Transcripts For BLOOMBERG Bloomberg Daybreak Europe 20240713

Nejra welcome to daybreak europe. If you are getting ready to kick off new years eve celebrations, were not seeing a lot of that in risk assets today. Quite a number of markets, bear in mind, are close today, including japan. We dont have the cash treasury trade either. A little bit of red on the screen. U. S. Futures perhaps pointing to a stronger open. A stellar year for Global Equities in general, the best year since 2009 the best year since. Fx, a fourth down day for the bloomberg dollar index, all the g10 currencies gaining against the greenback. Dollaryen, seeing yen strength at 108. 69. Euro near a 12month high. Butslipping a little today oil is heading for its best year since 2016. In china, a little optimism, even though it may not lift the market. The gauge of chinas Manufacturing Sector held steady in december, evidence the worlds secondlargest economy is stabilizing. The outlook for new export orders expanded for the First Time Since may 2018. On the trade front, deleting white house china hawk, Peter Navarro, said the phase i deal is in the bag, but he has declined to confirm reports that chinese emissaries will come to washington this weekend to sign the deal. Joining us is alan higgins. Great to have you on the final show of 2019. We love having you. A little caution in markets. Focusing trading, but on china and the u. S. China trade war which has been the focus of optimism going into the yearend, do these words from Peter Navarro give you any optimism for the first month of 2020, First Quarter . Alan i think there are signs of optimism. It looks like a trade deal will be done. And a little obscure indicator, maybe. Volatility is low, but within fow volatility a lot o investors are buying protection. Its technical, but another indication of caution in the market. Investors want put options, and for us as a contrarian investor, thats good. Ive been here many times, t alking flows from equities, but in the last few weeks there has been decent inflows, so go with that break while with that for a while. Manus the nejra the skew index hit a high but pushed off that, perhaps showing optimism. Stabilization with china, the word being used. Is that your view of the chinese economy in 2020, stabilization but not necessarily inflection . Alan china has been caught up in a Global Manufacturing recession, and we see tentative signs of stabilization in that, including in china. The data overnight, a little on the flat side. I would like to see some beats in the main indicators. But as you point out, exporter orders are up, and thats key. So, overall satisfactory. But s p 500ay, futures are edging up as we speak a little bit, so maybe not such a bad december. Manus the take from Bloomberg Nejra the take from Bloomberg Economics on china pmi is it is positive but not the end of the woes. They pointed out that some employment components didnt look that great. If you look at 2020 what concerns you about china . Is it leverage . It is the amount of default . Is it something to do with the propensity of the stimulus . What is the consent concern . Alan the trade deal, admittedly we have been talking about it for a few years now, but the corporate sector is leveraged up in china, like in many economies. Students of history saw it in ireland, spain, south korea, japan it did not end well. So china will have to work really hard to avoid this. Thats why a trade deal is so important. We have seen in the past, the currency really getting under pressure. I think we are slightly below 7. That is a perennial risk. Very hard to judge any economy thats thebut area we are watching very closely. Nejra so are asset managers, investors, traders bloomberg surveyed. In emerging markets, the top two things they see driving e. M. , not so much fed policy, but the trade war and chinas economy. Through that prism, translating it to emerging markets, would you be perhaps a little cautious or not gung ho about emerging markets given your view on china . I mean more so the asian emerging markets. Alan when you allocate broadly to emerging Market Equities, you are really buying asia. Emerging market bonds at the moment, they tend to be more latin america, south america. If the dollar continues to weakness, slight emerging Market Equities can do a little better. We are relatively light, looking potentially to add in emerging markets, probably broadly asia. Moving allocation to an index fund or asset manager, when you are doing that, you are buying asian equities,. We can see reasons to be there. Has become very elevated, so looking around the world, e. M. And other cheaper markets look interesting. Nejra alan higgins will stay with us for the hour as guest host. Lets get first word news with selena long wang in beijing. Selena hong kongs resolution for 2020, restoring order and harmony. That was the message from chief executive carrie lam in her yearend message. She acknowledged shortcomings in the systems. Hong kong has faced six months of prodemocracy protests, with another major rally set for tomorrow. The European Central bank needs more precise inflation goals, according to the incoming executive board member. She says it isnt clear that the goal of below or close to 2 is supposed to be symmetrical or not. The ecb is about to launch a first strategy review in 15 years. Nalized ad ukraine fi deal. Political tensions, ukraine remains the main export route for russian gas to europe. The nord stream 2 project is expected to start operations by the end of next year. In spain, the Prime Minister is signaling growing confidence, but still needs the backing of a party, whichatist is meeting this week to make a final decision. This would be the First Coalition government in spain since the 1930s. Global news 24 hours a day, on air and iat quick take. This is bloomberg. Nejra selina wang in beijing. Thank you so much. Coming up, the new twist in the carlos ghosn saga. The former nissan and renault boss has fled japan for lebanon. Hes been out on bail and under house arrest, so a stunning twist in the saga. What we have been hearing from ghosns lawyer is he has no idea how to contact ghosn. He is speaking at the moment, also saying he knows nothing more than what has been in the media, but saying that the legal team have ghosns passports. We will get more details on this story next. If you are traveling to work, tune