>> good morning from bloomberg european headquarters in the city of london. i am nejra cehic. >> and i am manus cranny live in dubai. nejra: day two of trade talks. asian equities take a breather, chinese stocks in a holding pattern as investors question if a reasonable trade deal will make it. raphael bostic expects a single hike only this year. blackrock says treasuries are back in haven fashion. 50 days after his arrest, carlos ghosn appears in court, saying he has been wrongly accused. his legal team holds a briefing this hour. ♪

manus: it is just after 6:00 a.m. in london, 10:00 a.m. in dubai. green on the screen. the market still believes on potential momentum for a trade deal. s&p futures are higher. morgan stanley says it's too early to call a clear call on the s&p 500. bank of america and citibank are saying to buy the dip. what is next in the markets? emerging markets giveback a little bit this morning, but the flow of money, $1.4 billion. patience, pause, the story yesterday from the fed, the 12th straight week, above the 200 day moving average. wti, the oil market is extending

the rally. look at the last five days, looking at one of the longest winning streaks in 1.5 years on the crude market. the question is, will inventories dropped today by 1.7 5 million barrels? the kingdom of saudi arabia exporting less to the u.s. in november and december, definitely moving this market. nejra, good morning. nejra: good morning. the 10 year yield down just one basis point, 2.69%. blackrock saying it will come back as a haven, treasuries will come back as a haven, and investors will start looking at that 10-year. although we could see moves back towards 3%, we don't see any big moves higher in the 10 year yields after the 3.26 handle in october 2018. the dollar losses taking a bit of upon's, the biggest three-day -- a bit of a pause, the biggest three-day drop. a little positive a right now coming through in the dollar. meanwhile, you showed oil moving higher, but we see copper off by

0.4%, so some weakness coming through in these base metals markets. we already had goldman over the weekend cutting its near-term forecast for base metals, based on the outlook for china. $5,898per trading at there. let's check on the markets in asia. juliette saly in singapore has more. a mixed picture. gains in japan, losses elsewhere? right, verysolutely mixed picture in asia. nikkei closing higher 0.8%. a bit of weakness coming through from the china market as we wait to see if the talks between china and the u.s. will be productive or lead to anything concrete. csi 300 down 0.3%. the other factor in asia markets , the dollar seems to have come back a little, so seeing weakness among emerging-market currencies, which is weighing on these other indices. samsung,ghed down by

although the australian markets finished up 0.7%. sampson certainly in focus today, recovering from an earlier dip of as much as 2% after coming through with fourth-quarter earnings estimates. they were pretty much priced into the market. an interesting piece is on the bloomberg, saying essentially perhaps the smart investors would be looking at samsung at the moment, off 1.3%. softbank in focus. we are hearing they will commit to about $2 billion in wework rather than $16 billion the analysts, the market floated, investors seeming to like that. ly ine downside gee hong kong, down 11%, biggest intraday loss since august 2015. a lot of brokerages are starting to cut their ratings on the stock after it gave guidance earlier last week. manus? nejra: -- manus: juliette saly,

thank you very much. the latest on the markets. this takes us to our mliv question of the day. what do investors need from a trade deal? is it about intellectual property? what is it that you will benchmark as you look at the deal? the team at mliv, myself and nejra will join in that debate. annabelle has your first word news from hong kong. trump willpresident deliver a primetime televised address today. all the major networks as well as fox news and cnn say they plan to air the speech, which comes as trump battles democrats over his proposed border wall. the fight over while funding has seen a partial u.s. government shutdown that shoul -- soon could become the longest in history.

democrats have demanded tv networks provide them time for a response. prime minister theresa may is said to consider a proposal watering down her threat to crash britain out of the european union without a deal. the plan by a group of lawmakers is intended to limit tax raising powers in the event of a no deal split. yesterday saw the u.k. stage a mockup of how the roads might look near the channel with lined amidrries after brexit, discussions of extending article 50 during fears the deal won't be completed in time. global news, 24 hours a day at at tictoc on twitter powered by 2700 journalists and analysts in

over 120 countries. nejra, manus? nejra: thank you very much. manus: now, these are, the lawyers of carlos ghosn are coming out. we know that ghosn was in court this morning. he says he was wrongly accused, tells the court he was wrongly accused and detained. we have a tliv on the go, you can jump into the bloomberg there out2 tickets were handed for this, 80 times oversubscribed. when it comes to the explanation, it was in regard to fx forward contracts and what he had done to prepare himself -- protect himself, would be his suggestion, back in 2008, 2 009. so this is the news conference. we will track that for you. nejra: we have had ghosn speaking out, saying he acted honorably and legally, saying he helped reestablish nissan as a pillar of japan's economy. joining us from tokyo, stephen engle. good to have you with us. tell us first what we learned from the hearing today. en: the hearing was the

