nejra? nejra: thank you so much. i guess is still with us.re showing you some pictures of the news conference following the decision today. standing pat on policy. what's your first take before we get into the details? >> the bank of japan, we have very tight economy. very low unemployment. we know about the demographic situation. in spite of everything, the long-awaited rise in inflation eludes them. they are stuck there, i'm afraid. nejra: long-awaited. some people are seeing inflation dropping to zero. are you of that view? >> certainly we think the economy is going to slow. it did slow because of some natural disasters. we don't think it will be picking up again to where it was before. nejra: how much is the boj going to be driven from what the fed her guest -- we heard from the fed yesterday? >> that expresses itself through the currency. the problem is that the yen looks like it may be strengthening during the course of next year. that will be another headwind on the bank of japan. does it really help them? i guess it doesn't. the u.s.

nejra: yes.i think if we go through the luxury goods companies, they are very well spread. even the u.s. companies. think about michael kors, 64% of sales in america. there will be movement, there will be change. the numbers for chinese travelers in the u.s. in q3 is down 20%. but overall, they are well held. we have a lot of luxury goods brands out of france and italy. the swiss, free trade situation, so not really touched, so for us we are still very bullish. nejra: ok. what about any day? any -- m&a? any details in conversations being held? deborah: there are stocks out there that are vulnerable, that have underperformed, and anything with the market cap of maybe $2 billion to $3 billion is fair trade, so to speak, in potentially being looked at. but if we look overall at the luxury goods market, where we stand, we have about 8% net debt balancey, so very blank sheets in what they could acquire. you go back to a week ago and look at what lvmh did with belmont. there's a lot out there that will

nejra: thank you. next month, financial havetutions across europe spent billions preparing for mifid ii. how are firms diversifying nearly after a year? joining us is my guest. guy cofounded aviation global. welcome to the show, great to have you with us. how would you sum up your one of -- year one of mifid ii? guy: enormous change for brokers and the asset management community. in the press, we can see what is going on from top to bottom, ongoing pain. i think 2019 is going to be more difficult. the asset management community has undergone a huge amount of change, which is the crux of what we are trying to build on. nejra: you emphasize pain, is there any gain? guy: definitely. winners and losers are coming out. some of the solutions we are putting forward, particularly in the outsourcing world, are becoming popular. we have seen enormous growth in the last year and outsource trading, having it on to our big outsource operations platform. we can fit the model very well with the agency side of the bus

good good morning --nejra: morning from london. a nejra cehic. quality -- volatility rips through markets. japan 60 per into a bear market -- sinks deeper into a bear market. mattis secretary jim resigns in a letter to the president. what does this departure mean for forum policy -- foreign policy in the new year? investors have another concern as a partial american government shutdown looms. ♪ nejra: good morning and welcome to daybreak europe. 6:00 a.m. in london. 1% on themore than s&p 500 yesterday, nasdaq plunging and futures plunging lower, ending just shot of a bear market, down 19.5% from its peak. 10 year treasury yields steady. still not relief in equity markets, certainly in the u.s. session. they question is what -- big question is whether the review is coming from the dollar. we talked about the losses in equity markets. bloomberg dollar index is heading for its worst week in 10 months, biggest drop yesterday in seven weeks. a touch of strength against the yen, but gaining for the first time in six sessions. .8%, bouncing back, up be

nejra: simon?on: one of the things we have not mentioned yet this morning as the trade war and the materiality of the trade war to the eurozone outlook, because you look at the composition of gdp, the eurozone is amongst the developed world the most exposed to a slowdown in global trade volume. jamie,utely agree with there is light on the horizon in terms of the ability of wages to coremit through to inflation, which has been set for four years to five years in the eurozone. you have to way that against the that against the fact that heightened risks may take the significant edge off and pare back some of the more bullish indicators in the labor market. nejra: i want to talk about the b word. brexit. 2019ave written a great outlook all about the u.k., and i really enjoyed reading it. i have a chart which is sort of a version for the chart showing the ftse 100 at its cheapest in five years. some say it could be poised for a re-rating. what is what you make? simon: it is very cheap. earnings2019 comp

nejra: how many times?lliam: the invested bank still -- the investment bank still has quach at times. we are a little more flexible. though that they still have further to go. the bond market -- the important point is that the expectation component is rising. we are not seeing inversion in the important part. nejra: if we get your expectation in 2019 and we get curve steepening as a result of that, would we get that? william: we should actually see that flattened. it is more likely to steepen if you pause. the markets will say that they are behind the curve. worrying about long-term inflation. you might see the curve steepen in that scenario. we expected to flatten. you're getting closer to neutral. does that mean the market is expecting the fed will bring the cycle to an end and that is bad for equities? william: in a sense, that should happen in the next few years. william hobbs with barclays will stay with us. up next, may date, may day. the u.k. prime minister facing a decision whether to go ahead with

