nejra: good morning from westminster. live outside parliament, i'm nejra cehic. manus: this is bloomberg daybreak: europe, these are today's top stories. nejra: theresa may leaves brussels empty-handed. european leaders step up plans for a no deal departure. chinese output figures disappoint. losses in asian equities. pimco says it's recession risk is at its highest in nine years. central bankers including mario draghi are concerned about what 2019 will bring. the warnings a week before the fed announces its next policy decision.

matt: what a week of brexit it has been. starting with the delay of the brexit vote. theresa may surviving that no-confidence vote. it is enough to bring me to work on a friday. it is a big weekend a big day. my question to you this morning politicallymay couched in this embattled by the gouged and disemboweled by the response. no negotiation. nejra: you could say the eu has been playing hardball. myself, how is theresa may going to spin this when she comes back?

is she going to put any kind of positive spin to lawmakers? we expect her to meet her cabinet today. bloomberg has been reporting that a number of cabinet ministers are pushing for an informal vote to have various options that lawmakers would vote on just to show that her deal is the best option. is it risky this close to brexit? question is, dewey county on all the way to january 21? is the pound tradable? the telegraph road a great article. they said hard brexiteers have been thwarted because they did not succeed in decomposing may. posing -- d d eposing may. the china data was torturous. you need to go sales because retails are the worst in nearly a decade. the s&p 500 is drifting. pimco are saying there are

recession warnings. the other side of the coin, citigroup saying by global stocks on the debt. -- on the dip. the bulls some would say are back in the agenda. about the new central bank governor, is he more market friendly? the oil is on the roll over. nothing seems to be taken at face value. this is wti. a quick flash of that was a staggering. $52. you can see that slow drift. top story on oil this morning. saudi arabia may cut their export to the united states to a 13 year low. how is sterling? nejra: i have decided to show eurosterling today. i know i could have shown cable,

but we are seeing that unchanged. traders do not know where we go from here. theresa may is entering this period of wargaming. it is interesting you are seeing the euro gaining against the pound despite what some saw as a bit of a dovish start to mario draghi yesterday. euro gains, sterling drops. we have seen eurosterling strengthen. today's session we are looking at it on an 89 handle. italy considering the structural deficit in 2020 and 2021. the italy government considering value-added cap hike in 2020. italy and the eu maybe 4 billion euros apart on the budget. lots of dynamics paying into these markets. in terms of the futures, we are seeing a weaker session in asia. yesterday was lackluster.

european trading in the u.s.. we could see a weaker open for the european equity market at 8:00 a.m. today. meanwhile, the 10 year yield moves over two basis points. moving around that 2.90 handle. it is interesting because goldman and city are clashing with bond traders. inflation breakevens continue to be under pressure. let's check with the markets in asia. juliette saly in singapore has more with that. juliette: not a good session. the nikkei closing of the session by 2%. we have the msci asia-pacific index back in the red after two sessions of losses, down 1.3%. that means its weekly drop will be a similar amount. industrial production and retail sales weaker in november. you also have the survey out of japan with some of the spending plans from the business is there

a little bit weaker then -- below the outlook before large manufacturers confidence we can. we have seen the r.b.i. board meeting for the first time since earlier this week. -- aew governor, you have little bit weaker, down 2/10 of 1%. not a great session for asian stocks. -- having ayer look, japan up by 35%, jumping substantially on talks with chinese companies. jumping the most since listing in 2014. we have seen weakness from a lot of these tech players. samsung electronics down by almost 3%. i have put in that bond as well because we are continuing to see the boj tapering. today they came through cutting their five to 10 year purchase for the first time at a regular operation since june. thank you very much.

juliette saly with the latest on the asian markets. i have shown you the s&p 500 drifting. dropping. the mliv team is standing by. what are the risks for the s&p bullst risk are the s&p underestimating? citigroup is saying you want to buy. you have this earnings recession next year, perhaps the market is way ahead of what the analysts believe. out. --on the tv plus at -- the tv plus app. >> european leaders have rebuffed theresa may's plea for help in selling brexit to the u.k. parliament. the prime minister traveled to brussels hoping to secure additional assurances on the irish border. eu leaders hardened their

approach, stepping up planning for a no deal brexit and offering limited assurance. say the mancutors who murdered three people in strasburg has been shot dead. police were attempting to it -- to arrest him when he turned it opened fire. fifth person has been arrested. prosecutors say he is close. the others detained are the killers parents and two of his brothers. the senate has voted to withdraw u.s. support for saudi arabia's war in yemen as punishment for the murder of jamal khashoggi. the resolution is seen as a public rebuke of crown prince mohammad bin salman and of president trump, who tried to minimize the prince's responsibility. the u.n. says 14 million people are at risk of starvation in yemen as a result of the fighting. inna's economy slowed again november with retail sales and industrial production weakening.

