francine: some ecb officials think the downgrade outlook is to bullish. they say the weaker outlook mean a softer break. in the red, chinese stocks sink and traders say the government wants to slow down. getting together. deutsche bank and commerzbank are set to intensify merger the long discussed combination finally happened? welcome to bloomberg: surveillance on international women's day. we have an all-female crew and guests throughout the show.

i am francine lacqua and london, let's check in on markets. , euro-dollar is the one to watch after the downgrade on growth. the question of traders are asking more and more is whether a lot or many central banks can't normalize this year. the euro-dollar is 1.12 and if you look at crude oil, it is at 56.07. ,oming up on bloomberg tv movies were speaking to the finance minister of norway and they have a thing or two to decide on whether they continue. investing in oil stocks. . let's get straight to first word news. the european union is urging the trump administration to stop imposing tariffs on the block if he wants a partner in his fight against china. the president has repeatedly threatened to hit eu vehicles with as much as 25%. the trade commissioner says that , if the u.s. imposes auto tariffs, the eu would have to retaliate.

if that were to happen, and i hope that would not be the case, we would have to impose rebalancing measures and then our relationship on other areas would be very difficult. president trump's former campaign check in was given almost four years in prison for financial fraud. this is far lighter than the advisory range of 19-24 years. the judge described this as excessive, but it still get worse. he faces as long as another decade in prison when sentenced next week on conspiracy counts. and exportsrts slump in february as a trade continues to take its toll. inis the biggest slump exports since february of 2016 and was not helped by the week long lunar new year holiday. signs that it is increasingly hurting the global economy. and the outcome of next weeks of brexit vote is an eu hands, which is what theresa may is set to say.

bloomberg understands the eu has made a new offering to break the impasse but falls short of what britain wants. may hopes to get legally binding changes ahead of next week's vote. global news, 24 hours a day on air and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine, happy international women's day to you and to everybody watching. francine: there you go, every day should we do this. mario draghi has joined the club of central bankers reconciling to a new normal. european central bank says rates will stay at record lows into next year as a weakening economy the rails his plan to withdraw stimulus. here are highlights from the conference. the outlook for growth has been revised down substantially.

in 2019, and likely in 2020. in the persistence of uncertainty related to , andlitical factors vulnerabilities in the emerging market. they maintain favorable rate lending conditions. conditions have been monetary policy being very confident, but financial conditions even since our last meeting. , youu think is right temper what you are doing with a consideration of uncertainty. , in a dark room, you move a tiny steps. you do not run, but you do move. francine: what does this mean for the euro and european assets? joining us this morning is the fixed income portfolio manager

and the strategist at mccoury. let me kick off with you. when we look at fx, there is quite a lot going on in europe. what does it mean the ecb can get away with? >> in the case of the euro, there was the question of limited expectations. really, very few banks in the market. two out of 19 were expecting a change, and even fewer were expecting the change in the euro. me was that in the 2021 forecast for inflation, it still only at 1.6%. not near the ecb's 2% target. basically, they are saying that the measures are not significant enough to ensure our confidence in future growth. look foroes suggest a more policy easing coming from

the ecb. i think that is what the move is suggesting. think they were too optimistic about growth prospects? >> coming into the meeting, the market did expect them to downgrade forecasts. to an extent, there was a market to market to where expectations are. i agree with everything said. the timing of the announcement was a bit sooner than markets expected. when you look at the detail of what was announced, they extended foreign guidance by three months only. additionally, we don't know the details on the lending rates they will be using they are that itg the discussion will be higher than the previous . the margin more supportive for growth was not as markets would of liked. francine: will they have to

downgraded in? -- again? were even these forecasts too optimistic? they might, even of a downgraded the policy stimulus, they don't see a pickup. the inflation dynamics were downgraded. it remains pretty static in the eurozone. previously,sting, market weight was going to seep through and the downgrade has been reflecting that. demand is coming back and in a tighter labor market. francine: was there a policy mistake? should they have hiked sooner? >> there was a small window when they should have been talking about hiking to move expectations. ultimately, it is the banking sector paying for these rates.

rates in aegative tax on banks, impacting ability to extend credit growth. for the ecb, they are stuck between a rock and a hard place while it was interesting to hear them acknowledging the headwinds from the market and trade concerns, ultimately is a structural issue. trends, declining disinflationary pressures and high debt levels amongst member states. similar to what japan faced several days ago. francine: we have actually been , with ourselves a lot some saying is it that bad if we become like japan? us.guests both stay with

coming up, china stocks slumped after a sign that the nation is trying to slow the equity rally. we talk trade with what the investor for the country had to say next. this is bloomberg. ♪

>> we celebrate international , and's day with this w i l index the pixie maximum of 10 stocks from each sector. some sectors with female ceos included ge, ibm hershey, and northrop grumman. the premise is that gender

diversity in the board room leads to better returns and will pay off in the long term. in 2014, w i l has seen a steady increase in assets to some $40 million. over that. -trail the s&p 500- that andpe has willed itself to top the benchmark in the first two monthsriod, it it has an expensehas ratio of 45 business points and gets a yellow light in our traffic light system due to low trading volume, credit risk, and an alternate weight. francine: that was scarlet fu l --iting the w i explaining the wil. the ambassador terry branstad says that there are still plenty of issues to work on with china. think the president is

interested in doing with previous administrations have not been able to do. address these fundamental issues such as the transfer of technology and enforcing intellectual property rights and access to certain aspects of this market that have been closed. you know, we have talked about that and we help china get into the world trade organization way back in 2001. they promised time and time again to do anything and then failed to do so. president trump wants to be the one that gets something significant and lasting accomplished. i know that the people negotiating this are very strongly focused on those issues. isassador lighthizer is tenacious that and very focused on getting something that is going to be significant and enforceable.

a deal made up primarily in reducing trade barriers. but just promises a structural reform, is that still a win? that is a problem of the past. we have gotten his promises time and time again from administration through administration. throughe not followed has been accomplished. what her an investor light house or are focusing on a enforcement mechanism that basic possible to enforce them. and that enforcement mechanism will involve the use of tariffs? it has really brought china to the bargaining table.

there need to be fundamental changes made, but i do know the details. i have confidence that the are focusing on those things that he thinks i'm not been addressed in the past. in terms of the enforcement mechanism, is that the key sticking point? >> it is one of the most important aspects of it. addressing these fundamental issues and having an enforcement china doesee that fulfill the promise that they make. that was the u.s. ambassador to china terry branstad. stay in china, stocks and shanghai has slumped the most in months after traders took a rare celebrating from the nation's largest brokerage as a sign the government wants to slow down.

guests.th us, our do you think that there is an appetite from the chinese authorities to slow it down or stabilize the market? slow down the value in equity markets, you mean? i think they are very confident about excessive the markets. -- the stands in the markets. there is a sense that this could be a policy measure to slow down. francine: what do you see impacting the economy? how much does the trade actually impact the chinese economy? how much is the economy slowing regardless? already signs that the economy was slowing down because of the deleveraging.

that was obviously compounded by the uncertainty around trade, and that is actually going through as we look at exploit data, and today we had some pretty poor export numbers out of china. i would say it is a mixture of both of them, but going forward, we are starting to see is perhaps some of the impact from delivering. growthre signs in credit is picking up in china, so we can get the trade deal through , i line and a resolution think that would be a positive impulse for the economy. francine: if we do have a trade deal, would there be some kind of clause on the stability of the yuan? >> i think that is key. we're looking at the national people's congress they have said they will increase flexibility. think what the u.s. is looking for's intervention, and what they might push for is to make public. this is that we have seen from

other central banks. if they came through on a trade deal it would slow the amount of the pboc can intervene in the currency and. definitely in the short-term. . that is one of the key things to watch for. francine: on stocks, this is our question of the day. this is an mliv question looking for some of the concerns out there. all chinese stocks have healthy correction after the world beating rally? or will it morphed into something more serious? you're watching at home or on the trading floor, you can id us with your thoughts. go. >> i think consolidation is not a bad thing for markets. the chineseince equity rally has been fast, so i think a healthy correction is not bad for markets. likelihoodhat is the of a touching seven and

psychologically what would that do? forget loads, it is definitely a concern on the financial markets. francine: thank you both. both stay with us. up next, theresa may calls on the eu to help break the impasse with just days to save her from deal. details next, this is bloomberg. ♪

francine: this is "bloomberg: surveillance. " the eu is set to make a deal with the u.k. though it falls short of what may is demanding. bloomberg understands they are bolstering the review system for the irish backstop. brussels minister in and conservative hardliners are arguing about how long backstop should be enforced and how the uk's would be able to withdraw still with us are our guests. you look at, when pound, there seems to be a believe in the market that we saw that we either get a soft brexit or a second referendum. that the no deal brexit has been taken off the table. >> he saw that rally in the pound as soon as theresa may votes, one on whether they wanted an extension of article 50 some really think

however,t pricing in, i think that the risk for the pound to the downside. some are now focusing over actually getting a deal. it'll be really important for sterling direction. francine: how much can the pound strengthen or weaken? depending on whether she gets the vote through enough. have almost priced in that there will not be a no deal brexit, there will be a hard brexit. theink it is very much on 12th. there could be some definite upside. i think it is very hard to take a direction, and i'm slightly more skewed to the downside, back into the low 1.2. francine: what does it mean for u.k. asset? >> it means uncertainty.

