good morning, welcome to daybreak europe. a tokyo district court has chairmanformer nissan carlos ghosn's bail. he could be released today after more than 100 days in jail. manus: joining us now from tokyo is our asia conglomerates media editor. this is good news and a big ticket to pay for carlos ghosn for his release. >> it certainly is. that comes to about $9 million u.s. this was his third request for bail, first time it has been granted. prosecutors do have a chance to repeal this so it is not a done deal yet but it is getting close to that given the timing and mounting pressure that his lawyers were putting on -- putting on prosecutors. u.n. in, bring it to their attention. basically, the more countries that came down on this, the harder it will be to keep him in detention without filing new charges. new charges would be harder and harder to come by given how long he has been in jail already. this is a big move. the man of the hour could be his new lawyer. his nickname is the razor and this could be his first cut, bail forarlos out on this crime which he has been held since november 19. it is a long time and pressure has been mounting for his release. manus: over 100 days and this is it -- this is his third attempt. progressesou as it from tokyo. let me give you a quick snapshot of the markets. if it is not lighthizer warning about tripwires in the trade agreement with china, this is how it has come across. gold cascading lower for six days but we managed to turn it around today. six down days and we are up for the first day. we are ripping money out of one of the biggest etf's. 500 million dollars came out of the etf last week. goldman sachs said $1425 is achievable because volatility will remain low. morgan stanley closed the long position. the aussie dollar moving a little bit lower. i thought we would pop in on this moment of angst we have. the rba leaves their rates unchanged. of course you have the anxiousness about the trade deal with china. toorts in australia cut 0.2%. cindy is warning on iron ore. it is crunch time for the iron ore market. they can still make it to $100. the implications of the tragedy of the dam breaking not fully priced. that is the news coming through from sydney on their markets this morning. you have a little bit of snp futures. nejra: you are talking about angst in these markets. inare certainly seeing it the asian session. it did pare some of the losses if we look at futures today. absolutely unchanged, so really in limbo today. you could say the equity market is in limbo in terms of the way we go. downgrade ofis key the growth forecast from china to 66.5%. some monetary stimulus. amid all that, you are seeing the bloomberg dollar index on its fifth day of gains. jobs data on friday. dollar strength is the story for five days in a row. i put copper in there because we mentioned what we heard out of china. we are still seeing some resilience in copper. copper.on lme the broader context is that goldman sachs is becoming a little less bullish on commodities. raw materials are no longer significantly undervalued and further increases will need evidence of improving fundamentals. let's check in on the markets in asia. juliette saly in singapore has more. what are you seeing? and china, stocks doing better than other places in the region today. the shanghai composite has been holding up quite well. down 0.2%. of nikkei closing lower, one the weakest performers today. manus mentioned no change from the rba. this is being supported by a very strong rise today. jakarta stocks, one of the worst performers today, and a lot of foreign outflow coming through out of that index. we had the news overnight that donald trump has started to turn his attention towards india and turkey when it comes to their trade agreements. we have seen a little bit of movement coming through and some of the indian exporters but they are holding up pretty well. you would expect proactive government action from india in retaliation. toyota shares are lower. a report that the chairman has said that if there is a no deal brexit, it will make it very hard to build cars in the u.k.. in china, and a lot of money going into planning in terms of robotics and ai. this company in particular saying it has a three year plan to put $12 million into ai. india, itt looking at is number 11 in terms of imports into the united states. china has lowered its growth targets for 2019 and announced a major tax cut. speaking at the national people's congress, premier li keqiang said the country must brace for tough economic battles. our correspondent tom mackenzie joins us from beijing. we spoke at the last hour and i said, for me, it is about guiding to a low benchmark. it seems like a punchy a game in terms of stimulus. i think that is right. we are looking at potentially $300 billion worth of tax cuts and fees, which would be paid for by an increased deficit. they were looking at raising the deficit from 2.6%, the target last year, to 2.8%, the target this year. six and 6.5%,een the weakest range they have set themselves ever. they think they will get to probably around 6.2, 6.3%. in monetary policy, we have heard they will want to prevent further cuts to the reserve ratios. the focus is really on providing support to small and medium-sized enterprises. private businesses are being squeezed not only by the trade war impact but also the deleveraging campaign that took a toll on them towards the end of 2018. there's this momentum now for policymakers to support private enterprises. the national people's congress, we have another nine days here in beijing, any additional measures around reform. reform specifically of the state owned enterprises, maybe phasing out of subsidies, maybe changes to the joint venture structure and making it easier for foreign investors to put their money at play in a chinese market. anything that addresses some of the concerns from the u.s.. the trade