manus: this is "bloomberg daybreak: middle east." it is a fed a day, investors eagerly await earlier details. what does it mean? plan will look and how policymakers will approach inflation and the balance sheet. president trump is continuing to sound optimistic about trade talks, but some u.s. officials are becoming concerned. china is pushing back at american demands. we have the latest. the eu is putting pressure on theresa may to make a decision about a brexit extension. tellsile, angela merkel bloomberg she will fight to the

very end for an orderly brexit. bill gates rejoins jeff bezos in the 12 digit club and his fortune crosses $100 billion marks again. ♪ manus: 9:00 a.m. across the emirates, this is a bloomberg daybreak: americas -- "bloomberg daybreak: middle east." oh, to be on the rich list. what about the dollar, is that the basis of their wealth? here it goes, down she goes, is the death of the dot plot already priced in? for seven at a pete sessions, we are turning around this morning. nomura says we have a dovish outcome as volatility plummets,

the lowest since 2014. a slow death, but is it all in the price? let's roll over and have a look at gmm. there are a couple of features that really come to mind. you have the asian equity session, just getting back a little bit of value for china down by 1%. but it is the aussie dollar want you to hone into your we are waiting for the unemployment data from probably show it has slowed, but the rba again focused on housing concerns the prices may drop further. the three-year illness that prevails across the world, aussie rates are still below the rba. it is a growing trend. ball,mao is always on the she's got the first word news headlines. manus, the eu is likely to tell theresa may that she must decide by mid april whether to extend brexit to 2020 or risk of leaving the block in three months without a deal your

sources say the other 27 leaders are ready to deliver an ultimatum, giving the prime minister three weeks to decide to force hermble bill through parliament or seek a longer extension. eu leaders meet in brussels on thursday. >> it could be in brussels or the outcome of an extension. how can we ensure that at the end of a possible extension, we are not back in the same situation as today? case, the european council will need to assess what is in the best interest of the eu. >> president trump is continuing to sound optimistic about trade talks, yet some officials are concerned china is pushing back. we are told beijing has shifted its position. after agreeing to change its ip policies, they have not rashida services that export tariffs would be lifted.

we're also told china is trying to bring in a wording that complies with chinese law. australia is summoning the turkish ambassador over comments president or the one made. erdogan. he claimed to threaten tourists who annually visit the gallipoli peninsula, a site celebrated as a world war i battleground. they said that scott morrison said he was very offended by the government. planning to put millions into a scheme to beautify riyadh in products -- projects that would create millions of jobs. it would open the door to $50 million in private sector financing. preliminary design work is underway under crown prince mohammed and construction is to begin in the second half of the year. bill gates has joined jeff bezos in the exclusive club about his

fortune crossing the $100 billion threshold. ines last celebrated that the.com boom, when business was just beginning his climb. bezos is currently worth more than 145 billion dollars, having added $22 billion this year alone. 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. manus: thank you very much. the federal reserve's policy decision is being eagerly anticipated by investors looking for further details on what this pivot really means. how the new dot plot is going to work and how policymakers will approach inflation targeting. is a lot of uncertainty around the issues, markets are optimistic as shown in the rally in stocks. cross as volatility is hitting new historic lows. the former fed governor spoke to

bloomberg earlier, and his advice to the markets is to pick -- take the plot with a grain of salt. >> it is likely to come down, but even if it doesn't, i don't think the markets should misinterpret that at the fed being tough. they should continue to think the fed it will be patient for quite some time. manus: let's bring in steve king, professor of economics in kingston university, joining us from sydney. should we just scrap they -- the dot plot? that -- me, i missed pardon me, i missed that. manus: not all, it is unlikely -- unlike me to come up with a short question. should they just abandon the. lot -- the dot plot? >> i can't --

manus: no problem. we are talking about the federal reserve and their guidance using iss my question for you saying to take the dots with a pinch of salt. my question is are they saving -- fading and relevance, should they be abandoned? steve: my way of thinking is completely different, because i know the way economists inside the reserve think. they have numbers on the rate of inflation, the rate of growth, and the rate of interest. that is what they are trying to target, what they are causing is a reaction with the mass of americans in large amounts of private debt and their credit demand is running out. so what they are doing is coming back credit demand and the recovering economy.

