. china's central bank eases restrictions in advance of the lunar new year. asian markets like it. pmi coming in under in 54 the 11th month in a row, once again by germany. a risk on start to the new year, with stocks from asia to europe, u.s. futures climbing even he higher, hope apparently springing a terminal. welcome now to "bloomberg ." break you can see u.s. futures have been up all morning long. no hesitation whatsoever. that was led by europe, of broadly across the board, led originally by asia. in the meantime, the u.s. 10 year, the yield is going down a bit on again. it was the reverse for the day but it has come around again. oil has curved up as well. off for a bit, that is where we are in the market.

now time for the global exchange . this is where we bring you today's market moving news from around the world. our bloomberg voices are on the ground and with this mornings top stories. in asia, hong kong kickoff 2020 with renewed protests, vandalism, and tear gas fighting running battles on new year's afterd into the night tens of thousands of mostly peaceful protesters flooded the streets. joining us now from hong kong, karen lee. give us a sense of why exactly things are in hong kong. what happened? karen: we kicked off the year with protests that resembled what we have seen over the past six months. thousands took to the streets. marching from downtown to the central financial district. we were watching them for signals of what we can expect in the months to come and how much the protesters are going to take the fight into 2020. what they came up with was a

turnout with a march that was largely peaceful for many hours and they intended to keep it peaceful. we didn't see tensions turn until later in the evening. for a long time there were young families and elderly out. one of the largest protests since earlier in 2019. we expect this to continue into 2020. all right, thank you so very much. staying in asia now, the pboc has slashed the required reserve ratio for commercial lenders by 50 basis points. joining me now on the telephone from hong kong, our bloomberg chief asia economics correspondent. the markets seemed to have liked it over there. but do they do this every year, release a bit more cash to put into those envelopes?

>> they are of course putting in over 100 billion u.s. dollars into the economy. as you mentioned, we have a big spring festival coming up that has always put the squeeze on the cash. it also goes to show you, though, that with signs of stigma in the manufacturing sector, the pmi and the trade deal that is expected to be signed off this month, policymakers are still clearly nervous, feeling that the economy still needs this support . they will tell you that there are probably more actions like this coming down the pipeline. david: thank you so much for reporting today. and in the middle east, more fallout from the escape in japan. detained seven people, including four pilots after they began an

investigation into private flights headed to beirut. joining me now from their, our middle east and africa executive editor. quite the mystery there. what do we know? what is the latest? >> it's a mystery, the turks are coming out saying that they didn't know he was coming. they are indicating this saying that the plane must have landed in istanbul, there was trouble with it and then they switched planes that flew on to beirut. they also mentioned that he appears to have been in a box that was transferred from one to another. in lebanon the story is of course also continuing to make waves. we just have the justice minister in lebanon saying that if the japanese were to ask for

him to be extradited back to there is no extradition treaty between the countries, but he did say that lebanon would investigate and look into them. which does raise the possibility of potentially having a trial there in lebanon. thank you so much. the downturnwhere deepened in december, despite new to monetary stimulus and an easing of trade tensions. it came in below 50 for the 11th consecutive month. joining me now with more from frankfurt, not much happy news here in europe. the pmi manufacturing and german polls, off as i understand it?

>> exactly. germany and the netherlands have the biggest slump. job losses were the steepest since 2013. that is the tail end of the last recession. there is a caveat, the survey was concluded in the middle of the month, just after the middle of the month, it may not capture all of the benefits coming out on the trade deal. similar issue in the u.k., the worst manufacturing slight in 70 years and the survey took into account the days after the u.k. election that for as johnson won. but again, there are concerns over what happens next in the u.k.. numbers are only slightly better in asia, but things were pretty gloomy on the factory floor.

but you do raise an interesting point about the effect in germany. finally, right here in new york, the fed will release minutes from its latest meeting tomorrow. joining me now with more is catherine, our cross asset reporter. we kind of know what the fed is up to, right? >> good morning, david. inflation.s on they signaled no moves 2020 but it was inflation that helped to move markets with several policymakers saying that letting inflation overshoot the 2% market target would be appropriate. they call that the inflation makeup strategy at the time. it has been important for the dollar and for the shape of the yield curve. remember, that is the bond arket you man that set off wave of warnings over the summer. but it is going to be difficult for short and yields to move that much.

they are very sensitive to fed policy. on the other end, if they are willing to let it run hot, it is going to pressure the longer-term rates higher. the natural curve steepener is what has been playing out in the markets will be parsing the minutes for anymore views on inflation and just how high the bar for rates could be. thank you some of, catherine. tune into bloomberg for our interview with charles evidence and loretta mester, from the american economic association annual meeting on san diego at 11:00 in the morning eastern time tomorrow. another story i'm watching, kim jong-un had a not so happy new year message from president trump, promising shocking action in the form of testing a new strategic weapon, something he said he could do for retaliation inbecause -- to do

retaliation to the pain on the american people. president trump had a muted response, pointing to the agreement he reached. didn't sign an agreement, a contract signing denuclearization. that was done in singapore. i think he is a man of his word, we are going to find out, but he is a man of his word. david: experts say that we should be prepared for a new weapons tests sometime in the future. coming up, more on your morning trade and analysis in today's first take. live from new york, this is bloomberg. ♪

david: time for the bloomberg first take. joining me today, vincent cignarella, the voice of the bloomberg audio spot. and damien, our chief strategist. also with us today, mark, founder and ceo of t6 capital. overnight, the pboc ways in once again. >> it's funny that they do it, you put in about 800 billion, but the real issue is they cannot structurally print, so they have to come up with something. special-purpose bonds can't find a home in the government is saying that we have nowhere to invest the money because there are literally no investments to be made that can earn money. you get a quick pop and suddenly to cover the interest expense

because you are not making revenue, you're burning tax dollars. it's just another instance of how do we keep and protect the gdp number. we are going to do it takes, as they say? point, he'seat looking at the other side, return on investments. it's one thing to give them as much liquidity as they want and it is another thing to lend it profitably. chinese banks are saying you have given us the rate cut and it certainly helps us during tax payment season. they will need at least one trillion to make and meet demands, but my goodness, they do have their work cut out for them in terms of trying to get the economy on the right foot. how about that, who would have thought? >> it's a sledgehammer of a tool for monetary policy and is not

done elsewhere on a regular basis. you are injecting this massive amount of liquidity into the system that creates liabilities on the banking sector and now they have to create assets on the balance sheet and assets need to be loans. there are not a lot of places to put the money. some marks point is perfect. >> the flipside is, why do you need to do it. >> that's the big issue. if you look at how many banks have come out to say that they need support or some sort of bailout, we are up to 73 and counting. you are talking about something serious and you can say that 73 doesn't sound like a lot, but how many went away because of crackdownsing or the that happened? suddenly you have a cash that has to find a home.