talk tensions to overshadow the national people's congress here in beijing. there's a lot we will be trying to digest over the next few days. nejra: thank you for joining us. joining us now is the chief economist for the americas and europe at standard chartered. we just had the update with all the details from the npc's first day. is china going about the stimulus and the right way in terms of the targeted monetary stimulus but also the big fiscal boost? >> fiscal policy is really leading the way. they've announced something of an increase in the budget deficit. i think if you look at the overall budget deficit, compared to gdp, it is a little bit higher than last year. if you take in everything, we are probably looking at a stimulus of up to 5% of gdp. i think that is certainly going to deliver some results. we have already seen some measures taken last year, measures announced today, cuts in the vat rate. ,here will be further action cuts to the required reserve ratio. we are not looking for substantial monetary policy at this stage. when i see this amount of stimulus thrown at a market, i just wonder, is there something more malevolent to come toward this? we put this in the g tv live view. this is for the united states of america, the global economic surprises, and emerging markets. it doesn't make for good reading. how malevolent is this in terms of throwing stimulus that the situation? i think that china is recognizing that they have to address what really has been a slowdown. we can see that reflected the the even today, where -- so it isg pmi sort of targeted measures to respond to that slowdown. having said that, i think that we shouldn't be too gloomy about the outlook. the target for this year is still 6% to 6.5%, and we think we will probably be at the upper end of that. the u.s. economy is still forging ahead. sure, we've had some slow data, but again, data signaling that the economy is going back at around 2.5%. europe data has been weaker but i think we are seeing some early signs of a bottoming out and a turnaround. some of the problems with europe have been down to temporary factors that should ultimately be giving more growth in the coming months. nejra: i want to ask you about the special project bonds, the shadow deficit: as well. you said before that you expect beijing may be to sort of use these to support the economy of a trade deal is not forthcoming. are these special project bonds shoring up projects for the future? sarah: the main point i think is to make sure that growth is supported. the special project bonds would be used really in the event that there is a negative outcome to the trade talks. of course, trade talks seem to be going in the right direction and hopefully will be lifted. if that is not the case, then the good news is that china has the ability to implement this stimulus. in terms of whether it is building up for the future, problems arise if the economy slows down dramatically. risk were to come , we imagine there will be some foreign-exchange control parameters put into this trade agreement. that could be the seeds of the next fx wars. the potential for the next set of fx wars. atah: i think if you look how the renminbi has been operating or has run over the it isew months, than difficult to say that the currency is being used in any sense as part of the trade wars. of cheaper, a sort currency of course stimulates exports, and that is one way to address the slowdown. but they are going to be very cautious that that could risk further capital outflows. i think we are certainly not looking for a depreciation of pmi. we see an appreciation from current levels. nejra: from the u.s. side, there were a couple of studies over the weekend showing a net loss for the u.s. from tariffs. let's get the bloomberg first word news from hong kong. macron once an eu body to protect elections from cyberattacks and manipulation. down on, micron doubled his vision. he also wants a climate bank to fund energy transition and a regulator for internet platforms to force greater transparency. could be released today on a bond of just under $9 million. the former nissan chairman has spent more than 100 days behind bars and he may not be released if prosecutors arrest him on new charges. of breachbeen accused of trust and filing false. juan guaido returned to venezuela over speculation of how he would speak -- how he would sneak back into the country without being arrested. he went to the country's biggest airport, daring the maduro regime to act against him. they didn't, at least not right away. >> we are here today in the streets of venezuela. we have a lot of work to be done with public workers. they will not continue supporting the bureaucracy and a dictatorship. this is an opportunity for transformation in our nation. bank of australia has left its key cash rate unchanged. it made the decision in the face of a credit squeeze and tumbling property prices. it is supported by strong hiring and low unemployment. tomorrow, we get fourth quarter gdp data for australia. global news 24 hours a day powered by journalists and analysts in more than 120 countries. this is bloomberg. manus: thank you very much. today, we are asking the following mliv question. it is all about italy. who would have thought of their debt moving below the greeks? could it be a negative catalyst for european assets in 2019. coming up, we are back in brussels as cabinet tensions continue to bubble over. can they get hard-fought concessions from the eu? when traveling to work, tune into bloomberg radio on your digital device and on dab digital radio and the london area. this is bloomberg. ♪ manus: this is "bloomberg daybreak: europe." nejra: we are seeing asian equities fall for the first time in three days as china has lowered its growth target. perhaps a little bit of steam coming out of these markets as well. seems like 300 fluctuates and we are seeing a little bit