Column, theres your equity indexes, down for the first. Ime, led by the ftse ,enmark, iceland, switzerland all the currencies are rising against the dollar today, led by the sterling, up by three quarters. 4 10 of 1 , we are seeing long bond yields gaining across europe, belgium, france, austria, switzerland. Those are the final two columns. Just want to talk about some of the individual movers today. This is royal phillips, the Dutch Company that has agreed to put a majority stake in to its lighting for the Apollo Global management. A cutprice deal valued at roughly two billion dollars. Phillips will receive cash proceeds of 1. 5 billion for preferred equity for the 80 . Their shares are barely changed. Blocking the plan to go scale capital in china and in january. Thathief executive says accepting a lower premium offer from the u. S. Private equity firm makes sense as it is a safer bet. Macro data in the u. K. Including house prices where asking prices for homes fell nationally in december from the previous month. The seasonal average, up 3. 4 earlier. Foronal prices increasing the seventh year, next year, forecasting a 2. 7 increase. London home prices are having their worst december in six years. Followed by a weakness in the primary in the capital, likely to persist next year with prices falling 4. 3 from november. The property website saying that the operator in the bubble continues to deflate and sees prices declining by 5 in 2017. That is the National Prices on the monthly basis going back to 2011. Lets talk chocolate. The falling price of cocoa has investors turning the least bullish in years. This is what the chart shows, cutting wages on higher prices, reducing the net long position futures and99 options. That is according to cmt see data. That is the lowest, by the way, since 2012. Futures in new york have tumbled with crops in west africa. The output means the market is shifting from a production surplusto the biggest in six years according to citigroup, adding to the overhang, people are eating less chocolate in the u. S. And europe, which is one of the last consuming regions in the world. Healthier options at the same time, confectioners have reduce the size of the suites and are using more fillins. The results of costcutting measures like cocoa resurging through 2015. My favorite chart of the day. The u. S. ,back to where Abigail Doolittle has the latest. Abigail . Abigail hi there, mark. U. S. Stocks once again carving out a new record highs. The dow is again on pace for another record closing high, carving out an intraday record high as well. Slightly right now, the nasdaq is the laggards being dragged right now by tech and biotech. Suggesting it is more of a risk on flair, we take a look at the yields, the bonds, and along with the bloomberg dollar we are seeing a bit of the selloff as represented by yields training trading higher. Interestingly, rising rates are not supporting the bloomberg dollar index, which is down slightly, perhaps ahead of the fed. Some investors may already believe that the rate hike increase likely to come wednesday has already been priced in. Confirming the idea that all of this is more risk on the not, we take a look at the chart for oil with oil absolutely surging today. Up nicely after saudi arabia insisting that they will cut production more than previously agreed to. Nonopec members have agreed to cut and there is reason to believe they may continue to climb. 60 per barrel is being called the new normal. 5087, this is the longerterm chart on oil with a crash in crude it took oil below the 200 day moving average, telling us that the fire has absolutely disappeared. Back above that moving average it has been tested a few times and it suggests that we could see oil climbing right up to that 60 per barrel, perhaps the new normal for oil. Thee will see of that is way it goes. Appreciate it. Lets check it check in on first world first word news. Donald trumps choice for secretary of state may have trouble winning over the confirmation because of his ties to russia. Rex tillerson has ties to russian president Vladimir Putin. Kellyanne conway, trump advisor, spoke earlier. Want someone who is accustomed to negotiating, because he has been an oilman, he has been in the middle east e ares not like he and putin are pounding down beer at the local bar. Marco Rubio Marco Rubio said that being a friend of putin was not an attribute you was hoping for from the secretary of state. From, slamming the expense of pentagon weapons system. Saying that prices were out of control, adding that billions of dollars could be saved on military purchases once he takes office. That includes shares of Lockheed Martin today. Last month the pentagon said that they would need up to 430 million more to finish the development phase. The u. S. Supreme court decided not to pick up a battle over sales taxes. Retailers toernet turn over Customer Data in an effort to get shoppers to pay sales taxes that they oh. A Retail Industry trade group the that they violated constitution. Turkey is still reeling from the aftershock from over the summer. An annual rate of 1. 