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tv   Bloomberg Daybreak Asia  Bloomberg  December 12, 2019 7:00pm-9:00pm EST

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>> good morning. good afternoon. good evening. i am anna edwards in london, where it is midnight, as we continue our special coverage of this crucial u.k. election. tories set for their biggest win since margaret thatcher if exit polls are to be believed. this gives the conservative party a big lead. more: there seems to be clarity on brexit and also on trade. i am shery ahn, at bloomberg
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world headquarters in new york. the other big news we are hearing from sources telling bloomberg that president trump has signed off on that trade deal, phase one with china, and also avoiding that $160 billion of chinese goods being given more tariffs. the plan was for this sunday, the deal could include agricultural goods, purchases from china, not to mention perhaps those existing tariffs also being lifted. that's get the market reaction right away because japan and south korea are coming online. david ingles is in hong kong. what are you seeing? david: if you took that and went long in the cash market on sterling or any of these as well, certainly, 13 514 what's your session high on cable. one thing to note on this as 2% wouldthing beyond make this the biggest drop since 2009 so these are quite
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substantial moves you are seeing. let's flip the boards and have a look at the open across the region right now. overall, asia is back to the highest level since august of 2018. i am guessing with the pop at the open, we are higher as well. it is now within 2% of the record in australia. these levels. that is a new record high for u.s. futures flip the boards very quickly and treasury markets are up and running in japan. a massive move up in australia. 15 basis points. 2, 5, 10 and steeper on your two year and 10 year curbs. purposes, itts and is a very brisk on session. i will give you an update on bund futures. anna: david, thank you very much. risk-on move coming at the start of trading for many of these asian markets. that's get the latest on the u.k. election.
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sebastian salek has a rundown of the members. very manyt had results. just a handful. we had a crucial exit poll. sebastian: some stunning members majority, a big tory bigger than anything we had expected. position whenting it comes to brexit. let's look at the results we have had so far. we have one game. conservatives getting taken from ther and what this shows is ripping up of the electoral map. for so many years, labor has been able to rely on the midlands and the north, these ex-mining towns to deliver results for them. that seems to be no longer the case. there are a lot of questions labor will be asking. this huge majority, if this exit poll is right, is a brilliant opportunity. we have not seen that for the conservatives. margaret thatcher way back in 1987. since 2010, there have been
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coalitions. there have been small majorities. boris johnson is free, if this result comes through, i should stress, to get brexit done, as he puts it. what sort of brexit do we get? what version of boris johnson do we get? he has been a man of changing opinions, and now we get to see which version of the prime minister comes forth. shery: sebastian salek in london was at the latest on those u.k. elections and exit polls. we are getting the japanese nikkei opening more than 1.6%. we are seeing the highest level since october of 2018. the kospi also rallying more than 1% at the open as we see these risk-on moves across markets. it's not just more certainty on the u.k. elections and brexit, but to our top story, president trump saying to have signed off the so phase one deal according to sources telling bloomberg
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perhaps that was avoiding the threat of new tariffs on sunday. sarah mcgregor is following the developments. what does this mean not only for the sunday tariffs i just mentioned but for the existing tariffs as well? sarah: absolutely. obviously, the timing of this trade deal hours sources are telling us trump has signed off on is not coincidental. we have these tariffs coming up on sunday on the remaining chinese imports into the u.s., 100 $60 billion worth of goods set to be hit at a 15% rate. and this deal that trump has apparently signed off on is going to avert those tariffs, and also, we are hearing it may scale back the tariffs rate on some of the existing tariffs put in place over the course of this trade war so a significant win for china coming out of these talks. this is what the trump administration does announce over the next few days. shery: sarah mcgregor, thank
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you, our senior trade editor. joining us now is executive vice president myron out of washington, d.c.. great to have you back. what does this mean if we get the trade deal and how important is it that the existing tariffs are also rolled back and not just avoiding the new tariffs on sunday? >> i think it's a big deal. thank you for having me back on. we need a shot in the arm. he had a big week on the trade front, with usmca moving forward. hopefully, we will get a vote in the house next week. with the china uncertainty hanging over the economy, hanging over the global economy, the fact that we are looking likely because we will have a deal eminently, i think the deal can be signed soon. they are talking about the final touches as we speak. i am confident the deal will be a movement in the right direction when it comes to removing some of the tariffs. it is much more than just suspending the tariffs that
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would have gone into effect the summer 15th. there will be a rollback on tariffs that are already in place. that is good news for the american business community, performers, consumers, but there is still more work ahead. we will get progress on market assess. get something in the intellectual-property area. we will see how robust the chapter is. my sources and the government i talked to over the last two days were telling me there is more in it than we think, but we still need to see the details, and there is still more work ahead. we are not going to get to the structural reform issues we have been talking about in the area of subsidies and data, but we are going to make headway and we are going to have a shot in the arm for the u.s. economy. it is good news. shery: exactly. that is the whole point. will this trade deal be to a broader deal that would go into those subsidies and other structural issues? how are your members seeing the prospects? for thee need to push
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bigger deal. this is a step in the right direction. this is going to bring more certainty, more stability in the relationship. we need to roll back some of the tariffs for sure. they have been hurting our economy. progressed to see more on the structural issues. i don't expect that in the phase i negotiation, but you don't get to phase ii phase two and phase three unless you get to phase one, so it is important. we should not wait. i have been asked are we going to wait until after the election? that would be a huge mistake. we build on the momentum we get from this deal hopefully in the next few days and then we go out and try to work on phase two, where we have to get to some of the core issues that touch on technology concerns and go through the agenda that so much is in our interest to addressed in that relationship. anna: we see markets move quite a lot on optimism for what is contained in this phase i deal. what would constitute a disappointment to you in terms of rollbacks? 15% on 110 billion.
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what would be a disappointment if we are trying to work out where the market should look to hear on rollbacks? myron: there are no winners when you have tariffs on goods both ways. no one winds. china does not win. the united states does not win. it is hurting china's economy more. there -- their economy is weaker. arefacturers and others holding on cash and waiting for a resolution on the trade front, so the fact that we are moving on usmca is good. i am hopeful we will move it to the senate. on the china deal, here is what i would say. it wass no question that much more than about december 15. we had to get something resolved this week because no one wants to see $160 billion more of tariffs but it has to be more than that.
