Out answersto find as we discuss what he does next on the program. Where are the markets going and what will they see next on the next trading day . Is dollar looking at coming back a little, the bloomberg dollar index of hortense of 1 . 4 10 of 1 . To towards the london open. In the bond market, data out of at u. K. , watch out for that 9 30. Inflation data out of the eurozone as we work our way through the week. Things to think about there. The dollar back on the front foot and we are watching what is happening in the corporate sector. A quick heads up on the value. We are going to see a followthrough about we saw in asia, a policy start here in europe. Looking at the euro stoxx 50 around 6 10 of 1 . Lets catch up on the news you need to know. Here is the first word. Thank you. A staterun chinese tablet has said donald trump is pandering to be responsible attitudes after the president elect accused china of not stepping in to curtail the north Korean Nuclear program. The article was published a few hours after trump tweeted that china wont help with north korea. North Koreas Kim Jongun said his country was close to the lots of an intercontinental ballistic missile. After the first instance 2009, outputs cut have started trimming production to stabilize the market. Citingng to newspapers, kuwaits oil leader. To 2. 7 5 Million Barrels a day. Deutsche banks former coceo is restarting his career at a much smaller firm. Fitzgeraldng cantor as president , where he will help oversee expansion of trading and prime brokerage. He helped build deutsche into europes biggest Security Firm in two decades. Before stepping down in june 2015 amidst mounting regulatory problems. Singapores Economic Growth quickens to the fastest pace in more than three years last quarter as manufacturing rebounded. Months from the previous quarter. More than double the expansion estimated by economists in a bloomberg survey. Global news 24 hours a day, powered by more than 2600 journalists and analysts in more im juliettetries, saly this is bloomberg. Up itsina has wrapped restrictions on foreign exchange. Chinese citizens must pledge converted money wont be used for overseas purchase of properties, securities and insurance. Our chief asia correspondent is live from hong kong from us. For us. It is really starting the new year where the old one left off. They are quite concerned about the lx acceleration. We are not near at the record levels we saw year ago, with dollar strengthening, with rate hikes again this year, the yuan will come under pressure. Theyre trying to get ahead of the curve a little bit. The annual quarter of 50,000 to move out of the country was reset. Authorities already found a bit of a rush for the door, too early to find it that rushes on yet. This is why we see a countdown of more rules. Guy they have widened the currency basket as well overnight. Now a greater number of currencies in which the currency works against in china. We also seem fairly recent data out. Authorities ato, little bit . The pmi data for december, break it down for us. There is no doubt on the economy, it has stabilized. Up, anseeing pmi picking increase in factory game prices and the economy is on track for growth target this government has set. Is where policymaking policymakers wanted to be. We discussed the yuan and its potential for weakness. Still story in china is subdued, not firing on all cylinders. The Property Market bubble hasnt gone away. The debt story is one of the constants in china. The economy is in a sweet spot at the start of the year versus a year ago, none of the big underlining challenges have gone away. Now, but some big problems are being started for down the road. Guy thank you very much. I want to quickly show you this chart. Maybe a bit of fun, but a serious undertone to it. This is bitcoin. Look at the ramp up into this year from last year. The big question surrounding this market is chinese ires looking for a way out and maybe using bitcoin electronic currency as a way of doing that. Good morning, happy new year. China . Does 2016 get repeated . Beginningthat at the of 2017 . Last year, we were about to see turbulence by china. The chinese authorities spent most of the year reconstructing the sector, putting more money into the economy and it is paying off. Numbers are better than expected, manufacturing seems to be stabilizing. It is looking ok. 2017 is probably a story of stabilization for china. Guy so we dont have to worry about china, for now. That is an important point to make. How much cash you got at the beginning of this year is to this year . Luke we got a lot of cash. We have been raising the cash levels, just looking for opportunities is getting harder at the end of last year. With the election in november, that changed the market tone pretty dramatically. A lot of cash coming in gives us opportunities to look at. And right now, hard to pin down. Will be au think it theme throughout the year that you are going to sit on a lot of cash . Luke we are right, it is not about it is about picking the right stocks than individual stock selection. You want them and they come available and at the right place price. Guy is it a volatile year . Luke i hope so. We like volatility. It gives us a choice. Rather than, the market looks cheap or this is a directional trade. I hope we get that volatility, i think