Ipo. Welcome to bloomberg daybreak europe. Areis easing as members grappling with issues of stricter compliance. Manus cranny is there. Great to see you. Looks like saudi offering a carrot and stick. Manus yes. Cuts compliances science. Nobody was talking. Iraq raised the flag of a cut of 400,000 barrels. Everybody stopped speaking. As far as societies are concerned, we all get on board and comply a little bit more, which is what you all promised to do. Nigeria and iraq. That could help. If you help me, i will help you. New saudicence of the oil minister, it is his first meeting. I have the sense that that period of grace and favor for everybody is over. He is putting his stamp on this meeting. Nobody is talking. There is even talk it could be canceled. The bottom line is this is a meeting where they do need to deliver. The risk is long on rhetoric and the lack of delivery. Good morning. Nejra long on rhetoric, lack of delivery. They cannot cancel it. I need to see you in it. In the meantime, tell me about how opec is facing the challenge of nonopec supply. Get a concept of what oversupply really means. The iea say next year, nonopec supply will be 1. 5 Million Barrels more than the market currently can take. We will be glutted from the u. S. To no way to brazil. Norway to brazil. It is not in the opec plus cartel that puts controls on it. When you have that in mind of whackamole going on, what do you do . You have to keep your house in order, first and foremost. U. S. Is a net exporter for the first time in nearly 70 years. That is a new level of threat to the oil market, but there just seems to be this sense that they are probably going to have to do more cuts if they are going to try and balance this market and get the market back on side. Nejra manus cranny in vienna. Great to have you with us. We will catch up later this hour. In the meantime, lets get to the markets. Riskon in the Asian Session with the Msci Asia Pacific index in the green, playing catch up to what we saw in the u. S. Yesterday on this bloomberg scoop that the u. S. And china are said to be moving closer to a phase i deal, talking about amount of tariffs to be rolled back. Meanwhile, the wrist on we saw yesterday, fading in s p futures. Also fading in terms of the 10 year yield. We are down a basis point for the 176 handle. We are seeing the bloomberg dollar index hold onto for days of declines but in terms of g10, the kiwi outperforming, and that is after traders pulled back their bets on easing. Cable also holding at a seven month high. We saw it hit that yesterday. The pound hitting its highs since 2017 against the euro on the polls coming out of the u. K. And oil softening a little after jumping 4 yesterday following the stockpile data. Getting back to the trade story, the u. S. And china getting closer to a deal. Both sides moving towards agreeing on the amount of tariffs that will be rolled back in a phase i trade deal despite tensions over hong kong and shandong. President ialc candidate, Elizabeth Warren, was critical about the trump administrations trade strategy in an interview with bloomberg. Senator warren the president has no plan. Trade is about tariffs. Isthe 21st century, trade about regulation as much as it is about anything else. What i want to see is a coherent plan for anybody who wants access to american markets. Nejra that was democratic president ial candidate Elizabeth Warren, speaking to Joe Weisenthal in new york. One such company that has been impacted from the u. S. Governments trade strategy is huawei, which sued the federal Communications Commission as it tried to gain greater access to the u. S. Market. The Chinese Tech Company is fighting to overturn a regulatory decision that bars rural carriers from using federal subsidies to buy its equipment. They said they were not accorded due process and were o unfairly labeled great to have you with us, chris. A lot of market moves this week. We were risk off for a lot of the week and then we bounced back on the bloomberg scoop. What is your take on what we are going to get by the end of 2019 in terms of phase i or not and the prospect of a tariff rollback . Chris we are very close to the end of 2019, so i suspect, as we go through the end of next week, that the news will soften as we head towards the holiday season, and the peoples eyes will be focused on what is likely to happen in 2020 rather than 2019. There will be a bit of two and fro in the next week or so. Fro in the next week or so. It is just not going to have the impact for President Trump and that is what he really needs. I feel that as we go through 2020, trump will want to do a phase i deal that he has talked about so that it looks good when he is debating against the democratic candidate for presidency as we go through 2020. Nejra will equity markets perform as strongly in 2020 as they have so far this year . Chris i would be really surprised if they do. I have to say that. 2019 exceeded my expectations substantially even though growth has been relatively soft. Global gdp growth has been relatively soft. Equities have done really, really well. If you look at the u. S. Market in sterling terms, it is up over 20 this year. That is a fantastic return. I think we will be really optimistic to expect markets to do anything like that in 2020. Nejra what is the timing in terms of when you expect we will actually get something through . Are you hopeful for q1 . President trump was even talking about we dont need anything until after the election but according to the bloomberg scoop, a lot of this is just unscripted rhetoric and behindthescenes, things are going quite well. Chris for me, again, it comes back to the election timing. I would have thought that trump would have wanted to get a deal in the public consciousness in the first half of the year to allow it to have maximum impact as we go through the second half of the year. Wantrepublican voters will to see is some level of certainty about what is going to happen as we go through the next four years of what they would like to see in another republican president. Nejra if you go into 20 20 and you are thinking equity markets performance will not be as strong as 2019, how would you make shifts in the portfolio . Would you want to be making decisions based on that expectation, adding more bonds or adding protection in other ways . Chris one of the things that really sort of struck me over this year is while i have been speaking to our clients is that they really got used to the fact that deposit rates on cash are not just low today but they will be low for some period of time, and therefore, if you can get high single digit returns, total returns for equities, that is terrific and compounded over year on year. If you get 20 in one year and you get 9 in the next year, that is a really good return. Actually, dont abandon equities. Continue to remain heavily weighted in equities. Bonds, we know yields are very low. Theres a bit more in Corporate Bonds. Bit, althougha equities may not produce the return we see in 2019, i still think i would have a portfolio towards equities. Nejra biased to which equity market in particular . The u. S. Or more em risk, more china risk . Chris china has been pretty much the best performing market this year. Other em countries have not done so well. Moreld imagine that a balanced portfolio in terms of not being necessarily to overweight in the u. S. But being balanced towards the european and u. S. Emerging markets as well as having a significant portion the u. S. In terms of the proportion of Global Market benchmark is 60 of the local market benchmarks so you will not be significantly underweight in the u. S. Usra chris ralph stays with for the hour. Lets get the bloomberg first word news with Annabelle Droulers in hong kong. Nato survives its 70th anniversary party. President trump canceled a post summit News Conference. He is escalating his threat to allies that do not boost their defense spending to two of gdp. With so many flashpoints, the summit could have gone much worse. Angela merkel describes a meeting as very successful. Japans government is pulling out all the stops on fiscal stimulus. Tokyo announcing measures to support growth as the economy contends with an export slump and a fallout from a sales tax hike. The total package amounts to around 240 billion dollars. It is expected to boost real growth by about 1. 4 . The antitrust probe facing amazon is expanding to include its cloud business. The federal trade commission has recently been asking Software Companies about the cloud unit in addition to the probe into its vast retail business. And amazon are declining to comment. 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. This is bloomberg. Inra Annabelle Droulers hong kong. Thank you. Coming up, a six straight cuts. Every economist in our survey expects a rate reduction from the reserve bank of india. How far the r. B. I. Will go in just a few minutes. This is bloomberg. Nejra this is bloomberg daybreak europe. I am nejra cehic in london. Manus cranny is in vienna. We will catch up with him again later. Right now, we are awaiting a decision from the reserve bank of india and what is expected by every economist surveyed by bloomberg is a sixth straight rate cuts after the challenging gdp data we had recently. Questions also being asked about what kind of Forward Guidance we are going to get and how much more we could actually get support from Monetary Policy. Some Asset Managers saying unconventional policy measures will have to start to come in for the reserve bank of india. So we await that decision from the r. B. I. Meanwhile, Bloomberg Economics in its preview says the drumbeat really is getting louder for that easing on those gdp woes. They think the economy has slowed abruptly. The r. B. I. Needs to make a deeper reduction to rates, dropping its baby step approach. Juliette saly is in singapore with more on the Market Reaction ahead of the decision. Juliette. Juliette absolutely. We are seeing indian Stock Holding up quite well ahead of this, which is meant to come momentarily. It is merely the one time anniversary of the r. B. I. Governor. We had 135 basis point cuts from the r. B. I. It is holding up well. Nejra Juliette Juliette that has just come through. Nejra we will come back to you in a moment. Thank you. India has a central bank unexpectedly holding its key very at 5. 1 5 , so that is surprising news, as we say putting much all economists predicted a sixth straight rate cut. Cutting meanwhile, full year gdp forecast to 5 from 6. 1 . That is a less surprising bit of news from the r. B. I. That it is cutting its forecast. Very surprising that it is unexpectedly holding that key rate. Indexessensex and nifty erasing gains. You can follow everything on the tliv blog. Juliette, the immediate Market Reaction. Are we seeing it elsewhere . In the bond markets as well . We sawe yes, certainly, that reversal as you were speaking. We do have our indexes tracking lower. A were holding near record highs. This is a surprise to the market with india keeping their key rate on hold at 5. 