industrial reduction growth slowed, lower than forecast by all 38 economists surveyed. retail sales posted their weakest performance in 15 years, rising 8.1% from 12 months earlier. the data provides a difficult backdrop for policymakers meeting next week in beijing. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. manus: thank you very much. theresa may returns from brussels empty-handed. the prime minister had hoped to win further concessions from the european leaders in her uphill struggle to get her brexit deal through parliament. the eu toughened its stance. jean-claude juncker says the ball is in the u.k.'s court. >> in terms of the future

relationship, our u.k. friends need to say what they want instead of asking us. weeksld like within a few our u.k. friends to set out their expectations for us. joining us now is maria tadeo. is theresa may even further away from a deal? >> good morning. it was not a good night for prime minister may. close to 1:00 a.m. in the morning. it did not go anywhere. she came into brussels wanting concessions around the irish border. at one point, european leaders did consider giving her some. the problem is this. the eu believes the u.k. has identified the problem as the irish backstop, the way it is.

nobody likes it. it's not going to get through u.k. parliament. the problem in the eyes of european leaders is chu does not know at this hour what she wants or how she gets around it. legally binding late which for the european union. for them it is crystal clear what the goal is. for prime minister may, yesterday night, she was not really clear. she needs to come up with a better plan to get this through in brussels. we arerstand obviously going to have to take this all the way to will january. nejra: the deadline of january 21, will we get a vote for them? -- before then? joining us now outside a seniorer is portfolio strategist at rubric

asset management. great to have you with us. braving the cold and sitting here with me. i understand you don't actually take any positions in the u.k.. i was reading this morning japanese fund managers are seeing opportunity in irish on, partly to do with -- irish bonds , partly to do with brexit. does this uncertainty pose opportunity elsewhere? >> absolutely. upset at the moment is high. we do not know if the deal is going to pass. we do not know if there is no brexit or hard brexit. we stay on the sidelines. we prefer to look at the overall situation. we are ready in case of something we think is going to the worst side, maybe to buy more treasuries in case of selloff in the market because of the maybe no deal for the brexit. we are ready to act. at the moment we are on the

sidelines given the huge uncertainty. manus: good morning. so that would be in the event of the hard brexit. you would look at treasuries and protection. if we get a softer brexit, what you need to see to make you take more u.k. equity risk? the u.k. is trading at a big discount to your neighbors in europe. >> the way in which i see a risky asset, because you are asking about u.k. equities, the way we see risky assets is that apart from the u.k., what we look at is the macro context. the macro context of the moment, there are three in the equation. real rate, real gdp growth, and if you look at the sellout -- the selloff in february, it was mainly in equities. thinking there was

asynchronous growth and dollars per share were going up higher and higher. still triggered by real rate jumping. the variables of the equation are getting worse. down and alsog per share. the global macro context needs to be taken into account before looking at this kind of trade. nejra: we will talk more about that. stay with us in the cold outside westminster. coming up, the world's second-largest economy is slowing. china's industrial production weakened with retail sales. how will this impact the global economy? manus: later on, the r.b.i. meeting for the first time since the sharp departure. will this that between the central bank and government

continue? if you are traveling to work, tune in to the team on bloomberg radio. we are live on your mobile device or dab digital radio in the london area. ♪

manus: this is "bloomberg daybreak: europe." nejra: let's get a check of the broader markets. we are seeing a down day in asia, looking at the msci index. you are seeing a risk off day reflected elsewhere with treasury yields moving lower. the msci pacific index down. not quite tracking those losses in the rest of asia. has been interesting how the nifty has held up with a new r.b.i. governor in place.

meanwhile, the u.n. weakening -- yuan weakening. manus: you have nymex crude, bad is off,data, cable theresa may comes back home with very little in her pocket aside from chastisement from the europeans. there is no doubt about it. global trade data is beginning irk the big names. pimco saying there is a flashing orange recession indicator. >> apple says it will push a software update chinese iphone users early next week after a local court found it had infringed a pair of key qualcomm patents. the ruling has threatened sales injunctions against older versions of apple's device.

the iphone makers of the update --ld foundtial inquiry has charles ghosn's competition complied with french law. of his pay between 2015 and 2018 has found nothing amiss reynold's ceo. he was charged democrat japan with breaking financial regulations. he denies wrongdoing. flying cars could be landing in the real world sooner than you think. according to analyst at morgan stanley, factors including better battery efficiency, artificial intelligence, and improve satellite communication supercharge the development of the market. the global market for flying cars could be worth $2.9 trillion by 2040. that is your bloomberg business flash.

