will the president-elect deliver on elevated expectations? the pound tumbles and the chancellor philip hammond repairs to attend a conference with angela merkel today. how hard will the conversation the? -- be? than one half hour away from the european open. let's look at futures. outlierooking at a ftse once again. yesterday we had the ftse close up, the dax closed down. today we have ftse futures up of 1%. hundredths unchanged there across the board. not a lot of actions. a lot of news today though. is interesting is the commodity space, what is happening with gold, what is happening with copper overnight. that is an interesting story. the dollar dipping a little bit and that is understandable, given what is happening. a bit of nervousness in advance to wednesday with donald trump. hear from janet yellen thursday as well. that is something to bear in mind. the bloomberg dollar index down one 2/10 of 1% this morning. the euro is up, we like to see the swiss franc up just to make it more bearable. some big gains. iron ore out of china up. zinc trading strongly as well. the front foot. it is a dollar trade. that is what we watching carefully at the moment. u.s.. week for the a lot of politics surrounding this. a lot of politics in europe as well, but the u.s. is dominating. here is the first word news. president-elect donald trump's son-in-law to be a senior but unpaid white house adviser. jared kushner played a leading role in the campaign and will work with chief of staff reince priebus and chief strategist stephen bannon. he will divest his various business assets to comply with conflict of interest rules. a statement from the transition team described him as a tremendous asset and a trusted advisor. meanwhile, toyota has become the latest major carmaker to offer insurance is over its commitment to the u.s.. in the wake of attacks by donald trump, the japanese company says it plans to invest $10 billion in america over the next five years. >> we understand what the president wants to do. we'd all agree with the president that we want to make america strong. we want to have good paying jobs, a good economy and eventually, that helps is this. if i am selling cars in a stronger economy. helps us sustain volumes in the future. some senior volkswagen executives in germany have been warned by their lawyers not to leave the country. that is according to a person familiar with the matter. us as u.s. prosecutors are said to be parent to charge for high-level employees over in missions cheating. vw executive was arrested in miami and faces charges of misleading regulators. the company says it continues to operate with the u.s. department of justice. yahoo! has announced sweeping management changes as it transitions to an investment company. the ceo and five others will leave the board on completion of the sale of its main internet businesses to verizon. the board will then be reduced to five directors. a shareholder in alibaba and japan -- global news 24 hours a day, powered by more than 2600 journalists and analysts in more than 120 countries. this is bloomberg. matt: a quick note on an acquisition breaking right now. isreal, the makeup giant buying acne free from valiant for $1.3 million -- $1.3 billion. targets are more attractive than the suitor. valiant foruy from $1.3 billion. china poised to export inflation around the globe. in 2016.mp the fastest pace in more than five years. i will have an effect that drives global inflation higher. -- asiaf asian correspondent is live in hong kong. why are we seeing factory prices their jump higher? >> the scene quite a significant spike in factory prices here, no doubt. only four months ago, china's factories and did a four year streak of deflation. a lot of this is down to higher commodity prices, higher oil prices. rather than any kind of sudden upsurge in demand or seven cut back incapacity that we all know is such a drag on china's economy. nonetheless, it is a positive and producers in china are complaining about higher costs, they are wanting to pass on those higher costs. it is the world's biggest exporter. so while we wouldn't want to the carried by -- away over what it means for the global reflationary story. some of this will spill over to the rest guy: of the world. put that -- guy: what happens when you put the two of those together? >> on one hand, the pboc are in neutral, they don't want to have to cut new -- rates more. if we see ppi flowing downstream to cpi, and we are seeing the currency come under continue rusher, downward pressure, and the neutral updater might suddenly start shifting to when they start to hike rates. to keep a lid on cpi, but we are not quite there. depends on public spending rather than private investment. no doubt on the back their minds, china authorities are going to be watching, will be i flow down street -- ppi flow downstream and hurt consumers. i'm sure that debate will be held in the coming months. guy: thank you very much. the latest data out of china had global ink occasions -- implications. ppi andlueline, china on the other white line, u.s. core pce, the fed's favorite measure of inflation. look at the correlations and how these two work together. pcet run by the ppi print, falling along tidily. if it goes higher, what does that mean in fed policy? do you want to buy more of that? are we going to see more coming from the federal reserve this year? we have a fund manager and head us some of good morning. we have an inflation problem? not yet. things