of yen spike. nymex crudee got coming off by 0.2%. libya says back in play later today. cautious over commodities overall. the bloomberg dollar index just rising. lowestetting the benchmark goal ever for growth. is that a warning sign? by two.res rise >> elon musk reportedly blind-sided many employees with thaturprise announcement the carmaker would close most of its stores. bloomberg understands that many sales personnel only found out about the decision when elon musk made it public. planning to proceed with a formal takeover offer for newmont mining. the ceo mark bristow says barrick is "definitely not withdrawing its hostile bid." he said they will take the offer to newmont shareholders. a profitable job of overseeing this stock in the hours after it becomes public. it is a popular job for banks because it comes with the potential of more commissions on trades. representatives of both companies design -- declined to comment. that is your bloomberg business flash. manus: to brexit. until theresaeek may has the vote in the house of commons. she has dispatched two ministers to brussels, seeking legally binding changes to the so-called irish backstop as she looks to win over enough pro braves it lawmakers in her own party. sarah is the chief economist for the americas and europe at standard chartered. i look here at our story this morning. we are going back to 1969, which is to do with northern ireland, trying to look at an agreement. you seem a bit skeptical that she's going to get anything .nough to satisfy the eu have we been too bullish on the prospect of a deal? think it is going to be tough to get the sort of concessions from brussels that hardline members will be happy with. to get those sorts of concessions over the next few days looks very difficult. some of the softer are comingthe erg around. i think there is a nervousness that if the deal doesn't get through next week, there will be an extension of article 50 and you could potentially see a second referendum. hardliners, we have to bear in mind also the view of this. the drp would move to support the deal that that would to fall some of the erg in line. it is still very much open. on balance, it looks pretty tough. you are expecting a vote on article 50 would probably go ahead on march 15. what does that mean for sterling? does that mean that the path of least resistance is higher or that it is just prolonging the risk that a no deal might actually still happen. sarah: it is very interesting what has happened to sterling. the news we have seen on very little news or headlines that doesn't have any real weight. the back of expectations that article 50 could be pushed back. it may just mean that a no deal brexit is put off for rate few weeks are a couple of months. risk is still very much there and i wonder whether currency markets are having the factor that in. if we get an extension agreed next week, then it may be temporarily supported, but there is still a lot to be decided. manus: there really is. whether it is a short extension or a long extension could create a whole new cliff ledge in itself. sarah will stay with us. up next, live from the geneva auto show, we speak to the ceo of the world's largest carmaker. volkswagen's herbert diess joining matt miller from geneva. the authorities, the prosecutors are going to appeal the decision to grant carlos ghosn bail. a little bit earlier, we had the district court agreed to a bail billion --, $8.9 $8.9 million. the prosecutors will appeal that decision to grant him bail. let's check in on the next story that we are watching. a little bit of autos. >> it is the geneva auto show that kicks off and matt miller is bringing us some incredible interviews. has pretty much a tough start to this year, especially january, hitting that low, but we are 18% higher. this is the trade war, which has really put pressure on the auto sector. a deal, if itget were to come to fruition, this is a sector that would certainly bounce. i want to look at the future because the ev's will be on display. some name brands like vw are investing big in new models. by 2030 three, electric vehicles will overtake internal combustion engines. you can see that in the white line here. i'm looking forward to what kind of ev's are on display today. nejra: thank you so much for that insight. let's focus on trade tariffs and the world's largest carmaker. the import levy could cost volkswagen as much as 3 billion euros. that is according to the carmaker. he says vw is doing all he can to avoid that situation. let's go live to the geneva motor show where matt miller is standing by. great to see you. matt: i'm here with herbert diess, the ceo of volkswagen. we are standing here in front of this buggy. is the concept for volkswagen but also a new business model. fast in we are really getting up to -- already 60 million cars. this new technology, the drivetrains will be quite similar. the differentiation between the drivetrains will be much more limited. one in the back, one in the front, you had to switch sides, battery in-between, so two motors. so it does make sense to share this technology to make it more affordable and to a better car. we are now really making good progress. i think it just makes sense to offer this to third parties. get our margin there and make electrics really come through. revenuesis also a new -- revenue stream. carmakers are experimenting with new ways to bring in money. you are going to need it because you are investing 50 million -- 50 million euros. how much can you bring in with new revenue streams? herbert: too early to chart. for the foreseeable future, cars will be our main source of income. the cars will change quite significantly, knowing there will be one or the other offered in addition to the cars through conductivity, through hiring cars out. also, our dealers. the platformh technology, it might be a second source of income. matt: you have a lot of money