>> good morning from bloomberg european headquarters in london. this is bloomberg daybreak europe. stories. trade flashpoints. the ceo puts more pressure on stocks. may day, may day, the u.k. prime minister must decide whether to put her brexit deal to vote in parliament or risk a humiliating defeat. and europe on edge. the french president addresses the nation tonight. and italy prepares its initial budget analysis.

good morning, everyone and welcome to daybreak europe. a.m. london.00 looks like a risk off day based on futures market. the worst week since march. looks like the slide cooking -- could continue today. the trading time being extended into the asian session and it is not looking pretty. down more than 1%. gain for european equities on friday. the stoxx 600 dropped more than 6%. the equity picture looking ugly. yields moving lower. the two-year yields also moving lower. and five weeks of declines in u.s. yields. could we see any pressure this week? there is quite a bit of supply coming onto the market. dollar weakness continues for a

third day. dollar-yen on a back foot. the dollar is declining against any much all of the g10 currencies this session. brentaintaining -- maintaining significant gains. a 62 handleues on with news flow out of libya. let us check in on the markets in asia. juliette saly is in singapore and she has more. as you have alluded to come it is a risk off session. the yen is high and most asian bonds are higher. down by-pacific index about 1.6% similar to the loss we saw across all of last week. look at the markets -- the nikkei is closing out the session weaker by 2%. the us trillion sharemarket is very high today with banks under

pressure. it closed lower by 2%. at a 23 month low. asian stocks under pressure we start to see a pretty tight race in state elections in india for the prime minister. let us look at some of the stocks we have been watching. nissan's chairman ghosn is to be rearrested for understating pay. nissan is closing out the session lower by 3%. a lot of uncertainty over that company. japan display also falling. but it could be cutting its iphone screen output. that is due to weak demand for the new iphone x and alibaba pictures is one stock doing pretty well, up in the hong kong session. it is up by almost 6%. we understand that the raising

is about one billion shares to its controlling holder. nejra: thank you so much, juliette saly in singapore. to catch you up on breaking news. first of all, starting with gilead naming daniel o day as chairman and ceo for march 2019. softbank setting its mobile unit ipo price at ¥1500 in line with expectations. sticking to its ipo price the pot -- despite the market dropped. underscoring the confidence in judging demand as it deals with the follow-up from a major network outage and a stock outage. now, we will get the bloomberg first word news. prime minister theresa may must decide whether to go ahead with tomorrow's brexit vote in the u k parliament.

risking defeat and the prospect of a political crisis. over the weekend, ministers insisted tomorrow evenings vote is still on. if it loses, breaks -- britain will be on course for a orderly exit next year. the eu courtrning, of justice will formerly role if the u.k. can unilaterally call off the divorce invoking article 50. -- china's foreign ministry has summoned the u.s. and canadian ambassadors in protests think it will take further action if needed after he was detained in vancouver. he said in a sworn affidavit that she is innocent of the allegations against her. president emmanuel macron is to address france later today a week after violate clashes that

his government to back down on fuel tax increases. protests in paris. saturday saw about 1700 people arrested nationwide after skirmishes with more than one of just 70 injured in the french injured in the french capital. japan's economy contracted driven by the biggest drop in business spending in nine years after a series of natural disasters. 2%.strength and annualized the biggest fall in more than four years. in thexpected to recover current quarter but trade tensions and chinese slowdown are major risks. as exportit a record growth slowed on uncertainty regarding the trade war. grew 5.4%tal exports

in november with imports rising 3%. leaving a surplus of over $44 million. inflation -- global news 24 hours a day on air and on tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. nejra: thank you so much. as we get closer to the crunch brexit vote set for tomorrow, we are joined by anna ross thomas. the question is, is may still on course to lose the vote tomorrow if it goes ahead? there were reports over the weekend that it might not go ahead. >> she has to decide today or at the very latest before the debate resumes on tuesday whether she is going to go ahead with this. we heard last week that were pushing her to

postpone it. certainly, nothing changed over the weekend in terms of support. the calculation for may is does she try to sustain a defeat and take it back to brussels as proof that the deal will not get through parliament. it might be an opportunity for her to go back and ask for help. others are concerned that she may not survive long enough to go back to brussels. we do not know how people will vote. if she loses, an unprecedented period of political chaos will open up. will there be a vote of confidence in her leadership? could we have a second

referendum even? and another option is gaining traction regarding a norway model. where you have close ties to the eu and some in the cabinet on both sides think that perhaps if she is defeated, the only way to get it through parliament is to rewrite it. way sheaps that is the will go though it is a risky strategy. nejra: you have outlined a number of things that could happen to theresa may enter brexit. if she loses, second referendum, norway option gaining traction. what is the most likely thing to happen in the next few days for traders to focus on? >> if only we knew. there is another option which i did not mention which is that she takes it back to parliament.

