But the s p 500 is about 3000. When we close above 3000, up. 6 , plenty of groups rallying on earnings, Morgan Stanley up 3. 5 , closing out the major banks with an excellent set of results. We have the rails rallying, and we will talk about that later on with fritz. The 10 year yield, 1. 76 . Curious about what is happening in britain, guy. Guy the deal we have in brussels is not a deal we have in belfast, so you can see this on the sterling chart. We got a deal, it was announced, sterling rockets up towards 1. 30 . Isn it is clear that the dup not going to vote for it once again, so the pound comes crashing back down, which at 1. 2838 is up on the week, but it has been a roller coaster ride. The negative pound is helping the ftse 100 out and the ftse 250 is positive on the day, an earnings story, and the dax is up by. 3 . What happened in brussels is certainly the big story of the day. Vonnie Boris Johnson has secured a deal, legal text with the European Union is now published, but he still needs to get the backing of parliament. Have a listen. We have a deal. This is a fair and balanced agreement. It is a testament to our commitment to finding a solution. Certainty, whereas brexit creates uncertainty. Now, speaking to elected representatives, that my fellow mps in westminster do now come together to get brexit done, get this excellent deal over the line and to deliver brexit without any more delay. Vonnie we are joined now by maria tadeo, live from brussels. What exactly got changed in this text as it relates to trade, the customs union, and consent . There are a number of things we are still looking at, because the deal only came out a few hours ago and it is a very big legal text. The political spin there are aa saying number of things that got changed, we are still combing through it, a 60 page document on Northern Ireland alone and it does establish a freetrade agreement that is wideranging. It appears that any kind of border would be in the irish sea, and as we mentioned, this is one of the reasons the dup is unhappy with this. Jeremy Corbyns Labour Party is unhappy with this and sturgeon in scotland is unhappy with this. It it remains uncertain who will back Boris Johnson as of now. Lets get to our first guest now, tobias left image tobias kovic joins us from citigroup. Your thoughts on whether this solves anything brexit wise . Party to thenot specific negotiations, i cannot enter into that with any real authority, but markets have been worried about trade issues in general. The trade issues in the u. S. And in the u. K. And europe. Their movingnse towards a compromise, some solution. Everybody is not happy with it, but that they are moving towards it is where the positive reaction is coming from in the markets. Vonnie what does it mean fxwise, because there was a big binary trade here . Will that get resolved or not . Tobias more details have to come out, you have to have more Political Support for it, but there is a move towards a little bit more value, a little bit more cyclicals, you see it in the u. S. With the spread between the two intends, the threemonth and 10 year yields widening out a little bit, and helping financials feel a bit better. This is something investors have been struggling with for a while. Guy tobias, hold that thought. We will come back to it in just a moment. Have are reestablished communications with maria tadeo in brussels. There has been some suggestion that Jeanclaude Juncker is hinting that there will be no extension. Has that been lost in translation . Is there a missed translation . Is that what he said he . This is critical in the way the mps will vote on saturday. Been no issuess with the translation. The words from Jeanclaude Juncker were crystal clear, there is no need to talk about an extension or giving you the United Kingdom more time, because there is a deal that works for us. That is very much the political spin here in brussels from both sides. The irish are happy with this, the europeans are happy with this, i spoke to Emmanuel Macron hours ago and he also said he was satisfied with video. The u. K. Delegation, including the Prime Minister, saying this is a deal that works for the United Kingdom and works for everyone. There is no need to ask for more time. Go ahead. Maria, is he ruling out an extension completely . I appreciate they do not want to talk about an extension now, but are they completely ruling out an extension . You have tory mps in london talking about the fact that this vote will be about boris is deal boris deal or no deal. If this vote does not go boris way on saturday, are they completely ruling out an extension or not . Course the European Union will tell you, we are not ruling out anything because a lot can happen on saturday, but the way they see it, the law, the technicalities behind the act make it very clear there is no need to ask for more time because the Prime Minister will leave tomorrow with the deal that works for everyone. It is down to the u. K. Parliament to come up with a solution to the deal. The Prime Minister had a deal, it works, why should we give more time if this is something we are all happy with . That is the political spin from the European Union. If we get to a situation where the deal is once again rejected, that will open up a number of scenarios. The u. K. Will not force the eu will not force the u. K. Out, they do not want to be blamed for a no deal brexit, but the spin and the line that runs brussels will push forward today, there is no need for more time because it is here. We will have to see if that allows them leeway for a prolongation, if there needs to be one. Is clearly someone trying to railroad this through, but it is not clear that parliament will get the votes. You how itnt to ask looks right now for Boris Johnson. How on earth is he getting the erg on thisthe deal that similar constituents with similar problems with the previous one, like the dup, are not happy with . Maria exactly. You could argue it is almost a rerun. Theresa may found this situation many times. The Prime Minister told us moments ago that he thinks at this point, it is about common sense. The people of the United Kingdom, in his eyes, do not want to go for a second referendum. They want to move on. Hase is a sense, and story run for a very, very long time. There is more of a possibility to leave in a way that is good for everyone. You could argue similar to that, this is a political story. He needs to be able to sell this. What is clear now, the europeans are willing to give him a little bit of leeway, willing to give him a little bit of momentum to this deal, saying that they also agree this is a good deal with the u. K. , that everyone will continue to work very closely and frankly, one of the biggest issues here, which was freedom of movement, is going ahead with these deals. That could put you in a situation where you are faced with a deal or go back to square one, the europeans will tell you, what can we change now . This has happened four times now. This is really the deal. Maria, thank you so much. A busy morning, busy afternoon in russell. Brussels. Lets go back to Tobias Levkovich with citigroup strategists. Do u. K. Stocks look cheap right now . Tobias generally yes, but there are reasons that stocks are cheap. When you have this going on in the u. S. Between value stocks and growth stocks, the idea of where we are in a Business Cycle, how much do you want to pay for future earnings that look uncertain . In the case of the u. K. Brexit deal, what is the impact to the currency, to the Business Cycle, etc. . That makes it more attractively valued. My team looks the u. K. Is interesting compared to the rest of the region, but we are still stuck on the issue of, can you get the deal . Your question about will time ,xtensions occur, in politics anything is possible. I would not rule out the potential for mr. Juncker doing something on that. It is just the way diplomats talk. Much is thiss, how impacting the euro trade right now . Obviously the british pound is very affected by this, but the stronger euro we have, up. 5 right now, does that have something to do with brexit talks . Does it have something to do with earnings and the u. S. China relationship . The euro has been weak partially because there is a desire to own safe havens like the u. S. Dollar and also because the Economic Trends in europe have been so poor there is a hope that with weaker currency you can get more export activity. The problem in my mind on europe is that it does not seem like negative Interest Rates are being productive. Many people are suggesting they may be counterproductive, suggesting there is no growth opportunity. That is not my decision, that is the ecbs decision on what to do , but anything that suggests that europe can get some growth is positive for the currency. Tobias, investing in u. S. Equities has been a nobrainer trade for really quite some time. Some. S. Data has provided backdrop to that i have backstops on the mind. The u. S. Data is starting to fade. The Manufacturing Sector is fading, there is some evidence that the consumer is starting to crack as well. Is that a reason to maybe rethink level equity allocation away from the u. S. Global equity allocation away from the u. S. , maybe to other areas . The currency aspect is important to that. The u. S. Dollar has been a great investorsfor how should react in the u. S. Versus emerging markets. If the dollar starts to crack, it suggests the emerging markets are a more attractive invest ment. I think Interest Rates and growth rate differentials have weighed in on this, and budget deficits have a lead indication for Currency Movement for the u. S. It does suggest some weakness coming forward. I keep stressing this when i talked to investors, in january, you will see things start to show up from the Third Quarter, given the senior loan officer survey tends to be a great ninemonth indicator. We saw thed up when data in january. The problem for investors talking about further weakening, inc. Got better in the april survey, stabilize in the august survey. This is not a further deterioration like we saw in 2007, 2 thousand eight, or 1999, 1999, 2000. , or you will probably see better data late into the Fourth Quarter to next year, and that is not what people are worried about. They are worried about the reverse, further deterioration, the way you asked the question. Guy trade is a factor in that. We have not talked about earnings yet, we will do that very shortly. Please stay with us. Tobias levkovich, he will stick around. Lets check in on the bluebird first word news with rico gupta. President erdogan met today with Vice President mike pence, a top turkish official described the two nato allies as being miles apart. Everyone says he will not halt the fighting until kurdish Militants Withdraw from an area along the border. Construction in the u. S. Pulls back from a 12 year high last month. It fell 9. 4 to an annual rate of a little less than 1. 