8 , its the first time in seven years that turkey has announced contractions. Recent announcements are the consumers are spending more in the fourth quarter. Global news, 24 hours per day, powered by 2600 journalists and analysts in 120 countries. Im courtney donohoe. This is bloomberg. Mark . Mark oil prices surging, pushing up the outlook for Global Information inflation. 2. 5 for the First Time Since october 2014, just two days before the fed widely expected to announce a rate hike. Joining us now, market, global strategist at j. P. Morgan, a 100 probability there of a fed rate hike. If the fed is to surprise us, if their chair, janet yellen, is to surprise us, where might the surprise lie on wednesday . We are not expecting any moves. If you go back the last two or three years, the markets have been consistently priced below and now they are dead on where the dots are. We think there is a twoway risk pricing around is not those dots. The market is clearly moving into an inflationary bias and we think the fed will be more reserved, using language like what the new administrations actual plans are. To would remain for the next year. We had a guest on earlier, mark, who said his own forecast was one next year. He thinks that the economy will pick up speed in 2018 and also that donald trump will be able to nominate the number of fed governors who he thinks will ultimately end up in a more hawkish fed. How does that align with your thinking . We are down for two dots next year. The way that we are thinking about it, we have had this very, very low stable economic growth. The risk is in adopting a more expansionary policy. When the employment could condense the next phase of the economic cycle. 2017s Recession Risk is very low, bringing forward that latest cycle. That is on the late stage of the regressive. Ing more not really one for 2017. Julie how does inflation play into your forecast in what you think the fed will do . We are seeing a pickup in fed pricestions, with oil going higher. Yes, fed doesnt look at that directly, but theoretically it should have some speed through and spurring inflation. Is that going to be a limit on growth as well . How we seenk that the inflation profile for the next 26 months is that there is a basis in the rally from the oil price coming through that is a key one. Will some headline pieces move upwards of 3 . But the core inflation dynamics right now from the fed will continue to grind higher, 1. 7 percent. You can see that moving towards around 2 at the end of next year. On Inflation Expectations with marketbased measures, you can see that. See are manyt measures of the Consumer Price expectations picking up to the same degree. Measuring consumer confidence, they are noticeably fewer in expectations for sure shortterm and it remains quite subdued. Julie it seems like we are seeing this very crowded thing shorting bonds in the u. S. Is that something you are all ascribing to as well . We are underweight u. S. Treasuries. We think that the rains that we are looking at, europe could move slightly higher, maybe two and three quarters. The clear reaction right last week was a fake taper. Can keep aof setting lid on the 10 year yields, two to three quarters. If we move any higher, i think that starts to become a bit more of a consensus of risk assets, where we see equity struggling while the 10 year yield gets around the 3 . Thats an important dynamic to be aware of. ,ark we had a survey, mark among economists, saying have we seen the end of negative rates in germany . Of forecast was for the end 2018. They say yes, yields will be picking up slowly. Have seen thee end of negative yields . This is a tenure path on the german curve. Post ecb . Post the fake taper . I think that we have. Going back to the middle of the summer and the concerns that markets had in the banking sector, it feels like most major Central Banks have learned the lessons of those concerns. Thinking about the ecb trying to introduce other measures to help the banks, we think that if they were able to produce lower rates and a weaker euro, it was a net positive for the banking sector. Hence we dont need to worry about whats going on in italy . Mark our case is that they are ready and clearly we have seen the mbs renewing their appetite for a privatesector solution. The state is really in the background. Mark the most instructive thing from the weekend, for me, was finally talking about not ruling out a state solution. To the germans, they are most condone a state solution and thats a pretty informative comment. Mark mark richards, global strategist at j. P. Morgan athens match management. Ande coming up, protests strikes in greece as they review their bailout deal. We will get