.ig shoes to feel -- to fill pressure mounts from mark zuckerberg to appear in front of lawmakers after reports that user information was sold to a third party without user consent. u.k. officials think the terms of a transition agreement have been agreed to. now just waiting for sign off from top officials. david: welcome to bloomberg daybreak. happy monday. we thought we had a big week ahead of us before the brexit deal. alix: we do not know how to cover all these. david: another crisis for the budget on friday. alix: all of this coming on the heels of another choppy market last week. .utures down about .5% it is the nasdaq that is getting hit in the futures market. take a look at table rates. the sterling, 140. a huge move higher. we have a selloff in the bond

market here, as well as europe. the guilt the underperformer. crude also softer and are all commodities. is it china news? we will see. david: you will know that. brexit negotiator david davis and his eu counterpart speak in brussels. they may be announcing an agreement on post-brexit transition terms. there is a u.k. side that thinks they have a deal. at the pentagon, at&t faces off with the justice department. it is saving its deal to buy time warner. g20 finance ministers start and when the sars with trade on the agenda. alix: three stores to watch. a brexit breakthrough. china's central bank changes and facebook stays under fire. david? david: joining us now, look. peggy collins.

we want to start with this news about brexit. how the pound reacted, the last few minutes to this report that perhaps there's a transition deal. that is pretty dramatic. peggy: shocking. volatility inome the markets because of central bank decisions. what is really important to watch for is what will the terms of the deal be. what we have been waiting for is a costly this is going to be for the u.k. we have seen a number of financial firms move out and set up officers in other places. any type of closure they can get , i think it will be good for the market. the cult we are not sure they have a deal. the u.k. side takes they have a deal. how sensitive are the markets to the possibility of a transition deal? >> you see that. you see that in the reaction to

that. i don't think the near-term volatility may tip the balance to the boe one way or the other. , everyone a u.k. firm is worried about brexit. but it really decreases the probability of you having a demand shock at the post. this'll will be costing us money through 2050, 2060. maybe that initiative, we are not falling off a cliff. i do find it interesting because it feels like the good news is not take in. a lot of rhetoric was we had to have more downside for sterling. it may not be the case. luke people have been seeing that for a long time. we see it with the u.s. dollar. for a very long time, we have been thinking the path of least resistance for the pound has been down.

he keeps surprising us and mark carney really laid the groundwork. david: a fair amount of volatility. some stability isn't china. we did have an announcement about a new head of the pboc. he came in and said i want to have stable growth. we have to cut back on the credit. is it doable, peggy? peggy: it is a must. that is what is facing the pboc. talking to banking -- the bankers recently who are saying we are not expecting big moves in china this year. by 2020, we will start to see them have to deal with the amount of debt that they have taken on. .hat is the question will they be able to manage it in this transition question mark that is what people are waiting for. david: luke, this is a cornet effort. -- a coordinated effort. how well is this integrated and

what this does to for worldwide markets? luke: that has been what we have been reminded of over and over. visit another reiteration of that. -- this is another reiteration of that. when i look back at august 2015, pretty much it is back to that right now in u.s. dollar terms. we are not hearing any loud screaming. in terms of it being an external , any worries about the extent rate will be in terms of a global competitiveness. maybe, along the debt problem, has been solved. domestic debt overhang. adding credit has been going on for five or 10 years. alix: here is all the debt, now my predecessor, go ahead and fix it. it highlights where we are at the g20 meeting.

you are the having to talk about protectionism, trade wars. you have a meeting with the german finance minister. these meetings are going to be percolating. where it comes at a time china is opening up its financial markets. we have seen a lot of the u.s. firm's starting to move in. we have seen vanguard within. lots of firms that go. it is important that that stability tone maintained there. very slowlying to let more foreign ownership into the country. david: he just you mentioned the debt situation, 250% of gdp. remember, he wrote in 2008, eventually china will have the floating exchange rate and the koran open capital.

--korean open capital. he will be helping facilitate them. anything that is going to come in china is going to come from the top. alix: facebook is down over the percent. apple also slightly down. here's the why. their issue with the data breach . they knew they were giving information to an analytic service that help donald trump when the election. what they didn't know is that service sold it to a third-party, for party. are we going to see more regulation? peggy: it is going to be one of the key themes for this year. europe be ahead of us on that front. it was an eye popper for me. is a hugeanalytics

proponent. not only in terms of rhetoric but also in terms of pure cash for the trump administration. ties to that and where that information went is a question mark that everyone has lost patience and is now saying mark zuckerberg, you need to answer some questions. david: the russians were coming in anonymously, this is a situation where facebook knew that it was giving away the data. they thought it was for academic purposes. this is a whole new front. facebook knows they're giving away the data. 50 million users, potentially. >> it is a new problem but it is the same old problem. clients and trust facebook in a way that -- if they are going to be forced to bring in people to become steley addressing and overjoyed all these problems. that is the big thing.

when we do inflows facing any sector, having its big share of the s&p 500 since the dot-com bubble. this is a big threat from tech. alix: u.k. privacy watchdog is saying that facebook will be pursued rigorously. yet a report that said eu regulators are going to start taxing tech companies in the digital world 3% of their revenue based on certain criteria. is the pressure going to come from u.s. regulators. how can tech respond to it? buty: europe has been ahead there has been a mounting push on capitol hill. or to get some standards in place. it happens a lot that technology is ahead of us in terms of regulation and law. what i do think also is unusual is it doesn't seem they have a

lot of standards in place for notifying customers when their information has been breached. i think the tech companies need to get up to speed with where somebody banks and other companies are. when you have are breach, people have a right to know. alix: absolutely. [laughter] to your point, when you have the same set performing, what happens? >> we are head over our skis, so to speak. for facebook's business model, the idea of trying to make it more people focused, lower ad. agher price per ad is direction they have had since q4 2016. it remains to be seen if this will hurt their business if companies are still willing to pay more and more for facebook ad of limited space. alix: both of you, thank you very much.

