Skip to main content

tv   Bloomberg Markets Americas  Bloomberg  November 24, 2016 7:00am-11:01am EST

7:00 am
anna: this is what we are watching this hour, the dollar dominates. the currency is driving the markets. emerging markets are feeling the fallout of the rupee and the lira hitting record lows. the ecb is warning the central banks saying the global market correction is intensifying. it poses a major threat to european banks and beyond. , make or break meeting shareholders vote on the rescue plan for the world's oldest bank. could the summit spell the end game for the italian lender? let's have a look at where the equity markets are trading right now. we're four hours into the trading day.
7:01 am
let's get to the details. >> let's have a look at the stoxx 600 are in it is flat around lunchtime. lethargy of thanksgiving is being felt on this side of the atlantic. we see half of the stocks trading higher. let's move on to the dollar. let's look at what's really moving. are coming off at the highest level in more than 10 decades. that is the white line. minuteswe have the fed yesterday. the data does support the case for a rate hike. the labor market is tight enough. the dow jones is hitting a record high earlier in the week, passing 19,000. consumer sentiment is on the up as well. the market is supporting a hike
7:02 am
from the fed. that is pointing to a 100% chance of a hike this december. we will have to wait and see, a strong dollar is way down on emergency -- emerging markets. we've got the indian rupee at a record low. ae vietnamese currency as at record low. there are domestic factors in play there as well. that is also weighing down on that currency. the index in general is at a five month low. i want to leave you with one currency to watch. the world's oldest bank, the shareholders a meeting to approve a plan to inject 5
7:03 am
billion euros of capital into the bank. it's part of the planet to turn it around it. stock has had a terrible year this year. investments are somewhat more ptimistic. anna: we are bringing in a little bit of latin. moved.kish central bank we have that story as we go through the program. the european parliament has underscored the concern in europe over turkey's crackdown on political opponents. lawmakers called for a halt to eu membership talks for turkey. it there was an attempted coup in july. they have detained 2300 judges and prosecutors and dismissed 130,000 the public employees. in france, one last chance tonight to salvage his campaign
7:04 am
for president. he faces former prime minister in a nationally televised debate. on sunday, there will be a runoff election to see who will be the republican party candidate. he was the favorite to win the presidency next year. he finished eight distant second in the primary. european parliament president may be challenging anglo merkel in next year's election. he is resigning his position and will run for a lower house seat. he is a senior member of the social democrats, one of her coalition partners. named trump is expected to wilbur ross to the commerce secretary. that is according to a person familiar with the transition planning. he acquired and restructured troubled companies. there is a sign that chinese
7:05 am
billionaires are betting that china and the u.s. are not on a collision course. the founder of china's group says donald trump will move away from his protectionist pledges. >> i believe the leaders of both countries are smart enough to find the best way to cooperate. i am not concerned. i am optimistic about the changes. it's worth looking forward to. maybe it's good. maybe there are some opportunities. he says donald trump will be able to engage in a trade war with china because of their common interests. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. anna: thank you very much. let's talk more about the dollar. it is at the highest level in more than a decade.
7:06 am
joining us now to discuss broader strategy is isabel matthews. thank you. it's great to speak to you on bloomberg markets. dollar andabout the how sustainable you think this upward trend in the dollar is. let's not exaggerate this upward trend. the dollar has been coming back from lows it reached in 2011. when you talk about a 10 year high, this is the background we need to have in mind. this is nothing compared to the yen or some other currency. is asked acted to hike interest rates at its december meeting. that is reflected in expectations of dollar appreciation. this is what we are seeing.
7:07 am
how much more appreciation are we going to see beyond that? our senses this isn't going to be relentless. this probably becomes more modest. anna: it seems the markets of made up their minds what they think is going to happen. i have a chart here. down at the bottom here in the purple we've got the odds of a fed rate hike in december. it is 100% couple of days ago. the conversation around the dollar moves on to it to -- 2017. isabelle: if you have the continuation of this chart, you would see that the market is still not expecting many interest-rate hikes. i thinks that -- think that is what will be interest. we will hear how the policymakers are setting up the outlook of the coming year. they have said they expect normalization to continue.
7:08 am
the question it will be can they proceed on that very gradual pace, which is less gradual than the market expects. the dollar appreciation should remain moderate or they fear there will be more inflation coming the system. then we will have to move faster. there would be more upside for the dollar. anna: how excited or concerned are you about inflation? i know it's something that you look out of that can tell us something about wages and inflation pressure. does that suggest to you that regardless of the policy details from donald trump, the fed is going to have to hike fairly often next year? forelle: our expectation is inflation to remain subdued or at least continue to move toward the fed target, maybe exceeded a little it. growth is running at 4%, which is pretty high with the kind of
7:09 am
low productivity growth we are seeing. there are structural forces that will keep prices down. the u.s. economy is pretty open. manufacturing and technology are pushing this is -- prices down. policies thatf the president-elect has been talking about will not be implemented overnight. pressure to adds the economy, it will be a while coming. we think inflation will be moderately upward in the coming year. anna: is this an administration that will try to talk down the dollar is a gets too strong? do you think they will have to? we talked about the weight on the dollar anyway. not everything can be delivered through capitol hill or come immediately. isabelle: they are going to be
7:10 am
concerned about where their trade deficit goes. that is probably going to go up. growing is going to be faster than it europe and most other parts of the world. had stimulus into economies that is already at almost full employment and that is going to go to higher demand for imports. the trade deficit will go up. the government will try to talk down the dollar. anna: when do you see emerging markets in the strategy quite --? they have been spooked by donald's victory and the conversation around trade. stocksg markets and the seem to benefit when we get commodities rally in. it looks like it's a complicated story. isabelle: you are right about that. markets have somewhat over punished emerging market assets. election, the
7:11 am
u.s. economy seems to be what people expect, if china is doing ok, emerging markets should do ok to better. they have strong fundamentals. going into the election, there were another -- number of things they were experiencing. these strong fundamentals put them in a strong position to deal with higher dollar, higher interest rates so long as it doesn't go overboard. we are actually optimistic about fairly -- emerging markets. india is downe in to a record low. that is an example in the week this. there is a lot going on in turkey in south africa. thank you for joining us. it has just gone 11 minutes past noon. coming up, the ecb is sounding
7:12 am
the alarm with a market reversal. we hear from the european central bank vice president. that is next. this is bloomberg. ♪
7:13 am
7:14 am
anna: welcome back, everybody. i am and edwards. the central bank is warning the risk of a global market correction has intensified. cb says they blame rising political uncertainty and say the threat to banks is real. matt miller is live in frankfurt. it's good to see you. is the ecb -- what are they
7:15 am
concerned about here? what they are concerned about his higher volatility. it that has been the result of this wave of populist victories in elections. it really started with the brexit and going through two donald trump. there has been so much unexpected because the polls of been wrong. that has really caused ball until the so far to the upside. it's definitely an interesting phenomena that the ecb has created uncertainty. the political dominoes, if they are lined up around europe, it focuses on italy. are really watching closely what goes on there. i asked the vice president of the ecb about what he expects from italy.
7:16 am
this is what he had to say. >> it's very hard to predict what will happen. for theequences italy,al situation in it's not useful to speculate too much at this stage. we will have to see what will have to be the repercussions. trying to nail him down on whether or not they would their december meeting and to extend it quantitative easing because of this uncertainty. he did not want to, and what they would be doing december 13 and 14th. there's going to be a lot going on. financial markets and assets have moved almost violently across the last couple of weeks. ata: we see the euro-dollar 10572. the dollar rally seems to pull just a little bit.
7:17 am
how happy were they with the weakness that we have seen of late in the euro? frankly, he seemed a little but optimistic about the fact that a lower euro against the dollar was going to help the economy here on the continent. obviously, the u.k. is using a different currency. you have seen weakness in the pound and the euro. that will help drive exports. they are looking for domestic strength, domestic growth and not just the export driven pop from the currency. the quantitative easing program is asked to end in march. it's interesting to see how the turkish lira drops to an all-time low and their central bank raises rates. >> i don't think there will be significant contagion to europe.
7:18 am
crisisnging financial could only really continue in the same way as in the u.s. if growth and inflation were to increase. it would be a normal thing to happen. matt: really he is saying look for act tivoli in india with the rupee or malaysia. we saw this with italy. the dollar is still causing issues for central banks. i suppose the other story around donald trump is if he is really going to bear down on globalization. that is something the ecb would be concerned about. all those countries are tied into the global trade flow, that would be a different kind of contagion. thank you very much for joining us on the program.
7:19 am
more from at later on. talks for a deal worth $1 billion. we will look at why amazon has growing interest in the middle east. this is bloomberg. ♪
7:20 am
7:21 am
anna: live from london, this is bloomberg markets. happy thanksgiving. now for a scoop. amazon is in talks to acquire a fori-based online retailer $1 billion. it will keep them in the middle east market. from a year someone with the matter. it's great to have you on the program. why would they be interested?
7:22 am
dinesh: this is the largest online retailer in the middle east. it is already a similar business model. ride -- range of product. if you are amazon, it's the perfect place to get into the region and get scale in a large business which is already existing and has access to growing consumer. why's this region so interesting? they have exposure to some of those areas a real wealth and some big youth populations. dinesh: if you look at saudi egypt, it's very young and vibrant. they are going online for their shopping. they use internet technology to
7:23 am
get products. that is one of the main raisins for amazon. amazon.ns for it gives them access to a growing consumer. plan had been for a minority sale. why this change of heart? buy sell to the big giant in the space? off with they started a plan to sell a minority stake and they were working with goldman sachs. if you look at it, they have a larger player coming into the market. they offered full price. key shareholders are people like an exit after the investment. this is a perfect buyer for them as we understand. anna: does this make sense for
7:24 am
amazon it rather does this maker amazon it rather than an starting up from scratch? dinesh: it does make sense. it's not easy to go in there and get that scale from day one. when you have a business of that size and scale in the key markets, it makes sense for them to be going after of is this rather than starting from scratch. anna: thank you very much for joining us. the business for flash. these are some of the bigger business stories in the news. wouldinto striking pilots threaten the german airliner identity. it's not about being tough, it's about the future. the strike has caused the cancellation of almost 1900 flights. iftes would have to be cut he agreed to union pay demands. the world's largest tequila maker has put its plan for an ipo on hold or it that's according to a person family with the matter. talked too has
7:25 am
investors to get a sense of the demand. they were hoping to raise as much as a billion dollars. that is your business flash. coming up, the dollar rallies to the highest level in more than a decade. this is bloomberg. we're going to have a look for you. we have some data for you. we have european equity markets trading higher. we have credit suites up. countrywide's down by a whopping 12.4% area they warned about profits and they are going to be lower. about this atg the start of the program. it is up by 7.5%. it's not worth this much as it used to be. this is the midst of a restructuring.
7:26 am
optimismeasing shareholders will back a restructuring plan. let's look at some other assets for you. we've got the dollar index. the dollar index is coming off a little bit during the session. by 1/10 of a percent on the dollar index right now. we've got the turkish lira in there. the central bank increase the benchmark rate to 8%. they were expected to make no change there. with themlk more about that story and others later on. we've got the commodities in there for you as well. copper is up. we had to vienna and that is the opec meeting we will focus at next week. this is bloomberg. ♪
7:27 am
7:28 am
i've spent my life planting a size-six, non-slip shoe into that door. on this side, i want my customers to relax and enjoy themselves. but these days it's phones before forks. they want wifi out here. but behind that door, i need a private connection for my business.
7:29 am
wifi pro from comcast business. public wifi for your customers. private wifi for your business. strong and secure. good for a door. and a network. comcast business. built for security. built for business. markets, live from london.
