>> welcome to the best of bloomberg daybreak middle east. brexitwmakers voted on options and failed to pass any of them. 10 year yields flag warning signs of global growth. concerns about transitioning away from oil.

u.k. lawmakers voted on a string of brexit options on wednesday and failed to support any of them. the saga had earlier seen theresa may promising to resign as prime minister if conservatives dropped opposition to her exit deal. several hardliners including boris johnson agreed. but the northern irish party reviews to back her deal. wanted to get a deal that worked for the whole of the united kingdom. a deal that works for northern ireland. but we are in a situation that cannot have it in agreement. it is all because the prime minister decided to go for that backstop back in december of 2017. >> bloomberg continued the discussion. >> i suppose it does not affect

us here on the currency landscape. what is going on with the sterling is very significant. it does seem want up quite tight at the moment. once we do have some kind of resolution, that is a concern. and a kind of resolution became less clear in the timeline. it is waiting for those moves to see which way the pound goes. if the inverse happens to be through, the pound could get dumped. that is the way you look at it from the subtle side of the world. obviously the fact that we are in the anglosphere. what are some scenarios unlikely moves? are you actively encouraging taking any position? kyle: it is a breakout position

on this one based on the environment that i just described. that goeset a deal through in any shape or form, the best would be some kind of soft brexit. assuming that the remain vote does not go back to the people with another referendum. that became a slightly higher possibility last night. resolutiont kind of which is somewhat more likely, we do position the pound just above the 133 mark. with a view of trying to play that breakout to the upside. brexit,t a heart probably positions below 1.30. around 1.24. there is so much energy locked up at the moment and so much desire to push the pound in other directions.

until we get out of that range, it is a little bit too uncertain to play it. coming up, 10 year yields flag warning signs for global growth. residents push to threats from europe and asia. this is bloomberg.

let's move to wider

implications for markets on the back of slowing global growth. and san francisco fed presidents pointed to a threat from europe and asia. we will hear their views. >> there are a lot of factors holding down rates on the 10 year. the rates are being held down for flight to safety. i am not freaked out. >> we have had a lull in the economy and the united states. but we are not expecting it to persist. slowing in china and europe and relative week japan all of

applied to some of the global risks. >> it is a signal of slowing down of growth. it is a signal that it's problems and to the market. reinforce and not oversimplify, it is the degree of inversion that matters the most. it is not inverted enough to be hyped. it is not inverted enoughflattet good. i am looking at another chart here. maybe what we need to be looking at is what is known as the fed model. what has beeny of an effective barometer where stocks are headed in certain circumstances. the gap between the s&p 500 earnings deals and u.s. treasury yields.

that means the relative attractiveness of stocks is improved. it is time to step in with conviction to u.s. equities? right, it is not a classic allocation, but you are earning your bond yield indicators. the s&p 500 is very compelling versus bond yields, for obvious reasons. any earning at yield and bond yields and determined that it is attractive to put in the risk. the degree of slowdown is creating this uncertainty. it is creating this incentive for risk acts goats -- risk assets. the rally and developed market equities, you cannot extrapolate for the rest of the year. you have to get a better 12% total return.

you will not get that in the next three quarters. you need to be cognizant of that. your dividends will be a larger contribution to your equity market return. i am looking at the yield on u.s. benchmark 10 year. 1%.rently drifting at 2.4 what you consider fair value? given the economic momentum, we don't know where it will go. the u.s. looks quite healthy. you have to think in a nominal 75 seems reasonable given the u.s. economic pulse. however, there is always that forward-looking. what degree of slowdown? this a version

the yield curve and the u.s. 10 acceleratingrt next week or next month. that could have unintended consequences that keep that yield lower. how long does a curve inversion the two last to be of real concern? the folks at jpmorgan say it will have to be to june. >> if you go back to the 80's , itthe height of inflation is usually a three-month inversion of up to 50 basis points that makes it a high correlation to recession. we are a long way from it. inversion is needed for three months. all things being equal. in thisthe scent that world's there is demand to buy log in regardless. keeping that flatness inversion that we were not getting paid 2007.

