWEST LEVEL SINCE 2014. HOW ARE YOU GOING TO TURN THAT AROUND, GIVEN THE CHALLENGES IN THE MARKET? > > MY JOB IS TO PERFORM. I CANNOT CONTROL THE STOCK MARKET. THE STOCK MARKET IS THE SUBJECT OF SENTIMENT AND GEOPOLITICAL ISSUES. WHAT THE WHOLE MARKET IS DOING. WE WILL BE DELIVERING 4000 UNITS THIS YEAR. WE WILL BE DELIVERING NEXT YEAR 6000 UNITS. I AM ON THE DELIVERY FOCUSING. WE ARE NOT GOING TO DO MANY LAUNCHES. WE WILL FOCUS ON SELLING WHAT PRODUCTS WE STILL HAVE. OUR FINANCIAL POSITION TODAY IS VERY STRONG, APART FROM 6 MILLION AN EXTRA -- IN EXTRA. OUR BOND IS DUE , ONE WAS DUE LAST APRIL. WE PAID IT FULLY AND ON TIME. MY NEXT BOND IS DUE IN 2022. IF THEY GIVE ME A 6% DISCOUNT ON THAT, I CAN PAY THE NEXT MAY. WE HAVE THE MONEY TO PAY THAT ONE. TWO YEARS AHEAD OF TIME. WE ARE PAYING OUR CONTRACTS ON TIME. THE ONLY THING WE CANNOT GIVE DIVIDENDS BECAUSE OUR PROFITABILITY IS DOWN. WE ARE NOT GOING TO GIVE DIVIDENDS IN THIS MARKET BECAUSE THE SATURATION OF THE MARKET. I WANT TO KEEP THE CASH IN THE COMPANY. THE MOST IMPORTANT THING FOR ME, TO PAY THOSE TWO BONDS. YOUSEF: UP NEXT, -- MANUS: UP NEXT, NOR ON THE -- MORE ON THE BREAKING NEWS FOR THE HOUR. SABIC. THIS IS THE LOWEST QUARTERLY PROFIT IN 10 YEARS. IT IS BASED ON A PROVISION THAT THEY ARE TAKING IN THEIR NUMBERS, THEY ARE TAKING A PROVISION OF OVER ONE BILLION, 1.5 BILLION SAUDI RIYALS. CLARION INVESTMENT HAS A 25% HOLDING. A GREAT DEAL OF DISCOMFORT IN THAT RELATIONSHIP. THIS IS BLOOMBERG. MANUS: WE ARE 30 MINUTES AWAY FROM THE START OF YOUR TRADING RIGHT HERE IN THE EMIRATES. IT IS SUNDAY MORNING. DAZZLING WITH YOUR FIRST WORD HEADLINES. DESIREE: THE LEADER OF THE ISLAMIC STATE MILITANT GROUP HAS BEEN TARGETED BY THE U.S. MILITARY IN SYRIA. NEWSWEEK IS REPORTING THAT HE HAS BEEN KILLED. THAT NEWS COMES AS PRESIDENT TRUMP SAYS HE'S GOING TO MAKE A MAJOR STATEMENT AT 9:00 WASHINGTON TIME TODAY. THE PRESIDENT TWEETED THAT SOMETHING VERY BIG HAS JUST HAPPENED, WITHOUT ELABORATING. PG & E HAS BEGUN SHUTTING OFF POWER TO AN ESTIMATED 2.8 MILLION CALIFORNIANS IN THE STATES LARGEST AND POTENTIALLY LONGEST LITERATE BLACKOUT EVER. THE BANKRUPT UTILITY GIANT IS TURNING OFF THE LIGHTS TO ABOUT 940,000 HOMES AND BUSINESSES ACROSS NORTHERN CALIFORNIA. THAT AS IT TRIES TO KEEP OUR LINES FROM IGNITING WILDFIRES DURING THE STRONGEST WINDSTORM