here are the top stories we are covering from around the world. a cio is the guest on markets. plummeting after a gloomy warning. countdown to shut down. what a partial government shutdown could mean for the market. eye on theresaan may in parliament. european markets are having an impact on the major indices. all the indices across continental europe lower as well as the ftse 100. down 1.1%. theresa may saying there will be a parliamentary vote the week of january 14, which is almost four weeks away. there are no other deals

possible or europe said there would be no more discussions. theresa may said the most anyone can expect is reassurances. are not turning up as much as last week, but headaches form a crime -- four emmanuel macron. let's check u.s. markets. down .2%. nasdaq s&p 500 down .3 percent. mattel and other stocks performing poorly in the s&p 500. the majority of the dow, stocks lower, down .5%. much off the lows. for more on u.s. markets, let's get to taylor riggs. in the i wanted to focus

s&p 500, but levels we are today and what it means. we're at a 2589 and approaching lows we saw back in february at 2581. that would be the lowest on a closing basis going back year to date. it has been a wild ride. abovejority of stocks are the 200 day moving average. it looks like we are getting near the low end. come inside my terminal. we talked about investors getting defensive. interestingly, financials higher despite the role off today. yields lower ahead of the meeting on wednesday of the fed. you do see discretionary also 1%. there are some specific stocks to focus on. 1%.umer discretionary off

yet best buy and walmart and other discretionary heading lower. i want to focus on best buy due to a deceleration in tds, apple products, and gaming, bank of america is downgrading them again for the second time. i've possibility best buy will miss the full fourth-quarter sales. estimates on earnings per share basis for 2019 and 2020 are too high. we will talk about yields. going into safety, you see that with 10 year yields down to 287 s a selloff inet equities and bonds pushing money into the money market. vonnie: taylor riggs, thank you. for more on markets, we are joined by the chief investment partner. ands start with theresa may

parliament. she set a date, but it is a long way away. but between now and then will markets trade on? >> they will be on the two key players. the first key player is europe. they may throw some bones to make the deal more palatable. broadlyhe deal is approved by both sides of the aisle. thes the backstop it is problem is that they soften it to give theresa may the wiggle room? the second player is jeremy corbyn. does he take the lead where make can't on the referendum as a potential way out? i think she is hoping for a move on either one of those issues. they will trade with europe and jeremy corbyn. thate: they could've taken

opportunity today and he didn't because they had said if there wasn't an exec state that he would call for that vote of no-confidence in the government. it sounds like he is backtracking a little bit. a no deal, it would seem like conditions could get worse for the united kingdom. i'm not sure that is there was a bank -- robust banking system. is still strong. if every brit took every vacancy available, 300,000 people moving in between jobs, the unemployment rate would be effectively close to zero, like the americans'. stirling is extraordinarily cheap. traveling across the u.k. and effects,sinessmen the and every case they say the effects of a weak sterling outweighs regulatory

uncertainty. if i sawif i saw the pound so oy on a no deal, i would be a buyer and not a seller. vonnie: which be an aggressive vonnie: which be an aggressive buyer of u.k. and ftse 100 with companies? vonnie: what is your base case.

it is a no faction interest to give any ground. guy: the key players will be can they shifts and get wiggle room from the irish. do they want to see the whole deal go down? ,n the u.k., the focus will be can you get jeremy corbyn to commit to a referendum or opening of the debate? referendum or opening of the debate? i think he is in a position prime minister may cannot go in because she is so dependent on the core vote. vonnie: euro trading versus the dollar at 11333.

