street. 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%.

the pound is leading the way across the u.s. dollar. thes up about 0.7% against dollar. it is time now for the global exchange, where we bring you today's market moving news around the world. our bloomberg voices are on the ground with today's top stories. let's start by going over to hong kong, bracing for more this option after christmas protests led to clashes between demonstrators and riot police. igh joins us on the telephone. give us a sense of what is in store. it sounds like there's more planned for friday and going into the new year. karen: there's protests planned for this evening in an area of the city that has seen some of the worst protests over the past six months, and again over the weekend in an area near the chinese border. all of this is leading up to a day, rally on new year's led by organizers that have led

some of the biggest protests since this began. the level of anger we are going to be seeing at the clashes willen protesters escalate, and we are looking for what this signals in terms of the movement we will see heading into 2020. it's already lasted so much longer than people thought it would have earlier in the year. it shows no signs of slowing down as we head into the new year. have any signs of any changes in the government's approach to these demonstrations? karen: no, we don't. one of the big questions is whether carrie lam's government will make concessions, whether the protesters would make concessions, who would do that first, and whether there is a ,ore conciliatory approach whether protests continue in the same frequency that we have seen in the past six months or take a

different shape. david: thank you so much. great reporting from hong kong. now we want to go to london. the brexit deadline is approaching, but the european commission president says it will be tough to work out the details of a deal next year. bloomberg's stuart wallace joins us now. i guess we shouldn't have thought it was going to get any easier. two reports today. interviewis that for the european commission she has doubts that they can complete this negotiation by the end of next year. the second report citing an eu document that threatens to cut off the u.k. to eu markets and halt, or at least curb the flow of data across the border. it needs to be on that negotiation table as it kicks off trade talks next year. again, no great surprise.

we are higher in the pound, but i wouldn't necessarily read too much into that. trading. thin we had a big rally after the , and lost almost all of it next week when they insisted that a no deal brexit remain on the table for negotiations. david: as press johnson goes to brussels, he has -- as boris johnson goes to brussels, he has a clear main date now that theresa may did not have. what other leverage does he have in these negotiations? stuart: it is hard to see because it is one against 27. the parliament of the eu is going to work in its own interest. it is absolutely not in its interest to have a no deal brexit. on the other hand, it cannot cave into every demand is that sets a precedent for any other member that decides they don't want to be part of the eu. david: thank you, stuart wallace from bloomberg.

we want to turn out to those markets. retail and tech shares are the big drivers. --'s bring in pretty good to >> i will want to bring to the attention that tech sector. amazon hitting record yesterday. really interesting for that sector because from the start of the year, we saw apple cutting their revenue outlook. it was a really stressful time for the sector. now it is good news now than investors are going into that market, willing to take a little bit more risk, but also on the consumer side, willing to show there's a little bit of a stronger consumer. that was a major concern going into the new year, that they have been derailed. david: they certainly haven't been derailed. thank you to bloomberg's could he group to -- bloomberg's kriti gupta.

kevin cirilli joins us now from the white house. the president is taking some credit going into the new year. does he have a little political wind in his back? kevin: he says that he does. president trump taking yesterday to twitter to retweet a series of articles, as well as boast about the record high stock market. this has really been the crux of his reelection campaign effort, which is that the economy is doing well. twitter tok to criticize democrats for the impeachment effort, clearly trying to draw a political battle line of sorts to say stick with me, and the economy will do well, versus the impeachment issue with democrats. no doubt, president trump still enjoying that holiday vacation at his golf resort in mar-a-lago, but we anticipate him in the weeks ahead to continue the re-election campaign effort. david: that strategy is really trumpeting the strength in the markets and the business economy overall. what is the democrats' response

to that? you can't deny the numbers, i guess. they say it is not doing well enough for everyone. lower income americans are not able to invest in the stock market. say that the disparity, social inequality, and income disparity has been an issue that president trump has exacerbated, and that is a problem they say they want to solve. david: many thanks to our chief washington correspondent, kevin cirilli, reporting from the white house. industrial products rose following a slump, another sign of stabilization for china's economy. a preliminary trade deal between washington and beijing early next year could help boost sentiment even further. hong kong traders cheered the news, pushing stocks to a five-month high. in japan, the drop in industrial production last month was less steep than estimated, but still back down at 2013 levels.

that undermines the extent of the slowdown in the third-biggest economy of the world. coming up, more on your morning trade and analysis of the markets in today's first take. this is bloomberg. ♪

david: time now for the bloomberg first take, where we give you the news and you get the trade analysis of the markets. joining me is yelena shulyatyeva, peggy collins, visiting us from washington, and

also with us is tony crescenzi, pimco portfolio manager. tony, i read your fascinating note. i've got a chart here that illustrates what happened with bonds. it was a bumper year, i think it is fair to say. not quite so clear we will have the same kind of year in 2020. tony: it wasn't a smooth path. where marketeriod participants thought interest rates would rise significantly. there was also a significant period where participants credit disparities would rise. year.as a coupon clipping bonds, you literally slip the cash. interest rate levels probably won't move margins. that means the prices of bonds won't move margins. the credit spreads, the difference in yield between treasuries and other securities

probably won't move a lot either because the u.s. economy is in reasonably good shape. the world economy is in reasonably good shape. they worry is when there is a recession, spreads are so tight to treasuries that they probably won't tighten much more, so that is why 2020 is likely a coupon coming year. david: one of the interesting things in washington now, the u.s. government is borrowing a lot of money, at record levels. why doesn't that affect the 10 year? why doesn't that affect u.s. government bonds? peggy: one of the themes that came out of 2019 was this modern monetary theory. it's one of those things that people have been debating more and more about whether or not if you are a reserve currency, as the u.s. is, whether it doesn't matter because you can print your own money, whether or not you can run up deficits. that is becoming a debate that is swirling around. a lot of investors keep saying

this will come to roost at some point, and inflation will rise, but we haven't seen inflation rise. as we've looked at the fed, that's one of the things they are really struggling with. they can't get to that 2% target, and no matter how tight the job market has been, we just haven't seen inflation rise. david: if you look at washington, the politicians would like to believe that mmt works because they can just borrow and borrow and spend and spend. you are an economist. does it work? yelena: i would say it works until it doesn't. we will probably get to the point where deficits rise so much that it will be a problem eventually. actually, we are looking at a deteriorating picture in terms of fiscal deficits. acttax cuts and jobs evidently reduced revenues, and the bipartisan budget act actually increased spending, so we are facing increasing fiscal deficit.

