Manus it is daybreak europe. Let us discuss the single bit biggest geopolitical issue in the world. For me, there is a divorce between market recalibration to risk on or less the risk off and retaliatory risk. Let us have a live picture. The foreign minister from iran speaking in tehran. The attack made the world a less unsafe place. The u. S. Is a more unsafe place. There are a number of other headlines translated by al jazeera. I is alling of soleiman big gamble and what happened was not an attack on iraqi sovereignty. It was targeting a man who was fighting terrorists. Good morning. See thee certainly do rhetoric not necessarily backing down on both sides. This is one of the questions we are asking ourselves. If weather with the u. S. Did last week was a great miscalculation and how that might feedthrough into rotelle tatian retaliation. Are we going to see rational actors being more calm in the markets as we wait to find the answers . Manus markets have repriced, and this is what im saying. Standdown, webout have given some back on oil. Goldman sachs would point to the essence of the capping of this market is because you have significant supply, but what about that question to the secretarygeneral . What does he make of the market likes ability . Market flexibility. The Global Impact of the bushfires. , 3500. 500 pension fund all in, i hope. I leave you with that. Three rate cuts. We will debate that over the next hour. Manus asian equity markets, we are seeing green on the screen, particularly tokyo and australia. The asiapacific index up almost 1 . Gold easing its rally from a sixyear high moving toward 1600 an ounce yesterday. The 10 year yield steady after rising yesterday as well. Risk on or relief across assets. On to our top story, tensions climbed between the u. S. And iran after the killing of general soleiman at the pentagon has deployed additional trips to the middle east and the u. S. Has denied it is exiting iraq. Iran is promising retaliation. President trump threatened to attack iranian cultural sites if that happens. Manus indeed. Investors are dialing back the concerns of escalation. Some appetite for risk premium back into financial markets. U. S. Futures a little bit higher. Oil, as we have said, and gold ease back from their recent highs. How should we assess risk this Tuesday Morning . The head of investment at commercial bankers, good morning, welcome. We put parameters around risk on the gtv library. Oil spreads and cdf for the region. What i find interesting is this. The attack on aramco provoked more market response than the taking out of qassem soleimani. Are we loaded into a false sense of security . Lulled into a false sense of security . S has had very little impact on markets for the years now. But theents are big, risk of further escalation is low. Yes . It sounded like you were finishing your thought. With risk, the biggest risk, the impact on the oil market, you translate into how that might potentially Impact Global growth. Our investors anticipating that even if and it is a big if, we get oil to 100 a barrel, is not going to impact the economy the same way it did in the past . Dont thinkall, i people really believe oil will go to 100. The oil market today is not the mostthe oil market importantly, oil is available across the globe, evenly spread out. You have a very large producers in the u. S. And russia who can cover up any shortfalls from other regions. Markets are placed very differently, so no one feels there is a risk of oil going to 100 and that becoming a risk to global growth. I think we have a huge supply issue coming with new countries coming and coming in to the market. Last week you must have noticed the real has come up with half a Million Barrels of oil a day. This is a new country coming to the block. Kuwait and saudi have resolved the neutral zone, more oil supply even in our region. Can i paraphrase you would suggest risk of buying on drawdowns . Deepak absolutely. No other risk than to stay invested. Your preference in terms of risk assets . Is it a is it equities . We have been very constructive on u. S. Equities. Despite all the problems we have had last year. Think Technology Stocks remain very attractive. The other asset class we are looking at is the highyield space, the u. S. Highyield space in particular. That remains extremely attractive. Everyone is hunting for yield in the low growth, low Interest Rate environment, fixed income and highyield will be favored by investors. Highyielddoes the world look to you . Ultimately, my view on highyield is predicated on i presume nonrecession in the united states. Deepak absolutely. The u. S. Economy is chugging along extremely well. Emerging markets look attractive because their Balance Sheets are healthy. Anywhere you get good yield, low risk of reform. Either u. S. Highyield or emergingmarket sovereign and corporate, these are attractive spaces to be in. Would you put protection in the portfolio . Does gold look attractive to you . Deepak gold does look attractive to us for different reasons. Gold. Scared buying no one does that. Gold is doing well because of other reasons. It is more to do with Central Banks globally loading up on gold in the last few years since the financial crisis. They have been adding 400 to 500 tons every year. Last year was Central Bank Buying was up 20 . There are various other factors that make gold very attractive. As a risk off, as a hedge to risk. You manus what about the rest of the commodity complex . Some would say that part of the disinflation discussion we are seeing the past for, 5, 10 years, the lack of commodity upswing. Walk me through. Deepak the trigger is the u. S. China trade war and the deescalation of that for industrial commodities to do better. That was a big headwind for the rest of the commodities space, including energy in the last couple of years. Deepak mehra staying with us for the hour as guest host. Les get the first word news. A decade of renewal for the u. K. Thats what the chancellor is promising for his budget. The treasury says it will make pledges to cut taxes. That will allow the u. K. To increase borrowing for infrastructure investment. In the u. S. , john bolton said he will testify in the impeachment trial if he is subpoenaed. It injects drama into the proceedings and complicates the leaderships plans for a trial with no witnesses. Beeny weinstein has charged with rape and Sexual Assault in california as the former movie mogul awaits trial in new york. He is already facing life in prison and has to confront a new set of allegations against him. Pla District Attorney says weinstein used his power and influence to commit violent crimes. More charges may be pending. Has launched more satellites. The 60 satellites will join more than 100 others placed into orbit this year. The Company Plans to launch thousands to provide old white internet. Worldwide 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. Manus thank you. Interview withs the opec secretarygeneral tomorrow on bloomberg tv. Nejra looking forward to that coverage. Coming up, as the u. K. Parliament returns from recess, we are going to look at this and reports on the day in our daybook. Musk attends a ceremony to mark the delivery of his china vehicles. Nejra this is bloomberg daybreak europe. Ahead. It is the day spains acting Prime Minister with a decisive parliamentary vote to form a government. We are going to get euros on inflation data. Parliament returns from recess. The house of commons is scheduled to debate Boris Johnsons brexit bill. Watch for the u. S. Factory orders for november. We will get ism nonmanufacturing. Tesla kicks off production in china, a major step in elon musks global push for electric vehicle domination. He is attending the ceremony for the first customers. It could herald the dawn of real competition in the worlds first ev market. Great to have you with us. Is problem here is demand declining in china. Is that the biggest challenge for musk as he needs to prove tesla has what it takes to go global . More is entering a much conducive market that when he made this decision to build his First Factory outside the u. S. Sometime around mid2008. We have obviously seen the rise of the trade war and the decline of the overall as well as electric Vehicle Market here in china. We are seeing an unprecedented slump in car sales here and electric vehicles are coming off because of a rollback of subsidies from the central government. At the start, they were very keen to push subsidies into this market to encourage carmakers and consumers to get on board, but now they are wanting the industry to stand on its own two feet. Tesla is coming right into that. At the same time you have volkswagen and toyota, the auto giants coming and with very serious ev lineups into china this year. Its going to be a competitive one for elon musk, who is gladhanding officials and enjoying all the pomp and ceremony at that shanghai factory today. The official opening. Manus they say he is shy, dont they . He does not like the press very much. Does not like walking down a carpet. Thank you very much. Emma obrien. Ok. Lets get your business flash headlines. Nissan says it will take appropriate legal action against its former chairman carlos ghosn. He fled japan a week ago. He is planning to hold a News Conference in beirut tomorrow, maintaining his that it dashes innocence maintaining his innocence. Meanwhile, a 20 billion loan as it continues its pursuit of hp. About theoubt companys ability to finance the deal, the biggest ever risk loan in the tech sector. It is welcome news to banks hoping for more merger activity in 2020. Huber is working on a flying car uber is working on a flying car. The air taxi would be able to take off and land vertically and see up to four passengers. It will cruise at speeds up to 200 Miles Per Hour and be fully electric. That is your Bloomberg Business flash. Thank you so much. Coming up, the one hits its strongest level in the yuan hits its strongest level in five months. Nejra this is bloomberg daybreak europe. Time for the chart that matters. Yuan is rising for the first time this year. It is not just about dollar weakness. Quickset is part of the story, but we are seeing more hands off approach from the pboc. Flirting with that resistance. Part of this is to do with the fact we have that intimate imminent signing of the trade phase one deal. Optics might look better for the pboc to be more hands off. Part of thisbe agreement. The u. S. Treasury and u. S. Officials certainly want more transparent pboc. Ahead of that trade agreement, you can expect the downward trend between the ust and the sea ny. It is also about the cny. It is also about optics. Nejra as we look ahead to china sending a trade delegation to sign the phase one deal annemarie was referring to, head of investments at commercial bank of dubai is still with us. How are you approaching investing in china . Are you doing it via the yuan . Are you looking at equities . The fixed income space . There are different aspects. We look at mediumterm view. We think china has been trying to reorient its economy from an export led economy to a domestic consumption oriented economy. We believe the trade war has helped expedite that transition. Domestically, companies playing on the domestic front in china, therefore are very attractive. Manus how do you play the differential in technology . American Technology Companies are resplendent versus those , do you agree . Think it is a structural change. It is technology that will decide the future. Chinese Technology Companies have done extremely well and they are far ahead in terms of developing new technologies like 5g, for example. I think that is a fundamental issue behind the trade war. There are opportunities in