Records and commodities enjoying their best weeks in five months. Nejra is official. The conservative party reserved a majority. Boris johnsons victory will allow him to carry out his promised to get brexit done. Aside from the parliamentary majority, it gives him free reign to take britain out of the union in january after four years of gridlock. The hope for an end made the pound jumped the most since 2017, highest level since may 2018 against the dollar, and the strongest rate against the euro since after the 2016 brexit referendum. Apart from it, its also worth noting Jeremy Corbyn said he would not leave the party in another general election and the lib dems leader has lost her seat in scotland. Taking a look at how assets reacted, you can see the pound jumped over 2 overnight. Us are ever to guests. Welcome both are our two guests. Welcome both. I think the pound could push higher. I think 1. 36 could be within isch, sterling around1. 82 in the cards. Brexit, with the outcome that happened a few hours after the trade deal between the u. S. And china would likely mean sentiment would remain supported, meeting swiss franc, yen likely under pressure, sterling lightly to outperform likely to outperform. Cable may offer the best potential for upside surprises, given valuations, given positions. Nejra what are the prospects of the kind of brexit we might get . Not all uncertainty has gone away. There are two sides as to whether we are going to see a closer relationship with the eu. What is your base case of how this evolves . s current phase of uncertainty goes away and i expect what sterling has done since the exit poll came out last night, it also gives us certainty about the Political Party in power for five years, barring something extraordinary. That removes uncertainty. But the next stage is, get it. What is reassuring is complicated. What is reassuring is theres much more room for negotiations. He was relying on his mps to come to Common Ground like theresa may used to have to. Its not going to be easy. Later next year, things will get complicated again, but it does give him room for maneuver, which is important. Things get as complicated later on in 2020, you are seeing six months of cable plunging, and one year falling right now. How would you betray bull markets even if the cleanest is with cable . We are in an environment of low fx and the pound was the one currency in that space that was offering an uptick up. The main reason was brexit. The uncertainty was likely to abate further. What i would expect is normalization of sterling gold coming more in line with the rest of the g10, e. M. Crosses, if you wish. Ill be a seller here. If anything, i would expect further steepening. Some of the risk, some of the uncertainty may likely persist, especially as we approach the end of the transition period. From that point of view, the long date for one year and beyond may offer interesting buying opportunities. But overall, we expect the curve to come off a bit and resteepen, some buying emerging for the long end of the curve. Nejra what reaction are we seeking in the gilt markets . Highend yields. That will lift. The front end will reprice expectations a bit. I think on the open. Slightly offsetting all of that will be relief were not going to get a massive increase in issuance, which might have been a consequence of government. Its a mixed picture, but initially the unwinding of the safe having bid, the renewed appetite, risk on in the basis, both with u. S. China trade talks, is going to be the dominant factors. With yields higher, the 10 year sector will over perform. Going to end isnt move far and along will be issuance staying under control with this confirmation. Nejra on these expectations, does this change expectations from the boe . You were expecting a cut in the first half of next year. Our view has been premised on a conservative majority. Clearly there was some doubts about it. You can see that in the reaction on sterling. Im not saying we were expecting one this conclusive, but the rate cut call was based on a conservative government. Q1 should be better. There should be a relief rally in assets, a pickup in sentiment. But by the middle of the year, were going to be worrying about what happens next. We wont know by the middle of the year. Inflation is going to slow significantly. Its already slowing. With sterling, it will be slowing more. Indeed. The effect from strong pound will likely play out as significant inflation, negative input inflation. The inflation input from august provides details on those estimates. They were pretty significant. The pound continue to rally. That may strengthen the length potentially down the road and possibly into 2020. Nejra briefly, you said sterling might stabilize around 82. Is that because you expect the euro to rise . Were at a fourmonth high for various reasons. Forerfect for europe, brexit and the trade war, both risks are now kind of gone for the time being. It feels like europe is offering value predominantly against the dollar, less against the pound. Wereechnical side, what also seeing is corporates returning to buy the euro. Theyve been missing in action for 18 months, since 2018. Were seeing buying of both eurosterling and eurodollar. Surplus inve a trade the eurozone, which compares to deficit in u. K. It could push them higher, especially year end. Nejra john and valentin stable, with it valentin, stay with us. In the u. K. , Boris Johnson has won a decisive election victory, the biggest win for the party since margaret thatcher. The labour party was battered in its heartland. Some areas of voting tory for the first time in generations. Johnsons win put britain on course to win the eu next month. It does look as though this one nation conservative government has been given a powerful new mandate. [applause] to get brexit done. Corbynr leader jeremy says he will be stepping down, but not immediately. He wont lead the party into the next election. Another highprofile loss, liberal democrat leader jo swinson. She lost her seat near glasgow. Brexit has redrawn the electoral map of britain, big swing for europe. The u. S. And china on trade deal, President Trump signed off on the pact. Washington has offered to cut existing tariffs by up to 50 . That in return for beijing making larger farm purchases and beefing up intellectual property protections. The terms have been agreed. It hasnt been finalized. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. Im one half. This is bloomberg. Nejra thank you so much. Lets get a check on the markets, a couple of risk factors taken out of the market. The conservative majority in the u. K. Election and reports by bloomberg there is a phase one deal between the u. S. And china, the msci index firmly in the green, table up more than 2 , highest since 2018, jumping the most into two and a half years. Ylatility, we did see the uan jumped the most in a year. If we look at dollaryen, no surprise the yen retreating with general risk on sentiment. U. S. Futures on the front foot 1. 9110 of a percent, and a handle. How soon do we get to 2 . We are waiting to hear from President Trump, perhaps later today, on the state of play between u. S. And china and the tariffs. In the meantime, he is commenting on the u. K. Election, President Trump saying the u. K. And the u. S. Are free to strike a trade deal after brexit. Also saying, congratulations to Boris Johnson on his great win. President trump approves phase one of a deal. All the details on that next. When youre traveling to work, tune into Bloomberg Radio or on dab Digital Radio in the london area. This is bloomberg. I declare Boris Johnson is duly elected. It does look as though this one nation conservative government has been given if our for a powerful new mandate to get brexit done. Brags has so polarized and divided debate brexit has so polarized and divided debate in this country. I think its turned out to be at a historic be a historic election that gives us now, this new government, the chance to respect the democratic will of the people. The issues of social justice and the issue of the means of people will not go away just because brexit is dealt with in the way Boris Johnson presumably plans to deal with it. I plan to unite this country and take it forward, and to focus on the priorities of the british people. These results will bring dread and dismay, and people are looking for hope. I will not lead the party in any future general election campaign. We will see if its possible possibleritish for the British Parliament to [indiscernible] thank you all very much. Not tomorrow, today. Nejra the highlights of the main story, Boris Johnsons conservative have won a parliamentary majority. What else is driving risk on an trade, u. S. Donald trump signed off on the trade deal with china that stopped additional tariffs at around 160 billion of being imposed is, 15th. Bloomberg learned imposed summer 15th. December 15. Bloomberg learned the deal has not been finalized yet. Our guest are still with us. Still ane valentin, lot of uncertainty, but it looks like we could have phase one and potentially rollback. Expect further recovery there, in particular with the phase one deal. There was uncertainty in the build to this week. A relief rally may have further to go. More importantly, the funding conditions for chinese exporters have improved. The actions by the fed that are translating into other liquidity into year end. We know from the last couple years, dollars scarcity, distress stress demand for dollars by emergingmarket corporates have been causing volatility, uncertainty, emergingmarket weakness in year end 2017. Liquidity could produce a more positive outcome, which could see the u. N. A bit stronger, especially given or taking into account in anticipation of all that, chinese corporates have been holding cash hoarding cash. They could buy u. N. Back you want back yuan back. That could be a positive outlook for asia. Korean won stands out as the currency from valuation point of view. That may benefit from that development. Nejra youre watching the korean won. In terms of the draw dollar index, how are dynamics into play out . One argument could be well see dollar weakness. But someone i was speaking to earlier said the dollar will benefit from yield support. The 10 year treasury yields mean we could get to 2 or beyond. They are on their way there. There are offsetting forces and with so much new information, i think we need to take a step back and consider what that broader picture does add up to. You can see from the Market Reaction this news is a positive surprise to the consensus. We put ourselves in that camp. We werent expecting to see this much progress and we werent expecting to see yields rise as much as they have done and are doing right now in the u. S. Theres a process of recalibration. This. D to see clarity on weve had false storms around trade talk optimism between china and the u. S. Cautious abouty being too optimistic. Nejra how would you trade the dollar . Would you sell it against risk butencies, maybe asian fx, by it against the yen . The way you would buy the dollar first, may be easier. The swiss franc. These are the currencies the safe havens have benefited the most during the previous risk aversions we are emerging from. By implication, i would expect the valuation could argue for weaker yen, weaker swiss francs. We expect the dollar to benefit from right advantage, doing relatively well. Thats in contrast to the euro, which has failed to benefit with the funding currency, but failed to benefit from the previous risk aversion bout. It was a perfect storm for the euro. The dollar may lack behind the euro. The euro could squeeze higher. In the case of dollar versus other risk currencies, i believe the relative fundamentals still favor the dollar against many of these. If anything, the experience has been there has been the darlings for the investors in the emergingmarket. You think of the mexican peso and indonesia rupiah. You expect those to do well across the board. The rest, the korean won up potentially the korean won potentially, but the rest look underwhelming. Nejra they stay with us. Lets get a Bloomberg Business flash. Hi, nejra. The top aviation regulator is criticizing the boeing executive. Hes quoted concerned the plane maker is questioning the agency on the 737 max. Deteriorations between the two sides will likely delay the jets return to service. It was grounded after two fatal crashes. Dealery hero is nearing a to buy the ticket Food Delivery Company at 4 billion. It would buy an 87 stake from existing investors. 