in the case of even a mild downturn of a mild recession, we are facing some $2 trillion fiscal deficit, which could total to 8% of gdp. that would be a problem. ifwould look really bad, and congress refuses to pick up the tab at that point, we are going to have a prolonged downturn in the economy. david: do you agree that there comes a point where it really hurts? is it far off? tony: what i hear often, this idea that some point it will have influence. i would argue, we would argue at pimco, that the impact is here now. looking at the picture behind as of new york city, i know there's a project that the senator from new york wants, senator schumer, which is to link new york to new jersey through a new tunnel because the one that links it now is 100 years old. david: and it is falling apart. tony: it is affecting us now in

the sense that there is so much indebtedness that we can't put , like awards projects recent project to link macau to hong kong. it is 1000 miles long, and the tunnel we want is one mile. there are times when it is an event, but it is more process. david: we hear about infrastructure from president trump early on, and congress as well. there's bipartisan support for infrastructure, and the interest rates are low. are we any closer to that? the thoughts at one point in the campaign was $1 trillion for infrastructure projects. tony: at the meeting -- david: at the meeting with nancy pelosi and chuck schumer at one point, they said we will come together on a per structure. peggy: anything that has to do

with getting the democrats and republicans together, other than usmca, which was in many ways a surprise for many people that they were able to get something done, and coming into an election year 20, uncertain if they would able to get something through congress that big. yelena: in an election year, what looks a little bit more appealing to both parties is probably some sort of payroll introduction of bigger deductions in terms of state and local taxes. something like that that could be so enticing for democrats to say no to in an election year. that: but when we go to point, you go back to that point of the deficit and adding on in terms of spending and tax cuts and where you get the revenue for some of these infrastructure projects we need to do in the future. david: exactly. there is such a thing as capital investment versus an expense. if you just had a payroll tax

deduction, that is going to stimulate consumer spending, which we are not having trouble with right now at all. infrastructure spending is a capital investment. tony: about 50 million checks went out to americans for $250. where did that money go? it might've been to a meal, clothing. nothing that lasted. yelena: short-term stimulus versus longer-term issues. david: it raises longer-term issues about growth, sustained growth. we made investments in this country in the 1950's that would benefit from today. are we making those investments? yelena: absolutely not. we are making some investments into intellectual properties, so if you look at the national accounts, you see that that part of gdp is growing, but not structures, not capital expenditures. i don't see much appetite going into the next year. david: that's more on the fiscal side.

let's talk about central banks, our central bank and others. how does that underpin your theory about what is going on with bonds this year? tony: our view on the european central bank is it will leave its policy in negative territory, or at most, zero, for the next several years, probably the next five years. same for japan. united states probably also low, pressured lower by yields abroad. but central banks are reaching what could be called a monetary endpoint. they realize they can't lower interest rates more because it is going to be deleterious to the financial system. banks don't like it, and other financial institutions. this leaves them with no reason to cut rates, no motivation, no reason to raise interest rates because the economies aren't strong enough. this is part of the idea of a coupon clipping year, that there won't be changes in interest rates that relate to the central changenless, the one big

in 2020 could be central bank's deciding, here's a new idea. here's a way to get inflation to accelerate, inflation expectations. that's one of the main drivers, how people feel about inflation. if the fed could make people think inflation is coming, higher inflation rates, then perhaps that will steepen the u.s. yield curve, cause longer-term interest rates to rise, because the short rate is not going to be a reason for a rise next year. david: whether it is in europe or the united states, we have seen that central banks are really having a tough time changing expectations. are we really just suffering the scars of 2008? basically, we have a generation growing up not believing inflation is going to come? peggy: i think we underestimate the changes that came culturally and in the mindset of investors since 2008, but also, you have seen incredible expansion. we are in the 11th year of a

record economic expansion in the u.s. how long can i come on? this summer we saw the yield curve invert, and that sometimes is a signal that we can have a recession in the next 18 months, but then we see consumer spending really hold up. i think what the central banks in the fed in the u.s. are saying right now is we will hold rates steady unless we see material change, a material reassessment, which essentially means something really big would have to happen for us to make a change. yelena: i totally agree that unless there is a material change, they will will rain on hold next year -- they will remain on hold next year. we will hear a lot about different strategies, about the results of an inflation targeting review next year, the results of a dot plot review next year. these things will move the headlines, but not policy. . action. it is very unusual for the fed to change the course of policy during an election year.

so if they were staying on hold, they would remain on hold. if they were cutting, they would continue to do so. but the bar is high for them to do anything in an election year, unless something bad happens. david: if it is a coupon clipping year, what is your one piece of central advice to somebody interested in investing in bonds? tony: as peggy said, it is the 11th year of economic expansion, so heading into june, july, we think it will continue. but towards the end of the credit cycle, one doesn't want to get what we would call pure credit data. don't simply jump on the y investmentd bu grade securities, high-yield securities. ensure that what you buy are good on their own basis, they for their -- that they are liquid, resilient, and agile, to be able to take advantage of volatility. there was some volatility in

credit spreads that enabled you to purchase credit instruments at better levels than we think today are rich. so be careful, and also look for shorter maturities because again, if there is going to be any rate rise, it likely occurs at the longer end of the curve, fading slowly as the risk on duration and credit risk. so we like that area. we like mortgage backed securities as well. there's massive liquidity, $300 billion of daily volume, so that's part of the liquid idea. david: thank you so much. yelena shulyatyeva and peggy collins, really appreciate you being with us. tony crescenzi of pimco is going to be staying with us. you can find all of the charts we just used and more by running gtv on your terminal. you can browse recent features and save our charts, all by

running gtv . live from new york, this is bloomberg. ♪

viviana: this is "bloomberg daybreak." bank's around the world are unveiling the biggest round of job cuts in four years. this year, more than 50 lenders and i when -- 50 lenders announcing plans to cut jobs. european banks making up more than 80% of the cuts. morgan stanley the latest to issue pink slips. about 1500 jobs have been slashed. apple is set for its best year in a decade. it's stock is up more than 82%. that's added about $530 billion in market value. that gain is more than the market cap of all but five companies in the s&p 500 . it's been helped by

positive holiday spending. that is your bloomberg business flash. david: thanks so much. tesla is expected to start delivering china built cars on monday. it is a major milestone for elon musk's company, which is pushing to expand in the world's largest electric vehicle market. the first 15 units were assembled at tesla's new multibillion-dollar plant in shanghai. it is the first outside the united states for the company. in another boost for tesla, the company has been granted an exemption by china for a 10% purchase tax. coming up, everything is coming up rosie, except perhaps leverage loans. we hear from brian moynihan a bank of america. this is bloomberg. ♪ what are you doing back there, junior?

since we're obviously lost, i'm rescheduling my xfinity customer service appointment. ah, relax. i got this. which gps are you using anyway? a little something called instinct. been using it for years. yeah, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy...

the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. david: this is "bloomberg daybreak." strong equityart markets in particular.

