johnson picked his cabinet, setting the stage for brexit. phase one trade deal done. now what? phase two sets the stage for 2020, while germany and china begin their own fight on technology and autos. global economy fine, not awesome. manufacturing and service is barely eke out a gain in europe. welcome to "bloomberg daybreak" on this monday, december 16, the last full trading week of the year. i'm alix steel. s&p futures clinging to their gains, up by 0.3%. european stocks hitting a record high. global stocks friday closing at a record high. cable rate jumping out to the highest level, at least when it comes to the euro, since 2016. the euro climbing higher despite iffy economic data, particularly out of germany. yields in the u.s. backing up by about two basis points.

will we had that 2% as we continue to get a trade deal? time now for global exchange, where we bring you today's market moving news from all around the world. from hong kong to beijing, london and washington, our bloomberg voices are on the ground with today's top stories. in asia, chinese economy is showing signs of stabilization and regaining some kind of growth momentum in november. china's industrial production and retail sales both meeting estimates. joining me on the phone is in an. current -- is enda curr give me some of the details in the data dump we saw overnight. enda: these clearly signal that the economy is ending the year on a better note. 8%.il sales climbed industrial production rose 6.2%. there's some caution around the fixed asset investment number, which only grew 5.2%, but nonetheless, the take away among

economists was it showed that the stimulus the government is rolling out is having some traction. there were some seasonal effects as well. but when you have a trade agreement coming into the mix of the coming months heading into 2020, we didn't get much on the way of extra detail on the trade agreement. the foreign ministry only said officials from both sides remain in konta -- remain in contact. now, the news on china's economy is upbeat for the first time in a while. alix: thank you very much for joining us. now we go to beijing, where hong kong chief executive carrie lam met with senior chinese officials over the weekend. both the chinese president and the premier reiterated their support for lam following another week of pro-democracy protests. joining us on the phone is tom mackenzie. what is the significant of the support from beijing, and where does this put protests in hong

kong? tom: support from beijing is absolutely crucial because that is what carrie lam relies on, and has been questioned for the last few months, how long she can continue in post given that poll ratings for her are at historic lows. we see more than six months of protests, the most in more than a decade. the first thing we heard when she came over for this meeting was would she still have their backing? it is clear that she does still have their support. -- despiteandover suffered the have grimmest year since the handover, they continue to support her. the other question is whether they would meet any of the key demands of protesters, or merge towards universal suffrage, and

on both of those, we got essentially no comment from beijing. no surprise. xi jinping said they would continue to support the police and uphold national security, so we should expect protests in hong kong to continue. alix: thank you very much . in the u.k., boris johnson is set to appoint new masters -- new ministers to his cabinet. joining us is near cherish -- is nejra cehic. where are we now? nejra: we are looking ahead to three new appointments today, -- appointments today, three secretaries. we are looking to introduce a law to get brexit passed so that the u.k. can exit the eu by january 31, and also, on thursday is the queen's speech,

where we find out about some of the new government plans. the chancellor of the exchequer actually stepped out of 10 downing street earlier and said, "welcome to the people's government." we are expecting some spending plans in that speech. we are expecting about $45 billion of extra spending on the national health service every year through 2024. this is a government that is going to spend more, but not necessarily open the fiscal taps. end of austerity does not necessarily mean spending boom. find out more today based on his cabinet picks and some of the speeches he might given the next few days. then the question becomes whether the brexit he wants is something he will be able to negotiate with the eu in 11 months or whether an extension will be needed july 1. there are still questions ahead. another big one outstanding, what is the future for the bank of england and the successor to mark carney, who leaves on

january 31? and also, what might happen in terms of the unity of the u.k. gains insnp scotland? the fight reemerges for an independence referendum in scotland. alix: thank you very much. now we go to the repo market, because today is the largest corporate tax payment day of the year. investors watch the repo market for signs of stressed. edie berger joins us from london. what are we going to learn today from the repo market? edie: we are going to learn whether the fed's plan is enough to relieve the stress. today is really a key test because we have a very similar set up to what we saw in september, and a lot of market purchase bins were really concerned what this meant for this really vital cog. things tend to drain from the and they pull back from

their market facilitating function. they said more action needed to be taken, so it is different this time is the sheer amount of liquidity that the fed has planned to do. willsaid $500 billion they inject into the market through the year-end. today specifically marks the start of a 32 day operation w here $52 billion is getting put into the market. that is the key question. is the repo market going to spike like we seen before, or has the fed did enough this time? alix: bloombergs dani burger, thank you so much. the u.s. and china reaching that much dissipated phase one trade deal. the two sides will release the full agreement in early january. u.s. trade representative robert lighthizer said several issues remain. > phase one is going to be

implement it right down to every detail. it really is a remarkable agreement. but it is not going to solve all the problems. alix: 20 me from washington is shawn donnan, bloomberg trade reporter. i just want to know how optimistic traders should be on this phase one deal. that: there's no doubt they've locked down this phase one deal. they are doing their final review of it. that should take a few weeks, and we will get that signed in early january. key points to remember. bob lighthizer making the point that he did not yet have a date in the calendar for the beginning of phase two negotiations, which a lot of people think are going to be much more difficult than these phase one negotiations, where they are going to address issues like industrial subsidies in china that a lot of u.s. businesses would like to see go away, and those phase ii deals are going to take some time. bob lighthizer this today saying he expects negotiations to go on for years. that's not too reassuring to a

lot of people. the second point is there's still a lot of tariffs that are going to remain in place as a result of this deal. there's a small rollback in existing tariffs, 110 billion dollars of so from china. we will see the rate go from 15% to 7.5%, but there is still a big 25% tariff on $250 billion in goods coming from china. those aren't going away until we get progress on phase two. that could take years. there is still a trade war going on. it has just taken a bit of a pause. alix: finally, we stay in washington, where the impeachment process is moving ahead. senate democrats are demanding that the trump administration testify in the senate trial. what they told abc this week. >> if president trump is

