>> defeat looms for may, the prime minister makes a last save her attend to brexit deal. slowdown and economic hits data and global stocks take hit and partial shutdown 24th day as rd president trump and democratic their ground. welcome to "bloomberg surveillance." i'm francine lacqua and these the markets. we are seeing a little bit of thanusness after the worst

expected data from china putting in worry about the strength of world economies. 10-year yield and slipping, dollar holding steady vote at se we have the the u.k. parliament tomorrow the 128.27. up fromll have our interviews the energy ministers from saudi arabia and we will talk about and global supply and emand and what that means for inflation. reviews to the first from new york city. >> the partial government longest in modern era lindsey graham saying he to d like president trump reopen on a temporary basis. not then declare a national emergency. no talks are scheduled for this

week. chinese trade slumping in ecember for an unexpected fall underlying the impasse in economic trade. worst down 7.6% the since 2015 and left a surplus of $57.1 billion. the president of france says the step in a debate he hopes to dissipate the anger in the violent protests aying out topics and signaling he is not going to reverse tax .uts that the first deputy governor says far from economy is adownturn. deceleration is in the expansion and i think the french

have a plan and we are very far downturn.a readydi arabia says it is to adjust output as necessary to balance the market on expect pick up the d will first half of the year. the energy minister also claimed output cut by the opec plus oalition provided a life line to the u.s. shell producers. 20%.prices are up more than >> if we look kwropbld the -- and data and se ibrations in the market and speculators herd-like behavior i convinced we are on the right track and oil markets will return to balance. to befind that more needs done we will do so. >> president trump warned turkey kurdish forces

after the pullout plan. be economically devastated if it did so. trump says there's little left so-called islamic state ut what is will be hit by an existing american base. the greek prime minister-elect for a confidence vote that could trigger an early election. defense minister withdrawing his party from the ruling name dispute with mass donatia. justin bieb the navy says it was found in t may shed light on the disaster. minutes ming down 15 after taking off killing 189 on board. sensor will not functioned on

the plane's four previous flights. news on the air and twitter powered by more than analysts.alists and this is bloomberg. francine. rancine: teresa pay says the brittain is more likely to stay if brexit is u. voted down. the prime minister is expected speech later this warn forcing ll be against those who wanted to leave. thank you both for joining us. what do i look at today? theresa may her lost chance to side.arliament on

>> she will make the speech and heavily ne of the most lead voted to leave and say it deal. not no deal. brexit so al or no she is making the appeal to the who threaten ions to vote it down. we have heard a lot of the rguments already at this point and if she thinks she will win it is em they are saying not changing my mind. we need to vote it down. seems to be going defeat. heavy >> if she is defeated what is mazing is even four years ago that would be seen as a vote in confident. universe losing by such huge votes you would it step down or for the government to fall. we don't expect that to happen.

to have a plan b which she will come to and what everyone is asking is what is plan b. we have to look at the margin of defeat and that is a key metric. if it is 50 votes, maybe plan b more argue for concessions. if it is 150 she needs something more. could it be herself dissolving for new t and calling election election. all of those options remain on the table. so we will be looking carefully at the numbers. he will come out soon and tell us what is next. >> what does it mean for u.k. pound?ions and the >> i think david makes an ofortant point with the risk no deal has significantly been reduced since december. hat was key for equity markets because there were two bear iis deal and e first no

second being anything that leads to not being a conservative government. step k we have taken one away from the precipice and we u.k. see value in domestics by that banks, home property and retail. >> is this today or wait for the vote? because -- >> we think there is only about 50% chance we get the negotiated outcome but it is ultimately our best case and we re not advising to pull the trigger now but we are lining ourselves up to do that. outcome seems a little the man able and it is thing keeping us from pulling the trigger. we n terms of time line expect the speech later on and vote?ow is the >> the result would be tomorrow evening between 7:00 to 9:00 or depending on what other

questions or amendments are allowed. we will have the result in a few minutes going into vote. and then we will have to see what happens. a statement e straight away. what will labor do? e know they are talking about making a no confidence motion but will they do it tuesday night with the vote wednesday or wait? the expectation is they are on the sidelines to time the vote think they can win because despite losing that vote the rebs say if it comes to a confidence vote we and labor will lose that. >> and there is without a doubt day, the al of the bloomberg chart showing traders to positioning for a delay the brexit date so you can find charts.our be sure to tune in to bloomberg brexit speech this

morning and stay with "bloomberg surveillanc surveillance". we have concernsor global growth china and day 24 the u.s. shutdown the longest in the era.n is the trouble a rating at risk lasts further? ♪

francine: this is "bloomberg surveillance". city. get to new york quit as it faces

enalties and bankruptcy in connection with wildfires. she leaves the company with 2/3 market value wiped out. it was downgraded to junk and demand a shake-up. investors are pulling money from bill gross's bond fund. $60 you red about million of redemption in december. saw the straight month assets drop below $1 billion last a loss of about 4% year. the c.e.o. of deutschebank and report thelynk are meeting regularly the last few months. he talks included the subject of tie-up between the two lenders. eutsch's listen previously saying it should focus on improving profitability before merger.ing a

slumped chinese trade in december underlining the impact of the trade war and showdown. the numbers are the worst since imports exports and falling from a year earlier. we have more on the data. do the numbers tell us? is it a slowdown or because of concerns? >> i think it does show that the starting to bite on china's manufacturing sector as domestic factor we know slowing the economy last year on deleveraging side of things. he key take-aways are slowing domestic demand coupled with hurtingglobal demand is the export sector and isn't expected to turn around any time soon. other key is this is the late drain after a stream of

soft numbers on industrial and t and retail sales factory prices. withdd it up it shows even done last et exports tariffs the new story is to be softer heading into 2019. francine: what can you tell us about when the figures could get little better? of the the feeling world economy won't turn around overd there is uncertainty the trade war with u.s. and chi china. story remains the export numbers underline how china's things are for economy and when the lunar new year coming when they could shut could be a choppy first quarter and could take a few see where the e economy is heading.

rancine: i think the main concern is how will china support growth without reversing they put in place. >> we have seen some stimulus coming and we expect more. that could take a while to feed into the economy. expect station for equity returns in china they healthy for the full year 2019. investors are nk going to give them the benefit some things until in the second half. francine: the equity market is not whether they get a trade deal and i heard it doesn't kind of deal as long as we get something but they are waiting for the data to get better. the trade deal would help but i think that in the absence of incremental new news the

trade has improved the last week and in the absence of any tangible news we need to watch underlaying data to see how the economy is doing and move into that data startsderlying to bottom out. francine: stay with us. 24 of the u.s. shutdown the longest it modern the triple a rating on.ld be at risk if it drags this is bloomberg. ♪ ♪

francine: this is "bloomberg surveillance." market and at indications of brexit but we are news.ng breaking this this is the big middle eastern up the stakeing to 49%.t air ways to i'm not sure if that gives them or extra voting rights. we will see the implications and new phase of a consolidation in some airline carriers. the ack to the u.s. with two top stories are what the markets are doing on the back of and into brexit and with the shutdown. let's talk about american

fed policy and some concerns underlying the shutdown. grace, when you look at the hutdown, 24 days of partial shutdown there doesn't seem to kon - rec significance. >> it will impact growth in the down by 25 hey are basis points primarily because impact of the shutdown that we assume will run through february as things stand. equity markets the u.s. is our preferred equity market. things got oversold in december and we have seen a 10% figure thereobably upside.er 4 or 5% we are still anchored in the you want to be not risking the exposure but i

shutdown along with the fed are one of the key things the markets are focused as indication of politics policy which is the further investors.er francine: are you seeing a lowdown in the u.s. or therefore the fed can hike rates? > we think the economy is slowing. s. g.d.p. peeked at 4.1% in the second quarter. shutdown is exacerbating that shutdown the. to move thefficient dollar in terms of earnings forecast but something in the the fed can deal with it. private bankers have more insight into the shutdown because the data partial government shut down demand sident trump's for border wall funding is

ongest in the modern era with 24 days and the new democratic told "60 minutes" trump is making a lot of money off his job. the issue is whether he benefits and tels, golf courses other ventures. we have senior international editor now. good morning to you, good afternoon because you are in asia. what is the latest with the is there any movement by the white house or congress to end the impasse. >> there's really in the any movement and no negotiations are scheduled. president trump is continuing to demand that the wall that he between the u.s. and mexico be funded with more than billion from the government and democrats are saying they are not going to do that, that to gosh that oing amount -- not going to gosh that amount. to talk about g border security but not willing to fund the wall and democrats

leverage because they control the house of representatives. so both sides continue to blame other for the shutdown which has come to the 24th day. about 800,000 government works in the u.s. didn't get paid last week. francine: what do we know about now dent trump actually going and declaring a national emergency to get the border money? >> he had floated that as an he would basically fund this as a national using disaster funding perhaps and that with then end shutdown. he now says that would be a last resort but some of his suggesting that he should do that. it would end the shutdown and ould almost be challenged in the courts so that is not happening right away but he is olding that out there as a possibility. lindsey graham a republican from

suggesting na is that perhaps the president should go ahead and lift the have a temporary respite in it so that he can try to negotiate with democrats. but democrats are saying they re not going to negotiate a wall. francine: jody, thank you very much. oil piec prices are up 20% since the december lows. hey think opec is on the raoigt track. there was the big conference here we spoke to many oil majors. this is bloomberg. ♪

