Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Ipo. Welcome to bloomberg daybreak europe. Areis easing as members grappling with issues of stricter compliance. Manus cranny is there. Great to see you. Looks like saudi offering a carrot and stick. Manus yes. Cuts compliances science. Nobody was talking. Iraq raised the flag of a cut of 400,000 barrels. Everybody stopped speaking. As far as societies are concerned, we all get on board and comply a little bit more, which is what you all promised to do. Nigeria and iraq. That could help. If you help me, i will help you. New saudicence of the oil minister, it is his first meeting. I have the sense that that period of grace and favor for everybody is over. He is putting his stamp on this meeting. Nobody is talking. There is even talk it could be canceled. The bottom line is this is a meeting where they do need to deliver. The risk is long on rhetoric and the lack of delivery. Good morning. Nejra long on rhetoric, lack of delivery. They cannot cancel it. I need to see you in it. In the meantime, tell me about how opec is facing the challenge of nonopec supply. Get a concept of what oversupply really means. The iea say next year, nonopec supply will be 1. 5 Million Barrels more than the market currently can take. We will be glutted from the u. S. To no way to brazil. Norway to brazil. It is not in the opec plus cartel that puts controls on it. When you have that in mind of whackamole going on, what do you do . You have to keep your house in order, first and foremost. U. S. Is a net exporter for the first time in nearly 70 years. That is a new level of threat to the oil market, but there just seems to be this sense that they are probably going to have to do more cuts if they are going to try and balance this market and get the market back on side. Nejra manus cranny in vienna. Great to have you with us. We will catch up later this hour. In the meantime, lets get to the markets. Riskon in the Asian Session with the Msci Asia Pacific index in the green, playing catch up to what we saw in the u. S. Yesterday on this bloomberg scoop that the u. S. And china are said to be moving closer to a phase i deal, talking about amount of tariffs to be rolled back. Meanwhile, the wrist on we saw yesterday, fading in s p futures. Also fading in terms of the 10 year yield. We are down a basis point for the 176 handle. We are seeing the bloomberg dollar index hold onto for days of declines but in terms of g10, the kiwi outperforming, and that is after traders pulled back their bets on easing. Cable also holding at a seven month high. We saw it hit that yesterday. The pound hitting its highs since 2017 against the euro on the polls coming out of the u. K. And oil softening a little after jumping 4 yesterday following the stockpile data. Getting back to the trade story, the u. S. And china getting closer to a deal. Both sides moving towards agreeing on the amount of tariffs that will be rolled back in a phase i trade deal despite tensions over hong kong and shandong. President ialc candidate, Elizabeth Warren, was critical about the trump administrations trade strategy in an interview with bloomberg. Senator warren the president has no plan. Trade is about tariffs. Isthe 21st century, trade about regulation as much as it is about anything else. What i want to see is a coherent plan for anybody who wants access to american markets. Nejra that was democratic president ial candidate Elizabeth Warren, speaking to Joe Weisenthal in new york. One such company that has been impacted from the u. S. Governments trade strategy is huawei, which sued the federal Communications Commission as it tried to gain greater access to the u. S. Market. The Chinese Tech Company is fighting to overturn a regulatory decision that bars rural carriers from using federal subsidies to buy its equipment. They said they were not accorded due process and were o unfairly labeled great to have you with us, chris. A lot of market moves this week. We were risk off for a lot of the week and then we bounced back on the bloomberg scoop. What is your take on what we are going to get by the end of 2019 in terms of phase i or not and the prospect of a tariff rollback . Chris we are very close to the end of 2019, so i suspect, as we go through the end of next week, that the news will soften as we head towards the holiday season, and the peoples eyes will be focused on what is likely to happen in 2020 rather than 2019. There will be a bit of two and fro in the next week or so. Fro in the next week or so. It is just not going to have the impact for President Trump and that is what he really needs. I feel that as we go through 2020, trump will want to do a phase i deal that he has talked about so that it looks good when he is debating against the democratic candidate for presidency as we go through 2020. Nejra will equity markets perform as strongly in 2020 as they have so far this year . Chris i would be really surprised if they do. I have to say that. 2019 exceeded my expectations substantially even though growth has been relatively soft. Global gdp growth has been relatively soft. Equities have done really, really well. If you look at the u. S. Market in sterling terms, it is up over 20 this year. That is a fantastic return. I think we will be really optimistic to expect markets to do anything like that in 2020. Nejra what is the timing in terms of when you expect we will actually get something through . Are you hopeful for q1 . President trump was even talking about we dont need anything until after the election but according to the bloomberg scoop, a lot of this is just unscripted rhetoric and behindthescenes, things