we are looking ahead to the bank of japan's first meeting of the year. s bloomberg. ♪ haidi: this is daybreak asia. shery: the bank of japan is not expected to pull any policy efforts at the meeting today as inflation softens and a tax hike looms in the coming months. kathleen hays is in tokyo for the meeting. kathleen? anhleen: well, it's interesting day today because right now for the bank of japan, what is driving policy is not what is going on domestically, it is also the global environment. it is the trade war that still shows no clear end. the federal reserve pausing on interest rate hikes and when will it resume again? we have someone who can tied together. she was a member of the bank of japan's policy board. great to have you back. sayuri: thank you. kathleen: let's start with this policy setting. domestically, inflation pullback a bit and we know the falling oil prices can be temporary. that is a big factor. is that tying the boj's hands right now? sayuri: underlying low-inflation, but that is always the system. very much worried about exchangin

the bank of japan cuts its outlook for price growth once again as it keeps policy unchanged. a bloomberg exclusive, the fed is said to probe deutsche bank suspicious this -- transactions. it could be one of the biggest money laundering scandals ever. manus: welcome to "daybreak europe." the machine maker saying the first quarter net sales, 2.1 billion. that is below the market consensus of 2.7 billion. margins also under pressure. they are saying, in the fourth quarter, that their margins came in at 44.3. 48.1%.ket wanted this story,balance raising the dividend. you are seeing a number of their players. their customers flashing warning signs. samsung talking about their. the guidance from margin in terms of the first quarter also being reduced. it will be 40% from 47.3%. raising the dividend by 50%. and in terms of the other news, they are seeing full-year shipments at -- first quarter negatively impacted by about 300 million euros. we will dig deeper with the ceo. good morning. to the ceoill speak later. one of the big questions will be how much other industries can offset a

in fact, bank of japan has been saying that probably the low interest rate environment, which has beenund in japan for so long, is increasingly a threat to financial stability, so actually interest rates in japan may rise in the medium to long-term. manus: i have to clarify myself. i meant to say short aussie yen as the perfect paradigm hedge. veryvery kindly -- nejra kindly sent me little messages. nejra: you actually caught yourself on this one, mattis, so i will give you credit -- manus, so i will give you credit on that. let's just talk about that yuan, because we have had this unusual meeting that xi jinping held the partyr members of talking about serious dangers as risks melt. aren't -- melts. on -- mount. are there serious dangers to the yuan? thu lan: certainly. hasn see why the yuan recovered, but this is going back and forth. it's quite volatile. it's quite -- it was quite excessive, the recover we we saw in the -- recovery we saw in the yuan. the chinese economy is struggling with structural issues and we have been forecasting a slowdown in chinese growth for quite some tim

kathleen: the bank of japan has this two-sided policy. this happens so often, doesn't it? art at least signaling we want to get out of this extreme stimulus. we know it makes it tougher on banks. we are concerned about the long-term effect of it. what it means for the jgb, inflation not cooperating. we are going to look at the core cpi. it has backed down again away from the 2% target. tot is the problem, down zero point 7% year-over-year and of course, that is occurring as oil prices fall. that is a big factor. if it is something standing in at boj's way now, if we look our bloomberg economics team, what they are saying is they are going to stand pat. there is not much they can do. the economy has a lot of risks. here is what they are looking for. first of all, they are saying that the downside risks, the yen has gotten stronger. global demand -- remember, this is an exporting country as well. to 0.7% slowed year-over-year. the bank of japan, at this meeting, is expected to trim its inflation forecast for 2019 and 2020. some people think that is maybe a bit dovish. it isil

the nikkei seeing downside .3% in the wake of the bank of japan decision. g steady, the bank of korea held their policy rate steady as well. australia seeing modest gains. shery: and other asian futures, we are seeing upside for taiwan after the losses in the previous session. this after asian stocks fell for the last two sessions. let's see how we fair as the markets open in asia. this is bloomberg. ♪ bloomberg. ♪ rishaad: 9:00 in hong kong and in shanghai, this is bloomberg markets china open. david: asian chipmakers defying the gathering gloom, they see an uptrend in demand and are leading the way in tokyo and seoul. rishaad: offering a rebuke to president trump's protectionist views. david: the shanghai exchange raises its game with a high tech board. it sees a financing and it will boost innovation. ♪