it is difficult for us to avoid it with the amount of politics around. Sit on it, yes. Guy looking for a little volatility coming through, one of the big trades obviously post november last year in the bond market, does that continue . Ofas reading, an awful lot ondit and very small section luke equities are procyclical assets, deflationary trade coming through. Still like credits, still like equities to a degree, but for government bonds, a gets hard. The u. S. Is going to lead us here. Forave been looking at 250 the last five months, we are already there. We have come back a little short, but we are 250. We got a little higher from here. But it may take until february when we see the shape of the budget from trump and congress before that moved really starts to accelerate. So call a january, wait for the budget, 250 now, how do you expect yields to go . U. S. 10 year, will we had 4, 3. 5 . Im trying to understand the magnitude. The market is priced in an awful lot. I guess youve got to look at a selflimiting factor. As we hit towards three3. 5, that will slow the economy down. The cost of getting investments higherthe economy that as gets go higher. Three may towards the top and where we go, maybe towards three and a quarter. We are going to have to see big moves on the fiscal front at the front of february and markets get behind that shift. Guy the u. S. Budget is the next big event for you . Coming up later, bloomberg surveillance talks about eurasia groups top risks in 2017. We are joined by great guests. The former u. S. Secretary treasury. Some really good guests. Also coming up on this program, business ways in. The head of britains five biggest trade bodies take a look input whenive their it comes to the brexit deal. And we preview the elections that will matter in europe this year. The referendum last your out of the u. K. , what do we expect in 2017, a complicated year ahead for the Federal Reserve. We break down what the Trump Administration is going to deliver. Four new voting members and trade policies. That is bloomberg. This is the open. We are now 19 minutes away from that market open. London this morning, it is 7 44 waiting for markets to open. A chilly day out there. Opening in 15 minutes. Lets get a business flash. Banned therea has sale of some cars made by bmw, nissan and porsche after the automakers had fabricated documents related to emissions test. 5. 9 million. A spokesman said they would cooperate with regulators, while bmw said the company will work on regaining its certification. Office have not answered. China has started a Freight Train to london as part of the president s effort to strengthen trade ties with europe. That is according to state news agencies. China railway court. The train departed from the in about 18l travel days before reaching the u. K. Capital, passing to russia, poland and germany. It will carry goods like clothings and suitcases. Spacex is expected to return to launches next week after a falcon nine rocket blew up on takeoff. Takeoff. An investigation concluded that one of three Pressure Vessels in the second stage liquid aquatint think failed. Oxygen tank failed. Elon musk called the companies most perplexing failure in 14 years. If you are going to be an expert, make it switzerland. That is a finding that says theign workers there have annual equivalent of 188,000. Highest in the world and almost twice the global average, the country also tops the expatriate career ranking for the second year. However, Previous Data relinks switch ranks switzerland close to last in cultivating relationships and the cost of living is notoriously high. That is your bloombergs newsflash. Guy thank you for the data. Out of france, this is my screen. This is the cpi number, the harmonized number year on year. 7, on a month by month basis, looking all right. The next chart, this is relevant to what the ecb is doing right now. This is core inflation, the white line. Remaining fairly stable. Headline inflation is picking up. The currency is coming down, oil is going up. There is some sort of the chemical effect that comes in to work in terms of the base effect, driving this line higher. The white line for the ecb is going to be spending most time concerned. Driving that number is going to be a challenge. The other number is a big negative in some ways. Lets turn our attention to the u. K. A country that is beginning to realize where inflation may be going. Britains five biggest trade bodies are urging the government to include their input in the printed negotiations in a letter to the telegraph, the you view the view of firms is crucial to brexit talks due to formally begin in march. The radically, as long as theresa may trickles triggers article 50. Leadernch capital could as many as 20,000 bankers from london. Still with us, how is the u. K. Going to play out this year . Luke it will be a year of transition. We will get article 50 triggered this year, no doubt. Parliament will approve. They are all just getting along with the job. They are living in the corporate marketplace where they have to compete. Sitting back and worrying about brexit every day is not a luxury they have. They are getting on with their job. It will be 20182019 report starts to hit them. Volatility ofe triggering article 50 and there will be a lot of talk of how the shape of it comes through the