Sterling down 7 10 of 1 to. A breakthrough in brexit talks. , sterling down and the ftse is that what european markets are rising today with the u. K. 10 year yield up for basis points today and commodities. Economy andcovering profits helped 41 billion in stock rises into its stocks this year, compared to 591 million for u. S. Funds and returns have lagged the u. S. Markets once again. , the u. S. Rd pe basis is the most expensive versus europe in 10 years. Analysts say that it is not clear what europe is all that she earnings estimates need to rise for u. S. Companies because of tax cuts, the u. S. Looks better to ask. Better to us. This is the yield difference room between germany and italy yield differential between germany and italy. The dutchassing of and french elections, without political upsets, the risk is that investors wrote too complacent about the next political worried in the region, italy, they select before may and the antiestablishment fivestar movement currently leads in the polls. Chaseoup, j. P. Morgan recommending various positions in italian bonds into the new year. That is the italygerman spread. This is japan gdp, the economy expanding at a faster than expected 2. 5 in the third quarter, the yearlong recovery in exports helping fuel business estimates. The economy growing for seven straight quarters. It registers at the longest expansion since the mid1990s, following government revisions to Previous Data released on friday. Key october indicators, while growth is slowing a bit right now. Gdp expansion will continue in the fourth quarter. Seven in a row for the japanese economy. How is it looking in the u. S. . Julie stocks are rising with on aow and s p at records closing basis, not an intraday basis with the nasdaq not quite getting there. We are seeing across the board strength today. The drugmaker,er the stock went to be highs at the session, up 5. 5 . They are considering cutting as many as 10,000 jobs. Cut down ony to costs and reduce expenses by 1. 52 2 billion over the next two years. Less than half of the cuts tied to research and Development Spending according to people familiar with the matter. It may not end up be the eventually number of job cuts, there may be none, but something they are considering. Notle said that teva does plan to proceed with an Equity Offering in the near term which could be helping the stock today. We are watching Technology Shares more broadly as we have seen a rotation out of and then seemingly back into the group appeared that is reflected in the drop on monday and the rocky trading throughout the week that infoteche s p 500 index gaining on the week by 4 10 of 1 . You see the games. Gains over that time. The most within the group, you look at what is doing the best today as an example, ebay, sigma Western Digital agreed to being acquired. That is sending those shares surging. Generally, a list and some of lift in names with the best momentum. The gunmakers led lower by American Outdoor brands, the maker of smith wesson which changed its name, they are slashing their forecast earnings missed estimates. It seems to be a factor of the political environment. Under the obama administration, when there were various gun related incidences and the tax and attacks in the country, you would can see you would see an increase in gun ownership because of worries of increased legislation. Now that donald trump to be an ally of the gun industry, there is not that motivation to something the ceo of American Outdoor talked about and says the motivation has been replaced by the search for bargains and that gunmakers are overproducing. And steep price cuts could continue for the near future. Its rivals are also down. Onnie julie hyman, thank you lets get back to the brexit breakthrough as it is being termed with the impact of the market. Stocks today, that is intraday, on my bloomberg, a threeday chart of the pound. It rose when the deal was sealed and now on the decline again. Joining us is daragh maher. Hsbc outlook the and a little bit but lets talk about the news today. We got a deal. Great news for some people and britain can move on to the trade part. What is going on with sterling . , this will be the easy part this was just like a little bit of talks at the beginning of the process and we can get to the bigger stuff. Look how hard it has felt. It has gone down to the wire. I think there was relief. They have the headlines they wanted and can move on. But now we have the tricky bit. Maybe not the transition negotiations but transition to what . Not clear the u. K. Government knows to what and they have to negotiate that with the eu. That is what we are seeing in sterling this morning. Vonnie talk to us about the medium outlook for the pound. How do you factor in these unknowns . We love doing that because you have good excuses when it goes wrong. We have a straightforward view of the pound, we are bearish. It has become nearly fashionable to be bullish of the pound, bloomberg ran a story yesterday talking about how we number of strategists, this is the big trade for 2018 but i do not see it. The politics are still very messy. The cycle in the u. K. Is turning over, if anything and not revising up u. K. Gdp forecast as we are in the u. S. Or the eurozone or major economies, seven consecutive quarters of growth in japan. We have always talked about the u. K. Structure deficiencies and twin deficits which are not getting much better, despite the weakness in sterling. It still feels we have to be looking on the downside. Taking sickhe boe six or so days await next week, how does this play into the bank of england in the past path of rate hikes in 2018, if there will be any . There will be a sigh of relief because they have taken the brave