insights from the greek minister of the economy and development, next. Mark five from london, im artan. Counting down to the european close, just about 40 minutes away. Julie im julie hyman. Lawmakers approve the countrys budget for 2017. The Prime Minister will meet with Angela Merkel later this week to review the bailout plan. International economics and policy correspondent, Michael Mckee, is standing by right now with the greek minister for economy and development. Michael thank you. We are here with some one has been in office for only two months now. Dimitri, lets get right to the whole issue on where greases, financially. You cant survive without additional bailout funds and those cannot be granted until the latest review of the program is finished. Will it be done by the end of the year . Our timetable is to complete the review by the end of this year. For us that is very important because once that is completed, then of course the greek bonds will be reliable, subject to be eligible to participate in the ecb. For us it is very important, this process. We will negotiate in good faith to be able to complete it. There are some difficulties , not everybody is happy with it, but we will see. Michael one of the difficulties appears to be that the institutions seem to be demanding additional reforms that will keep your primary surplus targeted at 3. 5 , which the greek government has called unsustainable. Its true. Even though i think that with the economy turning around, those primary services will become much lower. The difficulty is the incompatibility with the ideas of the imf, as well as those of the european leaders. Suspect thaters greece is on the road to recovery. As you know, the latest statistics indicate that we are about to turn the corner. In terms of experts and in other , therefore i think that we can complete the program in 2018. We think that greece will be able to go to the markets and be able to operate normally, especially when we are part of the quantitative easing as well. Call,f has, what i would not the courage of their convictions. They believe that the primary service will be 1. 5 and that it should be a restructuring of the debt. Saying that we have to take additional measures. This is a very uncertain world. To make these decisions in 2019 and beyond, thats beyond what anybody expects to be the case. Far. Hey forecast that so the imf has been spectacularly wrong. Michael the call for additional fiscal measures, like additional pension cuts, dealing with nonperforming loans, the euro group wants to open closed procedures for the removal of barriers for investment. Will they have the Political Capital to be of tomatoes reforms . Me tell you that this government has passed more changes based on the oecd recommendations than any previous government has ever to do it. Some of the accommodations make no sense. They are not really progrowth. They are basically ideas that the imf has put forward because that is basically the dog pound. As we know, most of these have been recommended in other countries and have failed. Two, there are more reforms that take place, but we have to be very careful. Reforms that actually lead to growth, lead to prosperity, you inequalitymits the that happens all over the world. Think that the government is going to do what is right for people. Michael you are a very well economist. Lknown looking at the budget passed this weekend, based on the forecast of 2. 7 growth in the coming year with additional reforms bringing additional ahead, howad can you square those . It is based on the cuts that have already been approved in the 2015 bailout program. There are no additional austerity measures or taxes. We have simply simplified attacks and committed at this time to remain constant for a number of years. The idea for us to create fiscal space, lowering the tax and being able to have the private sector be attractive to a degree for investments so we can actually increase our exports and the Foreign Direct Investment as well. With other things bring us back to recovery. Michael do you believe that that number is achievable . I do believe that it is. Its a realistic edge it and it is the first actually budget that includes growth rates of 2. 