Is when Prime Minister netanyahu faces a challenge up to the leadership of the party after failing to form a government. Lets talk about trade and not the usual tensions between the u. S. And china. There is escalation cost true trade wars two trade wars. Move is cutting tariffs, a partly aimed at expanding imports. The news comes as beijing and washington work to finalize the signing of the first phase of the trade deal next month. Japan and south korea agree to negotiate on export controls. President moon jaein and Prime Minister shinzo abe will meet for bilateral talks i tuesday, tomorrow. Joining us to discuss in more detail, bloombergs executive editor for Greater China john liu. Why is china cutting tariffs now . Remind us the process involved. John some of the products include pork, which is important to china. There has been a shortage domestically and we are coming up on chinese new year, peak season for me demand. Getting imports will be very helpful for president xi jinping and how things look domestically and you mentioned trade. It will set the right mood music as we get closer to a deal. Anna i wanted to ask about the onk between china moving freeing up some of its being more willing to import more product in terms of pork and other imports. What does this tell us about the phase one trade deal, because this is an part of that. Maybe it is all about the mood music. John thats right. Have been cutat today are not directly related to the phase one trade deal that is coming close to for wishing, but you have to connect the two in the bigger scheme of things. President donald trump tweeted about these cuts moments after china announced to them, so on both sides of the pacific, each side is watching what the other is doing and trying to prepare for what looks like a deal to be signed in early january. John if beijing wants to paint a picture of a government that is more willing to accept products from overseas, this perhaps goes some way to doing that. What about the trade tension we have been talking about between japan and south korea . We know shinzo abe will be visiting china this week. What is important about this visit . John there is a trilateral between china, japan, and south korea tuesday. Ahead of that, Prime Minister abe and president moon of south korea will be in beijing meeting with xi jinping monday. And primemoon minister abe havent met in over a year because of the dispute over women who were used subjected to sex slavery during world war ii are being treated. That has caused additional uncertainty that nobody wants to see in east asia. Anna thanks for the update. Thanks to bloombergs executive editor for Greater China, john liu. Fidelity international ceo Anne Richards said removing Systemic Risk has brought a new danger, illiquidity. She started on the positive signs for globalization in 2020. 2020, talk move into once again about getting a deal between china and the u. S. , if that comes to the fore, that will be helpful because it will get the flow of capital moving around the world and trade moving around the world would be hopeful. If the u. K. , when the u. K. Leaves the eu at the end of moment, thethat u. K. Will be in a position of negotiating new trade deals and will have an certain imperative to do that. Maybe that will bring back the need to continue to think globally to the fore again. It may be after a more difficult period, it goes more positively up the agenda. Time will tell. Francine how difficult is it for markets to navigate geopolitical events . Anne the challenge is not the volatility per se or the frequency of it is the frequency of political events. Business forthis 27 years and every year, there has been geopolitical stuff. I dont remember the quiet year when things didnt happen. It has never been like that. What i do observe now is calls pools of capital are more narrowly circumscribed and they have been for a long time. This has been partly in response to banking regulation, which has been trying to take away Systemic Risk, so within a bank structure, capital is defined it is defined by country. It is defined by types of business within the country. Tois prescribed within banks each desk and how much capital it has. That has been done to remove Systemic Risk. The unintended consequence of that means that when something happens unexpectedly over here, it is not always that easy for capital to jump from one pool to another pool to mitigate the risk of that. I think, strangely and perhaps without intention, by trying to remove Systemic Risk from individual banks, weve created a different risk, which is the capital cant move around in response to an event and when you look at some of the spikes in the repo market, for example or contortions in the currency market from time to time, i think there is a sense that once in a while, we had a little warning signal that capital cant just move where it needs to to respond to something quite small, but nonetheless quite significant that has happened and that is giving regulators pause for thought at the moment. I think this sense of sure, we need a set of rules that manage the daytoday, runofthemill weditions we are in, but need to say, in an unexpected condition, are those same rules which normally safeguard, are they making situations worse and that is a conversation that needs more fleshing out. Anna interesting conversation ceo of fidelity international, speaking with francine lacqua. You can watch the full interview in the next episode of leaders with lacqua. Lets get a blue bloomberg first word news flash. Credit suisse is pointing the blame at its former operating officer. It says he mandated the observation of the companys former hr chief and it says there is no indication the ceo for other members of the board knew anything about it. This follows another sign of involving the swiss lender. Bank of america is watching the Leveraged Loan Market for signs of stress. Brian moynihan is telling us there is too much leverage through Certain Companies and they have trouble, it will impact the economy. It comes at a time when direct lenders are doing many of the big deals traditionally handled by big banks. You are working with these firms as partners and they may do financing, but typically, we are more focused on the shortterm and how we finance and they are focused. Plans to buy Wealth Management in a 100 Million Pound deal according to a source. The price wont include a significant premium to the close on friday. No, from either side, and that is your Bloomberg Business flash. Anna thank you very much leighanne gerran , in london with us. Next, Credit Suisse blames it spying case on the same person who took the fall after the first scandal. We will delve into this one next and remember, Bloomberg Radio is live on your mobile device or dab digital in the london area. This is bloomberg. Anna welcome back to the european open. 7 41 in london so 19 minutes until the start of trading. It will be a lowvolume week. We are expecting weakness at the start of the trading day but European Equity markets, global equity. Markets, close to alltime highs. New alltime highs in the u. S. Last week. Credit suisses latest probe into spying points the finger at the former coo once again. The report said there was no indication the ceo knew about his activities. The bank said he issued the mandate to have the former hr chief followed. Our europeano finance reporter nicholas comfort who joins us from frankfurt. Give us the context, some of the detail you have been delving into in the release from Credit Suisse. They would hope in the wake of the khan scandal, they would put this to bed but here we are on another scandal with the same fall guy who fell before. The key takeaway is at the scandal, theyan went out of their way to point this as a isolated incident. , this isthe chairman not part of our toolbox, this is not what we do. Then, a similar instance so soon afterwards is obviously not what they want to see. What they are seeing today is the people responsible for this actively lied when asked whether there was another related spying scandal. Maybe it would have been better at the time if they had gone and done it a more thorough investigation, saying the guys responsible made sure there was no trace on the system of this separate surveillance operation. Still, you have to ask the question, did they do enough in the first time around . Enoughey thorough looking into the allegations and what it meant for the wider Corporate Culture . Anna this seems to be a story that isnt going anywhere, so we will keep across it and bank will have more to say on this. Lets talk about the future of the Banking Industry toward the end of the 2019 and head toward 2020. Unicredits plan to eliminate it thousand jobs pushes the total cuts announced by banks this year to more than 75,000. Deutsche banks cutting 18,000 jobs and nearly five 5500 jobs to go at santander. Also hsbc, and barclays. For than 80 of those issues will go in europe where negative tw torates and aslahs slash costs. What is the background . I would say negative Interest Rates are the key driver here. The economy is slowing and International Trade disputes, but the medicine for the ecb has been to open up monetary taps and try to juice up the economy. That is good for companies, but bad for people lending. They are making less money from loans, so if you look at your loan book and realize we are not going to be as profitable as we had hoped to be so soon, you will have to counteract that and they easiest way for banks is to look at the cost they have and they have i. T. And people, and they really need the i. T. , so they have to look at which people they can let go. The fallout is, how do you cut back in a way that doesnt de motivates the rest of your staff and cost you revenues in one part because you no longer offer a particular product. That is something european banks had trouble with the past three or four years. Wille how they manage that be something to look at next year. Anna what about winners and losers . Clear the knows who lost their jobs feeling like the losers in this story, but were there winners and the Banking Sector this year in the Banking Sector this year . Look at the reaction from the overall plans. Deutsche bank in july presented the plan and showed their targets and the stock market doesnt buy it. The stock market falls todays after the announcement two days after the announcement. Contrast that with unicredit, with targets the promised a higher payout in dividends, share repurchases, and people to buy it, even though on a down day they were up. I say between banks, i would Say Deutsche Bank has had trouble convincing people they can pull off their plans whereas other banks have more goodwill from investors at this stage. Anna what does 2020 hold for the sector in europe . I was speaking with gareth mccartney, who was talking about the need for consolidation. Domesticsettle for consolidation if crossborder stuff seemed to challenging. Bank mergers are pretty tough, even in individual markets. Look at the example of Deutsche Bank and commerzbank this year. That is an incountry merger. I still needers, convincing to see that will happen anytime soon. Asking people, they will blame different things. The bank blames the regulation, regulators blamed the bankers. Re seems to be resistance carrying the burden, people are still nervous about the idea of big banks getting bigger. Anna nicholas, thank you for joining us. European finance reporter nicholas comfort with latest from frankfurt. Keeping an eye on the sector, news out of Credit Suisse. Program, stocks might fly higher into yearend but one many manager warns there may be correction. We discussed the morning call next. This is bloomberg. Anna welcome back to the European Market open this monday morning on bloomberg tv. 10 minutes until the start of the session and it looks weaker per European Equity markets at this stage of the trading day. It is a week that will be dominated by lower volumes and closed markets in some developed markets. U. S. Futures, fairly flat. Markets may be getting ahead of themselves according to vanguard, who had a warning heading into the new year. More with this mornings call is bloombergs dani burger. Dani stocks have a 5050 shot of entering a correction next year according to vanguards chief economist joseph davis. Simply put, the market has gone too far in optimism on the reflation trade. 