Market. 33 basis points. Auto. Ft significantly not a massive change, but still notable. The dollar index is up. Lower. Uber is a lower by 2 . It is between 96 and 97. Tesla is down now for percent. Tesla one of the most interesting stocks giving away you have the first delivery of kinds to cars to shanghai vehicles made by factories in workers and also receiving a shanghai. Note that may be the model three it may miss the delivery target for demand saturation. Saturation is in terms of demand vonnie thank you. Kailey leinz with our market and that continues for tesla. Check. Here in europe, light volume. Us on key analysis. Stocks are down, 7 10 of 1 . Save your favorite for future we will talk about that in a reference. This is bloomberg. Moment. Eight basis points. We are 18 on the german 10 year. A selloff around the world for global bond markets. Here is an assessment from where we go next. We are joined by the head of fx strategy. Nice to see you. You dont like the dollar. I dont. Guy why not . Where should i start . On 2020 with a cut. Improvement in euro zone economic data. At a cheaping evaluation, for me, when we see that progress, softer economic data. If we seek and placement come up itll be a strong case for the dollar to weaken. To have fed it seems put himr numbing into year end it was felt we would see a scramble in the repo market and people forced to borrow or write dollars in the market looking what the fed has done on the injected billions, that smashed the front end of the curve appeared we are at low levels that bid for the dollar is in no longer something we are working worried about. Move ishow much is that repositioning at the end of the year . It is both i would say more to do with the fed they are keeping rates on hold. Injections liquidity indicated to markets that we have this under control and we will keep the front end rates low and prevent what happened in september happening again at year end. You have seen the dollar weaken and coming into 2020, this trend of dollar weakness will continue, particularly as we see. Lobal data improve elsewhere vonnie who will be the beneficiary . Peter those currencies that tend to have a beat toward Global Growth will do well. New zealand and aussie and swedish currency to a lesser extent. In emerging markets, i am a big vonnie live from new york, im fan of the mexican peso and the russian ruble. Vonnie quinn. Guy live from london, im guy shouldurrencies johnson. Outperform outperform against the dollar. This is the european close on guy a lot of people are talking bloomberg markets. Lets check in on first word about european stocks doing well. News. Give a sense of the magnitude deal on one of the and what that would have on the trade will be signed. Currency. Peter if you look at your being Peter Navarro said the agreement stocks and assets in a broad is still being translated. The hong kong newspaper said the chinese vice premier will lead a sense, they are underinvested, for good reasons. Slow growth, low inflation. Delegation to washington to sign the deal. The ecb has been pushing people in north korea, can john on kim jongun is expected to use away from europe. Coming into 2019, every thought everybody thought the euros his new years. Loan euro zone wouldnt do well and outperform the s p. Alreadyngace. In 2020, if we see fiscal stimulus or the commission talking about increasing fiscal andwarns that the nicety stimulus, there is no reason the bound tests might be coming to european stocks wont do well. An end. That can do well with dollar Vladimir Putin called drop to thank him for intelligence that weakness but also the broad helps prevent terror attacks in russia. Underinvestment theme. That is according to the it trades at cheap value nations kremlin. The two leaders discussed fervor valuations. Guy at 118 . Further cooperation to stop terrorism. Peter the case to move towards been diagnosed with stage iv pancreatic cancer. 125 to 130 was justified in he is 79. Valuation basis, but you will he has never faced a fight like probably get 118 or 120. He has now. Vonnie will that happen in a grind or happen all at once . Peter we would like to think it he suffered a Skull Fracture during a civil rights march. Happens in the grind, what we global news 24 hours a day, online and at quicktake on twitter, powered by more than know about currency markets is 2700 journalists and analysts in over 120 countries. They very rarely move in straight lines. It is more likely we will see a grind in the early part of the year, but once we see this is bloomberg. Vonnie we are back now with potentially another rate cut which isnt priced in, then we peter kinsella, global head of fx strategy. Will see the euro appreciate lets talk about the british from those levels. Announcements pound. It is almost the best performer against the u. S. Dollar. Regarding fiscal stimulus from the only one to beat it is the the euro zone or germany, that will definitely lead to another Canadian Dollar paid why the tailwind for appreciation. Strength . Peter it is a number of vonnie are all of the factors, but the main was the incidental, potential black political uncertainty. Swans or grey swans