Nejra we end the week with a risk on tone. A mixed picture across asian equity. Green on the scene for the msci asiapacific index. Back to business for the s p 500. We hit a record yesterday. We will see more risk on today. The 10 year yield edging up a basis point. The yen is actually heading for its worst week since july 2018. Another twoweek low right now. For the First Time Since 28 team. Brent heading for a weekly loss as well despite the spike on the geopolitical tensions. Belowing the same, back 60 a barrel. Justin trudeau saying the ukrainian jet was likely shot down by a ukrainian missile. He says it may or may not have been an accident. The head of irans aviation the theoryalls plausible. Trudeau is blessing for an indepth investigation of the crash. We have intelligence from multiple sources including our allies and own intelligence. The evidence indicates that the plane was shot down by an iranian surfacetoair missile. This may well have been unintentional. Nejra european Foreign Ministers holding an emergency meeting today in brussels to discuss the situation of unrest in the middle east following a week of confrontation. Our reporter maria tadeo is in brussels for us. Is calling for immediate deescalation. Look at actually do . Maria that is the number one priority for the europeans, to deescalate tensions in the region, to make sure everyone involved takes a step back and prevent military escalation. That is the number one priority for the europeans. This has been a delicate situation for them. They were caught off guard by the actions of the u. S. They are not naive about this. Iran has crossed a number of red lines. They have been trying to ignite a reaction for months. Look at what the European Union can do. Theres a nuclear deal. They believe they can salvage this. They appear to still be convinced that the best way to give keep iran and check is to keep them in the deal. It is difficult to see how they go about this. And the u. S. Will tell you that the deal is 100 dead. We have been thrown a curve ball. Reports are suggesting that the plane was shot down, it was a ukrainian plane. Ukraine is not part of the European Union. At this point, the europeans will want to see what exactly happened here before they take any action. Nejra maria tadeo in brussels. Joining us for the hour is colin pickering. We are seeing more risk on again in the market today. Does the evolution of what has happened show a resilience to markets to geoPolitical Risk . You could say resilience. It happens so frequently that we have learned to live with troubles in the middle east. What matters for markets is whether or not tensions could escalate to such an extent that it disrupts Global Energy and oil supplies. The market is not expecting that yet. If that were to happen, you would start to see economic effects. Markets would reflect that. At what point would you expect economic effects . Thats a good question. If we suddenly got a 30 spike in the price of oil, i would not focus on that too much. Global oil supplies would be disrupted so drastically. The Global Disruption and oil, the spike in oil price, that would have an economic effect. Markets would start to reflect that. That thell tells you market is focusing more on the supplyside at the moment. Global oil supplies have been disrupted. It is a supply problem that we should worry about. Dont anticipate that the happen. The u. S. Is now the biggest producer when it comes to global oil. As long as you can contain the the oilic tensions, price will go up. You will get producers in north america coming online. That will stabilize global oil supply. We should be fine. Nejra what has been interesting about the escalation and deescalation is how it has rippled across assets. Reached records. The take away could be that some Companies Fearing and escalation intentions and a more prolonged risk off, a rushing to take advantage of the low rates right now. Is that something you would read from that debt issuance at the start of the year . Kallum it is hard to say. In six months, we can look back. What i would be concerned about now is, after a good year and a half of gradually declining Global Industrial production wars,um and trade, trade you have a factor that if it gets really bad could prolong the Global Industrial slowdown. The domestic part is holding up well. Reallyar, consumers struggling. That gap cant last for long. If you get a continued slowdown in industrial production, you will see problems with consumers. We might worry about underlying economies. Nejra how extreme is the gap between where risk assets are and the underlying economy . If the worstcase scenario played out, how much of a hit to sentiment . Kallum after a good year of rising equity prices, there is always a risk that you get a corruption. That causes the trigger. Much of the rebound we saw last year is a rebound from the big correction in late 2018. If you go from peter 2018 to now, you will see Global Equities up 7 . Global nominal gdp is up 6 . We have a modest rise in Global Equity over a twoyear time with a big swing in between. I would take a much further look at this, zoom out a little bit. Nejra we will zoom out a lot during this hour. Lets get to the first word news with juan half in hong kong. Thanks. A brexit bill has cleared the u. K. House of commons. The puts an end to the parliamentary gridlock that cost theresa may her job. The bill now passes to the house of lords. Johnson wants the measures to become law before the end of the month. On u. K. Can leave the eu january 31. Federal reserve Officials Say policy is appropriate amid solid u. S. Growth. Risk inflation will continue to fall short of the 2 target. Richard clarida told the council on Foreign Relations that policy is in a good place. The fed left rates on hold at its final meeting of 2019 and signal policy is on hospice year. Notices seeking a red for carlos ghosn. Thats according to nhk. Interpol has issued a red notice for carlos ghosn. Is the latest move to put pressure on the former Auto Executives after his surprise escape. Blackrock is adding its weight to a campaign to get the worlds biggest polluters to change their ways. Members of Climate Action 100 plus have more than 41 trillion of assets under management. Corporateis pushing giants to lower their carbon emissions. 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. Coming up, economists expect 160,000 u. S. Jobs were added in december. Jonathan sparrow space with larry kudlow. This is bloomberg. Nejra this is bloomberg daybreak europe. Attention turning to u. S. Payroll report in a few hours. Juliette saly has the chart that matters. Juliette absolutely. It is nonfarm payroll day. Jobspect is a 160,000 created in december. We had 266,000 jobs created in the month of november. You have unemployment at a 50 year low of 3. 5 . Bloomberg economics is more positive. They are tipping 205,000 jobs were created. It is likely that as we see these easing trade tensions and stabilizations in the global economy, employers will be reluctant to let good workers go. We should be expecting to see 111 consecutive months of jobs growth in the united states. Nejra Juliette Saly in singapore. Thank you so much. Todays u. S. Payroll number will provide a clearer perspective on underlyingning trend. Bloomberg economics projects and above consensus gain of 205,000 and says its 2020 vision for the Unemployment Rate is hazy. Isnt too hazy on the possibility of using negative rates. Says that awn dove low probability of that happening and that there are more exotic it things the fed could consider. He did not vote on Monetary Policy this year. We hope we heard from Richard Clarida yesterday. The fed policy is in a good place. Our guest is still with us. Lots of things to get through. Let us start with jobs. Juliet was talking about how we have to have a hiring trend that is strong. A 2. 1 4 million payroll gain. It is more than one economist was expecting. It is the slowest gain since 2011. Should we be focusing on that, the slowdown in the numbers . Kallum that is a good question. There is not a batch of data that tells us more where we might be in the cycle in the jobs market. Go for any economy. In the u. S. , even though unemployment is low, wage growth is at 3. 5 percent and lower. That is pretty modest. Why is that . The Participation Rate has been writing more than we expected. That has allowed the integration of workers that are not participating in the labor market, entering the labor market has allowed the implement gains to continue. That is a difficult process. Wages have to suck workers in. Workers have to find jobs. It is likely that implement gains will slow down. The signals are that the u. S. Has not yet finished. We have another three years of jobs growth ahead. The signals inn the labor market that we are not at full employment. Nejra we are not yet at full employment. How much does it matter where the employment is being distributed . You talked about wages. In 2019, wages accelerated for the average american worker. Theres a discrepancy in the change in production of nonsupervisory workers versus private workers. Wages have been accelerating more steeply for those who work in production in nonsupervisory nonsupervisory. Some workers in different parts of the economy have more of a propensity to spend. Kallum thats right. The distribution of wage gains matters a lot. If we think about egg economic aggregates, gross real consumption in the u. S. Economy, what matters is employment growth multiplied by the wage gains. Employment growth, we should get in aggregate robust construction growth. Considerntinue the distribution of wage gains. If it is high earners were getting steeper gains in wages, then thats a problem. The less you are in, the higher your pretense of the to consume is. Propensity to consume is. Translate a 3. 5 inn in wages to a 3. 5 raise consumption. The savings rate would go up. Nejra Mohamed Elerian has written a commentary on what you said. Conveying the stock market will be derailed by a sudden change in Monetary Policy or a misbehaving bond market. Monetary policy should continue to support sustained growth as long as incoming information about the economy remains consistent with the outlook. Fed to be oning a hold through 2020 . Kallum i expected to be on hold. The bar to hike rates is much higher than the bar to lower rates. It looks as if u. S. Monetary policy is accommodative. Has the symptoms of accommodating Monetary Policy. Employment expectations are nominal. If we got a protracted slowdown into 2020, expect the fed to step in. If markets start to look for mobile again, vulnerable again, if we see a selloff in equities and a rush toward safe assets, the bank of england may step in and say, we will act as a financial backstop. Lets not let a Financial Market panic worsen the economic problems. The fed is ready to lift demand if need be. The u. S. Is set for an ok year. Nejra i wonder what that means for the dollar. Look at the dollar index. It is facing a convergence of technical resistance levels. I know you love the technicals. ,he 200 Day Moving Average pushing towards a downtrend. Are you a dollar bull or bear for 2020 . Kallum a dollar bear and a global bull. I would completely dissociate fed policy, u. S. Economic growth from the fed. U. S. Assets are still perceived as the most safe in the world. If the Global Market is risk off, we buy safe dollar assets. We go elsewhere. You can find 2017, u. S. Economy strong. Fed hiking. Weak dollar. 