francine: commerce secretary wilbur ross has prospects for a deal with china are good. we have president trump's primetime address tonight. samsung misses estimates as demand for memory chips slides. the weakness, taking a hit. carlos ghosn appears in court, saying he has been wrongly accused in tokyo. welcome to surveillance, everyone. good morning for those watching in the u.s. and europe. good afternoon if you are

watching in asia. i am francine lacqua. i am looking at crude oil because it is exact a lot. we saw a lot of villa till it a in 20 -- volatility in 2018. 115 --7, euro-dollar 1.15. we had disappointing data out of germany, but holding losses after the data. theng up ahead of president's trophy time speech tonight, we will speak to the ohio governor, john kasich. let's get to the bloomberg first word news in new york city. viviana: donald trump is set to prepare -- present a televised address over major tv networks. this comes as trump battled democrats over his proposed border wall.

the dispute that prompted a partial government shutdown could become the longest in history. democrats demand the networks provide them with their time for a response -- airtime for a response. theresa may is considering a proposal that would water down threats to crash out without a deal. the plan is supposed to limit the treasury's tax raising powers in the event of a no deal split. yesterday saw the u.k. stage a copep of how they might after brexit. arepean officials discussing the possibility of extending article 50 amid fears a deal won't be completed in time. carlos ghosn has offered his first rejection of financial charges. hetold tokyo district court has been wrongly accused and unfairly detained, making his first open court comment since november. he insisted number of his compensation by italy -- nissan was illegal.

he appeared in handcuffs and with a rope around his waist, customary in japan. the french government plans to deter violence after an eight consecutive saturday of protests. protesters will face tougher penalties for taking part in undeclared demonstrations and would be required to pay the damage they cause. more than 80,000 police officers will be mobilized nationwide for an expected fresh round of protests next weekend. italy's populist government has flagged its readiness to help the strapped for cash bank. this happening at an urgent meeting, ministers backed a decree law which would offer the broadest guarantees to safeguard the rights of savers and the lender. the government will issue future bond issues and has signaled support for possible cautionary recapitalization. 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.

this is bloomberg. francine: thank you. let's talk trade. the chinese vice premier expected to attend the first day of trade talks in beijing. meanwhile, the commerce secretary wilbur ross says they raise a good chance the u.s. get a reasonable deal with china. what does this mean for markets? joining us, lucy macdonald at allianz global investors. happy new year. say until can february. they want something for the trade deal by march. will it be substantial that portfolio managers think i can work with this or will it be smoke and mirrors? >> it could take longer than that, but we could also have back and forth on rhetoric during the next few months, but the fact they are talking, the fact there is this pause in

place and could be extended is clearly something the market is much happier about. the damage we have seen on the chinese side, but it looks as if confidence on the u.s. economy could be beginning to be impacted. it is a time you are beginning to see more potential deceleration in the u.s. too, so the time is right for a deal this year. it is also important for china, as well. this is an anniversary for them so in the second half of the year, some good news would help. francine: overall, is it hurting economics or consumer demand? if you are chinese, you think i am worried about this, i won't get the new iphone or the thing that cost 900 pounds because i worry about the prospects of a trade war or is it impacting my spending? to beit doesn't seem impacting hugely the chinese consumer or their attitude too much toward u.s. goods.

u.s., it has had no real impact on the consumers yet but you are beginning to see the confidence subside and business confidence be impacted. francine: this is what we are asking our investors and guests. this is our mliv question. if you are a bloomberg user, go to mliv . we are trying to figure out, what do investors need from a trade deal? lucy: they just need a deal. just more certainty, and to remove it from the concerns about potential deceleration. francine: any kind of deal. it is not an abc, china will do this in the next five years? lucy: obviously, the more opening there is, the better but it is about removing it from the concern. fromine: lucy macdonald

allianz global investors stays with us. carlos ghosn makes his first public comments since his shock arrest two months ago. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg: surveillance ." let's get to the bloomberg business flash with viviana hurtado. samsung's fourth-quarter profits were below expectations. --liminary offer aiding operating income dropped below the forecast and one third below the figure a year ago. trade tensions have hit demands for chips in the two big export

markets and shares are down a quarter. the activist investor targeting barclays has lost faith in the bank and will seek approval for board changes after being denied a seat. edward bramson is calling for a recomposition of the board after being reject it as a nonexecutive director. he may seek changes at the agm in may or through a separate shareholder meeting. against a controlling stake in lever. it will seek a smaller investment. into theported million company, but bloomberg learned it is backing away from complete control at $16 billion, declines in tech stocks are said to have laid a role in the decision. a are down more than a quarter over the last three months. that is the bloomberg business flash. carlos ghosn says he has been wrongly accused and unfairly detained in his first

chance to give his version of events since his arrest. the former nissan chairman has denied allegations of undisclosed compensation and says he had acted "honorably and legally to strengthen the company." joining us from tokyo is our chief asia correspondent stephen ssane outside ni headquarters. what did we learn today? ephen: the significance today was not a lot of legal precedent or ramifications from this appearance in court. ghosn'shosen by carlos defense team to give his side of the story because in the japanese legal system, the narrative is dictated by the prosecution and over the last seven weeks -- it has been 50 days since his arrest november 19. the narration has been dominated by the prosecution. chances carlos ghosn's

to set the record straight in his mind and that he did not commit any of these financial that have been accused by the prosecution. we got more details about his detention. he is in a larger room now with a western-style bed. he is getting three meals a day, but he is continuing the fight and has given no indication that he is going to sign any sort of confession, which is often the case in japanese legal proceedings. they detain you, they detain you , they detain you, they get a confession from you. it does not look like the man who once headed nissan and still the head of renault is going to give up the fight anytime soon. miranda: what's next -- francine: what's next for carlos ghosn in this process? thehen: this is the end of

third extension period. three days from now, that third extension period ends and the prosecution must do of one -- one of several things. they could rearrest him on separate charges, prolonging the detention or could formally indict him on the second round of allegations and charges. that would also extend the detention. either way, we are hearing the defense lawyers are going to file for another appeal for bail but even the lawyer today in a press conference in tokyo which i attended said if another indictment comes down friday, and the japanese legal system, it is extremely likable that carlos ghosn could be detained without bail for another six months until we get a possible trial. simply, the bail is rarely granted to defendants who have no sign of saying that they are guilty, and that is carlos

ghosn's situation right now. francine: quickly, what does it mean for the alto alliance? has he been fired from renault? he has not been fired from renault. actingve an interim ceo, in his stead. of renault andeo we heard from french governmen t officials. the government has the largest stake in the know. we don't have evidence in our hands to say carlos ghosn is guilty. we believe in innocent until proven guilty. in japan, you are guilty until proven innocent and that is the legal challenge carlos ghosn is facing. francine: stephen engle, thank you so much. he joins us from tokyo. keeping the conversation on the auto sector, still with us, lucy macdonald from euskaltel

--allianz global investors. he was seen as a pillar figure in changing the way cars worked. lucy: i don't think it necessarily affects the auto sector. it is a fascinating story from the outside, but we can't really work out what is going on there. i think there are issues about corporate governance to be looked at, possibly, but the specific issue he has been fxrged with, the booking of related to his pay and a payment is impossible to tell from the outside, whether the governance was right. he said it was right. side, howat to one much impact it will have on the auto sector, probably not as a whole. things like demand and taxation in china, so on. francine: and trade, i imagine? lucy: and trade, those would be

issues that are more important. francine: are you a buyer of the auto sector? lucy: not ever, really. it is not a very profitable sector. we look for high returns and we don't find them in autos. francine: lucy macdonald from allianz global investors stays with us. populistly's government has flagged signals to help the cash-strapped bank. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." staying bullish on the world's largest mobile market. qualcomm says the focus on 5g will be a driver. the president told us 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 through the year. we have seen markets like china upgrading to devices. >> you see chinese consumers upgrading? >> we see consumers in china, higher growth rates in high tiers.-- i

market. upgrade we are excited about china because china is excited about 5g. as an opportunity globally and are investing heavily in it. emily: that is a different story from what we are hearing from tim cook. how worried are you about the impact of the trade war on the chinese consumer and a pullback of the chinese consumer with the decrease in consumer confidence? >> you can look at this in multiple ways. one way is you have a big transition to 5g and if you are a customer in china -- and for an oem in china, companies like huawei, theyen are looking at this as an opportunity. if you are concerned about growth in domestic china, that

is where you accelerate efforts to go outside. strength within the china market dynamics and as we you at the china scale, look at china mobile, they have more subscribers than the united states has in population. emily: it is the biggest smart phone market in the world. need is a all they modification. like i said earlier, we are betting on 5g because every signal we get from china, they are excited -- as excited about 5g as the u.s. is. >> you don't see a pullback in the chinese consumer? cristiano: since we are not really impacted or part of the new apple phones, as far as our business, we are not in a position right now to be providing financial guidance, but we are happy with china.