right about that but the swiss national bank is a tiny central bank i think they inspired the bank of japan to also try that the bank of japan is but by and buying up e.t.f. but when the u.s. federal reserve and the e.c.b. start doing at. you're going to have hyper inflation in the stock market something like we haven't seen for you know hundred years i think twenty nineteen will see that it's corporate debt to twenty nineteen is what subprime debt was to two thousand and eight because i think you're going to see that edifice collapse and there is a whole bunch of c.l.o. collateralized loan obligations there's a lot of borrowing in the corporate sector most of it was to take the stock markets private and pay themselves huge fees and salaries and stock options via stock buybacks but i think basically the entire edifice will collapse the stock market because of all these that the corporate debt what we've seen one of these before with a corporate debt collapse in one thousand nine hundred seven after the mike milken in jackson introduced all junk bond phenomena and that topped out and all the

that has given the bank of japan's yield curve control policies a structure. ly it is anchored. dollar-yen is coming under pressure from declining in u.s. and rising in japan. short dollar-yen is one of our highest connection calls. we are forecasting one of five by the end of the year. i would say it is toward the downside. rishaad: not exactly what you might call sticking your neck out, is it? thank you, great talking to you. 80 by the end of the year? yvonne: making it harder for the boj to watch turns. it is beyond their control. another big interview to tell you about. bloomberg, we have interviews with chicago fed president at 4: 10 new york time on friday. do not want to miss that one. this is bloomberg. ♪ is bloomberg. ♪ yvonne: a quick check of the latest business flash headlines. jet airways says it is working with creditors to revamp $1.2 billion of debt which may lead to changes on the board. sources say one option is for lenders to seek investment. before the debt is restructured. jet airways has accumulated more losses than any publicly traded car

a significant upping of qe by the bank of japan. >> a moveu reckon? 00 as possible over the year. i would not doubt that. regarding qe from the boj, the problem is what are they going to buy? they are running out of assets to buy. that has been the case if you look at their qe volumes. they have been able to buy all they wanted to do so in the last number of years. increasing qe from the boj is not going to achieve an awful lot. it seems to me they are at a stage where they're going to have to throw in the towel and say their efforts to reap -- reinflate the economy are failing. given where yen trades in terms of valuation, we are going to see more pain over the year. manus: one thing that struck me was the lack of aggressive moves in yuan. this is a china story. myt is -- i am looking at bloomberg and it says one year swap rates in china are the lowest since 2016. it has probably drop since before you woke up. level sincelosing 2016. that tells me this market expects china to cut rates. is that a possibility? do you think the yuan will bust seven? >>

the bank of japan has met for the first time in 2019 amid softening inflation and weakening exports. s the decision comes down. this is "bloomberg markets: as ia." ♪ rishaad: bank of japan announced no change in its policies, no purchasingts asset plan. david: 1.4% against 1.5% for forecast should be 2019. .8%. they are cutting the forecast to .9% for 2019 fiscal year. keep in mind 2% is where that needs to be. look, the gdpg a for this year, we are looking at .8%. up, 1% gdpove growth, .8 of 1%. let's get you back to jules. jewels: trying to see a bit of movement coming through in the end, you can see on the terminal it has moved on that decision. it is interesting when they come through a little bit later than expected. you have the yen down by .25 of 1%. we are asserting to see a turnaround in these markets, we coming backreet after that public holiday. we have seen a little bit more momentum coming through especially after china's central bank pumped liquidity into the banking system. hong kong of by .2 of 1%. also are a reversal in the south korean kospi. an analyst says we are b

that convinces japanese investors that the bank of japan with the ministry of finance will be able tok down the yen or prevent the end appreciation, it could add to and couldf appetite exacerbate the yen strength at some point. >> they just continue to add to the narrative and the u.s. dollar into next year? datat is a significant point. it is not clear now, we're seeing deceleration down to just a trend like growth pace in the u.s. or is it -- is it something like a more severe slowdown? we think it is a natural deceleration. the market has a hard time distinguishing between something slowing down and something really falling. market really a focused on how great the economy was a few months ago. it seems to be going too far the other way and may be it is a little pessimistic. we calibrated that, taking out the fed pricing too much. >> thank you so much for that. on the fx move. let's get back to pelosi news. nancy pelosi has a vote to officially become the house speaker. the vote is ongoing at the moment. she needs the majority in the house to get the speakership which she was alrea

we saw the great financial crisis, we saw the fed, the ecb, bank of england, bank of japan, everyone came in guns blazing to sort it out. governments got involved, as well. when you look at the position central banks are rain, -- are thethe bank of japan and ecb are still in negative rates territory so there is not so much they could do if there was a global meltdown as we saw a decade ago. investors is to have all of this and quickly because they might not be helped out. anna: somebody suggesting the passing of the house spending bill was posting some sentiment but investors tell us the shutdowns affect the people involved, but don't affect the broad investment theme for a long time. how long does it have to last to become a market moving event? mark: it probably has moved to an extent already and depending on the response from the u.s. and it, -- senate, he could still cause damage. jay powell would be speaking so he might be a soothing voice but the way the democrats have turned this back, they have got a bid on the table and are saying to the donald -- to donald trump, it is your

