--anna: good morning from the new european headquarters. i'm anna edwards. manus: i manus cranny. anna: could the deal come this hour? manus: the u.s. congress passes a spending bill to avoid shutdown. anna: opening the door to another grand coalition. we are live in berlin. ♪ anna: good morning.

this is bloomberg daybreak: europe and we have a more positive picture coming through on the asian equities session. we are focused on what is happening in brussels. let's get to some of those stories. they are moving markets. , this is good news. a broad base rally coming through in japan, and hong kong is where we are getting strength coming through after it was all the u.s. stock market do nicely. s&p gaining for the first gain in a week. onto a story in brussels. we have seen theresa may arrive and it seems brexit will be done in brussels. david davis is with her and she is going to be meeting with barnier. could we get a deal is our? we are looking forward to the press conference and another

speech at 6:58 london time. we have bitcoin down by .43%. by any other asset standard, that would seem like a big move. 16,000 up to 20000 and back down again, but still of 16 fold. manus: everybody is sharing their voice in terms of what is next. billionaires were born and americans are getting wealthier. that is the fact of the day. 32.26, household wealth in white, hitting a record. the blue line is. corporate's in the united states , the assets are at an all-time high, $2.4 trillion in liquid access -- liquid assets. september 2014.

you are seeing this momentum for the individual. will they spend? are the retail stocks out performers? household debt is at the lowest level in more than a decade. so you have syncopation of three things, corporate's are loaded with cash. will they repatriate more? debt levels are the lowest in a decade. that is a trifecta someone say for the great push higher in markets in 2018. we have the rbf see and ross mcewen, i will catch up with him and an exclusive interview. let's get the first word news with juliette saly. juliette: the u.s. congress has passed a two-week extension of federal funding that averts a shutdown.

untilers now have december 22 to settle some larger issues on spending and legislation. they will be rushing to finish work on tax legislation before leaving washington for the holidays. germany has moved a step closer to a grand coalition. leaders of secured an endorsement from a party based to talk to angela merkel. the motion didn't specify what form an alliance will take, with form -- ining in favor of a minority government. global demand remained firm while import growth in china outpaces sales abroad. more than double estimates. imports climbed 7.7%, leaving a trade surplus of $4.2 billion. china's authority met big banks to assist the bond markets year

and supply and demand situation. china development bank and agricultural development bank of china said they may reduce their issue as planned. this comes after a bond rout that has driven the 10 year yields to three-year highs and made edit deleveraging campaign at rising inflation. banks have emerged relatively unscathed from regulators post crisis capital rules with few lenders needing to raise new funds. they broke the deadlock on curve -- assets.s the compromise reached fierce a lot during -- fears lobbying. all the measures we have been working on for quite a while are designed in such a way that they affect outliers much more than banks that are among a group of

average banks. as far as i can judge, the design produces a that results. juliette: global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . it has been a wild week for asian equities, maybe not as wild as the bitcoin movement, we are finishing on a positive note. to 2.5%revised upwards and the yen is weaker. good movement in hong kong. the hensing contract for its first back-to-back loss since april. the asx finished firmer by .3%. in terms of stocks, it has been a momentum back in tech. global wayfarers entire pay doubled.

a holding company in hong kong is rising thanks to a buy upgrade. this is a company in australia based in queensland. -- 25% onts debut, its debut. anna: thank you, juliette in singapore. we are getting up-to-date with what's going on in the market. breaking news on the subject of brexit. the policy giving as lines this morning. there have been substantial changes to the text as agreed by the u.k. government and the eu 27. and the border issue. theresa may has a text she is taking to brussels. agreement means no red line down the irish sea. we will see if the final text includes anything on igo tory alignment and all of the u.k.

getting regulatory alignment. manus: it is interesting that line come at some matters we would like to have clarified. this is about alignment. regulatory alignment, what does that mean? let's bring in our guests, the chief european economist at standard chartered. sarah, welcome to the new house. we are inching closer. it looks as if they may well have got this over the line. if that is the case and we begin to move to a discussion by the two t's, trade and transition. how much of a genie in the confidence bottle could that unleashed in the u.k.? we are a better group of old souls at the moment. guest: it could certainly help confidence. we haven't seen a collapse in confidence. even though we have gotten closer and closer to the brexit

date without a tradition arrangement being agreed. that is the absolute key for businesses, investors, they need to know what's happened after march the 29th of 2019. the transition being discussed is one where essentially everything stays the same. the u.k. no longer has a vote in the eu. planners, itness is essential that there is some continuity after march 29. after we can get over this current hurdle, if we can get through phase one, if there is an agreement in place, and that is signed off at the eu summit, that should be positive for confidence to the extent that the transition looks more likely to be taken place. movinghis story is markets, of course, moving the pound as we speak. moving it over in the asian session as we get into the

european session. we will learn more this hour. i have a longer-term chart. this is one of those traits a very out of fashion in 2016. they were suggesting there was an upside here. sticking to your world, would that sound sensible to the fundamentals looking to support that? guest: there are clear links to the fundamentals. we have seen that bouncing around of some of the confidence indicators. growing at half the pace it was a few years ago. it is all linked in together. the pound, of course, if we were facing a cliff edge after march 2019, would essentially be falling back on the rules, tariffs spent, that would have serious implications for u.k. trade and investments. that would be pulling the pound