china has been a very good story for qualcomm and we expect it to continue to be. francine: that was the qualcomm president. still with us, lucy macdonald from allianz global investors. hardware,oftware, software exposed to china. where did you see value? lucy: there is a lot of value through the whole sector. because growth has continued generally and you have had --ght -- there is a more more of a earnings risks and there will be or differentiation going forward than there has been. francine: are they not too expensive? lucy: you have to differentiate because they are so different. growth rates have come down, so you have to differentiate between them. the software names still seem to be coming through.

hardware, you have seen some mature areas like smartphones but also, more impact from the trade on semi. so it depends. there is value there, but you have to be discriminating. let's talk about banks because italian banks, italy's populist government has flagged its readiness to help cariage,pped bank providing broadest guarantees to guarantee the rights of savers in the lender. guarantee future bond issues and support for a possible for cop she married recapitalization. --possible repatriation. could this get out of hand and become contagious? lucy: yes, that is always a worry. italy has been a worry for years and will continue to be because

of the size of the investment but particularly on the bankers because it is fragmented and has not cleaned itself up. i remember a conversation a few months ago when there was conflict between the populist send europe about budget -- populists and europe about budget. they have seemed to have sorted it out. there will always be something. clearly, one needs to watch it. that deeply involved in it, but you have to watch it because of the size of it. francine: particularly to save cariage, does it mean markets will stay calm? if the populists are ready to help out, does it make you feel better about the italian situation? lucy: yes, but there will always be volatility.

it could carry on forever. there is no sign the banking sector as a whole in italy has cleaned itself up. until that happens -- francine: they are better, no? the: they are better, but underlying picture, the valuation of assets, is it right? francine: lucy macdonald from allianz global investors stays with us. next, could theresa may's breads it threat be watered -- brexit threat to be watered down by parliament? this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." let's check in on what is trending across the bloomberg universe.

a japanese employer believes rest is the key to productivity. it is paying its employees to get a full night of sleep. $1 trillion.com, worth of assets are fleeing london because of brexit. planningis said to be smaller, $2 billion investments in we work. what fixed-rate -- let's get straight to the bloomberg first word news. viviana: president god trump is expected -- donald trump is expected to deliver a speech today. fundingute over wall prompted a partial u.s. government shutdown. democrats are demanding the tv network provided airtime for the

response. gohn said none of his decisions that nissan broke financial rules. it could be atnk least six months before the case goes to trial. two existing charges, it will be difficult to expect a bail to be approved before the first trial, given that accidents and documents need to be examined in japanese and english. viviana: the french government plans to take new measures to deter violence. sayingme minister

protesters will be required to pay for the damage they caused. more than 80,000 police officers will be mobilized nationwide for an expected fresh round of protests next week. ministers backing a degree law in italy -- the government says back bond issues. 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. thank you so much. prime minister theresa may is said to be considering a proposal which would water down her threat to crash for out of the eu without a deal. it is intended to limit the treasuries tax raising powers in the event of a no deal split.

thatafter a report lawmakers are planning on extending article 50. keychief executive of a you -based drugmaker says the company is ready for the withdrawal from the eu. >> we have not for some time. obviously, there's a bit of uncertainty at the moment with the vote coming over the next few weeks. we have been preparing with the british government for a whole variety of outcomes. our number one concern is to make sure that patients and consumers can get them medicines and vaccines that they need. we are well prepared for that. company.global we have less than 4% of our global sales in the u.k.

this is something we are prepared to navigate. emmcine: linning is not his -- joining us that is emma, she covers brexit. i have 1,000,005 questions to try and understand what is going on brexit. our companies ready for brexit? lucy: i don't think anybody is really ready for the volatility that will come around with brexit. confusing a lot of people. is it a third back channel to try and. a hard brexit from happening? lucy: what we have seen is parliament assessing itself to try and prevent a no deal brexit. we have seen that with several

backbone lawmakers to try and soften brexit or prevent a no deal brexit. the latest one is a cross party effort to basically tied the treasury's hands in the event we end up with a no deal brexit. did extraordinary thing is, theresa may is considering accepting this amendment. theresa may, ever since she brought her deal back, has been using the threat of a no deal to back the accord. if she does concede on this amendment, that threat of my deal or no deal becomes a bit weaker. francine: why do it now? why talk about this now? emma: that is just a question of

scheduling. teas have beenn using every opportunity they can find to try and change the government's policy. this is the latest in a string of such efforts. i think we will continue to see this. if we are going to be headed toward a no deal brexit, there is legislation that has to be passed for that to happen. you can expect about that legislation would also be amended to try to prevent it. francine: was the chance of an accident happening? pre-brexit happening that is kind of a hard brexit by mistake? lucy: who knows. the assumption we have is because a majority of the population and a majority of the mp's, the prime minister and europe don't want a hard brexit. an accident can happen.

you need to take that into your nt when you're doing any scenario on this. the scenarios are narrowing down somewhat over them with a have been the last few years. it is a slightly clearer picture. francine: if there is a vote on january 15 and it doesn't pass, does the market move on the back of it? lucy: i don't think the subject is that it is going to pass. everybody is really thinking -- francine: what does theresa may do in the next seven days to rally the troops in parliament? emma: she is trying to get concessions from the european union. team wants that to happen before the vote. chatter in brussels suggests

that perhaps they're not too sure on offering concessions. there is a certain reluctance to waste the bullet. one of the scenarios is that she loses the vote and then the eu might come up with something. remember at the summit in december, there was a proposal kicking around that they would come up with a statement saying that the backstop, they didn't want to come into effect and they wanted it to be temporary, and then there was quick to be a summit in january. that was kicking around in the early hours of the senate in december, and then it was rejected because a lot of member states didn't want to do it. i wouldn't be that surprised if that sort of proposal would reemerge in january and february. francine: thank you so much for that raising. -- briefing.

trump address the nation in a primetime speech tonight, advocate to the mexican border, part of his drive for wall funding. the white house says he is going to meet those on the front lines of national security and the humanitarian crisis. president's demand for $5 billion for his wall has led to a partial government shutdown with governments rate -- democrats reiterating that they will not fund it. >> this is not the way to govern. two pound your fist on the table and cause damage to millions of people unless i get my way. it is not what the constitution says. elections have consequences. the president credit past his wall when republicans controlled the house and senate because they knew it was a bad idea. francine: the fed is beginning to show concern over the government shutdown.

lucy is still with us. what does that mean for economic projections? how long does the second have to stay in place for it to affect the economics of the u.s.? lucy: a bit longer than it has so far. expectations are beginning to hikesn on one or two from the fed. tables have a major impact yet. it have to go on longer than this. so compromise is highly likely to be reached on this issue between some sort of barrier in the budget. budget.he it will be resolved. francine: in the result in two months, free months.

-- three months? are we in uncharted territory? lucy: it is beginning to have some impact because expectations are starting to lose. the dollar has started to weaken. it is already impacting, but it is not having a huge impact on the underlying fundamental economy yet. francine: where do you see dollar in 2019? lucy: it is on the weaker side because of this. we are towards the end of the rate hikes. is likely to flatten out now. francine: does it have an impact on european equities? what are the big things in 2019 that you worry about that could come from the inside outside? lucy: china, trade.

the exports have been a big negative over the last year. euro. oil. the fact that oil has weakened is helpful. when you put all that together for this year, it looks like the impact on earnings should be, if we are right that the trade picture begins to be resolved toward the second half of the year, overall, that to be slightly more support for european earnings this year relative to last. francine: thank you so much. stay with us. plenty coming up. samsung posts its first profit loss in more than two years. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash. viviana: pg&e has downgraded its rating. shares plunged yesterday. pg&e facing an onslaught of wildfire liabilities. they are estimated to be as high as $30 billion. fourth-quarter profits at lg

falling 80%. both sales and profits missed analyst estimates. its latest midrange model lineup is not living up to expectations. that is the bloomberg business flash. francine: thank you so much. samsung is seeing weaker demand in china and experiencing the same slow down that crashed apple shares last week. and missed quarterly profits during 2018. matt, and for more is analyst for bloomberg intelligence. first of all, good morning and happy new year. what are the main challenges for some of these smartphone makers? smartphone penetration globally is in the 50%-60% range. you are having to work hard to

get customers to buy the next device. latestrades to the devices are engineer leave very engineerily, very clever. i think you are seeing a big slowdown in upgrades. we are seeing the china slowdown is hurting these guys as well. francine: is it market shares that are gaining because they are cheaper? and: china is slowing down others are gaining in international markets. francine: thank you so much. matt joining us to talk samsung. this is bloomberg. ♪

francine: this is president

erdogan of turkey addressing his parliament as we speak. he is talking more about foreign policy, but we are expecting him to pick it onto monetary policy or economic matters. if you look at emerging matters in 2018, we saw huge volatility in lateira. erdogan currently addressing turkey, saying they will soon neutralize terror in syria. also saying he is expecting sensitivity on terror from its allies. turkey also playing a crucial role in 2018 when it came to the -- the foreign affairs breakdown between saudi arabia and the rest of the world after the killing of jamal khashoggi.