i ignore the dot analysis and look at private debt levels of credit and interest rates. 2.5% of their forcing people to consider deleveraging. when they do, they will reverse direction. the dot i see is a big effect zero and, if anything, pressure to push rates down. manus: should they be cutting rates in 2019? they're going to find the economy is not as robust as they thought. partly, they will be responsible for slowing down. there's simply not aware of the impact they had a forcing households and businesses to decided to defer credit-based purchases. that takes demand out of the economy and away way their textbook tells them does not happen. i think they are rather floundering, not quite like the titanic, like 2008, the economy is going to slap down like japan. every time their bank has put rates up and leslie five years.

the federal reserve is now repeating these experiences. manus: what about inflation? we talk about inflation in the u.s., they set a target of 2% back in 2012 it has averaged 1.4% since then, and on the core, 1.6%. an elusive target, or what you want to hear on inflation targeting? steve: i think they are using the wrong economic model. but in terms of where rates are going, i expect to see the rise? -- to see them rise. qe and trump's deficit has given and of the stimulus to finally start causing labor shortages. the workforce is cowardly and

when bosses find they can't get more through the door, they'll put up a pay raise. i see a lot of volatility and inflation in the economy over the next one and two years as the federal reserve blindly stumbles into the future. manus: but then if inflation rises, and forgive my naivety, i don't have an economics degree -- steve: lucky you. manus: [laughter] if inflation rises above the 2% level, would that not force them to have to raise rates, polemics to what you just said? steve: they will, they will consider that. and what they are not aware of is the level of private debt america is carrying. they don't even remember what caused the 2008 crisis, remember their advice was the economy would avoid recession. that is literally when it started. we're not talking about rocket

scientists, we are talking about using the wrong models for core dynamics that are totally irrelevant the real economy. they are getting results the tell them what to do, but the actual -- manus: can i just ask you, you don't seem to have awful lot of confidence in the capacity of the fed? are they that bad? , and i have that more confidence in the bank of england, frankly. they have learned more from the crisis than the federal reserve has done. i think we have people who don't understand the economy and have a model, that is what they are driving. it does not include important elements of the real world. when the model push them in a direction they think the economy will go, the model and economy will go in other ways. manus: stay with us, we got more to date into professor keen, professor of economics at the university of college london.

show, the eu pressures theresa may to make a decision about a brexit extension. angela merkel tells bloomberg she will fight to the very end for an orderly exit. and president trump is considered doing -- continuing to set optimistic, but is china pushing back? this is bloomberg. ♪

manus: 9:14 a.m., what a beautiful day. a little bit better off, but are you worried about trade talks? of thereaching the peak recent run on the oil market? east,daybreak middle let's get your first word headlines. debra mao is with me in hong kong. >> apple has upgraded its

desktop computer for the first time in almost two years. and now has speedier processors from intel and new graphics engines. there are new for k and 5k screens on offer with the larger 27 inch version costing $1800. apple is releasing a blitz of upgrades ahead of a launch event on monday to unveiled new media and entertainment services the number of workplace injuries at tesla rose almost three full 2017, seen as to an indication of how much strain employees came under as they turned up cars on scale. 22,000, andre than is saying that two thirds of injuries came from repetitive stress injuries -- issues. instagram aims to offer even more its of gratification, launching a new e-commerce best -- feature. it allowed u.s. users to buy directly within the application

rather than being redirected. with advertising growth slowing on facebook is seen as a step towards a new business model maximizing instagram's hundred 30 million monthly users. that is your business flash. manus. manus: thank you very much. president trump is continuing to sound optimistic about trade talks, yet some officials are to be concerned that china is pushing back. still with us is our guest host steve keen joining us from our sydney studio. ,ere we are, another day another statement from president trump that things are going well your assessment of the trade talks, do you expect that they both desperately need a deal? they need a deal, and i trying to bring