on wednesday, president trump's national security team was deeply divided as to whether a small company -- group of countries should continue to buy iranian oil. russians refiners along the houston ship channel cap on pace for the best quarter. we heard from an energy reporter. is a major exporter of crude. it could make or break whether or not we are entering a bullish or bearish market. you look at what happens here. year, to the surprise of many, allow countries like china, india, and japan to continue importing iranian crude despite the u.s. sanctions. those will be ending later this year. the uss to decide whether to extend them.

right now we are heading toward a potentially balanced market by the end of april according to some of the analysts that bloomberg has spoken with. if they were to end the waivers, and that would take a lot of potential cargo out of the market, adding a more bullish sentiments. it really kind of boosts the prices. if they were continue with the waivers, then potentially the market will continue as a goes forward. folks are watching this very closely. > you have people saying that $65-$75 dollars per barrel is the right price for crude oil. what else are traders focusing on at the moment? >> the big ones, as it has been for the last two years, is opec and russia. what are they going to do? will they make the cuts they promised in december? ahead of thewent

heard and really pushed the cuts in december. they have already made what we does -- they promised. russia has always been looking -- looked at as the laggard. there were sentiments in the market that russia would not be able to make the cuts they promised. from the data and what they are hearing from the ministers of the russia they might be able to make it by the end of this month. adding more bullish sentiment of the market. at the same time, everybody will be looking at what happens in venezuela and what the u.s. will do regarding sanctions. comes out of cargo the country, that takes more supply out. you could have prices continue this uptrend as well. emma: a big winner for president trump and his administration. ueller investigation found no evidence of collusion with russia and the attorney general so there's not enough proof to call -- charge the president

with obstruction of justice. >> there was no collusion with russia. there was no obstruction. none whatsoever. it was a complete and total exoneration. emma: we were joined by our senior editorial -- international editor. summary of the report from attorney general william barr, who was appointed by president trump after he had fired jeff sessions. he that four-page report, says that it is clear that there is no evidence of collusion. that point is pretty unambiguous. there is no collusion. of obstructione of justice, he says there is general had made the conclusion that there is not enough that president

trump had committed obstruction of justice. that is more ambiguous than the collusion argument. president trump is saying that there is no collusion and no obstruction. totallete and exoneration. now the question will be will this report be made public. well congress get to see it? and what action they may take from their. >> what is been the reaction so far in washington and elsewhere? is it the case where you have two camps, the republicans and democrats, democrats will try to use whatever they can of this against the president and republicans will use it to vindicate their position? is that the way it is divided up? jodi: that is part is what is going on here. certainly president trump and his supporters view this as a total victory.

president trump has been calling this a witchhunt from the beginning. they are quite pleased. they will use this in the 2020 election campaign. democrats on the other hand are going to try to use this for their own investec a tour in apparatus. democrats to control the house of representatives. they can bring investigations. they certainly intend to do so. we heard from the head of the house judiciary committee. he said not only does he think this should be made public, but he tweeted that he wanted to call attorney general barr to testify given that there is some ambiguity on the question of obstruction of justice. we may even call him to testify. and certainly other investigations of president trump, his company, and his campaign and continue. >> in terms of what they are

able to do at this point, because the letter is quite clear about some of the restrictions that are in place as far as releasing some of that information. from what it seems, it could take some time until the fuller extent of this report because clear. right, and that is something the democrats will really push for. they have asked for mueller's underlying evidence to be released. given these other ongoing investigations which he sent them information, such as is virginia,n new york, the attorney general's office and justice department has an investigation going on as well. that catholic it's the picture of what could be released. and what will be made public. and what congress can do. but the democrats are certainly going to push. they're going to try to investigate. emma: senior u.s. officials began talks with china as both

sides work to reach a deal to avoid escalation of their eight-month trade war. our china correspondent tom mackenzie joined us from the forum and hainan ahead of the diplomatic talks. >> there certainly stepping up their discussions. sense ofying to get a the direction of the travel of these talks. we are expecting the focus to be ,n this enforcement mechanism how they deliver that. and also the question of tariffs. china is very keen to get some of these tariffs removed. what we heard from president trump over the last few weeks is that he is determined to keep them in place. there is a friction there that needs to be resolved. uchi is in beijing. n.

