♪ european stocks tick lower after big rallies in the u.s. and asia. another cliff edge. sterling weakens after boris johnson says he will change the laws of brexit measures are not extended. maker --ane ♪ welcome to bloomberg surveillance. these are your markets. after the rallies

in u.s. and asia. the pound is significant because we saw a lot of momentum since the election were boris johnson won a majority. thought himerts meant he didn't have to pander to his faction burden now the newly elected climb just prime minister opposed illegal change you may see a little bit of impact on a pap test on the pound. little bit of an impact on the pound. to theet straight bloomberg first word news in new york city. >> we begin in india. highoned -- tensions are after the new citizenship law.

the new law bars undocumented people from pakistan from seeking citizenship in india but undocumented migrants from other religions remain eligible. new greend on a regulations. including what technology should be on the list. the agreement should help set a framework for the fast-growing market of green finance. the final compromise includes both nuclear and gas. but under sorghum circuit -- but under circum--- under certain circumstances. governor carney says the risk from a no deal brexit has become less likely. he emphasized the financial system is prepared. the latest stress tests all past. mexico's to raise the minimum

wage by 20% as part of a plan to redistribute wealth despite the risk of spurning -- soaring inflation. it will rise to the equivalent a day.0 global news, 24 hours a day and -- on air and at quick take on -- this is bloomberg. stocks have slipped in europe and u.s. futures struggling for direction as global rally seems to have eased. globe earned -- global investor sentiment after u.s. tariffs on china. andks had an all-time high asian indices strongly trading. it remains unclear how china will follow through on pledges on cultural imports. >> we are doing a lot with the

farmers in china and so the deal we finalized over the next couple of weeks. andrew is cross asset strategist at morgan stanley. basics.art from the andrew: i think the global economy will look a bit better. we have quite a bit of easing in 2019 will filter through. the fact trade is no longer getting worse between the u.s. and china helps. that recovery will look uneven. it will be strongly focused outside the u.s.. that's where the trade changes help the most. that's were fiscal policy will ease the most in europe and japan and china. the u.s. economy will look quite stagnant. you have a similar growth right next year and corporate profits won't grow at all. francine: i have a great chart looking at a five-year quote --

correlation burden let me go -- when we go back to some thing more used to. andrew: i think we are probably close to that. last several months of this year quite a bit of optimism on stocks that has not been reflected in the bond market. as you flip the calendar we will get a very early gut check of how strong the corporate profit machine is when earnings come out mid january. if those are strong the market will of more focus and confidence, bond yields will go up. if not, bond yields in stocks go down. francine: margins weren't too better last quarter brayden andrew: the labor market is

continuing to tighten, those cost pressures aren't going anywhere. you don't have much acceleration in growth. markets there's a good -- next year. brazil is another market we like for its perspectives as well. you mention japan. there's been concern about the inflation target, the unloved market you are pointing to if earnings are pretty good. benefits ase japan a couple of channels. pushing that japan is ahead with domestic fiscal stimulus, that could boost earnings. quite inexpensive market relative to other things in the world level to global growth getting better. we don't think the market has high expectations for japan

which makes it easier for japan to exceed them. francine: what's the chance of inflation surpassing expectations in the u.s.. it's one thing you have to get right, your dollar and inflation call. andrew: it's quite easy for her to pick up next year a lot of investors are expecting that like we are and yet we are expecting it doesn't matter brayden inflation is going to pick up but either it's going to be temporary or the central banks will look through it. , thes important thing federal reserve has showed its hand to say we are now more interested in average inflation we have this tolerance are running high. , an easy thing to say when inflation is below 2%, it'll be harder position to particulate -- articulate when arises above 2%. that will be in porton thing to watch. could you summing in

the u.s. china trade. risk we'vere is a just gone through the eu's he part of trade and look at how difficult that was. phase one is all of the parts of negotiation, they were all intentionally pushed into phase one part of the trade deal and i think the stickier issues are set for phases two and three. however difficult it was to get the two sides to agree on a phase one deal, phases two and three are more difficult to achieve. there is a risk as the year goes on. it's unlikely you will see material progress on phase two and three. so the risk probably does rise. you will see more rhetoric as the administration rise -- you will see frustration with the lack of progress. and the best part around trade easing could rely early in 2020.

francine: stay with surveillance, coming up, boris johnson sets deadlines to get brexit completed. itsng holds production of 737 max. plus a conversation with the dallas fed president. this is bloomberg. ♪

francine: this is bloomberg surveillance. let's get to the bloomberg business flash in new york city. says sales will be

slightly below guidance. the owner of ben & jerry's ice cream and of soap says 2020 will see underlying growth in the lower half of the multi-year range. to halt production of its grounded 737 max. this deepens the crisis involving the plane maker. now accepts a can no longer turn out the max at its current pace. the company says no layoffs are planned. many -- many workers will be reassigned to other teams. amazon says third-party merchants can no longer use the fedex ground delivery network this holiday season because it is too slow. the move highlighting the e-commerce giants growing power over how products get to shoppers. amazon sellers have complained the change comes less than two weeks before christmas, when holiday shopping is that it's peak.

jumping the final regular tray hurdle for at least a $5 billion deal. first agreed upon by the two companies in february. they have had to repeatedly send an offer, this has regulators investigating how the acquisition might affect the market. next year, beyond me looking to push further past plant-based beef and pork, speaking exclusively to bloomberg, the ceo said a new chicken line is likely to get more attention. are already available globally in more than 58,000 locations. >> if you look at what the mobile phone did in relation to the landline, no one had to denigrate the landline. we simply have to provide the consumer with a new and better choice and let them make the decision and if we are successful, more and more will sign on with us. >> that's the bloomberg business flash. traders: just when

thought u.k. politics at stabilize, boris johnson said he wants to treat any brexit deal. he returned from election with a stronger wind. he could put legislation to lawmakers as soon as friday. sterling has lost most of its postelection appreciation. thank you for sticking around and thanks for joining us. we are back at basically no deal back on the table, boris johnson does not want to delay. >> sadly the door has been opened again a tiny bit at least to a no deal brexit. boris johnson showing up at his big election win. we are going to see the same old boris in this administration come a hard bargain. what he saying to the europeans

is not willing to entertain an extension so don't think we can drag this out and then you tell us we need an extension and we give that to you. i will put it in the law to say that i can't and if we don't have a deal by the end of next year we are going out anyway. this is him trying to set up his negotiating tactic ahead of time before these talk started february. francine: what are the chances of actually getting it done in time? >> it will be the fastest trade deal in history for sure. even the ones that don't involve comp getting sick services can take years. straightforward deal take years, they have 11 months to do this. angela merkel was saying this is incredible short amount of time and there lots of comp getting issues on the table. taxation, labor, you name it. there's a lot to get through. they will be working round-the-clock 24 hours a day

to get that. a bias in thehere markets that they think because they got a big majority he will soften his stance here? andrew: i think there was some thinking around that. i think talking to investors before the election there was a reason why the skepticism this would just move into the next phase of uncertainty out there. i don't think this will catch investors flat-footed. brexit is emphasizes by no means done or over and behind us, it's just getting started. but where we feel more optimistic about the u.k. equity story for example is i do think there is still a period over the next six months with the market can focus on the fiscal easing the new government is likely to do and assume or hope or think some of these trade problems are for the second half of the year. it's politics meeting markets. how do you model brexit and if

it -- a no deal brexit. until its december 2020 do you have to keep that in the back of your mind? andrew: it will certainly stay in investors minds. as long as the potential is out there, people have to assign some probability to it. are economists assigned a low probability, but it has to exist as a scenario. in some ways i think it will hold back more flow and more investment than you would see otherwise. francine: how have the tory mp's changed? rosalind: some of them are very new, they haven't been in power before. you don't have a significant majority. is one thing that is changed fighting amongst itself will of changed. enough people were he can probably see things true, there is no expectation it wouldn't

hardhe amount of brexiteers has been softened as a result. he came in promising to get brexit done in promising them to deliver. he will still have to answer to that group within the tory party. francine: do we have any kind of what kind of relationship he wants with the u.k. and eu? andrew: no. sorry, that's probably too flippant. i think at the moment what has been suggested will -- are somewhat contradictory objectives. literary divergence but also a close relationship and a close trading relationship and those two things per the european union side are mutually exclusive. it's a big unresolved question. there is no other way to put it. an unresolved question that will have to be resolved under what

seems like a short amount of time. saga has had a lot of twists and turns, promises and deadlines that have been shifted and move back. investors over the next six month will have some tolerance even if today seems troublesome to say we are underinvested in the u.k., there will be fiscal easing breed so moving toward something that seems more certain. i think investor slows up -- investor flows will move into the u.k. on the back of this. francine: the eu had redlines. the u.k. will presumably have redlines. if there is no coming together , will theyir part give summing up? is it too soon? rosalind: they would rather have something that's understandable and clear from their side as well. they may give ground a couple of

things for that to happen. we are too soon for the specifics. francine: thank you both for joining us. the crisis at boeing deepens, the playmaker halts production of the embattled 737 max indefinitely. what he means for the outlooks. this is bloomberg. ♪

francine: this is bloomberg surveillance.

