Largest economy in europe for 2019. There are more concerns about the global trade deals than there was yesterday. You can see european stocks pretty much flat. The dollar pretty much a steady. We are getting some data out of germany shortly. We also speak to the dallas fed president , Robert Kaplan at 3 30 p. M. London time. Lets get straight to the bloomberg first word news. Now, u. S. Story for tariffs on china staying put. The Trump Administration is likely to keep them in place until after the president ial election. Any relief is also contingent on compliance. Steven mnuchin and says tariffs wont be removed until the next stage of a trade deal. These tariffs will stay in place until there is a phase two. If the president gets a phase two quickly, he will consider relieving tariffs as part of a phase two. It has nothing to do with the election or anything else. Today, the u. S. And china are scheduled to sign their phase one trade deal. 1 billion is the figure by which jp morgans fixed income beat revenue expectations. Citigroup debt traders posted a jump that was more than double expectations. The surge at both firms helps them notch up the best trading year since 2016. The Trump Administration plans to restrict the medias ability to preprepare economic stories. At the moment, the u. S. Hosts a lockup, where journalists could receive data in real time in a secure room, that way they can publish the stories right on schedule. But now, the administration is looking at removing the computers from the room, making it more difficult to get the stories out on time. Democratic president ial candidates squaring off for their final debate before the iowa caucuses. There was a truce between senator warren and Bernie Sanders. Sanders was asked about a report that he told misses warren he did not think a woman could win the presidency. As a matter of fact, i did not say it. This is what donald trump and may be some of the media would want. Thatdy that knows me knows it is incomprehensible that i would think that a woman cannot be president of the United States. Senator warren pointing out the only people on stage who have won every election they have ever run in, all of them are women. Global news 24 hours a day, onair and on quicktake by bloomberg, powered by more than 2700 journalists and analysts in more than 120 countries. I am Viviana Hurtado. This is bloomberg. Francine . Francine thank you so much. The russian president , vlad or promote Putin Vladimir putins, annual state of the union speech is about to get underway in moscow. We should see the russian president arrive onto the stage and the speech usually last two, 2. 5 hours. Lets get more with our executive editor for international government. Joining us for the hour is james bevan, chief Investment Officer at ccla investment management. This is the much anticipated showcasing of may be russian might or russian domestic policies. What are we expecting from Vladimir Putin today . , it could be relatively short 6090 minutes compared to the two, 2. 5 hour odysseys we have seen in the past. He might be pretty careful about the idea of interference. Interferenced no and there is no need for pressure to interfere. That is even as a conversation obviously picks up about the coming election in the u. S. And any role by russia in that. He might try and needle the states about weapons. Trump pulled the u. S. Out of the inf missile treaty. It is only a year until the start until the Nuclear Treaty expires. He might try to push them on the missile front. Francine the president of russia has just started speaking. Is one of the first events of the year. It is urgent that we tackle the sizable economic and technological tasks facing the country and that we lay down e main guidelines for international for our national products, whose implementation real required will require direct dialogue with our citizens. Today, our society is demanding change. People want to development and they are trying to move forward in their own professions, in their knowledge, in their achievements to achieve prosperity. Y want to see real they have a clear idea of what needs to be changed, be it in the cities, in the country, throughout the nation. Change must continue to develop and people must be able to feel the effects, because we need to provide them with a decent standard of living throughout the country. Ladies and gentlemen, russias future depends partly on how many we are, so therefore, i would like to start with demography. Who those children will turn out to meet, what they will do to develop the country and what values they will base their lives upon. We have Something Like 147 million today, but we are facing , difficult period demographically speaking. Thanks to the measures which we took soon after the turn of the millennium, that situation is improving in our demography. Francine Vladimir Putin, the russian president , just started his state of the Union Address 2020. This is a slightly shorter one than in the past, maybe 6090 minutes. You can see the visuals are quite important and always quite impressive. When you look at the force that russia will be in 2020, to stabilizeabilize or de world politics, what are the three things we are looking out for . U. S. Elections, how they deal with china and the middle east. One thing very interesting is seeing russias behavior in the middle east and north africa in the past year. We have seen russia really advance its interests in both syria and libya. We saw that russia and turkey seem to have done a deal behind the scenes where they have agreed to carve up livia amongst themselves libya amongst themselves. That has pushed the u. S. Further out from that region. What we are seeing is a renewed Foreign Policy effort by Vladimir Putin in areas where he feels like he can have an effect. Russias economy cannot compete with the u. S. They cannot compete in that sphere. What he can do is needle, needle, needle and have impacts in other parts of the world that remind us that russia is still there and still a power. One thing to watch is his behavior in the middle east. Francine james, do you have any assets linked to russia . They are very oil dependent. We have seen a little bit of fluctuation in the price of oil. Given what we saw in the middle east, it has been relatively stable. James indeed. We have no direct connections to russian investments. Mr. Putin began his speech talking about demographics. Demographics globally are a huge issue in terms of whether or not we can get sustained economic growth. U. S. Has much better data for graphics much better demographics compared to germany. China is also in a tricky position. Francine thank you both. Our executive editor for international government, james bevan from ccla stays with us. Up next, President Trump is expected to sign a beautiful monster of a trade deal today. Details on phase one of what it means for markets next. This is bloomberg. Economics, finance, politics, this is bbg surveillance. Im Francine Lacqua in london. Lets get you straight to the Bloomberg Business flash. Heres Viviana Hurtado. We begin with a sweeping round of job cuts at ubs Wealth Management business in europe and asia. It has cut up to 20 from several european teams at every level from assistance to managing director. This is to bring clients closer to decisionmakers. Seeking, jp morgan is full control of its Fund Management joint venture. The wall Street Lender is in talks to acquire the company from its chinese partner. It overseas 22 billion of assets. The move coming as Global Financial firms are rushing to capitalize on chinas opening of its 45 trillion financial market. Morgan stanley promoting 130 executives to managing director. Marks the, that smallest wave of annual promotions to the firms top ranks. Bank has years, their tightened entry into its highest echelon. Rival Goldman Sachs has done the same. That is your Bloomberg Business flash. Francine thank you so much. President trump is set to sign what he cause a beautiful monster of a trade deal with china today. It is phase one of an agreement. For the first time, china could be punished for violations on currency, intellectual property, and the trade balance. Of. Tariffs on almost 2 3 chinese imports will stay put until the u. S. Elections. Still with us is james bevan. With tariffs staying in place until november, they are question exact what that means. What could it mean . James i believe mr. Trump simply wants to get through the next election able to say that he has stood tall and squared up to the chinese. We all know that actually reaching a sustainable deal between these two powers superpowers is exceptionally difficult. It is all about Whose Technology rules the day, who is the politically most important player. What happens on the military front . These are all issues that will not get signed off. Francine i guess the milliondollar question is they have avoided to try and talk about the state of capitalism in china in 510 years. Will that ever be addressed . James not through this process, absolutely not. There will be some form of survivorship over the years. China has greater share of World Trading partners and share of trade amongst those partners than the u. S. The u. S. Is a much larger internal economy. Francine will we get a phase two deal . Stephen mnuchin said they would only think about getting rid of tariffs if they were at the negotiating table talking about phase two. James it is very hard to see that we would get phase two anytime soon. If one thinks about what happened in terms of china joined the wto, it never really abided by the rules. Very similar to the stories in japan in prior generations. Their entire economy, in terms of subsidizing exports, still written in the frame. Francine what does it all mean for the markets . Were the markets to quick and in . Ing in in pricing james i think we are going to have an up year in equity markets largely because the u. S. Central bank is going to continue to an awful lot of cash. Francine despite the fact that the trade war is still looming and potentially could take a backward step . James i think the amount of credit and liquidity that floats around the market will cause people to look past the traded difficulties trade difficulties. This only becomes a real challenge with a credit crunch and recession. Francine if you look at the melt up, if the markets keep on being on a tear, in 2019, it was very difficult to lose money. What is it fundamentally based on . A stronger economy, strong fundamentals, or cheap money from banks . To pay ae preparedness rationally higher price in a climb of low inflation, low in terest rates, and low bond yields. We start with a higher yield on a like to like basis against credit debt. Francine are we creating bubbles . James we have every chance that we are going to create a bubble, which is why i think we have to be very selective. We have to think of quality of whether that growth is going to be sustained. Francine where do you see quality . James in the very best quality banks. I think jp morgans results this morning were an absolute indicator of the pure strength of that bank. Back. The name i would in health care, i would certainly back some of the best names. If we are going to see a real justification of the longterm appreciation of equity back. Prices from current levels, there has to be a pickup and productivity. That has to come from technology. Francine jp morgan beat on all levels. The share price gained 1 . How much more do they have to do for shares to go up more . James i think people are missing the trick on jp m. It is not just about growth. It is about the reorganization, rationalization of earlier acquisitions and a reduced overall cost structure. We have seen the effort they have put into growing the revenue. I think the next big trick is cutting costs. Francine james bevan therefrom ccla investment management. Germanys slowest growth in six years. We will focus on the your area economy. Towill also continue listen to president Vladimir Putins speech. His foreign minister is in india. This is bloomberg. Which will come into force again on the first of january, 2020. One a family has its first child, it will already get the capital,get maternal not from the second child, but from the first child, a full maternal capital payment. After indexation, it will be 466,000 rupees. This is bbg surveillance. Im Francine Lacqua in london. Lets focus on the euronet area. We have had a gdp data out of germany confirming the extent of 2019s slowdown in the continents biggest economy. Gdp growing at 6 0. 