>> iran retall yates, tehran fires over a dozen missiles. threats rises and stocks sink. a boeing 737 crashes in iran, everyone on board has died. state tv suggests technical ssues with the aircraft. in bay route, ahead this highly nticipated press conference. welcome. in lond, even though iran has retaliated it hinted at no further escalation.

some have moderated a little. we trade at 68:59. gold went above 1600 an ounce. we come off the high a ten year yield did get to a 170 breaking a trend line that we've been in since september but now down to two basis points on a 180 handle on that. looking at dollar yen though that comes off a little bit. unchanged there on that currency pay. european equities in the red but a reasonably muted move also what we're seeing in u.s. future. one point we saw it drop as much as 1.7% but we recouped ome of those losses. >> this morning we begin with the retaliation from iran against the u.s. for the killing of its top general. the nation firing a series of missiles at iraqi air bases housing u.s. troops. the escalation coming hours after president trump says the

u.s. was totally prepared for an attack. iran's foreign minister saying tehran's is retaliation. it adds it isn't looking for war but will defend itself. also this morning shortly after takeoff a boeing 737 bound for ukraine crashing in iran. nine crew h jers members dying. early assessment saying it was caused by a technical issue. boeing said it is aware of the incident. ukraine international is suspending flights to tehran. and the flagship fund suffering its first annual loss in two decades the fund falling half a percent last year despite many posting their best return since the financial crisis. it was only the fourth annual loss for the fund since it began in 1991. the fund has returned 11.5% on an annual basis. today the next ask of the dram

-- act of the drama continuing. he is going to tell his side of the story. he is accusing his former employer of making him a scapegoat to block further integration. he is escaping japan in late december fled to lebanon. the u.k. wants a free trade deal with the e.u. by the end of the year. what the prime minister will reiterate. european commissioner today. but late last year the e.u. chief expressing skepticism it was possible to reach a deal on such a tight schedule. and ten years ago the biggest story in the world now that saga looks like it's coming to an end. the international monetary fund is ready to leave greece for good and close its athens office. last year greece repaying some of the money ahead of schedule plans to repay more this year to prove the crisis real sli over. global news 24 hours a day

obair and that quick take powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. >> thank you so much. now to iran's retaliation. they have fired at least a dozen missiles at iraqi air bases housing u.s. troops in response to the killing of a top iranian general. the ayatollah says the people of iran have given the u.s. a crushing response. iran's foreign minister signaled the end of the retaliation saying it doesn't want a war. the u.s. president wiefed and monitoring the situation closely with national security team. he said all is well after the attacks. joining us from dubai. great to have you with us. is iran really aiming to avoid any further escalation here? >> yes. it is. and it's made that very, very clear in all its statements.

he even said that iran got in touch with the u.s. sending that message that they are not really seeking escalation with the u.s. over this. this was basically iran's official response because the killing of soleimani was something the americans did quite openly that president trump tweeted about it so the iranians felt this needed a country to country response, an open response. they wrote a letter to the u.n. announcing that they were doing it. and now they are saying, ok, our official response is done. we have concluded the response and president trump's tweet from last night suggests that he too doesn't seem to be keen on responding to the iranian response. >> do we expect any kind of escalation of rhetoric from the u.s. to riyadh? >> look, i mean, the rhetoric has been escalating from the

iranians and from the americans. both telling each other look don't do anything silly we don't want to go to war here. i think in a way they're kind of united in the rhetoric saying we can hit you hard, we can do some serious damage to the other side, but we don't want war. we don't want to escalate. at the same time, i don't think anybody expects iranians not to, for example, ask their proxies, people they're allied with in lebanon and iraq and other places, to strike at u.s. assets. but there the iranians at least have the deniability saying this is not us. and the americans as well. so the idea is to avoid an open war, to avoid this kind of action. this is iran saying we've done our best. you attacked us openly we attacked you openly and this

should be it. >> thank you so much. joining us for the hour is peter, global equities economist. great to see you. is the market reaction what you would expect based on what we know so far in the sense that we had some big moves we've moderated somewhat but still retain a bit of a risk off tone. >> in many ways. i'm a bit surprised the markets did not react wasn't even greater given the extensive rhetoric. it looks right now as though that was the right response because as we've been hearing it does suggest that the rhetoric's being dialed down a little bit and that some of the worst outcomes may not happen. under circumstances markets will remain with riskoff stand but not necessarily go all out in selling mode. >> if we see any kind of escalation, we understand that's not what either side wants but there's a lot of

uncertainty. do you expect the market reaction to stay more contained to say oil and gold or will it have a meaningful reverberation? >> depends on the extent of the response. if it turns into something really nasty, allout shooting, that kind of thing the initial response is a big selloff and then we worry about the consequences later. if it remains a contained kind of cold war kind of outcome as looks to be the case at the moment, then i think we'll start to see the proxy indicators. as you said, gold, and probably safe haven again. >> what's been interesting with the haven currencies is they haven't moved as much as some other assets. gold for example some of the explanations is gold is particularly appealing to investors in the negative rate environment but if we look at the ten year treasury reaction that was a seat drop overnight of 11 basis points breaking a trend line we were in from

september some saying the ten year yield to get to a 150 handle. is that in line with what you might expect at the start of the year for the ten year treasury yield? >> it will be a bit of a stretch. it's certainly possible given the possibility certainly in our forecast that might cut interest rates once more this year. given the extensive u.s. economy has lost a little bit of momentum. certainly i wouldn't rule out 150. a long way to go and i think it will take some time to get there. but it's certainly on the radar screen. >> for an equity invester what's the biggest fear of an escalation here of this conflict in the middle east? is it it might impact global growth if we get a really meaningful spike in oil prices? a plot of people tell me that's not something on their radar at this point. >> it's not. i think the concern however is just a sentiment one right now. we've had a very strong run the last couple of years have been great. from an equity perspective, surprisingly so.

and as a consequence, i rather expect investors might be thinking there will be a time in which i am going to take some profit and get out of the market. under those circumstances they may use the excuse of geopolitical uncertainty just to step back a little bit and take time out to see where we go. so i think it's a sentiment factor and the desire to cash in on the good run that will trigger that. but i think the problem is investors have remained so long that it's difficult to step out because they think there's still upside to go. >> and therefore is the mentality a buy when we get days like today? >> that certainly seems to be the strategy right now. but i rather suspect that it might be slightly bigger than we've seen over the course of the last year or so the rallies might be somewhat smaller so i think it's going to be a bumpier ride from here on in. >> stay with us and still to come, more in our top story

iran retall yates with a missile strike on iraqi basis. this is bloomberg.

737 s morning a boeing jet has crashed in iran shortly after takeoff. local media reporting it was a technical issue and all on board have died. boeing says it is aware of the incident and is gathering more information. good to see you we of course need to clarify this is a different model from the grounded 737 but do we know the course of the crash? -- the cause of the crash? >> we don't know exactly at this point. there are reports that the black boxes, the data

recorders, have been retrieved. the plane went down in a field shortly after takeoff. so this is terrain that is relatively easily accessible despite the debris lying around. and if they have indeed found these black boxes that gives authorities a much better clue of what might have happened. as you said, the first indications point to a technical fault. this is obviously important given the times we live in the geopolitical issues that we have, this occurred in the same night that we have the missile attacks on the iraqi basis so there was obviously speculation was this possibly a stray mifflet that hit the aircraft. that so far at least seems to be disputed. a technical fault is what is being investigated but all people onboard about 170 died in this tragedy. >> a tragedy indeed.

do we have any signal at the moment on how the investigation might unfold? and on the potential impact on boeing as well which of course as we know has faced a lot of challenges? >> yes. so this will be a very difficult investigation. normally the way it works is the country where a plane crashes is the lead investigators in this case it's iran. now, the manufacturer would normally come in to assist as would the authorities behind these manufacturers, the ntsb but these aren't normal times so the question will be how much access will international authorities be given? will the iranians be in a position to read out the flight data recorders? these are highly technical machines that require a higher degree of expertise. it's unclear whether the iranians or indeed the ukrainian authorities have that level of expertise. normally you have that finely

tuned international network that works hand in hand but in this case given where we are geopolitically that seems unlikely. >> the shares down some 2.6% premarket at the moment. thank you so much. now coming up german factory orders tumble again. we ask when it will start to pick up. that's next. this is bloomberg.

>> we focus on the access, risks, and rewards. oin us on bloomberg.

