Welcome to bloomberg daybreak. Our flagship morning show in london. What a few hours we have seen. The u. S. Dollar rallies. Where does it go from here . Be based onlly uncertainty. We came from what has been the best month since 2014 to reach the highest levels since the bloomberg of the inception dollar index. What we have done here is shown you some key indicators as to why the bears might take control and put this rally on hold for now. What you are looking at here the red light. Honeymoon period. Donald trump is elected. The shortterm crosses above the signal line. Later in november, you see it cross back down indicating the bears may take back charge of this rally. This is where we are right now. What could keep this rally going is the crucial jobs report. That is what we are looking forward to. That is what might lead the rally going forward. To the risk radar. The bond rout. Still very much in full swing. It has been a tough month for this asset class. Brent, down 1. 2 . 53 . 26. Still a bit of uncertainty. They are not sure if opec will follow through on the agreement. Even at 53 a barrel, back to levels earlier scene this summer. Gold, slightly up. The weaker dollar feeding into that equation. Keep an eye on u. S. Futures. On u. S. Pressure stocks. Especially i. T. Stocks. Let us get the bloomberg first word news now with haidi. Has madeench president a surprise announcement that he will not run for reelection paving the way for his more popular Prime Minister to enter the president ial race. At a hastily spoke organized address from the palace. The power. Being in power. Never madeof power me lose my lucidity on myself or the situation because i have to act. Today, i am conscious of the risk such a move would have if it does not have widespread support. I have decided not to be a candidate in the president ial election. I wanted to tell you directly as promised at the beginning of december as i had announced it. Haidi president elect donald asmp has put james mattis secretary. He is a career u. S. Marine. Donald trump called the nominee one of our great generals. And referred to him with his ickname mad dog mattis. Donald trump kicked off his victory tour in cincinnati. He also claimed credit for keeping hundreds of jobs within the u. S. And reiterated his pledge to cut taxes. We are going to massively lower taxes and make america the best place in the world to hire and expand. Haidi the antiwar exit liberal democrats have unexpectedly gained a u. K. Parliamentary seat. The vote was triggered after conservative al goldsmith quit his seat to stand as an independent in protest against the government. The result may further, may further complicate theresa mays effort to start the process to leave the European Union. A former plans to ban banker from the securities industry for 10 years. This is the latest penalty handed down linked to a scandal over the Malaysian Development fund. Goldman sachs says it is a clear violation of the firms standards. Global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Im haidi lum. Yousef crossing over to asia. What is driving these markets . Juliette a lot of uncertainty ahead of the u. S. Payrolls number in asia today. Quite a bit of number was quite a bit of money was taken off the table. We also had a strong opec fueled rally in thursdays session. In late trade, the hong kong index down over 1 . Solid support from most of the energy players. Haveve seen casino stocks lay sold out in late trade. This was on a cash declaration rule. If you had to macau, you will have to declare if you have more macau dollars. Closing lower by 1 . Coming off the commodity fueled rally we saw yesterday. Little bit of mixed movement from southeast asia. The china market is down 0. 8 . Goldman sachs called saying they have cut china equities although they do still favor the asian shan index over age h are index. You are seeing the yield on the 10 year note up eight basis points. Yield there at their highest levels since january for australian bonds. Yousef thank you. Joining us live from hong kong. The top story. Italian citizens well head to the polls on sunday to vote on a referendum regarding the countries constitution. Prime minister renzi wants to reshape the senate. He also wants senators, and this is key, to lose the power to call a vote of no confidence. But a yes vote does not mean instability in the longterm. You are looking at reinforced power. To drive through destabilizing policies. In italymark bond continues to thrive since yesterday. Despite concern of the stability of the countrys lenders. Joining us now from rome is bloombergs Francine Lacqua. What is at stake here . Francine people are voting on the constitutional reform because the Prime Minister, renzi did not manage to pass it through the house. What is at stake is the stability of the country. Has saide side, renzi he will resign if he does not get his way which means if he does not get a euros a yes vote. But if he does get a yes vote, in it will be a a lot more it will be a lot more difficult for him to win elections in 20 2018. Italy has been unstable for the last six years. 63 governments in the last 70 years. The turnover is a little over a year for each government. The reform wants to change this and make it more stabilized. It wants to try to kickstart and give the country a system which means they can perform and reform better. This is the view of the yes people and the view of the government. The no people are concerned that it gives too much power to one person. The Prime Minister. And there would not be enough checks and balances. To me more about that consolidation of power over there and the implications of that and how markets are seeing all of this. Momente markets at the would like stability. They may be wrong or right but this is what we are seeing. We are in a blackout period. We had polls about two weeks ago. At the time, markets were a little bit nervous. The consolidation of power is one of the main arguments that you see here in italy for the people that do not want this reform to go through. Let us think about it like this. In most of our western democracies, you have a government and two houses that balances. S and it is like the house of commons and the house of lords in london. Is thethe