thing for all parties concerned and a very good thing for the world. alix: talking away from war. investors have a big sigh of relief as the u.s. and the run step away from a deeper conflict. boeing's latest crisis. the jet that crashed in iran tried to turn back before killing 176 people. and save the date. china says vice career liu he will travel to washington to sign phase one of a trade deal with the u.s. next week. welcome to "bloomberg daybreak" on this thursday, january 9. i'm alix steel. it seems like the last 48 hours were just a dream for the markets. s&p futures up by about 0.3%. euro-dollar pretty much flat. about one basis point, but what's the 30 year. $6 billion of supply coming on

at 1:00 p.m. today. time now for global exchange. tom hong kong to beirut, berlin, brussels and washington come our bloomberg voices are on the ground this morning's top stories. we want to begin in china. chinese vice premier liu he will travel to washington next week to sign the first phase of a u.s. trade deal. ranthe current -- enda cur joins us. in some ways, no surprise. enda: no surprise, but is the first indication that we will find this next week. it will be a pretty heavy delegation with the vice premier. other trade and commerce related officials. we don't have much more detail be on. the foreign ministry didn't give much more detail. that agricultural goods

are part of the agreement, but we don't know what else. while this is obviously a positive sign that the trade deal will go ahead, a lot of people will be looking for any final hiccups in the days before the signing, and of course, when the details come out, there will be a lot of scrutiny. alix: thank you very much. in beirut, carlos ghosn spoke out against japan's legal system after fleeing, propping a response from japan. japan's justice minister said that the statements were "absolutely intolerable." >> the comments made by carlos ghosn dave the wrong impression of japanese legal system. express -- iy and will work to clarify and extend understanding of japanese laws. alix: what happens now after that to an a half hour unbelievable press conference,

and then japan's response? yousef: it was a dramatic scene. that two and a half hours you saw, that was the end of that, but apparently not. withs ghosn picking up another busy morning in beirut. he sat down with investigator from the lebanese authority, and this is a relative clarification. saysebanese government this is part of standard procedure. the conversation has been in the travel band that has been issued against him, but not for anything in particular, just until the investigations are complete and the prosecution has made a decision. team has defense adjusted they are comfortable with the path of jurisprudence here in lebanon. locally, there are a lot of questions about the visit to israel a few years back.

legally, here in beirut, you can't do that, and you can get charged and tried for that. that is another thing they will be looking at, but ultimately, that is something he would have en aware of before he got here, and thinks it is a better deal that he would get a japan. alix: thank you. the owing aircraft that crashed tried to turn back. benny kamel joins us in berlin. what do we know? benny: the latest is that the plane did try to turn back shortly after takeoff, before landing in a field just outside tehran. there's a lot of mystery still surrounding this crash. the main lead appears to be that it is still a technical fault rather than terrorism or a straight missile. remember, we had missiles flying from tehran into iraq last

night, so the theory is still out there that we be there was a straight missile. the black box and the flight data and voice recorder have been recovered and are undergoing scrutiny now. they are damaged, but can be read. how international will this investigation be? will u.s. authorities be allowed to play a role in this? normally this is what happens, that it is a global, international effort, but given the geopolitical issues, this seems far from clear at this point. it will be interesting how that plays out. alix: thank you so much. now i want to turn to brexit. prime minister boris johnson and european commission president ursula von der leyen held their first face-to-face meeting, setting out redlines for a brexit deal. maria tadeo joins us from brussels. where are the redlines for both parties? maria: good morning. at this point, we are starting

to get a very clear glimpse of where the negotiation is going to move from now on. the -- leyen was numb was in london, beating with boris johnson. we were told the meeting was constructive, but she did make one thing clear. the big, broad trade deal boris johnson is pitching cannot happen in one year. it is simply "impossible." there's not enough time to negotiate that kind of trade deal. if you look at every trade deal the eu has cut, they always take years, and eventually, the country has to align with the eu regulations and standards. that is the problem here. restaurants and saying he does not want to do copy and paste of eu rules. he is still optimistic you can get a similar trade deal to that of canada, where almost 100% of free.are trade you can see that there is no disagreement on getting the trade deal, but the tension is mostly on the timing. just how quickly can you get it

done? alix: fair point. thank you very much. in washington, tensions ease as president trump backs away from the precipice of war with iran. pres. trump: iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world. no american or iraqi lives were lost. alix: putting me from the white house is kevin cirilli, bloomberg chief washington correspondent. there was more that he said. give us what's next for the relationship between the u.s. and iran. kevin: it was a de-escalating statement as the president sought to call markets, as well as call on the international ,ommunity, particularly nato china, russia, and european allies to try to negotiate a new type of iran nuclear disarmament deal. those efforts are going to be underway in the coming weeks as top state government officials are set to talk about iran

specifically. also, there was some domestic political undertone to this speech. the president processing the jcpoa which his administration withdrew from, and saying the attacks earlier this week on those iraq facilities were paid for by the cash that the obama administration had paid to iran, so some undertones there for the democratic presidential race. it is not just a ron washington -- it is not just iran occupying washington's attention. chinese vice premier liu he will be here at the white house to sign the phase i trade deal on january 15, and on capitol hill, we are also hearing some new impeachment developments. a top democrat in the republican-controlled senate, dianne feinstein of california, saying she doesn't know what the holdup is with house speaker and asa pelosi to -- house speaker nancy pelosi to hand over those articles of

impeachment. alix: another story we can't stop watching is another reason for elon musk to dance. the tesla ceo was bogeying earlier this week when production formally began at his new factory in china. some cool moves. shares of the electric car maker rose more than 4% to another record. tesla's market cap is now more than $88 billion, more than ford and general motors combined. che would netn him about 64 million dollars. it doesn't seem that crazy anymore, does it? want to bring you some booking news on cole's. hl's.l -- on ko er's shares dropping as the company sees softness in the women's division that offset any momentum in other areas. coming up on the program, more on your morning trade and

analysis of the markets in today's first take. this is bloomberg. ♪

alix: time now for bloomberg first take. joining me from our in-house people wall street veterans and insiders, damian sassower, romaine bostick, and with us also, ben mandel, jp morgan asset management multi-asset strategist, who didn't get the purple blue memo today. do you have to fade any risk off move we see until the end of time? is this what we learn? damian: i'm a pessimist, but what i will say is you're seeing

people talking about moving down in quality. alix: that was fast. damian: very fast. that resonates with me. if we are risk on, where do we go next? that concerns me its beginning of the year. romaine: there is really nothing out there to knock sentiment down. even with the whole middle east situation, you saw it on the day of. you had the knee-jerk reaction, but a lot of folks we talked to that particular day said nothing has really changed. had abouthesis they the canonic story, about trading down in quality, chasing those returns, they didn't see any real reason to deviate from that position. ben: i think it is something bigger here. you've had a wholesale change in market narrative. if 2019 was a story of you have an inexorable escalation in the