it led to more intervention from the bank of japan. let's have a look at dollar-yen. have the fed on plausible plausibility. you have the ecb hoping to this has, but i guess 2019 we have the dollar-yen and how much of week that was. we are looking down the barrel of non-normalization in 2019 if you want to chew on reality. >> i think you're right. i don't think the ecb will rise rates this year. they are normalizing in the sense, but raising rates in the current environment -- >> and you are right to draw that's different feel -- differential. -- to draw that differential. james reeve, stay with me. coming up, brexiteers are hitting the u.k. and hitting it where it hurts, in the huizinga market. more on that. this is bloomberg. ♪ >> there is speculation brexit is hitting the british market -- british rising market -- huizinga markets. james reeve it -- is still with us. to the data, we have this ready. let me give the crude. i should have done this in the commercial break. price growth under pressure. it slows to a five-year low. say that the economy is beginning to s

the latest corporate earnings and moves to end the yen government shutdown and sliding at the bank of japan inflation outlook. tom: what is tomorrow in frankfurt? a small ecb. here is what we like to do. with a lot of conversations here. some of the highlights, let's go to the right now. look.needs a fresh i'm not going to comment on approach. in terms of the balance and things they are going after, it also i believe is important because politically, it is manifesting itself in this form of protectionism, which not just the u.s. but most places in the world expect that politicians and government to go after. of the important things most people don't think about as they talk about those discussions, trade deficits, tariffs, intellectual property. one of the things that i think could potentially be a dealbreaker is compliance. the u.s. is very focused on making sure that anything that is agreed upon actually occurs. american sending some beans to china with this 90 day cooling off period. they are being supplemented with south american dance. -- beans. >> i hope something positive will come o

should the bank of japan essentially abandon this target? not much more they could do in terms of extraordinary monetary policy. they are already seeing distortions in the market as a result of policy. it's down to demographics and reform measures that are politically difficult to take. >> i think it's a little too late for them to abandon the target. they have sort of anchored themselves quite firmly to the target over the past five years, five or six years. i think it's a little too late for them to abandon the target. going back to last year when they introduced flexibility to the control policy, we believe it was measured to pave way for tighter monetary policy, although given inflation is decelerating further this year, we don't expect it to move at all this year. haidi: to be fair, we have had a bit of a peak when it comes to gdp growth in japan as well. how much do you spend time looking at the implications of the trade war, the implications of demand across asia and on the supply chain, how much that really affects an economy that is

perhaps a more interesting debate is how the bank of japan missed its window to tighten.are talking about the end of fed policy, people have been discussing one the fed is cutting rates. if the global central banks start cutting rates again, maybe the be oj whenever be able to try this extra dinner policies. to me, this is a slight worry, i will continue to grind lower when we don't have those scary events. anna: mark, thank you for joining us. remember, if you want to join the debate or get involved in the question of the day that we are asking here on bloomberg tv and on the market live blog, you can. markets under pricing or overpricing the global growth slowdown? coming up, we speaks to the publicis group chairman, maurice levy, about the challenges facing the ad agency for his business. this is bloomberg. ♪ ♪ matt: welcome back to the european open, this is "bloomberg markets are: take a look at stocks, we're looking at job across the board even after we had a mixed session the riyadh some gainers in the asian session. europe, its here in seems to be turning worse. o

we have all of the banks in japan. electron.ave tokyo telcos. i am focusing on nintendo.look at what we are seeing with the stock. we talked about this whole pokemon go craze. have lost thate luster already when it comes to the market cap of nintendo. -- has beenseded superseded by sony. we are focusing on the consuls, how these two will play out. nintendo had a little bit of momentum thanks to super smash brothers which came out at the end of last year. pokemon, look out for rpg games. david: yes, impress the ladies with that one. i am looking at banks as well. not the most compelling topic. we are talking about debt interest margins. we do not have any positive yields in japan. anm really looking to see update here, whether or not that trend and dynamic actually continues to affect japanese corporate's. have a look at the chart. it will be very busy over the next two days. juliette: i am looking at komatsu. i have a tractor. we are looking at their profit growth. it should have moderated in the fourth quarter. much and focus after what we heard from caterpillar earlier

