Anna a warm welcome to bloomberg daybreak europe. I manus cranny. Donald trump with his First Press Conference yesterday, seven days until his inauguration and this is what he managed to interview as the ,arkets, the trump trade because of the lack of detail, we have a great quote from oscar wilde, in matters of grave importance in terms of physical, style not sincerity. Ofhas delivered a lack detail, and thats what the market has latched onto. His Donald Trump Style this is the dollar index. You can saven, but the trump mania trade has faltered. Anna show me the details is the market of the message the message of the market. How much does he cut back on globalization and what kind of fiscal stimulus, more importantly. Was that an unfair expectation . He was dominated by russia and Donald Trumps business interests, as we know. Lets show you where we are on overnight interest. The dollar index reflecting the questioning of the trump trade, more so reflected in the dollar against the yen. The en increasing the yen increasing. Lows we are on a onemonth , the dollar atmosphere is poor and there is a lack of policy detail. Volatility rising two levels weve not seen since 2013. I want to get the war started, that was the line that provoked the mexican peso traders as well. Weve got the s p futures in here to show that health care was one of the sectors that was really on the move during the News Conference yesterday. Weakness expected for equity markets in the u. S. A quick line on some breaking news, thirdquarter sales from , saying itompany will be 5 . The estimate was 40 are sent. They talk about full your profits facing challenges. Of 2. 90 6estimate billion. Strong numbers from the Third Quarter there. Market,n to the luxury and lets go to first word news. Trumpsidentelect donald s picked for secretary of state has said china must be denied access to the artificial islands its built in the south china sea. During his confirmation hearing, Rex Tillerson said a failure to respond to the countrys action in the disputed waters had allowed it to keep pushing the envelope in the worlds once strong united states. To achieve stability that is foundational to peace and security in the between for sentry, American Leadership must not only be renewed, it must be asserted. We have many advantages on which to build. Andalliances are durable our allies are looking for a return of our leadership. Shery a move could hit the Agricultural Sector with a tubulin dollar fall in annual sales. Meanwhile the u. S. Is said to be prepared to ill a complaint with the wto alleging chinese subsidies are suppressing global prices of the metal. Volkswagen has taken a major step toward resolving the initial scandal and has pleaded guilty in the u. S. And agreed to pay 4. 3 Million Dollars in penalties. At the same time, prosecutors are charging five executives in germany. Admitting using false statements to import cars into america and obstructing injuries when authorities were suspicious of the emission levels from diesel engines. Clear, volkswagen new of these problems and the regulators expressed concern, volkswagen up is gated, and they ultimately lied. Shery south korean officials have been questioning Samsung Electronics vicechairman as a suspect in a bribery investigation. While the de facto head of the Samsung Group was why of expected be called in for questioning, the fact that he was identified as a suspect was a surprise. Prosecutors want to know whether samsung and other Companies May payments to a confidant of the peace president for political favors and access. Brazil has slashed its benchmark access rate in it unexpected move. The board move to lower the to 13 . K rate by. 75 the move was predicted by just four of the 48 analyst in a bloomberg survey. The decision comes as policymakers ratchet up their efforts to jumpstart the countries stagnant economy. The governor of the bank of england has said the eu faces a greater financials ability danger than britain if the country leaves the brought the block abruptly. Warning of the need for both as he was quizzed by u. K. Mps. If there was not such a in ourion put in place, view, we will have consequences. We will work to mitigate those consequences as much as possible. Consequences would be greater for europe and for the u. K. , but there would be consequences for the u. K. Shery a former swiss banker has become the first order to become jailed, he was given 28 weeks in prison and fined almost 89,000 u. S. Dollars after being charged with 16 counts including not intoting to authorities two Bank Accounts that were suspicious. One person whos denied any wrongdoing is at the heart of the trial. Global news, 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. This is bloomberg. Manus breaking news coming in across the terminal on fast retailing. Netnd is better known , a nice comfortable beat. The market is looking for 54. 4 billion yen. Operating profit rose by 17 . They are nabbing the bargain hunters. Keeping prices low. The stores open in japan for more than he year fell into of the past three months, a 5 decline in december. Anna lets get the latest on the Market Action there. Good morning, juliette. If you look at this picture it looks mixed in asia. Thats what we have seen. The regional indexes tracking higher and holding on to the levels we have not seen since october last year, up for a fourth consecutive session. The regional index doing well today. Japan down by 1. 2 . The trump briefing starring a lot of risk aversion. Weighing into the nikkei 225 decision, down by 1. 