Nejra welcome to daybreak europe. If you are getting ready to kick off new years eve celebrations, were not seeing a lot of that in risk assets today. Quite a number of markets, bear in mind, are close today, including japan. We dont have the cash treasury trade either. A little bit of red on the screen. U. S. Futures perhaps pointing to a stronger open. A stellar year for Global Equities in general, the best year since 2009 the best year since. Fx, a fourth down day for the bloomberg dollar index, all the g10 currencies gaining against the greenback. Dollaryen, seeing yen strength at 108. 69. Euro near a 12month high. Butslipping a little today oil is heading for its best year since 2016. In china, a little optimism, even though it may not lift the market. The gauge of chinas Manufacturing Sector held steady in december, evidence the worlds secondlargest economy is stabilizing. The outlook for new export orders expanded for the First Time Since may 2018. On the trade front, deleting white house china hawk, Peter Navarro, said the phase i deal is in the bag, but he has declined to confirm reports that chinese emissaries will come to washington this weekend to sign the deal. Joining us is alan higgins. Great to have you on the final show of 2019. We love having you. A little caution in markets. Focusing trading, but on china and the u. S. China trade war which has been the focus of optimism going into the yearend, do these words from Peter Navarro give you any optimism for the first month of 2020, First Quarter . Alan i think there are signs of optimism. It looks like a trade deal will be done. And a little obscure indicator, maybe. Volatility is low, but within fow volatility a lot o investors are buying protection. Its technical, but another indication of caution in the market. Investors want put options, and for us as a contrarian investor, thats good. Ive been here many times, t alking flows from equities, but in the last few weeks there has been decent inflows, so go with that break while with that for a while. Manus the nejra the skew index hit a high but pushed off that, perhaps showing optimism. Stabilization with china, the word being used. Is that your view of the chinese economy in 2020, stabilization but not necessarily inflection . Alan china has been caught up in a Global Manufacturing recession, and we see tentative signs of stabilization in that, including in china. The data overnight, a little on the flat side. I would like to see some beats in the main indicators. But as you point out, exporter orders are up, and thats key. So, overall satisfactory. But s p 500ay, futures are edging up as we speak a little bit, so maybe not such a bad december. Manus the take from Bloomberg Nejra the take from Bloomberg Economics on china pmi is it is positive but not the end of the woes. They pointed out that some employment components didnt look that great. If you look at 2020 what concerns you about china . Is it leverage . It is the amount of default . Is it something to do with the propensity of the stimulus . What is the consent concern . Alan the trade deal, admittedly we have been talking about it for a few years now, but the corporate sector is leveraged up in china, like in many economies. Students of history saw it in ireland, spain, south korea, japan it did not end well. So china will have to work really hard to avoid this. Thats why a trade deal is so important. We have seen in the past, the currency really getting under pressure. I think we are slightly below 7. That is a perennial risk. Very hard to judge any economy thats thebut area we are watching very closely. Nejra so are asset managers, investors, traders bloomberg surveyed. In emerging markets, the top two things they see driving e. M. , not so much fed policy, but the trade war and chinas economy. Through that prism, translating it to emerging markets, would you be perhaps a little cautious or not gung ho about emerging markets given your view on china . I mean more so the asian emerging markets. Alan when you allocate broadly to emerging Market Equities, you are really buying asia. Emerging market bonds at the moment, they tend to be more latin america, south america. If the dollar continues to weakness, slight emerging Market Equities can do a little better. We are relatively light, looking potentially to add in emerging markets, probably broadly asia. Moving allocation to an index fund or asset manager, when you are doing that, you are buying asian equities,. We can see reasons to be there. Has become very elevated, so looking around the world, e. M. And other cheaper markets look interesting. Nejra alan higgins will stay with us for the hour as guest host. Lets get first word news with selena long wang in beijing. Selena hong kongs resolution for 2020, restoring order and harmony. That was the message from chief executive carrie lam in her yearend message. She acknowledged shortcomings in the systems. Hong kong has faced six months of prodemocracy protests, with another major rally set for tomorrow. The European Central bank needs more precise inflation goals, according to the incoming executive board member. She says it isnt clear that the goal of below or close to 2 is supposed to be symmetrical or not. The ecb is about to launch a first strategy review in 15 years. Nalized ad ukraine fi deal. Political tensions, ukraine remains the main export route for russian gas to europe. The nord stream 2 project is expected to start operations by the end of next year. In spain, the Prime Minister is signaling growing confidence, but still needs the backing of a party, whichatist is meeting this week to make a final decision. This would be the First Coalition government in spain since the 1930s. Global news 24 hours a day, on air and iat quick take. This is bloomberg. Nejra selina wang in beijing. Thank you so much. Coming up, the new twist in the carlos ghosn saga. The former nissan and renault boss has fled japan for lebanon. Hes been out on bail and under house arrest, so a stunning twist in the saga. What we have been hearing from ghosns lawyer is he has no idea how to contact ghosn. He is speaking at the moment, also saying he knows nothing more than what has been in the media, but saying that the legal team have ghosns passports. We will get more details on this story next. If you are traveling to work, tune into Bloomberg Radio live on your mobile device or dab Digital Radio in the london area. This is bloomberg. Nejra this is bloomberg daybreak europe. Lets get the Bloomberg Business flash with selina wang in beijing. Fulla jp morgan wants control of its joint venture in china, and we learned they plan to boost the stake from 49 to 100 , the first global lender taking advantage of the opening of the nations future market, allowing full foreign control from january 1. There is no comment from j. P. Morgan. Huawei will overhaul ranks next year in leadership after a slowing in 2019 with u. S. Sanctions affecting suppliers around the globe. They are bracing for a painful year if the u. S. Maintains restrictions. Tradinging in u. S. After the chinese electric carmaker lost less money in the quarter than expected, but it is still warning it is running low on cash, and doesnt have enough money to continue operating for another 12 months. The chinese car market has been slowing and nio has cut thousands of jobs and has started scaling back marketing. That is your Bloomberg Business flash. Nejra thank you so much. Now, the arrest that shocked the financial world. Automotive tighten carlos put on trialghosn in japan for alleged misuse of corporate resources, which he denies. Now a new twist. He says he has fled to lebanon to escape injustice and political persecution. Lets bring in chief north Asian Correspondent stephen engle. How on earth did carlos ghosn escape without a passport and while under house arrest . Twist, right at the end of the year, the last day of 2019 and carlos ghosn pulls this escape act. He fled bail. Is he on the lam from japan . And how did he do it . His highpowered lawyer who got in bail earlier this year, house arrest, from solitary confinement, a real defense guru in japan, in a country that has very few defense victories, how did he not know or claim he did not know how carlos ghosn got to beirut . He says he has all of Carlos Ghosns passports and that he knows what we all know, what was reported in the media. There you see junichiro hironaka, speaking to the media right now. How did he get out of japan . Lookingthorities are into whether he used an alias to get out of the country. Others are reporting out of lebanon he entered the country on a private jet from spain using an alias, allegedly, so lots of questions. Nejra exactly. Carlos ghosn in his statement answered some of them i his motivation, saying will no longer be held hostage by a rigged Japanese Justice system where guilt is presumed, discrimination is rampant and basic rights are denied. He said i have not fled justice, i have escaped injustice. Can a country like japan, with rate,ost 100 conviction where does this leave carlos ghosn . Stephen thats the big question. The japanese prosecutors really wanted this case. They were going to go hard with it. There were going to be two trials, one for pay disclosure irregularities and financial crimes, and another for breach of trust associated with financial, alleged crimes anding with suppliers partners in the middle east. So, we have no idea whether japan will go ahead with the trial in absentia, or whether this one gets chalked up, oh well, we cant go forward. But its definitely leaving a lot of embarrassed faces and feelings in japan right now. Nejra stephen engle, great to have you with us. Thank you so much. Bloombergs chief north asia correspondent. Coming up, bitcoins 9,000,000 rise this decade leaves other assets in the dust, but what is the chart that matters on the last session of 2019 . Find out next. This is bloomberg. Nejra this is bloomberg daybreak europe. Our guest host is still with us. No cash trade today in treasuries because japan is closed, but talk about the outlook for 2020. Would you be preferring equities, or bonds . Alan marginally probably bonds. Equities i think will struggle next year. Ill get to equities in a bit, but basically, we dont see any monetary easing this year. , we are of equities ahead of the global economy. In the u. S. , pretty hard to see monetary easing. Maybe 25 basis points priced in. For us with bonds, the main position is to leverage along the twoyear with the 10 year. Nejra why, if you dont expect much easing . Alan good question. What if we are wrong, and we see a lot of easing . We will make money. The second scenario, the kind of market we see now, what if the fed said rates are definitely not going up, the 10year yield will rise and you can make money in this central scenario, where if you like the economy improves and the 10 falls off a little bit. Nejra alan higgs, discussing equities in just a moment. Bitcoin is up 9,000,000 since the start of the decade. Gold ending 2019 on a high. What is the chart that matters on the last session of the year . Juliette saly has the details in singapore. Juliette im honored to present this. Assets,year for risk coming off that low in 2018 when we saw all the risk assets reverse gains for the year in the fourth quarter, an 11 drop on the ms all world index. 