Up 1. 4 . It has definitely come off its highs of earlier, and the u. K. 10 year yield down two basis points. In the u. S. , we have erased most of our gains, the s p 500 and the dow in negative territory. The nasdaq is pretty much unchanged having seen a lot of volatility. The dollar index is back above 97. Lets get to Boris Johnsons giant victory. HereBoris Johnson speaking in downing street an hour ago. Johnson i frankly urge afterne on either side of three and a half years, and increasingly arid argument, i urge everyone to find closure and to let the healing begin. Guy the Prime Minister speaking an hour ago. David riley joining us in london. We have seen u. K. Assets responding to the news overnight to this crushing delivery victory delivered by Boris Johnson. Furtherense of how much the u. K. Assets could have to run. David i do think there is some room on the upside for sterling assets. We have taken out two important tail risks for u. K. Assets. One was a disorderly no deal brexit. Uncertainty around whether there would be potentially a second referendum, that is off the agenda completely. Thirdly, we have taken off the riskn risk, a meaningful that was being priced in things like banks and utilities and other sectors of the economy. Investors are structurally underweight u. K. Assets and therefore we will see inflow into u. K. Assets going into next year. I think there will be some upside both on the equity side. I think gilt yields will move higher and it is good for fixed income investors. There is some room for credit spreads to go tighter in highyield and investmentgrade. Gives theajority Prime Minister substantial flexibility in the trade negotiations. He will get brexit done, but then we will get into the trade talks. In terms of the size of the majority, can we derive from that some clues of which way you think Boris Johnson will turn . Will he tack back toward the center and a more conciliatory or is hewith the e. U. , more likely to go for a kind of singapore on steroids approach . Boriss the Business Model johnson will adopt . David i dont think we can infer too much based on the size of the majority, because what it really means is Boris Johnson as Prime Minister has a free hand to go in the direction he chooses to go. I am a little skeptical that the duration direction he is going to choose is one whereby there is a close alignment with the European Union that is maintained. I think he will view, and even a hard line, he does view brexit as an opportunity that comes about by having a looser relationship with the European Union, being less constrained by the European Union model and framework. He is more likely to go for something which is a loose trade deal, a kind of canada minus minus. , think he will want to deal will want to avoid a wto brexit at the end of next year, but i think he will go for something that is quite loose. Until we have clarity on what will be the reengineered u. K. Business model, and that includes the relationship with the e. U. And u. S. And other trading partners, ultimately there will be uncertainty about where fair value for sterling will be. Vonnie another piece of news we , thearlier this morning bank of england is not going to have a successor announced by friday, according to governor officials, carney do to step down. The new government will not name a replacement. What is happening with the bank of england . It is a tough tour job for the successor, isnt it . David i do think it is a difficult job, a very difficult job for mark carney who i think will be quite looking forward to coming to the end of his term at the end of january. I do expect the replacement to be made. Be the guess would director of the London School of economics that was a Deputy Governor between 2014 and 2017, which i think would signal some continuity. Athink we will probably get rate cut priced out on the short end of the u. K. Money market, and if we also get a more expansionary budget than some are expecting, that would put upward pressure on gilt yields. Doing what are you regarding u. K. Assets, the currency, gilt, and so on . David we did have a long sterling position. We did close out just before the election so we did not capture all of the upside. We were surprised by the scale of the johnson victory. Gilt, as youu. K. Probably derived from some of my comments. We like things like the u. K. Banks. We do have some exposure in terms of Sterling Credit as well, but the margin, we would potentially be looking to add to that. Your expectations for what is happening between china and the United States. We will get a phase one deal but that is largely priced in. It will get risk assets moving significantly to the upside. What needs to happen . David im surprised the reaction has been as muted as it has been, because until very recently, what was priced in was that the december 15 tariffs would not be priced in, and that negotiations would be ongoing and there would not be any tariff rollback. It seems we will get some tariff , so that not dramatic explains some of the reaction in the market. With the u. K. General election outcome and the u. S. China phase one trade deal, this for a decentp start to 2020. Guy how difficult do you think phase two will be and is it even possible . David i am skeptical we will have a phase two deal that addresses all of the issues around intellectual property, oferprises, other aspects the u. S. China relationship before the president ial election at the end of next year. We