salesforce. sees big opportunities in europecom. est is its fast expanding region. salesforce announced last year it would invest $2.5 billion in its british business over the next five years. joining us now is chris. europe, i imagine is an opportunity. how much harder it is it to grow in europe compared to other parts of the world? chris: salesforc is the leader in customer service managemente. we are helpincompan deal with the way theyies handle customer service. what we are seeing is how they

transform their businesses and how they transform these relationships so that they can be more competitive. in europe, does like the rest of the world, companies have bases, multiple geographies. companies really need a 360 degree view of their customers. they need to understand what the customer wants, when they want it and what channel they want it. salesforce has helped a lot of companies do that here in europe. francine: how much harder has gdpr made it? usersharder to track what and determine the customer journey? chris: salesforce work in conjunction with the european commission. we welcome gdpr. our strategy around data privacy is, our customers data is their data, and we work to make sure it is secure.

with had to be go legit to make sure our customers -- diligent to make sure customers can develop their strategies. it really hasn't slowed down the business. with think it is something that is not just for europe.it is going to continue to happen in the rest of the world because trust is incredibly important. francine: should the european commission looking at facebook is anticompetitive? do you expect more of these types of cases to crop up in 2019 and beyond? chris: think what we see right now across societies in business, is a have a crisis of trust. industrioss all and governmentses. you are seeing companies like saying, within the way to help consumers and help businesses is to embrace this. salesforce is a

value-based company. all of our stakeholders, -- whenies, partners you to focus on that as much as we focus on the bottom line in business, if we want to continue to have a company that has grown as well as it has in the next 20 years. this basically to help with customer relationship management. how will that be helpful for your european operation? chris: everything you see is because the conversation we are happy with -- having with our customers isabel, had to they continue to take advantage of powerful technologies like cloud and mobile and social an artificial really optimize

those customer relationships in this digital age. and everythingn else you see us do is because our customers are telling us, we see an opportunity. if you can do this for us, with think it will help optimize even and bring incredible customer experiences. ofwant speed, relevance, information and the service we need when we want it. businesses need to deliver that. francine: thank you so much. hour.tinue in the next tom keene joins me out of new york. will talk a little bit more about the german data. this is bloomberg. ♪

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"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. francine: trade hopes. hoax.mmerce h --oax --

secretary says trade talks with china aren't good. almost two months into his appears in court saying he has been wrongfully accused. we are live in tokyo. this is "bloomberg surveillance." it seems that brexit is dominating a lot of the headlines. we also had some pretty terrible figures out of germany. there now asking ourselves with the trajectory for the european union is. we are still looking for inflation. quite a bit to go through an market movement when it comes to euro-dollar. this is economic confidence for europe. it is the same tone francine was giving us on german data. i would suggest over here, there than other discussion

5:00 p.m. tonight. america has come to a complete standstill awaiting the president's's speech tonight. let's get straight to the bloomberg first word news. knicka: the tokyo former nissan chairman publicly declared his innocence. he has rejected charges he finances tosclose nissan. kim jong-un is in china for a fourth time. the tip suggests negotiations over north korea's nuclear arsenal are gaining momentum. tonight, president trump makes his case for a portable to the nation. he is scheduled to deliver a

primetime speech on what he called a humanitarian and national security crisis on the southern border. democrats and congress are refusing to give the president money he needs for the wall. europe'largest economy may have slipped into a technical recession. german output unexpectedly falling in december -- november. it was broad-based and led by consumer goods and energy. 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. tom: thank you so much. today's nro, the list -- in a row, the list instability. futures up 16. curve flat. euro stronger. oil, 18 days in a row.

that is an oil getting near $50 a barrel. the average dax over two decades. sterling, we are watching. what i looking at is a similar data point to you. i'm looking at dollar is rising. the euro holding onto losses after the german data. if you look at the stoxx 600, it looks like they are shrugging off relatively weak german numbers. trading below $49 a barrel in new york. tom: let me show a chart that shows the market back 10 years. coming off of 2009, we are now

into 10 years out. here is the excuse to get out of the market. randomly picking these. here is a range market last year. and a big rollover we have seen, this puts it in scale. reasonsve been umpteen along the way to cash in on this great bull market. francine: i like your chart. mike turner is a little bit different. -- my chart is a little bit different. we're looking at the positive movers to u.s. stocks on monday nough toher it it is e trigger movement. is based on the volume of rising shares. when momentum surges from an oversold level. marty zweig tragically died

too early. he was hugely influential in new york. what is cool is the phrase of zweig that is so important is when you hear people say don't fight the fed. that is really associated with him. bring this chart up again. i love that francine did this chart today of the late great marty zweig. here is the mathematics of the suddenness. the up in volume we have seen back to 2012. francine: i can't take credit for this because it is hillary clark. they were looking at sundial capital research. they were talking about the late fund manager. i'm going to leave you with this

quote. markets, no rules in is not like this makes anything official. but it is something that has worked over the decades. president trump will address the nation in a primetime speech tonight ahead of a trip to the mexican border as part of his drive for wall funding. is demand for $5 billion for his wall has led to a partial government shutdown in washington. the fed is beginning to show concern about the partial government shutdown. the impact of a short-term shuttering should be relatively small. the impact is bigger as it shut down drags on. thank you and happy new year to you both. how long does the shutdown last? ie: that is the big question.

howhe moment, we can't see it gets results because both sides are digging in their heels. president trump has really locked himself in. themoney talks about it, more adamant he is. at the moment, it is looking like in the senate, democrats are saying nothing is to go forward on any until this is resolved. that also looking at individual measures that could perhaps be passed to allow certain agencies to reopen/ that is not likely to happen either. at the moment, it doesn't look like there is an obvious resolution. the public is good to get increasingly upset about this, and it is affecting a lot of people. the pressure on everybody to come up with some sort of solution is going to be ever stronger. francine: business impact the economy? kit: it must to the extent of

their people working for the federal government who don't get paid. it does have an impact beyond what it has now. is for trash cans in public places. it does prevent things happening that would otherwise. in my simplistic life, i just don't get a lot of economic data. there are a lot of things i found out that happen. it could slow the economy down over time. it will certainly mean we don't know what is happening. tom: in all my reading on this, i want to go back to justin and our team in washington's outstanding article today. this is a little hard to see on tv. important.s is so

the interview we did yesterday with mr. johnson, who worked with president obama. for battlefield situations, were situations overseas. in your reading, is there any indication that the defense department or pentagon could push back against the commander-in-chief? leslie: this is a political question. i think the more likely pushback would come through the courts. it is very hard for even trump himself to sustain the justification of national emergency, given all the different justifications he has used for the building of the small. i think the political pushback toagain, it was a congress enact new legislation to restrict the use of these powers. whether or not his own agencies will come out against him, that seems much less likely to me. tom: absolutely original time

here for the nation. i guess we'll see it tonight. i'm fascinated by the mechanism or process of this unique president. do, call of the chairman and joint chiefs of staff and say i'm breaking every rule? how does it actually work? we don't know, do we? leslie: we don't. what we are seeing is the manufacturing of a crisis. according to the data, that doesn't exist. the idea that there are terrorists crossing over the border, or even the number of people of concern is no greater at that border than it is at any other border crossing. the evidence simply isn't there.

with the president trying to manufacture a crisis. good conversation on this tonight. and quick to put out a series of stories and highlight the quotes at how i learned about this exceptional debate. where going to continue with leslie and kit. will be free of all discussion of arsenal football. coming up tonight, president trump to address the nation. look for that at 9:00 p.m. he will address the nation on the mexico border and his wall. this is bloomberg. ♪

viviana: the founder of oracle has taken a big stake in tesla. you may remember last year he joined the electric carmakers board in an attempt to show directors are providing oversight. samsung is feeling apple's pain. trade tensions and slowdown in china hit samsung's memory chip business. unusual move an for a leader in the cutthroat car business. the company decided to share with its rivals a safety system that uses self driving technology to keep cars from crashing. toyota says the system has the potential to save some money live. it should be shared with any company who wants to use it. to: right now, we're going

talk about china. what is the difference when we see a china-u.s. meeting with mid-level officials versus upper-level officials? what is the nuance there? leslie: there is something more to come. the path is being paid for the bigger announcement or negotiation. or it could simply be that other people are doing other things. it is not possible to know, but it certainly leads us to expect that this is one step on the way to perhaps a bigger negotiation. tom: what is the stance of the president here? ignoree he is going to upper-level officials. what is the negotiating stance of america? leslie: i think the u.s. right presidenttainly, trump is under a tremendous amount of pressure.

