United states and weak business in fixed investment. I sit at the time we should do modest limited adjustment to the fed funds rate. The other thing i was worried about is the curve was inverted and i felt it would be much better if we had an upwardly sloping curve. To me, the curve is a symptom that maybe our adjustments were about right it was not intended to solve these issues but intended to adjust policy in light of these issues. I think the curve being upwardly sloping tells me we are in the right place. Want to move on to the consumer because the fed is putting so much impact on the consumer. Beenl sales have decelerating. A november number was half of what the Consensus Forecast was. Our Bloomberg Economics team expected holiday sales to come in at a gain of 3. 4 , the second weakest of the cycle. What if your main engine of growth is starting to run out of gas . That weakbeen worried Business Investment and weak manufacturing would seep into other parts of the economy. We have not seen that yet. Month, any given Consumer Spending is a little bit weaker, there is no doubt that they are in utter shape and we have a tighter jobs market and there is no evidence that the jobs market is doing anything other than getting better. Thats something changes causes the employment picture to change, the consumer will be solid. I am telling you they have the capacity to spend. I think that is a pretty good underpinning. The policyr side of coin is inflation. He would have to see persistently rising inflation to get on board with a rate hike. What is your position . A situationeen in where we have been able to run a very tight labor force without inflation taking off. We have had muted inflation. Fomc, igreat about the will be looking at what attentional growth does, i will be looking at what the trends are in the labor market. And in addition, i will be looking at our target. I will be looking at a range of factors and also Financial Stability issues and weighing whether some action is appropriate. That was dallas fed president Robert Kaplan speaking to kathleen hays. He is a Voting Member of the fomc for the year 2020 coming up in just two days. The Central Banks are facing a moment of calm and liberty economics does not see the next downturn coming in and Bloomberg Economics does not see the next downturn coming. Bloomberg expects cuts in markets and more reliance on fiscal policy. Ratecould the longer environment leave Central Banks without the answers . Discuss, analyst david powell. Morning doess expect a cut from the fed in 2020, as well as the ecb. Do you agree . David that is not in our forecast. We look for the ecb to remain on hold in 2020. We also look for the fed to be on hold after three cuts we saw last year. Withheme last year, Central Banks to adjust the economy, but those trade tensions will be dialed down a little bit. That has to be one of the dominant themes for 2020. What were they in 2019 that you expect to carry through . David really, it will be a focus on how this conflict between the u. S. And china carries out. The trade war spilling over to europe. Donald trump had threatened european automakers, which never materialized. All of this had an effect on uncertainty. For the Trump Administration to be focused on november and not want to have a negative impact on the economy through additional tensions with china and other trading partners. Is it going to act as a model for others, in your expectation . David probably not. The change is not an improvement in economic indicators. Banks have been very vocal in their opposition. When we look elsewhere, we do not expect that to happen. The ecb has expressed some criticism, but they seem to be quite adamant that it doesnt look like it is about to budge on that one. The bank of japan, it does not seem to be in any way signaling monetary tightening. Sweden is going to be a solo case of exiting the negative Interest Rate policy. What are your expectations for the bank of england and andrew bailing . David probably going to be on hold in 2020. There is a lot going on still in , even ifwith brexit the eu leaves even if the u. K. Leaves the eu at the end of january, there still this a deadline of the end of the year for a trade deal with the eu. There is still plenty of reason to remain on hold as that transition takes place. Matt thanks so much for joining us. Appreciate your time early in the morning. This close to new years eve. Economist euro area david powell. Lets get our Bloomberg Business flash. Over itsis handing first china built cars. It is a milestone for the company after an accelerated push. Cars are going to local employees. Work will have to pay about if million to its coceos fired or leave the company. Ae equity passage comes with 300 billion tender offer by softbank. A lot of turnover among Senior Management. Morgan haves and jp ortedly found a way goldman, total returns. They have lower Capital Requirements than regular trades. Jp morgan has encouraged clients deals. Sponsored matt thank you very much. Coming up, golden parachutes. Turns year for wework into a massive severance package. We will look at the potential cost of a highlevel exodus. Isember, Bloomberg Radio live on your mobile device or on digital if you were in the london area. This is bloomberg. Welcome back to Bloomberg Markets. This is the european open. We are currently less than 24 hours a day. Were looking at some red arrows