♪ >> economics, finance, and politics. i'm francine lacqua. ,weeping away pessimist prices

up around 20% since the low in december. meanwhile, the saudi energy minister says he will remain vigilant and let the economy decide. >> i think early signs are positive, which in the fundamentals lead the market to drop prices, and time will tell. of course we will remain vigilant and do what we have to do. >> meanwhile, the us energy minister said he's willing to do whatever it takes to balance the market. while on an exclusive interview with manus cranny. bracee question, should we meeting?traordinary we will only do that during emergencies, and there is no emergency. >> but you are still in do whatever it takes mode. you are still in that mode. >> i think what we did is do what it takes.

we believe that the 1.2 is good and will take care of the market. the reason we needed for six months is we don't want to overdo it, and we think six months is enough, and in the first quarter we can correct the market, and then we will see what happens and act accordingly. >> so you would still be open to expanding if you need to. >> if we need to balance the market, we will do whatever is the right decision to balance the market. >> what's the uae done so far? since i saw you in vienna in december, what has the production been? how much has a dropped? >> uae production, even in december -- we met before here in november in abu dhabi for the gmmc, and since then we've decided that we need to reduce the production a little bit the kos of the waiver.

production at uae in december, it was lower than november. then we took the decision, our january production is expected , almostmillion 180,000 below december, which was the original from november. >> the uae started even before the deal. >> we started even before the deal, reducing production. energy, that was the uae minister speaking to manus cranny. let's get straight to the first word news in new york city. hi, vivianna. >> hi, francine. theresa may is warning eurosceptics that they risk killing brexit if, as expected, they vote down her deal in parliament. in a speech later today, the prime minister will claim no brexit is more likely than the so-called no deal outcome,

preferred by some in her party. reports someimes" lawmakers plan to seize control of the legislative agenda, which could allow parliament to extend the brexit deadline. the u.s. partial government shutdown is the longest in the modern era. 24 days in, u.s. senator lindsey graham says he would like president trump to reopen on a temporary basis, to see whether a deal can be reached on the border will funding. if not, then he could declare a national emergency. no more talks are scheduled for this week. >> i tried to see if we could open up the government for a limited period of time to negotiate a deal, and the president says let's make a deal then open up the government. nancy pelosi says even if you open up the government, we won't fund the wall. that's what i'm depressed. >> president emmanuel macron published a letter to the french, the first step in a three-month national debate that he hopes will dissipate the anger displayed in the recent, violent protests.

he laid out the topics, in signals he's open to all suggestions, saying he won't reverse tax cuts that he says are very prudent. in an exclusive interview, the french economy is still far away from the downturn. as well asal picture the european and french level, the deceleration in the and we are really very far away from a downturn. >president donald trum >> warns -- -- trump says there's little left of the so-called islamic state, but what remains will be hit by attacks from an existing american base. global news, 24 hours a day and at @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm the vienna ricotta. this is bloomberg. >> thank you so much. grease back in the spotlight, and alexis tsipras's futures on the line. he has called the vote in parliament after the government coalition broke down over the weekend. lawmakers in athens are expected to hold a confidence vote on wednesday, and it could trigger an early election. political risks across the continent is the key risk from brexit to france, political divides across europe are deepening. germany is also adding to europe's worries. let's get the thoughts of our guest, the head of u.k. macro rate strategy at ubs, and from ubs. thank you for joining us. john, i don't know how much of a headache europe will be, but it feels like as we get into the parliamentary elections, things could get more worrisome. clearly the data has taken a turn for the worse over

the past weeks and months. it wasn't widely expected, i don't think. clearly with the ecb ending qe, there was a chance that the ending of that stimulus might slow things, but there are signs that things are more significant, and as you say, when you don't think about the political ramifications, there's cause for concern. >> grace, this is our question of the day on our mliv blog, which i follow religiously, the question we are asking, how will markets reflect europe's problems? >> the political issue, the heavy political calendar, is one of the key things that feeds into how we are thinking about global equity markets, with europe lowest on the pecking order as we look through 2019. how will investors reflect that? in the pe multiple, primarily, because that reflects risk appetite. along with the weaker economic data, a draw down in that

multiple, but we are still not at levels that one could get to, if you look back in history in terms of where european pe has trough. >> when are we getting the repricing of the german bund? i feel like a broken record, every january everyone says this is the year it could get messy. is this the year? >> maybe, perhaps. >> we do think over the course of this year that yields will head higher, but q1 is always a dangerous quarter, not just because of what's going on in europe, but because of the trade tariffs and so on slowing down the u.s. there is still caused to think that things could accelerate as long as the ecb can stay on its policy path, then there's a reason to think yields of these core markets can rise. you can see why they are where they are, it's not just the data, it's the political risk and wider global issues that investors are reflecting. >> grace, are we too pessimistic

about european growth? it feels a little bit like there was a big push on the market when we had that german data. >> we actually think the opposite. [laughter] toohink consensus is optimistic about european growth, a person earnings growth in europe for 2019. we think it could be almost half that, 45% earnings growth. along with that risk of multiple compressions. we struggled to see much upside. >> but is this because of the domestic demand, or is it because of world growth? >> it's a bit of both. europe is very exposed to global growth, and that is why we see the data rolling over, but also the situation in europe, the more domestic picture, is heading down. >> could be be surprised to the upside on inflation, or is that far-fetched? >> we could be in due course.

i don't imminently know, not with what's been going on with the oil price, but we do need to man to pick up if we are going to see upside to inflation. grace is right, there's a lot to worry about. but we are thinking the global concerns are overstated and there's cause for optimism the on the first quarter. >> and what's euro-dollar moving on the back of? euro or dollar? >> for example, if we look at where we think sterling is going, we think it will strengthen in the fullness of time against the dollar, materially, but not against the euro. we think the euro has weakened as much as is justified, and it could clearly go further. >> all right. we'll talk about sterling next. jon wraith, grace peters. up next, theresa may warns lawmakers that voting her deals down could mean brexit.

could she change in of mines to push her agreement through? this is bloomberg. ♪ ♪

♪ >> this is "surveillance." now to brexit. theresa may has warned lawmakers that the u.k. may not leave the eu at all if the law is voted down. it's the latest in the series of moves to win support for her brexit deal, considered all but dead by many. whatever happens tomorrow, tomorrow's key vote sets the tone for the next few months of british politics. our guests are still with us.

john, your call on what happens next and what that means for the pound. >> well, first of all, we seem to have suffered quite a heavy defeat. theresa may call a vote of confidence but it won't succeed. we think theresa may will push on effectively, regardless, trying for more concessions from brussels. the plan will say i have proof of how unpopular this is, i will get brexit concessions. we still think, in the fullness of time, that her deal or something like it is what will happen. >> is it likely? i know this is political some pro-brexit conservative government no longer in power. >> in extremists, yes. some have hinted as much and said if the government were to pursue a formal no deal policy, that would be what they were pushing for, and some of the

programming conservatives might get out the whip. in terms of the vote of confidence in the near future, they would be ready to do that yet. it's almost unprecedented for mp's to vote against their own. we don't see that happening, and we think labour will lose their vote of confidence. >> how much are you a political scientist, trying to figure out where the economy goes? >> it's always interesting. i'd say our base case is to mirrore john's, the likely outcome from here. but i think conviction around that is still lacking. we think it would put the highest probability on the outcome but it is still only about 50%. that feeds into why we think there's an opportunity, but it's a tentative opportunity rather than something that is quite obvious. >> so is it a new government, fresh elections? >> if we think about how things have evolved through the fourth quarter, the chance of no deal

has diminished around 10%, leaving the other 40% being all the other possible options. from an economic perspective, when we think about the trajectory of u.k. and earnings growth, many of those options result in a reasonable outcome for the u.k., all relative to the disastrous no deal scenario. but really building conviction is still quite challenging. >> how many votes could we get, and what does it mean for the pound? not not necessarily -- sterling is obviously braced for a large defeat, that is what everyone seems to be expecting. round numbers, anything 150 or less is a probably relatively good outcome for the government, given what people are expecting, point, it iss clear the economy is struggling