the executive vice president we are in the last negotiations.e there is a need to address some of these issues. goldman sachs says they expect the deal but not a complete rollback of the tariffs. and that tensions are likely to continue. another indicator of headwinds that china faces. tom: absolutely, industrial fell 14%. that is the biggest drop in a decade. since 2009. it reflects weaker prices. and weaker demand domestically and externally. from the european union and the u.s. the oil sector and the chemical services sector and the office sector all being hit by this. policymakers are saying they will cut taxes. though she kick in on the first of april.

that could provide some relief. bloomberg intelligence says that this may not be enough. will benk the pboc looking carefully at this data. it could includes the chances of a benchmark rate cut at sometime this year to address the slowdown. profits are weaker which means they are spending less than investing us. that further weakens the economy here in china. emma: concerned that they $69 billion bill.

you are watching "best of bloomberg daybreak: middle east." our middle east finance reporter matthew martin has the story.

>> aramco is going to be buying 69.1 billion.e of that is pretty close to sabic's closing price. is getting this without having to pay a substantial premium over the market value. there is some question about how i got to be this agreement. not having too pay for it. is handing something from one pocket to the other. ultimately, there's not a huge amount of real value being created in this deal. with the providing pif cash to go out and continuous for an acquisition spree. >> what are they going to do with all that cash?

aramco, it makes sense. but with the new firepower, what is echo? pif has beeneen unafraid to write very big headline grabbing checks. there was some talk that they would look at putting similar amounts of money into a vision fund. checks towritten big invest in tesla and uber. their ability to raise through large amounts of cash very quickly should not be underestimated. it is short on -- not short on ambition. investment banks all over the world are pitching ideas to it. they will be of the race to this cash very quickly. an excitingfor a

few months ahead. let's widen out the discussion. joined by the chief investment officer and asset management at ads. at what is arguably a very focused steel between two very large companies. what is the likely ripple affect for stocks in saudi arabia? for the industry? what is your initial reaction? ani think this deal is unambiguous positive for saudi arabia. it is the next step in the vision 2030 plan. to diversify the economy away from its oil dependency. this provides an other source of capital to the pif into the government's. that is one of the aims that the pif has upheld. is there anyway to invest

around this that someone who is not involved in the deal. anyway to take a look at the material players. some of the company to work with saudi? with a supply chains? ashish: i don't think it is just about sabic or the people who provided it. it is much broader. will be invested in them the general economy lift up. there are vision 2030 plans that will benefit from this influence of capital. the best way to take it vantage this is to buy the saudi market itself. we are seeing people move notches from the headline banking plays to more out of index names and focus on more consumption. that is showing an uptick in saudi arabia. storycoming up, a saudi

continues to garner international investors apart. we hear from chief strategy officer next. this is bloomberg. ♪

emma: welcome back to "best of bloomberg daybreak: middle east." the saudi's expected passive amount of $11 billion. we spoke with a chief strategy from our studio in abu dhabi. >> we have seen this happen in the region before. saudi is the biggest inclusion story in the region. 2.8%. we have seen that coming in. we have seen the valuations.

we have seen this before. we expect this to continue. -- biggest influence all event will be in may. and then the second one will be in august. ftse is going up gradually to get us there. valuations are looking forward for these. above 16 times the multiple. we have seen some foreign inflows into that market. ofy are making the most those markets. rather than local investors. >> we had quite a few conversations on the set with some other voices. they make the argument of the

saudi consumer confidence numbers are making a bit of a comeback. how would you position around that? is it a time to get into some of the consumer play? >> we do believe in that. biggestink that the damage is the outflow of expatriates living in saudi arabia. that has probably buttoned up at the moment. the expectations between some saudi numbers are that up to 3 million people have left. we think there is strong local consumption demand. we think that will grow going forward. we are looking at some of those stocks. even though they are not included in the foreign inflows. that therewe think could be some good pockets of opportunities in those markets. the shares benefit from the kind of positive momentum in the rest of the market.

you have been quite bullish or optimistic about a turnaround story in dubai. i know that not everybody agrees with you. you have a contrarian position. we wait and we wait and we wait. is still not really coming through in delivering. when do you expect it to finally happened? >> i don't know. last year, dubai closed in the negative double digits. digit positive single right now. just below 5% up. it is not widespread. the bigger companies are the ones that are there. that if you get the turkish banks story out of the way, there is a lot of realization that the value.

