shanghai with plans to wrap up, fast. so much for secrecy, president trump identifies the alleged whistleblower, did his retweet break the law. equities take a breath. bonds sell off. the yield curve steepens. welcome to bloomberg daybreak on monday, december 30, i'm david westin in for alix steel today. get you caught up "on the markets." start with equities. going to the end of the year. are we going to break the records? s&p up slightly. that's come off where it was. nasdaq is in the red a little, flirting with the red. meantime, take a look at europe stocks -- the stocks sold off over in europe. the u.s. 10 year has been selling off. the yield curve is going up. the dollar is weaker once again. the british pound is leading in the charge. but it's down against all the g-10 currencies. time for the global exchange

where we bring you today's market moving news from around the world. from hong kong to beijing to london to washington our bloomberg voices are on the ground with this morning's top stories. start right now with hong kong with the city's financial chief said the economy's set to contract in fourth quarter. jeff joins us from hong kong on the telephonement welcome. give us an update where we are. and how the economy's doing there. jeff: good morning to you. the economy is hoping to see some kind of stabilization in the coming weeks. but the damage has already been done in the third and fourth quarters this year. we have only just seen a relative easing in the protests. but we are a long way from having an all clear or any kind of resolution to the political standoff. that means that the tourists and the spending that are the core

of this economy, they are not going to return soon. we may see stabilization but it will be lower levels. david: thank you so much. jeff black reporting from hong kong. stay over in asia, tesla delivers its first china built cars in a milestone. 15 see dance were handed over to employees at the shanghai plant earlier today. we are joined from beijing. welcome. >> yes, 15 very lucky employees got the first model see dance it at the shanghai plant. this is symbolic because it's the first car manufacturing plant outside the united states. china's foreign-owned car plant. what this shows is how quickly things have moved for tesla in china when it comes to getting the necessary permits and production. this plant is already producing more than 1,000 cars a week. that means the facility has met

a target set in april. they wanted to make 3,000 cars a week. his is a cornerstone of elon musk's plan. he has plans for a factory in europe. when it comes to china, it has clearly paid off. they are going to be on a list of vehicles qualifying for the exemption from the 10% purchase tax. but the environment is quite challenging for at the la -- tesla. even electric vehicle sales has been scaling back subsidies and face stiff competition from local players and international players like audi, bmw. all trying to get a slice of the world's largest auto and electric vehicle market. david: thank you. that's selina hwang in beijing.

from china to spain. acting prime minister pedro sanchez is set to take a second term in office. for more charles joins us. they are finally going to get a government. it's been a while. charles: that's right. the pieces of the political jigsaw here in spain seem to be finally coming together. so that pedro sanchez may be able to we think quite soon put together a new government. as you mentioned he needs the separatista cataline party whose 13 deputies are key for sanchez. as i say one of the latest things that's happened is that the spanish state lawyer or state legal department has said that it thinks that the leader, who was jailed in october for his part in an illegal attempt

to break away from spain in 2017, they said that they think that he should be allowed to pick up his credentials as a member of the european parliament. that's a gesture to the catalan separatist party that may allow this agreement to go ahead and may allow sanchez to stay on in his role. david: a big step forward for spain. thank you so much. to london now. the e.u.'s trade commissioner says the u.k. is likely to drop its opposition to extending the brexit transition period. the labour party is considering a new leader after corbin's election defeat. we have this battle going on for leadership of the labour party. do we have a frontrunner? >> the frontrunner is rebecca, a favorite of the current leadership. she's the party's business spokeswoman at the moment. she laid out her pitch in a

newspaper last night. she's calling for what she calls a progressive patriotism as she tries to win back support that lay bour something lost in this month's general election. the way this leadership battle is shaping up is, how far candidates want to move away from what the current leader stood for. that's the sort of dilemma going on within labour. david: thanks very much. we come back to washington. president trump is facing criticism after retweeting the alleged identity of the whistleblower. our chief washington correspondent joins us from the white house. there's quite a storm. not just the democrats. some republicans have pause about what the president did here. >> precisely. many republicans waking up this morning to uneasiness president trump's decision to retweet and

then tweet the identity of the whistleblower. regarding that phone call in july with president trump and ukraine president zelensky. twitter for its part blaming and outage, get this, an outage for the reason being why many of the president's 68 million followers on twitter were unable for a period of time to even see that tweet. they are blaming an outage. they put out in a statement that said that any personal information would be in violation of its rules and standards. however, naming an individual is not considered private information. so big tech silicon valley once again wrapped up in the president's personal twitter account. meanwhile, this comes at a time in which the impeachment trial still no development when that will start. again many republicans, including senator john kennedy, a republican representing louisiana speaking out over the weekend saying they would not be bothered if the president spept a little less time on twitter. david: i suspect we haven't

heard the last of that story. many thanks, kevin. we are in the midst of the biggest commodities rally in more than a year now. the bloomberg commodities spot index is now at its highest level since november of 2018. and analysts point to several reasons trade tensions are easing, there is a risk on mood in the market, and the dollar is losing strength. plus, the economy is picking up in china. that's the world's top user of raw materials. the rally iset pretty broad based. oil is up some 30% with opec and its allies pressing on with supply cuts. and copper has surged well beyond the $6,000 a ton range. global stockpiles as the metals have fallen. coming up here, we'll have more on your morning trade and analysis of the markets in today's first take. this is bloomberg. ♪ ♪

david: now to bloomberg's first take. we give you the news and you get the trade and nalcies of the packers. re to discuss is vincent signoreli. peter coy, the economics editor, and sylvia jablonski, managing director of capital markets. welcome all. quite a year. we had in 2019. sylvia: december is looking to be merry christmas, happy hawn caw, whatever it is you celebrate. the markets at all time highs across all three indices. an epic rally for almost every class particularly equities. the investors that got off the sidelines came into the market where we are wrpt this year.

david: vincent, were you a trader. how do you position yourself going into the holidays? vincent: it's interesting because you are being at the highs. no one wants to buy at the top. how you play this going into next year is challenging. i would imagine a lot of traders are stepping away from this. you don't want to carry the position going into january, immediately marked against you, if the market decides to take a down turn the first couple weeks in january. better to be nimnimble about this. i don't think people on the trading community are positioned strongly. david: what about the investment commute? what in the economy will justify what we have now. particularly earnings? peter: the economic conditions underlying are still strong and that's big reasons driving the markets. we have low unemployment, reasonable economic growth, and a lot of liquidity provided by the federal reserve. but what's fascinating to me is the way traders, managers of big

funds will do window dressing at the end of the quarter. let's say you have had a bad quarter, missed out on the rally for some reason you are in the wrong stocks. sell some of those dogs and buy the stocks that have been doing well just so when people look at their statements and december 31st they own this and this looks pretty good. david: vincent, did you do window dressing when you were trading? vincent: you don't -- i'll let the equity guys play the game. window dressing is something i think that happened more in the past when traders could take bigger and bigger positions. now in theory from what the fed has done with volcker rules from the banking standpoint, much less speculation. you don't see that as much in that sector of the market. again, going into the turn of the year, this is a challenging -- going to be a challenging year for investors with record gains, really easy last year when you look where december was

in 2018. i wouldn't say easy but december 2018 to where we are now, rocket ride up, now we are up here. and what is 2020 going to look at thend of december in 2020? show me the good trader next year. i haven't made money this year could have got on the coattails. the guy who makes money in 2020 i want to fire forever. david: what do we need to see in temples earnings growth to support this valuation. sylvia: the guy from 2019 can keep riding it into 2020. i totally agree with you you have to be nimble and valuations are high and some of the trades that worked will be trickier to pick up. i think for earnings we have to see a lot of the same. strong employment. we have to see strong consumer spending. the fact is, it's been a function of economy. the consumer 70% of that. they have been spending this yeemplet propping us up. wage growth has been increased, average 4%. job numbers have been good.

