And we will speak to the ceo of unilever after the consumer goods giant reported sales that missed estimates. The interview at 7 15 london time. Matt we are less than 30 minutes away from the open of european stocks. It looks like the rally is set to continue. Here you see gains in theaters cac. E dax, ftse, this, after we saw gains in trading yesterday in the u. S. , asia, and carrying through to us here on the continent. Manus lets have a look at gmm, because it tells the story. The dollar is unsure. Yesterday i was confused. This morning the dollar is flipping it ever so slightly against the aussi. There is a sentiment that the fed will be provoked a little bit like the bear with a stick into doing a rate hike every quarter next year. I was in a session yesterday where they talked about dr. Jekyll and mr. Hyde with trump. The dollaryen, 1. 1360. When it comes to trade policies in the u. S. , somebody might want to brief the administration on if they dont produce enough aluminum, iron ore, or steel , you might want to consider that when it comes to your fiscal expenditure. That has a nice momentum across the complex. Commodities are big. These equities are punching it out. Are we being overly exuberant . Perhaps on a bad day, irrational . Juliette saly has your first word news. Juliette President Trump has acted on two of his most Controversial Campaign promises. He signed an order to set in motion to build the physical wall across the 2000 mile southern border. He signed a second order that targets sanctuary cities that refuse to allow police to enforce federal immigration law. Hisese premier li says country Will Champion economic openness. He described china as an an chor of stability with its consistent message of reform and free trade. China has been perjuring himself as a champion of globalism, as donald trump scrapped the tpp and says he will renegotiate nafta. Chinas central bank ordered the to controlnders new loans this year. The government has been targeting home loans since thte Fourth Quarter to contain runaway property prices in areas deemed overheated. French prosecutors have opened a probe into president ial regardinger fillon the employment of his wife as a parliamentary aide. This comes a day after a french newspaper reported Penelope Fillon collected a public salary totaling 500,000 euros without actually doing any work. Says thisment, fillon investigation will allow him to put an end to the unfounded accusations. Global news 24 hours a day, powered by 2600 journalists and analysts in more than 120 countries around the world. This is bloomberg. Matt thank you. The Dow Jones Industrial average closed above 20,000 points for the First Time Ever yesterday in new york. Since donald trump won the u. S. President ial election. The 1000 point run was the second fastest in the indexs history. All three major stock indexes closed at record highs yesterday. Here you have a look at the dow, the s p 500, and the nasdaq composite, all at records. I want to focus on the dow, manu s. Though this is not as representative of u. S. Business, th it is the one that mom and pop look at when they open the paper in america. It is interesting to look at this broader view. In 1999, from 10,000 when i was still in college, it has taken us that long, 18 years basically to double up to 20,000. You can see this in your terminal as well if you type in 5310. Matt, eh . 9, i think i was working in a bank. Strangely enough, lets talk about a bank. Matt, you said it took us nymex to travel that 1000 points you said it took us nine weeks to travel that 1000 points. Here is what is driving that momentum. It is good old goldman sachs. We put on 1800 points since inauguration day. Satt, 70 points of that i goldman sachs. 160 points is boeing. And ibm, 150 points. This is what we need to conjecture, of course. If you get a tax cut, and a repatriation of dollars and share buybacks, what more can these beasts of the american equity market do . J. P. Morgan Asset Management, what better time to bring them in . Lets address that. This is the second fastest ratchet of 1000 points since 1999. Have they gone too far too fast . We got there he overexcited and the last couple of months of 2016. We were getting high on the idea that more Infrastructure Spending would come through and tax cuts. Very few mentions of that in the inauguration speech by donald trump in his first speech as president. We are looking for signs that maybe that fiscal policy might not be coming through in the scale we were hoping for. If they are starting to negotiate tax cuts now, the earliest realistic date they could get this on the table and pass through would be the end of 2017. That is how washington works. I think markets got a little too excited about this. Understandably so. We have not had any fiscal policy for a while, but i think we got ahead of ourselves. Matt i wanted to ask you about the banks. Goldman sachs is up 30 since election day. P financialsthe s index. Goldman sachs, up 30 . Other banks have climbed almost 40 . Bank of america, citizens financial why have these banks done so well since President Trump was elected . There are two factors. One of them is around the steeper yield curve and the interest margins that go into the loan books would be significantly improved. But it is also because of the fixed income trading revenues. At the end of the day, when the fed banks rates flat, it is hard for traders to make money because volatility is so subdued. Now we are looking at a steeper yield curve and we are seeing more activity and bond markets, which is helping the fixed income and trading revenues. In the Third Quarter of 2016, the fixed income revenues in the top 20 banks went up 50 year on year. That number will increase as more volatility enters the market. Manus tell me this. We had conversations with a number of different people. I know what you are saying to me, which is we dont have any details on the repatriation of dollars. 