nejra: good morning from bloomberg's european orders. this is "bloomberg daybreak: europe and these are today's top stories. a-shares rally with tech leading gains over shattering intel miss. u.k. -- u.s. shares slumped. mike pompeo honored -- ordered most u.s. employees out of venezuela, but could regime change be good for investors? think if there is a real change in government, venezuela will be very interesting. this is all about oil. nejra: the pound surges on reports the dup will not support theresa may's brexit deal.

the chancellor warns a no till brexit would be a betrayal. we will speak to him in 45 minutes. policy chief and business leaders are gathered in doubt -- in dav o's for the world economic forum. francine lacqua is there. i'm sure it does not feel quite the same, but you are there in the cold. a brilliant week. you have been saying on air this year felt a little different. how has it felt different? >> it felt different because it feels a little more squishy. it's not a technical term, but most chief executives take a position on the year. this year a lot of them have

difficulty forecasting. which makes me a little bit nervous. it also depends on what happens in the next couple of weeks. they were more cautious. this morning from davos we will we speaking to central-bank figures from across europe. it will be interesting to see what it means for world growth. we have an exclusive conversation with the ecb executive board member. we will also hear from the deputy governor of the riksbank. also as brexit uncertainty continues, philip hammond. we have a great day of interviews. nejra: looking forward to it. we will speak to you later. let's get to the markets. it was a really interesting session yesterday. we did see the s&p 500 close higher as chip producers led. intel is a miss on revenue and profit forecasting.

we see intel plunge, also the semiconductor index. , evens edging higher after wilbur ross says the u.s. and china are miles apart on trade. we have optimism not just on s&p futures, but also on nasdaq futures. the 10 year yield edges higher as well. a sense of risk on up a basis point. 273 is where we trade. global equities are heading for their first weekly drop in five. dollar-yen on the front foot. you are seeing a little bit of a risk rally. cable up 0.5%. are not going to be supporting her brexit deal. the euro was interesting yesterday. it dropped after downside risks were flagged by ecb president mario draghi.

cultures were discussed. rates are going to stay on changed -- unchanged. brent higher by 1.1%. risks in venezuela for the oil market, up for the third day. let's check on the markets in asia. juliette saly in singapore has more. i'm finding a conundrum seeing tech stocks rally in asia, particularly after what we got from intel and what we saw in u.s. after hours trading. what is behind the rally? juliette: we have taken the q from texas instruments. global wafers as well supporting the overall tech sector. inis a bit of a conundrum terms of what we heard from wilbur ross saying the u.s. and china are miles away from a trade deal. all the major markets closing higher. the nikkei closing higher by 1%.

asian stocks on track for a third weekly gain. that is the longest winning streak we have seen since july last year. chinese stocks up by over 1% in late trade hong kong up by 1.4%. let's have a look at stocks and tsmc. tsmc has held the taiex. global wafers also in taipei very strong. tencent doing well in hong kong and supporting the hang seng. china's regulator came through with some of those approved mobile gains. now we are finding out to have tencent's games are on that list. of tencent's games are on that list. it is going to see profit 96% lower than last year and also slashed its dividends. shares off by almost a percent in the sydney session. -- almost 8% in the sydney

session. nejra: let's bring you an exclusive interview from davos. economic risks for the euro zone have moved to the downside. well the ecb president stuck to positive language, investors are taking the view borrowing costs will not rise until well after mario draghi leaves the job. let's head to the west and francine lacqua. >> thank you so much. without a doubt, my interview of the day. the ecb executive board member coins us. -- joins us. welcome. overall, we heard president draghi talk about risks to the downside. how would you explain it? why did we not foresee this? >> we did foresee this. the tone of our discussion yesterday was acknowledging there is quite a lot of uncertainty. quite a bit of uncertainty around. a lot of the uncertainty is

political. first and foremost, global trade, which is a politically engineered uncertainty. we knew that growth would have to slow down. it started very high in 2017. the slowdown has surprised us. we have been surprised. we have to be very careful. we are underlining the data. in particular, what we have to understand is the persistence of euros on growth. >> when you talk about a shock to euro zone growth, how much of it is trade and how much of it is internal slowdown? >> a lot of it is trade. a lot of it comes from the outside. for months we have said most downside risks which come from the outside and until yesterday we would say risks are balanced and they are moving to the downside.

they have moved to the downside because these risks -- >> what about brexit? >> the ecb is not part of the equation. it is not for us to discuss. what i would say is that there are potential risks to real also ann the u.k., but effect on the euro zone. we are not complacent about it. the financial sector is now well prepared. >> have companies prepared for plan b? what would it mean for growth? you say systemically we are ok. >> systemically we are ok and sanctioning, most of the players are well prepared. >> do you worry about a big shock to pmi's, to gdp?

