i got plans for this eyesight. "street signs. i'm joumanna bercetche. >> these are your headlines. >> europe stocks lack direction after another round of fresh records on wall street, while u.s. future is pointing to a higher open ahead of today's u.s. job reports. >> the holiday season boosts ryan air, the low cost carrier rises guidance, boosting stocks across the industry. >> a record high for apple

shares boosts as iphone shares surge. >> the ukraine airlines flight that crashed outside tehran was likely shot down by an iranian missile, as intelligence from the u.s., uk and canada suggests the tragedy could have been unintentional. good morning, everybody, and welcome to this edition of "street signs. we made it to the end of the week and what a week it was, starting off with huge concerns that seem to have shifted into the back seats in the last 24 hours. we had record highs yet again for wall street, all of the majors making fresh closes also some of the sub sectors as well, the tech industrials, discretionary and health care all hitting fresh record highs

in the u.s the communications services has seen its highest close since 2001 so the market has shut off a lot of the concern that we saw earlier on in the week as for european markets, you can see it's fairly split, a bit of a mix, 50/50 on the map as we're seeing right now but overall, the stock is trading above the flat line, slightly in the green. let's talk about the individual indices and break it down further. you can see a lot of mixed detail it seems like it's very difficult to break through the level, down about one point, treading on water but slightly leaning negative we're looking at the airlines. a lot of the airlines stocks are trading quite high germany, also marginally

positive, up about ten points. one name in particular is rwe, the utility company. soaring up ahead north of about 3.5 percentage points on reports that they may be receiving compensation to the tune of about $2 billion for transitioning away from coal plants lucksly, again, we saw a bit of a rebound in the sub sector yesterday, coming off a little bit this morning, and in italy trading around flat. so you can see we're ending the week on a mixed tone, but at least a sigh of relief that some of the major events of the week can be put behind us let's talk about the sectors i did mention airlines and you can see the measure right at the top this morning, up 1.3%. and here there are two things at play first of all, we're getting some positive results out of ryan air, and good guidance

but also we are seeing oil and gas come off a little bit. so oil and gas, up about 2%, given some of the price action that we had at the beginning of the week the pullback that we've seen has been a positive catalyst for the industry obviously those sectors were hit harshly at the beginning of the week we're seeing a rebound there utilities, as i mentioned, up half a percentage point. rwe is something we're focused on health care also seeing a good rebound this morning after the session we had in the u.s. and then down at thebottom we've got the banks down half a percentage point this morning. retail also coming under pressure as well, down half a percentage point let's switch and talk about global yields. again, we did see money pouring into fixed income for the safe haven currencies early in the week, but all eyes will be on

the u.s. payroll and lets not forget that does still have the potential to move markets, and not just stock markets, but also yields as well because it sets the tone for what the feds may do in terms of monetary policy they said they're quite happy with where things are for the moment, but obviously data points can change the mod. we're about two bases points firmer in the last 24 hours. just one thing i want to point out as well, yields are trading at sub 80 and yesterday we had dovish commentary suggesting that perhaps we could see some more stimulus coming out of the bank this year so the bank in uk is shifting their attention away from the political climate, and the suggestions and impression we're

getting from the governor is that they will be standing ready to unleash more stimulus if need be juliana. >> i want to give you an update on the fatal crash in tehran the ukraine flight that crashed near tehran was likely brought down by an iranian missile, according to the u.s., can na and brittain canadian prime minister justin trudeau said it, quote, may have been unintentional now, video has emerged of the plane shortly after takeoff, which the new york times says shows an object exploding near the plane. >> reporter: citing satellite images, intelligence sources say ukrainian airlines flight 752 was shot down by a missile all 176 people on board were killed, including 63 canadians.