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china was not going to accept a deal with the u.s. unless they got something beyond that, and frankly, we wanted to see a rollback on the tariffs. i believe it will be more than the tariffs that were put on place on september 1. i had discussions with ambassador lighthizer and vice hoaier we'll have -- leah -- liu he. china is expecting a rollback u.s.d december 15, and the has been looking for more concrete commitments on the ag purchases in the tune of $40 million to $50 billion a year. i think we will see both. i got something out of the deal. it is a good step in the right direction. as i said earlier, more work is needed. shery: if we took 20 months to get a phase i deal, what kind should we have in mind for phase two and phase three? myron: short, short, and shorter. we need to build on this
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momentum and work at these issues. they will not get easier if we wait on it. work on these other issues that have been on the table for two plus years. shery: u.s. chamber of commerce executive vice president myron brilliant. thank you for joining us on his insight. let's go back to david for another check of the markets. asia trading at the highest level in 1.5 years. david: more or less. compared to where we are a couple of minutes ago at the open, we are coming up a little bit. a little bit. i have to emphasize that and give a good example of that. back down. it again, at this point, over in japan, virtually everything is up with the nikkei 225. currency markets, that is where you are seeing substantial moves. long story short, black on these tiles, statistically, you do not
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see these moves every day. case in point, cable is up the most virtually in three years. treasury markets also reflecting and moving back into risk. 194, 195 is your high. back to you guys. shery: david, thank you. still ahead, we will have more on the market impact of the interim trade deal later this hour. but up next, another check of how cable is trading with analysis from active trades fx strategist. in london. this is bloomberg. ♪
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anna: welcome back to this special edition of the program. u.k. decides brexit and beyond, bringing you the latest from here and london. i am anna edwards. bringing you the latest on the trade deal. the president in the united
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states. in london, the focus on the election. forecasting the majority of the conservative party has the whole. we had a few results being confirmed, trickling in from all 650 constituencies across the u.k.. themll not bring you all. let's get to sebastian salek. he said we should say we started out with the conservative taking a seat that labor held for more than 50 years. such is the size and the scale. >> quite the symbolic result. it predicts that big, conservative majority. we started to the northeast of england. this was part of the conservative strategy. very aggressive, very offensive, going for these strongholds and trying to turn them blue. they succeeded in this instance.
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we have seen some instances towards the conservatives. newcastle central, east, sondland. it matches what we are seeing with the exit poll and creates worrying prospects for labor throughout the night. as we start to fill out this map , we will be looking to see potentially more conservative gains. oror seems to be holding up even making gains in london so there has been a big cultural split within labor that we have seen even since the days of tony blair, playing out and out and out, places like kensington that the party took in 2017 in the last election that it had not held for a long time. we are likely to see more gains in london and losses in the for laborl heartlands in what seems to be as things stand a good night for the conservatives, which opens up options for boris johnson to go through and enact his brexit deal.
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>> i will take it from your. sebastian salek in london and of course, those exit polls having a big impact on the markets, especially with sterling on the surge. let's turn back to david for another check of the markets. david. it's also worth noting that when we did get exit polls, that is when we saw the initial surge. have a look at where we are right now. since that time, we have come up a little bit as well. the bigger question becomes, when it comes to the brexit story, and also the trade story. we are looking at things like gold, treasuries right now, 195. can we now say or assume that the worst case scenario is for both those stories now behind us? we are looking at bund futures, which should be up at any point now. sterling, there we go p or 134, 135. anna. anna: david ingles on your markets. let's get the views of active who isfx strategist --
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joining us on set. thank you fx strategist across europe and the world, watching the trade news and watching the u.k. elections. let's start with the u.k. election. the pound against the dollar, up by 2.25%. going into this election, there was an assumption it would be a conservative party majority. that is what the polls had been showing quite consistently, yet there was still more in the tank, wasn't there, for sterling? when this exit poll came out? do we hang onto these gains? pleasure to it is a be here. it is true that the base case scenario was pretty much what we ae witnessing now, so conservative win with a comfortable majority, however, we know that in the past -- especially in the recent past -- polls have failed spectacularly. they did, for example, with brexit. they did in the last u.k. election, and they did with
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donald trump well, so i suppose that many traders out there wanted to wait for the exit polls to make a more decisive move. anna: it is based on asking people what did you actually vote for rather than a sort of look into the future. where do we go next on sterling? we have boris johnson with a big majority. he is going to achieve that here. if we have that, we get brexit done perhaps by the end of january, as you suggested, but then we are into a complex negotiation about the future trading relationship. is that still possible at the end of december 2020? what does the market do with that kind of information? where does the pound go? >> -- ricardo: it is true it caps the upside for the pound. the strong majority for boris
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johnson will somehow free him from some of the pressure he would otherwise get from the hardliners within his own party. stancere, i believe his will be more constructive, more conciliatory, and more positive. therefore, we have a better chance of negotiations with the e.u. going in a smooth way and also, he will probably be more flexible in terms of extending the negotiation period, which he said in the past that he would not. of course, we are just speculating at this point. these are just exit polls. exit polls also have failed in the past, so if these exit polls are confirmed by the final results, there will be more upside risk for the pound. we can see it going up to 35, 36, maybe even more. however, these gains for the pound will be cut by knowing that, at some point in the future, we can still have a hard brexit. anna: exit polls have been wrong
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in the past. they were very right last time around, two years ago. very wrong in the early 1990's. the methodology was very different. that is something we need to bear in mind when looking at this polling data. shery: it is not just the polling data. you have to look at perhaps the u.k. economy. ifardo, what happens we see economic momentum falling? the u.k.'ss economic surprise index remains in the negative while underperforming both data from the u.s. and europe. if you do see perhaps the boe forced to move, how would this keep a lid on sterling? ricardo: well, it is true that we are living in interesting times. we had over 3.5 years of uncertainty about the outcome of brexit. kept investment and spending on holla bend it has not been good for the u.k.
