manus: good morning from dubai. it is "bloomberg daybreak: europe." i'm manus cranny. for mid-2018head highs after the s&p 500 closes at a record. thanks to positive momentum around trade, citigroup says risk on has room to run. boeing shares fall as it says it will stop production of the troubled 737 max in january. the playmaker says the factory pause is the least disruptive option. >> sterling weakens as boris

johnson changes the law to guarantee the transition phase is not extended. 'sis is the bank of england capital demand for the biggest u.k. lenders. welcome to daybreak europe. 6:00 a.m. and london, 7:00 in europe. there is room to run in the rally, the note from citi. palladium breaks $2000. the taiwan stock market at the highest level since 1990 and there may be a sustained u.s.-china trade truce and if that remains the base case an era -- scenario, we could grind higher. it depends if you are in the believer can't or the naysayers. which one are you in?

nejra: exactly, continuing the conversation from yesterday. is it enough for the market? are we at peak optimism and what is the outlook for central banks and whether the prospect of continued support through 2020 will keep the risk assets high. when we come to the u.k., no deal risk a lot and well again. manus: boris and the hard brexit . you can literally taste it in the market. i want to bring your attention to the jgb market. we are kissing the zero line for the first in a month. that is important ahead of the bank of japan meeting. there is a bloomberg survey which we can fatefully ignore, over 50% of economists expected tightening the 0% is a draw to investors. you are looking at records in europe and the united states.

what happens next to the asian markets? equity markets are flying higher as taiwan hits the highest level since 1990 and for the dollar, is it time to call for the death of the dollar? thenumber one analyst on dollar is rather bank's jane foley and she says doesn't bail on it yet. goldman says whole year -- hold your horses for the dollar bears. we see wickedness in the dollar in 2020, it will not be as bad as expected. the s&p 500 hitting a record yesterday, futures unchanged today. sinceosing at its highest may in yesterday's session and this is what they focus on in the metals market. they are bullish on copper and palladium, which hit record today. copper, continuing gains and cable taking a backseat out of the worst performer in the

session as boris johnson has been talking about trying to stop ministers from wanting to extend those trade negotiations with the eu if we don't come to an agreement by the end of 2020. that brings the cliff edge scenario and a no deal risk back to the forefront of investors' minds. manus: may be getting ahead of ourselves in terms of hard brexit off the table. global investor sentiment is improved because of the suspension of the u.s.-china tariffs on goods. european equity markets hitting all-time highs yesterday. asian stocks are heading to the highest levels since 2018 but it remains unclear how china will follow through on the pledges to boost american agricultural product. president trump says the preliminary agreement will be done soon. >> we are doing a lot of business with farmers in china, so the deal will be finalized over the next couple of weeks.

manus: our guest host this executive officer you have atal -- little bit of a caution retail in your notes, but your take in terms of this trade deal. are you in the believer can't or they detractor camp that it lacks details? >> my concern is we are in phase one of the deal. it tells us little at this stage. the main focus of the deal is the agricultural purchase in china. in essence, what we are seeing is basically the white house playing into the favor of the existing president's voting base. he is dealing with the manufacturing issue, the ip issue. while we have a short-term chinesere between the and americans, this doesn't

change anything in terms of the next few months where this deal will face critique from both sides. we are more apt to see headlines chinese accuse the americans of not keeping the deal and the americans accused the chinese of not keeping the deal. that is the big risk. nejra: nothing much may have changed in relations, but what about the market mindset? are we at peak optimism yet? say peakn you optimism, you are referring to equity market rally. that is not a function of the phase one deal, but more along the lines of what the fed has done and it has put a cap on rate expectations in 2020. the fact we have an eccentric risk of a cut rather than a hike, this has been a hated rally for a long time because most are underweight. you are seeing investors rushed in to be domestic before the

beginning of q1. say we would have passed peak angst in trade. that is a line from ubs yesterday. i am not calling an end to the global rally, but suggesting a risk of a correction. i want to know how you position for that. what is your top trade to protect yourself in 2020? are: one of the things we looking at for 2019 as a correlation and one of the things we have seen is equity prices and carry trades. this will be a different position. one of the top trade you can have on your book going into 2020 is short dollar-yen on the basis that we see a correction in equities income. it hasn't been working on the