weaker. it comes back to the question about what happens next and this progress is very good. it should be supportive of the pound. manus: there is a long way to go. we were talking to the swedish trade mr. about a plus plus less deal. let's look at the upside deal for sterling. we get to talk about chen edition and trade. a lot of people are talking about a lift in sterling from 140 to 145. what would that do to the inflation story? with that help us pass through the eye of the needle and therefore perhaps reduce pressure on carney to raise rates more aggressively? guest: it would certainly help the inflation numbers. i think we already anticipate headline inflation is going to be coming down over the course of the next 12-24 months, partly

as a result of the stabilization or even a strengthening of the pound. what does it mean for policy? that is tied in to what is happening in economic activity, what happens to wages, more information about that next week. the bank of england is going to be taking an incredibly cautious approach. we are not expecting any rate hikes anytime soon. market is not expecting anything until late next year. from our own point of view, we wouldn't be surprised to see the bank of england on hold until after exit. manus: and it is trying to get into twitter. i love european sensibilities. tweetntly, this is selma ing out a picture of a white smoke. here we go. anna: this comes from the sistine chapel, when a new

pontiff has been changed. clearly this is a sign of confidence. suggestive -- and also critical that we are quoting the dup, speaking of their view on this man. they seem to have been consulted and it is across the text that theresa may is discussing. manus: there is the white smoke. and it was like a brexit negotiation, it can be tricky, it can be tough. the whole point about this, we might get excited. the gilt market will certainly move. but the bottom line is, when are the real brexiteers going to show their -- again? this is something boris johnson has talked against. he is going to bring back control. there is a long article wrangling road to go, is there?

guest: there is. i think for people who do support brexit, the aim is to get there. now there is a recognition that in order to get to brexit, you have to come to an agreement on the exit deal. that involves money, that involves the rights for eu citizens and clearly it involves an agreement on the irish order. -- irish border. but for the end is in sight, 15 months away from brexit day. like orest people johnson, the aim is to, let's get there. johnson, the aim is to, let's get there. the issues around trade will become more apparent. what are we going to really stand behind?

what are we going to have to sacrifice? anna: i heard them talking about the need to take control. seeill be interesting to what the wording is in the text that is agreed around as to where that gives any clues about where the trade conversation goes next. how much of a freehand does the u.k. have to do its own deal? thank you for your thoughts. she stays with us on the program. manus: later, we will talk to ross mcewen. he comes into our new hq with an exquisite conversation. what does he think of this breaking news this morning? anna: if you need to switch off bloomberg television, you can listen to bloomberg radio live on your mobile device or on dab digital radio. in the london area, they talk to the united states on the spending bill to avoid a government shutdown. that will be coming up on radio next. daybreakming up on

with anna and myself, will germany see another grand coalition? what could stand in the way of an agreement? we will discuss that next. plus, we are going to hear from -- anna: we will hear what he has to say about sweeping a new capital regulation. this is bloomberg. ♪

♪ singapore, shot of 2:19 in the afternoon at the close of trade this friday. stocks are regaining the upper side. a nice side of trade in china, helping the markets rise. the pacific index up .6%. anna: germany's social democratic leaders have secured support from the party based to begin talks with angela merkel.

the strongest signal yet they will consider a coalition government with the cdu. matt miller is here from berlin. one way and you go the other. how far away from an agreement are we? stb -- spdis the authorizing limitary talks. -- preliminary talks. we have three steps. per limitary talks, the legitimate talks, then they have to vote again on whatever platform is adopted. they will agree to a grand coalition, it could still be a minority government with support from the spd. talks could still fail. schulzwhere are we with because the debate is, he is making statements of getting ready for more europe by 2020. that sort of wrinkles a little

bit with merkel. she is not up this huge federalist move. matt: his strong statement even flabbergasted people in brussels. he was calling for a united states of europe by 2025. this has been in their party platform, but to say that and push for that ahead of coalition talks is a strong signal that even some politicians say, this is a wrong time to say this. nobody is ready for that. manus: he says we don't have to govern at any price, but can't reject governing at any price. that's what he told in his 75 minute speech. , your thoughts. in terms of economics, a lot of people concluded when things were not as slick for angela wasn't once again

overnight chancellor as had been the expectation. they continue to motor regardless so it did not have a material impact. guest: you just look at the data , obviously showing the economy is doing very well. it is at full capacity, very low, and strong activity early this week. we had great numbers, strong demand from externally, so global demand is helping to drive this, it is also a good story domestically. we are seeing consumers, investment, it is all falling together now. it is a good economic story and what is interesting is that calm overe reasonably the political developments, but we have not seen the euro bouncing around with each piece

of news we have had from germany in terms of legal development. manus: i think the euro is battling with this resurgence. i'm putting this together for you. this is soft data. there is a date between hard data and the gdp. these are the pmi's. they are all -- i'm debating. they are still trending higher, but it looks as if we are topping out. this growth resurgence in europe. more to come? guest: i think more to come. what's to stop it? , mostending is rising governments now are, if anything, running a slightly symmetry policy. confidence is high, people are spending. it is difficult excluding and bigrnal -- or some force of major political crisis that does upset confidence.

