we are happy to discuss your ecb views. join us on line. >> coming up, a potential high stakes meeting is on the cards as washington mulls new tariffs chinese goods details after the break. (client's voice) remember that degree you got in taxation? (danny) of course you don't because you didn't! your job isn't doing hard work... ...it's making them do hard work... ...and getting paid for it. (vo) snap and sort your expenses to save over $4,600 at tax time. quickbooks. backing you. doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life. here, it all starts withello! hi!... how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. >>> wel

do notg about the ecb, miss our coverage of the last ecb rate decision of the year, the first one forn on twitter about her messaging. london, 7:45 a.m. london, and the press conference ,tarts 45 minutes after that 8:30 a.m. in new york, 1:30 london. bonds edging upward after the policy decision. this is bloomberg. ♪ ♪ bloomberg "surveillance," good morning. special coverage tonight, 10:00 p.m. of the united kingdom election. lots of talk on twitter. the worlds of tv and radio are different. no talk on tb -- tv, every network. we are truncated on that today. here is viviana hurtado. viviana: north korea may return to launching long raise ballistic missiles -- long-range ballistic missiles. the ambassador said kim jong-un's regime is poised for major provocation and has threatened to take what they call a new path in nuclear talks unless donald trump makes a more favorable offer. oilenergy agency warning market still faces surplus, even if opec delivers cuts. inventories will grow by 7000 barrels a day. israel will hold its third election in less than a year. netanyahu norin benny gant

alix: looking at the ecb rates decision, it was totally unchanged, but the surprise is the ecb says low extended time. with us is tony despirito, fund minotnvestment active equity director. you're going to to get the growth beta next year in europe. that might be a better trade. tony: i still like the u.s. market quite a bit. yes, valuations are higher, but you have to look sector by sector and quality adjust. the u.s. market just has a higher growth rate, and i think it is a higher-quality market. given where rates are, we are still very much pro-u.s. finding pockets of opportunity, certainly, and europe, but still pro-u.s. julia: where do you think the valuations are still? is there still room to run? we are so highly valued in the aggregate. tony: at first blush, the p/e ratio is over 18 on the s&p 500, but you have to consider the rate environment. we just heard from the ecb lower for longer, and that is a worldwide theme. in the context of a 10 year treasury at 1.8%, actually it is kind of low. it is a 5.5% earnings yield. while i wouldn't bank on getting upside valuation from here

that would be much more of a trigger than the ecb just calling for it.ok you talk about the fact that the ecb has reached its limits, but you don't necessarily expect the fiscal move from 2020 to come from germany. so where does that leave the european growth story? sonja: there's lots to think about here. again, the question to me is not so much whether there is a further 10 basis point cut to me the question is how effective would this be, and what i think we will watch very carefully is how effectively she communicates with politicians. the market is one side of the equation. we know it will be a big step to follow but there is high expectation that she might be better linked to the politicians and as such can stimulate the debate to a slightly different extent than we have seen before. what i thought was interesting is that she put climate change is part of the ecb's focus area. i'm wondering whether the fiscal stimulus and climate change, if you'll in the spending to a topic that is core to the european union, we might see something very interesting

nb, at the ecb, and the s swiss national bank, is meeting.o they take their cues from christine lagarde and co.? snb is expected to keep policy rates on hold, but that is likely where similarities and. they will likely take the opportunity to reiterate the need for negative policy rates because they are struggling in an environment of deflation and trying to keep contained a quite high value currency. now, going forward today we would expect to see possibly some upside to the currency, if we do see a hold. a bit of a pricing for a cut is there, but really going forward what we would expect to see is a decoupling occurring between the ecb and snb. when we look at the currency, since september, after strengthening most of the year, the swiss franc has lost some of its value, so this does provide some breathing room for the snb to keep rates on hold or even possibly cut next year, but ultimately we do expect them to continue to keep negative rates, the lowest across the world. angela merkel is meeting the new members of the social democrats afte

i want to take it back to the tone of this incoming ecb.d new members as well join the gc it's not just the president that's been changed. the expectation out there because she will look for more consensus and the germans, the dutch, the austrians, people very vocal around this, she will have to shift towards a less dovish stance than mario draghi did in the past. christine lagarde will want to get the consensus and when such a big part of the committee are still quite hawkish it means overall their stance has to be more hawkish than what it has in the past. >> what you said is reasonable but remains to be seen the path for monetary policy has been set by mario draghi keep in mind that the governing council -- so it would be surprising to see major changes. it's absolutely true there's been a change in leadership. there's been a change in the committee of the ecb, so things will change over time. of course will change. i think in the near term things are unlikely to change dramatically you are absolutely right that there will be a different

the next big bank focus will be ecb.tine lagarde heading up her first meeting as president on thursday, grappling with an economy that needs more stimulus. kathleen, how telling will this meeting be on lagarde's thinking and also plans for the ecb? kathleen: i think a lot of people are thinking she will not come out of the gate for force because she is too sappy for that. remember, when she testified, spoke the european parliament when she was getting ready to be approved as the new head of the european central bank, she stressed her role as the head of the imf, a former finance minister of france. she is not an economist. there has been off the record some grumbling that they have a politician headed by an organization that should be added up by an economist. at the same time, she is a savvy politician. everyone is hoping that she is the head of the ecb who can now talk to other european leaders, chancellors, presidents, who can help them boost inflation because mario draghi's bazooka did not help get the ecb that far.