>> that would be a big shock to the u.k. -- to the eu economy. there would be an impact of course. >> given this environment, will the ecb hike rates this year? >> as i said, we are monitoring the data. we have this rate guidance. we are not going to move through the summer. we could change it. we could extend it. possible forward guidance -- we have shown forward guidance works well. it is too early to have the discussion. >> are you comfortable with how the market took the president's comments yesterday? >> yes we are. we have seen flattening of the forward curve. providestself essential foundation. we are comfortable with it.

overreact,ets would if we see expectations that do not fit with the way we see the economy, we would have to react. we may have to do it at some point. >> would that be after march? >> really, i do not know. >> what tools does the ecb -- or could the ecb deploy to counteract this slowdown? back, any timeng we have to adjust to a new environment, we have done it. either using existing instruments or finding new instruments. we have been able to do it. what we have to say is negative rates. it is rate guidance, which we can adjust. it is liquidity provision, which has been part of the discussion yesterday even though here again it is way too early. >> we heard from president

draghi yesterday the ecb will need to have a good monetary policy case to offer a round of long-term loans. the market is reading this is less likely. was that the message? >> no, the messages in order to find instruments best suited to the contingency we are seeing. it is not about providing liquidity. there is a lot of liquidity in the system. rose are addressing -- teltros are supporting bum credit. we have to know if we are seeing our -- is likely to lead to impairment of credit. that could be an instrument. depending on the contingency we are facing. do you have an idea what kind of conditions you would need to

offer year-round? >> it is let about monitoring the way credit is extended. and how much bond funding will impact the rate of lending to the economy. so far conditions remain very supportive of growth. .hat is also why we did not we feel the set up we have, these instruments we provide, for an environment which is very supportive of the economy. >> do you worry there is a risk the banks will start repaying tltros this summer? >> yes. as the president said, the has to be a discussion. we are not going to have a tltro for the sake of meeting the net stable funding ratio.

they repay, that would tighten financial conditions. >> that is part of many business decisions. we have to look at the outcome in terms of conditions. issue, but it is only one argument among many others. we are talking to our supervisory colleagues, because that is what we do. >> how much does the personality of the president influence the discussion of the governing council? >> that is an interesting question. be in aident has to position to filter information out of the diversity of the council and to build consensus, which the president so far has been able to do. it is important to be in a

position to build consensus. >> how can you see the dynamics changing once president draghi leaves? >> i do not see it changing very much. we have a diversity of individuals. to filter out into europe. that is what the council is therefore. >> you have said you will continue to work for europe. you were offered -- if you were offered the top job, would you accept? >> who wouldn't? but it is not for me to decide. i want to continue to be useful. her many opportunities. >> thank you for joining us at davos. that was the ecb executive board member. we will bring you plenty more interviews right here from davos. timing after the

ecb decision yesterday. despite global growth gloom gripping markets, goldman sachs ceo says the u.s. economy is not in bad shape. he spoke to jonathan ferro at the world economic forum. >> the global economy i think is in ok shape. our economists are talking about 3.5% global growth. in the u.s., 2.4% growth. if you look at just the economy itself, we are doing just fine. the growth trajectory may has slowed a little, but the economy is chugging along pretty well. there is a lot going on at a high level, particularly around macro issues governments are dealing with. whether it is the shutdown with the u.s., trade negotiations, brexit, just to name a few. arcus are watching these and it's a lot for markets today just. i think that is the big thing

people are focusing on. how are these issues going to progress? what impact will those issues have on the underlying economic activity? >> you have made waves in davos. the headline is david solomon says 50% chance of a recession in 2020. what does that mean? >> let's put that in context. our economists recently wrote a report talking about the chance of recession in the u.s.. they said they thought in 2019, a 15% chance and in 2020 a 50% chance. it is hard to put in context what that means. the u.s. economy is in good shape. i think there is a possibility as we get into the latter part of 2020 we see continuing tightening as the fed continues to manage monetary policy, that we can see an economic slowdown. it is just as well possible this run could continue and we could

see economic growth continuing into 2021. it is hard to predict those things in advance. i think that is an indication we are closer to the end of the cycle rather than the beginning. nejra: that was david solomon in davos. coming up, we speak to a ceo. don't miss that interview. this is bloomberg. . ♪

nejra: let's take you back to the world economic forum in davos. good to see you again. >> i'm delighted to be joined by the chief financial officer of engie. thank you for joining us today. a lot of talk about protests. we have a lot of focus on oil and energy. talk to me about the yellow vests movement.

