Faded as the day goes on. Every sector in europe is in positive territory. Are seeing luxury stocks doing well. The mining stocks are doing well. The euro is softer. We have some disappointing data coming out of the manufacturing sector, particularly out of germany. Take a look at the relationship between the german twoyear and the u. S. To year. , take a looknyear at what is happening here. Yields are lower. Prices are little higher. Vonnie lets get to the economy and the markets. We are joined by Deutsche Bank securities chief. Not aly shy but that is bad reading, is it . It had been below 50 for a little while. War. D to do with the trade that is actually really good news. We are torn between the uncertainty from the trade war. Have seen indicators that spending,f cap and the number we got is confirming that there is some rebound going on. That has been weighing on the outlook for a little while. Had significant easing. As long as these uncertainties dont spiral out of control and we dont transition away from trade wars into election uncertainty, we believe the economy should do well. Growth at just about 2 . Lag what is the gap, the deal being done and lets assume it is done on the 15th, and its starting to show up meaningfully, particularly for europe. Indicators have been showing some signs of improvement. The halfdollar indicators, capping spending and businesses to trendhave continued down. Are we seeing any change and actual behavior, or is this things areee better but we are not going to open our wallet. This continues to be a Downside Risk. Guy if corporates do not spend, how will the fed respond . Will it respond . Will they try to get the wheel turning a little bit . Absolutely. Since the trade war broke out in the second or Third Quarter of 2018, we have been on the tram trend downtrend. Once that happened, the fed said we cannot allow a component of gdp do deteriorate in this way. Two deteriorate in this way. Deteriorate in this way. If we see more sliding, we feel strongly the fed will be coming back. The trade war is your number one risk. Europehat, we have spoken and asia as week but stabilizing. The u. S. Outlook is essentially flat. Gdp growth will show you that the quarterly profile will be roughly 2 for the next six quarters. If you look at it for germany and europe, they are having two week quarters. The second half, europe should see a significant rebound. Partly because of brexit uncertainty being behind us. Also, because trade war uncertainty is helping. The German Economy has had some issues with the auto sector that are beginning to fade into the background. Is answer to your question that we have seen convergence with europe catching up from behind, which is good news for Global Growth. It isg picture is exciting to be moving sideways. Vonnie what is the concern that the u. S. President opens up another fund with the trade war . Also, the idea that maybe that wont happen because it is an Election Year . Lester, it happened and it had significant indications for manufacturing. If we were to go down the road with the trade war, which could employmentd with low unemployment rates. If that happens, we will have to revise what that means for manufacturing. Manufacturing and the goods producing sector is only 10 of gdp. 90 is services. Stillt sense, we are monitoring for any risks of things happening in the manufacturing sector. The bottom line is that we have been impressed with how resilient the u. S. Economy has been and how well the economy has done overall. Guy if the trade war continues and the president is talking about the idea that we will get into phase two pretty quickly, he calls himself the tariff man. He likes to use that as his weapon of choice. We are still talking tariffs. The German Economy is going to be the major casualty from this. I want to dig into this more that you think germany and europe will bounce back in the second half of this year, isnt that contingent on if trade settles down . If it doesnt, what can we expect . Europe is vulnerable. The trade war shows how vulnerable europe was, last year. It did not originate in europe. Nevertheless, europe and asia, including china, showed more of a reaction to the downside as a result of this. That there is an expectation that you will see a rebound in growth. The way that we look at it is it is not only about the trade war. Brexit uncertainty has been eliminated, or at least is less than it was in 2018, that is playing an Important Role. Sector looksto better, which makes us more optimistic that things could be looking better in the second half. China continues to look stable. It is steady in the outlook. The contingency expects growth for the next six quarters. That is telling you that the Downside Risk is not as significant as we get through this year, compared to where it was last year. Guy back up into the brexit story. Do you expect a trade deal between the e. U. And the u. K. In 2020 . That remains to be seen. It is difficult to predict where negotiations will be going. At least it looks like the chances of no deal are lower. That is what the markets are trying to tell us. That improvement is at least minimizing the risk of that. That is a significant change compared to where we have been for the last year. Vonnie you have a chart in your presentation that says it takes four years on average to put together a trade deal. In your chart, this is a list of countries that did trade deals with the u. S. , five of them brought up the average. Of the other 20, that was well below 45 months. Is it possible, can it be done . The history illustrates that it takes a long time. Deal, think about a trade both with the u. K. And europe, and also the u. S. And china. There are many components thinking about the u. S. China relationship. We dont know how any phases we will have. Aad is revealing that this is long process. Takesy reveals that it four years on average. It could take longer in some cases. It could be shorter. We are at two years into this and we have barely just begun. We feel quite confident saying that these are not things you solve quickly. It could take some time. Phase one or two might be one way to keep markets coming along. They are saying we will deal with this and we will deal with this next. Southeastme of the asian nations have been benefiting. There were some silver lining. They continue to benefit, even if we get phase one and phase two and what about the rest of the emerging market universe . Fromere is a change away china to those countries is what we have seen in the data. If there is slow growth, that will be hurting them. You have risk that if Global Growth is weaker, Economic Activity is generally weaker. It remains to be seen. If the view in the global, corporate world has uncertainty eliminated, or are we still having this cloud hanging over the outlook . Back,we should be holding not only with spending but also in the form of hiring. Guy how much stimulus are we going to see out of china staying in asia during 2020 . Seen a slightly earlier than anticipated rrr cut. What else will we see . The Growth Outlook is impressively stable. This is what we expect. That authorities have things under control. In terms of what is going on with the economy. Growth will likely be slower over the coming years. Do you see the need for chinese stimulus this year . A lot of the answers to that would depend on is trade war uncertainty gone . Is there a need . That is something that they and policymakers evaluate. Is there a need to do something . The picture is that growth will be slightly lower. Vonnie i have to point to another chart in your presentation. The source of the rallies of stock markets since 2009. You have come up with the idea and you have it here that buybacks are far and away, multiple times the other sources of demands for u. S. Stocks. That picture shows you that if you look at the data from what is the source of money that got into the stock market . The source of money going into the stock markets from domestic real money, meaning u. S. Pension funds has been slightly negative. They have been selling equities. By far, the most significant source of money into the u. S. Stock market has been buyback. That has been going up much more then what you have seen from anywhere else. This is confirming the narrative that the support to equities has been because of the easing of the fed. There has been more issuance and more money and eventually issuance came back. Playing anve been Important Role in why stockmarkets have been continuing to do well. Buybacks be strong or is there a risk that buybacks will slow down . Vonnie it will be an interesting year. Thank you for joining us. Bankwas Deutsche Securities chief economist. Nancy pelosi and Mitch Mcconnell are locked in a standoff over President Trumps impeachment trial. Bloomberg learned that over the two week holiday break, there were no negotiations on how a senate trial be handled. Says she wants to see a fair process for the trial. Dropped out ofas the race for the democratic president ial nomination. He was the only latino candidate. He was unable to rise in the polls. In a video message, he said it simply isnt our time. China has haunted a link between the london and shanghai stock exchanges. The london shanghai link was designed to issue shares. Rescuey is rushing to thousands of tourists stranded by wildfire in australia. The fires have destroyed hundreds of homes in rural towns. Global news 24 hours a day, on the air at tictoc, on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. This is bloomberg. Guy thank you. Coming up, new year, new decade. We will take a look at which sectors will be in focus. That is coming up next. Tomorrow, we will hear from charlie evans. That is at 4 00 p. M. , london time. Remember, she becomes of odor. Becomes a voter. This is bloomberg. Vonnie live from new york, i am vonnie quinn. Guy i am guy johnson. This is bloomberg markets. Lets check those markets. It is a bullish start to the new year. Equities rallying, starting in asia. In europe, the stocks are higher by nearly 1 . Records. Pens at fresh lets look at europe. And how broad the rally is. If you look at the indexes over there and the stocks that are higher relative two the ones that are lower, the cac 40 has three stocks lower. The dax has four and five respectively. Stocks. 