200 billion is the number goldmans has pegged in. And repatriation of dollars part of the best case thinking . Of course. And that is a good longterm driver for returns. There are about 2. 7 trillion locked up overseas. When it comes home, that is going to look like special dividends, like m a activity. What i would caution a little firms have had access to cheap lending for quite some time. Central banks all over the world have made it possible for companies all over the world to borrow with low Interest Rates. They did not take the opportunity to borrow with a leverage up too much. Matt alex dryden of j. P. Morgan, talking us through this historicen after a record close of the dow jones. Coming up, we talked china as the worlds second largest economy orders banks to curb loans in the First Quarter. Later, we hear from the ceo of unilever as the consumer goods giant says tough Market Conditions are likely to continue in the first half of the year. Londonerview at 7 50 time. Plus, raise a glass. Diageoak to the ceo of after the drinks maker reported earnings that Beat Estimates. This is bloomberg. Matt welcome back to Bloomberg Markets. Chinas central bank ordered that nations lenders to control new loans in the First Quarter of the new year, another move in china to curb excess leverage in the financial system. The government has been targeting home loans since the Fourth Quarter to contain runaway property prices in areas deemed overheated. Alex dryden from j. P. Morgan Asset Management joins us. Alex, is china on the brink here . Is china a question mark in your Investment Strategy for 2017 . Not for 2017. We saw the gdp data and Sales Numbers last year, they were solid. What i would say is this guarantee for chinese data is for 12 months only. I am not concerned for 2017 because if we look forward to the autumn of this year, we have the Peoples Party meeting where the chinese leaders get together and discuss the makeup of the party Going Forward. They need gdp data and Economic Data to be stable to provide a good backdrop for those political discussions. Looking beyond that, there are cracks starting to show. Private credit is now 200 in china, more than twice what it is in other emerging markets. That is an area of concern. Manus the one thing the pboc is doing is trying to curb new loans. This is the long profile, in terms of new loans going back to last year. Last year they gave out 1. 8 trillion worth of loans. 36 of my came during the First Quarter of last year. Of that came during the First Quarter of last year. Is china doing a good job of quelling bubbles . At the moment what they seem to be doing is injecting this loan growth in in every little bit of loan you are making. They know they cannot do this forever. The one thing i do take some comfort from in the chinese situation is that there are some concerns. I have a list of concerns, they are round the currency, debt market, the overall composition of growth. I take comfort that my list of worries is the same as what policymakers have had. They are worried about currency, the debt market, how they get growth in the chinese economy. They are trying to fix these problems, but it is hard one for much of the chinese history, it has been built on stability. That has been the essence of everything. Trying to transition the economy to a consumption led one is not going to happen overnight. There will be bumps along the way. Manus one of those bumps could be what trump does in affecting change between the trading relationship. Alexander dryden stays with the market open. We are minutes away from the start of your trading day. Up next, we look at the movers. Unilever, we will hear from the ceo. Johnson johnson, they bid out and buy actelion. Diageo raises a glass. Matt unilever sales missed estimates in the Fourth Quarter and they expect tough Market Conditions to continue in the first half of this year. Anna edwards asked if the top conditions are wider than brazil and india . We live in a world where there are many challenges we have to deal with, in many parts of the world. There is slow growth in the middle east. These are africa devaluing. In latin america, we have brazil and to some extent, argentina. This is a world that is challenged. Consistently, the imf has lowered the forecasts. The good thing is, for the first time last week, they have slightly increased their forecasts for 2017 and beyond. Hopefully, we are at the bottom of this. Anna if investors are looking at your Fourth Quarter underlying Sales Numbers, will they look like compared to estimate . What would you say to them . The First Quarter is only 90 days. We had the full effect of this demonetization in india and that really affected the market there. We have a very big business in india and likewise in brazil. They are going through a very tough time and we have a big business in brazil. That is 90 days. Ook at the entire year, we are putting in good results. Andre doing this year in year out and doing this responsibly. For eight years in a row we have had top and bottom line. Topline with a market that is growing about 2 . Profitability is up 50 basis points. Our cash flow is at a record high 4. 8 billion. We think these are solid results. Worst on we passed the the india front . Communications are that we stillut i think we will have to deal with a soft First Quarter as the economy regains its footing. Especially the smaller distributors and the whole still traders. Obviously, with our deep business in india we have to go through this. One word of caution, there is a general sales tax coming in india on july 1. Anna turning our attention to the u. S. , does the arrival of donald trump changed the way that unilever has to do business in the United States . Do you have to be more american . Well, we have the fortune to be in every country for 100 years or more. We have a long history all over the world. One of our strengths is we deal with local consumers and adapt our products to the needs of the local consumers. Most of our brands are produced in the countrys themselves, like here in the u k we produce for the u. K. In