2 percent. Elsewhere we have seen weakness in hong kong as well. The first drop the Hang Seng Indexes had in about six sessions in the broader index down as well for the first time in 11 sessions. Casino stocks coming under the most pressure. The australian and new zealand share markets have closed flat. Worth looking at the uptick in taiwan with a number of results coming through. Taiwan semiconductor coming quite a good boost for taiwan. The regional index Still Holding above water. Much therek you very from hong kong. Anna u. S. Director of National Intelligence said he told all caps that the leak of the classified report probably did not come from u. S. Spy agencies. James clapper said expressed his found this may on the claims appearing in the press. Manus comments came after trump mr. Had his first News Conference after winning the election. They looked at that nonsense that was released by maybe the intelligence agencies. Who knows. But maybe the intelligence agencies, which would be a tremendous blot on their record if they infected that. Because a thing like that should have never been written. It should never have been had and it should certainly have never been released. He also addressed his relationship with russia and the countrys president. Utin lifestyle trump, i consider that an asset, not a liability. Russia can help us fight isis, which number one is tricky. If you look, this administration created isis i leaving at the wrong time. Achieve currency strategist joins us here in the studio. And Stephanie Baker also with us this morning. Great to have both of you here with us on the program. Stephanie, he did not cover things that maybe simon and his , thingses wanted to see to do with fiscal stimulus and trade, but there was detail on russia and detail on his business interests. On the russian subject. This is not a story that is going to die and if he dismissed the dossier that was released and published by buzzfeed saying it was fake news and had a very Testy Exchange with a cnn reporter who tried to ask questions, since they have been one of the first news outlets to report on that. I think the interesting thing is that he managed to use that to deflect from the larger question of what is his policy going to be towards russia once he takes office. He finally accepted that russia was behind the hacking, but then flipped a few minutes later and said anyone couldve done it. His comments really contrasted with Rex Tillerson during his senate testimony, who took a much harder line on russia. Still did not manage to satisfy some of the senators like marco rubio the thought, dont you think russia is acting like a war criminal in syria . Of ifs raise questions they are on the same page. A remarkable comment by tillerson saying he had only spoken in general terms with donald trump about World Affairs and they had not really drill down. We are left wondering, where is russia policy going . How will they respond to the russian hacking . Manus the divergence between the propensity for tillerson to talk about policies and trump to say that is the shape of things to come. Of trade the qb terms with the dollar in the bond market. This had a real volatile impact in the markets. The drift continues lower this morning in terms of the dollar and perspective for the Day One Press conference . Next week, excuse me. Bothat was interesting was what was said and what was not said. Clearly what wasnt said, weve seen yields, and that has helped the dollar story lower. But there was a flip side. You mentioned clearly china and japan and mexico. Not once but twice. If you go back and look at what donald trump is had to say over the last 12 months or so, hes been very clear in his concerns about china, as a currency manipulator. Nation that gets an advance from what it does on the currency side. So you could say its been about trade and the advantages those nations get him and by the fact that he mention them several times, you could say hes been a target and he is promised to call china a currency manipulator. Maybe thats perhaps why we did yen anna the weaker reflecting the information. The other thing he mentioned was around his business interests. Thats what the press conference was supposed to be around in the first place. Is not divesting his ownership and is not using a blind trust, although there will be an independent ethics officer appointed. How much will this satisfy peoples concerns with the likes of people posting details on what he should or should not be doing in this situation . Far from some of the leading ethics experts, this is not going far enough to satisfy them. Really saying he needs to divest his holdings in anything short of that will not remove the issue, any possible interactions he has might be foreign partners trying to curry favor with him. Anna does it just smell wrong . If the rules dont say it, he might not do it. Henie hes think thinks hes going above and beyond what is required. For instance, one of the issues was is he in violation of the emoluments clause of the constitution which bars him from accepting foreign gifts are payments . What of the issues in relation to that is his hotel and foreign leaders booking himself in their has been question as to whether or not they are trying to curry favor with the president there. He said he will donate proceeds from that to the treasury as a way of going beyond that. How they will account for that is very unclear. There is no doubt that his business is very unique in terms of it is a branding and licensing business. As his lawyer said yesterday, he know that he owns trump tower and that these deals happen. They are tied to his name, so they are not easily disposed of. However, appointing and ethics advisor, how is that going to work . Who is going to pay for that . By just want to pick up on one of the things you mentioned, that the countries he specifically went after, a clergyman manipulator for china is one thing. One of the most immediate reactions, dollaryen is the highest since 2013. One expressive move of the pro the dollaryen. There is much more pressure on the currency. I absolutely agree. Even if you take my view with regard to currency, there is a little bit of an analogy to what with billironically, clinton in his first term there. If you remember in 1992, there was a rumor that he would target a currency integration. Inauguration, the mike benson comes out in mesa clear that the administration is going to target the lower dollaryen. Last administration to call china a currency manipulator. Maybe those numbers are a reflection of what could happen. Anna thank you so much for joining us, Stephanie Baker. Later we will speak to kellyanne conway, Senior Advisor