Welcome. It is surveillance. Im manus cranny. Lets check on the markets. One view we have had dominating through the program is that inflation will recast itself during 2018. The market has the biggest long bets on bonds since 2004. We have got the three month yield here. That is driving the debt ceiling anxiety, shortterm investors demanding more. The bit to cover ratio, the highest stopover rate since 2008, and the lowest bid to cover ratio since january, 2009. But the asian equity markets and European Equity markets, rallying. Taking the cue from the commodity market. Copper is bid. Oil is bid. An overalleing move higher. Oil, we did make it above 60, i assure you. So, we traded post the close up at the highest levels since 201 5. We have the libya outage. Dont forget, we had the u. K. Outage a couple weeks ago and that spoke to market. This time it is libya, 100,000 barrels a day is a good be taken out of the supply chain as libya has an outage. More on that pipeline explosion a little bit later. This is what weve got in the show. At crosson the cio Bridge Capital will join me. We have got trusted sources jonathan fendi and the senior fellow at Heritage Foundation joining us. In the meantime, lets get your first word news. Reporter we are starting with the oil story, which is trading at the highest level in more than two years. Carries crudet exportsa and terminated yesterday. Saudi arabia is expected to see 23, revenue jump 80 by 20 helping the record the first Budget Surplus in more than a decade. Copper has surged to the highest level since 2013, after trying to have the parties are to halt outputs. Demand, as well as apply, hits the market. Days, after aine 30 jump this year, which makes the London Metal Exchange the topbased metal performer. Chinas Industrial Firm saw a slow month. Industrial profits rose 13. 9 in november from a year earlier. That compared to a previously reported 25. 1 jumped in october. TheUnited Nations say sanctions are unlikely to slow kim jon uns nuclear ambitions. The Security Council unanimously approved new sanchez on friday to slash imports on petroleum products. These are more likely to hurt ordinary people than the isolated nation. Earthe richest people on gained 1 trillion this year. Thats more than four times last years gain, based on the bloomberg billionaire index. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. This is bloomberg. Tom thank you very much raised the forecast for growth by. 4 for next year, comfortably above the 1. 8 rate estimated for the economy to be sustained in the long run. The equity will run will only come to an end when the fed starts raising rates aggressively, as was the case in 2006 and 2007. Great to have you with me. We had you on the radio show. So, look, the debate is this. Will the tax bill deliver the kind of nirvana growth rates that donnaald trump has for ecasted, or, are we looking at an impossible growth slowdown . This tax bill will not deliver the huge upsurge in growth that has been labeled by the presidency . If you are looking at shortterm, putting money into the economy, that has to be assumed. Whether that changes the path of the nominated growth for the u. S. Economy in the long term, that is debatable. Manus the noble laureate was literally scathing. He was repulsed. Manish you have had unfunded growth for a long time, in terms of money printing. The equity market will not go up. My point is, if you are looking at 2018, then this is can lid of. This is cumulative. Whether this will change for the u. S. Or not, thats a big question. We dont know. But i am happy to look at the data and go by the data. If you are looking at 2016 and 2017, that is the lesson. If you are trading on the headlines, you got it wrong. Manus i have got to have a word with you about phds, there are not many on the fed anymore. That worries me. I put together the s p 500 in dollar terms and in sterling terms, and in euro terms. 500. Ave 25 on the s p given what you have said, what is attainable in 2018 . Lets start off with the dollar. Manish on the u. S. . Manus yes, up 22 this year. What do i get back for my buck in 2018 . Manish i am looking at a low doubledigit return, 8 to 10 , i would say. It is very difficult to say where the numbers will be. You look at the bull market. Bull markets dont die of old age or valuation. Its difficult to say. I look at data more than anything else. The data points out this will continue. Manus does that mean three rate hikes . Manish well, three rate hikes is what i am thinking at the moment. Manus what turns you over to four . Manish if you have strong Inflation Numbers coming through, which we dont know. We are operating at 4. 1 for the unemployment rate, that is a low number. The counter to high inflation is, our people underemployed . If you are working less hours than you think you should be working. Look at the labor force division data. That is 4 or 5 lower than where it used to be. If they come back, you will not get inflation. If they dont come back and they are out for good, then inflation will come back. Manus goldman sachs, of course, you assume they look at the slack taken out. I started they show talking about three months bills. Take a look at this. Angst, anxiety. But i have been through this for 30 years. The bull market is covering the ratio the lowest since 2007. The price of money hitting the highest level since 2008 on the shorter market. Is this just a lot of noise about shutdown . Manish there is a lot of noise about shutdown, and thats a fac t. Thats all politics. You have far more politics than ever before. 