the koke coming up, matthew us.ghter, he will be with live from new york, this is bloomberg. ♪

alix: the move in the currency market comes from cable. take a look at sterling dollar. the big move that you saw in the potential headline is the u.k. has agreed to a transition deal. they think they have a deal and i have michel barnier and david davis having to sign off on it. that news conference coming at 7:45 today. have a deal,do what could be in it? david: this is the big question. we do understand that there is a

deal being hatched between the european union and u.k. on the key transition here that is going to last until the end of 2020 four brexit day which is just a year from now. it is a certainty for businesses. we don't know what compromise is have happened in on to get that deal. mr. barney was talking about a wide gap between the two parties in order to strike that deal. there's something that has changed. as you mentioned, there still seems to be -- is still have to be signed off by mr. barnier and mr. davis. they have a press conference scheduled for a few hours time. we are hoping to hear the details. it is on the table, the agreement itself. the problem with transition is nothing is really pulling greed. once they may have a futile agreement now to enact in the transition. -- transaction period.

it may be unacceptable to any u.k. prime minster. the transition period would not come into effect in any case. an enormous amount of questions. .he markets reacting positive the pound rallying on the back of his news. david: david, vicki so much. joining us now -- david, thank you so much. joining us now, matthew slaughter. excuse me. also with us is didn't look as i've just is daniel katzive a. put this in context. if there is indeed a transition deal, you just heard it is not a final deal, how good is this for the economy in the u.k.? thed: -- matthew: it helps u.k. economy, therefore the

european economy. uncertainty ash to what brexit will entail. issues about the trade agreements that the u.k. will or will not have put other countries. whether people will be up to move as freely. there is a huge issue. one measure that is a challenge to the care economy coming into brexit is it has had slow growth . in some measures, negative growth in labor productivity in recent years. the more that u.k. government can provide some sense of what exit is going to look like, the more companies and people are going to make the investment to make the decisions they need. unilever was discussing last week whether they might move their headquarters globally to the netherlands. there.y focus some minds alix: sterling, 140. you have a selloff in gilts. where is these risks in the

market? the really important rate is the cross rate with the euro. if you look at the exchange rate, sterling really isn't very cheap. cross iseurosterling going to get up to about 90. it could get there pretty quickly. even if it does, at these levels, that cross rate, you are pricing in a very successful negotiation round. there is a lot of uncertainty over the next several months. about the we infer about the ultimate deal? does that indicate that parties can get together on this? matthew: time is of essence. a little over a year until brexit date.

there is so much that has to be done understand what the rules of the road are going to be. the u.k. has been one of the most open economies international trade investment for decades. that has been an advantage for the country to have a lot of headquarters in financial services. what it is when to mean for the u.k., if they want to exit their current trading agreements, many people think that they become like north korea, in terms of having no legal ties through trade with the wto. it is going to take a lot of calendar time to figure out what happens come exit. if there is a path, it is a good thing. alix: matthew slaughter and daniel katzive. there is a new man at the head of the pboc. what monetary policy will look like. this is bloomberg. ♪

alix: there is a new man in charge over the pboc. was named governor over the weekend. he is signaling that stability is going to be his top parity. just his top priority. >> the main mission is to enable monetary policy, at the same time push for a form and opening up. alix: joining us now is in the current. -- is and the current. walk us through how big of a shift this may be for the pboc. andreas: it is not a big shift that all -- andreas: it is not a big shift at all. the deputy to the outgoing hasrnor has been there, he

been in the pboc for 20 years now. she is very much on board the narrative about reforms. tackling the level of debt. he is from the same energy as the outgoing governor. the chinese government is signaling they want to continue and they want a new page turned. does haveshoes but he the fx credit bubble. this shows total debt is now risen to 260% of the economy. you can't even really fathom that. majority there is corporate that just corporate debt. matthew, is he going to be able to tackle it? matthew: he will be one important leader to try and tackle it. that is one huge amount of debt. think the new governor year knows that is not sustainable. all policymakers, the trouble is

going to be how they can get more economic growth and productivity. that is going to have to come because the labor force growth that drove the economic growth is over. the new governor is going to be a force to try and help stabilize and bring down a little bit that that to gdp ratio. the other big challenge he will face is how to continue capital markets globalization for china. currentlye governor did a good job to try and open up china to the rest of the world in terms of its capital market. more that it does that, there's a lot of latent demand from households and companies in china to invest in the rest of the world. that will be a force that will put downward pressure on the chinese yuan. that is going to be another big goal for the governor. david: he is a member of a team. , what does itat

tell us about what president xi is trying to take to the economy? >> it is important, the remove of term limits for xi jinping. we have had a big overall of their predatory structure. with have this stable hand with a top job. is very serious about carving risk into the financial system. they do want stability in the near-term. the challenge for them is pulling off this task of managing. there are so many sectors the rely on spending tipping over because consumptions just isn't enough yet. signal we see is

in terms of what china can control internally, they want stability. they are aware of the risks. how come externally, with the trade story, how does that derail president xi jinping. ilix: how responsive is mr. y going to be? >> like any central bank governor, take jay powell, markets made some sense -- markets may in some sense try to test him. if there's going to be some new initiative that he undertakes and what does that mean? that will depend on the assessment decisions on a lot of people in china. a major question is going to be, will there be some systematic changes in the extent to which actors in china, companies and households are able to act out investment opportunities. the details of any policy reform

will be looked at very carefully see that is setting down some set of policies, relative to what his predecessor was doing. alix: thank you very much. bloomberg news, as well as matthew slaughter joining us from dartmouth. coming up, central bankers focus on the economic outlook. more from the g20 summit in buenos aires. facebook still getting question premarket, down by 4%. the thread, will we see more regulation on big tech names as data breaches continue to permeate the headlines? we will break it down. this is bloomberg. ♪

alix: this is number daybreak. i am alix steele. take a look at the nasdaq. those futures are down by almost 100 points. same as the dow. off by triple digits.