are going quite well. Chris for me, again, it comes back to the election timing. I would have thought that trump would have wanted to get a deal in the public consciousness in the first half of the year to allow it to have maximum impact as we go through the second half of the year. Wantrepublican voters will to see is some level of certainty about what is going to happen as we go through the next four years of what they would like to see in another republican president. Nejra if you go into 20 20 and you are thinking equity markets performance will not be as strong as 2019, how would you make shifts in the portfolio . Would you want to be making decisions based on that expectation, adding more bonds or adding protection in other ways . Chris one of the things that really sort of struck me over this year is while i have been speaking to our clients is that they really got used to the fact that deposit rates on cash are not just low today but they will be low for some period of time, and therefore, if you can get high single digit returns, total returns for equities, that is terrific and compounded over year on year. If you get 20 in one year and you get 9 in the next year, that is a really good return. Actually, dont abandon equities. Continue to remain heavily weighted in equities. Bonds, we know yields are very low. Theres a bit more in Corporate Bonds. Bit, althougha equities may not produce the return we see in 2019, i still think i would have a portfolio towards equities. Nejra biased to which equity market in particular . The u. S. Or more em risk, more china risk . Chris china has been pretty much the best performing market this year. Other em countries have not done so well. Moreld imagine that a balanced portfolio in terms of not being necessarily to overweight in the u. S. But being balanced towards the european and u. S. Emerging markets as well as having a significant portion the u. S. In terms of the proportion of Global Market benchmark is 60 of the local market benchmarks so you will not be significantly underweight in the u. S. Usra chris ralph stays with for the hour. Lets get the bloomberg first word news with Annabelle Droulers in hong kong. Nato survives its 70th anniversary party. President trump canceled a post summit News Conference. He is escalating his threat to allies that do not boost their defense spending to two of gdp. With so many flashpoints, the summit could have gone much worse. Angela merkel describes a meeting as very successful. Japans government is pulling out all the stops on fiscal stimulus. Tokyo announcing measures to support growth as the economy contends with an export slump and a fallout from a sales tax hike. The total package amounts to around 240 billion dollars. It is expected to boost real growth by about 1. 4 . The antitrust probe facing amazon is expanding to include its cloud business. The federal trade commission has recently been asking Software Companies about the cloud unit in addition to the probe into its vast retail business. And amazon are declining to comment. 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. This is bloomberg. Inra Annabelle Droulers hong kong. Thank you. Coming up, a six straight cuts. Every economist in our survey expects a rate reduction from the reserve bank of india. How far the r. B. I. Will go in just a few minutes. This is bloomberg. Nejra this is bloomberg daybreak europe. I am nejra cehic in london. Manus cranny is in vienna. We will catch up with him again later. Right now, we are awaiting a decision from the reserve bank of india and what is expected by every economist surveyed by bloomberg is a sixth straight rate cuts after the challenging gdp data we had recently. Questions also being asked about what kind of Forward Guidance we are going to get and how much more we could actually get support from Monetary Policy. Some Asset Managers saying unconventional policy measures will have to start to come in for the reserve bank of india. So we await that decision from the r. B. I. Meanwhile, Bloomberg Economics in its preview says the drumbeat really is getting louder for that easing on those gdp woes. They think the economy has slowed abruptly. The r. B. I. Needs to make a deeper reduction to rates, dropping its baby step approach. Juliette saly is in singapore with more on the Market Reaction ahead of the decision. Juliette. Juliette absolutely. We are seeing indian Stock Holding up quite well ahead of this, which is meant to come momentarily. It is merely the one time anniversary of the r. B. I. Governor. We had 135 basis point cuts from the r. B. I. It is holding up well. Nejra Juliette Juliette that has just come through. Nejra we will come back to you in a moment. Thank you. India has a central bank unexpectedly holding its key very at 5. 1 5 , so that is surprising news, as we say putting much all economists predicted a sixth straight rate cut. Cutting meanwhile, full year gdp forecast to 5 from 6. 1 . That is a less surprising bit of news from the r. B. I. That it is cutting its forecast. Very surprising that it is unexpectedly holding that key rate. Indexessensex and nifty erasing gains. You can follow everything on the tliv blog. Juliette, the immediate Market Reaction. Are we seeing it elsewhere . In the bond markets as well . We sawe yes, certainly, that reversal as you were speaking. We do have our indexes tracking lower. A were holding near record highs. This is a surprise to the market with india keeping their key rate on hold at 5. 