IN YEARS. CHINA SAYS PARTS OF THE FIRST PHASE OF A DEAL WITH THE U.S. ARE BASICALLY COMPLETED. THE TWO SIDES REACHED CONSENSUS IN AREAS INCLUDING STANDARDS USED BY AGRICULTURAL REGULATORS, PETER NAVARRO SAYS TARIFFS ON CHINA MIGHT BE IN PLAY. DEMOCRATIC GIDDINESS PARTY LEADER HAS THREATENED TO FRUSTRATE BORIS JOHNSON'S EFFORTS TO PUSH HIS BREXIT DEAL THROUGH. SHE WARNED THE U.K. LEADER THAT HER PARTY WILL CONTINUE TO OPPOSE THE ACCORD IN PARLIAMENT. JOHNSON SAYS HE WILL SEEK AN ELECTION ON DECEMBER 12 BUT TO HOLD IT, HE NEEDS THE SUPPORT OF TWO THIRDS OF MEMBERS OF PARLIAMENT AND THE OPPOSITION LABOR PARTY HAS SAID IT WILL BLOCK THE VOTE. TURKEY'S FOREIGN MINISTER SAYS GERMANY'S OFFER TO ESTABLISH AN INTERNATIONALLY SUPERVISED SAISON IN NORTHEASTERN SYRIA ISN'T REALISTIC. THE COMMENTS CAST DOUBT OVER EUROPEAN EFFORTS TO BROKER AN INTERNATIONALLY ACCEPTABLE COMPROMISE IN THE CONFLICT. GLOBAL NEWS 24 HOURS A DAY ON AIR AND AT TICTOC ON TWITTER, POWERED BY MORE THAN 2700 JOURNALISTS AND ANALYSTS IN MORE THAN 120 COUNTRIES. THIS IS BLOOMBERG. ♪ MANUS: LET'S BRING INTO THE CONVERSATION ARE MIDDLE EAST MARKETS REPORTER. WE JUST HAD THE SABIC RESULTS. 1.5 BILLION WRITE-DOWN ON CLARION. WE ARE WAITING FOR FIRST ABU DHABI BANK. THIS SABIC NEWS IS GOING TO BE QUITE SUBSTANTIAL. > > IT DEFINITELY SET THE TONE FOR TRADING IN RIYADH TODAY. IT WAS A BIG MESS, LOWER THAN ANY ANALYSTS ESTIMATED. THIS 1.5 BILLION SAUDI RIYALS WAS NOT EXPECTED. THIS SHOULD BRING THIS DEAL BACK INTO THE SPOTLIGHT FOR ANY INVESTOR OR ANALYST LOOKING AT THE COMPANY RIGHT NOW. IT IS A ONE-TIME IMPAIRMENT. AT THE SAME TIME, IT DELIVERED THE WORST RESULT FOR THE COMPANY IN 10 YEARS. IT IS TIME -- UNPRECEDENTED. NEGOTIATIONS WITHIN CLARION BETWEEN THE SAUDI'S AND THE CURRENT MANAGEMENT IS NOT GOING VERY WELL. I THINK IT'S MORE THAN TIME THAT INVESTORS ARE GOING TO BRING IT BACK TO THE TOP OF THEIR CONCERN LIST. MANUS: ON THAT THOUGHT, FOR ANY VIEWERS WERE TURNING AND, THERE ARE A COUPLE OF OTHER LINES TO BEAR IN MIND. WHEN YOU STRIP OUT THAT 1.5 BILLION, THIRD-QUARTER SALES DOWN 23%. THE ESTIMATE -- OPERATING PROFIT DOWN 53%. LOWER AVERAGE SELLING PRICE. THE VERY PERSONIFICATION . LET'S MOVE THE AGENDA ALONG AND TALK ABOUT OHANA. WE HAVE SOME PRESSURE EMANATING ON INDUSTRIES IN QATAR. > > WE HAD ANOTHER SET OF