the problem is the scale of the defeat. if it is a three digit defeat i think one could safely assume that the deal is dead. if it is a narrower margin, one could argue that she could come up with a few cousin that it tweaks, she could put it back to parliament. the markets seem to be quite sanguine at the prospect of a defeat because they are banking on the idea that she might get it through. also, the prospect of no deal. it would be a chaotic and limbo scenario. ofliament has taken control the end game to some extent and that means that the risk of new deal has been reduced. it is hard to map out what it would look like but what is clear is that in parliament there is a majority against the buteal and one could expect

if we get to january and nothing -- pproved, thank you so much. we arehave hinted at, seeing some investors expecting that we will eventually see this passed through parliament even if it is not the first time around. we are asking the question -- where is the best 2019 trading opportunity? hearing of while way -- ceo will continue. further action if needed. with tensions threatening to a been a fragile trade truce,

trump officials are working to insulate the case from talks with beijing. >> they really should not have much of an impact. i could understand why the chinese might see it this way. this is a criminal justice matter. separate from anything i work on. is unrelated. it is criminal justice. nejra: joining me now from taipei is tim. great to have you with us. this is not the first chinese company to come under pressure for breaching sanctions. how bad could this get for the tech giant? a smallerook at compatriot company, they broke rules on sanctions or trading with iran but they pledged to do something about it and they reneged on that pledge and eventually, they were looking down the barrel at having goods and components being halted. it was almost ground to a halt.

yhat could happen but ther are a few steps away from the other companies position. the endgame and what the u.s. buts out of this is unclear the scenario could be very bad from the perspective of getting access to the important components that western manufacturers do supply. which is more important to u.s. companies -- china as a place to sell things or as a place to make things? >> i would argue the letter. -- latter. every company in the world want to sell into china. l it is a huge growing market with a large middle class. if you were apple, you would not ort to give up selling 15%

25% of your product into china. but all of these companies supplied from china cannot devolve away from china quickly. they are trying. their suppliers are moving elsewhere. vietnam, taiwan, and even back to the u.s. but they are really dependent on china to make the products that they sell everywhere else around the globe outside of china. i do want to sell into china up but it is what they get out of china in terms of supply that is more important. nejra: thank you so much. declining withs asian equities amid the potential escalation of tensions between washington and beijing. and after data signaled that the chinese economy remains under pressure. dollarseeing some weakness in the session as well. joining us now is william hobbs from barclays wealth and

investment management. great to have you with us on this busy monday morning. what a start with the trade tensions. what retaliation do you expect from china to do with this supply chain? veryam: i think it is important for companies. the thing that we are focused on is the locatable deal. there are some common interest. china wants to become an innovator in its own right. have bettero intellectual property protection. and the u.s. also wants that. however, -- nejra: we have to cut in because we have an issue with your microphone. definitely risk off. pressure on asian equities. pointingties also lower across all three indices.

4% s&p 500 losing more than having its worst week since march. asia-pacific index is down 1.6 percent and chinese equities also coming under pressure. broad-based losses across asia and japan is particularly underperforming with the nikkei down 2%. treasuries continue to do decline -- treasuries continue to decline. barclaysobbs with wealth and management will continue with us to continue the discussion but coming up, opec agrees to cut production by 1.2 million barrels per day. if you are traveling to work and have to step away, tune into bloomberg radio live on your mobile device. this is bloomberg. ♪

we were very forthcoming and went ahead of the curve. more than the market needed at the end of the day. and we saw inventories building to dangerous levels. if anything, we are probably acting a bit late and of it conservatively. 1.2 is rather conservative. >> as of now, the decision has been made for six months. perceive the we market needs us to continue, we can extend it. if we see the market needs more oil, we have all of the instruments in place to make adjustments. we are flexible. >> it was not easy but the trust in the organization and the team and their analysis have led us to become more responsive. glutve seen a potential

increasing again and no one wanted to go back to the ending in 2016. >> iran is exempted. this exempted from resolution. >> these are real cuts. the gmc has a bit more work to do now. nejra: let us get a check on the markets. weakness across the asian session. you're are seeing japanese equities underperforming. the nikkei in particular. a stronger yen but dollar weakness. following u.s. yields lower. a weaker jobs number than expected. wages came in in mind.

brent continuing to gain. after the opec deal on friday. and an outage from one of the libyan fields and that may be contributing. the 10 year at 2.84. how will that fit into the dynamic? will it push yields higher? trade being extended. coming under significant pressure even though european equities ended in the green on friday. u.s. equities had their first week -- had their worst week since march. joining us is william hobbs. we were talking before the break about the u.s.-china trade tensions. your view that this will eventually be resolved but how soon? william: there are a lot of issues. there are two parts to the administration. one feels a much wider regardingl angst

china and that will not be solved soon. they are looking for unconditional surrender. the other side looking for a deal. if you look at what a deal could center around, there are some areas where the sides agree. ip protection and enforcement. wants to create. it wants to be an innovator. it wants to escape the middle income track on that. it needs to create a more complete intellectual property. nejra: key headlines. we know what happened last week with u.s. equities. take a look at the chart. people searching for reasons for the selloff. this chart shows that in this in 2015-2016, the s&p had two corrections. treasury yields though are quite a bit higher. does this look like 2015? william: that is a good point

particularly about treasury yields. when we talk about trade tensions and their role in this wer's market, i would say would want to push them further down the line because they have been elevated. we tend to elevate them in investment terms and their important but the reality is that the trade tensions have not been that important. nejra: what is important? william: the bond yields. investors are jubilant. growth was synchronized. the world has become less synchronized this year. a deliberate slow down in the chinese economy. and the last friendly central bankers and bond yields are the more important factors to consider. are more bond yields of the story, that takes me to the fed. the wages held out. 3.1%.

