Transcripts For BLOOMBERG Bloomberg Markets 20171123

Tenyear. But get you up to speed on top stories. Is taylor riggs. Federal reserve policymakers signaling there will likely be an increase next month. Their most recent meeting shows that officials are looking for stronger science of their rights. Want people want to see inflation on an upward path before another rate hike. Tomorrow, zimbabwe gets the first their first new president for a few decades. The the new could country as a democracy. He had fled after being president bite fired fired by president robert who got a, who will not face prosecution. In the u. K. , conservative party makers are delighted with a by hammond, who targeted Younger Voters with tax biggestand promised the Homebuilding Program in almost five decades. Conservatives lost over brexit. In germany, chancellor Angela Merkel make it a partial lifeline from democrats. Social democrat leader Martin Schultz is prepared to offer a limited support for a fourth term. According to people familiar with this plan, schultz could back merkel in a minority government, but ruled that repeating the grand coalition. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im taylor riggs, this is bloomberg. Jonathan . Jonathan thank you. For the latest out of germany, lets head to berlin with matt miller. Are we closer to breaking the deadlock . Uncertainty in germany . Matt it seems like there is movement in that direction, at least ahead of the csu. Angela merkels sister party in bavaria that is. They think theyre making progress as well. Its hard to understand how it will work green Martin Schultz, head of the social democrats, has said on a number of occasions, he will flat out refused to join a coalition with the city you, and the spd impacts the ruling board of the spd has put it to go into a coalition with her. Angela merkels priority is a coalition. Prefer elections over a minority government. Its not exactly clear how this will work out. Not clear how you these workout when you put schultz and merkel in that room, or see that negotiation take place. Matt, good morning. Said, another reason why they might not go into coalition or work with mercy merkels party is they wouldnt want to leave the afc, been the official position in germany, therefore lending the profile that would lend to that party. Thats right. Now, the afd would have the ftp possibly fdp possibly, or the greens to join again. The idea of how this could work is that the cdu would have a minority government, possibly with the greens are fdp, then the spd would enable parliamentary votes. Fdp. D the spd doesnt get much from that. They wont be able to take it for things that work well; they will always did the blame for votes they block. They wont be able to pick any positions. I spoke i suppose the one positive is that they could say there was opposition before that, but even then, merkel is going to be voting along the same lines as the afd on some issues. Thats something she wants to avoid. Thats why she doesnt want to have this minority government solution. Jonathan confused by the thanks giving outfit today, whats going on . You know what . Ive got little dogs. Jonathan not really thanksgiving outfit. Im glad to see you are celebrating thanksgiving, john. Jonathan i love it, its my favorite thing. Matt miller, great to come up catch up with you. Keeping Market Action at play, but it doesnt keep matt millers closest sense on message. Guests. Ng in our weve got his german story tackled from various angles. When you look at what is going on with politics, four months, it seems that the german election were a nonevent from the market perspective. All of a sudden, weeks after, or months after the event, it is it interesting. Is this, from an markets perspective, very interesting . Mackinnon i think youre right. The Election Results were right a surprise to some degree. This will always work to Angela Merkels disadvantage. The uncertainty of Coalition Talks is something that is now firmly on the agenda for investors over the last few days, week or so. Theres been uncertainty today, as your report is suggesting. There are perhaps movements here, has met with saying quite rightly, as uncertainty and perplexity about how all this works out. It may work out, it may not, but its something that for the next couple of months is going to be a key thing for financial markets. When we saw Coalition Talks fall apart for the weekend, it took the edge off, but that quickly unwound, because many investors pointed out the Global Growth story that is germany is a Global Growth story. Looking stellar. Does that outweigh, in the short term at least, these political tensions . First, you are to say that investors know that the Global Economic bank drop his firm. They know theres quite a good cyclical economic recovery taking place throughout the eurozone that seems to be across the board, germany is leading the way across the board; germanys leading the way. The 2nd thing is that weve seen throughout the course of this year, investors have struggled off geopolitical uncertainty, Political Risk. Architect proven resilient. Those things together markets have proven resilient. Those things together, will be positive. David, your thoughts here. We heard from matt miller what he sees in berlin, what the chapter is. Chapter is. Chatter is. What is your base case . Is it possible to have a base case of what the minority government might look like . David kohl you need to have a base case, but definitely, this as like you said, an interesting story. Theres a lot to talk about, markets, but when we ask yourself is this important for market outlook, for the fx outlook, we have to conclude probably not so much. Why . Germany is in a comfortable position economically, and when we talk about the euro, european progress here, even without a government, germany asset rights basically further european integration, and when the would be a need to decide here that there were be a majority here. Think . The base case i politicians in germany, miracle included, will take the time to divide on a government. There will be of the election process. I can imagine a minority government, and new elections. That would be the order in terms of trying new ways here in politics. The answer is unusual for germany. That should be the way forward. Theres things that dont make sense to some people. Market doesnt seem to care about this. If you look at pmi today, despite the high, twoyear bond spread is 240 basis points. The euro is marching stronger against the u. S. Dollar. Im trying to make sense of this, other people are as well. Talked about this verse is what the fx market is doing. This is, the astonishing enjoyedr 2017, the euro a lot of euphoria. Its out of sync with this parenteral. Much euphoria between the u. S. And eurozone. It will close on the growth side. People hope that it closes quickly on Interest Rate side. We have more caution here. Theres a time gap between these economies when it comes to economic recovery, capacity of this, output get. This justifies the gap in Monetary Policy and Interest Rates. We think the euro will correct from here. Jonathan neil, what is your view on this . How much oxygen is left up there . Good question, a jonathan. Think thats theres not a great deal of oxygen. The euro dollar has been trading at 115118 rate recently, from the low we have seen earlier in the month theres a much stronger euro, it wont be welcome for german exports. Mario draghi, ecb presence was concerned that there is an absence of inflation. The stronger euro tends to create inflationary pressures. Things are outside the control of the central bank. It will be very interesting to see where we go from here. ,he dollar will get support depending on what the fed does. The u. S. Dollar always has the capability of making a comeback. For the time being, you are right. Disconnect between Interest Rate differentials and this has been interesting. We had stellar numbers from the eurozone today. We had germany germany putting the economy on course. Six years of this chart bloomberg users want to bring it up. This is playing on the role of german households, with what we have seen recently. This white line is the gdp story in germany. It seems to be going strong, very much driven by the little of story there. Degree, germany being the leading export their willows be a benefit from the global economy. Thats been the course of this year. The appreciation in the Euro Exchange rate seems to have much impact. Thats all good news. This will keep momentum Going Forward. Thank you so much. Our guests stay with us. Jonathan coming up on the program, the Federal Reserve shows the fed it is on track for a rate hike that next month. Shortly. Ave the latest price action muted across much of the stoxx 600, a little bit softer. Bloomberg tv. Tiffany im taylor riggs with your Bloomberg Business flash. Taylor this is market value was lost after this two months ago. According to people familiar with the matter, Matthew Westermann has agreed to leave by the end of the month. The ceo heart can is going to boost a price of qualcomm if qualcomm drops its bid for a semiconductor, according to the new york post. They have set the current broadcom offer they said it undervalues the company. Thats your Bloomberg Business flash. Isthe Federal Reserve event out from its latest meeting. It appears the central bank is on track for a rate hike next month. As a former chief white house economist. We made the transition for starting to pay down the Balance Sheet. Theres a style of a style of tightening environment. The economy is not so strong that we would really be off to the races raising rates in an aggressive way, when all of our managing Major Trading partners are in some opposite way. Jonathan neil, i want to begin with you. The conviction around this remain stashed seemingly will get a rate hike. But you go to 2018, and any conviction they have, agreements, seems to be ,ncredibly divided or fractured and the way they should respond to it. Was that your takeaway question mark slightly. I think this rate hike is based in probability, depending on what metrics you look at. Whats interesting about the minutes is that yesterday and it wasnt you, but there is this growing debate about where inflation is going. Janet yellen has a knowledge that perhaps low rates of inflation are transitory, and it may be more permanent. There has been this debate about whether float low inflation rates are structural factors as demographics for it as an example. The end zone affects whether this whole relationship is in a coma because of the excess supply of labor. Right. Ink i think the fed is on course. The not going to derail the economic recovery like it is here in the states. I dont think they want to derail President Trumps plans for the economy either. I think, and even though this has rate hikes penciled in for 2018, which is way above current market pricing, we will have to see what the new look is going to do. I suspect, its pretty pointless trying to figure it whether this will be dovish. They have to face the economy as they face face financial markets, but whats also interesting is this acknowledgment that perhaps low volatility might contribute to this balance. This was a reference for a high stock market evaluation. Jonathan lets talk about what has dominated the conversation around europe as well, a yield curve. At what point does it start to bite for the fomc . Is at 40, 30, 20 . When did they start to get concerned . Thats a good question. Ensure your people at Bloomberg Economics have written about this particular issue on the yield curve quite extensively. By, the yield curve was seen as a consistent indicator of succession. But its different this time around, because of constrictive thisg and asset purchases was at 2. 63 , the high we saw earlier this year. This is unclear at the moment. To this, bringing you conversation, ecb 451, u. S. Financial conditions. Our colleagues at Bloomberg Economics say this is crucial for next year. What do you expect . This is why the u. S. Outlook for next years slightly better. Currency markets are basically shifting to the u. S. From the eurozone. There is an initiation of the euro, it waits for financial conditions. This is an equivalent of 7500 basis point rate hikes for the eurozone. The other developments you observe in the u. S. , particularly financial conditions i guess this is for equity markets, a blend market. U. S. , andfinitely the makes it much more comfortable for the fed to hike rates for next year. Up on the program, we take you to asia, chinese equities taking an absolute beating in todays session. Market selloff and the bond rout there next. This is bloomberg tv. Jonathan concerns of stocks plunging in china overnight. Down more than 2 since 2016. Joining us from china is our chief asia correspondent. Always great to catch up with you. Walk us through price action. As always, if equity markets face headlines specifically, the story in the bond market, thats what really counts. What is happening . Thats right, john. Quite a jolt today. In the bond market, Corporate Bond market, we are seeing foggy or top rated, aaa paper, yields known as this threeyear high. The reason for the cause of concern is because we have a significant amount of maturities coming in 2019. Watch how this works in total. The feeling is that if yields will go the site, it will make the cost of financing much more defensive, thats not a Good Companies know, for the stock market. Though, for the stock market. Hes going up there, sending warning signals, and stocks slowed off as a result. Anna how serious are officials about the deleveraging drive in china . We had comments on our live blog thats a actually, yields could inbilize, if they realize the mediumterm, the deleveraging story is a good one. This should allow more depots, because that allows more transparency, allows you to price credit in a way you can another markets. We are talking the talk, not walking the walk. Since then, weve had serious warnings about people who have raised the specter of this, for example. We had a big crackdown last week for asset managers. As all the indications are that authorities are aware of this problem, the need to deleverage risks and Financial Systems, pushing ahead. Theyre not going to push ahead at a pace stressing Overall Economic stability, or way that grows in a significant way. Jonathan possibly one of the most hardworking journalists i know in hong kong. Thank you, enda curran. Still ahead, the ecb is bound to release its latest investments, looking investors are seeing told looking to see what it could hold during the financial markets, respecting that ramp volume, as we told you go towards the u. S. Session. We will not get it because of thanksgiving. Price action muted across europe. This is bloomberg. Jonathan good morning, good morning. A happy thanksgiving to our audience worldwide on the United States. Im Jonathan Ferro alongside and edwards in the city of london. This is bloomberg its pure markets. Omberg, markets muted with the ftse 100 dead flat. At the stoxxoking 600 overall, absolutely none nowhere. Eurodollar termer by 2 10 of 1 , off the back of this, 11850. What are we seeing in the accounts . Anna interesting stuff coming through from the ecb, publishing the accounts of their october 2526 meeting. Some officials worry that the market may expect more qe extensions. Officials worried that a firm qe end date might cause tightening, and this plays into the debate of the october meeting, as to just how firm the end date on any of this policy should be. They also talk about how the private sector purchases will not drop, in line with total quantitative easing. The bond buying will not drop in line with qe. Thats interesting in conjunction with the Corporate Bond story we have been running here. Lets get the thought of neil mackinnon. He is here with us on london, kohl. Vid cole david officials worried the markets may expect more qe extensions. Does that china with your interpretation of what we heard think october . I think the ecb wants to keep their options open. We just reiterated that he still degree ofnderpin some monetary accommodation. Even though the eurozone economies are doing well, he is concerned that inflation is , and below the 2 target is an sufficiently Strong