overwhelmingly acquitted in the senate, is that a failure? it isn't, noto, in the sense of the constitutional duty in the house. alix: joining me is kevin cirilli. what do we expect over the next five days? kevin: on wednesday, the house likely going to vote along party lines to impeach president trump, backing him the third president to become impeached. alreadyre, rules are beginning to emerge in the senate, where minority leader chuck schumer yesterday sent a letter to the majority leader mitch mcconnell, calling on more folks to testify from within the administration, including john bolton, as well as mick mulvaney. it is unclear whether or not leader mcconnell will accept that request, but all eyes are indicating that there should be a quick acquittal in the early part of next year and the senate. onnwhile, the president friday telling reporters he would very much like to see folks testify that weren't able

to testify in the house proceedings. most notably, hunter biden, former vice president joe biden's son, who has been in some of the questions surrounding this. either way, that vote is likely scheduled wednesday, and then how they will shift to will be in the senate. 47% of folks in favor of impeachment, 46% opposed to it. . alix: thank you so much. another story i'm watching today, china is now threatening retaliation if germany bans huawei as a supplier of 5g equipment. some lawmakers are proposing a bill that would a -- that "untrustworthy vendors." meanwhile, huawei has repeatedly rejected accusations of its

potential. morris coming up in today's first take. this is bloomberg. ♪

♪ alix: i'm now for bloomberg first take. -- time now for bloomberg first take. joining me, you've got vincent cignarella, former fx and rates trader, mckee, bloomberg economics and policy correspondent, and with us is david kelly, did morgan asset management chief global strategist -- j.p. morgan asset management chief global strategist. what is the trade? vincent: we sort of have to

trade more behind, to some extent. there's a pause. the market is not euphoric, but it is giving us an opportunity to catch a breath. i think the focus traders are talking about is we are moving away from u.s. and china trade and focusing on europe, and germany looks to be front and center, first from what is going on with china and autos, and probably with donald trump and autos. germany is the next target insight for traders. david: i thing it's pretty clear that trade tensions are diminishing. one, a clear phase path to brexit. i think once we get brexit, it will actually be a smoother relationship with europe then people fear. it amounts to less problems with the global economy. i would expect international equities to do better off. i think the u.s. dollar will come down. michael: i'm going to defer on

markets to the two experts here, but from an economic point of view, i brought along a chart that shows what we've lost in exports to china during the trade war that we won't get back from this phase one deal. you can see the giant hole in u.s. export economy. that's not going to come back, and we have lost a lot. so there are a lot of questions about what we've gained. now that trade tensions may plateau because the trade war didn't go away -- still a lot of issues out there -- but the tariffs still remain, so the overhang on the economy and the global economy still remains for right now. vincent: i think mike has nailed it, as usual. he said it on one of these shows in the past. the trade situation with china, the ag exports in 2017 amount to exactly where we are right now, and lighthizer said over the

weekend before the billion dollar or $50 billion trade deal is going to be over a two-year over a two-year. we are going to see supply chain management the phrase for 2020 as to where people move. will see u.s. corporations slowly move away from china, and see china move away from the u.s. for the same reason. david: i think the tensions in the trade war is in itself a theme. both sides realize this is just making us both poorer. particularly in the u.s. case, the bus economy can't actually take that much more bad news on trade. the end mensuration talks about china being anxious to have a talks- the administration about china being anxious to have a deal. they are. vincent: i think that is totally

correct, but when you look at phase two, they are going to want to have the subsidies removed, which is what the u.s. wants. it is a state run economy. china is not going to move away from that. soid: but it is all artificial because the reason we have a trade deficit is not because of china. it's because the dollar is too high and we run a big budget deficit. we live beyond our means as a government. small trade deficit with china. we have a big one with mexico. but it won't fix anything in this economy. that, i think increasing trade tensions is damaging to both sides. i get what you are saying about phase two negotiations, but i think the administration might soft pedal a little bit over the next few months. vincent: going into the election, one would expect they will. i would only add the

administration isn't going to do anything. it is all what up -- it is all up to one man, trump. alix: that raises the question of what happens with europe. the headline of china versus -- of china, versus huawei, where does that leave that country? say the rest of the world is going to benefit from a trade deal more than the u.s., but then you still have these negative headlines. david: obviously there's still a lot of problems with german manufacturing. germany has the ability to do stimulus to get themselves out of this problem. but i wouldn't downplay the brexit news. i think getting past it, the almost internal battle with britain to some more peaceful relation for the future, i think that will be pretty good for europe in the future. michael: overtime.

in 2020, they have to negotiate with thede agreement european union and with the united states. it takes time to negotiate, so 20/20 is going to be a bit of an overhang over the u.k. economy -- so 2020 is going to be a bit of an overhang over the u.s. economy -- the u.k. economy. they've gotruth is so much in common once you get past the political issue of sovereignty. i think a lot of these different regulations and so forth such as they were will be kind of the same. than a: it took more year to negotiate usmca and there were no tariffs. that was just an update. alix: what i don't understand, if brexit was a big deal for the rest of the world when we were in that, why is it now a good benefit if we are out of it?

the eu hasthink other motivations. they are going to have issue with china with the car sales. huawei 5g, they have issues with trump. so germany is caught between a rock and a hard place. they are motivated, and they will motivate the rest of the eu to come to terms with the u.k. as quickly as possible. alix: just to end with a trade, you take a look at the cable rate, $1.33. do you want to buy cable? do you want to buy u.k. assets? vincent: i'm not a huge fan, to be perfectly honest. david: given the trade deficit, it is hard to be a huge bull on it is a small positive for the world. it is a slightly bigger positive for europe to be moving this direction. alix: do we get any fiscal boost here in the u.k.?

michael: it's going to be interesting to see how they handle this. boris johnson proposed a lot of fiscal spending, particularly for national health service. we understand that is going to be in the next queen speech, but where they get the money? it's been austerity for a long time. that changes. they've got to figure out how to pay for it. alix: maybe the 77 basis points on the 10 year will help them with that. vincent cignarella, michael mckee, thank you guys. david kelly of jp morgan asset management is sticking with me. we use, on the charts go to gtv under terminal. check it out. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." getting ther pfa

backing of its most important shareholder for the plan to merge with fiat chrysler. the french government signing off on the deal. the new company would be based in the netherlands, headed by psa's ceo -- headed by ceo. goldman is pledging to divulge financing that directly supports new thermal coal mines and upstream arctic oil upstream -- .rctic oil bloomberg has learned boeing may temporarily halt production of the 737 max. it now appears unlikely the company will get regulatory approval for the grounded jet to return next month to the skies. going executives are convinced a temporary pause would be less disruptive than another slowdown in production. that is your bloomberg business flash. alix: thanks so much. what are the broader implications if boeing stops

production? here is where it could matter. this chart shows u.s. aircraft exports, already getting downsized from slowing growth. boeing is the only substantial maker of u.s. aircraft, and engines and engine parts were about 7.6% of total u.s. exports . will we actually have a short pull down here, not only from boeing, but also down to u.s. exports, and then to u.s. growth? that's what we are watching today. coming up, china gets a boost from economic data and a trade deal with the best -- trade deal with the u.s. i will discuss with george from oxford. this is bloomberg. ♪ [ dramatic music ]