far end, we are so early in the process. If you are picking stocks, the longterm value is not going to make an awful lot of difference to your position today. You start to concern yourself in 2018, not 2017. Guy where are you positioned on the gilt curve . Luke were avoiding the 10 year area. The chances reflation coming through, but also cost pushing china, rising wages in the u. K. , under a lot of pressure earlier this year. Could give us another move gilt in the in u. K. In theld have a position long in, but the frontend is what is s be . Where will giltws bee maybe 2 , which would far from where we are. The banks will be enough worried about the brexit to stanhope this year. We are going to get lots of warnings from mark carney about inflation. But i think 2017 isnt the year it moves in england. Guy ok, we will discuss that later. Minutes away from the equity market open. Up next, a close look at the movers on the first trading day of the year. Eye on ryanair. The market open, nine minutes away. Start of trading in 2017 in germany, six minutes away. 11,000, equity markets getting a solid bid on the back end of last year. To they continue in 2017 . Focusock in germany in could be bmw, also in that list. Atth korea taking a look emissions and as a result, we are going to see halting of sales of some cars, bmw, porsche etc. , watch the german car sector this morning. Also, keep an eye on ryanair. Trying to nail this one down, but there are talks of a downgrade out there. Keep and i am that. We may see ryanair come under pressure via regulatory story. It looks like london will underperform today. We have the dax up around half of 1 . London only up 1 10 of a percent. Here that you go to on your bloomberg terminal. Equities dont perform this year . Luke reflation trade is right. Barclays says it will be earnings, not elections that dominate. His barclays right . Luke if we get a Constant Currency move they probably will be. It feels likely we get policy through currency. You cant put it aside. We would love to put it aside and go back to 2015, and i dont that think that is feasible. Guy plenty to talk to look about. Figure out where you should be decisions if Corporate Credit could be the real trade of 2017. Coming up, the market open. Pointing to a positive start on day one of european trading in 2017. That set to the the tone for the rest of the year . Someone wants to check their almanac, id sure they could figure out helpful stats on that. Isertheless, the market open four minutes away and we are expecting a positive, if chilly start here in london. 2017 kicks off in four minutes time. This is the market open. This is bloomberg. Keep an eye on the miners, will bit down under. That can be a tricky keep an eye watch carefully ryanair. An upward open on day one of the year. Barclays believes it will be here is the market open. We are expecting a positive performance from european equities at the getgo. We are up and running. Makerssee how the market deliver. We are expecting a positive pop. The ftse 100 is not doing that much there. But we are up by 0. 2 . Manus cranny, over to you. Manus only temporarily on hold. Equity markets are starting backtoschool with a fairly ess start. Fusel will the squeeze come in the u k in the form of inflation . This is the state of Global Manufacturing and it has a trajectory. There is europe in the purple relative to the rest of the world. Tonese data setting a nice to the market. The u. S. We are expecting that dated to jump from november. Europe expanding by the fastest pace since 2011. Germany rising and france for the most in five years. Europe is definitely starting with a better tone to it but what does that mean for the markets . Here is the stocks 50. It is overboard. 50. Ere is the stoxx just one facet i decided to pick up on this morning. The strength index is up. Longest running streak in a century. Hence the reason why i thought it was worth focusing in on. Stocks opening up there by 0. 5 . I am off to my radio show. Nejra has your stocks to watch. Nejra let us take a look at some of the movers today. Rio tinto some of the miners were called higher with some of the Industrial Metals heading higher especially copper. Rio tinto looking pretty flat here. Not too Much Movement either way. The London Stock Exchange group is not quite moving at the moment but what we had is lfc getting and your revocable offer lch for 510to buy million euros. It does look like it is opening down 0. 5 . On the other hand, we are seeing another Company Moving higher on some m a information. A Purchase Price of 218 million rea us rials. I wanted to keep an eye on some of the carmakers. Move at on the the moment on the information that south korea bagged several styles. Of 5. 9 million slapped on nissan, bmw, and porsche. Guy up to speed with the start of trading the equity space. More onet back and talk 2017, where are the opportunities on the corporate want to market . Corporate bond market . You are looking to pick up opportunities as you work your way through the year. Where are you positioning Corporate Credit . Cash intoinvesting oil, we have some great investments in oil from the u. K. , north sea oil users all the way through lng processing plants in the u. S. If you can spot an industry that is going through positive change on the cost space, that is good news for credit. We are also looking at some Big Companies with the Balance Sheets that are looking to buy growth. The time to buy those that is the time to get in. Some interesting opportunities there and in a broader sense, we are getting more defensive outside of that. Increasing our utilities, looking to decrease some of the more highly of the cyclical areas of the market. And some of the high yield areas especially european highyield. 