7 . Iss not forget that this not only the governments projections, but also the European Commission projections. They have a much better idea, having been involved in the last six years. Michael global bond yields are going up, that has to hit greece hard. Yes, but our own yields of and dropping. We may say we are against the grain. Michael on a relative basis . Dimitri it is a positive sign and i think thats important. Michael thank you for joining us today. Dimitri my pleasure, thank you. Thank you to Michael Mckee very much. Mark . Mark still ahead, giving an update on the statement, the government budget for next year, you can watch that on the bloomberg. Live from london and new york, i mark barton. This is the european close on bloomberg markets. Thee were all mark s p rose every single day last week. Biggest weekly gain since the beginning of 2015. Oil stocks rising on the back of the opec on saturday. Have a look at the currency board to see how some of the major crosses are moving up against the dollar, the euro and the pound. You with the german 10 year yield, highest since january. The closes four minutes away. This is bloomberg. Mark this is the european close. I am mark barton with julie hyman. Two Industry Groups rose today, oil and gas on the nonopec deal in vienna over the weekend. Utilities, the others all declined. Its the third decline in six days. Sinceggest weekly gain january 201512 Oil Stocks Rose on the back of that opec deal. Sinces for the first time april 2015. The oil and gas index fell to the lowest since 2003 on january 20. It has rebounded by 40 . Lets get to some of the individual corporate stories. Gains,he biggest ever its also a record high as well. Pioneere agreed to buy global for 3. 5 billion euros. Will do is accelerate its growth in the u. S. And in europe. 22the way, this overseas billion euros in assets. Eightl be the number asset manager in the world. The chief executive said he wants to be a european competitor to lack rock in the u. S. Shares are up by 5. 4 . I want to come back to this that broke on a friday. Did century fox tabled this for sky, the satellite broadcaster. Up. Es shot this is a today chart. Now, nine pounds 73, so saythis wont people familiar. Its a key decision whether to make an outright offer or pursue an arrangement to structure that would involve u. K. And make it easier to mop up those smaller sky shareholders that refused to sell. This allows them until january 6 to make a final offer. They are working to sew up the deal sometime this week, earliest on wednesday. Shares are up right 23. 3 . Will conclude on wednesday. That will likely culminate in the second rate hike in 12 months. It will be the second in nine years. This is the Balance Sheet of the fed. The purple line is the boj. The ecbs decision to extend its Purchase Program through the end introduces 540 billion euros to be stimulus. That puts the Balance Sheet on track to exceed the fed before the end of next year. The race to the top, julie. Julie some might call it something else. Lets take a look at u. S. Markets. The dow is touching a record, just hanging on to that gain. It is up 48 points right now. Fromonly 200 points away 20,000. The s p is touching a record as well. About half as done point and the nasdaq is falling back as well. We have a the virgins groups in the s p 500. On top, we have energy shares. As well as telecom shares, they are both doing well. Telecoms and utilities are higher even though they are interestrate sensitive. You have Consumer Discretionary and financial. When you look at other asset classes, you got oil prices higher. Oil prices are higher by 3 in new york trading. You have yields in the u. S. Higher. Its a little bit curious to feed through some of the Interest Rates as we still see yields continue to move higher. Lets check in on the bloomberg first word news. Courtney has more. Courtney Syrian Forces have regained 98 of aleppo. The syrian the lee terry says rebels only have a tiny enclave. They launched an offensive against aleppo earlier this month. Renzis foreign minister is trying to form a new government. An italian new services reporting that he has arrived at the president ial palace in rome. The new government is likely to be sworn in deceiving. The European Union will sound out japan about a breakthrough in trade talks. The negotiations are away for the eu to underscore commercial importance. The european trade commissioner says she expects donald trump to scrap a plan once he takes office. Nine members of the Electoral College want to know more about russian interference in the u. S. Election and they have asked intelligence officials to brief them. Russia tried to swing the election to donald trump. Donald trump calls that idea in the ridiculous. Global news 24 hours a day powered by more than 2600 journalists and analysts in more than 120 countries, this is bloomberg. I am courtney donohoe. Mobil ceo is under consideration or u. S. Secretary of state. With two decades of dealmaking in russia under his elk, the kremlin is applauding the deal. Joining us from our moscow , and from outside trump tower is our white house reporter. I want to start with you here. You are outside trump tower. Youve seen people going in. When we hearing about this in terms of opposition already to this pick . Donald trump goes ahead and chooses Rex Tillerson for secretary of state, hes going to face a tough confirmation fight. Several republicans including marco rubio and john mccain are talking about their concern about him and his close ties to Vladimir Putin and the russian government. That is something donald trump is had to deal with and the idea that russia meddled on his tillerson,hooses rex he will face the same questions from democrats who have spoken out against this but also republicans including marco rubio and john mccain. Julie you are there in moscow. Tell us a bit about what how close ties are. Saint Kellyanne Conway over the weekend on the morning news shows that its not like theyre doing shots of vodka at the bar together. Theres a lot of room between data and other interpretations of how close ties are. Maybe you can give us more information . Its perfectly true that Rex Tillerson and Vladimir Putin are not bosom buddies. They dont hang out together. On the other hand, he has close ties to the kremlin and specifically to a very powerful and close aide to Vladimir Putin. He is head of the oil company. That has been over 20 years almost that he has been active in russia. His company is now one of the Major Players in russia. The only way you get to do that is cultivating Close Relationships with people in power. The does this complete putin dream team . Michael flynn as National Security advisor, james mattis in defense . Is that his dream team . Absolutely. The reaction with a news was being considered was surprise. Frankly, the light in moscow. When you look at those three people together, the contrast to the current obama administration, rama feels the russia feels a could do business with those three. Julie i want to ask you as well about this hacking situation. We have Mitch Mcconnell asking for an investigation. Has he been in touch with the Transition Team on this . Donald trump is been very vocal in saying he doesnt think it happened. Thehat we are hearing from trump Transition Team is he has not spoken to the leadership in congress about this issue. Ity are casting this aside saying this is another effort to delegitimize his campaign and his victory. They are focusing on other things. Something they want to spend a lot of time focusing on. I dont think hes going to spend a lot of time speaking about how russia meddled in the election. I dont expect to see those conversations going on between the leadership in congress and the trump administration. It seems like they want to move on quickly from this. Mark how was russia responding to this notion that it meddled in the election by hacking . They have denied it. Frankly, the message that we got in recent really left some room open. They could almost take pride in it. Vladimir putin in an interview with Bloomberg Television in said it was important that the information i got out. They kind of reveled in the damage it produced in the clinton campaign. I just want to close with you on who else we have seen it trump tower today. Carly fiorina. Rick perry. She is a potential National Security pick. He is spending a lot of time meeting with the people that he defeated in the republican primary. He is also meeting with ben carson today. Its clear that he wants to mend the fences of the Republican Party and bring in some people that he defeated like fiorina whom he insulted during the primary. It would go a long way to mending some of those fence. Julie indeed. Thanks guys. Mark the high of head of the imf faces a negligence trial in france. What punishment if any could Christine Lagarde face. This is bloomberg. Mark live from london and new york, i am mark barton. This is the european close on Bloomberg Television. French court has rejected an appeal for a delay in the negligence trial. Her lawyer spoke outside court after requesting the delay. That her immunity as director of the imf be lifted her she could explain herself in front of the court. She is willing to respond. She wants to debate. She is here personally and he and she will be. Its not a maneuver to escape the trial. I have to convince her because she wasnt very enthusiastic about it. We this other investigation to be over before going further. Parallax rom paris is the Founding Partner of the ftp. The trial is still going on behind me. , i am joined by the lawyer. Good afternoon. What exactly is Christine Lagarde facing here . 15,000 euros in fines and one year in jail. This is the maximum sentence. The you believe she will actually be found guilty and face jail time . I do not think she will be found guilty and she will not have to go to jail or even have to pay a fine. I dont think shes guilty. If she does have to pay this this0 euro fine, does jeopardize her job at the imf . Im not sure about the regulations. The possibility to appreciate to fineextent any kind of would prevent her from discharging this job. Think they will probably think twice before they would terminate her office. You think they would keep trusting her, even if she was found guilty . I think so. The charges negligence. Is negligence over these arbitration cases. This is a rare charge. Says this isarde an unintentional chart. Is that a convincing argument for the court . In some cases it can be considered criminal. Technically, it could. I dont think in this case it was criminal negligence. Theoretically, it does exist. Said another donetigation should be first. This delay was rejected at the court this afternoon. Lawyer hase each their own procedural technique. I think it when ever she did has nothing to do with what offenses has been committed by other people. She had a political decision to make. Hat is to authorize this authority taken when she started office. The decision was to arbitrate on an issue that already has been decided by the courts. Offenses have never been denied by a court when the operation has started. Court did reform a decision by the appellate court. She politically was confronted with the decision that could be considered sound at the time. Her chief of staff, we know that they were publicly supporting. Is this political . It would be difficult to say it is not political. It is strange that all of this happened as he stepped down from his presidency. I do think there is a strong political. Thank you so much. He was a lawyer in paris. The trial keeps going on. Thank you for a much. Its time for a berg business flash. Its look at some of the biggest business stories. They want to avoid a government bailout for the capital raising. They will step up efforts to investors for equity swaps. Theyve been trying to clean up the Balance Sheet by disposing of 30 billion in bad loans. They will sell a majority stake. Is 2 billion. Almost a year ago, the u. S. Government lost a transaction with a chinese ire for National Security reasons. They will sell almost 17 billion to iran. Its the first deal of its kind since 1979. They may have to sell the deal to president elect donald trump. Donald trump as opposed to the nuclear deal with iran. This clears the way for the boeing. That is the latest Bloomberg Business flash. Battle of the charts is next. We battle over the yield curve. This is bloomberg. Julie it is time for our global battle of the charts. We look at some of the most telling charts of the day. Assess k that access them on the bloomberg. Taylor riggs is right here besides me. Taylor we have been talking about the 10 year yield and hitting the 2. 5 range. That is a big deal. I will field want to take a look at the yield curve in general. A year ago, where we were when the fed raised rates for the First Time Since the financial crisis. Then we go down to the blue, which is the day after election day. We pop up. Were much steeper now on the white wine today. The 30 year is approaching the 320 mark. The 10 year is approaching that 2. 5 mark. A lot of people say the 10 year at 3 is more elastic. We are seeking over 200 basis points to julie what if he got . And eases permeating in chinese markets. We are talking about the fed in italy. Do keep one eye on china. Interest reduction of circuit breakers. It really rattled double markets. It reduced volatility. Have a look at what happened since then. Today alone, we have seen the shanghai index, the white ise go up 2. 5 the blue line in at the which is lowest level. One year sovereign yield raised by business points. That is the purple line. The question is, what is the reason for this synchronized selloff . Youve got donald trump questioning of the one china policy. Youve got the crack down on investments. You have concerned that update prices are about to fall. The big fear is making a return to what happens in january. The unpredictable nature of donald trump on trade policy only adds to the uncertain. Naturist largest brokerage. It said it was more worried about the money market now than givingthe 2013 crunch accelerating fund flows. As we approach the end of 2000 seeange, are we going to the beginning of 2017. Unease is very much permeating in chinas financial markets. See yes it was. Think chart scares me more. Im going to have to give it to mark today. China is a very important issue at, especially in this political environment. Thanks to you both. Taylor, comeback back and give us another one in one. Mark he is giving this up date on the budget for next year. He says the government has made no decisions on the Customs Union post brexit. They are expressed expressing concern. That is the end of us today. It we will see you tomorrow. It is noon in new york. I am julie hyman. David welcome to bloomberg markets. From bloombergs world headquarters, were covering stories from new york to the unit. Exxon mobil chairman Rex Tillotson is the front wanted to be secretary of state. Look at what this could mean for oil and the Energy Market nonopec member say theyre ready to deliver production cuts. From Dave Rubenstein who weighs in on the state of europe and the most recent deployment by donald trump. Mixedl we are looking at the dowhere. We have slightly higher which puts the dow on pace for another record close. The s p is trading moderately lower. At which time, did carve out another record high