trade war, you have the fed doing something decisive and taking a step away from its hiking cycle and going into reverse, the question was, how does that all affect the outlook? what spillover is there with that? this year, my hope is that things are somewhat simpler because we are going back to a world where both of those have stabilized to some extent, and the new narrative is the global economy is going to recover in terms of growth, gradually in the case of what we expect, or not. that is what markets are betting on this year. romaine: can we point out that as this unfolded, we were getting slightly better economic data out of europe? in policy change position out of china. we have what you can say is a little to softening with regard to the trade war. you had some positive economic develop and's that people were able to point to and say, ok, if doesn't tamper

down, use have this. damian: the price action kind of gets lost in the mix because we were also much overnight and then came all the way back. that 10 year auction, the steepening after that, the twos-tens is almost at 30 basis points. we were inverted a few months ago, soap a pretty big move. in em dollar credit, we have seen indonesia, israel, so many countries, chinese property credits, have to market incise size this year. it is risk on for sure. alix: do we have an issue with confirmation bias? i understand export data we got from germany is down 2.3%, and yet, we are looking at the silverlining of industrial production in november that was about 1%. ben: it would be great to get some confirmation bias there. [laughter] ben: when you look at the sweep of global data flow, i think you have evidence that things have stabilized. i don't think you have any

decisive indication that the global economy has turned off. europe is a very good example of that. evidence is choppy and indicates it is moving more sideways than down. what we would be looking for in the new year, and not just for europe, but broadly speaking, is evidence that global manufacturing sentiment is going to translate into a pickup in industrial activity. but the stabilization we have seen in services and nonmanufacturing sentiment continues to improve. all of that is going to go well for the global forecast, but we want that confirmation. alix: and yet, since i am not an equity bear, i will give you an equity bear outlook out of cantor fitzgerald. " no good inflation in global growth, and many risk assets are now priced to perfection." kind of the opposite of what ben was saying. the note said ludicrous levels. romaine: i asked this yesterday. when do the fundamentals even matter?

no one is talking about it, and no one really cares. seriously, you think about the multiple expansion we've had, and whenever you challenge people on this idea that we don't really have the corporate profits to backup that expansion, people point to the fed. they point to central banks. as long as they continue to feed the liquidity, that's all you really need. no one is really willing to buck that. this is a classic go with the flow, don't fight the fed, you will like money. damian: forget about fundamentals. it is all about sentiment, all about behavior. but at the rsi, s&p. you are at some very extreme levels in terms of behavior, in terms of sentiment. look at dollar-yuan. i think the rsi is at the highest level since may of 2015. we had some really good moves in equities and fixed income over the better part of the last six months. ian equities is up 6% -- em

equities is up 6%, 7% over the last month alone. i think now is time to be a little bit prudent head of earnings. ben: i disagree on the direction, but not the general sentiment that there are limits. there's a search going down in quality. that was a big story in november already. so to some extent, looking for the cyclicals, looking for down in quality is a momentum trade at this point. that is very much true, and we are not seeing necessarily -- i mean, we are not going to have a repeat of 20 in terms of the fed. so we do see limits to it. it is just that the direction is a mild upward slope. alix: which means you need to earnings to give you that confirmation bias. it is not necessarily that you agree that we go down aquatic quality come up -- down in credit quality, but that is the way to go because it is a positive bias. romaine: thank you for defending

me. absolutely correct. [laughter] damian: what i am really looking at -- alix: he's upbeat, but he's bearish. in china, they need to flush the market with liquidity because they need yuan on the ground. what i am looking at is how much they need to pump into the system ahead of on send -- ahead of month's end. you're starting to see that. they have a lending facility that needs to roll over. you have about 200 billion yuan in size that needs to roll over. i think we will start to see jitters in the market. i imagine we will get announcement sometime soon. romaine: when you talk about this idea of trading down in quality, when you look at some of the gains we've made in equities, it is a lot more of the mid-cap names have been at the top of the leaderboard. some people would say that is a good sign, but a lot of folks

also pointed this idea that folks are now chasing some of the stocks that really have a lot works fundamentals. it is easier to justify an amazon that isn't delivering profitability because you know it has monopoly power and its own growth, but when you start picking the same strategy for some of these mid-cap names that don't have the same pricing power, that is little bit concerning. alix: which also, if we walk it out towards the future, i was struck by michael kiley at the fed board saying, "even if we get a moderate recession in the u.s., it may result in near zero interest rates and long maturities." what did you guys make of that? damian: that is supportive of my call that basically, tens, 30's, and dollar credit are going to have to flatten here. i am a believer in buying duration in dollar credit,

remaining cautious on credit overall. i think the duration bid is here to stay. ben: let's look on the bright side here. what he's also saying is that duration is an excellent hedge for downside growth risks late cycle. extreme int might be the next recession that you could easily see the 10 year below zero. this is your late cycle production and insurance policy against the next recession. romaine: you have to keep in context where inflation is because that's what a lot of people are looking at. if we have the inflation expectations anchored where they are now, i don't think negative or getting at the with zero level is going to be as catastrophic as some people think. alix: but it does point out that part of the note was that if that happens, the central bank does not have any ability to help with their monetary policy. if you have 17 year maturity at zero, mark carney said that the other day.

what do you do then? i don't know but the liquidity premium is going to wind up being. damian: look no further than china yet again. we had inflation data overnight. part b prices -- pork prices are declining. we will see more of that until there's no more stimulus left to use. ok.: go ahead, ben. ben: this is all in the context of a fed that is reevaluating its long-term framework. if these are a concern for the future, all the more reason to hedge against that and work in symmetry by targeting a slightly higher inflation rate. alix: billion set sour and romaine bostick, things a lot. and romainessower bostick, thanks a lot. ben mandel of jp morgan investment management is ticking with me. remember, gtv allows you to

browse all of the charts we use under terminal. gtv . this is bloomberg. ♪

viviana: you are watching "bloomberg daybreak." 2019 the worst year ever for british retailers. brutal price pressure and shifts to e-commerce hitting holiday sales. all giving generally downbeat christmas sales updates. surging. iphone sales official data shows smartphone shipments grew in december almost 19% year on year. that marks a big jump from previous months. 11 inlease of the iphone september boosted sales. alix: thanks so much. let's stay on apple for a second. spending on the app store between thanksgiving and christmas eve was $1.4 billion. apple's success really punctuates the haves and

have-nots of retailers, and the list of nots has gotten even longer. macy's said they are going to close more than 200 underperforming stores. this morning, both kohl's and l brands sinking in premarket downward guidance. coming up, p street is tempering some expectations. are you going to get a boost in the u.s., or is it going to be in emerging markets? where will the global growth in earnings come from? can the markets, it is still a by everything rally. some say it is ludicrous. others see you have liquidity bank, therefore you need it. this is bloomberg. ♪

alix: this is "bloomberg daybreak." the everything rally scope much attacked. nasdaq futures up, really the outperform are in europe, tech