locked up in volkswagen. analysts have been talking about it for years. in one segment, you have trucks. can we expect an ipo announcement in the next couple of days? herbert: we are working on that. but the final decision will be taken against the market conditions. matt: what about the luxury vehicles? i noticed lamborghini ownership went from audi to porsche. where we find the most synergies and clearly the sports car has the highest synergy. porsche, -- the lamborghini, but also bentley. it doesn't make sense to keep it all under control. see anan we expect to ipo they in the future? a lot of people are saying that is worth more than the entire company is worth now. herbert: lamborghini? matt: and porsche. herbert: we are considering the portfolio because the world is changing and we need to understand which kind of things do we need in 5, 10 years time. we have new brands when it comes to services. it is under review. we think we have a very good brand portfolio from really top level premium cars. we launched the top brandon china, -- top brand in china, opening up the entry. our brand portfolio is good but always under review. matt: let's talk about the changing world you bring up here. you've mentioned previously that tariffs in a worst-case scenario could cost volkswagen 3 billion euros. are you talking to the trump administration directly? herbert: i have been talking to the trump administration, the european administration, and to berlin. it would cost us lots of workplaces. america is a very important market for our premium brands, porsche, for audi mainly. i think it is possible to avoid it. we do everything but we have to understand, between tariff negotiations, it is not only covering the automotive markets, but the area, so we can only facilitate. matt: there were many different tariffs, but donald trump seems eu levees the tariffs on cars. herbert: i don't think we have to protect our european companies with a 10% import tax on american cars. it is not necessary. we are competitive. the scheme between different products, it is not in our hands. finally, there's just 24 days before the official brexit is scheduled. can you quantify the cost of a hard brexit? herbert: it is hard to quantify because we don't know exactly what is going to happen. the biggest exposure we had with it is exporting 80%, 85% of its production into europe and america. for them, it will be a major reshuffle of the operation. it is a big market. hope, after a decision being made, the market would recover and we would keep selling cars there. matt: bentley can't move its production, it has to be built in britain. i'm sure you have a lot more price elasticity there. what about the diesel situation here in germany. you need to diesel engines to meet your co2 targets. can you get germans to accept that diesels are cleaner for the environment? herbert: the diesel offering is really, for many of our customers, those who drive long distances, big cars, it is really still the right one. the new engines are really clean and for the foreseeable future, for the big cars, long distances , the high mileages through the years, they are still the right option. theill see a slump in reduction of smaller cars because it is getting more and more expensive. matt: will you be able to get the co2 targets in the eu changed? will meeterbert: we the co2 targets mainly through electric cars. matt: thank you. we appreciate your time this morning, herbert diess, the ceo of volkswagen. manus: i had a vision of you in that green buggy behind you on a beach somewhere in california. yes, that's you, you are going to be on that beach. matt miller, thank you very much. let's check in on the markets around the world. good to see you this morning. >> i wish i could be on the beach in california, too. flattish start today, about 0.25% or higher. first you see the markets and there is no big reaction to the news this morning about trump telling congress that they intend to terminate the designation of india. markets haven't reacted too much to this. they might react if it indeed becomes a reality. still not enough clarity about which sectors will be impacted. the indian you what stance is. the indian public minister put out a statement and i will leave you with that. the gsp, the generalized system of preferences said the benefits to india were relatively limited. table.on the that has been the stance. weaterial impact and that signed other agreements with the u.s. that would help navigate. let's see. as of now, not seeing that happening. great round up. thank you so much. hopefully you will get to that california beach sometime this year. a big day for data around europe. we will discuss whether the region's slowdown is set to continue. manus: if you're are traveling to work, join the bloomberg radio team, live on your mobile device and on digital radio and the london area. ♪ i'm manus cranny in dubai. cehic inm nejra london. congress in beijing. china has set a lower gdp growth target for 2019 and a range of 6% 6.5 percent. it will give policymakers more room to maneuver. manus: 2 trillion yuan of tax cuts. the top bracket will see a cut of three percentage points aimed at spurring the manufacturing sector. that's the latest, plus an additional 1% tax cut which will be made to the second highest bracket bringing out the big guns. nejra: an increased budget deficit as well. these targeted measures mean that the government will see an increase in gdp this year. the bloomberg business flash now from hong kong. elon musk reportedly blind-sided many employees with his surprise announcement that the carmaker would close most of its stores. bloomberg understands many sales personnel only found out about the decision when the tesla ceo made it public. until last week, tesla's strategy seemed to be one of expansion. barrick proceeds with a formal newport mining. the ceo says they are definitely not withdrawing