now because of this acute uncertainty. while we agree that these other outcomes at the end of the day are better economically for the u.k., to get from here to there will take a long time, which is another reason why, as time shortens, this deal becomes more likely. they're just isn't time to do anything else. >> and on u.k. equities, is it the small domestics you would be looking at? on u.k. newsgly, for, you look at what the corporates have said, and the news has been better than feared. the house builders, retailers, they have been quite optimistic. the opportunity, should this softer brexit arrive, very much lies with the domestics. banks, homebuilders, and there are more structural issues going on. the exporters, which primarily reside on the ftse 100, i think could lose out, because if we

get sterling strength you will see a negative impact. >> what is the bank of england do in all this? >> is due course raises rates,, if everything goes ok. we are not pricing until the second half of 2020. we think it probably comes a year earlier than that, but we have to get this over the line, and soon enough but the loss of momentum doesn't get more serious and mean the recovery takes that much longer and they have to wait for more positive data. >> ok. what is your pound call? is it binary? >> tumor degree, -- to a degre, but we have forecast of 1.37 until the end of the year, stable against the euro, strength against the dollar. there will be a significant sign of relief if we manage to get through this without any disaster. >> thank you both for joining us. john wraith, grace peter's. be sure to join in to bloombergtv for theresa may's

brexit speech a little bit later on this morning. up next, the stocks on the move this morning, including monte paschi, slumping after the ecb says it had capital and profit issues. this is bloomberg. ♪

♪ finance, and politics. this is "bloomberg surveillance." let's get straight to the bloomberg business flash. the bios of california utility pg&e has quit as the company faces massive penalties and possible bankruptcy in relation to devastating wildfires last year. geisha williams became ceo in march, 2017, and leaves the company with two thirds of the market value wiped out since the november fire. their that has been downgraded to junk, and regulators have demanded a management shakeup. investors are continuing to hold from bill gross's bond fund, the

unconstrained bond funds suffered about $50 million of redemptions in december. the outflows for the 10th straight month saw the assets drop below $1 billion. growth makes a loss of about 4% last year. the ceo's of deutsche bank and commerzbank are reportedly meeting regularly in the past few months according, to press. it included subjects of a tie up between the lenders. one leader previously said the banks should focus on improving profitability before discussing things like a merger. he'ss ceo tells bloomberg not happy about things are going at the carmaker he took charge of a year and a half ago. ford is on the verge of broadening its alliance with the german company, vw, after months of talks on sharing new models, developing battery-powered vehicles, and self driving technology. >> i think the auto business is going to be solid. the economy itself has signals that are creating uneasiness,

but i don't think there's anyone that would say we are in a recession right now. >> the ceo of italy's top oil producer addicts the latest oil price rebounds will average between $60 and $62 per barrel. in a bloomberg tv interview, he says any attempts to integrate oil production assets would remain unchanged in 2019. have thek that we topic of consumers and consumers are willing. times" saysncial pboc declined to approve applications from visa and mastercard to process payments and won. the requests were put in more than a year ago, a process which would normally see a decision in 90 days. the pboc visa and mastercard all declined to comment.

luxury cousin medics firm, agreeing to buy elemis for about $900 million. it's the biggest deal on record. the maker of organic lotions looks to expand in the u.s. and u.k. and that's the bloomberg business flash. >> thank you so much. let's check in on the facts. here's annmarie hordern. >> good morning. let's kick it off with monte dei downgraded. 6.6%, evening, they were urged to deliver on their restructuring plan, including boosting profitability. commerzbank is another bank under pressure, down to percent as we learn that the bosses of both commerzbank and deutsche bank have been meeting regularly of the past few months, and one thing on the agenda is a possible merger. lufthansa to the upside, up nearly 2%.

fuel costs look to grow slower than anticipated. that stock has been on the rise through the morning. >> thank you so much. annmarie hordern with the latest stock movers. wall street's earnings season kicks off today with citigroup, fixed income and equity revenue likely to be lower, according to the cfo. on tuesday, jpmorgan reports that growth prospects mount. wells fargo results were declining and average loans will be in focus. goldman sachs reports along with bank of america after a difficult quarter for trading revenue. and finally on thursday we get morgan stanley, which has seen a rare upgrade in a season of pessimism. "surveillance" continues in the next hour tom keene joins me in london. we will be covering the brexit vote tomorrow at westminster, and then we will make our way to davos. pre-davos coverage starts now as we talk about the shutdown. president has decided again not to come to davos because of a

partial government shutdown. we will get the options left for theresa may. idea of to give us an how she's trying to get home, and the vote is tomorrow. coming up in the next hour, we speak to unicredit's global chief economist, eric nielsen, on brexit, europe, the u.s., and china. this is bloomberg. ♪ . .

francine: the prime minister

makes a last-ditch attempt to save her brexit deal. she is ready to call it a no-confidence vote. bad news for china. imports and exports, global stocks take a leg lower. and no end in sight. enters. record shutdown a 24th day as democratic leaders and trump stand ground. good morning, everyone. i am francine lacqua in london. this is "bloomberg surveillance." tom in town for the week. i am going to travel to devils. everyone is telling me it is the margins by which she moves. tom: extraordinary news, i cannot emphasize enough how the stories this is for the united kingdom. we will show that chart in a minute. look at the headline we just watched across the bloomberg. is euro area industrial output, and that is the backdrop for every story we have as we go

to davos, it is a general statement thing, seeing global slowdown three francine: motivated by maybe political turmoil in parliamentary let's get straight to the homework first word news. it is very hot. theresa may,like still contrite here in an hour or so. francine: let's get straight to new york city, plus warm, it is viviana hurtado. viviana: chinese imports and exports unexpectedly falling last month. are the worst result since 2016. last week, trade negotiators from the u.s. and china expect optimism. president trump is firing back about the report. about his relationship with russia. the says he could not care less if his conversations with putin were released.

release an post" article that said he told them not to release with other officials. theresa may is issuing a warning to euro skeptics, the u.k. is more likely to stay in the e.u. than leave without an agreement. the house of commerce is set to vote tomorrow on her plan. in mystery, what brought down the lion air jet in asia. found the black box. in air sensor had malfunctioned on a previous -- on the previous four flights and had not been replaced. growing concern deutsche bank may not be able to emerge from its crisis without ou outside help. bloomberg has learned the german lender has had frequent talks

with the german government and its main competitor, commerzbank. global news 24 hours a day on air and @tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i am viviana hurtado. this is bloomberg. , sending it back to both of you in london. tom: thank you, viviana. i really want to emphasize the , a small detail, with news.he bank's citigroup,ith goldman sachs on wednesday, we also have america and deutsche bank are i. not only with politicians in germany, but with commerzbank, i do not know if we can or should read a lot into it. or if this is the kind of thing you do when banks are in trouble. breaking news, this is

important, we like to the headlines that move the market across the terminal and do this if we can. gold corp. for 10 billion dollars, and the $10 billion size may not be all that large for pharmaceuticals, but that is a big statement. francine: and it is one that actually started about 18 months ago. should we get the data? tom: i think we should get to the data. equities, bonds, currencies, commodities. let's look at it now. a churn in the market, -18, i stand corrected on that. a little bit of risk-off over an hour ago with oil taking a little bit of a pause. $19.93, almost a $20. francine? euro vote ar the

change, but the pound declining before the crucial vote tomorrow. the pound, theresa may no closer to getting the backing she needs to push it through. slump,han expected european stocks down 7%, tom. versusis is sterling u.s. dollar, not eurosterling as well. sterling. i wonder where that will be in 48 hours. francine: we actually have the same chart. this is what happens when i bring you over. happy 2019. i am looking at cable. i am using my chart of the week, basically telling us that pound options -- tom: this is a bit forward. francine: yeah. brexit.ay with

theresa may says lawmakers are more likely to stay with the e.u. if her plan is voted down. fromng us now is eric unicredit, global chief economist. what are the chances of this being voted through before march 29? eric: right. tomorrow she loses. i do not think there is anyone who believes she can swing it around by an important vote tomorrow. francine: by how much does she lose it? eric: i think a lot. in a way, it may actually suit her, because she can go back to brussels, and they can find something, but not mentally, i think that is impossible now. francine: they have no options? ur scenario is she will

get a deal that is not exactly her deal, something not far from that deal, something we talked about, 75%, 80%, now i think it has dropped more than 50%/50%. there has been a change in this credit process in this country where parliament is trying to take back our from the government, from the minority government, that is. tom: as an ugly american visiting, erik, i get the mp's in elite areas that want to remain, that represent their constituents, i am fascinated by mp's that represent constituencies that really want to leave, but therir mp's are not representing their constituencies. how is that possible in a democratic system? erik: that is a good question. it is possible because they were elected on a different platform before the referendum or after the referendum but on a broader set of issues.