>> this new information reinforces the need for a thorough investigation into this matter. >> reporter: the boeing 737 traveling to kiev took off from tehran at 6:12 tuesday morning two minutes after takeoff, sources say two russian made missiles fired at the plane. moments later, an explosion and the airliner fell to earth. >> there was a lot of evidence of puncture marks in various engine casings and other debris, which means that something external to the aircraft, like shrapnel, blew up and th >> reporter: there are unanswered questions >> why they decided to take off three, four hours after an attack instead of just saying let's stay on the ground for a while. >> iran has denied that a

missile could have shot down the plane and dismissed any suggestion the government has not been cooperative. >> now, the u.s. national transportation safety board has been formally invited to join the investigation into the crash by iranian authorities the authority has designated a representative to the probe, while boeing said it is supporting the agency. however, u.s. sanctions against iran mean it is unclear what role the ntsb will play in the inquiry. meanwhile, french foreign minister has warned iran could have a nuclear bomb in one to two years if it continues to violate the 2015 nuclear deal. the u.s. has pulled out of that deal with president trump urging other nations to follow suit and negotiate a fresh agreement. let's take a look at where we stand with the oil prices. it's obviously been a tremendously volatile week for oil.

we saw brent surge before giving up gains, as it looks like tensions in the middle east, the potential escalation in tensions between the u.s. and iran have faded. president trump suggesting iran is standing down and now we're looking at wti and brent stabilizing and we are lower week to date >> a dramatic move in the price of oil captivating the attention of wall street in the wake of rising tensions in the middle east oil prices initially moved higher last friday following the u.s. air strike that resulted in the death of iran's military general, qassem soleimani. once iran responded a few days later with its own air strike in iraq, oil climbed above $71 a barrel, but then reversed gains following a cool down in tensions strategists say while future

flare-ups are likely, the clear desire on both sides not to engage for now has come as a huge relief for the energy market and with that the premium oil has disappeared. still, the erratic moves in oil over the past week and the threat to supply can of course move the price of oil and energy producers as well. the effect of higher oil prices on importing nations and regions will be key to watch in the coming months. and whether countries like india and china will take additional steps to store more oil due to the recent flare-up in the middle east. >> i also want to take your attention to gold as well, because that was another commodity that did perform well in the first half of the week and obviously it has come off since. and you can see back on wednesday we almost -- well, briefly touched the 1600 mark, but of course now trading lower. and on the week, gold is

actually 1.1% lower than where we started out so almost broke through the 1600 mark so both gold and oil have come off in line with the fear about the geopolitical escalation in the middle east. let's introduce jeff curry, the global commodities -- the head of global commodities from goldman sachs and you put out a note earlier on this week saying that if investors were looking for a hedge out there, they're probably better off doing it in gold than oil. obviously both of the assets have come down since and this was a hedging situation on your side do you still hold that view? >> we like gold, no only as a hedge against geopolitical risk, but just more broadly on a tactical basis first, you're thinking about geopolitical risk. the potential outcomes are vast. we don't know what they are. so we think about the impact of

the events of a retaliation from iran and there's still a potential there. it could be demand or a supply hit. the market was trying to price in a supply disruption the only thing large enough in the region that the market was trying to price in would be a disruption in iraqi exports. but it could have been a hit to demand and as a result, when we look at it historically, gold typically outperforms oil in all of these events the second reason has to do with the sanctions the u.s. has been imposing around the world recently when we look at demand for gold from central banks, they're eating up 22% of global supply right now, 750 tons, the largest since the 1960s or the nixon era. and then the third reason is when you look at alternative investments out there, they're not that great so we look at returns from bonds, particularly bonds in europe the cost to take in the negative

of owning gold is not nearly as what it was historically so you put it altogether, our target is 1600. >> for 2020? >> yes >> so you're better off getting no return on gold than negative return on your bonds i want to take it back to the oil point as well. you said at some point with the spike we saw with the oil price, the market had started pricing in a supply disruption and the only place that that could stem from obviously would be from iraq have you done any analysis on how much disruption we would need to see from a supply perspective in iraq to justify the jump in the price of oil we saw? >> we estimate that when the market went up towards $70 a barrel and the shape of the forward curve, it was pricing in at 30% probability of seeing a disruption of 2.7 million barrels a day. kind of similar to the drone attack on saudi arabia now, the one export facility in the region that is of that scale

is the export terminal that exports 2.3 million barrels of oil. so it would need to be a disruption of that magnitude even during the attack on iraq itself, the disruption was only about a week or so so it takes a very substantial hit to disrupt those supplies, because the iraqis themselves don't want to lose the oil revenue. >> on gold you talk about central banks and the role they played amid the de-dollarization trend. how much further does this shift have to run? how much more incremental demand is there going to be for gold? >> the amount of gold held by the emerging market central banks is a traction of what is held by the developed markets. obviously, they could never go to the levels of the developed markets in the current environment, just be so disruptive to gold prices. but our estimates, we saw 750 tons last year