the fed have been supportive. it looks like we had china truth. who knows where that ends up. but it sounded pretty good. if that carries over into next year and you'll have volume tillity, uncertainty, there is an election. i think if those things in the background support the economy, we can continue to see some sort of expansion. there is a lot of places to look. there are a lot of good companies out there that still have room to grow. if you made a ton of tonny in tech this year, there is a.i., there is robotics. i think a lot of those trends will continue. david: going into the end of the year, how much are the equity valuations supported by a weakening dollar. we had selling off of the dollar tend of the year and that can help u.s. companies. peter: it can help in terms of making their foreign profits look bigger. david: which is a significant part of the large cap. peter: do we investors see through that and curnscies go up, they go down, i won't put a lot of weight on what a

particular mark is on my foreign profits. maybe vince -- ii vincent: the problem with the maimor shift in the dollar, i tell you this from too much experience, d.f.o.'s and corporate treasurers take forever to adjust a position. if their long dollars, dollars going up, try to convince them to trade and put on a hedge is banging their head against the wall. they take forever to change their mind. this shift in the dollar is probably going to impact earnings on a negative basis not positive basis. it will be interesting to see who your winners and losers are. usually -- always look at that going somebody's advertising for a foreign exchange for a certain corporation. that change in earnings was huge. sometimes those changes can be big like three, four, five cents a share. i think it would be more the negative side if they are not careful. david: one of the things we have coming tend of the year is more

pressure on the repo market. we have heard more about that. why is there more pressure? peter: typically there is more pressure because everybody wants cash dollars in particular. ncluding foreign institutions. the huge demand for liquidity, what we had this year is that some of the banks have been a little more hesitant to provide that because they want to preserve their own. we saw the big blowup in september. and a lot of us were thinking, whoa, this is going to be a big problem heading into the final few days of 2019. hasn't happened as it turned out. david: didn't the fed fix it? peter: they have provided a lot of liquidity through repos. last friday the fed was vastly undersubscribed on its offer of liquidity to the market which took a lot of people looks like we'll make it clean through

this. david: did the feds fix it? vincent: i think so. what people didn't realize because we haven't seen the fed in the short data money markets in such a long time, people forget, there was a time when the repo market and reverse repo market was how the feds managed the feds funds rate. since greenspan's era we have gone to targeting, not used the short-term markets as we did 30-odd years ago. the banks have found a way around it as they tend to do. between what the fed has done, the banks have done, the fed will offer i think three opportunities today to borrow for year-end. they'll probably do the same tomorrow. then things will quiet down as we go into 2020. david: we were talk about the united states. talk about china. china has just come out and said we are going to ease up some on the interest rate. particularly on loans already outstanding. we have to renegotiate those s that going to -- what do you expect in 2020? sylvia: china is an interesting place to look. we talked about the potential of

the weaker dollar. i think one of the winners could be emerging markets, china in particular. china has one of the largest growing costs economies out there to consumers going there. they have the highest deduction of a.i. and technology. investing in infrastructure, projects g.d.p. growth to be 5%, 6% range. i think that china with the help and support of the pboc, the growth of middle class, growth of china as the second biggest economy in the world going forward, and some of the ease off from the trade war and things like that willpropel some opportunities in their market going forward. we like china tech. we have china tech fund we look at where you look at names like ally baba. some of the names afeckeded by millennials and i think if they keep on the right path, that might be an interesting place to look where you can see returns. david: peter? peter: it's true this change in interest rate structure might have a slight easing effect.

the primary purpose is to become more market oriented. they are trying to get away from this one year lending the rate that's the benchmark for all interest rates and move towards more of the people's bank of china acting more like the fed. using its control of reserves to influence the broad turn structure of interest rates. that's a big change for what still remains a command and control economy. it will be interesting to see how it happens. in the short term, yes, could be an easing. in the long term could introduce volume till lit. david: it's not just the interest rates. we also have opening up insurance with respect to futures trading. even at the end of the year investment banking in china they are trying to open up somewhat. make it more market driven. vincent: this is from the sources in asia tell me. this is a big move on the part of china to move the hub of asia, of financial markets in

asia, away from hong kong and toward shanghai. this is a big, big step. the more shanghai becomes more prominent in the financial sector, the less hong kong is, more reduced, then whatever happens intentions in hong kong becomes less and less important. at the end of the day it's always about the -- if the money is in shanghai, watch the world care less about hong kong and that will become a situation that will no longer be a geopolitical threat to china. david: that raises the question do we believe the numbers? as we open this up, are they going to be more reliable than in the past? sylvia: who knows. i do think that structurally we are set up to see growth in china. we see that happening with the inclusion of all the china and major indices. opening up their markets, having global open trading systems and moving towards the fed type of activity, moving towards the u.s. type of open market

activity will lead investors to look to china and shanghai. i think the inclusion will be a huge thing for shanghai. david: bloomberg's vincent and peter and sill veeial thanks for being with us. sill veial will stay with me. you can run bgt go on your terminal. save our sharts by running b gtv. this is bloomberg. ♪

>> this is bloomberg daybreak. your business flash. it's a milestone for tesla. elon musk's company has delivered the first cars built in china. they handled over the first 15 model three see dance assembled

at its new multibillion dollar factory in shanghai. tesla wants to ram many up sales in china. in hong kong, six months of violent protests have rocked the company. financial secretary warns that g.d.p. is set to contraction trakt in the fourth quarter. the retail revenues has dropped by about a quarter. meanwhile the number of may line chinese businesses has plunged by almost half. the french italian giant says it was the target of a $213 million fraud at the factory in thailand. the company's trying to recover the lost funds. they are the owner of ray bans and oakley sun grasses. -- sunglasses. that's your bloomberg business. david: it was a good year to be rich. according to bloomberg billionaires index, the world's 500 wealthiest people added $1.2

trillion to their fortunes. that boosted their selective net worth 25% to nearly $6 trillion. jeff bezos still tops the list aheffed bill gates. kiley jenner became the youngest self-made billionaire this year. she sold 51 steak in her cosmetics company for $600 million. the korean familiar that popularized the baby shark song is now worth about $125 million. coming up here we know what did well in 2019. what looks good in the new year? we get sylvia's comments next. ♪ [ dramatic music ]

