anna: drums treasury. tomer goldman sachs is said be the top pick for treasury secretary in the new administration. a week on from election day, the bond selloff slows. emerging market stocks and currencies have their first gains in a week. the may doctrine. the u.k. prime minister says u.k. companies have a responsibility to show capitalism can work for everyone and soften resentment of those who feel left behind by globalization. --are they pressing on to boost the capacity?

we speak with the group ceo at 7:00 a.m. u.k. time after the airport -- after the airline report. ♪ anna: very warm welcome to the program everybody. this is bloomberg daybreak. our flagship show. we are getting some breaking numbers this morning. merck pharmaceuticals. yousef: let us break down those numbers as they begin trickling in. we are currently looking at third quarter coming in at 600 -- 676 million euros. for 1.563.e here was that is a beat on the adjusted eps brunch. we are still waiting for additional details. this is a firm that has been a

key driver in the global pharmaceutical industry. it works in areas such as oncology and degenerative drugs plus autoimmune and inflammatory diseases as well. third-quarter adjusted coming in with a beat. 676 billion euros. we do expect more details from this earning statement. usually, there is a lot more color in this. anna: let us take a moment to ceo.viewers that merck's let us talk about where we are on a number of asset classes that have changed tact. particularly around the dollar. let us remind ourselves of how wrong we were. this was the average forecast for the donald trump victory. everybody thought the dollar would collapse at the time of

the u.s. election if donald trump was the winner and that has not been the case. yousef: gains on the u.s. bloomberg dollar index. this is how they were forecasting before the election. they were called out. they were wrong in predicting that. what willme think -- happen to the inflation expectations in the u.s.? how will this mess up plans in december for the fmoc? a question worth asking. let us check the risk radar to see where we are on risk asset classes. the 10 year yield is down a little bit, 2.21%. treasuries increasing for the first time in a week. emerging market stocks increasing for the first time in a week. the dollar retreating for the first time since donald trump's

win. things look different this morning but that does not change where we have been in the last week. yousef: much of the talk of infrastructure is still weighing in on a lot of the commodities driving the momentum but think -- zinc is now taking a bit of a breaker -- of a breather. it is now being driven on better demand out of china. $45 -- $45.17. we are up 1.7%. up from the eight week lows that we had as opec nations but more momentum ahead of the meeting in vienna on november 30. it is still unclear if they will be able to come up with something as far as specifying what countries will produce. reynolds america is seeking higher prices from

british tobacco. that is according to people familiar with the matter. they say the companies are in talks. owns 42% of reynolds. that is the second-largest cigarette seller in the u.s. attacked the has low interest rate environment in the united states. he hopes that in the near future some accommodation would be removed. >> monetary policy being the primary policy of the united states, it has come to an end. -- having rates this low. it creates distortions in markets and business decisions. we have been saying that we would like to see broader economic policy. angie: theresa may says british companies have a responsibility to help soften the resentment of those who feel left behind by

globalization. she spoke last night in london. do that believe as i liberalism and globalization globalization continue to offer the best future for us, we must deal with the downside and show that we can make these twin forces work for everyone. angie: global news 24 hours a day powered by our 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . i am angie lau. this is bloomberg. anna: thank you. saudi arabia's missed global forum is one of the missions the kingdom is pursuing. one of the priorities is galvanizing saudi's youth and how it can help advance vision 2030, a blueprint for lessening the dependence on oil. speaking of oil, erik schatzker

joins us now from the conference. good to see you. >> i am here with bob dudley, the ceo of bp. some people might find it curious to see bob dudley in saudi arabia. a country where oil is a sovereign resource. are there opportunities for bp to do more here? >> possibly. saudi aramco has many partners. we have a lubricant business year and we do trading here. we do some business here. the world is trading. erik: how might bp become more of a partner? >> one of the great things about these conferences are that you have a lot of meetings and they explore a lot of ideas. tomorrow, i will be going up to , we will seearan what happens.