there in terms of futures. It will be a very Light Trading day today and tomorrow. A gold end of the year rally is gaining ground even as investors target risk assets, including equities. Again as funds plowed more money into bully on backed Exchange Traded funds. Georgette boele is still with us, senior fx and Precious Metals strategist. I know you have a bullish outlook on gold, but you want to wait for a pullback before you get in, is that right . Georgette that is correct. Longerterm, everything looks bullish for gold. At the end of next year, much higher gold prices. Positioning,t speculative positioning, they are really, really high. The only thing is, when you get a pullback, it can be a quite nasty one. I prefer to wait. Thatould have expected towards the end of the year. You see now some optimism building. The correction will probably, a the bit later because usually at the start of the year , it is picking up the same theme is the end of last year. Quite an optimistic wave. Probably the first two weeks continuing. Stretched, ition would be very careful. That is, for me, the main reason to just wait and see. We are getting a viewer writing and asking how much higher do you expect gold to go. I also wonder what your assumptions there are based on an terms of the support for the precious metal . Support forhe main gold is that we have more bonds and negative yielding territory. Also, Central Banks, so Monetary Policy easing. If theyame time, even were to stop for the moment, we wont see any higher rates in the near term either. General a positive for gold. A most important driver in terms of what does the dollar do. If you take those factors together, you should see higher gold prices next year. The only thing is, it could be people are running after it a bit too soon. You get the creator you get the correction when no one is expecting it. I was worried, we need to have some sort of healthy correction more than we have so far. Georgette, it has been great having you this morning. Senior fx ande, Precious Metals strategist. A story you need to know about today comes out of wework. It will have to pay millions to its cochief executives who just got into that position, if they are fired or leave. Annmarie hordern is here with more. What are we talking about in terms of size and how this would work . Million is how much they would have to pay out cochief executives were fired or leave the country leave the company. This is a report in the financial times. Financial times is citing a number of documents. The report says wework may continue to experience a significant amount of Senior Management turnover. We are talking about some ifious golden parachutes they were to leave. Matt i guess that is what happens when you sign on as coceos, you want to get the golden parachutes. Annmarie hordern covering that story. Coming up, turning bullish on the euro. We will get your morning call on a new wave of optimism on what has been a truly sleepy bear. That is next. This is bloomberg. Welcome back to Bloomberg Markets. 10 minutes to go until the open of equity cash trading across europe. Remember, a relatively light session today. Lets get the bloomberg first word news from laura wright in london. s economy setng to contract and the Fourth Quarter after six months of violent unrest. The secretary said that given the current situation, it is inevitable that lower growth will continue. On u. S. Launched airstrikes five bases used by iranbacked militants. The moves coming after repeated attacks on coalition troops. Secretary of state mike pompeo called the response decisive. They are not ruling out further action in the region. In australia, thousands evacuated across the southeast. Temperatures hitting 40 degrees celsius, closing sections of the highway. They are warning conditions are the worst in a decade. At least nine people have been killed and hundreds of homes destroyed. Day onnews 24 hours a air and on quick take by bloomberg, powered by more than 2700 journalists and analysts in over 120 countries. This is bloomberg. Matt thanks very much. Laura wright in london with your first word news. China is scrapping its benchmark rate for lending into china. The pboc has ordered lenders to stop using the rate through moving while gradually existing loans to a new rate. Joining us to talk further about this is the current bloomberg chief asia economics correspondent. Thisto us first about how is going to work and then about the significance of the move. I think you set it up pretty well. Rate, thenchmark government obviously meant there was a lot of bureaucracy and politics involved. This move to a market rate set by banks would speed up the process, make the adjustments more timely, more expedient when the economy needs them. And i suppose there would be an element of transparency as well. Tona on its gradual Path Financial liberalization. Markets have a bigger say in the value of the currency in recent years, for example. Move in a very modest terms of the difference between the benchmark rate and the underlying rate at the moment. Mean what is it going to for the economy . We did see chinese equity indexes rally on the move. Enda it should suggest cheaper borrowing costs, it should suggest that banks have to bring down borrowing costs. The Bigger Picture to remember, it is only one reform in an economy that is still dominated by statecontrolled banks and statecontrolled