the u. S. We produce for the u. K. Right now there is more optimism in the u. S. Economy and people think that the next few years, if you look at the stock market and consumer confidence, it has been able in a short time to build up. We have to continually assess what changes in policy due to our business. Anna does your excitement around growth in the United States, does that compensate for fears around trumps worldview and what he means for global companies, such as unilever . We are global, but we are local. In america, we have American Workers and sell products for the americans. In that sense, we are the same as any other country. But we do have to look at this changing environment. As you have seen over the last few years, the geopolitical tensions in the world do not make it easier. People,usiness hopefully responsible business people, have to do with this political process. When it gets to tougher issues like Climate Change or refugees, the complex we are seeing the conflicts we are seeing, we have to ask what we can do. What can we do to reform Financial Systems . What can we do for a battle social contract with society . For a better social contract with society . Anna another political point of tension around brexit. We have heard from Prime Minister may about what she wants from the Single Markets. Given what we have heard so far, what is your big concern about brexit . It is what it is. You know my opinion. We move forward with what other people have chosen. We are trying to limit the damage. Unilever is in many countries in the world, many countries that are not in the eu. In that sense, we are in the same position as many of our competitors. We feel we have a responsibility to ensure that the negative sides of this unfortunate decision are limited. Both for europe and the u. K. Anna anna edwards there, speaking to ceo paul polman from unilever. Moments to go before the start of the trading day. Three big news pieces to keep in mind. Unilever missed on the numbers, even though he said there is not much to worry about. Johnson and johnson paid 30 million for actelion. They are paying 280. 0 on the open. Geo ceo talk to the dia very shortly. This is bloomberg. Manus a very good morning. You are welcome to Bloomberg Markets, the european open. Alongside me, matt miller. Guy johnson is on assignment. Matt, you have got the morning brief. Matt thats right. We have history in the making here. The dow closed yesterday above 20,000 for the First Time Ever. How much longer can the ball run last in the land of trump . The u. K. Prime minister heads stateside where she will address the Republican Party ahead of tomorrows meeting with President Trump. What Common Ground will they have . Conditions for unilever. The ceo told us we are in a world with many challenges after the consumer goods giant mrs. Its a misses its sales target. Give its ceo smaller bonuses this year than last year. Bonuses will go down this year because of mistakes made between 2005 and 2007. They cannot claw them back from then, so they had to punish the 2017 class. Manus. Your bank has got to deal with litigation whether you were there or not. Stocks are open, off and running. She pricked my bubble this morning when i was getting excited about the dow over 20,000. It did not matter that much. Stocks are up. Commodities on the rise. Financials are absolutely the driver along with Energy Stocks on this marketplace. Andon, paris, frankfurt. Nejra cehic has your open. Nejra whether you think it is important or not, the trump trade certainly is alive in Global Equity markets and the global reflation trade allied in the bond markets as well. Treasury yields moving higher. Japans 40 year yield hit 1 . Im looking at the gilt market and it looks like they are following treasury with the rest of europe. The 10year gilts bang year it year up. T the sector breakdown, we saw financials leading the gains yesterday and in asia. They are the second biggest gainers up. 7 following i. T. Stocks, but it is pretty much green around the wheel, and then i have a great turn for you here. It is ahead to u. K. Gdp data and theresa may heading over to washington, d. C. This shows the gains in the ftse 100 in sterling, and dollars, and in euros. Interesting to see the difference in those gains since brexit. Let us take a look at some of the three stocks im looking at today. Im starting with royal bank of scotland have the headline about the bonus pool. A 3. 1e heard it will take billion pound charge in its fourthquarter results, moving closer to resolving that u. S. Probe. It is looking like it could be opening higher at the open. Unilever, we are keeping an eye on that as well. Sales miss analysts estimate. It grew at the slowest pace in at least two years. Actelion, the deal with j j going ahead. J j agreeing to buy the swiss drugmaker for 30 billion and spent off its research and development operations, clinching one of its largest deals ever to become a leader in medicine, treating a rare type of high blood pressure. Actelion up significantly at the open. Manus i will pass it over to matt. Matt im going to take it from here in berlin, because it is a little bit later. 