if it goes up, it will pull of the index. we have seen the pressure on the volumes because people are comparing quarter to quarter. don't compare quarter once a quarter four. it looks better at the moment. i think there will be a pickup in the real estate story in the end of 2019. story goingpositive up to the olympics. overall we still believe the story. it will benefit from some of the foreign inflows that will go to saudi. some of it may come on the year and may stop in the uae. how significant is the yield curve inversion from a regional perspective? i am thinking here of some of the rates.

a more dove-ish tone we are getting from the fed. affects0 year treasury the kind of appetite for long-term lending and some of the fixed income moves that the market.ming to the fact that this is going down at the moment, the fact that interest rates of stopped and now people are putting of an end.es we think that will help the market. in certain sectors. in a mortgage or borrowing, some of the companies will actually borrow. that may help some individuals. it could be useful for them. .nd the dollar goes weaker that should be positive for making the uae a less expensive place to be. it is a good story. we believe it is a good story

going forward. we believe we may see the possibility of a market pricing 10 or 20%. that will be stronger as we get to the second half the year. that is positive for us at this time of the year. markets have pressure on yields. me jump in here. in terms of the outlook. a raised forecast for 2019 oil prices. they are seeing an average of $70 a barrel. have you made any changes to your outlook given what we in venezuela in terms of a global economy that is beginning to show signs of a more pronounced slowdown? foronestly, if it was not the exclusions that trump has given the six countries on the iran, weting from

would have seen the oil much higher already. that six. will finish . maybe that is renewed for another six months. we continue that the oil will be at the range we see it now. around $70 a barrel average for 2019. if we don't get renewal of those exemptions, we will probably see oil go higher. especially if opec continues on this path of cutting production. that is a place where it sticks. i think producers will be happy for now for the second half of the year. marketoming up, the reaction to the extreme takeover of uber. the details, next. this is bloomberg. ♪

emma: you are watching "best of bloomberg daybreak: middle east." we checked in with fully. the checkout after the careem and it deal was announced. perspective.is in said that they are going to earn up to $480 billion from this deal. there was clearly a positive indication from the market. theng that this was one of best pieces of news he could get up the saudi market. the stock was up more than nine percent, close to 10%. it was the best session in over four years. it is trading back at the highest level since may of last year. all of this to say that there was positive reaction with al andar, kingdom holding,

also stocks that they were expected to trade up on account of the news. the money they are going toward is not nearly as big as al tayyarlet's talk about turkey. stocks have continued to a bumpy road. what are you hearing from traders? felipe: volatility is back to the turkish market in general. if we look at the short-term volatility, it is back to the highest levels. good andares to a very smooth start of the year for turkish stocks in 2019. we had the market entering territory a month ago. it was a positive story. --line with a very pope positive momentum for emerging markets in general. the spotlight is back in the currency.

it has dropped this week. we have stories and the government is not allowing it to slump for. we are not seeing the same with the stock market. volatility is back. there has been some criticism that dubai has not been fastened up with reforms in comparison to regional peers. what are they putting up on the table? they announce some structural reforms to their post trading scheme. now we have companies that will actually be in charge of being a depository. responsible for clearing of stocks post trade. those are things that are still being signed off on. the regulator is expected to start by the end of the year. these are good indications that the stock exchange is implementing different measures to try to attract new investors.

a improve liquidity and market that has to seen the money flowing in. the federal reserve has handed egypt another reason to proceed with what could be the deepest interest rate cuts. we spoke with the head of research for credit suisse on wednesday about the recent performance of the nation's currency and how the central bank will respond. >> up the last week we were quite comfortable with our view that on balance the central bank would wait until after fuel increases in june. after having raised interest and the devaluation, there was a lot of room for the cuts to go. we thought this year there would be a slower pace. but after the fed meetings, ishre was a much more dove- outcome. you look at the context of the rate cut that we saw last

month, that was unexpected. it occurred despite the fact that inflation had increased. clearlyral bank position themselves on the aggressive side, showing they are willing to cut even when inflation is increasing. how aggressively are you recommending exposure to egyptian assets? fadh: we are very bullish on egypt's. it is pretty much our topic across the middle east. equity sidewith the is that liquidity is a bit more of a difficult obstacle for investors. for me the upside there is still substantial. fixed-income side, you get a more attractive risk-reward payoff for investors because the liquidity is easier. the those concerned about the growth risks and egypt, having that coupon of return is a more attractive opportunity. with the rate cuts coming and