companies. You can say, clearly there is another wind by the liberal side of things are the reformers, and after pushing away, the Petroleum Benchmark rate, you have to look at the underlying customers and act as an all of this would mostly be taking control of the banks and the enterprises. The net effect for the economy has been a marginal positive for growth. In the bigger scheme of things, there is a way to go yet to keep pace with the overall level of development. Matt what are Economists Outlook for the chinese economy in 2020 . What kind of growth and inflation are they looking at . As you probably picked up on yourself recently, something about stabilization. A rocky 2019. With a trade war, there is a sense that the external environment for china will improve. Then the big question becomes, around theep growth 6 level next year or will they let it slip under 6 . No details on what they agreed on that in march. I think most economists would say that it will be broadly stabilization but slower pace growth as expected and china continues to grind lower. Given what is happening on the credit market side at the moment, and a lot of people would say that its important for development and would put a ce it is certainly ody is calling a return to by all accounts, no sign of a crisis. Matt thank you so much for joining us, enda curran, bloombergs chief asia economics correspondent, talking about the move by the pboc. After two years of setbacks, the euro is enjoying a wave of investor optimism as 2019 draws to a close. We will tell you what analysts are forecasting. We are going to bring in Annmarie Hordern. What can you tell us . Annmarie what they are forecasting in 2020 is that the euro is really going to take the cake. Take a look at the calls right now. 2020, 1. 15 on of the eurodollar. Right now, we are below 1. 12. Matt coming up the market open. This is bloomberg. Matt a minute away from the open of cash equities trading. Headlines. Ur the pboc takes another step toward opening up its financial system. Tesla delivers the first cars built in a shanghai plant as elon musk accelerates has pushed into the worlds biggest auto market. President trump facing criticism for naming the alleged whistleblower. Lets get to Annmarie Hordern for your european open. Are seeing red arrows acrosstheboard ahead of the European Market open. European equity futures are higher. Then trading today ahead of the new year holiday. We have just gotten to 8 00 here in the city of london. Lets look at how the European Markets are opening. Look at the bloomberg dollar index. The dollar has been weaker against major peers. That day of declines on dollar. Here we are seeing all of red. The german dax today will be closing a little bit early. Lets look at what is going on today. Health care firmly in the red. We are seeing a lot more red than green on the screen. I am wondering if oil and gas stocks will get a lift. Commodities are on a tear. Very much a risk off day today. What do you see for individual movers . Matt we see more down than up. 191 gainers. I am not sure if this is in prep for new years eve. Those two companies will probably be selling a lot of their product. This looks like we are getting luxury. And Consumer Staples are rising. On the downside, you see drugmakers and oil producers. European markets in general are opening up lower. It is great to have you with us. We appreciate you spending the time. What do you think about the year that was in the unit we can expect in 2020 . Change frommajor 2018. Avoidg challenge was to losing money. Year of very positive returns. Having said that, 2019 has been a bit of a diversions between individual markets. Compare brazil with chile. The broad equity indices have brought broad returns. The computer index is up 50 this year. A big divergence there. Matt coming onto 2020, what does that mean for next year . Been theg theme 19 has major divergence of Financial Assets and the real economy. Had economicave growth. Corporate earnings numbers have been lackluster. I think that divergence in 2020 will change. We are not going to have a recession in 2020. But only a modest uplifting growth. We can quantify that by region. Chinese growth will probably generate 5 gdp. We will have convergence with the real economy doing slightly better. Where do you think we will see the biggest gains . And the biggest problems . Our theareas to watch impact of social unrest on economies and markets. We have seen that particularly this year in hong kong. If you look at the chinese the hang seng has seen major underperformance. The social unrest in chile has been a major factor. That is one risk factor to watch. The other risk area to watch as areas of high levels of debt and the potential for increased defaults. I think pboc will manage this well. There are sectors of the Chinese Market that need to be monitored carefully. I think we could see some problems. Those are the primary risk factors. I do think 20 20 is going to be characterized by a rotation out of cyclical Growth Stocks and into value defensive sectors and particularly sectors which pay high dividends. I do think you will see that rotation out of the sectors that have done spectacularly this year. Matt we will keep you with us. We have a lot more to talk about. Up next, made in china. Tesla delivers its first cars built in a shanghai plant. We will look at the Auto Industry next. This is bloomberg. Matt welcome back. This is the european open. 10 minutes into the session. We are looking at losses across the European Equity index. The Bloomberg Business flash. The italian eyewear giant is working to recover. The scandal is reuniting concerns about how it is run. We work will have to pay 17 its founders if they are fired. 