Well, less of an outperformance, but a little bit of one. We are seeing a bid when it comes to crude. European equities not exactly having the same story as the United States, only up by 0. 1 . Markets actually in negative territory. The you is a little bit softer today. Christine lagarde speaks in frankfurt tonight. Weve got a policy meeting next week. The rand, a little bit of surprise from the central bank in south africa, delivering a to five basis point cut today. The big question, is there more to come . Is there going to be further rate cutting and south africa in what is a critical year for south africa . Somebody are getting absolutely pummeled today. The Canadian Company under pressure on a number of fronts on the train business and the aircraft business. Airbus a220, the ramp up to that program costing more than anticipated, and a buddy are essentially talking about walking away. Essentiallyrdier talking about walking away. Lets get some more insights on these markets and where u. S. Stocks are going next. Joining me in london, robert chief Global Equity strategist at citi. Do we get outperformance in the u. S. This year, or do we get it elsewhere . Robert i like the old stock market saying, the bull market is narrow. This bull market started 11 years ago, and it is narrowing. It is typical for the s p to forge ahead, european markets lag. So we are expect in the u. S. To continue to lead the way this year. Cheap. T europe looks the relative valuation story looks cheap. If europe has any chance, its got to be now with the kind evaluations we are seeing in the states. Robert thats one of the great conundrums of this cycle. Guy value has started to work a little bit more. Robert there was a bit of rotation, but im afraid that growth against value is making new highs, and at a global stockmarket level, the s p is the growth trade. Europe is the value trade. Guy in terms of what has ultimately driven us over the last 12 months, its been multiple expansion. Do we get Central Banks helping year . Th that this is the lower rate story going to come back and help us at any point in the next 12 months . Robert this time a year ago, we were expecting two rate hikes from the fed, and we got three rate cuts. We are not expecting that kind of help this year, but the caps are still on. I just dont think they are going to but the taps are still on. I just dont think they are going to open even more. One of the problems is if you take cheap money away, they can have tantrums. Guy talking of tantrums, people are back shorting volatility at the moment. It is pretty depressed, and yet people see it going even lower. What does that tell you about sentiment right now . Robert we think that is one of the things that has really been manipulated. Is that the right word . Affected heavily by central bank policy, which is volatility. They are essentially taking volatility out of the market that, if we were pricing things, would definitely be there. I think the lability is going to stay fairly low. Not forever. They are not going to stay with the taps as wideopen as they are right now forever, but they are suppressing volatility. Lips andsee b corrections and so on in the market. Guy the dispersion is going to stay very low, judging by that whole story. It doesnt sound what a year for active managers. Robert it is going to be very difficult. Most people are just buying s p tracker and doing very well. Guy you talked about mid singledigit returns this year. What do the tales look like and that forecast . Robert if you were going to say give me 10 swing, i would be on the upside, not the downside. One of the really extraordinary things about last year is we made 24 , 25 on Global Equities is out much flows into equity as an asset class. We did it despite fund flows. Normally, we do it because of fund flows. I think we could get that extra spurt to the market. Guy fear of missing out. Robert absolutely. Guy but Institutional Investors feel more invested in retail. Robert yeah. Areitutional investors often just the decision of retail investors. It feels like one of the grumpy us to bull markets ive ever seen in my life. Guy earnings . Expecting 4 to 5 global this year. As we saw last year, the number came down 7 , 8 . Still, the market went up 25 . late cycleare seeing increases in wage inflation. I think the risk to the forecast is generally encyclical stocks where analysts are forecasting a bit of a rebound this year. A lot of the 10 comes off of analysts expecting earnings numbers and cyclicals to be up. I think that is where the risks is. Guy where do the differences lie in europe . Robert we like the u. K. If i was going to say one value trade that i like in the world right now, its the u. K. Obviously, its had its problems. The election has cleared a few of those problems. We just see value there. What i really like about the u. K. Is that the companies are really answerable to if they trade on a low multiple continually, something will happen. Happen. K. , they will guy i am just percolating what you are saying. I want to come back to the issue of people being sucked into the market. I hear a lot of people that are nervous about the market as well. Howard marks was one the other day, talking about how this is not a time to invest. Some of the biggest investors in the world see most track record are talking about being nervous right now. Why are people going to invest rather than being put off, considering where we are in the cycle . We had a great rally out of q4 into the beginning of this year. Why would i be putting fresh money to work at this point . Robert another great old stock market saying is that markets cloud a lot of worry. Theres always something to be worried about. What you said earlier, the fear of missing out, you will start to see flows coming into equities. They might come into passive, not active funds. That is the last part of this bull market. We runt a what i call a bear market checklist. Im still only up to 3. 