house is here senate, u. S. Senators for life. And the other is the house of representatives. Balances in every main democracy means the senators appointed have a little less power than the representatives per say. That is not the case in italy. He wants to change that so the senators have less power. Those that want the new vote to 60 say they are essential because they make sure that if there is an extreme party in power, that they do not do anything too dangerous. Also have local authorities in italy that have huge power. Wants to putister a stop to that. It means that if you are Prime Minister, you could really push through you are in charge for five years. That he isright, just giving power to himself. It is a complex debate. Yousef sounds like the definition of a catch 22. Francine lacqua, joining us from rome. Let us bring in our guest. Great to have you on the program. I would like to kickstart the chat with this fantastic chart that shows the italiangerman spread and how it has a vault. It goes back to december 2014. It spikes here and there but starting in september and all the way up, it has narrowed slightly. Italian elections. Just as we thought we had recovered from the american political volatility, what is your topline breed on what is going on here. I think the most important point to make on this is yes, in terms of italy specifically, there are important implications in terms of how the boat goes and the Banking Sector in particular and the media outlook in terms of politics. But from a market perspective and from the perspective of the forecast i am setting for the major currencies, this is one piece of a potential jigsaw that is playing out at the moment. It started this year with the brexit vote and then moved to the United States with the election of donald trump. If we get a no vote this endsnd, the Freedom Party up winning in austria, it will be another two examples of this wave of populism that is spreading throughout the world and has now clearly arrived in europe. What i mean in terms of the broader consequence is that the crucial thing for europe next year is the french president ial elections. And the idea of Marine Le Pen winning that election would be catastrophic for europe. The polls clearly show that will not happen but if we get those examples of populism spreading yousef we will pick up on that in a second. How do you prepare for this kind of political volatility . This is one of the many indicators we are seeing. There is also downside pressures on the euro. I would steer clear of this. One of the reasons there is a narrowing of the spread is a rumor this week that the ecb would be very active in buying italian debt if there was a no vote and that makes perfect sense. They are conducting onto tate of easing and they want to keep the market stable. They are conducting quantitative easing and they want to keep the market stable. We have already had a pretty big move on the downside of eurodollar. In the equities space, there are opportunities there. Approach,roader purchasing volatility is the obvious one. There would be an element of uncertainty that would create that volatility. Yousef you see european populism spreading with momentum going forward. The other side of the argument which made it clear that people are going to realize populism is not that great. And way before the eurozone starts raking up, people will start to move back on that sentiment. I am not convinced on that. Is lowt of all of that Economic Growth. If you want to point to a country in europe for an example of that, there is no better example than italy. If you take real gdp, he could growth levels before the great financial crisis, real gdp in italy is about 7. 5 below the precrisis week. In the United States, it is over 11 higher. In the u k, 8 higher. There is a real fundamental problem in italy. And it is to do with debt and the fact that they have had to run these large budget surpluses. Draw gate mentioned the draghi mentioned the large budget surplus. I would argue it is one of the reasons why italy has such significant problems on the growth side. They have to run those budget surpluses to keep debt stable. That is ultimately one of the big problems italy has. Continue thist conversation. Some breaking lines. Italy has made a request with the European Union on a lender. Atand italy discussing this state help for this bank. Aswill continue to add meat more of these lines come through. Let us give you a preview. Nonfarm payroll are ever a nonevent. The number always creates the bait. Out of the game, the least historyleader in modern will not run for election. We get the latest on the french president. And breaks in the brexit. Demand strengthens. Is it time for british Property Managers . This is bloomberg. Yousef it is 6 20 a. M. In london. 2 20 p. M. In hong kong as they get ready for the weekend. Hang seng trading slightly lowered. We talked about some risk aversion creeping in amidst some reconsideration. The yen extending its rebound ahead of the key u. S. Jobs data. Let us cross over now and get the Bloomberg Business flash. Juliette veteran investor bill gross says he is not buying the u. S. Postelection stock rally or the prospects of Growth Driving it. He says deregulation is misguided. Donald trump is also being criticized by mexicos richest man. He says americans have more to worry about under donald trump than mexicans. Close thes going to economy, it is bad. Thee goes out of international, he has the risk to lose the International Leadership of the United States. , whotte Howard Schultz built the starbucks empire in the last two decades will step aside next year. He will hand the reins to his Top Technology veteran Kevin Johnson while keeping his role as executive chairman. I will remain executive chairman of the thing fulltime on the incredible Growth Opportunities we have in expanding and building out our portfolio. This will be a significant part of the focus going forward. Wells fargo has changed its bylaws to acquire a separate chairman and chief executive officer. Years of sales of abuses. And it has spiraled into a national scandal. That is significant in an industry which has long fought off pressure from shareholders. Is poised to block a Chinese Company from buying a German