when you look at the fed, there are a number of options -- they could stay the course through 2019, a dovish hike in december or a surprise holds. more and more voices coming up with that. what do you expect? william: we think december is still on. there are a huge number of stories in the bond market. in version. the curve. whether they should pause. we still think the fed will continue raising. we still think the economy warrants that. nejra: how many times? william: the invested bank still -- the investment bank still has quach at times. we are a little more flexible. though that they still have further to go. the bond market -- the important point is that the expectation component is rising.

we are not seeing inversion in the important part. nejra: if we get your expectation in 2019 and we get curve steepening as a result of that, would we get that? william: we should actually see that flattened. it is more likely to steepen if you pause. the markets will say that they are behind the curve. worrying about long-term inflation. you might see the curve steepen in that scenario. we expected to flatten. you're getting closer to neutral. does that mean the market is expecting the fed will bring the cycle to an end and that is bad for equities? william: in a sense, that should happen in the next few years. william hobbs with barclays will stay with us. up next, may date, may day.

the u.k. prime minister facing a decision whether to go ahead with the brexit vote. and in france, pressure is mounting on french president emmanuel macron after four days of street violence. this is bloomberg. ♪

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week: the brexit vote this goes ahead. one of the things for markets to digest. we are seeing a sea of red across asia. japanese equities coming under pressure. the msci asia-pacific down overall. u.s. futures pointing lower, too. here is what you should be watching this week. it is a key date for theresa may tomorrow.

the proposal has drawn criticism from opposition parties. on wednesday, in strasburg, the european parliament votes on a draft free-trade agreement between the e.u. and japan. on thursday, the european central bank looks set to cap asset purchases after spending 2 trillion euros over the last three years to over deflation. the board of the reserve bank of india board meets amid standoff over the central bank's autonomy and reluctance to cut rates. let's check in on the markets around the world. joining us in mumbai -- m dani burger. dani burger. we have this small matter of state elections to look at as well. good morning. friendly, the markets probably are looking at that and that is why they are a bit soft. one would have started off poorly. all of the gains for 2018 after

of it today. awfully of them are down. the currency has depreciated strongly. 71.32. i recommend is in part to the prices as well. at least, that is what the exports seem to suggest. markets.hat is on our ahead of the state elections justts tomorrow, there are -- to fill in our viewers about what is important, prime minister modi could well be facing imminent defeat in three of the state elections which are important. ahead of that, the index falling. anti-that,lts are they have more chances of remaining soft. nejra: thank you. you're taking a look at chinese equities. what are you looking at? dani: chinese equities off again today. muchan really see just how

that has been on the market back and forth by looking at its shares. look at what has happened over the past few months. they have been trading in a very tight range. you can see the latest move has been downward over the last four days with a 6% decline. they are falling more than 1%, but they are about to hit the bottom end of the range, which is just under 10,000. the index right now is this. look for this to rebound. their losses may be capped if history is any guide. the huawei cfo rests. look at the commodities market. we have seen volatility skyrocket. i have a 30 day realized volatility measure for the bloomberg commodity index. this is pretty incredible looking. up to 18much it spiked over the past couple of days. it is at its most volatile in over two years. the opec output cut the most recent thing to throw off markets. a big surge on friday. we saw hedge funds got caught

wrongfooted on that move. look for more short covering, more likely to bring volatility in the market again. nejra: volatility. that is all i have been hearing for weeks and weeks. they do so much, dani burger. i have been asking the question on mliv. where is the best 2019 trading opportunity in europe? you can reach out to us and the on yourtv bloomberg. let's get the bloomberg first word news. thanks. the bail hearing of huawei cfo continues later today as the dispute over her arrest escalates. china's foreign ministry has some people in protest, saying it will take further action if needed after he was attained in vancouver for allegedly violating american-iran sanctions. she said she is innocent of the allegations against her.

is again warning about trade tensions, saying the simmering dispute between the u.s. and china threatens to derail the global economy by undermining business confidence living.ing the cost of it cut the forecast in october for the first time in more than two years, blaming the trade war and the threat to emerging markets. takes both parties, u.s. and china, to be determined to reach closure on this, and it is vitally important because trade is a major engine for growth. is damaged, if it is threatened, is going to affect growth. jobs, less, less investments. people suddenly who are in the business of investing, who are in the business of creating jobs, will lose confidence. toley: saudi arabia is said resume its policy of imposing fees on ex-pat workers. acording to sources,

ministerial committee is looking at modifying or restructuring them, but it is unlikely it will be canceled altogether. tokyo prosecutors are said to have rearrested former nissan chairman carlos ghosn on suspicion of understating his remuneration. he underreported the compensation according to a news agency. a spokesperson declined to comment. prosecutor representatives said an announcement has not been made. almost gone has previously denied the allegations. -- carlos ghosn has previously denied the allegations. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. nejra: thank you so much. theresa may has to decide if she is going to delay tomorrow's key brexit vote. the prime minister risks of humidity in -- humiliating defeat that could plunge them into a crisis. the secretary says there are no

