>> this is

>> this is bloomberg "bloomberg daybreak: middle east." the american economy is on solid footing. jay powell signals the fed could thwart interest-ratejay powell d thwart interest-rate increases if that changes. as u.s. and chinese officials prepare to meet in beijing for more trade beijing for more trade talks, the pboc takes a further step to secure liquidity and amid slowing economy. beijing for more trade talks, the pboc takes a further step to secure liquidity and amid slowing economy. oil just had its best week since 2016. a warm welcome to the show this sunday morning. ity roared, they rocked, and was two words that did it. listening sensitively. i was jay powell's words. it is utterly alive. s&p 500 up. city says by the depth. they are overweight u.s. stocks. earnings-per-share slowdown is priced in the dollar index. who let the birds out on the dollar? jay powell let the birds out. suisse, affected by the

dovish comments. notes are really rocked out. you saw the move by 12 basins points. that beat the 10 year government bond in terms of rally. it was the biggest increase since november 25. now the most overboard since 2008. the speed of her -- of retracement was visceral. trumps the deal. that is the bottom line. the data in the united states of america trumps the opec non-opec deal. of 9% -- up 9%. they cut the long positions and those of the markets. humphrey is standing by with the first word headlines. today. -- good day. trump isent considering declaring a national emergency to secure funding for the mexico border wall.

nancy pelosi in the congressional democratic leadership is the source. they told chuck schumer the shutdown could last months or years. >> absolutely asset that. but i amhink it will, prepared. i think i can speak for republicans in the house and senate. they feel very strongly about having a safe country. central bank has taken a further step to secure liquidity to the swelling economy. the amount -- slowing economy. pboco supper months, the and will offset a funding squeeze ahead the chinese beer. the telegraph said theresa may's aids plan to make parliament approval of the brexit deal conditional on brussels providing for the concessions. specifically on the issue of the irish backstop.

they say the move is intended to limit opposition and gain more time for negotiations to continue with the eu. france's yellow vests movement protesters have taken to the streets for an eight week in the row. people participated across the country. there were some slashes of violence. a small group smashed through doors at a government ministry. --s a range of grievances there is a range of grievances. carlos ghosn will get his day in court. cell since in a jail november. he will be in the district court where his loyalists -- lawyers ask why he is behind bars. global news, 24 hours a day on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm deathly humphrey, this is bloomberg.

-- deasly humphrey humphrey. this is bloomberg. >> the s&p 500 rallied 3.4%. top 4%.aq, 100 surged kevin cirilli has more on the numbers. jobs -- 312,000 jobs added in december and beating expectations. the average hourly earnings rose $.11 to $27.48. that is up $.84 or 3.2%. the labor participation rate steadied at 63.1%. there were some revisions up from 155,000 to 176,000.

october also revised up from -- 244,000.30 growth polled more than 206 .obs kevin cirilli, bloomberg news. >> jerome powell spoke on a panel alongside janet yellen and ben bernanke where he said the fomc was always ready to ship policy if needed. >> we reached a different conclusion. we wouldn't hesitate to make a change. if we came to the view that the normalization or any other aspect of normalization was part of the problem, we would not hesitate to make a change. >> joining me now is the chief economist at somber financial. the debate for the market is

between data and rhetoric. it isook at the data, was blowout as the headlines suggested? it as blowout a set of data as the headline suggests? >> it is backward looking. markets are focused on the outlook. good and jobs rate was wages are up, it's interesting jerome powell decided to say we are ready to listen to markets. said that, he is not at all. he has been steadfast about looking at inflation and unemployment. >> to a certain extent, we have been using this chart. the market is pricing in no hikes for 2019. rate cuts and 2020. -- ingument would be 2020. the argument would be that this

set of data, perhaps the market is in denial. this data was a sigh of relief for the fed. has the markets got it wrong? do you think there is room for one to two hikes is here? >> i think the fed would go for another hike. what is interesting about the data is the increasing participation rates which takes the pressure off, or should, in the weeks to come, off of wage increases. wages should stabilize. that would be a help to the fed. i think we will get one more hike. inmark said if they go march, -- take a look at this data.