is to halt production of the grounded 737 max next month. andmove deepens the crisis will complicate the eventual recovery sending ripples through the u.s. economy. of the best-selling planes are languishing in stores. benedict joins us. how embarrassing is it boeing has had to halt production? anedict: they were facing number of fairly unappetizing options. do keep building this plane at a big cost but not make money off of it. if you're not selling any of them, that causes a huge problem terms of cash flow. or do we stop production right now, stop the bleeding but see can get the plane back in the air. the company decide this is the least disruptive option.

but it will be disruptive going forward no doubt. the question is when will these planes actually be sold to customers, how long will they language and's -- languish in storage. there be steep discounts on these planes? a lot of unresolved questions and we still really don't have a date or even a window when this plane might be freed up by regulators, certainly slipping into 2020. some people say maybe even the summer will be another phase with a plane isn't running. francine: what is it mean for suppliers then? -- what does this mean for suppliers then? aboutkt: each plane has 400,000 components that go into it and a lot of suppliers rely on some just-in-time delivery for these components. anding around the clock

stopping it is very difficult to do. one of the big suppliers make the fuselage, that cap building them but these are now piling up. where do they put the parts. what do you do with all the employees, the 12,000 employees alone boeing engages with the 737. the longer that takes, the more problematic for the company. for now i hard stop but the question is how long can they keep that going. bottleneckthis huge and the shorter they can keep that, the better. francine: coming up, we talk more about -- ♪

francine: european stocks to close after big rallies in the u.s. and asia. citigroup says risk on has room

to run. a sterling week after boris johnson says he will change a lot to measure the brexit transition phase is not extended. tough measures. boeing shows solid. it will stop production of the troubled 737 max in january. the plane maker says a factory pause is the least disruptive option. could morning, good afternoon, good evening. this is "bloomberg surveillance ." 1.5 hours into the trading day, let's check in on your european stock movers with annmarie hordern. annmarie: we are seeing a lot of move to the downside in the corporate space. unilever down 5.5%. rbc says it is the worst sales growth they have seen in a decade for unilever. the pressure points seem to be south asia and north america. also changing habits of shoppers. the likes of that is weighing on the company. lloyd's also on the downside, down more than 4.5%.

the biggest lenders would be able to weather the financial crisis, but citi says lloyd's is the most disappointing for their stress test and can maybe wait for their buyback. an down more than 4%. they are a buyer for boeing. to comestrain is going on the suppliers, and the big question for them is when will boeing start production again. francine: annmarie hordern with your main stock movers. let's go to the first word news in new york city with viviana hurtado. viviana: boris johnson guaranteeing no extension to the brexit transition phase. he wants to deliver his election promise for a free-trade deal with e.u., but it is highly unlikely. that will be enough time for negotiations. the move setting up possible new cliff edge for a no deal brexit in one year.

across india, tensions are high. protests continue against a controversial new citizenship law. the new law bars undocumented reforms from countries from seeking citizenship in india, but undocumented migrants from other religions will remain eligible. divisions onminute what technology should be included on the list, the landmark -- should set a framework for relation for the fast-growing organ of green finance. the final compromise of green technologies includes both certainand gas under circumstances. -- a heart split with e.u. financial stability report, governor carney says the risk from a no deal brexit still exists but they have become less likely. mr. carney exercising the financial -- emphasizing the latest stress test saw the seven

largest ledgers all past. raising the minimum wage by 20% is part of a plan to reach tribute wealth, limiting room for rate cuts per the new wage will rise to the equivalent of $6.50 a day. the president has already hike to the minimum wage by 50% during his first year in office. footballorld's governing body is suing its former president and the x head of european games, saying that there was improper payment. fifa -- both men deny wrongdoing. they say the payments fulfilled a verbal contract with fifa. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, viviana hurtado. this is bloomberg. tom: thank yo --

francine: thank you so much. with 68.1 billion in outstanding debt in two days alone, for more on exact the what is going on and what is troubling investors, let's go straight to our beijing bureau chief, sharon chen. what exactly is happening and why? mean, it is not unusual that more and more companies have been defaulting on debt in china, but what is worrying now is that there is a cross guaranteeing of companies guaranteeing the debt of other companies, and this does not have to be disclosed. with this wave, it is really a problem of contagion and that risk. investors do not know who is on the hook for whose debt. all that uncertainty is making

the situation worse because companies are trying to get out of debt -- investors are trying to get out of debt even when the companies involved have nothing to do with the companies defaulting. it is the lack of transparency that is leading to the problem. francine: i have always been told that debt is manageable in china because authorities are on top of it. do we worry at this time they are not? increasingly they are letting companies default. it is the same problem china has grappled with. it is no longer a guarantee that the local governments will rescue these companies. china is also trying to teach investors that it will not step in all the time and they need to become more like an economy where investors accept risk.

francine: sharon chen joining us from beijing. first of all, congratulations, andrew, on the 2020 strategic outlook. what if we were wrong about the trajectory of the chinese economy? andrew: i do think that mix a big difference. for the moment we expect that growth in china stabilizes and gets better. but certainly it would be a risk if that does not pan out. i think where it would probably be the biggest risk is for some of the companies in europe, like the capital goods sector, who valuations are very expensive, pickup, a immaterial better outlook in china. if that does not come through, we need to look at places that are already expensive that are geared to china that would be more exposed. francine: what does it mean for -- i don't know whether there are repercussions on u.s.-china trade, but china needs that trade, whether it has more of a chance of holding then if they did not. andrew: this can be seen in

multiple ways. there is a scenario where if growth in china looks weaker, either the chinese government could say with this current plan not playing out, we maybe wait until after the election, we see who the next administration is, and that will allow us to cut a better deal. --also could weigh on that we are in a stronger negotiating position if chinese growth is weaker, and maybe that causes the u.s. to push more aggressively in phase two and phase three. i don't think it is so straightforward that if chinese growth is weaker you are guaranteed or more likely to get a breakthrough on trade. francine: how do you grade the trade story? i don't know whether you play it through some of the places where the supply chains have moved or whether you play it through china. andrew: there are some markets we are optimistic. in korea and japan. in japan because we think it is an inexpensive market and

broadly will benefit from a pickup in global trade flows, better global growth. korea because we think it is quite exposed to specific areas of the tech market. the semi conductor market that we think will pick up both of her broader trade reasons and also idiosyncratic reasons, the improvement to 5g investment that we think will happen in a variety of scenarios could help that market. ofncine: wve a great way looking at china, things to hillary clark. we have charted it to some pre-trade war expectations. overall, how much do you worry about things such as liquidity in the market. is there anything mechanically because we have seen such long periods of accommodative monetary policy that we should worry about? andrew: i think we are in this place where the market has really just assumed that central banks will step in and be supportive under almost any condition. there is always a dangerous

assumption when markets are higher. it is also a dangerous assumption because inflation i think has been a little bit stronger and people appreciate. in the u.s., the fed focuses on core pce, but most of what is used in government payments, tracking statistics, etc., is cpi, and cpi is 2.3%. an easy thing to say there is no inflationary pressure in the market. if chinese data gets better, if u.s. data continues to get better, that should allow more inflationary pressure. the idea that the federal reserve might be anything other than accommodative i think would kind of shake market confidence, given those expectations. sheetse: andrew from morgan stanley stays with us. the world economic forum says it will take a century to cross the gender pay gap. more from the author of that report next. and for 2020, we take you

through the big cause for stocks in the year to come. this is bloomberg. ♪

francine: this is "bloomberg surveillance." let's get straight to the bloomberg business flash from new york city with viviana hurtado. viviana: unilever says this year's sales gains will be slightly below guidance. -- theer of berrien owner of ben & jerry's ice cream says 2020 will see low overlying growth, between three and 5%. next month boeing is to halt production of its grounded 737 max. this stevens the crisis of the plane maker.

almost 400 jets are currently in storage. boeing can no longer turn out the max at its current pace. the company says no layoffs are planned. many workers will be temporarily reassigned to other teams. amazon says charting merchants can -- can no longer use fedex ground this season because it is too slow. the move highlights the e-commerce giant's growing power about how cl items get to shoppers. this is one holiday spending is at a peak, near christmas. that is the bloomberg business flash. francine? francine: thank you so much. it will take 99 years to close the global gender gap. this may seem high but it is significantly improved on last year's estimate of 108 years. the latest report, political representation has helped. narrowing the overall gap. but women are at risk of losing their jobs to automation.

-- saadia heating zahidi joins us. when you look at this report, what do you see echo saadia: we are starting to see the role model effect. as more women are going into politics, we are seeing more parity at the top of organizations. it is starting to create more of a positive momentum. i think that is why we are seeing a bit of a narrowing of the gender gap today. that is why we are starting to see slightly more improved trendlines, but it will take a lot of other changes if we are going to try to speed up parity instead of waiting a century. francine: what are the countries that are doing better? what are doing worse? is there a shaman doing worse that the trend in the gap is out of better -- saadia: the top 10, seven are from europe. the 90 -- united kingdom is at

21 p the united states is at 53. for ais a long way to go lot of countries. iceland is number one, but it is only about 80% of the gender gap. a lot of countries have more progress to make. 101 of the countries covered between this year and last year actually made progress, so the majority of countries are heading in the right direction. francine: when you look at women more likely to be displaced by automation but almost underrepresented in the fastest growing jobs, what can people do to change that? is it education or retraining? saadia: it is a lot of things in combination. one, if you look at those fastest-growing professions of the future, cloud computing, 12% isthe talent in that role women 15% in engineering, 26 percent in artificial intelligence. these are all the things shaping the future of our economies, so

we need them to be managed by, produced by people that are more diverse than they currently are. that is going to be one aspect that will create a positive momentum. the pipeline does exist. what we are finding is there is a gap between the pipeline, the women coming out with the right kind of degrees and what is happening in terms of outcome. mostly it still comes down to organization, business is essentially changing themselves. they are still designed for outdated family structures. they are still designed for outdated organizational structures. they are still thinking about a different talent pipeline than today. --ncine: the u.s. is at 53rd, the united kingdom is that -- they have slightly different situations. in both countries, you do have the majority of university graduates being female, but in the united states they are perhaps not making it to as much

positions of professional skills roles as they are in the united kingdom. iny do slightly better political empowerment, which is why they are doing better in the u.s. overall. francine: when we look at the efforts that the world economic forum has done, what are you expecting for 2020? saadia: we have been focused on getting countries to actually think differently about setting targets, getting the public and private sectors working ok together. there are about 10 economies at the moment working with us to accelerate the pace of change. we expect that to grow to 15 countries over the course of 2020. the second is hardwiring gender parity. working with a number of countries to say -- companies to fivef these are the top professions of the future, how do you build parity today instead of five or 10 years and from now when it may be too late.

by 2022 at least double the participants at our meeting in davos that are female. francine: let me bring in andrew sheets with morgan stanley, who is a big investor. you look at investing, is this more something that you look at at board level, if you choose the sector of a company you want to invest in? andrew: are quantitative analysts have looked at this, quantitatively looking at gender thatsentation and found companies with better gender diversity significantly outperform and do so after you adjust for the company size, yield, volatility. we think this is not just the right thing to happen, but it is ble aspect monetiza for investors. francine: have you seen a difference when you come to dapo's? there seems to have been a shift -- two davos?

there seems to have been a shift? saadia: there is a clear momentum that is building up. if you look at the broader conversation around stakeholder capitalism and what companies are now responsible for and what they should be thinking about in the years to come, it is clear that gender parity and gender diversity are part of that. that is going to be important not just because of the new metrics and focus on esg, but it is also important because it's is the other person just pointed out, there is a good case for it. we know companies that are more diverse tend to perform better, and that will be more applicable. those roles i talked about earlier, cloud computing, engineering, artificial intelligence, these are roles where we face talent shortages. thank you so much, saadia zahidi, managing director of the world economic forum. we will get back to andrew

sheets of morgan stanley. we are talking about the prime minister's stance on brexit and the withdrawal agreement. all gains against the dollar have been erased. plenty more on brexit and on the e.u.-u.k. future relationship shortly. coming up, positioning for 2020, we take you for -- two stocks for the year to come. that is coming up next and this is bloomberg. ♪

finance, economics, politics. this is bloomberg surveillance. i'm francine lacqua in london. investors are looking ahead at the position in 2020 p the s&p 500 broke 3000 for the first time in july, and most forecasters expected to hold above that level next year. the higher targets come from btig, credit suisse, goldman sachs, and at the lower end you have ubs, morgan stanley. even that is about a fifth above where it was at the start of the year. andrew sheets from morgan stanley is still with us. on the s&p you are more cautious. andrew: i should probably spleen

ourselves. i think an underappreciated part of the 2019 narrative, and it was an incredibly strong year for markets, but it was all multiple expansion. even for the s&p 500, the strongest market, the market is up consistently all year. earnings have not grown. when we think about next year, we think the market now has to come to terms with that. anotheret is facing year of earnings growth per the u.s. economy is not going to accelerate on our forecast. the market is getting tighter, meaning more margin pressure, and on the face of that the market will struggle to pay up the same multiple it is today at the high end of the historical range. we see no earnings growth, a little bit of that multiple being given back, and that gets us to 3000 by the end of the year. francine: are there industries you like more than others? andrew: we think financials in the u.s. are well-placed. they are one sector that is

inexpensive, pricing in more growth risks already. we also think the staples sector will do well. it has underperformed going into the end of the year as the markets become more risk on, see yields rising in the u.s. francine: what do you do with emerging markets? that is partly a dollar play and partly a structural reform play. andrew: on a relative basis we upgraded local markets, emerging markets, took it back up to equal weight. the market -- the elbow looks better -- the outlook looks better than this year. it also is an area where there will be variation, and we are more optimistic about em stocks in brazil, india, russia, korea. we have taken our targets down and we are less optimistic in china where that market ran quite a bit this year and is rising in more optimism. francine: the one thing you want to stay away from because you

think it is a bubble or overvalued. andrew: i would not say bubble, but our biggest concern next year is probably in the u.s. tech sector, where there was a major outperform her this year. i think the market assumes it is not cyclical. the market is assuming it is immune from growth risks that emerge in the u.s. it is a sector this year that saw some of the weakest earnings , which has passed under the radar. francine: thank you so much, andrew sheets from morgan stanley. a top interview, 3 p.m., london time. this is bloomberg. ♪

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every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. francine: european stocks tick lower after a big rally in the

u.s. and asia. citigroup says risk on has room to run. another cliff edge. sterling weakens after boris johnson says he will change the law to ensure the brexit transition phase is not extended. boeing shares fall after it says it will stop production of the 737 max in january. the plane maker says a factory pause is the least disruptive option. london.ncine lacqua and tom keene is in new york. if you look at pound, it is a shift to what we saw with exit polls in the last couple of minutes per the pound gave up all of its gains since the exit poll. a more hardline of prime minister johnson. tom: let's go to the bloomberg terminal. we showed it nicely on the open. it is real simple. 10:00 p.m., anna edwards, guy johnson, jon ferro -- up we go. near 1.30 five.

then down, down. a lot of people look at this and it is the news flow to come in the coming weeks. sterling is the u.k. litmus paper of the moment. francine: it certainly is. we will have more on that shortly let's get to the bloomberg first word news in new york city with viviana hurtado. viviana: tomorrow the u.s. house is set for a historic vote on impeaching president donald trump. a few uncommitted moderate democrats are putting out how they will vote. most say they will vote to impeach, but first term commerce woman out of michigan -- the first term congresswoman out of vote will be to the end have are short political career. boris johnson is revising the threat of the no deal brexit, changing the law to guarantee the transition period is not extensive, setting up the possibility of a no deal split with the european union at the end of next year. e.u. leaders warn in that timeframe it is unlikely negotiators will be able to complete the kind of deal johnson wants. the european union agreeing on

green finance regulations or the landmark agreement sets environmental goals and standards for banks and moneylenders lenders and insurers. a final compromise means under certain circumstances, nuclear and gas power could be part of the green finance list. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i'm than 120 countries, viviana hurtado. this is bloomberg. tom: thanks so much paired one screen today. markets churning. just one screen, futures negative two. that is really all i got. i know francine is looking at sterling. francine: i am looking at sterling. i am also looking at some of the other things we are seeing on the markets are it overall, a risk-on move when it comes to sterling, a couple of investors taken by surprise. others were less taken by surprise. atrently at 1.3 190 --

1.3190. boris johnson wants to change the law to make sure that the brexit transition phase is not extended. now, our guests, and law,, if you put it into does it mean that a crushing out no deal will still be on the table? >> he could always change the law again. this is the same prime minister who said he would rather die in addition and delay brexit. on the other side, if he did come to the end of the transition period and the e.u. were faced with crushing out, would they extend it? to me it means the possibility of crashing out is still there. crushingean that the out is inevitable? far from it. the markets thought boris johnson with a big majority would be more market friendly. i guess wanting a softer brexit.

what kind of boris johnson are we going to get? ed: people over read the idea that when boris johnson had a majority, he would go -- this will be a much looser alliance with europe, more of a canada style agreement on trade, not services. this is a political statement he has a majority, is in control, and he is going to the voters are he wants to get on and get brexit done and that is what he is doing. tom: i know there is a norway style, an edward evan style, and a canadian style brexit. what in god's name does that mean? limited agreement that covers goods, not services. this is not going to be the kind of close alignment, soft brexit, where we stay at have a deep and free trade agreement with the e.u. what johnson wants to do is get diversions from the e.u., and to

do that he has to make sacrifices the e.u. is not going to let the u.k. have access to single market while at the same time allowing it to undercut single market members. johnson is pushing for clearly a much stronger divergence for people than expected. what will happen is they will try to come to an agreement on goods first. now of course when you have the high-pressure deadline, things might have to get sacrificed along the way. you can probably get a deal in 11 months. the question is how far do you go? this suggests a more limited end to that. well said. who has the leverage now, brussels or prime minister johnson? areit depends on where you sitting. at home, johnson certainly has the leverage. he has that majority and is showing that he is not afraid to use it. i think you have seen he will not give mp's a vote on this, and he will not allow parliamentary scrutiny on any

trade deal. how far that cuts ice in brussels is less than clear. one of the mistakes that british leaders make is that they think because they have a majority at home, that will carry them and make europe -- a e.u. members change their mind on this. nothe others, the e.u. does want to u.k. to crash out without a deal. it is possible there could be a compromise. that is the question of the e.u. budget coming up. one could imagine that you would get to july and in return for a contribution you might get some form of extension. whether you could put a number on that, you could try 350 million pounds a week, i suppose. francine: there you go. what doing know that prime minister johnson wants with brexit? what kind of deal does he want with the e.u.? >> he has been consistent. we should not be surprised that he is doing exactly what he said he would do. divert, towanted to diverge on green standards, on

what has been announced, and he is no longer going to guarantee what is right, which was a prior concession. ,t is actually very consistent and we have spent a lot of time discussing trade and goods. it is now the focus again. in this economy, the u.k. raising essentially on services, and nothing is being set on services since the start. and here we go. we have probably the ingredients for a bare-bones trade deal with very few things. we knew this. it has been in the pipeline for four years. francine: it seems the market did not believe it. is there a correlation between what the market believes and what we are hearing from the prime minister, or -- boris johnson has not always been consistent in what he says. gilles: in any case, we have

progress relative to where we were before the elections. no possibilitys of a no deal brexit until the end of 2020. that is better than the situation in which we were just a few weeks or a few months ago. second, i would never think that boris johnson would change his mind more would change his entire set up just a few days after the elections. as you said, he always has the possibility of changing his mind when we get to the end. it will depend on what kind of offers he gets from the e.u., and what is the state of the british economy by the time we get to brexit. tom: we will talk negative rates and europe in a bit. edward evans, thank you for being with us this morning, and to your team for wonderful coverage off the united kingdom and election. coming up, an important conversation. always s2, robert kaplan of the

dallas fed. in the 10:00 hour. this is bloomberg. ♪

pres. trump: doing a lot of business with farmers in china, so the deal will be finalized over the next couple of weeks. was the u.s.t president, donald trump, talking about trade, talking about steel in the future. and it is something that will move markets even more than it has so far. -- need this trade deal more? could we see the phase one going back on the attack in january, or is this something at the end of the day that will be -- >> i think it will hold because

now it is in everyone's interest. that is clear. the december 15 package, terrified package, was going to be quite hurtful to the u.s. economy. it was the first one that would hit consumers directly and hit high u.s. -- high-tech u.s. companies. thisrice to avoid this was phase i deal. i think it will hold. not within the realm of possibility at this stage. francine: how should the fed look at this? if we have a slight pickup in inflation, plus a trade truce phase one actually holding, doesn't mean we will see more normalizing? which is not at all priced in the market? gilles: i would be surprised. to a large extent, i think the improvement in sentiment is not only due to the fact that we are getting good news on the trade war, it is also due to the fact -- we had the first

impact at the beginning of the year of tightening. now we have some support. in spite of the support, the debt still remains quite -- i think the fed will choose to remain on the dove or side. s, on trade it is simple. multilateral is dead. we are defining a new bilateral. as i said before on brexit and who has the power across the channel, who has the power in this bilateral or even two separate unilateral debates? where do you perceive the power? in washington or in beijing? if you look at how the pain has been allocated across countries, i would say that china has paid a higher price than the u.s. has been quite significant in the case of china.

the u.s. thanks to what the fed has done so far, has barely registered the factors of the trade war. it is only on investment that we have seen an impact in the case of the united states. for now i would say even if i am a great believer in free trade, for now the upper hand is probably on the u.s. side. tom: what do you perceive for investment next year? are we changing our investment plans right now for second quarter or fourth quarter next year, or is that already in the cake? ed: i don't think we have enough -- gilles: i don't think we have enough in the news flow to believe that upward investment should re-accelerate in 2020. even if you forget about the trade war, which has been quite horrible in 2019, you have internal -- within the u.s. which are not conducive to investment. i am quite interested in the

deterioration in profit in the u.s. i know it does not show in equity prices, but in the initial count in the u.s., you have a significant decline in possibility, and that is not normally conducive to a lot of investment. francine: what does this mean for dollar? the fed probably does not need to do much more, easing by 75 basis points. they do not need to do much more. at the same time, we have some good news on the trade front. are -- toward the second half of the year, i would be quite negative on the dollar because i think the fed ultimately has to restart easing a little bit. francine: thank you so much. coming up, unilever says this year so skeins were slightly below guidance. backing away from growth

targets. this is bloomberg. ♪

viviana: this is "bloomberg surveillance." european car sales are heading for a flat year, this despite a boost last month. in november, sales rising 4.5%. it was the third straight monthly increase, but sales for the year are down .3%, the

slowdown coming when automakers are spending huge amounts to selfop electric and driving vehicles. the boeing 737 max crisis got deeper. next month, boeing plans to halt production of the grounded jet. the indefinite shutdown will help conserve cash but will jolt -- boeing employees will continue the 737 related work, temporarily assigned to other teams. fedex is too slow -- that is why the world's or largest online retailer said merchants cannot use fedex ground for delivery to shoppers during the holidays. for a while, the two companies have been at odds, failing to renew a delivery contract. that is your bloomberg business flash. francine, jon ferro and i are thrilled to say we will be at the economic forum meetings in davos this year. speaking at the forum on topics,

and one of the key topics are negative interest rates. maybe it is investing in negative interest rates, maybe it is losing money with negative interest rates. we begin the discussion in january. with gilles moec. a german yield and they have been low, low, low, lower for longer. what is the urgency to escape negative interest rates? thatdon't think it is all urgent to escape negative interest rates. what we first need is for the global economy to escape the damage done by trump's trade wars. once we do that, we will no longer need the a negative interest rates. tom: very simple. i guess we don't need the negative interest rates, but here they are. and there seems to be a great divide come a huge divide between those that think they are productive for society and those who think they have real

harm. you saw this through. what do you think? gilles: i am not a big fan of negative rates. createslly because it issues for the ecb. but i would say simply that i do not think you would find the wide majority at the moment at the ecb was actually that in favor of negative rates. they are where they are because they had to do it to respond to when the fed was doing it a few years ago no one was happy about them. the problem the ecb has is trying to bring the rates out of negative territory, it is quite cumbersome. in part because it has a significant impact on trade. that actually is the main reason why we are staying in -- it is not so much -- it is because exiting from negative territory is complicated. francine: we understand that there are new huge -- there are

huge negative effects. are negativenitely effects. as to huge, it is difficult to say because credit growth is roughly where the ecb would like it to be. in that sense, their policy is seeming to be working. we cannot seem to be saying whether it is a come at be, or c of the policy set. ecb wanted to further litigate the negative side effects of the negative deposit rate, they could make the tearing more generous. it would not see the headlines announcement that would send the euro straight up, but it would still be little help for the banking system and it would probably still mean money market rates could go up a bit. -- towould be for the mitigate it next year. can they be more generous with the tiering? gilles: seven european banks

have been able to borrow from other european banks to restore money borrowed at negative rates, it is working. it is generating popular -- it is not only the cash-rich banks. yes, it is an option. i agree with holger. the issue is how do you sell the headline hike in the deposit rate? i think that would be very complex. even with we could sense that several members of the governing council will go there, we will have a swedish experiment this week. tom: this is fascinating. let me bring up another chart and introduce the swiss 20-year bond. both of you are brilliant on this. holder, what i noticed in the swiss 20-year yield is lower for a teensy ween tea bit in 2016, and now we are lower for may longer. -- for way longer. how does the duration of negative interest rates fit into the pain to retail europe?

holger: well, that is a pretty big question. the real issue here is how long will interest rates be that negative? once again, i kind of think that we have seen the most negative of the rates probably in all of september right after trump re-escalated his trading -- trade conflict with china. are nottive bond rates quite natural. if you look at risk on 20 years ahead, you should get a little reward for lending money. my best guess is that a year from now we will have most of these yields close to zero, and some of them slightly above negative where we are. but of course life is full of risks, especially political risks. if they stay negative for much longer, then indeed the negative side effects could eventually take over for banks, insurance

companies, and others. tom: you see the chart, folks. this is incredible, moving from the agony of switzerland through to germany, the united kingdom, and italy, with yields that harken back to another time and place. i want to suggest this is a huge theme for 2020. moec and holger schmieding. he has written a lot about negative rates. a conversation with mohamed el arian today in the 9:00 hour. stay with us. this is bloomberg. ♪ here, it all starts with a simple...

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london. thank you for the show we did last week overlooking st. paul's and st. mary, the gothic tower of london. that is an original gothic tower, not a stage prop. good morning from bloomberg "surveillance." george sarah los says-- sarave enough. should the transition not be extended next year, the most likely outcome, disorderly exit. domestic legislation can be changed at a later date, but it sends a clear negative message to business, we believe recession risks are likely to crystallize. francine: this is something people felt in the markets, there is a little bit of bias. this is what boris johnson been campaigning on and said, i would

rather be dead in made it then delay the withdrawal agreement. saying what he said in the past, he wants to get it done, and that is weighing on the pound. let's get to the bloomberg first word news. mostna: one of the important decisions u.s. house democrats will make in the impeachment process, who will prosecute the president next year. adam schiff and jerrold nadler are expected to be named to the trial managers' team. tomorrow, the house votes on articles of impeachment. turkey maysuggesting be on a collision course with nato. they threatened to close two critical nato bases. at issue, the turkey of a russian-made missile system. imposessays if the u.s.

sanctions, he will retaliate. india embracing a new citizenship recall -- law, bangladesh,e from seeking, and -- from citizenship. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. francine: unilever is taking the most points up the stoxx 600 after it lowered its sales forecast for the year. the company cites challenges in some markets, including the economic slowdown in south asia. we are back with andrea fell stead. thank you for joining us. doing?unilever

a previous chief executive scaling back. andrea: this is not looking good . nestle is doing pretty well and has steady growth, not spectacular, but steady, and unilever is falling behind. tom: what can they do -- francine: what can they do better? is this a problem of margins or regions? andrea: regions and categories. the generally accepted aserstanding about unilever it has certain categories that do well, but lots of sluggish food businesses which it needs to tackle. tom: watch yourself. ben & jerry's is not a sluggish food business. it is consumed at a high rate. if nestle is the best practice, what are the best practices unilever has to institute now to

get off the 10 year train wreck? donea: what nestle has well is identify the categories they want to be in, like coffee and pet care. they have bought in those areas and divested businesses that don't fit with those categories. we saw an interesting and creative deal to get rid of their u.s. ice cream business. unilever is falling behind. tom: are we asking too much of these countries? you know lever is up 12.8% over the last 10 years -- unilever is up 12.8% over the last 10 years. are we trying to make growth-iness in basic products? andrea: part of the unilever story was they did have that approach couple of years ago. they got a bit of takeover boost

with that, and that has probably faded a bit and we are coming back to the reality of having to sell these products into these markets. francine: how much of a problem is the indian market for unilever? i read a great story on bloomberg businessweek saying the problem with india is it is a huge market of a lot prefer their local product compared to the big conglomerates. andrea: this is a big problem for unilever. they were saying india has slowed down, plus you have this idea of switching consumers into big brands. you need lots of marketing, lots of salespeople on the ground, so that is definitely something that has to get moving again. withandrea felsted bloomberg on the conglomeration

of these different products, unilever bringing $.12 on the dollar. holger schmieding with us. this goes to globalization. new foreign affairs magazine talks about how globalization has been restructured. in ado multinationals do new globalized world? holger: first of all, for businesses that are sensitive, that are in the areas that we are likely to see deglobalization, those businesses have to say, which side are we on, where do we grow most, and where are we reluctant to do that? they need to identify areas where it is unlikely to get a lot of disruption, where the geostrategic rivalry between the u.s. and china will not play a major role. that may be the case for many consumer goods for many products

where data are not that relevant, so companies need to think along these lines, which products are sensitive to deglobalization, some delinking between the u.s. and china. francine: what is your take on the u.s.-china trade? we have a phase one and you seem pessimistic about it going further. holger: i am optimistic that this phase one is a lot more than a couple months. this tackles several thorny issues we have come on intellectual property. this is about rollback of uf tariffs -- u.s. tariffs rather than increasing. this is basically phase one and two already. we are still hoping for a new one which will be called phase two, we hope there will be more next year. if we can hold everything at the conclusion of this phase one deal, that it implemented, and

hiccup, thatp -- would be enough for global trade to recover over the course of next year and left trade tradeent -- lift dependent economies out of stagnation. francine: we are getting headlines from dow jones, peter thiel is advising mark zuckerberg on politics, saying he should not bow to public pressure. i do not know if that is an impact to possible raking up calls. this is bloomberg. ♪

♪ bloomberg "surveillance," good morning, everyone. holidaye joy of the

season to have holger schmieding on our desk in london, and to pick up the bentley that will drive back to germany is our our queenller and victoria street studios. congratulations on the bentley. i love the brown you picked out. of a few people doing spending in germany. --e is the crux of the issue i travel across this continent for a living, and the question i am asked more than anything is well christine lagarde be able to convince the german government, because i am based in berlin, spend money. about is i was talking what that even help? if all of schulz said, -- a loft olz,lz said, -- olaf sch

said, we will spend, would that help the issues they have in italy? the answer in berlin is no. on athe comments come out daily or every third day basis. it seems to be hugely cultural. explain your observation of the reticence to provide stimulus day-to-day across government, across business, and to people of germany? matt: it is cultural. they don't want to spend too much money. head, andshaking his anybody who goes shopping in germany knows they do not take last take. -- plastic. germans only want cold hard cash. francine: this is not about giving money and fixing the audubon, this is public spending to avoid a recession in germany because that impacts its

neighbors, fair? publiche problem is that spending will not necessarily get more people to buy volkswagens and that is where the recession is coming from. francine: what public spending help, regardless of whether you want it or not, with softening the downturn? holger: if it is applied correctly, it would help. there is more public money being spent on where it helps. there are more subsidies to buy clean cars, that is what helps. an attempt to get more highway construction going in a country that has no single unemployed construction worker, is simply to get -- simply ridiculous. francine: net investment on infrastructure is below zero according to some. holger: that is a quirky statistic. widely before unification we had a burst in infrastructure and

the depreciation from that, which is calculated in the books, is overtaking the net -- gross investment. is germane seeing public investment for the last four years has been going up and up. it is currently rising, german public investment, at a rate of 8% to 9% nominal terms year-over-year. that is a big stimulus. it is being done to fix the highways. when you tell berlin to spend more, you get a blank stare sendse we are doing it and us the construction workers before we can spend on them. we have billions in money unspent because there are no workers. matt: because you employ people cross borders to do audubon construction. holger: exactly. tom: wherewith the euro be if it

was the deutsche's mark? be if itwould the euro was the deutsche's mark? holger: it would probably be 15% stronger than it is now. in that hypothetical scenario, the bundesbank would have negative rates as bad as switzerland or worse, whatever they are saying about interest rates. tom: they are essentially going to do a swissie quit jubilant -- equipped -- swiss equivalent on negative rates but where would the price be? holger: in those terms, it would 1.30bly be around 1.25 to under elevated uncertainty. to be asche mark used safe haven just like the swiss franc is now, but we are not

having currency turmoil within the euro zone. likes to take the 35,000 foot view. when you look at this experiment we have going on, will we keep this common currency? will we keep this many countries using the kerman see or will it -- currency, or will it be destroyed? holger: nothing mankind has invented is indefinitely forever, but the probability that the united kingdom breaks as thes at least as high euro breaks apart. the euro has not done bad, it has weathered deep crisis, and it would continue to thrive despite italy not being a currency but a structural policy -- problem. francine: if we look at the

black zero policy germany has in place, if every major government had the same policy, where would the world economy be? holger: if every major government had pursued policies of serious labor market reforms, structural reforms -- francine: forget that, black zero policy. holger: the world would be better off. you need to get full employment and then a balanced budget, but if you have full employment you should run a balanced budget so that when a recession strikes you can afford to do something about it. agree. point, i tom: there you go. matthew miller, enjoy the bentley. we are going to come back, lots to talk about. later today, robert kaplan of the dallas fed. as an exceptionally timely

interview, with thoughts on the border and trade. this is bloomberg. ♪

♪ this is bloomberg

"surveillance." beat back an, uber aggressive attempt to force it to make drivers employees. the judge refused to throw out the case. it is an early test at california law aimed at gig economy companies. pg&e bought itself more time. they decided they do not need the governor to sign off on their $13.5 billion deal. said the pg&esome plan does not comply with state law. this is the biggest utility bankruptcy in u.s. history. that is your bloomberg business flash. tom: we have had a wonderful discussion this hour.

i think we have to bring it back to the fed's central bank of the world. one thing you do is think broader, and i want you to go to em. em did not participate last year and there are signs of strength. what does chairman powell have to do to not upset the nascent em recovery that we see? holger: that is a very simple answer. he probably just has to do nothing, neither cut nor hike ifes, beyond an even keel the u.s. economy stays on an even keel, which we think it will, and stable rates and decent growth in the u.s. will probably be good for emerging markets. it will make it easier for them to borrow the outlook for stable rates, and the good economic performance plus a little rebound in europe should mean

that many emerging server the course of next year should have a little upside. francine: when you look at inflation, is there danger that inflation will overshoot the u.s. in 2020? holger: i don't think this risk is significant yet that inflation will overshoot. at the moment, it is subdued and we will probably see for the fourth quarter of this year and the beginning of next year, growth rates and gdp slightly below the 2% trend, meaning that probably inflationary pressures, generic inflationary pressures coming from the domestic economy will remain muted. we will likely have a gradual uptake in overall inflation over the course of next year, and the fed is ready to tolerate that for a while. tom: we want to bring your attention right now to breaking news. muddy waters is the acclaimed short seller. i want to make clear on nmc

health of abu dhabi, hammered off the muddy waters report that the company did not immediately respond to a bloomberg request for comment. this is a short by muddy waters. i want to make clear a key paragraph -- the company's relationship with its auditor earnst & young "raises flags." we will have much more on this, muddy waters driving shares, nmc health of abu dhabi close -- lower this morning. papernversation on short and repo, jerome schneider in the next hour. ♪

♪ tom: it is a market grounded in

central bank policy. in an age of oversupply, when will the bear market begin? maxes are on the ground. alpert onur, daniel america's oversupply of labor. from new york and london, francine lacqua and tom keene. we welcome you to a round-trip sterling, jon ferro, anna edwards, guy johnson, 10:00 p.m., and we rolled over. francine: we rolled over because of news from boris johnson that he wants to put into law a law that says you cannot extend the transition agreement. we have made progress because he has a clear majority and the withdrawal agreement will be voted through, but we are back

to square one in our relationship with the u.k. and e.u. and we wonder if boris johnson push it to the end. tom: in new york city with our first word news, here is viviana hurtado. the house is set for a historic vote on impeaching donald trump. moderate democrats are announcing how they will vote and both say they will vote to impeach. told this would mean the end of her short political career. boris johnson is reviving the threat of a no deal brexit. he will guarantee the transition period is not extended. in thatders warning timeframe, it is unlikely negotiators will like -- will complete the deal he wants.

the boeing 737 max crisis got worse. they plan to halt production. it will jolt their supplier base. for the 737roval max approval -- return has slept. -- slipped. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. tom: thank you so much. equities, bonds, currencies, commodities, futures negative five, a pause in the melt up. hero, 1.1158. -- euro, 1.1158. francine: the threat of a no deal brexit was revived so the pound is currently at 1.13 not -- 1.3198.

tom: much to talk about in this hour. bloombergatrick, our government reporter on the house and on the senate. why are the democrats in the senate different from the democrats on the -- in the house? you will seeissue the political difference between the house and the senate, because the senate tends to be slow and deliberative and naturally needs to be bipartisan. , ofstrategy for impeachment course, is one in which they are andating from the minority cannot be quite as aggressive as house democrats. tom: they are operating from a minority and we knew that from the republicans in the house. do the democrats in the senate have any valid power or are they

just going through the motions? jack: they are essentially going through the motions because it is more the republicans in charge of those motions. probably the biggest question for senate democrats is do they hold all their votes together or does somebody like joe mansion of west virginia break off and impose impeachment? they have less control then house democrats did, so democrats' chance to control the narrative -- -- narrative has passed. francine: why is the impeachment process having no impact on the polls? answer a would have to lot of questions about polarization in america and how people view congress and the presidency. i am not entirely sure democrats knew what to expect when they came into this in terms of how it would affect the polls.

sayhave heard nancy pelosi a few times they are not doing this based on politics or the polls. a lot of republican voters have indicated numerous times that they are flexible with president trump doing things that maybe would have gotten other politicians in trouble. he is kind of an unusual politician and his support is kind of sticky with his core republican supporters. tom: jack fitzpatrick in washington today. i have been waiting for this conversation. one of the acclaimed undergraduate degrees in america -- out of pennsylvania, jerome schneider, a definitive conversation on the repo market. let's go to the chart and lay it out. here is the balance sheet of the fed, here is crisis.

here is the trend if they did nothing. here is the flatline trend and here is the trend of maybe where they would grow back. thank you to ira jerzy and his team for this concept. is there a crisis and which trajectory is it on? fed -- we are well aware of what happened. what is consequential is what is going forward in that regard. the fed has done a tremendous job indicating they will be a life preserver and will be the safety net to systems, and will provide some stability to the liquidity markets through open market operations and cable purchases. what the market has gotten away from is the notion that it is ok to have some volatility within the money markets. ,f you go back a decade or so

daily volatility in repo rates was something we lived with every day. tom: every day, every friday the gloom crew comes out and says there is deal whale at the fed, they took this person -- ill took thise fed, they person out, on and on. jerome: undoubtedly, the fed has a resiliency so maybe there is a slight friction with assuming new roles and responsibilities, specifically the new york fed. the fed is on duty. the market has gotten the message. operations are providing almost $5 billion excess returns over the year end and beyond, so that is helping alleviate stress is in the marketplace last quarter. when you look at the micro, yesterday, we should have seen a

lot higher repo rates if there was an ongoing concern where the funding prices might be -- crisis might be. francine: here is boris johnson. seismicson: it was a collection, but we need to repay their trust and work 24 hours a day, work flat out to deliver. daysurse, the first 100 were very busy, 140 days, whatever, was a frenetic time. we are going to have to work even harder because people have a high level of expectation and we must deliver for them. how many new hospitals are going to build? >> 40. mr. johnson: how many more of us are we going to hire? >> 60,000. mr. johnson? there is a huge agenda -- mr.