600 is upean stoxx 20 . Give us a sense of Corporate Credit versus corporate equity. How does that relationship work . At times they work well and they move in lockstep. After we have seen the programs from central banks. Assets, the alternative starting to look more attractive. As yields go up and government bonds with equity look like they are going through a recovery phase and leverage starts rising, those are risks to corporate bonds. Attractivetill looks but the risks are starting to build then and worry as. Moving more to defensive holding, higher levels of cash and being up being opportunistic. I think that is what 2017 will be about. Guy you said something earlier about the relationship with politics and currency, is that a current currency trade . Is that a growth trade driven by the u. S. Or is it a stronger dollar trade having an impact on european exports and the potential fallout . Currency is in there. The euro will come under more pressure this year. Inflationary numbers are a little higher that nothing to move the ecb towards a tighter start. We may get some tapering with that. The currency will continue to be under pressure and it will help european currencies recovery. U. S. Growthe pattern in improving, it is a good time for european equities to look to move higher. They may be expensive but as we look for a longerterm perspective, it is there. You would have thought within the first term of a donald trump presidency, youre likely to see that happen. The market at the moment is pricing in reflation. When does it start to price in recession . Back to the come budget. It is if the fiscal stimulus is not as big as the market is expecting, maybe it is focused more towards people with money rather than people that do not have money and their propensity to spend. Everyone risks i think could face in terms of equity markets and credit markets. Up prior torun february. The kind of numbers needed to support the market moves that we are seeing now. Guy if i am sitting at home watching this right now, and i have got money that i need to taking and i have been out yields of one if i am lucky or 2 in the last few years, is that period gone and is inflation back . And will i be compensated for it . Aboutsibly, it is more moving towards the end of monetary stimulus which is what is driving you down towards 1 or 2 . Do you invest in government safe ons or equities . In government safe bonds or equities . Investment, great last year. 10. 5 . Guy you are an income investor. Not so great. That changes as we move into fiscal stimulus because it tends to be more inflationary. Where you spend, save, and invest will probably have to go into assets that benefit from growth and not from lower Interest Rates. Guy we will talk about which risk events is giving investors the biggest amount of concern. Could a european political surprise trump trump. Outlook isss buoyant. We are joined by a guest from lloyds. Kuwait capping output. Will others follow . This is bloomberg. Guy welcome back. Youre watching the european open. 12 minutes in. This is the picture as you can see. 600 is in a bull market. We are up by 0. 7 . At 7182. 100 trading as you can see, european equities are well did. What is rising are well bid. What is rising this morning . Suisse. And some of the oil stocks as well. Isg doing reasonably well. Ryanair, a little softer this morning. We have seen some downgrades. Watch out for the inflation story and what will happen with gold. Luke, let us talk more about political risks. You have read all of the different articles and most of them seem to mention Marine Le Pen as the biggest risk in 2017 lyrically. Would politically. Would you agree with that . Luke yes, but i do not think she will get in. That will be on the radar. But i think the german elections will be more interesting. We have seen reports today that Marine Le Pen will have to finance her election campaign. I think that gets really difficult to do. The costs of a campaign these days is pretty high. Donald trump had to put up a lot of his own money to get there as well. Financed hemp said he did it on a small amount of money relative to history. Maybe Marine Le Pen can repeat that. Main you have the three political players in europe all facing elections with italy, france, and germany. The italian one is not official but we know it is coming. They are getting more skeptical about the european project and that will worry investors greatly. That the euro relies on confidence. Area, and the way the euro works in the European Union works will continue ad infinitum. If people start worrying that is not the case, that is an enormous risk event. We will all be watching european politics again. Is that going to put off u. S. Investors . They are pretty skeptical about europes ability to carry on with his current political structure. The architecture will change they believe. Will they be looking at europe and saying we are