7:30 am
let's check in on the first word news. >> thank you. the european central bank's morning there could be an abrupt market correction because of rising political instability. central banks had a stability review. they said donald trump's victory increase volatility and affects profound economic changes. iraqi troops of made more gains in their attempt to oust islamic state troops from the city of mozilla. ul.mos the battle is now in its sixth week. at least 67 workers were killed in china when scaffolding at a powerplant construction site collapsed. one worker is missing. 100dcasters say more than military police are involved in
7:31 am
the rescue attempt. donald trump is calling on unity after his election campaign. he recorded a message for the thanksgiving holiday. it's my prayer that on this thanksgiving we begin to heal our divisions and move forward as one country, strengthened by shared purpose and very common resolve. he acknowledge that emotions are still raw from the election. he suggested that u.k. independence party leader would make a great ambassador. hish's should not hold breath. he needs advice from him he will give him a call. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. anna: i know some we have that
7:32 am
fabulous picture of nigel farage presenting himself, looking as if he would like to be ambassador to the united states. we will explain that later. this is the look at our morning must-read. it is from mark told. he writes about the referendum italy. it is less than two weeks away. the bond market says there is more to worry about. to quote him. joining us now is francine. have you with me on a bloomberg markets. what is mark getting at here? he said it's not just about the
7:33 am
referendum. francine: i love this article. you can think first of all if there is a no vote and we don't know if there will be, renzi would stay on. he goes on in the article to say that we are overstating political risk. we see political risk everywhere. would it be the end of the world of the italian prime minister had to step down? you argue about what comes after him would be a technocratic government. interviewed the ceo couple of weeks ago. it's a problem of timeline. if you are an investor, the you pull back? how do you go through capital raising? it's piece, i love because saying we are over anxious. in this case for italy, it could
7:34 am
be ugly. ata: he talks about jumping shadows there in our we jumping at shadows when it comes to italy? get: it's a difficult exercise. who is asked me traveling in asia recently that said you've got to explain to people that this is not about engagement with the eu. the referendum is about a preferable statement. anna: sometimes people vote for something entirely different. it's not like brexit. what we have now is this uncertainty with banks. don'thave an election or we have an election? ,hat technocratic government what does that mean?
7:35 am
it could be a slow burn or sometime. anna: the reason we might be justified, the five-star movement lurks in the shatters. if -- if you look at all the populist parties, they are 50% of all electoral votes. there is an italian general election coming up in 2018. the problem is you don't know what comes after renzi, if he has to step down. ago, he said if he doesn't get the yes vote, i will step down. it seems quite difficult. on if you your political life on it? anna: it's a danger for markets when a leader stakes their political future.
7:36 am
how much of a risk is this for the euro? somethingking about that knocks the currency for a little bit? first lease of the problem is i can't see how investors get to the point of thinking the europe -- euro has fallen. after this event and until things are clearer, until they think they are confident about who wins the french presidential election. we've got this list of things for which the italian referendum is next. we don't solve anything that day definitively. we just learned from uncertainty. it's not that anyone is going to run in and sell the euro. a vacuum.s us with suddenly, it falls. anna: thank you very much for bringing us this story.
7:37 am
let's talk a little bit about what's been happening with the dollar. it has rallied. the index is flat now compared to yesterday. it's the highest level in more than a decade. let's get your thoughts on all things dollar related. the dollar has gone far on the back of what donald trump is said so far. it's partly due to the weakness of the euro. there is political uncertainty in europe it causes weakness to persist. and it looks like in terms of dollar index, it would take us to some exciting levels historically. think we can call it time on the bond market selloff
7:38 am
anytime soon. a lot of people, we have a lot of people who are not very short. we are trying to get our arms are and how much inflation should -- inflation donald trump's presidency will bring. there is a shift in the debate about physical policy globally. we think they will get there at some point. i think the dollar probably goes on rising on that basis until spring. anna: we are yielding 2.34 percent. the markets are not what they normally are because it is thanksgiving. you say the market in the u.s., the tail is being wagged by the bond dog. that's what's pushing up the dollar. correlation i can do is with real yields and
7:39 am
foreign-exchange rates. the real yield move in the u.s. is big. a -20 basisg from points. appears silly relative to what the u.s. economy looks like it's doing. there is more adjustment to come. i think the foreign-exchange follows that. anna: the chinese holders of treasuries, they are dumping some of those treasury holdings. is that something that changes your view? kit: there has been enormous growth during the time of a weakening dollar. and people are kind to hold their currencies down, a lot of that went into dollars. a lot of that went into treasuries. nowhe currencies are weakening, reserves in china are falling, the reserves are going
7:40 am
down. aroundess money floating , that's come out. that drives yields up. that leads to the perception of a dollar shortage in the markets. that fuels the dollar upward. it all has everything there. if donald trump doesn't manage to get all of the policy suggestions through capitol hill, even if we don't see his policies quite as inflationary as they could be on until we getow far to targeting inflation in the united states. it's already at 1.7% and you look at the set number number. -- september number. that's eating its way there. kit: it will continue to crawl there. we will get the inflation by
7:41 am
next year in some form. we will get more wage growth. the stronger dollar is going to lean against that. oil prices are higher now. the inflation rate is going to move higher. most people are rushing around saying instead of one rate hike, it's one this year and two next year. anna: we get the minutes from the fed. does that add anything to your understanding of the world? unemployment is 4.9%. one of the things that is positive is there is more longevity to the cycle because the unemployment rate is falling more slowly. people returning to the labor force. wet gives you some hope that won't get to full employment as fast as people jack. -- project. the fed is going to pick up the
7:42 am
pace on hiking. the markets are going to price all of this in. by the time donald trump arrives in the white house. we do look forward along way. a stronger dollar may be the consensus for next year. levels fasterey and faster, the peak is the year. we have a guest coming up who does not like the dollar rally. the dollarh more on later in the program. thank you very much. a quick mention of some headlines. chrysler ceo is speaking in italy just moments ago. he says he will work with donald trump and has not yet spoken to him. those are comments coming through the transatlantic carmaker. coming up, the european central
7:43 am
bank is warning there could be an abrupt market correction. we will look at why the bank is sounding the alarm. this is bloomberg ♪.
7:44 am
7:45 am
anna: live from london, this is bloomberg markets. market is warning of a correction. donald trump's victory increased
7:46 am
volatility in signals profound economic changes. we have talked about the homegrown european political volatility he could face. donaldt yet know what trump means for global trade. that meters per year. some economies are a credibly tied into global trade flow. kit: markets of quickly jumped on one side of the boat on donald trump, better for u.s. growth and he's bad for world trade. we will see what he does. that has been the big drive so far. we will have to wait and see what happens. if you get a lot of rhetoric on trade at the same time as we have high yields and a rising dollar, you will get a fair amount of instability. so far, it's all been friendly from a risk standpoint.
7:47 am
when you try to read the clues we've got so far, he is stepping away from the tpp. that is keeping with his rhetoric. he said they will do bilateral deals. we don't know exactly how it's going to be. tpp hasn't happened yet. it might've been a good idea. notlly, level trade is growing. that is a fundamental problem in the world. this is a separate issue. it doesn't seleka man who's going to give global trade the shot in the arm that it needs. theconvergence of performance of economic growth by a lot of emerging markets has helped enormously. does not get that
7:48 am
going again is causing damage. anna: let's talk about the pound. we were following the details yesterday and the statement to react brexit to the vote. it was described is not really doing much. others suggested he is moving in the right direction. over five years, the borrowing is not huge. the most striking thing about it is how much the deficit target forecast increase in how much more debt the uk's going to take on. story is pretty awful at this point in time. he did what he could to be fair to him. moree going to get a lot over the next few years. someone is going to have to buy them.
7:49 am
anna: this is adding up the brexit impact. green goingrea in through the increased r.o.e. and the bits in to see, green are the brexit impact. this is bring it home to politicians on both sides of the debate. what impact it will have on their flexibility in the future. they are either going to have to have much bigger deficits and figure out what the rating agencies think about that or we are going to look at this in a more austerity and stroller growth. -- slower growth. anna: nigel farage is on his way to becoming u.k. ambassador to the united states? kit: seems unlikely.
7:50 am
anna: here he is posing. this is a well-known symbol of the united kingdom of being an ambassador. there he is playing up that stereotype. up, the trump transition as the president-elect builds his cabinet. it we talked to the sky bridge capital founder. that is coming up next. this is bloomberg. ♪
7:51 am
7:52 am
anna: the trump transition, he anthonying his cabinet is a member of the transition team. he spoke with david about the outlook for regulation.
7:53 am
not >> after the fec chairmanship. >>i am not really. i'm not really a lawyer. i never practice. i hope -- no one has asked me to do that job. use theation, i want to sports metaphor. if you are resting a soccer game and you put out too many yellow cards or red cards. you slow down the game. the became -- game becomes less interesting. i think with regulation we're trying to make society to safe. we're over regulating society to prevent a crisis. that eliminates any banking failures. we don't want to do that because when over regulate you slow down the growth. regulation is great for wall street or in they won't tell you
7:54 am
that. they can hire the incremental outside counsel and build the compliance department. my first nine employees would have to be lawyers. i wouldn't be able to start the company i started in the regular -- regulatory environment. that is unfair to younger people. >> we need the right kind of regulation. i would imagine you are a conduit between the wall street and the president. telling donald trump that you see as most important to be removed? the capital look at requirements. now.should be lower they went to 34 to one on the leverage. best 20 toke we do
7:55 am
one where there are some banking failures but no systemic risks. you've got to get these smaller banks back in the game for small businesses. the businesses need to capital. the median doesn't like wall street. wall street is the flow of capital in the structure of capitalism. it's the heart and blood system of capital. it is efficient. google is an example. we have to make sure the arteries are unrestricted enough that the capital is flowing freely but we don't have any systemic risk. i think we can do that and get ourselves back to an appropriate level of regulation, at the over regulation we're with now. donald trump said he wants to close the loophole.
7:56 am
are you a fan of it? >> i could debate it. i think the media is hot about it. other politicians are hot about it. >> he said he is going to do it. >> the great irony is the hedge fund gets labeled with it. i am paying super high taxes. really get any benefit from the interest. if it's going to help society and heal society and improve the optics that we are all in the boat together, let's do it. i won't argue the economic merits. this is bloomberg. ♪
7:57 am
7:58 am
7:59 am
anna: it is 8:00 a.m. in new yorkanna:, 1:00 p.m. in london, and on a cap p.m. in hong kong. i am anna edwards. welcome to bloomberg markets.
8:00 am
here is what we are watching this hour. the dollar dominance the u.s. currency, driving markets and investor's positions for a fed hike in december. investors feeling fallouts. the ecb warning to central banks , saying the risk of an abrupt global market correction has intensified due to political uncertainty, posing a major threat to your pain banks and beyond. a make or break meeting -- shareholders vote on a rescue plan for the world's oldest bank .could the siena summit spell the end for the italian lender?
8:01 am
welcome to the program. this is a special edition of bloomberg markets. let's look at how the markets are performing. chris a low-volume day. a dish the function of of the stoxx 600, flat about half of the set. one stock i want to ank about -- it has had awful year. shareholders meet today to see through the plan to inject 5 billion euros into the troubled lender. ceo wants to shed 28 billion euros of bad debt and restructure the bank. we have seen a jump as much as 14% on optimism the plan will go through. the big move of the day is the dollar. there it is, rising to its highest level in over a decade. blue, sitting to the lowest level in eight months
8:02 am
after the fomc minutes yesterday show the fed is saying that the data supports a fed hike. the labor market is tight enough, and the market is pricing in the possibility of a hike in december. rates elsewhere -- i want to look at emerging markets. it is weighing down on those. we see the layer of hitting a record low. it is the lire i want to focus in on. we saw it bounce after the record low. we are back after the central bank hikes. the repurchase an overnight lending rates -- analysts had expected it to be kept flat. for almost three years we have seen such a move. the currency falling since the coup on july 8, the start of this chart. flies in the faces of the political correctness -- pressures.
