carlos ghosn flees house arrest. china continues to show signs of stabilizing as manufacturing pmi's stay in positive territory. and market deed to her. it was all heading up until yesterday. welcome now to "bloomberg this tuesday, december 31. i'm david westin, in for alix steel. let's start with equities. futures are up in the united states, towards the session highs so far. the stoxx 600 is down. don't pay too much attention to that. most of the exchanges are closed, but that is the second day in a row the stoxx 600 is down. this is the fourth day in a row the dollar has been weakening against essentially all g10 currencies. new york crude selling off a bit after the best run they've had in many years. it's time now for the global

exchange. this is where we bring you today's market moving news from all around the world. frombeijing to beirut, istanbul to washington, our bloomberg voices are on the ground with today's top stories. we have chinese pmi numbers that beat expectations, a positive sign as the sector's improvement is crucial to stabilizing the chinese economy. joining me on the telephone is beijing.'s bureau chief how much encouragement should we take from these numbers? reporter: it was slightly higher than what economists expected. new orders also moved into expansion for the first time pointing toall signs that economic slowdown may be reaching a bottom. looking into 20/20, we also have indications that infrastructure investment is going to increase,

and hopefully some of that takes. of course, if this so-called phase one trade deal with the u.s. comes to pass, that will involve tariff rollbacks, which will also be a boost for exports. positive signals here in china. thank you so much. we go now to the middle east, where dozens of militants broke into the u.s. embassy in baghdad. thank you for joining us. this is in retaliation for that missile strike at five locations of the militia backed by the iranians, but affiliated with iraq. what is going on at the u.s. embassy in baghdad? reporter: those of the events that led up to the storming of the embassy in baghdad today. friday, there was an attack that killed an american contractor and wounded four u.s. soldiers. strikes followed by the

.n iraq and syria they work into the front gate, through bottles come but were repelled by teargas. david: as far as we know, the embassy is secure? the bridge to the outer wall, as i understand it, but embassy is secure as far as we know. reporter: yes, as far as we know. the protesters have set up tents outside and are continuing to protest. david: thank you so much. now we are going to go to fledon, where carlos ghosn to escape what he called "rig japanese justice system." 's lawyer told reporters his exit was a complete surprise. the news is a complete

surprise to me and my team. i am shocked. i don't know anything more than what has been in the media. david: joining us on the telephone from beirut is 's correspondent. what do we know about how he got they are and what he is doing now? reporter: yes, carlos ghosn is in lebanon. he confirmed what we know is he entered lebanon legally from a lebanese minister. he said he entered legally using a french passport and a lebanese id. we don't know where exactly he is staying. i went to his house in beirut, and one of beirut's most posh areas. wasasn't clear whether he actually staying at the house. david: fascinating. he's a very big figure in lebanon, as i understand. his face is actually on a stamp in the country, so he has support zoomable he from the government?

-- support presumably from the government? reporter: i'm sure he does. they said they would extend whatever help is needed for him. he is a national hero here. a lot of people see him as one of the immigrants who actually made it big time. originally,arrested billboards in support of him sprung across the nation, so he is seen as a national hero. david: quite a story. thank you so much. now we go to germany, where german chancellor angela merkel issued a warning on climate change in her new year's addressed. she said she will do everything in her power to make sure germany makes a meaningful contribution to address global warming. joining us from frankfurt with more is bloomberg's daniel schaefer. give us a sense of what she had to say. this is consistent with what the european community is doing as well, isn't it? daniel: yes it is.

we seen a bit of a revival of merkel as the climate chancellor as she put the threat of climate change to the center of her new year's address. she said that the warming of our alarming, andand she would dohat everything in her power to make sure that germany will make a contribution to tackling climate change. she also acknowledged that there were some shortcomings in the recent climate package that the german government adopted in september. she said that there were some .hortcomings they have been criticized a lot domestically. there's been criticisms from environmentalists and other party members, and even within their own ranks. so the packet was passed just a few weeks ago with some

significant changes for a high levy on carbon pollution. david: thank you so much. finally, we had to washington, where the white house's leading china hock peter navarro says the phase one deal is in the bag . officials may be traveling to washington to sign the agreement. going bs kevin cirilli, bloomberg's chief washington correspondent. why the mystery about where and when they are going to sign this deal? kevin: it allows them a way out. that is what i am being told. navarro saying it is all but a done deal, but other sources inside washington still holding their breath, understanding that until it is signed on the dotted line, no phase one deal is in fact complete. we should note that chinese vice premier liu he is anticipated to

be here in washington later this week to meet with u.s. trade representative bob lighthizer again, signaling that the u.s./china trade deal is moving along. david: in the meantime, we are just getting a tweet from the president saying that iran is behind those attacks that killed u.s. contractors and wounded others. what other reaction, if any, are we getting in washington? kevin: yesterday i spoke with secretary of state mike pompeo's senior advisor, brian hook. he is the u.s. special envoy to iran. he said that potentially more sanctions are going to be waged against iran as far as the maximum pressure campaign, and to anticipate them sometime in the short term. meanwhile, the administration also following that airstrike that was carried out in response to that attack, which you mentioned sunday. the president met in mar-a-lago

with his national security team, including the secretary of state who is scheduled to depart for ukraine in the coming days this week. david: finally, as we go into an election year, we have a new poll bloomberg is reporting on out of florida about a head-to-head contest between president trump and former vice president joe biden. kevin: according to a mason-dixon polling institute released just earlier this morning, former vice president joe biden leading president trump in the battleground state of florida in a 47%-40 5% margin. in contrast come up president trump leads senator elizabeth warren, but this will only bolster former vice president biden's campaign efforts to try to make the case to democratic voters that when it comes to electability, he should be the choice. david: many thanks to bloomberg's chief washington correspondent kevin cirilli. happy new year. the other story i am watching, wildfires continue to rage

across australia, where new south wales was hit particularly hard. tourists have fled to the beaches, with the australian military called into to help evacuate them. five moreed so far, missing. here, we will have more on your morning trade and analysis on the markets in today's first take. live from new york, this is bloomberg. ♪