9 00 here, 8 00 and the u. K. , which is probably still a little bit too early for a drink, msu mess you are the Prime Minister. That sales and profit Beat Estimates in the first half. The drinks maker also said it is confident it will it tree its mediumterm it will achieve its mediumterm estimate. Joining us now is the ceo. Thank you for joining us. Let me ask you first about the brexit and how that is going to affect your business. It may be that u. K. Politicians need a little bit more to drink yecause of the stress the are dealing with. How is it for a company like diageo . Guest if you look at the numbers we just bolstered, scotch whiskey business, a third of our business, grew 6 . Scotch whiskey is a global category. We sell in 180 countries, and in the context of exit, we do support the clarity we are getting from the government on the direction, but specifically, for us, within europe trade, will be terraced free ta rrifffree. Regardless of the european solution, well be able to trade in europe without tariffs. If you look at the rest of the world, there are some countries like korea, south africa, and columbia, where the e. U. As freetrade agreement. I would fully expect the u. K. To get the same, if not better, arrangements with those markets, and then, the upside will be for countries where there are not existing ones like india. A u. K. india freetrade agreement would be very positive for scotch whiskey. Matt speaking of scotch whiskey, that is what im thinking of. When i think brexit, since i am american, i think i can get that for much cheaper because the pound fell for so much. Are you selling more u. K. Spirits to americans or two big countries or to big countries who have got an advantage . More afford diageo scotch and am i buying more because of that . We always want you to pay more and please by Johnnie Walker blue label the next time you are buying your thoughts. [laughter] guest we do well regardless of currency. The u. S. And these results, spirits business grew 4 . Gods grew faster than that. The premium and of scotch is doing end of scotch is doing well, like our single malts. That is a trend we see around the world. Whiskey is hot and premium itskey is even hotter, and is well positioned in scotch whiskey and in north american whiskey. You know, we have a brand like bullet growing 29 . Crown royal growing 17 , so the trends on whiskey are good around the world and the u. S. Indeed is an extremely attractive market for us and we are getting good momentum there. Matt good momentum. Manus ivan, a very good morning to you. It is manus in london. With such a story, sir, such an optimistic outlook, are you in the mood to do deals . Are you going to buy more of the business in india . Are you going to make any more meaningful acquisitions . Would you rate your stake in that case in United Spirits in india . Optimistic . Diageo today say has a strong footprint to grow agenda,growth sustainably. We have the Balance Sheet and to be proactive in further consolidation in the industry. Obviously, we monitor what is out there, when opportunities arise, and you could expect us to continue to build our leadership position. Speculation ono india, i will not comment, but i will say that we have the controlling interest in a very attractive spirits market, and i am pleased in these results, our India Business performed well. Manus just carrying on with that india seen is something we caught up with the unilever ceo. Anna edwards is off doing that. The worst passing and yet in terms of the demonetization effects, how does it impact you . Where does it impact you . Has the worst passed . Ivan we have certainly got impacted. Business, in spite of it, grew first half and hour premium brands, prestige and above, grew 11 . It did have an impact, and i expect it to have a bit of an quarter as well. We will come through it and in yet remains very attractive for spirits, because it is a young population, the penetration of premium spirits brands is still low, and we remain optimistic of the Growth Prospects of india. It is our second biggest market in revenue terms and we have the marketleading position. Scotch whiskey business is growing double digits. Johnny walker was up 23 , soanya india is very attractive. Indians of whiskey and they love premium whiskey, and we are a company that knows how to do that well. I wonder about china. The chinese love cognac, and that love affair cooled off at the beginning of this decade, but we are seeing signs of a turnaround. Are you confident that the Chinese Market will continue to pick up . Ivan i am, and in these numbers, Greater China business grew 22 . We have a fantastic business, white spirits business which is growing very nicely. It is very premium and doing well, and our scotch whiskey business is back into growth, so went through a couple of years where we had to fix the basics. Well seeent attractive and Sustainable Growth out of china in the next few years. Guy all right matt all right, ivan, thanks so much. Menezes,ing, ivan talking about his firsthalf profit and sales that Beat Estimates on diageo. Manus have use and donald trump a bottle of your finest scotch whiskey to help him through the first couple of days of his administration . A little bit of an interesting flash coming through. 46 of russians believe u. S. Ties will improve under the trump administration, so one of the interesting sort of dynamics in terms of getting together with the commodity picture. The deals are being done. There is an interesting one for you. Matt. Matt trump does not drink alcohol. Manus ah, i did not know that he is a teetotaler, and no one in the family drinks. No one in the family drinks, and the last president that had a completely dry white house, i think, was jimmy carter. Well have to google that, matt. Coming up matt i believe george w. Bush did not think either. Manus maybe theres something a republican thing. Matt maybe. [laughter] [crosstalk] is having abody stressful time downstairs. We will get there and talk about the u. K. Government. They are publishing a bill to trigger brexit. That was on the agenda for parliament and it promises to be short and straight forward, but it will pass parliamentary scrutiny. That is the question. Retreat. O bulls retreat. The dow hitting 20,000. Professional investors warn it will not last. Those stories and more, this is bloomberg. Matt welcome back to the European Market open. Take a look at where stocks are trading just 15 minutes into the session here. Gains across the board, stronger on the continent than in the u. K. The ftse up. 1 . The dax gaining two thirds of 1 and the cac up. 4 . This after gained yesterday for these indexes, but maybe more importantly, big gains in the u. S. To new records,. Dow, 20,000 for the First Time Ever in new york. The trump trade continues to equities, with u. S. Manus, up almost 10 since donald trump was elected president on november 8. Manus absolutely, and the velocity of that move, matt, is quite incredible. We have not seen a move like that since 1999. This time, around, it took multiple weeks. Deals and results are what is driving the numbers here. Diageo comes in at number eight as we just had a conversation with ivan menezes. A little bit more in this order, but really an optimistic story across the United States of america and in regards to thought and cognac. Ch and cognac. Johnson johnson pulls it out of the bag and pays for actelion, 280 swiss francs. Johnson and johnson are using dollars, matt, from outside the United States to fund the deal. The bid is 280. 