3 millionad of a tender. To facemay continue turnover. Getting. K. , farmers are almost 3 billion pounds. This is to ensure that they receive the same funding next year that they got from eu subsidies. That is your Bloomberg Business flash. Matt thank you very much. Its firstdelivered chinese built cars, a milestone for eli mosques company. They accelerate a push into the largest Vehicle Market. Beijing raised its 2025 sales targets. Before we focus in on china, what do you think about the auto market in general . I have not been very positive on it. I think it saw a number of challenges. Disruptionhallenges to the auto market. There was a move to other vehicles. We go through that type of destruction. Still having to deal with the challenges of the emissions problems. That was a particular problem for volkswagen and the german industry. A major challenge for the auto sector is the trend toward car sharing. That means less demand. Coming onto tesla and their production in china, one has to emphasize it is very clearly stated, chinese Economic Policy is to try to boost the number of electronic vehicles on the road in china. Tesla is very much this new production in china. It is compatible with chinese Economic Policy. Matt tesla has been an incredible stock. It has its detractors and fan boys on twitter. They are sometimes fun and a bit tiring to follow. The stock has gone up since 2010. It has been an unbelievable run. Companyo damage to a products . Ces luxury i would hope not. I would think not. The chinese auto market is one of the biggest auto markets in the world. If it is managed intelligently, and tesla has a Good Relationship with the chinese betterties, they can do to maintain that relationship. The American Automakers have always struggled in the chinese auto market. It will be very interesting to see how tesla succeeds in the Chinese Market. Good luck to them. Everything suggests they can do well. See the economy slowing there, other still great opportunities in this economy . I consistently take the view that you have to look to china as to economies. There is the old economy of old industry, heavy industry, the steel sector, the coal mining sector. That old china has been in recession for a couple of years. Obviously tesla is a variant on the text theme. If you look at the Consumer Sector, the tech sector, the health care sector, that economy is still growing. If you focus on those growth sectors, you have opportunities to make money. That is compelling is that it is still growing. The Consumer Sector remains very interesting. You with us, keep our guest cohost for the hour. Stock, people love to hate it. But a hit for 35 on friday. Zooming past the all important for 20. If you help teslas toxins the ipo, you wouldve gotten a 40 return. Company,ou hates the which a lot of people seem to, it made people very rich. Up next, the stocks on the move so far this morning. Italianfrench eyewear giant was a target of a fraud at a factory in thailand. We will discuss this further. This is bloomberg. Matt welcome back. 21 minutes into the session. We are looking at some slight red arrows on this the 30th of december. Lets get our top stock stories now. Annmarie we are seeing a lot of muted movers today. A few are of interest. About 213 million were stolen from the company. They are seeing sales increase after they won this major refinery contract in africa. I am wondering if this u. S. Billionaire owner becomes the owner, will he call it a Football Club or a soccer team . Matt hopefully soccer. Football is the most important sport in the world. My heart aches today after ohio state lost to clemson on saturday. They will no longer be going to the national championship. Soccer is a different game. You just kick the ball around for like four hours. May be one person scores a goal. Annmarie 90 minutes. Matt it feels like four hours. They never get a tiny little ball into the gigantic gold that is only guarded by one person. I dont really get it. A lot of other people do. Lets get back to the markets. Politicalmarked by turmoil, certain stocks were shunned by investors awaiting clarity on brexit. This gains the most in 2019. The worst performing stock was metro bank. What do you think about the home market . In 2020 afterok lagging the other european indexes . The first point to make his there were very clear reasons the ftse 100 and the ftse 250 underperformed the euro stocks. It was the lack of Foreign Investment into the u. K. Market because of brexit uncertainty. Forget, that uncertainty still has not gone away. The British Government has an objective to negotiate a trade deal with the eu. If they fail to negotiate, my view is that they will negotiate what they call a trade one phase deal. There is still that outside risk that the u. K. Has a hard brexit at the end of 2020. It will be a factor in the continued lack of investment in the ftse. I dont think the rally and , we are nowhad settling down. Think sterling has much upside. That continued uncertainty will be a factor for sterling. The export sector in the u. K. Should perform well. I think that will