Where is they thought that would of come to the forefront but maybe be cap is too expensive. Lets put up the risk radar and show you where we are. We are seeing a little bit of support for the japanese equity markets, the weaker yen, that is helping. China is selling. That has fizzled. We are near december near record levels. Manus keep an eye on oil. We are waiting to see what happens at opec nonopec. Youve got disruption at the keystone pipeline, transcanada is said to reduce shipment by 85 . This week, oil is up. 7 . Lets get to edward ludlow. Hes got your first word news. Edward germanys biggest Opposition Party is debating whether to begin talks with Angela Merkel on a minority government or coalition. It is the first sign that the socialist social Democratic Party is willing to help the chancellor stay in power. As they met last night, Martin Schultz faced calls to drop his refusal to join the merkel coalition. U. K. Officials have tried to accelerate brexit negotiations , ireland could hold fire and block a final call if it wished. Avoiding a hard border in ireland is one of the key issues requiring sufficient progress for the eu will allow the future relationship with the block with the bloc cured in the u. S. , the legal team for former National Security adviser, michael flynn, has stopped sharing information with Donald Trumps lawyers. That is according to two people familiar with the probe. The move signals that flynn who was fired in february may be in discussions with robert mueller. The u. S. Navy has abandoned the search for sailors missing after the plane came down southeast of okinawa but a search involving uss ronald reagan, three helicopter squadrons and other aircraft failed to find them. Eight of the colleagues were found soon after the crash. President is due to be sworn in later. The ceremony takes place after a dramatic 10 days before the military seizing harare. Mcgarveys resignation sparked yet to be seen how much change he will bring to the crisis hit nation. U. K. Consumer confidence tumbled in november reaching the lowest level since the onset of the brexit vote. Optimism suffered its biggest decline since the month after the referendum with all eight measures. The score for the financial situations in the past 30 days dropped to its lowest level since january 2014. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. You can find more stories on the bloomberg at top. Lets check the markets in asia. The day has turned less perilous with chinese stocks with one hour left to go in trading. Shares in hong kong resumed their climb but volumes are light. Investors were reminded you cannot be complacent about chinas resonators i rising margins and the ongoing monde rep. Ongoing bond wrap. Chinese stocks fell as tariffs on imported goods are to be cut. Over in tokyo, Mitsubishi Materials is losing the most ground since june 2016 after it said two units we do have a touchy cuckoo acai climbing i do have hitachi cuckoos kokusai. Anna interesting lines coming through from clarion, in relation to the investor, white tail. The carrier met with white tail. They have been putting pressure on the management. White tail do not present their own strategies. Major investors are backing the plan to buy strategy. This was the company to abandon its merger because of activist shareholder pressure. Current says the board has approved desk clarion says the board has approved the merger. Manus that was unanimously rejected. Lets talk what china and the chinese stocks. The Energy Consumer discretionary shares leading the lot. The drop comes amid concern about the bond market selloff. Some of the highflying stocks. Anna china says it will make further cuts on a wide range of consumer goods. Lets get to beijing with m obrien. Is this a temporary blitz in the chinese stock market or does the selloff we saw more yesterday, does it still have legs . Are signs there are signs that beijing may have expired. Ever since then, markets have been a lot more volatile. This not the first big dip that we have seen in the afternoon and the hours of trading in china since that congress and there are a few people saying that this is the beginning, Credit Suisse saying the correction is only Getting Started and sean darby, he is the Global Equities strategist to jeffries and says that china may be seeing the correction that is about to spread so we could be seeing the angst and decline in china spread on the correction, i guess, in china that is due for the Global Equities market. Manus the other major story that was just beginning to get into, i do and i do not know if where more excited about the cheese about blue cheese. We are talking about important tariffs. What does this mean . Biggest one moot. Ggest cut was there biggest one, the that we are looking at, that we think will have the most impact is this reduction on tariffs, some to zero for baby formula. This could have a really big impact for producers like nestle, and that were really big and into this market here. China, the worlds biggest very market and also the worlds biggest market for baby formula. You have the one child policy scrapped, boosted to two here so it is a growing market. Im sure that there will be peering over in the headquarters of those companies. There was a wide range as you set of products. This is all about easing consumer access to some of the products that you are just unable to find a local productions of here. Some are saying it is also a bit of an olive branch to donald trump. He was here in beijing a week or so. Maybe a hat tipped to this constant criticism about the trade surplus that china has the u. S. As a product, the coffee machines, you may not have seen that, cosmetics was could be key to some of the japanese and korean makers per manufacturers, even ski equipment was on the list. Anna it is a big list. Well see if it has an impact on any of the share prices that could benefit when they open up. Joining us here in the studio, alan higgins. Great to have you with us. Alan last day in the studio. Anna it is. Our shiny new studio for monday. We need to talk about china. We started talking about market calls. What worries you about china . Is it the fact we have seen a selloff in stocks . Maybe the chinese actors are not acting in the same way . What do you interpret from the selloff . Alan yesterday was a big one. Stabilized today. That is the good news. That is really good news on the tariffs. We step back in terms of went trump first came in. One of the big risks to markets, trade war, chinau. S. China cutting tariffs, great news. Turn to the market, they know the debt buildup in china is the number one concern. It has started to stabilize. I am not worried. If you pulled up chinese biggest banks, icbc, pua shows 6. 