thank you so much. chinese equities and the yuan falling after the world's second-largest economy slowed again in november. industrial production weakened along with retail sales, which posted the worst performance in years, signaling a deepening slowdown. a challenging backdrop policymakers who meet next week to set the tone for the year at their annual economic conference in beijing. joining us from hong kong is bloomberg's chief asian economics correspondent. we have outlined the top line takeaways. take us below the surface and give us your take on the data. >> there is no doubt the numbers are disappointing. we know the policymakers have been taking some stimulus measures to try rebooting a little bit. they are not getting much traction. retail sales are noteworthy given that has been -- for

china's economy. fixed asset investment did pick up. that is a positive and it could be more notable as we go forward. they do need to see more positive news on that side of things. war truce wede have at the moment, policymakers are going to have to be hawkish to keep the economy on track. they had a meeting next week. it is possible we get some information there. manus: have a leadership meeting next week on the economic policy side. what are we expecting their? be moreing to have to work to be done when you have the numbers the way they are. when you consider the trade war has not the economy yet, partly because of the frontloading of orders, so you're going to have to get a little their homework. maybe get the banks to lend more.

economists talk about the reserve rate requirement being cut again. the theme of any communications will be chinese policymakers have work to do for the following year. u.s. and china can cut a trade deal or if it moves to the next stage, would be undoubtedly negative for the chinese and u.s. economies. manus: great wrap up their. our bloomberg chief asian economics correspondent. let's bring back our guest host, the senior portfolio strategist at rubrics asset management. ,istening to our reporter there we decided we would put all that data into a chart. my question to you, because you are a credit man, you are a bond fixed income man, my question is, does the pboc go for more reserve requirement cuts?

do they go for any movement from the pboc, or is it stimulus from the government that is the basis of 2019 china? >> basically i think the risk overall are on the rising china isbecause slowing down. i would like to make the comparison between 2003 and 2015. china was growing at 10%, stimulating economy, and was -- emerging markets. there was no cutesy. -- qt. china is 5.8 quarter over quarter, slowing down with less ability to stimulate the world financial market. if there is -- on top of that, the fed is hiking rates. to ease is for china

a still there. it is getting more difficult. the risk are on the rise for the trade war and the geopolitical risks. nejra: with all those risks in mind, and i know you are long only, goldman is saying strong versus week investing seem likely isn't over yet in credit. they expect strong balance sheet . where are you long in the credit space? >> we try to buy high quality paper. we don't like really long dated bonds that can have a lot of volatility. of course, as the yield start to go up because of risk in the financial markets, given our strategy of having shorted

bonds, we can buy cheaper bonds as the bonds get cheaper. on the other side, we get a higher level of liquidity. a big problem of the next few months is going to be a lot of investment managers, along with low yield. dated atto stay sure quality paper. manus: think you so much. stay on the short end of the curve. keep the quality up. our guest host this morning from rubrics asset management. a couple quick price checks looking at cable as the morning fx trade begins to wake up. we are seeing demands on sterling on the downside. his theresa may politically more weakened coming home? clear about what it is she wants. sterling is drifting lower. we will talk more on that.

the ecb calls time on its historic stimulus program. mario draghi says the risks to the euro economy are worse. ♪

manus: the reality for stocks is beginning to bite. expectations are lower. stocks are lower around the asian session. s&p futures also lower. that is your world map. that takes us to your morning must-read. the chances of the u.s. recession are at the highest in nearly a decade. downturn the risk of a next year at 30%. models are flashing orange rather than read. -- red. it does not seem to be there base case.

they are saying it will be a positive the federal reserve ofing trajectory -- a pause the federal reserve hiking trajectory. these markets are pricing china data. the reality of a potential slowdown globally and in the u.s. nejra: that said, even though they have put that risk of downturn at 30%, they still want to be active in emerging markets. they say along with fears being reduced, prices have gone up. even with everything you have ont said, he said stock up lower risk assets to defend rising volatility. it is not about staying out of markets. it is about taking the opportunities even with this increasing risk. they do say save some cash for

opportunities ahead. you know what else i found interesting, they talked about u.k. financials. they save values are falling amid concerns about chaotic no deal brexit for the eu, which they put out a low probability. also, u.s. mortgage backed securities, defensive alternative to investment grade corporate credit. manus: the conversations we have had this week with mervyn king on stage in dubai, they are worried about that. they are not sure where the next pop is going to be. we know mortgage backed securities in 2008, but that is from big failures of the crisis and managing that. they are worried about one or two credits popping. that is when you get the contagion effect. that is the issue for the world. another big issue for the

world's inflation at what that means for how you allocate across fixed income. we have been talking about breakevens coming right down, rolling over. goldman and citigroup clashing with bond traders dimming inflation view. goldman sachs saying inflation breakevens continue to be under pressure. they say the fundamental case for owning them appears to be intact. the only scenarios were there on attractive to own our in situations were growth is decelerating more sharply. that is the key. fed policy is already restrictive. let's check on the markets with dani burger. tell us what's happening in the asian session. >> volatility. when we have this asian session declining for the fourth week, gains at one point were over a week earlier. this is the 60 day volatility on the msci asia-pacific index.