not going anywhere near that or will they say your is going down in the dollar is getting stronger, corporate profits could be a little stronger. The rational part of my brain is thinking this could be a bonus for europe in which case i want to piece of that. U. S. I think if you are a corporation looking at where you invest around the world, you will have a lot of action at home in the next year and potential he have a lot of repatriation of cash back home. That is going to be a lot of focus at home. They cannot ignore your. If we are right and we are starting to see inflation and a small recovery, that may be an area where they are interested in terms of acquisition versus investment. Andrew, 2016 was a gear for global politics. Donald trump, brexit really stand out. I lost count of the number of Research Pieces and articles that i read over christmas talking about how european politics are going to be dominant in 2017. Is that actually going to be the case . We have priced in a lot. We should understand the risks and the tail risks associated with them. Andrew i was just listening to your guest talking about how to thousand 17 will be dominated by europe and i cannot see how it would be any other way. In addition to germany and netherlandslso have and possible snap elections in italy and greece. Vote,brexit and the u. S. You cannot discount to anything. Do not forget that we both brexit and donald trump happened in 2016, those event will play out in 2017. In addition to the year of elections in europe, you will also have article 50 and brexit playing out, and the donald Trump Administration playing out. We had the playbill, we know the act or us and the story but we have no idea how it will play out. Guy there is one thing that i took away from 2016. These lyrical events we think will be catastrophes, are not catastrophes at least in terms of Financial Markets. Be though could also that the jury is out on that one. We had the brexit vote though it has not been triggered yet. Who knows how that will play out. And though donald trump was elected, he has not taken office yet and we have not seen how geopolitics will play out or trade will play out under his administration. I dont know. What i do know is that investors are looking at geopolitics were closely than ever and as your previous guest was saying, france and germany are big ones and Angela Merkel who has been very resilient she is also very vulnerable as we saw in berlin which set off a lot of attacks on her on social media in germany. There is a lot of uncertainty anywhere you slice it. Andrew, managing editor. Thank you. About thepoint Financial Markets being shocking prices of political risks are becoming more important. Andrew is right we do not know what breaks it means yet or what donald trump means yet. Waitit for the budget and to see what the fiscal story will be. If you could take one thing away from 2016, the markets are as clueless as the rest of us when it comes to positioning for this and pricing for it. Investorsink that need to learn from 2016 that politics do not hit economics right away. It takes time to put policies in place. The political wrangling to get your policies through Parliament Takes a lot of time as well. We get caught up in the event. Guy how do i position for that . Do i take risk off the table or do i disperse risk . How do i position myself for these events because 2016 taught us that if you position one way or the other aggressively, you are probably wrong. Luke it is about the companies. It is about the individual investments and not about the markets. The market is getting caught up. I think in that sense, barclays is right about it being earnings and not politics. But that has always been the case in the long run. You have to sit through the volatility while you are waiting for the returns to come through. Guy it is a complicated year ahead for the Federal Reserve. We will break down the donald Trump Administration and what the trading policy will mean for the world. That is up next. This is bloomberg. Guy welcome back. You are watching the european open. We are to me three minutes into the European Equity market trading. Is in a bull market. European equities are powering into the new year. What could not them off their perch . What could happen in the u. S. . Barack obama moving over to donald trump. What are the crucial decisions that the new president will make in terms of what the Federal Reserve will do . We are thinking about who will be replacing janet yellen. Luke is back with us. You already think the u. S. Treasuries could get to about three, 3. 25. Will the fed be more aggressive . Luke the fed has not priced in trumpanomics. Once they see that and they look to the economic momentum we have going into that budget, there is a bigger risk of higher rate rises. Janet yellen will want to get ahead of the next slow down as well. Higher Interest Rates. She has some firepower on the other side of the hill. Guy will it be her . Luke probably not. She does not have to be chair. She can still retain the governor seat until 2019. But i think if she goes, she goes. If she goes though i think others will move out. Fmocbut we do expect the to be more hawkish. Yes, especially in terms of language. Guy how close is the market to pricing in the fed not reinvesting what it has on its alanson sheet . Luke i dont think that has come on its radar yet. Proper temperthe tantrum we had a few years back when they started talking about that in the first place. But they have said quite clearly that they want to get through rate rises first. Guy we have a couple of rate rises and then maybe they start to talk about it. Does your three or 3. 5 number include that . Luke i will tell you when it happens. At the moment, it does not feel like it does. That would be a volatility event, definitely. Through thosee numbers quickly. In the last six months, we have seen how volatile government bonds can be when the environment is changing for them. That change in the environment is massive. View,s a longerterm three, 3. 25. Guy what is liquidity right now . Been pper bonds has have been good. It is getting harder to purchase them then sell them. Guy thank you very much. Luke, Senior Investment manager at Aberdeen Asset management. Business, britain, and brexit. Lloyds releases its latest report on British Business sentiment. That is up 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. Hey, drop a beat. Flix . Show me orange is the new black wait, no, bloodline how about bojack, luke cage oh, dj tanner maybe show me lilyhammer stranger things, marseille, the fall in the same place as my basketball . Narcos, fearless, cooked the crown, marco polo, lost and found grace and frankie, hemlock grove, season one of. show me house of cards. Finally, you can now find all of netflix in the same place as all your other entertainment. On xfinity x1. Guy 8 30 a. M. In london. 9 30 a. M. In frankfurt and paris. How are the markets shaping up . Bulloxx 600 is in a market. The ftse 100 is up nicelys 0. 7 . To 0. 7 . The banks are leading the charge. London is outperforming. 7191 is where the trade is now. These are the things it you need to know on the stock story. Nejra off the back of a negative article on shortterm rentals for airbnb. Intercontinental hotelsnejra ae outperforming. 4. 3 . One of the best performers on the stoxx 600. It has also risen the most since june of last year. Euronext. E upside, agreed toter the lsc sell its french clearing unit. Putting it on course to end a 13 year combination that the Company Hopes will pacify competition watchdogs. The deal could be completed at the end of the second quarter. The device meant divestment swedish iso a an effort to assauge the bolt the watchdogs. Counterintuitive given that gold is up for a fifth session at of the last six after posting its first annual gains since 2012. The outlook is positive as we expect chinese jewelry purchases to spur two spu that increase in demand. Guy following a dip in the summer. Economic uncertainty following the brexit vote continues to be the biggest threat to duke a companies, that is the latest from the lloyds report. Thank you for joining us. Good morning. We have stabilized but after a fairly significant drop. The good news is that confidence has increased but if you apply the context to that, it was just after the eu referendum. We do these reports a few times during the course of the year. A longres remain quite way below the 25 year average that this report has been going. Guy you can see that quite clearly on the charge. Is 23 and that is not where we are sitting now. British businesses after the shock is now are now getting more comfortable with the idea of brexit and beginning to realize that at the moment, not much has changed. It is difficult to say. Bit of these surveys are a volatile. The businesses i speak to are cautiously optimistic. They are getting on with it. If you dig into the details, businesses are not looking to reinvest in 2017. The investment level is looking more sluggish. Guy what about the people . This report is telling us that businesses are not looking to recruit. Not much appetite there. And when they do recruit, they are finding it easier to find the people with the right skills. Guy there is no skill shortage. I still think there is a shortage of the businesses say they are finding it easier than they have found for a long time. Guy what about the currency story . The u. K. Is an exporter. Services have not demonstrated this. That this ising the good news that the businesses which are looking to export are saying that they expect their orders to increase in 2017 and that is particularly with the manufacturing sector. That is probably the most optimistic of the sectors that we look at. Guy is there a flip side to that . Input cost . Businesses that import say they will be raising their prices in 2017 and the wholesale and Retail Sector a sharp increase in their intention to buy. Guy they are just going to drop it straight down. Certainly within those two particular areas. The overriding sentiment is that prices will increase but particularly in the wholesale and Retail Sector and for the businesses that import. Guy how jumpy do you think they are . Theyis anecdotal but are that aftere believe the initial shock, the political volatility will go down or are they continuing to expect little are they continuing to expect political volatility to affect how they go forward from here . How big is the politics . A difficult question to answer. We have asked them what they were concerned with and by far the biggest concern is Economic Uncertainty although to buy weaker demand. The next is Political Uncertainty but it is a lot lower scoring number. Customers and businesses are not talking about Political Uncertainty as much as Economic Uncertainty. Guy if donald trump delivers an Global Demand except, that is what they are focusing on. Absolutely. The businesses that i speak with anecdotally, they are just getting on with the job at hand. They are cautiously optimistic. They are very resilient. And i think that there are some good opportunities for these companies. Guy any sort of credits or is there an effect at the bank doing what it is doing in the Corporate Credit market rippling down . Capital,a shortage of are they capital constrained . In this report, it is the lowest scoring factor. Only 5 of businesses are saying that their access to finance or the cost to finance is a concern. That would support the bank of englands own server way survey that shows eight out of 10 businesses are still able to get credit. From lloyds, our lending increased by 4 . People are still wanting to borrow money and they are able to get access. Guy it is difficult to judge this because it is hypothetical but if credit were to become more expensive, u. S. Treasuries expected to rise and we are seeing that ripple down through the structure. Would that be a problem . If Interest Rates were to increase dramatically that would be an issue but certainly my view is that the base rate is likely to remain where it is. Guy but the Corporate Credit market will be affected i a whole range of factors. Of course it will be but that has always been the case ever since the financial crisis. I still think the cost of borrowing is the cheapest it has ever been and it will likely remain the case for the next 18 months or so. Guy thank you so much for coming this morning. The former Deutsche Bank coceo returns as the president of Cantor Fitzgerald. Details are next. This is bloomberg. Guy welcome back. Let us talk about the markets. We are 41 minutes into trading. The stoxx 600 is in a bull market. Theis outperforming mining is performing well. Some names like ubs doing well this morning. The dax is absolutely flat. We will break that down for you in a moment. Is up by 0. 6 . Let us find out what else is going on. Sebastian south korea has banned the sale of some cars made by nissan, bmw, and porsche after finding the automakers had fabricated documents related to emissions test. They have also been fined. Withwill cooperate closely regulators while bmw has said the company will work on regaining its certification. Has started a Freight Train to london as part of the president s efforts to strengthen trade ties with europe. Train will the cover more than 12,000 kilometers in about 18 days before reaching the u. K. Capital. Passing through russia, poland, in germany it will carry goods and clothing, bags, suitcases. Spacex is scheduled to return it to the launching pad next week. Vessels ine pressure the second stage liquid oxygen tank failed causing the explosion for months ago. The faa has accepted the reports. Expatare going to be an , make it switzerland. Foreign workers there are in the annual equivalent of more than 188 house in dollars, highest in 188,000 more than highest in the world and twice that of the global rate. But switzerland is close to last in social life and developing relationships. The cost of living is notoriously high. Guy that is an understatement. Deutsche bank. Deutsche bank is down pretty hard in frankfurt this morning. I do not know if i can tie a line between that story and our next story which is that the mer Deutsche Bank cosio coceo is joining the Cantor Fitzgerald firm. He left Deutsche Bank in 2015. Michael moore from our finance team joins us now with more. A couple of quick questions. This is an odd gig for him to take, isnt it . Michael it does not follow the usual playbook of a bank ceo. Typically we see them go into government or to do something on ventureside like capital or the philanthropic side. But, clearly he felt he still had something to do on the cell this is in hisd wheelhouse, the trading business. Sidethis is a firmly sale job. Why do you think they want him . What is he going to bring . He was a guy that really struggled at Deutsche Bank to deliver what he promised. I sat through a series of press conferences that he delivered. Sidewise on a number of occasions by legal costs regulatory issues. He hashe fact that learned so much in those experiences that he can bring them now onto the sale side . Michael it is partly that. He had built a business before. Perhaps that is what they want out of him. As ceo he thought things would turn around pretty quickly and Deutsche Bank could hold on but ran out of time on that bed because trading did not pick up. Maybe at a private firm you can take a longerterm bet or one that is out of the spotlight the way Deutsche Bank was. Attentionit refocus back on Deutsche Bank . We finally started to get an understanding of what its legal story looks like. Day one of the trading and Deutsche Bank is back in the spotlight. How big is the tale that the current manager has to deal with . Michael they have a number of things outstanding. Whetherre still asking they need to raise capital to get out ahead of some of the legal costs. It is not the end of the story for them. I dont think jain taking this job affects them but they do have a lot on their plate to do. In 2016, they talked about it being the peak restructuring air year but that does not mean that 2017 will be great. Guy let us talk about what is happening in turkey. Pressure this after the socalled islamic responsibility for the new years eve massacre. Been two daysas since the attack and the killer is still at large. Are there any more details on what is going on and tracking the suspects down . He is still at large. The turkish authorities, we do think they know who he is. Photos are being passed around. Selfies thato be he took in a central area of istanbul. We do not know how or where they were obtained and whether they were before or after the attack. There are media reports that are unconfirmed saying he is an ethnic minority from the western part of china. There are also reports that his wife has been to change. Those are unconfirmed reports. We do not know his whereabouts. We can only hope that this manhunt is successful and they track him down soon. Againhe lira leaning once toward record lows. 356 against the dollar. We are close to the intraday lows. Is that what the market is reacting to . We have a much stronger print and we anticipated on the inflation front. What we saw yesterday in the immediate aftermath of the attack was that there was almost no reaction in the market. That suggests that these incidents in turkey have become familiar and all too common. What the market is reacting to is the deteriorating economic data. You had negative growth in the third quarter. Today, inflation data showed the central bank missed its target for the six Consecutive Year and this year missing by three and a half percentage points. The layer is close to a record per dollar. 3. 60 guy great stuff as always. Benjamin harvey, our bureau chief joining us from istanbul. The emirates cut their production. We will bring you the details next. This is bloomberg. Guy let us talk about what is happening in these markets. Fronticking off on the foot when it comes to equity markets. The stoxx 600 is in a old market. We are trading pretty close to the high, 7193. The banks do not seem to be doing the business in germany the way they are in other european markets like switzerland. Let us take you to what is happening. Here is the breakdown of the stoxx 600. Banks are dominating that it is heavyweight like Credit Suisse that are dominating. Unicredit is trading a little softer this morning. Well, down byas 1. 8 . Nevertheless, we are seeing ranks and minors competing for being the best performing sector this morning. London, out performing. One of the big stories this when. , 7202 for theigh ftse 100. Great if you are a sterling investor but less so if you are now. You can break it down a different way. Let us have some one. Going back to the wei function. Year to day. Change that to one year. You can see the adjustment. On a oneyear basis, the ftse 100 is trading down by 0. 1 . Sterling is up. The bulk of the people in the ftse 100 are strictly investors. Anyway. We will move on. Oil started the year kicking higher. This is kuwait, it really started its output cuts. Coming into force from the first of january. Yousef, run us through the impact that kuwait has had. Again, it comes down to crude oil. It has had a block lester year with gains at about 45 . Will depend on if opec is successful on implementing the deal along with nonopec. It includes mexico and russia. Kuwait has started moving on that front. Citing the ceo of the kuwaiti oil company, this is how much oil they are taking out of the system. You are looking at this chart. When hundred 30,000 barrels per day. 130,000 barrels per day. That is how much we are looking at. Iraq addressing some of its reduction requirements. Youre looking at news coming out around concerns that it is not kuwait that should be in focus. There is commentary out from gadfly saying they need to look iraq, and nigeria specifically. Some of the exceptions to the opec agreement. If they increase reduction they could derail this understanding. And oil prices beginning to rise. Over in the u. S. Only you have the rates targeting, u. S. Crude is up. That trend continues. And you is producers feeling more comfortable to bring production that online. Guy great stuff. Joining us on the oil story brick getting some data out of germany. This is the unemployment number. Big story. 17 k. The german labor market continues to tighten despite what is happening with the immigration story. This could be a lead indicator. The cpi number out. The regional breakdown at the moment. At cpi number, year on year 1. 8 . Do ishat we need to upgrade our estimates for headline inflation. That we could be looking at for coming out from the german constituent parts of the eurozone. Watch for that later. We have some great guests for you. Looking through your asias top risks for 2017. We will be joint by a range of secretary officers including larry summers. We are looking forward to that conversation. I am going to go join the radio team. You can listen to daybreak europe live in london on digital. This is bloomberg. The stoxx 600 enters a bull market. Up 20 since last february. How long will the rally run . A new report shows Business Confidence in britain has rebounded from a post referendum. Could paris pilfer tens of thousands of banking jobs from london . And the hunt for the istanbul nightclub killer continues