erik: what are they looking for from bp? the countries are going through their efficiencies and changing. i am interested to see some of the amazing things they have done with technology. we will meet and talk and we know them well. the ceo is on the oil and gas initiative for the climate with me. erik: this country is engaged with some delicate talks with its opec partners. what is going to happen in vienna? prices drifted up to 44 this morning. these are low levels for opec. we will see. i do not have any special insight. i am not speaking to ministers directly about it. it looks like they will have some serious discussions. there is a lot of volatility.

erik: do you expect an agreement? >> i don't know. statements from the iraqi oil minister confuse me a little bit. i think there are some behind the scenes talks. : what if they fail again? >> i think we will stay at the level we are at. thele are pessimistic about possibility of an agreement. you see that in the price. erik: there is a joke going around now. oil producers exempt from cuts is what opec now stands for according to the joe. if the nigerians ask for an exemption or the libyans or the iranians, can the rest of opec really cut a million and a half barrels a day? >> there is a lot of surplus.

it would be surprising if one or two countries cut and for that amount. so i think they will try to reach some consensus. i ensure that is the objective. erik: what are the russians going to do? there for 25 years. we have an interest there. i've listened to the statements of president clinton in istanbul. they said they would look at freezing or reducing. i have heard elsewhere that they are not going to do that. they are sending mixed signals. erik: which one would you bet on? >> it looks like the prospect of $40 oil, i think there would be opec andensus around not opec countries. erik: here is one of the problems, the supply picture has gradually improved in the algiers meeting in september.

knowing the oil market the way that you do, how much would have to be taken out in terms of capacity to drive prices back to $60 on average were a sustained period of time? you look at supply and demand, it is generally in balance. in china,growing europe, and north america. it is about equal. you have tremendous levels of stocks around the world and it will take time to drain them off. if there were cuts, some substantial cuts from opec, that would send a signal that the stocks are being drained. erik: how does donald trump's election affect the global oil market? >> i do not know. it has drifted down in the last few days. normally, production does come up in september and october. i do not know. we will wait and see. he has fashioned himself a

champion of the u.s. fossil fuels industry. >> i do not know what will happen. we will just watch and see. the president -- the role of the president is a complex job. and when you get in there and see what it takes to make these big changes or directions, it will not be overnight. other europeanme oil companies supported the paris deal. do you change your mind if donald trump wants to kill it? >> not at all. we have a climate initiative with 10 companies. will keepco, we driving to try to develop clean technology. we are going to try to make sure that we get rid of our methane emissions because that is a greenhouse gas. we think gas is a clean fuel of

the future. there will be 2 billion more people in the planet in 2035. we will need all forms of energy. erik: shell says it expects oil demand to peak and then plateau somewhere in the next 15 years. what is your video? thatspoke with them about and he says it was somewhat of a misquote. but i think our review is that we could see peak oil production in late 20 30's, early 20 40's. that is our view. it will still be oil and gas. 50% of the world's energy supply in 2035. the world will need all forms of energy. erik: i would imagine that is one of the reasons bp is preparing to go back into the gulf of mexico. a momentous decision. -- have a project -- mad.

mad dog ii. >> it is a funny name for an oil fields. we look at this project -- we are moving towards natural gas but this is an oil project. in 2011, this is a project that is now under $9 billion. we have reengineered it. from bp anyct f id day now. the first quarter of next year. erik: thank you very much. of bp.ley is the ceo more from riyadh coming. yousef: that is erik schatzker joining us. we want to take you back to what is happening in merck. goals to 4.6 its billion euros.