Enough to cause the qe program, or in their Interest Rate policies. Hes keeping his options open. A be hes worried about other things, but he wants to see inflation pick up. Its a general debate we touched on earlier. Anna yes, and the fed context. Exactly. There are other countries in the eurozone that might be worried about the banking system. He wants to keep options open. Anna when you look at the tape we will see from the monthly purchase, january going from 60 down to 30, a lot of questions being a asked about what will drop. See that drop, but not corporate buying bond bond buying drop. This goes to the heart of limitations and qe. They might run out of some of the bonds to buy. Thatats one of the issues markets have been focusing on. Theres also these guidelines that are selfimposed. For thisas room maneuver. There has been Corporate Bond buying, which has had a tremendous effect. This might be creating a bubble there. That might be helpful for eurozone corporate. They know that september 2 thousand 18 would never be a finite date. People want to keep their option and they havent done anything until the options are clear. I want to talk about the corporate debt market. Pointhe ecb ever get to a where they can trust the economy . It seems to me if you took the , peopleof the equation would not have yields this low. This bond yields across the this a search for yield, behavior. Effect. A distorting thats what people are saying and all of the latest data. People thought that would be associating with rising bond yields across the board. Thered accommodate would be accommodative monetary policies, but not enough environment. So to a large degree, compression and yields we are seeing is somewhat artificial. In 2018,us must be as we go through 2018, that we could see some reversal and all that. The economies doing well. It should be Strong Enough to absorb all of that. That will be high on the agenda for the ecb. If this stopswo behaving like credits typically when an economy its the sovereign for stash to sell off, for yields to go higher. For years, you had spain and italy more like credit. You expect that to change anytime soon . Not really. I think you make a good point all of this. While the ecb has not stated this explicitly, their money investors worried about the situation, in terms of european banks, italian banks. Theres one third the one trillion euro outperforming loans. Drug in his colleagues worried about that if we get any snap back in this, we get a return of this between the banks Balance Sheets and the holdings of domestic sovereign debts. Thats something he cant or wont a knowledge. Thats not the only reason, but one of the reasons why hes the ecb is keeping its options open. Its an interesting phenomenon, very dependent on where we go. You weigh in with your thoughts. The ecb is close to the action there. Worry that they are not keeping extensions, theyre really trying to keep their options open as to how far this is open, possibly because of political tensions in germany and italy. I wouldnt say its political the ecbs operating here, and there simply not sure if there scaling down qe, scaling down monetary similar to it. Jumps re if market there keywords here. The careful action by the ecb is warranted. They will march forward for ford and scott Forward Guidance without underwriting the foreign guidance with the purchases of bonds. This is definitely a good, healthy step. This highlights the eurozone story, but also the french story , and strong growth story with this coming through with that. At some point, where is the better data from the eurozone i dont know if you call a boom or just a recovery. Where is this with the ecb at the moment . There still a lot of slack in the eurozone. When you look at the labor france,n spain, italy, what we are missing the most with catalonia, we are missing good political development, which helps the economy. What doesnt help is on the demand side, its more the supplied side supply side. This helps to create a boom of growth with risk inflation being late in the economic cycle. Neal, the consensus view of europe is that the economy is good, the politics are decent compared to what some people have expected it to be sixnine months ago. My question would be as follows how do you express that positive view in european markets most if . You think about the fx market, its going to hit a lead. It will put a cap on any advance. If you try pushing through this coming yields will sit at 40 basis points. If you try to push it through equities, its also been really gains. Lt to get decent view do push that positive through . ] its got a be in equity markets. At some point, investors recognize that. For as long as the Monetary Policy backdrop is so long as the economic picture remains good, watching these numbers, for example, we wonder whether we can keep pushing above the 60 level, which previously has been seen as associating with economic activity. That will remain to be seen. Im positive on European Equity i thinknancials Going Forward that thats all very helpful. Your point about credit, bond markets has been very difficult, to push investors toward that. They keep pressing yields lower. This is a bit of a wild card for sure. I think the ecb would get worried if the euro dollar Exchange Rate started moving up much above the 120125 levels, for example. ,here is a threshold there which i think may come into consideration. Generally, its equities breakup to express a positive view. We have the euro trading in, 11850. My favorite fact has to be thats, french companys steppedup hiring, that be the past fastest paid in almost 70 years. Canon, thank you very much. Our guests stay with us. Check in with bloomberg first word news. Heres taylor riggs. Taylor taylor australia warns that power in asia could shift to china if the u. S. Does not cut off its Economic Security ties. Australia said it is concerned that chinas military expansion in the South China Sea will lead to Something Else. J. P. Morgan chase ceo has us that President Trump does not wait a second term. To come upill have with a reasonable alternative. He says the party nominates what he calls a complete leftist candidate. President trump might be reluctant. A congressman has to apologize after eight lewd photo appeared of him. He said he was separated from his second wife, and had sexual relations with other women. He said he is sorry he didnt use better judgment. The Trump Administration has delivered a blow to one of its million supporters. The Environmental Protection agency will relieve refiners of their obligation for quota. Investor icon in Oil Companies have stopped the change. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im them taylor riggs, this is bloomberg. Jonathan think you very much. Coming up, abrasive breakthrough next month could end up disappointing for theresa may. We will discuss as truck crunch time nears. This is bloomberg. Jonathan anna happy thanksgiving if you are celebrating. This is Bloomberg Markets. Europe is preparing for an offer from theresa may. Even as a consensus is falling in brussels, this might not be anything like program what prime what Prime Minister theresa may is saying. Research, head of and neil david kohl join us still. We might get more money offered by the bricks, that would offer trade conversation in december. When we get onto trade, it will be a tough road to get a trade deal. The u. K. Want something that includes Financial Services. These talks and negotiations certainly are complex, these posts keep getting shifted. It is exhausting. Things i couple of would like to mention, more in terms of the simple financial, in which the u. K. Has got to confirm. Budget,ack of the u. K. It would be difficult to get past u. K. Voters. Any sort of divorce bill thats of substance, 40,000,000,00050,000,000,000, which might include payments, actions for the eu bureaucrats thats a poet difficult political sell for the u. K. , particularly for the budget. There is still a degree of fiscal tightening over the next few years. Thats more the issue. Whether there, can be some sort of trade deal, it remains to be seen. One of the legalistic things is that all the eu countries have to agree to that. We saw the eu canada trade deal, that was initially vetoed. You dont need a trade deal to trade. You can move from march 2019, or april 2019. There will be calamity for the u. K. Economy. Theyre not entirely focused in my opinion. We will come back to you on that. David, to bring you into the conversation, we did a recent survey of a currency strategist, pound would get ahead on various brexit scenarios. There seems to be a wide range of estimates out there. What is your thinking on cable . Well, the starting point is cheap. The likelihood that it can appreciate. Given the number of outputs, most of them would be negative. Its sharply negative for the u. K. Economy, all by direct investment. We are very much concentrated on the services industry. Not great on services, it will be difficult to attract the same market. This is important because the uks running still. This needs to be financed. It can be much easier to be financed with a weaker pound. This is our story when talking about brexit being out of the eu market. This is the reason where we convince the pound despite the fact that this is so cheap. How significant is a transition deal . Yesterday, they were saying to me even if we get something, it wont be enough, it wont be solid enough for banks to back around it, for transition deal, so if it comes now nothing is certain. That may be true. I tend to think brexit is positive. I dont share the notion that it will be the world for the u. K. Economy. I think it can all be worked around. The notion that we will be working in frankfurt or paris is completely incorrect. Its not going to happen. London is already the worlds number one financial sector. Theres world outside of brussels, the eurozone. I think we can work around all of this. I think we should be positive. For davidnot go anytime soon. Neil mackinnon sticking with us. David kohl staying with us as well. Coming up, a stop between brexit politics in a weaker outlook for the british economy. That conversation next. This is bloomberg. Anna this is Bloomberg Markets. British pound deteriorating slightly. U. K. Budget what dark watchdog forecast has a growth rate for each of the next five years. Today, the rigor this outlook for productivity growth, investment, lack of gdp growth across the forecast. Growth 1. 5 see gdp 2018, 1. 3 in in 2019 and 2020, before picking back up to 1. 5 , and finally 1. 6 . Hammond this interior rating. David cole still with us. This dont look favorable. There globally synchronized growth story. This is in the, economic cycle, much more demands than the euro. There is potential to have a slowdown in growth. This is a global phenomenon. This is not something unique to the u. K. We have the same phenomenon in the u. S. And eurozone. This has a lot to do with too few investments. All in all, its important here to knowledge that this is a andterm out for the u. K. , the u. K. Is pretty much advanced in the economic cycle. This is a reason why the u. K. Gross picture looks like this. Along u. K. Is further compared to europe, thats fine, but so does the United States. They have similar headline numbers. The gdp is still printing 3 , a quarter on quarter on quarter. How do you explain how anoka open economy is downgrading this forecast . Think they made some fair points on the u. K. Economic outlook. This could be more optimistic, rather than pessimistic. I think all of these forecasts are not worth the paper theyre written on. The treasuries forecast was completely wrong. There talking about impending recession, increases in unemployment. It never happened. For sure, we will be further on the economic cycle. It wasnt exactly a headline from the financial times, but the confederation and british industry last week reported that manufacturing orders in the u. K. Remain at a 30 year high. Production, somehow the u. K. Economy is weak. As far as productivity numbers are concerned, they dont mean anything. And a digital economy, how do you measure that . In the age of producing widgets, you can send a digital widget trade we dont do that anymore. We are going to leave it there. Great to catch up with you both. From new york and london, this is bloomberg tv. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Jonathan from new york city, i am Jonathan Ferro alongside anna edwards on this thanksgiving thursday. A warm welcome to Bloomberg Markets. Jonathan the Federal Reserve tees up another rate hike in december, but a persistent divide over inflation continues to divide the fomc. Angela merkel inches toward breaking a political delight in germany. The political deadlock in germany. Lets went through some of the Market Action. You will not get the volume ramp from the u. S. Session, today. We are closed in the equity market and the bond market. Dead flat on the stoxx 600, but still grinding toward one of the best weekly gains in europe since september. A 79 monthome in at high for manufacturing and services in the eurozone. Dead flat throughout much of the session. That is your cross asset field and across the euro. Lets get you up to speed on some of the top stories. Taylor iran is living up to its end of the nuclear agreement. Irans dealnitoring with the u. S. And five other nations. Last month, president refused to certify that iran is in compliance. Federal reserve policymakers are signaling there will be a Interest Rate increase next month. Minutes of their most recent meeting show some officials are looking for stronger signs that prices will rise. A few wants inflation on a upward path before another rate hike. Tomorrow, zimbabwe gets a new president in the first time in almost four decades. The former says theirparty president will not face prosecution. In germany, Angela Merkel may get a partial lifeline across to social democrats. The democrat leader is preparing to offer her limited support or a fourth term. According to people familiar with the plan, schulz could back merkel in a minority government but he has ruled out repeating the grand coalition the governed germany for eight of the last 12 years that governed germany for eight of the last 12 years. Global news 24 hours a day powered by more than 2700 journalists and analysts in over 120 countries. Jonathan matt miller is in bloomberg, stint matt miller is in berlin, standing by. Im understanding is that chancellor merkel did not want in minority government. What is on the table right now . Matt our understanding is she said as much in a Television Interview just a couple days ago. She would prefer elections to a minority government, but we also heard Martin Schulz say that he would not under any circumstances join a coalition with merkel and he would refer prefer new elections as well. Somebody is going to have to do something that he or she does not want to do and it is because the president of germany has taken over and is trying to ors together a government, majority or minority. He does not want to call new elections. Jonathan as we reflect on the u. K. Experience of coalitions. The lives learned very quickly that it is not a good experience, being with the conservative party. Is that going to be the reason they stay away, keep a step back . That is absolutely the experience of the parties that have been in coalition with merkels cdu. The fdp, the liberals, they joined a coalition in 2009. In the following elections, they did so badly they were kicked out of parliament. The social democrats win into coalition with her in the last government. They had their worst result in elections since the second world war. No one really wants to be in a coalition with merkel because they have learned they get burned. The voters punish them afterwards. That is her problem, after being in power 12 years. That is what is keeping her from clinching her fourth term. Anna in the u. K. , when you have a minority government that relies on another party, similar to what we have, it is called a confidence in supply deal. I dont know what that translates into, in german, but is that something we might be looking at . Some agreement between parties rather than a coalition . That is exactly what bloomberg has learned from people inside the