>> good morning from westminster. i'm a wreck nejra. cranny in manus dubai. thea: 70 days left until u.k. leave the eu. theresa may's with the biggest in history. we are live from westminster. fromdovish messages prominent fed officials and even the hawkish esther george urges patients. bragging rights, j.p. morgan stock trader earned their keep. is ruinedo the ceo

over a pay dispute. ♪ manus: a landslide defeat in parliament. nejra, you are covering the brexit drama from westminster. good morning. nejra: good morning, manus. yes, calamitous, catastrophic, crushing -- whatever you want to call it. the defeat was not a surprise, but what was was the scale of the defeat. theresa may losing the vote by a margin of 230 and then we have labour calling a confidence vote in her government. theresa may is going to converse and have cross party conversations. one might wonder why she has not done that before, but the questions ahead for what happens now. what is striking to me is the stability we have seen through all of this. we had a lot of volatility

yesterday but today, barely moving. manus: her margin of everybody gets behind her, including the dut. the global markets are moving as well. furiously intos the system. that brings the you want a little easier. is it because of chinese new year. we have the spread of 530. i know you are never far from 10 year paper, but steven major talking about steepening trade of the year. and in terms of that steepening you are seeing, we are seeing what we have not tested since february of last year. a little bit of slippage. 3% yesterday on wti. we are seeing this market move. yesterday, we would return to

normal averages and this would increase confidence to the oil market. up, up and away for the past two days. nejra: yes, big story in those markets. what we have seen on the 530's. low year-end forecast for the 10 year yield. looking at the equities, the s&p 500 gaining more than 1%. euro was higher but not quite as much. it was like we can see gains in the u.s. again. futures on a little bit of a firmer footing but it is muted what we are seeing. meanwhile, the yen bid, the safe haven. dollar-yen by 2/10 of 1% and focusing it on cable. a two-day chart. we saw a big loss yesterday but then it was reversed. today, it is steady, over two days. is it because the result we got yesterday was priced in even if the margin of defeat or simply do not know where to go and that

traders are sitting in the sideline? juliette saly has more. how are we looking? juliette: traders sitting on the sidelines but piling into the yen and that has seen the nikkei closed lower today. it is worth noting that regional stocks are doing a lot better than earlier in the session when the asia-pacific index was up by 6/10 of 1%. a lot of these market starting to turn around. hong kong and china fairly flat. australia closed higher today. but we have seen asian stocks retreat a little from that six-week i we saw yesterday. let's have a look at stocks today. fairly disappointing data coming through in terms of china home prices. 1%.ng just a bit of the hong kong developers coming under pressure today. to the upside, there was a news report that xi jinping has visited the new construction zone and companies linked to

that development actually doing very well in the a share market today. in india, jet airways coming under significant pressure. we have heard news that there is an exemption on an open offer and preferential pricing. that is raising a few more concerns, in the clouds, about the debt level that jet airways already has. manus: thank you very much. juliette rounding up the markets from singapore. today, the question is this -- one key market issue is brexit grinding out or not at all. you can join the debate, reach out to us on tv on your bloomberg. let's get your first word news with deborah man in hong kong. >> theresa may's brexit deal has suffered the biggest defeat for any government in modern u.k. history. lawmakers voted by a majority of more than 2-1 against her eu withdrawal agreement with

conservatives uniting with anti-brexit labor members. a defeat by a majority of 230 leaves may's deal all that debt with 10 weeks until brexit. the labour party leader jeremy corbyn will try to force a general election, calling a no-confidence vote later today. a vote may expects to win. >> it is clear the house does not support this deal, but tonight's vote tells us nothing about what it does support. nothing about how -- nothing about how or even if it intends to honor the decision the british people took in a referendum parliament decided to hold. >> now it is time for the u.k. to take a stance. on our side, we will remain united. says the euroi area is not heading for a recession, but softening momentum underscores the need for central bank stimulus. the ecb president warned members

of the european parliament that the current slowdown could be longer than expected. investors have been questioning whether the central bank will be able to start raising rates this year after a state of disappointing data from the region. forces in kenya struggle to end an attack on an upmarket hotel and office complex in the capital of nairobi. 15 people were reported killed. according to local reports, explosions and heavy gunfire heard earlier this morning and security officers engaged the assailants. it is the first apparent major attack by an al qaeda affiliate in kenya in a most four years. china central bank has boosted injections via open market operations for the most on record. yuan into theion financial system to meet seasonal demand for cash due to tax payments and major holidays. home price growth in china slowed last month and the latest

sign of property market is cooling. home prices gained 0.77% from the previous month. that was the slowest pace in eight months. global news 24 hours a day, on air and on tic-toc on twitter powered by more than 2700 journalists and analysts. manus and nejra. nejra: thank you. let's get back to brexit. i'm outside westminster. theresa may's brexit deal was defeated by a landslide last night. parliament voted 422-202 to reject the deal, making it the biggest defeat for a british government in modern history. the u.k. prime minister faces a confidence vote in her administration so what happens next? to discuss, we have david merritt, news director in london. for reaction from europe, maria in brussels. david, let's start with you.