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all three equities indexes and futures are up. although only slightly. they have company down off where they were. meantime the stock 600 in europe down day. although it has been on route to have its best year since 2000. going over to the next board, we can see first of all the pound against the dollar continues to gain. the dollar is off for several days and the pound has been the leader against it. the 10-year has been selling off. you can see the yield is up about four basis points. the gold remains over 1,500 an ounce having a wonderful run. new york crude also up again. that's where we are at the moment in the markets. 2019 came in like a lamb and going out like a lion. with uncertainty over trade and brexit and the fed causing a good deof angst for investors during the year. all that seems to have quieted down as we head into 2020. sylvia jablonski is still with

us to give us her take. you got a lot of thoughts about going into 2020. let's start with e.m. and tech. where are you on that? sylvia: i think the stories are married together well. i think u.s. equity market has done absolutely amazingly. as you said it's come out like a lion nent. that also means that valuations are quite high. if you are not in already it might be tough to get in at the highs and expect those returns. when you look at a place like e.m., you have a young, educated growing population there, growing middle class there, they have been absolutely hammered. the u.s. dwlar had been strong. we see some weakness there. and the fruition of investments in technology coming into play now. cubbled with the china deal you might see growth in e.m. the u.s. markets have ralpid this year. and europe has been behind and e.m. has been the worst. we are starting to see green shoots in e.m. in this last

quarter anti-trade deal and sort of supportive acome dayive policies there might help push them up. china is a big story. china is probably the shining start. david: it's a powerful point about demographics. we are not only starting a new year but a new decade. as you look around the world, you made the point before in china, they are adding middle class. it's not so much the population but adding middle class. if you look at india, philippines, indonesia, you have real growing younger population there that could help fuel growth into the next decade. sylvia: you do. that leads to investments in infrastructure. new technologies and it helps to push the economy forward. other regions in the world have a problem with an aging population. look at japan. when you butt those talent to the workers to use and jobs for them and supportive fiscal policy and no trade war, they are poised to do well. they are going to look at those % to 6% g.d.p. growth.

i think for lower valuations ehaven't seen the uprising of e.m. i think it's there. david: on that e. americas has created equal you are pointing towards asia and all the countries you mentioned. you did not point to latin america. to europe or africa. sylvia: i think the asia story for me just seems to be clean. not clean in terms of can we rely on the numbers or the news that we get out of the region all of the time, no. we probably can't. everything aside there is a strong infrastructure there. we talked about the population. the consumer of the consumer is growing in asia. the adoption of technology, i., and robotics. china has more investments in robots and a.i. than any other country in the world. i think that if you just look at those areas anti-fact that there are simply so many people and so much investment in those spaces it would make sense to me that chinese technology would be a

place to look. david: chinese technology. what about technology broadly? a.i. and for that matter biotech and things like that? here in the united states and west as well? sylvia: on both points i completely agree. one of you our most stellar performing e.t.f. was a global robotics e.t. you have an aging population in japan so they are having robots to keep the factories going. you have the internet of things. you have this growing millennial population both in the u.s. and globally where new millennials are coming in and the oldest millennials are essentially at the peak of their careers and they invest in things like technology. i think that a.i. is poised to go further and probably be a story like tech. biotech and health care. if we look at the market it's a sector that hasn't performed as well. up until this quarter it caught

up and why? we have massive aging population in the u.s. we'll have consumers of health care. we have more preapprovals -- david: you have more political regulatory risk. sylvia: you do. and i think that's -- that leads to volume tillity in those sectors f we are looking for lower valuations, where can we potentially make money and the story is there. if we don't get the medicare for all, if we don't have major impact. it's been -- i think it's created volume tillity because it's been all the talk. nothing happened other than we did see more approvals, more preapprovals. we did see these coming out with some sell' gains compared to other sectors this year. they have had earnings growth this year. they have paid dividends this year. i think in terms of where you potentially look to see the price of a stock rise might be health care and biotech.

david: do you continue to bet on the consumer going in 2020. do you expect it to continue? sylvia: i do. i think the reason why i think the consumer came back towards the end of the year. i think that it's pretty interesting a lot of consumers sat on the sidelines. the risk to that is that if we keep turning on the tv and seeing all this stuff about twitter words and potentially there is a fear of the election going the other way and that markets might pull back, the consumer is still sort of afraid to go all in. i do think 4% wage growth, best unemployment we have seen, the consumer has cash in his or her pocket and spending it. david: listening to you through all this seems very, very compelling, there is not a bit of defensiveness in it at all. with the markets where they are, with this much of a gain, is there any party that says take money off the table? sylvia: i'm generally optimistic. i'm very optimistic and get that pushback how can you possibly be

so sunshine about all this. i think the support is there. i think if we continue the support of fed, we get better news of the trade words, the economy is expanding slowly, we can continue to see positive gains in the market. to your point we always say have a diversified portfolio. you should have a certain amount of your capital investment in the market where you are looking to make gains and taking risks to do so. i do think it would be wise to take some of your gains off the table. perhaps look at alternative asset classes like gold is probably something that we'll see something improve this year because there will be volume tillity. david: how much of that is because of the declining dollar? what do you project there? sylvia: i think we'll probably see some impact of a falling dollar in 2020. to that point look at emerging markets. where we might see airas we might see opportunities in other areas. for investors, die

diversification is key. not 100% a.i., global. but there is a portion that might work. and the safety havens the tables the goaltender goledse of the world are still smart places to be. david: gold is it e.t.f.? sylvia: i think i'm biased towards e.f.t. david: that's what you do. sylvia: that's what i do. we are gold related e.t.f.'s. you have a whole bunch of gold e.t.f. options out there. i won't name all of ours. there is i.a.u. directions are nugget. i think e.t.f.'s are easier to trade. david: how dependent is your analysis on president trump coming to some sort of termsle with president xi? we are baking that in. the deal is not done. sylvia: i think if we get terrible news about that, then i think all bets are off. both sides have compelling reasons to reach a deal. we don't know that we have a

deal right now. we sort of have -- we have like a merry christmas. i think what comes out that have deal will be very important. and will tib to drive of the markets. i expect it will be more up and ho conversations and around those tweets. if you are strategy short-term -- strategic sho trader, maybe you buy. if you are long term, then you probably do look some safe haven investment likes gold to counteract. david: great to have you here. thank you very much. fascinating. sylvia jablonski of direction has been joining us for the hour. now an update on what's making headlines outside the business world. we are here with "first word" news. >> the u.s. has launched air strikes on bases in iraq and syria used by iranian backed militia. defense secretary called the attack successful.

he didn't rule out further action. rocket attacks into installations where u.s. troops are based. putin called president trump to thank him for intelligence that helped prevent terror attacks in russia. that's according to the kremlin. russia says the two leaders discussed further cooperation to fight terrorism and other matters. and civil rights icon john lewis has been diagnosed with stage four pancreatic cancer. the most senior black lawmaker in congress is 79. lewis says he's never faced a fight like the one he has now. in 1965 he was beaten by alabama police and suffered a skull fracture during the civil rights march. 24 hours a day on quick take by bloomberg powered by more than 2700 journalists and analysts in 200 countries. david: the overall markets in 2019. really good. hedge funds, not so much.

we take a look what went wrong in 2019 on wall street beat. that's next. check out tv go. watch us jn line. go to tv go on your terminal. this is bloomberg. ♪