5 or four red flags out of 2018 out of 18. Guy so youve got to stay fully invested. Robert until you see these emerging signs of euphoria, of which bigger inflows is one, i would stay invested in this market. Guy so the rally at the back end of last year doesnt feel like that euphoria, like this kind of melt up . Years it should after 11. Ipos and lots of m a. I cant see it yet. Guy in terms of the sector story, do you want to get tech feels like a safe haven right now, which feels crazy. The defensive names within the market feel very expensive. Here in europe, youve got the likes of nestle. They feel superexpensive. If i want to stay invested but get a little closer to the exit, where do i go . Robert thats one of the interesting things. I would look at Something Like nestle the other way around. Nestle is excessive relative to the rest of the stock market, probably the most it has ever been in europe, but it is the cheapest relative to bonds. If you are an asset investor, you are coming out of the bond market. If you can get negative one in in bondu can get 1 yields and 2 in nestle, its a good deal. They might look expensive relative to the stock market, but relative to defensive assets elsewhere, they look pretty cheap. Guy stick around. Still got more to talk about. Robert buckland, chief Global Equity strategist at citi, is going to stick around. Lets check Global Markets with kailey leinz. Kailey in the u. S. , it is definitely risk on. In the u. K. , a little less so. The ftse down by 0. 5 . In the u. S. , all three major accurate is all three major averages are at record highs. You have every sector within the s p 500 higher today. Take a look at the dow, up 177 points, continuing that climb above the 20 men thousand level. If we happen to the terminal at gtv and take a look at the dow over the past few years or so, this isnt the first round milestone we have seen recently across the 27,000, 28,000 level in 2019, and now more than 200 points above 29,000. Whats led the dow are some of its biggest heavyweights. The likes of goldman sachs, apple, visa, mcdonalds have all seen gains of 6. 5 or so, and we will see if they continue to lead the dow towards the 30,000 level. Of course, there are some other stocks moving on the day. I wanted to go look at chip stocks. Taiwan semiconductor is well off the highs of the session, now up just about 0. 4 , but fourthquarter profits top to highest analyst estimates. First quarter outlook also really strong. 5g a big part of that story. This is a bellwether stock for the industry, leading its peers higher come of the likes of micron, western digital, and andy, all up and md,e than two per and a all up around 2 today. A remarkable week for the big banks. Goldman sachs, bank of america, j. P. Morgan, they have racked up more than 20 billion of profit in the fourth quarter. J. P. Morgan really taking the cake on that one. Guy absolutely. Amazing that they came out of the gate so strong, and everybody else had to fall behind it. On the program, you may be wondering where vonnie is. She is getting ready for an exclusive conversation with phil hogan, the new eu trade commissioner. He is in the u. S. I suspect hes having quite a tough time of things. Vonnie is going to find out exact a what is going on. That conversation is at 6 00 p. M. New york time, 11 00 p. M. London. Next week, a number of key interviews coming up from davos. These are the names weve lined up for the Global Economic forum. We will talk to the mall next week. Its going to be a great week. This is bloomberg. Guy from london, im guy johnson. This is the european close Bloomberg MarketsBloomberg Markets on european close on Bloomberg Markets. Lets get the first word news with ritika agrippa. With ritika gupta. Ritika chief Justice John Roberts will be sworn into preside over the impeachment trial. Senator Mitch Mcconnell says it will fully get underway next tuesday. The Government Watchdog Agency says the white house broke the law when it withheld money appropriated by congress for ukraine. Turns out there was a late Holiday Shopping rush in the u. S. Retail sales rose 0. 3 in december. For between 19, the overall value of retail sales increased 19, the overunny for 2019, the overall value of retail sales increased 3. 