the ecb or even the boj.the leap is once we have one central-bank making matt, you see the ecb following and that is the broader picture it i don't buy it, to be honest. i think this is a very special case in sweden. i don't think it has any direct implications for what the ecb will do and certainly not what the boj is going to do. nejra: great to have you with us for this hour. peter schaffrik. that is it for "bloomberg daybreak: europe." the european open is up next. we start monday fairly muted in terms of the equity trading front. this is bloomberg. ♪ g. ♪ [ dramatic music ] this holiday... ahhhhh!!! -ahhhhh!!! a distant friend returns... elliott. you came back! and while lots of things have changed... wooooah! -woah! it's called the internet. some things haven't. get ready for a reunion 3 million light years in the making. woohoo! -yeah! >> good morning welcome to the european open. i am anna edwards aside matt miller in berlin. a health check. pmi data do across the nation. futures solidly higher. ♪

jub: that is the ecb's line of attack, if you like.aid, we put ultralow rates for an in place.eriod it is up to the policymakers to do something more aggressive on the fiscal side. can you get the political unity to actually deliver that in europe? in other places, fiscal easing out of japan during the week. we are seeing ongoing fiscal easing in china. there is modest fiscal impulse coming in various parts of the world. a function of that is the fact that you have wealth inequality at multi-year highs. interest rates at multi-year lows. it looks like the next natural policy option should be on the fiscal side. matt: i never know if i should use btp, bund spreads, or look at spain or portugal. we saw them blowout. i have a chart going back to the 15th. 2018, they blew out and came back. has the ecb been successful in handling the so far? jub: i think so. heart of that widening and subsequent compression was related to the idiosyncratic political development in italy. when we had that big blowout a possible new coalition that would work

let's turn to the ecb.hristine lagarde says the central bank will be resolute in priceing eurozone stability in her tenure. she said it will be wide-ranging including climate change and inflation. accommodative policy stance has been a key driver of domestic demand during the recovery, and that stance remains in place. in the ecb's forward guidance, monetary policy will continue to support the economy and respond to future risks in line with our price stability mandate, and we will obviously continuously monitor the side effects of our policies. manus: christine lagarde was speaking at the european parliament's economics committee in brussels. elias haddad, senior strategy at cba europe is still with us. had a debate at what christine lagarde will attempt to do and i am seeing more notes about rate cuts from the ecb next year, which almost is in contrast to the intimation we have had into the run-up of her accession to the top. what do you make of the debate? elias: to see the ecb turn more inressively loos

i'm sure the cb. -- the ecb.nd can increase the -- for instance. >> would the ecb go into deeper negative territory? it's effectively tiers for the banks. >> they could. ther eie is some room left. in theory, i'm sure they would prefer not to do that for many reasons. the efficacy of further negative interest rate is question about. certainly -- is questionable. the side effects we know are significant. and i suspect it will not be required in the baseline scenario. i think the preference for the ecb would be not to have to do that. we'll see what the macro environment provides. the outlook is not terrible. the market is probably too pessimistic, critically on price pressures even on inflation, including in europe at the moment. come, as we to revisit the top interviews from bloomberg's coverage of europe, the middle east and africa and 2019. saudi arabia's oil minister spoke about the kingdom's surprising decision to make deeper cuts in oil production. >> i wouldn't take any corrective measures without consultin

we look for the ecb to remain on hold in 2020. we also look for the fed to be on hold after three cuts we saw last year. withheme last year, central banks to adjust the economy, but those trade tensions will be dialed down a little bit. that has to be one of the dominant themes for 2020. what were they in 2019 that you expect to carry through? david: really, it will be a focus on how this conflict between the u.s. and china carries out. the trade war spilling over to europe. donald trump had threatened european automakers, which never materialized. all of this had an effect on uncertainty. for the trump administration to be focused on november and not want to have a negative impact on the economy through additional tensions with china and other trading partners. is it going to act as a model for others, in your expectation? david: probably not. the change is not an improvement in economic indicators. banks have been very vocal in their opposition. when we look elsewhere, we do not expect that to happen. the ecb has expressed some