and a stronger pound, it becomes all the more attractive. don't think the rally and egypt is going to sustain in the short term. we think beyond 17 will be quite difficult. as we head into ramadan, which is an import heavy month, you could see some pressure coming into egypt. iswhen you look at what happening in saudi arabia, you have some of the bank spain the best of -- performance year. now that the fed is turning a sh, could inove-i argument be made that is time to go for a broader rotation and how you deal with saudi equities? the amount of, inflows we see coming in on the ftse upgrade is more than we anticipated. i think that on its own shows you that there is better upside potential than what we saw before. we previously said the market is going to struggle to reach 9000.

once you get the upgrade, that could be breached, albeit momentarily. once you have that, and you have may,nclusion in the end of that is when a lot of the will be looking to rotate. thanks of had a very good run. they have a bit further to go before we see the inclusion. there will be investors looking to lock in. >> the united arab emirates was also highly featured on your research note. you're calling for a recovery around the corner. improvement in certain sectors. where are you saying that? because the broad picture is very negative. fadh: very selective. dubai's number of business

licenses issued has been on an aggressive decline since 2014. but thank you for last year, but we saw a sizable rebound. the could be a sign of a bottoming out of the economy. positiveld be more ripple effects across the economy if that trend continues. but i think it is not quite at the stage where we can call for an out and out recovery across the economy. emma: coming up, the uber this week.s big news stoking interest in the region startup nbc space. we talked to the region's most established investor. this is bloomberg. ♪

emma: welcome back to "best of bloomberg daybreak: middle east." the level of investment in the region remains modest despite global standards. that including to bloomberg intelligence. one of the more established players in the space spoke with us. >> it is still behind because of two things in my view. one is access to markets. we have a huge market. if you talk about the arab world, it is a $3 trillion economy. all of the numbers make sense. but it is so fragmented.

there is an open market where you can build up the mess and scale it very quickly. in an environment that is uniform across the region. if you have that, you will have hurdles. it will still happen. it will just be delayed. that is one big hurdle. the other obvious one is capital. there is capital. there are more funds popping up. s areovereign wealth fund announcing initiatives to invest. to dhabi announced a fund fuel their ecosystem. are the two most critical elements in my view. they will create that scale and attract people from outside the region. they will say maybe we can invest. i need to also remind you that when size happens, when there is scale, the big foreign funds and

investors will come to the region. >> speaking of some of the giants, you back some companies that became global heavyweights. what is the next unicorn around the corner? what are you most excited about? fadi: you need to think of the region in terms of consumers, mobility, logistics, e-commerce, all of these things are converging around. people are interacting online. the technology will eventually catch on. anybody in e-commerce and mobility and logistics, you will find in the coming years, the next unicorn or the next sizable company. we don't need to view things in terms of unicorns. you need to view them in terms of businesses that can scale. and make a statement for their presence in the market. we had quite a bit of

speculation around whether it is the right thing for some of these global companies to come in and buy local brands. some people say there should be protection for some of the local names to encourage competition. -- do you share that view? .adi: i disagree we cannot have an open market and say we need competition. more and getvest more people to invest in the space. he is unique in being a bold investor and initiative taker. but you need to have plenty of those in the region to believe and what he is doing so the

ecosystem builds and creates its own companies. the kareems of this world can still existing compete and scale without selling to outsiders. but the fact that they do is a product of what markets are all about. it is about their investors and how they decide to go about it. protection means the ability to produce products that are competitive. we are able to do that. >> how big a deal is the uber-careem deal? fadi: it is going to be huge in my view. proved that it can scale in the region. they can be a unicorn that maintains its value. taking attract global investors. importantly, it has two elements. its biggest investors a regional investors.

for the first time, you have us.lies and the kingdom and these are the biggest investors in careem. this is a statement that when you believe in companies coming up from the region, you can see returns. a lot of angel investors to leave than it early on. you will see angel investors having incredible returns. and stock options. they have very generous stock options. that will be new wealth. there will be a down process that is by the book. ship --re nous entrepreneurship should be about. they will go out and fuel the tech 2.0.