no doubt leaving the way lower is going to be facebook. front and center. any sort of regulation overhaul coming from eu, u.k. or u.s. as data breach developed over the weekend. also want to take a look at what is happening in equities overseas. the ftse hitting smacked. here is the why. you have a big jump in sterling. you might see a u.k./eu deal. sterling brought ftse down. you have seen a strong yen rally early on. a selloff in the bond markets heavily over in the u.k.. guilds underperforming. david: we turn to kailey leinz. guildsreporter: deal for the brt transition have been agreed upon. all that is needed is a signoff

of the eu's chief brexit negotiator, michel barnier and david davis. they meet in brussels today. it was a not very surprising landslide victory for vladimir putin. russia's longing serving leader since joseph stalin was easily reelected with almost all of the ballots counted, putin has 77% of the vote. and no hard feelings for saudi billionaire, prince alwaleed. he spoke to bloomberg's erik schatzker and an exclusive interview. >> i am for the anticorruption that the place. unfortunately, i was under the group. but fortunately, i am out of it right now. i am not the person who is going to come and say, i forget but i

don't forget. i forget and i get the same time. >> the saudi government said it will pay more than $100 billion in settlements. global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. i'm kailey leinz. this is bloomberg. that could g20 finance ministers and central bankers start their meeting in buenos aires today. michael mckee is right down there. give us a sense of what the agenda is. you are making some news down there. michael: we are making some news because the united states cashsecretary got describing the state of u.s.-china relations. -- but then had to walk that back because the u.s. doesn't

want to give the impression that we are not talking to the chinese at all. secretary mnuchin has been talking to the chinese officials on a regular basis. at this point, the strategy malpass be mnuchin and try to turn the g20 toward china and the chinese actresses of cheating on trade to try and deflect some of the criticism they are going to get over this deal on aluminum tariffs. bitcoins trade the number one item on the agenda? michael: overall economic growth would be the overall agenda item. trade is going to be an important in the corridors discussion. this is an unusual time. the ocd came up just the oecd 3.9%. with a report, as a result, they are changing the way they are talking about the economy, instead of the member countries giving their own forecast. they are going to talk about what the risk factors are and

try to identify those again ahead of them. the u.s. and its trade stamped, one of the risk factors. they are going to talk about infrastructure and the need for continued building out so the world does not fall behind. you're talking about the possibility of facebook and regulation. there is a proposal to tax internet companies. that is going to be high on the agenda, as well. david: michael mckee is going to be covering it. along with g20's meeting, we are doing something meetings. general powell is meeting as a chairman this week. there may not be much suspense this week. people are watching carefully to get a sense of where they are going from here. one of our favorite charts. it shows that the median., the green line there shows the anticipating three hikes this year but some people like goldman sachs are announcing

maybe it might be for pierced still with us, matthew slaughter and daniel katzive. dan, i want to talk to you. fx, what are you projecting in terms of rate hikes? daniel: three rate is for the year. close to as much you can price ,nd even the had another. everything is always contingent on the economy's finance of conditions. wielding rates for the dollar need to adjust a lot. guess we don't take rates for the dollar need to adjust a lot. the dollar hasn't been that sensitive to front and rates in the u.s. anyway. we would see may be temporary dollar up five. we don't see that as a watershed moment for the dollar. alix: why? daniel: we are in a structural period for the dollar. the dollar got expensive in 2014

at 2015. we are in a period of reversion toward equilibrium. it is happening. we are not at a threshold. ugly to get into a threshold of rate differentials. david: the short end of the curve is sensitive to the possibility of rate hikes. we're getting computing signals on how the economy is going overall. where do you think it is? expectation, i think, that reflects that new governor powell as chair. what is the potential growth rate for the us economy overall. productivity growth has been very slow in recent years. with a look at the labor market, strong by many measures. unemployment is 4.1%. illegitimate open question about how much slack there is in the

u.s. labor market. data that theof fed is going to need to monitor and real-time. is there other structural things going on in the global economy such as consuming the expansion and growth around the world but you don't price inflation relative to what people think it has been in the past. the question for interest rates are what are people's expectations about inflation? alix: that brings into question the real race. seeing real rates in that white line. the red line is the national rate of interest. it is where we expect rates to top out. now you're having the real rates above the neutral rates for the first time in 10 years. what does that tell us about the current state of monetary policy? matthew: one of the things that it may reflect is a get more

data is the fact we got a very strong cyclical recovery and structural recovery around the world. oecd report that you mentioned points out that major economies in the world are experiencing strong and synchronized economic growth. in that kind of environment, investment demand tends to rise and don't put upward pressure on real interest rates around the world. it would be great for all of us at this period those called stagnation, we would move past that and we were in a traditional period where we got decent growth and could -- and demand, that would put pressure on interest rates. david: the dollar has not had a good time of it. daniel: getting to fiscal deficit would be a sign of dollar strength. rates would be going up in the dollar would do well. markets seem to be looking ahead.

when the deficit is big in the economies topped out. it goes back to the valuation story. dollar is kind of expensive. the market knows that. they see this risk on the horizon. the plenty of's it would compromise and it is adding pressure on the. reduce exposure to u.s. currency. boe. we had the are we in a world of central bank convergence are divergence? in 2016the game back was the fed was going one way. that was a really good period for the dollar. now there is a parallel movement and policy. that is still tightening but of the suspects are in that mode. david: before december we had global synchronized growth. the tax cutsed in

and we have added in a pretty substantial budget compromise that really confuses a lot of cash in the system. what is that going to do to the u.s. economy? >> it is going to accelerate growth in the least. a lot of forecasts have been raised in recent months. tax cuts have been put into place. that is going to tend to expand the budget deficit. expansion tends to reduce the mystics savings in the united states overall. relative to capital investment, that is going to mean the deficit will grow. g20 meetings this week, there is currently focused on trade to the united states. it is important that everyone keeps in mind that what the united states does with fiscal policy 1070 major impact on the overall trade imbalance is. there might be trade frictions with particular countries but

the overall trade in the united states reflects fiscal choices we make here at home. alix: that is a great point. when you take a look at the g20, discussing cash take a look at the potential trade war and i have had officials who said we when you take a lookare not any. when does it tipped over? tipped over?it matthew it depends on what the response of other countries. what choices the united states might make. our trade deficit with china was $375 billion in goods. there is a lot of legitimate concerns that companies in have about market access, national treatment and

intellectual property. ofx: if we do get some sort trade war that escalates -- daniel: you might to the dollar weakened further. with evaluation is him that goes back to the 90's and 80's. there is a next rotation that the dollar will weaken. things will change as a move through the process. we get a series of trade back and forth. global economy slows and currency will get hurt worse. isiously euro -- that probably a few steps down the road. we would expect thing worse on the trade front. the dollar would do worse. andd: matthew slaughter dental catches -- and daniel katzive, thank you for being with us today.