francine: would the ecb go into deeper negative territory?t's effectively tiers for the banks. >> they could. there is some room left. in theory, i'm sure they would prefer not to do that for many reasons. the efficacy of further negative interest rates is questionable. the side effects we know are significant. and i suspect it will not be required in the baseline scenario. i think the preference for the ecb would be not to have to do that. we'll see what the macro environment provides. the outlook is not terrible. the market is probably too pessimistic, particularly on price pressures even on inflation, including in europe at the moment. nejra: much more to come, as we revisit the top interviews from bloomberg's coverage of europe, the middle east and africa and in 2019. saudi arabia's oil minister spoke frankly about the kingdom's surprising decision to make deeper cuts in oil production. >> i wouldn't take any corrective measures without consulting with everybody. nejra: and straight ahead, iran's foreign minister lashed back against press

alberto:alberto: actually, the ecb is starting with a new presidency, and the next ecb press conferencen december 12 is the first conference by president lagarde. she's been hailed by market precipitants as someone who would better connect the monetary policy from the ecb with governments. if you actually look between the lines of her first speeches, it is interesting that the ambitions are very widespread. the ecb is looking at helping with climate change, for example. at the same time, the side effects of negative rates are governingore -- council members are becoming more skeptical about the side effects of negative rates. one of the ways the ecb could change this next year at the strategic review of its market policy could be to do more qe type of expansion and correct some of the side effects from negative rates by helping banks with more tltro's or more iering,ive t essentially swapping negative rates for more qe. negative rates in europe have the side effect of making people save more and banks lend less. this is becoming more and more apparent. mayhile madame lagarde see more fa

lagarde at the ecb signaled she would be launching a review. ecb has some problems on their plate in terms of not having ammunition, either interest rate ammunition or balance sheet ammunition. scarlet: that is something they don't talk about regularly during the news conference. they address the more concrete issues of, are you changing your forecast. the fan will be -- the fed will be releasing projections on thursday. paul: obviously, the fed, the focus will be on economic projections that come out every quarter. the question, what is the fomc itself signaling? i think most people think that probably next year, the median forecast of the fomc will be for rates to remain where they are, particularly in the election year. after that, looking for some gradual increases. romaine: a year ago, we were talking about the fed raising rates. we got three rate cuts despite the fact that we were never really headed for a recession. if we had not gotten those three rate cuts, do you think we would now be talking today about a recession as almost a certai

anna: christine lagarde at the ecb.akobsen, cio / chief economist, saxo bank is still with us. christine lagarde said she will be resolute to keep the inflation mandate. does the ecb have the tools? they know at all, and that. this is code for saying the fiscal handle preferably with the banking union, i would not be surprised in 2020 if we saw christine lagarde do it draghi said to save the euro. she may need to say i want to save the european banking system. the only way to get inflation back is to use the banking system to lend money. inflation comes from the demand of money suppressed by negative interest rate policy. the only way you get more inflation is to help the banking system, then it becomes the multiplier where you get demand of money. anna: what can the central bank due to help the banking sector? the tieredied interest rate policy, and some suggest that did not work. the banking union is held up by politics. steen: the banking union will be a first step in that respect. -- you needcreate negative capital,

very opaque and the ecb is unique in that all of them publish the votes and i think the ecb should fall into line with this best practice >> outside the realm of the policy is a green policy and becoming a hotter and hotter topic when it comes to the european central bank. do you think there is any conflict of interest focusing on that primary mandate of price stability? >> no. i don't think there is a conflict the mandate is clear primary mandate is price stability. that's in the treaty secondary is to support the policies as long as it doesn't interfere. the european commission flagship initiative is the green new deal the president just announced last week. this is totally consistent with the mandate. the question is how much the ecb can really do. in some quarters, there is a saturated expectation of the major influence. cannot it can't help. theregulation like pricing of different type of energy this is all a measure of government this is not the responsibility of the ecb they can help, they should help and probably would help. it can only be a marginal player in all of this >> chi

the ecb has been pushing people away from europe.oming into 2019, every thought -- everybody thought the euros loan -- euro zone wouldn't do well and outperform the s&p. in 2020, if we see fiscal stimulus or the commission talking about increasing fiscal stimulus, there is no reason the european stocks won't do well. that can do well with dollar weakness but also the broad underinvestment theme. it trades at cheap value nations -- valuations. guy: at 118? peter: the case to move towards 125 to 130 was justified in valuation basis, but you will probably get 118 or 120. vonnie: will that happen in a grind or happen all at once? peter: we would like to think it happens in the grind, what we know about currency markets is they very rarely move in straight lines. it is more likely we will see a grind in the early part of the year, but once we see potentially another rate cut which isn't priced in, then we will see the euro appreciate from those levels. announcements regarding fiscal stimulus from the euro zone or germany, that will defini