it is raising its full-year profit forecast. a quick recap. their quarter net sales which missed estimates. and thested was a beat net sales came in at 14.9 billion euros. overall, an interesting set of numbers. merck is more bullish on the numbers ahead. anna: we get inflation data out of france later this morning. and the u.k., 9:30 a.m. london time. we also have gdp from germany and italy culminating with numbers from the eurozone as a whole at 10:00 this morning. bank of england governor mark carney is scheduled to be quizzed by parliament treasury. yousef: a banker for the masses. theresa may tells an audience in the city of london that there to globalization and

capitalism can work for everyone. anna: the goldman connection. will donald trump's finance chairman hold the top role at u.s. treasury. yousef: not exactly flying high. on theirt planning projects. stay tuned for that and much more. this is bloomberg. ♪

anna: welcome back. you are looking at live shots of hong kong. 22,000 on the hang seng right now. up by 0.4%. we have seen a reversal in many trends in markets today compared to earlier this week. let us get the bloomberg business flash. juliet: reynolds american is

seeking the highest price from british american tobacco after rejecting a $47 billion buyout offer as too low according to people familiar with the matter. they say the companies are in talks and bnp is willing to increase the price slightly. it already owns 42% of reynolds, the second-largest cigarette seller in the u.s. estee lauder has agreed to buy forcosmetics company -- $1.45 billion. the deal would be the largest acquisition. company popular with millennials. expand esteehelp lauder's online sales. apple is waiting -- is moving into glasses. a potentially lucrative area according to people familiar with the matter. they say the company is still at the exploration phase of the device would connect wirelessly

to iphones, show images and other information in the field of vision of the wearer and may use augmented reality. that is your bloomberg business flash. yousef: smart glasses. what is the world coming to? thank you. to the u.k. where prime minister theresa may says british companies have the responsibility to help soften the resentment of those felt that they have been left behind by globalization. do that believe as i liberalism and globally -- and globalization continue to offer the best future for our world, we must deal with the downside and show that we can make these twin forces work for everyone. anna: meanwhile, pricewaterhousecoopers says brayton -- britain may borrow more than previously forecast in the next five years. the budget deficit is on course to reach 67 billion pounds in

the current fiscal year. 12 billion pounds more than what officials estimated in march. britain will still have a shortfall of 18 billion pounds in the year that it was meant to have a surplus. jeremy joins us. great to have you here. it is fascinating. theresa may stands up and speaks out in support of liberalism and globalization as offering the best options in the world at the same time that donald trump wins the u.s. election. they are speaking from different points of view. >> what theresa may is starting sheevelop is a theme that developed on the steps of downing street. helping people left behind. how do you turn that into practical reality? if we assume globalization is

the best option in terms of macroeconomic performance, how do you translate that into the benefit to the individual consumer who gets left behind? without raising people's skill levels and enabling them to compete in the global environment. yousef: all of that sounds great. globalization. free trade. how will that translate in terms of how the u.k. manages the brexit process? this painful divorce is still going to be drawn out. >> it sounds good as you say. theresa may is trying to make the right sounds practicality remains the issue. if we go back to last month where sterling was under real pressure where markets were concerned about the hard brexit scenario, there is a real question on how to transform this into reality. there is still uncertainty about that. any sterling rallies will not be short-lived and the growth trajectory into 2017 and beyond

will be slower which has implications for the budget deficit. anna: let us talk about sterling under pressure. chart. a sterling under pressure here. with a two-year lag. putting that alongside u.k. core inflation. the big question is, how long does it take those moves in sterling to feed through two core inflation? maybe two years. how much you have to move one set of data by two influence the other. does that sound like the right kind of lack? --kind of lag? >> i suspect it will happen faster. nature of the extreme the sterling fall, in the post-brexit world, we have seen that reflected in a high profile price discussion in terms of certain foodstuffs and we will

see that replicate in terms of the earnings numbers from the food producers in the next few days. the uptick in inflation in the u kate will be faster then that to your time horizon. anna: why so quick? sterling movement has been advanced this time around. the ability to allow margins to be squeezed in terms of pressures is that much smaller this time around. it will be difficult to hold back those price increases over that to your time horizon. yousef: how is all of this going to weigh on mark carney's plan and the boe as it tries to navigate all of this volatility? the ongoing brexit process. currency weakness. external variables feeding into this. how does that all play out for the boe? >> in a sense that is the problems that the bank of