RESULTS. QATAR, DECLINING PROFITS OF 47%. THIS IS A BIG NAME IN THE LOCAL MARKET. THE SECOND-BIGGEST MEMBER OF THE MAY INDEX IN DOHA. THEY ALSO MENTION UNCONTROLLABLE EXTERNAL FACTORS TO ACTUALLY TRY TO EXPLAIN THIS RESULT. BASICALLY BLAMING DECREASING ECONOMIC ACTIVITY. THERE SHOULD BE A SPREAD WITHIN THE QATARI MARKET AS WELL. IT'S A MARKET VERY CONCENTRATED WITH BANKS. THIS IS ONE OF THE NAMES THAT IS ACTUALLY OUTSIDE OF THE FINANCIAL SECTOR. IT SHOULDN'T BE A GOOD DAY OF TRADING THERE EITHER. MANUS: I MENTIONED BANKS. WE HAVE ABCD WHICH IS ON YOUR RADAR. WHY? > > WE HAVE A PIPELINE OF RESULTS FOR THIS WEEK. YOU MENTIONED, FOR SOME DUMB BE BANK. THEY PUT THEIR RESULTS OUT LAST THURSDAY. WE SHOULD SEE SOME REACTION IN THE MARKET TODAY. WE HAVE OUR ANALYST HERE IN DUBAI, ESTIMATING THAT THEY WILL BE ABLE TO DELIVER A 8% GROWTH FOR 2019 AFTER THE SET OF NUMBERS WE SAW FOR THE LAST QUARTER. THAT IS ACTUALLY POSITIVE FOR THE NAME. WE HAVE EMIRATES EXPECTED TO DELIVER THEIR NUMBERS HERE IN DUBAI THIS WEEK. MANUS: THANK YOU VERY MUCH. THE VERY LATEST ON THE QUARTERLY RESULTS IN THE REGION. MY GUEST HOST, GOOD TO SEE YOU. IN YOUR NOTES YOU SAY, SAUDI IS NO LONGER NEGATIVE. WHEN YOU LOOK AT NEWS FLOW AROUND SABIC, VERY IDIOSYNCRATIC. IT'S A VERY GLOBAL STORY. THIS IS THE PRESSURE THAT IS EXERTED IN TERMS OF THE EARNINGS STORIES. > > ABSOLUTELY. YOU ARE ABSOLUTELY RIGHT. I'M NOT SAYING THAT THINGS ARE LOOKING UP AND COMING OR ROSIER IN THE SAUDI MARKET AT ALL. YOU DO HAVE TO KEEP IN MIND, IT IS DOWN 20% FROM WHEN WE WENT AGGRESSIVELY NEGATIVE. THERE MAY WELL BE FURTHER DOWNSIDE RISK. AS FAR AS TAKING AN OUTRIGHT NEGATIVE VIEW, IT'S REALLY NOT AS INTENSE AS IT WAS BEFORE. MANUS: YOU HAVE A COUPLE OF PIECES OF EVIDENCE THAT ARE WORTH LOOKING AT. I NEVER THOUGHT I COULD GET AS EXCITED ABOUT CEMENT BUT YOU MADE IT COME ALIVE. THE YOUR HEART OUT. THIS IS ONE OF THE IDIOSYNCRATIC PIECES YOU PUT INTO YOUR RESEARCH WITH STANZA TO THIS THESIS ABOUT SAUDI. HOW DO YOU LOOK AT DATA LIKE THIS? LET'S HAVE A LOOK AT THE ATM'S AS WELL. WHY ARE THESE IMPORTANT INDICATORS? > > IT'S IMPORTANT TO KEEP IN MIND WHAT THE BIGGER PICTURE IS. AND HOW THE RELATIVE DEVELOPMENT OF A LOT OF THE INDICATORS THAT YOU ARE GETTING HAS BEEN PROGRESSING. THERE WAS A LONG STRETCH WHERE YOU THOUGHT FOR SEVERAL YEARS THESE INDICATORS