i'm curious as to where you think there may be possibilities in continental europe as italy's woes get lighter and the same goes for france. guy: it is tempting, isn't it? it is hard to believe the numbers. that in dollar terms, the dax is down 21% this year. isdollar terms, euro stock down 17.5%, and aggressive bear market. 8%expect to see earnings of 40 full-year 2018 which index down 17 means the pe multiple in europe has contracted by almost a quarter. i am beginning to think there are some bargains out there. in may, everything changes with european parliament elections. draghi goes. we get a component of the european parliament and we will be through brexit. timeght be that h2 is the

to really look for the rebound for european valuations with the euro. .he short-term i am worried on a six to 12 month view, the earn -- the euro and european equities. vonnie: with the fed it meeting tomorrow and wednesday, what are your thoughts on u.s. investments next year? guy: i think we are looking at what will be the rate rise and the markets have done exactly what the textbook says. if you raise rates and go from easing to tightening, you get more volatility, compress and in valuations -- this is the first year in seven that pe multiples have contracted -- and you get lower returns from all asset classes. tofollowed the text book the words. next year, i think the first opportunity will be in the value

and dividend sections of the market because we see exceptionally strong underlying dividends. i think it will be a handover of leadership, a mantle from growth to value at the beginnings of a new race forming at these equity valuations. i have the s&p 500 trading for a full year 2020 on 14 times forward, which is a healthy 20 are multiple. vonnie: that is very optimistic note. guy monson, thank you, coming to us from london. let's get first word news. courtney: british prime minister for themay had a month brexit deal. lawmakers will vote the week of january 14. she canceled last week's scheduled vote when it became clear the proposal was headed for defeat. tomorrow, she and her cabinet

will discuss with the government will do if the u.k. these the e.u. without a deal. socials plot to use media to divide americans and help donald trump's campaign in 2016 was even more massive and sophisticated than previously believed. those are the findings of researchers who put together reports for the senate intelligence committee. they found that african americans were among the groups heavily targeted by the russians. director james comey is testifying on capitol hill. to houseearing before panels investigating how federal law enforcement officials handled probes of the trump campaign's russia ties and hillary clinton's emails. during the six-hour session, comey defended his decisions as fbi director. he would not say whether president trump has tried to obstruct justice by firing him. student loan debt in the u.s. reach a record of $1.5 trillion last month, more than double what it was in 2009 when the

recession ended. haveong dispersed in 2012 defaulted at faster rates than any other loan group financial crisis. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm courtney donohoe. this is bloomberg. vonnie: coming up, retail prices in europe going from brick-and-mortar to e-commerce. it tumbled 38%, after giving a gloomy outlook. and, a programming know, session coverage of one days -- wednesday's fed decision. our guests will include the former chairman, alan greenspan. this is bloomberg. ♪

vonnie: from new york, i'm vonnie quinn. this is "the european close." is souring theg crisp -- christmas feeling. you can see the sales growth is lower by 38%. retailers in britain, france, and germany seem weakness. let's bring in our bloomberg opinion columnist covers the retail sector. the chill is that it is spreading to online, a slowdown in retail. is that right? >> that is right. online and they're not

saddled the stores and get they are suffering. , why are they suffering given that they were the retailer that was honored for so many years? andrea: consumer confidence has slumped, not just in the u.k. but also in france and germany. we introduced on black friday spreading across europe and that has consumers addicted to discounts. big price cuts also taking its toll. vonnie: how much does brexit mighto do it this? asos be in dozens and dozens of countries, but 38% of profit and sales come from the united kingdom. doubt theere is no political uncertainty in the taking its tall on

consumers. it is easy to blame brexit. i think this is real. i talked with lots of retailers over the months and they has said the consumer has slowed down. they are nervous. they have reigned in spending. one said it is like some he switched the lights off in october. vonnie: is amazon picking up the is able touse asos compete. andrea: that is correct. one of the areas that amazon hasn't been able to crack is a fashion. asos does it well. they are thinking about other we 10 -- retailers and competes

others areth them doing well. others are expanding across lear and the u.s. vonnie: how much does the price point have to do with this outlook? we're seeing h&m lower and all of the lower end retailers not doing so well today. is it also spreading to the higher-end? andrea: not at the moment. the higher-end seems to be faring at the moment. there is worries that in china it is a different issue. there are a couple of interesting things. in menswear young chaps work spending much on expensive trainers as they have been and that is taking its toll. vonnie: we are seeing bouma --

plymouth dip. our thanks to adrea felsted. up next, the latest on the partial government shutdown. this is bloomberg. ♪

vonnie: in new york, i'm vonnie quinn. this is "the european close." time for the bloomberg business flash. malaysia has criminal charges against goldman sachs went into trade investment funds. they said goldman misled and a bond was misappropriated. it could face fines well in excess of $2.7 billion of allegedly misused funds and the six undermine dollars they

received. goldman says the charges are misdirected. shares of jack in the box are higher. the company is reviewing options that include a sale. if they can't find the right deal, they will sell bonds or securities pay the chain is facing pressure from activists who harbor group. the owner of the new york knicks said he would sell the team if the offer was good enough. no one has come to with an offer. squareirman of medicine garden -- he is the chairman of madison square garden. that is your latest bloomberg business flash. the fed decision is wednesday and it comes with the president urging the fed chairman and the fomc not to hike. we spoke with a nobel laureate earlier. >> the thing to remember is we gave the fed a job and delegated

to them responsibility for managing inflation and keeping output close to potential and also being the actor of last resort with the financial crisis. the thing to do is let them do their job. they have the best data and they are looking past the next election cycle. we want somebody to be doing that. there is a chance they will make an error but is it likely anyone else knows better? no. place to makeest the decision. financial conditions are already tightening and there is a lag time, especially as they roll out the balance sheet that isn't being felt and that we are going to see increasing tightening without additional hikes. paul: is always tempting to see with -- say we will do the right thing later we will get to it

later, you need to ask to expectationsgeon coming have to be ready and back at normal conditions and you just can't go from strong stimulus to jerk up suddenly to stronger strength. the fed is trying to get back to the normal stance we should be at. david: have to deal with the economy. the administration came in and had a theory to cut taxes and we will get investment up and productivity up. has it worked? the evidence on the tax cut is that it didn't lead to be sustained long-run improvement in potential output that is what we need to have higher standards of living in the future. we need to look back at the history at what worked. , we were ambivalent

about it because it is more fraught with fuel and reducing coal. that depend on investment by government labs and scientists and the market took up the ideas and now the united states is on the verge of becoming an exporter of fossil fuel. that is an effort both by the government and universities and the market that can give us the benefits we want. nobel laureates and nyu professor of economics paul romer speaking on bloomberg earlier. a critical friday deadline approaching to avert a partial democrats shutdown as and president trump are locked in a standoff over funding for the long promised border wall we are joined by our white house leading coverage. the markets not paying too much

attention to the partial shutdown. what are the odds that it will happen from your vantage point? seems high. it seems the president is inclined not to sign anything that would even grant a brief reprieve from a potential shutdown, both sides don't seem to be moving fast toward figuring out a solution. talk on capitol hill and the white house does not seem to be doing a lot to bridge the difficulties and get a bill on the desk that could be signed. surprisely would not me if what happens at the end of the week everybody throws up their hands and pass something that punts the issue into the new year and the president goes on with his vacation at mar-a-lago. vonnie: it is about the $5 billion that has been an issue since the campaign and beginning of the presidency. how does this 5 million boardwalk question and? -- end?

as well he find a win as everybody else something they can work with? alex: democrats are digging in their heels. they don't want to give the president and money for a border wall. i am not even sure the 1.6 billion that was on the table a few weeks ago is still available to the president. he might have to settle for very little or nothing. they are certainly not going to give him $5 billion. they will not give him money for anything that says wall in the legislation. i think it was a border security and will require him to defer to the experts at the homeland security to see what it means. do you think it will shore up his base to shut down the government? alex: it won't hurt him with his supporters but it won't look