13 held by Senior Management would be converted into shares of delivery hero. U. S. Regulators are considering suing the plan to merge axes him. The federal trade commission is considering blocking messages. The integration plan has come under criticism. Some say it would make it harder to break up facebook as part of any antitrust chase against the company. And that your Bloomberg Business flash. Nejra thank you so much. Its official. The conservative party has secured a majority in an historic u. K. General election. Well be all across the story all our. Its risk all hour. Its risk on all across the world. Theres much more ahead. This is bloomberg. Nejra this is daybreak europe. Im nara k pitch in london. We are joined by Juliette Saly in singapore. Take it away. Juliette i think this chart encapsulates the risk on friday we are seeing with global stocks hitting that first alltime high since the eve of the global route in 2018. We have exit clarity but also the strong record coming through from u. S. Stocks overnight. We also have the trade agreement signed between the u. S. And china and investors position themselves after the better than expected jobs report coming through in the u. S. Last week. Peter atwater telling bloomberg it feels all the bricks are falling at once, and as Bloomberg News puts it, it is time to pop the champagne this friday the 13th, earlier for me then you. Nejra Juliette Saly in singapore. Get on that champagne. Our guests are with us, not tricking champagne yet. Weve got risk assets rally. But lets not forget what we heard the past 24 hours is already priced. Should we be fading this wisconn valley at this point this risk on rally at this point . But there are reasons to wait and see whether this has followthrough momentum. Theres a lot of leading indicators and data that looks at where things may be heading that has already turned sour over recent weeks and months because these concerns suddenly seem to be lifted. Will this alleviation of risks of being followed by an upswing, and thats where you need to see growth rates react seller a and get onto firm footing reaccelerated and get onto firm footing . Person is naturally cautious about this things. Its worth a little bit of caution at this point. Nejra when would you exercise caution . You want to write high for a little bit. Its been a difficult year for many. It. Think you want to milk you have another week or so before year end. Some cautiousness will ultimately prevail because we need to see the positive developments and the geopolitical risks abating will translate into stronger business confidence, Consumer Confidence data around the globe. Happen that may indeed and our expectation is that europe, in particular, may provide that evidence, given pmis in the euro zone have been beaten down so badly in the u. K. And the euro zone. You expect that recovery. The initial rebound could be the strongest. Asia could offer the hope for the rebound. By implication, the european assets, the euro dominated assets, may be looking attractive. What remains to be seen is if the markets wait for the rebound to take place before they tap into those markets again in earnest. Some have said even a potential rebound is already priced. But we hit high after high. John and valentin stay with us. The conservative party confirmed a majority. Well be across the story all our. All hour. This is bloomberg. Nejra this is daybreak europe. Im nejra cehic in london. These are the top stories. It does look as though this one nation conservative government has been given a powerful new mandate. [applause] to get brexit done. Boris Johnsons Conservative Party heads to a landslide election victory, the likes of which havent been seen since margaret thatcher. The pound source. Chinas u. N. Jumped more than a year as bloomberg reports donald trump signed of on a phase one trade agreement. And a sea of green is risk on with global stocks hitting records, commodities enjoying their best week in five months. Nejra it looks like christmas has come early for risk assets on two fronts, a conservative majority in the u. K. Election, which made the pound jump, getting a 1. 34 jump on cable. And the yen retreating after bloomberg reported a phase one deal is in the works between the u. S. And china, meeting this december 15 tariffs are on pause. We get reaction from all over the globe. Lets turn to ever reporters, dani burger joining us from london. Juliette saly joining us from singapore. Ticket offer us. How is the agent kick it off for us. How is the Asian Session looking . Juliette im looking at big moves in the currency markets. Weve got this agreement between the u. S. And china, and oil in the Asian Session, we saw the onshore yuan have the biggest jump against the greenback in a year. In the offshore currency, when you look at my chart, has seen the u. S. Dollar trade on the lower side of the moving average against the u. S. Dollar for only the second time since we saw President Trump reescalate the trade war in may. 6. Rate advanced from 1 to big and weve also seen rallies in the korean won. You are seeing risk assets played out in the fx based in asia fx space in asia. Nejra your learning at the bearish option unwind with major macro capitalists come and gone. Dani ive been beating against the drum about how it goes under the surface. Weseeingre an unwind of these positions. We have these catalysts that have gone off the table. When you look at the putcall, it has plunged, now for every bearish option, we see more than two bullish options. Circle, lastellow december, after the markets finished their correction, it was put to use. This time, its not that they are put to use. They are just not necessary. They are not going to pay off. This shows the extent traders have a sigh of relief today. Nejra you just want the tongue twisters for me. Dani burger in london and bloombergs Juliette Saly in singapore, thank you. Lets get bloomberg first word news. Ecb president Christine Lagarde struck a positive note in her centralbank debut. She says the slowdown is showing signs of bottoming out. We learned some wanted her to mention the risk of subzero rates, for the council thought it would be over introverted by investors over introverted by investors. E. U. Pledged to eliminate net carbon emissions, and historic pledge. 