479 xx advancing, 64 decline. Most sectors are higher. Ones that are lacking are the more expensive sectors. Real estate, health care and utilities are in the red. Bestology is the performer, early in the session, up about 1 . Lets take a look at two Technology Stocks that are leading the charge. Apple and amazon are up more than 1 . Out macauted to point gaining revenues less than expected. The stock is getting a nice lift. Vonnie thank you. For more on what you need to be watching in the first couple of trading days in the new year and ke with us. Have lu plenty of optimism to start the new decade. It is not how you start the year, it is how you finish. We should be careful not to read too much into todays actions. Doneere was a good job between how the first day goes and how it ends. In general, not taking the day but thinking about the backdrop. The backdrop seems more supportive than it did at this time last year. It was january 3, where we thought the world was nearly ending, when you had the apple revenue and the japanese leverage and another blowup. The next day, you had a jobs report and china announcing measures. In terms of where we are, it is a different world from one year ago. Europe does not seem to be stabilizing as much. Data hasthat the bottomed is alive and well. We get to january the 14th, how critical are those earnings going to be . Will they satisfy High Expectations . High thosesure how expectations are. If you look at year end price targets, it is not like anyone is looking for a repeat of what we saw last year. It is much more the cautious optimism that Jonathan Ferro let off the show with. When it comes to the earnings look, i think it is important to note that if you are comparing it to the context of bond yields ey areal yields, ther low. About one half of a standard deviation below its average and compares favorably. Expectations, they might be firm but they are firm in the context of at least they are going to be up. We will find a way to make do with it. Guy the earnings story is going to have to be one of the prime drivers this year in a way that it was not last year. Last year was about expansion. Last year was about the fed and other Central Banks providing a really solid, rocket boost for the equity markets. What is going to be there is the question . Could major driver that square the circle is that the u. S. Dollar will be the most important currency to watch. You can run it up against whatever you want. That will help shape a large part of the earnings story. If the u. S. Dollar goes down, especially as we head into the back half of the year, we have that natural boost in earnings, it will support the consensus trades you have around the world. That is generally the rest of the world over the u. S. Therehe past two years, has been little multiple expansion. Over theve gone up twoyear timeframe. Is done that expansion and dusted, it might be overplayed. We have to leave it there. Thank you as always. This is bloomberg. Vonnie just checking markets now. Across thedate board, in europe and the united states. Bank. Y is led by deutsche yields. Those the 10 year in the u. S. Is at 1. 86. The german tenyear is that. 23. At. 23. Vonnie live from new york, i am vonnie quinn. Guy from london, i am guy johnson. Lets check in with the bloomberg first word news. The the gun is prepared to deploy more troops to iraq. Mark esper says it is in turmoil right now. Mark esper says iraq must do more to confront militiamen. U. S. Filing for unemployment benefits, unemployment is down. President trump plus campaign its Trumps Campaign says raised 46 million in the last three months of 2019. Bernie sanders likely has the largest war chest of any central nominee. 34. 5ampaign says it raised million dollars. Benjamin netanyahu will ask for immunity from prosecution on corruption charges. Israel is headed to another round of elections in march. He is counting on being the person who forms the next government. Global news 24 hours a day, on the air at tictoc, on quicktake, powered by more than 2700 journalists and analysts in more than 120 countries. Vonnie nancy pelosi and Mitch Mcconnell are locked in a standoff over President Donald Trump trial. Willingonal lawyer is to testify at the impeachment trial. Na adjutant. S an. Nancy pelosi has not we were supposed to be further than this, no . There are a few steps that have to be done. They have to name and impeachment manager. Dodid not expect them to that until they got back from their break get back from their break, on tuesday, january 7. Thiswill be interesting is is a strategic moment. It is hard to see Nancy Pelosis in goal if she delays the process further. For now, it seems like there is uncertainty surrounding what her plan is and when she plans to move ahead on this and what, if anything, she can demand of the senate. Lets say we go to this trial in the senate and Mitch Mcconnell sticks to his line that this will be a partisan event and the president is equated acquitted, what does she do after that, is there a plan post that happening . Nancy pelosi and House Democrats went into impeachment knowing that this was the most likely samaria scenario. They knew a republican led senate that has to convict the president by a two thirds margin is going to end up acquitting him. They knew it was a possibility that they were dealing with this throughout the entire impeachment process. When we get to the election in november, it will be about messaging. Whether or not they can use what has been uncovered to remind president se alleged miss doing straight if they can, that provides them a political benefit from a partisan process. Vonnie democrats have been calling for more witnesses. Rudy giuliani is coming forward. If that happens, does that benefit anybody . Witnesses that democrats want to hear from our john bolton, the former National Security adviser who is in the middle of this. Mick mulvaney, the acting chief of staff who is at the center of these allegations. When it comes to rudy giuliani, they have to ask themselves this, what his testimony help the president. Or, would that be another liability . He has gotten himself into trouble with cable news interviews where he has admitted to things he has been accused of. It is not clear that even if giuliani is willing to testify, whether or not that would help the president. Guy