Some of the other Asset Classes are moving on a bit of news. Sterling falling, erasing the gains we saw for the currency before the general election. Going below 1. 31. The thai baht is one of the strongest currencies in this part of the world, Interest Rate. Bit later coming out Oil Inventory story, that is not the oil price but we have 60 or thereabouts. That is reflective of a growth in u. S. Inventory. Bitcoin, continuing to be there even though it is higher. A report says the cryptocurrency perhaps peaked two years ago and on top of that we have a lot of rivals out there. There is a crypto scam in china which is seeing unwinding of the action. That is where we are from these Asset Classes. What else is going on . Lets join su keenan. Japan and the latest economic data, japanese exports fell for a 12th straight month in november. Aat confirms little sign of pickup despite indications the slump in Global Manufacturing may have bottomed. The value of shipments abroad fell just under 8 from a year earlier, extending what has been declinedst run of since 2016. It was slightly better than forecast. The wider economy is expected to shrink 2. 5 this quarter. , the centralppines bank is investigating lenders that may have received funds using the Westpac Service that was allegedly linked to Money Laundering and child exploitation. The bsp says account holders at 10 philippine lenders say could have been sent by australians accused of child abuse. Westpac has a partnership to make transfer to the philippines easier. Anger continues across india as the government defends a law that bars undocumented muslims from seeking citizenship while allowing migrants from other religions to do so. You are looking at protests. The home minister helped move the bill through parliament and told Business Leaders there is no chance it will be repealed. Police, clashing with students in new delhi. Protests flared in the Financial Hub of mumbai. The house of representatives in the u. S. Has passed to giant spending bills that will provide 1. 4 trillion to fund the government through september and avert a shutdown. The bills, after weeks of bipartisan talks. It heads to the senate where they are expected to pass. The white house as President Trump will sign them. Nsa whistleblower Edward Snowden will not profit from his recent memoir because he failed to win publication clearance from the u. S. Security agency. The book was released in september and reveals how he helped build the topsecret Surveillance System that he later exposed. The u. S. Government sued to prevent him from profiting from the book but didnt try to block its publication. ,lobal news 24 hours per day powered by more than 2700 journalists and analysts in 120 countries. This is bloomberg. The news that broke a couple moments ago, the pboc lowering the 14 day reverse repo rate, a five basis point cut. Lets bring in mark joining us with the latest from singapore. In chinese breakout stocks yesterday. Now we have a reverse repo cut. Are the stars aligning for the rally to continue . Certainly they are doing what they can. This is typical of what the pboc has done all year, small incremental cuts in rates whether it is through the rrr, repos. D now the reverse they have been doing these small changes, not yet unofficial rate cut but maybe that will come next year. They are doing the part to help maintain this bullish mood in markets, the fact that the trade war looks as though it is going into the background is also helpful. There could be more room for stocks to rally to the end of the year. Certainly managers will be looking at this and advising clients. Switchll probably help some flows more towards the equity market as the year ends rather than the bond market. People will take this as a positive. Pick. I will make you what should we talk about, the yuan consolidating at seven or the fact that sterling is basically giving up and then some or all of its gains from friday . Take your pick. Shortterm, traders are more interested in the pound because that is a classic example of where too much exuberance was expressed about what would happen with the u. K. Direction over the next few months. People are rapidly unwinding their view. Once the momentum gets going, the pound can move very quickly in one direction or the other. Now that people are sensing that the u. K. Is in for difficult negotiating with it eu next the eu next year, the downside for the pound could be as fast as the upside. We saw it had a tremendous rally going into the december election so it could have a pretty big selloff going into the year. As liquidity gets worse, it will be tough to hold the pound up unless there is something unexpected that surprises people with good news. That is unlikely in the next couple weeks. The downside courage could be sharp over the next couple weeks. The you want will probably be probably be a sideways trade with a year and factors and funding issues. I think the pound is more interesting for the next couple weeks. David great stuff, mark. We will have more on this story and the days trading action across the region for our bloomberg clients. Rishaad Capital Markets chief asia market strategists paul, great to see trade deals. Do we have more coming . Paul sadly, no. Start, but the a underlying tenor is that there is not much of the existing tariff framework that is being rolled back. It is a nonescalation, in essence. Edgesis a bit around the being negotiated but nothing really substantial. We think this is enough combined with the avoidance of a nearterm no deal brexit through to see. Election process policy uncertainty drop. Pmis are stabilizing since the summer. The combination of those factors in october led us on our tactical allocation view to go risk on into the new year, but not much beyond that. Either the big unknowns we had last year at this time, there is more clarity. Can i attach a higher degree of confidence on the earnings . If i believe the ones last year, i got burned. Paul we need to look at aggregate earnings forecast. The u. S. Aggregate earnings forecast is 10 . There is a little risk for that. It is aroundink 15 , not terribly outrageous especially in the first half of the coming year. We are in a lower plateau level of growth. Around 3. 3, three point 5 . From the middle of 2019 to the 1. 52 growth, being the u. S. In that zone it is fairly sanguine. Our view is, and this relates to our Strategic Asset allocation view which is more cautious from the second half of next year into 2021, is that the impulse from the fiscal stimulus still present in the data really drops out of the data from the middle of next year. Then we see a move out of that 1. 52 percent range to 1. 6 in quarter 3, 0. 6 in q4. The u. S. Economic team has contraction in the First Quarter of 2021. Im not quite 100 percent in agreement with the exact numbers based on my work, but the shape is a little come i think the shape is right. My baseline is a slowdown and risk earnings into 2021 starting in the letter part of 2020. On a couplead you times and you were one of the first that said the u. S. Could be heading to a recession when it comes to Asset Allocation. Play things didnt quite out. How have you changed your Asset Allocation . Has it changed . Region in theest area has been india, the best performer in the region. The biggest overweight has been versus 10 , as our alltime highs. 10 . Is down korea is our biggest underweight for this year and it is down over 20 in u. S. Dollar terms since february of last year. Has been overweight in india and underweight in korea and it worked out well. The rest have been small bets, the relative performance in markets that have been overweight like the philippines ,nd vietnam have actually been have outperformed the benchmark. If we compare against the u. S. , which thankfully we dont have to, that would be a little tough but if we strip out u. S. Equities and technology from the Global Equity space, it has been a mixed picture. Happening before the big war, china was getting more expensive. We saw decoupling hastening and at the same time the supply d. 150 being rejigge taiwanese Countries Companies returned home. 23 of German Companies thinking about or moving reduction here. With what you look at in terms of these markets, what is the impact . Paul the reason why we are constructing on some parts relates to that. At production and capacity shifts, vietnam is a major beneficiary. Vietnam in my coverage is the only markets that has positive earnings revision. Rishaad can they level up . Can they scale up . Are limitations to that. There are skills shortages and that is a factor that is a limitation for both thailand and the and him. Having and vietnam. Having said that, they are seeing a major benefit. Third country repatriation of Production Capacity. That is one of the two reasons why we have not been underweight in taiwan, because it is creating jobs and while the i. T. Sector earnings, for example, globally are 35 percent, singapore 60 , a big reason why we have been underweight in repatriation that in no small part has led to the better performance in taiwan i. T. Sector earnings, which has been about minus nine percent. Taiwan has yield support, 4. 3 dividend yield as opposed to korea, 2. 3 . Well. In the twos as there are additional factors to consider. Around, weul, stick will get to some of them. Ahead, unemployment in hong kong rising to the highest since 2017. The protests drag on. We are assessing hiring trends for the finance sector with a ceo. Yvonne a Company President lays out his arguments for keeping rates on hold. This is bloomberg. Rishaad you are back with Bloomberg Markets. To say it has been an upanddown year for the Federal Reserve be perhaps not exaggerating in any way. Cutting rates three times in the face of weakening global growth, starting the year looking hawkish. Policymakers indicate they will hold rates although there are underlying conditions that havent changed. Robert kapan spoke with us earlier. I have already got baked into my outlook, we will have weak manufacturing next year, growthh Global Global but with a strong consumer. There will have to be Material Change from that outlook. David that was robert kaplan, the dallas fed president. Paul is with us. Forgetme of rate cuts, i the exact number, something on the order of over 40 central to 3000 basis point of rate cuts combined. It went up a little bit. Are we underestimating, that will kick in at some point. Are we underestimating the reinflation percentage potential . Paul it has kicked in already. Better stat. 15 of Central Banks cut rates in 2019. That is a large number, a coordinated Monetary Policy intervention and the reason why we are seeing pmis taking up which we anticipated last october. The question is, is the degree of monetary space, the latent ability of Central Banks to be able to stimulate the economy sufficient to offset the bigger , the Overall Economic slowdown, rather than just the pmi . Imagine a big slowmoving super which is your Global Economic cycle. The pmis are the volatility around that smooth line. T smooth is that enough to offset the general cycle . I believe not. Unlike the previous monetary easing cycle that began in 2007, the fed doesnt have the luxury 5. 