another day, another vote. is may's government going to survive tonight's confidence vote? david: it seems as though she is confident one in that, despite so many rebelling against her. more than 100 and last night's vote. they are pretty quick to rally around and say the intent to support the government including northern ireland's coalition partner, which props up or minority government. the margins are very small. she has a majority of 30. not many of her own party to vote against her. it seems unlikely. that is why we have not heard from a single one of the m.p.'s who say they will try to dislodge the number. she expects that to go through. it is remarkable, isn't it, after such a catastrophic defeat, the biggest in modern british political history, that government seems to be shouldering -- soldiering on. manus: it depends if the dup get

behind theresa may. they are the margin. maria in brussels. time is nearly up according to mr. juncker. what is brussels reaction? maria: that is right. i would say in the eyes of the european union, this deal, this version of the deal is dead. there is nothing the eu could offer right now that would make 200 mp's switch sides. you can see the immediate reaction from juncker who said this is a fair offer and they did not take it. it is up to the u.k. to come up with a new game plan. we are not going to fix what is a domestic political problem in the u.k. i would point out to a tweet by donald tusk, the head of the european council, who set at one point someone will have to make a brave decision. some people have said that is the first hint that maybe that is canceling brexit altogether. today in brussels, the conversation will switch to

article 50. many people here will tell you brexit does not take place in two months would have to be delayed and that would be the focus. although, we heard that maybe prime minister may may make a quick visit to brussels. in the eyes of many officials, there is no point in doing this now if she does not come up with a new radical plan. nejra: yes. speaking of plans, talk us through what happens next. draw the line from here to a possible general election, second referendum or other. david: that is right. i think we can expect things to move fairly fast. we know the private if there is facing the vote tonight. assuming she wins that, that takes the question of a general election off the table. so, she said last night she is going to conducting cross party talks. maybe trying to find some consensus in parliament for what could pass. a function to that would be a softer version of brexit itself,

maybe rubbing out her red line. labour is arguing for a customs union. is she about to change the government policy on that? those sorts of changes are something the europeans are open to. an inclusive relationship with the eu, if they are willing to counseling. yes, those things are on the table. the other thing is the big one about the second referendum. she has said again last night she thinks it is a bad idea. if there is a majority in parliament, maybe her hand will be forced on that. as maria said, the other big question is about the timing. we have 2.5 months ago. there is a growing consensus there is no time to make any changes to get brexit done. that means an extension to article 50. perhaps that is what mrs. may is going to ask mr. juncker when she travels to brussels. manus: ok, team, thank you very much. david merritt in london and maria in brussels. staying with the historic brexit

vote, joining us now from our european headquarters, the head of g10 fx. great to have you with us. straight to the point, the assumption is she will have a government standing in the morning. with that in mind, will there be a sense of relief to the market if she went for an extension of article 50 to give the u.k. time to sort out this what next? would that shift the bullish case for sterling, first of all? >> indeed, i think part of the reason the pound has been relatively stable in the face of all the political uncertainty in westminster is the expectation that before long, we may need an extension of article 50. with that, i think an accidental, if you wish, no deal brexit may be avoided. without the tail risk of mildew brexit kept away from the table, keeping the pound supported.

all that said, everything happening yesterday and what transpires later today, making the bullish case for the pound, while certainly appealing towards the medium to longer term, it is becoming harder in the near term. investors may not necessarily he willing to sell the pound, markets are short, they may not be as willing to be in any longer exposure before there is any clarity. not only will they have the government functioning in the u.k., but also that the eu will be willing to consider an extension of article 50, but also reopening negotiations before long. good to speak to do this morning and good to see you. yesterday ahead of the vote, avoid trading the pound overnight because we could see huge swings, citi was saying this to the high net worth individuals. we could see swings 10% either

way. we do not see that level of volatility, but we did see some. i'm wondering what kind of attractive proxy hedges are you looking at on sterling if brexit fears actually -- escalate this week and beyond? valentin: what has been interesting is the persistently positive and strong correlation between scandinavian currencies, for example, and the pound, and between the volatility of those currencies and the implied volatility of cable or sterling. given that and given the fact that the imperial liquidity of saccandi may lead to more accentuated moves in the event tailno deal brexit or risks really shows in those currencies alongside longs and the implied volatility. it has been highlighted. we have been highlighted an interesting proxy hedges.