england has. there is a confluence of factors and they are pulling it in different directions. there has been a lot of debate about how quickly the economic slowdown will come in. the bank has been more downbeat. the inflationary report was revised. that will be one thing that mr. carney will have to outline to the committee including the critics on the committee today. those different variables are going to cause him headaches. we will see inflation ticking higher. and it will be interesting to see how the bank can look through those criteria. anna: looking for a modest giveaway around infrastructure? >> that is the underlying message. we have seen that globally and we have seen fiscal policy work in tandem with monetary policy. i think the u.k. will follow that route. anna: thank you very much. here mate will stay with us here on daybreak.

siemens is serving up its industrial basis. how does the group feel about the incoming president donald trump? all of that is coming up here on daybreak. this is bloomberg. ♪

yousef: welcome back. you are looking at a live shot from tokyo. the imperial palace. dollar-yen currently trading lower. 0.3%. the 10 year bond yield has risen to zero for the first time in the globalmonths as asset classes continue that rotation off the back of donald trump winning the election. it is still not over. what is also ongoing is a new edition of daybreak which is now available on your bloomberg and your mobile. it is a function. let us see what is making the top stories. anna: it features some ongoing

m&a activity. it looks at m&a in the tobacco sector. reynolds american has rejected a buyout offer. to seek a higher sale. thatdo remain in talks as is willing -- bat is willing to increase the price slightly. englandthe bank of governor will be questioned about his forecast after a report is expected to show that further pickup in prices. economists see inflation accelerating to 1.1% in october. the start of what is predicted to be a sharp rise. borrow onein may hundred billion pounds more than previously forecast over the next five years as brexit hit the economy. the budget deficit is on course to reach -- in the current fiscal year. yousef: the cell down in

benchmark treasuries has moderated and bloombergs dollar index is in negative territory for the first time since americans voted donald trump into the white house. good morning. nejra: the selloff in treasuries that took the 10 year yield to a 2016 high yesterday. it put global bonds on track for their worst month since 2003 after the worst week for treasuries since taper tantrum. look at if you treasuries. the 10 year yield coming down five or six basis points to 2.20%. the bloomberg dollar index not gaining for the first time since wednesday, edging into negative territory. what we are also seeing is japan's 10 year yield rising, going to zero for the first time in almost two months meaning that the treasury 10 year yield was at its widest

since 2014 yesterday, that may be may be mayor -- narrowing. i have the rsi surging to its highest since 1990 suggesting that perhaps the selloff was a little overdone. another thing that was pushed into rsi overboard territory is the dollar-yen. dollar -- we are seeing a switch now. the yen is gaining against the dollar. the dollar falling from a five-month high versus the yen. take a look and see that we are also seeing a little bit of euro strength. 45% chance of euro-dollar parity in the next year given the dynamics we have seen in that pair in recent days. em currencies gaining as well

against the dollar. moving quickly to see what has happened in the equity space. equities rising from a or month low. asian stocks steadying after a two-day drop. yousef: fresh off yesterday's announcement that his company ford pay $4.5 billion graphics, the biggest acquisition, siemens ceo has been speaking to bloomberg in riyadh. well asoned the deal as how the election of donald trump and populist movements could impact global markets and siemens. impulse from the united states is spread all over the world. it matters what the president does because the whole world is looking at the united states in many ways. that is why i believe we should be very mindful about what he does and so we will see. way --me put it to this

let me put it to you this way. >> we have been growing. dollars in revenue is enormous. what does a ceo of a company of your sides want the president to keep in mind as he considers the implications of free trade projected -- protections. we need to be mindful. me, i would tell him if this was your own country. erik: you have said that the populist tide in europe whether it is represented through brexit