the whole leadership of the ecb. what i don't think you'll see is a huge amount of change in interest rates throughout the year >> that's what mandy was saying. we went into 2019 talking about central bank normalization the feds cut interest rates. ecb went back to their old tricks even the bank of england are turning more dovish. are central banks stuck here >> what we've been hearing is that from the ecb, there needs to be fiscal stimulus that compliments this policy where the governments have the space to do so that will potentially free up the central banks. i think those two things go hand in hand. there are still ways to go that central banks can deploy i don't think they are in a position where they are weary of normalization without the review >> in 2020 and beyond, how much will we be talking about central banks. >> certainly china is leading the charge but what about other central banks? >> port of tart of the review ik at that. just left the ecb to move to the bis to head up the innovation unit he's also v

we get a benefit from the ecb hearing, no doubt.conservative way we have offset,d the segment to so it is a flower of mitigating measures. it shows us there is potential to offset. francine: that was the deutsche bank chief executive. coming up on "bloomberg surveillance," emmanuel macron is bracing for a clash with labor unions. the likelihood of french reforms. this is bloomberg. ♪ francine: this is "bloomberg surveillance." emmanuel macron is bracing for around two of pension protests. 800,000 people took to the streets on thursday in labor unions are planning further disruptions across the country. reform will be presented in full tomorrow. we are back with philipp hildebrand, vice chairman, blackrock. you look at these pictures, it seems this is cultural. images,ok at these would you invest in france? philipp: these images are hurtful, no question. what it also shows is that europe needs reform. france had years of no reforms. it is a natural consequence of such a long time of falling behind, that when you start to do this, it

we do get benefit from the ecb. there is no doubt.have also in a conservative way started to increase the one or the other segment in order to offset. in the flower of mitigating measures, it shows us there is potential to offset. matt: is there going to come a time when all german depositors are going to have to pay banks to hold their balances? >> i don't think negative interest rates will be passed on to the normal client segment. we have legal restrictions there. i cannot see that. i think it is far more important actually to do a better advisory. if there is one bank in germany who has all the expertise and the capacity to advise in terms of moving to really good investment, giving clients flexibility, it is deutsche bank. can you imagine interest rates staying negative? are you prepared for interest rates to stay negative the next five or 10 years? >> we have taken a conservative outlook on the interest rates. in this regard, we also changed their underlying planning. lower for have longer. we have prepared for that. we need to

the 10 year yield at 1.88% following the ecb this morning.hat is a pretty good incline in .ields we were at 1.85% just a couple of days ago. definitely selling in bonds with more positive outlook for the economy. the dollar index repairing some of its declines. guy: stocks here in europe off their highs, but higher on that trumped week. bonds selling off, yields higher. the pound is trading lower. we are down by 0.6 percent. the polls close at 10 a click p.m. london time tonight, 5:00 p.m. new york time -- at 10:00 p.m. london time tonight, 5:00 p.m. new york time. president trump indicating that we have a very big deal on the way, getting very close to a "big deal with china. they want it and so do we." it is that last bit that is important. the s&p leading an all-time high a little earlier on. just off that high now, but we are moving up. dow jones are reporting that negotiators have offered to canceled tariffs on chinese goods that were set to take effect on sunday. brendan murray, who leads our coverage of global trade, joins me no one tr

plus, we have the ecb tomorrow, the u.k.n tomorrow, plus we are counting you down to the trade deadline. the market has got a lot to deal with over the next few days. today, as a result, pretty cautious trading. we are heading into the close. this is bloomberg. ♪ here, it all starts with a simple... hello! hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. vonnie: finishing up the day in european trading. for the most part it has been a be nine session. if you look at most of the major indices from paris to the dax in germany, seeing some gains, even if there are slight negatives for those economies, like in paris we are seeing the retirement age bumped from 52 to 64. that did not have an impact. .n spain, a gain of 1% that is due to a company making

ecb bring in terms of creative policy for next year?anus: let's see what creative policy madame lagarde can deliver. charles-henry stays with us. let's get you around up of the business flash that we have. in hong kong. >> thanks. about stanley is cutting 1500 jobs around the world as part of a year-end efficiency drive. it is weighted toward tech and operations and will affect staff and stale's -- sales, trading, and research. goldman sachs is being asked to raise new financing to revive wework,. softbank is pledging $5 billion in funding. we are told that in order to make the deal more palatable to other lenders, softbank will be listed as the borrower and the company will be a co-borrower. and that is your bloomberg business flash. nejra: thank you so much. coming up, climbing back. japan's 10 year yield rises to zero, boosting the case that the easing program is sustainable. this is bloomberg. ♪ manus: it is "bloomberg daybreak: europe." i'm manus cranny. nejra: i'm nejra cehic. let's go to singapore. the chart that matters. juliett

knowarkets will be keen to what the ecb president makes of the economy.t sheto suggest acknowledges the negative impact of the accommodative monetary policy. to go ahead and provide stimulus going into 2020. >> you have the weaker euro as well hurt germany narrowly avoiding that recession -- the weaker euro as well. germany narrowly avoiding that recession. datae cheerier ration of -- the tier -- the deterioration of data. 1.2% this year and 1.3% next year. not that strong but signs of stabilization. the u.s. seems at a much stronger place than the eurozone. >> thank you so much. have a great christmas break as well. aramco soaringi on debut. we will bring you our coverage. ♪ >> india's markets have just open for the trading day. let's get to mumbai. what to expect from today's session. markets closed in the green. yes, following the asian markets today, after the fed policy. -- we have a positive start for indian markets. think traders will be watching for the 20 day fiscal moving average. you have the banking index, which has opened with gains. for the