that, congress is very much on his side. even this new congress. theree the jobs numbers, is a sense the u.s. economy is not in the strong position it was even a couple of months ago. athink there is very much desire to see some sort of went for the president worried he was to be able to claim a victory and take that back, especially given the broader context of the government shutdown. francine: what the markets want in a trade deal? kit: i think the markets want some sort of resolution. how can they be so sure? even if there is a guilty for march, is it possible with this kind of political setup to know whether it is an incentive? kit: no, but if you turn around and reach an agreement --

nothing is new. is the push it out, we are fine. we can cope with that. i think the concern in markets now is, can you get something that pushes this far enough, unless there are concessions on intellectual property rights, which at the end of the day, is the most attachable and biggest issue. it is not a company has a solution. what does-- francine: the u.s. want out of this deal? leslie: what is good for the economy, business, corporate, and what is the president want? he wants to be able to say he a tough stance on china.

i think for the president, politically, that is incredibly important. here is still going to want to be able to threaten the prospect of more tariffs down the line. i think he wants to be able to hope that is pressure because it seems to be quite effective. i think that is meant to have her. whether or not he can get something that he can turn back to america and a, what we have achieved is, there going to buy more automobiles. they are moving forward on the question of intellectual property. tom: look forward to seeing you next week in london. kit is with us. truly one of our most popular guess on the charts, christopher, where he does trend studies. he is really good. we will trend with chris in the

next hour. please stay with us. in london, in new york, in japan. good morning, tokyo, this is bloomberg. ♪

francine: this is "bloomberg surveillance."

tom and francine from london and new york. gohn hasn't said he has been wrongly accused and unfairly detained. in his first chance to get his version of events. the former nissan chairman of. court today to deny allegations of undisclosed compensation and saying he had acted honorably and legally to strengthen the company. first of all, what did we hear in the hearing today? steven: we heard from carlos gohn, that is what made it so unique. this is something defendants in japan usually don't employ because there is no real legal benefit to doing this 10 minute speech to the court. there was no legal ramification. because this is such a high-profile case and he is so well known, and because the prosecution has dominated the

narrative so far. he has been in detention for 50 days. hosn likes the microphone. he didn't necessarily paint a picture that it was a palace coup against him. because he left nissan and the people he worked for, but the prosecution and those on the existing board are wrongfully accusing him and the prosecution and judge are unfairly detaining him. he is innocent of those financial crimes. francine: where does he still have a job? he hasn't been fired from renault. what is his position in the alliance? alliance, he is still in the alliance because he is still the ceo of renault.

an interim ceo has been named while proceedings take place in japan. there is a lot of uncertainty as to whether he will be able to get out of detention on bail. that is something the lawyers are filing another petition for bail today. the lawyers said it will be very unlikely given his approach. he is not showing any contrition. and is very likely he could be in detention for another six months. you might have to take a different view on this, whether they can go a long time without him as the ceo. the main union in france is saying we can operate without ghosn. japanould you explain 1948 and their habeas corpus? rightssngho have any not to be in jail?

stephen: that is with the chief attorney said. there is no reason to keep him detained. because he isno the former head of the special investigations unit of the tokyo district court. --.s the guy that put he knows the tricks of the japanese legal system. he is saying there is no reason to keep entertained for so -- detained for so long. in japan, you are guilty until proven innocent. francine: thank you so much. coming up, we will talk more about markets. this is bloomberg. ♪

tom: "bloomberg surveillance," good morning, all of you worldwide, across europe, across america. this is "bloomberg surveillance." francine lacqua in london. i'm tom keene in new york. next week i'll be joining francine in london as we begin

two weeks of really good coverage and conversation on international relations and, of course, the markets and the politics of the moment. you need a news update, your first word news, here's viviana hurtado. >> donald trump will argue there's a humanitarian and national security crisis at the border with mexico, and that a wall must be built. that's set the stage for him to declare a national emergency, and this is crucial, because this could allow him to build the wall without congressional approval. the stalemate over the wall has kept the federal government partially shut down. meanwhile, the internal revenue service will issue refunds to taxpayers even if the shutdown extends until filing season. that may reduce the pressure on congress and president trump to make a deal to reopen closed agencies. in previous shutdowns, the agency was barred from issuing refunds. today british prime minister theresa may will decide whether to water down her threat to crash the u.k. out of the e.u. without a deal. bloomberg has learned may is weighing whether to accept a plan drafted by pro-e.u.

politicians. they want to make it harder to leave the bloc without a divorce agreement. may's advisors are waiting to see if parliament has selected the proposal for a vote n. college football, clemson stunning top-ranked alabama 44-16 to win its second national title in three seasons. quarterback trevor lawrence throwing for 347 yards and two touchdowns. the tigers, by the way, ending the season a perfect 15-0. global news 24 hours a day on air and on twitter, powered by more than 270 journalists and analysts in more than 120 countries. this is bloomberg. tom and francine, back to you. by the way, that was your college football flash. tom: that was our floob. did you see how she did that? i got to start doing that. viviana did it like this, football. for our global audience, college football a huge deal in america, really goes back to the fabric of the 20th century. good to see clemson, which is a machine. rumor has it clemson, in a careful match, could probably

beat the new york football giants. we are in london on the desk with francine. bring up the chart, if you would. kit, i want to go to the magic of your 6:00 again daily note, which is all about linkages and orrelations. dollar weakness, then modest dollar strength, almost back to that red trend line. and we roll over. help me with the correlation right now and the ambiguities around our debate. how should we be framing correlation in the market? >> correlations are still high. what's happened, we had very good -- we've had moving correlations, i guess, one of the issues that i find every day is what credits with what changes around a bit. but you're still getting a dominant drive over a long period of time, what's happening to longer term u.s. bond deals drives where the

dollar goes, and both reflect expectations about the longer term outlook for the u.s. economy more than anything else. so the 70 basis point fall that saw in 10-year notes in the fourth quarter, that has turned the dollar round, and as that stopped in the last three days, and this is since the payroll data, the dollar has stopped -- it stopped falling, it hasn't gone up very much at all. tom: what is your house call on the 10-year yield? we have other houses making bold moves. is this an easy thing to predict right now, that benchmark, the u.s. 10-year yield? kit: no, i think generally this is as high as i can remember it, remember sort of looking forward through the market. i think there's a clear sense -- i'll start by saying, i think the yields fell too far. i think we'll end the year with higher yields than this. a house call is 3.1% at the end of the year.

i think we'll get back to somewhere like that. the first half of this year is going to be incredibly messy. i would, though, still say that president trump has put the cycle back into the u.s. economic cycle, that is, by having an acceleration, we will have a slowdown, and we are past the peak in u.s. growth, past the peak in u.s. yields. we just fell far too fast, and we'll have to adjust, making markets messy. francine: how messy? if you look at, i don't know, the level of stress in markets in 2019, will it be bigger than 2018? kit: not necessarily bigger in terms of stretch. messy in terms of -- we could trade euro dollar between 112 and 118 until the middle of the year. so i could be bullish for three days, bearish for two days. i could easily from here, i could ease frill here get a bounce back that doesn't get back to the highs in the s&p, and then a fall, and we could be bearish, bullish, bearish,

bullish. we could have several, more than anything else, so we could have several occasions this year where there's a big temptation to go into emerging markets and say these things are cheap, i want to load up and still get disappointed again. francine: do you have a lira call? we heard from president erdogan talk mainly about domestic politics and foreign policy when it comes to syria. are we going to see more idiosyncratic moves or will it be more synchronized? kit: the lira has two defenses to help it. one is that it is cheaper now. it's only cheaper now with inflation at 20%. that cheapness gets eroded in real terms over time. the current account deficit has been annihilated by the recession that they are now feeling. the big weakness, this is an economy where do i want to go back in and get bullish about turkey at the point in a committed, long-term way, when

that recession, and i've still some uncertainty on politics. you know, you're a brave man who goes in way too early. i think you probably get a positive return, but wow, this is not a straight line, because the economic data is going to be weak. francine: how do you choose when it's not too early? is there a catalyst? is there a level that you're targeting? what is there? kit: nothing would give you confidence to go into all of those markets more than confidence -- and i think this is what we're toying with right now. yeah, the u.s. economy is rolling over, but can we just forget the hard landing? in other words, i'm going to get slower growth in 2019 than 2018 and perhaps significanter slower in 2020 than 2019. but i might not have a reception at all. like the early 2000's. that would get me, if i felt really confident about that, that would get me looking at saying, look, i'm going to get slight easing monetary policy,

and we've taken the froth off the top of it. can we please look at where it's cheapest and where it's going to benefit from global growth. tom: what is the price of easier monetary policy? that's certainly been the theme of the last 20 days, even 30 days. there's got to be a cost to everybody loosening up at the same time. what is it? kit: well, the long-term cost is, it doesn't feel as if we've done enough to normalize, and it does feel as if we have to take some of the excesses out. you know, we've still -- in a sense, the long-term cost is, we've still made yet another new high in global debt to g.d.p. levels. we still haven't taken out the excesses in private corporate debt in some of these market economies overseas. so we're not better yet. tom: this is really important. i don't want to get you in trouble with society general of paris talking about other e.u. banks. but the basic idea that europe must clear its lehman low debt burden, we're still waiting on that in 2019, aren't we?