2018, fed hiking. U. S. Economy even stronger. The dollar is appreciating. Why . We turned risk off. Global sentiment toward risk drive stollar trends. Nejra our guest is staying with us. Lets get the Bloomberg Business flash. Designed by clowns and supervised by monkeys. Thats how one boeing employee described the max 737. It signals growing unease that the jet that has been grounded since march. Grubhub isnt for sale. The Food Delivery Company is looking but thats pushing back against media reports. It says it is confident that its growth strategy. Grubhub stock is down more than 30 from year ago. Manager with a competitive salary, want to. 100,000. The job isnt that a family fancy restaurant. It is at taco bell. The chain is trialing the attractive pay package, hoping it will attract toplevel staff. That is your Bloomberg Business flash. Coming up, a critical eu foreign minister meeting in brussels. The u. S. Dropped report for december. This is bloomberg. Nejra this is bloomberg daybreak europe. Lets take a look at the events i had today. The aircraft manufacturer is largely guess likely to release deliveries and orders for 2019. A meeting in brussels to discuss the fallout of the iran nuclear deal. The u. S. Jobs report will be released, projected to show nonfarm payrolls rose 160,000 in december. Evidence that the labor market remains strong. Lets turn to brexit. Boris johnsons legislation has cleared its final hurdle in the house of commons. Members of parliament voted 330231 in favor of the Withdrawal Agreement beal. Lawmakers, ittold is my hope that they will give due regard to the clear majorities we have seen during the Committee Stage and establish their endorsement of the bill in a similar fashion. Our guest is still with us. Your outlook for the pound as we start off 2020, we now move to negotiating the trade to with the eu. Kallum our outlook for the pound is a modest appreciation from here, driven by betterthanexpected Economic Performance. Nejra ok. Kallum i would expect this year to see a material improvement in confidence followed by stronger consumption. You will get fiscal stimulus and the bank of england will shift to a more hawkish tone. This should support the pound. Say the bank of england might shift to hawkish. We heard from mark carney yesterday seeing ample space for the bank of england debating fresh stimulus. He said policymakers are discussing the merits of in your to boost. What do you make of the comments . Kallum the u. K. Economy has lost a lot of momentum since the brexit vote in 2016. It has trended downwards for a good part of last year. Growth was stagnant. Into this year, do things get worse or better . If the u. K. Looks likely to have a genuine recession, it makes sense for the bank of england to step in. This is basically an insurance policy for the bank of england. We will stay on hold. Will happen is, growth will improve. Inflation expectations will remain elevated. The bank of england will look to its next rate hike. The difference between 2019 and 2020 for the pay is simple. We face less uncertainty. It is easy to do the actuary stuff instead of facing her uncertainty. Fiscal policy will be positive. The global backdrop improved. More political certainty, including the lower risk of a leftwinger. Those are all positive against the risk of a hard brexit. The net balance of factors should be good for economic momentum. Nejra Bloomberg Economics takes a different view. They say that this comment is more finely balanced than the recent vote split suggest. They say, they think the committee will hold off cutting rates. It is clear the tolerance for downside surprises is low. When you agree with that . Monetary policy should be forwardlooking. Looking forward, it looks as if we are at the bottom of this week. Weak period of economic momentum. If we dont get an improvement in the next couple of months, the bank of england may need to react to that. Nejra will fiscal stimulus help the outlook . Globally, it is a discussion for the next three years. Kallum you could get more than a 0. 5 addition to headline growth this year from fiscal policy. That is pretty big. Consumer spending is not quite as fast as wage growth. There is potential there. You would expect a rebound in business investment. Overall, the economy is set for a improvement this year. Taiwan votersup, face a choice between a prodemocracy party and a prochina party. We are live in taipei next. This is bloomberg. Nejra good morning from bloombergs european headquarters. This is bloomberg daybreak europe. These are todays top stories. Canadas Justin Trudeau says there is evidence that a blowing plane was shot down by an iranian missile. The view is shared by boris johnson. Number, the payrolls number will give a clearer view on the with economy after a strike at gm skewed results. Larry kudlow joins us after the event. Taipei, Economic Performance could act as a tiebreaker for undecided voters choosing a candidate. We are on the ground live this hour. Nejra the fear of geoPolitical Risk is fading in these markets to end the week. The s p 500 hit a record yesterday. Asian equities in the green. The yen at a twoweek low. Gold back to where it was before the killing of cosan solomonic. We get the action from all of our world reporters around the world. Great to see you. Juliette, kick things off for us. Juliette a pretty good week for asian equity markets despite all of those geopolitical tensions. The msci asiapacific index on track for a six weekly gain. This has been a big call for a number of analysts for 2020. We are only one week in. Already, asiapacific tech stocks hit a record high today. Management,asset seeking tech is a go to sector this year. Citing benefits from the 5g rollout and smartphone demand. Manager saysstment that hardware tech is important, apparent in asia. Interesting to see. First week of 2020, tech stocks at a record here in asia. Nejra thank you so much. Companies trying to take advantage of a low