futures indicate they will go even further. upn in england, the ftse is 13% despite brexit uncertainty. u.s. ten-year really not moving much. it's dipped just below 1.9%. the pound is up, a leader against the dollar, although the dollar is down premature around the world. oil as well continues to be up as we end the year. it looks like now a strong note. 2019 has been a strong year for fixed income, but some have raised concerns about the area of leverage loans. even a leader in the area such as bank of america. brian spoke with ceo moynihan just before christmas, he says his bank has been careful not to hold too much on its books, but that leverage loans could pose problems for others in the case of a downturn. brian: the actual exposure on

our books is relatively small, especially given the size of our loan book. 's have balanced company commercial concerned lending. that's how you manage risk. when you go back to the question earlier about what could go wrong, we view anything could go wrong, so you manage your risk by having diversification and thinking about the client selection. when you thick about leveraged finance, we've always been very good at business. the question is overleveraged companies tend to have problems when the world slows down. that's economics 101, or credit underwriting 101. so we have to underwrite with the right amount of debt turns and other things. you hear us get concerned when the market moves away from the traditional sort of levels that major financial institutions have further providers. it reverberates back at some

point. the real concern is there's too much leverage in certain companies, and if they have trouble with that impact the economy, that's the question on the table. you are hearing people talk value, the fund will go down in value, and that happens all the time, but is it enough of a market share that it impacts the economy? that's the concern you hear more about. david: we saw a lot of negative interest rates out there, and an awful lot debt. is it inevitable that people borrow too much? they are almost compelled to. it is most free, or better than free. they will pay you for it. brian: you always worry about the end of the day, when you go back and look at all financial crises, access leverage is the thing that usually tips them over. what has been interesting is when people are talking about the biggest asset class for consumers, the home, has been very well structured for a long time. what the economy has grown

, from $14 trillion in size, earnings power, you see the home mortgage loans total barely above what they were. they are at record levels, but in the percentage of everything you think about over 15 years ago, you can see how inflated they were. we feel that the mortgage structures are good. we feel the credit card lending structure and the prime business is good. you don't see, even though the volumes are high in the low rates allow the servicing to be lower, which is the reason why the fed keeps low rates, because it stimulates the economy, the reality is it is a question of how many debt turns. a company can have. that's why we try to keep -- how many debt turns a company can have. we are very comfortable in credit. it doesn't mean other people are

inducing -- aren't doing something different. david: that's brian moynihan, ceo of bank of america. still with us is tony crescenzi of pimco. we do hear some concern about it, even if it is not for their company in particular. tony: there's a healthy consumer sector, but some businesses might be overreaching. here is that he said there was nothing systemic. that's one way you could interpret it. there's nothing systemic you could suggest from the leveraged loan market. the could be problems related to the leveraged loan market that could exacerbate in economic downturn, but there probably wouldn't be the source of a downturn, or make it such that there would be big problems overall. it does have the idea that when you are investing, you have to be thinking about the loan market, the debt markets generally, that perhaps there is some risk in companies that would show up in a time of

stress. you want your investments to be good on a standalone basis. remember, these days, investors, because they are reaching for are negative interest rates globally, investors are starving for yield, and they are willing to say to some companies in this leveraged loan market, it's ok. you can go a little bit further than you normally would. i don't need as many protections as you normally provide, so-called covenants. you can borrow more. you can lower s and put us later in the line in terms of what moneys i would get if there is a problem in your company. it's ok. be careful of that. as an investor, you've got to be careful. the messages are, number one, yes, there's some indebtedness that could be a systemic issue. secondly, it does raise the red flag to be very careful, and to be a reminder of choosing investments that look creditworthy on a standalone

basis. don't look for pure credit beta. don't jump on the credit bandwagon in the 11th year of an economic expansion. it's a little too late in the cycle for that. david: one of the things we are seeing here is a shift not away from banks, but certainly adding to banks and who is making the big loans. we have a lot of private credit now jumping in. they are not regulated banks as much. they may have different standards, but it does put more pressure on the supply side to go find people to lend to. tony: what your interview with mr. moynahan also suggests is that he is somehow cautious in how his bank is creating loans. the system is probably in good shape. pimco favors investing and financial companies today, u.s. financials and also european bank capital securities, because, as mr. moynihan pointed out, the banks are looking to be careful about the type of credit they have. under stress tests by central

banks, banks wind up having capital levels that are above regulatory minimums, even in very dire situations, that are altiple times greater then in crisis, meaning a stock market decline of up to 50%. yet, the balance sheets of banks are in good shape. some of the lending is occurring elsewhere, but keep in mind a key rule about the money market. only banks can create new money supply out of the money the federal reserve puts into the system. . it's just the way it works. some financial institutions may be lending money that banks lend to them, but the amount of that in this postcrisis era is low. probably not a big thing to worry about, but be careful as an investor in looking at those institutions. david: when you look into 2020, where do you see the bargains when it comes to fixed income? what are things that are underpriced? interview's adjusted

one key area, the real estate investments. -- your interview suggested one key area, the real estate investments. loan ratios are low. credit worthiness of borrowers is high. there's two ways pimco has been investing, in subprime mortgages precrisis. and agency mortgage-backed securities, which yield close to investment grade securities and are highly liquid, and in a downturn, have proven to be highly resilient relative to corporate bonds, and annexed downturn, would probably ash and in the next downturn, would probably be even more resilient -- and in the next downturn, would probably be even more resilient.

david: it sounds like the theme of what you say is short dated, liquid, things like that. are you avoiding duration right now? tony: we want to be fairly neutral on duration. we think the central banks want more,er interest rate but they may do things that are unorthodox that raise inflation expectations somewhat. unorthodox? cutting interest rates when the jobless rate is at a 50 year low, and finding other ways to make investors think we are serious about raising the inflation rate. that should also make inflation protected securities relatively attractive. so yes, being liquid, resilient, and agile in a portfolio is very important. take a big fixed income book and find the little things one can

do. be active, liquid, resilient, and agile. david: you can't predict a black swan by its very nature, but as you look into 2020, where do you sort of keep your eye open for something that could come in from left field that could help or hurt? mindset couldtion be completely different than the pre-election mindset because who knows? we seen elections worldwide go different directions. in central banks doing unorthodox things to raise in place and expectations, and people beginning to think inflation is accelerating. that could change everything. emerging markets, probably not , but wetest source think that emerging markets look good to be sanguine generally. david: tony, a treat to have you with us today. that is tony crescenzi of pimco. we really appreciate you coming in.

it is time to get an update on headlines outside the business world. viviana hurtado is here was first word news. viviana: in hong kong over the christmas holiday, more than 330 people were arrested. protesters smashing store windows, police responding with teargas. police say those detained include children as young as 12. nearly 7000 people have been detained. hong kong is bracing for more disruption into the new year. in 2019, ireland issuing more than 900,000 passports, a record high. amid brexit uncertainty, applications from citizens in the u.k. surging. people with an irish grandparent or those born in northern ireland are also indicted -- also entitled to an irish passport. landslide primary victory, is really prime minister benjamin netanyahu is looking ahead. in order to stay in

office, he will need a big win in national elections. the thirdvote will be in less than a year. --ay in pakistan, at least in kazakhstan, at least 12 were killed and nearly 60 others hurt in a plane crash. because asked on has a shaky air safety -- kazakhstan has a shaky air safety record. all but one airline in kazakhstan are banned -- work were banned from flying in the eu, only lifted in 2015. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. david: coming up, the banks cut back. wall street beat is next. if you have a bloomberg terminal, check out tv .