can i take you back to your previous answer when you talked about the political effect of this . The president s Approval Rating has not been affected by this. What are you hearing, what is the sense of why this is how does that affect the democratic strategy . It is hard to tell because both sides are so dug in, not just in washington but around the country. People feel strongly about President Trump and the impeachment process. There are a lot of minds that have been made up. It is not clear how the impeachment process plays out from here and how it could change anyones mind. When we get into november, it will be interesting to see how many people are undecided, or who are going to vote against President Trump. Not just because of his behavior in office put because they are unhappy with some of his other policies. Question. E final Julian Castro dropped out of the president ial race. We expect to see more of that as we get into the Iowa Caucuses on february 3. Especially after that first primary contest, when people either do less well or better than expected, it will start solidifying the field. One thing to be looking for is when candidates start picking their Vice President ial candidates. Kamala harris or Julian Castro could be an attractive Vice President for someone who wants to add diversity to their ticket or appeal to a different part of the elector. Ate. Vonnie oil amid tensions in the middle east as militiamen move away from the u. S. In bc in baghdad. The u. S. Troops fired tear gas embassy in baghdad. The u. S. Troops fired tear gas. We are joined by simon casey. Come, what began as a skirmish and could deteriorate, how come it is not having more impact on the market . If this situation spirals and gets much worse, that would have an effect. Steady. S reasonably had remarkable steadiness and a lack of volatility. There is plenty of supply from the u. S. U. S. Become ahe net exporter of crude oil for the second consecutive month. The world is still awash with crude. Whatever happens in the middle east, go back to september, when we had the attacks in saudi arabia. It was widely speculated that it was iran that made the attack. In two weeks, the price went back down. You could see the markets shrugging that all. It is still shrugging off what is going on. Drawis there a line i can between the attack and what is happening now . Is that how the market sees this, as potentially providing another catalyst for a similar attack . That was one of the biggest events in oil market history. It changed the game in so many ways. Itif you look at the price, was a tremendous price spike. The market went crazy. It settled down quickly. The aftermath was getting back aftermal saudi production a lot of initial concerns that it might be impacted for months on end. It stabilized quickly. To willersation shifted demand continue to stop in . Soften . Ast few weeks to that attack, we had an opec meeting. An agreement to extend banks that they were trying to implement. Is updates from opec members achiever were an over last year. The conversation is much more and the impacts of the trade war. Rule out whatot is happening on the in the middle east, there could be an event around the corner. Who knows . Says theecretary esper u. S. Is prepared to deploy more military forces. This could get nasty and quickly. It already is nasty. How closely is the market watching this . They are watching it very closely. Things can move very quickly. To explain my previous comments about why the markets got comes what situation in saudi arabia after the september attack, we can have a serious turn. In of whatiss in 1979 withraq the attack on the usmc. U. S. Embassy. Things can turn very quickly. Iraq is a big oil producer, it produces about half of what saudi arabia does. If there is some sort of and that begins to impact the operations of the oil fields, that could have a serious impact on supplies. We cannot completely discount what is going on. Vonnie thank you for joining us. That is bloombergs simon casey. Tell and scores to settle. Theories about how he made it out of japan are going well. We will bring you the latest on what we know. This is bluebird. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy live from london, im guy johnson. Airbus rallying 3 . This after the company exceeded its delivery target for last year. Katie joins us with more. Reuters said airbus delivered it hundred 53 planes in 2019. 853 planes. That exceeded their target. If reuters is correct, that would be an 8 increase in deliveries. The bulk of these came late. They ramped up the production in the fourth quarter, delivering nearly 300 planes in that final three months of the year, pushing it by 75 . What is noteworthy is, if these numbers are correct and they delivered nearly 300 planes, that is almost as many as boeing delivered throughout the course of the year, through november. Boeing had only delivered about 340 five planes, in part due to the grounding of the 737 max. Planes, in part due to the grounding of the 737 max. Guy are they benefiting from the grounding of the max . The 500you look at billion dollar backlog, there are planes competing. You are seeing it show up in the stock price. When you look at the year airbus best year. The to meaningfully claim market share because there are concerns involved in that. The longer the 737 max is grounded, the more opportunity airbus has. Guy the max has struggled to get the rate up. Lets go from airplanes to cars. A daring escape from japan and is in lebanon, after spending a year trapped in the japanese