>> the end of shadow banking, that's the big one. looking at china, right, it's the trust certificate that needs to be the rug that was ripped right out from under the chinese economy and we are trying to fill the gap. that's what it comes down to. pboc thinks that the special infrastructure bond issuance is going to be a big deal to drive growth, but it remains to be seen how it will float through the real economy. >> and this is really trying to stimulate the domestic economy, the movement they made away from the fixed lending rate to a more floating rate. giving them more opportunity to massage the economy. they need the consumer to do in china what they are doing in the united states. the global economy is just not there to support the exports. we need to try to drive the domestic center to make up with a lack of both. want, but atat you least they're manufacturing pmi

is over 50. >> look at the u.k., the employment gauges at the weakest since 2012. but you are right, you have got new export orders in germany picking up, which is a good thing. yeah,om where i sit, there was the printout in china that was better than 50. look, i think it's going to be interesting. 2019, there april was this kind of paradigm shift to the yuan.cking is it a precursor for where the dollar is set? that remains to be seen and that is a big paradigm coming into the new year, whatever drives the dollar going forward. yuan didn't react were a much? >> some, but they are in a lot

shape than they think. pmi was at 60, basically a 25% drop in manufacturing. it's a situation where the u.s. and china are going to put germany in a box. if they don't take the 5g goffin they will face tariffs. the overall -- 5g, they will face tariffs. be looking to brazil, argentina for agriculture. deal,id a 50 nation trade 30% of the global economy, to do the supply chain moving away from the united states and europe. >> if you go behind those numbers and look at what they orders going down with guys working off of what was there in order to try to

just maintain a certain amount of flow. back to the point that damien made terms of exports, germany makes a lot of cars. our market has to be backfilled. deals ine a lot of january and you should see the export pop a little bit. but it's still a contracting .arket beating estimates instead of being 46.3, you are at four to 6.8 and it is nothing meaningful that will show in .eel and expansion >> it's a great point on the auto sector. output, theuto official pmi, 55. that is a huge upward move showing cyclical strength. david: the auditors like to believe that. back here in the united states of america, what's coming up? looking at the dollar,

still. it's very interesting and there are a lot of structural reasons it will do well again. we have looked at it being knocked down in terms of powell being easing and rate cuts, not qe or whatever we want to call it at this point, it doesn't move and that is because there is a current account issue abroad that will remain. >> it's interesting, the dollar was weakening into the new year back up again. >> it will be a redo. andhasing emerging markets selling the dollar, we will go into that in the first quarter with the same result with a bottom of the dollar towards the end of the first quarter and the same people getting burned on the same trade in 2020. >> sounds like vincent is a bit of a skeptic, but a lot of you are coming here now saying that this is the end of the decade? to the i prefer one

other myself, but i would say that it is only going to go as far in my opinion as the dollar gets weaker and i agree with mark, the dollar is a far more resilient asset then many care to believe. building, dollar weakening, but if you look at the rate increase, you have got something like last year. seems similar and the dollar didn't even come up that much. >> i'm making a 2020 prediction, the correlation between emerging markets and the dollar is going to break and both are going to go up this year. for completely different reasons. the traders that sit and trade that trade up or down are going to get toasted. add to that and say i think that gold is going to continue to go up, for some

different reasons. typically you think about gold and the dollar being inverse but i think there is a lot that will be driving it higher and i think we would be remiss if we didn't talk about the fact that the u.s. said that january 15 is the day and we're still waiting for china to confirm. it is taking forever to translate it. what are they doing? learning how to translate? what's going on? [laughter] >> it's going to come down to what is the meat and bones of the contract in the agreement, and i really don't know. david: this feels like mcs are to me. everything is going up? >> the one thing that i like in the environment is to lead into these locations. you know that. look at the cross currency basis . we said we wouldn't talk about repo, so i will go there, but it's positive. widely to positive territory having a global financial crisis.

dislocation.y big you shouldn't see that cross currency basis in positive territory. david: there you have it. thank you so much for being with us. a reminder, you can find all the charts that we just used and more on your own terminal and even save the charts by running g tv . live from new york, this is bloomberg. ♪

daybreak, bloomberg this is your bloomberg business flash. fallout from escape from japan, turkey has detained seven people, including four pilots.

private jet flights appear to have taken the former nissan chairman to they root. one official said that istanbul they transferred from one plane to another inside of a box. a new trade deal between the u.s. and japan has taken effect, cutting tariffs on some agricultural products and industrial goods, but japan failed in getting tariffs on cars and auto parts reduced in there is little indication that they will meet their pledge to start the new round of talks expanding the deal. china has temporarily halted a link between the shanghai and london stock exchanges. the news prompted by political considerations. the u.k. staff on the hong kong protest is one of the issues, designed to allow companies listed from one venue to issue shares on the other and that is your bloomberg business flash, david. david: the world of sports lost

a legend on new year's eve, former nba commissioner david stern passed away after suffering a brain hemorrhage. he led the nba for 30 years, the longest anyone has ever been commissioner of a professional sport. he took an also-ran league and made it into a multibillion dollar global powerhouse, adding franchises, instituting drug testing, turning it into a marketing machine. in the process he made players and owners enormously wealthy. david stern was 77. [no audio]

"bloomberg is daybreak." taking a look at the asset, starting with equities, u.s.