has it impacted your business? >> it is obviously something you have to keep in mind as you look into the future. i think collectively with the government and business, we need to see whether long-term solutions we can provide people. one of the things we have been working on is to say, how can we provide cheap energy to our clients the echo we came up with nts?lient siya -- clie people can change their heating and for one euro they can -- energy consumption. we are looking at different options for what we can ease the tension. we will take it from there. , it is you look at engie one of the five western european countries lending funds to finance the gas pipeline going from russia to germany through

the baltic sea. do you worry about sanctions on russia? does that mean the project could be at risk? >> it is important. we are obviously following this very closely. we don't have any reason to believe there's going to be additional sanctions. we will stay watching this. >> do you worry about brexit? doesn't impact the u.k.? could have implications for the rest of the market? >> our business is very local. , -- ouru.k. business u.k. business, we do energy efficiency for u.k. customers. very little movement across borders. it is impacting us less. however, if there was a hard brexit, it would impact the growth in the economy and all of

us could be impacted. >> talk to me about possible acquisitions. are you ready to buy up companies? >> we are happy with what we have been able to do over the last three years. bydid indeed reduce our debt $7 billion and really sold down some of the areas that were growing. heavily reinvest into greener infrastructure as well as renewables. we are going to keep an eye on the market. nothing concrete at the moment. certainly the balance sheet what have room to look at certain things. >> two company such as yourself need to become bigger? do you worry about being a takeover target? >> size is not necessarily a target. , do we care about is

have relevant solutions for customers? what can we bring to the table? i would mention a few things that testing wish ourselves in the meantime. to runur capacity centralized infrastructure for customers and all the energy efficiency. in the meantime we have two thirds of our employees working on solutions. that is creating a competitive advantage. we are also seeing the different parts are playing together. renewablevide , package it for corporate customers and also provide energy efficiency measures. that is a really good value. >> what is your biggest risk in 2019? >> i'm sure you're not going to be surprised we are watching what's happening geopolitically.

there are a few big topics here that could go either way. i feel confident in 2019. >> concerns -- >> we are watching very closely what is happening in brazil. it is a very big country for us. it is among our top three. but also watching with confidence what is happening there. >> where are you most confident about your growth? >> i think we still have growth we had in europe, but also brazil. to need moreg energy infrastructure and more renewables. surprisingly, a very fragmented market. there are lots of opportunities for us. we have come up on renewables there in wind.

our core business in europe custom mostly around solutions also. much for joining us. that is the chief financial officer of engie. i'm going to handed back to london. many more interviews to start the day. nejra: we look forward to them. let's get to the markets. looking at this, u.s. equities could build on gains from yesterday. semiconductor stocks led the rally yesterday. intel missed. still positive sentiment for u.s. futures. the 10 year yield moves higher by two basis points. dollar-yen on the front foot. the dupmps on reports could support theresa may's brexit deal. brent traders seem to be focusing on venezuela risks. coming up, as brexit uncertainty continues, we will speak with philip hammond. do not miss that interview live from the world economic forum in

davos. this is bloomberg. ♪

>> it is having a big impact on the economy. both parties know this. something will get done soon. both parties know they are going to be hurt. >> the first quarter will be stronger than the fourth quarter of last year as things go. the shutdown ultimately will start to affect economic activity. whether it affects banks in the short remains to be seen. >> it is much more in relation to the government shutdown then companies sitting on the side. >> they are going to start conserving capital, slowing down investments into infrastructure

for their companies, start hoarding cash again. you can't have this level of dysfunctionality in the government. asian equities posting a strong and to the week led by tech stocks. this is the third week of gains for asian equities. looking at europe, numbers from erickson breaking across the bloomberg right now. what we have is fourth-quarter net sales coming through from erickson, 63.8 billion swedish krona. the estimate was 61.3 9 billion swedish krona. that is quite a comfortable beat on the fourth-quarter net sales. looking at other headlines, erickson saying talks with u.s. authorities continue. -- 5g trialree costs will continue. the swedish network equipment maker is getting into them -- into an important year. it's profits are being boosted by security concerns faced by

chinese rival huawei. 5g trial costs continue. that is something we are looking at. just to reiterate, those fourth-quarter net sales coming in at a beat. the dividend per share is one swedish krona, a slight mist on the estimate of 1.054 quarter adjusted operating profit comes in at a beat quarter on quarter. the fourth quarter adjusted growth margin, an ever so slight miss. let's head back to the world economic forum. haslinda amin is there. great to see you on the final day. >> on the final day. it is so cold. joining me now is the mckinsey and company global managing partner. a glasgow man, he says he does not need a coat. >> a beautiful morning. i'm having a great time here. >> it is not so summary when it