first time we really heard directly from carlos ghosn. everything we had gotten from him had been through his lawyers or the prosecution. the narrative of this case over the last 50 days, he has been in detention for seven weeks, has been primus through the prosecution leaking it out to local media, so this was his opportunity to tell his side of the story, and he said he has been wrongly accused, he is innocent, and has been unjustly detained for those 50 days. we are hearing as well that the lawyers we see in the video, the livestream actually, we are just a few feet away from that briefing from the lawyers, who plan to file today if they had not already done so a motion to end the prolonged extension carlos ghosn has been under. he had that extension of his detention three times already, and the current extension was itnted on december 31, and expires this friday on the 11th,

so he could potentially if the court doesn't grant another extension, could potentially be iigible for bail, which probably the best case scenarios given his legal woes right now. the lawyers previous to this briefing said that there is no risk that he will destroy evidence. that is what prosecutors had been saying, he could get out and destroy evidence or could flee. the lawyers are saying that this is a well-known individual, his face is known all around the world, especially in japan. his passports have been confiscated, there is no opportunity for him to escape. manus: one might recognize carlos ghosn, if he's trying to get out of japan. what is next for ghosn in this process? i find it fascinating that he's talking about the help he got from nissan in regard to the fx hedging he was undertaking. so he's coming out fighting here . what is next?

stephen: pretty much he has been saying that everything that was done was done aboveboard, with the knowledge of the appropriate executives at nissan, including those fx losses, personal losses that have been transferred into a personal company. it gets into a lot of nitty-gri tty detail, but basically he wanted to be paid in u.s. dollars and not japanese yen, because he was sensitive to the fluctuations with the yen. in the global financial crisis, we had nissan shares tanking and 80 yen strengthening about to the u.s. dollar. he took a big hit, and said he would either have had to retire and take the retirement payment to pay for the collateral the bank demanded to cover that, or he would ask nissan to cover it temporarily, which nissan did. carlos ghosn says nissan did not

lose any money on that transaction, as prosecutors alleged. that is where the saudi angle comes into play as well. fx contracts the were returned to the company provided by carlos ghosn, the letter of guarantee was provided by this saudi arabia an businessman. manus: stephen engle in tokyo, bringing us the latest. let's get to some latest breaking news from lg electronics. fourth-quarter operating profit looking like a big miss, 75.3 billion won, the estimate was 389 billion won for lg, 75.3 billion won. fourth-quarter sales number as well, 15.7 7 trillion won, also a miss on the estimate of 16.40 6 trillion won. these numbers coming in from lg

electronics after numbers from samsung earlier today as well. samsung pain, have the some say they are surprised it is not lower. samsung says they saw a great deal of strength from apple. now you have lg electronics. thes under pressure, chinese stock market taking a hammering. a confluence of negativity building up in reporting season. the question for markets is this , simply. is apple just a curtain raiser of more pain to come on the consumer side for those with exposure in asia? of course we can discuss that. let's talk about china now and trade turbulence, because the chinese vice premier liu he unexpectedly attended the first day of trade talks with the u.s. in beijing, according to people familiar with the matter and a photo by bloomberg. commerce secretary wilbur ross said there's a very good chance

the u.s. will get a reasonable deal with china. our correspondent enda curran is standing by. do you think that liu turning up was a significant move? enda: it definitely shows china are serious about these talks and serious about putting an offer on the table. as you know, the vice from there is the top economic emissary of xi jinping, so no doubt he added weight to the negotiations. the comments from wilbur ross as well. all the movement points to at the very least some progress being made, and that is why perhaps at the end of today when the talks wrap up we might get commentary from either the chinese side or perhaps the u.s. side. depending on how that goes, if the signal is after moving to the next stage of talks with high-ranking officials, by all accounts it would appear as though china and the u.s. are pushing towards some kind of deal. what shape that deal will take and whether or not it can be reached by march 1 of course remains to be seen.

the commercet secretary was mentioning, whatever they do agree, it will mechanism kind of a to hold china to their promises. we had lots of promises from china in the past, but this time the u.s. wants to hold them true to their word,a interesting dynamic of any deal agreed. nejra: thank you so much, enda curran in hong kong. joining us for the hour is bob parker. the showhave you on and thank you for your patience as we got through all the breaking news. i want to pick up on enda curran's point, not just about the deal but about the implementation process. investors look for a deal and see the details of how it will be enforced? bob: it is probably premature that we will get a lot of detail on a potential deal this week. we probably have to wait another month or two until we get a

comprehensive, detailed trade deal between america and china. having said that, i think the ground has shifted quite significantly from the very difficult conversations we had between the u.s. and china in the second half of last year. i think that now both the trump administration and the chinese government are much more motivated to actually try and achieve a deal. now, if one looks at what the potential deal is going to be, one has to break it down into different components. the trade aspect, where i think china has made a strong commitment to increase imports of american goods. there is the debate about intellectual property rights, where again china has actually increased sanctions and finds -- fines on intellectual property theft, so movement has occurred there. the more difficult areas are the american criticism of china over the question of chinese support