it has been hired in general this year. we are ending the week here at about a 17 level. the last time the asia-pacific index was all the way back here in 2016. to give you an idea of the positioning, most people are flipping to short. chinese officials deciding policy next week for 2019. theyis the type of picture are going to need to take some hedges out to protect themselves. i want to switch gears and talk about oil. we did have production cuts from opec as well as saudi saying they are likely to not export as much to the u.s.. but traders not buying it. this curve right here basically, these are the contracts for 2019. 2027, what out to traders expect. the one on top is that exact same curve, but a month ago. you can see the shape changes.

what this means is the price has dramatically dropped, meaning traders right now don't believe what they are seeing from officials from opec. they are believing prices are not going to be as high as they were once priced. much. thank you very all these markets are on the move. thank you very much to our question of the day, which the mliv team are running. are the markets underestimating bullish s&p forecasts? you can join that debate. one of the risks of the s&p bulls are underestimating. nara and myself are standing by on your bloomberg. let's get your first word news. leaders have rebuffed theresa may's plea for help. the u.k. prime minister traveled

to the brussels summit hoping to secure additional assurances of the irish border backstop. an arrangement opposed by many in may's party. eu leaders hardened their approach, stepping up plans for a no deal exit and offering limited reassurance. u.k. friends need to say what they want instead of asking us to say what we want. , within a few weeks, our u.k. friends to set out their expectations. beck saudi arabia is said to planning to/exports to the u.s. in an effort to dampen buildup after flooding the world's largest oil market in recent months. america's oil refiners have been told to expect much lower shipments in january. saudi crude shipments to the u.s. could touch the 30 year low

set late last year. president trump has reaffirmed his promise to punish general motors for its decision to close auto plants in the u.s., saying the news is unacceptable. the gm boss said it will cut 14,000 jobs and close of and factories around the world, including one in ohio that makes the chevrolet cruz. the president said he would block any federal subsidies gm receives. company --want a car all electric is not going to work. it's wonderful to have it as a percentage, but going into this model -- to tell me a couple weeks before christmas she's going to close in ohio and michigan, not acceptable to me. open fast orgot to someone else is going to go in, but general motors is not going to be treated well. global news, 24 hours a day on air and @tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries.

nejra: thank you so much. let's take a look at what you should be watching today. it's a big day to end the week. we will get an update on the euro area at 8:00 a.m.. spanish inflation data with italy following at 10:00 a.m.. we are going to get december pmi numbers. from it: 15 a.m. u.k. time. taken in context after we hear from mario draghi yesterday giving a dovish tilt. at 10:30 a.m. u.k. time, economists expecting a hold at 7.5%. manus: let's see what that does to the ruble, let's see what oil does to the ruble and the commodity complex. the is ending its stimulus program with bond buying, finishing this month. almost four years of using. -- easing. mario draghi flag decreasing

risks. >> the underlying strength of domestic demand continues to expansionhe euro area and gradually rise in inflation pressures. the outlook for each icp inflation has been revised slightly up for 2018 and down for 2019. the risks surrounding the euro area growth outlook can still be assessed as allen's. -- balanced. the balance of risks is moving to the downside owing to the persistence of uncertainties related to geopolitical factors, the trade protectionists, vulnerabilities in emerging markets, and financial market volatility. that is mario draghi. simon, good to see you this morning.

i have gone straight to your quote and i want to understand this is tied to mario draghi. you talk about the european flow market tied up with political asked. -- angst. ?re the two tied >> i do not think they are tied exactly. mario draghi is talking about more broad risks. i do not think he is reflecting the concerns about slowdown in france. i do not think he is necessarily reacting to anything. what mario draghi is reacting to is what every central banker is reacting to. the global slowdown. something could happen in credit or emerging markets and high volatility more generally. i think he is looking more external. but i think it has also got to be said, you are right to pick up on those political risks. talking aboutngs

the euro over the course of the last couple years, you can't ignore political factors. you can't ignore what happened in 2017 with the friends presidential election. you can't ignore this year, the italian crisis. you can't ignore the fact that the euro is not going up despite the fact yields are moving in its favor. nejra: good to speak to you. i am out here at westminster. wish i were with you in the studio. marioeople interpreted draghi's comments as dovish. the euro gave up gains. we did not see massive moves on the back of his news conference. some say we are going to miss him. we had that comment from our own marcus ashworth in terms of not getting any sort of temper tantrum in yesterday's news conference.