matt: it makes sense you talk about exit a lot being that there is news today. but in europe, you don't hear anything about brexit. nobody cares any more my end. honestly. if exit went all wrong, with that the a problem for european growth? guest: that's what our clients are asking us. not the impact on the u.k., the what is the impact on the rest of europe? on the we think it is ascension that there is a long transition period, and we get to free trade agreement. -- in 15 months time, that would have repercussions for the major markets in europe. the eu exporters, the u.k. is a significant destination. anna: we will be watching what happens with the euro closely. it shows the strength we have

seen. this is g10 currencies. the euro against the dollar is up very strong, 12% or so. we are not talking about one 30's or when 40's, angst that people would say would stretch that. the eu is happy at these levels? guest: i think they are happy. i think if we look at european central banks in particular, in the past, they been reasonably come double as anywhere between 1.00 and 1.40. at these levels, it is not a concern. particular issue for exporters, german exporters, exporters across eastern europe area. manus: we have had some german economists come through. it's interesting between the german view and the pan-european view. these are the exports. exports from europe around the

world. you talk about the u.k. being important. the german people we have spoken to say, you have a problem, you call brexit, not ours. ofst: for the u.k., 50% nearly half of our exports go to the eu. if you take the eu as a whole, it is something like 15%. it is potentially, there is not a reasonably good trade deal for the u.k., there are problems. matt: one of the surprising things about the growth story is that it is domestically driven. who would have thought the german consumer would show up? anna: be careful what you wish for. we spent a long time talking about the fragility of the economy in the u.k. aced on the consumer. manus: it will be the french because they are on a 17 year high. sarah, she stays with the team and matt, thank you for staying in here.

ofa: banks bring a sigh relief as the deadlock over the capital limits is broken. we will hear from the chairman area -- chairman. this is bloomberg. ♪ retail.

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♪ this is bloomberg daybreak: europe. london, 3:30 in tokyo. we see the dollar against the 113 .43. -- we have theresa may in brussels. that's where we are focusing, but asian equities are where we are focused. things are more positive in the asian equities session. let's get more with nejra cehic. nejra: it looks like asian equities firmly putting those eight days of losses, the longest losing streak in two years, behind them. it is a sea of green across the

region. the japan, the nikkei closing higher than 1.4%. hensing higher by 1%. australia showing gains, a second day of gains. we are seeing dollar strength. the bloomberg dollar index gained every day this week. you can see the dollar chart up here. it is heading for its best week this quarter. that is partly on the progress you have seen on the u.s. tax bill. also the reports that donald trump is going to announce some infrastructure plans next month and averting that government shutdown that was due to come down that has been delayed for now. dollar strength is what we are seeing. it is not getting against the pound because we are seeing sterling strength. i wanted to look at sterling yen because this has pushed past 1.53.

volatility has really spiked, showing trade is not prepared for the bullish signals coming out of rustles that we are getting this week, certainly with theresa may meeting over there. -- we areressed expecting a press conference. finally, we take a look at gold. i was talking about dollar strength. this was weighing on gold. right now it is heading for its biggest weekly decline in seven months, biggest since may. anna: thank you very much. a new edition of daybreak is available on your bloomberg. the cover story is that coin, where the wild ride continues. it reached $17,000 before dipping below $50,000, frenzy training -- trending. anybody'seen wild by definition.

yesterday, within a 19 and it stretch, $16,000 to $20,000 and crashing down again. is there anything you are looking seriously at? guest: everybody recognizes this is a case of a bubble. you can track it against any , itr previous bubble events is probably overshadowing every single one of them. the central is, banks need to worry about the systemic issues here? most policymakers are keeping a close eye of what is happening. there are broader repercussions at a certain point, what goes up is likely to come down sharply. to.comome people compare . regulationou think -- who is really going to regulate this is the big question? but can regulation come to bear on this kind of phonetic market

in a constructive way? guest: it is going to be a question more of central banks feeling comfortable. the institutions are not vulnerable to sharp rises or sharp declines. that is the key. manus: stay with us, we have more to get through. the congress passed a two-week extension of federal funding that averted a government shutdown. lawmakers now have until december twice second to settle a larger issues -- december 22 to settle larger issues. this is what janus capital management bill gross had to say that the fed should stop raising economy isor the going to slow down. >> real fed funds or nominal fed funds closer to 2%, at that

level it is close to a two-year, close to a ten-year. at that level, it is the 2% rate, not the 10 year at 2.35 that threatens the economy going forward. the fed should stop soon arose the economy will slow down. manus: that is from the veteran of the bond markets. we get the job reports and there is a variety of data we are going to be looking at. one of the things jerome powell will be focused on, this is about the disappearance of men. -- theferent disappearance of men from the u.s. labor force has gone from 97% down to 88.5%. this seems to be one of the big conundrums. a real reflection of the unemployment rate is perhaps masked. i think we have seen some

clear structural changes in the labor force. some of that has been positive. and women participating that has been a steady increase over the last 20, 30, 40, 50 years. but there are concerns about men missing from the labor force essentially, and it seems to be a particular issue for the u.s., which is perhaps not reflected in the same way in europe, for example. anna: when does labor scarcity start to create wage inflation in the united states? this is something talk about many times. many policymakers at the fed, including janet yellen, admitting there are things we don't understand. even chief labor market economists don't understand how the market is functioning. i was reading a preview of today's jobs report and it line, sometime next year, we will start to see that

the shortage of labor will push up wage inflation. that could have been written at any point. guest: that is absolutely the case. pointe gone past the where in previous cycles, we would have expected wages to accelerate. ,n this global environment there are issues of globalization, new technology, business features are constantly pointed out for why wage growth hasn't picked up even though on a plummet rates have come down very low. i think in the past, janet yellen pointed to underemployment, the new measure in the u.s. as being one of the factors behind slow wage growth. manus: we are going into a few breaking headlines. sorry to cut you off there. there has been a breakthrough by the european union. the eu and the u.k. reach of brexit deal, opening the way for trade talks. progress, the