barclays chairs on the rise. more that next. you can tune on the radio. two to our colleagues, john keane -- tom keene in jon ferro. bloomberg surveillance can be heard in new york, boston, bay area, watch wash and all across the united states on sirius xm radio. live from new york, this is bloomberg. ♪

alix: this is bloomberg daybreak . i'm kailey leinz and this is the hewlett-packard enterprise. coming up, oecd secretary-general. ♪

now to your bloomberg business flash. apple is looking to replace the samsung screens it uses on phones. according to people familiar, the company is designing and producing its device for the first time. they are being built at a secret facility in california and maybe several years before consumers see the results. -- he owns about 7% of the company share. the maker of rubbermaid storage containers will speed up a transmission program and add for independent directors to its court. and the retail apocalypse in the victim, claimed another claire's filed for bankruptcy today. the chain has agreed to a debt restructuring plan. claire's is controlled by the private equity firm. that is your bloomberg business flash. alix: we turn out to wall street.

first up, banking on barclays. activist investor edward branson takes a 5% stake in the bank. paulson's push. john paulson returns capital to investors and continues to cut staff and:'s conundrum as it dominates exits point72. david: joining us now is jason kelly. let's start with this barclays investment. jason: so interesting to look at that. you mentioned edward branson here, a well-known but a secret to figure in terms of activists. we see his handiwork and this is part of a mini trend. european banks drawing interest from activists investors. we saw using activism, steve feinberg go in last year and

commerzbank and european banks seem to be a little more right than their u.s. counterparts. daily -- jesjust staley is a mix of 2017. barclays seems to be getting back on the right track. branson said the stoxx could double. alix: the stock is at its highest level since april. david: does it double because jes staley is doing a good job? style, he is fairly quiet. takes a board seat, a chairmanship if he can get it. he goes on a listening tour and makes suggestions overtime. one thing he is one of four is investment in three i, as well as electric private equity in europe. alix: one of my favorite stories

is john paulson. opening the door for more money to leave and the question, when does he admit it and become a family office and call it a day. jason: as big questions in hedge fund land go, that seems to be the most pervasive. we have incredible opportunity funds. it does feel like it is a march toward family office lan. >> he is cutting staff and a lot of money right now. jason: it is down from the 30 plus billion dollars range. alix: if you can go family -- ok, but why would he continued to do that when there's so much bleeding of your funds? jason: it seems like that this is a win. you never know.

this is a tablet market. -- this is a turbulent market. this is a market. volatility is back. this is where these guys to drive. john paulson has known for what -- so well for his bet against housing in u.s.. david: let's turn to a different sort of turbulence. taking private money. he had a superstar president but no more. alix: i read the story and i thought, is this a promo for billions. you have this guy come in, he spent four years really retooling what is down point72 after steve: leaves the business. office thismily fellow, duck and put together a structure and then there are reports of a very difficult

culture. david: that is the question, whether this is a me to issue because there was a lawsuit that was filed. they brought in my old law firm, will firm. the rumor is they want to change the culture. is culture just >>, culture something that is very top of the mind across all industries. hedge funds are a tough culture to let's say the least. if you believe half of what you hear about point72 and is predecessor is they rough-and-tumble. david: let's talk about march madness it unbelievable the upsets. particularly, uva losing to umbc. jason: nice of you not to gloat about michigan right at the top.

from a brackets for a cost perspective, virginia especially just wiped out a number of people. a number of people have been .oing -- had them winning players who are very proud uva alums, mike bloomberg and cliff assets, if you look at the rankings, -- that is a collaboration with aaron brown whose if you are is former head of market research. cliff had ubi. the funnies email was from jim chanos. we have a quote that we can put up on the screen. he does not tweak anymore. he gets permission to put this. he is a famous short seller. david: he is doing great with the shorts.

many thanks to jason kelly. alix: we do have breaking news concerning a u.k. and eu transition deal. here are the latest headlines. the u.k./eu reach a deal on exit transaction according to the eu commission. they're great on a new compromise of an irish border wording. we have yet to get the new conference between david davis and michelle barnier. nonetheless you still have sterling holding around the highest of the session. you do see a selloff in guilds. they move up by five basis points. the socgen says we will see more negative news for guilds on this. you could make the case for more boe tightening. udc michelle barnier is that -- you do see that michelle barnier is now speaking. on this next, this is bloomberg. ♪

alix: our breaking for you concerning eu and the u.k.. michel barnier is speaking in brussels. they are presenting a joint text and see a decisive step and agree on a large part of the brexit treaty of what will be the withdrawal deal. not at the end of the road but seeing selloffs worsening in guilds. the color they made a lot of progress on the overall deal. alix: what we do not know are the details. we are waiting for david davis to take the stage. this is bloomberg. ♪

♪ alix: we have a deal. the e.u. and the u.k. has agreed

on a brexit treaty and an exit bill. new phase, same story. pboc gets a new governor. mountsriendly, pressure from mark zuckerberg's appearance in front of lawmakers that allegations information muscle without consent. david: i am david westin along with alix steel. the brexit delisting news. alix: amazing headlines coming through. a complete agreement on citizen rights and an exit bill. a large part agreed on the brexit treaty. we had been waiting for this. it seems to be a concrete agreement. david: and with big news regarding ireland. that was a sticking point. alix: also waiting for david davis to speak. in the market, you are seeing a reaction. if you take a look at sterling,

140. futures are relatively weak. nasdaq futures are putting pressure on the other indices. sterling, the big move there. a selloff across the bond market. deals getting hurt very hard. higher by three basis points. david: beside the brexit announcement, at 10:00 a.m., at&t will be facing off in court, fighting the deal to buy time warner. this afternoon, president trump will be delivering remarks on battling the opioid crisis at a college in new hampshire. and the g20 finance ministry starts two days of meetings. alix: let's get an update on what is outside the business world. >> it was a not very exciting

landside victory for vladimir putin. he was easily reelected to a fourth term as president. with all of the ballots helmet, he had 77% of the vote. president trump is taking aim at special counsel robert mueller, making his most direct attack yet on the investigation into russian meddling in the 2016 election. the president use robert mueller's name for the first time criticized his staff and his personal lawyer says the investigation should be shut down. and the european union says it has reached a deal on the brexit transition including a compromise on the wording of the proposal covering the border between northern ireland and the republic of ireland. the e.u.'s chief negotiator in the brexit secretary meet in brussels today. global news 24 hours a day, powered by 2600 journalists and analusts in more than 120 .

