nejra: good morning from bloomberg headquarters in london. i am nejra cehic. manus: i am manus cranny from the summit in other david. this is "bloomberg markets: middle eas nejra: asian stocks in u.s. futures rise as negotiators say they have raised a tentative deal to avoid a shutdown. more time, theresa may looks to update parliament with six weeks until britain leaves the bloc. can't you negotiate? nissan will deliver its first earnings, will the widening

scandal deliver a blow? manus: germany is slowing down, the world is under pressure. ebit, adjusted first-quarter, a small miss, but 168 million euros. there in mind confidence in germany is at a three-year low. factory orders among the biggest .rop back to back since 2012 they are saying 2018-2019 forecast, uncertainties are growing. we are talking about the tensile

global slowdown and confidence -- we are talking about potential global slowdown and confidence being eroded. they say they will begin operating october 1. they are trying to split the company in two, investors are questioning that. that is not a headline, just a fact. uncertainty is growing. good to see you, let's get to the travel sector. thisd a profit warning for company, plunged the most since 2016. the seasonal first-quarter loss doubling on a heat wave and brexit. the first quarter underlying euros.ss at 83.6 million the first quarter turnover is 3.7 billion euros.

it is beating on the first quarter turnover, but it is the loss that is the focus. looking at how it is broken down, he usually has a deficit in the three months through december 31. the loss based on underlying what they call the northern region, was twice the amount of last year. the hot summer cap travelers at home because of good weather. the devaluation of the pound mid-brexit hurt the profitability of the business. manus: you need to take more holidays. come and join me in abu dhabi. let's talk about the dollar. there was a bit of a dip. even though the shutdown may be averted, you are seeing yield differential trade, and therein

lies the issue. pivotedugh the fed has to a stopped her, you will see the divergence in yields play out. oil manages to cover -- recover from a two week low. have a look at dollar yuan. goldman sachs said, no unilateral devaluation in the yuan. that is all well for the moment, let's hope the trade talks turnout the way goldman sachs hopes. there is discussion about rate cuts. the u.s. session yesterday in terms of equities, nothing to write home about. the stoxx 600 gained 0.9%. s&p futures up, a little hope from investors on the tentative deal to avert the shutdown.

hopes around the u.s.-china trade talks as well. the 10 year yield moves up three basis points. risk on in markets today. treasury bonds have come off the 2018 highs. that brings me to the euro. we see the yen in today's session hit a 2019 low. the euro hit 2019 low yesterday. we are holding the losses from yesterday. it is about dollar strength, nine straight days of gains. banksthat other central are out doving the fed? juliette: the markets are cheering. the weekend leading gains in asia up by 2.6% on the close, but risk on across most markets

with the exception of selling in indonesia after credit suisse cut their look at indonesian stocks. we have this positive move and equity futures on principle agreement on the u.s. federal government funding that has boosted sentiment. we are seeing upside from the em currencies despite strong dollar. the msci asia pacific index has its first win since last tuesday. nissan is expected to come through with results, the first since carlos ghosn was detained. closing high in tokyo up by 2%. toshiba has been laggard on reports it will slash profit. upside, the best performer on the hang seng index boostingr 5%, analysts targets on january sales for the carmaker.

morgan stanley raising its price target as well. thank you very juliette saly in singapore. those are your markets. let's talk about other major issues. today we are asking the mliv team about defaults. tsen will china default seriously impact global risk appetite? you can reach us all on your bloomberg. now to congress and the negotiators, they have reached a tentative deal to avoid a new government shutdown. the agreement will give the president less money than he demanded, one point $4 billion, he wants $5.7 billion. trump says the shutdown was important to highlight issues on the border. notident trump: if we did

do that shutdown, we would not have been able to show this country and the world what the hell is happening with the border. that was an important thing. manus: we are joined from our singapore studio. what can you tell us about this a deal? is it robust? >> i love that question. let's see what the president says. you played some clips from that rally in el paso, just miles from the u.s. southern border were trump was trying to rally his base talking about the wall. just as that was coming up, we had news that the deal includes far less money than trump wanted. he mentioned this during the rally, and said, i could have been backstage talking about

i figured i would talk with you instead. then he held a rally and did not say if he liked the deal or not. we are waiting on the president to say. republican negotiators say they are cautiously optimistic and hope the white house likes it. we are waiting for the white house. we are waiting for the white house, what have we heard mothers like nancy pelosi? and democratic negotiators are happy about this deal. they feel they have a bit of a of here on the top line money, less than trump wanted. they feel like they have a win in the overall number of detention beds, this is a in the weeds issue that is important as we go into this. one of the other things a lot of