macro man on the bloomberg says shortage are's monetary policy -- schroedinger's monetary policy. draghi played that incredibly carefully. his very detailed comments. he went out of his way not to say anything that might excite markets, might give cause to go into the euro. we brought to a close a program. for him to keep things so calm says a lot about his skill when it comes to central banks. do we miss him when he is gone? we probably do. he has probably been the most skilled of all central bankers in the last decade when it came

to careful use of his words. let's pivot to brexit and sterling. you have done some cracking analysis. where we go on eurosterling in a moment. how we get is theresa may at the close of business? five tumultuous days. does she stand weaker at the close of business today coming home with nothing from europe? >> that is probably technically a question for a political analyst. if we look at it from the markets perspective, how they perceive theresa may's position, yes, we do perceive it as being weaker. we have a clearer idea of what likelihood there is she's going to be able to get the deal through. we have got a clearer idea of how many people within the conservative party opposed that deal. have a clearer idea of how the

european union is going to react with regard to the reopening of negotiations. all three of those put her in difficult position. nejra: she is in a difficult position, i'm going to put you in a difficult position. you said the markets concerned about volatility in either direction for the pound over the next two months. what's your best bet on the direction we end up with on march 29? are we heading lower? are we heading higher? >> that's obviously in a possible question because there are so many outcomes. let me put it this way. the market is underestimating the risk of a no deal brexit. remember, in all of this, that is the default outcome of

article 50. if nothing has been agreed in parliament and there has been no change in article 50, we are leaving with no deal. i suspect the market is pricing it rather narrow. if you look at other alternatives, the referendum, the general election, they are narrow and difficult paths. i would say the risk to the downside is greater than markets necessarily appreciate. manus: i am robbing from the indian rupee discussion. more threat to sterling. this is going to be short. is there a risk to sterling as a reserve currency? >> no. at least not at the moment. the reason is there are so few alternatives. the renminbi is coming up on the

ropes. there not that much else out there. that said, people are going to the lower end of their benchmark for sterling holdings on the back of this. manus: i hope you have good answers on the rupee coming up. nejraderrick stays with and i. oil. --might be in a bear market, and optimistic future on crude, anybody? nejra: later, india's central bank is meeting for the first time since the shock departure of patel. will the spot -- this fact continue? ♪

nejra: this is "bloomberg daybreak: europe." braving the cold again in westminster. manus: i am in 25 degrees and getting ready to -- out of it. how are you? nejra: very well. let's talk oil. manus: we've got a man named andy hall. he expects demand to rebound after a fall in prices and says traders would be better off betting on crude to rise. he spoke to bloomberg about why he is so optimistic. side, theregative are headwinds regarding demand. worries with the threat of trade wars. how robust is emerging market country demand? a stronger dollar is generally not constructive for oil demand, commodity demand in general. on the other hand, not only have

you had opec cut production, there is no question lower prices will have an impact on production growth here in the u.s.. when we look at 2018 as a year of the biggest highs has been the rapid growth in u.s. oil production. everyone knew it was going to grow. i do not think many people expected to grow by as much as it has. growthow, year-over-year is about 2 million barrels a day . back in january the u.s. government was forecasting growth at half a million barrels a day. that is a staggering difference. prices are now dropping 25, $30 a barrel. that will presumably have an impact on production growth here in the u.s.. >> we are going to dig down deep in that. before we go to set it up, are you bullish or bearish right now? around prices hovering

you wouldel, i think have to have a pretty negative outlook on global economy to believe prices will continue their downward trajectory. i don't think we are on the verge of a global recession. i think to use that old commodity outage, price kills price. you have a 30% correction or downdraft. not only is it going to impact on supply side, demand also that kind of price move. if you want to place a bet on oil right now, you are better off betting on it going up. manus: that was in the hall speaking exclusively to speaking -- andy hall exclusively to bloomberg. bloomberg's -- joins us from

mumbai. what is the board likely to discuss? is this about their relationship with the government? >> it is. the government normally is the one to discuss governance within the r.b.i.. they want the oversight committees to look into the r.b.i.'s various rules from foreign exchange management. all of these in the name of tightness, greater accountability. they also want the lending strictures imposed to be lifted so that loan pickup happens and growth gets a boost. was close because he thought this was an attack on the central bank independence. the new governor is a bureaucrat.

in sharp contrast to dr. patel. what the new governor is bringing to the table is greater consensus, likely to be better at hearing of the government's position as far as bank lending goes. nejra: thank you so much to our reporter in mumbai. let's get back to simon derrick, the chief currency strategist at bny mellon. we have heard a lot about the challenges this week. indian equities have held up despite the election risk and the appointment of a new r.b.i. governor. a lot of questions about whether central bank independence will hold going forward and whether he will be more dovish. what is your outlook for the rupee? >> i would be cautious about it. when you're looking at emerging-market currencies, one of the top issues is always

going to be central bank independence. the has been exactly the concern the market has right now after losing central bank governors. we obviously know he is from the finance ministry, he has those connections. he does not seem worried about inflation. leaves -- we're not entirely certain and comfortable . for the moment, the market will steer clear. currency does feed into an improvement in the stock market situation. the currency seems likely to weaken on the back of this. what i have done is put the turkish lira and the indian rupee together.