out of the a divided position way . I am thinking of the Banking Sector in europe that was always a threat and it seems there are from september or august. It traded at levels around 120 so many regulations and rules in and now it is below 132. Place and banks are issuing so. Uch debt to protect themselves the recent election it was 135. It is a number of factors we now will that be a check for 2020 . Disagree. Ery humbly have certainty and we now have the reason i do is there is a certainty regarding that brexit is going to happen. Good reason why banks trade at we will see the beginning of an the levels that they do in the euro zone. It is not the debt profiles they euu. K. Trade negotiations in the new year. Carry but the earnings outlook these are the main reasons we is very poor, particularly for are seeing the trade higher than Court European banks in the where it was. Likes of germany and elsewhere. From evaluation perspective, it in the absence of decent is still cheap not as cheap as earnings or file, i dont see it was. The Banking Sector in the euro i believe the u. K. And assets zone doing a lot. I dont they will collapse and have been heavily underinvested in for the last three years. That will start to increasingly they look to be very wellcapitalized but there is not a strong case for them to see International Investors look outperform any time soon. At u. K. Assets with a better i wouldnt be buying them myself. I will put it to you that way. Light in the coming months. Guy i have heard you sayl vonnie what we need to happen for you scribe starts to take four or five times so far what if it doesnt happen . Place . Peter we plod along as we have does there need to be an outline of a trade deal . Been doing. Guy does that change your peter one would hope so. No, there is nothing more there is a lot of rhetoric regarding the future discussions the ecb can do there they are that are going to take lace out of bullets. About whether it will be done in it is the account trend. One year and what it will entail and what it wont entail. Johnson, the. Dont get the fiscal stimulus, it is not the end of Prime Minister boris johnson, the world. The problem for the euro would not be fiscal or elsewhere but saying it will get it done by the end of 2020 with no if we saw higher inflation in the states and potentially a extension, is at least an opening gamma or an opening rate hike. A tactic. Gamut or that would spell trouble for the euro. Guy peter will stick with us. Given the fact that the eu and , cohead oflla the u. K. Have got the same trading relationship Foreign Exchange strategy is effectively, and going from a sticking around. Similar starting point in the trade negotiations, it means a check ont to get there is no reason why the global markets. Kailey leinz is here. Negotiation should take between it is a second to last five and seven years as new trading day. Trade partner negotiations have done. Turning softer across the board. It is depending on what the the stoxx 600 on pace for its worst day in a month, down. 7 . Political parameters are to get the trade deal done or started. There is no reason it should same for the s p 500. Take 18 months to two years. We are seeing an incredible year so it may be profit taking into i think we will see sterling year end. Continue to trade well in the coming weeks and months. Now, how 127 right much higher . Peter 137 is easily doable i the end of may or thereabouts. Guy how much is dollar weakness . Peter i would say probably 5050 but it it more dollar strength. No one will jump in until we have some certainty about the future trade relationship between the eu and u. K. Vonnie you mentioned the russian ruble as one of your favorites and it is the best performer against the u. S. Dollar this year. Do we see it cut . Peter we could get a few more cuts. I think the story is they are an institution which is always cognizant of political risk. Consequently, they keep a good profile as they have done since 2015, 2016. I think that will continue but keep the rate profile at 2 throughout 2019. They are doing that in conjunction with a large bus large surplus of 7 russian gdp. It is a decent profile and decent balance of payments. If the dollar continues to weaken and oil prices trade higher, that will be good news for the ruble. I like the fact we may see more spending from the russian government. There is no reason not to like the ruble. We could see 16 ruble before long and could trade below 60 in that context. There is no reason you shouldnt be involved with the ruble it should continue to trade well. Vonnie we are at 61. 