plans to postpone the vote. the vote is going ahead because it is a good deal. it is the only deal. and it is important that we do not let the perfect be the enemy of the good. the brexiteers in a party, for people like me, we campaigned in the referendum to take back control of our immigration party, to have a say on things like not sending money to the e e.u. th nejra: let's bring back in william hobbs from barclays wealth management and introduce simon lewis, a senior of the associations for markets in europe. he served as a director to communication to pry minister gordon brown. welcome, simon. should theresa may delay the vote given that most people say she stands to lose it tomorrow? simon: it is going to be tight. obviously, that is a possibility. it has to be today.

there has to be a motion moved today to delay it. that could in itself set off a set of other circumstances, so what we know is this week is going to be a very challenging week for the prime minister. nejra: how is she going to come out at the end of it? what is your best guess? simon: that the industry has to plan for the worst but hope for the best. and all of this is really ignoring the fact that we still don't have a transition plan. there are risks. the industry is saying how do we make sure that we plan for the eventuality of an new deal -- a new deal? nejra: the pound is stronger on a backdrop of general dollar weakness. as the market preparing for this to pass eventually? william: in our estimation, and most of the other views i have been hearing around the street are my chances of a hard brexit have been receiving a little bit amidst the very moves in parliament and so on, so really, you know, that is the big thing that matters. they are quite close to irrelevant. it's really no deal or some

deal. bewe cannot quite see how -- careful about short-term movements. our view is that probably on a medium-term basis, it looked reasonably inexpensive, but you have to search through a lot of news flow in the short run to get through the next week in particular. nejra: what sort of preparations i am members making? -- preparations are your members making? one of which is this option of a sort of norway plus model. now, how our business is preparing for the various options that might be put on the table if the vote does not go through ' ? >> what do you do in the case of no passports? you have to have provisions in place. coming back to the fact that if there is a transition deal, that gives a period of a new relationship to put in place. do they do between now and march and then what happens after that if there is either a deal or no deal? most of the planning is already

in place because we have known about this for sometime that brexit was coming, so it is a question of getting everything ready. nejra: how prepared are your members for a hard brexit is that does become the outcome? william: they are as prepared as they can become a but some things are out of their control. there needs to be e.u. action to make sure there is not a major that edge risk. the have to put in place deal with mitigating effects. nejra: what would be your advice for theresa may this week? >> i know how dramatic it can be. situation, it is uncharted territory, completely uncharted, so they will literally be taking it hour-by-hour. nejra: what do you do as an investor? i know you look more longer-term, but for example, we have been reading stories on the bloomberg that trade is preparing to be up all night. we could see swings in the pound of 6% either way. there must be some opportunity

you can take as a long-term investor. >> you just have to be careful. the thing with these situations is a respect for markets. targets are mostly efficient. they assimilate to new information relatively quickly. that means you have to have a very high threshold of betting against the market in these circumstances. generally, with lighter investors, you are looking at u.k.-related assets. the intrinsic value actually has relatively little to do with the u.k. traditionally. little bitrket a more. sterling swings are going to have an impact on your ftse values, but that should be transitory. and in the end, our best bet is the u.k. economy will survive, will endure, whatever happens. your trend growth rate will be dragged up to a respectable institutions, the legal system, those kind of things, so in the end, you have to keep your cool as much as possible. on that note, let's look

at a chart of u.k. equities showing valuations have plunged relative to the world. you can see the lowest since 2010 basically. to me, given what you just said, you will be looking to buy at these levels, but indiscriminately, or are you looking at -- i know you do not talk about specific stocks. how would you be navigating this market? >> if a look as a long-term investor just quickly and i think about my returns from stocks, my dividend yield, plus my dividend growth, if i look at the ftse and i have 5% dividend yield, and it traditionally grows at around the pace of gdp growth, that is high single-digit long-term returns. very attractive. the problem in the short room is not so much -- short run is not so much brexit, but the composition of the ftse is very defensive. consumer staples, your banks are boring relative to some of the racier alternatives in europe, so if you are looking to still have some cyclical skin in the game, then the ftse is

quite low down the list. we can probably, we are focused more on emerging markets and continental -- in continental europe. nejra: what would be the worst case scenario for your members? no deal, crashing out of the e.u., or a labor government? simon: crashing out, because that is when we enter territory we have never been in before. orre has to be a firm deal in place to make sure it can be cleared through markets and over-the-counter. nejra: thank you so much for joining us. simon lewis and william hobbs with barclays wealth and investment management. will hobbs stays with us as well. just got some breaking lines to get through here. tokyo prosecutors reinvesting carlos ghosn for understating pay. this just crossing the bloomberg. tokyo prosecutors indicting nissan as well. we will bring you the headlines as we get them.