6 . Credit card stocks are among the big gainers. Companies like visa and mastercard moved a step closer to gaining access to the chinese payments market. Commodity markets got some numbers on chinas commitments to buy farm products. Still, some doubts about the deal remain. In russia, authorities are nuven to make that a mere putin are moving to make Vladimir Putins after a reality, one day he shook up the government and asked for a constitutional overhaul. Tot could allow him stay in power after his term of office ins in 2024 of office ends in 2024. Global news 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. Im ritika gupta. This is bloomberg. Guy thank you very much indeed. We are back with robert buckland, chief Global Equity strategist at citi. Lets talk about emerging markets. Ritika talking about what is happening with russia. That market has had a good run. You see emerging markets is broadly neutral for the year. How much is that dependent on the dollar . Robert we upgraded them from underweight at the start of this year. Part of it is a view of the dollar being weaker this year. Dollar, onea weak of the ways to play it is outperformance by emerging markets. Another way to play it is underperformance by japan. So we moved japan to underweight, e. M. Up to neutral. Guy where do you feel about china . Robert ive got a neutral call on china within the emerging mix. The overall economy is still growing, so you still want to bes of that, but there are always a few issues about why the chinese stock market is not quite as good as the chinese economy. Thats been an issue for many years. Guy is the trade deal having an effect on that view . If so, what . Robert i would play improving trade deal conditions through taiwan and korea. They are much more externally exposed to trade around the world. We are positive on taiwan, neutral on korea, but those are the two beneficiaries of some form of resolution of these trade wars going on. Guy davos next week. Esg as part of the conversation. The sustainability story seems to be getting momentum. Yet, we still havent nailed down exactly what it all means. Therefore, i think there appears to be some potential mispricings. The oil price and the oil stocks are an obvious one. Are there others . As you look for what you are trying to see as the opportunity this year, does esg present one . Robert we were talking earlier, i kind of got the oil price right and the oil stocks wrong last year. Guy i thick a lot of people did. Robert plainly what is happening is the stock market is looking through shortterm upticks in the oil price and starting to worry about the longterm Business Model of these companies. Ive given up on that trade. We are neutral on it. If i am bullish on the oil price, i am better off buying Oil Countries like russia. That one is still giving you some leverage to moves in the oil price. Guy stocks like bp have got fantastic dividend. In a world where dividends and yield is so hard to come by, decently elevated dividends, they dont come along very often , how many people you think are going to look at this and go, i appreciate that this is not part of my portfolio, but i need the yield . Robert thats been one of the interesting issues in this whole cycle. Low Interest Rates have triggered a search for dividend, triggered a search for yield in the bond markets. We all know that. But theyve triggered much more of a search for Dividend Growth and dividend yield. Youve been better off buying the u. S. Stock market where the dividend yield is low, but growth is high, than the european stock market, where dividend yield is high, but growth is low. Growth is a key driver of our strategy. We gave up on dividend yield some time ago, im afraid. Guy if im not into the growth thing, which some people cant get re do i robert how about this . You dont have to go right out there buying the 6 yielders. Sacrifice a bit of that. Collect 4 , which is still good, and get a bit more growth. That is how we get our clients to thing about dividend. Guy thanks for stopping by to cs here at bloomberg. Robert buckland, chief Global Equity strategist from citi. We are watching what is happening in washington, votes on usmca, plus the impeachment story. Plenty still to come. This is bloomberg. Guy from london, im guy johnson. This is the european close on Bloomberg Markets. A key vote at out a key vote about to take place on usmca on the senate floor. Lets go to his kevin cirilli. Kevin the senate is expected to vote on usmca. We are here with the Republican Rep is in think south dakota, a key member of the usmca team. How is this going to impact your state specifically . Say that if itto was canadian wheat, they would pay a premium for it. If it was not, they would not pay the same premium price for the same quality of wheat. For producers in south dakota, both spring wheat and winter wheat producers, this gives them the opportunity to compete with canadian producers, long time coming. This is worth jobs in south dakota. We will be able to now trade with canada and mexico, and it is the first in a series of trade agreements we want to get done. The china deal, phase one, was done yesterday. That was a marvelous opportunity for us. That, along with this here, we think it is going to really change the markets for our commodities for our farmers and ranchers. Kevin in terms of trade policy in the past 24 hours, it has been a monumental day as it relates to china and canada and mexico. I am curious, though, when you look at the european front in terms of where tariffs go, phil hogan was a washington, the amope trade chief, i wondering if you are concerned with europe. Sen. Rounds we know that our beef is in demand in japan and china. This is going to be huge for our producers. We want to see those negotiations back on track again. Is a real opportunity for farm producers in the midwest to share their product with folks in europe. We are very excited about the fact that as we knock these off one at