>> getting a check on the markets. saying they didn't want further escalation, they moved towards $72 a barrel. the first time since 2013 but we're at 1518 now. down as much as 1.7%. to recoup some of those losses. let's focus on europe's biggest economy now german factory orders unexpectedly slumped in november the biggest decline since july and despite forecasts for a gain. germany's economy is still struggling to overcome its worst industrial downturn in a decade. joining us from berlin. peter is still with us as well. welcome to the show. great to see you as always. where is the stabilization in

ermany's manufacturing sector? >> the best surprise we've seen these difficulties for some time now in manufacturing but in recent months all indicators suggest that there was a certain stabilization now that's -- this is the news now still we think that the downturn in manufacturing which is severe is bottoming out at least that's what our forward-looking indicators generally seem to be saying. >> so you're seeing signs that there's a bottoming out. but before we get there, are we going to see the troubles in the industrial sector spill over into services? >> well, we've seen some of that recently, for instance in the services closely related to manufacturing. we've seen some weakness there but it hasn't really spread

out. if we look at consumption it could be the case that people get worried about their jobs and consume less. but currently we don't see much of that. that may be related to the fact that the labor market in services is still booming, increasing. overall we don't expect the weakness to spread to the rest of the economy at the moment. >> would you agree with that in terms that we are seeing a bottoming out in the manufacturing sector in germany and that for now services remain resilient? >> i certainly agree that services remain resilient and every indication that will remain a supporting factor in 2020. i'm hopeful that the bottom of the manufacturing journ turn but obviously the latest numbers was a negative surprise. i think the extent to which the global economy remains weak will be one of determining factors there. if we get any downturn surprises globally that will spill over on to exports. so i just think a little

caution is wasn'ted although i'm hopeful the worst -- war ented. although i'm hopeful the worst is behind us. >> of course today we're digesting the conflict and at the moment it seems like we're perhaps not going to see too much escalation in the near term between the u.s. and iran. but when you look at the tensions in the middle east do you see any potential read across at all to germany and europe? we've seen on several occasions in recent months the problem, the peak in oil prices but no permanent increase. this one looks the same. but there's no guarantee that there is no escalation. if there was one, that would be a problem. if you look at germany for instance our oil imports are roughlyly 0.7% of g.d.p. so if oil prices increase by say 20% that would be a

negative shot but it would be something like 0.2% of g.d.p. i think that could be digested of course, such a negative shot in the current situation would be highly unwelcome. but i don't see a crisis in the middle east having, let's say, a major negative impact on the european economy. for that to happen the crisis would have to spread to other countries, maybe draw russia into the conflict. that's very unlikely. >> you were talking about a forward-looking indicator early as well. what are specifically making you perhaps a little more hopeful about germany and perhaps the rest of the euro zone? >> in our surveys we ask companies what you expect for the next six months. and here answers from the manufacturing sector have improved. that's suggesting that there is some light at the end of the tunnel. but that may change for instance if there is a downturn in china, if there were

problems in the u.s. that would have an impact and would then -- certainly 24 would change. but overall there are -- companies think that the downturn is bottoming out. > do you expect the ecb in its upcoming strategic review to find ways to deal with the challenges facing the euro zone? >> i think the ecb will find it very difficult to come up with new things allowing it to come up with more stimulus. i think the major concern is that there is very little room for more stimulus should a downturn occur in the euro zone. i'm sure the ecb will think hard about that and there are thing that is can be done but it is getting difficult. i think we see that quantitative easing is reaching its limits. it doesn't seem to have a big impact.

i think it is very challenging. i would expect it to emphasize there have to be other struct ral reforms for policy. >> thank you for joining us. peter stays with us for the rest of the hour. coming up later, carlos speaks out. the former ceo has stories to tell and scores to settle. don't miss this at 1:00 p.m. london time. this is bloomberg.

retaliates. a dozenires over missiles at u.s. iraqi airbases.

a boeing 737 crashes in iran. everyone on board the ukraine bound flight has died. we were technical issues with the aircast. -- with the aircraft. -- this isn says bloomberg surveillance. i am they reach a pitch in london. carlos ghosn has leveled a blistering attack on nissan, accusing the japanese carmaker of scapegoating him to block further integration with french partner renaud. guest joins us from beirut, where he is getting ready for the news conference. good to see you. what can we expect from debriefing? as a bit of ame surprise. you mention some of the key points. he also added that the nissan characterization of the situation in earlier in the week was a gross perversion of justice. he underscored that they never

came to his doorstep to ask for an interview, and that really set the stage for the next few hours in what could be an explosive set of revelations that include not just names from some of the company officials in japan at nissan, but also perhaps more potently, some government officials as well from the legal side. that is where it is at from the ghosn perspective, setting this up as an expected takedown of the industry tighten, but on the others, officials from japan from the government, and celebrations are ongoing with the government here locally, and nissan said it will continue to take necessary legal action. the timing for this could not be any worse. he will be heading to the news conference with carlos ghosn later. do not miss our coverage from the news conference at 1:00 p.m. london time. just over 1.5 hours into the

equity trading session, let's check in on your european stock movers with anne-marie horton. annmarie: have the mover screen up. -- annmarie hordern. annmarie: we have the movers screen up. 33%, surging as annual -- annual american is in advanced talks to buy the company. thanll value them at more $500 million. poly metal also to the upside, with a flight to safety. gold surging passed $1600 an ounce. clearly that is a trade given the geopolitical tensions in the middle east. and nmc health to the downside, down more than 14 points 5% -- 14.5%. you remember, this company has had a rough last six months. carson block had this report out

in december saying he would be shortselling them. but nmc health did come out and say those claims were unfounded. nejra: let's get to bloomberg first word news with viviana hurtado in new york. viviana: iran firing a series of missiles at iraqi airbases housing u.s. troops. this is a retaliation against the u.s. killing of its top general. the escalation coming hours after donald trump says the u.s. was totally prepared for an attack. iran's foreign minister says tehran finished its retaliation. this morning, shortly after takeoff, a boeing 737 bound for ukraine crashed in iran. all 167 passengers and nine crew members have died. reports suggest a technical issue caused the crash. ukraine international suspending flights to tehran.

opec is looking to reassure oil markets. saysae energy minister there is a risk to the straight of hormuz. it is a bottleneck for global oil shipments. >> we are not forecasting a shortage of supply unless we have a catastrophic escalation, which we do not see. viviana: global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in i amthan 120 countries, it's viviana hurtado. this is bloomberg. nejra: thank you. daimler says cost cuts today will fund the cars of tomorrow. last year the automaker mapped out a plan tilde eliminate more than 10,000 jobs will wide -- plan to eliminate within 10,000 jobs worldwide. the chief executive says he wants executives to share this forward thinking view. >> we welcome investors that

have a long-term view to see the future, the long-term future of the auto industry, daimler, and share our views of the industry developing and how it is changing. that is a good thing. nejra: still with us, peter dixon from commerzbank. youcarmakers a buy for long-term? peter: a long -- a lot will depend on the strategy with electric vehicles. in the longer term, i think all but thers will have to, question is, how far advanced are there. -- are they. a buy, buterally within that universe, you have to take the winners if you are going to do well. nejra: what about the consumer demand side of things? we were talking earlier on radio, you're not that up eat about where we are in the cycle, and about 2020 in particular. does that mean that short-term

perhaps we will see more pain for carmakers? peter: that is highly possible. will remain muted across europe in the next few months. partly it is a physical thing. consumers arehat being squeezed a little bit. it is not time for consumers to make big purchases of consequence. it is not going to be a stellar year for car manufacturers. nejra: when you look at the story of carlos ghosn -- and i know you will be riveted by the news conference, as all of us are, later -- is this something that has implications for you in terms of the auto industry in general, or is this a story they just captured our imagination? peter: it is more a story about the japanese corporate government. it is not the first time an outsider who came to japan had difficulty. story, to theosn

extent to which the japanese government affected the rest of the world -- it is well-known that the system of withholding suspects on demand happens a lot more in japan than elsewhere. it is the last place you want to be accused of any corporate misdemeanors. think fewer leaders will be attracted to do business in japan. nejra: it is a big thing for you in the next decade. does it get more appealing in a way with strict corporate governance, or not because it makes it perhaps more difficult for some to want to do business? peter: it is all about the company's issues. the pan i think is not exactly renowned as being a particularly esu friendly pressure. -- place.