nejra: i am nejra cehic.nvestors brace for the last policy decision of 2018 and what is set to be the worst year for global equities. a budget accord, a formal the eu, while the u.k. prepares for a no deal divorce. manus: telecom units of softbank and the largest offering since 2014 tanks on its trading debut. we are live to tokyo. nejra: heading for the worst since 2008, here are how futures are looking one hour away from cash trading in europe. yesterday, the stoxx 600 dropped 8%. ftse 100 futures off. dax looking for direction. on a headline level, if you look at euro stoxx 50 teachers, they are dead flat, going nowhere. gain.utures, a the u.s. session was interesting yesterday. the past few weeks you have seen a swoon in trading. the s&p 500 closed flat. we could be playing a waiting game ahead of the fed. question asks how many hikes will the equity market be able to withstand? remove gradualy hikes? in the price. let's look at the bond markets. the headline is to italy, there is a deal on the table whic

nejra. nejra: does a humphrey integer by, thank you so much.king the question today, how far can the yuan rally go from here? reach out to us and the mliv team, and you can also had to shis to give us your opinion. let us look at the rest of the world. joining us from our bloomberg earner in a dubai is our next guest. danny, you are looking at chinese equities. we are seeing a broad best rally -- broad-based rally in asia. looking? >> so far, and does not look like much conviction in the trade. volume levels on the shanghai composite as we get the site up higher today, you can see volume levels have dropped, about the lowest so far this year. trading at their lowest since 2014, save for 29 minute circuit record here, where volume stopped. we will put that aside for a bit. it basically shows that perhaps there is not much conviction in today.ly when much headlines coming out about trade tensions improving, maybe it means that all the bearish bets, anyone who is going to sell, has been washed out of the market. the hope is that retail invest

nejra: think you so much.as continued on its roller coaster ride with volatility soaring on uncertainty output cuts by opec and its allies will be enough to counter u.s. production. crude is set for its biggest quarterly loss since 2014 after reaching a four-year high in early october. kallum pickering, senior economist at berenberg, is still with us. is oil oversold and due for a bounce? >> i am an economist. the cheap oil price is best for consumers. for markets we tend to focus on concentrated costs the oil producers, which i minority -- a minority. but the low oil price is a boon for real incomes, for consumers. remember the story in 2015 when the oil price came down, it brought the market with it. but it was the cheap oil which give consumers the boost in 2016 which really started the global upswing we enjoyed in 2017 and 2018. earlier this year i thought the oil price was higher than i wanted for consumers. consumers make up two thirds of economies in the western world. now at $55 a barrel, this is prett

nejra: no deal brexit preparation. theresa may continues talks with the eu as she set the deadline for the parliament vote. ♪ manus: warm welcome to "bloomberg daybreak: europe." we are looking at these markets. s&p 500 index, you are looking at the bulls getting crushed really in this market. these are the euro stoxx 50. we don't have the stoxx 50 open at the moment. we can certainly talk about crude. s&p futures. you are looking at this index been the worst in the world globally. you're looking at a drop of nearly 8% this month, the worst december since 1931. what the fed continue to build on that and raise rates -- will the fed continue to build on that and raise rates? global stocks are under pressure, global growth is under pressure. 1%,x is down by over closing below $50. near is a lack of belief that this market has got its act together in terms of supply. good morning. nejra: we are here on a day which is a down day for equities. msci all country world index heading for its first loss since 2015. the s&p 500 ha

nejra: i'm nejra cehic in london.inal charges against units of goldman sachs. malaysia is seeking fines in excess of $2.7 billion against goldman and others. malaysia charging goldman over false statements linked to 1mdb. we'll keep an eye on that story and bring you more as we get them. manus: let's quickly check in on the markets now. we've got the small bounce in asia. some rhetoric moving from the chinese side in terms of auto tariffs. citigroup had a note to buy the drop in the global markets. mixed crude geeking out the smallest of gains. looking at riggs in the u.s., perhaps the least number in eight weeks there. nejra: taking a look at u.s. futures, pointing higher after the s&p 500 hit an april low on friday. they did get pummeled along with the dow, health care and tech stocks underperforming. the 10 year yield on a 2.89 handle. we been watching the curve to see if the fed makes any changes, the mo saying if we don't get changes, we could see further curve flattening. .1%, socks features up we could see agai