comes to relationships between the u.s. and china. tell us how companies are adjusting. >> everyone is hoping there will be some kind of deal. they are also realistic this is one part of a broader conversation between china and the u.s.. as a result, i think there is an increasing focus on the supply chain. how do we think about the impact of tariffs changing perhaps supply from one part of the world to the other. there are consequences even now that are beginning to emerge in terms of trade and production. most ceos are asking their teams, are we ready? what if there is not a deal that allows us to maintain the approach we have taken so far? this is getting quite real. >> lots of challenges. headwinds. we talk about access to talent. how do companies cope? >> i think talent is the key issue. talent around the world has been

taken for granted, including myself. we cannot make the assumption the way we used to. we are beginning to look very hard, highly regionalized, more than we did in the past. there are many issues impacted by the way the world does business and the extent to which we are able to assume the relationship between business and government remains constant. there are plenty of uncertainties. >> anything not on the radar of companies right now that should be? >> perhaps things are better than we expect. one of the striking observations i have had, this time last year, synchronous growth. this time this year, cautious trending pessimistic. as a result, -- what if the upside happens? people are almost in the mode of wait and see. there is the risk of investment being deferred. investment in technologies that are going to change business. it is important that ceos and business leaders keep an open

mind. if somebody tells you they can put it will happen six months from now, they are being optimistic about their capabilities. >> asia-pacific in particular, what risks do you see? we have the india, indonesia, thailand elections, possibly even singapore. >> political risk is on the agenda. you cannot forecast the outcome of those elections. in asia-pacific, the conversation is so different than the conversation with european delegates. there is a considerable amount of optimism. there is a sense that tomorrow will be better than today. business leaders feel that, too. there are clouds on the horizon and you can hear the talk around emerging markets contagion and what happens next. actually, the asian pacific economies are in reasonably good shape. the question is more, how do we adjust to the political changes whilst maintaining our generally optimistic view of the year

ahead? isdo you think asia well-positioned? >> i think so. even though you can argue this has been a conversation not at davos, most of those are here. how do we think about in investment -- about investment in asia? that is what i'm hearing from asian-pacific leaders. thank you so much for your insight this morning. thank you so much, and have a great final day at davos. right now, let's get the bloomberg first word news. >> china will grant more licenses to global banks seeking majority ownership in local ventures. this will allow foreign firms greater access to the world's second-largest economy. a senior chinese regulators

spoke to bloomberg's haslinda amin. you have to go through what we call a public bidding process. that takes some time. procedures kinds of that have been occupying the time. >> within the next 12 to 24 months? >> sooner than that. in the next six months you will see more licenses. >> george soros has warned of the mortal danger of china's use of artificial intelligence to repress its citizens. he called xi jinping the most dangerous opponent of democracy. not the only authority -- authoritarian regime in the world. thes undoubtedly wealthiest, strongest, and most developed in machine learning and artificial intelligence.

ordered mosto has u.s. government employees to leave venezuela. this follows the demand by venezuela's maduro that all diplomats leave by saturday. the trump administration declared maduro an illegitimate leader, throwing support behind opposition leader. a veteran investors says he is watching the venezuelan situation. >> we are interested. if there is a real change in government, venezuela will be very interesting. you must remember, this is all about oil. >> global news 24 hours a day on air and at tictoc on twitter powered by more than 2700 journalists and analysts in more than 120 countries. thank you so much. the u.s. government shutdown is entering its 35th day and the senate rejected two proposals to end the impasse.

the white house has signaled the president may be receptive to opening agencies for three weeks, but only if opponents agreed to a down payment on the wall. for more, jodi schneider joins us from hong kong. market observers who are looking at this, some of them are saying this time could be different to 2011. we could see money come out of the dollar, out of treasuries as well. a different reaction to 2011. if you look at the politics, can we get any hope at all an end to the impasse might come from these new talks? >> at this stage, they do not seem to be closer. the president has said he would be willing to consider legislation that would operate the government, reopen the government for a few weeks in terms of a short-term spending bill, but only if he gets a down payment on the wall. democrats do not appear to be willing to give him that.

nancy pelosi has said she will not agree to that. in the senate, the minority leader chuck schumer did meet with the majority leader mitch mcconnell. they had some talks. afterwards, a spokesman for mr. schumer said he also is against the down payment idea. that does not appear to be working. cnn was reporting the president may be preparing his order for a national emergency, saying there is a crisis at the border. he would try to get spending that way. that would be certain to end in legal challenges. at the same time, the shutdown is entering its 35th day. this particular day, the 800,000 or so government workers who are going without paychecks will miss their second paycheck. we are starting to see economic effects as a result. any more pressure on lawmakers and the president to try to

start some kind of talks to end the impasse. nejra: great roundup. thank you so much. jodi schneider in hong kong. coming up on bloomberg, as brexit uncertainty continues, we will speak with philip hammond. don't miss that interview next, live from the world economic forum. this is bloomberg. ♪

>> it is a tradition in brazil that we elect presidents who are the u.s.. in several occasions i have met with american authorities and had to tell them we are friends with the u.s.. we want trade common to all.