into Bloomberg Radio live on your mobile device or dab Digital Radio in the london area. This is bloomberg. Nejra this is bloomberg daybreak europe. Lets get the Bloomberg Business flash with selina wang in beijing. Fulla jp morgan wants control of its joint venture in china, and we learned they plan to boost the stake from 49 to 100 , the first global lender taking advantage of the opening of the nations future market, allowing full foreign control from january 1. There is no comment from j. P. Morgan. Huawei will overhaul ranks next year in leadership after a slowing in 2019 with u. S. Sanctions affecting suppliers around the globe. They are bracing for a painful year if the u. S. Maintains restrictions. Tradinging in u. S. After the chinese electric carmaker lost less money in the quarter than expected, but it is still warning it is running low on cash, and doesnt have enough money to continue operating for another 12 months. The chinese car market has been slowing and nio has cut thousands of jobs and has started scaling back marketing. That is your Bloomberg Business flash. Nejra thank you so much. Now, the arrest that shocked the financial world. Automotive tighten carlos put on trialghosn in japan for alleged misuse of corporate resources, which he denies. Now a new twist. He says he has fled to lebanon to escape injustice and political persecution. Lets bring in chief north Asian Correspondent stephen engle. How on earth did carlos ghosn escape without a passport and while under house arrest . Twist, right at the end of the year, the last day of 2019 and carlos ghosn pulls this escape act. He fled bail. Is he on the lam from japan . And how did he do it . His highpowered lawyer who got in bail earlier this year, house arrest, from solitary confinement, a real defense guru in japan, in a country that has very few defense victories, how did he not know or claim he did not know how carlos ghosn got to beirut . He says he has all of Carlos Ghosns passports and that he knows what we all know, what was reported in the media. There you see junichiro hironaka, speaking to the media right now. How did he get out of japan . Lookingthorities are into whether he used an alias to get out of the country. Others are reporting out of lebanon he entered the country on a private jet from spain using an alias, allegedly, so lots of questions. Nejra exactly. Carlos ghosn in his statement answered some of them i his motivation, saying will no longer be held hostage by a rigged Japanese Justice system where guilt is presumed, discrimination is rampant and basic rights are denied. He said i have not fled justice, i have escaped injustice. Can a country like japan, with rate,ost 100 conviction where does this leave carlos ghosn . Stephen thats the big question. The japanese prosecutors really wanted this case. They were going to go hard with it. There were going to be two trials, one for pay disclosure irregularities and financial crimes, and another for breach of trust associated with financial, alleged crimes anding with suppliers partners in the middle east. So, we have no idea whether japan will go ahead with the trial in absentia, or whether this one gets chalked up, oh well, we cant go forward. But its definitely leaving a lot of embarrassed faces and feelings in japan right now. Nejra stephen engle, great to have you with us. Thank you so much. Bloombergs chief north asia correspondent. Coming up, bitcoins 9,000,000 rise this decade leaves other assets in the dust, but what is the chart that matters on the last session of 2019 . Find out next. This is bloomberg. Nejra this is bloomberg daybreak europe. Our guest host is still with us. No cash trade today in treasuries because japan is closed, but talk about the outlook for 2020. Would you be preferring equities, or bonds . Alan marginally probably bonds. Equities i think will struggle next year. Ill get to equities in a bit, but basically, we dont see any monetary easing this year. , we are of equities ahead of the global economy. In the u. S. , pretty hard to see monetary easing. Maybe 25 basis points priced in. For us with bonds, the main position is to leverage along the twoyear with the 10 year. Nejra why, if you dont expect much easing . Alan good question. What if we are wrong, and we see a lot of easing . We will make money. The second scenario, the kind of market we see now, what if the fed said rates are definitely not going up, the 10year yield will rise and you can make money in this central scenario, where if you like the economy improves and the 10 falls off a little bit. Nejra alan higgs, discussing equities in just a moment. Bitcoin is up 9,000,000 since the start of the decade. Gold ending 2019 on a high. What is the chart that matters on the last session of the year . Juliette saly has the details in singapore. Juliette im honored to present this. Assets,year for risk coming off that low in 2018 when we saw all the risk assets reverse gains for the year in the fourth quarter, an 11 drop on the ms all world index. 24 , then up almost best year for global stocks since 2009, with a gain of around 30 . A number of the indexes have been trading at records, despite the u. S. China trade war, a a lot of uncertainty, brexit, protests around the world. Apple, best performer on the dow, amd the best performer on the s p 500. The best stock of the decade . A new Zealand Dairy company, a2 milk. Thats something to raise a glass to. Nejra you had to keep it antipodean. [laughter] thank you so much. Alan higgins is still with us. You said you like the treasuries. When it comes to Global Equities, we had a conversation a year ago when you said equities could do well in 2019. Guess what, they did. Are we too optimistic for 2020 . Alan for the start of the year, you are probably fine. At some stage, the markets are way ahead of the economy right now, way ahead. Bloomberg,sures, on price per sales on the s p 500, were even more expensive than in 2000 in the u. S. We had a really nice monetary easing, and markets love monetary easing. We dont see any monetary easing. Ironically, we get a trade deal and the economy does better and we dont need any more monetary easing, and as we go into the election, which will have some concerns, the market will have some concerns about the more progressive candidates in particular, and wouldnt be surprised to see the market end moderately down. So no great disaster. But