propensity for the rupee to suffer the same demolition? the lira is the yellow. the rupee is not that battered. what are the similarities, if at all in terms of independence? >> you have hit the nail on the head. it is that question of independence. the reason we lost faith in the lira, decisive pressure that came in here and year out from president erdogan. ultimately, that left us with that story this summer. we have the urge -- the huge current-account issue on the foreign that story. perspective, i think the issue is more muted. nejra: simon and eric, chief currency strategist at bny mellon. you will be continuing the conversation on bloomberg radio and 7:30 a.m. u.k. time.

tv, may returns from brussels empty-handed. for aders step up plans no deal brexit 105 days away. ♪

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mom. ♪ manus: good morning from dubai. i'm manus cranny and this is "bloomberg daybreak: europe." nejra: time nejra cehic outside parliament in westminster. these are today's top stories. manus: theresa may leaves brussels empty-handed. eu leaders toughen their stance had to step up plans for a note yield archer. -- no risk -- departure deal disappointment. risk is atrecession the highest in nine years. is concernedank about what 2019 could bring.

warnings come a week before the fed announces its neck follis -- paul -- next policy decision. nejra: what a week of brexit news we have had. it started with a last-minute delay to the key brexit vote and theresa may survived a no-confidence ballot among colleagues but more than one third voted against her. now, the brussels summit. would thought -- who would have thought the eu would have played hardball? what will theresa may say when she comes back to the u.k. today? will she put a positive spin on this to her cabinet and lawmakers. reported that some cabinet members are pushing her to hold this indicated vote. parliament to take informal votes on different options of brexit.

the point, show them there is no better deal than the one on the table because the math is stacking up against her in voting her current deal through. manus: exactly. we can phrase it as being no. go away, tell us what you want. there is no renegotiation. if her deal is a dead deal, does that ultimately mean article 50 is extended? let's say they go for an extension. if this deal is dead, how much time do you need to put another deal in front of the british parliament. january 21 is going to be a big date in our diaries. turning to brussels, the site where theresa may came into one door and came out empty-handed. she had hoped to win concessions, but eu leaders said negotiations are over. proceed.s to the opinionl of

may is fighting hard and bravely, but we have not seen the results. our desire is to have an agreement and to withdraw deal we have finalized will not be put to debate again. we have to negotiations and this is it. >> this is it. this is our response has 27 countries to the grave concerns raised in the u.k. of course, the british are free to say they want to continue talking and we are always open to that, but this is our answer to the concerns and the british parliament. manus: all the hallmarks of the greek negotiations. maria tadeo is in brussels. he's theresa may even further away from a deal? it was a bad night all around for prime minister may. she knew expectations were rough not get a she would

breakthrough, but was hoping to get some more words from european leaders and at one point of the night, they had about given her something but were taken aback during the presentation. she wanted clear concessions on the irish backstop. this is the big problem and they know unless this is changed, the deal will not clear to the u.k. parliament but from a european perspective, it was very vague. you really need to tell us how this will work. she left home empty-handed and there is a sense in brussels patience is running thin. what i can run the ground, forget about a breakthrough in december. we will have to take it all the way to january 21. that is seen as the real deadline. nejra: thank you, maria tadeo in brussels, covering all the movement there. let's get to the markets because we are under an hour from the

equity trading session. yesterday was a lackluster session for europe in terms of the stoxx 600. it closed slightly lower. we are seeing how those equities are moving. this headline before we show you the equity board. europe car sales dropped 8.1% for a third decline in a row. not a pretty picture in the equity market open today. ftse 100 futures off .8%. cac 40 down about .7%. we are seeing risk off coming in through markets. we have seen it in the asian session and it looks like it is seaping into the european session. there are other dynamics than brexit. manus: absolutely. the data sweeps from china and asia have affected the mood music, along with apple. dropping, 125.25.

