jean-claude juncker at a joint press conference after discussions taking place in strasburg, france. they have come to a conclusion that resulted in joint, legally binding instrument to do the withdrawal agreement on brexit. essentially taking a look at the irish backstop, the legal obligations and the insurance nature of the backstop. theresa may say it is an insurance policy but it it can be replaced by something else and both parties have legal ways to get out of it if one party decides to use it as a threat. lots of questions still remain. let's go to analysis. , a lot of skepticism in the chamber when they were going through this proposed instrument being drafted, waiting to be to the attorney general

as well. has anything really meaningfully changed from what you heard? >> not very much. it is clear that theresa may did not want to say the obvious, that not a single word has changed in the withdrawal agreement. you have is a supplement to the withdrawal agreement. hypothetically, the u.k. could, under its own interpretation, seek a unilateral exit from the backstop. require, essentially, legally interpreting things like best endeavors and the u.k. having to prove that e.u. was acting in bad faith. this is incredibly difficult to do in any circumstance. at the bottom of this, i regard this as a legally binding figure leaf that i doubt will be enough

to win the vote in the house of parliament. haidi: that was going to be my next question. is it politically binding, enough to give her little more leverage? -- a little more leverage? think, the vast majority of the members of her own parliament have voted against her deal the last time. they have said no, we need therial changes to withdrawal agreement. she has not achieved that. also, it is clear that the irish government has signed off on this. they are quite happy with it. thatnk that will indicate they will be quite unhappy with it. way for theresa may to find a majority here.

that important to know there will be no more in negotiations -- no more negotiations based off this. is saying this deal or no brexit at all. what is next? next isnk what is whatever happens in the house of -- mys tomorrow, we will baseline will be that she loses the vote. then it becomes important. there is a theory that says if she does not lose the vote by very much, maybe she can come the for a third time after eu council on the 23rd. see is if she loses tomorrow, there will be the vote scheduled for wednesday that will probably back no deal or

oppose no deal. on thursday, we have the scheduled vote for the potential extension of article 50, which would be the big vote. i predict that will pass. the question becomes, what 27 putons will the eu upon approving such an extension? i think you will look at quite a teresa mae does not have her majority for the withdrawal agreement. shery: the attorney general will come to his own decision on the deal. there is not much of a change here. what more can we expect? if mr.ill have to see cox is a legal scholar or a politician. from a legal point of view, it is difficult for me to see a material change, but obviously, this is the last chance.

the vote tomorrow will be very important. if he were to change his legal advice, it would be helpful for theresa may. it might get her close to majority. ultimately, i do not believe this will be enough. haidi: if you take a look at the various flowchart options, no extension,-term second referendum, a longer extension. what seems more likely from here on in? that you read the letter was referred to, that he sent to the council president, it says very explicitly that unless u.k. holds european elections in may, they will only have a short extension of article 50. i can already imagine the political scenario where the u.k. is willing to participate in the elections in may.

all the ideas of a long toension that you hear basically give time for a second referendum, i do not think that is very credible. the possibility of that is very low. i continue to believe that there is no majority for no deal in the british parliament. that they believe chances of no deal remains low. mean less than 10%. my baseline remains that the withdrawal agreement past, but probably accompanied by a softer brexit political declaration with large support from the labour party. it will entail a split in the tory party over this. that, to me looks like the most likely way forward. shery: we are seeing the british

pound fluctuating, sitting at 132 at the moment. the talks were focused on how to negotiate their future trade relationships. when it comes to the economies of the u.k. and the eu, where do we stand as the brexit process unfolds? points to ahe arrow closer relationship in the long run. we are looking at something that at the end of the day, whether this is decided before brexit actually happens or as part of the future negotiations, think you are looking at a permanent customs union and a defective -- de facto number ship. any result would be devastating to large parts of the u.k. economy. you are starting to see that effects.

very though levels of corporate investment, companies relocating and the like. in the long run, no u.k. government can afford to ignore it. wrap up theto conversation, we heard from the policymakers saying that a withdrawal agreement will not be enough to get foreign investors back to the table. is there really a threat of longer-term uncertainty? where does that leave the boe? >> to boe basically has the same conundrum that it has always had. it has had to plan for the worst possible outcome, which is no deal. in that situation, the bank of england has one basic choice. do we basically try to stabilize the economy, the gdp, the unemployment rate?

that means going very easy and easing monetary further. we try to stabilize inflation? likelyface of a significant drop in the pound and a new deal scenario, we entail raising interest rates. i do not think that has changed. shery: thank you so much for your insight and putting all this into context. to sophiestraight kamaruddin and hong kong for a check on the markets. we have seen them reaction in the pound. sophie: the pound adding .1% against the dollar, jumping as much as 1.1%, extending for what we saw as the euro is sliding to a low against sterling. they will not be a delayed to the brexit vote, but it looks like the market is seeing it

unlikely that a hard brexit will materialize. let's check on how the stocks are faring. seeing stocks and wellington climbed this morning up 1% -- .1%. broadly, we could see risk appetite return, seeing chinese stocks outperformed. i want to quickly look at one stock in sydney. britain's smaller lenders. 2016, we are seeing this stock climb. --ing the outlook may be improving given the development over brexit. they are the most exposed in terms of outcomes and downside

risk to the brexit story. haidi: sophie kamaruddin there in hong kong. let's get to first word news. >> oil began the week on the rebound as saudi arabia moved to extend a deeper supply curve. threatening production in venezuela. rising 1.2% after falling last week. oil has traded in a tight range amid output curves. there are fears that a global slowdown might hit demand. >> a slowdown dictation coming .rom china china,ee a slowdown from this may impact our demand expectations. for this year and maybe beyond. >> president trump has presented