on really stocks -- in europe, technology stocks hitting their highest level since 2011. it is a stronger dollar story in the g10 space. do you de-risk or take on risk with the dollar? that is really a confusion for the market. you can see the safe haven big coming out, with the yen lower by 0.3%. the curve when he ate basis 30.ts, almost kissing the crude having a terminus rally and then selling off yesterday -- having a tremendous rally and then selling off yesterday. here was a closer look at what to expect is bloomberg's sarah ponczek. sarah: earnings season is upon us once again, if you can believe it. profits ofcting core 1.3%, but that is not with the market is focused on. rather, it is focused on what is to come following the fourth

quarter and what guidance is going to look like. what is expected is a rebound. in the first quarter of 2020, low single-digit gains. after that rebound, you get to more than 9%. by the fourth quarter, you get to 14%, as you can see. so typically, companies beat their marks at the same time. you do see that 1.3% decline number this point in time start to moderate, potentially even turn to gains. either way, the third or fourth quarter will mark the trough likely. what you can see here is where you do see troughs and eps for the s&p 500, you can see nice gains thereafter. typically in the 12 months following a trough in eps, you see gains of roughly 7%. in recent times, we have seen gains of more than that. from the8, rebounding financial crisis, we saw a gain

of more than 20%. in 2016, we saw a gain of the theme percent. but which areas of the market are really supposed to lead this gain in corporate profits? it is the cyclicals. we're supposed to see double-digit profit gains in the likes of materials, energy, industrials, tech. this comes to us courtesy of credit suisse to categorize the different sectors for us. you can see a major swing from 2019 corporate profits to 2020 corporate profits. in 2019, we saw a decline of near 12% for cyclical companies, while in 2020 we are expecting a gain of 15%, more than any other group. what this does is potentially validate those expectations for cyclicals to maybe outperform in 2020. alix: thank you so much. still with me on set, ben mandel of jp morgan asset management. how do you look at the fourth quarter earnings?

ben: fourth quarter is important. i tend to agree with the comment that it is really about the guidance for 2020. we've been talking a lot in 2019 about how the expectations for 2020 look outsized even more than usual, where they levitate and then come down over time. those were levitating throughout most of the fourth quarter, but then started to come down to what we see is maybe more reasonable, obtainable levels in the upper single digits for the year as a whole for 2020. i think that is all consistent with an environment where the economy is not shooting the lights out, but it is doing ok. inflation is hovering around 2%, and all of that is relatively supportive for topline. , whichessure on margins is coming in the opposite direction. compensation is slightly driving upwards. productivity is low. that is a recipe for a relatively quick moving labor

cost. there's not a lot of inflation on the side of that. the key for q4 is that guidance for 2020. what is going on for margins that we see is a bellwether for not only earnings season, but how resilient firms are going to be this year. alix: i feel like one narrative is that we have gotten the boost for multiples last year because the fed is going to expand its balance sheet and cut rates, so we need earnings to deliver and sustain these high levels. where are we accurately priced for earnings guidance for 2020, and where are we not? ben: first of all, i fully agree with the idea that the fed is not going to come to the rescue for multiples this year, so it is an earnings gain in an environment where the fed is basically on hold. where is that earnings going to come from? in some sense, it will come from the areas within the economy that have borne the brunt of

softness in 2018 and 2019. i think you're looking for the manufacturing sector, which is cap, 1/3 of s&p by market to do a little better in an environment where you're getting stability and the underlying macro data. i would look for other pockets of exposure to china, in manufacturing specifically, to lead the way, at least in terms of singling, of this getting better or not. alix: what about globally? should we look at where we seek earnings growth globally? where is the strongest? ben: when we look at other regions, there's a fairly clear preference that emerges for emerging markets versus somewhere like europe. if you are looking at two cyclical markets and the equity space, we have a preference for em. part of that is the earnings story, where you are seeing earnings revisions start to improve. in europe, they are not doing poorly on that score.

it will probably keep up in the sense that if everyone improves, it will get a lift, but the risk profile for europe is much worse than it is in an environment repair inare seeing the u.s.-china relationship, at least some stabilization, which should be a boost for sentiment. europe is very much in the crosshairs of potential geopolitical and even the continuation of the trade war this year. alix: when you are taking a look within emerging markets, do you distinguish those countries which have the earnings growth and also have the benefit of a central bank that can add more liquidity? is it one of the other? how do you view it? ben: emerging-market central banks and em currencies in general are an important part of that. we think that the general follow the fed dynamic that nowacterized a lot of 2019, what the fed stopping come of the question is, is everyone else forced to stop?

emerging-market central banks is one area where we see a little a scope for that to continue to ease even as the fed stays put. i think there's some central-bank support you're going to get in emerging markets you're not necessarily going to get and pleases like europe or japan, where the political backlash is going to be an impediment to further easing. alix: doesn't matter how much room they have to cut or pump more money in? ben: insofar as their preference for high-yield or's versus low guilders -- alix: like a south korea versus turkey. turkey is probably a bad example could, but you know -- a bad example, but you know what i am getting at. ben: i think the distinction is a little more regional in nature , which gets us to that high-yield or low yield to some extent, but even in places like ofa, where we are thinking and improving in financial

conditions and global manufacturing. still, we would expect that to move a little further. season next week is what we will all be focused on. do you like financial? do you like big banks? what do you do? ben: it is tied to the rates view. i think there's a real sentiment in our baseline scenario where growth is improving and we are stabilizing. that is an environment where bond yields are drifting upwards. you can imagine in a place like europe, where we don't expect growth to be great, but where the central bank is providing some pushback against further easing, and intact, market pricing is already starting to move in the other direction, that might be an area where yields start to rise a little bit more. notwithstanding the mixed picture for europe in general, some of the upgrades we have seen recently actually have a fundamental basis in yields that we would expect to rise from here. alix: does that mean you would

like european banks versus u.s. banks? ben: i'm not sure i would go that far. basket,in the european i say financials are ok in an environment where we think european yields are the fastest to rise. alix: ben mandel of jp morgan asset management, thank you very much. we want to give you an update on headlines outside the business world. viviana hurtado is here with first word news. viviana:viviana: house democrats headed for a symbolic showdown on iran with president trump. lawmakers will vote to limit the president's military options. it would require the president to cease action against iran unless the u.s. congress gives approval. the president could also act in response to an imminent threat. the boeing 737 that crashed in iran tried to turn back before plunging to the ground, according to iranian regulators. at 8000 feet, the ukrainian international airlines jet disappeared from radar. witnesses say they sought on fire in the air.

they are examining several scenarios. among them, a missile strike and terrorism. week, it willt sign the first phase of a trade deal with the u.s. vice premier liu he will travel to the white house for the ceremony. he has acted as china's top trade negotiator. the u.s. has agreed to suspend some existing levees. china has agreed to buy more american farm products. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i'm viviana hurtado. this is bloomberg. alix: thanks so much. coming up, arrested development. new leases for wework offices in new york and london take a nosedive. and if you have a bloomberg terminal, check out tv . you can watch us online, click on charts and graphics, interact with us directly. scroll through, check it out, and see anything you may have missed. this is bloomberg.