♪ david: it's time now for the bloomberg first take, where we give you the news and you get the trade and analysis of the markets. here to discuss is vincent

cignarella, voice of the bloomberg audio squawk, mike reagan, bloomberg markets editor, and julian emanuel, btig cheese equity and derivatives strategist. as we approach the end of the year and go into the new year, let's start on equities. you are relatively bullish. you were all of last year, sort of took a victory lap on that, and going into the new year, you are bullish as well. what are we seeing right now? julian: it didn't feel like a victory lap a year ago. it felt like pure fear. [laughter] julian: paradoxically, it's why we felt good about it working out. from our point of view, if you look at the last few months, the groundwork has been laid for another positive year. very importantly, and september, when global yields turned, and we think this is a major pivot in bond yields, you had simultaneously the fed coming in to smooth the repo operation, which continues to mean ballots

expansion, helping confidence turn, global pmi's are turning, all of this basically tells us that the probability of recession next year is low, valuations aren't cheap, but they are ok, and interest rates in the big picture, very benign. think it sets up nicely. -- we think it sets up nicely. david: do you buy it? michael: maybe we did dodge the bullet. i think a lot of the opinions on wall street, what strikes me is there is this cautious optimism. i would put the emphasis on caution. if you look at the average strategist forecast for the end .f 2020, the mean is only 3318 the median is 3350. julian is actually sort of on the high-end. year afteraverage

such a blockbuster year. i think it is hard to get too optimistic about next year when we've had this insane rally behind us, and we have valuations pretty high. 7,hink equity markets go up 8 years out of 10. it is natural to expect another gain coming this year without a recession on the rise. i do think the high valuations potential for political uncertainty is what is keeping that optimism in that cautious spectrum rather than the exuberant rally we saw this year. david: you already said you are sitting on your hands right now. but the new year will come. how do you position yourself? vincent: i think julian is totally right about this cautious optimism. you are optimistic. the groundwork is laid, but i it is going to be a really volatile month. if you believe in higher u.s. yields, that emerging markets

are going to gain, that sets up for a lower dollar, a little bit earningscorporate targets. i think it makes for a challenge for the first quarter, but overall, the year does set up for a positive tone. it might just be a better level to buy going into the first quarter than to say, take the position from december into january. andd: in comparison to 2008 2018, there's a chart you put in that said there's some rhyming going on. julian: there's a lot of rhyming, whether it is the fed coming into make cuts in the midcycle adjustment, a consumer that remains reasonably confident, but geopolitical friction. you had impeachment to then, you have impeachment now. from where we sit, and i think vince is probably right on this, if you look at the last two years, nothing moves in a straight line for very long.

essentially, stocks have moved in a straight line higher for the vast majority of this quarter. there's definitely an idea that in the near term, you may have borrowed a bit from next year, but the fact that analyst estimates and strategist estimates are as conservative as they are is part of that wall of worry. we think stocks climb. vincent: let's pivot to -- david: let's pivot to fixed income. the straight line on 10 years has been going right on down. it can't go down forever. julian: no, it can't. i think part of 2019's story is that essentially, what we are seeing is the seeds for a little bit more inflation than the market has been pricing and because essentially, central bankers are saying we've done about all we can do on the thisary side, and there's groundswell of fiscal stimulus coming in globally, which we

think backstops inflation. if you think about it, the fed is the one that really wants inflation. steeper yield curve, more confidence. david: should we be selling bonds? [laughter] michael: you know, especially when you talk about what is going on in the repo market and all of these overnight ofrations in the purchases 60 billion dollars in cheap bills a month, that strikes me as potentially inflationary. something i don't think you can look at as a short-term thing. this budget deficit we have is not going away. we are going to be very well supplied with treasuries for the for seeable future. 2010-2011, when everyone was concerned that qe was going to cause inflation, they were flat out wrong. the question is, is that potential to be wrong still there, or could this really be the time when the central bank activity, combined with historic

low unemployment rate, a creep higher in wages if we do start to see inflation pressures, i think that is the thing that would cause a pain trade. david: i keep hearing about disinflation again and again, and it never comes. vincent: i think in 2020, if we see inflation, we will see from a place we are not looking for. ofna imports track a measure inflation of the g7 by the oecd. if china is able just to be late domestic economy, and that looks like what the pboc is doing from a fixed rate to a more floating-rate to stimulate domestic demand, if they do so, that import flux is going to cause growth in a lot of emerging-market currencies. it is going to cause a bit of growth from a commodities based. that is going to give us the base for wage pressure that comes on as commodity prices go

up. if china manages to pull off that growth story, we could see inflation coming from a place we are not looking for it. david: if we get a little bit of inflation, is that part of your anxiety about negative interest rates in europe and around the world?the central banks might actually start to raise a little bit. julian: central banks are raising rates, maybe not in our lifetimes, but it will happen eventually. at this point in the cycle, when you are really actually seeing the surprise, that manufacturing pmi's globally have turned, not, forhe u.s.'s has us, this is the point in the cycle where a little bit more inflation is actually a good thing, and that does spur what we think could be rotation out of bonds and into stocks. david: mike, i will come back to you on repo. this may be the last time we talk about repo for a while. [laughter] david: yesterday, we were

watching with anxiety at 7:00 eastern, and it didn't do much of anything. michael: i don't think we are past it. i think we are past the point where it is an acute problem you have to worry about. i think the fed came may work -- with way more on the table. they are still picking it up. they are under subscribed, but there still is a demand there. i think with the massive treasury issuance that is going to continue, i think the repo story and the fed's intervention is going to be here through at least the first half of the year. david: thanks very much for a terrific conversation here at the end of the year. julian emanuel of btig will be staying with me. a reminder, you can find all 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. ♪

ritika: this is "bloomberg daybreak." a group led by tencent's byington percent of the world's largest music company. it values universal music at almost $34 billion, and will allow tencent and its partners to increase the stake to up to 20% in the next year. vivendi has been trying to cash in on the soaring value of the music business. it could help give universal better access to china. j.p. morgan chase plans to be the first global bank to take advantage of the opening of china's futures market. bloomberg has learned the bank wants 100% ownership of its joint venture there. starting tomorrow, china will allow full foreign control of future firms. that is your bloomberg business flash. david: thanks so much. we are back with julian emanuel, btig, who has a bullish call on stocks for 2020, but warns it may not be bullish enough if the public pause in love with stocks

-- the public falls in love with stocks. what will it take for the public to fall in love with stocks again? julian: it is perhaps just the realization that yields are likely going higher. if you look at the last five funds the flow into bond has been consistent, almost torrential, whereas there has been a reasonably steady exit us of funds out of the equity funds. at the same time, money market funds are almost at their highest balance is going back to the financial crisis. so you put that altogether with the backdrop of an economy likely to continue chugging along, and this idea that every great bull market -- and so you what you want, a lot of people have been arguing about this for the last 10 years, this is a great bull market. david: and it is getting cheap. do investors come in? julian: this whole idea of zero fee online trading, fractional share ownership, these types of

things, this democratization of investing, is likely the thing that is going to lead to more interest. from our point of view, all great bull markets have a period where the public does become interested in terms of flows. we haven't seen that yet in 10 years. david: and by the way, the sec is interested in exactly that marketization. that is julian emanuel of btig. he is staying with me. coming up, we may have been nervous about the economy at various times in 2019, but the end, it did come out all right. what should we be looking for in 2020? we will talk with adam posen, president of the peterson institute of economics, next. this is bloomberg. ♪

