nejra: good morning from london, i am nejra cehic. mrs. "bloomberg daybreak: europe -- this is "bloomberg daybreak: europe." bank suffers its eighth straight revenue contraction. we speak to the cfo in a few minutes. make or break budget, india's prime minister tries a last ditch attempt to woo voters.

good morning. welcome to "bloomberg daybreak: europe." let's get straight to the markets in asia. juliette saly has more for us. juliette: happy friday. pledging to double incomes by 2022. elsewhere, it is mixed in asia. we had disappointing numbers out of china, which has weighed into weakness. hong kong stocks tracking lower. china up by 1% despite disappointing data. let's look at the stocks we are watching, indian stocks in focus. jet airways on a tear today. it is getting close to the

agreement with -- this is a solution, the bailout plan. we have seen the revenue for the 2016 inme since july hong kong under pressure. australian private health operator, the board recommending a $4 billion bid. they could increase their bid. investors are liking that. you so much. looking at global equities, heading for their best month. u.s. futures are not interesting looking. lower afteres amazon drops after hours. the 10 year yield as we look ahead to jobs data. talks.set up for trade

saying we could see a rate cut from china as soon as today. that might come as a surprise to many. y are looking at a weaker uan. hours from cash trading in europe. fourth-quarter net outflows coming out at 7 billion euros. those are bigger outflows than expected. fourth-quarter adjusted revenue coming in missing the estimate. deutsche bank is the big story we need to get to. lines, revenue declining for an eighth straight quarter on lower trading. we were watching for the revenue number to post its first annual

profit in four years, meeting its goal. fourth-quarter net revenue, key euros, thatbillion is a significant miss on fourth-quarter net revenue. we have a 23% fixed income slump feeding into this. deutsche bank resolving 19 of its 20 most significant legal issues. costs, adjusted fourth-quarter costs, 5.4 2 billion euros. that is where we are in the cost picture. other questions will be around a merger, the implications from the scandal. if all else fails, deutsche bank could be looking at a merger

with commerzbank later this year. it is suffering its eighth straight revenue contraction. we are going to deutsche bank cfo who spoke with matt miller. >> the results were in line with expectations informed by the context as we has seen through our peers earnings reports that the industry faced in the fourth quarter. with that in line performance we were not able as we hoped to stabilize revenues on a relative basis. being down 2% year on year in light of the backdrop that was the industry backdrop, and credit stresses we faced, we thought it was reasonable performance. we continue to work on a stabilization and growth of our revenues. we think we built a lot in terms of foundational improvements that will carry over to 2019. matt: deutsche bank had specific

drop was theuch industry, and how much was deutsche bank specific? >> in terms of business, we are a leading rates and credit house. those areas were among the most affected in the market in the fourth quarter. the rate did impact our business in december. it is hard to measure how much, but clearly being in the headlines that way is unhelpful to client confidence. we have gone some ways to restore that and stabilizing as reflected in cds spreads and credit spreads, that is encouraging. there is more work to do to communicate the nature of these issues, and how we want to resolve them. matt: how much of the danske bank affects you, and how much will it cost this year? >> it is in the papers a lot so

it affects employee and client confidence around the name. we are seeking to put it behind us and by explaining our perspective of the facts, cooperating with all inquiries. as we have said in the public, as we look at the fact pattern and research, our engagement with the don's got estonia branch, we see deutsche bank acting responsibly, and we hope as the authorities go not see thatwill as we do. we have not incremented our legal reserves or contingent liability, the best reflection of our financial accounting view of the risks attached to these matters in the fourth quarter. that is intended to signal how we see the fact patterns and what are reviews tell us. byt: have you been contacted the commission in regards to a sovereign bond collusion probe? >> we have not. matt: you are not a bank the

european union is looking at. >> we have not been contacted by the commission. matt: cost cuts were better than inspected, you are raising it for 2019, is that difficult to do at the same time you are trying to boost revenue? >> that has been the markets concern, and why we went through the reshaping. notable strategic milestones in our asset management detail and our personal and commercial banking business in 2018. it was a year a year of tremendous transition and change in the organization just part of the foundation we feel optimistic about as it carries us into 2019. we have made enormous progress, and we feel confident about that. and completedaway the reshaping as it impacts our front office staff, as it impacts clients. we will continue to work to

drive efficiencies and our platform, that will be a multi-year effort. we think it is their we can bring a billion euros of additional savings to the bottom line in line with our gallery the -- our downwardly revised target. the private and commercial is the mix solid now, or are there areas you want to tweak? selling, weit is talk about growing stable businesses. we have excellent businesses representing half of our revenues. particularly private and commercial banking which grew strongly in germany particularly. also in our international franchise. and global transaction banking which has grown 5%.

we see momentum in those businesses. significant loan growth of over 20 billion euros. loan growth is the leading indicator for future revenues, and an indicator of the health of the franchise in those businesses. nejra: that was deutsche bank speaking ton moltke matt miller. we can go to matt now standing by to talk about that great interview. great to see you this morning, nice job on the interview. the big concern going into this was the revenues. how convincing was james von moltke on that side of the story. y? matt: he was very forthcoming on the revenue issues. there has been an issue with trading revenue falling. deutsche bank was not affected by that, and they're fixed incomes, currencies, and trading revenue fell 23%.

he said they had their own issues, the raids they experienced in the fourth quarter did not help. how muchnot quantify that hit revenue, but deutsche bank has its own issue to work through as well as industrywide issues, and he is optimistic that this year. cutting costs has been an issue as well. and you are cutting costs the way deutsche bank is, it is difficult to boost revenue at the same time.

he wanted to speak more about the results than the merger speculation. i asked him if he could rule out of merger this year. he did not do that previously previously they said they will not consider a merger until 2020 at the earliest. it looks like the pressure may be sooner for deutsche bank to , and proveh targets to investors they can go on their own. or start to consider a merger at the end of the first half. frankfurt, miller in thank you for that story. let's get to more news, we are deep into earnings season. billion from¥835

705 billion. boosting its net income there, beating the highest estimates. it says the full-year results ¥154 billion, by that is the headline on the bloomberg. ¥306 quarter coming in billion, a comfortable beat. it lowered its sales forecast on certain areas. quite a few lines coming through. let's get the first word news, debra mao in hong kong. china's contraction deepens, the pmi worst readout since 2016, the latest

indication the slowdown in the world's economy has a ways to go. it fell to the lowest reading in three years, and below the forecast. business confidence is at an eight month high, and export orders has risen above the 50 level back to expansion. to expandpromised purchases of u.s. goods after the latest rounds of trade talks in washington. both sides plan further discussions to reach a breakthrough. china says they made important progress, and president trump seems optimistic about a meeting with his chinese counterpart. there is one month before the trump administration is said to raise tariffs. president trump: we have to get this on paper if we agree. there are points we do not agree to yet, but i think we will. i think president xi and myself meet, every point will be agreed

to. china's holdings of treasuries have fallen to its lowest level in a year. dropped tond bills 1.2 trillion in november according to treasury department data. the u.s. is said to be withdrawing run a nuclear arms treaty with russia. president trump will and the ,acked with the soviet union the treaty has become a pillar of arms control. this represents another flashpoint in u.s.-russia relations, and another rejection of an international agreement by the trump white house. wooesa is setting out to members of the opposition labour party to get enough votes to get the brexit deal through parliament. ast year she managed

several votes, but she needs many more from labour. 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 so much. the breaking news, out in past few minutes, fourth-quarter net income coming in at one billion euros. that is in line, a slight miss on the estimate. the fourth quarter ratio fully 11.3% thats in at tells you they cut the price target yesterday. downside risks to the lenders dividends. fourth-quarter net income number is the key want to focus on.

coming up, china promises to substantially expand purchases of u.s. goods after the latest round of trade talks. can a deal be reached at the month ago before the trump administration is set to raise tariffs? this is bloomberg. ♪

nejra: let's get a check on the markets. they will keep talking, the u.s. and china. stepping seven days of gains today. the dollar is heading for its second week of losses. .il looking for direction in terms of how europe is set up, we are not seeing a lot of direction. we are heading for the best month in global equities in

almost seven years. s&p futures flat. amazon dropped in extended trading. the 10 year yield not getting us direction, but we are lower than where we were a year ago. let's get the bloomberg business flash from debra mao in hong kong. amazon shares have dropped in extended trading, the e-commerce giant gave a tepid outlook for business in india. fourth-quarter sales and earnings topped analyst estimates, but growth in a north american retail unit slowed dramatically in the holiday. y period. apple pulled development tools from google after the phone maker said the internet giant broke its rules. sources said employees at google -- apple reinstated the apps

hours later, a sign the tech giant is flexing its muscle of the most lucrative app store. deutsche bank suffered its eighth straight revenue contraction in the final months of last year, the fourth quarter was overshadowed i market gyrations, and images of the police rating its headquarters. couldy's biggest lender see a merger by the middle of the year if they cannot turn the bank around. james von moltke is not ruling out a merger. >> we have talked, and there is talk in the sector overall that over time mergers, consolidation in the european banking sector would be sensible for a variety of reasons. agree with that, what form it takes and how long it takes to do is kind of anybody's guess at this point. debra: that is your bloomberg business flash. sora: debra mao, thank you

much. trade optimism, president trump says a deal could be reached, raising the possibility of a meeting with president xi jinping. beijing agreed to buy more will sendwashington its top trade officials for the next talks. christophe donay, head of asset allocation & macroeconomic research, banque pictet & cle joins me now. thank you for joining us. we are talking about the market referring to january and hurtling toward the march 1 deadline for trade talks. for the markets, do investors need to hear there will be concrete enforcement rather than a deal of words? steptophe: it is a two process, the first is to be engaged in positive momentum. around theomething

first of march, or potentially the second step could extend in order to conclude an agreement. what is important for markets is to have a deadline that everyone newso respect, and good regarding tensions between the u.s. and china. in order for markets to be reassuring at the global level. the u.s. dynamics on one hand and chinese dynamics on the other. impactould be a negative on the dynamics of the countries. nejra: let's talk about the economic dynamics of china. we get more worrying pmi data today, and barclays economist who called the 2014 move for china's benchmark rate said we

could get a cut as soon as today read the chart i have shows the divergence between the pboc and boj key rates, you can see that gap. is china due a cut in the benchmark rate? christophe: it is a possibility. at,ever country you look the u.s. or china, we need growth to generate. and some banks can be used to cut interest rates, or the pboc is something highly likely. that can inject liquidity. two weeks ago the pboc decided to inject perpetual bonds, which is another channel to stimulate

growth. we need growth to preserve the economy. country, theor any u.s. on one hand or china. nejra: hundreds of chinese .ompanies warning on profits we'd you be buying chinese equities now? christophe: yes, we are definitely more optimistic regarding emerging markets in asia and within asia, india, and china. authorities are active to stimulate economic growth. nejra: buying china on expectations of stimulus and valuation. christophe donay, head of asset allocation & macroeconomic research, banque pictet & cle stays with us.

concerns on rising cost slowing retail growth for amazon, and murky look on the growth in india. this is bloomberg. ♪ the latest innovation from xfinity

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month for global equities in almost seven years. how are we starting february? and trade talks in china, the msci asia index is a little lower. let's get a check on the markets with annmarie hordern. how are we kicking off february? chinese equities are higher, the msci index is a mixed picture across the region. 1%,ld be trading more than trump says they are making

progress but there will be no definitive deal until he sees his counterpart president xi jinping. the dollar against the yuan comes ahead of the chinese new year, year of the pig. the manufacturing index today shows a deterioration in the economy could bring a cut in rates as soon as today. nasdaq futures dropping lower as amazon had a lukewarm sales forecast. they are showing rising costs, slowing retail growth, and a murky outlook in india. oil, wti had its best january on weord, its best month since have been collecting this data. this spread of trade in the oil markets very popular. december 2019 contrast to december 2020, right now it is up more than a dollar a barrel to the plus side. a significant trend

in the oil market. nejra: thank you so much. let's get headlines from deutsche bank. we heard from the ceo who told matt miller that they are in control of its destiny. now we get headlines from the net is nowhere near where we wanted to be, and we can increase revenue by a different approach. it would be instant to know what approach that would be. fourth quarter revenue missing, a 23% drop in income trading. headlines, referring to a different approach to the onuidity, and we will build pbc revenue growth. no wrongdoing indications on dansk e bank.

quite a few headlines drum deutsche bank. we also have a news from novo nordisk. pretty much meeting estimates for novo nordisk, that is the headline on the bloomberg. other numbers, a new share buyback of 15 billion danish krona. up 2% to 5%. coming up, the ceo of novo nordisk with the first conversation of the day at 8:00 a.m. london time. now debra mao from hong kong. ebra: china's contraction deepens, pmi had its worst read out since 2016, and the latest

indication that the slowdown in the world's second-biggest economy has a ways to go. it fell to the lowest reading in nearly three years, and well below the forecast of 49.6. ansumer confidence is at high. promised to substantially expand purchase of u.s. goods after the latest trade talks in washington. both sides plan further discussions to reach a breakthrough. have made they important progress, and president trump seems optimistic about a meeting with his chinese counterpart. there is one month to go before the trump administration is set to raise tariffs. president trump: we have to get at some pointper if we agree. there are points we do not agree to yet, but i think we will agree. when president xi and myself meet, every point will be agreed to.

bra: the u.s. is said to be withdrawing from a nuclear arms treaty with russia. president trump will suspend a 1987 packed with the former soviet union as it prepares to pull out entirely. the treaty has been a pillar of international arms control. it represents another flashpoint in u.s.-russia relations. india's budget has been announced. these plans are seen as a last attempt to win voters. india missed a deficit target for a second consecutive year, but economic growth has been positive. india has overtaken france to become the world's sixth largest economy, and is set to replace the u.k. in the fifth spot. trump is considering herman cain for a seat on the federal reserve board. ran for thee

presidential nomination in 2012. two seats are vacant, but nominating came raises the prospect of a grueling senate confirmation. accusations of sexual harassment the end of his presidential campaign. 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 so much. let's talk about amazon shares after a tepid first-quarter sales forecast. .elow analyst forecasts amazon raise concerns about rising costs, slowing retail growth, and a murky outlook for business in india. that's get the latest from our tech reporter in hong kong. investors were not happy with all the news from amazon.

what is the biggest concern? was it where did all the growth go? >> that is exactly right. the last quarter was not so bad. it was the warning for the quarter coming up, and people are starting to wonder where is this revenue growth amazon has famously had. that is the reason why people buy into amazon, regardless of the profits, quarter after quarter they post high revenue growth. this is not the first time they have warned that the stock has gone down, amazon in the past has warned, our revenue may not behind this quarter. they have lumpy quarters from time to time. of the cloudms services, the holiday sales were elements. those is this the silver lining we can take away from the bad news

including the warning about business in india? >> yes, i think that is right, they are morphing into a different business, it is no longer about retail sales. they are becoming part of the business as they shift into a more mature company. if you think about where amazon has come from, it used to be just a retailer but that is no longer the case. tech: bloomberg's reporter, thank you so much. let's turn to the fed, the dovish pivot is supercharging markets, but is a threat, corporate credit is overrun with low grade debt. dani burger, what are you looking at? dani: credit quality quickly deteriorating. grade credit,ment the market share of the lowest

rated triple be credit is surpassed that of the counterpart. this happened just this year. bad debt, and that switch happens as the fed comes in and give it dovish pivot, and we can see that affect on trading in markets for the past six months we get widening spreads with investors paying attention to this issue with the worsening credit. the fed comes out and says they will be patient. we get a tightening and for 10 straight sessions we see credit tightening. tightenedime but it's like that u.s. stocks were at an all-time high. there is a mismatch here. it will be more important for u.s. stocks as it goes on, half of u.s. stocks have high-grade credit. 20 years ago about 90% had high-grade. u.s. markets not caring too much. this is the goldman sachs week

in january it bounced back from a poor december, beating 12%, the benchmark gained 8%. that is their best performance since back here. this weakening economic picture we are starting to see, that data will get investors to care, and we may see this reverse in credit and equities. great charts, thank you so much. christophe donay, head of asset allocation & macroeconomic research, banque pictet & cle is still with us. i was asking yesterday whether the fed turning dovish would encourage risk-taking in the market and further fuel imbalances in the market. we have this rally in january bonds, even, and in ahead of this dovish decision. it feels like powell has been following the markets, and questions have arisen whether he has over delivered.

has he? christophe: i think [indiscernible] thes important to preserve market channel. when the fed decided the qe, the effect for have the economy growth first. i suspect this achieved some way around policy. chineseid for the the same story in the u.s., we need quick growth. to achieve it, the fed is targeting two things. , and the ideats

is to limit the widening spread in markets. the second thing is the liquidity injection, as much as needed in order to stimulate credit growth. we need credit growth to finance different segments within economies. this is why the fed is dovish, nejra: is it done with the hiking cycle? christophe: i think it is done. the contraction was a target of the federal reserve to contract the balance sheet by $400 billion per year over the next few years, and probably the fed

will make a pose on balance sheet contraction as well -- a pause on balance sheet contractions. nejra: what does that mean for how you allocate u.s. assets? christophe: u.s. assets, we , monetaryuidity policy turning dovish, these are the possibilities we have. to play equities versus bonds, including credit. .e prefer equities careful about the rise in stock prices. , theasdaq is close to 9% s&p close to 6%. remember, on the other hand, regarding negative forces, we have a negative earnings momentum.

a lot is being downgraded. probably we will be 5%, which is negative forces. we have two forces in opposition. the positive one is the trade war truce. nejra: the positive outweighs the negative for you at the moment. christophe donay, head of asset allocation & macroeconomic research, banque pictet & cle stays with us. india will reach its deficit target for the second straight year. we will bring you the latest, next. this is bloomberg. ♪

nejra: let's check in on price

action. stocks in asia mixed with chinese equities climbing after progress made in trade talks between china and the u.s.. they will keep talking. nasdaq futures dropping after amazon disappointed with sales forecasts and concerns about rising costs. -- india's new budget deficit target, let's get more on the indian story. the country will reach its deficit target for a second straight year. prime minister modi trying to woo voters before the election with more spending. india is solidly back on track. and marching to growth and prosperity. we have prepared the foundation for sustainable growth, and better quality of life. nejra: that was finance

minister, let's get the latest. us, ito have you with has been a busy day for you. in terms of reaction in the markets, it looks like it is not as bad as expected on the deficit target. >> you are absolutely right. the 3.4% is what the government will tell us. had put it at 3.5% on gdp, the fiscal deficit. when it was reported 3.4%, the bond markets rallied. there are other issues the market will look at, how will the math workout. there are other things the market is waiting for. nejra: give us details from the budget other than the top line. apart from the fiscal deficit , the finance minister announced

a small loan for farmers, what the markets will be interested in is how they will get that money. will they assume subsidies already given to farmers, or what? the details, we will have to watch out for that. that is one thing the finance minister has announced. if you see stocks off of focus companies, they have started reacting to that. nejra: more broadly, what does this mean for growth and the economy? the finance minister sounded up eight, is he right to be? he is expecting india to be a $5 trillion economy in five years with the projects they are coming out with. the government has been working on a lot of dole outs for the

poor, it is an election year. investors do not have much confidence in the numbers especially after a lot of things have happened over the last 24 hours. , ford the data ministry the year government banned all caps, that had been thinking how did that happen. then the joblessness, data showed there was a leak that unemployment is at a 45 year high. growthot know if the will be as high as the government expects, let's see what the budget comes up with. asia managing editor, thank you so much. it you can follow all the action on that budget on the tliv blog

on the bloomberg. today, we are asking the question, will india's budget be the catalyst for its underperforming assets to catch up with asia? join the debate, reach out to us, christophe donay, head of asset allocation & macroeconomic research, banque pictet & cle is still with us. will the budget be the catalyst to catch up with asia? story.phe: yes, the same china, the u.s., and now india. you can make a remarkable point, which is economic forces are back everywhere including in india. they have an ambitious program to come back in a prosperity period with growth as prime minister said a few minutes ago. this is the same story everywhere. the idea is to make economic

growth sustainable, and then be above potential economic growth. this economic growth is around 5%, and the target is slightly above 5%. strong positive signal for the markets. policies -- are these policies going to lead to sustainable economic growth globally, when it is largely coming from central bank stimulus rather than the fiscal side? christophe: it depends on the countries, in europe you can consider there is not so much way to work through the policy because public debt to gdp ratio already. you have constraints. in the u.s. you have other

constraints. emerginglook at countries, the story is different because in china you have a lot of leeway. we stand at 40%, in china and waya they have a lot of the the fiscal policies to stimulate the economy. nejra: it sounds like you have a high conviction on global emerging markets. where would you want to make your money work in emergency ing markets? christophe: we like to play two things, the first is weakening that can be favorable to emerging bonds. we like to play emerging sovereign bonds in local

currencies first. the second thing is to play the global economic stimulus. we like to play emerging equities. nejra: the chart i have up now shows the dollar breaking lower. along see that dropping with treasury yields in 2019? christophe: not necessarily. we expect long-term interest rates, we are at 2.7, our official target is slightly above 3%. long-term interest rates will stable in the u.s. nejra: are you expecting inflationary pressures, and how? christophe: this is the risk we have on u.s. treasuries. up,use growth is picking nothing concerning for the time being, we will be concerned

around 3.5% to 4%. this is a risk. to the fed,me back the fact that jerome powell did, you can argue capitulate to markets, and you say inflationary pressures are there, is he setting us up for more volatility later in the year when we could get an unexpected hike? christophe: if we have inflation, this is a clear allation to look at closely around the year because the fed the fed could appear behind the curve which is a worse situation for markets. we are in a fragile and volatile situation. nejra: christophe donay, head of asset allocation & macroeconomic research, banque pictet & cle, so great to have you with us.

coming up we speak to the ceo of merck. 1:30 p.m. london time. this is bloomberg. ♪

nejra: good morning from bloomberg's european headquarters. this is "bloomberg daybreak: europe." . china promises to substantially expand purchases of u.s. goods, but can a deal be reached before the trump administration is set to ratchet up tariffs? deutsche bank missus. the german lender suffered a retraction. were not able to stabilize revenues on a relative basis. being down 2% year on year in light of the backdrop, the industries backdrop and some of the stresses we have faced, we thought was reasonable.

>> make or break budget. india's prime minister in a large attempt to woo voters. a fiscal deficit at 3.4% of gdp by next year. good morning, everyone. we are just under an hour from the start of cash equity trading in europe. month fors the best global equities and more than seven years. the s&p 500 closed higher. the stoxx 600 closed flat. s&p futures not doing a lot. nasdaq futures you want to keep an eye on. europe.to we could start with muted gains. futures up 0.2%. dax futures higher by 0.1%. cac futures unchanged.

a question of how much more of a pebble put we could get -- powell put we could get. has the market price a lot of it in already? does that mean there is not going to be upward momentum, particularly if we don't get anything concrete on trade talks? moment isent at the to keep on talking. we have been seeing a weaker yuan. the context is a 10 year treasury yield is lower in the past couple weeks we have also been seeing the dollar headed for a second week of losses. let's take a look at the bond market. the 10 year treasury yield flat today. lower than where it was a year ago. --terms of europe, the bond bund yield -- we could see a bit widening.d spread

saying no buyback program will be initiated in 2019. the bank's dividend policy is unchanged. it sees 2019 net income at 14 billion to 16 billion danish krone. at fourth quarter comes in 5.9 billion danish krone. a slight beat on the estimate. quarter netth income or fourth-quarter net income comes in at 2.4 2 billion danish krone. that is a beat. the things in focus going into this were aside from danske bank's efforts to cope with the money laundering scandal, margin pressure and guidance regarding and higherconomy

short-term rates. it has lost half its value in the last year and missed out on the recovery in bancshares. danske bank saying the estonia case impacted customer numbers, but the top lines here, no buyback program initiated in 2019. fourth-quarter net income comes in at a beat. the full-year net income comes in at a beat as well. let's check on the markets in asia. juliette saly has more. we are starting the month with a little bit of a mixed picture here. it certainly is. january was the best month for asian stocks since march 2016. china closing out ahead of the lunar new year holiday. on a positive note, not surprising you are seeing money ahead of that holiday. up by 1.4% on the close after a choppy session. hong kong not looking as good. a bit of a miss with macau

monthly revenue for the previous month. also watching india. it has been a very farmer friendly budget from the modi government trying to learn both to head of the crucial election. japan close lower. let's have a look at currency moves. we had the tatian manufacturing index weaker than expected. that has weighed on the aussie and the yuan, particularly as sue's trade talks -- as these trade talks where on. you have the yuan down by 0.7%. the aussie also losing ground. rupee, which is up very1% as we get that farmer friendly budget. it seems they are going to blow out there budget deficit for a second year in favor of spending. nejra: thank you so much.

today we are asking the question on mliv, as the development come through on budget day, will india's budget be the catalyst for its underperforming assets to catch up with asia? you can reach out to us, ib+tv under bloomberg. certainly the market reaction today so far has been positive. let's get the blumberg first word news with debra mao. >> china has promised to expand purchases of u.s. goods after the latest round of trade talks in washington. both sides want discussions to reach a breakthrough. china says the sides have made important progress. president trump seems optimistic about a meeting with his chinese counterpart. there is one month to go before the trumpet ministry should is set to ratchet up tariffs. administration he is set to ratchet up tariffs. >> i think we will agree.

, everynt xi and myself point will be agreed to. >> india's budget has been announced. planes are seen as a last-ditch attempt to win voters. india has missed its deficit target for a second consecutive year. economic growth has been positive. india has overtaken france to become the world's sixth largest economy. it is on course to replace the u.k.. venezuelan opposition leader one quite so is said to announce -- juan guaido is set to announce -- do says a police squad visited his home after the authoritarian regime restricted his travel. the commander denied the visit took place.

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. nejra: thank you so much. markets are hinting at a muted start. the dollar tracks higher. the fed's dovish boost is taking a backseat to the earnings and data. evidence the face world economy is cooling. joining us now is david page, senior economist for the u.s. and you so. -- at mac so. fact theking about the markets had already replaced before we got to that dovish statement from powell. i want to talk about the curve because it steepened on the press conference. we are seeing it flattened again. we are on the 16 basis point handle. the 10 year treasury yield, the

longer end, is that reflecting a dovish fed is not going to save the u.s. economy? >> i'm not sure it is. the 10 year mark is struggling to see what the direction of the fed is. 10 year yields have typically dropped out around where the fed funds rate tops out. they try to anticipate. the fed was signaling it was going to be taking a little bit above three. that's why markets were hanging around. we have a much more ambiguous outlook. jay powell saying -- some discussing cuts. the markets are drifting a little bit lower. the current high as around 250. some thing of a nominal anchor. see hopefully a little bit of optimism come back. a little bit of risk assets recovering, trade talks should help a pickup in eurozone growth. all these crosscurrents. prospects of fed

tightening could rise again. we would expect to see yields rise further. for now, markets are struggling with this uncertainty. nejra: at what point could we see that tightening? do you expect the next move from the fed to be a hike rather than a cut or some tinkering around the balance sheet? >> we think the next rate move is still going to be a hike. that could come as early as june, even though the fed is suggesting patience. we think six months is a long time in this market. at the same time, there is going to be tinkering. powell's the wake of autopilot sentiment of the balance sheet in december, we have seen the fed uncertain about its approach. they have distantly ruled that active policy, but wondering whether the quantitative tightening is to aggressive. now they have made the decision

on the long-term monetary operation stance, they're going to have abundant reserves. thinking about the pace of this balance sheet. i think we are going to see an announcement on that. that will soften the pace of balance sheet. they will see how markets move. there any justification for the fed to resume hiking based on inflation expectations? >> we think there will be. i think that is the key. what was reflected in the statement was the fact market rates mentioned inflation expectations have softened. if you look at the 10 year expectations they have started to pick up again. they were at 2.4. the latest estimate has picked up 2.6. growth oforecast 2.2%. we are below the bloomberg consensus 2.5%. 2.2% growth this above trend.

it will still rage ways growth -- it will still raise wage growth. rise.costs are going to domestic inflationary pressures still the same. that is what the fed has to consider. oil prices are going to leave headline inflation softer. the rest of the economic complex does not look compelling, the fed could sit out most of this year. nejra: we have got to talk about the u.s.-china trade talks and whether we are going to get any sort of deal by march 1. you have been very smart trying to gauge where this goes from here. it seems as if what investors really need by march 1 could be more than just simply, we are going to keep talking, or something to do with buying more goods on either side. there is a bigger structural issue to do with tech. >> there is.

i think markets just want to see tariffs off the table. it may not be that by march we have a complete deal that allows us to do that. i think markets would breathe a big sigh of relief at some point if they agreed the first of march was not the time to increase tariffs. whether we will get that is anybody's guess. what we hear at the moment is very constructive. trade talks a few weeks ago look like they went well. they lasted longer than expected. have got the vice premier in washington now. the mood music seems relatively good. we have learned from watching trump this can change very quickly. for now we have remained relatively optimistic. we think there is a possibility of these tariffs not rising on the first of march. it does remain highly uncertain. stays david page from axa

with us. let's recap headlines from deutsche bank. we got the numbers, the revenue was very much in focus. we have a miss on the fourth-quarter revenue. the ceo saying deutsche bank is now moving to controlled growth, setting also saying they are well advanced in the internal reviews of danske bank and panama and they have not found evidence of wrongdoing. sewinge bank, the ceo saying danske bank panama paper reviews have advanced. the big focus has been that revenue number. we saw that drop in fixed income trading by about 23%. that hurting the revenue, the slump deepening for deutsche

bank. coming up on bloomberg, we speak to the ceo of -- domestic first interview of the day. ♪

nejra: 7:18 a.m. in london. 40 minutes away from the start of cash equity trading. let's get more on the glencore earnings. >> i'm looking at their full-year production results. this is glencore, one of the biggest trading houses, biggest chipper of cobalt, of coal, and what is interesting is coal specifically. their production was higher. 54% higher. of theirsaying in one subsidiaries in the congo, there cobalt production is being stockpiled on site.

transactions of getting uranium out of this cobalt. this morning, they were notified by the government the project they are using, this ion exchange to get the every -- the uranium out of the cobalt is put on hold. this could affect shipping. skyrocketing last year, used in things like electric cars and mobile phones. as we are seeing a slowdown for need and china, those prices have come down. the ceo was saying there could be too much cobalt in the market. interesting to see how much they are stockpiling. nejra: thank you so much. let's stick with earnings. we have seen a mixed bag on corporate earnings. one thing has been china. is the slowdown to blame for week earnings? industry bellwether caterpillars

in the gloomy single monday -- signal monday. a worrisome development. apple shook investors with a warning on china sales, which fell in the holiday quarter. consumers in the world's second-largest economy lost appetite for watches. johnny walker paints a rosier picture. the hype is real. the ceo of phillips told bloomberg it is growing in the double digits for health care and toothbrushes. let's take a look at how what -- wall street digested the news. ultimately rallied as investors saw the move away from the high-priced iphone as a good thing. it was a different story for swatch. the watchmaker plunged. a positive week for lvmh. phillips looks to be ending the week higher on its share buyback announcement.

here is a look at what you should be watching. at 9:00 a.m. we get pmi for the euro area this comes after gdp data showed italy had fallen into a recession. will the data proved to be another headache for the ecb? look for help brexit uncertainty is impacting sentiment as we move closer to the u.k.'s exit from the eu. jobs data from the u.s. hitting another high for another record of gains. could the shut down spoil the party? let's focus on the economic outlook for europe. let's get david -- david page from axa. given the data we have seen in europe, is the ecb likely to back draft on its withdrawal? >> it is difficult for the ecb. the ecb stimulus has never really been about the strength of the economy.

have seen good expansion in 2017. the inflation output -- outlook has remained positive. they closed qe not because they thought they were meeting there their inflation target, but they are running out of things to buy. we wonder whether negative rates does more harm than good to some financial institutions. even though we are seeing in economy that looks like it is back to trend and inflation outlook that looks like it's going to be subdued, we think the ecb is going to move toward removing negative rates. it would characterize that as not a tightening, but in normalization. -- a normalization. week, data continue to be we might see the pushback. we are expecting to see better sequential growth as we move into the first half of the year.

that might keep the ecb on track for now. to be there are lines drawn between the euro zone economy and china. we were just recapping the earnings talking about how it was a mixed bag of various corporate's. what they were seeing in china. we get weaker pmi's today. you get barclays saying that benchmark interest rate cut as soon as today. save anyus going to kind of slowdown we get from china 2019? >> it is part of that story. you need to see that pickup from china. the slowdown we saw across europe -- particularly for germany, that slowdown looks like he was driven by a deceleration in the chinese economy. we know we are seeing a lot of stimulus. it will take some time for that to find traction. infrastructure looks like it's picking up already. in the broader chinese economy is going to take time.

it might take time to spill over into the rest of europe. ,e do need to see stabilization which we think the stimulus will lead to before we see a stabilization between europe as well. nejra: what more stimulus are going to see in the short-term? could this come soon when you look at rate differentials and global monetary policy? >> there is more scope. the chinese authorities were careful because of what was happening with remember the. we think there is more scope. another two or three of those. they want to focus more on fiscal policy. david page, thank you for joining me this morning. get the bloomberg business flash with debra mao in hong kong. itseutsche bank suffered eighth straight revenue contraction in the final months of last year. the bank's fourth quarter was

overshadowed by market gyrations and ended with police rating headquarters. bloomberg reported executives at germany's biggest lender could see a merger by the middle of the year if they cannot turn the bank around. >> we have talked and there is a lot of talk in the sector overall that over time, mergers, consolidation of the european banking sector would be sensible for a variety of reasons. we have tended to agree with that. is kind it takes to do of anybody's guess at this point in time. nejra: -- >> deutsche bank shares called higher on trade gain. china's weakening the economy has hit macau. casino revenue has fallen for the first time in two years. a 2019 -- a 29ed month growth streak.

giving receipts outstripped those of las vegas. that's your bloomberg business flash. nejra: let's check on the markets. we are 35 minutes away from the start of cash equity trading. the focus for global markets is trade talks. the u.s. and china say they have continued talking. a weaker yuan. the bloomberg dollar index on the front foot, but it has dropped out the low of a recent uptrend. we have been seeing weakness for the past week. 5380 is where we are. january was the best month for wci. -- wti. in the u.s. session we saw gains yesterday. nasdaq futures you are watching move lower. basically on the move we saw after hours. the 10 year yield is steady, but the trend has been lower following the fed on a to 63 handle.

"bloomberg markets: european open" is next. tune into bloomberg radio life on your mobile device and on dab digital. ♪

anna: good morning. welcome to "bloomberg markets the european open." we are live from our european headquarters. i am anna edwards alongside matt miller in frankfurt. matt: asian stocks little changed following the best month for global equities in more than seven years with u.s.-china trade talks set to continue later this month. cash trade is less than 30 minutes away. anna: