francine: amazon find self on the nice list with record seasonal sales. apple is on track for the best global stocks picked a new high. -- year. global stocks hit a new high. we prepare for january 1. ♪ good morning, everyone. this is "bloomberg: surveillance."

thanksa list yesterday to amazon packages. yesterday was a key point for the nasdaq at 9000 word we also have a record high. -- 9000. we also have a record high with apple. a good litmus test when it comes to risk. ecb commission president that they may be having to have an extension for the transition. itiing up, we speak to the c chief u.s. economist and get his outlook for 2020. let's get straight to first word news in new york city. israel wheren benjamin netanyahu fought off challenges to his leadership.

he won a landslide in the race to lead his party. he will lead it into israel's third election. it comes amidst an election scandal for the prime minister. he has recently been indicted on charges of bribery and fraud. the transition for the u.k.'s exit may need to be extended, according to ursula von the lion. -- according to ursula. she says the plan to secure a trade deal by the end of 2020 is optimistic. and a false alarm japan's estate broadcaster, who mistakenly issued at alert say north korea have launched a missile. isis the second such error -- in as many years and highlights increased tension in the region. warnedng has cryptically it will use the holiday season to deliver a quote christmas gift to the u.s..

global news, 24 hours a day on air, on quicktake, and on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. francine: thank you so much. european markets opening higher this morning after tech shares cents nasdaq above 9000 went. topon was amongst performers after a record-breaking holiday season. higher,d apple shares leaving them on track for the best performance in a decade. analystus is a retail as well as patrick armstrong from chlorine wealth. -- renee wealth. plurimi wealth. we hear amazon numbers are record-breaking. >> the only surprise would be if it wasn't record-breaking.

they have got a lot of new countries and it is inevitably going to be more. francine: i was reading it is basically prime services. >> some have very big percentage increases, but they are almost coming off the lower base. get the 6080% increases in that way. way.-80% increases in that >> we don't own apple or amazon. it's the consumer you want to be in and i think that still has legs. what do you like in tech? let's look at 2020. their concern about overregulation? >> there is the potential for that. we on facebook, which might be at the epicenter of that.

we own chinese stocks as well and all of them are performing well. it's the consumer we really want to zero in on and i think the chinese consumer is very resilient. francine: if you look at amazon, is it retail or a tech company russian mark -- tech company? >> it is not purely tech. theytech in the sense that don't seem to be as concerned about making profit as most others need to be. sense's retail in the that it is selling stuff. francine: where do they take market share? is that thees well, local shops doing badly all over the world? i think it is taking a little

from everyone. marketplace there are lots of businesses doing well through amazon. you have got probably 55-60% of amazon packages are not amazon selling itself. do youou -- francine: like anything in retail? are notetail sales making profit, they are just keeping competition out. are making very little profit. it is not an area they have been able to translate into profits. like he sales are up 18% year-over-year and brick-and-mortar down almost 2%. that's not great, but probably not as dire as some of the

forecast would be. i guess the point is we are buying more stocks differently and online. i don't know if you break it down, is it luxury that would be better than others? >> again, it's difficult to say. there are winners and losers in each category. tiffany saying luxury has rebounded in the u.s.. i think a lot of the value retailers will have continued to do well. themcularly it is not selling less, but reasonable quality at a lower price. you.ine: thank patrick armstrong stays with us. plenty coming up, including christmas chaos in hong kong as

protests continue on the island. we get updates next. this is bloomberg. ♪

francine: this is "bloomberg: surveillance." i'm francine lacqua in london. alert -- to the blues to the bloomberg business flash in new york city. >> this company ended discussions on a takeover. the dutch company and proposals were un-compelling and will continue as a standalone company. a rebound for tiffany in the run-up to christmas is good news for lvmh, buying the u.s. brand for billions. chinese shopping is leading

growth. the recovery comes after a decline in profit in the nine months through october. up on $.6 billion of financing from its new factory in shanghai as it prepares deliveries of chinese model three sedans. yesterday, shares closed at a record high over $430 apiece. francine: thank you. now, to trade deal talks. that has been a story dominating the market this year. the world's two largest economies agreed to the first phase of a broader trade agreement that see the u.s. raised tariffs and temporarily calm fears of and ask leading trade war. if you look at the main themes for 2020, is trade at the top?

it's a truce, probably, that will get us through the election. tensions trade war unless there's the possibility to do that to increase support. but i think we made progress and it took longer than expected. i can't think it's a real game changer in terms of putting us back on huge amounts of export growth, but it gets rid of that tail risk about increasing trade wars. francine: change what sectors you want to be in? >> it has not changed positioning at all, since it looked like we were there since spring. happen, we would have gotten more bearish.

now, we think we have continued economic expansion. francine: what is the biggest unknown? is there something with central banks? >> i don't think it is a big risk. the policy mistake will be on the dovish side, if anything. there is a lot of uncertainty about the next moves from the fed, which i don't think do anything but grow their balance sheet. cut butprobably won't will expand qe. fed turna very hawkish very dovish. don't think we will have stimulus to the same extent. i don't think it will be as much of a boost for markets as it was

last year. francine: patrick, thanks so much. hong kong is bracing for more disruption over the holidays. protesters left to clashes. small demonstrations have been organized, but the next major rally has been scheduled for new year's day. joining us for more on this is our greater chinese after. what is expected this evening and over the weekend? >> they are gathering at a in an area that has seen some violence. and over the weekend in an area near the border as shopping centers become centers of confrontation. that could be bad news for retailers who have already taken a big hit over the last few months of protests. whatwe will be looking at

turnout is over the weekend possibly as an indicator of what we might see january 1. francine: how likely is it protests continue and how does beijing deal with it? >> protesters have said they will continue fighting in everything we've seen points to those protests sustaining momentum. we had one of the larger protests earlier this month and things have been scheduled over the holidays it's hard to imagine wouldn't can tell you well into the new year. -- continue well into the year. the more they crackdown, the angrier it makes people and it feels that cycle. -- fuels that cycle. francine: does carrie lam have to be replaced? you have any insight as to who

she could be replaced by? >> there has been no talk of that. she has said she is going to finish out her term. she has said it members of the public are coming to hong kong, though there are fewer these days. they were naturally disappointed christmas eve had congruent by a group of writers. that kind of language is on -- only going to make people more upset. whether she gets replaced or not, public opinion is at its lowest and she has that to face in the new year. francine: thanks so much. we are back with patrick armstrong of querrey me wealth. there was a time there was was goinge protests to trade. doing just know that is not really true -- do we just know

that is not really true? >> we know it is not true. hong kong is up in terms of equities and is an area we think of in terms of investment. retail sales will continue to be weak. property is one area we are looking at this does not seem to be dying down to any extent. it's not clear what china's end game will be now that they have the deal. if will be a long, drawnout approach, this might be the catalyst for change. francine: is this a catalyst worldwide? i don't know if it is mishandling from beijing for the u.s., it could turn ugly. >> that's very difficult to say. i don't think this is the

trigger for something more global, but with hindsight, we will be able to judge. francine: patrick stays with us. coming up, and experiment gone wrong. andear from our interview discuss it with patrick armstrong. this is bloomberg. ♪

>> when we look back on negative rates, it's not going to look like a great experiment. i don't think they are bringing

the benefit we would like to see. there's no question growth in this part of the world has been lagging and negative rates have not allowed in acceleration -- allowed acceleration. francine: that was the goldman sachs ceo david solomon speaking to matt miller. we are back with patrick armstrong. the concern of negative rates is that they could go even further. is that a problem? >> is a problem for society, potentially. the wealth differentials have been really exasperated by the negative interest rates. if you are rich, you owned assets. . have got moreve's and those without haven't. picture, not just

on bank profitability but the rise of populism and wealth differentials. francine: how does not get fixed? stimulus,ose fiscal particularly in europe. northern european countries have strong balance sheet. -- sheets. germany is screaming out for fiscal stimulus. inflation, central bank targeting, there's questions if that is even the right call. i think we probably do get to the point where they create some sort of inflation to get away from negative interest rates. there are consequences on pension funds and investors. those are questions central banks will have to start asking. francine: helicopter money where? >> whoever does it first wins.

think you. did it, i did get a benefit not only for asset but the economy. i don't know where it starts, i think you will get growth from it. francine: is it like mmt? >> it's almost like mainstream policy. i think that's the start of it. i don't know where it will be mentored first -- implemented first. wingism has lent right which does not address the concerns. francine: when you look at the ecb review, one thing they look at is inflation. --the review to brought now too broad now? policy is open ended

right. like the u.s. has. you don't want something too prescriptive about how things have to be done. targeting 2% inflation might not be the answer. subtle changes is probably what we will see. francine: where do you see the biggest value overall? currencies -- buy currencies? equities are trading at the highest they have ever treated. -- traded. looking at the decade, u.s. and japanese equities both traded at highs. with japan, we think the olympics will draw attention to the country.

we think japan is a beneficiary of the improvements and trade. we liked japan as a play on risk aversion. francine: i have 1 million and two questions about japan. we will get back to that. patrick armstrong stays with us. coming up, with the brexit deadline coming closer, the focus is on a new round of talks. we will also talk about an interview that the president of the european commission gave to a french newspaper. and it cannot she says a transition agreement may have to be delayed. it, she says a transition agreement may have to be delayed. this is bloomberg. ♪

♪ francine: holiday cheer. amazon finds itself on the nice list as they report record seasonal sales.

apple is on track for its best year in a decade. gains from the tech sector propel the nasdaq above 9000 for the first time. christmas payoff in hong kong paves the way for a messy new demonstration january 1. this is bloomberg "surveillance." let's get straight to the bloomberg first word news. viviana: we begin with prime minister benjamin netanyahu fighting off a challenge to his leadership in israel. to lead hisdslide party into israel's third election in less than a year. been indicted on charges of bribery and fraud. operation,ay repo the federal reserve is taking -- this includes in

october, a record near 10% slump , another sign of stabilization for china's economy. a preliminary trade deal could boost sentiment further. in hong kong today, more gatherings are scheduled as the city braces for disruption into the new year. that follows protests over christmas, leading to clashes between protesters and riot police. a major protest is planned for january 1. 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. this is bloomberg. francine: thank you so much. the deadline for the u.k. to the e.u. -- to leave the e.u. comes closer.

boris johnson wants an agreed deal by the end of 2020 and ursula von der leyen has called it optimistic. periods the transition may need to be extended beyond 2020. the city of london will get an important bargaining chip for the e.u., according to a report from the times. brussels will threaten to block their access to european markets and put up barriers to data sharing as part of the strategy to demand britain aligns with e.u. rules. we are back with patrick armstrong. we are getting brexit done but do not know what to do with the transition agreement. patrick: we have another cliff edge next year in december, and for the next nine months we will probably see most size and trenching and their negotiation position, a lot of rhetoric

about what will happen if the deal is not done, and it is hard to see how europeans do things, how we make progress in quick order. until we get past this december cliff edge next year, that is going to curtail investments. francine: what does it mean for pound? i am trying to get the pound chart that i am in a food coma from wednesday. patrick: i think we will lend the year roughly where we are and then we will see significant depreciation in the pound. outcomes will be the rhetoric from both sides, and it is hard to see a move in the pound from either side i think it probably -- others either side. -- boris hasransit

said he will not extend the transition agreement but has also said he would rather die in a ditch so when we get to q4 the transition will be extended. francine: this is the pound chart looking at cable rising above the 200 week moving average and it broke above that line -- against that line. if you look at the strategy of the prime minister, will we go back to we get out and wto rules? patrick: that is what his rhetoric will be and i don't think it will be effective. get togethere will in october and november and maybe work something out i then, but i worry it is three quarters of wto, that is where we are going. that will be the soundbites coming out of downing street. it is because you don't have the 11th hour catalyst that brings things together, that is where

we go to, just waiting for a q4, maybe some progress. francine: you also have a parliament that will let that happen. do you buy on dips or is that so negative you do not want to touch it? patrick: if something looks incredibly negative you would be buying on the dips, but that is the time it is hardest to do. i think we get an extension or trade deal in december, so buying the dips makes a lot of sense. if there is any exuberance, i don't think there will be a lot selling away those highs. until that 11th hour need, it is hard to see the forecast. francine: what do you do with european equities? patrick: the same impacts of the european economy. the u.k. suffers to the same direction and european equities look reasonably valued. there is not real economic

growth in europe so it is not a screaming buy by any means. we have been taking profits on industrial companies that have done well despite not very strong economic numbers. has seen some extent the multiple expansion, not to the extent as the united states. francine: stay with "surveillance," including 2020 vision coming up. what will the next year holds? 70,000 jobs have been lost in the banking sector in 2019. we will break down the numbers. this is bloomberg. ♪

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time as there is a deal, we will be taxing the hell out of china. progressade tremendous , does not mean you will have a deal. we are working on a new trade deal with china, but it must include real structural change and unfair trade practices. it is if you think about it the biggest deal ever made, the granddaddy of them all. it would be a start if we could do a fair trade deal. we are totally open to it. we have a long way to go as far as tariffs is concerned with china. i wish they didn't break the deal we had. they very much want to make a deal. we had a deal and they decided not to make it. i guess they are going to do a deal. we are looking for a complete deal, not a partial deal. we come to a deal pretty much

subject to getting it written. if we don't make a deal, we will substantially raise those tariffs. we have come to a substantial phase one deal. in some ways, i like the idea of waiting until after the election for the china deal. the deal will be finalized over the next couple of weeks. we made a great deal with china. that was president trump talking about the u.s.-china trade deal. the world's two largest economies have reached a phase one agreement and some investors are striking and optimistic tone. find bridge investments sees 10 year treasury yields rising as -- for the first part of the year. patrick armstrong is with me. you are quite bullish on japanese equities. even if they don't reach the 2%

inflation target? patrick: it is not driven by that it is a region that is cheap, surprisingly. it has never been much cheaper. 2.5% versusield of negative yield. it is priced nearly as cheap as it has never been. it is one of the regions that has lagged for so long it is cheap on most measures. when you talk about markets near all-time highs, i feel safer buying stocks that are not at all-time highs. ebitda growth in japan has not been terrible. laggeddamentals have not as much as the stock markets. francine: there is a fear in the markets that europe is becoming like japan. patrick: i think that is misplaced, the japanification of europe.

if you look at where japan was at the start of the decade, it had no nominal economic growth. europe has no economic growth and a little bit of inflation. its nominal growth is better than japan got to because japan had no growth and no inflation. europe has a little growth and a little inflation so the nominal growth is better. it is a potential that europe falls into something like that, but i think the central banks have been proactive enough that is just going to stay on the cusp of falling into something like that but never falling into the stagnation like japan. francine: what is your dollar call? patrick: we think dollar will weaken but not much. that is supportive for emerging markets and for the global environment for risk assets as well. a weaker dollar with everything priced in dollars looks a little

bit better. the fed became dovish when it looked like it would be very hawkish 13 months ago. it has not led to a selloff in the dollar and we think that falls through to this year. francine: what does it mean for emerging markets? i feel like i ask you every time. into 2019, weg loved emerging markets and thought they would be the biggest beneficiary of the powell pivot. it has not played out that way. we like the chinese consumer technology companies, alibaba and tencent. we don't like the commodities going forward. we think the global weufacturing recession, think it puts a headwind for commodity prices so we prefer consumer constructs. francine: have we reached peak

globalization? patrick: possibly, it seems that way. that has been the thirty-year theme where when we were in the 1980's, we had huge inflation and globalization created a huge disinflationary force, outsourcing to regions that could produce goods more cheaply. it seems to have termed the other way -- turned the other way where we are more about nationalism and protectionism. you do get stagflation forces from that. people should not be shocked if they see the wrong kind of inflation, higher prices with weakening growth. francine: patrick armstrong stays with us. let's get straight to the bloomberg business flash. ,iviana: we begin with amazon surging after reporting record holiday shales -- sales. the e-commerce giant did not release in-depth figures but it

statement backs up reports that this year shopping picked up u.s. web sales rose 19%. over 82%,ock is up set for its best year in a decade. that added about $530 billion in market value, more than the market caps of all but five companies on the s&p 500. apple air pods and iphones were widely cited as must have items. plunging after they ended discussions on a potential takeover. the company says the proposals and "not compelling" decided to continue as a standalone company. francine: coming up, europe is set to lose more bank jobs than

any year since 2013. why the cuts are so concentration -- concentrated. this is bloomberg. ♪

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economics, finance, politics, this is bloomberg "surveillance." banking job cuts toppedopped 77,000 -- 77,000 this year. beingjority of jobs , almostare in europe 82%, and deutsche bank has been hit the hardest. nicholas comfort joins us. , or a well-written story about bankers losing their jobs. where are these jobs going? is it europe or the u.s.? nicholas: it is definitely europe and it is reflective of the idea that the operating environment the european banks face, and they have not done their homework compared to many global banks. negative interest rates for

longer than the banks expected at the beginning of this year, clearly that will hurt. if you think your loan book will be more profitable or hoped it would be, you have to reassess. europe is so dependent on exports, international trade does not help on that front. it is a question of homework. european banks have not embraced the digital revolution as much as the u.s. banks in prior years. they are catching up. a large part of their workforce are not what they need to be competitive in the years ahead. francine: is this -- i don't know if it is automation or or robots inalms the banking sector. do we have any idea how many more jobs will be lost? nicholas: cuts announced this year will play out over several years.

in europe, there are restrictive labor markets that offer protection to workers so you cannot find people from one day to the next. you have the labor unions and early retirement options, various methods. this is something that will pay out this year through the next three or four years depending on the bank. beyond that, there are large numbers from consultants who talk about automation and robots replacing the banking workforce. areevery job loss, there not as many jobs created, but we will still need humans to go and do banking services, especially on the more complicated stuff. retraining and adapting to the digital revolution is probably one way that any people in the banking industry will continue to find work. francine: if you look at the breakdown, deutsche bank plans

to get rid of about 18,000 employees through 2022. how much will consolidation change the european landscape? what does it mean for jobs? nicholas: if we do see consolidation in big banks, it is still a big have -- if because the banks complain about the regulators and the regulators complain about the banks not having the courage to move ahead. you would also have tens of thousands of jobs going at banks thess the continent because whole allure of consolidation is you increase your revenue base and take out a bunch of costs. in banking, costs generate i.t. and people, so you could do the same amount of revenue with one set of i.t., and also remove a lot of the people working in those institutions, back and

front office, there would be overlap they would look to eliminate. if these big mergers happen, you would expect this trend to accelerate. francine: thank you so much, nick comfort. we are back with patrick armstrong. is 20/20 the year where we will see consolidation in european banking? patrick: i don't think so. we talked about the job losses in european banks. revenue per employee is much lower than u.s. banks. there is probably a way to go. consolidation would trigger that revenue for the employee. if you get one, there may be a lot. until you see signs that the first one is being discussed, it is hard to say 20/20 is when it will happen. francine: do you own any finance stocks?

patrick: we sold them all. we sold in -- bnp october. we prefer the coco bonds where you get a significant yield compared to equity. francine: is there anything that looks in bubble territory? away from treasuries. patrick: most things are very expensive right now, and in 2019 if you had any self-discipline you were punished. if you bought anything, you made a lot of money. bonds and corporate bonds did well, gold and oil did well. in 2019, everything did well if you bought it. bubble is probably too strong a word, but we have expensive asset prices. that is the path of least resistance. as long as the fed is increasing

its balance sheet and interest rates stay negative, equities are one of the best asset classes to be in but not cheap. francine: do you have to be more selective in 2020? patrick: i don't see how that is not for sure. if you are more selective, it should pay off in 2020. we prefer sectors like health care in the u.s. 500, faster than the s&p the risk is you have democrats you may put some headwinds for health care stocks the united states. japan is very cheap. we think it will do very well next year. yenou want and exposure -- exposure, there are companies where you can get a 4.1 percent yield. the hunt for yield probably

continues with central-bank policies. francine: patrick armstrong getting is started for our 2020 coverage. scarlet fu joins me out of new york. we will speak to alan hall and horst out of citi. stocks hitting fresh records. we had a tech rally. global benchmarks saw a robust gains. dollar flipping for a second day. i am looking at pound. oned is an interesting because when you start the negotiation phase between the e.u. and u.k., we will see what boris johnson has next. this is bloomberg. ♪

[ dramatic music ] this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't. get ready for a reunion

3 million light years in the making. woohoo! -yeah! ♪ francine: holiday cheer. tech giants propel the nasdaq

over 9000 for the first time as global stocks hit a fresh record high. period maytransition need to be extended beyond next year. christmas chaos and hong kong paves the way for a messy start to 2020 as protesters gear up for another day of protests on january 1. i am francine lacqua in london, scarlet fu in new york. happy holidays. scarlet: happy holidays. we missed you yesterday. i have a feeling we will go over the similar themes because there is a lot of optimism in equity markets. the msci world index at a record high after all the u.s. indexes closed at record highs. francine: we are speaking to an andyst regarding amazon they have a fresh record every year during the holiday season

so you wonder what it will be like in 2021. viviana: we begin in israel prime minister benjamin netanyahu fought off a challenge to his leadership, winning a landslide to lead his party into israel's third election and less than a year. the challenge coming amid a corruption scandal for the prime minister. the e.u. may threaten to block london's access to european markets, according to "the times." this as post-brexit trade talks take place. wants britain to stick closely to its rules. in the philippines, 28 are dead and 12 are missing because of a typhoon. forcedg and landslides thousands to leave their homes, power knocked out to complete provinces.

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: thank you so much. thin trading volume counts for something, so keep and i out for that. dollar slipping for a second day. i am looking at what asia did up.they seem to be futures in the u.s. are up as well. we had pretty good data on china, industrial profits which -- pound, 1.3071. back of ursula von der leyen speaking to a french newspaper saying watch out for the transition period, it may have to be extended.

scarlet: that is a reason to be cautious, but in the u.s. with amazon reporting record numbers, that is good enough for the nasdaq, s&p, and dow to close at record highs. the 10 year yield is little changed, taking lower to 1.9%. the dollar is down. i am also keeping an eye on wheat which is climbing for the third session. it could be this prizewinner from a phase one trade deal because china has a wheat quota they need to fill, and do not need soybeans as much to feed its hogs because the herd has been decimated. that might fulfill its quota by buying more wheat. there is anticipation and wheat is higher. , amazon: back to retail yesterday said they had a record number of sales, giving a nice

lift to the nasdaq. the cma, one of the u.k. thehdogs, will prefer amazon deal. that deal will have to go through an in-depth probe. joining us is ben jones and charles allen. we were talking about amazon and how well it did, but let me quiz you about amazon delivery deal. will it go through? charles: it is impossible to say, but the fact that it is nearly eight months since it was first mooted in the competition has been looking into all this time suggests they are more concerned. every time amazon says how well it is doing, people get more concerned about the breath of where it will be involved. the point about deliveroo's it is not just in restaurant meals

where amazon is interested. it is the increasing overlap between delivered, cook food -- cooked food from restaurants and food from supermarkets. amazon mentioned primary in the u.s. but how much food is it delivering? deliveroo is a competitor in delivering groceries. francine: nasdaq hit 9000 thanks to amazon, record, and you said every year they have records. charles: it would be a surprise if amazon did not have a record because there are new countries it has opened in. always add customers and prime members where it is worth remembering that the subscription fee as well below that of the u.s. just because it has more prime members does not mean it is becoming more profitable. a lot of the expansion is not in the u.s. anymore, although it

continues to do well. scarlet: that is a great point and something to keep in mind as we look at the numbers that come in on what has been a fairly good retail season for the retailers because the consumer is doing well. do the sales numbers lead to profits for traditional retailers? it is competitive and we know the consumer is very savvy. do wech discounting -- have an idea how much discounting they need to do to book those sales? charles: it seems to be very extensive. one of the difficulties with all of these and one of the spaces where retailers are getting theyer is the first price are paying something is, the price they are discounting to, if the first price keeps going up so the discount looks big but it is not necessarily eating into as much profit as they may have thought.

we are getting to a stage where -- plans andons promotions, you have to have them as a retailer. the promotions are there but you have planned them so you should make profit. it is when you get unplanned promotions that you get the profit issues. the only retailers who have said anything about christmas are amazon and tiffany, who both implied it was slightly better than people might have expected. francine: let's -- scarlet: let's bring in ben jones. when you look at the u.s. consumer and how strong here she is, compare and contrast that -- strong he or she is, compare and contrast that to the european consumer. ben: it is a global story that the consumer has been holding up economies over the course of last year. u.s. retail sales were strong.

it looks like christmas will show an extension of that, but in europe you have seen the retail sales in 2019 have held up strongly. monthsto sales in recent are starting to improve in europe. the european consumer is still in relatively good shape. you had seen a softening in many fracturing and industrial earlier this year but you are seeing improvement -- manufacturing and industrial earlier this year, but you are seeing improvement. francine: is amazon getting too big? ben: i cannot speak about specific stocks, but online retail, that is something that will continue to grow and grow. some of theying bricks and mortar resellers -- retailers, because consumers become more savvy. everything is then checked online, and the default is that

that is the immediate place to go. you think that will be cheaper than it is in the off-line store , so you might do windowshopping but also you will go online. francine: the trend leading up to the holiday season is changing, people buy more online but do last-minute buying. charles: there is a polarization. right across the world, black friday which used to be a u.s. only event, is a huge spending peak. we have a huge amount of spending on that weekend, the end of november, beginning of december. through had a huge lull december and people rush out at the last moment. we have not seen exactly what the sales figures were monday and tuesday before christmas, but i expect there will been a records as people went out and bought. scarlet: charles allen of bloomberg intelligence.

forng up, hong kong braces more disruption as protesters prepare for the new year with more demonstrations. this is bloomberg "surveillance." ♪

♪ --rlet: this is bloomberg viviana: this is bloomberg "surveillance." a rebound in sales for tiffany in the run-up to christmas is good news for lvmh. shoppers in china leading growth. in the asia-pacific region, they ,ushed a 5% to 7% increase

following a declining profit in the nine months before december. tesla lining up financing in factoryr its new gige as it plans to begin delivering the china s3. plunginging, keygen after they ended discussions on a potential takeover. the dutch company says proposals were "not compelling" and will continue as a standalone company. francine: hong kong bracing for more disruption over the holidays. protests over christmas lead to clashes between demonstrators and police with hundreds hurt. demonstrations have been scheduled for this weekend but the next major rally is wednesday, new year's day. joining us is karen lee.

give us some perspective when it comes to protests in shopping malls, because unlike the u.s. where the malls have seen declining traffic because it has been displaced by e-commerce, malls play an important role in hong kong. they are gathering places, meeting places for people, and through ways because they are entries to public transportation. karen: they have taken a starring role over the next few days. more protests are scheduled tonight at a shopping mall. this is a mall and an area that has seen some of the more violent clashes over the past six months. the protests will continue over the weekend near the chinese border, with a major rally planned for new year's day that could shed some light on how much momentum this movement has going into the new year. coming back to the mall, over

the last six months, tourism has taken a massive hit and retail has taken a massive hit. when you look at the fact that the protests are becoming more centered on malls, that could be bad news for retail where you are already seeing quite a bit of damage. scarlet: it could also be bad news for the landlords of those shopping malls. have we heard from them? have they responded? karen: most of the malls here are owned by a wealthy group of people who have all seen their portions take a bit of a hit as the city reels by these protests. to walk around downtown on the holiday week, normally there would be a ton of tourists and shoppers. you are seeing very little traffic on the street. , carriet walking around lam saying many members of the public and tourists coming to

the city were naturally disappointed because there celebrations were ruined. we are really going to see whether or not it is going to succeed. this has gone months longer than people thought it would in june when it kicked off. francine: thank you so much. let's get back to ben jones to get his thought on the hong kong economy. it is unclear how beijing will deal with it in 2020, but if the protests continue, does the asian financial capital move elsewhere? benjamin: ultimately it probably dunn's -- does. this has showed no sign of easing up and no signs of how it gets resolved, the center of hong kong starts to move away. the problem you have with visitor numbers collapsing 40%, retail net -- retail sales

numbers collapsing and pmi collapsing, with no sign of a turnaround or improvement in the political situation. hong kong is still a place to stay away from, from an equity perspective. it is hong kong's center as a financial hub that has become weaker. if you want to move into the asia region, do you look at hong kong or singapore or another region? hong kong has moved down the list because of the massive degrees of uncertainty. francine: if you look at luxury stocks, does the spending that is not happening in hong kong move elsewhere or is it lost? benjamin: i think it moves elsewhere. the reason hong kong is one of the most visited cities in the world is because you have chinese consumers going into hong kong and doing their shopping. if you look at the retail sales for the luxury goods areas in

china over the course of the last year, you have seen an acceleration. if you listen to the luxury goods makers from europe, they are talking about record growth numbers from the chinese. a lot of it moves on to mainland china, particularly the european luxury goods is expanding their operation in mainland china, which means they will be less worried about the slowdown in hong kong. it is more of a hong kong problem than a knock on effect to some of the luxury brands. scarlet: you say it is a hong kong area problem. within asia you don't like hong kong, but when you compare it to the united states, the u.s. comes out on top still? benjamin: u.s. equities are still the best place to be. that will be the best earnings growth and quality earnings growth. one thing you have seen over the last decade is the rally in the u.s. equities and the strong

outperformance has not been a multiple expansion. it has been on earnings growth outpacing the rest of the world, focused on the tech sector. places like china can still do well and in the short turn, places like korea and taiwan would be favored, particularly if we get in easing in the trade situation. some of those beaten up areas can do really well. it is those areas that can do well, as opposed to going to places like hong kong. the geopolitical uncertainty is too great and i think there are better opportunities in asia at the moment. scarlet: van jones of state street is joining us. -- ben jones of state street is joining us. we look at president trump and his art of the china deal, when it gets signed. this is bloomberg. ♪

♪ time as there is a deal, we will be taxing the hell out of china. >> we have made tremendous progress, doesn't mean you will have a deal. we are working on a new trade deal with china, but it must include real structural change to and unfair trade e --nd unfair trade practices. >> it is the biggest deal ever made, the granddaddy of them all. it would be historic if we could

do a fair trade deal. we are totally open to it. we have a long way to go as far as terraces concerned. i wish they didn't break the deal we had. we had a deal and they decided not to make it. i think they want to make a deal. i am not sure they have a choice. if they want to do would deal, let's get it done. i am not looking for a partial deal, i am looking for the big deal. when we come to a deal, subject to getting it written. if we don't come to a deal, we will raise those tariffs. we have come to a substantial phase one deal. in some ways, i like the idea of waiting until after the election for the china deal. it will be finalized in the great -- next couple of weeks. we made a great deal with china. francine: those were some of the comments president donald trump has made about china throughout

the year. they agreed to the first phase of a broader trade agreement earlier this year. ben jones of state street is still with us. what happens after ray phase one deal and what does it mean for the markets? benjamin: we will have to see china following through on what it has agreed to end the u.s. gradually rolling back tariffs. if that happens, i think the optimism around trade can continue into 2020. i think over the course of next year, he will probably see points when you will get -- you will probably see points when you will get areas of fear that the trade deal is off. i don't think it will be clear sailing. donald trump wants a strong market and a decent economy going into the election, tends to benefit the incumbent. he has campaigned on being tough on china which plays very well with his base.

it is not something he can completely walk back from in the election year. more thandeep cuts, 50 lenders have announced plans to cut or than 70,000 jobs in the banking sector there globally -- more than 70,000 jobs in the banking sector globally. which sector will get hit the hardest? there is also deutsche bank, a piece by nicholas comfort about losing. we will have the breakdown of where jobs will be lost and whether we will have more robo advisors. ♪

francine: this is "bloomberg surveillance" -- surveillance. scarlett, is with us.

>> the federal reserve is taking 18 bids in 14 days. this is the third straight time the sales have been under subscribed. it may signal balance sheets near capacity or those who need your end funding have already secured enough. for thesition period u.k.'s exit from the eu may need to be extended according to european commission president according to an interview. she was worried with how little time is left. she says they plan on getting the trade deal by the end of 2020. in hong kong, more gatherings scheduled. protests over christmas lead to clashes between writers and ride police. a false alarm -- riot police. a false alarm for broadcaster alertistakenly issued an

saying north korea launched a missile. this highlighted the increased tensions in the region. pyongyang said it would use the holiday season to deliver a christmas gift to the u.s. global news, 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. scarlet?and scarlett: let's turn to banking and job cuts. it's the biggest round of job cuts in four years as the industry slashes cost to a slowing economy and adapted digital technology. the majority of jobs are in europe. the region accounts for 82% of the total. for more on global banks, let's bring in our next guest and ben jones is with us. when we look at the job cuts taking place, it is not just the over hiring, over firing cycle, these are structural,

strategical -- strategic changes. >> people are bracing for downturn but also getting ready for having a more digital workforce moving forward. an investment banking, trading and wealth management, and just about every line of business is impacted. investors want these banks to produce better profit but also to do it with better margins as well, which tends to help less people. scarlet: deutsche bank is one of the hardest hit but what when you look at more -- morgan stanley, the latest round of job cuts, 1500 is a pretty big number for a company going through the motions of streamlining its operations as opposed to making a huge shift at this point. sonali: putting it into perspective, it is only 2% of the global workforce. it's not that much. but, morgan stanley and citigroup are the big two

that announce job cuts. we will see if the others follow suit. francine: what's the likelihood we get consolidation among european banks? sonali: you are asking the milling -- million dollar question. we ask every banker we talked to. if you put one and one together, you wanted to equal three for it to make sense. this year was the year where we -- theresurfaced consolidation conversation between deutsche bank and commerzbank, and one of the reasons it didn't work out was because the job cuts were so severe it would upset the regulators in germany. it would be difficult to get deals done, but i think what everybody really wants is a banking champion that really stands across the european continent, rather than having so many banks in each particular country. you look a negative

rates in europe, how much of this is a problem? 18,000 there are like jobs lost at deutsche bank through 2022. is this a negative rates problem or we don't know what the bank's business model longer-term is and whether it will survive it? sonali: a lot of these job cuts were announced before the negative rates became a problem for them. once the negative rates issues sunken after they announced restructuring plans, it became more of a problem because they were leaning heavily on retail divisions, and the most recent word by the deutsche bank ceo was that they were leading on the investment bank in times of trouble for the retail bank, which is impacted by these rates. it's not even just for deutsche bank, for quite -- credit suisse, they have offloaded some of these pressures onto clients. some of the issues into next year will be how much our clients feeling the burdens from the negative interest rates. our fees going to be going up across the year? scarlet: let's bring in ben

jones. how do you see negative interest rates hurting the banking sector overall? ben: they are a significant headwind. there are three key headwinds for the banks, negative rates, steepness of the yield curve or the lackeof, and also of volatility we are seeing in markets at the moment. that impacts the trading side. until you get an increase in all three of those, is going to be the significant headwinds for the banking sector. i would keep that separately from the digitalization we see in some of the banking sectors as she was saying, but the three headwinds for european banks are going to remain. you might get a little bit of uneasy more alleviation with a slight push up in yields, but is that going to be a sustainable long-term trend? i'm not sure it is.