a time, we are making good new trade deals. The president s right. Youve got to take these one at a time. Youve got to work them through, and it got to be towards a fair trade deal. Our producers are going to win on this one. Kevin you chair the subcommittee on cyber on the Senate Armed Services committee. As we look to china phase two, do you have a timeline in terms of when issues pertaining to National Security would come up as it relates to 5g, as it relates to huawei, which are much more bipartisan issues . Sen. Rounds they really huawei is an arm of the Chinese Government. Lets face it. We simply cannot allow them to be part of our infrastructure. When they have and the embed that throughout our communication systems, it becomes a threat to our National Security. We are going to have to take them out of all of those locations. Theres no doubt of our mind theres no doubt in our mind about that. We want free and open trade, but we are still in competition with them. Right now in cyber, they are very strong. They are basically sneaking in and stealing information. They get in and they dont necessarily tell people they are in their networks, but they are gathering information. They take it home, they disseminated among their businesses to give them an advantage. It is different from some competitors who are disrupting. China would just prefer that we not even know they are in there. Kevin can i press you want a timeline as to whether that phase two come before or after the election . Sen. Rounds we havent really discussed that with the president. We have talked about ag issues because we have to get the Commodity Prices up, and these trade deals should really make an impact. Phase two is important. I dont think we are going to gas, orpedal off the the foot off the gas pedal, because it really messy ourerent as to whether businesses are disseminating information that would otherwise be proprietary. This is not something that is easy to do. If it was easy to do, it would have been done along time ago. Kevin 32 billion the chinese are saying they are going to purchasing agricultural products. How do you ensure they are going to do that . Sen. Rounds it is actually over 40 billion a year. That is almost 16 billion more than they have ever done before. They are saying they are going to need it, and they recognize their markets are involved in it, but they are going to have to do something with the tariffs or they wont be able to meet it. The proof is in the pudding. We are going to hold them accountable. Kevin the other big develop into here in washington is the impeachment trial. What are you going to be looking for once that impeachment trial starts this afternoon . Sen. Rounds i think what you will find is the senate will have some decorum. We will treat this thing as seriously as our constitutional forebears wanted us to. They said the house was always full of emotion. It was always going to be a spot in which emotion was going to take hold. They wanted the senate to clearly be a step above that, and wanted us to hear all of the story that the house sends. They want us to hear the entire approach to why they think we should overturn the results of an election. What that is done, but we will also do is allow the president the opportunity through his spokespeople to respond. Did we get a chance to ask questions in full. At that point, we decide do we have enough facts, and can we make a decision, or do we need more facts . That will come several weeks down the road. Kevin senator mike rounds, i know you have a busy day. I dont want to keep you from your vote. Appreciate you coming on bloomberg. I appreciate you coming on bloomberg. Guy thanks very much, indeed. Kevin cirilli joining us from washington. Libby cantrill will be joining us from washington. We will continue the conversation about what is happening in d. C. Lets continue the conversation with european close, very muted session, particularly with what we are seeing in the United States. We started with a push higher and then faded that quickly. Up. 2 . Individual markets break out a little bit. These are the three big ones around europe. The ftse, dax, and cac 40 mixed. The ftse down with the mining stocks on the move. The autos soft in the dax. London is giving back a little bit. Still trading above 7600, but compared what we are seeing, pushing down on 30,000. A division across the atlantic. Lets take a look at the grr. Utilities trading strongly. Doing well out of germany and some of the spanish stocks doing well. Real estate up. 7 . Oil and gas getting a bid. Minors mixed. That suggests food and beverage catching a bid. The bottom end of the market, where do we see weakness coming through . Where are we getting some of the rotation. Let me take you down to the bottom end of the story. You have the car sector weaker. Travel and leisure under a little but of pressure, and health care giving back. Health care has had a solid few days. The j. P. Morgan Health Care Conference in San Francisco giving europeans a boost when it came to the health care story. That story just beginning to fade a little bit now. Individual names, i want to show you a few worth paying attention to. Pearson is one, airbus is another. Airbus is down. Up because a Canadian Company is coming out with Sales Guidance at the markets are not liking it. Part of it is down to its relationship with airbus. They are having problems with the jets and also in the trade business. That downgrade coming through from barnier. The worlds biggest Education Company down soft down sharply. It is not working out. Downgraded. Down 8. 