are starting that as we see here on the chart with china, it is interesting because you see ppi go higher. but don't forget, china is climbing the ladder of technology today. it is going to sell more and more products. industry, the drone then beating gopro with advanced products. gopro is struggling. chinese technology is there. the rubber factory automation producer biting. -- buying. they are climbing the ladder and they are going to come up and produce -- they are going to bring deflation on the top of the market as well. not only on cheap products like they used to. for me, the story is not over yet with the huge wave of deflation coming from china. especially where the currency is where it is today. guy: i deflationary force you are talking about that will still be present and not going to go away. what implications does that happen terms of fed policy and ecb policy? if there is a lid on inflation, loweres not go as high, than some are pricing now? the case.at could be but what the fed does and what inflation is our two different things. we are not convinced inflation is there yet. almost seven on the dollar. do you think that trends down even if china is fixing at an about-face and putting currency higher to stop an outflow? i'm not sure china needs to continue devaluation. looking in many sectors, china products are becoming more competitive, especially at current rates. you have huge pressure in the as. with minimum wage at $16, lot of states have signed up. we think china doesn't need to devalue more from here. matt: so even if the currency were to hold or get stronger, it wouldn't prohibit china's competitive advantage in increasingly higher tech spaces? look at the solar industry. the price keeps coming down every day. aboutis a misperception technology, same with korea for example. matt: we're going to talk more about this, he will stay with us. we just got china data out showing the ppi up five point 5%. he says they are still putting a deflationary force across the globe at the top because they are moving up in the technology ladder. coming up on the show, all in the family. trump's son-in-law is poised to get a white house role while confirmation hearings start today for the new administration. the latest from washington. there is a lot going on. plus, what is in a name? yahoo! reveals plans to change its name and shrink its board after the verizon deal. also, one woman will no longer be working with the company. later, driving the auto industry. showed the detroit auto and hear from ceos of the biggest auto companies about the incoming trump administration and the donald effect on carmakers. this is bloomberg. ♪ ♪ guy: 7:44 in london. here is juliet with the business flash. supplier haslisted said alibaba wants to take it private. the company is valued at 2.5 billion dollars. it is part of alibaba's strategy to integrate with brick and mortal stores -- brick-and-mortar stores. according to people with knowledge of the matter, discussions fell through after the wall street journal the orchid than last month. a 5% jump in energy transfer partners shares in the wake of that report hurt the economics of the potential deal. carlyle group is preparing to u.s. real estate fund in the first half of the year. that is according to people with knowledge of the matter. they say the washington-based private equity firm is planning to target $5.5 billion. is $100rt of a planter billion over the next four years. a representative declined to comment. that is your bloomberg business flash. matt: thanks. president-elect donald trump's son-in-law jared kushner will be named senior adviser to the president. for a preview of what to expect this week at washington, let's ring and kevin. -- bring in kevin. would be ashner senior adviser within donald trump's white house, this comes more than a day before trump gets a press conference where he will discuss how to divide his business assets in his organization. johnsonol hill, boris met with key republican members of congress, including paul ryan. and majority leader kevin mccartney. it comes as appointees to the cap it are set to begin confirmation hearings this week. including rex tillerson, the former exxon mobil ceo who trump has chosen to be his secretary of state. kevin cirilli, bloomberg, washington. us, alexis. this is going to be a long couple of weeks of confirmation hearings. the democrats plan to make a real show out of it, they cannot stop any of the confirmations. they don't have the numbers. is it a distraction for wall street? the global wall street? i'm not sure it is a distraction. i think people are not questioning the fact that donald trump will start on the 20th of june. a review is on the fact that we are a little more cautious on u.s. equities for other reasons because we think a lot of good news is pricing in the markets. we think protectionism is probably the major risk that not many people talk about, more than the political risk currently. we keep bumping up against doubt 20,000, not quite crossing the line. do you think the trunk euphoria that we saw -- is that stimulus money already priced in an protectionism, angola is what is holding us back? alexis: definitely in some sectors. if you look at infrastructure linked sectors like trucking, steel, you see huge rallies coming back and also in the banks, i think you have to be courageous to follow banks at these levels, when you look at where goldman sachs or bank of america's stock rises are today as opposed to