the longer it goes on the more the market has to question what the bank of england will do. back the possibility of hikes, which the bank of england has communicated they are keen to deliver at least one hike your -- hike. it makes the outlook much more protectable -- unpredictable. francine: what does it mean for the economy and how much does that hurt small or medium enterprises? toit definitely continues weigh on business investment and consumer investment. although the economy is supported by a tight labor a big, we have seen corporations announce they're willing to move operations out of the u.k., and prolonging this discussion makes that likelihood much more probable. francine: should people by volatility as a protection? >> i would say it is interesting. it is not like it just shifted.

what people call the new deadline for the end of article 50. it is really pricing in the fact that there will be some kind of agreement. if we get an extension, there could be every aroundit is an interesting way to play higher ball is around the euro-dollar. much of the european equity space. francine: euro-dollar is like range ground. our guests both stay with us. getting together. the deutsche bank commerzbank merger is starting to take shape. we are live in frankfurt next. this is bloomberg.

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

bloomberg understands that deutsche bank and commerzbank have intensified formal discussion after the german government pressure on the firm's to strike a deal. thank you so much for joining us. we have been talking about it for months. will this know happened quickly now that talks are intensifying? an-patrick: there is some signal it could go quickly. if the quarter is not going well, because this is giving them another question. until then, i think we will have a more often addressed the question, how quick will this be. francine: who will benefit the most if it goes through? rick: that is the question because i think bridget think deutsche bank is having a

bigger benefit because the bank is struggling more with its business model. i'm not really sure what is in there for the commerzbank shareholders because the bank is doing relatively well if we put aside the general struggle banks are going through. commerzbank has a valid business model and is doing quite well. i'm not sure how fond they are of the merger. francine: thank you so much. let's get straight to the bloomberg first word news. the euro plunging yesterday to a 20 month low as the ecb downgraded its outlook for the european economy. some policymakers see even this kind as to optimistic. bloomberg understand they think the projected pick up in the second half of the year might not materialized. mario draghi says growth risk is still tilted to the downside. is suing the trump

organization. he claims the family cheated him out of millions of legal fees and costs. previously pleaded guilty to nine felonies stemming from a federal probe. china's imports and exports slumped in february. it also wasn't helped by the weeklong lunar new year holiday. these are signs the trade feud is increasingly impacting the global economy. the u.s. ambassador to china says the deal can be made. i think significant progress has been made and are more hopeful now that i have been in a long time. viviana: the outcome of next week's brexit vote is in the eu's hands. theresa may is trying to make progress toward a deal. bloomberg understands the eu made an offer but fell short of what britain wants. there's still hope to get

legally binding changes ahead of next week's vote. 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 so much. it is jobs day in the u.s. and americans might get good news. average hourly earnings likely gained 3.3% from a year earlier. it should match the highest levels in nearly a decade. panels are expected to rise by 180,000. now is the chief economist and head of research at office. when you look at the u.s. market and jobs and in general with the fed can and can't do, how much did it look at and domestically and international factors? >> is interesting we have seen

more dovish signals coming from the fed. does not really explain what we are seeing in the data. i think the international environment is being taken into account. that is the something that the fed knows we are currently looking at. francine: way risking a global recession? ae: global growth will be moderated, so much slower than it was last year, but it is not about the headline numbers and growth. the gives about the downside risk and how these could materialize. china,e: you mentioned what else is there? fed, there wase a couple of things. there was the impact from the tray were but also that the policy sheet and a stance was making policy stands

quite tight in the u.s. think there were a couple of things that the fed took into account. francine: what do you see as the main risk? danae: i would say in europe, brexit in italy. clearly the trade war in china and whether the u.s. and china are able to seek and find some sort of deal. i think monetary policy normalization and how that is managed is also a risk, but from what we have seen so far, it seems to be going in the dovish direction. francine: when you look at china, are we overly worried about china because they are going through some of the market hiccups that maybe the u.s. did 50 years ago but they were not under the spotlight like china is. at the end of the day, authorities seek to have a good grasp on how to cooperate with authorities. :; i think there has been

monetary and fiscal cooperation with china. overall, i think it is in china's interest to seek some sort of deal with the u.s.. when we look at the growth numbers, the target has been lowered in terms of what they expect. whether that response to the real growth numbers is another question in another story. francine: what does this all mean for treasuries? yesterday, we were try to figure out whether china and some of the emerging markets would continue buying treasuries. diana: ultimately come up with , we sawdid two markets that reaction induration coming through across most treasury since the markets.

i think it will be very hard for treasuries to break out of the current range. francine: thank you both. european trade commissioner siciliano strong says the eu -- cecilia made comments in an exclusive interview with bloomberg. >> we haven't seen the report headed to the president. we still hope that it will not recommend tariffs on cars for the european union. it would be very harmful for our economy and for the global economy and u.s. economy. many cars are produced here in the u.s. with car parts from europe. as a whole, european trade and investment supports 7 million jobs in the u.s..

we have a strong relationship here and we don't want to jeopardize this. this will have effects on the whole global economy. as i understand: nobody is desperate asking for these cards are us in the u.s. if that were the case, we would have to impose rebalancing measures and that our relationship on other areas would be difficult. can you talk to us about your thinking about which sectors he would look to if you had to be forced? >> we have started to prepare a draft list. it is not public yet. we have to consult with eu member states. it will have the value of around 20 billion euros in total. i really hope we don't have to do so because we shouldn't impose tariffs on each other. europe is an ally in the work that the u.s. wants to do reform wto and working on china addressing some of the market

distortions that are there. that work would be so much more difficult if this happened. matt: we heard mario draghi site protectionism as a determining factor. to what degree would you say that trump's trade thoughts and to the have contributed slowdown in the european economy? >> i think most international warned thats have these escalating possible trade wars and protectionism is bad for global economy. tariffs is not making us richer in any way. we are so interlinked with each other, the big economies. it has effects on all of us. if it deteriorates a situation, it would be worse. francine: that was the eu trade

commissioner speaking to bloomberg. coming up, in honor of international women's day, we look at where there is a lack of women at the world central bank and what they can do to fix the issue. this is bloomberg. ♪

francine: it stopped raining in london and the skies apel -- a bright blue. here are the reports he findings. iceland is ranking for the

welfare of women in the workplace. sweden and new zealand make up the rest of the top three. billion. 14 is the number of places the united states has dropped in the rankings since 2000 and it pwc survey. five is a number of nordic countries in the top spots. $6 trillion, pwc says increasing female employment across nations could increase gross domestic product. 27 is the place china would rank it was included in the survey. is a great chart and we will talk more about some of the gender balance index. first, let's get straight to the bloomberg business flash. bank anddeutsche commerzbank are reportedly intensifying merger discussions. bloomberg understands recent setbacks for the two banks at

into the urgency to repeal. the idea of a merger between tw biggest banks waso. vendors to sell directly to consumers. it takes more money that way by uploading the cost of supporting products. the pentagon is reportedly reviewing elon musk's security clearance. bloomberg understands he has three filed his security for. it requires federal contractors to acknowledge illegal drug use. women are massively underrepresented at the world central banks. out of 173 thanks, just 14 are headed by women.