, marie lepen in france, poses more of a risk to your business. >> first of all, if the way it populism -- if it moves into nationalism -- this whole world has been prospering because of global trade. globalization has been meaningful for many people. now, if you try to turn it, this to going the risk next step to industrialization. theyone talks about getting internet into the investor world. think a little bit about the internet coming to the investor world. the internet has no boundaries. there is no border.

anna: that was siemens ceo speaking to erik schatzker. jeremy, let us talk about europe. talking about the threats from populism and nationalism and there were many places in europe where we can talk about that at how does that manifest itself in currency markets? the strongt-term, dollar in the weakness we have seen in the euro perhaps boosting germany's export machine. europe is a place that likes to export. when does this start to threaten the story? >> there is a concern about the rising tide of populism. we have a number of electoral challenges in the next few months. the italian constitutional referendum coming in december. and the dutch election in mid-march and then threw to

france. there is a rising tide of populism that perhaps has been amplified by the donald trump victory. it does cause some concerns. there is a perception that the european model could be compromised by this rising tide of populism. the euro dollar are at current levels. that is good news for german exports particularly. yousef: you think for germany it is slightly higher. >> a huge advantage for germany. it is also useful for the ecb as you come to the december 8 meeting that the fall in the euro is providing an inflation back to which will help ease their policy backdrops also. yousef: we have put together a chart that shows the state of affairs when it comes to the upcoming italian referendum. it is still a fairly close race between the yes and no votes. not that we should read too much

into pulse to begin with. take a look at the track record. they have not gotten it right very often. there has to be an algorithm that can translate that into something that will happen. how concerned are you? the 10 year yields we are seeing for the italian sovereign are still creeping up. >> they are. and that is an interesting juxtaposition of the events of the last few weeks. i think that is notable. that is providing a directory of's -- a degree of stress. the prime minister to lose the referendum, they will widen further. markng a further question over the italian macroeconomic environment. and there are problems there already. i think that will be a catalyst for euro-dollar to edge lower.

parity not expect that to return with any significance. anna: it is all guesswork as to what donald trump's real policies are going to be. onis too early to speculate how much he will stick to globalization from his campaign. japan sayster abe in he is keen for america to ratify tpp. i was listening to you earlier and you were talking about markets are being wrongfooted by the donald trump victory. the reality is -- will we get the donald trump candidate or the more conciliatory donald trump in the victory speech? that is a problem. we don't know which way the policy will go. as the cabinet is put together that will help to facilitate a degree of understanding. if we move away from the

protectionist stance and go back to 2009, if donald trump goes back to that protectionist tendency the global backdrop would be better than what we assumed and we will see a better macroeconomic environment. yousef: what is your gut instinct when you look at how the cabinet is taking shape? messages seeing mixed in terms of the initial process between the strategists and the chief of staff. at this early stage, donald trump is trying to provide an early degree -- an early degree of diligence. -- divergence. trump may be a loud to be more mainstream than the candidate may have suggested which will provide some degree of stability and safety for

markets. anna: there does seem to be an expectation with some business leaders, bob dudley was making his comments earlier. jeremy will stay with us on the program. yousef: balancing the books. the u.s. treasury chief includes a widening budget deficit and slow productivity growth. is donald trump's finance -- pledges earlyvis services to the aviation -- industries. ofwill speak to the ceo easyjet at 7:00 u.k. time. cfosf: our global concerned about the level of uncertainty? we speak to them about that. stay tuned. this is bloomberg. ♪