a budget that seeks one of the largest cuts to domestic spending while boosting defense coffers and adding $8 billion for his border wall. of $1 trillionit until 2022. they say it is headed for almost certain rejection and could trigger a new government shutdown. boeing was the biggest laggard today as it tried to deal with a crisis of confidence in its 737 max eight. the plane remains airworthy despite a second fatal crash in five months. regulator says it will demand flight control enhancement by april. some regulators have grounded the plane, which is the best selling aircraft, generating almost one third of its profit. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i'm jessica summers. this is bloomberg. be talking about why any trade deal between the u.s. and china be fragile and brave. the nextr guest says major event will be a recession. solutions multi-asset see is a downturn coming. this is bloomberg. ♪

shery: counting down to asia's major market open this morning. we could see a second consecutive session of gains. this on the back of predominant losses last week for the nikkei and japanese stocks in general. 111 .27.t our next guest says it is behinde the fed could be

or ahead of the curve. bit withcuss a little the chief investment strategist. we know that patience is the name of the game. the only other question we are waiting for is when they unveiled the plans for the balance sheet. it feels like every day, we are getting downgrades to global growth. i think it is great news that they decided to when they did. been hard for the economy to get over that, in light of the global slowdown. i think that they will slow down the balance sheet before the year is up. the actions that they have taken to ease back will be enough to keep us out of recession, it is unclear.

this year, we should be in good shape. at u.s. equities. it was nothing to write home about. the worst all year. we did see a rebound breaking through. is there really a meaningful catalyst? what are investors looking for? if you look back, 14 months, we are basically at the same level as he were in january 2018. we have been flat for 14 months. thehe plus, you still have market working its way higher. on the negative side, you have the global economic slowdown. i think we can continue to work our way higher as long as you do not going to recession.

prices 31%rive stock in one direction or another? it will be more likely when a recession comes. it strikes me as the next big mover of the market. stock marketr the is stuck in that range, we keep getting mixed messages. tribes on bloomberg showing that we have seen retail sales stabilizing for the month of january coming after an abysmal december figure. what can we take away from these mixed signals that we are getting from stock and eco-data? >> it has been a remarkable several months globally. you had that bad export number. if you average it in with prior months, we had a lousy job support but a strong month before i. think it is a little premature

to decide what direction we will go. when you average it all out, we are still in pretty good shape. probably market will work its way higher at a modest pace. shery: when it comes to consumer sector, things look strong. the stocktion, in markets we have seen consumer discretionary sector outperforming every other sectors. does this give you more confidence about the health of u.s. consumer? >> u.s. consumer has stayed strong. retail sales were probably hit a little bit with the government shutdown and the drop in the stock market, but we will continue to see solid consumption growth, as long as we have nearly full employment and starting to cease wage growth. it is likely that the consumer

will hang in there and drive the economy higher. comingis the risk outside the u.s. coming stronger? >> you are looking at the most recent meeting that was fairly positive. at a is slowing precipitous pace. they have taken policies to prevent or reverse that decline in growth rate. they are throwing everything they can, trying to stabilize growth. that said, once you start to slow down, it tends to continue to slowdown. ofhink you have to be wary the possibility that global growth pulls the u.s. in a recession somewhere down the road. shery: does this remind you of 2015 when they had to postpone rate hikes until december because of external factors? think the fed has made it

clear that they are thinking in a global context. that was one of the reasons they cited, with that 180. clearly, global context plays a role there. they will probably find themselves behind the curve. us.y: thank you for joining we can get the stories you need to know to get your day going on your addition of daybreak. go to your terminal. it is available on mobile. you can customize your settings on thethe news that -- assets that you care about. this is bloomberg. ♪

haidi: this is "daybreak: asia." u.s. aviation regulators

has said that they anticipate mandating changes to boeing 737 max aircraft by april after a second fatal crash and five months. the faa says the plane remains airworthy and they have no intention of following china's lead in grounding it. crashhiopian airline killed many people. stephen engle, the reason people because thisned is board similarities to the lion air crash. faa --directive from the if they had issued a grounding order, that would have been issued to global carriers around the world and they would have been compelled to ground themselves. it is basically china, asia, ethiopia, cayman airlines and a few others grounding orders. it has not been a blanket order.

the faa is saying there is no conclusive evidence linking the airline andopian that lion air crash in indonesia, even though there has been widespread speculation. right now, it is too early in the investigation to link them. signaling that in this global the 737- stating that max eight continues to have airworthiness. they are not issuing that blanket grounding. boeing is working on improvements to the flight control system, the stall software that had issues in that lion air crash and the faulty sensors that perhaps lead to the in thet of software cockpit, that led to the pilot struggling to control the aircraft in october.

the faa also saying it will publish directives to operatives no later than next month. no later than april. confident inwe are the safety of the 737 max and work of the men and women who build it. asian countries, indonesia and china grabbing their flight. we have been seeing that u.s. airlines are sticking by billing right now. people are wanting to know if scheduled flight is on the max. are we going to see them grounding claims because of passenger concerns? >> it is possible. we are seeing a number of different comments. the airlines, including southwest, which is the biggest purchaser of the 737 max eight

-- they are confident in the safety of the fleet and currently have a fleet of 34 737 max eight in operation. heard from the u.s. flight attendants association indicating that some flight attendants have voiced strong learns about buying on the 737 max eight. keep in mind, the stock did plummet, the biggest fall since lion air crashed in october. this is their cash cow. nearly one third of operating profit comes from the 737 program. more than 100 grounded outside the u.s., mostly in china. also, ethiopia, indonesia and boeing is slated to deliver another 558 over the next 12

months. this is quite a headache or boeing. thank you so much. lots more to come on "daybreak: asia." this is bloomberg. ♪

jessica; new research by bloomberg economics shows global growth at its weakest since the financial crisis a decade ago. production predicts growth at a quarter of a percent. seeing to the sour mood that momentum in the u.s., canada you the u.k., and is slowing. there are signs that china is stabilizing stop after a plunge in december that was larger than originally reported. 0.6%.lue rose