-- in more than 120 countries. alix: thank you so much. markets reacting with spelling -- with sterling at 120 and selloff picking up steam in the gilt market. joining us is stated. -- joining us is david. walk us through. david davis is holding a press conference. we have learned there is a give it has been struck on this crucial transition agreement. that means after britain leave the european union in march of next year, nothing will change for businesses and consumers for the next 18 months to the end of 2020. and crucially, the main exit agreement, which is crucial, because without that, the transition agreement cannot comes into force. he stood up in brussels and pulled up the document, all highlighting mostly in green,

showing the bits that are not still agreed, so they really hope to get this deal in time to be rubberstamped by the council meeting at the end of this week. that is when the leaders of all the european countries come together in brussels to move the talks on to the question of trade. so the detail of ireland was a big sticking point, and it seems they have come to a compromise, but don't have a compromise on how it will work to create a hard border. but they have agreed on the principle. that is really important because that means they can agree to transition, and that means talks will continue onto which trade deal. so markets reacting positively to that with the pound up significantly this morning in london, and businesses will be relieved that they can now plan this transition in theory until the end of 2020. david: i want to make sure i

understand. they have a transition agreement , and now they are talking about the ultimate agreement, but they have come to an agreement on the major principles of that. is that fair? david: yes, and they needed to get over these agreements to move talk, so the long-term relationship really matters to businesses and investors. what is the trait of going to look like between britain and the e.u.? they have agreed on all of the exit terms, things like the bill , and the border, and the principle of a transition agreement. that means after the european council summit on friday, the talks can begin on what this free trade agreement, what mrs. may cause a deep partnership between the u.k. anti-e.u., what that will look like, then they have a year to continue those negotiations. alix: thank you, david. what i would give to be a fly on the wall to see how they got there.

pretty amazing. david: that is typical of a lot of the negotiations, that it is a mess until the end. i want to talk about the market reaction. >> it is nice to get a good piece of geopolitical news after last week in the market is reacting accordingly. from a longer-term perspective though, i think the real focus i have had is that brexit is bullish for europe. not so much for the u.k., but for europe as it forces europe to look at more closely. the opportunity is not so much in the u.k.. the opportunity is on the continent in with your mom probably. within europe, i am focusing on the southern tier of your. david: if this causes the rest of europe to integrate more

properly, will kind of upside is there for europe? >> we are seeing the european recovery strength and and become more self-fulfilling as we see it brought in, so further integration and the removal of this uncertainty surrounding brexit is going to be positive for the european outlook and will likely see the ecb continue to move toward reducing accommodation and further raising rates with that outlook improving. alix: this comes on the heels of the boe meeting on thursday. sarah writing that means you can see more hawkish boe. are you of the same mind as that, sarah? >> we have seen the boe tilt towards more hawkish views, which is why we moved it up. and so, this really solidifies that. david was saying earlier, you have a lot of the uncertainty being taken off the table, so business investments slowed in the wake of brexit, but this

removes a lot of that uncertainty to where they should be picking up, and so that is constructive for the u.k. outlook. david: i think i understand the argument it helps europe because it knits them to get a more tightly, but why is it important for the u.k.? the pound has really weakened a lot. jay: it does help the u.k.. ultimately, the u.k. is a much smaller market, and in terms of financial markets and the equity market, it is made up of minors and commodity producers and banks. alix: i want to let everyone know where we are at. i think that is david davis talking now and saying, i am confident the e.u. leaders will welcome the deal that is reached , and you wind up having a deal that has been agreed to by the u.k. and the e.u. you are looking at a transition deal as part --at a transition deal and parts of the final bill.

so a big breakthrough coming. david davis is now taking the podium. mr. davis says he is confident that bridget leaders will welcome a deal reached. sarah, and a world that we're , whatg about trade wars this that do for the conversation? sarah: i think it as a level of certainty that we were still wondering about in terms of what the u.k. and european negotiations would look like, and so, that does remove part of it. i think where the issues between weree and the u.k. protections were stemming from. a lot of m&a with the trump administration. david: is this terribly good news for angela merkel? she is now the chancellor for another term, right? and she has her friend amanda macron working and now she has this cleared up. jay: i called the three main

regions, call it research europe, led by merkel and macron. you are right about that. europe is put to bed for to demonstrate disintegration process more fully in the next couple of months, that is really what investors should be looking for. more integration from europe. david: sarah, let me jump ahead to the ec bp what does this say to the head of the ecb if they look at possible -- possibly coming off qe? be slow to will remove accommodations, so inflation right now remains only around 1% if you look at the core. and so, i don't think that will really accelerate the pace of a policy accommodation removal. we are still seeing structurally competitive headwinds with population growth. i don't think that will necessarily see a ramping up in terms of the pace of policy normalization that has been outlined. david: sarah, thank you for

joining us today. jay pelosky a pelosky global advisors will be staying with us. keeping the economy growing. more on that next. this is bloomberg. ♪