six months ago. on the other side, you still have this large allocator, we start the year in january and need to go into u.s. equities because he knew resident's business friendly. these flows take time as well. i think the market is very expensive. if we are going to reach the doubt 20,000, i don't know. 20,000, i don't know. we are trying to go where we can find value. don't find much value in currency markets. guy: are they going to be -- am i going to make money more elsewhere than in u.s. equities? alexis: in the five-year horizon, yes. guy: what about one year? alexis: hard to say. yes, public you would make more money elsewhere. speaksnet yellen thursday. you said, i don't care what central banks do. most people have been investing every2008 on the basis of utterance from the federal bank. someone said something earlier on. donald trump's tweets have more fromtance than any missive them. is that the story no? our central banks the? trump on fall on twitter. so i agree with you. you have to know what he is saying and how that impacts your investments. i am taking these tweets in consideration. i am not acting on them immediately or individually, but what the picture is. guy: plenty of conversation still to come with alexis. next, a look at morrison's with a holiday sale that beat estimates. this is bloomberg. than open is nine minutes away. ♪ ♪ matt: we are minutes from the open. we want to bring you stocks to watch. keeping an eye on metro ag, a german retailer that runs media market. some electronics businesses. it says sales in the first quarter were below estimates. we were looking for 17.1, they got 17. analysts said it was helped by christmas falling on a sunday and normally, everything shuts down on sundays in germany. but in december, we had three sundays that were open for shopping. so, a treat for people who live here and for metro shareholders as well. guy: everybody wins. maybe the german consumer could do more of a boost. let's talk about morrison stock. looks like a solid trade on the upside. beaten expectations. there is a call as we speak, the business saying it is in the thick space of the recovery. price deflation narrowing. .2 in q3, but 1% a year ago. look at the recovery phase, a 50 point -- an impressive performance. miller, let's say our guests in the consumer range, l'oreal, what is going on there? matt: l'oreal buying three 41.3esses from valient billion dollars. one of them is called acne free. feel like that is the second biggest moneymaker in the world, what do you think? guy: i suspect history would dictate you are right there. matt: i would be happy for either. one or the other. guy: we'll -- we all get older. let's talk about where these markets are going to go today. we are expecting a positive start in london. less positive elsewhere. interesting to see how commodities read. the market open is next. ♪ guy: you are watching bloomberg markets. i am guy johnson. i am in london. matt miller in berlin. your morning brief. surge, factory to the world. china sees ppi rise the fastest in five years. the dollar is down again. investors turn nervous ahead of donald trump's a briefing on wednesday. will the president-elect deliver on elevated expectations. british diplomacy. as the pound tumbles, the chancellor of the exchequer todayes for a conference with angela merkel. how hard will that conversation the? -- how hard will that conversation be? guy: it is expected to be a reasonably caution open this morning. the dollar is in focus. the ftse 100. a little more positive. 7240. we will strip out what happens to commodities when it comes to the ftse and we will play around with the pound as well. a mildly positive start. not a bad trade for the ftse. let us happen -- let us find out what is happening below the surface. reinforcing that boom is going to get more momentum. -- theort of deflation exporter of deflation turns into the exporter of inflation. our guest said at the end of the year you could hear the rhetoric changing. european financials opening down 0.6%. -- materials travel a little higher. this is what i'm talking about when it comes to great global reflation. said that the consequences of the reflationary trade are numerous. the euro is relatively undervalued. that is within the european context. this is a great global reflation trade. theu.k. is outpacing country cousins in the united states. here is the pound. she speaks. she speaks again. and she wreaks havoc with the currency. we are talking about brexit. the reaction to her party conference speech was clear. the pound was down by over 1%. after her new year's speech, the pound went down 0.9%. that direction of the thumb continues. there is a big options trade in asian trade. around 120. is the market positioning up for a hard brexit? a german retailer, metro. crv which is a skincare business. they spent $1.3 billion. the market likes it but is it worth it. ? crackinge they had a business, morris said. sales up 9.9%. the guiding consensus is higher in terms of profitability. handing it back to matt miller and i am off to radio. matt: is that a scottish thing? the way you say pound? thing.it is an irish stick with it. matt: i could listen to you all day. when i am done here, i will listen to you on bloomberg radio. let us turn now to our guest. speaking of the pound and theresa may, i wonder what you think when she tries to deny that there will be a hard right sick. isn't that the only choice? riskah, i think there is a definitely that the