for state companies which are exporters, or semi-state companies. that i think is a very difficult area. and then we get into the much more complex area of cyber-crime and basically the whole tech area, is there chinese state intervention in tech theft, and that is very complex indeed. manus: that is going to be difficult to police. there is regulation there, but the question is about the implementation. back to the concept of markets. the chinese stock market has been battered and bruised. the yuan is remarkably sanguine over the last few days, may be more to do with the dollar. this chart, money market rates in china. goldman sachs says china decelerated notably.2019 , what additional policy response to you see from china to bolster the situation? on thee first point, chinese renminbi or chinese yuan, let's not forget that last year the chinese renminbi peaked

at 6.25 against the u.s. dollar, and a reversal to a range of 6.90, touching 7 three fleet, now stabilizing at about 6.85. the people's bank of china are very anxious to see a stable currency as a background to these talks. derail these talks would be a sudden, further devaluation of the renminbi. assume the currency will be stable as the talks go on. we recently had a further easing of monetary policy and injection liquidity with the cash reserve requirement for banks cut by 100 basis points. that injected essentially close to $120 billion equivalent of liquidity into the chinese economy. in addition, on the fiscal side we have seen statements that there will be a significant increase in fiscal expenditure

on infrastructure. monetary and fiscal policy are both being eased. nejra: well summed up. bob will be staying with us for the hour. looking at pictures of carlos ghosn's lawyers speaking in tokyo. we brought you that update at the top of the hour. nissan for former chairman carlos ghosn speaking at the foreign correspondents club of japan after his appearance in court today, where ghosn said he was innocent. this is bloomberg. >> we believe as his defense team that there's no reason for him to be detained. >> i will speak to the details. ♪

manus: it is "bloomberg daybreak: europe." manus cranny in dubai. nejra: nejra charity in london. a mixed session in asia, but

seeing the rally up zero point -- the nikkei rally up 0.8%. s&p futures are pointing higher. we saw modest gains in yesterday's session, up 0.25%, trading at a three-week high. futures pointing high after a lackluster session for european equities yesterday. nothing to write home about, off about 0.2%. manus: oil had the strongest run in 1.5 years, giving a little value back. the dollar is bid. what will trump say at his press conference? could he declare a state of emergency? jgb's kissing the zero line. what does it mean for the bank of japan and abenomics and a sales tax hike later this year? we are in the middle of this swing for the boj. risk off can affect the bonds. annabelle in the meantime has your business flash from our hong kong studio. good day.

manus.le: thanks, california utility pg&e bonds have been cut to junk status by s&p, the rating downgrade from triple b minus to b comes after shares plunged on news it is exploring bankruptcy filings. pg&e faces an onslaught of wildfire liabilities, estimated to be as high as $30 billion, far exceeding the company's $10 billion market value. slowing memory chip demand and the u.s. china trade war left samsung profits below expectations. preliminary operating income fell to $9.65 billion, below the forecast of $12.3 billion, about a third below the figure of a year ago. trade tensions hit demands for chips in samsung's biggest export markets with shares down a quarter last year. and the activist investor targeting barclays says he lost faith in the bank and will seek

shareholder approval for board changes after being denied a seat. edward bramson holds more than 5% of the stock and calls for a recomposition of the board after being rejected as nonexecutive director. he says he may seek changes at the agm in may or through a separate shareholder meeting. that is your bloomberg business flash. manus: thank you very much. few stories in the emerging market space. the talks between the u.s. and beijing will likely determine if em currencies can sustain the rally after hitting the highest levels since july. what risks remain? bob parker is our guest house this morning. gmmt the emerging market map in for you to get a little perspective. ruble, riyal, rand, month to moment oneendid

would assume for emerging markets. can it endure? bob: the answer is yes, although the pace of recovery for many emerging currencies probably has to slow down. let me give you two examples. first, the brazilian real, reaching a low point last year of 4.25 against the u.s. dollar. we now recovered to around 3.7 against the u.s. dollar. now, i would not be surprised if the central bank of brazil actually sent out a message to markets saying it does not want the brazilian export recovery to be threatened by too strong a real, so they would argue 3.60 against the dollar is probably the ceiling there for at least the next few months. nejra: a good chart here on em currencies, showing ability to stay above the 200 day moving

average might herald more gains if you look at technical to judge on how to invest from here. citigroup, ubs predicting more agony for emerging markets, saying enough other stuff is going on locally to offset what might happen with the fed or a weaker dollar. looking at the em fx space, what countries would you avoid? bob: i think one has to look at the three currencies in severe trouble last year. argentina, turkey and south africa. argentina is now working through its imf program. it obviously has a huge problem with inflation above 40%, but as we go to the second half of next year, we will probably see progress on argentina. the worst is in the market there . similar story with turkey, which looks like it will hit a recession and will avoid it now. manus: hold those thoughts. more to get into, how the fed will play in. bob parker stays with nejra and