have these snapback provisions in terms of up. Tariffs, tariffs can go and that will be an ongoing source of uncertainty. You can always get the trump tweet threatening tariffs to be put back on or increased. When the outline of a deal was reported by the wall street journal, there was some pushback by the democrat side and some republicans that the u. S. Or President Trump been too easy on china. That underscores the difficulty he has in terms of getting a broader, more conference of deal that would be acceptable in washington and acceptable in beijing. Credit, 6 manage billion worth of credit, and i curious if all the resolutions we have seen today, partial resolutions i suppose you would call them, if that makes emerging Market Countries more or less attractive. David i like the emergingmarket local currencies. I think with sterlingdollar pretty well anchored and set higher in terms of its range, with the phase one u. S. China with thel in place, fed providing ample liquidity to yearend, that takes away some of the concerns around u. S. Dollar funding. It was set up for emergingmarket currencies to do quite well. Realexican peso, brazilian , there is some upside on all those. Vonnie looking forward to speaking with you next time. David riley, Bluebay Asset Management chief investment strategist. Investors trying to understand the latest developments on trade. We do not have tariffs on sunday, but the details are more fuzzy. Flat p 500 and the dow are , while the nasdaq is holding onto some gains, 1 10 of 1 . Landslidesons election has the ftse 250 up. 5 , at a record high the pound is rallying off the election, stronger by 1. 4 . We can see the pound is moving heading to its best day since october, its highest since june 2018. If we look at a chart of s p 500 futures, we have crossed between positive and negative territory about eight times, investors reacting to every headline on trade. Trade is lower, but slightly. Mattel is a positive trade story. Tariffs on toy makers were set to take effect, so it is getting immediate relief. They are higher 3 . And syrup aut 5 therapeutic up. Vonnie remember the function g tv on the bloomberg and it allows you to grab every function and save it for your future reference. This is bloomberg. From downing street, i am guy johnson. Vonnie from new york, i am vonnie quinn. Lets check in with courtney donohoe. Courtney the House Judiciary Committee has approved the articles of impeachment for pedicle President Trump, setting the stage for the vote. On capitol hill, negotiators have come up with a deal to avert a government shutdown. The one point 3 trillion deal will fund the government for the rest of the fiscal year. It will get the president s signature next friday. European Union Leaders have vowed to eliminate net Carbon Emissions by the middle of the century, requiring an overhaul of the economy. Objectiveorsed the but did not vowed promised to meet at. Says his plan is historic reforms for france that better equips it for the 21st century challenges. [no audio] ending special privileges for some workers. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. Im courtney donohoe. This is bloomberg. Guy a crushing victory delivered by Boris Johnson. Afternoon. N, good resultss last nights mean for British Business . fundamentally it provides clarity. Boris johnson will bring back the withdrawal agreement, it will go through, and we are looking forward to a year. Stretch bya bit of a 2020, so for us and lots of businesses, the focus will be what is ideal and how do we adjust when it is in place . Business modelof will Boris Johnson adopt . Will it be close regulatory alignment with the e. U. , or something a little looser . What are you looking for . Edwin it is very hard to tell. This Election Campaign has not focused much on business so we dont have a perfect idea where the Prime Minister lies around that balance. Year, a close line with the e. U. , so we would expect a fairly light trade deal. We would hope for more. Most businesses would like to contender consider regulatory alignment because that would mean market access. We hope the government will continue to engage with business as negotiations go on. Vonnie on the campaign trail, it came up from time to time that if Boris Johnson were to win, there might be the possibility of privatizing parts of the nhs. There was even the mention that u. S. Companies might be part of that vision. Is Something Like that likely to happen and with the British Public be behind that . Edwin theres a couple of things there. The nhs is a hugely significant Political Force in the u. K. And Boris Johnson on downing street sod it is the First Priority i dont think it will be a major part of what we would offer in a trade deal to the u. S. The big thing is we have had the more on transparency and get rid of the fears some people have about the trade deals. Lobbying about when it comes to corporate taxation . Edwin we have obviously been told by the conservative party they are canceling the reduction in corporation tax. Corporation taxes are relatively beenso there has not received too badly by business. Here has to be a quid pro quo if we are not getting that, some things we were promised around , and the business rate other side is the incentives to and productivity. That would be welcome by business. What does the iod want to the126172989 be a bank that works hand in hand with fiscal policy, or acts as a beacon of stability, maybe leaning in a little bit more if we