does this put more pressure on the ecb to cut rates? seeing rafa bank say another 10 bips to go in march and june, and september. is that the take away from what you said? paul: the ecb was probably one of the more narrow inflation targeting central banks we have seen over the last -- that is what led to the woeful 2011 hiking into a massive recession because they had a narrow inflation focus. they don't have a jewel mandate like some others. in recent times, we have seen the ecb abandoning their inflation target. they have been forecasting over their forecast to rise in a huge miss on inflation and have not been doing it again out it. historically, that reaction would have been 1.9 or two. that hasn't really been happening. now, they haveor somewhat given up on that forecasting euro inflation and managing policy around it. for what that means going forward has much to do with the politics of the institution, the financial markets and the way they are behaving. interesting thing to take the other side of what manus was saying is a lot o

i'm going to say this is the most important meeting for the ecb this year.ference is where we get to see lagarde in her debut as leader. matt toecting that -- be up there asking questions. what is the efficacy of bounce rate expansion or cutting rates into negative territory? takes kind what it of person? anna: there you go. bob is giving you a nice rundown of all the questions you should ask. matt: i am happy to have him do a little bit of the work for me. i'm not sure she will be as forthright as we would all hope. the question about the efficacy of cuts, how do you think that plays out? everybody seems to think central banks are pretty much out of dry powder, unless you ask a central banker. how do you think this plays out as far as the ecb holding negative territory and being a big player in the bond market? anna: i think it will continue -- bob: i think it will continue. there are worrying bits of data out of germany. inflation is nowhere near the 2% target. if they still have a 2% target, they will need to cut rates further. they will have to push peop

they are easing, and the ecb is on hold right now with negative rates. i think the whole shift is really elsewhere, one is fiscal policy. in the u.s., i think that's going to be big in for structure spending, and the idea of working on a trade deal with china. the whole focus of economic and financial interest has shifted away from monetary policy toward fiscal policy and other things that will spur the economy outside of the monetary area. vonnie: i want to get to your longer term in a few moments because you have some excellent on what are the equivalent of who will loops -- of hula hoops, and the essence that they won't have an effect on the economy in the long term. is trade one of those? gary: yes, trade is. we are a largely domestic economy. the world you and i live in is global, but u.s. exports are 13% of gdp. you go to europe and it is 20% to 50% in the case of germany. we are largely a domestic economy, but trade is important because it can be volatile, and on the edge it can be important, particularly from an investment standpoint. companies t

we have decisions from the fed and ecb. there is a sense there are things that could happen this week that could perhaps lift risk appetite again. you look at the u.k. election and that tariff deadline. hurly-burly is done -- i'm quoting macbeth, for the oil market. look at this. five days in a row. you have just come off a fairly magnificent move. the china export data wobbles the market. 1990's.oing back to the more about that in a moment. have a look at that. versus eye on germany the united states of america. of course, global issues may hold the fed back. , long-term bond holdings, you can diversify with a little bit of gold. kills the market more than a bit of fear. not a lot of fear in the asian equity session. muted gains, but gains nonetheless. different from what we are seeing in s&p futures. we saw the s&p 500 gain following the blockbuster jobs report. concern around that chinese trade data weighing on the aussie. the worst-performing g10 currencies. the dollar index steady overall. boris johnson heads into the

she is in the ecb because she is a politician.s someone that can bring people together and generate consensus, and this is what they basically need. anna: one of the things she said in the press conference yesterday -- i am forgetting what th day of the week is. she is very aware of the side effects of negative rates. does that mean we see any change to the negative rates policy or just get a very long review process? ricardo: it is all data-dependent. the ecb monetary policy moving forward will depend on the recovery of the euro zone economies. so growth in the euro zone economies has been anemic. inflation is very far away from the 2% target, and i think that, for now, we will see a continuation of the monetary policy. evangelista,o thank you so much for joining us. we are counting down to the market open in china. let's get back to david and see where we are standing. david. david: yes, well, there you go. 36 minutes until the open of the cash markets in hong kong and the chinese mainland. that is literally when your two bigges

the ecb is at a good point for you talking about climate for example.he's got her work cut out for her. >> i want to bring back in charles and ask you, we heard a bit there from george about disunity, some division inside europe when it comes to fiscal plans, all sorts of things when we look at this from a global perspective, not just within europe, when you look at the division amongst international leaders, even on the g7 level, if there's a major economic problem, god forbid over the next 12 months or so how well do you think these various policymakers and leaders will be able to work together to try to confront it >> not very, to be honest with you. we have lowered our political risk rating for greece for 2020. so positive trajectory in greece's political outlook but you know, in the 2008 crisis we saw the federal reserve the european central bank, the bank of japan, the bank of china, just big central banks acting in concert to resolve that particular financial challenge given that multilateralism seems to be falling apart and that the united state

