>> good morning from bloomberg's european had. i'm nejra cehic. this is "bloomberg daybreak: europe." iran response. tehran fires missiles at two iraqi u.s. bases. iraq's foreign minister says it has concluded proportionate measures. iraning 737 jet crashes in shortly after takeoff due to what state media describes as technical issues. reports suggest all on board were killed. ahead of a highly anticipated press conference today, carlos ghosn says nissan used him as a scapegoat to block further integration with the renault. we are live in beirut. ♪

nejra: we wake up to retaliation from iran. we hear that this isn't war. here are some of the market moves. brent paring some of those gains. gold strongly bid. still firmly bid on that safe haven. dollar-yen as well trading a bit to the downside. we are coming off the highs for the yen. we switch the board and take a look at the 10 year treasury yields. we saw quite a precipitous drop at one point in the asian session, down 11 basis points. the 10 year treasury yield has actually dropped to below a trend line we have seen since september. we see asian equities on the back foot as well, but

generally, equities paring some of the losses. after iran has said that this is the way,also, by volatility was created by the news of the boeing crash. when we got the technical issue headlines, we saw the market stabilize a little bit. a lot to digest. iran retaliation. iran has fired rockets at two iraqi airbases housing u.s. troops in response to the killing of the general. iran's revolutionary guard claims its assault on the airbase left it completely destroyed. the tax have come hours after donald trump -- the attacks come hours after donald trump says the u.s. is totally prepared for any attacks. he said all is well after the attacks. joining us now for the hours patrick armstrong, plurimi wealth cio. we will get an update from our reporters in a moment on the prospect of any response from the u.s. to this, but just your first reaction to what we have

seen in markets. proportionate reaction in safe havens? patrick: i think that's great news if you are just thinking about the markets. response from iran, they are calling it proportionate. no u.s. casualties. thisest case scenario is sort of puts a line under it and there is hopefully no escalation and retaliation back in response to this and markets can move forward. that's a big if. nejra: exactly. patrick armstrong of plurimi wealth stays with us. let's get more on this from our reporters. in hong kong, we have jodi schneider. great to have you both with us. aim here?ly is iran's is this the end of the escalation? >> i think that's what they are saying. their aim seems to be very much that there was a lot of rhetoric after the killing of the general

in which they said, we are going to react. they have been keen to point out that trump was very open about the killing of the general being an act that the u.s. formally undertook. it wasn't some sort of covert operation. 'sthink this is the iranian way of saying, you did this overtly, now we are going to respond by attacking these u.s. bases. this is our official response. we have informed the united nations of this. the foreign minister has basically said, we are done. of course, that doesn't mean that they might not then take further action through their proxies. jodi, what kind of reaction to this can we expect from the u.s.? jodi: we will hear from president trump. we are being told we will hear from president trump in the u.s. morning. there was that tweet that said, "all is well."

it seems to be the u.s. response at this point that if this is all there is, this was anticipated. was there any u.s. loss-of-life and any major damage to those u.s.-iraqi facilities? if that had happened, we probably would be seeing another response from the u.s.. president trump had threatened that. he said if iran did anything that he would -- that there would be a response. it is anticipated that if this is all there is -- and there was not u.s. loss-of-life -- that things may now go back to the heated, but perhaps not as as the escalating situation we have seen since the death of the general. we still have not really heard from the president much. we are anticipating that. at this point, if this is that proportionate response, we do not expect things to escalate

that much more incoming days. nejra: i suppose the big question was whether the u.s. or iran sees the u.s. react or overreact to this. what about the 13 types of retaliation iran talked about yesterday? yes, so i mean, that was quite an interesting statement. and that 13 scenarios the least of them is going to be extremely painful for the americans. you know, it is not really clear whether the iranians were saying we are going to do 13 things to the americans. the idea they were trying to get out is that they have various options on the table and all options are painful. right here, what we are seeing today is kind of iran's official response. they are using legalistic terminology. they sent a letter to the united nations saying that they were going to do this. right now, for them, as a formal