the hope is we really never have to use those edges, but it is the case that after yesterday's vote, the uncertainty is likely to remain high in the near-term. int may indeed put a push some investors considering adding to their hedging scandiies, in short currencies with long positions in the respective volatilities. manus: i'm looking at the global market map this morning of the fx line. yen is strongly in there this morning. do you think yen is a good hedge? do you think it has behaved itself as a hedge in the geopolitical anxious moments? valentin: it is the case that yen has been traditionally considered a safe haven. fact of the matter being we are dealing with extensive yen short in the market. that was put in place during better times when risk aversion was not as high. it is also the case the end of

the funding currency makes it an attractive safe haven at times of market uncertainty. usually, that is the place to go. i guess in the european context, another currency that has been traditionally used as a safe haven was the swiss franc. very much the same reason. from that point of view, if indeed market uncertainty were to escalate on the back of those brexit fears, both are really safe haven currencies and will remain supportive. by the looks of the price action at the moment, what the market seems to be telling us is the fact they are in wait and see mode, a holding pattern, awaiting further developments in london, in the u.k., and see how brexit drama will play out from here. valentin stays with us for the hour. coming up on bloomberg, we speak

to the leader of the u.k. house of commons. don't miss that interview at 9:30 a.m. london time. all talks about brexit coverage from westminster. this is bloomberg. ♪

nejra: this is bloomberg daybreak. i'm in westminster. manus: i'm in dubai. let's give you a quick snapshot of how the markets are performing this evening -- morning. asian equities are a little bit lighter. coming off a six week high. the yuan is moving lighter as well on the injection of capital, the most ever into the money markets as we go to the dollar-yen. you have seen the dollar drop, yen strengthen slightly.

nejra? yeah, interesting looking at the currencies in general. cable has been holding pretty well, not doing a lot in today's session, barely budging. the same story over two days, even though you saw a lot of volatility. valentin is with us. he says perhaps that stability is because the market is expecting article 50 to be extended. futures going nowhere, but s&p futures pointing higher to another day of gains, 1% gain on the benchmark. debra mao in hong kong. onra: reversed course selling as the bank' next ceos after standoff of tens of millions of dollars in deferred pay. the unit until recently with the swiss bank holding a hard-line that he would not receive bonuses from previous years. santander refusal to pick up the

bill of $40 million to $60 million which means alvare will continue as ceo. close to raising $20 billion for the largest ever real estate fund having only started fiscally marketing the fund towards the end of last year. blackstone is already the private equity industry's largest real estate investor. a source says it plans to close the new find at the first quarter of this year. that is your bloomberg business flash. nejra: debra mao in hong kong, thank you so much. let's turn to china and the central bank just me its biggest cash injection on record. punting in around $83 billion yesterday in the latest steps to prop up the economy. the move comes ahead of the week long looming new year holiday next month which typically triggers illiquidity trumps -- a liquidity crunch and economic

data from exports to home prices. let's get back to valentin. we just hinted there at the signs we have gotten about a slowdown in china's economy. we have seen a little bit of a stimulus bias from the pboc and government. we talked about the tax cuts yesterday. is yuan's strength consistent with that? valentin: to a point, really. the fact being that many investors really weaponizing the yuan, pushing it lower still was part of the solution for china now that it is facing a growth slowdown, slowdown in global trade. i guess the fact that the officials have really opted to do something different. cuts, mentioned, the tax but also the stimulus measures to come, expected, may indeed suggest that the authorities may not necessarily need weaker currency as much as thought

before. maybeect that the yuan embarking in a more sustainable uptrend against the dollar. we think part of the story is precisely that. the solution for china's troubles at the moment, really, weaker growth, deteriorating growth outlook is not necessarily weaker currency. instead, it may be more proactive fiscal stimulus measures which would be consistent with what you are seeing more recently. manus: yeah, i mean, they will have some 18 million companies in terms of tax incentives they are injecting to. staggering number. if fiscal latitude continues from china and the basis growth and you have a trade deal, where is the biggest upside currency for you that you want to belong in australia-asia, if that is where you go? valentin: it is usually been seen as a higher affect on the yuan. if anything, the pain could be

felt greatest there, outperforming against a broader range of currencies, including the dollar. all that said, we obviously have to get there first, but it is the case of looking at the levels of the australian dollar. an undervalued currency. the economy is still performing relatively well. indeed, the central bank, while not necessarily considering policy normalization, monetary easing either. from that point, it could be interesting proxy. nejra: valentin marinov at credit agricole stays with us. next, sale is off the list. the pick for the next ceo has been straight. a dispute of over $60 million in pay. we will bring you that story. manus: bloomberg radio is your destination. we are with you every step of

the way on your journey. on your mobile device. ♪

manus: this is bloomberg daybreak: europe. i am manus cranny into by. -- in dubai. struck me this morning was the stability in the stock price of cable. you get the feeling this market wants to look to the positive when it comes to brexit. the expectation we will get an extension of article 50 or a brexit vote at all. manus: the emboldening of tail risks seems to be staring that confidence. a couple of lines coming through from the germans side, the foreign minister saying

concessions would already have been made if possible. may's exit would have made things extremely complicated. 13 dup's have put their claim down. i wonder what they will get in return? nejra: big expectations theresa may survives the vote but perhaps people sitting on the sidelines and focusing on other things when it comes to cable. ,e had fed officials overnight china news from their. -- from there. let's go to our guest for the hour and ask what key market issues is brexit drowning out? >> there are quite a few issues at the moment that might have been of interest to the market.