you could argue that the people within assume, and therefore it did not really matter who they are. a let's necessarily a brexiter. fight aboutggest the structure of democracy we have had in europe since the second world war. tom: right. i have a morning must-read, folks, francine and i argued, even on the cover of "the guardian," avril lavigne relaunching her career front and center of the u.k. press. i don't really understand that, but ok. here is "the guardian," fabulous by andrew as well. do not expect queen theresa to collapse when she loses in parliamentary getting there by evolution rather than revolution, britain has never had the codified constitution.

this can be called blackmail brexit. it'sin will need to think casual attitude to the roles of its democracy and embrace a properly qualified and protect the constitution. do you really think there will be a constitutional choice after? probably takes it far, but this country needs a national conversation about the rule of law. i mean, it is implemented -- tom: we have a rule of law. it is leave one. erik: yes, to me. i have aay says democratic legitimacy from that referendum, although it did not say what kind. francine: that is the concern. tom, if you are a parliamentarian and you represent a constituency that wants to leave, what do you do? do you vote for a deal where you

are leaving, but it actually safeguards the economy, or do you vote for a hard brexit? nobody really knows what kind of leaving the u.k. is voting for. erik: that is exactly right. where i think theresa may has gone out on a limb is the fact that she says i have a democratic legitimacy from the referendum, i do not care about parliament's majority, per se. she is putting something that is the best, feasible deal, if you want to leave. tom: this is dartmouth 101, believe people say we need a wto follow-on. if that feasible? wto negotiation? erik: the world will not close to britain. wto, go to allhe sorts of places, but nothing will happen quickly. is ade deal with the wto

five-year to 10-year operation. it, we are core of so entwined in the trade and investment community and the way that we conduct business is that nothing can be changed in quick order, as you put it, tom. francine: this is the concern, hundreds of trade deals being negotiated unilaterally. erik: literally hundreds. francine: we will get back to you, unicredit, and stay with bloomberg as we bring in full coverage of the prime minister's speech on brexit. that should be starting in about 45 minutes. this is bloomberg. ♪ s bloomberg. ♪

viviana: this is "bloomberg surveillance." i am viviana hurtado. let's get to bloomberg business flash. newmont agreed to buy goldcorp total $10et to billion. newmont is facing colorado. goldcorp is based in vancouver. 's head is stepping down. of company has seen 2/3 profits wiped out since the devastating wildfires. investigators are trying to figure out if e.g. any equipment ignited the fighter, which could lead to billions of dollars in liabilities. cadillac's new vehicle unveiled show. auto

cadillac is counting on china to give the business a boost. a representative spoke with bloomberg's david westin. hope that the trade issues are finally in the rearview mirror as the year goes by, but even with the nncertainty, it is still a enormous market with a huge upside for catalog. are up more prices two 20%, taking in almost year low in september. the ceo thinks the price range between $62 and -- $50 and $62 a barrel keeps them under pressure for now. >> i assume it is the object of consumers, and consumers are winning. [laughs] viviana: and that is the bloomberg business flash. tom, francine? tom: thank you, viviana.

much going on in the united states. kevin cirilli will join us. our bureau chief has a perspective on asia and the pacific rim like few in china. he joins us this morning. they have got a low economy coming up, the mandate is a need to keep people employee. ed. are they succeeding at that? is the labor function in china so fragile now that they will see a change? guest: it is hard to tell. there is a lot of dispute about how accurate china data is, how reliable the china unemployment numbers are. but you see tech companies laying off people. you have heard reports about promised,we have universities promising a job and then on the last day canceling

the contract. foxconn cutting back on over time, things like that. there is definitely a slowdown in the labor market. the economy is slowing, and that is slowing down people's jobs. the government is very worried about that. as you say, the biggest thing china needs is they need to keep growing. even though the economy is slowing down, it still has a massive workforce each year that needs jobs, and that is a tremendous responsibility. they need to provide them with some kind of employment. tom: is there a hard landing? james: i don't think so at the moment. the government is currently forecasting economic growth this year between 6% and 6.5%. i should not say forecast, i should say target. do notrnment officials think it will be a hard landing. there is no sign of that

happening. there is much less demand for overseas commodities. less demand for chinese exports. slowing, people are buying less, so it is not a hard landing, i think, at this time. francine: james, thank you so much, bloomberg's james mayger there. let's get back to unicredit's erik nielsen. how much is a slowdown we should really worry about, and how much is a side effect of the trade war? erik: it is an underlying mental slowdown. first of all, the trade war, per se, only has disrupted global trade so far, it is minor, but it impacts sentiment. but they have something underlying. we have seen the trade data. we have our own global indicator for global trade, and this past positive end seen

of your numbers, traded down 1.5% now. so this is very significant. something very strange is going on, and my hunch is that china is going more than they actually report. to trade number is difficult ,et, but they are not growing they are in a decline. know, they are starting with a policy response to that. francine: erik, really quickly, do you think it will put the world in a slowdown? erik: yeah. francine: erik, thank you so much, unicredit. coming up on "bloomberg daybreak: americas," vanguard's chief i economic officer will speak. this is bloomberg. ♪ this is bloomberg. ♪

noise,e look beyond the the data, vibrations in the expected behavior, i remain convinced that we are on the right track and the oil markets will quickly returned to better. if we find that more needs to be done, we will do so. >> for three days, we will do what it takes.

it will take care of the market. months, wefor six don't all do it. we think that six months is enough. we can correct the market, and then we can see what happened and act accordingly. >> so the test will be whether we can keep $60 during this low next eightod for the weeks, 7, 6, 8 weeks. >> i presume we are the object of consumers, and consumers are winning. [laughs] francine: that with commentary from the global energy forum in abu dhabi. brent crude trading lower. coming back to a recovery. because it is oil, it is always good to look at some of the dollar dynamics.

tom: are we going to vienna? we should probably go to vienna. francine: let's get back to erik nielsen of unicredit. up, up,me say it is up, others say down, down, down. for the year? erik: i do not think they are far away, but if the world is slowing, i think we should probably see more downside risk than upside risk from here. francine: how can we be sure this is not an indicator of a slowdown? that this is not a demand issue. erik: that is right. what you are seeing now is a bit of a demand story. on the screen a while ago, there is a lot of noise, but the sectors ultimately see weaker growth numbers coming from europe projecting into the future, and then you take it

down some. that is certainly their story, but the equilibrium than will the client from there. francine: erik, thank you. erik nielsen stays with us. a little bit of downside to the european market. you can see 0.8%. what we are looking at is basically the china trade data showing a worse than expected slump. i think that is reigniting concerns about global growth. we await that theresa may speech in about half an hour. this is bloomberg. ♪ this is bloomberg. ♪ tom: good morning, everyone.

i am tom keene in london with francine lacqua for the week. a little bit going on with constitutional process in the

united kingdom and a little bit in america. your monday birthing -- your monday briefing, here is first word news. >> foreign trade slumping at the end of the year, experts down more than 4% in december imports. both are the worst results since 2016. the u.s. and china expressed optimism before mid-level trade talks wrapped up. one of president trump's allies once the government reopen on a temporary basis to see if a deal on the border wall can be reached. if congress cannot reach an agreement in three weeks, the president should declare a national emergency. the partial closure is now 24 days in and the longest shut down in u.s. history. president trump is warning turkey not to attack kurdish forces in syria. the president tweeted turkey would be economically devastated

if it did so. tensions have been increasing between the u.s. and turkey over u.s. support for a syrian lead-kurdish militia. in greece, the political future of the prime minister is on the line this week. he is calling for a confidence vote in parliament, raising the vote of an early election. there could be a shift in power to the opposition center-right new democracy party leading greece through bailouts and force an unlikely bond with angela merkel. global news 24 hours a day, on air and at tictoc on twitter, powered by more 2700 journalists and analysts in more than 120 countries. tom: thank you so much. there is too much to talk about with london, the challenges scheduled out the green -- at the green tomorrow. if you went to -- want to look at how the needle moved saturday

and sunday, perhaps it was a senator from the carolinas. here is lindsey graham. lindsey graham: -- senator graham: i tried to see if we could open up the government for a limited period of time. the president says, let's make a deal. nancy pelosi says even if he open the government, i would not fond of the wall. that is why i am depressed. depressed. not depressed, the senator from texas, ted cruz. senator cruz: he is more than willing to compromise and meet in the middle. tom: ted cruz, the bearded one with us as well. an active weekend for republicans. we study the message and good question with the head of the u.s. and america's program and erik nielsen of unicredit. it is a historic moment for britain and america. what is the level of sweat at the white house this morning?