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economy. given the scenario just described, you can say that having 1.8% gdp growth year on year is actually not such a bad result. there is a degree of vitality and the u.k. economy. and also, we can expect what some would call it brexit dividend. so with a smooth resolution for this brexit saga that has been dragging on and on and on and holding the economic growth in the u.k. back, that will give a new push to growth, so of course, we have to look into the global context as well. and what happens within the currently ongoing between china and the u.s. will impact.e a more general that will also condition the sentiment of economic operators out there. however, i am moderately optimistic, and i think the main issue for u.k.-related access is still -- assets is still brexit
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and the way it will be dealt with. shery: how much has dollar strength affected your calculations? the economy is the best house in a bad neighborhood. ricardo: there is an element of truth in that statement. dollar strength will play a big, big role. it will be interesting to see what happens in the u.s.. growth. economy and its is being driven mainly by the consumption, by internal consumption. and that may be coming to an end. we may be facing the end of economic cycles in the u.s., and that will more than likely have a negative impact on the dollar, so we should expect in 2020 to see some dollar weakness. anna: in terms of the bank of
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england, where we go, we have the domestic story around brexit, and that will no doubt dominate. this is a very open economy, very exposed to global trends, and trade tensions have weighed on key trading partners such as the euro zone. if we see some of those trade tensions alleviated, that can also be a bit of a positive for the u.k. ricardo: most definitely. monetary policy of the bank of england will, to a large extent, be decided in the next year and the healtho come, by of the relationship between the in trade its ma partners. for thell also be scope relationsthe u.k.'s with other trade partners globally, notwithstanding the so-called restraints of being in the e.u. i think the policies of the bank of england will reflect the developments that we will have. it is too early to talk about that. i think that if the results of tonight's election are as we expect now, then we can see a
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new governor for the bank of england that will have a more pragmatic stance. maybe someone who will be better versed in the arts of fixing interest rates, and actually running monetary policy rather than what we would otherwise see if there was a hung parliament. for example, we would be more likely to see something more of a politician like we have in the ecb. anna: with a big majority, does that tempt the government into putting pressure on a central bank? we have not seen that very much since the bank of england was made independent back in 1997. we see that in the united states a lot with donald trump and jerome powell? if the new government -- if boris johnson's government appoints the new person at the bank of england, is it somebody they can put pressure on? ricardo: we would like to see that -- think that that will not happen. there is a global trend at the
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moment for governments to apply political pressure over central banks. we see it in turkey. we saw it recently in turkey. we saw donald trump constantly tweeting and making statements. not always very calm with jerome powell. i would not completely discard it. with a comfortable majority behind him, boris johnson will be a more conciliatory figure. i think he will probably hold back from doing that. shery: there seems to be pressure not only on central banks around the world but also on governments to do more. we have seen more stimulus measures coming out of japan as well. are we going to see something like that in the u.k. on the euro zone? -- or the euro zone? ricardo: we are already witnessing a scenario like the one you described in europe. i mean, there's talk about a
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need for fiscal policies to support the monetary policies and the policies of central banks. i think in the medium-term to long-term, that is the way to go. central banks are a bit short in resources at the moment. the scope is no longer what it used to be. interest rates are at levels that are historically low. we had a very prolonged period for the mainhases central banks. extension ine an terms of the policies apply to stimulate growth and to get the economy back on track. i believe very much that fiscal policies, for example, will be one of the past. anna: ricardo evangelista. we will hear more from him later on in the program. up next, clouds are lifting for
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the markets. the reaction to the interim trade deal and the u.k. election. all of that in conversation with julius baer. a big majority in the u.k. election paired big news on trade, lifting global risk assets. this is bloomberg. ♪ [ electrical buzzing ]
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[ dramatic music ] ahhhh! -ahhhh! elliott. you came back!
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>> this is so unique an outcome that there has been -- there has never been a prime minister who the party and increased its standing in parliament with the number of mp's. he is going to have his eye on the next election already. it tends to poll,
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get it wrong by may be 15 feet maximum. for this to be wrong, it has to be a new historical error. >> very few things are better for a currency that uncertainty. it is higher right now. allows him toty go either way. and the bigger the majority, if it is confirmed as the exit polls are suggesting, the more he will be able to determine his own position. guests earlier on bloomberg television on the u.k. elections. and pretty much, this is the picture a cluster markets this morning. boom, baby. right? that is the risk appetite. there is also the effect of the yen being set aside as well. you could make the argument that people were priced for either one of the big ones today, the other being trade.
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both happening at about the same time. this is asia across sectors. .7% to the upside. wee or take at this point, don't have other markets yet. split asthis will be a well. 90% of stocks on the way up as well. 160% compared to what we are used to seeing. there is going to be a busy day, all things equal. an update in terms of context. massive move up in cable. to put that into context, this is your daily percent change. you put together standard deviations for you here as well. contextualize the move. it is a three standard deviation move to the upside. here is the move down of course during the first referendum. speaking, this is something that does not happen every day. it is 99% of the time.
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shery:shery: david, thank you. joining us is marc matthews and head of h-share research. great to have you with us. are all the clouds finally lifting for markets? we are talking about clarity in the u.k. just now, another headline dropping that the mexican senate has passed their changes to the u.s.-canada trade deal. can we just say smooth sailing for 2020? we put our trades on autopilot now? >> i wish we had kept some of the good news for 2020, but i think what this is going to do is because a really powerful rally into the year end. what is going to be left over, i am not so sure. they say when it rains, it pours. i don't know what the expression is for the opposite of that, but clearly, that is what has happened because the u.k. election and brexit as well as the trade war, the conflict between the u.s. and china, they
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were the two biggest things hanging over markets and those clouds are now lifting. are there risks to the upside? it seems central banks until recently have been using. is there some risk on the others of the coin? mean, there's always downside to the market. so many things can happen. what i would say now is that i think we are in a very, very positive place, where britain is not a large economy in the grand scheme of things, but for whatever reason, and i am not british, as you may notice, but it has a larger impact or influence on the rest of the world, on the markets, then it's its size would make it deserve to have. it sends a positive pulse to the global markets. all of the markets would be up strongly on the back of this,
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most of them. on the top of that, you have be surprising 100 80 degree turn on the part of the united states, saying they are going to cut $300 billion worth of tariffs by 50%. you have the treasury yield going from 1.7 to 1.9. it's definitely a risk-on environment, you put those three things together. >> you did definitely miss risk-on. the morning from london. picking up from what sheree was saying, the fed needs a big change for some kind of material reevaluation of where the u.s. economy is. is a phase one deal enough for that? enough to see a change in interest rates coming back onto the agenda for 2020? it is probably early days for that conversation now. slightlyhink it is early days because this is a phased deal and of course, there's two sides to the deal. the part that china has agreed
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on, large agricultural purchases, i don't think that will move the needle on the u.s. economy opening up china's market to the u.s. financial companies. i don't think that will move the market on the u.s. economy that much either. if we see the same kind of payrolls we saw last friday, a few more months of those, i think you can start to talk about the fed having to raise rates towards the end of next year. but that is still more than 12 months away. so i don't think it will speak the market. -- spook the market. >> we don't know the details of what is in this phase i deal. we got confirmation that the government has accepted it. i asked this of a guest earlier. what would constitute disappointment for the markets in terms of rolling back some of the existing tariffs? one obvious disappointment is if it's a head fake. there was a tweet donald trump
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set out at the spur of the moment. i think something is happening, and the usmca, which democrats have agreed to, it has not actually been approved by congress yet. we are coming toward the end of the year so that needs to be done quickly. i think getting mnuchin and lighthizer back to capitol hill to work on that should be a priority, and therefore, basically, not having to haggle with china. they had to get the china thing done to push usmca through congress by the end of the year. it seems like all of this is happening paired you mentioned the mexican senate has approved what they needed to do. this does not always happen. for whatever reason, the stars are aligned. market friendly events seem to be coming out with great rapidity in the last few hours. results are getting through the evening from various
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seats in the u.k. election. that was a surprise swing in newcastle. it was not a huge surprise but it was a big event. it swung from they were too conservative, something of an indicator as to what we are seeing more across-the-board for the u.k. in this election. labor losing some of those northern seeds going to the conservatives, mirroring the brexit vote. those pictures coming to us from newcastle. that may get your thoughts on takesthe brexit narrative markets globally. it's interesting that you put emphasis on the brexit story when you look at these market reactions in asia. is that the significance this has getting clarity on brexit, lifting asian stocks? or is it all about trade? mark: i think it is both. asia would have been up strongly without the trade agreement. aboutr earlier point
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newcastle, had the conservatives just been running on what they had done by the economy over the last few years, they would not had fared so well. a lot of the people in the north england did not want to stay in the e.u. so even if they naturally would have been labor supporters, they were not in this instance. there are pockets of asia that kind of have a hybrid of asia and the u.k. i am thinking about hsbc and standard chartered. hsbc, a lot of business in the u.k., a lot of business in china . interest rates are rising. that one seems like a no-brainer to me, for example. that is the third-largest stock in the hang seng index. shery: tell us a little bit about what happens as we see the chinese economy recovering. we have seen some asean pmi's recovering as well. we have seen the industrial sector recover p of how big of a positive will that be for euro
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and the u.k.? sector recover. how big of a positive will that be for euro and the u.k.? mark: they are big exporters to the rest of the world. they have half of germany's gdp, for example, so a lot of the weakness in the european economies last year can be attributed to the slower growth in china, the worries over the trade war. naturally, i would therefore think that with this trade deal moving in the right direction and also with indicators that you mentioned showing the chinese economy starting to pick up. particularly the new orders ising and the inventory falling. that is positive for europe. yes, it is. anna:anna: thank you very much. thanks for joining us. marc matthews -- ricardo ,vangelista --mark matthews
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head of asia researcher that's get to jessica summers now for a first word headlines update. jessica: thanks. large manufacturers in japan have unexpectedly lost optimism for the first time in at least six years. saysoj's quarterly survey sentiment fell from plus five to zero. highlighting concern about weakness in the economy. confidence drained for four consecutive quarters and the drop to zero indicates there are now as many industrial pessimists as optimists. that china'sns stimulus measures might be working. sales of construction equipment jumped more than 20% last month. that has more than doubled in the pace of october. heavy truck sales are strong indicators of infrastructure investment. setting aside more than $100 million of special bonds for building projects.
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china is reported to be helping macau diversified beyond gambling and what i seen as a -- amid the unrest in hong kong paired reuters says -- hong kong. it coincides with the 20th anniversary of macau was returned to chinese rule. the exchange would focus on startups and companies from portuguese speaking countries to avoid direct competition with hong kong and shenzhen. aramco touched a valuation of $2 trillion briefly listed company, meeting the kingdom's desire to target. it had become a point of pride for riyadh and it comes after skeptical international investors of the company's true value is far lower. aramco is set to be paying just $64 million to banks to arrange the ipo, roughly .25% of the deal. indian inflation surged to its
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fastest level in more than three years. giving the r.b.i. more reason to keep rates on hold despite the slowing economy. cpi reached 5.54% in november. that is the highest since july 2016. meanwhile, the philippines central bank had this key rate unchanged for a second straight meeting. more easing is predicted in 2020 as risks mount, but inflation remains subdued. global news, 24 hours a day, on air and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. i am jessica summers. this is bloomberg. shery: coming up next, we continue our special u.k. election coverage, and the market reaction to the trade headlines. we will speak with standard charters eric robinson and another guest. this is bloomberg. ♪
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shery: as the results of the u.k. election start trickling in , we are seeing reaction. michel barnier saying the bloc will send a strong brexit message on friday. we are hearing from the e.u. commercial chief, ursula von der leyen. maria tadeo is in brussels. we expecting to hear from the european union when they come out with an official statement? maria: we have leaders meeting in brussels, keeping an eye on results coming out of the u.k. but if you look at the exit poll, that is the final result. they would say it is good news for europe. if you listen to what officials have said repeatedly, they wanted to hear the u.k. speak with one voice and that was always a reference to the u.k. government and the u.k. parliament.
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they operate on the basis that with a majority, boris johnson will put back the deal to the u.k. parliament, it will get approved, and the united kingdom will leave the european union in january 2020 with a deal. this is of course good news for the e.u. because they accepted the fact that brexit was going to happen. they gave up on the idea of a second referendum and were hoping that they could get this thing done with a deal. results to materialize, you would see the u.k. leave with a deal. the crucial thing is that future relationship is the trade relationship, and the e.u. is concerned about this. in a way, this is just the easy part. what really matters is the trade deal for the future relationship. one line we keep hearing is they don't want to be undercut by a u.k. that leaves the e.u., that no longer plays by the e.u. rules, and perhaps has become a competitor when it comes to
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trade going forward. of theas the president european council who just said that the block will send a strong brexit message on friday. what do we think a strong brexit message looks like? does it look like what you just outlined, something about not diverging, not undercutting? maria: exactly. european leaders back for day two tomorrow. reaction toetting the final result. one of the things i have her tonight is exactly just that. they want to have a fair and close relationship with the u.k.. they will tell you they want to remain dead allies and do this in good faith but you need to be aware that ultimately, the u.k. will not become a competitor. in particular, when you look at business, when you look at trade with the e.u. and they want to be mindful of that. they do have a very different
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take on the timeline going forward. they believe that if you want to get a comprehensive trade deal, and we are talking about a deal that will affect all of the industries in the e.u., you are perhaps going to need more time. the idea that perhaps we can get the trade deal done by the end of next year, officials here are skeptical about that. anna: thanks very much. maria tadeo with a crucial update on the timeline and the thinking in brussels. for a closer look at that, let's ,ring back ricardo evangelista still with us on set. let me talk to you about euro pound because we have seen of course the pound surge against the dollar also surging against the euro. move of 1.9% in today's session. where do you expect that want to settle? we have trade headwinds hurting the euro, but at the same time,
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a new leader at the ecb. what do we think the future holds for the euro pound? ricardo: i think it will get worse before it gets better. i think we will have a slow first quarter of 2020 for the euro, and after that, things will start to pick up, especially if the trade front helps. good news from the trade front. it will definitely be good news for europe. the main economies in europe are exporting economies so the resolution, some form of resolution, a postponement. anna: if the euro is gaining momentum on trade tensions being lifted to some extent in the pound is gaining momentum on a little bit of this, where does that lead the crop? >> we can see and expect some gains from the pound in relation to that. the pound is seriously underpriced because of all the political tension we have had surrounding the issue of brexit because the economy, to some
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extent, has been put on hold because of political tension and uncertainty. i think the pound is underpriced. and with a clearer path, in a smooth way, this will provide upside risk for the pound. at least for the next two quarters. shery: the euro-dollar showed almost no reaction to the ecb meeting. of course, there was no surprise there. what does that january review ?ean for the markets ricardo: we need to once again put things into perspective. christine lagarde just joined the ecb. she said she is different. she is not a dove. she is not a hawk. she is a politician. she proved that today. we can expect more of the same
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from the ecb in terms of monetary policy. there is not much more that the ecb can do at the moment. i think we will see a carrying on at least for the first half of 2020. shery: on christine lagarde, how successful would you say her first meeting has been given that really we have seen no outside market moves from that press conference? euro, notds, not in in anything that is significant? ricardo: that is the typical laceration of no news is good news. the fact that the markets did not react, it probably means liquidity -- in my opinion, she did well. she is in the ecb because she is a politician. she is someone that can bring people together and generate consensus, and this is what they basically need. anna: one of the things she said in the press conference yesterday -- i am forgetting
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what th day of the week is. she is very aware of the side effects of negative rates. does that mean we see any change to the negative rates policy or just get a very long review process? ricardo: it is all data-dependent. the ecb monetary policy moving forward will depend on the recovery of the euro zone economies. so growth in the euro zone economies has been anemic. inflation is very far away from the 2% target, and i think that, for now, we will see a continuation of the monetary policy. evangelista,o thank you so much for joining us. we are counting down to the market open in china. let's get back to david and see where we are standing. david. david: yes, well, there you go. 36 minutes until the open of the
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cash markets in hong kong and the chinese mainland. that is literally when your two biggest stories of the day, the u.k. elections of course, and the risk appetite that that is bringing to the table, and progress on trade and the fact that we might not see tariffs kick in this weekend. theill see what happens for cash markets. eric roberts and of course is the head of fx and rates. in the meantime, sterling still on an absolute tear. anna. anna: absolutely on a tear. david ingles on the markets. a recap of where we are, three hours since we got the exit polls, which suggested a big majority for boris johnson's conservative party or his brexit campbell, election gamble paying off. his brexit deal bringing the voters to the conservative fall. -- full. we have the -- fold. we have the exit polls.
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we are looking for results with an update on where we are. the results so far, here is sebastian salek. sebastian: 10 seats declared so far. two for the conservatives, eight reliable. -- for labor. ,hey are going for the redwall all of these seats that for a long time were hard-core labor lori lists -- loyalists. that does not seem to be the case anymore. we have had one gain so far for the conservatives. i am talking about here, up in the northeast. in newcastle and the surrounding areas. a lot of the others are staying read, staying labor, but the swings to the conservatives are notable. i should show you as well washington as well, which is one seat that did not go read so that is one exception to the trend we are seeing. what is interesting is the correlation we have seeing between the outcomes tonight and
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the seats that voted for brexit. brexit is the number one issue for our voters and this seems to be exactly what they are doing, going to the ballot box and thinking about this issue. boris johnson's core message seems to have resonated so far. shery: it seems as if the labour party has had a tough fight. we will be watching to see whether jeremy corbyn decides to stay or whether he decides to resign because he won't be speaking at some point this he?- wont't ricardo: people will say this is the final nail in the coffin for corbynism.n -- there will be a lot of soul-searching in the labor movement and infighting as well. we are seeing that for the party, trying to shift the blame
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but they really have to have an answer because this is a party that has not won an election now since 2005 so it needs fundamental changes if they are going to get anybody in there anytime soon. shery: coming up, we continue our special coverage of the results in the market reaction to the trade headlines. standard chartered derek robinson is with us next, and we will hear from citi private banks representatives. that is it for this hour of special u.k. election coverage that continues throughout the day. anna: up next, bloomberg markets china open. equity markets in the asian region jumping on trade news and brexit certainty. this is bloomberg. ♪
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welcome to "bloomberg markets" china open, i am tom mackenzie. david: and david ingles. we are counting down to the open in china. top stories today, global stocks hit a record as president trump signs and interim trade deal, the first new tariffs on -- to reverse new tariffs on chinese goods. tom: stunning exit polls, boris johnson on track for a big win. the conservatives look set for their biggest majority since margaret thatcher. threats -- we are
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joined by the central bank dionko this hour. ♪ two big market moving stories. that signing off on a deal over its fresh tariffs on china and the u.k. elections report that will decide the fate of brexit. london, and here in hong kong, bloomberg's senior editor jodi schneider. when you look across these markets, two words, risk on. up, central bank leading the charge higher, 2.2%. more importantly, china futures up and running.
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the developments over in the u.k. as well. perhaps on the back of an upsideent, 1.3% to the in terms of what we are seeing. as we have been talking about all morning, pounding -- pun intended -- to the upside. china lower compared to where we were yesterday. em, veryto flow into quickly, last board, take a look at where we are in terms of treasuries. u.s. 10 year yields, german bond yields, u.s. 10 year 1.91%. let's get more clarity on the trade deal. clarify, whatd to did president trump sign, and
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what did he not sign? thatople have told us president trump has signed off on a phase one deal that he has been saying is close since october. basically, what we are being diverts those december 15 tariffs on another $150 billion of chinese goods. china would be buying more agricultural goods from the u.s., making some commitments on intellectual property rights, and the u.s. would look at rolling back some of the previous tariffs. we have not yet heard from china on this. there is a 9:00 event where the chinese foreign minister be. not a trade event, but it would be an opportunity to talk about this deal. president trump tweeted that there would be a big deal announced. we don't expect a big deal.
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this was always supposed to be about the next round of tariffs and trying to get some of those commitments on more purchases from china of agricultural goods. tom: still waiting for more details. the foreign minister expected to be speaking in the next few minutes. senior international editor jodi schneider, thank you for that. to the u.k. elections, covering this from the get-go. it looks like the exit polls -- if the exit polls are correct, a major win for boris johnson. momenteally was a wow when we got that exit poll. the conservatives. the biggest majority since margaret thatcher. it really puts boris johnson in the driving seat to deal with brexit and get brexit done as he puts it. if this comes to pass, we are looking to see a deal with parliament in january, then we go through to those trade talks with the eu.
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two seats for the conservatives, eight for labor. we usually expect labor to hold up in the northern heartlands. these areso it's -- seats that have voted labor for decades and some are starting to shift. one has gone conservative and there is a swing in the others. we are seeing a correlation between people voting for tories and voting for brexit. that is the issue on people's mind as they went to the ballot boxes. david: solid stuff. good work out of london. you can also turn to bloomberg for more on this developing story. commentary from all the experts here. speaking of, let's bring in standard chartered head of credit research out of singapore. pleasure to have you. quite a substantial morning to have you on the program. features --g
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futures, sterling strength. where do we go from there? eric: sterling we think goes higher. we have been recommending long positions in sterling for a number of weeks now on the anticipation of a better election outcome. we are getting that now. our forecast is that sterling goes to 140. probabilitykind of to a treeow attach deal between the eu and the u.k. -- a trade deal between the eu and the u.k. by this time next year? eric: the way i would think about that is, all parties involved have a significant vested interest in putting pen to paper and coming to an agreement. what we have learned through the brexit saga the last couple years is that prolonged uncertainty as a significant negative impact on markets and economies.