CONSISTENTLY FELT AND FELL. THEY ARE NOT GOING TO FALL FOREVER. AT SOME POINT, IT WILL HIT BOTTOM. MANUS: HAS THE FISCAL PLAN BEGUN? TO BURN > > FOR SURE. -- BEGUN TO BURN? > > FOR SURE. WHEN I WAS TRYING TO LOOK FOR IT, THAT INFLECTION POINT MIGHT START TO SHOW A BIT OF A BOTTOMING OUT. YOU HAVE CERTAIN AREAS SHOWING IMPROVEMENTS. MANUS: THE BAD NEWS AND GOOD NEWS. ARAMCO IS DELAYING. THE IPO HAS BEEN HALTED. THE MARKET TAKES THIS AS GOOD NEWS. WHY? IS IT BECAUSE OF THE FLOW. IS IT SUDDENLY BEING REDEPLOYED? > > HISTORICALLY, IT ALWAYS LEADS TO A TEMPORARY LIQUIDITY WITHDRAWAL. THE REMOVAL OF THAT IS OBVIOUSLY GOING TO BE A NET POSITIVE. OR AT LEAST HISTORICALLY, THAT IS THE CASE. RIGHT NOW, THERE IS A GREAT DEAL OF UNCERTAINTY OVER HOW MUCH OF LIQUIDITY WE MIGHT SEE. IN THE SHORT-TERM, IT LOOKS LIKE IT HAS BEEN AVERTED TEMPORARILY. MANUS: ONE OF THE MARKETS FROM A VOLATILITY POINT OF VIEW IS LEBANON. A TENSE STATE OF DISRUPTION. I FOCUSED ON THE BOND MARKET. THEY EXPECT A DEBT RESTRUCTURING. THIS IS WHAT WE HAVE HERE. 2021% 2029. YOU ARE SEEING THAT SPREAD BETWEEN THE TWO. WE ARE LOOKING AT BECOMING MORE AND FOR DID. HOW WOULD YOU DESCRIBE THE MARKET PERCEPTION OF LEBANON IN THE REVERBERATIONS THEREOF? > > THERE IS A DISTINCT INCREASE. LEBANON HAS BEEN THROUGH A LOT OF ECONOMIC PROBLEMS. THERE'S NEVER BEEN A CONCERN THAT THERE WOULD BE ANY KIND OF RUN ON THE BANKS. OVER THE LAST SIX MONTHS, IT HAS BECOME A DEFINITE CONCERN. IT HAS NEVER REALLY BEEN THE CASE BEFORE. I'M NOT VERY FOND OF THAT PHRASE , THIS TIME IT'S DIFFERENT. IN TERMS OF THE SACRAMENT OR RISK PERCEPTION, IT IS DIFFERENT THIS TIME AROUND. MANUS: -MY GUESS SAID, EXPECT A RUN ON THE BANKS. ARE THOSE TWO SCENARIOS THAT YOU CONCUR WITH? > > NO. WE DON'T HAVE THAT IN OUR EXPECTATIONS. IT IS A PLAUSIBLE SCENARIO, CONSIDERING THE DURATION A WISH -- IN WHICH THE ECONOMY HAS BEEN DEALING WITH. CONSIDERING THE SCALE, LEBANON HAS A SIGNIFICANT AMOUNT OF CHANGE IMPLEMENTED QUICKLY THROUGH A DEFAULT. THAT WOULD BE PAINFUL. THE ISSUES THAT LEBANON NEEDS TO ADDRESS WILL TAKE SEVERAL YEARS TO BEAR FRUIT. IT'S PLAUSIBLE, WE THINK THAT A LOT OF THE ISSUES THAT LEBANON IS CONTENDING WITH RIGHT NOW, WHILE THEY WILL TAKE SOME TIME, WE DON'T SEE A RUN ON THE BANKS OR A CREDIT EVENT. THOSE CAN BE AVERTED THROUGH CASH INJECTIONS FROM OUTSIDE