coming up, and angry france is waiting to see if president to placatefind a way protesters. we are in paris, next. when you're traveling to work, tune into bloomberg radio on your mobile device or dab digital radio in the london area. this is bloomberg. ♪

nejra: let's get the blues bird -- bloomberg business flash. prosecutors have

rearrested former nissan chairman carlos ghosn on suspicion of understating his remunerations. he has been indicted for breaching japan's financial instrument and exchange law by snderreporting ghosn' compensation. they had previously denied the allegations. softbank has set the final price for its ¥2.65 trillion japanese telecom ipo at its original target. technology conglomerate has fixed to the final price for the offering at ¥1500 apiece, underscoring its confidence in judging demand for the shares. the shares for softbank corporations will be -- tesla boss elon musk has launched a direct attack on the securities and exchange commission. when asked about his punishment earlier this year, he told cbs that none of his tweets have been sent since he reached a deal with the commission.

following the top of the go private suite in august. he says he has no time for the abide by theld deal. >> i do not respect the sec. i do not respect them. >> but you are abiding by the settlement, don't you --aren't you? >> i respect the justice system. desley: that is your bloomberg business flash. nejra: let's turn to the events unfolding in france. the friends financial -- french finance minister. let's take a look at the comments coming through from the french finance minister. protests will mean less jobs, less prosperity. the minister repeating that roads is to be dented by 0.1 points by year-end as the french finance minister was saying protests are against france's foreign attractiveness. emmanuel macron will address them today.

the president has seen his approval ratings collapse as the so-called yellow vest demonstrations continue. critics say he needs a grand gesture to stick to the substance of his mandate and convince skeptical opponents. our reporter joins us from paris. great to see you. what can emmanuel macron offer the french tonight to ease the tensions? he has already you turned on the fuel tax. maria: what we are seeing now is the fourth week of protests. the fuel tax has been scrapped. we hear from the french government there will be no more taxes in 20 19, but really, this has escalated into something way bigger. it is about emmanuel macron. it is about his policies. tonight, a lot of people in france will be waiting to hear the french president just apologize or say, look, i see what you're doing. i understand what's going on.

perhaps it is a mistake i should not have made. in terms of the politics, we could see perhaps in tax deductions, we could see matches aimed at the minimum wage. at this point, we had to show -- he will have to show that he really gets that the working class french people, it is not an easy time. underpaidreally feels , overtaxed, and is not shown any love since the financial crisis. perhaps also to show a little humility. i have been wrong. maybe we can do things differently going forward. nejra: maria, these protests began about fuel tax. they have become about so much more, putting even more pressure just on the president himself. what sort of comments have we had from the french government in response? we updated some of the latest lines from the french finance minister there. i think, in terms of economics we heard from bruno le

maire, the finance minister, he will tell you this was supposed to be the busiest time of the year, and we are seeing shops he much every weekend. i must say, this weekend, it was not -- it was on lockdown. red alert. police were everywhere. if you own a business right now, it's not business as usual. you are not making money over the week because everything is shut. for tourists, this is very difficult. this goes beyond. given what we see, the bigger question is what does this mean for the reform agenda that macron has put on the table. he says we are going to see a revolution, we are going to go forward. no more strikes. this has got to be a new nation. at this point, the french government, if they want to ease tensions for the time being, they are going to have to scale back. and do things, but perhaps not as quickly. over the short term, there will

be hits to retail sales. the biggest story here is what does this mean for the macron revolution?are going to see more reforms like the ones he promised ? nejra: thank you so much for joining us in paris. today, we are asking the question on mliv. where is the best 2019 trading opportunity in europe? you can join the debate, reach out to us and the mla team, tv on your bloomberg. let's bring back in william hobbs, the head of investment strategy at barclays wealth management. let's put the question to you and look ahead to 2019. where is the best trading opportunity in europe, taking into account everything we had heard and everything with brexit as we discussed. i would- william: ague, in i diversified -- diversified context, it is european banks. you will see interest rates. our bet is that president draghi

will get his chance to raise interest rates before the end of his term. but increasingly, the market will focus on that. the point about the european economy, and her commentator got a just right. the european economy is ok. it looks alright. we have had some accidents in the road this year, particularly that new emission standards. that trend looks ok. we will see nonperforming loans continue to fall. european banks are very cheap. our bet is there is some deal with regards to italy. he will see tensions subside. markets can help that angle, so it looks like european banks, but it has got to be done in a diversified context. there's lots of problems associated with that sector. uber further european banks. in terms of equities more broadly, do you prefer them over u.s. equities given what you are saying earlier in the show where you see the fed hiking four times in 2019?

the would give leeway for ecb to follow because there have been discussions about if the fed pauses, whether that would mean the ecb could not raise rates, too? i justen everything said, are european equities your preferred space for the u.s.? william: over the rest. if you look at 2019 and profits growth around the world, it is not inspiring. the world economy should slow a little bit. you should see low growth around much of the developed world. in europe, you have got a dividend which is a little bit more attractive. the valuation story, more attractive in europe. you should see some of that sentiment move a little bit more in favor of europe. the advantage we have got in 2019 over the state we entered this year, that is sentiment. we are not jubilant in any way, shape, or form. sentiment is much more depressed. that gives you much more scope to absorb the inevitable actions that you will see ahead.

our preferred region and the world is still p.m. -- em. nejra: euro traders still opting not to take out call options on the currency. we have seen the euro, and the pressure this year. does it recover in 2019, and to where? william: you have not got a big ask to grime -- axe to grind. you should see a little bit more support for the euro over the course of the year because reducing the ecb is going to move out of the extreme position it is in now. nejra: thank you so much to will hobbs. he will be continuing the conversation with us on bloomberg radio at 7:30 a.m. u.k. time. markets under pressure on renewed worries about trade. the trump team are trying to insulate the china talks from the huawei case. we will bring you the latest. you can see asian equities taking a beating.