08. , 4. 4quarter profit billion. Estimate of 3. 3 5 billion swedish on the gear maker and 55. 2. Quarter net sales, that was a nice sleep for them. Erickson, up, up and away. Those are your morning market movers. Let us return to business. Brexit business, that is. And the bill to trigger brexit will be published today. It will be a short paper, leave a room for an amendment which is expected and could help the government begin negotiations by selfimposed deadlines, march 31. For silo makers on questions on the bill at 9 30 a. M. U. K. Time. We are projected to see 2. 1 growth year on year that will come out at 9 30. The forecasters saying the economy has barely broken stride in the six month after the it vote. Alexander died in his with us. Dryden is with us. We are perhaps overly diluted because we have got passporting and we will continue to have trade with europe, with the United States, with everybody. Nothing has changed. What has changed in your opinion . Very robustve seen data since brexit and a lot of economists being proven badly wrong on how quickly the impact would go into the underlying economy and the gdp numbers today should probably stack up relatively well, but there are areas of concern. Alexander things like the current account, which is forecasted to come in at 6 of gdp, a record deficit. We have not seen the pound to the rescue yet. Theres also the retail sales number from december im a little bit concerned about. 1. 9 month on month decline, the biggest monthly drop in 4. 5 years. That is a sign that maybe the consumers actually starting to feel the pinch of brexit. If the consumer feels the impact, that will go into the underlying economy. The u. K. Consumer makes up 60 of gdp. If they start to feel the pain, the economy will slow down. It is taking time to ripple through. Alex, what about Business Confidence or business spending . I remember after the brexit vote, a lot of Real Estate Developers were saying people just stopped work, putting up new office space. Have you seen that come through or do you expect to see that come through in gdp numbers . Alexander itll take a little time. You have seen services and manufacturing firms saying we are its drying our initial and drying ourare with initial investment until we get clarity between the u. K. On the european union, even though we have received some clarity from theresa may about the outlook Going Forward. Heard from the other side of the negotiation table so we need to see what is feasible Going Forward before the investment is turned back on again. You are surprise anybody is thinking the bank of england could be pushed to raise rates . Alexander market 5050 on a rate hike this year. The economy is still slowing down. If you try to increase Interest Rates now, consumer indebtedness is at its highest. That will really hurt and with the uncertainty of brexit and the trade negotiations still there, im very surprised people are still pricing in a rate hike. Of policy possibility error. Stay with us, alex. News coming in for our viewers s view of to the s p china. Aa minus to that. Their outlook remains negative. The talk about growth in the next few years at or above 5. 5 . So that is the top line coming from s p. Ng there reaffirmi outlook at a growth level above 5. 5 over the next three years. Of next, well talk about banking. What can we do . Rbs is set to take its 20 billion charge tied to u. S. Mortgages. We discussed banks. That is next. This is bloomberg. Matt welcome back to the European Market open. And matt miller in berlin. 23 minutes into training. Royal bank of scotland says it will take a 3. 1 billion pounds charge in its fourthquarter results as it moves closer to resolving a u. S. Probe into the sales of mortgage securities, though to be clear, it has not resolved that probe yet. In a statement, the banks is continuing to cooperate with the u. S. Department of justice, it also says its bonus pool will be lower in 2016 that in 2015. Rbs has taken provisions related to mortgage investigations and litigation. Still with us is alexander , and alex, im looking at banks performance here. I just put in the brexit date on a custom grr screen on the bloomberg and i feed banks are the second best perform on the stoxx 600 as far as Interest Groups are concerned. Banks up 41 . They seem to be turning the corner and getting this litigation stuff behind them must be a good thing, right . So i cut bankers bonuses and 2017 . Alexander there is still a lot of stuff feeding through from the financial crisis is that litigation comes online, and the uncertainty hanging over that means bonus pools have been retreated slightly, but the rally behind been seeing and banks over the last six month has been driven by two factors. It has been driven by higher yields within the Government Bonds bake and it is no surprise that around june or july, that is actually win german when german reached bottom yields. They have been rallying ever since, lifting the banks as they go. The italian Banking System, that has been a big question mark hanging over the European Banking world for quite some time and a look that we are getting close to a resolution and if we start fixing the italian Banking System, that is to close the book on the eurozone banking issues. It has been a longrunning saw the, but there is no other major economy that needs as much structural reform to its Banking System once italy get that out of the way. Manus and there is console edition we understand in the generally story. Generali story. That is the u. S. Yield curve. Im thinking of those that are dollar denominations which have outperformed those of the european counterparts. Therefore, do i want to be more overly bid on europe . Inxander you have to go expecting a degree of volatility. The reason being is that european financials are going to be used as a proxy for political im in 2017, however, fairly positive about the Political Risk and i think it has been overhyped and once those political clouds clear, you will start seeing the european fundamentals have improved significantly. Alexander, thank you very much. Alex dryden, Global Market strategist at jpmorgan. Up next, the u. K. Government to triggerhe bill brexit. It promises to be short and straight, but will it passed parliamentary scrutiny . This is bloomberg. Matt welcome back to Bloomberg Markets european open. Gainss a picture of the we are seeing across the board. Stronger on the continent than they are in the u. K. It could be because of movement in the pound. The ftse up. 1 . The dax or the cac up. 5 or more. Let us get more on our top stock stories. Nejra so much to jerusalem this morning. Using a combination of mrr, i have picked these three. Actelion rising the most ever today and also getting a record high up more than 20 at the moment after j j did finally agreed to by the swiss drugmaker for 3 billion and spinoff 30 billion and spent off its r d. The ceo previously said he wanted to keep actelion independent. The biggest scare on the stoxx 600. Thesson also gaining, up most since midjune last year. Reporting higher fourthquarter revenue than analysts predicted, offering some relief to the ceo who took the helm just last week. Im looking at unilever and it said it would get off to a slow start in 2017 after sales missed analyst estimates. That is its biggest division, personal care units. Anna edwards spoke to the ceo, who told bloomberg that the negative side of brexit must be limited. Unilever is in many countries in the world, many countries that are not in the u, so well know how to deal with it and it we are in the same position of any of our competitors, but we feel we have a responsibility to ensure that the negative side of this unfortunate decision are limited to the maximum extent possible, both for europe as well as for the u k and this is where my energy will be going. Unilever shares down about 4 right now. Earlier, they did drop the most since june 24 last year. Manus thank you very much. The u. K. Government will publish the bill, the parliamentary approval they seek to trigger brexit negotiations today after losing the case to bypass parliament and the Supreme Court. Prime minister theresa may has also given in to lawmakers demands to present a white paper which will detail her brexit strategy. Of u. K. Macroead ate strategy and economics ubs senate. John, welcome, good to see you. Happy new year. Will it be a short, sharp bill as the Supreme Court suggested . It could be quite a short bill. Guest that is the idea. They want to make it as amendment proof as possible so it will be concise, to the point, and they want to try and rushes through as quickly as possible because they want to meet their deadline at the end of march. What do you think theresa may hopes for in the best scenario as far as timing is concerned . Svenja she triggered article 50 by the end of march. The interesting thing would be the white paper. Are not sure when that is going to come but once it is published, it will keep the debate alive and it can be talked about in parliament and that in a way could potentially time her hands more than the bill itself. We saw the reversal of fortune yesterday in the pound. Every inch that they get closer to more questions, les hard brexit, etc. , there is a flip in risk perception, isnt there . John every time there has been a decision which gives more elementarys gritty over the process, sterling as a barometer of war ease potential worries about the fallout from the e. U. Does as well. , of worries about theworries follow from the e. U. Does as well. Matt are they going to take the full two years to negotiate this . We do not formally take of you on that but if you consider the range of issues that have to be covered, and negotiating e. U. 27 is likely to take, yeah, it will take the full two years and indeed, at the twoyear deadline, there is not likely to agreement on a range of issues so a transitional arrangement will be necessary. We do not think we will get clarity on that until later in the day so we are worried about momentum and sentiment for the u. K. Economy over that twoyear period. We have got david davis coming to the house later on. The speaker of the house of commons will be the final arbiter of what amendment go to this. How protracted could this is this the most messy part of it . Once it has been drafted, youre expected to be expedited through Parliament Quite quickly, because the Upper Parliament house is a mess with this bill. It could be the death knell for them. Svenja they still have full power to do so. The problem with bills is they can technically, theoretically passing one day. In practice, it takes several weeks. It can get to stages which is called pingpong where it gets thrown out by one chamber and turned out by the other, so it could potentially take ages. I think the devil here is going to be in the details. No bills amendment proof. The opposition and indeed those mps who want to cause trouble for theresa may, will have to try and find amendments that are acceptable, because they will try to word it as tightly as possible, and they have got to keep the issue alive. Matt is the devil in the details from an Economic Perspective . When you are putting her models together, trying to look out as difficult as it is, obviously, two years into the future, do you just factor in the basic hard brexit . Or are the mechanics of what happens here really important to you . John yes, the mechanics are important, the timing is important, and therefore the process as it unfolds through parliament and potentially affects the timeline, is all something we are trying to form views on. In terms of this sort of exit we get, it is clear to us really from very early after the referendum result, that leaving the Single Market and the Customs Union was the most likely outcome. I think markets are braced for that as well, but how we get from where we are today is a full as a full member of the e. U. To post member existence is fraught with uncertainty. That for us will damage investment in the private sector over the coming period of time, and as i said before, we think we will you clarity over any of this very late in the process, because that is the interest of the e. U. Negotiations in particular, so things look ok for the u. K. At the moment, the weather that can continue, we would doubt quite significantly. Manus 6 of gdp. That is the largest on record. The country, to coin a phrase, is the beggar of neighbors. As we go through these next two years, if article 50 is triggered, john, our clients beginning to question the validity of the portion of the u. K. Government on they own, hold, or are tempted to hold toward the relative to other bonds . No. in a word, i have to say the fall in sterling we have seen of almost 20 in a little over a year is a very significant decline. It is partly because the current account deficit is so large. And in itself, it will take time to come through that adjustment. Sterling will correct to accent anyway. The size of the current deficit, certainly of the now, overseas investors have increased their appetite for gilts. I do not think sovereign credit worthiness is seen as being under serious threat no matter what the next two or three years old. From an economic view and certain sectors and businesses, the risks are extreme for the time being. Matt all right, we are going to keep talking gilts. Usual, foro much, as your reporting. Center all donald svenja odonnell. We will get the view from our guests. This is bloomberg. This is the European Market open 40 minutes into the trading day. Sebastian salek is with us with a business flash. Johnson johnson have agreed to by actelion for 30 billion, becoming a leader in medicines. Johnson johnson will pay 280 per share in cash or 23 percent above yesterdays closing price. The transaction was unanimously approved by both more than j j sees the deal closing by the second quarter. Bank of scotland will take a 3. 1 billion pound charge in its fourthquarter results as it gets closer to resolving a u. S. Probe into sales of mortgage securities. The bank says it is continuing to cooperate with the u. S. Department of justice and it will be lower. Rbs has taken the Fund Management arm expects rising inflows to boost assets to 400 billion euros. It expands its institutional client base. It widens its distribution network. According to the ceo, the group plans to expand its europeanstaff by 3 this year. Market, let usl say we start the year having a positive view on risky assets, and we think this could be the year of europe catching up in terms of performance with the United States. Sebastian and that is your Bloomberg Business flash. Matt. Matt thanks very much for that. Now, the Dow Jones Industrial average closed above 20,000 points for the First Time Ever. It is up 9. 5 think Donald Trumps election as u. S. Pointent, and the 1000 run was the fastest in u. S. History. Benchmarks closed at record high yesterday. Here is a look at the dow, s p 500, and the nasdaq, at new records under President Trump. The fed is about to go rapid fire on Interest Rates. Boosting them in the second half of this year, and following that with a hike every quarter in 2018. At least, that is the view from bnp paribas ahead of the fed meeting next week. John wraith is still with us from ubs. What do you think about this forecast . To goincredibly difficult out that far and say what the fed is doing, but taking a foure of four rey kites rate hikes must mean a lot of faith in a dollar rise, right . John it means faith in reflation, to say the least. It is very early days in the process, which is expected to bring that about. I think of the fiscal boost we releasecipating and the of animal spirits which would we u. S. T are priced in Government Bond markets, if that would come to fruition, thei fed would have to start accelerating its rate hikesn to keep a lid on inflationary expectations. We will be talking about the economy heating up quite fast. A lot of these markets are getting to fairly optimistic levels in terms of whether these reflation expectations do crystallize, and to put it mildly, there is many a hurdle that has to be got over before we can be sure that has been a successful mission. John, what do you think when you look across the street at forecast for u. S. Rates . A lot of people last month talking about 3 or more by the end of this year, and then some outliers like stephen major saying 1. 35 . The range is so wide. It is there that much uncertainty . John yes, to a degree. We are in the middle of those two relative extremes. I mean, as i said, we are pricing in an awful lot now. That is not to say it will not happen. It may well be the bond market has anticipated things to be however, if there are any signs of a loss of momentum, ultimately, there is a long way for yields to fall as well. We are fairly fully priced. For us, yield, and this is not just apply to the u. S. Incidentally, it is true of our eurozone debt, yields are ending this year. We have had this selloff that the start of this year or since the president ial election, and though we would not stand in the way of it right now given the momentum, fundamentally speaking, it had got as far as it should go for the next 12 months or so. Reflation whole trade has gone as far as it has gone. One of the products i think the treasuryoks at were inflation protected businesses, the outlook you can look at. I usually look up at treasuries. It is quite flat in terms of what is going on with tips. Where are you with that . Do you think that trade has run out of momentum . John when youre looking at a curved like that, there are very different drivers of the different extremes. Manus of course. John there is clearly in a variety of economies at present significant acceleration it and acceleration going on because growth is strengthening somewhat as well. The long end, it is more about credibility and whether in this instance, the Federal Reserve is adept at keeping inflation under control medium term and to go back to your immediate question, that is why, if reflation is successful and the fiscal boost leads to growth, the fed will have to respond to keep a lid on longerterm reflation aspects. Manus the u. S. With its current trade rhetoric as opposed to policy, it does not have an iron ore, it does not have enough pigs feet, it does not have enough of all the commodities it takes to build roads, repair the road, build bridges, and do the kind of infrastructure he is talking about, so inflation could get a double crack. John and the stimulus we are looking at in the u. S. Does involve rises in these. One of the bigger questions however is whether, even if it is this a guest role in the u. S. Whether it is successful in the u. S. , whether it will be successful in other economies. Japan, these u. K. , other economies are seeing the consequence of the rise in notrlying prices but do necessarily have the stronger economies to with stand it. You will see an ever strengthening dollar which will ultimately cause problems for the u. S. As well. Matt i want to get back to your home market to the u. K. , and looking at gc 3d on the bloomberg. This allows us to grasp yield occurs in three dimensions. It is an interesting tool. If you look at this over the last year or so, not a lot of movement in gilts. 1. 29e tenure, going from to 1. 47 now, where do you expect this to be next year . John part of the reason we are seeing this selloff in gilt yields is because it has been essentially dragged by the moving u. S. Yields and only done about half or thereabouts of the move we have seen in the u. S. , and it does partly next summer best performance some robust performance. When you move out to that 10 year maturity, you have to price and expectations of what is coming over that timeframe. And as i said before, we still concerns aboutt how the process of leaving the e. U. Alternately unfolds in terms of its impact on the u. K. Economy, so it is one reason why the rise in yields as you described it in the u. K. Has been relatively subdued compared to what we have seen in the u. S. , particularly over recent months. Very muchn, thank you for joining matt and myself. John wraith, head of u. K. Macro rate strategy and economics over at ubs. Up next, the banking sector. Front,ing the pain up 3. 1 billion pounds worth of pain. It is a charge tied to u. S. Mortgages. This is bloomberg. Matt welcome back to the European Market open. I am matt miller into berlin. You are looking at a gorgeous shot of the brandenburg eight in the german capital. German day ahead. An idea of how the economy is faring when gdp figures are published in 45 minutes time. Timeis nine 30 a. M. U. K. And 10 30 a. M. On the continent. Also, at 9 30 in the u k, the brexit secretary, david davis, takes questions in parliament. A new bill seeking parliamentary approval to trigger article 50 could be introduced as early as today, so you will want to keep tuned in for that. watch on top. Discuss greeces Bailout Program and they will be discussing the ireland,play in portugal, and spain. Now, royal bank of scotland says it will take a 3. 1 billion pound charge in its fourthquarter results as it moves closer to resolving a u. S. Probe into sales and mortgage securities. Is continuingit to cooperate with the u. S. Department of justice. Joining us now is bloombergs michael moore. What does this say about the potential settlement . We saw a couple last month for Deutsche Bank and Credit Suisse. Is rbs set to move ahead now . Rbs wouldt looks like be next in line, but interestingly, the executives went on the calls today and made that to warn investors this does not mean they are particularly close. They said there is no active negotiations going on right now, and this was more about getting some clarity from the other European Bank settlements, specifically Deutsche Bank and Credit Suisse gave them more clarity that they could provision for their own. But that the timing is still uncertain for them. It could be a little ways off. Manus they do go on to say that this, you know, expect more provisions. That is what they are saying. 3. 1 billion today. They are saying there could be more on the way and they are not able to claw back any of the money in relation to the periods time that this reflects upon, and they are going to impact bankers bonuses. Michael yes, i think, you know, ok thisf analyst to as good news, but they did go out of their way to say, you know, this might not be the end of things, even though we have about 8 billion in provisions for mortgagerelated items. There could be more on the way and it will ultimately come down to how negotiations go with the doj and the type of tone the doj takes under donald trump. Matt michael, thanks very much. Michael moore from Bloomberg News covers banks for us. Definitely a hot story today as their bonuslearn for will be smaller this year. Stay with bloomberg television. Up next, it is surveillance. Conversations with Randy Klausner and ericsson ceo sound good to you, then stick around for that, on this, and historic day in the u. S. , one day after new records have been hit. 20,000. ,000 dow will tom keene have a custommade had to celebrate the occasion . Francine the dow at 20 thou. The index at an alltime high. Is that the trump economy . Building Material Company is gain. The u. K. Prime minister has to the states to become the first world leader to meet the new president. Sehe