i. theext, we dig deeper into atlanta fed comments from mr. bostic. ♪

manus: you're watching a news carlosnce and regards to ghosn's lawyers. what we do know so far is the french ministry have responded saying carlos ghosn remains had a friend now. wronglycourt has been accused and detained, he is read this, if you statement, a lot of the accusations around the fx contracts that he used to hedge

himself in terms of compensation and the role of nissan and that. also the role of the saudi arabia and company -- saudi arabia and country in terms of compensation for their role in organizing this. you have some of the lines coming through from the french minister on carlos ghosn remaining the head of renault. nejra: france is intent on the alliance, you can follow this on the t live blog, this log is commenting that these comments from the french minister would 's governmentfrance has confidence in carlos ghosn at least. taking the time to go through a

swapled argument about the contracts. we will keep you up-to-date as the hour progresses. we will check in on the markets around the world. line in thepening first paragraph, i have a genuine love and appreciation for nissan, very clear statements from carlos ghosn, let's see where the trail continues. we have our reporters standing by. butdid trading flat today where will we see some excitement, is that the phrase? >> exactly. you summed it up, it is a flat day.

on most or all the key benchmark indices. is currency is weaker and it sub-17. there has been quite a bit of weakness. and bond markets have gone through a bit of pressure in the last few days, the last five or six obsessions. you will see how there was a significant fall and a recent spike the last five or six days. currently trading up 7.0. -- 7.60. there are companies in the sugar space, all of them doing well. futures went up and therefore the companies are doing well. treating --mes trading with a ferret degree of green. as we look at to the

outcome of these mid-level trade talks this week, you're looking at china lng and soy imports. >> these are two potential winners for the trade deal and china has been buying up lng and soybeans toward the end of last year, they ought 139,000 tons of lng in november and before christmas, 1.2 metric tons of soybeans. seeing invel you are 2017 and 2018. if we were supposed to get a trade deal which wilbur ross says the prospects are looking good, we could see bigger volumes of soybeans and lng be exported into beijing. the other egg winner and positivity is the korean won, on top of geopolitics, we have a weaker u.s. dollar. you can see the dollar index dropped 5% this year. only three times since 2012 we did see the dollar index weaker n.ainst the one -- wo

high sidee won on the of 125. i want to take it to our guest host this morning, bob parker, in brief, what do investors need from the trade deal, if you were to sum it up as a top line, what would that be? bob: i think two things, first of all a clear statement that planned tariff increases will not happen and that this temporary pause in the trade conflict which currently runs until the first of march, that will become permanent and not temporary. secondly, some rolling back of the tariffs that have already been imposed, those two

conditions occur, that would be positive for investor sentiment. nejra: thank you my we will get you, weyou -- thank will get back to you. democratsent battled over his proposed border wall, it comes as a partial government shutdown enters its third week. formal -- for more on this, jodi schneider joins us. good to have you with us. just sum up for us where we go from here. the presidentote, ,ill give a primetime speech his view about the need for a border funding for the $5 billion he has been demanding for border wall saying in his view, there is a crisis at the u.s.-mexico border. he will give that speech just before he goes down to the border. this has led to the partial government shutdown, his impasse with democrats and congress

which democrats there see this kind of spending as an effective and wasteful. and nancy pelosi, the new speaker of the house passed with her -- votes from her caucus a bill that does not provide that funding. they are very four-part still, the president has said he is considering declaring a national emergency at the border that would get him that funding which presumably there would be a legal challenge immediately to that. shutdownts of the which is starting its third week are starting to spread, the consequences are greater. several workers, hundreds of thousands across the u.s. will not get a paycheck starting january 11. we are seeing closed courts, trash piling up at national parks, and things like the smithsonian institution shuttered. the internal revenue service has made a decision it will issue refunds, tax refunds even if the

shutdown goes past the start of tax filing season which starts january 28. willal presumably -- that lessen the political pressure for resolution as the refund checks will go out regardless. us,a: thank you for joining jodi schneider, our senior editor in hong kong. us.parker is still with let's talk about treasuries and we heard from blackrock earlier. take a listen. good yield, real rates are attractive, and it works, you think about how it has worked in the last two months when the equity market has gone down, the 10 year note has performed really well, that will happen going forward. i would argue the 10 is pretty symmetric in terms of where it goes up or down, but in a portfolio, it works really well. nejra: even if investors are

going to be looking at 10 years as a haven and they might buy treasuries, is it your -- worth putting her money and treasuries or equities? bob: you need to start doing the opposite. in december, safe haven assets performed very well. gold went up to $1300 per ounce. the u.s. treasury market, the 10-year and the 30 year saw significant rallies. insaw the major adjustment the two-year treasury yields reflecting the changing expectations and what the fed will do. the swiss franc strengthened against the euro, all the traditional safe haven assets in the end movement toward 108 toward the u.s. dollar. the theme in december was safe .aven assets outperformed the key question is, will that continue? if you believe as i do that we are seeing probably a base being