what can the bank of japan do to stop the yen from continuing to climb? the only central bank in the world where the currency refuses to weaken. they cannot do more and still its currency refuses to weaken. the fed is probably not going to hike rates in the same way. in china, everyone is taking a look at apple and louis vuitton. chinese economy is not doing well. these are not good news. the yuan weakens, the dollar might weaken because it doesn't have the support. that isn't good for the japanese yen in the context is it is going to continue to strengthen. >> what about bpp's blowout today? >> i don't know. sign thatnally the risk office spreading out to where it should be risk off? been doing so well for so long? we know they have sorted out problems with the eu. down, theyields are italian yield should be suffering. big move in german yields as well yesterday. if germanogical yields drop as much as they have, you expect that tonya was rise. the fact that the italian -- get -- it was a fine auction not great. there's a lot of money to be raised for ita

let's talk about demographics in japan, one of the biggest challenges for the government and bank of s it playing out across the space? tom: absolutely. if we look over the past five or 10 years, convenience stores have been growing rapidly. that will start to slow. there is a lack of workers and that is leading to a slowdown in the number of store openings. stores are starting to move away from the 24-hour operating model. we think as a result we will see a bit more earnings volatility. because of the worker shortage, you will see more spending developing on staff stores, efficiencyand enhancing technology. because of that spending a lot of the growth will be driven by differentiation rather than the overall expansion of the market. we think particularly with the backdrop of higher taxes on tobacco, the ability of being able to differentiate yourself is going to be the key. they have taken the lead and we expect them to spend more on technology in the next couple of years. about fasts talk clo.iling or any club -- uni outlook, is that likely to be a trend we see across retailers? tom

the bank of japan is almost certain to cut its inflation forecast for the next fiscal year due to the fall in oil prices. bloomberg has learned that the new policy will change this. calls fort forecast prices to rise 74% with oil down roughly 74% since the last outlook report in october. global news, 24 hours per day on air and on tictoc on twitter, powered by over 120 countries. i'm courtney donohoe and this is bloomberg. guy? guy: think you are. european equity markets through the equity process have settled and these are the final prices that we have here in europe today. pointing out earlier on the banks definitely are at the forefront of these markets. a little bit more during the auction process, positive territory. trading desk, the going through the middle and back office paperwork, you can join jonathan ferro and myself the top of the hour for the cable show. in a nice, warm studio in new york, i will be here in westminster in the weather in the london area. this is bloomberg. ♪ ♪ london, i'm guy johnson. i'mie: and in new york, vonnie quinn. this is "the european close on bl

to some extent got into their quantitative easing and unusual policy after the fed, after the bank of japan. there is a neat -- a need to work on this globally. the fact that the fed has begun to move and they are working at and talking about it, that is productive and it makes it easier for mario draghi to make their decisions. it will happen. again, after so many years of unusual policy, it is hard to get over it. but i think it will be good when they do. the world economy will work better. it is always harder to get to the point, but a good goal to have at this point in time. >> professor, we still do not know where the u.k. and brexit are going. of impact do you see thus far, from the uncertainty that brexit has caused question mark what impact would you expect if there were to be a no deal brexit? >> i think uncertainty is a problem, uncertainty about policy all over the place. the brexit is one. once that was made -- that decision was made, it should be an effort to make that work at this point. but the uncertainty is a drag. it is hard to quantify. people have tried to but it is cert

bank of japan holds steady the ten-year around 277. back rally on the back of some strong corporate results as we said, united technologies, p&g, ibm, comcast, sharply higher open. >> and shutdown, day 33. and the sign of some progress in washington senate set to vote on competing plans to reopen the government it is the chamber's first such vote since before christmas. >> and the streaming wars go mainstream viacom buying the ad supported streamer pluto tv. $340 million we're going to talk to ceo bob bakhash later on this hour stocks set for a strong open after the sell-off which snapped a four-day win streak. dow components, ibm, p&g and utx posting better than expected quarterly results. comcast meeting the street with a 10% div hike 1.2 million xfinity mobile subs, big strength in broadband over there. >> broadband ads are where people watch they continue to watch video sub declines, which were not substantial. and that's always encouraging. we know where the trend is going it actually not as much as it had been broadband ads very s

we get to the end of 2019 which of the major central banks do you think will end up being the most dovish? >> i think that it's -- tie goes to the ecb and bank of japan i think they're both going to be competing for that title, wilf i don't see any way around it, actually if they didn't have the nerve, either central bank, totry to do more when times are better, it would be shocking to me that they're going to put their neck on the block at a time when obviously we see a lot of cross currents and the inflation is fierce especially in japan because it imports all its energy and energy prices have been volatile. at the end of the day, their economies aren't as strong as they were, whether it's in europe or in japan it's true in the states but the state is still the cleanest shirt in the hamper, so to speak, to revive an adage from the credit crisis. it's an ongoing issue of the united states creating a bit of a pressure scenario. we normalized as much as the markets would take, which is much more than all the other large developed economies but it's going to give us a cushion. it will continue, in my opinion, to give us a capital benefit with regard to