25 . Ting at the eurozone and bank of japan arent ending their easing cycle, they are starting below the zero lower bound. Today andmoves made this is helpful, the pboc is constrained not by the zero lower bound but fears of undermining the rmb. It was seven but only a five basis point cut. They are being prudent and they dont want to undermine the r b in the context of the trade war negotiation. In addition, there is a lot of dollar denominated corporate debt in china that is unhedged. In r b terms, that is more challenging if the currency is weak. There is a constraint. Rishaad in equity strategy, looking into Industry Groups and the names you like. Paul there are five big themes that we like. In the outlook report through our bottom up work, we came up with 32 microeconomic themes. The five i would highlight our consumer premium position in inna, premiumization china, in discretionary and staples respectively. We like china fintech and in , healthar, good doctor care and technology. We think they might be right this time. We dont want to be contrary on everything. Picks. Geely to my top i went further and added what fiery i see and added this company. The crowd can be right. We like auto tech, more stringent requirements on safety in north america and europe are toving Companies Like manto autonomous driving. The philippines story is very powerful. That is why we have had this company and our top picks. To the earlier discussion on Production Capacity shifts, we are playing that through industrial parts in vietnam in City Developments and thailand. Yvonne talking about your big surprises for 2020, you have four negative and four positives. Paul these are not a baseline, these are deliberately our second or third case scenarios. I like your terminology. It go wrong . Lp one of them is trump bump version 2. 0. What if, like 2016, going ahead of any fiscal stimulus that was implemented by the tax cuts in the United States, we see that anticipation again that the markets start to factor in a Trump Victory in november 2020, where the republicans retain the senate but win back the house of representatives. One question i get asked is, what is the biggest upside risk tactically . Responses, the democrats might agree to an Infrastructure Spending bill. Now we are getting to the point where that is probably the wrong answer. The right answer might be, if and when trump actually wins. Then he will have no obstacles, and that might get factored into early next year in which case we are in a strong dollar environment, an environment that is driving u. S. Earnings again and we are in a continuation of an America First and multiple expansion driven rally in developing markets that wouldnt emerging in asia and india. David 249 pages. Happy new year, paul. Yvonne that has to be a record on all the outlooks. That has to be the biggest one we have seen. ,avid in case you missed it the hong kong dollar is up for an eighth straight session. I wasnt even born the last time we hit that sort of street. The longest one since 1987. There we go. Coming up, you are watching bloomberg. Flash the business headlines, fedex plunged after delivering a lower profit forecast for a second straight quarter. Adjusted earnings will be no more than 11. 50 per share in the fiscal year ending in may compared to a previous outlook of more than 13. Fedex claims Weak International demand and increased spending. Southwest airlines expects to go more than a year without a boeing 737 max fleet as it is more services. 300 daily flights are being cut through april area that is five weeks longer than originally planned. It represents a most 8 of southwests regular daily operations. American airlines pulled the max through early april while united hopes the plane will return in march. Rishaad lets take a look at usingvers on the market the rank return function. We find ourselves looking at a market, nanjing securities, universal signs [indiscernible] chinese brokerages, which have done well in the last three days. A Risk Appetite is back. Some opaqueness over drug pricing in japan. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Yvonne in hong kong, shanghai, new york city, im su keenan. U. S. Where ain the democratic led House Committee has moved the north american trade agreement, otherwise known as the usmca, forward, sending the measure to a full house vote thursday. Overhauling what had been known as nafta will give president muchneeded Political Capital as he faces an impeachment hearing in the house later wednesday. The Republicanled Senate wont take up the trade accord until the new year, after the conclusion of the impeachment trial. To the u. K. Sterling slumped the most since january. This as fx traders give the thumbs down to Prime MinisterBoris Johnsons plan to enshrine next decembers brexit deadline into law. Hard splitt of a from the eu erased to gain since. Ast weeks elections money markets wait in what the probability of a bank of england rate cut before may, falling back to 50 , the same as it was before the election. The u. S. Government is heading off calls by china and russia to ease sanctions on north korea. This, despite claims pyongyang has complied with yuan resolutions. A proposal sent to the Security Council met pushback from washington. President trump said he would take care of any threats kim jongun has in the works. Beijing and moscow say north korea is at a critical situation and needs help. In new zealand, the country is the act ofplace governing the rbnz with two new pieces of resolute resolutions. The