scarlet: as a result, banks may not be your first place, certainly in europe. what about in the u.s.? do banks in the u.s. look more favorable to you? ben: they look more favorable compared to the european banking sector, but it still wouldn't be my favorite sector in the u.s.. a lot of the headwinds i just mentioned are also applicable to u.s. banks. but they are slightly more profitable and have run down -- they took a lot of the medicine do to them over recent years, so i think the european banking sector hasn't done. within the u.s. market, i still think there are better sectors then banks in 2020. francine: where you see the big value of 2020 -- do you see the biggest value of 2020? ben: the biggest place for us to still tack. cyclicale of the areas, particularly industrials and consumer discretionary areas. i would steer clear of energy,

even though i'm value screens it is by far in the way the cheapest area. we need to see a sustainable rally in oil for that sector to do well. the consumer remain strong. the tech sector remains a strong. there will be worries around the u.s. election cycle, i'm sure, but these are solid companies, and they are not trading particularly elevated multiples -- at particularly elevated multiples. if we continue to get this gradual uptick in manufacturing and places -- manufacturing, then places like industrial looks attractive. this moreere you get cyclical offspring. francine: when you look at u.s. banks versus european banks, how much favoritism does u.s. banks have with regulation? sonali: regulation is a big part of the story, but if you look at how much u.s. banks are entering europe, jc morgan has a plan to

expand their regional banking operation through europe. goldman sachs is going after european wealth clients. many banks are edging into frankfurt. they are looking for german deals which a bank used to dominate. even in europe, the u.s. banks are planning a big entry, but in the u.s. as well, even with all of the fear of low interest rates throughout the year, they have done well. there lending has held up. thatrgan, bank of america, have a huge consumer focus, have been blowing it out of the park. goldman sachs and morgan stanley have been benefiting from the volatility in the markets that are enough to keep investors coming back to the fray. scarlet: sonali basak thank you for joining us and ben jones of state street is staying with us. ben mentioned the tech stocks. take a look at u.s. futures. we see highs with the nasdaq futures leading the way, up .3% after the nasdaq closed about

9000 yesterday. i see gains in apple, tesla, alphabet, and this is after apple, tesla, and microsoft closed at highs. from new york and london, this is "bloomberg surveillance." ♪

>> you are watching "bloomberg surveillance." we begin the u.k., where amazon's delivery field is being investigated. they want to buy a minority stake in the food delivery company, but the competition and market says the deal could hurt competition. it might discourage amazon from reentering the bridge food delivery market on its own. amazon is speaking up after

reporting record holiday sales, it shipped billions of idols -- items including tens of millions of amazon items. they didn't release figures, but it statements backup reports that shopping picked up this year. a report says u.s. web sales rise to 19% this holiday season. apple is set for its best year in a decade. addingck is up over 82% $530 million -- $530 billion market value. been -- that is your bloomberg business flash. scarlet and francine? francine: thank you so much. as the deadline for the u.k. for eu leave -- to leave the

draws closer, boris johnson wants to make a deal but the commission president called it optimistic. she says the transition period may need to be extended past the end of 2020. that was an interview with a french newspaper. the city of london will be an important bargaining chip for the eu, according to a report in the times london. brussels will threaten to block the cities access to european markets and put up barriers to personal data sharing, according to the paper. we are back with ben jones of state street. i guess the concern is that we go back to the prime minister saying they would rather have a wto agreement with the eu, rather than extend the transition period. ben: he's gotta say that. the problem we have got for the not an months is that awful lot is probably going to get done in that period until the end, where you have the cliff edge hanging over you and brings the eu and u.k. together to come to some form of deal and

moved to wto rules or move to some other framework. it's optimism on this idea that boris johnson has a strong majority from the election can push through the withdrawal agreement. that's great because we finally get the agreement, but that is not the end of uncertainty. i think 2020 will be a lot of uncertainty around how we -- what trading rules we move to. i don't think you will get clarity on that until the end of the year. francine: so that u.k. leave the eu without an actual deal -- the u.k. leaves the eu without an actual deal? ben: i think it's something that is a non-deal, a probability out there, yes. scarlet: we spent a lot of time trying to figure out what orest johnson will do and how the u.k. positions itself. what about the eu side? all 27 members need to be in agreement on the upcoming negotiations as well.

what is their confidence these 27 members want to form a zero tariffs, zero quoted relationship with the u.k.. >> i think they all want to defend regulatory standards, whether that means they want to give the u.k. some form of zero tariff deal or whatever that might be. i think that relationship is a little more tricky to see universal agreements on. i think there are some in europe that are keen to make sure brexit is not seen as easy at go, and some wanted to through a little more smoothly, because they are worried about the ramifications on the rest of europe. it's unclear. hasink the european union the strong bargaining chip there , using london as a bargaining chip. i think that makes an awful lot of sense.

that's a lot of leverage the you has over the u.k. -- the eu has over the u.k. scarlet: what does this mean for british assets or u.k. pound in particular? it's back above the $1.30 level, but it has seen quite the rapid selloff from its 133 -- one dollar 33 set level. ben: i don't see any big moves unless we get shocking news from sterling. the one thing sterlin, as far as we have 3%s, undervalued. we see the sterling a little overvalued as a result of the rallying we saw over the last weeks or months or so. for me, the buys more toward the downside, as people become more aware of the uncertainty has not dissipated. it's not going to be plain sailing from here. if we get any sterling weakness,

that tends to be more positive for large-cap u.k. equities. ftse 100 over ftse 250 will look start -- will start to look more attractive if we get the u.k. equity and that weakness going forward. scarlet: ben jones of state street is staying with us. we have less than four hours of end- hours to go before the of u.s. trading, but indications are that we will build on record highs. the nasdaq is closing above 9000 yesterday, powered by the likes of apple, tesla, amazon, microsoft. many of those closing at record highs. morning, they are building on the advance. lots of encouraging data when it comes to retail sales over the holiday season. in particular for amazon. from new york and london, this is "bloomberg surveillance." ♪

francine: good morning, this is "bloomberg surveillance." i'm scarlet fu in new york with francine in london. tom is off.

francine, it is the time of year to celebrate and their is an etf for that. fej tracks leisure and ticker companies. scarlet: it's time to close out the year in style with fun into version, wining and dining. fund thatinvestment tracks companies in the leisure and entertainment industries. chosen on earnings momentum, quality, management action, and value. you've got gaming and media companies, hotels, along with cruise opportunities -- operators and airlines. resorts, and hilton, to even manchester united. progress --election process equally weighted.

they have an expense ratio of 63 basis points. since launching, it returned almost 240%. that trails the s&p 500 by 20 percentage points. bj gets a green light the bloomberg intelligence traffic light system with one morning for its alternative weighting system -- warning for its alternative weighting system. you can catch bloomberg etf that it's -- at its usual time. francine: i'm looking forward to it. tim it isn't how most people would describe the investor renowned for making huge aggressive bets, including one famously -- or infamously broke the bank of england. it's not that the investor has sworn off taking risks, but he tells bloomberg in an exclusive interview this month that the current state of politics in the u.s. has him unsure about which investments are safe. administration, with

wondering about where the hell the next bomb is coming from, doesn't allow me to take some of the positions i have taken, historically, where i thought it was a one way bet. to me, this was always binary and eight two-way bet. francine: we are back with ben jones. when you look at the wall of easierdoes 20/20 become if you look at central banks, the geopolitical risk, does it come back with a vengeance or have we been through the worst in 2019? ben: i think some of the bricks have started to fall away, but there is still a wall there. some of the tail risks around dissipated.r have some of the tail risks around brexit have dissipated. the sentiment i'm getting from investors is that they are looking at that wall of worry and they are not confident it has been old does down.

-- bulldozed down. the election is a key stressant 2020. if everyone was talking about that worry having disappeared and being able to take large bats, that would make me worry because i would think investors got overly optimistic and got euphoric, but that is not the with from speaking investors. while there are those concerns, people are more costly -- cautiously positions, the markets can continue to climb this wall of worry. francine: in 2019, it was difficult not to make money. ben: yes. francine: is 2020 going to be the same? ben: in a lot of ways. it risk assets generally do well. when you say it wasn't difficult to make money, if you just bought tech equities you would make money, if you bought gold you would make money. if you are a currency trader this year, it was difficult to make money. some of those macro funds have

struggled, because you have had these low levels of volatility. for me, because investors are still cautious and able to take a big that's, they wouldn't -- big bets, they wouldn't have the cash high levels of volatility will struggle, certainly the early part of 2020 anyway. if you are long equities, tech equities, i think that asset will be relatively easy to make absolute returns, whether it will be easy to outperform the benchmark is a slightly separate question. i'm less convinced on that. scarlet: you mentioned early 2020. over the last few years, there has been a pattern set where the u.s. economy tends to underperform or be seasonally weak in the first quarter, and even the start of the second quarter. the u.s. economy is the strongest in the world right now. how much of that is priced in? ben: i think some of it is

priced in, but not fully. i go back to my point a second ago, people are still cautious, still looking for the reason why they might be wrong. they are not taking these large bets. although we see u.s. equities trading on higher multiples and certainly the dollar is looking quite extensive on some measures, we don't see u.s. equities really extensive in the long term scheme of things. francine: ben, thank you so much. ben jones of state street, getting us started for our 2020 outlook. in the next hour, andrew hollinghurst talks inflation. we talked jobs. this is bloomberg. ♪

francine: holiday cheer. tech giants propel nasdaq above

9000 for the first time in u.s. futures are at session highs. amazon reports record seasonable sales while apple is on track for its best year in a decade. more disruption, hong kong braces itself for more chaos as protesters plan another major demonstration to kick off 2020. good morning, good afternoon, good evening depending on what part of the world you are in. this is "bloomberg surveillance." tom is celebrating, in a food coma. i'm still in the food coma, but we look at markets, the tech industry, very thin volumes, which is why we see some of the stocks bounce around a little bit. scarlet: and in the case of these faang type names, they are climbing to new highs. microsoft, apple, tesla, all closing at highs yesterday. they are building on those advances by rising in the premarket, sending features to session highs at the moment. it looks like it is the early trade -- if the early trade is

any indication, we will open higher. francine: now, let's get to the bloomberg first word. news in new york city. hi, viviana -- word news in new york city. hi, viviana. >> benjamin netanyahu won a landslide and he will lead it into israel's third election in less than year. corruptionnge amid a scandal, recently indicted on bribery and fraud. the eu may need to be extended -- deadline may need to be extended. an official is worried by how little time is left and says the u.k.'s plan to secure a trade deal by the end of 2020 is optimistic. in the philippines, the death toll from the typhoon has risen. at least 28 are dead and 12 are missing. thousands are forced to flee their homes amid flooding and landslides.