nejra: should theresa may step down?a need to make things clear. leadership contest now would be a great dereliction of our duty. at ang ourselves inwards moment when the country needs us to think about the national interest. thanks fori morgan, joining us here outside westminster. matt: we are minutes away from the open. we will take a look at your stocks to watch including telecom italia and vivendi, shareholderng a meeting on telecom italia. this is bloomberg. ♪ ♪ matt: welcome back to bloomberg markets, this is the european open. we are six minutes away from the start of trading around europe. let's get your stocks to watch. italia.oking at telecom what is the story with the vivendi meeting? danny: vivendi is going on the attack. for several months, vivendi has been at odds and at war with elliott's investor, the activist investor from the u.s. about control of the company. elliott one management but board control in may, since then he has been trying to figure out a strategy to get more influence at the company. spe

♪ nejra: good morning from bloomberg's european headquarters in london. i'm nejra cehic.anus: and i manus cranny live from dubai. this is "bloomberg daybreak: europe." is today's top stories. nejra: the rally in risk assets comes to an abrupt halt in asia as larry kudlow dials back on trumps trade do with china. bond market moment. the u.s. 3-5 yield curve inverts for the first time in a decade. is a warning sign for the fed? theresa may's attempt to celebrate a deal gets torpedoed by mps before she even starts her pitch. mark carney also faces a grilling from parliament today. ♪ manus: a warm welcome to "bloomberg daybreak: europe." let's get straight into these markets. itsis rising and has had best to date gains since june. day gain since june. one thing to bear in mind, we are in mind, we are conduct cross mode on the bright market, which is where the moving averages cross over one another. there could be a lot of bullishness priced in to the cuts we already expect from the vienna. the equity markets are stepping back their overall belief, in terms of what was affecte

nejra: going good for now. are taking a look at the yuan, risk on in asian equity markets on the prospects for some optimism around trade. what are you looking at for the yuan? chinese importers stepping in to buy u.s. soybeans. we might be looking at a more optimistic picture. we are also seeing do a little bit better today and now it looks like the momentum might be in favor of the chinese currency. here i have charted the u.s. dollar cost versus the yuan. the one-month moving average has just crossed over the 55 day moving average. this shows you the momentum picture. .omentum is pointing downward what china does and 2019 with the monetary policy will mean a lot to this picture here but it used to be, would we get to the level here. now the next thing to look out for is will it get to its 200 day moving average. trading atllar cost 687. since you are out there in the freezing cold outside of parliament, to bring up the pound volatility. pound is little changed today holding on big gains from yesterday, optio

nejra: good morning from westminster. live outside parliament, i'm nejra cehic. manus: this is bloomberg daybreak: europe, these are today's top stories. nejra: theresa may leaves brussels empty-handed. european leaders step up plans for a no deal departure. chinese output figures disappoint. losses in asian equities. pimco says it's recession risk is at its highest in nine years. central bankers including mario draghi are concerned about what 2019 will bring. the warnings a week before the fed announces its next policy decision. matt: what a week of brexit it has been. starting with the delay of the brexit vote. theresa may surviving that no-confidence vote. it is enough to bring me to work on a friday. it is a big weekend a big day. my question to you this morning politicallymay couched in this embattled by the gouged and disemboweled by the response. no negotiation. nejra: you could say the eu has been playing hardball. myself, how is theresa may going to spin this when she comes back? is she going to put any kind of positive spin to lawmakers? we expect her t

nejra: stay with us.with us from dublin because you missed your flight from gatwick. we can see the fallout from this even without our markets team. alternative from ubs is with me on set. as we head to the end of the week, we still see this selloff in equities and try to figure out what exactly the fed could have gone wrong. what is one of the big mistakes given more nuance on the balance sheet? >> the markets have misjudged the fed. morearkets think they are important than they are. the federal reserve exists to sort out the economy. the economy is doing just fine. in 2018, the u.s. economy has done exactly what was expected to do. 100%. it has been astonishing. if you look at the ubs surprise index, it is a flat line this year. there are no surprises whatsoever. the fed is responding appropriately. they told everybody we are going pause. pause, hike reactedets suddenly surprised because they had a temperature from and thought the fed was going to -- temper tantrum and thought the fed was going to ride