johnson: there is a huge agenda offocial process, leveling and uniting across our country with debtor infrastructure, education, and technology. believe in extending opportunity and that is what we will devote ourselves to. thank you very much for your efforts, for what you have done. today, theto say risk of sounding more north some goodn normal, economic news, unemployment -- employment is up again, unemployment is down again. the economy continues to be robust, but we must take steps to strengthen it. thank you all very much and thank you to the ladies and

gentlemen from the media who have done us the honor of attending the ceremony. i will respectfully ask you, if i may, to depart so we can get down to some proper conversations. boris johnson, the prime minister of the united kingdom. last week he won a big majority in this is the first cabinet meeting he held with his team. moments ago, this happened, and they just released the footage, which is why we had to go to it, encase case he talked about the brexit deal. the withdrawal agreement he negotiated with e.u. will get voted through parliament because it is fresh mp's, but we do not -- if he wants to negotiate. tom: we are with jerome schneider of pimco. i want to go back to the repo chart and look to the future.

the balance sheet came up in the balance sheet rolled over. here is the action of the fed. where do you envision them ending this? is it back to the stability level here? do they grow it out with the economy, or do they revert to another time and place? jerome: they probably grow it out with the economy gingerly over time. there is a natural need for a surge as the economy grows, so for them to create a flatline basis for the excess reserve does not work in the construct of monetary policy. they have provided additional excess reserves, probably more than we need. they have the liberty to let it grow over the next year or so and not need to adjust, so the combination of open market adjustments and t-bill purchases, those give the fed a lot of leeway to let policy rome

and repo rates remain consistent. jerome schneider with some clarity on the repo market. we will revisit this. smart conversation at 10:00 a.m. this morning, robert kaplan of the dallas fed, an important interview. this is bloomberg. good morning. ♪

♪ francine: moments ago we heard from boris johnson, speaking with the cabinet for the first time. he gave a few comments on camera that was released to the press. a lot of volatility in the pound after we understand boris

johnson his brexit pledge extends to not extending the negotiations with the european union. saravelos wrote -- now that the contest is over, we are turning negative on sterling again. the most likely outlook -- outcome will be a disorderly exit. can alwaysgislation be changed at a later date. however, it sends a clear negative message to business, we believe recession risks are likely to crystallize. what do we know is the plan of boris johnson in dealing with the e.u. and getting brexit done. >> he will drive a hard bargain, that is for sure. he is making it clear if and before his brexit bill gets through parliament that he is

going to be extracting trade negotiations to be done next year and wrapped up, otherwise we will go out either way and that would equate to a no deal brexit. francine: what does it mean for businesses? boris johnson was seen as pro-business in the past and a lot expected him to become more business friendly when he won the majority. rosalind: the idea of getting the mandate through parliament was having some of that uncertainty received, and now -- recede and now he is saying you cannot expect a deal next year and i am going anyway. toinesses want to be able port their services around different parts of the european union. will they be able to do that at

the start of 2021? that is unclear. tom: what are the images we will get over the next 20 days? will prime minister johnson or a minion go to brussels and we see photo ops and happy talk? rosalind: what we have on thursday is the queen's speech to parliament. she will set out boris johnson's agenda, timeline, policies. then we get into christmas. as thisry -- as soon friday, a vote on brexit deal through parliament, and in january before the brexit date we will see boris johnson going to brussels and trying to start negotiations. there will be hundreds and hundreds of negotiators required around-the-clock for 12 months. even though the brexit bill has passed, that is starting now. writing, gethague

to it, help the north. is it a matter of days or weeks for we see budgets for the new conservative districts? rosalind: we are looking at that early in next year. we expect a fresh budget from this government, expect to see money flowing to these districts that swallowing from being labour to swung from conservative. brexit and secondly, they want him to get that done and focus on the domestic economy, to spend more money and bolster things like the health service. tom: thank you for your help and all of your team's help last week, exhausting week, rosalind mathieson driving our government coverage. let's look at boeing. what an exceptional american

story of a near 40 year boeing. you can see the incredible support boeing has had recently. we will see if they break support with the recent 737 max news. stay with us, jerome schneider, dan alpert. this is bloomberg. ♪

♪ bloomberg "surveillance," good morning, everyone. math.cane

forget about it. it is a bull market in bonds. you have made double-digit returns this year. forget clip the coupon. i am going to go along and not the short term paper, do they go year to year? get a good need to alignment of the stars. approach 2020, think about the volatility that can persist in the marketplace. when you look at the uncertainty, all of the tail risks have been cut and there is still some uncertainty whether it is the trade policy, the election process, that leads to more volatility. it is not about being a bond or risk on bowl, it is about having --bull, it is about having risk-adjusted assets. it is about volatility management. tom: steve major and gary

shilling talk about lower for longer. yearver the summer on -10 -- an essay over the summer on -10 year yield. that inwe are seeing some consequence. we need term premiums to recalibrate higher and that will be reinflate as inflation picks up to 2% pce and beyond. you also have to have additional growth from where we are currency -- currently, stabilize, and move higher. higher growth trajectories will lead to higher interest rates. we feel the 10 year and beyond are contained and you will not see a huge breakout to 3% simply because of the global growth dynamics and uncertainty leads us to see glow just growth

trends stabilized -- growth trends stabilized. ultimately, this becomes a growth story in 2020 and the reverberations could play out and that creates uncertainty. that plays into financial conditions that the fed will continue to pay close attention to over the course of the next few cycles. francine: where do you see the most value in bonds? jerome: we have been saying this over 18 months or so, 2019 was one of uncertainty, driven rates lower. staying at the front end of the yield curve remains tremendous. take advantage of higher repo rates, higher front and rates. you do not have to take a lot of interest rate exposure. the duration are of how long -- duration of how long does not have to be that extreme and

gives the opportunity to pivot should we see the left tail reemerge, china reemerge, or an optimistic growth where we get to 2% and beyond. tom: more on boeing, this is really important. stock moves on this. the intraday stock is here, a little bit hard to see. southwest hugely emotionally history,oeing, with a a heritage tied to boeing. they will pull the boeing max 737, an important headline. this is bloomberg. ♪

♪ this is bloomberg "surveillance," tom and francine from london and new york. we had some pretty good calls on treasuries from pimco.

let's get straight to the bloomberg first word news in new york. it is one of the most important decisions u.s. house democrats will make in the impeachment process, who will prosecute the president? adam schiff and jerrold nadler are supposed to be dutch expected to be named. tomorrow, the house votes on articles of impeachment. a compromise spending bill is not likely to include an expansion of the tax credit for electric vehicles. backers say president trump is to blame. they are told the measure could cause the bill to fail. they use the tax credit to mainly benefit taxa -- tesla. embedsark agreement local environmental standards for money managers.

both nuclear and gas power could be part of the green finance list. india bracing for more demonstrations over the citizenship law, leaders calling for protests. -- from seeking citizenship. this undermines plans by narendra modi to increase investment. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. ,om: jerome schneider with us and dan alpert with us, who changed our discussion on the oversupply of america 2008, 2009. the thing i know what bloomberg is the number one thing i get mail on, what suits and ties and over so -- overpriced dresses

say we are fully employed. maybe we are not. rigoroust has put academics and combined that with a feeling for rigor in statistics in the american market. hugh cornell law school says the good.rket aint so employed, whatly do you say? dan: we have been creating jobs in the lower quality spectrum. it has been a progressive stage. not only have we seen more jobs with lower wages but more jobs with lower hours. you combined those, you get lower incomes. the high income category is doing great. the growth rates in the lower income categories are not. tom: this chart is when i

featured months ago. orange, yes. white, no. waitresses and bartenders. how do we shift that in society if we identify it is not a good thing? daniel: you talk about waitresses and bartenders. our last print showed something like $286 a week for limited service restaurants and something like 380 something dollars a week for full-service restaurants. think about that, multiply that times 52. you cannot survive. the big issue this report features as there is this thought on the part of many people in policy that these are people holding down multiple jobs, but if you look at the nature of their employment, very often it is just in time, they do not know when they will be working, they get their hours

and cannot hold down a second job. as it turns -- and out we are in a historic low as term dutch as far as multiple job holders, only about 5% -- if people are trying to subsist on these low income jobs, is this economy really healthy? francine: what needs to happen for the economy to create quality jobs? daniel: normally you would see a pivot as aggregate demand builds , a pivot into higher-quality jobs. we are faced with this very large -- and i wrote about this 10 years ago -- large, misogynist labor force that has eroded our manufacturing, so the jobs that you would see people normally trade into as domestic aggregate demand improved, are simply not available, so the jobs on offer are very poor. on top of that, we have seen the

increase in the number of service relative to goods producing jobs for decades. this is an interesting phenomenon. at the time of the great recession, the pivot from goods to service producing stopped. we are 86% service in this economy and are not going any higher because at some point you still have to build the buildings and mine the minds. francine: who's problem is that, apart from people who don't get good jobs? is it something the government should fix? is it something society should fix, or the companies retrain? daniel: a couple of things. when you go down to the economics, you have a limited growth rate and cannot build aggregate demand because money is not getting to the households and they cannot spend. at the end of the day when you have lost your goods producing

jobs, you have a government under investing in infrastructure and things that could possibly support ander-quality construction employment, you have the perfect storm. tom: a lot of people say wages and benefits are great. that study people it, but how do benefits fold into the academic research? daniel: we do this without reflection of benefits. tom: thank you. lose the benefits, i need more money. daniel: that is right. tom: bring up the chart again, the first chart which shows the job quality index -- not that chart. that is boeing going south. daniel: they look similar. tom: this chart, what are the ramifications if that index drops below 2011? daniel: the same thing that has given rise to the post recession

slump, which at the end of the day is the fact that there is nothing masking anymore. we had the credit bubble creating jobs, productivity ballooned. that is gone and we are on our own. tom: this is real math and real economics. how do you put your growth view globally in america into the brilliant work on the partition of our labor economy? daniel: these are things we discussed in the secular format of our strategy sessions. ist of the issue is there structural rigidity that needs to be reconciled. somebody has to do structural education, how we retool the workforce. you have to look at how the growth environment is precipitated on a go forward basis, and that the vergence

does not lay the groundwork going forward. we get back to our new neutral type of thesis. tom: i will put this out on twitter, cannot say enough about the academic rigor that mr. alpert has brought. another index, they have done the work others have done here and here and coalesced it into a statement on high and low quality jobs in america. we will come back, dan alpert and jerome schneider. in the 9:00 hour, with mr. farrow, dr. el-erian. good morning. ♪

♪ you are watching bloomberg "surveillance." healthon, shares of nmc plunging as much as 20%. muddy waters is shorting the stock because of concerns about their financial statements. outside representatives could not comment. bankrupt company pg&e bought itself more time and decided they do not need governor gavin newsom to sign off on their $13.5 billion deal. last week, the governor said the reorganization plan does not comply with state law. complication to their exit from bankruptcy. windsne: as december down, investors are focused on how to position into 2020.

the wall of worry, manufacturing mallett's, fiscal policy -- malaise, fiscal policy. still with us are jerome schneider and dan alpert. forgst the wall of worry 2020, what are you optimistic about? tariffs, hadve had some positive impulses over the past few days. i think what it comes to is how much of that $200 billion worth , agricultural purchases comes to for ration. it is a large propellant -- fruition. it is a large propellant to u.s. gdp. the negative is how it could potentially be extended and maybe goes over a multiyear horizon and becomes more protracted.

we have a clear change in increased the fed, liquidity needs, and focusing on the important aspect of inflation and looking for persistent inflation before they move away tighten and sequencing, which could provide -- tightening sequencing which could provide support to risk assets. you see fragility in the brexit discussions, in trade, so it is a time for caution, maintaining optionality in portfolios amidst a relatively tight risk environment, meaning credit spreads are tight, equities are fully priced, and where there is possibility to move higher and tighter, the reality is that will be very ginger and not as judicious as in 2019. it will be a more complex environment, especially ahead of the election. francine: if there is a downturn

in 2020, do central banks around the world have the tools -- world have the tools to fight it? jerome: in the united states, we will not focus on negative interest rates but changing things in the dynamics of funding and managing the balance sheet, utilizing the balance sheet, and using other market operations. the degrees of freedom for central policy remain robust. other central banks are trying to move off the negative interest rate policy , transition if they see signals and growth to a more normal policy, but it will take an extended time to do so. do not be foolish in thinking it is a flip of the switch and everything comes back to the old world. tom: let's bust dan alpert's -- withich chapter 14

chapter 14, the age of oversupply. managing multilateralism, that worked out. how do we manage mercantilism? daniel: i think we still have the same problem, and the one thing if you remember the back of the book where i said, we threaten for a while, we try to jawbone, and we had a guy who came in who did not threaten, just went right to the chase, and it has not worked out. the chinese got what they were looking for out of this deal. the agricultural purchases may or may not happen. are not just, we facing the u.s. situation. we have europe and the u.k., everywhere else. retrenching and probably will do something that will be a detriment to aggregate demand. europe is in a position where it

can only compete with its currency channels. that is the only way it has been able to for some time. we tend to look at europe as one and really it is germany and everybody else. when you get down to china and the rest of asia, that is not going to slack. china has had some slowing but only because aggregate demand is over performing in terms of production. you will still have subsidies and dumping and it will be an issue. jerome: sequencing is important over the cyclical horizon. there is a lot of things that could cut one way or another, but also structural rigidity that will put a feeling on optimism coming to fruition. daniel: you put it far more articulately than i did. our structural rigidity is we are begging dan alpert to follow the age of oversupply

over the next decade. we would love that. francine: thank you to our guests, jerome schneider and dan alpert. bloomberglater on "daybreak americas tom: an interview with the -- "daybreak around's," an interview 8:30 a.m. new york, 1:30 p.m. london. this is bloomberg. ♪

♪ this is bloomberg "surveillance." let's check in on your stock movers with annmarie hordern. rie: unilever out with the sales warning for this year and next year, a big leg lower. rbc says it is the worst growth in a decade. sluggish demand in south asia and north america as consumers are snubbing mainstream brands,

going for niche consumer brands. in pre-market in the united states, everybody will be watching boeing, down 2% as they say they will stop production on the 737 max, a bid to save cash. brauners in europe, zach under pressure. when will they restart production? francine: amazon is setting the pace for holiday shipping. amazon says third-party merchants cannot use fedex's ground delivery network because it is too slow, highlighting their growing power over how products get to shoppers. some amazon sellers complain the change is when spending is at a peak. matthew bloxham joins us.

drama. how is fedex taking it? matthew: not well. amazon wants to reduce their awaynce and have shifted from fedex on prime deliveries. they track this stuff probably minute by minute, and say fedex is not delivering against the one-day prime guarantee. if that becomes a problem, they will have to refund customers. they are protecting their own brand representation and this -- reputation and the consumers. francine: does it benefit competitors of fedex? matthew: it benefits ups in the short-term. you would think fedex would want to get back in this, and this is a standoff between two pretty big companies.

i would imagine next year, both sides will want to have the flexibility of working with each other, but that is a few months away at least. francine: it is such short notice. will there be a backlash against amazon? matthew: i don't think so. some merchants have complained it is short notice but they would've had multiple options to deliver anyway, and if they are not living up to that one-day expectation, i don't think there will be a backlash. francine: how is fedex doing overall? matthew: it is a huge logistics company. that whole area is going through amazonradical -- and planning to invest in drones. i think that you volusia and of logistics globally is just starting -- evolution of logistics globally is just starting.

gave in q3e amazon and q4 was softer on revenue than people expected and we have such a big holiday season. there is only so much they can do, but they are really pushing the one-day delivery up to the wire in terms of how soon you can order stuff close to christmas. francine: that will remind everyone to get your christmas shopping done if you haven't. coming up, an exclusive interview with the dallas fed president robert kaplan. this is bloomberg.

♪ alix: sprinting to brexit.

prime minister breast johnson putting to brexit divorce -- minister boris johnson putting the brexit divorce deal to a vote on friday. risk on voices saying to phase i trade deal could unlock more upside for equity markets. an boeing production grounded. shares of the plane maker dropping after announcing plans to stop production. "elcome to "bloomberg daybreak on this tuesday, december 17. i'm alix steel. you are seeing a little bit of a pause in the markets, unless you are in taiwan, because those markets hit the highest level since 1990. a teeny bit of buying in the bond market, a teeny bit of lightness in the s&p futures. time now for global exchange. we are going to bring you today's market moving news from