Transcripts For BLOOMBERG Bloomberg Markets European Open 20161229

At an alltime high. The company has lost more than 40 of its value since christmas. Commodities come back. Run materials are said to snap a fiveyear losing streak but can the rally be sustained in 2017 . This is the european open. Were half an hour away from the european open. The second to last trading day of the year. A weaker session in hand when we get there. Asian session was positive and only mildly so and there was a negative story coming out of tokyo. Perhaps that is captivating investors minds in europe. 8 of anese currency up percent against the u. S. Dollar. We get a glimpse of some of those moves, the nikkei down by 1. 3 . Following weakness in the u. S. As well where we saw the s p under pressure, down by. 8 of a percent. 2. 3 . The dow falling yesterday as well by more than 100 points further away from that 20,000 mark. U. S. Futures looking sluggish fairly flat, i should say. The japanese yen is on the move as well. Of ahe end up by. 8 percent. Looking some nervousness creeping in as we head toward the end of the year. Word news. He first u. S. Israel he have reached another low after john kerry and Prime Minister Benjamin Netanyahu traded them over the stalled middle east process. John kerry said his policies were running a solution to the israeli conflict increasingly out of race reach. Coalition is the most right wing in israeli history with an agenda driven by the most extreme members. Is reallys do not need to be lectured about the importance of peace by foreign leaders. Israels hand has been extended and peace to its neighbors from day one. From its very first day. We pray for peace. We work for it every day since then. Has plunged the most on record falling as much as 26 , the most since 1974 after the companys Credit Ratings were cut following an announcement it may write down billions of dollars of an acquisition made by the u. S. Unit westinghouse electric. The firm lost more than 40 of its value this week. Italys finance minister has described the supervision of the bank as opaque. The boxing day letter to the troubled lender. In addition to a letter, some explanation would have been useful. The ecb said in the note that it needs a. 8 billion euros to bolster its Balance Sheet. Britains chief Financial Officers are turning optimistic but they are cautious. That is according to a report. It found the number of cfos are more positive about the prospects for the company outweighs those who are more optimistic by the most in 18 months but with two years of brexit negotiations said to begin in the new year, visitors are looking businesses are looking to stay flexible. Bank of japan has released comments and opinions fm its most recent policy meeting relating to the the session before christmas with one unidentified member admitting the inflation target of 2 remains a long way off. Another opinion says japan is at a critical juncture to achieve its goals but one mom member is more optimistic seeing a rise in consumption is evident. The Actress Debbie Reynolds has died at the age of 84 when day after her daughter, carrie fisher. Her son said the stress of his sisters death proved too much for his mother who was reported to have suffered a stroke. She started along side gene kelly and singing in the rain and was nominated for an oscar in the and single molly brown. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. Has foundck obama deadd trump after the after he accused obama of hobbling the new administration. Beadded he thought it would a fair transition. He was enraged by obamas direction that the u. S. Abstained from a unit a Un Security Council vote declaring israeli settlements as a legal. Following the calls from said they had had a very nice conversation. As president elect trump has taken an unusually activist role with interventions into Business Decisions and Foreign Policy he isust 23 days until inaugurated. What can we expect under his administration . We are glued to the latest tweets from donald trump as well as they give us any firm policy clues. What were waiting for what is your case . This toared reaganomics. There are big differences in your mind. That it iske to feel a basket of the nobles. Unknowables. Said, youhat he has will see a major impact event. If you see the Market Correction i believe the market could correct in the first quarter. You look at you points he mentioned. I think he can make america better. But great is a strong word. A lot of moneyst and strength. It is not a matter of [indiscernible] when you look at the reaganomics days when president reagan increase the increased the debt to gdp by 30 . That number is ray different now. Even and even bigger factor is the demographics. The working age population was 2 . Now it is. 5. By 4 . If President Trump influences policy about removing outside immigrants, workers from the isnomy i do not think he going to followup on this policy. There was a lot of rhetoric and his election time. His intentions are strong. Andill keep the u. S. Equity a better market to be in. A lot of what he has said cannot be done. We see some weakness coming into the dollar. Were down by maybe half a percent. And. 4 on the bloomberg dollar index. The strong dollar has been one of the themes towards the end of 2016. I have this chart here, very patriotic number, 1776. Important in u. S. History. The dollar index game gained 23 of 26 trading days. You suggest there will be some further Dollar Strength to come but is the market over doing the king dollar bet . The u. S. Is ahead of the cycle. 