the people's bank of china offering the money by purchase agreements. the bank of japanertain to cut its inflation forecast for the next fiscal year due to the sharp fall in oil prices. bloomberg has learned there is no indication monetary policy will change. the current forecast calls for prices to rise. oil down roughly 20% since the last outlook report in october. global news, 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. tom: thank you so much. a real risk on feel to the markets. euro, 114.10. euro churning as well. vix well in under 20 over the last two or three days. extremelyt is an impressive number. i will let francine talk about the euro. my number one thing i am looking at is the negative two-year yield in germany. that is going against everything else. i feel like we have been talking about repricing of the german bund for quite some time. left right andy, center we are seeing fluctuate a little bit before the no-confidence vote in the prime minister's governm

what about the bank of japan? the probability of any normalization, or is there more qe to come from them? valentin: they are in a similar position to the ecb, they hit rock bottom in their easing cycle and failed. year havehe last shown the asset classes the ecb is struggling with is an issue for the boj. we do not have a well-defined timeline as to when things could happen in normalizing policy. either way, the markets will continue to expect the boj will either do nothing or have to gradually start unwinding its vast monetary stimulus, which in relative terms, will translate to convergence between the fed and boj. nejra: thank you so much. valentin marinov, head of g10 fx research at credit agricole for joining us for the hour. we talked about a lot of issues around the hour. today, we asking what key market issue is brexit drowning out? poor brexit coverage next. this is bloomberg. ♪ manus: good morning from dubai, this is "bloomberg daybreak: europe. nejra: live from westminster in london, i'm nejra cehic. the

. >> reporter: thank you, carl bng bank of japan is behind us and we have mario draghi and the ecb toal bank meetings ought to be really important to the fx markets having said that, let's look at a three-day chart of the dollar yen, what you really want to notice is the way the dollar started firm up, especially yesterday against the yen and the way it reads to crescendo after the announcement came out that kor row doe didn't really change much, in a way he did, still keeping lots of stimlouse -- stimulus in place, sounding very cautious, and cutting inflation targets. it is something the market prepared for, so the dollar moved down let's look at the three-day euro versus the dollar. when the dollar went down against the yen, it accurately predicted what would happen. this is not an abnormal move as the dollar moved down, the euro kicked in on that the proactive hot gun here was the dollar/yen relationship that spilled into the euro, but the euro's time will come. the point of this is is that fx markets, particularly the dollar, if they get above last year's closing high around 9750

that the ecb, as with the bank of japan, they all contribute to the longer view on rates. from the outside possibility of a technical hike, it is not going to be a normal tightening cycle. the market is correct in pricing out the chance of the ecb hiking rates. nejra: does the ecb have a more difficult job than the fed in communicating to markets? , because steven: yes they are beholden to a range of different states that all have different agendas. germany would've worn ted higher rates in the last -- germany would have warranted higher rates. it seems to me that it is a complicated job because how do you set one single interest rate for all of these diverse countries? what is going on in italy does not need a rate hike right now. much of europe is struggling. brexit throws another challenge to the ecb because europe is a major trading partner with the u.k. rates are not going up. markets have adjusted to realize that. major, global head of fixed research at hsbc. goingto have you with us around the world in global markets and even answering a viewer question. is set tonti

what does it mean for the bank of japan and abenomics and a sales tax hike later this year? re in the middle of this swing for the boj. risk off can affect the bonds. annabelle in the meantime has your business flash from our hong kong studio. good day. manus.le: thanks, california utility pg&e bonds have been cut to junk status by s&p, the rating downgrade from triple b minus to b comes after shares plunged on news it is exploring bankruptcy filings. pg&e faces an onslaught of wildfire liabilities, estimated to be as high as $30 billion, far exceeding the company's $10 billion market value. slowing memory chip demand and the u.s. china trade war left samsung profits below expectations. preliminary operating income fell to $9.65 billion, below the forecast of $12.3 billion, about a third below the figure of a year ago. trade tensions hit demands for chips in samsung's biggest export markets with shares down a quarter last year. and the activist investor targeting barclays says he lost faith in the bank and will seek shareholder approval for board changes after being denied a

we are declining, but they're in purple you have got the bank of japan.iously massive balance sheet. in blue you have the european central bank. it was the biggest in 2018. not china has once again overtaken the ecb. these other global -- now china has once again overtaken the ecb. these global balance sheets are expanding. does this quantitative tightening work almost like an administrative job? dennis: i will depend on my experience having been in the fomc meetings for 10 years. global conditions, including global balance sheet conditions and such, are a consideration, are monitored, but very rarely are they really a critical factor in a decision. the fomc, by law and by nature, is focused on the domestic economy. so what is the right thing to do with its own balance sheet at this stage? and whether or not, for example, is very muchrunoff a domestic kind of decision with this as background knowledge. matt: anna? anna: i just wanted to ask you about concerns around recession and united states -- in the united states. i saw one piece of research from a du