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3 million light years in the making. woohoo! -yeah! alix: this is "bloomberg daybreak." markets are clinging onto that rally. global stocks hitting a record on friday. one area not participating as much as european autos.

will we have retaliation from nota if europe winds up using huawei 5g components? if you switch of the board, you can see other asset classes here. euro-dollar regaining, moving higher. germany not good, but overall it is all right. cable rate still holding onto the $1.33 level. the u.s. and china inked that phase i trade deal, but some reversible damage has already been done to china's economy. both imports and exports are decelerating this year. will we get a real boost here? 20 me on the phone from london is george magnus, -- joining me on the phone from london is george magnus, university of oxford china research associate. is this trade deal enough to stimulate domestic demand for china? george: i don't think it will

be. it might at the margin because we don't know exact lay is going to happen. there's still a degree of uncertainty about whether it actually comes into being, and how long it will last, but it may have some short-term effect on bolstering business confidence and exports in china, beticularly if there were to a very rapid recovery of u.s. importsural exports to from china, kind of reverse flows to the united states. i think these are really all the margin. i don't to get is going to have . material impact on china the bigger forces are domestic, not external. alix: one of the big wins in this phase one trade deal is that china would support a stronger currency, which then helps the dollar weakened, which

is a win for the u.s. is that a nuance in this deal that you see? george: to be honest, it is an irrelevance. of all the things that appear to be on the agenda between the u.s. and china, i just don't think that the currency has any of the -- the currency commitments really have any of the relevance that isn't covered by other pledges and policies. thedy seriously thinks dollar exchange rate against the yuan is seriously overvalued or undervalued. it is just not an issue. i know it is politically perhaps significant to get something on paper that says there's going to be some sort of mechanism to ensure an appropriately valued is a methodn there in place to adjudicate that, but

it is just not a big issue, to be honest. with you it does not affect the commercial relationship between the two countries. this what areas in asia is good for that might stimulate external demand for china to help offset that weakening economy? george: well, the only thing i would say about that is of course, if it comes to pass that the trade between the united states and china were to materially alter during the next several months, which would have the effect of narrowing the u.s. trade deficit a bit, the bilateral trade deficit, so americans deficit vis-a-vis china would give down a bit, and china would surface vis-a-vis the united states. that is purely a bilateral relationship.

perhaps there would be a change to trade relationships with other countries. i already see this as being a for the rest gain of asia or the rest of the emerging world because i think, to the extent product flows direction --e flows change in one direction, they will be compensated in the other direction. i just really think it is politically tempting to mick a big deal out of this, but in reality, it is going to do very much in the big scheme of things in terms of bilateral trade or the relationship. alix: george, so great to get

your perspective. george magnus of the university of oxford china center. how much of that is going to deliver into economic growth? "oomberg economics wrote, lower uncertainty could boost gdp by 0.6%." still with me as david kelly of j.p. morgan asset management. you've got to sides their. where do you sit for global growth? david: i don't think you can say with that much precision that it will be 0.6%, but i do think that global growth will do better. it is not just the exports and imports. it is the investment spending that is held back. if you have less tension, you get more investment spending. also, this is about a manufacturing slowdown. manufacturing is notoriously cyclical. i am more optimistic about global growth going forward. if we do see the dollar come down after all these years, i

think that will spur more investment around the world, so that will be doubly helpful. alix: it is a hard time looking up and being a ceo, saying now i am going to make that $20 billion investment in a plant. david: i don't think we will see a lot of excitement about it, but we will have more fiscal stimulus him some parts of the world to try and support growth. there may be some pent-up demand for investment spending. you want a plant somewhere and don't know where, but now you can feel like you can pull the trigger. i do think the economy will do better in 2020. alix: the u.s. has been the upper former. obviously, value is in europe and emerging markets. where you shift your money, if at all? david: i think you should shift your money if you are overweight the u.s. about 66% of world market capitalization.

that is as high as that has ever been. but how any investors have more than 56% of their equity exposure in the u.s.? almost all u.s. investors do. so i think everyone is chronically underweight equities. -- chronically underweight emerging-market equities. i would go em first, europe second. alix: so does it matter the absolute level of growth we see in 2020, or is it the rate of growth that may be a game changer? within emerging markets, there's always this political pendulum, and you need this to stop swinging so widely. you have to go country by country in emerging markets. speaking, the key point is the u.s. will grow. it is likely to grow by more than -- by less than 2% over the

next few years. you can make a bet on the forest rather than trying to pick out the particular trees. i think that is a good investment to make for 2020. . alix: what do you do with sovereign debt? david: that's insurance rather than a source of income. in europe, it is ridiculous. you've got negative income out of government bonds, and here it is still well below the rate of inflation. i think you should be underweight as a long-term investor. how do you get stability into a portfolio? maybe you are more conservative when it comes to equity allocations. underweightould be sovereign debt in general because too much money has been chasing after it. enough money will ruin any asset class, and i think it is time to ruin sovereign debt. into as you make a shift

emerging markets and then into europe, do you also make a rotation and say value versus growth? it is not quite where the dividing line with the united states is. in the u.s., we like the total cash is a company produces, but we do have to look at buyback yield. when we look at it from that perspective and the valuations, i would lean on financials, technology, and energy. those are all sectors we think that can do a little better than average, traditional yield plays -- better than average. traditional yield plays we tend to shy away from. alix: thank you very much. we want to give you an update on what is making headlines outside the business world. viviana hurtado is here with first word news. viviana: this week, the impeachment vote in the house is a number ofe for

democrats that still say they have not decided how they will vote. the new credit majority -- the democratic majority hinges on keeping those districts in the next election. kim jong-un has returned to nuclear talks. north korea also being warned -- to engage in publications engage in provocations. u.k. prime minister boris johnson on a collision course over the cuter -- over the future of scotland. scottish leader nicola sturgeon says there should be another referendum, but the johnson team has ruled out another vote. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: coming up, goldman sachs

thedavid solomon laying out plan to take on climate change. if you have a terminal, check out tv . look at our charts, check us out online, even scroll through and check out what you may have missed. this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." a transaction in the foods and beverages business , a $26.2 billion agreement for dupont's nutrition division. the transaction will create a new company.