european union they show an example by being quite tough but the u.k. this is a risk to try to encourage other countries to leave. but on the other hand, i think this may also be beneficiary to the u.k. on certain sectors. the u.k. cut taxes dramatically. will it try to do things differently and become a safe haven within a troubled europe? it is a lot of talk. at the end of the day, the u.k. is still a small country when you look at it globally. investors, theal size of the u.k. is less and less important. note i read through your this morning. and some of the stocks you have on the books in terms of the longs and the shorts with a smile on my face. you like a mexican real estate. you like mexican toll roads. you don't like american pizzas .nd you do not like u.s. steel walk me through what is going on. >> what is going on is trying to find value. these are many valuation calls. is equity portfolio trade based around fundamental valuations of individual stocks. initiated --mp has for example, real estate in mexico is down 45% in dollar terms since last may. this is very cheap. it is still a country where you have strong demographics, a middle-class that is growing, you have good assets. real estate in mexico is not dead. matt: it will not become cheaper. >> they had the same tenants. walmart, ford. if everyone leaves and you do a huge trading war, then it is the end of the u.s. 45% of the revenues of the s&p 500 are coming from outside the united states. u.s. protectionism is a huge risk for the u.s. economy and people do not talk much about that. you only see lower taxes. repatriation of cash and so on. all of the good news, the stimulus. but they do not look at the risk. of atal's sales are going to china. the chinese consumer is huge. to youraise paris highest customer, it is a recipe for disaster. and people don't talk much about it. matt: i talked to jim bullard about this from the st. louis fed and he says the reason he is not so focused on the protectionist threats is that those are concerns longer-term. tax cuts and stimulus as something that will affect the u.s. economy in the shorter term, in the next one or two years whereas the protectionist issues will slow the economy down in 3-5 years. at at what he has been doing with the auto industry. --that is not protectionism to push every major u.s. -- to push every major auto maker in the world to stay in the u.s. -- that is a farce. what do you think about those moves? ford will not invest in mexico where it could have had cheaper labor. chrysler is building a trucks in ohio and michigan where it will pay up to do that. is that a reason not to own those carmakers? >> yes. 150, that is already huge. if you start to manufacture in a place where you have to pay workers $15 an hour and you have to rebuild the whole factory because it is an old one while you could have a new factory in mexico with a three dollar per hour working force with an existing supply chain. today are chains completely interconnected between the u.s. and mexico. products are going from the u.s. into mexico. 20% made here, 20% made there. just -- wens are not are in a global world today. again, even if the new factories from ford are in the u.s., the big question is what is happening with what is in the you -- with what is in mexico. we are looking at areas that are not much linked to the u.s. more butte is a bit within real estate, you have benefits like hotels. currently benefiting from a o. hotel prices are going down. sts will gouri even more to mexico. guy: didn't you just sell your big ford truck? matt: it is for sale. guy: let us talk about pizzas. in dollars. this is an area you don't like right now. on the list i got this morning it was papa john's but you also mentioned dominoes. there is another stock that you mentioned. here is one out of the u.k. i wonder if this is a technology story or a u.s. story or a consumer story or what is going on. let us go to dominoes. pe.ing on a punchy zero sales of domino's pizza right now. why are you short on that? >> because there are zero sales. the next move will be a downgrade. valuation call. -- this is a software type of valuation. it is an interstate where there is no barriers to entry. no ip. wasonly ip they had digitization like taking the orders digitally. it is enabling the mom and pop shop to do the same. guy: it should be trading on an aggressive multiple because it still has plenty of potential. >> it is a franchise only model with a lot of debts. it is very leveraged. tailwinds int of the last few years. commodity prices came down, it digitization helped them cut their costs. oil prices are coming down which helped their trucks. these guys are going to suffer. guy: you would be sure to dominoes -- that whole sector is an area you think will come under pressure. different it is a animal. a pure software company. and papa john's are just pizza manufacturers. guy: and delivers. >> they are not technology companies. the technology is simple. no rocket science there. really, we believe -- guy: do you like pizza, at of curiosity?