power knocked out two extreme provinces and the typhoon is expected to leave the philippines tomorrow. i'm viviana or todd oh, this is bloomberg. -- viviana, this is bloomberg. francine: stocks seem to be propelling global benchmarks and we had posted data out of china, helping things along. you have computer retail stocks, amazon reporting the record-breaking holiday season, which means there is a risk on sentiment out there, and it started tuesday, and we had a couple days holidays. i wonder what 2020 will bring. scarlet: the latest data out of china helped. industrial profits, reporting a rebound. that helped to give equity markets a tailwind share. the dollar weakened for a second day, off by .3%. wheat is a gainer, extending its

gain. people think wheat might be a big winner in the phase i trade deal because china has a weak quota it needs to fill as part of the truce. if beijing moves forward with purchases, it would be new demand. let's take a look at a chart i have on my bloomberg. in any discussion of u.s. equities of growth versus value, you have tech at one end and energy at the other extreme. this chart shows the energy waiting in the s&p 500, and it has gone down since 2010. 4% and was 10% at one point. energy stocks are the worst performers this year, up less than 8%. this decade, up only around 6%. we will talk to kevin of clearview energy partners later this morning to get his 2020 outlook for energy. francine: we will have plenty

more on that. i'm also looking at my bloomberg terminal, and this is a little different because we haven't been talking too much about brexit and we have this report from london saying the eu may use london as a bargaining chip. we heard from the commission president she was intimating delaying the transition period may happen. i'm looking at pound rising on the 200 week moving average for the second time in four years, and it broke that level and came back down. scarlet: as we mentioned earlier, and as francine showed us, u.s. futures are climbing. this is after the nasdaq was sent above 9000 for the first time ever. amazon is among the top performers after reporting what it calls a record-breaking holiday season. the strong reading push apple hire as well, leading to its best annual performance in a decade. during -- joining us now is andrew hollenhorst and paul sweeney.

clearly there's a lot going on for each of these companies. you mentioned record-breaking sales for amazon -- we mentioned record-breaking sales from amazon. amazon always has a record-breaking year whenever the holiday numbers come out. paul: they do. it looks like retail sales for the holiday period, certainly in the u.s., will be up 3.5%. the is important is we see e-commerce sales during this holiday period close to 20% this year. when you think about e-commerce, you think about amazon. they came out with positive news about another record-breaking holiday season. i think the long-term trend for e-commerce, retail sales continues to be a long-term secular story, and amazon is the way to play it. stocks underperformed a little this year, and had a very strong december. scarlet: clear beneficiaries there.

clearly the consumer is doing well, and retail sales, the numbers that have come out so far really support that idea. we have gotten three interest rate cuts this year. do you see that having an effect on the numbers this holiday season or is that a separate issue? andrew: i think it is too early to see this having a large effect on the consumer. you usually think the monetary policy is working with a lag of six months to 18 months. it's not clear it's coming through yet. you could see positive affect in the sense you stabilized equity markets, positive for sentiment and risk appetite in general. all of that is supporting the consumer. francine: what will the consumer doing 20/20? are we going to see record buying like we did and amazon, or is it the way we shop is getting different? think andrew: we have a lot of positive dynamics, positive tailwinds supporting the consumer. income growth has been strong and supported by strong job growth.

recent data has been interesting. we have seen upward revisions to the prior jobs numbers. that is telling us jobs growth is running stronger than we thought it was, really hasn't slow down as much as we thought. over time, we should see slowing in the jobs numbers, which should may be slow incomes and consumption. we don't see that in the data yet so 2020 is setting up to be a strong year. amazon,: if you look at they haven't released the details, but what does it tell us about how we shop differently? it seems we shop closer to the hollis eat -- holiday season and online. paul: you are right. amazon developed their distribution platform, fulfillment platform, so they can deliver products in one day, today, maybe same day as well. that conditioning consumers to spend more online, by more online, retail sales online -- buy more online, retail sales up

this holiday season, but shopping closer to the data because amazon will deliver it to you. scarlet: another way we shop differently is that when we buy things online, we buy more of what we need and return stuff. according to one estimate, --tomers return 41 point six $41.6 billion. what that potentially take some of the shine off of the numbers we get, whether it is from amazon or any other retailer or government retail sales numbers when you factor in returns later on? andrew: i think you always have to be careful with these holiday period numbers, because we almost always here they are record-breaking and they should be because the economy is growing. we have seasonal effects, and some of the purchases happen and maybe you get returns later on. thehave to look through longer-term trends, and it looks like that trend is continuing into 2020. i'm not worried about month-to-month volatility. scarlet: e-commerce is clearly winning and retail.

a report yesterday said u.s. retail traffic was soft in december, down 7% to 9%, versus up 5.6% last year. this might be a win for amazon, but it could be awash for other companies that have to maintain an e-commerce presidents -- presence. andrew: when you talk about retail sales, people talk about on the channel. you have to have the physical store and the e-commerce as well. i think we see a short holiday shopping season here this year, shorter than we have seen that in previous years. clearly, if you have a strong retail presence, like a walmart or target for example, they put up 30% or 40% e-commerce growth, right on par with what amazon is doing. the department stores are probably on the other end with a with likechallenged apparel and trying to get that foot traffic. francine: are we shopping with amazon because we are not shopping elsewhere or because

they are in every market? andrew: i think it's a little bit of both -- paul: i think it's a little bit of both. amazon seems to be in almost every consumer vertical that a lot of consumers shop in, so that is a challenge for some of the other departments or type things, some of the niche apparel of retailers as well. if you look at walmart and target, they are performing well on their retail sales and e-commerce sales as well. it looks like the big-box retailers that figured out a way retailers figured out a way to compete against amazon. francine: when you look at the u.s. consumer, what do they need to stay at this level? how can we be sure the consumer holds up? andrew: i think we've spent a lot of 2019 worrying about the weakness in manufacturing and the spill over into the broader services sector, into the consumer sector. like i was saying, we haven't seen that.

you need to see job growth and wage growth hold up, and all of those things are happening. that keeps us quite positive into the new year. francine: thank you both. paul sweeney and andrew hollenhorst stays with us. coming up, hong kong braces itself or more disruptions as protesters prepare for the new year. we discuss the latest, next. this is bloomberg. ♪ ♪

this is "bloomberg surveillance." let's get your bloomberg business flash. amazon's delivery deal is being

referred for an in-depth probe. they want to buy a minority stake in a food delivery company but the market authority says the deal could hurt competition. it might discourage amazon from reentering the british food delivery market on its own. [indiscernible] that's after the company enter discussions on up at that -- potential takeover. they say the proposals were "not compelling. -- compelling." that is your bloomberg business flash. francine: hong kong bracing for more disruption over the holidays, protests over christmas lead to clashes between demonstrators and police, with dozens injured. small demonstrations have been organized for the weekend with the next major rally scheduled for new year's day. joining us on the phone is caringly -- karen lee. what type of protests have we seen? are they going to get worse and

how will beijing respond? over the past holiday week, they have been in shopping malls and we expect protests to kick off right now in an area that has seen some of the worst violence in the past six months. this comes after the tear gas fired on christmas eve near a hotel, which is one of hong kong's most decorated hotels. ofs is coming ahead scattered protests over the weekend, including some plans of an area near the chinese border, all leading up to a major rally. some of the peaceful protests broke out in june, so we see these protests having no signs of slowing down. scarlet: it's kind of the lead up to the big one on january 1. one thing about hong kong is that, unlike the u.s. where people spend christmas with

their families hold up at home, and hong kong, it is more of a commercial holiday where people go out and celebrate with friends. people are out, and the pictures show that, but they are in shopping malls protesting. they are not spending any money. what happens to the stores? karen: the past six month have taken a major hit for retail and tourism, which are two of hong kong's biggest industries. this is only going to be bad news for retailers. you see, even if you walk on the street, he would walk out in previous years during the holiday shopping season and see tons of people there, tons of people downtown, lots of traffic. if you walk downtown, it is quite a bit different. it probably has retail worried. .rancine: thank you trade has been one of the stories dominating 2019.