8:03 am
lira back at a record low. anna: we have some analysis coming up on the turkish lira coming up before the decision, which was a surprise to the markets. i got some notes through from vasileios gkoinakis, and he was talking about how he wasn't sure any of these measures would help boost the lira and he looks to be right because it did not last long. thus check out first word news. press the european parliament has -- >> the european parliament has underscore the concern on turkey's crackdown on political opponents. halt to theed for a halt human version talks. turkey has obtained more than 2300 prosecutors, dismissed more than 130,000 public employees. european parliament president martin schultz mckee preparing to challenge angola merkel in
8:04 am
next year's election. he says he is resigning his position and will run for a lower house seat. he is a senior member of the social democrats, one of merkel's coalition partners. european central bank's warning it could be an abrupt market correction because of rising political instability. the warning came in the central banks twice yearly stability of you. it said donald trump's victory increased volatility and signal profound economic policy changes. u.s. president-elect donald trump is expected to name billionaire investor wilbur ross to be commerce secretary according to a person familiar with the transition planning. ross made his fortune by acquiring and restructuring troubled companies. what are the developed countries with the highest rates of inequality -- chile, mexico, and the united states, according to
8:05 am
the organization of this for economic cooperation and development. chile came out first and having the biggest gap. inequality is the lowest in iceland, norway, and denmark. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. anna: thank you. let's have a look at some of the markets and where we are trading. we were talking through the bigger picture, but the stoxx 600 entirely flat. the ftse 100 down by .2. 40 down. plenty of news about the company and its attempt. this is the steelmaker, the maker of other industrial
8:06 am
products. the prophets were in line. they are proposing keeping dividends stable. countrywide is down by 12% in today's trading session. this is the uk's largest real estate broker. they won profits will be at the lower end of forecasts. we have monte paschi up by 6.4%. is only worseit under one corner of a euro, but they have a restructuring plan. shareholders are voting on that today at a general meeting. let's think about what is going on more broadly, and talk about strategy. the u.s. federal reserve is getting them to tighten monetary policy the next month. that was the consensus take away from yesterday's meeting. december looks so much of a certainty, that attention is shifting to what the fed might do next year.
8:07 am
i am joined by james purcell from ubs. james, great to have you on the they q4 joined us on this thanksgiving on this special edition of bloomberg markets. tell me what you think the fed is going to do. i assume in december you think we will see a height -- hike. how many hikes in 2017? mr. purcell: december is pretty much a certainty. we are looking at 2017 -- in a tight labor market, we would look at two more hikes. anna: in terms of the broader strategy, we have seen a bond selloff taking place, in particular since ,resident-elect's trump victory and one of the facets of the run has been anti-globalization, but you think is because the rhetoric is going anti-globalization, portfolios do not need to. you think diversifying globally is important.
8:08 am
mr. purcell: absolutely. it has been shown diversification is the only free lunch in finance. if you want to tilt your portfolio, and we do have high conviction, we would look at u.s. equities and emerging-market equities to add more juice to returns next year. anna: there are some themes you are investing around. if we cannot invest around globalization in a way we could confidently in the past, what are the other longer term trends -- aging population and the like you are looking to to invest around seems? mr. purcell: absolutely. we are keen on looking at things that have a sustainable ilk -- things that cannot only look at your investment portfolio but play a wider role in investment at large. we are seeing fantastic uptake from clients on these themes. it is increasingly becoming
8:09 am
something clients want to hold, especially as the economic cycle advances across major markets. anna: talking about energy efficiency -- that is an adjusting one, james -- that is another part of president-elect trump's rhetoric that we need more detail on. he has said he will keep an open mind on the paris climate change agreement, but as an investment theme, the energy efficiency theme, does that survive trump, and an attack by trump should one materialize? mr. purcell: that is a great thing about the longer-term things. they spend multitier time horizons and they can move -- multi--year time horizons. thingsre structural driven by demographics, driven by aging, urbanization. these are trends that are not going away regardless of the political administration. anna: tell me more about your
8:10 am
detailed strategy -- the short-term strategy -- u.s. stocks, u.s. debt, things that protect against inflation. you think inflation will build. is that because of trump's policies, and which products do you buy to protect yourself? mr. purcell: if there is one word to sum it up, we are in man inflationary -- in an inflationary environment. we will look at u.s. equities. there is strong earnings momentum as we analyze the strong dollar we have had previously, and also the oil price headwinds. we have been looking to u.s. ti ps. breakeven's look far too low to us. reflation is the name of the game. would beties and tips our top two choices. the dollartrength of is something that has a momentum since the victory of donald
8:11 am
trump. is that something you are happy to see ron, or something you think has further to go? mr. purcell: it really does feel like overweight dollar is the most central position in the market we would take the other side. we are looking at euro-dollar at 1.15 in six months time, going in 12 months time. if you start doing fiscal spending in a tight labor market, you get inflation, and inflation is dollar negative. second, if trump is to fulfill his pledge, he needs a weak dollar. the idea that cash stuck abroad is going to be repatriated by u.s. companies is completely true, but a lot of the cash, the vast majority, is already in u.s. dollars, so it does not move the needle. we would be short dollar versus long europe. anna: fixing. inflation is still a negative.
8:12 am
i've heard a lot of talk about the repatriation and the difficulty about trying to figure out what currency it is in. you say it is an dollars already. james purcell, thank you. just a few lines coming out from a conference here in london -- the commissioner for economic and financial affairs for the european commission is talking about -- reiterating that the european union's four freedoms are indivisible. he is saying the eu is preparing for article 50. the eu will focus on defending its own interests, speaking at a conference in london. --ing up, monte paschi for crunch time for monte paschi. investors fault. can the ceo persuade shareholders he can turn the troubled bank around? that is next. this is bloomberg. ♪
8:13 am
8:14 am
8:15 am
anna: live from london, this is bloomberg markets. crunch time for ms. mateos y lago:. -- four monte paschi. the stock is up. elisa joined by martinuzzi. the stock is up. it is bouncing off of low levels. tell us, what are the chances shareholders back this capital ?lan an elisa: i think this is seen as the easiest part. they have to pull off parts of securitization. it includes far more than company wealth and shareholders, persuading some bondholders to swap bonds into equity, and all
8:16 am
that against the backdrop of political uncertainty with december the fourth been a key date in italy with the national referendum. anna: the good news is they have a big quorum showing up. they have ecb approval yesterday. does this suggest we are getting there slowly on the italian bank problem? elisa: this is something the ecb has pushed for when the bank came through with weak stress test results. it urged the bank to get rid of more of the bad debt it has in its stocks, and that is what is leading to this massive recapitalization. expecting the next three or four weeks are going to be critical. anna: we were talking about the ambitious nature of this plan and the assumptions. one thing they need to do is get in these long-term shareholders, anchor shareholders. have we had any updates? last time i spoke, there were
8:17 am
not any. were -- there were meetings, but we are not told of any commitments. it reflects in part political uncertainty, and what investors are expected to do -- take a leap of faith in the probability of the faith going forward. it will be the cleanest of the italian banks, but it is also promising to continue to be clean and the valuation indicates investors would be taking a leap of faith because they would be paying a premium to theest of the industry. anna: we have the ecb warning that certain euro zone banks show vulnerabilities. are they talking about italy when they say that? elisa: i would think not just. the eurozone is exposed in more countries than others, particularly in germany with income profit from london.
8:18 am
margins are very thin, and they are not seeing an end to the difficult conditions for generating profits. anna: this is a bank that has been dealt out twice already. elisa: that is correct, yes. anna: still, it lives to fight another day. elisa: yes, and i think the conditions at the moment are such that there is only private funds to be pursued. the italian government did hold talks to try to find an agreement with the eu authorities to put in public funds, but that did not go according to plan. anna: thank you for joining us with that story. elisa martinuzzi on the program. keeping the lines of communication open at pepsi -- what the ceo ingenuity told david rubenstein about staying in touch with her employees. that is coming up next. this is bloomberg. ♪
8:19 am
8:20 am
8:21 am
anna: live from london, i am an edwards. this is bloomberg markets. when one ones a global company with hundreds of thousands of employees, what is the best way for a chief executive to connecticut with their worldwide team -- communicate with their worldwide team? indra nooyi who is the pepsico chair and ceo says she gets personal. she sat down with david rubenstein on her communication strategy. ms. nooyi: so, we do videos, emails, town halls and forums every quarter. every time i travel we meet with employees, and i do town halls in the town or country i go to. occasionally i will write personal letters to the employee base as a whole. . vimplecom kids were going to -- for, and i wrote example, my kids were going to
8:22 am
college, and i wrote a letter saying i was going through anxiety. whatever is on my mind on a personal basis -- i want them to know me as a person rather than just an executive. i'm very accessible to them. i talked to everyone from the frontline to senior executives. david: a number of years ago you spoke of the economic club of washington and made a speech that captured a lot of people's attention, and one of the things you said was you write letters to senior officers mothers to give them a report card on how their children are doing. do you still do that, and what was the theory behind that? i first became ceo i went back to india to visit my mother, who was in india at the time. my father had passed away. my mother was there. i stayed at the hotel because the home was a little more rugged and i wanted the comforts. she told me i had to dress up and show up at 7:00 in the
8:23 am
morning and i wondered why. when mom gives you instructions, you follow it. when i got to the living room, a stream of visitors would show up, say hello to me, and go to my mom and say you did such a good job with your daughter. not a word to me. when i watched this interplay going on, i realized i was a product of my upbringing. and my parents -- if my father had been around today -- they should get the credit, it is what they did to me that allowed me to be what i was that day. it occurred to me that i never bank the parents of -- think the parents of my executives for the gift of their child to pepsico. i started to write direct reports, and senior executives are reading the story -- my cultural background, what happened when i went to india, and then i wrote a personal paragraph about what their child was doing. i said thank you for the gift of
8:24 am
your child to our company. it opened communication. parents started communicate directly. it has been an amazing experience. mr. scaramucci: you write a letter -- toid: you write a letter their parents -- what do the executive say -- don't do that, or i'm glad? david: our executives get emotional about it because their parents have never received such a letter. it is always a positive report card. i am not going to write anything else. parents are so delighted about receiving this letter. they tell neighbors, uncles, of, and then the executive says this is the best thing that happened to my parents, and to me. writtenave you ever letters to the interview is you have had? their mothers? ms. nooyi: not yet. anna: david hopeful there. we have breaking news from south africa.
8:25 am
we were expecting an interest rate decision coming through. interest rate decision from the central bank, the south african reserve bank, they left the benchmark rate unchanged at 7%. we understand from the governor there that the decision was unanimous. aboutc remains concerned the inflation trajectory. cpi should be above target until the second quarter of 2017. in their concern about global trade, trump policy is a challenge for emerging markets. here you see the reaction in the dollar against the south african rand. let's look at some of the other markets and see how they are on the move right now. the dollar surging. that is been one of the big stories we have been covering -- dollar strength has been a feature of the markets. the dollar is almost flat on the major dollar index. these are european markets.
8:26 am
we are pretty flat on the cac 40. the ftse 100 down by around .10%. the dollar index fairly flat, approaching and eight-month high. turkishar against the lira -- we previously had seen a gain on the back of the move that was a surprise by the central bank in turkey. that reversed, and once again we see the dollar gaining against the turkish lira. top -- copper is a. coming up, the fed since the greenback story. our next guest says the trend is the sign of any rational market. stay with us for analysis. this is bloomberg. ♪
8:27 am
8:28 am
8:29 am
anna: this is bloomberg markets. index is
8:30 am
let's check in on the markets -- the first word news. france, one last chance to salvage his campaign for president. he faces former prime minister francoise -- in a nationally televised debate. on sunday, there will be a runoff election to decide who will be the book and party candidate. was thest sunday, juppe favorite, but the -- but he finished a distant second in the premise. iraqi troops have made more driving a so militants out of mosul. the slope battle is now in -- slow battle is now in its sixth week. in eastern china, 67 workers were killed when scaffolding at a power plant construction site
8:31 am
collapsed. two others were injured, and one worker is missing. 100 paramilitary police are involved in rescue attempt. the hillary clinton campaign is being pushed to call for a recount in three battleground states. a group of election lawyers and data experts say they want to make sure a cyber attack was not used to manipulate the results. clinton narrowly lost in wisconsin and pennsylvania, and is the hide by a small margin in michigan. the clinton campaign has not responded. meanwhile, president-elect donald trump is calling for unity after a bitter election campaign. trump recorded a message for the thanks giving holiday. prayer thatt is my on this thanksgiving we begin to heal our divisions and move forward as one country strengthened by shared purpose and a very, very common result.