if you are a student of history, about 30 of the time the u. S. Market was down since 1930. It is normal, to have down years. No big recession, yield curve drama like in the summer. Just the market is ahead of the economy, as simple as that. Nejra so you think 2020 could be a down year. Weve been having conversations with people, historically when you saw gains like 2019, you normally got another year of still more modest gains. You dont think we could see maybe 5 or something . Alan of course, anything is possible. We got it right last year, but these are not forecasts you want to drive your portfolio on. Of, we all do it, it is interest, but i think you will have to work the portfolio very hard. The u. S. Market dominates msci world. Away from the u. S. , emerging markets, doing better. So we can keep the market up next year, but overall flat to somewhat down in the markets, in the Global Equities, yes. There is no monetary easing next year. Nejra you said the reason it might not come through is because of global growth. Will that not feedthrough to corporate earnings which might drive equity gains . Or the earnings and then we sell off of that . Alan could have somewhat better corporate earnings. 2018, spectacular corporate earnings and a tough market. Last year, flat corporate earnings and a fantastic equity market, especially in the u. S. So yes, better corporate earnings, better economy, but we are there already, the markets are there. A consolidation in market, coming up to the u. S. Election, could bring the msci world down a couple percent, Something Like that. No great drama, but more likely a negative year. Nejra how will european equities perform amid that backdrop . Alan normally when the u. S. Is down, european equities are down more. But there is such deep value in that market now. When you by european equities, you allocate to value sectors like autos, banks. The dividend yields alone of the banks. Here are equity returns unicredit,eld, buybacks and dividends. Nothing, just holding them. Also, these dividends are a lot more secure than they used to be. Weve previously been in financial credit. Thats worked tremendously well. Maybe europe can buck the trend and get a modestly positive return. Nejra would you look more at value overgrowth in 2020 . Alan we have tweaked the portfolio somewhat more towards value. Especially in the u. K. We are big investors in more domesticorientated situations. But we have got some balances. Despite the momentum, that wewth, 10 years of growth, are tweaking the portfolio more towards value. Just like europe. Nejra what about other sectors in general . What would be your favorite sectors, for 2020, either globally or specific regions . Alan financials. Previously we were in health care and tech and we have taken those bets off. Both have done very well. Tech has been sick tackler. Health care has been spectacular. Health care, the u. S. Election is key for health care. For us, financials look interesting. More of a slow year for markets, so earning a 6 8 dividend yield in europe, a pretty solid equity return in the United States, could well be the standout sector next year. Nejra alan higgins is staying with us for the rest of the hour. Markets spooked some investors this year, but yearend repo operations were under subscribed on monday. We have the latest on that, and new faces joining the ecb. Lots to discuss with Central Banks. Alan higgins says there will not be easing in 2020. What does that mean for markets . This is bloomberg. Nejra good morning from bloombergs European Headquarters in london. This is bloomberg daybreak europe. The great escape. A fallen automotive a giant, carlos ghosn, flees to lebanon, saying he cannot get a fair trial in japan. It is another twist in the saga that began in his arrest a year ago. Peter navarro says a trade deal is in the bag. This is chinas Manufacturing Sector continues to expand in december. Closing the decade. A rally to remember for global stocks, oil poised for its best year since 2016 and bitcoin up 9,000,000 since 2010. Tocks, oil of 2019 andst day we are ending with a bit of caution in asian markets. A lot of markets are closed. Thin trading this holiday season. U. S. Futures slightly on the front foot and a fourth day of dollar weakness. Lets get all the action from our markets reporters around the world. Joining us is Juliette Saly in singapore and in london, Annmarie Hordern. You are focusing on the hong kong markets. A little bit of optimism there today. Juliette yes, absolutely. We saw hong kong markets close lower today. I am looking at what we have seen over the course of the year, particularly in the month of december, which has been great for hong kong investors. We saw a gain of more than a 7 for the hang seng index in terms of what you signed december. That also what you saw in december. Some analysts doubt the strength will keep the hong kong dollar on track for its best month since 2013. The u. S. China trade dispute. There has been positive return for a city dealing with ongoing protests. Nejra lets get to a reporter in mumbai. What are you looking at . Welcome good morning to you of course well, good morning to of course. The larger trend is what i am trying to focus on. You will hear a lot of people talk about whether the broader markets have returned arguably for a lot of markets. The last three days we have seen the midcaps do well. Despite that, the ratio of the midcap index to the largecap index is at levels from where it whichlly bounces back, would suggest maybe there is a chance of the midcaps doing well in the times to come. It is something a lot of people are betting on. Lets wait and watch if that happens. Except for the one , we have seen this hold. You can expect the broader markets to back to you. Nejra lets get to Annmarie Hordern. You have been looking at the bitcoin meteor cries. It was the best meteoric rise. It was the best performing asset class this decade and the most controversial. Not 900, not 9000, 9,000,000 . Thats how much it has risen since 2010. No other asset comes even close. The next 10 years for bitcoin will be very critical. They still struggle with the mass adoption and will likely start to face intense regulatory scrutiny. Nejra Juliette Saly in singapore and in london, Annmarie Hordern, thank you all. Lets get to the first word news with selina wang in beijing. Thank you. Carlos ghosn has escaped japan, fling to lebanon. The former chief of nissan and renault was facing a trial for alleged financial crimes. He says he is not fling justice, just the japanese legal system. He is a citizen of lebanon. The country does not have an extradition agreement with japan. The end of the year is looking a bit brighter for the chinese economy, with the Manufacturing Sector continuing to expand in december. New export orders growing for the first time in over 18 months. This as a preliminary trade deal between washington and beijing is expected to be signed in early january. It is very likely more sanctions will be imposed on iran, according to the United States state department. Brian hook. Aftermments come on rocket attacks that have been blamed on iranian proxy forces. The u. K. Is giving up is giving a pay rise to the lowest earners next year. Says it will put the u. K. On course for a living wage of 10. 