kit: yeah, so, you know, i think it's all right to be very slow about it, but it is clear that the difference between europe and the united states is that in the united states, there was a removal of a lot of the bad problems from the private sector that allowed the banks to get up and running properly. and then that problem was removed and the economy could grow. in europe, we still need to figure out a long-term structural solution to the problems caused in the crisis. not doing that has resulted in this, you know, sub trend, just grizzly soft economic performance in recent years, which keeps on coming back to haunt us. we're not done. that doesn't mean that we won't get to the point where we see a rate rise this year in europe because we want to get away from the policies. but it means there's still a ton of work to be done behind e scenes to just come get it

healthy. francine: what's the risk of a significant slowdown in 2019? is it 10%, 25%? kit: 10 feels too low, 20 feels about right. bear in mind, we might have very little growth in the fourth quarter in the current rate. the fourth quarter had, you know, everything from the german car industry, the global trade problems, you know, some of the european politics. all at the same time. and if we do a bad brexit, which isn't impossible today, i wouldn't be talking about brexit ever again. francine: oh, really? [laughter] kit: that would give europe just another negative push. francine: all right, thank you so much. kit juckes of soviet jen. coming up -- of society general. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine from london and new york. tom, let's talk a little bit about italy, faced with a potential bank failure that could wipe out thousands of depositors in, well, italy. the deputy premier's northern base in rome has approved guarantees for any future bond issues by cash-strapped bank t. has also signaled its support for a possible recap. this comes as bloomberg opinion writes that france's yellow vests have found an unlikely ally just across the out. the leader of the five star

movement has written a blog post in praise of the french protesters, going as far as offering them organizational support. joining us now from rome, our bloomberg opinions, on the phone with us. as always, thank you so much for joining us. is it really that outrageous? it's basically anti-establishment movements, whether it be the yellow vests, whether it be the charge in italy, and they're just trying to shake up the establishment. >> well, i think there are two points to make here. one is that actually will you age owe had been courting emmanuel macron just over a year ago. that's rather curious that now he's courting his political allies. it's just showing us that the movement is rather confused when it comes to e.u. politics. we know that in the past we were not so sure about which group they should join in the european parliament, whether you're a skeptic group. so here's another instance of confusion. but the other point is a

diplomatic point. it's very unusual for a government, an official of an elected government to back protests, which have actually turned violent against another european government. and i think this would not go unnoticed in france. we know there are many who have been very unhappy about the behavior, and i think this is going to be an issue. francine: right, but ferdinando, i remember we were covering the elections together in rome, and the day after we had the election results in italy, the deputy premier actually praising marie l.a. penn. how different is this for this government to praise the opposition? >> i think that's different. marie la pen may be seen as toxic by some in italy and europe, but here we're talking about a party. this is actually win ago lot of votes. the yellow vests are just a protest movement at the moment. there is no sign that they're

going to run in elections yet. that would be a different ballgame some. people here in italy asking i think legit thely the question, how would the italian government feel if the french government backed some violent protests happening in the streets of rome? i think that's very different from the legitimate attempt to form alliances across europe with other skeptic parties. tom: how do you link in the challenges of federalism across europe with a clear economic slowdown that we're seeing? is federalism further threatened by the new slowdown in growth? ferdinando: the pair atax is the federalist -- the paradox is the federalist cream has been really proceeding during crisis, and actually the last few years, which were a decent economic performance, were pretty bad when it comes to

deepening the monetary union, taking those steps which would make sure that europe can really face another crisis in a much better way than during the sovereign crisis. i think the problem in europe with federalism is a problem with three different cycle, and unfortunately, the only times when we see some developments are the really bad ones. francine: thanks so much, ferdinando from blood vessel opinion. we're back with kit juckes of societe generale. we were talking about the movement of the yellow vests. i don't know whether you call it movement or just protest, but it seems to be ongoing in france. but i also want to talk about some of the pretty dire economic data we had from germany. are you more worried about germany, france or italy? kit: i worry about all three to keep me going. i think i'm probably more worried on an economic perspective that there's a strong consensus that germany

faced a bunch of short-term shocks that will fade. this is a temporary slowdown. but if you used industrial production as the basis of your g.d.p. forecast, you are not forecasting a positive number for q-4 at this point in time. francine: fair. kit: take that one. germany is close to not growing here at the back end of last year. hat's a problem. it's a lot of things coming in at different times affecting the scommi. you think, come on, all of this ought to improve in the new year. if it doesn't, euro dollar is not going to go back up. they're not -- tom was asking me where the u.s. forecasts are. i can find my forecaster, and we're not going get anywhere close to those forecasts if things don't get kind of right now. so i worry about those a lot. in the long run, tom's question about federalism, you can't help but thinking what's happening in france and italy

that the federalist dream i think of now is one more about, you know, closer fiscal union, closer monetary union. it's not about the political to al dream in europe is, me, that's kind of gone. i know very few people who still hold on to that. tom: with all that said and very nice comments, what do you do in terms of a trading strategy for the first 90 days of the year? i mean, am i an activist looking for opportunities, which is in your research note today, or am i timid in really husbanding for careful ideas? kit: i'm always going to be looking for opportunities. i don't think i'm going to find easy opportunities trading the euro, and i don't think i'm going to be finding easy bund. nities trading the francine: thanks so much. later today, more from day two of j.p. morgan's healthcare

conference. bloomberg will be speaking with the chief executives of eli lilly and c.v.s. that's starting at 10:30 a.m. in new york. that's 3:30 p.m. in london. and this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and fran cry from london and new york. tom, glaxosmithkline is moving quickly to rebuild the u.k. pharma giant's position in cancer. this follows an agreement last month to buy drug maker for $5.1 billion. the chief executive spoke to bloomberg's taylor riggs about the appetite for m&a. >> weave just done rather a lot of activity in december. in fact, if you look across the year, we've really staged the portfolio quite aggressively. so we stopped in pharma 80 projects so we could focus on our big bets. we're now at the acquisition, and we also did a very exciting deal with 23 and me to build a

partnership around genetic validation of new targets for our drug pipe line. and then we made a lot of moves in our consumer business, first of all, earlier in the year, buying out the novartis in that joint venture so we had control of the destiny of that company. we announced the divestments of a business in december to unilever. and then an absolutely pivotal deal at the end of december in a joint venture with fizer, which creates a world leader in healthcare, tremendous synergy, half a billion, and a lot of value creation for shareholders there. tom: very good conversation there with our taylor riggs this morning. still with us, kit juckes of soc gen. i want to get brexit on my trip to london next week. sterling, what is your call on sterling? kit: look, most likely still along the bottom. sterling is today about 8% off its all-time lows in real

terms. it's really very much at the bottom end of a range for very good reason. we get a much bigger move if we get a soft brexit or if we get anything that's good news to the upside than the down side. i think the interesting bet is if we get good news, i can't imagine sterling stopping anything much between 130 and 140 against the dollar. we're either staying not that far from where we are now, going down a little bit, or we'll be back up above 140. 135 is almost inconceivable. tom: i get the idea of the new slow and bouncing off the politics. what are the ramifications to our listeners and viewers in the united kingdom if we retest the 1992 trade-weighted weakness? kit: you know, the last time we went there, i mean, after 1992, you know, we had a big economic recovery, because we had a big cut in interest rates.