formed in global equity markets, i call it the has intent rally which will take place in the next few months, then further progress in the u.s. treasury market will be limited. i don't think you will get a big the answer is no. extra remainsnt and that is in part what rick is referring to, getting back to 328 will be hard. what do you think of the comments? he is not a voting member and he may go to zero if he had that opportunity to vote. what do you make of that kind of shift, this is a trifecta of frederick shift, powell, -- mester.d mr. significant change in fed garments -- guidance in

december. more recently i think we have had a clear statement from powell saying the stance of u.s. monetary policy has changed. bloombergntly set on that we would get one rate increase this year, i think that is still the case. i do not believe we will get three or four rate increases and the rally in the two-year treasury is looking a bit overextended. there was that move from 280 plus down to where we are at the two-year, probably it is anchored there for the moment. nejra: basically we had powell pointing to 2016 when he spoke on friday. in 2016, the fed could scale back its tightening plan to help car markets. if you look at this chart here, you can see the comparison at the amount of fed tightening price into the u.s. curve for the next will months. what can the fed do from here because they will not cut, are they? bob: it is way too early to say

they will cut. the question is to what extent do they raise rates? my view has been they will raise once, they may be on hold but certainly the economic outlook is such that they will not be raising rates three or four times this year. the second factor which we have to follow closely is what are they doing with their balance sheet? oneink you could see interesting development over the next couple of months which is the fed coming out and saying we are going to slow down quantitative tightening and the reduction in the fed balance sheet which is about $4.1 trillion u.s.. perhaps they will stabilize the balance sheet below $4 trillion. that would be significant because that would mean that the withdrawal of liquidity comes to an end. financial conditions are tightening, this debate will run for the duration of 2019.

up parker, our guest -- bob parker, our guest host stays with us. of why the leading maker mobile phone chips is staying bullish. apples pain as it loss in tworst years. we talked tech. nejra: when you're traveling to work, tune in to bloomberg live on your device or dab digital radio in the london area. this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. manus cranny in our dubai studio. the dollar is rising for the first time in four days, we are waiting for the news conference from donald trump.

goldman sachs and nomura are the clack -- claque. a shakespearean theater i would have been. you see the context of these talks, a little pressure on the aussie. but as you say a lot of it is to do with general dollar strength. let's check in on what is trending on tictoc. kim jong-un visits china ahead of possible -- a possible trump summit. $1 trillion worth of assets are fleeing london because of brexit. an interesting read. nejra: the most read stories, and third place, softbank's

planning a smaller $2 billion investment in we work. withdraws from consideration and on top, carlos ghosn says he is innocent and his first appearance since the arrest. leading maker of smartphone chips is staying bullish. qualcomm says china's focus on 5g will drive stronger results despite concerns over the sluggish sales and the economic slowdown. why he remains excited. >> we have seen a lot of interesting and good things happening in the mobile market, it has been reflected in our performance throughout the year. we have seen china upgrading. >> you see chinese consumers upgrading. >> we see in china, higher

growth rates on premium tiers and upgrademarket, market and we see more traction for snapdragon 800. we see customers going outside china. --na is excited about five t 5g. they see it as an opportunity for upgrades globally and that is why they are investing heavily. >> that is a different story from what we are hearing from tim cook. how are you hearing the pullback with achinese consumer decrease in consumer confidence? >> you can look at this in multiple ways, one way to look into this is you have a big transition to 5g. if you were a customer in china, companies like devo, one plus, even while way, they are looking

into this as a growth opportunity not only within their domestic market but outside china. if you are concerned about growth in domestic china, that is where you accelerate your efforts to go outside. we have seen this trend within the china market dynamics. inwe look at the china scale itself, if we look at china mobile, they have more subscribers than probably the u.s. has an population. emily: it is the biggest smartphone market in the world. >> they need to rate their customers, change the incentive, and then you have a big change in the market. we are betting on 5g because every signal we get from china, they are is excited about 5g as the u.s. is. emily: you do not see a change in the chinese consumer. >> as far as our business is concerned, since we are not part apple phones, as far

as our business, we cannot, we are not in a position to be providing financial guidance. happy withwe are china, china has been a good story and we expect that to continue to be. qualcomm's was president speaking from san francisco. while qualcomm is bullish on china, samsung is grappling with weakening demand reporting sales -- off -- profits admits that missed estimates. is this a sign of more pain to come in tech? we talked about the reaction in apple shares, the stock price getting crushed, it has been interesting, the reaction, the andk raised to 2.1% climbed. why have investors reacted the way they have to samsung's results?