DONORS IN NEIGHBORING COUNTRIES. WHERE THE AMOUNTS INVOLVED AREN'T STAGGERING AMOUNTS. MANUS: CAN WE BROADEN THE CONVERSATION? YOU HAVE RIOTS IN JULY. WE'VE GOT OVERWHELMING AND PEOPLE PROTESTING ON THE STREETS OF LONDON. WE HAVE LEBANON IN A STATE OF CRISIS. HONG KONG, WEEK 20. WHEN YOU LOOK AT THE LEVEL OF ANGST IN THE WORLD -- OUR BLOOMBERG ECONOMIC IS PLOTTING THE RIOTS. YOU HAVE A CALL ON GOLD. I WONDERED, TO WHAT EXTENT IS THAT PROTECTIONIST TRADE FROM GOLD DRIVEN BY CONCERN ABOUT GLOBAL LINKS? IS IT -- THANKS -- ANGST? > > WHAT YOU ARE SEEING IN TERMS OF THE BACKDROP, WE HAVE A SUPER TREND, A FIVE-YEAR THE MEDIC BE WE HAVE TAKEN. THE RISE OF A POPULIST RIGHT-WING POLITICS DRIVEN BY SUSTAINED WEALTH INEQUALITY AMONGST OTHER THINGS. FOR SURE, THAT PLAYS A ROLE. I WOULDN'T SAY THAT IS THE KEY REASON. IT DEFINITELY PLAYS A ROLE. NEAR-TERM, OUR VIEW ON GOLD IS NEUTRAL. WE THINK IT WILL FALL FURTHER. IF YOU ARE WILLING TO TAKE THAT THREE-YEAR VIEW, ESPECIALLY FROM A TECHNICAL STANDPOINT, WE ARE VERY BULLISH ON GOLD REACHING AS MUCH AS 1700. IF YOU TAKE THAT THREE-YEAR HORIZON, YOU ARE EFFECTIVELY TAKING INTO ACCOUNT PROBABILITY OF A U.S. REFER -- REGRESSION KICKING IN. MANUS: THANK YOU VERY MUCH FOR JOINING US. TO INTEL NOW. THEY REPORTED EARNINGS AND STOCK ROSE 8% ON FRIDAY. CONCERNS LOOM WITH THE U.S. CHINA TRADE WAR. BLOOMBERG SPOKE TO THE CEO TO SEE WHERE THE CHIPMAKER STANDS. > > WE ARE OUT -- WE ARE PERFORMED BY $1.2 BILLION IN THE QUARTER. WE EXPECT ABOUT 200 MILLION OF THAT WAS PULLED FROM THE FOURTH QUARTER IN LIGHT OF THE ANXIETY ABOUT AVAILABILITY OF PRODUCTS. NOT A WHOLE LOT OF IT BUT SOME OF IT. DESPITE THAT, WE DID TAKE UP OUR FOURTH-QUARTER OUTLOOK AS WELL. > > IN JUNE, YOU SAID YOU WERE REVIEWING YOUR SUPPLY CHAIN. IT WAS IN THE CONTEXT OF THE TRADE DISPUTES IN THE U.S. ENTITIES LIST. I'M WONDERING IF YOU CAN SHARE ANY INSIGHTS FROM THAT REVIEW. ARE YOU MAKING ANY CHANGES? > > FOR OUR CUSTOMER BASE, WE HAVE CHINA AS A LARGE MARKET FOR US. IN TERMS OF CUSTOMERS FOR CHINA CONSUMPTION. ALSO FOR GLOBAL OEMS THAT HAVE MORE OF THEIR ASSEMBLY AND TEST OPERATIONS IN CHINA. WHAT WE ARE SAYING IS, IN LIGHT OF THE DEBATE AROUND TARIFFS, WE ARE TRYING TO WORK WITH OUR CUSTOMERS TO ENSURE THAT THEY CAN GET THEIR CUT -- PRODUCT MOST EFFECTIVELY BY LEVERAGING OUR GLOBAL SUPPLY CHAIN