8:32 am
-- resolve. trump acknowledged emotions are still raw from the election and tensions do not heal overnight. global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. betting on a fed rate hike -- the dollar is approaching an eight-month high against the japanese yen. we are joined by vasileios gkoinakis. great to see you again on this thanksgiving edition of bloomberg markets. let's talk about the dollar and how strong it goes. i have the work function in the which shows the probability of a 100%,ike in december at but things get interesting next year, and i find your view fascinating, and you're not the first person on the program to say this -- you do not wholeheartedly believe in the dollar rally, do you? mr. gkoinakis: right. no, we do not.
8:33 am
there is no point in standing in front of a train, as i was saying before, in the sense that over the past couple of months, e short-term momentum of the dollar has been exceptionally strong. i suggested will last for a while -- suggest it will last for a while. the issue we have had is that it has been way above what real differentials would suggest. in otherwise, this period in the u.s. is unique in the sense that over the past year or so, real rate differentials, and i'm not talking about the past couple of weeks -- real rate differentials have gone down, and the dollar has gone higher. this is not typically what you see. currencies, should, from a fundamental perspective, move in line with real great potential. anna: what explains this oddity?
8:34 am
we are coming out of a period where we have --erienced didn't experimented with unconventional monetary policies. first money gets excited when they see these sub moves, especially when you look at u.s. nominal rates. as we go into the next year, the market will come to realize the valuation of the dollar. anna: how much are we focusing in on president trump's policies, and what we hear from the fed? of course they are linked, but the fed does not know how inflation-neutral trump's policy will be either. anna: this -- mr. gkoinakis: this leg higher has been driven by politics. i see this market almost exclusively focused on the positives a child presidency brings with it -- trump
8:35 am
presidency brings with it, and disregards the negative -- trade, immigration, and at the same time, if we go down the route of fiscal stimulus, think there is a big question mark, and our u.s. chief economist put it out there, saying this is not the phase in the u.s. business cycle to go ahead with fiscal stimulus. the output gap is close to zero. therefore, it is likely to be inflationary, it and why should a currency go higher when inflation is higher? anna: we'll wait and see what that does to the inflation picture. let's talk about emerging markets. fewave had news flow and a surprises on this thanksgiving in terms of emerging markets -- appropriate, perhaps, i think given, the surprise comes from turkey. this is the weakening in the turkish lira. for a few minutes, half an hour or so early this morning
8:36 am
european time, investors were caught offguard, weren't they? we saw the central bank unexpectedly increasing the benchmark rank, and that caused the u.s. --turkish lira to go higher, but it did not last. mr. gkoinakis: no, and there is an expedition. right now the turkish lira is in the midst of a perfect storm. it has been the citations to the dollar, pushing the turkish lira lower, but what is unique, we have a strong dollar and strong commodity prices. turkey being an importer of oil, and largely exposed negatively to hire, the prices -- higher commodity prices is now in the midst of a perfect storm. as a result, the external balances plus the fact we see a strong dollar are really playing to the turkish lira's weakness. some of the weaknesses longer-term. i wanted to draw attention to
8:37 am
the bar over there -- the green for low risk, medium risk, and high risk. we see turkish debt is in the high-risk category, suggesting there is a lot of uncertainty around the turkish story at the moment. mr. gkoinakis: yeah, i mean, the problem is they have, as you said, external imbalances, and at the same cap, very low currency reserves -- same time, very low currency reserves. from that respect, they are exposed to the negatives out there. i am still very skeptical. i understand, and i take the point that the rallying dollar is very much over-stretched right now, but from a fundamental perspective i can in favor of aents material and lasting rebound. anna: i was looking back at your notes, and you are skeptical any of the measures the central bank
8:38 am
would bring forward would allow a rebound in the turkish lira and other day, you are right, because the rebound was short-lived. mr. gkoinakis: right. you're the thing that goes back to our real rates argument -- real rates in turkey right now are negative, and that is not inviting flows in any way, shape, or form. from that respect, that is why we are seeing a short-lived rebound. anna: as we see this strong dollar phenomena, this train you do not want to stand in front of, we need to asked stash start asking questions about which parts of the market will be heard by the weakening dollar. mr. gkoinakis: this time is quite unique in the sense we have a strong dollar and at the same time we have elevated commodity prices, or at least the pace of increase has been especially strong, especially in industrial metals. from that perspective, you do not see em selloff -- the weakness we saw back when
8:39 am
nominal rates shot higher. in this environment, and said, momentum for the dollar is strong. it is likely we will say that remain as strong levels -- remain at strong levels. i expect the commodity-related, trade-related currencies, the ones were exposed in exports like south africa, brazil, russia. they are going to outperform. the south african central-bank leading benchmark rates unchanged. that was as expected. they talked about trump's policy, that being a challenge for emerging markets, and concerns about global trade. this is one of those countries that ties into the trade flow. right.inakis: it is a big unknown. right now the market is not seem to be spooked or worried at all about the possibilities of trade
8:40 am
protection. whether this will turn out to be the case or not, it is impossible to say because this is an unprecedented event. as we stand right now, if trump's moderates his pre-election announcements on trade, at the same time we see further strengthen commodity prices, i think those currencies that are commodity exporting are going to outperform. anna: thank you very much. good to see you, vasileios gkoinakis. coming up, opec's headaches turn into a migraine. iraqas a rock agrees -- agrees to a production cuts, russia wants to freeze the conversation. this is ♪ -- bloomberg. ♪
8:41 am
8:42 am
8:43 am
♪ live from london, i am anna edwards. time for the bloomberg business flash. the largest bank in france may spend up to 3 billion euros in the next four years to improve digital and other services according to a french labor group that has had discussions with top management at bnp paribas. union representatives say the bank is considering new tools for serving clients. retailers in the u.s. are thrilled election tuesday is over. -- they hope on black
8:44 am
friday. 137 million consumers will buy in stores or online over the four-day weekend. a -- the amount americans spend over the kickoff to the holiday season has dropped. some believe consumers held onto their money during the election campaign. froma is under pressure opec to make a significant cut in oil production. the russians are not willing to do that, but they have repeated the stance that freezing production at current levels is likely -- is like a cut to next year's plan. that is your bloomberg business flash. let's stick with the oil theme and talk about opec. the cartel meets indiana. for next week -- in vienna. let's bring in how your boss. blas.ier
8:45 am
we have had this discussion on a cut or a freeze. fill us in on the details. opec is trying to reach their own agreement when they meet in vienna. we do not have the details of the agreement. iraq did not agree. iran has not signed to it. opec has not reached a final event itself. then there is a matter of russia. toy have been trying .onvince opec has the hope that at the end of the day the russians will cut. actually, they are not going to do that. when does the freeze become a cut? javier: russia is trying to tell
8:46 am
opec actually we are cutting because we were planning to freeze next you, we're not going to do so. when we say we are freezing, actually we mean to cut it i do not think it will be perceived well. i do not think opec will buy that. i think opec will see that is a bit of a mockery. i've been talking to opec officials that are not happy with that. it was not what they were asking, and a most treating them like children, pretending you are doing one thing when you are doing the other. anna: that is why cooperation with russia matters. this is why opec -- javier: you look at the chart, in have a big jump in iran august and september. we were at 10.7 million barrels a day. and saudiint, opec arabia and russia started to talk, and since then, russian
8:47 am
output has increased it will have a meeting of senior in the nr on wednesday, we will have -- in vienna on wednesday. then there will be a meeting where the minister will most likely attend. there will be senior ministers from opec. that will be the crunch time. say we areroducers not going to help. at its going to discuss own building -- it will be difficult for opec to agree on a production cut when they know that will not be help from others. anna: all the action taking place in the middle of next week in vienna. as we are talking, a story crossing bloomberg -- opec iran as the iraq problem receives.
8:48 am
iran. are focusing in on this has been a stumbling block for a long time. javier: it is not just about oil -- but politics, the war in syria. iran feels every time there has been a supply disruption, saudi arabia has taken that opportunity to increase the saudi market share in the global oil market. this is an area that is playing a key role in trying to reach out to every opec member. the algerian oil minister is traveling this weekend to turn koran 2 -- itan and will start to emphasize there is a problem at the highest -- and
8:49 am
the highest level of officials need to be involved to resolve it. it in the case the deal is not done, and we do not know if by the middle of next week opec is going to be able to present something that pushes prices to $50 a barrel or we do not have a deal, and the price of oil dropped significantly. some traders think we could see --umber starting with a 3 37, 30 five dollars, if opec fails to reach a deal. anna: that is what i was going to ask. -- 48.12 under bti. you are talking about more than $10 coming off the price of a barrel of oil. do see araders significant risk of a drop in profits -- prices because the market, if opec does not cut production on russia, it will be over-supplied. it'll be the fourth consecutive year we will be building inventory. prices will move down.
8:50 am
the market will try to kill production through low prices, and traders are telling me 35 dollars a barrel is a potential price. anna: and we way to find out what president trump's means for shale producers in the united states. up, bloomberg speaks to the billionaire chairman of the chinese conglomerate. that is next. this is bloomberg. ♪
8:51 am
8:52 am
live from london, i am anna edwards, and this is bloomberg markets. president-elect donald trump's victory has led to questions about the future relationship with china. one person not worried is the
8:53 am
chairman of fosun, guo guangchang, who told tom mackenzie why he is positive. guo guangchang: i believe the leaders of both countries are smart enough to find the best way to cooperate. fosun will continue to invest in the u.s. and seek to cooperate with american companies, guided by the strategy of combining resources with china's global growth momentum. there is a system of balance in the u.s.. i've nothing to president is free to do whatever you he wants. it is a balancing act. it is only a four-year term. the best thing about a democracy is this balancing mechanism. if the president does not do a good job, the people will vote him out. i am optimistic about the changes a businessman turned president will bring to america. it is worth looking forward to. maybe it is good. maybe there are opportunities. tom: i wonder what you think are
8:54 am
the key risks for china's economy. : nonperforming loans might be on the rise because of overcapacity, but i do not think this is a major issue because other types of loans like consumer loans and residential mortgages are benign. capacity is a most complete in the steel and coal making sectors. the chinese economy, indeed, has many challenges. on the other hand, consumption is rising. especially consumption by the middle class. there are challenges in everything. economyident china's will maintain 6% growth in next five to 10 years. tom: what are your ambitions in the moviemaking word, bearing in mind it is a much riskier investment than insurance?
8:55 am
: we are very confident. we're developing more projects. as the market changes, we will have more options in investments. anna: that is part of the diplomatic fallout from trump's election victory. other diplomatic fallout -- still following the story surrounding nigel farage, the leader who took the world by storm. donald trump endorsed him as a good candidate for u.k. ambassador. here is nigel farage last night ofa party posing with a tray candy typically associated with ambassadors. the u.k. government quick to stress there is no vacancy for u.k. ambassador, and it is not up to any person to point that person, and the chancellor telling nigel farage not to hold
8:56 am
his breath over any role in the united states. let's bring you a quick look at what is happening in the market. we are fairly flat on these european equity markets, as we are thin on volumes because the thanksgiving holiday. the dollar index is fairly flat. the dollar against the turkish lira -- a surprise move from the central bank in turkey. you see in the other direction. hour, up in the next stocks, bonds, and slashed prices. retailers ready themselves for the shocking frenzy that is black friday. willie live up to other years and high expectations? this is bloomberg. ♪
8:57 am
8:58 am
8:59 am
anna: it is 9:00 a.m. in new york. from london, i'm anna edwards.
9:00 am
the dollar dominates. the u.s. currency drives markets . emerging markets are feeling the fallout of the rupee and the lira hitting record lows. warning from the ecb. the central bank says the risk of an abrupt global market correction has intensified due to the political landscape. russian dressing. russia tries to dress up its readiness to freeze oil production at current levels, saying that would amount to a production cap. let's now check in on the markets. overhat they usually are in the united states, it being thanksgiving. happy thanksgiving, if you are
9:01 am
celebrating. we are trading in europe. sebastian: not what they are over here either. have a look at the stoxx 600. sectorslf of the gaining. retail stocks, as well. the overall index roundabout just shy of that. let's focus on one particular stock. this is the oldest bank in the world. it has had a terrible year. it is spiking up a little bit today. we have seen it up by as 14%. they want to inject the troubled lender with 5 billion euros of capital.