you can watch us online, click on our charts and graphics, and interact with us directly. just go to tv on your terminal. live from new york, this is bloomberg. ♪

viviana: you're watching "bloomberg daybreak." monday, tesla will start delivering china built cars. it is a major milestone for elon musk's company, pushing to expand in the world's largest electric vehicle market. the first 15 units were assembled at china's new multibillion-dollar shanghai plant. it is the first outside the u.s., another boost for tesla, the company has been granted an exemption from a 10% purchase tax.

also in china, industrial profits rebounding in november. that those three months of declines, including a nearly 10% slump in october. it is another sign of stabilization for china's economy. a preliminary trade deal between washington and beijing early next year could help boost sentiment even further. hong kong traders cheering the news, pushing stocks to a five-month high. in 2019, rich homebuyers laying low. several factors keeping buyers away, including trade wars and next year's u.s. presidential election. taxes on the richest cities also weighed on. the 2020 forecast for sales, followed by miami and berlin. i'm viviana hurtado. that is your bloomberg business flash. david: thanks so much. we turn now to wall street beat to cover three things wall

street is buzzing about this morning. for the, banks are set biggest job cuts since 2017. then, charlie scharf has the bank under a magnifying glass, prompting executives to ponder the strategies. and china's brokerages are on a hiring spree, at least for analysts, while keeping the global trend for cutting research. with us is bloomberg's sri natarajan. when you added up over time, it's a lot of jobs. dhar: it bears repeating that technology has been injected into the veins of the financial markets, and that is was possible for a lot of the change. but it is not just technology. his lost nearly 500,000 jobs in europe, where they are facing their own challenges.

that changess happening, and it is only going to speed up over the next 10 years or so. david: deutsche bank are leading the pack. we know they have a longer-term plan to really cut back on costs, which means people, unfortunately. sridhar: and look at the kind of changes deutsche bank is making. they decided to get out of equity markets. that's a part of the market that's had the maximum amount of change because of technology, but ahead, you see what areas are ripe or further disruption, and you have to think about the fixed income market. technology hasn't made great inroads there, but that is going to happen as well. you look at somewhere like beenan sachs, who have getting into consumer banking and wealth management at the lower end of the spectrum, but think of those who have legacy operations, and the chance of some anymore jobs that could possibly be lost. david: one thing where there hasn't been wholesale change yet is wells fargo. they've had a really tough time.

the new ceo charlie scharf a mother's a fascinating piece on the bloomberg saying that he is asking a lot of questions and not letting on on what he is sinking about doing. sridhar: there's a new sheriff in town, and that town has gone through a lot of strife. they have to try and win back the trust of regulators, lawmakers, and their customers, but this is an $86 billion operation. large investments don't turn corners easily, so you have to give the new ceo some time to settle in. charles scharf comes by way of visa, bny mellon. he brought an executive from bank of santander as his chief operating officer, and bill bailey. david: former chief of staff to president clinton. sridhar: former chief of staff to president obama. david: in the meantime, some banks are hiring, and they are in china.

, wheres, research people they are on a hiring spree. sridhar: it is fascinating, purely because it goes against the grain of what we are seeing everywhere else. the growth in the chinese capital market, we have to assume it is very early stages. they are keen on opening up by next year to make greater inroads into the chinese economy. it is interesting how they are seeing growth there, but look at the factors responsible for it. you are seeing a lot of foreign fund inflows. you are seeing a growth in stock issuance. . they are also keen on creating invest in banks that can possibly in the years ahead rival some of the global players, and that would be very interesting to track. david: you make a very interesting point, be careful what you wish for. we wanted those capital markets to open in china. if they open up, the chinese banks may actually dominate them. sridhar: well, maybe not. right now they have about 130 securities firms.

the large commercial banks like icbc. but when you look at investment banks, their entire balance sheet is worth that of one goldman sachs. you have a full-service tommaso there's a good chance international banks come in and eat -- investment bank, so there's a good chance that international banks come in and eat their lunch. david: thank you to bloomberg's sri not a russian. a michigan woman -- sri natarajan. surprisen woman got a in her gift exchange when she found out a gift was from bill gates. her gift box weighed a whopping books,ds and contained and original manuscript copy of

"the great gatsby," and a donation to the american heart association made in honor of her late mother. coming up here, the fed is pumping billions of dollars into the market in today's trader's take. we are going to take a look at what this means for positioning in 2020. live from new york, this is bloomberg. ♪

david: time now for our trader's take. joining me is bloomberg's alex harris. there's a lot of talk about repo late in the year, so what do you have for us? alex: i have a chart showing how much the fed has injected, somewhere around $240 billion. this is all going to go, and that is really what the concern is of the market. what happens when the fed pulls this temporary liquidity out of the repo market?

right now, the fed funds rate is sitting at 1.55%. people are wondering what happens when this goes away because they are still rebuilding those permanent level of reserves, so this is what people are really going to be watching, what happens when we remove those. david: do they really need it? i understand the repo limit is still under subscribed. alex: the fed, i believe, is trying to be over prepared. this is very much a credibility issue for them. i believe when september rolls around, they were kind of caught flat footed and the market really dinged them for it. they are trying to make sure they have enough and they are well prepared going into year end. i think they are happy to see it oversubscribed, but we won't know how bad the end of the year is. david: is there a crunch at the end of the year? alex: there usually is. you try and understand where balance sheet scarcity is, and the only way you get that is by talking to the banks.

the other thing is you have other repo market participants that come in for last-minute funding. there's a miscalculation and they end up needing a bit more and don't already have it. the other thing is you have treasury auction settlements. when you push all of that collateral into the market, that tends to push repo rates up as well, so you have a few things that could weigh on the markets on december 31. david: we will look forward to that. many thanks to bloomberg's alex harris. coming up, we take the pulse of the globe looks funny -- of the global economy. we will speak to michael gapen of barclays. live from new york, this is bloomberg. ♪