positive side but to the negative side, it has. the last time i was on, the yen had plunged to 1.05 -- 105 and there was a deal of panic. we are heading into an election year were the chinese will not allow the currency to depreciate significantly. there will be a great deal of pressure heading into march, especially into primaries. people will begin to take risk off the table before the beginning of february. nejra: does that mean you would avoid a risky currency? withre protecting yourself dollar yen, but do you simultaneously avoid commodity currencies, for example? saed: with commodity currencies, there is attachment to the trade deal that essentially deals with thatnderlying problems face the global economy, and that is the global slowdown. there is a great deal of optimism regarding commodity pairs but we have to take note that we are in a slowdown phase

and barring a new fiscal package from germany and europe, barring some new incentives from the fed, there isn't that much space to the top side. is bullish commodities, but this is a market rally rather than a fundamental rally. senior ned abukarsh, visor at ark capital. let's get the first word news with rosalind chin. >> boris johnson is to change the law that guarantees the exit transition period is not extended. he wants to deliver his election promise to ratify a new free trade agreement with the eu by the end of next year. brussels has warned it is highly unlikely negotiators will have time to complete a deal. the news sets off a possible new cliff edge for a no deal brexit in a year.

tensions remain high across india as protests continue amid a new citizenship law. anger stokes five days of ranging from new delhi and mumbai to the eastern states. the new law bars undocumented muslims from seeking citizenship allows undocumented migrants from other religions to do so. the eu agreed to a landmark finance regulation. sustainablelled on activities overcoming last-minute divisions. the agreement should set a framework for the fast-growing market of clean finance. list.r and gas are on the global news 24 hours a day, on-air and tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries -- on quick take on bloomberg, powered by more than 27 hundred journalists and analysts in more than 120 countries. rosalind chin in hong

kong. coming up, and interview with the dallas fed president. don't miss that at 3:00 p.m. today, london time. nejra: of fed speakers this week and keeping the max to a minimum. bowing to halt production of the 737. we discussed the crisis engulfing the company. this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." nejra cehic in london. manus: manus cranny in dubai. is to halt production on the grounded 737 max next month, languishing in storage since a global ban hit. the playmaker, will prioritize delivery of stored aircraft and employees work orher 737 related

be temporarily reassigned to other teams. joining us now to run through the details, annmarie hordern. book, onep of the day of the most read stories. how much pain will this deliver? annmarie: certainly a lot of strain for boeing and its suppliers, as well as the health of the u.s. economy. he saidt it well when this is like pocatello -- coca-cola stopped making diet coke or mcdonald's halted their big mac production. of boeing'sse 80% operating income comes from servicing and making these commercial planes and 7% of that is that 737, so almost half their business. the big question, what does this mean for suppliers and what it could mean for gdp. boeing makes up about 1% of the u.s. gdp. bloomberg economics says that percentage point could be taken off first-quarter growth in the

u.s. because of the halt and the suppliers, additionally the strain on suppliers because we don't know when boeing will start to bring this 737 back into production. the strain on suppliers could be huge and there could be job cuts and it could be a vicious cycle. what happens when boeing is ready to ramp up production? does this risk their own business? manus: yep. the one that caught my eye was the 1%, gdp in the united states. great analysis on the boeing story. here are the events for your trading day. u.k. parliament reconvenes after boris johnson secured a victory in last week's general election. it is important for the merger. scheduledbeen a -- board meeting to consider. the first headline, last october. u.k. time, argentina

releases gdp data file growth is expected to pick up from the previous three months, analysts forecast a 1.5% top from last year's level. at 9:00 u.k. time, we get fedex earnings. the pound has slid after the prime minister revised the threat of a no deal brexit. he will change the law to guarantee the transition phase is not extended and after a winning a majority in last week's general election come he has the power to do as he pleases on brexit without fear that parliament will for his plans. the bank of england says banks have passed stress tests and can weather a financial crisis. the capital buffer is being raised for the biggest lenders. mark carney also spoke of the risk of a disorderly exit from the eu. >> the worst-case scenario is effectively a no deal disorderly brexit. the probability of that scenario has gone down, because of the election results and the intention of the new government,

but the scenario itself and that risk that we protect the system against has not itself changed. it has just become less likely. nejra: saed abukarsh, senior executive officer at ark capital . you expect cable to trade back below 1.20, but we have been here before with no deal risk and since the referendum, it is rare cable has been below 1.20. why do you see it going that low? two: first of all, we have think in context of what the rally is about. the rally of the past two weeks has been a relief rally in the u.k.. what you have to understand about the u.k., it has structural issues with a current account. in a situation which has entered a hard phase of brexit, the last three years have been the easy part. the hard part is negotiating with the eu and this could last

one year, two years, four years. tois johnson puts in a hard date he thinks he can get 100 days or 200 days. he puts back the hard brexit scenario on the table. that is something that will dissuade investors to pile into sterling for investment into the u.k. in that situation, we are looking at sterling being sold off again. with the data in the u k, which is weaker. equation, i have a hard time seeing consistent buying of u.k. assets over the medium term. manus: with that in mind, can we assume there is a cap and what that does to the equity market? bank of america morgan stanley says we have no positioning going into the u.k. equity market but this is from j.p. morgan. they bust that. they say billions expected on outsidelines could be

there. foreigners have invested and have played catch-up and the adjustment has already taken place. do you agree with bank of america and morgan stanley or do you think jpmorgan a right? is hard to allocate to the u.k. asset market at this point because you don't have clarity about the final deal. i think investors come in at the lower parts of sterling and ftse and buy the risk rally into the u.k. at this point, it is hard to say whether bankamerica or morgan stanley is right. you have to step back and see what the market will step into next. we had the theme of elections and now, we have a theme of when is the final exit date? that will be the theme. essentially with the recent announcements, the story from "telegraph," about boris johnson's plan, the theme goes back to let's look at the data and let's see if this can

continue over the next one or two years. if you look at the history in the eu, that one day or two days, but not one year. hardeal risk brexit is a versus extended -- hard brexit versus soft brexit. , what if he johnson said this as a negotiating tactic and doesn't have an intention to take the u.k. out of the eu in a hard brexit scenario? the other side of what you are saying and what a lot of people have said is u.k. assets are undervalued and now is the time seeet in, because we could an upturn in investment and an improvement in growth in 2020. again, the ambiguity of of final date or the plan the prime minister remains ambiguous. as long as the ambiguity exists, long-term money -- especially

since there are other alternatives. european assets are very cheap alongside u.k. assets. there is an alternative. if there was no alternative, i would agree but at this point, there is in the european union and u.s. manus: very briefly, we are assuming the bank of england will enter a 50-50 coin toss they would cut next year. we scaled all the way back. are we incorrectly pricing bank of england coming -- cutting briefly next year? global edition of the bank of england, there is a skewed to the downside over the next two quarters. manus: well done. saed abukarsh, executive officer from ark capital stays with us. you got rosalind chin with a business flash. amazon says 30 party merchants can no longer use fedex's ground delivery network

this holiday season because it is too slow. the move highlights the e-commerce giants growing power. some sellers have complained about the change, which comes less than two weeks before christmas when holiday spending is at its peak. beyond meat is looking to push for the past its plant-based beef and pork next year, seeking exclusively that speaking to bloomberg, the ceo says a new chicken line will likely get more attention in 2020. the company's products are already available globally in more than 58,000 locations. >> if you look at what the mobilephone did in relation to the landline, nobody had to denigrate the landline. we don't think we have to denigrate animal protein. we simply have to provide the consumer with a new and better choice, and let them make the decision. if we are successful, more will sign on with us. rosalind: that is your bloomberg business flash. nejra: rosalind chin in hong kong. coming up, japan takes the lead

after a treasury department unveils the biggest holders of u.s. debt. this is bloomberg. ♪

manus: this is "bloomberg daybreak: europe." nejra: let's focus on the world's most indebted government. japan is increasing its lead over china in u.s. treasuries. here's dani burger. dani: you thought china hold a lot of you'd asked at, budget -- u.s. debt, but japan overtook china as the biggest holder of u.s. debt, and it keeps extending that lead. this chart is remarkable because -- one point $17 trillion in japan's holding of u.s. treasuries despite the fact jgb's are creeping back toward zero but it shows you how when we have a world with growing

negative piles of debt, the u.s. is still the most favorite place in offering the best yields in developed nations. and you look at china, we saw their holdings fall to a 2017 low so a little give and take but for now, japan is still holding supreme in terms of the biggest holdings of u.s. treasuries. manus: lovely chart and roundup. let's bring it to our guest host. saed abukarsh of ark capital. that chart speaks volumes about a reach for yield. saed: absolutely. the amount of money in japan is tremendous and what you have seen is japan effectively play the kerry game, jgb versus treasuries. ironically, as yields become depressed, you see piling into more treasuries so this isn't going to change anytime soon, especially since we haven't seen

any inflation numbers out of japan, so the bank of japan is unlikely to change policy in the medium-term or next year or the year after that, barring an inflationary surge in the u.s. in that sense, we will see increasingly more investment from japan into treasuries, and even into equities. nejra: i need a yes or no answer from you, but is that reach for yield going to support the dollar in 2020? if you look for the yield play, the fact is we have seen issuance out of the u.s. into euros. we've seen purchases of dollars across the board, simply as a funding vehicle. it remains the superior trade, so overall, not in the short-term. in the medium-term, we see dollar support on the differential.