magical words would have been waiting for to the european council article. this is a rare headline on your bloomberg. stage two, get ready. of firmnally some news news to talk about the pound, pushing higher on this. let's see if we can get a chart for that showing the pound moving higher on this news. we talked about this at the start of the program. it is difficult talks, but we have now our first record. this is really significant in terms of the ability of these two parties to reach agreement. it's demonstrated here. in a very early stages, things seemed antagonistic. then just difficult, now there seems to be some room and appetite to make progress. guest: yes, it does. we have seen a much more pragmatic and realistic approach from the u.k. government really

since this summer. the tone seemed to change and acknowledgment that there needed to be an agreement on the exit in terms of money, citizens rights, the irish border, before we moved to trade talks. this is great news. we are in a position to start the trade negotiations. we won't have achieved a trade deal by the time the u.k. leaves, but at least we are in the first stages. r is making a contribution here. we have made the first breakthrough and barnier is saying we can move forward. let's have a look at the pound. cable traits at 134.95. i'm going to be absolutely trashy. , goodness knows, and sell the fact. sell the red hot headlines. maybe disingenuous to the markets.

when we talk about the future relationships, and this is the critical part. we need to understand what level of climate there is between the north of ireland and the south thereland and understand trade deal, this feature relationship everyone talks about, what is it going to include? and is it going to include services? guest: if it does include services, what is the price that has to be paid for services included? this is a highly political point. manus: what do you think they might have to give up? that's part of stage one, really. what do you think it is that europeans might demand, clearing for derivative product? pharmaceutical industry moves headquarters. what else are they going to want? guest: it is a question of what the u.k. government is willing to concede in terms of how much

of an arrangement we want to have with the eu. we are taking the view that we want to be out of the single market, out of the customs union. if that remains the case, the free-trade deal is relatively straightforward to organize , of course. many countries in the eu have an interest in building and enhancing their service industries themselves. that one is going to be a tougher deal. anna: let's take in to what has been going on in brussels. prime minister may has assured me that it has backing of the u.k. government and on that basis, i believe we have no made -- we have now made the progress we need. it is a result of a long and intense discussion between the

commission negotiations and those of the u.k. had to listen to each position.adjust their this leads to compromise. this was a difficult negotiation for the european union, as well as for the united kingdom. wednesday,y, last the college of commissioners give me a mandate to include the negotiation of the joint report and it had to be concluded today, not next week. today, because next week we have the european council and the order to allow our partners to prepare the meeting of the european councils. we had to make the deal today. mandate,sis of the which was given to me by the european council.

the commission has just formally decided to recommend to the european council that sufficient progress has now been made on the terms of the divorce. [indiscernible] [speaking french] >> the decision on sufficient progress will be in the hands of the 27 heads of states of government. that they willt share our appraisal and allow us to move on to the next phase of negotiations. with theay, i also met european parliament cover presented as.

from the start of the process, conversations between the u.k. parliament has been close and our position closely aligned. these negotiations can only be successful if we take an approach. that's exactly what we did. we won't go into all the details. allow me to go into what they mean in practice. my friend michel barnier will be available to explain all the details of this agreement we reached today. a few remarks. negotiation,s citizens have always come first. it has been of great importance for the commission to make sure eu citizens in the u.k. will be protected after the u.k. leaves the european union.

citizens have made important life choices on the assumption that the united kingdom was a member of the european union. brexit created great uncertainty for those citizens and their families. today, we bring back the certainty. the commission negotiators have made sure the choices made by the eu citizens living in the u.k. will be protected. we have made sure their rights will remain the same after the u.k. has left the european union. this is a difficult case for eu citizens right to live, work, and study. their right to family identification, their protection, the right of children and health care pensions and other social security benefits. procedures will be simple.

this is an issue for which the commission will pay particular attention when reaching the agreement. the same goes for u.k. citizens living in that european twice seven. -- european 27. the united kingdom would honor its commitments, including beyond 2020. this was a detailed, line by that i am very grateful for that. ireland, the union has consistently supported the agreement. they have made it a priority to detect the process on the island. i have made contact over the last days, including last night,

and including last negotiations. yesterday we had with our irish friends. the u.k. has made significant commitments on the border. eu 27 stand firmly behind ireland and behind the peace process. clear, we still have a lot of work to do. the joint report is not to withdraw the agreement. the agreement needs to be drafted the negotiators on the basis we agreed to yesterday and today and then approved by the council of the u.k. parliament and the european union. 34 days ago, the british people voted to leave the european

249 days ago, they notified of their attention -- intention to leave the european union. they will do just that. i will always the said about this development, but now we must start looking at the future. a future in which the united kingdom will be and will remain to be a close friend and ally. the prime minister discussed the need for a condition -- a transition period and the need for a close partnership. it is crucial for us that we continue working closely together on issues such as trade, research, security, and others. atwill take things one step a time. starting with next week's

european council. we areay, i am hopeful now all moving towards the second phase of these challenging negotiations and we can do this jointly on the basis of trust. determination, and the perspective of the minute friendship. thank you, jean-claude. we have been working extremely hard this week and as you have seen, it has not been easy for either side. when we met on monday, we said the deal was in reach. what we have arrived that -- arrived at today is a significant improvement. getting to this point has required give and take on both sides and i believe that the joint report is in the best interest of the u.k.