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equity markets hit new highs with broad support across almost all the sectors. tech leads the way, with amazon breaking its own holiday sales record and apple on its way to adding over $500 billion in market cap in this year alone. and breaking up is still hard to do. europe is reportedly threatening the city of london in brexit negotiations, and the eu says boris johnson shouldn't count on resolving things in the new year. welcome now to "bloomberg daybreak" on this friday, december 27. steel.id westin, in alix the markets have been on a tear. that u.s.dicate equities will go up again. the nasdaq up over 9000 now. futures up still further. in the meantime, the 10 year u.s. bond is really unchanged, down to just below 1.9% on the yield. the british pound is up on the west dollar, but it is not alone. the u.s. dollar is generally weaker against all of the

various currencies. joining me now for the entire hour is romaine bostick, cohost -- of "what'dmiss you miss." the equity markets are going gangbusters. romaine: the narrative continues to be that investors are continuing to buy into the market or some of the long-term narratives. about a year ago, when we had that low on christmas eve back in 2018. ralliedk about it, we to the record high we hit in april, and since then, we hit something like 30 plus record highs on the s&p 500. so you have a market that continues to believe the trade narrative is getting better, the economic narrative is getting better. at some point, they think the fundamentals of some of the corporate profits are going to get better. all of that is underpinning some things -- what some think is

going to be a record 2020. -- so you are not going to protect when he 5% predict 25% gains? gapen,bring in michael barclays chief u.s. economist, and michael antonelli, bayard market strategist -- baird market strategist. is this sustainable? >> it is, but to the point we made a moment ago, it looks like growth is stabilizing. it will be interesting to see whether or not that corporate profitability shows through, and whether prices can follow, or this is a multiple expansion. if it is about multiples, the more constrained over time it will be. romaine: how concerned are you

that the fundament of backdrop isn't as strong as some people think it can be? >> i think the idea here is everybody's modal expectation has been realized. we didn't expect these downside risks to materialize. to me, it is more about distributions. a verywere skewed in conservative way as we came into year end, but we got clarity on four fronts. u.s.-china trade, usmca come of the budget deal, the u.k. vote. now the questions are tilting in the other direction. do we get inflation? if so, when? if the fed is on the sideline, how do i position for that? equity markets and risk assets have floated higher. fundamental underlying growth that is sustainable on one hand, or do we stop beating our head against the wall so it feels good, whether it is u.s.-china trade or brexit?

is there relief from pain, or is it fundament to underlying growth? michael a: relief from pain would be my bet. markets trade on better or worse, not good news or bad news, in the short term. things got better as 2019 went on. i want to go back to this notion that the u.s. economy is either slowing dramatically or growing dramatically because both of those have been essentially wrong. the best theory of economic growth over the past decade has been this notion of muddle through, that the economy can continue to muddle through with a low unemployment rate, 2% to 3% growth. those are sufficient for the stock market. those are sufficient for companies to continue to expand profits. people who have been trying to pick either way have been wrong, where ultimately, the u.s. economy is fine as it muddle through these issues. romaine: michael antonelli, when you about that aspect of it, is

some of the positive sentiment that we have here in the u.s., is that more a reflection of the fact that things weren't necessarily good? it is just more that the relative value people had for the u.s. versus the rest of the world, and is that going to continue into 2020? michael a: i think it does. the u.s. consumer at many times in history literally holds the world on its shoulders. the u.s. consumer in 2019 once again held the world on its shoulders and said, i have a job. i am confident about my pay. my wages are increasing. i have a home i investing in. i think the consumer ultimately held its flashlight out and walked ahead and pulled the u.s. through the darkness. yes, we are just relatively better. think of the makeup of our stockmarket. the tech companies that dominated this past decade are all u.s.-based. everything structurally for the u.s. worked this decade, and i think that continues.

david: michael gapen, focusing on the u.s. consumer, is that because job growth is there, and real wage growth as well, including at the lower levels? is that what is driving the u.s. consumer, or is it just pure sentiment? michael g: i think it is low labor market. it is employment, and the income that generates, and the comfort of knowing that your employment prospects look good. i would also add on the fact that the savings rate is elevated, so there's room for the consumer to draw on if we do get some downdraft of any kind. asset position is quite strong. if there is a potential cloud on , do credit standards start to tighten, there's a number of factors on the consumer. support?what about fed

the general consensus is they do nothing in 2020. is that going to be enough? i think so. certainly, their preference would be to stay on the sideline as long as possible. they have a review of their framework. romaine: i think the president wants something a little different. michael g: and in the second half of the year, the election will be a little more paramount. i think they would like to stay on the sideline and see with the world looks like in 2021. i think that is the right view. david: what about the central back support not just in the united states, but in europe as well? there's a lot of liquidity that has been pumped into the international market. michael a: that's right. one of my favorite charts this the world country indices against how many central-bank moves were an ease. so if the last move was an ease, it tends to go up. 80%.number reach 70% to

central bank's around the world have been very supportive. honestly, can you think of a year where don't fight the fed mattered more than 2019? that age-old kind of phrase just reared its head this year, not only in the u.s., but around the world. i think that is not going to change in 2020. david:david: to pick up on that point, it is change that drives markets. looking into 2020, there's a bloomberg piece right now that suggests we will not see the same move toward easing by central bank's around the world come with some exceptions. by and large, people will be holding pat. michael a: we've reached our cruising out two. will there be turbulence along the way -- cruising altitude. will there be turbulence along the way? i think people expect turbulence, maybe even in the start of the year. without the fed cutting come up with central banks in watch mode, we will certainly be prone to some bumps along the way, but

i think the fed stands by, ready to help assist. that is important. their tone, the way they view the world, the fact that we are not going to hike until we see real inflation, that is a meaningful change from the past. that backdrop i think is what is up a littlep goose more along the way. romaine: the sentiment on the equity side, this is a little bit offset or may be matched by a lot of buying we are still seeing in treasuries, by and we are seeing in have currencies, buying in gold. -- buying in haven currencies, buying in gold. how much do you see that if the federal funds rate doesn't move much? michael g: the way would look at it is that is just balancing out your risk exposure. it is a bit of a barbell strategy. if we get a hick up, the fed does have at least a little more to do. holding something in the front ,nd of the treasury market

something closer to the front end of the curve that would respond to fed easing should things slow. it provides nice balance for the risk position. broadly speaking, it is going to be hard to repeat the year they had in 2019, which is why we would prefer equities over fixed income at this point, but a blend of the two certainly gives you good risk weighting. david: when you pump money into a system by and large, it encourages bad decisions somewhere along the way. where might would be exposed to some of those bad decisions? when money is that cheap, people typically spend it in not good ways. michael g: the concern, and you hear this from some on the federal reserve, is that financial stability concern. they would point to issues in the leverage loan market, debt markets more broadly, and are we feeling the next asset price bubble. there are concerns on the

leverage side. most people look at that and say difficult to see that that is systemic at this point. it is probably not. probably not the trigger for a downturn, but it certainly could propagate one if you had it. that is probably on the leverage side of the equation, too. of barclaysel gapen and michael antonelli of baird will be staying with us. --ing up, we ask whether continues into 2020. that's coming up next. this is bloomberg. ♪

david: the markets are ending on an up note, but at times this year it has been touch and go, with fears of slowing global growth and of an inverted yield curve. still with us is michael gapen of barclays and michael antonelli from baird out in milwaukee. we have had softening manufacturing, softening trade at various times. on the other hand, the consumer has been stepping up. do we see more of that tug and pull going into 2020? michael a: i certainly think so. isber one, manufacturing officially not the portion of the economy it was in the past. number two, let's remember that the great stockmarket rally's of all time, if you think about the 1950's or 1990's, they aren't done on amazing news and ridiculous a really great -- and ridiculously great fundamentals. the trade war might have been kind of good for stocks because it kept the wall of worry in