to the president elect donald trump. That is at 12 25 u. K. Time. Anna and a hard brexit could be worse for europe than for britain, says mark carney. We break down his comments. Manus and a central bank slashes rates. The worst recession in the countrys history. Anna setting the tone after Donald Trumps press conference. We look ahead to what it could mean to u. S. Equities. This is bloomberg. London, to 6 22 in 22 in hong kong. 7 . Ang seng is down we are all meteorologists on bloomberg daybreak europe. Juliet can do the business flash for us. I think that is a polite way of saying it. Volume more than doubled the threemonth average. Its asias bestperforming stock this year of more than 280 after last years 90 plunge. Bloomberg data shows strong foreign interest with investors snapping up 217 million in shares since january 1. Consortium for Global Logistic properties, according to people with knowledge of the matter, the buyout firm has been speaking with banks and potential bidding partners about an offer for the singaporebased company that has a market value of 8. 5 billion. Assets in china, japan, the u. S. , and brazil and has asked for first round offers by early next month. Seeking vester backing for 13 billion offer, almost as much as its market value. Shareholders will be asked to into newhe conversion shares. This as the ceo attempts to turn around italys biggest bank after the stock dropped more than 45 last year. Thats your Bloomberg Business flash from hong kong. Thank you for clearing up the important meteorological details of the day. Lets get back to the central banking conversation. Mark carney has launched a new defense of the bank of england. Onon is still with us here bloomberg daybreak europe. Upgrades. T be which is great. This will affect the pound. My guess is probably not actually. If you look at todays performance, this is something manus has talked about. Over the course of the last 12 months, its reflected the other comments that mark carney made a couple of months ago on the reliance of the kindness of strangers. Manus the market disagrees with mark carney. He warned that brexit is a danger to the eu transition and agreed the consequences would be great. This,estion of the day is is theresa may a onewoman wrecking ball on the currency . She speaks and it drops like a stone. Given everything you know of history, is this building to a hard brexit . The reality is, looking at what is been said by theresa may so far, talking about where the red lines are. Suggest remaining in the single market. Then you have a waiting toward hard brexit and thats exactly what it is reflecting. If you want to look at the historical context, compare studies in the past 12 months to performance from november 1983 through 1985. That is what happened in. Some breaking news coming through on the Health Care Sector in the united states. Obama care repeal is a step , donald trump spent a lot of time yesterday talking about how hes going to set up plans about how they repeal obama care and replace it. He will get those moderate republicans to vote everything through. This is bloomberg. Wow, x1 has netflix . Hey, drop a beat. Show me orange is the new black wait, no, bloodline how about bojack, luke cage oh, dj tanner maybe show me lilyhammer stranger things, marseille, the fall in the same place as my basketball . Narcos, fearless, cooked 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. Anything with a screen is a tv. Stream 130 live channels, plus 40,000 on demand tv shows and movies, all on the go. You can even download from your x1 dvr and watch it offline. Only xfinity gives you more to stream to any screen. Download the xfinity tv app today. Anna welcome back, everybody. This is bloomberg daybreak europe. Its 3 30 in the afternoon in tokyo. The dollar weakness seen after the Trump Press Conference, the fiscal stimulus detail pointing toward some the comments that he is still making around trade. On the dollar,g it seems. 6 30 here in london. Lets look at some of the stories that have made it into this weeks edition. Manus volkswagen may have pleaded guilty in the emissions cheating in the u. S. , a story we brought to yesterday. It admitted to using false imports ofon vehicles and obstructing investigations. The prosecutors charged five sayinglkswagen employees they signed up for the script to duke regulators if questioned, delete documents and order disposal of hard drives. Anna next story is a fresh plea from the u. S. Finance ministry to avoid the need for preemptive angst on an interim agreement that delivers mutual market access, transitional arrangements to allow for enough time to implement the new relationship and access the talent. Manus and seeking investor backing for 13 billion euro rights issue, almost as much as the market value of the bank itself. Shareholders are meeting in rome today and will also vote on the conversion of every 10 shares after theew share stock lost almost half its value last year. Lets turn to the goal price because it is flirting with 1200 an ounce. Surged during his speech. We have the chart of the hour. Im on the edge of my seat. The story very interesting, and i love fascinating data, it tells the much larger story. Yearsrst quarter in three. The expectation of reflation, higher rates, stronger dollar, pressure on gold. With the election of donald trump, any political anxiety around the incoming administration, and some of the brexit news in the last few weeks. Love this chart on your bloomberg and get the extra context right here. What i have done is charted gold and 10 year treasury yields as well. You can see the latest rally around middecember of about 14 , in line with the interest we are seeing, up 13 . Found especially interesting are the calls from bloombergs top forecasters when it comes to gold. As monetarying tightening takes hold in 2017, 1 the key things you could be looking at gold price falling below 1000 an ounce briefly before climbing again. The last time we saw those price levels was october 2009. , a hongr key forecaster kongbased hedge fund, saying the same thing. Saying the credit bubble in china