that is because a lot of investors have expected to be bouncing back, a lot of people who are watching the semiconductor industry and the cycle in at expect that the first quarter is going to be something of a low for samsung. there is still demand for a lot of different types of devices from ai to self driving vehicles. there is a market that is growing for samsung. it is a matter of time, a lot of people believe that samsung before samsung starts to rebound before -- from the low it is hitting, the first quarter is a traditionally low time for demand. what can we expect from the next galaxy iphone launch, especially when you have concerns surrounding the ability -- of the market to absorb higher prices. we saw apple's lap out a product

and rip up the price. what can we expect? >> the galaxy smartphone lineup is very important for samsung. it is also very important for the global market. something ofill be a barometer for the global smartphone industry. for samsung it should be bouncing back from its low in memory chip sales. there is momentum coming out of the smartphone industry globally. if apple does badly with its sales, that means apple will buy fewer memory chips from samsung. samsung is relying a lot on not just apple but also its own smartphone lineup. to be able to drive demand for its memory chips. thank you very much, our --hnology editor sam king sam kim.

literally dropped last week, profit fell by 80%. samsung under pressure, if this -- is this quarter of reporting going to be made or broken on tech angst? bob: i think probably not. ,ust to focus on the bad news it is not good, the results we have seen from the guidance we have had from samsung lg and apple. there are two issues, the first issue is to what extent are they impacted by the slowdown in the chinese economy and the consumer sector for tech and consumer tech has been negative over the last six months. that is question number one, what happens to the chinese economy? they are easing monetary and fiscal policy and you will see growth in china in the first half holding close to 6.5%.

are they affected by the trade conflict and the answer is the tech sector and the consumer tech sector, most notably apple are the most sensitive to trade conflict, it would -- if we get some resolution the bad news is largely behind us. nejra: if tech is sensitive, and you still want to stay invested in tech my what do you look for question mark there is a great column on the bloomberg talking about the fact that samsung early action to rein in costs shows the company is capable of fiscal discipline amid the tech downturns, that is one reason investors should be looking at it. bob: the answer to that is absolutely yes. i would come back to the area of the tech sector, it is tech infrastructure. it is that companies which are doing that cabling, doing the nuts and bolts of the tech sector. that rather than the highly valued, very sensitive consumer

sector is much more attractive. we popped three of the things we were talking about, amazon, apple, and microsoft on the board, apple taking a level of pain but amazon claiming the most valuable company in the world. would you be having a bit of amazon? bob: first of all you want to look at the valuation. , it is a consumer distribution company as opposed to a tech company. if you believe the global economy is going to moderate and i am for us -- i emphasize moderate, i think we will moderate. discounting a major slowdown in the economy? if it is you have to have amazon in your portfolio. market share, performance remains positive. up withreat to catch

you. bob will continue the conversation with us on bloomberg radio at 7:30 a.m. u.k. time. can track alls the charts we have shown using tv . this is bloomberg. ♪

manus: good morning from dubai, this is bloomberg daybreak: europe. nejra: these are today's top stories. trade talks,o of chinese stocks said in a holding pattern, markets are in a wait-and-see mode as investors questioned whether reasonable trade deal will make it across the line. one and done, nonvoting fed president rafael austin expects one single hike this year ahead of the fed minutes this will week. fashion.s are back in in 50 days after his arrest, carlos ghosn appears in court

saying he has been accused wrongly. his lawyers say they do not see any reason to keep him under detention. nejra: welcome to daybreak europe, we are under an hour away from the start of cash equity trading. we have some data coming through from germany. looking at industrial production, it is coming in month on month down 1.9%, the survey was saying 0.3%, that is a mess and surprised move to the downside and a mrs. well -- a miss as well. estimate ofs on the a drop of 0.8%. this after we had some other german data coming in weaker yesterday. if you look at the 10 year bond

deals, he will talk about this in a second. we have them saying they are short the 10 year bonds despite the fact that the yield is that low and moving lower with the data coming through from germany. let's take a look at the equity data, a mixed session yesterday, modest gains on the s&p 500, it was the small-cap -- small caps and tech. we had a lackluster session in europe, we ended in the red down .8 of 1%. ftse futures higher, dax futures edging higher up .2 of 1%. same for cac 40 futures. we may see some modest gains. still questions over what we will see over the trade discussions, where we are likely to see a lot of fed news and what is happening and what is happening in equity markets against the backdrop of a stronger dollar the session and a 10 year treasury yield on a 269 handle. that, the one thing

[indiscernible] the price basket was the same as last year, the nine week sales extending gasoline were up 4%. they talk about the year-end view for this year being unchanged, christmas comparable sales numbers, 2018-2019 unchanged, reports of fourth consecutive -- the fourth consecutive christmas comparable sales growth. we will get an indication of how the high street has done. let me take you to global markets and the bond markets. you want to focus in on the bond saying short 10 year bonds, the rally has gone too far too quickly, too aggressively. talking about one's that have touched the lowest level in more than two years, that was last week. commerce bank recommends

shorting 10-year bunds. that is one view from them, last quarter the biggest jump since may 2016. let's look at the bond market treasuries, we honed in on what they had to say. treasury yields have topped out. 325, your unlikely to see the yields again. u.s. notes can work in europe portfolio. you know what that says, we are perma-angst.f always poised, never anxious, juliette saly. juliette: i am still stuck in when you said mintz by to be honest. we had a pretty good session coming through from medicaid. also australian stocks moving higher. we have that stronger dollar coming through so that is affecting the emerging-market

currencies and weighing in on a.m. markets, china weaker by .2 of 1%, investors are trying to see whether or not we'll get anything productive coming otherh from these talks than the primerica -- the premier was positive. the malaysian ringgit pretty much the only currency going higher against the dollar today in asia, you have incurred holding around $60 a barrel. 1%,indian rupee up by .5 of we had numbers coming through from the government yesterday atwing that gdp should rise the fastest growth since 2016 this year which is great years for the primary stress he faces a number of challenges and/or state elections, the rupee a is off, oldman has been is he at the start of 2019 with their calls and they are saying that the rupee are could outperform the rupee.