>> this is bloomberg daybreak. your bloomberg business. mixed results in 2019. ending the year on a high note. the latest targeted middle eastern operator and m.c. health has fallen 33%. said the company's understating debt and overstating its cash and m.c. health has denied any

wrongdoing. gold is on an end of the year rally. prices have risen five times in the last sick six sessions. some analysts say the rally is due to the weakness of the u.s. dollar. the dollar is set for the biggest quarter-l lost since 2018. sharon stone is back on bumble platform. the matchmaking app reinstated the basic star's access. it had been suspended for hours after several users campaigned her profile was fake. stone went on twitter to lament her suspension. that led to bumble unblocking her and telling stone we hope you find your honey. david: no comment. we turn to wall street beat. three things they are buzzing at. hedge fund purge. leading cash, dismal returns, and plain shutting down. 2019 was not great year for hedge funds. bigger isn't always better. goldman's plan to bank middle market companies has started off

with rating talent from rivals already there. boutiques pay up. advisory firms have been gaining on the big banks and showing up in how much they are paying for talent. joining us to go through all this is bloomberg shania. >> it's been a big year of closures. even some closures of funds of some of the biggest firms. octagon unit for example. with all of that said, when you go into the large brokerages on wall street people are still excited about the outlook for hedge funds not because there are more of them but it's consolidating among the major firms. david: there were too many to begin >> they were charging a lot of money. david: that's the thing i find interesting. we talked about bimo last weekend. and the issue not they were doing bad they weren't doing well enough given the fees. >> some people say, this is

active question management at large, you have to perform to be paid for what you are doing. there are definitely people out there charging 3 and 10 rather than the 1-10. while we are seeing pressures in someplaces in the market. we are seeing people raging major money and launches next year. exodus has launched a lot of money for example. the industry's not dead by any means. bill is having a resurgence this year. a note of optimism. there is definitely a lot of money flowing out of the interest. . a lot of people looking to private markets instead. traditional hedge funds. david: private equity and private market. it's all going there. >> it is going there. especially even among traditional hedge fund managers. one of the things i have to ask all these managers is, are you straying away from the things you know? after the last crisis we saw a lot of people locked up in a lot

of liquid assets, is that something we have to contend with? david: goldman went into the middle market banking and they'll raid talent. >> that's story written by bloom fwerg. they are -- bloomberg. they are stealing from big firms, jpmorgan, wells fargo, that can big regional banking expertise. also smaller firms like lincoln international where you don't typically see goldman poaching from. david: when will this make sense? >> the idea is -- remember they have a huge private equity operation. so if you are looking on smaller deals, private equity firms are looking at those deals. something i notice that's less talked about is family offices like those deals. now in business school they tell people not to work for private equity firms to go to the family offices. david: are the margins as big? that's the thing i think about. >> steadier flow. the small deals -- david: not as much volume tillity. >> exactly once the big deals

stop, remember we are going into the election cycle where deals will be scrutinized. health care and technology are. so biggest place, then these deals keep on. david: there are big banks who have been in the middle market for a long time. they are proud of the fact they are a middle market. >> it's huge. but you are right. banc of america, wells fargo, jpmorgan. jpmorgan expanded this strategy in europe as well. and so they are really going throughout the world now. goldman is known for the big deal. which tend to be very different. the idea here is these bankers they are hiring have the relationships they want. we'll see if it works out. david: looks like they are looking more like the other banks. talk about the boutique advisory firms. we have seen them coming on and challenging the banks for some time. now looks like they are going to pay for the talent to get that done. >> we were talking about goldman sachs, a lot of talent have gone to either form their own

boutique firms or gone to boutique firms. evercore is the most notable. there is a lot of talent there. the pay is rising. if you look at the lead tables this year it's amazing how many firms are in the top 20. dial was very early in the year worked on bristol myers. tiffany's. big deals this year. even deutsche bank is above the tables. david: if it's advisory work is that a place where paying for talent is good sense. isn't a lot a personal relationship? >> that's t that's why people are willing to pay so much for these bankers because they take their relationships with them if they are very good. not for everybody. for the one that is do kept relationship. david: that's my question. does it work? can they take that relationship with them across the street? there are other industries that has not worked so well. you hire away an anchor, it doesn't work. >> it doesn't always work.

you need to have people -- find people who have deep relationships. we saw a deal where a bappinger slipped from banc of america, worked on a deal by himself, that the bapping would have otherwise gotten. sometimes it does work. we have seen it time and time again. it's definitely specific. david: terrifpblgt fascinating. appreciate it. we work reportedly has give its two c.e.o.'s a golden parachute of $7 million. exi-package terms were sent to shareholders ahead of a $3 billion tender offer by softbank. wework may continue experiencing what they call a significant amount of senior management turnover. up next, we are taking a deep dive r dive into china's g.d.p. live from new york this is bloomberg. if you are heading out and jumping into your car, tune in to bloomberg radio heard across

the u.s. sirius 119 and bloomberg business app. this is bloomberg. ♪. oomberg. ♪.

david: time for our traders take. joining me is vincent, a voice of the bloomberg audio squawk. you can listen to vincent on the bloomberg by squa go. no wk. what do you have today? vincent: wanted to talk about the big story overnight what the pboc is did was changing the lending rules, moving away from what is more of a fixed income type of a lending facility to a floating facility. a lot of talk this is comment for the economy. but a larming part of the economy, the industrial sector, is managed by state-owned banks. and all of those loans are actually already below market. so i think what this really is an attempt to do is pboc is

influence the commess beingic go from spending or import level. this is the china credit imbulls. this impacts new lending and ackle is racial of credit to gdp. as this line turns positive, imports are increased. and vice versa. david: we need to pull up the chart. we took it down. that's great. tell us about the white line and blue line. vincent: the white line is the -- the more acceleration of credit going into economy. the more imports rise. this shows where the pboc kimm pact domestic growth by influencing -- can impact domestic growth by influencing -- david: why does the chinese government want to increase imports? trying to ina's been stimulate the domestic economy to move away from situation with

the united states. david: how much is this driven by president donald trump? vin sent: i think this is largely driven by him and president xi attempting to move the economy to more domestically driven to what they can control as being controlled by exports for the rest of the world. the more they can make this an import necessaryic driven economy, the less they have to be worried about exports. and be beholden to other given not the only one they have taken, are you expecting more stimulus? we are talking about g.d.p. growth where? vincent: they are tagging at 6%. i think they would be loathe to bring it down below the 6% rate no matter how they have to fudge that. a couple years ago they were at 8%. their economy has been declining. this i think is -- this is what china's trying to do to stave off that. it's going to keep declining over time. there are going to be more an

more developed industrial economy which they are. not an emerging market economy. e.m. markets tend to run hotter than developed economies. as their growth rate overall slows, the better internally to fix those numbers to make it more of a domestic driven economy similar to the u.s. whether they can get it as largely consumer driven economy as the u.s. is is another story. i think this is moving in that direction. david: thank you so much. great. coming up, we talk to ian harnett. he has a call on recession in 2020 you might not like. that's next. this is bloomberg. ♪. ♪.