does not burst. So a tale of two stories as it always is with many of these commodities. Much. You very one man whos always poised to give you the market rundown is matt miller. We are honored that you are with us on daybreak. How is the dollar looking and how is your paycheck these days . Is all mine. Asure i switched over to euros when i came here. I was on the edge of my seat at i have chilled out now. Thats how traders fell. They were excited about the new trump presidency. They were excited about a stimulus, and that they would get regulatory and tax reform. Now they are starting to unwind this optimistic trump trade that started in november. Strength, theh dollar was, and now it has come off the last few days. They did not get the details they wanted and began selling the dollar against most major currencies. They also began buying treasuries. Weve been talking about treasuries rising two maybe 3 this year. The yield coming back down as they go back in. A threemonth look and the same as the dollar chart, rising with planssm over what trump to do, but now that they are not theing any details, optimism fades. Health care took a hit for a different reason. Donald trump saying maybe he would have Health Care Companies bid for u. S. Government contracts. You can see at the press conference, a big drop in Health Care Stocks in the u. S. Still optimistic about the industrials stocks that are hoping will cash in on the stimulus trade. Industrials stocks continued to rise but maybe that is because of oil, which continues to gain a bit of strength. You, matt miller in berlin. Us from bank of new york mellon. Lets start with the brazilian riel. , but this iste cut a brazilian surprise rate cut. Hardly anybody saw it coming. They must feel so lucky that they were in a position where they can do that. If you think about other markets , turkey is a great example, one of the fragile five four years ago. The currency heading lower. Here is brazil, the situation where relatively speaking, the currency has been stable and they can cut rates, also making clear they are ready to do more if necessary. It is not having the negative impact that has been seen elsewhere. Whether that changes, if we saw a resumption of a strong dollar, would be key. For the moment at least, the fact that you dont have concerns about Dollar Strength impacting on the brazilian economy the way it did four years ago, i think is the same relatively speaking. Manus it sets the stage and 2017, many people said we come to the end of an easing cycle on a global basis. Its very clear that were Central Banks can help their economy, they will continue. Story intion stays brazil is dropping, in part the justification that they have been able to do this. Isto say that the cycle over, it makes no sense to me. Europe is possibly a good example and elsewhere, do you really think the story is over for emerging markets and the concerns there . I dont think they are. Turkey,u mentioned there are record lows on the turkish lira regularly. With inflation near 10 , we spent a lot of time yesterday talking about the standoff between the government and the central bank. Story, is the essential if you look over the last two or three years, the negative comments at of come out from the government on the subject of ,ate hikes have been so steady you absolutely know the pressure on the central bank to do terms ofr do as little hiking rates as possible is going to continue. Maybe they need a 100 basis point hike, but whether they will do it is a different matter. 30 since the movies downgrade back in late september. Manus theyve had the worst fiveday loss since 2008. Story as political opposed to an Interest Rate story, for me. How much more mileage is there . I was looking at the interaction between markets and the yield story and the currency. Ofyou look over the course the last four or five years, typically on the fiveyear spread it has been about 10 . I reckon that is your benchmark. If you go beyond that, i really tells you this is a genuine crisis and this is going to turn into something truly dramatic. If you see picking up yield at that point, it we will start to see a slowdown. Simon, thank you so much for joining us this morning. Derrick, chief currency strategist. Manus volkswagen has agreed to plead guilty to the emissions scandal. Prosecutors also announced charges against five individuals in germany. Anna the editor for european transport in germany is in frankfurt. Tom, very good to see on the program. Where does the settlement leave volkswagen . It basically clears the deck for them in terms of u. S. Thisatory disputes over diesel emissions cheating scandal. The focus in that regard now will shift to the individuals that have been charged. In terms of volkswagens future in the states, they are not going to be able to sell the vehicles, or at least they set they are unlikely to be selling them anytime soon, which will mean they are going to have a different set of lineup than in europe, where diesel cars are extremely popular. They also will have to rebuild their reputation overall. Manus they will indeed. Its interesting in terms of recovery in the stock prices. We talk about reputation damage. They have recovered remarkably. Widertalk about the implications for the industry as a whole in terms of regulation and market share. What are the wider invocations, post vw admitting they were guilty . Weakness ints out a the Environmental Testing regime. Basically what they ended up doing was taking advantage of the fact that theres a certain amount of flexibility built into the testing system. That,xposed weakness to and other carmakers as well as regulators have said youve got to start looking at ways developing or accurate tests. Secondly, diesel itself, while it provides good gas mileage, also produces a fair amount of environmental pollution. With theeing that paris and london smog alerts and regulators there are wondering how can they prevent that, and thats going to be something which everybody is having to look at for the regulators in terms of what are the standards and how you measure them, and are they strict enough . Us