TO DIMINISH THE IMPACT THE TARIFFS COULD HAVE ON THEIR SUPPLY FOR GLOBAL MARKETS. WE HAVE A WONDERFUL GLOBAL SUPPLY CHAIN. WE WORK CLOSELY WITH OUR CUSTOMERS TO DEAL WITH THE DYNAMICS THAT WE ARE WRESTLING WITH. I WOULD SAY, WE ARE ENCOURAGED THAT CHINA AND U.S. ARE TALKING. WE ARE A STRONG BELIEVER IN GLOBAL TRADE. WE DON'T FIND TARIFFS TO BE A CONSTRUCTIVE MECHANISM FOR GLOBAL TRADE. WE ARE VERY ENCOURAGED THAT THE TWO SIDES ARE BACK AT THE TABLE. IN THE MEANTIME, WE WILL LEVERAGE OUR GLOBAL SUPPLY CHAIN COMPETENCIES TO MITIGATE THE IMPACT ON OUR CUSTOMERS AROUND THE WORLD. > > WHAT ARE YOUR SHIPMENTS TO HUAWEI LOOKING LIKE? THEY HAVE BEEN BLACKLISTED BY THE U.S.. > > WE DON'T TALK ABOUT SPECIFIC CUSTOMER DEMAND. THEY HAVE BEEN AN IMPORTANT PARTNER AND CUSTOMER OF OURS OVER THE YEARS. WE CONTINUE TO SEE THEM TO BE AN IMPORTANT CUSTOMER GOING FORWARD. AT THE SAME TIME, WE HAVE TO ADJUST AND ADAPT TO THE LAWS IN THE MARKETS IN WHICH WE SERVE. WE WILL CONTINUE TO SERVE THEM TO THE EXTENT WE ARE ALLOWED TO UNDER THE CURRENT ENTITY LIST. > > ARE YOU GETTING THOSE TEMPORARY WAIVERS AND LICENSES DOES APPLY TO THEM AT THE MOMENT? -- LICENSES TO SUPPLY TO THEM AT THE MOMENT? > > WE HAVE PUT APPLICATIONS IN TO GET LICENSES TO SHIP. WE HAVE NOT HEARD BACK YET. WE HOPE TO HEAR FROM THEM SOMETIME SOON. MANUS: UP NEXT, TURKEY'S CENTRAL BANK CUTS INTEREST RATES YET AGAIN. CAN THE LIRA WITHSTAND MORE EASING? WILL CONFLICT IN SYRIA PLAY ANY ROLE? WE WILL DISCUSS. THAT IS NEXT. THIS IS BLOOMBERG. ♪ MANUS: LET'S GET A BUSINESS FLASH. DESIREE: LVMH IS EXPLORING A TAKEOVER OF TIFFANY TO EXPAND IN THE U.S. JEWELRY MARKET. THAT'S ACCORDING TO PEOPLE FAMILIAR WITH THE MAC IT -- MATTER. TIFFANY SHARES HAVE GAINED THIS YEAR. LVMH HAS RISEN 40%, YOU GET A MARKET CAPITALIZATION OF 215 BILLION. BLOOMBERG HAS LEARNED THAT SOFTBANK'S VISION FUND PLANS TO TAKE A WRITE-DOWN OF $5 BILLION. THAT IS TO REFLECT A PLUNGE IN THE VALUE OF ITS BIGGEST HOLDINGS INCLUDING HUBER AND WE WORK. SABIC AGREED TO BAILOUT WE WORK IN EXCHANGE FOR 80% OF THE COMPANY. CITIGROUP IS SETTING THE STAGE TO NAME ITS FIRST FEMALE CEO. THE BANK HAS PROMOTED HER TO PRESIDENT, THE SECOND-HIGHEST POSITION. SHE HAS BEEN RUNNING THE OPERATIONS ACROSS LATIN AMERICA. THE CEO IS COMMITTED TO LEADING THE BANK IN THE COMING YEARS. THE GIANT ADVERTISING