♪ david: this is "bloomberg daybreak." alixavid westin, in for steel on the last day of the year. equities futures have gone negative, which meant a good

part of the early morning was in the positive, but now they are all negative, and this is on top of the stoxx 600 or get a lot of those exchanges are closed, and volume is down about 80%. let's switch it out now and take a look over and see the u.s. ten-year. you can see they are selling off a little bit, down just under 1.9% now. the dollar index, where the dollar has been weaker several days, the fourth day in a row against the g10 currencies. gold remains up well above $1500 an ounce. that's been a remarkable one up -- a remarkable run-up. crude is up quite a bit. now it is selling off a bit on this come of the year. we spent a good part of the last year fretting over u.s.-china trade relations come about as we approach the new year, it looks like we will get at least phase one of that deal early in the year. how important will this trading

relationship be for the u.s. and the global economy in 2020? we welcome now adam posen, president of the peterson institute for economics. welcome. there's almost nobody i would rather talk with us about. how important will china be for the economy going into 2020? adam: thank you for having me. it's great to be with you. china is going to be new more or less important -- going to be no more or less important than the last few years. international matters are important, but secondary. this conclusion of this round of the trade war, which i think is just a cease fire, is going to be a small boost to chinese trade. the bigger effect on the rest of the world has been the shift in chinese trade, that they are looking for both markets and inputs from leases ever been the u.s.. that is everything from lobsters

in canada to semiconductors in taiwan to natural in africa. those trends will continue. china is going to just keep diversifying and engaging with other countries other than the u.s.. david: another thing china appears to be doing in the new year is liberalizing, at least to some extent, it's capital markets. with futures trading, with insurance, and it appears they will open up investment banking. could that be a game changer for the financial community around the world? adam: i must admit, i'm skeptical. not that they are not opening up. i think the insurance market, in terms of the growth effects on china, the potential reform is much more important than the investment banking market because there's not going to be that much hostile takeovers or mergers that are not really directed by the chinese government. i'm not sure there's going to be as much cross-border flow of people pulling money out or into

china, but i do think it just says that, as i heard while i was in china earlier this month, they are very concerned about getting more capital into their financial system. so it will be interesting to see how much they want the benefits and how much they can get without giving up control. china, asing on from you look at the major factors for the economy in 2020, what ranks towards the top? what about central banks, the fed, the ecb, and other central banks? adam: i think the central banks are going to be running in place. in the u.s., there will be the run-up to the election where the fed will understandably not want to be a political football, no matter how much president trump tries to make them one. but i think more broadly, there's just, as you were discussing before the break, there's no inflation threat, and a little bit of inflation would be good because it would have to come through the form of wages, which would be a good thing, as

chair powell has argued quite strongly. i think we are soon going to see those kinds of arguments in europe. i think the central banks are going to make a lot of noise because they will be turmoil around them, but they will be standing in place. the other big story i think for the next year is going to be how much momentum we get behind the green revolution. i think there is increasing momentum over the next year or two for big fiscal investment in the green space. us to which takes fiscal. we just heard german chancellor angela merkel saying that is her goal. they will really be investing in green. can we expect substantial fiscal stimulus, perhaps in the green movement? adam: i'm hopeful.

, expect in the near term particularly the german finance ministry makes promises, and then they don't tend to be as big in actual numbers as the claims. that is just the nature of finance ministries. i think that over the next year, we will see increased momentum. the key point which you made is that europe is going to be leading, both in the sense of actually showing leadership, but also a sense that they are going to move first. so how much they are willing to stand in that world and then start thinking about a carbon price or external taxes on u.s. and china once they go down that road is going to be a key determinant of the future. david: and a key determinant for the u.s. economy this year has been the u.s. consumer. what are you looking for in the new year> -- the new year? adam: my colleague at peterson did a forecast and got it basically right, that we are

basically going to have weak, very strong consumer growth, and that we were going to continue at this rate through the next year or two. i've argued that there's no reason for that to change, that in a post-financial crisis environment like we had in japan or in the nordic countries or canada in the 1990's, you would have long, steady expansions. so when you start talking about these things, i think housing, just, durable goods, even straight up wages have a long way to go. the whining you here occasionally about wages from businesses is just because they haven't had to pay half of the increased wages for a long time. so i think there's room to go. david: can you keep the consumer and the growth going, wage and job growth going, if you don't have capital investment? that seems to have trailed off some. don't you have to keep that going? need long-term, yes, you

to have capital investment to get productivity growth, to replace depreciated machinery and get movement in those sectors, but short-term, that is not the case. you can look at japan, which had a very long-lasting recession, totally driven by consumer. the corporate's were just saving, saving, saving. you can go a very long way with that. david: adam, thank you so much for being with us. that is adam posen of the peterson institute of economics. still with us in new york is julian emanuel of btig. let's start with china and how that fits into your hypothesis about what happens in 2020. how do you see it? julian: from our point of view, getting this phase one over the line, which presumably is going to happen sometime in the near term, is a good thing. president trump has made it clear that there could potentially be a phase two.

perhaps that depends on how the election polling goes. but from our point of view, what's interesting is that china already has a lot of stimulus to its pipeline, so similar the turnabout that the fed engineered in 2019, we would expect to see the stimulus start to kick in first quarter, second quarter of next year, and that provides upside risk to the global gdp, which essentially, at a forecast of around 3.1%, is as low as it has been in years. david: there's continuing fiscal stimulus in the united states, if you look at the tax bill and things like that. there's monetary stimulus in europe. can you have too much stimulus at some point? do you get out over your skis? julian: we think, with regard to negative interest rates, that is proven to be too much stimulus, given the fact that europe has been moribund economically for a number of years now, which is why we think the transition to

fiscal stimulus is likely to be very significant. but adam really hit on an instruction note -- on an interesting note in talking about the smooth runway on gdp. in fact, economic volatility the last number of years has been much more subdued, and that has been sort of a boost to financial markets and financial volatility, which has also been subdued. david: what about the climate? could it trigger the fiscal stimulus that adam posen was just talking about? we had and alum merkel talk about it, the new head of the european commission talk about it earlier. is there a possibility we get real fiscal stimulus in europe? julian: no question about it. the coalition partner with merkel, they change leadership several weeks ago, and the new leadership was very open about the fact that they wanted fiscal stimulus to spend on infrastructure and on climate change. we think that is a movement that is really in its early innings globally.

your: let's go back to bullish with some caution in it. what are the risks? what would keep us from getting there? julian: for us, the most important thing over the last couple of years have been the in constance. until september, yields were plunging. the yield curve obviously ce ofed for a time, and confidence really trended down with all of those over the course of the trade war in the last year and a half. that has turned. consumer confidence seems to have stabilized at relatively high levels. if either of those is threatened by the trade war, by internal politics in the u.s., that is becauseest threat to us , again, the consumer has done most of the heavy lifting. will continue to do so.