withanks for joining the latest on that story. Set the tone in his first and early press conference as president elect . We look ahead at what it means for the u. S. Equity markets. And Political Risk for europe. We look ahead to 2017 elections. This is bloomberg. Anna welcome back, this is bloomberg daybreak europe. Early morning in new york, a quick look at the futures, a little weaker at the start of trade. Donald Trump Press Conference sent many on a wild ride yesterday. A long way to go until we get to the u. S. Open. Lets get the bloomberg is this flash. Business flash. Johnson johnson has agreed according to be what knowledge of the matter. Are focused on value what would be a new unit and a deal could be finalized as soon as this month. A Johnson Johnson representative declined to comment. A former barclays director has been jailed for five months in the u. S. For passing inside information to a plumber for cash and free work. He pleaded guilty in july to offering information that was used to make 10 illegal traits, bringing in about 76,000. The plumber also pleaded guilty and worked with prosecutors. Hsbc will pay 45 million to settle pricefixing case in the u. S. Actionlted in a class lawsuit filed by investors on derivatives. Last months hsbc and j. P. Morgan chase work fine 520 million in the eu for rate ranking. That is your Bloomberg Business flash. Manus thank you very much,. Uliette donald trump has confronted to his biggest political challenges just a week before he becomes president. He said he will not divested his company but he plans to avoid business conflicts. Anna he dismissed the claims that russia has damaging information about him. U. S. President elect donald trump healths First Press Conference since winning the white house and for the first time said he thought russia did have the Democratic National committees emails in order to hurt Hillary Clintons white house chances. Aside from that, he push back against everyone when it came to russia holes that information that could hurt him personally and financially. He did that rue his famous media which is twitter. He said i win an election easily and crooked opponents try to belittle our victory with fake news, a sorry state. He targeted the u. S. Intelligence agencies saying they should never have allowed this fake news to leak into the public. Germany . Ving in nazi basically saying if you are not with me, you are against me. It looks like he will continue to use the office of the presidency as a bully pulpit as he sees fit. Have 500 companies spread across more than 20 countries with total assets worth 3. 6 billion dollars. He said he didnt have to do anything, but he is going to anyway. Mr. Trump i could actually run my business and run companies at the same time. I would be the only one that would be able to do that. You cannot do that in any other capacity, but as a president , i could run the Trump Organization and i could run the country. I would do a very good job. He said he will step down from all positions at the Trump Organization and his business will be placed in a trust managed by his sons. He will not divest ownership of company. Of the his attorney said that selling the company would exacerbate conflicts of interest and said he will not be informed of any new deals made by the Trump Organization so long as he is president. It goes some way to quieting some credits. The head of the federal golf saide of government ethics it was meaningless. On the Incoming Trump administration and the outlook for markets, lets welcome an investment strategist at principal global investors. They manage 380 6. 7 billion. Welcome to the show. Yesterday was the first News Conference that donald trump gave to the world. He becomes president in just over a week. From what you have heard in the past 24 hours, the market assumes it is light on detail, would you concur to worry that he didnt say more about fiscal, more about taxes, more about the banner headlines that have driven market . That wedisappointing didnt hear more. The market was clearly expecting something. We will get more details next week. Marketsurrent state, face markets are underpinned by government policy. Changes orany small even the lack of detail, you will get swift moves in markets and investor sentiment. Thats what we can expect to see for the coming year. Manus this is 10 year Government Bond yields and the dollar. This is the level he can invoke. Clearly that is just disappointment that he didnt say any more on what markets were expecting. It changes the discussion on , and i thinktion he will get some significant moves in the dollar. Them, do you buy into the Dollar Strength story around trump and a higher equity market around trump . It, from a into market perspective at least. We think the u. S. Economy, what happens is it will enable the market to believe an economic uptick is on the way. Whatever he does, unless its something awful, it should help push up dollar equity markets as well. I it is help the market realize it. The economic recovery is a sustainable one. Its been a virtual circle of rising wages, employment gains and consumer confidence. These are things that should enable the u. S. Economy to be strong this year. Manus there was a fantastic article on the bloomberg overnight that talked about many women who flip burgers overnight being approached by headhunters. About men and women who flip burgers. And donald trump talking about being the biggest creator the world has ever seen. But he will not be the biggest welcome her of immigration, perhaps. There are many conflicts for him. We seen recently is there wages were already broken before donald trump came in. We were looking at a tight labor market already. We can see the potential to a stronger market than was expected last year. Manus what fascinates me, he talks a protectionist game, make America Great again, bring the jobs home. As a macro to you strategist is, does the or doestor fact remain it have the ability to accelerate . It has the potential to move across the atlantic. You can see that with bond and equity markets. Everything is benefiting. I concern is really what happens in 2018. Any trader stretch and are put maybe if the market is disappointed by what donald trump hasnt done, that is expected to come in 2018. For emerging markets, its not a great thing. Thank you very much, we will talk later about europe. 9 00, the german gdp for 2016. An hour later, unicredit shareholders set to approve a Capital Increase. 12 30, the account from the last ecb policy meeting. President sr from fed culminating in a janet yellen town hall meeting at midnight. Manus up next, a Trading Update from a recruiting firm. Paul venable joining us. This is bloomberg. Few details of the stimulus plans. Stocks take a hit. Seeksitalys biggest Bank Investor backing for its turnaround plan. Shareholders me today. The highexit and street. Fresh data from the u. K. Retailers including tesco, marks spencers, and a sows. Have they felt the pinch from pound . Ding it is lumbar daybreak europe. The flagship morning show right here in the city of london. I am manus cranny. Anna breaking news coming in from various corporate surround the u. K. In particular this time of day. Tesco and thats coming in at one point 7 . Not fine pass the estimates as some in the retail space have. We have more sends and morrison us. Few moreng us a details on the Group Comparable sales coming in at 1. 5 . Beenis a is this that has trying to turn itself around since it prevailed a few years ago. We do have some exposure to the clothing lines that have been out of fashion in recent years but less so than some of the pure clothing retailers. Deflation was a theme yesterday. It was uncertain how much that tond or the pound is going impact them and whether deflation where the deflation story goes. We are seeing some of these big retailers fighting back again. The discounters have had a fairly decent christmas. Sales upcomparable 0. 7 . The estimate was for an increase of 0. 6 . Lets talk about marks spencers. They are indeed confirming their guidance. Home and like for like sales rallied 2. 3 . Of oneimate for a drop point 5 . Where did you go shopping for christmas . Marks spencers like for like sales on the food side of the asiness grew by 8. 6 of 1 significant outperformance in terms of like for like comparisons. And the ceo closed 30 stores in the late autumn and converted 45 of those stores over to food only. Marks spencers is 5 of the u. K. Food store business. Group sales rose by 5. 9 . Is outperforming like for like sales and clothing and home where they are doing quite well. Third quarter rose 5. 9 . Case the food side of things are helping at marks spencers. This is a food business but in a retail space they are around clothing. Performed well and the outlook is unchanged. They still see that they are in this Financial Year. Sales, they are up. Hayes,critical lines on total growth of 2 . Fees rose byr net 17 on the headline basis so set of not a bad numbers. Nestles raises by 17 . Conditions remain good. We will have that conversation with mr. Paul venables. To sort out how good, bad, and ugly it can be. Future suggesting we could have a weaker start to the trading day. Weakness in the dollar has been a theme since the trunk conference. We did not get anything on fiscal stimulus and we got a few tidbits on his attitude to trading partners and that was enough for people to start worrying about protectionism and the dollar was weaker. Pervasivebecomes most in dollaryen. There is no desire to lift yourself into the dollar yet dollaryen. Sideline this morning. The peso at. 1. 90. He talked about mexico quite a bit and said he wanted to get that wall built. Weakness for the Third Session in a row. Protectionism seems to be the same. Anna we have a sluggish start to trade. When we get there in a few hours. Lets get the bloomberg first word news for you. Tona must be denied access artificial islands it has built in the china sea, Rex Tillerson said. He said a failure to respond to the countrys actions in the disputed waters has allowed it to keep pushing the envelope and that the world wants a strong united states. The stability that is foundational to peace and security in the 21st century, American Leadership must not only be renewed, it must be asserted. We have many advantages on which to build. Our alliances are durable and our allies are looking for a return of our leadership. There are signs of growing trade tensions between the u. S. And china. That is as china is to levy and duties in a move that could hit the Agricultural Sector by as much as 2 billion. The u. S. Is said to be preparing to file a complaint. Producers are suppressing global prices of the metal. Volkswagen has taken a major step toward resolving the schedule and they have agreed to pay 4. 3 billion in penalties. Prosecutors announced charges against five executives in germany. Toy are you importing cars america and instructing inquiry obstructing inquiries. Manus south korean officials have been questioning [inaudible] identifiedat he was as a suspect was a surprise. Prosecutors want to know whether samsung and other Companies Made politicalt the for levers and access. Anna global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. More stories on the bloomberg terminal at top. We are seeing the yen higher against the dollar for four sessions and seeing the regional index in asia also higher for the past four sessions despite the fact there is weakness today in hong kong, china, and japan on the strength of the end. The nikkei to 25 falling by 1. 2 . Drugmakers not surprisingly daring a lot of the selling after donald trump said some fairly disconcerting things about the tech sector in his press conference. 5 of 1 . Eng downpipe this is the first loss in six sessions. Casino players coming under pressure in late trade. This is on concern that the macau revenue forecast maybe a little bit too high. Shanghai also closing out the session lower by. 61 but we are seeing a lot of fine come through in Southeast Asia markets. Also in korea. And that hasup kept the regional index in the black. It is holding at levels we have not seen since october 25 last year. The end is rising against the dollar. 114. 