>> good morning. i'm nejra cehic. this is bloomberg daybreak: europe. these are today's top stories. of the little big for markets. the u.s. and china hold trade talks, but making progress may not be easy. central banks in the spotlight. jerome powell gets a fresh charge to communicate and markets at a press briefing on monday. mario draghi addresses the european parliament today. lifts sanctions on three companies, including aluminum producers. the prices of the metal dip in london. ♪

manus: welcome to "daybreak: europe." we have rallied 13% on the s&p 500 since santa claus came on the 20th of december. what will the fed say this week? is it more important than the trade talks in washington? nymex crude is later, with three days of -- is likeghter, with three days of gains. the venezuelan standoff seems to be for the moment influx. in brent, the lungs are rising the most since august. let's have a look at the rest of the markets. we have a big bellwethers reporting this week as well. has had its biggest one-day drop since 2016.

china's demand, this could be the canary in the demand coal mine. china's gas demand could drop in january. that would be the first drop we have seen in a number of years. it has gotten warmer, but we have some big shifts in some of these commodities, a whole variety of stories. nejra: good morning. it does feel like a pivotal week for markets. i don't envy the treasury traders, because we have been in a 14 point -- basis point range for the last couple of weeks. today, we are down a couple of basis points, but what a big week. we have the fed press or, we also get a quarterly refunding announcement from the treasury. of course, the trade talks and jobs data at the end of the week. ahead of those trade talks, we see strengthening in the yuan. it is pulling up the aussie and kiwi dollar. we see more lending from china. i put aluminum up there. we are down 1% on the lme.

we have been declining as the u.s. has lifted sanctions on russo. they get a shot to the markets in april to set the tone for the aluminum hasently been trading near those two-year lows. let's check in on the mountain -- markets in asia. juliette saly has more. great to have you with us. what are you seeing in the asian markets? juliette: we are higher for a third session, starting the week on positive footing. australia is out of action for the australia day holiday, in japan was weaker, up by 0.6% on a stronger yen. china and hong kong markets have turned negative in late trade. there was that boost in terms of $37 billion that you touched on that gave a boost to chinese stocks earlier, but we are turning negative now. remember, industrial production numbers came through from china today for december, down 1.9%.

that was a mess. have a look at some of the stocks we have been missing in the region. you mentioned the move in aluminum. we see shares in hong kong in focus after the lifting of the sanctions on a couple companies in hong kong trade. they are up by 0.6%. they dropped by almost 3% on news that the u.s. securities regulator is looking to whether they accurately disclosed executive pay. this follows the news about the former chairman and ceo carlos ghosn, who remains behind -- detained in tokyo. is risingthis company sharply, up over 9%. it looks like the billionaire owner has managed to find some creditors to make sure it does not default. manus: thanks. juliette saly with the latest roundup on the markets from singapore. for the mliv question of the

day, which market is set to benefit the most from the end of the u.s. government shutdown? you can join the debate with tv . we thought it would be a humongous relief rally, but the shutdown is a new bullet for the markets. we have your first word headlines. juliette just mentioned, the u.s. has lifted tensions on three countries tied to elect era pascoe. they are removing restrictions on rusal and to others. the restrictions on the ceo will remain in force. congressional democrats try to block the move, questioning the administration's motives. a new poll shows a majority of americans think the u.s. is heading in the run direction. according to the nbc/wall street journal survey, 28% thought the country was on the right track.

the lowest percent on that question during the president's term. it was taken before the end of the partial shutdown that ended on friday. former starbucks chairman have words schulz -- howard schultz says he is considering running for president in 2020. >> not only the fact that this president is not qualified to be the president, but the fact that both parties are consistently not doing what is necessary on behalf of the american people, and are engaged every single day in revenge politics. theresa may is said to have privately rolled -- told the cabinet she will roll out a no deal brexit. ministers have been imports, but she does not want to make it public as it would affect negotiations. the parliament is preparing to vote on amendments to the bill this week, with some wanting to delay the march 29 split to avoid crushing out.