we would expect to see similar type numbers this year and the next year as they continue to diversify themselves and gold is one way to get away from from dollars. >> i'm surprised that your target for gold is 1600. we've already seen gold hit that level recently >> in terms of looking at the 750, we're talking about the same type of demand precious you saw before gold, we still produce it every year so when we think about the gold supply coming out, it just means more of it is going to be eaten up by central banks. what happens if the etfs, the real money investor really becomes interested in gold, then you open it up to the high the highs we saw in august of 2011 were in the 1900 range. we get that kind of pressure from what you're talking about, we could go back and re-test those highs again. >> let's take it back to august 2011 what actually propelled the climb then and how is the

situation different today? because another fact that we haven't talked about is the central bank towards easing the low real yields in the u.s. that obviously has been a very strong catalyst for the performance of gold so why would we not, to juliana's point, break through 1600 this time as well >> the big difference is the dollar the dollar was very weak that was the weakest point of the dollar in august 2011. we look at the current environment, we have low real rates like you're talking about, particularly in the u.s. so when we think about gold, is it a hedge against inflation i go back to february 2009 when we came up with the rate model, i was getting calls from clients saying gold is up because of inflationary concerns. now i get a call it's deflationary concerns. what we saw in 2011 were printing too many dollars and the real rate goes down, which

then pushes up the price of gold now, the other factor that played out in that time period was the weakening of the dollar. a lot of clients discussions i have, the question is will we see a substantial weakening in the dollar as we go forward. if you do see that, the potential to push gold back up into the 1800, 1900 range becomesrealistic. >> certainly something to watch out for when it comes to gold. let me take it back to oil as well what is your target for this year and how do we end up there? i guess the situation that unfolded in the summer after the facility attacks proved that there's a lot of extra crude inventory if need be sitting on the sidelines. is that true in this situation as well? >> when we think about not only was there inventory sitting in places like saudi arabia and china at that time, also you look at the united states. it is now the most recent data shows that the u.s. became energy independent even on a

monthly basis. because of that, it has all of these large strategic petroleum reserves that are no longer needed 600 million plus barrels of oil. when you factor that in, then the flexibility of the shale production, it becomes difficult to get the same type of price response that we would have seen years ago. bringing this back to our view, the one thing that is happening is while we're not bullish on oil prices per se, we see our target is $63 a barrel in 2020, markets trading 64 and change right now. what is happening is supply is coming down in the shale because we are not investing, supply is dropping in non-opec after, we have a big wave that the norwegians are bringing on that is beginning to tighten the underlying market. you can see that in the shape of the forward curve. right now today, if the oil price just trade sideways for

the rest of the year, the front of the curve is going to give you a 17.5% return with oil doing absolutely nothing and we think going forward, the investment will continue to tighten. and there's three reasons for that one, the returns in the sector are still relatively poor. two, there's still a lot of debt in the system so they're taking the capital they would normally be investing and then the third is esg, environmental issues are starting to have an impact you put those three factors together, investments going down, production is beginning to drop, you're tightening these markets, we recommend being in oil. even though we're not pounding the table, it's rolling at the front of the curve. >> stay with us. plenty more to talk about in the commodity space. now, one corporate story i want to highlight for you this morning. ryan air has raised its guidance

fo for profit after taxes the company has seen a slight uptick in forward bookings this year ryan is up over 6% it opened at 9% at the start of the day and it's providing a nice boost to the broader airline sector in europe easy jet is up nearly 4% as well and you just want to remind you, pricing rising is and earnings momentum is being littered with upside risk. so that view seems to be coming through. >> it came in on a day when all of the airlines were down because of geopolitical risk, but it looks like fundamentally the view is beginning to play out. so strong reaction in airlines today. if you have any views on anything we've discussed, gold, oil, airlines, you can tweet us.