i very much welcome the process of moving ahead to the next phase to talk about trade and security and to talk about the future relationship in all of our interests. i have consistently said we want to build a decent partnership with the eu as we have made the decision to leave at the end of march 2019. doing so will provide clarity and certainty for businesses in the u.k. and the eu and crucially for all of our citizens. the deal would have struck will guarantee the rights for more than 3 million eu citizens living in the u.k. and the citizens living in the eu. citizens in the u.k. will have their rights enshrined to u.k. law and they will be able to go on living their lives as before. i was clear that we were a country that honors our obligations. ,fter some tough conversations we agreed on a settlement fair to the british taxpayer. invest moreble to

at home. in northern ireland, we will guarantee there will be no hard border and we will uphold the belfast agreement. we will continue to preserve the constitutional and economic integrity of the united kingdom. tohave taken time this week better fight this part of the agreement following discussions with unionists in northern ireland and across the u.k. we spoke yesterday and we both committed there should be no barriers are the north, south, or east-west. the importance of these principles, i'm writing today to the people of northern ireland to set out on this approach. millions of jobs depend on the future trading and i am optimistic about the discussions ahead of it reaching this agreement now assures us we will be able to make investment

decisions based on a. that will remain -- i look forward to the publication of the guidelines and i look forward to the next european council meeting where i hope and expect we will get the endorsement of the 27 two what is a heart agreement in all our interests. thank you. >> we have time for some questions. let me start with europe. >> prime minister, this was a difficult negotiation like you just said, very challenging like the president said, but it is just the beginning, the first stage and the beginning of a long complex negotiation. did ever the question come to your mind that maybe after all, this whole brexit affair is a bad idea for any second? >> in 2016, the british people

were given, in a referendum, the opportunity to choose whether to stay in the european union or not. parliament was united across all parties agreed the decision was given to the british people. the british people voted and they voted to leave the european union. i believe it is a matter of trust and integrity in politicians. the people should be able to trust the politicians should put into play what the people have determined and that is exactly what we are doing and we will be leaving the european union. what is the biggest compromise the other side has made to get you to this point today and was it a champagne breakfast? >> this was a question of coming together and working together

reports and agreements that were in the best interest of all sites. in finding the way through we were able to deliver for our citizens, a financial settlement and to deliver in relationship to northern ireland, and agreement on no hard border and respecting the economic activity of the united kingdom. that is with the joint report sets out. >> misprint minister, -- miss prime minister, the arrangement seems to have made a status for northern ireland. will it not mean that the rest of the u.k. it will also remain in the single market? >> no, it doesn't mean what you

suggested. if you look at the agreement, it achieve the work to relationship, the trading relationship between the u.k. and the european union that we be, that we believe will be a good trading relationship for northern ireland. if that is not the case, we will look for specific solutions to what are the unique circumstances of northern ireland. everybody recognizes the good northern ireland is the only part of the u.k. with a land border. that is a set of unique circumstances and there are already unique circumstances with specific solutions for northern ireland. there is a single electricity market across northern ireland for example. that we can, in negotiating the future trade relationship, we can in short we both won't have a hard border in northern ireland, but we will

maintain the economic integrity of the united kingdom. >> good morning. mark stone from sky news. youe minister, can i ask what has changed between monday's lunch and now, which allows you to say the deal is done now and you couldn't on monday? the point oflly on justice, the prime minister says the eu citizens in the u.k. will be under u.k. law and u.k. courts. is that correct and are you happy with that? the first point, as we both said when we stood here on monday, there were a couple of issues that we still had to finalize as we went through the last few days, but as i said in

the remarks i just made, we have one of the things you can see is a strengthening in commitment in relation to northern ireland and the united kingdom. i think that's important and helpful. within the joint report, he was a commitment both to no hard border between northern ireland and ireland, but also that we ensure we meet in the constitutional integrity of the united kingdom. citizens, the court of justice will still be confident. michel barnier will explain later in detail what is involved as it could take too much time to explain. >thank you. that is the end of the news conference between theresa may and by mr. juncker. european courthe

of justice, it looks as if the u.k. courts will gave -- will give regard to the u.k. justice decisions. uncker talked about a remarkable speech, but the details on northern ireland just seemed like a little bit light at the moment. unique circumstances will be maintained. be -- there will be a document attached to this is conference. one of the questions on the subject, we are trying to listen closely to what they are saying on ireland. there was a commitment to no hard border and to respect the integrity of the u.k. where is the detail because these are commitments that seem to have been made many times before. she didn't answer a question on what changed monday, saying we

have a strengthening of commitment on northern ireland. guest: i think it still does leave questions as to what does it mean for the status of northern ireland. clearly from the dup side, she's done enough and that's what matters in terms of getting the deal going through to the next phase. circleg that particular is appeasing the republic, the dup, and behind back benches. it is still a tough deal. she managed to do it. that is taking us forward to the next phase, which is significant in terms of business confidence. transition starts those discussions, that was a rare headline. it is interesting she cited one of those very you have this all one electricity market.