5. The market knows. The market knows there is bad debts in the system and not all is rosy. It is not one of those situations where completely by surprise. Manus the debate is what is the chinese preparing this for . One of the guests said that is because inflation is coming. I question that. The trillion dollars worth of debt maturing next year and the spread is blowing out. Are the chinese capable of tolerating a trillion dollars worth of maturing debt . Alan not the defaults that may come. They need to the maturing debt needs to be reissued. And manus it is manus it is going to be expensive. Alan part of the debt we leveraging, spreads have widened a bit in the u. S. We have had a bit of a highyield selloff. This is part of the adjustment process. They are very aware. We have seen debt to gdp come down for the first time in this quarter. That is what they want to do because they are aware of the big risks. Of you ask for the ep the pe of ipo. That is your pe. It, the point is look at 6. 5. It is very low. It is yielding about 5 . It tells you the market knows. When i started my career in contrast,e 1980s, in i can remember i b. J. Ibj, a Japanese Bank was on a pua of 100. The market had no clue. Anna when people talk about the extensive largecap, what do we take away from the fact that we saw a little bit of the selling spread into hong kong. Not into europe. Was that because with thanksgiving, people took their eye off the ball . We dont worry about the china story the way we did a couple of years ago . Alan if we have more days like yesterday, we start to worry about the china story more. You remember the consent of the currency . There were concerns we could go much further. One of the amazing country and traits of the year. They stabilized that. Hope there is a bit of built in that they can do the same thing on the debt situation. We had amazing strong data out of europe yesterday led by france, really Strong Manufacturing data. Not just manufacturing but the whole economy. That. We will debate alan higgins stays with us. If youre on your way to work, you know what to do, you can leave us or you can go to bloomberg radio. Chauffeurou have a then you can watch bloomberg television. Coming up, breaking the brexit impasse. The case suggestion to deal with the irish border issue. Manus will go to germany as the stb showsust as the signs they could join a coalition with merkel. This is bloomberg. Anna this is bloomberg daybreak europe. Prettyi asia pacific high today which is no small achievement. Shanghai composite is flat. Lets get to Bloomberg Business flash with ed ludlow. Toard unilever has reported have started the foundation of the ceo. According to sky news, thought saying where he got information, to help it identify its successor. The report says no date has been set. Offer. Raised its that is after a rally in the shares of the chip systems maker says many invested including Elliott Management to seek a higher price from the buyout firm. U. S. Waste permit Equity Company increased its october bid by 18 . That is your Bloomberg Business flash. Manus edward, thank you very much. The has try to accelerate brexit negotiations by suggesting that rather than willing its veto, ireland could hold fire and block the final court if it wished. Anna that comes as theresa may is due to meet with donald tufts in brussels today. It is tumbled flows level since the brexit. Alan higgins is still with us. Quarter, Business Investment and trade were not supposed to be a driver but the consumer story was still a driver. What is your assessment of u. K. Economy after the budget will result productivity estimates slashed . Alan those numbers were longterm. We will address those. U. K. Economy is underperforming and there is no doubt that because of brexit, at least shortterm, u. K. Corporate sector is somewhat cautious and now with all this gloomy news around no big surprise, the Consumer Confidence in the doghouse. We are underperforming. Lucky thing is is the global innomy is either in a boom europe so that is getting us through. We are underperforming. Something on productivity. If you think about it manus this is the chart. Alan activity means we have slow growth but very strong employment. Our unemployment ratio is close to 4 in contrast in europe, several countries are 10 . Employee a lot of people and productivity looks low, or have a high Unemployment Rate. It is just a political choice. Anna it is just a political choice. Alan u. K. Has great incentives on lope come to work. Government says the first very low rates of tax at the front end so incentive to work. He compares incentive to work to low played employees, it is very lowpaid employment, it is very good. It is not all bad news. Theres a big debate on productivity. Is gdp understated . It is hard to measure it are we really picking it up . , just like the United States, the u. K. Has vast numbers of people employed, very low on implement rate. Manus very low Unemployment Rate. Manus oneman shows up with a lot of jokes. How bad lee off how badly off are we . Resolution sundays but it is a fast track. Lets have a look at it in terms of what they believe we are going to do. 42 billion pounds smaller and the economy by 2022. We are going to have the biggest fall in Living Standards and our average pay is going to drop by 1000 on disposable incomes are going to fall for 19 quarters. If i was an investor, i would worry if i saw those facts. Alan if that is true, that is the forecast. Say that is unlikely to work based on that scenario. We would be skeptical because it is about the court sector. One of the corporate sector. When im in speeches to the press people in the u. K. , one of the things i point at is a very good survey. The world bank ease of doing business. In ranks countries from one to 190. How quickly can you get electricity . Instruction permits construction permits, really practical. Umber 190 is libya the u. K. Is at number seven. U. K. Is a very good place to do business. Manus we are very open economy. Alan it is the corporate sector the creates the world. Anna you think there will be a transition deal . Alan we think there will be a u. K. Tradition deal . Why . Europe needs the money. All it needs is extending it. Most people would agree that u. K. Just doesnt have enough time to get a brexit deal and therefore we need the time. Game theory would suggest in the history of european negotiation is dirt tends to be a deal and it just be really difficult. We think there will be a tradition deal of this is more shortterm. Deal, well see higher sterling. Probably not that great for ftse 100. Probably ok for the ftse 250. I dont know if you saw last week one of the big enough banks that is survey and they shorted markets up there, one of the most unloved markets is the u. K. Shortterm you got a lot of opposition to the k. To the k. Manus up next usa Ian Duncan Smith joins at 9 30 people will talk german politics when we come back. 9 30. We will talk german politics when we come back. Is this a phone . Or a little internet machine . It makes you wonder shouldnt we get our phones and internet from the same company . Thats why Xfinity Mobile comes with your internet. You get up to 5 lines of talk and text at no extra cost. So all you pay for is data. See how much you can save. Choose by the gig or unlimited. Xfinity mobile. A new kind of network designed to save you money. Call, visit, or go to xfinitymobile. Com. Manus it is friday afternoon. Dollar yen is on the move. The dollar suffered three days of losses. We are seeing a little bit of a turnaround. The yen is weaker. The question is, where do we go to . Is dollar yen really cap out. Anna we got a little bit of yen weakness. We got equity indices to the left of the screen. China csi 300 which seems pretty flat. Weakness in the big cap stocks that we saw. We did see it spread to hong kong a little bit but not the european session yesterday. We talked with the currency markets and the move we have seen in the yen to the bloomberg dollar index is pretty flat. Manus you see copper and iron ore rallying as investors look beyond what their calling the winter steel curves. We have these curves in terms of production. Iron ore is having a renaissance. Shaping up to be a strong week. China investors are looking to china. Youve got wti. Youve got disruptions at the keystone pipeline. The trend canadian pipeline down by 85 . Youve got, you know what . We are down 7 in november so there is belief that opec number of pick opec nonopec will do something. Anna flat of the euro. They got strong data coming out from europe, particularly from france. Lets begin alan higgins was about the European Growth story. In particularly the french data. I was taken by some of the french data. I am taking it out now looking at some of the numbers. Hiring at the fastest pace in almost 17 years in the french economy. Is that a boom . Alan in recovery mode . Boom or boom let. As manus like to calls it. Manus likes to call it. Also thee impact but fact that weve got global signal nice growth. All he could global synchronized growth. All economies are doing well. The employment story, france really needs that. The Unemployment Rate is circa 10 and in contrast with the u. K. Down to 4 . Plenty of capacity in france. Manus anna, just as you were creationbout the job which is the highest in 17 years. The whole of europe is eating up the capacity. I want to test you on this. Bloomberg intelligence would say going into 2018, this is irony. And despair and commodities is going to be enough. Soften. Are going to i think this is bringing in negative drum. Banging a negative drum. Anna how long can the last . Alan we have had a little bit of tightening from the strength in the euro. Over the course of the year, it looks a little bit pessimistic. Clear despite this very strong data, he is not tightening. We had a little bit of tapering clearly. Ecb. to the key, to the anna and i anna and i had a long discussion about this. Anna no, no. As our story says, theyre committed tos keep to keeping their portfolio in line. This is basically very contentious in germany. We have statements from the bundesbank saying they need to stick to the p. P. T to the to the key. The capital idea of the ecb buying more periphery. It is hardly periphery these days. The bundesbank just doesnt like that because it sees credit risk and the like of portugal, spain. Manus this is the debate when you get to the end of bond buying which is in theory will and at least theory will end next september. They stipulated money maturing from debt to be reinvested in the country until that point in time. They have this wiggle room. Are we underestimating the momentum from reinvestment . Alan reinvestment alone is worth 12 billion a month. The idea of big bond bear market in europe is probably remote. It is good value. If you buy even if you go as far as portugal that is struggling at the 2 level on tenure bonds on 10 year bonds. It is not a great investment in terms of longterm income. This buying that weve got until september so i agree with you. I do wonder whether draghi could change. We keep getting economic want to know i could in q1, i said we can keep it until september. Given trust like this, the economy is so strong, he could take away a little bit more. Central bankers do change. Anna one th