leslie: i think it is fairly high. with this president, never entirely clear. we are headed into day 24. this is very high stakes and it is not clear how it gets resolved. to the president and republicans . there is pressure on republicans to try and resolve this. tom: i went through tsa at jfk and it was interesting to see all the people thanking the tsa people for being there. it wasn't crazy, but a lot of people reacting to the fact these people have no paycheck. the senate republican leadership, they have paychecks right now. how much did the pressure increase from president macconnell, as he is called? leslie: the impact of the shutdown is being felt by others and many, not at all. many people who were part of

that base will be hit by this. mc pressure on macconnell -- onnell is high. perhaps with some border security, perhaps a little bit -- tom: keep negotiating. francine: it will be difficult to get some actual pieces of data, does it have impact on commerce, trading, how the fed looks at the u.s. economy? erik: it depends on how long it goes. -- in terms ofow when the data comes out, it doesn't have a material impact on tdp as a trend. there can be noise in the system, but it is not enough to tip the economy. leslie: how do you break -- francine: how do you break the impact? is it the president that declares an emergency and gets funding from another budget or caves, what happens?

leslie: i think you have to step back and we are talking about the idea it might not have any impact, that the u.s. government is in partial shutdown. this is extraordinary. we are looking at a contest of who is in charge. it is certainly going to have an economic impact. i think the bigger thing at play is congress is drawing a line saying things are not going to go forward as they have for the tom: last two years. it's a critical question then. legislative -- this is so different than england. can the legislative branch diminish and take back some of the lawmaking we have given away to the executive branch? is that even feasible that could occur? leslie: and yet there hasn't been a lot of lawmaking. there was the tax cut, that deal went through. very little went through congress.

we will make it difficult for you to govern. lessevil in some ways is in the detail than what is at stake in the big picture. francine: bring us up-to-date with what is happening in the mueller investigation. do we have any idea where it takes us next? leslie: the stakes are getting higher and higher. this question on friday and saturday about russia and trump has clearly taken over. we will see a president that is deeply unsettled. until that report is released, we are not going to know where it is headed. certainly people are much more concerned. francine: we had another warning from jeff good lack of double line saying he worries about the debt. it feels like in december it was recession christ in the markets and now they are taking more of a cool head. there will be slowing in

the first half of this year. you are coming off the sugar numbers.we have strong the question where most economists disagree is does it settle around trend growth or do we go down to what we have, a mild recession or near recession 2020? tom: let's be careful. are you talking negative gdp or some fourth of growth recession? moderatehave a slight negative growth for two quarters mid 2020. who knows. it could be cross quarter. this is impossible to see. the point of the story is it is not necessarily a crisis like the financial crisis. it is a cyclical downturn that is deaditical apparatus

and there is a limit what the fed can do. you cannot prevent the cycle. tom: leslie, this goes to the heart of your work. it is all about economic growth or the lack thereof. that is true in poland, hungary, italy, the united kingdom. forecastsen's economic gives us a politics where this never ends. leslie: absolutely. economic growth is critical certainly for trump's sustained success, but it is not just about economics. it's about culture, distressed, all sorts of thing -- thanks. it has a lot to do with immigration and concerns about sovereignty and the nation. tom: are you going to go back and run for president? everyone else is. leslie: there are a lot of great people putting their hands up and a lot of them are women. 42: i think we are up to

candidates and that is just for one party. terry mcauliffe with an interesting resume, not only has a democratic party support, but former governor of virginia. look for that in the 12:00 new york hour. lots coming up, including an important speech from stoke on trent and prime minister may, a fractious day in washington. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom and francine in london as we cover the brexit vote tomorrow

and make great -- migrate to davos. tom: this is the best coffee on the trip, london coffee. francine: brood by italian -- brewed by italians. -- government coalition broke down over the weekend. the vote could trigger an election. political risk remains a key concern for investors. political divides across the continent are deepening after weak data is adding to troubles. still with us, erik nielsen and leslie of chatham house. you have these parliamentary elections for the european parliament. people care, but how much power do they really have. erik: on the european side, they have a lot of power. the outcome of the european election would be important for

the appointment as president of the commission. then there are other sides of it. it will shift a lot. likearticipation rate is the american election stuff where only half the people vote. francine: you are optimistic in general about europe. are you worried this year because of the economics coupled with this wave of populism? erik: i am worried about europe because of the political shift. the economics is not bad, really. we have created more than 10 million jobs in the last five years and not only by taking unemployment away, but people who come into the labor market as opposed to -- there are deep fundamental imbalances. the european economy is what it is. populism is a big danger to policymaking covert -- going

forward. this i worry a lot about. right,e idea of the far whatever that definition is, gains more of a critical mass. are they in a better moment or can they grain -- gain critical mass? leslie: i think a significant minority that puts pressure on the majority to behave differently. tom: like in austria, can that happen? leslie: unlikely to become a majority. a significant minority that alters the political discourse and the policies that are viable and alters engagement beyond its borders. significant of a minority is really what we are looking at. tom: what other benchmarks this year? i know there are elections in indonesia. are there going to be democratic moments in europe this year? leslie: i think the european parliamentary elections and i think obviously what is happening in the u.k. matters separate from europe,

increasingly separate from europe. everybody is looking at europe. tom: should we have a dumb moment. parliamentaryean elections. leslie: members of the european parliament. the u.k. is probably not part of this going forward. tom: don't look at me like that. i am getting the eye. care in france about macron. they care in germany about merkel. do they care about european parliament? erik: it is a fair question. tom: did you hear him say that? erik: every electorate goes to the electorate in denmark or france and the gist of what is most often campaigned on is how do i get something out of europe?

how do i protect denmark and france? that is the wrong spirit. there is an underlying problem in the narrative of this election. francine: it is actually a genius question, tom. tom: really? francine: the dichotomy between what people care about and they don't. a lot of people in their day today probably don't feel about europe. if you have a euro skeptic european parliament, can they influence the citizens in each individual country to turn against it? erik: this is what -- in italy is campaigning on. the underlying problem is nationalists are not very good at coronary -- coordinating things with other countries by the nature of being nationalist. alliance there is an -- was elected and the next day he said i wish that on the pen madam le of france --

pen was president of france. .rik: it is a problem the minority of anti-europeans in the european parliament will influence them. which way it does is not clear. on the important key things of the important -- appointment, you see a return to coalition prices. back to braggs it, we understand according to the u.k. that the e.u. letter on the backstop assurances will be published shortly. theresa may spoke to angela merkel on the braggs that question. does it mean we could get concessions from germany, i.e. from europe? erik: my sense in berlin and wiggles is that there is room, not on fundamental things,

but there is a fundamental view that britain is leaving and theresa may's deal is the best we can. tom: this is an important point because in the papers in london, there is this idea of get through the ugliness of tomorrow and toss it back to the e.u. does the e.u. wanted to catch the toss? leslie: it seems unlikely the e.u. will give at this point. this becomes looking to see where britain is going to go. we have seen the call by john majors that we need to look back at article 50. is: to be clear, tomorrow tomorrow evening. at night is it like the greek parliament? midnight? leslie: we don't know how long that vote will take. tom: leslie from chatham house and erik nielsen of unicredit. in the 6:00 hour, the prime

speak.r is scheduled to it is the north american international auto show, bloomberg will have coverage from the detroit show, the chief executive officer of ford motor and toyota north america all speaking. stay with us from london, this is bloomberg. ♪

>> this is bloomberg -- "bloomberg surveillance." more consolidation in the global gold mining industry. newmont will emerge with gold court -- goldcorp. year, -- creating the world's's biggest gold minor. investors take -- keep taking money out of bill gross' fund. what it washan half last february. he lost about a 4% last year, worse than more than 80% of his peers. ford upon ceo says he is --

ford's ceo says he is not happy with the automaker's performance. he is on the deal -- the verge of brokering a deal with volkswagen. hackett telling bloomberg at the detroit auto show the industry as a whole is in good shape. >> the auto business is going to be solid. the economy itself has signals that create uneasiness, but i don't think there are any markers that would say we are going into any kind of recession right now. >> a $28 billion liquefied project will take place this year. the facility's first cargo will ship in 2023 and she expects asia to be a major market. >> china should become a one million ton market.

the growth potential in the market is really important. and theese need lmd u.s. has a lot of natural gas. there should be some natural synergies there. francine: we are back with erik nielsen of unicredit. we were talking about exit and populism. i want to get to your thoughts on china. you say the growth could be slower. is it a much slower or just a little bit slower than we have now? indicators wekey don't think we can rely on. certainly a percentage point -- 1.5 below the public numbers. francine: what does it mean for world growth? can the authorities have a pretty good handle on what happens in their economy by stimulating it without getting rid of reforms? erik: this is the key problem.