own 51%hareholders will of it. pg&e has until tomorrow to address concerns over its reorganization plan. california governor gavin newsom rejecting the plan, held responsible for wildfires again. newsom wants to make sure. jeannie can provide financial assistance -- wants to make sure pg&e can provide financial assistance. authorities blocking at hudson bay. i'm viviana hurtado. that is your bloomberg business flash. alix: thank you so much. we turn now to wall street beat. first up, goldman sustainability initiative. marketsman sex ceo asks -- the goldman sachs ceo asks

markets to combat climate change. my sushiand m 'sme -- and masayoshi son bankers are worried. bloomberg's sonali basak. -- sonali: so what is he saying he's going to do here? $700 billion of financing and advisory towards things that target climate change. solomon is doing what a lot of investors are doing, saying, what is measurable? what can we tackle? on topof

that, he is saying the government needs to step in as well. alix: also pulling back on certain financing, each other banks have started to do as well. sonali: and i'm glad he addressed the 1000 foot gorilla in the room, which is that goldman can't stop doing work with fossil fuel companies. the profitability matters here. so he addresses that up front in this op-ed, but also says goldman will do its part for the climate change initiative. alix: which is fair. he saying we can do both. we just have to do it differently. let's get to the next story, which is ubs. they were under pressure to restructure within six months, and did. sonali: what is happening here? they are starting to separate the riches of the -- the richest of the rich that are focused on investment banking activity.

they have been focused on this for a while. they created the global family office group that tends to merge the activities between investment banking and wealth. what is that mean? asia wants to in buy u.s. commercial real estate, they can do it in really interesting structure deals, including an ipo markets and whatnot. they can merge these units closer together. this has been happening for some time now. alix: does this mean what is left over and wealth management goes lower wrong, where inclusive of those that have less wealth? sonali: they are going to be focusing on people much more regionally. thoses part of separating that are involved in those that are not. those under $500 million in assets, they will probably use technology to focus on those. alix: interesting. let's get to mossi as she son --

get to mossi of she son -- get bankers are son's worried. privately, from the top banks, they are saying they want a greater turnaround planned from wework before they get more comfortable with the plan moving forward. one of them said their bank is tomping up against limit. there's a lot of financial debt. they are looking for more. you see goldman, for example, stepping up. that article read on "the wall street journal" over the weekend on wework? it was so good. the relationship of adam neumann with everybody. sonali:sonali: and how they enabled him. alix: basically. thank you very much. like stones strategy to get the staff ready for the firm's

annual holiday party, meet mr. stone. he appears in a video shot in the style of the hit comedy "the office." he looks like blackstone president john gray, complete with gray skin. he played basketball, ran through the monday morning meeting, and reach some serious havoc. but the reveal that the man in the custom -- in the costume was none other than ceo and cofounder steve schwarzman himself. pretty active. they do that every year, but it is pretty fun to check it out. coming up, we look at the impact of usmca on the canadian dollar and mexican peso. if you are heading out, jumping into your car, tune into bloomberg radio on sirius xm channel 19 and only bloomberg -- channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time now for our trader's take. joining me is vincent cignarella. you can listen to vincent on the bloomberg by typing in squa viviana: all the talking -- in squa . what are we looking at? vincent: the reality is that usmca going forward is way more positive for mexico than canada. supply chain management is the talk of 2020. i could easily see supply chain management moving from places like china and europe to mexico as the rules change. in the past, people subverted the deal. they would just send parts to mexico, manufacturing in the home country, assembled in mexico, shipped to the united states and say made in mexico. the u.s. is changing that rule

so it has to be actually made in mexico. should be good for the peso going forward. that said, we have seen some pushback from mexico's chief negotiator over the weekend, using twitter of all means pushback on the monitoring. ,hat was added by congress probably to accommodate the afl-cio. we will see how that plays out. i think in the long run for mexico, it needs to get done and we could see a couple of percent down. alix: so if we see any movement, we want to be fading that? vincent: i would. anything to about that blue line. you can see where that's held. i think it will continue to hold, barring this whole thing blowing up, but i think it is an mexico's interest more than anyone else to see this through, and canada is very much in favor as well. alix: you take into account the yuan, the cable rate, does

it all feature into a lower 2020? vincent: there would be currencies in asia that would benefit because of the trade situation with china, and you might see mexico gain, but the canadian dollar will fall. a lot of it balance out across the globe. i don't see a major selloff in the dollar, but a small selloff. alix: good stuff. incident cignarella, thank you so much -- vincent cignarella, thank you so much. calvasina of rbc capital will be joining us. this is bloomberg. ♪

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december 16. i'm alix steel. let's take it from the top. >> the agreement will also help to boost global market confidence, stabilize market a fairtions, and create environment for normal economic trade. its tradea talks oup deal with the united states. now the hard work begins. >> phase one is going to be implement it right down to every detail. it really is a remarkable agreement, but it is not going to solve all of the problems. alix: now implementation, verification, and phase 2 loom for 2020. everyone ini urge either side, after three years of increasingly arid argument, i urge everyone to find closure and to let the healing begin. alix: boris johnson will appoint

new ministers to his cabinet as he pushes ahead with brexit after his historic victory last week. thise main priority of government remains getting brexit done come out so we are expecting boris johnson -- brexit done, so we are expecting a lawjohnson to introduce to get brexit passed. >> we are almost there. it is hard, it is difficult, but it is worth it. titansoldman sachs policy on fossil fuel financing policyman sachs tightens on fossil fuel financing. "the needs of our clients will increasingly be defined by and society'sowth overall well-being will depend on it." if the president is acquitted, is that a failure?

