>> president trump plans to use executive powers to get money for his border wall. we can manufacture data in china raises concerns as trade talks end with little progress there. escape from new york, dropping plans for a second when reporters in queens. -- headquarters in queens. francine: good morning, everyone. good afternoon if you're watching from asia. welcome to "bloomberg: surveillance video --

surveillance." we had retail data out that it was of concern to a lot of market participants. a lot of these european stocks are looking at earnings, some of them better than expected, we are trying to see if there is a breakthrough in those negotiations. 2.65, andury yields if you look at the pound, is one .2802. theresa may's government was once again defeated in the house of commons and that we look to february 27. francine: coming up, we speak to a former chief executive microsoft and the owner of l.a. clippers. let's get to bloomberg first word news in new york city. >> few signs of progress in the u.s.-china trade talks. the latest round of high-level negotiations wrapping up time is

running out to avert an increase in u.s. tech increases. trump says he is open to letting the deadline to seal a deal. u.k. parliament throws out theresa may's plan to renegotiate, the defeat stripping the prime minister of a mandate to demand changes. has learned the u.k. is telling the eu to reopened the divorce agreement and will accept other ways to address british concerns. the death toll in india has climbed to 41 after an assault on a paramilitary convoy in india controlled kashmir. it is the worst attack since modi came to power. a pakistani-based group is claiming responsibility for the attack, and now, he is under pressure to approve a military response. the trump administration is considering its next step to choke off the power of venezuela's president.

it may block foreign entities from dealing with the venezuelan oil company. the u.s. also is bracing for a assible a proxy filing by venezuelan -- an american refiner controlled by venezuela. bill de blasio says the e-commerce giant is throwing away a great opportunity, coming after fears opposition from local residents and politicians. former goldman sachs ceo says the move above -- i guess amazon wasboth anti-product -- both undemocratic and anti-progress. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine. francine: the ticket off with the latest in washington. president trump plans to sign a spending bill averted a shutdown. write aso planning to national emergency to get the money for his wall.

i have just had an opportunity to speak with president trump, and i would say to my colleagues as indicated, he is prepared to sign the bill. he will also be issuing a national emergency declaration at the same time. i have indicated to him that i'm going to prepare and support the national emergency declaration. the move risks provoking a lengthy legal battle. joining us is our senior international editor jodi schneider. why is president trump willing to sign the spending bill even though it contains far less than he wanted? the spending bill is all about trying to avoid another government shutdown, of course, there was a 35 day shutdown in january that ended at the very end of the month and they only have a few weeks to try to come up with something.

so this is what they came up with. it does include 1.4 billion in , 55ing for border security miles more of a border fence and. -- fencing. but is not nearly as much as he wanted, but he is willing to sign this because he wants to avoid the shutdown and move on to try to makeys good on his pledge to build that wall with mexico. francine: what are the concerns from republicans about the state of emergency? will we see legal battles? jodi: i think we are going to. nancy pelosi, the speaker of the house, has said that she and

other democrats are going to challenge this in court. basically, the president is deciding to unilaterally invoke spending authority to go ahead and say it is a national emergency. they find other ways to get that money. republicans, including marco rubio, say that is not the right way to go about it. they're concerned about overreaching and going into areas congress controls. democrats who don't like the idea of a national emergency be declared said the spending is wasteful. in a case, legal challenges are a must certain. -- are almost certain. francine: jodi schneider, thanks so much. pictures out of a dread, the prime minister making a statement in madrid. he is about to start talking, of course, facing possible fresh elections.

watch the address on live go, just type m l iv. is the us for the news head of the uk's ubs office jeff. ?hat worries you the most jeff: nothing, particularly. but we don't get a satisfying resolution to the rest of the markets. we will be looking around asking where is the good news? there's no bad news cause you to run for the hills, but no good news. francine: what about the fed tightening? that is in the price already, so that is the least they can expect. fear, the risk is that everyone goes into risk management, holds for the rest of the year, no management, notables.

if you declare a national emergency, it is kind of more politicking than actually hurting the economy, that's good news. the firstyou look at shutdown, it was not until the end with people started to really worry about the economic news. it is now the prospect of government and the economic side. when does theg political come bill of come back , and when will that impact investment in the u.s.? we are also getting pictures of the prime minister of spain briefing reporters. does it make you buy again or swissie as a haven? do they want to see a massive influence of yen and swissy?

we are just telling clients to stay diverse, manage your risk. the global economy, just on its own, is taking on. francine: are you worried about the economy? retail sales in december were weaker worldwide. i don't know if that is and will not a similar showdown, or if it is just ugly. the snow down next year is even weaker than it is for this year. push back against the notion there will be a recession. we have nothing to suggest otherwise. francine: overall, what to do with treasuries? geoff: we think the 10 year project backup but the curve will just be flagged as a pancake. investors willng be happy with. francine: thanks so much, he

stays with us. coming up right here, fragile china. factory data continues to slow. we talked china next. this is bloomberg. ♪

francine: this is "bloomberg: surveillance. our >> hathaway has short up their portfolio. they trimmed their stake in at an exit it is more than $2 billion stake in oracle.

it's been the last half by thanks, moves that make it a major shareholder in four of the five largest u.s. lenders. dividend,ised its announcing profits in line with estimates. the german insurer said they were starting a new share buyback program. he tells us why the dividend could go up. >> is a combination of strong operating performance combined with external growth and also with capital management. rbs plans to award shareholders a special dividend off the back of strong profits signaling the lender is compliment in the -- competent in weathering the storm. remains one of the strongest capitalized banks in europe. a volkswagen are close in agreements to georesources on self driving cars.

they have letters that have been a total of breakthroughs, one of them -- three of them being preventable. at value makers discuss that $4 billion. that is your business flash. time is running out for the u.s. and china to reach a trade deal. talks in beijing are wrapping up today with few signs of progress. learned the two sides are split over reports over the chinese economy. meanwhile, factory inflation slowed. when you look at the chinese ,conomy and have a great chart are you worried more about domestic slowdown compounded by trade, or just rate? geoff: absolutely the domestic slowdown. that is repeated to look at the consumer, make sure producers are looking as well. that is something organic and far less impacted i trade tensions and the like.

the impetus for markets is to focus not on trade talks but the national people's congress of ahead. what is the strategy, where's the growth going to come from? francine: this is not like collapsing real estate, how much can they actually do. do if youy still can look at china, it's not exactly liquidity. they have done enough short-term and medium-term operations. it was a very effective in showing the direction and more needs to be done. what needs to be done to lift the chinese consumer? once you're done with tax cuts, you need wage growth. that's what is going to happen. a trade: if there is talks that come up for the moment, we have progress. if they do have an agreement, how much does it help? geoff: i don't think it will

help that much in terms of lifting growth back up. the economy, i think there is acknowledgment that it's going to slow. the sake of argument, let's say that if there is a downside, in the short-term, markets may not like that idea. francine: markets worldwide or -- geoff: worldwide. that is for the long-term investor, saying they absolutely should be favoring that. francine: first, let me bring you over to one of my favorite there looking at whether is a deflationary price when you look at the wholesale market and let me ask you the question we are trying to ask on our markets live blog. which is willie likely extension helped or hurt global equities? i just don't think it will help that much. it's a bit like brexit, you extend to what end.

actually, there is sufficient flexibility built into the wording of the march 1 deadline. a possible extension. i don't think they'll be much a be abut there is going to resolution, what kind of resolution our markets looking? -- looking for? structural changes the economy would be massive. you could rerate equities in terms of governance. francine: but what is the likelihood of that? geoff: low, right now. but when we talk about things that will actually help global equities, that really is going to be a significant change. at the same time, let's not be too overbearing towards downside right now, the focus is on growth, to stimulate growth. it is more domestic politics and policy. that is what we should be

looking to rent than march 1. francine: thanks so much. nigeria's millions live below the poverty line. we will preview this weekend's general election in africa's biggest economy. that's next, this is bloomberg. ♪

francine: this is "bloomberg: surveillance," nigeria's president says the country has fully recovered. he spoke in a televised speech at of qamar's general election the vote is said to be close as he seeks a second term. first of all, who is likely to win? >> it is difficult to say. saidugh the challenger has that there is a 60% chance of incumbent, ande heelligence is saying that is going to win at the polls.

if the election goes smoothly, monday or tuesday, we will be able to tell who the winner is. francine: what do people go and vote on? is it reforms, security? >> it is difficult to say. in nigeria, for the middle class it is about voting for the people who are going to provide for the economy and provide jobs. but for low income, it is just about people who give the money. are issues of regain serenity nigerian elections. it stains the credibility. francine: what is the atmosphere like? does it feel tense on the ground? >> as of now, it is very calm. foring going on except stampedes and deaths recorded during rallies in the past few days. earlier in the week, about 14 people died in an election rally for the president. but because of this violence,

they have come together to sign a peace accord to make sure we maintain peace and order and accept the election outcome. francine: thank you very much, joining us from lycos -- lagos. talking about this chart that looks of the performance of the stock market in nigeria. what does this chart tell us? geoff: if you want to compare , that is the best tier group. they are in the hopes of changes and reforms, and all of these put together have undershot expectations. heard from thest spanish prime minister that he will call a snap election. is it just another scalp being taken because of the

separatists? geoff: that will be the direct trigger, but for the broader european narrative how strong is the force right now, like what has to come into play here, i think people have been focused on italy and germany, brexit and france, of course. now, another major economy is going to join the fray, relative to the rest of spain. shares have been falling over the last few years. so that has been the change. francine: we now have a date for these elections, but if you had to choose between yields or spread -- geoff: the focus will still be on italy, that is where the risk premier is. we have seen, in terms of debt sustainability -- sustainability

spain has had a few years and significantly overshot wider eurozone growth. with anchoring market demand and growth there, it is a strong buffer against politics and government changing your but don't count on certainty for politics. francine: thanks so much. in the last couple of minutes, just talking about it with geoff, the prime minister of spain has said there would be a snap election on april 28. coming up, is the u.k. backing down on the backstop? and what is happening in periphery europe, italy and spain. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." we are just getting retail sales out of the u.k. this is a good way of actually

looking at what brexit means and what it could give given what we have seen the last few months. we did have a couple of figures we're still try to figure out the significance of this. well as i'm looking at is what is going on the brexit. i'm looking at hound. currently, it is flat. retail sales much better than expected. if you strip out auto fuel for the month of january, 1.2% instead of the 0.2% we were expecting. it's interesting because we were talking with ubs about the fact that retail sales in the u.s. were disappointing. the u.k. is better than expected. i wonder whether it is also sales and maybe a little bit of discount. point 15.e pound, 128 >> much-needed relief from a

domestic point of view given the bad news from the retail sales in general. let's see if this is something that can last. don't expect too many upside surprises from the u.k. industrial site and consumer side as long as the uncertainty persists. the pound is reacting marginally. you come down from 130 or so. let's see what comes out of westminster. francine: if you look at boe pricing or the probability of a hike, that has been taking off the table -- taken off the table. geoff: if you look at the u.s. and all the emerging-market currencies -- india grew 10% for this year. they are cutting rates. pulsatile banks right now -- and the boe knows sterling is

undervalued. may be money will be flooding back in because everyone is underweight right now. that is four central banks staying away. i think we just want to keep things as managed as possible. francine: thank you so much. once again, let's go back to the politics of it all. parliament has rejected theresa may's approach to brexit. with just two weeks left to save her deal, bloomberg has learned the prime minister is prepared to compromise with the eu over the irish border. joining us now is the government special adviser and professor of leadership at henley business school. welcome to the program. what happens next? who does theresa may actually trust that we can listen to to have an idea of what her strategic plan is? benjamin: strategic plan is quite evident. even jeremy corbyn has recognized what that is, that is

to play down the time that is left. with potentially parliament. what we will see -- currently we are at a deadlock. in two weeks time, we expect to see cooper to bring back her amendment. amendment, which will seek to legislate against leaving the european union on march 29 without a deal, be taken off the table. at the moment, the vote and consensus around what an effective brexit would look like is split three ways, those who would like her deal, a lot of those -- francine: that is what 30% of parliament? benjamin: not even that. you have those that want to exit with no negotiation and lastly, typically the remain perspective which is we want a second referendum, in people's vote.

the reason cooper's amendment will be particularly important is because it will take out one of those three philosophies, particularly the one championed by jacob rees-mogg and the erg. then there will be two options left, vote for the deal or see an extension if the deal can't be passed. it is at that moment in time we expect the mp's to rally around her deal because that rather than an extension they will see is delivering on brexit. francine: are your clients fed up with brexit? 100% the questions relative to brexit, the next question is is it time to buy the pound? given our forecast, sterling is undervalued, they are just

waiting for a time to pull the trigger. waiting for two years to invest and now they feel the time is approaching. francine: it is very high-stakes. something could go wrong. when you have enough time to go legislation? why is there an assumption in the markets to assume that this will be settled in an orderly way? think one of the key problems here is regardless of whether there is a deal or not, what does u.k. plc say to the world? i know you have the points around the pound being particularly undervalued, but if you are looking at negotiating with new trading deals and trading partners, this whole fiasco -- our people more or less confident now in seeking new trade deals with the u.k.? we have to say yes. if you look at the last 24 months, what does that say about negotiating a high-stakes trade deal with the tape given -- the

u.k. given we have taken the deal over the line? francine: let's say that theresa neil miraculously gets through -- theresa may deal miraculously gets through, then they actually need to negotiate in two years the relationship. what was that look like? benjamin: many people believe that is the deal is passed exit is done. is transition very deal simply a head to begin how we may even consider negotiating a deal. taken 20 for months to get to this point and we can't even agree on transference, experts are telling me it may take three years to negotiate a deal, which we don't have time for. what does this all mean for fundamentals in the u.k.? geoff: we know some existing

deals are rolling over. not a great record at this point. i would separate renegotiating rather than negotiating new deals versus actually what this current negotiation is. secondly, it doesn't have to be -- the city needs bilateral investment treaties. the u.k. has managed to piggyback what the eu has done. these are very easy to roll over and negotiate. the tatian is be so fixated on -- thed side of things u.k. shouldn't be so fixated on the good side of things. we are actually quite sanguine in terms of long-term prospects for the u.k. that is what our clients are waiting for some form of resolution, and then waiting to put money back, and preferably at cheaper levels because of her

sterling is. francine: you are telling me that if we have the theresa may through, theets pboc is back? plc -- we should focus on our competitive advantages right now, which is on the services side. francine: should we worry about stockpiling in the case of no deal? geoff: this is where i'd take to -- they find their own way by and large. there are ways around things. -- thaturance policies is always out there at this point. most clients exposed to this are not exposing signs.

francine: how can we be sure that actually the eu will agree to this? is there a general understanding that as long as there is progress, the eu will stick with the u.k. and try to help it as much as it can? correct. think that is the eu is a big buyer of what we have to offer, which is largely a service industry. from the eu's perspective they see this as a fundamental issue, which needs to be resolved. it is dragging on. they want resolution as much as we want resolution. if the intent pse becomes more there is potential the treasury could reduce corporation tax. that has been seen as a turbo charge of the economy. they would reduce it down as low as 10% to really open up and say the u.k. poc is back, bigger than ever.

potential he, there is a scenario in which a lot of across.es could move your lots of stories all the time we talk about scaremongering. when of the biggest is companies leaving our shores, when actually, we may even see businesses from berlin coming back across to set up industries for the first time because the corporation tax rate is so competitive. francine: thank you both. what's hot and what's not. we dig through the latest 13 filings from hedge funds, including a surprise bid from hilton's timeshare spin off. pedro sanchez calls for an election on april 28. he is still briefing reporters in madrid. we will bring you the latest on

spain. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg first word news in new york city. viviana: legislation is headed to president trump's destined to avoid another government shutdown. he has yet to sign the bill even though he isn't happy with it. bloomberg has learned trump is also planning two use executive authority. this morning, concerns about the

return of deflation after china's factory inflation decelerated after a seventh month. price index rising just 0.7% since january. they started falling late last year amid a slowing economy. amazon is asking plans to build a new headquarters in new york. the mayor says the e-commerce giant is throwing away a great opportunity. the decision coming after fierce opposition from some local residents and politician. the former goldman sachs ceo says the move against amazon was both anti-progress and anti-democratic. 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. bloomberg. much.ne: thank you so stained prime minister has just called for snap elections for april 28, making it the third election in less than four years. this comes after the socialist

government's budget was rejected. 20 us now for more is our maria tadeo. you covered spanish politics for many years. what's next? it is no surprise this year, this was a very weak government, a very weak prime minister and a very neutral coalition. this isook at polls, another story of fragmentation and another european country. it could really go anyway. what you see is that the next government will have to be no question, a coalition. an unprecedented situation for spanish politics. when you also continue to see is the catalog story continuing to shape the entire political discourse in spain. the second prime minister ousted by parliament in two years. shaky, veryy unusual time in spanish politics.

francine: what does it mean for the spanish economy? is are going to be uncertainty? until now, you had seen a very strong economy that has actually outperformed most of the european union. if you look at modern spanish history, as long as you have very strong unemployment or employment growth, the economy continues to ignore the politics and grows strongly. but the question is, at what point do we get a slow down or at what point do we get complete paralysis that actually sees no reforms? you have to keep in mind there is no budget. there has been no reforms done in almost two years and the country is actually slowing. you also have to keep in mind we have another regional election in may. we are at months of political impasse is there is going to be no clear majority here. it is going to be very difficult to form a government. you also have to keep in mind there will be a european

election by the end of the year. francine: what is likely to emerge from this? could we see a new right of center government being put in place? maria: we could. it is an interesting one because you see the pp has really gone into disarray. you also see the liberals taking a turn to the right. you also have a new party which which some multi-you they are a far right party, that really the national fight when it comes to politics is all about catalonia. which party will preserve the national unity. that is no question what spaniards will vote for. they won't vote on euro or the economy, it will all be about catalonia. ue theat, you can anarg center has taken a fast

approach, but it is a very shaky coalition because you have never had a three-way government in the history of democratic spain. francine: thank you so much. maria tadeo covering all things european and the spanish economy for us. let's take a look at what's hot and what's not in the hedge fund world. dani burger has been digging into the data. dani: let's start with what the filings told us about pay. the top three managers made a collective $3.7 billion last year. jimbest pain of the group, simons of the quantum fund renaissance technology, his fortune increased by a pretty $1.6 billion.as for the holding changes, we have pretty big names make pretty big cuts, especially in tech. tiger global slashed its amazon state by a third. one of the real big losers is

spotify. we have managers released -- really fleet at a breakneck pace. looking at some of the big themes. fourth quarter all about protecting performance and seeking safety. the top two etf's was added to were short-term etf's. you can see in december, we get about $13 billion added. this is likely fueled by those hedge fund additions. the interesting thing though this year, that trade looks to be fading. we have had net outflows. when it comes to the next round of -- we may see something drastically different. francine: thank you so much. , amazon pulled the plug on it -- up next, amazon pulls the plug on new york. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." let's take a look at today's stock movers with sebastian salek. : the listings

company over in germany agreed to be taken over to the private equity group lacks down -- blackstone and how. they came back after being robust one-time, and this time they confirmed it. investors flooding into this one as well, up by more than 12%. ivendi, the partial sale of universal music, the streaming income music that has been shattering estimates. they are also talking about buying back up to a quarter of the total stocks. vivendi up by more than 6%. standard life aberdeen, not such a positive story here. this is taken a company to the lowest in two months, perhaps reflecting the sentiment around

it. to this takes the total drop over the last year to 40%. francine: thank you so much. amazon pulled the plug on new york, the company is exing planned to build a corporate office in queens. he says the e-commerce giant is throwing away a great opportunity. we spoke to a new york city councilmen of the news broke yesterday. >> amazon chose to pull out rather than site for the steel deal.ht for this the mayor was right, this is a tough town and you have to be able to take criticism and fight for what you believe in. francine: joining us now is alex went. always great to have you with us. why did he pull out? headquarters they are building in d.c., new york and nashville were all about building relationships with what seemed to be power centers,

taking something seemingly positive to these towns. that has not been the feedback they have gotten.the response has been overwhelmingly negative. if you are sitting there as amazon, you might justifiably make the calculations, what is the point of me being here? francine: why was there such backlash? alex: i think the tax backs they are getting. a lot of the rigmarole about how they found these headquarters. hundreds of cities around the u.s. and canada 78 applications to do it. in the end, it seemed like complete.of a they were never likely to go to iowa or wisconsin or somewhere. that possibly also flavor the thought theyyork were being taken for a ride on the financial incentives they were getting the company. francine: this is kind of only from the realm of business. i don't think jeff bezos

has political ambitions, but i think if you're a politician in new york, you are seeing the mood and sentiment toward silicon valley or tech. west coast tech firms mutate slightly are becoming more negative, concerns about privacy mount. given what has come over the months, the biggest company in the world by valuation getting tax breaks doesn't look good. francine: thank you so much. we continue in the next hour. taylor riggs joins me out of new york. coming up on bloomberg tv, talking tech, we talk with the chief executive of microsoft. this is bloomberg. ♪

taylor: state of emergency. president trump plans to sign

the governmental to keep the government open the use executive power to get money for his border wall. fragile china. with littleend progress. amazon's escape from new york. jeff bezos cap plans for a second headquarters in queens. good morning everyone. good afternoon if you are watching from asia. in for tom keene who has a very well-deserved day off. we have quite a lot of news in europe. snap elections in spain on april 28. we look at retail sales and lots of news in new york as well. taylor: the amazon story, when that broke yesterday quite a story here. less of a company story , more of a real estate story. we know we will get more on that soon, but it was a big story here in new york city. fat and retail sales

are pretty ugly in the u.s. when they are great in the u.k. let's get straight to the bloomberg first word news in new york city. viviana: spanish prime minister pedro sanchez calling a snap election for april 28. he announced the vote after the parliament in madrid rejected the government's budget. this will be spain's third election and four years. this morning, he signs of progress in the u.s.-china trade talks. the latest round of high-level negotiations wrapping up today. time is running out to reach an agreement that would avert iffs onof 10 reps -- tar march 1. legislation is headed to president trump's desk to avoid another government shutdown. he is set to sign the bill even though he says he is not happy with it. bloomberg has learned he is also planning to use executive authority to spend $8 billion on the border wall. provoking a lengthy

battle over presidential powers. >> i just had an opportunity to speak with president trump. is prepared to sign the bill. he will also be issuing a national emergency declaration at the same time. i've indicated to him that i'm going to support the national emergency declaration. viviana: 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. this is bloomberg. much.we: thank you so are just getting breaking news out of lloyd banking . william saying that will join as the chief financial officer in june. this is some of the changes we are seeing in the banking sector in the u.k. early on. ands get on to your markets let's do it across asset data check. this is what i'm looking at overall.

a lot of the impetus from europe came from the u.s. after we had disappointing retail numbers in the u.k. the pound fluctuating after yesterday, parliament refused to endorse theresa may's approach to resolving the brexit deadlock. i think a lot of the focus onto next week and today will be first on the emergency funding in the u.s. and american chinese trade talks. there is no clear breakthrough as we see whether these tariffs actually get postponed by 60 days. taylor: as you were mentioning, trade having of weight on u.s. equities. nasdaq, as a talk about tech gaining a little bit here. we are still on pace for weekly gains on all the major averages. nasdaq higher for every week in 2019. you are looking at a little bit of flatness on the yield curve in the 210. in the u.s.y here continues to be the strength of the u.s. dollar despite a dovish fed. you are getting even more dovish

in international central banks pushing more money in the u.s. dollar. as we take a look at the bloomberg, it's all about margins. as you know, as we talk about trade, gross margins are not being affected. that is the white line. gross margins really holding in their us companies are able to pass on those higher costs. the pressure is really coming on the operating margin situs companies increased their r&d and. very interesting as we talk about trade. that is not having an effect so much on margins. it is definitely more the u.s. company spending story. francine: thank you so much. this is my chart. we are looking at nigeria ahead of those elections. analysts are really split down the middle on who will win. difficultyn a lot of

in sampling the nation of 200 million people and factoring in rigging. this is a simple chart in u.s. dollar base. nigeria's stock market may rally is president bihari loses the election. we will go back to nigeria and back to earnings, that president plans to sign the spending bill that will avert a government shutdown. he is also writing to declare a national emergency to get the money for his wall. the move risks provoking a lengthy legal battle over presidential powers. joining us now is the black rock multi-analyst strategist. -- we are expecting the government to not be shutdown partially, that is a take of good news for markets. if we have to president declaring a national emergency, what decided to investor sentiment? >> we do expect the rest of us

presidential mandate to be high in noise, a lot of conflictual issues. going to manifest itself in different ways as long as the government remains open, markets can focus on other things. francine: we will focus on those other things as well. as president trump does use presidential power to get funding, is that link back to legal battles and a nightmare? rosalind: a number of states already, california, new mexico, nevada have already indicated they will go with lawsuits. this opens the door potentially to declaring national emergencies for a bunch of different things and where does that lead? the democrats are going to put what they call in resolution of disapproval through the lower house. if it gets through the lower house, it does go to the senate,

where the senate majority leader will have to have a vote on it. that will see where republicans stand on this as some have expressed concerns that what they see as an erosion of the power of congress. taylor: talk to me about the voter angle here. should he be of little bit more moderate in his tone now that the midterms are over? what it does potentially risk is the backlash over what is being portrayed as the parrot until paradigm. there was a survey last month that showed that two thirds of americans, more than a quarter of them republicans oppose doing the border wall through a national emergency declaration. there was another poll out this week which showed that 20% of those people who voted for donald trump in the last election thought it was a bad idea. while it may play well to a certain part of his base, other people are saying in this case, it does risk an extension of the presidential power, which is

something that concerns many of them. taylor: as we switched the markets, i wonder how much of a tailwind this now provides equity markets going forward. this, a shutdown and trade were two major markets. does this give and all clear to push forward? isabelle: not necessarily. we have seen a meaningful rally already since the start of the year. i think the question now is what is went to keep the momentum going forward? the q4 earnings season has been very encouraging particularly in the u.s. the fed being on hold for now is also an important tail wind. i think on the trade front, the fixtures more nuanced because markets started pricing in a relaxation already for the last two months. i'm not sure we going to get a great deal more unless there is a very significant deal that is reached, but it is not what it is looking like.

it seems we talking about just a postponement of the deadline or a temporary truce, nothing that would dramatically change sentiments. that is like going forward, we think tell winds are going to be less than what we got from the fed in january. francine: how do you interpret the fact that amazon is no longer building a second headquarters in queens? this is basically political backlash from liberals. rosalind: it plays very well to cortez's base. however, we have to see in the longer term how this plays out. there is some anger in new york over the missed opportunity potentially for jobs. supporters for amazon relocating their may come out better. it facilitates the republicans. taylor: think you.

-- thank you. isabelle will stay with us. murphy.p, governor phil this is bloomberg. ♪

viviana: this is "bloomberg surveillance." ford and volkswagen are close to an agreement on self driving cars. there have been a couple of breakthroughs. the automaker is discussing value in the company at about $4 billion.

allianz raciest evidence. yesterday, -- raised its dividend. yesterday, it announced its buyback program. the ceo said he will return money to shareholders if you can find attractive acquisitions. berkshire hathaway has shaken up its portfolio, piling into financials. it trimmed its stake in apple more th -- it's been the last half of 2018 buying banks and insurers. an ensure and four of the five biggest u.s. lenders. francine: the spanish prime minister has called a snap election after the parliament veto his budget and lay bare his minority government's inability to paschi legislation. the vote is set to be held on april 28 and will be the third election in spain in only four years.

joining us now is maria tadeo. if you look at the polls or what we can expect, it is either a pedro sanchez government or you have a three right-wing groups that could potentially form a governing allowance. what will their different policies be? you look at a lot more political fragmentation. the election now call for april 28, which is awkward timing because it's easter week. half of the country will be on vacation and it comes just a month before the regional election. the timing of it is a little bit strange. when you look at polls, it can go both ways. you could get a social government. but again, it is a replay of the very unusual, very shaky, very weak government we have seen over the past few months. or we could have a three-way coalition. to get a coalition government or the need to rely on three different parties also looks

difficult because it has never been done before or tried before. again, both scenarios are very shaky. what we are seeing increasingly are very short, week fragment governments that are unable to get any legislation done. francine: what to investors want and what does the economy need right now? it is interesting because if you look at spanish economists have completely show that itself from political uncertainty. if you look at spanish history, it is pretty simple. as long as you create jobs, the spanish consumer continues to spend. you have big global names but don't actually rely on the economy. at this point, it is pretty clear they want to see reforms in things like that banking sector. there is also a need for an overhaul of the regional financing system that has really

created a lot of uncertainty and a lot of attention that we have seen in catalonia. this is what spaniards will vote on. they won't vote on the economy, they won't care about the european collections or euro. it is all about the idea of who will protect the national interest and national unity best. francine: thank you so much. thea tadeo was covering spanish economy for many years. i have a good chart which i will get up in a second which basically shows the yield difference between bcp's and spain. should we worry much more about spain? isabelle: i don't think so. this uncertainty in spain has to be put in context. if you look at the number of fundamentals between spain and italy, spain is clearly in much better shape. growing at 2.5% in 2018 and has been one of the theest growing economies in eurozone in recent years. this political uncertainty is

not about fundamentally -- fundamental issues like dewey want to stay in the euro. it is probably about catalonia, also partly about your standard ideological divide between left and right, between the we want to have a more consumer-oriented policy in tax corporate or the opposite. i think that is also going to feature importantly in the election. this snap election wasn't exactly unexpected. it was a very fragile government to begin with. the date is the new news. there is going to be a bit of uncertainty priced in, but spanish assets have been underperforming already since the start of the year. would look forward to resolution of that uncertainty. we are essentially neutral on spain assets right now. taylor: i wonder if spain is indicative of a much larger program going on within europe that is just slowing growth. do you see that or are problems in spain more idiosyncratic?

the problems in spain are much more idiosyncratic. they have been slowing down much more than the rest of the eurozone. spain is looking really good and has been much less affected by the slowdown in global trade we have seen in other countries including especially germany. we are really talking about a domestic, political issue, which is a tough one, not unlike brexit. it is a really complicated one, but it doesn't immediately affect economic policy or the attractiveness of spain as a investmentn. destination it is temporary uncertainty, but nothing fundamental. francine: isabelle stays with us and we will talk about trade next. coming up, kathy jones, charles schwab chief fixed income strategist. this is bloomberg. ♪

taylor: i'm taylor riggs in new york with francine lacqua in london. tom keene has the day off. we are getting headlines crossing about the trade meeting over in china. china's president is set to meet u.s. treasury secretary steve mnuchin according to cctv. we knew they were far apart on a deal.any agreement really meant that president trump and xi needed to meet in person.

this is all according to cctv as we await this key deadlines ahead of march 1. meanwhile, china's factory inflation moved again. walk me through the tray picture we are coming out of. companies are pretty constructive on china and trade and tariffs. is this just another excuse to rally here? isabelle: actually, that is something that is a bit of a worry to us for two reasons. u.s.-china,is on whereas there are other issues. we are expecting in the next few days the report to the president on whether car imports are considered a threat to national security. we're going to see a return of these issues of might the u.s. impose tariffs on cars.

focus of theinded markets on u.s.-china worries as a bit. there may be a blind spot there. secondly, as i was mentioning earlier, around gauges of market sentiment around this trait tension suggests that markets have relaxed quite a lot already compared to last fall, and in fact are expecting enough of a deal to be found for the new tariffs to not come into play. that is also our baseline. what this means is that there is a lot of good news already priced in. there's potentially room for disappointment there. even if something is agreed on the trade front, let's not forget there are deeper issues out there, particularly in the tech sector but are likely to keep the relationship between the u.s. and china pretty tense, pretty adversarial. that could also rock the markets. we are not necessarily pessimistic, but the risks are to the downside in terms of sentiment and new stream. taylor: we are getting another

headline that the u.s. and china will continue trade talks in d.c. next week. the backdrop of all of this is slowing chinese growth. how concerned are you that we haven't seen a bottom yet in slowing chinese growth? isabelle: we're looking at this extremely closely. every new data spot, we're looking for the sign that we have reached the bottom and things are picking up. i think it is too soon to say that yet. our expectation is that china's economy will bottom out by the end of the second quarter, given the amount of stimulus they are now delivering, that they have been delivering already for a couple of months. there is some uncertainty there. francine: what i am trying to figure out is that if we have chinese growth cap at 6% because of structural reforms, this is actually may be a catalyst for a downside for shares. isn't this what the west wa

nts? i think -- isabelle: the west wants different things on different time horizons. i think in the longer run, the west also once china to avoid some kind of a sharp lending. that requires continued prudence on fiscal and credit stimulus. this is what they are doing. francine: thank you so much. isabelle stays with us. coming up on bloomberg markets the open, we speak to the morgan stanley chief executive strategist. this is bloomberg. ♪

taylor: this is bloomberg surveillance. tom keene has the day off. marketst to bloomberg

-- news. >> the president plans to declare a national emergency. this would shift $7 billion in federal resources to construct barriers along the frontier with mexico. that strategy avoids another government shutdown but it is likely to lead to a long legal fight. the trump administration is considering it's next step. it may block foreign entities from dealing with the venezuelan companies. the u.s. bracing for a possible bankruptcy filing. amazon is nixing plans to build a new headquarters in new york. ther bill de blasio says economic giant is throwing away an opportunity. lloyd blankfein says the move was anti-progress and

anti-democratic. as the death toll in india has climbed to 41 after an assault on a convoy, it is the worst terrorist attack since gas came to power. a pakistan terror group has claimed responsibility. the prime minister is under pressure to provide a military response. global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. i am viviana ricardo. this is bloomberg. francine: let's talk about brexit. lawmakers voted against supporting the prime minister ministers plan to renegotiate with the e.u. with two weeks left to save her deal, the prime minister has -- is prepared to compromise with the e.u. over the irish border. to follow all the

various amendments, votes. you almost have to read theresa may's mind. is it too complicated? to the markets say, if there is no deal, exit will rally desperate that will rally? or are they that sophisticated? i would say global investors, it looks like a way to come story, a bit of a mess and reinforces the lack of conviction or affection for european assets, not just u.k. but europe is a mess story. for the people who are following this closely, the base case is -- we are going to avoid a new deal brexit. there is a meaningful probability it will happen and the closer we get to the deadline, the closer desktop more you cannot rule out this risk. markets are pricing in for some of that. we remain confident this will be and we will expect

inflation expectations to fall. that is another way we express this conviction in the space. uncertainty is not helpful. francine: your base case is it is the theresa may deal that gets pushed through. isabelle: the base case is some kind of deal gets pushed through. not necessarily this deal. she did not have the majority in parliament by a longshot. there has to be movement towards the position of lowered by the labour party, which will be a softer brexit. doesine: if we get a deal, it pound rally on the back of it? to what level? isabelle: that is hard to tell the market is pricing a meaningful -- of no deal. we would expect the pound to rally at that point. taylor: you talk about the pound rallying. recently we have seen stronger

dollar. you see that we had weakness in the pound. is this pound weakness because of the brexit uncertainties or so much of this more of a dollar strength story after the fed meeting on january 30? is this a pound story or dollar strength story? isabelle: there are different things going on. on the pound side, there are brexit risks we talked about. there is a fast weakening economy and you heard the bank downgland revised sharply its growth expectations this year. that is weighing on sentimental u.k. assets and the pound. thirdly, there is the dollar aspect. what is interesting is if you compare the dollar to other g10 currencies, the dollar is the high-yield are. is a case we are going into the dollar against other g10 currencies, whereas if you

compare to em currencies they have done well against the dollar. we know the fed is going to be on board for a couple quarters and that is the great outlook to going into kerry assets. the picture on the dollar is divorced -- people located whether you compare it to g10 or sx. taylor: we are in new york and it is hard for us to keep up with the day-to-day mnuchin going on within brexit. once -- takesmes one step forward, two steps back. with her defeat, where does that rank with her list of defeats? how concerned are you about yesterday's defeat? isabelle: i would say not much more than before the boat. it does not dramatically change the picture. what it does show is the tory party is not united behind her and the majority she thought she had after the vote a couple

weeks ago is fragile. she is going to need to look for other people to find a compromise that gets a majority in parliament. that is the take away. francine: when you look at possibility of a rate hike, it has been taken off the table. are the markets overreacting? isabelle: no. there is genuine weakness in the economic data coming through and not all of that is brexit related. fullber we will not have clarity even if a deal goes through parliament because everything is going to be about the future relationship. how quickly can the u.k. economy rebound? can investment pick up? all that is not clear so it some point the deal we will feel comfortable to guide towards another rate hike. the economic weakening, it is not just sentiment. it is also data. it is not just be a we. --boe.

francine: if there was a new deal brexit, do you think overall if you look at the fed, it is a monetary tightening this year? isabelle: not necessarily this year. we are looking at the next two quarters. it will depend on how the economic data of all. the u.s. picture is interesting from that standpoint. look at the cpi data. the core was strong. the fed is going to have to get back into the saddle before the end of the year. you look at the retail sales data and think may be the economy is not strong. convictionave strong one way or another at this point. this pause attitude of the fed seems appropriate. taylor: pause attitude seems appropriate. that was isabelle matteo see log.

matteos y lago. this is bloomberg. ♪

>> in the housing bust, buyers, lenders and builders were caught up in speculation. prices soared even though there was a flood of new homes on the market. preventingst may be another one. contractors cannot overbuild because bankers burned before are afraid to make loans. the rate of single-family homes

starts is below that of the early 1960's. that is when the population was less than 60% of what it is today. instead of an oversupply of homes, there are not enough. made worse by- low unemployment. the result, higher prices. owning a home is out of reach in some areas. u.s.ts see double in the san francisco is the only u.s. city to make the top global real estate bubble index. that is one of the stories in the new business real estate issue. thank you so much. a country has suffered its worst -- india has suffered its worst terror attacks. -based terror group has

claimed responsibility. now, and indian government reporter. there is a tragic loss of life which we need to keep in mind but what does this mean for investor's appetite for india? does it make a difference if we see renewed tensions that the border? this is eerily similar to a situation a few years ago where there was a similar attack in the loss which led to of life of 19 indian soldiers. after that attack, -- faced pressure to strike back which they blamed for this, what are operating out of pakistan. they launched some sort of limited military strikes across the border, currency cell, equity markets cells briefly and there was a bit of market

turmoil when they decided to do that strike. now that we are in a similar situation to that attack, investors are -- markets are .alled --calm investors are wondering how serious the response will be from india. francine: this is a major test given the last approaching election. will he be judged on this? this is a huge test for modi right now. pakistan is a very emotive issue in indian elections. the average indian voter understands pakistan, that they might not understand the dynamics with china or the u.s. or trade issues or even just a sick economic issues like an employment. , evenives modi a chance though he may not fix the jobs

situation. he promise that he had when ran for office in 2014, this is simply.g he can do this gives him a chance to do something quick if he wants to approve some sort of limited strike across the border, it would allow him to look tough on national security and the last time they did these strikes across the border in 2016, to be frank the government milked that incidents. there was a volley would movie rant -- made out of it. they held an anniversary out of these strikes two years later and invited actors official government functions. it was a situation they feel like they can get political mileage out of it if that is what they choose to do. taylor: you mentioned a strike. i wonder if this is isolated to india or you get regional

pressure here supporting india against pakistan. you mentioned china and the u.s. if they are alone in their response, what some -- sort of support they get? india stands with a lot of western allies, including the u.s. the white house put out a strong statement, calling on pakistan's and support for terror groups inside-- operating pakistan and the trump administration administration has been forceful on pakistan. pakistan other than china does not have too many international allies willing to speak up for it at the moment. the thing with this particular terrorist group that claimed responsibility, china has been blocking india's attempts to have the chief of that terror group prescribed as a designated terrorist at the united nations. china is supporting pakistan on the u.s. is supporting

india along with the u.k., australia and other countries. this is setting up a diplomatic feud and india has already pledged to isolate pakistan diplomatically, which is what they did after the 2016 attack. francine: thank you so much. turning to another developing nation, this is nigeria. the president says the country's economy has recovered from a recession in 2016. he spoke in a speech ahead of tomorrow's elections in africa's biggest economy. the vote, expected to be close as he seeks a second four your term. joining us now, our guest joins us by phone. still with us is isabelle mateos y lago. the polls are closed and the polls and nigeria are difficult to read, but that -- does the opponent to mr. bo hari have an edge?

he has struggled to fulfill the elections. >> bo hari has struggled with importanty but it is -- to say got aspirations he originally had in office. that has been a key factor for him. francine: what are they each promising? is it a fight against corruption again? corruption is still a big isue but the opposition focusing on the ability to grow the economy. they are trying to cast themselves as the business riccardi as they say they will have better competence to attract economy. that has been something that has

been one of the hari -- bo hari's strengths. look at: if you rigging, which has marred every vote since africa's biggest oil producer got independence from the u.k. in 1960, what is it like on the ground? is it tends? --tense? does it feel smooth? nigerian elections have had a lot of irregularity. the path to elections have been competitive and this in particular, the elite are divided. sides are going to try to intimidate the other side some of both sides are going to have votes in their stronghold. the country has security services and they controlled the state patronage they were have an upper hand but it is not

limited to one side. this is something both sides engage in and have an intricate part of elections and nigeria. taylor: you mentioned in your report that things are likely not expected to get violent on the ground, but i wonder for our global audience, how contentions it feels -- contentious it feels? i'm an broody and now and it is fairly empty. a lot of people have left. a lot of people who live your are from other parts of the country. a lot of people i know have left to go to the southern parts of the country because they are worried if there is violence or protesters after the election, they do not want to get caught up on the -- in it. there is tension on the ground. ofre will be isolated cases violence.

expect anyot widespread violence, when, if after the elections one side feels cheated the tension could rise and there could be protesting, but because we expect the incumbent to win, the chance there will be a widespread violence is slim. the supporters of the opposition are not as passionate. taylor: we will await the is election results. thank you. we will be back with isabelle mateos y lago oh. this is bloomberg. ♪

francine: this is bloomberg surveillance. , isabelle mateos y lago of the blackrock investment institute. we were talking about nigeria, the elections this weekend. we were talking about india and that attack. overall, emerging markets have been at a sweet spot and that is a present from the fed. isabelle: it is a present from

the fed combined with global growth environment that is ok. everybody is slowing but we are not seeing a recession around the corner anywhere so indeed, for emerging markets that is a good place to be. assetbearing in mind the -- beat up in the second part of last so evaluations are not demanding. they have come back so in terms of what we prefer with an emerging market, we have a preference for equities because the has come back a bit but it is a good environment and as i was saying, we are bullish on the msx versus dollar. francine: is this across the board? i we expecting reforms and a fight against corruption? isabelle: it is across the board but we have parts we prefer and others where we look at it

election uncertainty and try to be cautious around india, south africa, argentina as we get closer to the end of the year would be another as countries where you have the election uncertainty, like brazil, mexico we are more optimistic. , inontinue to prefer asia terms of broader structural and encyclical trends. definitely brazil and mexico are good stories now. fundr: the bank of manager em was listed as the most crowded trades. you mentioned you are more constructive on a em equities over em debt. is that due to dollar strength? isabelle: no, it is due to the fact that as you point out, a lot of money has flowed back into em over the course of the last quarter or so and that has been true for debt and equities.

while we remain overweight in terms of ian m -- yen equities on debt, we take a stance that would tend to wait for a dip to add more risk to em debt now. francine: thank you so much. now, coming up on bloomberg surveillance, gabriela santos with jpmorgan asset management. we will talk shutdown, latin america and europe in the last hour or so. we had the promised her of spin calling for snap elections on it with 28th after the stem it over the budget so we will look at that. we will get your stocks and go back to retail sales. this is bloomberg. ♪

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francine: state of emergency president trump plans to sign the funding that keep the government's open but use executive powers to get monday for his gas money for his border wall. trade talks and with little progress and amazon's estate from new york, dave off opposition. this is bloomberg surveillance. in fouriggs in new york tom keene who has the day off. i am francine lacqua in london. lot going on.is a on the china trade, you mentioned futures up in the u.s. on the hope we might get a deal or possibly postponed after a handshake. taylor: very interesting as you said. a lot can happen. we have had conflicting views. headwinds coming out of the shutdown which looked to be resolved and trade getting a little bit of a resolution, but you know francine. it is one step forward, one step back. but wait for real headlines to come out.

futures turning positive. francine: we have a brexit update. ceresa may has a plan b, plan . we will get back to the markets in a second that let's get to the first world news. saying, as you were sanchez calling for a snap election for april 28. he announced the vote. the bill failed due to lack of support from -- separatist parties. this will be spain's third election and four years. a few signs of progress in the u.s./china trade sought -- talks. steve mnuchin calling the talks productive, still time is running out to reach an agreement that would avert tariffs on chinese goods by march 1. legislation is headed to esk toent trump's d

avoid another government shutdown. bloomberg learned trump is also planning to use executive authority to send -- spend $8 billion on the border wall, -- a lengthy legal battle. >> i would say to all my colleagues as indicated he is prepared to sign the bill. he will also issue a national emergency declaration at the same time. i have indicated to him i am going to support the national emergency declaration. global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. this is bloomberg. taylor: thank you. we have headlines coming out. pepsico earnings coming out. mind withht in estimates, they are managing

down the income statement. interesting here. full growth of 4%. you are coming in better than at gdp. they are reporting a 3% annual boost in their dividend per share. now coming in at 382 from 371, they are looking at total cash return. shareholders at $8 billion. i think the key is organic revenue growth coming in at 4% even as top and bottom line come in red is estimates. francine: what is interesting if -- write aagainst big miss. interesting to see similar companies reporting differently so you wonder what the chief executives are doing differently . coming up, we will see -- speak to pepsico chief officer. taylor, let's look at the markets. a lot going on today as you were saying.

there is left thanks to -- lift thanks to the fact that there was a handshake between the u.s. and china. the deadline, march 1 but we heard from the trump administration that they may delay tariffs if they see some kind of progress. i am looking at treasuries and dollar. they are steady. i am looking at pound. it is choppy after parliament refused to endorse theresa may's approach to resolving brexit. taylor: futures turning positive. as and be higher by 81 hundredths of 1%. not big news but the fact is, we have gotten a little lift from the negative to positive and we are positive on the week with the nasdaq. every week has closed higher in 2019. i am taking a look at the two tense because we were getting flatter. now we are getting steeper but

15% basis points there. it is near the flattest, going back in three weeks. the big story i am watching his strength in the bloomberg u.s. dollar index. we talked a lot about jay powell on the 30th saying he was dovish but because international sentiments are more dovish, you are getting is that of assets back into the u.s. dollar, pushing dollar higher. president trump, i want to shift the politics, planning to sign the spending bill that will avert is can -- that will labor a second government shutdown. he is to declare a national emergency, promoting a lengthy legal battle over presidential powers. joining us now, kevin cirilli. kevin, how significant is it he is declaring his national emergency? we have only seen this handful of times, 9/11 for example. what does this mean?

kevin: it is going to be a long time in the courts. there are republicans uneasy. that is significantly less than the $5.6 billion he had wanted and rather less than the $25 billion he called for. it is going to set this up for a long legal fight. thet, politically speaking president is able to say he is not done fighting for the wall. speaker pelosi is able to say she got a deal to her base that is lower than what is the wanted, but the policy -- this is where it matters. there is not going to gi -- be a government shutdown so no volatility coming out of washington for now. fromr: you mentioned playing to his base. i wonder if it is good strategy for him to double down on that base, going forward with the wall or as we have seen with previous presidents, becoming

more moderate after midterm elections. kevin: he has a tough 2020 reelection fight. for his base, one of the foundations of his lyrical policy background was his -- him campaigning to build the wall. on immigration, that is a key pillar of his entire political platform. moving ahead to the weeks ahead, the president has to negotiate with china. get debt limit agreement in the next few weeks. there is more in the shirt term in the next -- short-term in the next six weeks. francine: i do not know if we can call it trumps wall crusade but if he does declare a state of emergency, do the republicans pay a price? kevin: it depends on which republicans. i would call it a wall crusade. he would agree with that given he has been pushing for this.

there are different types of republicans just as there are different types of democrats. there are 2020 republicans of our reelection who are uneasy in moderate states about having to campaign on the issue of the wall. i talked to democrats. even strategists, who tell me when you look at texas at some of the districts, texas democrats want to be tough on immigration. they do not want to have an open border situation. that is where the politics of this are localized depending on where you are looking in the country. francine: talks to me about amazon. $2.5rapped its billion -- billion headquarters. this feels like a tech story but more like a political, also democratic story. kevin: absolutely. i interviewed congresswoman carolyn maloney and we will speak with her later. she is a congresswoman from new york.

her district impacted by amazon's decision and she was incredibly disappointed in amazon's decision. she was also disappointed in what she called, disingenuous characterization by progressives framing the issue of that deal. congresswoman cortez said she viewed amazon's decision is a political victory because they were not satisfied with how workers were going to be impacted. sending shockwaves through the new york delegation. it is getting folks in washington in northern virginia happy because of real estate. taylor: broader implications because of politicians. that was kevin cirilli. have been talking about amazon and one thing i wanted to mention if you come into my terminal, is amazon's

real estate expansion. this is less of a company story and more of a real estate story .s you can see in blue office space has been growing the fastest in 2018. now as we look at amazon pulling out of new york city, we want to get the fx on office space and the physical stores around new york city, long island city. joining us is jonathan miller. jonathan, you are the president and ceo. what are the short and long-term applications of amazon pulling out, what it means for long island and broader new york city? jonathan: you have to break it down. it is short-term versus long-term. on the short-term side, what we saw last fall with the announcement made, is a tremendous amount of hyperbole about people buying condos, sight unseen the way it was sort ofrized some

frenzy. which never existed. there with activity on the at the realook estate play as a long-term window. hiring 10 year window of and you still have to go through community approval for building the structures. todayy to look at it is versus before the announcement, there ist is saying not a short-term hit to the market. in the long-term, this area is ripe for development. it needs a lot more office demand in order to support higher quality, but a variety of retail, which it is still a little short of. of, and thein terms part many people on the ground

that have connections to this market is, it conveys a concern that, is the city hard to do business with? what happens when we have another proposal coming in to this long island area? is it going to be pushed back or rejected? taylor: you mentioned this area is ripe for development. i wonder what real estate companies you are looking at are winners and losers from this? who lost? jonathan: when you look at the winners and losers, as a general sense, the landlord's for developers that have invested in this market over the last five when thest because announcement was made last fall, i looked at this in the short term as a most a bailout. there have been 15,000 multifamily rental units that have been constructed and there

are 12,000 more in the pipeline ready to go. that,here was this sense that is going to clear the deck. the problem is now, 75% of the rental property that is out there is giving some sort of .oncession to renters it is an oversaturated markets and by amazon coming in, that would quickly resolve the problem. the losers of -- i'm are on the development and the owners side aside from the city itself and the winners in the short term of the tenants. once amazon comes in, you will see those concessions melt away. francine: thank you so much. coming up, on bloomberg surveillance will have more on your markets and later, our coverage of president trump's remarks. he speaks from the rose garden on national security and the

southern wall. all of this live on bloomberg tv and radio and online. this is bloomberg. ♪

viviana: let's get the bloomberg business flash. ford and volkswagen are close to an agreement on self driving cars. there have been a couple breakthroughs, one a possible framework for vw to invest in argo ai. discuss valuing the company at $4 billion. -- hathaway has shaken up its portfolio, piling into financials. than $2ited more

billion. it spent the last half of 2018 buying banks and moved to make it a major shareholder. the royal bank of scotland plans to award shareholders a special strongd off the back of profits. this signals the lender is confident in weathering the brexit storm. the special payout will be the .irst to the bank in a decade rbs remains one of the strongest capitalized banks in europe. francine: thank you. presidents xi jinping said u.s./china trade talks would continue. to raise aes are deal by march the first. joining us now, gabriela santos. chief handshake corresponded. we think they are going to do a deal. they move -- may pullback trips.

how much hangs on having a deal even if it is a deal that is smoke and mirrors? gabriela: a lot hangs on it, the trade uncertainty was an important variable last year. it had a big impact on business confidence and business investment. it is crucial for there to be a continuation of cease-fire between the u.s. and china. by that it means no further increasing tariffs. outcome isnt, that priced into the markets. what would be a positive surprise is the next will removal of the existing tariffs. it is an important issue. it is very important to see this progress in a positive way. taylor: you pick it to where i want to go. if you look at the top-down macro view of evaluations and learn how much of this is priced in or not into the markets, power estimates on a basis a 17.5.t

how much more of a tailwind can this provides? seen, after have multiple contraction last year, the pe coming down. we have seen multiple expansion this year and that is true in the u.s. which we see and in global markets. sentiment has said away from that extreme pessimism that worries about trade and the do not on growth so we get more multiple expansion especially in the u.s. where we are at average evaluation. the support has to come from earnings estimates. taylor: groping -- global, gabriela santos will stay with us. this is bloomberg. ♪

taylor: we have a u.s. read on the economy and that is earnings. they are reaffirming their net income assets for the year. this is after their first quarter adjusted. salesfirst quarter net are meeting estimates again. reaffirming their net income forecast of $3.6 billion and this is even after their first quarter adjusted earnings per share view. francine, we know this is a bellwether gauge on the u.s. economy. you more of aives

hands-down approach of what is going on in the economy and you pitted against the retail sales. let's get back on earnings and the strength or weakness in the u.s. economy, let's get back to every yellow santos -- gabriela santos. when it comes to earnings come at the you want to go heavy equities in the u.s.? or is it time to -- your appetite for it? gabriela: what is interesting about the u.s. economy and global economies, there is a stark difference between the investment side of the economy, where there is a weight on business investment as result of all of the policy and certainty we spoke about, trade being one of them and the consumer domestic demand aspect of the economy. when we look at u.s. equities, we do not want to buy everything at this point. we want to focus a little on the deposit of domestic demand story. if we get a big change, a big

lift in the global economy, a lift in business sentiments, then perhaps we can think about being more positive on something like industrials. taylor: talk about earnings and you mentioned trade a little bit . we have seen a big divergence between growth margins holding in their cuts, companies are able to write off the tariffs, showing pricing power. but the operating margins, the rd, that is where you see pressure in the u.s. equities coming off of earnings. what do you make of the earnings season so far? gabriela: it has been interesting. one of the interesting things is the fourth quarter is the first time we are starting to see a fading from the tax cut boost. you-- it is interesting if think about fourth quarter one year ago, the tax plan has been announced. companies were already doctoring that in. tax rates had already gone down.

this is the first time where the comparison is harder and you get a boost from that tax cut. these some of the dynamics happening. ultimately there is going to be a slowdown in earnings growth but revenue growth still hanging in there, we think we can do 6% earnings growth. taylor: the debate between and earnings recession and an -- and economic recession will be next. that is gabriela santos staying with us. coming up, bank of america head of global commodities and derivative research. this is bloomberg. ♪ this isn't just any moving day.

this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving...

simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. francine: good morning, everyone. good afternoon if you are watching from asia. we are getting more breaking news out of pepsico.

we hear they are cutting more costs and that would include planned closures. we are trying to get through earnings and analyst call to figure out where those planned closures are. overall, like a lot of rivals, including coca-cola, taylor, these companies have been handled by currency pressures. they have been handled by higher transportation and aluminium costs. when we broke earnings recently, they were in mind with expectations and they were adding investments. maybe they are adding investments in certain part of the business. taylor: you are seeing a surprise drop in profit. withiced that yesterday coca-cola, sounds like every paragraph was a discussion about currency. you would expect some of that with a multinational company but this felt more. interesting to see as we get on the pepsi call, how much of this

is related to some currency headwinds like we have been talking about. francine: we know pepsico has raised prices for higher expansions -- expenses. willna: president trump invoke broad presidential powers to build his border wall. the president pence to declare a national emergency. this would shift $7 billion of federal resources to barriers along the borders in mexico. that strategy avoids it shut down but is likely to lead to a legal fight. the trump administration is considering it's next step to choke up the power of nicolas maduro. it may block foreign entities from dealing with the venezuelan oil company. the u.s. is bracing for a possible bankruptcy filing from citgo. amazon nixing plans to build a new headquarters in new york.

e-commerceaying the giant is throwing it away a great opportunity. the decision coming after fierce opposition from local residents and politicians. former goldman sachs ceo lloyd blankfein says the move was antidemocratic. global news 24 hours a day, on-air at tictoc on twitter, powered by more than 2700 journalists and analysts, in over 120 countries. this is bloomberg. francine: thank you. let's talk about brexit and the brexit victory. that is according to a u.k. official familiar with the plan. this follows theresa may's debate in parliament yesterday. lawmakers voted against supporting the premise is to renegotiate with the eu -- you. edwards.s now, and

know that could be the prime minister's plan going forward? -- is sheating renegotiating? >> we are running a story out of is doingthat what she is compromise a little bit. she talked about getting significant changes to the withdrawal agreement, to the backstop in particular and we understand her chief negotiator mr. barkley has said he does not want to open the withdrawal agreements so he is scaling back that plan. opposition leaders and others say her strategy is to run down the clock because depending on what she manages to get, might depend on which state people in the u.k. are given a choice on whether they like the plan or not. francine: have we figured out what plan would have the support of parliament?

or is it a matter of running down the clock? anna: the point of all these havements and everything in some cases been to narrow down expectations. it seems as if there is widely held views there is no majority for a no deal brexit although some mps will be happy with no deal. we have not gotten to the just --gist. some kind of norway plus plus scenario would hold back the comments. you get a disconnect between and whatiament is for the leaders are planning and so finding out the answer is only part of the solution. francine: talk about the timeline. there are going to be more votes on the amendment but february tablet -- 27th is a big one. anna: will get a motion from the government and look for a

meaningful vote for a neutral motion from the government. we will see how things develop over the next few weeks as we work our way towards that february 27. the question will be parliament trying to seize control and block a new deal -- no deal or parliament give her more time. does u.k. or brussels have the upper hand now? anna: a good question. it depends on which side of the channel you ask. where we are is theresa may is trying to get changes to the backstop. u.k. might if the scale back plans a little bit, looking to compromise with brussels. on the other hand, we're looking at it conversation about the extent to which any infrastructure would be put on the irish border.

sayingsh leader has been according to our reporting, telling angela merkel he would never put any hard border across the island of ireland, which leads to questions about what is all this conversations about the backstop for? who has the upper hand at any one point in time, still unclear. francine: thank you very much. us, gabriela santos. whether we have been no deal brexit, whether we do not have brexit, is it a systemic risk? gabriela: it is a different situation because it is a story about leaving the european union versus leaving the euro as was the case with greece a few years ago. less of a systemic issue in that respect. it is one of the long laundry policy uncertainties that has been on weighing on growth in europe. in the u k, we can say and the

rest of the e.u. as well. it would be a relief if we get this deal squared away, the sooner the better. francine: is there anything you like in europe? we have a new vote in spain. the situation could be volatile or a three-way coalition on the right. we have italy. is it a bad time to be invested in europe? gabriela: of all regions around the world, europe is the one we are less optimistic about. that is where we see the steepest deceleration and growth. we are not speaking about a systemic crisis or recession in the region broadly speaking but it is where the momentum feels like it is downwards. we have domestic political uncertainty. being a bigeurope exporter in the middle of this battle between the u.s. and china. europe needs that to get

resolved and more chinese growth and emerging-market growth to pick up. talk about momentum heading negative. i wonder if it is a broader eurozone or if it is germany or large companies dragging everyone else down. what is your concern? gabriela: it is on the manufacturing side. it is business investment. it is export. that is the issue in europe and it has become broad-based by country. it started off idiosyncratic and now it has become broad-based. what i like about europe at the moment is the domestic demand, that consumer is holding better but what we are watching is the length from the business issues to the consumer and that link is employment. we have to keep watching that. taylor: heading into 2019, all of our concerns have than about chinese growth. have markets done a good job of slowing european growth?

gabriela: when we look at bigings estimates we see a decrease in expectations for the u.s., for emerging markets, especially asia. there has been a decent job and pricing in uncertainty but when we look at european earnings estimates, they barely budged. that keeps us additionally less optimistic about investing in european equities. taylor: thank you. santos. gabriela she will stay with us. coming up on the open, it is fixed income all the time. kathy jones, fixed income strategist, 9:00 p.m. in new york. 2:00 p.m. in london. this is bloomberg. ♪

viviana: this is bloomberg surveillance. worried about another housing bubble? according to bloomberg businessweek, you should not be. bust, buyers, lenders and builders were caught up in speculation. prices soared even though there was a flood of new homes. now it is different. the last bust may prevent another one. contractors cannot over a bill because bankers burnt are afraid to make loans. the rate of single-family home starts is below that of the early 1960's. that is when the population was less than 60% of what it is today, so instead of an oversupply of homes there are shortage isnd the

made worse by low unemployment which makes it hard to find workers. the result, higher prices. owning a home is out of reach in some areas. u.s..s build above in the san francisco is the only u.s. city to make the top global real estate bubble index. that is just one story in the new bloomberg business week real estate issue. it is on new stand now. -- news stand now. islor: staying with us gabriela santos. come into my terminal for our single best chart. what we are taking a look at his brazil. originally their stock market in whites being rocked because of political uncertainty. right around here, the election where you got a big pop. on a normalized basis going back a couple years, you have brazil

outperforming. you have comments from the central bank saying they want to remain dovish but also highlighting brazil needs fiscal reform to boost that part of the market. what do you see? gabriela: brazil is a constructive story in latin america. we did have that during the election, even before the results and we got another pop once the cabinet was announced in january. the story is after 14 years of a leftist government, we have a right government. that is favorable for business reform, for fiscal reform, so getting the country back on track and it has been lifting local animal spirits. business is more confident. local investors doing the majority of that heavy lifting in the market. i feel optimistic, constructively optimistic about brazil. taylor: one place you said is the opposite is mexico, which we have seen on the normalized

basis -- negative territory underperforming e.m. markets. mexico is in the opposite camp. gabriela: we see that in the chart. upwards versus mexico moving downwards. tradef that is uncertainty with the u.s. part of it is domestic as well. after the political elections in the middle of last your in mexico, the country moved toward the left so the opposite direction brazil went in. that generated uncertainty locally for businesses, so we have been seeing lower momentum in mexican growth. perhaps earnings estimates are too high. perhaps mexico does not deserve the same -- that it used to. francine: if you look at brazil, doesn't the future of the economy ride on pension reform? how can we be so sure that the country is ready to be reformed? gabriela: it is a crucial issue.

the number one issue in brazil this year is pension reform. that is to get the disco counts in order. it is an urgent issue. brazilians retire at an average age of 55 now and in line with the rest of the world it is a population getting older. it is on a sustainable -- unsustainable. the president announced the initial draft of the pension reform, which the market to wealth. it is an initial proposal. it has to be debated in congress did the year but it is an issue that is in every brazilians mind. it is something that the general population realizes needs to get done this year. thecine: if we do not see pension reform, if it has not been approved, will it prompt weaker currency and inflation concern in a major selloff? gabriela: this will not be approved this quarter, not even next quarter.

it is probably a second half of the year issue but progressives need is see this progressing in a favorable manner through congress. if it does not happen, it is a big issue for brazil. you will see fields spike, the currency -- yields spike, currency weaken. it is an important issue. enough but itthat is more of a second half of the year conclusion. taylor: when we talked about venezuela, it is about oil sanctions. how are you playing venezuela on the debt and equity side? gabriela: it is hard to play. venezuela is not in any equity indices. it is more of a debt story. venezuelan debt is only 1% of the emerging-market u.s. dollar index. broadly, investors barely have direct exposure to venezuela. it is more of an indirect story through oil prices and a huge

humanitarian issue for the andle of venezuela neighboring countries where there has been migration. depending on what the trump administration does it change your outlook? gabriela: the u.s. is putting pressure on the current maduro government by choking off access to dollars and access to u.s. markets. what will be an extra step there, some of those reports we have been hearing about further sanctions, which would limit venezuela's ability to sell oil globally. that would be a bigger step in terms of pressuring the local government and would be short-term bullish for oil prices. it would be a decreasing supply. longer-term, this story if we have regime change, it could get venezuelan oil production on track after years of deceleration, which would actually be long-term bearish

for oil prices if there is positive regime change. francine: thank you so much. coming up, a little later today, we go to those pepsico earnings with hugh johnston. he is the chief financial officer of pepsico. we will ask about higher costs, whether they can push on parts -- price increases to consumers. that interview, do not miss it. this is bloomberg. ♪

francine: do not miss our coverage of president trump's remarks at 10:00 a.m. today. he will speak from the rose garden on national security and the southern border. all of that live on bloomberg tv, radio and online. speaking of national security, mike pence and mike pompeo are attending a key security conference in munich as tensions over huawei set the tone.

the two are expected to meet a top ranking official and top ambassador to the u.s.. while huawei has become a in one of the world's richest markets. joining us now from munich, is jason boardwalk. he founded the center on global energy policy. thank you for joining bloomberg surveillance. securitye munich conference. do people worry more about china or russia? jason: both of those are high on the list of concerns and both of them affect the outlook for energy. a trade war with china has the potential to suppress global energy demand. the u.s. is a major oil and gas exporter locked in a major trade war with china and congress introduced new legislation yesterday.

growhe potential to russian oil production in the future. how would you describe the relationship between russia and the u.s.? are we going to see more sanctions? , obviouslys strained given what is taking place over ukraine andrs with interference in u.s. elections. it has become a political issue where the democrats see an opportunity to score political points by being the best possible on russia because of perceived closeness between the president and putin. we see democrats easy -- eager to push forward with new sanctions. on issues of foreign policy, whether syria or traits, that is where you see cracks among the republicans and we see republicans that might go along with that despite opposition from the trump administration. taylor: so much on the campaign trail when presley was running. a lot was about -- president trump was running.

a lot was about nato. how much of that is on the agenda? who has the advantage? jason: that issue is on the agenda and the relationship between the u.s. and european countries on trade and specifically on issues of energy policy are important. one of the major issues we spent the morning talking about was about the north stream to park , the leinsterne of natural gas and the united states officials are here trying to encourage europeans to buy u.s. natural gas instead. we see energy playing into that relationship. francine: how are you expecting the u.s./china trade stand up to develop? or they find an agreement anything that has to do with ip will make the divide bigger? it does seem like it is

in the interest of both parties to find resolution before the early march deadline kicks in for new tariffs. a major part of president trump's success story that the them in a station watched to be able to tell -- that the administration wants to be able to tell is a positive economy. we will see some resolution either to the delay -- to delay the deadline but it is difficult to deal with the serious issues challenging this relationship, ip being one of them. francine: thank you so much. energyordoff, global policy. we have plenty more. taylor, thank you so much. this is bloomberg. ♪ the latest innovation from xfinity

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president xi jinping as trade talks continue. they will push for a win-win agreement. talked to one of the authorities on the asset allocation and commodities. amazon versus new york, the politics of tech. what now with a world-class developer. david: welcome to "bloomberg daybreak." as we look at the white house, they will have some big events down there today. the president expected to sign the bill to keep the government funded. he will saytime, that wasn't enough money. i need another $7 million plus to build the wall. bi