about a success that nobody else could. my way of thinking is that the fatal flaw is that the american dollar, of being the international reserve currency is at least 30% over the value it should be to make manufacturing viable and he's trying to compete with china. the matter what, there will be a trade deficit and the matter what, we will go back to trade talks and retaliatory tariffs. with a dollar has overvalued as that, this is not necessarily going to bring it down now is it? steve: that's right. they're trying in a one-sided way. he will just continue to fail, because as long as the dollar remains inflated, it will just be impossible to get back to a point where the manufacturing he claims to love will be competitive with the ones they are fighting. my way of thinking is that the

only real breaking point will be countries getting sick of the way in which trump has weaponize the american monopoly of international trade and have now got both turkey on one side and china and russia on the others, as well as your talking about devising another currency exchange system. this could be a breakpoint in this particular year, because finally that monopoly is starting to be broken. is there anything good to come from weaponizing trade? was there a need for wto to change? perhaps a reconsideration about the bilateral relationship, or as all of this talk about technology transfers just hyperbole? hyperbolel, it is not in the sense that there is a good reason the chinese have established this free trade zone. i was actually there when they were laying the concrete, it was

to get american technology has quickly as possible to build a chinese capitalist class. they did that brilliantly, and now after 30 years or more of industrializing, they are almost on a level with america, the one thing they can do is sub micron manufacturing. china to go towards free trade because they have already built up the industrial base under the protectionist policies they use for the previous 30 years. i don't think president trump quite realize that. manus: what about the yuan? we hear a great deal about stability in the yuan per. is that possible? can you have a stabilized yuan post trade deal? i don't think so. the japanese have the same story with the yen which has moved much higher against the american dollar until they fell into the property bubble trap themselves.

china is japan on steroids if you look at how the credit system is driven in their rate of industrialization. they have got themselves caught up with a cannot keep that currency undervalued and they're getting pressure pushing it up. be a breaking point, but it is hard to say because we are connections about the future. this is whether china is so big or it can no longer play the small game on the international stage. that is one way china has given trump a wake-up call. my view, trump himself needs a wake-up call. , i have not enjoyed a conversation as much in a long time. you really are enjoying this, so let's get one more out of you for a bit of value. what about brexit? steve: ugh. manus: theresa may, can she last, how will it end? liven up the show, give you call

. steve: it will be delayed, and what she should have done is take the advice given in an ,ditorial back in 2016, i think saying that all you should do is put a norway plus deal on the table. ining we will renegotiate seven years time, on a time for all of the current politicians to think i will be retired, i can relate. , she said if you don't do it you will get the brussels runaround, going nowhere. which is where she has ended up, it is classic incompetence on her card -- her part. think of her earned goals, part of the remaining campaign to part of the leave, because she saw a possibility of promotion. then she went for a reelection with a huge gap at the polls by campaigning so badly, she managed a huge gap in her favor into a home election for jeremy corbyn.

be allied witho the dup and has got no authority in parliament. it has been a total mess, ultimately, it will be a case of delay, put it off, and leave it to the spanish and french really know how to break out of a stranglehold like the euro. manus: ok, steve. you've got to come back, we will bring you back when we got some potential resolution on brexit. steve keen, honorary professor at the university of college london. coming up, more on brexit, in case you have not had enough. we've got more. the details of the extension. this is bloomberg. ♪ erg. ♪

manus: the eu is likely to tell theresa may that she must decide brexitwhether to extend to 2020 or risk leaving the