6 in the last year. The odds of recession in europe this year our solo, the risk can almost be ruled out. He was talking saying the French Economy is still relatively resilient and he also says the impact of the strikes we have seen over the Holiday Season on french gdp will be at most 0. 1 in the Fourth Quarter. There is the french bank governor. On him. Keep an eye still with us, james bevan from ccla investment management. What do you worry most about ecb policy . A lot of hope is that madame lagarde can try to move something on fiscal policy. What if she cannot . James i am reasonably confident that she can. If she cannot, then we have a problem. In effect, giving the come on to the government to spend more money. The governments know they have to spend more money in order to get their economies moving. I think that we will get some traction. I am very pleased that you asked me to send in my german gdp forecast. I share the french optimism that we will not see a recession. I think we are bumping along the bottom and we will see better progress from here. The challenges, if there are significant challenges, are very adverse demographics in germany. We have real issues in terms of variation of unit wage costs between germany and the peripheral european economies. That will require real expenditure. Deflation we will see in those peripheral economies to regain competitiveness. Francine what do we do with the german two and 10 year yield . If it is no longer negative territory, what does it tell us about the state of the world . James i think the german bond market is an absolute basketcase and investors should stay away. It violates all principles of capitalism to have negative yields. We grew up in an environment where a textbook staple yield, nominal yield on a 10 year Government Bond was 10 year nominal economic growth. Unless you buy the idea that we will have outright deflation, protracted economies, these are wrong. Francine when they are no longer negative territory, doesnt mean the situation normalizes . James well, it is not as if bond yields are going to drive normalization. They will reflect underlying normalization. I subscribe to the view that we are likely to have a longperiod of long period of low inflation. It is the global component which 2 depending3 and on3 which economy youre talking about. High levels of global indebtedness and of course, against that backdrop, we have real challenges of demographics. To me, we are not going to see an acceleration back to the high inflation days we saw in the 1970s and 1980s simply because we do not have enough push to get there. Francine what is the one thing you worry about with friends . Is it reform mobile france . Is it reformable . James the thing that worries me is the banks. If you were to join the links in the Global Banking system from the enormous amounts of credit that were created by the federal reserve, so where did it go and what was the transmission mechanism . French banks are absolutely center stage. I think if there is a draw in global credit and liquidity, french banks are in the firing line. Francine james bevan from ccla investment management. That 3 trillion year after a bumper 2019. We will focus on the longest m a cycle in history. Stocks struggling for traction in europe, as markets are trying to figure out with these trade tensions lingering with china. What does it actually mean for world trade . This is bloomberg. Hey. Hey. You must be stevens phone. Now you can take control of your home wifi and get a notification the instant someone new joins your network. Only with xfinity xfi. Download the xfi app today. Francine washington and beijing are set to sign their phase one trade deal. The u. S. Terrace could stay in place until november seppi election. The u. S. Terrace could stay in place until novembers election. 3 trillion in deals. We will focus on the future of global m a. Good morning, good afternoon, good evening, depending on where you are in bloomberg surveillance the world. Bloomberg surveillance. The money markets have really moved toward pricing in rate cuts either in january or march. I think a rate cut from january is up 50 at the moment. The december inflation rates have fallen to 1. 3 . Was onecast we had. 5 . Core inflation has fallen to 1. 4 . The pound moving a touch on the 2992 that one point 1. 2992. We get to european stock movers with dani burger. Dani the biggest decline or is christian hansen. On the stoxx 600. They cut their outlook for organic revenue, but Bloomberg Intelligence says even that new goal is still too ambitious. The ceo saying in the earnings that it was a mixed starch of the year and they see persistent problems. Because the problems are sticking around, we are seeing shares fall by more than seven. 5 . On the other side of the leaderboard, the biggest gainer on the stoxx 600 is asm international, the chipmakers having a good quarter. Thereasm says fourthquarter is going to come in stronger than they previously expected. Order number 370 million euros, more than 20 then where they saw their midpoint. We are seeing shares skyrocket to a record high. Jly, jay martens martins. A lot of their look says it is the strength they said that food inflation picked up mor