clearly, the stimulus in china is working to support sentiment by reducing the tail risk of a real slow down in the world's second-largest economy. the dovishness of the fed providing a put for the risk correlated assets but it is the case that invested in -- investors are ignoring it because of the noise at westminster. , ithe noise starts abating would think the environment for the markets may turn more benign with investors more willing to buy a risk correlated commodity currency. they could look attractive, assuming the noise levels start subsiding in london. manus: a lot of that. it all ties back to the dollar and you've got strong views on

that. we will talk out the heavenly host of fed voices. the head of g10 fx is with us. let's check on other markets around the world. partners our mumbai and in london, annmarie hordern is alive and eating biscuits, covering everything markets. how are your markets looking as asia stocks and -- a little paus for thought. e>> today's session looks like we looked through the outcome of the brexit vote and the markets since the morning have been trading to buy. gain big move, but a .25% on the back of the 1.5% gain from yesterday. it is the banks gaining ground in today's session, leading from the front.

oil contributing, the like of axis bank and the nifty doing well. it will be focused on what the earnings result is. in today's session, you are seeing a heavyweight, a strong set of numbers being rewarded by shareholders today. nejra: thank you. anne-marie, you've been up all night. wonder if your biscuits are as crushed as theresa may is feeling this morning. niche pound is very what i am seeing. you are shocked by the resiliency and a rally after the vote. what i saw on this screen last night was a sea of red. sterling was trading higher than all of the g10. have sterling down against the again, the key week, the loonie, e-krona and the u.s.

dollar. about the talking fact that investors are taking aresidelines and traders saying the volumes are very thin right now and that could be a for a few reasons. lots of things happening in the markets, but also for the fact that people don't know what happens next. thing that happened overnight, it looks like a happy chinese lunar new year. the pboc injected a record amount of funds into the money markets last night to the tune of 83 billion u.s. dollars. this is part of the fact that they want to spur growth but they want to avert any sort of -- manus: the latest. it has been a turbulent 2019. emerging markets have seen a change of climate this fear -- year.

tone,d caution dovish commodity prices, all driving investor optimism. here are events on the em horizon. the turkish central bank. no change expected. the president of argentina, brazil will meet in brasilia, south america's largest economies will focus on commerce, security, and defense. thursday, the bank of indonesia is expected to hold rates in an aggressive tightening cycle may be coming to an end. african reserve bank is anticipated to hold interest rates on thursday. that is what is happening in the emerging markets space. now, let's get the first word news with deadly humphrey in dubai. --desley humphrey in dubai. draghi says the

euro area isn't heading for a recession, softening momentum on the need for central bank stimulus. the ecb president warned members of the european parliament the current slowdown could be longer than expected. investors have questioned whether the central bank will be able to start raising rates this year after disappointing data. ult is preparing to remove carlos ghosn as ceo. the board has concluded a decision is burning -- urgent after ghosn failed in his latest appeal. misconduct.nancial directors are affected to meet in coming days and some say he will be replaced regardless of the case against him. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm desley humphrey. this is bloomberg. manus: i'll pick it up from

here. desley humphrey in dubai. the fed's leading hawk is changing her to. the kansas city fed president esther george is advocating patience. she urged her peers to pause before considering more rate increases. she called for more time to sense the impact of past policies. she adds to a growing number of dovish fed speakers. nejra: let's get back to the head of g10 fx research at credit agricole. in dollaring a pause strength or the start of a downtrend? valentin: that is the question. -- the -- will be pausing. we expect that march into june,

especially with the political uncertainty of the shutdown. the next one in march, the u.s. government really continues. pause in the fed is translating into underperformance and that is the beginning of the downtrend for the dollar and despite the fact the fed should resume its rate hikes in the second half of the -- they're they are policy rates are in the u.s., they are close to the nominal neutral level and historically, the fed struggled to push rates ,nto a restrictive territory rates at levels that are hurting the recovery so the economy can slow down. that in mind, any rate hikes that could come from the fed medium to long-term are likely to be dovish hikes.

hikes that will be accompanied by relatively dovish forward guidance, which by implication, will not necessarily be adding to the dollar's rate advantage. to us, this means on the whole, 2019 will be an era of policy fed'sgence whereby the policy outlook will be converging to the more dovish policy outlook of the likes of the ecb or boj, name it. any other central bank in the g10 space. if you talkat note, about currency convergence, this is where you say you want to be a seller of any rallies. you talk about convergence, but you've got a nice benchmark and it goes back to 2006. how much could the dollar dropped by him 2019 based on an analysis? forecast,in our euro-dollar heads above 1.20.