block in three months without a deal. sources say the other 27 leaders are ready to deliver an ultimatum, giving the prime minister just three weeks to onide whether to gamble forcing her twice defeated divorce bill through parliament extension.a longer reporter. is our our last guest said that he asked forlistened and a norway style deal for seven years. but starling might be telling us something a little different. what did you think? >> i think the conversation is interesting. it goes to show how one of the things about the norway model be this is why people who wanted to brexit was delayed. unfortunately, you're still in the single market, and therefore, it does not solve the problem that is an issue she generally has. do i solve the problem everyone had come it is very hard indeed. for the moment, that is why i think sterling would like an extension. look at what to do, whether it be a referendum or some alternative measure. if it is a short-term extension, basically the problem is it is maze deals with no deal. her deal has been voted down twice and may be able to push it not, bitsine, but if and no deal and sterling would not like that at all. the producer and myself data,ooking at the cft they're cutting their short position. the market is ramping up its net long exposure. probably for what, a short of the punchy extension or a long one? what is it telling you? long one, it would risk out of it. obviously, we have got good payroll data yesterday good inflation data today. everyone has been looking at the wording we don't know exactly be long this extension will in that will pay into the function in terms of how hawkish or dovish it is. obviously, if out on the hawkish side, they may well sit in the moment in terms of being very neutral. if you look at leveraging funds, they are trying to short sterling. obviously, it is been a very short trade and has been edging higher. recent --f the most recent data short-term funds. matter what has happened recently. -- no matter what has happened recently. it will be one of those battle royale's against fast and those who don't want to take exposure. they do very much, david, our fx reporter. up next, talking oil. the recent rally has stalled,

the question is why? that's next, this is bloomberg. ♪ s 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.

york.is mid time in new is the mob index. volatility hits a record low in the bond market. suppression. upswings in the bond market. see a moment? it was spanked, it was sold. 0.8%. a very patient fed. debra mao stands by with your headlines. >> president trump is continuing to sound optimistic about the

trade talks yet some u.s. officials are getting concerned. has shiftedbeijing its position because they have not received assurances export tariffs would be lifted. we are told china is trying to bring in wording that come lies with laws peer-reviewed nations putting emergency response funds towards helping victims of the cyclone in mozambique and malawi. 300 people are confirmed dead with hundreds reported missing. in mozambique alone, almost tough a million people are thought to be homeless. arealf a million people thought to be homeless. the department of transportation is calling for a wide-ranging review of how the boeing 737 max earned certification from regulators and the airline itself. this is separate from the from

and all investigation the inspector general is conducting. it was grounded globally following two crushes and five months that may be linked. android phoneve users a choice of apps. it will change the way it appease smaller rivals. attracted record fines or more than $7 billion and a wave of regulation amid fear of the power of big tech. kazakhstan's -- leader for life has announced as president.n he is the last soviet era leader in the region. he has run kazakhstan 1989.

russia says the move came as a surprise. global news, 24 hours a day, powered by more than 2700 journalists and analysts. i'm debra mao. this is bloomberg p. let's look at the markets. >> a little bit more of a cautious tone. asian stocks off. you can see south korea is one of the largest. samsung coming through with a warning saying it is going to be a challenging year ahead. upside coming through in the apple suppliers and taiwan. the new imac and ipad. we are watching the aussie dollar fall. start to increase bets on a rate cut from the rba.

also watching the hong kong dollar. we have heard the central bank in hong kong has produced a billion dollars so far to defend its currency peg as investors sell out of hong kong dollars. >> i cannot see that hair letting that go. let's talk about the specific movers. cut itss said to have china sales outlook. how is the stock playing out? >> we are not seeing too much movement in the afternoon session. fairly steady. interest in a lot of as you would expect in the stock. yesterday, they said it would the increasing. cuttingearing nissan is

china sales targets. by 8% to 2022. let's have a quick look at some other stocks we are watching. sony and nintendo falling after a push into video games with the streaming service. also watching tencent, they are insidering a bid for a stake a beauty and chemistry shop. australia, down 24%. this is a company that manufactures and supplies a range of agricultural chemicals. we have some corporate news weighing on individual stocks. >> thank you very much.

the very latest on the markets. our own region, a resident reporter. the etf's from saudi arabia becoming popular. legsstory could run out of one day, but it has not for now. know the index inclusion is the major topic. talk -- trackally saudi stocks. both attracted $330 million this year. net flows versus total assets, they are on top of a global ranking for etf's so far. it is interesting to see

betstors are placing their through these markets. to tradet need to go saudi stocks. when we hear there is more to come when it comes to inflows. both funds are delivering a little bit more than the total index in riyadh. knew proof they might be the mechanism for exposure. one market that is on fire is egypt. volatility still a bit high, isn't it? >> every time we talked to managers, they say egypt should be on the top of the list for those looking at middle eastern markets. names tradinggood

at cheap levels, but volatility is part of the game. it had its worst index so far. is they were related to a big name in the egyptian stock market. shareholdereal, the trying to buy out minority holders. it is still pending approvals. they might need a capital increase. in the marketm and just a bad session. the family?t day withig decision regards to the family. bigmaar properties, a company within the group, they all have their boards meeting today.