96. The other thing is the mexican peso and you mentioned you like that. It is down this year. What happens to the latin american countries . It is very much a mixed bag. I do not like the zillion currency i think the profile brazilian currency, it is too low with the balance of payments and political framework. I like the mexican peso, a decent profile, very proactive central bank. Up 2020. Growth pick the mexican peso could do quite well and if we see a weaker dollar, as i expect we will, the mexican peso would benefit from that in a broad pace. Sees ean idiot cinco idiocyncrasies will play into the restructuring negotiations. Guy how will things change . Peter it will change in the context of volatility not being for castable. Not being able to be forecasted. If you have a low. Of volatility, it is not latch last for long. We in that . Re peter in three or four years, or in cyclical or secular klein. We are seeing some Central Bank Moves in the fed cutting. There is potentially another rate cut in 2020 or even in qe four. We are seeing some of the stars aligned in currency direction and will tilt he will follow. Guy a more exciting year coming up. We will continue the conversation. Peter is going to stick around. Peter kinsella, the global head of foreign trading come will stick around. There eight minutes from the close. I will give you a rundown of exactly what has done well and what has not done while this year in european markets. That is coming up. This is bloomberg. Guy from london, im vonnie guy johnson. Im vonnie quinn. This is the european close on bloomberg markets. Lets get to your first word news. Tesla down, the most in months. Giggle delivery may miss the company target. Deliverympany may miss target. Lexis still not much to celebrate. 30 years ago, the day view of toyotas luxury brand shocked automakers. It has not been the Market Leader in the u. S. Since 2010. Market share has fallen from 18 a decade ago to 13 now. Vehicle lineg outcome increased competition and inability to keep pace for demand for bigger suvs. Holiday shoppers in the United States probably saw the most motion. Fewer shopping days and access inventory were reasons. There was a shift in preference for offprice retailers. Bloombergslatest business flash. Lower. Ndex is hotel and residential after wiki weaker home sales data. Oil and gas up almost 3 . Crude oil up . 20 today. A barrel. A bow downu look at the nasdaq,. 6 . Many stocks pulling the nasdaq lower today had an amazing 2019, so just giving back a little today. In europe, ftse 100 down. Dax 54 down. They are all lower today. The ftse only up by 12 on the year. Dax up by 25 . By 46 . European close is next. This is bloomberg. Guy 30 seconds to until the end of regular trading in europe. I say regular trading but volume is on the light side. The out of Office Returns are flashing bright on many computers. That is what we are seeing in europe. It is a negative session but the signal and the noise is very light. Lets take a Bigger Picture story approach to what is going on. This is the year to date performance of the stoxx 600. We have kept up with United States, which nobody expected earlier on this year. Trade. One directional if you took this chart back a month and a half you would get a massive december drop. Lets ignore that for the moment. It has been a good year for european stocks and that has helped out this transition from growth value has done very well this year and it is largely down to european names coming back. Lets break it down a different way. Lets look at the closing numbers. Ftse 100, dax, and cac 40 all down. The ftse 100 was outperforming over last month. Over the year it has not done so well. In dollar terms, 16 . In dollar terms the dax and the cac 40 have done 23 to 25 . That gives you 90 of the underperformance. In terms of the sectors that have driven us throughout the year, again this is quite interesting in terms of what has provided the biggest emphasis. Financial are at the top. 39. 29 . Exchange, oneck of the best performers. The London Stock Exchange is the best performer in the Financial Services sector this year. Obviously a lot of m a surrounding it, as a result of which that sector has outperformed. Also it is more interesting in terms of the eclectic mix. Construction has done quite well in europe despite the fact that it has been reasonably difficult for that sector. Technology is not a big sector. Retail is up 34 . Again the consumer has been great but not that great in europe. In terms of where the real drivers have, take a look at food and beverage, up 26 . That is where the big bond proxy names are to be found. Utilities is the same thing as well. The staples are up 26 . That is where we have seen the strength. The bottom end of the market, telecom sector, we have seen telecom not trading well. The oil and gas sector has ,nderperformed, only up 6. 4 and then there the banks and the car sector. The banks have had seen of get problems and continue to cut. The auto sector has been the trade story. It has been a story of outperformance relative to expectations. The big question is from the euro point of view does it carry on into 2020 . Vonnie right. We look forward to being on top of that story either way. One more session left for the european trade but in the u. S. We are in the middle of the second to last session. At other one who is repositioning is doing it today and tomorrow. To 3222. 00 down. 5 today some of the sectors are giving back some of the gains, including semiconductor. That is why the nasdaq is one of the worst performers today. A five basis point move in the 10 year yield. 210wotenure the spread has widened. The dollar index a soft miss, but it is Still Holding up there at a healthy 96. 