if you were aspirational about what the ecb would do for italy, draghi said italian bonds bought and be less due to the slow growth. it portion of btp's would depend on economic conditions. eu to finish the budget talks by sunday. $4 billion, $4.5 billion depending on which newspaper you read. all eyes down on italy. when it comes to treasuries, $16 billion worth of paper went well with 30 year options. there are signs and signals of a recession. recession risk is that a nine-year high. dani burger has a look at the

global market map. good morning. when she said risk off, that is what we are seeing in the asian equity trading session. some responses from hong kong, down 1.5%. japan, down fairly more than 2%. the comes after manufacturing survey showed negative sentiment, but the big story is the chinese economic figures. the index, down more than 1.6%. retail sales missing, industrial output missing. the trade story earlier in the week, lifting stocks but this economic picture weighing on them, showing any pop we get will be short-lived. investors using it as an opportunity to sell at a better level. what fx pairs are doing in reaction to the negative number. most of these, falling against the u.s. dollar. , dollar gaining by

nearly .2%. the kiwi, a central bank decision feeding into it being one of the worst-performing. the indian rupee, r.b.i. meeting today. traders waiting on the sidelines to see what happens with that. nejra: dani burger, great work. yes, sentiment continues to be fragile in today's session. we talked about the china data increasing concerns around growth and also mario draghi highlighting downside risk. are we highlighting risk toward the end of the markets? bulls, ares, s&p they underestimating risks? the mliv question of the day. the bulls see further upside in the equity benchmark. reach out to us and the mliv team. get the first word news with debra mao. economy ina's

november with retail sales and industrial production weakening. 5.4% lower than forecast by all 38 economists surveyed. retail posted its weakest performance in more than 15 years, rising it on 1% from 12 months earlier. the data creates a challenge for policy makers gathering at their annual economic work conference in beijing. withdrawe has voted to u.s. support for saudi arabia's war in yemen as punishment for the murder of dissident journalist jamal khashoggi. it is seen as a public rebuke of mohammad bin salman and president trump, who has tried to minimize the responsibility of the prince. 14 million people are at risk of starvation in yemen as a result of the fighting. reaffirmedrump has his promise to punish general motors for its decision to close auto plants in the u.s., saying

the news is unacceptable so close to christmas. mary barra said last month, it will cut 14,000 jobs and close seven factories around the world, including one in ohio that makes the chevrolet cruz. the president said he would block any set federal funds -- subsidies g.m. receives. >> i don't run a car company, but all electric is not going to work. it is nice to have it as a percentage, but the model she is doing is a mistake. to tell me a couple weeks before christmas she is going to close ohio and michigan, not acceptable to me and she is either going to open fast or someone will go in. general motors is not going to be treated well. debra: flying cars could take off faster than you might expect. stanley, to morgan better battery efficiency, artificial intelligence, and improve satellite communications may supercharge the development of the market. the most bullish calculations suggest the global market could be worth $2.9 trillion by 2040.

global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more .han 120 countries nejra: debra mao in hong kong. chinese stocks and the yuan falling after the world's second-largest economy slowed again in november. industrial production slowed along with retail sales, which posted the weakest performance in more than 15 years. joining us now, the chief market strategist at hsbc private banking. great to have you with us. inare seeing risk off today's session and sentiment has been fairly subdued in equity markets this week. that and growth fears coming to the fore around china. mario draghi, pointing to downside risks for the eurozone. our equity markets over doing the risks to global growth? >> we do think so.

we think in particular, the u.s. is still very strong. if anything, we see an acceleration of data there and momentum in lending, the housing markets, in the labor market. in china, we think what we are seeing currently has to do with trade. withtle short-term effect automotive's, but we think we are already seeing in the data some of the stimulus around infrastructure and so on, we think will offset the weakness due to trade. we are bullish on chinese growth and think we will have 6.6% and therefore, no global recession and therefore, we think there is value in the market. manus: good to see you this morning. you talked about the data from china. i put together components within the csi. we are down pet -- 10%. this is on gdb live.

do you want to pick up more china on these drawdowns? this is i.t., telecoms, and materials in the csi at 300? do you load up on the drop? willem: well, it depends where your client is, but we are overweight on the u.s. in the short-term. china for the longer-term. weather the shorter-term volatility because you are going to have an issue about timing. when the fiscal stimulus is really going to start to have the full effect. therefore, focusing on quality. also, going into longer-term trends like the consumer. the wealth in asia, one of the things we like their is what we call the empty-nesters. which the only child is leaving the house, therefore they have a lot of wealth. they go into health care and the health care is picking up significantly.