20 years back, not everybody knew who the Central Bank Governors was. Now, Everybody Knows who the Central Bank Governor is. Manus we will talk more about the politics shortly. Stay with me. Singhch angst with manish from cross Bridge Capital. More to come. There was an explosion in libya and it cut the production line by tens of thousands of barrels per day. We will look at the real impact on the market. And bitcoin, it bites back. The cryptocurrency roller coaster continues its climb following a five day slump. So history. This is bloomberg. Manus it is just gone 4 13 a. M. In new york. This is bloomberg surveillance and im manus cranny. Taylor riggs is standing by. Taylor a capital stake in volvo, making it the largest shareholder. Nomura and Barclays Capital agreed to acquire the shares and tomitted to share the shares the chinese carmaker. Geely will they control of 88. 58 million class a shares, responding to 8. 2 of capital. Shell expects a potential impact to be favorable for the company and the operations in america. It says that will be primarily due to the future reduction in the income tax rates to 21 from 35 . Analysis is not a complete, but will impact fourthquarter results. Iphone shipment production for the first time next year. They are citing lackluster demand after the holiday season. Handset shipments during that could be 10 million less than he previously estimated. Thats your Bloomberg Business flash. Manus will is trading near its highest close well, closed at the highest level in two years. The pipeline carrying crew to libyas biggest export terminal has curbed the nations production. China ordered the top producer to halt output to combat winter pollution. Joining us now to discuss commodity markets, oil, and beyond is joe wallace. Still with me is manish singh. Thank you for coming in. Just a couple of weeks ago we saw brent well bid on the back of the u. K. Outage. Here we have the libya outage. Do we know the damage to the pipeline . We think it is Something Like 70,000 barrels out. In the grand scheme, that is not the end of the world and it does not compare to the u. K. Outage a couple weeks ago. That had a much bigger impact. No doubt, they are struggling. They have had problem after problem with militants, tankers being shot up because they did a deal with the wrong side, and so on and so forth. I dont think the Global Market is counting on it, but it is a nice bonus for prices when it does happen. Story i look at the oil and i just wonder where you stand on this. On the lefthand side, i have a u. K. Will outage and now this outage on libya and on the righthand side i have opec and nonopec telling us, apart from a review in june. I am looking at a squeeze in supporting markets, as opposed to something more substantial. Post the election in march, i think the russians will wobble a little bit. Joe there is certainly pressure building from the Oil Companies in russia. They are unhappy about the extension of the deal. On the other hand, there are bigger political constraints that have to be paid attention to as well. That there is no doubt that if you are russia, you have one of the lowest cost fractions in the world and you are asking yourself why you are restricting barrels in favor of other places which cost up to four times as much to get out of the ground. Manus if i look at the commodity market, manish, in a relative sense, if i look at the commodity total return relative to the s p 500, we are at a record low. People are saying, you should think of this as an opportunity to enter into commodities, whether it is oil and i think the saudis are talking 75. How bullish are you on commodities going into 2018 question mark copper is at a threeyear high this morning. On oil. I really bullish i think your supply will keep on growing in the u. S. , and that will be a big potential factor between the u. S. And russia in the latter part of 2018. In that sense, im bullish. However, i am not very bullish on the oil price. I think there is a sort of cap. The oil price cannot just run away, just because of supply i think, in particular from the u. S. Again, russia has far cheaper means of using oil than any other country. They are having issues and will think of how to produce more. Im not bullish on Oil Prices Going up. Manus i want to come back to the saudi story. The saudis expect oil revenue by 2023, rising to 11 Million Barrels a day by 2023. , hopes,e ambitious aspirations, or realistic targets . I have got a plan and i have to put something in the plan that with balancing the budget. This reminds me of the British Government balancing the budget. We are somewhere along the line in that plan. Theres two things. In terms of the production estimate, 11 Million Barrels, no question. They could do that tomorrow if they had the mind. They do have the capacity. The big question, which is unresolved for me, if you take 11r production to 1 Million Barrels a day, there is no doubt the pressure could round 75. There has got to be pressure on the shale producers. It is hard to see where they are making that calculation, but you could see at least half of that calculation being spot on. Manus one of the stories this morning is that we have recovered. We have found our footing. We are 10 years through the crisis. A new normal has been found and there is a firm footing for Global Growth. The imf says Global Growth will increase by 3. 