response, they seem to be saying this is it. with president trump with his tweets seem to be indicating similarly that they don't seem to have an interest in escalate and this further -- in escalating this further. does that mean it's over? no. any actions, if at all, will come through indirect means. nejra: our middle east and africa executive editor and jodi schneider, thank you so much. with that -- we are back with patrick armstrong, plurimi wealth cio, who is with us for the hour. i mentioned the 10 year treasury yields at the top. it has sort of moved back to a 1.77 handle. would that be one of your preferred safe havens in the event that we get further escalation? patrick: if we get further escalation, yes. i prefer gold. i think that is a broader hedge against many risks.

we prefer gold because i think it is the broadest safe haven right now. we don't think yields are attractive, particularly in europe, japan. gold i think will benefit from geopolitical risk, trade, iran. i think that is the best portfolio hedge right now. nejra: how high could we go on gold? patrick: basically if you get an escalation, you're going to see higher moves in gold. it is a lot of uncertainties in 2019. you have iran right now, which will be the epicenter of what everyone is talking about in terms of hedging. as the year progresses, you have the u.s. election, china-u.s. trade, where everyone is expecting phase one. i don't think you will see any progress after that. it is something that gold will be spiking when everybody is wearing about everything, it will spike higher. if the year doesn't go well, you get past 2000.

it is the kind of thing you want as a hedge. nejra: what about dollar-yen? the movement in the yen has been fairly muted. given through all of this escalation, dollar-yen has been one of the assets that has not moved a lot? -- a lot. patrick: that is another good safe haven. if you have a lot of risk aversion, it is a beneficiary. i think it will act in a similar manner to gold in that it will strengthen a lot in times of risk aversion. it is 30% under fair value on most of the measures we look at on purchasing power, consumer purchasing power. it is a very cheap currency. it is depressed basically by carry trades. patrick,ally briefly, do you still remain pro risk? patrick: we are pro risk moderately right now. nejra: right. patrick: so we have cyclical assets in our equity exposure,

net long equities. nejra: makes sense. patrick armstrong of plurimi wealth staying with us. let's get to the first word news now. >> good morning. 737 jet has crashed in iran shortly after takeoff this morning. media reporting it was a was technical issue and that all on board have died. boeing says it is aware of media reports out of iran and is gathering more information. flagship fund has suffered its first annual loss in two decades. the fund dropped 0.5% last year. fourth annualy loss for the fund since it began in 1991. the fund has returned 11.5% on an annual basis. the next act of the carlos ghosn drama begins today. this morning, the former nissan chief is hosting -- holding a

news conference in beirut. it is to tell his side of the story. he is accusing the former employer of making him a scapegoat to block further trouble with renaud. he escaped -- were no -- renault. 10 years ago, it was the biggest story in the world, but now the sagas coming to an end. the international is ready to -- thereece for good international monetary fund is ready to leave greece for good. it plans to pay more this year to prove the crisis is really over for good. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. don't miss our exclusive interview with the opec secretary-general, as we have seen oil spike today on brent. that is later in the show. don't go anywhere. and carlos ghosn speaks.

the former nissan ceo has some stories to tell and scores to settle. don't miss coverage of the widely anticipated news conference at 1:00 p.m. london time. this is bloomberg. ♪

♪ nejra: this is "bloomberg daybreak: europe." financial markets have been shaken up again today after iran retaliated against the u.s. for killing one of its top military commanders. joining us to discuss is dani burger. what is the chart that matters? >> it is all about oil today. trading has been wild. it is the highest amount on a wti since september during the saudi arabia oilfield text. another superlative that is -- oilfield attacks. calls right now are just about the same price as puts. that's what this chart is showing. the spread nearing zero, the most extreme we have seen the

rush to call since back in september during those oilfield attacks in saudi arabia. this oil picture is one we will have to constantly watch because investors are certainly preparing for further upside. we have manus crannyabu dhabi preparing, keeping us in line with what's happening with the oil story manus: he is interviewing the opec secretary-general later in the show -- oil story. he is interviewing the opec secretary-general later in the show. nejra: patrick armstrong still with us. if we add this time spread chart to dani's chart, that obviously tells you there is concern about near-term prices. is that something you might want to fade in the short-term? patrick: there is a risk premium that has really pushed oil prices up. with oil, you get a very quick supply response. you have the shale production increasing.