- out of >> i do. trait is finding no reassurance in the comments of philip hammond. what is on the verizon for verizon? we will have details on that. and later, donald trump takes the wheel. what will that mean for the auto industry? this is bloomberg. ♪ guy: welcome back. let us take a look at what is happening with the crude prices. theve put this next to bloomberg dollar index as well because the correlation works well. a bottoming out of oil this morning. but again, that is slightly mirrored by what is happening in the dollar trade but a small position at the moment. we will see what donald trump has tomorrow. i suspect that will be a factor when it comes to the dollar trade and the energy trades. let us show you what is happening with the european trade. the 600 is down but not by much. the ftse 100 up by 0.2%. the pound is stable. we are watching some individual stock stories. morrison, tesco -- will bid this morning. another is trading to the downside but it is a very expensive stock. matt: i am looking at which stocks are moving up and down with the mmr screen. , we seemook at mmr moves in terms of percentage and not in terms of what they are adding or taking from the stoxx 600. morrison is up at the top. even though the british love their supermarkets so much, i have to point out that it is worth less than $6 billion in market cap. it is still not a massive stock tesco, also gaining today. also worth 17 billion pounds. i was surprised that the morrison cap climbed over spencer. withhose of us obsessed grocers, today is an exciting day. guy: i will quote you napoleon. he was not wrong. we are becoming a nation of shoppers and not shopkeepers. matt: i see, shopkeepers. that is where the obsession comes from. i want to turn to my wcrs screen. dollars left over from my life in the u.s. and i want to point out that emerging-market currencies in the last six months, the mexican peso is the second worst performer. alexi is still with us. he likes mexico because it is on a discount since the drop in the peso versus the dollar. lira, a bigger drop in the last six months. down 20%. why don't you like turkey if you like mexico? it is really on sale compared to the peso. thees, but i think geopolitical risk, you have a leader at is gaining more power, democracy is under threat. your of a risk of a russian is a show in -- you have a risk of a market.zation of the for us, it is a different story. when a mentally, there are some great companies in turkey but we believe it is a bit too soon to reenter the market. we need to see what the president will do and also how the political and also the situation in syria and the middle east which is impacting the turkish army. it is still in syria. and you still have this confrontation. a lot of the jails are getting more full in turkey. is muchcan situation more stable. brought russia back. oil is a big factor in what is happening in russia. what brings turkey back? russia starts to look better and it managed the currency better. can we make the same argument about turkey? calm down.ave to tourism. toryism -- guy: the russians are going back a little bit. >> and the implication of tourists not coming back is showing a spillover. you need stabilization. yearerrorism attack on new did not help. we need some standardization and stabilization in the region and in the government as well. to see has been great you this morning. thank you for sharing your time. a man that loves pizza but not pizza stocks. name?t, what is in a yahoo! reveals plans to change and shrinkingtaba its board. someone is leaving, someone quite significant. details of next. this is bloomberg. ♪ guy: welcome back. you are watching the european open. yahoo! is announcing the sweeping changes once the deal takes place with verizon is completed. it includes removing marissa mayer from the board. >> marissa mayer is stepping down from the board of yahoo! and the company will switch its name to altaba. those are some of the biggest changes announced as the company aims to close its 4.8 billion dollar by of deal by verizon. grissom meyer is just one of six directors departing the board including the co-finder, the chairman and ask chairman. in its filing today, yahoo! made a point of saying that for each resigning board member, it was his or her intention and not due to any disagreement with the company. for marissa mayer it is unclear what she will do in the new company if anything at all but it is reported that she is a severance package of as much as $55 million. people were confused but online records show that it may have since october. five yahoo! directors will stay on in the new company as it becomes a shell company for asian assets. it has a 35% stake in yahoo! japan and a 50% stake in alibaba. in alibaba. stake it is unclear what will happen with flickr, tumblr. there is also still a question whether verizon will continue with its purchase of a yahoo! especially after the recent revelation of two major hack attacks in the last few months. verizon has been trying for a cheaper price or even possibly an exit. altaba will become the name of the shell company. the yahoo! brand continues and marissa mayer continues as ceo but we'll just stepped down from the board. a bit convoluted. it will be interesting to see if she sticks around her what she will do next. i want to show you this chart. what we have done is yahoo! versus the nasdaq. there has been a degree of outperformance under marissa mayer but i would argue that actually the outperformance is not due to marissa mayer but due to jack markell -- jack ma. about to say the exact same thing. it is all due to alibaba. if you pull up a news graft for alibaba, you will see it moves the yahoo! shares. the problem is a lot of people would argue that a lot of people could have done this outperformance holding that big of a stake in alibaba. jack ma talking to donald trump he is telling the donald that he can help create another million jobs in the u.s. and hopefully he gets on our good list. he is currently on the naughty list because of ip problems with some of alibaba's problems. guy: it will be interesting to see whether jack ma can deliver on those jobs he has ultimately promised. you go up in the elevator, promise a lot of jobs and everyone comes down smiling. matt: an interesting plan. they want to put a million businesses in the u.s. together with alibaba and they think these businesses will each higher one person. angela merkel makes a pitch for european unity. we will talk about the chancellor of germany. >> otherwise -- matt: welcome back to the european market open. we are 30 minutes into the trading day. let us take a look at how things are shaping up on the continent and england. the ftse gaining 0.2%. the outlier on the upside as the cac ises no move and the down. your supermarkets are helping the ftse for the second day in a row. guy: cannot argue with supermarket action. many argue england should be an island but in most people's minds it is still attached to scotland and wales and cornwall. let us talk of it about what is happening with the supermarkets. tesco doing well is when. it has done well on the back of morrison's numbers. the miners are also high is mine. angelo is trading high today. metro in your part of the world is fairly negative today. a tale of two retailers on either side of the english channel. he talked about another stock this morning and what is going on with the debt loading, a technology company. a stock merger to mention. this one. a portuguese bank. it is a rights issue. .94 of a euro. a story for portugal to keep an eye on. the european banking sector. sorry, that is not a one-day move but a move over the last few days. byt is the gap below, down about 8%, nearly 9%. matt: very interesting stuff on the subject of thanks raising capital. ostrom has no plans to raise capital. there was a summer of speculation about a possible takeover. the german lighting company has already sold a unit to the chinese and has since faced an in-depth probe by the german government. here is what they had to say about m&a speculation in an exclusive interview from new york. been a lot of speculation all summer long about possible acquisition object is. if it would have been an ink -- a concrete offer, we would know because based on german disclosure rules we would've had to disclose it. there is nothing concrete at this point and time. matt: you are the chief financial officer. you look at the books every day. do you need someone to take out a majority stake or is your business running in a way that you do not need any extra investment to continue to produce bigger margins, more sales, more profits? obviously, we are happy with our current shareholder base. we are always looking for new investors. that is also why of -- that is also why i am here. we are always interested in attracting new capital to the company. matt: does that mean you will be looking for someone to take out a stake, either majority or minority, if possible? >> we constantly talk to investors although we do not have specific targets. that is usually a decision and investor makes. we want to spread our investor base globally because we are a global company. inare trying to address that europe, asia and in the u.s. matt: you have high-tech lighting solutions. and a huge global footprint one that has been in the news lately because of donald trump's concerns about trade, are you worried about terrorists -- tariffs affecting your business when you work with a company like bmw? >> there will -- if there would be an imposition of tariffs at borders, it would affect global trade. the possibility of a disruption is relatively remote. guy: angela merkel has reiterated her position on your. she said aiming to maintain good relations with great britain does not mean caving in once brexit talks get underway. merkel: we need to be clear that the entry to a common theet can only happen if four freedoms of market access are adhered to otherwise you need to settle for less. we cannot let negotiations take the form of cherry picking as otherwise this would have fatal consequences for the other 27 number states and such consequences we cannot let happen. believe that it is very important that we make clear on one hand during the negotiation talks that we want to keep a close relationship with great britain. we are good partners on a bilateral level. we work together well in nato. we in germany have great personal ties with britain. but on the other hand, the joint entry into the market can only work if you adhere to the four market -- the four freedoms for market access. matt: with us now is joseph janet. senior policy fellow at the european council on foreign relations. angela merkel striking on the one hand and very european centric tone saying that she cannot cave-in to britain's demands but on the other hand saying they are great partners. how are these negotiations going to go? will they be clear-cut? >> the european market is priority number one with germany and good relations. the german government will probably hold back and those institutions, those european to lettions are mandated the negotiations do their job. germany is not interested in meddling in the east negotiation's as it would confuse things. and it would compromise the german position. matt: they do not want to meddle in these negotiations but when she had the decision to unleash a flood of immigrants into europe, she did not consult anyone else. is that going to be her downfall or can there be no downfall for her in her fourth campaign for chancellor? she does not seem to have any opposition. >> she is standing pretty solid at this point. what can bring her down is when she failed to deliver. for the fourth time is very much about her delivery capacity. if she can deliver security, prosperity, and predictability to the germans, there is basically nothing that can stop her. she has to watch it for those black swans, those disruptive events that could derail this promise. missing the real issues surrounding the german elections? it is not ultimately who ends up being the leader of germany but how the makeup of the parliament will develop from here. that will make life considerably more difficult for angela merkel. what are you expecting and how will it impact policy? >> there is a good probability that the next german parliament will have seven parties if you count the bavarian christian union as a party. that makes coalition building much more complicated. on the other hand, likely cdu and csu will have a theoretical option to form a coalition. elent michael -- a jamicha coalition. not probable that possible. they could also form a coalition with the right wing fringe nationalist party which is out of the question but a theoretical option. there is also an option for them to coalesce with the social democrats again in a grand coalition. angela merkel has three options even though one is purely the reticle. the social democrats have one option, to continue the coalition with the conservatives and that gives her the upper hand. comeshe french election first. while it looks improbable that we would see marine le pen winning, were that to come to pass, or we were to see difficulty surrounding the french election, how would that bleed through to the german election? >> that will be a serious factor particularly if and when marine le pen as president would set out to immediately put into move from the european union. i would not expect that to happen even if she should win but such an election would make it more difficult for merkel because it would weaken her promise to deliver stability on the european french. matt: i went -- on the european front. i wonder what you think about the european union further out. the telegraph over the weekend had a story about the germans getting angry about the ecb the europeannflate economy and getting the southern countries out of debt and the germans feel they are stuck with the bill. does the european union still keep all of the members that we see in it today? >> longer-term, there is a good chance that it will but i believe we will only see movement if there is more momentum generated in the political center of the european union. view, in an intergovernmental lies to -- intergovernmentalized system, you need to take things into hand going forward. germany needs like-minded partners, large and small to push ahead and to deliver to its own public. the german government needs to demonstrate that germany is not alone but there is a critical mass at the center willing to move europe and willing to deliver. let me ask if it is possible that the european union is strengthened by a common enemy. you have written in the past about russia. it looks like the u.s. and coming closer together. does that strengthened european unity? european.les a lot of it does not necessarily strengthen them. if they would both turn aggressively against europe, or butight be a federat that is not in the cards. it will take a good bit of that innd conviction this world, a donald trump world, in a chinese influenced world, in a vladimir putin world, that europe has to stick together. matt: in the cause of liberalism. >> maybe not liberalism but to for the model of an open, diverse society connected to the world but at the same time is very conscious when it comes to social equality. that is the european model and this is what europeans need to defend. that is what is unique about them. -- josephph standing janning with us. donald trump is the talk of the town at the auto show in detroit. we will hear from another -- we will hear from a number of ceos from carmakers about what they expect in this age of uncertainty. this is bloomberg. ♪ guy: welcome back. 8:45 a.m. in london. let us get you your bloomberg business flash. valeant has agreed to sell to l'oreal or $1.3 billion in its second asset sale announced today. the struggling canadian drugmaker announced it was selling a unit to a chinese group. in ant has been embroiled investigation about its high prices. a hong kong department store is sold on news that alibaba and others want to take it private. the offer of 10 hong kong dollars per share. they plan to integrate -- alibaba plans to integrate with brick and border stores. blackstone is no longer involved --discussions for an energy the discussions fell through after a washington journal report from last month. that is your bloomberg business flash. guy: a couple of things to mention. it does seem that we are getting another big move in the turkish lira. this is the dollar-lira. it goes back once -- one month. we have another one in action this morning. i can show you a three day. you can see that move a get in this morning as we continue to see selling pressure on the turkish currency. the other factor yesterday. iraq came out confirming it was cutting 160,000 barrels a day of output under the opec deal. that is interesting stuff given what is happening at the detroit motor show. absolutely, the north american international auto show underway in detroit. president-elect donald trump's presence is being felt in their it when though he is not attending. several ceos have given us their views about the incoming administration. >> there is a lot of opportunity. we have more in common with the president-elect and we have at odds. we are looking to strengthen the country, business performance because we are a big provider of jobs. we provide over 100,000 good paying jobs. we are looking for reforms. regulatory streamlining. that willall things it improve our business and allow us to reinvest. >> we understand what the president wants to do and we agree that we want to make america strong with good paying jobs and a good economy. that helps my business if i am selling cars in a stronger economy. everything which has been done in collaboration with the industry is much easier to be done. no matter what the administration wants. the industry can do a lot of things as long as it's collaborative efforts, as long as we have some visibility about what will happen, we can do a lot of things. the only thing we do not like is being caught by surprise. >> we would like to have open trade. build everyannot model in the local market. most cars will be locally made buthe u.s. but some will -- some we will import and some we will export from the u.s. fair trading open, environment -- that is what we expect to see. >> we have very good relationships with every administration through the years. we want to see regulation and regulatory policies that are more reflective of reality. we want to see corporate tax reform. here in the u.s. amongst developed nations, we have the highest corporate tax. interesting was market field there. he gets two out of three. free trade does not seem to be agenda but hent's will get friendlier regulation as far as cafe standards are concerned and he will get corporate tax reform if the hisident has his way -- has way. it looks like the auto industry in general is behind this administration. -- will u.s. consumers pay more for cars or trucks? is the u.s. consumer prepared to pay for this? consumerk the u.s. would probably pay a slight premium to buy as we have seen ford or chevy pickup trucks over toyota or nissan. they certainly are not willing to pay a premium to buy the japanese trucks even if they are made in the u.s. at the end of the day, they will not pay more just to buy something that is made in the u.s. if they do not put their money where their mouth is where that is concerned and that is what the u.s. auto industry is most worried about. we spoke about this yesterday. if a mexican autoworker gets paid on average less than $8.50 an hour and the u.s. auto worker gets hate more than $46 an hour. you can see the cost difference is massive. guy: i think that it -- i think did.to what henry ford he significantly increased the so they his workers could afford his cars. there is that element of the argument. if you increase wages, maybe consumers would be willing to pay more. was the only one building cars in the whole world. at a time when no one else built cars. guy: you face competition, then the argument is harder to justify. we need to talk about what is going into the cars next. market has the included optimism. this is bloomberg. ♪ guy: welcome back. you are watching the open. the u.s. oil fund posted its first weekly inflow since december on expectations of an international deal will be upheld. iraq has already announced lower output volumes. on the oiltimism outlook story is beginning to gather momentum. >> that is right. i have to say that it is not just on the equity side. if you look in credit where we saw a lot of energy related pain this time last year, there has been a stunning turnaround. the percentage of high-yield energy credits trading at distressed levels has dropped from 75% last february 2 under to reset now. away from the markets, we have also seen activity picking up on the business side. oil majors and announcing they will ramp up investment. to u.s. rig camp continues climb. employment in energy intensive states picking up in the last six months converging with less energy focused states. a lot of optimism in the u.s. oil patch right now but the irony is that the optimism tends to be self-limiting because as soon as you see people picking up their activities in terms of oil, youdrilling for have worries over the u.s. shale impact on total supply begin to rear their ugly heads and that seems to be what happened yesterday when we saw oil dip below $54 a barrel for the first time in quite a while. now, getting down to $52. is it the shale producers pushing down the price? >> that seems to be the major concern. if you think that opec is limiting production in order to make the economics of the oil storage trade less profitable, about shalee all right now and we have inventory numbers coming out of the iaea tomorrow so that will be something to watch. guy: thank you very much. that is the open. this is bloomberg. ♪ francine: the dollar drops again. the postelection euphoria subsides as the reality of a trump residency sets in. economists say it is running hot and overshooting inflation is a concern. china has factored the rise of -- to export inflation to nations around the world. and forest talks brexit. the yuan foreign secretary faces parliament after he says no decision has been made on the single market, while