all of three stocks have recovered considerably in the past five weeks. delivereder their their result, earnings for 2018. if there is in the indication they are going to disperse dividends beyond what the market seexpecting, we should another leg up for such scare -- shares. >> always great to get your input, every day. to oil now. hasn't stalled? some u.s. official said there is --ear the chinese push back prices have climbed around 25%. they rose earlier as opec and its allies agreed to production cuts until june. a couple of lines

come through from the oil ministry. good to see you this morning. let me update you with a couple of the lines. they are committed to delivering 100% on the oil cuts. has been rising since the fourth quarter. he goes on to say it is not their ability to control. oil supply has been rising since the fourth quarter of 2018. they cannot and supply cuts as long as the glut persists. do in the they permian basin keeps chugging it out on the right-hand side. in 2019?win out

>> we have a fairly constructive view. really, to answer your question, it goes back to the demand side of things. going into 2019, there was a demand was not failing as strongly as it did last year. if you look at the recent numbers for january, we think demand growth will be around 1.1 million barrels a day. continue forc to the first half of the year. there is a potential for that deal to be extended into the second half. we think the market will remain will support of this year. >> from your perspective, pakistan, we were bullish on pakistan. bank governor talked about inflation in the first instance. it is one of the highest levels

since 2014, he talks about the central bank will stand ready to use monetary tools after the most aggressive interest rate tightening. hardened by this? >> we have had the most non-consensus call. we have been forecasting the peak in this cycle will be around 4.58%. we still think there is a significant way to go on the monetary policy side. we agree with the central banks assessment. think there is further upside .tarting next year >> the twin current account and deficits, it is one of the current headwinds. what do you expect tackling

these issues? >> we think the focus of policymaking is clearly going to be on stabilization. there is going to have to be a significant fiscal impulse that supports that. targets as part of the agreement we think pakistan will reach with the imf. we are going to see a slight slowdown, that is the base case for you. is what you trend refer to as the big three. what is your the confidence in the restacity to beat of their listings. >> if you look at the big three oil importers, they are at different stages of the stabilization process. growth ton, we expect slow going forward. in egypt, a lot of those measures were taken and have

started turning around. we think there is upside, particularly given the external account stability. >> you are still going for more rate cuts. how much will that be back ended? >> we are slightly off the market in the sense we expect rate cuts might be delayed into the second half of this year. the central bank might hold policy rates. >> is that just precaution? egypt is improving from the sentiment. on the domestic front, there are a few steps to go. there are plans for the elimination of fuel subsidies by june. those could see some upside. >> that could bring them back to

the bond market. always great to get to your input on these markets. thesenior economist for pakistan region. coming up, she is angela merkel and she spoke to bloomberg. she will fight to the very end for an orderly brexit rit our exclusive interview with the german leader is next -- brexit. our exclusive interview with the german leader is next. ♪

>> angela merkel says she will fight to the end for an orderly brexit. she spoke exclusively to the bloomberg editor. >> we will very carefully follow britishwith the government is going to say with regard to what was stated yesterday. onannot say anything

thursday. >> she is going to come and ask you for an extension. do you have any prejudice on your side? would you like to have a short extension or give them a year to sort out the problem? >> what i absolutely want to do, i am interested in having a good relationship with britain even after they have left. it is in the german interest and the interest of the member states. i take theresa may seriously when she says britain stays in europe. we have common interests because of our geopolitical situation. britain has always been a country that has felt very much committed to the principle of multilateralism. defense.

security and so on . that is why we made provisions for this is since to have as clear of a legal situation as nosible even in the event of deal. until the last hour of the 29th of march. i will fight for an orderly brexit. we don't have that much time left to us but a few days. i am not in a position to speculate what i will do on thursday because it depends on what theresa may will tell us. we will adequately and together as 27 react to this. the less everyone speculating, the better. empower womenw to

in the tech industry. our interview. this is next -- that is next. this is bloomberg. ♪

