Manus europe rallied. You are welcome. It is surveillance and i am manus cranny. Rallied. Ment, europe where up on the stoxx 600. It was text and telecoms that to the heavy lifting, nothing compared to your performance in asia. Record highs in asia. You are looking at levels that you havent seen since the 1990s in japan. Technology up 50 in asia. Europe, you are seeing this growth story. It is absolutely intact. The next question are you, European Equity markets, can you sustain the growth gains that we have had the euro at around 120 . Could the euro valuation unseat the story we see here . Week,llar index, what a what a year. This is the first yearly loss since 2012 for the dollar. You are seeing another push low. You get a 3 growth rate, you get a tax reform deal, you get three hikes from the Federal Reserve and still the dollar is lower. 2 lower from here at end of 2018. The most bearish view is the dollar will be down by another 5. 5 , not everybody is so pessimistic. On the upside, you get a rally of 6 . Spot index down near 1 . Eurodollar, 119. We are waiting to see what happens next with the European Central bank. Will they change their language in the middle of the year . That is what ing told me this morning on daybreak. Of thedy for a resetting language coming from mario draghi. Italians have an election. Coalition grand coalition. I said we had quite an enjoyable collection of people to enjoy and to join us. Nandini ramakrishnan will join the team. We will speak to Luigi Zingales zingales. I Michael Purves and chief global strategist. This be up the s p up this year. In the meantime, there is one deskthat Close Software 17 closes off 2017 with a promise, it is taylor riggs. Warned donald trump has china over tales of oil to north korea. Says theretellite are chinese vessels transferring oil to north korea ships. Donald trump tweeted caught redhanded. There will never be a friendly solution if this continues. While themp is said investigation into possible ties between his campaign in russia make u. S. Look very bad he believes Robert Mueller is going to be fair. The comment was made in an interview with the new york times. Even republicans argued that the investigation is tainted. The u. K. Government is withholding the publication of secret files on the creation of the european union. The documents date from 1992 and were due to be released today under the 25yearold but the 500 files, one is a 14 are being held back. The Cabinet Office hides them liberally hides them the liberally. Theresa may will meet Emmanuel Macron to begin trade talks with the european union. Talkay use the meeting to for control between the two countries after brexit. The issue of who pays for hter Border Patrol checks over in liberia, george has been elected the next president. It marks the first fully democratic transition in more than 70 years. He play for top Football Clubs. Global news, 24 hours a day powered by more than 127 journalists in more than one at to 20 countries. I am taylor riggs. Manus thank you very much. Heckled, the dollar. It is had its test it is headed for its biggest weekend drops. Green bay dropped against all major peers on the way to its worst year and more than decade. The 10 year treasury market take a little bit higher after in a twoday slide. U. S. Inflation was surprised in 2018 and a bond market tension could easily be the catalyst for an asset correction story. Patrick armstrong the cio of Plurimi Wealth joins us. He just joins us on the radio. Thearted talking about dollar. This is btv 1595. If i started the year and we got 3 growth, a tax reform, three hikes interwar the way and the dollar rally. Why . Did the fed not matter anymore . What is holding the dollar back . Patrick that was my biggest mistake of 2017. It is gone to hike three times, strong u. S. Economic growth and the ecb is going to remain on board with kiwi, just with qe. The current account deficit in the United States and the political instability created by trump, wheres the dollar store off desk sold off, equity markets never did but the dollar did and never seem to recover. Manus very honest of you, well done. Not many people come on essay, i got it wrong. If i take myself forward, is it a rerun . Is it a rerun . Does the dollar trade lower in 2018 . Think it patrick i is not going to rise much but i think it will. The fed will be the driver. Thefed is in front of all Central Banks and the Interest Rates, you havent seen treasuries with the fed on the short end pushing that up. The long and rallies going to create capital flows. Manus lets break down the bond story. We never really pounded through on the treasury market because we didnt get the whites of the eyes of inflation. On the radio program, you said to me that story is going to evolve. Dont mind me because my opinion is an important. Yours is. Why do you think we are going to get inflation . Patrick sharp patrick you have 12 months of ewen dollar. Dollar of ewen weak dollar. There is where inflation is going to start to emerge. You dont get inflation unless people are paid more and they consume more. Unless it is consumed by borrowing, you need ways growth. The are some warning signs that we will get ways growth. The most pressing issue for Small Businesses in america, 22 of Small Business owners responded texas. Texas are their biggest worry. Taxes. Taxes are their biggest worry. The ability to attract labor. It is a issue for Small Businesses. Manus on unraveling of the bond market at 3 . Patrick i think will go to three and a quarter. The markets are not expecting that. Every risk asset is based on tenyear treasury. Manus lets take that. Three 3. 5. Lets look at volatility. This is the vix. We are seeing at volumes traded almost 730,000 options traded. Utures changed hands that is the most on record and yet the vix language at 11 . Volume backat do to of does that turn volatility up . Does volatility ratchet higher volatilitytrick will spike higher if it to that three and a quarter in a quick manner. If it is a slow grind higher where Economic Expectations are improving, the market might be able to cook with that. If we get attention that is revoked by the fed hiking when there isnt the signed inflation there isnt this signs of inflation, that could push volatility. The incentive to shortfall is so attractive that if you bet nothing happens in the next three weeks, you can get a 50 desk at a 15 return assured in the january features. That is a pretty good return. You get huge shorts and the vix. The because the vix not because the vix. Manus we got a whole lot more to get through. Some of the calls for 2018. Stay with the Surveillance Team because they are lost in this last hour. Banking on uber. Investors hope a new deal with Technology Billionaire will smooth the road ahead for the ride heading up. This is bloomberg. Manus economics, finance, politics. One this nation surveillance. Uber shareholders have agreed to sell a sizable stake in the ride ridesharing cap company as it is now officially known in the u. K. And to softbank group. The transaction implies 48 billion valuation for uber. Our guest host, patrick armstrong, is from the rini rimi whererom plu he is the cio. Patrick there are issues facing right now and the ipo isnt going up until next year. People are keen to crystallize some of the gains and they think they are giving and nice discount. Manus you mentioned the investments, typically they want to get out. Uber has been around since 2009. It is an expected to go public in till 2019. It has been through a lot of hurdles this year in terms of management, in terms of accusations, litigation and it is still mired in litigation in this country. Technically, it has lost its license. How does it look to you from the patrick s an investor . I think everything you alluded to is a reason you would want to get out and you get an illiquidity discount. People got pretty big gains. Hacking of private information of uber is the other issue. I think it is a company that is growing rapidly still. It is facing some issues, and it is and i position it is an acquisition that long the softbank takes a long view on. Manus when i look at something ways, i yen, in many know softbank has the muscle to do this. Dollar yen has played into this,. S as far as currency as far as dollar yen, what next for that . If you see that kind of resistance from yen, does that carry through . Pietro i dont think there is going to be Much Movement in it. The divergence between what the bank of japan and what the fed is going to be doing will lead to a strong dollar. I dont think it is going to be sharp moves in the currencies. Manus one of the things i started with was the msci asia pacific. What is still a performance that has been. Part of that has been technology. Something you want to lever into again in 2018 . Patrick i dont think so. These are the ones at risks at risk. There is no real country in recession right now. I think you want to have oldfashioned industrial. Im a banks. The most valued i want banks. We are short netflix, tesla. The enthusiasm and optimism are the good news in the price. If there is any disappointment, there is an theres air pockets. Why wouldfor example, you buy tencent . Tencent 30 cheaper if you buy in the South African listing. They want to on the direct asian stocks. These are the kind of things that happened when there is extremely enthusiasm when people dont care the price they are being for something. Manus heavy hit extreme enthusiasm have we hit extremely enthusiasm . 22 return in the United States of america, is perhaps extreme enthusiasm. Do you think you are going to see do you remember we talked about a rotation out of technology and into perhaps more growth let stocks . Patrick we saw some of our tech names at some of our big companies. We sold microsoft in april. That is when they start to get fully valued. We are shorting companies that dont have Sustainable Business models. Its got disney that has all the fox content. It is going to come up with a competing service. Earnings. 190 times netflix is going to really be competition going forward. Amazon has various to entry. Manus patch ago we dont own amazon. Manus find it ever got to push along. Pesek is the cio of Plurimi Wealth. Why would theresa mays government hold the files. Well discuss. This is bloomberg. Manus you are watching bloomberg surveillance. I am manus cranny in london. The u. K. Government is withholding publication of secret files on the creation of the european union. The documents date from 1992. They were due to be released today under the 25 year rule. Back and ang held dozen of those related to the european politics. The Cabinet Office denies elaborately hiding sensitive materials is a cause for the papers to be published. Fascinating story this morning. I think i take my mind back to 1992 when the pound was expunged from the Exchange Rate mechanism. Interest rates went to 15 . Do you remember just rate of 15 . What is fascinating here is the papers they did release were the ones which are around the expulsion of britain from the Exchange Rate mechanism. Almost decisive almost divisive with at least. Patrick we dont know what they release. Manus this is very brexit orientated. One could assume. Setting up the gambit for the trade negotiations. Probably of the other side of things were talking about benefit. Manus this expunged is any of those. The pound has had a little bit of a better year. Charthave a look at the this is the performance this year note of the last year and to an extent a lot of those if you get a transition deal, this is going to help take the pound higher into would you agree with that . Is 140 attainable . Patrick i dont think so. I