26 nations gave an endorsement of the goal. Poland budged, endorsing the objective, but not committing to meet it. In the u. S. , the House Judiciary Committee is plowing ahead with articles of impeachment against President Trump despite objections and amendments of republican members. After hours of heated debate, the chairman delayed the final vote until today. Apple bought a u. K. Based startup with technology that improves smartphone voters. The tech giant controls spectral edge. We havent learned a purchase price, but erased raised more than 5 million in funding. No comment from apple. Global news, 24 hours a day on air and on quicktake by bloomberg, powered by more than 2,700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra thank you so much. It is. The conservative party has concern reserved a conservative majority. It will allow abortions and to carry out his brexit practice. It gives johnson free reign to take written at of the European Union in january after years of gridlock. The hope of nn has made the pound jump most since 2017, and had the highest since may 2018 against the dollar, and the strong is rate against the euro since after the brexit referendum. Lets look at the highlights first. Declare that [inaudible] [no audio] nejra we will get back to that in just a moment. Joining us is devon merritt, the Senior Executive error editor. We did manage to see the highlights of what happened overnight. Why dont you take us to of them . Take us through them . What a dramatic night. British politics upended. Weve got a conservative majority, which we havent seen since the heyday of margaret thatcher, a disastrous night for Jeremy Corbyns labour party. He announced he would be stepping down. This career is over and his version of a socialist britain is not going to happen. You are seeing relief of that in the market. Mr. Johnson is the most powerful politician and conservative new leader conservative leader for a generation. What is he going to do with that power . What about the future relationship . Maybe the size of the majority means he has more wiggle room to negotiate a closer relationship with the European Union that many in his own party has wanted. He is no longer hostage to his warring factions that hampered theresa may. Beyond brexit, what is his vision for britain . One thing we know for certain is he is going to be per minister in a powerful position, leading this big, conservative majority for many years to come. Nejra there still certainly is uncertainty through 2020 in terms of how long the negotiations might take. The prospect of a klepac next year of a cliff edge next year. But the other prospect has been down to the results of the national party. What can we read from those . David yes, indeed. A very different result in scotland. The scholars nationals scottish nationals having a clean sweep. The constitutional fight within the u. K. Itself, he has got a mandate to take the country out of the European Union. The leader of the s p is arguing this gives her the mandate to have another independence referendum for scotland, gives them a choice to stay in the eu, as well. Up to now, johnson said he would not allow that to happen. With such a huge victory for the party tonight, would he be able to resist . The fight is going to switch from this tussling over from whether or not we need the eu to whether or not the u. K. Can stay together. Also, to go back to what you were saying about what kind of Prime Minister and government Boris Johnson is going to lead, what can we expect in terms of policies other than brexit . Spending, for example . Campaign, it was fairly and liberally so cap to rather vague deliberately so kept rather vague. Repeated,he pledges hiring new police officers. I think we will get a budget, of course, probably not until after the brexit hurdle has been crossed. So maybe in the early spring. And then we will get a sense of spending. This election was around the question of austerity, which johnson has declared there were going to loosen the spending caps. The analysis of the spending plans, the numbers didnt add up. Conservatives traditionally far more cautious with the countrys finances. Now that hes got this mandate, what sort of budget is he going to put forward . Who is going to run that . We will find out later today whether he was stick with the cabinet or make changes there, as well. Nejra exactly, looking ahead to any potential cabinet announcements. How robust an opposition will there be in the house of commons now . David im having trouble hearing a little bit. Weve got some music. Im not sure whether is in celebration or commiseration. Nejra just asking. I was just asking how robust an opposition well have in parliament now for Boris Johnsons conservatives, given what a painful night it has been for labour . Has had ahink labour disastrous night and will be in disarray. Interestingly, we know many of the mps in the labour party were not fans of the lead ship, so there will be a tussle in the direction they take. Are they going to pivot back to central ground, which was successful for them under 20 wonir, w tony blair, who e three successful elections. We know mr. Corbin has tried to lineup successors, like bailey, for example, who would step into his shoes. Its going to be fascinating to see how that plays out over the coming months. How is labor going to rewin the hearts and minds of these people who have never voted tory all their lives, and last night switched to Boris Johnson conservatives . We will find out. Nejra we will let you get back to enjoying the music outside westminster. John and valentin are still with us. You were saying there was a reasonably care plath for labor clear path for labour to get to 1. 40. At what point would you want to fade destroying rally . The structural short in the market, which is evident in the Portfolio Outflows weve seen, especially in the run up to the election. Before that, earlier this year, if you use balance of data. You expect some of those lows will go into reverse. U. K. Assets still looking relatively cheap. Any potential risks down the road notwithstanding. Bpp is an indication there is value in those assets. I would expect that to continue. I mentioned earlier we are long cable, so we have target 1. 36, consistent with our longerterm fair value model. That may be the level you consider taking profit, not chasing it all the way to 1. 40, because 1. 