15 . We are seeing indexes move lower, having a look at the rupee. It is not moving all that much. If we can have a quick look at bonds, we have been seeing most of the bonds across the market today, seeing yields going higher. Just trying to get a quick read on india if we could maybe get that along the bottom of my screen. I want to show you what has been happening in the Indian Economy and why those similar points you were saying about why some are saying unconventional policy tools now need to happen even though the r. B. I. Has not even rba has not all even cut rates at all. Inflation above 4 , more than what they are wanting. Theres also calls that india has to be more to try and stimulate this economy, which we have seen their Economic Growth really falter. It is falling below the likes of china and indonesia. There is one fund manager out there saying that they should look at pulling down longerterm yields i selling shortterm bonds and reinvesting in longerterm ones as well. Manager whond correctly predicted the credit crunch that had been hurting indian banks. A big surprise here. Coming after the india should maintain its accommodative Monetary Policy staff. Nejra Juliette Saly in singapore, thank you. Absolutely, big surprise. None of the economists surveyed by bloomberg predicted the r. B. I. Would stay on hold. The are seeing the Market Reaction. Surging eight basis points to 6. 55 . Our guest for the hour. A surprising decision. What do you think might have prompted this . There was a unanimous decision to keep these rates on hold. Chris good news is breaking. It would be interesting to see the followup for press conferences during the day. I suspect it might have something to do with inflation data. That was obviously strong there than people expected. And the r. B. I. Board is just reacting to that and saying do we want to be cutting into a market where there has been some evidence of inflation . From what i was reading, it looked as though that was in relatively small areas of food production, that it was not a general increase in inflation. Really surprising information from the r. B. I. Nejra a little bit of detail coming through here. You can follow all of this on the tliv blog, suggesting the cutting cycle may not be over because the npc decided to continue with the accommodative stance as long as it is necessary to revive growth while ensuring that inflation remains within the target. How soon do you think they will resume cutting if that is your assumption . Could they employ unconventional measures as well . Chris it was interesting. Obviously, what they are trying to do is get a balance. They dont want to be too predictable to markets. What Central Banks want to do is retain the elements of surprise, so one would imagine they would get back on the cutting cycle relatively soon even at the next meeting. I would need to double tech when not actually double check when that actually is paying seeing if there are other methods they could use to provide that stimulus to the Indian Economy and keep it on track from the growth protections, the slow growth protections the oec was talking about. Nejra they have 135 basis points of cuts so far this year. Chris ralph, cio, staying with us to discuss japan now because your pants Prime Minister, shinzo abe, announced stimulus measures to support growth in an economy contending with an export slump, natural disasters, and the fallout from a recent sales tax increase. During us to discuss from tokyo is paul jackson. Paul, great to have you with us. How much bang will this package actually have . Paul thats a good question. We have a lot of numbers here, havent we . Its very confusing. The headline figure is 240 billion. That is a large number. Thats 26 trillion, the headline figure. I think we have to dig deep down to another figure of 7. 6 trillion in Central Government Central Government direct spending. And that is going to be the punch that comes into the economy. Already, we are seeing economists look at todays figures and revise their growth forecast for the coming year. Our economist at bloomberg expects the economy now to grow 2020 as a result of these measures, which the government says will add 1. 4 Percentage Points to growth. Economists are a little skeptical about that. They think it is not going to be quite as effective as that. Why does japan need this . It is because the economy is contracting as a result of that sales tax hike. We are expecting a contraction of 2. 7 this quarter. So we need this to get out of the recession and keep abenomics on track. Nejra bloombergs Japan Economy editor paul jackson, thank you for joining us. Lets get back to chris ralph. Does this take the onus off the boj at all . Paul i am not sure it does. I still think they have got to be very focused on continuing to provide that environment so the japanese economy does not grind to a complete halt. Talking about growth protections for 2020,. 5 . The imf suggested they were looking at a figure of. 4 for japanese growth for 2020. That is really near the economy, just stopping in its tracks, and as paul was saying, we are going to likely see a contraction because of the sales tax increase in the final quarter, so the boj has got to be there. Nejra there is a difference between stopping and economy grinding to a halt and actually feeling growth and inflation. How do the authorities, whether it is the central bank or the government, do the latter . Paul it is the challenge we talked about in terms of conventional and unconventional Monetary Policy. As you just pour more and more money into the economy, it seems to have less effect, so it is becoming harder for the boj policymakers to do anything thats actually going to have a really positive impact on the growth for japanese economies. It is when