australia has joined the u.s., israel, and several countries in recognizing one wide-out --j uaido as the interim president. this comes as they top in their stance against nicolas maduro. germany and france pledged to recognize guaido if the elections are not called within the week. global news 24 hours a day on air and tictoc on twitter, and powered by 2700 journalists and analysts in more than 120 countries. nejra: thank you so much. hundreds of thousands of u.s. federal government employees will be going back to work this week after congress voted to end the longest government shutdown in modern u.s. history. the white house acting chief of staff mick mulvaney is warning that the president is ready to close federal agencies again if you does not win funding for his wall. let's get more from jodi schneider. good to have you with us. are we going to be back where we

started on february 15? what signs can we look for to know this is going to happen? jodi: president trump is still demanding that $5.7 billion for the wall with mexico. including nancy pelosi, are saying they do not want to give him that money, that they don't want to find a wall with mexico. so you have the same positions you had before. you have just gone through the longest federal government shutdown in u.s. history, and that means that both sides got some of the blame. president trump got more of the blame than the congressional democrats did, but there was plenty of blame to go around. they may be willing to negotiate somewhat on the issue of border security. -- in border force security, but not necessarily the wall. mick mulvaney says they still

want the wall money, but there may be a path between about border security that may get them there. the democrats want to move on with their agenda. they took over the house of representatives in the second week of january, then shut downs started in late december, so they have not been able to move forward either. although both sides are sticking to their positions, there is thinking that maybe it is about border security rather than a wall and they might even to get there that way. they have a short period of time. february 15 is when the new deadline takes effect. that is not a lot of time in washington. manus: thank you very much. well summed up. capitulation with a bullet in the markets, as he could declare a national emergency. that is the real risk. let's stick with the u.s. at the end of the week we will hear from jay powell in a news conference after the decision on wednesday. after every meeting, no changes are expected in the fed's

strategy, reducing bond holdings with rates forecast to remain unchaining -- unchanging. what better man to put said week into context? good to see you this morning. marketdwidth of the bond move, 14 basis points in two weeks. this is the narrowest we have seen for some time fall in this market. do you trust the volatility, or could it get worse with the shutdown and said drama at -- fed drama? guest: i think the case of volatility is we have been trading in the 10-year note below 2.80%. a sufficiently positive catalyst in u.s. data, u.s. events, we could go about that level. toward 3% over the medium term is a likely outcome for the u.s. rates market. this is why it seems so suppressed. there has been an acknowledgment

from bearish market participants that we were in an environment that was sufficiently pessimistic that ballplayers were encouraged to be selling the asset class. nejra: given what you have said about the 10 year yield in the expectations around dovishness from jerome powell this week, would you say that there is a potential for curve steepening in the twos and tens. guest: you could get some steepening. if he does communicate a dovish tone signaling something, which means the market pricing doesn't really change over the next one month or two months, then the reaction would be for the riskier asset classes to rally. and for the 10 year notes to go with that. i am cautious on how much we can

steepen, and that is because i am doubtful about how long they can keep it on hold. once we get past the hard data, which is going to be weak as a result of the government shutdown, i think we will look at a picture that suggests the fed will be in a hiking mode. manus: what is the most important part in the data? i had a guest who said the employment index is higher perhaps against the soft data, which is telling me a different story. pce are the eci and key issues for the fed. agreement inn broad terms. what i really look at and what i think the fed will still be looking at is the average earnings accelerating much higher when compared to the unemployment rate. it is a way of looking at the phillips curve in the u.s.. it is not dead. that is something that when the

fed has the opportunity to, this week we saw higher equity prices, how is the hike data looking? nejra: we are talking about the rates, but what about the balance sheet and what we could potentially hear about that this week? i heard commentary that it has been so jumbled, it has left markets in disarray. what you want to see on the balance sheet this week? i thinkhe balance sheet the fed miscalculated the impact it was going to have. ongoing reduction is the reason we think the neutral fed funds rate is 2.155. we are currently in restrictive territory because of what they promised to do what -- deliver on the balance sheet. what we really need to do is cap the pace they are producing at,

reduce the cap, or state explicitly that we refuse this at the end of every year. then there would be room for the fed to the livermore hikes. -- to deliver more hikes. that is the simple mechanics of it. manus: let's hope the leverage loan market does not low up. if i see another person writing about it. take a look at this. let me clear something quickly. actual household debt. it is the lowest since 1980. the consumer is in good form in the united states. household debt, 8.9%, the lowest since 1980. this is what? it is a real flaw on the eco-growth story in the u.s.. would you not agree? peter: it is all about the corporate leverage, that is the main concern in the u.s. i think we are still going to be

seeing more corporate deleveraging, which will slow economic growth and ultimately would lead to job losses. for the time being, the consumer is not in bad shape. it is about when it starts to be job cuts that the u.s. economy will be moving into a recession. this is the story for next year, not this year. nejra: jobs data looks like we are far from that. peter chadwell is staying with us. coming up, theresa may risks losing control of brexit in a series of votes in parliament. could she be forced to suspend the entire divorce? this is bloomberg. ♪

the yen is stronger this morning, the dollar is down.