not only in the ecb but also the fed. there has been a of conversation centered around how should we approach inflation? how do we effectively addle inflation from the downside? effective in the upcoming year and even into 2021. is there a trade behind it? if anything, it suggests that we might see the reintroduction of term premium which would presumably stephen out the curve. to get there, we would need to see true inflation in the system which we have not seen for a long time. >> there seems to be a growing sense that policy will have to step in sooner rather than later. is that also true in the eurozone? >> in the eurozone we have seen a lot about pushing germany and pushing the economies to produce on the fiscal front. that's not new for central banks. we have heard that from the fed several times. a monetary policy from a lot of different perspectives is effectively pushing against constraint. if we think about the fed dropping rates as far as they have and mortgage rates being as low as they are but still the domes

the hurdle for any ecb movement is very high.on't know if german central bankers need to be traveling with guards, but it has become quite heated, hasn't it come in sweden. on thee your positions interest rates in germany now? rateegative interest experiment has a negative impact rather than a positive impact on the economy in germany. what is your assessment? simon: the german labor market is extremely tight. no doubt about it. savings behavior has been rather odd. what happens in germany is if you cut rates, people save more because they are targeting a return. it is no surprise that it is extremely important. it is not just across germany, it is across the government cap, where it is very divided. why the major task this year is going to be to heal that risk and focus on the strategic review. anna: is that just going to be keeping a low profile for a while? and if so, for how long? to be fors it going christine lagarde and the ecb? simon: they certainly have to keep rates on hold, policy on hold for as long as possible. there

the ecb will be largely sidelined during that period.r euro-dollar profile we have in our forecast. matt: you're going to stick with us as our guest cohost for the hour. valentin marinov of credit agricole. ending on a high. white house advisor peter navarro says a trade deal is in the bag. this as china's manufacturing sector continued to expand in december. we will discuss next. this is uber. ♪ -- bloomberg. ♪ ♪ >> this is "bbg surveillance." i am karina mitchell and let's get your bloomberg business flash. a group led by tencent is purchasing 10% of the world's largest music company. it values vivendi universal music at almost $34 billion and will allow tencent and its partners to increase the stake to up to 20% the next year. vivendi has been trying to cash in on the soaring value of the music business. tencent could help universal get better access to china. uber and postmates are suing california, alleging that labor rights laws set to go into effect are unconstitutional. they argue the move will threaten worker flexibility and unf

we will look at the markets and look at the ecb.♪ here, it all starts with a simple... hello! hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?! a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. tom: this morning, in search of the marginal voter. no one trust the polls. therey are over brexit. will be fiscal stimulus. this monday, markets are quiet after the u.s. jobs report. in washington, the president considers another week of an impeachment debate. good morning, this is "bloomberg surveillance." we are in london this week. thrilled you are with this. you wonder, francine, 10:00 p.m. thursday night, when jonathan ferro, guy johnson, and anna edwards, what they will be talking about. francine: it is either landslide or clear majority. you will see something very clear in the exit poll at 10:00 p.m. or you

matt: what does that mean for the ecb? vasileios: i think the ecb stays where it is. will never admit they are running out of options. the big issue would be if we have renewed negative shock out of the external environment. that would be a big issue for the ecb. in modeste comfort stabilization, and therefore they will stand pat. there is room for the ecb to do something meaningful is still positive, that is very limited. anna: where does that leave the fed? we have seen talk about the phase one deal. will it be significant enough to get investors talking about the possibility of fed rate hikes, or will we be on hold to 2020? vasileios: i think the fed has telegraphed clearly, of course things can change. so far with the information we have from the data and the fed communications, the fed will be low for longer. the message from powell in his press conference was clear on that. somewhat can rejoice in the fact they are getting accommodative policy stance from improvement modest in the trade and manufacturing outlook. , stays stays the course where it is right now fo

whatdid you take away from she said, what the ecb said today? core conclusion for that there is no urgency for immediate action. let's see how the economic data unfolds. there are still early but broadening signs of a bottoming out in the global manufacturing cycle. that speaks to the german situation directly. materializes and strengthens over the next few months, that should allow the ecb to just assess. i think we are not in a rush to reverse course and normalized. at some point they will want to normalized. >> they are assessing the ecb but also met him lagarde was explicit in saying we need some help. it the eu figure out what means to be investing in green. she was direct and thing you need to get moving. not just the ecb but many central banks have been desperately calling for additional levers of policy. problem because we have been very one-handed in terms of the policy response. we do need to do something more red when she first came in as the head of the ecb, our initial response was that perhaps she might have more impact not just on