sales taxes come through that there seems to be this banana scheme that the japanese economy is falling over. Nejra we talked about india and japan. Looking at both of those countries, different issues prn any of those interesting propositions . Paul you can argue that Japan Equities look really, really attractive. I mean, its been another challenging year to be invested there japanese market, so is this dichotomy between the largecap exporters and the small cap domestic stocks. They have been absolutely killed this year. The largecap exporters have done a bit better because of the feedthrough into china. Some managers saying that they are quite interested in japan. We think theres good value. Equities in japan are cheaper relative to the u. S. , as we were saying earlier on. So maybe looking to japan for opportunity. India, on the contrast nejra we have seen the equity benchmarks hit record after record, so that means they look expensive or the valuations are justified . Paul you have to look at it on a casebycase basis. Indian stocks are looking more expensive. As you say, this nzx index has sensex and dax has done really well. Its less likely they would be the bargain opportunity you would see by comparison to japan. Nejra in terms of the big global theme being the year where fiscal stimulus comes more to the forefront with Monetary Policy reaching its limits, how does that impact the way your Fund Managers look at their portfolios . Chris probably very little in reality. Thats more sort of pushed towards the consumer. Is the consumer going to benefit from that. And i guess the flow through maybe. Do consumer stocks look more attractive . This fiscal stimulus is going to put more money into consumers pockets. But generally, Fund Managers, they always say to us we just look at companies on a bottom up basis and try to see where the value really is. Nejra chris ralph is staying with us for the hour as our guest host. Coming up, taking the top spot. What is expected to be the worlds biggest ipo comes closer. Of course, we are talking about aramco. We will bring you all the details as soon as they break, next be also, if you are traveling to work, tune into Bloomberg Radio on your mobile device or on dab Digital Radio in the london area. In terms of the market action, we have seen some green on the screen in asia after a bloomberg scoop saying that despite the rhetoric this week, the u. S. And china are moving closer to a phase i deal. A lot of green on the screen in asia. We saw that in the u. S. Session yesterday. Some of the Risk Appetite could fade into the u. S. Session and the 10 year yield dipping a basis point to a 1. 77 handle. This is bloomberg. My cohost manus cranny is in vienna covering todays opec meetings. We will catch up with them a little bit later. We are standing by for the worlds biggest ipo. Has discussed the pricing of its shares. It might raise a record. Lets get a quick update. Great to have you with us. We are still waiting. Yes, exactly. Still waiting for confirmation from our emco on where shares will price. It will probably come out on the top end of the range. Making it the biggest offering in history. The worlds biggest listed later on this month will be based in riyadh. No longer based in the u. S. Still waiting for this pricing to come out officially. Was thatdetails we had it was oversubscribed. It has probably moved on a bit more in the last few days. We will also be watching for how much foreign money there is in the book. Whathas been a key part of saudi arabia initially wanted to raise. Attract foreign money into the country and into aramco. So far there has not been a flood of foreign money coming in. Nejra we are Still Standing by for that pricing. As we just discussed, this is very much a local listing now. As a global investor, what significance does it have to you . This is a sideshow. Global investor to invest in the saudi market is really challenging. Listingies about the last year said it would be a global roadshow. It would be listed in london and new york. But that has not happened. We will have to see if there is a second three listing in london or new york or elsewhere. That is when i think Global Investors will get involved. The other way you can look at it is what impact does this have . Commentary says the best way for the kingdom to boost secondary shares is to regulate profit. That likely means increasing production. They want to prop up prices. That is the quandary they are in. It actually does not solve the problem of the dependency on oil in the saudi economy. Their Biggest Company is aramco. They need High Oil Prices to make the company look attractive to foreign investors. One of the aims was to divert the economy. This is not doing that. I think we will still be focused on what the saudis are doing. In terms of production. The saudis have been not meeting their total production capability. They have been slightly shy of that. The news withet Annabelle Droulers in hong kong. Saudi arabia will use a carrot and a stick. To raiseom is willing outlook prices slightly. Other producers keep failing to meet their targets. Riyadh will lead the way in deepening the cuts. Opec will not be able to defend crisis prices. Globalemand is weak and supply of Oil Continues to grow, we will have low price. U. S. President ial hopeful Elizabeth Warren is drafting a bill to reverse megamergers. Speaking to bloomberg, she said President Trump does not have a plan when it comes to trade. Want to see trade occur but i want to see trade occur in a way that is helpful to the american workers, the american consumer. Donald trump is destroying markets, destroying