Bloomberg surveillance. U. S. Yields jumping to the highes level in three years. I looking at crude. The monthly report just coming out now. The report sees explosive growth in u. S. Oil output as prices rally. There is not that much of an impact for the moment on wti. Maybe traders are trying to see what that means for the markets. Coming up right here on bloomberg surveillance, we talked to an activist investor, one of europes largest equity funds later this hour. We will speak with gina miler about all things brexit and nigel wilson joins us to give us his take on where to find the best returns in 2018. Lets get straight to the bloomberg first word news with nejra cehic reporter Germanys Social Democratic Party is looking for other ways to sweeten its stint in angela merkel. Delegates bothdp this sunday on a proposal by Party Leaders to stop formal Coalition Talks with the chancellor. Vote,s predict a tight while young Party Activists lead a campaign to shun policy cover moses. Shun policy compromises. Britain must accept the eu court if it wants its banks to keep access to the Single Market. Macron, as he piled conditions on theresa may. Macron made the comments alongside may after a daylong summit. Rench i am not here to reward or to punish. I i am here to do the maximum for our mutual interests. I have one request, that the Single Market is preserved because it is fundamental. U. S. Federal reserve insider John Williams has been interviewed by the white house. It is according to a person familiar with the discussions. However, they say he was not viewed as being on the shortlist for the job. He is currently president of the feds Regional Bank in san francisco, when he took the reins in 2011. He served as a senior economist for bill clinton. Haveurope, economists brought forward their estimate for when the ecb the beginnings way among policymakers. No action is expected at the governing Council Meeting next thursday, but half of responders predicted essential bank will announce a definite end date for as a purchases by june. Global news 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries around the world. Im nejra cehic. This is bloomberg. Thecine in the u. S. , house of representatives has passed a spending bill to avoid a Government Shutdown. It would keep the government open through february 16 while all sides negotiate a longerterm funding. However, democrats in the senate say they have the votes to block the measure. They want republicans and President Trump to include protection for young immigrants. Current funding will run out at midnight today. We are joined by Stephanie Baker. First of all, what are the chances of them avoiding the Government Shutdown today . Stephanie it is hard to tell. We saw last night that senator Chuck Schumer said that he supported a continuing resolution to keep hte government going for a few days while they continue to negotiations. They might be able to get to a point where they can pass a spending bill that keeps them working for a few days. But theyve got republican senators that are against the house bill that are willing to vote. Senator john mccain might not be able to vote. They dont even have all the republican votes mind up. T votes lined up. You also have trump set to go to maralago this weekend. Will he do that if the government shuts down . Francine can he sign bills from maralago . Stephanie that might be the least of his problems. The optics of him going to maralago, hosting this celebration of his first year in office with tickets going for 100,000 each, i think hes got bigger issues. You know, should he be staying in washington to hammer out a deal . He has already come under criticism for not making enough of calls and the mixed messages coming from him have brought us to this point. Francine the optics are not great. Athink 250,000 for a couple maralago. What does a shutdown actually mean . Does it matter . Is it felt today, or in two weeks stephanie if there is a shutdown, it means everything but essential Government Services shuts down. It means hundreds of thousands of government workers go home. Many are not working over the weekend, but it means National Parks close down, vacationers might be at yosemite, for instance, will face difficulties. On howly depends they handle it, but it is a big deal the government shuts down. It is costly and stepping back, the government has been operating on his continuing resolutions for months. They cannot get a spending deal. For over six months they have had stock at measures for three months, two months, one month. This is no way to run a government. Francine thank you, stephanie. For more on the shutdown and what that would mean for the dollar, james foley joins us. Thank you. What does this mean for dollar . I think it is quite interesting. If we look back at the dollar and its relationship with safe haven currencies, it has been really advantageous. Sometimes the dollar catches a bid on the back of that, but right now that is not the case. We still have the swiss franc as the staples for the swiss haven. During 2017, it was clear the euro was taking over a safe haven role. With that still the case, i dont think the dollar will catch a bid on this. Francine what is moving the dollar . It seems to be dropping on the back of the shutdown fears. At the same time, they are ignoring higher treasury yields . What would this mean for the dollar, up or down . Jane the mindset of the dollar is negative. This explains why the dollar is moving lower. We have seen in the past treasuries move up and the doll ar appreciate higher. Right now, we are worried about the u. S. Shutting down and we would actually rather be in the euro, and in bunds. You have to remember, the euro has a huge current account surplus. That suggests its the euro, rather than the dollar, which is likely to be in the safe haven role. For many fx investors, the focus may not be the u. S. Government shutdown. That might be more of an issue for fixed income investors. The ecb will meet next