GROUP WPP HAS POSTED ITS FIRST QUARTER OF SALES GROWTH IN MORE THAN A YEAR. THE FIRM ONE MORE BUSINESS IN THE U.K. IN THE WESTERN EUROPE. IT SAYS IT HAS SEEN SIGNIFICANT IMPROVEMENT IN NORTH AMERICA EVEN THOUGH BUSINESS THERE IS STILL DOWN. THAT IS YOUR BLOOMBERG BUSINESS FLASH. MANUS: THANK YOU. TURKEY'S CENTRAL BANK HAS DELIVERED ANOTHER SURPRISINGLY LARGE INTEREST RATE CUT. IT REDUCES ITS KEY RATE TO 14%. THAT WAS MORE THAN EVERY FORECAST POLLED BY BLOOMBERG. GOOD TO SEE YOU THIS MORNING. IT WAS QUITE A SURPRISE, WASN'T IT? > > YES, IT WAS. TO PUT THIS IN CONTEXT, THOSE ANALYSTS POLLED BY BLOOMBERG EXPECTED TO SEE THAT INTEREST RATE CUT BY 100 BASIS POINTS TO 15.5%. INSTEAD, WE GOT A 250 BASIS POINT CUT. IT WAS MADE POSSIBLE BY EASING INFLATION IN TURKEY. WE SAW THAT NUMBER FALL TO 9.3% IN SEPTEMBER. THAT IS LOWER THAN ANYONE EXPECTED AT THE TIME. PAVING THE WAY FOR THE CUT OF THIS MAGNITUDE. THE QUESTION BECOMES, WILL INFLATION CONTINUE TO LET THE CENTRAL BANK CONTINUE TO EASE, REGARDLESS OF WHAT THE TURKISH GOVERNMENT SAYS OR WANT? CAN THE INFLATION ALLOW FOR THIS GOING FORWARD? IMMEDIATELY, NOT SO MUCH. THIS IS PROBABLY IT FOR THE YEAR. MANUS: WHAT ARE THE LIMITING FACTORS? YOU SAY, THAT'S PROBABLY IT FOR THE YEAR. WHAT ARE THE LIMITS? IS IT ABOUT THE U.S. TARIFF -- U.S. TURKEY THREAT OF DEMOLITION COMING FROM THE U.S. ONTO TURKEY? > > FRANKLY, THAT IS PROBABLY THE LEAST OF THE FACTORS IMMEDIATELY WEIGHING ON THAT DECISION-MAKING. WE DID SEE SOME ASSETS LEAVE TURKEY. $960 MILLION WORTH OF ASSETS FLOWING OUT ON THE WEEK THAT ENDED OCTOBER 18. WE HAVE SEEN A LOT OF THOSE LOSSES IN THE STOCK MARKET AND BOND MARKET. YOU ARE BACK MUCH CLOSER TO WHERE WE WERE AT THE START OF OCTOBER. THERE ARE OTHER THINGS. POLITICS BOTH INSIDE THE COUNTRY AS WELL, SOMETHING WE ARE WATCHING. IF THE U.S. WERE TO CHANGE ITS MIND, AND REALLY GET BEHIND THE SANCTION BANDWAGON AGAIN, THERE IS MOMENTUM FOR THAT. WE SAW IT STALL IN THE SENATE IN THE UNITED STATES. THERE ARE OTHER THINGS. GROWTH HAS BEEN SLOW. WHILE WE CAME OUT OF A RECESSION IN THE LAST HALF OF 2018, YOU HAVEN'T SEEN STRONG GROWTH SO FAR. THERE IS STUFF LIKE FOREIGN CURRENCY RESERVES DECLINING PRETTY SUBSTANTIALLY. THAT WEEK OF OCTOBER 18. THAT WAS A QUESTION WE HAD ABOUT ACCOUNTING WITH THE CENTRAL BANKS GENERALLY. MANUS: THANK YOU