9:02 am
a little uptick on that today. the dollar goes to its highest level in over a decade. gold dipping to an eight-month low. this as we got the fed minutes, saying it is ready to hike relatively soon. whether this means december, we don't know. the market pricing in 100% chance of a hike in december. the stronger dollar waiting down on emerging market assets, particularly currencies. the indian rupee has hit a record low. same with the vietnamese dong. bank tried to step in to raise rates. we saw the italian lira bouts, back to that low.
9:03 am
on investments, alex joins us this thanksgiving. things are pretty quiet this morning london time. then we got the surprise move. it has proved to be short-lived. markets still in a low phase. alex: they were rallying hard, helped by commodities and better growth. now, it has started to drop back a bit. investors are starting to question what trump will actually do and the impact it will have on trade and foreign policy. we were talking earlier we need to start
9:04 am
distinguishing. we need to start distinguishing, but it does not look as if it is going to be getting better. alex: it is not one homogenous blob. you look at southeast asia. trumps protectionist measures, looking to reverse globalization, that will be felt sharpest in southeast asia. we saw a bit of a reaction on the turkish bond markets. risk, highedium risk. alex: turkey is one aspect.
9:05 am
you see investors turning away from an area they were looking to get into. third, i will take the 5% or 6% offer, but with bond yields starting to creep up, it is hard to be saying, i will buy a bond in the emerging market space at 5% or 6%. that for me does not give you enough yield for the risk you are taking on in that space. a lot of people around the brexit vote were asking .uestions about the currency was it trading like its history or like an emerging market? talk about the statement
9:06 am
and what we learned in the last 24 hours. investment in productivity. where do you think the chancellor came down? alex: this is where this budget was the better late than never budget. there were things we should have implemented a few years ago, things like fiscal support would have gone a long way in helping produce productivity in the u.k. providing a bit of support in the wake of the financial crisis. it is better late than never. overw this coming online the next five years. that is going to help support the economy post-brexit. whether it is monetary or fiscal policy support, that can only cushion the blow. what we need is more clarity around the u.k. position with the eu and the various exit and trade negotiations. philip hammond would say
9:07 am
that the reputation of the u.k. fiscal management has been hard won. is he dipping his toe into the gilt markets? the other sideon of the house have been arguing, borrow some more, spend some more. is he trying that? alex: when you tap the markets at one point sent -- emerald 1%, 1.5%, it for some more.go a little bit of borrowing at these low levels makes sense over the longer term, but they need to use it in the right way, they need to implemented properly and in the right projects. anna: the u.k. and the u.s. seem
9:08 am
new in this fiscal activism is the new buzzword. alex: the growth baton seems to have passed from the central bankers over to the government. a lot of the central bankers have been screaming about this. they are saying, we are coming to the limits of monetary policy, we have expanded quantitative easing as much as we can, we need some fiscal support if we are going to take this recovery and turn it into long-term, sustainable development. anna: are we to tentative on investing in this productivity? we expect more from trump, do we? alex: we expect more from trump, but there are question marks about how much he can get through congress. republicans by nature are fiscally conservative and they are not going to sign off on unfunded fiscal projects to make their president happy.
9:09 am
there have been question marks over that $1 trillion number. at home in the u.k., i would expect a little bit more going into the next year. there is not much they can do considering their net borrowing position. anna: we talked about it being i watering lehigh -- eye -wateringly high. joining us you for on this special thanksgiving edition of "bloomberg markets." let's check in on the first word news. >> in france, one last chance to salvage his campaign for juppe. in a nationally televised debate. there will be a runoff to decide who will be the republican party candidate. juppe was the presidency, but he
9:10 am
finished a distant second to fillon in the primaries. the european parliament president may be preparing to angela merkel in the german election. he is a social democrat. the european parliament has underscored the concern over turkey's crackdown on political opponents. lawmakers called for a halt to eu membership for turkey. turkey has been paying more than 2300 judges and prosecutors. it has also dismissed more than 130,000 public employees. torched --rael have forced thousands of people to flee their homes. other fires have been reported near jerusalem. they may have been caused by arson.
9:11 am
what are the developed countries with the highest rates of any quality? , mexico, and the united states. they measured wealth distribution and chile came out first with having the biggest gap inequality. the lowest in iceland, norway, and denmark. global news 24 hours per day powered by more than 2600 journalists and analysts. this is bloomberg. anna: thank you so much. still to come, when politics is economics. the ecb sends a warning on how political instability could pose a risk to economic growth and banks. more on that next. ♪
9:12 am
9:13 am
9:14 am
-- live in london, i'm anna edwards. bank'sm to vote on the $5 billion capital plan. italianinsight into the banking sector. we have reached a quorum, the shareholders going to vote on the capital plan. what are their chances of success. >> they can hold a vote. that there will be a lot of work between now and the end of the year to be done.
9:15 am
arehave investors that asking to swap debt into equities. you have capitals looking to raise stock shares. that is on the back of political uncertainty, which could -- arrive significantly around december 4. anna: shareholders have already been through a lot, haven't they? this is the monte dei paschi share price. this is a stock worth less than a quarter of a euro. we see it bouncing quite healthily in today's session. but in the context. roundabout in january, investors lost confidence in the ability of the bank to turn itself around. this is what the plan is supposed to be doing once and for all. after years of uncertainty, we are going to be cleaning the box.
9:16 am
it should remain clean. the plan includes a high-tech digital service to develop new credit, which should give the bank around the bad loans, which have plagued it hitherto. anna: because this is happening at a time when the political story in italy looks a little ,ess certain than it had done it adds an extra layer of uncertainty for investors. elisa: yes, quite, and entirely out of their control. they could get all the bits and pieces of capital rates working, but if investors don't believe that italy is an investable market because of the political uncertainty, there is not going to be an awful lot that management can do about that. anna: ok, that is one to watch continuously. italianining us on the banking sector. let's stick with european banking. the european central bank says the possibility of an abrupt market correction has
9:17 am
intensified as political uncertainty spreads. the latest financial stability review shows that donald trump's surprise victory increased instability, along with brexit. there is no use on speculating in how italians will vote during the referendum next month. >> it is very hard to predict what will happen. and what will be the consequences for the political situation in italy. it is not useful to speculate too much at this stage. then we will have to see what will be the repercussions. by oure are joined correspondent covering the ecb from frankfurt. the ecb concerned not just about political tensions in the eurozone and the italian referendum, but also the effects of the victory of donald trump. >> well, yes indeed.
9:18 am
the victory of trump has previously been like brexit and the major european countries in the next few months, the referendums, they have increased the level of unpredictability. ecb has a three color-coded level of risk. yellow, orange, and red. it was yellow on the risk of a global market reversal and it has been upgraded to orange from six months ago. we are not at read yet, but there is more risk around. anna: are the concerned about sovereign debt returning? >> well, yes. countries from italy, france, the netherlands, austria are all voting in the coming months. with protectionist policies, they can definitely make inroads in this. this would mean less reforms,
9:19 am
less predictability, probably less growth, more deficits, all of this could risk market pressure. ecb has flagged this potential worst-case scenario risk. the ecb also saying that there are significant vulnerabilities in the eurozone banking sector. they are talking about italy, but not just italy, i guess. >> no, no, this is elsewhere through the euro area. the italian case is the most blatant one. the problems with the euro area banking sector are well-known. low profitability, high cost, the big burden of legacy of not fulfilling loans. there is the risk that there may be more instability, putting more pressure. on the other hand, there is also the silver lining, meaning that
9:20 am
bank equities have been going up because of the expectation of more growth, more inflation, and this may help in the medium-term, the possibility of euro banks. this would not address the other problems they have and that they will continue facing. anna: thank you so much. this afternoon in germany and in london. coming up, donald trump and the u.s. supreme court. we will look at how his nominees for the high court could shift decisions. this is bloomberg. ♪
9:21 am
9:22 am
anna: this is bloomberg markets. i'm anna edwards in london. u.s. politics, we continue to look at how the country will alter under donald trump's leadership. what to expect of the next four
9:23 am
years. know he is going to get one appointment. that will not shift the balance of the court. we have three other justices in the center of the left of the court who are at least 78, so there is a reasonably good chance that donald will get another appointment. that one could shift the court on a whole variety of issues. trump has been talking about abortion so much. the courts could be much more receptive to abortion restrictions. we could be talking about voter id requirements, affirmative-action, in the business context, we could be talking about stopping class-action lawsuits. there are a whole host of areas where we could be looking at a more conservative court. >> do just this is always follow
9:24 am
the party script once they actually joined the supreme court? >> no, they definitely don't. that is a big part of the dynamic that will be going on. if you look past over the desk back over the past 30 or 40 years, you see justices like sandra day o'connor and david souter and anthony kennedy, who have ultimately backed abortion arets, even justices who generally conservative people, like chief justice john roberts, who badly disappointed conservatives by voting twice to uphold the core of obamacare. donald trump will be hearing from an awful lot of conservative legal thinkers, conservatives who want to make sure that this is a rocksolid conservative who donald trump nominates to the court. >> on those nominations, trump has a list of 21 prospective supreme court justices. take us through some of the names. >> well, we know more about some
9:25 am
of them than others. one name to watch for is a guy named william pryor, a very outspoken judge, very conservative. called -- he has called roe versus wade one of the worst abominations of the country. you would expect a vocal fight with democrats over him. about have been talking is a michigan supreme court justice, she has only been on that court for about a year. you talk to conservatives and they say, she has a lot of firepower. she is an up and comer. if she does not get this nomination, her name will be out there for future nominations. >> i suppose a trump victory puts an end to dreams of a liberal u.s. supreme court. >> we have not had a court since the late 1960's where you had a
9:26 am
majority of democratic appointees. after antonin scalia a died in february, that is where many folks thought we were headed because it looked like barack obama or hillary clinton would name the next appointee and we would get a fifth democratic appointee and a much more liberal court on some of the issues that we already talked about, things like abortion, things like class-action lawsuits, potentially considering overturning the death penalty. it could have been a really dramatic shift. instead, we are going to go back to where we have been the last few years, with a conservative leaning court. in the middley and we will look to see who might be leaning the court next. anna: that was the bloomberg supreme court reporter. this is bloomberg. ♪
9:27 am
9:28 am
9:29 am
anna: welcome back. i'm anna edwards.
9:30 am
you are not looking at london. you are looking at thomas the tank engine. this is the thanksgiving day parade in new york. this is a special thanksgiving day edition of "bloomberg markets." let's check in with the bloomberg first word news. more from our newsroom. kumutha: thank you so much. iraqi troops have made more gains in their attempt to oust islamic state forces from mosul. troops drove militants out of the three neighborhoods as they drove toward the center of the city. voters in columbia will not get a chance to ratify a peace deal aimed at ending the half-century long civil war. instead, columbia lawmakers will be asked to approve the proposals. it gives the rebels guaranteed seats in congress and poses restrictions on those who confess to serious crimes.
9:31 am
colombian voters narrowly rejected a similar deal last month. the president-elect suggested that the u.k. independence party leader nigel farage would make a great ambassador to the u.s. exchequer sayshe that nigel farage should not hold his breath waiting for an appointment. he said that if he ever needs advice from voronezh he will give him a call -- nigel farage, he will give him a call. day,l news 24 hours per this is bloomberg. anna. anna: thanks very much. currently, emerging markets continue to weaken against the u.s. dollar, falling near multiyear lows. the global reflation trade is accelerating on expectations that donald trump will boost spending, driving treasury yields up.
9:32 am
great to have you on the program. we see strong dollar still something of a theme, even if it is a little bit stagnant in today's trading. strong dollar is a theme, weaker emerging-market currencies, does this continue to go higher from here? >> we think it does. we have revised up our forecasts. we also think there is scope for the markets to further price in the trajectory of the fomc. we do think it is a reflation trade very much in play and we think the dollar has a lot more to go. anna: i will just return to a chart i have here around the dollar. this is around king dollar. we have the chances of a fed hike in december. it has come up to 100%. this is for the december meeting the market has not bought into many rate hikes in 2017.