65. Lets move to the s p 500 and what is moving underneath the lid. We are looking at commodity Type Companies for the oil and gas drillers and gold miners up. That is not enough to hold onto gains for the s p 500. Neither is the retailers, macys up 1. 5 . None of that is helping because on the lower side we have several Biotech Companies and we also have other Companies Like andy, which is dragging like amd, which is dragging down many of the indices as well as its competitors. Nvidia down. Any of the stocks are off couple hundred percent this year. Guy one of the factors to talk about as to why stocks have done so well this year is what has been going on with Central Banks. The multiple expansion story is huge, and it has been a big year for the federal reserve. Reversing course back front end of the year going for a rate hike. Three rate cuts coming through. Now it is signaling it is likely to stand pat, possibly for all of 2020. The market has a cut priced in at the back end of next year. We will see whether that comes to fruition. Things change. Lets get a sense of where we are going next and a sense of where the fed fits into the wider central bank story. I am joined in new york by michael mckee, Bloomberg International economics and policy correspondent. Bankin london, the union level head of fx strategy. Mike, lets talk about the fed. It will change. We will get new members and some of them are more dovish. Presumably that is factored into the thinking. Michael this is the annual rotation. Four members go off, four members go on. This year, it is almost an even trade across. You look at oncoming minneapolis fed president Neel Kashkari, but going off is james bullard. Both of those are doves. The hawks are esther george, she is leaving. An investor from cleveland is coming on. That is an even trade. Patrick harker is a centrist with hawkish leanings and Eric Rosengren is a centrist with hawkish leanings. You substitute parker for rosengren and not much changed. We will have to see if there is a real difference between Robert Kaplan of dallas coming on and Charlie Evans of chicago, who was more of a dove, going off. Robert kaplan has been talking gabashvili, has been talking does not lookit like the new members will have any influence in any kind of change of policy. It will be whether we see any kind of change in the economy that will cause them to rethink. Born,he fed wants to be it wants to be a nonevent. You think it will get its wish . Peter probably not. The one worry i have for the fed and i think it is more globally speaking is if i look at some of the leading indicators for inflation data, they rolling over. If you look in inflation the u. K. , 1. 5 , 1. 6 year over year. Same story in the euro zone. The worry for me is if you look at china these at chinese ppi, that is a decent indicator for global inflation. Weare likely to continue and seek much lower inflation than what the fed will do. They will have to cut again, probably earlier than people anticipate. That would be the risk in my view. Vonnie if we think of them in terms of descriptions. You talked about the most hawkish of the four and Neel Kashkari the most dumbest. Maybe the most and Neel Kashkari the most dovish. What can you tell me about harker and Neel Kashkari . Harker is speaking friday in california. We will know whether or not he will be changing tack, but i doubt it. Their view is we do not to cut more because we want to save ammunition for when we do have a downturn and this is about as far as we want to go. It will take a lot to get us to move. Jay powell has put that into a phrase of Material Change in the u. S. Economy. It does not look like that is in trade. If we do get inflation, which is an interesting question, that could change their view. What is probably going to be the most interesting this year to watch for now from the fed is the policy framework review that should be out midyear. You do not have any other changes in the economy between now and then. That will be what is on traders minds. If they get to inflation averaging and suggest they want to push inflation above the target, they will have to sell that to the market. Not only the credibility of getting it there, but can they keep it there without going too far . There are issues to watch, but not in terms of rate moves. That would be quite the surprise given not many have been vocally supportive. Idea of what they are targeting, the dot plot is unanimous for next year. Has that something to do with the fact it is an Election Year . Michael it is unanimous because they are all seeing things the same way. At this point we need additional stimulus. They are mostly agreed on that. There is no inflation danger, which has brought the hawks like george into line, influencing Robert Kaplans views as well. You do not need to raise rates because inflation is not taking off. The fed does not have any problem with moving in an Election Year if it thinks it is necessary. The bar will get higher the closer we get to november. Guy if the fed does nothing, does that mean everyone else does nothing as well . Wonder what the aggregate number of rate cuts around the world is, it is enormous. It is largely