50 futures significantly lower. in into bloomberg radio on your mobile device or dab digital radio in london. i will be joining me there at 8:00 a.m.. -- i will be joining you there at 8:00 a.m. this is bloomberg. ♪

nejra: good morning. i am nejra cehic. this is "bloomberg daybreak: europe." and these are today's top stories. trade flashpoint. the arrest of huawei's cfo puts more pressure on global stocks, asian equities, and u.s. equities trade. the u.k. prime minister must decide whether to put her brexit deal to a vote in parliament or risk a humiliating defeat. europe on edge. emmanuel macron addresses the nation tonight after a weekend fraught with protest and street violence. italy prepares its initial budget analysis.

good morning and welcome to "bloomberg daybreak: europe." we are one hour away from the start of cash equity trading in europe. we have an indication of where the futures are going through tradingn session with time extended. we have seen the euro stoxx 50 futures come under pressure. quite significantly down one and 1%. it's interesting if you look at the futures. dax futures down 1.3 percent. cac 40 futures off by .8%. ftse 100 futures down by the same. we did see gains for european equities on friday. a different picture if you look at the weekly picture, down almost 3% on the week for european stocks. u.s. stocks had their worst week since march, down more than 4%. u.s. futures coming under pressure as well. trade tensions seem to be escalating around the huawei cfo case that is ongoing. we have been seeing yields moving. let's take a look at what is happening in the bond market.

the two-year and 10 year yield coming under pressure. 2.70wo-year yield on a handle. a lot of supply coming into the treasury market this week. how will that help the dynamics? we will have to wait and see. in terms of european bond markets, you are seeing some money flowing out of italian bonds, looking at the futures, so judging by what the bond and due to the futures are showing, you could see a little bit of spread widening in this session. we're asking the question on mliv, where is the best 2019 trading opportunity in europe? we have seen the bund yields drop significantly in the past couple of weeks. also, could it be in the italian budget standoff? is it in the euro? thisve the ecb decision week as well. you can reach out to the mliv team on your bloomberg. let's check in on the markets in asia. juliette saly in singapore has more.

good to see you. are we still seeing the selling pressure continue in asian markets? juliette: we certainly are. not a great start to the week at all. where is that santa claus rally? down by 1.8%. over theimilar today, course of the last week. it's all substantially today. the mining stocks, the banks under pressure, down 2.3%, now at a 23 month low. you had stronger yen on the state haven buying, so the nikkei down by over 2%. in china on the close, the csi 300 down by over 1%. indian stocks coming under pressure. it looks like prime minister modi may have a bit of a tough break in those elections. indian assets alcohol dumped today. we chinese and japanese data chineseo this -- weak and japanese data adding to this. asian bonds in focus today.

the yen is up by .1% against the dollar. 112.53. you have actually seen the indian rupee, the worst-performing asian currency today, falling .7% against the dollar. in terms of that move into bonds, south korean bond looking very good today. that yout saying should avoid buying south korean bonds until the second half of next year because they think the market may signal a rate cut, and inflation could come in below the projection. today, investors ignoring that address. a lot of money coming into the asian bond space. saly inuliette singapore. first word news. desley: thanks. the bail hearing of huawei's cfo continues later today as the dispute over her arrest escalates. china's foreign ministry has

summoned the u.s. and canadian ambassadors to protest, saying it will take further action if needed after she was detained in vancouver for allegedly violating american-iran sanctions. she said she is innocent of the allegations against her. >> it should not really have much of an impact. i can understand from the chinese perspective how they would see it that way. this is a criminal justice matter, totally separate from anything i work on or anything people in theicy administration work on. it is unrelated. it is criminal justice. desley: china's trade surplus in the u.s. hit a record number. official data showed china's poor export in dollar terms grew 5.4% in november with imports surplus%, leaving those at $34 billion in the month, the highest this year. factory inflation was at its lowest with the consumer price index also slowing.