good for him with a broader spectrum of voters. beating in the midterm elections. it is clear there are more voters that don't like him them like him. if he is turning his attention to reelection, you may want to try to appeal more to the middle of the political spectrum instead of the far right that is never going to go anywhere. vonnie: is there anyway he can spin this before he leaves for mar-a-lago to keep the government open and put off the decision on the border wall funding? it will especially bad for him if he goes down to his estate in coastal florida with a bunch of federal workers furloughed or required to work for no pay over christmas. one agency that would be shut down is tsa, but a lot of those employees are essential and they would stay on their jobs and simply not be paid. that makes it even more likely

they would wind up punting on this at the end of the week. i think he does want to go on vacation. vonnie: went to minor shutdowns, but the last major shutdown was 2013. what about personnel changes? what can we expect in the next five days? he is walkingke iszinke isr -- zin walking out the door. rosstin nielsen and wilbur are both in a bit of trouble. we don't know exactly why the ,resident has turned on ross but it could be simply he doesn't like what he sees visually in the commerce secretary who is old and looks distracted at times. vonnie: that is bloomberg's alex wayne. approach,rading as we

let's take a look. >> this is where we are. we are closing lower for a third day on the stoxx 600. just below the 1% mark. this is the lowest in a week. down .8%. the dax this is keeping for the theme. the index down since 2018. retail, down more than 2.5%, on the u.k. high street and also now online. the problem started with asos with a trading statement, the worst in years. 38 percent drop, the biggest ever. it spread and went to a german

competitor. close online also in dropped 11.4%, and many more. also the high street, h&m, none of these were immune from the widespread selloff. bhp up 3%, one of the best performers. they announced a dividend of one dollar a share. for stocks make up 60% of the stoxx 600 index. that is the reason that is one of a few sets of groups in the green in europe today. . writing and say there is a chance of a no deal brexit and it is just below .9, up .2.

a forecasted hold at the next and euro dollar up. that is a look at the european markets. vonnie: let's have a look at u.s. markets. we are back to flat for some of the major indices. other asset classes, dollar index showing weakness. euro up one third of a percent. strolling up .2% as we did not get a vote of no-confidence that jeremy corbyn promised if theresa may didn't mention a day for a parliamentary vote on the brexit and backstop. 14 andtioned january there is uncertainty on that. in the bond market, 10 year -- down 2.8%.

crude is down 2.2%. gold futures seeing inflow today . other safer access like the yen 113.ng just below that given that the president xi jinping is giving, offshore trading it's .90. let's go to hell european markets have been trading with bloomberg opinion. he joins us from london. may andgin with theresa jeremy corbyn not calling a no-confidence vote. there is no resolution yet. change the market

dynamics on brexit? is interesting to see some of the tactics that may or may not come. they are playing very carefully what they are doing. as clear as make possible a division within the opposite party. this is a cat and mouse game. ands next year's business brexit in that sense is not going to stop anytime soon. year.k we look to next yield and thear 10 year, is it believe going into year end or is this an expression of an opinion about what is going to happen? marcus: that market is its own universe. if you look beyond 10 year yields, they are in a complete

universe and it is important to -- toa not just brexitr watch not just brexit. yields and the whole panic risk off type i don't think it will change much. vonnie: i'm having trouble to thought -- deciphering the number you put in your column. that is the one thing -- come not come as across as much. i am worried about europe. that is a big potential change next year. we saw the diesel crisis creating a problem for german gdp and that may go on more than just one quarter. we have troubles with italy as well.

that could get serious. let alone brexit as a random thing which doesn't affect europe right here, right now that might toward the back end of 2019 is a goes badly. a lot of things in europe to worry about, particularly if the ecb stops quantitive easing your it is a brave call. i think there is a risk that italian gdp could be negative in quarter for and that the rest of europe has hit another growth vacuum. i don't get is recession, that certainly the whole upswing we saw in europe and that does seem to have lost its legs. vonnie: i am wondering about italy. it feels like the government has come to some kind of arrangement that is better for the european union. is a tax on luxury car

purchases. how is that in line with the italian government for either party, and how is it going to help next year went it comes to movements and equality and so on? marcus: the point is, is it tinkering on the edges or rearranging the deck chairs? in may which is what has been focused on clearly for the past few months. whether or not there is an agreement with the european , 2.04 deficit, just enough to get the e.u. saying we will not but the brakes on you. this is built on a falsehood that italian gdp will grow 1.5 in 2019. there is almost no chance it

will happen. onis forecast based illogical assumptions. that is what will become more and more evident through 2019. the reality is, when it comes down to it, it the economy will not grow as strongly in 2019 as it hoped. vonnie: marcus ashworth, think of for the outlook, although terrifying. is askingire investor the fed to pause rate hike. the reasons were outlined including slowing economy and falling markets. joining us is air shocks are -- is erik schatzker who will be doing an interview. of ratee-barreled blitz

hikes on the one hand and what people so often fit, quantitative tightening on the other hand. we remember quantitated -- quantitative easing, but sets the fed stop buying bonds it has rolled off asset purchases and availabilityts the of money to the economy. underlyingt is the argument for why the fed should stop. erik: he sees things in the market that to him are flashing a warning sign. sensitive sectors, housing, transport, industrials, and financials are all down by double-digit percentages since the beginning of october, dramatically underperforming the market. stan would say those are the what ishat indicate really going on in the economy,

not the economic indicators and the model that the fed uses which is backward looking. criticalhere have been -- some have been critical of the fed. some of the indicators they say are lagging and the employment data, but they might be lagging in other areas like financials and the stock market and commodities. erik: credit markets as well. vonnie: yes. erik: not withstanding the call for a pause, neither stan or leave it isarsh time to ease again. what they are saying is the markets are telling us there is at the very least uncertainty and the possibility of economic

downturn. let's wait and see. instead of hiking rates now in december, let's wait for three months or perhaps six months and see what happens. the point being if the fed hikes now, and actually tips the economy downward, the actions it may have to take in the months ahead would be far greater and more destabilizing then the consequences of waiting and hiking as soon as march. vonnie: you are going to be speaking to stanley druckenmiller. are you going to figure out where he sees opportunity? erik: of course. in his 29 years running duquesne capital management, the period where he became the greatest investor of the modern era, putting up 30% to hear on average with no down years, the

way he did it was by following central banking mistakes and the impact on the quiddity. he is warning of potential central banking mistakes. -- liquidity. he is warning of potential central banking stakes. what is the possibility that jay powell that is listening? probably not high. maybe they will pause on wednesday, but based on the minutes, the likelihood of that happening is certainly less than 50%. if that is the case, then the fed is risking a mistake, and stanley druckenmiller will be positioned and ready to pounce. vonnie: you know that stan and ones are not the two only talking about why the fed should continue to increase rates today. i can't wait to see stanley's results on this. thank you very that is

bloomberg's air checks there. -- erik schatzker. interviewr his tomorrow on bloomberg television. let's get first word news. courtney: president trump stacking up his attack on federal reserve over interest rates. he blasted the central bank for considering a rate hike at a time when inflation is low and the dollar is strong. begin a two-day meeting tomorrow and expected to raise rates for the fourth time this year. top democrats say it is now to president trump to decide whether there is a partial government shutdown. he said he will not sign the budget needed to keep the agencies open if it does not include $5 billion for a wall with mexico. notk schumer said there are enough will for the wall in either house of congress. turkey president

has threatened to launch -- meanwhile, there is another sign the u.s. economy is moderating. a sharp slowdown in business and that sent federal reserve index falling to its lowest level in 19 months. the empire state survey showed week shim it's an unfilled orders. global news 24 hours a day, online and at tictoc on twitter, powered by more than 2700 journalists and analysts in over 120 countries. i'm courtney donohoe. this is bloomberg. vonnie: let's check now aware of european stocks have settled as we head to break. retailers drag things lower, although banks and weakness in .9%,nes sent the dax down the worst performer.