spd who declined to be identified. The plans have not been made public. Martin schulz is meeting with the german president right now. He is going to suggest that could be one of the possibilities, that the spd serving an enabling role to a minority government led by Angela Merkel. We learned that today is a sign that progress can be made. Possibly the cdu will come toward the svd the spd. No one knows exactly how it is going to turn out. Anna fascinating to see what amounts on the screen what this man on the screen wants to get out of any enabling deal. Matt miller, in berlin, thank you. Lets take this conversation further. James athey, senior investor at aberdeen nasa Aberdeen Asset management. Shifted yourady stance on any german assets as a result of this . James it is very difficult to do. The situation you have been discussing is how we see it. It is difficult to see where the Common Ground between a number of these parties is. Is it it is easy to see where there are red lines on specific policies, where it is going to be difficult to get agreement. In terms of how that affects the investing horizon, they havent. They are reacting to the Economic Data and the data continues to be incredibly positive for certain parts of the eurozone and as a whole. It is going to be difficult to position for some catastrophic political outcome that has meaningful impact on the economy. Longterm, there are big issues. Anna is it possible to come up with circumstances an agreement, whether that is elections or a minority government of some sort some form . In the shortterm, i think it is difficult to get an outcome which looks negative for german assets. With regard to the spd, it is clear that the policies they would like to see enacted are very proeuropean, but probably more loose and supportive on the fiscal situation. The stp at the other the spd at the other end of the spectrum and the right the need to become more rightwing. The cdu division, there is some disagreement. Or likely coalition competent supplier, i dont think we are talking about catastrophic leave a little policies. Jonathan the lesson for investors in 2017 has been stop trying to trade politics because it has not mattered. If you think about President Trump coming into the white house, everyone thought it would be terrible for e. M. , e. M. Just ripped. Europe, germany is in a bit of a mess, but it does not seem to matter to broader markets, if you look at Asset Classes. Is that response rational or is it complacent . James i think it is incredibly complacent. There is some subtle difference between various Asset Classes. In bond markets, you have not seen an overreaction to these outcomes, but i argue a reason the dollar has performed so badly is her Political Risk is for Political Risk. There is now a view of need for risk premium within dollardenominated assets and the role the dollar Going Forward because Donald Trumps stance seems to be rather isolationist to be slightly extreme and that has played out in the dollar. Eurodollar is trading at 1. 18. I still find it incredible that the dollar is so weak and i would attribute that to Political Risk. The on that, there is an element of complacency beyond that, there is an element of complacency. That may change in the next 12 months. Anna what is the best way to make money out of the German Growth story . Economists were lifting their forecast in 2017 German Growth eight times since the start of this year. Community has consistently underestimated germany. Absolutely incredible, talking about 3 growth, potential upgrades, inflation of maybe 2 on top of that. Phenomenal growth, 4 to 5 . Progrowth trade is definitely selling bonds. Equities across the globe in this environment of abundant liquidity and a globally supported backdrop seems to be the best the perfect storm for equity markets. There is a lot more noise in bonds and i say that as a bond investor. It has been a difficult environment to translate. An outlook into the policy steps , what that may mean for the markets. Jonathan james athey, staying with us, chief investor at Aberdeen Asset management. The markets quiet in the United States this thanksgiving day. In europe, a little quiet as well. The stoxx 600 going nowhere, the ftse just a little softer. The pmis just absolutely solid. 1. 1850 is about where we trade, up about 2 10 of 1 . This is bloomberg. Taylor this is Bloomberg Markets. The maker of angry birds appears to have done angry investors today. Rovio lost a fifth of its market value since going public two months ago. Fell 29 nys earnings from a year ago. The highprofile dealmaker brought in to overhaul hsbcs Investment Banking arm. Matthew westermann has agreed to leave by the end of the month. They say the former Goldman Sachs partners brash management style clashed with the culture at hsbc. Female employees of bank of england are paid more than 20 less than male workers on average. That is according to a report by the central bank. 70 of employees in the highestpaid quartile are men. That is your Bloomberg Business flash. Anna now the Federal Reserve is out with the minutes from its latest meeting and it appears the central bank is on track for a rate hike next month, even as inflation concerns remain. Withscussed the minutes the economic professor at the Boston School of business and former chair of the u. S. Council of economic advisers. We made the transition to starting to ease down the Balance Sheet pretty successfully and the fed deserves credit for that. That is a style of a tightening environment and the economy is not so strong that we would really be off to the races, raising rates in an aggressive way when all of our meeting Major Trading partners are going the opposite way. That makes me nervous. Anna we are back with james athey, senior asset manager at Aberdeen Asset management senior investor at Aberdeen Asset management. Is next year and how many rate hikes have you penciled in . James we seem to have forgotten it is difficult to be critical of the feds actions. Hikes intronomic rate the state of projections. We are fully expecting a december hike. They are telling us they will hike three times next year and i dont have much reason to disagree with them. The policy is pretty much on autopilot. U. S. Headline cpi is above its 20 year average. In china, gdp is above average. In u. K. , inflation is above its 20 year average. It is only the eurozone that is below. We are still stuck in this mindset of low inflation when in reality, we have seen improvements in inflation indices in a number of major economies. Given the lack and policy and between full employment and that pressure in wages and prices, i think it is rational for the fed to carry on with this steady pace of normalization. Jonathan if you think about the actors that have come on board, one of the biggest nonstories was this concern about who would be the next fed chair, a very consensus pick in james powell. It does not look like the vice chair is going to be outside of the norm, either, a strong academic background. Is this going to be a nonstory in 2018 as well . The president has some pixie could make for the board, but it does not look like he is going to go to the extreme pets he could picks he could make for the board, but it does not look like he is going to go to the extreme. James trump has his advisers that will make sure he is aware of the disruption that might be cost in the short term if he were to put some of the extreme candidates out there. If you look to the people who are leaving or who have left, they sit so close to the dovish end of the spectrum that i think it is going to be unlikely for them to be replaced. I see a more hawkish evolution. I dont even like the categorization that some of these people are hawkish. With unemployment nearly at 4 and cpi nation above 2 and the economy growing at 3 , consistently quarter after quarter if you go out and strip. Ut the inventory cycle to think that Interest Rates going up while the Balance Sheet is above or trillion dollars, maybe up to 2 is somehow hawkish is crazy. Jonathan how much longer can the fed go alone . Look at the treasury spread on the twoyear. We are as wide as 200 something basis points. Can they carry on with the ecb where it is . James the irony is the ecbs policy and the boj policy helped yieldp bun year bond down because money is flowing out of those markets into the treasury market. There is money that has to be put to work and that is why i think we have seen this flattening of the curve. While that is not great for banking, the u. S. Markets is largely sensitive to rates further out from the curve. You have a corporate sector which is largely funded through markets. Curve helps of the to ensure that there is fed that this fed tightening is not moving financial conditions tighter. How long can they carry on in this regard . Certainly through 2018 without huge changes to policy elsewhere. Jonathan james athey, in your investor at Aberdeen Asset management is ticking with us. Still ahead, we take you to wait concerns in china. The shanghai composite seeking the most in 10 months. We will discuss the market selloff of stocks and bonds as the government continues its deleveraging plans. Jonathan stocks in china plunging amid rising concerns about the wrath of the chinese bond market. Shanghai composite sinking the lowest since 2016. Stimulus still with us is james athey of Aberdeen Asset management. I want to zoom in on china. When you have these kinds of market moves, these breakdowns either in the stock market or much mode much more in the bond market, it would bleed through developed markets as well. Why are we not seeing that play out this time around . James there is an element of what it in, twice shy once bitten, twice shy. Aggressive price action in a particular market and people have reacted in the past. The quantities of liquidity is sloshing around the Financial System and people have gotten out of those trades and regretted it. About the wall of worry and just being a little higher and taller than previously. In terms of chinese equities, the decline we have seen is relatively small in the grand scheme, and so people are not concerned. The chinese authorities have learned from some of their past mistakes in terms of micromanaging some of these markets. Some people may argue the fact that chinese authorities have not tried to aggressively step in is a marginal positive. If we were to continue to see these markets move in this direction, it will increase and worry investors. Jonathan the Central Bank Governor has warned. Elsewhere, you are looking at a situation where the government is pushing work with deleveraging. You say in the mediumterm, it looks like investors are happy with this. I wonder whether the Chinese Government is happy with this and if it is just a matter of time before they see a little too much pain and back off once again. James i dont know. Eventually, they will have to make a decision on these policies which are in contradiction to each other at times. They are trying to achieve things that are almost impossible to do. They sort of move from one play to another and keep it winning and the whole thing keeps chugging along and growth is being supported because monetary and fiscal tax is wide open. I dont know which one they prioritize the most. The underlying priority is always keep people happy and so you need growth to be reasonable. Where should bond yields be because we had this conversation about the bond yield going above 4 and that seemed to be something people thought was triggering some nervousness. Thatpeople have suggested china bond yields are about where growth and core cpi indicated they should be. Does that sit comfortably with you . James what is interesting about the curve is it is inverted. How we look at the u. S. Curve and how people say that is a recession indicator and is very worrying. The chinese curve has been inverted for quite some while and i dont hear anybody talk about how it is in recession. Anna is it because it is not like other markets . James exactly right. At 6. 5 andok up the gdp deflator at 4. 5 . We have to look at real rates and where inflation is trading. I dont think this is us of sensibly a yield ostensibly a yield. Jonathan e. M. Has had a fantastic year. Do you look at the experience of china and keep along on e. M. As well . James i am quite cautious about e. M. We were talking about whether the dollar was week because of political issues. You mentioned the fact that political issues have not bled into em, i think that is because the dollar is weak. We have just seen sign there might be can might be some concern. Jonathan james athey of Aberdeen Asset management is ticking with us. Coming up, ecb officials expressing concerns about setting a firm date for quantitative easing. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Jonathan live from new york city for our audience worldwide, good morning and happy thanksgiving to our u. S. Audience. I am Jonathan Ferro from new york alongside and a wet words anna edwards in london. Getting you up to speed on some of the top stories with taylor riggs. Taylor the euro area economy is on track its best annual performance since the financial crisis. Economic growth speeding up to 8 10 of 1 in the fourth quarter. Companies and the euro area increased hiring at the fastest pace in 17 years. Australia warns that power in asia could shift to china if the u. S. Withdraws its political, economic and security ties. In a government white paper, austria said it is concerned that chinas military expansion in the South China Sea will lead to clashes. The Prime Minister says australia will take a bigger role in regional affairs. In the u. K. , conservative Party Lawmakers are delighted with the budget laid out by chancellor of the exchequer Philip Hammond. He targeted Younger Voters with a tax break and promised the biggest Homebuilding Program in almost five decades. Those were the sort of voters the conservatives lost over brexit. Jamie dimon says he doubts President Trump when the second term wins a second term. He says the democrats need to nominate a suitable candidate. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 100 in more than 120 countries. Jonathan the ecb has released minutes of its october Monetary Policy meeting and they are learning that officials expressed concern about having a firm date for the end of quantitative easing. Joining us for more insight from frankfurt. Have we learned anything else about the divide that is currently dominating the governing council . A few things here and there. At their last meeting with a decided to extend quantitative easing but at a slower pace, they did discuss how they want to implement that. They also discussed how they should change their policy guidance or whether they should ship the policy guidance because at the moment, progress on inflation is very much linked to asset personages asset purchases. Get the ecb decides to end the program next year, that will have to change. 