>> in this week's bloomberg equality segment, we spoke with theresa tucker. she says more and more women in the tech industry are fighting gap and culture plays a key role in promoting diversity. >> i would have women i promoted, especially knowing our company was small, and said, don't worry about a raise. i am just so excited to have this next step. i have never had a man do that. there is a reason there have been pay gaps.

i have seen certainly in the younger generation of women under, they are all in on negotiating for equal pay. that is a fabulous thing to see. they have been told there is a gap. they are determined. isn't that wonderful? do you think that is changing within the culture. i do think that is changing. i think that as women demanded the parity, it will become commonplace. >> you are based in l.a. but you have an office in london. do youout tech cultures think are different? culturend the overall still will impact the tech culture.

culturengeles, the tech is very influenced by the entertainment industry. our tech has to be beautiful. it has to be graphically pleasing. in europe, black line is a software as a service company. all of the services in a private cloud. for years, europe and england fell behind. iny were not interested software as a service. absolutely not. in the started to see last couple of years a dramatic view in how europeans will whether or not having the software is good. you do see the overall norms impact the tech culture at

large. there are in other countries, not necessarily europe, you will see where a lack of freedom in general tends to hinder creativity. you will see less entrepreneurs. when you are living in a culture that does not ask you to express and yournd creativity own ideas, you're not going to see as many startups. is thenteresting, it subculture of the mainland. >> what markets are you going after? you said england at first didn't actually buy into software as a service. what is your next england? >> we just opened a new office in japan. we think that market is going to be -- it is a large software market.

toare seeing an openness some of the products we bring to market. we will probably be focusing more on the nordics and to germany. in some part, this is due to a recent partnership we announced with sap. we are working in some of their larger markets. those three. japan, germany, and the nordics. >> let's end on the diversity conversation. what is the one thing you would want to see changed? >> my goodness. only one? i think it would be really wonderful if the bad boy behavior really became just not ok. in any company.

in any culture, any place. and yet still it is fairly pervasive. there are headlines all the time. the me too movement hasn't come to tech. markets, dealing with understanding what is going to come from the fed. i want to show you currency volatility. the lowest since 2014. we have written some of the wildcards up. nejra will discuss that with you. it is getting crushed, from the bond market. g7 volatility. the fed say.

there are tweets aplenty facesting theresa may 1922 committee. what is it going to take to get her party behind an extension? this is bloomberg. ♪ this isn't just any moving day.

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>> good morning from bloomberg's european headquarters, i am live in the city of london. these are the top stories. plotwill the latest dot look like? it is fed decision day. u.s. officials are said to see pushback from beijing in the trade talks. and fighting on both fronts. theresa may directing a request for more time to reach a exit deal, as reports of a glory revolt pile on the pressure.

>> warm welcome to daybreak europe. it is fêted day. -- fed day. speared byhas been the view the dots will be lower. is it all in the price? that is what nomura are saying. go to your podcast on your bloomberg. the dollar fixation is back with a vengeance. want to show you a couple of other currencies. host prices, they could go lower. of wherethis new wave rates are below central banks.

in australia and the knives states of america you have your dollar -- i love this story -- $5 billion into india. have 67 against the dollar. trade. the carry >> yesterday's session, we preview for the first time since october. those gains were given up as concerns came through. we ended the session flat. we are flat on the futures. on front and -- end. it tells you something about expectations. anything in the messaging that can be seen as hawkish?

as well as anything else they have seen on the balance sheet. unchanged, but we saw a rally yesterday on better than expected -- out of germany. let's check on the markets in asia. >> the bank of thailand, also coming through with a rate decision. trying to anticipate how dovish it is. a little bit of a pullback with .ome caution ahead hong kong stocks under pressure. samsung coming through with a warning, saying it is going to be a challenging year. and then having a look at indian markets, pretty flat but there have been seven sessions of

gains. let's have a look at some of the stocks in detail. nissan saying they are going to cartheir targets for china sales by 8%. this familiar with -- from people familiar. nissan shares closing fairly unchained -- unchanged. newsn getting hit hard on google is going to launch its own gaming service and you will not need a console or pc. in australia, this company losing half its value. a car leasing company. oey say a rea deal wit one of the rivals is going to go forward. >> the dot plot thickens.

a dovish revision is expected after the two-day meeting comes to a close. beyond interest rates, markets will be looking for details on the balance sheet. the top market analysts make of it all? >> the head of european rate strategy says the fed -- underlying data has remained resilient. the head of fx strategy says they need to get specific on the schedule or the market may be disappointed. front,he communications a pimco portfolio manager suggested the fed would likely steer clear of actions or communications that would disrupt the recent improvements. says one, a fed watcher

balance we may see one hike for 2019. it is considerably larger. former fed governor's advice is to take the dot plot with a grain of salt. >> it is likely to come down. should the market misinterpret that. i think they should continue to think the fed is going to be patient for quite some time. during the us now is the head of equity strategy. simple question first, the bar could be low to have any kind of hawkish surprise. can they really do anything but lower that? maybe for 2020? are two questions, what is the outlook going forward? they will likely lower the dot

plot. theou look forward, why did fed to turn dovish? we have seen a strong rebound in the equity market. data has remained resilient. you look at what that means the market, it is down 20 basis points. that is the one market, the bond market that has to move. with still consistent higher bond yields going forward. >> if there is a shift in the data, that could lead to higher bond use. one thing missing is inflation. what do you expect on inflation targeting goingre is a big debate

on in the background. there is not going to be any communication today. what matters is core inflation. if you look at what the best growth hastors are, been very strong. message weens the have just gone through. financial conditions are easing. consistent with the dovish fed. >> i believe you are targeting a 10 year yield. how does that translate into an equity strategy? >> we have seen a rush for safety. doing well.hey were

these defensive hiding places, they will underperform. telecom.ed underweight >> we put together a compilation of the debate about goldilocks. take a look at this. this is bank of america. only 3%. there, one more rate hike. asm surprised the markets under owned. it brings me back to one of the key bases for our product. this data and sentiment data is

not very reliable when it comes to predicting the market. is sensitive to our swings and macro momentum. equities sold off. they undershot the historical relationship. we got a confirmation growth is ok. global pmi has picked up for the first time since august. the rally you have seen is justified by the fact the data is not as bad as the market fears. that is far more important than sentiment. touched 2850. despite the rally we have seen, do you think u.s. equities are below fair value? where is europe is above it? >> you clearly know our research. have been going from meaningful too low to having overshot it. in the u.s., we are 5%.

we would like to remain underweight europe relative to the u.s.. >> stay with us, we have a lot more to get to. the head of european equity strategy at deutsche bank. we are going to have special coverage of the fed decision this afternoon. headlines coming through on carlos ghosn. third -- of may 23, the pretrial proceedings. start ghosn's trial will as soon as this fall. the latest headlines coming through. . long and protracted battle of whennto the weeds this trial will begin. let's get your first word news. >> the eu is likely to tell

theresa may she must decide by mid april whether to extend brexit until 2020. bloomberg has learned the eu would deny requests for further delays. it would give the prime minister three weeks to decide whether she can get the current deal through by july. concerned china is pushing back against american demand. bloomberg understands changes to rules would -- were not being met with reassurances. that -- isde team set to move to beijing. the u.s. transportation department is looking for a wide-ranging review of the 737 max. was groundof jets

after evidence linked to bank crashes. the gates has again pass 100 million dollars threshold. he joins jess they so's -- jeff to --as the only two sent centa billionaires. he says he intends to give away half of his wealth. day,l news, 24 hours a powered by more than 2700 journalists and analysts. this is bloomberg. mao in hong kong. with the fed expected to hold rates, market volatility has gone missing. most investors waiting on the sidelines, but one group stepping in. to jesus could end the tranquility.

dani burger is here to explain. players,he fundamental there are bonds that by one volatility is low. these funds rate here have seen the best returns over the past since 2000 10. as there is no volatility, that has allowed them to capitalize on this long, leveraged exposure. even though this is the strategy of 2019, it is not all good news. they follow trends. they are also sensitive to volatility. as bond volatility has been sapped, the exposure expresses a measure at the highest two years. they hold a lot of these stocks. not a lot of fundamental managers to act as a buffer.

flip -- picture flip. pick it up here. great selection of charts. this is one that is fascinating everybody. can waythis low -- what full a toady from its slump? sebastian.hat to the head of european equity strategy at deutsche bank. record, central banks actions repress volatility. what is the biggest risk to a -- >> there are two triggers his historically that will lead to -- we will go into the

u.s. recession, which is likely going to happen in two years. that will clearly be associated with higher volatility. the second one is the political shock. if we get one of the political points going wrong, the italian political situation becoming a problem, that would be associated with higher full attila these. catalyststhe two main . >> our guest for the next hour agrees with you. and currencies need a proper price. the head of european equity strategy. says tradetrump talks are going well. china could be feeling differently. the latest next.

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this is bloomberg daybreak: europe. headquarters, a little bit of a holding pattern head of the fed. concerns coming through about the u.s. china trade talks. struggling there if you look at the offshore. the governors saying home prices may have further to fall. >> we have a slight turnaround. nomura says it is. upbrent, a little higher,

0.8%. the minister saying we are going to make it -- what is your position? we will talk about that. we will debate that. let's get your business flash. >> sony and nintendo shares are falling after google outlined a games.ush into it allows developers to put them on to a streaming platform. much they not say how will charge users or whether it will be funded through advertising. phasesas lost the first of a jury trial after determining -- they now moved to the second phase of a trial. paying to resolve the u.s.

lawsuits could cost them as much as $5 billion. nissan is reportedly cutting a carre target for china sales by 8%. this signals a downturn may be an extended one. passenger of it sales in china fell 6%, the first klein since the early 1990's. ongoing tensions threaten to dampen demand. that is your business flash. president trump continues to sound optimistic about the trade talks. some u.s. officials are concerned china is pushing back on american demand. worried changes to intellectual property rules are not being met with reassurances existing terrorist will be lifted it sebastian is ahead of european equity strategy. going through, you very clearly

to the trip and you have a more optimistic view on china. is that medicated on a constructive outcome? it is. if you have a native outcome, especially stop talking about car tariffs, you would be talking about a macroeconomic backdrop that is different. if you get a trade truce, you swing factor main is the credit cycle. seenharp it's cuts we have tends to be the main indicators. that is what we have started to see. the credit in polls which is a key driver has turned positive.

growth momentum should start to improve. >> what does that mean for your outlooks? does it mean strength? metals -- models. highlighte economists you get this by easing monetary policy. this is where you see effectively meaningful easing that pushed downward pressure on the currency. they expect it to be weaker. that means the european sector is very sensitive. they should continue to see it as a headwind, not a tailwind. saysne piece i read, he the slide in the consumer is a bigger threat than debt or pollution. the consumer index which

is almost prodigious in its drop. are you concerned about this? >> to be honest, i am not very concerned. the clear structural issue have in china is a corporate sector. we know from the experience in japan in the early 1990's and the u.s., if you have a trigger that leads to deleveraging in -- if you have an over ledford -- levered sector, that can be meaningful. >> what about other sectors with

exposure to the chinese consumer? is it as simple? >> we don't have a clear theme and the european equity market of sectors driven by that. sectors highly sensitive. these we clearly like. -- is capital goods. if we now see a pickup in europe as we expect, that is good news for capital goods. for us -- >> the head of european equities stays with us. going to bring you a headline on a brexit. theresa may is to request a brexit in ato letter to that eu. we speak to the ceo of generale.

don't miss that after 7:00 a.m. european time. radio aso bloomberg always. this is bloomberg. ♪

♪ let's get a look at the world map. we see the msci asia-pacific index overall unchanged. as we look ahead to the fed, as some concern comes through about u.s.-china trade talks. the market so dovish we positioned going into this fed meeting, you have to wonder if they will close the gap today. what happens with that 2020 dot as well as the balance sheet, of course? manus: let's just get to zero. the debate is what way the data goes. we h