be the major theme for 2020. Will the underperformance of the ftse bs pronounced . I think not. What is your longerterm view of the u. K. Economy . Assuming a hard is avoided. If you look at the , hopefully there will be free trade deals negotiated. Hopefully the free trade deals that the eu has with other countries can be easily replaced. Sterling probably stays undervalued. Interest rates remain at low levels. Feature the johnson government is different from previous government will be the relaxation of fiscal policy. Matt thanks very much. When it comes to using data, everyone is different. Which is why Xfinity Mobile is a different kind of Wireless Network that lets you design your own data. Choose unlimited, shared data, or mix lines of each and switch any line, anytime. Giving you more choice and control compared to other top wireless carriers. Save up to 400 a year when you switch. Plus, unwrap 250 off a new samsung phone. Click, call or visit a store today. Matt welcome back to Bloomberg Markets the european open. 30 minutes into the trading day and we are looking at equity indexes that are down. Im matt miller in berlin on this new years eve eve. Lets look at the story so far in equity markets. You can see the stoxx 600 index, the broader european benchmark, down about one point or. 2 . All of the Industry Groups are down. Inve got a couple of gainers the grr function. If you take a look, you will see banks are up slightly with insurance companies, but Everything Else for the most part is down. Media, utilities, and industrial goods leading the way. Joining us to talk more about a key driver of asian trading curran,t an enda bloombergs chief asia correspondent. That, after we saw a rule change, maybe a new era in terms of lending regulations. Explain the big news out of the pboc. It is certainly a symbolic shift. The statently, council was in charge of the benchmark rate. It meant government, politics involved, transparency was not what it could have been and it was a more cumbersome operation. To thinking is it will move to a more marketbased rate. More timely rate and probably filter through to the economy and reflect economic commissions in highfrequency. Broad markethinas liberalization, is it a positive and it is expected to trickle through to the economy as banks are forced to bring down the cost somewhat. It is only one reform in a much bigger piece, for chinas economy remains state dominated. Matt we are just getting headlines across from hong kong. November exports were down 1. 4 . Much better than the drop economists had been anticipating of more than 6 . 5. 8 ,er imports were down and that is also better than the drop of 8. 4 economists were estimating. What is going to be the effect of hong kong on the chinese economy in 2019 and 2020 . Well, it is interesting hearing those numbers, because obviously the porch and Logistics Hub in hong kong makes up a quarter of hong kongs economy and there was a feeling november was a good month because of frontloading of exports to get into the u. S. Ahead of the tecnicas tar iffs planned. Shippers were trying to get in front of those tariffs, and we know those arent coming into play. The overall picture for the port might be looking into the year, but how the economy place, there is a lot at stake and there will be an impasse at the political situation. There is no give or take on the government side and on the protest side, they continue to play more marches. To have a big month planned for new years day so the tourism side remains under pressure. The logistics side may get a little lift from the easing trade tensions with the u. S. , but a lot depends on how china views hong kong politically in the coming months and year ahead and if there will be a meeting of minds on the demands the protesters are making. That will really set the tone for what relief there will be for hong kongs economy. Matt thanks very much, enda curran, chief asia economics correspondent on the new policy and the new year for china. Lets get to the bloomberg first word news with laura wright in london. Laura President Donald Trump is for outing them allegedly for blower who testified against him. The retweet may have violated the law. A republican senator had advised the president to spend less time tweaking. In china, a single senior part of april and are a trade pact. Beijings ambassador to the u. S. Says china will honor its commitments as part of the phase one deal. The comments came as the sides are working on the final details of the interim agreement. Russia is thinking the u. S. For help and prevent its terrorist attacks. The president spoke on the phone. The president , thanking the white house for sharing intelligence. They discussed further cooperation to combat terrorism. Russia and the ukraine are remaining silent on the gas talks. To two sides had agreed resolve all existing disputes by yesterday to reach an agreement allowing the russian gas sold to europe to continue passing through ukraine. If they cant reach a deal, gas flow may need to be halted until january 1. 