Technology company. It would mark only the third time in more than a quarter century that washington has anected an investment from overseas buyer as a National Security risk. The white house has a say in the deal because there is a subsidiary in california. And that is your Bloomberg Business flash. Yousef thank you. It is jobs day once again. It is nonfirms payroll. It looks likely it will give us some clues on how quickly the fed may tighten next year. Our guest is still with us on set. A big day. It does show the big picture back to 2007. And where we have come from. Take a look at that increase. Through the red shaded area. That is a financial crisis. Since then, it has been a stable path downwards with the unemployment number as well as individuals that want a job but are not looking. What are you expecting . The Bloomberg Survey anticipates an increase in november of 170,000 jobs. Are you on the same page . Of the data is pointing to a continuation of the labor market growing. That is clearly enough to remove some of the slack that still remains. If you look at the unemployment rate, 4. 9 . Getting down to the kind of 9 average that existed before the financial crisis since the data began. We are pretty much there in terms of the dual mandate. Considerable focus on wage growth. To really understand the health of Consumer Spending as well. What are you looking for in the numbers . We are expecting wages to pick up and we think that will really be the story of 2017. We have a way to model and based on very conservative assumptions that we put into that model, we on anerage earnings annual basis heading 3 for the middle of next year. As we said, we are there in terms of reaching the dual mandate of the fed. Worryingartly what is the u. S. Treasury market. In terms of economic history, there are not too many examples of seven or eight years into an Economic Cycle with full employment and price stability and then this potential massive stimulus humming at that stage of the Economic Cycle. That really does potentially result in some instability going forward. Yousef we think of the Asset Classes as taking a breather as donald trump continues to pick different candidates for different positions. What is your analysis about the Incoming Administration and what that bears for the market as we go into 2017 . You are making the argument that the market has got it wrong. Ofi am saying that in terms what is happening potentially on the fiscal side, on tax cuts and and Infrastructure Spending, it explains why we have had a 100 basis moves in the u. S. 10 year. On that side, the markets are correct. If you look at Donald Trumps policies, you have the reflation side, youn the other have the antiimmigration, protectionism, trade friction which is far less positive. I think the markets have probably got it right in terms of focusing on reflation. That is perhaps the route to go initially for donald trump. Yousef 10 year yields. Jp morgan says 2. 55. On board . We have 2. 8. Yousef we will continue this conversation. Also still to come, european politics in focus. The french president says he will not run her reelection and austria goes to the polls this week in. We are live in paris and in vienna. Stay tuned. This is bloomberg. Seeing is believing, and thats why were opening more Xfinity Stores closer to you. Visit us today and learn how to get the most out of all your services, like xfinity x1. Well put the power in your hands, so you can see how x1 is changing the way you experience tv with features like voice remote, making it easier and more fun than ever. Theres more in store than you imagine. Visit an xfinity store today and see for yourself. Xfinity, the future of awesome. Speed always wins. Especially in my business. With slow internet from the phone company, you cant keep up. Youre stuck, watching spinning wheels and progress bars until someone else scoops your story. Switch to comcast business. With highspeed internet up to 10 gigabits per second. You wouldnt pick a slow race car. Then why settle for slow internet . Comcast business. Built for speed. Built for business. Yousef it is 6 30 a. M. In london. And 3 30 p. M. In tokyo. Currently dollar yen holding at 114. Slightly lowered. Japanese stocks decline ahead of the u. S. Payroll. Isthe weakening dollar steaming into sentiment alongside the political volatilities in mainland europe. Let us show you some of the Asset Classes we are looking at. The 10 year, 2. 43. The bond rout continues. Brent at 53. 28. We sawback to levels earlier in the year. There is still skepticism on how it will be implemented but what we are hearing from opec members is they will move fast on cutting back production. Gold, 1173 an ounce. Higher off the back of the political anxiety in europe. And finally coming u. S. Futures, down 0. 1 off the back of a lot of these developments. Let us get you to a new edition of debris. Available on your bloomberg. Let us take a look and see what the top stories are. The cover story is of course italys referendum on sunday. After brexit and Donald Trumps of election, investors are not taking any chances. Swings in italian stocks are the most expensive in two years. The next story is Donald Trumps fading rally. Jeffrey says the dollar is losing steam. Bill gross is not buying it either. He argues investors are betting the promised tax cuts, Infrastructure Spending and deregulation will spur growth that is misguided. And a finally focuses on the french president who has announced he will not seek a second term. Clearing a path for the Prime Minister to run as the socialist candidate in next years election. Staying with the political the aim, austrian voters head to the polls to elect a new president. The Runoff Election after the Green Party Candidate one bank by a narrow margin. Jonathan tyrone joins us live from the an a. What is expected this time around . Will it be as close a result as we saw in may . Good morning. Go to the polls on sunday, no one is expecting a firm result by 5 00 in the afternoon. It will probably be a repeat of the last election on may 22 where the postal votes, the male in votes have to be counted the following day. At this point, we are still at a statistical dead heat and the polarization of the electorate reflect some of the