but you have come a long way, and confidence needs to reign supreme. david: what is restoring confidence in the c-suite? you're right, there was a shaking of corporate confidence in the middle of the year, i think related to the trade war. it's just a phase one agreement enough to get us past that? by reports, it is relatively modest. julian: no question, but it is a step in the right direction against the backdrop of the tenancy for presidential election years to engender upside risk to the economy, if you want to get reelected as an incumbent. we think democrats be as incentivized as the republicans to show upside economic risk. but it is really more this sort of knowing that there isn't likely to be any more escalation for the balance of the year, along with the fact that, for the most part, people that were making adjustments have made

their adjustments over the last year or so. youd: as we going to 2020, may the important point that historically, presidents have had some letters to pole, buttons to push mud to give a boost to the economy to help them as a practical matter. many thanks to julian emanuel of btig, and happy new year. now it is time for an update on headlines outside the business world. ritika gupta is here with first word news. ritika: a stunning turn of events in the saga of carlos ghosn, the former nissan chairman. he fled from japan to lebanon to escape what he called a rigged testis system. he was arrested -- rigged justice system. he was arrested a little more than a year ago on alleged financial crimes and was awaiting trial, but he says he is the victim of injustice and political persecution. he has lebanese citizenship, and lebanon doesn't have an extradition treaty with japan. dozens of protesters stormed the u.s. embassy compacts -- embassy

complex in baghdad. guards fired gunshots and tear gas to contain protesters. president trump tweeted that iran orchestrated the attack. it is one of the largest corporate espionage efforts ever. chinese intelligence stole large amounts of documents from scores of companies, according to "the wall street journal." they included mining company rio tinto and health care giant philip. 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'm ritika gupta. this is bloomberg. up, stripe,g airbnb, and palantir, some of the big ipo's that may be coming to the market and new year. and if you have a terminal, you

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

ritika: this is "bloomberg daybreak." a shakeup at china's largest technology company. huawei will overhaul management ranks after revenue growth slowed in the second half of the year. u.s. sanctions under huawei have spooked customers, and suppliers around the globe as the trump ministration has called huawei a threat to u.s. national security. oil is poised for its biggest yearly gain since 2016. prices are up by about 34% this year, bolstered by fresh

geopolitical tensions in the middle east, plus u.s. crude stockpiles are forecast to extend declines. publishing growth in the u.s. has hit a speed bump. it was the lowest this year and a century. the reasons are declining birth, increasing death, and slow down international migration. the u.s. population rose in the , or year by almost 0.5% about 1.5 million. the population is now 328 million. that is your bloomberg business flash. david: thanks so much. we turn now to wall street beat, where we cover three things wall street is buzzing about this morning. first up, 2020 ipo candidates. mkm partners is out with its table of the biggest public offerings that may be coming to us in the new year. then, a big bet on private credit. arizona's pension plan says it wants to allocate 1/6 of its investments to private credit. finally, jp morgan's futures

ambitions as the new year brings liberalization in chinese capital markets. joining us now to take us through it all is sonali basak. happy new year. sonali: happy new year. david: let's talk about ipo's. why are they going to be better than last year? sonali: we don't know that for sure, but there are still a lot of unicorns out there. we have a new most valuable startup in america, and that is strike. they have been pretty lukewarm on whether they are going to ipo or not, but airbnb has been very vocal about their intent to go public. we will see if they use a direct listing model. they would be the third want to use a direct listing model. david: that's what they are talking about instead of traditional ipo? sonali: exactly. they could make that a more popular model. fccthing interesting is the is taking a look at the model, apparently.

they've been asking market makers for data in regards to .lack, which happened this year let's see if that has any impact on the demand for airbnb. david: palantir is a fascinating one. very involved in high-tech defense. sonali: they've also raced so much money in private markets. i actually don't think they are going to go this year. think that was the initial hope, but it looks like they will be delaying for some time. post mates had to delay this year. casper could go next year. there definitely are some names up there. david: the question is, how many of these are making any money? the lesson upon a 19 is markets do care if you are making money or not. sonali: they are much more disciplined, and they want to see a real tech company instead of a real estate company with a little tech. door -- i think will be -- doordash will be one of the more interesting to watch.

it hasn't turned a profit, valuation is $12.6 billion. it is softbank backed. a lot of skepticism. down see if they take it and see. from 2019 tran carrying over to 2020's is private credit. now there's a state pension plan saying we want a lot for our credit. sonali: and one out of every six dollars that it manages, a really big amount. you have other pension funds doing the same thing, ohio and illinois. some of these are moving high-yield bets over to private credit. remember, low interest rates for so long has really put these pension funds in a tough spot, so they are searching for yield. they are really hoping private credit could be an answer. the question is how they are going to get exposure to all of that. david: is there demand? at what point does it really

deteriorate the quality of the credit you are getting? sonali: that's the big question. we have definitely heard managers really concerned about this. hedge funds are also changing their strategy. private equity funds are pouring into private credit. apollo is a bigger credit manager than a private equity manager, so if you are competing with all of that, with tons of years of expertise, how do you compete for the best? david: in the meantime, jp morgan wants to compete in china. china is liberalizing some of its markets, allowing u.s. companies to take interest in futures trading. sonali: so interesting. bloomberg intelligence estimates there's about $9 billion of profits on the table by 2030 in the commercial banking industry in china. there's a really big opportunity here. jp morgan is taking one of the first chance is to jump at the futures market, one of the first part of the market that is really opening up. part of the business also is

insurance. it is really important. it's a lot bigger of an opportunity, and kind of a more obvious to a lot of people. one of the managers has already started to capitalize on that opportunity. allianz as well. david: sonali basak, thank you so much for being with us on this last trading day of the year. in today's off the beaten street, where you looking for good return for your investment decade? last if you put your money in the s&p, it tripled. some of the best performing stocks in the russell 3000 were that much, but the s&p group the bitcoin- but

grew 9,000,000% over the last 10 years. whatever people say it is worth, you have to be able to buy something with it. a coming up, be careful what you with four. we will look at why growth in china's domestic economy could weigh on u.s. equities. that is next in today's trader's take. if you are jumping into your car, tune into bloomberg radio on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

♪ david: time now for our trader's you can listen to this by typing in squa . i am trying to pull up this terminal, but it had a typo in it. vincent: no worries. but we see is there's a very close correlation between china measure of the oecd

g7 inflation. ,alking point for u.s. equities with china attempting to build up or increase domestic demand, if they do so, it will be seen in china imports. with imports rising, that reflects well for emerging-market currencies. david: this is a fascinating correlation i would not have drawn. you're going to see what should do better is emerging markets, asia, perhaps not europe. this rotation that julian talked about out of fixed income. david: many thanks to bloomberg's vincent cignarella. next, we will talk to kathryn rooney vera of bulltick. this is bloomberg. ♪

♪ david: carlos ghosn escapes

house arrest in tokyo and shows up in lebanon. he says he wasn't fleeing justice, but injustice and prejudice in japanese courts. china's economy continues to show signs of stabilizing as manufacturing pmi's stay in positive territory. and markets take a detour. it was all heading up until yesterday, and then both stocks and bonds sold off together. can we get the mojo back before the bell rings? welcome to "bloomberg daybreak" on the last day of the year. i'm david westin, in alix steel. -- in for alix steel. there's not a lot of trading going on. there's almost none over in europe. a lot of exchanges are closed. once again,s weaker fourth day in a row against the g10 currencies. crude has turned around and come down a little bit after a nice, long run.