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. Wright in london. Tesla is handing over its First Chinese build cars. It is a milestone for the company as it accelerates its push into the Worlds Largest electric Vehicle Market. Lets get the latest with selina wang in beijing. What did we see at teslas unveiling event . A we saw 15 very lucky employees get those first china made build cars from the shanghai giga factory. More workers are expected to get cars in the coming days and customers will be getting deliveries in china in january. This is the cornerstone of elon musks plan to be a truly global car company. After this opening, there are plans to open one in europe. Isalso represents how tesla quickly creating this First Manufacturing plant outside of the United States and the fact wis chinas first holy holly four run company. Elon musk says china has clearly paid off. We have ramped up to 1000 cars a week at the shanghai plant. Before april, he wants to get up to 3000 cars per week. We also note has left has been exempt from a 10 purchase tax in china. Things are so far on track for tesla in china. Challenges is tesla going to face in the Chinese Market . It has got some stiff competition, right . It is a very crowded electric Vehicle Market given it is the largest auto market and electric Vehicle Market. Day modeleir big neo with incentives to attract consumers. You have bmw, audi, mercedesbenz which have come out with new ev models to gain a slice of that market. You have local products, analysts have noted it is taking longer than expected, which means cars that are being produced now are not totally china made. Some products are still being imported from the United States. In addition, you have a pretty challenging macro backdrop. Chinas auto sales are in an unprecedented slump in the broader slowdown. You have electric vehicle sales slowing given the Chinese Government has been scaling back those subsidies. We know tesla plans to do price cuts, according to our sources, next year as they source local components to bring the price down and be more competitive. Early signs show demand is pretty strong with november registrations for new cars in china jumping 14 fold for tesla from year before, surpassing 5000. Matt selina wang in beijing, reporting on teslas chinese production for us. We will continue to keep you notted on that, obviously, just through today, but it will b. A. T. Story for tesla in 2020. Text, stocks on the move so far or,s morning including essil the italianfrench i wear giant says it was the target of a 213 million fraud in a factory in thailand. This is bloomberg. Matt welcome back to the european open. We are 42 minutes into the trading day and looking at equity indexes that are down, the dax losing. 4 . Lets get the Bloomberg Business flash with laura wright in london. Hasa essilorluxottica uncovered a 190 million euro for it at a factory in thailand. The eyewear is working to recover lost funds. Reignited concerns about how things are run after a power struggle in the year. Goldman sachs and jpmorgan have reported to limit the regulation on repo trading according to the financial times. Goldman is using total return force. They have lower capital then return rates. Deals,ed retail between trade. Nearly 3re getting billion pounds in u. K. To offset leaving the eu. This will ensure farmers receive the same funding next year as they did through eu subsidies. Many u. K. Farms are the viable without payments. They account for more than 60 of the farmers income. That is your Bloomberg Business flash. Matt laura wright, with your business flash in hong kong in london. Emerging markets are about to embark on another year of Wealth Creation after adding more than 14 trillion to investor portfolios in the past decade. Developing nation assets will outperform their developed peers, with asia having the best prospects according to bloombergs survey of 57 global investors. Strategists and traders on their outlooks for next year. Bob parker at quilvest is still with us. What do you expect for 2020 . The first point to make is if you look at the broad emerging market index, it is undervalued relative to developed markets. The average earnings ratio on emerging markets, we are running at around 12 developed markets 12, developed markets 15. Valuations are used for outperformance for 2020 relative to the last two years poor performance. Coming back to a theme earlier in the program is significant gence. Ion struggle in will 2020. The indian market, i think, will continue to underperform. One risk factor to watch is the shadow banking problems in india and lets not forget the last gdp number year on year was 4. 5 percent, so an overvalued indian market, i would be cautious on. Theuld also be cautious on south african market. It is not particularly cheap. There are major structural problems in the economy, a market to because us of. I think the brazilian economy is going to recover and we could easily see 2. 5 growth. The deregulation is actually starting to have an impact. Lets not forget, the brazilian index was up over 13 in 2019, so what was a cheap market is starting to look at least fairly priced, so i would not be putting more money to work there. The japanese market, although it did very well in 2019, is still undervalued, and if we get to 5. 