place. i dusek many fracturing will improve. -- i do think manufacturing will improve. i think the market is looking towards manufacturing to be improved, yet the transports still haven't recovered their all-time highs, so the worry is still there. but we kind of do want some worry to be with us. we don't want this all to go away. romaine: michael gapen, when you hear that idea and look at manufacturing and some of the bumps we've had in the u.s., i guess the question is twofold. how much is the current u.s. manufacturing malaise tied to what is going on globally, and can the u.s. work itself out of that hole without being intended with the rest of the world? michael a: i think a lot of it is. it is only about 12% of the economy, so sometimes we may over read its importance, but it is a sector that has the highest global content. the fact that global growth last year was decelerating, that we

were putting tariffs into place, it was mucking things up and slowing things down. i think it is highly correlated to the global growth cycle. romaine: what does that mean with regards to a trade deal, which we still haven't signed? we are heading into an election year were a lot of folks think trade could end up being a political pawn by both sides. does that create -- does that forestall any rebound in the manufacturing economy here? michael g: for us, it means you get a modest dip in business spending. this misspending has contracted for two straight quarters. it is likely to do so again -- business spending has contracted for two straight quarters. it is likely due to do so again. therade some uncertainty on trade front for potential uncertainty.

so we don't expect a big rebound, but we would be surprised if business spending continues to contract. if it does, the labor market is at risk at some point in time. we do think it rebounds in a way that says you get nonresidential fixed investment in the 3% range next year, about half as strong as it would have been in the early stages of the recovery, but certainly not in decline. david: michael antonelli, do we need to see a change in 2020 into our three different respects to keep things going? ande are trade going back forth, capital investments from activity up, and on the demographics, a turnaround in the developed world. michael a: demographics, if you look at the united states, are really good. the fact that the millennial generation being the biggest, big asn x, are twice as the baby boomer generation. so the demographics are still really good. my friend from fundstrat will say millennial generation will

boost the stock market over the next decade or so because they are coming into their prime working and earning and homebuying years. i am kind of a proponent of that theory. if we think about trade, remember, we don't need trade to be solved. my theory is that trade, the trade war with china is just cold war 2.0. it wasn't anything that was ever going to be solved with a deal. you just needed time to go by, and he needed the two nations to feel each other out. i don't think the trade war is going away anytime soon, but it got better, and the market really cares about that. as for the manufacturing data, i agree. i think it will get anchor limply better next week -- i think it will get incrementally better next week. david: you look at imf numbers, the growth rate of trade is slowing down, and it is not just u.s.-china or even just u.s. there's all sorts of trade disputes around the world. michael g: politically, there's

been a pickup in nationalism, so a fragmentation of the economy is leading to a reduction in global trade volumes. yes, it's not just u.s.-china. it's happening on multiple fronts. i think we are in for a prolonged period for the foreseeable future were trade volumes are likely to continue to slow. romaine: do you think that people, investors, pay too much attention to the political back-and-forth at the expense of maybe just focusing in on what normally matters for markets? yes, in general, but in this specific case, tariffs do matter. there are some fundamental things economists are good at, and if you make something more expensive, you will get less of it. the direction that tariffs were going i think was the problem, and i think markets were right to focus on that. i agree what we are likely to get in the phase one isn't going

to solve it, but for the moment, it calls a cease fire, and markets are reacting to that. , more let me push on broadly, we have an election year coming up. do you think there is risk, upside or downside risk, in november or 2020? michael a: markets don't necessarily care about politics. markets care about policies. certainly the election and election years typically have a volatile first and second quarter leading up to the election. from what i understand, a u.s. incumbent president has not lost a reelection with unemployment below 7.5%. but if a democrat or market unfriendly policies start to appear to have a higher pop ability of being enacted, the market will worry about that. wallwould be some sort of

street tax or some sort of view on capitalism in general. it is about the policies, and what are the odds of those policies being enacted. that is what the market will worry about. right now, i think the market is viewing the incumbent as the favorite, so you don't get much concern around the election as we are starting the year. david: thank you so much to michael gapen of barclays and michael antonelli of baird. they are both staying with us. coming up, boeing continues to struggle. what could this one company mean for the u.s. economy overall? this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." board.ing softbank's he founded the fashion chain

uniqlo. maxhe wake of the 737 crisis, another high-ranking boeing executive is stepping down. the plane maker says michael letting is retiring at the end of this year. he served as boeing's general counsel, but in may is reassigned to advise dennis muilenburg and the board on matters related to two deadly max crashes. next month, david calhoun will replace dennis muilenburg. david: thanks so much. boeing has stopped production of its 737 max, fired it ceo, and put off calls on return vacation from railing -- on recertification from regulators. michael gapen of barclays is still with us, and has a view on that subject. michael g: that's right. obviously the halting of production is going to slow manufacturing data. we have been talking about will

manufacturing bottom, what evidence we are seeing of that. this, like the gm auto strike, will be something that muddies the water. as it pertains to boeing, the cessation of production, if it is on hold for the whole quarter, could shave at least 0.5% off of gdp growth. romaine: wow. so far, though, boeing has said they will keep those workers around. they will still get paid. is there any risk if this drags on past the first we could see those workers without work? michael g: what we were looking at is the direct effect. if you halt production, what is the direct effect on growth? that as people, who know the boeing production process, it is highly fine-tuned and precisely timed, so we think the longer the shutdown goes on, the more you will have downstream effects on suppliers.

those numbers could get you even closer to 1% of gdp. if it goes pasty first quarter, certainly would think downstream effects will be there. you would expected to start showing up in employment and other areas, so we think, again, if it is shut down for the whole quarter, you are looking at at least 0.5% off of growth, may be something closer to 1%. david: it is a big problem. michael gapen of barclays will be staying with us. coming up come of the leaders of the financial and business world called for a new approach in the year. what that could mean for investors, and what extent they are driving the push. we will talk about that next. this is bloomberg. ♪

♪ david: this is "bloomberg daybreak." i am david westin in for alix steel. let's take a look at the markets. we are looking at futures.

dow jones, s&p and nasdaq pointed upward today. e know the nasdaq was upward 9000. in the meantime, the ft is se is up. they're up about 13% for the year. we have the 10-year, the yield is under 1.9%. we have the pound leading the way against the u.s. dollar. a lot of currencies are up against the dollar. the dollar is softening. we have crude oil also continuing to rise. let's talk about one of the things that happened this year that was important. we heard from jamie diamond and other leaders about the need for capitalists to rethink their model. to take an expanded view of their priorities and which stakeholders they need to serve. among those doing this work is brian moynihan, c.e.o. of bank of america. he told me about the initiative when i sat down with him just before christmas. brian: when i define how we

operate, it's basically what we all the genius of the end. you have to produce for your customers and shareholders. and you have to produce for society because if you don't, i won't be sitting here because i've got to deliver, the team has to deliver all those things. that's the way we think about the company. can we do both, what our customers need us for, returns are second to none, get more capital, bring our customer experience up there, and do the volunteer work and charity work and investment in housing work we do and drive the whole company toward these goals? that's how we think about the company. it's really a stakeholder view of capitalism. to think 's -- he had about society, not just share

return. what the business roundtable did with josh and jamie and alex and others is basically modernize our statement because quite frankly, most of the people running the company this way, when you talked about it, people said your biggest business group -- statement says shareholder maximizeation is the only thing to think about. in 1996 we modernize the way people rup the companies. they perform well. so it's not an excuse to try do something else. it's a modification of capitalism and the discussion about it, but it's a trend that's been going on for years and in our particular industry, i remember writing my first future plan in 1993, somebody chastised me because i didn't talk about the community. i was -- wait a second, shareholders, customers, teammates, what do you mean? they said you have to remember, a bank has a special role. the bank city has been part of