♪

viviana: this is "bloomberg daybreak." lebanon issuing a travel ban for carlos ghosn, the fugitive former nissan chairman. according to the associated press, lebanon is responding to a notice from interpol. the notice does not require he be arrested after being smuggled out of japan. her arrived in japan on december 30. the ceo of british airways parent iag is retiring. he is facing down unions and cutting costs at ba, and led the purchase of you barium. the popular chase sapphire reserve credit card is about to get more expensive.

jp morgan is about to boost the tonual fee from $450 $550. in return, they are adding new perks like a $100 credit on doordash delivery service. i'm to be on a hurtado. that is your bloomberg business flash. alix: the entire control room is so mad about that sapphire card yearly fee. now we turn to wall street beat to cover three things wall street is buzzing about. first up, you've got revenue from the investment bank, the largest business -- the bank or just business. up next is quant firm cutting its global workforce. and wework pumps the break. -- the office shuts no expansion as they shut to offices in new york

and london. what did we learn from jeffries? reporter: one reason we always like jeffries report is because we get a read through to other banks. they clearly seem up to mystic about everything, and it is incredible in some ways. the world thinks constantly on the edge. there's a threat of war under the three -- under the trade conflict. in is am also interested the 2020 element. i wonder if any of that is going to be frontloaded because of the uncertainty around the election, and maybe bankers are saying you should get your deals done before they could change in administration. 2018, volatility blew up so much that people were sitting on the sidelines, worried about taking too much leverage. the volatility backup might be a good readthrough for the banks reporting this week. ,lix: is the pie getting better

or is jeffries taking away business from someone else? sonali: if you look at the m&a table, they are going to bump deutsche bank. alix: yeah. [laughter] sonali: they are a much smaller firm than deutsche bank. reporter: reporter: they have also created a lot more deals because of the regulatory framework. they are getting a seat at the table and a lot more discussions, so you're seeing more presence out there. alix: let's get to the second 5% of itsting about workforce. does that surprise you? sonali: clip assets almost a bringso -- cliff assets him well under 1000 in terms of the headcount. it is a pretty scary time out there for quant.

investor if you are an and if you're looking to allocate capital, if you want to go the direction of index trucking funds, understood. fire, do youve a go to distressed headphones? those are certainly not doing good. but if you are underwhelmed by asset managers in general, i still feel like quant is the king in the land. sonali: everyone has to be a little quant these days. people who are blending strategies are tending to do better. i don't think it is universal. up 10.5% de shaw was over the last year, gaining three of the last five years. you probably need some quant, but are we at peak quant? alix: if you basically have one of the reasons why hedge funds have struggled is because you have low dispersion and the main

large caps leading, and technology crushing it, that is not the way they make money. his quant different because they can follow the trend but also try and distinguish? sonali: the benchmark for a lot of these are a three months treasury bill. they are not trying to blow through and outperform the market. they are supposed to be something that mitigates risk, like a hedge fund should often be doing. when you put that into perspective, the fact they lost against that is even tougher, i think. reporter: they are trying to reduce risk across assets, and then focusing on various other factors they think can be useful in making better numbers. alix: let's get to the last story, which we know we love talking about. backk basically paring some of its business in new york and london. it wasn't necessarily a surprise to me. been an: wework has urgent restoration project. they've got some new financing.

they are trying to ride the ship -- to right the ship, but this is not the only softbank backed business where we are seeing a lot of change. we saw a headline yesterday. sonali: there are a lot of interesting softbank stories on the horizon. door -- is maybe one of the top doordash is -- maybe one of the top of them. like wework, they spent a lot of money to grow, and they are pulling in money very fast. so is there a lesson learned last time around that we can blow into this? reporter: we are focusing more on making money instead of focusing on insane growth, but the unfortunate fallout of that ,s when they are changing tax there's going to be a loss of job, and that is not pleasant. alix: not too much and that upstart companies, not even the ones that are established, they

are not having access to that kind of funding to than grow any kind of. sonali: others have raised a lot of money, like blackstone for growth equity funds, kkr, tiger , and a lot of big sovereign wealth funds and big government capital pools. so there is money still flowing in. it is just not all coming from softbank. reporter: there was a trade story yesterday which i would like to read out. they are known for showering companies with far more cash than they are seeking to raise. kevin: alix: on the flipside -- alix: on the flipside, you get a

blackstone that can go invest in a lesser valuation, which is not a bad thing. in fact, they change private equity hands three times, from goldman to blackstone, and now from blackstone. they are going public, which is keeping them in private equity ownership than a public markets. model, butifferent you're seeing people able to keep the money coming in. reporter: you will never be bored in the world of finance. [laughter] alix: that's true. thanks, guys. in today's off the beaten street , prince harry and his wife meghan markle may become stars in the public speaking circuit. the two have announced they are stepping back from their roles as senior members of the british royal family. they said they will work to become financially independent. one agent said harry could command as much as former president obama, about $500,000 per appearance. that will help with financial

independence. coming up, trading and leverage loans after jeffrey gundlach says it could be a good investment for a retiree. if you are heading out, jumping into your car, tune into bloomberg radio, heard across the u.s. on sirius xm china will 19 and on the bloomberg business app. sirius xm channel 119 and on the bloomberg business app. this is bloomberg. ♪

alix: time now for trader's take. joining me is sarah ponczek. we usually get the trait of the day with vince cignarella, but you have a trade from jeffrey gundlach instead. gundlach oney tuesday, they have their annual just markets webcast. someone asked him, if you are retiring and you want to make a return of 7%, what should you invest in? he recommended what could potentially be seen as a little

bit of an esoteric etf. this is the invesco senior loan etf. it has $6 billion and trades under the ticker bkln. it is a floating rate product, so as interest rates change, the coupon changes as well. when you look at funds flows compared to interest rates, through 2019 as we were seeing the fed lower interest rates, then as we saw the fed really stabilize, we have seen five months of inflows. what is really interesting is that after gundlach suggested this trade yesterday morning, we saw a massive block trade print. it was 3 million shares, $22.90 apiece, $69 million trade, and today we are able to look at the actual flows for all of yesterday. we saw in hundred $44 million of net inflows, the largest in three years. alix: that worries me. when you have one person give a trade and then all of the money follows it, it shows to me the

desperate environment there is to get any kind of output anywhere you can. stephen: that is the --sarah: that it's a situation here. i don't want to completely be in equities because of the risks, but right now in fixed income, it is a star for yield. alix: and there could be even 0% yields for twos-tens if the fed has anything to say about that. loung up, while at have goa opcuoglug up, lale t will be joining us. this is bloomberg. ♪

beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity.

every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. ♪ alix: come to "bloomberg daybreak" on this thursday,

january 9. here's everything you need to know at this hour. pres. trump: iran appears to be standing down. alix: tensions diffuse between iran and the u.s. after a retaliatory strike from iran resulted in no casualties. kevin: the president sought to calm markets, as well as call on the international community to come with the united states to try to negotiate a new type of the run nuclear disarmament deal. alix: president trump will impose new economic sanctions on key regime figures and others. the boeing jet that crashed near tehran wednesday try to turn back soon after takeoff. to turnlane did try back shortly after takeoff, and then before landing in a field just outside tehran. stillis a lot of mystery surrounding this crash.