dollar-yen more stable but ultimately with risks on the downside. we expect downside risk to persist. on a trade weighted dollar index, we think the currency will move closer to the lows we have seen in the second half of 2017. 2018 and that would be our call for the year on the back of that policy convergence between the more hawkish fed converging to the more dovish stance of the rest of the g10 central banks. other factors may play a role, as well and i want to bring up something that has been a topic last year that could feature more prominently later 2019. the fact that the u.s. will continue to struggle with excessive deficit. that could be an important driver for the dollar, as the u.s. economic performance deteriorates in

the second half of the year. how much impact, we've talked about the political drama in the u.k., but the shutdown continues in the u.s. how much impact is the u.s. shutdown having on dollar price action? valentin: for some clients, that why theisive factor dollar is not benefiting as much from its otherwise. -- superior economic data out of the u.s., the dollar is still the currency with the and fundamentals out there for some clients, that may be due to what is happening in washington. that may become an even stronger driver and even greater negative for the dollar if one considers that the spending authority of expire. government will in march and the question about raising the debt ceiling could

hit the headlines and the politicians in washington, d.c. will have to deal with that. at the moment, they cannot agree about the funding of a wall which would cost $5.2 billion according to trump. come march, we may be talking about trillions of dollars of extension, even when it comes to raising the debt ceiling or government spending authority. the big debate is about to start so that particular negative and the political noise in washington will continue to be a drag on the dollar from here. manus: let's see how that plays out. fxentin marinov, head of g10 research at credit agricole stays with us. bank earnings, what a week. started with citigroup monday and shares rallied after the lender said the worst is over in a grim quarter. jpmorgan also reported a mess on revenue boostcord

insurer -- boosted shares. wells fargo reported. on wednesday, bank of america and goldman sachs and thursday, morgan stanley comes in, which had seen a rare upgrade in a session of pessimism. let's get to our finance reporters. great to have you with us. what did we hear from j.p. morgan and wells fargo? was it the wrong type of vol? >> as you mentioned, the fixed income dipped in market was as bad as the citigroup trade we had seen two days ago. it is the fixed-income asset class that is suffering across the banks and this will probably be reflect it in europe at some point. the equity business did very well. jpmorgan where equity traders used to be overshadowed by the

fixed income business, but this was not the case this time. mixed ande was quite the shares. investors were not completely disappointed by the number. dimon'sting, jamie one-off that didn't go well for the fixed-income. the u.s. banking, and jpmorgan made reference to the risk the you economy is running -- u.s. economy is running because of the government shutdown. economy,oncern for the if there will be a recession and of course, there is risk for the global trade with china, the u.s. politics. europe, whatg to

is the latest with the search for a ceo? unusual: this was very for the european financer. it has been unusual to see an , basically be screwed up in this way. this should provide some comfort to investors according to analysts. this raises many questions. investors would like to know why this issue came up only now because generally, those discussions are held behind the scene during negotiations. the chairman of the biggest bank of europe will have been careful to know how much it was supposed to pay that would be acceptable.

reporting,o our around 56 million in deferred compensation at ubs. analysts, onlyme $20 million. this was for the appointment. this is very unusual and we will see what type of strategy to two banks will follow because one issue will raise concern for both banks because santander stick with the ceo. choose another ceo, we start another search or look for other candidates in the top list along orcerrcel and ubs,

doesn't seem too keen. manus: thank you so much for that roundup on the banks. a couple of lines, we will get reaction through the day. we brought you the german foreign minister. this is the european commissioner and he is saying in regard to brexit, the eu is preparing for all scenarios. the germans are raring -- preparing for a hard brexit. no one wants a no deal brexit. these are a couple of lines. down, sterling up for a fifth day in a row. that is the story we just covered in regards to the minister, that is the job he used to have at ubs. nejra: in london outside westminster where i am, big questions over where theresa may goes from here. she is facing this vote of confidence against her

government but the expectations are she is going to win it. broadly about europe because we heard from mario draghi yesterday for the first time in 2019. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i'm nejra cehic at messed with -- westminster. manus: i'm manus cranny in our dubai studio. the chinese go for stimulus. slip into the red, nikkei down .5%, began stronger ofyen stronger and the yuan 1.5%. higher on is snipping the back of the huge stimulus

into the cash injection into the market. nejra: the euro area economy isn't heading for a recession according to mario draghi. of parliaments yesterday, the question we should ask, is this a sag or heading toward a recession? the answer is no, a slowdown is not headed toward a recession but it could be longer than expected. his remarks follow a state of disappointing data in weeks, casting doubt over the euro area's economic outlook. let's get back to valentin g10 fx research at credit agricole. given everything mario draghi i am finding it hard to go long euro-dollar. valentin: it is true, the data is somewhat contradicted by what the ecb expects but we