value around the world. This is bloomberg. Thank you so much. Lets get a check in on the markets around the world. What a stunner. Reacting . Rkets with a resounding surprise. Markets reacting negatively to that. They will see future data points. In terms of targets, they have increased their valuations. They have also lowered the gdp forecast. That is lending some support to the market. Nejra thank you so much. The 10 year bond yield jumping a most 10 basis points. You are looking at sterling. It has been trading at its highest since may. You were all over this yesterday. What is happening today . The momentum continues to be to the upside. It is interesting the turn of events we have had. Had these option traders who have had puts on sterling back off. Go intoe confidence to cash long heading into the election. Now the Big Development is momentum traders playing along. Assuming that sentiment stays pretty much where it is, we can expect these gains in the pound to continue. We can also expect the volatility premium. Vote, beforeexit that white line, it traded at a discount in terms of volatility. You see the brexit referendum. You get a spike in volatility. A conservative government or more certainty within the government, look at this correlation. Or this comparison to start to fade into december 12. Nejra thank you so much. It is one week until the u. K. Election. Boris johnson has unveiled a list of pledges he rolled out if he could wednesday majority. Wins a majority. Says legislation on immigration would be a priority. The polls are looking great for a labor victory, a labor landslide. But we saw in 2017 that the polls were wrong. The choice in this election is very simple. Hard brexit a new deal. Ouray or a labour party that would give the british people the final say. Lets see how it turns out. Nejra that was the mayor of london speaking to bloomberg. It is interesting because a lot of people have said to me, we will see it struggle. But then we see a move. Money coming off the sidelines. How long is the pound . Not particularly. Certainty want some as we sit here today. We are still in an uncertain position. The poll data is promising. That is the reason the pound has been strong. But as the mayor was just saying, anything can happen in the last week. We still have this major debate that will happen tomorrow. Lets see what happens with that. The labour party pushing very hard in terms of making a few lastminute policy announcements. The key pound for me is tactical voting. What Fund Managers are looking for is certainty. What they have today is uncertainty. Nejra in the event of a certainty, lets assume for a moment, i know a lot could happen, but if we get the conservative majority, Boris Johnson puts his deal through, what are your fan fund manager standing ready to do . Put more money into the u. K. You look at domestic focus u. K. Stocks, they are looking particularly attractive at the current time. That could be the path. There could be a stimulus to the u. K. Economy. Some of the Investment Decisions that we know the u. K. Will be putting off. We have a majority government in place. Now we can make some clear decisions. And also u. K. Consumers will feel more confident about what their prospects are looking like. Speaking of opec, we have been covering at this hour. Members grapple with the issue of output cuts. Manus cranny is there. Great to see you again. Manus thank you very much. We are here. The iranians are and there. The venezuelans are in there. To see you this morning. We are talking about cuts. But i need you to define for me what is a real cut that could be . Elivered here today this is from the 2018 levels. Saudi arabia has been over complying for most of last year. Lets say they take half of the cut. Goesmeans thirdbase line from 10. 3 to 10. 1. They were already below that. This is the problem. Right now they were producing around 10. 2. You are doing annual averages, manus how do you deliver something of substance . What will be a progressive message in the next 48 hours . Opec does not need to deliver additional cuts. The crude market is incredibly tight. The flat price has not gone up. That has to do with demand and trade wars. I dont think opec can do very much to change that. They have delivered what they set out to do. To deal withtinue the current existence. Manus do you think there is a . It of shock and all awe i do think the timing of it is too much of a coincidence. There is a budget that is supposed to be announced. Manus lets go with a base case scenario. What would that do to prices on the upside . I think it is hard for it to rally much more than that. Manus no cut and a lot of waffle. Will go down on the waffle. It could be bullish. They have done that in the past. Manus there is a new man in charge. Maybe this is his time to deliver. I do think they are going to make sure there is a strong message. This is interesting. I was at a News Conference in abu dhabi a couple of months ago. They all sat on a platform in front of me and said they would comply to this number. They have not. This is the problem. I would not put it past them to do that if compliance is not improved. Manus he is a crafty man in terms of managing the press. Your take on that continuity . Will it endure . I do think it continues. That remains to be seen. I do think the relationship is here. It is staying. But not necessarily in exactly this form. Manus thank you very much the cold. It is very cold. We can see your great haircut. A fantastic conversation. Coming up, u. S. Companies added the fewest workers to payroll this month, according to a private report. We will look at the worlds biggest economy ahead of jobs data tomorrow. This is bloomberg. Nejra lets get to some headlines. What he has been saying is the inflation has been up for a few months. But this spike is transient. There is some indication of the cycle turning. The overall liquidity in the system remains in a surplus. They are ready to act if the situation warrants. Turning to the u. S. Economy, Companies Added the fewest workers to payroll. The numbers signal a Fourth Quarter economic slowdown. I want to see trade occur but i want to see it occur in a way that is helpful to the american worker. I want to see what donald trump is doing. He is destroying markets. He is destroying value around the world. Nejra we also got other data out of the u. S. Yesterday. There was an unexpected drop. The details some are saying represent a stable growth. If you look at the gains in employment and new orders. What is your take on the u. S. Labor market . We will be looking at the jobs data carefully. If you look at it from the broad perspective. There is positive news. We are starting to see signs of unemployment picking up. There are signs saying that companies are hiring less people. That would accelerate the slowdown of the u. S. Economy. That would go to Elizabeth Warrens point about the impact of trade. The trade negotiations are having a negative impact on chinese companies. There are also having a negative impact on u. S. Companies. They are becoming more cautious about their hiring prospects. Nejra some people expect that in 2020, the rest of the world will inflect somewhat when it comes to growth. Is that the trends that you predict . We also look ahead to german factory data in just a few minutes. The german data has been pretty horrific over the last couple months. It will be good to see a pickup. , we have a look at what strategies are saying. There are very few that are saying we are going to improve in 2020. There will be recovery and other parts of the market. Nejra what will that mean for the dollar . Is starting to hit the top level. Nejra do you expect that the dollar reaching a topple be a result of the fed cutting in the 2020 . They will be connected. How the fedtion of board thinks about policy. They want to retain control over that policy. If they signal more cuts through 2020, we will see the dollar coming up. Nejra thank you so much. A crucial opec meeting with saudi arabia. We will have all of the details. We are also keeping an eye on the r. B. I. Governor delivering a News Conference following the surprise hold on rates. He says the full impact of policy rates cuts is playing out. Nejra good morning from london. Asian stocks climb on reports that the u. S. And china are headed toward a trade deal. Japan announces a stimulus package. This as the r. B. I. Defies all forecasts for lease rates unchanged. Are in vienna before todays opec meetings. Welcome. Lets get straight to the german factory orders. It is a negative. The prior reading was at 1. 3 . It is coming in worse than expected. We have declined 5. 5 . There was out optimism when we got last years numbers. It, europewe look at and germany in particular are more followers than leaders. In particular, we are focusing on the data out of china. Nejra he is still speaking following the surprise decision. He said the cut should be done when the rate cuts are at their maximum. He is reemphasizing that the Indian Government and central bank need to work in a coordinated manner. Lets get to the markets. The rupee has been fairly steady. We are looking pretty flat. This seems to be stabilizing a little bit. If you look at u. S. Futures. The asian market is playing a little bit of catchup. You can see the futures are reflecting what is happening in the cash market today. Both sides are agreeing to tariffs that will be rolled back in a phase one trade deal. There was quite a bit of risk off with trump saying he did not have a deadline. He said behindthescenes discussions are going ok. How optimistic are you that we get a phase one deal . We are reasonably optimistic. President trump pulled the same kind of stunts. As they got close to an agreement, he threatened to back off in order to try to squeeze extra concessions. We expect we are seeing the same things now. American step back on sanctions on huawei. We feel like that was a big step. Nejra how optimistic are you . We understand you are fairly defensive in the portfolio. We ares not so much defensive. Theye do have protection are important for the overall narrative of the global economy. We look at the rollback of tariffs is the first round of stimulus. To be followed by fiscal out of the u. K. And europe as we move through 2020. And out of japan in the next few weeks. Nejra 2019 has been great for equity and bonds. How does the shape up for you in 2020 . We think 2020 has shifted a bit. Return should be much lower. Be focusing ond taking coupon like returns. Nejra what about the prospects for the dollar . One of your conviction causes for the dollar bull market to come to an end is that to do with a fed rate cut . The globaln as picture gets better around u. S. China trade and Global Growth . I think it is for both of those reasons. The fed signaled that it was moving toward an easing by. Not just with rate cuts but with the balance sheet. We think the growth dynamic around the world chess from the u. S. , which is carried the load for the last two years. As in more international, particular fiscal starts to take hold in europe, japan, into a makes certain extent, china. On ise are not focusing the political dynamic which could start to shift. Here in europe, politics have been an overhang. That is