the amount of trade that flows backwards and forwards across the border. this will come to alignment and what form of alignment that takes. to what degree do you have a alignment and -- we have a strengthening of commitment on northern ireland. this is about getting the dup across the line. krhaps bodes well for the u and e u to salvage the best deal they can from these negotiations in the next phase given the strength of the word's is referring to. the fact juncker talked about and words about close friend and ally, deep and close partnerships. this is different language, isn't it, compared to a year ago? thet is really setting scene. obviously, it has been difficult to get there this point. the last thing you want to do is unnecessarily stoked up

tensions, either from within the u.k. or the eu, from within the european parliament. junckeroth jean-claude and theresa may treading carefully, using very diplomatic, warm language with a view to their constituents in london, brussels and across the eu. us for the, joining past hour and a bit. thank you for listening with us. the chief european economist at standard chartered. of you to join us and step away from poring over the details. what do you make of where we are? new mood music, but as we have stillaying, there seems to be vagueness around northern ireland, but stronger words and where they were. right, it seems all positive

here and you can see that from the interaction between theresa herend jean-claude juncker in brussels early this morning. you are right. we are still pouring over the documents and details, trying to figure out exactly what they are proposing. the agreement is. especially in terms of northern ireland. it is important to know that the dup in northern ireland and the officials in dublin both seem to be behind the text as it has been presented this morning, which is a change from what we had monday when the whole thing got scuppered. the: it seems to have support from those constituents you mentioned. whether it has the support of all of theresa may's own party in westminster will depend a lot on some of that detail. she talks about doing a good deal for the u.k. taxpayer. what is the cost of that deal?

maybe that is in the detail you are pouring over. she talks about -- she didn't and was questioned on the role, so some detail that is still vague at this early hour. jones: right. you heard jean-claude juncker stress strongly that citizens rights will be preserved. he also made clear that the u.k. has signed up to honor commitments beyond 2020. all of these things are crucial to the withdrawal issues that need to be part of this sufficient progress, that the eu leaders now at their summit next week are going to decide, make the final decision whether or to the talks can transition the trade negotiations and to the transition period. jones hayden in brussels with the latest analysis on the shifting brexit debate.

let's show you how markets are reacting. global equities have a little reprieve. the london market up about nine pips, underachieving relative to the european peers. it definitely was a large brexit breakfast. you have the u.s. perhaps avoiding a shutdown for another couple of weeks. china exports jumping the most in quite a while, rising by 12.3%, and asian stocks cra cked the downside. nice upside risk. sterling is dropping, that will feed into the ftse and a bit of a relief in the iron ore futures, which seem to see a little relief on the back of those china members. poundas you say, the slumping a little bit, down .1%.

during the asian session and it is a market cliche. the red hot headlines seem to be the headlines this morning. the headline across the bloomberg was brexit deal, opening way for trade talks, closely followed by ready to work after the summit. that triggered the pound to get weaker this morning. there has been a lot of anticipation that a deal could be done. at the top of the last hour, we were saying will a deal come? we got the deal. we had tweets around white smoke from members of juncker's cabinet. equityoadly, the asian session with .7% higher. we have seen a losing streak for asian equity markets but today, we have them going higher following the tax optimism. we put bitcoin in there because why not? ride over thewild

last 24 hours in thursday trade. 16,000nute session from to 20,000, then crashing back down. manus: let's talk about the bond markets because if there is an explosion in bitcoin, the u.s. consumer is getting richer. $96.9 trillion worth, record house -- household wealth. such a squashed moment in pricing. unchanged report today. that is perhaps the bigger issue to figure.d market the average hourly earnings, 2.7%. where have all the males gone? notthat everyone is asking, in hollywood, but they are asking in terms of participation rate. stocks are higher, we have euphoria in the asian market section.

o.a.t.'s down 28 points and we have updated bund treasury futures. someone put the dollar in the slot. anna: you accused it of being unchanged, it did its best to move for you. let's put into the context what we have heard the last few hours. theresa may and jean-claude juncker have reached a brexit deal. said it is ready to work on britain's transition out of the bloc after next week's summit. >> prime minister may has assured me the backing of the u.k. government. basis, i believe we have now made the move forward we need. depend ons of jobs the future trading relationship we will determine and i am optimistic about the discussion ahead.

in the meantime, reaching this agreement now ensures businesses will be able to make investment decisions based on an implementation period that welcomes -- offers welcome certainty. ands: that was mr. juncker theresa may, the prime minister. senior manager at aberdeen is with us, david merritt is our london bureau chief. let's take it straight to the markets. here we are, we have the red hot headlines. theresa may is as we speak, meeting with mr. tusk. we expect a few more headlines from that. by the rumors, sell the facts, is this good news? james: absolutely. the point anna makes his right. what surprised me is how much positioning there has been on the long side in sterling. when you speak to other difficult to is find anyone with anything remotely positive to say about the potential for positives in

the long run and difficult to find anyone who likes sterling -- >> it is still 6% of the global reserves. james: you don't need to tell me. i completely agree. people are lost in this maelstrom, some of the more structural facts that will affect sterling and forgetting that the u.k. has a strong institutional framework. seeinghould prevent us the e.m. style comparisons we have seen. because a lot of people have been more long sterling, and i am a bit this appointed we haven't seen a bit more of a rally before the profit-taking, but it doesn't surprise. anna: not much sleep for anyone tracking the brexit story. our colleagues in brussels, pictures from brussels this morning, not much sleep happening for any of our journalists. >> it has been pretty frenetic.

to play this way. the all-night negotiations, bringing back a few memories. they are well-versed in it. the news has been moving fast. we learned early on that mrs. may was on her way to brussels for the predawn press conference bleary-eyed. she was asked if she had a champagne breakfast, which she dodged. manus: just a few lines coming from the irish foreign minister. default position is full rule alignment this is the irish position. the dup were given extra insurance is on no internal border. we will get reaction through the morning and bring that to you. this is the foreign minister for the republic of ireland. it comes down to the assurances and thehard border integrity of the good friday agreement.