their hostile bid. take the offerll to shareholders. and, the job of overseeing lift stock in the hours after it becomes public. it is a coveted job for banks because it comes with potential for more commission on trades. representatives of both companies declined to comment. that is your bloomberg business flash. thank you so much. a big day in europe today. eight: 45 -- at 8:45 a.m., they will give a press conference on bouncing back from the recession. manus: it is likely to reinforce a weaker outlook. the u.k.we've got but the risks are to the downside. economycus on europe's now. it is interesting how bond markets are re-pricing something between greece and italy. what i'm drawn to his the contagion risk that bruno le maire warns us. do not underestimate the contagion risk from italy. i'm surprised by that warning. are you? surprisedm a little because i think we have moved on from the dark days of 2011-2012 when there clearly was contagion from greece at that time to italy, spain, portugal. i think now the european central bank, the european institutions do have a credible backstop in the form of monetary transactions. to the extent that there are problems, i think that there are measures that will be taken to support spain and other keepries in the region to those bonds from really selling off sharply. nejra: let's ask you the question of the day, which is very simply, will italy be a negative catalyst for assets again in 2019? sarah: i think there is a risk that could happen because we are seeing tensions building, indeed since the elections a year ago. we have seen the ledger moving well ahead of its coalition partner, five-star. it raises the question of whether we could see early elections. i think markets would be nervous about that. oute may be ripples further to the euro if that were to happen. the biggest the liberation for the european central bank would be inflation or the lack thereof. differentiation. cpi. core concernt is a real because it really hasn't shifted outside a very narrow range over the last six to nine months. i think the ecb take some comfort in the fact that we see wages growing, and that would suggest that in time, core inflation is going to pick up. if you look at super core inflation, that recovery has already started. we have downgraded our forecast but we still expect that we would see a roundabout target in a couple of years time. enough for the ecb to remove policy accommodation over the course of the next couple of years. nejra: as well as downgrading your inflation forecast, have you downgraded your bund yield forecast? sarah: we have. we are looking at yields to be points,bout 20 basis picking up very gradually to 40 basis points. oft is partially on the back what happened in the u.s.. it is partially on the back of --t happened in the growth we will see stronger growth in the region and the second half of the year but momentum has slowed and that should be reflected in our upward forecast. manus: there is usually only one instructor on the show, usually nejra. if you had to stand up the top of the class and give marks out itous for the most auster ecbral bank, you have the -- who gets top marks for the most dexterity? sarah: that is an unfair question because i would give them all pretty good marks. is far too politically correct. let's look at what's been going on. in china, quite a dramatic slowdown. i think the pboc has managed that situation very well. for the european central bank, i think they have been somewhat line cited by the momentum -- by the slowdown in the momentum there. it is very clear that rates are going to stay for some time. it wouldn't surprise me if for out.week, they extend for the fed, very full of prominent -- very full employment, rising wages. think there is the scope for rate hikes to come through but we will find out more when they meet later this month. japank what we see from -- sorry, from japan and china has beene and the u.s. pretty well-managed policy. have taken ite global, i want to ask you about modern monetary theory because it is the zeitgeist at the moment. it was a piece in the bloomberg the other day talking about how the bond markets and the u.s. seem ok with the prospect of it because it is already happening. is this something markets will wake up to more in the u.s. and europe and is it something that will continue happening? sarah: to a certain extent, it is. if you look back since the global financial crisis, since that time, we've had governments largely having to rein in public spending. the opportunity is there now for more stimulatory policy. how you balance that with central bank monetary policy is the key going forward. it ist sure how far really taking hold at the center of government and how far central banks will be promoting this policy. to a certain extent, it is the reality. having said that, the traditional monetary policy will still be pretty important in my view and it's a matter of how to address this low inflation environment where the rules no longer seem to apply. manus: it is a paradigm shift in terms of what we should be looking at. maybe stock in trade should be part of every central bank's arsenal. you'll run the numbers in terms of the potential risk of a trade war and also the trade war between the u.s. and europe. if i'm not wrong, it could kick europe technically into eight recession. it could kick germany into a recession. germany, germany. 25%, which is with the threat is, it certainly would have an impact. we think it would shame about 0.2% off growth for germany -- off growth. germany, that impact could be double. you are looking at a german economy that narrowly avoided recessions in the second half of last year. this really could be a body blow. at the same time, we still do have that lingering concern about a no deal brings it. that will be more damaging still gdpcould reduce euro area by 0.5% to 1%. nejra: thank you so much for joining us this morning. sarah will be continuing the conversation with us on bloomberg radio at 7:00 a.m. u.k. time. withg up, we will speak the ceo of toyota europe. this is bluebird. ♪ this isn't just any moving day. this is moving day with the best in-home wifi experience and millions of wifi hotspots to help you stay connected. and this is moving day with reliable service appointments in a two-hour window so you're up and running in no time. show me decorating shows. this is staying connected with xfinity to make moving... simple. easy. awesome. stay connected while you move with the best wifi experience and two-hour appointment windows. click, call or visit a store today. manus: this is bloomberg daybreak: europe. announcing a major tax cut. thei japanese court sets [indiscernible] at $9 million. live from the geneva motor show, the ceo tells us they are in discussions with trump administration over tariffs. still ahead, the man in charge of some of young w's best brands. nejra: we are an hour from the cash start of trading. we have seen a little bit of weakness come through in the asian session that we will hear about in a moment but yesterday as well, a bit of a reality check for u.s. stocks, the ingest drop for the s&p 500 a month, coming off of that 2800 level and u.s. futures doing nothing so a little bit of limbo and a similar picture when you look to the european futures, ever so-- a dax futures slightly lower. equity markets trying to digest the new -- news out of china and the prospect of more and certainty these trade negotiations. we did see a lift in risk assets 24 hours ago but it did not last too long once we got into u.s. trading. robertno and i think [indiscernible] bit more, ia little want to bring your attention to the italian government bond yields, what we got here is a really interesting moment with the 30 year government bonds yesterday for italy, demanding more premium than the 10 year greek, raising race by two notches on friday. the risk is this, what is the spillover from italy if there is more warning shots coming from the eu in regards to the slowdown, in regards to the debt and potential contagion? you can see that grace versus italy and as a relationship and you can see it is cascading in one direction. -- markets are looking for a little more guidance. saly has your asian market rep. a lot of focus on central banks, we have the rba leaving rates on hold at 1.5% and it decision coming through from the bank of malaysia them a they have left their overnight rate at 3.25 of 1%. also in a still you. have a look at china, no on,rise with the mpc going you have seen chinese stocks outperform today, the csi 300 closing higher by .6 of 1%, the shanghai composite which closed 3000 points at an eight-month high yesterday also closing higher, a switch out of stocks coming through in japan which weighed on the overall regional liftingd tata motors the semsex. a surprise change for the central bank governor in the philippines, the budget secretary being named as the new governor which took many by surprise because he seems to be on a path to suggesting rate cuts when they have been on a aggressive hiking mode -- move. the aussie dollar just a little bit weaker on the rba decision and having a look at the routine -- at the rupee in india, the in terms ofurrency performance. there will be proactive movement coming through from the indian government with president trump targeting india and turkey in terms of trade. manus: thank you. this is a provision being made will set aside 465 million pounds. 400 and 36 million pounds will be set aside. let me take you to the judgment deal itself. aty are set to appeal they were ordered to pay, and this was on friday, damages in the amount of $17 billion after losing an appeal. this is a class-action lawsuit filed by quebec smokers and it is the defining moment in the smoking industry. this is the start of the provisioning in regards to those lawsuits that were lobbied against the smokers. at the beginning of a long haul to provision of ea t, it will be in play and philip morris is -- philip morris cut their outlook after the decision. get back to our top story and stocks in asia slipping as china lowered its growth outlook area beijing has set its gdp target for the year at a range of six to 6.5%. speaking at the national people's congress the leader said the country must brace for an essay tough economic battle. great to have you with us. from what we've heard the lowering of the growth target not coming is a huge surprise to investors but in terms of the stimulus on the fiscal and monetary, is this the right way of going about the stimulus for the global economy? >> what is economy is we look at is major economies, the u.s. slowing and the european economy being very middle-of-the-road. china is very important to the global economy as our view is that the stimulus measures --ther they are fiscal or will help stabilize the chinese economy and that will help stabilize the global economy. it is the delta global economy currently. it is almost as if the a game, some people would like to have it in their pocket. bonds are outperforming u.s. treasuries, with all the stimulus being thrown at it, what comes next in terms of the bond market and would you buy chinese bonds? scott: it is an interesting question, the chinese market is indices, weo broad see this in the fixed income markets. it is an interesting diversifier because it is not going to follow the u.s. monetary policy although it will be related. we like chinese bonds as a diversifier, as that market opens up as a liquidity improves, yields are higher than they are in the treasury market, we will take a close look. mentioned treasuries and diversifiers, i will move to a chart showing the negative correlation between five-year tips and the s&p 500, the strongest since 2012. what is this telling you about risk? >> this is an important chart, what it tells you is the offset toarket is an the risk in your portfolio. when the s&p rallies we saw in the last few days the treasury market sells off, yesterday the treasury market rallied and s&p sold off. that was -- with that increasing behind us and the fed on hold for the next six months, investors can own treasuries as a hedge to their overall portfolio whether it is fixed income or equities and that allows you to take more risk because you can head some of their risk with the treasury is an so this correlation incredibly important thing for investors. there was another bond story which said it carries along the same which is the 10 year paper and the similar suggests a fit, that little bit of inflation asked in the market -- thanks to in the market. has that run its course in terms differential? scott: the inflation has increased which is to save the break even has widened, that is likely to continue. the fed is on hold for six months, maybe longer, so real rates look attractive. the u.s. economy is doing fairly well, we will see a slowdown in the fourth quarter for a number of reasons related to the government shutdown but as we look at acceleration into next year, is slowing and growing u.s. economy. the fed members of beginning to talk about average inflation targeting which is in credit we important which suggests they would allow inflation to go over to offset some of the below target inflation we have had. all of those three things in my mind makes that attractive. nejra: i have been wondering at what point does the bond market get its head around that and believe that we could at some point see this overshoot and inflation. the fed cannot generate inflation or can it? obviously they have managed to do the first one as noted and we will get the information about that at the end of the week which i think will be positive. the second one is slower moving and there have been questions about the relationship between the employment rate and inflation. the profile continues to improve and if they are more relaxed about the level of inflation going forward area it makes to siri interactive -- attractive. -- going forward. it makes tips manus: attractive. tips:-- it makes attractive. manus: what might that mean in terms of overachieving on that target? scott: this is a problem they would want to have. rising inflation above the target. i think there is a discussion the federal reserve about this concept of allowing the inflation target to move above, inflation to move above before they react and it is important. on the other side is the ecb and what the ecb would do in the event we do get a slowdown in europe, i saw the previous guest was talking about economic elements in europe, we have an active debate internally as to what would be the next steps for the ecb if they had to go back to oregon easing mode. on iner they will decide the next several month will be interesting but we are talking about monetary policy, qe theyam, what are the steps can take now given where they are in the program? nejra: i was going to ask about the ecb. much. thank you so let's get the first word news with annabel in hang -- in hong kong. annabel: huawei is planning to sue the u.s. government, bloomberg understands it will claim the administration has overstepped by banning the tech giants increment from its networks. what way is likely to argue it is unconstitutional to analyze a person or group without a trial. and facing a long struggle for democracy, the opposition leader returned after speculation over how he would sneak back into the country without being arrested. he took a flight straight to the nations biggest airport. act againstegime to him. it did not, at least not right away. center attorney general to brussels to negotiate legally binding changes to the backstop. if he succeeds, the premise to has a chance of getting through parliament next week but if he fails, britain faces even more political uncertainty and brexit may well be delayed. approved bailhas for carlos ghosn on his third request, setting the bond under $9 million area the tokyo prosecutor has decided to appeal the decision area than former nissan chairman has spent more than 100 days behind bars after being accused of a breach of trust and filing false statements. global news 24 hours a day on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. nejra: thank you so much. story, the with that timeline we can look through in terms of what happened as so far beencarlos ghosn, this has a long-running issue since 19 november to my 2018. we are getting some of the latest but big questions in terms of the legal system in japan. comes down to over 100 days in car straight in. we had the bail set at ¥1 billion which is $9 million, that is being challenged again by the courts, we understand the tokyo court approved his bail, that is going to be appealed and let's stay with the auto theme because we are live in the geneva motor show today. designererrari, the unveiling its first hyper car and it is a beauty. the priceeuros is tag. they are the first to compete. the ceo spoke to bloomberg at the geneva auto show. goteople think we have beyond the luxury, they want something with -- that is sustainable, zero emissions and understated. manus: coming up, as glover -- global automakers grapple, we will bring you more from the geneva motor show. that is next. this is bloomberg. ♪ manus: it is 7:18 a.m. in london in the morning, 11:18 a.m. in dubai and we are under 14 minutes -- 42 minutes away from the start of the trading day. nejra: this is lumber daybreak: europe, i am nejra change. coming out with the a game in stimulus, knocking off the vat and going ahead with stimulus, charging ahead on the csi 300. do you want to be long on short is ites or is the run, better bid, what will the details be of the ethics agreement if and when it comes. good morning. the market is digesting what we heard out of china. not quite as