think even in the worst case, when the ecb is forced to go back to its toolbox and unveil a plan b, what to do next if the economy does not do as well as expected, we think the ecb will resort to credit easing tools. in other words, a will of hit the rock bottom in its monetary easing cycle so anything they can do from here would be more credit easing measures. historically, such measures are not negative for the euro. they were positive for growth, but not negative for the currencies. as part of their effort to boost the banks' profitability, we cannot exclude rate hikes, which penalize banks holding excess cash. if the ecb wants to restore parfitt ability, they could --

profitability, they could bring them closer to zero levels and the currency terms, that can play out as a positive development for the currency. i should mention that a big part of the euro selloff since 2015 was the introduction of negative rates. central banks holding reserves in europe are holding a sizable portion and have been, in cash. being penalized for that cash is not anything they want to do but the penalties being removed, they may go back into the europe in force. that is hopefully convincing enough and we do think the second half of the year, we may see euro appreciating more noticeably against the dollar among other currencies. in terms of that normalization process, is this what you mean about closing the gap between europe and the u.s.? everything converging toward the u.s.. what about the bank of japan?

what is the probability of any normalization, or is there more qe to come from them? valentin: they are in a similar position to the ecb, they hit rock bottom in their easing cycle and failed. year havehe last shown the asset classes the ecb is struggling with is an issue for the boj. we do not have a well-defined timeline as to when things could happen in normalizing policy. either way, the markets will continue to expect the boj will either do nothing or have to gradually start unwinding its vast monetary stimulus, which in relative terms, will translate to convergence between the fed and boj. nejra: thank you so much. valentin marinov, head of g10 fx research at credit agricole for joining us for the hour.

we talked about a lot of issues around the hour. today, we asking what key market issue is brexit drowning out? poor brexit coverage next. this is bloomberg. ♪

manus: good morning from dubai, this is "bloomberg daybreak: europe. nejra: live from westminster in london, i'm nejra cehic. these are today's top stories. manus: 72 days left until the u.k. leaves the eu. theresa may's divorce agreement is rejected by the biggest landslide in modern british history. her government faces a confidence vote. we are live from westminster. more dovish messages from prominent fed officials, robert kaplan and even the hawkish esther george all urge patience.

jpmorgan's stock traders earn their keep while fixed income lags in the fourth quarter. orcel's rise is ruined over a pay dispute at santander. nejra: a calamitous defeat for theresa may. withat westminster dealing this aftermath and we are both talking about it because what has happened now is she faces a no-confidence vote in her government. she is expected to get through that, but the question is how long can her brexit strategy last? we've had cable fairly stable overnight. perhaps investors taking the positive view that brexit may not happen at all. the eu's response is this is horrific but they are not going

to reopen the deal. manus: the question is, did the two tail risks come together? a second referendum or a no brexit deal? the question is about the extension of article 50. other breaking news to rip through, the bruised european economy is reflected in the car sales. car registrations dropped by 8.4% to just under one million units, .999 recurring. total european car registrations dropped by nearly 9%. who are the most injured people of them all? 9%, nissan nearly year,dropped 29% year on and you are seeing bmw down nearly 9% year on year. this is very much a battered and bruised auto sector from take --

trade tariffs to anxiousness around the economies. is germany flatlining? is italy careening toward recession? u.k.mer confidence in the under pressure. the euro against the dollar at 1.1403. let me show you the bond markets, the other thing to keep an eye on. these are the five's, tens, that steepened. the 10 year bond futures we've got in there, a death cross on the 10 year treasuries, where the 50's cross under the 200 day moving average but we have seen esther george purge the fed to be patient. urge the fed to be patient. bundre looking at the

market, lower, off by 12 pips at the moment. nejra: that fives, 30's curve catches my attention because we spoke to steve major yesterday who said the next move in the u.s. curve will be steepening. not only do you expect a fed pause, but further ahead, cuts and more easing from the fed. let's turn to europe because yesterday we got data showing germany slowed to its weakest in five years last year. number comingpi out, the december final cpi up 0.1% month on month, up 1.7% year on year for november, 2.3% year on year. numbersan eye on cpi out of germany, that economy in focus after comments from mario draghi yesterday saying the slowdown could last longer but we are not heading for recession in the eurozone.

we have seen a further picture for u.s. futures after quite a blockbuster session yesterday with the s&p 500 gaining more than 1% and we could see another gain in europe. dax, cac, and ftse futures on the front foot. juliette saly has more. it is not looking so positive in the asian session. juliette: a lot better than it was. pretty flat on the msci asia-pacific. we were down .6%. the weakness is in japan today. you mentioned yen strength saw japanese equities lower by .6% but we have more stimulus come through from the chinese today. the pboc added the most in its open market operations on record. the csi 300 closing flat and a little uptick in hong kong markets. we saw the likes of india, australia rise today.