5 pounds per hour after five years. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Nejra selina wang in beijing, thanks so much. One of two new executive Board Members is joining the European Central bank this week. She signals she wants a more precise inflation goal and warned her native germany against unjustified criticism of the institution. Under Christine Lagarde, the ecb is about to launch its first strategy review since 2003, yackling questions such as whi the yearend fed repo operations were under subscribed. It signals that dealers have ample funding for the end of the year. Alan higgins from coutts and co. Is still with us. The year ended repo battle but the war to control rates drags on. How much of a risk is the repo issue going to be in 2020 . Alan i really see the repo is quite isolated. You could even say that coutts is part of the problem. We are long twoyear notes leveraged. How do we finance that in the repo market on an underlying basis . All you are basically saying is that certain banks have been very riskaverse of the repo market. Some of the major nationals at j. P. Morgan because of regulation. If there is a warning sign like the 10 spread whitening, other signs of distress, then yes, there something going on, but this is very technical. I will steal from a matt miller from berlin. He said you can imagine a sea of treasuries, ultra safe treasuries but a shortage of action in cash. Just because there is a sea of treasuries, is their problem . No, there is not is there a problem . No, there is not. The fed intervening in the repo markets, socalled overnight repose and system repose, people who have been around for a while will remember that, it was quite normal for the fed to intervene. It was a sign of maybe popular trades like ours being long two years versus 10. That needs to be financed. And just generally, this slight caution, because obviously, rates go to 10 . There is no shortage of. Cash when we look at mutual funds, cash everywhere. Master repo agreement, something technical. You cant just grow and capture it. It was a very technical head fake for me, the repo side. The fed is taking care of. Nejra fine. Doesnt need to have any more kind of permanent facility, change anything in the way of its balance sheet, in addition to whats its already done . Slightly more deregulation of banks needed. Nejra lets turn to the ecb. You are saying earlier that you dont expect monetary easing in 2020. Im guessing youre talking mainly about the fed and ecb. That said, on one of these made, maybet was there is a risk the ecb has kinda been backing away from its stimulus little bit too soon. Is it doing that in any way or credit risk doing that in 2020 . Alan when they look at this review, i hope they look at corporations in europe, 18 of the financing comes from bank loans. It is completely different from the United States. Europe is highly dependent on the banks. The banks need to be profitable, otherwise, they become riskaverse and it becomes a negative for the global economy. I think this is what they are missing. Negative rates is a penal tax on the banks. They need to address that. Sweden has moved away from that. Low rates, yes, i can understand low rates. We have to remember, inflation in the euro zone is not negative, so we have got deep negative real rates. When they do this, the Christine Lagarde review, i hope they look at it a bit more holistically i look at the impact on the european Banking System rather 0. 5, thinking, rates are maybe they go to 60, 70, we need more stimulus. Its not working. Nejra one thing Central Banks have been talking about, not just a boe, the bank of japan as well, the risk of Financial Stability under Climate Change. Is this something that should be under the purview of Central Banks . Do you have a faith that they would be able to maintain Financial Stability that could be at risk, as they say, from Climate Change . Alan what you are really talking about here in mark carney talked about this yesterday, is the fact that Pension Funds in particular owning stranded Energy Assets and or materials assets. I think that is somewhat overplayed. I think there is a big move at coutts and co. Towards esg investment. We embrace that. Gas, butest in oil and we have invested in the top quartile of oil and gas in the sector in terms of esg characteristics. Inll and bp are typically the top quartile in terms of esg. Of equity weighting outside the u. K. Of these sectors is very low. Arguably, the bigger risk to Pension Funds this tech funds is tech. Overplayed, but no harm in Central Banks giving us a warning. If you look at the amount of money involved on a Global Equity perspective, the weightings are too small. Nejra alan higgins from coutts stays with us. Today marks 20 years since a bottom report and came. To power in russia. We will take a look 20 years since of Vladimir Putin came to power since bottom approving the power. We will take a look at since Vladimir Putin came to power. We will take a look at his time. Nejra this is bloomberg daybreak europe. Lets get the Bloomberg Business with selina wang in beijing. Full controlwants of its futures joint venture in china. We have learned the base plans to boost its stake to 100 . The first global lender taking advantage of the opening of the nations futures market. China is allowing full foreign control of the firms from january 1. No comment from j. P. Morgan. Uber and postmates are suing california, saying a labor law about to go into