7 . Goldman sachs says commodities will rally. Global growth is in a good spot. Is that something that will underlay these markets . Manish that is very important. That is why the miners are getting supported in that is a good story. Point we discussed during the radio interview is the u. S. Tax reform has a huge implications, for europe as well. That will cause European Countries to question whether they should be operating within a hightech environment. I dont think they will move lock stock and barrel with the u. S. I take it as a Silver Lining that the growth in the u. S. Could help emerging markets and in eu rrope. They could create the fiscal headroom for europe to create some reforms. If that happens, you could be in a multiyear growth story. Manus hold that thought. Stuart, thank you for being with us. My thanks to Stuart Wallace and manish singh. , looking toissuance accelerate on the back of a record 2018. Manus it is surveillance. You are watching manus cranny. Manish singh is my guest alongside me this morning. We are talking dollar bond issuance from the indian bond companies, accelerating to a record. Theys investors raised sovereign rate for the first time in 2004 in november. Lets have a conversation. Do you want to buy the bonds . Manish i would like to buy the bonds, and the reason is simple. We are looking for structural reform in india. We have an election next year, which means we will have better deliverance on growth and economic numbers. You should see the focus the whole of india has on gdp numbers. Manus 6. 3 , yeah. Manish besides that, we are collapsing many different taxes into one. Reflecting next year as well. Manus that is one of manish singhs calls for 2018. We will talk much more about the spectrum of inflation in 2018. Cannot live without it. So if you cant live without it. Why arent you using this guy . It makes your wifi awesomely fast. No. Still nope. Now were talking it gets you wifi here, here, and here. It even lets you take a time out. No no yes yes, indeed. Amazing speed, coverage and control. All with an xfi gateway. Find your awesome, and change the way you wifi. 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. Economics, finance, and politics. Theres one destination for that, surveillance. Good day to you. Lets get you your first word news. Taylor riggs is standing by. Taylor oil has traded d knew the highest closing two years. The oilne run by company that carries crude to libya exploded yesterday, reducing output to 100,000 barrels a day. Saudi arabia said it expects oil revenue to jump about 80 by 2023 to help the kingdom record its first Budget Surplus in a decade. Copper has surged to the highest level since 2014 after china ordered its top producer to halt. That added further impetus to a rally in the metals this year that has been driven by optimism about demand as well as supply disruptions. Gains now run to nine days, the longest streak since 2004. That makes the London Metal Exchange a top eight metal performer. Chinas Industrial Firm saw Profit Growth slow last month as the Producer Price rebound appeared to soften. Industrial profits rose 14. 9 in november from a year earlier. That compares with a previously reported 25. 1 . The United Nations sanctions on north korea are seen as unlikely to slow kim jonguns nuclear ambitions. The Security Council approved new steps on friday two imports by almost to slash imports. The richest people on earth gained 1 trillion this year as stock markets shrugged off economic, social, and political divisions. That is more than four times last years gain. The increase on the bloomberg billionaires index compares with an almost 20 index for the msci world index and the s p 500. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im taylor riggs and this is bloomberg. Manus thank you very much. Investors are keeping an eye on the momentum of the euro ahead of the german cpi data. That is due friday. The currency is seen extending its run against the dollar next year even though the ecb is an expected to abandon the near zero rates until 2019. How does this feed into stocks . Our next guest says he remains positive on equities with the eurozone and switzerland. Joining us now from zurich is pierre bose, head of european strategy at credit suisse. Menacing is alongside me for the ride. If i look at the euro, eurodollar is up 13 in 2017. Eurosterling is up 3. 6 in 2017. The market says that is unlikely to be the end of the story. We are up 8 on the stoxx 600. Holding back the story in the equities for europe . Pierre we dont think so. We think it is more a story of fundamentals. There is good cyclical momentum in eurozone. That should feed through to an equity market which tends to be more cyclical by its nature, given the composition of the market. Also think we are in that stage of the Business Cycle that earnings will also support european equities. It is not so much the euro as fundamentals for us. Manus fundamentals for you. ,trongest call going into 2018 if i look at the growth rate in europe, the strongest in 10 years. France is hiring at the fastest pace in 17 years. If i look at what macron is telling the world, labor market will be delivered in 18 to 24 months. Where is the biggest bang for my euro . Mentioned,you just we do like the french equity market. That is one of our calls within europe. Risks at thecal periphery, so we wouldnt be spending their. But certainly we think french equities are wellplaced. When you look at france over the last six to nine months, we think the equity market may have underpriced some of the positive momentum in france. Like european energy, european telecoms, and European Health care. We also upgraded industrials, again playing to the idea that if we continue to get the cyclical recovery, industrials continue to do well. Manus of that thought. Mannish sing is with crushed Bridge Capital. Manish singh is with crossBridge Capital. Do you agree with that . Do you want how do you want to look at europe . How do you