we take a look at president trump and the art of the china deal. this is bloomberg. ♪ erg. ♪

pres. trump: until such time there is a deal, we will be taxing the hell out of china. we have made tremendous progress. we are now working on a new trade deal. with china. must include real, structural change to end unfair

trade practices. it is, if you think about it, the biggest deal ever made. this is the granddaddy of them all. it would be historic if we could get a free-trade deal. we are totally open to it. we have a long way to go as far as tariffs and china is concerned. we are talking to china about the deal, but i wish they didn't forget deal we had. they very much want to make a deal, we will see what happens. we had a deal and they decided not to make it. if we are going to do the deal, let's get it done. we are looking for a complete deal, not a parcel deal. deal, prettyto a much, subject to getting it written. if we don't make a deal, we will substantially raise tariffs. we have come to a substantial phase i deal. in some ways, i like the idea of waiting until after the election for the china deal. the deal will be finalized over the next couple of weeks.

we made a great deal with china. [cheering] francine: those were some of the comments president donald trump made about the trade negotiations with china throughout the year. the world's two largest economies agree to the first phase of a broader trade agreement earlier this month. we are back with andrew hollenhorst, city chief of u.s. economist. it is hard to read what comes after phase one. is it phase ii or phase three, or do we get stuck at phase i one for the foreseeable future? andrew:andrew: i think that's what markets are looking for and what we as economists are looking for, where are we going from this trade deal? there is positive that a deal around agricultural exports to china. that will be positive in the material way. you will see that showing up in the numbers. theyonger-term issues, will be addressed over time, probably postelection.

from the markets perspective, that is probably the positive sentiment, you are pushing out these uncertainties further. we might have a period of calm for the next few months. francine: who needs to deal more, the u.s. or china? andrew: it's a good question. these are the two largest economies, so in the u.s. and china, it is in both of their interests to come to a deal around this and it is in the interest of the world and global economy for a deal to be worked out. that is the positive or optimistic part of this whole ,tory, that ultimately incentives are aligned, even though they don't seem to be because they are going back-and-forth and forth on various different deals on whether we will make progress or not. ultimately, but the u.s. and china benefit from a better trading relationship. scarlet: the president mentioned a substantial phase i deal. do you think we will ever see the details? andrew: i know we have not seen

the details we have liked to seen so far but i think we will. we would like to know what the diesels for 2020 look like. in terms of the agricultural purchases, ramping up to 40 to 50 billion the year, are we ramping up quickly or slowly? that matters quite a bit when you look at gdp and exports. more of those details will be forthcoming. reports are those details are there, we just haven't seen them publicly. that is what is more positive about this agreement than months ago, where it looks like we had an agreement but it -- we had no details. this time, it looks like there are details worked out we just don't know all of that. scarlet: do you think part of the president's call is to reduce the u.s. trade deficit because he uses that to keep score between the u.s. and trading partners. you as an economist see value in looking at the trade balance between the u.s. and another country, or the u.s. trade deficit overall? andrew: you have to be careful

on how you look at numbers. these numbers matter, they tell you something about bilateral trading relationships and the general u.s. exposure to the rest of the world. the caution any economist would give you is if you look at the trade deficit, you can make progress on the bilateral trade deficit between the u.s. and china, but are you just shifting imports away from china to another country, for instance, and that is what you want to be looking at. that is where the details matter. francine: there was a story that caught my attention on the bloomberg terminal for bloomberg businessweek saying the chinese government's leading default happen. investors had assumed they managed them more. is this china letting out steam or could it be the start of something turning sour? andrew: i think i wouldn't be too concerned with this, and i think we could view it as a

positive, almost in the sense that this is china joining a more globally open financial market system. if you're going to play in the global economy and global financial markets, it needs to be the case you allow firms to occasionally have problems, make mistakes, have default, have the natural part of the system. if we think about corporate debts, if we never had a default, there would be no incentive for those doing the hard work to figure out if the company would default. i figure it as a positive. francine: thank you so much, andrew hollenhorst from citi. 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. scarlet: i'm scarlet fu in new york with francine lacqua in london. tom keene's offer the day. less get you to the first word news with viviana. >> we begin with the federal

reserve taking an $18 billion -- taking in $18 billion of business. this is the third time the sales has been under subscribe, which may signal balance sheets near capacity or those who need year-end funding have already secured enough. the eu may threaten to block london's access to european markets, according to the times. it says the moves will come as part of post-brexit talks in the new you are -- in the new year. the block once britain to stick to its rules, even after brexit. in china, industrial profits rebounding in november, after three months of declines, including a record near 10% bump in october. it's another sign of stabilization for china's economy. a preliminary trade deal between washington and beijing in early 2020 could boost intimate even further. japan, alarm from mistakenly issued an alert sing

north korea launched the mitchell -- missile to retract it shortly after. this highlights the increased tensions in the region. pyongyang cryptically warned it would use the holiday season to deliver a "christmas gift" to the u.s.. global news, 24 hours a day, on air and on tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. scarlet: thank you so much. when we look at what has going -- big going on in the commodity world overall, from the oil spill in 2010 to the drone attacks on saudi fields this year, commodities have had a roller coaster of a decade. with the new decade around the corner, what will matter most for the energy sector? we are joined by kevin book, who is just publishing his 2020 outlook. kevin, we were talking about the u.s.-china trade war. your take on the trade war that 75% of a trade war is still a trade war, and it has done a lot

of destruction to the demand picture, and that has not cleared up yet. kevin: the main point is that the uncertainty that has been stalling investment in the industrial space is the thing that is killing demand for the intermediate term. you can look at pmi's, the stoxx inflows, inventories and production, but that is the back -- but in the end, it is things not sanctioned, courses not taken. at that backlog has not been rebuilt because there is a preliminary bargain. if you look ahead at phase i and on, if this does not stick for some reason, we move from trade decoupling, and all that that brings. with the uncertainty, there is room for demand to lag a little behind expectations priced into the markets today. scarlet: we are also in this world where deglobalization seems to be a larger trend, which will take years to a unfold. -- two unfold.

far enough, for -- this could provide an opportunity. explain. kevin: when you think of deglobalization, think of it as the decoupling of the two largest economies, breaking up demand is stimulative. metaphorically, one apartment to two apartments, one car to two cars, you have a short-term pop, but the long-term trade relationship could have reduced economic dividends which have it stayedurther had together. it might give illusion of demand stimulus, but that is not likely to last. talk aboutevin, you underinvestment. what does that mean for energy futures? thisur to five years, does underinvestment mean prices will shoot up? kevin: underinvestment in the upstream is what i think you are talking about. the unlocking of low prices by underinvestment, becoming high prices in the future, that is

the cycle of the supply system from start to finish. the question in this case is less about the underinvestment in the energy upstream, so much as the underinvestment in the demand side. the industrial underinvestment created by trade uncertainty creates a while to wash out of the system, takes a while for projects driving growth to come back into play. this is not an overnight thing. francine: kevin, when you look at the iran deal for example, what will that deal look like in 2020? is that gone? kevin: it is dying slowly. the real question of how it goes away is either there is a new deal which seems unlikely for 2020, or it is essentially taken out by the europeans who begin the dispute resolution process which culminates in the u.n. bringing back sanctions, the eu bringing back sanctions, and the end of the deal. iran's deal is set for next

week, and the eu is threatened to -- has threatened to start the dispute process. it runs breakout time. it has gone from a euro more to probably six months or less. that is getting into the hot zone, not just for the europeans and u.s., but for israel. look for increased risk into q as we look at things getting hotter in the middle east. scarlet: we know temperatures have been rising around the world, climate policy is front and center for a lot of nations. it is moving further in the european region than in the united states. talk about the bifurcated road climate policies are taking. kevin: the last decade shipped to climate policy from a top-down global federalism construct to a bottom upcountry level -- or country block level construct. that same top-down is happening here in the u.s.. the europeans are moving ahead with the green deal of their own. it is not a green new deal but

it is a green deal and includes propositions for border adjusting imports based on carbon lifestyle content. short, if u.s. manufacturers and exporters are facing the loss of export markets, congress could respond by changing tax -- wtoeating double t o to enable market access. this is middle of the decade time frame but the eu is making the first move. nationally, you see the same bottom up pressure. states on the west and east coast taking action based on deregulation in washington. we expect that to continue, especially getting a second the trump term. francine: kevin, thank you very much. we are back with andrew hollenhorst of citi. if we look at the dynamic between energy prices and global -- gdp orems there

growth is a lot less sensitive to the price of energy, is that right? it is certainly >> >> true in the u.s. where the u.s. is relying -- andrew: it is certainly true in the u.s. where the u.s. is relying on -- now that there is so much domestic production, we have an office that -- an offset. you will pay more they gazprom for consumers, but on the other hand, that would be good news for producers. you get more of an offset, particularly in the u.s. case. scarlet: andrew hollenhorst of citi is staying with us. we are keeping an eye on u.s. futures with just under three hours to go before the start of u.s. trading. it looks like the dow, s&p, and nasdaq build on record highs. the nasdaq is closing above 9000 yesterday for the first time ever. big names, including microsoft, amazon, apple gaining in the premarket. this is uber surveillance. -- "bloomberg surveillance." this is bloomberg. ♪