9:33 am
we think the market has repricing to do. >> we think there is room for the markets to price in. a call on whoas he elects personnel to the fed. one to twoing to get hikes in 2017 and four hikes in 2018. we think the forward trajectory has a lot more to go. anna: what about the dollar and the yen. in terms of rate differentials, is that where you are looking? >> that will be one of the biggest beneficiaries of the u.s. rate move. with inflation expectations going back in japan, and also we will nominal yield,
9:34 am
continue to see stronger levels. we are looking for dollar-yen to go back towe are looking for doo go back to the 120 level next year. anna: donald trump doing things for the weakness of the yen that they only dreamed of. >> it is perfect, right? it helps everyone. anna: the market seems to be caught up in the positives and the growth trade and the return of inflation and maybe not looking too much into what it does to global trade. that is going to be the big next question from the emerging market perspective. what is the downside to this trump story? >> i think there will be a lot more focus on his trade policies. he has highlighted china, india, but also canada. that is one of the trade recommendations we have at the moment. we think beyond the fiscal stimulus, the markets will start to focus more on his trade policies. , particularly nafta and if there is a renegotiation of
9:35 am
nafta. canada is in a very poor position to deal with that. they are lacking trade competitiveness at this time. anna: we don't know all the details, do we? i thought it was interesting that when he said he was going to rip up tpp, he didn't say he would like to go on to do bilateral deals. the u.s. seems to be a bigger player in the bilateral than in one of these big global conversations. let's move on and talk about something else that is very topical this week in terms of currency markets and that is the pound. by pound is pretty and moved all the announcements we had yesterday. more guilt issuance. issuance. markets took that in stride, at least currency markets. >> we have a bit of a short squeeze on sterling. they took this opportunity after the u.s. results and take some profit. from my point of view, i think it is very obvious that we are
9:36 am
looking at a hard brexit. you look at what came out yesterday, it was a lot of income inequality. it was not a budget for business or a budget for foreign investors. the agenda and the narrative coming out of the u.k. government, we are giving people what they want, we are giving more income inequality, perhaps that is part of the brexit. we have a chart that illustrates a lot of the news. if those with the bloomberg want to bring this up on their terminal. this is the brexit impact in green. it shows the extra borrowing the government is going to have to do. the bit that relates to brexit is in green. yesterday was the day that all of those expert forecast that had been forecast before the brexit vote, that had been dismissed by those in favor of brexit, those were the day that
9:37 am
those forecasts came home to roost in a lack of pixel -- fiscal flexibility. >> absolutely. they put in capping cyclical borrowing. debt to gdp ratio falling. there is not actually that much room for fiscal flexibility, when actually there probably should be. we have monetary policy in the central bank with negative rates. you have to feel that the u.k. economy is facing this massive uncertainty, with very little support coming from the two engines of policy. anna: the next big date in the diary is early december. where is the risk for the currency around that particular
9:38 am
date? honest, because the risk has a substantial decision and the wording was very strong, unanimous, we think they could, there could be .urther upside risk we think they will vote to trigger article 50. if you break down the u.k. referendum results based on parliamentary constituencies, 65% to 35%. it means that 65% of mps know that their constituents want it. anna: the constituencies vote much more pre-brexit then popular vote. thank you very much for your thoughts this thanksgiving day. coming up, we are going to talk more about oil. brent crude around $49 per barrel as the iraq you prime minister says they will curb
9:39 am
output as part of the broader opec supply deal. international energy agency executive director spoke with bloomberg about the prospect of a deal being reached at the meeting. >> it will be up to the opec decide what they see is good for their countries, but for the global economy. many people expect a freeze or a cut from the meeting. aboute should also think the next steps after the possible cut or freeze. prices go up toward $60, we may well see significant amount of -- other countries can pull in
9:40 am
the markets. downward pressure again. active in bringing oil to the markets, the end of the story is that there is life after november, as well. >> but stuck in little bit about that. does this mean that more needs to be done. does the material seem to be dated now after a surge in production in countries like libya?xcept -- do we need to see more cuts? >> it is independent. opec ministers, based on what they see as appropriate. , the markets are best out with, the market forces, such as demand and supply. dothe producing countries cut the production, do freeze
9:41 am
the production, this will definitely have an impact on the prices. ,nce again, if the prices go up what are the implications of that for the other markets? >> we have been trading from $40 to $50 for most of the year. if there is a deal, what do you expect to be the new price range for oil and where will crude traded if it fails? set since two weeks shows that our analysis that we are entering a period of greater oil price volatility because of the market dynamics and, also as a result of three years in a row of global oil production in decline. -- 4015, 2016, 2017. this is the first time in
9:42 am
history of oil that it is declining three years in a row. bigger difficulties in the fears of time. that was the executive director speaking with my bloomberg colleague. coming up on this special thanksgiving "bloomberg markets ," holiday shopping season in the markets of the u.s. starts today. it accounts for nearly a third of u.s. retail sales. what kind of deals would retailers need to get consumers to part with their money? this is bloomberg. ♪
9:43 am
9:44 am
9:45 am
anna: welcome back. you are watching a special thanksgiving edition of "bloomberg markets." it is time for the bloomberg business flash. , chancellor of the exchequer in the u.k. highlighted the problem of british tech companies' inability to grow to international scale. another promising u.k. startup was bought by china -- a chinese company yesterday. about $1.7 billion u.s. dollars. credit squeeze -- suisse is trying to raise money to buy stakes in hedge fund firms. they are trying to buy minority stakes in 10-12 money managers.
9:46 am
a company says luxury spending in the united states will increase if the president-elect is successful in lowering taxes. remy has been focusing on the more expensive spirits, such as a six liter bottle of cognac that sells for $80,000. that is your bloomberg business flash. an update on very expensive spirits. none of which we can consume this thanksgiving or black friday. black friday is 24 hours away or less and retailers are gearing up for the seasonal rush of consumers shopping both in stores and online. effort to score the best deals of the year. mark barton spoke to bloomberg intelligence. -- ifed of black friday black friday was important. >> absolutely. is it important online or in
9:47 am
stores? more people are going to be shopping online because a lot of the deals are online and in-store. it is still important, but the importance of spread out over the days and the formats that you decide to shop. in line, notting online? >> you know, the folks are really focused on value. keep in mind that black friday still about 15% of holiday sales. there are still shoppers that want the doorbusters, that are ok to wait in line to get those coupon giveaways, whether it is a free $500 shopping spree or $10, whatever it may be. they are waiting for those deals, they are waiting for something free. >> are the deals really that good? or a lot of it marketing activity? >> i would say some of both.
9:48 am
are those deals only to be found that day? .ome, maybe you have started to see deals pre-black friday. there are a lot of online retailers making a big push to promote bigger or maybe even the same deals again. i think the deals will be there. i think there is a bigger buzz about online black friday. >> who benefits the most? >> it is amazon. we ran a survey and, for the first time, more than half of the people of the 3600 people said that they would shop on amazon for gifts. it was more than half for the first time ever. people are going to amazon. >> what can amazon's competitors do to try to take a bit more
9:49 am
market share on black friday? >> it is all about the deals. you have to have one, too, or three items that will get your customer into your door. if you can promote something of interest at a great deal, you will catch someone's attention. it is really just about making sure your website works, first of all, on black friday and the days around it and you have deals that are compelling to get that shopper in. the hardest thing is that there are so many deals out there, where do you go? the shoppers know where they want to go. they know where the deals are. it comes back to deals, deals, and deals. deals, and deals. what is your take on holidays? optimistic? >> i think retailers and consumers are optimistic. we have two extra selling days between thanksgiving and christmas. on a sunday, so we get that extra shopper in on saturday when no one is working. at the end of it, people are
9:50 am
looking to shop. they are looking for deals, they have been waiting for deals. holiday sales could be up 3% to 4% and that is pretty optimistic. black friday could see more shoppers this year versus last year. anna: stay safe if you are shopping on black friday. mark barton speaking with the bloomberg intelligence senior retail analyst. speaking of the holiday season let's talk a little bit about food. it is thanksgiving and there is always lots of it. while many abandoned calorie counting well tucking into their turkey, the growing focus on healthy living has made food and beverage companies rethink product offerings. pepsico is one of those companies. their ceo and chair set down with the founder of the carlyle group and a host of "the david rubenstein show" and they discussed the company's shift to healthy. >> most people would say that
9:51 am
pepsico and coca-cola are not that healthy for you, so you must have heard that argument for you before. how does pepsico try to make products like pepsi-cola healthier? what is your plan to do that? products like pepsi-cola were invented many years ago when society was completely different. there was more undernutrition than over nutrition. people felt the drinking products without much sugar was all right. society has changed. it behooves us to change with society. we are launching more products with zero or very low sugar. we are reformulating pepsi with lower sugar levels. we are training the consumer to start accepting carbonated soft drinks with lower sugar levels. you've got to step them down piece by piece, so that when we get to a level that is 50 or 60 calories per eight ounces, 70
9:52 am
calories per 12 ounces, they buy the product. >> what about snack products. how are you trying to make those healthier. >> let me give you a good piece of news. a single serve back of lace -- lays as less salt and a slice of bread. >> really? >> it is surface salt. bread you needed as a leavening agent. soup, you needed as a preservative. potato chips, it is a surface salt. three ingredients in a bag of lays. salt, potatoes, and heart healthy oils. you should eat your back of latest with a smile on your face -- lays with a bag of smile on your face -- with a smile on your face. >> i'm not sure i would have a smile on my face. i would be thinking about gaining weight. >> you'll be fine. >> what is your snack that is going to make me the happiest? >> fritos.
9:53 am
you will feel acute died and went to heaven. oh my god. that is the pepsico ceo speaking with david rubenstein, of course. will turkey prices gobble up a big chunk of the holidays? we will look at that next. this is bloomberg. ♪
9:54 am
9:55 am
anna: welcome back. bloomberg's offices in london, i'm anna edwards. headlines coming through. the ceo of monte dei paschi speaking. they will start the debt swap on monday. the debt-to-equity swap to last for five days. x giving shoppers may be in for a bit of a turkey price this year. the popular holiday bird price has risen.
9:56 am
the cost is about 6% higher than last year. to price per pound rose $1.21 from $1.16. a person's and other retailers -- albertsons and other retailers offer lower prices in turkey's to get your spending. the ceo of boston market spoke yesterday. in fact, we don't have that sound for you. hasreliably sure that he comments about your turkey dinner. take care of you are shopping on black friday. enjoy your turkey dinner. i will be back on bloomberg. we will leave you with pictures. ♪
9:57 am
9:58 am
9:59 am
>> u.s. markets are closed on holiday. we go from berlin to istanbul to santiago. this is bloomberg television.
10:00 am
u.s. markets are closed on a holiday today. berlin to istanbul and santiago in the next hour. here is what we are watching today. the greenback is soaring to its highest in more than a decade against all of its peers, and that is thanks to the federal reserve bolstering the case for higher rates. it is all greet in fx. the dollar reverberating through currenciesding some like the turkish lira to an all-time low, despite support from the turkish central bank. and an exclusive interview you don't want to miss today, eu
10:01 am
commissioner pr moscovici will join us later today to see how the block will defend its interest in the brexit negotiations. 19 minutes away from the end of the thursday trading day today in europe. no trade in the u.s. because of the thanksgiving day holiday. gains care leading the today. average trading roughly 30% below average at this time. there is some corporate news to tell you about. he wants to increase annual earnings to at least 2 billion ano to cut debt and regain
10:02 am
investment credit rating. steel prices ever covered a bit this year. to syncrude shares little changed, down a quarter of 1% today. the dollar is the big story. this engages the dollar against 10 of its leading peers, record high today after data on wednesday showed u.s. economic growth remains on tack. the dollar held by speculation that donald's reflation policies a quicker pace of monetary timing. 5% dollar spot index raising since the election. this is after the peso down by 11%. look at the rsi.