take a look at this data. this is the iso data versus the. and apple profit walling give sesame to that. and we have the government shutdown. things are beginning to build up. there's a general sense the cycle is getting a bit long in the tooth. i think the markets are probably right to follow that indicator. >> i chatted about the two-year notes at the top of the show. it was a block performance.

this is what we do in markets. we're back to the overreaching on the upside. , it took me tove curb and i look to crossed two year, three-year, and five-year. fed bondsll at the level. even if you think we squeeze another in, are we almost at the neutral rate? do you think the neutral a rate -- neutral rate is at the lower end of the range? >> i don't think anyone knows where the neutral rate is. [laughter] range, andk the neutral ai thia we're getting towards where i don't think anyone really knows. >> in terms of these markets overreaching on the times, financial conditions are tightening. do you think that restricts the -- as to the plausibility of the fed -- adds to the plausibility

of the fed and? >> i think it does -- fed? >> i think it does. there has been tightening, so i think the fed could quite reasonably pause. i don't think anybody will say he paused too soon. certainly the breakevens are adding to that. james, you stay with me. james reeve is our guest. still on the show, the encouraging u.s. data. the oil market has its best weekly gain in more than two years. is opec's strategy still a winner? up next, trade talks between the united states and the chinese resume tomorrow. this is bloomberg. ♪ ♪

>> sku up to speed with the business flash headlines --

let's get you up to speed with business flash headlines. the followed fund california's november wildfire has had the stage for a showdown between the states of government and its largest utility power company, pg&e. they are said to be considering the bankruptcy prescription within weeks. half its market value since november. the government is considering legislation to help the company. citigroup is urging investors to buy the depth. in the new node, strategists say the slowdown is forecast for this year, but not a recession. citi upgraded emerging markets and favors u.s. equities. fromank cut the uk neutral and is underweight on japan and australia. tesla is close to winning approval to start selling its model three electric car in europe.

bloomberg learned the company expects to receive certification after some authorities returned from the holidays. this is a priority for elon musk targeting the bmw three series and the volkswagen golf. that's your business flash. >> thank you very much. the china central bank has taken over the step to secure liquidity to the furthering economy. lenders must hold a certain amount cash and that is cut by one percentage point in too such --- two such as moves separate moves. has progress been made in terms of trade standoff? engle has astephen preview. >> this'll be the first face-to-face meeting between chinese and u.s. negotiators since donald trump and xi jinping brokered a truce in early december. neither side will be sending in a big gun. the us delegation will be led by

deputy u.s. trade representative jeffrey gerrish and will include david malpass. china will be represented at the vice ministerial level. meetingy -- the two day happens after beijing announced tax cuts on 700 goods at part of -- as part of its efforts to open up economy and lower costs for domestic consumers. analysts say chinese consumers fall short of trade representative lighthizer's expectations. the chinese will likely want the u.s. to remove the tariffs it has imposed, but sources say beijing suspects the u.s. will ask for more concessions before it agrees to do that. president trump has agreed to put on hold, at least temporarily, a scheduled

increase in tariffs while the negotiation takes place. to be see whether weaker domestic economies and slumping stock markets in both the u.s. and china will be an added impotence to move forward -- impetus to move forward. >> james is the chief to be seer weaker domestic economies and slumping stock markets in both the u.s. and economist and we are listening. --is going to be important an important week for tone and what we can expect from trade. -- important isn't in china is it in china and the u.s. in terms of economy? >> it is vital. in the u.s., margins are under pressure. threats just some empty from u.s. companies. it is hurting margins. a big engine for oil demand, oil commodities, i think -- i'm skeptical a deal will be done because it means thea has to throw away

model it has been using of state intervention for the past 30 years. >> so are we overoptimistic? >> i think a lot of people are. so if we had a crystal ball, we would all be very rich. i want to show a recap of the manufacturing and throw it all in their. this is the data. -- there. this is a result of the data. we see this resign action -- this reaction from the chinese. are they beginning to worry as opposed to panic at the pboc? >> i think they are. i wouldn't say they are in a bit of a panic, but they are in a bit of a bind because the overarching policies from 2016 has been to rein back credit explosion and dampen down the debt. ofy are now having to sort

