Back. Esident trump hits he says that his tweets are enough of a notification for congress. We had a volatile day on the oil market on friday. Result as this is the the reaction. What you seeing as asia and markets get ready to open. Areathleen, stock futures pointing to london across the board. On the radar, we will have react to be from japan and hong kong. Very muchts in iran set to dominate the picture. Al at 2 , saudi since at the lowest level selling its kuwaiti stock. Performinge best gulf market of last year. Jumping in to check in on the yen. We are seeing a continuation of fridays advance. It is trading at the highest. Evel since october the aussie dollar being weighed against the yen. The flight to safety very much continuing. It edges closer to a sixyear high. The 10year yield under pressure. The aussie bond reacting, curve flattening in australia with the 10year yield off as much as 10 basis points. Is where traders are bracing for more volatility. Lets get you live pictures. We are straight to tehran, where casket haseimanis arrived. He will be buried tuesday afternoon in his hometown. We are seeing an escalation and rhetoric continue with President Trump. Iran says it no longer considers itself to be down of the limitations of the 2015 Nuclear Agreement that was negotiated with the u. S. And other world powers. U. S. President trump pulling the u. S. Are be packed 2017. Canceled ine of and honor of the slain general due to overwhelming demand and turmoil on the streets. We are seeing these live pictures of tehran and his casket there arriving. Lets get the very latest on the mounting tensions in the middle east. Our washington editor joins us. , notwhat is the latest just from iran, but around the world . We are seeing increasing reaction from iran as well . Z yes, it has been a whirlwind of reaction. We had iran coming out with a statement saying it is no longer bound by the the team nuclear deal. Of course, our President Donald Trump pulled us out of that todayand irans comments say that that is a death knell for the deal. Iran a process foreign minister came out and hedged around that. Is to be sad and possibly what is not lost. But Iraqs Parliament bowing to kick out u. S. Troops. The u. S. As it is seeking clarification. The state Department Spokesman says they are looking at the legal basis and whether it is really from real. And i think the u. S. Has said consistently they would like the u. S. Troops to stay in iraq. Is 2000 or more u. S. Rapid response troops on the way to u. S. Iddle east to protect interests. Theres a lot of tension and moving parts. Kathleen it does seem that President Trump was loath to have any escalation around iran. How much does this have to do with the contractor that was killed in the region . How much does it have to do with the rioters outside the embassy . That is a very good question. President donald trump watches a lot of cable television. He would have seen those images are again and again. He would remember the attack on the u. S. Consulate in benghazi. It seems like it really toughened his stance on imani. Ating general sole trump had a statement at maralago that the u. S. Did this to stop a war, not to start a war, but his commentary on and sunday wasy very inflammatory. It was almost like someone flipped a switch in the administration and change the tone. Even mike pompeo, secretary of state, he was tweeting about deescalation. He mentioned that tweet several times. He stopped saying it very yesterday. There could have been a messaging unit that went out in the administration. And as we saw overnight, President Trump tweeted about culturalstriking targets in iran, and just within the last hour saying that the u. S. Could act in a disproportionate manner. Definitely the rhetoric is being ramped. We dont know what the in game is. We have thosese, tweets from President Trump from his florida resort. Hes back in town. How does this set of the week for him . He is find back from maralago. We mayor may not hear from him when he lands. He will have a lot of things on for this week. We are keeping an eye out for on impeachment machinations capitol hill. I suspect even though that is still going on and there are , there willements be a lot more focus on this Foreign Policy developer in the next few days. This probably the main thing to what child for, further commentary from trump and the foreignpolicy team about what the next steps are with the islamic republic. All right, roz crosby rasny, thank you. Our guest is joining us from washington. George, a lot has happened in the last couple days excuse me, from houston. My mind is in d. C. I got a little further south now. Voting toarliament kick u. S. Troops and anyone having to do with the u. S. Out of the country. Is this an issue for the an issuer is it more for the citizens . It is an issue, i think, for both. You a market standpoint, see a number of incidents, developments over the past that have come and gone. And the market, perhaps incorrectly, has become somewhat in urge, does not react greatly. Risk,s a market risk off that the longer the rhetoric continues, and really, to some irant, the less retaliates, the more injurious it will be to the market. Whom i talkedh yesterday said iran does not have to do anything immediately. They can wait and wait and wait. But even the best intelligence cannot watch everything forever. So, a waiting game could wear on the nerves, on the endurance of in markets and be a negative the weeks to a month ahead if nothing happens, which is paradoxical, but its quite possible. Kathleen george, we are waiting to see how the crude oil market opens, how it trades. In analyst who spoke to Bloomberg News over the weekend oilsically, with rent a 70 ceiling. At do you think this peters out any kind of oil rally here . And would not be a place to put more of your money . Since i am in houston rather than washington, at least at this moment, i have, like everybody, of view on oil and there are three parts to it. , as is quite possible, the iranians will attack saudi or other major petrochemical complexes. That could cause a spike. Is a somewhat unrelated, but very strong phenomena and that i think bodes well for oil over the year ahead. On one hand, clearly opec has floor for oil in iran should be around 50. Oil trackers, they can replace a on shortl of shale oil notice. One thing that has not been talked about much, banks are not toling to lend for loans fractures. Bankers want to keep their jobs. So, the availability of credit to the shale and fracking il, andty is virtually n i think that takes the 70 ceiling off wti oil 2020. You can talk about that being the upper boundary. That would be quite possible, particularly coupled with the political and military risk today. Haidi if we look at this as one more bump of unpredictability the markets have failed to you point out in your notes that iran has the ability, the choice to retaliate how and when it wants and that makes it ethical for u. S. Militant difficult for u. S. Military to preempt an upset that. How does that factor into how businesses price in this risk . Are probably three levels of risk. One is the iranians and our Current Administration are difficult to predict. They can be 10 past u. S. They can be erratic. There isnt really the normal set of policy progressions. Risk probably pushes against the market rather than on the upside. The other is increasingly during 2020, the u. S. Election is going to weigh very heavily on the u. S. Domestic markets, but all of the markets worldwide. It has been talked about, but it has not been the central focus of investors. Passing week and month, i think that will be a much more important factor in terms of do prices go up in terms of equities, or down, up in Interest Rates that have been the case of 10 now. Politics will take over is a major factor in the midterm in direct things stock prices. In that, probably, on balance is not a plus. Does this change . One number you throughout was we ave a 25 chance of successful democratic president ial candidate and democrats returning both houses. Does this change that likelihood , the levels you are looking at . George no. A very respected u. S. To called rollgazine call there is a 35 chance that there will be a democratic split house, 30 chance there will be republican president and a split house, trying 5 chance there will be a democrat president and senate house beingng democratic. 10 chance all branches republican. Fors not a good scenario the corporate level or the taxes paid by people who own the stocks and bonds. The probability of waiting it that way, you will be more cautious about the u. S. Markets and assess it for them, im afraid. Haidi george, im going to leave that with you. Im going to leave on my favorite part of your notes. Own assets that make you happy. Chairman and ceo. Right, lets get you to our fastbreak news with su keenan. Australiart with which is suffering the worst fires since the bush fires broke out last year. Strong wind and high temperatures are fueling the flames. Milder weather and light rain improvement, but conditions are expected to worsen again. Half a billion animals are estimated to have been killed. To hong kong now. Dozens were arrested on sunday amid a process that the china order. Marched against socalled parallel trading where can buy andnese sell at a profit back home. There is growing resentment against the practice as it drives up prices. Taying with china it is bowing more support for Small Businesses while sticking its small economy. To focus on aim longterm regulations for internet and real estate lending. Tokyos famous tuna auction has a sale. Se to largest fish ever was bought for one point 8 million. The sale makes this fish second only to a similar bluefin, also bought by the company last year. Day. L news 24 hours a 2700 journalists and analysts in more than 120 countries. Im su keenan. This is bloomberg. Haidi thank you. We will have more on the ongoing tensions in the middle east and the repercussions. Kathleen and another big story. The dow is down slightly. But not out. We will look at the year ahead. Haidi this is bloomberg. Haidi i am haidi in sydney. Inhleen im Kathleen Hays new york. You are watching bloomberg. The signing of a socalled phase one trade deal chamber 13 our correspondent tom mackenzies joining us from beijing. Come, this keeps to really busy. What is the latest we can be sure of . The latest reports, kathleen, chinese were once again taken by surprise by President Trump in particular that he was planning to sign off on this phase one deal in the white house january 15. The chinese delegation have in planning for earlier than that. They discussed this over and. Fternoon they came to the decision they would do that. They will be flying out on genworth 13th. The chinese will fly back on january 16. And of course, what we know in terms of details, broadly, is there is a commitment from the chinese side on purchases, currency, and keeping the currency in the spotlight for both sides. And of course, changes to things like intellectual property. We do not have the exact details. President trump suggesting he might fly over to china to negotiations. Those may be the really tricky ones. But so far, it seems like january 13 will be the time when the chinese delegation will be in d. C. China has replaced the top official in hong kong. He is a strong land character. What is the significance . Yes, a yes man, a strong man, as you say. He was, until recently, party secretary. Is seen as a man who will effectively take the orders from beijing and implement those. As an order to them that beijing is really intent on trying to restore law and order and they will not be giving into those demands. They will not be deterred by the installation of this yesman. They were particularly damaged by those november local elections. He is seen as someone who will be tried to implement those orders from beijing. Thats our china correspondent there. Us withinteract with the tv function, that is tv , on the bloomberg. You can also join in on the conversation and we do send out this instant messages on the show. This is bloomberg. Haidi im in sydney. Kathleen i am Kathleen Hays in new york. Youre watching daybreak australia. You are watching daybreak australia tesla is predicting fast growth in china. It says it will soon be able to triple production at a shanghai plant at 3000 cars away. That ross that brought their stock to an alltime high on friday. It is more than double that of ford motors. Lunch msung will launch new events at an event. There is speculation of a new galaxy s series in the clamshell foldable smartphone. Insung launched its galaxy 4 february, but it only went on sale in september due to design defects. Coming up, more massive actuations across the country and australia with one of its worst weeks. More on that coming up. This is bloomberg. Haidi the market open is 30 minutes away. We are looking at a dismal start to the trading week. Future showing a bit of downside. The s p falling the most in about a month but also middle eastern markets trading on sunday, plunging yesterday over concerns tensions escalating in the middle east continue to leave investors on edge. Locally the country is increasing and the rest of theworld is watching bushfires across australia. Multiple states have seen around 1500 properties destroyed. The death toll is up to 23 people killed. We will get more detail on that as we have seen higher temperatures, record temperatures and the response from federal and state governments. Authorities in australia are continuing to count the cost of the devastating bushfires after one of the most of a stating weekends. Hundreds of properties were destroyed across the southeast. Firefighters are still working to extinguish 200 fires before the weather conditions worsen again. That is expected later this week. What is the Current Situation on the ground . Of a turna little bit to the weather. It is cooler but there was no rain. It will not do anything to really make a substantial dent in the fires burning. Sydney, 135les, burning and more than 50 of those contained. The expectation is the weather is going to worsen near the end of the week. It will get hotter. There is more potential outbreaks. To give you a sense of scale, 5 million hectares are being burned. Making this unprecedented and one of the worst fires on record anywhere. Though you are on the other side of the world from these videostch and read the stories and feel the photos, it feels like what the country experienced in california and maybe worse. After all of this hardship, what is the outlook . We are nowhere near out of the woods yet. We need a huge dump of rain to stand any chance of winning this crisis behind us. And even when that happens, looking into february before actual rain is forecast. Until that happens it will be a huge job of trying to rebuild. The outlook is in great. To come you will have back and update us. Now we get back to first world news. Su we start with the middle east where tension is rising in iran, saying it wont be bound by the 2015 nuclear deal on enrichment of uranium. This comes amid the fallout from the killing of general solid money. With iraqi lawmakers calling for all American Forces to be expelled from the country. The state Department Said it is disappointed in the reaction and it is awaiting clarification. Reports from beijing say the vice premier is preparing to lead a trade team to washington next week for the signing of the socalled phase one deal. The South China Morning Post said he will fly to the u. S. Next monday ahead of the ceremony january 15. China wasnt expected expecting trump to make the announcement about the date. Ghosn nissan boss carlos shared his escape plan with two americans who worked in private security. One of them is a former green beret with extensive experience in extracting hostages but who also served time for fraud. Name carlosoesnt ghosn but passengers of Michael Taylor and george antwan. Arrest, Harvey Weinstein is finally facing court. His part terminal trial including predatory is a group Sexual Assault and rape, expected to begin later monday in new york city. Jury selections could last two weeks with the trial itself at least six weeks. Accusations triggered the metoo a torrent of similar claims against other men. Global news 24 hours a day on air and at quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am su keenan. This is bloomberg. Markets are likely to face a volatile start to the week. Sophie is looking at the set up area sophie futures are sliding across the board and the yen trading up, forming against the greenback. The 200 day moving average. Amid this haven demand we are seeing a pickup in yen calls as supply falls are rising. Now in go to the largest bearish skew in nearly two months on the front. I looking at oil prices closed on friday. Traders braced for a choppy week ahead. Brent and wti at one point jumping more than 4 , closing at the highest levels since september with aramcos facility back under attack. Looking at gold as well while we await contracts to trade, gold was posting higher, closing in on a sixyear high. We also see options pointing to gains for olein. Thei lets get more on how tensions are moving the currency market. We expecting . Our previous guest said this sort of uncertainty is almost something the markets are certain about. That is right. It hasnt taken much to dissipate the euphoria from 2019. We had sort of scene the mood turn as investors have been piling into the safe haven assets. The yen is higher. It had a rally on friday. Old was up and treasury also we also saw middle eastern markets sinking on sunday. There is a lot of unknown where this is going. The focus is on emergingmarket assets. We ended up with analysts and strategists positive on the return in developing markets this year, seeing them outperforming especially the u. S. Where they are seeing valuations quite stretched. It will be interesting to see how this legal latest Development Impacts the forecasts. Volatility will creep up. We have got a chart showing implied volatility on emerging markets currencies, the highest since august. It shows pressure to the downside on the assets that have benefited from that enthusiasm on the trade deal, that lifted risk assets in december. We are probably in for a v