>> the danger of populism is high in europe and ukraine. we have extremely irresponsible politicians. -- theto that, we have election. states,european union it is not clear what great britain wants. what changes they want to have, what things they would like to renegotiate. we need to use the next week's -- weeks so great britain can explain what it wants. those were some of the world leaders we spoke to at davos about the political risks in 2019. the coverage continues. philip hammond has warned

leaving the eu without a deal undermines the country's prosperity and is a betrayal of the decision. -- suggests he is reluctant to let the u.k. exit the eu with no deal in place. >> i am absolutely delighted to be joined by the u.k. chancellor , philip hammond. the man everyone wants to talk about to try to make sense of the options on the table and what happens next. how likely is it we see a general election? not wantvernment does to see a general election or referendum and we will be doing everything we can to persuade our colleagues the deal the prime minister has negotiated or some variant on it is the right way to go forward to deliver on the brexit referendum decision. but to do so in a way that ensures a prosperous future. >> there is a vote on january

29. do we have enough time to implement the changes to make sure there is a smooth transition? >> there are likely to be a series of amendments tabled by back benches on january 29. i do not think january 29 has to be the high noon moment. there will be other opportunities for parliament to express its view. what we are trying to do is build a coalition around a common ground. a common way forward. we have to come together. we have to compromise. it is a great british tradition to find a solution rather than standing throwing rocks at each other from different sides of the argument. >> the second scenario is the vote does not go through january 29. the prime minister loses. what are the options then? >> the government's commitment is to make the steelwork. -- make this deal work. to improve the terms, to talk to colleagues in parliament to persuade them of the logic and

reassure them about the very real but specific concerns different parliamentarians have. there is no good alternative to the deal. leaving with no deal is a very bad outcome for the u.k. not leaving would be also a very bad outcome that would undermine our democracy and destabilize our political settlement in the u.k.. >> what is the chance of no deal brexit? are the markets misunderstanding? >> i am confident we will achieve a deal because of the logic. it is in the interest of everybody that we reach a deal. it may not be a deal which is everybody's first choice, but the alternatives to leaving with a deal are very stark indeed. i think over the coming days and weeks, common sense will prevail. the country will come together around a compromise solution.

>> it looks like everybody is -- if you are a remainder, you wants a second referendum. if you are for brexit you want a hard brexit. >> for business leaders, the deadline is only two months away . that seems awfully close. in the way negotiations happen, we are still at the phase where people are camped on their preferred outcome. the truth is, too many people have not yet moved from their preferred outcome to an acceptable outcome that allows compromise. that is the process that will happen over the next days and weeks as people recognize they cannot get their preferred outcome because there is not a majority for it. have to find a common ground we can all live with, we can all except, which represents a sensible way forward for the country and protect the interests and living standards of the british people. >> is there a chance we get a no

deal brexit? >> i'm not going to put a percentage on it. clearly there is a risk of no deal. that risk is very real. .eople need to remember that equally, people need to recognize there is a large body of opinion in parliament that would think -- would seek to at allo deal at no -- costs including put aside brexit itself. bothpromise which avoids of those extremes and allows britain to proceed prosperous lane to a sensible future relationship with the eu after we have left. >> has the cabinet thought about a second referendum? >> there are real problems around the idea of a second referendum. there is no majority for that in parliament. what we have to focus on is ideas that are ultimately likely to be supported by a majority in

parliament. our judgment is there is no majority for the second referendum. >> what is there a majority for? >> at the moment, nothing. parliament knows what it is against but has not worked out what it is for. we are still at the stage of the argument where people are promoting their ideal outcome rather than compromising towards common ground we can all agree on. >> if we do not find a solution or something parliament would be in favor of with the majority, would you be in favor of delaying article 15? >> that is not the government's preferred outcome. we want to leave on the 29th of march. we believe we can leave on the 29th of march. the problem is this. you asked me what it is that will bring people together around a compromise. it is the sense of a deadline. sense were to remove that of an immediate deadline, you take the pressure off people and you are only going to reinforce their inclination to keep

promoting their preferred outcomes rather than seeking compromise. >> if there was a delay, would it be until -- a betrayal of the british people? >> what would be a betrayal as if we did not deliver brexit or if we delivered brexit in a way that undermines their prosperity. i believe no deal brexit would britain's-- undermine prosperity. they heard from the leaders of the campaign we could leave, we could get a deal with the european union, we could have a seamless exit. that is what the majority of people in britain want to see. >> is it not fair to actually ask the people what kind of brexit they want now? >> it is not unclear to me. it is clear there is a majority of people in britain who want to see us navigate this process in passage to a smooth a future arrangement with the european union that allows us to