>> in my conversation with the president-elect, he expressed a great interest in maintaining relationships and so one of the messages i will be able to deliver is his commitment to nato and the transatlantic alliance. i think that is one of the most important functions i conserve at this stage during this trip. u.s. president obama speaking last night about president-elect from and u.s. alliances. a live shot for you out of new york. interesting to see that we are expected to go higher on those u.s. equity markets at the start of trade. futures pointing up at this early stage. let us get the bloomberg business flash. julia: reynolds american is seeking a higher price from rigorous american tobacco after rejecting a $7 billion buyout

offer as too low. according to people familiar with the matter. they say the companies are in bat is willing- to increase the price slightly. it already owns 42% of reynolds. lauder has agreed to buy the cosmetics company two-faced 41.4 $5 billion. the deal would be estee lauder's largest acquisition and adds a brand popular with millennials to its offering. it is expected to top -- in net sales and it will help expand estee lauder's online sales. apple is moving into expansion of digital glasses. a risky a potentially lucrative area of wearable computing. they say the company is still at the exploration stage but the device would connect wirelessly to iphones, show images and other information in the field

of vision of the wearer and may use augmented technology. that is your bloomberg business flash. yousef: holding fort in hong kong. to our top story. donald trump may be continuing a pattern of putting his closest pre-election allies into key roles in his administration. ministerign finance may be a favorite for the role of treasury secretary. we have all of the details. >> goldman's tax -- goldman nugent. steve campaign national finance chairman and has been considered the leading candidate according to those frail your. this is -- according to those familiar. this is consistent with donald trump. the pattern is loyalty to his closest allies.

he served as the campaigns national finance chairman. he is a second-generation goldman partner and were he to become the secretary, he would be the third goldman partner to do so. following in the footsteps of robert ruben and hank paulson. he was seen at trump tower on monday. as he was leaving, he was asked by reporters the context of his visit and he said that he was just helping out with transition. the transition team also said to be considering -- as a dimonentative and jamie although the final decision has yet to be made by president-elect trump. an appointment will probably, sometime later in the week. president obama spoke out about

his recent meeting with president-elect trump and said that he can assure the public and the nato allies that the u.s. commitment to the alliance will continue even through the trumpet administration. >> in my conversation with the president-elect, he expressed a great interest in maintaining our full strategic relationships and so one of the messages i will be able to deliver is his commitment to nato and the transatlantic alliance. i think that is one of the most important functions i conserve at this stage during this trip. >> one of the things president obama said impressed him about his meeting with donald trump was that he was both charismatic" practical. pragmatic. his pragmatic approach will likely allow him to analyze and adjust his tender.

there is a suggestion that the donald trump as candidate will be different from the donald trump that assumes the important role of president. anna: we will discuss that contrast in a moment. down the stretch, robert kaplan has attacked the low interest rate environment in the u.s. he said he hoped in the near future some accommodation would be removed. >> monetary policy being the primary policy of the united states, i think has come to an end. it penalizes savers. it creates distortions and markets and in business decisions and we have been saying that we would like to see broader economic policy. yousef: still with us is year may. .- is jeremy looking ahead to december and showingmeeting, 92% is as the likelihood of a rate

hike. there is almost a certainty what is it perhaps too soon given the amount of changes we are seeing across asset classes? look at u.s. dollar strength and where the yield level is, might they have to hold off until they have a clearer picture of what is going on? is ever certain particularly in terms of monetary policy decisions. that is one interesting point -- there is a certain expectation of december. the reality is that when we had that donald trump victory we assumed we would see a risk off move and that would diminish the december hike but as soon as we saw that stability in markets and risk assets, that has allowed markets to come back to the assumption that if you look at the baseline economics in the is probablyd increasingly behind the curve. they will need to push through in december and then we can

factor in how aggressive the fed will need to be in 2017 especially in the context of the changing dynamics and inflation. anna: you talked about what we have seen regarding the dollar in relation with donald trump. we talked about how dollar has rallied with the victory. . donald trump's victory would lead to a selloff of the dollar. yousef: those are your top forecasters. not just any forecasters. that itur point being depends on which donald trump you get. the market is reacting to one type of donald trump. >> obama talked about donald trump being pragmatic. if he is really going to be pragmatic, that is why those forecasts have proven to be incorrect. the tone in the victory speech was more conciliatory. coming through so