failure,at is not a at least in terms of our duty in the house. alix: representative nadler says trump "poses a threat to national security and democracy." in the markets, you are seeing some followthrough buying after european stocks had a record. the dow not participating as much, dragged down by going. the cable rate still climbing on that boris johnson victory from friday. a little bit of selling in the bond yields, up by two basis points on the long end. joining me for the hour is ed hammond, bloomberg deals reporter. happy monday to you. ed: merger monday, with two deals this morning. alix: i knew you would bring it. peugeot getting back with the french government over there. it's nice that we are this late in the year, this late in the

m&a cycle, and still seeing prints. ink a phase one trade deal. buy moreeed to agricultural products and technology transfer pressure. joining us from washington is amy celico of albright stonebridge. she leads the firm's china team, and before that, was the director for china affairs . if i want to make a business decision in china, does my job get easier today, or is it still cloudy? amy: i think your job is going to get easier in january, perhaps. this is very good news that the u.s. and china announced, that they will make a phase one agreement. the devil is in the details, so they also said that they are still ironing out the final agreement, likely to be signed in january.

for a ceo looking at this, the positive obviously is tariffs didn't go into effect on december 15. that is what the u.s. and chinese side had been threatening. that did not happen. there's been tension taken off the relationship. that's very positive. as far as what do these purchase agreements look like, we are going to have to likely wait until january to see will china reduce retaliatory tariff rates so that these purchases of u.s. energy goods, ag products, manufacturing goods and services are really a positive for the u.s. economy. a little bit wait and see. we can't exactly pop the champagne yet. ed: what lighthizer said at the end of last week was that it was the most momentous day ever for trade on friday. does he have a point? amy: he definitely has a point. the trumpet must ration has been pushing to make its agreement on as new nafta/usmca, as well

a trade agreement with china, for quite some time. so the problem monday morning as we don't really know that both of these agreements have truly been finalized. so while absolutely progress is being made, we need to continue to see details, and details that u.s.oing to be good for consumers, as well as for exporters, to these major markets of mexico, canada, and china. ed: what would those details look like? at the moment, it is all very vague. what does the market need to see to really get on board with this deal? weid: in --amy: in january, are hopefully going to see what the actual purchase agreements look like. for agricultural products, for example, it is terrific that the chinese say they are going to buy more, but at what tariff rate? if the chinese side are going to force our exporters to actually

continue to purchase at the same high tariff rates that have been in place, that is less good for our exporters. they need to see those rates come down, and the u.s. side hasn't been able to make that reassurance yet, so we are waiting for that. for energy purchases, for services agreements, we are waiting to see the details of what, as ambassador lighthizer said, a package of $200 billion of purchases over the next two years would look like. we just don't know yet how the chinese are going to welcome those products into the market. but there will be indicators starting in january. china's foreign investment law takes effect on january 1, and on friday the china state council did approve, lamenting regulations. that is where the forced technology transfer, the intellectual property protection, the market access liberalization from financial services, some of the barriers on ag purchases, those could

take effect january 1. we will see what that looks like. that is when we are going to see if this is a great deal. alix: just too broad made out a little bit, i was struck by the headline that germany is debating whether to use huawei's 5g, and china says we are going to retaliate when it comes to autos. how much of the rhetoric that the u.s. and china started is going to permeate the rest of the world? how would you think of that if you were still in the trade representative office? amy: for certain, this trade agreement is not going to decrease tensions in the bilateral relationship, for example, over technology issues. as early as this week, the u.s. government could put in place new restrictions on u.s. sales to huawei. the commerce department is looking at trying to close american that allow companies to continue to sell to huawei, and the chinese

government is looking not only at what the u.s. is doing on technology sales to china, but how this is impacting europe. so the chinese government is certainly going to continue to up the pressure on u.s. companies, european companies, as well as on our governments to try to keep restrictions against huawei from being implement it. personally i am very pessimistic that that will happen. i think it is likely that the u.s. and europe are going to continue to increase restrictions on huawei, and these technology tensions are likely to persist. alix: amy celico of albright stonebridge, thank you very much. joining us on set, lori calvasina, rbc capital markets head of u.s. equity strategy. what did you make of the market reaction? lack of reaction friday, today a little bit of upside in the futures. lori: this phase i deal, it is a good thing. we don't deny that come up we think markets have been rallying on this since august.

betray deal was a hot topic of conversation. we put forth the view that a lot of it has already gotten priced in, and we did get a lot of pushback on that. i was not that surprised to see the market not doing much friday. it is more and more likely that we see impeachment. that affect the trade deal? lori: i don't think so. i think we've always looked at the impact on the 2020 election. we think markets have been interpreting what is going on with impeachment in that it is not have an effect on the 2020 election. i think they are separate issues at this point. alix: from your point of view, if i am a ceo and i am going to make a business investment, and my more or less likely to do it today, specifically if it is a chinese company? or are there still a lot of hurdles? ed: i think a chinese company is off the table at the moment. that goes both ways.

it is nylon impossible because of all the tensions come of all the tensions, the concerns around technology and some of the limitations there. if you are a ceo one to go with a domestic deal, i think now is a good time to do it. i think the market is very supportive. investors continue to be supportive of m&a. credit conditions continued to be good. if you can use some of your own stock as currency, valuations for the most part are very high. deals, we saw a little bit of a falloff coming into the fourth quarter. the reason i ask is because the only way you get a substantial move in the market is if you get the investment we've been waiting for, that everyone says has been held back by this trade issue. is that even true anymore? lori: what we've been thinking about in terms of business capex,nce, whether it is deals, business confidence, we are at recessionary-type lows.