in a sense, which are the policy tools? expansion,do fiscal but they are having a massive public investment program. in most numbers, they are already doing more than they should. they have a negative return. they don't like to stimulate private consumption. monetary policy has been fueled powerfully on credit expansion. the exchange rate, you can use for political reasons for the americans and -- tom: is it a marxist theory? what underlying theory are all these reaction functions? totalitarian regime. it's not marxist, is it? it is an original thing they are trying to make, right? erik: i think that is right. when you see the crisis in democracy, there is a lot to be said about the competency of

policymaking in china. whenever you meet anybody of import in china, you are impressed by what they know and how they think about stuff. the population is declining and they are running out of -- tom: erik nielsen, thank you so much. weekend, a momentous occasion within the united kingdom. what you are looking at is seven candles of joy. is it remarkable? those are not legos. francine: it is so the kids do not think i am totally useless.

i am a family man. i am a techie dad. 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. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. tom: this morning, let the pressure began as senate

republicans consider abandoning the president. they would join with house democrats to end the government shutdown. no word if mcconnell has spoken to president trump. unaccountable palace dues. corbyn out. the remaining say brussels, just do something. a do that tomorrow about fruitless ground. economics, finance, investment bank earnings matter. in two hours.rt good morning, everyone. this is "bloomberg surveillance." from london, i'm tom keene. francine lacqua here as well. tomorrow we will be at westminster for a vote. francine: this is a last chance attempt for theresa may to get our limit on site. tom: it will lose by 200 votes.

francine: it is unlikely she passes the deal. it is depending on how much the loss is or how many parliamentary votes against her will determine. 150,e think if it is below they think she has a chance to get it through on the second or third attempt. tom: in america, the papers lit truly constitutional crisis. united kingdom publishes eu letter on brexit backstop provision. this is about ireland. irelandd the dup of respond to this european letter? it is on the backstop because pre-brexit people say if you followed -- pro brexit theme say if you followed

in, they will work on a post-brexit trade deal. maybe it is no wanting that could help. tom: it is not us versus them but there are eight teams involved in the debate. that says nothing about washington. in new york city, first word news. >> in china, more signs of the impact of the trade war and economic slowdown. chinese exports and imports falling last month very both the worst result since 2016. trade negotiators expect optimism after talks wrapped up in beijing. president trump firing back at a report about his relationship with russia and says he couldn't care less if details of his conversations with vladimir putin get released. ,he pentagon reportedly

according to john bolton, asked staffers of the pentagon to provide the white house with military options to strike iran. that came after iranian backed -- shots fired grounds and anmpty parking lot embassy. a german lender held talks with a government and a competitor. deutsche bank struggling to reverse years of losses and declining revenue. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. tom: thank you so much. equities light. futures, -26.

down -200. euro 11562. speakminister may will shortly. looking at what is happening to the pound. i am looking at stocks falling. disappointing which seems to be refueling concerns about global growth. tom: let's look to washington and the shutdown. nothing funny about it. publics on the persuasion jockey for position. here is lindsey graham. if. graham: i tried to see we could open the government for a limited period of time to negotiate a deal and a president says let's make a deal and open the government. nancy pelosi says even if he opened the government they

wouldn't fund a wall. that is why i am depressed. we welcome our chief washington correspondent kevin cirilli. what is the count right now of geo senators who have defected from the president? has defected. there is no major breakthrough expected. it is becoming the longest ever in history. the folks are at a stalemate. through jfk to get to london. what i noticed was the spirit at tsa and people thanking them for working. hillanyone on capitol understand that the paycheck says zero? , and: they say they do

they say they will ultimately receive a paycheck. beyond tsa agents, i would andion people to note remember that inside washington every time there is a restaurant or 25% of work. force not coming, it is a punch to small businesses and contractor and elsewhere. country, folks not showing up to work has a crippling effect many times on small-town economies. francine: is this about the wall or setting the relationship on who has most power and how does it get resolved? does he go for emergency funding? kevin: yes, it is completely about the wall. the president wants to use emergency funding.

when exactly what he decide to do that? will the time it with the state ait to nuanceor weig this and extend a broader fight? we are from democratic staffers and they are saying if he works -- if you were to declare emergency funding, would he take m puerto rico or of california wildfire fund? it would appear he is on that path. the question becomes, what took him so long? would you know about the robert mueller investigation? kevin: it is going to take six more months to complete. this will drag on well into the calendar year of 2019. over the weekend, the new york

times reported that the fbi opened an investigation into whether president trump was russian agent or cooperating with the russians. this was something the administration forcefully pushed back on both and a television interview with po fox news and tweets. thank you so much. we have been expecting news on the fires in california and what it has meant for the san francisco gas and my company. -- gas and light company. severalged with companies several years ago and formed pg&e. the headline is they are in trouble and the ceo resigns. chart.on, help me with a you can see the erosion in 30

days of the pacific gas stock prices. a 27 level and now the indication is down 11. with us in our london studio is frequencyerg of high economics. just in the short time, the back of your daily note is about the pulse of the fixed income markets and credit yield and what they signal. do they signal european and global slowdown? policyhey reflect expectations in the central banks and they reflect the slowdown in headline inflation that took everybody by surprise after the drop in oil prices. tom: can you link gdp of low inflation into the political crises we are seeing right now?

carl: it is hard for me to come up with an explanation. fact and we harder may have a residual delayed effect from the surging oil prices last year, inventory prices in europe and canada and australia. it is hard right now to understand why europe in particular is slowing down but it seems to have turned the corner. for a busy day and we wait the prime minister's comments before the vote tomorrow evening. the north american international auto show, they do that on the border of canada and detroit. conversations of the leadership of full to waiting, ford, and toyota -- volkswagen, ford, and toyota.

this is "bloomberg surveillance." ♪

>> this is "bloomberg surveillance." let's get the "bloomberg business flash. consolidation of the gold-mining industry. a merger in an all stock deal valued at $10 billion. says it is paying a 17 percent premium on the share price the last 20 days. last year they merged and created the biggest gold miner. general motors has a lot riding on the new suv unveiled at the detroit auto show. cadillac sales down 3% in the fourth quarter. gm is behind rolling out crossover vehicles. they also count on china to give

business a boost. he spoke with david westin. >> we would be hopeful the trade issues find a way into the rearview mirror as the year goes on. that uncertainty subsiding and with the uncertainty still an enormous market for cadillac. >> italy's top oil producer protects the latest rebound will stick. up more than 20% after hitting a two-year low in december. price range between $60 and $62 a barrel. ofyou have the topic consumers and the consumers are winning. >> that is the "bloomberg business flash." tom: bankruptcy announcements and directness to it. and that is what we see with pg&e. they say they are cooperating

with a probe on cause of the camp fire. clear theyto make it are declaring bankruptcy. they will miss and interest payment and they do not intend to make a $22 million interest payment due january 15. they shell out some of the financing and most importantly send a "bankruptcy notice" to their workers and employees of january 29. francine: i don't know whether this is contained to what this company feels like but we have to look at the repercussions. tom: south of the origami border down to bakersfield, the northern part -- south of the egon border down to bakersfield, the northern part of california. francine: this is a california

issues grappling with that might push it to bankruptcy. theresa may has a last-ditch effort to gain support for her deal which is expected to be defeated in parliament. a speech is expected later this morning and morning that 14 brexit would be a betrayal -- thwarting brexit would be a betrayal of what the people voted for. joining us is carl weinberg. i am looking at some of the sayinges we have had that he was told that brexit is that risk. he says he doesn't want the brexit backstop to come into effect. how turkey is a backstop?