yahoo!sed to be >> do you become a billionaire now as well? fadi: no, not even close. that does not matter. if this deal happens, the most important thing for us is that it will be the first big vc in the region. ages about five years now. we will start paying back for a limited partners. that says if you invest in bc, you will be able to make money and return a substantial amount of your money. >> where are you looking to invest at the moment? you just signed a deal with the difc. regulators understand that you cannot not find a way for a

regulator that does not allow for fundtech. we will invest in that and mobility. and e-commerce. and consumer. and new technologies that are popping up in the region to disrupt slope moving industries. >> any new funds that you are planning? fadi: we are into our second fund now. i'd everyone else in the region, we are excited about it. there and it of investment that we have not seen before. this careem deal will what the appetite of investing -- whet the appetite of investors. people will say this is a place you can invest in. where we not in it? where were not participating?

12 did invest like al tayyar well reap benefits. i am emma chandra. this is bloomberg. ♪ you.

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>> good morning from london. this is bloomberg daybreak: europe and these are today's top stories. third time lucky. theresa may makes a desperate push to get her brexit deal past. stocks rally in the first quarter. dramatic reversal in tech and first income. and a changing of the guard. the wells fargo ceo abruptly steps down. this is morgan stanley presidents announce he will work retire in june.

>> yesterday the s&p 500 closed higher. futures are up again. the 10 year yield hovers around 240. we have seen a dip below that a couple of times. we are up at basis point today. switch the board and look at other things we are watching. we are keeping an eye on cable as theresa may takes her brexit deal to parliament for a third time today. will she get it through? we are slightly higher on cable. also extending losses.

it weakened more than 4% in yesterday's session. we've seen some gutwrenching moves in turkish markets this week. some big moves in stocks and bonds. we will look ahead to the election and what comes next for turkish assets. we are seeing oil higher as well. set for its best quarter in almost a decade. it's check in on the markets in asia. yvonne: looking pretty good. we are wrapping up the trading week on a positive note. year to date we her up close to 9%. recouping some of the loss that we saw back in q4. china is coming out on top across major equities. take a look at your large-cap. we are up more than 3% in shanghai today. that brings us to a year to date

total of new to 31%. earnings have been in focus. we have seen some consolidation. turnovers have been coming down a little bit. numbers coming out over the weekend could be crucial. take a look at the movers. we have seen massive moves. asiaiggest mover here in has been the stock. going toward a daily limits of up 16%. that is after they announced a deal, 7 billion deal with astrazeneca to work together on a cancer treatment. we are up to a record high for the stock. up 5.5%. earnings, goldman says it was a

beat. the liquor giant really showing that they dutch the slowdown in the economy. and air china as well. we talk about the airline earnings today. they lifted optimism when it comes to the industry. and oiltabilization prices. that is really helping the airline carriers here in china. air china is up close to 8%. neera: it is the 29th of march, what should be brexit day, but exactly two years on from the triggering of article 50, theresa may is still try to get her deal through the u.k. parliament. later today, lawmakers will vote on the irish backstop divorce bill. a discussion about the relationship with the eu will be set off for a later date. today?n we expect from it seems like it is a key time

to watch. we are expecting the vote to take place later. just on the withdraw agreement. not on the future relationship. on whether there will be a free trade agreement or anything similar. we are taking part of theresa may's deal and putting it to a vote in the house. 11 a clock a.m. is relevant. that is the deadline that theresa may agreed with brussels by what she has a passer deal. she thinks this qualifies. she has a by 11:00 p.m.. that of -- unlocks the 29th of may as brexit day. do that, april 12 looms large on the agenda. that is when the government has to extend the government -- brexit discussion or go no deal.

