Sterling on the slide. Midreports Boris Johnson wants to outlaw an extension of the eu transition period raising the prospect of a harder brexit. Uk banks sell off despite getting getting a clean bill of health how much capital lenders must hold in their coughers a very warm welcome to street signs. Lets get to the top story the stock that has been in focus the last several months. That is boeing the companys biggest shut down more than two decades. It comes after the u. S. Federal Aviation Administration refused to clear the flight before 2020. Some 12,000 employees will keep their jobs as the plane maker focuses on delivering the aircraft the key competitor to boeing shares up 0. 15 on the back of this news. Looking at suppliers of boeing weve got senior shares down, safran lower the big reaction in regards to that news from boeing. Lets look at european sector players looking at these down. Rolls royce taking the biggest hit. Down 1. 7 . Another development in focus is the uk stress tests. All seven have passed the bank of england stress test for the third year in a row. Ruling that they could withstand deeper sessions including an economic shock worse than a disorderly brexit. Saying they will double the size of the counter buffer to 2 of risk weighted assets this Rainy Day Fund will allow lenders to absorb during a down turn without cutting lending lack at the reaction you can see taking a bit of a step lower all three of those down more than 3 . Potentially caps the share buy backs in the future. One more thing to bear in mind, the uk domestic assets in particular the banks performed very, very well last week a bit of profit taking on that as well. Widen it out. Look at the european markets yesterday, a strong day for equities worldwide the global power by the phase one news a bit of profit ticking coming through. Stock 600 down now as you can see, it has been an incredible strong run for the stoxx 600. Holding onto the majority of the gains. Lets take a look at the european markets with a split yesterday. The rally driven in large part by the ftse 100. Now this morning, the ftse 100 essentially flat outperforming some couldnmarket. The mib up 0. 15 looking at sectors. We saw the banks and euro space. This morning, we have utilities and oil and gas in the green oil and gas up at the bottom, the biggest hit inhouse hold goods. That is down about 1. 8 . Unilever sharply in focus. Travel and leisure down. Looking at asian markets yesterday, we saw a global rally come through on the back of that u. S. china trade agreement it seems asia would follow wall street we have the shanghai up as well. A strong session for Chinese Markets. Several indices in acsia hittin an 18month high not so much the case for european markets this morning. As kudlow has hit back at suggestions the phase one deal is still not a certainty amid a lack of public consensus from two sides on the details. Eunice yoon filed this report. Reporter on the circuit to sell the benefits of the phase one trade deal overnight, larry kudlow said any concerns about the uncertainty are misplaced. This is what he said let me make no mistaking about it the deal is done the deal is completed. I was out and about last friday. Some people were suggesting this is not true. The deal is absolutely completed. The lack of a completed text raise speculation. The chinese have not mentioned how much they would want to buy. Increasing purchase of goods by 200 billion over the next two years. We are going to double u. S. Exports. The positive effects on Economic Growth in this country cannot be exaggerated. Thats why i keep calling this growth in addition to lowering the tempers and putting more certainty into it, youll get a very Good Business year. Trade experts say the government wouldnt want to acknowledge any hard figures to avoid the backlash but negotiators could agree to a very big figure. The u. S. And kleinas phase one trade deal is expected to bolster economic brother, our next guest warns there can only be truces and not peace. You have just published your 2020 outlook how closely are you monitoring this when formulating your outlo outlook for 2020 like everybody, very closely. Clearly these phase one deal is a step in the right direction as we have seen since 2018. It is are a truce. It is not peace forever. It is not just a question of trade. It is a question of tech transfer of ip technology. Movement of talent of people across the countries this will remain in place for a long time. Raising power. It is an incumbent power as we have seen in the past, this never tends to be completely peaceful. Never this goes into hot war as opposed to a new cold war. It is complicated. They are starting to see the trading for 2020 and what the world will look like all things being equal the fact that there is a phase one trade deal is a positive the further deterioration, how does that factor into your growth assessment for 2020 where do you think growth will end uplanding . It is an important factor, we still believe china will continue the gradual structure slow down towards the Growth Potential which is around 5 we see China Growing at 5 quite an important break the World Economy might pick up slightly from 3. 0 in 2019 to 0. 1 in 2020 and 2021 being 3. 3 because large economies that severely underperform and contract in 2019, turkey, brazil, russia, iran, will recover. This doesnt mean that the World Economy is going to go towards serious reflating at some others suggest. Kind of more of the same then you mentioned your china forecast 5. 