were to see fiscal expansion . Do you have any preferences . Great to return, and the bank will take on that basis. If growth disappoints, we would want the bank to be ready if necessary. Vonnie busy times ahead. That is edwin morgan of the institute of directors joining us from westminster. This is bloomberg. From downing street, i am guy johnson. Vonnie from new york, i am vonnie quinn. Time for the latest Bloomberg Business flash. Deutsche bank is considering cost bonuses this year. Discretionary compensation could be cut by as much as 20 . Christian sewing is trying to eliminate aliens of dollars in costs in a restructuring. Airbus wins, boeing is the loser. Picked. Ine has been qantas selected the airbus a350 over the boeing 737x. Service ined on 5g 10 u. S. Markets, among them los angeles and san francisco. To take advantage of it for now, they will have to upgrade to the iphone x plus. That is your latest Bloomberg Business flash. Not exactly what we were anticipating this morning, but all of the major indices are lower having popped higher on trade headlines. Following that, the china News Conference, the tweet thread from donald trump which took some of the exuberance out of the u. S. Guy in europe we see the continental markets up a little bit in regards to the trade story. The cac and the dax up. U. K. , a stronger response from the ftse 100, driven by some of the bank stocks. Really outperforming. The european close is next. Here, it all starts with a simple. Hello hi how can i help . A data plan for everyone. Everyone . Everyone. Lets send to everyone wifi up there . Uhh. Sure, why not . Howd he get out . a camera might figure it out. That was easy glad i could help. At xfinity, were here to make life simple. Easy. Awesome. So come ask, shop, discover at your local xfinity store today. In european trading, we had green across the board, just italy lower in the european session. We had some gains in germany and france, but the bigger gains came in britain and ireland as well, on the conservative majority win, a crushing win giving britain a mandate, giving Boris Johnson a mandate to carry out brexit. With some uncertainty gone, it removes Jeremy Corbyn because he resigned, and the threat of labour to the markets. There was a lot of talk about what kind of policies Jeremy Corbyn would implement to get a result out of the general election. Lets take a look at the ftse 100, it is paring some gains but is up 1. 1 . It hit a record today, up more than 5 . The dax in germany up 1 , up two the cac 40 thirds of a percent. All eyes were on britain and the china trade deal overnight. We got some headlines positive headlines very early on and as they came into the u. S. Session, that enthusiasm was tempered a little bit. The markets head onto gains. The british pound is up 1. 3 versus the u. S. Dollar. Look at the pop overnight when it became clear once the polls closed, that Boris Johnson was not going to just win, but his party was going to get a larger majority than the initial polling data seemed to expect. In other words, an absolute mandate for Boris Johnson to continue, so he has a gain for the pound, paring a bit. I say for pound traders that were long. Lets look at some of the individual stocks that were higher in the session. It is the residential, developers, utilities. Berkley, persimmon. This is all because the corbyn threat has gone away, so these utilities will not be made public or state owned. At least that is for now. Banks are very much the winners out of this result because they have been undervalued. Rbs up 8 . A very large move to the upside, not so much to the downside. The worst performer in the ftse 500 down 3. 3 . It was a good day for those long housingties, banks, and. Lets look at the u. S. Because we are coming off the highs, the s p 500 down one third. Other indices are lower. The air coming out of the china trade balloon, because it looked like we had a very positive deal that was all done an agreedupon. Anna came out and gave unusual News Conference that said very positive things, positive emanations, but the details were short and there was very much the sense that china is looking to the u. S. To make some concessions. The 10 year yield 1. 82. It is a muted vics. Vix. Crude went above 60 on the china deal, that the tariffs that are in place will begin to rolloff, although not immediately. Soybeans popped higher, up for tens of 1 , but well off the highs of the session. Adobe one of the stocks on the move, 4. 8 higher. Broadcom marrow think that, for print 8 mirroring that, for. 8 lower. Broadcom labeling some of its units as core assets and others assets, which has wall street thinking there could be some potential domestic tours. Divestitures. Guy we have the u. K. Election story, just had Boris Johnson over the last couple of hours. We have the trade story with the Chinese Press conference and the developments surrounding impeachment in washington. Lets go to washington where we are joined by adam posen, president of the Peterson Institute for international politics. Lets talk about what is happening in the united kingdom. Pop inhas gone through a the u. K. Assets, but the question is what does the future trading arrangement look like the e. U. . We are going to get brexit probably the start of next year but then we start the negotiation toward the final settlement. What kind of Business Model is Boris Johnson likely to want to proceed with . Is it closely aligned with the e. U. Or is he looking for