can she get her deal through today is the big question. some still seem to be holding out. she has given some to come aboard. neera: speaking of the fact that this was supposed to be brexit day, a lot of businesses in the u.k., there is a big story on the bloomberg, they have already made the preparations. some of them will have gone to waste. talk about the symbolism of today's vote. anna: great symbolism around the boat happening today. it was supposed to be brexit day. 11:00 tonight was supposed to mark the hour that the u.k. left the european union. two years to the date sense theresa may triggered article 50. many of the newspapers are focusing on that symbolism. that was supposed to be the moment that britain became a proud, sovereign nation. is calling it a

day of reckoning. i like this from the sun. arlene. channeling dexy's midnight runners. this headline says there is a deadlocked britain. and a business that has been planning around the 29th of march is the brexit day will be frustrated to hear that there will be some delay. there is the story on the bloomberg talking about companies stocking their shovel and nonperishable goods. maybe those will go to waste. or they will have to pay next are warehousing. other people are relaxed about what deal we get here. bloomberg's anna edwards

at westminster. joining us this morning's head of asset allocation at a wealth management firm. you.me both of thank you for joining us on the show. you reminded me before we came on air that two years ago you said hard brexit or nothing. we are there. what does that mean for your asset allocation in the u.k.? the sterling could be under pressure. we have experienced the strengthening of the sterling. over the past three months. decision a good

regarding brexit. but nothing has happened yet. what we expect is a new deterioration of sterling in the next week. great to have you with us as well from berlin. is your base case still a soft brexit? >> yes it is. the uncertainties have not declined. they are still very large. forecasts are quite difficult. but we have to make some kind of plan for our economic positioning. we do think that a soft brexit is the most likely scenario. one way could be that today the may deal, and both of its parts, is past. that would be good news for the markets. if it does not pass, we will have another long. of uncertainty. i would expect another extension of the article 50 exit. and a continuing discussion of

it. i saw that the vote in the parliament was quite positive for a customs union and for that to be an indication that many members of parliament do want a less disruptive long-term solution for great britain. we think a soft brexit has the best chance of 70%. neera: what does that mean for u.k. growth in 2019 and 2020? growth is somewhat subdued by all the uncertainties that surround brexit. you mentioned that some companies are thinking about three locations because of the uncertainty. we sought the pound plummet and it has risen again a little bit in the hope for a softer brexit. inflation andd up reduced purchasing power. the economy is going at a speed of a rep -- about 1.4%.

that still looks pretty good on the headline basis. but it has also been pushed ahead by the stockpiling that will end at some point in time. and the servings rate -- savings rate in the u.k. has gone down significantly. this is stabilize consumption. the u.k. economy has already taken a hit. we expect around 1.3% growth this year. and the same number for next year. under the assumption of a soft brexit. betterif things turn out than you expect, are you waiting to put money to work in the u.k.? if so, which assets would you be looking at? >> we will probably enter again in the u.k. equity markets which could benefit from a good deal for brexit. we have two main scenarios. the first one is a long extension of discussion with europe about brexit and the way

to do it. formaybe a longer extension negotiation and a new agreement on how to do brexit or would it be for early general elections? the probability is rising regarding the general election. is a no dealenario brexit which could also be a possibility. tose two scenarios combined an 80% probability. neera: i with to get your outlook for the bank of england. in your baselines neither you have talked about, you estimated in february that sterling would reach higher levels in the second half of 2019. that obviously is weaker from here. if we have weaker sterling and we continue to have a tight labor market, is there any

chance we could get any tightening from the bank in 2019 or 2020? i think the scenario of a tightening is rather remote. the international environment with interest rates on be sliding downward is not going to entice the bank of england to raise rates in anyway despite inflation being somewhat higher. i think we will be on hold more or less in the soft brexit scenario. the no deal scenario is quite a scenario.

. treasury secretary steven mnuchin the talks were very productive. u.s. policymakers say the economy is still on track for solid growth. this is despite financial concern.

president john williams is downplaying fears of a recession. and st. louis fed president says the growth should rebound. -- says that calls for a rate cut are premature. boeing is being sued on behalf of a passenger who died in this month's crash in ethiopia. the suit claims that plane is not safely design. and follows earlier claims against the company. boeing's troubles are growing as the plane maker is under intense scrutiny and a criminal probe. is heading for the biggest quarterly gain since late 2016. a january disaster in brazil forced a producer to shut down tons of output. investors are still try to pick up a long-term effects of that decision.