may mustister theresa decide whether to go ahead with tomorrow's brexit vote in the u k parliament, risking defeat and the prospect of political crisis. over the weekend, ministers insisted the key vote is still on. britain will be on course for a disorderly exit from the yuan march but it could also trigger -- the e.u. in march, but it could also trigger a second referendum. later this morning, the european court of justice will formally role in whether the u.k. can unilaterally call it off by revoking article 50. president emmanuel macron is to address france later this day a week after filing clashes -- violent clashes. museums and shops were reopening this week and protesters were streets.one from the saturday saw 1700 people arrested nationwide after skirmishes with more than 170 injured in the french capital as extreme right, extreme left, and riothist elements defined

forces. saudi arabia is said to be reviewing its policy of imposing fees on extent workers after rising costs inflicted economic pain and contributed to an exit is of foreigners. a ministerial committee is looking at modifying for restructuring. it is unlikely the fees will be canceled altogether. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. nejra: thank you so much. the bail hearing of huawei's cfo continues later today in the dispute over her arrest. decline amidtures the potential escalation of tensions. sentiment has been fragile in recent weeks as traders gauge whether -- joining us now is the fund manager and a chief equity

strategist for bloomberg intelligence. ray to have you both on set. gina, let me start with you because we are talking about what's u.s. futures are doing. so many discussions about what drove that. what is your take on what has happened and where we go from here? >> a number of factors have driven the weakness in your stocks, starting with earnings revisions. we point to the policy measures that have occurred over the last three months and reduced risk tolerance at-large, but if you go back to what happened in september, we made a peak in earnings estimates and they have come under some degree of pressure. until we get some sort of stabilization in earnings estimates into next year, it is likely stocks remain under pressure. and then you have other peripheral impacts such as the one way arrest, such as u.s.-china trade relations, such as the fed, where we are going back and forth, the ecb with qe ending, contributing to this overall weakness as well in terms of risk tolerance.

that created a pretty messy risk. nejra: are there any technicals or sentiment indicators pointing to when we might come back in? >> so far, the 10% correction level has held pretty steady. we close right a few ticks above the november low, so we have been in this area of 2600, which is the intro market in september areahe way to 2650 as some of stabilization. it remains to be seen. futures are pointing to 2620 as a likely open. if we push down to the 2600 level, i would expect us to continue to press lower because there is not a lot of support below that level. i will say that momentum is not getting worse. this is an interesting picture for your stocks. if you look at the 14 day rsi on the index, it is not making lower lows with price. momentum is creating a little bit of stabilization and it

seems to be helping to support at 10% level. we will see this morning if we close lower. the negative side is calling -- coming from mid-cap stocks and not supportive of any sort of rally occurring in the broader exchanges anytime soon. nejra: meanwhile, we see yield in the u.s. dropping along with u.s. equities. we have yields dropping for five weeks. a lot of supply coming into the market this week. does that have the potential to push yields higher given how the market has repriced around the fed for 2019? >> i am not sure if supply will have a massive impact. i think people are going to be a lot more focused on what policymakers say. nejra: we are in a quiet period the. / -- periods though. have blinkedople and are pushing back on their more gradual pace.

think they are going to be data dependent, watching markets. i think markets -- policy is mutual. i think the market is probably right. nejra: given what has happened in markets and the economy for the latest jobs data. the headline data was a miss. perhaps they tell a bit of a different story. will the fed be able to deliver anything other than a dovish hike in the december meeting? >> i don't think they will. i think it will be a dovish hike. what you are seeing if you look at financial conditions, i mean, the fed would have been frustrated earlier in the year as it hikes gradually, but financial conditions did not really tightened because you saw -- also because of the stimulus package going on. he felt they were pushing on the string where it is finally now starting to turn a little bit lower. widen andedit spreads

stocks come down, so i think they can be satisfied now that fed hikes have started to have an impact. financial conditions are tighter and they are trying to engineer a softer landing for u.s. asset prices. nejra: i want to show you a chart that this here we go again. in 2015-2016, the s&p had to bring corrections within months because people are searching for historical parallels as to where we go from here. one thing that was very different in 2015-2016 was what the fed was doing and where yields were. is this a repeat of 2015-2016 for the full case or do we have to look -- bull case or do we have to look at it differently? >> there are certainly rhymes. we suggested we are in for something like a 2011 or 20 15-2016 correction amidst a longer-term bull trend. we have had material corrections.

those corrections were affiliated with changes in monetary policy. i think that what is happening today is more about a pending contraction in the ecb balance sheet. we have absorbed the fed's contraction, and that is a lot of what their collection was about. this one is more about europe and removing the liquidity conditions in europe, if you were to point to a kiwi case. i think it is not the same precisely. in 2015, the cali had -- rick had a massive crisis. we saw energy sector earnings contract 3% in that period. driving a major correction. we are not likely to see earnings contract in the year ahead, but we are likely to see them rise at a much lower pace, roughly half the pace. there are some similarities. it is not exactly the same. i think one thing we want to watch certainly is the 50 week moving average. one of the things we have seen consistently about the 2011 and

2015-2016 correction was stocks found resistance at the 50 week moving average which proved a critical resistance once again in the santa claus rally we had after the thanksgiving holiday in the u.s., and we really struggled to press above that moving average since. there is similarly, that was the demarcation line between a bearish correction and bullish advance, so we are watching that level carefully. nejra: are you watching 2019 as some people are, gina? theirple are saying that value of the index, if you take our earnings model, would probably get closer to 2950 over the past -- next 12 months. it is somewhat dependent upon the fed potentially easing the pace of tightening. the market absorbing this earnings weakness we have seen over the last several months, and probably some trade policy resolution. we have to see continued walked back of the hawkish trade rhetoric and material improvement and relations.