assumption in the forecast that the transition through brexit is relatively benign. That could be how it plays out. They will be encouraged by that. Any signal is that points in the opposite direction is a challenge to their view because they say they have taken this benign relatively optimistic spin. They will be relieved, it should not have a Material Impact on the rate hike or rate of you. Rate view. Relief and sterling. Mark i will chat about the ecb with you, we have the ecb next week. We did a survey and most suggest most economists suggest the year hase ecb next reduced its Bond Purchasing Program to 30 billion and will come down to zero in the final three months. Does the ecb give anything away next week or has it done everything it needs to do in its last meeting and can just hang on until maybe the middle of next year . I sense they are looking to a holiday break. O not see where they can we may get more of an upbeat view from mario draghi on the state of the eurozone economy. I do not think he will feel the need to say much about the euro, particularly if it is not trading above 120. You are right, we will look towards getting into 2018 and see where inflation is and whether they can begin the next excruciatingly long runway towards the next iteration of policy which is to drop the qe altogether. Vonnie i have to give this a plug. Like a book launch. Vonnie the u. S. Dollar is soaring, are we ignoring . Lets look at this chart. 3293, which shows the yield spreads. Look out flat everything is. Can the dollar continued to strengthen . How is the correlation going to play out . The title are we ignoring . We have a view that the dollar will not do anything next year. The fed is baked in any tax reform is baked in. In september, we had a decent rally and it got is nervous and sometimes we challenge our own view. We decided was at the core of the view was the for a benign dollar, you need benign way growth, the was employment report, that benign print again on wages, i think it reinforces our view that not much is happening with the dollar, it is not just in for being the big story in 2018. Vonnie is there a danger it will do the opposite . A lot of dangers in the Federal Reserve, likely going to move in december. Why would not it be risk on both sides . A few people saying i am four dollar weakness but there are if the fed has to capitulate on their view that this inflation softens it is temporary and set of three hikes, we have to hikes. Two hikes. If we get stronger than expected growth in the eurozone and maybe japan, some of the other emerging markets, that can play. For now, we have a nice balancing act in terms of upside and Downside Risk of the dollar throughout the year and it should offset each other before you get sideways in the currency. Vonnie daragh maher, good to securities, ahead of fx strategy in the u. S. Lets get the first word news with Courtney Donohoe. The u. S. Economy added more jobs than expected last month as added to hundred 20,000 in november and the Unemployment Rate is at 4. 1 still, almost a 17 year low. Wages increased less than forecast. Congress has put off making tough choices on the budget as lawmakers averted a Government Shutdown tomorrow by passing a twoweek extension of federal funding. Thece a september summer 22nd deadline about what to do with spending on defense and domestic programs. Another member of congress has resigned over congress over allegations of inappropriate behavior, trent franks of arizona says he will quit at the end of next month and says the Ethics Committee is investigating him for discussing surrogate motherhood with two female staff members. Social Democratic Party in germany is once again considering a socalled brand coalition with Angela Merkel. The Party Leaders have gotten the goahead from the wrist to begin talks with her, 10 weeks ago the social democrats vowed they would not establish an alliance with Angela Merkel and her Christian Democratic Led bloc. Global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. I am Courtney Donohoe appeared this is bloomberg. I am Courtney Donohoe. This is bloomberg. Mark does the brexit deal change the outlook for banks, we hear from ross mcewan next. Vonnie live from bloomberg will take orders in new york, i am bloomberg World Headquarters in new york, i am. Mark i am mark barton. The u. K. And eu have managed to unlock the stalled talks opening the way for negotiations to move on to trade, what banks and businesses have been looking for but officials warning that the toughest challenges are ahead. Rbs chief executive ross mcewan spoke to us in an exclusive interview about the latest developments. This is the good news to come before christmas and be real conversation about how can we trade with the eu. That is the important piece and this is really good news for all businesses. They talk about a twoyear transition. Bank, withof a Major Business to do in europe, two years enough . Two years will be enough as long as we get detail early. This misses like ours hate to move forward as if we are not going to get any form of deal that would be good for banking. We look at the worst scenario so that we can build a bank that works for our customers. If we get a longer transition and get the rules established, that is good news for us. We have had to move forward anyway. Institutions, the people that run the institutions, if you get more detailed news on transition and Financial Services in the first three months of the year, could that make you pauls forethought . Pause foror though . It does help. We can slowdown activity if we think this will be a slow twoyear transition and we can find out what the rules are. The canadians do not have a certain Financial Services element. This is missioncritical for you in terms of regulatory. I am hearing alignment. Take me do your vision of alignment with europe. Ande have total alignment are running on the same rules as europe. It is what is the difference going to be . Some people want a lot of difference and to be more flexible in europe. I think, given one of their Major Trading partners, the closest we could get to his lets talk about the customers because this is good news with movement in sterling, it is moving come up and down, a volatile currency. Your customer has been battered. Consumer confidence at levels we have not seen since we voted for brexit. What is the borrowing like for the customer . We are pleasantly surprised about how resilient the consumer, retail customer, Small Businesses and medium businesses, have been since brexit. 