starting to clear. That overhang should come into the u. S. Market as we get into the president ial elections in 2020. Nejra if you think the focus in terms of growth will shift away from the u. S. To other parts of the world, does that include europe . What is your strategy around European Assets . We do think it includes euro. A few things drive that. We see a change in the Political Leadership in the eu that will be important. Fiscal and Monetary Policy to become coordinated. We think that will manifest itself by midyear in 2020. Obviously in the u. K. , the clearing of the issues surrounding brexit should clear the capabilities to move policy and restart growth. Nejra how does this actually play out . Does this mean we get yields rising or government bonds . A stronger euro . We do think the euro will strengthen going forward. That will be key. We think sterling will strengthen as well. On the continent, the ecb continues to intervene in the bond market. The prospect for a meaningful rise in yields is quite nonexistent at this point. Standing by for the worlds biggest ipo. Saudi aramco has discussed at the top endes of its marketing range. It would raise a record 26. 5 billion, knocking off alibaba for the biggest debut. We are still waiting. Has anything changed . We are still expecting an announcement to come from aramco today. Giving us the official figure of where they will priced the ipo. We understand that it will come in at the top end of the range. If you look at the order books so far from the last announcement, they were are about 2. 5 times covered already. All of the bids seem to be coming in at the top end of that range. That gives them the comfort to price at that top end. Debuting inbe around a weeks time on the Stock Exchange in riyadh. The worlds biggest listed company will be based in riyadh. It will not be apple or microsoft any longer. It will be aramco. The saudis will be very pleased with that. The 2 bit short of trillion valuation they had hoped to raise. It is lacking some of the foreign capital. Because of concerns around that valuation. We are still waiting for the final confirmation. The final number. Nejra lets hope we get it so you can start your weekend. Thank you so much. Lets get the first word news. Japans government is pulling out all of the stops on fiscal stimulus. Tokyo announcing they will support growth as the economy contents with an export slump and a fallout from a tax hike. To boost realed growth. The antitrust probe against amazon is expanding to include it cloud business. Commission isade asking about the cloud unit. The ftc and amazon declined to comment. An unexpected hold in india. The r. B. I. Keeping its benchmark rate unchanged as headline inflation. None of the economists predicted the move. They were all expecting a cut. Retained itsank culminated staff. We have learned that the carmaker is being presented with a hefty deal. It relates to the 2014 restructuring. Global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Nejra Annabelle Droulers in hong kong. Thank you very much. The r. B. I. Defies forecasts and leaves Interest Rates unchanged. We will talk about that next. Tune into Bloomberg Radio. This is bloomberg. We are 44 minutes away from the start of cash equity trading here in europe. Japans Prime Minister has announced stimulus measures to support growth and economy contending with an export slump, natural disasters, and the fallout from a sales tax increase. We are looking at a total package worth about ¥26 trillion. Much bang will this fiscal package have for japan . It should be very helpful. If you look in terms of where the deficit is. It pushes it down to where the u. S. And china are. We think this buys time for the rest of the world as well to get their fiscal house in order. Really move fiscal to supporting growth around the world. Nejra how positive are you on Japanese Equities . Expect theming you to outperform bonds on a global basis. Japan is interesting but one of the challenges for investors is when Japanese Equities go up, the currency tends to strengthen im sorry, would need to weaken. In this environment we think the currency will work against you whereas in europe we think the currency will work with you. Nejra why would the currency work against you, particularly if you think we will get further stimulus from the boj . That would be very good domestically. The problem with japan is they run a very large surplus in terms of capital inflow in the current accounts. You tend to see investors coming back to japan that will increase the currency. A you are in exporter for japanese corporate, that is not very good for your earnings picture. Nejra to broaden this out to the fiscal picture generally, one of the things youre looking for for 2020 is the transition from monetary to fiscal stimulus. How do you factor that into the portfolio . It is certainly a Global Growth picture. One of the other things you will tend to do is shift your focus on the size of the company. What you tend to see as Larger Companies can be very globally oriented, export oriented. To isou want to shift focusing on domestic beneficiaries. A shocking decision from the r. B. I. India central bank testified all forecast to leave rates unchanged. Lastecision comes despite weeks gdp data showing a slowdown. Economistvery other surveyed expected a rate cut. Had isments that we have that they are waiting to see the real impact of Monetary Policy. Given the signals we have had from him in this News Conference, when do you think we might get another rate cut . Is that easing cycle still in place . Todays decision was a very surprising one. What it does is shows that the r. B. I. Is once again changing its goal post. Betweenipflopping earlier saying that it was a priority. Once again switching to inflation as a priority. Inflation and growth dynamics, my sense is that, even in february, we are working on another hold. Beyond that, there might be further Space Available for this new policy easing. This is overall negative for growth. Todays policy decision is certainly inconsistent. It will further downgrade into 2020. The growth is further downgraded to 6. 1 . Been downgraded even more sharply to 5 . 190 basis point reduction. This is quite a serious affair. Nejra you say in february we might get another hold from the r. B. I. Need for fiscal policy to work in tandem with Monetary Policy. It comes with a growth impact. What kind of easing cycle will we need beyond that to actually support growth sufficiently along with what we know we will get on the fiscal side . If you look at the real economy, it is starting to turn around. One needs to take into account the severity of the current slowdown. Potential growth stands at a wrapped at around 7. 5 . That is a very sharp downturn in the economy. Even if the economy starts to recover, a lot more stimulus is needed for the recovery to be sustainable. And to close the negative output gap. Todays decision signals that the r. B. I. Seems to be in no hurry to do that. My senses that we will continue to see a recovery but it will be shallow and slower going ahead. It will only deal a bigger financial shock. Will give it ats bigger view of higher rates. Perspective, it bodes not well. It will only increase the trust deficit. Thank you so much. In general, you are saying that investors should be looking for opportunity. India, you looking at particularly given the surprise decision . One of the challenges we are seeing in the emerging markets was pointed out. You are not seeing that coordination between monetary and fiscal. Be veryant to selective. With india, is that a debt market that you would like as well . We have seen yields jump on this decision. Equity markets taking a little bit of a hit. Readuncertainty on if the easing cycle will resume. They are behind the curve. Want centralbank ordination with fiscal policy makers moving out in front of the curve to really coordinate that picture from a growth perspective. Nejra we will turn to the u. S. Economy. Companies added the fewest workers to payrolls in just six months. Assing the median estimate in bloomberg survey. This signals a Fourth Quarter slowdown. We will also be looking at the jobs report tomorrow for more information. Elizabeth warren was scathing in her remarks of how trumps Foreign Policy is affecting american markets and consumers. And want to see trade occur a way that is helpful to the american worker, the american consumer. I dont want to see what donald trump is doing. He is destroying markets and nejra round the world to just your first thought on the jobs report. The employment side looked a little bit positive. This might cause some concern. It well. The way we look at it is the u. S. Economy is in this tonsition phase from slowing a monetary acceleration as we move into the new year. You will see trends that are a bit disappointing. It will be bumpy until that momentum picks up going into 2020. Nejra what does that mean for the fed . Are you expecting a number of fed rate cuts in 2020 . One of the things you are seeing if you look at the financial conditions of the u. S. Is they have tightened once again. We expected the fed to start shifting its tone. Becoming a bit more dovish. If these numbers continue to be week, it will not surprise us to see policy easing further in 2020. What is the balance . This is a scene we have been talking about globally. Will that be a big discussion in the u. S. . On the fedbe focused in 2020. With the elections coming in november, the fiscal momentum really will not pick up until 2021. You will have to rely on the fed to buy time. We think that is what they have tried to do with the move in october. Not just with rates but with a big move to start read balancing the sheet. What is the impact on the u. S. Bond market . Will you be anticipating steepening in the u. S. Curve . Perhaps led by a selloff in the back end if you are expecting Global Growth to hold up. The fed has singled signaled that it would like some steepening. They want to effectively do some yield curve control like the japanese have already been doing for the last several years. In addition, in the bond market, what it single signals is they are key to keep the Corporate Bond market liquid. They dont want the trends to push out too far. That is an opportunity that investors should take advantage of in the new year. Nejra you have written a piece that explores what lurks under the surface in credit. What is your take on that . What is the key message . This is one of the reasons why we believe the fed will stay easy. Asare seeing leverage loans well as lowquality highyield bonds. A lot of pressure start to emerge. We dont think the fed wants to see a full cycle take hold. Really great to have you on the show with us this morning. Thank you so much. That is it. The european open is up next. Futures in the u. S. Are pointing a little bit more positive. Following a bloomberg scoop on u. S. China trade. U. S. Futures also in the green. We see gains in asia. What a beautiful sunrise in london. This is bloomberg. Anna good morning and welcome markets european open. I am anna edwards alongside matt miller in berlin. Matt spend spend on trade optimism and a huge fiscal boost, japan futures point higher. The cast trade is 30 minutes away. Matt