not just from the ecb but from banks around the world.ink banks around the the key inat will january will how the data turns out. sentiment indicators. if manufacturing is still suffering. i think we are more data dependent. given how things have developed in the last week or so, it seems less likely that markets well in.e we need to see a pickup in growth. thank you so much, pooja kumra from toronto dominion was they with us. we have a look at stocks, markets and the u.k. elections. when of the homebuilders we are looking at is persimmon. this is bloomberg. ♪ matt: it is a risk on day. more thaning gains of 1% across all european equity indexes including the u.k. even with 2% gains in the pound, the ftse is up. let us go to the individual stock movers with dani burger. dani: we are seeing banks do much better today in the u.k. the threat of added regulation has subsided. domestictse index, the index, seeing its highest prices since 2010. the threat of nationalization being removed. a more than 7% gain. as you said earlier, it is not just

we also expect an ecb rate cut in q1. not hamper orll push the euro lower.l move up, especially if the economic economies index -- the economic side -- things start to improve somewhat in the sense that you have it. this will be a positive thing as well as if you look on the others of the atlantic. we are not that optimistic on the dollar either. overall, from a technical point of view as well as most weaknesses in the price, we expect a higher dollar. matt: we will get to the dollar on the other side of that in a moment, but i want to focus in on your ecb call. you expect christine lagarde to cut rates even deeper into negative territory at the beginning of next year. and what do you expect as far as the bond purchase program? georgette: we expect a bit more qe. program thanger the market is currently anticipating. as well, we have another rate cut. and even though both are not really priced in, we have at the same time also fed rate cut, so if you add those two together and the impact on euro-dollar, we don't think it will push euro-dollar lower, but stabi

about the effect of ecb i thinke market a while to understaat the inarde wants to take the ecb looks for and may thestimulus ecb is reluctant to do too much more than currently in terms of easing. if there is anything we have itrned from the draghi area, is that policymakers or lawmakers are not all that willing to take advice on board, so have to wait and see whether we generally get more of a flow-through fiscal before we can understand what the ecb is likely to do in its response and if the trade war picture starts to brighten, maybe that takes a little bit of pressure off the ecb and lawmakers to do that much more if it helps the euro area. matt: for perhaps president trump brings the trade war to the e.u. and that encourages governments to spend more. mike, i am curious what you think more fiscal stimulus would provide. when i talk to lawmakers in berlin after they tell me they are spending a lot, they usually say what good would it do any way for the rest of europe? it doesn't matter if germany is spending money on infrastructure. mike: i think there is a difference between cyc

wednesday, ecb president christine lagarde speaking in frankfurt.y, rate decisions from the bank of england and bank of japan. marilyn watson, matt hornbach, and subadra rajappa are still with us. which rate decision will be the most important to keep an eye on? subadra: with all of the brexit developments, i would pay attention to what is coming from the bank of england. we have seen a collapsing on breakevens in the u.k. we will see what we get from them. i think there is more room for policy accommodation coming out of the u.k. matt: i completely agree with subadra. i think that is a place to focus on. i would say it gets more interesting the deeper into 2020 we get. next week may not be much of an event. lisa: marilyn, will anything be much an event coming up? marilyn: we think that brexit will remain on hold the next week. next week will be important because we will also learn who will be nominated to replace mark carney as the head of the bank of england as well. next year not only will you have someone else heading the bank of england, but as

that will dictate ecb policy in the short-term. the biggest procedure review. is a chronic inflation problem. it is nowhere near the target in pretty much any developed market. got some thinking to do ther and that wase from it -- there and that was the main thing i took away from it. to see then't wait hawk-dove-i will clipart -- hawk-dove-owl clipart in your next research. is there something outside of the ecb control such as fiscal stimulus that might shake things up? >> i think so. i think euro-dollar from the validity -- volatility perspective. adding to policy stimulus in the margin. that has been helping keep a lid on the currency. i think something has to break out in one way or the other in the euro side or the dollar side. if you are thinking about the euro side, fiscal stimulus comes to mind. i'm more focused potentially going into next year, the 2020 u.s. presidential elections. at least from a negative dollar perspective. after 18 months of negative data, in the european about to see some string of positive spreads. that seems very unlikely at this

the new ecb head christine lagarde hosts her first policy meeting thursday. a digital currency, a new topic, is among matters up for discussion. governing council members will address the subject non monday. while there is expectation of a decision on a cryptocurrency the fact that it is being discussed is seen as a sign of how far christine lagarde is going to shake up the ecb. 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 su keenan. this is bloomberg. just getting some news crossing the bloomberg terminal that does concern hong kong. the police concluded an interim are hopinghich they to complete by january, hoping to keep contact with the foreign experts, the topic of the day after the international police complaints commission did see five foreign experts quit, saying they did not have the power to conduct a full investigation into the actions of police. that's currently what we have at the moment. the hong kong police hoping to keep contract with -- conta

i wonder what you expect for the ecb?f people are talking about a resurgence for the euro in 2020. i cannot imagine that happening if there is a cut here and not there. i wonder what you think of it if there is no cut on either side of the atlantic. we are positive on the euro at the moment for that reason. in that i think you are seeing and increasing number of developed markets in central banks in europe shy away from the interest rate policy they have been adopting for a few years now. christine lagarde come the ecb talkingt, has been about the unintended consequences of the negative rates. talking about taking the rates back to zero because of the harm it was doing to the banking sector and some people argued that it increased rates because people were less interested. and it was having and impact that was counter. bar for further cuts is quite high for the ecb. i think it is more likely to be because the euro strengthens considerably. and there would be a manufacturing rebound. going into the first half of the year,

i'm guessing you're talking mainly about the fed and ecb. of these made, maybet was there is a risk the ecb has kinda been backing away from its stimulus little bit too soon. is it doing that in any way or credit risk doing that in 2020? alan: when they look at this review, i hope they look at corporations in europe, 18% of the financing comes from bank loans. it is completely different from the united states. europe is highly dependent on the banks. the banks need to be profitable, otherwise, they become risk-averse and it becomes a negative for the global economy. i think this is what they are missing. negative rates is a penal tax on the banks. they need to address that. sweden has moved away from that. low rates, yes, i can understand low rates. we have to remember, inflation in the euro zone is not negative, so we have got deep negative real rates. when they do this, the christine lagarde review, i hope they look at it a bit more holistically i look at the impact on the european banking system rather 0.5, thinking, rates are - maybe the

with the ecb meeting coming up, it is lagarde's first meeting.on't expect her to change anything, but she's going to set the stage for the january 23 meeting, where she sets up the ecb strategy for 2020. the market is exciting a lot more volatility built into that date, so i think there is a more importance placed on wednesday's meeting with lagarde to just see how she is going to handle things as we head into 2020. prices more market volatility if we don't get it. the best rate of 2019 has been riding options, not buying them. what i was talking about was inflation is the earnings number. i want to see what wages are, and how that is real earnings are compensated by inflation. that's what i'm looking at. that's why retail sales will give you what the consumer picture is, maybe, going into the first quarter. slowing.rowth is still not critically, but still slowing because the consumer. we did see some deceleration in income growth, and that goes to your point about wages. damian: i know oem is not important as the developed market -- i know oem i

and the first female to lead the ecb?e: i think christine will do a great job at the ecb. i think she will be able to do three important things. one, she will be able to marshal all the talent of the staff of the ecb to come up with new ideas. second, i think she has got the political negotiation skills to manage the european political scene and the role of the ecb. and third, she has got great communication skills, which are necessary for any central banker to persuade the public that what they are doing is the right thing. francine: up next, challenges in central banking. what can monetary policy do to reduce inequality? more with minouche shafik, next. ♪ francine: when minouche shafik was at the imf, she was responsible for many of the crisis countries in the euro zone and arab countries in transition. later, she moved to the world of central banking at the bank of england. so, what did she learn about how policy can reduce inequality, and what do today's central banks need to do to prevent the next crisis? minouche sh

i would not be surprised to see the ecb move in that direction.coming year of the review. interesting that they want to get it done in one year. the fed took one year and will take another six months to give us a final report. francine: peter hooper stays with us. says he has no doubt the european central bank can ease further with current tools. one of the last speeches before he goes on to be in charge of additional currencies that -- additional currencies. this is bloomberg. ♪ ♪ tom: good morning, everyone. "surveillance." right to our bloomberg first word news. viviana: we begin with a historic day shaping up on capitol hill, six days -- six hours of debate and then the democratic-controlled house is expected to vote in favor of impeaching donald trump, accused of obstruction and abuse of power. the senate majority leader calls it a partisan affair and promises an almost entirely partisan outcome in the senate, and acquittal of the president. the u.s. is conceding defeat trying to stop a pipeline project between russia and germany. the u.s. ha

francine: christine lagarde's era as the ecb -- at the ecb has begun with her debut conference on thursdaywcased her initiative for a year-long review of monetary policy and expressed hope for the economy to stabilize. after the meeting, she said she was neither a dove nor a hawk but wanted to be an owl. francoise says the euro area is stabilizing. he said there is the beginning of stabilization and we stopped revising down on inflation forecasts. still with us, gene frieda from pimco, arend kapteyn from ubs. should we focus on what she says? gene: i would rather do that. my spirits and wildlife is lacking. i think so. francine: what did you learn with the press conference? gene: very little. the goal from her perspective was not to make any mistakes, be defined as one thing or another, a hawk or a dove. there is not much new to say. they're going into 2020, they will have a mandate review. it is interesting that they are talking about stabilization recovery. saying, the evidence of stabilization is still very tentative, so the notion that you can talk about what is next is premature. fran