we were waiting with bated breath, what was the extra bit between monday and today? anna: some of it sounded like similar language. commitment to no hard border and respecting the integrity of the u.k.. people were wondering how you put the two together. is the devil in the details? david: absolutely, arlene foster was on the airwaves today and said a couple of ominous things. she is letting the deal go through, and yet she still feels there are things she wants in this process. she is not going to let it pass. manus: another line from arlene, is it the brexit deal will come back to the house of commons? we have debated about what happens with the final deal and there is a great deal of ridicule made that the deal that comes back to the house of commons and if it gets voted through, the brexiteers will be happy. there is still risk. james: there is still an

enormous amount of risk. really hard task starts. if we thought this was difficult, think of how complex the negotiations are going to be to come and the short timeframe we have. we only have just over a year until brexit day and the idea of forging the special relationship with the eu in that timeframe is almost impossible. and in the complication of the dup having to approve anything to keep mrs. may's government. anna: -- by juncker and his team. the eu still gets to make that decision and juncker hopes that -- the possible headwind. james, the fact they have said work will start immediately on transition, this could be material, couldn't it? if we get some kind of transition deal, or not? does it become too late for that? the chancellor talking about

this as a wasting asset. james: the whole point of the transition deal is you are just buying your time to sort out details. it will get complicated and the negotiations will be tricky. on the whole irish border deal and the progress so far, the whole purpose of what we are seeing here is not to gain any sort of agreement whatsoever. this merely to get addition to progress to move on. from both sides of the negotiation, you can see why that is the case. the u.k. needs to make sure -- and sure it has a trading relationship. manus: part of the conversation has been about the tail risk that you could still go to elections and get into trade and transition, that is what we begin to discuss. will enter awe tough period of negotiation. --re is still nothing to

room to say that we still pill the -- pull the red chord. there are still tail risks in the market which on days like this, sigh of relief. finally. what tail risks are you most cognizant of? david: all of the ones you mentioned, unfortunately. part of the frustration of being in the eu or negotiating with them is that on occasion, it can speak with one voice. that is still one representing 27 voices. the amount of negotiation that needs to go want to get a common the give andh less take between the eu and the u.k., there are a lot of parties with their own electorate's to answer to, their own party members to answer to and everybody needs their pound of flesh. that process of assuring that everyone isn't satisfied enough, that everyone feels they can move on, is incredibly complex and can break down on a number of issues at any stage. colleagues poring over

the details and getting more commentary from various parties. another line coming through coming through that seems interesting. he is saying northern ireland would remain aligned with eu rules if there is no deal. this is a solution that kicks in only if there is no deal. it seems we are getting -- there are two versions of the agreement done today. one which applies if we get a beforerade arrangement the brexit date in march 2019, and the other that applies if we don't. it is as if ireland has protected itself from a hard brexit. david: it will be interesting to hear the reactions from other parts of the u.k. let's see what sturgeon has to say about that. earlier this week, what about us? eudidn't vote to leave the either, we want a special deal. that will add more problems. manus: if northern ireland would

remain aligned with the eu rules if there is no trade deal, i can't square that away with arlene foster's original point, which was about borders. she wants to remain part of the united kingdom, including northern ireland with its integrity, all of the rights and does not want to be treated differently to any other part. this is a rather -- >> unfortunately, the politics cynical, butit is -- >> from an economic point of view, i can see the value of this. from the political point of view, this is a crawl in someone's throat. the party needs the support of the dup because they don't have majority on their own. if we have a deal on the table that needs to be voted on, we would need to support the dup. the conditionality here is if there is no deal, the trigger has been pulled on article 50

and we are therefore on a preset course towards an exit to the -- from the eu and even if there is a transition deal there pushed down the line, there is an the exit triggering of arrangements. if there is no deal, that would mean no dup. anna: if there is no deal, we don't know what kind of regulatory line the eu would decide as a whole they wanted to implement. this is something david davis was alluding to when there was the whole confusion over what alignment meant. he was talking about some of this alignment being for the u.k., but i guess that is a can of worms that someone on the hard brexit side would not be happy with. manus: one or two other breaking lines, the great brexit discussion, sorry to interrupt. the south african retailer dropped by nearly 45%. it is under pressure, some management changes.

it looks to be under a little more pressure at the start of trade today. anna: more lines about talking about alignment is up to the u.k. to design that. do you think this question of alignment, this is going to become very much part of the overall trade agreement that will be forged between now or after transition is forged? maybe between parallel between now and march of 2019? what will you be looking for to make this a good deal? for your investments? a good deal satisfies enough people that it can go through. a bad deal is one that looks good for one party and has no chance of passing. -- a little overplayed because there is a lot of regulatory alignment globally in terms of international trade, which is

not aggressively governed by agreements by either eu or a single market. mutualas some recognition with the eu and is committed to import goods with minimal quality checks, custom checks, because they are allowed to be stamped as being authorized for sale -- >> the financial services in the u.k. has been talking about managed divergence. james: the financial services one is interesting because we are in the eu today, yet we still have a different regulatory regime for financial services. the rules are not the same, but they are deemed equivalent. i don't see much reason why that should be vastly different outside the eu. anna: thank you both for the moment. he stays with us. david merritt joining us, london bureau chief keeping track of the brexit headlines.