a more leaves deal . Loose deal . Adam thank you for having me on. As you were saying to the representative before the break, there is a lot of room for play. Commitmentinisters that he will get brexit done does not specify whether it is hard, soft, or indifferent, and he willmains hope that say the point of brexit is done, is political, is not being part of the European Union, but then only. O a brexit in name mine is go for a canada deal as it is called, or Something Like a norway minus. It can take a lot of offtheshelf, agreed to stay in alignment with e. U. Regulations. This would require contradicting things that were said but would be easier to keep the irish question under control as well as the scottish question. I am hopeful for that scenario, but there is no indication one way or another. The other fast way to get it done is to go for a hard brexit and some of the brexiteers in his party have advocated. That doubles the Macro Economic damage that would be done, but it would be done quickly. Guy talk me through what you expect in the first hundred days from this new administration. What do you anticipate in terms deal, theected trade fiscal priorities . Where do you see the priorities lying in terms of the need to spend money in taxes, raising taxes . What kind of a budget do you anticipate we will see from the u. K. . Proven to has to be the british people the pain we have been through is worth it. How does that happen . How does the economy bounce back . Adam in the next hundred days they will get a pop because of the things you have discussed with the pound, capital inflows, corbyn risk and that will last maybe 100 days, 200 days. It will buy the government some momentum and they will get a new bank of england governor. The bank of england will probably back off a bit on talking about easing, but not tighten. The table is set, and then the chancellor, assuming he is reappointed, had promised in the manifesto a large spending campaign. Compared toed small the labour promises in their manifesto. You will get some reversal of austerity and some spending on nhs and to a lesser degree on police and infrastructure. None of it will get the u. K. Back to where it was or should be prior to austerity, but it will improve matters. That will also be growth because it will be fiscal stimulus. I think they can have a pretty clear scenario. On the taxes and regulation, it is less clear. The regulation as you implied will do partly will partly depend on what they can do with the e. U. , but once they have a trade deal with the e. U. That will affect what they decide on regulation. This redraws the map like we have not seen since 1987. Except for small pockets, it is blue. How does this change the domestic economy over the next five plus years . Do we see more privatization . Do we see an improving nhs . Do we see more employment and more of a Services Economy . Adam if you start looking out to the fiveyear horizon, two issues become paramount. The first is the union itself, do Northern Ireland and scotland stay in when the u. K. Is out . England has gone blue, but Northern Ireland had a Seismic Shift and they replaced the unionist parties with the nationalist, proirish parties. Conferred the Scottish National party. Will bethey will remain increasingly the issue once you get through the initial economics. The second issue looking five years out and this is a historic change and a large mandate will be similar to what we have seen in the u. S. And other countries, the question of cities, the biggest cities versus the rural parts of the country. You can map to some degree who and it wasxit, basically london voting to remain and the rest of england against. That ruralurban divide will be an ongoing issue. I give credit to Prime Minister johnson to talking about being a one country conservative. That will be a challenge. Vonnie you have to wonder who he was speaking to exactly when he said that, and what the rest of the union he was addressing. Does this weekend the European Union weaken the European Union . Do we see other countries taking a step closer to the door . Adam i think it is the opposite. In some sense, having a major economy like the u. K. Choose to leave is not good, but that has been priced in politically and economically. This cleans up the uncertainty in the overhang and led to kava now it he commonality to move forward. It encourages more people within the e. U. To appreciate being in the e. U. I think it is mildly positive for the e. U. , although it will be hard for ireland, netherlands, and a few others. Guy what do you think of the phase one trade deal . Was it worth the pain . Adam no. This was a stupid exercise. They went through a year and a half conflict to achieve almost nothing. Before, onit i think this Product Program before, to economic afghanistan. To get are, we are going some rhetoric about intellectual property rights, get back some soybean and pork purchases, and achieve nothing and put some people out of work. Mostly created an overhang for years to come about the u. S. Is not supporting the trade regime the way it once was and is not able to push china. I think it is a terrible thing. Guy do you think we get a phase two . Do you think that ever happens . Dam ever is a long time before the election . No. Do we get a meaningful phase two in the next term . Possibly. The hope some democrats are expressing is if you line up with the e. U. And japan and canada you might be able to push china on subsidies of