8 . In the past, weve seen china lack april tide to let the economy slow down. When it showed signs of doing so, it was with stimulus is your expectation that they will refrain from the stimulus or that it wont be as effective as it has been in the past china has always intervened to backstop the economy. Also because they need to legitimize itself. True xi jinping made himself emperor for life that cannot be changed we are seeing the riots in hong kong when growth slows down, the government needs to intervene with fiscal monitoring and regulating maybe they have not been as effective as they have been in the past maybe they are not as large as they have been in the past we saw imbalances coming in. They also have limits to what they can do. We saw recently they let some Big Companies go that they allow some mechanisms to come in because they cannot backstop everything in the economy. You mentioned with regards to china and the u. S. , we could see more restrictions on the flow of people when p it comes to the th war. What is your view on how this unfolds. So far, tariffs have been the main goal. Will we see more restrictions on tech experts and skilled workers . There are known tariffs that can be introduced in the relation between the two superpowers. The transfer of knowledge is clearly one of them. So far, that has been very open as far as allowing those who want to come in and learn and perhaps come back with a much higher capital to be deployed back in 24ir home country in china. As we go towards a sort of vol canization and Global Supply chain, every single power will have a sphere of influence this will be reduced in a time people are even taking splinter net. An internet for china and the rest of the world. The american side of the world for those countries more closely aligned to the u. S this is a real threat. You can imagine what the world looks like if a half a Million People will use one internet and the other side of the world use a different one. Something to worry for 2030 well pick up the conversation in a short while head of research at rosa and roubini. Unilever says the company will miss the sales growth this year they expect growth to be below the forecast of sales in the lower half of 3 to 5 range. The company says earnings margin and cash will not be impacted. Swiss lender ubs plans to overall the arm dedicated to the ultrawealthy the shakeup would aim to migrate price clients between departments. Signaling the first major mark with this move after his departure from Credit Suisse moving on to pharma, roche says the 4. 3 billion take over announcing over 60 of sparks outstanding Common Shares have been tendered. Roche announced this in february with the treatment of Rare Diseases we are close to the end of the year but not quite if you want to get involved in the conversation, follow us or tweet us well take a quick break. Coming up, brexit fears return Boris Johnson will move to guarantee a 2020 exit with or without a trade deal sterlings reaction, ahead clients voice remember that degree you got in taxation . danny of course you dont because you didnt your job isnt doing hard work. Its making them do hard work. And getting paid for it. vo snap and sort your expenses to save over 4,600 at tax time. Quickbooks. Backing you. Welcome back to the show the pound, sterling is on the slide amid reports the Prime MinisterBoris Johnson wants to outlaw an extension of the transition period beyond 2020. That would give them 11 months to get a free trade deal raising the prospects of a harder brexit putting an agreement bill before the commons this friday. Larry kudlow will visit the uk in early january for wideranging talks including trade. Kudlow stressed he looks forward to working on a deal and hopes to get a deal started as soon as possible germany will hike the price of carbon emissions. The move comes as berlin looks to pass the sweeping climate reform package germany is looking to cut emission levels by 50 the initial pricing scheme was widely criticized for being too low. The new agreement will see the price beginning to climb from 55 to 65 euros a ton. Despite a collective failure to get to any agreement with respect to the carbon targets. For more on the outlook for the green fiscal policy and the green deal, wel can agree on is spending on when green. Certainly more open to the idea of spending only as it pertains to sustainable investment. Is that your understanding as well of the situation . Absolutely. We know germany in the fiscal stimulus, the large section doesnt like these parts anymore. However breaking that rule is complicated. Everybody wants to kill it but nobody wants to be found with a smoking gun. One way of going around this is investing in green projects. Environmentally sustainable projects something that can be easily sold to the general public we can even say green is the new black. Right the new black zero. Exactly exactly. We know the green party is on the rise in germany. That might even be the first party in the general elections in 2021. If the coalition collapses somehow the countries already moving in that direction in which the greens might enter the coalition at some point. People seem to be placing a lot of hope on fiscal spending particularly out of germany and towards a slightly more expanding stance how much more will that have on the eurozone how much will that affect the likes of italy, spain and france very little especially if the environmental projects and construction building in germany using german work force and companies so starting to using work force from other countries it becomes complicated. The fiscal multiplier remains limited. You will need a very large fiscal package in order to be felt through the eurozone. There is always hope germany will act as the fiscal stance 2456789 will not happen unless there is real political change even if the greens were to come on board, they have kind of an interesting combination of being socially progressive but fiscally responsible even conservative, which is what distinguish them the reason why they would not change that position put them at the very center, they dont want to change that they know this is what can bring them into the chanselory in a year we heard from madam lagarde last week that they are going to be looking at Climate Change as a factor to consider it seems like it is pretty controversial. There has been some backlash getting involved with the Climate Change in your view, how evented should a central bank be . Is this something they should be focusing their efforts on . There was a path broken here in london who Start Talking about the modern Central Banks into Climate Change issues the imf stepped in that direction. Again, my impression is that it is one of the ways for lagarde to say, if we need to buy something new. That could be green bonds. Perhaps you should buy the Investment Bank to finance the green projects this could be the way of keeping the qe program the reason why the segment or the governing counsel is shooting towards the target. Christine lagarde wants to achieve some consensus you raise an interesting point Monetary Policy meeting fiscal policy most people say, look, we are getting to the limits of what Interest Rates can actually achieve here that is the big thing on the years to come. We know there is some form of fiscal monitoring going forward. Various forms of helicopter money. Monetary financing discussing in policy circles not just on the fringes but mainstream on the likes of central bank governing from the fed, theyve talked about that we believe this is very important. We talk in our outlook what we call helicopter put. Somehow investors know when the next down turn comes, there is going to be a new instrument used to backstop the market. This is keeping markets so excited at the moment. This money as in literally central bank is handing out checks to people they will find a way. Fiscal deficit directly mond monatized. Much more in europe, which is why they have to go through the Investment Bank project. Doable adventure thank you, the ceo and head of research. Coming up, well talk all things chinese tech. Stay with us do you have concerns about mild memory loss related to aging . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to street signs. Im Julianna Tatelbaum and im joumanna bercetche. These are your headlines sterling is on the slide after reports that Boris Johnson wants to outlaw an extension of the eu transition period. Brexit weighs on Home Builders as they prepare for the worse fall since early october broader european markets fall despite fresh record highs on wall street. The trade deal rally takes a breather unilever drops after warning on sales growth. Boeing suppliers fall as the plane maker halts production of the 737 max jet after u. S. Regulators dash hopes of the plane returning to the skies before 2020. Weve got another data point to share with you on the unemployment front the jobless rate fell about 13,000 to 1. 28 million in three months to october that puts the rate at 3. 8 polls were expecting 3. 9 . That is the level to keep an eye for uk employment. Uk earnings is a number people watch closely. The bonuses came at 3. 5 year on year higher than 3. 4 that is still the weakest. October alone was up 3. 2 . Still a strong picture i would say 3. 5 on wage growth is very, very strong other countries will be looking at that and thinking that it continues to be one strong feature. Sterling has been down about 1 . The bulk of those losses coming in reaction to suggesting that Boris Johnson could outlaw the suggestion of the transition period raising the prospect of the hard brexit. Investors reacting to that news. Exactly lets talk about what is going on with sterling 1. 3190 is where we are right now. You remember when we came out of the exit poll we bounced up to these levels touched 1. 35 briefly we are seeing a big decline in the pound, down about 1 a plan to proposal from the Prime Minister to rule out another extension beyond 2020. Certainly, that is sending a few jitters to the market. It raises the prospect of a hard brexit if we get to that cliff edge in 2020 investors who may get involved probably taking some chips off the table. That is what we are seeing in the pound this morning, some weakness we are seeing the weakness in the yen and swiss frank. The safe haven coming off. We are seeing a Strong Performance in the equities. I nikkei at a twoyear high. The euro, i would say one interesting aspect of the euro has been trading very closely in sink with the pound. The possibility of a soft brexit for the uk is a good thing for the euro as well even though the pound has strengthened, there is a brexit premium traded today 1. 1140 yesterday, we had the pmi numbers that are some what di disappointing for the month of december lets talk european markets. Yesterday, the stoxx 600 had a strong session it was strong for the ftse 100 yesterday. Up north of 2 can you see we are just about inking out gains about that 7500 mark up almost a fraction weve been watching the banks closely today. Some of the big banks like rbs and lloyds trading on the back around 3 to 4 after they revealed the latest stress test. There is concern that perhaps the capital buffer in an extreme scenario is not quite what they are looking for. One of the reasons lloyds is trading on the back foot we are looking at some travel names very closely there is linkages after boeing announced that they will be freezing the production on the 737 jets the suppliers in germany and france are getting hit on the back of that story these are some of the negative names. The ftse up as well. The italian