effect is unconstitutional. Hoover and postmates argued the move will threaten worker flexibility and unfairly targets certain companies. Eventzbank is in it stocks to purchase an activist stake instake its online broker. It currently has a market value of 140 million euros. No comment from either side. That is your Bloomberg Business flash. Nejra selina wang in beijing, think is so much. Here is what you need to know today. Today marks 20 years since Vladimir Putin first took power in russia. Whats his economic and political record . Annmarie hordern has the details. Weather as president or Prime Minister, the power over the last two decades has been held firmly by Vladimir Putin, outlasting all other major world leaders. He has restored the countrys global reach. The man thrives on foreign policy. Putin has repeatedly vowed to achieve Major Economic breakthrough but real incomes continue to fall, Career Prospects are shrinking and his Approval Rating has dropped about 20 since the annexation of crimea. Crimea. His biggest dilemma now is how do you perpetuate putinism after his term ends in 2024 . He starting to grapple with this question of the future. He has repeatedly rolled out amending the constitution to allow another term. No other option for staying in power looks like a safe bet. Nejra thank you so much. The state run energy giant gazprom and ukraine have a finalized a deal to continue europe for the next. Five years. The agreement should avert. An winter supply crisis ukraine remains the main export route for russian gas to western europe. Europe for the alan higgins from coutts is still with us. You have long been a lover of russian assets. It has performed the best globally in 2019 on a total return basis in dollar terms. Currency, secondbest worldwide. Is it time to take profits . Alan it could be. Russia has always been a cheap market. What got us interested, so stepping back a bit. Probably one of the low points, 20152016. I went on an Adam Smith Institute visit to moscow. I was one of the people there. Sometimes, it pays to be eight contrarian investor a contrarian investor. We bought dollar bonds and russian equities because it was a ridiculously cheap. It is less so today but it is still a market. Plus, it is an oil plate. Part of the play. Part of the reason it has performed well this year is the oil correlation. Performance can be eased out, especially when we talk about equities, especially on the bonds. Going back to 2015, i think i would like to thank putin for having someone look after me, take me for a drink. Nejra i did not think i would be sitting here on new years eve with alan higgins thanking Vladimir Putin. Alan there were so few foreign visitors then. The Intelligence Agency had to look after important people like me. Nejra looking ahead to 2020, one thing of course, with stale Stable Oil Prices allowed Central Banks to cut rates. Do you expect that to be the path for the central bank in russia in 2020 . What is your outlook . And for the russian economy . Alan so investing in russian equities is an oil and big deep value play. Going back to what Annmarie Hordern was talking about my what hes been driven by is broadening the economy. In whata lot of faith the world bank looks at as the ease of doing business. Hes had some success. Its all about the emerging middle class. Can they get that . Russia, brazil, even china toy certain extent, that is the big test. Nejra alan higgins from coutts staying with us. From deadlock and a new Prime Minister to a new divorce deal, brexit has dominated the agenda again in 20. We will take a look at what 2020 has in store. This is bloomberg. Nejra this is bloomberg daybreak europe. Some of the most valuable startups in the u. S. Could be ready to go public in 2020, according to new analysis. Annmarie hordern has the details. Whats the morning call . Next year, these are the ipo names we could potentially be discussing. And km talking about strike, mkm talkingor about strike, airbnb, and doordash. Thistially next year after lackluster 2019 ipo market, we could be looking at a lot of these the next six months. Nejra alan higgins from coutts and co. Is still with us. Would you be looking to buy into any ipos in 2020 . Alan not for us. Its not what we do in direct equities. Very rarely do we buy into ipos. I am pleased to say that the Public Markets are showing some discipline it now. These names are going to have to come a much cheaper than previously. The clunkers of after the clunkers of 2019. Nejra as we turn to the u. K. , the story of brexit for most of 2019 was one of deadlock but now number 10 has a new occupant and the divorce deal is likely to pass. How did we get here . Ive always said that no deal is better than a bad deal. I do not to see article 50 extended. I profoundly regret the decision that this house has taken tonight. Their deal, their proposal is clearly dead. We will now not leave on time with a deal on the 29th of march. This delay is a matter of great personal regret for me. I will shortly leave the job that has been the honor of my life to hold. I do so with no ill will, but with enormous and enduring gratitude to have had the opportunity to serve the country i love. Deliver brexit, unite the country, and defeat jeremy corbyn. We in the u. K. Want a deal. I want a deal. We will leave by october 31 in all circumstances. This reckless government only has one plan, to crash out of the eu without a deal. The decision to advise her majesty to Prorogue Parliament was unlawful. P. M. Johnson i strongly disagree with what the justices have found. This unelected Prime Minister should now resign. P. M. Johnson i dont want early election. Weve got to the stage where we have no choice. We are going to go out there with the Biggest Campaign this party has ever mounted. P. M. Johnson this one nation conservative government has been given a powerful new mandate. Story of the last 3. 5 years will be at an end and we will be able to move forward. Nejra alan higgins from coutts us. Co. Is still with you are pretty positive on u. K. Assets for 2020 but how much higher can the pound go . Analyst surveys are looking at 1. 