2015 aar in december said they were going to raise rates and i found it incredible. They eventually got one as we know. Are there might be for for rises. I think that will help the Dollar Strength. We have had three big dollar. Ycles thefirst one was from reagan administration. The japanese yen was forced to strengthen against the will of the economy. The second was in the latter part of the clinton era. When you had the. Com, the technology revolution. This third one, what is going to stop the tide. The only thing i can think can stop this dollar rally if they are forced to raise rates are you anna we might see the fed talking about this stronger dollar. Thank you very much. Coming up. Ftsi gets a record high, cfos are more optimistic. And from materials digging their way out of trouble. They are said to cap there first annual rise since 2010. Will the comeback continue . Materials digging their way out ofit has been a tough yr europes banks. How difficult will it be to fix their Balance Sheet . Plenty more. The open is just around 20 minutes away. Anna welcome back. This is the bloomberg market european open. Lets get the Bloomberg Business flash. Donald trumpelect is seeking to take credit for sprint to bring back 5000 jobs to the u. S. Amongsaid there were those who add workers. They said they intended to invest 50 billion in the u. S. Using a previously announced technology fund. We have a combination of sprint for 5000 jobs and that is coming from all over the world and they are coming back into the United States which is a nice change. And also one way this is a new company. He is a turf it guy. Shares roser overnight after the wall street journal reported the company is nearing a settlement with the u. S. Department of justice to resolve allegations of criminal wrongdoing related to faulty airbags. The newspaper citing people familiar said such an agreement may include being guilty to criminal misconduct and penalties as much as 1 billion. To cut a said the nothing has been decided. The doj declined to comment. And a legal fight to expand reserves. Venture found gas in the North Highlands although the size of the deposit has not been determined. Exxon offered to file to buy intraoil. They have gone to court to block the purchase arguing the price is too low. Yum brands is planning to three franchise it kfc business in turkey is part of a global shift away from owning its own outlets. It said in october it will increase its franchise restaurant ownership from 77 to at least 98 globally by the fiscal year ending 2018. That is your Bloomberg Business flash. Anna thank you. Britains stock market closed at an alltime record high. First day since the of trading after the brexit vote in june. A new report out this morning shows britains chief Financial Officer officers are optimistic. Need to behey cautious. The study found the number of cfos that are positive about the prospects whether the companies outweigh those who are pessimistic by the most in 18 months. There is two years of brexit negotiation set to begin in the year new year. Businesses are looking to stay flexible and that rebounded confidence comes from lower levels. Our guest is still with us. Lets talk about the u. K. , we higher. Ts are heading towards the triggering of teen 50. Shock andas a bigger we have been playing through it and we have seen the sentiment going to be positive. Be why did see could this happen . Theas in response to question of controlling the Free Movement of people and you said no. They suddenlyt decided one day i will pack my bag and leave the eu. It has not been driven by some kind of other motive. Youre still doing the same thing. I have been part of the discussions with some Business Leaders and political people as well. What i gathered from the leader eu and u. K. Have to understand it is in their interest to find a solution which is pragmatic which keeps things going. You talk about the demographics problem. Pragmaticd that outcome looks like from a british perspective might depend on who the leaders are in various parts of europe come 2017. Guest absolutely. I do not see a lot happening in terms of negotiations until the election is over. And markets, you have seen with trump elections. Everyone thinks the market is going to crash but the market kept rallying. Surprised that the market will carry on. You see this happening in the latter half of the year. This has not been much of a reflection of the u. K. Economy. You talkpoint in time, about when this starts, is there a point in time when, depending on how far out of of the you we end up, how hard brexit into being, is there a point in time when that is reached and investors say i will not invest in the u. K. Corporate because it doesnt have the potential it did before. Guest two the bigger thing is if the u. K. Is able to get a good deal with the u. S. And we have seen signs of that. Technicalities. Who benefits from this. , i thee an allout war chat think the chances of that happening are very low. Anna thank you. Stay with bloomberg since we moretalking conversations around the u. K. And brexit. We are minutes away from the start of European Equity trading. We take a look at the movement in trading. T and a we are minutes away from the start of the European Equity trading day. Six minutes away. We are expecting to see a weaker start to european trade. Lets look at some of the stocks that could be on the news move. Itsfrance cells 49. 