15 . We are seeing indexes move lower, having a look at the rupee. It is not moving all that much. If we can have a quick look at bonds, we have been seeing most of the bonds across the market today, seeing yields going higher. Just trying to get a quick read on india if we could maybe get that along the bottom of my screen. I want to show you what has been happening in the Indian Economy and why those similar points you were saying about why some are saying unconventional policy tools now need to happen even though the r. B. I. Has not even rba has not all even cut rates at all. Inflation above 4 , more than what they are wanting. Theres also calls that india has to be more to try and stimulate this economy, which we have seen their Economic Growth really falter. It is falling below the likes of china and indonesia. There is one fund manager out there saying that they should look at pulling down longerterm yields i selling shortterm bonds and reinvesting in longerterm ones as well. Manager whond correctly predicted the credit crunch that had been hurting indian banks. A big surprise here. Coming after the india should maintain its accommodative Monetary Policy staff. Nejra Juliette Saly in singapore, thank you. Absolutely, big surprise. None of the economists surveyed by bloomberg predicted the r. B. I. Would stay on hold. The are seeing the Market Reaction. Surging eight basis points to 6. 55 . Our guest for the hour. A surprising decision. What do you think might have prompted this . There was a unanimous decision to keep these rates on hold. Chris good news is breaking. It would be interesting to see the followup for press conferences during the day. I suspect it might have something to do with inflation data. That was obviously strong there than people expected. And the r. B. I. Board is just reacting to that and saying do we want to be cutting into a market where there has been some evidence of inflation . From what i was reading, it looked as though that was in relatively small areas of food production, that it was not a general increase in inflation. Really surprising information from the r. B. I. Nejra a little bit of detail coming through here. You can follow all of this on the tliv blog, suggesting the cutting cycle may not be over because the npc decided to continue with the accommodative stance as long as it is necessary to revive growth while ensuring that inflation remains within the target. How soon do you think they will resume cutting if that is your assumption . Could they employ unconventional measures as well . Chris it was interesting. Obviously, what they are trying to do is get a balance. They dont want to be too predictable to markets. What Central Banks want to do is retain the elements of surprise, so one would imagine they would get back on the cutting cycle relatively soon even at the next meeting. I would need to double tech when not actually double check when that actually is paying seeing if there are other methods they could use to provide that stimulus to the Indian Economy and keep it on track from the growth protections, the slow growth protections the oec was talking about. Nejra they have 135 basis points of cuts so far this year. Chris ralph, cio, staying with us to discuss japan now because your pants Prime Minister, shinzo abe, announced stimulus measures to support growth in an economy contending with an export slump, natural disasters, and the fallout from a recent sales tax increase. During us to discuss from tokyo is paul jackson. Paul, great to have you with us. How much bang will this package actually have . Paul thats a good question. We have a lot of numbers here, havent we . Its very confusing. The headline figure is 240 billion. That is a large number. Thats 26 trillion, the headline figure. I think we have to dig deep down to another figure of 7. 6 trillion in Central GovernmentCentral Government direct spending. And that is going to be the punch that comes into the economy. Already, we are seeing economists look at todays figures and revise their growth forecast for the coming year. Our economist at bloomberg expects the economy now to grow 2020 as a result of these measures, which the government says will add 1. 4 Percentage Points to growth. Economists are a little skeptical about that. They think it is not going to be quite as effective as that. Why does japan need this . It is because the economy is contracting as a result of that sales tax hike. We are expecting a contraction of 2. 7 this quarter. So we need this to get out of the recession and keep abenomics on track. Nejra bloombergs Japan Economy editor paul jackson, thank you for joining us. Lets get back to chris ralph. Does this take the onus off the boj at all . Paul i am not sure it does. I still think they have got to be very focused on continuing to provide that environment so the japanese economy does not grind to a complete halt. Talking about growth protections for 2020,. 5 . The imf suggested they were looking at a figure of. 4 for japanese growth for 2020. That is really near the economy, just stopping in its tracks, and as paul was saying, we are going to likely see a contraction because of the sales tax increase in the final quarter, so the boj has got to be there. Nejra there is a difference between stopping and economy grinding to a halt and actually feeling growth and inflation. How do the authorities, whether it is the central bank or the government, do the latter . Paul it is the challenge we talked about in terms of conventional and unconventional Monetary Policy. As you just pour more and more money into the economy, it seems to have less effect, so it is becoming harder for the boj policymakers to do anything thats actually going to have a really positive impact on the growth for japanese economies. It is when sales taxes come through that there seems to be this banana scheme that the japanese economy is falling over. Nejra we talked about india and japan. Looking at both of those countries, different issues prn any of those interesting propositions . Paul you can argue that Japan Equities look really, really attractive. I mean, its been another challenging year to be invested there japanese market, so is this dichotomy between the largecap exporters and the small cap domestic stocks. They have been absolutely killed this year. The largecap exporters have done a bit better because of the feedthrough into china. Some managers saying that they are quite interested in japan. We think theres good value. Equities in japan