the housing market recovered, and the pound went up. the pound took two years to start moving after that, but it ent up a lot from 1995 onwards. i bought a house in the recovery at the beginning of that process that was one of the wisest things i ever did, the first house i owned. the ramifications this time around, frankly, were disappointing. we just break a little bit lower, and we stay a bit lower, and we just don't -- it just means that going on holiday is more expensive. and if we had a big manufacturing industry, they would be good, but we don't. tom: do we want to talk about the condo you bought in spain? i think it was september of 2007. kit: i'm not going to be able to go there soon, that's the problem, according to this. i have to get a spanish passport to do something about that. tom: well, that would be very good. kit, thank you so much. francine: why spanish? the crucial question, tom, why spanish? tom: four times a year i talk

to kit super someplace in spain, and he said don't tell soc gen i'm in spain. but anyway, kit juckes, thank you so much. great to hear about real estate history of 1992 and all the mistakes mr. juckes and i made in 2007 and 2008. we were all geniuses in 2006. christopher marrone is always a genius, really our most popular analyst of technical analysis. we need support. he'll join us in the next hour, and yeah, i'm going right to it, the technical destruction of s.p.x. stay with us from london and new york, this is bloomberg. ♪

tom: this morning, there will be a test of presidential power. can president, any president, demand the military construct a

wall given a declared crisis? is the border with mexico "a battlefield situation?" president trump speaks to the nation tonight. 800,000 will miss their next paycheck. the shutdown, a clear and present reality. and courage, well, you need technical support to be in this market. good morning, everyone. this is "bloomberg surveillance." we're live from our world headquarters in new york. i'm tom keene. in london, francine lacqua. i love talking to kit just ckes there about the huge ambiguities of this early days of this year. francine: yeah, so i think there are two things that we're looking for worldwide. first, brexit. now there's like a third way of maybe changing the fenway. tom: we need a fourth way. francine: i just find it a little bit confusing, as most people probably on the street, and then the second thing is, of course, the pretty dire german economic data. it could point to an economic recession.

that's significant, tom. tom: yeah, german data i thought was really, really interesting, and shows the degrees of freedom for mr. draghi, to say the least. right now with first word news in new york city, here's vivian owe hurtado. >> tonight president trump making his case for a border wall to the nation. he's scheduled to deliver a primetime speech on what he calls the humanitarian and national security crisis on the southern border. democrats in congress are refusing to give the president the money for the wall, and he's refusing to approve legislation that would end the partial government shutdown. north korea's kim jong un is in china for a fourth time. there's speculation he may meet with chinese president xi ahead of a possible second summit with president trump. this trip suggesting negotiations are gaining moment over the nuclear arsenal. there haven't been high-level meetings in months. in tokyo, former nissan chairman carlos ghosn declaring his innocence since being arrested in november. ghosn telling the court he has been wrongly accused. he rejected charges he failed

to disclose income from nissan and passed on trading losses to carmakers. as francine just mentioned, europe's largest economy may have slipped into a technical recession at the end of the year. german industrial output falling in november to 1.9%. it follows a decline in october. the drop in november production was broad based and led by consumer goods and energy. global news 24 hours a day on air and on twitter, powered by more than 270 journalists and analysts in more than 120 countries. i'm viviana hurtado. tom: viviana, thank you so much. we'll see the v.i.x. comes in here in a moment. futures up a nice 15. dow futures up 50 points in the last hour, up 153 right now. crude oil with a nice look to the market. next screen, please. as i scope out the 30-year bond, back near 3%. that's important coming from the 292 area back out near 3% is a big deal. and i noticed sterling, francine, churning. loved what kit juckes said

about the political linkage into the future of pound-sterling. francine: yeah, i thought that was particularly strong. european stocks climbing as u.s. equity futes, investors really trying to figure out what the trade talks between the world's largest economies will bring. i'm also looking at retailers and real estate companies amongst the biggest gainers here in europe, but, of course, if you look at the index, tom, it's gaining .9%, so it's really shrunking off unexpectedly weak german industrial production numbers. euro actually holding to some of the losses after that german data. tom: very good. with all the news flow out of washington, it is time to have a very important conversation on the events of 43 years ago. we can do that with our chief content officer. marty and i were in our yute of watergate, and on we go. you were just 12, yes. and on we go, marty, from what changed in 1976, which is we needed to give the president more freedom to do things out of watergate, but there were constraints as well.

can the president tonight in this historic speech, can he fall back on the debris of richard nixon and watergate? >> he might actually be thinking about doing just that. you know, a lot of the narrative suddenly never do that for this spiche. it's supposedly only eight minutes, but it is still out there, and it is still possible he could declare a national emergency, and then the end games begin. tom: your advantage is our team in washington in a court court team, a legal team here, bloomberg opinion, noah feldman of harvard among others. what do our legal people say about the ground that the president stands on tonight? >> well, it's uncharted territory, right? it's a law that has not been invoked, and if he tries to do this tonight, it will undoubtedly trigger a legal challenge. but to me, the most important thing is that it actually would give donald trump cover tonight the shutdown, because the whole justification for the shutdown

is funds for the wall. if he declares a national emergency to move those funds for the wall, then the whole rationale for the shutdown is gone. francine: marty, i know it's a simple question, but do we have any idea what actually happens next? i think people balk at the idea that the shutdown could last for two months. but how long can this last? >> well, as many of you know, friday is the first day that federal workers actually miss a paycheck, and it's clear that the pressure on the g.o.p. and the white house will increase exponentially as the stories come out about people missing their mortgage payments, getting eviction notices, not able to pay their bills. that pressure becomes intense, especially for a g.o.p. that's sort of tenuous about this shutdown to begin with. francine: ok, again, what does that mean for some of -- i mean, does this actually distract from some of the other things that the president is

dealing with? >> well, look, what could very well happen, you may get republican senators who are on the fence on this move over with the democrats and pass these appropriation bills that have been passed already to get the government open and override a presidential veto. so the senate is the key here and mitch mcconnell. tom: i want to go to one of the micro things we talked about besides paying mortgage bills. this is vox. i think they really put in scale here the wages we're talking about. it's a wage the president doesn't know, and frankly, i'm going to be honest to say, i don't know either. here's the reality. this is from vox. i really love what bloomberg did today as well. t.s.a. agents are deemed essential. they must come to work even if they are not guaranteed a paycheck. yeah, right. it is actually weakening the security in gateways where people have actually been stopped, airports, like this is really where the risks are versus any given border.

i didn't know this, it's one of the lowest paying federal agencies, i mean, 17-k is a number, and others are saying $25,000. somebody at reagan or la guardia is making that kind of money and the president is screwing with them? >> that is exactly the kind of narrative that's going to come out of the shutdown. that could undermine donald trump's position. i mean, there's definitely an increase in people calling in sick at the airports, and there's a real concern this could snowball as it goes on. tom: i'm going to take the gulfstream from teert brow to england. >> well, if you can pass it, anybody can do it. tom: there was a phenomenal summary. i put it out on twitter, folks, phenomenal summary for bloomberg of where we stand. where do we stand after a supposed eight-minute speech? >> it all depends on donald trump. in this day leading up to the speech, does he try to invoke these emergency powers, or is

he just trying to marshal his argument, which would lead us nowhere? tom: do you have any idea where the pentagon is? >> not with jim mattis gone, but i'm sure mattis would argue against the national security. tom: marty, thank you. a political day to say the least. you will see this coverage tonight. we'll do it at 9:00 p.m. out of the oval office. the president of the united states will address the nation on, well, i don't know how quite to frame it, on his wall, on his border. we will see. again, scheduled an eight-minute speech. this is bloomberg. stay with us. night note note

>> let's get to bloomberg business flash. the founder of oracle has taken a billion dollar stake in tesla. larry ellison revealing the investment in a filing with regulators. he's a long-time friend of tesla c.e.o. elon musk. last month he joined the electric carmaker's board in a attempt to show directors are providing effective oversight. samsung is feeling apple's pain. quarterly profit and sales missing estimates at the south korean conglomerate. trade tensions and a slowdown in china hit the memory chip business t. happened in the same quarter apple reported anemic sales in china. billionaire ken griffin from citadel is hiring away citi group's head of strategy. citadel manages about $30 billion across multiple markets. the firm is beefing up its units that makes macro economic bets. tom: thanks so much. francine, i think that's a huge deal. i know there was a wonderful 14% return, maybe better than good year, but so many others

failed, francine, and i would predict we're going to see a lot more announcements like that. particularly out of london as well. you know, a macro grab by the hedge funds. francine: yeah, agree, tom. we have to watch this space, and, of course, we will continue providing you great coverage. we had a pretty big scope on hedge funds and how they've been doing. tom: i know years ago migrating out of citi group over to the hedge fund space. maybe that's a precursor of things to come. right now, what a joy it was yesterday to visit with ian bremmer and look at their top 10 risks. we tried to get as many voices on as we could. we failed. christopher verrone with us, and we'll get to the charts. ight now, michael with us from eurasia group. an open question, what is the single thing that all of us should be focused on given the day-to-day debate over u.s.-china relations? >> i think the big thing is to look past the important, but