3 million. Drop was driven by weakness in the multi family category. Joe bidens campaign is short on cash when he needs it the most. New government findings show the democratic president ial candidate spent almost 2 million more in the third. Uarter then he raised that is unusual for a major candidate at this point in the election cycle. Than 9 billion in the bank. It is the smallest cash reserve among the five top polling candidates. And a key figure in the impeachment inquiry and critic of President Trump has died. Democratic representative Elijah Cummings of maryland was chairman of the House Oversight committee. Died duettee said he to publications from longstanding health challenges. His panel is one of three investigating the president s activity in the ukraine. He was 68. Guy thank you. This is bloomberg. Oomberg. Vonnie live from new york, im vonnie quinn. Guy and from london, im guy johnson. This is bloomberg markets. Vonnie we are back with Tobias Levkovich, chief citigroup equity strategist. In the last two days, including earnings, china and hong kong notably, have you changed your mind in relation to anything that might be of value here in the u. S. . Tobias not really. The issues going on in hong kong are kind of isolated in that sense, i do not think that is having much of an impact other than creating some anxiety for people. This point. K at we will have to see more, it is still early in the earnings reporting period. The guidance issues for next year are really where the focus is our, and investors are not necessarily getting a lot of information yet focuses are, and investors are not necessarily getting a lot of information yet. Cringe worthy, cautious optimism, but we are just not getting enough information on that forward look. What we have seen in fourthquarter guidance has not necessarily been that bad across the board. Individuals already have bad some individuals always have bad numbers, but i have had some that have good numbers, some Industrial Companies that have good numbers, some Manufacturing Companies that are not as good. Rewardinge investors better than the lower bar too much in this quarter . 4 , westanley up almost have the rails higher by multiple Percentage Points as well, it feels like because we did not do terribly that everything is all well in the world and we can rest. Markets are actually very much driven by what the outcomes are relative to the set of expectations. If expectations are cut and the stocks weaken alongside the ifectations being reduced, things are good better than bad, stocks react more policy that we positively. There is better news in trucks and rails, and that alone is a positive delta. It has been bad for a while and if you were down, to use a term, accurate for are descriptive purposes israel volumes are down 5 and now only 3 , that is a two percentage point improvement. But better great, than it was. A lot of markets are also going along with what has been happening on the yield curve. That has a huge impact on how stocks have been trading. The yield curve when down to a the markets went down, and now you have an opportunity for the net interest market in financials. I think that is normal trading behavior. Bring up the fed. Do you think that are going the fed are going to cut prices . Tobias our markets are thinking yes, but it is shakier the second time. There is a view that they are going to do something, and i would actually support the fed in this respect, not talking about rate cutting cycles. If you look at the past 20 years, rate cutting cycles have generally been associated with a sense that there is really horrible economic weakness toeloping and they have respond so aggressively, but stock markets actually go down on that regard. I have suggested that the white house should probably not be asking for massive rate cuts, because that is not a good sign for economic activity. Guy do you think we need a trade deal to get the s p convincingly about 3000 . Not really. We have been talking about trade issues for 18 months already, and you need to stop it from getting worse. If there is incremental improvement, that is fine. You do not need a solid trade deal. I do not and people anticipate think people anticipate there is going to be this allencompassing trade deal. I have only heard the president talk about phase one. I do not think the market is protecting this allencompassing, omnibus type trade deal. And that is not what both parties are working with either. Guy you have to get phase one done. The lighthizer deal might have to wait for a while. Tobias, great to see you. Thanks for stopping by. Citigroupsvich, chief u. S. Equity strategist. Emma we are seeing Risk Appetite stoked across the board, largely by the deal we heard the u. K. And the european ,nion have come to over brexit with most european averages rising today, including the ftse 100, up. 6 , rising with the found, compared to the usual inverse relationship we see. The pound has given up most of daily gains. The s p 500 is back above 3000, we have not been there for a month. The downturns on that rising a good 4. 1 . Of the earnings movers, ibm having its worst day in a year, a topline miss there. Morgan stanley, a different story, up a good 4 today, better than expected. Surging fixed income revenues helping them and netflix doing pretty well, booming overseas growth really impressing investors. Vonnie . Vonnie still ahead, we are live from the world bank imf meetings in washington, d. C. This is bloomberg. Vonnie its time now for your latest Bloomberg Business flash, a look at some of the biggest business tories in the news right now. Boost incomeing to with venmo. [inaudible] the offcolor remarks of billionaire money manager ken fisher are getting expensive or him, now approaching 1 billion. The city of boston has joined to other government Pension Funds roaming banking money from fisher investments. Bostons banking board is pulling 250 million. That is your latest Bloomberg Business flash. The imf managing director will be joining us live from the world bank imf meetings, his take on the latest negotiations over brexit. We will talk about the state of the Global Economy as well. This is what the pound is looking like right now, indicating a little bit of traction again. This is bloomberg. S is bloomberg. Vonnie live from new york,