triggered by the fed three rate cuts and what has been happening with trade. If the fed as a boring 2020 and does nothing, can anybody else it back as well . Peter it will depend what their own idiosyncratic developments are like, the economic side and the deflationary side. The fact that the fed cut rates in 2020 and 2019, basically you have a green light to the rest of the world. That gave a green light to india to cut rates and that is exactly what they did. Are stayingsaid we on hold but will cut if necessary. They are not talking toward a hike. Even if we move towards an inflation averaging regime, that is saying we are not hiking rates. If other Central Banks feel the need to cut rates, that is what they will do. Theme, continue the Central Banks around the theme fired a lot of bullets. How many bullets are left in the ammunition box into 2020 . Michael not many left. Rate, so you only have 150 basis points you could cut from the fed. They can do that, they can go back to qe, which they said they would do. Doubts about its effectiveness. There is the possibility of yield curve control which the japanese have used as a weapon they could use, and also forward guidance. None of those have any guarantees. That is part of the problem. The European Central bank has nothing left so they cannot cut rates. Everybody is turning to the idea of a fiscal response, but they do not seem to be any governments that are interested in doing more fiscal on a continuing basis. It is important to note the u. S. Has a big impulse coming this year thanks to the spending bill that was just past for defense and domestic. The u. S. Will be supported by that, whether congress thinks there is any room left if we get into recession as a whole other question. Howie isnt it amazing opinions change radically from midyear. At one point the majority of people we talked to expected some kind of a major downturn, if not a recession. Now that is gone from everyones mind. Is that an outlying scenario now . Michael you had a slow down and then you have the markets react to the slow down. Because of the length of the expansion, people thought this is it, we will roll over, plus the unpredictability out of the white house. People do not know what would happen with the trade wars. Now the trade wars seem to have the data has gotten better, markets are happy at the moment. There does not seem to be any reason to think we are going to see the recession. The idea is recessions do not die of old age, someone kills them. At this point no one has a weapon in their hand. The fed has stopped. At this point, it does not look like theres any reason you can see. What is the old saying about the fed having called 10 of the last five recessions . Vonnie exactly. Peter, i want to ask you about christine lagarde. We have a story about she has two tasks in front of her. One is to learn german and one is to learn centralbank speak. Does she get some runway before she needs to do something at the ecb . Peter i would think so. Learning curves at the ecb will be a lot easier than learning german. She comes in with a tremendous amount of goodwill. That is going to help. She is entering an Ecb Governing Council which is divided and she will need time to get the more hawkish members on site and she will also need time to get the more dovish members on site. It has been interesting noting the majority of her comments so far have centered around more for governments to take advantage of low borrowing and to engage in physical stimulus. She has not spoken about what the ecb intends to do. I do not think it will do anything for the next six months. She has the best part of six months, maybe nine months to get her ducks in line and speak to the stakeholders and plot forward through the ecb Strategic Review and try to encourage the european government to spend a bit more money. It is a lot easier said than done. Guy we will leave it there. Thank you much to bloombergs michael mckee. He will be back later on in our battle of the charts, and peter kinsella. Happy new year. Lets check in where european stocks have settled. As i have indicated, it has been a Light Trading session. We have been dipping into the close. Ftse 100 down. 8 . Dax down 17 . The cac 40 pushing lower dax down. 7 . The cac 40 down. 9 . His is Bloomberg Vonnie live from new york, i am vonnie quinn. Guy from london, i am guy johnson. Lets check in with the blumberg first word news. Here is ritika gupta. It is another sign u. S. Economic growth is holding up. Exports increased and imports declined. The u. S. Currently runs deficit to merchandise trade at a surplus in services. The u. S. Has launched airstrikes on bases in iraq and syria used by iranian bank militia. Defense secretary mark esper called the attack successful. He did not rule out further action. There up in rocket attacks aimed at iraqi installations where u. S. Troops are based. New york, a suspect is being held for a multiple stepping during a. Officials say a man burst into the home of the his did it of a hasidic rabbi, wounding five people. Andrew cuomo calls it an act of domestic terrorism. In australia, wildfires have forced thousands of people to flee a popular spot. The fires have been fueled by a heat wave and strong winds. It is the latest Development Enterprises that has gripped australia it fires broke out last month. 