also, upgrading consumption. a number of ways to whether the thetility, give them longer-term positive outlook and the value that has been created. we think it is an area to be. you are overweight u.s. equities, coming on the show today with a pretty lush outlook on equities on growth. i suppose, on risk. the mliv team has collected analyst views on the s&p 500 and see further upside. our question flips this on its head and asks, what risks are s&p bulls underestimating? your answer. willem: this is extremely strange. we have a market which is selling off and more concern about earnings that analysts, not yet, and economists, certainly not. and businesst ism

leaders, they are not negative. , so the market is relatively bearish, so difficult look -- difficult to see this. one thing we are struggling with is the oil price. we do think it will go up, but it is difficult to read. probably going up because we are somewhere in the marginal cost of production for a big part of the oil sector. also, probably oversold because people were long. -- theired to positions. related to the fear of the global economy. probably overdone, but an uncertainty we are facing. manus: those are the uncertainties, and how do you grow your business in an uncertain time? a little breaking news

interrupting the flow. belmont.s to buy they expect the deal to be completed by the first half of 2019. they will pay $25 a share in cash for belmont. the presencerease in 46 luxury hotels. 46 luxuryns part of hotels, restaurants, trains, river cruise. looks like we will have a busy time testing out this brand. the deal looks as if it is being done. the question is, how will the market response to that? that is the top line. $25 a share, a deal to be done. was that an invitation to go on holiday with you? i think we should take a trip around the world. i can't wait, but it is -- it is

a busy morning. manus: i'll see you. i've got to head back to the radio studio where i'll be covering the european market open in less than -- in less than 45 minutes. coming up, what does 2019 have in store for us, next? tell us what we will be discussing. manus: i'm going to time you, but we will walk through all of the things that could go wrong. will someone bring me the optimist guide for 2019, please? we will discuss the pessimist guide. fires, floods, and famine. this is bloomberg. ♪

seven: 20 a.m., 40 minutes from the start of

european trading. let's look at the markets. the data in china is tortured as the hang seng is tempestuous. equities down 1.38%. yuan softens. will there be movement from the pboc? cable that are offered as theresa may comes home gauged. s&p futures down .7%. we need something on trade to move the dial. let's talk 2019. what is in store? every year, bloomberg puts out the pessimists guide for the following year. what could go wrong in the global economy and geopolitics over 12 months? this year, we have based things that have happened in the past. than david.man

a long serving friend of bloomberg tv. good day to you. what possibly could go wrong? david: this year, we have looked at an extreme weather event, el niño, and tried to trace out what could go wrong geopolitically as a result. think about it. if there was a scorched earth in australia, in brazil, if there was disruption to rice production in india and japan and china and asia, just think how severe that could be for the world if there wasn't enough food? manus: that is a very salient fact. you think of the major events we have had this year. i know what it is to live in 55

degrees and not be able to stand outside. let's talk about food production. has it ever been wiped out over the entire globe at the same time? david: our assumptions coming because even though you might have food wiped out in asia and latin america, whatever , but chances are you don't see it completely written out. if there is an el niño effect, maybe in north america, the united states, canada, maybe ukraine, russia, these countries keep hold of their wheat supplies. how do those countries react when you see prices rise and people outside starving and wanting more food. in russia in 2010, mr. putin decided to put export curbs. what would president trump do with american surplus food? it is conceivable he would want to say american food for americans. manus: last question. give me a piece of good news and

make it sucsinct. manus: if mr. trump kept the food to himself, what do you think justin trudeau would do? according to our prediction, he would give canada's food away for free and the result of that is he gets to win a landslide election because he becomes incredibly popular and he gets nominated for a nobel prize. a great read on the website, bloomberg.com. you shameless self promoter, but i love it. ending on a always good note. seasons greeting, our government reporter in hong kong. chief markets the strategist at hsbc private banking. i will not ask about el niño, but david talked about recession risk. pimco this morning, very -- the recessionometer is at a 30 year

high. what is yours? willem: we don't look for a recession at this point. the u.s. economic data is still -- still has good momentum. , the's domestic economy difficulties related to trade. it is in europe we see weaker data, 1.4% gdp growth but a lot of business sentiment indicators are close to the 50 level, the neutral level. if we have a little weakening, even around the world, if you get closer to the 50 level, markets could worry about them. in terms of sentiment, europe is our underweight and both on the equity market and the euro. manus: can i ask, we've got the louis vuitton story to pay $2.6 billion, $25 a share to buy belmont. is this idiosyncratic? is this a hallmark of 2019?

is this the lifecycle to buy growth? what do you make of m&a 2019? willem: we still see m&a, but more buybacks and in the u.s. in part because of the cash that is still coming back. there is a growing concern in the market that u.s. companies have built up a lot of leverage in part because of m&a. we think that problem hasn't deteriorated in the last three years. at some point in time, we will markets see this moving , influencing markets. we look for a little bit of spread widening. that is why we have a buy-and-hold approach on short and paper. it is difficult to manage otherwise. manus: well done getting that in for us. willem sels, hsbc.

thank you for being our guest this morning. that is it for "bloomberg daybreak: europe." the european market open is next. ♪

matt: welcome to "bloomberg markets: the european open." we are live from london. i am matt miller aside anna edwards in westminster. anna: asia falls as china data disappoints. will europe also suffer in equities trade? the cash trade is less than 30 minutes away. matt: