haidi: welcome to daybreak australia. shery: i am shery ahn and bloomberg's world headquarters in new york. sophie: we're counting down to asia's major market open. haidi: the top stories we are covering, china's robust start as market return from the holiday break. yuan is under pressure from a strong dollar. trade is it to dominate the week again as negotiators meet in beijing. the vice premier will again join the negotiation.

looms in shutdown washington as talks stumble on capitol hill. an agreement is said to be 50-50 at best. shery: let's get you first the markets. a mixedn the u.s. was picture as we saw the dow fall a quarter percent. we had a tech-led rally in the final minutes of trading which helped the broader markets. still the s&p 500 fell for a second executive week. energy and financials leading to decline. we had growth concerns globally. the u.k. downgrading growth forecasts. those concerns in the markets. the dollar gained for its seventh consecutive session. now at the highest level in five weeks. they are very close to that resistance level, to 97. theting the asian session, chinese markets coming back online after a weeklong holiday. an exciting week. sophie: we are preparing for the

reopening of chinese markets, which will test the bullish start to the year for chinese stocks. we saw that drop in hong kong shares. that may not bode well for the reopening of chinese markets. there in mind today japan is also applying for a holiday -- off-line for holiday. we are seeing futures under pressure. we are seeing the aussie dollar steady after a near 2% drop last week. this, as the rba moves towards a dovish stance. today,eco-agenda checking in on the line number. malaysia numbers for december, fourth quarter data from china and hong kong due this monday. haidi: sophie kamaruddin in hong kong. let's get you caught up to date with the first word news. su: retail and catering sales during the lunar new year

holiday rose more than 8% from a year ago to $150 billion. cctv says revenue from tourism was also higher. up 8%, more than $76 billion. trade dispute with the u.s. has the chinese economy under restraint but consumer confidence remains robust. onto the u.k. prime minister theresa may will ask parliament this week to give her more time to renegotiate brexit, promising lawmakers a further chance to take control. she will ask the comments to reaffirm his desire to remove the irish backstop from the withdrawal agreement. if she does not come up with a new deal by february 27, parliament will have another vote. observers, including the imf, are increasingly concerned. a whether it ends well, smooth custom unions, or the result of a brutal exit on marc 29, it will not be

as good as it is now. su: a bloomberg survey says there is now a near one in three chance of recession in the u.k. in the next 12 months. a poll of 10 economists find probability is two consecutive quarters of negative growth. that is up from 25% a month ago and 20% throughout all of last year. the survey was conducted before the bank of england forecast its slowest economic growth in a decade. political tensions are high in thailand, just a month before the first general election since a coup five years ago. a party linked to the former prime minister has abandoned plans. that is after the monarch public we opposed the idea. the election commission will be -- meets later monday amid calls for the party to be shut down. global news 24 hours a day on air and on tic toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm su keenan. this is bloomberg. shery: the bullish move that was starting to build in china will be tested when markets reopened later after the lunar new year break amid renewed concern about the trade war. our china correspondent tom mackenzie joins us from beijing. we saw the chinese markets recovering about $380 billion just this year. then last week the mood was more pessimistic. what should we expect in trading? recovering $380 billion after a bleak 2018. chinese markets, some of the worst performers last year. they had that recovery january through early february. as you say, you look at the hung some china index ending lower on friday. there are trade concerns that seem to be playing in some major headwinds for investors in chinese equities at this stage. 300ing up to this, the csi

was up around 7.9% year to date. shanghai composite was up above its 100 day average. you have some momentum increasing around the stock connect looking to buy into shares. but now boost trade winds have been of concern. there is focus on stimulus measures which is come through from policymakers in terms of monetary policy and fiscal stimulus and the extent to which that will support the economy. all those playing in. it may be a struggle as chinese investors reengage in the year of the pig. we will also be looking at the yuan. we talked about the pressure that was under, particularly as a result of dollar strength. we will see what happens with the pboc fixing at 9:15 local time to see if they support the currency onshore or if they allow it to drop as the levels move offshore. in focus and what happens with equities as they

open a few hours. haidi: potentially the big catalyst is another round of trade talks. is there any expectation on how this round will go? process wems of the are expecting the deputy to be in beijing to start talks with their counterparts. ustr and the under secretary of treasury, they will be here with their team meeting with chinese counterparts. but the big show is towards the 14th or 15th with robert lighthizer and stephen mnuchin in town. they are meeting with the vice permit her to try and get some momentum aloof -- to move forward. it seems they are under pressure to get the chinese to commit to much more than just buying additional goods from the u.s. of course there is -- there was concern after president trump suggested he would not be meeting with president xi before the march 1 deadline.

so there is pressure on both sides to come to some kind of agreement. the consensus view is they will get something before that deadline, maybe an extension of the deadline. is a lot of focus on what happens and how much progress is made towards the end of the week here in beijing. shery: tom mackenzie, thank you so much. now, a new u.s. government shutdown is looming as negotiations broke down over the weekend. indeed, republicans and democrats are not communicating at all for now, and the prospect of a deal before friday's deadline dwindles. ros, lawmakers went into the weekend pretty upbeat, but we are now looking down the barrel again. ros: yes, it seems like we have come to this point. and it is a bit of a surprise. that is a lot of optimism about striking a deal maybe by today, maybe by sunday night in the u.s. but talks really faltered late saturday, as far as we can tell,

over the number of beds, if you can believe it, that the immigration customs enforcement agency can have funded in the united states. essentially, it is the democratic effort to force i. c.e. to detaining criminals versus focusing on visa ove r-stayers. this as a way for them to use the budget process to change some of the enforcement and talks of i.c.e. that have been going on are focused on numbers on funding a wall. it has all kind of broken apart for now. we do hear that is a bit of a congressional telephone game going on at the moment. one lawmaker is calling another lawmaker was talking to another lawmaker. there is the possibility that even tonight in the u.s. we will hear there has been some kind of breakthrough, some kind of new compromise. but certainly an interesting development.

texasent goes to el paso, tomorrow night for a rally. there is no doubt he will be focused on democrats and their new demands, and he is not happy. haidi: ros, in terms of geopolitics, do we know the latest when it comes to the second trump/kim summit? there was scathing criticism from singapore that it was just a photo op and nothing substantial. are we expecting a breakthrough this time? ros: we hope. weekend said over the that there is a lot of hard work to do to get ready for the meeting. it is now just three weeks again and it is coming together quickly. the u.s. envoy to north korea spent several days in pyongyang last week. and there is another set of high-level talks that will start beund the 17th in a yet to disclose location, possibly in

-- disclose location, possibly location, possibly in vietnam. so many times before the summit aids will come up with an agreement and in the leaders go in and put their blessing on it. but with president trump, he does the opposite. he will go in, he will meet with north korea's kim, then let his aides follow-up and try to make some progress on the flipside. so, do we know that anything will come out of the summit? we certainly do not. as we have spoken about recently, it seems kind of unlikely that kim is prepared to make any kind of commitment to get rid of his nuclear weapons, but he is looking for concessions from the u.s. rollback of sanctions and sort of a rollback of the close relationship with south korea.

and i think that is really where we stand at this point. haidi: ros krasny with the latest in dc. still ahead, theresa may will be asking for more time to renegotiate her brexit deal as she seeks to avoid -- shery: next, region atlantic joins us to look at the week ahead for global markets. this is bloomberg. ♪

haidi: we're counting down to the start of trading. sydney open is almost upon us. pretty flat. a virtually unchanged picture when it comes to the u.s. close on friday where tech shares rebounded in the late session, but really not offsetting concerns over trade talks. another round of talks taking place in beijing this week. we are waiting to see how that

plays out as a catalyst for worthy volatile market was next. we are looking at a flat start in sydney. i am haidi stroud-watts. shery: i am shery ahn in new york. you are watching daybreak australia. turning to the week ahead on wall street, where earnings continue to be the big focus. but the potential for another government shutdown hangs over the market. su, we had a mixed bag of earnings last week, not helping the pessimistic outlook. su: as always they are looking to see what the companies are saying going forward. then we had the backdrop of brexit and nato and geopolitical concerns. let's go right to the snapshot. stocks were mixed. what is interesting is oil ticking up in electronic trading. it has been under significant pressure. let's take a look at the bloomberg real quick going into the latest chart. it is titled rally pauses. this is the first week in 2019

where we have seen the global rallyes drop in the that began last december. that shows you a lot of the momentum is on pause. it is a peak weaker earnings. let's go into the summer -- go into some of the companies. which is clearly in the spotlight as we look for chipmakers to go against the grain of what has been gloom on the sector. there have been some bright spots. there will be a lot of focus on what they have to to say. ify going to reporting interest. coca-cola in focus because of international interests. some of the last of the aig's. nissan, among others that will be out with numbers. haidi: what is going on in oil in terms of the outlooks? we are seeing hedge funds raising their bare bets. su: if we look at trading data

from last week or is a 28% increase in hedge funds. let's go take a look at the five-day trading pattern. you can see oil has really been under pressure, and that is surprising given that the opec output costs have started to take affect. let's look at the bigger picture. some concerns on the market, and you are seeing it increased 1% for brent, but both are increasing, both the bearish and bullish bets. it has a lot to do with concerns about slowing global economic growth, concerns about the at, and thereade sp are veteran traders is a resolution of the trade war can clearly break the market out of its doldrums, as could a significant increase in the agreement in opec. there has been a lot of internal tension of like. shery: su keenan, thank you so

much. joining us in new york is region director of research. mentioning oil prices taking a hit because of growth concerns. we have the latest countries, australia, the u.k., both downgrading forecasts. what message does this send to investors and portfolios? guest: 2018 was a paradox between solid economic figures, solid earnings growth all around the world, but at the same time every single major market was falling. what we are seeing this year is a lot of the reasons why they fell was really a prediction. it was a prediction about the weakness and uncertainty we have this year, first and foremost political. driven in part by the longest shutdown in american history over the smallest difference if you waited the -- weighted the percentage of the budget.

it is also a manner of principle, the principle aside it was a small difference. will happen over the coming weeks and months is we will continue to test this paradox. last year's paradox of strong fundamentals, weak markets. this year it is strong markets, relatively weak fundamentals. shery: we have seen this rally in the u.s. the chart on the bloomberg showing what is interesting is during this rally we saw the role of a smaller company really get heightened. we are taking a look right now against the s&p 500, that is your line in white. we have seen some momentum for the smaller companies against the dollar, which is now trading range bound. what does this tell us about where small companies are headed this year? andy: i think it tells us something brought learn -- broader, which is what is going on with the markets this year. last year a small handful of tech stocks were driving the market. that has been the u.s. market for many years now.

this year we are starting to see a lot of companies guide earnings expectations down. in a market where everyone is going down, or a significant amount are guiding down, investors focus less on potential for growth and focus more on value for money. and value for money is where you go for small caps today. smaller companies in the u.s. benefited more from the tax-cut, grew earnings per share buyback 30% last year but experienced a larger decline in large-cap stocks, which is driving investors to look for bargains. haidi: you take a look at some technical indicators and it suggests even though we have had this pullback after the delayed santa claus rallies, if you will, it has been relatively well contained. i want to bring up a chart looking at the percentage of stocks that the client. 70% of stocks on the s&p 500 falling, and that is pretty typical of most down days for the markets. contrast to the lows around this

mistimed, about 90% of stocks are falling. if you get to a point where 10% are rising, i guess you would start to see it more panic. does that suggest we have yet to bottom out and the worst trading days are yet to come? andy: when you consider rallies, when you considerable markets in general, brexit -- it is only in a week market where you only see a few names pulling up the average. e breadth is encouraging. it is only in a complete catastrophe such as in the 24th in the u.s. where more than 90% of stocks are falling. haidi: what is interesting is despite the uncertainty, despite what hinges on u.s./china trade talks, geopolitics and domestic politics, potentially by friday we could have another shutdown, a lot of analysts and investors are saying u.s. stocks are still

opportunistically where you want to be. what does your forecast look like? andy: i agree there are pockets of opportunity in the u.s. smaller companies in particular. some of the things that occurred last year really made them an exceptional bargain. they continue to be an exceptional bargain. actually, i would look for other than the u.s. the u.s. has really been the epicenter of a lot of the outside gains in global markets for a very long time, and the result has been a relatively overvalued u.s. market relative to the rest of the world. is the u.s.or this is likely to turn later. we have seen sooner turning in fundamentals in most of the markets outside the u.s. that said, you are getting paid to take the economic risks. you are experiencing very substantial discounts relative to u.s. valuation. take the s&p for example.

it is a small premium to long-term history. if you look at emerging markets, it is closer to 11% to 12%. dynamic markets, you are buying into markets with more fundamental problems, less certainty about their long-term growth trajectory. also buying into higher rates of economic growth. a bad year for china would be like a 5% rate of growth. unbelievable here in america. haidi: are you saying 2019 is the year u.s. outperformance at ends -- ends? andy: we are likely to do better than western europe or japan. but markets in the absence of strong, fundamental growth, high etf growth, will look much more towards violation. and valuations are really not know -- not that robust or attractive in american

companies. valuations are much more attractive abroad, especially in emerging markets. haidi: we will have to leave it there. director of research in new york. you can get a roundup of the stories you need to know to get your monday morning going in today's edition of daybreak. bloomberg subscribers can go to your terminals. it is also available on your mobile in the bloomberg anywhere app. another round of trade talk dominating headlines this week. you can tweak settings so you can just see what you care about. this is bloomberg. ♪

haidi: let's get a quick check of the latest business flash headlines. reports from japan say toshiba will cut its full-year operating profits when it reports earnings tuesday. the target will be lowered from the $550 million seen in $270mber to between 180 and

million. they are expected to maintain its aim of $3.5 billion of full-year profits by 2024. haidi: reports from rome say delta once a deal that would -- they say discussions are complex. both airlines a submitted bids in november and a decision may be announced later this week. lufthansa reported the government may go with delta because it would not require job losses. shery: boeing and aviation regulators are expected to postpone safety fixes for the 737 max until april. the upgrades have been prompted by a fatal crash of a flight. thewall street journal says delay stems from a difference of opinion over how extensive the changes should be. the crash happened when a faulty

sensor triggered a stall. haidi: coming up next, theresa may trying to get british lawmakers on side to grab her more time to get a brexit deal with the eu. this is bloomberg. ♪

is 9:30 a.m. in sydney where markets are open for a brand-new trading week in a few minutes. futures looking slack we have an unchanged session. tech shares rallying from wall street but there is the undercurrent of volatility still in play as we get into another round of trade negotiations in beijing. in new york it is 5:30 p.m. you are watching daybreak australia appear let's get to first word news. su: we start with should test with president xi jinping'a top economic aid who will be part of the -- xi jinping's top economic

aid who we part of the trade -- who will be part of the trade talks. they are hoping to avoid expanded tariffs from march 1. trend -- president trump is ready to impose heavier duties if necessary. avoiding a new government shutdown, talks stumbled over the weekend. the parties stopped talking. nine federal departments and agencies would shut down all over again. weeks after the record 35 day halt in washington. announceons hoped to an agreement later monday to set up votes in the house and senate before friday's deadline. italy's populist leaders are testing their electoral and regional vote into the government -- eight weeks into the government. the leaders campaigned heavily in the central region and tensions rise in their

coalition. the right-wing league antiestablishment movement has been quarreling over issues including immigration, security and infrastructure. happy 50th birthday to the jumbo jet. the iconic plane made its debut in february 1969, having been brought to life in just 2.5 years. it was double the size of burrowing -- a boeing's next largest jet at the time. it defied the wishes of pan, -- pan am went almost bankrupt. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am su keenan. this is bloomberg. shery: the chinese markets reopened today after a weeklong holiday, although japan is away on national foundation day. let's bring in sophie

kamaruddin. sophie: with that setup we are bracing for a mixed start to the week for asian stocks. in sydney we could see the extension of declines we saw friday. the aussie dollar is trading near a five-week low after the cut in the inflation forecast last week, with speculation it could cut rates. in sydney,atch several companies reporting earnings this week, including jp high-five. and forecasting they continued positive growth in the second half. a packaging player looking for solid earnings growth as margins companyowing and this is expecting book you to earnings to be [indiscernible] flipping the board, we have venti go in and laid reporting

in december and a drop in approvals. forecast buted its offered a lower range for 2020. looking at this one after the millionts to raise $750 australian in a capital offer. haidi: some of the movers, potentially, in the sydney session good let's look at what we should be looking at. -- in the sydney session. let's look at what we should be looking at. we are really watching china. do we have expectations for the first year will go -- first day of the new year will go? adam: change in sentiment will hit the market but there is an argument to be made there might be caution creeping in to chinese equities. we have seen a little decline in the unsure currency, the yuan -- the onshore yuan. the sense of the

sentiment on destroyed -- on the trade negotiations, maybe things were too far in december, we saw it go into early february. that took a pause last week or we had closures in hong kong. they had two days of trading. it fell on those days. you can see how the hang seng -- thenterprises index equity index is struggling to break through some of those highs it made during 2018. the worry last week really was being sounded and echoed by a number of central banks on cut from thests bank of england, downgrade to forecast from the australian central bank, the indians cut rates themselves. that leads to a picture giving impetus to the rally from global bond markets where yields continue to be under pressure.

10 year treasury yield down to 6.3% or so. it is cautious. starting with trade talks in china, it puts a lid on sentiment to take this further in chinese equities. shery: we had earnings downgrades as well. we saw that rallying stocks at the start of the year, investors seemed to push aside those worries at the time. what has changed now? adam: that is what was interesting is it was happening at the start of the year despite the fact earnings and the outlook was looking for and certainly deteriorating from month-to-month. what the situation is now, fundamentals are starting to reassert themselves as you get a peek in that sentiment of the trade talks -- peak in the sentiment of the trade talks. the focus shifts back to earnings.

this chart shows it clear -- what happens when profit growth slows and the responding impact pertains to the performance -- performance of the equity market. stocks tend to struggle during courses where you see profit growth lower than zero. that is what we are looking at. we will be below zero for the first time in three years. will have onat people wanting to push this market higher, given the extent of the post-christmas rally that has been surprising to some people how long it has gone, without the earnings backdrop to lift us through to the end of earnings season not just in the u.s. but the rest of the world, we continue to hear the concern and warnings from companies about the future outlook for growth. little lid on the rally for the moment. , thank you.haigh

you can find his charts on the gtv library, gtv on your bloomberg. is asking for more time to negotiate her brexit deal. kathleen hays is here with more on this. we have the boe holding steady, downgrading growth forecasts, really a prisoner of this brexit saga. with the contentious messages from the e.u. to theresa may, getting a deal, it doesn't look bright. today we are learning theresa may in fact has written a conciliatory letter to the opposition labor leader, jeremy corbyn. he proposed a new deadline for winning lawmakers' backing to the exit deal. this we learned earlier today, theresa may was already getting

ready to ask parliament for more wednesday next week. if she doesn't have a deal in hand, the teams from the u.k. and e.u. are negotiating, nevertheless on february 14, she has to go back to parliament. sources, she is ready to propose things for them to vote on on february 14. let's take a look at what this is about. him a corbyn, her sending letter to woo him. will vote on february 14 one way or the other. .he will ask him to reaffirm one of the things they need is to remove the irish backstop, causing the most contentious fight. next in line, there will be another vote february 27 if she doesn't get a new vote -- new deal with the european union.

wants ant for its part second vote, a february 27 vote. she wants to say that if they don't have a deal, they can take control, they can make sure there is no hard brexit. this is what is going on, setting the stage for a dramatic week. with the irish backstop, parliament wants it removed. main -- it will vote will remain. the e.u. said no way, that has to be there. we want to make sure the union between the republic of ireland and northern ireland is maintained. there is concern that unless this is settled now, it could upset the piece agreement that existed for these few years some people including tony blair said could be in jeopardy if it were to happen. even as we get used to

this up and down nature, there are more red flags popping up including at the bank of england. this could get damaging. think about, it is march 29 is the deadline and so many things haven't been worked out. story,sh and u.s. banks sources say they are divided what will happen with banking post-brexit. it is the case u.s. banks want the u.k. to keep as close ties with the e.u. as they can. in this posttough brexit world. the u.k. is working on a global financial partnership. there may be something announced by the chancellor of the exchequer, but they have lowered expectations about what kind of relationships that can maintain with the e.u. they are getting ready to settle for the regulatory equivalents deal others have with the e.u.

no more guaranteed easy access to the single market. this is a concern to u.s. bankers. is important.s the deal will expire -- brexit will be happening by march 3 nine -- march 29. most of the trade turns -- trade terms that are set with the u.k. and trading partners around the world haven't been rolled over. people will be waiting to receive imports of goods they will use in their production to exports. they don't know what will happen to those inputs and outputs in between. and the bank of england did cut their gdp broke -- forecast the 2009. since a recent bloomberg poll shows 30% expect a u.k. recession in the next 12 months. this is becoming more and more of a present issue. the red flags are waving, people

see there is damage done. how much worse it could be if they get to the point of march 29 and leave without a deal, the hard brexit, there are many taking steps that won't happen. but forld even extend, now it is a huge deal. this isot knowing where going. thank you, kathleen hays. extremists part of our conversation -- if you missed a part of our conversation, go to the terminal. tv . you can also see the interactive tv function, dive into bloomberg functions we talk about on the right-hand side. askhe bottom left, you can a guest a question. to get to those per this is for bloomberg subscribers only. this is bloomberg. ♪ is bloomberg. ♪

ahn in new shery york. haidi: i am haidi stroud-watts. you are watching daybreak australia. l'oreal is the latest name to defy a slowdown in china with sales on the mainland hoping to produce best performance in 40 quarters. they affirmed l'oreal's strengths when we spoke with them. there is a strong appetite of chinese consumers for beauty products, luxury beauty projects -- products and so far we are seeing no slow down at all. reporter: other companies are caterpillar, apple with iphone. >> different. reporter: what are you seeing in chinareporter:? >> we see a strong demand. it is true also there is something called ballistic effect which says some time when

people don't want to buy two expensive items, lipstick, skincare, fragrance or something like that, we think that this strong growth could continue. reporter: you are not seeing any impact from the trade war but what about the weak data from china? when are you expecting a slowdown to hit your company? there is no reason for the moment to be worried. obviously if there is a slowdown, we will adapt, adjust. reporter: you don't see it in 2019. jean-paul: for the moment, nothing. wekeep -- one of the reasons are not seeing a slowdown is we have been investing for many years on our brand. l'oreal paris is the number one in china. we are number one in makeup, in

men's care, skin care. reporter: now it is your number two market. jean-paul: yeah. reporter: when will it be number one? jean-paul: certainly it will be, but the u.s. is much bigger. i don't know. 10 or 15 years. shery: that was the l'oreal ceo speaking to our reporter. talks to avoid a government shutdown stumbled over the weekend with republicans and democrats said to have stopped talking. nine new federal departments would shut down again after the record 35 day halt in washington. this nobel laureate says the shutdown may hurt the country's credibility. >> it was like a stretch of bad -- itr in terms of it it actually impacting. what it will do in a longer run to the credibility of the u.s. policy, it has been eroding on

various fronts for a while. i don't think this will be a big part of the story over the next few months. yourter: how surprised were by the fed, and what does it mean for the trajectory of the fed, 2019 and beyond? >> >> i wasn't really surprised. the actual way to play it out was more abrupt. the fact of the matter was the fed's normalization of rates was never really grounded in the data. it was always we need to do this away from rising above target, but where was the inflation? it became clear there wasn't enough inflation. there wasn't enough of a signal to justify. meanwhile you have some headwinds facing the economy. continuing to raise rates was looking like a bad idea.

is it possible you could switch to cutting rates? trade, europe is looking problematic. there could be blowback to the u.s. if it is going bad. china is having a slowdown. that blows back to the u.s. if we have a -- if there is a deteriorating environment, quite possible the fed will end up close -- cutting rates. yousef: an overwhelming majority of ceo's think the recession will happen in the next two years. is that something you see? likely.ems pretty there seems to be an accumulation of smaller problems, and we have no good lessee response. the fed can't cut rates very much area physical -- very much.

it is hard to see this current leadership will respond to any nimble way. so i say we will have a recession. yousef: when you look back at the last crisis and compare it to now, is the u.s. or the world in better shape? paul: we are in worse shape. we came into the last crisis with interest rates above zero and lots of room for cuts. not enough but lots of room we came into the last crisis with public debt lower than it is now. which isn't a big factor but it is a psychological factor. we came into the last crisis with pretty remarkable leadership. enjoy maligning government officials. our current treasury secretary

is no [indiscernible] we are in worse shape. worse shape to deal with whatever shocks come along compared to 10 years ago. yousef: the imf downgraded expectations for global economic growth. what is the biggest risk facing the global economy? two, andctually see one is china. i am predicting a chinese crisis over inadequate consumption. it does seem to be getting closer to that point. the other is europe. the euro area is experiencing a slowdown close to recessionary levels and has no recourse. , but theyhi cut rates are negative already. there is plenty of room for fiscal expansion but it is room in germany. they won't do it.

a danger spot as big a deal as china. yousef: let me get you to weigh in on this trade stand up with china. is it only going -- standoff with china. is it only going to go away if trump gets [indiscernible] paul: the odd thing about the u.s. trade conflict is, making predictions is hard. it is the mind of one man. there is no broad constituency, no deep-rooted movement in the u.s., it is all trump. he wants it. his party doesn't want it. the voters don't really want it. it is all about him. haidi: that was the nobel economics laureate paul krugman. for breaking news wherever you are, we have teamed up with twitter to launch tictoc.

it is the first global news network designed for social media, offering live video coverage and only updating things that are verified by us on bloomberg. make sure you follow tictoc there. this is bloomberg. ♪ ♪

haidi: a quick check of business flash headlines, bloomberg is considering -- this company is considering options for a malaysian banking community. the london-based lender has been gauging the business, known as standard charter static. they are wearing to move -- weighing the move because there are limited growth prospects. shery: electronic arts surged to its biggest gain since 2014 after their latest release attracted 10 million users in 72 hours. apex legends is the latest free to play our game.

positive commentary and user look liket had online ite that hasof fortn had rival publishers scrambling to catch up. let's preview the markets' open in australia. sophie: we are seeing fluctuations for aussie futures after stocks halted a four-day gain. aside from jb hi-fi have different things to look at. -- aurizon andin others. this one missed estimates and the stock is trading at a september 2008 hi. looking at the aussie dollar, trading at a five-week low, it could be a structural week after the rba cut its growth forecast and warned about trade tensions last week. that is the start up for cash trade in sydney, and that is it

from daybreak australia. we will get all of the action in daybreak asia next. this is bloomberg. ♪ s bloomberg. ♪ this isn't just any moving day.

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haidi: australian markets have just opened for trade. shery: i'm shery ahn. sophie: i'm sophie kamaruddin in hong kong. i'll come to daybreak asia. -- welcome to daybreak asia. ♪ haidi: our top stories, china's robust start of the year faces a test as markets return from new -- the lunar new year. the yuan is under pressure from a strong dollar. negotiators meeting in beijing.