>> i was a hostage of a country that i have served for 17 years. alix: it is a war of words between japan and carlos ghosn. the country responds after his two and a half hour affiant press conference come over he professed his innocence. >> no matter what nationality you are from, top class businessman like him should respect the law of the country where he works in deal with legal procedures to prove that he is innocent. alix: she also said she would work to spread a correct view of japanese law. prince harry and meghan markle will step back from their roles as senior members of the royal family and work to become financially independent. this is after many months of reflection and internal discussion. >> it hasn't really come as a shock. i think it's been brewing for a

while. it is a shame because a lot has been spent on them. alix: the queen has issued a statement saying discussions with the duke and duchess of sussex are at an early stage. people are not happy about that in the u.k. in the markets, it is a buy everything rally. it is almost like the 48 hours we can take out of the market. s&p futures up by 0.3%. euro-dollar flat, despite the fact that you had a export orders down. yields pretty much go nowhere after a very tumultuous trading session yesterday. we have $6 billion worth of 30 year coming online at 1:00. crude stabilized as well. joining me for the hour, lale top tool lou, johcm -- lale topcuoglo, johcm senior fund manager. onnever she wants to come and talk, it is always the repo, plumbing. haven't we fixed this? [laughter] lale: isn't this a good

christmas conversation? alix: let's talk about repo, guys. [laughter] lale: and nobody will talk to you ever again. alix: the perfect strategy to get people out of your house. lale: there's obviously news. to start my day. i loved your interview with deadly. i think you raised a really good point. , the fed isews suppressing be front rate, and there's a little bit of a glitch ratehere the federal funds is above where you are seeing the treasury bills. the impact of that is money markets can either by bills or repo, and the bill supply gets sucked up by the fed. the issue you have now if you are a money market, you just have the repo to go. if you are a money market and you look at the phenomenal flows we had, do you really want 60%

to 90% of your assets to rollover overnight? i suspect the answer is no. so there's clearly more plumbing work to do. i think dudley raised some good points. i don't ever question the fed. they are very smart individuals. they will figure it out. the issue you have which i think everyone is skirting around is we had wealth inequality, income inequality, and excess reserve inequality. the reality is when you look at excess reserves in the banking system, it sits with a handful of banks, and there is one specific bank that dwarfed everybody else. think inntioned that i the interview. you can't force a bank to lend their excess reserves, period. there are suggestions that the fed can open up spots of repo to other per dissidents. -- other participants. did you get into the moral hazard issue. you already have people that are

angry about financial markets. how do you feel about headlines if the fed makes a loan and there's mechanical issues around it to explain the hedge fund? it is, catered. alix: but either way ash it is complicated. alix: but either way they have to be involved in the market, and it creates distortions. theseve qe paired with fundamentals, and how do you square the two? just over a week into 2020, several on the street are getting more bullish for the year. part of that is going to be more liquidity. you have strategists raising their in targets for s&p 500. joining us to break it down is brian levine and mike wilson, morgan stanley chief u.s. equity strategist. i feel at this is a begrudging

non-upgrade. mike: it is, mainly because of this issue. we are creating excess reserves in the system. the big debate we have with equity investors is they say, how does this translate into the equity market? the way we quantify that is hard, but we have said pretty specifically, basically they have suppressed volatility in everything. in the treasury market has suppressed volatility in rates, which is the pricing mechanism for every other asset in the world. so they have removed two-way risk, and when that happens, it attracts flows into the equity market. we quantify that is about $200 billion since september, when they announced the repo operations in the first place, just from the vol targeting funds and cta's. i'm sure it has attracted other players because price momentum attracts new players. look, this is don't fight the fed on asset prices.

the one thing the fed is really good at is asset price inflation. i'm not sure that is what they are trying to do, but that is what we are getting, and it is going to shoot to the upside. we know the fed is likely to continue to purchase through april, and it could extend beyond that, but at least through april because they want their balance sheet to be a certain size. don't forget the ecb and the boj is still doing qe as well, and the pboc just released a bunch of reserves into the market place. we have a liquidity driven bull market right now, and i think it is that simple. i don't think you have to overthink this. we've noticed the flows, what has been outperforming are the types of securities that would benefit from that. large cap, liquid securities attached to futures. qqq, spy. small caps are still underperforming, and cyclical stocks are underperforming still , which is unusual. people think it is because of a

recovering global economy, which we think is happening, but if that were true, cyclical stocks should be doing better. they are doing better, but not outperforming. it is still a low beta fund of move, meeting market participants are smart enough to know what is going on in saying, i am still going to play in liquid assets and somewhat defensive and high-quality assets. i think it is that going forward. alicia: i agree with everything mike just said. let's not forget the full impact of what the fed did last year in cutting three times. it is not really felt until the summer. we are marching into the spring and summer with liquidity everywhere, and the full effects of the rate cuts really in front of us. is path of least resistance up. we don't do sb targeting, but we are positive on the year. when you have such a positive year like we did in 2019, up almost 30%, the following year

tends also to be pretty positive . not to the same extent, but you're going to have a solid year. having said that, there are going to be places for volatility surrounding domestic politics here and the election cycle, but ultimately, earnings have room to come in, and the market can still be solid. alix: we don't have a chief economist on set, so i am going to play one. [laughter] i am alix: alix: go to say it is not qe -- alix: i am going to say it is not qe. it only matters if growth picks up. mike: it is not qe. alix: right, so why should it matter in the way you guys are talking about it? alicia: when you look at the whenal reserve -- lale: you look at the federal reserve balance sheet expansion, there's liquidity coming into the system. whether liquidity is slipping into the right pockets or not, there is debate about that, but people know there is a fed

backstop, and people know globally, there is a central bank backstop. what alarms me about it, central bankers -- i think previously i said they were muggles. [laughter] alix: i love it. fan. huge harry potter they are not wizards, so the reality is at some point down the road, it creates the risk of a policy mistake. flows cominghe into u.s. dollar dominated assets globally, we are actually creating a u.s. dollar bubble. this has been my issue. i warn people, watch the fx swaps market because that is the second derivative of this, along with the repo and funding market. the question is, when does it pop? that is almost a possible to tell. alix: we can do a banner that is --e, how will not tumble or

dumbledore.well not mike: i think if you are in our camp and recognize this as more liquidity driven, in the assets of a real fundamental uptick, it is more speculative. in that sense, if you are being speculative, let's not be doubly speculative. let's try to stay where things are more liquid in case we are wrong, or maybe the fed changes tacked, or there is a shock the iranian situation is more severe than people are expecting, or something else happens. i think that is what we are doing. we are being somewhat more conservative in the way we are playing. we are fully invested, actually overweight equities, but anymore high-quality areas. i don't think this is a time to double gun it.