♪ alix: optimism over u.k. anti-e.u., a transition deal. we are the news conference a david davis is speaking and he says he is confident that leaders will accept the deal. he says businesses have certainty after a transition deal, and it says they -- and it looks like they have agreed on

an exit deal and a final bill that has been talk through. one important point that davis says there will be no disruption of trade deals. waiting forve been this forever, and it may happen. alix: it feels like a lot of people had written it off. that is why we are seeing market reaction as well. david: i want to turn to china. there is a new man in turn to pboc. he was named governor of the central bank over the weekend, featuring that stabilization is a top priority. mission is to a next table monetary policy, and at the same time, push for financial reform and opening up, maintaining the overall financial sector's stability. david: jay pelosky is still with us. there,u heard that right stability, but at the same time, opening the market.

can they do those two things at the same time? jay: i think they can, david. investors are looking for stability. time isortantly over the opening of the chinese markets. chinese markets the money abroad. and chinese investors themselves need to globalize their portfolios. can both have stability and open the markets, but they can get their debt down? i am pulling up a chart. the thing that struck me is the last five years xi has been in charge. this bar keeps going up and up. in the detailsis and the thing that investors need to remember about china is that the debt is all domestically held and all the local currency. therefore, it is highly unlikely to be a problem in terms of foreign investors are spreading to the rest of the world. what is interesting is the best debt investments year to date is

in the chinese local currency debt. dim sum is up year-to-date. i think it will continue to grow. you will have a continued appreciation of the renminbi. when you look for opportunities and the debt markets that the yield so low, you are looking for currencies and appreciate and the chinese currency over will continue to appreciate in they can manage that appreciation by letting money out, some that is part of the process. there is a lot of things happening in china. it is like a master juggler that can juggle 10 or 12 balls at a time, and that is china. they keep it in-house pretty idea of opening up to foreign investors for their investors to and fore or portfolios, foreign investors, increasingly to get access to the chinese market is one of the big actions for the next three to five years. alix: but at the same time, you have president trump that says

retreat -- reduce your trade deficit. [laughter] jay: what a nice thing to ask for. alix: how do you have to that in -- how do you factor that in? jay: the way i look at it is china has done a lot on the trade side. the crisisus when began with 10% of gdp. now it is 1%. the currency we talked about, there is no way to value it as it is undervalued. it has been appreciating. i think tariffs will comey. come.hink tariffs will he feels that president feels your has been taken advantage of. there are two ways to play. you need to look at the small-cap stocks within china. in then two, i like to go back to my south strategy -- my go .outh strategy were growth will develop over

the next 10 years. consumer-focused, and they are not exposed to the stronger currency that you would get with the renminbi. jay: if china gets hit hard entree -- david: if china gets hit hard with trade, won't that spill over to those different countries? that is probably likely, but you are a lot less exposed. tied into the technology supply chain. in the big cap companies in china itself, so i want to be in the small caps within china, in that debt instrument, and it in south america, those of the three best opportunities in the world today. david: thank you, jay. coming up, facebook is under pressure. shares are down following in at firm that help president trump win the election.

alix: and we are taking a look at the news conference going on with david davis. he is speaking and taking questions from the press. here is what we know. , david davis saying a deal is closer than ever before. the one thing they have to work out is what they are going to do about ireland. it seems like an exit bill remain intact to move forward. potentially giving some certainty to u.k. businesses. we will discuss more of that. this is bloomberg. ♪

♪ alix: this is bloomberg daybreak. have come to an agreement with carl icahn. the maker of rubbermaid food

storage containers will speed up the transformation plan and add for dependent directors to its board. icon said shares were undervalued. the retail apocalypse in the u.s. has claimed another victim. ,he change restoreth claire's the chain has agreed to a debt restructuring plan with a group of creditors. by apolloontrolled global management. apple is looking to replace a samsung screens on iphones. according to people familiar with the matter, the company is producing its device displays for the first time. they are being built at a secret facility in california, but there could be several years before consumers see the results. alix: mark is moving on the news. common sight the bloomberg. this is the supply chain analysis function that shows which countries -- which companies are exposed.

has 160 seven suppliers, and samsung it's over 6% of its revenue from apple. telln 70 gets 21%, and gets 5%. if we do wind up getting replacement for the display. david: overnight, samsung was down. they are getting hit. far.is experimental so alix: it is not uncommon because you see all of the losses. why wouldn't they want to give them out of the picture? we are going to turn from apple to facebook. facebook is embroiled in another controversy over its role in the 2016 election, this time because of data on as many as 15 million users making its way in the hands of the social media team. you can see facebook's stock down 3.5%. , head ofe paul sweeney

north american research for bloomberg. what happened here, paul? paul: a lot of data, 15 million users got into the hands of -- a professor had use. that data found its way to a consulting firm. it kind of goes to the issue of how much control does facebook have over to the data and its user's data? this is another issue in a long list of data issues, maybe not technically a breach, but clearly goes to the issue of control of the data, access to the data, and how that data is used. david: maybe not technically a breach, but much of the same thing. paul: it felt like a breach. in the meantime, you have e.u. saying that we will impose a tax across all of the yuan some of the social media firms, including facebook.

and going to the g20 and when authorities saying this should be a global system that a taxi services. -- that taxes the services. paul: he really goes to the issue if you think about the tremendous run these tech stocks have had like google and amazon, even for the bulls, the key is a relative or a -- the key is the regulatory overhang. whether it is coming from the e.u. specifically are more globally is probably the biggest cap on the stocks longer-term. an jay pelosky still with us from global advisors. would this make you rethink of investing in tech? jay: tech has been the clear leader for the equity market going back years. it is done fantastically, and now, it has become a piñata for issues, but it has not manifested itself in the price. i think we are at the beginning of the shift away from

technology, which means away from growth and towards value, and the market needs to find a leadership, and that leadership could come from financial and industrials. the tech has had a great run. many companies want to play some of that value back. growth will slow and investors will start to look for new homes. alix: reminds me of oil companies. when oil prices are high, companies want a bigger piece of the pie. , the secretary-general will grow -- will join us where trade talks in when osiris are front and center. this is bloomberg.