same issues that we saw divided them during the brexit and the u. S. Election. Yousef how much influence does the president of austria really have . That is an interesting question historically, it has been a ceremonial role. Austria works bury much on the basis of consensus. Much on the basis of consensus. Both sides want to use the presidency in a much more assertive way. The former Green Party Candidate who is now running independent wants to use the presidency to prevent a euro, nationalist government from forming should they win parliamentary elections. The Freedom Party candidate has said that he would use the power of the presidency to dismiss the government if they if he thought they were not enacting adequate legislation. Repeat of the refugee flows we saw in the middle of 2015. Yousef tipping the balance of power. What would a Freedom Party went for the european project as a whole . Freedom party traditionally has been eurosceptic. They have tried to moderate that in the last few months. Not prevented them from meeting with other eurosceptic parties across the eu, most notably the alternative for germany and Marine Le Pen in france. They definitely want to prevent the European Union from accruing more power. They would like to see more decisionmaking returned to the national level. In thestion of course european context at that point is when you start dissolving material, the ability to regulate and create rules, does it fall apart on its own . Does a party like freedom actually need to assert policy to break it up or remove austria from the mix . Is aally, right now, it symbolic firewall. It is a question yousef symbolic firewall. We will have to leave it there. Jonathan joining us live from vienna with the latest. Let us get back to the top story from france. The french president has announced he will not seek a second term clearing the path for the Prime Minister to run as the socialist candidate in next years election. Why is the french president not running for reelection . What has gone wrong . Did not want to be humiliated in the next president ial election given that some of the recent polls show his popularity is as low as 4 . He has said he would only seek reelection if you managed to curb the unemployment rate. That is something he has somehow managed to do in recent months. The latest figures did show a 100,000ecrease of about jobless people since the beginning of the year. But the president acknowledged that these came too late. The power. Being in power. The ritual of power never made me lose my lucidity of myself or the situation because i have to act. Today, i am conscious of the risks that such a move would have if it does not have widespread support. I have also decided not to be a candidate in the president ial election. When he did tell you directly as promised at the beginning of december as i announced it. The power never made me lose my lucidity. That is what he said last night. His supporters among the socialist party said this was a brave decision. We had reaction from the Prime Minister in a Statement Last night. He said it is a tough and serious choice. The choice of a statesman. The decision came as a shock for Many Political observers. Nation was to the the mediaoned it to about 45 minutes beforehand. Since the beginning of the fifth republic in france that the current president does not seek reelection. Yousef a shock them. But talk to me a little bit about how this alters or affects the new Political Landscape going forward. Is consideredter as the natural candidate of the left. The ideal candidate if you want of the socialist party. He could actually announced his own candidacy in the next few days, even this weekend. He has until december 15 to do so so he can run in the primaries, in the socialist primaries that will be held at the end of january. The road will be difficult because the socialist party is very divided and at the moment, the latest poll that we have that was published before the president s announcement showed that the republican nominee would be the very clear frontrunner in the first round of the next president ial election followed by Marine Le Pen, the National Front leader and the independent candidate. A fourth man could be the Prime Minister. Kerley oombergs caroline joining us. Our guest is still here. We talked about the ongoing political volatility. I have pulled up this charge. Our viewers can also pull this out. This shows you how german bonds are performing. The 10 year yield are climbing nine basis points. Look at that pop heard on the ongoing concerns of the ongoing bond rout. Was going to send signals imminently about a potential and to qe. What do you expect the ecb to do on december 8 . Perhaps a bit of both. Some form of extension of quantitative easing beyond the deadline of march 2017. That has been indicated in the past and i would expect that to be confirmed. However, there has been a fairly notable shift in some of the dynamics that influence inflation. The weaker euro. Yousef seismic shifts. So much more has happened since last time around. You cannot end the mario draghi for the upcoming decisions he has to make. The euro is weaker. Is significantly higher and we have potential stimulus coming. Unknown to what extent. The inflation dynamic perhaps look a little looks a little bit different. Convergenceificant divergence. Ecb thatd give the degree of confidence to signal something in regard to some form of paper later in 2017. Yousef what about specific parameters in terms of the bond buying program. What are you expecting in terms of the finer details . Initially, it will continue beyond march 2017. They may confirm six months. And then they give a fairly clear message that based on that, there would be a taper process beginning after that. Anyially, they cannot make significant changes at this point and time because the big change in the inflation dynamic potential he is this a stimulus coming from the u. S. But we know nothing about that. We know that donald trump has promised during the campaign but what he gets through congress could be very different. Yousef we heard that eurodollar will reach parity. What is your outlook for the currency . Yousef growth is not speeding up as quickly as thought. I think there is still a