2018 is it feels like going to be autopilot for the ecb for at least the next six months before we hear of any changes or projected changes. Is that your sense in frankfurt or do people think differently . That is pretty much our sentiment. I have spoken to a few policymakers and they all seem to think that they have made their announcements for policy of until september and now they are looking at how the economy develops, how inflation will pick up and where we are going with the region. Thank you, from frankfurt with the latest on the ecb. Lets bring back james athey, senior asset manager at Aberdeen Asset management. The eurozone is one of the five Major Regions that does still have inflation below its 20 year average. Perspective, i would be quite concerned if we were starting to see some tight labor market price and wage pressure because youve still got high unemployment relative to other regions and relative to the eurozones own history and you have pockets of incredibly high unemployment so we were to start if we were to start to see price pressure, that being said, the lag between policies being changed, steps being introduced and that affecting the economy and between the labor market and inflation suggest that you have to be quite forwardlooking and i am concerned that some of these economies which are showing real impetus in terms of gdp growth and inflation, which within the statistical sort of range of what is normal and you still have Central Banks that are fully foot to the floor in terms of Monetary Policy. Anna you think it is behind the curve. James i think it is hard to argue. You have a Balance Sheet which is larger than the fed Balance Sheet and you are telling the markets dovish things of the last meeting. It is hard to argue win 3 growth anna the Unemployment Rate is still high. James absolutely, but you have to get there. I dont think we are talking about incredibly negative rates and i dont think the economies are that damaged. Jonathan looking at the guidance through the ecb versus the Federal Reserve, this is going to get more extreme. Theyre going to stick with this negative rate through december of next september of next year if we take their guidance on face value and they are going to have to wind down a qe program before Interest Rates. We could going to 2019 with the ecb at 40 basis once and the Federal Reserve pushing rates through 2 . What kind of repercussions could we see with the spillover from that rate differential elsewhere . James fx is where i would look, first and foremost. Post central, we appeared to have this coordinated step among central bankers where a number of them said hawkish things of the same time and a first initial market was that initial response was the bond markets were very weak. Central banks tell you they will no longer buy bonds or keep rates at low, you would expect bond markets to move and that seemed to scare them and then we started seeing this dynamic emerge were if you have ago, we will have ago and everybody took turns being hawkish and that leads to a lot of volatility in fx markets. Fx first and foremost is the one place i would look to see the situation that you described playing out. We still have the eurodollar pushing up towards 120. It looks increasingly stressed and strain relative to the policy outlook and from Interest Rate differential. Jonathan something is confusing everyone, the idea that you can have a twoyear treasury spread and a euro that keeps driving higher. If you think that needs to reconcile back, it needs to break down again, what kind of levels are you looking for . James lower . It is difficult to say. In this particular dynamic and position an investment strategy, i must be out of step with the market. A lot of the market is looking at euro as being just a proxy for how good growth is, in the region and there is still this narrative that the u. S. Economy is not as solid as we thought or now has Political Risk and that keeps the dollar off. If and when that changes, it could be quite dramatic because ane next year, we will have italian election where id still where i still dont see a good outcome. I could see some outcomes that are not incredibly euro negative. You also have this dynamic where Debt Management offices want to get as much as they possibly can done in the third and fourth quarter. We see this to lodz of supply coming deluge of supply coming. Anna we could see stress in bond yields and the euro. I think you were short italian bonds. Is that Political Risk and how short are you . 6 james i am pretty james i am pretty negative. I think you have a number of trades. It seems to me that the eurozone Government Bond complex is too low in yields, given the changes that we are expecting in 2018, the policy, the Political Risk premium in italy and as we start the show, and germany as well. I dont see a particularly stable situation in the mediumterm. I am sure italy and i am happy to be so because i think the market will reassess a lot of these things in the new year. December tends to be a funny month and people tend to take chips off the table and then reassess of the beginning of next year. Jonathan james athey, senior asset manager at Aberdeen Asset management, taking with us. Coming up, u. K. Government says the Economic Outlook is looking worse. Hammond islor philip being affected by brexit talks. Taylor this is Bloomberg Markets. The new twist in what could be the biggest tech merger ever. Broadcom is offered 130 billion to buy qualcomm. Broadcoms ceo is willing to boost the price according to the new york post. Qualcomm says the current offer undervalues the company. Opecs biggest producer is trying to regain lost ground. Indi arabias aramco is talks with conglomerates that are building some of the worlds biggest plant in china. The biggest supplier in china has been overtaken by russia. Volkswagen wants to make sure it is what prepared to build electric cars. Vw is stepping up its hunt for called, one of the metals crucial for building batteries. The automaker met at a headquarters with global producers and traders coba lt producers and traders. Chancellor Philip Hammond delivered a speech, wednesday. Business investment and gdp growth across the forecast period. See gdp growth at 1. 5 in 2017, one performed 1. 4 in 2018, 1. 3 in 2019 and 2020 before picking back up to in 2022. Finally 1. 6 jonathan that was the u. K. Chancellor Philip Hammond. Joining us in london is david merritt. Chancellor hammond, i wonder what he has done and what is in this budget they can help offset some of that brexit related pain in the eyes of many. David thats right. He did his best, yesterday to come up with measures to try to boost growth, investment. The core problem is productivity issues. A bit of money to try to boost sectors Like Technology but nothing that is going to move the needle anytime soon and overhanging everything is this question of how brexit is going to affect the economy. Hammond was no fan of brexit. He was in favor of staying close to the European Union, but it was up to him to try to mitigate some of the negative impacts. The opr from independent analysis about how about quite how bad the picture is looking. It is a sobering reading for the government and the ordinary person is going to see less money in their pockets. There was nothing hammond could do about that. His hands are tied because it all hinges on the outcome of these talks and that is a great big unknown. Jonathan has he done enough to protect himself and keep himself in the job and protect his boss as well . David it does seems he does seem to have been a successful speech. Expectations were low, so that probably helped him in the end because he managed to outperform. A lot of headlines and the newspapers, some of the very popular measures such as scrapping the tax on new homes for firsttime buyers a certain amount. Freezing duties on things like alcohol, helping out pubs. Some of these things are popular , giving a little bit more money to the nhs as well, so he spent a little bit more money without abandoning austerity and that seems to have gone down fairly well. It has exceeded expectations. Throughout the speech, he seemed ,elaxed, he was cracking jokes really counter to the impression we have of him as a bit of a ulll chancellor d chancellor. Anna peddling out the oneliners. When it comes to the gilt story, we have seen the amount of borrowing that is going to be very shortterm, surprising the markets a little bit. We had expected to see them decreasing issuances over the rest of this year, instead increasing targets. James i am not sure is necessarily that important in the shortterm. Gilt yields are going to be driven by Economic Outlook for policy that results from that. I dont think there was enough in terms of Economic Impact to really change the investors possession. What the opr did was almost rubberstamp the reason stands which is this is a surprise story. Talking about lower productivity , it is the same bank of england for this for the last five or six years. Anna was there anything investable for you . Racesbuilders after the with the cut in duty or do you focus elsewhere . David he said the magical world the medical word, political and it was looking about it was about looking at the key issues. It looks like they lost key voters to labor during the general election and something for the 1922 committee to keep them happy with regard to brexit. Give them a bit of money. Anna a bit of generational fairness. The former u. K. Chancellor was saying he does not need to come out and give away a lot. We are not going according according to the calendar, going to another election anytime soon. This was a budget that was full of giveaways. David exactly. A did feel like a bit of preelection pitch to the voters. Technically, we dont need to be a not place but that shows we are in a very fragile situation with this government. There may be an election far sooner than the conservative party would like. It could happen at any time, so they need to be ready and they need to start clawing back the support they hemorrhaged this year. The key constituence is this younger voter. That is why we saw the stamp duty cut, railcars for under 30yearolds, trying to reach out and bring the back. Anna although for the older generations, some of the moves around alcohol pricing, i saw a reports suggesting they would be firmly for that. Reporting out of brussels suggests once we get to talk is it still wont be an easy ride. Eu 27 might not want to do a deal. Seen it written that we will accept a deal which is similar to the canadian deal and given at that does not include services and we are largely a Service Sector economy, that would be strange to do. We give them free access to goods but dont get a deal on service. I dont believe that is where we are going. , i am one of deal those crazy people that does not quite see as much importance in some of these issues as others. There are frictions in the shortterm when you go from completely free to borderless trade where you have customs checks and borders. If we were to go to know deal, we would have the same relation with the eu as the United States, which is the biggest trading partner and described as being the most integrated economic ship in the world. That does not sound like a scary description to me and there are sectors that would be more affected, but i do think that there is a relationship with the eu that is not necessarily an allencompassing canadian style whereby we will still have access to the eu market and they will still have access to hours. Jonathan james athey of Aberdeen Asset management, sticking with us. David merrick, thank you very much. Coming up, jamie dimon speaking on pretty much everything. Comments from the ceo of the jpmorgan of j. P. Morgan chase at the economic chicago club. This is bloomberg. Jonathan j. P. Morgan chase Ceo Jamie Dimon says he is betting president will not be elected to a second term. Speaking at the chicago economic club, he said he would support a surcharge on his income, that taxes need to be more competitive. Jamie at this point, you are talking one million or 2 million additional small businesses. Products system has been driving Companies Overseas for 10 years. 5000 u. S. Headquartered companies are now owned by Foreign Companies because of the tax system. 5000. You are clearly in favor of tax cuts. Jamie it is not a tax cut. If you are a democrat or republican, we need a competitive tax system in a competitive world. Notion that we are going to have a uncompetitive tax system and do well for our country is crazy. Jonathan jamie dimon doing and around the world tour on pretty much everything. James athey of Aberdeen Asset management. On the competitiveness of corporate america, is he right and does this tax overhaul bill that is going through congress on both sides, do either of them do anything to address it . James i am not known for agreeing with people. My colleagues can all agree with that, but im going to agree with jamie dimon. It is incredibly important and he mentioned small and medium enterprises. They are the engines of growth in the u. S. , roughly 85 of new job creation. We have not seen the necessary recovery there and if you look at Something Like the nfib server a survey, you have seen things like uncertainty in tax if not hi if not top of their list of priorities. Big multinationals do not pay 35 tax. They pay something much lower. The Corporate Tax cut will largely be impactful for those smaller and medium enterprises. I do think there is some competitiveness there, some competitiveness gains and freeing up cash to invest because i hear a lot of people talk about how companies are cash rich. They are looking at the top end of the s p 500 and the tech giants, specifically. I do think that the Corporate Tax cut can be and should hopefully be stimulative for those smaller and medium enterprises. Jonathan it looks like it is going to happen, so why havent small caps had a massive did . James that is a good question. I think people are still in doubt. You say it looks like it is going to happen. Obviously the are aiming for today and we have not seen anything sitting. I am certain it is not going to happen by thanksgiving or by the end of the year. Because of the windowdressing we have had, i think investors are holding off until the beginning of next year. Jonathan james athey of aberdeen standard Aberdeen Asset management, thank you so much for joining us. Coming up, we talk about solid european Economic Data and a market that treads water. This is bloomberg. Jonathan from new york city, i am Jonathan Ferro alongside anna edwards in the city of london on this thanksgiving thursday. Welcome to Bloomberg Markets. The Federal Reserve tees up another rate hike in december, but a chancellor merkel inches toward bridging a deadlock in germany despite the uncertainty. Chinese stocks drop the most in 17. A Deleveraging Campaign continues to gather pace. Lets whip through some of the Market Action. The stoxx 600 positive by about a 10th of 1 and grinding toward one of the west weekly gains. Of fx market, bonds bonds positive about 1 on the back of some solid eurozone pmi numbers. In the bond market, bunds on offer. Markets shut in the u. S. Lets get you up to speed on some top stories with taylor riggs. Taylor myanmar and bangladesh have signed an agreement on refugees. It refugees are,000 now in bangladesh. It is not clear how many will out how will how many will be allowed to go back to myanmar. Iran is living up to its end of the nuclear agreement. The iea is monetary iran with the u. S. Along with five other companies countries. President trump refused last month to acknowledge iran was in compliance. Recent of the feds most meeting says officials are looking for stronger your stronger signs that prices will rise. In germany, chancellor chancellor merkel will get might get a lifeline from social democrats. Martin schulz has offered limited support for a fourth term. He could back merkel in a minority government but he has ruled out repeating the grand coalition that governed germany for eight out of the last 12 years. Global news 24 hours a day powered by more than 100 2700 journalists and analysts in more than 120 countries. Jonathan for more on merkels path forward, lets get over to berlin. Our understanding was that chancellor merkel did not want to be in a minority government. Does this change anything for her if these talks do go through . It is hard to say at the moment what the actual outcome of this is. We know that the spd is very reluctant to change course. At the beginning of the week, they made a clear choice not to engage in any talks over a grand coalition and now it seems they have to offer something after spds Martin Schulz meets with the german president. The outcome is completely open. There might be a signal they are willing to support a minority government. Jonathan i dont want to get stuck too much on the in the german political we, but are they united on this . Are they all together . They are deeply split, between a more rightwing leaning faction which supports a rerun of the grand coalition, which has worked reasonably well for germany, but not so much for the spd and there is a more left leaning faction which feels that this is not the way forward for the social democrat party. Things of thehe spd said before the election was that they did not want to go into coalition again because of the way they have been damaged but also because they did not want to leave the afd, the official opposition. Does this look as if it might end up being the case . Does that lend them extra credibility credibility or extra profile . Rainer