legal batter. Le. He is a fugitive. Give a pressd to conference, sometime next week. Joining us now is chris bryant to give us a sense of what is happening. Expected to hear from him expecting to hear from him . I think we will hear from him next week. The tentative date is the eighth of january. It is one of the most anticipated press conferences in corporate history. An absolutely stunning turn of events, evading Japanese Justice and managing to get himself to lebanon. People want to know not just how did he pull it off but, it will be an opportunity for him to outline his defense. But also, settle a few scores. He is extremely sore about the out. E was pulled he wanted to push for integration that tokyo did not want. Fireworks could fly. Vonnie we have heard from the man himself in an email statement. He said he organized his departure from japan himself. His family played no role in his departure from japan. Media reports that he was aided by his family are false. He is coming out strongly in supporting his family and says he is the only one, the only one who solely organized his departure from japan, himself. There will be many questions ask about that. Where does he get tried . Does he avoid trial, chris . Can entirelyink he avoid legal consequences. At the end of the day, he has fled japan. At the very least, there is a warrant out for him. He is at the very least a fugitive. Some of the allegations that were made in japan are quite , surrounding undeclared income and misuse of funds. A press conference is not going to cut it. Can he have a trial in lebanon . Could he have a trial elsewhere, in france perhaps . Those would be reasonable. Life wants to carry on his , he probably does not want to sit it out in lebanon for the rest of his life. Vonnie what guy what effect will this have on the ongoing expectations surrounding sustainability . If he comes out and starts to talk about what has been going on within the company and what has been happening in japan or the relationship between japan and france, this is going to put another factor onto that story that is likely to destabilize the alliance. Absolutely. These Car Companies are under huge pressure. Falling sales and profitability. Things have gone from bad to worse. He is very disappointed with how that is going. I would expect that next week, he will use that opportunity to criticize some of the executives, some of whom have moved on as well. Really, for both of them, is escape is unhelpful. He will know the answer to every question next week. He will be well advised by p. R. Advisors. This is an anxious time for both companies who could do without this. Defyinghe has been judicial systems in the last few months. Deemed worthy of being taken into custody. There was a level of trust extended to him and there are repercussions for what he is doing, both in japan and france, all over the world at this point. It has escalated to the level of diplomacy between countries, the idea of their not being an expedition treaty between certain countries. For does this affect have whitecollar crime . It could have some serious repercussions. He is being made out to be a folk hero for fleeing justice. It is incredible that he managed to pull it off. Could consider what happen to whitecollar criminals in japan going forward, it is unlikely that anybody will be granted bail in a similar situation. He left behind his close associate in japan, mr. Kelly. What happens to him, that is an interesting question. Is a bit too short. It will have serious repercussions. Mr. Ghosn is not in the clear yet. Are able tojapanese cooperate with lebanon, that would be the best way for him to clear his name. Some of the allegations against him are serious and detailed. Tohas serious questions answer. Vonnie thank you. Check, the s p 500 begins the year on a positive note. The 10 year yield is back down to 1. 86. Some six basis points lower today. Down . 10 at 60. 96. This is bloomberg. Scott. Ining us now is tensionious, how is the in iraq being taken by the oil market . Not as much as i would have thought. We have seen this with geopolitical risk. The market is shrugging it off. Of looking to 2020, what are the prospects for crude . Of optimism a lot from other parts of the markets about how the Global Economy is going to pick up, why is that not being reflected in the crude market . Crude has gotten ahead of itself over the last month. Of the rangecy that it has traded in is still holding. Even with the geopolitical events, even with the Global Climate picking up a little bit, i see some pressure on crude and auld not be surprised to see wti below 60. Guy we have 1. 83 on the u. S. 10 year right now. Does it get about 2 . And if it does, can it stay there . At two pointapping 05. I see it falling down to 1. 7 and staying in that range. Bauer joining us. Vonnie coming up as we count wen to the european close, will speak with alberto. This is bloomberg. Guy the rally continues on the first day of trading of this new year. This is china delivers a couple of best a trip to our cut a little earlier than anticipated this estimate delivers an rrr cut a little earlier than anticipated. Our guest will be ginning us to discuss that. And, china suspends the shanghai stock link. Is this a warning . Live from london m guy johnson with vonnie quinn in new york. We are counting down to the european close. Vonnie beginning of 2020 on a very nice high note. The stoxx index last year was up almost 60 . Rising 1. 2 right now, bringing the s p 500 up. 4 , along with its, media and entertainment stocks