fundamental problem domestically. Day, thed of the policy stimulus is going to have to be maintained and that story has divergent more to run. We are now forecasting levels below parity by the Second Quarter of next year based on the politics showing populism votes rising, Marine Le Pen not winning and the recovery of europe in the second half. Yousef what about the bond yields in the german bund . A signal that tapering is coming. If donald trump does implement stimulus, crude oil holds around 50, a look that points to a continued turnaround and higher yields going forward. As well assuming as what i said about u. S. Treasury yields going higher. It will drag the german 10 year bond higher as well. That will remain in place. We will not see much of an outperformance. Externalhat about the very ball of the United States and some of the programs that will be initiated there. Rising bond yields as well. How will that feed into the european story . We have to make some assumptions in terms of what donald trump might do but a safe bet that instead of 2 real gdp growth which is what we have had in the last five years on average, perhaps it is something north of 2. 5. Maybe 2. 7 or 2. 8. If we get that, that is good news for the global economy. Domestic demands could be stronger and that will play into better growth in other key trading partners like europe as well. Yousef how many rate hikes in 2017 by the fed . Two. Yousef we will leave it there. Thank you so much for joining us on the program. Still to come, and that is why you should stick around. Italian political risks. Thei plans to reshape senate and it could cost him his job. We are live in rome. Bricks and brexit. Demand strengthens. Is it time for british Property Developers to rejoice . We break the numbers from berkeley group. Nonfarm payrolls. One of our key themes. A fed rate hike this month might be based in. We get into that discussion. Stay tuned. This is bloomberg. Yousef let us get the Bloomberg Business flash in a second. Some swiss gdp numbers are crossing the bloomberg. A misstep. Up 1. 3 year on year. An estimate of 1. 8 . Seco saying the week Third Quarter is due to a special factors, not chiefly the swiss franc. Swiss Economic Growth stagnating in the Third Quarter. The estimate was. 3 . Interesting. We will try to expand on that. Juliette. Ss now to juliette bill gross says he is not buying the post u. S. Election stock rally or the prospects for growth and driving it. He says the bets on tax cuts, Infrastructure Spending, and deregulation are misguided. Donald trump is being criticized by mexicos richest man. He says americans have more to worry about under donald trump then mexicans because he could cost the u. S. Its place as a world leader. If he is going to close the economy, it is bad. If he pulls out of nafta and other international agreements, he risks losing the International Leadership of the United States. Juliette Howard Schultz who built the Starbucks Coffee empire in the past three decades and served to separate stints as ceo will step aside next year handing the reins to his top lieutenant Kevin Johnson. While keeping his role as executive chairman. Will remain executive chairman focusing fulltime on the incredible Growth Opportunities we have in expanding and building out our portfolio and reserve stars and on the social impact of agenda which will be a significant part of the focus going forward. Juliette and barack obama is poised to block a Chinese Company from buying a German Technology company. It would mark only the third time in more than a quartercentury century that washington has rejected an investment by an overseas buyer as a National Security risk. The white house has a say in the deal because there is a subsidiary in california and employs 100 people in the u. S. That is your Bloomberg Business flash. Yousef thank you. Let us go back to italy where citizens will head to the polls on sunday to vote in a referendum on the countrys constitution. Renzi wants to reshape the senate. Gets consulted uncritical matters. He also wants editors to lose the power to call a vote of noconfidence. Yes vote does not necessarily mean stability in the longterm. Reinforced government powers could also be used by future, potentially more extreme administrations to drive through destabilizing policies. Francine lacqua joins us live from rome. What is at stake here . What is at stake is what you were saying. Especially the constitutional reform. A onceinalifetime opportunity or once in a Generation Opportunity to reform so it is more governable. 63 different governments in 70 years. You need to have a more stable piece of legislation to make sure that the reforms can be pushed through but the proponents of the no says this is not the nice not not the right reform. Because renzi says if he gets the no vote going against what he once he will have to step down. It is difficult to say what will happen next. Will there be a more technocratic government, early elections . We dont know. We also had to deal with the banks. They are still not fully recapitalized. If you have political instability, this may further delay dealing with that situation. Yousef the consolidation of power. That is a key item in all of this to watch. How will this unfold . Why are people so worried about that scenario . Worry firstthere is of all we are in a block out period. The latest polls we have are from two weeks ago. People worry that because of Donald Trumps election, brexit, there is voter angst. People voting on sunday will not really be thinking about the question on the piece of paper, the constitutional reform. They will be saying do we like renzi or not . Backlash where people are not thinking about the referendum but they will decide whether they are happy with the situation as we have seen in the past. We dont know if this will open something uglier. Another group wants italy out of the euro. But itd not be fast could give a another opportunity to come in and be more prominent. I am looking forward to our coverage. Later, i will speak to the italian Prime Minister, a technocratic Prime Minister put in place by the president. He will be interesting to talk to. Nois one of the most famous proponents. He says it is not the right constitutional law. We also speak