VERY MUCH. I REPORTER TRACKING THE LIRA VOLATILITY. LOW INTEREST RATES AND BRITAIN'S BREXIT HIT, BRITAIN AND THE ECONOMY WILL MAKE IT TOUGHER TO MAKE TARGETS NEXT YEAR. THAT'S EVEN AS THE BANKS TRADERS OUTPERFORMED MOST OF WALL STREET IN THE THIRD QUARTER. THE CEO SPOKE TO BLOOMBERG. > > OUR RETURN ON EQUITY IN THE THIRD-QUARTER WAS IN DOUBLE DIGITS AT 10.2%. IN SIX OF THE LAST SEVEN QUARTERS NOW, WE HAVE GENERATED A RETURN ON CAPITAL OF OVER 9%. WE STILL FEEL PRETTY GOOD ABOUT THE 9% TARGET FOR 2000 19. -- 2019. AS YOU LOOK INTO 2020, YOU HAVE THE MACRO ENVIRONMENT IN THE U.K. WHERE ECONOMIC GROWTH IS SOMEWHAT MUTED. IF WE CONTINUE WITH THE UNCERTAINTY OF BREXIT, ONE HAS TO THINK THAT YOU WILL CONTINUE TO HAVE SOFT GROWTH IN THE U.K.. WE ALSO HAVE LOWER INTEREST RATES. IN THE LOWER INTEREST RATE ENVIRONMENT, IT PUTS PRESSURE ON THE BANK'S NET INTEREST MARGIN IN THE PROFITABILITY OF ITS DEPOSIT BASE. GIVEN THE CURRENT INTEREST RATE VIEW ACROSS EUROPE IN THE U.K., NOW THE U.S. AS WELL, IF WE HAVE ECONOMIC SOFTNESS, YOU NEED TO PUT SOME CAUTION AGAINST THE 10% TARGET FOR 2020. WE WILL MAINTAIN THAT TARGET FOR NOW. > > WHAT DO YOU EXPECT IN TERMS OF BREXIT RIGHT NOW? DO YOU WELCOME AN ELECTION? IT COULD PUT AN END TO ALL OF THIS UNCERTAINTY. > > WHAT WE'VE SAID OVER THE LAST COUPLE OF DAYS AND WEEKS, WHAT WE ARE HOPING FOR IS AN END TO THE UNCERTAINTY. I WILL NOT MAKE A POSITION FROM THE BANK, WHETHER IT'S THIS PRIVATE DEAL OR THAT TYPE OF DEAL. UNCERTAINTY BEHIND US AND ALLOWING THE FINANCIAL SYSTEM AND BANKING SYSTEM TO BEGIN TO EXECUTE WITH AN IDEA OF WHAT THE FUTURE WILL LOOK LIKE, I THINK THAT'S IMPORTANT. I THINK THAT'S IMPORTANT FOR THE COUNTRY. THE ONE VOTE IN PARLIAMENT THAT VOTED IN FAVOR OF A DEAL, THE EUROPEAN UNION HAD ALSO BEEN SUPPORTIVE OF IT. THAT WAS A GOOD STEP FORWARD. WE HAVE UNCERTAINTY NOW THAT MAY LEAD TO A GENERAL ELECTION. WE WILL HAVE TO SEE HOW THAT PLAYS OUT. MANUS: WE WILL TALK ABOUT SABIC AND THAT IS NEXT HERE ON

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Bloomberg Daybreak: Middle East Full Show (10/27/2019)

Bloomberg Daybreak: Middle East live from Dubai, connects Asian markets to the European opens. The show focuses on global macro issues with a Middle Eastern context. (Source: Bloomberg)

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