still somewhat narrow issue of tariffs. there's a lot going on in the u.s.-china relationship, and it's mostly getting worse. we are in a new normal of a more tense, more politicized u.s.-china relationship. look past tariffs. look at the non-tariff measures. foreign policy issues that have real potential to heat up. all of these are going to play out in 2019, even if we have a trade deal on tariffs between trump and xi, if this fragile cease-fire holds. tom: we're all formed by our childhood in politics. i have the clearest memories of one grandfather and the whole taiwan experience, and the other grandfather thought he was a fraud. you know, we all have those debates. where are we now on the taiwan mainland debate with the news of the last few weeks? >> taiwan mainland is interesting. i think the u.s. -- i think we're past the period where trump was inclined to use taiwan as a bargaining chip. he realized that that was very dangerous and could lead to war with china. i think that's an accurate

assessment. but for ideological reasons, there are a lot of key figures in the administration, like john bolton, who want to show support for taiwan as a democracy and show china we are standing up for allies. this is the most sense sive issue in china, and although i don't think we're likely to see a military conflict over taiwan any time soon, it is going to remain a flash point in the relationship. this is an issue that u.s. businesses need to be aware of. if taiwan really ratcheted up as a source of tension, that's where you see chinese households mobilized against the u.s.. the likelihood of a consumer boycott against u.s. brands, all of this becomes much more likely if taiwan or the south china seas heats up. that's something to watch. francine: when you look at the economics of china, do you have any doubt that the authorities or even on the fiscal side have the tools to actually deal with

anything that happens? so if politics spills into the economics of things, can they deal with it? >> well, i don't want to presume that they have an unlimited firepower, but i think they have the tools to manage through this in 2019 and 2020. they are reluctant to use their full firepower, because china doesn't want to overstimulate the economy. xi is invested a lot in this political derisking campaign that's now two years on. so they're trying to stimulate only as much as they need to. but i think we have the firepower to avoid a hard landing or financial crisis certainly in 2019. francine: ok, what's the one thing that you're looking for as an indicator of political stress? is there something in the economy that could point to soured tensions? >> i think confidence is really the focus right now for the chinese authorities, and that's hard to tease out from the data. but what we need to look at is

signs that confidence domestic until china is flagging. that would be more signs of capital outflow, pressure on the currency, weakness in real investments. so far those signs are not looking great, but they're not flashing red signs of panic. that's what i'm most focused on, the deteriorating confidence. tom: let's gets a clinic from christopher verrone. bring up the chart on trend. this is what verrone is best at. i should point out, chris, this is shanghai. i know you don't look at shanghai every day. the china boom, the flatness, the range. and these are climbing moving averages. all you got to know is these are kisses. and these are -- chris verrone, this is a textbook chart, and as mr. zweig would say, we mentioned him last hour, this is not president xi's friend, is it? >> it's been a bear market in chinese stocks since the early part of 2018. tom: well contained, well

behaved, signaling south, right? >> and nor have we seen the price action in this market that often marks it -- tom: thank you. you set me up beautifully. christopher verrone, how do you have this kind of action in a totalitarian regime? he and i have been doing this for years. can you do that in the strange regime of china? >> well, beijing would like to be ard to order the stock market around. tom: thank you. >> but they have limited ability to do so. tom: i think this is a huge issue, francine. i mean, how do you have a cathartic move? what's your experience on this, chris? >> perhaps you have it away from chinese stocks. if you look at all the things related, whether it's samsung or apple or copper or the european luxury names, maybe that's where the capitulation needs to evidence itself to stay sa say that we've put in a low in china. i don't think we're there in that part of the world. this is where the global bear market began about 12 months ago. i suspect this is where it has to improve first. there's not a lot of evidence of that yet.

tom: ok, thank you so much, on the 10 ideas from ian bremmer. i really want to focus on the china set up by michael hirson and others. i also want to focus on innovation. thanks to beth and sally yesterday for joining us here on technology and some of the challenges for it. that from eurasia group. this is an important discussion, well-timed. this morning on "daybreak," look for the senator from west virginia, always interesting, 8:00 hour, look for that this morning. you are with this is bloomberg. ♪

tom: you start with a chart, francine, let's do that right now. how about the s&p? this is the classic lehman low chart off of early 2009. what's amazing about this, folks, as we forget time races on, this is a 10-year chart. one, two, three, and on we go. 10-year chart, christopher verrone, here's all that cash. go to cash, go to cash, go to cash, range bound, and then a rollover as well. where do you find the courage to once again stay on trend? chris: i think we need to see the internal conditions that often present themselves at the beginnings of a durable, new bull market phase. i think the tricky part here is they have yet to present themselves on this eight-day rally off of lows, specifically, i want strength indebted within the tape, right? we can see big headline

advances, but we need the individual stocks within the market to exhibit that. tom: i'm going to translate that, and you need the tech crew, the ones that made this recent bull marketed, to climb back on board and find a bit, don't you? chris: not only that, i think we need to see the stocks that were most pronounced on the down side in this bear market stabilize, and then take the flag of leadership moving forward. the industrials, the semiconductors, home builders, these are the stocks that led lower for most of last year. they need to find their footing and emerge as leadership coming out of this. francine: chris, how far away are we from that? chris: well, very simple test that we look for is the percentage of stocks making a one-month high. you get about 50% of the market making a high. that was the evidence that participation is broadening out to the extent that is consistent with durable, new, bull market phases. yesterday, for example, only 7%

of the s&p made a one-month high. so there is work to do before we can embrace this as the start of a new strategic or durable type advance. chris: what is the one thing you don't want to touch in 2019? chris: i think the one thing to be careful with is the idea that bond yields must go higher. i know that's still the very consensus view out there. if you look at a distribution of economist forecasts for 10-year yields, it will this be year, there's only one economist on the street with a 10-year yield forecast below 275 for the first half of 2019. we're already below 275 in the first half of 2019. i think we need to be careful with this very consensus idea that bond yields must go higher. tom: talk about cartar success in china as well. i don't look at volume. cardinal rule from the 1940's, ignore volume. fine. but i need catharsis. i don't think i observed it, did i? chris: you saw some of the tactical indicators. tom: 30, don't any chris: you

had some of the biggest put call fights we've seen in about 30 years, so did you see some tactical indications of stress in the system. where i'm less convinced is that structurally sentiment has been relieved of all the optimism that's been in place for the better part of the last several years. i think that will take more time. what you're seeing here is the fundamental data starting to catch up with what price has been telling us over the last several months. tom: agreed. chris: you see it with apple and samsung. do we need an erosion of the fundamental data before you can get a better volume? tom: how do we know bottom on apple? chris: one interesting fact about apple here is the percentage of analysts that have a buy on it, is that the lowest we've seen in about a decade. the analyst community is starting to get far more negative on apple. that has presented lows or bottoms in the past. i suspect we're close. i don't know if it's 140 or 130, but we're in the ballpark. tom: i want it to the nearest five cents. [laughter] francine: yeah, chris verrone, thank you so much.

he stays with us. coming up later today, the chief executive will be joining "bloomberg markets" at 2:30 in new york. we'll talk data, talk talk. i'm sure she'll be off a little bit about valuations and why not the trade war between the u.s. and china. that interview coming up, without a doubt, one of the interviews of the day. this is bloomberg. ♪ place, the xfinity xfi gateway.

and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods.

simple. easy. awesome. click or visit a retail store today. tom: good morning. i'm tom keene in new york. francine lacqua in london. tonight president trump will

make the case there is a humanitarian and national security christ is at the border with mexico and the wall must be built. that could set the stage for us to declare a national emergency and will without congressional toll. there is a partial government shutdown because of the deal made over the wall. the irs will issue refunds to taxpayers.s -- that may reduce the pressure on congress and president trump to make a deal to reopen closed agencies. the irsous shutdowns was barred from issuing refunds. japan's to cadence pharmaceuticals has purchased shire. clemson stunning top-ranked alabama. quarterback trevor loewen's

throwing for 347 yards. global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in over 120 countries. we talk a lot about futbol. that was a taste of american college football. francine: i'm still clueless but i go along with the brackets. sometimes ignorance is bliss. you just always say, i love what notre dame is doing. francine: always. does that win? tom: you are at the italian embassy and you say, i love what notre dame is doing.