we will see dollar weakening, but -- , senioraed abukarsh executive officer at ark capital stays with us. coming up, we sit down for an interview with dallas fed president robert kaplan. this is bloomberg. ♪ what are you doing back there, junior?

since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. nejra: good morning.

with manuscehic cranny. these are today's top stories. stocks to the highest level since mid-2018. s&p 500 at a record thanks to positive momentum around trade. citigroup says risk on. .oeing shares fall it will stop production of the troubled 737 max in january. a factory pause is the least disruptive option. and no deal threat.

boris johnson says he will change the laws to guarantee the transition is not extended. for thepital demand biggest u.k. lenders. nejra: s&p 500 hits a record. asian stocks pick up the risk, when do we hit peak optimism in risk assets? in the u.k. the focus is on a weaker pound. indeed, it seems we have peak trade angst. juliette saly is in singapore. let's bring it to you. i am looking at this

risk on rally which is sparking milestones in asia. msci asian index set to close at its highest level since june 2018. chart, ink at my taipei," above 12,000 points for the first time since february 1990. it was up 1.3% today. taiwan's dollar is at an 18 marks high. inre could be further gains the tech industry rebound. potential political risk around next month presidential election which creates an opportunity to buy more taiwanese stocks. 12000 and beyond. nejra: david, you are looking at the emerging-market. what are you seeing? on the em index

puts us within 1% of an 18 month high. a lot of this has to do with the dollar. with the exception against the japanese yen, the dollar is down against every single major. that depends on everything from spread to sentiment and whether the dollar rolls over from here. the dollar strength needs to go away for em to strengthen. from the current level to what the price target is for the top benchmark, a love and percent is what strategists are looking at for 2020. matt: annmarie hordern, let's talk about amazon. as he gets ready for the christmas season. shares tumble in overnight trading. has been blacklisted for prime deliveries. slow, says they are too

but fedex is back in the spotlight because they had earnings down. it is a critical time i had of the christmas season. they have been trading at a deep discount for the past five years. that is fedex, the white line. they are below ups and the s&p 500 my and bloomberg intelligence says this is due to fedex's earnings power. after yesterday, snubbed from amazon, it will be a big focus. nejra: annmarie hordern in london, david inglis and juliet sally. let's get back to our guest host. saed abukarsh is with manus and i. thes focus on emerging-market rally. we were talking earlier, you expect caution over the risk on over u.s. china trade.

does that make you cautious on emerging-market fx? just do not like it at this point in time. it is not the levels i would choose to engage in em at this point. the phase one deal with the china is not addressing primary issues. reasons why the markets are rallying, but i do not understand why i want to invest in em. one headline out of the white house or beijing can change the entire dynamic. it is not favorable for me. that, wepick up on have seen economic surprises out of china. , and its been stimulus would seem that is beginning to play out.

maybe we should focus on the surprises from china and what that does for em, or is it all about the dollar? when the phase one deal was struck, this morning a massive change in the currency. if the markets believe it was a game changer, it would be trading substantially lower. this is more about momentum a game changer. the deal is not a game changer in the medium-term, it is headline stuff. nejra: there is an interesting column on the bloomberg about how china's central bank and the fed look more like, they are on hold on the monetary front. about december

winding down. investors are focused on how to position in 2020. we have been speaking about it with saed abukarsh for the hour. some of the higher targets come from etig. at the lower end, ubs and morgan stanley at the 3000 mark. that is about a fifth of what it was at the start of this year. that's get back to saed abukarsh , co-founder, ark capital. these are calls on the s&p 500. we can take this global as well. you the more cautious tone are entering 2020 with, if you are looking at equity markets, will we see a rotation out of u.s. equity markets into other parts of the world, or if concern hits the market mindset, will investors rush to the defense of market of the s&p