-- how tricky is a bank stop? will it make a difference for the vote tomorrow? >> i don't think it will make a difference tomorrow but in the sense that there will be some against --l vote voted against the deal and may vote for it now. it will still be a defeat tomorrow. it matters because tomorrow is not the end of the process. point later to the deadline, the eu will have to deliver on the backstop repositioning. they will have to make -- produce more than a letter of intent. francine: what we have is a letter of intent offering brexit assurances. can they offer more? wolfgang: they can offer more. francine: will they?

wolfgang: they will go for changes in the political declaration and make it -- depending on what the u.k. wants and where compromise is heading. for example, if she wants to make a deal with the opposition opened up toht be alternative outcomes and give parliament a greater say. that is something the eu can do quite easily. the backstop is the most difficult thing. important is in the financial times words weren't minced. everyone focused on the vote tomorrow. what do you want the eu to do? stand on the side and be quiet and you say speak. often: the eu should say -- wolfgang: the eu should say forget it.

if you have five options, you won't get a majority. tom: what eu option would advance the discussion for all? : the eu should firm on the backstop change and take the second referendum off the table and take any brexit extension off the table. small extension is fine but only if you ratify the deal. if the deal versus no deal it will be deal. tom: if a firm up the backstop does that put the border in the irish see? wolfgang: i don't think it will. there will at the end of the deal a border issue which has yet to be resolved. they haven't got a plan how to deal with it. there will have to be ultimately some kind of technical arrangement if they want to keep the border open and have an external customs border.

it can be done, we have one with switzerland. it is a fairly open border. francine: thank you, we will talk more on brexit as we expect the prime minister's speech. we will be back. this is bloomberg. ♪

francine: this is "bloomberg surveillance." we are awaiting the prime minister to start her much anticipated speech. she is making a last-ditch effort for her brexit deal. prime minister may: tomorrow members of parliament will cast their votes on the withdrawal agreement on the terms of departure from the european union and the political declaration on our future relationship. that vote in westminster is a direct consequence of the vote cast here and in and cities and towns in every area of the united kingdom. in 2016, the british people were asked by mps to take a position, should the united kingdom remain member of the european union or leave? both sides disagree on many on one thing they

were united, the british people decided the politicians would implement. the government set a leaflet to every household making the case to remain. it stated this is your decision. the government will implement what you decide. those with the terms on which people cast their votes. the u.k.emain, th would have remained a member. on the rare occasions where parliament but the question to the british people directly, we have always understood their response carries a profound significance. votedhe people of wales and eternal of 50% to endorse the creation of the welsh assembly, that was accepted by parliament. we have never had a referendum in the united kingdom that we

have not known the result of. factament understood this when they voted to trigger article 50. both parties did so when they stood on election manifestoes in 2017 that pledge the results of the referendum. westminster, there are some who would wish to delay or stop brexit until we use every device available to them to do so. i asked them to consider the consequences of their actions. nothouse of commons did face the people of scotland and in itand despite voting -- what if we find ourselves in a situation where parliament tried to take the u.k. out of the eu? people in the democratic process and politicians would suffer catastrophic harm.

we all have a duty to implement the result of the referendum. reached an agreement with the eu on a withdrawal agreement and declaration on our future relationship, i have argued the consequences of parliament rejecting it would be great uncertainty, potentially leading to one of two outcomes. exit that would cause turbulence for our economy , barriers to security cooperation and disrupt people's daily lives. or the risk of no brexit at all for the first time failing to diplomat the outcome of the statutory referendum and letting the british people down. these alternatives both remain in play if the deal is rejected. threat ofviews on the what a no deal poses. i have always believed that we could all to make a success of no deal, it would cause significant destruction in the short-term and would be far better to leave with a good

deal. if the house of commons took a theerent view and regarded no deal as a threat. i say this, the only way to guarantee we do not leave without a deal are to abandon brexit, betraying the vote of the british people, or to leave with a deal and the only deal on the table is one mps will vote on tomorrow night. you can take no deal off the table by voting for that deal. you believe, it will be the height of recklessness to do anything else. while no deal remains a serious events atng observed westminster over seven days, it is my judgment the more likely outcome is a paralysis in parliament that risks there being no brexit. that makes it more important that mps consider very carefully how they will vote tomorrow night.

as i have said, the deal we have agreed is worthy of support for what it achieves for the british people. immigration policy back in the hands of people you elect so we can build a system based on the skills people have to offer and not where they come from and bring the overall numbers down, getting control of our borders. decisions about how to spend the money you pay in taxes back on the control of people you elect so we can spend some we center brussels as we choose and on priorities of the nhs. governingot eu laws this country for the people you elect to decide what the law of the land is. of the common agricultural policy with farmer supported by schemes we designed to suit our own needs. the common fisheries policy, fishes in ourho

waters and can rebuild fishing fleets for the future. we taking our seat at the world trade organization to strike deals around the world that work for british businesses and consumers. the rights of eu citizens guaranteed and guarantees for u.k. citizens across europe. partnerships in our peace services that protect us everyday from threats that no borders sustained. an limitation. that insures the departure from the eu is smooth and orderly, protecting your jobs. and a guarantee that the people of northern ireland can carry on living their lives just as they do now whatever the future holds. these are valuable prizes. in thel honors the vote referendum by translating the people's instruction into a detailed and practical plan for the future very no one else has put forward an alternative which does this.

-- future. no one else has put forward an alternative which does this. with no deal, we would have no guarantees for u.k. citizens overseas, no certainty for business and workers across the u.k. and changes to everyday life in northern ireland that would put the future at -- of our union at risk. with no brexit, we risk subversion of the democratic process and send the message from westminster to communities like stoke that your voices don't count. the way to close off both of these potential avenues of uncertainty is clear, it is for mps to back the deal the government has negotiated and move our country forward into the future that awaits us. i have always believed that the majority in the house of commons for smooth and orderly exit delivered by agreement and that is why the government tabled the vote last month.

it became clear that mps concerns about one particular aspect of the deal, the bastad preventing a hard border between ireland and northern ireland in the event we cannot reach an agreement on the new relationship met no prospect of winning the vote. allowended the debate to time for further discussions with the eu to address those concerns. ofay i publish the outcome those discussions in the form of letters between the u.k. government and the presidents of the european commission and council. listened -- i listened very carefully and particularly concerns of those from the oven ireland. in my discussions with the eu, we explored a number of suggestions made on how the backstop would operate and for how long. the eu has said throughout that they would not renegotiate the withdrawal agreement or reopen for alteration and that remains

the case throughout my discussions at the december european council incidents. -- and since. i guaranteed the point at which the future partnership would come into force because that is the way to bring an end to the backstop, by a green -- of agreeing to new relationships. while they never want or expect the back top -- backstop to come into force, a legal time was not possible. we have secured valuable before theto put house of commons, including getting future relationship in place rapidly so the black shop -- backstop should never have to be used. work and begin as soon signing the withdrawal agreement in advance of the 29th of march, and we have an explicit commitment that the new relationship does not need to

replicate the backstop in any spect whatsoever. whatsoever.y likely thatven more the backstop will never need to be used. we now have clarity on the linkage between the withdrawal agreement and political declaration, putting beyond .oubt these come as a package and finally, the eu confirmed their acceptance that the u.k. can unilaterally deliver on the commitments made in the northern ireland paper last week, including a lock on new eu laws being added to the backstop and restored northern fire -- ireland executives. the legal standing of the conclusions of the council have been confirmed. if a backstop were triggered, it would be temporary and both sides would do all they could to bring it to an end as quickly as possible.

the letters published today have legal force and must be used to interpret the meaning of the withdrawal including future arbitration. they make absolutely clear the backstop is not a threat or a trap. i fully understand that the new legal and political assurances which are contained within the letters do not go as far as some mps would like. i am convinced that mps have the insurer since -- the insurances that this is the best deal -- assurances that this is the best deal. rightstection of workers and environmental standards, i could not have been clearer that far from wanting to see reduction, the u.k. will continue to be a world leader. we have committed to addressing these concerns and will work with mps across the house on how

to implement them, looking at legislation were necessary to deliver the best possible result for workers across the u.k. i will set out in greater detail to mps in what is contained in what i publish today and what it means for the withdrawal. tomorrow i will close the debate. as we start this crucial week in our country's history, let's take a step back and remember what is at stake and what we stand to gain by coming together behind this agreement. settled question of our withdrawal and we can move on to forging a new relationship. that is the deal tomorrow and that work can start on wednesday. fail, and we face the risk of leaving without a deal, or the even bigger risk of not leaving at all. i think the british people are ready for us to move on, to move beyond division and come together, to move beyond

uncertainty in a brighter future. that is the chance mps of all parties will have tomorrow night , and for our country stake, i urge them to take it. thank you. [applause] prime minister may: i will take a few questions from the media. >> thank you. bbc news. you have been extremely eager to move on. if say this is a good deal you know the majority of your colleagues disagree with you. do you really think you have a chance of changing their minds? may: i spoke with mps over the weekend and we will be back in parliament today making a statement and speaking to colleagues. we will speak when i close the debate tomorrow, and i have seen mps when i have spoken to them

of recognize the importance this that is being taken and they say they were -- will support the deal. we have seen assurances published today and we will get more assurance and confidence to mps about the nature of the relationship we will have and the desire of both sides not to see the backstop and what we both do to ensure we are working to make that not happen so that we can get onto to the future relationship, which is the best ensuring a sustainable long-term relationship and dealing with the northern ireland border and the commitment expressed today show commitment on both sides to get on and do that. paul? years tove had two reach out to mps. left andtoday's

virtually nothing to offer them. why shouldn't parliament wrestle trollope brexit from you? may: we have been talking with mps about issues they want to see raised and that they have been concerned about. also about the process of what i've been doing over the last two weeks is having heard mps in december and the debate taking those issues to the european union, and we have achieved this exchange of letters which gives further clarifications which gives further assurances, which i believe do give the further confidence to members of parliament about the future relationship we will have with the european union and about both sides not wanting to use the backstop. you talk about parliament taking control, what i think is important is that we deliver on the result of the referendum. iat i am concerned about as