the bank of japan leaving rates rates unchanged overnight while cutting its inflation outlook. you can see here the shanghai composite pretty much flat the hang seng in hong kong, yes, pretty much flat, and the nikkei in japan just down .1% we're going to stick with asia china remaining front and center for investors following some conflicting reports over trade national economic director larry kudlow came on "the closing bell" and shot down those reports. >> with respect to the story is not true right at the top, wilford. the story is not true. there was never any meeting. we are moving towards negotiations these will be, as i have said before, the broadest and deepest scope of negotiations with china in history >> larry kudlow also reiterated the high level talks with china on the trade front will take place in washington d.c. later on at the end of this month. >>> well, let's bring in boris schlasberg boris, there was no doubt the markets took about 100 points off the dow on those financial times headlines about trade meetings being canceled. they, then, moved to session low

japan has been historically known as a low efficiency market. the has changed. have lots of cash flow. they have met negative debt. the underlying fundamentals are increasing dividend payout. the bank of japan is always buying stocks. agree, the stronger yen would be a headwind. that is probably important to look at. on a day like today when we have a breakthrough on trade talks, japanese markets -- cyclical growth. nejra: i want to ask you one oil because the lower oil price, although we have seen a rebound, has played into that lower inflation in japan. how are you positioning on energy companies? >> energy is one of the most interesting sectors right now. last year we had oil price collapsing. that not only really hurt oil companies. it hurt overall capex for industrial companies. it is very interesting what they are going to say about capex inflation in terms of longer-term prices. that could be one of a few sectors we are really looking at. valuation is very attractive is commodity prices stabilize, if we see chinese demand coming through. course, playing into these risks is the political risk, the continuing shutdown in the u.s., brexit. we will talk about brexit in a second.

wednesday, the bank of japan rate decision followed by comments from kuroda. peaks shortly after the return of the european central bank. with earnings season in full swing, reporting by friday. manus: let's get into brexit. theresa may will return to parliament today to set out her plan b. to be looking for changes to the irish tax that as she attempts to win over 118 conservative lawmakers who voted against her last year. the international trade secretary's compromise -- trade secretary says compromises vital. they either voted for the prime minister's deal or they did not because of the issue of the backstop. that seems to me to be the area we are around. if we are able to get agreement and future relationship with ireland, the interesting thing is ireland and the united kingdom have said we do not want to see a hard worker. the irish prime minister said in the event of no deal, he would not want to see a hard border. that should be the area we look to find compromise. viraj, how would you describe what is happening in sterling? is it resilience? confusion?

said before i don't know how you feel about this, but i am extremely skeptical that the ecb and bank of japanful attempts to tighten. and mainly because i just don't think they have the flexibility to do that i know they would like to do that but given what's happening in the economic data particularly in europe, i think there's a limit to how much the fed can really go off the reservation as far as the world's other central banks without causing a lot of financial market instability >> i broadly agree with that i don't think there's any hint of meaningful tightening of policy in japan. maybe a slower pace of purchases. but they're going to continue to be stimulative and i think the europeans are going to need to see a stabilization in their economic data before they do any more than they've done. yesterday's industrial production data out of germany were very, very concerning and raise the possibility of technical kind of industrial recession possibly happening in germany. >> just answer a quick question. you're a big believer in the tax cuts i followed your research at your group which has

of the year's best interviews. while the federal reserve and the european central bank began to at least signal moves towards policy normalization in 2018, the bank of japanon that it's preparing to wind down its stimulus program. at the imf and world bank meeting in october, kathleen asked of the governor what investors could expect from the bank going forward. >> at the last policy meeting, at the end of july, we decided basically two things. one, we will continue the current extremely accommodating monetary policy for the time being. because, yes, the economy improved greatly. the economy is growing 1.5%. unemployment rate is 2.4%. the corporate sector is enjoying profits. but inflation rate is still less than 1%. far away from the 2% tariff. so that we have to continue the current conditions for some time, longer than we anticipated. that is one point. continuation of monetary easing. the second point is things we have to continue much longer than we originally anticipated. we have to avoid side effects, some negative impacts on the financial sector. particularly in the market. since we introduced the controls, saying that 10-year rates be targeted ar

economy eventually slows rather than getting stuck at 2.25 or 2.5 because that reminds me of the bank of japan at zero which they have never been ail to get themselves out of. >> and that's a good place to leave the conversation because those who are criticizing jay powell ought to contemplate that very notion. peter, thank you contessa, happy new year, and back to you. >> happy new year to you, rick, thank you. >>> let's send it over to jon fortt with a look at what's coming up on "squawk alley." >> happy new year. a couple of insights here. the market did take a beating at the end of 2018, but don't call it a bear market, and also if history is any guide, the major indices are almost guaranteed to end the year higher. who says that? ngermaetellan, number one lo-tm rk timer he's coming up on "squawk alley. >>> welcome back to "squawk on the street." i'm dominic chu. stocks well off their lows mostly in negative territory but energy is the outperformer today. gains are being led by pioneer, also apache and cabot oil and gas. big trade to watch here, guys. i'll send it back downtown to you. >>

bank of japan will not move. a decent backdrop on financial conditions.e for asian equity makers -- investors because asia is significantly influenced by movement and u.s. treasury yields. in our case, they are stabilizing. shery: great to have you with us. global investors managing director and portfolio manager joining us from hong kong. plenty more to come on daybreak asia. this is bloomberg. ♪ shery: let's get a quick check on the business headlines. chief and its the officer is leaving but not due to internal ingredients. the departure has not been released for tim stone. he will continue in the role to search for a successor. snap expects the report earnings "slightly favorable to the top end of previous guidance." haidi: netflix gained after raising prices in the u.s. for the first time since 2017. the stock was listed by anticipation of increasing revenue. the shares had already been up on a tear, up more than 40% since christmas eve after drifting lower from june record. much more to come. ♪ >> used by the 19 european union states and was produce

but the control that the bank of japan exerts over the yield curve, at some point this will be challenged will be more tantrums most likely. if you look at a dollar index for one week, we've gone from a 97.5 high from last year now we're testing 95 it all happened quite quickly when we had our first close under 96, a very important key technical level. if you flip it because over 50% of the dollar index is the eu e, it's broken out to the upside for the first time since about october. >>> the bond report. as we head to break, let's take a look at this morning's top performing stocks on the s&p 500. >>> stocks are down for the first time in about five sessions coming off of a pretty strong win streak. macy's not helping the mood of the markets after putting out lower fiscal 2019 guidance, lower than expected november and december holiday comp store sales, the stock is down more than 8.5%. david on track for its worst day ever we're talking about going back to when it came out of bankruptcy in 1992. >> wow the old chart slide. >> the holiday season they say began strong, particularly during

up, the federal reserve bank of japan president.berg. ♪ viviana: this is "bloomberg surveillance." facebook has taken down two fitness campaigns linked to russia. spreadingmed at discord between the baltics in eastern and central europe. retailer seeking bankruptcy protection. gymboree filing for chapter 11. it plans to use fund to wind down all of its storess. it has nearly 900 locations. j.p. morgan chase expects to see big growth in china's so-called panda bond market. regulators making it easier for foreigners to sell new debt in the country. we spoke to jpmorgan's china ceo. >> we are very optimistic. given allngs equal, the interest from everyone pulling their effort to make the market more transparent and efficient, i think it is not surprising. viviana: that is the bloomberg business flash. tom: thank you so much. sebastian with us. i first want to get to him with deutsche bank. simon french with us. thank you for being with us in our year-end show. what has changed since your brilliance of december 31? i think the big chang

doing it, bank of japan doing it, when you start to pull that back and then issue debt like the u.s.asury's doing, the system is draining liquidity. and people underestimate that means more volatility. so if people think we're going back to 2017, 2016, not going to happen. but are you going to see the extremes like you saw around christmas time? i think that -- >> we're going to have to leave it there. rick with us. ♪ place, the xfinity xfi gateway. and it's strengthened by xfi pods, which plug in to extend the wifi even farther, past anything that stands in its way. ...well almost anything. leave no room behind with xfi pods. simple. easy. awesome. click or visit a retail store today. >> you're watching "daybreak asia." first word news now. the house of commons returns later with just 12 weeks to go until the split from europe. prime minister teresa may has created a special committee to prepare for a so-called no-deal brexit. and a date for a parliamentary dothe vote on her deal will be set wednesday, with a final debate next week. may has repeated she expects further assurances fr

steve, because, of course, the dollar is stronger and as you look at both the comments of the bank of japanhis week, ecb today, hard to see dollar weakness in the immediate future. >> fair enough. >> we have to see. as you said, the s&p flat with 53 minutes left of trade steve, thank you. >> pleasure. >>> well, joining the "closing bell" exchange to talk about today's market, we have ryan dietrich and rick santelli at the cme in chicago good afternoon to you both ryan, a same question to you we were discussing with steve given the comments from secretary ross earlier today, are you surprised to see the market not reacting more to that >> well, right here not really honestly, the looking at the market it had resolve the last we'll call it four weeks or so and taken the negatives in strive and we are seeing that today. talk about what do we know mention today. claims at 199,000. 50-year lows go back in history before recession and you tnd to see a spike of about 75,000 in initial claims right there to us tells us we're a long way from a recession. is there a recession in 2019 we don't think s

banks. back of japan's short term rates have been in negative territory since 2016. >>> vice president mikece defending his wife's new job teaching at a christian school that bans gays and lesbian students and parents. karen pence announced earlier this week that she was returning part-time to emanuel christian school in virginia. she previously taught there for 12 years. the vice president responding to the criticism in an interview with the catholic news network ewtn. >> we're used to the criticism, but i have to tell you, to see major news organizations attacking christian education is deeply offensive to us. this criticism of christian education in america should stop. >> the human rights campaign, nation's largest gay rights advocacy group, accused of pences of showing that public service extends only to some. >> we've been doing this the couple days and i've been getting questions about how you can discriminate against a child for their parent's sexuality. >> nothing christian about those values. speaks for itself. >>> a nuclear envoy from north korea wakes up from n. washington this

jonathan: think about the last 10 years, whether it is the federal reserve, the ecb, the bank of japan. what i see is policy exhausted. the federal reserve can back away but how much can they do besides just backing away? tom: the interview today, the akk is going to take over for merkel. francine: -- tom: she internation have the potential for a 2.5% topline gdp. the elite in davos cannot work with that. jonathan: did you hear the prime minister early on? this is not a region that wants to -- anytime soon. [indiscernible] jonathan: this is not a region that wants to do fiscal stimulus anytime soon. draghi has to analogy was wrong in q3. he says the weakness -- he said though weakness in -- he said the weakness in q3 would be tempered. francine: he was the anti-austerity guy. jonathan: he wants governments to do structural reforms, etc.. we have been told again and again that these central banks are data dependent. what is happening in europe right now? how does manchester united lose? jonathan: really? francine: at least let's talk ice hockey. this is bloomberg surveillance. james gor

at the same time, the bank of japan continues and the pboc will continue to add liquidity to try to boostlse in china by reducing the rrr ratio. it seems in the eurozone, the ecb will not do very much. they will stop buying bonds, but not be shrinking the balance sheet. they are merely stabilizing the balance sheet for the moment. guy: is all of that going to stabilize the global economy? the fear at the moment is we are in a global slowdown phase. even the is peaking, u.s. is feeling the gravitational effects and as a result, that will be the story we have to manage through this year. our central banks going to slow that process, halt that process in 2019? what can investors expect from global growth? thend: i think that's why u.s.-chinese trade talks are so important because they can tip the balance either way. central banks can do their part and say, we are not going to really clamped down tightly and it seems the ecb will go slowly, the fed will likely go slowly is be data dependent, pboc easing, but at the end of the day, if the trade talks go south notthe u.s. says this is working f

bank of japan cut the growth forecast and inflation forecast.k. stuart: driest towel on the rack. ashley: least used shirt. stuart: only game in town. can we say that? >> i like that. stuart: sir, mr. chandler, thanks for joining us, i will see how this all works out. >>> now this, not good news for the housing market, existing home sales, the number down to a three-year low. come in matt is hb ia, ceo and president of united wholesale mortgage. matt is the mortgage guy. let's be clear. tell me why the housing market is weak at the moment? >> i think it is just affordability. you know the market, the rates are going up, we've seen that, and we think that will continue to happen through the year and housing values were really high all last year. we're seeing softening. i think the market is slowing down. maybe a good time to buy, almost turning into a buyers market where the last year plus was a sellers market in my opinion. stuart: is there another problem here, student debt? that is huge overhang for first-time buyers, millenials, that is a pro

bank of japan holds steady the ten-year around 277.

of the historic partial shutdown and now lining up at three banks. hello there we've got a fair amount of wet weather that's crossing japan at the moment if we look at the satellite picture we can see this area of cloud hayward is bringing some rain and in the northern parts we're seeing a fair amount of snow from that as well the whole system is moving through pretty quickly though so by around lunchtime on wednesday it'll be hit away to the east of us but behind it is not going to be completely dry there will still be a few outbreaks of rain and snow particularly in the northern parts of honshu towards the west and for many of us here it is milder than it has been but the winds are coming in from the west so forcing beijing that's not a clean direction expect the pollution to be getting worse as we head through the next couple of days down towards the south and here's that huge area of cloud and rain that we've got with us as it hits the cold air in the north we'll see a lot of that tend to snow and the whole system is sweeping its way southeast would say most of us here are going to see some of that white weather as we head through the next few d