99 of survey units to gates group. The value is 475 Million Euros according to a statement coming through from the French Airline this morning. The german engineering business saying they struck a Labor Agreement for all its plants in the United States. They are reporting this agreement between siemens and the labor union. Include thets rights of employees to form Work Councils and an establishment of a committee that includes labor union representation. Were focusing in on the Banking Sector in spain. One of the banks in spain is it has agreed to sell 20 of its hotels to apollo. It will sell for 700 Million Euros. Million euros in debt linked to the hotel. It sought to sell 32 hotels but now looks as if it is selling 20. Let lets look at t ee futurs as we head toward the start of European Equity trade. The asian equity session has been fairly flat. Around up by. 8 . So that is the handover we are dealing with into the European Equity market. The yen considered to be stronger this morning. This is bloomberg. Good morning and welcome to Bloomberg Markets european edwards andanna bloombergs European Headquarters in london. Moments away from the start of the european trading day. Obama callednt donald trump after the republican complaints about roadblocks in the transition process. Gold advances and the yen strengthened against the dollar creep inor jitters ahead of the inauguration. Uncertainty is the new normal. In 18sm at its strongest months. Caution remains the key word. That as the ftse 100 closes at a alltime high. The crisis continues for toshiba as its Credit Rating is cut. The company has lost more than 40 of its value since christmas. Commodities come back. Raw materials set to snap a fiveyear losing streak, but can the rally be sustained in 2017 . European markets opening up than for the second to last trading day of 2016. We were expecting to see some weakness at the start of the European Equity trading day and having a look at where we are in the ftse 100, we are dropping down from the levels we achieved yesterday. The ftse 100 closing at alltime high levels yesterday. A little bit of change. Since prebrexit vote. Mining stocks, a big driver behind the move yesterday. Today, a slightly different story, down. 3 as you could see in the early part of the trading day. Let us cross over to Sebastian Salek with all the details of what is on the move this morning. Slightly lower at the open, taking us away from a raising of the losses on the stoxx 600. Will we get there . And analysts we surveyed say no, but we started we will end the year at 366. Let us take a look at our sector groups. Here we are. Dragged down by the financials by. 5 . The Telecom Companies down by. 8 . These are your gilts, have a 1. 3 onint, and sat at those. A couple of assets to watch here. Looking at the ftse because that hit a new record high, part of what we are seeing with stocks advancing towards the end of the year. They are higher by the minors. Indeed, you can see the commodities racing higher. Higher byr zinc 1. 5 , the bestperforming metal this year. 2009. Ince on that note, let me talk you through some of the stocks we are watching today. First up, air france, selling 39. 99 of surveyor. The wall of that is 475 Million Euros. It is also ended a dispute with unions. France says it is seeking a productivity gain over five years. Asking for cfo union 25 to 30, according to afc. Nxess ag looking for a deal that will more than double the size of its at his business. Still pending in china and the pco, the atlas co sale could take place in the first quarter. Stop lower. Thank you very much, Sebastian Salek. A fairly quiet day, as you can imagine. Let us talk about japan because the bank of japan has released a summary of opinions from its most recent meeting. And kepted its outlook policy unchanged. On member said it is a long way to meet the 2 inflation target, another step that u. S. Growth may accelerate under the trump administration. For more on henry hoenig joins us now from tokyo. Good to see you on the program. This was the last year meeting of the year, so what can we from this summary. Overall, what was the message . Henry hi, anna. At the end of a difficult year for the bank of japan, it is sure to say that most of the Board Members can be described as pretty up beat, going forward. Most of them noted improving conditions such as a pickup in exports and the yen is quite a bit weaker. They noted improving strengthen the global economy, so heading into 2017, they have reason to be optimistic, even as the inflation gauge remains in negative territory. Were any changes to policy flagged . We see the way this report comes out, you said one member thinks this, one thinks that. Were any suggesting they could get closer to change in policy, henry . Henry no, there were knows ingestion the policy changes to come. Just a couple of months ago, the witheworked its framework sustainability in mind, and a majority of economists surveyed by bloomberg predict no further easing until at least the end of governor kurodas term, which runs through march 2018. Henry, thank you. Henry hoenig joining us. Sh, he had an interesting line. He was pointing out something some people might have missed, and suggests there was a big pivot in policy. The amount of money being spent by the boj towards the yield targeting policy. Has stepped away from the a little bit and has to stick to their annual pace of increasing jgb holdings 18 trillion yen annually. Where do you see the boj heading in 2017 . Manish they will continue on the 10 year. They will continue that. What we are not seeing, we are not seeing a pickup in inflation. It about to come to an end. Aims going to make it his to achieve the 2 target. We saw some acceleration, but it is gone. My point is that unless you see the inflation, you see the numbers coming through, bank of japan cannot back off and say they are not going to target yield. A weekend and researching commodities complex help the boj in its course . Manish if you look at, we have seen another round of this fiscal stimulus in china. That helps japan. If there is going to be a global exposition of growth, that helps japan. If you look at the nikkei equity index, that has a very strong correlation dollar jp buying. Clearly, repatriation of dollar earnings that to japan is going to make the Japanese Equities look better, but economies are completely different story. Of are mentioning in terms nominal gdp growth. We talk always about nominal gdp growth. If you look at the real gdp growth in japan, excluding inflation patterns, and look at gdp per capita, it is not as bad. You see 1 growth in gdp per capita, to me, gdp per capita is far more important than the nominal gdp. Nominal gdp is good for asset owners in terms of top lines. Japan,compare u. S. And if you look at the incoming equality, in japan, it is final. If you look at the world being held by 0. 