upiah could outperform the rupee. have er st a note, we futures remain gains after the industrial production data was a big miss from germany. that's get the first word news. >> president donald trump is delivering a prime time televised address. all the major networks say they plan to air the speech which comes as trump battles democrats of his proposed border wall. the dispute over the wall funding has been -- led to our shut down which could be the longest in history. democrats have demanded the

networks provide them air time for a response. carlos ghosn has offered his first rejection of financial charges telling tokyo district court that he has been unfairly detained and wrongly accused, making his first comments since his arrest in november. of thested none compensation was illegal or broken any roles. he appeared in handcuffs and a waist as isound his customary in japan. benjamin netanyahu is demanding the right to confront former close aides who turned state witness. he is standing for reelection in april and is challenging his accusers to a public debate. early polls show the investigation has little impact on his chances. afraid, i have nothing to hide, and that is why

this evening, i am repeating my request for a confrontation with the state's witnesses. as far as i'm concerned, this confrontation should be broadcast live so the public will see everything, hear everything, and know the full truth, i am certain of my innocence. >> 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. this is bloomberg. manus: thank you. i will pick it up from here. let's turn our attention back to trade, they shootings ministry of foreign affairs briefing has begun. waiting forets are literally any news, there is a good chance the u.s. could get a reasonable deal with china. our chief asia economics correspondent is standing by. what are we expecting out of these talks, how will he benchmark success this week? with -- iternoon,

will be interesting to see if they give us signals or guidance on how talks have gone. they are looking for whether they have progressed to the next round of officials. they visited the vice premier gave it a lot of substance. there are theories that china is [indiscernible] officials leave, -- that would indicate that negotiations are continuing. up, theve demos coming president expected to be there along with the top chinese politicians. for, not are looking one is expecting a conclusive solution, and that is a stretch by march 1, but there is an anticipation among investors and

economists that some middle ground could be reached on how goods between the u.s. and china, for china to make some offers. the bigger issues may be parked for another day. thank you for that update. joining us now is an etf strategist. great to have you with us. thanks for joining us. into 2019, a lot of risks on the horizon, geopolitical tensions and trade one of them. you point out that market corrections are likely to become more frequent in the late cycle amid the geopolitical tensions. how do you reduce the volatility drags on long-term returns, if you look at the u.s. session yesterday, it was volatile even though we ended in the green. >> one way to achieve that is through income generating

strategies. we are seeing in etf flows and sectore for defensive focused etf's, but also high-quality and hide dividend yield strategies. these extra income will help small -- a smooth the volatility. we are seeing more appetite for short dated high-quality credit to diversify away from the risk of an equity air market and provide extra income as well. manus: good morning to you. part of the slow we have seen around trade and the fed, we will spend more time on the fed. ground zero is a potential for a trade deal in the u.s. and china and we have seen the money coming into emerging markets, what can you tell me about the flow of money, we have seen 15 one .4 billions, since the start of the year.

do you see evidence of a similar flow? flows to markets are recovering and this helps with the expectation of the u.s. dollar plateauing. especially since the fed has indicated its willingness to pose or be flexible and patient around tightening monetary policy. this helps to somewhat offset the negative impacts for slowing economy growth in china. and benefits the emerging market. nejra: when we talk about volatility, i have people coming out saying this is the moment for active managers, this is where the stockpicking will count, this is not the year when strategies will win out. you talked about some of the strategies to reduce the impacts of volatility on your returns. what would you say to investors about how you can fit has to of investing in a portfolio at times like these which you could

argue are more normal. active and passive investments are come from injury. not a full passive investment is a good thing for investors, it is always good to have both. now that the industry is expanding, there is more market that provides flexibility and tools to investors to adapt to such an environment. it is about looking at what the new strategies from passive are offering in response to the market conditions. about de-risking the portfolio and going slightly more defensive, where's the most lucrative dividend proposition for you? looking atout dividend yield and quality. the risk is to fall

into a value trap. looking at quality is key in this environment because the economic indicators are slowing down. there are tighter profit margins and we are seeing more uncertainty around labor costs. it is adopting a safer approach in terms of selecting equity and equity etf's. guest stays with us. coming up, an activist targeting barclays says he wants changes to the board after the british lender denied him a seat at the top, the bloomberg scooping -- scoop next. ♪