index doing well there the focus has been on the stablization when it comes to the political outlook and the recent recap they did there. That is worth baring in mind as well how about u. S. Futures. Yesterday, we saw fresh record highs for the three majors the dow is up about 21 , s p up higher what goes on with the developments on the phase one trade deal larry kudlow saying a phase one trade deal is pretty much done and dusted lets talk tech now huaweis participation in the rollout of 5 g could be challenged suggesting proposals of tightened security of suppliers. The measures seen and reported on stipulated the exclusion of suppliers where, quote, manipulation or espionage could not be ruled out theyve objected to the potential sidelining reportedly propertying the vote chinas tech sector has seen other landmark year despite challenges from the economy and trade war uncertainty. A ali baba held out with a strong listing. Joining us now with more on these chinese tech giants. Thats right. It has been a mixed bag for the chinese. If we kick off with bidu the chinese Advertising Market has been very weak part of their business is around advertising. Youve seen increased competition in the Search Market they dominated the popular social media app tiktok has stepped into that space. They are trying to look at new avenues of growth. They have a video streaming sort of like netflix that is big Revenue Growth putting the bets on new areas the likes of Driverless Cars it could be a big player in the future in this space lets move on to perhaps the best performer that is alibaba. The core Commerce Business has continued to perform well. A lot of concerns about the chinese economy, the slow down and what that might do to the Chinese Consumer alibab shows though consumers continue to flock on line. This Company Continues to perform well in the cloud space. Revenues up 64 . That is a big boost in the future area for alibab as well they continue to invest in the key areas. There is a sense that alibaba is able to touch in key areas moving on to the final company, that is tencent. In 2018, we saw the Chinese Government freeze approval for video games. They allowed those games to come to market. That helped in the recovery of the on line gaming industry. They have a strong portfolio of games coming to market it is not about games. The likes of Cloud Computing and fintech, which is seen as future growth for the company there is a lot of optimism with new games coming to market but a lot of caution as they look closely at the Gaming Sector giving concerns about addition and gaming in china thank you for that break down it is worth baring in mind that the tech sector is up almost 50 this year despite the fact that we spent the last 12 months discussing the trade war and the effects it would have. A lot of good performances for 2019 playing a central role, characterized the phase one trade deal as President Trumps Christmas Present to president xi he wants an agreement because that will help him win the election of 2020 a selfserving give then a gift to himself yes do you see things lasting and settling down between the two sides. I think that is a fair summary of 2020, yes when you say long lasting, i assume maybe more than just 12 months what we are looking at here is a longterm contest for primacy in the World Economy and geopolitics. As a result of this, you have to assume that the trouble will resume after i dont wish to minimize the question but you clearly raise it as some sort of a contest who will end up winning and what is the definition of the contest . They are both major countries. One has to assume they will continue to be massive economy for the next, say, 10 years. As far as the eye can see, no one is going to win. There will be this competition does that mean we are going to see a splintering about the content of splitter net. Pushing to the National Security threat that the u. S. Imposes do you think well continue to see this when it comes to technology and the separation of u. S. I wouldnt be at all surprised. We think the world is going to evolve to some degree of what we have had for 30 years since the cold war to something more like regional blocks. That does contain the possibility that you just mentioned that is a splinter net, which is a clever phrase. It obviously will be sub opt mall covering these tech giants closely. Focusing not just on the domestic clients but expanding beyond the Chinese Markets not just about the u. S. And china competing in their home markets but grabbing these opportunities. How do you see that unfolding . This is one aspect that threatens the stock market in terms of pe ratio in the long run. Japan, korea, taiwan in the Public Defense system, this he will be increasing for all the reasons we just stated part of the chinese economic block that implies bad news for or difficulties for them. Tension. So certainly Collateral Damage the chief economist at ts longbar. We discussed plenty of different topics if you want to talk about the trade war or how you see the relationship evolving. You can tweet us directly. Also coming up in a few moments, a historic vote. Members of congress could move the impeachment trial to the senate tomorrow. More from washington in a few moments. Memory loss related to . Prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Welcome back to street signs. We have some fresh commentary and economic adjustment from fitch rating they expect china to grow. An upgrade to the forecast there. Growth in chinas economy is expected to support the outlook for the World Economy helping the gdp to stabilize they say the domestic demands may further complicate issues between the u. S. Remaining in the fields such as economy posting major obstacles to the resolution of the trade war. This is fresh comments from fitch. Trade tensions eased but not resolved fitch lentiding around 6 switching to the over side of the equation in the u. S 10year notes about 1. 