it is still early to say if the spd will actually end up in another grand coalition, but lets assume they did. The afd would be the biggest Opposition Party. They got the chairmanship off of the budget committee. Unless the spd starts changing its rules, that would give the e which has been critical of euro rescue policies and has taken a tough stance on migration, it would give that party a platform in parliament and that is something the spd wants to avoid. On the other hand, there are a couple arguments from the spds point of view in favor of doing another grand coalition. Anna thank you very much, Reiner Bergen Rainer buergin. Joining us for the next hour, peter dixon, chief economist at commerzbank. When you look at the way that german markets and the stock markets reacted, there was nervousness but we quickly saw a rebound. Treading waters with the latest spd headlines. Volumes are low with thanksgiving. How material is it for you that we have this relative chaos in the german political scene, the German Economy keeps powering ahead . Peter chaos is relative. As far as the markets, no big deal right now. It is two months since the election and we would like to see more clarity as to where we are going, but running into her year end, investors are not switched on much anymore. When we get to the start of 2018, we would like to see more clear direction of where we are going and if we are still talking about the future of Angela Merkel as chancellor and we have a problem. Anna when you buy the dax or the german middle shannon or german stocks in german companies, what about the Coalition Talks or political talks could affect your attitudes in buying those companies . Policy around diesel cars could affect the auto sector. I think buying into large chunks of corporate germany, what you do is you buy into exports and expertise. It is perhaps a little bit left dependent of from what is going on. There are certain policies which do need to be resolved. For the moment, you have relative stability and i think the general feeling is this will work out. You may or may not get the government composition that was visible a couple months ago, but i think chancellor merkel will still be in place and i think she will have to spend much more time looking domestically rather than internationally. Anna that is your base case. She takes her eye off the ball of the eurozone. Does this lead to implications for europe, that the reform agenda is slower . Peter i think that is a risk because the irony is youve got metabolic wrong Emmanuel Macron boosting forward. It looks as though one of the stocks might be falling. It certainly might be one of those issues which in the long run leads to a slightly less dynamic eurozone but you will not notice it immediately. Anna best case is that Angela Merkel stays in power as chancellor. Have you shifted any of the portfolio on this uncertainty . Peter you have to wait and see. Political uncertainty tends not to have a big impact until it does. It is a binary switch. It is very much off right now at the moment. Anna we have been reporting the growth story. Economists listed their forecast for 2017 German Growth lifted their forecast for 2017 German Growth eight times this year. Is this relative strength in the euro . Mind you have to bear in that german domestic demand is recovering. People are dipping into their pockets a little more. We have been in worse situations, before. I think it is fair to say that germany is comfortable where it is, right now. Dixon, globalr equities economist at commerzbank is going to stick with us. The president of the United States is delivering some live remarks to troops on this thanksgiving thursday. We will bring you some of the comments, later. Elsewhere, the minutes from the latest meeting showing the fed is on track for a rate hike. Still some concern about inflation. The latest is coming up next. This is bloomberg. Anna taylor this is Bloomberg Markets. Lets get to the Bloomberg Business flash. The maker of angry birds appears to have some angry investors. Romeo lost it rovio lost a fifth of its earnings after going public two months ago. 29 from a year ago. Householdiggest Energy Supplier plunged the most in 20 years, today. They forecast fullyear profits less than expected. The companys market share is shrinking plus they are having to deal with government led limits on the amount customers pay. A new twist in what could be the biggest tech merger ever. Broadcom has offered 130 billion to buy qualcomm. Broad conns ceo is willing to boost the price if qualcomm drops its own bid for an xp semi conductors. Qualcomm has said the current offer undervalues the company. That is your Bloomberg Business flash. Jonathan the Federal Reserve out with its minutes from its latest meeting. It appears the central bank is still on track for a rate hike x month even as inflation concern next month even as inflation concerns remain. We spoke with the former chairman of the u. S. Council of economic advisers. We made the transition to starting to face down the Balance Sheet pretty successfully phase down the Balance Sheet pretty successfully. That is a style of a tightening environment and the economy is not so strong that we would really be off to the races raising rates in an aggressive way with all of our Major Trading partners. That is the thing that makes me nervous. Jonathan we are back now with peter dixon, lowell equities economist at commerzbank Global Equities economist at commerzbank. This rate differential is north of 240 basis points and a Federal Reserve that is seemingly going this alone with no one else coming with them and nowhere near at the pace they are driving at. How much longer can they do that . Peter that is a good question. The view on the street is they can do this for some time to come. Probably until the end of 2018. Pointk he makes a good that the economy is perhaps not as strong as it may appear. At the same time, you have the Balance Sheet reduction in that is quite aggressive and that is quite aggressive. You are sitting yourselves up for some interesting market gyrations. Your new fed chair may have to later. Th some things jonathan for a lot of people, there is an argument out there that inflation is like a coiled spring. Andployment pushing at 3 the potential for some fiscal stimulus to come through next year, is it a matter of time for inflation to finally start barking in a aggressive way . Peter if we get some more Wage Inflation, i would agree with you but at the moment, it is relatively muted. That says something about the way labor markets have changed. In most industrialized economies, i understand the fear and concern and i certainly think we will get a little more inflation over the course of the next year, but nothing to really write home about. I would not be as concerned as the inflation hawks are. Anna a couple charts. Us fromhey was with Aberdeen Asset management and he said he does not inc. That inflation is all that low. He says if you look back over 20 years, he does not see it as such a constraint but you think this is still muted. How many times do you think the fed can hike if the inflation picture does not pick up much . Peter it is going to limit the ability of what they can do. Working on the assumption that we might get another three hikes next year is quite punchy. Fall inflation you might say is muted. You could track that against the Unemployment Rate. It is still below 2 . For those of us who have gone up with inflation, that is not too bad. Too think that it is going be about what happens to wages on the one hand and what happens to prices on the other. Anna the minutes overnight suggest there is a chain of events, the linkages they think are still there. You talk about the Balance Sheet and how the what how the unwind is happening in the back round and the fed says they want it to look like watching paint dry, really boring. We heard the professor talking about it earlier. Isnt it the right way to view this . Should it be set on autopilot or should it be something that has more possibility . Peter i think the responsibility. The fed says it is on a automatic course, what we are here to stop it at any time. It is like automation. You would not let the robots work without any supervision. I think if they felt that at some point the economy was tipping over, they would certainly be in a position to halt the Balance Sheet reductions. Jonathan looking at the 210 spread on treasuries, how much flatter are we going to get . Peter hopefully not much. I certainly think this could rebound if inflation does pick up a little bit and stocks see the Treasury Curve begin to steepen. Certainly i would say think about putting some positions on because it looks a bit cold for me. Jonathan does draghi hold the keys to that or Something Else going to drive it . Peter probably Something Else. I think it is inflation. If you look at what is happening in the curve, the 10 year the twoyear is moving along the lines of the fed expectations with regard to policy, but the 10 year is not moving. Anna and john was referencing hour, jamesur last athey talked about whether or not the boj is in the mix. That seems to be the view, that the fed is in control of the front and but at the 10 year horizon, it is very much international and because of where we started, the fed is in a very different place from the ecb and the boj. We are not going to see a steve curve in the u. S. Ther lets not forget that boj and the ecb are only buying their own assets, they are not buying treasuries. Ultimately, the u. S. Market fundamentals, i am not really concerned about that. I get the argument and i think it means that draghi has a bit more influence than you would normally have in the u. S. 10 year, but it is normally the other way around. It is a nice irony. Jonathan chief level economist at commerzbank, sticking with us Global Economics global economist at commerzbank sticking with us. This is bloomberg. Jonathan from a beautiful new york city on this thanksgiving thursday, good morning and a happy thanksgiving. I am Jonathan Ferro alongside anna edwards in london. This is Bloomberg Markets. Concern over the chinese bond market pushing stocks lower overnight. The shanghai composite seeing its worst day since 2016. Should we be concerned that the gut if the government continues to push through its Deleveraging Campaign and will the still overcome through asia into the development of . Peter dixon of commerzbank joins us. We have seen these bouts of attila the, moves to the downside before. Sometimes they bleed through to europe and the United States. Sometimes they dont. Why is it different this time around . Peter you need to see more from china as to whether this is going to be a major cause of concern. If you look back 18 months or wasyears ago when xi rattling the chinese gauge, there was a sense that china was not as robust as they had been. They were moving from a high growth rate to a very low one. The economy seems to be on more stable footing. The general sense in the thisnational community is is a domestic chinese problem as it he leverages. If it would lead to a sharp slowdown in growth, then that might be a different kettle of fish. International markets might be a bit more concerned. I think we can afford to look at this from the sidelines. Anna it does seem china is trying to get into the Global Financial markets and it is gradually being accepted in various forms. It still does go its own way in some ways. One strategist said regulators might give guidance to big institutions to net buy stocks to ensure stock solvency toward years and. It is heres end years end. It is still treated differently. Peter absolutely. China is a difficult market to buy into. It does not operate on the same principles of growth as it used to. Operating inators the background and they can push markets in whatever direction they want. , they could say we are not going to allow this one to fall to the floor which is one of the reasons why in the investment world, we should not be too concerned. The not so invisible hand is here. Anna does it give reason to be concerned, you see bond yields going above 4 and you think they should go off of that particular pedal or is it an objective that is very worth pursuing so they need to carry on . Peter i think it is a question of the degree. Most people would agree that the chinese economy is heavily overleveraged. Way itd awful long has come an awful long way in the last 20 years. I think it is time to take some air out of the balloon. The danger is that chinese that china has not dealt with this before. They are not as experienced as other countries or companies and if things were to run out of control, markets were to completely collapse, that would certainly send some shockwaves around the world, not to mention badly damaging the governments trust in the operation of markets. Jonathan are you confident they can unwind a credit binge that has gone on for over a decade . Peter i would not say confident. I am hopeful. I think they can do a limited amount and could take the edge off the excess leverage which exists in china. If they want to continue this policy over many years, they run the risk of causing the economy grow more slowly and that would change the International Perception of the chinese market. Jonathan peter dixon of commerzbank staying with us. Coming up, the latest accounts of the ecb meeting as they pull back on qe 32018. That is next three 2018. That is next. It is a clear winter day on this thanksgiving thursday, typically we would be waiting for the up and about in new york city, but not today with the market closed. A very happy thanksgiving to all viewers across the United States and beyond. Im Jonathan Ferro in new york. Anna edwards is in london. We are going through some of the Market Action outside of the United States. In europe, unchanged across the board. We are still grinding toward a decent week of gains, potentially the best week for the stoxx 600 so far through november. Outside of the Market Action, there is the bond market, going nowhere on boones bunds, despite Solid Services data. Pmi coming in a really clear and nicely. At a 17 month high, captured by a stronger euro. And that is the field the market. Now top stories. President trump wished american servicemembers a happy thanksgiving, speaking by videoconference he thanked of them for their bravery and said they were letting me when before. Tomorrow, zimbabwe getting a new president for the first time in almost four decades. The new president pledging to lead the country to a new democracy. The former spy chief returned after being fired by the former president. The ruling party says that mu gabe oneoff face prosecution. And how are could shift a china is the u. S. Withdraws security ties. In the government paper in australia, concern has turned military expansion into the yellow sea and it could turn to clashes. The payments are says australia will play a bigger role. Track. You economy on Economic Growth speeding up to 8 10 of a percent in the fourth quarter. Meanwhile, companies in the euro area increased hiring at the fastest pace in 17 years. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im taylor riggs. This is bloomberg. Jonathan thank you. The european economy looking decent and now all eyes on the ecb and Mario Draghis next move. They are reviewing Corporate Bond buying programs and private debt could make up a large part of qe purchases in 2018, all according to officials familiar on the matter. And it looks like this is the direction that they are moving in upon her affection of the latest meeting. Rich is in berlin. I understand if you purchase corporate that, it does not have debt, it does not have political argument of buying more spanish and italian debt, but there is not much of it, is there . Rich that is the problem, is you do not have a deep pool like you do with the sovereign debt. Part andt is all parcel, the ecb is realizing given the strong data that we have in the euro area right now, the pmis you talked about earlier, strong gdp data for the Third Quarter today as well, they have a little bit of a communication problem on their hands. We understand they want inflation to be higher, and that is yet to materialize. And if it does i guess it makes the committee kitchen job easier, but until we see inflation picking up, growth is being missed john, you can see where they need to take a hawkish tone, but they need inflation to pick up and it has been elusive for them. Jonathan that is fine if that is the goal. I am trying to think about the message and how effective it will be if you are going to be. If youre going to buy more corporate debt, what message will make what effect will have on the economy . Rich that is the question. So far you could probably say given the growth figures out of europe and given where the forwardlooking pmis, what they are telling us on where the economy is going, so far so good. Again, the elusive thing is inflation and the passthrough to the economy, it is the same problem the fed has and peter dixon was talking about it earlier, we do not get that kind of Wage Inflation we should be getting given all this the most we have had and where the Unemployment Rate is. It might be coming, but that has been the difficulty so far, not only for the ecb, but the fed as well. Anna one other thing we learned from minutes today is that some of the ecb were concerned if they did not put an end date on the Bond Buying Program, it could lead investors to expect be one could be extended current expectations. Is that significant in your mind . Part of thek it is balancing act that the ecb is trying to conduct, which is to say that we see growth is picking up, we would like inflation to be higher, and it also kind of place to this scarcity problem we have been talking about. So i think there is reason for them to sort of tried to try to point out to investors that qe is winding down, but the ecb is ready in case it is required. It is a fine balancing act and it is difficult and will get even more difficult next year. Anna richard, thank you very much. Richard jones joining us from berlin. For more insight here is peter dixon, Global Equities economist at commerzbank. Look at what the ecb is doing and compared to other Central Banks, they have a good growth story going on, something of a rebound in the eurozone economy, even a boom by some of the pmi data we have seen today, but did they have sufficient excuses to keep doing the qe program, because inflation is weaker than they wanted to be and unlike other areas of the western world, unemployment is still high . Peter the unemployment story is a fair point, but when it comes to inflation this argument is wearing thin. We have heard for years that Central Banks can continue to buy assets and it will push inflation, but that is mixed at best. I understand the ecb would like to have a higher inflation, but it may be the labor market is not delivering it. And without the market the labor market delivering it, you will not get it. What the fed reversing on purchases, if the ecb goes down this track it will end up stocking of the kind of bubbles in asset markets, the likes of the president has warned about, it is increasingly a case to maven output an end date on it, but certainly make it clear that over the course of 2018 of conditions persist, maybe they do not have to do as much as expected. Anna yet where do you see in that context . Anna we were peter we were talking about Mario Draghis control. This is in territory. There is an element there. If you look at real estate prices in many parts of the world, particularly germany, there is an element of a bubble there too. I think it is spilling out across off across all asset prices. Jonathan im trying to get my mind around why the equity market has not done much since may. If you asked them what needed to go right, what needed to go right has gone right. You have the politics that with, companies have better earnings, the economy, that data is coming in solid, the ecb has remained patient and kept the stemless going, and stocks have done nothing since may, why . Peter an investor would say it was all in the pricing and it was expected in the market or the economy has done with the market was expecting, but i think that is a little glib. I think there are residual concerns. If you look at the amount of noise surrounding the valuations of stocks, people say equities are too high, valuations are at multidecade highs, maybe we would be, or we want to be more cautious about getting into those levels. It could deter investors from stepping into the market, despite the fact that all the fundamentals are very much in favor of equities and a lot of other assets. Jonathan peter dixon sticking with us. Next up, what is becoming a neverending story, brexit and a brexit breakthrough next month could disappoint theresa may. We will discuss as crunch time nears. From new york and london, you are watching bloomberg tv. Anna this is Bloomberg Markets. Time for your Bloomberg Business flash. Volkswagen wants to make sure they are well prepared to build electric cars. According to those familiar with the matter, they are stepping up their cobalt, one of crucial for building batteries. They met this week i german headquarters with cobol producers and trainers thats traders. The Trump Administration has delivered a blow to one of their billionaire supporters. In environment of Protection Agency has projected a bid to relieve refiners of their obligation for the biofuel carl icahn and Oil Companies had stopped the changed, it is a win for state lawmakers and ethanol producers. Opecs biggest producer trying to regain ground. Saudi arabias aramco is in talks with pegida, dutch chemical conglomerate that are building some of the largest plants in china. The biggest oil supply for china has been overtaken by russia. And that is your Bloomberg Business flash. Anna thank you, taylor. The European Union is ready for an offer from theresa may that could unlock brexit trade talks, even as consensus is forming in brussels that the future trade deal available will not be anything like the one that theresa may is seeking. For more details we go to our editor in brussels, james, good to see you. In terms of where we are going on this story, theresa may will tusk onng with donald friday in brussels. What are the chances she will make progress on the talks . Will it be an important meeting or do we look beyond that . James we have been waiting for the key here to unlocking these talks. Tomorrows meeting between theresa may and donald tusk is the perfect opportunity for theresa may to come and put something on the table that will lead it to the talks being unlocked and moving on in the mid december summit that the eu will also have in brussels. That is the expectation, however, we have been disappointed on numerous occasions in this long road and the brexit negotiations. Anna long road, yes. After this, she will be meeting with others to see if we get anything delivered. So if we do move on, talk about the trade relationship. What will it look like . Will it look like a freetrade agreement including Financial Services, which is to be with the uks after . Wants i think the u. K. The deepest theyll it can get deal it can get, but what we hear here in brussels and that they are setting up something more like what canada has gotten, a canada style agreement. This is not as much as theresa may has been pushing for, but it is the best trade deal the European Union has ever negotiated. It is the closest, within any outside the yuan countries e. U. Countries. They are putting it on the table as a starting point, but before they even talk about that they need to get the brexit bill and the Northern Ireland border, and Citizens Rights sorted out, so hopefully she will talk about those issues tomorrow with donald tusk and then we can move forward. Anna what is the tone of the talks . When i was in florence, that had a certain tone, a very constructive tone, described as constructive by many that were there or who were listening. How are things developing and how will they be in december . Jones what the European Union has continually said since theresa mays speech in florence, is that those sentiments need to be transformed into negotiations themselves and i think there is frustration that has not happened yet. David davis continues to say that we are making progress, but from the European Union side the concrete proposals that the u. K. Is supposed to be making as far as the e. U. Is concerned are not there yet. There is frustration that this optimism that theresa may engendered in her florence speech has not really trickled through in the negotiations, even at this point. So we are hoping that tomorrow when she is here again meeting with donald tusk is that she will be double to do Something Else, put Something Else on the table that moves the ball forward. Anna with that she will be meeting in december with. Jones, thank you. Still with us in london, peter dixon, the Global Equities economist from commerzbank. If you look at the brexit saga that is ongoing, what is your best case for what the trading relationship will be like and what upside or damage there will be to the u. K. As a result . Peter i think the base case is we get some kind of extension beyond 2019, first of all, because in that way you preserve some semblance of a trade relationship and you kick the problem down the road. Anna so that would be in Implementation Phase . Peter that is the first thing we are looking for, but in terms of the deal, which the u. K. Likely to get further down the road as weve been hearing, it sounds like the eu thanks this is the best deal we will get. I spoke with an official last week and he said, we think a norwegian type trade deal would work for the u. K. Because the u. K. Economy is far too complicated. Obviously another deal is not on the table because they do not like what they have. The canada deal is all that is left. I must be ok decides they do not want to leave unless the u. K. Decides they do not want to leave the European Union, but given where it is domestically a cannot see that happening. Anna speaking of Financial Services, if it is a canada deal it would add on Financial Services. Just because it is not done often, does not mean it cannot be achieved, correct . Peter that is correct. We have a vested interest in that happening. But it would be difficult because i think that the European Union are not that came to offer concessions. That of Financial Services deal will be more expensive for the u. K. , it may raise the exit costs as a consequent of that. I just think that there is also a certain amount of political competition within europe to grab parts of the business, which is partly conducted in london. We have seen some Banking Institutions moving to paris, other institutions moving out as well. So the u. K. Is right to at least allow Financial Services to be called up a little bit. Obviously it will not take it all away. But take off in bits. Theink that might preclude Financial Institutions very quickly. Anna they will get a boost because of the weakness in the pound, and there is that relationship, so when you look at u. K. Equities, do you want to go there because of the Global Growth the story . Do you think negativity has been overdone, do you go for the 30 to 50 or smaller . 3250 or smaller . Peter i would go for the small caps because of the reasons you outlined. As a consummate of roadblocks, sterling goes down. And it should boost those countries reporting and foreign currencies. That is perhaps were the risk lies for me as an investor. Jonathan you will be sticking with us. We will discuss why he says bitcoin could be an accident waiting to happen. We do not have a u. S. Session, it is thanksgiving. Happy thanksgiving. And in europe, here is the picture across the continent. Treading water on the stoxx 600, up by a 10th of a percent and going nowhere on the and softer on the dax. The story and fx market is the euro, firmer on the back of decent data. Pmis at a 17 month high for manufacturing and services across the confident. Of 1850. Dollar south this is bloomberg. Live from new york city, im Jonathan Ferro alongside anna edwards in london. Yearhas been a tumultuous for bitcoin, with three separate slumps giving way to subsequent rallies. It now can bet on bitcoin with less volatility risk. Bank quote swiss switching holdings between bitcoin and dollars. Still with us is peter dixon from commerzbank. I want to read you this, because it is so given what today is. If you see cryptocurrency like a religion like i do, thanksgiving is going to be a watershed event in the space. People go home, they will in doctrine their families and friends, there will be a fear of missing out, then there will be a surge in bitcoin. That came from twitter. As i think about the amount of parties i have gone to recently were everybody wants to talk about cryptocurrencies and bitcoin, are you experiencing the same thing and what do you think of it . Peter in keeping with the thanksgiving him, i think theme, i think that the coin will be the huge turkey. This has gained a huge amount of traction as we can see, but primarily because investors like the underlying technology, not necessarily because they like bitcoin as an asset class. Most people buying it for financial reasons will quickly be disappointed. There is a lot of interest in it, but i think people generally do not understand how difficult it is to get this far. Splits changes and it every year and it may change again and again and it is definitely not a stable store of value. Anna maybe that seems to be something that appeals to people, it will volatility environment. Iss is there rally bitcoins rally and we talk about volatility in many Asset Classes and maybe for those investors with a strong start, maybe they would choose Something Like this for the volatility that you might get. Peter yes, if volatility is your thing, it is the place to go. I think the trouble is, if you look at the price action it is reminiscent of dutch tule bulbs, bulbs, and we know how that ended, one of the first booms and busts on record. I think that is what will happen. What happens when the whole thing turns south, you will be left with a worthless bunch of digital stocks. Anna but what brings it down, because it is all well to say it will not last, but there will be a timing element to it . We have seen substantial move in it when a chinese regulator brought in some new rules. Is that what will stop it . Will Central Banks to try to put a lid on it . Peter i am not sure the Central Banks will do that, they have an idea on where they can use cryptocurrencies. What could cause of the collapse, maybe selling, giving where we are. I would certainly be selling if i had bitcoin, bigtime, and i think a lot of investors feel the same. That is one possibility. Another one could be another fault in the chain, because bitcoin investors, they speak with one another but do not necessarily agree. If the chain was to fall, maybe you get a new bitcoin, it could certainly be something which could cause this branch to collapse if something falls in the chain. A lot of things could go wrong. Jonathan peter dixon, thank you for joining us. The story in the markets looking like this, from anna edwards and myself, Jonathan Ferro, thank you very much. Here is a snapshot of the markets. In europe much trading the u. S. Equities and bonds are shut down. And for our audience worldwide, from new york city on this thursday, a very happy thanksgiving to you all. York, live 00 in new from london i am mark barton and welcome to Bloomberg Markets. Mark here are the top stories we are covering from the bloomberg and around the world. Germanys biggest Opposition Party ready to begin talks with Angela Merkel on a minority government offering her a way to restore Political Leadership in europes biggest economy. A brexit breakthrough next month could end up disappointing Prime Minister theresa may as crunch time nears. And ings chief executive preparing for the worst case of brexit scenario, but hoping for the best. More in on our interview with him later this hour. U. S. Markets closed for the holiday and we are 90 minutes away from the end of the thursdays session. Take a look where equities are training right now trading right now. You can see it to my right. Little change. We have been up and down. It has been a topsyturvy day. As you know, earlier we were down for the third day. We have had strong days out of the eurozone, but we had a big selloff in chinese stocks and we had the dovish fed minutes yesterday as well. One of the big movers in europe, take a look at that stock decline today. 