>> at the moment we do not have access. you're looking at a live shot at the news conference with carlos ghosn's lawyer.

taking questions at this stage, carlos ghosn had his first opportunity to speak to the court, he says he acted honorably and legally with nissan's knowledge. understandst time we a lot of the accusations are surrounding hedges which he put on. in so doing this is where the linchpin comes, he took help from the sun and said that ,issan took on the collateral and more about the relationship between nissan and a saudi arabia company. a full briefing there. nejra: you can follow it on the t live long, there are questions

being post, one of the latest is about why the defense team has not spoken until now if they felt there was not a case over the payments issue, was there a feeling there was a case over the tape? let's get a check in on the markets, a mixed session in asia. the nikkei closing higher in today's session but we have seen some weakness elsewhere, s&p futures with another you day of gains, up .7 of 1%. tech and small caps leading the rally and a lackluster session for eurostoxx. they gave up some of the gains since industrial data out of germany was a severe miss. vacillating between gains and losses, day seven of the gains for wti, what will the drop be today? the dollar is stabilizing, trump will give a special news conference later in the day.

this is the first after the biggest three-day drop since august and jgb's coming into positive territory after falling to subzero, a 2016 low last week. that is not jgb -- jgb. my apologies. funds are traded up .23 and there is a note out from [inaudible] commerce berke -- commerzbank saying to short those. bramson who holds more than 5% of the bank said he will seek shareholder approval for board changes. this after barclays sprint's offer to become a non-executive director. joining us now is our managing editor. great to have you with us and

great scoop from bloomberg, we were talking about activist investors yesterday and the fact that increasingly, they start to ask for changes on the ward but i do not want to still your thunder, walk me through the story. mentioned was earlier, it is a volatile world and adding value to activism and this is one of the ways that investors can rattle up, shake up the boards and try and affect change. this is one of those cases where we see an activist ratcheting up , jes staley, the ceo of barclays has so far been resistant to any kind of change, he believes that the investment bank is the core and the linchpin of the strategy over where the activist investor wants him to shrink it, they are

at odds on a fundamental issue. this: good to see you morning, good to have you on the show. we know that he is looking for a seat on the board, jes staley will meet him in march. he expects -- refers to them as a black box with too much leverage. , the activist wants barclays to be more conservative, reduce leverage, and that is something that jes has indicated he would not do. the third quarter results from barclays show that there was some momentum behind staley's strategy. staley will be able to convince the rest of the management, barclays did bring in a new chairman recently. it is likely they will find a sympathetic air with the new chairman.

this is very much a fundamental issue. staley has said in the past in a bloomberg markets story he did say that he sees the biggest risk as being the consumer card and personal credit division. with brexit looming and consumers under pressure as we brexite at -- as unfolds, he may well be right. this is ray much in play and we will see how it unfolds in the upcoming weeks and months. manus: it did not fair that well in the european bank stress tests as exit lambs. the head of the atlantis set saying one hike will be enough. he sought to increases in the coming months but he has his

downside view, that could be none. he has said the fed should avoid cautious to urve.ting the u-c he does not vote, we know that. patients,voices of they are rising. has the market got too far ahead of itself in terms of completely pricing out the fed? is pricing no rate hike and this is due to concerns around global economic growth prospects but also u.s. growth prospects. it has come down a little bit after the job report but there we are entering a late cycle phase.

also looking at the medium rateate for the long-term of 2.75%, this is also suggesting the fed might hike one more time in the cycle. 2019: not pricing in the hike could start to question what the fed will do compared to 2016 in terms of avoiding tightening financial conditions. let's talk about the dollar. i have a chart showing the bloomberg dollar index is closing in on its 200 day moving average. we are stronger in today's session but the trend has been downward. will we continue to see dollar weakness in 2019 and what implications does that have for your investing landscape? >> we can see the dollar plateauing if there is no fed hike. that is a likely possibility. in terms of implication, back to the trade war dispute, having a

dollar plateauing this year would mean that we will have to stabilize the u.s. trade balance and relieve some pressure in this u.s.-china trade talks. that dollar ine the trade deal, imo am looking at the russell 2000. i picked up some key benchmarks, there is this palpable sense of joining the dots, morgan stanley to call ais to early bottom. they want to see something from the dovish tone to dovish action . what would be a dovish action? >> it could be not to hike this year and give the market rights about pricing. nejra: thank you. for daybreak europe. bloomberg markets, the european

open is next. we could see some modest gains today. manus: absolutely, the german data has not held. you can tune into bloomberg radio, we are live on your device and on the dab network in the london area. ♪

anna: good morning, welcome to bloomberg markets, the european open. i am anna edwards alongside matt miller in berlin. matt: today the market say wait and see, asian markets trade mixed after modest gains in the u.s. as investors hope for a tradeve outcome from talks in beijing, their cash trade is less than 30 minutes away. -- the cash trade is less than 30 minutes away. ♪ anna: