nejra: good morning from bloomberg's european headquarters in london. i am nejra cehic. this is "bloomberg daybreak: europe." president trump says a meeting with president xi before march 1 is unlikely. deal to the fire, reports of a u.s. ban on tech, equipment. may up, dublin, theresa with a new deadline for further talks.

good morning. welcome to "bloomberg daybreak: europe." trade fairs act in the minds of investors. futures pointing lower. the dow and nasdaq take a hit. the reaction across asia with markets coming back online, a number still closed for lunar new year. money moving into the safe haven of a 10 year yield. dollar-yen unchanged. curious, i thought you would see more volatility. we will discuss that with our guests. a lot to focus on in terms of central banks. .ore signaling from the rba if we look at the aussie dollar, coming under pressure after we got more dovish signals, cutting the outlook for growth and inflation. that has been interesting.

so is the yield differential between treasuries and aussie tenure yield. iron or markets reacting to the hitting itswti worst week this year. , the about demand concerns global slowdown, and trade fears. let's check in on the markets. welcome back, david, how is it looking? a lot of risk off. back, ifnot a welcome you can put it that way. ,hese equity markets, the moves you talked about the aussie. essentially, we are looking at the biggest decline across equity markets on this side of the world. basically for this year, that is the biggest drop. we are also looking at several indicators.

china, taiwan, and vietnam are closed, not a full roster today. taiwan,l news out of the daughter of the late king is joining the political fray. rba cuts about the when it comes to the growth outlook. have a look at the commodities space, we talked about iron or. ore.on it depends on which contract you look out, the story on these markets, a massive move. belowok at japan, back zero for the 10 year. we areickly, the movers tracking in the asia-pacific, 80 companies reporting earnings in the region today, a lot of which should be coming out of japan. we talked about iron ore

already, you are looking at reaction from the market. buy backs for sony. one, the biggest single day drop at tata motors. the back of the biggest ever loss for corporate. investors are looking at this and saying, impairment charge, ok, a big loss. 18% down for tata motors. asking onay, we are mliv when will blend yields drop below japan's? you can reach out to us on your bloomberg. lots to discuss around central banks, with a dovish shift. let's get the bloomberg first word news. says he willtrump not meet his chinese counterpart

ahead of the deadline for chinese terrorists. they will not strike a deal before the truce. the white house is expecting to band chinese telecom equipment from using u.s. wireless networks. let go reports trump plans to release the executive order before the world congress that territory five. this comes as the u.s. warns allies anybody using huawei or other chinese technology could face u.s. countermeasures. project after, the financial times reports the group is putting together a strategy to revive the u.k. economy in the case of no deal. the prime minister leaves brussels without a deal and goes to dublin, as she looks for changes to the brexit deal before time runs out. plandent ramaphosa has a to revive the south africa up

our flagging economy. when the post the plans to remove red tape. ourselves aet target of being among the top 50 local performers within the next three years. we are going to get there. special counsel robert mueller is looking into a meeting paul manafort had in 2016. according to unseal transcripts, -- he has notith answer the indictment. is amazon boss jeff bezos accusing the national enquirer of extortion and blackmail. the tabloid published an expose on his relationship with tv

personality lauren sanchez. says the inquirer has threatened to publish photos if he does not stop his probe. 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: thank you so much. a line crossing the bloomberg on the business magazine, saying germany is seeking a deutsche bank decision before the eu elections. that is something we will keep an eye on. let's get more on the trade story, asians talks tumbling as that biggest economies will not strike a deal before a 90 day truce comes to an end march 1. ,oining us now is geoffrey yu cio, ubs private banking and simon derrick, director / chief currency strategist, bank of new york mellon corp. we can see sensitivity in the

equity markets. are they waking up to the reality of anything concrete coming through march 1? it aney: let's call adjustment of expectations. they do want at, deal, and there is enough flexibility around the march 1 deadline to kick the can down the road. this is not everything falling off the table. i think it is a healthy dose of reality. nejra: is that all markets need to see, that extra tariffs are not imposed? geoffrey: i think a combination of both. cease-fire isnt the best way of calling that. at the least, no escalation will do for now. both sides are on track for that. nejra: equity selling off, yields moving lower. however, dollar-yen, what is

going on there? i think it is the swamp of liquidity to foreign-exchange markets. euro-dollar has not moved in four months. it is not a race to the bottom that people expect with regard to monetary policy, should the situation in global markets that worse. it is an important point, should. what we are seeing with equity markets, it would be interesting if you consider it in the broader context. what we have seen and a last and months with the moves particularly the u.s. indices, very similar to what we saw in late 2007, similar to what we saw in 2000. it is a question of whether the ,arkets natural pessimism taking away monetary policy stimulus can be dealt with now by what the central banks do, if

they can give enough to ease the situation. i think that will be critical to the dollar-yen and everything else. you have highlighted some of your research, and are seeing more volatility in the u.k. than the dollar-yen. simon: there have been a couple days where that happened, the irony is fingers point steadily to china with currency manipulation. if you look since 2014, you see an increase in volatility. currencies,nd other i can argue if that is due to monetary policy in place like the u.s. and japan. to where you could regularly be saying just as much volatility taking place in the yuan. nejra: is this market more

skewed to seize bad news are good news? geoffrey: that is a tricky question, at the same time with respect to chinese and currencies, it is bad news and good news. is more likely you get a bank stimulus from china, and you do not want to stand in front of a train. i think it reflects positioning. that might wear off the effect of bad news. nejra: speaking of risk on risk off, i have a chart showing the aussie swissie snapping a rally that could hint at risk off sentiment. is this the return of the pain trade? simon: potentially, it depends on what happens. at this point typically in the cycle, this is where the most risk for equity markets if central banks can handle it, great. where we are now, the risk on

aussie yen is the classic, yes. when you see relatively low volatility, over the course of the last few weeks, people are not ready for a big move if we go risk off in a big way. volatility is below as well, a lot of that has to do with the dovish tilt we have had from central banks. geoffrey: we think it will be a volatile period, and taking a step back to shift out the noise. byproduct of expectations being softer. 's dovishnessed patd was overpriced. tell that is where people want to put protection. we will get periods in the next 18 months where recessionary

alarm bells may come back. nejra: if that volatility does pick up, you are ready with what currency pairs? simon: i think traditionally would be dollar-yen. that has proven not to be the case. if we get some moved to the downside in terms of risk off, where are we to go? clearly, you will be focused on those china trades, and i think you are seeing the rest of the bottom potentially in terms of monetary policy in australia and new zealand. anything around the kiwi is where you will see volatility, and equally to the upside as well, should things start to agree with the china trade is this. you will get that moved to the upside. nejra: our next central-bank conversation is keyed up quickly. geoffrey yu, cio, ubs private banking and simon derrick,

director / chief currency strategist, bank of new york mellon corp. they stay with us for the hour. when you are traveling to work, tune into bloomberg radio live on your mobile device or digital radio in the london area. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic. the hang seng comes back online. concerns around trade in the front of investors minds. the 10 year yield in new zealand dropped to a record low.

we are seeing yields move lower globally. the aussie under pressure after the rba cutting growth and inflation outlook. the dollar has been on a tear. is this about the dollar been the best of a bad bunch? asking on mliv when will bund yields drop below japan's? you can reach out to us on your bloomberg. let's get the bloomberg business flash. the ceo has no idea what he is doing, according to him, accept running the bank into the ground. it was targeting cost cuts. sony has announced a share buyback worth almost a billion

dollars will run from tuesday, march 22, and will be the biggest ever. week, the company cut its forecast, sending shares down the most in 3.5 years. twitter fell the most in seven weeks after a lackluster first quarter sales forecast. it also reported tepid user growth, suggesting changes have not attracted a wider audience. the company's priority is to create value. >> we are not trying to get people to come to twitter monthly, twitter is a place were newsbreaks and conversations happen around sports and politics and entertainment, things people care about. if you are coming monthly, we are not doing a good job helping you find value in twitter. >> that is your bloomberg business flash. nejra: thank you. more of the world's central banks dovishness, the shift has

all but erased tightening fears. money managers are in the fringes of the fixed income market. dani burger is with us, what can you show us? dani: we had all these prayers that central banks would turned dovishness and we are living with the consequences. the world is awash in negative debt. i have the market value of that, and last year, the quantitative tightening trade reduced the value. look at what happens this year, we have spiked to 9 trillion. back to 2017 levels. the fed making a dovish u-turn, and boe, rba joining in, that helped change the picture. we are also seeing riskier debt, and one of the effects of traders saying this business cycle will be prolonged because of the dovish tilt. u.s. high yields is at a record

level. it did climb steadily for 2017. yields comes back online, the fed and other central banks driving this year. whether this is overdone or we will get a turn in the credit cycle given the economics, if the doves can support this picture, that has yet to be seen. markets are looking optimistic on their odds. nejra: geoffrey yu, cio, ubs private banking and simon derrick, director / chief currency strategist, bank of new york mellon corp. are still with us. are you looking at the fringes of the fixed income market? geoffrey: at this point, we overweight equities. risk onan important element to take into account. points we at certain weighed into those areas.

calling it high-yield equivalents, pushing it a bit, and taking it back to support allocation. nejra: you are nodding. simon: absolutely. the instinct question, there are people who see it as a short-term reaction to what is going on in markets over the last few. we have had the fed for over 30 years, and when you look at what powell has done, it is entirely in line with what you see from previous governors. you really argue that over the course of the last five years, the fed has become better at implementing and fine tuning

what to kick in. considering the signals in late november, we were barely into this cycle when the fed was telling us we are ready to catch it if it falls. that is the measure. the central bankers must feel like the masters of the universe. nejra: this will be the year of the central bank dove? geoffrey: you are trying to get rid of the business cycle, last november and december, powell did question why does there have to be an end to the cycle, rather than try to compress volatility? you see equities and light bonds, i think we are ok with that. nejra: does it make harder to get returns in 2019, much like 2018, or are there new opportunities? geoffrey: it concerns us when it

comes to diversification. diversification is key for our clients. marginal returns in sovereign hard currencies, the euro and dollar, this does mean if you need to see a situation with inflation weather is an unwinding correlation, and then diversification stops working, that is a concern. nejra: in terms of diversification in fx, is the dollar the big winner? no, i think you will really make a call for the dollar when we have traded sideways for five months. is going to do will be followed by everybody else, the ecb for instance. you're going to ask if central

bankers will be dominant, should they need to, you have to imagine that hard assets will be a winner. to get beyond the current we get the worries about china where it starts to look better. you go for things like the aussie dollar. you will have hard assets behind it. history of the last 20 years tells you what happens. ork what happened in 2002 you had golden currencies connected to it doing well. geoffrey: i have more questions on gold from clients. that is saying something. do you want gold going up? the answers are for the former

rather than the latter, is there an inflation impulse? if it starts to show up, we can talk about policy. nejra: when will bund yields drop below japan's? quick answer. geoffrey simon: by the end of this year. geoffrey: when german demographics -- [laughter] nejra: geoffrey yu, cio, ubs private banking and simon derrick, director / chief currency strategist, bank of new york mellon corp.. presidentuth africa's has a plan to rescue the ailing state power companies. we are live in capetown with the latest. today to bloomberg radio live on your mobile device or digital radio in the london area. this is bloomberg.

♪

nejra: this is "bloomberg daybreak: europe." let's get a check on markets around the world. mumbai.joined from the happy friday. indian markets looking to be outperforming asian counterparts. is this a follow-on from what we heard yesterday? good to see you. say, the bank of india viewed as positive, and a slight outperformance.

0.5%. there is strength in the currency. 71.2.pee is that performance, and welcome. , tata motors is something everybody is talking about in the session today. it has posted the biggest quarterly loss by an indian company ever. drophart shows a sharp about 20% in the session today. that is the real worry. one big company missing but the markets are not paying heed right now.

tata motors is the one i am watching out for. broadert looks like the indices swept up in trade worries. the reaction to the rba yesterday was short-lived. week the dollar is on pace for its biggest gain since august 10. year, thert of the dollar was falling, but because of weakness in the peers is boosting it. is the dollar again a haven trade? it will be interesting as growth concerns come in. as concerns and trade might be what is hitting the msci asia-pacific mud down the most in about a month. nikkei leading declines. the other market story is iron ore. price,bidding up the over $90 right now, the highest

price since 2014. the real market story we have our eye on is the rally in asian bonds. we have the u.s. 10 year yield and australia. australia is sinking lower along with new zealand. the lowest on record. a lot of this drop is central-bank action, but perhaps a bit of a risk off move looking for safety in asian bond markets. 1 we approach the march deadline for tariffs. >> president trump says he will not meet his chinese counterpart ahead of the u.s. tariffs. they will not strike a deal before the truce brokered last year. house is expected to

band chinese telecom equipment from using u.s. wireless networks. trump plans to release an executive order before the world congress that very 25. the u.s. warns allies anybody using huawei or chinese technology could face u.s. countermeasures. a secret break at working group has a project called project after. the group is putting together a strategy to revive the u.k. economy in the case of no deal. theresa may leaves brussels without a deal and goes to dublin to get changes before time runs out. amazon boss jeff bezos is accusing the national enquirer of extortion and blackmail. the publication published an expose on him and his relationship with tv personality . he says the inquirer has threatened to publish revealing photos if he does not stop the

probe. special counsel robert mueller is looking into paul manafort meetings in 2016. until yesterday, metaphor met --h constantineh \ he was charged last year with witness tampering, but has not answered the indictment. supporta's embassies nicolas maduro. argentina and brazil temporarily switch sides. they now say the websites were hacked. 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: thank you. a week of emerging-market bank .ecisions, a rate cut

the next decision comes from .ussia, it is expected to hold emerging-market currencies are on the longest slide since the line. president rome oppose a unveiled plans -- rome oppos -- tell us what the biggest --ghlights were from re >> the biggest story is that from -- the utility will be separated into three units, generation, distribution. by the be wholly-owned state. what is significant about the announcement is this restructuring, unions have said they will oppose the , we spoke to the

ceo and he highlighted this is the beginning. ramaphosa says the state will support his balance sheet. plan tol us how they optimize the balance sheet. another key highlight was ra maphosa says national elections will be on may 8, strongly coming out, and highlighting the state will be tackling corruption as we go into the new year. nejra: how much is at stake given the run-up to that election? >> there is a lot at stake. seeks to increase the

ruling party majority. if he does get the party to have a win over 60% it may embolden him and make it stronger, and we detractors and people who do not support him. this election will be key. stake, strong thing at ratings agencies will make their assessment later this month on the sovereign credit rating. that may help that the ratings agencies consider restoring south africa to investment grade when it comes to the sovereign rating. we saw it coming up after the president made those announcement. the national election as well as the budget is where the market will be looking to see how these

reforms will be financed. thank you so much. geoffrey yu, cio, ubs private banking and simon derrick, director / chief currency strategist, bank of new york mellon corp. are still with us. em fx.ooking at hi earlier you were telling me you did not have conviction in dollar strength. director / chief currency strategist, bank of new york mellon corp imagine everybody feels more comfortable that the such a banks will support, and you get this burst an activity in emerging-market currencies. things,he interesting one place you see volatility being crushed is in emerging-market currencies.

it is not as dramatic as you expected. i would expect the rand to do well, but not the highlight you are expecting. subdued volatility in em currencies, and the u.s. you have a strategy to get exposure to em that is more stable than going to em? is important in a volatile environment. there are short-term and long-term aspects. short-term, there are tailwinds. em growth has stabilized. repricing, the develop market equities and the european equity market is more attractive, you can get reasonable prices. , itthe currency element

does not mean there are headwinds puke. \/\ s. what is interesting when i was going to the list, big names here across a lot of industries. a lot are in consumer and staples, but you have industrials in their, i.t. stocks as well. on dependent is this theme the chinese consumer? geoffrey: the chinese consumer will be the driving force. catalyst now is what the chinese again, you spending get the industrial side first and the capex, or is this the structural rebalancing where the chinese , that rises by itself.

the other element is more stimulus dependent where arising tide will lift all boats. you get the structural rebound, and can enjoy the consumer and not worried. nejra: one thing that is euro ising from ubs the weakened against currencies in the last three months, do you see further downside in the euro? simon: potentially. i think the theme of the hour is central banks, the ecb has been the central story. do we have slowing growth in europe? absolutely. driver, been the prime dramatic moves within the euro, , some of the years

overnight moves you have seen are generated by the ecb policy. right now what they do in march is essential. the foreign exchange market, when things happen rather than anticipation, we will think the ecb will signal something dramatic, i think we will wait to see if that could give us downside. nejra: reactive rather than proactive. thank you geoffrey yu. cio, ubs private banking and simon derrick, director / chief currency strategist, bank of new york mellon corp. stay with us. after tense meetings in brussels, ukip prime minister goes to ireland in search of brexit progress. we will discuss that next. tune into bloomberg radio live

on your mobile device or on digital radio in the london area. this is bloomberg. ♪

>> brexit is causing short-term volatility. more fundamentally, it is creating tensions in the economy. the economy is not prepared for a no deal, no transition exit. brexit is creating tensions in financial markets. those remain sensitive to brexit related news and a variety of risk on u.k. assets are elevated. we have downgraded our forecast for u.k. weighted global gdp. over the past year, the global economy has transitioned from robust broad-based expansion to a widespread slowdown with all regions decelerating in

tighter financial conditions and rising trade tensions. with of the easier path of monetary policy and all major economic areas is now implied by markets, global growth will stabilize later this year. nejra: that was bank of england governor mark of carney speaking during the inflation report yesterday. with less than 50 days until brexit, the prime minister goes to dublin to discuss the contentious issue of the irish border. yesterday they agreed to further talks by the end of the month. the u.k. has asked for a time when it to the irish backstop. the eu insists it does not want to reopen the divorced deal. i'm joined now by theresa may's former spokesman. geoffrey yu, cio, ubs private banking and simon derrick, director / chief currency strategist, bank of new york mellon corp. are still with us. it is getting to be an

intractable issue. do you have any insight to theresa may's thinking, and why she has not made any signals of extension of negotiations? it is tactical, everybody is assuming if we do not get over the line, we will find a way to extend, but she needs that deadline because that deadline is central to the strategy of trying to concentrate people's minds, and get them to stare down the barrel and recognize that they need to make concessions. some of that is a hope on the european side that there may be concessions to help her out. is for her colleagues as well. aree are no signs people prepared to give ground. we are stuck and worried, that is the place for all of us to be. nejra: in terms of getting ground, let's talk about the backstop.

theresa may asked the eu for a time limit on the backstop. another person familiar with the raised allay may three options, technological solutions, a time limit, and the unilateral exit. she did not show a preference. which do you think is closer to her thinking and how she will negotiate this backstop issue? jilly: anyone of them, if the european union were shown appetite to go down that route would be enough to come back to westminster and say to her colleagues, we are making progress, there is a way forward. the problem is each of those three issues has been debated over many months, has been considered as part of the negotiation. she herself and her colleagues principally her chief negotiator have discarded each one of them over time, and the european union shows no appetite for

going back and reopening something they do not think will work or solve the issue. looking at the political betting yesterday, and it showed jeremy corbyn is the lead and political betting to be the next prime minister. post-march 29sk of an election this year, and if we have that, do you think we could see a coalition? corbynne reason jeremy would be the candidate is because we do not know who the conservative candidate will be. if there was a front runner for the tories, it might be they might be in front of jeremy corbyn. there are two potential routes to a general election, one is that the paralysis in westminster can only be unblocked by a general election. that might be on the conservative side, remainders see we are about to tumble into

no deal and they feel the only way to stop that is to join with vote, in a no-confidence or that the deal is being pursued but they cannot accept it. they precipitate a general election. the other route is that theresa may succeed in getting a deal through, and the conservatives decide they are ripe for a reboot, a new leader. that does feel if we can get over the line, the route to election. geoffrey: will parliament take control over the next few weeks? joey: the government still holds the cards most of the time when it comes to the parliamentary and legislative timetable. the things that mps are voting on, but mps have shown, and the speaker critically has shown that he also would be willing to allow unprecedented turns of events.

if theresa may does not come back next week and show substantial progress, then i think she will be deeply worried there are others who will seize the initiative from her. i am not sure she will get as far as she needs to. she will probably try to kick the can down the road. plan, it could not be simpler. it is let's get closer to the line and hope somebody corrects. she is showing steely resolve. the photographs and film you saw of her and jean-claude juncker, she was putting on a hard poker face. the mood music in dublin today will be different. ultimately, that is the only card she has the play. nejra: is there enough volatility in cable to signal that investors are getting worried enough about the prospect of a no deal?

simon: no. if you look at where volatility is, it is at the average of the last 10 years. these are not normal circumstances. i think the risk is in either direction, either from the possibility of having no deal, and ending up with remain, or you get huge potential moves in either direction. i do not think the market is i think we price things in in may and june before the referendum. nejra: is the market pricing the bank of england appropriately? isffrey: i think yes, and it asymmetric. the cost of

insurance, why answer something you do not own? that is the situation. people know their exposure to sterling. crash, there will be a spike in volatility. we be sixere will yo months from now? joey: i think there is a degree of complacency, and people are .ssuming it will be all right they are assuming that politicians should want to do the right thing, and not wish us to go down the route of no deal that nobody finds attractive. nejra: what are your clients telling you? are they giving you a sense of complacency? joey: certainly not, if i have anything to do with it. there are real reasons to be worried. theproblem is, the issue at

heart of it, the backstop has been in tractable for a long time. i do not see why necessarily there should be a sudden breakthrough now. it is worrying, and i think clients have been generous, and business has been generous to the government and european union in holding their tongue most of the time, crossing their fingers hoping it comes out all right. i think it will become understandably noisy if we do not see progress soon. jones, cicero group strategic group, geoffrey yu, cio, ubs private banking, simon derrick, director / chief currency strategist, bank of new york mellon corp.. how should investors play the trade story? we will discuss that next. you can see all the charts

throughout the programming on gtv go. this is bloomberg. ♪

nejra: good morning. i'm derek a hitch. --s is the -- i'm derek kh. cahic.er a kh -- nejra fuel to the fire. shares slumped in hong kong. next stop, dublin. theresa may leaves brussels with a new deadline for further talks. can dinner harold a breakthrough? ♪

nejra: good morning and welcome to daybreak europe. just under an hour from the start of cash equity trading in europe. we saw u.s. futures pointing aser, asia under pressure concerns around trade come to the forefront. we could see a flat open across some of the markets in europe. we saw weakness in equities yesterday. dax futures struggling for direction. cac 40 futures up .2%. some really interesting moves in the bond market that i will get into but i want to look at some of the german data coming through. this is to do with the trade surplus. it comes in at 13.9 billion euros, imports rising 1.2% month on month, exports rising 1.5% month on month.

let's talk about bonds because we are seeing yields drop globally. you're not seeing that reflected too much in the futures, which are pretty much unchanged. saw the eurozone cut growth forecast for the weekend. bcp yields jumped higher by nine basis points. we saw the bug spread widening. it's like it could be more of a study session today judging by these futures. the 10 year yield in negative territory, which segues nicely to the markets in asia. david inglis is standing by. welcome back. how are we looking in the english session? david: bad start to the almost full roster for the year of the take. we don't have china. that market reopens next week. let's put south africa in there.

biggestown about 1%, drop since christmas. volumes are light. thailand, a lot of political news as far as that market is concerned. that is the biggest drop going back to june of last year. dollar strength coming through. aussie dollar story, taking a cleaver and splashing on their growth outlook for the economy to 2.5%. yields are pushing lower. --'s look at it across negative three. it is playing out across g10 and dm markets. flashback friday, back to levels of 2016. iron ore, throughput 5% up. -- 3.5% up.

let's bring that down. we talked about iron ore. have a look at the movers we are tracking in asia here, as well. the city was out in the asia-pacific, revising the forecast. iron ore, $88, pushing that up 40% on just in this right -- 40% odd. the biggest ever loss for corporate india on the back of long-term impairment charge for the company. investors don't care if it's impairment or core business, down 19% for that stock. nejra? nejra: david inglis in hong kong, thank you so much. we've been talking about that race to the bottom when it comes to yields, the one will bund yields drop? you can join the debate. reach out to us on the mliv team.

let's get bloomberg first word news with annabelle in hong kong. annabelle: thanks, najra. a secret or is good -- secret brexit working group has a plan. they have a strategy to refine the u.k. economy. the prime minister leaves brussels without a deal and heads to dublin as she races to get changes to a brexit deal before time runs out. president rep. posey: announced a plan to revise the south african economy. he wants to attract more tourism and step up the fight against corruption. he aims to remove red tape and rise up the rankings of doing business index. of being among the top 50 growth performers in the next three years. and we are going to get there.

annabelle: special counsel robert mueller is looking to -- manafort. a translator who the fbi believed had a relationship with russian spies. you start with witness tampering. accusing the national enquirer of extortion and blackmail. exposeloid published an with him and lauren sanchez. he investigated to find out if it was politically motivated. in now says they threaten to publish revealing photos if he doesn't stop the program. venezuela's embassy supports nicolas maduro. mexico, argentina, and brazil appear to switch sides. they posted support for one quite a. they now sit -- juan guaido.

they now say there sites were hacked. global news, 24 hours a day on air and at tictoc on twitter, powered by more than 2,700 journalists and analysts in more than 120 countries. nejra? nejra: annabelle drillers in hong kong, thank you so much. how should investors play the trade story? president trump says he won't need chinese counterparts, stoking fears it won't reach the deadline. ian growth will slow this year, refocusing tensions on high debt levels. let's welcome the state street mobile advisor -- global advisor. great to have you on set. really looking forward to this conversation. i want to talk about global equities first. looks like we need a reality check today. are there too many things that have to turn out just right, for equities including trade tensions, in order to build on the best start to the year

since 1987? guest: it has been a great start. global trade tensions are the biggest thing that's going to affect markets this year, for sure. you're right. the fact that trump and xi jinping may not be able to meet before the tariff deadline is an issue. at the same time, we do believe the political will is there for this to be resolved in a way that doesn't escalate beyond a u.s. china spat, which it is at the moment. we do believe that yes that does have to be resolved but it's something that's going to happen. nejra: you're adding to emerging-market debt. is that to do with any way with the trade story, or much more to do with the fed? altaf: much more with of the fed. the way it has wrote back on its autopilot means dollar strength won't be there this year that we've seen in the past. that's going to be good for emerging-market debt. at the same time, in the local currency space, we feel

currencies have been punished too much and they will rebound. we see good reasons. we are starting to see flows come back into emerging markets after a tough year. nejra: on the debt side, emerging markets. but when you look at equities, do you prefer the u.s. over the rest of the world? altaf: definitely. nejra: why is that? altaf: for the u.s., it is seeing fiscal stimulus positively play out. they are still pretty strong. we're not as disappointed as mega the market was worried we would be. we do feel like even though is -- capx is pulling back, there will be a strong impact on the market. nejra: i've got a chart here since president trump was elected. lineligned -- the yellow

-- the white line goes above that. we're not quite there yet. i've been asking people there for whether small-cap stocks are an opportunity here. you're favoring large-cap stocks. why would that be? altaf: the trump bump or the fiscal stimulus did seem to favor the domestically focused, which tended to be smaller stuff. now, predicated on positive outcome to trade talks, large caps with more international exposure, more exposure to the markets, are going to be more favorite going forward. nejra: we've had heard in earnings report a stronger dollar being a headwind. that would put a hit on the large-cap stocks. does that concern you or do not believe in dollar strength? altaf: we do think the dollar is going to be more range bound. its the fed rolling back on

rate hike assumptions, we don't think we will get that move on the short end. at the long end, we don't think there will be a lot of selling on the dollar. it will remain a safe haven currency. we see a dollar stuck in a range, which means it is in something u.s. corporate's need to be worried about. nejra: you're also remaining underweight government bonds. right now i'm looking at 10 year new zealand yield at a record low. the 10 year treasury yields falling, as well. we are looking at a 265 handle. what's your conviction we're going to see higher yields given this devilish tilt, particularly in the g10? altaf: i don't think we're going to see materially high yields. i don't think there's much room for them to move lower, either. we don't think bonds are the place to be, versus equities. it's a relative trade, for

example. at the long end, long-duration bonds are always in demand. there are always pension funds, insurance companies. nejra: what about cash? altaf: cash, we think yields are picking up. it's a great place to have dry powder. there was a massive hunt for yields in 2017, 2018. that has abated because cash yields have picked up. it's not as bad a place to park in money as 16-18 months ago. nejra: where do you see the outlook for the fed the on the first half of the year? could we see the fed turn hawkish again if we see a successful resolution to some extent to the trade talks? altaf: yes, what you would need is a successful resolution to the trade talks. the fed has been clear they are much more data dependent. every release would have to be watched. if trade talks are resolved successfully, if it leads to a pickup in capx, we could see one

more rate hike towards the end of this year. nejra: ok, i'm going to ask you the mliv question because i know you're more than well-positioned to look at it. basically, it's when will the 10 year bond yield traded between japan's 10 year yields? we got a chart showing how the spread has been moving lower. when will the 10 year bond yield traded below japan? altaf: i don't think it'll happen anytime soon. japan will see a pressure on rates. it's got demographic issues. that means bonds will always be favored versus equities, where a large portion of the population, especially domestic investors. i think in germany, there's a possibility of a's -- fiscal stimulus, as well. i don't think the bond yield crossing the jgb yield is a near-term possibility. kassam stays with us. coming up, next stop dublin.

with less than 50 days until brexit, the prime minister heads to ireland in search of progress on the backstop. we'll bring you the latest. when you're traveling to work, tune in to london dab. this is bloomberg. ♪

london, 42 in minutes from the start of cash equity trading. this is bloomberg daybreak: europe. i'm derek a hitch in london. -- i'm nejra cehic in london. s&p futures on the back foot, as well. we are seeing a struggle for direction across some of those

european futures. the dollar on the front foot has been on a tear, the dollar being the best of a bad bunch in terms of currencies, particularly in g10. bcp yields move higher, jumped nine basis points yesterday with the european commission cutting growth outlook for the eurozone and italy by a full percentage point. that gtv on spread heads toward -- bunds spread. jumpingressure iron or to a 2014 high. and of uti heading for its worst week this year. let's get the bloomberg business flash with annabel do this in hong kong. annabel: jeffrey gundlach has hit out at general. he said the ceo has no idea what is doing, accept running the bank into the drowned. -- into

the ground. it announced it was shrinking its market is this an targeting massive new cost cuts. sony has sort after announcing a share buyback worth almost $1 billion. it will run for next tuesday until march 22 and be the company's biggest ever. a less reported shares in two dozen for, $6 million worth. last week, they cut the forecast. twitter fell the most in seven weeks after giving a lackluster first quarter sales forecast. they also reported tepid user growth, suggesting changes to improve the service hasn't attracted a wider audience. the ceo says the company's priority is to create value. >> we're not trying to get people to come to twitter monthly. as a, place where conversation is happening around sports, entertainment politics.

if you are not coming monthly, we are not doing a good job helping you find value in twitter. annabelle: the government is set to sell impartial stake. there is no partial timetable on any sell down and shares may have to be offered at a discount to offer uncertainty in brexit. the government injected almost $60 billion in ibs. dansk a reported for your revenue above evidence. 2019, siding weak oversupply and waning confidence. that almost -- also cut dividends. it wants to continue to grow, the remains financially strong. that's your bloomberg business flash. nejra? nejra: let's get the latest on brexit. with less than 50 days to go, the prime minister travels to dublin to discuss the issue of the irish border.

yesterday, following tense meetings in brussels, they agreed to further talks by the end of the month. maria tadeo is in brussels for us today. good to see you. no concessions from the eu, but was there any good news for theresa may yesterday that she can bring back to the u.k. eventually? maria: good morning. no concessions, clear as day. but it wasn't a complete failure, especially if you take into account just 24 hours before she arrived, the head of the european council pretty much said brexiteers should go to hell. the two sides agreed to talk. and we know they will meet by the end of february. that in itself is good news for the prime minister and the u.k. the eu has said, as far as we're concerned, the negotiation is done. in terms of actual policy, they are still on a different page.

the prime minister said she will deliver brexit on time. the eu will say we cannot ditch the backstop. and if anything, we just look into political declaration, not the divorce agreement. we're not going to go back to do this. nejra: according to eu officials, theresa may asked the eu several times on a time limit for the backstop. were people on the uk's side said theresa may raise all three options without making a preference for any. what kind of timetable can theresa make on the backstop? maria: that's a very good point. in public, she was very defiant. she said i need this. if we don't get this, we won't get this through u.k. parliament. there was no deal. she also said we won't get this done in time. i won't ask for an extension. that has people in brussels

confused. we understand she did prepped for the time limit. for the eu, that is not an option. the question is whether she can hat done one-on-one with the irish government. eight in1 10 irish men and women want the backstop. it's very clear that if ireland does get to a point where they're comfortable with changes to the backstop, the eu would be inclined to go through and continue negotiations. at the end of the day, both sides still want a deal. nejra: maria tadeo in brussels, thank you so much. kassam is still with us. the main point maria made is both sides want a deal. no deal brexit is lose-lose, globally. the political will is there.

the fact the eu is still talking to the u.k. despite having officially said there's no more negotiation to be done i think is a good sign, as well. nejra: this neatly moved my chart, analysts raising their forecast. is the market positioning correctly here, or is this complacency? altaf: i don't think there's complacency. i am surprised how low foreign exchange and applied volatility has been. does it feel like the fx market is positioning for a big move in either direction. it does feel like the market consensus is for some deal to be reached. i would not call it complacency. i think the options market is a good place to take it. nejra: taking of you in the auctions market, would you take a view in u.k. equities? altaf: right now, the uncertainty is so great i would be waiting more on the sidelines. you have the push pull of a

weaker sterling flattering u.k. companies overseas earnings versus the harsh reality of a no deal brexit. i think for us, in particular, the u.k. market is not somewhere we are stepping in. nejra: what about europe? we had the downgrade of the growth forecast. that news seems to be piling up for the eurozone. i had a conversation with ubs, really interesting play. that theme is to get exposure to emerging market consumers by a certain eurozone equities. how are you investing a run europe? altaf: i think for europe and the em, you are better off getting em's exposure through em equities. europe is in a bad place. it's true the growth forecast is going to be revised down. it does feel like there are structural problems with the european union. i think italy is doomed to fail. we may see more political crises there, even another election

this year. germany is doomed to boom, if you like. there may be a possibility of a fiscal stimulus. i think europe, again, functionally, something to stay away from for now until the brexit uncertainty is resolved. if you do want exposure to the emerging markets, i think you're better off given the weakness and emerging-market equities and weakness in currency. you're probably better off getting that exposure through equities. nejra: you increased your overweight to risk assets. that's the view you're taking at state street global advisors. thank you so much, altaf. great to have you with me. that is it for daybreak europe. bloomberg markets the european open is up next. we've seen equities come under pressure in asia. futures point lower. a little question to european

futures. tune into bloomberg radio live on your global device and dab digital radio in the london area. this is bloomberg. ♪ i'm a veteran

and the army taught me a lot about commitment. which i apply to my life and my work. at comcast we're commited to delivering the best experience possible, by being on time everytime. and if we are ever late, we'll give you a automatic twenty dollar credit. my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome.

anna: good morning. i'm anna edwards alongside matt miller in berlin. matt: today the markets say, what happened to the new year rally? stocks across asia stop -- slumped as trade tensions sour the move. he was futures also point down. the cast -- u.s. futures also point down. the cash trade is less than 30 minutes away. ♪ anna: back with a