500, the dow, and nasdaq? saed: you have a few caveats. yearrmany in the next investors will rush into european equities. they are massively underpriced. the base case is if we see disappointing data out of the u.s. and lack of inflation, will the fed do anything about that? the risk is the fed might change their tone next year in terms of and inflation should be, remember we have insurance cuts. if those have not worked, and as prices rise over the year, if those cuts have not worked and we see deceleration in the economy, i think the market will be shocked because those cuts were made without fundamental

reasons. if we see a slowdown, markets will panic. ,att: one of the things i saw here we are at a 20 year high in terms of optimism in the u.s. does that continue with yields at these low points? saed: one thing you have to look you see a tremendous amount of investment over the course of the last 18 months in housing, in the funding costs engaged marginal activities is supportive of the market. relative to the year ahead, the more rates go down, the more we will see investment in housing. them do see an uptick in

-- and unemployment, that could have a negative impact on the sector. with the pboc and the fed in a similar place on hold in monetary easing in 2020, who is more likely to cut more aggressively in 2020? the pboc or the fed? and how might that impact global flows of money? saed: i think we are more likely to see the pboc do a few more reserve cuts. the equityplay into market. theyisk is at this point both have similar business at this time. if we see an external shock, a selloff, you have to consider the liquidity situation in the u.s., the risk is to the downside for rates.

the risk is after cuts in china we will see a fed cut after a slowdown. matt: saed abukarsh, co-founder, ark capital. let's get you sorted out with what is coming up. stay tuned on everything you need to know. ♪

manus: this is "bloomberg daybreak: europe." i am manus cranny in dubai. nejra: i am nejra cehic in london. manus: the european union agreed to finance regulation, and the what is greenne

and what is not. joining us now is maria tadeo. this could be significant when it comes to regulating sustainable investment. we have the european union agreeing last night to clearly set out parameters when it comes to green investment, and the thinking when it comes to the eu is they believe if you move quickly with regulation and set up regulation that will put you in a better position to attract sustainable investment, you look at hedge funds, banks, insurance, they want to get into the green space. a say they do not trust the rules and are not sure about the regulation. the european union says it will provide that. if you look at last night, it is

early and vague but it is a deal nonetheless. let's get the bloomberg business flash. boeing is grounding in 737 max next month, deepening the crisis. except you cannot turn out the max at its current pace. many workers are assigned to other teams. amazon says it can no longer use fedex ground delivery because it is too slow. some sellers have complained that the change comes only two weeks before christmas when holiday spending is at a peak.

the final regulatory hurdle on a $5 billion deal, they have repeatedly extended as regulators investigated how the .cquisition might affected that is your bloomberg business flash. much. thank you very looking ahead to the rates decision from the bank of japan, the central bank is expected to leave monetary policy unchanged. that is after prime mr. shinzo abe unveiled a stimulus package to bolster growth. is still with us, he is co-founder, ark capital. this is the third time they tried to get to zero. let's focus on the jgb.

we are pushing to get back to zero. what happens if we break through the zero line? saed: i think one of the core zero,es, hovering around the problem for the bank of japan is inflation numbers given whereoutside the fed and the ecb is. significantlyve without causing a massive rush into their currency. if we look globally, the fed equities are dictating monetary policy. we are seeing a fiscal package out of the government and seeing that accommodative. i do not think we see a big change over the next few quarters. in terms of what that

means, when we did see it hit zero in the past few days, a lot of commentary said this would bring the japanese buyers back, and the yield would not stay above zero. ass that impact treasuries japanese buyers move back into the jgb market? i think what you see effectively with the jgb moving upwards, you also see u.s. treasuries move upwards. it is in the jgb moving by themselves. you see european fixed income, u.s. fixed income, global fixed income yields rise over the last two weeks, especially this last week with the trade announcement. i can see the logic going into

u.s. treasuries, but i do not think this will change. the only difference is the hedging policy might change. policies inedging japan, there fixed income allocations, they may change over the short term. i do not think this will cause a massive shift. manus: when we look at the shifts in bunds, treasuries and this is a could say spectacular moment for a buying opportunity. the risks of a phase two, does that stack up for you as the , these bondy yield markets could reprice? think we will see a move

down in yields in terms of global fixed income. the real risk is most investors, there was a highlight of the repo market. the fed has been active in the repo market. that could cause a spike in yields. if i was an investor, i would engage. nejra: saed abukarsh, co-founder, ark capital stays with us. humbles belowcoin $7,000. what analysts have to say. that is next, this is bloomberg. ♪

nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. manus: i am manus cranny in

dubai. has beendani burger seeing what they have to say. dani: it has fallen below $7,000, the first time it has been that low in sediment. the charts do not look good. drivenchnical analysis is seeing lower lows, and the highs are not as high anymore. veryounce from bitcoin is cute. it is not seen as going much higher from here, but the track record on calling bitcoin has been mixed. who cannot say the same? nejra: still with us is saed abukarsh, co-founder, ark capital. what do you make of the fact we are seeing this drop in bitcoin

as equity markets have been rallying? saed: it is not a coincidence the equity markets are rallying and bitcoin is dropping. over the past two years it has been used as an alternative vehicle. as long as equity markets keep rallying, bitcoin will go to the downside. it all hinges on the risk sentiment in equity markets. i think bitcoin will correlate to equities. manus: the fed has been aggressively active in the repo market. punchy yesterday in the marketplace. when do i stop worrying about this and think everything will get back to normal? this has been the

underlying theme and in the back of everyone's mind. markets are at that point in thirdhere the second or week in january we will see more activity in the space. activity atntinuous the start of january, markets my pressure yields higher. us how that impacts the dollar dynamic into year-end and how you position around the dollar also in the first quarter of 2020? saed: obviously if this dynamic is in play as opposed to a main at theyou would look swap market moving first. that would cause a demand for dollars in the swap market.

the main vehicle is dollar-yen, we could see that move aggressively down in a liquid market space. manus: would you take a contrarian view, goldman says hold your horses, but the consensus is for the dollar to weaken next year. that is a contrarian view? ind: every year we come back january and say growth issues and budget constraints, and a lot of things we say at the start of the year. the fed rate is significantly higher than anyone else's. ofus: it is hard to get out hotel california. saed abukarsh, co-founder, ark

capital, great conversation this morning. that is it for "bloomberg daybreak: europe." the european open is up next. this is bloomberg. ♪

anna: good morning and welcome to "bloomberg markets: european open." we are live from our european headquarters in london. i am anna edwards. matt: i am matt miller. are pointingeurope to a negative start of the cash trade -- to a negative start. the cash trade is less than an hour away. matt: no deal is back on the

table. sterling weakens as boris johnson plans to change the law guaranteeing the brexit transition phase is not extended. halting production, boeing it willall as it says pause production of the troubled 737 max in january. is that good news for airbus? awaiting the shine off, peugeot shareholders meet. risear registrations for third straight month. the start of cash equity trading across europe and in the u.k. is an hour away. very interesting to see red arrows as you look at european futures, considering we had to 1.5% ands up 1% then some after the big rally around the world. maybe the buck stops here. 27% rise on the dax may have been enough.

u.s. futures, more than mixed picture. we still see some green arrows. dow jones futures are slipping below zero. we had eu new car registrations out this morning. car sales rising for the third straight month. we will be talking about car news in that sector. the peugeot deal is the breaking news in the car sector. sees underlying sales growth for 2019, below guidance. guiding lower on unilever. this is related to the auto story. , young some lower guidance will ever expecting their first

half 2020 growth will be below 3%. a hand over at unilever not that long ago. emerging-market stories are of interest. the packaged food story picks up on that. we will talk more about the unilever story as we go through these markets. does the buck stop in the asian session? we did see some progress to the upside in some of the asian markets. the chinese market doing well, in the asianir .8% session in some markets. despite not getting any clarity agriculturalhich purchases from china, and how much rollback in terms of the u.s. tariffs on china, we do not

have any clarity on that. the s&p hit new records. keep an eye on fx markets. the pound on the move to the downside, and a change in the loss of no extension can be made after december 2020. this ties the hands of mps and the government. we will talk more about that. matt: after that intraday record we hit yesterday on the stoxx 600, asian stocks near their mid-2018 highs. mark cudmore our managing editor joins us to discuss what we are seeing. really big rallies around the in the asianhan 1% equity indexes. european futures are down. is that it? i think this is a consolidation, not the end of the rally.