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. I am ritika gupta. This is bloomberg. Vonnie thank you. Our stock of the hour is one of 2019s struggling ipos, lyft. Taylor riggs joins us from san francisco. A difficult year for lyft. Taylor it has been. They are down an additional 5 , bringing the total lost since their ipo 40 . Both lyft and uber have been struggling. Isays news is los angeles considering making both uber and lyft use electric vehicles to help curb emissions as their goal to become Carbon Neutral. That is putting some pressure on the stocks. What i wanted to do is take a look at some of the sales growth. It struggled in 2019. You had sales drop in some of those vehicles. They are expected to rebound. 25 growth since we talked about how well tesla is doing. The flipside is they want the cars to be ev by 2050. That could put pressure on them. Want to run through some of los angeless plans. We know they want to cut omission by 25 by 2028, Carbon Neutral by 2050. Of passion dirt vehicles 30 of Passenger Vehicles need to be electric, and they are looking to cut single occupancy by 20 . All of the uber and lyft vehicles becoming electric would put a lot of pressure on those ridesharing companies. Guy lets talk about what is happening in new york. L. A. Is a story. Talk about where we are making gains in new york city, which is the biggest ridesharing market which is the biggest ridesharing market . Taylor it is the largest market so it is important to see how the companies are doing in new york city. We got numbers for october and across the board it look strong. Thrive. 3k at lyft, million 5. 3 million rides in october and up 33 year to date. That is potentially good news in new york city. Vonnie taylor riggs in san francisco, thank you. Coming up, it is our global battle of the charts. I am back in the game. This is bloomberg. Guy time for our global battle of charts. You can find these on your bloomberg. All you have to do is run gtv. Kicking things off he is back michael mckee. Michael i will take a turn on the old phrase, wwcd. What would china do . A lot of people are talking about Monetary Policy in china, but china has not done anything. They have room to do anything. The blue line is chinas lending rate. This is their Monetary Policy rate. The yellow line is the prime rate. It has gone down since it has changed the way they are calculating that, not because they have eased policy. What they have done is change their reserve ratio. That is the white line. They are now requiring banks to hold less cash, which makes more available. What china is trying to do is stimulate the economy through things like infrastructure spending. They do not want extra credit if they can avoid it because they do not want more debt. That is a problem, a debt overhang for the chinese bank. You can watch the chinese and see if they are feeling the economy is slow enough they need to cut rates. So far, they have not. Guy they have not. Thank you very much, indeed. Vonnie . Vonnie my chart is called submerging markets but it is not as negative as you think. It is a chart pointing out emerging markets are showing less weakness, in fact substantial strength, mostly thanks to china. Ofs index is at the level 2004. This is the msci emerging markets to msci world market ratio. That is the world index of developed markets. That ratio is at the lowest it has been in more than a decade and shows us we are getting strength in emerging markets and that might continue. As we said earlier with our guest peter kinsella, we may need to see the dollar we can for that happen. You can see that chart on the bloomberg at gtv. Vonnie a lot of people have the em story as the top of their list. As a result of which, vonnie is todays winner. A nice chart from michael mckee. The pboc want to watch into next year. Vonnie quinn is the winner today. Coming up, balance of power with david westin on Bloomberg Television and radio. He will be speaking to the former u. S. Ambassador to israel. In terms of the u. S. Market, we have been a little softer today, but remember, we have had a very solid year. Have a great new year. I am not in tomorrow. Me, have a great day. 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. On the brief today, anna edgerson in washington about how some senators approach to impeachment could affect the reelection chances. Michael mckee in new york on economic data, and Charles Kinsey in madrid on what could be a deal to keep the acting Prime Minister in office. Lets start with anna in washington. We are waiting for nancy pelosi to send the articles of impeachment to the senate. What about the senators once they get it . Who has to be concerned about the reelection chances depending on how they handle it on either side . Anna we expect this to be a partisan process, just like it was in the house. Most democrats voting for impeachment, of most republicans voting against. There are 35 senators up for reelection, and only six of those will be interesting to watch. Two