♪ this is bloomberg daybreak. i'm alix steel. a selloff in tech in the u.s. and a potential deal between the e.u. and u.k. is optimistic coming from a press conference

with david davis and michel barnier. nasdaq futures off by a full percent. the s&p futures off by .4%. the ftse getting hit very hard because you wind up having a powerful rally in the cable race. take a look at what is sterling is doing compared to the dollar. up by almost 1%. at the highs of the session. that is reverberating in the bond market. look at that selloff and the 10-year gilts yield. that ferocious selling spreading in bunds and treasuries with yield up by three basis points. let's get you updated on the headlines coming out of the press conference with david davis and michelle barnier. davis says we need an agreement on the trade deal as soon as possible. they say a good deal is closer than ever before. they have not decided on what to do about ireland, but david davis says we know what we need

to do as well. he says, i am confident you leaders will welcome the deal that was reached. michelle barnier getting headlines earlier this morning, saying they had made steps, but they agree completely on business rights, and exit bill and a financial settlement, and that they are taking decisive steps. david: gibraltar comes back. they have gotten this acted and now they want to get to the free trade agreement as soon as possible. by the am really struck ferocious market reaction we are seeing as well because you wonder that is not priced in? there could be more downside to sterling, but is there an asymmetric risk to the upside? have we factored in that everything could be fine? david: a lot of companies are

probably saying, boy, this can really change our lives. even with auto companies, there is a lot of cross shipment across the english channel, like bmw. higherolls-royce moving and other equities moving higher, easyjet was up. update on let's get an what is going on outside the business world. >> voters in russia have given vladimir putin their overwhelming approval for a fourth term as president. almost all the ballots counted, he had 77% of the vote and barely campaigned. some of his rivals described the election as a farce. putin is expected to keep trying to rebuild russia as a global power while dealing with the global -- will do with a stagnant economy at home. president trump is calling for drug dealers to get the death penalty in some cases. that is part of an effort to deal with the opioid crisis.

opioid overdoses killed women 40,000 people in one he 16. and no hard feelings for the prince who was detained in an anticorruption crackdown. he spoke to erik schatzker in an exclusive interview. unfortunately, i was part of that group, but fortunately, i am out of it right now, and i am not the person who will come and say, i forget and don't forget. i forgive and forget at the same time. sayse saudi government they have paid more than $100 billion in financial settlements for those detained. global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: thank you. g20 finance ministers and

central bankers are meeting in buenos aires. and mckee is on the scene has a very special guest. mike? mike: thank you, david. is topicl outlook number one for the foreign ministers of together today, and we have a special guest. he is a secretary-general of the organization of economic development. out with thecome strongest global growth forecast in 10 years, 3.9%. what are the risks of that and let continue? >> we hope, but it will only putsnuewhat are the risks of tr stability is left on the monetary policy side is applied. there is very little room on the fiscal policy side because everybody wants to reduce the debt and deficits. so, the question is, go for the

structural change? that means education, innovation, that means more competition, and better relations, and also flexibility in the labor markets, flexibility in the product markets. r&d efforts, how you deal with your university system, how you deal with your banking system, how you deal with the education system. these other things that will keep the growth going. skills, skills, skills, reskilling. these other things and will us to say, yes, it is going to stay. mike: but if it doesn't, the last eight times, you had a gross level around the world. it was an economic shock. what is the busiest risk out there right now -- what is the biggest risk out there right now? angel: let's put it in perspective. the are coming from 3.1%.

but 3.9% is still below the 4% cruising speed that we had before the crisis, so just too, you know, to be a little sober about the facts, we are talking about 10 years into the crisis, quite where we were before the crisis. it should make us pat ourselves on the back for 30 seconds, and then say ok, let's get back to work. mike: the ministers will be talking about the biggest risk factors that they see. what is the oecd see is the biggest risk? angel: complacency, and the fact that we have observed, measured, and compared, the thrust for reform, the impetus for reform, the appetite for reform is clearly slowing down. this, at a time we should be accelerating the pace. why? .here are political reasons

so call reform fatigue, what have you, but this is a time that those things we set about structural change have to be not had accelerated, but they become indispensable. you cannot substitute for those with in amount of fiscal stimulus or monetary stimulus. we are running out of that. is interesting because many countries around the world are getting into new free trade agreements, except for the united states, which is talking about raising barriers. how much of a risk is a trump policy to global growth? angel: we had a very sluggish growth of trade in the last 10 years. trade was one of the biggest casualties of the crisis. and then, we have had some ,ather, well, i would say hopeful signs, for example, canada and europe.

and then we had the tpp, which was revived, minus the u.s. for the time being only. hopefully for the time being only. and then the negotiations of nafta and its complexity. so basically, you are seeing the trade that has to be one of the great engines of growth of the world economy. we should be growing double the atld -- we should be growing double. we need to continue to support it. we need to continue to push it forward because it is a crucial element of this revival of this recovery of the world economy. mike: the united states is talking about soon imposing tariffs on china for intellectual property theft. do you find that china does trade unfairly? does the u.s. have a case? angel: we have not heard about that except in very broad

comments, and we have not seen anyone actions, but there is something on which we have a direct responsibility, and that is, on the steel and aluminum case, for example, we have a global forum that was established by the g20 themselves, and then confirmed ,n hamburg in the next g20 which is called the global forum on excess steel capacity, to do with the substance of a problem. with in other issue, rather than taking lateral action, what we would advocate is that we create these institutions so we can go to the bottom of the problem. otherwise, you get into tit-for-tat, and everybody loses, and we do not solve the substance of the problem. mike: one other problem they will be discussing, or one other

issue is one that involves tech companies around the world, particularly companies like amazon, google, and facebook, the tax digital companies across international borders. the oecd in the middle of that. this a major issue? angel: we just submitted a report to the ministers about that particular issue. is, this is not about taxing digital companies. this is about how you tax and increasingly digitalized world economy. even the store on the corner is offering digital services, you know? you can order through the internet. so, how do capture that? otherwise, ministers run the risk of a very fast eroding fiscal base that means a base in which they are taxing the benomy is going to increasingly digitalized and will be shrinking and they will

be left without a knee revenue base. so, we need to find a way. the question is, there does not seem to be today an agreement on what is the best way. final supposed to, with a -- we are supposed to come up with the final relation --with a final resolution by 2020. there will be another report next year moving to a final set of accommodations in 2020. mike: thank you so much, angel gurria. secretary-general of oecd. sending it back to you in new york. alix: thank you, michael mckee, in buenos aires. here with us is jay pelosky. can you factor in the trade war? jay: you have to do that, alix. trade is something that the president has been very focused on. the next phase of global growth will become -- global growth

will come from regional distribution. that is driving this process to regional integration, so when we think of asia, led by china trying to reintegrate the region. been a resurgence in europe with merkel and micron. in the u.s., we are missing that opportunity in this is one of the biggest geopolitical issues is that we are not integrating the way we should. to, tech is very exposed taxation, and two, tariffs drive regional integration. we want to be in those southern parts of each region because that protects you against the tariff risk. david: jay pelosky, thank you so much for being here. coming up, at&t faces off against the justice department to buy time warner. and you can listen to the radio and tune into our colleagues with tom keene. florida ort he in something? david: what am i talking about?