52 voted that this was a good thing, there has to be some buoyancy. Usually uncertainty brings some slowdown in peoples habits of borrowing. That has not been seen. We have had good growth in our lending books, particularly around the consumer and Small Businesses. What about mark carney . He said complacency. You people who run the institutions are complacent. Would you agree that there may be a little bit of complacency in terms of the Banking System at the moment . I do not think so. We have been looking and looking to see if there are early signs of the difficulties, we have seen none. Arger corporations are in difficult situation and our view has been it has not been systemic in the industry, more around the management or structuring of the businesses, as opposed to issues running through a cigna. All banks have been keeping a close watch on early indicators to see if there is anything dramatically changing, we have not seen it. Changing,ng that is 259 branches are too close. This is about business migration, me, my mom, my sister not using the branch and about me going digital. Closing, the foothills of closure are or their more dramatic steps to come . When yousues are large take away 259 branches out of the network. It is a big move and has come because Customer Behavior has changed dramatically. Click statistics that show how dramatic this has been, it has taken me by surprise. , 40 decline in the foot traffic and Branch Network. In the last 10 months, 25 increase in the number of our Customers Using the mobile phone as their major portal into our bank. Dramatic numbers so quickly. We have decided to get the Branch Network in as close to shape as we can so that we do not keep having to negatively surprise customers with a Branch Closure here and another one in another year. Two as close a shape as weekend given what we know today. The customers are changing their behavior. Mark rbs chief executive ross mcewan speaking to us earlier today. Breaking news, shares of objectionsgher, eu to the monsanto deal with the eu filing said to layout regulators antitrust concerns as merger objectives on what remedies to offer. Bayer will face eu objections to the monsanto deal. The 66 billion deal and the hope was for the chief executive of bayer to complete the deal by early next year, already selling a seat and agricole ere big headline is bay facing eu objections to the monsanto deal. Monsanto falling to a session low on the back of that. That is the big news crossing the bloomberg terminal. This is bloomberg. Mark take a look at where european markets are trading until the close, four minutes until the end of the friday session with stocks rallying and taxcut hopes in the united states. U. S. Nonfarm payroll up and stocks rallying. Lets get to the currency board, what a day for sterling and brexit breakthrough, sterling and initially rising but came back down against the dollar, down against the euro today and we will talk more in detail about this with our next guest. The close is next. This is bloomberg. Mark live from Bloomberg NewEuropean Headquarters in london, this is the european close. I am mark barton with vonnie quinn. Every Industry Group rising on the stoxx 600 led by banks rallying by speculation that new capital rules will free up more cash than expected for dividends and basic resources, travel, also rising. Of Health Higher by u. S. Economic data with the brexit breakthrough and hopes over u. S. Tax cuts. Lets get to brexit feared this is pound versus dollar. , monday feelsek like a long time ago in brexit land, that was a head of the meeting between theresa may and jeanclaude juncker, the big lunch that led to a failed momentum feared at the end of the week, we got the breakthrough and sterling is lower. Jones, byes, neal rumor appeared manufacturing data in the u. K. , record car manufacturing. Factory output rising by. 1 from september, marking six consecutive increases for the First Time Since modern records began in 1997. For the biggest weekly drop since may as investors anticipate higher u. S. Rates, progress on tax reform, a spectacular reversal for the precious metal. Two weeks ago flirting with the 1300 level and bowl jan its first backtoback annual advance since 2012. Vonnie there has been so much with the brexit deal going on and Everything Else that we have not mentioned the reprieve for the government, two weeks more spending. Vix below 10. 10 year yield up to 2. 38 . Whichbs data this morning did not derail any prospect for a Federal Reserve rate increase according to most people we are speaking to. The 210 spread widened back to 57 basis points. The yen is weakening. It broke through the 113. 50 mark, which is interesting and a substantial piece of market moving, primarily thanks to dollar strength. That is what is going on in the u. S. Mark lets check in on the first word news with Courtney Donohoe. Declaredent trump jerusalem at the is really