32 by the end of the First Quarter. Do we continue to see gains through the end of the year . Alan we can. What a year. Some. Great clips there i love them. What are we looking for, businesses want certainty. We got nervous december 31 issue , but at least we know where we are going. We have a deal in place, so at least a first stage a deal, if dealike first stage come if you like. We expect deal, if you like. We expect consumption to remain reasonably robust. We know that people forget about the good news about the u. K. Economy, the fact that the employment picture, unemployment circaircle 40 year low 40 year low. That will encourage u. K. Assets to better. Normally one sterling does well, the ftse 100 doesnt come of course when sterling does well, the ftse 100 doesnt, of course. Russia was supremely unloved. U. K. , a bit of a different picture. It really is an unloved market. A tough environment for equities next year. Nejra what a way to end 2019 with alan higgins saying that u. K. Is the rush of 2015, 2016. Alan from a market perspective. Alan higgins, cio at coutts and co. In will be back with a banh g bang in 2020. This is bloomberg. Good morning. Welcome to Bloomberg Markets european open. I am matt miller live from berlin. The cash trade less than an hour away. Matt the great escape. Former automotive giant, carlos ghosn, flees to lebanon, claiming he was held hostage by words, notged, his mine, legal system. Ending on a high. White house adviser pete navarro says a traitor deal with china is in the bag. This as the countrys Manufacturing Sector grows more than expected in december. And a rally to remember. It has been a bumper decade for global stocks. Oil is poised for its best year since 2016 and bitcoin is up 9,000,000 since 2010. The under an hour away from start of cash equity trading in europe. Lets take a look first off at futures. Those that are trading remember, we have got some markets closed in asia. A lot of markets will be closed here. You are looking at dax futures but the dax will not be open today. Closed for the new years eve holiday. Happy new years, by the way. We will see ftse and cac trading, although they will close a little bit early this morning. Take a look at u. S. Futures. Of course, the american exchanges will all open today. Futures, ands, snp Dow Jones Futures all up s and p futures, and Dow Jones Futures all up. Take a look at this bitcoin chart. I am going to say just one time during this program, it is not the end of the decade. A decade is 10 years starting with the year one. There was never any year zero, so it is logically ending next year. Because of our excitement to get to it sooner, we will probably say a lot throughout the program that this is the end of the decade. In any case, if you look at bitcoin over these 10 years since 2010, you can see as sword it has sword to over it over 9,000,000 gain. Since then, its been incredibly couple. Over the last of years lets get into the markets now with mark cranfield. Start first off with whats going on in japan. Not the carlos ghosn story, which we are going to talk about as much as possible today, but the fact that markets are closed and for a long stretch of time, possibly setting us up for a flash crash like we saw earlier this year. Amongs has been a topic the few traders that are still around here on december 31. They have been talking about the yen and the risk that we will sawat a flash crash like we on january 3 of this year. That happened when japan was a way for an extended break. The same thing is happening again this time around. Japanese markets wont really open again until next monday. In the meantime, some traders will of course becoming back to work on january 2. Liquidity will be reduced and people think there is a chance of a big move in dollaryen, as we saw earlier this year. The conditions have changed a bit. What we saw january of this year was coming off the back of that horrible december period, when period. Y was a risk off dollaryen was the main instrument, along with snp futures and treasuries s p futures and treasuries. We have had a decent rally across equity markets going into year end and people are more comfortable. That does it mean to say we can to say we cant get some very unusual trading. Earlier int period the day before asia gets full liquidity when people try to exploit these moves. It is on peoples minds, the risk that during this illiquid. When we comeeriod back in january, we might see someone trying to push dollaryen around. Push dollaryen around. There are not that many big players around to hold it in check. Matt we also have the chinese pmi data to talk about. How did that look today . Mark i think generally, a sense of relief early. This is one of the most important data points in the chinese calendar. It came in slightly better than expected, 50. 2, Still Holding above that 50 line. The other, composite and services, were slightly below forecast but they were still pretty decent. All in all, i think people are pretty relieved and quite interested to hear now what president xi has to say tonight in his new year address. Hes probably going to talk more about some of the big picture items between g20. Certainly, people in this part of the world are a lot more optimistic on where the chinese economy is going in early 2020 than they were 12 months ago. This time last year, people were in. A pretty depressed state. The trade war was not going well with the United States. Even some of the gross estimates are being advised revised upwards for china. We are looking forward to a much better start for 2020 than 2019. Matt i guess a lot of people will be home today at on vacation come about to celebrate new years but maybe want to tune into that address. To sayxpect president xi anything about the u. S. China trade relationship . Mark interestingly, he rarely does. He rarely comments specifically on such things as that. He make may make an oblique reference to it. He will be very domestically focused and he will be talking about the things that hes doing to push the chinese economy ahead over the next 510 years and possibly about some of the more structural things related to changes and employment and that kind of area. Its unlikely hell touch on the United States. From ourk cranfield bloomberg mliv team out of singapore, thanks very much. Happy new years to you and thanks for all your help in coverage over the last year. Look forward to talking to you more in 2020. Lets get the bloomberg first word news now. Hong kongs new years resolution for 2020, to restore order and harmony. That is the message from carrie lam in her yearend video message. The embattled leader