15 lower. The best i can say is it fell 18 earlier, but still both declines are a record amount for great britains biggest household Energy Supplier. It will meet its financial targets for this year, but it did say i just did earnings adjusted earnings per share will probably fall below market consensus after a disappointing performance, grappling with Government Intervention that would cap the amount that customers pay on default tariffs. Customers are switching amid increased choice of supply. It is the biggest decline today and in 2017, down by 40 year to date. We have had big data today in the u. K. , gdp data, consumers driving the economy in the Third Quarter, spending on cars, rebounding but brexit inflicting a toll on business investments. Spending rose at its fastest pace per year from households. Net trade acted as a drag on growth. Over all gdp rose at a revised. 4 , this coming after the chancellor announced a downgrade to the Economic Outlook as a result of a sluggish productivity. Brexit headwinds. In the final chart, big chart, chinese stocks, unease rippling through the stock market today. The gauge of large cap shares plummeting the most since june of last year. Investors thinking a drought will worsen. This is the csi 300 thinking. You can sinking. You can see the losses statement, 60 shares declining 16 shares declining. Something we will talk about in a second. We will check in on first word news, taylor riggs with the details. Taylor in the u. S. , President Trump wishing american servicemembers a happy thanksgiving. Speaking by videoconference, the president thanked them for their they wered said, not letting you win before. In german, Angela Merkel reaching for a lifeline from social democrats. The social democratic leader prepared to offer limited support for a fourth term to Angela Merkel. Heording to people familiar, could that are in a minority government. And bangladesh and minimart signing an agreement on refugees. It that the return of refugees who fled. More than 620,000 refugees are not in bangladesh. It is unclear how many will be allowed to go back. And the u. S. International agency says iran is living a bit up to its end of the nuclear agreement. They have been monitoring the deal. Last month, President Trump refused to certify that iran is compliant. Global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. Im taylor riggs. This is bloomberg. Mark thank you. European stocks getting a boost after the economy data signaled that they will be gaining steam on pace with its best performance since the crisis. The news helping to counteract shockwaves from chinese stocks today. The csi posted its biggest gain since june. Last year on fears of a bond rout, criticism of over evaluation of one of their best performing stocks. Joining me is capricorns fund manager, thank you for joining us on this holiday. What is going on in china . Is it spillover from the bond market route we have seen . Is this something that investors need to worry about . Rippling out to some of the bestperforming sectors year to date, such as which hasch names, started to show stability after just biking incredibly spiking equivalent. It is a very localized bond market, not like turkey were a small shift sees the currency whipping around. Mark but the move by the chinese is clear, we want to control leverage over growth it seems, growth will keep ticking along. Is that to the detriment of the economy . Does it mean we will have bouts of volatility . Definitely, they have been borrowing 20 to maintain the growth rate and anything that could affect that will have reverberations of through the economy itself. The question is, are they serious about it . Every so often they say we are going down, but we will let it go cooling down, but we will let it go for a little bit longer. So the question is if they will cool down parts of the economy, or see what they can do with words alone . Mark the other big thing was minutes from the fed during their meeting yesterday. Hed implement rates t Unemployment Rate low, but they still seemed unsatisfied with the growth of inflation. Who will win out when it comes to the pace of rate hikes, not only possibly in december which it seems nailed on, but in 2018 and beyond . If you are going to hike rates, you will doing now. Sigrid nice growth has been fantastic. Inflation has not kicked on, but it comes back to the questec are we in a normal environment where the Unemployment Rate should cause the increase . The answer clearly is, no. However if you do not do rate hikes now, you probably are never going to india will be stuck in this kind of low rate trap. And it will cause even more distortion in the market. Mark and you need to get ahead of yourself for women at downturn begins, something i am guessing you are not predicting at least in the near term . Look, again, this is a good year. Assets could be more difficult next year, but everything right now is positive. Get ahead of yourself so you have room to cut. Otherwise, you will go negative like the german bunds. They do not have much room to play with. They cannot go to 3 or 4 . They are playing in a limited field. Mark on inflation, the ecb will reducing their bond verily buying program. We have had stellar data today. The pmi data is very strong, hiring intentions very strong, and ecb will slow down the Bond Buying Program next year. It seems there is discrepancy on what will happen beyond september. Do you think it will come to an end, the program next year, whether it is september or tapering for free months after september into december . It has all been a grand experiment, how much of the synchronized growth is finally coming through with this, and how much is the Bond Buying Program . You do not know until you stop trying. They will try to remain agile on it, because there has been support for Corporate Bonds. When you see them issuing negative rate bonds, that is crazy to save the least to say the least. They will see how it goes and they will adjust tapering as a result. Mark thank you for joining us. From the Capricorn Fund. He is staying with us. Coming up, the power grab by the saudi prince intensified as suspects held on the corruption crackdown set to start making payments. More on the future of investing in the middle east. This is bloomberg. Live from london, im mark barton. This is Bloomberg Markets. The consolidation of power in saudi arabia is taking a turn, detained officials among the wealthiest in the country said to start making payments to the tune of 100 billion in an effort to settle alleges corruption charges. Still with me Emad Mostaque cochief Investment Officer of , Capricorn Fund managers. I love your commentary on the crown prince, mohammed bin salman, subscribing to the Mark Zuckerberg mantra. Better. Pefully for the he has a reform mindset and if you think about saudi arabia, it has stayed very dull where you cannot get things done. He is getting things done, for better or for worse, we will find out soon. Mark this is a massive test. Emad exactly. Will it happen or will it not happen . You have to view saudi arabia like china, where there is one guy effectively saying that things will happen. Mark and when will investors start believing him . Emad when they have to do the work. You have to battle decades of perception of saudi arabia. It is not like argentina where everybody is piling and, it is in, it is where people have to understand it. They are really focusing their minds. It . and the 500 what is emad 500 billion city. More robots and then humans. Mark you do not buy into it . Emad i hope he pulls it off. It is a city across three Different Countries that will be an incredibly interesting place. So it is fantastic, and i do hope they pull it off. But they have not been successful so far. The centralization of decisionmaking, let them pull it off. Mark what about stocks . History . Cks versus emad saudi arabia has been trading at a 50 premium, because the committees do not pay tax. The largest in saudi arabia has a capital ratio that pays out a 7 dividend in dollars and 12 times earnings. You do not see things like that anywhere, so i think they will move to a massive premium. Especially now. Mark and what will that pick up to . Emad 40. It is a bigger market than south africa, almost as big as india in market caps. Mark you are bullish . Emad yes. I think it will maintain that. Mark it was not a bad call. We are at about 60 or approaching 60. Emad ultimately, the inventory numbers are collapsing and you are seeing tightness in the market. It is overextended, so there might be a pullback, but the fundamentals of oil are coming toward a tightening and consolidation and saudi arabia means they will keep the deal going. Mark they are betting on oil, or are they betting on saudi politics . It seems the benchmark is more geared toward politics than oil. Emad if you are looking at the oil price, you can see it from the structure of the curve. It did not really move much on the saudi news, because their supplies are not affected by this. I think it will be more fundamental moves then anything else. The spillover has been in countries like lebanon, where you have pressure on the countrys currency. And in saudi arabia, things are moving smoothly at the moment. Mark i will tell you where they are not moving smoothly, turkey, which you touched on earlier. It is another flareup which will die down . Is it a buying opportunity when you look at turkish assets . What has been going on . Emad fundamentally, the market is overdone and bond yields are breaking out, they need to raise Interest Rates and fast. Mark by like 100. Emad 200 really. Mark before the next meeting. Emad before december 15, they need to move. The market, the fixed income market is testing and the banks have reversed. Again, the length is so long, so short of the lira, it has potential for a sharp pullback where it will depreciate and the banks go flying and all the hedge trades will reverse. Mark thank you for joining us. Emad mostaque, cochief Investment Officer of Capricorn Fund managers. Turkish lira down by 9 . Coming up, the risks making investors nervous. The chief investor saying he is not too concerned. He will hear from him next. This is bloomberg. This is Bloomberg Markets. Im mark barton in london. Ing building a platform that will help Grow Market Share anywhere around the globe. They are not concerned about geoPolitical Risks, even in the gulf. The chief executive spoke with Tracy Alloway and says that good Customer Relations are the key. Work in the way that we in this region is that we really look at the different we have, the sectors in which they are active. Basically, if you believe in the sectors and you have good client relationships, you can work around these things. It has to be really close contact with customers. Tracy have a seen impact from geopolitical in the events . Ralph we have not seen it. We have sanctions on the qatari side, we have to make sure how we work with those, but apart from that we just follow the developments as they are. Tracy away from the region, we are nearing the end of the year. Give us color on what you have seen in terms of the q4 operating environment. Ralph it is still good. If you look at Global Economic growth, it feels stable and it feels good. We see the u. S. Charging ahead in their growth. Growing. Ies we see the lowest employment figures in the u. S. Since 16 years, as we speak. Confidence is up. Basically globally, imf is expecting a growth over 3 . So globally, it is looking good. The question is, what are we missing . Because i do not think there is a paradigm shift here. The question is, where is the real risk in this moment in time . Most likely it will come from some geopolitical issue. Tracy two had just your risk adjust your Risk Appetite to take into account unseen risk on the horizon . Ralph what you cannot see you cannot imagine, so we run different scenarios and we make sure in the industries that we are active, we continue to be very prudent in what we do, and cautious. You know, we do not want to be over enthusiastic like most markets are. Tracy we were talking about Political Risk in the gulf region and we have seen some Political Risk in europe, Angela Merkel for instance a potentially facing an election in germany. How will it impact your business and how are you thinking about the future of europe these days . Ralph clearly everybody hopes and wishes political stability. I think with the elections, the elections in france, we were electionsful that the in germany would also lead to a clear political coalition. It is what it is. We will have to deal with it. But i think if you look at the majority of the germans, they are proeuropean. And with an ambitious president france, and also with the changes that are coming to the European Union because of brexit, i think there is a case eu to take ar the real crucial role. I think they can make a difference. Immigration is a big one. The second one is defense, the defense industry. And the third is making sure that the Economic Development we are currently seeing continues, because in the end stability is always caused by low unemployment, people having a job, people feeling part of the system and being satisfied with the role they can play as part of the system. It provides stability and i think then we will have a better europe. Tracy financial relation not one of those three things i noticed regulation not one of those three things i noticed. Ralph the has a lot of work that has been done in creating a single mechanism. I think the ecb has done a really good job in ensuring that amongst the banks there is a true level playing field. The next step in for filling in creating a Banking Union is to make sure that the banks are less dependent on the countries in which they are based, either from a build out perspective, or from the Government Bonds perspective. As wek both are being are moving ahead. Buffers are being built up. This makes you less dependence on countries dependent on countries and their decisions. If it happens, there will be more likely and it will be a final step. Tracy you are in a position to benefit from Economic Growth. As it picks up, do you look outside the eurozone for expansion once again . Ofph we are on the hopes the big inside, basically active in the whole world. And what we saw over the last four years, lackluster Economic Growth in the eurozone area, but basically we continue to grow because we had access to basically the globe. And we had growth in my america, asia, north america. And on the consumer side of things, we also grew in the eurozone and that is just if you take a digital model you can basically be so competitive that you can take market share. For example, in germany, we were at 43 or 44 , our next best competitor of 73 72 , so we can be competitive. We are growing 1000 customers a day in germany alone. We do not necessarily outside the eurozone for growth, but if we are successful in building a crossborder platform, which is what we are trying to do between a couple of countries, once the platform is there you can open up anywhere. Mark and that was ralph hamers speaking with Tracy Alloway. President trump is speaking, grading the u. S. Coast guard in Riviera Beach florida on thanksgiving day. He commends the coast guard for their efforts in texas and in puerto rico after hurricanes harvey and irma. He also mentioned something he likes to do, that u. S. Stocks are at alltime highs. President trump addressing the u. S. Coast guard in Riviera Beach, florida, on this thanksgiving day holiday. Praising the coast guard for saving lives during hurricanes. He has been busy tweeting this morning as well, heralding his a successes this year in his first year of his presidency. We will talk more about politics, next. Can Angela Merkel break the stalemate . We are in germany we are in berlin as Angela Merkel takes departs on her fourth term. This is bloomberg. Mark live from bloombergs World Headquarters in london, im mark barton. This is Bloomberg Markets. Lets check in on first word news. Taylor the euro area economy is on track for its best annual performance since the financial crisis. Economic wrote is speeding up to 8 10 of 1 . Companies in the euro area increased. Newrrow, zimbabwe gets a president