my reaction to this trade deal was, whether we are thinking of m&a or capex, are we going to correct that? i don't think there was enough to really lift those all that much. ed: but that has been the case for a while, that you had this disconnect between confidence and activity. ceos say repeatedly we are not confident, and yet exit cute significant transactions. what drives that? lori: we are seeing a lot of private transactions. there have been a few blockbuster deals, but for the most part, they are taking small bites of the apple. they are not taking big pieces out of the public markets. isyou look at capex, it slightly down year-over-year. so we are seeing an impact. but the overall landscape isn't great. certaintynow got some over trade, some certainty over brexit. what needs to happen to make that rise? lori: the devil is in the

details. isaac there's a lot of uncertainty about what is in this phase one deal. these 86 pagehown documents, but we are still not sure exactly what is in them. what i am looking forward to is outlook season. i am looking forward to hearing with companies are saying about how the specifics once they come out actually end up impacting them. i also think the conduct of phase two matters a lot. when i read the tweet on friday saying we are going to start immediately, i emailed my team and said, why, why? i would like the drama to go away. i frankly think the corporations do need to see a little bit of a steady state of negotiations and less trauma overall. alix: i wonder if some of the activity is going to be idiosyncratic. if you have $40 billion to $50 billion of ag purchases, are you going to have to have small players team up with the big players to increase their capex? exporters breathe a sigh of

relief? i wonder if that is more where we have to be looking for things. ed: i think we are already starting to see it. you saw the deal that came through this morning, it was exactly that. they've both been distressed by prices in the trade tensions. coming together, they are going to rely significant cost savings on that basis. andink is going to drive, certain sectors, m&a. but the fact that we are now kicking into phase two, let's just enjoy the phase one that has been reached, enjoy some of the certainty coming back into the market. lori: valuations, not just on my models, are looking pretty stretched. as we go through the earnings calls, we hear companies talking about that. it is tough to find things at a reasonable value. i think you will see idiosyncratic opportunities being pursued, but i wouldn't expect a big wave. alix: lori calvasina of rbc

capital markets will be sticking with ed and i. coming up, u.k. boris johnson says it is time to go forward. more on the next steps to leave the eu. this is bloomberg. ♪

♪ alix: boris johnson set to appoint new ministers to his cabinet after the u.k. election. joining us is teresa raphael of bloomberg opinion. what do markets have to pay attention to over the next week? therese: the first thing is that johnson is going to get his brexit deal through parliament.

we should see that as early as this week. there will be a queen's speech and what is called a second reading boat, which is what he couldn't -- second reading vote, which is what he couldn't get through before this election was called. all of that is really priced in. he's got a very substantial majority, and that is not going to be a problem. the real problem is what kind of trade arrangement does he want with the european union. bet was always going to the hard part of brexit, and that is where things start now. he's insisting he doesn't want to extend things beyond december 2020. giving a trade deal in that brief amount of time, and keep in mind you have to request an extension by july 1, that what they are calling a skinny trade deal, one that is very bare-bones. ed: obviously another major issue he's going to have to face is the scottish question, whether or not they should be allowed a second vote on

independence. obviously it is within his aft to give it to them or not, but how much will he be persuaded by the democratic process? therese: he ran as the candidate is going to, and he take a paramount of criticism for selling out his allies, the democratic unionist party, to get a trade deal, but in general, the english aren't that concerned about what happens in northern ireland so long as things are peaceful they are. scotland may be a different story. the scottish national party did very well in these elections, and as you say, they are not going to back down off this request for a second referendum. he came out right after the election, or michael gove, his close ally, did, and said there will not be a second referendum. it's hard to believe he can continue to refuse that if that and theill of the snp

scottish people. there are local elections in 2020 that would be pretty instrumental in determining that. i think he will hold off for now. he will try to focus on delivering brexit. he will try to focus on satisfying some of the demands from the new northern formerly labour voting constituencies that are now conservative, so that would be his big mission in government, to ensure that those 2019 voters that had previously been labour for the last 70 years will become 2024 voters for the conservatives. that is not easy, especially because the brexit that he wants, a quick trade deal, is going to be most damaging for the manufacturing heartlands of the country, where these votes came from. alix: thanks so much. great analysis. lori calvasina of rbc is still

with us on set. if you are taking a look globally, u.s., u.k., europe, em, do we see money move? lori: when we were talking to investors last week, we were putting forth this idea that if you think we are moving from growth to value, you better prepare for a shift from u.s. to non-us. we found a lot of sympathy for that view. the things fueling the shift -- the shift back to value, people are really looking to move out of safe havens. the u.s. has been the big safe haven. in my work looking at europe versus em, they all put a much ,ook undervalued and underowned but we do feel like you should buckle up for some rotation out of the u.s. and back to some of these cheaper overseas geographies. ed: how much is that undervaluation in europe is being driven by the fact that we

don't have a clear agreement on brexit and what trade will look -- and how trade will look? ati: whether you are looking u.k. or european valuations, they are both at rock bottom relative to history. that you'veus gotten here because of a policy predicament, but we are in the process of resolving that. alix: when you talk to your guys about europe and u.k. investing, there's talks about fiscal stimulus. as johnson outlined some when he was running. there was advising over the weekend, don't go down to black of budget austerity, whatever that meant. how do they see it? ed: i think there's this tremendous sense of everything being slightly undervalued, particularly in the u.k., where you've had so much uncertainty for so long. i think now you will start to see more investment going, and you will see more inbound m&a.

this year there's only been one $10 billion plus u.k. deal, so it's been very depressed. lori calvasina of rbc capital markets will be sticking with ed and i. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." bloomberg has learned boeing may temporarily halt production of the 737 max. it now appears unlikely the company will get regulatory approval for the grounded jet to return next month. boeing executives are convinced a temporary pause be less disruptive than another slow down in production. the food and in beverages business, a 26 point

$2 billion agreement for billion -- a $26.2 agreement for dupont's nutrition business. getting ther psa backing of its most important shareholder in a plan to merge with fiat chrysler. the french government signed off on the deal. the new company would be based in the netherlands, though, headed by psa's ceo. that is your bloomberg business flash. alix: thanks so much. what do you think of this psa-fiat deal? ed: it is like the final straw in the legacy of carlos ghosn. not that long ago, it was going to be fiat merging with renault and nissan in this huge alliance, and that didn't happen. that got leaked too early, then blown up, and i we see peugeot fiat disappearing into the sunset together. alix: i have to wonder how this

all plays out with europe and the u.s., too. you need to team up because you need to spend billions of dollars on the ev market, and most of those cars aren't even profitable yet, and you need your old cars to finance the new cars. so who is left standing at the end of the day? ed: potentially we see these mega global players, because they have to get the ev piece of this right, with tesla in the background, does anyone managed to usurp them? alix: and you had that factory being built in berlin. coming up, can 2019 optimism last into 2020? what to expect are your new year's trade. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. in the markets you're getting a little follow-through from buying on friday. european equities climbing onto their record highs. even the auto sector in europe drama thatespite the

may play out between china and germany. euro-dollar also on the upside. cable rate on the upside. the curb steeper. 22 basis points. it feels like a risk on day. the question is can that continue or will it be some santa claus rally buying? in two weeks we will wrap up the decade. for the past 10 years. michael mckee will explain, next. mike? michael: this is a remarkable chart. it took me by surprise. this has been the longest expansion in history. that means we have gone this entire decade without a recession. according to the national bureau of economic research, this is the first decade ever since they started keeping records in 1840 that we have not had a recession. our data only goes back to the

gdp accounts in world war ii created. 1940 --s back to the the 1840's. hello is that? -- how long ago is that? alix was watching tv by candlelight. if we look at that through the eyes of the misery index, which combines the consumer price index and unemployment, how much are we miserable about our jobs? we have not had this kind of performance since the 1950's. 1953 was the same time you saw unemployment, consumer prices, and the misery index that low. it has been great, except for one thing. we are not making a lot of money. yes, the median household income has been going up after a period of pause, and that is good news, but the rate of increase has gone way down. 1970's, ando the

every year gets slower and slower. in the last two years it has fallen off again. we are making more money because the economy is baker and inflation has affected our paychecks, but we are not seeing growth in incomes the way we used to. ,hat means as this decade ends a new decade, that will be one of the big political questions of the year. one of the issues will be talking about. alix: michael mckee, great set up. it makes me feel old. staying with 2020, bank of america strategist putting up a note saying markets are primed for risk asset melt up. they say we expect units to be frontloaded 2020. lori calvasina is still with us on set. i know your long-term view might be more sanguine, but you share the frontloaded optimism? is inwe set of the market qe, which we do not think will be the case, there is a risk of

a melt up. we actually worry more about a pullback early on in the year and a recovery in the back half. the reason we say that is valuations are at peak levels similar to where we were in december 2017, january 2018 when tax reform past. if you look at the positioning data, we crested above the highs of early 2018 in the summer of this year. we think we are stretched. we have digested the good news in the market. ed: what does drive growth next year? lori: in terms of growth in markets? ed: if we say a lot of the news is already priced in, what does it take to turn that peak into something that goes up even more? lori: we do agree with the idea we have seen a bottoming in the ism, the bond yield is not sending a false signal. we think it will be a tougher road to get there. if you look at the economic data , we have had some neutral data,

we have had the blowout jobs number, allows the ism number, we do not think it will be an easy ride. we think the idea we are feeling is probably right. ed: before we came back from the break we were talking about esg and how that is not necessarily working out for everyone the way people expected to. i heard something fascinating that investors are thinking much more long-term, which over the duration is beneficial to the investment in attachment industry but also the customers that getting more support for long-term shareholders. client wenow every talk to is doing work. it is early days. we were talking about energy. this is the sector that whenever i go out and i talk about the valuations we had seen earlier, people site there is no long-term growth. it is getting derated. guess what?

last week i was getting questions on energy and it is not like those concerns have gone away, but there is a focus on has value been unlocked? this is one of the most interesting angles in the market going forward. you always hear ceos saying we do not want to do quarterly reporting, we want to look long-term. esghe focus becomes more that helps them make the case. lori: maybe the environmental angle is new, the social angle is new. the governance has always been something investors have cared about. it is repackaging something that has always been a focus. ed: and if valuations are high, that is the best possible time. keep us where we are. lori: i think the active management community, we have seen these ferocious outflows and this is something my clients are telling me their clients are wanting. the active management community responding to the desire to meet

with their potential investor base. that is all healthy. you can see the underperformance of the russell versus s&p. this -- could you pair what mike was talking about the last decade, and if you want that lowered, no recession but lack of wage growth, that does not feel like a good small caps environment. lori: the small caps call is not 100% clear at this time, but we do think the risk rewards askew favorably to small caps. if you look at the large and small caps, you are back to 2002 levels. in are cheaper than you were 2016, when small caps had a ferocious rally around trump. the other thing we know about small caps is they've have not been played. we are concerned about crowding. the positioning data shows people of not played in small

caps this year. small caps are an easy vehicle to lean into the domestic economy. view that we bottomed into the ism, if all of that is correct, small-cap is an undervalued way to play in a hurry. it is not that different from the sectors we think are interesting and large caps. the financials look interesting. small-cap industrials are not cheap but they have gone from defensive to neutral on our model at the earnings quality on both of those sectors is high. i stressed that because one of the knox we get with our small-cap upgrade has been the leverage is high. if you look at the earnings quality, it is low and small caps, generally. 36% of companies are negative earners. i would lean into the higher-quality sectors. alix: in terms of m&a, do we see more tieups? what do you think? have to getls together because that was the

only way to survive. now you're moving to a different market where you have such strong private equity, and private equity will take some out of the public market, it normally starts with small caps because those are easier to digest. we have private equity with power in the market and everyone is expecting 2020 and 2021 to be a huge year for those kind of buyouts. if we get that, you start to see real activity along the small caps. lori: i would say keep an eye on what is going on with regional banks. we know hedge funds are deeply under allocated, financials in general and banks in particular. it is a mystery want gets heads funds reengage with trade. if you see small-cap m&a pick up on the backside, that would get the caps back into the space generally. would you prefer financials and a large cap space or small-cap space or both? late -- i would say slightly less policy risk on the

big caps. alix: thank you for joining us. happy new year. i cannot believe it is last week of full trading. now we get an update on what is making headlines outside the business world. viviana: we begin with the impeachment vote in the house. it is a crucial test for more than 2000 vulnerable democrats who represent districts donald trump one in 2016. the democratic majority in the house hinges on keeping those trump leading districts in next year's election. the u.s. urging kim jong-un to drop his hostile tone and return to nuclear talks. north korea is also being worn not to engage in provocations. during what an american diplomat called the sacred christmas holiday. north korea set it conducted a second test and boosted its nuclear capabilities. over to the u.k. where boris johnson's government will introduce its brexit built a friday. johnson will not have a problem

getting a mandate to ratify the divorce deal. the question is whether the government can get the bill through vote this week instead of having to wait. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. alix: thanks so much. coming up, pg&e chairs plunging .n premarket a complete nightmare. more in today's bottom line. bloomberg users, interact with us, check out the charge, browse the features on gtv . if you miss anything, you can check on it -- you can click on it and check it out. this is bloomberg. ♪

viviana: you are watching

"bloomberg daybreak." goldman sachs tightening policy on multiple fuel financing, pledging to decline financing coal mine andof arctic oil exploration. the firm is also targeting billions of dollars for climate transition and inclusive growth financial good japanese bankers are taking a hard look at their most important clients. lessprivately set they are comfortable with billionaires management of softbank's vision fun. softbank reported a $6.5 billion loss blamed on falling valuation on investments in wework and uber. theplans to restructure unit that serves the banks top billionaire clients. this under the new cohead of key wealth management. woulderg has learned ubs break apart the ultra high net worth unit.