negotiators and congress feel is a win is that nobody seems to want to shut the government down again. the one problem, and the one trip hazard as we wait for trump to say what he thinks, is the fact that some of the congress,s allies in jim jordan, mark meadows, sean hannity on tv, a conservative commentator who speaks with trump all the time do not like this deal. hannity called it orbits. meadow -- hannity called it garbage. there is a difference between i am not thrilled versus i want to think it and shut the government down again. sign, you saw the move in u.s. futures. we are waiting for the president. it is important when he speaks, what he says. isdoes not matter if he

happy or not happy, it matters if he will put pen to paper. bloomberg's editor for breaking news in singapore. joining us now is derek halpenny , european head global markets research, mufg bank. good morning. good to see you. we have for the update on that tentative deal to avoid a shutdown, it looks like we are risk on in these markets. are you setting yourself up to be pro-risk ahead of the trade talks and what we heard about i think itn? derek: is obviously good news. it is more specific risk on related to the u.s. economy first and foremost. from a global cyclical story, the potential outcome of developments at the end of the week, we will not get a firm outcome but how those negotiations go is far more important for a strong global risk on rally, but certainly the avoidance of the government shutdown is positive news.

manus: good morning. i am gladly welcomed you back. with carl black and perniciousut he levels of debt. would you agree that debt ultimately will be the driver of when you have to blink first? derek: yes, there is a lot of issues on both sides. really, i think both sides have an incentive to reach a deal. first and foremost from a market perspective, it is avoiding increasing the tariff on chinese imports from 10% to 25%. the most likely outcome is an extension for another three months.

i think the markets can deal with that as long as we avoid .scalation in tariff rates that can be taken quite well by the markets. nejra: nine straight days of gains for the dollar, erased losses on the dovish fed. r central banks out doving the fed, and we will see dollar weakness for the rest of the year because of the differential? obviously, when you look at data that comes on the u.s. relative to the data from europe , and also china, certainly in europe you have had germany on the brink of recession, a contraction of growth in the u.k. in december, and the central banks have shifted. it is more the data and the fact that that has pushed the timing of any action central banks in europe further out. that has offset the change in

rhetoric from the fred. -- from the fed. it will be difficult for non-dollar currencies to rally in the context of these economies on the brink of recession, and the trade uncertainty that would undoubtedly have negative impact on china. the most important thing in terms of risk on is whether or not we see evidence in china of the stimulus measures and lamented toward the end of last year started to stabilize economic growth in china. that has had a big impact on if we, and in that sense, can see better evidence of growth in china, that would improve sentiment in europe. maybe that is the point, maybe we are under assuming the potential impact of the stimulus from china.

china. derek halpenny, european head global markets research, mufg bank stays with the bloomberg team. have the automakers, will they recover from sluggish sales in china, management scandals, and the slow death of the soul? this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." institutelken gathering in north africa and the middle east. nejra: i am nejra cehic. u.s. entering a mild recession is seen by next year, he spoke with bloomberg earlier

about fed policy and his global outlook. >> if you look at asia and components of chinese industrial in negativethey are territory. if you look at europe, italy went into recession a week ago. germany's numbers look like it will be in a recession in the next three to six months, and the u.s. has this positive stimulus from the tax cuts that a 250 billion dollar impact last year, and a $400 billion positive impact next year, but next year it will only be 150 billion. -250 next year, so i think economic activity will back half of 2019, and the middle of 2020 we are likely to be in a recession. and the conflict between democrats and republicans and congress, my guess is the democrats will not let trump

stimulate going into an election year. the are saying he is taking economy hostage, and they will let him shoot it. i expect the u.s. in a mild recession by mid-2020. f inu gave powell an december and said he failed emerging markets. now?path are they on and what score would you give him? had the worst december and stock market history, it dropped at 1.60% in a month. in a month. they took lehman down, they came down worrying about aig and we lost 10%. we were down 16% in december. i am getting the central bank an f because look at what is asia,ing in china and in

and in europe from an economic perspective. the u.s. stimulus is about to wear off. the last three recessions, we have cut rates 500 basis points, and now we can only cut them 250. a week ago san francisco put out a white paper about the benefits of negative interest rates. i hope that is not where we are going. we can only cut rates to hundred 50. 250. they were really late in the cycle raising rates, and now they are stuck. when we get into a small recession, i do not think we have the arrows and the quiver. let's hope we learn something from japan about negative interest rates. they destroyed been banking sectors -- they destroyed the banking sectors. what i am telling you, in 2020,

interest rates could be lower than they are today. >> when it comes to u.s. stocks, is it more likely be will get a revisiting of the september hikes or the december lows? there will be market we get ao the extent trade deal, it will be short-lived. by the end of this year, the u.s. market will be lower than bank today. nejra: now to autos, investors get a look at the fallout from the carlos ghosn scandal. today, they missed earnings since the arrest. china and the in u.s. will be in focus. dani burger with more. 7:30 in london we get nissan sales today.

heard quarter results will be closely watched, not just for the fallout with the carlos ghosn scandal. sluggish sales, will we see them in the u.s.? thursday, we will hear from renault. is goingman of renault to japan, he announced that this morning. we get financial widening from the scandal? that is going to be in focus. thes not the only headwind carmakers face. we have trade headwinds coming in, u.s. delegates in beijing today. where will that put us? will that continue to hurt sales? it will be interesting to see what the executives say. there are troubling signs in china, have car sales peaked? i have the monthly sales figures for china. you can see last year six months in a row figures declined, that

means in 2018 this was one of the first drops in annual sales in at least two decades. ford's main, partner in china said trump that might have fallen as much is 93%. that is because of this potential slowdown we are seeing. manus: dani, thank you very much. is our european guest hosts and european head global markets research, mufg bank. i want everybody to know this is the report i get at 5:00 in the morning. aboute not optimistic march 1, are you? derek: in terms of getting a deal and everything goes away we do notky-dory, no,

have time for a significant breakthrough at this point. i think the best we can hope for is there is some kind of half-baked deal that kicks the can a little bit further down the road, and we keep the rate at the current level. i think that is enough for the market at the moment as long as we do not get an escalation, i think the markets can take that as relatively good news and we carry on going forward. more importantly, it is the stimulus and whether or not we get stability in chinese growth. nejra: what does that mean for the you want? -- what does that mean for the yuan? derek: chinese authorities focusing on stabilizing the currency. if it was fundamentals, i think the dollar would be higher. yesterday,big jump

over the last couple of months there has been more of the countercyclical factor at play in terms of supporting cny. is that something going on in relation to the backdrop with the united states, steve mnuchin is anntioned cny important element of trade negotiations. in that sense we could see continued stability, but if the dollar strengthens, undoubtedly that allows some of the dollar strength to come through versus cny as well. manus: very briefly in 30 --onds, with good outcomes beyond the yuan, is it the aussie dollar? derek halpenny, european head

global markets research, mufg bank is our guest post this morning. coming up, we will focus on europe. is spain heading for another election? the risks are rising. ♪

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world map, risk on in the asian session. japan outperforming, the nikkei up 2.6%. the yen hitting a 2019 low against the dollar. world, let'sd the kick it off. bets.of bearish what are the key indicators? you summed it up right, and if you look at the index, it does not show that. it makes it look flat.

look at the broader spectrum, , all show that particular weakness. the kind of numbers the indices are showing is hardly anything. , theifty auto index broader markets are exhibiting because that index has fallen over 25% since september alone. there is no attempt to pull back. if i was a market watcher, i am looking at the auto index now to see if there is a bounce coming. manus: asian stocks coming back with liquidity post lunar new year.

to china, what is going on with asia? >> the nikkei is the standout, .p 2% back from holiday this is due to a weaker yen, the 2019. in the dollar is much stronger. eight days it has been higher and recouping losses. s&p futures are higher. the u.s. government has reached a tentative deal to avert another shutdown. the bloomberg commodities index, , somerally drop the year bearish sentiment on oil and commodity indexes trading lower than the 50 day average. some bearish sentiment coming into the market.

many talking about oil and stocks trade in tandem, this could mean bearishness on equities. nejra: in terms of the trading in tandem, oil is up, recovering from a two week low. we get energy outlook today from opec. what are you looking for? today isec data crucial, the first official numbers from the cartel following their intimidation -- implementation in december. they are making a strong impact, more than 80% of the deal implemented. iny cut 930,000 barrels january. yesterday the oil minister said january compliance was excellent . on top of this data numbers from opec, we had outlook and the iea. the last time they said they

were maintaining outlook demand, this will be critical now because since the report, we have had weaker data in china and asia, and a softer outlook in europe. italy in a recession. germany on the brink. ampenf that may hav demand. will they defy gravity and maintain it or cut it? if they cut demand, opec will be more reliant on the losses in venezuela and iran to prop up output. manus: great. my compliance on the road is excellent. amory hoarded in the mliv question is about china.

when will it impact global risk appetite? joined that debate with the mliv team. nejra: let's go to bloomberg first word news. congressional to go shooters have reached a tentative deal to avoid a new government shutdown. the agreement on border security would give the president far less money than he demanded. $1.4 billion. trump says the shutdown was important to highlight the issue on the border. if we did notp: do that shutdown, we would not have been able to show this country and these politicians what the hell is happening with the border. that was an important thing we did. a recession is seen on the horizon. ,he bounce from fiscal stimulus and the democrats will not let

trump boost the economy further. >> i think economic activity back half ofhe 2019, and in the middle of 2020 most likely in a recession. trump administration says the u.s. president wants to meet with xi jinping, fast approaching the march 1 deadline on tariffs. the latest round of trade talks take place in beijing this week. the eu is considering a joint response to cyberattacks allegedly conducted by a china backed hacker. u.k. presented evidence of software and hardware attacks. the group reportedly behind the attack was at the center of u.s. indictments in december. the issue could be discussed at summit in april. the british government is being sued over a no deal brexit. this comes days after one of the

contracts fell through with the company that does not own any shares. they accuse the government of a secretive process. the government minister response has space calls to resign. nejra: thank you so much. here is a look at what we should watch for today. nissan reports warnings. ministers willce hold a news conference after the meeting in brussels. we look for any readout on the u.k. economy and data across europe. italy falls into a recession. we stay with the european scene and get the latest from brussels.

what is occupying the ministers'minds later this morning, their own internal growth, or brexit? what have we got? that is the big concern. the outlook for the european economy from a data point of worse.s gone from bad to germany now flirting with a recession. italy back in a recession. the european finance minister says the economy has slowed, but they do not see a recession and there are more optimistic voices here. yesterday, we could get a surprise, and the risks in europe are political and external. you look at brexit and european elections in may, and trade tariffs, and the u.s.-trade tension. you could see a european economy

that outperforms. for the time being, the data paints a different gloomy picture. spain,tension turning to it looks like the spanish boon the spread is at 112 basis points. spain in a way, because of the strong economy and recovery we saw in the country for five years, it has managed to shield itself from political uncertainty. you did see that spread move on speculation we could get an election as soon as april. the story here is the week prime , and the catalan independence flaring up, you could see a situation where you have three elections this year,

the portuguese elections, and perhaps a new one in spain. nejra: thank you so much. derek halpenny, european head global markets research, mufg bank is still with us. we were talking about the euro hit a 2019 low. if you look at my chart, as the growling, why do you believe downside from the euro from here is limited? to thegoing back micro-story, obviously when you look at the data, it is grim at the moment. there are factors that suggest from a domestic demand situation, we could see improvements that could offset the net external demand weakness. in germany we have a strong labor market, nominal wages up

5% on an annual basis, the largest since the 1990's. in ae fiscal side, we are different situation in europe this year. according to the european commission calculations, we have a net gdp stimulus of 0.4 percentage points. that is the largest fiscal easing in the euro zone since the great financial crisis. factors. certain there have been temporary elements to the german weakness, and the data we had most , whichy on production fell and was disappointing, but a lot of that was instruction related is more volatile and weather-related. if you strip out construction, gains month on month, there are tentative signs the bad news, which i think is well priced into the currency, well priced

into the rate markets, could be close to the bottom. external factors and what happens with china and trade is important, and what happens with brexit. there are reasons to believe the pessimism out there is very extreme, and as we move forward some could melt away which would be the opposite of last year. at the beginning of 2018 optimism was up here and we spent the year going the other way. manus: can you tie that together , without looking at five-year is that the nadir in terms of inflation? we are almost in negative on 10 year yields. tie them together for me. derek: certainly from an

inflation expectations perspective, since the fourth quarter last year, inflation expectations have nosedived. that is not just a story for europe, that is a global story. it is a reflection of the asset price collapse we have had in q4 . in terms of the data, if things start to improve, and we get a inde deal or no escalation the trade tensions between the u.s. and china, and brexit is eradicated, but the risk of a no deal is eradicated, those are factors that can help inflation expectations turnaround. sayingalso what you were about the fiscal side in germany, that makes me think you would see the 10-year bund yield moving higher. how do you think it will impact the bund spread that has come off its 2018 highs. does that feed into euro strength?

the correlation with euro-dollar is not always obvious. derek: when we talk about what is going on globally, what has not changed much is the 10 year spread that has dropped from 282 0 to 250. there has not been a shift to the united states. lastds are narrower than year. while the correlation is not strong, it certainly is not moving in favor of the u.s., which would suggest the impetus toward continue dollar strength will start to fade. manus: thank you very much, derek halpenny, european head global markets research, mufg bank. undoing all the pessimism we suffer on a daily basis. coming up on bloomberg, this is a man you want to speak to. the ceo of the alcoholic drinks

company. you will be having your drinks by then. when you are traveling to work, tune into bloomberg radio live on your mobile device or on dab digital radio in the london area. this is bloomberg. ♪

manus: it is "bloomberg ."ybreak: europe i am manus at the milken institute, mideast north africa institute 2019. nejra: i am nejra cehic in london. gucci fourth-quarter sales growth coming in that 28%, a beat on estimates of 27%.

3.9 billion euros. it will operate at performance and keep the cash flow, 3.9 billion euros is a beat on estimates. the full-year revenue also comes in at a beat. among chinese clients it is extremely dynamic in the fourth quarter, that is from the cfo. they are proposing a dividend of 10.50 euros per share. read it users are -- reddit users, 10% invested $3 million in the site. reddit depicting

imagery band by beijing. nned blizzard sank to the lowest in two years and has tumbled 50%. the company is planning layoffs that could number in the hundreds. ,his is part of a restructuring and increasing profitability. the company is due to report earnings today. asianvestment bankers in comes after a slump in equity offerings. it had been reduced by 8% with managing directors hardest hit. this is a reversal from last year when they saw bonuses rise 6%. that is your bloomberg business flash. manus: thanks for the roundup.

geopolitical risk has never been worse, that is the view of a german investment firm. investment opportunities in venezuela. he spoke to me earlier herein abu dhabi. >> it has never been worse. you have the chinese coming back, everybody wants to be an emperor today. the gas is who will be the emperor in the end? we have all the ingredients for a big mess. the problems in france and italy, brexit, everything is indicating a big mess. manus: you said it is a craziness scale. where are we on the craziness scale politically? >> quite high, on a scale of 10,

8. are we underestimating risks from europe? >> if you get brexit, and italy and france, who will be left, germany? it is like dismantling the whole european union which has been a positive story. , i am sorry for everybody who voted for it, i think it is a disaster. when they voted for brexit, i do not think they knew what they were voting on. they were told foreigners are coming to take jobs. you have all these other bigger problems. they focused on one area, and now we are in this mess. manus: you said there is a possibility they will strike a deal. that is a possibility.

>> even if they strike a deal, it will be a mess. time, howsk you last much more capital might you put into play in the u.k.? property prices are lower. you are shaking your head no. >> brexit puts a big question mark, even if they come to a deal. i like italy. i had a good experience there. they were open to a foreign investor from egypt. manus: what assets would you like to buy? >> they will privatize the real estate, they sit on one of the most lucrative real estate assets in the world. they will privatize this. manus: they have tried that before. >> this time i think they are serious.

all theirexhausted avenues. manus: half a billion? we like numbers, give us a number. what do you want to put to work in italy? >> 300 million. manus: that was naguib sawa iris. derek halpenny, is the european head global markets research, mufg bank. he wants maduro to go, and to invest in venezuela. if we look at political risk, he says we are on the crazy scale eight out of 10. what is the protection trade? , or gold?uries, bunds how do i protect myself from peak crazy question mark derek: in terms of the previous

interview, we have to get used to peak crazy. it is the consequence of the u.s. relative importance globally going forward. tragically diminishing. therefore, you can pick all of these different political scenarios that are unfolding, and ultimately we need to get used to the idea of china, russia, other emerging markets and economies and governments coming to the fore to be more influential in world geopolitics. sure this is aly crisis moment. it is very different, but we should get used to it. craziness, if we want to collect that, we saw the dollar as a safe haven, and i asked if we saw the strength in the last nine days with continue because other central banks seem to be out doving the fed, but you remain negative on the

dollar. when will that turn and why? derek: i would say q2 into the summertime to a weaker dollar. the relative cyclical story which looks compelling is not going to be as compelling as 2018. you could not have got it better last year in terms of what the fed did relative to expectations and the economy. it will be different this year. brexit as those factors, recedes as a risk, improvement in relations with china, then the global story becomes better relative to the united states. from a cyclical perspective the dollar starts to weaken. structurally, there are other mechanisms a long-term perspective points to dollar weakness. nejra: derek halpenny, derek eun head global markets research, mufg bank. host of global automakers, the first reports of the carlos ghosn scandal. that is next.

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dhabi. summit 2019. this is bloomberg daybreak: europe. change, liveejra from the city of london. these are today's top stories. this rally.n the dollar continues its longest winning streak in more than three years. asian stocks and u.s. futures rise as could gretchen -- congressional negotiators say they have reached a tentative deal to avoid another u.s. shut down. seeking more time. theresa may prepares to update parliament on brexit with just she -- can she

renegotiate her deal with the eu? and the carlos ghosn effect delivering the first earnings since the tsonga corrupted, well the scandal delivery blow? nejra: good morning. i has gone 7:00 a.m. in london, one hour until the start of cash equity trading. stoxx 600 gaining. it looks like we will see another risk on day, a second day of gains, ftse futures higher by .2 of 1%, futures outperformed .7 of web percent. you and weres up for saw a little bit of a lackluster

session yesterday, the s&p 500 ended flat that u.s. futures pointing higher. optimism coming into these markets perhaps ahead of the u.s.-china trade talks but progress being made on a tentative deal on the u.s. shut down. andave seen dollar strength there is questions over whether that could hurt the big u.s. corporate's. nine days of gain for the rest dollar basically reversed, the losses we saw in 2019 on a dovish fed. saying.here is a have a look at the bond market. they are nervous. you have a drop in prices, equities are bid. we had mufg where they are saying the worst is past for europe and as a result of that, they would be a seller of bunds, they say they could trade up to

60 basis points. keep an eye across the u.s. bond market. showdown has been trumped. a deal has tentatively been done. will it hold? no one wanted to close the government down again. bit of aave a little move from the bank of japan and terms of what they are prepared to do on the bond buying side. they are concerned about where the yields are in japan. cutting bondapan buying to arrest the slide in the bond market. let's get deeper into the asian session. we have trade thanks. juliette saly is standing by. juliette: everything you are talking about, the boj move, the yen is at a 19 year low boosting japanese stocks, they were closed for a public holiday yesterday. the topics and then nikkei,

closing higher by 2.6% and gaining, adding to the gain across asian equities. the first win on the msci asia-pacific index since last tuesday. chinese market closing from her by .7 of 1%. australia was stronger. you see weakness coming through in a.m.'s -- em's. of -- off bystocks -- and an asian stocks off. we have seen some upward movement coming through in the offshore and onshore renminbi after they touched a three-week low yesterday. where closely watching the kiwi which is unchanged. no rate decision tomorrow, change expected from that cash level and now analysts pushing

the rate, securities saying you will not see the move until [inaudible] they could he come the latest central bank to turn dovish. telling youtte about another day of gains for chinese equities. while we saw some euphoria after the letter year -- new year, -- the lunar new year, we're asking the question when will china -- impactriously risk risk appetite? let's get the bloomberg first word news with annabel drill it -- drillers. the agreement on border [inaudible] as $1.7ought as much billion. trump said the shutdown was

important to highlight the issue of the border. president trump: if we did not do that shutdown we would not have been able to show this country, these politicians, the world what is happening with the border. that was a very important thing. annabel: a recession on the rise and. the founder said the bounce from fiscal stimulus would wayne and democrats would not let trump boost the economy further. >> economic activity will wane in the back half of 2019 and by the middle of 2020 we are most likely in a recession. annabel: the trump administration says the u.s. president still wants to meet with china's president. the as we fast approach deadline for the ramping up of tariffs. latest round of trade talks

take place in beijing this week. to -- closehas come to issuing an ultimatum. the u.s. secretary of state says the contracts with the tech giant could limit the availability of u.s. equipment. a top american diplomat is making it push against huawei a key theme of his trip to europe this week. u.k. lawmakers have criticized philip hammond in a report on the autumn budget. claiming the divorce agreement dividend.ver a said toe minister address the house of commons later today. 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. manus: i will pick it up from here in ovid dombey. let's turn to the auto sector.

investigators are getting their -- investors are getting the first look at fallout. they will report the first send -- set of earnings. you have sluggish growth on sales in china and the u.s. as well as the global focus for the overall auto market. sentiment. what are you going to add to it? >> that is exactly right, sentiment at 730 a.m., that is when it kicks into high gear and we need to watch closely the u.s. and china numbers, are we seeing more sluggish sales and it is the extent of that follow which you mentioned that we will be in high focus word nissan and as if that is not enough, a few days later on thursday, we hear from renault. this is a tumultuous week. we heard from the nose chairman saying he will visit japan and

hoping to reestablish trust. also we may get a decision over carlos ghosn's differed compensation package. that is all this week and to throw another factor in there, trade and tariff fears, those loom large over the global automakers as u.s. delegates are in beijing. the other main question, trade slowing, are we getting growth in china and is that going to hit the automakers? certainly signs of that. we have seen sales declined year-over-year for six consecutive months. 2018 was the first time in at least two decades that annual sales fell. we are seeing that fallout hit the industry late january. 2018 profits might have tumbled as much as 93% because of that slowdown. nejra: thank you so much. let's go live to nissan's headquarters in your, and our

chief north asia correspondent stephen engle is standing by. great to have you on the show. the big question here is how much will the carlos ghosn saga weigh on today's results? stephen: that was the drama over the last 86 days as he was ousted as chairman not only of nissan but mitsubishi and eventually renault. the focus is how does nissan turn the page and how do you go forward from here? it has been 86 days and we are seeing the ceo unwind some of the moves that carlos ghosn was making. in particular was the consolidation, the eventual what we heard would be a merger between renault and nissan and to a lesser degree, mitsubishi. that is not something the existing board members wanted to do. the focus of the earnings as we will get within the next way

minutes out of the headquarters is thed you'll, is what guidance going forward? they have severe headwinds in the u.s. where sales dropped 19% in the first month of this year, in january. down 6% for the full year in 2018. we have brexit concerns with the sunderland plant, nissan deciding we are not going to brexite big suv, weighing on their expansion plans on what is the largest auto plant in the u.k. and then there is china, the joint venture partner of nissan reporting of 4% drop in the calendar fourth quarter, unit sales in a year in china which saw the first drop in sales in decades. there are significant headwinds, forget about carlos ghosn, there are other issues that are playing on the minds of the board members here inside the headquarters. this, where is the

great alliance between the sun and renault? decline or in cardiac arrest? stephen: i would say it is in between. have had ally could massive coronary. when you take a figure like carlos ghosn out of the equation, he was the glue of the last two decades keeping this together. bother, it serves carmakers and i mean renault and nissan to have this alliance when there is severe disruption in the auto industry but at the wants a moressan equitable partnership. the french government has a 15% stake in renault, nissan has a 15% nonvoting right stake in renault. there is an an equitable partnership when nissan

contributes the bulk of sales and profits. look for the next few months, nissan, if they are going to forge ahead with this alliance, they want a more equitable partnership and keep in mind as that the new chairman of renault will be here in japan in this building behind me thursday and friday. meeting that the new chairman of with the executive team and we are hearing already from him, he says i have received encouraging signs from the japanese, however, he added, we must reestablish trust. much, thank you so stephen engle for us outside nissan's headquarters. as we have been saying, investors have been flocking to risk assets on the double dose of good news that has emerged u.s.the lawmakers have agreed on a tentative deal to avoid shutdown and trump sounded optimistic about -- in a rally in texas.

us.t to have you with welcome to the show. what is your appetite for risk right now? positive, we felt the risk rally had to pause in the short-term and the reason for that is we bounced a long way from the big selloff at the back end of last year when markets got cheap. at msci global pe was down 12.5 pounds, it is now 14.5 pounds today. needs -- we need to pause, we are waiting for progress in the u.s. shutdown and more important a, we need to progress on u.s.-china trade. if markets are going to make more progress is the global economy will find traction at some point at the end of the first quarter, beginning of the second quarter

and the u.s.-china trade deal is key for that. morning to you, i am fascinated to know, we need to clear some of these risks off, the are not small area the shutdown seems to be off the table but you are still actively pointspreads.r you think that there is merit and hedging. as where far concerned, we are positive on risk. you cannot be blind here. to fact is we are running eight march 1 deadline as far as u.s.-china trade is concerned. last week we read that president trump was not going to meet the chinese president. larry kudlow told us there was a long way to go. it is critical, we saw global confidence, production fall off a cliff in the fourth quarter. that was not entirely due to

u.s.-china trade but if goods to 25%, the hopes for a global recovery would be quickly stopped. get a trade deal in some of the businesses that put stuff on hold, they will start spending and the five point five earnings growth which the market is expecting looks like it will be deliverable and that is the key for markets to push on from here. nejra: what about the dollar pushing from the rally we have seen in the bloomberg dollar index, does it continue from here? james: i think in the short-term our fx strategist thinks it can bounce further. further out, we are more skeptical. deal,g actor that trade why was the dollar stronger of the last few days? importantly across the rest of

the world, you have very weak data particularly in europe, you have concerns about brexit, weak data out of japan and asia. it backn, i will link to the trade deal, get a trade deal, before -- become more comfortable about global growth and confident about growth outside the u.s. and the dollar can have another leg lower. as low -- that puts a floor under the dollar. the dollar has had a week run and that helped emerging markets . we have seen lots of inflation and that is something we felt had to go on hold and with the dollar bouncing, that gives room to pause. over the long term we have seen the dollar weakened and not stronger. pickup on one of those themes you're mentioning which is on the emerging markets. i was looking at some of the 30w data and it is splendid,

weeks of inflows into emerging markets. you think the china-u.s. trade give the em trade the second big leg if you have the fed on pause? the first leg of the rally was triggered by the fact emerging markets got very cheap at the back end of last year. emerging markets came under a lot of pressure earlier and troughed markets around september. you saw emerging market performing in the third quarter and valuations on the equities side got to bear market levels. what has happened is the fed has gone on hold, and yields have come down, that is igniting the field and we see seven or eight or 9% in some of these markets. that encouraged investors to look in that space.

for a further leg higher, you want confirmation that you have a trade deal, the global outlook is looking better and then investors can carry on looking for emerging markets. i suspect that is more of an emerging market equity story than it is a debt story. barty stays with us and coming up, threatened -- budget plans threaten to unravel. could the prime minister said to call another election? we will focus on europe next. this is bloomberg. ♪

nejra: this is "bloomberg "aybreak: europe. manus: i am manus cranny. let's give you a quick look at

markets. the prospect of a shutdown being off the table. the dollar is up for, the longest winning streak we have on the dollar in nearly three years. is there a structural challenge or is it a yield differential story that continues to drive that? the reason we have that up for you, it is day nine on the dollar, not a eight. jgb's still in negative territory. of price -- in spite cuts. nejra: last week was the worst week in between 19. things are getting caught up in the broad risk rally we are seeing in these markets. the euro bouncing back slightly, it hit a 2019 low yesterday. talk about dollar strength, the yen also hitting a low. you talked about european futures pointing higher, your futures are doing the same from

a bit of a lackluster session. but get the -- let's get the blumberg business -- the bloomberg business flash. was among the companies to invest $300 million in the link sharing site. took [indiscernible] depicting imagery banned by sensors in beijing. reddeport said read it -- it has long been banned in china. the videogame maker tumbled 60% from its october record. the company plans layoffs that could number in the hundreds. this is part of restructuring and centralizing functions and increasing profitability. the company is due to report earnings today. that is your bloomberg is this flash. -- business flash. that is the other topic,

european political risk. the prime minister could face a to getion if he fails his budget through parliament. in the k, the house of commons -- the u.k., the house of commons [indiscernible] i will start with your brexit risk. an investor is keen to put money to work in italy although he does warrant the great political construct which is europe is under pressure. how do you look at european political risk from a market perspective? james: it is one of the things that kept investors out of europe. when i talked to global

investors, there is a number of reasons they are cautious on europe, one is the week data and the other is politics remains poor. we thought we would -- there was an agreement but for the european commission cutting their growth forecast last week, once again, we have to ask whether the italian fiscal situation is stable. discussions will be back on the table through late march, early april. that will come back and it will be difficult for the italian politicians to talk about deficit cuts, given the weakness of growth in italy. there will be a standoff there. as you mentioned you have spain and on top of that you have brexit. there is a bunch of reasons why international investors five europe take -- difficult. -- find europe difficult. good to speak with

you this morning. that is it for daybreak europe. bloomberg markets, the european open is next. this is bloomberg. ♪

anna: we are live from our european headquarters here in the city of london. i am anna edwards alongside matt miller in berlin. matt: good morning. the markets say place your bets. president trump wants to make deals to avoid a u.s. government shutdown and avoid higher tariffs with china. index futures are higher and yields are rising. the cash trade is 30 minutes away. ♪