13 have no women and senior positions. on report says gender balance at the banks is below where it was two years ago. danae helped write this report. they do so much for sticking around for this. this is basically 20 pages where it goes through what can be done, why this is the case, how people can lead by example. was the most surprising find? alwaysthe people are surprised to find out how much women do. banks, people tend to think they would do better. as he said, one in five central banks have no women in top positions. are index looks at over 200 individuals. with look at the top 10-15 positions. a loss,: if you look at it is mainly academics that went into these positions of central

banks. academics tend to be gender diverse. importantt happen role models. janet yellen was one of them. -- you tend to have gender balance in the entry-level positions. is about the policies and also traditions of stopping themselves and believing these type of careers are not possible. francine: is about actually or is itng politicians really how things work? e: i think there is a lot of awareness come up much more nail that we need diversity in central banks because of public policy institutions, you need to avoid group think.

is also about making sure you have access to the best talent pool that you can. you mentioned iceland coming on top. this is also the case on our report. perhaps it has to do with the fact that it is a country with a very small population. francine: do you have any data on when you lose women? is it was they had children, when they go for governor and don't get it a go to the private sector? anae: it is all of these things. is not enough women central bankers. women still think these type of cars are the careers for them. you do not think i want to be a central banker when i grow up if there is not a role model. enter the workforce, it

is about the policies they have in place. a lot of central banks are working on this. there is diversity and inclusion in steering groups and committees. we have the central bank of ireland, spain explaining what they are doing. there is also now a task force on the road level for diversity. does it make a difference if you have a woman central banker to a man central banker? danae: it is not about the quality of your professional capacity as a central banker. when you make choices about the avoidingit is about groupthink and bringing in backgrounds.ferent it is making sure you have the driver's perspective. i think that is why it matters to bring women into central banking.

there is some evidence looking at women's attitudes being more hawkish or dovish. there was a study in sweden showing more women are hawkish. it is very hard to draw this conclusion because the sample size is so small. you cannot say inflation was more stable under a woman central banker when there are so few. there was aink difference from two years ago that there are now fewer women in central bank positions. why is that? danae: we only have 14 governors out of 132 central banks. it is not really fluctuated in a great range. lester, there were 12. francine: thank you so much. i urge everyone to pick it up. norway's wealth fund could be divesting its oil and gas stocks. by would western europe's

biggest producer don't patrol? that is next. this is bloomberg. ♪

francine: be after republicans pushed the mission through congress, bloomberg businessweek looks at whether it lived up to its promises. viviana: it was a laboratory for the $1.5de economists, trillion tax cut would show them if their theory worked in practice. bloomberg businessweek found out it doesn't. the top corporate tax rate was ate profitspor rose. didn'ts is technically take those profits and increase federal spending. instead, they use the money to buy back shares and increased evidence -- dividends. bloomberg found the tax rate is not a big factor when it comes to business investment. instead, it boosted business

confidence, but as bloomberg businessweek put it, the sugar high is already fading. francine: norway is about to decide whether to let its $1 trillion sovereign welfare fund don't all of its oil and gas stocks. as western europe's largest energy istune, it's already linked to petroleum. it would likely he even more companies. big oil the finance ministry is set to announce its decision at 12:45 p.m. london time. annmarie joins us now from norway. why are they doing a new? e: they put this on the table in 2017. they had more than a year to think about it. the question i have is, is more way to -- norway too much exposed to oil? one part is they are one of the

biggest producers in western europe. 20% of the government's revenue comes from oil. the question is, it makes sense to then invest the money and funds in oil stock. the whole point was to diversify the economy against the price of oil and oil industry. the question they are facing is, if you are set up to diversify, why would you extract oil to -- moneythat o mon into oil stocks. the question is is this about climate change or environment? the central bank maintains this is just the a play on risk management and hedging against the oil industry. francine: what does it mean for the sector? arie: it would be a huge

blow to major oil and gas companies and the sector at large. sum of their biggest holdings are royal dutch shell, tells how, bp. when they even put this question on the table in 2017, he saw a massive drop in oil and gas stocks. . that is likely what you would see today if they decide to don't the shares francine: thank you so much. willg up later today, we bring you an interview with the finance minister of norway. this is bloomberg. tom keene joins me next. we will be talking about banks. ♪

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downgraded growth is still too bullish. in the red. chinese stocks think the most in 2019. together. deutsche bank and commerzbank are set to intensify merger --ks with a long discussed happy international women's day to you. surveillance.erg new york and london, we go for your markets and politics. that chinese markets rally that no longer was. tom: absolutely extraordinary. that we saw from the press conference. we will have a number of charts showing the reaffirmation of these lower yields this morning . of course we look to

your u.s. jobs report and whether that gives us any clues as to what the fed does next. deutsche bank and commerzbank resumed informal talks on a possible lender. bloomberg has learned recent setbacks for the bank is adding urgency to reach a potential deal. to germany finance minister is pushing the idea of a merger between the countries two largest banks to create a national champion to serve the german exports economy. today, theresa will make a last-ditch plea for brexit. she will tell the eu the outcome of her historic vote next week is in its hands. there are signs the eu and u.k. are trying to make progress toward a deal. donald trump wants u.s. allies to pay a big premium for hosting american troops. bloomberg has learned the administration is trying cap demands. germany, japan and other countries pay the full price for

american troops on their soil, plus 50% more. ministerd, the prime resigned. he had the center-right government. to its biggest project collapsed in parliament weeks before a general election. asking himresident to stay on as caretaker prime minister until the election. 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. tom: let's reset with the markets right now. i'm going to go quickly through three screens. equities south with further erosion this morning. dow futures down 96 after -200 yesterday. euro with 111 earlier. weaker euro will show the chart. second screen.

the usual second screen with a big south. 3.03. year bond, gold it's a safe haven bounce as well. euro 11214., the people now talking about a positive best possible negative yield. i threw in there because we have to throw them in right now. francine: we do. i have five data screens. i don't, but i'm looking at a pond in chinese stocks. the stoxx 600 down. but it went points, down from 0.6%. i'm just looking at havens. gold climbing.

investors trying to figure out exactly where global growth will go or won't go. tom: i am really glad you put yen in their. it goes opposite of everything else. let me look at the charts. the plaza accord is over here. weak euro, strong dollar. the advent of the euro. up we go.everything is great . strong euro. now, we have had a financial crisis. the long-term rollover back to 112. back in here three years ago was a parody watch. you wonder if we will be on a parity watch in weaker euro. francine: we are all on watch. this is what i'm looking at. this in three indices see have european stocks, the s&p 500 and in the emerging markets.

european stocks that have much to celebrate. if you look at the difference between these three indices, volatile politics and slowing profit growth are to blame for european equities. stocks setn chinese the tone for global markets. equities in europe are retreating with you as futures. joining us now is the global chief economist at hsbc bank. great to have you. when you look at the rally in china that we understand may have been caused by authorities say, they are rounding by too much, what does it tell you? that there is something that should make us more nervous? >> i think for now, it is interesting to say -- too soon to say. they are mandated to do with growth and inflation,

they know that if you get very sharp moves in financial assets that go beyond a level that is really do by the underlying level of activity, it could potentially poses some issues. i wouldn't read too much into the. the broader story is that the global growth outlook is still deteriorating. francine: do you believe the ecb will have to revise downwards? are they still too bullish? moment, think that the the ecb growth forecast, they have already come in at the lower end of expectations. i think that was the big news yesterday. as much as they said it was becoming more accommodative, it was really not even going as far as what was already priced in by financial markets. it was the scale of the downgrades. china, the export numbers this morning, we know the u.s.

economy is going to be a lot weaker because the government shutdown affect. it is much more about the underlying growth story. tom: thrilled to have you on today. been the resilience of the equity markets in america. great to have you with us. let's listen might not to mario draghi. >> you just do what you think is right. you tempora what you are doing with uncertainty. in a dark room, you move with tiny steps. you don't run. powell isess is jay watching mario draghi yesterday in a dark room in washington as well. you write about u.s. resilience. that the job effect come over and diminish u.s. resilient? janet: the u.s. economy has been

resilient. it has been helped by the fiscal stimulus. last year, growth forecasts were pretty much unchanged at the end of the year. we had these massive downgrade. even in china it didn't underperformed significantly. i think as we go through this year, as far as europe is concerned, it is not just what happens to growth in the u.s. and what happens to growth in china. it is the mix of growth in the economy. what we are thinking about in the year ahead is actually that the outlook to the consumer is still recent -- reasonably firm. for a big swing in the world trade cycle, you actually need a big pickoff in capital spending and an overall manufactured goods. that is what europe is really waiting for, rather than the u.s. being hit. for the u.s. exports, they only make up 12% of gdp.