the msci asia-pacific index unchanged. looking at currency moves, i am watching the yen against the pound because we have seen the pound weaker, the yen rise after the brexit vote and the best-performing g10 currencies against the pound. the chinese run, fairly unchanged. we saw weakness following the movement from the stimulus. it seems the pboc is trying to add liquidity ahead of the lunar new year and as many face their tax bills. the aussie dollar, higher against the u.s. dollar. we had a consumer confidence down, falling the most since 2015 and that is on the back of the global uncertainty in the u.s. china trade relationship and with brexit deal. manus: thank you very much. ceo, he will their

go at the end of this year. he is to retire by the end of the year. this is a company at the forefront of the challenges of the fast moving consumer goods industry last year. the board has initiated a process to name his successor. oor is to retire at the end of the year. there you go. in terms of the performance by rakesh kapoor. he has been there for just over seven years and in terms of -- he is 60 years of age, he has been there 7.3 years. he joined 2011. his peers delivered 10%. the search is on. let's get to desley humphrey.

what have you got for us? theresa may's brexit deal has suffered the biggest defeat of any government in modern u.k. history. lawmakers voted by a majority of 221 against the eu withdrawal agreement with programs that conservatives uniting with anti-brexit labor members. 230defeat by a majority of leaves the deal all but dead with 10 weeks until brexit. labor leader jeremy corbyn will force a general election, pulling a no-confidence vote today, a vote may expects to win. house doesear the not support this deal, but tonight's vote tells us nothing about what it does support. -- nothingut how about how or even if it intends to honor the decision the british people took in a referendum parliament decided to hold. >> now it is time for the u.k.

to tell us next steps. on our side, we will remain united. draghi says the euro area isn't heading for a recession, but softening momentum underscores the need for central bank stimulus. the ecb president warned members of the european parliament the current slowdown could be longer than expected. investors have been questioning whether the central bank will be able to start raising rates this year after a spate of disappointing data. global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm desley humphrey. this is bloomberg. manus: thank you very much. another rally is taking a pause. asian equities stall as earning season kicks off. ron is over results. investors are dealing with political angst.

from frankfurt, the ws' chief currency strategist. chief currency strategist. if the proposition to the world's we may face slower growth, synchronized slower growth in the world, which currency do you want to defend yourself in that scenario? thanks for the question. in that scenario and as we are that we haveasting a variety of currencies that we -- this ispending not the market to go with one currency and expect it to move in one direction. we have already experienced last year and learned we will have a pickup in volatility but that comes opportunity to trade the market.

our strongest call and strongest non-consensus call is to look dollar,latively strong still firmly in the camp that we maintain our euro-dollar call as we have carried it along from last year march are ready, still at 115 when the consensus was looking at the u.s. dollar lower and .24 --llar at 123, 1 1.23, 1.24. forve outlined the reasons medium and long-term based on concerns around the volatility we get from european political angle. got perspective on how the brexit is weighing on the euro. in the short term, there are things to consider. to be able to trade that range

in a profitable way. case, just want to jump in because you mentioned the euro-dollar. i want to talk about the yuan because that plays into your strong dollar view but what hedging trades are you looking to enter into euro-dollar as it has broken out of its range? euro-dollar last week attempted to break out of the range, but we saw this has not been sustained and we think there is a variety of reasons that this would bring us back into a range for the foreseeable future and as you know, we are looking at three pillars to forecast currency. fundamentals, the technical side, and positioning.

from the fundamental side, we expect volatility to come into the market, especially from the u.s. side. looking at data only and while this data set is getting corrupted, trump said he is not going to join the world economic to 25th of june, so we could expect the government shutdown goes on for longer, which would disrupt even more important data like december retail sales. expect much more clarity in terms of monetary policy guidance on the back of hard data we're not getting. we see this picture could quickly change again and right now, higher volatility still means lower euro-dollar. on top of that, while positioning has been disrupted, the government shutdown, the metrics we get is the market is

not over positioned along dollar and we have seen the break below 1.15 again. manus: back in the range on that. i want your opinion in terms of what happens next in sterling. we've seen a muted response. rousing more of a reaction. perhaps more a euro story than sterling story. play out the rollcall on your sterling call. tail risks are rising, second referendum, no deal, or cross party alliances. does this lead you to the higher land? do the scenarios of a referendum and cross party talks lead me to 1.35, 1.40? is the softer brexit in play for you? stefanie: the muted reaction yesterday, you saw quite a volatile trading session. the market got what they asked for or positioned for, which was a defeating parliament and on

the back of that, you saw the positioning taken ahead of it was squared and we have stabilized and await the next information to come to be digested because what we learned in the present -- brexit negotiation part is we need to take it day by day because it is getting affected by each day that brings us news. backed reaction, we are where we started. now is a level that will need to be challenged with the next steps. thatill assume and hope the rest of the market, the u.k. can manage an exit from the european union and the worst-case is avoided, that we get some sort of deal and we do not have to brace for the worst. in the meantime, we need to w

how the the -- weigh no-confidence vote will go. we're in the camp that may will be able to win this one. europe has given their support. we expect her mps to stand behind her and we take it from there because of the general elections. manus: let's see where we go this evening during the vote in the houses of parliament. will theresa may survive? what happens next? s'chief currency strategist stefanie holtze-jen. today, we're asking the questions, what key market issue is brexit drowning out? is the world really that focused on brexit on a fat all? -- if at all? on bloomberg,up we speak to lawmakers starting with nicky morgan, chair of the u.k. house of commons treasury committee.