for the first time in almost four decades. Come pledging to leave the the country to a new democracy. From south africa after he fled after being fired by robert mcguffey. The ruling party says robert moog of he will not face prosecution. Australia warns power in asia could shift to china if the u. S. With draws its political, economic and security ties. Its concerned that chinas military expansion and the South China Sea will lead to classes. Prime minister Malcolm Turnbull says australia would seek death will seek a bigger role in world affairs. Analysts had given a different outlook on oil which means that cutsmay have to make without a consensus on shale but opec meets next week. This is bloomberg. Mark thank you. German chancellor Angela Merkel may get a partial lifeline from the main Opposition Party. The social democrat leader is prepared to offer her limited support for a fourth term. Repeating theut coalition and the german coauthor of the Angela Merkel book. Clear this up for me he is willing to back them on a limited basis, implying that the merkely government but doesnt want to go down that route so how can this work . Martin schultz who lost the election to Angela Merkel two months ago has boxed himself in. The day after the election and as monday, he was saying that i will not enter into a Coalition Government or a fullfledged government with Angela Merkel which would be a repeat of the ofvious government and also Angela Merkels first term government. , iteels it has emerged hasnt gotten a lot out of these governments because there was always a junior partner. Thats the schultz stance and , the socialhe s Pd Democratic Party to resolve that conundrum. They have actually scheduled a meeting for later today. Split . Snt the spd one size says one side says yes we should go into a andation with the cdu bloc maybe they can influence the agenda but the other side of the party wants to back off completely . Which side will emerge with the upper hand here . Thats the 64,000 question. They will have to resolve that. We are getting readouts that theres a fair amount of ,ressure including for schultz the party chief, to stand aside because he is so associated with note to a coalition. There are other people in the party who could step in and say this is a new day. For the good of the country, they could say we would now do this. It seems like it is up for grabs. Spdhave a record of the even when they went through wrenching soulsearching saying that we have more influence in government than out. Was pushedhultz aside and wanted to step down, is there a natural successor waiting in the wings . Ofthere are a couple candidates being speculated about. S whof them isandrea nale has been around for long time withhe is more associated the left wing labor wing of the party. Hot onry, that is not so another grand coalition but there are other realist or moderate candidates, not candidates, but potential contenders who could also step up. There is a lot of talking going on. The uncertainty now has shifted to the spd and thats where we are at. Mark great job, thanks a lot. Ck, the bring inina sche associate director at hand very strategy. As tony said, schultz has backed himself into a corner. How does he get himself out . He might not be able to. There are mps in his own party that won him to go. One faction wants to enter a coalition with Angela Merkel. Given the dismal performance of recent election, schultz once to be the party of opposition but his performance, in being leader of the party, did not give the spd the hope they thought he would give them so he is not too stable as the leader. Mark given the parties that have entered into coalitions with the merkel group, why would anyone in their right mind want to enter into a coalition with her right now question mark there are two arguments to this. One is that the longterm is better for democracy if you have the central being the credible voice of opposition. Before the election, with a Martin Schulz debating Angela Merkel but they were far too similar. On the other hand, one could argue this is unprecedented it is unprecedented in postwar history. There has not been a minority government and for the stability of the con the country, the spd should do the right thing. Aft became the coalition, does that give them pause . Entered the bundestag. It would scare Angela Merkel and the spd but all the other Political Parties as well. Its interesting the liberals crashed the Coalition Talks and are taking a tougher view on migration. They want to position themselves as the voice of opposition. Ishink the leader of the spd trying to craft himself as a German Version of Emmanuel Macron. Mark is that over . Its formally not done but the leader of the spd has a longer strategy and i dont think he will be returning to the table. Ftp in the last election were often the Junior Coalition partner and they were wiped out. They did not make it into the bundestag last time around so now theyve got this charismatic christian leader similar to Emmanuel Macron many ways and he doesnt want his party after being wiped out, not getting seats in the bundestag. If you go into coalition with Angela Merkel, shes got one star. Mark most likely is what . Say elections, nor to government, grand coalition. What is the most probable option . The least probable is a return to yakika. Of nest the next least likely option is a minority government which is not popular with the german public and it would be getting the backing of the various parties so it would be a slow government. Perhaps is a return to the grand coalition. It will be interesting to see what happens at the spd congress on monday. I think elections are a potential. Mark Angela Merkel did not seem to be frightened by the prospect of elections. Should she be . That ifust gambling there are elections, the electorate might blame the other parties and not her . Even though Angela Merkel might be we can, i dont think she will go. If you look at the public opinion, she outperforms her party even though her party got 32 . Popularity at ratings for Angela Merkel, she is over 50 . I dont think the gamble is returns Even Stronger but there are so many things going on, perhaps we will see voters but blaming the ftp and spd but voters will have been shocked at the political instability in the country thats supposed to be the strongest country in europe. Thank you so much and thanks for staying with us. Why a brexit break your could disappoint theresa may. This is bloomberg. Mark live from london, i am mark barton and this is Bloomberg Markets on bloomberg television. Eu is ready for an offer from theresa may. The consensus forming in brussels is that the future deal will not be like what the premise or is seeking. I smile a bit with this story that bloomberg has written today. Brexit crunch nears, eu trade we are looking ahead to the possibility of what the trade deal might look like. We are we . Lets go there. Where are we . What sort of trade deal is possible . Everyone is talking about a canada option. Is that the best the u. K. Can hope for when it comes to a trade deal . I think that will be the starting point. You can negotiate further but i dont think there is any appetite in the eu to give the u. K. The kind of deal they want because as the far as the eu was concerned, they will say this is the Single Market and these are the rules, you tell us which one you want to apply. That will then determine the type of model you will have. On one hand, you have the norway model where you have complete access to a Single Market for your goods and services will stop on the flipside, you have to accept the jurisdiction of the ecj and Free Movement of people and make budget contributions and you have no say on how the rules of the market are formed. Im the other hand, the canada model has relatively Free Movement for goods. Services and that is the Crucial Point for the u. K. Being 80 of our gdp is generated by services. One might be lulled into a false sense of security. The brexit trade deal talks might go swimmingly. Thats where the real disagreement can happen. Absolutely. We think the divorce has been painful. We have not seen anything yet. I think the future trade talks are where we will have even tougher negotiations. Mark is that where the real risk of people walking out and hard brexit and cliff edge of scenarios comes to the fore rather than what we have been talking about the last few months . Thebsolutely, but i think real risk is a question of domestic politics at home. During the referendum, brexit was presented as a Silver Bullet with no downside. How do you talk to the public now having promised them in these brexit supporting mps, how do you sell them something which does not quite match up to what was promised . There will be compromises inevitably. How does the public react to that and can the government which is quite weak withstand that . Mark lets rewind a bit because we are not there yet. We do not even have the eu moving the process on. It seems this week we have made progress and maybe there is an offer in the offing. Is that right . Offer in theill offing which will move us toward this big event in december where we can move on finally . Where we are at is that the u. K. Has to almost entirely capitulate to the eu position. That has been clear for eu observers for the many months we have been talking about this. We think the u. K. Is preparing to make an offer of 40 billion to unlock the next talks but that will not be enough but it might just be enough to say we are moving to phase two. The real issue where there could be the potential for a breakdown in talks in december is Northern Ireland. There is no solution. Realistically could be the solution . The u. K. And Northern Ireland dont want to be part of the single customs but you have to be. Is there a compromise . The eu wants to know what their stand is on this . Way you can avoid ahard border if you want Single Market and there in lies the quandary. Although the u. K. Says we want creative and flexible solutions, they can cobble together some kind of compromise but one party cant they save this for the trade part of the deal . Thats what they want to do, the u. K. . Theow can you talk about future of what will happen with the border until we know what kind of relationship the u. K. Has with the eu . Ireland has really been flexing its muscles in the past few weeks because they see brexit is something that was done to them which could have a devastating impact on their economy and their society. Mark if they veto it, they are damaging themselves. Yes but they want a commitment to know hard border. Obviously, if youre leaving the Single Market, how do you not have a hard border . Mark lets talk about domestic politics. We had the budget yesterday. Can they survive the Brexit Process . She has been weakened after her extraordinary gamble to call the general election and that not going her way. I think she will survive simply because the conservatives are aware that if there is any kind of leadership election contest now, the clock is ticking on the thatt talks and would trigger another general election . Its not an outside possibility ministernext prime would be jeremy corbyn. She will survive for now. There are less palatable parts of the brexit talk. Mark what is your best Case Scenario . It will probably not be over in march, 2019, what does it look like question mark the best bye is there is no way that march, 20 the u. K. Can have its new free trade deal with the eu so lets rule that out. The best Case Scenario is that they will agree to a transition. Mark is that soon . Businesses have to get on with a because of they dont do it soon, theres hardly any point as continuing with the in the negotiation. That transition deal will look very much like what the u. K. Membership of the eu is right now. Although that makes sense for business and continuity, can you sell that to the public. They will say we have not actually left the eu. They are still making budget contributions. The best Case Scenario economically is a transition and during that transition, you use freetime to negotiate the trade agreement which is heading toward canada and the u. K. Negotiators will have to negotiate hard and heavy for services. Mark weve got a busy few years ahead of us, thank you very much. Markets, on bloomberg the spirit of black friday we will hear from the managing director of harrods and why he thinks the biggest shopping day of the year is not so great for business. This is bloomberg. Mark live from london, im mark barton. This is Bloomberg Markets. There will not be any black friday deals at harrods. The Retail Holiday cheapens brands and the ceo talked about what help them but the amazon trend . We will not do black friday. Thats not in our dna. What we want to do is make sure youve got brands and products you can find nowhere else in the world. Customerat drives the to brickandmortar. Its got to be supported by a gritty commerce offer which we have. In the end, its got to be unique and rare and something you cannot get anywhere else. Do you think black friday cheapens your brand . Absolutely. So none of these promotions, none of these discounts in your view, you dont want to participate in any of that . Absolutely not, we want to have gorgeous products that you cannot find anywhere else and we want to sell them at full retail. Are you worried you will be one of the few to advocate an approach like this . 27 salesar we did a growth. If we are a dinosaur, i would like to be the same down the same dinosaur. Youre not worried about amazon . I think amazon is really more of a Technology Company than a retail company. Amazon cannot recreate the magic of harrods in london. Thats the point. Weve got to continue to develop and grow that brand so when you come online, you got a great experience thats unique to you and different to amazon. Real quickly, i was in europe a few months ago and i was supposed to buy a wallet for my cousin and she said do not get it in paris, get it in london because of the weaker sterling. Does that hold true for next year . The brexit has been great from the perspective that anybody who comes to london now gets great hotel deals and london is an amazing place to be. The brands equalize prices. At the moment, within three mons, you get an equalization across the luxury brands. Its not a price to rent thing at the moment. Hotels, the restaurants, they are good value at the moment and i urge you to come to london. Mark that was harrods managing director michael ward. Time for the Bloomberg Business flash. Telecom italia plans to hire advisors for a spinoff of its landline network. The government is concerned about the influence of shareholders. The main issue will be Telecom Italias structure, not ownership. Ofits not about control Telecom Italia team on the network. Its whether structure will be one company or two separated companies, two different companies. Its not the ownership of the or the control. He said Telecom Italia should consider splitting up the net worth. The network. Of female workers have been paid less than men and bank of england. The household Energy Supplier in england plunged the most in 20 years today. Their forecast for the profit was less than expected in the companys market share is shrinking plus it has to deal with government limits on the amount customers pay. Your Bloomberg Business flash. Coming up on the european close, were following stocks and where lesson 35 minutes away from the third day session. Stocks are little changed and the closes next. This is bloomberg. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Mark there is 30 minutes left in the trading day in europe today. Live from london, im mark artan. This is the european closed a Bloomberg Markets. Im mark barton. Here are the top stories. Ecb officials expressed concern about a firm date for the end of up anotherfed tees rate hike in december even though officials remain divided on inflation. Unease is rippling through chinas stock market. Largecap index plummeted the most since june of last year. Why investors are fretting a bond rout is getting out of control. Steelmakeriggest recovers and our interview with the chief executive and his thoughts on the merger. U. S. Markets closed for the thanks giving holiday and we have a look right here in european equities