the environment is to start the new year positively. the next week might have sideways action because it has been an exhausting year for everyone. but with a sideways, positive bias. the new year will start freshly. it is also which markets have the most to gain. asian markets are incredibly cheap and undervalued. u.s. markets are more expensive and will struggle to gain upside. anna: one of our colleagues pointing out the role the u.s. is playing, and it has been a u.s. story, and other emerging markets not catching up. let me ask about the pound, it seems as if the government wants to change the legislation to tie its own hands as well as that of mps. comings legislation is to tie its own hands to stop it

from extending the deadline 2020, whichber surprised the markets. mark: i will give the disclaimer, the pound is confusing me already. in the context of a real trade negotiations starting next year, there is extra certainty, and now i think there is downside. into the election matter, i asked a lot of guess how long it would be before the market deal in 2020? matt: i wonder what you think about the central bank question. it seems they were so important in 2019. are they losing their importance? how vital will central banks be in 2020? lag on whatre is a

aey added, the fed has added choice in dollars back into the market. ofober was the largest month pumping since december 2018. it only takes a couple of months to feed through, and we are seeing the largest central banks increase their balance sheets and that is helping the dollar weakened. theo not get the data, december froms of the fed, the ecb and the boj, they are increasing again. we will have a tailwind into the new year. anna: thank you very much, mark cudmore, bloomberg mliv managing editor. you can get involved in our question of the day, how involved will central banks be in 2020?

up next, we look at stocks to watch including u.k. banks as the bank of england plans to lift a key capital demand the biggest u.k. lenders after they all pass the stress test. bloomberg radio is live on your mobile device or dab digital in the london area. tune in. this is bloomberg. ♪

anna: welcome back to "bloomberg markets: european open." consolidation after recent gains expected at the start of the european trading day. where will we go after? let's get a first word news update from hong kong. >> tensions remain high across india as protests continue against the new citizenship law.

five days of sometimes violent demonstrations across the country. undocumentedans muslims from certain countries from seeking citizenship in india, let alone documented migrants from other regions. on a landmarkeed green finance regulation. lawmakers approved in accordance sustainable activities, overcoming last-minute divisions. should help set a framework for the fast-growing market for green finance. the final compromise saw nuclear and gas included on the list of green technologies under certain circumstances. the bank of england says it is less worried about the danger of a hard split from the eu. the financial stability report, mark carney says the risk of a no deal brexit still exists but effect lisicki -- but is less

likely. seven largest lenders all pass the bank stress test. world the balls governing body of theg the head european games over alleged improper payment. court papers could cover more than $2 million of services to 2002.between 1998 both men deny wrongdoing, saying the payments fulfill a verbal contract with fifa. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. this is bloomberg. let's get your stocks to watch around the newsroom. we are covering u.k. banks. hordernger and annmarie

, this is related to boeing? nmarie: they are putting a pause on the 737. potentially we could see airbus rise on this news. the supply chamber we will see serious strain. for an eye on rolls-royce potential pressure. amazons this to do with and what it is doing with his delivery network? dani: it absolutely is, the story is that third party suppliers cannot use fedex for holiday shipping. it shows how much power amazon has, just weeks away from the holiday season. investors may need to look at european delivery stocks to see if they need to price in amazon ricks. them to potentially

move on this action. we discover. banks the u.k. bank has its own 20 acre tennis club in london. today we have the stress test results. >> the stress test yesterday was generally a positive report for all seven banks that passed the test. lloyd's was a particular weak spot, only passing some of the test by a slim margin. barclays is not particularly great, but they say rbs will work better than expected, which could support buybacks going forward. it is varied across the sector. they were not extreme scenarios. all seven banks past with varied results across individual companies.

anna: thank you so much for joining us. first go is the function to use on your bloomberg. unilever,ep an eye on they are citing not just what is going on and develop markets, but emerging markets including the economic slowdown they site in south asia. matt: watch unilever and fallout across the space. other consumer goods stocks as well. let's stay on the u.k.. the pound, after boris johnson revived the threat of a no deal brexit, the prime minister says he will change the law that guarantees the transition phase -- or to guarantee that the transition phase is not extended beyond the end of 2020. he will tie the hands of mps and possibly himself. johnson can count on a parliamentary majority after securing a landslide election victory.

joining us from geneva is vasileios gkionakis, global head of fx strategy, banque lombard odier & cie sa. this newou think of development, and is it worth a drop in the pound? definitelyit is copper getting things. our working assumption has been so far that given the extent of the majority, this would give a lot of leeway to the pms to tone down the stands during negotiations and maybe make a u-turn. this is in terms of requesting an extension. now we are getting headlines that it is natural for sterling to be pressured. let's wait and see. i think it will be at almost impossible task to get the deals in place in the space of just 11 months.

definitely boris johnson's track record in keeping his word is questionable to say the least. i still think we will end up with an extension for the transition period, but these headlines will keep pressure on sterling for now. anna: with that in mind, do you have a target for sterling for the end of 2020? do you make an assumption about where we are at the end of 2020, and what are your sterling targets with those assumptions in mind? vasileios: as we have discussed these past few days since we published our outlook three to four weeks ago, we were looking for cable at 135, and withterling around 584 risks to the upside for sterling. following the election, we sharpened the risk trajectory for sterling to the upside,

potentially sang we could keep the 140, but we revise that forecast and stick with 135. in terms of their valuations, we estimate cable has a fair value at 138l. we are not miles away from that. it is subject to all the caveats. 135 is a natural level. ramping up ofous the no deal risks, we could drop below the 130 level. is watching cable closely. do you think the euro pound has a different place ship? vasileios: no. there are two factors. seear as euro-dollar, we some modest upside.

we see the dollar weaker and some stabilization in trade and growth. at the same time, if sterling goes significant we hire, obviously this will put downside pressure on eurosterling. on the whole, aiming for a trajectory between 85 adn 8 -- 95 and 85-82 is a reasonable target for the next couple quarters. anna: vasileios gkionakis, global head of fx strategy, banque lombard odier & cie sa stays with us on the program. coming up, is the worst over? the data and the stock markets do not seem to be in sync when it comes to europe, is that because investors think we are at an inflection point? the dax index in frankfurt is up

27% year to date. when you are traveling to work, tune in to bloomberg radio live on your mobile device or on dab digital in the london area. this is bloomberg. ♪

matt: this is "bloomberg markets: european open." 37are currently about minutes away from cash equity trading across europe. stocks hit record highs yesterday despite continued we ares in the pmi data getting across the region. was the euphoria enough for investors to see past the negative readings, or do the markets believe the worst is over? anna: vasileios gkionakis, global head of fx strategy, banque lombard odier & cie sa is still with us. with the worst over, in terms of

the european data picture, we have been having that conversation for a couple of months. yesterday's data make people question that logic. i do not think it will be a one-way street. it never is. on how tradeepend negotiations between the u.s. and china go. it seems we have the phase one deal and we will get stabilization. we will not get something exciting were bright, but nonetheless the manufacturing activity, and the thing to isember about the eurozone the shock has been externally driven. the underlying fundamentals of the domestic economy remain resilient. we will get that positive shock from the external environment. we expect modest improvement in

activity and growth going into 2020. matt: what does that mean for the ecb? vasileios: i think the ecb stays where it is. central bankers will never admit they are running out of options. the big issue would be if we have renewed negative shock out of the external environment. that would be a big issue for the ecb. in modeste comfort stabilization, and therefore they will stand pat. there is room for the ecb to do something meaningful is still positive, that is very limited. anna: where does that leave the fed? we have seen talk about the phase one deal. will it be significant enough to get investors talking about the possibility of fed rate hikes,

or will we be on hold to 2020? vasileios: i think the fed has telegraphed clearly, of course things can change. so far with the information we have from the data and the fed communications, the fed will be low for longer. the message from powell in his press conference was clear on that. somewhat can rejoice in the fact they are getting accommodative policy stance from improvement modest in the trade and manufacturing outlook. , stays stays the course where it is right now for the next few quarters. is a distanceikes away from us. matt: is it only modest improvement, or would you have

expected to get usmca phase one china trade deal decisive u.k. elections all at the same time? everything comes with its own risks. the tail risk of brexit has diminished, but with johnson he would like to end everything by next year, you have this hedge coming in as a probability, a low probability. the phase one deal is what we expected, only a partial rollback of tariffs. this is definitely positive. the important thing is investor sentiment will improve. if you are asking if we will see something more of a modest improvement, this is possible is investors sentiment improves. front, itbal trade still remains to some extent.

anna: thank you so much. vasileios gkionakis, global head of fx strategy, banque lombard odier. up next, what you should be watching out for. we will give you a rundown of everything that lies ahead. this is bloomberg. ♪

matt: welcome back to the european market open. away from cashes equity trading across europe. i am matt miller. alongside and edwards. anna: nice to have you here. checking in on the stories we're watching for developments in around europe today. london. on paris and in paris, the focus is on the auto sector. on in the u.k., the focus is the politics. parliament reopening after boris johnson named his parliament.