that is sort of the philosophy we are taking. forhe way, back to the vet a second, they are not omnipotent. they do make mistakes. i do think they made a mistake underestimating how much reserve they needed in the system in the first place, and that is how we got here. in september, we had stress in the repo market because they had taken reserves down too far. now they are correct -- now they are correcting it with aggressive action. they will decide is stable and back away again. when i see very blunt instruments used, first with qt and now going the other way, there are market implications which you have just discussed. alicia: whether you think there is room here on the regulatory side, part of the reason we had a misjudgment on the need for the reserve level was the new regulations that caused banks to hold on in their basement to the reserves. do you think there's room here to settle with that at all?

the fed really seems to be boxed in here. how in the world are central banks going to get out of this? alix: did you plant this question, by the way? lale: no. [laughter] lale: we did have a conversation that she works with another lale, and i was so excited that i am not going to be called lale. andill create some issues, i think people take comfort now in the fact that the banks are almost overregulated. when you think of the risk, it is all in the private sector. that is a whole other conversation. but the easiest thing i think the fed can do, and i think people have talked about it, on the high-quality asset bucket, they have basically told the banks that your treasury holdings, which get lumped into the high-quality asset bucket, are as good as money. so on demand, we will just give you cash. as a result, don't worry about

holding onto those. you can drain your cash holdings, and we will match it on the other side from the treasury point of view. that could be done. i'm sure people smarter than me will figure out the hurdle around it. everyone else is going a different direction. for us, to pull it back, i don't know. alix: we will continue the conversation here. they are all sticking with me. we have much more on their expectations for earnings season, coming up next. as we had to break, take a look at the live shot of ice fed chair richard clarida speaking on the outlook for the economy at the council of foreign relations in new york. he says his view on the economic outlook is still intact since the december fomc meeting. areays risks to the outlook

skewed to the downside. you can tick a look at life go -- at live . this is bloomberg. ♪

alix: we just debated a liquidity driven rally in the previous segment. "markets areote, out of rhythm with the fun a mental's. risk assets are now priced to near perfection." still with me is lale topcuoglo of johcm, mike wilson of morgan ofnley, and alicia levine bny mellon investment management. mike, what do you think? mike: this is a continuation we have seen for the last four quarters. change for us.

we haven't upgraded our earnings forecast significantly, and we are still below consensus, but that is an important change. that is a function of confidence improving. leading indicators what the pmi's and consumer confidence have turned up because of asset price inflation, but also things are stabilizing in trade. probably the biggest thing we have seen so far is that global trade is bottoming out. this is one of the reasons why we think international markets could do better over the year. they are more levered to global trade improving than the u.s. is. the u.s. is kind of a closed economy. earnings will still be more of the same, large over small. there's also income inequality for corporations. this corporate income inequality. we were talking about retail on the break. the large retailers are doing a phenomenal job at merchandising, the smaller guys are getting killed because they don't have the technology. they don't have the scale. i think one of the biggest risks

for the economy is not only income inequality at the individual level, but at the corporate level. that is not a sustainable outcome. cannot destroy small and mid-cap businesses in the middle part of the economy that comes with large scale. so we think it is more of the same. arch capital continue to do better. small and mid-cap companies probably continue to see market degradation because they don't have that scale, and they can't deal with it. alicia: we have a similar call for this year. we like international markets and emerging markets but the greatest impact is in germany and europe. this is the region that was most affected by the trade slow down. having said that, we actually like small caps this year in addition to large because we think you get inflection growth in the u.s.. i think there is a growth surprising the u.s. i hate to put a calendar on it, but somewhere around the summer. we also think that, interestingly, while inflation

will remain low in the short term, we are kind of set up for an inflation surprise if things go right. so if we do get that growth inflection and we do get better than expected growth overseas, we have the fed saying they are willing to let the economy run hot, and we don't see any kind of hike in the future. so you are kind of set up for a surprise on inflation, particularly because everyone expects the opposite. when everyone expects the opposite, you are almost guaranteed to see something along the lines of the unexpected. lale: i have a question. obviously, inflation has been nowhere to be found. if you look at the real rates, it is this trajectory down. is it possible, and this is the internal debate we had, and i'm hoping maybe you guys can shed a light on it, is it possible that the disinflation that we are seeing is actually the reason

why companies are reluctant to invest? because you know you are basically going to deplete your capital stocks, see you are better off buying stocks, which is financially engineered. you can see that. there's stock buybacks. if you believe in the disinflation theory, you should arguably see more cash holding, which we are because money markets are getting phenomenal inflows. alix: let me hold it there because we have to go to commercial. this is a great segue. we will circle back on that, i promise. lale, mike and alicia sticking with me. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." shares of kohl's plunging, reporting a slight drop in

holiday sales that reinforced concerns retailers are losing ground. this despite robust growth in consumer spending. profit for the fiscal year will be at the lowest of its previously announced range. europe's primary bond market is on track toward a record week. deutsche bank and santander are among the banks offering notes. the $88 billion record set a year ago. that is your bloomberg business flash. alix: thanks so much. we want to talk about credit. the fed paper came out yesterday. the surprise, warning on high-yield -- no surprise, warning on high-yield. you would agree. lale: i think high-yield come us implicitly, if you think about a high-yield spread, you have two components. one is your default loss. the next leg is the second component, your risk premium. that you can define in any way

you like. i think of it is how much money you get compensated for going into high-yield, i.e. junk bonds. the fact that it is also like liquid and you are buying a lower quality asset, what you get paid for that? averages around 250 basis points. if you look at the selloff, it goes as much as 500. if you take today's overall index of 350 and break it down, people are only willing to get 100 basis points to go into high-yield. i think that is ludicrous. alix: does it matter the overall environment? if you are taking a look at negative bund yields, you may see 0% rates in the u.s. on a moderate recession, does that matter in terms of what you are willing to take on? lale: from a top-down standpoint, i understand that matters. i am a strong believer that fundamentals trump at the end of the day because there is a

reason why it is called a junk-bond market. it is levered companies. you know how i feel about adjusted ebitda. things are massively overstated. we have seen episodes of this, where people have reached in for yields and gone into private assets, liquid mutual funds, and what happens? redemptions come along, and people are like, what is that asset? how do you value that? well, welcome. liquidy is a risk. alix: she is so joe foil -- so joyful, lale. coming up, initial jobless claims ahead of the jobs number for december. this is bloomberg. ♪

alix: this is "bloomberg daybreak." i am alix steel. a few minutes away from initial jobless claims. on friday. numbers

s&p and technology stocks are moving. not a lot of movement anywhere else. a broadly stronger dollar story. i thought we were going to have a weaker dollar in 2020. now is that called into question? dollar-yen up .3%. initial jobless claims for last 214,000,ng in at slightly lower than estimated but also in line with what we've been seeing. continuing claims also in line. jobsyou look at tomorrow's numbers, what will be the key indicators. still with me to break it down is lale topcuoglu, mike wilson of morgan stanley, and alicia levine of bny mellon investment management. what do we care about tomorrow? about the labor force participation rate because that will tell you where your wage growth is going. to the extent we've been picking

up over the last six months, if we bring more people into the labor market we can be comfortable wages will remain in the 3% range and not go higher. the topline number itself will probably be a sleeper unless it is 200,000 or below 150,000. the december number blue everyone away. you have a bias to the upside. there is room to be weaker. if it is much stronger, that could drive the market higher. mike: i agree the participation rate is important. if you do not get more participation it will get wage inflation. participation rate is important. -- can we get unemployment to 3% and a non-inflationary way? that is the key. if you cannot do that, you will get inflation and it will have to reverse and nothing will come apart. i am looking at continuing

claims today. we saw this number spike. that is worth watching. that would suggest that there are more layoffs than people are talking about. let's watch that as well as the numbers tomorrow. this i will take a pass on one. i have no value to add. alix: i love the honesty. [laughter] circle back because i find it winds up find your question on inflation, what it means for , r&d. investment, capex does this inflation wind up affecting what companies do? lale: most people associate declining ceo confidence and the decline in capex with the trade wars. my question is whether it is not the trade wars but perhaps real rates continue to decline and we will hit negative territory. in the case of japan, it would

suggest that this inflation can impact the company behavior. alix: what you think? mike: trade definitely has an impact on ceo confidence. i do not think it is 80%. our view is explicit. it is around earnings. earnings disappointed relative to expectations. it was all about margins. companies have not been able to, or have chosen not to raise prices for the increase in cost. there are two reasons. number one is we get a tax cut and a windfall profit and a lot of companies say i will use that to compete. companies decided not to raise prices for that reason. the second reason is they cannot raise prices, because of they do they will lose market share. you cannot raise prices just because it will be demand instructive. consumers have gotten used to lower prices. they shop around. there is a lot of things going

on. it is not just one thing. technology as part of it, but there are a lot of disinflationary forces at work. alicia: i agree with you. the capital stock in the u.s. is very old. at some point there will be a capex cycle sooner rather than later. that is something to look out for. alix: is all of this a good or bad thing? consumers, isn't the disinflationary environment -- i will wait for a sale next week -- isn't that good? mike: it is good for the consumer, i'm not sure it is good for the core profit. that has been our call. the market recognize that in 2018 and even recognized it this year in terms of what they want to buy. the market is still shunning companies with uprising power. i am in alicia's camp. at some point we will see a pickup in capex. that could be 2021, we will see.

then there's a chance we will get more inflation than anybody is thinking about. your point.s we are so unprepared for it. alicia: wall street, the economists, are not prepared for an inflationary surprise. one thing you know is that when everyone agrees on something, we are all wrong. mike: the portfolios are not prepared. alicia: the bond market is not prepared and the fed is not prepared. that is one of our risks going probability,small but this is the thing that could unwind all of this. everything is predicated on quiescent inflation and lower inflation going forward. i want to say also if i can bring policy, i want a full 30 minutes without talking about international policy or domestic policy, whoever wins the

election in 2020, there will be a fiscal spend in 2021. the trump administration has further plans for tax cuts. we know the democrats are interested in fiscal spend. , andwill boost inflation also get things moving on the spending side. lale: fiscal spending is important. all roads seem to lead there. i would say i do not think tax cuts are the solution. i think there has to be a well thought out fiscal policy that addresses some of the income inequality. in my opinion, if you do not start addressing that along with your immigration policy and how you build your education. our working population continues to decline that will create problems longer-term with the aging population. it has to be smartly approached. i do not know what the answer is. i am sure there are lots of smart people that can figure it

out. it is not the tax cuts. tax cuts to me are like a gift card. we need a long-term sustainable position. that could help enable the fed get out of the pigeonhole they put themselves into and help us normalize a little bit. alix: does all of this imply not so great growth? matterstimulus will not if the growth picks up the same time. if you're growing it is ok to get the boost in inflation. does this imply sluggish growth forever? mike: i don't think so. i think it implies higher nominal gdp. the combination of real gdp through productivity. handing out checks does not do anything. you need investment from corporations and investment by the government and things that can drive productivity. infrastructure, education, other forms of public good the middle class can benefit from as opposed to funding share

buybacks. that does not help anyone. wages have to start going up. a report said -- i have to pay my workers more so i can buy my cars. there is truth to that. if you cannot have a healthy middle class, you cannot have a healthy economy. alix: here is what richard clara had to say about inflation. >> i want to distinguish between the basic buying view -- our view is for core measures of inflation to begin to move up toward 2%. i would be honest in confessing that if there is a risk to that outlook, it is skewed to the downside. alix: to wrap that into what mike was talking about, if you happen overshoot in the fed seems to be committing to that in some capacity, what does that want up meeting for inflation in wages and corporate profit margins? alicia: a little bit of inflation is a good thing.

don't forget the reason we have had such a long business cycle is there is no inflation. the classic boom/bust cycle is because there is in inflation and the fed kills inflation and kills the economy. that has not happened. it is a double-edged sword. sluggish growth, sluggish economy, sluggish wage growth. there is also no downturn in the real economy. inflation will lead to a more traditional cycle that we are all used to and we simply have not had for the last 11 years. mike: 20 years. we have not had inflation since china entered the wto and globalization into thousand one. all of that reversal is happening. that is what populism is about. that is what the groundswell is about. it is taking decades. it will be slow. as inflation goes from 1.5% to 3%, bullish for equities, but the kinds of equities people do

not own. that is a long duration equities. it is the short duration equities that have cyclicality, international stocks. paperthere was a fed yesterday that talked about how we could see zero rates in one year to seven year maturities, even a moderate recession. you guys think that is going to happen? specifically the market expectations controls the tail end. through qe and the asset buying that is what they are controlling. i do not read the fed papers, but that seems counterintuitive to me. alix: is there a scenario you can think of where we get to something like that? mike: zero? that would make us a bad outcome. that would make us bearish on equities. i do not think we can get there. i think we could see fed funds go back toward zero.

i think to see it out to seven years would be a bad outcome. i think the u.s. is inherently different than the rest of the world. the u.s. will not allow that to happen. americans will not allow that to happen. that is not our nature. we have a president who will not allow left to happen. nest, and iation think americans are reflationists. i do not think that will happen. alicia: i hope it does not happen. it is frightening. in europe i got the question about the possibility of negative rates. zero is a definite in the next recession. the market will take care of it. the risks of that and the add-ons that happen from that are terrible. the u.s. market is just a different market. alix: really enjoyed having this conversation. thanks to mike wilson of morgan stanley and alicia wilson of bny investment. lale topcuoglu will be sticking with me. i want to give you an update on

was making headlines outside the business world. viviana hurtado is here. viviana: house democrats are heading for a symbolic showdown on iran. today lawmakers will vote on a resolution to limit the president's military options. it would require the president not to seek action against iran unless congress gives its approval. the boeing 737 that crashed in iran tried to turn back before plunging to the ground according to iranian regulators. at 8000 feet the airlines get disappeared from radar. witnesses say they sought on fire in the air. ukraine now says it is examining several scenarios, among them a missile strike and terrorism. china has confirmed it will sign the first phase of the trade deal with the u.s. the vice premier will travel to washington, d.c. for the ceremony. during the terror of conflict, he has acted as china's top trade negotiator -- during the tariff conflict, he has acted as

china's top trade negotiator. agree to buy more american farm products. global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am viviana hurtado. this is bloomberg. still much to: uncover about how a boeing jet bound for ukraine crashed on the way to iran. bloomberg users, check out any charts we are using at gtv on your terminal. this is bloomberg. ♪

viviana: this is "bloomberg daybreak." i'm viviana hurtado. begin with lebanon issuing a travel ban for carlos ghosn. the fugitive former nissan chairman. according to the associated

press, lebanon is responding to a notice from interpol. the notice does not require he be arrested. carlos ghosn arrived in lebanon on december 30. british airways parent idg is retiring. purchase -- the popular chase sapphire reserve credit card is about to get more expensive. jp morgan is about to boost the annual fee for the card from $450 to $550. in return, the bank will add new parks. cardholders will get a credit on tour -- food delivery service and a full year of lyft membership programs. alix: time for bottom line. we look at three companies worth watching. i am taking a look at tesla because yesterday it's market value was over $88 billion, that

is more than ford and gm. do you have a tesla? lale: no. alix: have you driven a tesla? lale: no. you want tox: do buy a tesla? lale: no. alix: good talk. macy's,,ve l brands, , kohl's. anything in retail you like? lale: in credit we would not touch anything on the retail side. we actually have good luck in retail on the luxury side. there are stories that have played out in the headlines. a self-help story where we believe in the management and believe they can do better for product launches and gain more share. those have played out exceptionally well. alix: there has also been m&a.

the third company is bowing. brooke sutherland joins us now. this is all part and parcel to the crash yesterday. where are we in this investigation? brooke: we have not made a lot of progress since yesterday. there are still significant questions as to what happened to the planes. the iranians have said it is a technical issue. ukraine initially ruled out terrorism and now they are saying they are exploring terrorism, a bomb or a missile attack. it is unclear what has happened. aviation experts say that based on the trajectory of the plane and the fact that the global positioning radar cut out midflight suggested it was not an engine fire. still a lot to be discovered. not the headlines you want if areare bowing -- if you boeing. in,: now ukraine can come but to the sanctions allowed to happen? brooke: they have to get special

dispensation from the treasury to investigate, and that can take up to a year. we could be waiting a while for questions to be answered. france does have the capability to analyze the black boxes that have been recovered from the crash and they have helped iran in the past. it is not clear if those black boxes might be sent to france. still a lot of questions. boeing is still dealing with the 737 max. they came out earlier and said they are recommending flight simulator training for the pilots. a significant shift and will likely drag out the grounding. alix: the stock is down .7% in the last two days. i know you cannot talk individual companies, but you have a duopoly like airbus and boeing, people are like it will be fine, and then you see the headline rest. how to investors deal with headline risk when there is

still a fundamental case it will be ok? ,ale: yes there is the duopoly but by the virtue of the business you are in, these are significant risks. it is lives lost. once somebody loses confidence -- if you have two banks you lose confidence and one bank. does it matter? i would say that investors are may be under appreciating some of the risk in relying too much on the benefits of the duopoly. if you play this out down the road, i think boeing will have to come out with the successor to the 737. there is been so much scrutiny over the initial decision to retrofit the older model they will have to go down that path. airbus will have to respond. airbus is in a position where it can afford to do that. you're still talking about billions of dollars. that is a lot. alix: it also raises the question, to your point, it does

not matter if there is two, how many companies that airlines we will see moving from boeing? brooke: i think you are right. airbus has a backlog of six years. lale: capacity has such a long tail. alix: it is not that easy. brooke: and they do not want to. if you shift all of your orders to airbus airbus has too much power. china is trying to develop a home champion. even if they just take that china development, that is where a lot of demand is for planes. if they do become a significant player, you could see the duopoly start to crack. lale: that is a great point. i do not like flying and i am about to get a plane on sunday and it makes me nervous. i always think i'm going to die on a plane.

you are going to be dead anyway so what is it matter if you're asleep. brooke: these headlines do not help boeing all they are trying to get the max back in the sky. alix: on that note. [laughter] brooke sutherland, it was good to see you. lale topcuoglu, thank you for joining me. happy new year. fun to have you. more on the state of retail and technicals to watch for calls. as you are heading out, check out bloomberg radio heard on sirius xm channel 119 on the bloomberg business app. this is bloomberg. ♪

alix: time for technically speaking. bill maloney, chartered market technician and voice of bloomberg's equity squad joints me now. we are looking at tesla. i looked at the five year and i was like whoa. bill: tesla is now up in the premarket.

had a bid in the last half-hour. stocks clearly gone parabolic after breaking out of this range. market cap is now bigger than gm and ford combined. may be some resistance around 496, which is the fibonacci level. or 525. level is 500 alix: i would not of expected that six months ago. cole's coming out with earnings guidance. they did say it would be at the low end. holiday sales do not live up. bill: stocks down 9% in the premarket. it is in a trading range dating back to may. it does break back at 35. right now, 43 to 45 is your number. alix: let's rounded out with bed, bath & beyond. yesterday the stock was halted. it did not look good for the company. they are not being able to deliver their quarterly earnings. bill: stocks down 11% after last night.

or support zone around 14 15. 14 is the bottom of this cap. below that you are looking at 1380. 14 or 15 you might have some support. alix: the have and the have-nots, the nots dominating our conversation. that wraps it up for me. open," amy wuthe silverman with rbc capital markets. within the market, it is about tech outperforming. nasdaq futures are the upper former. european technology stocks hitting the highest level since 2001. the fx market, the bond market relatively quiet. this is bloomberg. ♪

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

jonathan: middle east tensions fading. stops inching back toward all-time highs. tona vice premier heading washington for a phase one deal. attention turning to the american economy. payrolls friday just round the corner. here is your thursday morning price action. equity futures positive 11 points on the s&p 500, up .33%. you're a 1.11 $15. 1.1115. let's begin with the big issue. market jitters fading. >> political risk is not something new in the market. >> persisted event risk. >> the market is going to follow the fundamentals of the economy. >> the fundamentals have been improving. >> weakness may represent a buying opportunity. >> this is all about liquidity. >> this