futures are up, the dow is up 65 points. the s&p and nasdaq are also up. it has been trading up nicely and broadly. there is a lot of depth in the asianfollowing on equities being up as well. going across to the next board, you can see the u.s. 10 year has been unchanged, flirting around up and down and right now it is up a bit. the pound is down against the dollar and it had been going into the new year, now down. withcontinues to rise crude turning around, up again, having a nice long run going up. turning now to climate change, wildfires continue to rage across southeast australia and specific phenomenon or difficult to trace to climate change, it has been increasingly her that a warming world has devastating consequences for all of us. jeff sachs has been at the forefront of warning about these

consequences and putting forward plans for turning things around. he's the director for the center for sustainable world. welcome. >> happy new year. david: one thing that struck me about your work, you don't say just that it is bad, but put out a plan for how we can get to carbon neutral by 2050 -- 2050. . how do we get there? >> there is no doubt, debate on the fringes but no scientific doubt that we are impacting the climate and it is becoming horrendous. the dangers are extraordinary everywhere. each year we are looking at losing in damages just a climate related major events more than $100 million year. so this is something that is happening all over the world. science tells us very clearly what we need to do. we need to de-carbonized the

energy system. what does that mean? it means that after 150 years of building a world energy system based on coal, oil, and natural gas, we have to move to zero carbon energy sources. wind, solar, hydro, geothermal, ocean, and so forth. the remarkably good news is that technology has improved so dramatically that we can do this at very, very low-cost. we are not facing bad choices, but we are facing a battle between the fossil fuel industry and the renewable energy industry. this is what it has really come them to. it is ironic that in australia, devastated by climate change, it's the coal industry preventing them. david: the crop -- prime minister, morris cap criticized for his plans over that.

we need to get electricity. and then we have to figure out how to make it without burning things. >> the easiest part is moving to zero carbon power or electricity. the wind, the solar, it is so plentiful. the united states, as is every other area, is so blessed with fantastic resources. we could move to a zero carbon energy grid. take the other sectors, buildings, transport, and industry. there you have to go one by one. transport is relatively straightforward. automobiles, as we know from --la and from every man every major manufacturer can move to low-cost highly effective battery electric vehicles. other kinds of transports, the same. buildings? basically we already have the technology for new buildings to be all electric buildings.

it will be a major challenge of retrofitting older buildings. with industry it's pretty much one by one, can you go from fossil fuels to electricity? or will there be one added cycle that is clean power going to hydrogen or other synthetic fuels and then used for furnaces and so forth in industry? but i'm dealing a lot with the engineers around the world. they have pathways for each of these. the battle is not that we lacqua to do or what we are told all the time, that you can't do it or it is too expensive. we are battling fossil fuel interests. that's it. david: how long and how much costs? you have existing cars, you own a car. how long and how much money do you have to spend to get rid of the existing facilities? >> take the major physical

infrastructure. automobiles basically have 15 to 20 year life span, you have to roll those off. all new sales of light-duty vehicle should be electric vehicles. this should be public policy but also understand -- understood. >> does the market take us there or does the government need to not just? >> is going to have to be mandated. but it won't be costly in the end. that's the irony. but we are going to have to be clear. president trump is saying fossil fuels, fossil fuels, he's absolutely distorting the plans everywhere and businesses don't even know what to do. they say that we probably should go clean but the president says go dirty. >> automakers fighting with each other and the government. >> the automakers want clear guidelines. they can go all electric, but if

they are told that we are sticking with oil, they are trapped in between. with the new buildings, not so hard. old buildings will need retrofitting. the power plants? we have basically 30 years to roll off the old dirty stuff and role on the clean stuff. by 2050 we should aim for zero. david: if you had asked me to her three years ago, i would have said that china would lead the way. but with angela merkel, is europe going to take more of a >> europe role here? has adopted already, the leaders last month said european green deal, it's good. david: is it where we need to go? >> is comprehensive, it's ambitious.

we need detailed plans and i will be working with the european commission this year on specific planning but it is absolutely feasible. china is watching and saying well, president trump is going dirty. why should we do the opposite? they are in between. they have the technologies, dirty air, they need to clean up. they are watching and saying why should we give up what we are doing when the united states is going dirty? this has to be a worldwide shared effort. david: of course that raises questions about the government. we have different governments saying that we will mandate carbon free. >> new york by 2040, california with what theys call renewable portfolio standards saying that whatever washington is doing, we are moving. >> how far will the states get us without the federal government?

>> halfway. halfway. .hey are moving many states are moving. but many states are not moving and the fed is pushing the coal states to produce more. we are so confused in this country. we know what we should do, we have the technology and the economics on our side, but the president and the oil interests are on the other side. david: a real issue for the new decade. not just the new year. thank you so much, jeff, for being with us today. mark, i want to turn this into being about commodities. having heard what the professor had to say, as you look forward to the next year, the next decade, sounds like some will be winners and some will be losers in the noncarbon world. >> the big focus is breaking down the oil demand that can be brick -- broken down into a straight oil condensate. when you are looking at where

the shift is going to go, it's going to be into the lpg liquefied petroleum gas. you know, there is a lot that has to be done, but as you pointed out, what is it going to costs? we came out of a 12 year bull market. is there really going to be funding to drive this? if the pace of change has really slowed because investments have been harder to find, especially so in china. david: some are becoming more precious. electric vehicles, that's uncertain. >> and it gets smaller and smaller and more minute. the real focus for me now is nickel and megan deese. every piece ofto steel that is made that it is also one of the best ways to be a natural batteries. it has the strength and the connectivity. nickel, it really comes down to that. lithium, there is a lot out

there. lithium and cobalt can be found in 20 amounts. but it is the things that have to be fewer, have a certain amount of. he and can be scarce given where there is demand in other places. david: also there are the soft commodities and whether climate change can affect it. gets harder and harder to grow coffee, perhaps. >> the big focused is where is yield and climate change. where is it? where is rainfall? can we create something drought to insulate ourselves? soybean has growth terms of demand. and it is not as negative on the soil. you are pulling out nitrogen and nutrients and you have to reinject it.