continue trading together, to protect jobs in the u.k., but also means we are outside the european union delivering on and honoring the decision of the people in the referendum. >> if there were a referendum today, which way do you think it would go? >> i'm not going to speculate. the british people voted in june 2016. it was close, but we have a political system which -- where winner takes all. it is clear what the outcome was. our job is to implement that decision of the british people. i take it very clearly is our responsibility to do that in a way that protects our living standards and delivers a smooth transition to a new relationship with the european union. it is very clear to me from the campaign that took place that people were not voting for a disruptive, chaotic brexit. they were voting for a smooth and orderly brexit. >> will we have a general

election this year? >> i do not think so. i do not think a general election will resolve this issue. both parties are divided on this issue. this is not about a clash of the parties. if it was, it would be easier to resolve. a genuine division among people of all political persuasions about the right way to go forward to deliver on the decision of the british people. >> is it fair to say the prime minister has a choice between her party or her country? >> the prime minister is very clear and always has been that she will do what is in the interests of the country. clearly we believe what we are putting forward as a government is in the best interest of the country. we will always act in the best interests of the country. >> how many questions do you get about market reaction to the pound? few.rprisingly

you will have talked to a lot of chief executives here. there is a great gulf of misunderstanding between business and politics. for many people in business, this is terribly simple. why don't you just do what needs to be done? what i have been trying to explain to business leaders here is that of course we have to address the needs of the economy. people need jobs. protect and to support the political consensus that underpins our system. if we betray the political decisions the people have made, that would also be very destabilizing for our country. ultimately, destabilizing the political system undermines our economic prosperity in the future. we have the political and the economic objective. >> do you worry about social unrest? >> not social unrest, but political discontent fueling

populism and a sense the political system is not working. there are plenty of people out there willing to stoke the fires and we need to show people the political -- onra: asian equities jumping the tech rally we saw in the u.s. yesterday even after we got that mix on intel. european equities and u.s. equities look like they could build on their gains. that will make it a second day of gains for europe. a third day of gains for u.s.. equities heading for their first weekly drop in five. dup could support theresa may's brexit deal. the euro recovers from losses

yesterday. oil traders focusing on venezuela. this morning from davos, we will be speaking to many more people from around the world. ♪

nejra: good morning from london. i am nejra cehic. these are today's top stories. asian shares rally with tech leading gains. u.s. chipmakers -- the pound surges on report theresa may's brexit deal will be supported. philip hammond just spoke to look francine lacqua and says the risk of a no deal is a real risk. slow down surprise, the ecb says economic risks have moved to the downside. it is too early to tell if rates will rise in 2019. >> we knew it would slow down.

inwas at a high point 2017-2018. nejra: policy chief and business leaders are gathered in davos for the world economic forum. the final day of the meeting. great to see you, has linda. how is it looking? , the global week slowdown in government breakdowns, that seems the consensus that we will not be in for a recession, but there is concern if the global economy takes a turn for the worse, policymakers will make it hard to respond appropriately. resources have been -- bank governors have missed the chance

to raise rates. a lot of concerns there. callingheard from abe for the world to come together and rebuild the trust in free-trade. we heard from wto chief saying if international systems were to break down, we could be in for the dark ages. here in davos.y going ahead, we will bring interviews, the governor of the bank of france, and we heard from philip hammond. lots to come. amin for us,da have a great final day. breaking news, still coming through on the bloomberg.

third quarter service revenue coming in at 9.7 9 billion euros. 9.82.stimate was nin we will see what the right number is when that correction comes through. third quarter organic service revenue is the key number you want to focus on, up 0.1%. the estimate was a drop. that guidance is reiterated, a full-year spectrum at 5.4 billion euros. vodafone will explore opportunities to monetize its assets. a few headlines therefrom vodafone. the start of european cash equity trading is in under an hour. welcome to "bloomberg daybreak:

europe." euro stoxx 50 futures moving higher. 40 firmly in the green. we saw gains in the u.s. yesterday led by semiconductor equipment makers. good numbers coming through in that sector. you get that miss from intel and a move down, but yet you see asia rally, picking up from the u.s. session. interesting dynamics overall, you are seeing global equities heading for their first weekly drop. we could end the week in the green. the risk picture, you are seeing the 10 year treasury yield move higher in today's session. , newhutdown continues discussions underway. the move in treasury could be

different than last time if it is prolonged. we could see yields move higher. not much going on in the futures markets in terms of bonds. there is a lot of action in the markets in asia. juliette saly can tell us all about it. happy friday, and for are on track for a third weekly gain, the longest winning streak for asian equities since july last year. coming through with intel, we also have texas instruments boosting momentum amongst chipmakers in asia. it lifts taipei to a seven-week high. chinese stocks are closing higher, a good session in seoul, and every market we track is moving higher today. wilbur ross said the u.s. and

china are miles away from a trade resolution. at momentum inok currencies. the japanese yen overnight lows down by 0.2% against the dollar. the korean won is one to watch, the best performing asian up.ency today, malaysian against the greenback, on track for its second weekly loss after we saw the bank of malaysia. they hold their key interest rate. nejra: juliette saly in singapore, thank you. let's get the first word news from debra mao in hong kong. dup has decided to privately backed theresa may's says thean, "the sun" dup will accept a backstop if

the time is limited. chancellor philip hammond has warned that leaving without a deal would betray brexit voters. >> there is no good alternative to the deal. leaving with no deal is a bad outcome for the u.k. not leaving would also be a bad ourome, it would undermine democracy and destabilize our political settlement in the u.k. raise the window to interest rates by the ecb is about to slam shut. mario draghi acknowledged yesterday that europe economic risk is moving to the downside. the ecb executive and board member says the extent of the downside came as a surprise to the central bank. >> a lot of uncertainty is political. first and foremost, global trade which is a politically

engineered uncertainty. slowew it would have to down because of the high point in 2017-2018. the slowdown has surprised us. we have been surprised. we have to be very careful. that is what we are doing now. u.s. bank chiefs do not see the fed reversing course. as investors are scaling back expectations for 2019, morgan stanley ceo says the fed would do well to take market sentiment into account. market areple in the projecting rate cuts, i do not see that happening. i do not see three or four increases. my personal projection is it will be one or two, and currently the u.s. economy is doing great. has a dual mandate of inflation and jobs, and on both of those it argues for continued increasing modestly.

debra: global news, 24 hours a day on air and at tic-toc on twitter, powered by 2700 journalists and analysts in more than 120 countries. nejra: debra mao in hong kong, thank you. he seessachs ceo says good prospects are underwriting this year, and he downplayed concerns the leverage loan risk for big banks. he spoke to jonathan ferro at the world economic forum in davos. >> our underwriting book is not consistent, i would say it is below levels that were higher at certain points based on individual transactions. we might have distributed at one point in time, leverage finance activity has slowed based on the slowdown. we feel good about the commitments we have. there is a lot of took about leverage loan growth, i do not think people necessarily put it

against market cap growth. that is important thing to balance. you said it has exploded, i guess market cap growth you would use a different adjective. buts at record levels, there has been good market cap expansion to support that. >> supply exploded relative to the high-yield. >> absolutely, there is no question there was a growth in leverage loans. , i am notenario looking at the big bank balance sheets and thinking about leverage loans as a risk issue. it is something that does not get talked about from a regulatory perspective, there was guidance given on leverage lending standards coming out of the financial crisis that has kept leverage levels more constrained them what i think we would've expected to see at this point in the cycle is guidance had not been given. >> do you see it picking up in the first quarter? >> there is no question underwriting ticked up.

it was quiet in december. ipo is showing in the united states is lower given the shutdown, which is putting a meaningful ipo backlog a little bit. if the market environment continues to be what we see today, i think we will have a relatively robust underwriting calendar for 2019. >> whenever we have a bad quarter, i hear that we cannot do anything about the weather. is it the weather that has changed, or have we seen a real climate change for the fixed income trading business? ,> if you look at the evidence haswallet available declined meaningfully over the last 10 years. we like our position. there are opportunities for us to continue to grow and expand with certain clients, but our 2006-2007 tofrom

today has increased meaningfully. we have increased our market share. the wallet available for us has decreased significantly. we run that business based on the opportunity we see with clients today. we have the best team. when it comes to mediation, we are a leader in that. clients work with our team in fixed income. americanighly comp comments about our business. significant, it is not as big as it was. >> do you see the pie getting any bigger? >> i am not good at predicting those things. is, wes is the size it have the right team in place. if there was a big opportunity, our team would capture that opportunity. at the moment, we respond to the needs of our clients, and

operate our business that way. goldman sachs ceo david solomon and davos. ,quities in asia climbing conflicting signals over u.s.-china trade progress. great to have you with us on the show. this rally we are seeing in asia, since we got those results from intel aftermarket yesterday, we see the move lower , and some chipmakers in the u.s., but it was a brutal year last year. msci technology index rebounding so far this year. what are investors looking at? are they looking ahead to a second-half recovery? >> yes, you are right. a lot of people have been a recovery ist expected in the second half in terms of earnings. people who believe that our thinking in terms of valuations

