>> roadblocks ahead. european>> carmakers in the crosshairs. theresa may asks the eu for concessions. there is just 39 days to get a deal extended or crushed out of the bloc. says the bank could change. ♪ francine: welcome to "bloomberg surveillance." out at what i am looking the stoxx 600.

they are pretty much flat. a lot of optimism sizzled out because if you look at the trade between china and the u.s., we heard from people in the trump administration that the tariffs could because bond if there is significant progress. we think there could be progress this week if trade talks renew in beijing. but we put that against the threat of other tariffs, as we understand there is a report that says some of the auto imports are a security threat. we see a flat european stock market. also a reminder because of president's day, u.s. markets are closed. i am looking at crude above $56 a barrel. we understand that theresa may and her allies this week will do a tour of europe to get concessions. coming up on "bloomberg surveillance," we will talk commodities. don't miss that interview at 10:30 a.m. london time. let's get straight to the bloomberg first word news.

europe is under pressure from the u.s. and china. the question is whether the equipment should be banned from the future network. they used the munich security conference. >> the united states has also been very clear on the threat otherby huawei and chinese telecom companies. as chinese law requires them to provide the security apparatus with access to any data that we musttheir network, protect our critical telecom infrastructure. people should not and cannot be misled. as a company is cooperating very closely with european countries in the fourth industrial revolution. we should all work together, and chinese law does not require companies to install backdoors

or collect intelligence. theresa may is appealing to conservative party colleagues to unite behind her brexit deal. she is prepared to go back to brussels for more talks with eu leaders. but gaining headway could depend on whether she can show a united front at home. meanwhile, airbus says a no deal divorce would be catastrophic, and lead it to reconsider future u.k. investments. that ecb is keeping the eye on the data. they say the current slowdown is significant, although the bank could change its guidance if it becomes clear the situation is temporary. it is another dovish signal as they prepare for a new president and chief economist this year. saudi arabia has dismissed a report that mohammed bin salman wants to buy manchester united. reports say the crown prince could send billions of pounds to buy the club. saudi arabia calls the report completely untrue.

global news 24 hours a day on air and tictoc on twitter, and powered by 2700 journalists and analysts in more than 120 countries. i'm sebastian salek, and this is bloomberg. inncine: european automakers focus after a u.s. probe reported to say that car imports pose a risk. this could ultimately lead to the u.s. opposing tariffs. angela merkel rejects the suggestion that german carmakers compromise u.s. national security. >> we are proud of our cars. those cars are built in the united states of america. if those cars, which are no less a threat than those built in bavaria, are a national security threat to the u.s., that is a shock to us. francine: joining us from berlin is kris bryant. what do those u.s. tariffs mean -- what could those u.s. tariffs mean for the car economy? kris: we don't know if the comments department has handed in the report, if donald trump

will decide to impose tariffs. the comments from angela merkel signal there is a real fear in europe those tariffs will be imposed. angela merkel goes out of her andnot to rock the boat speaking quite strongly about how she was shocked at the idea of german car imports being a national security risk to the united states. that suggests that merkel thinks something that is coming down the line. it affects the german car industry most of all. the germans have a lot of manufacturing in the united states. they would obviously be hard-hit by any tariffs, and their share prices are clearly pricing in risk is something that might happen. francine: car sales in china continued to decline. is this bad timing for the industry? chris: it is a rotten time for the industry. valuations are six or seven time

earnings. china was a huge help in terms of cash flow. right now, sales are falling quite suddenly. for months, it seems to be getting worse. not all carmakers are affected the same. -land rover sales are down 60%. issues.some local broadly speaking, the chinese economy not as strong as it was in the past. consumer spending has been reined in. -- no sign chinese the chinese government will rise to the rescue. francine: we have the possible tariffs, china. what else is plaguing the auto industry? chris: the big issue right now is the huge spending requirements that the carmakers are all having to front in order to meet the structural shift away from combustion engines to electric vehicles. that means they need to generate

cash flow from somewhere. the problem is the chinese market is slowing, european sales not doing much, the u.s. slowing a bit, too. it is hard to know where that cash will come from. if you look at valuation for the car makers, that is telling you that the stock market is saying the future for the carmakers is brightened. they are going to have the better of the car industry. that is not yet certain. if tariffs to not happen the way the markets expect or if chinese car sales can recover, perhaps things could be a bit rosy for the industry. essentially everything is going against the carmakers. francine: thank you so much, bloomberg opinion columnist kris bryant. let's keep the conversation on trading and the markets. joining us now, a global fixed income strategist. she is a portfolio manager. thank you for joining us. when you look at these tariffs

and the kind of reports that come out of the trump administration, we don't know whether there is a timeline or if it will go through. what impact does it have? >> i think the impact it has on the psychology of markets is potentially quite meaningful. we heard the impact of auto tariffs would be quite ,eaningful for parts of europe for large parts of asia, and for the united states itself. but of course, we don't yet know is going to of that be, and what trump is going to do off the back of that. i say there are two tracks. the u.s. trade war discussion, where the direction of travel has been in a positive direction, then auto tariffs discussion, where there is a big unknown. i would say on balance, there is very little by way of incremental wins for donald trump here from the auto tariffs. but who knows? francine: do you agree with

that? it seems there are separate issues, but if you goes ahead with one, he goes ahead with both? we are migrating the administration, or do we take it off the table? guest: i think we know more about europe and china and the does it -- the desire to get a deal. with cars, it is not clear what he wants. the problem with the car industry is it is the poster child for the idea of sourcing from everywhere and last-minute sourcing from everywhere, the weight to benefit from global trade. so much of the growth of corporate profits all over the world has come from this. away, yourt picking will think that profits will be weaker across the world, and growth will be weaker across the world. why on earth would you do that? that is different from the u.s.-china thing, where it is intending to get a deal. francine: will they get a deal?

a deal that puts the u.s. on stronger footing longer-term? kit: i suspect they will get progress on a deal, but i suspect we have more rounds of this before we get that. there is a direction of travel, the big sticking point about intellectual property rather than anything else. you get the sense that both sides want to be seen to be making progress, because both of them have skin in the game economically. francine: let me go over to my chart, which looks at the important numbers in vehicles on u.s. sales. let's get to our mliv question of the day. this is what we are trying to figure out. autoe u.s. designates imports as a threat to national security, will that be a tipping point for ecb banks offering long-term loans? maya: i think you would see that in context of generally a weakening european area. i think the gp numbers we had last week could reveal

meaningful slowing in germany and italy. europe,when we look at certainly the tariffs side of things, but there is also the broader economic slowdown, and the real threat from exports overall. from 6%orts have slowed to 7% real growth at the end of -- of 2017 to 0% today. if you add auto tariffs to the mix, you do have the need for a bit more of a backstop from the europeans. but absent that and with some positive resolution of the trade talks, you have got the opposite scenario in that markets are priced out the ecb doing anything by way of tightening for the next couple of years. a resolution, we

go the other way. francine: do you think it impacts tlro's? kit: i think the reality is if the ecb can work out whatever it takes to sort things out, they do that. but the question now is about what can they do that helps from here when negative rates are hurting some bits of the economy quite badly? when the issue around who is going to finance the banking system is still there. aboutk what is important the auto industry right now is the ecb had thought that europe was facing a series of one-off temporary shocks that would eventually go. here is another big one. if you get enough one-offs, if i get punched enough one-off times, i would get knocked over. francine: that will not happen here. maya bhandari stay

with us. we are six weeks from brexit's d-day. we will talk market reaction next. this is bloomberg. ♪

finances.economic this is "bloomberg surveillance ." the british prime minister theresa may will lead a major push to get the european union to a great on brexit -- to a brexit agreement. members of her cabinet want to stop from leaving without a deal. allies believe she has nine days to save her strategy before

lawmakers run out of patience. parliament is set for february 27. let's keep the conversation on brexit. arejuckes and maya bhandari both still with us. kit, i'm not sure whether we figure out what parliament would vote for at this point, but what is she trying to compromise on? kit: i think she is trying to get enough to get people to say, particularly in the conservative party -- i think she is focused on her party, saying, if you do not come to the best deal i can get for europe, what we will do is lose an election and never seapower again. this is as good as we will ever get again from the eu. if i had to guess a game plan, i think it is that. maya: i would agree with that. all i would add is the closer we get to the deadline, i think the balance of probability is shifting quite meaningfully toward an extension. when we think about it from our standpoint as investors, the

real impact of brexit on portfolios comes through sterling. the outcomes for sterling are quite binary around where we end up. veryd brexit, albeit unlikely, probably delivers quite a meaningful weakening, about 115 if not lower. whereas any sort of agreement, be it with an extension or in the current form of the withdrawal treaty, probably leads to some sterling strength. that is what we are grappling with. you have these extremes, a full range of outcomes, and they have meaningful impacts on how we think about investing money. francine: but overall, are we too complacent about a new deal brexit? we are getting down to the wire. a wides like there is held belief there will not be a no deal, but we don't really know. kit: we don't know, but if you

turn around and say that we would trade comfortably, about 150 for the dollar if we canceled this brexit nonsense, we might trade to 120 with no deal, the most likely is we get some kind of extension that gives to 140 -- that gets to 140. it is not far off, there is a chance they get to 120 and i am sitting here at 130. we don't know what to do with ourselves. we quoted against the dollar, where it moves against the euro and the reality is that no deal is that for the euro and a deal is good for the euro. i believe what happens is the euro against the dollar, that euro-sterling rate, is trading in a tiny range. francine: kit juckes, maya bhandari, both stay with us.

huawei.e sight for allyand riskits falling behind in telecoms-? we discuss that next. this is bloomberg. ♪

francine: this isfrancine: "bloomberg surveillance." europe is caught in the crossfire between the u.s. and china in the tech war. the trump administration has been pushing allies to block

huawei over concerns that the chinese government could use its equipment for spying. huawei has repeatedly denied the claim, but the situation is particularly tricky for europe as huawei supplies of third of its telecom systems. joining us is alex webb. great to have you on the program, as always. a lot of people know what five g is. why is five g different? alex: it will be significantly 4g.er than and one of the reasons is not everything has to be pumped through a central network. it can work from node to node. each antenna communicating with the next. francine: worldwide? alex: country by country on its own basis, but ultimately yes, worldwide. the reason they are talking about eight different antenna is it is -- a different antenna, it is faster. each antenna could be vulnerable. people say they don't have huawei in the core networks, in

the servers where each antenna communicates to another one. cutting out the central core might mean that 5g is more vulnerable. francine: what are governments saying? ina: in europe --alex: europe, they rolled out slower than the u.s. because it does not have the same financial imperatives as in the u.s.. 5g they use more quickly to get people into their networks. in europe, the cost of the network is a lot lower, therefore harder for them to get the return to 5g. those investments will happen in the next year or so. now is when they have to say, this is what you should do. francine: who is up for using huawei and who is not? alex: clearly, the chinese want to use huawei. the u.s. is not using them. they said they have not used them for a long time.

in europe, they have quite high market penetrations. be more of it might the network for companies like deutsch telecoms. it is a high cost. francine: are you invested in telecoms? maya: i am an asset allocation person. probably not the best person to comment on it. francine: does it make a difference to how -- this goes back to framework. backthe conversation comes to different industries in the same place. we have boosted corporate profits as a share of gdp 30 years in a row on the back of these kinds of linkages. the more we wind them back, though more we will lose those gains. francine: thank you all. alex webb, tech writer for bloomberg, kit juckes and maya bhandari.

up next, nigerians heading to the polls. we will have a look at the currency promises done by both candidates. we also have a deep dive into emerging markets, and we look at what is happening in venezuela. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." president trump said

last week's trade talks in beijing were very productive. the u.s. and china are sending signals they may improve talks. the two sides continue talks in washington this week. car imports pose a risk to u.s. national security according to afp. this could lead america to impose tariffs, but angela merkel seems incredulous about german cars posing a risk to the u.s.. those cars, nonetheless a threat -- are no less a threat than those built in bavaria. sebastian: the ecb is keeping its eye on the data. the bank could change its guidance if it becomes clear that the situation isn't temporary. the central bank prepares for a

new president and chief economist this year. bill gates says boosting chaplai -- capital gains is the best chance to tax the wealthy. he says increasing the mac market -- marginal tax rates is not the answer because there are ways wealthy can shelter their income. abe did praise the president for what he called decisive efforts to resolve the problem of a nuclear arms north korea. president trump and kim jong-un meet again at the end of the month. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'mebastian salek -- sebastian salek. this is bloomberg. francine: nigeria has postponed its election. lands of nigerians have traveled

to their hometown to vote. for more on what the delay means for the oil-rich nation, paul joins us now. great to have your the program. the delay capability out of the blue. what happened? paul: voting was meant to start at about 8:00 a.m. on saturday. bloomberg started swirling around 9:00 p.m. friday night that i might be a delay. we had wait until almost 3:00 a.m. when the election commission said logistically, it would be all but impossible for them to hold the vote. delay thethey would elections for a week until this coming saturday. it was a big shock. francine: what does this mean for the two main candidates? paul: they are thinking this is when two reduce voter turnout next saturday.

a lot of people have traveled quite far to their hometowns to vote. a lot of nigerians have actually flown into the country just to vote. some of those people won't be able to vote next weekend. either they won't be able to travel two weekends running. people who came from abroad may have to leave the country. if there is a loyal voter turnout, the consensus is that that would hurt the opposition abubakar. francine: thank you so much. let's keep the conversation on emerging markets. us.and maya are still with what does it all mean. if you look at fed policy, is it now overcrowded? quickly. coming that

there has been a lot of money flowing out of emerging markets since the back end of last year. certainly, emerging market debt has been on fire, possibly led by china more than anywhere else. this willingness to symmetric chinesemonetary policy, credit policy is way more important in the economic cycle has always struck me as being a legacy of the fact that we haven't had a proper economic cycle for so long. this feels to me as if we are going to. old, but just getting it feels scary to be piling this early in a global economic downturn, saying rates are coming down, let's go in. francine: because you are worried about a recession? what we have had since 2010 but nothingow down,

that has turned into a recession in the u.s. or globally. this looks more like an old-fashioned, not 2008, but 2000 global economic downturn cycle with a couple of quarters of slowdown in china and weakness in europe. i don't know if emerging markets can just right through that. the market is betting that is fun. maya: i'm not sure i agree with that because when we look at what markets are pricing into a recession today, they are down 40% odds but there is of a recession, which we don't expect. market,ook at emerging i see big differences between em's, but broadly. as the emerging markets as being structurally in better shape. i see them having high real yield interest rates. as he china stimulating.

china-- i see stimulating. the first credit impulse in china since 2017. francine: if you put you can emerging markets and u.s. neutral -- maya: within emerging markets, ecb favor asian market. emergingarts of markets where you have structural forces in place. there is quite high real interest rates when you look at the big industry and quite inventive risk premium when you look at it from an equity standpoint. clearly, markets have come a long way. we think there is probably further to go. a don't know if i call

you skeptical on emerging markets, but careful. is that equities and currencies? it is much easier to look if you say the chinese are going to ease monetary policy further, and if they can keep the currency stable, if that is their current policy at the moment they can do that and eu will continue to see money flow into the china bond market. it feels like it will run its course quite quickly because it is going to be too fashionable. in places where your most cyclically foldable to negative prints on u.s. gdp in the next 18 months. found my source of concern. this looks to me more like a slow down to what we have had any time since 2010. that could translate into real nervousness about how latin america might play out in the environment. asia is further away. possibly a reluctance to turn

around and they, i cheat the turkish lira or south african rand. i'm going in all guns blazing. i look at them and think, can i buy them at this price in six months please? in six months, you'll have a better idea of where the world is going or idiosyncratic things happening in individual countries? kit: it will feel to be so much as if i'm standing at the top of a's peaceful and i don't know whether it is red, green or black. aancine: i have you down as blackbeard, but nevermind. areag up, as the euro economy slows, what does this mean for the ecb's great past? we discuss that next. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash. a u.s. hedge fund has dealt a blow to barclays efforts to win against the turnaround plan. the install their stake in the british bank. it had been one of the strongest supporters of the ceo's plan to revive barclays. citigroup is set to be in talks to build a tower. fromwant to purchase partners.ity the skyscrapers honor was considering a sale for more than 1.2 billion pound. deutsche bank's top investor is continuing to cut its stake. to 3.6%. its ownership

bloomberg understands the former ceo initially refused to meet with his executives. and newspaper says prosecutors are aware of a fellow the new about plans to publish the news. francine: thank you so much. recent data out of the euro area has taken them by surprise. 's francois says the slowdown is the second. kit and maya are still with us. when you look at monetary tightening around the world, are

we going to take a long pause, not only interrupt europe, but also given the uncertainties, or could it come that quickly? maya: i think in the u.s., we have certainly taken a positive pivot.r response to is in the sharp tightening in financial conditions we had 20 and the year. insofar as i see that as the real driver of the pivot, as opposed financial conditions are lanes in terms of what we get from the fed next. more broadly, if we look at japan, the bank of japan has told us they are going to be low. i think that is about right. in europe, i think it is a bit more challenging. so far, we have had a pretty savage discussing of gdp forecast. the street, more broadly is

cutting growth expectations. the drivers are being slightly are that we see a lot of temporary factors having driven the weakness in european growth from protests in france to conditions in the rhine and so on. certainly temporary factors being one aspect, but also the global trade environment and what that has done to reelect in europe. started orwe discussed at the start, if we do have trade discussions the beginning of the direction, that does create room for europe to supply from the upside, given how domestic demand has been. but that i have been

ecb board member who says the slowdown is deeper than expected in the eurozone and contains guidance on ecb. the discussion, of trying to get policy rates back to zero at some point when it was safe, i wouldn't even call it normalization. we not have this dangerous negative interest rate for a day longer than we have to. we don't have a conversation about european monetary policy. we're not going to get that possibly for a decade. what we have not think is a series of temporary shocks. it's even harder to get to this normalization only from negative rates. an actual rate cycle, i have no idea how funny have the project into the future to imagine the idea of an ecb rate cycle where

you get a series of rate hikes. francine: are we becoming like japan? i've heard a lot of economists pushback on the. kit: we suffer from some of the same things. large parts of europe, the stock parts ofve growthk europe where what monetary policy makes -- . needs to have a massive change of heart about how fiscal policy works and is much more concerted effort. europe doesn't have a mostly undervalued currency, which japan had from 1986 until 2013 pretty much all the way. we like japan in the sense that there is a lack of demand across the system. francine: do you like anything in europe? maya: we like european equities.

we like japanese equities somewhat more. we're strongly in favor of japanese equities, in favor on europe. relativelywe see good earnings potential, certainly relative to what the announced. valuations are relatively reasonable. i think if you have certain european equities, perfect storm of concerns around trade, lots of one of things jinping some of the european growth numbers and plenty of political risk within europe health. when you put all of the things together, you've had some quite meaningful european underperformers.

there are opportunities presenting themselves. francine: thank you both. up, oil has higher after trade talks between the u.s. and china wrap up on a more optimistic turn. we discuss that next. this is bloomberg. ♪

francine: economics, finance, politics. this is "bloomberg surveillance." oil trading near the highest levels in november and optimism that the u.s. and china can actually reach a trade deal. on offer in saudi arabia has helped boost prices. joining is now is the executive equities andmbined commodities for bloomberg. overall, what is the oil story? i guess we are not seeing a recession. >> i think all of the above. the main influence is how aggressive saudi arabia has been. if you think about the opec plus deal, they basically relied on two big players cutting their

production. saudi arabia is that going into the deal that because of the russian winter, it was quick to be somewhat constrained. nonetheless, very disappointing in terms of the monthly numbers. saudi arabia has been very aggressive. i think there is every indication is going to drop below 10 barrels -- million barrels a day. at the moment, saudi arabia is pretty much single-handedly propping up the oil price. francine: when you look at u.s. sanctions on iran, does it move the needle in terms of reform? stuart: i think it does. it is quite incredible that in a few rare cases, the stuff which would normally be considered vastly inferior to the crude is trading at a premium. you have to reconfigure your whole process to deal with a different type of crude.

francine: we keep saying that the fact that we are seeing possible across between the u.s. market.a lists the oil to be have any idea by how much? >> now. -- no. it is a question of how much closer are they today than yesterday? i'm not wholly convinced we are a lot forward. do we see any concrete evidence whatsoever? not yet. francine: thank you so much. we are back with kit and maya. i don't know whether it was back to the u.s.-china trade, the risk of a recession and if there's something you can see in the price of oil or whether it is a pure inflation? maya: think it is a bit of all of the above.

i think certainly on oil, the supply-side has a meaningful driver recently. demand is relatively resilient, although it has come off of a global economic growth has slowed. -- steady as she goes, you can start to make it relatively constructive case for parts of commodities in the that needs todity benefit from some of these would be conditions. a lot of the chinese growth we have seen has come in the form of trough -- targeting profitable measures once again. property targeted investment or power easing from china does tend to lead to greater

investment in boost some of the basement prices. certainly there, after many years of seeing some us says, you are starting to see deficits in terms of supply deficits. base metals, we think and be positively impacted. i will go as far as gold and say you are in an environment within dollar looks terribly negative. gold- we might as well buy in addition to other things. i think that is really important is the boost the economy from a stable currency. that helps the whole as the oil story is all about how far we bounce back from the fall we had at the back end of last year. still chewing through a

fall that was much bigger than expected. thank you all for joining us. we continue in the next hour. this is what the markets are saying. we are seeing a little bit of hope in the trade talks between the u.s. and china. if you look at commodities, oil to copper action climbing, don't forget there is a president this isin the u.s. bloomberg. ♪ i'm a veteran

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

my name is antonio and i'm a technician at comcast. we're working to make things simple, easy and awesome. francine: roadblocks ahead. european carmakers in the

crosshairs as the u.s. is said to call audio inputs risky. just 39 deals to get a deal, extend or crashes out of the block. the ecb lies the data as the policymakers that the bank could slow its guidance. this is "bloomberg surveillance." u.s. equities and bull market are closed. let's get straight to the bloomberg first word news here in london. the white house is sending more signals that the u.s. and china will either reach a trade deal or agree to extend talk. president trump said last week that negotiations were productive. president trump has received a report that could lead him to impose tariffs on imported cars.

the president has 90 days to decide both foreign and domestic automakers are posted the tariffs. the pressure is building on makers in china. holzer -- wholesale passenger vehicles doubled from almost a year ago. theresa may believe a major push deal. her brexit a vote in parliament is set february 27. 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. thank you so much. this is my bloomberg. physical --out

physical car deals. we understand wilbur ross had until yesterday to deliver his whoings to president trump has the final say on whether to impose tariffs on cars around the world. 25%as threatened as much as on foreign-made vehicles. like on imported vehicle. let's get straight on to the broader markets. if you look at some of these stocks in europe, but also u.s. futures, i reminded equity futures and treasuries are closed in the u.s. because of president's day. u.s. futures are drifting. we didn't see a rally in asia that boosted shares to the highest level in october.

optimism in china's economy. some of that rally really peering out. pound at 1.2908 what will. theresa may do today? president trump says trade talks are very productive. each side is sending signals that they may reach a deal released extend talks. this eases fears of a trump administration will ratchet up tennis when the key deadline -- isiffs when the deadline here. it seems every day there is another specter of tariffs or belligerence coming from the u.s. markets seem positive the u.s. and china will find a way through this. are they wrong? eric: i don't know.

i think the market has a view that will be an extension or deal along the way. that is probably right in some minor way. the americans don't believe in much oil is the money more. we are moving constantly left to what -- francine: is it true they don't believe in it or they just say they don't believe in it to get vote? very similar to the agreement we had yesterday. eric: it is a little bit less good. they were trying to strike a lateral deals. it's a long process and is disruptive long the way uncertainty that now is hitting

sentiment, unfortunately. is that a bullet hit? specifically in europe and china and asia, we saw numbers. it hurts trade and sentiment. investment is much more trade oriented than good. you have that two pillars slow down and potentially bigger crop . it is really coming down significantly. i can think of no other reason than this was out of washington. do you see it as a genuine slow down? erik: probably not enough global

recession, but it is threatening. there were a few technical things that suck temporary, but the underlying picture we see in they areindicators, coming down rapidly and come off the export numbers. do you see them come down, you see the sentiment toward expert demand coming down. francine: where do you see europe in all of this? i'm trying to find a headline we had an angela merkel saying to be wrestled by what she heard out of the u.s. i don't know what wrestled means on uneconomic turn. she had this great line that she was slightly shocked by hearing that german cars are a potential .ecurity threat to america i think it's very clear in berlin and throughout western

thepe, the political class, governance are in shock over what america is doing. people are starting to understand why and how true it is.and then if the other side which is the business side. life goes on any her noise from the political side. what we heard is a lot of nervousness, particularly on the x orders. francine: it is almost like the third-party in these talks. k: they are certainly indicators that china is taking a big hit also. we don't quite see this genetically in china right now, but if you look at the import numbers that came down -- francine: is that sentiment in china? we are seeing a slowdown, but not the same as 2016.

erik: i wish i knew. to what i have heard is that the chinese now -- the exporters into china now are higher upfront payments. the reason is because the capital controls what is being put in place which makes a harder to control the money. sign of something quite problematic. francine: thank you so much. coming up, the ubs global head of macroeconomic strategy. this is bloomberg. ♪

sebastian: this is "bloomberg surveillance." in germany, the financial tor -- shares of wirecard have been on a roller coaster. they have denied any wrongdoing. comparable sales rose from better than expected. expects formaker your growth from 3%-4%. citigroup is in talks to buy a tower.

the bank is negotiating with a middle east group. october thatast the skyscraper was considering a sale for almost $1.6 billion. francine: theresa may is leaving a less ditch attempt. she is facing a rebellion from members of her own cabinet who want to stop the u.k. leaving with have a deal. many allies say she has just nine days to save her strategy. of the problem is set for march 27. i have some people saying that no deal will be off the table and other saying there will be an extension. 39 days until march 29, how do you see it going? be, athink there will deal pretty close to her deal

because there is such a big majority in parliament against dropping out so early. i'm nervous. a significant amount of parliamentarians going to push the u.k. over that cliff just to get out and then try to take me .rom there we understand it couple of future mps have resigned. sebastian: -- >> i don't understand labor. the most divisive issue in this country for a decade, or at least from -- they haven't identified where they are staying. a comes up to carbon being a brexiteer. it divides labour as much as it .evolves the tory party

francine: and a says she is embarrassed and ashamed to remain in the labour party. we will post that out on social media. she is saying a number of in peace will sit in parliament at independence. i don't know whether it will .ave a lot of traction putting off the labour party? so. hope i'm struggling to understand why this didn't happen a long time ago. it is very difficult to break down the two-party systems. the result we see is the fact that the model of the two-party

is more with the multiparty systems where people can allied themselves. francine: does it change the fundamentals? what is the crossover uneconomic? it feels like the permeation of politics is getting almost more and more into economics. erik: the big problem is, we don't know where these people stand on economic policies. it has become a one issue political issue in britain. you can imagine tory people leaving because they are upset with the way theresa may has been performing, but there is no guarantee at all. they just update us on the way the price is handled. they may disagree on almost

every domestic policy. francine: we were just hearing berger say many people have resigned. when does it become critical? does it really change brexit negotiations? francine: it could -- erik: it could. within the real estate f it islistic frame, interesting in the sense that it undermines jeremy corbyn very significantly. you wouldow how many need and you will have to see what happens from the tories decide. this this change the way the eu

watches the u.k.? it is certainly one of the most high-profile defections. we were hearing the press eight could be as much as 100. eu look at the u.k. and say we are going to give it an extension giving everything happening in politics? or will the state to her red line. erik: the first thing is the red lines a deal she negotiated once to reopen, i don't think any of this happened in london can change that. all she can get that is changes to the political lesson, not the legal agreement. i think it would be very surprising if they would open that one. where it could change is if you -- for -- if the

political landscape in london is starting to shift around to sort out what we actually take and what to do. in a sense, it will become easier for brussels to ease tension if the landscape starts to change. francine: what chance of a no deal brexit is there? erik: 10%. but i worry it has cut off development. francine: thank you so much. we have just hired a small group of labour party -- all editions. -- politicians. coming up in the next hour, a

ccla investment management, we will ask him about this, you politics and brexit. on your markets as well. this is bloomberg. ♪

francine: this is "bloomberg surveillance." tom keene off for president's day. let's get to some european news. antiestablishment movement is putting its ruling coalition to a test with an online vote.

at stake is whether five-star should support immunity from the prosecution from the league party leader, matteo solving the. he faces charges for refusing to let a microchip dock left some. we are joined by bloomberg news's euro chief. this is confusing, but does it go to the fact that depending on the way five-star votes, we could see a prosecution of and the coalition will be able to hold together. the concern is basically whether the coalition holds together or not. many analysts say they will somehow managed to hold together. this is the issue with five-star. they were ahead of like out when they won the election and now they are way behind. this is a way for them to get back to their roots. they always said you need to stand trial if you are accused of anything.

they are going straight to their voters and telling them we haven't changed. we have become corrupt by being in power. for matteo salvini, many are saying it is a win-win tuition. he has come to power by saying he is opposing migration. him, italyhappen to will still have the impression .hat he is doing his job fair francine: do be have any idea when five-star will vote? >> it's likely. that is a hostile has always felt about these kinds of issues. what will happen after that, we are not sure. how will salvini handle that? so far, it seems like the coalition will stay together. there is a lot of concern.

viviana: think there are also new polls out. -- francine: i think there are new polls out. the idea if he does really well and continues to do well in this way, he might be able to go to power by himself without the five-star. the leg you have issues like lower taxes for businesses, whereas the five-star is more interested in forms of welfare. the issue is, at some point, these two parties are likely to break off. if they do really well, there might be appetite to break away. would be the leader of the right because he is gained so much and polls.

francine: thank you so much. up next, wti. oil trades near a three month high. we will focus on the commodity stories. we also have a couple of questions on china. if i'm looking at commodity spaces, it is interesting because you pick some of these shortfalls we saw in oil blessed couple of. you look at the fact that it has been rising. this is also on the fact that if you look at sanctions against minnesota and i ron, their limit iran, they are limited. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?"

"all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ good morning. that afternoon if you are watching from asia. tom keene off for presidents' day. that's get to the first word news. news from breaking

london, seven members of parliament including the they remain party and becoming independent. they are unhappy about frexit. 1 -- about exit. on capitol hill, lawmakers say there may be enough support in congress to disapprove president trump's emergency declaration. they admit there will not be enough votes to overturn his veto. japan's prime minister says he will not say if the has -- if he has nominated president trump for the nobel peace prize. and kim jong-un meet again at the end of the month. -- increased tax collections from the wealthy. he told cnn he is worried about the high edge it is it run by

the u.s. he says the increase in the marginal tax rate is not the answer because there are ways the wealthy could shove the income. 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. missus bloomberg -- this is bloomberg. francine: a u.k. update. moments ago, seven members of parliament have quit the u.k. labour party. for more on this developing erik. we are joined by are talking,s giving their reasons for resigning. is this disappointing? was this the first resignation? >> over the weekend, we were hearing five. it is more than that. it is not two dozen, which would

have made a bigger impact. it is indicative of a divided labour party. they are divided over much more than brexit. there is opposition to jeremy corbyn's leadership. it is not reflected in the membership base. it will be interesting to see how this plays out over time. it aims to put pressure on him to go for a second referendum, something he has been resisting. on the brexit front, it creates pressure. francine: does it split the labour party? >> it is a split in the same way a small week off of a giant tree g off a giantl twi tree trunk. it is too early to tell. it would be interesting if we mpsthe central tory

splitting off. the seven mps resigning say they will run as independent. they have not announced a new party. electoral system, it is hard for a new party to gain electoral traction, even the u.k.'s independent party with less than 13% of the vote. 2013. one mp in it is hard to say there is a new force in british politics. francine: we are hearing from jeremy corbyn saying he is disappointed certain mps have left the parties. will he change his policies toward the anti-semitic things we have heard and brexit? problem is-semitism a huge one for him. he is not been able to put it away. mps are onany labour comfortable with. on the brexit side, he is in a more secure position.

he put forth the policy. he challenged theresa may to agree to a custom's union. it is a comfortable position for him. for a second go referendum if you cannot go for a second election. he sidestepped it. mps who resigned and those in the party are going to push him harder on if theresa may does not agree with the domains he has put forward. francine: thanks for joining us. she covers u.k. pollock six extensively -- u.k. politics extensively. islowdown in europe significant. the banks could -- a bank could change its guidance if the situation is not temporary. we are talking about slowdown in the your zone off of this u.s.-china trade deal. any kind ofn't

tariffs on the european automakers, does it change? is it the same -- is it the first thing the ucb would change? erik: it is in the back. it is a matter of them to come around and say it. the first one in the not be- the money could counted on the balance sheets. gett of smaller banks would trouble if they do not -- or they have to go to the market and get a high cost. it in plies a monetary tightening -- it implies a monetary tightening. the question is -- you do a variable rate or a fixed rate? how do you do the guidance on the interest rate? francine: it is more accommodation?

is it fair? it is to avoid a tightening. unless yout is -- knock it down with a parent he ise -- a guaranteed rate, it tightening. the mechanism does not work. >> why were they reluctant to say there could be a second round? they seem to be more resident than they have in the past. eirk: i was surprised. they're assessing the situation. they do not see the same problems in europe. ucb --s a divide in the the ecb. the usual hawks were more reluctant, thinking is not bad to squeeze banks. i do not disagree. is problem the ecb has

transmission does not work. if you have to have spanish and portuguese banks go out and borrow a high cost, that is a monetary tightening. you have to transmit the money. also, the interest rate. they got themselves in a trap in a negative rate. it is a tax on the banking system. why are you taxing a mechanism? francine: is it time for a german to be the head of the ecb and how will it change? be what should not nationality, but we know it is. there are plenty of great germans. you want to have a person who understands and is willing to act an put all the instruments at work if need be.

one has been against too many instruments that worked well. ofwould face a lot oppositions from some countries. francine: thanks, erik. he stays with us. wheng up, election delays nigeria postpones going to the polls in one week. this is bloomberg. ♪

♪ this is bloomberg surveillance. tom keene, a day off for presidents' day. happy presidents' day for the american viewers and listeners. let's start off with commodities and crude oil, rallying since

november. a south african producer -- doubling thanks to surging prices. sector watchers will look aninsight for iron after incident. is at blackrock. erik with us as well. evy, welcome. when you look at commodities in 2019, what is your favorite? >> that is a great question. we love the news recently with -- regardsimpacting on impacting commodity prices. of axpectation is one consistent approach from companies able to return from the margins. commodity prices look good. 2018, average prices were higher than 2017. the year, as a whole, was

tainted by the two forths selloff. if it had not been for that, the sentiment would be more positive than it feels. the result they have coming up will set the tone for the year. francine: when you look at the valley dam incident -- evy: it impacts the supply of certain components of iron ore. it is a high-grade material. it will go into production. we have seen an increase in prices following this tragedy. to be thinking this will play out over a multiyear period. the industry will have to contend with greater levels of regulation. it will take time to get projects approved. it will impact future supply growth. a supplythe near-term, disruption as other companies think about where they will get the material. francine: will shareholders ask

for more safeguards, more operationally, safer products? does it change the industry? evy: in the commodity space, this trend will be more pronounced over the next few years, a divergence in mati prices. some -- in commodity prices. some commodities trade at premiums when you have speciality. you get the different pricing coming through. is we are seeing speciality metals trade at different levels. in time, you may get green pricing coming into commodities, then trading at higher prices. francine: erik looks at palladium all of the time. [laughter] what will rally more this year? evy: it is different in

fundamentals. it is impacted by the auto space. gold is more currency. a peak in year, pessimism with high expectations of rate increases. gold prices well above $1300. palladium is in shortage of surprise. you have strong demand from auto producers. look at the system for platinum. the system could not have diverge more. it is a function of a changing auto market. a move -- it is a move away from diesel. francine: what makes you worry about the chinese economy? what do you worry about? if they are slowing down, is it what the west asked of the chinese economy? eirk: no. for me, china is slowing down.

they are slowing down stop julie ockually.t ur orars from now, -- fo theyyears from now -- slow down, but they do not give us the data. it has to do with the trade and trump. they have to counter with policy measures, which i find wrong. if they on a credit -- wanted to stimulate the fiscal policy. they are building up a credit bubble, increasing the risk down the line. francine: what is your take on china? evy: we are seeing the slowing. we are seeing a policy response. the policy response has two

elements, fiscal and credit. both converge at the same time. we have seen a fiscal financing number coming out last week, ahead of expectations. we are also seeing the approval process for more infrastructure process. we have the fiscal side as well. willwo-pronged approach support growth. growth will slow through time. francine: on gold and gold prices and gold producers, how much of a rise? evy: we see a lot of the rally today. we have seen it over the last few months, low-level, where we are trading right now. we are in a macro environment where we see the market in prices play out. we get a rate cut this year in the u.s. as the data suggests. the gold price has a lot of room to move. if it does not play out, we stay around the levels in the current trading range. francine: any rate hikes from

the fed or inflation bite back? rate cut iny have a 2020. we believe the u.s. will start to low around midyear, then hit a mild recession by mid-2020. looking at a reaction pattern, you will see the fed issue a stop about now. then, wait a year, than a cut. -- then a cut. is an earlier cut rather than a later one. francine: talk to be about emerging markets and impact on commodities. too many people in it now? is it an overcrowded trade? is, probably. i have been more nervous

about the world in the last three months. em hase back january, been a beneficiary of this. if i were a portfolio manager, i would look at risk on to do the opposite -- to ease up risk. em is one space. francine: they are strong enough to support commodities first? evy: absolutely, it is what we are seeing. two elements, supply and demand. we have not seen investment in new supply. we have the demand recovering coming through, it is being driven by things we spoke about. we have not seen the supply response. we expect to see a consistent approach to capital. francine: thank you, erick and evy. angela merkel tells donald trump german does not compromise u.s.

security. this is bloomberg. ♪

♪

this is bloomberg surveillance. --aking news, the british unprecedented step of banning short sales on the payment company. we are getting breaking news on this story. this is on the back of the move by the german regulator who is hitting investors from taking a short position. saying he is excited about taking bafin to court. we will have more on that through the day. it is expected to be an interesting story. let's get to the bloomberg business flash. here is sebastian salic. sebastian: tiger global has dealt the lows of berkeley for a turnaround plan. have milliono and dollars. it was one of the strongest --

investment banks. chinese conglomerate -- most of the company's holdings were hedged. it is double the latest price. the company plans to dispose all of its stake. it almost owned 10% of turkey. in canada -- of nurture bank -- of deutche bank. in canada, software is being used in cars. it is testing software for self driving vehicles. for more on the future of transportation, is it bloomberg.com/hyperdrive. that is the bloomberg business flash. francine: the star of our bloomberg universe, eric universe -- erik.

--ckrock has focused autonomous vehicles. how far away is it? we spoke about it the last time you were here. trends. to look at evy: it is a huge topic. it has so many ramifications. transition is going to be a norm us. it is accelerating. it is happening faster than we anticipated. looking at the sales growth of the vehicles, ahead of expectations. , the massiveme extension of products available for customers. in the past, we have been restricted to a few producers. we had a blended approach from highly electric and hybrid. sellingve groups electric vehicles mean the price point drops in the choice

widens. as a customers, fantastic because you can cloud and select what you want. francine: what does it mean for portfolios? do you want to get in through the banks? how do you get the entry point? evy: we have taken an approach on theer than focus obvious things, the supply chain. the commodities go into the charging infrastructure is a small part of our fund. then, vehicle manufacturing. there are 15 times more semi conductors in electric vehicles than a traditional combustion engine vehicle. you have a shift away from the business model from owning. then, autonomy, difference in connectivity. it is a massive change. francine: erik, this will change the way you look at the economy. are you looking at the changes now? our central bankers looking at

the difference in transport? eirk: for sure. i cannot tell you how many --kshops we have seen a big thing in southern germany. we have a kenai on german auto producers -- a keen eye on german auto producers. years, it hastwo been a real learning process for us. we are aligning a lot of businesses. we are appointing a new team that sits advisory on this. francine: thank you so much. this is bloomberg. ♪

♪ francine: roadblocks ahead, the u.s. is set to call auto import

a security threat. brexit countdown, theresa may office the eu for concessions as her ministers resign. deal.are 29 days to get a significant slowdowns, the ecb one says thea as banks could change it tightens. good morning. this is bloomberg surveillance. tom keene is off for president'' day. u.s. equities and bond markets are closed today. we will get to your market action. first, sebastian. sebastian: seven members of parliament of the labour party will quit and become independent. alleged unhappy over anti-semitism and bullying within the party. one said labour has been hijacked by machine politics of the hard left. the white house is sending signals the u.s. and china will reach a trade deal or extend

talks. president trump says last week's ifgotiations were -- there is no deal by march 1. president trump received a report that could received tariffs. the president has 90 days to decide for foreign and u.s. -- to decide. foreign and u.s. auto makers oppose it. car sales in china kept falling last month after a slump in more than two decades. passenger vehicles plunged 18% than one year ago. 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. sebastian.hank you, this is what i am looking at in terms of what your markets are

telling us. stocks in europe are mixed. futures in the u.s. also mixed, a reminder u.s. equity markets and treasuries are closed today for presidents' day. we had a rally in asia, boosting shares to their highest level since october on optimism chin'' are on track. i am looking at commodities, oil and copper, climbing. i am looking at dollar steady after two weeks of losses. 1.2937.ne .29 37 -- theresa may is leading a diplomatic drive to sway european union members to support her. i love this track. whatis a nice snapshot on the possible tariffs on autos mean for some of the ones we are seeing overall across the board.

shares of u.s. unit sales are 23%. this is after we heard from president trump or wilbur ross. yesterday, he delivered his findings to president from on who has a final say to impose tariffs. he threatened as much as -- trump threatened as much as 25% on foreign trade vehicles. trade talksump has with china. first, car and u.s.-china trade talks. the u.s.-china trade talks were productive. signals forhow trade talks. focusede, automakers after a u.s. probe said car import pose a risk. angela merkel resisted german cars compromised u.s. security. and yianos

kontopoulos are here. thank you for joining us. yianos, when you look at the andible threat of tariffs the fact we do not have progress between u.s. and china, how should we read this? is it more uncertain? does it get sorted? yianos: it appears to be less uncertain. those are elements of a movie we have been watching for a while now. there is probably a higher threshold for the market to get upset about developments on that front. francine: d.c. agreements -- these he tariffs on automakers coming into play -- do you see tariffs on automakers coming to play? yianos: it would be bad news. car manufacturers are material in the context-based employment. the elephant in the room is what is going on in terms of china's

economy. china has been important in terms of import of cars from europe. also, the export of capital. i see china slowing. it is going to cause deflation. corporate earnings could be down five percentage points. that is not a background the market should consider. francine: is that right? should we be more bearish on the chinese economy? is it adjusting at the margins? yianos: i would disagree, kindly. the market -- these are not risks ahead of us, we have to think about what is priced in already. according to our estimates, in respect to growth, we are close or thexies for china it is a -- question of what is the

threshold to lower in terms of what the market is acting on. the threshold for a move to something more stinging is high. francine: if you look at the china policies, are they dealing with the slowdown in the right way? fewos: that would take us a hours in order to sort it out. it would involve the chinese themselves. we need to focus on the direction. the direction is they are moving toward brexit. they have showed signals since april they are accelerating now. francine: do you agree with that? is there a concern they are creating a credible? risks,there are real than theer and deep market. i worry we may see an earnings

corporate-- a earnings recession. the markets cannot price it at all. yianos: what do you think it is pricing right now? the numbers are low, close to low single digits. james: low to single digits, absolutely. around five percentage points. i were read the consensus is expected double digits earnings growth for 2020, on sublimed. i expect margins. chiefne: is this executive's not investing because they are concerned about certain situation or actual earnings? james: earnings will fall because of you news will be less extravagant than expected. the one offs from last year would have gone. we will see margin compression as wages rise. francine: we will get to james

yianos.james and makes an appeal for her conservative party. we are six weeks from brexit. this is bloomberg. ♪

♪ sebastian: this is bloomberg surveillance. in germany, the financial regulator has temporarily banned short sales and a -- sales in a company. it threatens the commodities of a broader market. a series of reports of

alleged fraud. comparable sales rose 4% in the fourth quarter. the dish maker of household and food products expects to grow. citigroup is in talks of buying an office tower. bloomberg has learned the bank is negotiating with a middle east equity group. waseported last october it considering a sale of more than $1.6 billion. that is bloomberg's business flash. francine: thank you. let's bring you a u.k. update. seven members-- have quit the labour party over issues like brexit and anti-semitism. >> british politics is broken. in all conscience, we can no

longer knock on doors and support a government led by erin mccormack -- led by jeremy corbyn. francine: that was a member of parliament of 19 east -- of nottingham.-- of could this be the split of the labour party? james: are anymore going to join this group of seven mps? we have heard rumors for a long time. not only on brexit, but on a range of issues. it is around things like with our relation ship with nato, the response to the russia situation, syria. all of the things they disagree with -- we finally got it. these are not inconsiderable

people. we have someone who is a former shadow chancellor. one has a high-profile with business. it has some weight. we will see. there are not courting just the labor party, people across the spectrum. anti-brexitpect the wing of the surfeit of party. it is a small and meant -- of a party. it is small -- francine: does it change to theresa may -- does it change theresa may's negotiations? david: this group of people want to stop brexit happening. they are the people most strongly advocating for a second referendum. you will not see them rallying around may. it will not change the labour party. fractured british

politics is. it could add to dismay in brussels and the chaos we are seeing in west minister. francine: the market believes there will be a solution, we will avoid a no deal brexit. will they focus on? is it the deal as it is? david: may will get a deal through. staring down the barrel of the gun, this may be the best outcome we can achieve in the time frame available. therefore, we will go ahead. it may be an extension. the big picture issue -- do or do we not leave? it will revolve around may's plan. francine: is a big enough -- say there is a vote on this deal.

she loses? how can we be sure people could say i will vote for the deal. james: we cannot be sure about nothing in this world. the referendum is the least likely. the mechanics of setting a referendum in the current legal environment is difficult. there is no agreement about what the question we should ask. shall we stay or shall we take the may deal? do you want to have a more extreme brexit deal? underestimating -- are we underestimating a brexit deal? yianos: we are always underestimating. [laughter] francine: that make me feel great. yianos: i do not think anybody feels great about this. we have an extra thing that allows us to move around our daily business, which is there is a high chance if things fail,

down thealways pushing road. there is the last-minute option to say this is not the end date and we have a few months more. that is why you see a level of reallocation, but not enjoyment. francine: david, do you think -- level of relaxation, but not enjoyment. francine: david, do you think -- david: we will have a flurry of diplomacy this week and next week as she tries to get some sort of concessions. europeans are not minded to do anything right now. if anything comes, it will be at the last minute. we have a european council summit at the end of march. you may see something. that will be the last chance. it will not be something dramatic. there is something that may have legal binding nature.

is something they are considering. i would not hold your breath. francine: thank you for a spirited discussion. up, a take on the last -- on a last meeting. the minutes are out on wednesday. what will feds do in 2019? this is bloomberg. ♪

♪ good morning. good afternoon if you're watching from asia. this is bloomberg surveillance. tom with a day off thanks to president's day. the world's biggest retailers and employers posted fourth-quarter earnings. it is the first time we have heard from walmart following a crucial holiday quarter. it is not -- it has not announced the sales. emma chandra takes us through what to expect. emma: walmart is the biggest's company by revenue, notching up 512 billion dollars in sales in the past 12 months. it is more than the likes of china petroleum. more than 23% of walmart's revenue is from overseas.

it has operations in 27 countries. seeing stalled sales, walmart has 17 consecutive quarters of sales growth. the holiday quarter is crucial. analysts are expecting a 3.1% exceed in if you will and foreign-exchange. it, a breakout in e-commerce sales, up 43% in the third quarter. investors expect high-growth as this part of business is not profitable. that makes operating markets another number to watch. a downward slide, walmart -- slide moment has had to spend to keep pricing competitive while facing higher expenses with rising rages and -- rising wages and freight costs. s e-commercedia' market, walmart is battling out for market shares. an update on strategy, more

important. india has announced e-commerce regulations favoring home retailers. expect this on the analyst call. francine: that is emma chandra. stay with us is james bevan and yianos kontopoulos. there was a slight disagreement in terms of earnings. your exciting a slowdown? james: absolutely. there is a risk we have -5% global corporate earnings from canada 2019. there is a chance u.s. corporate earnings growth comes in at 0%. analysts are looking at 10% in q4. it is unrealistic in the contest of the mobile economic growth trends, in particular, the slowdown in china and the pressure on margins. francine: you think james is too pessimistic? is priced, i think it in. it is a key impact for the markets. noteed to be looking at,

from the perspective of growth in the next few weeks, but the perspective of growth on central banks. to james' point, if we do not have progress by q2, his concerns will be relevant. we are still in q1. francine: could we see feds cutting interest rate -- seeing the fed cut interest rate? yianos: the market is pricing probability of a rate cut. economists do not think so. policy we have seen is a significant. as long as the fed 62 it and get help from the chinese and europeans, it becomes meaningful. francine: if we have a resolution, even temporary and u.s.-china trade risks, does it change your view? james: it is supportive of markets having a further leg up. i am not convinced it changes

the earnings. the global economy grinds through a pace that will not be materially altered by better news from the trade talks. francine: will we see consolidation? ises: what worries me financials are priced. i see no good news out of the euro zone. we will see significant downgrades to corporate earnings numbers in europe. i am looking at good quality growth areas at a company level, secular level, and health care. back favoring 2019. francine: could we see an upside from emerging markets? yianos: it appears we are getting of an upside. economistssts -- our

show an exercise in q1. there are first -- global growth numbers from emerging markets, surprising. it has to do -- we will find out further down the line in the future, china had to do something on the way down. i agree with james, the upside is further away. expectations, most people are not expecting good news at this stage. francine: thank you, yianos kontopoulos and james bevan. up next, the fight over huawei shuns the tech giant. europe is left in a tricky position. as a joint ally or fall behind in -- does it join its ally or fall behind? 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. ♪ this is berg surveillance. i am in london. tom keene, all for president's day. that's get to first word news. sebastian: on capitol hill,

lawmakers say they are getting tough support in congress support president trump's emergency declaration. there are not enough votes to overturn his veto. abe has not said if he has nominated president trump for the nobel peace prize. trump and kim jong-un meet again at the end of the month. bill gates says boosting the capital gains is the best way to increased tax collections from the wealthy. founders told cnn he is worried about the high deficit being run by the u.s. he says increasing the marginal tax rate is not the answer because they are ways the wealthy could shelter income. need a majorill th push to save her brexit agreement.

members of our cabinet want to stop the deal. her allies believe she has 90's to save her strategy -- has nine days to save her strategy. 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. francine: thank you. europe is caught in the crossfire between u.s.-china trade war. the trump administration has pushed allies to block hallway overcome -- block huawei. huawei has denied the claim. it is tricky for europe as i -- as huawei supplies it. explain to our international the difference between 40 and 5g -- 4g and 5g. >> 4g sends data through a central core.

it is a more scattered arrangement than 5g. it means 5g is faster than 4g, 10 times faster. it is harder to police. francine: what does it mean in terms of what governments need to choose on. s behindrope fall or risk security because of huawei? stefan: they are caught in a tight position. they need to make a decision quickly, whether they want to allow while way -- allow huawei to deploy its equipment. it is considered advanced. or banning 5g

technology would mean delaying the entire rollout by 18 to 24 months. that is what some telecom operators are saying. francine: how quickly could we see the rollout of 5g? stefan: it depends on countries like china and the u.s. be -- they would be farther than europe, two years behind. it is not only because of the huawei thing. also because there is a more difficult situation in europe when it comes to revelatory approaches. francine: thank you. so with us, james bevan and yianos kontopoulos. james, are you invested in telecom? does this make a difference to your appetite for telecom? james: the competitive climate in europe could be hostile. europeankeen on

telecommunications companies. i look at verizon and at&t in the states, companies with reasonable balance sheets and rates.cash flow francine: how do you see the 5g rolling out? if they shun huawei, does it have a difference? i would observe this is part of a complex dance between the u.s. and china. it plays out in a range of different ways. who could be in charge of the global economy and progress. i expect a semi-peaceful solution. in terms of the challenge the u.s. has with employees of huawei, the legislature, judiciary rather than government. between: this goes back the trade risk between the u.s.

and china. who wants the deal or desperately? yianos: that is a good question. it is a recent change in what we have extracted at a macro level by using the micro data. looking at estimates of a trade discount, how much dispute?er the trade what you have observed is there between of symmetry china and the u.s.. in december, we saw it become more symmetric. the cost of additional noise is now more for the u.s. than a few months ago. now, it is a more balanced issue in how much the envelope needs to be pushed. francine: what impact does it have on the economy? is it measurable? unfortunate of a dynamic impact. you have linear effects and they

become nonlinear. as situation is described damage between q4 and q1 of this year. this is not the bulk of slowdown. it is an issue. we have to be aware. francine: james? james: trump will want to deal. if you are to join the dots on currency, there is a chance the rmb devalues against the u.s. like clarity.d he needs to demonstrate some process. francine: some progress, smoke and mirrors? do they want a deal because it looks good? are they looking for meaningful changes from china helping the u.s.? james: the u.s. recognizes it needs a deal that slows the pace of change. it will not alter the fundamental picture that china

is developing fast and is skillful. it will slow the impact to allow the u.s. economy to adjust. francine: how much do you think china can give the u.s.? eye of that is in the the beholder. they can give some. the numbers, when it comes to changing the trade deficits for a trade surplus, is meaningless. it could look good in terms of the headlines. what it means is a different issue. the structural issues are the important ones, not likely to change anytime soon. francine: if there is a deal or no deal, where do we see it first? rmb? it is government controlled. would it not have been? i do not think the chinese will try to react too quickly on any good news. everybody will try to minimize

the impact in terms of what it costs them. you see incentives aligned more than a few months ago. it make armb, does difference psychologically? james: we will see it through. we will see a weak rnb. -- rmb. '' chinas economy is much -- china's economy is much weaker than the data suggests. francine: thank you for your time. coming up, more caution from the ecb. a governing council member calls a slowdown significant. could we see more economic surprises? would it lead to central banks to change? we will talk about who can replace mario draghi. this is bloomberg. ♪

♪ this is bloomberg surveillance. i am in london. tom, offer president's day. has out of the europe area taken policymakers by surprise. germany narrowly avoids a recession. ecb governing member says central banks could change guidance as it becomes clear the situation is not temporary. yianos kontopoulos is still with mess. -- is still with me. ecb woulds in europe, make sure there is --? yianos: potentially, i want to put an asterisk. what you see could not be what you get. tariffs on autos is not the same

as on auto parts. an autossing a mirror, part. details will matter. do you need the ecb to counteract the tariffs policy? do you have other ways you can fight back or exhaust at the fiscal or regulatory level? it will take precedence. the ecb might take action. against thee current noise, they will not do it at once. they have time. it may take -- they may take the time. francine: how ugly is the situation in europe? germany is not doing great. it is doing quite badly. should we worry about the fundamentals of the euro zone economy? yianos: the study point is when the market has not stopped worrying about for the last 10 years. we have gone through a period in the last quarter for the country

to grow. stabilizationsome in respect to germany and potentially italy. even in the most intense part of the crisis, italian gdp growth was highly correlated with the rest of europe. i would not separate it. it is why europe needs to take time. if it needs a signal, it will do something. it will not specify terms for a while. it stalls the riddle in terms of what to do. francine: what is the game changer for the euro zone? the european elementary elections? -- therapy and parliamentary election -- european parliamentary elections? yianos: surprisingly, china, outside of europe. from a structural perspective, what could be a game changer, the european elections. the threshold is higher. i am worried more about china

the next two months. sometimes, i am doing it positively as a positive risk. subsequently, the european election. francine: the chinese risk plays on earnings and gdp. does it play on euro? yianos: yes. it is a related risk. we have observed with euro-dollar is the market has had a construct against the u.s. statistical evidence shows the missus out of the european growth matters is related to china growth. if you have stabilization, it will make a huge difference on european growth numbers. it will translate into renewed confidence in the euro. francine: taking the chinese risk away, candy europeans to perform expectations -- can the europeans outperform excitations? yianos: yes, the threshold is low. three quarters of the damage in europe in 2018 was related to

the external factor, not trade. forget about getting positive supplies. it creates one plus percent growth in europe. at this stage, it will be celebrated. francine: brexit plays into how? yianos: brexit is the hidden risk. it observes the noise out of nonsequentials a risk. how much we fear -- i do not. trigger, d-one at the end of march where we can say -- t-1 at the end of march, where we can say it is not the end, we have two more months. francine: do european leaders put politics -- is it there twice at the end of the day? yianos: the two are extremely related. .rancine: thanks, yianos

coming up, and election delay -- an election delay. nigeria postpones the poles by one week. this is bloomberg. ♪

♪

this is bloomberg surveillance. let's get to bloomberg's business flash. supportge funds -- win -- 2.5% in barclays. it had been one of the strongest supporters to revive barclays. plain whentself some it unloaded it deutsche bank stock. double its price. hna owned almost 10% of deutsche bank. saudi arabia is dining a report been solomon made a $4.9 billion bid for minister united in november. after the uproar of mall shoji

bloomberghat is the is the/. francine: election postponement in nigeria, last minute delay investord confidence. an election body colluded -- what it means. us andou for joining briefing us on what happen. what are the consequences of the postponement? thise consequence of raises the question of the theetency of the body of electoral body. most nigerians are saying they may not be able to go out next week.

at the end of the day, the vote was canceled. it creates a lot of disappointment. they are -- francine: what does it mean for the candidates? is there some one who can benefit from this? does it mean the reputation of the entire political class is thrown away? it is a contention between the two leading parties. thisnalysts are saying turnout,there is voter if we see a higher voter turnout, it will favor the opposition party. francine: what are investors saying? how have market reacted -- i have markets reacted -- how have

markets reacted? the global market, close to 2.5%. dropped close to 4%. it shows there is a negative reaction in the market. we are working to see if this is going to change things. francine: thanks. let's get back to yianos kontopoulos. away from nigeria, there is an emerging market story, i wonder if it is a cap entry. how much more can the fed do more for emerging markets? yianos: they can work more on the real rates side, if needed. as far as we are concerned, the rates are higher in equilibrium. they have the space to push. if they do, inflation expectations will rise. it tends to help the emerging

markets because it allows for a cycle more active than what we experience the past couple of quarters. in the context of positioning, burnedhave thought about in 2018. we have not seen a significant influence. in the context of 2018, there is space. in the absence of news, that is the path of least resistance. we need to go to further duration. turkey -- fromto brazil to turkey. there is space for it to happen. we are in phase one of recovering. the growth data has been debating for a while, it will not be that great. francine: is this structural recovering or a healthy hand from the fed? yianos: -- or a helping hand

from the fed? yianos: a helping hand from the fed. we need to get confirmation we are getting a helping hand from the chinese. we have time in terms of realizing it. an interesting thing is because of the weird data set out of thea, u.s., and europe, market cannot take a strong view. go with the flow. the flow is getting the emerging markets carrying. francine: we were talking during the break. you said minutes, through your research and ai you are using, influences policy. yianos: it was an interesting finding by one of my colleagues from australia who has started doing this by putting technology around interpreting minutes in the communications of central banks in australia and new zealand. we did it for the fed, too. we came up with minutes have strong impacts on the subsequent statement.

there is a lot of informational content if you are not giving in approaching the markets. francine: is this market reaction or clues we are not looking at? yianos: that is the other dimension. foundrket behavior, we out, influences a lot of krishna's -- of hawkish in this -- hawkishness -- it will make the fed more hawkish over time. let's not plan ahead of element. we have time -- of development. we have time. francine: dollar strength this year? yianos: not yet, but dollar down. it will take some time. we need europe to common. we have a nice positive discussion at some point for everybody's price. we think it will happen in the next few months, but not yet. francine: thank you, yianos kontopoulos. coming up, tensions between the

u.s. and europe dominate the munich security conference. u.s. vice president has met with awkward silence as he touts american leadership. we look at the americas. because of presidents' day, a lot of the u.s. markets are closed. i am looking at a mixed session in europe. we saw a rally in asia earlier on. that is on optimism on china's economy and trade talks. we should have more of an idea of whether the trade talks between u.s. and china are going ok later in the week. this is bloomberg. ♪

♪ anchor: seven k labour party

politicians resign over jeremy corbyn's brexit stance and alleged anti-semitism as theresa may tries to save her deal. stocks in asia rise to their highest since october after president trump calls high-level trade talks between the u.s. and china very productive. sluggish european growth. weak data takes ecb policymakers by surprise, with one governing councilmember seeing a significant slowdown of the european economy. welcome to this special edition thisloomberg markets" on monday, february 18. public holiday in the united states, so we are live in london over the next few hours to take you through these markets, and we are awake and trading here in london. let's have a look at some assets on the move and have been on the move overnight.