the yen bulls this week, a lot of data coming to the stage. retail sales and production. deutsche bank said if you can get the yen to 100 to the end of the year. the stock to watch this morning is nissan. as have a look at nissan under pressure. that stocks slide as they face an sec probe, a securities exchange probe, into remuneration over executive pay. it is whether there were lapses in reporting of executive pay. we are now down 0.8% off the lows of the day. with that in mind, let's bring in dave mccrone. he joins us now. is all around a variety of stories. good to see you. how do the stakes for carlos ghosn and nissan look at the moment? dave: this is obviously becoming a global issue, on the same

weekend we had comments from emmanuel macron suggesting that he is very concerned about the length of the detention that ghosn has been kept under here in japan. we have this coming out that nissan, the carmaker itself, is being scrutinized for its disclosures in the u.s.. one thing this also signals is that nissan's role is going to loom larger and larger because of carlos ghosn himself. when this initially broke in japan, it broke as a story about carlos ghosn. it was not until later that nissan was indicted. putting thesec company itself front and center and saying, we are scrutinizing the company's disclosures and whether or not they met our standards. you can be pretty sure that because nissan also sells securities in other markets in europe, elsewhere, they will be given the same scrutiny there when they do make disclosures for securities sales.

typically, they do have to close -- to disclose things like topics negative salaries. no one will be surprised if this continues to spread globally. nejra: thank you so much, dave mccombs in tokyo with the latest. let's get a check on the broader markets. we take a look at asian equities. you are seeing some read on the screen in terms of asia-pacific index. we also see some highs struggling for direction. it is the yuan moving more ahead of the u.s.-china trade talks on some increased liquidity for banks. you see that yuan higher for the fourth day. we could see lower european equities, starting the week on the back foot. manus: you have got nymex crude stabbing three days of great -- snapping three days of gains. the 10 year government bonds, 2.74%. week.fed

s&p futures just giving a little bit of a light touch. it will be a big reporting week. what matters more, the china trade deal or a dovish fed? those are the key issues. nejra: they are indeed. also in the u.k., theresa may risking losing control of brexit to parliament in a series of votes this week. the prime minister is facing amendments to the withdrawal agreement, which could put brexit on hold or force new negotiations. theresa" reports that may has told colleagues she will not take the country out of the eu without a deal. peter chadwell is still with us. here today,ve you particularly because i want to call you up on a call you made last year when you said the gilt curve would invert. what has happened? peter: the market is listening to the opposition in the house of commons rather than listening

to the prime minister. the prime minister is doing her best to make sure that no deal is still a viable option, for the minority government to maintain leverage with the eu. i think what the market is more focused on is that the opposition, event cooper, the veriest -- the various amendments are being tabled, which is to take no deal away from the government, remove it as a possibility. if we get beyond the end of february, one of the motions -- amendments says that she will be forced to extend every call 50, negating the risk of a no deal brexit. whole varietys a of permeation. it depends on what goes through the house of commons. the bottom line is, even if the house of commons votes to take no brexit off the table, this is a rock and a hard place. if the bulls cooper a minute

goes through -- amendment goes through, for the markets do you think we have been overly optimistic there will be a delay to brexit and that no deal will be taken off the table? that is the proposition in the fx market. it is breaking its 200 day moves. a number of houses have said, you are far too optimistic in terms of the potential for this no deal to come off the table. peter: i believe this is aremistic, that there technical factors. the two year-term, is cheap.t given the uncertainty about how this will play out, i think the rally has gotten ahead of itself , because the likelihood that we increase inby the

likelihood of a no deal brexit is still something that can check out a lot of those leveraged loans. -- leveraged longs. there are enough risks that the government still wants to keep a no deal brexit on the table and try to get the existing deal passed through the house of commons is the most likely outcome. i think that would still be negative for house that is trading. nejra: what is the key trade you will be putting on the gilt her? -- the gilt curve? peter: the flattner has the most asymmetric risks. something being passed, which would have the bank of england in a better position to deliver on rate hikes imminently, whereas in the event of a no deal brexit, still becoming more likely as it is currently underpriced.

that should mean that long-term gilt use it falls. manus: nejra cehic will be there to keep you -- there is the curve. if anyone will keep you in check, it will be nejra cehic. peter chatwell, you stay with us. we have more to do, more work to do in the bond market. next, the national rail company signed a $6 billion deal as it aims to create the world's largest refining business. it brings a great deal of value. they bring very sophisticated technical expertise. they bring operations and expertise for agencies across our business. manus: that is sultan al jaber. more in our exclusive conversations, including guess who is back in town?

he joins me for an exclusive conversation. you know what to do. i know you don't want to leave, but you do have bloomberg radio. .

>> asia is running other show. when we look at oil, asia is really coming up with the right news. therefore, we have to look into the gdp numbers. china, especially, people are thinking 6% growth is really a small number. in europe, we have not seen that. omvs: that was the ceo of up in abu dhabi. we talked about china and asia running the show and the oil

price at taking a break. what i found fascinating and he reminded me, sometimes he loses me, the slowdown in italy, the slow down in europe is palatable and important. nejra: yeah. when you look ahead to mario draghi's speech and emphasize friday, and at the march meeting, when they give their forecast, it allows them to make the language a little less dovish. it is a role balancing act that the fed chair will have to make. fors a big pivotal week markets for manus: yes, a nice bloomberg opinion peas and focused on the language and what he talked about the balance sheet. that will be the key concern for markets. let us check in with the

markets. we have the team. let us go through them. -- and we have anne-marie and a mixed monday for asian stocks. talk us through the picture in india. reporter: you guys are talking about 6%. we are growing at 7% in india. markets. unfortunately, it is not showing. started off a flag and we are in at the lowest point. and down about 8% and a half. the money markets, they are falling off in the session. we made a bit of a habit of having index stocks, the next se, want tohe nt leave you with one key chart. is what isound india

happening to the media space. the media index on friday collapsed the most in 20 years. sanity out here, but watching for the index and the media stocks because they were the talk. otherwise, a bit of a lackluster day. that's you. manus: niraj shah, thank you. i believe you are kicking off politics is at play in america. many issues, isn't it? will get to that and a moment. i what's ticking off with what equities are doing. a mixed day in asia. -- i want to kick in off with what and these are doing. hong kong and chinese stock and what we are seeing in japan. a big week. tech earnings and facebook and set thed that could

stage and asia is tried to figure out how they are going to to the week. , $37ollar and the yuan billion for a bank lending. here we go. here's aluminum, it is softer. down 1%. america is lifting the sanctions on rosfet. i want to take a look. it was as high as 5%. this is the bigger picture of when the sanctions were put on the company in april. it is the most liquid a stock in a moscow. it has lost 30%. today is good news long-term. it has been under some pressure. never bank and the issue, thank you to niraj shah and annmarie. first word news. annabelle: thank you. afters., the reopening

president trump signed a stopgap. the president told "the wall street journal" key doubt that that the deal could be struck in a three weeks. he said at is less than 50%--- he said the chances less than 50%-50%. europe's three biggest nations is said to offer a deal to help companies despite u.s. sanctions. key effortsseen as to keep iran from quitting of the accord. deal.s. pulled out of the and has reimposed sanctions. australia has joined the u.s., andel and several second -- several latin american countries as representing juan guaido as

of the interim president. france. and germany and pledged to recognize juan guaido as president if the election is not called within a week. manus: i will pick it up from here. the latest. omv,an energy giant, agreed to pay $5.8 billion for --take -- stake. i spoke to the ceo. >> the refinery possibility that is very important for us to balance our the exposure. we have grown a lot in

australia. development and our -- [indiscernible] have a strong downstream in italy. that is not enough. [indiscernible] the best and unique opportunity to grow our downstream capacity, creating flexibility, more efficiency. a lot of new licenses and abu dhabi. that completes of the value chain. ask and terms of this deal, the impact on your margins and breaking even? claudio descalzi: this deal is

really important to increase our margins. phase, we are at -- per barrel. 1.1 million barrels per day, i think our break even average, all of our sector will go to 1.4 million barrels. the low break even. capacity willsed be in the first phase of 35%. it is a really important one. relationship is growing. this relationship is becoming incredibly important. how much more capital are you committing to this region? capital,escalzi: more especially in australia because we put our equity. we talk about some $10 billion

of investment and restoration and producing assets. south case of -- that is because it is already producing, we have to invest clearly. we have to invest because we are increasing the capacity of 900,000 barrels per day to 1.1 million. future, maybe to 1.6 million barrels creating the biggest refinery in the world. manus: how quickly could you get to that level? : the firstcalzi phase to reach 1.1 million is 2022. the second is under -- we are

starting and then the company will make a decision. i don't know really the timing for 1.6 million. manus: did you think the release on dividend, what kind of dividend ambition do you hope to strike in terms of the payout? that wedescalzi: i hope can start taking a dividend from 2019, so that is very important. casereate a very strong with the flexibility and the improvement. with the improvement, we are going to create altogether, we are sure it will be interesting, interesting. payout?0% payout? 50%

never bank that was our thatsive with -- nejra: was our exclusive with claudio descalzi and abu dhabi. the trump administration said it plans to remove restrictions on an aluminum producer. shares is surging in hong kong. for war -- for more on what it means for aluminum prices, where joined by our reporter. this changes of the outlook for aluminum. does it put the focus back on china? >> it to does. that, one ofell the biggest stories, the threat of sanctions on a room sound, -- on roussau. there was a lot of fears people would not be together supplies.

a behind does. aluminum prices are falling a bit of this morning, they are trending downwards over the past few months anyway. this is a two-year low so this is the last sigh of relief in the market. shares are up 5%, something like over theit was down past year. it is back to looking at china and global supply balance and the geopolitical intrusions we have had over the past year. other major story where tracking, breaking headlines from brazil. the largest iron ore miner and the board is reconsidering what might happen with the dividend. this is another human tragedy, lives lost. tragedy and put it into the iron ore markets. it is having a significant

ripple effect, isn't it? : well, what we have seen so far this morning is on your futures in china, somewhat of a benchmark, as they have shot up. it will be something of short falling supplies, the biggest i and or miner in the work -- iron ore miner in the world. it operates in a fairly specialized part of the market. it is not huge in the grander scheme of things. reaction,ee initial the bigger topic is what happens and that executives have already said they might cancel the dividend and stop payments. that is inevitable when you see the size of the human catastrophe here. it has been the -- one of the issues ining related

the past 20 years. nejra: thank you so much. martin ritchie from shanghai. peter churchwell is still -- peter chatwell is still with us. you heard of the conversations around commodities. link it to china and tell us whether we will have an uptick in inflation going forward. peter chatwell: it is difficult to see an driven by commodity prices and energy and import prices. i will give you an example, if i look at u.s. headline inflation. there is still negative for base effects that will be feeding through. at the data coming through, it is difficult to see a headline year-over-year rate will be rising because it will be on the downside for the next

five months or so. means even ifit commodity prices managed to offset some of the turbulent and it does manage to sustain a rally, there will be a concern it managing policy unless really does become an extraordinary rally. i think a small rally will not to be an increase in inflation expectations. manus: we have touched on inflation and a variety of ways. last week, japan. on 2 -- japan and europe. this chart does not make for good reading. what is the risk? does jgb go negative? so big of bond markets we

perhaps have not touched on. peter chatwell: a good question. the 10-year points will struggle to go lower. one will struggle to going to negative territory because of policymaking decisions, the 10-year points. what we can have happen is the curve in europe and japan can get significantly flatter because of the downside risk to inflation. that is really important. it is a downside risk over the medium term. that is something that you can substitute after the curve. what is the risk premium from inflation? i think the curve which will flatten the much on the long end is jgb at that will have ramifications for all the other major developed curves. stays withr chatwell us. lendg up, tge k -- in the

er, is it enough to turn around germany? this is bloomberg. ♪

manus: breaking news, trying to do their rail. a decision from the commission is expected february 18. the remedies. probably going to be an 11th hour deal off some package to preserve the economic value. there is no certainty. it goes back to last week. example, one person said she was open to a new proposal but it would have to be very blunt

or sizable. what are the remedies they will offer in terms of all sales? that is what we have to ask ourselves. we will know on february 18. more remedies to come. how markets looking? neighbor banged a big, big week. trade talks and the fed. -- nejra: a big, big week. we are down on the features, three days of gains for the s&p 500. it looks softer today. the futures are down. let us talk about one of the stories dominating the weekend. deutsche bank is said to have secured a commitment for thetional investment from german lender is looking to bolster finances after shares went down almost 50%.

then investment bank to -- banker is likely to be done through the qti. to spend a dollar or 2 pretty any indication of size or the timing of this deal? good to see you. >> what we have is a they made the commitment. there's nothing on timing the yet. it will probably be a large deal. former prime the minister, very large shareholders and deutsche bank. the assumption is that they are going to step in the second with a big check. nejra: great to have you with us. is it a great of confidence in deutsche bank? mohammed sergie: i think it's probably a partial vote of confidence -- confidence and qatar'spotter's --

appetite to do these quick deals that would prop up. they did it through the financial crisis with barclays. are trying to make a connection with germany and deepen that relationship. they've committed on about 10 billion euros in investment and germany. if they wanted is the best political bank for their buck, getting deutsche bank propped up probably the best thing. they have a deep pockets. how quickly could visit deal come to fruition? is amed sergie: i think it matter of was they agree on the size and the price. this can go very, very fast. qatar has shown in the past, they invested in ross net in the past, it happened overnight coming essentially, 420% on one of the largest oil companies in the world.

