The next governor of the bank of england. He is no stranger, 30 years of experience in a range of positions. Francine lacqua joining me now to take over hosting bloomberg surveillance. About his experience of Monetary Policy, the economics of the u. K. , and on the regulatory side, and reflecting on the brexit experience, even if many people point out a lack of Monetary Policy setting experience. In terms of market reaction, we do not expect a lot of reaction. Our colleague was pointing out he was widely expected to be the next governor of the bank of england. Move on the ftse 100, equity markets not moving far. We do have confirmation on who the next governor of the bank of england will be, and mark carney has extended his term to the middle of march. Francine thank you so much. Welcome to bloomberg surveillance. Governor of the bank of england will stay until march 15. Andrew bailey is to succeed mark carney. Bailey spent three decades at the bank of england as Deputy Governor. Lets welcome our guests, jari stehn, director chief european economist, Goldman Sachs. Mber, Global Market strategist for j. P. Morgan. He was front runner, and there liquidity that the problems why was he picked . He is the safe pair of hands and knows the moving parts to help us through brexit and keep the city in the ability to conduct itself. Clear what needs to be done with brexit. His experience is unparalleled. The fact he does not have Monetary Policy setting is not relevant. He has been around a long while, everyone knows him and respects him. The most important thing is not where Interest Rates are. Think the bank of england want to do too much for the next few quarters depending on how the economy does. It is all about how we handle the European Union and are regulatory role are handled. Expect fromat we the bank of england governor . What is his first job next year . Mark carney is thing until march 15, then he goes back to setting Monetary Policy . That is the beauty of andrew he is not known for his economic views or cutting Interest Rates. It is more about how he handles banks and insurance companies, and Pension Funds and the regulatory requirements that we need with the European Union. Itt is the boring bit, but will be more important for the next eight years. This is onceinalifetime breaking news. What does it mean for the u. K. Economy . He has a lot of experience, three decades of experience in the bank of england. Headed the fca for three sors and is widely respected i think the experience he brings will be a great asset for the bank of england and the u. K. Manages aconomy number of challenges as we go into 2020. The key challenges that growth currently is very weak. We assume momentum into the fourth quarter. The bank of england lowered their assessment of growth. Quite a lot of that has to do with brexit uncertainty and the effects on investment. At the same time, inflation pressures are not that far away from 2 . That will be the key balancing act that angie bailey faces. Francine the question is if he works through it or not . See ife are waiting to that will bounce into next year. We have had data the last couple of days which is not reflecting the election result. We want to see the extent the Political Uncertainty helps the u. K. Economy bounceback, or if the shift in focus is toward a cliff edge exit toward the end of 2020 is the main driver for the u. K. Economy. His first job in march will be to assess the extent to which of those forces are winning. Francine how difficult will it to be to set Monetary Policy when we do not know what the trade relationship between the u. K. And the eu will be . We are seeing across Central Banks, they are happy now to be on the sidelines as long as they can. We heard it from the fed and the ecb, they would like to look at six months of no changes in policy if they can get away with it. The hope is business surveys and pmis bounce back and allow them to do that. For next year, it is an asymmetric relationship. If economies weaken, monetary stimulus will come back quickly. On the flipside, the barrier is higher for Central Banks in 2020. Youcine i do not know how model the u. K. Economy, the Boris Johnson will be able to negotiate with brussels. Is it a range, or could it be widely different . I think this wide range of possibilities, we expect that ultimately the u. K. Will be further away from where it has been in the past. At the same time we also see some positives for the u. K. Economy as we head into 2020. One factor is the Global Economy is starting to look a little somewhat better data here recently. Some trade risks have diminished. Ofn we look for an expansion fiscal policy in the u. K. In 2020 and beyond. Finally, uncertainty remains around the Brexit Process from here, but we think the passage of the Withdrawal Agreement will take away some of that uncertainty and help investment to come back. Optimisticelatively view on the u. K. Economy ofrting in the second half 20 20. Then into 2021 and 2022. Look at theen you front runner for a couple of weeks, was it a brexit view that went against her . Marcus i have no idea. Have an excellent time at the bank of england when she was there as Deputy Governor. I think her relationship with mark carney was excellent. Andrew bailey is a far more experienced person on the wider range of things. He was head and shoulders above the rest of the others, and i think going back on the economy, we have the potential for one insurance rate cut in the First Quarter or second quarter, but the bank of england will hope to avoid that. Isbe what bailey could do like christine lagarde, a nice long review for a year. Francine on brexit . Columnist. Pinion jari stehn, director chief european economist, Goldman Sachs and hugh gimber, Global Market strategist, emea, jp morgan Asset Management stay with us. Coming up, european stocks are ending on a high note with their biggest gains. Can the rally continue . This is bloomberg. Francine breaking news from the bank of england. The head of the Financial Conduct Authority, Andrew Bailey will succeed mark carney. Mark carney will remain until march 15, 83month extension. A threemonth extension the pound has moved a touch but not much. We begin first word with the leadership standoff in the u. S. Congress over the impeachment process. Speaker nancy pelosi is holding off sending the articles of impeachment to the senate after Senate Majority leader Mitch Mcconnell indicated he wanted a would trial, the outcome determine possible removal of office, and that includes arguments from both sides. Those waiting for heathrows third runway will have to wait 12 more months. They expect to complete the project in 2028 or 2029. Heathrow says the conservative election victory is good for its runway plans. In Spain Coalition talks are on court ruledou top the separatist leader was immune from prosecution and should be freed from jail. The Prime Minister has been trying to persuade the party to support him in government. The latest government could derail talks entirely. A ban on public protests in anger over a controversial citizenship law that has been criticized for discriminating against muslims. Protesters have died and a thousand people have been detained. Curfews have been imposed. The work of the hong kong protest may be over according to city officials, as xi jinping is in neighboring macau. He is praising the colony and bring attention to the differences tween the two cities. It to diversify is economy. 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. This is bloomberg. Lets look ahead to 2020 despite poor economic data, trade headwinds and brexit worries, european stocks are ending on a high note with its biggest gain in 10 years. Can the rally continue and should investors be position for the new year . Jari stehn, director chief european economist, Goldman Sachs and hugh gimber, Global Market strategist, emea, jp morgan Asset Management are sticking around. When you look at europe from an economic point of view, 2019 was not great. Will 2020 be better . We think so. We are looking at a pickup in growth of 1. 1 which points to a significant pickup from the current pace in growth across europe. I think the reasons are foreign and domestic. On the foreign side we have seen some reduction in risks, we talked about brexit and we have. Een progress on the trade war also some indications that some of the global data points are beginning to get better here. More domestically we are seeing some encouraging signs. On the fiscal side budgets are turning a bit more expansionary. We see wage growth that remains dynamic. That has room to run into 2020. It is a more gradual turnaround and more limited pickup, but a better 2020 than 2019. What makes you worry . Is it negative rates . The familiar it is risks. On the trade war we have seen progress, but those issues have not been resolved. On brexit, we have seen progress, but there are issues to work through. Politically when we look across europe, i would highlight italy is one of the risks we focus on in 2020. The political situation there is ,ore stable than in the summer but we have Regional Elections coming up, and we need to be focused on that as a potential risk for 2020. Hugh it is potentially a tricky year for assets. , in january things were cheap across the board. If you are willing to say we were not heading into a global recession, it was a great time to buy risk assets. The king forward one year on, the way in which equity markets drivenved are entirely by the pickup in valuations. It has not been an earnings story for europe, it has been buybacks. The starting point is a lot tougher for European Assets despite a relatively optimistic outlook on the economy. Francine where do you see the best value in 2020 . About looking for quality stocks. This is the stage of the cycle we would be focused on companies with the strongest Balance Sheet, the highest levels of Free Cash Flow. That tends to lead you towards a u. S. And a more cautious economic scenario. If we see Political Uncertainty clearing, emerging markets in asia look like they have the most upside. A meltup, that stocks will surge into the start of next year, and if that is right, asia will have the most value. Francine what kind of consumer are we having in europe . Are they strong and ready to spend . Jari i think the manger ivers our consumption, wage growth and thanately in the long run important driver. And the signs have been encouraging. The nominal wage growth is between 2 and 2. 