david: musk invades china. the first tesla's roll off the

assembly line in shanghai with plans to ramp up fast. so much for secrecy, president trump identifies the alleged whistleblower. did his retweet break the law? equities break a breath but bonds sell off. yields on u.s. treasuries all move higher while the yield curve steepens. welcome to bloomberg daybreak on monday, december 30. i'm david westin in for alix steel. start you with the markets. start off with futures in the united states. look at s&p. narrowly in the green. trying to hold on to that green after having been up more earlier in the day. in europe, stocks sold off. down about .4%. the u.s. treasury yield i mentioned a moment ago has within selling off some. and it's not alone in that the european sovereigns are also seg off. dollar is down again. dollar's been softening here at the end of the year against all the g-10 currencies. the british pound has been

leading the charge against it. joining me for the entire hour is michael mckey, bloomberg's economic and policy experts. we'll have a new year and fomc. michael: i don't think we'll see a lot of changes. you are replacing doves with doves, hawks with hawks, and none will be voting interest rate moves this year. according to their own forecast. when you are talking about interest rates at 1.5%, does neart whether you are a dove or hawk? david: does gnatter whether they keep pumping money in the system to help repo? michael: next few days, yes. we haven't seen any movement in general collateral repo rates. tend of the year there is always funding pressures. if you look back over the last five or six years you see the spike comes at different times. last year it was on the third of january. as when new year's hits. we could still see that. there are three options today. we'll see if there is a lot of

take. undersubscribed for term repo we may see overnight repo get a big take up today because it's cheaper than term. we are just trying to get through the week. after that, a little problem. david: trying to get through the week. joining mike and me from london is ian harnett. chief strategist and here in new york joining me is damien, bloomberg intelligence chief meerging markets strategic gist. i'm going fought you on the spot. you are a little outliar and down side. are you talking about a recession in 2020. don't hear many people saying that. ian: absolutely. it's very much a different view as some people might say. or brave as others might say. about three months ago there was much more concern when we look at our own assets survey of 200-plus investors around the world. many more people were concerned about recession risk.

now that seems to disappear. but we don't think that that can go away. when you look at some of the indicators out there. our own now cast are very weak or negative territory in a number of countries around the world. activity surprise is still neglect tifment we still worry that for all the optimism about trade, very little has changed and money growth. we have this short-term stimulus from the fed may not be able to be sustained at this rate. we worry that you are still looking at an environment where essentialry economic growth is going to be challenged in 2020. and that is going to mean that earnings growth is challenged and that's going to put some pressure on these valuations for the equity market. up to 24 times. great to see you after the christmas period as well. david: happy new year to you early. we all know that past performance is not a predictor what comes next f you look back through history, traditionally, we have not gone into recession the year after a really up

market. putting up a chart to show that. why is this different? ian: i think this one will -- i think there are a lot of things different if you look at the political environment. all of us would have i the political environment this time has been very different with the rise of populism. we are just worried when you look at these kind of valuations, normally they are not so led by multiple expansion, all of this rally has been led by multiple expansion. we are looking at we believe earnings growth will be minus 5% for the u.s. this coming year. minus 9% for the global economy. i think we are also already seeing some of these signs of stress. although people aren't talking about it, a lot of the s&p, about a quarter of the s&p 500 are still in their market territory relativele to their 24-month peak and the s&p 600, small caps, over half of those stocks are in bear market territory. and their earnings are declining at an annualized rate of over

30%. far from being the healthy economy if you read the hit headlined indicators, we worry you have a more mixed picture and very dependent on this belief the trade deal will save everything and the fed is riding that put as long as they need to. michael: you talk about recession but you don't say where we get recession. and you are talking global indicators. you can make a case for germany or italy or some of those countries. much harder for the u.s. you mentioned in your notes you need a shock, a trigger. do we have recession in the united states? does it come from overseas? how does it play out? alix: i think we still -- ian: i think we still see it led by the u.s. in many ways. the trade environment will not be helpful. although we have this phase one deal, the effective tariff has only been reduced by about one percentage point. you still have 25% tariffs on

$250 billion worth of goods. 64% of the trade between america and china scoffered by these tarrifs. we haven't seen a lot -- is covered by these tariffs. we haven't seen a lot disappear. when you see the trend like the c.e.o. surveys of confidence, those are as weak as they were in 2008 in the gfc and prior to that 2000. that tends to be a real dampener. if your stock's down 20% relative to where it was in january 2018, you are not going to be hiring people, you are not going to take on new topics, either. that's the thing that worries us. even the labor market, some of these job opening numbers are starting to decelerate. if you stripped out the government's job openings, then you would be looking at a much, much weaker environment. i'm just overly -- maybe i'm a bit too old and cautious in this

environment. what strikes me is that we've got a much more fragility in the corporate sector than i think the equity market particularly and the headline equity indicators are suggesting. david: i'm going to do something terribly unfair to you. headlines across bloomberg right now from the south china, morning post. saying that china's hur will visit washington this week. late in washington this week to sign a phase one deal. does that change your view any about the optimism in 2020? ian: i don't think so. the good news is you have that continued dialogue. clearly markets feel more confident when we get a reduction of policy uncertainty. we know that relationship between these policy uncertainty inkators works very nicely. but our view is that a lot of this optimism is being fueled by that short-term liquidity boost from the federal reserve as they look to stabilize these interest

rates. what worries us in many ways is still ee-month lois is therepoints, our worry is is still too much dollar debt in this world that needs to be refinanced that the fed's going to find it physical once they have got a balance sheet back to where it was before q.t. started to then carry on this rally. how large is that trade is and how long account liquidity boost last for. those for us are the key questions. we are not convinced that either of those is enough. david: damien. damien: many a strategist and analyst have kind of gotten the timing on the recession call incorrect over the better part of two years, five years. i don't disagree with what you are saying. there was a great piece in the "new york times" this morning,

someone i respect very much, what he said which is interesting in the 2010's the u.s. is not only outperformed other developed markets in terms of growth but avoided a recession. first time since the 1850's that's ever occurred. while i agree with you this call that there may be slower growth is certainly in place over the longer term. it's very difficult i think for an alses and strategists to make that call for recession in 2020. in terms of your now high frequency data, what really jumps out more than anything else in terms of making that call for 2020? ian: it is actually the fact that our recession risk models, you could argue there are conditions on the yield curve, but that yield curve has still been the most reliable indicator of all the recessions over the last 70 years. our recession risk indicators are continuing to be very elevated for the united states. more so in the america than they are in the euros going back to mike's point whether it might be

germany or one of the other european economies. our worry is that when we go down the list of the things that tend to trigger recessions, we are starting to see more and more of those near term indicators, things like the loan officers survey where the landing standards have deteriorated and the loan demand has come down. some of these more traditional measures. remember, i'm a strategist, i'm doing that 12 months ahead not the next couple months. david: ian harnett, and damien of bloomberg intelligence, will be staying with mike and me. coming up, the fed appears to have taken itself out of the game signaling it's heading nowhere. what does that mean for fixed income? will that shift the attention to other central barnings around the world. next. ♪.