some less risk clients would be moved into the regional division. i am viviana hurtado and that is your bloomberg business flash. alix: time for bottom line. we look at three companies worth watching. first i am looking at pg&e getting wrecked in the premarket, off the lows of the session. i find it completely stunning because you basically are having multiple different bankruptcy proposals. nobody can agree on anything. who will take the hit? will be the county, will be the state, the equity holders? no one wants to take on any hit financially and you're left with this company in shambles. ed: and millions of dollars in fees. the number of lawyers and restructuring experts working is phenomenal. and -- you throw in elliott, one of the most litigious investor, this could drag on for a while. alix: elliott is taking their

heels on that. this deals with the broader issue of how do you change a business of your utility to deal with all of these disastrous weather events. regardless of the $13 billion they owe, they still feel like they can restructure business and figure something else. ed: they have to get back to the bread-and-butter of their work, which is given californians power. alix: maybe sometimes they turn it off. you are looking at imf and dupont. ed: an interesting transaction. one dupont has needed to do for a long time. it is a funny transaction. they will have quite a lot of debt. they want to get down to three times levered. the interesting thing -- the interesting thing will be whether they can keep their investment rates. alix: will they bring enough synergy to help with that? ed: it is a modest number they put out. they say cost synergy is $300 million. i do not think they will fire a lot of people.

they will have purchasing synergies and production synergy. iss is a deal where iff taking on a huge additional business and the shares reflect that. investors slightly skeptical on whether this is the right tried. alix: the third company is going. brooke sutherland -- the third company is boeing. brooke sutherland joins us. what is the latest? brooke: a constant stream of bad news. the latest report is the company is considering halting work, slowing down its production line for the 737 max. they did cut production in april after the second fatal crash, took it down to 52 planes per month. those have been piling up in boeing factories so much they are now parking them an employee parking lots. you are running out of space the longer this drags on. the faa mid it abundantly clear the plane is not going anywhere in 2019, probably 2020 at the

earliest, and it could slip into a february or march timeframe where you could see the plane grounded for a year. that becomes untenable for bowing. forhat becomes untenable boeing. ed: what is worse, being the pr for bowing or the pr for pg&e? brooke: i do not know that there is any win. alix: boeing still needs to make money. ed: as you said the planes are sitting there in the car parks and we have seen the pictures. at what points does it become untenable because the technology is starting to get aged out? brooke: that is a part of it. once the faa lifts the branding order it takes just two months for these airlines to bring the planes out of storage and get them ready to run again. you also stove pilot training the faa has not determined what will be required.

that will be part of anything. southwest airlines has made it clear they want all of their pilots trained before they start flying the jet again. the other variable is the european and asian regulators. we do not know what their timeline is and there could be a lag between the faa says the max can fly and when some of these other regulators come in. you could see bifurcation. alix: the headlines that it was like soda without coke. forng in servicing accounts -- 70% of commercial deliveries. if boeing is not making 737 it is shutting down close to half of its business. that was a staggering statement. if you do it, what are you? brooke: so true. the wide-body jets are seeing weaker demand. they --s max crisis is orders they had been counting on from china had failed to materialize.

at the dubai air show we saw week demand for the wide-body jets. all of this is happening at the same time. you are seeing cracks emerge in the cycle has been so strong for so long. the other element is a boeing production cut does not affect boeing. there are tons of suppliers, including big guys like ge, united technology, who have made extraordinary effort to catch up to the production pace boeing has push them towards. they have already had to rejigger things to take them down to that 50 a month. that could wreak havoc on the suppliers, some of which are so dependent on boeing. ed: who wins from the scenario? there are a lot of losers. brooke: you have seen a little bit and uptick in demand for airbus planes, specifically from china. we have seen more orders for airbus jets out of china. nothing from boeing out of china

for a while you're there is a hesitancy on the part of airlines to ship completely. you do not want to just have one major plant, that gives airbus extraordinary price leverage. down the road, airlines could be winners if you start to see price back -- push back on the pricing for a lot of these jets. they could get deals down the road. also for the suppliers. the narrative has been boeing turning the screws on the supplier, squeezing out more and more cost. i think this will shift the balance of power back. refuelinge suppliers their leverage and profit margins. alix: brooke sutherland of bloomberg opinion, great analysis. ed: it has been great -- alix: ed, it has been great. thank you for being here on last monday of last full week of the decade. if you're heading out and

jumping in your car, tune into bloomberg radio heard across the u.s. at sirius xm channel 119 on the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. we will set you up with some trades. marketloney, chartered technician and voice of bloomberg equity squad joins me now. listen to bill all day, type in on your terminal. we just talked about boeing. zone,today your support theoctober 21 low, 324, august 15 low, 320. if that fails you're looking at 300. your first support zone is 320 to 324. talking about the iff merger with dupont. the market not liking that for iff, they like it for dupont. where is the support?

bill: not liking the deal, downline filed percent -- down around 5%. below that is 124, first support level 125 to 128. alix: financials finally recouping all of the losses from the financial crisis 12 years later. what we see on the high end? bill: goldman sachs trading higher on the premarket, up around 1.5%. since been in this range september. it looks to break away from this trading range top. aboveur first resistance, that 234. alix: thank you very much. that wraps it up for me. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪ jonathan: coming up, risk

proceeding driving equity market -- risks receding driving equity markets and uncharted territory. better data from china feeling optimism. the market ending 2019 just as it started, struggling for momentum. here is your monday morning price action. all-time highs at the close on friday. up 17 points on the s&p 500. there is your dollar weakness against the euro, euro-dollar up .33%. treasury yields pride higher by three basis points. 1.85 is your yield on a 10 majority. let's begin with the big issue. >> we have a trade deal. >> a trade deal. >> phase one. >> this is a process. >> clearer that has been for some time. >> reason to be more circumspect. >> not a big bag moment. >>