state owned enterprises. It is a deal to be had there, but this is all sideshow. We will get decoupling diversions on education, on standards. There is a huge bipartisan support in washington for taking the u. S. And u. S. Technology away from china, and china wants to decouple with the Technology Sector and be more independent. From a National Security point of view, this might be a good idea, but it will be a less efficient world and there will be a lot of friction for multinational come trees companies. Vonnie thank you for all of your time, adam posen. Lets check in on the bloomberg first word news. Fullney it is up to the house of representatives to decide whether to impeach President Trump. The House Judiciary Committee approved the articles of impeachment, accusing him of abuse of power and obstruction of congress. To make mr. Xpected trump the third president almosted, but it is certain he will be acquitted in the senate. Flu season is hitting children the hardest. Symptomsays flulike caused higher than normal doctor visits. Officials say the severity of the flu has been relatively low. Two years ago, the flu killed more than 60,000 americans. In india, violent protests continue over a new law. Police shot two protesters who broke curfew. Thousands of people started fires and blocked streets. The law bars undocumented immigrants from seeking citizenship, but their counterparts can you come indian citizens become indian citizens. Global news 24 hours a day, on air and quicktake on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Guy european markets are now shut. Decent number, a out of the ftse 100, outperforming its european peers on the comp continent. The ftse 250 with a higher domestic base, it has really outperformed. The ftse 250 today closing at a record high. As a result of the crushing victory delivered by the man inside the building behind me, Boris Johnson. We are going to continue the coverage of what this u. K. Election result means on the cable show, at the top of the hour. Jon ferro is in london with me and will be carrying on the conversation of what this means for British Business, the economy, and the future of the british union. This is bloomberg. Vonnie time now for the bloombergquint take. Quicktake. Northations toward Koreas Nuclear capability have stalled and kim jongun has been making his arsenal bigger and better. A missile could hit the United States. It is not clear whether the military could deceive Missile Systems or hit their target. May be working on icbms that carry multiple warheads. North korea is also working on it subway for submarine force. North korea promises it would abandon its nuclear arsenal. That is todays quicktake. We have headlines crossing the bloomberg, the president meeting with the paraguayan president , telling reporters the 25 china tariffs will be used in phase two of the talks. He was waiting to wait until after 2020 on the phase two talks. They will start immediately and that will be rolling negotiations now. This is bloomberg. Vonnie it is time now for our global battle of the charts. You can see them on the bloomberg. Kicking things off is i am looking at the brexit story. Withis the british pound the Deutsche Bank tradeweighted index, not just comparing it to the dollar and the euro, but against the five trading partners the u. K. Has. If you can see, since the 2016 today is whenil it broke out of the technical range on the Boris Johnson win. There may be some room to rally so this is not the end. What will happen next is how this Brexit Agreement moves forward. If we see more good news, sterling will go higher or higher. Sterling will potentially break out of this trading range. Guy very on vonnie very on point today. Jessica summers. Jessica if you are an oil watcher jessica if you are an oil watcher, west texas intermediate trading in a narrow range. This signals we may be in store for a big price move. Whether or not we see it to the upside or the Downside Remains to be seen, but one analyst says they will see it to the upside because we are seeing a pattern of higher highs and higher lows. Watch for that breakout. You can find my chart on the bloomberg. Vonnie this is a tough one to go. I think because it is such a strange day in the sense that we dont often get a british general election, i will give pta. Crown to kriti gu power,p, balance of carla hill will join the show to dissect the latest on phase one of a deal with china. Taking a look at where we stand markets wise in the u. S. , lower on a couple of major averages, 1 10 higher on the nasdaq. This is bloomberg. David from bloomberg World Headquarters in new york to our tv and radio audiences worldwide, i am david westin. Welcome to balance of power, where the world of politics meets the world of business. The big story of the day, at least one of them, is trade. The United States and china have agreed to a phase one trade deal. President trump says the chinese have agreed to structural changes in agricultural purchases. China says United States will be rolling back tariffs in phases. Here to take us through it all is shawn donnan of bloomberg news. The more ive heard about this, the less i understand. What have they agreed and havent agreed . Have nailed down the text and it is now going to the lawyers. That deal calls for four big elements. The first is a ramping up of chinese agricultural purchases before the trade wars, they were buying about 120 a year. President trump says he expects that to hit as much