24 , then up almost best year for global stocks since 2009, with a gain of around 30 . A number of the indexes have been trading at records, despite the u. S. China trade war, a a lot of uncertainty, brexit, protests around the world. Apple, best performer on the dow, amd the best performer on the s p 500. The best stock of the decade . A new Zealand Dairy company, a2 milk. Thats something to raise a glass to. Nejra you had to keep it antipodean. [laughter] thank you so much. Alan higgins is still with us. You said you like the treasuries. When it comes to Global Equities, we had a conversation a year ago when you said equities could do well in 2019. Guess what, they did. Are we too optimistic for 2020 . Alan for the start of the year, you are probably fine. At some stage, the markets are way ahead of the economy right now, way ahead. Bloomberg,sures, on price per sales on the s p 500, were even more expensive than in 2000 in the u. S. We had a really nice monetary easing, and markets love monetary easing. We dont see any monetary easing. Ironically, we get a trade deal and the economy does better and we dont need any more monetary easing, and as we go into the election, which will have some concerns, the market will have some concerns about the more progressive candidates in particular, and wouldnt be surprised to see the market end moderately down. So no great disaster. But if you are a student of history, about 30 of the time the u. S. Market was down since 1930. It is normal, to have down years. No big recession, yield curve drama like in the summer. Just the market is ahead of the economy, as simple as that. Nejra so you think 2020 could be a down year. Weve been having conversations with people, historically when you saw gains like 2019, you normally got another year of still more modest gains. You dont think we could see maybe 5 or something . Alan of course, anything is possible. We got it right last year, but these are not forecasts you want to drive your portfolio on. Of, we all do it, it is interest, but i think you will have to work the portfolio very hard. The u. S. Market dominates msci world. Away from the u. S. , emerging markets, doing better. So we can keep the market up next year, but overall flat to somewhat down in the markets, in the Global Equities, yes. There is no monetary easing next year. Nejra you said the reason it might not come through is because of global growth. Will that not feedthrough to corporate earnings which might drive equity gains . Or the earnings and then we sell off of that . Alan could have somewhat better corporate earnings. 2018, spectacular corporate earnings and a tough market. Last year, flat corporate earnings and a fantastic equity market, especially in the u. S. So yes, better corporate earnings, better economy, but we are there already, the markets are there. A consolidation in market, coming up to the u. S. Election, could bring the msci world down a couple percent, Something Like that. No great drama, but more likely a negative year. Nejra how will european equities perform amid that backdrop . Alan normally when the u. S. Is down, european equities are down more. But there is such deep value in that market now. When you by european equities, you allocate to value sectors like autos, banks. The dividend yields alone of the banks. Here are equity returns unicredit,eld, buybacks and dividends. Nothing, just holding them. Also, these dividends are a lot more secure than they used to be. Weve previously been in financial credit. Thats worked tremendously well. Maybe europe can buck the trend and get a modestly positive return. Nejra would you look more at value overgrowth in 2020 . Alan we have tweaked the portfolio somewhat more towards value. Especially in the u. K. We are big investors in more domesticorientated situations. But we have got some balances. Despite the momentum, that wewth, 10 years of growth, are tweaking the portfolio more towards value. Just like europe. Nejra what about other sectors in general . What would be your favorite sectors, for 2020, either globally or specific regions . Alan financials. Previously we were in health care and tech and we have taken those bets off. Both have done very well. Tech has been sick tackler. Health care has been spectacular. Health care, the u. S. Election is key for health care. For us, financials look interesting. More of a slow year for markets, so earning a 6 8 dividend yield in europe, a pretty solid equity return in the United States, could well be the standout sector next year. Nejra alan higgins is staying with us for the rest of the hour. Markets spooked some investors this year, but yearend repo operations were under subscribed on monday. We have the latest on that, and new faces joining the ecb. Lots to discuss with Central Banks. Alan higgins says there will not be easing in 2020. What does that mean for markets . This is bloomberg. Nejra good morning from bloombergs European Headquarters in london. This is bloomberg daybreak europe. The great escape. A fallen automotive a giant, carlos ghosn, flees to lebanon, saying he cannot get a fair trial in japan. It is another twist in the saga that began in his arrest a year ago. Peter navarro says a trade deal is in the bag. This is chinas Manufacturing Sector continues to expand in december. Closing the decade. A rally to remember for global stocks, oil poised for its best year since 2016 and bitcoin up 9,000,000 since 2010. Tocks, oil of 2019 andst day we are ending with a bit of caution in asian markets. A lot of markets are closed. Thin trading this holiday season. U. S. Futures slightly on the front foot and a fourth day of dollar weakness. Lets get all the action from our markets reporters around the world. Joining us is Juliette Saly in singapore and in london, Annmarie Hordern. You are focusing on the hong kong markets. A little bit of optimism there today. Juliette yes, absolutely. We saw hong kong markets close lower today. I am looking at what we have seen over the course of the year, particularly in the month of december, which has been great for hong kong investors. We saw a gain of more than a 7 for the hang seng index in terms of what you signed december. That also what you saw in december. Some analysts doubt the strength will keep the hong kong dollar on track for its best month since 2013. The u. S. China trade dispute. There has been positive return for a city dealing with ongoing protests. Nejra lets get to a reporter in mumbai. What are you looking at . Welcome good morning to you of course well, good morning to of course. The larger trend is what i am trying to focus on. You will hear a lot of people talk about whether the broader mar