week and perhaps the bank of japan meeting and being in focus as well. Francine depending on what President Trump says in davos next week, and i do not know if it is the right forum for it, but we might get an na ta pullingnt on nafft out. This is an issue for the make of canada and bank of mexico. With respect to the board, it would really start up speculation in the market that this will be where we see the u. S. Treating global trade. This will put china very much in the balance again. We are likely to have a lot more speculation. Whats he going to do with respect to the trade with china . It will bring up trading expectations on the front. Again, i think in the shorter term, this is likely to be overshadowed by what draghi says next week. Francine stephanie, when you look at the president in davos next week, what is he going there for . Do we have any understand of his thinking . Stephanie yes, we have been told that his agenda there is pushing american businesses, the american economy. It is very much the America First agenda. He wants to take a victory lap on the Corporate Tax bill he passed. Lets remember the last time the government shut down, it was fotr 16. To get ahey are able continuing resolution for the next few days, will they resulted in time for trump to get on a plane to davos . What are the optics of that, for him to go to davos with a crisis at home . Francine stephanie makes a great point, on whether the president will be able to go to davos. What does it mean for other currencies . Emerging currencies take a hit . Jane quite possibly. The market right now is really quite optimistic about low growth. That is underpinning risky assets and stock markets. Now, trump, of course, has the capacity, if he talks about trade deals, to put this in the works. However, this will not be new news. This is something the market has been getting used to since he was elected. For nafta, yes, it is very much up against it in the next few months, but with respect to other trade deals, we did not see so much bad news. Many people were anticipating this with respect to the u. S. And china last year. It is a big issue for the Canadian Dollar and the mexican peso. For many other currencies, we will be watching very carefully. I think the market will perhaps take this more in its stride, given the center of Global Growth right now. Francine thank you so much, jane foley, senior fx strategist at rob a bank and Stephanie Baker. Coming up, we speak with the cofounder of one of you ups largest the cofounder of one of europes capital funds. This is bloomberg. Francine economics, finance and politics. This is bloomberg surveillance. The term activist has become almost synonymous with the aggressive tactics. They have gone after big targets, including volvo, but cevian has its own brand of corporate partnership. What is cevian, and what is it trying to do . Lets go to zurich for the exclusive conversation. Good morning and thank you cevianch to be here at outside zurich. So, lets talk about activism for a moment. The reason i say that is because there is a widespread assumption about what activism is. At the same time, there is an understanding that every firm in the business of activism practices it differently. So, what is cevians brand of activism . When we started this strategy 20 years ago we had not even heard about activism. I was supposedly the biggest activist in europe. Our activism is rather an engaged shareholder. That means we are taking large spaces in a few companies, we make maybe two investments per year, sometimes 10 years, and we look at companies that are sound Good Companies and where the companies are underperforming. Where it is underperforming its peers. Then we are asking ourselves, isn we invest in th com company . Reporter would you say you are a take no prisoners activist, like a jusjeff smith from starboard . I think our environment is quite different in europe, an d our style is different. Over the last 20 years, we have been on the boards of our companies. We have never had to do a proxy fight. We are doing in more of a constructivist way. But we are pursuing change. We are pursuing change within the company because the company is not performing to where it should be. Therefore, we want to make sure the strategies and the right ones for the future. Reporter so, you say no proxy fight. Is that because you have not needed to . Correct. Reporter is that to say you would . We have not been in that situation you. What we are doing is good not just for us, but all stakeholders. We are not asking the question, what should we do to this company to make the price go up . We are thinking about, how do we make this company more valuable . You do that by making it more competitive, so it has the byproducts, gets the right customers, so it makes better profits, better cash flows. By doing that, we are creating value. Not just for us, but all the shareholders and stakeholders. Reporter you mentioned european activism and the nature of activism in eruope is different from what people in the states might be used to. What is the difference . If i look at the American Space of activism and the legacy, it came from the hedge fund side, as from the trading side. That is coming in, being pretty aggressive, going for shortterm measures. Not necessarily bad. Shortterm measures reporter like share buybacks. We are thinking about the whole company. Reporter so, lets pick an example. Gigantic german industrial company. Youve been in that stock for four an dd a half years. Will kind of impact have you had thus far . Its a giant transformation. A very well known company in germany. It is what of the largest companies. It employs about 150,000 people. Reporter and there are all kinds of companies, right . Correct, it has been built up over 100 years into a vast conglomerate with many different businesses, many of them very good businesses, but together, the structure of the company is way too complicated. That complexity is hampering the business from