very busy in brussels. we are joined from the news conference in brussels. have you with us. what progress has been made. what has allowed the breakthrough to come about. >> it was pretty clear after monday that they were close to agreement and the only thing that was stopping it was the dup, but the credit -- democratic union. they clearly worked very intentionally, through the night to find this form of words that would satisfy all sides. satisfy the government and the irelandsfy the northern party. they seem to have done that for now. it means they can advance the trade talks hopefully at the summit next week. crucialy also know that questions remain unanswered and they know that they have to be

answered before this overrule -- overall deal is struck, before in 2019.leaves the eu they were upbeat, positive, optimistic this morning. the irish minister saying that ireland would remain aligned with the eu rules if there is no deal. the republic of ireland and north of ireland would remain deal.d if there was no we have a fallback position, no hard border under any scenario. this is what it will come down to. it is our understanding, the details about what alignment might well be. dup ons got to keep the side. ian: this is the thing and the devil is in the details. all they have done so far is agree on a set of words that seems to satisfy all sides. there is a long way to go before

the u.k. gets a trade deal with the eu. what sort of trade deal would that be? how close would it be to common eu regulations? if it is close then fine, there is no problem with the irish border. the u.k. doesn't manage to get the trade deal it wants and there is no guarantee whatsoever, things start to get difficult because the then have to start answering questions about what does alignment mean? what does no barriers mean? i don't think they have answered the questions yet. everyone is crossing their fingers that they will get their as part of the trade deal, but it will be a difficult next few months. anna: yes, indeed. this wasrd on the ecj, a sticking point until ireland became the big sticking point in the room. theresa may didn't mention in her statements of the ecj, you wonder whether the devil is in

the details that will be poured over by the press there? ian: what we call it the very beginning of the negotiations, might be an obstacle. it would appear she has given theto a certain extent, but eu has given way to a certain extent. some compromise that european citizens living in the u.k. will have some records to the european court of justice for a set number of years. that seems to keep everyone happy. i don't think it is something that is going to cause major headaches. they seem to be happy about what it is. the irish border is now looking ahead to what the trade talks might hold. that is really what is on the path now. manus: thank you very much. the very latest from brussels. one man who says he will be sad complementker

theresa may on her speech. this is the repercussions for markets. god or sterling against the swiss. -- dollar-sterling, sterling against the swiss. we did peak, did you buy the rumor, sell the fact? that is what we got when we got the red-hot headline on bloomberg. james is here this morning from aberdeen standard. matt miller has joined us on set, as well. there are a couple of ways to look at this. sterling has rallied. we moved to transition discussions, trade discussion. have the unleashing of a bit of optimism -- optimism for the u.k. consumer. it has been tough. we were told this could be a relief. if it gets going, it could be a

u.k. economy.the those growth numbers might up themselves a little and that has good consequences for the bank of england. david: the consumer confidence story is a bit different. this is more one for consumer confidence. the story has been about withheld investment and the more certainty we can have as economic commentators are business leaders, the more confident they will feel to invest. on the consumer side, if you do a chart versus u.k. inflation, it ties pretty closely. leastnsumers tend to feel confidence when prices are rising faster. we have seen the pulsed -- inflation looks to be topping out and we expect that the fall over the next 18 months. that will do a job in drawing a line under the consumer confidence story. anna: a few headlines, other

political news in europe, the dup putting out a statement saying that more work needs to be done on the areas where alignment is necessary. they say more work is needed on that. they welcome the u.k. focus on soul alignment, which is interesting for the future trade conversation. the dup says they will play a full part with the government in talks. matt miller joins us on set. we need to talk about what has been going on in germany. it news from the german political perspective overnight, in terms of where coalition talks go. making a big decision. matt: dpa reporting that preliminary coalition talks will begin next week on wednesday. who voted and said it was an overwhelming majority for

talks on some sort of alliance. not necessarily a new coalition, but expected to pass. martin schulz had a vote of confidence, more of a mathematical vote and he got 82%. that is a strong be minus, but , not ast as good -- b- good as the beginning of the year. he has lost some credibility as the party leader. especially yesterday when he called for a united states of europe. putt of members of the std a shadow on the possibility of a working coalition, because that is something angela merkel is not going to agree to. shocking one for me is schulz. a united states of europe by 2025. that is his suggestion. the date is the 100th

anniversary of the party, founded in 1925. he knows that is not going to happen. europe is not ready for shared debt. shared security forces. we know that. --is asking that the cdu things that the cdu and analytical will never agree to. a completely new national healthcare system is something he wants, and expanded pension system is something he claims to want, although he must know that is not going to happen. we may see some other alliance and a grand coalition. anna: this is not the note -- negotiation team in brussels theresa may thought they would be up against. angela merkel will represent germany at the meeting as she has done for many years, but not quite the relationship that the u.k. was hoping for? wanted to have angela merkel a little stronger to maybe make some decisions based around what might be best for the german economy rather than the politics of europe? with: we have seen that

the domestic political situation in the u.k., it can either help or end it. we have seen juncker has not wanted to push too hard because that push -- resets the clock. in germany, you have a similar situation where now, the ability for aggressively pro-european decisions at the expense of domestic voters and electorates, is material reduced -- materially reduced. aat would imply constitutional change. matt: he is arguing for scrapping the eu and forming some kind of new federal system over europe. manus: the strong better join and those who can't afford to join reconsider arlene foster's other lines coming through. cautioned against moving forward. she says she can still vote against a final brexit deal. it is interesting.

everyone has their caveats. the republic of ireland has they will haveat alignment if there is no deal. arlene foster saying she may well not back the government. there is so much more political risk factor in -- factored in. transition starting, but all of these protagonists on the other side who have their vested interests. this will be a bumpy road. does that cap out the markets? what does it mean for us? terms ofinvestments in sterling, waiting, ftse and bonds? james: i don't think what we will see is a massive rush for people to pile into sterling because of this breakthrough to move on to trade talks and largely because the irish border issue does seem difficult to come up with a scenario where everybody is happy without there being an all-encompassing deal.