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signs. we've got some tech news for you. shares in apple are trading slightly higher this morning after the stock hit a record high in the u.s., following a jump in december iphone sales in china. it rounds off a strong 2019 for the u.s. tech giant, but apple is still looking to catch up with local lower cost chinese makers >> reporter: apple shares hit a fresh record high on thursday as iphone sales in china rose 18% year on year in december, according to government data now, a large part of that is likely thanks to apple's pricing strategy around the iphone 11, rectifying some of the missteps it made back in september 2018

i just want to dig into that, because back in 2018 when the phones were released the iphone 10 r was priced at a 28% premium in china, versus the u.s that was just too expensive for chinese consumers who flocked to android rivals fast forward to 2019 when the iphone 11 came out, the cheapest iphone was priced at just an 11% premium in china, versus the u.s., and that's been giving this boost to apple in the december quarter that is one part of the story. as well, apple has made improvements on the camera technology and we're going into the holiday season with chinese new year just around the corner as well, which is hoping to boost sales. all those factors together have given apple the december boost and the stock price boost as well but a couple of challenges remain firstly, fierce rival huawei is bringing out a flagship phone within the next couple of months and that could be a challenge,

as well as the fact that apple doesn't have a 5g phone on the market it will be interesting to see how consumers react to that and whether they might be turned off by apple as these new phones come to market over the next few months >> meanwhile, chinese ceo will travel to washington next week to sign a trade deal with the u.s., following months and years. >> let's bring back the global head of commodities research who is still with us let's talk about the phase one trade deal with china. part of the alleged pledge is that china will be buying more u.s. agricultural products is that being fully priced into u.s. life stock and ags at this point from a commodities perspective? >> the answer is no because there's still a lot of uncertainty about exactly how you could achieve 40 or

potentially $50 billion of agricultural purchases last year it was around $17 billion. >> even before the trade war it was $20 billion. >> so the increases we're talking about are tremendous the other factor that makes it difficult is because of the asian swine flu, you don't have the same amount of animals who can eat all of the soybeans if you brought them into china. so if you put it altogether, you go what is china short, what is the u.s. long, you put it together and the two markets where you can see the biggest increases are corn, as well as in pork. you actually move the pork itself to china. you put it altogether, add a big increase in soybeans, and the question is where is that going to go, you can get to your $40 billion number but the key is you've got to move a lot of that into pork and into the meats and livestock a lot of the people i talk to are skeptical how you're going to achieve the $40 billion number. >> what do you think is baked into the commodity prices when it comes to the u.s./china trade

agreement. is the signing of the phase agreement already in there and is there anything beyond that already priced in? >> i think the big question is going to be the physical demand. when you actually see boats loaded and see what's on those boats -- because there's a question of which commodity can perform here so it's more of wait and see the physical demand and that's going to take you to the next level. but the question is we don't even know which one would be the right one. we estimate that corn and pork would have the most upside >> can i take you to a slightly different topic, but very important one. the world has been watching very closely the bushfires that have been taking over australia causing a devastating amount of life, devastating amount of damage also, when it comes to the supply side of things, if you're thinking about natural resources in the world, when you think about commodities and when you think about agricultural in the future, how much of a big deal

is climate change and sort of how that's going to interplay with where the produce is coming from and natural resources >> big deal. you already see it in the soft price, coffee, cocoa and sugar let's take coffee. you look at central america, honduras, coffee is up 24% in the last several months. because droughts in these regions, that land is no longer good right now combined with a drought in brazil sugar, another one, you had a moon soon, the biggest in 100 years in india has had a substantial impact on suggest ar supply you're seeing a big shift and migration in what land was airable and what is going to be going forward. so the answer to your question it's had a significant impact

and will likely continue to have a significant impact going forward. >> jeff, thank you very much great to have you with us on the show all-encompassing conversation. the global head of commodities research at goldman sachs. stay with us, because at the u.s. labor market, we'll bring you the wall street estimates in just a few moments

welcome back to "street signs. i'm juliana tatelbaum. >> and i'm joumanna bercetche and these are your headlines. >> europe lacks direction after another round of fresh records on wall street all u.s. futures point to a higher open ahead of today's u.s. jobs report >> the holiday cheer keeps on giving for ryan air. the low cost carrier raises guidance for profits, boosting stocks across the airline industry. >> a record high for apple shares, boosts asian suppliers as chinese iphone sales surge.

>> the ukraine airlines flight that crashed outside tehran was likely shot down by an iranian missile as intelligence from the u.s., uk and canada suggests the tragedy could have been unintentional. we made it to the final day of trade this week it's been a rocky week for assets across the globe. now we're seeing a little bit of a mixed picture emerge in europe but overall the magnitude of the moves contained. more gains, so building on what we saw yesterday the key outperformer was the german index spanish equities also trading around the flat line in the u.k., not much movement either and this comes along side some stabilization in sterling. but overall underpinning the stabilization in equities, no

doubt the stabilization that we've seen come together in the oil price. we saw major swings this week and then the easing of tensions in the middle east so now the picture seems to be one of stabilization as investors reassess the risk in the region let's take a look at fx markets. yesterday sterling came under pressure as we got come dovish comments from england. now we're seeing it stabilize around 130.70. the euro down around the 111 mark, a little bit of news on the brexit front as well we saw u.k. lawmakers give the green light to boris johnson's brexit deal, so moving ahead as expected with his plans for departure from the european union. let's take a look at u.s. futures. we saw all three indices hit record highs yesterday

the pace of gain seems to be slowing a little bit we are all looking ahead to the payrolls report due out later day. juliana. >> u.s. is expected to slow a slight payroll slowdown. it's seen rising by $160,000 according to dow jones estimates. that's down from $266,000 in november the unemployment rate is estimated to hold steady at 3.5% month to month, while average hourly wages are seen higher by 0.3% >> the wall street forecasters are looking for a modest cooling in the job market when government reports payrolls at 8:30 a.m. eastern time tomorrow. but new data from bank of america using its own big data is looking for a sharper slowdown but could it be lower? bank of america has a new model in which it aggregating direct deposit data from bank of

america accounts and tries to forecast the private sector employment they look for growth of just 54,000, compared with the consensus of 160,000 but not only do they rely solely on this data the chief economist says it's just an input into the jobs model. so that forecast is for 140,000. it appears as if the new data has led bank of america to a low average forecast like all private sector data, this is going to be limited by bank of america's market share they have the biggest deposit base in north america but it's just north of 10%. the data is adjusted and there could be geographic and income bias since some poorer people don't have bank accounts and bank of america may not be equally strong in all parts of the country. these are early days from the promise of big data to give a clearer picture of the broad economy. the federal reserve uses credit card spending data to get a better picture and the bureau of

labor statistics is using apparel for part of its inflation report but over time the kind of data that b of a is using to forecast payrolls could give a better picture of the u.s. economy in real time. steve leaiesman >> let's bring in chief u.s. economist who joins us for the rest of the show thank you very much for being with us. >> good morning. >> so as we just heard, consensus is looking for a modest cooling in the jobs market you're a little bit more optimistic, right? >> we've got a job gain that forecasts to be slightly above consensus so we're at a gain of 185,000. both of those numbers, the consensus and our own, are down from a higher reading in november but remember, the november data that jump, a lot of that was the returning of striking workers from gm. so you can't look at the 266 necessarily and the step down as signifying a big slowing

our number of 185,000 is roughly in line with the average pace of payroll growth that we've seen this year. so we're sort of on balance looking for a trend-like number, no real change in labor market conditions, and then of course what steve was just talking about in the package earlier was the fact that there are concerns that maybe we would see a sharper slowdown one of the things people have looked at is the number of people filing for unemployment claims has ticked up a bit in december and maybe that's a source of concern. >> another source of concern are the recent numbers, the very weak manufacturing and non-manufacturing ism as well. why are you not taking those into consideration >> the level that we've seen in payrolls, and particularly in our forecast for manufacturing payrolls is actually consistent with the numbers that we've seen in the ism the overall manufacturing sector the stabilizing and we've got expectations that manufacturing

employment in the report this morning will be sort of flat what is more important is on the service sector side, and there we are still seeing growth, and our that in our view would be consistent with the 180,000 in payroll growth but of course this is all slower than what we saw in 2018 when the ism numbers were equally stronger >> now, business investment, if i look back at 2019, has been one of the key weak points in the u.s. economy what do you think for 2020 because this obviously does play a role when it comes to the labor market as well, companies are hesitant to invest >> juliana, that's in our view so much of the story here. if companies are hesitant to invest, they're probably also res tent to add new workers. and this is where i think it separates to some extent from others who are more upbeat about the u.s. outlook there's a feeling that because of the phase one trade deal that

companies will suddenly now in 2020, with the uncertainty about trade removed, reengage and begin hiring and investing more. and i'm skeptical of that. i think there's a lot of uncertainty, particularly in 2020, perhaps around the u.s. election, the presidential election, that will keep companies in a bit more cautious mode and i do worry that as we see continued sort of softness in investment and again maybe less appetite to hire given the unknown, that eventually the labor market will soften and that will undermine the consumer a bit. >> are you not surprised at this late phase of the cycle we're still getting an average of 180,000? you would think that by this stage it would have softened to around 130, 140. why is it so strong and does that show you there's considerable amount of slack in the economy? >> you're exactly right. first of all, 180,000 is an

incredibly solid number. well above the number that you would need to bring the unemployment rate down it's more than enough to absorb new workers coming into the market looking for a job and to be doing it at this late stage, after ten years of economic growth at this pace, is really impressive. so i think that's a very important point. even if you were to see a job gain closer to 100,000, that would still be a pretty solid reading. so that point is well taken. and the fact that we've been able to continue to employ this many people without seeing a sharper pickup in wage growth speaks to the idea that maybe the labor market isn't as tight, that there is perhaps more slack. that's one of the ideas or certainly that's one of the possibilities the federal reserve themselves are considering, which is why they've been very willing to even cut interest rates to

support the economy, because there is this idea that perhaps there is more slack than we realized. >> you mentioned earlier the strength of the services part of the u.s. economy and you seem to be taking respite in the fact that it's held up better than the manufacturing side of things the ism for manufacturing fell to its lowest level since june 2009 so even though service is important, isn't there a risk that we see the manufacturing sector actually tip the u.s. economy into a downturn? >> i don't think it's the risk of manufacturing itself being weak enough to pull the overall economy down it is less than 20% of the overall economy. but i will say even though the ism non-manufacturing numbers or the service sector numbers are better than manufacturing -- it's growing, they have come off as well. and if you look at the level of service sector activity, it's as

weak as it was in 2016 and really only twice in this economic expansion has it been growing as slowly as it is now so there's signs of spillover from manufacturing or there's signs that the weakness is more broad based than just manufacturing. so in that sense, i think i take comfort that we're at least seeing services continuing to grow but the pace at which it slowed is giving me pause, and again it feeds into my feeling that i'm not quite as upbeat about growth prospects for the u.s. in 2020 as maybe some others. >> we'll talk about what that means for the fed in our next segment. the co-head of global economics and chief u.s. economist also coming up on "street signs," stock markets are at record highs, but are the bears dominating the bulls we'll have analysis after the break. i remember thinking about things i did and wondering if that was the last time i was going to do that thing.

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welcome back to "street signs. who would have thought that us stock markets have hit fresh market highs, but retail investors are getting more bearish. that is according to the american association of

individual investors and new data suggests pessimistic sentiment has risen to a six-week high. bullish sentiment fell over 4%, while bearish views increased by 8% but the advice of the fed chairman said the u.s. economy has started the year in a good place, speaking at an event in new york >> the downside risk to the global outlook has maybe diminished a look and there's some early signs that maybe the decline in global growth is bottoming out. but again, our baseline projection is really for 2020 in terms of gdp growth, unemployment and inflation to be pretty similar to last year, with the pro advice oh that we certainly will focused and indeed very focused on getting the underlying rate of inflation in the economy back up to our 2% objective. >> let's get back to michelle. the co-head of global economics

and chief economist. we ended the last segments and you're saying throwing in a word of caution into the outlook for 2020, reading between the lines it sounds to me like if the fed were to do anything, they would lean toward the rate cut. >> we debate a lot in the markets about whether or not the fed will cut rates and we can talk about that. but the one point that is very clear, the fed themselves have really signaled is that there's not really a chance of the fed raising interest rates so it feels like when you look at the interest rate outlook in terms of the policy outlook, it's either steady or lower. the fed chair powell was asked a bit about what would be the conditions for raising interest rates and he talked about the need for kind of a significant and sustained inflation rise so the hurdle for raising rates is i think very high >> now, another debate going on in the market around the fed is

around their balance sheet and just yesterday dallas fed president was flagging concern about the balance sheet, which is now at $4 trillion. do you share this concern? do you think this is going to be an issue that the fed needs to focus on this year >> i don't have a concern about the level of the balance sheet i actually think that most of the fed members are very comfortable with using the balance sheet as a tool. that's been -- a lot of the work that they've done to kind of reflect on what happened during the crisis and the consequences of growing the balance sheet and the success that they had in growing it and then being able to shrink it back down and now they're growing it again. they've indicated that because they feel that they were fairly successful and they have a confidence in using that tool that they might even use it earlier next time if needed. i think this is really interesting. this will be something that will maybe gain more attention. in the u.s. the fed is doing monetary policy review they're kind of examining their

approach and i think one of the questions that they'll look at and perhaps we'll get more guidance on is this idea of how quickly might they use the balance sheet going forward. at some point if the economy or inflation warranted more action to support, maybe we wouldn't be talking about interest rate cuts maybe the fed would go quickly to the balance sheet so i don't share the concern and i actually think that most members on the fed don't share a concern and might even be more willing to use the balance sheet more quickly if necessary. >> as in the case of other central banks that we're seeing as well. back to something you mentioned, 2019 was a year of business uncertainty because of the trade war and that dominated much of the narrative and started of an impact on the manufacturing sector you could say that some of that uncertainty may be coming to an end that now that a phase one

tra trade. so the inflation target, the 2%, making sure that inflation is on the right track, rather than focusing on the secondary effects of the trade war >> i do think it's worth just mentioning that while trade uncertainty is perhaps reduced, and even that is maybe questionable, but assuming that the phase one deal reduces uncertainty on trade, again we do have the presidential election, which may introduce offsetting points. but you're exactly right about the focus that the fed will have we all are thinking that the fed's decision about whether or not to cut into rates is based on growth, and how the data looks in terms of the economy. but what i actually think may be the case is that there will start to even focus more on the inflation numbers and the persistent shortfall, this inability to get inflation back up to 2% and as they review kind of their

monetary policy approach and they consider whether or not policymakers should be trying to get inflation to 2%, but above 2%, when the company is well to create a cushion, you might have the fed starting to think about taking out -- cutting rates again and doing more not because of growth, but in order to do more to get inflation up so that focus i think could be an important theme this year. >> michelle, thank you very much for giving us your views the co-head of global economics and the chief u.s. economist >> in other news, british lawmakers have backed legislation that will see the u.k. exit the european union we've voted in favor by 230 to 231 votes, putting an end to three and a half years of political upheaval around the terms of the divorce focus will now shift to the future relationship as the two sides look to strike a free

trade deal before the brexit transition closes at the end of this year. what a difference a majority makes. over in the u.s., the house of representatives has passed a resolution designed to limit president trump's military actions against iran the war powers bill passed along party lines and will now proceed to the republican-controlled senate for debate. a white house spokesperson described the measure as ridiculous our nbc colleague, tracy potts, joins us now live from washington, d.c. tracy, i guess the question now is what are the chances that this bill actually passes in the senate >> very little, because the senate is controlled by republicans, the president's party. also, it is a non-binding resolution, so the president would not have to consult congress as one lawmaker put it, it's got about as much juice as a new year's resolution. but it is symbolic and

significant in that there was a ground swell of support on the house side for restricting what the president can do without going back to congress what the constitution says is that only congress can declare war. what's happened with modern presidents is there's been leeway to use executive power to respond to conflicts and deal with military conflicts. we heard the president talking about this at a campaign event last night saying that these are split-second decisions in this case, when general soleimani of iran, they knew where he was, they knew where he was going, and as the president put it, i didn't have time to pick up the phone and call nancy to get the okay. >> thank you so much for bringing us the latest tracy potts, nbc news from washington. >> well, it's a big day today. we can talk about something that isn't meghan and harry for a moment payroll day is a big day always for markets. the three u.s. indices look like they are going to open up in the

green, the s&p 500 opening up about 8 points higher, dow about 65 points higher and this on record closes yesterday for the three majors what a whirl wind of a week it has been with all of the geopolitical concerns and fear gripping the market in the first half of the week and now we're at record highs. and attention is going to shift to earnings again. >> and you and i maybe pick up the conversation on meghan and harry after the show. >> it's going to be heated that is it for our show today. i'm joumanna bercetche. >> i'm juliana tatelbaum "worldwide exchange" coming up next good morning!

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it is 5:00 a.m. at cnbc global headquarters and here is your five at 5:00. let the rally resume stocks set to open at record highs as 2020 picks up right where 2019 left off. the pressure building at boeing, what new memos released by the company say about the 737 max jet, designers and the regulators overseeing that model. waffling on the deal, new comments from president trump casting some doubt on a january 15th phase one trade deal signing. ghosn on the run