at the moment it is more of an -- over time, i suspect it will become more of -- right now if you are interested in esg, i think you speak to the western world rather than japan. nejra: peter dixon from commerzbank staying with us. opec is, -- confident that middle east leaders are doing everything to restore calm in the region. a reclusive interview is next. plus, carlos ghosn speaks out. do not miss our coverage of the former nissan ceo's press conference at 1:00 p.m. london time. this is bloomberg. ♪

nejra: this is "bloomberg surveillance." let's get the bloomberg business flash with viviana hurtado. viviana: samsung reporting profits beating estimates in the final three months of the year. operating income fell, but it was better than expected. fornd for dram chips used smartphones and servers is expected to arrives -- two rise, helping china and samsung. barclays is facing a vote on climate change. a group of shareholders filing a resolution focused on the lender's support of fossil fuel's. they are calling on barclays to state how it will phase out energy firms that do not align with paris climate goals per shareholders will vote in the annual meeting in may. last year ken griffin's citadel seeing its main hedge fund soaring over 19%. for months, its multi-strategy fund has bested rivals.

these -- last year hedge funds probably gained 9%. pilots gorecommending into simulated training before flying the 737 max. this shift threatens more delays for airlines. they say there are hurdles as they prepare pilots to fly the grounded plane. the u.s. regulator will make the final decision on training. that is your bloomberg business flash. nejra: thank you so much. let's get back to the top story. a uae oil minister has told number he does not foresee a major escalation in regional tensions. forecasting a , unless we supply have a catastrophic escalation, which we do not see. opec's secretary-general

also sought to reassure markets. he spoke with manus cranny and abba dobbie. dhabi.emain -- in abu >> we remain confident that leaders in this particular region currently are doing to restorepossible normalcy, to arrest the situation before it spirals out of control. and i just want to use the opportunity you are giving me by -- to this question respectfully ask all world leaders, the regions, to rally around and support the noble efforts of the leaders in this region who are embarked on this initiative to restore normalcy. we in opec, in the last 60

years, we have faced several challenges, including wars, invasions, six oil cycles. we tried toe insulate ourselves from the geopolitics and depoliticize this beautiful resource, oil. and i believe we are going to continue to do this in order to remain reliable, dependable , tolies to consumer nations bangladesh, india, china, many other emerging markets. i am sure that this beautiful resource remains competitive in the energy transition. pack -- thewas the opec secretary-general. annmarie hordern, you have been

looking at the options market. annmarie: gains are really starting to pare down now. the action is in the options market. look at the calls we have to here. the highest we have seen since the attack on saudi arabia facilities in september, so while we are seeing geopolitical brentome back aback, into going above that brent-wti prices, people are starting to protect themselves. they want to protect against further spikes, and that is why we are seeing these call options tick higher. nejra: annmarie hordern, thank you so much. still with us, peter dixon from commerzbank. do you see a sustained raise -- rise in oil prices? peter: i am not sure about a sustained rise. i am surprised if we get much further than this. rightly, there seems to be an awful lot of excess supply at the moment. not evenec -- which is the biggest institution in the world -- can cut back its supply

further, i think there is every possibility. 70 tohis year, we go to 60 on nejra: the oil price. do you expect -- 260 on the oil price. nejra: do you expect these challenges to persist? it is probably not going to be sufficient to absorbency the streaming of a large amount of capacity. as a consequence, the global market will remain in a supply surface, i think. even if we do see a spike in oil prices, the impact on the global economy is not going to be as big as it was in the past. peter: i think it depends on how big the spike is. if you get a big spike, at a time -- the global economy is

already slowing down a little bit. that could cause a bigger than we currently admit to. but oil dependence is somewhat lower than it once was. the impact, one would hope, would be smaller. dixon fromr commerzbank, never underestimating anything. stay with us. coming up, the great escape, live in beirut for carlos ghosn's press breathing later today. -- press briefing later today. a left his house with surgical facemask and boarded another bullet train, then a jet to a brief flight to beirut. more details as we get them. this is bloomberg. ♪

nejra: economics, finance, and politics. this is "bloomberg surveillance ." in record five $.9 trillion in value added to stocks last year. while it was a great year for the s&p, my next guest says it was all to do with -- it had

little to do with profit growth. with us, peter dixon from commerzbank. john, welcome to the show. what does this mean for 2020? john: the critical question is that we need to see what happens to corporate crop fits -- corporate profits per last year literally all of the gain in the s&p was to rising multiples. you could also point out that if you go back two years, the rise is roughly in line with earnings, but then again, if you go back two years, that takes you to a point just before the markets had a big break. that was after the tax cut in the u.s. the critical question is exactly what is going on with profit growth and whether we can discern underlying factors after the way the tax cuts muddied the waters. as it stands, if you look at the prophets, the ones produced by the gdp, that if you look at

profits, the ones produced by gdp, the question is after the impact of the tax cut, much of this is merely due to people bringing forward depreciation charges, something che,really there in the ca or whether we have a broader slowdown. nejra: what can we observe at the sector level? john: we have had a fairly major rise and then fall in the last five or six years in earnings, and 90% of that has been energy companies which are in terms of the actual market cap, the s&p really very small, but they still make up a decent proportion of profits. what is somewhat concerning about the flattening off in profits growth as reported by finally that is

flattened out. it is not part of what we are seeing at the moment. nejra: peter, you are saying that we have been overextended in the equity market. do you expect in 2020 we might start to see profits catch up to where we are on valuations? peter: i suspect not. one of the things we have been discussing in the course of the half-hour is that the economy will not be -- i do not think profitability will be catching up. if you look past the last couple of years, the defining story of tax cuts come and last year it was the unexpected rate cuts. boosted the discounting value of future earnings. suspect that the upside is limited if at all. anything to be

positive about, john? there are still a lot of people who think we are still going to see equity gains in 2020, navy not the kind you saw and 2019, but they were -- maybe not the kind you saw in 2019, they are still going to be there. john: every year we hear there are gains of about 6% or 7%. it is rare to have a year where the stock market is up a bit. it tends to be much lumpy or than that. than that. while we have the liquidity being pumped out at the moment that we do, it is difficult for stocks to fall very much. this is a lesson we have all learned many times over the course of the last decade. measures of which the economy you take, it does look as though europe might have hit a navigable bottom, and we still have no clear economic slowdown in the u.s.

i am not saying there are not reasons for optimism, it is just that most of them are probably already in the pricing. nejra: what have you found that we are looking at with debt and balance sheets? john: this goes to exploring profits. debt is increasing in a way that is getting quite alarming, so it is regularly increasing at a faster rate than prophets have. intereste you have rates as low as they are, you can see the gradual -- companies that are able to buy because they are able to refinance, at ever cheaper levels. but this is plainly one of the reasons that makes it hard for the fed to cut rates. it is a big part of why there was quite such a market freak out before christmas eve of not last year but 2018 now. nervous,ed exactly how

how scared people whereby the mere prospect of actually trying to normalize interest rates, that there is still a dangerous amount of over leverage, which is horrible for now, but it means we are very sensitive to rising rates. nejra: and a lot of caution around this desk heading to 2020. thank you for joining us, john authers and peter dixon. "bloomberg surveillance" continues in the next hour. tom keene in new york, and anna edwards will be here in london. 's news conference is at 1:00 p.m. london time. do not miss it. ♪

tom: this morning, all is well after a missile barrage.

the president must assess his options. .e will speak this morning in tehran, they will also assess. this morning, kevin cirilli. amid escalating conflict, congress and the president asked find a way together forward. morning, everyone. this is "bloomberg surveillance ." i'm tom keene in new york. anna edwards in london. an extra ordinary sequence of events, all of america riveted. what i noticed yesterday is that the beginning of linkage in the language of tehran of the united kingdom and the united states. how did that play in london? to see theesting overnight developments, and the risk-off, as-on that we saw for markets initially, and then some of the risk-off being paired, after the comments from iran

about concluding measures. but we have not seen every voice on the same page. tom: well said. it is amazing to see the different voices out here, and viviana hurtado and her team will sort that out as we await the president's comments, scheduled for later this morning. here is viviana hurtado. claima: we begin with a to responsibility from the islamic revolutionary guard corps, this required -- firing 15 missiles at air bases in iraq, iran's retaliation against the u.s. for the killing of a top general. the big question, where there u.s. casualties? that could determine how the white house response. this morning, a statement scheduled to come from president trump. he has already tweeted, "all is well." iran to 737 bound from ukraine crashed after take off. all 100 76 people on board were killed and one arabian official said an engine appears to have

caught fire. ukraine international plane was not the same version of the 737 grounded. that is the 737 max. and a stunning reversal from boeing on pilot training. it now backs simulator training for pilots before they fly the redesigned 737 max. the move is designed to reassure the public of safety. , when testing the max's updated system, the results were less than stellar. former nissan chairman carlos ghosn is holding a news conference. it has been more than a week since he staged a dramatic escape from japan. he identified those he considers responsible his downfall. a.m. new be at 8:00 york time. global news 24 hours a day, on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries, i am viviana hurtado. this is bloomberg. tom: let's do a data check right

now. i will do two screens, but really i want to emphasize the calm that is out there. you see it in futures barely moving, dow futures -81. these are all the nudges we are seeing. onto the next screen with oil up fractionally. but nevertheless elevated. brent crude, 68.71, not nearly $70 level. anna, what do you have? calm,you mentioned the and that stands in contrast to the knee-jerk selling of risk assets that we saw during the asian session. interesting to see that the initial setting was met with a reversal, but we do still cling to some of those gains. 1584. we did go over $1600 a choice out for gold. --e of the risk assets

sorry, some of those haven assets as a result of these latest tensions. tom: we are monitoring headlines out of new york, iran, iraq, and the united states. we will be doing that throughout the morning. to begin the conversation on "bloomberg surveillance," our champion joins us from london. trenches,ton, in the kevin cirilli. kevin cirilli, what was the mood of the people you know in the white halls of marble last night when we heard of these rocket attacks? waiting with bated breath. good morning, tom. we anticipate fresh comments from president trump. there were some rumblings we might get that comment. i reached out to the white house and they said not to expect anything and to anticipate that sometime this morning. lawmakers on capitol hill received a briefing ahead of that attack yesterday, but the situation in iran, there are

fresh reports that those briefings will continue on capitol hill once lawmakers get to capitol hill in a couple of hours. tom: we have seen some stark differences. stephen cook with me yesterday making it abundantly clear, now is the time to exit. what is the dialogue that you hear in washington about the simple question, should we leave iraq? kevin: democrats are saying have a plan. you heard this yesterday from some top contenders, including former vice president joe biden, who raised concerns about the president's withdrawal of the jc pla. you also heard from elizabeth warren echoing similar sentiments, calling for ds kill his asian -- de-escalation of middle east tensions. in the republican party, you have rand paul raising concerns. but predominantly, virtually all

of the republicans with few exceptions are standing behind president trump. i interviewed congressman lees ofin from new york, a member the foreign affairs committee in the house, saying he is completely behind president trump and noted that democrats and republicans have raised concerns about soleimani before his coming. democrats raising concerns about how this was carried out. anna: mark, i want to bring you into the conversation, and good morning to you. let me ask you about which of the voices we should focus on coming out of iran. because the market is looking for signs that we have seen an end to this escalation or not. and we hear from the foreign minister talking about the conclusion of proportionate measures in self-defense. but other voices are talking about how this is the first big slap on the united states, talking about how stepping back would be a mistake. what is your assessment about what we have heard from iran? mark: the key thing in the u.s.

has been the concern that when the strike against soleimani was made, the administration did not have a plan. i think -- obviously the iranians were not expecting this attack, but of all things, you cannot really accuse the iranians of lacking a plan at any time. and they will be working it out now. this was their first response. we will see -- everything depends on how it was done. we still do not know how it was done. was there any information beforehand? we do not know the level of casualties. but it is quite possible that this was done deliberately, in a way not to force an escalation. but that still does not mean that they will not continue by other means. they have many other methods at their disposal which are less prominent. this was something they had to do for reasons of national pride. and this was more blatant

than some of the proxy attacks we have seen in the past. trump'sut president need to response in some form? marc: it will be made much easier if indeed there were no casualties, and we simply do not know. it really depends on what happened. if american lines -- if american lives were lost, it will be great pressure on him to do something. if not, it will be easier. tom: i have been stunned in the last one he four hours, even 30 hours, how quiet it has been out of riyadh. we have the reality of a president trump in the kingdom together. give us an update on a saudi arabia and how it fits in on all of this. marc: you're absolutely right, and it is not just the saudi's. the israelis have been extremely quiet. both i think will be very cognizant that whenever the iranians talk about striking back at the americans, they always say, "and whoever

supports them, whoever hosts their troops in bases." the calculation in riyadh, likewise in israel, is simply there is no upside at this point to raising your head above the parapet and getting involved in this very delicate question of escalation. an: kevin, as you begin exhaustive day in washington, i want to step back. who dida president everything he could to have an equivalent parade in washington to mr. macron's parade in paris. the --he mashing kevin: it depends on who you ask. the democrats got started this week as to raising the issue as to why the president was trusting the intelligence community relating to iran, but

not in other instances. meanwhile, republicans are standing by the commander-in-chief. but also noting this is a president who ran on the issue of winding down the wars and striking a much more isolationist type of tone. backdrop, the political backdrop of this simply cannot be understated. headline edwards, the -- and we will see this all received- iraq says it verbal notice from iran prior to its attack. that is an important idea from our champion, isn't it? debt from -- anna: yes, we wonder what the leadtime was because we heard there were no iraqi military personnel in this attack. they stepped back before we knew

what happened with the u.s., and the question is what they would do with that information or not. absolutely. they do not want to be a battleground. between the world's greatest military superpower and then their neighbor, which is much stronger and has a capable expeditionary force that soleimani used to have -- used to head. the iraqierating, prime minister is saying there were no casualties. iraq is saying that iran said it would limit attacks on u.s. positions. so we will continue to watch headlines coming out of iran and iraq. cirilli, and marc champion, thank you so much. still to come on "surveillance," more on stories about onaliatory strikes by iran

u.s. missile bases in iraq. ♪

anna: i am anna edwards in london, with tom keene in new york. iraq says they got verbal notice from iran prior to its attack, the latest missile attacks that we saw by iran on u.s. bases in iraq. has said said -- iran that they would limit the attack on u.s. positions. they also say that the prime minister of iraq is saying there are no casualties reported on the iraqi side or on the

coalition side. let's get the initial source of the overnight develop its. -- developments. joining us on the set in london. these headlines still coming through. we just digest them now, who knew what when, and what kind of casualty toll are we going to see from this? suggestions are that there are limited casualties from this. if there are no casualties on the u.s. side, does the market participants -- do the market participants hope for a muted response for the united states? -- from the >> united states? we need -- >> we need to hear from the president. the other caveat is this is not going to be the end of heightened tensions between the u.s. and iraq. this is a new normal for the region, but similar to the old normal for the region. having said that, i think the market response is correct. allowing an escalation that seriously impacts oil supply,

which is going to be the main issue for markets, and therefore in all likelihood this is going to be a de-escalation. rupert, let's go back to -- this is a fabulous essay from "the new york times," a sharp essay on that painting hanging in the president's office of andrew jackson. "jacksonian" belongs to walter russell mead. the famous typology that re-divides american foreign policy into hamilton, wilson, jackson, and jefferson. a great deal of what makes president trump different from previous presidents is plainly jacksonian. what is the best of jacksonianism? it is the capacity to identify and prioritize threats. how jacksonian is prime minister johnson?

with get on board president trump in a unified coalition? think prime minister theson will awkwardly -- statement coming out of europe, including the u.k., have been extremely cautious. of course, the u.k. government condemns a lot of the actions that the u.s. has identified, that iran has been carrying out, but the u.k. has maintained alliance with europe on the u.k. deal. it will be extreme the cautious before -- i don't think boris johnson is going to be going out of his way to align himself with donald trump on this issue. what is the united kingdom exposure that you see to all of these affairs and matters? rupert: the u.k. is extremely

engaged in the middle east, and will continue to be so. we have certainly military personnel and assets in the region, and so the u.k. will continue to be an extremely concerned participant. but i don't think the u.k. is in a position right now to be a leading actor on this issue. i think jacksonian is a description of -- as a iscriptive president trump inaccurate, i think unpredictable is more of a characterization of u.s. policy over the last few weeks. i think the u.k. will continue to be a kind of nervous observer and trying where it can to assist with de-escalation. but not much more than that. anna: so in the immediate future, we look to what the white house has to say, what president trump has to say. we also look to further actions from iran, other options, avenues, that other attacks are perhaps less open to iran, or

very blatantly, whether that is further in iraq or israel or -- rupert: let's be clear, we have seen in recent months increasingly erratic action by iran. -- the tensions underlying these issues will continue. trying to cement its influence in iraq, supporting proxies in other parts of the region. that will all continue. when we think about the market response to these issues, this has been going on in a period where markets have been rallying, where the markets are more focused on the global fundamentals driving the rally. unless we get a significant escalation that will permanently and significantly disrupt all supply, this is not going to be a major market issue. it seems very unlikely that would happen because it is significantly against the interest of all the key players. anna: and disruption to oil supply might affect iranian

partners and partners in asia. welcomethat will not be to china, russia, and other allies who have important access to iranians. tom: what are you listening for from the president this morning? clearly his tone is going to be very important. is he going to seek to continue de-escalation? we seem to get a hint of that havehis tweet, and we hints of that from other statements from the administration. the tone is going to be very important. i have to say, it seems very unlikely that he will come out and dramatically re-escalate the situation. but as i said earlier, unpredictability is the hallmark of the trump approach. so i hesitate to make traditions. i think everyone will be looking for the tone. everyone will be looking at any hint as to whether he sees further steps necessary. tom: we will continue with the

news flow -- an eight-hour time difference between washington and baghdad, and with tehran as well. kevin cirilli will join us once more, with early-morning washington observations. and then the former ambassador, robert hormats will join us. really looking forward to this. robert hormats on the strategy forward. this is bloomberg. ♪

viviana: this is bloomberg

surveillance. let's get your bloomberg business flash. gold is surging above $1600 an ounce for the first time in more than six years. all of this coming after iran fires missiles at u.s. bases in iraq. after the foreign minister says the country was not seeking war. gold paring its gains. good news for the largest maker -- samsung's quarterly sales fell short, but profit was better than expected. that is the bloomberg business flash. tom: this is the data right now. i want to inform, tom beckett will join us. we are thrilled to ring the former lieutenant general, i believe in the 6:00 hour. churning in oil with a little bit of a lift, a churn off the news of last night. wea: futures go green, and

see european equity markets goals set into the trading day, down a quarter of 1%. down .8% or so. a jet crashes shortly after takeoff, due to what state media calls a technical issue. all 176 people on board were killed. many other airlines have also suspended any flight activity over iraq or iran. we will have further on the aviation sector. this is bloomberg. ♪

♪ proud on the work we did. i am aware of the mistakes we

made. he said he will attempt to find the tennis court in the coming weeks. alan greenspan, the fed, and what was most interesting was his place in central banking in the forward world. with us, rupert harrison of blackrock. this talks to mr. bailey coming in as governor of the bank of england. will we go back to a more operational central bank going theard or will we ad hoc situations like we have been? rupert: central banks will have to continue to innovate. optionsacing limited when faced with economic risks,

and we will see further innovation with quantitative easing and interactions between central banks and fiscal authorities. tom: you call it innovation, others call it instability. can we innovate with instability or just assume the migration out of negative interest rates, we will find some fiscal space. will we do it with instability? rupert: that is the challenge. the actions the central banks have taken have led to stability and they have been successful. the major debate in europe and the u.s. is more a conventional monetary policy. in europe, the debate is around monetary policy and i don't think we will get a necessary shift until we are staring into the abyss. rupert harrison of

blackrock with us, and i want to commend adam posen who joined as yesterday, suggesting the debate at american economic association meetings is around this path forward and the underlying theories. now our first word news. viviana: one question in washington in capital and global market -- how will donald trump respond after the -- iran retaliated? iranian forces firing 15 missiles at american bases in iraq. the president tweeted "all is the iran's foreign minister tweeted the government will defend itself against any aggression. iraq says iran gave a verbal notice before the attack.

-- in iran, a ukrainian plane crashed. the plane that crashed was not a 737 max, the plane that was grounded. mitch mcconnell says he has the vote and does not need democrat cooperation for the terms of the impeachment trial. that would let him reject their call friend agreement on new witness testimony. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. anna: thank you very much. let's get more on that story surrounding the crash of a boeing 737 in iran and reportedly for technical reasons. 100 76 passengers and crew all killed overnight. joining us overnight is benedikt

kammel. good to have you on the program. the verdict from the iranian side coming incredibly quickly. planesly when we see crash, we do not know about the cause. what do we know? benedikt: so far, the wording from iran is it was a technical fault. it might have been an engine that caught fire. there are reports about the , have been retrieved , and those are crucial elements because they give vital clues as to what might have happened right after takeoff. this is a plane that crashed shortly after takeoff, a couple of minutes into flight still ascending. there is footage taken by somebody in the middle of the night of this plane as it came crashing down, and does show

apparently it was ablaze. we do not have more than what we can go on from the around side that there was a technical fault. there is speculation given what else happened in the region over the night. tom: i saw the footage and it there is levels of service of airplanes. what is the gradation of service of these two parties, iran and ukraine, versus the west? benedikt: normally if you think about ukraine, you think about iran and the fleets they have, they are dinosaur-ish. parts and not get flew very old aircraft. this is not the case. it is a very new plane, a couple of years old, has been properly

serviced, and is the first crash by this airline. you would think this should not have happened. this was a properly serviced plane that is often used as a cfm engine, the most widely used engine out there, fairly fault free. a lot of things that do not match up at this point and that has given rise to speculation. anna: thank you very much, benedikt kammel joining us in berlin. we will be looking for more comments coming through. let's get back to our top story and the missile attack by iran on u.s. air bases in iraq, two airbases. let's bring in lindsay newman from chatham house. rupert harrison is still with us as well. good to speak with you this morning.

what is your expectation, as we look at president trump speak into the afternoon european time? >> we have the tweet that says all is well, but what we need to know is where their casualties as a result of this ballistic missile attack on two bases with u.s. military officials in iraq? anna: that will dictate president trump's response. side wants toer find themselves in a full-scale conflict, but the u.s. has said they will respond to further iranian aggression. tom: i want to go to a paper eight years ago you wrote linking terror and elections. this is the definitive study of linking these events around political events. what did you learn in your study about the people applying terror and what they do to win

election, or the people who remove from terror and what they do? lindsay: it is kind of you. in my doctoral studies, at looked at electoral violence and how terrorist violence occurs around elections. we see a sharp increase in violence closer to an election, particularly election-related violence, so those actors that want to see violence impact the outcome of the election. there is a sharp, clear bell curve. dr. out of yale and nyu, newman drove this conversation forward. tell me what the president is going to say today as he is speaking to his core constituency. lindsay: what the president will say is this is a promise kept. he has kept his promise to confront iranian aggression. the killing of qasem soleimani was part of that.

according to pompeo, it would have been negligent not to take him out according to an imminent threat. very clearly, this was a promise kept. and weu are the academic have been talking to the military people. they are all screaming for a political strategy. is our political strategy jacksonian? lindsay: it is a tactical one. it is tactical responses rather than a larger scale strategic plan, butfor trump -- for trump, that is a way he is moving forward. criticism from democrats whether the u.s. is safer as a result of the killing, but what about the endless wars and the question of moving the u.s. troops out of the middle east? kuwaitoops are going to

and the ongoing question of the islamic, what does this mean for a potential resurgence? they have to stop counterterrorism efforts in order to defend their outposts from similar ballistic attacks. hoping theyy are can resurrect or save the iranian deal, what should they think? lindsay: the interesting thing about the jcpoa, these are the ballistic missiles trump was concerned were not taken into account in the jcpoa. is nottion overnight, it entirely surprising what iran did, target u.s. military assets in the region. prop -- trump will be able to deal andcpoa was about we needed to renegotiate to get ballistic missiles in. europeans will have to continue to be in this balancing act. anna: lindsay newman of chatham

house, rupert harrison stays with us. up next, carlos ghosn says nissan used him as a scapegoat to block further integration with renault. he is holding a press conference. this is bloomberg. ♪

♪ bloomberg "surveillance," we welcome you from london and new york. ,ews overnight from iran missile attacks in a barrage. we have had headlines in the last hour with iraq managing their message forward. we have with us rupert harrison of blackrock, and his public

service to the united kingdom. how would this play in a parliamentary system? i have been told since the night that mr. johnson did that are then good, that he is unanimous -- better than good, that he is unanimous and has one voice. how do you prosecute a killing and the reactions of it within a parliamentary system? it is totally different? rupert: it is, but there are many similarities in the u.k. tome minister has authority respond quickly without the control of parliament. things have changed since the of theperception experience in iran and afghanistan, and in 2013, they refused to give authorities permission to intervene in syria. decade, we have

seen increasing assertiveness and her lament to control the executive when it comes to military action. this leads to widespread, a sense the public is increasingly ,ired after a decade of war particularly the long experience in afghanistan for the u.k. after the election, we are in a new world. master ofson of everything and has personal authority over his party. in this case, he doesn't want to get into a war. it is a distraction from his interest as it is probably from donald trump's interest. tom: beautifully explained. bring that to the united states and as a foreigner, interpret this ever-changing relationship with congress and the executive branch and the war powers. rupert: i am certainly not the expert. everything now in an election year will be seen through how

anh side is going to see advantage over these debates. i get the impression the american public is similarly weary of overseas wars. donald trump has an acute political antenna, and his pledge to withdraw troops is a response. how do he and the key candidates on the democratic side sees scope for advantage? donald trump will have to keep will the news but he change the subject quickly to something else. anna: let's talk about one of our other big stories of the day. we are gearing up for a press conference in lebanon later today, carlos ghosn, the former leader of nissan will be speaking to the press. he will be defending his

reputation and trying to set the record straight, at least the facts as he sees them. he had other choices. he did not have to go to lebanon. another passport was french. joining us as lionel laurent. you have been writing about this onlyorning and you say the noise is a sigh of relief that he is hundreds of miles away. lionel: i would say it is more convenient. what is incredible about this story was that carlos ghosn was essentially made in france. this was a ceo educated in break inho got his big the french auto making industry, and as head of renault was given the job of being the man in japan with nissan.

since his arrest, at looks like french -- it looks like france has dropped him like a hot potato, trying to drop -- keep japan on side. the beef is with japan. macron and the parisian elites will be watching with quite a bit of attention. anna: some of our colleagues are writing about the possibility whether carlos ghosn may choose to stand trial somewhere else to the extent that that is a choice , whether in lebanon or he could go to paris. i don't suppose the french would want that to happen, what they? lionel: i don't think so. france has investigations open that indirectly target him, and french justice is different than japan's, so it is not as if ghosn will be treated as badly as he was in japan.

i think his choice of country of lebanon tells you his lobbying efforts to get france to hear his case and defend him strongly against japan has pretty much flopped, has failed, so he chose his new home carefully and i'm not sure he will be moving anytime soon. tom: i have got to rip up the script, given all the events in the french orbit of the middle east as well. foreign policy with that great quote from a number of months ago, macron has gone full degaulle. what have you observed from akron -- macron on iran and iraq? his tone, is it unique or does it harken back to something we saw from the great gall? -- degaulle? lionel: i don't think so. macron is in the privileged position of being europe's

foremost leader. boris johnson has been reelected but the u.k. is leaving. germany's angela merkel is a fading star. what is macron doing with the microphone? he is sticking with european priorities all the way through, u.k., germany, france mission of keeping the nuclear deal alive. i see no signs there is a desire to step up to the plate and take on the u.s. directly. i think there is an actual fear they would have the nooses position of saying -- nuisance position of saying, hardline is doing so much to rip up. tom: go back to "lawrence of arabia." france has invested -- a vested interest. explain the french-iranian, the nature of that relationship in 2021. lionel: i think it is all based

iraqd the post iraq 2003 middle east. europe was torn apart by this u.s. led invasion, and europe was resolved after that to never go through that again. it had to make some uneasy compromises, but once it got this position of this nuclear deal in this new way of aligning the u.s., it does not want to leave. it has bent over backwards to find ways to get iran and the u.s. on the same page but sadly it has not worked. france departing anytime soon. harrison, what do you make about europe's commitment to the jcpoa despite all the headways does headwinds? toert: they are responsive

the trump administration position on iran. the agreement is all they have got in want to prevent further destabilization, but europe does not have the diplomatic or military have to to make the make the- heft to weather on the situation. it is really up to the u.s. anna: thank you, rupert harrison joining us. lionel laurent, thank you for joining us on the carlos ghosn story before tom ripped up the script. where we sit today here with european equity markets being paired back, down to tens of 1%. -- 2/10 of 1%. the initial risk off reaction has been turned off and now we wait for clues and direction from president trump. this is bloomberg. ♪

tom: we welcome all of you this morning, particularly across america waking up in the early morning. the news we have seen overnight, anna edwards is with rosalind

mathieson. two key headlines out of iraq moving forward the story, iraq saying that from where they stand, their people were fine within this barrage of missiles. the president expected to speak this morning. we have seen a little bit of recovery in the market. there was a safe haven feel to the market through the evening and we have reversed that and come to some more stability. -- hour, tomur, beckett will join us. we are thrilled to bring you for the entire hour ambassador robert moore matz.

♪ tom: this morning, "all is well." after a missile barrage,

the president must assess his situation in tehran. robert hormats joins us from kissinger associates. oil, a better tape in the next 20 minutes. gold up. conflict, the president must find a way forward. holding court in london, anna edwards in for francine. the news flow has been extraordinary. i love what rupert harrison gave us. what do you suggest will be the british response to this news? was: prime minister johnson not in the house of commons to brief parliament. he left that to his defense minister. europeans in general struggling to give up on the jcpoa. it is what they have on iran,

trying to find a playbook and liaise with the white house. european equity markets paired their earlier losses of u.s. futures. tom: sir tom beckett will join us at the bottom of the hour with his years of experience in the middle east. here is viviana hurtado. viviana: we begin with a claim of responsibility from the islamic revenue should narrow group for filing -- revolutionary group for filing missiles at any rocky base. the big question now, were their usual -- -- iraqi base. big question now, where there u.s. casualties? boeing 737 bound from iraq to ukraine crashing after take up, all 176 on board killed.

an engine appears to have caught fire. the ukraine international plane was not the same version of the 737 that has been grounded. in a stunning reversal from boeing on pilot training, it now backs simulator training. the move is designed to reassure the public of the grounded plane's safety. boeing opposed training but last month, results were less than stellar. in beirut, carlos ghosn holding a news conference. it has been more than a week since he staged a dramatic escape from japan. he is hinting he will identify those considered responsible for his downfall. that is at about 8:00 a.m. new york time. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg.

tom: let's look at the data, equities, bonds, currencies, commodities. a haven risk overnight and futures up seven. markets churn, oil still elevated. elevated much more earlier. the beginning of the year dynamics with vix at 13. weaker yen today pushing against the need for safe havens. anna: it seems as if the markets have some buy the dip mentality. it does not seem like they have to get away from the sidelines to keep buying. european equities almost down to flat territory. of the gains made by gold have not given up all of the gains in precious metals. tom: we begin with our chief washington correspondent kevin

cirilli. where does secretary of state pompeo fit into this discussion? what will he do this morning? kevin: he is in lockstep with president trump. he had a press conference yesterday and he was in lockstep with the comments at the white house. it is notable, first and foremost there has been an issue of how the president has communicated on whether or not they would pull troops from iraq or target cultural sites, all of those questions pompeo had to answer on the sunday shows. he is appearing behind president trump, showing they are on the same page. pompeo and the state department and secretary esper will have to be working with capitol hill lawmakers in order to brief them and get the trust of them. ,he second point i would make

and this really was underplayed but bears repeating, the state department announced a top official will be going to europe by the end of the month to meet with european allies following a summit of global leaders as it relates to iran. whene criticized america they pulled from the jcpoa. now america needs europe to work with them to sanction iran to further isolate them. tom: one last question -- megan o'sullivan writing in foreign affairs makes a clear case for staying in a rock. stephen cook -- iraq. stephen cook from the council on foreign relations says leave now. what is the mood in your orbit? stay asepublicans say long as you can have the president make sure it doesn't completely escalate and really flipped the whole region upside

down. democrats are saying -- particularly those running for president -- that they want to pull out. how do you do it? it is politically popular to say to pull out from iraq. what with the domino effect be? i remember covering president trump on the campaign trail. once you become commander-in-chief, you are faced with the new reality given the dynamics of the situation. anna: i wonder what president trump makes of the comments this morning from european leaders, many condemning the iranian attack on the u.s. base in iraq. dominic raab saying, we condemn the attack and coalition is the word he uses, coalition troops. some of these have been used by coalition troops for activities into syria. kevin: that is a great point, a massive point.

the usage of the words "coalition troops" bears repeating. the state department says they will be sending a top official to europe within the next couple of weeks, to get europe more on board. will europe follow with more sanctions on iran? that is the biggest question this morning. tom: kevin cirilli, our chief washington correspondent. to synthesize all of this, it is more important to speak to someone with more experience. i will call on the youngest of the old guard. he is robert hormats, vice-chairman of kissinger associates. his work on both sides of the aisle, his affiliation with tufts university, and we are thrilled he could join us. you wrote at the beginning of my book expect the unexpected.

what is the unexpected we should be aware of or fear? robert: the unexpected would be that this could have escalated very substantially, and was almost on the cusp of doing that last night. little bit oft a time has passed. we see perhaps cooler heads have prevailed and maybe we are at the point where it will not escalate, and possibly the escalate. -- de-escalate. tom: what is the tone? the president has to come out, as rupert harrison said, and create a tone. what is the best practice tone for the president? robert: project credibility and thoughtfulness. , why the united states decided at this point in time to take out general soleimani.

general soleimani has been traveling around iraq and syria for some time. what is the argument they use to take him out now? what is the threat that this would prevent? realizing that he was the head kudse kuds force, but the force is a much bigger enemy. what was the actual threat that caused this to occur at this very moment? that will help in terms of credibility. the second is to project a thoughtful latitude with respect to american strategy. is there a strategic planning process to determine what we want in iraq and iran, and how do we achieve it? if there is to be a de-escalation, what do we do next? do we have a strategy to have a more normal set of relations with iran, and avoiding a further set of destabilizing events in iraq?

tom: let's bring in anna edwards. anna: from what we know so far qasemthe killing of soleimani, would you assess this to have been a successful tactic , or is it only history that can tell? robert: history will give us more information, and perhaps we will get more information from the administration quick the. general soleimani played a complex role. kudss the general of the force, the outside version of the iranian revolutionary guard. the iranians regard him as a great hero. he was nonpartisan and a major player in fighting isis, which we also wanted to deal with.

in the middle east, strange things happen. you can have someone who opposes you and harms your interest on the one hand, and works with you on other issues like defeat of isis. in iran, he was a great hero. it would be like assassinating during world war ii general marshall or general eisenhower. he has a major role and had a major role in iran both politically and in terms of the public sentiment. shiites in general have a sense of the heroism of martyrdom, so they are seeing him both as a hero who has been killed and a martyr for the cause. the government of iran really had to respond. the question is what the response was, and if there are no americans killed and no other country forces killed, then i

think there's an opportunity for the president to say, we did what we did, whether it was the appropriate thing or not. the iranians did what they did. period of time a to de-escalate and have conversation? i am sure behind the scenes there were conversations either through other countries, the u.k., the swiss, to calm things down somewhat. ambassador,- anna: thank you so much. still to come, more on our top story. iran retaliates with a missile strike on a rocky mill -- iraqi military bases. this is bloomberg. ♪

♪ anna: welcome back to "surveillance," a statement from boeing on the ukrainian flight. this is the crash we have been covering overnight. the ukrainian 737 crashing in iran, 176 on board killed. the statement from bowing is it is in contacts it with the client and is ready to assist in any way needed. furtherfor for -- information on the cause. the information as this was

technical issues, but we wait for clarity. does aristopher rupkey fabulous job within his research notes of linking economics into .he fiscal to begin this discussion on the price of war and conflict, an essay from leon panetta. this is someone ambassador well.s knows very history makes clear that too often the cause is stale leadership. the past three years, the president has questioned the role of u.s. leadership and ignore the guidance of his military and diplomatic advisors. military power alone will not be enough. we bring in christopher rupkey on liberty.

we need to pay for this at home if we will need to extend ourselves abroad. are we too far extended? christopher: yes, we are, and we will pay the price. at the moment it is fine because we have lower interest rates, but if the deficits continue to rise the government will have to make spending choices as to how it deals with its money. over time, you cannot pay for these things indefinitely by creating debt and that could mean more constraints on our military or domestic programs. we have to make choices. tom: alan greenspan wanted to make those choices at age 93, yesterday, when i spoke to him. he has been talking about this for years. why is the deficit a nonevent in your world? andstopher: i don't know, it is interesting that central bankers like the federal reserve

are arguing, do not look to us to rescue a nation from the next recession, look to fiscal policy. tom: you argue we have fiscal spending, another year of a 17 year conflict? christopher: i am not the boss, but can't -- congress thinks they have fiscal space. we have a 200 $20 trillion federal debt. it is a mystery that these bonds and options get snapped up. the big worry, the fiscal debt bomb coming with the baby boom to 75,ion, basically 55 the crunch time to pay for their social security will come over the next 10, 15, 20 years when they age. we are not there now. tom: mr. rupp key saying the baby boom age and in at 75.

-- ending at 75. robert hormats, we will extend that out to keep you a baby boomer. we will continue, much more coming up. anna: coming up, we will get back to the story surrounding a boeing 737 jet that crashed in iran due to what state media in iran described as technical issues. 176 people were killed. ukraine international halts flights to iran and others have halted flights to iran and iraq in response to this and other geopolitical activity overnight. this is bloomberg. ♪

♪ you are watching bloomberg "surveillance, billionaire investor ray dalio suffering his first annual loss since 2000. bridgewater associates p ralph a fund falling 1.1%. some piers posting their best return since 2008. -- jeffrey gundlach is doubling down on his weak dollar call. he says his strongest market conviction is the strong dollar will decline. the reasons are the growing deficit, trade issues, and a

--lback in trade anna: let's get a recap of what we have heard from boeing after we saw the 737 jet crash. boeing says it is ready to assist in any way needed after its jet crashed in iran, and says it is in contract with the airline customer and stands by them. let's get the latest from berlin . coming just hours after military action between iran and the u.s. an line from iran is that engine fire brought down the boeing 737. benedikt: that is the line out of iran. it is interesting what you just read out on boeing saying they are ready to assist in any way possible. how that will play out will be

interesting, because normally the rules are such that where a plane went down, that country takes the lead. this would be iran. normally the manufacturer woodpile in with their expertise in with their expertise along with the faa and ntsb, but these are not normal times. it will be interesting to see whether boeing gains any access to the wreckage, the black boxes , and the level of cooperation between iran and ukraine. this is a microcosm of geopolitical tensions that have been unfolding, and we will see if that will play out the same or very differently. the iranians saying this was a technical fault. they came out rather swiftly with that kind of a statement, so whether that will hold out of

theory or fact remains to be seen. much to be learned from the black boxes have been retrieved. much fork you so joining us, benedikt kammel in berlin. edwardscontinue, anna in london, tom keene in new york. let me do a data check. futures with a little bit of hour.ion here in the last oil up 4/10 of 1%. we see a turn moving away from the safe havens we saw at night last night. this is bloomberg. ♪

♪ go as far as we can, but the truth is that our partnership cannot and will not -- anna: this is e.u. commission

president ursula von der leyen talking about brexit in london. choice -- with every choice comes a consequence. with every decision comes a trade-off. without the free movement of people, you cannot have the free movement of capital, goods, and services. without a level playing field on ,nvironment, labor, taxation you cannot have the highest quality access to the world's largest single market. the more divergence there is, the more distant the partnership will be. without an extension of the transition period -- anna: ursula von der leyen speaking. she will be meeting with boris johnson later.

the e.u. position that the extensive assess -- access the u.k. can have will depend on the alignment they have on a host of matters. to: interesting getting january 31. now here's viviana hurtado. viviana: how will president trump respond after iran retaliated? 50 -- 15orces firing missiles. the president tweeted "all is well." iran's foreign minister tweeting "the government will defend itself against foreign says iran gaveaq it notice before the attack. in iran, a 737 crashing. there are no survivors. it went down after takeoff in iran.

one official says an engine appears to have caught fire. the plane that crashed was not a 737 max. website says it is willing to assist, but political turmoil may limit its involvement. free-tradeon wants a deal with the uk's largest market and wants it quickly. that is what he will today president ursula von der leyen. notill also say the uk's interested in aligning itself with e.u. rules. mitch mcconnell says he has the votes and does not need democrat cooperation to set the terms of donald trump's impeachment trial. that would let him reject their calls for new witness testimony. global news 24 hours a day, on air and @quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. hurtado.ana this is bloomberg. tom: futures up nine with a

continued advance in the market. with us in new york is chris rupkey. thrilled he could be with us. ambassador hormats has been leading our coverage. ambassador hormats, it is about relationships. and so manygulf, me americans look at as monolithic. it is not. you have traveled extensively. tell us the nuances you perceive. robert: it is very complicated in the sense that you have the sunni-she our rift and you all rift and you have all the internal pressures within lebanon. you have hezbollah, concerns in lebanon that has below --

hezbollah seems to dominate politics. israelis are concerned about giving it a bigger base. has bola is fighting -- hezbollah is fighting through its proxies in syria. tom: these are iranian proxies over in the west, in the labonte. fine. qatarn your perception of and shieh and everybody else in the persian gulf. it is a terrific tension. one of the things that concerned americans about soleimani as he was good at organizing militias. tom: is he organizing qatar? robert: probably not, that is more of a diplomatic saying between tehran and qatar. they are worried about qatar's

relationship with the shiites. these proxies, militias have been troublesome, harmful to america's interest. the dispute between saudi and qatar, where you would think they would have a similar sense of use, has also been a destabilizing force. then you have yemen where you have a proxy for -- supported by iran and a proxy force supported by the saudis. you have complex country by country issues. butonly sunni shia factions. we have the kurds. we should not forget the attack. tom: very close to near the need to -- iraq. robert: and in a kurdish area. tom: do you think it was

specific they fired a barrage of missiles up toward northern iraq as a symbol to mr. erdogan? robert: i don't think they would do that. these are both big bases. they were showing they had the capability of launching ballistic missiles. i think there was probably a feeling, don't kill americans or others but show you can do it. ios out with the chart of a 168 mile ring around. we want to go to anna edwards. anna: let's bring another voice in. easteckett, middle executive director. from an international perspective, we are focused on

what president will say and do in response to this attack. i wonder if you can give me your assessment of what the implications will be for iraq-iran relations. there have been talks that these latest events may be bringing them closer together, and it seems overnight iraq knew this was coming. tom b.: that is a good point and an interesting thing. iran had two options of how to retaliate for the killing of the general, through its network, its partners in the region, or by direct means. and it shows -- and this is important -- a direct conventional military response launched from iran up towards u.s. forces in iraq. all of those forces are based inside the constitutional forces of iraq.

it is the forces of the kurdistan regional government at the other. acting as a state against another state, notwithstanding that's impact on it's a relation -- on its relation with iraqi sovereignty. anna: you have set out nicely the way we saw the stable state action and that surprised some, but there was a backdrop for it. do we switch to weimar proxy two moresituation -- of a proxy violence situation? behind a door, if you like? tom b.: i think what iran did, it took stock of the senior level of the u.s. strike against general soleimani, and it

decided how it wanted to respond. the state on state response is about national pride and the ability to present the case that it attacked american assets in a way that was appropriate to the status of general soleimani. it is important to remember that what iran has always wanted since 1979, is to remove the united states from the arab gulf region or the arab world. that is its long-term goal. it's short-term goal politically is to force the u.s. out of iraq , so what it will be doing now is trying to turn this calibrated response to the killing of general soleimani into a political goal where it can continue to convince iraqi decision-makers that it ought to leave iraq. tom: i want to go back to your leadership long ago and far away with the first battalion

parachute regiment of the united kingdom with boots on the ground. do we really have boots on the ground now? do we have a strategy and of boots onessment the ground or are we making it up as we go? institute,a research from a research institute, we would say that during the recent time of this administration, what a state tries to do is deter its advertise -- adversaries, and conduct diplomacy to achieve its policy goals. the inconsistent approach from the united states has meant that iran was not deterred, its allies were not defended -- look at the attack against aramco most recently -- and there was not an effective diplomatic line

from a ron to the united states. -- iran to the united states. the killing of general soleimani brought deterrence back into the frame, but deterrence works best when your position is consistent , and your opponent needs to a, you will do b and i will probably not do it. the united states has to get consistency back into its approach. its approach needs to be more consistent if it is going to -- this crisis appears, as long as god willing no american servicemen have been killed in this attack, this a crisis appears to have been averted, but the confrontation continues. are decidingemics whether we should stay in iraq. many are saying we should stay. stephen cook heated in an essay

in the last 24 hours that we should leave and leave now. is that any way to run a policy? does the president have to state we will stay in baghdad, fallujah, iraq? tom b.: what we ought to remember is the purpose of the presence inlition's ,raq is to counter daesh counter isis, and isis is not defeated. it continues to operate in iraq and syria, so to effectively counter them there has to be that coalition presence on the ground. the backbone of that presence is the united states. without it, the rest of the coalition would find it difficult to operate. and is going to need help who could they get that help from? they will get it from a ron, and

iran -- iran, and iran has been helping them throughout the campaign, but they may have to go to russia. it would be a curious response russia iraq and iran to if that is the way america chooses to do it. tom: thomas beckett. we will continue with ambassador hormats, chris rupkey with us. a little bit of lift in the markets. proxy withlar-yen, a a nice lift to the market. yen has been at a very nice 108 level. we have not seen that safe haven move of stronger yen. this is bloomberg. ♪

♪ bloomberg "surveillance," the news flow extraordinary since friday. we are following this as we go to the president's comments. robert hormats and christopher rupkey. and trillionflict dollar deficits do? does that go to the economy? -- boost the economy? of a basis point help economic growth? christopher: defense spending, if it ramps up -- we just ramped up defense spending to a high

2/10 -- it will only add ths to gdp. the surge that added a percentage point to gdp growth, it will probably not be as much as we think. tom: there was a photo yesterday of mr. assad and mr. putin lighting a candle in damascus. that is extraordinary, his second visit. what is the symbolism of mr. putin stopping by damascus to have tea? symbols, one lighting the candle at this marion night church. the russian government fancies themselves as the defender of christianity in the middle east. tom: in the eastern orthodox. robert: in the eastern orthodox church. the broader point, the russians

are increasing their influence in syria already, in part because the u.s. has pulled away from its allies, the kurdish allies. if the united states were to move out of iraq at this point in time, the russian influence strengthens and the iraqis have to call on iran to a greater degree, because isis is still there in a diminished form. the iraqi government would be left with far less choice if the coalition were to weaken or pull back. anna: ambassador, i wanted to ask you about europe and its policy. we heard from ursula von der leyen or lion that -- ursula von der leyen that the new and u.k. must cooperate. -- e.u. and u.k. must cooperate. bet should europe's response

on the middle east? robert: the europeans have to get together and figure out how to create a more stable environment in the region, and work with the united states on iran rather than have this big rift on iran. i don't know how that is done in an environment where they have views onally different lots of things. been.s. and e.u. have cooperative in a lot of areas in the middle east. that strategic cooperation seems to have evaporated. britain and the continent have to get together, but there needs to be some effort -- you have got to stabilize iraq. we forget about this, jordan can be vulnerable. jordan is critical and support for jordan is essential. ,ebanon is right on the edge and the europeans have much more

influence on lebanon than the u.s. we have to work with them on this, so all these areas are in a state of flux. the u.s.-europe divide does not help. tom: we are out of time. ambassador hormats, thank you for joining us. christopher rupkey, thank you for your perspective. there will be news flow out of beirut. will continue his travels, if you will, in a most interesting press conference. we will have coverage for you here in a bit. later on, the president speaks. this is bloomberg. ♪

♪ you are watching bloomberg "surveillance." we begin with the price of gold surging above $1600 an ounce for the first time in more than six years, after iran fired missiles at bases in iraq.

gold pairing its gains. prices climbing out of their persistent slump, good news for samsung electronics. samsung quarterly sales falling short but profit was better than expected. that is your bloomberg business flash. anna: let's get back to another top story, the press conference that carlos ghosn will put a for the international assembled media later on today in lebanon. joining us is yousef gamal el-din, braving the elements in lebanon. i see that the japanese justice minister will perhaps hold a press conference of his own after carlos ghosn speaks. the criminal justice system in japan and the world will be listening. what will we hear? yousef: we have got over 100

journalists gathered here to fight the bad weather. it is a tight corner in downtown beirut and we are waiting for the man himself. there are special forces from the police an additional backup to make sure security is in place for deterrence. the expectation is that we will get some revelations. we got an appetite for that overnight, basically saying the statement from nissan earlier in the week was a perversion of truth. that will come with some name means of names -- naming of names this afternoon. that is why the coming hours can be quite explosive potentially. anna: are we expecting further allegations and criticism of nissan, is that where the focus will be rather than details of his escape? it still captivates many, how

this daring escape was planned and executed. yousef: that is definitely a source of much of the curiosity and questions that follow of how he managed to escape, and the finer details of that. the focus is likely to be on how exact we everything went in japan while he was in custody and under surveillance. anna: thanks very much, yousef gamal el-din braving the elements. u.s. futures a little higher as we hear no u.s. casualties in the iran strikes. headlines coming from a u.s. official. ♪

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lisa: iran striking back with missiles aimed at u.s. iraqi airbases. boeing facing deeper declines. crash raisingne new questions for boeing. welcome to "bloomberg daybreak." i'm lisa abramowicz, in for alix steel. we are seeing markets turn positive after the revelation that there were no u.s. casualties reported in the attacks. we are seeing s&p futures edge higher ahead of the u.s. open. meanwhile, crude lower for the second day, although yesterday was quite volatile. gold futures still up, still maintaining a new high. 10 year yields edging lower, also interesting. the haven plays still working out, even as risk on returns to markets.