10:03 am
the dollar is the most overbought since march 2015. minutes from the last fomc meeting showing officials saw a strengthening case to raise rates as the labor market tightened. some saying a hike should happen in december. it is thanksgiving, so i have to do a lovely thanksgiving chart. cheaper turkeys and pumpkin pie mix for this year's grocery bill. the cost for the holiday meal fallen to $49.80 per 10 people, according to the annual survey from the american farm bureau federation. lower than the record high from 2015 when a bird flu outbreak trimmed turkey production and heavy records and summer rains damaged the pumpkin crop. there is your special thanks
10:04 am
giving chart. special thanks giving chart. let's get a look at first word news. erik johnson has more. >> iraqi troops have made more gains in their attempts to oust islamic state forces from the city of mozilla. according to a senior iraqi commander, his troops drove militants out of three neighborhoods as they headed toward the center of the city. the street battle is now in its sixth week. in eastern china, 67 workers were killed when scaffolding at a power plant construction site collapsed. two others were injured and one is missing. china state broadcasters say more than 100 police are involved in rescue attempts. what are the countries with the highest rates of inequality? chile, mexico, and the united states. they measured wealth distribution and chile came out
10:05 am
first. -- inequality is lowest in iceland, norway, and denmark. hillary clinton's campaign is being pushed to call for a recount in three battleground states. a group of election lawyers and data experts say they want to make sure a cyber attack was not used to manipulate the results. clinton narrowly lost in wisconsin and pennsylvania and is behind by a small margin in michigan. the clinton campaign has not yet responded. global news 24 hours a day powered by more than 2600 journalists and analysts in over 120 countries. i'm erik johnson. this is bloomberg. mark: thank you. after two weeks of being whipsawed by the election and the outlook of monetary policies, stock market returning index.tive calm in the
10:06 am
30%, 20%y has dropped here in europe over the same period. with other votes on debt, plenty of risk and brewing. alan higgins helps to oversee more than $17 billion as chief investment officer at cu tennant company. happy thanksgiving day. does the lack of volatility in the u.s. and europe equity markets make you nervous? look at it,ight to generally it pays to be contrary more so volatility, but when volatility is high. you mentioned the referendum. that is a bit different from brexit and trunk. -- trump/ it will be more interesting to see how renzi supports. mark: let's talk about what has happened post trump.
10:07 am
how much of a shock was it inside your company, were you well hedged, prepared for a trump victory? >> we were not expecting it, we were well prepared. , it was not a complete shock. maybe a little bit of a surprise to see those shy americans. brexited about the shy voters. in fact, i will be having thanksgiving with a shy trump couple tonight. i think the interesting thing is the market did not look at economic policies. we have seen them before, right in on the scum of low corporation tax. all of a sudden, people look up to that. mark: i am pointing the finger at you. , thet you meant to tell us s&p 500 is not going to plunge
10:08 am
10% and bonds are going to rise? you did not say this. but the exact opposite happened. we knew what trump was going to do. >> let's say we knew what trump was going to win. what that's when we have put on? we would have lost money. that shows the danger of prejudging these events. -- an, what we look to do event happens, can we take it vantage of it in the markets? it waslook at trump, hardly dislocation, the japanese equity markets mainly, but you have to go against it. if you look at brexit, an interesting parallel, generally you went against it. except for sterling. the interesting parallel today is the bond mark: let's talk about the bond market versus the stock market.
10:09 am
this is the world country index. the aggregate index has completely fallen through the floor. huge divergence. what gives? >> the equity market is completely high right now with higher bond yields. it represents growth. screen, 100%s wirp probability of a fed rate hike. , however, should it continue, bond yields will compete with stocks. should treasuries get to 3%, that will look like competition. 10-year yielde above the dividend yield of the stoxx 600? isn't that telling us something? coming up on you mean the s&p
10:10 am
500. >> you can get a higher yield in the 10-year. the u.s. equity market is a low yielding market because there is a buyback. if you added that, the payback to shareholders would be closer to 4%. it is a fair point. bonds are starting to compete but they are still really low. mark: let's get to the charts. i know you like japan, the longest run since june 2015. it is a lovely chart. the nikkei, bull market, january the are market. japan. saying buy >> we are overweight. sticking with we do not buy direct japanese
10:11 am
stocks. we like very much value in japan. there is great value in terms of not just a cheap market but also within japan some great value stocks. the major banks are on attractive yields, very low multiples, smaller stocks in japan, very interesting. almost no leverage. mark: how high does the dollar go against the yen? this is another thing that everyone got wrong. the yen has gone in the opposite direction. that's been the most amazing thing. it has really moved a lot in a short window. honestly, i don't know what level. sterling is important for us. mark: hold that thought. alan higgins will be staying
10:12 am
with us. we will be talking about sterling power as political headlines continue to drive volatility in the currency. this is bloomberg. ♪
10:13 am
10:14 am
mark: i'm mark barton. this is "bloomberg markets." is with us, chief investment officer from coutts and co.. this is the emerging markets currency index. the white line since trump's victory. the blue line is down roughly 5%. emerging markets have been hammered the most. too much? >> some money flows went into em
10:15 am
over the summer. it was the popular trade. em question, does your portfolio include fx or is it local? negative returns on currency. currencies are holding up a lot better than the yen. i would look at this as an obvious trade, maybe afraid of what trump will do to certain countries, huge inflows. there is often a big move after this would can be technical. we are still long. we are buying opportunity. , we managege for us all awful lot of sterling funds. therefore, is it time to come back into sterling? mark: you have been a buyer of sterling. this is the power of the dollar.
10:16 am
dollar, white line, euro, blue line. we are off the lows of late september. >> if you look at that decline, the first was not tradable. that was overnight. i am sure that you were here. actually, i was lucky i was not. >> if you look at what is is back, sterling-yen sterling-euro is back, but sterling-dollar not so. generally we think it's an overreaction. we think it is an opportunity. -- if youy with trump look at brexit, you should've bought everything, except for maybe sterling-dollar. is, there is going to
10:17 am
be more growth and inflation. mark: on the currency point, the dollar spot index, record highs going back to 2005. a strong dollar has been cited in the past as one of the reasons why the fed may not tighten. are we getting to that point? obviously, it seems like they will go in december. >> you are right, it is basic central banking. tightening of monetary conditions. you can do it by raising rates or appreciating currency. -- if we getget is tightening, it would be a major surprise. i don't think they want to surprise the bloomberg wirp. ,ut in the yellen commentary let's see what they say about the dollar. mark: how many hikes next year? >> we would say to, some say
10:18 am
three. there is a mini cycle going on in the u.s. right now. some growth, but not huge. you could see one or maybe zero if the dollar continues to fall. mark: dollar euro parity? >> i will say no. why no? >> it's not just about interest rates. we have seen the yen strengthened. the euro area has a current surplus account. germany has a huge current account surplus. factors like this become important. growth is strong in europe. i would not be surprised, especially if yellen helped out trade, the rush into the dollar unravels a bit. mark: there is a chart that
10:19 am
shows the european fear index, pretty calm. but european volatility, there is a disparity. the fear seems to be in the fx channels. why isn't the weaker euro helping european companies? we are seeing record highs for the u.s. every day. -- why isyou europe in europe getting some traction? >> i think that is the opportunity. people have largely given up on europe, it's been so disappointing. you have not had the earnings delivery we have seen in the united states and, to a certain extent, japan. there are these huge outflows out of european equity. we see that as an opportunity. mark: banks? >> we do light financial credit more than equities.
10:20 am
we are contrarian investors by design because of our process. financial credit looks like the best risk-adjusted opportunity. global banks, yes. miners are the best performing sector in europe since trump. coming off of a 13-year low. >> that was deep value. just did not identify that as a potential opportunity. for us, banks were a bit more clear. when you look at active u.k. funds, it is a disaster in terms of alpha. historically, they have done pretty well. this year it's a disaster and that sector is one of the reasons. last time you are here, we
10:21 am
talked about russia, mexico long bonds. give me something funky. >> you put this on me. we still like russian equity, where we can own it. it has tremendous value, even for russia's state, and is also a mini trump play. mark: alan higgins, thank you. coming up, a look at the challenges facing american malls this season as amazon and other online retailers exert more pressure. this is bloomberg. ♪
10:22 am
10:23 am
mark: this is "bloomberg markets." i'm mark barton. tomorrow, the holiday shopping season officially kicks off with black friday online and in line.
10:24 am
i asked our senior retail aboutt poonam goyal whether this year is expected to be as big as other years. >> absolutely. inis important whether it is store or online, that's the question. more people will be shopping online because a lot of the deals are both online and in stores. still important, but the still important, but the importance has spread out a little over the days and the former that you decide to shop. mark: who is waiting in line? >> the folks who are really focused on value. black friday weekend is about 50% of holiday sales, so still very important. there are shoppers who are looking for deals want those doorbusters that are ok to wait in line for those coupon giveaways, whether it is a free $500 shopping spree, or $10, whatever it may be, they are waiting for something free. mark: are the deals really that
10:25 am
good, or is a lot of it marketing activity? both.ould say some of the deals on black friday are good, but are they only to be found that day? some, may be, but most could be found prior and even after black friday. you have started to see deals as early as this week on pre-black friday sales. and don't forget, we have cyber monday, where a lot of online retailers will make a big push to make even bigger or the same deals again. , think the deals will be there but there is a bigger marketing buzz around black friday. mark: who benefits most online, amazon? >> it is. .e ran a survey for the first time, more than half of the people of the 3600 said that they would shop at amazon for holiday gifts this year. 49% last year.
10:26 am
so more than half for the first time ever. that means people are going to amazon. amazon'st can competitors due to try to take a bit more market share on black friday? >> it is all about the deals. one, too,o have that or three items that will get your customer in the door. if you can promote something of great interest at a great deal, you will catch someone's attention. it is really about making sure your website works in the first of all, on black friday, and the days around it. you have deal that are compelling to get the shopper in. there are so many deals out there, where do you go? mark: that was poonam goyal. this-- -- wow, x1 has netflix?
10:27 am
10:28 am
hey, drop a beat. ♪ show me orange is the new black ♪ ♪ wait, no, bloodline ♪ how about bojack, luke cage ♪ oh, dj tanner maybe show me lilyhammer ♪ ♪ stranger things, marseille, the fall ♪ ♪ in the same place as my basketball? ♪ ♪ narcos, fearless, cooked
10:29 am
♪ the crown, marco polo, lost and found ♪ ♪ grace and frankie, hemlock grove, season one of...! ♪ show me house of cards. finally, you can now find all of netflix in the same place as all your other entertainment. on xfinity x1. ways wins. especially in my business. with slow internet from the phone company, you can't keep up. you're stuck, watching spinning wheels and progress bars until someone else scoops your story. switch to comcast business. with high-speed internet up to 10 gigabits per second. you wouldn't pick a slow race car. then why settle for slow internet? comcast business. built for speed. built for business. mark: you are watching bloomberg. i'm mark barton. this is your global business report. fiat chrysler chief executive
10:30 am
has high hopes for a trump presidency. why he thinks it could be great for the auto business. amazon is about to do some shopping of its own, closing on to buy thesui in today's quick take, we look at turkey. and unsuccessful coup attempt president erdogan. how has the fallout impacted the turkish people? sergio marchionne see the election of donald trump as positive for the auto industry. game changer,s a mainly because there are a number of conditions in the u.s. that are not yet spelled out. . heard him during his campaign i think the president-elect made some statements about how he sees trade. that is a big issue because of the way that nafta is configured , and the implications it has on the industrial footprint that we
10:31 am
have in all three countries, mexico, the u.s., and canada. mark: he says the longer the stronger dollar last the better. he is also concerned about the perception of italy if they reject the constitutional reform. credit suisse will try to buy minority stakes in tend to 12 money managers. germany's largest steel maker plan to leave its full-year dividend unchanged. profitsude posted newly . the company's ceo is trying to turn the company into a more industrial group. amazon is in talks to buy the dubai-based online retailer amazon is in talks tothe deal wa foothold in the high-growth middle east markets. and plan to sell a stake of
10:32 am
at least 30% originally. time now for our bloomberg quicktake, where we provide context and background on issues of interest. a botched coup in july resulted in hundreds of debts in turkey. what this means for the people of turkey and the nation itself on the international stage. turkey's president recep tightening his grip on power. more than 250 people died in a night of street battles and aerial bombardment on july 15, 2016. but the turks revolt is nothing new. in country experienced crews 1960, 1971, 1980, and 1997, the
10:33 am
prime minister step down. erdogan has been encouraged by the uprising. the latest highlights one of turkey's biggest problems, a division that is tearing the country apart. here is the situation. turkey's political identity echoes it jog or, straddling the middle east and europe, the nation were east meets west. the father of modern turkey is the military officer, who led the nation in the founding of the post-ottoman state in 1923. since then, the turkish armed forces have played a central role in remaining the secular western looking society ataturk envisioned. minister inme prime the following year. as the most powerful ruler since ataturk, he is molding them back into an islamic world power by giving a voice to conservatives.