40 four. The korean won had a very strong rally against the dollar. The dollar index falling below the 50 Day Moving Average for the First Time Since donald trump won the election. Moving t of Good Movement coming through today. Manus thank you. We have broken the hayes numbers. The net fees for the company for the Second Quarter rose by 2 . Downees for the u. K. Were percent 10 year on year. Welcome to the show and good to see you. The bankng what of england governor is getting ready for possibility of movement. You are down 10 . Lets get into the u. K. , we spoke to you three months ago. What has moved, what has changed. Paul it is the same. We were 10 down and here. We have been sequentially stable. In the exit guidance we gave we were 7 down in december. Funnily enough, we are not seeing a lot of change. We were 15 down in london. Construction properties subdued and london difficult, thus further away from london you move into the sector. Not a lot of new investment going on. We are not seeing a lot of our clients looking to do a new i. T. Products project and infrastructure. We saw some improvement in the private sector as we exited the quarter. You benefited from the pound, is that something that has been the case whether you wanted it or not . Take no credit. When i joined 10 years ago, 75 of the business was in the u. K. And 75 is outside now. This Financial Year we expect assuming things stay where they of 30 benefit to the tune Million Pounds profit of sitting any weakness we have in the u. K. Because 75 of our business is outside the u. K. , we are still growing in europe and asiapacific. How much does that rely on the status quo in terms of the trading relationships . Paul we have had a nice, supportive backdrop. The has been the odd shock and then brexit has been the main one. The markets have been stable. We have always said give us about 1 gdp growth and we will grow our business Something Like 10 . We have continued to do that. ,ustralia continuing to improve strong growth and asia quite difficult. U. S. Is ok. What we do not want any of us is a big trade distraction disruption. That will lead to companies we had thinking about their investment plans. Are getting on with their lives until they see anything that comes out. City u. K. Has held the flag up for a transition deal. I want to dig deeper. Downaid the city of london 17 , it was a tough quarter. About clearing and there is a push in terms of the the of london to hold on to vanguard. What is coming through with the ceos that your main relationship people talk to, are they looking at plans about escape . All of those. Businesses have to move on. They have to play the field they are given. What we are seeing is all the Financial Institutions are beginning to build on contingency plans. You have to do that if you are ceo. In you have to make assumptions. It does not mean jumping the gun. Of hiring. Not a lot we are not seeing investing in the Financial Services industry and situations where people do leave and are being replaced and you have a lot of companies where there plans are ready to go, getting some of the structures ready. It does not mean they are moving jobs abroad. If we are getting not getting clarity for a few years, to isend Growth Opportunities not going to be in the u. K. , it will be in frankfurt and paris and we will lose out. Anna the problem for Financial Services businesses is they cannot wait until we get to the end of the negotiation process. That is why they are calling out and calling for this transition arrangement. What do those clients tell you about the importance of that transition arrangement whether we get one and whether that changes the timeframe, whether they have to pull that record, that emergency brake . Paul what any Business Needs is certainty. Businesses, if you like it, the best scenario is here are the rules and here is a here is two years to implement them. That is the best way to ensure we have a smooth transition. If you do not have some sort of time in which to implement the changes, the risk is that Financial Institutions decided is not worth taking a risk, it will be hard and we will move jobs now. We are not seeing too much of that yet. We have seen some, were seeing some institutions with all the structures and place and moving certain jobs. I do not think we will see new investment. It is pretty orderly. The good thing is if you are in the Financial Services are it is not like you had a fabulous eight years and now turmoil. Your already in cost control and used to dealing with change. This is almost in a financial type issue in theres lots of contingency plans being made. Manus looking at the Financial Analysis of your company. Taps tops that. We have trump and the possibility of trade wars. You have to try and look at the business through a number of different prisms. What rattles you about the possibility of this trade war between the u. S. And china . That can contaminate your business. Paul it could. You have to deal with the things you can understand. If you can tell me what the trade wars are i will think about what our response will be. I havent a clue what we will do. We will do with the cards we have got. We have a strong, supportive economy and we dominate the market place in australia. Accelerating from 7 in the previous quarter and every single spate state feels good at the moment. Are going to do is grow our profitability significantly. If in a year or two years time the market changes, we will react to that now. We are doing very well in china. Percent in this order. Up 17 in hong kong. There is still opportunities but other parts of asia are difficult. One of the things we are arective of doing, we surgically aware were we put our revenue investment and we are good at extracting profit growth. We are not a business focused on top line. Where more focused on profitability and cash flow. We are successful and our share price has reacted. Or twoou know a thing about job creation. When you hear donald trump say that he will be the greatest job creator that god has ever seen, do you buy into his plans for the u. S. , doesnt excite you because some of that might spill over into the global economy. Paul he is certainly a very confident individual, isnt he . And the more you here, the more concern to get. Clearly any large stimulus some serious significant risks over the long term. Years, itne to four should help underpin economic growth. At the moment for us and a lot of cyclical type businesses, the World Economy is in a good space. The sort of environments, you think about our business, a massive shock to the u. K. And we are down 10 but we are still growing, 16 countries growing by more than 10 on i am confident we will grow our business. Anna thank you very much. Paul venables, the finance rector at hayes. At tesco, Third Quarter u. K. Comparable sales excluding fuel and vap came in as a rise, of rise of 1. 8 . 1. 7 . Timate was for we did a line that it was 1. 7 . A quick correct on that. Anna lets get the Bloomberg Business flash. Juliette Johnson Johnson has candidly agreed with actelion to acquire the company. According to people with knowledge of the matter. Arey talks about focused on a unit that would house the research and Development Assets and a deal could be finalized as soon as this month. Johnson johnson declined to comment while a spokesman for actelion did not immediately respond for comment. A former barclays director has been jailed for five months in the u. S. For passing inside information to a plumber for cash and free work. Stephen mcclatchy plated guilty for offering tips that were used to make 10 in legal traits that brought in 76,000. Pleaded guiltyo and worked with prosecutors against mcclatchy. Hsbc will pay 45 million to settle the pricefixing case in the u. S. Over claims of price fixture fixing. Hsbc, jpmorgan chase, and credit ever code will were fined. Unicredit is seeking an investor a rise offer almost as much as its market value. Shareholders will be asked to approve the conversion of every 10 shares into one new share. The ceo attends to turn around italys biggest rank after the stock dropped more than 45 last year. That is your Bloomberg Business flash. Manus thank you. Our guest is from principal global investors. We had paul, this cfo from one of the biggest recruiters, it is a Global Company and he had a strong message, get on with business. How strong is europe for you, when you look around the world, europe seems to be doing its own thing at the moment in terms of accelerating. Agree with that to some extent. The european economy, there is some improvement. There will be significant critical risks. You have the french and journal german election and italy with potential early elections. And you have brexit. I would say the risk factors are pretty great. The risk factors are great and we talk about them often. We have seen 2016 was the year of unpredictable things happening. Will 2017 more predictable, do you think . There is a lot of talk about what could happen in germany and france. In germany people worry but Angela Merkel will stay as chancellor probably. Guest i have to agree. Of concerns, there is a lot distrust of polls. , it has taken away support from all the parties not just from merkels party. It is still leaving the grand coalition as the most popular party. I still think they will come into power and stay in power. My greatest concern is france. I do not think the pen will win. But the risk, there is a terrorist attack that can upset the market. Take, i want to get your one or two people have suggested this far that the ecb could be forced into either scaling back its stimulus earlier than rates, itr raising could be the grey swan of 2017. How great could a rate hike be . Think what we see toward the second half of this year, we will see further talk of more tapering. 1 we will see another step down in 2018 january. I do not think the european economy is there and you have the Political Risk. Anna we see some strong data about germany. Theation is building but rest of europe is still chugging along. You still have a lot of spare capacity. I would be surprised. I would not say no. Stand i am thinking that is likely. Manus china is the ever present risk for the world. If you look at the growth, if growth is [inaudible] the big question is chinas ability to sustain 6. 5 growth. Where does that fit in and how does that the one play into your thinking as the new currency off the leash . Thet what we are seeing at beginning of the year is china trying to respond to president elect trump, trying to tone down some of his rhetoric by allowing that yuan to appreciate. Overall the chinese economy has potential to sustain the 6. 5 growth. Much power over the economy. China is a stable area for now but a lot depends on 2018. U. S. 17 when the [inaudible] you can see movements and ripples. Anna the positives around fiscal stimulus and tax cut, that could be the easier wins o capitol hill for donald trump. The protectionist impulse rates, we seek concerned on the u. S. Site itself. Maybe the fiscal stimulus is greater than they were hoping and the u. S. Is not suffering from its over protectionist agenda come 2018. Manus risks could be rising going into 2017. Thank you for joining us. Investors,pal global part of the Global Investment strategy team. Be intailers are going to focus. Tesco and marks spencers, these are the key stocks we will be watching along with the state of trade along with richmond. Anna we get german gdp for 2016 and credit shareholders meet to approve the Capital Increase and stock split. Manus at 1230 u. K. Time it is the ecbs last policy meeting. How dovish was the meeting . We get a little bit of a hand. We will hear from the fed. Yellenting with janet with her meeting at midnight tonight. Anna where watching some of the u. K. Stocks. Tesco were up by 1. 8 . Are on track to deliver the full year. A bit sluggish at the start of trade. The european open is up next. Manus is on bloomberg radio. This is bloomberg. Guy what are we watching this thursday morning . With theks a fight drug sector. Pharma stocks are expected to follow their peers lower at the open. It is a big day for bonds as the u. S. And European Companies bump up against their averages. Will