sales in the control group subset which excludes food services, car dealerships and gas stations rose 1% of topping expectations. one of africa's lauren -- longest serving leaders is bowing to popular pressure and will not seek reelection. persuaded him to abandon his campaign. -- how it could be identified and retreat through browser software. that universal connectivity is

what drives much of the world today. declined to patent his idea and offered it royalty-free. global news, 24 hours a day on twitter,@tictoc on powered by more than 100 journalists and analysts in over 120 countries. in on the market in hong kong. >> we will see how the aussie market is faring. the s&p 500 adding 0.7%. pretty much all sectors are in the black this morning. the aussie dollar, little change. now, flipping the board to check in on some stock movers of not. 7.8%., rising in the wake of announcing its

capital requisition plans, -- athensn to buy -- at ubs decision is seen as a strategically positive move but is expected to dilute fiscal year 2019 earnings per share. without any apparent catalyst this morning, the stock is downgraded to sell at morningstar. i want to highlight cybg. britain's smaller lenders. stock perhaps finding support on the latest brexit development. let's check in on how the pound is faring. cable is on the rise. rising as well to a 22-month high above the pound.

we have these reports on the back of the news that there will be a delay to the brexit vote. i want to jump into the terminal to show you what is going on. -- rising.ng cable higher across the curve. the one week gaining ground. we have it climbing to the highest level year-to-date, the highest since december 11. shery: for more reaction on the brexit saga let's bring in kathleen hays. we couldn't even see an agreement -- these are legally binding changes. where are we now? >> we had an interview at the top of this hour with peter kierkegaard. he is very optimistic on making any progress at all.

we are all scrambling to put this together. it, they didn't change the withdrawal agreement they have added something specific on the irish backstop. it's true that nothing changed in the deal but this is the thing that they keep getting stopped by. the fact that they have this extra wording for the irish that thewhich says u.k. in charge by the end of 2020, saying that the eu has not made its best endeavors. jacob kierkegaard said it is hard to define. i'm listening to my producers as

i talk to you at home. somethingcome up with that is exactly what parliament said that they wanted. this is what theresa may said moments ago at this press conference. >> one of the request that parliament had, parliament came together and had a majority vote be, is that it should possible to replace the backstop with alternate arrangements. we hope to have a very clear timetable that enables the backstop to be replaced as defined with alternative arrangements. >> she also said that we have secured it very clearly but the backstop cannot be indefinite and cannot become permanent. they said so may times that it is an insurance policy. let's listen to what jean-claude juncker said. policy, an insurance the backstop, nothing more,

nothing less. it is not meant to be used. if it ever were to be used, it would never be tracked. >> i love metaphors and i think that is a great way to understand this deal. we are putting this in their telling the world that we are certain we can figure this out by the end of 2020. young claude juncker said, let's be crystal clear about this choice stop the big vote is tuesday or brexit might not happen at all. enough signs that this will consider some of the pro brexit fans to vote for it? they're getting closer to a point where they might not get any deal.

it raises the question of a hard brexit. the worst thing would be leading to a second referendum. shery: kathleen hays at global economics and our bloomberg policy editor. let's talk to christopher smart. we are eager to have you with us. prime minister may calling us legally binding change. anything happen that might ?hange the outcome >> it is hard to tell. we are coming down to the wire now. she's trying to bolster a very weak hand that she was dealt, there are no solutions to this. with all due respect our british friends, you look at them giving

interviews, and they look like exhausted wrestlers wanting them to be done. i think there will be an extension because it is hard to look three -- look through how all of the arrangements can be put in place before the end of the month. it seems like she has been able to bring something back to london from brussels. shery: our previous guest calling it a formulated political fig leaf that could give her more leverage. i wonder about the european side. we have heard the same sentiment from jean-claude juncker saying this is the best deal. there will be no more negotiating after this. we have heard this before. how much leverage does the u.k. have over europe? given that we know trade flows and growth is slowing in europe?

>> that is what is increasingly donning on the british political leadership. there leverage is quite limited and rapidly fading. the european union has carved or itself a clear path to exit from the u.k. if they don't want to excepted on those terms, it is hard to renegotiate something that doesn't exist. in the sense that having access to all of the european union's benefits without being a full european member is not something easy to negotiate in political or economic nature. jacob kierkegaard is one of the great scholars who follows this day-to-day. right now it appears as if there will be enough backing for an extension of the deal. that is probably what i would expect going forward, some way

to extend the deadline beyond the end of the month. we will see if the fig leaf that she brings back from brussels is enough to bring people around. in any case, it is an extension for companies in business in britain or looking to invest, the uncertainty is likely to continue. we don't know what the final outcome will look like beyond 2020. shery: there might be a short-term rally in the pound or some optimism in other british assets, but is a withdrawal deal going to be enough for the restoration of investor sentiment in the medium-term, let alone the longer-term? >> i think the uncertainty will persist. if you are a company that has been embracing, you have to continue to embrace. putting a lot of your working cash flow to work on creating reserves, buying supplies, bank

liquidity. englandthe bank of requiring banks to boost reserves and liquidity in case of a sudden shock to the system. that moment of racing to disaster will have to continue for several more months. in terms of understanding what the regulatory relationship will the eueen the entities, and the u.k., that will remain that way for a long time. it is easier to say that the u.k.'s relationship with the eu will be more or less what it has been, just more complicated and more expensive. there will be more paperwork to file, more rules to follow. from a business point of view, it will be a more complicated world. the general flow of goods and services is likely to be more or less the same as it is now.

>> let's talk about the broader economy. this couldn't have come at a worse time. we are seeing european downgrades really missing estimates. it seems the global economy is slowing down. how problematic is the pace of the slowdown at the moment? , it's not news that there is a slowdown. atgot news of that last week the ecb-esque about downgrade of european growth, a lower target out of china, and the jobs numbers out of the u.s.. what is more important from an investor's point of view, you have policymakers offering support. in chinaonetary policy with the u.s. now, with the fed on hold, in europe, and japan. we have fiscal policy that is

supportive, certainly not in consolidation mode. you have some scope for the global economy to react to those government measures to support cushionor at least to and slow the deceleration. i don't think it is easy to make a case that it is headed for recession. i think we have governments and policymakers pushing for the other direction. shery: it is helpful to see it when you put it into the bigger context. listen to what he said over the weekend. >> i think growth this year will be slower than last year. last year was the most growth we have seen since the financial crisis. this year i expect growth will continue to be positive and at a healthy rate. >> should we be looking at the global economy? especially with the u.s. economy still looking solid and the glass being half full.

>> they say never find the fed. i'm not one to disagree with jay powell. the outlook for the u.s. continues to be good. if you look at the jobs numbers, look at wage growth, look at corporate profits, look at corporate valuations, the outlook for an investor in the united states is still good. it should underpin confidence for the growth path. the main thing under this is china and when we will see the results from the moves from chinese authorities to boost their slowing economy. it's still a little tentative right now. the export numbers earlier this year were very bad. that has to be explained from seasonal and other issues. more important is that you have a government with tools, with resources to respond to slowing growth, which will play to the

chinese economy. the slowdown in europe is related to slowing demand in china. germany is related to its capital exports. if demand from china stabilizes, we should see that play through to europe, to japan, to korea, to other parts of the world. if you believe that the outlook is relatively solid, i think we are looking at a pretty good year in 2019. shery: for those who are feeling sanguine about a medium-term trade deal with china, ignoring the fact that any such deal would be ephemeral, given that the longer-term relationship between washington and beijing will be one of tension and competition. anybody who has looked at the u.s.-china relationship understands that any deal has to be ephemeral, or a temporary truce, if not more

than that. i think the differences, as you real.out, our real -- are it will take a long time to come to some understanding between the sides. the market has been focused on tariffs, not just the current ones, but the threat of new tariffs from the united states. stance on thates has been it is not in their interest for that to expand and continue. i think that the chinese authorities are eager to get this story off of the headlines before the u.s. presidential election kicks off. that will be one part of the debate going on. the body language, the mood music, is that we are headed to some sort of temporary agreement. they have made

progress on some issues. that will give the market some relief that the -- if the current tariffs are repealed, no new tariffs will come going forward. over the longer-term, we will still be talking to china about all of these issues, government issues, government subsidies, intellectual property protection, and all the differences that separate the countries. shery: always great to have you with us. we have breaking news. a brazilian airline has announced suspension of flights of the 737 airliner after the second crash of one of these planes over the weekend in five months. china has ordered all of its boeing 737 models to be

grounded. next, tesla makes a u-turn, changing course on closing physical stores and prices. this is bloomberg. ♪ ♪

>> tesla has done a u-turn on its recently revamped business plan. a week and a half ago, shares plunged 8% after the company said they would close most of their stores and shift to online only sales. now there is a breeze change. >> a u-turn on a u-turn. february 28 is when elon musk and tesla said they would shift to online stores and drop prices. earlier today, they said, we are going to change tack. some folks have said because maybe the share price reaction was negative instead of positive. what will happen? we saw the share jump 2.4%.

this is music to the ears of investors. it is the highest since march 1. many of these will stay open. no actual numbers. much. are not falling as prices anraise average of 3% higher. we are only going to close about half as many stores, but the cost savings are only about half. those will affect some variant styles. the $35,000es, model three, that will not be effective. analysts are concerned. spontaneous leadership doesn't lend any confidence. it looks like amateur hour.

that is one to raise eyebrows. response saying this is the right course of action. shery: we haven't had a positive headline for tesla with regard to the supply chain. what are we hearing regarding the batteries? >> it is the battery and it is in china. focus. the company in it is tesla ask about number one battery maker. they are reportedly in talks to be the number one battery maker for tesla. that these guarantee will go anywhere. haven't said that they signed any business agreement with tesla so far. it would put see atl on the map -- catl on the map in terms of the global battery making sector. tesla has said they will be making their batteries in china

and they need a lot of batteries. shery: more to come on daybreak asia. this is bloomberg. ♪

haidi: this is daybreak asia. shery: i am shery ahn in new york. let's preview the market open. >> after that positive read from wall street, teachers are hinting that the nikkei could add more than 2.1% at the start of cash trade while the yen is slipping for the second day after the u.k.-secured changes to the brexit deal. ul, we will be watching these shares after the advisory theyiss recommended that vote for two nominees to the board. there has been a lot of

speculation about what direction that negotiation may take. stocks to watch in japan, we are watching machine tool makers. and houma after a trade group reported that orders fell 30% last month. that would be the biggest drop -- octoberer 29 2009. slump -- affecting the japanese economy in the first quarter. the chinese trade story as well as concerns around brexit. there will be a lot of focus on how companies are exposed and react to the latest developments around brexit. sophie there with a look ahead. hour,g at the next daybreak: asia will be joined by

the next guest. shery: and we'll be on a little bit later after that. the market opens next. this is bloomberg. ♪

sophie: welcome to "daybreak : asia." ♪ strengthens, winning concessions or europe and [inaudible] growing concerns. about growth, the

weakest conditions as the financial crisis. sophie: at the gate in tokyo we are seeing gains for the topix and nikkei. the yen is under pressure training at 111.31. checking in on stocks in korea, someospi gaining, improvement for the korean won. we had some lines around south korea. also keeping an eye on vstoxx on speculation that they appears toorth korea be operating a nuclear facility. a two day decline

while the aussie dollars looking little changed and we are seeing stocks edge higher by .20 1%. a quick check on early currency moves of note, cable on the rise jumping as much as 1.1% against the dollar. shy of that 133 handle that we saw gains. to a 22ve it rising month high against the euro hovering around the 85 handle. now looking optimistic it will an fx a hard brexit and strategist says he sees the path of moving toward 135 as we look like a hard brexit may be avoided. haidi: theresa may has one changes, raising chances that the deal passing parliament on tuesday. agreement on legal moves around the issue of the irish backstop. >> one of the requests that parliament has that parliament

came together and had a majority --e for was it should be possible to replace the backstop with alternative arrangements. we have secured a clear timetable that enables the backstop as defined currently to be replaced with alternative arrangements. >> let us be clear about the might not happen. >> we heard a great deal of skepticism in the changer -- chamber. is there anything near here? deal butave their neither side can agree what the deal amounts to. theresa may says it is legally binding changes but the she was sentat into change, that has not changed. enough year in terms of

legal language, legal assurances, clarifications, guarantees that for those members of parliament who are looking for a way to climb down from the opposition, there is enough there to do, the big test is whether the attorney general will come out on tuesday and say he has changed his mind on the deal. he was one who had raised concerns that the irish backstop u.k. in the eu's orbit forever. we have a deal but the drama is not yet over. on tuesday we will have the vote which is looking to be a pretty tight vote. in january, the brexit deal with rejected by a historic margin. we will have a rerun of that on tuesday and the drama continues on tuesday. changes enough for this meaningful vote on tuesday? what can we expect given some of the reactions we have seen so far? >> earlier on monday, before

theresa may went to his -- to strasburg, the highly -- hard-liners were softening, some appeared to be in the mood for compromise. as soon as the agreement has been published, they say they are reserving judgment, their lawyers are going to look at it. the attorney general is going to look at it today and present advice. and so as we stand now, yes, there is an agreement and there are improvements. for those who want to back theresa may's deal there is plenty they can grab hold of but for those who are not convinced and still, the key thing is whether theresa may is going to be successful in scaring the brexiteers into thinking if they do not back her deal, they -- the alternative is exiting reversed, that is her strongest trump card and you heard juncker referring to it, the choice is now between this deal and brexit

not happening. it was this deal or no deal. parliament has made clear it will not tolerate a no deal scenario. if parliament is not tolerating that than the choice facing brexiteers, some of spent there lives campaigning for exit, between this deal, or brexit being reversed in a referendum or delay. >> thank you. let's bring in bloomberg mliv strategist mark cranfield. we have seen some reaction in the pound, we continue to see it gain ground, it is at 132 against the u.s. dollar. we see a more risk on across the broader market. mark: it is a full and situation. the reaction in the pound, what you are seeing is in the past when he for hours. it has gone from a situation where theresa may looked as though she would suffer a huge

defeat but now she seems to have given herself a chance or she may get the deal passed and that is why the pound is up so much. are we are, we are sitting on 132 but it will be a turbulent tuesday. there is no guarantee that this will pass the legal requirements. how heorney general interprets the legal standing of this will be important as they are getting people on side and whether theresa may can get the vote but it is likely that the .ound could rise to percent it will be volatile and you see that in the option market as well. i am's on monday, the pound against the dollar was the thend most traded parent option market which is unusual, it is usually dominated by the big currencies, the euro and yen and sometimes the chinese currency. to be on the global stage is unusual. there is a lot of interest, suddenly people coming back into the pound, they were not looking

at it a few days ago. market is interpreting a bit more optimistically than it was a day ago. we still need to see how this place through and whether or not the hard-liners come on side and they can believe in this, this ss a fudge to get theresa may' deals through. we will find out in an hours time. general positive bounce back for wall street. does that feed into the asia state of mind today? mark: absolutely. you already saw chinese stocks at a decent rebound yesterday which was reassuring for people, we have seen a lot of volatility in the china equity market over the past couple of weeks and to see it have a bit of recovery friday, it fall on helps people to think the china rebound a sustainable and we have a good wind from tech --

tailwind from wall street. that is feeding through across asset classes, the dollar a bit softer which is usually a good sign for asian markets, for asian currencies are doing well, it feeds into equity markets as well. to start the day, we have a very positive outlook, there is a risk on mood across, tokyo is up in the early stages. it depends on what happens with chinese markets but there is after is him that china is in a good place, beijing is turning positive and we may see a follow-through from what we had yesterday. the volumes are encouraging. we've seen a lot of money come back into the etf market. and the emerging markets in general. people are putting money to work . the mood is much better. soundbitesome good towards the trade deal with the u.s., this could run on for some time. we're looking at a positive tuesday in addition to what we are seeing going on with brexit.

>> will have to see what happens. you can follow more on the day's trading on our markets live block at mliv on the bloomberg. some breaking news, we are airline,nother suspending flights that use the 737 max airplane. this is in addition to china yesterday grounding all 737 max planes within chinese airlines and we heard similar decisions from indonesia, ethiopia and cayman islands. we did get that brazilian airlines have suspended its flights that use the 737 max as well saying that this will have -- have been on account of that .rash we had a similar incident with lion air, the plane that crashed into the coast of -- of the

coast of indonesia, killing everyone on board. we are seeing -- hearing from the new zealand aviation body that they are not grounding the planes used in new zealand. let's get you the first word news. research by bloomberg economics shows global growth at its weakest. knew gdp tracker puts expansion at 2.1% on a quarter on quarter basis, sharply down from 4% in the middle of 2018. the oecd adds to the sour mood saying momentum in the u.s., the u.k., and the euro area is slowing although there are signs that china is stabilizing. the week on the rebound as saudi arabia move to it -- to extended steeper supply curve and a power outage threatened production in venezuela. futures in new york rose 1.2 percent after falling last week. oil is trading in a tight range

after rallying from december lows and -- amid opec driven output curbs. there are fears that it global slowdown will hit demand. >> the slowdown indications coming from china, from the car space two telephones to construction, if you see a slowdown from china, this may impact on our demand expectations. for this year and maybe beyond. >> president trump has presented a budget which seeks one of the largest cuts to domestic spending and also boost defense coffers adding in more than a billion dollars for his order well. the plans see rising debt to the annual deficit of more than 120 20 22.rillion until observers say it is heading from a certain rejection and could trigger a new government shutdown. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries.

i am jessica summers, this is bloomberg. >> we will be speaking to the author of a latest report. >> we will dig into the bond market with one of the influential figures in australia , from ubs asset management. this is bloomberg. ♪

>> and this is daybreak asia. risk appetite improved. great to see you. i want to start off with this chart.

tracking at the lowest level since 2013, it feels like every day we get renewed downward forecast when it comes to global growth be at china or growth or europe related. though bond markets waking up, they have been all is the especially in the treasury space. guest: i do and the job -- tweets have acted to suppress volatility. week was weaker data whereas this week it looks like it is starting off somewhat stronger. this is what we are going to have to put up with for some weeks to come if not months. it was doom and gloom and then retail sales makes reading better. the fed raising rates is

externally high and you will see elsewhere in the world including australia. curbs. generally flatter people are trying to time it. times whenying out it is right to take directional trade but you have to get your timing right. there has not been very much volatility so you need to be able to capture the moves. they are fairly moderate. tradingtuck in narrow ranges. the court trade should be long breakevens in the u.s. we think that real yield in certain markets are quite attractive. australia and new zealand, that is not necessarily long breakevens but long real yields. chart showing you across asset volatility. -- we're seeing

volatility plunging, it is this complacency creeping back in given the central bank put? i think so, particularly in the equity market. where we have recovered very quickly. and the assumption that the central bank will bailout risk assets not completely misplaced it it is very well in the market now. the thing is policy options globally are somewhat limited asiacularly in europe and and so far as we are at the lower bound. we have some fiscal stimulus coming, particularly in europe but it is not a game changer. fiscal stimulus in china, was that be supportive of the bond markets that are being pretty supported by technical factors? that there i think

is a broader array of tools at work which is the right antidote for the chinese economy. release of liquidity, cuts is some beam, tax an important part of the tools that the chinese authorities are using. year was a great year for sovereigns, it feels like the focus is coming back at that 3% level. guest: correct. it looks like china has found a nice support level just north of 3%. i think it will range around these levels. given theill stake inclusion as the weakness in the economy. spectacular year for chinese funds.

it might just have to stay for ours -- stabilize for bit. -- there iseen diminishing returns. do we see more conviction if we or see an actual deal that flow into something positive on a macro front? crucial.solutely having some sort of catalyst to be more confident about the way ahead as we talked earlier, the isa absent flows and it mixed with the pool of demand and the cliff that we have seen at the beginning of this year. the fact that the trade has affected germany but also japan and we are seeing early signs that might be behind us but you could not call it yet. always a pleasure.

here with us in sydney. you can get the round of the stories you need to get to get your trading day happening. term -- terminal you can customize our settings, this is bloomberg. ♪

>> u.s. regulation -- regulators have said [inaudible] the faa said the planes remain airworthy and it had no intention of grounding planes. shares fell sharply after a crash that killed 157 people. joining us now is steve engle.

it seems airlines are not waiting around, we have heard from the brazilian carrier and aeromexico that they are grain -- rounding its 737s. steve: it has done twice the last 40 years, have the faa issued a grounding for an entire model of aircraft area that was the dreamliner in 2013 with the battery problems. no one died in those incidents ama and in 1979 when the left engine of the dc-10 fell off in chicago killing more people, the worst aviation disaster still to date in the u.s., the dc-10 was grounded. only twice in the last 40 years and the faa right now is a,cking with the 737 max

they put out a notice of continued airworthiness of this model despite the accidents we have seen, two and five months. also the lion air on october 29 in indonesia. the global notice from the faa saying no conclusive evidence linking the loss of the plane and lion air crash, the latest news as well, the flight data and voice recorders have been more so that will give information on to the cause of this crash, still too early to say if those two crashes are linked but the faa says right now no conclusive evidence. i want to run through an list airlines in countries that have grounded the model so far, china has issued a blanket grounding of all 737 max planes, that was 96 aircraft, indonesian -- indonesia also including lion

air's 10 in service, they have 190 ordered. ethiopian airlines, the victim of this most recent tragedy has four, cayman has grounded there to bank, 737 max eight, era mexico is the latest saying minutes ago they were going to suspend all flights of their claims, there are six of them and a brazilian carrier have an 800 andfleet mostly 700s but they have six max eights, they are also grounding the max eight fleet. we just her from the new zealand aviation authority saying they will be waiting and seeing. not ordering a grounding so far. passengers are demanding answers. stephen: we are seeing a number of testimonials and we have been compiling a number of comments

from passengers and airlines, some airlines like iceland, southwest sticking by the airworthiness but passengers are concerned. they are linking the two crashes and not wanting to check in. we had heard from the president of the flight attendants association in the u.s. indicating that a number of flight attendants have strong opinions not to fly on the plane, a number of air their airlines have indicated they are willing to waive rebooking fees for passengers who want to switch aircraft. different flights that are not flying with the max 8, this is a public relations crisis for boeing even though the faa cited someone with boeing overnight continuedt the airworthiness of that model but the dominoes are starting to fall as far as the number of individual airlines that are not waiting for the faa to ground their 737s.

>> coming up next, oil players are in houston, we will hear from the iaea's executive director. want more from your entertainment experience?

just say teach me more. into your xfinity voice remote to discover all sorts of tips and tricks in x1. can i find my wifi password? just ask. [ ding ] show me my wifi password. hey now! [ ding ] you can even troubleshoot, learn new voice commands and much more. clean my daughter's room. [ ding ] oh, it won't do that. welp, someone should. just say "teach me more" into your voice remote and see how you can have an even better x1 experience. simple. easy. awesome. >> this is daybreak: asia for

you am jessica summers. changes to has won the brexit deal passing -- raising the chances of it passing. securing assurances on the irish asked up including that the measure cannot be permanent. carlos ghosn's -- that of itshange the course alliance. the three companies want to form one single board to oversee the alliance and as the architect of the partnership you wanted to explain himself to directors. rejected saying it

would violate terms of his bail. u.s. retail sales stabilized in january after a plunge in december that was larger than reported. to value rose .201% compared a 1.6% drop in december which was the steepest to -- since 2009. sales in the control group toppingose 1% expectations. longest-serving leaders is bowing to popular pressure and will not seek reelection. wanted another term but mass protests persuaded him to abandon his campaign. the election was set for april 18 but it will be postponed and the government will be replaced. he promises a new constitution before the end of the year. this month marks the 30th

anniversary of something many have come to take for granted, published soft a paper. that vision of universal connectivity is what drives much of the world today. his ideaed to patent and offer to it royalty-free. -- offered it royalty-free. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers, this is bloomberg. but see how markets are shaping up. sophie: we have concerns over brexit, stocks are gaining ground. rising withes are asian stocks, the nikkei 225 adding 1.26% as the young --

yanis softening on improving risk appetite. the kospi is adding. are snapping a two day decline. we are seeing some moves to the upside after we got some data this morning, we are seeing a drop in the gauge of business confidence and conditions for february. it come in less than expected when it comes to houseing impact but cbiz prices declining over the first half of 2019. we have the pound gaining ground early in the asian session headed towards biggest two-day gain since november as parliament heads for a vote on theresa may's brexit plan. let's check in on some movers across the region. mron, set highlight o

to replace pioneer on the nikkei 225 index. we are seeing moves higher on machine makers in japan. , the biggest up since october 2009, we're seeing toolmakers joined the broad rally in electronics players. also as kate gas rising after lawmakers agree to abolish regulations on lpg vehicles with usage limited to taxis and rented car shares. j, haltingnd on cyb a two day drop. it is seen as one of the most exposed to brexit risk in the u.k. banking space. last week we did pay a record coupon price, as it is preparing for brexit.

the latest development may be seen as a button for the company. >> let's get more on our top story, theresa may undergoing changes to the brexit bill raising the chances that the deal passes parliament. and agreement on legal moves around the irish backstop. hays joinskathleen us with more. how is the deal? several hours have unfolded, theresa may was meeting with your team whether or not to get on a plane and fly to strasburg until the early afternoon when she finally did, sat down with jean-claude and this will turn out to be the final historic meeting that was able to get something on the table to resolve the irish backstop issue. to preserve an open border between the republic of ireland

and northern ireland, something that is so important knowledge to the irish but across the eu and in the u.k. as well. a new clause, it is wording around backstop that theresa may sees as legally binding although jean-claude juncker referred to it as based on assurances and guarantees. it is not exactly hammered out. here's what theresa may said and why it is so important. >> crucially, one of the requests that element came together and had the majority vote for was it should be possible to replace the backstop with alternative arrangements. we have secured within this a clear timetable that enables the backstop as defined currently to be replaced with alternative arrangements. >> what parliament asked for, what she says she is delivering. juncker stressed as good theresa may this is an insurance policy. let's listen to what he said, it is a great metaphor for what

they are hoping to achieve. >> the backstop is an insurance policy, nothing more, nothing less. is the intention like in every insurance policy and if we are ever to be used it would be a -- never be a threat. >> there are a couple other things added to the deal including a joint statement on the political declaration that hammers at the future relationship between the countries and how the back stop would work into that. juncker said he hopes that parliament would ratify the deal because he says if they do not, there will be no negotiations. this is what is facing parliament as they get to vote on this deal of theresa may, we will see more later on tuesday. >> what are we hearing in terms of what we could expect, is there anyway that theresa may

has come back or going back to london with more leverage? >> even before theresa may stepped on that plane, there , thatome notable skeptics looks like they were going to come around to considering this deal in part because they do not want to get in a situation where there is no brexit. in terms of what has been said, let's take a list of a few prominent things that have been said. the leader of the pre-brexit tory european research group said it is too early to tell definitively but it is a step in the right direction. the democratic unionist party said it would study the deal. steve baker who is a tory eurosceptic hardliner said parliament should fear and trautman in this backstop arrangement and jeremy corbyn, the labor opposition said mpstiations had failed and

should rejected. it is up to them to decide what is legal and can move ahead. we shall see. i am not in a position to get what he might say but that is be clearedrdle to for this vote to get into parliament and have a chance of passing. >> oil titans have descended on houston, at one of the most prestigious conferences underway. steel is there, she sat down with the iaea's executive director and asked about the latest projections. >> our numbers are sure that in the next five years, 70% of the global oil production growth comes from the u.s., it is a big number, it means that the u.s. production will dominate again. this is very good but there is a second part of the story which is the following.

a major producer but also becoming a major energy exporter not only in terms of oil but also for natural gas. in terms of oil our numbers show that the u.s. will overtake russia and five years will catch up with saudi arabia. in terms of natural gas, and the , threeve years, 75% fourths of the lng exports will come from the u.s. only. emerging asthe u.s. a major actor in terms of energy trade in the world. there are terminal on it but -- bottlenecks and stores bottlenecks, how do you see that factoring in? resources, of the the shale revolution has started

seven or eight years ago. you in the last seven years we produced a lot of oil and gas, shale oil and gas. you use from the reserves but we had discovered new reserves and current reserves are .7 higher than eight years ago. in terms of the pipeline there are problems but there is a huge andastructure development capacityrs show that was increased two thirds which will make the u.s. oil industry in a position to react to global oil market developments much faster and larger terms. >> does the u.s. what does the rest of the world need our oil, it is very light, can the rest

of the world clear it? >> the world oil demand is growing, there is a lot of hype about electric cars. it will have an impact on the oil demand growth rate but we expect global oil demand will increase average one million per day -- euros per day each year. where will the demand come from? mainly driven by the petrochemical industry and aviation. both of them need lighter crude and the u.s. shale is fixed for that, the world will need u.s. in terms of volumes and in terms of [indiscernible] >> does -- what role does saudi arabia and opec way over the next five years? >> my humble advice would be to oferstand the new realities the oil market. numbers two, they are especially

-- the important country especially feeding the growth in asia. ands -- at the same time the history of oil, this is the highest time for those countries , those economies are almost exclusively reliant on oil. the economic front -- beast needs to be rod and for two reasons, a new major guy is markets, shale on the production side and on the consumption side, there are new , the consumption of it is notric cars so time to diversify the economy's in the oil-producing countries. to prepare themselves for the future.

up, standard & poor's ofeases a report warning another credit downturn. we will be joined by the author of that report next. this is bloomberg. ♪

>> a new report says the stage is set for another global credit downturn but the next crisis is unlikely to be as dramatic as what we saw in 2008. joining us now is the author of that replay it -- report. great to have you with us. you are saying that it -- a great it -- a credit downturn will not be as bad. why? terry: firstly what we did obviously example global debt governments and households. is it riskier? if you mentioned -- measure against gop fast jp or income,

yes it is. we think contagion risk is relatively contained. the reason for that is where the debt has come up is mainly in [indiscernible] and china corporate's. it is largely funded domestically because of high savings in china. the fact that investors are confident about western governments put the risks in terms of contagion is relatively ok -- contained. we don't think the next downturn will be as bad as 2008. >> we are seeing chinese corporate to adding to that debt, the chinese debt to gdp ratio is huge, we all know that thishe pace of increase, chart showing how fast chinese debt has risen as compared to germany or the u.s. how much of a problem is this?

it is a balance, the chinese economic credit model is to push a lot of the debt on corporate's. the china government itself has relatively much lower debt. to what they have done is get the corporate's to push economic growth including the state owned enterprises which is slightly half of the corporate debt. the government has kept its powder dry and kept its debt to gdp ratio low. it is a balancing act where they are trying not to slow down the economy too much. but at the same time trying to curtail some of the credit overhang. ropeey are walking a tight and it is not an easy one. >> are we getting signals are signs of greater willingness for

increased leverage in china as opposed to the de-risking priority of last year? we had the securities general quoting that the regulator in china is advising smaller corporations can take on greater nonperforming loan ratio levels. is that risky to you? >> absolutely. it is a difficult tight rope they are walking. they are trying not to slow down the economy too much as you know, they have revised it to about 6.5% in terms of target growth. at the same time, they are trying to curtail some of the credit. bit of hising a exact in terms of policy and approaches. they're moving one step forward, one step back. we do know they are trying to control for example some of the andl government signs

shadow banking but at the same time, they are concerned that small and medium enterprises may not get sufficient credit because by tradition the major banks tend to land to larger corporations. but they do see the small and medium enterprises as being an area of dynamic activity. and they are trying to encourage the financial institutions to land more to that area in order to sustain growth. this is a difficult balancing act. >> can you tell us a little bit about what you're seeing in terms of this investor migration years?e last two -- few postat has happened is 2000 8, 2009, the banks have been pushed by regulators, higher capital, they have become much less market makers. what has happened is into the breach moved various types of funds, etf's and also capital flows from emerging markets and

east asia. because of the high savings rate. what makes us a bit more risky is the uncertainty about avestor behavior and to get shock. we saw the noninvestment grade market issuance close down in december last year. it could happen again. investors if they already for the door could have market liquidity stress. liquidity falls in the next downturn and that depends on how investors behave. >> thank you for joining us. went us in melbourne. still more to come. this is bloomberg. ♪

>> a quick check of the latest is this flash headlines. the company says the cars affected date from 2001 through 2010 and only involves models that had a inflator -- a jakarta inflator or had collision repairs. the total number could top one million cars if they recall extends to the u.s. facebook took down some ads from senator elizabeth warman's presidential campaign and then restored them after reports on

the decision by politico. facebook says they removed the ads because they violated the sites global rules on -- and have restored them in the interest of debate. tencent backed shopping platform posted a net mock -- loss of $400 million. what was the cause for the spinning margins? >> it is engaged in a growing battle with alibaba even though the company says that is spending half the subsidy rates as alibaba is engaged in a war with them and it seems that the e-commerce giant is not ready to let up and that is eating into margins. >> how are they adjusting to their strategy in order to cope with a new environment, are they focusing on specific sectors?

>> is sure. it is still going to invest for new initiatives such as restaurant management services but will become much more disciplined when it comes to spending on ride-hailing and bike sharing. the company is cutting back and most of the overseas market and plans to narrow the losses for its ride-hailing service. >> thank you so much. let's get a preview of what to watch in markets with sophie in hong kong. down 1.i percent in 2019 as investors remained sidelines on policy uncertainty waiting for the government to act on the budget deficit along with other measures. estimates have turned bold. morgan stanley does not see any improvement with a gain of one or 2% expected for earnings in 2019. chinese stock analysts are the most dilution among major

markets, flipping the boards pushing the hang seng toward its first golden crosses 2016 suggesting more gains to go after an 11.4% year to date event that is outpacing the hang seng and is running higher, it has been even after authorities signaled the pace of gains had become too extreme as we have seen from a recent commentary from the government along with the stock downgrade we had last week. haidi: we are awaiting some wetements on -- from boeing, will bring those as they become available. they are working on -- with the faa. that was the airplane that was involved in the fatal ethiopian airlines crash and the same plane involved in the lion air crash off the coast of

indonesia. we have seen a number of countries grounding their fleets of the 737 and we're seeing a response from boeing now, a statement of what they are planning to do with the software enhancements and that they are working with the faa on that software it has been is a developing story. given the importance of is about operating profit. we are looking ahead to the start of trade in hong kong. the china open is next. this is bloomberg. ♪

comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. >> welcome to bloomberg markets:

china open. damon: let's get to your top stories. wins brexit concessions. tories are told it is a deal or crisis. ivanka: stocks rising for a second day, investors are boosted by retail sales. growing concern about the 737 max, more airlines are grounding the plane amid passenger fares.