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will be u.k. and eu looking to come to trade agreements as quickly as they can. for that reason, it is one of the reasons we like euro higher. we think euro will be a beneficiary of this reduced political risk. we like sterling as well as your low. -- as well as euro. tom: do you also like u.k. equities? eric: we don't cover equities within our franchise, but the comment we have made a number of times over the last few months is that with the level of sterling denominated assets in been extremely cheap, we anticipate a significant amount of foreign capital going back into the u.k. to try to accumulate those assets. you can probably put u.k. equities into that basket. tom: let's bring in the china u.s. deal. it seems like we have this goldilocks mix in terms of the
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u.k. election results still coming through, this deal between the u.s. and china, a more dovish fed. a bit of optimism around the eu economy. does this sustain a risk on the economy into 2020? how long can this continue on the back of this news? eric: let me put a twist on that question. one of the key themes that we wrote about in our outlook is that 2019 had been the year of the bond. we think 2020 will be the year of the dollar. more specifically, dollar depreciation. if you look over the last couple business cycles, sustained periods of dollar strength have been challenging for emerging markets and global economy. we have experienced a fairly pronounced global slowdown over the last 18 months. if you believe because of the u.s. china trade deal or u.k. election uncertainty being
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reduced that we are in a better environment for global economics and global markets, then the perceived path of dollar depreciation should reduce and enormous amount of risk for global markets. we have taken a fairly constructive review on emerging onkets -- constructive view emerging markets, especially for asia. that: i would imagine dollar weakness, apart from the japanese yen, where does this take the yen? in an environment where risky assets and risk sentiment is better, i would say 1 in the07-110s 107-110 range. we think the bank of japan has been struggling to lift inflation expectations, but that keeps monetary conditions in
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japan too tight. the other factor is more of a portfolio approach. if you are constructive on emerging market assets as we are, owning the yen is a good portfolio hedge in case something in the global economy or markets goes wrong. tom: standard chartered's eric robertsen stays with us. coming up in first word news with su keenan in new york. we start with impeachment proceedings in the u.s.. sources in the u.s. of an impeachment vote is being tentatively planned for next wednesday. the white house says it remains in close contact with senate republicans planning strategy in the event the house does vote to impeach president trump. the president's do to hold a campaign rally in michigan on the evening that the vote is scheduled to happen. lagardecb, christine launched her term the european central bank with an optimistic
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sentiment saying there are signs of bottoming out. speaking after her first policy meeting, her comments suggest for the rate cult are unlikely in the foreseeable future. updated forecast shows a muted outlook for growth. the euro jumped before pairing those games. -- those gains. the fastest level in more than three years. more reasons to keep rates on hold despite the slowing economy. 5.54%, meanwhile the philippine central bank had been unchanged. risks amount, but inflation remains. ipo for saudi aramco,
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it touched a valuation of $2 trillion briefly on day two of trading as a listed company. the total had become a point of pride for riyadh after skeptical international investors said that the company's true value is lower. aramco is said to be paying a 64 million dollars to banks who arranged is ipo, roughly a quarter of 1% of the deal. global news 24 hours a day on the air and @tictoc on twitter -- and by quick take on bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. . david: you can keep up to get analysis by our expert editors. tom: up next, we speak exclusively to philippine bangko bank governor
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sentraing pilipinas -- central bank governor benjamin diokno. we will get his expectations. this is bloomberg. ♪
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david: pleasure to have you join us. you are watching bloomberg markets china open. we are waiting for the pboc, expecting a big move down in dollar overnight. getting higher than estimates. we continue to watch u.k. election results as they come in. the two big stories. tom: two major stories. we do have eric robertsen still with us, global head of credit
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research at standard chartered. isrting on the yuan, what your outlook for the chinese currency? to what extent is it tied to a potential reduction in tariffs? eric: i think it is a big factor. i think the range now is probably 690-710. one of the things markets will be focused on the next few weeks and months is what is the follow-up where the follow-through on the potential for trade deals? it is an important first step to see china committing to agricultural purchases and other purchases of u.s. products. it will be an important first step to see the u.s. postponing or canceling december tariffs and potentially rolling back existing tariffs. beyond that is where the markets will start to ask questions. we have a number of strategic issues to work on such as technology, intellectual
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property, etc. beyondct much progress the phase i deal will be a challenge for markets. it is why we don't see meaningful china -- meaningful downside in dollar china. tom: let's switch back to the u.k., because i did want to ask your views even that we have the boe decision coming out. of course, the election results continue to come through. is a boe cut still on the cards? eric: i think the thing we have to remember is that for the bank of england, the policy rate is extremely low. i think the marginal benefit to the economy from cutting interest rates further from here is probably pretty small. one of the things we are extremely focused on for the next 18 months is the possibility of fiscal stimulus in the u.k.. it is our expectation that we will see some kind of a fiscal
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plan, especially now that the tories seem to have such a significant majority. if you do see a fiscal stimulus program, that should put steepening pressure on the u.k. yield curve. long and should be under pressure. david: just to put everything together, recently, we have had a bottom pickup in global pmi when you look at what is happening in china. certainly positive news out of britain and positive news out of trade. are these the three things that bond markets were waiting to come together and to what extent do you think bond markets can selloff? celsell off? eric: we don't expect immaterial selloff in bond markets. you are right that the trade deal, u.k. election outcomes, they reduced the uncertainty in the markets.
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that should help sentiment, and we have seen some stability in some of the sentiment measures like pmi. i think the challenge, and that is why we are still constructive on global bond markets, is stability at low levels of growth is different from a big recovery. it is our view that the global economic outlook remains challenged. we expect global growth just above 3% for next year. we expect u.s. growth just below 2%. more importantly, in an environment of low inflation, that will be the key determinant of how high global bond yields can go, which we don't expect much upside from here if you are looking at 10 year treasuries. year, looking into next you mentioned already, fiscal policy seems to be a main thing that not a lot of people are talking about. bond supplyry about hitting markets next year? importants an
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question. a lot will depend on which country we are talking about. as we discussed earlier, we expect fiscal stimulus out of the u.k. another is how much fiscal stimulus we might see out of europe, specifically germany. germany has constitutional hurdles to get over before we can do more meaningful fiscal stimulus. that is a question in our minds. asia, we have seen early stages of fiscal stimulus out of china and india. for the rest of the countries, a lot will depend on budget deficits and whether they are issuance toncrease fund stimulus. that is a decision they are probably unlikely to face, but in an environment where we seem to be seeing better sentiment and currency performance, you may start to see some examples of fiscal stimulus. japan, korea are examples of
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that. david: always a pleasure to have you. happy new year if we don't see you. eric robertsen there, standard chartered head of rates and global research. 1:30 in the morning over in london. sterling moving up. we look at you the latest. there is plenty more ahead. we are just getting warmed up here. you are watching bloomberg. ♪
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david: welcome back to the program. let's shift our attention to the philippines. yesterday, the central bank kept rates unchanged at 4%. let's get some guidance from the man himself, joining us out of manila.
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bangko sentraing pilipinas governor bangko sentraing onipinas --benjamin diokno the line. benjamin: our next policy meeting will be february 6 next year. we want to find out how the 75 basis points we did last year and 400 basis points is going through the system. developmentere is a , the fed said they want cap for 2020. ecb also. that give us more time to find out where we are going next year. david: is that the same as saying -- it is reasonable to
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assume that it can also be on hold for the rest of next year? is that accurate? benjamin: no, that is not accurate. i think we are may be considering 50 basis points next year. time, because my we reach single digit by the end of my term. right now, it is 14%. points, so basis more time. then be thewould catalyst for the cut? we are data dependent. we want to find out that whatever options we take will be consistent with the targets of
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the government. for next year, we expect to grow -7.5% up to 2022. that is the target. david: every economist i've spoken to has the philippines as the fastest-growing economy in the region for next year. that is their forecast. my question becomes are you seeing any signs of inflationary pressure? benjamin: no. forecast that will be stable around 2.9%. that is within our target of 2%-4%. we are pretty happy with where we are for the next two years.