this is bloomberg. ♪ nejra: economics, finance, politics. i'm nejra cehic in london.h just 2019 have in store for us? bloomberg puts out its pessimist guide to the new year. it's a walk through what could go wrong. is our senior government reporter. the great to see you. take us to look at the wrong. i decide to anchor it in a reality of what really could happen. were based it on things that happen in the past. extreme climate change of the moment. what if we had another el niÑo with droughts in australia swiping across? sending happening in bill? the impact on rice. imagine if you have a situation for you have a whole lot of hungry people. is there any good news for next year? -- >> if people who had surpluses decide given to themselves like for example donald trump, might decide to keep agriculture for americans, and this prognosis maybe justin trudeau would give away excess production for free and get a nobel prize for it. nejra: our government reporter in hong kong, great have you with us. ecbext to talk about the calling time on the bond by program. was a contrad

nejra: exactly.hat means in terms of the shale in the u.s., but let's get back to u.s. politics and what it means for markets. get that jittery over the prospect of a shut down , but why would democrats agree to any compromise? >> the had better prospects getting their way next year with a new house. i think they will hold out, change the goal posts. the shutdown story is not big for markets. the bigger story is you now have a new dynamic with the democrats having a say. tom: i'm going to cut to the chase. there is this word progressive. i hate it. they are liberals. can them the brussels be jackson conservatives -- the liberals be jackson conservatives with some form of fiscal responsibility? >> probably not. i think the democrats agenda is very ambitious. they are looking at 2020. the left-wing progressives are now ascendant in the party. tom: we have to leave it there. i'm going to bring up this chart. my chart of the year. the twin deficit charts. we are back at ronald reagan, fiscal deficit to g

nejra: i am nejra cehic in london. these are today's top stories.cks and ftse futures rise, but u.s. futures point lower, even as powell praises the u.s. economy ahead of today's jobs report. theresa may could push back on as vote on her brexit deal senior mps tell her parliament is to reject it. michel barnier says there is no room for renegotiations. no deal inside. end talks in vienna and -- as rush holt back on curbs, oil slides -- russia holds back on curbs, oil slides. warm welcome to "bloomberg daybreak: europe." i am back on the rooftop for day two of opec and non-opec. the latest line, the russians will consider adding 150,000 barrels of a cut. that is from russian news agencies. no deal there, but the question is how close are they doing a deal? the first time in five years they have broken up without one. the question i asked on this becomes thehe u.s. net exporter for the first time in 75 years. markets are shifting. they are repricing growth. that is a key and if the critical issue is getting everybody in opec on board, perhaps without

nejra: thank you so much.ctivists and scientists have gathered in poland for the united nations climate conference. it will seek to transform pledges made in paris three years ago into an international bulwark. bankat event, the world announced it will double its five-year investment to fight climate change. is for selena -- is the ceo of the world bank. welcome to the show. thank you so much for joining us this morning. this $200ounced billion over five years for climate action. 2025funding for 2021 to includes a significant boost for adaptation and resilience. does that mean that you're concerned the climate targets will not be met which is why you need to provide money for particularly poor countries to be more resilient against the impacts of climate change? >> we are convinced that the climate story is a developing story. that there already are climate impacts that are affecting the most affordable countries and the most horrible people. severelycting them so that we ought to act to build a resilient futu

ng nejra nejra: we are showing you what u.s. futures are doing. how concern is the ugly open on thursday? we jump to us. let's get the first word news with debra mao. huawei has been arrested in canada over essential violations of u.s. iran sanctions, prompting outrage from china. she faces extradition to the u.s. and in extradition into whether the leading telecoms equipment maker made sales to iran despite sanctions. the arrest provoked a strong protests in the u.s. embassy in canada. arabia, russia, and other members of opec meeting in the anna have recommended in oil production cut and -- meeting in vienna have recommended an oil production cut. core opecfrom the group will meet to thrash out a consensus. largest andussia's nonstate oil company says he is hopeful there will not be a need for a large supply curve. i hope maybe, these measures will not be necessary. as i mentioned, the price is where it should be in my opinion. we are not working with the volume. is notduction cut something we are working with. macron has vowed to face down the

nejra: it was.d may have hidden -- ctory on ares vitor battle,er a long and a special counsel robert mueller recommends no jail time for michael flynn. these are our most read stories on the bloomberg. manus: weeks of protests in france. the prime minister announced a moratorium on tax increases. the change is not enough to stop the demonstrations. the budget keeps raging on in italy. conti may be willing to cut deficit targets. ick, you look at the pressure that is piling on europe. this is where the bond market volatility is perhaps the best response by germany versus italy. the government laid down a mantle. what does this take for you to take italian risk? >> we don't. if we want to spread assets over we will be looking at different markets within europe from a sovereign perspective. we could be looking at the market -- emerging-market debts within local currencies. the popularity of those institutions is high. the backward step on structural reform is most troubling for investors. i think presi

let's go down to nejra cehic on the green.is christopher "akson, the author of political history of modern britain." a lot of questions over what happens next. did theresa may make the right decision to delay the vote? >> only time will tell on that. clearly, she has avoided what would have been a calamitous defeat. she lives to fight another day. this is in keeping with this prime minister. she is someone who counterintuitively keeps getting up in the morning where others might not. now a very difficult summit on thursday and it is hard to see what kind of concessions, meaningful concessions she can win now. nejra: back here at home we will have a emergency debate in parliament by lawmakers around what has happened. what would happen if this vote did not occur at all, is there any chance of that taking place? i was told earlier that would be a constitutional crisis. >> i think it would be a constitutional crisis and the real issue is we are getting to the point where the labour party needs to decide whether it's -- what it's

nejra: thank you.xt, we will have the latest i had of the no-confidence vote in theresa may tonight. that is next. this is bloomberg. ♪ francine: "bloomberg surveillance." you are watching -- you are watching "bloomberg surveillance." there was quite a bit of market reaction after we had the vote of confidence. it will happen this evening and we should have the results before midnight london time. good morning.the world's largest clothing chain is entering the christmas season resisting pressure to cut prices. its struggle to reach targets. the google pause has rejected claims of bias. he is also stressing the company's roots. lawmakers grilling him on capitol hill yesterday on data information. he says google has no intention right now of launching a search engine designed for china. >> if i walk over there and sit next to mr. johnson, and carry my phone, does google know that i was sitting here and i moved over there? >> you are welcome anytime, judge. >> yes or no? am shocked you don't know. i think

nejra: let's talk about the equity markets. i want to show you this chart showing the s&p 500 suffering its biggest draw down since the u.s. credit rating downgrade. the drop from the peak in september. i want to bring our mliv question to you.

nara church is looking at -- nejra is looking at the front pages. nejra: let's take a look.an, tori coup fails. mail, let her get on with the job. let's get the bloomberg first word news. theresa may is heading back to brussels today after winning the confidence vote among fellow conservative members. with may now safe from challenge for a year, she returns getting her brexit deal approved by parliament. china is said to be considering plans to delay some of its made in china 2025 program by a decade. dominate.gy aims to china has resumed buying u.s. soybeans. the u.s. soybean expert counsel says china had purchased 1.5 million-2 million metric tons of soybeans in the last day. the white house has threatened to veto the move. historic review of what saudi arabia is doing in yemen and what they did in killing khashoggi. as they keep behaving the way they are and bombing civilian centers in yemen, come january, this comes back up and i think we will get to a vetoproof majority on this saying, no more arms to saudi arabia. >> the italian prime minister has proposed to cut the c

i am nejra in london. this is the show where we delve into the challenges an

nejra: mifid ii year on, how has the brokerage model involved the buy side adapted to the legislationad for crypto in 2019. is the regulatory framework a help or hindrance? plus, we talk through the challenges for european financials in the new year and

. ♪ ♪ nejra: we will speak exclusively to the architect of legislation of about successes and failuresregulating the tech space. what is next for washington dc. will the u.s. get its own version of gdpr? and we are on a founding squeeze. as we approach the end of the year, the u.s. currency tends to be a hot property. why is this year different? welcome to bloomberg markets "rules and returns."

nejra: mifid ii year on, how has the brokerage model involved and how has the buy side adapted to thetion? more pain ahead for crypto in 2019. is the regulatory framework a help or hindrance? plus, we talk through the challenges for european financials in the new year and what changes are on the table. we delve into the regulatory challenges and opportunities for financial markar

i'm nejra cehic in london. let's check in on the markets. it's a

i'm nejra cehic in london. rules and the returns is at the

nejra: i thought you are here for the festivities, the seasonal greeting. i have a chart that talks about what matt was talking about earlier. the s&p 500 is on track to face its worst december in nearly 90 years. this is not the way you want to go into the end of the year, is it? that i did not realize until i sell that in the lead-in. that is impressive. whened do not hike equities are doing this badly. people have been expecting the hike for some time. if they do not it might send a more worrying message. the people are still expecting to hike and it is important to emphasize that rate products are struggling. and it is a slightly higher hike. i am here for the festivities, i am not ignoring the market. noticed ishing i that as these markets continue to slide, we continue to get big banks out recommending investors by the dips. goldman sachs was added yesterday, parents which is in -- news -- of parents -- againredicting at for the s&p. are we to take them at their word or is this what banks to at the end? it depends on which context, it is a good sign o