1 of the population hold how much of the worlds income, that is 12 , 4 japan. Anna you have been drying parallels and trying to find the differences between economics and trumponomics. But the world in conflict with japan economically and the accord we talked about earlier on during the program. Where does the relationship are we going to see some conflict between the geopolitics of the u. S. And japan under trump, or is trump going to be more focused on his relationship with china . Chinah i think the u. S. Relationship will be more important. This is where the difference is very real compared to what happened in 1985. The u. S. Was able to force japan to receive the currency because they had won militarily over japan. They have not won militarily over china. Asna wants to put themselves a superpower. The rise of china also has been helped by the u. S. Because the reason the u. S. Embraced asia as a whole is because they were trying to win against the russians. , there is also a promise that when you become wealthy china is not sticking to their side of the bargain. They have their own reasons for not doing it. If the u. S. Is somebody who will be stable will destabalize them. They are not looking for expansion. China is looking to establish themselves as part of the u. S. , wherever it is. It is definitely on the path. Anna manish thank you. Menacing, sete the ceo. Digging their way out of trouble. Commodities might come back and ouare set to snap. Can the rally continue . After the Deutsche Bank drama and monte dei paschi problems of 2016, what does it next year have in store for europes banking trouble . Cfos. W normal for british we talked to lloyds cfo. Anna welcome back. This is the european open. Year,ading day of the this is what we are trading, some 12 minutes into the trading day, weaker on these dockets 600, down by. 4 . The ftse 100 down by. 3 . The cac and the dax also weaker. The recession in the United States, possibly more importantly. It down. 8 on the u. S. Equity session yesterday. Up by 10 , there was a negative flavor to what we saw yesterday in the u. S. With that in mind, important to point out that futures are looking pretty flat at the moment as we are a few hours away from the start of the u. S. Trading day, of course. Let us have a look at some of the movers this morning on the r function. 0, the mr member range returns show some of the mining stocks doing well yesterday and today again. That is possibly to do with a resurgence in the gold price we are seeing, currently up by. 7 , compared to the previous close. Others doing well as well, which ties in with the commodities theme and a mixed bag for the dow circle. Volkswagen also trading weaker, down by more than 1 . As i say, we have the gold price researching and the yen price resurgence as well. We head towards the end of the year and a lot of interest in 2017 and what President Donald Trump means for their strategies. Oil retreated from the highest close since july last year after Industry Data shows u. S. Crude stockpiles expanded, adding to the global glut. It has been a good year for commodities, set to cap their first and will rise since 2010. Gains in energy and metals such as zinc and copper helped boost the sector. Way to bloomberg commodity market index on the graphic has bounced back, it was weak, strong five years ago, and then we had these years of weakness, and once again returning because of a Resurgent Oil price, where do you see commodities heading in 2017 and where is the broad brush that will boost that will keep it in check . Manish they move in really long cycles. We have very strong. 2000 2, 2012, bullish. If you look at the larger cycle, we are it does not mean it will keep falling all the time. People start buying it. I am not very bullish in commodities. I think you are seeing a rally. Seeing 55 wti in the 60 range. Nonopecd by opec and agreement. In terms of metals, we might see more rally, but im not very bullish and metals. I would say that emerging markets clearly plays more on dollar story, because of obviously, since we are talking exporting of the economies will get some boost on Energy Prices and metals prices, but if you look at Dollar Strength story, i believe the dollar will be strong for the next year. Anna bearish for emerging markets. Are you focusing on any in particular . Is it the trades that were you in 2017 and focus their, or all that Dollar Strength . From theiven how far economy they are, i think the biggest story in emerging markets is india and we talk be monetization story and how it could have an impact on gdp growth and we have some of these coming in in q1 and q2. A shining example of gdp growth. It is probably going to be q1 and q2 next year. Anna interesting how it seems to have changed the narrative for the reasons behind the ation, z demonitization. Assessment of how necessary it was . Manish a corruption problem, absolutely. You cannot impose a Cashless Society on people. I see why he is trying to do that and there is a need for it, but if you use patriotism and shame as a big cocktail, people support that. You saw what happened in germany in 1940s. People were shamed to support the groups on the borderline and andted clothing, wall, everything, so people will support him. I do not think he is going to back down. Anna he survives this because he asks people to give him a certain number of months . Manish it will not be great for the economy and that will bring into picture whether it has an impact on the group given that emerging markets rely on funding. It could be bad for equity markets, gdp growth, but i think he will survive and double down because he is not going to bed down in the sense that it will be completely loss of faith. Anna thank you very much for staying with us on the European Market open. Up next, renzis italian referendum lost and trumps election victory. Should investors be expecting the unexpected in 2017 . We look ahead. That is next, this is bloomberg. Anna welcome back to the open. Let us get the number first word news. Here is Sebastian Salek. Trump told reporters at his monologue a resort that the pair had a very nice conversation, but in a tweet, the president elect alleged inflammatory statements and roadblocks which brought tensions between the two men into the open less than a month before inauguration day. Toshiba has plunged by the most in record in trade come up by 26 , the most since 1974, after the companys Credit Ratings were cut, following an announcement it writedown itsions of dollars after acquisition of westinghouse electric. It lost more than 40 of its value last week. Britains chief Financial Officers turning optimistic as they head into the new year, but intended to be cautious amid the cloudy outlook, according to a new report by lloyds. Its on a number of cfos more optimistic. Ofh potentially two years brexit negotiations set to begin, businesses are looking to stay flexible. Stay with bloomberg says he will speak we will be speaking economist. Chief Debbie Reynolds has died at the age of 84, just a day after her daughter carrie fisher. Todd fisher said his sisters death was too much for his mother. Debbie reynolds died along side played alongside gene kelly in the rain. This is bloomberg. Anna. Anna thank you ray much, sebastian. 2017 marked a year of maybe even italy. We dont know yet. In all three of those countries, the rising popularity of far right politicians disrupt the status quo. Should investors now expects the unexpected . Froms get manish singh capital. Which political upset the you foresee . I think theurope, netherland one is when im really worried more about, and that comes pretty early on in march. Europe, in u. S. At least, we have seen the Central Banks are moving into the background during the politicians are taking over, but in europe, you see the Central Banks will be very much in the foreground, and you saw that it was not a tapering, more a tinkering in terms that they increase. Central banks will be there to support. From a risk point of view, im not as much concern you see the bottom falling off because they will take action, but yes, politically, it could surprise us. We have seen a sense of populism and the reasons are there. People are feeling left out. Everything comes down to gdp growth. If you have Economic Growth going on, things are going well. If you dont have growth, that is when you have competition for jobs. Anna a lot of to both said that with unemployment rates as low as they were in the u k up a of the brexit vote and in the united rates at the time trumps election victory happened, a lot of people were surprised by just how tight labor markets were at that time. We did not have mass unemployment, it was not mass unemployment that led to the populist successes. Manish if you look at the way the elections work in france and germany, the systems are very different. Francepart system in which brings about a populist versus nonpopulist, you never rule out who is going to believe the polls, given our own reality, but a still think the chances much lower. Despite what is happening what is merkel and her policies, if you look at who comes if she goes, i mean, they are even from a left wing. It is supposed to be a centerright party, believe it or not, even though their policies are more central left. I dont see a big chance of surprise to me. The netherlands can be. Ultimately, what really is very bad for europe is that if somebody goes and calls for a referendum for the country to be part of the euro. So that is a bigger thing. The euro does not work. I think the euro is holding up recovery in many parts of the european economy. Anna if that is a risk, how can you say the ecb is there as a backdrop if we are talking about the existence of the euro, how do you find comfort in the ecb as a backdrop . Manish it will do all it can. They will be there and supporting the economy, but how it plays out, we dont know. Look at italy. They have talked about a haveendum, they said they the fivestar movement. The referendum will be advisory, so what does that mean . Interpretation of that . They had an opportunity to leave the euro. They did not leave. New politicians them the old politicians. Talkinghave seen people about how weak the euro and pound it next year. Analysts are most divided on record on euro sterling right now and how weak it gets, because it depends on who you think will feel the most pain i suppose next year. Manish that is true. Story of, the brexit negotiation or any negative impact from that is going to happen after the german election, so i dont see sterling set bring suffering as much. I think you could see euro weakness, so that could be a story. Anna think you for joining us this morning. Happy new year, when we get there. Manish singh. Up next, trump heads to the white house. How could the prospect of losing banking regulation impacts the sector . We will discuss that, next. 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. Anna welcome back to Bloomberg Markets, the european open. We are 30 minutes into the trading day. Let us see how things are shaping up. We are weaker across europe. The stoxx 600 down by. 3 . The dax and cac weaker. We see some of the mining stocks performing well, but really those related to the gold price doing the best as we see the gold price up i. 6 compared to the close. A few signs of nervousness. They weight 6 compared to close. A few signs of nervousness. Our top stocks stories. Another commodity german day, starting with the gold price and gold stocks. 2. 2 there. Gold is up for a fourth day, the longest in a most eight weeks. We saw it drop after trumps election. Nervousness following a few comments he made for the call for obama following discussions with the current president. So gold rising. The gold stocks rising with it, and from gold to steel. The worst performing sector on the stoxx 600 and the worstperforming stock in that index is a producer down by 1. 6 . Ore extendingn in jane murray. The commodity index, point to its first annual advance since 2010. Commodities in general. It is not tracking oil today. Oil retreating from its highest load since july of 2015. Expanded in the country, expanding the glut there. That is the longest run of gains in seven years. It is rising up for a fifth consecutive day. Regulation iseet something that is very much in focus in 2017 under a trump presidency. It is perfectly natural for washington to rethink it. He addressed the prospect of looser banking rules in an exclusive conversation with Bloomberg Businessweek editor megan murphy, featured in the magazines special Good Business edition. Thepmorgan jeopardized area. How much do you think we lost in the nine quarters after the lehman crisis . 20 billion, 30 billion. We saved 30,000 jobs and in doing so, we helped governments, cities, schools, states, hospitals that probably would have survived but for jpmorgan stepping up. I understand the concept that the American Public saw a disaster that was not their fault. Generally, it was wall street and washington. They have the right to say we want a safe and sound Banking System that does not take down my economy. That does not mean it is false to say that therefore all these world and regulations are good. They are unrelated. Whenever a bank wants, dont do it. That is not accurate. Some of these things, a lot of the things had nothing to do with the crisis, i mean, zero, pet peas ofhe certain democrats to put things in because they did not like it. It has the name of a senator on it, that was the bad part. Like barney frank and i agree that things should have been in there. Anytime you have done major legislation and major regulations, it is reasonable for people to look back, recalibrate, think it through, talk about what good it did, what damage it did, how it can help. Folks, we have not fault the Housing Market with mortgages. Because we have not solved the issue which is among seven agencies or Something Like that, people banks and other institutes are afraid to make marke mortgages to people with a prior bankruptcy. People with a prior bankruptcy it up or set of the time are perfectly legitimate. It was usually due to debt, disease, loss of job. It is not that they are bad person. Theuld look at some of rules and regulations of reducing credit available any system, but they do not create more safety and soundness. I dont want to bore you with the details about that. Doddfrank is not the bible. Ok . Even Chuck Schumer used to say to me that eventually, these huge legislations open up, we synchronize it, we reduced the negative parts, the costbenefit, while looking at the ultimate goal. It is important to figure out what you can do better as opposed to the kneejerk reaction that everything put in place is good. Tell us about minimum wage, one of your big pushes. You believe it is vital to growth. You have moved up at jpmorgan. We have a nominee for labor secretary that is one of the most open advocates against raising the minimal age and has been quite from about that. I dont think so. What he said is that the government should be very raisingabout its minimum wage too high, and it should be made up a local level. A lot of businesses cant afford california and new york can afford 15, but upstate new york probably cannot. States it is not against raising it thoughtfully that can help people. Im in favor of that. I would not be in favor of the federal government doing it at imposing real hardships. If you can afford it, i think your business can afford to raise it. Share the wealth of little bit, ok . I told the people at jpmorgan im more worried about the lower bid people them a higher bid people. Help society with the earned income tax credit. My example is that is what helps Small Business. If you are a Small Business and need wage at 10 an hour to get by and cannot afford medical, im not saying you are a bad person, this will really help you. You can attract better people to be paid more, have less attrition, and afford more so there are time, solutions to this and us raising it is a teeny piece of it. Talking about bank regulation. In europe, it was a dramatic 2016 for the Banking Sector. Crises at Deutsche Bank and monte dei paschi, to name a couple. Where do we go in 2017 . Let us talk about the Banking Sector with otto dichtl, who joins us on set. Were the banking story goes in u. S. And europe took different time frames to fly since the financial crisis. They are linked, arent they . The regulation story could link between banker it is donald trump on to set the tone for European Regulation just as much as the u. S. , do you think . Otto that is probably less the case. There are bigger changes in the u. S. Regulation that you could expect that there is some knock on effect to the point for mr. Dimon earlier that there are some areas where too much regulation was brought in. Im sure many people in the industry probably find some point where they would agree with that, so probably, there could be not on effects, but at the same time, i do not think, you know, it is likely, especially in europe, that, you know, all of the regulation has been put in place. That actually is not entirely finished or is still some finishing touches in socalled basel four and these types of things still being discussed that all of a sudden politicians would be willing to roll significant part of that back. Anna so that you think means that we do not do not think then that we see much bonfire of regulation in the United States . Otto personally, i would be surprised even in the u. S. It was brought in as a political project. I think, not only on them was a whirl side of the political spectrum, but i think, in many areas, really. Banking has not had a good lobby andmany years, in the press in the public domain. I would be surprised, plus, there is also the aspect that has a globalso aspect. Many of the regulations brought in over the last few years were agreed at the g20 level that there is global agreement. Banks have operations, especially the large banks operations around the world, so, you know, it is a connected situation that the u. S. Would all of a sudden just take doddfrank and tear it up, throw it out the window seems a little unlikely to me. Anna one of the structural problems that europe is described as facing is being overbanked. How overbanked is europe . His consolidation likely to be a theme of this year . Otto it is a funny term. Personally, i do not really know what that means. Anna more consolidation in the Banking Sector as margin pressure remains one of the big themes and Interest Rates are low relative to history if not relatively earlier this year. Some have suggested consolidation is the answer. Otto you can make that argument, and there are various markets where, i mean, there is still a large number of banks, and where certainly, from a purely industrial point of view, you can make that case, but i think the obstacle to that are probably coming more from the regulatory side these days because i mean, of course, a lot of the regulation that has come in is to prevent banks from becoming too big to fail, and bigbig in regulators too regulators and they would like more smaller banks, which are more easy to resolve, like, you know, even you mentioned, monte dei paschi, the thirdlargest bank in italy. Not huge, but it is already a big challenge, in terms of resolving the capital challenges they have, so i think regulators are not too keen on banks getting even bigger. Anna who are the banks that stand to gain the most from the move into digitization from banks . It is what they like to talk about when they have new products to push, and new ambitions in that field. They dont like to talk about what that will do perhaps to the branch network. Who stands to benefit . Otto i mean, the simple answer would be the quicker ones are a bit more on top of that issue. Losers, on the other hand, probably the more branch based business models. Banks in spain and italy, they probably have larger numbers of smaller branches and more to do. You could also point to savings banks, cooperative banks in germany, for example, or austria, where there is more to do. At the same time, i mean, i think with digitization in banking, youave have seen several rounds of challenges. First it was the advent of the internet and email, and internet banking, and then mobile banking, and i think it was always, with each of these developments, a thought that there will be the incumbent will somehow missed the boat and disappear. Reality has shown so far it has not been the case. I think banking business is still a very sticky business. People dont want to change their bank account and Bank Relationships that much, so i think it is a slower moving thing than some people here. Anna they you very much. Great to see you, otto dichtl. London. Us here in uncertainty is the new normal, it seems. Evencfos are optimistic though they intend to be cautious amid the cut economic outlook. We speak to the chief economist. That is up next, this is bloomberg. Anna welcome back. This is the european open. The u. K. Economy and focus now because optimism among chief Financial Officers among u. K. Businesses is the strongest in months. Nine in 10 say they face high levels of uncertainty. A study was compiled from a survey of 119 cfos. Joining me on the phone is ian stewart, chief u. K. Economist to take us through the details here. Good to have you on the program once again. Cfos entering 2017 in better spirits. Safety say there is coming up a load base. Big fall ina very confidence in this survey in the wake of the referendum and it has been it was weakening, which was taking place in germany and brexit was a real big shock. An interesting moment in terms of confidence. We now see a strong bounce back confidence that is much closer to normal nonrecessionary levels. I think part of the reason for this is that the early fears of an immediate and very negative reaction to brexit had just not been fulfilled. The economy has remained ysoutput and compani growth has run. Companies output growth has run. Anna how will that be expressed in terms of businesses putting their hands in their pockets and spending money, whether that is hiring people or investing in machinery and other assets . Is a few, i mean, this messages. One is confidence. The other is a continued view that uncertainty is high. Risk appetite has picked up, but it has not picked up in the family confidence has, so, i mean, in the long term, cfos remain quite concerned about the effect of brexit on the business environment, so i think some uncertainties around brexit are continuing to exercise a expenditurefects on for, so you have not seen for capex. Made a commensurate shift in spending plans. 21 ofou say that just cfos and think now is a good time to take greater risk onto their Balance Sheet. That is a reading that is well below the longterm average. 21 played up against something more like 70 in 2014 and compares to the lows of the financial crisis around 2000 nine. It is that kind of territory we are in in terms of that Risk Appetite measure. Ian yes. I mean, Risk Appetite is perhaps the key variable for companies because it determines their willingness to borrow money and to undertake projects to engage to makeertainties and spending decisions, so there has been a recovery. A strong one. When i would hope is out if we see a maintenance or the recent trend growth through 2017, that we will see Risk Appetite starting to catch up with optimism, but i think what the survey is suggesting is that the longterm uncertainties around brexit remain a drag on spending, even though it has not been an immediate downturn in your economy and has made people more optimistic about the shortterm outlook. Anna thank you so much, ian stewart, chief u. K. Economist for deloitte on the phone to talk about the report of the cfo u. K. Survey. Up next, we tech and on the markets to see what is moving. The ftse closed at a record high yesterday. What is going on today . Stay with us. This is bloomberg. Anna welcome back to the european open. By the start of 2016, amazon new it had a knew it had a hit on its hand with the echo. There is a lucrative Consumer Market for voiceactivated assistance in the home that google and apple can no longer ignore. The top five most viable Tech Companies are betting big on the success of virtual assistants that respond to voice commands. It started with the echo, which is powered by a digital assistant named alexa. How many championships has dan marino won . Zero. Alec baldwin has won zero will play. By april 20 16, consumer researchers reported that amazon had already sold more than 3 million devices. It was cheap, selling for the relatively low price of 180 a pop, but the real payoff was in amazons core ecommerce business. One of the fastestgrowing businesses or amazon and what it adds into the ecosystem that amazon has where they only have a bunch of traffic coming to this is aite, but chance for amazon to grab the traffic, which is not online. Owners are spending an estimated 10 more time on amazon. Com after buying these my speaker and amazon stock has popped more than 70 since the echo came out in the u. S. So it is no surprise that google wanted in on the action. Credit to the team at amazon for creating a lot of excitement in the and we have been thinking about our own unique approach, and we are getting ready to launch something later this year. That something was google home. It hit the market in october, priced 50 less than the echo, and loaded with googles own conversational interface, which put the elephant in the room. It sure is great to be on the mac. C3 has been out for five years now and debuted on the iphone 4s, but its use has been limited to the iphone, which could be a problem for apple because by some estimates, only 23 of your smartphone owners actually use Voice Assistant like siri on a weekly basis. Of a is so important category and amazon has proven there is a customer demand and it is a sexy new kind of interface for information that apple would be insane not to get out there with a product that is similar, but it is all about the implication, and it is also going to be a real disadvantage not to have been first. Apple was offers with the smartphone and tablet market either an back in september, bloomberg reported apple is pushing ahead with an echostyle competitor. We can all expect this month to keep growing in 2017 with idc broadcasting shipments jumping 130 to 21 million. Fascinating thought there. Let us check in on the market at and just today and tomorrow to equity Market Action this year of course. This is the suns picture we have for you on this thursday. Stock down by. 3 on the at 600. Seven thousand 91, coming off a record high on the ftse 100, which closed at a record high yesterday, now down by. 2 . Are underwater as well. Credit suisse down by 1. 9 . Re are group down wei group down. Others on the move, just sensing a little bit of appetite for some say haven assets as we head towards the end of the year. That is just an of your positioning, content about what 2017 and all of the politics have in store for us. Certainly increased appetite for the gold price up around. 5 on the gold price. The dollar against the yen we have for you as well. 116. 49. Yen, against for the u. S. Currency, going to explain why we see weakness in the japanese trading day. The japanese equity market certainly underperforming when it comes to the asian equity session, the nikkei closing by 1. 2 and the topix down by 1. 2 percent. Still a day to go in trading. Up next, surveillance. Francine transition tensions. President obama calls out call trump after the president elect takes to twitter to complain about the handover of power. Will retreats and european equities trade lower as investors closeout a volatile year for markets. Executive optimism. Are more positive about the outlook for their companies that may have been in 18 months, and the ftse 100 hits a record. Could brexit be good for business . This is bloomberg surveillance