5 . That is lower than before the crisis. Given that inflation is 1 , the real income gain is sizable. The other component is the savings rate, and what we saw here in the first half of 2019, the sitting rate moved up rapidly in the euro area. We see some room for that to reverse as we go into 2020. The outlook for the consumer is a reasonably outlook opportunity. Francine thank you both for joining us. Jari stehn, director chief european economist, Goldman Sachs and hugh gimber, Global Market strategist, emea, jp morgan Asset Management we will focus on the rates debate, and prospects for europes economy. That is coming up next. This is bloomberg. Francine this is bloomberg surveillance. I am Francine Lacqua in london. Bankerday, swedens riks ended its fiveyear experiment with negative rates. It could be looked back on as the beginning of the end of a historic policy experiment that worked initially but was undermined by the failure of politicians to follow up with a progrowth policy response. Jari stehn, director chief european economist, Goldman Sachs and hugh gimber, Global Market strategist, emea, jp morgan Asset Management are still with us. How distorted our markets because of negative yields . Hugh very distorted but that is here to stay. It is hard to see the ecb being able to normalize policy anytime soon. People are suggesting the move could beriksbank followed by others. They are looking at their inflation target and feeling they are pretty much there, and extraordinary levels of accommodation are no longer required. The ecb are different, projecting to be missing their targets a couple of years down the line. That distortion in bond markets is here to stay. Francine do you agree with that . Expect negative rates for quite some time. We have the ecb on hold in 2020. Inflation is low but growth is expected to pick up, so that takes away the urge to cut more, but we have them on hold until then a gradual, exit from negative rates all conditioned on the idea that inflation over the nearterm will be low and rise gradually. Francine what do you worry about with the ecb . If you change the inflation and how you measure it, or your target, you do not have continuity that we have had for decades. Jari the review will be wide, and it will look at the target and the tools, the side effects. President lagarde has indicated she will spend a year on that review. The key of the review will be about the objectives, and i expect the ecb leadership to push for symmetric 2 target to clarify with the aim is, to move away from the fuzzy formulation at the moment. That should help the Government Counsel to coordinate behind a clear objective, and contribute to an improvement in Monetary Policy at the ecb. Francine thank you so much, jari stehn, director chief european economist, Goldman Sachs and hugh gimber, Global Market strategist, emea, jp morgan Asset Management stays with us. Coming up, chinas Economic Growth will come in. We will talk more about the worlds secondlargest economy. We will talk about trade and Steven Mnuchin yesterday saying the phase one deal should be ready to sign in january. This is bloomberg. Francine a new boss for the bank of england. Andrew bailey takes over. Goes to theill house of commons today. Eu inre set to leave the six weeks time. Giant says itil will keep a lid on investments. This is bloomberg surveillance. Uk getting some eu thirdquarter gdp readings. We will have plenty more on your markets. We will have plenty more on your pound checks just over 1. 5 hours into the european trading day. I want to start with renew. It is up more than 22 . Who knew garbage could be so valuable . It is a Waste Management company. Nmc health down 10 , having a tough day. Responded to the report overnight saying it was false information. They are said to be raison datre to fund. Adidas down. 4 this morning. Nike and do with aftermarket trading. Adidas is one of their peers. I want to see what nike is doing and free market trading. Cap of mackey, the stock value was the highest on record yesterday. It just was not enough. Francine lets get straight to the bloomberg first word news. Viviana we begin with breaking news at the top of the show, Andrew Bailey will be the bank of englands next governor. He spent three decades at the central bank. , heuncing the appointment was described as the clear frontrunner. He will take up the post when mark carney leaves in march. Andrew baileys salary will be nearly 500,000 pounds. Four people have been arrested with the group to help bail protesters out of jail. Held fore being suspected money laundering. It is connected to a group known as spark alliance. Million u. S. Dollars associated with the fund. Malaysia wants to bring Top Executive to court and is hoping to recoup up to 9 billion. The two sides are still a long way apart. They have not there is still a Pacific Ocean gulf between malaysia and Goldman Sachs. Viviana Goldman Sachs declined to comment. 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. I am viviana hurtado. This is bloomberg. Francine lets take a look at what you should be watching out for today. The chinese president is commemorating the citys 20th anniversary of the return to chinese rule. There is a call to diversify the economy. Brexit Takes Center Stage in the u. K. With the government introducing the Withdrawal Agreement bill to the house of commons. We will get gdp figures, expected to show growth. It makes people think of halloween. Lets talk about the worlds secondlargest economy, chinas E