Remarkable considering the last 48 hours. The dollar continuing to strengthen, and crude at a very sanguine 59. 19. Guy lets talk about what is happening here in europe. Weve got a risk rally underway. Stocks reasonably well bid. Volumes pretty good as well, so that is worth paying attention to. Pound down by 0. 3 . Brent crude down as well. The pound down on those carney comments. Lets talk about what is happening with the trade narrative. Vonnie yeah. China announcing that vice premier liu he will travel to washington next week to sign the first phase of a deal with the United States. Joining us from washington is bloomberg trade reporter shawn donnan. It would appear the events of the last couple of days havent deterred china from that january 15 date we heard before for a signing ceremony. Shawn absolutely. This is the first time weve heard the chinese confirm that the vice premier will come to washington. The real theme since this deal was first announced way back in october has been skepticism about exactly what is in the deal, and part of that has been met by a lot of silence from the chinese side. They have confirmed that there was a deal, but even then, there were some questions about when it might be signed, who might be the signing. Now we know, luca and the delegation of senior officials, including the now we know, liu he and the delegation of senior officials, including the trade minister, will sign. We expect a big crowd of Business Leaders and others, that there is a bit of a party the white house wants to throw for this. Guy when do we actually get to find out what is really in it . It is 90 pages long. When do we actually get the details . Shawn theyve started circulating the text on capitol hill. We are trying very hard to get hold of it, as you would expect, but it should be released publicly very shortly after the signing. That is what theyve done in the past and what the administration has been promising. That is really where the fun and games is going to start. We and others, and certainly a lot of people in the markets, are going to want to see how much substance there is in this deal, not just in terms of purchases, the administration saying china is promising to buy 200 billion in additional u. S. Exports over two years, but also in terms of commitments on big structural issues like intellectual property. We will get to look at the substance, and then immediately turn to the next question, which is likely to pack up at the signing. What comes next . This is phase one. When is phase two . Vonnie it took a long time, there was a market volatility a lot of market the lability, and so many headlines leading up to just phase one. It seems like they decided to bite a chunk off of the entire project in order to get something done. How long will say to take . How many phases are there going to be to this socalled deal . Shawn the president over the holidays tweeted that he expected to go to china later this year to nail down phase two. We have not heard anymore on any potential visits to china by the president. When you talk to people in the administration, they are much coyer about that then the president has been. Viewnk theres a common here in washington that while we may get some more talks this year on a phase two, and that would address important issues like industrial subsidies, the Real Foundation stones of china, but the real question in washington is whether you get a deal before the election in november this year, and i think the consensus, it is fair to say , in washington is that any phase two is elected to come before next year. Vonnie bloombergs shawn donnan in washington, thank you for all of that reporting. Guy to figure out what it all means, Chris Watling, longview economics ceo and chief market strategist, joining us on set in london. Is that trade deal going to be enough to keep moment in going . Chris i think the market is largely moved on from the trade liquidity, to a reaccelerating Global Economy, to the things that really matter ultimately. I think it is looking through and assuming it will be broadly in line with expectations. If it isnt, the navy theres a little bit of a wobble in there. But beyond all of this trade stuff, it is assumed that the Global Economy is decoupling. This is sort of a backwards step the other way. I dont think anyone really expects a very serious phase to treat deal anytime next year. I dont think that is baked into excavations. I think the sumption is it probably wont happen. If it does, it will be pretty uninteresting. Guy if it is not trade that keeps risk assets marching on, is it Economic Data . You talk about liquidity. That was a big feature of last year. The central bank the quiddity continues to provide Bank Liquidity continues to provide momentum for these markets. Chris it is continuing. We had big repos in the last week. Theres more Central Banks cutting around the world. The ongoing qe program we see in various countries is happening. When money supply growth is accelerating, and has been for six to nine months now, that is important. If you look at the Global Industrial cycle, it turned in october last year. That was its trough globally. Another way of thinking about it, the u. S. Has largely finished its d stocking phase cking phase. Orders are broadly stabilizing. They were a bit disappointing whenever they came out, but broadly they are in line. Vonnie is this market resilient . I think it is a very resilient market, and i am pretty hopeful for the outlook for 2020. Im a little bit concerned as to what will happen when and if the fed stops its repo program because that will take away quite a lot of liquidity that has been supporting this market, but at the moment it is very resilient. Look at the way it waves look at the way it behaves with the middle east issues the last few days. We really just gone sideways since september on the s p 500, and now breaking to the upside with geopolitics out of the way. It looks pretty and perceptive me. Vonnie a rare occasion when you market is right not to get too rattled. There are some signals, though, for concern, such as a bit of a , potentially am lack of breath. Too positive positioning, potentially. There are little signs out there. Have you confidence in this market . Chris i think weve got a difficult months, six weeks. You are quite right. A lot of the shortterm multi week indicators look pretty top he. They suggest the market is come too fast, too far. Thats what markets do. ,hey shoot up, consolidate reposition themselves, and prepare for the next move higher. I wouldnt jump on it at this. Evel i think the outlook is good for 2020, particularly the first half. Guy i want to come back to the thing you said a moment to go and followup on it. You said you are a little concerned about what happens when the Central Banks do step away, when this liquidity tap is turned off a little bit. Walk me through what happens. That strikes me as being a very marketnt part of this narrative. If it changes just a touch, what happens . Chris it is utterly key, and part of the resilience that vonnie was mentioning. It depends why it changes. They have says hast fully if they have successfully timed trying to turn it off, and the Global Growth driver will provide differing liquidity because people swap out of bonds into equities, it is fine. But if they miss time it, go to hard, do it too early, i think we have some real issues in stock market. It is undoubtedly one of the key things that is creating momentum at the moment. Guy in terms of what is going to drive multiples for stocks Going Forward from here, you are talking reasonably positively about the economy. How does that translate into earnings . How strong to using the earnings picture is going to be . Earnings were pretty flat last year. Input costs have the potential to rise this year. The middle of the p l could be affected by this. You could see productivity not picking up at this point. Could see input costs from other factors coming in. How finely balanced is it . Chris it is worth saying that there is no correlation between twelvemonth returns and expect it earnings and the stock market. Guy fair enough. Chris and no correlation between actual earnings and twelvemonth. Guy where do earnings show up . Chris they matter over 3, 5, 10 years. But if the economy is going to accelerate, Earnings Growth is going to do better than people expect. I think they could easily beat to the upside. That it doesnt really matter. Whether it is multiple expansion or Earnings Growth, in a sense, that is kind of the output. It is the liquidity that drives it in the Global Economy. Both of those i think youve got at the moment. Guy chris is going to stick around. Plenty more still to come. Chris watling from longview economics. Vonnie lets get a check now of global markets. He is kailey leinz. Kailey the Global Relief rally is continuing. Three major averages in the u. S. At fresh record highs. The nasdaq higher by the better part of 1 . If we take a look at some of the movers within technology, what is really leading the rally is advanced micro devices, up 4 . It was upgraded at mizuho today. Qualcomm higher by the better part of 2 , as is apple. A few things working in apples favor today. Doubledigit iphone growth in china, and holiday growth was likely very positive for the company. You have tesla falling from its record high, bears saying it might be time to take some profits after what has been an incredible surge. Far in 2020. Up so it is a higher value than ford and General Motors combined. We are giving back some of those gains today. Finally, i want to take a quick check on oil. With those easing middle east tensions driving the rally, it is taking crude lower by the better part of 1 today, bringing a threeday declined to nearly 7 . That is the worst threeday period for wti [no audio] vonnie assets. Remember, the function gtv allows you to browse all of the recent charts featured on bloomberg tv. You can save your favorites for future reference. This is bloomberg. Vonnie live from new york, im vonnie quinn. Guy from london, im guy johnson. This is the european close on Bloomberg Markets. Lets hand things over to ritika gupta. Ritika iranian aviation regulators say the boeing 737 that crashed in iran tried to turn back before plunging to the ground. The Ukraine International airlines jet disappeared from radar at 8000 feet. Witnesses say they saw it on fire in the air. Ukraine now says it is examining several scenarios. Among them, a missile strike and terrorism. Filings for u. S. Unemployment benefits fell to a fiveweek low. Toless claims dropped 9000 214,000, the latest indication the labor market remains solid. She government the government comes out with the december jobs report tomorrow. Bushfires in australia are likely to way down the economy. Todman sachs sees hits develop into an production, some of that offset by an increase in fiscal spending. The fires have burned an area larger than ireland. Prince harry and his wife Meghan Markle may become stars on the public speaking circuit. The two have announced they are stepping back from their roles as senior memory of the British Royal family. They say they will work to become financially independent. One agent says harry should be able to command about 500,000 per appearance. 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. Im ritika gupta. This is bloomberg. Vonnie thank you. We are back now with Chris Watling, longview economics ceo and chief market strategist. Let me start with something Richard Clarida, the vice chairman of the fed, said today. He was speaking in new york, talking about u. S. Growth. Lets have a quick listen to this. To distant we want was between the baseline view and the risk around the view. I think private sector forecasters baseline view is for inflation to begin to move towards 2 , but i would be honest in confessing that if there is a risk to that outlook, it is skewed to the downside. Ere. Ie rich clarida th we also had byron wien on this morning from the Blackstone Group saying that he also thinks growth is going to underwhelm this year, and he actually thinks there is going to be two fed cuts. Where do you see gdp growth coming in . Chris i think growth will reaccelerate. I think the interesting point is inflation, as Richard Clarida said. The risk is to the downside. A lot of what we look at would suggest core inflation is going to be not terribly impressive at all in the first half, 3 4 of this year. Anda is basically exporting a lot of deflation at the moment, and that gives you a good 12, 18 month lead on what is going on in u. S. Inflation as the states. It is all pretty tame. I would be very surprised if we got two rate cuts this year. I think that is pretty unlikely. I think the fed will just hold pat. I think what is interesting is what they do with this repo program. Then obviously, if we dont get enough inflation, we can continue to grow at an accelerating pace. What solves that conundrum . Chris well, when do we eventually get inflation . Im sure as we accelerate through the year and into next year, eventually we will start seeing a tighter labor market. Theres is a real conundrum out there. Why is Wage Inflation growth stabilized the last 12, 18 months . Part of that is the u. S. And Global Economy slowed into 2018. The other part is if you look into the oil states, where oil price came off 2018 into 2019, Wage Inflation fell dramatically. If oil price sustains this reasonable strength year on year, you will get more inflation out of the oil states. In aggregate, you get more Wage Inflation out of the states. Then i think you will start seeing some general cpi pressures. The first two or three quarters, i think it is going to be muted or look through and not worried about. Guy at the bank of england, talk about what happens next. The market assumed the risk to the upside and the downside were pretty symmetrical. Carney was talking earlier today, and the hints seem to be actually that the barrier to cut is significantly lower then maybe the market has assumed. Is that the correct interpretation . Chris yeah, and i thing they should have got there sooner. Everyone around the world has been cutting rates. U. K. Is now much less of an issue, and growth is sort of sulky. We will probably get a brexit bounce. We had a bit of a bounce in the currency. Guy youre not getting it much in the retailers at the moment. Theres not much of a sign, judging by the sainsbury numbers or much else. Chris i think it will come. And i think a rate cut is a great idea. Guy rate cut or rate cuts . Chris well, theres not much to cut. Guy lets assume 25. Do we get down to their . Chris one or two from here, it is not far. Guy but will get there . But will we get there . Chris possibly. I would go for one cut. In the sense that a lot of the cuts have happened, Global Growth is lifting, and the u. K. Should get a bit of a bounce anyway, one cut is a nice oomph to help it along. Vonnie what about a trade agreement . When do we see the first of them, and will the u. K. Managed to get good terms . Isis well, my understanding from boris johnson, there is one already ready to go in south korea. Fast tracked deals negotiated through out this year. The real question is the European Union and the u. S. , which comes first and what terms we get out of it. The reality is, like everyone else, or like many people, i think we will get an ot deal with the european yet get an ok deal with the European Union. I think this is much less important than it was. Both sides need to do a deal. Theres notion at against to try to keep the u. K. In the European Union. Thats done, and it is just a straightforward negotiation for a trade deal. It probably wont happen by the end of the year, but im pretty sure it will happen and be decent for both sides. The u. K. Economy is not really about trade. Theres a little bit of uncertainty thats not driven rate cut would reinforce the Housing Trend and the acceleration in the economy. Guy chris is going to stick around. Chris watling joining us from longview economics. This is bloomberg. Guy from london, im guy johnson. Vonnie from new york, im vonnie quinn. This is the rpm close on Bloomberg Markets this is the european close on Bloomberg Markets. The dow is up zero point 6 , the s p 500 up 0. 5 , and the nasdaq up 0. 8 . Some of the best performers in the s p include the chipmakers, amd for example, and starbucks up 2. 25 . Guy in europe, the dax is outperforming. Stocks like lufthansa doing well. Stockshas got 20 of oil has got plenty of oil stocks as a result. Underperformance is coming through for the cac 40. We will deal with the details next. The european close is coming up. This is bloomberg. Guy 30 seconds to go until the end of regular trading in europe. 40 has gone down and down throughout most of the day. That is the picture in terms of the 30,000 feet you. This is the view in terms of how the session is developing. The stoxx 600 has moved higher. We are not quite at session lows, but nearly. Volume has been all right. Individual markets look like this. Oil has been a laggard today. They are that in mind. That in 100 bear mind. The ftse 100 up. 3 . The cac 40 a little bit of a laggard. It is stocks like total that have not done well. I have not loaded up the grr, the sectorbased story, but my excellent producer has. Let me show you what is happening from a sector point of view in europe. Technology has done well. Suppliers, they have done well. You can see what has done an apple on wall street. Tier three been the suppliers that have gone well. Silicon has gone well, cars have done well. A big conference coming up n