and the administration's plan to ease regulation. have a look at european equities, a different color on the wonderful gmm function. yesterday this was a sea of red. the biggest increase for europe's benchmarks is stoxx 600 since april of 2017. the gauge is rising for the first day in seven. we saw a big decline yesterday of the magnitude of 2.4%, to the love was level since the end of august. oflowest level since the end august. currencies falling against the dollar, bond yields declining and the german ten-year is higher. let's get to some of the earnings, profits fell more than expected last quarter from a company that lost patent protection when it's blockbuster insulin, the impact from recently made acquisitions. billione more than $16 of deals last month and shares down 1.5%. rio tinto with shares up 9/10 of 1%, the number two minor. it raised dividend payments. it says it will extend a share buyback program, responding to a request from shareholders like blackrock. underlying profit for 2017, their best results since 2014. shares in rio tinto up 1% today. german industrial production slipping in december after strong momentum throughout the year help europe's biggest economy expand at the fastest pace since 2011. factory output declined and bolstered by strong domestic demand and surging trade worldwide. manufacturing is driving germany's economic boom and we will talk more about the eurozone the economy in a second . how is it looking in the u.s.? julie: we have wide swings in the major averages, at the highs of the session after opening lower, similar to yesterday. what happens the rest of the day? we have had big volatility and bouncing around. the point range in the major averages, this is all three major averages. we have had a wide spread between the highs and lows of the session and the percentage the largest in the dow, 1.5% range in today's session alone. losers,ings winners and in the midst of earnings season. a corporation is the winner, the maker of packaging for consumer products and with an arrow is taking estimates. -- beating estimates. akamai better than forecasted. e, their fourth quarter traffic falling, it is still facing challenges. microchip technology, we have had semiconductors rebounding on earnings but this company forecasting fourth-quarter sales that missed estimates and seasonable consumer softness. a half hour after we got the oil numbers, how it is doing, it has not recovered. we saw donald -- ethylene and this bullet inventories -- gasoline and distal it inventories a problem. mark? mark: markets rebounding with some investors saying the fear of interest rate hikes was the spark for the stampede out of equities. let's bring in jean-claude trichet, former president of the ecb and current european group chairman of the trilateral group. thank you for joining us. do you have a sense of what caused what was deemed the stampede in equities? >> as very often in such circumstances, a multidimensional cause. that obvious that the idea the u.s. economy would need higher rates. the fact that inflation seems to be much better, to the extent they are looking for more inflation in the u.s. i would say the fact that the price earnings ratio are easily -- obviously very high, and a large number of observers had said that the correction was probably necessary. and likely. you see a number of factors play their role. we are observing a correction. a number are saying it is a healthy correction and we needed it because we were too high in terms of the historical price-earnings ratio. what will happen next, that is an open question. whether we are on the -- only observing a mild correction or a gentle correction, or whether it is something bigger is a question. bankers do not like to use the bubble work but janet yellen in her parting ,nterview cited properties stockmarket market, did not use the bubble word but mentioned them. now you are no longer a central banker, are you worried at all about certain aspects of the global asset space? in bubble territory? and the implications? >> absolutely. at the global level the economy, which i continued to leverage -- which had continued to leverage at the same pace after the crisis as was before the crisis. more or less at the same pace. clearly, ired very think that is a consensus, over leverage had been one of the then,ions of the crisis, if i take this indicator, global, public and private leverage as a percentage of global gdp as a permanent indicator, we are today in a situation which is more vulnerable than was the case in 2007, 2008. if i take that indicator. this is no time for complacency for all of us. private sector or public sector. i would say also that a vast economies, which were -- advanced economies, at the center of the crisis in 2007 and 2008, and developing countries and emerging countries, which may be now, because they are also leveraging properly, at the epicenter of the next crisis. at the global level, no time for complacency. we have indicators that are worrisome. vonnie: what are the warnings and where would you be looking for something to maybe collapse? it is not the problem. not for observing the next collapse but for embarking on what is necessary at the global level. less indebtedness and more liquidity. in all countries. for the private and public sector, not having the bias in favor of the indebtedness, bonds. if any buyer is possible, legally, in terms of taxation. buyers in favor of liquidity across public debt, it is very important not to accumulate and by public debt -- buy public debt which has been the case in many countries. not only in the advanced economies but emerging economies. addressing ther market of the global economy, this is a question for authorities and for the private sector. vonnie: that is not the direction we are going in the united states. we are getting more indebted and maybe an infrastructure plan which would put us more in debt, publicly. what will that lead to? what will be the major ramifications that would be negative? >> i have to say that i am more a a little bit, because -- i am more even a little bit, -- i am worried a little bit, because that's not what you a what you would expect at this point in the cycle, embarking on a big spending program. thisis not natural in present day part of the cycle. we will see what happens. the u.s., unfortunately, my own understanding is that it used to deficitith an account and savings in the u.s., lower than investment, which is needed. much more because of the government, and the household, then the corporate sector, which thriving and very impressive. households on the one hand, government on the other hand, have very meager savings or negative savings. that is a problem for the u.s. but for a number of advanced economies. mark: jean-claude trichet, former ecb president stays with us. up next, the ecb's future. stay with us. this is bloomberg. ♪ ♪ inflation, we have come in the medium-term, the price stability will be there. that is why i think in this year, we can accept the next program in order start with coming back to a more normal monetary policy. mark: the ecb executive board earlier,eaking to us talking about the eventual wind down of the ecb qe policy. we are back with jean-claude trichet, former ecb president. a healthy debate about when and if the asset purchase program comes to an end. do you think it will happen in 2018? do you think their tv program -- end?ogram will >> it is open, they could decide to stop or continue a little bit. it will totally depend on what they will observe, at the level of the governing continues and we will hear some that are considering that it is about time to say it is over. on the other hand, they are totally defending on -- depending on inflation and there are signs that inflation now -- the underlying inflation might be there. taking into account the future inflation, which is with a good economy, and it is good. much more than what was foreseen by all observers, imf and ecb. we are in an episode that is encouraging and we will see. the collegial wisdom will play its role. correctlyhink quite in the past two taking into account where we stand. i hope it will be confirmed that they can continue to be wise. stop --permits to mark: persuade me that inflation is or could move towards the ecb goal of just under 2%. >> we have undoubtedly signs that inflation -- underlying inflation is there in a number of countries. germany,look at recent you see to which extent the unit labor costs may advance and it will have an influence on inflation. i hope we will not observe too much inflation in italy or france, because they have to catch it with the competitiveness they had lost before. it is complex, europe. 2% -- less whole is than 2% but close to 2% in the medium-term. for countries that are very competitive, they may be more than 2% and countries not competitive are less in employment. be careful on the cost and continue to moderate your cost. europe is complex. we should not oversimplify the recommendations. vonnie: given that, what is the correct level for the euro? trading versus the dollar at 1.2295, should there be concern? have wasncern i would not the fluctuation we had observed in recent times. that are market laid and can be understood. atdebt and observers looking what is happening on both sides of the atlantic. what would worry me is if authorities are embarking on talking down there currencies. remember,as you may something coming from the u.s. government that was not encouraging, but has been corrected. corrected.has been being at the very heart of the international monetary system, and being one of the major countries and currencies being at the heart of the international monetary system, should not embark on talking down its currency. vonnie: are we at risk of a currency cold war? as i saw it called earlier today. >> i hope not because it would be the worst possible episode, and we did not have any kind of cold war between the major currencies that are making me international monetary system. we have not had that -- i never observed that because it would not be proper. it would play against the interest of all the -- interest of all. unfortunately, a number of observers or economists are acting as if it's continent or nation is isolated. that is not the case. embarking on such war is to the detriment of all. mark: can we talk about positions within the ecb? they, we discover that spanish economy minister put forward to become the next vice president. now -- some say that one is to political for the job -- he is too political for the job? >> i will not talk about the specific candidates, it is the responsibility as the -- of the heads of states and governments, as always has been the case. i will let them decide. that being said, of course, the ecb is independent and independence is key in the treaty. the treaty has been respected. legally and it is part of the credibility and authority of the central bank. it does not drive me to conclude that any individual would be excluded. because the independent, you have it in the treaty and you are not supposed to accept any instruction on anybody when you are a member of the governing council. you even are not permitted to ask for any instructions from anybody. including the political sphere. vonnie: the question of who will succeed mario draghi? jens weidmann is a potential successor. maybe withdrawe -- would he maybe withdraw stimulus too fast? >> i will not comment on the future president of the ecb, i trust the wisdom of the head and states and government. we have very important decisions. don't forget, the decision taken by -- the governing council who decides. it was the case when i was president and the case with mario draghi and also my predecessor. as in the united states of america, we have open market committee deciding, it is the same in europe. there is a visibility of the president. which is normal. he is not -- vonnie: he is a message bringer. at the trilateral commission, there is a question of whether north america, western europe, and japan are as close as they used to be. what is the primary concern of the group right now? confidence,ay that cooperation, between all countries that are systemic at the global level. which is the franchise of the g20 itself, is the franchise of the trilateral commission. we are doing what we can to exchange views of all persuasions, all sensitivities. it is very important. we are not associated with any association but we trust that the world, which is interconnected, which is so important in terms of links -- interlinking between all countries and all markets. between all economies. we need to have confidence and cooperation. and what goes in that direction is, for us, very important. vonnie: a new leader at the federal reserve. do you anticipate jerome powell's leadership will be affected of interest rate moves? three or four on the united states this year? >> after i said on the ecb, i will repeat. vonnie: i had to drive. -- i had to try. >> i trust the wisdom of the open market committee. observation and i will not embark. we will see. what is clear is that, if it is important for the central bank, on both sides of the atlantic, to remain totally credible in the eyes of the economy as a whole. in the eyes of market participants. and be able to guarantee, any medium and long-term, price stability. vonnie: yes. >> with a solid anchoring of inflation expectations. talking about how important independence was to the european central bank and with the new fed chair, inflation rising, and the need to maybe raise interest rates by more than markets expected, may 8 not pleased president. -- maybe a not pleased president. that forof a risk is the new fed chair? >> you do not pleased always executive branches, when you are a responsible central bank. i have known that myself. the i expect is that central bank of the united states, as it has been doing in the past, take the right decisions, maintain its own credibility, which is essential. we are in a world that is volatile and we can see that in the market today. we could see that tomorrow in difficult circumstances, as we have seen in 2007 and 2008, the authority and credibility of the central bank. particularly of the ecb and federal reserve. it is essential. the new president will do the yellen andet maintain authority and credibility. mark: it has been a pleasure. jean-claude trichet, former ecb president. three minutes away from the close. this is bloomberg. ♪ ♪ bloomberg's european headquarters in london. stocks finishing the day in european trading. i am mark barton. stocks rising debate, a different story -- rising today, a different story from yesterday. we made up a lot of the gains. rising for the first day across european markets after the longest losing run in three months. the gauge yesterday at its lowest level since the end of august and its biggest one-day fall in 1.5 years. the biggest asset manager says it is too early to buy stocks and investors need the dust to settle. that is the situation across the european equity market. i want to show you shares of carlsberg, not just about the broader markets, but about individual stocks. the brewer raising its dividend by 50% and increasing its cost savings target by 15% and reducing expenses faster than expected. earnings will rise by mid-single-digit percentage in 2018. -- thecer of two ball volume slumped because of restrictions of plastic beer bottles. the ceo is feeding the turnaround around of carlsberg by expanding craft beer and cutting jobs and closing breweries, and exiting slowing markets so just finland. -- such as finland. statoil, the biggest crude producer in europe beating earnings expectations and sending shares up by 4.6% in the fourth quarter. thanks to record production and a recovery of commodity prices. it is ready to race investments in new projects and deliver more cash to shareholders. the optimism is in the drastic reduction of cost across operations forced by the collapse in crude prices in 2014. statoil can turn a profit of less than $50 per barrel, well below the benchmark it brent current price of roughly $60 -- $67. shares up by 4.6% today here mark: in the u.s. -- today. vonnie: vix down to 23. market a sighhe of relief. dollar-yen with a 109 handle, incrementally higher. a little bit stronger for the japanese yen as the dollar -- inventory data, crude oil, 6192, down two dollars. south african rand is a little bit weaker today but generally strengthening as it looks like zuma maybe going within the month. markets on this side of the atlantic, we are in the green in the u.s., a big difference from two days ago. mexico is down a little bit. some of latin american countries having a better day today by the volatility we experienced the last couple of days has been normal for some of the latin american countries. mark: from market insight and gartside the chief international investment officer for jpmorgan asset management. how have things been in recent days? >> welcome volatility because the absence of volatility was a problem. mark: welcome volatility, some say it is welcome before it happens but it happens, not so welcome, you are embracing it to -- embracing it. >> from volatility, you get opportunity. mark: the 10 year yield is a focal point. a big swing in recent days. what are the pivotal levels for you from here? 258 -- twoownside, and 5/8 is key and on the upside it is three. we are mid that. when you take a step back and look at the economic data, the 10 year will test the 3% level in the coming weeks. vonnie: you are with the old regime. you say it will test in the coming weeks, does it back off the 3% or continue higher? we will have more inflation data by then. >> when you look at the inflation data, the reality is fairly muted. hardly that inflation is raging out of control. there is also a great rotation. a great rotation into fixed income. when you look at the flows into core bonds and the u.s., another fixed income assets, that is supportive of tapping yields at around the 3% mark. vonnie: well that continue? you say in influx" bonds and corporate bonds in the u.s., but they did not benefit from the volatility of the last couple of days. >> they did not. that is the key. when you look at the volatility, center is equity markets. the bond piece, you see stability. when you look at investment rate or high yields. the reality is spreads are still pretty wide. you are looking at high-yield bonds and spreads approaching 4%. it does not accord with economic reality. a percent tighter than where we are now. opportunitiesing present themselves in recent days? >> one is high-yield, u.s. high-yield. 615 today. you have a nice backup. emerging markets. when you look at emerging markets, 40, 50 basis points higher in yield, that is an interesting opportunity because emerging markets have a plan global growth. that is going up. mark: rising interest rate environment, particularly in the u.s., you may see a not gone affect toem -- not on em. >> a young moved -- a yields 3%, over that would be a taper tantrum environment of mid-2013. we are not talking about that but yields going up for the right reasons. the premium on emerging markets is high. the average local emerging-market gets real yields up 6%, 6.25% today, a steal. when you have core fixed income at its lowest level. vonnie: would you be buying indices of emerging-market bonds , or looking at specific countries or local denominated bonds? >> when you look at emerging markets it is all about the country's election. no two are equal and with emerging markets, the place to look is the local side. , 6%,verage local yields 6.25%, if you go to a brazil, you have double that yield. the benefit of the local side is you get the currency kicker. we are in an environment structurally where the dollar is likely to be week. -- weak. vonnie: is it worth taking the risk in brazil or colombia, venezuela? latin america? >> when you look at countries like brazil, we think they offer great value. you have an economy that is growing. you have a great fundamental backdrop. and attractive yields. when you look at the entirety of emerging markets, an argument to say investors are very underinvested there. the yield picker relative to treasuries or core they can come is attractive. -- core fixed income is attractive. boe, weak mark: data in recent days, does that deter what many say it will be a hot this message that caucus -- hawkish message from mark carney? will be around to present in the u.k. and the risk of that is to the upside, not downside. because the u.k. is higher by much stronger global growth. when you look at the bank of england this week, they should eing up the rate hike, arguably the first of two this year. in november, the end of the year. u.k. rates look way too low, given the economic backdrop. mark: thank you for joining us, nick gartside at jpmorgan asset management. vonnie: let's get the first word news with courtney donohoe. senateapitol hill, negotiators are coming up with a long-term budget deal that would prevent a government shutdown tomorrow night. the leader of the group of conservatives, mark meadows, says it will be a bipartisan deal but it is likely to pass because increases and defense and other spending will appeal to many lawmakers. vice president mike pence is in japan where he is threatening north korea with the toughest economic sanctions yet. he spoke after meeting with the japan prime ministers shinzo abe. has made his sister to represent north korea at the winter olympics in south korea and she will be the first kim dynasty official representative to set foot in the south. in germany, the way is clear for , hera merkel's fourth term bloc has reached a deal with official democrats to form a coalition government and people familiar with the matter say social democrats will run the finance foreign and labor ministries. her block will -- the deal finishes a four-month stalemate and social democrats still have to ratify the agreement. the european union for next the euro area economy will grow faster than expected this year and next year. they forecast 2.3% growth this year and 2% in 2019, but says inflation will remain subdued. that is a disappointment to the european central bank. global news 24 hours a day, powered by more than 2700 journalist and analysts in more than 120 countries. i am courtney donohoe. this is bloomberg. vonnie: coming up, is the white house concerned about inflation at how strong is the u.s. economy? we put the questions to kevin hassett of the white house council of economic advisers. that is next. this is bloomberg. ♪ ♪ mark: live from london, i am mark barton. vonnie: live from new york i am vonnie quinn and this is the are being close on bloomberg markets. shares of chipotle falling the most in three months. that is after the earnings report showed traffic declining at its restaurants with shares off more than 10%. taylor riggs is with us for details. taylor: coming to my terminal and we will talk about same-store sales. we are looking at g #btv 5249. same-store sales in the fourth quarter of december year-over-year rose about 9/10 of 1%. let's go back to 2015. the food safety crisis. it push them through a bad 2016, you sought recovery in 2017 but struggling to recover. the good news is, well put traffic was negative, putting some pressure on same-store sales, the increased prices, which is helping boost revenue. we have a chart showing revenue. they can grow about 8%, going forward for the next years after growing 17% this year. revenue looks up. the rising cost -- the rising prices are helping margins. trying to offset decline in foot traffic. a little bit of a cautious note. mark: what do analysts say will be key for the company to speed up its turnaround? taylor: they are waiting for a new ceo, which may help them. one analyst at morgan stanley said that the current ceo said he will resign once the new a second of takes over. new management can always help shake things up. some other caution tones from other analysts, a steeple analyst downgraded them to a sell today. saying the expansion of new stores is missing the mark and they should focus on existing stores and getting that under control. another analyst from -- coming out with a downgrade, discouraged by the ineffective and misplaced capital. vonnie: the stock is up 35% year-over-year. breaking news on wells fargo, a-from a by s&p. wells fargo changing is trading a.m s&p to a- to the stock up 1.25%. the white house keeping a close watch on the volatility in the stock market but the administration insists u.s. economic fundamentals are strong. let's bring in david westin. david: we are joined by kevin hassett, chairman of the economic council. let's start with the president. he said it is a big mistake to sell stock right now because the fundamental economic news is all good. who is right? the president or the market? >> the president has made great about the market since elected, paul friedman said it would never recover and the ups and downs were up 35% right now since elected. mystery, thet a reason the market is up because the president has pushed policies that are good for workers and good for the economy and good for business. there has been a medium-term upward trend that is significant. day-to-day fluctuation is something we will always see. the president understands that but he points to stronger economic on the metals, no longer -- economic fundamentals. david: on friday, with the ways numbers, 2.9% increase in wages. many of nervous say that was the first trigger -- many say that was the first trigger of a selloff because they were worried about inflation. why were they wrong to be concerned about inflation? >> i am a chicago style guide so i do not want to say the market is right or wrong. on the show, going back to the fall, we talked about the fact that wages will go up because we are cutting corporate taxes which will increase the marginal productivity of workers and drive up their wages. we are seeing that any data with hundreds of companies offering raises or bonuses because of this. data on friday saying we had the biggest increases in wages in about 10 years. the market is worth it is an inflationary sign but as an economist, i do not see it is that. if wages is going up with productivity, it makes complete sense. think about it this way, if you go back to the supply and demand curve from your economics 101 class, the supply curve out and quantity goes out any price goes down, a supply-side tax-cut right now should actually put downward pressure on inflation and it should be good news for those who want to see a sustained recovery. david: you are asking me to go back a long way. explain the productivity growth. you have more dollars chasing the same goods, that drives up prices and you get inflation. you have to produce more goods. productivity has not been increasing at that fast of a case. we had 1.2% or something like that/ . >> capital spending contribution to death during second half of the obama demonstration when negative for the first time in u.s. history and wages were declining because they have chased businesses offshore and the capital formation was overseas. president trump brought it back home and that will lift productivity. the wage increases are coming back. there is a strong explanation. are optimistic about what the tax-cut and deregulation will do and worried about retaining workers, once the new factories located in the u.s. they are increasing wages preemptively because they see the higher productivity coming around the corner. david: what about the rate of productivity you can expect? productivityth and and increase workers, we have had .5% growth in the size of the workforce. what productivity are you looking at? >> we will sit back this year and watch what happens to productivity growth and capital formation. all the signs are it is lifting off anyway we have not seen since before the great recession. i most likely looked at, you covered it, the advanced durable data, spending and orders and shipments of nondefense capital goods comics moving aircraft. when you see the orders ahead of the shipment, the future shipments will be a lot higher. right now, a double-digit growth capital formation. with that, expect significant productivity gains and significant wage gains that will be inflationary. david: 2% -- if you are looking at 3% growth which you are looking at and you have the fed saying the capacity is around 1.8%, what numbers -- what about productivity and what does it go up to, 1.5%, to present productivity increases? >> you will see the capital formations. growth, thatned 3% potential gdp calculation like the one you said was something that matters a lot. up front, the capital spending can get you to 3% growth before it feeds into productivity. we expect that the capital spending boom will drive growth this year and the output from that capital will drive up wages and productivity's as we go forward. david: what about the matching -- david: i understand you have been in casa communication with various regulators to figure out how markets are responding and regulations are working. who are you talking with? who do you call and what do you hear? >> steven mnuchin and gary cohn and i remain in contact with financial regulators. we have to keep the conversations to ourselves. we want to make sure markets are functioning smoothly and if there is a circuit breaker, it is working. the fact is that markets have function smoothly through this volatility. the fundamentals of the economy are strong. you have to, in a situation like this, monitor the situation closely. that is the normal course of business. if you want to ask the conversations, get austan goolsbee and say when there are volvo days, who did -- volatile days, who did he talk to, he can now speak frankly about the conversations. david: good suggestion. >> he will be funnier and better looking than me. mark: thank you. the chairman of the council of economic advisers. vonnie: fantastic interview, david westin, thank you. that is david westin and kevin hassett. coming up, bain capital jonathan lavine will talk volatility and spain's recent real estate deal. this is bloomberg. ♪ ♪ mark: live from london, i am mark barton. vonnie: i am vonnie quinn and this is the european close on bloomberg markets. let's get to the biggest business stories in the news. the biggest private employer in the united kingdom facing a case that could cost billions. -- says theyt underpay its mostly female store staff. they say more than 200,000 workers could be entitled to compensation. tesco says it has not seen the complaint. carlyle group posted for quarter profit that beat estimates. their energy portfolios gained and they ended the year well on the way to a four-year goal of raising $100 billion. maybe in a galaxy far, far away, star wars toys are sellers. not on earth with toymaker hasbro says fourth-quarter revenue fell and missed estimates. they blame the bankruptcy of toys "r" us and sluggish sales of "star wars" merchandise. i guess everyone already has a lightsaber. mark: exactly, i still have mine. european markets ended, a reverse of yesterday's decline. not quite topping 2.4% -- two point -- a gain of 2%. the biggest gain since april of last year. this is bloomberg. ♪ >> i am mark crumpton would be first word news. nancy pelosi says she will oppose any long-term government spending bill that does not address immigration. on the house floor, she reference senate majority leader commitment tol's protect the dreamers and called for similar cooperation in the house. russian cyber spies pursuing sensitive u.s. defense technology tripped key contract workers into exposing their emails. that is an according to the associated press. the hackers went after dozens of people who work in small companies and that defense giants like lockheed martin, raytheon, boeing, airbus. president trump and emmanuel macron will test their tough hand-checks when the french president visits washington this bring. they france foreign minister says mccrone -- emmanuel macron will visit in late april at the invitation of president trump. they struck up a friendly rivalry starting with the first white metal handshake last year. emmanuel macron has vocally upfront -- opposed the president on the. climate agreement a i

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