to one of the renzi. T men who advises he is a thinker and an economist. Im looking forward to hearing both sides of the argument. Yousef thank you. Francine lacqua joining us live from rome. Joining us now is nick nelson. Let us put some meat on the bones. This is creating volatility in markets. This is italian referenda. That means there is opportunity to be found. Where are the opportunities . Say this is the beginning of a busy political calendar in europe. On the same day we have the austrian president ial rerun as well. We have preliminary article 50 being triggered in the u. K. Dutch elections, french elections, and german elections. If you look at u. S. Investors, they have been net sellers for 10 months in a rope. It does provide opportunities because the fundamentals are Getting Better in europe. The Italian Economy is weak. That is true. The rest of the eurozone is doing better and we are critically, seeing a better turn in profits. We will be focused on this. As mentioned, in the interview, it is complex. The yes and no are not the only story. We had the telecom reform. You dont necessarily want one party to get power especially if it is antiestablishment. Yousef what will this do to the Ecb Governing Council meeting . No major shifts in the modalities of the program. We are pretty much on the same page. Given how much event risk we put around this and the fed meeting the following week, the ecb is likely to extend for the next six months. 2017 we come september may see some tapering. 2017 we may see some tapering. It is finely balanced. The economy in europe is Getting Better. Inflation is edging up slowly because oil prices are rising. Given how much uncertainty is out there, it may best it may focus on the next six months. Are duenonfarm payrolls at lunchtime. Can any number deter the fed for a rate hike this . Month . . U. S. Futures are called lower. Stay tuned. This is bloomberg. The truck rally runs out of steam. Rush concerns over the out from raleigh. Traders await todays critical job report. Loafer Prime Minister made. The proeu liberal democrats unexpectedly gain a seat in parliament during a result that could complement take the plan to leave the year team union European Union. Yousef welcome to bloomberg daybreak. Our flagship morning show. Lets see how the futures are holding up. We are set to open lower than across the board. Look at the ftse 100 there and some of the others, as well. Remember, we came off mostly lower u. S. Equity session. We also called lower in the United States overnight. I. T. Stocks, which had been performing well early on. You are getting hammered overnight. Barclays first half revenue coming through. 1. 4 one billion pounds pretax. Operating profits for the period. That is better than 91. 4 film billion pounds. , we aret of numbers looking to get more information as to how brexit has affected that company. The analysts are feeling good about this. We will continue to watch that for you. As we get more context. Thatst got a report out london home prices are to fall 1 in 2017. There we are. Further direction. Toy say they are on target deliver the three year, pretax profit of 2. 0 billion pounds. There you have it. They are on course and on target. Lets take you to the risk radar. Some of the things i am watching. Major moves we have seen. Oil taking itends a little off the back of that opec agreement to take 1. 2 billion barrels a day out of the market. Also moving fast to execute on that promise. A weaker dollar factoring into this. Up to fifth of a percent on this. Futures called lower. Lets get the first word news. Going to france for france president has made a surprise announcement that he will not run for election. The decision paves the way for his more popular Prime Minister to enter the 2000 17 president ial race. He spoke at a hastily organized address. Being in power, the ritual of lose myver made me lucidity. Need around myself or the situation. Because i have to act. Today, i am conscious of the risk that such a move would have if it doesnt get widespread support. Also decided not to be a candidate in the president ial election. , wanted to tell you directly at the beginning of december, i have announced it. Yousef the antibrexit liberal democrats have won seats. The boat was triggered after conservatives ask goldsmith the resulth may further complicate Prime Ministers theresa mays effort to be in the process of leaving the eu early next year. Just when you got it wasnt complicated enough. South africa may be lewd hours away losing from losing its Investment Grade. A relegation that could take years to undo is due later today. The countrys foreign currency is at risk of being rated junk i smp for the first time in more than 16 years. Only six out of 20 countries relist below Investment Grade by snp over the past five decades have ever regained it. That took up to 11 years. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more a reminderntries, you can find more stories on the you bloomberg. Lets check on the markets. In asia, and see if the sentiment has improved. Juliet sorry to be the bearer of bad news. No, we havent seen improvement in the last hour. In fact, the regional impact has erased its weekly gains. Looking like it will end about 1 10 of 1 down. Casino stocks coming under pressure. You willn reports that have to declare if you have more than 120,000 macau dollars with you. Cutting tohs today market weight from overweight for chinese equities, even though they say they favor them over the hr index. Korea didnt have a good day. Stronger yen closes down one half a percent australia finished lower by 1 . Quite a few weak movers in the region. I mentioned casino stocks in hong kong. You can see how they did. Have a look at this stock. Makeritary equipment falling on news that it may run out of sales orders. Limeys b, and ellamis reported its baby formula sales slumped. Na in tokyo falling by 7 . This stock came under a closure website on news that it had fake , dubious articles providing dubious health advice. It had to close down a number of websites. Indicates stop down 7 tokyo. A quick look at the yen. It holds. A little bit of strength in asian trade ahead of the u. S. Jobs number. Later tonight, yousef. Yousef a little strength then. Thank