44 . Barclays is cutting jobs. It has been an interesting two days. You banks up massively. Europeans not responding to that. We will talk about the numbers shortly. In the United States, pushing on the dow, 30,000. We will see what happens. Do we get there . What gets us there . We are seeing a more positive picture emerging from the United States. We are seeing in europe the markets pushing on post deal. Usmca about to be voted on. There is another catalyst. Taking with what is happening with crude, up 1. 7 . That is the global story. Lets talk about the barclays story we were just mentioning a moment to go. Developing of the last couple of hours. It will cut around 100 senior jobs with investment banks. This was to a certain extent to be expected. Is the number bigger than we wouldve thought . Is even if it is not a huge number guy these people get pays get paid a lot of money. It is still a European Investment bank. That is expected because the bank will report fourthquarter. The second week of february they have had to reach on the profitability side, and what they have been doing a lot last year is cutting costs. Those are the investment banks. Rbc has been the focus of many critics because it seems too expensive to run. Guy it clamps down on the cost. Is there more to come . In terms of job losses . Stefani the number we have is about 100. It is early to say if there will be more. Everything depends on cost. If they need more, i think they will do more. Lets remember at the beginning of the year they said they will cut the variables. Be needed to reach the profitability target. They are ready to do anything. Hey have to do guy and analyst was talking about the big u. S. Banks taking share way from the europeans. Where does barclays fit into that narrative . Stefania they have always been trying to compete with the u. S. Banks. We will have to see if they are joining them in this trading joy that has been coming up. Is barclays the most likely to do that . It feels more like a European Bank than any of the other europeans. Doesnt feel like the European Banking reporting season is more disappointment . The u. S. Season has gone well. Morgan stanley is trading up strong up strongly. Citigroup looked solid as well. Wells fargo a little bit of a mess, but trading came through strongly. Stefania absolutely. You would expect to see from a trading perspective, the trends in the market are the same for every investment bank. We are expecting traders to be on the same level. Heard others talking about the u. S. Teams taking market share away from the european team. I heard some talking you cannot make money in this environment you are messing up. The relative performance are the u. S. Banks doing better . Stefania definitely. When it was a good moment for trading in the third quarter, with the option outperforming, have mores related to costs. There has been a change in the law and the u. K. Regarding contractors work. Work is more expensive now. They have to assume they can work less and perhaps work with more traditional employees, that means less flexibility. There are two changes in the organization that makes everything more expensive. Guy thank you very much, indeed. Interesting to see what the reporting season looks like in europe. Stefania joining us with what is going on a barclays where it looks like jobs will go. Lets go to first word news. Ritika an indicted associate of Rudy Giuliani has accused President Trump of lying, saying it is not true he and really giuliani did not know and Rudy Giuliani do not know what they were doing in ukraine. He was aware of all of my movements. I would not do anything without the consent of Rudy Giuliani or the president. In terms of the president and what he has said about you, he said about you and igor fruman, i do not know those gentlemen, i do not know what they do. You are saying that is not a true statement. He lied. Ritika he worked with giuliani to dig up political dirt on former Vice President joe biden and his son hunter. The question is what is next for phase onetrump after of the trade deal . Beijing is now committed to buying 200 billion of american products. The big issue of Chinese Government subsidies and business has put off to phase statencluding chinas back of american companies. The leaders of hong kong say the twoes one country, governments framework could last after 2040. Carrie lam spoke to demonstrators. The city has been battered by antigovernment protest since june. Many see beijing trying to tighten its control. Meanwhile, hong kong tops the list of the worlds most expensive cities when it comes to luxury items. That is according to research from the swiss bank. Shanghais second, followed by tokyo, new york, and singapore. Cities are ranked based on the cost of fine dining and luxury cars. 