joining me for the entire hour is brooke sutherland, bloomberg opinion columnist. talk about a new year. carlos ghosn has a new year. brooke: he has fled from japan, gone to his homeland of lebanon, where his grandparents are from, and he does have citizenship there. it is very unclear how he got there because his lawyers are insisting they have all of his passports, and he just escaped in the middle of the night. david: japanese lawyers said, it wasn't my fault. big surprise to me. brooke: i think they don't want to be blamed for the fact he is gone. my bloomberg opinion colleague writing about this, wondering, does japan just not want the distraction with the tokyo olympics come up? david: sort of look the other way? brooke: who knows? david: he has apparently said he's eager to talk to the media next week. think we may not have heard the last from mr. carlos ghosn. brooke: it is interesting that he did not go to france because

he's also under pressure in -- in france, of course. they are not too pleased about the way he handled the finances, so if you are really not fleeing justice, why not go to france? it will be interesting for this man who flew around constantly as a ceo all over the place to stay in one country indefinitely. that is a little tricky. brooke: and he will probably have to because lebanon does not have an extradition treaty to japan. for your point, he can go to davos, he can't visit the united states or anywhere else. it will be interesting to see what happens. we want to bring in now kathryn rooney vera, bulltick head of research and strategy. great to have you. happy new year. last day of trading, lastly of the year. what are you looking forward to

in 2020 given what has happened in 2019? it was a pretty good year for everybody kathryn: sure, it was a great year. in december we had a top to bottom correction near 20%, so since then we have rallied 25% on the s&p 500. even emerging markets have done well. recession risk and trade war fears have been priced out. 2020, we are telling our clients that it is very important to protect your unrealized returns. you have some really juicy returns up to this point, so either you liquidate some of them, and/or predict the remaining. one of the recommendations i am telling our clients at the moment is to buy put options. you can buy them through november expiry. superet you through tuesday, through the democratic nomination, and the presidential election. there's likely to be some volatility. i get some pushback regarding

the fact that, in the year up to a presidential election, markets tend to do very well, but we've already done very well, and a lot of the outside risks have been completely discounted, discarded. you talk about removing that uncertainty, a couple of headlines from bloomberg opinion this morning on how it is harder to forecast the economy given that we are not seeing cyclical patterns. what the market got run with the bond boom. how do you predict the market in this environment? how do you have confidence in what we see in 2020? kathryn: you are right, there is a divergence. i was one of the very few who was saying there won't be a recession in 2019, nor 2020, when that was increasingly consensus one year ago. what we saw at that point was that the market was mispricing recession.

now i have to go the opposite direction because the fact is, the market is not pricing in really any negative news. the market is pricing in a complete resolution on the trade front, no u.s. recession, no undesired consequences from the monetary expansionary exercise we've seen on a global scale. 25% of government bonds are negative yielding. you have a massive appetite for risk because of the central banks have been doing. i think there's some inherent risks that the market has completely ignored. kathryn: you -- david: you've mentioned several possible negative consequences. how do you rank those? kathryn: my biggest concern is on the political front. the market is at record highs. discounting a trump reelection. whether or not you like him, he's been good for the markets. david: that is undeniable. kathryn: the market likes less

regulation, lower taxes, tax codes implication, and less onerous governments on private sectors. when you have private enterprise and consumer confidence very high, you're not going to get a u.s. recession unless we have some negative shocks. my biggest concern at this point is that you get the market finally discounting political risk, which is trump doesn't get elected, or you get a socialist in the presidency. sandersthat a warren or , if they capitalize on trump's unpopularity, regardless of where the economy is, then i do think the markets will dropped when he 5%. brooke: there is a reason why candidates like sanders and warren are popular. we talked about the divergence in the economy, the tale of two separate environments. is there a risk that we are

overstating the strength of the consumer? is the consumer really this strong when you look at the spike in installment loans and online lending? goodyn: that is a really point. it is not as near-term a risk. i am talking about warren, sanders, even biden. anybody who is not trump. trump has been great for the markets. anyone who is not him is a very near-term risk. the bigger risk is the inflation of consumer appetite, the inflation of risk assets. that you can tie holy to central bank intervention -- you can tie wholly to central bank intervention. the interest rate policy has caused a lot of may be elation in the markets and has forced people out the risk curve. and hungryirsting for duration. there are people that should not , somerisk assets who are

plea for the yield. david: there may be people borrowing money who should not be borrowing money. but almost always happens when you have money floating around. do you see it in leverage? kathryn: you actually do. in the publication i recently got out, you see corporate slightly moreing debt then just before the great recession. brooke: that is not a great comparison. david:david: that is not encouraging. kathryn: yes, you are seeing that. brooke: when do you start to see the consequent as of that said in? is that a near-term risk, or something we may be see in a postelection environment? kathryn: that is the right question. what will be the spark to cause this unwinding of risk? and that is not a near-term phenomenon. inflation.ched to once you get inflation picking atthe pace, the ecb is now

-0.5, so once you get inflation picking up and central banks sounding less and less dovish, and even having to increase rates or come off the negative bound, then you're going to get an unwinding of risk, and that's where the chickens come home to roost. david: i don't think you heard -- i don't think i heard you mention a risk of inflation. kathryn: one of the misconceptions we have right now is that inflation is dead and buried, and never going to come back. i say over the next year that inflation is a risk? no, but it will be. a more positive phenomenon, but i do think that inflation will come back to the four, especially if the u.s. continues to go at a nice clip, europe comes back on the economic horizon in 2020 and does pretty well.

david: kathryn rooney vera of bulltick will be staying with us. in the meantime, we are taking a live look at sydney, australia, where they are already ringing in 2020 with fireworks at sydney harbor. it is always a great scene every year. live from new york, this is bloomberg. ♪

♪ where we've talked about the markets overall may head in 2020 and where the risks may live. now we want to delve into the specific sectors and what we met expect in the new year. still with us this kathryn rooney vera of bulltick.

give us your overall sense of sectors. kathryn: our top picks are going to be real estate, staples, financials. those are the top three we see outperforming this year in terms of valuations. if you have the more bullish scenario to which i attach a 60% probability, you're going to see the market priced in sectors that have heretofore underperformed. i am not overweight on tech. it has done so spectacularly well. it has really brought the market to where it is now. i think we need to be market neutral there. but with regard to where we see interest rates staying in the u.s. economy evolving in 2020, i would have to go with my top being financials. brooke: i noticed you have industrials underweight. that is near and dear to

my heart, covering industrials. is it just that all of the good news is priced in, or do you worry about the growth trajectory? kathryn: not to to do my own horn, but that was my top picks horn, not to toot my own but that was my top picks for 2019. say let's continue, let's recommend still buying that rally, but we think we've seen the bulk of the rally up to this point, and we have recommended that are investors take gains on industrials, which was our top picks for this year. ie one country or sector that have been actively recommending come our top performer this year was in consumer considered -- was in consumer discretionary. there i think there is further upside. even though it has done so well and there are etf's attached in

the chinese space, i think there's more room to rally. but in industrials, i think we are tapped out. brooke: is that true even in aerospace and defense? kathryn: when you go into the subsectors, there are different stories that play out. there i think there would be more value, but in the broader space, i think that we have seen the bulk of the run. david: explain to us about health care, such a substantial portion of gdp. a lot of talk about it in washington. i see it as a little bit overvalued on urinalysis, so you not as enthusiastic about it. it's -- on your analysis, so not as enthusiastic about it. kathryn: it is a tricky space. that makes me weary of the space, especially if in february, we have iowa and new hampshire, which historically,

if one candidate takes both, he or she runs the table on super tuesday, so i am very weary of health care, and i think the three sectors that would be most affected if you got one of those candidates as the nominee would have to be tech, health care, and financials. brooke: you talked about consumer discretionary being an opportunity. 10 you unpacked that a little bit? -- can you unpacked a little bit? kathryn: i like staples, actually. i think it will be a more defensive name. i think we need to be more defensive this year. there's a lot of euphoria, and there's this herd mentality. last year, everyone was calling for recession and protecting yourself. now the markets are going to go higher forever, the consumer is doing very well. i like to take a more contrarian position, and that is why i like going for more defensive instead just consumer staples. david: you are also positive on energy.

but there are some complications. [laughter] kathryn: absolutely. i couldn't agree more. to bti at $55 a barrel. i have it underweight this year. i think it is overvalued, but reason i don't think it is a place we want to be buying at the moment. brooke: i want to pivot back to industrials for a moment. david: i would be disappointed if you do it -- if you didn't. [laughter] brooke: with everything boeing has been through, it is basically where it was at the start of the year. as you look at other opportunities, are there places where you have seen a lot of these rifts? where later in the year, you might see some of that peter out? kathryn: sure, and you are touching on some of the things we talked to our clients about, pivot points. if in early february we had something pan out on the democratic front, which moves the markets, then we pivot.

we say, where is the value right now? if the market does fall precipitously, that would be a pivot point. another would be on the trade front. let's say there is a conflagration of tensions between xi and trump. that would be another. you're looking for where there is market dislocation or pricing. david: kathryn rooney vera is staying with us. coming up, the new year rings with it the -- what will it mean for refiners, shippers, and ultimately, consumers? live from new york, this is bloomberg. ♪

♪ ritika: this is "bloomberg daybreak." a group led by tencent is buying 10% of the world's largest music company. the deal values vivendi's universal music at almost $34

billion and will allow tencent and its partners to increase the stake to up to 20% in the next year. this nd has been trying to cash in on the soaring value of the music business. tencent could help give universal better access to china. j.p. morgan chase plans to be the first global bank to take advantage of the opening of china futures market. bloomberg has learned the bank once 100% ownership of its joint venture there. starting tomorrow, china will allow full foreign control of futures firms. suingnd postmates are california to block a new gig worker law designed to make sure workers such as in uber drivers receive employment protection. the companies argue that the law unfairly targets companies like there's and will threaten worker flux ability. uber and postmates also complained that other industries are exempted from the law. that is your bloomberg business flash. david: thanks so much. we turn now from cars to boats.

the new international maritime organization rules go into effect tomorrow. explainer takes us through the input haitians. alix -- through the implications. new international maritime rules take effect in 2020 and limit use of maritime fuel. the rules are here to stay, and you can't cheat. if you do, you pay a big fine and risk being labeled as un-seaworthy. you can buy an exhaust gas cleaning scrubber. the most popular are open-loop scrubbers, but they release a into the ocean. certain countries like china and singapore are banning them, and they come at a high price of two to $4 million. or you can use low sulfur compliant fuel like diesel and

marine gas oil. analysts say demand for these could grow as much as 2 million barrels a day. the problem, supply. refiners can run the u.s. light crude and get diesel as well come up eventually creating a glut, or choose heavy crude from canada and venezuela to get more diesel, but that is in tight supply. the result would be not enough product, too much demand, and potentially high diesel margins. the new rule could add to billion dollars onto its annual fuel bill, ok with a company for a market cap of near $30 billion, but a dealbreaker for a smaller shipping firm. the result, some shippers lose money or go bankrupt, while others see business boom for moving more product around the world. it is good for refiners who can use lots of different type of crude. crude and product spreads go haywire, and vessels turn to alternative products lng. anyway you slice it, it has the power to change the shipping world. david: so i won't get into the

intricacies of sulfur limits on tanker fuel, but it raises a broader question, whether this is the first of what may be a lot of developments in the new year, and in the new decade, actually, where climate change regulation and responses really affect business decisions. brooke: the aerospace industry is very actively watching this and concerned, especially when you see the pushback in europe towards airplanes. see people climbing on top of airplanes, trying to stop them from flying. a lot of concerns about climate change and the inflations of that, and i think ceos are watching this, trying to make prudent decisions. in the aerospace industry, they are pushing into more fuel-efficient engines, but you have to wonder whether you might see something or limiting in the future. david: you certainly see it in the automotive industry, but europe is very aggressive in this as we move into electric vehicles and all of these companies trying to figure out

the capital, doing joint ventures in having to invest in the process. brooke: it also has implications for the labor market because you need so many fewer parts to build an electric vehicle than a traditional car, so you need fewer people to put them together. where are the jobs going to be as we push into more climate friendly technologies that don't operate the same way? david: there are also to question about what we consume. coal?consume as much does climate change but pressure on softer commodities like coffee and sugar, where it is harder to grow it? brooke: in the shipping industry in particular, they've raised a lot of concerns because there's a huge variability in terms of what fuel meets these new standards, so if you mix them together, you can have catastrophic onset once is that range from the system getting clogged up two explosions, so you had a lot of pushback. you can see that likely happening and some of these under industries as people try to figure out what these regulations mean and how to adapt. david: which means cost and

difficulties, and also opportunities because someone will sort this out. i will make this work for you, so someone is going to make some money from this as well. brooke: i'm sure you are going to see startups and new upstarts. with these bigger shimming up a nice -- these bigger shipping companies, it is a lot easier for them to manage this expense. others will have to do consolidation and bulk up for this regulation. david: coming up, one of the predictions we are hearing about 2020 is that emerging markets led by china may take the lead. we will discuss that next. this is bloomberg. ♪

david: this is "bloomberg daybreak." i'm david westin in for alix steel. in the united states, in the equities future market, they are

all in the red. there was a selloff last couple of days and equities after a nice run up. in the meantime we go over the next board where the 10 year is selling off a little bit, just a very little bit. we also have the dollar down for the fourth day in a row against the g10 currencies across the board. gold continues to rise, up well above $1500 per ounce. new york crude is selling oft after a long run up. the one thing we know for certain about 2020 is china will be a major factor for the united states and for the world. earlier today we talked with adam posen, president of the peterson institute about what we should be watching with china in new year. adam: china will be no more or less important that it has been for the last several years. china like the u.s. has the luxury of being focused on domestic economy.

international matters are important but secondary. this conclusion of this round of the trade war, which i think is a cease fire will be a small boost to chinese trade. the bigger effect on the rest of the world has been the shift in chinese trade. they are looking for markets and inputs from places other than the u.s.. that is affecting everything from lobsters in canada to semiconductors in taiwan to natural in africa. those trends will continue. china will keep diversifying into keep engaging with other countries other than the u.s.. brooke: another -- david: another thing china appears to be doing is liberalizing its capital markets. first with futures trading, and then with insurance, and then it appears they will open up investment banking. could that be a game changer for the financial community around the world? adam: i am skeptical. not that they are opening up. i think they are to some degree.

i think the insurance market in terms of the growth of fx on china and potential reform is much more important than the investment banking market. there will not be that much hostile takeovers or mergers. they are not directed by people in the chinese government. i am not sure there'll be as much cross-border flow of people pulling money out or in of china. whennk it says as i heard i was in china earlier, they are concerned about getting more capital into their financial systems. it will be interesting to see how much they want the benefits and how much they can get without giving up control. david: that was adam posen earlier. president of the peterson institute for international economics. still what is kathryn rooney vera. you mentioned china earlier. while you are talking we had someone send a message and it said what investment vehicle would you direct an investment

-- is equities, is it etf, is it real estate? what is the best way to invest in china? kathryn: there are different etf's. there is the ssi which has a different waiting with the banks. i prefer ones tied more directly to the consumer discretionary sector. you can look at certain etf's that have a higher waiting attached internet company names or big consumer names. that is the way to put china. i agree with your previous , it is interesting to consider this as a phase one and what the next round will mean for trade negotiations with china and how much control they are willing to cede to gain that top position, which is what they're looking to be. the superpower politically and economically of the world. brooke: talking about consumer discretionary specifically, but if you look at the broader china

stock market where do you think we are headed directionally? kathryn: if we get another phase one, phase two, some thawing of the relationship, given the fact that 25% of the economy is tied to exports, you are more than likely not going to see chinese equities continue to rise. that should bring up the emerging markets index etf, which is now the top five are entirely asian. it used to include a couple latin american names but now they have fallen out. if you want to play x asia -- ex-asia, then you have to go with a specific name. david: you mentioned msci. the msci is in the process of adding more stocks to the index. what effect will that have? adam posen expressed some skepticism there'll be a flood of capital into debt or equity markets. kathryn: it is interesting

because emerging markets is now consensus bullish. everywhere i go on wall street, emerging markets is the next cap performer for 2020. i think there should be some skepticism, especially with regard to latin america which is growing low potential and faces a lot of headwinds with those that are unwilling or unable to engage in structural reform and fiscal expansion. if you look at non-china emerging markets, are you still bullish on consumer discretionary? kathryn: that is a china call because that is the purchasing power in that sector. that is the growth engine going forward. the chinese authorities, it is slatedhey realized exports and government spending, there'll all relate -- there are only so many roads to nowhere so they realize the past economic growth is that of domestic demand.

with regard to latin america, i would say you need to look at the brazils of the world. brazil has benefited from the trade war. it has benefited. it has seen an increase of exports of soy and other materials. how do you account for clinical rest when it comes to president bolsonaro because it is not clear where the country is going -- how do you account for political risk? the political sense, i would not look at brazil. i would love more in argentina. will that become a disorderly default? look at chile or peru. david: two or three years ago, would've thought chile? kathryn: it is a pet caster fee what is going on. brooke: you talk about brazil

benefiting from the trade war. they have accumulated market share, and i think the pie can expand. if china continues to grow at the pace we have seen -- over the last five years china has been decelerating but they continue to add demand to the global economy -- there can be that pie growing. i think brazil has maintained the ability to export and increase their production to match that. david: where are you on mexico? the private sector is not sure where the president is going. kathryn: they are scared. with some reason. from a market perspective, mexican assets are looking beaten up and i think there's a lot of value there. on the other front, while he talks a big game, he has not hurt the economy in any specific way. the economy is not in recession,

it is blowing that it -- it is growing at a slow pace, and that has been the story for the last 10 years. i think mexico has some value. i think there is value in the fixed income space. brooke: back to china, a pretty good pmi reading this morning. you think we will see stimulus from the central bank or is that moving off the table? kathryn: that is the other point i like about emerging market. the countries that have the capacity and the ability to implement stimuli, which china has. it has the ability to implement monetary and fiscal stimuli without having to get the approval of a congress. congress has that benefit. they have not done it thus far. i think china will see a deceleration from 6% in growth to 5.8%. i think that is a good chance. david: before we let you go i want to pivot back because we have a viewer who wrote in about something i want to talk about earlier. back to the united states.

when you talk about the price-to-earnings ratio expansion, or contraction, which sectors do you think are likely to have an expansion or contraction in the price-earnings ratio? kathryn: if we have the scenario where the s&p moves higher and we do not have any problems, we have the s&p hitting 3500 by the end of the year and i would stick with my sectors. if you get undervalued sectors that continue to see multiples of higher prices, then you get money flowing into those other value sectors and bringing up the prices. i will stick with my sectors. i like staples, financials, and real estate. dubai the idea we should see a rethinking of what a normal pe ratio is? -- do you by the idea? kathryn: we have to look at where we are in the united states. what is the neutral rate? there are a lot of things we have to consider, and i do with

regard to where we are in monetary policy. david: let's talk about the natural interest rate. change seen a structural in the economy overall? kathryn: the taylor rule is something to consider. have the inputs changed or doesn't no longer work? i think the natural accelerating inflation rate of unemployment is lower, which means to incite inflation, we need to get even dramatically lower unemployment rates. it is not that these formulas no longer work, it is that the inputs have changed. david: thanks so much to kathryn rooney vera. good to have you with us. now let's get update on what is making headlines outside the business world. we turn to ritika gupta. ritika: president is blaming iran for an assault on the u.s. embassy compound in baghdad. he also called on iraq to protect the facility. the iraqi militia men and their

supporters were venting rage over the u.s. airstrikes and their iranian backed comrades. they broke into the compound through a main door and set fire to reception area. guards fired tear gas to contain them. a stunning turn of event and the saga of carlos ghosn. the former nissan chairman has fled from japan to lebanon. he was arrested a little more than a year ago on allegations of financial crimes he had been out on rail in tokyo since april and was awaited trial. he says he is victim of injustice and political persecution. citizenship and lebanon does not have an extradition treaty with japan. in australia, coastal towns in the southeast have now caught on fire. andeast 12 people have died thousands are seeking refuge on beaches. the emergency puts a spotlight on australia's capacity to fight the blazes.

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? are theoming up, what big issues for the health-care industry as we head into 2020? we talk about drug prices and medicare for all next in today's bottom line. bloomberg users can interact with the charts shown using gtv . catch up on key analysis and save charts for future reference. live from new york, this is bloomberg. ♪

ritika: this is "bloomberg daybreak." a shakeup at china's largest

technology company. itse wake will overhaul management ranks after revenue growth slowed. -- thenctions on huawei transit administration has called huawei a threat to u.s. national security. oil is poised for the biggest yearly gain since 2016. prices are up 34%. they have been bolstered by geopolitical tensions in the middle east. stockpiles are forecast to extend declines. population growth in the u.s. has hit a speed bump. it was the lowest this year in a century. the reason for declining births, increasing debt, and -- increasing gas, and a slowdown in migration -- increasing debts, and a slow down in deaths,on -- increasing and a slowdown in migration. the population is now 328

million. david: time for bottom line. i am watching netflix. netflix has done extraordinarily well, but its stock as not as good. it now has two movies eligible for an oscar, the irishman and a wedding story. it has caused some dissension in hollywood. the story released this morning that came out of the wall street journal, the disney company is about to own 30% of the box office. no studio has ever done that before. it helps that it bought fox. the battle of the studio tightens. brooke: and you have the launch of disney plus which is a testament to how much netflix has changed the way we consume entertainment. david: they are doing the movies and disney has gone in a big way. brooke: a lot more subscriber -- david: a lot more subscribers than they thought they had. brooke: staying with entertainment, i am looking universal music group.

a 10% state in the business has been sold to tencent. vivendi has been trying to sell since july 2018. a lot of doubts about whether this would come together. they were initially trying to sell the private equity. i do not think the valuation was quite what they wanted to be, now tencent is stepping up and the valuation for the universal group. that is a tough business. what will tencent do? brooke: they have benefited from the shift to streaming. they are starting to see some of the growth died down in markets like the u.s. and europe. really the growth is in asia. there is a lot of piracy and upstart local competitors. tencent will give you an edge. universalarantee music stays on its own platform. david: also if you own the rights you do not have to pay

the royalties. brooke: and tencent has a stake in spotify. if you think back to stars like taylor swift who pulled their music from spotify one point, it helps make sure the business continues to run smoothly. david: i want to make a correction -- our producer points out it is a marriage story, not a wedding story. i did not watch it. i did watch the irishman. the third thing we are talking about is the whole sector. health care represents a third of gdp and is something everyone cares about. as we head into 2020, 1 of the big issues facing health care is to what extent what goes on in washington could impact how we take care of our own health. we welcome brian ride who covers health care. let's start with drug pricing. we heard a lot about that on capitol hill. they will do something about that. democrats want to, president trump wants to, will they get

something done? they possibly can. 22hink the deadline is may for the budget that has health care specific funding extensions. they want to extend those programs noncontroversial and widely supported. what they are envisioning is drug price reform and surprise billing that could do just that. drug pricing has risen much faster than the cpi. the drug companies sate that is because we are doing such a good job and doing so much research. our lawmakers buying that argument? brian: some are. you saw the house passed a comprehensive drug pricing package a couple of weeks ago. that will die in the senate. within that package is something for there is agreement between republicans and democrats. that to me is a reform of the medicare part d program.

both parties agree on two key components. they want to put a cap for seniors and the part d program. reduceey want to taxpayer's exposure in the catastrophic phase from 80% down to 20%. when they do that, that is the trick. either pharma or health insurers will have to pick up the slack and that is where the debate will be. brooke: the other big issue is the single-payer health care. a lot of debate about that among the democrats. what would be the impact of that on the health care industry and you feel like the stock surprising in that risk or some of that still to be seen? brian: it is a great question. the term medicare for all covers a wide range of health care programs that democrats are debating amongst themselves. if you look at the single-payer vision bernie sanders is supporting, that would absolutely obliterate the health

insurance industry. it would be catastrophic for hospitals and other providers, everyone across the board. from senator sanders standpoint, that is a feature, not above. if you look at -- not a bug. if you look at joe biden, they would view it as expanding a public option to open up the idea if you are under age 65 and do not have a lot of good options, you might be able to buy into medicare. americans like options more so than they like being told what to do. brooke: would you see an impact on the drugmakers themselves with that type of policy being proposed by democrats? brian: the drug industry will be closely watching the november elections, not only for who wins control of the presidency but more importantly who controls the senate. as long as republicans control the senate, the democrats holy grail on the drug pricing front, dimming the government the ability to negotiate prices directly, that is a nonstarter

with republicans. as long as mitch mcconnell is the leader, that will not change. you are seeing the drug companies act accordingly. 2020, tomorrow starts which happens to be an election year. we have a few primaries and impeachment. is congress going to do anything this year? brian: it is a great press -- it is a great question. we are not in the best environment for bipartisan agreement. usmca looking like they will have some signing agreement. there is a reticence among democrats to hand the president a win in an election year. they have to get reelected themselves. i think their voters are saying they need to do something. an out-of-pocket cap and the part d program is something that makes sense. congress is a lot like a college freshman where they tend to work best when they have a deadline

forcing them to do so. i think the may 22 funding deadline is important and what investors need to watch because of they are going to extend funding for community health centers and other noncontroversial things, they have to find a way to pay for it. drug pricing reform could be a way to do that. david: gives a whole new meaning to the freshman 15. brian rye of bloomberg intelligence, thank you for joining us. and thank you to brooke sutherland from bloomberg opinion for joining us. coming up, we took a look at some of the best and worst performers of 2019 in today's technically speaking. if you're heading out, jump in your car entered into bloomberg radio on sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

david: it is time for technically speaking. bill maloney, chartered market technician and voice of

bloomberg equity squad joins me now. you can listen to bill on the bloomberg by typing in squa . bill: andy was one of the big movers. those trends have only accelerated since october. what we little -- what we want to look at is the 2000 peaks. look for resistance around 4050, which is the 2000 peak in the stock. shorter term, the stock is clearly in an uptrend. macy's was one of the bigger decliners this year. down around 40%. the stock may be finding a bottom. 14 has been support dating back to august. david: thank you so much. happy. this is bloomberg. ♪

romaine: i am romaine bostick in for jonathan ferro. the countdown to the open starts right now. ♪

romaine: coming up, a tale of two have spirit how the market ian's d 2020. 2020w the market ends depends on which part of the are you want to focus on. and if the pickup in growth is cyclical versus cyclical. the markets wrap up year dominated by trade negotiation. 30 minutes until the opening bell this morning. you can take a look at where we are. muddling along. absence on the desk. the titrating range. s&p futures down .2%. coming up the 20 runoff. you can see euro-dollar up the seventh straight day. 1.1238.ng to see on the 10 year yield, 1.89. we started the year over 2.68. quite a