manus: i love the line and that they injected 10 billion euros in germany over the next five years. we will see what kind of deal comes to beer. a good story. our middle east editor, mohammed sergie, on the legs. academics ares said to go on full display. numbers are selected to show a recession and a further decline in confidence for the euro area. days after mario draghi acknowledged the negative outlook said at the risks have "moved to the downside peeping -- downside." is still with us. i want to ask you about italy. one of the big issues with the ecb. if you are expecting it to be in a extension, bcp is what you buy? : absolutely.l

if you think about it italian zero, even if it is a though rate, it demands of the entire curve is a carriage rate, it is something that traded at positive. alternatively, if it means the banks will extend more credit into the real economy, they should boost the italian economic data. asymmetric positive for the curve we would expect. performing very well and there is room for more performance. we talked about it briefly. you said perhaps ecb would be one of the bulwarks. and brevity terms, what is your outlook for bonds? is going toll: it be very secure in very well supported. the only scenario which sees

goes rising is if the ecb toward more for technical rate hike to remove the problem for bikes of net interest rate, negative interest rates. it looks to be something that the market prices. that is the point where the yield moves.y the biggest move will be the front end, the german two-year. we think it could be rising two -10 basis points while the bond only moves a few basis points. nejra: it is still along with your flattening trend. thank you. great to have, you with us. peter will continue the conversation with us on bloomberg radio at 7:30 a.m. european time. it is fed week. a new era of press conferences after every meeting. can he balance the markets with

strength? manus: what will they talk about? you can use all the charts of that nejra and i use. ♪

manus: good morning from dubai. this is "bloomberg daybreak: europe." nejra: these are today's top stories. a pivotal week for markets. the u.s. and china on trade talks in washington. interpreting if they have made real progress. that is the challenge. spotlight.he jerome powell gets a fresh chance of to communicate to the --kets in a press briefing wednesday. mario draghi addresses the european parliament today. crude halts its gains. -- $53 a barrel.

ceo tells bloomberg they want to reduce the industry's -- >> we are going to reduce by 50% the carbon emissions. as we go forward. net zero by 2050. with the technology coming, the progress we have made, that is very doable. it is in line with what our customers are talking about. we will do it ourselves and we will help our customers. nejra: good morning, everyone. we are under an hour away from the start of cash equity trading. we could see a weaker day after gains in the stoxx 600 last week. we eked out a weekly gain for european equities. inimilar thing we are seeing

u.s. futures, even though we did end the week higher on corporate earnings and the end for the shutdown giving a lift to u.s. equities. we have been heading for the first weekly drop in five. it looks like risk sentiment is on back foot when you look at equity markers. there is so much going on it is hard to see real direction arrows right now. not least in the bond markets. you have trade talks, the fed, and a slew of corporate earnings as well. question is, 40% the s&p 500 earnings are outside of america. the bond market quarterly statement will be the key statement. that gives us a little bit of indigestion in terms of how much supply will come to the market by u.s. government. a trillion dollars being thrown around in terms of the needs of the government. you are looking at big supply.

total supply, $113 billion in the u.s.. it almost does not matter. it depends on what powell has to say on wednesday night after the fomc. will there be a shift? a tilt, a reaffirmation of patients? the there be anything in after news conference? bunds better bid and we will keep an eye on btp's at a near six-month low. let's get to juliette saly in singapore. she has your market rep from asia. -- wrap from asia. in theseof ifs markets. we are starting to see weakness coming through. the nikkei closed higher by 0.6%. china closing out fairly flat.

we did see momentum in ship stocks. that sent the taiex higher above that 10,000 point level for the first time since early december. australia out of action for public holiday. we had this injection of funds from the pboc. $37 billion interbank lending. in terms of the currency, the yen has been on the front foot, up by 0.2% against the dollar. 109.33. we saw that stimulus from china boosting the chinese currency by around 0.2% and also boosting the aussie. equity markets out of action in australia but the aussie has been one of the front runners in terms of g10 currencies, up by 0.1%. all eyez on me washington ahead of those trade talks -- all eyes on washington ahead of those trade talks. are asking the question on mliv, what benefits most from the end of the shutdown in terms of assets?

ont to us, ib+tv your bloomberg. let's get a bloomberg first news. the u.s. has lifted sanctions on three companies tied to oleg deripaska. the treasury department is , all therestrictions restrictions on deripaska but remain enforced. democrats tried to block the move questioning the admin's rations motive. federal agencies are reopening after president trump signed a stopgap funding measure. the president tells the wall street journal he doubts a deal can be struck, saying the chances less than 50-50. said trump was prepared to close the government again if he had congressional

leaders were unable to reach an agreement. a sizable shows majority of americans think the u.s. is heading the wrong direction. according to the survey, only 20% but the country was on the right track. thought the country was on the right track. the poll was taken before the end of the shutdown. minutes --t told 60 howard schultz told 60 minutes he is considering running for president. >> not only the fact this president is not qualified to be president, but the fact that both parties are consistently not doing what is necessary on behalf of the american people and are engaged every single day in revenge politics. >> theresa may is said to have told the cabinet she will rule out a note yield brexit. the sun reports ministers have been informed may does not want

to make it public, as that would affect negotiations with brussels. parliament is preparing to vote on amendment this week with some measures to delay the deadline. australia has joined the u.s., israel, and several latin american countries in representing the leader of venezuela's national assembly as the country's interim president. this comes as the eu toughens its stance against maduro. u.k. saying germany and france him if to recognize elections are not cold in the next week. novak djokovic beat prof and the afal to win his -- beat r title.o win his 15th earlier, naomi alaska won.

she became the first -- 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. manus: great to have you with us. a new member to the team. let's focus on the fed. we are going to hear from the federal reserve chairman as he holds a news conference on wednesdays fomc decision. no changes expected in the fed strategy. rates also forecasting -- forecast remains unchanged. the global market strategist at j.p. morgan asset management, great to have you with us this morning. i take you to the line from j.p. morgan. j.p. morgan says equities and credit are still -- still have

not priced in a fed pivot point. have you priced in the pivot? >> i think the bond markets clearly priced in the fact the fed are not going to hike rates again this year. to me, that was a risk. this week orpause in march. i think the chance of them putting rates up at some point is higher than the markets pricing. i would not be surprised if we see one or two rate rises come through this year. the big upside surprise for risk assets would be if you see something from the fed on the balance sheet where they to actually slow the pace of the reduction in the balance sheet. that would be a significant positive for equity markets. on the other hand, the market is too dovish in terms of pricing out any fed rate hikes this year. the rally we have seen since the end of december, that has been

largely on the back of this more dovish fed. does that make you comfortable with the fact you have been reducing risk since the summer and comfortable with the fact that you have a rally at the start of this year? >> since the summer we took risk down from an overweight position close to neutral. we have not been underway equities significantly. the rally we have seen recently, obviously, could have been more overweight there. i think we are not really tempted to chase that rally we have seen since december on the view that we had the dovishness from the fed. it would be hard absent them doing some thing significant in terms of slowing down their balance sheet reduction. it could happen. it is an upside risk. combined with the fact you could get some resolution on trade.

it is quite possible they continue to reduce the balance sheet at this pace they are doing at the moment and that they could hike at least one, possibly twice this year. that's not in the market now. that would be hawkish relative to market pricing. it is by no means guaranteed you're going to get a trade deal . the risks justify a more neutral position. manus: you have pricked my consciousness into the yield curve. seeing quite a significant repricing in the curve. we have seen steepen. daesh seen it steepen. -- we have seen it steepen. ultimately, the way we are viewing the world is that we are late in the economic cycle in the u.s. and we are seeing a slowdown in growth across the world. you are seeing a slowdown in

europe quite materially in the u.s. appears to be slowing. we know the u.s. is going to slow, but also the business surveys have been rolling over. against that backdrop, the medium-term risk over the next couple of years of a more significant down turning growth are rising. against that backdrop, it is quite possible you see the yield curve invert at some point and then obviously steepen as the markets start to price cuts in interest rates at some point in the next couple years. >> what about earnings expectations? are they to negative? what kind of reaction could you see? that is one of your upside risks. >> i do not think they are two negative. ultimately what companies have done is gone from earnings expectations that were double-digit over the next 12 months now down to a single digit growth number.

i think the risk, when you look at the global growth backdrop is there could be further downward revisions ahead. 7%we deliver something like earnings growth, broadly what has been -- for earnings, that is an upside risk and one of the reasons we would not want to be underway or be shorting equities in a big way. on the other hand, if growth continues to slow, that kind of high single digit earnings growth number looks too high and there is further downside risk. i think downside risks are slightly more elevated now than the upside risk. manus: might they present themselves in faang? you have alibaba, you have microsoft, you have a number of big tech companies reporting this week. could we get a faang price? >> the way we are thinking about

this, not just purely faang, but growth versus value. clearly if you look at most faang names, they are the big growth stocks. you have seen since 2007 this phenomenal rally in growth stocks and since october, value ,as broadly reasserted itself although not in a really straight-line. our view is the value you have seen since october could have further to run. if we are right we are in the late stage of the economic cycle and over the next couple years the risks are more significant for economic downturn, what you tend to see his value stocks outperformed during an economic downturn. the obvious exception was the last downturn. we think that was because that was a financial crisis. a lot of banks in the value index. now we look at the banking sector. it's got double the capital it had into thousand seven.

-- it had in 2007. nejra: mike bell, global market strategist at j.p. morgan stays with us. coming up, making the business case for reducing carbon emissions. ♪

manus: let's give you a quick snapshot of how these markets are doing. 41 minutes until the start of the trading day. markets are moving. we have a little bit of tepid caution. the nikkei down by 0.6%.

stronger brent. rigs are rising. global stock market capitalization has rally 10% since early december. we are on the march in equities. good morning. nejra: martin malone always looking for wins we are yet to get for these markets. alleman m drops. -- aluminum drops. the 10 year treasury yield is what you want to watch ahead of the fed. ftse futures lower along with other european futures. gains in the stoxx 600 last week. the world's third oil services provider plans to commit to net zero emissions by 2050. the ceo sat down with bloomberg to discuss how the company will cut carbon emissions. >> our technology we are introducing allows emissions to

come down. it is from a business perspective, you look at our lm 9000, some of our methane sensor technology, it's all around emissions. when you look at the customer discussion, our customers want us to move in this direction. we think it's right we do so. we all have a responsibility. from a business case and from customers, we are heading that direction. >> there are two parts to it. ge as a company is going to do this. the other is the equipment you are going to give to your customers. >> that is very true. you can look at it from a complete picture perspective. we are reducing the emissions bhc produces. if you look at 2012 to where we are today, we have already reduced by 26%. by 2030 we are going to reduce by 50% the carbon emissions.

as we go forward, net zero by 2050. with the technology that is coming, with the progress we have made, that is very doable. it is in line with what our customers are doing. we will do it ourselves, but what will also help our customers as they look at the total carbon footprint with the capabilities we are introducing with our inspection products, the measurements and sensors division. there is a lot of capability we provide. >> isn't going to cost you more to do that? >> no. >> how does that work? >> it comes from a business perspective. we have been enhancing our technology. you are also able to make equipment that is more carbon efficient. it really has to stand on its own. it is good for our shareholders. >> that was the baker hughes

ceo. let's get the business flash now. >> siemens has decided to offer fresh concessions to save their merger. the packages designed to allay eu concerns the buyout would hurt competition. the eu's top competition official has come under intense political pressure from france and germany to allow the deal to go through. and e andergy giant an oil and gas producer have agreed to pay $8 million for a valuing a refining unit the business at $19.3 billion. a unique opportunity to create flexibility, more efficiency. we won a lot of new

licenses. >> the world's largest iron ore minor says it's board have deliberated for spending the company's dividends. -- the board has set up committees to probe the disasters that struck friday at one of its operations. that is your bloomberg business flash. nejra: thank you so much. europe's economic weaknesses said to go on full display this week. the data is expected to show a recession and italy. manufacturing slump in germany and a further decline in the outlook for the euro area. this comes after the eu president -- the ecb president mario draghi acknowledged the outlook saying risks have moved to the downside. a global market strategist at

j.p. morgan stays with us. it is hard to see positive reasons to be invested in europe. the would agree with characterization of risk to the downside. struggling to be in positive territory. the risks, therefore, when you put that in the cycle perspective of being late cycle in the u.s. with a euro zone is struggling to grow, it suggests to me the risks for the euro zone are skewed to the downside. we would not be overweight european equities. story,in the german german stocks might not be the hottest place to be. it depends whether you think you are going to get a trade deal or not. on the cusp of a recession. an effusivehan image. how much of germany in the european portfolio do you want? >> we are not at the moment that

concerned on the regional differentiation within the euro zone. it is more about not being overweight euro zone equities as a whole. germany, there are several factors that have weighed on germany. the rhine was drying up, so you saw difficulty for producers to actually transport goods the way they normally would. you have seen auto production where the new orders for auto production look like they are bouncing. the emissions testing regime seems to have been a temporary factor there. there are temporary factors which could mean a lot of the bad data at the moment in the euro zone starts to improve. on the other hand, i would caution against being one of these economists who always looks for reasons why the headline data, which is telling you a negative story, is wrong and things are going to get better. are not quite as

bad as they seem, but there is a slowdown in growth going on. while therefore it does not matter to have big underway positions or short positions, the risks are skewed to the downside. things might not be as bad as the headline notice suggests. us, mikehave you with bell at j.p. morgan asset management. "the european open is up next. we have futures pointing lower although we did manage to eke out gains toward the end of last week. risk rally taking another pause, perhaps. manus: it is going to come down to the powell put. we will get a clearer idea about what is to come. bloomberg radio can take you through your journey to work. we are going to set up the trading week for you. let's send nejra out into the cold. we will see you again tomorrow

morning. more exclusive on bloomberg. ♪ ♪

anna: we are live from our european headquarters here in the city of london. i'm anna edwards alongside matt miller in berlin. matt: the markets say don't trust, just verify. chinese and japanese stocks fall with index futures. the cash trade starts in just 30 minutes time. anna: