Minutes until the finish of the tuesday session, stocks are rising, not in these two countries. These currencies are falling against the dollar, the euro down the 6 10 of 1 , Political Risk reflected in the price of the euro. The greek twoyear about 10 9 today, 72. 6 basis points, in the green, between creditors and greece, yields falling elsewhere, commodities. We will talk about oil later. Raisensurer plans to dividend payout. Fourthquarter profit declined more than estimated 29 on higher claims for natural companiesey like this are struggling with subdued demand and struggling in lowes, amid a five years of claims from natural catastrophes at the same time, ultralow Interest Rates curbing investment returns and shares little changed today, the little change over the last 12 months. Pandora today, shares down as much as 7 , the biggest decline since february last year, this is the danish charm bracelet maker, is forecast lower profitability this year, higher gold and silver prices making jewelry production more ebidtave, you get a significantly lower. Sales growth will decelerate this year, gold is trading at near a threemonth high. Investors at their head around the new donald trump companyration with the expanding manufacturing operations and aiming to double production to more than 200 million pieces per year by the end of 2019. ,his was a big chart yesterday the spread between france and germany, italy, and germany, the french spread is the white line, yesterday we reached the highest levels since 2012. Spread at the highest levels in a couple of years. The spread is narrowing a little thetoday but highlights importance of Political Risk now and having it price ahead of the elections in france, holland, and germany and possibly in italy. The big spotlight seems to be on the upcoming French Election which starts in april, possibly the second round in may. Lets get to new york, how was it looking . Julie our share of Political Risk in the u. S. Lamarcus shrugging that all market shrugging that off as records for the dow and s p at all three major averages continue to climb in the session today, helped in part by some of the earnings news we are watching. As well as a lift after days of decline. Still small moves. Look at the bloomberg, if you want to play along at home, you can look at how long it has been since we have had a 1 move in the s p 500. You have to go back to early december, two months, in calendar days, 61st date we have had less than a 1 move. As of closing in the s p 500 and we continue to watch that. We continue to watch motorola solutions, after citroen research, the short selling Research Firm mention the company negatively in a note which you can find online, down nearly 4 in the wake of that as they put a 45 price target on the stock, we are trying to get in touch with the comfy to get comments. We had earnings misses to talk about, even though there are always winners and losers. Lets look at the losing side of the equation, michael kors down after they cut its forecast, we have seen a lot of troubles in the retail industry, particularly the company that tried to sell through Department Stores like michael kors, General Motors had been higher and is now lower, the Company Profit margin contracted a bit last quarter and they said the border tax adjustment is too complicated and balkan materials coming out with earnings that missed estimates by a wide margin. Finish by looking at other assets, the dollar strengthening for the second straight day in part because of concerns about what is going on in france, crude oil prices on the flipside are down and goal is that gold bouncing a third of 1 . What policies President Trump will mean for investors, heing us is Ronald Temple has 190 billion under management and an exclusive preview of their 2017 outlook which he will present today at their event. The key theme for you is deflation versus inflation, are we at a key Inflection Point now . , if weink we might be look at the cyclical indicators of what is happening in the world economy, particularly in the u. S. , over the last four years, a grinding increase in weight pressure, when we are 1. 5 percent wage growth in 2013, now almost 3 , during that time, energy price declines of security some of that pressure, acid health care cpi which has the seller rated. We think waste growth will accelerate towards 3. 5 which is more in line with the historical norms. Always the oil prices have doubled since february 1 year ago which means you may see pressure more visibly. Care policy changes out of washington and we could see more pressure. Mark how do we protect ourselves, assess our asset allocation, whether we are looking at moderate inflation or potentially above average inflation Going Forward . Just sketched out is the starting point in terms of the cyclical pressure in terms of inflation,. 1, if we look at the u. S. , the lesson we saw sustained inflation over 3 was 1995, you have a generation of investors who have not dealt with inflation pressures,. 1 is cyclically we see this and also we can get into in a moment some of the structural pressures, when i look at the world, 30 years of convergence in terms of trade policy, Monetary Policy, Global Capital flows that may not be turning around, if that is the case, we need to figure out how much exposure we want bonds and for which bonds at which equities we may want to own. Not all equities response to inflation in the same way and they are part of the other Asset Classes we may want to consider to provide exposure or protection from inflation. Mark which equities and bonds and are those other Asset Classes . Before we get into structural issues. When we look at the debt market, i would be more focus on short Duration Bonds to protect you from the risk of fire inflation, and the backup and yield curves that can result. I look at bonds with higher. Come out emergingmarket debt may be a good solution, being careful, security selection is critical in terms of e. M. Debit and highyield debt where the coupons are high enough you would have a color return that is positive come even with inflation backup. Equities, we have done a lot of work looking at this, 20 years ago or 30 years ago, they may have said by large to equities, but we figured out which companies in pure a great improve them, that they can pass through Cost Increases through the customers and protect their margins. We consider those companies do have Pricing Power or the ability to capitalize on pricing opportunities. Mark what level, you were talking about wage growth at 3. 5 , what level is the treasury market going to show in the coming year . What yield are we looking at on the u. S. 10 year Going Forward . I think this is important to be careful, the best Case Scenario is a grinding higher inflation, not a strike. That could mean we could see the 10 year trending up towards 3 . What i think is important is questioning whether the structural shift comes, if we see the structural ship which could be accompanied or achy feature of that structural shift to be protectionism then we could hire rates if we see that again coming to pass in the u. S. And other countries. Mark will we see the structural shift . Tough to call, for the last eight years my primary concern has been deflation, worried about whether eurozone may flip it to deflation and the u. S. , slipping down towards 1 now i amce readings, looking at this and saying part one is our lives needs to shift from 0 to 1 inflation to 2 to 3 inflation being the rest. I think risk. I think a 25 chance of a structural shift is underway, 30 years ago, if we think about global trade policy, we have had a substantial convergence in the last 30 years, starting with the uruguay rows of the wto in 1986, a tremendous number of trade agreements reached globally and Monetary Policy synchronized around the world with independent Central Banks with 2 inflation target, and Global Capital flows arbitrage those differences between markets and inflation rates low and steady and Interest Rates low and steady. We may be seeing now is populism leading to the election of politicians who advocate protectionism and effectively reversed that 30 year process from global convergence to global you virgins devergence. Europe, talktioned about Political Risk in europe. The spread between the french tenure and the german 10 year widen to levels we have not seen since 2012. Is that adequately priced now, or should the risk premium the even greater for french assets right now as we approach this key president ial period . , it is a tough call to make, if there are two or three lessons out of last year, number one, the polls were close in most of the instances in terms of brexit, the u. S. Election, and the atari and constitutional referendum italian constitutional referendum, investors it wouldmated the risk go a different way so lets in the board is to build a bit higher probability of what you consider perhaps the adverse outcome, or the outcome and that is unexpected, depending on your perspective. Number two, preplan your action in terms of picking what that would mean, in the case of the election in the u. S. , many people expected the exact opposite outcome that came out of the election, i think it is important to question the scenarios that come out of this and think about what it made me for the yield spread in the eurozone if you do wind up with a National Front winning or a victory in the netherlands. Story, thee european euro today is falling and some say it may be the beginning of a time where by the euro stops reflecting the Political Risk, right now that risk is being reflected in the eurozone bond market. Could this be the beginning of a time when we see some serious downside of the euro because of the impending risk . It has held up ok, hasnt it . That is true, a number of reasons to think the euro could be under pressure, one is the Political Risk which many of your guest of talked about, number two, when we think of to virgins and central policy, centralbank policy between the gence andcb dever centralbank policy between the fed and ace when i keep imagining protectionism, i focus on the border adjustment tax that has been proposed in the House Republican party a way to Fund Corporate taxcuts. This is protectionism through the tax code, to the extent we see that tax policy put into place, that can put upward pressure on the dollar against currencies of key trading partners. Mark great to talk you, thank you for joining us. Thank you for having me. Mark money vonnie . Vonnie lets check in on the bloomberg first word news. The fighttrump says over his immigration been could in the supreme court, government lawyers will make their case in a federal appears court today in san francisco. At the white house, the president says he is ready to go through the system to get the album and reinstated, saying that we have to have our security in our country. History today on capitol hill, not long the senate is expected to vote on betsy devos to the education secretary, it appears wo republicans will vote against will vote republicans against her, that would make the vote 5050 and mike pence may cast the tying vote which is never been done for a cabinet position. A suicide bomber struck outside afghanistan supreme court, 19 People Killed and more than 40 wounded. The taliban has been targeting the afghan judiciary since last may when six convicted insurgents were executed. In london, the brexit minister warns if parliament votes down the brexit deal, there will be no renegotiation come he spoke of the house of commons. I cannot think of a greater signal of weakness that for this house to send the Government Back to the European Union at the site we want to negotiate further. Seized that would be upon of a sign of weakness and therefore i cannot agree with it at all. He explained the governments position during a debate on legislation that would trigger the formal start of brexit. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Vonnie thank you, coming up, we explore why fans are on the gathered to celebrate the new England Patriots super bowl championship for the fifth time. You can hear the shouts, the biggest comeback in super bowl history, not great weather but somehow i do not think they mind. This is bloomberg. Mark counting down the european close about 15 minutes away. Vonnie from World Headquarters in new york, i am vonnie quinn. Mark paribas shares are tumbling, the biggest bank in france posting a 36 decline in its Consumer Banking division, they set up with us, he highlighted the Global Investment banking arm, corporate and institutional banking. Deliveredrted they , Global Markets and security services, they have been doing well. We are looking at to push the concept further with respect even further than it was. Biggercost savings cost savings . Another year that will be they will further evolve in an additional year. On french retail, do you expect returned Revenue Growth in 2017 . During the year, we have improved our lending rates, increase them the last quarter and improved by 4. 2 compared to the year before. That is a positive thing but the low Interest Rate environment will most likely remain for the year to come. I think next year will remain difficult, although the trend is positive that lending to accept. We will see lending will pick up. Towards the end of the 17 or 2018 . It is more on those horizons but not the next quarter. Have you gated your continuous he plan in case of a euro breakup with france possibly leaving the euro . For the moment, we have a situation which is that we are positioned within the european environment, we are active within the countries like belgium and france, for us it is not on the agenda to move anything. There is a scenario in case of a Marine Le Pen victory . Comment onot politics but we are a diversified banks and if something changes in the environment, we adapt to serve the client. We are in the business of serving our clients. The United States President Donald Trump wants to repeal the doddfrank banking regulation, could this have an impact on European Banks like yours . Ifwe will have to seek him you go back to the g20, guidance with respect to banking regulations, they said any new regulations should have no material impact, so we will have to see. Withiny, if one remains the framework it should be manageable. Doddfrank putting European Banks at a disadvantage . The world is bigger than just europe and the u. S. , 20 states that have come up with an environment which makes it comparable for banks to operate. You do not see an impact . It is too early. These processes take time, things will evolve and that is one of them. What they coming soon is the triggering supposedly of article 50, are you planning to move soon some london to paris . We do not have to move the headquarters, we have to stay close to our clients and serve our clients, and that is what we will see once we know more details. Kendrick farris take a big piece of the equities that can paris take a big piece of the equities . Who i would need to move those people out of london, as i said, we are a European Bank first, we cap activities in paris, belgium, the netherlands, that is how we do business. Change the balance after brexit . We will have to see how things evolve. Mark the paribas cfo with us. , shares ofll ahead General Motors are lower today, even after they posted record annual profit and sees more growth on the horizon. What their cfo is saying next. This is bloomberg. This isve from london the european close on bloomberg markets, i am mark barton, 10 minutes before the finish of the tuesday trading session here. Vonnie in new york i am vonnie quinn. General motors posted record earnings for last year and they expect to amass or exceed the profit, sales of suvs in north america is one reason and they faces issues in the European Union, we spoke with her cfo chuck stevens. Mr. Stevens brexit is a reality and will be a headwind in 2017 for us, the impact from the currency standpoint, as we look at the overall environment, is prettyrowth challenging environment, especially with the currency in the u. K. We would expect flat performance from a profit standpoint in 2017 versus 2016. Vonnie they have a month extra unsold cars, compared to this time last year. Look at where european markets are trading, four minutes away from the tuesday session, france is lower and germany, the stock europe 600, the ftse 100 up, the closes next. [ alarm clock beeping ] weather. [ laughter ] cartoons. Wait for it. [ cat screech ] [ laughter ] [ screaming ] [ laughter ] make everyday awesome with the power of xfinity x1. Hi grandma and the fastest internet. [ girl screaming ] [ laughter ] mark live from london and new york, this is the european close, i am mark barton. Stocks finishing up today led by real estate and basic resources rising for the second day in three, appetite for risk has returned, blackrock raising it to poser to european stocks to overweight from neutral, saying investors have become too skeptical on the region while the risk price into the upcoming german and French Election it says is to use it towards, overstated. Lets start to use it words, overstated. Down 5 , paribas finishing lower, most Fourth Quarter profit that missed estimates and earnings fell as the french Consumer Banking business. It laid out a multiyear plan to lower costs and boost investment in technology, it will spend 3 billion euros over the next three years to upgrade its Digital Banking services and increase automation with shares jumping 46 since falling to a fouryear low. The three big lenders in the last three years, always roughly 42, 43 percent, they day out of germany, german Industrial Production unexpectedly falling in december by the most since 2009, led by contraction in manufacturing and construction. Output dropped 3 from november, fascinating bit of data because we have had a lovely data recently thats a lot of data, confidence falling in december National Elections in september, risk related to brexit, and protection is trade policies in the United States weighing on the outlook, companies assessment of currency Current Technology conditions remain favorable and unemployment falling to a record low. Big data out of china, we will talk about it in a second, chinas foreign currency reserve edging just below 3 trillion in january, falling to the lowest level since 2011 after the yuan annual steepest annual decline in two decades. Further erosion of the stockpile may persuade policymakers to tighten measures for controlling outflow. We will talk about it in a few minutes. Vonnie we could talk about him letss with look at where other Asset Classes are trading, the dollar index higher, but just Nymex Crude Oil has taken a dip in the last day or so. Yuan. N the offshore yesterday, the Canadian Dollar as well is showing some weakness today, 131. 50 5 1. 3155. Abigail we have highprofile Earnings Reports come after the bell including disney, both shares are trading ahead of those reports, Something Else the Media Company has in common with the oreo maker is the fact that expectations are low relative to the Earnings Report for both companies according to a number of Bloomberg Intelligence analysts, disney s disney expecting z in asaid that mondele tough space. Chart, thisve year is in the terminal, a beautiful uptrend in flight, that is disney stock and it yellow, revenue, both are breaking the uptrend, typically bearish and a divergence, whether disney is ahead of itself. Bloombergto a intelligence analysts, she expect them to make this 15. 3 billion estimate for the december quarter, representing 16. 3 growth but if there was a pickup, she says it could be around the media segment considering that parks and films expected to be the weakness. Mondelez,belize stuck in a sideways range, it could drop back down, it is expected to be a low bar quarter and investors looking at 64 9 if there is weakness , the stock may slip down in that range. Vonnie costcutting everywhere you look. Lets look at the bloomberg force word first word news. The Supreme Leader of iran says sarcastically, said iran will respond to the growing hostility from the u. S. On friday, the anniversary of the 1979 islamic revolution. Rex tillerson in place a secretary of state in the u. S. That many senior posts remain allies and many u. S. Adversaries looking for clarity on President Trump Foreign Policy and they will have to wait longer. Rex tillerson has to name more than two dozen undersecretaries and assistant secretaries. The miami won in will not meet fiscal surplus target, the fund says the greek Budget Surplus will rise to 1. 5 over the long run, half of the forecast from european creditors who took part in the bailout. The imf has said it will consider making a new loan to greece but only if its Debt Reduction plans are credible. Scotland is taking its protest over brexit to the next level, the Scottish Parliament will debate the proposal that the brexit trigger bill being debated by british lawmaker should not proceed without scotland, wales, Northern Ireland being consulted, Scottish First minister said that scotland opposes what she calls the catastrophic hard brexit. Global news 24 hours a day, powered by more than 2600 journalist and analysts in more than 120 countries. I am courtney donohoe. This is bloomberg. Mark the two Major Oil Companies reported earnings today, statoil chief executive says where he sees the price of oil in the next couple of years. We had impairments this quarter of 2. 3 billion dollars net and the main reason for that is related to the fact that we have adjusted downward our longterm price assumptions, mainly for oil, we are looking at an oil price in 2020 at 75 u. S. Dollars per barrel. Mark high crude prices offset by weaker than expected earnings from refining and joining us is the chief energy correspondent. They have in common, all missing earnings estimates, what is going on . Oil prices have increased enough to ring the attitude inside of the oil business, what the Oil Companies are producing ,il and gas, back to the black making significant change from earlier this year when they were losing money. That increase is bringing upstream to make more profit, at the same time, putting pressure on the downstream business because refining markets are getting squeezed and price increases and the refining margin and the trading refining sector and the trading sector, what have been insulating big oil from the impact of oil prices, the moment is the worst time for Oil Companies, prices are a bit high but not high enough to drive the profitability. Mark cash flow, for them it cover spending and dividend, for 60. Rett needs to be at the sharen reason why price has gone down, earlier in the trading day, 3 down, because bp has been telling investors over the last year that with oil prices between 50 and 55 per barrel, a big surprise today will be between 10 and five dollars higher, 60 at the end of 2017, the price they need, significant change, the company highlighting it needs a higher breakeven because it is too low. Marginaloes it make difference with these companies if sanctions are lifted from the u. S. On russia or iran or other places . It will make a difference but it will not change the outlook for 2017, the sanctions were lifted in russia, they will want to see certainty of what will be the terms and even if they go back today to russia, the kinds of projects they will see the first oil in the next four, 5, 6 years. It could be Welcome Development for Companies Like bp that they can go back to russia or uruguay but it will not change the outlook for this year. Vonnie another soundbite. Our projects are really longterm, we think through the cycles, and also through political cycles, for us to be consistent with what we do, continue to what we have on regulations, staying ahead of regulations and continue to do that. In terms of climate policy, we have a policy on how to address the no carbon future in terms of oil and gas business, and in terms of our renewables business. Vonnie give the new trade agreements with the new administration and new allies politically speaking make a difference to statoil when they planned so far ahead . Saying no, the ceo of shell and bp, they say donald trump may be in the white house but we will not change our views on Climate Change. We are focusing investment regarding the fight on Climate Change and global warming, the companies have highlighted this and will invest in renewable energy, wind, and solar and will continue building their portfolio of investments to oil and gas but they seem more future rather than in oil. The european Oil Companies are in a way ignoring the rival of donald trump to the white house. We see how long that will continue given the policies in the white house if they go a different way. Mark is the Oil Trading Boom over . It is over, the trading boom we saw in 2015 and 2016 was driven by oversupply, easy to buy crude oil, put it in a tanker and sell the futures, cash and carry trade. Like what the cfo of bp said, the oil curve is flat like a pancake, he used to be an oil trader and run their trading business, he said that was kind of special on the Trading Floor and the oil cure is flat like a pancake as he put it, traders do not make money. Mark not independent Commodity Trading houses, the pill bp. They own oil fields and refineries. Ark good to see you the chief energy correspondent. Vonnie coming up, china has tightening Monetary Policy, how strong is their economy and what are their views on President Trump . Toboston, fans gathering celebrate the new England Patriots super bowl championship for the fifth time, i have to shout to get about their roars, the biggest comeback in super bowl history, a Pretty Amazing game, my iphone says it is 42 degrees fahrenheit with a 100 chance of precipitation, six degrees for you in europe. This is bloomberg. Mark live from london, i am mark barton. Am vonnie new york, i quinn, this is the european close on labor market. Chinas foreign currency reserves edge just below 3 trillion last month, falling to the lowest since the early parts yuan capser the steepest decline in two decades. 4374 on the bloomberg. Joining us is the chief Asia Economic correspondents for bloomberg, usually based in hong kong, visiting us in new york this week. It looked like a lot of a difference in the chart, these reserves dropping but 3 trillion in reserves is a lot of money, does it matter that it is below . Significant but below the psychological three mark, demonstrating china is burning reserves at a rapid clip and they are willing to spend their reserves to defend the currency. Administration has said china was in fighting the current the fighting deflating currency. L close is a concern. Capital outflows is a concern. Vonnie there has to be some kind of intervention, we got more tightening on friday as the markets opened for the new year. The first day after the new year, they times in the liquidity the liquidity market, cyclically the economy has stabilized and has given the authorities room to rein in excess credit. Chinese economy hit its growth last year, only on the back of a debt binge. Total debt out is they have to get a grip on their net story. They showed they can take one foot off the gas. It tricky, ark is balancing act, you risk troubling the economy which is going at its lowest face in a couple of decades. That is what they are trying to balance, they had a housing , housingrly last year such a huge multiplayer in terms of growth and they had to come in hard with curves and restrictions but they do not want to choke prices, a similar story for the wider debt economics in china, they cannot that would mean shooting down big firms. It is a balancing act and one ,hat is in the view of analysts keeping the pace and scale of the debt increase over last year. Mark checking out the u. S. Trades the year, the deficit with china did shrink, 347 billion, what367 is the latest in the donald trump versus china soccer saga . Will they be labeled a currency manipulator . It is difficult to label them that now, but what is the relationship now . On the currency side, more complicated, five years it couldve been more grounds to tackle china, now harder to label them as a currency manipulator. The trade side of thing, in a watch and see mode, no one is sure what donald trump will do, he is promised to shrink the deficit with china to with punitive tariffs. There is a concern in asia and china, it goes beyond protective measures on the wellknown Industries Like coal and steel and agrochemicals. Pushes into new areas like electronics, that would not just for china but american manufacturers in china and hurt in the zipline in the supply chain. Some i am giving you books by peter navarro, he is fully convinced that china is not a great trading partner. How far does this go . He has a point about china hawks, makes no doubt about it, if you living the incoming treasury secretarys, his tone on china was softer. We do not have visibility how it will go but it is feeling like the u. S. Will do something towards china in terms of trade tariffs which will be potentially hurtful to the chinese economy, but china has made clear it has big six to retaliate if need be. They are making clear you can but after us with tariffs we will respond, look at data american manufacturers in china. Mark i were vonnie our analyst, thank you for joining us in studio. Dollar how bad is it . Any hope they can return to growth this year. This is bloomberg. Time for the global bound of the charts where we look at some of the most telling chart of the day and what they mean for you the investor come access the start on the bloomberg by running the function features at the bottom of your screen. Kicking things off, Bloomberg News stocks reporter dani burger. I am looking at something a lot of investors are looking at and they are putting their money in crude oil crude, at a record, the rate in the white e, the vti futures crude, wti, futures crude him of what Money Managers are doing, a record that, in the blue bed, in the blue, what crude is doing, usually in line together, late november, opec decided to pump that will which set prices plummeted and that falling down. Bets falling down. Wti has fallen 2 since the start of the year but that has not been stopped investors from being bullish on the opec deal to cut production. We have seen Record Number of contracts, above 400,000. I would be skeptical, have to have someone voicing be skeptical voice because the u. S. Dollar is surging and if there is continued tightening Monetary Policy from china, that could hurt these long bets regardless of what opec is doing. Vonnie, that will be hard to beat, can you do it . Vonnie even if i do not, i am giving glimmer of light to a country we do not particularly look at. Markets,the frontier you can see the currency, the iuds in june, suffered its first this happened after the valuation. The official nara continue to weaken and 500 to the u. S. Dollar, the problem is inflation come in january past 18 , erians having a difficult this year there is hope they may come out of recession, dollars are not going over there like politicalto, huge instability and militants not helping the oil situation. There is hope they may come out of recession and one more fact, is the fifth country in the list 20 billion goes home to nigeria. You can see that chart on the bloomberg. Mark that is these that you stateo pull out the outue stat to pull battle of the chart but she brought out bon jovi and that is what you need to do. Vonnie i thought i was getting the crown and you pulled it away. Mark well done for invoking bon jovi. Dave berger, congratulations dani burger, congratulations. Today in europe, stocks rising, this is bloomberg. Vonnie it is noon and new york in new york. I am vonnie quinn. David i am david gura. Welcome to bloomberg markets. David from the world had gores in new york, we take you to washington, beijing in the next hour, here are the top stories from around the world we are following. In markets, u. S. Stocks with an earlier gain, the dow, s p just off come a rally in tech shares leading to the nasdaq in a record close of the dollar strengthening against its major peers. Devos coulder betsy come down to mike pence, he could make history by breaking an expected time in the u. S. Senate over the nomination of her as education secretary, the go expected to take place this hour and we will bring you the latest on bloomberg television. Lamborghini latest supercar, its new flagship store, it should arrive in our courtyard any minute and i will speak to the coo of them are getting america later this hour of lamborghini america later this
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