brexit.: let's talk the prime minister is considering a proposal to water down her threat to crash britain out of the eu without a deal. the plan is intended to limit the treasury's tax rating powers in the event of a new deal split there's a split million things going on that they are all tangential to the main question. this is a bill from people that want to remain in the eu that will make it harder to crash out. >> yes. this is not the brexit bill that parliament is debating. this is the finance bill. this is usually about parting the budget. it goes through parliament and the government can spend the money it wants to spend. this time brexit got in the way

the opposition amendments went through and the treasury was left with a very weak position and they are expecting that could happen again today so there's an amendment going through designed to stop the worst effects of the new deal brexit and it would stop the treasury's tax raising powers in the event of a no deal. tom wasn'ts if confused enough. i thought theresa may's main bargaining power was trying to coerce parliamentarians to vote for this deal is the remainders would be scared of a no deal brexit and the people who wanted brexit would be concerned about a second referendum. >> this is parliament in return exerting some of its power showing that there's a lot of people in parliament would not be prepared and are very worried about a new deal brexit -- no

deal brexit to soften the blow of a new deal -- no deal brexit. tom: what is the ireland contingent doing today? the representation of northern ireland? >> we're not entirely 100% sure on what the dup's plans are. abstaineden they have or they haven't voted with the government as they are supposed to do. it seems like the treasury is hedging that they are not going to vote on the amendment. i think they probably would vote for the finance bill as a whole to pass. tom: is that what it's going to come down to? i'm going to be over there next week. this is all about ireland. give us an update on this tension between ireland and all

the fancy people in london. where is that going to be in a week? >> it is still exactly the same position as it was before christmas. nothing has changed. they still don't want to have the backstop and it looks like if you have brexit you are going to have some kind of hard order in ireland. -- order in ireland. people have to decide whether they go for the deal or take the chance of a no deal. it's the eu willing to give extensions? >> it doesn't look like they are at all. whether the u.k. is looking to extend article 50. the government is denying that. but i think that's a big question people are going to be asking over the next couple of weeks. francine: is there a bigger chance of the u.k. inadvertently

leaving the eu without a deal? things get muddled. no one really knows what comes next. >> that would be crashing out without a deal. that is what they are trying to stop happening today. tom: the story continues on brexit. coming up, an important interview. what a fascinating year 2018 for verizon. wonder what the path is forward. please stay with us. this is bloomberg. ♪

>> this is bloomberg

surveillance. a startup that lets you log on to your bank account is now buying one of its biggest competitors. the deal may be valued at up to $200 million. although specializes in wealth manage and brokerages. microsoft surpassed to become the world's most valuable company. now 797 market cap is billion. amazon briefly held the crown in early december. samsung feeling apple's pain. estimates blaming trade tensions on china's slowdown for weaker chip demand. us.k you for joining

different to what we saw >> yes andlast week? no. part of it has to do with the smartphone slowdown. but also samsung is a supplier for apple. it makes the screens. it supplies some of the semiconductor technology. it sort of has double exposure to this weakness. analystsy we saw some cutting their estimates the past few weeks. the decline isn't as steep as it was apple. francine: if samsung and apple aren't doing so well in china does that mean that we -- huawei is gaining market share? >> they probably are gaining some amount of share.

there are three big players in china they are feeling a bit of a squeeze from. the market in china does seem to be slowing more broadly. tom: is samsung a private company masquerading in public shares? >> the family which controls samsung controls samsung and user -- has a huge amount of influence over it. as you have seen with so many companies that have an anchor shareholder. shareholders don't seem to be too concerned. tom: and looking down at the bloomberg terminal. christopher perrone with us. no banner on this chart. it's apple.

it looks the same again on a log basis. how do you interpret apple computer as the technology bellwether? are down to some kind of interim low here. tom: templeton is telling me that you buy shares on sale. of high orn a series low. this 140 neighborhood is no different. the analyst have cut opinions on apple over the last number of weeks. tom: this is really important. there's a modern disease about short term charts. ugly ifesn't look so you look at a weekly or monthly chart. >> it does not it looks like a

cyclical drawdown in a secular long-term bull market. i think you are very close to some type of tradable bottom here. francine: what happens after the tradable bottom? >> that's where we have to do our best work. is this a rally or the start of a -- i think apple comes into about 170 range where it broke down from. i think the discussion about them song is very interesting. the weakness in sansom has been articulated for 12 months now. it is not a stock that was suddenly week overnight. this bear market that we have seen and some of these big tech stocks is not new. this has been ongoing for the last six or 12 months.

francine: if the trade war goes up a notch how difficult is it for these tech companies to change supply chain? that's where we let price action dictate our opinion on these names. this is where i think it's this bear market price action predates the weakness we have seen here at home. we had most major markets peak last year. global indices are 12 months into a bear market at this point. the question on this relief rally is this is the start of a new durable move or is this a move that you want to fade. we lean more towards the latter right now. i will make this up as we go. this is the semiconductor index.

here's a really elegant chart is -- on a monthly basis the stock hasn't even broken through the long-term support. >> we have to put this in context as to how it's performed relative to other stocks. tom: it has been ugly. >> we need to look at relative improvement. everything.e is explain that? why is relative so important? >> if we are going to give capital to security a bit better be better than security b. francine: is there any space ,hat we haven't talked about not your worst companies or your best industry groups that you think will get a little bit of love from the markets in 2019?

>> a pretty good contrary and for 2019 is homebuilders. some of the stocks have become more immune to bad news. that's very important when you're putting in a low. the news on the stocks has not been very good but they have stopped going down. i look to the homebuilders as an opportunity and lower rates probably help. tom: is cash chargeable? -- chartable? 3%.e went zero from almost there has certainly been appetite for cash. we saw that inflows last year. cash as an asset class is far more meaningful than it was a couple years ago. thank you, chris.

we will have more from jpmorgan's health care conference. toomberg will be speaking chief executives of eli lilly -- cvs. this is bloomberg. ♪

tom: bloomberg surveillance. i'm tom keene. we are all charting technical. chris is with us. we're going to do bonds in a moment. as a single best chart idea this is pretty cool. gorgeousitye real to it. these are climbing moving for those of you keeping score at home. how do you pick what this is relative to'? >> if we think of semi-'s as a cyclical index we should look at

sammy's relative -- semi's relative to stuff like gold. that's where the underperformance has been most pronounced. semi's have one of the highest correlations with the broader market so the message from this group is very important to how we view the broader tape. i put industrials in that camp as well. industrials and the highest of any correlation to the s&p. it's imperative that semi's and industrials are involved. tom: let's look at the 210 spread. the trend is there from 60 days after the president took over. >> what surprises me how price action in this picture is very different than the narrative over the last couple weeks in this supposedly from the fed. is goingtion in 2019

to look meaningfully different than fed action in 2018 we would have expected the curve to stiffen meaningfully. the message from yield curves around the world is still one of slower growth. up: we should have come back vere with a steeper yield cur and it didn't happen. francine: what are the data points the fed is looking at? the market of perception of those data points, that's where i think the response from bond yields is so critical. you had this s&p rally and you have only brought 10 year yields up to 270 and you still have the spread still inverted here so the two-year yield is trading below where the fed fund rate trades. that is not the best environment to be pro-risk or owning risk

seeking type groups. we've got to be a little bit careful here. the message from the bond market has been different from that than from stocks. indicatoris there any worldwide that we should be looking at more? >> i certainly think that seven level on chinese wand is important. what we watch is the ratio between copper and gold. how are industrial metals being traded versus gold. i think that's going to be very growthl as we perceive expectations. if the environment is getting better toppers should be outperforming. tom: what is it, journal of commerce industrials? let's look at gold right now. this is important.

you should have this right now with chris perrone. the big four-year rollover. you could almost take the range from here. six years of range bound gold. like you a boring guy do with a boring chart like that? >> i think gold is starting to bottom here. not made a lower low since early 2016 and importantly it is starting to outperform other stuff like copper. this at theoking at market perception on growth expectations of gold stronger than copper is a different message that we have seen. tom: this is comparison. one ratio to another. you mentioned the flattening of the gilt market in the united kingdom. is that a brexit thing?

outhere's a lot of excuses there right now whether it is brexit or chinese trade talks. i think the more dominant story is the message of the market which is flatter yield curves, lower bond yields and that is a message of slower growth. i think we need to be careful we don't confuse what the headlines are with what the price action is telling us each day. francine: is it really possible to do technical strategy on something like brexit in the u k which is so political? it's a binary outcome so difficult to latch onto technicals. >> i think it is more relevant in environments like this where you we can use price action. looking at sterling for example. just a couple days removed from the 124. important message to us that there is still some pressure in that part of the

yield curve is another indication there is still some pressure in that part of the world so the optimistic outcome from brexit i don't think is being priced into market share yet. tom: i'm going to look at the bloomberg industrial subindex and run that by gold as well. thank you so much on the charts with some important and relevant analysis there as well. jonathan ferro and i will continue the discussion. we will drive forward the industrial relative to gold matrix. something like that. we will do that next. stay with us. this is bloomberg. ♪

alix: calling the bottom. be in for stocks.

small caps climb with earning seasons right around the corner. miss aftert revenue it cut guidance. is the reason trade or a slowdown in china? german industrial output shrinks raising the possibility of a technical recession. : welcome to bloomberg daybreak. i'm david westin with alix steel. nfib survey out. exceed expectations. optimism has dropped as well. you've got taxes, no stimulus is coming their way again. and their biggest concern is getting