says the city has to tackle the problems at hand and acknowledged the shortcomings in the system. Hong kong has faced six months of prodemocracy protests, with another major rally set for tomorrow. Russia and ukraine have finalized their gas a deal with just a day to spare. It allows flows to continue to europe for the next five years, despite political tensions. Ukraine remains the main export route. The nord stream 2 project is expected to start operations by the end of this year. It is very likely more sanctions will be posed on iran, according to the u. S. State Department Envoy brian hook. The comments, in the wave of rocket attacks on u. S. Installations in iraq. They were blamed on a rainy and proxy forces on iranian proxy forces. The u. K. Is giving a pay rise to the lowest earners next year. The move is to deliver on the manifesto pledge to raise Living Standards as the country leave the eu. The treasury says it puts the u. K. On course for a living wage of 10. 5 pounds per hour after five years. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Matt . Matt laura, thanks very much. Happy new years to you as well. Ghosn. Up, going, going, a new twist in the saga of the fallen automotive tighten as he escapes japan titan as he escapes japan. We will have the latest. Bloomberg radio live on your mobile device or dab Digital Radio in london. Tune in. This is bloomberg. Matt welcome back to Bloomberg Markets european open. I am matt miller in berlin counting down to the last trading day of the year. We wont be trading here in germany. Our markets are closed. Across europe, many major markets, including the u. K. In paris, will be open and just closing earlier to celebrate. We have an incredible developing story. It was the arrest a little over a year ago that shock the automotive world. Automotive titan carlos ghosn was put on trial in japan for alleged financial misconduct and misuse of corporate resources, allegations that he denies. Now, there is a new twist. The former head of nissan and renault says he has fled into lebanon to escape what he calls injustice and political persecution. Lets bring in bloombergs chief north asia correspondent, stephen engle, to talk more about this. How can carlos ghosn have slipped out of japan . He was talking about the possibility of having to wear an ankle bracelet, there were cameras on his door. He had officials watching him. Must have been some incredible, covert operation. You know, thats what we are all waiting for. He has already indicated, carlos ghosn in a statement from beirut, where he is now, that he will finally be allowed to speak to the media. He will put out another statement and speak to the media next week, hes saying. Hopefully, we will get all the details of his escape from alcatraz excuse me, japan, in this case. It is interesting, because how can he do it . With all of the biometric fingerprint readers now . I didnt even see an immigration officer when i left the country. I used my two fingers and they read them. You can leave the country with another passport and alias but you cant leave with different fingerprints, right . So theres a lot of questions to be answered. To make this all the more lawyer, the lawyer, his gave a press conference on the steps of his office and basically said, i know nothing more than whats already been reported in the media. By the way, i have all of his passwords passports, so how did carlos ghosn get out . Matt well, you hope that he would say that. If he said i know exactly how this happened, he probably would be in a little trouble. You assume carlos ghosn may be didnt leave the country using the traditional security measures of going through border control. Where does this leave the trials and his alleged accomplice, greg kelly . Yeah, we havent talked about greg kelly. What is going to happen to him . Because hes out on bail as well and has been charged with similar alleged crimes. He is still in japan, according to his lawyer. We dont know his fate. Of the tokyoforce District Court and Prosecutors Office go on greg kelly . Will carlos ghosn to be tried in absentia in japan . We simply dont know right now. Surely, the japanese Prosecutors Office is embarrassed. They were really itching for a fight in court, which has of course, and japan, nearly 100 conviction rate. Thats why carlos ghosn says i was not going to get a fair trial in japan. Matt thats a point that even though we have been hearing it for a year reporting, bears mentioning again. Carlos ghosn has said, basically, he doesnt think the Justice System in japan is fair. You are saying they have a 100 conviction rate. That means every case the prosecutor brings, nearly every single one ends in a guilty verdict. How is that defended in the country . Yes, this is what has happened over the last 407 days. I have been covering this story over the last more than a year. The expose of the japanese judicial system and how the Prosecutors Office often times gets confessions from those who they charge and then they proceeded down a foregone conclusion of a conviction. There was a funny story that i read about when carlos ghosn was talking to some advisors when they were trying to change the legal team and find an adequate defense attorney in japan. They said, how can we find one who has won a case . There are very few Defense Attorneys in japan who have actually won a case. Him outet one, who got on bail and has successfully allowed him to have somewhat levels of freedom in japan. However, he is the same gentleman who this morning in tokyo is saying, i dont know where he is or how to get a hold of him. Matt he helped him get enough freedom to escape to lebanon, which has no extradition to japan. Thanks so much for your coverage this morning. Happy new years to you. Chiefn engle there, our north asia correspondent on this developing carlos ghosn story. Lets get the Bloomberg Business flash. Jp morgan wants full control of its futures joint venture in china. The bank plans to boost its stake from 49 to 100 . It is the first global lender taking advantage of the opening of the nations futures market. China is allowing for foreign control of the firmss from january 1. No comment from a jp morgan. Huber and postmates are suing california, alleging that labor lights labor rights laws set to go into effect are unconstitutional. It is to ensure gig workers get employment protection. Say itd postmates