tom: i was really taken yesterday i eat the optimist who said the u.s. will pick up. even mr. draghi touched upon in his press conference. state the case for this being one false alarm and that we will see some sort of recovery from july, august or november. janet: it with the other way last year. we started the year with maximum optimism and ended with two of the false. certainly even our numbers due point to some improvement in europe over the course of a year, helped by the fiscal stimulus. i think what is going to be an ongoing period of volatility. at the end of last year, we saw some of the one off factors decline. pmi's.the better we are buying into this idea that the worst was over in some of these countries, and how the

to the drivers of the world, data, much weaker impacts the government shutdown effect. i think it is going to be a bit uneven, but i would still expect some stabilization in european wewth, not at the scale saw. tom: i'm looking at the german , of a bit weaker in the last. hour we are thrilled janet henry is with us. toing up, we will speak lawrence kudlow. that after the jobs report. it's just a in america. stay with us. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." global agreed to buy rpc group 44 $.4 billion. that derailed the planned takeover of the british maker of packaging materials by apollo global management. u.s. regulators cause their review of t-mobile's proposed takeover of sprint. the federal communications commission some more time is needed to review the arguments for the deal presented by the companies. the agency says it wants to review significant new information. the pentagon is reviewing elon musk's security clearance over marijuana use. the billionaire refiled his government security form. it requires the applicant to disclose any illegal drug use.

last year, he smoked marijuana on a comedian's podcast because of his role as ceo. clearance.cret level the company certified to launch military spy satellite. francine: thank you so much. two biggest lenders are reportedly stepping up merger talks. deutsche bank and commerzbank have intensified formal discussions. joining us now from berlin is chad thomas, bloomberg's managing editor for western europe. great to have you on the program. has we figured out if this happens, who would benefit most? that is one of the big questions here. it is something the german government is looking at very closely as well. we hear isent pushing this in part because they are looking for that national champion. they are very concerned about the performance of both of these banks. to helpthem together,

will help them create that national champion they are looking for. that said, there are a lot of critics who don't believe this is the move they should be twing, that putting together struggling banks doesn'to necessarily make one national champion. ande talks are intensifying we do here is because in part the government is pushing for a, but whether that will actually come to fruition remains to be seen. banks -- doeshe it make sense for them to merge? if there is political pressure, because we have been talking about it, will be resolved fairly quickly or could it drag on for the rest of 2019? chad: i think political pressure is increasing in part because of what we are seeing. what we are hearing from our government sources is that they are concerned that if they don't get this merger push through soon, that that will make any

sort of merger more difficult because of the worsening economic situation. we have the ecb cutting their forecast for this year across the euro area. more weak economic data out of germany today. we are hearing that as the pressure increases, that something may happen sooner rather than later. that said, deutsche bank we hear is also looking at other scenarios. whether this comes to fruition or not remains to be seen. tom: i have a key question that i want to walk through the reality for you. here is the german yield curve. all the need to know is one million years ago when things were good, the yield curve looks like that. it looks like this with short rates coming down. now, we have this huge negative yield space pushing 10 years. the yield will be out negative

to 10 years. i've yet to hear a single person say banks can prosper given negative interest rates. do you have a revenue growth model for the smurf dinosaur? -- merge dinosaur? problem.t is a huge we saw pictures take a hit yesterday when the ecb came out with the new stimulus. bank is parking money with the ecb are paying money to do that. ultimately, you put these banks together and that really doesn't solve the fundamental problem of negative interest rates. tom: it doesn't solve the revenue line of either bank. the only solution is to massively cost cut on massive presumed synergies. is anybody modeled out how many bodies are going to go out the door? chad: we don't have that information.

certainly, that has to be part of the talks that are going on. that would be one of the arguments. these two banks are huge in their german market. there would be a lot of overlap in terms of the retail part of the banks and in terms of the outlets they have across the country. there would certainly be political pressure in germany. imagine you are on main street somewhere in germany in some small town and then all of a sudden one of your outlets closes. every local politician is going to be pushing back against the. while there is this discussion to do this at the national level, getting it through and actually, want to have made the merger, having the cost cuts that are necessary would be incredibly difficult in this country. francine: thank you so much. picturesoking at live of the french president, emmanuel macron about to present

the newly created prize aimed at reporting actions around the world in favor of women's rights. this event coincides with international women's day in paris. for those of you listening to us on radio, we are hearing his talking and will push out this award on social media. coming up later today, an exclusive interview with the finance minister of sweden. atjoins daybreak america 8:30 in america. this is bloomberg. ♪

tom: markets on the move. let me look at the german ten-year. this is my draghi benchmark. is a foundational yield. here is a draghi presser. janet henry was talking about. down we go. this is critical. right now, in the early morning of america, the middle morning of europe, we can't really get a lowerr a higher yield, price on the 10 year yield. right now, that is a tenuous chart. with that, letter sent to janet to janetlet us go henry. nothing upsets my viewers and listeners more than when people like you say america is fully employed. is america fully employed?

janet: we never know. we only know with hindsight. there are lots of impacts on the labor market to do right. all of these changes in the participation rate, which have been edging up over the course of the last few weeks. that that mean that you cannot still create more employment without adding much more to wage growth in the coming year? it probably doesn't. i still think the u.s. unemployment rate can edit a bit lower. -- edge a bit lower. call ont is the hsbc what chairman powell does? anet: i think it is very easy for the fed to be patient at the moment. we heard from just about every governor. most of them think that the policy rate is at neutral.

certainly, even the more hawkish members think it is very close to it. everything at the moment, slower global growth. inflation coming in lower than expected means it is very easy to be patient. if we get to the end of the year and growth globally is improving. the u.s. unemployment rate is still edging lower and wage growth is still edging up, we still think there is a chance that the fed could raise rates, probably only once more, that is all we have in kevin logan'forecast for the year aheads. it is too soon to rule out further tightening. it will come out to what comes with inflation. francine: what is a policy mistake look like up a moment? janet: we know that everything ends in a recession. feeling that it didn't with that mid-1990's pause when it cut rates.

the economy slowed and they were able to actually cut the rates without the economy going into outright recession. if they raise interest rates and find themselves in a position where they have to cut them again in a remarkably short period of time. i suppose this is one of the issues about 2020. we know by the end the fiscal stimulus will have faded more materially and probably unemployment will be rising. francine: thank you so much. janet henry with hsbc. coming up next, andrea jenkins, u.k. conservative mp. we talk brexit. this is bloomberg. ♪

♪ tom: bloomberg surveillance. good morning, everyone. we are doing extra data checks today with what we saw yesterday and i am watching the german ten-year off the bloomberg

terminal. stability at .055, but that's a long way from where it was 24 hours ago. right now your first word news. >> the american ambassador in huawei's lawsuit against the u.s. bizarre. they are facing multiple criminal indictments in the u.s.. the company's lawsuit claims a government ban on purchases of its gear is unconstitutional. an investor says their legal maneuver is not very smart. the european union's top trade negotiator is urging president trump to lift tariffs if you want a partner to cooperate on china -- if he wants a partner china.erate on they disagree over u.s. duties on european steel and aluminum. some european central bank policymakers think the institution did not go far enough in cutting its forecast. forecb slashing its outlook

2019, cutting its estimates for growth from 1.7% to 1.1%. some officials argued that was still too optimistic. former trump campaign chairman paul manafort saw a break from a federal judge in virginia. he could have gotten up to 24 years in prison, but instead got less than four years. he faces more prison time next he will be sentenced for conspiracy linked to a secret lobbying campaign for ukraine. global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine? francine: thank you so much. it has been a week of a dovish turns at central banks and officials in europe unleashed more stimulus while their u.s. peers indicated they are in no hurry to raise interest rates. the fed governor says weaker

economic prospects at home and abroad call for a softer pause on interest rates. still with us is janet yellen from hsbc. when are you expecting -- janet henry from hsbc. when are you expecting an interest rate cut from the fed? >> second half of 2020. francine: the trade concerns between the u.s. and china, that was in a moderate weight, but the economy kind of deteriorated. >> a lot of the 2020 view, and obviously this is looking around a lot of corners, these broad-based geopolitical concerns, but it's actually a fairly long-standing view that we came out with in the middle of 2018. it's based on the fact that by 2020 we will have seen a tightening of financial conditions and we will be seeing the fiscal stimulus starting to fade. we are talking about a year in the coming year where growth is

slowing. wage growth is edging up a little bit and the profit slowdown likely to seep through into slower unemployment growth, a rising unemployment. francine: so janet, if you look at a worldview of central banks, are they all turning dovish? >> they are all turning dovish relative to where we were six months ago. they are all saying that there is no urgency and they are right. the balance of risk has material shifted -- materially shifted. one year ago every client i spoke to want to talk about -- wanted to talk about inflation. nobody is talking about inflation at the moment, except with regards to turkey. so much has been about forward guidance. mr. draghi stopped his time specific forward guidance, but everything we are hearing from the fed is data dependency. if we are in a data dependent world, the markets do the work for the fed.

maybe the fed does not raise rates but the market anticipates it might, and that's where it comes from. tom: does the dollar do the work for mr. powell? >> the dollar could certainly be part of it. david bloom and his fx team at hsbc have long been not consensus in forecasting the dollar. tom: i'll say. how do you put up with that? how do you put up with that? >> it's our long-term view. it has been that inflation will stay low. we also last year forecast fed tightening. mr. bloom was forecasting a stronger dollar. everybody was saying, how can all three of you be right, but we were. tom: let's pick euro, because we are talking about it today. where does the eurodollar call

go? >> from here, we are staying with the view of eurodollar at one point and -- at 1.10. it's never going to be a straight line view. it's not that they are bullish on the prospects of a further fed tightening, but it's more about their concerns on the rest of the world. it's negative news elsewhere. it's a reversal of what you saw in 2017. the surprise came from the prospect that the fed, the ecb would ever be able to end qe, the euro rally. the surprise has come from just tell them the european data has been -- just how grim the european data has been. francine: one more central banks use the medication -- will more central banks communicate? >> i think the communication is part of it and we saw that yesterday.

of when its world was explicit forward guidance and obviously we now have the dot plot with the fed. would kind of knew where we were going and the markets gradually priced them -- we kind of knew where we were going and the markets gradually price them in. francine: who has it more difficult? side.leave the boe to one if you look at the bank of japan, said, ecb, which -- bank of japan, fed, ecb, which one is more likely to positive 2019 -- in 2019.019 -- pause >> because the fed is more likely to do something, there is more likely therefore to be a policy error. tom: janet henry, thank you so

much. we will continue to drive forward the conversation and synthesize all of the economics of mario draghi into market reaction. we are thrilled to bring you abby joseph cohen of goldman sachs, their advisory director. look for that at 8:00. i'm tom keene in new york. stay with us. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. let's talk about brexit. just days before parliament votes on her divorce deal, theresa may is asking the eu to help break the fast.

the prime minister is set to give a speech today, saying that the outcome of tuesday's vote is in their hands. jeremy hunt has called on brussels to be flexible. joining us now is brexit supporter and conservative member of parliament andrea jenkyns. thank you for joining us. thank you for giving us a little bit of insight so close to the vote in parliament next tuesday. does theresa may have the majority or could she actually scraped through the numbers to get her deal through? andrea: from what we are hearing at the moment the attorney looking highly unlikely that theresa may will get a vote through next week unless we see any moves regarding the backstop, and all honesty -- in all honesty. francine: is there anything that theresa may could bring back from brussels that would convince you to vote for her deal? andrea: my colleagues have got

different views. i have said all along it is not a good deal. anything that keeps is closely tied to the eu where we are still a role taker is not brexit. still haven courts jurisdiction over us. my fears are this is going to be the blueprint for what the final deal is going to be. if we have given all of these concessions in just the riod, --al agreement pei period, it does not look good for the final outcome of what the final deal will be. we have seen the way that eu has operated. they said they would not give any more money in a bailout. the 20 final 24 hours -- the final 24 hours they came up with something. we blink first every time.

i fear that we have not been playing our strongest card. tom: it's wonderful to have you with us today. you are the ultimate marginal conservative. you said in july of last your that prime minister may's prime minister ship is over. is it over? -- over this march of 2019? andrea: [laughter] if i had 1000 pounds for every time i thought that prime minister's term was over, i would be rich by now. if anything, it has shown that plitics are in unprecedented eriod. we look at corbin, the way he is still there, the prime minister is still there. so i want tothere, focus on getting the right deal for our country.

i do think that -- sorry? tom: please continue. andrea: i would prefer a deal but it has got to be a good deal. i am a democrat. what is the point of giving people a vote and not honoring that? tom: i want you to speak to your constituency this morning. iain duncan smith was on the program a few days ago and caused a modest uproar over the idea that brexiteers call for a new reformation in the united kingdom. give us the optimism of where the united kingdom is three months, six months, 12 months after you finally leave. andrea: [laughter] asking me -- you are asking me what economists are getting wrong. look at the economists, what they said after the referendum result. i have great faith in our country and people.

i get frustration when we are on the doorstep. we are 2.5 years, maybe three years down the line. we have not put britain's interest first. we have not respected the referendum result. i am not a little englander. i do not want to remain strongly tied to one of the slowest trading blocs in the world, which is the eu. i believe in free trade. i am a conservative. i believe global trade. , free trade is far more important than being closely tied to the eu. i want an immigration system that is fair. i want to see the brightest and best, doctors from all over the world, the engineers coming into this country. i want to see the money invested into our country. so we can invest in the skills of the future, so we have got growth and strong productivity.

that's what we need to be doing post-brexit. unfortunately, there has never been in our government and also the opposition, there has never been a post-brexit vision and plan set out for our country. we've missed this great opportunity. francine: let me just go back to the vote next week. are you concerned that on extension will lead to a softer brexit? do you think that will focus the minds of parliamentarians to vote for this deal even though many think it is not perfect? andrea: i do not think it will. the prime minister has failed to listen every step of the way. i have been on the brexit committee coming up to three years. their lack of organization, if it was business, you would not succeed with this really. the prime minister has failed to listen every step of the way, even in july when she brought out a proposal that had working groups.

she failed to listen to a solution on the northern irish backstop situation, and so we are here through the prime minister's stubbornness and failure to listen. i hope that this will focus the minds of the eu as well. if this gets voted down next week, look, we will not accept this poor deal for our country. we expect better and if not. we will leave. francine: andrea jenkyns, thank you so much. many people say the eu have never changed and they never voted for this. andrea jenkyns, conservative member of the u.k. parliament. we are back with hsbc economist janet henry. if you are a market participant you need to look at the variation, the possibility of the vote getting through and you need to make a pound call. it's a very binary outcome right now. >> it is. strategistsmost fx tend to take the view that you have to wait out the possibility -- probability.

no deal or a hard brexit or soft brexit. they now think there is three probabilities. one of them is that we go into a long extension after the end of 2021, which would point to a firmer sterling. francine: we have some breaking news out of norway. norway deciding to take upstream oil companies out of the wealth fund. this is the largest wealth fund, one of the largest wealth funds in the world. norway is such a big oil country. 2 oil companies so this could actually move the industry. we will have 20 more from norway -- plenty more from norway through the day. norway deciding to take upstream oil companies out of the wealth fund. we will have more on that later

this morning. we will speak to the norwegian finance minister about what we just broke, the news that norway will take the upstream oil companies out of the wealth fund. the finance minister of norway at 12:30 p.m. in london. this is bloomberg. ♪

♪ francine: this is "bloomberg surveillance." tom and francine from london and new york. we just had that decision from norway, deciding to take upstream oil companies out of its wealth fund. annmarie hordern joins us from oslo with that story. what kind of impact does this have on the sector? >> it's a huge impact on the sector. as you can see, immediately following the the decision we have totale, bp, shell following office news -- falling off this news. it is going to be a big question. the finance minister will have to be answering this to the oil and gas world and the world in

general. they maintain that this was about diversification and a hedge in risk. they do not want to be doubly exposed to the oil industry, given 20% of the country's revenues come from oil and gas. many saying why would you extract oil and put that money into oil and gas stocks, that's not about diversified. this could be seen as a betrayal to the oil and gas companies, and those invested here. it could be seen as a betrayal, that they are exiting from the industry across the board. it will not happen immediately. it will take months and years but it's a big signal to the world and a huge blow to the oil and gas industry. francine: give us a sense of why it's happening now. it seems to have taken some unparalleled momentum. have they been thinking about this for a while? >> yes. they have given over a year to think about this. they had a report.

the government commissioned a report that advised against it, but many economists were split on the decision. they have given it a lot of thought. there are some saying that maybe they view this as the last big some oil and gas companies in terms of share prices and want to get out now. no one in the government has explicitly said that. they have given this a lot of thought, well over a year. today was the decision. this is a huge blow for the oil e, bp,s sector, total chevron, exxon, they have shares in all of these companies. tom: why are they going cold turkey? why are they eliminating oil instead of taking a more modest position? >> it's a good question, tom. they do argue that they are just

too heavily exposed. they say it's too much of a risk given the fact that the country is already exposed and they are the biggest producer in western europe for oil. they will be doubly exposed by investing in this companies -- these companies. they still own more than half of uanor.r -- eq they are keeping all of their shares in the state-run oil company, formerly statoil, and will be jumping into oil and gas stocks. tom: thank you so much. janet henry with us right now. the future of hydrocarbons. it really comes back across europe for the need for gas from russia as well. it's an age-old topic. it really works at the end of a long winter. give us an update on the flow of gas from russia into your.

-- europe. janet: i'm not sure i can add much to the story at the moment, certainly not on the russian -european situation. tom: i look at all of this and the backdrop of the jobs report and the incredible market we have seen today. just absolutely extraordinary. francine: if you look at what we have done around the world, we have not talked about emerging markets. tom: thank you. francine: i don't know if it's the idiosyncratic stories we follow, for example in south america. this goes back to being a fed story, a dollar story. which economies have put some of the hard work in place to really benefit from what the fed will do in 2019, which is nothing? janet: this is a very good question. when we think about emerging markets from a demand perspective, it's increasingly become about china. from a policymaking framework

it's so much about the fed and the dollar. if the dollar remains firm or if the market starts to price in the fed rate rises, then it is emerging markets that will be under pressure again. what's interesting looking at asia, we have seen some countries like india being very quick to reverse the rate rises that they had to deliver last year. indonesia is the country that stands out. they are the ones that would have the best prospects of being able to ease. tom: thank you so much for being with us. in our next hour, on jobs day, not only the data, but the policy of america's labor economy. professor stephenson of michigan with us.

♪ tom: this morning the contagion of mario draghi. global markets reprice, as once

again the ecb must say that germany, italy, and the rest from themselves. ation of europe. it is jobs day. we consider wage growth. we consider a miserable fully employed america and mr. manafort has his day in court. he will have another day in court next week. good morning, everyone. this is "bloomberg surveillance." an extraordinary morning after draghi. tom keene in new york. francine lacqua in london. the ramifications of mario draghi yesterday morning are still reverberating. francine: yes. it was interesting, his message to the markets. european bonds is the one thing we need to look at. over all i hear more and more from ecb quarters that even the pretty dovish outlook, or the fact that they had to downgraded the forecast could also be revised downwards with time.

i hear more, is europe becoming like japan? francine: i like what you did talking about -- tom: i like what you did talking about em. em currencies give way just a little bit over the last four days. argentinian peso out to new weakness as well. your first word news. >> deutsche bank and commerzbank resumed informal talks about a possible merger. recent setbacks for the banks has added urgency to reach a deal. germany's finance minister is pushing the idea of a merger between the country's two largest banks. the idea is to create a so-called national champion to serve the british export economy. theresa may will make a last-ditch plea on brexit to the european union. she will tell the eu the outcome of her historic vote. there are signs the eu and u.k. are at least trying to make

progress towards a deal. president donald trump wants u.s. allies to pay a big premium for posting american troops. -- hosting american troops. we have learned the administration is drawing of demands germany, japan, and other countries paid the full price for u.s. troops deployed on their soil, plus at least 50% more. president trump's team sees this as one one way to prod nato countries into spending more on defense. and the new crew capsule from elon musk's spacex is heading for splashdown off the coast of florida. early today the dragon capsule undocked from the international space station. it's only occupant is a test dummy named ripley. global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine, tom? tom: i am going to do three data screens and francine will guide

in with a look from london as well. futures deteriorate over the next hour. -1.12.tures euro weaker and a little bit of a bit across europe as low -- bid across europe as well. he vix.n tyh 30 year u.s. bond, 3.11 into 3.06. gold a little bit of a safe haven. let's move to the next screen come at which is a eurocentric screen. jump in here. i am going to go right down to deutsche bank. i find it remarkable that deutsche bank and commerzbank are south for the day. francine: yes, except i get a lot of people -- you know, there has been a rumor about commerzbank and deutsche bank for quite some time that people

are trying to figure out what is accelerated talks mean. we broke the news about 10 minutes ago that norway decided to take upstream oil companies out of there wealth fund. they are not divesting everything they have in this industry because we now hear from them that the oil fund investments do not include -- divestments do not include integrated companies. the impact this could have on the industry is a little bit smaller than what we were prepared for. stocks extending some of the decline after chinese stocks were down again. it's about growth concern and that is leading to havens taking gold, yen climbing with as investors trying to go for safe havens now. tom: we are doing this in real-time. let me show royal dutch shell out of london. we saw the decline in royal dutch shell shares, down they went off of the norway bombshell announcement and the news that

francine just mentioned gives you that relative bounce. you may see more of this coming up. what is your bloomberg this morning? francine: this is a look at european stocks, that they do not have that much to celebrate. the stoxx euro 600 gained about 110% since march 2009, "let to about a third of the returns we saw -- the equivalent to about a third of the returns on the s&p 500 that we saw it while a goat. -- a while ago. tom: let us lunch into any number of the themes this morning -- launch into any number of the themes this morning. in america that comes to jobs day. we do this with yelena shulyatyeva. it is shocking how optimistic she is. she brings us a dose of optimism this morning. they call me gloomberg. wrong a wrong -- am i

that the world is coming to an end? yelena: you heard from the recent fed participants and chairman powell that the state of the labor markets in the u.s. remains one of the most optimistic things among these mounting headwinds globally. that's why today we are probably going to see a mixed reaction to the payrolls report. a week number would exacerbate the worries coming from outside, but a good number would probably show us ok. tom: you are so irresponsibly optimistic. what is your jobs number four today? yelena: at 250 today. probably the highest number in the consensus. tom: i have to stop michelle. 10 -- stop the show. 10 years ago everybody told me the run rate of the american economy is 120,000. why is america delivering month after month the 200-ish they are

delivering. yelena: we expected to 50 because of a statistical -- 250 because of a statistical abnormality in february. it sounds like the labor market is now lifting those lows. women, minorities, everybody is coming back from the sidelines and contributing to this strong report. francine: is there something that the markets understand -- misunderstand about that messaging? yelena: i think it's -- fed messaging? yelena: i think it's really the same. the markets are clearly hearing the message that the fed is going to be patient. whatnk what will do fine the fed will -- define what the fed will do this year is what happens with inflation. what if we see a flareup in inflation? then they will have to persuade the markets to start pricing in the rate hikes again.

tom: thank you so much. yelena shulyatyeva with us. she has this hugely optimistic view, including fed hikes out in the distance, one or even two as well. later today after the jobs elenat, you just heard y say 250,000. kudlow all over that. i'm sure you are listening this morning. lawrence kudlow of the white house will be talking up job america. please stay with us worldwide. this is bloomberg. ♪

♪ francine: this is -- >> this is "bloomberg surveillance."

let's get the bloomberg business flash. a big blow to big oil. norway's government has given the go-ahead for its trillion dollar sovereign wealth business.vest its oil it says it makes little sense for western europe's biggest oil producer to be doubly exposed to oil risk. --berrybal agreed global agreed to buy rpc group for $4.4 billion. berry used to be a holding of apollo, a private equity firm. u.s. regulators positive review of t-mobile's proposed -- pause their review of t-mobile's proposed takeover of sprint. they say more time is needed to review the arguments for the deal presented by the companies.

it wants to review significant new information. much.ne: thank you so america's top diplomat in china says the two sides have made headway in talks on tariffs, but terry branstad stresses there are still many issues to work on. he spoke exclusively to bloomberg. >> i think the person is interested -- president is interested in doing what previous demonstrations have not been able to do and that is address these -- administrations have not been able to do, and that is address these imbalances, like enforcing intellectual property rights and pects ofo certain as this market that have been closed. we help china get into the world trade organization way back in 2001. they promised time and time again to do these things and failed to do so. i think president trump wants to

be the one who gets something significant and lasting accomplished. i know that the people that are negotiating this are very strongly focused on those issues. ambassador lighthizer is certainly one that is tenacious and very focused on getting something that's going to be significant and enforceable. tom: absolutely fascinating. to our global audience, ambassador grandstand -- branstad is the former governor of iowa. iowa has been hammered by tariffs as has all of the agricultural midwest. right now kevin cirilli, our chief washington correspondent. it's friday. where are we on the trade talks as we go into the weekend? >> trending positively. i think there is a lot of attention not just on the u.s.-china talks, but where

things go with europe. european union representatives were in washington this week meeting with president trump's economic advisers, from larry kudlow and others to u.s. trade representative lighthizer. it's almost as if the president is willing to back off tariffs with china but threatening to increase tariffs on other routes in europe. tom: i want to go to mr. manafort. inhas been beaten to death the last 48 hours. ellisalice is esteemed -- is esteemed and all that. what happens when mr. manafort steps in a different court next week in washington? >> he gets on additional sentence that could be either equivalent or more than that 47 months he received yesterday. in total he could face up to more than a decade of jail time. the bottom line is that for paul

manafort, who is 69 years old, this jail sentence is a significantly less than the more than two decades he could have been sentenced to. he's not out of the water get. he's going to be behind bars for longer than michael cohen will be and still faces an additional sentence next week. francine: can you actually describe it as a reprieve for the president in the russia probe? what are you watching out? for this weekend? >> the crimes paul manafort was convicted of, they were, as you alluded to, they were not collusion. they were not because of the russian investigation and they were brought about because he was being investigated. this was before he was involved with the campaign. that was number one. everybody wants to know when the investigation is going to wrap up, and also notes that michael cohen now filing a lawsuit

against the trump organization could be a new legal fishing expedition for documents within the trump org. tom: thank you for joining us. coming up, one of the most interesting governors out there. he is distant from us at our studios in new york. he is the governor of new jersey. he is a democrat, the former ambassador to germany. he's the guy who actually understands finance. the governor, maybe they will talk my ability -- talk the montreal canadiens winning the stanley cup. maybe i can do that in a jersey. ♪

♪ >> compared with the december macroeconomicem projections, the outlook for real gdp growth has been revised down substantially in 2019, as likely in 2020. tom: it was extraordinary yesterday to be with john farrell listening to draghi and watching the immediate market reaction. eu stocks down. just the new immediacy on deutsche bank and commerzbank is really something, isn't it? francine: it is really something. we did see quite a sharp

reaction to what mario draghi was saying yesterday and on the commerzbank-deutsche bank, we understand they are talking again. we are still tried to figure out if there was actually m&a or consolidation between the two groups, who would benefit the most. tom: right now on jobs day and we will speak wages in a moment with tom poor sally -- with tom markets,of rbc capital their chief economist, but i want to go to the global slowdown. rbc, the royal bank of canada, everybody is in this together. how is canada linked to the draghi actions? how is america linked to the draghi actions? tom p.: we are seeing a global slowing. it's quite clear in the data. the tone that came from draghi yesterday was not particularly

surprising. i would say even in canada, where things have their own set of challenges, i think people will start to push out the expectations for hikes there, too. the one country that would seemingly have the ability to actually continue the process of raising rates, the united states, is unable to. that theseclear events are weighing on the thought process. i think for this point it's foolish to think you will see additional hikes. tom: when the facts change, i change. do you just assumed stronger dollar pushing against a consensus demands weaker dollar? tom p.: i think that's a completely reasonable call. we have the dollar moving more sideways over the course of the year. tom: sideways is not a weaker dollar. tom p.: exactly and i agree with the call. it's really easy to say on the back of a sort of the relative

strength of the united states that you could see some strength there. even for the united states, we are moving into sort of a more trend like environment from a great perspective, which is to say -- growth perspective, which is to say we will be slowing down. francine: what does a policy mistake from the fed look like at this point, tom? tom p.: it's probably not what everybody is thinking. i think a policy mistake from the fed today looks more like they have not been enough and what kind of imbalance to the create down the road -- do they create down the road. that's based on argued that economic activity will look pretty good in the united states over the course of the next year -- on our view that economic activity will look pretty good in the united states over the course of the next year. if the global slowing becomes more pernicious, you could strike that from the table. that is not our base case. our base case is fed should continue the process of normalizing rates and the risk

if they don't is you do create some imbalances down the road. francine: pernicious is a great, great, great word, tom. it's an economy thaty glides to something more pernicious, more sinister. where do you see it first? tom p.: i think the likely corporate will be in the credit markets -- culprit will be in the credit markets. we always talk about this idea of financial conditions tightening. i think you have to look at things like -- and it's funny, we even had a fed official talk about this recently -- triple b plus. triple b plus credit. let me be very clear on our view on that. it's not just the issuance that is a video, but how are they -- that is a big deal, but how are they issuing? and i want to jump here

moved to what we will talk about with you in a bit here. where is the wage growth in america? i get tons of mail, guys like porcelli are delusional. is it there? tom p.: it is there. even when you sort of breakdown the aggregate and look at high-paying jobs versus low-paying jobs, it's present. wage pressures are present. it may not be wage pressure that people want to see, but that's a philosophical view. the reality is that all of the which numbers are moving in the right direction -- wage numbers are moving in the right direction. tom: it's a philosophical "surveillance" today. francine: maybe the central banks are more philosophical than the markets. tom porcelli of rbc stays with

us. we are getting some pictures of protests and strikes in madrid as part of massive marches at women's workers strikes across spain to mark international women's day. if you look at international women's day 2019, there are celebrations, but also protests taking place in countries as diverse as iceland. a picture coming from madrid. later on we have an exclusive conversation with the finance minister of sweden. magdalena anderson joined daybreak america's at 8:30 p.m. new york -- a.m. new york. this is bloomberg. ♪ this isn't just any moving day.

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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 "bloomberg surveillance." tom and francine from london and new york. germany's two biggest lenders are reportedly stepping up merger talks. deutsche bank and commerzbank

have intensified informal discussions after the german government put pressure on the firm's to strike a deal. joining us now from frankfurt is jp barnett, our banking team reporter. what is intensifying talks actually mean -- does intensifying talks actually mean? could it happen quickly? >> i would love to know what intensify means in that case, because we are reporting about the lenders talking for almost a year now. i am not saying any real progress here -- seeing any real progress here. they have now a bigger mandate from the board and management to say ok, let's have a real, closer look on how we can make looksappen, what it like on the operational level. francine: give me a sense of who actually wants this? is this political pressure? if it is only political pressure, will the chief executives go for it? >> i guess it's a little bit of

everything that's happening right now around banks. political pressure right now is certainly a think. thing.man government -- the german government still invested in a stake. they want to get closer to a solution in it. we have the environment of depressing margin, declining revenue, so that the only hope is to work on the cost base and what is better than a merger here? tom: work on the cost base. there is that anglo-saxon phrase. 140,000 bodies. anytime you do a synergy, it's 15%. that's 21,000 bodies out the door. can you or anybody in germany actually frame the idea that there would be a merger in 15, or 20, or even 25,000 bodies would go out the door? is that socially feasible? >> yes, that's ironic that the

german government is pushing for causing --that bush push causing these jobs most likely to go away. in germany it's not that easy to push bodies out the door. there is a huge amount of costs upfront coming what that, -- with that them up because you have tough labor laws in germany. the cost saving aspect is down the line, like five years, i guess. tom: tell us about the revenue visibility. going forward draghi came out yesterday with the doom and gloom. do you just ran down the revenue view -- ramp down the revenue view forward? >> it depends on what happened on the trading side of things in the first quarter. what happened yesterday within the ecb, i called a lose-lose for everyone.

arenorthern european banks at this point disappointed because the rate hike perspective, if you want to call it that way, is pushed out further. curve is flattened. that's bad for banks. i guess many of them will alter their outlook to the downside in the first quarter. tom: great uptake -- update. both stocks trading down a little bit, which surprises me a little bit. right now and with the story, the update from washington. >> former trump campaign chairman paul manafort got a break from a federal judge in virginia. he could have gotten up to 24 years in prison on fraud charges. instead, he got less than four years. manafort faces more prison time next week when he will be sentenced for conspiracies linked to a secret lobbying campaign for ukraine. norway taking a half step towards divesting oil stocks in its wealth fund. its bears the biggest integrated

producers. norway's finance ministers says the goal is to reduce the vulnerability of the country's wealth to a permanent oil price decline. spacex hopes by the summer this new crew capsule will be caring flesh and blood astronauts. a test dummy was the only one on board when the capsule undocked today from the international space station. for of the last eight years nasa relied on russian rockets to take astronauts to space. now it relies on spacex and boeing to do the job. global news 24 hours a day and on tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you so much. how about single bus chart? we are thrilled to do it with on economist who wrote this up. this is the inflation adjusted all in wages and benefits. eci less thei --

core service inflation we all feel. it shows the massive wage gloom we have seen. map, we are doing better. i don't care, tom. sustainingy hope of 2003, 2004, 2005? tom p.: just to make sure we are bringing this conversation. . this is the -- full circle. this is the philosophical part of it. there has been improvement in wages. the reality is that the pieces are in place for it to happen. the labor backdrop is incredibly tight in the united states. on our forecast you can usually make the case that the unemployment rate gets close to 3% by the end of the year.

tom: 3.0? tom p.: you will get close to it, not to it. that will continue to put pressure on the wage. i think you can get pretty darn close. tom: i'm going to read this book. screen is we are aggregating all of our data. you have been courageous about this. h people are really getting a wage pop and other people are not. it's all aggregated malarkey. the house are getting it all, right -- the haves are getting it all, right? tom p.: it is aggregated. we are looking at this aggregated data in a macro sense. when you break it down, if you look at the lowest paying job industries right now -- tom: what about the middle? tom p.: so let me make this

point. the lowest paying job industries are actually seeing wage pressures, as are the upper end, and everything in between. there are wage pressures. is it the wage pressure that people want to see? i would argue that the answer is always going to be no. the wanting more part of it is, let's have a beer and have a conversation about that. if you just want to have a conversation about -- tom: we do not have a beer on friday. continued, francine. francine: a beer or beverage of your choice. does the world have an inflation problem and actually could it change very quickly? tom p.: i think the world does not have on inflation problem. united states is sort of a great microcosm of this idea. we import this inflation. right. here's a great way of driving that home. we are a service dominated

economy in the united states. ask yourself, where is services inflation, core services inflation? is running at 80% pace -- it is running at eight 3% pace -- it is running at a 3% pace. because we are serviced dominated and we import most of our goods, that i think really drives home there neatly this idea that -- very neatly this idea that we are importing disinflation from all corners of the world -- this inflation from all corners of the world. i do not think the world has been inflation problem. you have a full of scarves that is in the midst of re-steepening in the united states -- you have a phillips curve that is in the midst of re-steepening in the united states. you have this idea that the full of scarves is receiving -- the full of scarves is reese --

receivingurve is -- re-steepening. that camp --rly in our team clearly in that cap. -- camp. tosey stevenson will join us talk about the core labor policy of united states of america. do stay with us on this jobs day. this is bloomberg. ♪

♪ tom: "bloomberg surveillance." good morning, everyone. . extraordinary. 48 hours i'm tom keene in new

york. mr. draghi and then there is the backdrop to this. one of the great things we take pride in is the theory and thinking behind all we talk about in the markets. you can do that with betsey stevenson. she is at michigan, where she is a professor. a former chief economist for the department of labor but that hardly describes her impact on the raging debate of america's labor fabric. i am worn out with everybody telling us it's a tremendous america. without question, the mail i get the greatest on his your world, which is the inequality within arleigh burke economy. is a true -- within our labor economy. is it true that the haves are taking it all? betsey: that's what we have been seeing, that income gains have been going disproportionately to the top. we have seen some income gains go throughout the distribution.

policies that raise the minimum wage of across the country have done a lot to lift wages across the bottom. since 2000 we have added $10,000 in real gdp per capita. each person in the country, we are producing $10,000 more stuff, and yet real household income has been largely stagnant. so where is all that money going? it's all going disproportionally to the top. tom: part of this is the medical industry. 19% of our output is going to america. are we missing the wage growth because it's going to medical growth and medical benefit growth? betsey: well, there is certainly something to be said for the fact that health care has become an increasing share of household budgets and we do not actually see it in household income because a lot of people, those costs are being paid by their

employer or the government for medicare. some of those costs we do not see and that's definitely been part of the problem that that's not the whole answer. francine: given what you have just said about the distribution concern or the fact that much more money is going to the top 1%, but does america want it change -- a change? what that basically overshadow anything when it comes to -- will that basically overshadow anything when it comes to economics over the next two years? betsey: i think america does want a change. they want an economy that feels a lot more fair to them. we could do some redistribution that everybody wants. one example, paid sick leave. the vast majority of americans believe in paid sick leave. if we give everybody paid sick leave, that's a small token way of redistributing and showing

that the gains are broadly shared. as we get richer as a society, we can't afford to pay parental leave, sick leave it. those are ways -- sick leave. those are ways in which we improve prosperity. we are becoming a richer society. let's make sure you can take paid time to spend with your family. that's one small step but i do think people are increasingly frustrated. what they do not understand is what needs to be done. there is sometimes just this anger, because what they see as they are not getting their fair share, and they are right. francine: is the u.s. creating quality jobs? are people trained to do the jobs that there are openings for? betsey: so that's a broader question. are we creating quality jobs? absolutely. we added over half a million jobs in professional and business services in the last year.

that is a major source of our exports as well. people often think we export cars or stuff, but one third of america's exports are services. they are often in services like business and professional services. we sent a consultant to another country. the thing that concerns me is that the u.s. used to lead the world in having the most educated workforce. ur comparative advantage in the global market has always been having the most skilled workforce. we are losing ground to other countries. nearly two thirds of students start college. 36% ofup with only people in the late 20's and early 30's with a college degree. what happens? they run into money -- run out of money, run into trouble? they have to -- trouble. they have to drop out because of financial challenges, personal challenges. many students are parents themselves.

we do not provide the infrastructure for people trying to go back to school as parents so they wrestle with childcare and housing. they end up dropping out. we are seeking i think one of ing i think one of our important in then chooses -- advantages in the world. tom: one of the important hallmarks of your work is the -- fromure some pr guy amazon is going to call me and say i don't know what i'm talking about. not that the system could be gained, but there are incentives for business to say raise the wage, but change the mix of that wage or the hours worked. that's to be expected, isn't it? i think the other

way to think about it is that the economy is constantly creating and destroying millions of jobs. what we want to see is the technological change -- that technological change allows the mix of jobs to set higher than jobs. it may be the case -- higher-paying jobs. it may be the case that amazon needs fewer workers and will pay the fewer workers more money, but the technological changes, amazon is also creating lots of people to branch out, create their own businesses. i do not worry about any particular sector losing jobs, as long as we see no job creation occurring and -- in job jobtion occurring -- net creation occurring. even if they will need fewer of those exact same workers in this

economy where we are creating fewer jobs. what i want to see is wages go up. francine: that was betsey stevenson joining us this morning from michigan. later this morning we speak with the norwegian finance minister at seven: 30 a.m. in new york, 12:30 in london and this is bloomberg. ♪

♪ >> that's garbage. [laughter] you are with jay powell on this one? helpising taxes does not modern economic growth and more importantly, yes, i'm a big believer that deficits matter. deficits are going to be driving interest rates much higher and it could drive it to an unsustainable level. tom: in class at princeton. they sit there and go, it's garbage. first on modern monetary. -- theory.

i want to state there is a legitimate group saying we could have a better, more efficacious fiscal policy. >> what we have to keep in mind here is that during the last economic downturn central banks did the bulk of the heavy lifting. we had some significant fiscal stimulus in china and the u.s., but even the size of the u.s. package was not all that large considering the size of the economy. tom: there was committee -- timidity. >> exactly. what's important in the debate is the notion that in the next downturn central banks will not have as much ammunition to fire at the problem. we do not know that qe will work as well the second time around and a lot of central banks do not have a lot of room. tom: do you want to say garbage? >> the problem with mmt is that it works in till it does not --

until it does not. when it stops working you are argentina, venezuela, or some other country. francine: mnc economists are economists aret arguing that because the u.s. borrows in its own currency, it could print money to cover its obligations and cannot go broke. when could that change? >> that's an over several kitchen -- that's an oversimplification. for the private sector, that's not necessarily issuing credit in that thing currency or is more sensitive to international exposure, the private sector will be clobbered in that type of environment. i think that is the most important consideration. francine: right, but you are saying it's an oversimplification so that people cannot latch onto it? or is this something that would change the way economists think? i think it's an

oversimplification because we are simply looking at the sovereign issue of credit and not considering a much more complex financial landscape. that's why private sector folks are very alarmed by these calls. tom: they are in might hear -- my ear. would you shut him up, it's jobs day. >> full me once, shame on you, for me twice, shame on me -- once, shame on you, fool me.wice, shame on if your view is that the labor market is creating jobs at the pace of about 200000 and month, you should adjust your payroll call by 50,000. that's what we are 250,000 on payrolls. it's simply adjusting to this

bias. tom: is laurence fink going to speak to a happy larry kudlow today? >> labor fundamentals are strong. while we have lots of room on the external periphery, the domestic economy is in sound condition. it will be this year. you are getting labor inflation and will be getting price inflation. tom: i don't care what side of kudlow debate will ?eyond -- be on he will say supply-side will fix mmt. stay with us. it is jobs day. this is bloomberg. ♪

alix: jobs day -- brace for impact.

after january's blockbuster numbers, we await the february numbers. a study says the economy is 12% smaller than estimated. norway shuns oil. the sovereign wealth fund will sell upstream oil equities to hedge against risk. david: welcome to "bloomberg daybreak." it is jobs day. it is also international women's day. we've been taking a look at some of the numbers. behind,e still a ways but they are catching up. alix: david is our token male on the program today. this is a great report from bank of america. there's a quality -- equality for women, it could be a $28 trillion