40 may come, or to lower levels, but to see the economy recovering and assets discussing earlier not materializing. Nejra on the prospect of the economy recovering, how do you anticipate a resurgence in Business Investment, Property Market lifting, any indicators for the u. K. Economy that would react to the news overnight . I think the consumer can react the most quickly. We can look at indicators and consumption and year end and early next year as the first signs. The problem with Business Investment is all were getting now is clarity over a year. Thats one reason we think the rebound will be fairly muted. We have to wait and see what approach mr. Johnson takes with negotiations and whether he starts to become more flexible or sticks to his line. In this election campaign, theres been an oft repeated commitment there would they wouldnt extend the transition period. They have one over brexit voters, so he needs to think carefully before he becomes too careful. Theres a bit of a pickup in consumption. Investment is muted until we get more clarification. Nejra john and valentin stay with us. 64 million. Byll explain why this number aramco is a letdown. Stay tuned. This is bloomberg. Nejra this is daybreak europe. Is what you need to know. Saudi arabia heres what you need to know. Study aramco is to pay banks. Dani burger joins us. I wouldnt mind 64 million. Dani i wouldnt mind either, but for top banks, this is a massive letdown given the size of the steel. Usually bankers will earn more than 40 , but that 64 million is only a quarter of a percent, much smaller than what they earn. In real money terms, that thats [no audio] they brought in the majority of the orders. You have to keep in mind these big wall street banks have pitched aramco on reaching the goal of eight 2 trillion value. That didnt happen and a lot of officials were frustrated. This is largely a reflection of that and even junior positions and payouts like book running, we saw domestic banks paid more than twice as much as the big foreign banks. Nejra thank you so much. Lets turn the ecb, Christine Lagardes first big announcement. Lagarde striking an optimistic tone. Somerms of the takeaway, she was a hawk or dove, more of an hour. What did you take away . There was clearly that message, and thats what caused most of the reaction. But there was more cautious comments about downside risks, as well. In the wider contexts, this removal of a lot of perceived risks, the takeaway has been on the more positive side. That makes sense. That seems to be the message she wants to put across at the beginning of her presidency, whether it can survive the coming monthswell have to wait and see. Nejra when she came to the helm of the ecb, there were questions whether there would be more messages around thats enough in terms of negative rates, but do you see the prospects of more easing . Is that more via rate cuts or q. V. . Bottomthe ecb, its the of the easing cycle, and quite open to easing further if warranted. But it does feel the backlash against negative rates has been growing of late, which may tilt the balance of risk towards more qe, private assets, as compared to lowering rates further in the euro zone. But as john was saying, Christine Lagarde herself, she refused to get into any detailed discussions, which may be preferable at this stage. What is quite important and of interest is the fact that she views negative rates and qe as one package. That offers a useful way to resteepen or prevent flattening or inversion of the curve. Could qe lead to that outcome . I thing outlook for rate in the years on may depend on where the bond yields will be trading down the road. I think we are closed to the rockbottom of the easing cycle. Nejra john and valentin stay with us. Coming up, after the decisive win, sterling has sort. How far can it go . Stay tuned. This is bloomberg. Nejra this is daybreak europe. This election result has made sterling jump since the most since 2017. Dani burger joins us with the pound calls. Dani with the election over, its time for strategists to update their pound calls. One of the first we heard was from paxton. During this Asian Session, we might see traders push session to1. 36. Once europe comes online , we could see the pound retreat, as this result was expected by a lot of traders in london. Cable going as higher high as one spot 37. Were likely to have the vote done before before 2020. The upside is likely capped. For ubs, sterling not likely to search past 1. 35 level were nearing this morning. There are a lot of unknowns, not to mention a trade deal but between the u. K. And e. U. That needs to be accomplished. A deadline is likely unachievable. Nejra dani burger with the updated pound calls. John and valentin are still with us. You are here from ubs to talk about the fact capable struggle past 1. 35. Why . As she was saying, we have gone there at no time at all, but to agree, the good news is that its all happened. Its all priced in. Theres conservative government within the majority. They will leave the eu. There will be a transition for 11 months after that. We think there will be a bouncing growth in q1. What moved sterling next is what happens beyond that. As we were discussing, in our view, negotiations are going to be problematic. The changes in isnt long enough and this new government, although it does have flexible it, it has been committed to not extending the transition. That remains to be resolved and they drag their feet on asking for an extension when they think phase one is definitely need. Theres going to be worries about the deadline next year, which we think will soften sterling again. Nejra can i get both your thoughts on why sterling is not at prebrexit referendums . We still have got this process to get through. And even if we do get through it, most of view it as brexit, economically in the shortterm, is a cost. Even if we come out on the others of it, sterling is in going back where it came from. The economy is in a much worse shape than it was before the referendum. Deal ising, johnsons still looking like hard brexit. Is not a Customs Union. Its not eu measure bishop. Membership. The overall impact could leave the economy weaker than before. That is reflected in the market, for the pound, for lack of performance. Valentin, great to have you both with us. Thank you. We are looking at live pictures from downey street, where Boris Johnson is going to speak on his conservative party got his biggest result since margaret thatcher, a conservative majority. Thats what weve seen overnight, a painful night for labour, not a painful night for the pound. Thats it for bloomberg daybreak europe. The european open is up next. This is bloomberg. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Good morning, everyone. Welcome to Bloomberg Markets european open. Im Francine Lacqua in westminster and matt miller is in berlin. Matt today, the markets say risk on. The ms ci all country index hits a record high as the trade deal gets further. Tory victory eases investor angst. The cash or trade is less than 60 minutes away. Bring on brexit. A decisiveon wins majority in what is likely to end the brexit deal deadlock and the pound sores. Phase one done . A bloomberg scoop. President trump signs off on a trade deal with china, canceling a fresh round of tariffs that were due sunday night. Markets rally bigtime. As we hit record highs said bond yields, and the pound jumps as well. Risk on as trade and brexit worry fade. From ther an hour away start of cash equity trading across europe and the u. K. Lets take a look first off at futures. You are looking at gains across the board. Probably most interestingly, they are big numbers. Dax futures up 1. 3 . You see ftse futures still putting up decent gains, even as the pound rallies hard against the dollar. Nsually, those two have a inverse relationship. Take a look at s p, dow jones, nasdaq 100. We see green arrows across the board. S p futures up 0. 4 . Dow and nasdaq futures up 0. 5 . We are still seven hours away and change from the start of u. S. Equity trading. Take a look at the gmm. If you look at the gmm you will see also some sorry, just more risk on indicators, francine. I guess you get the picture. Francine sorry. We are so excited about covering the u. K. Elections that i even interrupted the great matt miller. A landslide win for Boris Johnson. A few constituencies are left to declare, johnsons conservatives 360 60 seatswon with labor just under 200. Jeremy corbyn says he will stand down. The liberal democrat leader actually lost her seat. This puts the u. K. On course to leave the eu by january 31. Joining us now is bloombergs Senior Executive editor, who is with me covering all the big market moves. Garfield reynolds in sydney. Thank you both for joining us. David, this is a huge win for the conservative party. What does it mean for brexit . It gives mr. Johnson a mandate to get brexit done. It will be the first in first stage in brexit he will get done, his Withdrawal Agreement. He could not get it through his parliament. Now he has the sort of mandate that no conservative leader has had for a generation for generations. It is the heyday of margaret thatcher. That deal will get past and britain will leave the European Union on those terms at the end of january. We then go into the transition phase that is due to last until the end of 2020. Some people say thats where the hard work actually begins. Aey have to hash out comprehensive freetrade agreement with the European Union. What is that going to look like . We have a few clues in the future declaration. Francine is there any chance we have a no deal brexit . That has probably been taken off the table. Will we get a vote on the Withdrawal Agreement before the end of the year . It is very likely we get a vote on the Withdrawal Agreement. He will push that through possibly even before christmas. No deal brexit is very unlikely. We have been talking about another cliff edge at the end of december. The size of this majority means he has a lot more leeway. He can do what he likes now. He is now the most powerful conservative Prime Minister since margaret thatcher. If he wants to ignore the erg and extend the transition or go for a softer brexit, he has the frieden freedom to do that. Matt absolutely fascinating indeed. Today, we are asking the question on the mliv blog, what is the biggest risk left for markets . We have been talking about all of the gains that we see in equity indexes and futures around the world because of trade and the election. What is the biggest risk left for markets . You can join the debate, reach out to us and the mliv team. Lets get over right now to Garfield Reynolds from our mliv team and ask him what he has been hearing. You guys have had this question on the blog for im guessing a good four hours now. What are the responses you are collecting here, garfield . Of the responses have been precisely that a big one of the details that come from the all we have got right now is some things said about people familiar with agricultural purchases and putting off the december 15 tariffs and potentially rolling back some of the others. The legal text has not been agreed. We had deals that seemed to be so thats a very key risk a lot of people are worried about. Some people are also pointing to whats going on with one of these in particular, industrial with commodities in particular, industrial commodities. Agricultural commodities have been doing just fine. Those are still pretty weak and that his attributed to the underlying weakness that remains in the global economy. It is not clear that what we are getting out of the trade deal is going to necessarily allow for a sustained economic turnaround if a lot of the tariffs still stay in place. That is a risk. The economic surprise index has continued to disappoint on the downside. It has gone back below zero and stayed there. So if the economies of the world keep on demonstrating that sort of weakness, then that is a very grave risk for risk assets. The trade deal cannot solve everything. Matt what about the pound . We are looking right now at 3451, a big jump in sterling. There were some traders and some people on the mliv blog talking about buy the rumor, sell the news. A conservative victory was priced in. Come result today, we would see a selloff as investors took profit. That is not happening. Is this a risk for some traders or in any way for markets . Garfield well, it is definitely a risk. Very interesting to me the way that the pound, as you said, roared out of the gate and then stopped. Some people were saying its just waiting to see the exit poll was such a surprise to be so much better than had been expected, even in the event of a strong conservative showing, that people wanted to see if this really was the result that we were going to get. It is. Yet, the pound has not gone very far. Part of that is even that the concern is that now brexit can happen on an accelerated basis. And that in fact brings into focus some of the potential downsides for brexit. I mean, as far as the actual levels for the pound, we were talking about how the range for the pound was likely to be 1. 27 1. 34 depending on whether it or strongour win conservative majority. Now, we need to discover more of the details on that front, what the eu and u. K. Can get done, and also what the impacts will be of an actual brexit. This concern that there is a limit to how much you can benefit just from the removal of uncertainty. David, i do not know whether President Trump well, he seemed to be one of the first ones to take to twitter congratulating Boris Johnson. He had always said once brexit gets done, there will be a massive u. S. U. K. Trade deal. Eu andst come after the u. K. Negotiations. There have been talks going on already between british and u. S. Officials. This question about what sort of trade deal was going to be struck was one of the big controversies in his campaign. Was the nhs on the table for American Companies to access . President trump tweeted just about an hour ago saying we have a huge trade deal in the pipeline. It will be bigger, better, and more lucrative than anything struck with the eu. We will have to wait and see. Boris johnson argued 3. 5 years ago in the campaign that we will be able to strike these great new trade deals. Now it is time for him to deliver. What sort of terms is he able to negotiate with President Trump, who we know does not give in easily on these questions. Thoughly does start stocks. Francine David Merritt with meat in westminster with me in westminster and Garfield Reynolds from our mliv team. A couple of people are starting to come out and actually speak. Lets listen in. [applause] why this is such a wonderful country. Because we comprehensively rejected Jeremy Corbyns policy on division, extremism, and antisemitism. [applause] [cheers] we voted in record numbers for a Prime Minister dedicated to restoring our democracy by getting brexit done. [cheers] [applause] this new government says thank you to the british people. We will strive every day to live up to the confidence that you have shown in us. Tolso want to Say Something our jewish friends and neighbors. You have had to live in fear for months now. You should never have to live in fear again. Cheers] [applause] i also want to thank so many of us who worked so hard to make this victory. I want to thank the members of the conservative party, supporters, candidates, friends, and family who worked so hard and gave so much in order to deliver this victory. The people to thank who stepped outside to speak the truth. I want to thank those people. Boris johnson was the right person to lead our country. [applause] labour politicians showed amazing courage. They were joined by so many other people who have voted labour for all of their life. I am delighted that they recognized Boris Johnson as the right person to lead this country. [applause] was built on the focus of those who originally supported leave. It was also built on the votes of those who chose remain but who believe above all that democratic votes must be respected. [applause] y recognized that Prime Minister is Boris Johnson. [applause] there were conservatives representing people all across this country. Ership, wead have talented, younger conservative mps who served in the newwho are now mps . Vesncine that is michael go speaking at westminster. He is the opening act for Boris Johnson. The Prime Minister will be speaking next. It is interesting to see the banner, the peoples government right behind gove. Lets bring in christopher granville, managing director of Global Political research at ts lombard. Christopher come up Boris Johnson is the most powerful Prime Minister since dashboard christopher, Boris Johnson is the most powerful Prime Ministers since margaret thatcher. Christopher i think he is the most powerful conservative Prime Minister since margaret thatcher. Tony blair had a larger majority in his heyday. I think it is a spot on question. I think the fx market is really reflecting this. This much larger than expected conservative majority will, to put it at its blunt test, will allow Boris Johnson more political scope to, to put it politely, adapt the commitment in the conservative manifesto not to extend the transition within the eu beyond the december 2020 timeline provided for in the treaty, which will now be ratified and implemented. That means the risk of another crash out, another crash out risk at the end of next year, which the fx market would have had to discount, looks much less likely. Francine what are you expecting from the Prime Minister . He is expected to take to the stage in the next couple of minutes. Will he try and unite the divided country or just focus on getting brexit done . Christopher on a rhetorical level, he will unquestionably a message of reconciliation and trying to get over the deep authorization in British Society deep polarization deep polarization in British Society. The referendum must be respected. The opponents of brexit have all along said that the referendum and did not define what was meant by brexit. You could say the conservative manifesto has defined that. It is to leave the Single Market and the Customs Union of the European Union. That was also conservative manifesto in a june of 2017 at the last u. K. Election but the conservatives failed to win that election. There is a mandate for that brexit. An extremely complicated operation. It is like on stitching deep, complex stitches that have been in place for decades. Even if the rhetoric about that will be conciliatory. Matt we see strength in numbers. Certainly, they will come away with a strong majority. How unified is this conservative party . You have a couple of dozen Boris Johnson expelled, some of them have come back, some of them have not. Michael gove famously stabbed Boris Johnson in the back, kind of like a brutus giving a victory speech for caesar. Sticks a party that can together and achieve everything the Prime Minister wants . Well, i think the political effects of such a large election victory will make unviable, i would say, for conservative backed benches who may not agree with all of Prime Minister johnsons decisions. The crucial decision being to extend the standstill transition phase with the European Union beyond the end of next year. I do not think of the Political Capital and scope will exist for an effective rebellion, even if hypothetically, the numbers required of that would be given the likely size of the majority, will in fact almost weekly, 30 or 40 rebels who would be required. That i think is even if those numbers were hypothetically there, i think the political scope for it would not be there. I dont even think the numbers will be there. The most enthusiastic, older generation conservative brexiteers will stick to their line. I think a lot of a younger conservative mps, even though avers,ay be fervent le and euro skeptics, they will be looking for the political dividend of a full parliamentary term in government. They will be thinking of their political futures. All of those reasons, i think there is a real division which you quite rightly point to. They will not politically result to pryrious handicap minister johnson. Matt the 1 Prime Minister johnson. Matt the one handicapped i was reminded of this morning was the victory. Ry snp as we wait for Boris Johnson to come up, as we look at this empty podium that says the peoples government. We are waiting for Boris Johnson to come up and speak. Christopher granville, what do you think about the possibility of a hard border across the United Kingdom . Comes back in full force and gets a referendum, could brexit be the beginning of the end of the u. K. . If scotland stays in the European Union, does that border move from the irc the irish sea basically into the middle of england . England,er the u. K. , wales, scotland is united with northern ireland. You can argue that the u. K. Has already seized to exist ceased to exist. The draft Withdrawal Agreement places a regulatory and Customs Border in the irish sea, a fact which the conservative party has is eager to paper over. That fact will be enforced by the European Union. Francine christopher, Boris Johnson talking. [applause] p. M. Johnson we broke the deadlock, we smashed the glorious, and in this prebrexit moment where a new dawn rises on a new day and a new government. I just want to congratulate absolutely everybody involved in securing the biggest conservative majority. [applause] as i look around, literally before many of you were born. With this mandate and this majority, we will at last be able to do what . [indiscernible] p. M. Johnson you are paying attention. Getting brexit done. Unarguable. With this election, i think we put an end to all those of a second referendum. [applause] of a second thats it [cheers] [applause] [indiscernible] i have a message to all those who voted for us yesterday, especially those who voted for us conservatives for the first time. Youray only have lent us vote and you may not think of yourself as a natural tory. I think i said 11 years ago to the people of london when i was elected in what was thought of as a labour city, your hands may have quivered over the bow the paper andhe ballot you may intend to return to labour next time around. If that is the case, i am humbled you would put your trust in me and that you would put your trust in us. I or we will never take your support for granted. [applause] and i will make it my mission to work night and day flat out to prove you right in voting for me this time and to earn your support in the future. I say to you that in this election, your voice has been heard. We politicians have squandered the last three years, 3. 5 years in squabbles. Arguing, and about the tone of our arguments. I will put an end to all that nonsense and we will get brexit done on time by the 31st of january, no ifs, no buts, no maybes. Leaving the European Union as one United Kingdom, taking back control of our laws, border, money, trade, immigration system, delivering on the democratic mandate of the people. This onee same time, nation conservative government will massively increase our , whichent in nhs represents the very best of our country with a Single Beautiful idea that whoever we are, rich, poor, young, old, the nhs is there for us when we are sick and everyday, that service performs miracles. This onehy the nhs is nation conservative governments top priority. And so we will deliver 50,000 more nurses and 50 million more gp surgery appointments. We will deliver longterm nhs 650et enshrined in law, million extra every week. Priorities other that you, the people of this country, voted for. Record spending on schools, australian style points based ,mmigration system, more police lots of new investments in infrastructure and science, using our incredible technological advantages to make this country the cleanest, greenest on earth with the most farreaching environmental program. You voted to be Carbon Neutral in this election. You voted to be Carbon Neutral by 2050 and we will do it. Ynu also voted to be corb neutral by christmas and we will do that, too. [applause] thingsed for all these and it is now this government, this peoples government, it is our solemn duty to deliver on each and every one of those commitments. It is a great responsibility, a sacred trust for me, for every newly elected conservative mp, for everyone in this room and party. I repeat that in winning this election, we have won votes and the trust of people who have never voted conservative before and people who have always voted for other parties. Those people will not change. Notannot, must not, must let them down. In delivering change, we must change, too. We must recognize the incredible reality that we now speak as a conservative party, literally for everyone from working to conservative from wimbledon to as the nation hands is this historic mandate, we must rise to the challenge and to the level of expectations. Parliament must change it so that we in parliament are working for you, the british people. That is what we will now do, isnt it . Yes p. M. Johnson thats what we will all do. Lets unite this country. Lets spread opportunity to every corner of the u. K. With superb education, infrastructure, and technology. Lets get brexit done first, my friends, lets get breakfast done. [laughter] thank you very much for coming. Thank you all very much. Thank you, thank you, thank you. [applause] francine Boris Johnson, prime where we just outside are at westminster giving his first speech after his landslide victory of the tories. We are back with christopher granville, managing director of Global Political research at ts lombard. It was his first speech, in a jubilant mood, cracking jokes. What brexit does he intended to deliver . Christopher i think the largest omission from the speech, which may be quite bullish for markets , was any mention of what happens after brexit is done in formal sense that the u. K. Leave the European Union on the 31st of january. No particular mention of the standstill transition, which will be so crucial. That omission i would suggest may be significant, that flexibility on that will be extremely important for reducing uncertainties, and maintaining confidence. Matt i just want to point out here, in germany, we have this result across the front of the most important newspapers. This is one newspaper. Most of them show johnson with a dog for some reason. This looks quite church