global news 24 hours a day, on air and on tictoc at twitter. this is bloomberg. neera: debra mao in hong kong. thank you. today we are asking the question, which asset will outperform next quarter? we have seen a number of the rise in the first quarter. notably stocks and bonds in tandem. reach out to us. up, global equities round up a strong quarter with gains heading for the best quarter since 2012. we discussed the factors contributing to the sea of green. this is bloomberg. ♪

acts on the government

the democratic well of the british people. and it acts on the clear and convincing position of this house. a few minutes ago, and brussels, permanent kingdom's representative to the eu handed a letter to the president of the european council on my behalf confirming the government's decision to invoke article 50 of the treaty on the european union. thea: on that day, government acted. but over the last two years, it has failed to strike a deal on brexit. let's take a look at british accents -- assets over the last two years. the ftse is down nearly 2%. it's go to bloomberg in hong kong. the first big u.s. tech listing of the year got off to a stellar start. it raised its $2.3 billion in its initial offering. shares were priced at $72 at the

top of a revised range. it could value the company at $25 billion. this sends an encouraging signal to silicon valley companies lining up to go public this year. after zeneca has agreed to pay $70 million to buy into a promising japanese cancer treatment. it is the pharma companies biggest deal in more than a decade. and part of its push to become a global oncology powerhouse. is tied to money sales milestones and other contingencies. has stepped down as the chief executive of wells fargo. a range ofto tame scandals. he will be replaced on an interim basis by the board's general counsel. democratic presidential hopeful elizabeth warren cheered the departure. she says he should have been fired a long time ago. that is your bloomberg business flash. neera: thank you.

asian stocks look set to round up a strong quarter with gains. is due the improvement to the prospect of the end of a trade war. the economy is still on track for solid growth beside concern for trouble. that made up on a couple of the comments here. we heard from the new york fed chief, john williams, downplaying fears of a recession risk. also interestingly, one of the biggest doves said it was premature for the fed to consider cutting rates. is it premature? early. it is too demand in the u.s. is still very strong. corporate investment and consumption.

is marginal for the housing sector. regarding thee on prospect for the next quarters in terms of growth. growth is slowing down compared to last year. expect this year is a little bit more than 2%. we are not in a recession yet. we do not see any early signals suggesting that a recession is right around the corner. meaning that it is too soon for the bet to cut interest rates. bed made its own job more difficult from here by its dovish pivot? >> it was a strong change of communication over what we witnessed in december. the data has not changed so

much. but the announcements of the fed changed massively. now there is this expectation that their interest-rate policy may even see terms -- cuts of the adjuster a. adjustments rate. the fact that the yield curve has an inversion is a sign of concern for many. the yield curve always has been a pretty good indicator of slowdowns and recessions to come. but we also have to that the yield curve can remain in an for a long time before a recession hits us. 006-2007, we had an inversion of the yield curve in the economy is going very strong. the year 2019 will not be bad for the u.s. economy. theave to wait and see what debt ceiling issue and the setup of a budget for 2020 will bring. i expect some controversy

between the government and the democrats in the congress. there are some problems ahead but i don't see a recession retro the corner. have blue bay selling treasuries in a bets that the bond rally is irrational. has it been irrational given where we are with global growth? >> i would not say irrational. i would prefer to mention a conundrum. how to explain that your own interest rates are so low. conundrum.d of trying to explain why long-term residents -- interest rates are so low. broken -- rue is golden rule is broken and this is the news regime. this rule is broken since the

crisis. maybe the premiums are lower than before. we have many explanations. that areexplanations making sense to explain why interest rates are so low. there is no consensus. this is why could be misleading to conclude that the inversion of the interest rate curve is another signal of a recession. neera: meanwhile, you do think the 10 year treasury yield should remain well below 3% for a while. we will discuss more in a moment. thank you so much for joining us. up, you will be feeling

pretty happy as the first quarter comes to an end. we will study what is up and what is down in what could happen next. that is next. while you are traveling to work, tune in to bloomberg radio. this is bloomberg. ♪

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♪ ♪ through look at potential hiccups to financial systems from a disorderly brexit. managerse up money based in the e.u. could be blocked from using exchanges in london. the plan was unveiled just this month and has lobbyists pleading with the e.u. to reconsider and for the u.k. to not retaliate. second, while contract between the u.k. and e.u. leaders will remain valid, investors are still scrambling to work out how they will be serviced. banks have also been undergoing the cumbersome process of re-papering,