bullish on comedies as it was before. a bit of a diversions that copier -- copper is rallying. we are at 56.30 seven. futures really not doing anything in europe and the u.s., we saw the u.s. equity market dropped by the most in a month yesterday. a little bit of a reality check behind -- around the trade talks that were struggling for direction. does the rally need further impetus? let's get a limerick business flash. annabel: elon musk reportedly blindsided many employees with his surprise announcement the electric carmaker would close most of its stores. bloomberg understands personnel found out when the tesla ceo made it public. until last week the strategy seemed to be one of expansion. jpmorgan will reportedly take on the profitable job of overseeing lyft stock. comes with the potential for more commissions on trade. tradeill not disclose until a later filing. making asked for very for possible bankruptcy filing. freighters and the wall street journal are saying the move comes in the face of hundreds of lawsuits over its role in the u.s. opioid epidemic. that is your bloomberg business flash. manus: i will pick it up from here. let's bring you the geneva motor makesthe company which opel cars is seeking a deal -- a dealer that will expand its footprint. the french automaker has 9 billion euros of cash. it is weighing mergers or potential collaborations behind -- beyond its home region. one man in charge of the motor show, matt miller is joined by a very special guest. matt: thanks for a much, i am here with the ceo of the psa group, thanks to -- thank you for joining us. you do have $10 billion in cash and there's a lot of stuff that could use -- you could use that for but acquisitions is one of the things that analysts are watching. do you want to go out and buy another carmaker? >> last week we announced our 2018 financials, they were ok, they were in great progress compared to 2017 and we announced three major things, the first bringing the personal rant to the u.s. and the canadian market and to the indian market and we will bring the opel brand to the russian markets unless these are the three big announcements on which we are putting our energy and focus. we are in the second half of the plan, with very challenging goals for 2021 and that is our point of focus. beyond that we have many thoserships, we value partnerships, we work with those companies to make our partnerships even more valuable and this is where we are, there is nothing else to be said today. proven yourself with opel, you can do something that other carmakers particularly the former owner was not able to do which is sell the cars at a profit. you anxious to use that kind of strategic know-how with another brand that needs it? >> first of all i would like to say that the turnaround of opel is to their credit and merit of our employees. and setoing a great job -- in sometimes a very adverse environment and i would like to congratulate them for that. turnnk we know how to around the companies, we did it for psa and opel also. not mean we have to do it for the world, it means that in that circumstance we could be at the right moment with the right skills and with the right things. open for business, something we have always said and there is nothing that we not open-minded. we want to look for the best opportunities for our company but we have a very sick -- very strategic plan. we have clear goals and objectives. this is the focus in which we are putting all of our energy. matt: one of the important things is establishing a areership network, there existing networks you could take advantage of. tve you talked to talk to -- partnering? >> the world is changing very fast and within this world, business is changing very fast so when we enter a new market, being on the product side and the technology side, being on the distribution side, we have to look for new ideas, we have to look for breakthroughs, ways to do business which are not choosing as many resources as the conventional ones, make sure that we bring the company in a scalable way, something that does not bring us in the red, gives us a chance to build a successful roadmap. this is challenging and new, business hashe way been managed so far and we are working very hard on those new ways of doing business. some of them will surprise, some of them may disturb but this is the way we need to move because of region not move, then we die, that is clear. it is darwinian, either you change your disappear. word one of the ways the -- world is changing is trade wars everywhere. the u.s. is hopefully working out a deal with china but then we are expecting donald trump to turn to the eu, are you concerned about tariffs, are you concerned about trade wars with the u.s. and the eu? >> we consider that is not in the best interest in the communities in which we operate all of the world, it is better for human beings to collaborate with each other. this is a small planet with limited resources, it is better that we look for a better world altogether than trying to be defensive or even aggressive on those matters. to theave you talked trump administration in washington? >> we're bringing this message to all the responsible people that are willing to listen. isactive listening nowadays a rare resource in the world and it is important that we understand that without proactive listening, nothing good can happen to humanity and we are supporting global trade. this is the best way for people to have a better life altogether. matt: thank you for joining us, carlos tavares here at the geneva motor show. this is bloomberg. ♪ anna: welcome to bloomberg markets: the european open. the cash trade is less than 30 minutes away. ♪ times, china cuts its growth forecast and announces 2 trillion yuan of tax premier warns of a tough economic battle ahead. theresa may put -- puts -- tries to sway the eu to make

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