think the transition is good news. It is not really good news, it still leads to uncertainty and you talking about brexit every day for the next two years. Manus i love talking about brexit. Patrick nothing is going to happen. When you have these transitory deals the lead to uncertainty, if youre a multinational company, where are you going to make your hundred billion pound . It is going to lead to a lot more investment in europe over the u. K. And that uncertainty. Manus more uncertainty to come. With the bank of england will do is anyones guess. We have more to get through. Patrick armstrong from serenely just from plurimi stays with us. Is there anywhere gas left in the tank. Bring that bell. What investors are looking at for 2018. Manus economics, finance and politics. This is bloomberg surveillance. I am manus cranny in london. Literature first word news with taylor riggs. Taylor u. S. President donald trump has warned china over sales of oil to north korea. Official,ified korean u. S. Satellites have observed chinese vessels transferring oil to north korean ships 30 times since china is allowing oil to go to north korea, there will never be at from the solution if this continues. U. K. Prime minister will meet french president next month as britain years up for trade talks with the european union. Macron may use the meeting to discuss financing some of the Border Control between the two countries after brexit. The issue of who pays for tighter border checks could be a further headache from a as she seeks to agree to a transition the oh as well as transition period as well as the bloc. On march 4. The vote could lead to a Hung Parliament and a further period of turbulence. The antiestablishment five Start Movement ahead of the Democratic Party and the potential centerright coalition. Former Federal Reserve vice chairman has said the republican tax overall will benefit americans and middleclass he made comments with kathleen hey. Middleclass tax cuts are temporary and they will go away according to the slow. But they may not. I think it is very heavily weighted toward business and toward upper income people. Taylor in the u. K. , a new batch of government documents have revealed a remarkable tale of topflight politics in zoology. The papers from 1981 show that Margaret Thatcher refused to share her concorde with a giant panda on her first trip to visit ronald reagan. The iron lady said mammals bad luck to politicians. Mammals brought that luck to politicians. Global news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. This is bloomberg. Manus thank you very much. After a bumpy year for global stocks, how much has the market got left in the tank . Our guest host says that while we expect continued expansion, the risk for equities will be magnified because the Global Economy is not going to replicate data results it had throughout 2017. He expects negative returns on u. S. Equities, small positive on european equities. Joining us now is our senior bank analysts, jonathan tice. Jonathan, welcome. We chatted a couple of times this morning. Ou express some cracking views from a valuation perspective, there are a couple of things driving banks, what are they . Jonathan 2 to 3 revenue growth, and most. Provision stay low. It is difficult to see much momentum. Is, one,tment story capital return. It is bad debt cleanup. The new rules on thats. New rules on that. Bad bank debt. This is one of the big stories for you going into 2018 which is about high, nonperforming loans. But this could be quite a big wildcard play for you and 2018. You have to look at how italian banks were trading. Two opposing sides talking about it. The bad debt in italy. It is begin to fall but a long way to go. Ireland, you got npl ratios doubledigit. Dont forget greece. There is a lot of work yet to do. The rate of earnings position as you clean up the Balance Sheet is a very interesting story. I dont think well get an answer overnight. Manus patrick, let me bring you into the conversation. Banks up 8. 15 . Jonathan says they could be a part of the wildcard stack for next year. View . Agree the b. I. Patrick we like difference banks. They are trading it book value. They are trading at book value. With french banks, your trading 10 pounds earnings. Youve got not a terrible amount of bad debt. Difference banks the french banks are preferred play in europe. Manus we could talk about basel and this does play in. We have had some kind of curtain raiser in what we can expect for banks. Jonathan, you said get ready for banks of ing to give us more as a result of basel. Jonathan they have been using the uncertainty for a long time to defer paying. I wouldnt disagree on the french banks. B p is huge. What do you really play their. What do you really play there . Selling, it iser a hard to be. Manus you mentioned turnarounds. The turnarounds are barclays with jes staley hopefully. Obviously Commerce Bank obviously, commerzbank. Those kind of stores, are they going to be front and center for you . They are big stories. Deutsche bank, we dont on the stock. I dont the risks but i feel very comfortable that they are an ongoing entity that are valuable forever. You do get a reasonable premium. Manus jonathan, you mentioned to me, i talked about bitcoin and you said i have written a bit written a piece on blockchain the could provide an additional boost to the financial story. Why . And of the bases of the trade. I know the bases of the trade. Jonathan europe at the first oil trades early in 2017. You got hsbc looking at trade finance and the group they said they are going to commercialize as of the second half of 2018. Youre getting the cost cuts out. His will be a beneficial revenues are not really going anywhere. Lets not forget hsbc and standard chartered. If you look at revenue expectations for the next year, those two are the very top