thriving. Reporter so, you have recently called for effectively a breakup of the company. We think it is not the right thing for a company to combine and try and find synergies between on the one hand, elevators and a more and buildingon, or factories and making order components. In this kind of fast moving where you have to be really good at what you do, if you are grading complexities, you are just making it difficult for the businesses to thrive. Reporter so, if complexity is a hindrance, i have to draw the conclusion that it is depressing the stock value. It has a market cap of just shy euros. Billion it should be worth double. If the margin targets were correct that the market put up four years, it would be 50 rutod euros per share, rather than 25. The important thing is that it is breaking up the company. This is about making sure that, thinkking about what management needs to do and what the board means to do. Think about the various components of the business, the elevator business. The question, how do we make sure this company is free to move ahead . Know,er as you probably the company is holding the annual general meeting today. Germany,eo is in projecting your proposals, your criticism and saying he needs more time. Reporter there has been a lot of time already. Frankly, the direction the company is taking is to restructure. Agreement to combine steel plans into one. He came out into the press this morning, indicating there would be a strategic deal with the company for the spring. That is good news. Reporter how much more time do you give them . I would suspect the Strategic Review would lead to basically, thorough review that would lead to a very thorough change. Reporter and if he does not do what you want . This is what we are looking at now and through the spring to have this work done. We have a representative on the board and we have dialogue. Francine you know what im getting at here. You whatsnt giv eyoe you want, it is the next step to campaign. The strategying that has been pursued so far has not really worked out. These targets were put out four or five years ago to move the margins of the industrial business from 3. 5 presented with the competitors are around 6 to 7 . They are not there. That means something is not working and the root cause of that problem is the structure of the group. Reporter you seem to have infinite patience. I think what we have is a combination of patients and impatience. And i think that is what we need to have. Francine you have made a lot of money. It is similar to the way that volvo reporter i was just about to get there. By which you mean, what . You sold your interest in volov. What do you do with that capital . Let me back up one step. We invested in volvo 10 years ago. The first three or four years ago were difficult to get our thoughts in. Changes were made to the Management Team and the board that could support the company in doing a contingence from being one of the loudest in the industry to one of the best. Taking advantage of 4 to coast to 10 , we doubled our stakes years ago. Reporter what do you do with the capital . That capital will invest in situations. Reporter what appeals to you . Im not suggesting that striking fear in the heart of every ceo in america, people do want to know where you are likely to next . Tigate you are looking at financial services. Were looking at all those industries you have talked about. But we will not have about what company we are investing in. A company, we in look at the company for many, many years. We have been following ericsson for 10 years. We have a team of 30 investment professionals that make maybe two investments per year. The travel the globe and meet with the competitors of the company. There is a sense that the easy money and activism has been made in the u. S. Few companies had wrong management for erratic boards. How do you compare that with the activist opportunity in europe. And never thought about this in europe. This is a very engaged strategy and going into companies and making sure they perform well, that they will be better companies. That is very hard for them it takes a lot of preparation. Because we designed the change plan before we advised to shelve the company. Then it takes hard work in a collegian matter with the other members of the company to make it a better company. I have never seen if the money. I love spending time with you outside zurich. That was lars forberg. S you heard, hes no carl ichan. Francine thank you. Up next, gina miller, sounding partner of scm private, joins us to talk about all things brexit. Id andl also talk misf regulation francine welcome to our weekly brexit show. Im Francine Lacqua here in london. Lets get you a roundup of the week sick of brexit news with nejra cehic. Nejra the ceo of lloyds told bloomberg she is still planning for a hard brexit. The comments come as the u. K. Is preparing to resume talks with the European Union. Were still going full steam ahead on our plans. About 2 billion euros of business for us. Asare going full steam ahead if it is going to be a hard brexit. Mays hopes of thawing frosty relations with donald trump at a meeting in davos next week look to be fading. According to people familiar with the matter, the Prime Ministers team wanted to schedule a conversation during the World Economic forum. While there is still a chance they will meet, coordinating their diaries is said to the proving difficult. Global news 24 hours a day powered by more than 2700 journalists and analysts in more than 120 countries. Im nejra cehic. This is bloomberg. Francine thank you so much. Just getting some u. K. Retail sales. If you look at retail sales excluding fuel, month on month, 1. 6 . Year on year is a little better than expected. It is weaker both on the monthly and yearly side. Trying to see whether theres a little bit of pound movement. Also looking at europound. Something we still quite like to look at. At i guess the concern overall is the black friday hangover. We look at retail sales,