86 remember after the strong employment report, we reached 1. 95, so we have rallied back even after the fed announced a pause. They are saying the u. S. Could consider a bare market lets tie in the talk of recession. For a good part of this year, the yield curve was reverted the fed went on to cut three times and everything was great again. Back in positive territory and no one is talking about recession. We have said we expect 2020 to be a recovery year. The point is that the very weak performance in Continental Europe and japan has meant that theyve gone to negative yields. As a result, people have massively switched in and took the yield down just over a year ago in the space of nine months. Now back to 1. 86 do you think this experience has taught us the yield curve is not as reliable today as it was in the past given the pref length of negative rates in early 2005, you had the negative curve the huge rallies in the long bond both of those were it was the savings glut in 2005 and the russian default in 1998. Neither of those were forecasting recession. When the yield curve gets cut in the short and going up the fed is doing a whole lot, often too much, too late well have to leave it there. Thank you kpfor joining us today the u. S. House of representatives is likely to vote on the two articles of impeachment against President Trump tomorrow widely expected to pass in the democraticcontrolled house. Marking the third time in u. S. History, a u. S. President has been impeached democrats in swing seats have committed to voting in favor of the articles a considerable move from the partys most politically vulnerable members going to tracie potts live from washington, d. C. Can you spell out what those two impeachments are sure. They are abuse of power and obstruction of congress. The evidence in the abuse of power article is that President Trump exchanged aid from the United States for an investigation that he was pushing for of joe biden and his son hunter who was connected to a ukrainian company. He froze the aid until ukraine agreed to announce that investment that announcement never happened but investors argue because he withheld the aid for a political favor, it still amounts to what they agree to are high crimes required for impeachment the second is obstruction of congress once they start invest gating, President Trump and the white house blocked current and former officials from testifying and turning over investigation even from subpoena. He has been charged with obstruction of congress. They couldnt do their investigation because he wouldnt cooperate the president s defense is that the solution is not to impeach him but to go to the courts. Some of those cases of people that were subpoenaed are in the courts democrats argue that this is a matter of National Security. The courts work too slowly and no new evidence will come out. They believe they have the evidence to impeach the president. That chiefinal debate and vote s expected tomorrow. Yesterday, you gave us an update and we had a guest in studio that said the markets are going to remain immune unless we had a surprise result. What would you categorize as a surprise to this i heard that interview and i was thinking about it while we were talking the markets tend to react to things that are unusual, a surprise result. If we know what the result is, the markets are unlikely to react to that. A surprise would be if the democratically controlled house would not impeach the president on one or both of these. They have the numbers, the majority they have a few people that have decided not to support the surprise would be the president doesnt get impeached at all what does that say about the power of the Democratic Party . The other would be if he is actually found guilty in a senate trial and removed from office because the senate is controlled by republicans, they are controlled by the white house. It is not expected ease going to be removed from office if for season reason, 20 republicans change their minds, that would be a really huge story. Something to watch out for. Thank you for breaking it down lets get back to the chief economist from lumbard in the runnup to november, how do you think that will impact fiscal policy . One of the first things President Trump did when he ka imto power was enact this massive stimulus do you see that happening as well i dont think so, no. Youve got slightly below trend growth in the Fourth Quarter where we are in the middle of now. Largely because of inventory overhang if you go to Consumer Spending and housing, they should carry the economy through and carry us back to on trend and slightly above trend through the 2020 quarter. I wouldnt think the economy needs a stimstim. I think the cap x whether come on year by year it is always a late cycle phenomenon in response to the shortages of labor. We could easily have those developing by middle to late next year. Well leave it there. Thank you for joining us the chief economist. A look at how u. S. Futures are fairing up today the picture is a bit mixed on the year, the dow is up 21 , s p up 27 very strong year that is it for todays show and our last show together for the year well see you in january look forward to 2020. Im Julianna Tatelbaum. This is joumanna. Worldwide exchange is up next. It is 5 00 a. M here is your five at 5 00. Boeing plans to suspend the production of the 737 max jet in january. From impeachment to the budget to nafta 2. 0 get ready for a big week in washington, d. C. Former director helps