-- i wouldn't say and 80 degree turn -- i wouldn't say a 180 degree turn, but they have to issue. brakes on the a small misallocation of capital, the bang for the buck is less each time. of course, it's a confidence problem. denigratingspute is confidence problems. >> that's probably what was manifested in the apple. can i broaden the conversation? i see dollar-yen ripping away last week. whatever added to the movement in dollar-yen. it led to more intervention from the bank of japan. let's have a look at dollar-yen. you have the fed on plausible plausibility. you have the ecb hoping to

this has, but i guess 2019 we have the dollar-yen and how much of week that was. we are looking down the barrel of non-normalization in 2019 if you want to chew on reality. >> i think you're right. i don't think the ecb will rise rates this year. they are normalizing in the sense, but raising rates in the current environment -- >> and you are right to draw that's different feel -- differential. -- to draw that differential. james reeve, stay with me. coming up, brexiteers are hitting the u.k. and hitting it where it hurts, in the huizinga market. more on that. this is bloomberg. ♪

>> there is speculation brexit

is hitting the british market -- british rising market -- huizinga markets. james reeve it -- is still with us. to the data, we have this ready. let me give the crude. i should have done this in the commercial break. price growth under pressure. it slows to a five-year low. say that the economy is beginning to show real signs of slowdown in approvals,ortgage and the worst growth in two months in six years. >> is not surprising.

the housing market was due for a cool down. it has been going breakneck speed for a decade. or more. it's good for a first-time buyer. the younger cohort. a necessary correction, but praise it is weighing on the consumer and investment segment. >> we are waking up this morning to -- speaking to angela merkel by telephone. he says he is willing to a the leader within reason. leader within reason. not to reopen the negotiations, whatever all of this means. your-based case scenario -- you are moving toward a second referendum has more likely. why is that your base? >> i think because the other options are beginning to look a little unrealistic. there doesn't seem to be enough coming from brussels to give may a victory for her

agreement. i be surprised to see enough movement in the next 10 days or so to really give her the momentum. if you rule out that agreement, you are left with a no brexit deal, which nobody seems to want. then, you have the referendum or general election. is thatorbyn's problem most of his young voters are pro-remain. if because a general election or engineers a new election, it's going to be a referendum on a referendum. that may make it tough for him. question, the service sectors, are we now looking at 12th destruction in the u.k. -- wealth destruction in the u.k.? part of a wealth

destruction medium discussion? >> i think that is possible. it's quite an emotive word, destruction. word, colorken the dissipation rather than destruction -- call it dissipation rather than destruction. >> i think you are right. brexit storyhe will not be good for wealth creation. if house prices begin to take a hit in the shires, the natural brexiteers, maybe they will begin to have a change of heart. >> the bank of england in the midst of all of this. ad, with some description, gets done. would you expect a moderate normalization at 25 basis points or token nest -- tokenist

normalization? basisould see may be two point hikes. >> taking that there into markets, with their be a -- in sterling? you look skeptical at the floor 125. maybe back to where we were at the beginning of the year, pushing 140. you could say 135. >> on a softer brexit deal, you could probably start scrambling around in the dust. james, thank you very much. thank you for joining us and sharing your thoughts on the market. n brent surges to its biggest weekly gain in more than two years. could that be -- could there be

further to go given the recent slump? what are the opec members earning in 2018? is it all bad news in the oil market? we discuss. this is bloomberg. ♪ s is bloomberg. ♪

>> is 9:30 a.m. in dubai. we start the trading week in our markets are open. we're down to 30 minutes time. 30 -- let'sith the check in with the first word headlines. says he ist trump considering declaring a national emergency to secure funding for the mexico border wall. that followed a meeting with nancy pelosi and the congressional them are medically leadership. the president was asked to confirm if he told chuck schumer the shutdown could last a month or even years. >> absolutely i said that. i don't think it will, but i am