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. Am ritika gupta this is bloomberg. Thanks so much. A couple of stories i want to bring you. The first of which voting is underway on the senate floor for the usmca. It has been a massive week for trade in washington. Yesterday it was the phase one china deal. Today we are getting usmca. A complete change in terms of the trait outlook, or is it . The other story is an interesting one. It potentially has deep implications for us at bloomberg. It looks like a u. S. Official is saying the Labor Department in the United States is going to ban computers in the lockup period. There has been some suggestion that the lockup you get a bunch of journalists in a room, they are given data before it is released to the market and the wider public in order for them to be able to put their story together, and then theyll. Elease it at the same time you get some sort of uniformity. There has been some suggestion we would see a band for lockups and the date it would go straight to the website, which within potentially provide a situation where funds with Fast Computers and connections to the website could get the data earlier and make trades earlier. It looks like maybe we are not going quite down that road, but it looks as if the labor to market the Labor Department will ban computers in the lockup room. Fascinating. Interesting to see how this turns out. A quick look at where european markets have settled. We are through the auction process. The ftse 100 climbed initially and that it has fallen throughout the rest of the day. The drugmakers have had a cracking week as a result of the story that just about San Francisco, the Jp Morgan Health conference. You are seeing some of the big names giving background there. The dax is a little softer. Not much action during the auction. The cac 40 up. 1 . We will carry on the market coverage and talk about all the things that have dominated today, trade, impeachment, what is happening with the data. You see fascinating data with retail sales. All of that will be talked about in the cable show. We need to talk about what is happening next week. Well be live in davos. A big week for u. S. Banks this week. Next week we will talk to the bosses of all of those businesses. Bloomberg. Guy this is the european close on Bloomberg Markets. Time for the stock of the hour. Here is viviana hurtado. Viviana we are taking a look at taiwan Semi Conductor. We can tell you it was rising most of the day in the overnight hours. Right now paring some of its gains. All of this on a q1 beat that beat analyst estimates. What is critical is the improved outlook. Lets take a look at this chipmaker that supplies some of the chips for some of the most critical brands, we are talking about apple and huawei. Some of the Key Takeaways have to do with q1 sales as high as 10. 2 billion. Profit reaching almost 9 billion. Be critical is the strategy taiwan Semi Conductor has, that is investing in the future. Specifically, it will continue to plow, clearly improve that investment in technology. This has to do because of its demands for its products. Think about the chips that go into phones, for example the iphone. Will be critical in addition to other products is the global rollout of 5g. If you think about it, think about some of those big liens they have, we were talking big clients they have, we were talking about huawei, talking about apple, there were jitters with u. S. China tensions that there would be possible bands around the world as well as bands in the u. S. Because of allegations of possible fines. This is something that will continue to not only go forward in 2020, but we can also tell you our analyst just publishing they are confident the 2020 outlook is going to be great for taiwan semi conducting precisely because of that. We will leave you with one last element. That has to do with this semiconductor rally. The stock was able to ignite today. When you look at taiwan semi conducting with a stop for the year, it has outperformed the sox index. I am viviana hurtado, and that is your stock of the hour. Guy thank you. Let me take you back to washington, d. C. , the traden usmca agreement that replaces nafta, is still underway within the senate. Within the last couple of seconds we have reached the point where we have a majority, i. E. It is going to pass. Joining us from capitol hill is bloombergs chief washington correspondent, kevin cirilli. Was it ever in doubt . Kevin it was never in doubt but we know the senate does have the votes in order to pass the usmca , handing President Trump a significant policy victory on a bipartisan front. When you crunch the numbers in terms of democrats who split with the president , the top democrat in the senate, senator chuck schumer, a democrat from usmca,k, voting against in a statement saying he has concerns about environmental protection. That is in line with bernie sanders, who also voted against usmca. Other democratic president ial candidates who have voted in favor of usmca, senator Elizabeth Warren, as well as senator Amy Klobuchar, all of them joining with republicans to advance usmca. In terms of the policy significance of this, it has significant policy implications given the dynamic of the past 24 hours coupled with the u. S. China phase one trade deal. Now likely to be one of the final pieces of Bipartisan Legislation that advances during the Senate Impeachment trial. For is a significant win president and his investigation. No doubt he will take through the campaign and the battleground states like was again like michigan, wisconsin, and ohio. Guy shawn donnan joins us from washington. Ive been trying to figure out what the market implications of the impeachment trial are. One of them is the fact that weve accelerated the usmca vote. It is coming in just