anna: i'm edwards. manus: i'm manus credit. anna: -- manus cranny. anna: trade talks wrap up after president trump pushed for what he called a fair and reciprocal trade agreements. the uk primeus: minister fighting to end -- u.s. crude continues its march higher health by a weaker daughter and holding shells -- shares jumped.

♪ very good morning, everybody. warm welcome to daybreak europe. let's check out the markets. picking up where we left off. the mse i asia-pacific eating out further gains. we touched all-time highs in the united states in friday's session. we did have some action to talk about. , a yen is steadier now little bit weaker against the u.s. dollar. we have seen a move higher in the japanese currency. had the bank of japan's governor corona guided the market higher, when he was at demo's, apparently not. he was not changing his stance, changing his forecast. busy one.it will be a we have a dollar a little bit

stronger, which makes a change after seven weeks of losses. it will be a busy week. yellen is in her last week of the fed. lots of data including jobs data and a state of the union address i president trump. the metal price for you, this is zinc. we could have shown you others, the zinc is up 2.3%. because of the week's dollar affect, lme inventories coming down and that's something that is focusing on how much higher, how much stronger can these metals get. this in the context of the oil rice which has dollar weakness. manus: it just keeps racing away. a jamboree week in terms of jenna yellen and the jobs data, but one market that is absolutely in jamboree mood is the equity market. 94 24, the monthly accumulation of wealth. the size of the market is pretty germanic.

-- dramatic. that's the best month ever, $30 trillion market. think of the wealth trickling down. sitting on cash, deli of says it would be stupid to hold cash in this kind of environment. , one of thet week lines that came from him. of course they have vested interests. if you think about what's going on in the world, this is to trillion dollars global equity markets. the third highest in flow in nine years. is that good for history? saw big years we preceding with big inflows. that's the biggest play on the rally. can it hold along with the oil majors to the technology side? let's get to juliet sally. she has traveled far and wide.

she is in hong kong. minister the uk prime theresa may is fighting on multiple fronts this morning as critics inside her governing conservative party threatened to upend her plans for conservative party after eu trade rules after a divorce wanted her to fire philip hammond. who they believe is denying them the clean, quick breaks they want. even della trump is being critical, saying she has taken a tougher stance with the eu. oppositionof the labor party has rolled out calling for a second referendum on bricks it. jerry corbin spoke to the bbc's andrew mark. >> what we asked for an demented and parliament has been a meaningful vote in parliament. what happened with this bill is that it was an undemocratic power grab.

must and the bank acuity as soon as possible. the head of the dutch central bank said the program did what anticipated and there is not a reason to continue. hi saidsident mario drag there were signs of inflation that persistence still requires. shouldn'tchs says we rattle off of the meeting as a nonevent. goldman economist says they expect a slightly hawkish upgrade of the central banks like which. that comes despite it being slighted as jenna yellen's last as fed chair. saudi arabia shares and kingdom holding shared by a 10% limit after the chairman was released from the tension at the ritz-carlton hotel in riaz. returned home on saturday after reaching a settlement with authorities and

will remain at the helm of his company. in russia, thousands of protesters demonstrated against president blinder pollutant, who -- the leader who has been barred was dragged away and taken away by police in moscow. , yous told he supported are not coming out for me but for yourself and future. iceland's newly elected by minister said her country's decision to force employers to pay men and women the same amount for the same job through unequivocal legislation is the first step gender equality, made comments in an exclusive interview with bloomberg. revolution and iceland has been an eye-opener for us because we have women from every sector of society describing their experiences with showing

how difficult this expense is. me too is not just about sexual harassment. it's about inequality in power and society. 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 taco. --top go. yen has been giving back some of those gains. a little bit of a hangover. it's has recent highs down .5% and some weakness in the large-cap stocks in china. , there seeing an uptick regional benchmark is holding onto these record highs, up by .1%. australia had a good session. in terms of stocks we are watching, macau has fallen in hong kong along allegations that

the chairman sexually harassed a number of women. there has been a couple of broken downgrades. ceolargest stock has a new who has been at the bank for 20 years with the bank is returning to the helm. he will be taking over the ceo job from april 9. then you have qatar in india lifting the overall -- which remain at record highs. there is a big rally coming through in these commodity producers. the producers are listing the indian market to a fresh record high. anna: thank you very much. is u.s. trade representative hopeful a deal can be done to save nafta, one of the big focuses according to dave fry gets. the republican chairman of the house ways and means committee. this after we saw president

trump of course speaking at the economic forum in dos -- davos. trump: we cannot have free and open trade if some countries exploit the system at the expense of others. we support free trade, but it needs to be fair and it needs to be reciprocal. because in the end, unfair trade undermines us all. manus: also on the u.s. domestic events they are taking center stage with the state of the union address. the latest fed rate decision, len,last under janet yel then you have the jobs jamboree on friday. david is our guest host from jpmorgan at private bank. great to have you with us. let's start with trade first of all.

we will get to the fed in a moment. we have a state of the union. he is not going to rep out nafta. you have done a couple of scenario analysis. you are thinking right now? david: some kind of nafta 2.0 upgrade the deal to reflect the realities of the modern economy i think that is the best case scenario, probably not what ends up happening. the worst case is the u.s. pulling out and being an acrimonious fallout there. anna: nofta? david: exactly, no deal at all. you have these sticking point issues. the low hanging fruit has been agreed. content requirements for the auto sector. 85% to be within nafta, 50% in the united states. obviously there is a decision over who oversees, has the

authority to make good on disputes. significant issues. also the mexican election is coming up. the trade authority expires in june it. there is little bit of urgency, but i would be shocked if he pulls out on the podium this week. anna: you think he won't do it. will be ironed out after nafta. had his separate the rhetoric from the action? separate the rhetoric from the action? trade wars are fought every day, u.s. troops are going to the rampart. then you have trumped saying america first doesn't mean america alone. david: this is one of the key risks to market to the start of the trump presidency. the reality of geopolitics. you can pick and choose a few

industries like washing machines here and there to make a few headlines and keeping your base happy and that's what he is trying to do. this gets real for me for global markets if they start talking about pulling out the dead eto. that's when you are starting to care at the heart of the rules-based writing system. that's when you get at the major -- you see in u.s. sovereignty. that's when it gets real for me. upus: why do you bring that as being a risk factor? is that a 10% risk, a 20% risk? we haven't heard anybody say he is at the point of revving up wto, which would be a splendid isolation. sayingalking about tpp, they had states are prepared to negotiate. tpp.includes countries in you can call it the trump tpp. david: i would like to say

things you haven't heard before. anna: because i asked. david: i tried to adlib. the keywords in that paragraph is bilateral. he wants to negotiate with other countries. they don't like regional or multilateral deals. that's when they pulled out of the whole tpp. he says we will negotiate with the country. it's my fear they go after wto. they are undermining it by not appointing new judges. they are already undermining it by ignoring it to a certain extent. i have no reason to suggest they will pull out. it's a 10% risk. that's what i would be afraid of. have some in the ms ration concerns about how to balance being involved and that's what they are wrestling with. how is illustrating with

they have seen friends in treasury reels after this yield. the u.s. has from here. we have the fed this week. a busy week of data, as well. which data we need to watch. what is the crucial bit of data? we get all of cap the report but you are focused on the wednesday. david: there is a humorous -- huge amount of data coming up, american employment. we have employment cost index. one of my favorite indicators is very important to measure the growth in wages and employment costs in the united states. the quarterly has a treasure trove of data taking down types of cost of wages. etc.. if we were to see another strong quarter, it would add upward pressure on bond yields. let's keep our feet on the ground. we broke out of the recent trading rage, up 2.6.

the highs of this cycle is 3.98 in the spring of 2010. let's keep our feet on the ground because even if you look at real yields, they are low. if you look at inflation expectations, they are 2% cpi. it usually traits 30-50 basis points above cpe. today are experts under shooting the fed's target. that's the reality. it's quite modest. it doesn't bring excitations in line with the fed's target. it's not that big of deal. manus: goldman sachs, our top story is that they are slightly more hawkish tilt from the fed. it's not just going to be a nonevent. with that in mind, if you look at equities, at the start of the show we started with an equity tilts. let's have a look at it. this is the best month on record.

if it becomes slightly more hawkish, ray galliano -- ray dalio says don't sit on cash, that's music to a bankers years. you would agree with that, but this adding of value can't be unseated by the fed. it has to be -- david: it can be unseated by the fed if there is a perception they have to raise interest rates because it's behind the curve. we are a long way from that. you need six months of above expectations. you need a range of other things like eci pointing to inflationary pressures, hawkish rhetoric, etc., commodity prices rising. you can get to situation a couple quarters from now when it affects of valuations. remember 1994, terrible year for the bond market. people lost money on bones. earnings went up 20%.

the stock market didn't go anywhere. multiple contracts. right now, people are looking at 20% earnings growth. it could be a nice 94 rerun, but that's a pessimistic view. we don't thing bond yields will breakout this year. anna: before bond market is something we don't talk about. thank you very much. chief client investment strategist at j.p. morgan private bank. let's tell you what is coming up. we talk about some of these things already. due tow, donald trump is make his first state of the union address to congress. manus: on wednesday we get a decision, janet yellen's last. anna: we get the u.s. jobs report for the month of january. that's wednesday. coming up, the big cutie question, when can we expect a

change from the u -- the central bank. we have the latest. manus: another bumpy week for theresa may. this is bloomberg. ♪

♪ 6:21 a.m.s just gone in the city of london. is 6075. citigroup is upgrading their view on where the market is going to. a little bit of a bullish call and we are on a rally with the commodity market. let's get a business flash. juliette: manus, thank you. japanese will use its own

capital to reimburse customers rift.st money in their at awill pay the users rate of 82 for each of the 523 million points that were stolen. it shocked legislators, who introduced legislation to prevent such disasters. shares of steve wenn' operations of following the most in almost a month after allegations that the chairman sexually harassed women. morgan stanley downgraded their rating after "the wall street journal" reported he pressured massage therapists and a former resort manicurist to perform sex acts. they were denied. shares in the company's u.s. parent fell 10%,. of the most

in 13 months. his company grew out of a boyhood business selling yo utensils and seeds. they revolutionized the way furniture could be stored and shipped before being sold at home. the bloomberg billionaires index estimated his worth that $58 billion. that is your bloomberg business/. >> thank you. juliet sally in hong kong. the ecb has ended the program as soon as possible according to ecb policymaker who said there isn't a single reason to continue the program. he added it had already done what could realistically be expected of it. let's stick to the chief coin investment strategist. david, your thoughts on where the ecb heads from here. fairly aggressive comments

coming from the dutch central-bank. hawkish comments from the dutch central-bank, but inflation is where they are supposedly inflationand does data justify a move away from qe? >> we have more cpi data this week and if you look at the last two or three hiking cycles of the european central bank, they would already be hiking significantly at this point. the issue is depressed inflation. absolutely they are tiptoeing toward it. they have a solely inflation mandate. their mandate is to keep inflation below 2%, asymmetrical target. they're the most inflation centric bank but they can't even get inflation there. they have a variety of tests. drug wanted to be at the right level.

it's persistent, doable, and broad-based. those three other inflations aren't in the eurozone right now. >> if you look at this chart it looks and i chose, as if core inflation and headline inflation -- if we are so far removed from that target, why are we hearing so much heft from the hawks? why are they rising so aggressively when draghi did everything last week to try to quell them? there is a real division, isn't there? >> there has been the division the entire time. the ecb was ready to go to court qe.justify the legality of it.e's a couple things to they look at the momentum in the economy, which is fantastic at the moment. 19 straight quarters, providing investment banks, pointing to

how much of the global improvement is south of the eurozone. then of course financial stability issues. you look at where government bond markets are still trading, hefty amounts in negative interest rates, global equity doing very well, credit spreads very tight. it's hard to argue that it should continue to pound for even more, and they are running out of bonds to buy. >> and pushing up the euro in the meantime. it adds threat to the growth story. >> not that much, because this is a very domestically driven cycle. >> hold that thought, we have more to get into. david stubbs stays with anna and i. up next, we will go to saudi arabia. they have freed all only been to law, and others from the

ritz-carlton hotel in riyadh. we keep an eye on kingdom holdings. will it add to the rally, by more than 10% in the trading day?

♪ anna: this is daybreak europe. we did see some movement stronger for the dollar against the yen. the yen we are trading a little bit -- it has been lifted by governor kuroda in doubles late on friday -- davos late on friday. let's check out the border market action with nejra cehic. on friday,h record asian equities were heading for another record high, but some of the gains in the msci asia-pacific index pretty much unchanged. some weakness in china offset by strengths on the cost be and in australia. pretty flat trading for asian

equities. flip to the next chart. the hensing enterprises index, interesting has an 18% rally and more shares closed one year peaks at any point in 2015. we saw a third of them do that on friday, the most since 2015. volatility, the wildest swings since 2007 is what we have been seeing. how much further to this rally have to go. that's the big question we have here. looking at the dollar, the dollar index ended seven weeks of losses. inlar-yen is on the front today's session in the bank of japan, pushed back kuroda's butents in davos, dollar-yen on its 100th week moving average. is this a bearish signal? i showed a couple of technicals last week, one awake .80 is where we are. this is out of 2014 high at

around about 2.68%. if we move on and take a look at oil, it is extending gains, closing its highest since 2014. you are seeing cpi beyond six dollars a barrel. the cpi brent spread at the moment at its highest since october. manus: is all about the backwardation in that market. nejra cehic what's -- with the latest. -- has been released from the ritz carlton. this marks the end of the first phase of the anticorruption crackdown against princes billionaires. shares gained 10%, the most since november 2014. following the news, he returned home saturday. for more, yousef gamal el-din joins us from dubai. we have many signs of watching

this story closely. give us the details of what's going on in saudi arabia. mentioned to shares of kingdom holding and as much as there are not a lot of analysts who cover this stuff, it's always the shockwaves that come from this. with the onset of the anticorruption crackdown in the first week of november, it really shook things up. the concern was this was a crackdown on political opponents rather than corruption. really continues to weigh on sentiment evaluations in saudi arabia. there is a lot more that can be unlocked if this anticorruption probe can be -- what we do know at this point is that the chairman of kingdom holdings will retain his position in the company. he will continue to hold onto ownership of that. but we don't have any more detail on that in terms of whether a settlement and what

kind of financial settlement it will be reached. we don't know what the position of the prince is. he said it was all a misunderstanding while the government argued that those had have been released have reached settlements. it important thing is that is nearing the end, weighing on the shoulders of quite a few people. for the reputation of saudi arabia and a market index, arguably in that -- ritz, he wasok at worth $18 billion. number 65 on the bloomberg rich list. it will be interesting to see what proportion of that he has to give up, some key holdings we will watch very closely. market,comes to the oil bid up by the hedges offered by the oil fractures in the united

states. if i look at the iranian position, they are getting vocal about their concerns about rising prices getting too far too fast. what was the latest over the weekend? iranian oil minister said six he dollars is a good price. -- $60 is a good price. it has been really stand out in their opposition to this fierce rally. they are worried like many other observers that price much higher from here will feed into the shell boom. you pointed it out, as well. rising by another 12, the most since march. oil production rose to 8.8 million barrels per day. the highest level in weekly data compiled since 1983. some credibility that can be asserted, can be assigned to the comments from the iranian oil minister.

that theyrom the rest do not intend to change anything when it comes to the current policy, at least just yet. anna: thank you very much. bloomberg markets middle east anchor, yousef gamal el-din. scene at the ritz carlton, phenomenal news flow coming out from that part of the world. from your perspective, from the clinic conversations, how have things shifted? how are they shifting at saudi arabia at the moment? david: the people i have been speaking to our concerned about that situation. they are concerned that the group around the perpetrators of this is very, very tight. they don't seem to leak in very many information. people you think are in the know are not in the know. so it's very difficult there. even if you are in that region,

there's only a minority of your investments. there are other global trends in their portfolio. a lot of these countries are pegged or soft pegged to the u.s. dollar. it is intriguing what's happening in saudi arabia and it is relevant to lots of our clients around the region here. actually, it's a minority of liquid investments and they have bigger things to worry about in terms of retooling a portfolio. manus: you mentioned the pegs. you raise the soft pegs. is that getting talked about? our people concerned? are they shifting their portfolios in reaction to the positions?rency david: i'll take any of them are taking it seriously. if you look at the saudi and the generate first, the first time they had that, there have been significant budget

consolidation measures for saudi going into recession last year. there's a perception they are doing enough and have done enough to defend of these pegs. i don't think we have seen major spec lead of action. it will be interesting to see if someone with deep pockets took a shot. i don't think they are taking that seriously. what they are taking seriously is the potential for a multiyear gradual decline in the u.s. dollar and a lot of them have not hedged their exposure significantly and there are questions about how you get around that. anna: does it put them off treasuries? david: i don't think so. if you are put off treasuries, you are put off why the outlook for inflation's and the prices of security can itself. we are underweight in bonds globally. many yearsaded bonds ago and the outset came from a variety of geographies in recently. the demand for treasuries in the middle east -- david: it is one that yields

take off from here. the major cause of money in the middle east and europe, to buy percent, 2.9%, 3%, hand over fist. [laughter] they are still going to buy it and that will be the case. 2.75%, 2.8%. i won't say we will never get i won't but underestimate. how credible the fed is keeping inflation below 2% at how much demand is for real yield. them two point 9%, to play percent, they will buy it. anna: that's why it's there. about, oil to talk linked to that conversation. isant to talk about metal reposing in our risk radar because it's moved to percent overnight. % overnight.

generally, the pattern has been of of fall. there is the dollar affect many will point to when you look at the higher isis for industrial metals. there is a demand side, as well. david: i believe demand supply intricacies of the individual commodities are the dominant driver. the dollar doesn't matter in big moves, but it's about supply and demand in the actual commodity. we are more positive on metals and there's a discussion going on for our core folio's how to play that. you mentioned -- core portfolios how to play that. you mentioned australia. manus: i do read what i write down. finding if in ways to look in that pacific, extra pen is another index, a lot of australia, new zealand, hong kong in there. if you buy that we are transitioning from a low-quality growth, driven by low interest

rates, higher fixed prices, weaker investment, to overall a better trade and higher confidence, and i do by that story, that it's hard to see there won't be significant demand for commodities. oil has been a demand story so far. to playre a great way that, as well, and we are looking at different ways to do that. manus: what about the equity side? shell is going to buy with exxon in terms of market cap. poll up the relative value function in terms of dividend for shelton versus bp. this will be a big week in reporting. rebelief that they won't squander it again. does the equity value in the oil market appeal to your clients? david: i think so. what's most interesting is the far right hand column, the

dividend yields. look at that. you look at the yields you can get on these major companies. only six months ago, you really could have questioned the sustainability of the dividend flow. a lot had to borrow to pay it. at the same time, oil has risen and there is cost compression in the sector, as well. it's a fair to say now that you can go after these dividend yields in reasonable confidence they will pay you going forward. i don't have an individual name pick. if you are looking for a dividend play. i think now the narrative has now changed in these companies. they were fragile. now it appears they have the strength to continue this cash to shareholders. anna: thank you very much. manus: conviction from david stubbs, along new title they've given you. we have come up with something different. ministers will

adopt new directors for brexit negotiations when they meet today as theresa may faces is letting challenges to her leadership. we discuss that next. anna: u.s. trade representative is hopeful a deal on that the can be done. -- nafta and be done. this is bloomberg. ♪

♪ manus: a live shot of new york, just gone 1:46 a.m. somebody is having a late treat. futures are lower tonight, a record on friday, a jamboree week. a week of jobs report, janet yellen's final hurrah at the fed and what has been the eci, the employment cost index, that's what the pros will look at this week according to david stubbs from j.p. morgan private bank.

in the meantime, we have our own key lady with the business flash , julia sally in hong kong. juliette: japanese cryptocurrency quite check said it will use its own capital to reimburse customers who lost money in friday's $400 million theft. they said it will repay all 260,000 users impacted by the theft at a rate of 82 u.s. cents. each of the 500 million coins stolen. it shocked the japanese policymakers to injuries legislation precisely to prevent such disasters and pressure on crypto markets wary of rising scrutiny from regulators. steve wynn's casino has fallen the most after allegations that the chairman harassed women. -- after theed the wall street journal says he

pressured employees to perform sex acts. the allegations were tonight. shares jumped 10% in new york, the most in 13 months. the founder of ikea has died at the age of 91. his company grew out of a boyhood business selling pencils and bicycles. he revolutionized the way furniture and other items could be stored and shipped before being assembled at home by customers. his net worth is estimated at more than $58 billion. slept with crushing u.s. tariffs last year has been given a new lease on life after an american trade paddle mixed duties. boeing enabled somebody to jumpstart sales campaigns in the world's largest aircraft market. a revival of orders will help them barnier add momentum to its comeback.

ismany's most powerful union -- wages and flexible hours with a strike that threatens to hit major companies. talks with ig missile that represents 3.9 million workers in europe's largest economy broke off without a deal on saturday. the union, which has rallied thousands of people across germany for one hour protests says it plans a daylong walkouts that would be much more disruptive. that's your bloomberg business flash. anna: thank you very much. they meet in brussels to discuss their position on a transition could, but theresa may face her biggest challenges on the home market. critics inside her party are calling her to show more leadership. joining us to talk the financial of --es, the ceo miles, welcome to the program.

today, we get the eu giving marching orders to michel barnier. his negotiating brief. this is what you want from the transition. what is your message when it comes to transitions? miles: ultimately, you need it as soon as possible. the greater the clarity, the sooner the clarity. the greater sense of direction we are going in, the better for customers, clients, shareholders, and employees. manus: you made the point that the eu needs to step up their vision on what they want in a new relationship with the u.k. afterward. from the rhetoric we have had lately, i can only go off the rhetoric, it is the emphasis that it's up to you the u.k. to define what you want. i assume is off the table. is that your base case assumption and why do you think it is up -- why do you think it is not more up to you to define

the relationship than the eu? miles: it's quite clear from the u.k. side and the conversations we have had in brussels that is off the table. the question is, what do you replace that with? that depends on are you privatizing politics or privatizing the economics -- prioritizing the economics. it depends on where that individual or institution is coming from. if you are prioritizing economics, what is the regulatory relationship, the trading relationship? and had he do that with a minimal amount of dislocation? anna: just in terms of this transition, i pulled out lines from the rhetoric, if you can't get clarity, business will have to assume a disorderly brexit and execute contingency plans. if you are talking about board members with duties toward shareholders, when is it too late? is it already too late?

cutoff point.s no there is no great calendar where -- secret calendar where everyone cuts off the same day. it will depend on your risk appetite. there is a variety of factors. some companies have already moved operations or individuals into the continent. others are looking at it. others will move at certain points. it depends on the institution. if you are looking at kriegel mass, sooner at the start of this year, the better. how big is the pool of services they require that can only be delivered in the short-term and how quickly under arrangements which is not very favorable to financial services trade with the services be developed in-house inside the eu in frankfurt and paris and dublin? miles: it's difficult to take and go, that's

purely european or international. the studies we commissioned showed 25% of the activity that happens in u.s. financial services is related in one form or another to europe. how quickly do shift that? the question here is, where do you go other than europe? if you knew look at where economic growth is coming from, where clients want to book business, it's not in europe, it's in asia and the united states. what brexit is doing and if we are not careful, what they will accelerate, is they will move out of europe as a whole. this is one of the reasons why critical mass in the broader european market is critical. anna: europeans buy that argument? they don't think it's a negotiating tactic? miles: i think at the start, some of them did think that. but if they have seen where jobs have moved to, i think it's very clear. we have a fantastic brexit

tracker that shows where jobs are going. that underpins that there is no signal place in europe where these jobs are going. it is fragmenting. manus: this goes nicely back to the macron interview. they talked about a number of different things. was this discussion about the risks of the eu being cut off from london's market and everything you said, this is what he said on passporting. therein lies using that as a placard to the europeans. is that really the smartest and most genuine way to create good debate about how to come up with a solution? miles; we are not cut off from u.k. financial services, but there is a risk. manus: badly, money mode make it. miles: there is a risk at this. we are about 40-50% of the financial activity in the u.k.

if you look at where financing comes from, often it's a german in effect for indusind dorf that doesn't realize the back end is happening in london. they are just seeing the front and. the activity driving european growth is critical. anna: when you talk to clients under travels about exit, are they fixated with the politics or whether it will transpire? do they just want to talk about european property? david: ukip properties a crucial -- certainly, u.k. properties are a crucial topic. we all know that for major liquid markets in the u.k., the path of global growth is going to matter more, certainly in the median term where oil traits, where metals trade. right now, my personal belief is that in the next couple of quarters, brexit will not move

the markets as much as we have been used to. it will be a transition deal. i think it will be favorable to the maintenance of the current relationship. that alongside getting past the initial phase has reduced a lot brexittrue, cliff edge risk that were moving financial markets. companies have to plan for some of that and i agree. whatever deadline is in the first half of the year. it takes many months to move families. to even have the remote possibility that in april next year you can service your clients. that's everything to us and the financial institutions. manus: tens of billions of pounds is what the cost has been to the economy so in this discussion. david, thank you for being with us and anna this morning. david stubbs is the client investment strategist at j.p. morgan private bank. the next, we talk about those trade talks. this time, it is about the sixth

round of nafta talks set to ramp up today. what is the latest? what's at stake for donald trump? mexico and canada. ♪

tom: good morning. i am manus cranny. anna: i'm anna edwards. manus: the sixth round of nafta discussions will wrap up today after president trump pushed for what he called a fair trade agreement. anna: the u.k. premise is fighting critics who threaten to offend her brexit plans. meanwhile, eu ministers will sign up on their terms for the transition period. manus: u.s. group continues the march higher, marked by a weaker dollar. in saudi arabia, the prince is released from detention.

welcome to "daybreak: europe." london.00 a.m. in the prince is released, along with the final checkout riyadh.t saudi arabian and putting markets are in fairly good for. stop market rallying. the stock markets are basically ignoring the rally in the euro at the moment. could that be the concern for the threat pain threshold? brexit troubles mount for theresa may and you have the house of lords perhaps challenging the brexit bill. demand andeeing

calls rising for sterling. you have the nafta discussions going long, the longest since 2009. your overall complexion of these european markets, commodities are rising and oil is rising. withn davos they are busy their hangovers. i suppose that speech from mr. trump on friday. anna: it cap to many people late. -- it kept many people late. not changecific, this morning. one hour ago, we were making modest gains in the asian equity session, picking up where we left off in the united states, where was the all-time highs in those markets. let's talk about currency markets. the dollar is stronger by 0.2% against the japanese yen. we saw a move higher in the japanese yen after governor kuroda spoke about inflation. don't read too much into those

comments because the boj clarified, saying there is no change in the forecast and expectations. the dollar is edging a little bit higher this morning. the contrast with what we have seen over the last seven weeks with seven weeks of losses in the u.s. currency. yellen with the last meeting at the fed this week. we have the house of earnings and the state of the union and jobs data in the u.s.. think, up by the -- zinc, up by 2.1%. the dollar effect is the crucial point in here. we spoke to j.p. morgan private bank and they said this is something they are watching, the moves in metals. we mentioned oil, which is adding high. manus: the other thing david pointed out, amidst the jabbering all week, the cost index will come out on wednesday.

that plays into the bond markets and there is a lovely story this morning on bonds. it will be a wild ride in 2018. we are talking about everything that anna just pinpointed, yellen's final swansong at the fed, a filing more hawkish tone. j.p. morgan private bank' is message was very clear, show up, roll up, and buy them. they want to buy the paper. the state of the union and nafta will be closely watched. the futures are down by 36 points. an unraveling in the bond market. bond slow grind in the market. state of the union will be critically important. personal ]\ consumption expenditure will also drive the bond market and in terms of yields on treasuries, 2.69% on

the u.s. treasury market this morning. have i got it right? check with the bus. moving at the view on what happens next from the european central bank in terms of let's get to the end of the fecb ecb qe road. juliette saly is in hong kong. juliette: theresa fighting on multiple fronts today as critics inside her governing conservative party threatened to up and her plans about brexit and even her premiership. they believe philip hammond is plotting to deny them the clean,

quick break they want. even donald trump has been critical of their handling of brexit and has taken a "tougher stance with the eu." the leader of the u.k. opposition labor party is calling for a second referendum, exerting pressure. jeremy corbyn spoke to the bbc. >> what we asked for and demanded in parliament has been a meaningful vote in parliament at the end of this. and what happened with this though, it was an undemocratic move. ecb governing as soon asl end qe possible. the head of the dutch central bank says the program has done what was anticipated and there is not a single reason to continue with it. last week draghi said there was signs of rising inflation. in the u.s., goldman sachs said we should not write off the federal reserve meeting. sa expect a slightly hawkish upgrade.

in saudi arabia, the kingdom has a raised all losses sense alwaleed bin talal was detained in november. shares surged again today after alwaleed bin talal was released over the weekend. the billionaire return home on saturday after reaching a settlement with authorities and will remain at the helm of his company. in russia, thousands of protesters have demonstrated against president putin, who is seeking to prolong his almost two decade-long elections. shortly afterwards, he told his supporters, you are not coming out for me, but for yourself and your future. the newly elected prime ministers says the decision to force players to pay whe men and women the same mount is just the

first step and gender inequality. the comments were made during an exclusive interview with bloomberg. as it metoo revolution, has been called, has been an eye-opener for us as well because we have women from every sector in society describing their experiences. big this to show how inequality is. and is not only about sexual harassment. it shows us the inequality of power. juliette: global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. you can find more stories on the bloomberg at top . mapou look at the world function in asia, you can see a significant amount of red, but also a significant amount of green, which means the regional index is unchanged. australia had a good holidays and citigroup updating the asx 200 year and target is 6600

points. we did see a flat move coming from japan today, the yen studying itself after those comments from kuroda in davos. a little leading is coming from hong kong, where the hang seng has been holding at those record highs. having a look at the stocks we are watching in the region. the brokers focus, after the the stocks allegations of the allegations of sexual assault. this is an upgrade from morgan stanley to overweight. there were concerns over the smartphone pricing from china. this is being factored into the current prices and they are also updating tpp today. stockrgest listed in australia has a new ceo.

the stock is up by about 0.7%. anna: thank you. l can bes hopeful a dea done to save nafta. the republican chairman of the house means and ways in trade .ommittee will speak president trump said trade needs to be fair and reciprocal. donald trump: we cannot have free and open trade. not a some countries exploit the system at the expense of others. we support free trade, but it needs to be fair and it needs to be reciprocal. because in the end, unfair trade undermines us all. elsewhere in the u.s., domestic events took center stage. you have the say of the new

address tomorrow. the latest fed rate decision, the last under janet yellen, that is due on wednesday and then of course the jobs jamboree on friday. nicholas is the manager of the global investments. welcome to the show. this is a big week for the bond market. if you saw that it was a busy past month, this is the week when it could all come to bear. you have the jobs jamboree and the state of the union, p.c., and to david stubbs says he will be focused on the employment cost index. what is the pinnacle for you in your bond week? eci is very important. it is yellen's favorite stock indicator. it is pointing in the same direction. you have seen all these u.s. companies on the back of u.s. tax reform plan and announce bonuses and wage hikes. we do think labor market

pressures are finally coming to the labore are seeing market lead to higher wage pressures. phillips curve, missing in action, you think it will be found. >> i'm going to go with that. goodfriend was interviewed for congress. his fed chair role, clearly the market got the levels wrong. it is just lower than we thought. yet we do think that is coming through now. manus: that goes to the debate of, what does technology due to the economy? ringing it back to the basics, anna had a look at raising the taper ofing about duration. where are we in that cycle?

is the struggle over growth priced in at 2.69%. david said, take your mind back to 2010 when bond yields were at 3.85% -- i can't remember the exact levels. so, have we still got a distance to run in bond markets on the downside? >> i believe we have, maybe not quite to the 3.8% level. but it will still be bearish and bonds. the picture is looking good in the u.s., but it is also looking good across the rest of the world. if you look at the term premium in the curve, it is still negative. manus: it is turning up. is stillut it negative. if you look at what is happening in europe and japan, with kuroda's comments, they are preparing the markets for a slow normalization.

you see capital outflows from europe and japan -- bond investors have no bond within their own countries. curve canhat the u.s. remain stable here as well. what kind of movement to you see on u.s. 10 years? you see it going about 3% this year on the 10-year? .> it will be lower potential growth has come down for demographic reason since 2010. to save still a demand assets out there. happening with growth and other central banks around the world, we should rollout a truce. how bothered are you about the $1 trillion supply to finance the debt. i read more and more articles

and they are saying, perhaps we are being a little bit relaxed about it. this is quite a lovely bit of supplies that will hit the market. there's something less relaxed about the bond market. there is definitely a supply coming. we should be concerned about it. i think the dollar has already expressed its concern about the deficit. and we do not know how much more is to come. we have the state of the union address yesterday, when he expects infrastructure plans to be laid out. it is easy to ask for a rise in discretionary spending as well. the gloves are off when it comes to spending. and this pressure on field. anna: president trump will give his state of the union this week. the eci function shows the

deficits president trump likes to talk about. is the risk around what he says or what kind of rhetoric we get on trade? is there risk around the dollar? we saw president trump talking about the dollar last week. and not everyone gives signs in the same direction. >> i think some of the comments from donald trump's team, which were not helpful for tribulations. a lot of his administration says , but itde is justified has not always been reciprocal. but you would hope you would go mechanisms towto resolve this dispute. rather than off the cusp trade action. we saw with the sanctions against the washing machines in south korea and solar panels -- there could be more to come. china probably still, which plays nicely into his face,

could be in a fight. what we hope this is not -- anna: there are concerns. >> could pro-quote, u.s. and china. they go off to aggressively then yes, china could sell off the treasuries. but china is also the fastest-growing market of u.s. products as well. anna: nicholas wall, thank you very much. a big week in the united states. we mentioned some of this already, but worth chinese on your radar. tomorrow donald trump will make his first state of the union address to congress. anus: when do we get the fed policy decision? jobshen it is johanet's jamboree on friday. anna: coming up. manus: the ecb unwind. change in

policy language. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." 51 minutes until the start of european trading. sharell see 45 euros per at 3.9 billion euros. we've seen reporting around this from various outlets. in fact, the belgian regulator was talking about this earlier this morning. sanofi launches a takeover bid to purchase that for 45 euros

per share. manus: one other breaking news headline. you have got the bid on the m&a. the five year government bond yields touch zero, the highest 2015. there are a couple things happening in the markets. definitely really beginning to move these markets. we will hear from global investors shortly. in the meantime, let's get to the bloomberg flash. hare will usensh its own capital to reimburse customers. the tokyo-based company says it will repay all 260,000 users impacted. s forrate of 82 u.s. cent each of the 523 million coins stolen.

japanese policymakers who introduced legislation last april to prevent such disasters and put pressure on the global grid markets where he -- global theto markets wary of cryptocurrencies. after allegations that the chairman sexually harassed women. morgan stanley downgraded their rating. the wall street journal reported that the former resort manicurist performed sexual acts. the allegations were denied. on friday, shares in the company's u.s. parent fell 10%, the most in 13 months. died atder of ikea has the age of 91. his company grew out of a boyhood business selling pencils and seeds are a bicycle. he revolutionized the way furniture and other items could be stored and it shipped before being assembled at home.

the bloomberg billionaires index estimate he was worth more than 58 million dollars. that is your bloomberg business flash. has got to end the quantitative easing program. that is according to the ecb policymaker, who said there's a single reason to continue the program. he added that it has already done everything that it could do . nicholas wall, as we came back from break anna was doing the sanofi deal. k to zero. the comments guard the momentum with a lot of other commentary as well. there's the five year government .ond yield the hawks are right in the ecb.

what does that mean for yields? >> i think the five year will keep on rising in yields and europe does look quite steep. there have been many european countries expressing optimism about the state of european recovery. i think they want a normal policy. the bob purchase program has been quite pervasive. , if possible,ase without increasing the euro too much. it can keep going and i think we will see more comments coming out. gdp datahe european chie this week. it is extraordinary, considering where the potential growth rates were suggested. 9473 on the bloomberg chart. this is weakness in europe and inflation pressure remaining subdued. a lot has been done on bringing unemployment down and a lot

still has got to be done in the eurozone. a lot is being done on the growth story, but inflation still remains here. is this what keeps those hawks that they when you are inside the governing council around that table? >> i think the first thing to \ they will still be reinvesting the proceeds. it is still easing in terms of where we are and growth. yes, they probably keep going and it is a fairly loose policy. i don't see any reason why they purchasing bonds for the market. i'm not very worried about it. anna: the market can take it in stride. nicholas wall, thank you very much this morning. that's it for "daybreak: europe." the european open is up next.

digesting the president trump had to say. putting behind us, perhaps, leading into another busy week here at bloomberg. ♪ we use our phones and computers the same way these days.

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guy: good morning. i am guy johnson. alongside me is matt miller. welcome to the cash trade. ♪ guy: so, untying the not. the ecb governing council member program to end as soon as possible. big action in the bond market and german bunds