the Technology Space in china. Companies will do extremely well in the future. The chinese economy remains robust as it becomes more domestically oriented. You see how Much Technology has it is amazing. There are huge opportunities. Nejra issues in tech are going to carry on beyond phase one, dare i say phase two, phase three. But you see investors buying on dips. How do you connect those ideas we are not going to have resolution to the trade war . I agree with you, that is exec a the situation. This is an issue much bigger commodities or intellectual property rights. These are fundamental issues the world dominates of Technology Going forward . This is likely to persist. At the same time, investors are concerned that the china that china and the u. S. Are keen to their economies. China is trying to create a domestic economy. The u. S. Is doing extremely well. Is in a better place to be, fighting these wars that this point in time. Chinese growth is at 6. 7 . It is still growing at 6 . Manus the debate is where does chinese growth going . 5. 5 to 5. 8 , sub 6 . I want to talk about the rba, the pboc. Have a look at this. This is the onemonth g10 over the past month. The aussie dollar as you can see has the trade market relief up over 1 . I know everybody is going to go, i know month to date. The aussie dollar is underperforming. Goldman say the probability markets are saying rate cuts will come into the rba, it is a global issue. How do you look at that . Rba, but i cank tell you about the chinese currency and the yuan. Authorities chinese look at the yuan from two angles. It is a weapon to fight the trade war. If you have seen over the last 18 months, most of their tariffs were neutralized by the devaluation of the one. The yuan. On the other hand, the chinese authorities also not scaring investors who are converting their money into yuan. It is a balancing act they do. Seven dollars is where the redline lies. Seven yuan is where the redline exists. You see correction already over there. It is managed very well by pboc. Manus thank you very much. We will continue this conversation with you. Let us just bring you some quick pictures from tehran, the funeral session for mr. Soleimani. The foreign minister has been warning the world is now a less safe place. Nejra the rhetoric not backing down. Also keeping an eye on the pound. Hedge funds and large speculators betting sterling has further to run. That is next. 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. Good morning from bloombergs European Headquarters in the city of london. I am they with manus cranny from dubai. This is bloomberg daybreak europe, and these are todays top stories. Manus bouncing back. It is riskon again for global stocks despite lingering tensions between washington and tehran. This as the u. S. Says no decision has been made about leaving iraq. Peaking out nissan says it will take appropriate legal action against while ghosn will stte japan because his escape highly regrettable. All of this ahead of tomorrows press conference. And made in china. Elon musk is in shanghai as the consumer rollout of teslas vehicle finally takes place. We are on the ground this morning. Nejra a pause for thought and markets. Relief when it comes to geopolitical risks are to oil and gold retreat and Global Equities bouncing back in the 10 year yield holding onto the level. We get all the Market Action from around the world, manus. Do indeed. The divorce between rhetoric of deescalation and the reappraisal of risk. Lets get the context. Juliette saly is in singapore and niraj shah is in mumbai. Dani burger is in london. You are looking at this turbulence which is very market specific in hong kong. Juliette absolutely. We had more bad data coming through today, showing that visitor arrivals were down 36 in the second half of 2019 after we saw a 14 gain in arrivals earlier in the year. This of course as we start to see this really impact the city due to the ongoing protests. Frome same time, we heard carrie lam, saying the economic recession in 2020 is expected to be more severe with rising jobless rates and some businesses could shut down after lunar new year. On the positive side, the tourism board is preparing a rebranding campaign. We spoke to the tourism Board Chairman on bloomberg tv. He says we tournament in hong kong is not canceled and will take place. There has been a little bit of upside in hong kong equity markets as we see the rebound continue across asia today. Nejra juliette saly, thank you. There has been upside in indian equities as well. Speaking of data, you are looking at the first estimates of indias gdp, due today. Niraj good morning to you and manus and everybody else at the Indian Markets in line with what the World Markets have done. Thats not news. The news is what is going to happen, and two key things for the currency perspective as well. Is coming outnce later today. I dont know how much credit people will give to it because we have seen how estimates are by and large getting missed, so therefore, while this is an anticipated event, lets see what the data brings. Allowed of india currency. The rupee trading aroundtheclock. This is the first time a step has been taken to bring more onshore delivery in the rupee, and as a result of that, the currency is in focus. More reason for the rupee to be in focus for equity markets. Back to you guys. Manus thank. Niraj shah in mumbai. Lets talk about cft positioning. The latest data that we have. Dani that data shows that it is back. That is what hedge funds and other large speculators are betting on. So after being short for sterling, basically all of last year, they are the most long nonsterling since the summer of last year and when you look at the dollar positioning, it is basically the exact opposite. Dollar positioning has flipped to a net short level, so you have to keep in mind that this data is a bit del