francine: we cannot finish the week without a brexit update, or finish the decade without a brexit update. while boris johnson wants to get a deal by the end of 2020, the european commission president called it optimistic. she said the transition period may need to be extended beyond the end of 2020 in an interview with the french newspaper. be uk's financial city might and will be an important bargaining chip for the eu, according to a reporter at the times london. let's take a quick look at the pound. thatart of the year, after

election, my chart of the year looks at table rising over the 200 week moving average and it is quite important because we don't exactly know whether boris johnson still intends to renegotiate the transition deal or leave the eu on wto terms, which would be quite scary for a lot of investors in this country. >> or maybe he is using that as leverage in negotiations for later on. either way, we will be watching it. it from the u.k. to the u.s., where the battle over impeachment continues, you have one republican senator breaking the. lisa murkowski of alaska said she spoke out -- spoke out saying she is disturbed by mitch mcconnell's stand on the upcoming senate trial. this comes as mcconnell has promised total coordination with the white house. let's get some insight from kevin cirilli, our chief washington correspondent. center murkowski has been saying this for two days now. has anyone followed her lead and

expressed doubt? kevin: as of now, no clear signs of other republicans doing that, but that is the key question as we head into the senate impeachment trial, and no word on when that will formally begin. senator makowski voted against the confirmation of justice cavanaugh during that controversial confirmation hearing, and she is laying down a marker for republicans who have concerns with president trump and leader mcconnell. she is not saying she will vote to convict president trump, what she is saying is that she has concerns with the process. aader mcconnell is needing simple majority in the senate, not two thirds, to advance the rules package for how that impeachment trial will go. she is potentially having some leverage there that she sees say she pushed for a failed trial. -- fair trial.

scarlet? scarlet: kevin cirilli keeping watch for us on the latest on the impeachment. he will get us the latest there. we are back with andrew hollenhorst of citi. the impeachment has not factored citi,your work over at but you said people are watching the horse race between the democratic presidential nominees more closely than the impeachment situation. andrew: that's right. we have a lot of interest around the democratic primary and i think that is because the field between investors between the democrats and republicans, within the democratic party as well, were further separated than they have been in prior years. market trying to get around to the idea of pricing different potential policy outcomes, but probabilities get complicated, because depending on the outcome of the primary, that could mean

-- scarlet: and when elizabeth warren was going up in the polls, you got a lot of questions from clients about what a worn presidency would look like an mean for the u.s. economy. how can you look out that far? andrew: it's difficult, because it depends not only on who the president is, but what those legislatures look like. do we have a democrat senate or republican senate? can you get these policy proposals through are not? we are hearing different views of the u.s. economy, different visions for the u.s. economy being laid out. we can speak to what those visions look like, whether or not they will actually get done, that will depend on exactly what the politics look like. thecine: if you look at u.s. economy, what kind of economy does president trump need? i think looking at the u.s. economy right now, again,

we have been telling a consistent story for 2019, which is outside of politics, that we thatan expansion continues, it continues on the back of consumers that are spending, they are spending because of job creation, because of wage growth, and that continues -- i would say that is outside of politics. francine: if you look at the politics, andrew, does bashing the fed work? andrew: it's unclear what the actual effect of pushing the fed one way or another from the executive branch is. on the one hand, it could put pressure on fed officials. on the other hand, if you are the fed or a fed official, you want to maintain independence. there might be an incentive to not do what you are being told to do publicly, so it's not really clear this has a material effect on what the federal reserve ends up doing in terms of their policy, but at the end

of the day, president trump was asking for lower rates and we ended up with rate cuts. i think one was not causal for the other, but maybe rates are not as low as the president asked for, but we saw a rates move lower. scarlet: he has asked for negative interest rates and kiwi as well. the fed made clear it will do what it deems best when it comes to the economy. provided liquidity into the repo market and even though chair powell says this is not qe, many say they are spending their balance sheet. it president trump get what he wanted in terms of the fed? andrew: i think not but perception is sometimes reality with these things. the fed is buying short-term treasury bills, and that doesn't have a large effect on the economy. if you are going out and buying 10 year treasuries, you are meaningfully depressing long-term rates and that will have a depression on the economy.

iere is a sense in qe, and heard many people say it is qe, and if that's the perception supported for risk assets, that will have the same effect. scarlet: andrew, thank you so much for joining us. we should mention that michael bloomberg is founder of bloomberg lp, the founder of bloomberg news. winners and the big losers for 2019, coming up next. amazon is among the winners. this is bloomberg. ♪

are watching "bloomberg surveillance." let's get your bloomberg business flash. tiffany is reporting a rebound in sales in the run-up to christmas and that is good news for lm vh, which is buying the brand for more than $16 billion. growth was led by shoppers in china, pushing an increase in the asia-pacific region. -- tesla lined up 1.6 billion dollars of financing from chinese banks. this, as it prepares to begin

deliveries of china made model food stamps. yesterday, the electric carmakers shares closed on the record high, more than $430 apiece. enterscompany discussions on a potential takeover. the firm says the proposals were not compelling and decided it will continue as a standalone company. that is your bloomberg business flash. is endingthe nasdaq 2019 on a high note. rallying tech shares sent the index of 9000 points for the first time -- above 9000 points for the first time. the strong consumer reading also pushed apple shares higher, leaving the iphone maker on track for its best annual performance in a decade. joining us now is charles allen, consumer decrypt -- discretionary senior analyst. how would you describe retail for 2019? charles: if we look at a lot of

the stocks, they've done a lot better than you might have expected, given the big shifts that have been going on. for example, this morning, jd sports had a new record high, and they have been able to have this mixture of stores and online retailers that has propelled them, but they are not alone in that. paul sweeney talked earlier about walmart and target that have done well this year. francine: what you looking at in 2020? are we seeing -- interest rates are normalizing anytime soon, so are we going to cd felts -- see defaults? charles: there have been a lot of losers and a lot of companies in the u.s. going into chapter 11, a lot of companies in europe who have also struggled. the call ofg stores, and that will continue because online becomes more important, and it is those who

had the mixture of online retail and stores that are probably among the traditional companies doing best. scarlet: what about consolidation? theirse brands cull stores, the question is if they can survive this challenging environment. you see retailers teaming up to share resources and hold off on this challenging environment? charles: to a certain extent, yes. although, what you're trying to do is migrate sales from your store base onto online, so that you are maintaining the overall level of revenue, just in a different mix. i think the other thing we see is it is not quite consolidation, which is obviously one of the strength of amazon, marketplace, where it has more than half of its gross revenue, which they don't report, coming from the marketplace. we have lots of other retailers trying to build marketplaces to become a single destination for

a whole load of brands, walmart, doing it in the u.s. and elsewhere. scarlet: let's talk about the high end. we have seen consolidation and luxury retail with lvmh buying tiffany, and there were reports montclair was a discussion with the owner of gucci. that has not come to fruition, but does there need to be consolidation within luxury retail? charles: i'm not sure if there needs to be, but it seems to be there are economies of scale to be achieved by the larger luxury goods, and i think that's in both store planning, merchandise selection, and almost certainly in distribution. in luxury, shipping things around the world is different than if you are just doing low-end merchandise, because

each shipment you make is valuable, so it has to be secure. it,ou have someone doing you can get significant efficiencies out of that. francine: how much were shopping online and how much more will we shop online? charles: again, it depends how you sort of look at these things, but broadly speaking, if you divide the retail world into food and nonfood, in nonfood, and a lot of countries including the u.s., the online shopping is over 20%. in some categories like electronics, it is over 30%. there is still momentum to go there. in food, this is the place where the potential biggest movement is. in the u.s., it is less than 5%, probably less than 3% and the more advanced countries like the u.k. -- 3%. in the more advanced countries like the u.k., it could be 7%. it will be whether profit would be important in that. francine: charles, thank you so

much for joining us. he is our senior intelligence analyst covering retail. this is what we are looking at in the markets. arelet nir -- and i prepping for an interesting trading day. if you look at the nasdaq, reaching that 9000 points, so we will have to look at what the tech rally trades next. we also have pretty good data out of china. i'm looking at chinese sentiment and the impact it is having on treasuries. treasuries are pretty much flat, european bonds flat, but if you look at a gauge of risk sentiment, european investment grade sentiment, it's within one basis point of a 12 year closing low. we will have a look at that. this is bloomberg. ♪ here, it all starts with a simple...

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equity markets hit new highs with broad support across almost all the sectors. tech leads the way, with amazon bridging its own holiday sales record and apple adding over 500 billion dollars of market cap this year alone. breaking up is still hard to do. europe reportedly threatening the city of brexit negotiations, and the eu says boris johnson shouldn't count on resolving things in the new year. welcome to "bloomberg daybreak" on this friday, december 27. the markets have been on a tear. they continue to be. sb futures continued to climb higher. the s&p is headed to a gain of more than 3% this month alone. that would be roughly five times the norm. the nasdaq went up above 9000 yesterday. futures up once again. the u.s. 10 year not moving much, with the yield under 1.9%.