damien: this year was a big one for the federal reserve. reversing course and going from a series of rate hikes to three rate cuts. now it's signaling it would like to stand pat for all of 2020. what does that mean for fixed income investments? damien of bloomberg intelligence here in new york. ian, i'll start with you. how well bonds did. it was a good year. damien: we are up 30% in the s&p bloomberg barkley, global ag is up 50%. where have we seen this before? you would be hard-pressed to find any example. taking a step back, forget about the returns, what it means to me with yields coming off. and that 17 trillion pile has

been reduced to 10 trillion. the fact is you are stealing returns from the future. it reduces return expectations going forward. that's the environment we are going into in 20220 where return estimates going into next year have been depressed to the point where people aren't going for four than 4%, 5%. it's going to be an interesting environment. michael: even with equities people are concerned about what kind of margins you can maintain. the trade war's still going on. we don't know what will happen with that. if we do see a down turn in europe, comes towards the united states, i know that's what ian's talking about, then we are going to see a different kind of environment. and nen what really becomes important is how do investors react? ok, this is normal wheel buy what we need to buy. or panic and see some drops that feed into consumers confidence. a lot of what happened last summer with all the recession concerns was a reaction to the markets. damien: what about it? if you are right and what you admit is an outliar call and we'll have a recession in 2020

what is it going to do film healeding bonds? ian: absolutely. we would say you want to be buying bonds here. and u.s. treasury is up at 1.9% on the 10 year. seems like a good bet for institutional investors not just retail investors who are trying to meet their return objectives. if we get the economic slow down that we are projecting in the united states, then historically you would see the interest rate, the fed funds for alt fed talking about no change this year, the fed normally would cut rates aggressively. this is the inconsistency in markets. why are they getting so hyped up when the fed is talking about no rate reduction. if we are right, historically then you would see the fed funds come down towards zero. and the we believe that the 10-year yield could come back down to 1 one a quarter, maybe 1% in a slow down environment. bonds we would be big buyers and

treasuries still provide a good support relative to that negative yield in europe's own debt you are referring to. michael: given what i was saying about how people react, when you might see this happening. we were talking off air how the u.s. is involved in massive fiscal stimulus at this point. a lot of money going to be coming into the economy over the next six to eight months. this is an end of year collapse? certainly we are not seeing any pricing in the merkts right now. ian: i think our concern is that it is going to be an erosion of confidence coming from the corporate sector. as we say, we are particularly concerned about the small and midcap environment because it's that area where you have the largest buildup of debt. it's that area where you are seeing the weakness of these earnings accelerating very dramatically. remember that it's that area that does the bulk of the employment in the u.s. so if you get a negative dynamic there, it could have been easily

offset some of that fiscal expansion. damien: we hear about zombie companies, don't have the data to cover their debt service in the small cap area. at the same time, isn't all of this supported by the extent to which central banks around the world have eased. we have enormous negative yielding debt, i'll put a chart up that says it's coming down f it continues to come down could it put pressure? >> i think pressure in terms of higher yields. basically the whole point of having negative yields is it's generated this reach for higher yields. you are seeing much in the sense that. so high yielding emerging markets like indonesia, russia, south africa, their currencies have been really well. just for me looking forward and based on what ian's telling me, this upcoming year will be one where i think there is a lot of uncertainty. it's going to be an up picking your spots. trader's environment. it will be very difficult for

the markets to call for a recession. that being said i think trump will try his best to engineer some sort of a federate cut throughout the course of the year. it seems inevitable he'll need that market strength to support his bid for re-election. if that does mean some first half weakness coming through the markets, i wouldn't be surprised if we saw that happen. but recession seems unlikely to me at this point. damien: i wonder whether president trump, damien referred to him, hasn't gotten what he wanted. he's gotten three rate cuts and the dollar here at the end of the year is weakening. he would say i need a weaker dollar, has he gotten what he wanted? michael: from the outside we would say yes. what satisfies donald trump no one knows. is he happy? does he want to pursue a phase two deal? it was an interesting discussion in the notes about what happens with this phase two negotiation. if trump thinks he's going to be re-elected, we could see those december 15 tariffs come back then he has no constraints.

doesn't have to please anybody. he believes in tariffs. it could be an interesting question throughout the year as ian was talking about. concerns about trade wars don't go away. damien: take the flip side of that argument and the flip side, if things get rocky, the president's going to pull out all the stops he can pull out to make sure we don't go into recession come november. ian: that's limited. the other thing is that remember who sets the agenda for these trade deals. if we know that president trump needs a trade deal, the chinese do. we believe that china is setting the pace and the agenda and the timing and the scale of any trade deal that gets done. so they have the limiting card here. i'd like to draw on two other points that came up from the discussion with mike and damien. first of all, uncertainty that word again, although policy uncertainty is many coulding down, economic unsrnt, if you look at the professional forecasters, disperfection of forecast, we are starting to see that rise quite substantially.

if the past that has meant that you tended to get more risk of a down quarter in economic growth. and a decline in cap x. and the whole range of indicators getting more negative. the second point is about what damien raised, meerging market debt. everybody loves it at the moment. great place to get yields. those c.d.s. spreads, the default risk you are pricing in the insurance that you can take out on these indices, that's down record lows relative to the median type of numbers we have looked at. lots and lots of optimism built in in various pockets of the market we think just look very exposed. if you don't get the dollar weakness or economic growth coming through. damien: we can all breathe a sigh of relief, the new york fed's 15 day reprooperation was smaller than maximum of $35 billion. we are all worried about the repo. looks like it's going so far, so

good. ian and damien, stay with us. we'll have much more with them next. this is bloomberg. ♪

>> this is bloomberg daybreak. it's a milestone for tesla. elon musk's company has cliffered its first cars -- delivered its first cars built in china. they handed over the first 15 see dance assembled at the new factory in shanghai. tesla wants to ram up sales in china. the world's largest electric vehicle market. in hong dong, six months of violent protests rocked the economy. financial secretary warns that g.d.p. is set to contract in the fourth quarter. hong kong's retail revenues have dropped by about a quarter. meanwhile the number of mainland chinese visitors has plunged by

almost half. and the french italian eyewear giant says it was the target of a $213 million fraud at the factory in thailand. the company is trying to recover the lost funds. they are the owner of rayban and oakley sunglasses. it defused an internal power damien: thanks so much. still with me is bloomberg's michael, talk more about the st. we don't expect change this year. we don't get to 2% until sometime after 2021. we get all the way up to 2025, way out in the future. this strikes me this is a year where central banks are rethinking their entire methodology. michael: way may lead to a change the way you look at that. you look at this chart, look at the top line. that is where we thought we would be or the fed thought we would be back in 2012 when they started. you can see how much we have come down in half in terms of

where they thought the terminal rate would be, neutral rate. if they start changing the way they look at i nation and decided they could run inflation hotter, interesting to see if the market pushes up that long-term neutral rate. if they believe that the fed can actually generate that kind of inflation. damien: is the biggest change in assumption the curve. we thought with the labor market this tight, 3.5% inflation, we were convinced wages would be going up faster than they are. michael: that's the fundamental change in the way things have worked. you are always reluctant to say this time it's different. obviously it appears to be different. there is a global supply of labor. you throw in automation. you have a very different economic world than we used to. inflation dynamics also have changed. a lot of different things having to do with trade, auto mation. that are shaving inflation off a little bit. damien: and expectations. having gone threw what we went

through in 2008 and 2009. michael: they have been remarkably stable. they have been moving by 10 or 20 basis points. we do see consumer expectations for inflation now at the lowest they have ever been in the history, about 40 years. that -- if that keeps going down, that becomes more of a problem for the fed if it's ratified by the michael mckey. emerging markets had a good decade. what's next? we'll talk about what -- how they can top agged $14 trillion in new wealth over the last decade. this is bloomberg. ♪

david: this is "bloomberg daybreak." i am david westin in for alix steel. the equity markets futures in the united states are strengthening.

in the meantime, in europe, they sold off overnight. -- a rough dayy today in european equities. let's look at the cross asset board. the pound is still up against the dollar. the dollar is weakening against all g10 currencies. bold remains up over $1500 an ounce. crude is up. anna rolled -- on a roll. we have breaking numbers on inventories. --. wholesale inventories retail inventories are down .7% is what i have. the survey was for them to be up 1%. i do not have wholesale out yet. retail inventories down .7%. a look at of a surprise. michael: it is a surprise because you would've anticipated driven up because of the holiday season.

what we may have seen is companies had purchased ahead of tariffs and they are starting to work off their stocks. it will be interesting to see how that leaves retailers going into the clearance sale season. we may not see as many sales as we did. david: in the meantime we did just get wholesale inventories. flat. 0% increase. projected to be a .2% increase. michael: those are tied to trade. stocking up ahead of tariffs ended by november. we also got the advanced goods trade balance and it is lower-than-expected, $63.2 billion. we're expecting an increase. that bodes well for fourth-quarter gdp. suggests gdp may gain. you have to put the numbers together and adding services. it is better news. david: a tea leaf worth leading

-- worth reading. i want to turn to emerging markets. gains led by china at which has a jump on 2020 by introducing new stimulus. we can see this in the terminal. the redline is going down. not only on the new loans, you have to go back and renegotiate the old loans. this will help a lot of chinese companies. joining us is ian harnett. damian sassower of bloomberg intelligence is with us in new york. china stimulating -- surprising? ian: i don't think so. if you look at the money growth in china, it has been lackluster. the pickup in money growth you have seen has been in developed economies and that chinese number has been relatively disappointing. i think there is another angle that is at the risk of being missed. i believe that what the chinese authorities are trying to do is trying to get some of their domestic companies that have

issued debt and taken out loans in u.s. dollars, switching those back in two rmb. i wonder how much stimulus that might be. about a fascinating point whether they are changing the way loans are dominated. i wonder if they are moving into a more market-driven rate. this number is more related to the market. they are trying to rib light -- they trying to liberalize the way rates are set in china. most china's corporate's go to hong kong in order to borrow more. this is a notable shift. a lot of those companies, if you're going to be borrowing, may shifting focus to shanghai as opposed to hong kong. tryingint, it does mean to make every effort, at least on the outside looking in to liberalize our economy and to be added to more indices.

as for the sake of argument come investors being incentivized to come in and fund their debt and receive the chinese yuan. -- michael: you go back to the chart. the chinese interest rate, the benchmark rate the chinese have has not changed. they are not using monetary policy. what they have been doing is using the reverse ratio -- the reserve ratio as a substitute for monetary policy which suggests they still have a lot of ammunition if they want to use it. that is the question. do they want to use it? they have been trying to stimulate through infrastructure rather than using interest rates because they do not want to create more debt. it is a balancing act. how bad does it get that the pboc is ordered to step in? david: i wonder if we need this

in a larger perspective when it comes to china. ofalso have over the course the year a plant liberalization in the insurance industry and even in the investment banking industry in china. could that be one of the more profound effects of 2020? ian: what we are looking is for china to try to wean themselves away from borrowing the monetary policy of the united states. that is what the hong kong does in the u.s. dollar reliance the chinese economy has delivered for the chinese authority. i think they are taking lots of measures to gradually wean the economy off dollar rates and dollar processes, but the same time they are running a difficult balance between trying to slow the economy and get the debt level down without killing things completely. that is why we do not think we will see big rate cut because the housing market is not being stressed. in the past what they've been

trying to do is use the interest rates and the reserve requirement rate to channel credit to the rest of the economy. the big question facing portfolio managers is we will see a shift away from the yuan being the ultimate driver to where the dollar is headed next and to the ultimate driver? it was the euro that drove all of the ms until the yuan took it over. that perhaps has something to do with all of the u.s. china trade negotiations. maybe with the phase one agreement we are going to have a renewed focus on the euro and the impact on the dollar. if zero does appreciate, rest assured you will see emf -- tf follow. -- ef. at the currencies

that have outperformed the most this month, it has been all the ones that are tied to china. we are talking taiwan, singapore, hong kong. you're absolutely right. how that will fuel the growth of asian fx removes to be seen. if you look at the performance, it has been nothing short of spectacular. david: even growing rotter -- put aoing broader, i will chart up of how much tech is driving em. we have positive developments in demographics in india, the philippines, and you have the tech develop meant at the same time. ian: that is an important point. if you look at the things that have driven the global equity market, it has been stocks that have exposure to china and it has been those tech stocks. the growth of asian technology is an important factor. i think linking those arguments

we were just hearing from damien globalat point, the switch back to emerging markets is not going to happen until you get that dollar significantly lower. historically, republican administrations have been harbingers of weaker dollar, not stronger dollar. that would not be unusual. that leads me to the rest of the world has to start growing faster than the u.s. or it will be a bigger inflation shop coming into america because of the oil price increases, rather than the rest of the world. i think the pound dollar plays out is absolutely critical for em equities and em credit as well. damian: you make a great point about the commodity currencies leading the way. if you look at the strength of the chile in case or the colombian case, they are all up on the trade negotiation. the bloomberg industrial index is at one year highs. i agree completely.

for me the big question will be what is the driver of the dollar going forward. i think the verdict is still out heading into 2020 whether it will be a continuation of 2019, which is the china yuan driving it, or will be a revert back to the paradigm of euro strength fueling em strength. many traders are putting their money where their mouth are ahead of your and for sure. we have a recession somewhere, what is going to be the growth rate for the u.s. in 2020? -.1%.e are forecasting we are putting our next on the line. we think there is a risk. that means the rates come down and maybe the rest of the world outperforms. david: many thanks to damian sassower and ian harnett. now let's get an update on what

is making headlines outside the business world with ritika gupta with first word news. ritika: the u.s. has launched airstrikes on bases in iraq and syria. the defense secretary called the attacks successful and did not rule out further action. been the fall there of rocket attacks into u.s. installations. president trump called vladimir putin to thank him for intelligence that help prevent terror attacks in russia. russia says the leaders discussed further cooperation to fight terrorism and other matters. and civil rights icon john lewis has been diagnosed with age four pancreatic cancer. the most senior black lawmaker in congress is 79. he says he is never faced a fight like he has now. in 1965 he was beaten by alabama police and suffered a skull

fracture during a civil rights march. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am ritika gupta. this is bloomberg. david? musk: coming up, elon builds a new factory in shanghai in 168 working days. we talk about teslas move into china as it delivers its first chinese made model three. that is next. bloomberg users can interact with the chart shown using gtv . interact with charts to catch up on key analysis and save charts for future reference. live from new york, this is bloomberg. ♪

ritika: this is "bloomberg

daybreak." short seller carson block has mixed results in 2019, but he is ending the year on a high note. his latest target is middle 33%.rn -- it has fallen muddy waters capital says the company is understating debt and overstating its task nse health has denied any wrongdoing. gold is on an end of the year rally. gold prices are up 18% this year . some analysts say the rally is due to a weakness of the u.s. dollar. the dollar is set for its biggest quarterly loss since the start of 2018. lexis does not have much to celebrate in the u.s. this year. 30 years ago the debut of toyotas luxury brand shop german automakers. now demand for lexus has stalled.

its market share has fallen from 18% a decade ago to 13%. lexis has been hurt by an aging vehicle lineup, increased competition, and a need to keep pace with demand from figure suv's. i am ritika gupta and that is your bloomberg business flash. david: time for the bottom line where we look at three companies worth watching. i am looking at wework. there's a report that says there's been a golden parachute given to the new co-ceos coming in. they will split $17 million if they get fired for various reasons. it pales in comparison to what the founder of the company got. they said in this disclosure, which is a offer from softbank, there is us never get amount of senior management turnover that may come to pass. they may get their money, it looks like. michael: i feel sorry for them. david: i would not feel too sorry for them. michael: i am looking at one of the old-timers. .ot old, old

semi conductor equipment maker's have had a fabulous run recently. i am looking at lamb research, the second-best performing stop after applied micro devices, which everybody has heard of. look at that. the stock has gone up more than double this year. there record on december 20. r record on december 20. people are putting money into the stocks. the interesting thing about the chart, it is down. the company was founded in 1980, which is four years before mark zuckerberg was born. to me that qualifies as an old timer. what it makesvid: me i do not even want to think. find 2020 is when we whether the 5g thing is real or not. michael: i read a text

prediction that said this year it will be real, but it will be a slow rollout. all of the big wireless companies are rolling it out, but you have to be in the right place to get it. michael: the one thing -- david: one thing we know is real is tesla coming out of the assembly line in shanghai. brooke sutherland joins us to tell us all about it. brooke: they got the china factory up and running in record time. it took them about one year. for tesla tomal meet deadlines. that has been an issue for elon musk and tesla. this is a positive development and it is relevant for tesla stop because the price tends to be driven by whatever is new, whatever the company comes out with that is new and hot and will keep growth going. the question with tesla is always will it be profitable and how profitable? david: they got a boost from the government because they said you do not have to pay the sales

tax. they could expand pretty dramatically. brooke: they do, and they do say they can bring down the price of the vehicle by 20% by making more of the components locally. the question is how much does it cost to make those cars and how much are they selling them for once you factor out the subsidies and tax benefits. i think there is a question about longer-term demand in china. if they release some of the new models, are you just cannibalizing the old models? important make an point about how much is manufactured in china. it is about 30%. the question is can they start to locally sources, particular as they are worried about tariffs in the united states? brooke: and that is the plan, they want to source a lot more locally. you see that across the board for manufacturers. traditional industrials adopted this strategy decades before where they have localized manufacturing bases and that has helped provide somewhat of a

buffer from the tariffs, but not as much as they might have hoped given how complicated some of the supply chains are. david: having come from an auto manufacturing background, the fact that they programmed last january, it has been less -- they broke ground last january, it has been less than 12 months. you cannot imagine that in the united states. brooke: absolutely not. do we have more regulatory regimes? they are also planning a european factory. they are clearly expecting that to be a longer process. you do wonder do they have the same standards as what you would expect in the u.s. and europe. david: this is a high end car in china and we do have the bmw's and mercedes-benz moving in and that will probably be there competition. brooke: there is also a lot of local competition. your a lot of upstart electric

vehicle companies in china and that has been a long-standing china policy that they want to develop a local champion. we have seen that with rail and gas turbines and some of these other industries. i think you wonder does tesla give up some of that market share for these upstart local companies, especially once you put a factory there and build up the local supply chain. david: especially because we have seen the chinese government put their thumb on the scale and have a local competitor against a local competitor against u.s. competitor. brooke: they have not been afraid to do that in the past. that gets back to the question of profitability and can you keep a healthy growth margin. david: you have to grooved -- you have to give china credit. they have doubled down on electric vehicles. the entire auto industry is transforming to electric vehicles. brooke: exactly. this is why this is so important to tesla and a positive to see the factory getting up and running and positioning tesla to meet the demand. tax exemption does help because

they have been caught between the trade war and questions of whether the vehicles would meet market share because of the extra tariffs. to get that up and running is a positive. you'll still have that battle of the bulls and bears over tesla profit. david: many thanks to brooke sutherland of bloomberg opinion, and thanks also to michael mckee for joining us for the hour. 10-year german bunds yields hit their highest since july and what could be a breakout. that is next in today's technically speaking. if you're heading out of jumping at your car, tune into bloomberg radio heard across the united states on sirius xm general 119 and on the bloomberg business app. live from new york, this is bloomberg. ♪

david: time for technically speaking.

bill maloney, chartered markets technician and voice of bloomberg's equity squad joining me now. you can listen to bill on the bloomberg by typing in squ < go>. bill: let's start with a spike in the yield. german 10-year gilts hitting the highest level since july -- german ten-year yields hitting the highest level since july. look for a temporary resistance around july highs. if they can get above there, the next level watches -1.55%. turning to the u.s., you are also seeing a move in yields, a spike as well. currently around 1.94% or so. the trend is higher since september but it is not breaking out. look for resistance on the u.s. 10 year 1.95 to 1.97%. above that, looking at the 200 day at 2%. looking at equities, especially the financials, looking at the etf, the u.s. stock market

hitting record highs. the etf is not hitting record highs. the xl left is that the 2007 pete. look for potential around 31. if it does break out, you will see a lot of upside. david: i came in this morning it looked like bonds were moving more than the equity futures and i do not know why. bill: nobody has an answer. some people are saying maybe year end some movement, but right now the story is bonds, not equities. david: the question is what does it mean going into 2020 after they had such a year in 2019. bill: looking at the financials, you are at resistance. you will see what happens with yields and the financials also have a significant impact of what happens in 2020. david: not just the yields but the yield curve. thank you so much. that is bill maloney from bloomberg. that does it for "bloomberg daybreak -- america's." coming up, mark connors.

re, we will take a look -- equities strengthening, them up, went down, they are strengthening into the open. they only need eight points to be in the top 10 of all time in terms of percentage growth this year. over in europe, not quite as good a day. they were down about .3. at the same time, we are seeing the 10 year yield up. gold remains above $1500 an ounce and it is having a big run, as is oil. live from new york, this is bloomberg. ♪

romaine: live from your city for our viewers worldwide, i am romaine bostick in for jonathan ferro. "the countdown to the open" starts right now.

♪ s&pine: coming up, the adding $6 trillion in market capitalization this year but could sentiment be getting too far ahead of fundamentals? a big policy rotation for 2020. will fiscal stimulus catch up with central-bank support, and financial stocks among the top performers, but some analysts raising concern about slowing loan growth. we are 30 minutes away from the opening bell. s&p futures holding on to some of the gains from last week. 1.1195,lar looking at we were down 1.09 just a few months ago. the 10 year yield now hanging around at 1.94. still in a tight trading range. , if you're looking to buy a barrel, it will set you back about $62.