8 growth, i think the Chinese Market will continue to outperform. I would also mention in asia one market which is underperforming, and that is south korea. That is a beneficiary from any progress on the trade from between the u. S. And china. In central and eastern europe, the russian market has done well. It remains super cheap. Prices stay atil these levels, at least in the first half of next year, russia continues to do well. One market which has underperformed this year which i bynk could see some rotation investors into it is the polish market. A difficult market in 2019. I do think some outperformance is possible in 2020. Effects youre the are expecting for the dollar . Weve seen the bloomberg dollar index come down sharply at the end of the year and we had the expectation of the fed rate cut in 2020. What is your outlook . Point to make his assume the Central Banks are on hold in 2020. Andr the easing by the fed the ecb in 2019, i think that i would be surprised if we get further easing. One key factor in 2019 was the fed balance of the sheet and reintroduction of quantitative easing by the ecb. All of that is market supportive. In terms of what happens to the dollar and its impact on markets, i think this recent weakness we have seen in the u. S. Dollar will continue. I do think it is going to continue at her a moderate pace. At a moderate pace. I stick to dollars zero in the Second Quarter of 2020 being to 1. 12 1. 20 relative where we are now, assume the yen at 105. It will be dollar weakness, but not a rapid selloff. He will be a slow burn selloff. That is supportive for emerging equities and in turn, i think will encourage capital flows into emerging markets. Matt bob, thank you for your time this morning. Always great to sit down with bob parker, Investment Committee member at quilvest. Top stockto our stories within reordering in london. Essilor, employee stealing 13 million in thailand. Tecnicas up 4 , outlook with new outlook guidance. This is in light of them winning this big contract in algeria for a refinery. Italy is down 2 as close to making a decision on whether or not to revoke highway concessions. Atlantia would be one at risk if italy was to move toward that. Essilor nmarie looking at your stock movers. Coming up, Central Banks in 2020. Weve talked a lot about that. We will get investors take on Central Bankss role in monetary first is fiscal policy versus fiscal policy. This is bloomberg. Matt welcome back to Bloomberg Markets the european open. Into the trading session and we are looking at red arrows on new years eve eve. You are not going to see heavy volume. Down 50w, the dax points, but it has been a stellar year for the german equity index. Really, for european indexes, all doubledigit gains. 25 if you more than own stocks the index from day one. Central banks are facing a moment of calm and bloomberg doesnt see the next downturn coming in 2020. With a little room for maneuver bloombergttle room, economics expects cuts in emerging markets and heavy reliance on fiscal policy outside Central Banks purview. Comes, could the lower for longer rate environment leave Central Banks without the answers, assuming they have any to begin with . Joining us to discuss is our senior euro area economist david powell. What were the dominant narratives for 2019 and we will we see the same story in 2020 . In 2019, Central Banks had to cope with weakening economies. It was the result of the trade war between china and the u. S. They had to ease Monetary Policy to combat that. The fed cut three times, the ecb relaunch of asset purchases. 2020, we look for the Worlds LargestCentral Banks, the fed andthe ecb, to be on hold to not announce any additional stimulus. The of that is because as u. S. Turns towards its election in november, in all likelihood, the trade tensions with china will be dialed down a bit. We wont see an increasing tensions the way we did last year that were so harmful to the economy. Is the oneiksbank that ended its negative rates experiment this month. Will it be a model for others . David probably not. End itsbank didnt expanse with negative Interest Rates because the economy had experienced some significant improvement. It was more likely the result of domestic criticism, and when we look elsewhere, we dont see other Central Banks have negative rates, meaning the ecb look like j boj, they will move because of criticism. From has been criticism germany and german banks about the negative Interest Rate policy but they seem to be standing pact. The Economic Conditions in the euro certainly dont warrant any monetary tightening at this stage and largely the same for japan. Sweden is likely to be a case that is not repeated elsewhere in the foreseeable future. The what do we expect from bank of england and Andrew Bailey this coming year . David the bank of england will be a bit like the fed and ecb. Will probably be on hold for most of 2020. Been u. K. , we have leaving the eu at the end of january, and there will be a transition in place, and that is good news for the economy. That should reduce some of the uncertainty related to brexit that has been weighing on the nomy, but there is a still still a trade deal to be negotiated by the end of the year and in the face of that uncertainty, the bank of england is likely to leave Monetary Policy on hold, at least until the end of 2020. Matt david, thank you so much for joining us. Bloomberg economics senior euro area economist david powell. That is it for the european open. Next, surveillance. Im headed off to radio. Tune in if you are in the london area on dab digital. This is bloomberg. The pboc tells banks to adopt a new low pricing regime ending in 2020. Another step in the President Trump faces criticism for tweeting the name of the allegedly some lower. Allegedly whistleblower. Some of the years best performers and look ahead to 2020. Welcome to