have said over the last few days is the real prospect that we parliament operating or people in parliament trying to operate in a way that frustrates brexit. we have a duty to deliver brexit and that is what i and the government want to do and it is what we are going to do and i want mps to recognize that as well. jack? jack: from the daily mail. standards,nmental are you prepared to go further to attract votes of labor mps? move on a customs union or other issues? : will not ber may in the customs union because it has other aspects that other people did not vote for. what people want to deceit was

us able to ensure we have independent trade policy. we are working to make sure the agreements had the opportunity to make better trade agreements for the u.k. we can do that by having an independent trade policy and order to have that in means not being in the customs union. francis? clear aboutvery what you say is damage to the public faith if brexit doesn't .o ahead at all a brexit deal imposed on you by parliament or a no deal. may: for those who don't want to see no deal, they have to agree on a deal. i think if you look at what is being said across parliament, nobody has yet come out with an alternative brexit deal that is and that delivers on

the result of the referendum. that is what we must remember. this is not just about negotiating a deal but negotiating what delivers on the result of the referendum, taking control of the northern borders, and also ensure we do it in a way that maintains jobs, security, and protects our union, and that is what the deal does. >> good morning, i want to add to a question mentioned earlier. to understand where you are in your own mind right now, do you believe that you can get this through tomorrow? i am sure you hope you will, but do you think you will? i am workingr may: to make sure we get members of

parliament voting on the deal tomorrow. it is important that we deliver on the results and don't see situation or the risk that parliament tries to frustrate brexit. we have seen the risk increasing. i want to deliver on the referendum and leave the european union, and i want to do it on the basis of a good deal that protects jobs, securities, and unions. the eu is offering an extension of article 50 until july, do you categorically rule that out? prime minister may: we are the of the 29th of march. i do not believe we should extend article 50 and having a second referendum. we have that instruction from the british people to leave. it is our duty to deliver on that. i want to do it in a way that is smooth and orderly and protects jobs and security and our union.

one last question. you say it is important that people feel they are not being .gnored in stoke those in favor of brexit don't feel what you are offering is brexit and people are opposed to brexit. who are you doing this for? prime minister may: the people here in stoke voted 70% to leave the european union, and that is what we are delivering and that is what i and my government will be delivering. for many people when they voted, they had a number of different reasons. there were key things that were crucial. bringing an end to free movement and talking control -- taking control of our borders. lawng back control of our

is another. the deal delivers on those and takes that our money by not continuing to send sums of money to the eu every year, and it delivers an independent trade policy and gets us out of some of the policies people are worried about, agriculture and fishing. those were the things that were of concern when they were voting . they wanted us to be able to have independent trade policy and make decisions of who comes to our country. i believe it delivers on the exit, of the referendum, but protects jobs, security, and our union. thank you. [applause] that was the u.k. prime minister theresa may addressing factory workers in the midland region. we are back with carl weinberg and wolfgang munchau.

the speech was well thought out and was convincing. does it move the middle? -- the needle? wolfgang: it doesn't move the needle. the arguments are the same as they were before. i believe these arguments carry weight with the british public but not necessarily with mps. i don't think this alone will move votes. what i find is implausible is her three-way betting. tom: what do you mean? of sayingthe idea that using don't have brexit icad have no deal. she could frustrate one of those absence -- options if she wanted. she could say whatever happens i am not going to go for no deal brexit. she could turn it into a two-way option and get the deal through. the wolfgang munchau with

superb view. over here asrming prime minister may was speaking. what was your take away? clearlytated her case for the people. she may have moved the needle with the people i don't think it will change votes in parliament. tomorrow it becomes a two-way choice instead of a three-way choice, no deal, or no brexit. controliament may take of the process away from the prime minister. they would still have to deal with a europe that does not want to renegotiate. tom: which is still -- would you show sterling? why is it stronger off of the speech? the probability of an orderly brexit has increased and

the possibility of a no deal is reduced and people are optimistic. tom: should prime minister may fly to new york and hope president trump with the shutdown speech? wolfgang munchau thank you very much and carl weinberg. we can go to the congress of america. the battle of the trump writes versus moderate democrats and liberal democrats. matt gorman is a former and rcc communication -- nrcc communications. how will senators move the needle today? matt: that remains anyone's guess. i think what we are seeing is broader than the physical wall but about the politics of this. this was a campaign promise of

trump. they want to find a way to stop trump and the wall is the way to do it and the encapsulation of the campaign. at theu are an expert parsing of the size of mr. trump's royal republicans -- loyal republicans. audienceing his core by the second zero paycheck? regardless,ill stay but he will lose the independent those he needs. airports shutting down terminals and security checkpoints. my over driver was a federal government employee not getting paid and now driving for uber. -- not his base but independents in 2020. francine: who wins this?

backedresident trump is into a corner and recognizes nancy pelosi and chuck schumer are not going to play ball. he needs to find a way out of this. usually he will change course or do something to change the subject. he can't do that this time because the government remains closed. we have seen him vacillate on what you will be willing to negotiate about, who was on the attack, what he calls a humanitarian crisis versus poor security. it is a bind we haven't seen him in at any time in his presidency yet. tom: which senators are you watching? we heard lindsey graham on fox, every republican senator to grow a beard? matt: i didn't do it, nothing yet.

i am watching susan collins, tom tillis, and cory gardner, who are running for reelection in purple states. the local presses in their states have been dos i'll. cile. as we see the effect of the shutdown take hold, those will be the ones to watch. that.hank you for chart, wonderful to speak to fred cannon, global director of research. it is a chart which encapsulates that not all american too big to fail banks are created equal. all you need to know is from the financial crisis, they turned and there was ugliness.

the blue is banc of america, and that top is the excellence of j.p. morgan. what did james dimon and company get right? >> they didn't convince the market of a strong balance sheet during the crisis and they didn't have to come to market and get as big a bailout. they got support from the government we didn't have to dilute shareholders to raise capital. if you raise capital at diluted rates, you can never get that back. tom: over the past 18 months, banks are the story that was supposed to go and did not have a good year to say the least. do you see more disappointment this year with tank earnings to seeout, do we begin banks rationalize themselves to good total return? frederick: it looks good.

loan growth picked up in the fourth quarter. when we come out a quarter, we will see significant share repurchases because of strong capital. big banks with capital markets activities in the fourth quarter can be not so good. francine: i am looking at some of the analysts and they seem to be pessimistic about what u.s. banks can deliver. citigroup is kicking it off. is it all about the cost ratio for 2019 we should be focused on? frederick: it is beyond that. loan growth, net interest margins are the stable part of the business. the challenge for the group catalyst is we lack a to get things going. we don't have tax cuts, interest rates no longer a tailwind behind the banks. it is the lack of a catalyst. at anaid, we look

industry with 13% to 15% return on equity, which is good for the banking industry. francine: for wells fargo, regulatory update. what is it for jp morgan? frederick: it is about what jamie dimon is going to talk about. depending on his outlook, that bank is the leader in the u.s. and the globe right now. what kind of out little -- outlook he presents will be key. banki understand deutsche is off the next four days. but this is something you have seen for years is that you have to have a theme, siri, vision -- vision. how does deutsche bank and other banks and u.s. banks clear the market and move on? frederick: for the european

banking system it is tough. it is the darkest of times for the european banking system. and just rates sitting at zero and banks not making money. we are profitable in the u.s., and that means banks can move forward. tom: i set you up and i knew what the answer would be. u.s. bank reporting's thursday, can they become more international banks or do they feel constrained in the u.s.? frederick: they are international banks, but do they want to expand further? we believe the u.s. is the place to invest for banks globally. tom: interesting. thank you so much. fred cannon, as we move toward banking. we have so much to talk about. we need to recap what we heard from the prime minister and washington. almost a numbness in washington. francine: she was quite

compassionate and trying to explain why people should vote for her deal. the vote is happening tomorrow night in parliament. let me bring you to my pound chart. tom: strong pound, right? francine: markets are thinking there is less chance of a no deal. tom: i love how she went to a part of england that was 70% brexit. she so politics to them. that, i: apart from don't know that it moves the needle. continue on bloomberg radio as well. this is bloomberg. ♪

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reignitedort for 2016 trade war and global worth fears. globalin sight to the government shutdown. feeling the pain. and citibank reports painful earnings with loan growth margins key for investors. i'm alix steel in new york. david westin is an detroit, driving cars all around. i'm kidding, what's the mood at the auto show? david: these are exciting new cars, to be sure, but it's a slightly different auto show, a lot of them talking about things you are talking about, how the economy and china is going. a little bit of a subdued element to the show this year thus far. david: walk me through those -- alix: