nejra: good morning from london, i'm nejra cehic. manus: and i'm manus cranny, live in dubai. this is "daybreak: europe." bloomberg scoops, washington said to as beijing to guarantee is stable you in. hasial meeting, theresa may back to brussels and a last-ditch attempt to save her brexit deal. but theis not bullish, pound climbs to a two-week high. but turbulent year for the world's biggest commodity trader. fortescue strikes an optimistic note after profit falls. ♪

manus: it's 6:00 a.m. in london. it is that day, everyone will get their minutes. we have a big call, you're going to go to zero and possibly to inversion. urban's -- early balance sheet announcements and the short end of the curve. this is where you are at the moment. you thought you had been safe with a pivot to patients, but not according to bno. the fed may indicate the risk to the economy are higher than we are all thinking. let's have a look at the pound. a significant day, we rallied by 1%. abovein the highlands, when hundred 30, but the skew in terms of the options money, they are protecting themselves, not so much for the present. we will talk more about that

later. gold is on a rush, the highest in 10 months. can the rally in gold and stocks endure? dayl talk about the 40 coalition later on. later on tonight, apparently the relationship cannot endure. nero, good morning. nejra: what will be the relationship if it does not invert in the next few weeks? yesterday we did see u.s. stocks gain for six session in seven. the key index is about 500 level that some have pointed to work struggle to hold above at least return since october. again .2% in the s&p 500 yesterday, largely lifted by consumer stocks after walmart earnings. the biggest drop this month, and some of that is to do with what we are seeing in dollar yuan.

this is against the g10 but i have the em currencies up there as well. we've seen a number of asian currencies gaining. the yuan leading the gains among asian currencies on this scoop that bloomberg has had. whether the yuan has been more stable recently is another question that we will get into. is it about the u.s. pursuing a weaker dollar policy? let's check on the markets from asia. david inglis in hong kong has more. you do see you. how is it looking? also the u.s.'s basic -- way of using the most effective shock absorber to support its economy, which is cooling? this is the picture across the region. anytime you get a down day on the dollar, typically this is what you get. we are up overall on the benchmark. within theok

markets, the southeast asian markets are outperforming today. there's a clear tilt toward gm's because of the weak u.s. dollar story. away from the equity market, we are up for a third day. let's have a look at the currency markets. talk about dollar china a lot. the dollar is down, and not just against the chinese currency but against a lot of these trade related and em currency resource related currencies as well. you talked about gold, commodity

are seeing here. a good example, the thai baht. this out with export numbers on friday. the highest level against the dollar since 2013. it is conducive of risk appetite for now. manus: david, thank you for -- thank you very much. the roundup from the asia side, to the u.s.. they are asking china to keep the value of the yuan stable as part of trade negotiations. bloomberg understands the move and it seems to neutralize efforts to devalue the currency to counter american tariffs. mark cudmore joins us from singapore. , and it's astory logical story, but it's very hallmark of light heiser tripwire in the whole negotiation. what do you make of it? to me, it came to mind the idea of powers asking for a ransom of $1 million. really, the yuan is one of the most able currencies in the world. it's below every other g10 currency. it has been stable for many years. in the last six months it has been far more stable than the dollar, the euro, the yen, the starting, whatever you want. is the u.s. upset

that the yuan might be too strong? find it ironic that the u.s. has been criticizing currencies -- criticizing for intervening in the currency. bizarre to me. i don't think it is a game changer. overall the team has been constructive on the one anyway. nejra: thanks for joining us, mark cudmore, from singapore. guy stear.is one of the first things that , is is themind is u.s. asking china to be less privy to market forces? it's difficult to tell what they want. it is ironic that the currency has been the stable and you get these comments. what they are really trying to achieve is to get china to open

up more to u.s. goods and they are using any kind of dialogue they can about other things to actually get this done. guy.: good morning to you, firstam has written their take on this. i was struck by what they talked about. china is being asked to accept that happen to japan, the plaza accord. you saw the rapid appreciation of the yen. that sticks in their throat, doesn't it? yes, a china economies likes to say every chinese person of her generation is always talked about the plaza accord in school and how this was the beginning of the it for japan. eriod ofrovoked long p pressure for japan. the wording is absolutely wrong to talk about, to focus on the currencies, rather than to focus

on the internal impediments to other goods into china. nejra: mark pointed to the fact that he doesn't think were likely to see more you won strength from here, but what about the dollar side of this? is this the u.s. indirectly targeting a weaker dollar? is that how investors might read it? guy: it depends on what is going on domestically in terms of the u.s.. the fed minutes have the potential to influence the dollar one way or the other. if we do get further signs from the fed minutes that the u.s. is backing away from rate hikes, and indeed is going toward easier monetary policy, that could weaken the dollar. on the other hand, if we get comments saying the u.s. economy is excellent stronger, if the minutes are interpreted as saying we will keep going with rate hikes, it will drive the dollar higher. the dollar is much more in the hands of the u.s. federal

reserve than anybody else at the moment. one of the great debates is the truths what in reconciliation of default and credit. i called up the cfo from hsbc. i was quite surprised when i asked him about default in china , was he more concerned about that? it is not that he wasn't concerned about china. i was quite surprised that he wasn't more concerned about defaults in china. you are in the fixed income world. what does it look like to you? guy: i would be concerned about a couple of things. the chinese property market, that is very much the motor of economic growth in china and the motor of default and most of the credit has been focused on the property market in china. the property market in china has been weaker in the tier one city since the beginning of this year. we've had month on month declines terms of the 70 city survey. they have not been big declines. if we start to see accelerating

declines in terms of the property market am a that would make me more worried about what would happen in terms of chinese credit and chinese defaults. nejra: does what we have heard about the one overnight in any way change how you view chinese sovereign debt and were yields go from here? is it going to put a flaw into how low yields could go? guy: not really. the chinese yields will depend on a couple of things. first of all, what is going on with chinese growth, and it will depend on chinese policy. don't think chinese policy is being made with respect to the currency market. is being made with respect to domestic growth. if we saw a scenario where house prices begin to fall, you are seeing stresses. the chinese government and the pboc feel they need to inject more liquidity, that leads to a scenario where you start to see a downward translation of the chinese yield curve. pboc responses of

mechanisms, 2018 was hallmarked by the rrr's. do you think the chinese are going to allow themselves to heather quan -- have their hands quite literally behind her back in terms of freedom to act? that is what they would be doing if they sign up to eight corridor on the currency, isn't it? guy: yes. i think there are two different things. first of all, you would really have to differentiate between how much policy would impact currency markets and how much policy would impact domestic liquidity and domestic growth. you could have a situation or you do have currency intervention or destabilize the currency or keep it at certain levels, and at the same time you are seeing domestic liquidity injections. it's not quite that there is only one lever they can use. i think they have a little bit more flexibility than that.

but i think they care much more about the domestic growth situation than they really care about what is going on in the foreign exchange market. let's get the bloomberg first word news from olivia here in london. olivia: today we could get a clue as to how dovish the fed has actually become. minutes from the january meeting will be leased at 7:00 p.m. u.k. time. something kick could have an impact on the point to curve for bouncing back from under 10 basis points. starling has rallied on optimism of her brexit retool as the prime minister has to brussels. she set to eat john kline -- to meet with jean-claude juncker. he is anything but optimistic a deal is close at hand. >> there's not enough movement for me to be able to assume that it will be a productive discussion. an unregulated exit of britain from the european union would have to setting -- devastating

consequences for both britain and europe. >> some even leaders are pushing for a change to antitrust rules. angela merkel and emmanuel macron are pushing for the change, as germany french companies are often the target of top merger reviews. block aws attempts to real merger. the prime minister is under pressure to reduce the deficit. leaving the government below revenues that could necessitate cuts. and a power utility is likely to require further support after rolling blackouts in recent weeks. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. manus: olivia, thank you very much. stay we have the question of the day. -- today we have the question of

the day. will the next fed move be up or down? i suppose it is a fair question. the market seems to be pricing out any move at all. join us and the team in the conversation. up, the markets fed induced euphoria may come crashing down to reality. strategists are warning that overboard assets are in danger ahead of the fomc minutes. when you're traveling to work, tune in to bloomberg radio live on your mobile device or on digital radio in the london area. this is bloomberg. ♪

manus: this is bloomberg "daybreak: europe." i manus cranny in dubai. nejra: i'm nejra cehic in london. stronger gains that we saw in the u.s. benchmark yesterday,

global equities, the msci all country world index above the key 500 level. we are seeing some you won strength, and the 10 year yield 10es up, but that point to -- that flattening saying we could see inversion within weeks following the fed minutes. ones: if you got you stability, it would kick emerging-market. where do we go? it depends on the fed, doesn't it? dollar-yen, don't forget the bank of japan stands ready to do whatever it takes in that marketplace. just a little bit of turnaround in dollar-yen. breaking news coming through on france klm. this is the revenue numbers, 26.5 billion.

that is bang in line with the market. that's look at the forward statements, they see 3.2 billion euros worth of and they are below 1.5et ebitda times. like should carriers around europe are enjoying a better time than the low-cost carriers. it seems to be the ability to sell business seats versus low-cost. the fuel bill is going to rise, 650 million euros. this is guidance for them in terms of their costs for the year forward. let's get the business flash headlines with olivia in london. olivia: the tesla ceo elon musk has shared his latest production forecast. he's aiming for a half million cars this year. the numbers are broadly in line with what markets had said

before, but it's difficult to gauge, given his proclivities to stretch goals. tesla's total deliveries more than tripled last year. the price surge in iron orchid help boost fortescue this year. verse cap earnings fell at the positive outlooks echoed similar outlooks from bhp. they also announced a special dividend. the iron ore market is grappling with concerns. >> most of us are looking for incremental turns in the market. currently foreign material increase applies to the market in the short term. olivia: that is your bloomberg business flash. nejra: market stand at a critical juncture ahead of today's fomc minutes. assets are flirting with levels some argue are deeply overbought when investors digest the meeting notes, any crack in the dovish narrative could send markets tumbling.

has been combing through the markets. what have you found? >> we have quite a few of them because the doves fueled the major rally. that all stands to be undone. indexes are flirting with the 200 day moving averages. nasdaq 100 just crossed the threshold. chart watchers would argue this is a fragile point. tech stocks are rallying that have yet to confirm and over trend. sitting on the 200 day moving average, emerging markets have drawn a lot of concern. increasing numbers of strategist saying this rally is running out of steam. the dovish turn also echoed and central banks throughout the globe, ecb, pboc among those that followed suit. flirting with the 200 day moving average, the stocks euros 600 very touching them. most of these have yet to break out in a meaningful way.

copper, the same situation. it's not just equities. the next move will hinge on just how accommodating the fed really is. you very much these markets are waiting the fed this evening. is our guest host this market. -- this morning. this has popped all over the bloomberg this morning. deeperiving into a negative territory. this is about what premium you get in terms of the bond market versus the short end. what is it tell you about the bond markets at the moment? guy: i think the whole shape of the curve is dependent on two different factors. the first is what kind of comments are going to get about fed policy going forward?

that will dictate what happens with the two years. we get common saying we have to be more careful in terms of interest-rate policy and maybe we need to start easing rather than hiking interest rates, that will drive down two years, and the slip of the curve should steepen up. on the other hand if you get common saying we're still worried about underlying inflation pressures and we need to hike, that would have the opposite effect. is what kind of comments do we get about economic growth? if on one hand you say we will be easy on policy but we still see good things happening in terms of economic growth and it is strong, that leads to a steeper curve. on the other hand if all the comments you get are about the weakness of the coming growth, it drives down the long end of the curve and we been talking about some curve inversion. that is when you can start to see more inversion and the possibility of inversion between

-- along the curve. , if youy chart shows take it further back, the chart shows in 2019, the yield curve is actually barely budged after years of flattening. that says to me we are at a critical juncture and people are not sure where things go next. for the is the bar market to get on board with a fed that could resume tightening in the second half of this year? guy: i think it would take quite a bit of detail in the minutes to get people to change their mind. at the beginning of the year, everybody was expecting more. expecting towere more hikes. now it has gone to stability in terms of the rest of the year. to get us back to a situation where people are expecting hikes from the fed, you would have to see some different language in the minutes then you had the impression coming out of the

last fed meeting. manus: also, we had comments from loretta mester, she supports ending the balance sheet unwind later this year. what caught my eye was the other line, i would skew toward short-term treasury. that has quite a significant messaging to me in terms of what she said. one,a big pivot, number for someone i see as being quite hawkish. when she talks about short-term treasury, that rings a bell in my head on mortgage-backed securities. you are right. the whole discussion of what goes on in terms of the fed portfolio come in terms of how we do it interest rates, this is changing a lot, for two reasons. one is because some of the core inflation pressures which seemed to be going up or rising, have now been abating in terms of more recent data.

i think the fed is reacting to a global economic situation, which is a lot more uncertain. people have focused on china slowing down a little bit. people also focus on the uncertain situation in terms of europe, terms of brexit, in terms of italy. a lot of the economic data in your has been weaker. although the fed is supposed to be making policy for the u.s., the u.s. doesn't live in a vacuum. it is influenced by what is going on elsewhere in the world. these are the issues they are grappling with. stear stays with us. with the rand down 6% this month, a make or break budget delivered today. we are live in capetown, that is coming up next. try it -- when you're traveling to work, tune into bloomberg on your mobile device or digital in the london area. this is bloomberg. ♪ i'm a veteran

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

across thereen screen, if you look at asian equities, the msci asia-pacific next higher after we saw gains in the u.s. a .2%. the six day of gains out of seven. if the fed in focus today, we been have a nice conversation here on set in london. talking about the fact that be a most said we could get curve in person in the next few weeks. he doesn't think we will get an inversion, but between a bull and bear inversion depending on the message the fed gives, whether it's about growth or inflation. manus: his point is he thinks

you're going to get a dovish message on policy and probably a more upbeat message on the economy. we are all speculating that the call is for a steepener. back to zero and into negative territory, but that's the point, that's the difference between the market. you have to have a bid and you have to have an offer. little bite seen a of flattening in 2019 compared to history but it has been fairly steady. it highlights that the market is on tenterhooks as to where we go from here. some of the scenarios could .2 steepening are flattening. manus: we have to see what happens with u.s. and china discussions and the new level of banks that has not hit the radar, the is-u.s. relationship. those are all up for -- the e.u.-u.s. relationship. the team is standing by.

dani burger is on the team this morning. your markets have posted the longest losing streak since 2011. it flipped into gains today, but did yoution is, why guys miss out, and our people prepared to buy the dip? chris good morning to you. 2018, whileback to a lot of people raise questions about this divergence and why it should be unsustainable, i ask, why not? we had a great 2018. hang on to our horses and see what the next few days settle out. it's been eight or nine straight days in the longest losing streak since 2011. yesterday we felt we put a halt to the losing streak but he

didn't quite happen. for now we're trading reasonably ok. it could be contingent on to one more aspect, something everyone is watching in india. it's going to give guidance has come upe index the last few days, if the guns is positive or better than it in support to the markets in the session. particulart for that aspect. did we managed to hold onto our gains? dani, you're looking at the yuan. a second day of gains after the u.s. had a scoop that the u.s. was said to ask for a stable you want. it has been reverberating across the asian and u.s. space. the macrol about

space. you can see gains for the chinese currency, up .5%. whether it will last is the the question. we do have that march 1 deadline entrée. this shows negotiations are taking place but we don't have any clear outcome. the msci asia-pacific index up .7%, about to cross the 200 day moving average, showing how fragile the markets are. especially heading into the fomc s.eting note it's been one of the big beneficiaries of the dovish fed. will it continue? just became the most volatile currency in the world, surpassing the lira. it had to do a debt problems in its state on electricity company. it has become the whipping boy for this because it is a more liquid beta play.

overnight volatility spiking for the rand since the highest in about a year. the budget today will be interesting to see how much more it can move this currency around. thank you so much. financeh african minister is presenting the country's budget today. he is under pressure to cut costs while looking for a way to keep the countries main power producer from sucking the life out of the economy. to make matters more difficult, it's debt accounts for more than 50% of the country's total corporate debt. more on how the debt needs to be taken on by south africa, it could jeopardize the credit rating. welcome to the show, great to have you with us this morning. the mostd about elegant solution in this difficult scenario.

describe what that would be and how likely it is to happen. goolam: elegance in this respect is least worst outcome. clearly the markets are concerned that the national treasury may have its fair share and there's the risk that munis would downgrade south africa to a low investment-grade status. in south africa would be nked.rsally ju we think the national treasury is aware this is a redline they cannot cross. they cannot risk inviting the ire.ngs agencies' i think they will seek a solution rather than adopting the entire or partial debt stock. manus: good to see, thanks for coming in.

i get the sense with south africa, we have politics at play in the central bank. these are the chess pieces. i get the sense we are very slick close to one step away from junk on a permanent basis with south africa. is it that tentative a position? goolam: the sort of damocles has certainly hung over south africa -- the sort of damocles has hung over south africa. i would be in concert with you with respect to that judgment. being one inch away from moody's, i would suggest moody's the other rating agencies have begun to look somewhat kindly on south africa, and there has been an enormous to reforms in the main that have been effected under his

administration, especially over the last year. there is new leadership at the police services, the revenue authority, investigative bodies in south africa. the nuclear deal which was muted by the president's predecessor has also been linked. in that respect we've had what we call stage one reforms, institutional reform nation. stage two will be more tractable in 2019. it will be stabilizing public finances and then galvanizing macro economic reforms which will be the mainstay of the latter half of this year, especially after the may elections. nejra: as you alluded to, most economists surveyed by bloomberg don't see a downgrade to junk by moody's this year. iswitch to negative outlook a different question, but could this evolve to a point where movies patience is really

tested? what would the tipping point be, given that economists don't expect that downgrade this year? i suspect that the rating agencies will look to the balance of forces that inform growth. the risk that growth accelerates, especially in the latter half of this year, with theirt them preserving current ratings. however, say we enter the elections and the anc falls below the majority and perhaps is compelled to form a coalition with the more leftist opposition party, that may introduce some sense of policy gridlock, at least the interpretation of policy frictions, and that suggests that growth will remain suspect the i ratings agencies would be unforgiving. theyg said that, i think

are more than likely to achieve a majority outcome in a -- i have a sense that he will emerge from the forthcoming elections unshackled and able to continue the reform agenda that has been filled with numerous milestones over the last year. manus: that is what the markets will hope for. let's bring in guy stear, head of fixed income at societe generale. flow of moneynal into south african debt, you can see we have just tipped over recently but we're seeing one third of one billion rand go in, the highest since last april. d of damoclese swor removed and he is still in power, are you a buyer of rand

debt? guy: i think so, but there are couple of issues. if the general bull market continues in terms of emerging-market currencies, as we looked at those charts before ,ou started talking to goolam this is a market that would do well if emerging markets in general are doing well. that gets is back to the discussion we've had about the fed. in terms of relatively easy policy out of the u.s., with relatively decent growth in the u.s., then i think emerging markets will continue to do well. nejra: where are you actually looking to be nimble and take opportunity in emerging-market debt, either putting money on the table are taking it off? put it moret to

into things like south africa. potentially could see good opportunities in europe as well, latin america would tend to do well. if you're looking to take money off, you would be taken it out of these areas and reflecting about the situation terms of china. the new would look in terms of chinese growth, if it is weakening, that will have a negative effect on southeast asia on most of the emerging-market currencies as well. so we will grapple with those. today is pivotal. dani talked about a couple of issues for this budget. we haven't perfected the revenue and expenditures side of the equation. wage bill hastor ratcheted by 11% annually from 2006. this is part of the expenditure side that they need to grapple

with. do we need to hear something today in regard to tightening of that? where can he make the cuts? i suspect that the fiscal numbers are likely to be soothing. we estimate that revenue will be short by a modest 7 billion rand. the last cycle, the announcement was that the revenue deficit 50hin the vicinity of billion rand, so far more diminished on this occasion. we anticipate there will be about $1 billion shortfall in it expenditure. we think on the whole that will not compromise the budget thecit and overall, those budget deficit and the debt to gdp ratio will be closely aligned to what was suggested last october, the occasion for the so-called many budget. budgetni-.

i think the state has run out of road to be able to continue to provide generous wages that it has been able to accommodate. labor is unable to flex its muscles as it did in the past. i would suggest over the next three years, the expenditure profile, including wage growth, will remain within the overarching profile as suggested at the last budget instants. nejra: thank you so much. uy stays with us. let's get in update from olivia hows. minutes from the january fomc meeting will be released at 7:00 u.k. time. some analysts think it could have impact after bouncing back from the december low of under 10 basis points.

signals from the fed could see it resume narrowing. sterling has rallied on optimism of a brexit breakthrough as the prime minister heads to brussels. she is set to meet with jean-claude juncker and tried to secure a meeting. he is anything but optimistic the deal is close at hand. >> there's not enough movement for me to be a to assume it will be a productive discussion. and unregulated exit of britain from the european union would have ever stating consequences for both written and europe. -- for both britain and europe. >> the aim is to allow companies to compete globally. angela merkel and emmanuel macron are pushing for the change. this follows ceo decision to block a rail merger. global news, 24 hours a day, on-air and @tictoc on twitter, powered by more than 2700 journalists and analysts in more

than 120 countries. manus: olivia, thank you very much for the roundup. coming up, the pound rallies to a two-week high amid optimism of a brexit breakthrough, but the e.u. placed down expectations. we are live with brussels with the very latest. that is next. nejra: tune in to bloomberg radio live on your mobile device or digital radio in the london area. this is bloomberg. ♪

nejra: this is bloomberg "daybreak: europe." i'm nejra cehic in london. manus: i'm manus cranny in dubai. breaking news from glen park, pressure from activist come to pressure. glencore said to plan to cap the

cold output in a climate shift. the company will not make any new acquisitions that would add to production. this is critically important, no new acquisitions that might add to their current level of production. investors have been pressuring, waiting for the glencore numbers to come through as well. the company said it proposes to limit output, currently around 145 million metric tons a year of metallurgical coal. the plan, no major acquisitions to come through. you can see there is pressure all the way around. so the paris agreement, climate targets, that is what is pushing this as well. supporting a call to align its business more closely with the planet targets.

i will bring in the numbers at 7:00 a.m.. theresa may is meeting with jean-claude juncker in brussels today. the officials are working on a new legal text on the contentious irish backstop. optimism that the stalemate could be ending, but the european scene -- the european ,ommission president downplayed saying he's not expecting results. contradictory signals from the two sides. , down for a juncker significant day. >> we know in the past that means bad news. prime minister may coming out and saying we do think it will she significant meeting as tries to get those concessions on the irish backstop. coming out juncker last night saying i don't what the prime minister will tell me but i say there will be no breakthrough and sometimes i

lose time on brexit. sterling has rallied but in the eyes of the european union, in many ways, nothing has really changed. it goes back to what we've talked about many times, that the e.u. thinks there is no incentive to give out concessions now. prime minister may will be back for more concessions in march and it will go down to the wire. so very different perspectives on the same meeting today. we will keep our eyes and ears open for what is significant as the case may be. guy stear.t is i reflect back to the conversation with the cfo of hsbc. he said i'm very concerned about credit in the u k. how might that manifest itself on hard brexit scenario?

what would happen to those spreads in the u.k.? guy: it would depend on what happens in terms of the economy. they have businesses that are focused internationally. even if you have a much weaker domestic economy in the u.k., there is a lot of u.k. businesses that will muddle along. the sector we should maybe be concerned about in the u.k., possibly the banking sector. that has been the focus of attention because of worries about the housing market and the property market and what they might do. if there's a single bellwether for brexit, optimism or pessimism, it does tend to be the pound. nejra: i want to talk about the u.s. and europe in terms of the credit rocket. you said your underperformed the u.s. in 2018 but it could start to turn around from valentine's

day. i have a chart that shows the u.s. has still outperformed europe this year. andn terms of total return other issues as well. is it want to know is, actually going to still turnaround and what is it contingent on? does it have to do with default rates? guy: there are two reasons it should turn around. the u.s. markets are getting expensive for europe. the second reason is, when we talk about the u.s. economy slowing down, we are looking for that in 2020 and conversely, although there is bad news about europe, we could see 2020 inc. slightly better or less of a slowdown in terms of europe in 2020. in that sinks in, they will start to factor in bigger defaults in 2020. that's when you will see european high-yield perform the u.s. high-yield market from here

on. i thought credit markets would do well this year. they have done well this year, but i certainly do not expect the u.s. to be doing better than europe every i think it is now time for europe to start doing better than the u.s. nejra: thanks so much for joining us. swedbank is feeding -- facing allegations that was used to launder money. lets the to bloomberg's managing editor for the nordic region. thanks so much for joining us. what do the allegations say? >> it's yet another nordic bank being drawn into money-laundering allegations. the specifics allegations show that about 50 customers that swedbank, there were clear warning signals regarding money-laundering,

transferring money with another bank which is at the center of another money-laundering scandal. swedbank has until today quite strongly denied any link to the other bank case. today they acknowledge that they have identified suspicious transactions that they say have now been reported to the police. that is the full context of their response, briefly. they have already reported it to the police. our managing editor for the nordic region, thank you very much. it is all about the fed, but it is all about glencore. we will break down some of the numbers very shortly. what is the latest from the white house in regard to trade?

a deal on currency to keep it stable, as part of any trade deal. we will discuss. this is bloomberg. ♪

>> good morning. this is "bloomberg daybreak: europe." > i am marriage heritage -- nejra. said to askngton beijing to guarantee a stable yuam. -- yuan. theresa may heads back to brussels and attempt to save her brexit deal. the pound climbs to a two-week high. and reports after us turbulent year for the biggest commodity

trader. the numbers are due now. manus: it is. daybreak europe. if you are a shareholder of glencore, $2.8 billion. they promised you buybacks in the december guidance and there you go. the numbers are lighter than the market anticipated. $15.77 billion, below the estimate of $16.23 billion. ebit, $9.1 billion. that is lighter than the market anticipating. seized 2019 marketing ebit

toward the middle of the long-term range. they have capped their coal production. no more major assets will be bought. they brought austrian assets from rio tinto. headline. good morning. nejra: i have a couple of things to get through. lloyds are going to start up to $1.75 billion share buyback korea this is a red headline. something key for investors. a key focus for investors. billion share buyback coverage secretary pretax, 1.0 3 billion pounds. the statutory on pretax.

profit, 1.7 6 billion pounds, a miss on the estimate of 1.8 3 billion pounds. for,hing investors looking i have given you the number for the share buyback, how resilient the net interest margin is proving to be. the shadow of brexit uncertainty. fourth quarter, 3.1 7 billion pounds. the estimate was 3.22. a little soft. net interest margin. the main one to highlight, the 1.75 billion pound share buyback. basically, the competition has

found extensive competition concerns. it is provisionally finding extensive competition concerns. this is a headline, it is difficult to address these concerns. it will set out options for addressing the provisional concerns. it is worried about something, it doesn't know how they are going to address them. it is going to put out these options. they include blocking the deal. these are the headlines from the competition and markets authority in the u.k.. it is all about the share buybacks. you have broken the lloyds. theree you more context, is $2 billion buybacks.

it is all about buybacks. we know that is a big theme in the u.s.. coughing up and looking large. we have some big themes coming through. taper onshe favors a the balance sheets. she supports ending the unwind. her skew is to be shorter and. to zero.erhaps back treasuries are did being. what will happen between china and the u.s. in terms of the deal. you have a touch on the equity markets. nejra: let me give you an update thehat we have heard from

markets authority. re--- regulators said it was going to be difficult to address the concerns. some suggestions include blocking the deal. there is a response from sainsbury, saying they fundamentally disagree with the findings. they will work to find the it inale and work to find the coming weeks. those are a couple of the stocks you will want to watch. that takes me to the futures pointing higher. the ftse futures, lagging a little bit. context equity markets, yesterday we saw the 500 gained zero 12%. -- 0.2%. all world index, struggling to

hold this point in recent history. rallies and emerging-market equities as well. can the fed say any in the derail today that could this? the rally in the west was not all that strong. let's check in on the markets in asia. david ingles has more. >> we are entering the last couple of hours of trading. we are looking at anna eight as asapproach the -- an update we approach the latter part. the benchmarks up 0.6%. shades of green, a lot of these markets are the emerging markets which are getting more bids. of the dollar being weak. talking about the currency market and a little bit. euro .8% for southeast asia. 8% for southeast asia.

you are worried about over bites signs, we talked about the currency markets. positivem, it is a correlation, about 0.4. as it pertains to the one -- yuan. longer-term strategists have pointed out, the world does not need the dollar to collapse. i would imagine the stronger currency doesn't help the case. back to you guys. >> thank you very much. someimitations of perhaps delusional moves. let's bring you more on our

bloomberg school. the u.s. is asking china to keep the value stable. moveberg understands the aims to neutralize efforts to devalue currency to counter american tariffs. good morning. welcome to the show. do you think the chinese could swallow that in the negotiations? that is a key to them in this trade war. they can't match the u.s. on the trade side. they very effective when depreciate the currency. that puts them in a weak position. our guest in the previous our said in the trade war, the currency is not the thing to focus on. china is more focused on the domestic economy.

does that necessarily mean we are going to see yuan week miss? >> we have seen that recently. just because they feel they have done enough and they are waiting to see what happens to the economic growth numbers, i think they want to retain that optionality. if you look at the deceleration during 28 teen, the root cause of that, it was probably currency strength and 27 team. ok.a: in 28 we dropped by 5% team. are we getting the right kind of stimulus? the measures you have seen and is it a kind of stimulus or a playbook of the past? >> historically we have seen

very effect of stimulus but it has also been very big. it is decidedly incremental. there are good reasons for that. china is concerned about storing up future problems but there is a risk they undercut get. nejra: is that what is going to happen? >> they have just about done enough. it is tenuous. we are not sure. manus: go ahead. january, theoint, total social financing pick up. sign of a the first real purchase we have seen so far. we need to see more to come. if you were going to have

currency controls, you have to rewrite the rules about currency manipulation. haranguing been china to free up the floating of the yuan. >> they can't loosen up those controls for fear of capital outflows. mixing in with the effectiveness of the exchange rate depreciation. it is a difficult balance. this trade war is problematic for china. nejra: the u.s. administration has been calling for more market-based reforms. let's get the first word news. sterling has rallied on optimism of of exit breakthrough.

she is set to meet jean-claude juncker to secure an agreement on the irish border. >> there is not enough movement for me to assume it will be a productive discussion. havenregulated exit would devastating consequences for britain and europe. president trump says he is in no rush to reach an agreement a deal with kim. recordum has surged to a price. it is driven by an acute shortage of supply. strugglingturers are to get a hold of the material. day,l news, 24 hours a

powered by more than 2700 journalists. thank you very much for the roundup. cap.ore planning a we will bring you more on the story and the earnings. it is dividends anonymous. that is next. this is bloomberg. ♪

7:17 a.m. in london. this is bloomberg daybreak europe. teen. it has gone 11:7 almost the end of our morning session. european futures are higher,

running out of steam. we are in the green. we will take futures any day of the week. you have seen a resurrection of the s&p futures. yield. .e have a great deal of debate feda: how much are the minutes going to sway the dollar? the bloomberg dollar index showing it against g10. the one straight -- yuan strength having quite in effect. perhaps it is driven in part by the bloomberg scoop. has been moret stable than the dollar recently. oil, slightly on the front foot.

let's get more on glencore. the biggest commodities trader saying to cap coal output. numbers coming after a turbulent year as they face a number of problems in the democratic republic of congo. let's get analysis from our executive editor. significant shift on coal. i am wondering if we might get a positive reaction because of the buyback. >> the buyback and a large dividend. they are having to do it for one of their corporations. which might be bullish for the copper price. it is a hodgepodge of strange stuff. anybody that has listen to any executive knows they are bullish

on coal. the numbers suggest people are going to keep burning it. pressure isestor quite fierce. you arere saying either going to play ball so we are not going to invest. >> whether it is ethical investing, environmental considerations, it has hit the top of the agenda. they just bought those investments before christmas. what did we hear about china? pick the bones. what was the intonation? >> the one to look out was one of the big iron or producers. 100% aced on china. they were saying two interesting things. the margins on steel production is coming down. --laurel quality than the

lower quality than the top 40. there is no sign that is going to fall off. the second thing, they are maxed out on capacity. toare running out of options make up for that lost production. ore prices are going to stay high for some time to come. that affects steel companies and chinese construction. it has a global impact. >> thank you for joining us. the bloomberg executive editor. great to have you with us. let's talk about the fed. investors awaiting minutes. one strategist says they could send one of the most yielded -- it could lay the groundwork for an inversion and the spread may fall below zero in weeks.

our guest is with us. what do you need to hear from the fed today to be constructive? >> i think they are going to try to write the inversion. veryhave gone very patient dovish. that is more than simply responding to the week eight. this is a fundamental shift to a different strategy going forward. good for be very equities and bad for bonds. >> it is live tv. this is what nobody sees, me preparing the charts. let's give it a go. the s&p 500. we got there. this is live tv, this is how we do it. it is going to be good for equity markets.

morgan stanley says they have a touch of whiplash. which one have we got on the s&p 500? what do you need? sixth session in the last seven. close to overbought? if we get a dovish fed going forward -- can they create a articulaten which to the strategy? we have a framework review. can they formalize the attempts to overshoot? that, there is a lot of support for the equity market . a lot of money out of bonds and equities. >> you said you expect a reflationary shift. they are not going to worry

about being behind the curve, as it were. likely to do away with that or should they? helpful at the margin. it is not perfect but it is helpful. learned over the past couple of years ago, this low inflation is proving very persistent. are very concerned about going to the next downturn with a low inflation rate. it creates two big problem's. easy for a recession to tip the economy. it constrains them in terms of the real interest rate cuts they can achieve when inflation is very low. >> can i go back to one earnings story, this is about buybacks and dividends. ist do you think the market

going to focus on? taking in coal which is note of investor pressure. >> what investors love at the moment is they are throwing off cash in a wonderful way. they have a cash flow yield of 15%. best. --ssily rational massively rationalize the business. huge problems for the company. question for investors going forward is what do they do with all that cash? be inar is they will disciplined. this prerogative to constrain the supply is help full from a profit perspective.

>> thank you for much for being our guest. just a great recap, a couple of big stocks we are going to keep our eye on. some have made comments. i want to bring them to you. it may have been involved in the money laundering related to a european bank. is preventing money laundering which is a top priority. a spokesperson saying on the phone, going back to the story ran, they were involved in money laundering. this is the report. >> let me update you on sainsbury's. saying it is difficult to address the concerns they have around the deal.

they will continue to make their case in the coming weeks and work to understand the rationale . the cma has said there could be some options including the sale of stores. this is bloomberg. ♪

>> good morning. europeanve from our headquarters. i am anna edwards. the cash trade is less than 30 minutes away. ♪ anna: devaluation conversation. washington said to ask beijing to stabilize -- guaranteeing a stable yuan. glencore announces a $2 billion share buyback after a