10:34 am
many love him. you triple the size of the economy in a decade. years, hehe last two stifled debate while fighting accusations of corruption. in 2014, he began purging the police and judiciary, began detaining journalists, and tighten control over the internet. he said those responsible for the latest coup are involved with a self-imposed exile in the u.s. and that has been denied. erdogan has taught been shy about his ambitions, building a huge presidential palace, a complex four times the size of versailles and over 30 times larger than the white house. here is the argument. while erdogan is denounced for being increasingly autocratic, he is still admired. he has built hospitals and schools.
10:35 am
former turks have seen a standards rise under his control. turkish years, the people have been divided about the man in charge. turkey has been a member of nato since 1952 that has not been able to join the eu, which has been critical on the countries track record on civil liberties. mark: you can read more about turkey and all of our quick takes on the bloomberg. that is your global business report. for more stories. staying on turkey, the nation central bank unexpectedly raising rates initially sending the lira up against the dollar. that faded. the lira now at a record low against the dollar. it has been a tough time for emerging markets after donald's victory sent yields spiking. joining us now is the managing
10:36 am
manager for emerging markets. justin, great to see you. erdoganay or so ago, heightened his criticism of policymakers and bankers. did the central bank not listen? >> they did not listen by the looks of things. and it went it's own way to an extent. a gesture to the markets that we will raise interest rates a up the lira shore in this volatile environment. as you said, the lira was bowing ansome extent for about hour, but it was not a good day for em currencies generally. thing or anit an em erdogan post-coup thing? >> you cannot ignore the background. this guy is going to be in the white house next month and the whole market is looking at this
10:37 am
as a re-inflation environment, which is driving up u.s. bond yields, making em bonds less attractive relatively speaking. what is going on on the ground in turkey is extremely salient. thehave a situation where central bank and the president are at loggerheads over economic policy. , if they don warned not do what he wanted essentially, that risk provoking him. he did not give an indication of what intervention he meant. what did he mean when he talked about intervention? >> i don't know. it's difficult to read what he means by that. what is he going to do, tell the central bank to sell dollars to prop up the currency? ande is doing it privately, if he is surreptitiously pressuring the banks, but up
10:38 am
till now he has been very vocal about his criticism. maybe he is just trying to give the markets a bit of a threat. we will see. mark: let's take a look at the function. it perfectly and capulet to what emerging markets are doing right now. all of the emerging markets since the trump victory. the peso for obvious reasons. south african rand down by 6%. no move from the south african central bank today. what is next? >> i think the central bank in africa -- south africa is on hold. if you look at the rand over the past five days, it has actually done quite well. a lot of that is on the back of the commodity rally we have seen. are the backbone of the south african economy. the central bank is thinking, let's get through this unt of volatility.
10:39 am
we saw inflation jump a little bit yesterday. probably not a good thing but probably within the central bank's target. they are probably in a wait and see mode. turkey, you will probably see more action sooner. placed in a best trump world where protectionist policies -- we mentioned tpp is already dead in the water. which ones are best placed? does that accurately reflect the countries that are well-placed in a new trump world? >> you have dated it back to the trump election. probably you would see the rand higher. if you are looking forward to see what is in store for currencies -- mark: because of the commodity aspect of it. >> exactly. going back to your original question, turkey is in the worst possible place because it is not
10:40 am
a commodity producer. it is dependent on commodities to import. it is in a pretty poor spot right now. mark: great to see you, justin. managing editor for emerging markets. coming up, the eu commissioner of economic and financial affairs joins us next ahead of his thoughts of brexit negotiation as well as the latest on the greek debt crisis. this is bloomberg. ♪
10:41 am
10:42 am
mark: you are watching "bloomberg markets." i'm mark barton. toughsight today on how the eu will be when it comes to brexit negotiations.
10:43 am
the financial affairs commissioner here muska vinci says the eu will focus on defending its n interest. right now from europe in westminster. commissioner, thanks for joining us on bloomberg television today. >> good afternoon. mark: you have sent the way the brexit negotiations begin will have a huge bearing on the outcome. what then is the biggest risk as we near the triggering of article 50? about what i say is there can be no negotiation before the notification of article 50, but the spirit of the negotiation matters a lot. we do not want a hard brexit. brexit.a cooperative the eu and u.k. will remain an important european partner but of course, the ball is in the british governments camp.
10:44 am
it is important for us to know what strategy the government lands to have. we did not ask for the brexit. we will wait, we will negotiate defending our own interest. we can say notably that the full credence of the internal market are indivisible, but we will try to find pragmatic solutions and the best outcomes possible. resultis clear the depends on the spirit of the negotiations. it will be a spirit not to punish, but a very collaborative one. commissioner, the rhetoric from europe gives the commissioc from europe gives the impression that the u.k. government is clueless. what are you hearing when you speak to the u.k. government, does the government have a plan, does it appear to be clueless when it comes to its planned for brexit? >> again, we are not having
10:45 am
talks before the negotiation opens. the negotiations will not open before the notification of article 50. we have talksi will be meeting with phil hammond, a partner whom i respect a lot, a very cool tempered guy with a very clear ideas, pragmatic interlocked tour. what i hope is we can keep that spirit, but again, it is up to the british government and cabinet to define its global strategy. theill respond to that with best spirit of cooperation but also defending our own interests in negotiations. with the 27 countries that chose to remain in the eu. we will be doing that through our commissioner, who was with me in france. of thell act in the name
10:46 am
27 member states and on the basis of our principles. pre-brexit has been knocked off the front pages by the election victory of donald trump. does the victory of mr. trump provide a template for populist parties in upcoming elections in to engenderyear further surprises? toi was here in the u.k. discuss about populism, how we interpret it, how we can respond it. obviously, there is a common whoor for several voters voted for the national front in france, who voted to leave in in u.k., who voted for trump michigan, wisconsin, pennsylvania. there are people who are angry, they feel they are losers of globalization, forgotten by the elite which is too distant from
10:47 am
them. to this common problem we must have a common response. this common response is to be closer to them and to be closer to their preoccupation and especially fight inequality. as far as europe is concerned, i would like a europe that is more protective than today, social protections, security protection. i would like a europe that is more democratic than today, capable of addressing those challenges. a europe that is more dynamic economically. which means the fiscal policy of the union must be tomorrow positive when you see how it contributes to growth. that is why the commission last week levered a statement on the aggregate fiscal stance of the eurozone which now must contribute to growth. message,isten to this we must respond to it, and we
10:48 am
must have common responses. democracies again, must react to populism with popular responses. commissioner, you mentioned the french election. it is an apt opportunity to talk about francois fillon, who is now favored to be the candidate for the republican party barring any surprises. who knows after what happened in the first library. as theon were to emerge victor, would he be the favorite for the presidency next year? >> we are in between two rounds of elections. 'st's wait for the voter verdict. we have two people who are very experienced politicians, two former prime minister's. from my perspective as european commissioner, i hope they will have a pro-european program and
10:49 am
a strong capacity to launch your alongside the future chancellor of germany. it is too early to say who will be the favorite of the presidential election. what matters to me is that whoever it is, and it is clear the center-right has the strong hand -- seems to have the strong hand -- but it is not finished. as we have seen in elections in recent times, whoever is favorite, we must defeat marine le pen. i do not want france to be given to the populist extreme right. mark: has the probability of a le pen victory increased? >> who can say now with the elections? who would have said that brexit would win? frankly speaking, i was not surprised. who would have said that mr. trump would win the presidential election? that is totally different from
10:50 am
brett fluffy on, who seems to be an outsider. with theve problems post. the voters tend to change their minds sometimes quite brutally. so we cannot exclude that. we must fight madame le pen's victory. i don't thing she will be president because she has lost her party, including in the regional elections when she was candidate, but there is a risk and we must take that risk populism, and to fight , again, we must give popular responses, show to the ones are tempted by the vote for the national front, that there are other ways in the center-right and centerleft which are realistic enough, ambitious enough, capable to provide growth and jobs in the country, and fair. we need to combat inequalities.
10:51 am
we must be closer to what the voters want in our countries. mark: can we talk about greece? there is a big finance ministers meeting. is there a plan for a high-level meeting between creditors and greece and finance ministers, ahead of that, is that a possibility or not? i hear about no plan. i know i will be in athens on monday and tuesday. i will meet the prime minister, several representatives, as well as the governor. what i wish for greece -- i am the commissioner in charge of the negotiations for greece. i hope that we can build a success story which means successful reforms and on the right way to do so. then confidence coming back to greece through investors. then he growth. 2017, which2.7% in means we have confidence.
10:52 am
if the greek authorities take their own responsibilities, we, members ofhe eu group, member imf,s, commission, ecb, must also take our own responsibilities and except positive-- accept talks about the debt. i hope we can reach a global agreement before the end of the year. mark: the idea is that greece will complete its ongoing review by december 5, and then you will discuss short-term debt relief. is that the ideal calendar of events? say that we must discuss all issues in the euro group after the fifth of december and we must show that they are strong progress in the second review.
10:53 am
the teams of the so-called institutions, imf, ecb, commissioner, are aware on the ground. they were on the ground last week, three weeks ago. the discussion of the review are quite political. i'm optimistic and i will send this message that i'm optimistic but there is still some progress .o be made i will be in athens talking in the name of the commission no further than next monday. mark: let's talk about the ecb. today it released its twice yearly financial stability review. it warned of an abrupt global market correction intensifying on the back of widespread political uncertainty, it said that poses a risk to bank stability and economic growth. is the eurozone ready for such an abrupt global market of of such in the event
10:54 am
a political eventuality? we have the italian referendum in a week or so. >> i usually do not comment on decisions from the ecb, which are always inappropriate -- appropriate and intelligent. right now we are in a recovery which is solid enough, which is not strong enough. we need to enhance our growth potential. we have regained stability, but we need to fight for our political stability, for the stability of our democracies. as far as the economic and financial tools are concerned, i think we have all the tools to fight any kind of problem that could intervene. but i'm quite confident about the eurozone economy. what i know is we need more growth in order to create more
10:55 am
jobs and to have better capacities to fight inequalities . that is why this commission addingo help the ecb by to and accommodated monetary policy,positive fiscal and efforts on structural reforms that tend to develop investment and innovation. finally, i spoke about investment to develop our investment plan for europe, 315 billion euros. already 150 have been decided. i must say to the british people who maybe don't know it, the u.k. is among the most important beneficiary of the plan. what isnal question, your number one worry right now, what keeps you awake at night? >> populism. the populistabout
10:56 am
wave. i do not want it to become a tsunami. that is why i think we need to oppose responses which address the worries of the people to populism. we must keep our open societies, witheconomies, but also taking everyone on board. that is my great worry, and also my fight. mark: thank you very much for joining us today, pure muska vinci, the eu commissioner for economic and financial affairs -- beer muska vinci-- this is bloomberg. ♪
10:57 am
. .
10:58 am
10:59 am
mark: 11:00 in new york and midnight and hong kong. 30 minutes left in the trading day and i'm mark martin. this is the european close on bloomberg markets.
11:00 am
barton.k this is the european close on bloomberg markets. u.s. markets closed for the holiday and we are going to take you from athens to johannesburg to san francisco in the next hour. here's what we are watching central banksean warning a correction is back on and rising political uncertainty has intensified, posing a serious threat to banks, stability, and economic growth. worldwide are being forced to take action. howell things fair in the face of incoming president donald trump the growing populist mood in europe question mark is content in greece as banks struggle to clean up their balance sheets of bad loans. we will hear from the chairman of greece's largest bank this hour.


info Stream Only

Uploaded by TV Archive on