-- industry has been part of this for a long time. david: still with us is michael antonelli of baird and michael gapen of barclays. michael antonelli, let me start with you. we hear a lot about this, not just from the top down, from the c.e.o. to his or her organization, but also we hear about it for investors, that they are responding they say to what investors are demanding increasingly. do you see that? is it changing investment patterns? michael a.: yeah, by the way i love this trend. i think the days of just caring about shareholders and profits are over. i say with investors all the time coast to coast talking about the markets, at its heart this notion of shareholder capitalism is e.s.g. i've sat with clients and said i don't want to invest in companies that aren't good members of the community. make me a basket of stocks with good leaders, e.s.g. friendly, good parts of the community who care more than just about its profit and shareholders.

so this is a great trend. it's a very popular trend, certainly among younger investors, but also older investors. i have seen all sorts of people come to me and say i want to invest in companies that are good corporate citizens. that's a great trend. this is a trend that should be wholly embraced, not just by companies but by investors. i am a big proponent of it and so is baird. david: michael gapen, when the business community made that declaration, a bunch of bloomberg correspondents tried to talk to the companies. only 10 were willing to talk about it on the record. when we talk about embracing this trend, is there enough buy-ins? we have a couple c.e.o.'s that are vocal about it but there are so many that are completely silent about it. michael g.: i would say yes, you are getting the early stages of buy-in. there are always first movers, so somebody has to move and demonstrate the ability of how you do it.

it may also just be some c.e.o.'s and leaders don't want to front run their board and it should be a group decision in that regard. but i think it's the right direction of travel, particularly in a world where we are dealing with global climate change and other issues where the externalities of what we do day to day are becoming more apparent. david: michael gapen, as an economist, don't have to -- don't you have to measure it? unless you have some generally accepted standards by which we know whether you are complying or not, are we going to make progress? michael g.: typically -- right, the more you can measure it, the more you can identify, here are the steps we are doing and here are the effects we think it's having. that would be one way to do it. that's one of the difficulties, right, to identify what we do individually as a firm and how that creates a meaningful effect that we can say see, that's what we want.

david: michael antonelli, back out to you here. you had the great reference there, the paper -- iconic movie scene where you had one or two people standing up demanding these changes. when you hear from clients and you talk to investors out there, are they really willing to sort of -- i don't want to call it a tradeoff, but really sort of make it clear that they want these types of progress made even if that means that there might be some sort of loss in profit? michael a.: yeah, when you think about how you would implement something like this, certainly you could say we only want to invest in companies that are acting as good corporate citizens, but really when you think about what people want going forward -- we at baird think about this all the time -- this notion of kind of a values-based wealth management or values-based investing. you are right, it's difficult to implement. it's difficult to tell whether companies are doing it, but investors are demanding new things from their -- not only

their investment advisors but from the market itself. it's going to take time for that to work through. this is a new notion, e.s.g., being a good corporate citizen. sure, it will take time. yes, it's being demanded. we are going to need it. romaine: there are some people that have criticized this movement from the corporate side and said this really isn't a failure of corporations or even of capitalism. this is a failure of the government to do its job in ensuring that capitalism works for everyone or works in an equitable fashion. how do you respond to that? michael a.: i think they're framing the question wrong. it's not government's responsibility to make sure everything is an even playing field. what corporations should be taking the lead on being better corporate citizens. that starts from the bottom, giving workers time off all the way to the top, being good citizens of the world. it's on the corporation to do that themselves. i don't think we want the government to be mandating that. i think the best companies will start to be rewarded with higher

multiples, the ones that are engaging in these processes will be rewarded by investors over time. david: is that right, michael gapen? wouldn't the companies go there anyway and going back to your background in economics, how much of this is an externality problem? the costs are not borne by the company themselves. it's borne by somebody else. unless the government makes them bear the cost, they won't change. michael g.: being a good corporate citizen means you follow the rules. you don't skirt the rules. there is no extermity on that. you don't need the government to mandate that. that's a culture across the firm. but in terms of the second part of it, externality part of it, that's the problem. you can look at this on global climate change or u.s.-china trade. the u.s. government is saying it's the dual use technology of the future that's causing us the most concern. if you leave that up to the individual firm, the profit motive will dominate.

they'll say ok, a little intellectual property theft is fine. transfer of technology is fine because the profit motive dominates. they don't react to the security canls. the externality is where the government can play an important role. but good corporate citizenship, follow the rules, do the right thing, i think that's up to the individual firm and i agree with michael, you don't need the government to mandate that. you just have to want to do it. david: michael gapen of barclays and michael antonelli of baird, thank you both for being with us today. it's time to get an update on what's making headlines. for that we turn to viviana hurtado. viviana: the transition period for the u.k.'s exit from the european union may take longer than originally thought. the european commission president held a french newspaper, she's worried by how little time is left. boris johnson is pushing for a long-term trade deal to be wrapped up by the end of 2020. von der leyen says that's

optimistic. days after the japanese prime minister and sourk president met at a summit in china, the two leaders agreed to tone down their feud. but they made little progress in resolving disputes. the icy relationship is hurting tourism, trade and security relations between these two nations. in india violent protests continue. today paramilitary and police forces were deployed in the majority districts. officials shutting down the internet, nearly two dozen people have been killed. 1,000 arrested in the demonstrations. protesters are calling for the revocation of a new sit is zenship law -- citizen law. it excludes muslims. powered by more than 2,700 journalists and analysts. i am viviana hurtado. david: thank you.

why the beverage industry could see above average sales growth next year, that's next in today's bottom line. bloomberg users can interact with the charts shown to, catch up on key analysis and save charts for future reference. this is bloomberg. ♪

♪ viviana: you are watching "bloomberg daybreak." on monday tesla will start developing china built cars. it's a major milestone for the company. it's pushing to expand in the world's largest electric vehicle

market. the first units were assembled at tesla's new shanghai plant. it's the first outside the u.s. the company has been granted an exemption from a 10% purchase tax. in china, industrial profits rebounding in november. that follows three months of decline, including a nearly 10% sump in october. it's another sign of stabilization for china's economy. a preliminary trade deal between washington and beijing early next year could help boost sentiment even further. hong kong traders cheering the news. they're pushing stocks to a five-month high. laying low.e buyers several factors keeping them away is next year's u.s. presidential election. taxes on the rich in cities such as vancouver and new york also weighing on sales. next year global property consultants expect things to pick up. paris leading the agency's forecast for sales followed by

miami, florida, and berlin. i'm viviana hurtado. david: thank you. it's time for the bottom line. this is where we look at three companies. i am watching boeing. maybe not for the reason you might think. there was one announcement made, the former general counsel stepped down. for those of you who don't know, michael is a true superstar as a lawyer, clerk for justice scalia, really surprised that he stepped down because it was thought he would considered for the supreme court. but now at the age of 65, he is stepping down perhaps because of his age, perhaps tied up with all the problems they're having in the change in the c.e.o. there. romaine: david, i am watching tesla. viviana mentioned it. rolling off the first car out of china. they broke ground on this plant this year. so the turnaround to get a full plant that makes cars up and running -- the devil will be in the details as to how they're

going to price it. roughly around $50,000. some folks think because labor costs are a little lower versus in the u.s. where they build here in california, that they'll have a bigger profit margin. investors love it. the shares have more than doubled since june. it looks like today they're going to open at another record high. david: if that weren't enough, china is giving a tax break. ok. for the third story, we are looking at the beverage industry overall. joining us now from princeton is ken shea, bloomberg's senior food and drink analyst. welcome. good to have you with us. give us a sense how the beverage industry did this year in terms of stock price. ken: hi, david. happy holidays. the beverage industry this year had a typical year in terms of sales and profits, high single digit profit numbers in the broad category of global beverages. it was driven mainly by companies that did a good job in

expanding their presence in vibrant categories. no surprise. examples are boston beer, with truly spiked seltzer. surprised everybody but did really well. some of the other categories, monster beverage did really well, expanded their share in the u.s., expanded aggressively internationally. those are some of the stories that led. some stories that didn't go so well are companies with legacy type products, that mass produce popular bills like miller and coors and lacroix was punished by more competition in the nonspike seltzer category. david: ken, go back to the hard seltzer. i am not sure what this winter was, but do we think that's going to have staying power as far as it being a trend, a fad? is it sustained power? will we see people drinking this next summer? ken: i really do think this

category has legs. it really taps into the demand by consumers for things like clean labels, simple ingredients, and i think a key trend in 2020 will be a continuation of low calorie. it's been around for a while, but those are all things that are really coming together and giving that category a boost. david: not to be a cynic here, but aren't the things that are doing well tend to be more small niche products rather than the big guys like budweiser? can they make up for the overall sector? ken: it's funny. that category seems to be a great testing ground. it did really well for a while. last year it exploded. now you are seeing big companies like anheuser-busch and coors jump into the category. clearly it will make things more competitive. it will raise the stakes in terms of innovation by the boston beers of the world. that will make the industry exciting in terms of some new

ingredients that are around the corner. romaine: ken, one of the stories for 2019 was the rise of c.b.d., awareness about it. there were a lot of beverage companies that either intimated or made plans to start adding it to their beverages. constellation brands had the deal with canopy, but yesterday we heard coca-cola come out and say we have no plans to get into the c.b.d. market. and look at c.b.d., t.h.c., as products that will be infused in beverages during the year by small companies, but not by the big players. it's not just a reputational risk that the coca-colas of the world would take by jumping into that category. it's not proven to be a product of high demand. i think we will see in canada starting early next year what kind of demand there is for these products. there's been a lot of talk about

cannabis 2.0 in canada, where the products will be proliferating. i think a lot of beverage companies will look up north to see how popular they will be. david: ken, finally, looking into 2020, give us one company that we should be watching as perhaps a bellwether about how the beverage industry overall is going to do. ken: i would look at constellation brands. they've been shedding low margin, nonstrategic brands, still in the process of selling them and they're looking for ys to expand upon the fast growth for modello. its decision to expand from that will be telling in terms of where it sees the next big thing. it's made a stake in canada, but in terms of beverages it will be interesting to see where they're going to place their bets. david: ken shea of bloomberg intelligence. thanks also to romaine bostic who despite his best intentions

stayed with us for the entire hour. romaine: anytime. david: great to have you with us. coming up will the tech bull market continue in 2020? we discuss that next in today' technically speaking. if you are heading out tune into bloomberg radio heard across the united states on channel 119. live from new york, this is bloomberg. ♪

♪ david: time for technically speaking. abigail joins us now. surprise, surprise, it's tech. >> this year is all about tech. microsoft is up 56%, best year since 2009. what makes microsoft really remarkable, in 2018 when most stocks got decimated by the fourth quarter sell-off, microsoft is up. look at the beautiful uptrend the last two years. the buyers are very much in control. but right now you are talking

about overbought conditions. this stock looks overextended. once it gets 20% above that, 200 day moving average, something that tells you the buyers are in control over the long term, it tends to consolidate a little bit. david: it may be overbought. take it back further. this is an old school tech but it reinvented itself. it became a cloud company. abigail: you are right. that cloud everybody really likes. that's a big piece of the uptrend. where we don't have a record high on the year, lots of record highs for microsoft. if we take a look at the banks, it's a bit of a different picture. everybody talks about the fang being the big engine, ongoing bull market. the last couple years, a beautiful uptrend into 2018 and the nerves around the big tech could be regulated, take a look. the fangs have the not put in an all-time high, not much more so than 2018.

however, there is something bullish. that is the fact that the rising 200 week moving average, the fact you have higher lows, that tells you on each dip the buyers are willing to buy a little higher. you could see the range break out to the upside. david: i would not have predicted that. abigail: i agree, it is surprising these big names everybody thinks of as the engine of this bull market, they've been lagging a little bit. facebook in particular, netflix has had had a difficult time. last record high for netflix back in may. 2020, they have their work cut out for them. david: could have a tricky year in store for them with all the streaming services, they have competition. abigail: good point. perhaps we won't see new all-time highs. the big question though is the nasdaq, take a look at a long-terl chart. this originally came to us from walter zimmerman of icap tech. take a look at the three bull markets to bear markets.

back in 1999, yesterday we were talking about trends. example. great look after the long term capital crisis. big bear market, same thing in the last bull market. this year -- or this decade, it's a decade long bull market, something that gives you caution is the fact that how long it's going. on the other hand, look how it's breaking above the consolidation. david: fascinating. thanks so much to abigail doolittle. that does it for "bloomberg daybreak." michael hans is coming up 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! >> the countdown to the open starts right now. ♪

star clt: the stock market avoids a 15% sell-off that haunted december last year with a buy everything rally. so now what? corporate bonds on track for their best returns in a decade. what will it take to keep the rally going into the new year? plus a roller coaster year for i.p.o.'s. a look at the best and worst we are formers and -- performers and what is to come in 2020. 30 minutes until the opening bell this morning. are you looking at futures pointing to a higher open. at this point any gain would mean a new record high for major indexes. the nasdaq closing above 9000 for the first time ever. euro dollar moving higher. the dollar weaker for a second day. he 10 year yield ticks down,.18%. crude adds to its gain, up .2% at 61.80 a barrel. we begin with a big