you for that update. In the wildest month. Payrolls looked unlikely to alter expectations. It may give us some hints on when the fed may tighten. With more details. Bloomberg. Plus 180,000 jobs for bloombergs foreign payrolls. Looking at the range, the lowest estimate comes in at 140,000. A number we havent gone under since may. The highest on the other side is 250,000 in july. That0,000 is correct, would be slightly higher than octobers initial number of 100 xt 1000 jobs and it would also be significant for Interest Rates. Further proof that the labor market is healthy enough for the fed to raise rates in a few weeks. Hike and6 chance of a a near certainty there. Other data points to look out for, average Hourly Earnings are expected to stay at a sevenyear high with a two point game. Ame, matching octobers gain they will be watching the participation rate. Workingws the number of age people who are employed or looking for work. In october, that fell to its lowest number since 1978. That is thanks in large part to baby boomers retiring. As for the unemployment rate, that is forecast to stay at 4. 9 . The november jobs report is set to come out friday, 8 30 a. M. Wall street time. Nick nelson is still with us to pick up the conversation. Manufacturing. Expanding pace in five months. Encouraging signs from Consumer Spending and retails as well. Report later today. What are you looking for here . The bar must be low for the height. We assumed december the 14th would be a rate hike, and of course the markets would come around that as well. Will probably come in around 1. 5 , accelerating as we get aext year , so the u. S. Economy is definitely improving. We expect a hike ins december, maybe two hikes again in 2018. A gradual tightening cycle. A economy that is gaining. Found the diverting calls into thousand 17 fascinating. And how many more rate hikes to expect in 2017. What is your outlook for 2017 . These are directional differences. Michele saw anirst, we acceleration in bonds post trump victory. But we are tardy seen that in balloons, treasuries and of course that had a big ramification for equities. What we would be thinking is, we are probably not going to complete that scale of move. Getting towards a level where we may hang around over the next 12 months or so. It will clearly be volatile. We wouldnt extrapolate that move from what we saw in july. This is one my favorite functions. It really shows us the kind of move we have seen. I have adjusted it. This is since donald trump was alexis elected. 11 , copperd down up 10 , massive shifts, the strengthening dollar there, 4. 5 . Have you position yourself now . What are the exciting plays that are going to get me more money . Havele i think wall we seen is initially, this expectation we will have some tr umpflation. Bond yields have risen, curves steepen. What im looking at now, maybe some of the commodities pass through the markets. In europe three weeks ago. We upgraded energy. This wasnt a specific call about opec, that fell in the shortterm. It is more the longer term that we see oil prices raise up to an average of 60 next year. In europe, they will be lapping. N january we will see oil price up almost 100 , that will generate earnings. If we are sitting in europe and looking at european equities, we thatbasically had continues to do well into q1 next year. Yousef theres a fascinating story on the bloomberg describing how that opec deal hinged on a 2 00 a. M. Phone call and how it almost failed. Is the deal going tos stick . To prove theye can keep up with compliance. Nick there is the compliance that is always an issue. We will have to watch and see how that goes. In the big picture, we point to nash massive reduction in capex, meaning that 2018 and beyond, you start to see much lower supply going through than expected. Maybe 4 Million Barrels a day the slime downing. It is not just opecs, but all other points. Yousef for you see Oil Prices Moving . What you have in your forecast . Nick we are seeing 60 for an average difference the next year. That would certainly give the Oil Companies the equities a boost. Remember, you look at shale with almost a 70 dividend yield. There is a dividend story. 6 dividend yield across market. There is value support as well. Yousef what are some of the other calls you have for europe off the back of reflation trade and now, Higher Oil Prices . ,ick we are bullish on autos cyclical demand coming back. If you look at consumers across europe. Area, we supportive look at construction. About alternative away from energy and the inflation trade . Nick on the contrary inside, i would look at health care. Pharmaceuticals performed corley, they have cheap valuation, valued low where defenses are. And cyclicals. They are looking at cheap multiples. That would be a sector left behind by this big moving bond yields. Is that moderates, that to be a sector to look out for. Yousef plenty of stuff there. Take you, nick nelson. Joining us here on bloomberg daybreak. Still to come, we will continue to date into the story of political risk. The italian Prime Ministers plan to reshape the senate could cost him his job. We are live in rome ahead of sundays referendum to get you all the details you need to know. This is bloomberg. Yousef hits; 18 in london and 2 8 team in new york. Futures caught slightly lower. Off the back of stocks falling from their alltime highs, tech shares plunged. That overshadowed the rally we energythe bank and shares. Also the weaker dollar one of the key aims to watch off the political anxiety that has risen around the european mainland. Its crossover to the business flash. Grosseran investor bill says he is buying the postelection stock rally or the prospects for Growth Driving it. He says it is misguided. Donald trump also being criticized by mexicos richest man. He says americans have more to worry about than mexicans under trump. The president elect could cost the u. S. Its place as the world leader. If he is going to close the worlds economy, it is bad. If he is going out of nato and other international he has the risk to lose International Leadership of the United States. Theoward schultz, who built Starbucks Coffee empire over the past three decades and served two separate stints as eeo will step aside next year. He hands the reins to his top lieutenant Kevin Johnson, while keeping his role as executive chairman. Remain executive chairman, focusing fulltime on the incredible Growth Opportunities we have in expanding roaster is an building out our portfolio and on starbucks social impact agenda, which will be a significant part of the focus going forward. Wells fargo has changed its a separateequire chairman and chief executive officer. It marks the break from most of its u. S. Peers after years of failed abuses in the branches spiral into a scandal. An industry that has long fought off pressure from activists and shareholders. To block aa poised Chinese Company from buying German Technology company x only thewould mark third time in more than a quartercentury that washington has rejected an overseas buyer as a National Security risk. The white house has a say in the ixtron employs about 100 people in the u. S. That is your Bloomberg Business flash. Italy. Italian citizens will head to the polls to vote in the referendum on the constitution. A recurring theme throughout the program. Benchmark 10 year bond continued its rise in the last 24 hours despite concerns of stability of the nations lenders in the event of a no vote. More on the italian referendum story. Live to Francine Lacqua who is also joined by a key guest. Francine thank you so much. We are live in rome for full Coverage Today and on monday, the referendum on sunday. What is at stake is the political stability of the Italian Economy. I am pleased to welcome the capital to the program. A lot has been said about the once in a Generation Opportunity to make italy more stable. What happens if we get a no vote . Im sorry i am having a pregnant silence, but i am a bit concerned. Yes amly, i hoped for a rooting for it, italy needs to move forward. One things italian needs to do is a step forward. No areroclamation for a either doing this as a personal attack or even worse, they are discussing whether to put the for the left leg, or the right leg . At the end of the day, it is irrelevant. We have to go forward. If you dont, it will be sad. And the repercussions to the Financial Markets could be negative. The markets the last few days have gone down, the last three days have gone up in expectation yes waspolls where the getting a slight edge. But definitely, the markets are trading at the yes will win. The expectation is yes will win, but you dont know. Francine and we are in a blackout. The last poll was two weeks ago. What i am trying to understand fear . Hat does the market italy is no stranger to instability. Do they worry about the banks . Guest that is the prime concern of politicians, the government of the central bank of europe, it is not a concern of 99 of italians because they are fundamentally clueless. Most italians havent even read the entire document of the referendum, which is quite simple. I dont think there is one word which has more than five syllables. It is a very simple document. Francine he goes back to reform. We could have a whole debate. We could talk an hour about whether you should put these things to referendum, but the Prime Minister had no choice. You invest in companies and take them over, are there opportunities because of this instability . Absolutely, yes. I will give you a basic example. , wellknowncompany eyeglass manufacture whose stock price has gone down 90 because of things that happened outside of italy. And i dont see how an eyeglass manufacture could have gone down 90 in one year. You look at italian banks. If the yes passes, i think italian banks are off to the races. Especially monte dei paschi. Going back to corporations, i think the best deals are Unlisted Companies because Unlisted Companies, you have a lot of people who are really being taken by the throat by the banks. They have borrowed from the bank sent are unable to pay them. Mystic arctic opportunistic realities that exist. Even real estate. Francine the one thing we are trying to figure out is how this country starts growing. Is in charge wouldnt have these referendum problems if the country was growing. You see italy becoming more productive, more competitive . Growth for 2016 was anemic. Our personal forecast is any mix growth for 2017, also. The reason is because of this enormous debt overhang. Italy has over 2 trillion euros of debt and it wont disappear tomorrow morning. One of the things dropped a very smartly did was keeping Interest Rates at zero, it has made it so that interest burden on that debt is growing slowly. Even if the gdp grows a little ratio isdebt to gdp going to come down. Is ane really need exogenous event to spark. What that will be, i dont know. Whether it is committing to buying monte dei paschi but we need something. Thank you. I am looking forward to an interview. And a key advisor. Yousef . Yousef thank you, francine. That is it for daybreak europe. Daybreak open is next. Stay tuned, this is bloomberg. Ive spent my life planting a sizesix, nonslip shoe into that door. On this side, i want my customers to relax and enjoy themselves. But these days its phones before forks. They want wifi out here. But behind that door, i need a private connection for my business. Wifi pro from comcast business. Public wifi for your customers. Private wifi for your business. Strong and secure. Good for a door. And a network. Comcast business. Built for security. Built for business. Hey, drop a beat. Flix . Show me orange is the new black wait, no, bloodline how about bojack, luke cage oh, dj tanner maybe show me lilyhammer stranger things, marseille, the fall in the same place as my basketball . Narcos, fearless, cooked the crown, marco polo, lost and found grace and frankie, hemlock grove, season one of. show me house of cards. Finally, you can now find all of netflix in the same place as all your other entertainment. On xfinity x1. Welcome to Bloomberg Markets the european open. Where we bring you the first trade of the day. I am anna edwards and here is what we are watching. The fate of italy and its Prime Minister hanging in the balance as the nation votes on constitutional reform. No encore for a lawns. Went again as he clears the way for 2017. Trump on tour. The victory lap begins as the
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