cac finished down. ftse 100 also down. it ended the session down more than 1%. retailers taking a beating after gloomy warning. this is bloomberg. ♪

vonnie: time for the boot -- bloomberg business flash. money toll invest expand presence in new york city. they will move into new buildings by 2020. by on washington street 2022.

it could double the current 7000 people it employs and new york. a big acquisition. a japanese conglomerate is buying abb. into --l turn hitachi abb will focus on robotics and automation. standard chartered has a deal to sacco -- separate private equity units, ending a two-year effort. the majority is private equity and it will transfer to london's intermediate capital group. next to ithe charts is a good one. this is bloomberg. ♪

vonnie: it is time for our global battle of the charts. you can see these on the bloomberg on gtv .

taylor: last week we saw a record outflows out of equity, mutual funds, and etf. near record outflows out of bonds at $13 billion. the money is going into cash at $81 billion of inflows according to data. money market funds are the best performance everyone but past -- cast, up 2%. bond markets off in a more from 2% meeting cash is king. vonnie: you can see that chart at gtb dots . -- gtv . >> jay powell, are you making a -- mistake by raising rates? it is been pointed out that it is. here is where the balance sheet is. it started up and slowly started to go down and it has gone down

more. the blue line is the s&p 500 and the white is s&p financials. they have rolled over as the fed balance sheet has gone down. is this correlation or causation? does the fed needed to stop or change its balance sheet reductions, or does this not feed into the real economy and traders looking for a fed put? vonnie: i would not like to have jay powell's task and the fomc in general. as much as i hate not to give the winning shot to taylor riggs. today the winner is michael mckee since that is the vacation we will have. congratulations, michael. taylor, you are amazing. time for the stock of the hour. pg&e headed for the worst day in a month, falling 4% after the company was accused of

falsifying safety records for natural gas pipelines. kailey leinz is here with more. the chilly commission announced on friday they are opening up a case for pg&e for pipeline safety. they say they allegedly falsified records from 2012 to 2017. a little disturbing because it comes in the period after the 2010 explosion that killed eight people. also that they haven't followed all the safety of teachers. this would be -- save the their safety procedures. the downside today considering what we have seen over the past several months. all of these deep in the red after the camp fire. pg&e is being probed as to whether there is equipment started the fire. this company facing up to $25 billion of liabilities from wildfires in both 2017 and 2018.

the commission said they could find them for these violations. when you add these concerns, it is not only regulatory concerns but monetary, putting pg&e to vastly underperforming utilities. increasedw could the regulatory impact the fight over the wildfires? kailey: the president said the findings are another example of why we are investigating the genies safety culture. they have been -- pg&e's safety culture. you need this commission in your corner because it is up to the commission to enforce against potential liabilities. 24 hours before the commission announced, pg&e asked the legislature asked them to raise rates to cover the liabilities.

california has the seventh highest utility rates in the country. if you are able to convince legislators, you are able to convince the commission they can trust you if they find they committed the violations and the falsified reports. credibility a big issue here. vonnie: thank you. the worst performer in the s&p 500, although the index has been crawling back towards flat. it is down .2%. the dow is down 50 points. better performers include boeing and apple, which are improving today for the dow. this is bloomberg. ♪

david: from bloomberg world

headquarters in new york, i'm david westin. welcome to balance of power were the world of politics meets the world of business. sarah frier under reports that the russian interference in the 2016 election was more extensive than we knew. michael mckee in new york about what the fed should do. and from london, theresa may's roadmap for brexit. in san francisco, a big report out. tell us what this report is and what it tells us that is surprising. >> this is the first independent report by the senate intelligence committee to look thatall of the data constitutes the internet resource agencies campaign on social media around elections. that is the russian troll agency. was that thend campaign was extremely intricate and interconnected and focused on emboldening voters