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when it comes to the lending part of the business, you talk about reducing the reserve requirement, there does not seem to be proportionate pickup in bank lending. why do you think that is? benjamin: monetary policy works with a lag. at this point, we can find out how they will respond to significant cuts. maybe a lag of six months to nine months. that is about 2-3 quarters. we have seen there is a slowdown in lending. , butdity has increased lending has been rather slow in picking up.
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maybe another quarter or two. david: just bring in your earlier comment on definitely being on hold for next year is at the moment unlikely, but given the patient's you are exuding, is it safe to assume that the bsp is prepared to wait at least one or two quarters for everything you mentioned to come to fruition? benjamin: we are not starting from zero. by 175,r, we increased and right now, we are able to target five basis points. i would like to go back to the old set up as soon as possible, but as i said, we will look at the data and evidence. it could be as early as february or as late as the second quarter. tom: philippines central bank
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thankor, benjamin diokno, you very much for your time. let's bring in the latest lines from the u.k. election. we have working 10 going to the tories. it was a labor stronghold. let me bring you more lines before we get out. darlington as well, tories gaining darlington. in london since the exit polls came out, why is working to and a significant bellwether in terms of the votes. what are you seeing in terms of the latest lines, particularly with this red wall in the north of england? was boris this johnson's strategy. he is going after these labor stronghold. he was predicting that they will --fer his party to the
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they are older, working males. those are the people johnson is trying to get. in the same box. these brexit votes, there is that correlation we were seeing. i should mention the sep gains. -- s&p gains. high prediction. 55, just shy of what we saw in 2015. we are seeing a step toward that and that's a problem for boris johnson, because it can be seen as a mandate for scottish independence. the s&p, it is in their name that they want another vote. he said no before but this will make it even harder. the conservatives are getting and predicting to get would put things much easy on the brexit front when they have to negotiate and deliver. one path is made much easier, one that could prove tricky. tom: thank you very much.
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we will be coming back to you. sterling holding onto gains. in terms of the mainland market, they have opened up. still awaiting exact details. we may get lines from china's foreign ministry. shanghai composite up 8/10 of 1%. currency is firm. it is above 6.95. that is how the mainland markets are opening, risk on on the back of these moves for u.s. and china to sign a trade deal. china is likely to commit to u.s. purchases or purchases of u.s. agricultural goods. david: we are also looking at the open in hong kong. man, are things on an absolute rocket. 540 points to the upside, that is massive from our close yesterday.
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the so slightly just below 200 day moving average on the han seng index. similar when it comes to the index shares. continuing to track 48 hours back, we have held around these stronger levels. down 4% from here. broader picture looks like this. have a look at bloomberg. 2.3% is the gain. you have the inverse correlation there with the japanese yen on the back foot against everything else. ,he other side to that equation you look at that 1% up, that is about 800 from where we were yesterday. you have sterling as well, the big macro story. the yuan is up against all its
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peers with the exception of sterling. major peers, i should mention. let's map out where we are. where to be go? us, citigroupth asia-pacific investment strategist. where do we go from here? ken: some of this was kind of expected. the politics made sense that both china and u.s. wanted it, but the rollback -- the expected rollback is much larger than what was previously expected. really, if that does happen, today's move is just the beginning. belowd expect that to go 690 if it does come through. david: what is key here is do i assume that those tariffs are rollback? you argued those are not priced in. what you recommend your clients go ahead given these levels?
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i think the odds are better than even that we will get some rollback. just how the conditions are, how much needs to be purchased. in fact, i wanted to go slower. i don't want this to be finished in two weeks. david: why? ken: first of all, even before this deal came through, we were looking at indicators that were slowing the rebound in growth. have production falling this year, demand falling, and depleting inventory. that inventory a cycle gave us the confidence that next year would not be so bad. we are expecting a growth rebound. now, with this trait happening, that growth rebound will happen earlier and go farther. the endemember, since
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of 2015, we had the global scare at the start of 2016, that cyclical recovery lasted two years. i don't think this is necessarily just a one-time deal . what i mean is that is not just a one-day thing. there should be more follow-through. how does that more optimistic view of the growth picture with china translate into how you position in mainland markets? many analysts have been focused on domestic consumption and stocks. does that start to change now? ken: i don't think that needs to change, because the domestic demand story, the consumption story, that is sustainable growth. that is what you get if we do have a doubling in china's middle class. between nowow -- and 2025. when this trade war was
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escalating, even that was coming under doubt. a lot of people were afraid to invest in the future because of the trade uncertainty. certainty, you can see better investment environment and better sentiment in general. better investment environment, so more capex spending. did the issue get sidelined for the moment? ken: between the u.s. and china? tom: yes. ken: i think that is something that is going to happen anyway. perhapsvides a break for the more entrenched, longer-term competition. before the u.s. elections, i don't think it will go much further. after, i think it becomes uncertain again, but i think over the next year, we should be
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seeing relative stability. david: lot more to talk about with you on top of this, there is the u.k. election. ken peng, we will be coming back in a couple of minutes. if you have a question for him. theresa may met with her constituency and we are tracking more of these lines coming through. let's look at where we are. 135.14 was your session high, but that is optimistic. more lines coming through from the foreign embassy. for more of what is happening pre-much across the world, i'm going to take it to su keenan in new york who has an update. su: thank you very much. we are going to start with the latest on the protest in hong kong. hundreds of demonstrators
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gathered in central hong kong thursday night to mark six months since the city's protest movement began. the government is showing no sign of new concessions, however pressure has increased this week on an independent probe of the police handling of the probe. a team of foreign experts brought in to oversee the project quit. the panel says the inquiry lacked authority. the latest on the boeing troubled jet, american airlines is removing the 737 max from its flight schedule through april, pushing the grounding of boeing's best-selling jet to more than a year. southwest airlines, the largest operator, hinted at a further delay. meanwhile, aviation authorities in china are reviewing the software updates. zheng has not offered a timeframe for letting the boeing plane fly again commercially. china is reported to be helping
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diversifyrsity -- beyond gambling, i should say. includesays the plans ust nominated stop -- stock denominatedu.s. stock exchange. it would include startups from portuguese speaking companies to avoid direct composition with hong kong. there are signs that china's stimulus measures might be working. sales of construction equipment to jumped more than 20% last month, more than double october. excavator and heavy truck sales are a strong indicator of infrastructure investment. beijing has targeted construction to boost growth, setting aside more than $100 billion. global news 24 hours a day on quicktake, powered
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by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. we mentioned the foreign minister of china would be speaking at a symposium. we do have some lines crossing now. he said the u.s. china relationship has been the most important topic of 2019, stating something of the obvious. also saying that the u.s. has defamed china in several occasions -- on several occasions, i am assuming is what he means. the u.s. has a wrong understanding of china and that is the root cause of these tensions. these comments coming after the news that trump had signed off on the deal. we are waiting to see the details of those tariffs that would be penciled in this sunday. of course, beijing time. it looks like china will be seeing a relief in terms of tariffs, it will be reduced according to our sources. china will be buying more ag
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purchases, according to some reports around 50 billion u.s. dollars. another focus is the u.k. election results. we will continue to bring across those results as they come through on the constituencies across the country. what does it mean for boris johnson is the other -- what does that mean for britain's relationship with the euro zone? plenty more ahead. this is bloomberg. ♪
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tom: absolutely incredible. the number of people expected may be 350. to see 368 on the screen is incredible. , iif these numbers are true do believe the pressure is off boris to get that deal done. this is a party that has gone into the country for the fourth time and increased its standing in parliament. it's number of mp's.
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poll tends to get it wrong by 15 seats maximum. >> very few things are better for currency than certainty. things are certain now. just some of the reaction we have had so far on these election results coming in and reaction across the market tells you this was quite a shock when you look at risk aversion. it is a very good example of that. look at the pound against the japanese yen, up the most in 3.5 years. the euro falling virtually the most. drop theythe biggest are going back 10 years. there going back 10 years. tom: it looks like a miserable night in scotland, which raises the question whether scottish independence is a risk at least for the longer-term for the u.k.
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and the european union. sebastian: i have got to bring a game that domestic reporters are talking about. this is just outside cambridge, a constituency that has gone conservative. it had a vote a few months ago and labour held then. conservative came third then. it shows you the shift we have had in just a few months. it voted for brexit with a margin of 63%. what we are seeing here is a continuation of a theme that people are using conservative votes as a vote for brexit and that is something we are seeing in what we are talking about earlier. the so-called redwall these seats and current labour conservatives are trying to chip away at. that is the main strategy and that is why we see this labour poll of 368. 325 is the point for a majority. it shows you the comfort boris johnson would enjoy in
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parliament if this is accurate. also talking about scotland. we have seen early gains from snp. close to where they were in 2015. that puts the pressure on boris johnson. they will use that as a mandate for another scottish referendum. questions about the future of the union as well will be on the mind of politicians as these results continue to rollout. roll out. still with us is ken peng . we had the ecb last night, bank of week. what will we be seeing? ken: the ecb result was before the election result. that is not completely connected. then, hearing we are on hold for now, she is optimistic
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for a bottoming out in the euro area economy. that support of the expectations in the market for a steeper yield, slightly higher interest rates. belowond yields are still zero. has --that ken: that has been a key pressure on u.s. rates. scenarioe can see a where european yields go higher, that gives us more upside. that is important, because 2019 has been a great year. if you did investment grade, high yield, you made good money. now, it is time to think about how to reposition.
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we want to move a little more building rates, and toacked securities, dividends growing stocks. this is one of the key messages we are sending to our clients for outlook 2020. 0.8% on thearound 10 year, are we looking at breaking through 1% by 2020? ken: that is possible. i think right after this election, obviously the attention is going to go to what sort of brexit deal we are going to have. let's be optimistic that we can get something done in january or shortly afterwards. then it is about growth, it is about the economy, how much more money to spend to revive the u.k. economy. that is going to be risking interest rates as well.
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monetary policy, while it is still very important, is going to have less impact in 2020 than fiscal policy, and that probably gives us a little more upside. tom: you moved overweight into u.k. equities in september, which looks like a pressured move. you start to take money off the table at this point? ken: not yet. we still have areas of uncertainty. those are rooms for improvement as well. u.k. comes back into the global viabler's mind as a market, where previously the brexit risk seems to be too great. so now, i think we should be looking at this in a more traditional way. looking at 2020, since we have been talking about it, 2019, i lost count. that pipsthing like
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worth of cuts across central banks. he put that with pmi bottoming out, doable or not? we getable, but even if there, it will not stay there for that long. we are still late cycle. 250 will be to painful for mixed income investors. you want to be positioned for that kind of risk. david: always a pleasure. have a great holiday. , asia-pacific investment strategist. we can continue to watch u.k. election results. have a look. time, get in real commentary through your terminal. covered, locked and loaded for everything you need to know. more coming up on the show. keep it here. this is bloomberg. ♪
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tom: welcome back. you are watching bloomberg markets china open. a quick look at the business flash headlines. lyft is testing a new service in los angeles and san francisco. it offers unlimited mileage and avis- sent shares of plunging. rental companies
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have time as building up a fleet is expensive. u.s. day of trading in the was shares marginally lower than ipo price. millionany raised $40 wednesday. shares were in the bottom of the range. the hope to make flying taxis commercially viable. over $9 million in the first nine months of the year. the collapse of british tour operator thomas cook is said to be relaunched by its chinese owner. the group plans to use the 178-year-old brand of a travel platform targeting european customers and will debut the platform in the first half of the year. thomas cook's bankruptcy led to thousands of job losses and left tourists stuck overseas. for a look at how the chinese markets are doing, it is full
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throttle in terms of the mainland and hong kong. csi 300 is up more than 1%. the news the u.s. and china have come to a trade avertit is likely to traditional tariffs on december 15 and we are expected to see a reduction in tariffs if we get this. in terms of hsi, up 1.6%. the currency has strengthened as well. currently 6.9%. a note here,ut out if we get a 50% rollback, he at 672.y are looking sending a signal from the pboc. lots of things to watch. edwards,ng in anna pre-much the busiest person on tv today. she is with us out of london. where do we go next, what is next? anna: we are watching the
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results come in. 650 constituencies and counting taking place across the country. the message so far, the two big winners, the conservative party, that seems to be the main message. the exit poll said they had a strong majority and what we are seeing so far seems to concern that. in other winner, snp scotland has done very well, taking some seats away from the tories. tories taking seats from labour, snp taking seats from the tories. we will see where this leaves the brexit process. if boris johnson does not have a big majority, that could leave him -- does have a big majority, that could leave him in charge of the process. more on the next hour with this. tom: fascinating. that convergence between brexit and the tory vote. of course, the snp question
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raises the question of independence. plenty more ahead. all that coverage from the u.k. in terms of the vote implications and the trade deal with the u.s. and china. this is bloomberg. ♪ here, it all starts with a simple...
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hello! hi! how can i help? a data plan for everyone. everyone? everyone. let's send to everyone! wifi up there? uhh. sure, why not? how'd he get out?!
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a camera might figure it out. that was easy! glad i could help. at xfinity, we're here to make life simple. easy. awesome. so come ask, shop, discover at your local xfinity store today. >> 2:00 a.m. in london. 10:00 a.m. in hong kong. i am anna edwards. rishaad: a vote that will decide the future of britain's future ties with european union. boris johnson is on track for a big win. will give them the biggest majority since margaret thatcher. anna: labor leaders are already calling for jeremy corbyn to stop -- to step down. rishaad: president trump signs and interim trade deal. an interim trade to.
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an interim trade deal. my guestd early morning from london. two stories are dominating. the news of the election and the --- election in the u.k. u.s. china interim trader. -- the first one is first one to come out as wrexham and wales. these

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