10 ory, the odds fall more, around 30 so 50 , certainly heightened concern. He says the volatility is such a low base, it is likely to put up. Investors should be conservative at the end of the year. He says next year is the time to put the dry powder to use when there are sufficient dips to buy. Anna dani burger with that caution from vanguard. Lets get a first word news update with leighanne gerrans. European equity markets, a touch weaker is what we are expecting to see in eight minutes when European Equity markets open for the week. Lets get to leighanne gerrans. Leighanne china is cutting tariffs for a range of goods including frozen pork, pharmaceuticals, and hightech components. And is notanuary 1 related to ongoing discussions with the u. S. , but is part of beijings effort to support the claim it is opening up its economy. And saudi arabia could reach an agreement to restore oil output in the neutral zone. Fields have been shuttered for years because of tensions. They could produce as much as 500,000 barrels a day. In the u. S. , new documents show President Trump asked ukraine about ukraine 80 before his call with the countrys president. That is a conversation that went on to trigger the impeachment investigation, the heavily redacted emails from the center for public integrity. They show the administration ordered a hold on aid about an hour after the phone call. Bush fires are burning out of control in new south wales. They are devastating property and farmland and at least nine people have been killed and hundreds of buildings barged down. The fires are being stoked by record temperatures in the region. Carlyle plans to buy hardwood Wealth Management in a 100 Million Pound deal according to sky news. It is a takeover will be announced today, adding the price wont include a significant premium to harwoods close on friday friday. No comment from either side yet. 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. Anna thank you, leighanne gerrans, here in london with your first word update. Lets look at stocks on the move this morning. The u. K. Grocery, busy time of year for this type of business. Very much in focus with people stocking up for the holiday festivities, but not the news flow we want to see. Tesco, suspending a chinese card maker, its contract on forced labor allegations. To suspend its supply of christmas cards from this particular factory, says it is investigating a news report. All cards have been withdrawn for sale according to a followingfrom tesco, allegations in the sunday times newspaper. Not market moving in itself, but something a backstory tesco will not want to be the focus of things. The drug sector, keep an eye on astrazeneca for better news. Regulators giving policy news flow around breast cancer. Fda givingline, the something of a setback to the ambitions in the hiv space. A couple of things to be watching for. Youve heard from the u. K. Government over the weekend they are okaying the acquisition of a business by private equity and Credit Suisse remains a big story. The results of an internal investigation by this giant. They have concluded the ceo had no knowledge of the spine that took place against the exhr chief. This, coming close after the khan scandal and the same coo being blamed. Will be around. European equity markets expected to open to the downside at the start of mondays trading session. The open is next. This is bloomberg. Anna a minute to go until the start of the cash equity trading, here are your headlines. Credit suisse blames a second candle on the coo a scandal on the coo. Yet another case is emerging. China cuts more tariffs, from smartphones to frozen pork. Products. Slash on global stocks have are near highs after wall street capss its best week this quarter. Whether positivity followthrough into europe . 25 seconds to go until the start of the trading day. Its going to be a week dominated by volumes. Doesnt mean well see voluntary volatility we will remember. Lets ignore that. We were expecting to see weakness coming through at the start of the trading day this morning. Suggesting we would be weaker, but not by much, flat expectations. European markets opening up and we see movement in fx markets on waits for some of these markets to populate, the pound stronger, over 130 once again. A terrible week once again yesterday on the back of a stronger performance the week before. And the election, we know that story well. The dollar weaker. The ftse 100 moving to the downside. The euro stoxx 50 flat. The dutch market down to 10 7 . We are seeing weakness coming through on these European Equity markets. A little bit of mood music around trade notes, firm news around the trade tensions. The chinese rolling back tariffs on port is not related exactly to the trade deal, but helps at the margin. Lets look at a sector perspective as we had towards the end of the year, nearly the end of 2019, but not quite. We ask ourselves where we go in 2020. Incredible returns, ending the decade with the best returns in a decade for a number of assets. Where are we on the sector picture . A slight downward bias, it would seem. Weakness. In area of if we do see positivity, its coming