jon ferro will be there. live from new york, this is bloomberg. ♪

♪ daybreak. bloomberg this is the hewlett-packard in a price premium. him and up on bloomberg markets, republican representative crist stored of utah. ♪ david: at&t gets its day in court against the justice department, fighting for an $85 billion deal to buy time warner.

to understand the strength of the case, we welcome a professor who was acting director of the bureau of competition. welcome, professor. let me start with you. the standard that it will diminish competition. why would it diminish competition? at&t does not compete with time warner as i understand it? >> that is correct. in most cases, you are worried about to direct competitors getting together, like general motors and ford. but this is what is called a vertical case. when you have a merger among competitors, it is easy to see what kind of anti-competitive .onduct could occur those competitors have a norm is of a well-defined market, there can be dangerous and letting the total number of competitors in from 6-5, orrank

5-4. anyway, that is what the debate is about. situation,vertical it is much more difficult to define what would be wrong with it. was back in the 60's and early 70's, what was wrong was a vertical merger might change the trade patterns anyway that harms competition at either level. a classic example is an actual supreme court case from 1972 with the government succeeded in preventing ford motor company from producing itself spark plugs by taking over auto line corporations, which was a supplier to ford. so the theory is, ford no longer buys from auto lights competitors, and auto lights does not supply ford competitors. that is not regarded as competitive theory. david: let's ended over to

jennifer. i understand the government's case is that at&t would be charged for its direct competitors like hbo and the turner channel. why is that no longer of problem under competition law? economically, a much more complex theory of harm to show the strategy could be worn out by this merged company is difficult to do. don't have an example of adding concentration and a market. if you take one competitor out, it makes prices possibly go up, but here, you have a situation where the government will have to shell that it will economically process -- will have to shell that it will economically gain subscribers by doing that, and net. professor, but stuff about whether this is a fact-based case.

there are other vertical mergers out there pending. could the judge decide on a very narrow basis that this is not have precedents? >> of course, he could always base his judgment on the specific facts. for example, the government seems to allege that at&t would get control of some really essential or key programming inputs like hbo, and i think some others. there is going to be a big fight about how much power that gives at&t. judge decided there was not sufficient powers that the government has alleged, that would free the judge from the need to make in a new law about what you need to prove to establish that a vertical merger is illegal. on wednesday, there will

be open arguments. how long will the trial take? >> the judge set at the outset he expected three weeks, and now he has doubled that to six to eight weeks. athink he sees there will be lot of evidence to be presented. there are a lot of documents and witnesses, and understands this is an american and understands this is an economic theory that will be difficult to prove. david: do you have to change the deal and get rid of some things? quite,s kindly -- it is and that when the judge begins to signal how he will rule, he will put pressure on the parties because they may not like what he is signaling. so, there was always a possibility of a settlement mid-trial, so we could, -- so we could come up something different that the parties had talked about to date. david: ok. talk to youweeks to guys about this.

thank you guys wa very much. live from new york, this is bloomberg. ♪

♪ alix: i am watching sterling in guild seeing a powerful selloff it in the u.k. you see sterling versus the dollar, up 140. joining us is david:. there is a deal reached between the u.k. in the e.u., and part of the final deal. david, what is your take on the news? david: i was at a press conference where they basically outlined in principle, they are ready to sign a transitional time-limited period, which

removes some uncertainty from the old picture in the short-term. the irish issue has yet to get resolved, but that will only out shape near the final term. and could still remain critical at least for this week, we know they are rolling toward signing this transitional deal, which is good news. we have the bank of england meeting on thursday. it basically means they can make that decision about interest rates and not worrying too much about whether transitional deal will get signed in the short-term. david: explain that to me. i would think with the strengthening pound, it would be concern about inflation. david: but the bank of england made clear in the report that the u.k. economy is growing slightly above trend. we got labor market statistics on wednesday.

if wages are accelerating, there is a small possibility that they will move this again, but it is likely they will go in may. but that will put less pressure for them to raise rates. at the same time, if they believe the economy is growing uncertaintyial, the will be pushed to the back, a gives them a cleaner slate in terms of setting policy. alix: if i take a look at the market reaction, cable off highs of the session with the 10-year gilt yield off highs. are we caps off? david: i think this whole iris issue again came out in the press conference. they cannot agree on anything at the moment. this whole issue about if the ultimate solution will require full alignment between the north and the south of ireland, which would, in a sense, means

manufacturing and agricultural will be compounded by the time they leave. and then if services goes their own way, there will be increased certainty. that was gone over in the press conference. to get your great perspective, and thank you for joining us. positive, but there is some risk out there. david: better off the main were before. alix: in the u.s., it is all about the tech selloff. this is bloomberg. ♪

jonathan: from new york city for -- i amers worldwide jonathan ferro in this is the

countdown to the open. coming up, g20 g20 confusion. a treasury official says that he misspoke saying the u.s. would pull out of economic talks with china. the finding the trading week -- a fed that might set the stage for a rate hike this year. fresh taxes in russell's and regulations in -- fresh taxes in brussels and regulations in d.c. 500 down a half of 1%. the rate hike debate sending the euro higher, up a 10th of 1%, and treasuries up by three basis points at 287 of the u.s. 10-year. through the week and, confusion at the g20 summit in buenos aires, david malpass adjusting that --