smith, formercan leader of the conservative party and later this morning, the leader of the house of commons, all part of bloomberg's brexit coverage all day. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." i'm manus cranny in dubai. nejra: i'm nejra cehic in london. let's check the broader markets. european futures on firmer footing, but in asia, a little pause for breath. yuan not going anywhere fast after a record fund injection by china. begin on the front foot, but giving up some gains. -- one of only 10 g

the only g10 gainers against the dollar. manus: possibly a second referendum or indeed no deal brexit, stable cable. ftse futures, to take slower -- two ticks lower. s&p rising, can the reporting season bolster the stock story? desley humphrey is with us in dubai. santander has reversed course on installing andrea orcel has been a ceo. led the ubs investment bank unit until recently with the bank holding a hard-line that he wouldn't receive bonuses from previous years. the refusal to pick up the bill of some 40 to $50 billion means alvarez will continue as ceo.

lost --bas said to have linked to the s&p 500 last year as turmoil gripped global markets. according to bloomberg sources, b.n.p. paribas's head of u.s. index trading has yet to return to the bank since going on his christmas vacation. this after the french bank's position on the u.s. stock market went awry when the index posted several sharp declines. this is bloomberg. desley humphrey in dubai, thank you. theresa may's brexit deal was defeated by a landslide last night. you could call it calamitous. 432-200 22 with -- reject her withdrawal deal, the biggest defeat in british government in modest -- modern history. she faces a confidence vote. juncker warned time is almost up. we went as far as we could

with the agreement and in trying to resolve a problem of internal british policy, we won't abandon the interests of europeans. u.k. to time for the tell us next steps and on our side, we will remain united and determined to reach a deal. march is ofof importance to come to a deal. we need to sit around one table, opposition and majority and sort out what are the national interests that is the best relationship between the u.k. and eu in the future and we need to do that as fast as possible. nejra: what happens next? with me to discuss is the head of europe and trade policy for the you k's institute of directors. she used to invite a number of pilot terry and's --

parliamentarians. reaction overnight is palpable. we know they are frustrated, but there -- are they making changes to actions? when you talk to larger companies that have held off contingency planning, you will see them press ahead but the majority of smaller companies are simply not prepared for a moat -- no deal exit. they are waiting for next moves and as frustrated as the business community is, we are looking at the next steps and we want to see that pace matched by parliament. nejra: there are different options on the table. business says what they want is an end to uncertainty but is there one option out of many that would be preferable? allie: there is scope for getting consensus between the main parties in parliament, particularly on the scope. the withdrawal deal is about orderly exit, but consensus

about the future relationship we have will probably command a bigger majority then any second referendum. manus: good morning. looking at some of the comments that have come through. , according toer one in the manufacturing lobby. acceleration of jobs and capital leaving the u.k. as we muddle through with whatever this next 11 months brings us? -- it isthink interesting, manufacturing has held off contingency planning, among our partnership. financial services is ahead. -- ifis no likelihood there is no likelihood of the extension, we will have to make those decisions because at the moment, we don't know about what our tariffs will look like, customs processes and if it is

clear we are ultimately leaving without a deal on march 29 and there is no consensus on an alternative deal, that activity moving out of the u.k. will accelerate. manus: thank you very much. europeenison, head of and trade policy at the institute of directors. interesting that it is manufacturing which has not hold the record but in many ways -- ripcord but choosing the locations -- banking has made the biggest strides in looking at where they would go to. nearly one billion pounds has left london in terms of assets and talents. nejra: it is important to talk about the real economy because a lot of guests have pointed how investment has been coming down already. , soe has been fairly steady fx traders sitting on the sidelines or looking through what happened, looking through the confidence vote we will get and perhaps hoping some sort of

softer brexit might come out of this. that is it for "bloomberg daybreak: europe." "bloomberg markets: the european open." we continue our coverage from westminster. this is bloomberg. ♪

♪ drew: good morning, welcome to "bloomberg markets: european open." we're live from our headquarters here in the city of london. i am anna edwards who is in westminster. >> flat after the uk's crushing defeat in the commons. will theresa may survive today's no-confidence vote? european trading starts in less than 30 minutes. >> brexit on the