nejra: what does that mean for the dollar? >> we are forecasting for dollar weakness because you can, you know, the fed is one place where you can take some hikes out, so we think we can expect the dollar to weaken on the back of that and the fact that you do see, you know, people do seem to have trade as well, i think to continue to push for that to stabilize their own economy, which i think should benefit the rest of the world growth and also as the stimulus words often the u.s., you see earnings come down, as gina stated. allure ofe over of -- your stocks is weaker. nejra: thank you so much for joining us. mick wall with marion global investors stays with us. coming up, downing street

insists it will go on as planned. traveling to work, tune in to bloomberg radio on a mobile device or dab digital radio in the london area. we stay with you wherever you are. this is bloomberg. ♪

nejra: -- >> it should not really have much of an impact. i can understand from the chinese perspective how they would see it that way. criminal justice matter, totally separate from anything i walk graham -- work

on or anything the administration work on. for us, it is unrelated. >> i think that is a false narrative in terms of the impacts. mighty view is that -- my view is that this is an interest rate effect. the fed went too far too fast, and what we saw basically was a little asset reallocation from the stock in the bond market. we had some impact on the housing market in terms of the dollar. it is too strong now. and that has exacerbated our trade deficit. this is a normal adjustment. >> that is just being tough and protecting the integrity of europe's national security policy, very important. got some headlines coming through here on the bloomberg. this is from the china foreign ministry spokesman, speaking in beijing, saying that other nations have no evidence of huawei security floors as the trade tensions continue.

the trump team is working to insulate these china talks from course,ei case, but of this is a story we are talking in terms of the trade tensions and the impact on markets. and speaking of the market, we have been seeing general risk off in the session. equities falling. treasury yields falling as well. a little bit of dollar weakness continuing, too. let's get the bloomberg business flash with deadly humphrey in dealey humphrey in dubai. tokyo prosecutors are said to have rearrested former nissan chairman carlos ghosn on suspicion of understating his remuneration. he underreported the compensation according to a news agency. a spokesperson declined to comment. prosecutor representatives said an announcement has not been made. ghosn and nissan have previously denied the allegations. a japanese technology conglomerate fixed the price for the offering at 1500,

underscoring its confidence in judging demand for the shares. the shares of the new entity softbank corporation will be trading on the tokyo stock exchange on december 19. credit suisse is reported to be planning to announce a share buyback program and increase dividends at investor day this week. according to newspapers, the share buyback would be for just over 3 billion francs with the ceo set to outline plans as his restructuring comes to an end. declined to comment when contacted by bloomberg. reports from germany's they deutsche bank has reported suspicious tax transactions that may have allowed client claim payments on shares they did not own. they say an internal review found more than 5% of the banks pre-released 80 our dealings between 2010 and 2015 were prone to abuse of germany's dividend tax credit. the potentially suspicious moves account for 25 million euros in

withheld tax. and that is your bloomberg/. deadly humphrey your bloomberg business flash. -- desley: that is your bloomberg business flash. nejra: emmanuel macron is set to address france later today after another weekend of violent protest across the country. critics are calling on the president to make a grand gesture to end the crisis. with all of that in mind, today, we are asking the question on mliv -- where is the best 2019 trading opportunity in europe? you can reach out to us and the mliv team on your bloomberg. let's bring back the fund manager with marion global investors. your world is fixed income but within that world, what is the best trading opportunity in europe in 2019? i like telling them.

what you are seeing from the aboution is the language the deficit being kind of a negotiable. unis being -- being kind of negotiable. extremeder more procedures. the path is likely to be avoided. i mean, you can see from france that protestsel against austerity and any kind of tax rises, this will be a theme across europe is you will get the spend and the european commission will have to allow for that because politics demands it. nejra: earlier, you said you dollar weakness. does that mean we are going to

see euro upside in 2019? volatility is that 2018 averages at the moment, so not all a lot to play around with in terms of volatility. ecb would not put it on the meeting this month. i think they are going to try and -- and they are conscious that there qe is ending but they don't want to tighten financial conditions on the back of what has happened in the u.s. there will be a dovish end to qe. i think you will see european yields selloff. that will draw money back into europe, which has been sent out to the u.s. with high-yield and high stock returns. you will see stabilization european banks as well, which to the european stock markets and repatriate the money that was left in droves since the ecb started its qe program. nejra: cable is pretty much untradable, but to me, it seems he will miss an opportunity if you do not get in given the moves we could see around the smoke this week. ame people are calling for

move. >> you might miss something, but you might be the wrong way around and miss this. it could be a good thing. long cell from the basis that we don't see any parliamentary majority. the chance for a hard brexit will come down with the amendment passed last week. as they are stays no majority in parliament for a hard brexit, which would be chaotic and pretty much wiped party for a generation perhaps, i think cable can do ok. nejra: thank you for joining us. wall, great- nick to have you with us. "bloomberg markets: european up next. if you have to step away from the tv and listen to the market open on radio, tune in to

bloomberg radio on your mobile device and on dab digital in the london area. i will be taking you through that equity market open on radio from 8:00. this is bloomberg. ♪

good morning, welcome to bloomberg markets. this is "the european open." cash trade is less than 30 minutes away. flea factor. sundial warns funds the still have stocks to dump as futures slide. china escalates tensions over the arrest of huawei