the consequences. if you have deforestation brazil, that will feed the climate change problem by all accounts rather than helping it. >> that is whether has to be a certain amount of policy around mitigating the burned down. how do we focus on increased yield? that is the component of jim own on gilles muller, increasing yield without trying to take ine land away from forests the deforestation setup. david: really a treat to have you with us today, mark. now it is time to get up on what is making headlines outside the business world. iran, -- in a rack -- and iraqi militia backed by iran attacking the embassy in baghdad. there is always concerned that a broader lead to

confrontation and additional forces are being sent to the region. the navy rushing to rescue thousands of tourists straight -- stranded by raging wildfires. at least eight people have been killed in the blaze. fires have destroyed hundreds of homes in rural towns cramped with tourists during the peak summer holiday season. eaten in israel, benjamin netanyahu will ask parliament to read him immunity for production charges -- corruption charges. netanyahu is counting on being the person who forms the next government and has his coalition consider the immunity requests. global news powered by 2700 journalists and analysts in 120 countries. this is bloomberg. david? david: private equity going into 2020 with more dry powder than ever.

on our charts and graphics and interact with us directly at tv on your terminal. this is bloomberg. ♪

>> this is "bloomberg daybreak." shares of general electric had their best year since the beginning of jack welch's tenure as ceo almost four decades ago. in 2019, it was their first full year as chief executive since taking over and making changes to the ge portfolio, tackling concerns about debt and cash flow. a new trade deal between the ,.s. and japan has taken effect

cutting tariffs on some agricultural products and industrial goods, the japan failed in the goal in the tariffs on auto parts being reduced. soon both sides will be talking again. a hollywood talent agency in media business endeavor is looking to expand online location experiences for high-end events and the wealthy. it valued at $660 million, and and ofs redbird capital the carlyle group. that is your bloomberg business flash. david? david: beijing is said to be putting its stock connections on hold. private equity's war chest. led by firms like blackstone and carlisle going into the new year

with 1.5 trillion in cash looking to be invested somewhere. david einhorn had a rough december but the funds look to be up for the year overall and joining us now to take us through it, [indiscernible] happy. let's start with london connect. suspended supposedly for political reasons? >> it's really interesting, familiar to sources with the matter, part of this was because of the reaction to the protests. do a lot of people use this? u.k. companies have used this connection. >> it won't affect a lot of people right away. >> but it does come at a time when boris johnson is trying to improve the relationships between the countries. it's a political statement. what's interesting is when they try to take over the london stock exchange.

remember that? london said that their preferred connection to china was the shanghai stock exchange. it was a part of the defense strategy and seeing it severed doesn't look great. david: something that will affect people, private equity. how about that? >> in terms of fundraising, we didn't have a record year, last year. 2017 was a record for fundraising but people have been working to put it to work with high valuations. here's the thing, if you are private equity firm number one selling to private equity firm number two, you put them in a unique direction. you have the same assets moving in between with transaction fees the middle. real concern that

people will just be selling to each other. david: and if you have been in private equity for a long time, do you want or? or are these newcomers? >> that's the thing and the thing where people are really skeptical, there is all of this dry powder but if leverage loan markets don't dry up, how will they put this to work smoothly? afterid einhorn is back having a record loss in 2018. , but he doesby 14% have big convictions against tesla and netflix. david: well tesla is not doing well at the moment. >> exactly. netflix is a really interesting one because you have david einhorn on one hand, dan sondland on the other hand, who thinks that netflix overtime will go to $1000. it's one of those names rather

is a lot of disparity. david: it's a different world for netflix with everybody else crowding into the streaming space. >> how that works out will be interesting. i say always bet on disney. >> exactly. green brick is the homebuilder that rose up, where we saw things really working out. david: congratulations to david einhorn, welcome back and happy new year. today on off the beaten street, everyone talks about the roots is with lawyers insisting on passports entering with a french passport. this after stopping to change planes. word comes out employees were questioning a private company, reporting that he may have been hidden in some sort of box for the handouts -- hand off,

lending credence that he had case in hisrument escape from tokyo. in the meantime, the fed has signaled a pause in rate cuts. is coming up next. if you are heading out to jump two men on sirius xm 119 and on the bloomberg business app. live from new york, this is bloomberg. ♪

time now for the traders take. join me today, vincent cignarella a. you can listen to him by typing in sqago. >> the rod market is that the dollar will decline.

i think this is going to be a true story for january. i think it will bite like it did this year, going towards the end of the first quarter. as the dollar to cry -- declines, credit conditions ease . falling 10% on a trade basis, it's the equivalent of a 25 basis point cut by the fed. the dollar doing the work for the fed for them. he has been railing against the strong dollar, saying it is that the fed's fault. a stronger dollar is actually a good response to an economic growth picture. >> one of the things i look at from time to time is u.s. debt compared to gdp.

gdpou get your debt to ratio here its downward pressure? endook at japan, it's the that is substantially stronger. the highest and all the g7. what it will do, potentially, is drive yields higher in the first as the wait for securities falls on the market. david: looking back in 2019, how much of it came from trade? there was this perception that it came from safe haven. >> a large part of that and the reason people think the dollars going to fall is they think that the trade situation hasn't solved but it won't -- isn't.

even with that we will get a and back in the trade war will be with us for a long time. david: there you go, something to look forward to. the wells fargo asset management president will be here to take us through what he thinks is coming up in 2020. what will we look at from the fed, markets, earnings, and from washington. live from new york, this is bloomberg. ♪

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central bank eases restrictions on commercial loans in advance of the lunar new year and asian markets are off and running. europe's manufacturing funk, coming in up -- coming in under 50 for the 11th month in a row. stocks climbing even higher in the hope of apparently springing eternal. welcome to daybreak this thursday. i'm david westin, in for alix steel. let's take a look at the markets . at the moment, s&p futures are up there. at the same time, the european stock 600 has been up substantially and across the board. europe, this rally in starting in asia with the announcement from the pboc. the treasury has been up a little hovering for the entire day. witharly looking at wti, oil being around flat as well.

brooke, we have got to start with carlos ghosn. >> everyone on wall street is watching the story, judging by the hits on the articles, but it just gets crazier and crazier. that he wasports smuggled out in a music rocks with security forces that had been planning the escape for months. there are questions as to whether or not the lebanon government was involved. >>'s lawyers say that they knew nothing, no one knew anything about anything. but those securities, they had different groups operating in different countries. something had to know . he didn't come up with it on his own. there is a report today that lebanon would probe the allegations if japan requests is -- a return. they don't have extradition treaties with japan, i don't

think he is going back there. but there could be a trial in lebanon. given all the protests on anticorruption, it's not a foregone conclusion that it would go in his favor. i think this is what is driving the speculation, did they have a hand in this? toe they pulling the strings get him out of japan? france is a player in this, saying that they will not necessarily extra night him either. a man with a lot of connections, raising the question as to why he was granted bail in the first place. david: you want the screen rights, there's some great movie in here. >> and maybe a music box. [laughter] david: we want to welcome now kurt. let's talk about 2020 and what's going into the new year. what do you anticipate?

>> earnings for the last three and of thebeen up most logical conclusion to make is that if earnings are projected to be up 10%, we would finish the year at 35,000. >> but what is going to be driving the growth? or financial engineering? where does it come from? >> a little bit of both. there is a lot of money in the system and you will continue to see financial engineering. , it's an amazing market for tech and i think it will continue. usually i hear stock buybacks when i think about that. are we expecting that to continue robustly into 2020? >> i think so.

thinking about buying it back at these high levels, that's an issue, but i think that these dividends will continue to be in vogue. i expect the yields to be pretty flat. >> others are looking to take their profits there, so what are >> ai inriving that? particular. in the old days you would have plant equipment, manufacturing, infrastructure today, the largest car company in the world doesn't own cars or hotels. every company is going to the asset model and it is driven very much by technology and the consumer wanting things on demand. >> are you worried at all about the levels of corporate debt we have right now? it >> no question about it. there is a lot of debts in the world. the central banks are very stretched. if you ask me my biggest worry

about the markets, it's the debt in the system. have low interest rates, you would need quite a downturn. debt service is expensive as a was. .> absolutely coverage ratios are good because interest rates are low. this is a dangerous game, borrowing $1 trillion a year. it as a simple equation, borrowing more every year that the markets have to finance. >> are you worried about liquidity in the bond and equity markets? .> not liquidity per se what you have to be worried about is the crowding phenomenon. you have a lot of investments in specific equities and debts. 15% of the market, corporate bond issuers, you have story about that.

david: we can put a chart of showing the yield curve really shot up. does it give you more optimism in 2020? do you pay attention to that? >> you have to. it probably goes over 2%. the steeper yield curve is better for the markets and is a good indicator and an inverted yield curve is not good and i think will see if stephen a bit more this year. >> what does that mean, though? steepening, that's true, but is it range bound? you don't really see that breakout within the tight range. >> i think that at the end of the year, rates are say in terms of treasuries and sovereign bond yields will be flat, spreads will be wider in terms of markets.

we have some people saying that we expect to five. when does it hit pressure? >> that would be a lot. 250, you are maybe talking about a 33% rise in rates. that's a lot. i don't think that is going to happen. >> do you take out a risk of the inverting again? >> that's highly unlikely, must be somehow go into recession, which i don't see this year. what will keep the earnings up? with some pressure in the margins, will it be topline growth supporting the 10%? >> consumer spending, that's the key. marketsit is consumer

holding the key. >> as we round out the holiday season, there is discussion on how strong spending was. will we see a decline and is >> i think it is very strong and they will continue to spend this year with rates this low. david: is the number that you look at more than anything else the jobs number? >> absolutely. unemployment is at an all-time low. that will continue a think. actually, a little bit of wage pressure is good for the consumer. >> do you feel that the market prepared for this acceleration? i think it is prepared some, but clearly they are not anticipating a dramatic rise in rates.

i think it is steady as she goes, this year is an election year and there are a lot of reasons why a steady-state is probably the place to be. that: we will talk about is itinute, but why flattened so much? >> get his technology and globalization. you have much more price discovery that has a lot to do with muted inflation. >> is there a risk that the fed is too complacent? that they don't do enough? >> prices convey information and notworried that they are conveying the right information in the market. central banks are highly leveraged with a fed balance sheet increasing again in my mind back to the $4.5 trillion level.

the government is borrowing and the fed is buying. david: geopolitical uncertainty, what does it mean to investors? for anything? we asked sarah bianchi. this is bloomberg. ♪

david: markets were whipsawed in 2019, particularly the us and downs of geopolitical trade negotiations and the ongoing drama of brexit.

we have ahead of public policy research from washington today. thank you so much for joining us. let's start out with the big one. we are told january 15, authorities are coming to the white house. does this relieve us of the uncertainty for 2020? >> unfortunately, not. i think it is a big victory for the president to sign the deal. phase one, phase two enables him to settle down some of the turnaround this issue and calm down the economy, as well as take off the risk, enabling him to stay tough on china through phase two to show that he is continuing. a great book and for him. i do however believe that democrats, presidential candidates in particular will be

looking at the substance of the deal and asking where is the beef and i do believe that we are in for another year with politics in the election at hand , a lot of disruption and turnaround time. >> there are still a number of terrorists in place. do you see this rolling back? growhe economy continue to with those in place? them to be some of rolled back, but not all of them . the he is that there were not additional tariffs. to your point, if there are any more, the market reacted .egatively >> along those lines, with her >> there will be but i'm not looking for it in terms of it having a lot of substance. a lot of the trade technology

and legal issues over companies will be agreed upon, but i don't expect a global macro deal that will change the nature of the relationship. agree.tally first of all, i'm not sure that we will see a phase to deal before the election. but they have punted on the harder issues like these tech transfers, things that are much harder for these countries to agree on. i think who will be in conversation wealth through november. investors should not expect anything meaningful or certain before that. one thing we were promised by the end of 2020 was a deal with europe in terms of what we go forward. staying in is a different issue. how much will that affect europe? i'm not saying it would affect the u.s., but the pmi's coming encouraging.

>> there are a lot of challenges to getting a deal with the eu on trade in particular. they are solving for a very different set of issues within the united states is around climate and other things. i wouldn't expect there to be update deals. the eu is one place where the president can pick at it during the year. remember, he has a core group of and we need to see that he is not off the ball. >> given that they haven't caught in the middle, there is potential. would you agree with that? >> there are some, but with a company like germany, so they go, so goes the eu, in a way. it is fraught with some danger

if there is a hard line. david: you mentioned that democratic candidates want to turn to the question of the election. yesterday was new year's day. we talked to her and she said there was a substantial risk. this is what she said. biggest concern at this point is that you get the market finally discounting political risk, which is that trump doesn't get elected or you get a socialist. talking about warren and, sanders, even biden. anybody who is not trump is a near-term risk. the market doesn't seem to be paying attention to this at all. >> i think the market for relief

after more and start to fade little bit weary of was concern in the market when she was looking strong in the late fall but now the market has decided that it looks more like a biden, buttigieg, or stronger. i think the market is comfortable. one of the things investors are going to have to start to pay attention to a bit is that bernie sanders is doing ray well. with those fundraising numbers in early states, that will be something that the market looks to towards ginny way. >> do you think that there are underappreciated risks? >> i think the markets in some ways are discounting too much. it's a very fractured company.

it's a lot of political turmoil this year. there's a lot of debate about who is going to be the democratic candidate for the policies are going to be. the other thing that is interesting is that it will be a frozen year in terms of getting anything done in washington. i would expect a very little to come out of congress with a year of political entrenchment and fighting. >> there was a good run there, getting things done in december. but i agree, the main thing on impeachment is watching the senate trial. we will have justice roberts presiding. they shouldn't expect anything in terms of outfall, daunting to

watch the proceedings. then we will be done with this issue. if they ever send it over? >> exactly. kurt will stay or with us in new york. about bimboalking about china, next. this is bloomberg. ♪

>> this is "bloomberg daybreak," i have got your bloomberg business flash. fallout from the escape in japan, turkey detaining seven people, including forming pilots , taking the former chairman from japan to istanbul and onto beirut. one official says that in istanbul, he was transferred

from one plane to another inside of a box. artificial intelligence that can spot breast cancer more accurately than doctors. artificial intelligence is particularly good at reading scans, often outperforming experts. china has temporarily halted the link between shanghai and london stock exchanges, learning that the move was prompted by political considerations. david? david: a new year's eve we got to speak to the peterson economic like with adam posen and he talked about the diversification of china away from the united states. this is what he said.

>> the euro affect on the rest of the world has been a shift in chinese trade, looking both for markets and inputs in places other than the u.s., affecting everything from lobsters in canada to semi conductors in taiwan and natural resources in africa. the trend will continue. china will keep diversifying. david: what does it mean for investments? it >> one of the implications is that china will diversify away in terms of technology, so you want to look at the companies in asia that will take the place of andchipmakers in the u.s. i'm not recommending them one way or another, but those are the ones that will fill the

void. they know they have to diversify away from the u.s. >> given that the trade deal has a significant obligation to purchase goods, how does that stack up? is the economy strong enough? >> i think it will be a little bit of both. a purchase of agricultural goods and a relief on tariffs in terms of technology. long-term, china got the message that they need to diversify away . our teams travel a lot to china and are clear that china is diversifying away. it's clear this won't go away and will be an investment theme in my mind. david: where do you turn to? >> they don't have the skies of technology companies like others do. the other thing to look for is which companies in china will

fill the void as well. historically, china has looked outside for things like chips and a lot of five g technology, but a lot of this will be homegrown and imported from korea and taiwan. >> they are investigating a lot of homegrown gas turbines as well. >> interesting. up, how muchming consuming did we do this holiday season? we talk about retail and who the winner of the holiday season was . that is coming up next. this is bloomberg. ♪ when it comes to using data, everyone is different.

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save up to $400 a year when you switch. plus, unwrap $250 off a new samsung phone. click, call or visit a store today. david: i am david westin in for alix steel today. the first day of trading in the new year equities up across the

board. up of the equities have been all through the morning and that reflects coming off of your, europe is up in its trading, broad and deep in europe. this started in asia with the central bank announcing a cut in the reserve ratio. now let's move it out and quickly look at the 10 year which has been flat. the pound is down. over $1500.still wti is off a bit. let's take a look at jobless claims. 226,000, 2000 more than what the survey was. last month was revised upwards. 224,000. hair,s claims up just a but historical trends it is relatively suppressed. brooke: i think it is. as you spread this out over a longer time, are you concerned

about the labor market or are we still on an upward trend? -- i think we are still doing -- kirk: i think we are still doing well. as long as rates stay low the consumer will do well. david: let's turn to retail to see how the consumer is doing. every year we wait to see how much we all spent together on christmas gifts. we may not have the numbers yet but it is not too early to get an early read. for that we want to go to seema shah. welcome. what we know and what don't we know about this season? sales from november through december 24 were up 3.4%. the bulk of that growth was from online, which was up 18%. butdid see robust spending

it is at the lower end of what a few were forecasting. lower than previous years but still positive. the bulk of the growth was online. david: when you say online sales, if i order it online and i picked up in store, which is that? seema: typically that is still counted as online. they usually break down and say online sales were x, with whatever percentage picked up online. nowge trend in retail right is pickup and it is helpful to get traffic back in the stores and improve margins at the retailers. hopefully you will pick up something extra when you pick up your gift. brooke: when you talk about a marginal slow down, what is driving that? things.t is a mix of there is a fatigue in spending. there has been a change in retail where you have a perpetual deal cycle and you

have prime day in the summer. a lot of ongoing deals. it is not to say overall spending has slowed but he dad shifted to other periods and people might pre-buy. black friday starts a month in advance. that might be part of it. brooke: i feel like i got email starting in september. seema: absolutely. david: we are seeing a diversions between department stores and retailers. is that continuing this holiday? seema: i would say so. i think department stores and retailers face competitive pressure from the online players . walmart and target have done a increasing their capability and expanding into other categories. there definitely is still that pressure on specialty so they have to step it up in terms of what they can offer the customer. brooke: you talked about

pressure on margins from logistics. do you think there is ever a turning point where retailers clawback or are they stuck with it? seema: i think they are stuck with it. this year versus last year, people look to buy something and they say if it can come in faster. if you cannot provide an immediate service, people abandon their cart and find somebody who can. i think it would be hard to break people of the cycle of promotions and fast shipping. people want it whenever they want it. brooke: and they want free returns. , the: the free returns reverse logistics, a much larger problem than people in his abated. you have multiple types of product coming back and how do you account for that? wetouched on -- david: touched on this briefly earlier when he talked about price discovery having some squeeze and functioning on margins and then you add to that same day delivery. good for the consumer.

more convenient and cheaper, but there is pressure on retail. kirk: retail is under enormous pressure. that is why i am not a fan of retail stocks. it seems to me a lot of consumer spending is just on technology. apple, all of your software and your x games. that is where consumer spending is. i would be curious about that friend. seema: i would agree with that. ofsumer electronics is one the biggest gifted items for the holiday. if you think about how much a smartphone cost and how much of your discretionary income is going to that, that puts pressure on other discretionary categories, basically anything else. people are trying to juggle that. by doing so they look for deals. that is where the retailers have to fight. 85% of retail is still done in aores, but you have to have

compelling experience and differentiated product. brooke: going back to your point on discoverable ability, i remember talking to the ceo of union pacific about how that changed customers impact for pricing. have you seen a shift in how consumers react? kirk: if you look at the mortgage industry price discovery, look at how that industry has changed. in all areas, price discovery is immediate and that is important. david: that raises the question of pricing power. in classic economic theory you have perfect information three that drives down costs. seema: you have to be differentiated or have something that is so different and compelling people are willing to pay up. if you don't, if it is apples to apples, they will go online. isbeauty i would say ulta doing it very well. they have new products at multiple price point. the mass players, target and

walmart are doing well. at the high end, restoration hardware meeting their customers needs. you have to maintain your brand. if you go into promoting, you lose your core customers. who are you selling to and how do you keep the experience? brooke: we did see a number of bankruptcies in retail in 2019. are we through that trend? seema: i suppose there is always a chance there could be more. i think a lot of it was due to the cycle. a lot of it was when a lot of companies took on private equity leverage and then they struggled. i guess it could happen over time, but probably larger ones have slowed. david: at what point do you have enough consolidation that it becomes more attractive to going to retail. we had sears, we had toys "r" us , we at radioshack. -- we had radioshack. kirk: like other industries,

there will be distinct winners. i think consolidation is good for some of the names you mentioned, the survivors. you see that in every industry and it will be the same in retail. brooke: one thing we have not talked about a lot is how short the holiday season was. i know that is a big concern for the shipping companies. we have not heard anything about that. our all indications that was ok? kirk: there were 26 days this year versus 33 last year. when thanksgiving is so light it pushes everything back. --ailers pull back on things on saying we will deliver by this time. instead their message was we will help you get your last minute gifts online to buy in stores. the last day of shipping was moved up to december 16. it was compressed, but in some ways you could argue it was good for the retailers because you get people into stores to get

that last-minute gift. it was harder to put it off. david: brooke raises a great question. retail is one thing. how about logistics companies? all of these companies say they will get there in one day. that has to be good for people paying for deliveries. kirk: no question. i think logistics will continue to do well. ai and onlinento demand and price discovery. i think those industries will continue to do well at the expense of a lot of retail pure brooke: that is interesting because you have not seen that so far in fedex numbers. ups seems to be doing better in automation. carrierstraditional lose to him of the more tech savvy companies? kirk: clearly amazon is building that in. i expect there will be distinct winners and losers, but i think the industry will do well because the demand will have to be fulfilled in some way. it is a matter of where it is. same-day delivery seems

to be here to stay. seema: people expected and amazon seems to have push that through. other retailers have to match it. back to what can we do to ship customers mindset by still giving them service. otherwise, it is hard for retailers. in light of what you said, there is amazon building logistics, but the vast majority of retailers will still be relying on third parties. david: what is the next big thing? is it drones? no cashiers? seema: those are all coming in the future. cashless shopping, there are drones. that is a huge change in consumer behavior, having a drone coming to your house. i cannot imagine it will proliferate the industry. david: you might not trust a person coming at your house, but may a drone. brooke: have you seen these drones? i do not know if i want one in

my apartment. seema: what will they find out about you? david: seema shah and kirk hartman, thank you for being with us. we will take a deep dive into holiday shopping with craig fuller tomorrow morning. now it is time to met an update on what is making headlines outside the business world with ritika gupta with bloomberg first word news. ritika: in north korea, kim jong-un has declared he is no longer bound by his pledge to halt missile test and he is promising a new strategic weapon. according to north korea's news agency, he wants the u.s. to "pay for the pain suffered by the country" because of economic sanctions. president trump had a muted response, saying kim jong-un was a man of his word. prime minister benjamin netanyahu will ask parliament to grant him immunity from prosecution on corruption charges. that could block the start of

his trial for months or longer. the trial is headed for another round of elections in march. netanyahu is counted on being the person who forms the next government. in australia, the navy is rushing to rescue thousands of tourists stranded by wildfires. at least eight people have been killed by the blazes in new south wales and victoria. fires have destroyed hundreds of homes in towns crowded with tourists during the peak summer holiday season. 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. . am ritika gupta bloomberg. david? david: coming up, boeing may be struggling but airbus is building aircraft a record pace. that is one of the companies we are watching, next. bloomberg users can interact with charts on gtv . catch up on key analysis and

save charts for future reference. live from new york, this is bloomberg. ♪

ritika: this is bloomberg daybreak. i am ritika gupta with your bloomberg business flash. their best year since the beginning of jack welch's tenure nearly four decades ago. it was larry probst first full year as chief executive. since taking over, kulp has made changes to ge's portfolio. he also had concerns about debt and cash flow. a new trade deal between the u.s. and japan has taken effect. tariffs on some agricultural products and goods. japan failed in its goal to get

tariffs on auto parts reduced. the hollywood talent agency and media business endeavor is looking to expand. bloomberg has learned the firm is poised to acquire online location experiences, and events business for the wealthy. the sellers include redbird capital, sports capital, and the carlyle group. that is your bloomberg business flash. david: time for the bottom line, where we look at four companies worth watching. orre is a specific company two i would like to take a look at. who did the best among the automakers? it is for ari. for our is way up. -- ferrari is way up. margins are through the roof, closely followed by portia. it was at the bottom? renaud and nissan.

those are the company's carlos ghosn used to run. they are the bottom of the list. that is the update on car companies. brooke: they might be missing him. he is now available. david: a lot of friction between nissan and renault. he kept them together. brooke: and issues because they missed out on the merger with fiat. look ati am taking a tiffany and berkshire hathaway. there is a report warren buffett was asked to be on tiffany and he declined. another deal he is not putting his giant cash pile to work on. now the question is what is he going to buy? david: there is a lot of pressure on him. i'm not sure he feels it. maybe it is because he already has a jewelry company. brooke: that is what people were saying. they might've had synergy. i think he is concerned about high valuations.

the tiffany deal was not cheap. i think he is waiting for bargains. with all of these calls, he might have to keep waiting. david: not always a fan of options. he does not like competition. brooke: there been reports that he has bid for smaller assets. private equity is hungry to get the deals. he has a lot of competition and is not being as aggressive. , wed: for our third company will welcome the senior editor for bloomberg based in berlin to tell us about airbus's record december. benedict: airbus, speaking of stocks that have had a good year, they were up more than 50%. -- a lot of that has to do with record deliveries. the official numbers are out. we will get them tomorrow or early next week. what we are hearing or others are reporting as they managed to

meet their target of delivery, which is 850, 860 planes. that is quite a huge leap from where they were weeks ago. normally airbus manages to eke .ut 70 deliveries a month if they did manage to fulfill the lasty doubled that weeks. that is helping the stock. people are happy about that increase. not a flipside, boeing good year in terms of stock and delivery. brooke: i was fascinating leaving the stories where they talked about the late end of year search, canceling holidays, keeping workers there midnight on new year's eve, as you look at the supply chain, given the production cuts, are there opportunities for airbus to enhance its supply chain through label, through infrastructure? benedict: they always try to

improve the supply chain and that is where the pressure points are the most acute. they are close to 60 in terms of the single-line and they want to get that even higher. that is where the supply chain starts creaking. they have the final assembly lines in germany and france, china and the u.s.. particularly in china and the u.s. where they want to do more, where they want to increase the output. they are stopping production of the a380. there is excess capacity available to airbus. it will be interesting how they manage the shop floor, how they manage the supply chain, how they reallocate some of the resources. the 320 family is where the money is made. if they put out 860 planes delivered in 2019, the vast majority were from the single aisle. that is where the focus is. brooke: if you look at

longer-term, is there an opportunity for airbus to take market share from boeing? benedict: it has been a hard duopoly for many years. the real question is what happens to the max? no one knows the answer. we have had the dramatic string of news over the last couple of weeks where the production stopped, the ceo departure. show how the duopoly develops. if the max continues to remain grounded and if these planes continue to pile up -- remember we have 400 built but not out there.axs if that continues, airbus can take more market share from boeing. the issue is can they then built the planes fast enough to service that huge demand? if you're a 737 max customer that you want your plane, take

the back of the line on the airbus side. a lot of other companies want this plane. this is going to be very difficult for airbus to swiftly pick up market share from boeing because of the constraints supply chain. continues, they do get to benefit from this. david: thank you so much. thank you also to brooke sutherland of bloomberg opinion for joining me for the hour, getting up early this morning. brooke: happy new year. david: happy new year, i guess. the shanghai comp rallies to its highest since april. we will have a closer look in today's technically speaking. if you're heading out and jumping in your car, tune into bloomberg radio heard across the united states on sirius xm channel 119 and on the bloomberg business app. live from new york, this is bloomberg. ♪

david: it is time for technically speaking. bill maloney, chartered market technician envoys of bloomberg's equities quach joins me now. you can listen to bill on the bloomberg by typing in squa . bill: the shanghai composite rose 1.2% overnight. that is the highest level since april. looking at a potential breakout on the action overnight. those gains continue. the next levels are the march highs and above that the april high. we might be looking get up breakout over trading range in the shanghai composite. let's talk about tesla. tesla's price target was raised to five -- two 515. that former resistance is now support level. tok for support level 380 400 on pullbacks in tesla. the last thing i want to talk about was wells fargo. wells fargo was cut to underperform at baird. stocks little changed.

momentum stalling around november highs. 54 to 55 is probably resistance in wells fargo. david: tesla shorts -- thanks so much to bill maloney. great to have you with us. coming up on bloomberg the open with jonathan ferro, he will have quincy crosby, prudential's cheap market strategist on a day that is risk on with equities up around the world. this is bloomberg. ♪

jonathan: from new york city for our audience worldwide. i'm jonathan ferro. "the countdown to the open" starts right now. ♪

romaine: coming up -- jonathan: coming up, 2020 begins with stocks rallying with china moving to ease financial conditions, investors look for further support as eurozone manufacturing remains in contraction territory for an 11th straight month. good morning. here is your thursday morning price action. equities up 20 points on the s&p. positive .6%. euro-dollar 1.1196 and a bid in the bond market. yields down to 1.88%. we begin with the date issue, a new year, new decade, a familiar outlook. >> we are cautiously optimistic. >> cautiously optimistic. >> more optimistic. >> more positive for 2020. >> the earnings have a followthrough. >> the economy is expanding. >> mixed economic numbers. >> trade uncertainty. >>