before we start the impeachment process in the senate. How important is it for the president that this gets across the line . Shawn this is important politically. The most important thing economically is that it locks in nafta for more time to come. It means it will not be going away. There are improvements at the margins in this deal based on nafta, the freetrade agreement that has been in place for the last 25 years. There is an update on what this means for digital trade. There are rules that require more north american content and cars made in u. S. , canada, and mexico. There are wage rules for auto workers that will require more production to happen in the United States. In terms of the Economic Impact and what this is going to mean for business, the biggest thing is this means donald trump now owns nafta, or his new version of nafta, which he has rebranded usmca. Guy as we digest what we got yesterday, 86 pages, what we learned about phase one, does it fit what we anticipated . Was it what we expected . Shawn i think it does fit with what we expected. You wake up this morning and the biggest question is whenphase t . That is exactly the reaction we saw for most of the Business Community yesterday. The reason for that is there is still a lot of tariffs left in place. 360 billion of imports from china are still subject to tariffs. The president saying he was leaving those in place as leverage to get phase two, which will tackle some of the more difficult issues he promises, including industrial subsidies in china, the backbone of state capitalism in china, and that is important. The problem a lot of analysts wills it is unlikely we see phase two delivered anytime this year. The president said it may come after the election. This is a demand from the United States for china to rip up its economic model and a lot of analysts do not think that will happen. There is a question of whether it is phase one and done. Guy i was talking to someone earlier on from the cne in chicago and the feeling was that the farmers simply do not believe this is a deal they can take to the bank. It is also a process that feels political and ultimately comes down to what the president. Ecides is that the sense in washington . That is what it feels like on the farms. What does it feel like in d. C. . Shawn i think a lot of Manufacturing Companies are looking at these purchase commitments and trying to figure out where all the exports are going to come from. These are hugely ambitious targets. The benchmark they have in the deal in 2017, before the trade wars took off, and that year the u. S. Exported 80 billion of goods and services. That was a record. 200deal calls for another billion over the next two years on top of that. I do not think you have to be in economist to realize a doubling in two years of trade is an enormous ask. The political trick in this deal is that we are not going to know whether china lives up to the commitments until after the president ial election. This is where it all comes back to politics. Guy kevin, let me come back to you and talk about the politics. We have what is taking place in the impeachment story. On the other hand, we have this big win for the president when it comes to the economy. Does one offset the other . What are independent voters seeing . Kevin i am struck by how Elizabeth Warren and Amy Klobuchar voted on this. They are democratic president ial candidates. Hey voted to pass usmca that vote will no doubt play in the democratic primary as a stark contrast with senator bernie sanders, who voted against it. How this trade deal plays in those heartland states, states that democrats are going to need to pick up one or two of if they want to defeat President Trump in his reelection effort, is going to be paramount. Quickly, i would add this now puts the focus from a geopolitical statement on europe. Now that the u. S. Has had pause in its trade relations with china and with usmca, now all talk of tariffs turns to europe. Guy it certainly does. We will leave it there. Thank you very much. This is bloomberg. Guy live pictures from the u. S. Senate. Usmca clearing the senate within the last few minutes. It world place nafta. We will carry on the coverage of what is happening in d. C. Balance of power is coming up next, david westin on the how long Bloomberg Television and radio. The former australian prime minister, kevin rudd will be joining him. He is always great on what is happening with the trade story. I suspect they will talk about what is happening in australia. U. S. Markets perkier than european markets. Morgan stanley leading the charge. This is bloomberg. David bloomberg. Com 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. Today, so hell cup or in washington on the Senate Passing usmca just moments ago. Tom orlik on what comes next for u. S. China trade relations, and Anthony Holbert in moscow on president putin shaking up the constitution again. Lets start with you, sahil. Usmca past. It is a new era. Sahil it certainly is. This was an overwhelming vote, much like we saw in the house, a bipartisan vote to pass the usmca. This was a Major Campaign promise for President Trump. He will spend the next eight or nine months bragging he got it done. It is not a radical departure from nafta. There are a few things tweaked here and there, but he promised he would do something. Now he can say he has done it. Guy the senate david