unfairly targets certain companies. Huawei will overhaul its executive ranks next year after wth slowed in the second half ofh 2019. Chinas Top Tech Company isnt bracing for a painful year ahead is bracing for a painful year ahead, as the u. S. Maintains restrictions. Matt lower right in london with your business . Coming up, from deadlocked to a new Prime Minister and a new divorce deal, brexit has dominated the u. K. Agenda again in 2019. We will take a look at some key moments and try and guess what 2020 has in store. This is bloomberg. Ive always said it no deer is better than a bad deal. I actually think weve got a good deal from the european union. I dont want to see article 50 expected. I profoundly regret this decision taken tonight. There deal, their proposal is clearly dead. We will now not leave in time. Ith a deal on the 29th of march this deal is a matter of great personal regret for me. I will shortly leave the job that has been the honor of my life to hold. I do so with no ill will but with enormous and enduring gratitude to have had the opportunity to serve the country i love. ,. M. Johnson deliver brexit unite the country, and defeat jeremy corbyn. We in the u. K. Want a deal. I want a deal. Will leave by october 31 in all circumstances. This reckless government only has one plan, to crash out of the eu without a deal. Will leave the decision to ar majesty to Prorogue Parliament was unlawful. P. M. Johnson i strongly disagree with what the justices have found. This unelected Prime Minister should now resign p. M. Johnson i dont want an early election. Weve got to the stage where we have no choice. We are going to go out there with the Biggest Campaign this party has ever mounted. P. M. Johnson this one nation conservative government has been given a powerful new mandate. The sorry story of the last 3. 5 years will be at an end and we will be able to move forward. Matt 2019 sox wass and turns in the 2019 saw twists and turns in the brexit saga. Now, number 10 has an occupant with a majority and westminster has a divorce deal that is likely to pass. What can we expect in 2020 . Joining me now from frankfurt is carsten brzeski, chief economist at ing germany. In london, david merritt. A lot has happened this year. Though,ever understood, and i feel like this is the right opportunity to ask you, why was elmo standing behind Boris Johnson as he won the great majority . David i think it is a unique feature of british elections. Anyone can stand against any of the mps, including the Prime Minister. Look at footage from Margaret Thatcher standing. You see someone with a bucket on their head and neck to them. It is a slightly ridiculous scene but adds a bit of humor to cut through the gravity of the moment. That is why elmo was standing behind. There was an even bigger gallery of a slightly strange creatures. It turns out that he beat them hands down on the night. Matt actually, sounds like a fantastic tradition. With that cleared up, you point out the system the situation still had a lot of gravity. Arsten, how grave is this situation . I mean, what do you expect from brexit in 2020 . Carsten brexit is going to continue. We will now start negotiations about the future trade agreement. I think there is no single trade agreement which has been negotiated less than in less months. There is an extremely high chance they will not finish the negotiations between the u. K. And eu government. Could there be a disorderly brexit . That idea will be quickly back on the table. Matt do you still think hard brexit is a possibility . Carsten i think hard brexit is still a possibility because remember, Boris Johnson has a ready said he wanted to rule out that there will be another extension of these trade negotiations. The end of 2020 would be a very hard deadline for brexit. I dont see how they will manage to really make a trade deal by then. This again means either there will be on extension of the deadline or we will have a disorderly brexit. Viewers,id, for our clients, i think one of the most important questions is, what happens to the city of london as the Financial Capital of europe . Last week, we were reporting that now it makes like the eu could be using that as a bargaining chip. What are your expectations for londons place as the Financial Capital of your europe . David this will be a huge question in 2020. We are going to hear these phrases we were hearing a year or so ago around mutual recognition and equivalence, all these different arrangements that the eu and u. K. Can have in order to recognize each others Financial Services sector and the degree to which the access is going to be granted. It is certainly going to be a shift. Europe,f places in paris, dublin, amsterdam arcana to grab some of that more to grab are keen some of that more business. London has got the scale that no one else can match for the time being. We have not seen the big outflow of jobs that many predicted. Maybe that will accelerate. We are going to see how hard a brexit mr. Johnson wants to negotiate this year. And really, everything is to play for. We can expect some really hard negotiations on both sides on this point. Matt david, thanks very much for being here today, for your work this year. Really, entire this job. David is blumbergs Senior Executive bloombergs Senior Executive editor. Carsten brzeski will stay with us in one of those cities around europe that wants to grab more business from london. I dont know why he has chosen to celebrate new years eve in frankfurt rather than berlin but he is there, the fact remains. We will continue to talk to him about what to expect in 2020. We will also talk about what white house advisor Peter Navarro said, the trade deal is in the bag. [ dramatic music ] this holiday. Ahhhhh ahhhhh a distant friend returns. Elliott. You came back and while lots of things have changed. Wooooah woah its called the internet. Some things havent. Get ready for a reunion 3 million light years in the making. Woohoo yeah welcome back to Bloomberg Markets, this is the european open. 30 minutes from the start of cash equity trading in some parts of europe and the u. K. It is new years eve so a few markets will be closed. Early. E closing stocks will not trade in frankfurt today and they will close early in london and paris for the holiday. Let us get the bloomberg first word news ever that we go to lunch laura writes in london. Carlos ghosn