if you see sustained a higher prices, opec cuts may come into question -- sustained higher prices, opec cuts may come into question. oil is oversupplied this year. with the risk premium needed with the events in iran right now, it is justified. prices areo 2024, down 15% over where they were 15 months ago. basically, people are worried about near-term production, the strait of hormuz, those kinds of things. long-term, you are seeing the supply impact. nejra: are you participating in this at all in terms of buying or selling options? how exactly would you trade this? would you just waited out? patrick: i think it is probably the point where you can start looking to fade it right now. when everyone is fearful, moving the other direction makes a lot of sense right now.

longer out on the curb. i think the short end spiking up will provoke some production. it will pivot around it. i think being short longer data -- supply demand fundamentals is driving that. nejra: would you trade it via commodity currencies? is that something worth buying right now? patrick: basically, australia and cad are two favorite currencies. we think it will be moderate, continued growth. and then oversupplied market, we think there will be a bit of weakness on the commodities at the tail end of this year. both of those commodities have housing bubbles right now. we think the central banks in both of those countries would have to ease aggressively so we would actually want to belong those currencies. nejra: i am assuming the answer to this is perhaps no, but

should we in any way start to worry about oil spikes impacting growth in 2020? patrick: at some point, you have to worry about it. the world economy is less oil intensive than it was 15-20 years ago definitely and even 5-10 years ago. at some point, it is a tax on the consumer. different regions are impacted differently. u.s. is basically, you're getting a benefit from the producers now. in other asian countries, that is more of an impact. i am not worried about that right now. nejra: patrick armstrong of plurimi wealth staying with us. let's gay bloomberg business flash in hong kong -- let's get a bloomberg business flash in hong kong. >> samsung reports profits estimates. operating income fell by a third in the final three months of the year but that was better-than-expected. demand for dram chips, smartphones and servers is projected to rise. samsung was helped by the easing

of trade tensions between the u.s. and china. the dollar will weaken this year, according to billionaire manager jeffrey gundlach. the double line ceo says economic data is flashing yellow for recession. he says the growing u.s. deficit , steepening yield curve, and a pullback in foreign investment may finally hit the greenback. daimler says cost cuts today will fund the cars of tomorrow. last year, the automaker mapped out a plan to eliminate more than 10,000 jobs worldwide, over 3% of its workforce. ces in las vegas, daimler's chief executive says he wants investors to share this forward thinking view. >> we welcome investors that have a long-term view, that see the future, the long-term future of the auto industry at daimler and share our views of this industry. that's a good thing. >> that is your bloomberg business flash. nejra: thank you so much. day where it is the

we show you the events you should be looking out for, from carlos ghosn's highly anticipated press conference to boris johnson and newly appointed eu leaders. this is bloomberg. ♪

♪ nejra: this is "bloomberg daybreak: europe." i am nejra cehic in london. let's take a look at the events you should be looking out for today. today, carlos ghosn delivers his highly anticipated briefing in lebanon. isanbul, president erdogan receiving vladimir putin. prime minister boris johnson will receive the new eu commission president and at 1:00 p.m. london time, we will get the u.s. adp jobs report for december. we have patrick armstrong from plurimi wealth, he is cio there, still with us for the hour. we have been looking at the reaction to the retaliation from iran.

you believe we will see curve .teepening for 2020 that trade has kind of come off a little bit at the start of this year. what makes you convinced it will resume? patrick: we believe the macroeconomic backdrop is reasonable. we think the u.s. economy will grow at about 2.2% this year. it is driven by the u.s. consumer basically. the u.s. consumer says -- does what it says, consumer. they have all got jobs. unemployment is that a 50 year low, wage growth running about 3% and you can borrow money for zero. all of those things which remain in place will continue to drive the economy forward moderately. it will not be incredibly robust but with that kind of growth, we do think you will see 10 year yields drift markedly higher. basically, yields will go lower in moments of risk aversion. as a safe haven, if you are worried about trade, wars in iran, 10 year yields spike higher on risk aversion but it

is stagflation is the consequence of basically trade wars and war basically. long-term, you don't get compensated for the inflation part. nejra: there is some called and thing for the 10 year yield to drop to a 1.50 handle on this escalation of geopolitical risk. in terms of equities, we have taken other bit of a hit. do you have conviction that we will continue to see a strong equity market based on central banks or growth for 2020? patrick: that is exactly what we have. i am a reluctant bull, i suppose. banks.riven by central i think the path of least resistance for equities is to grind higher. earnings for the msci world last year fell. world equity markets were up 30%. that is not a normal environment. it is very little alternative. central banks will keep liquidity high, the federal keep increasing its balance sheet, you will have qe from the ecb, bank of japan, lower reserve rates out of china.

we don't think there is a huge amount of upside. i think the path of least resistance is equity prices. nejra: i guess not so much upside because the potential for surprise this year is less than was. patrick: i think central banks did surprise. we came into the are expecting hikes from the fed may be an we got three cuts. the central banks will not surprise but keep the path. nejra: i was actually asked myself this morning as i woke up to see the retaliation from iran, is there any readthrough across to the u.s.-china trade war. if president trump is focused on other geopolitical issues, cookies take -- could he take a softer stance with china? at.rick: we talked about th as trump has got piece with china, it looks like, he's combative, he likes to have an enemy and rally his crowd saying, this is the enemy. we where worried it was going to be europe on trade or something like that. command --ind a new

combatant. he likes to have an enemy and iran is the focus right now. if you want to be an optimist, maybe that is good news that we get the phase one traded deal and trump turns his attention elsewhere. bad news, there is always consequences with this approach. nejra: as an investor, is the geopolitical risk playing out in iran right now easier or more difficult to manage than the u.s.-china trade war? patrick: it is very volatile and we think it will simmer behind the scenes for most of the are basically. we don't think there will be much of an escalation right now. if iran escalate, the u.s. policy turns to regime change basically. right now, they are saying they are not going to force a regime change, that is not their goal. both sides probably want a truth right now, just like we got with china and the u.s. -- truce right now, just like we got with

china and the u.s. butill be the fragile truce simmering moments where things will spike. nejra: patrick armstrong of plurimi wealth staying with us. let's remind ourselves of what we have seen overnight in the asian session and now as europe wakes up. brent crude earlier was heading toward $7 barrel. we have come off the highs a little bit. gold staying supportive. we went above $1600 per ounce for the first time since 2013. we give up some of the gains but still face firmly in the green. dollar-yen unchanged at 108.35. u.s. futures took quite a hit. paring some of the losses along with asian equities pairing the losses. risk off clearly across the board. the 10 year treasury yields got to a 1.70 handle. coming up, the great escape. we are live in beirut ahead of carlos ghosn's briefing after he left his house in tokyo wearing a hat and surgical style facemask and took a bullet train

to osaka on december 29. he stayed in a hotel near the airport, where he boarded a private jet headed for istanbul. the jet flew over russian airspace. he then boarded another jet for a brief a flight to beirut. ♪

nejra: good morning from bloomberg's european headquarters. this is bloomberg daybreak: europe. these are today's top stories. response, tehran fires missiles at two u.s. iraqi airbases. global stocks swoon. iraq's foreign has concluded proportional measures. wrongng jet crashes in a shortly after takeoff due to what state media describes as technical issues. all on board were killed. the head of a highly anticipated press conference today. carlos ghosn says nissan used him as a scapegoat to block further integration with renault. we are live in beirut. ♪

nejra: retaliation from iran prompts risk assets to selloff and prompt investors to move towards havens. not war. we get all the market reaction from around the world. joining us to discuss the reaction is juliette saly in singapore. tom mackenzie is in beijing. annmarie hordern is here in london. great to see while. juliette, let's kick it off with you. you've been looking at the risk off movements in asia paring a little bit. juliette: similar to what you have seen in the likes of oil, gold as well. before president trump tweeted, down by 2.4%. when you look at where asian markets have and the day, the nikkei closing lower. the msci asia-pacific index having its worst day since monday.

earlier, it was on track for its orst one-day drop since last august. the japanese yen is stronger against the dollar. i'm watching the yen versus the korean won which is always one to watch in risk-averse moves. it had been tracking significantly higher against the juan earlier. now up by one third of 1%. nejra: let's move to tom mackenzie in beijing. are the equity markets in china tracking what the rest of asia is doing? is there something specific we should focus on? tom: it is the geopolitics it seems. csi 300 of by 1%. we had a pretty solid day in terms of the close on tuesday. it is a bit of a reversal of that. there's a question about china's dependence on oil and the fact that prices are higher might be a drag on the economy. suggest asiats could be a safe harbor if

geopolitics in the middle east continue to unravel. tensions continue to escalate. you have the central bank proving relatively supportive. picking upng is little bit. inflation data out tomorrow. in terms of the currency, that is essentially fln today's session. in terms of the shanghai you will be surprised to hear that the energy sector is eating out some gains here. up about 2/10 of 1%. nejra: thank you. anne-marie, speaking of the energy sector. oil. annmarie: we broke through $70 on brent. atns -- i'm also looking currencies and a basket of access that are sensitive to the middle east. gold taking off. 1600 -- $16 anh

ounce. -- silver is also higher. every major middle eastern , all of these currencies are down. there's a lot of tension in the middle east. thanks so much. juliette saly, tom mackenzie, it annmarie hordern. let's get the bloomberg first word news. iran has retaliated against the u.s. killing of its general. the escalation coming hours after president donald trump said the u.s. was totally prepared for an attack. iran's foreign minister tehran isn't looking for war but will defend itself. ray dalio's flagship fund has suffered its first annual loss

in two decades. the fund dropped 0.5% last year. despite many peers posting their best returns to the financial crisis. it was the only fourth annual loss for the fund since it began in 1991. the fund has returned 11.5% on an annual basis. the u.k. wants a fresh trade deal with the eu by the end of the year. that's what boris johnson reiterated to ursula von today. expressedef skepticism it was possible to reach a deal on such a tight schedule. 10 years ago, it was the biggest story in the world, but now the saga is coming to an end. the international monetary fund is ready to leave greece for good. closing its office. last year, he repaid some of the ipf -- i met. it plans to pay more this year to prove the crisis is really over for good. global news 24 hours a day, on-air and on quicktake by bloomberg, powered by more than

2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you. carlos ghosn has leveled a blistering attack on nissan, accusing the japanese carmaker of scapegoating him to block further integration with french partner renault. for the latest, our anchor joins us live from italy. great to have you with us. what exactly has carlos ghosn been saying? yousef: it was a surprise. the timeunting down until the press conference begins later this afternoon. the defense team released a statement from him overnight. it gives us a flavor of what to expect. saying that nissan came out with a gross mischaracterization of the truth, gross perversion is what they described it as.

carlos ghosn adding that nissan sought anever interview with him during the investigation. this sets the stage for potential revelations later on today, including the naming of names which is of course a biggerly part of it, set of explosive information that can really change the course of the conversation. the japanese government and nissan have continued to pile the pressure both diplomatically here and in beirut. they have spoken with the lebanese president and on the corporate side, ongoing litigation as well in terms of pushing the legal front. we will have to wait to see at this point what carlos ghosn reveals in the coming hours. nejra: absolutely. what could be some of the implications or fallout of what he reveals, other than capturing everyone's and imagination -- everyone's imagination? yousef: this really comes at an

inconvenient time for renault and nissan. they are trying to patch up their relationship. now you have carlos ghosn basically out free and able to speak freely. it could really overshadow those efforts. renault has indicated that they are keen to fix this up. a top french official has told bloomberg, we cannot reveal his name, there is concerns over -- aer corporate fallout decade low for nissan. a seven-year low for renault. given the amount of challenges self drivingfaces, cars, it's an expensive realignment for the trade wars that are still in overhang on demand. the timing of all of this is more than inconvenient. nejra: thank you so much. live for us in beirut. patrick armstrong is still with

us. to pick up about what yousef was saying, is this something you see solidifying after we hear from carlos ghosn as the story develops? we are short automakers as a whole. it's an industry that is oversupplied and very low returns on capital. the average age of people's autos gets longer and longer. you don't see the turnover that you had. most profit comes from financing. , new capital expenditures that will be needed to get up to speed on those types of things. we think it is a very low return industry. looks cheap on earnings. patrick armstrong stays with us. don't miss our interview with the opec secretary-general. that is next. the go anywhere. this is bloomberg. ♪

>> the world cannot afford 100 daughter oil. that's -- the world cannot i spoke to the secretary-general of opec. his matches was wary clear. there is a preparedness to respond, excess supply. oh yes, there's a matter of compliance. it's going quite well. confident that the leaders, our leaders in particular in this region, currently doing everything normalcy, toestore arrest the situation before it spills out of control.

i want to use the opportunity you are giving me by asking this question. respectfully urge all world regions to rally around and support the noble efforts of the leaders in this region. we in opec in the last 60 years have failed several challenges including wars, invasions, six .il cycles each time, we tried to disengage ourselves from the geopolitics. this beautiful resource, oil. this incontinue to do order to remain reliable,

toendable suppliers consuming nations such as bangladesh, india, china, any other emerging markets. it has made us competitive in the energy transition. market,f i look at the john and i were chatting about this. to conceptualize the past six months, it's not an incident of suspended isolation. monthsn amalgam of six of banks in the market. our you surprised that the calmt has been relatively in the face of such geopolitical links? , the the last three years market and financial markets in particular have come to accept,

acknowledge, the declaration of cooperation of 24 producing countries. it's the first time in history to come together, to take decisions jointly, to implement them jointly in order to issue a sustainable stability in the oil market. september, the unfortunate events in the kingdom of saudi arabia where 5% -- supplyil surprised was shut out. >> is that we need to remember? opec plus stands ready to do whatever it takes, if there is an outage. is that the consensus that the market needs to understand for me this morning? >> it is not about slogans. it's about facing reality. facing the situation of uncertainty. today, the only

thing is certain is this uncertainty. -- world should commence these 24 countries, diverse as they are, coming together to work together to ensure the stability, to ensure the security of supply. the secretary-general speaking to us a short time ago. more of that interview to come. the audience here in abu dhabi -- manus: they have weathered a few risky moments of war in this region. that's the message. good morning. manus cranny me from abu dhabi. patrick armstrong is a with us. do you believe him when he says

that opec plus has the measures and capacity to maintain civility? there are-- patrick: millions of barrels. i can get back on stream if they need to. yeah, basically. they are cutting. they can produce more than they can. any spikes should incentivize them to produce more if needed. there is definitely ample ability. feature atou see any all into inflation expectations or is it too early to be thinking about that? patrick: it has not been a dramatic move in oil. if you have a sustained move higher in oil, that will change inflation expectations. right now, people are thinking of it on the risk aversion side of things rather than inflation consequences. from him thateard iraqi oil facilities remain secure. we have not had any attack on oil facilities. isn'trket presumably

pricing the worst-case scenario. is that a scenario that the market can price? patrick: it is not pricing the worst-case scenario. i don't that will happen. something more possible about iran deflecting supply. if relations go sour and the troops have to pull out and trump response by putting sanctions on iraq, iranian oil going to iraq rack and being sold as iraqi oil. ,hat could be a hit to supply 300-500,000 barrels a day. there are risks to oil. i think what we have had is a response from iran, probably looking at not escalating. it might have went too far right now. up, doubling down. cnn money manager still thinks the dollar has further to drop. we discuss in your morning crawl. that is next.

this is bloomberg. ♪

nejra: this is bloomberg daybreak: europe. the greenback has largely defied expectations of its demand. a call for further weakness. here is dani burger. take it away. dani: he had a lot to discuss. his biggest conviction was a weakening dollar. he says the yield curve will continue to speak in -- steepen. assets are going to leave the u.s.. non-us assets like emerging markets will outperform. some of his other bullish calls, he thinks gold will do better long-term and he sees bitcoin spiking above $50,000. that is double from what it is currently. he says if you are thinking

about shorting oil based on its risk of spike, it is not a good time to do this. you and patrick were discussing how the worst-case scenario of oil refinery attack is not priced into the market. good luck thinks it is a possibility. he think it's a -- think that is a bad time to short oil based on that. nejra: lots for us to think about. thank you very much. let's start with the dollar first. are you in the dollar demise camp? patrick: we think the dollar weakens against the other g4 currencies. on valuation grounds. he still have the big twin deficits in the united states. it is not something we hear much about right now. the u.s. economy is growing, it is slowing. that deficit is going to matter. there will be political risk as we enter the fourth quarter on the election. potential headwinds for the dollar apart from valuation as well. nejra: he refers to headwinds

for returns for stocks and bonds compared to 2019. he thinks volatility will pick up. he says, it won't be the roaring 20's. it will be the boring 20's. is that look at -- what we can expect? patrick: that is the consensus view. volatility will pick up. is stresses volatility. there is so much liquidity in the system. every time there is a dip, there are buyers of that. there is free money going right now. that is powerful for us. trillions of dollars being built up and balance sheets. that suppresses volatility. geopolitics pushes volatility a. nejra: investors use it -- moving out of u.s. assets. are you wanting to move money out of u.s. equities into equity markets elsewhere in the world? patrick: definitely. we are 30% underweight u.s. equities.

we are net short u.s. equities. they traded at 13.5 times in her prize value. that is very high. higher than it has ever been. go back to the tech bubble. it didn't get to the levels whereat today. japanese equities trading at a 8.5 times. -- we think those emergencies are way too wide. we are long japan, short u.s.. nejra: you said you expect the dollar to weaken against g4. do you expect it to weaken against emerging markets in 2020? patrick: i don't think it will weaken. things are staying flat in emerging markets. you get such a carry pick up because of the interest rate differentials. i don't think they will appreciate. nejra: are you buying chinese equities? patrick: we own consumer stocks that are performing well.

alibaba and tencent. chinese consumption will continue. we think the growth compensates for that. nejra: i know you disagree that now is not the time -- patrick: i would not be shorting. nejra: thank you so much for joining me. great to have you with us for the hour as our guest host. we have been following the story of the retaliation by iran in terms of a missile attack on u.s. iraqi basis. ataliation for the killing of general. further commentary from around the globe. a foreign secretary says, we condemn the attack on iraqi bases hosting the coalition. he has urged iran not to repeat dangerous attacks. iran has hinted that this might be the end of escalation. even though we have seen risk assets selloff, global equities

and futures have been paring for those losses. oil spiking. that's it for lumber daybreak europe. the european open will pick up next with all the market reaction. this is bloomberg. ♪

>> welcome to bloomberg markets: european open. we are live from our european headquarters in london. i am anna edwards alongside matt miller. the worstmarket say is over. futures and stocks, flows as traders see the military retaliation in the middle east is done for now. the cache trade less than an hour away. trade is less than an hour away. ♪ matt: iran response, brent jobs. global stocks swoon after