and stock prices, we might be around the bottom or have hit the bottom. there is still a debate whether we are at the bottom. if you are confident with that, and there is a recovery in the second half, people will be willing to buy. the news has been bad in terms of fundamentals and earnings misses, the people are thinking it is time to buy. one of the things about intel's release is that people found relief that capital spending at high levels compared to last year. we will have to see if the rally continues into u.s. equities tonight. nejra: that is a good point about intel. what is driving the action ?oday, seeing the rally is it building on the gains in the u.s. yesterday? yes, pretty much. we had a good day in asia

yesterday. today was another great day. we still had a series of earnings misses, but people are looking beyond that to what is coming up next. the earnings recovery expected in the second half, as we get closer to that, people are more willing to buy stocks. skeptical still whether the rally will continue. we have to keep a close eye on more earnings releases next week. is this a comeback that has legs? thank you so much for joining us. coming up, our coverage from the world economic forum continues. we will bring you the first interview of the day with francois villeroy de galhau, governor, banque de france, and ecb governing member.

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>> the price move from 55 to 60, that is very positive. the test will be if we can keep 60 during this low demand period for the next six to eight weeks. we are about 40 minutes from the start of cash equity trading in europe. european equities could build on yesterday's gains. tech stocks led the rally yesterday. the dup could support theresa may's brexit deal. downside risks were emphasized by the ecb on a third day of gains. top regulators have told bloomberg more banks will get approval for the majority ownership in local securities ventures. the chinese repertory commission

spoke to us at davos and explained why beijing once more participation. more tong up , sornational participation in the area i work we have relaxed the foreign equity share to 51%. ubs has taken advantage of that and given license to own 51%. in three years time, shareholders can own 100%. asset management, the same .rrangement has been in place in futures markets, the same arrangement has been put in place. that is how we open it up. --banking and areas >> when can we expect the next

bank or batch? whoe have a few companies are in the process of applying for 51%. i do not want to give the names. >> how soon will the next be? >> the approval is very swift. get the application materials ready, sometimes it takes some time. the foreign shareholder wants to acquire more shares, and they have to buy from the local shareholder. a lot of local shareholders, for an soe to sell, they have to go .hrough a bidding process that takes some time. these procedures have occupy the time. within the next 12 to 24

months? .> shorter than that i think the next six months we will see more licenses granted. connecthanghai-london -- the launch date was already announced. you have to ask the british government. they are a little distracted by brexit. how when theye will refocus on this effort. >> do you think it will happen this year? >> i certainly hope so. our intentions to move forward, to forge a stronger link between london and shanghai remains.

i think they have to get their vision right. removingve recommended the price limit, when will that take effect? process ofn the finding a proper way to relax that limit. i think the direction is clear. generated,ay prices at the beginning there is what we call the bidding process, and there will bet regular trading. the first day prices composed of a number of steps, and it takes careful consideration to find the correct way to remove the first-day price cap. ipo pricing the

restrictions? >> that is a good question. this is connected with the first-day trading price limit. getting a good indication from the secondary market trading, there is no way you can price the ipo correctly. they are connected. after the first-day trading, we will have a better sense of how we will go about the ipo price. exclusivet was our ghai inew with fang xin davos. mike pompeo ordering u.s. employees out of venezuela. the trump administration has a slate of sanctions prepared. maduro who controls the

military and the treasury and the state oil giant, is refusing to stand down. .nnmarie hordern is here big question for the markets, whether sanctions will be imposed. how likely are they? draft, buts them on he was urged by refineries to not go that far. he does have been in his back pocket, likely if many in the military, the senior ranks still continue to maintain power. the junior ranks in the military are revolting. the seniors are still backing him. all ministries including oil, he will use that and expedite, and use the sanctions. many refineries in the u.s. do not want that to happen. louisiana, texas, along the gulf, they still import, venezuela makes up 7% of imports. >> what kind of dilemma could

this post opec? >> it will make the market tighter. we have saudi cutting, alberta and canada are cutting, similar crude. and brent see wti react, they are up higher today. venezuela does not have the weight it once did. it follows nigeria, angola. we are not talking about as much crude, but it will create a heavy market. if you look at the benchmark, at a five-year high, while we have more of a glut with the sweet crude. nejra: you have that surprise jump in u.s. treasuries, but oil higher today. thank you so much for joining us. that is it for "bloomberg daybreak: europe." davosore coverage from throughout the day.

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markets. i am anna edwards alongside matt miller in berlin. matt: long live the tech rally, the sector gains in asia despite wilbur ross saying the u.s. and china are miles away from a resolution. cash trading is 30 minutes away. anna: riding the