that allow the market to take off the risk off mentality. yousef: the selloff in the bond market taking a bit of a breather. bonds, much global of it was wiped out. where will this go in terms of the u.s. 10 year treasury yields? -- does it have any further legs to go? >> we have seen on many occasions the discussion at the beginning of each year -- will this be the year for the tenure yields. -- 10 year yields. i wouldn't be surprised if we saw them move further. the curve could steepen a little bit more. somewhere in the vicinity of

50-70 range. the devil is still in the details. we come back to the transitional process. anna: how strong with the dollar have to get to cause the fed to cause, to act as a tightening in the u.s. economy negating the need for further hikes from the federal reserve? >> monetary conditions in the u.s. may not be as receptive, you could argue. the u.s. is not reliant on its export component to draw in growth like other g7 countries are. the dollar would have to appreciate significantly for that impact the fed and instant -- and inflation expectations markedly. the labor market is close to full employment. breakeven inflation rates. we have to go some considerable distance for the strength in the dollar to really impact and weigh on the fed

expectations. yousef: is there a specific level that you would say it would impact the fed? i was looking through the minutes and the strength of the dollar this year is a concern. what level with that be? >> we still have some way to go in the dollar index. we would need to go substantially beyond those ties we saw in december last year in order to facilitate question marks about dollar strengths. i think we are at least 5% away from the levels i suspect that would cause the fed to start to pull back. anna: jeremy, thank you for joining us. head of fx strategy. easyjet ceo joins us for her first interview of the day. the groups earning cheap -- chief will join us. ♪

a -- emerging market stocks and currency have their first gain in a week. the made doctrine in her first major policy speech that british says u.k. companies have arisen on to show capital of the can work for everyone.

will bloomberg daybreak. our flagship morning show. i'm alongside the lovely anna edwards. we have some numbers out of germany. anna: not so lovely numbers. .2%,erman economy grew by versus an estimate of .3%. it's coming in a little bit below estimates, slowing more than estimated as trade weekends. we talked about weaknesses for a long time even before we had the victory of donald trump. the data is showing a slow but steady growth, and we will continue to build up the picture of how the euro zone economy looks. breaking numbers from easyjet. yousef: yeah. 108.4iscal year is at

pence, easing pain related targets for executives. anna: full-year revenue, 4.6 7 billion pounds against an estimated 4.60 3 billion pounds. let's talk to somebody who knows these numbers better than we do. day,irst interview of the easyjet ceo carolyn mccall. she joins us here. great to see you, as always, on the program. we're poring through the details of this release. you made an announcement weeks ago to the market, so perhaps there aren't going to be too many surprises in here. how confident can you, do you feel, about the numbers penciled in for your performance next year in the wake of all the uncertainty you face? >> we've not given any guidance, really, for the next year. guidance,ven some rps but there are no surprises of

these numbers. we have had a very resilient year, a very good year. you think of the external shocks that have affected us, easyjet was particularly exposed because we have such a strong network, which is city to city, and a lot of those external shots have affected that. and of course there was the devaluation of the pound against the dollar, where we get our fuel. profit,illion pounds growing passenger numbers, loyal customers, 54 million coming back and rebooking, shows we are doing a lot of things right, and we are going to continue to get things right. when we look forward to next year, there remains a degree of uncertainty for obvious reasons, but the issue i think is that consumers are going to get brilliant value, and that means pricing will remain under pressure. and that is what all airlines are thinking.

yousef: i'm looking through the additional lines that came in. you point to a tough market that will make it difficult for you to hit the target, but at the same time, you are confident about achieving those numbers. what are the implications for next year? what does that mean? >> we finished this financial year at the top end of guidance, so there is no surprise about the numbers this year to the markets. when you look at next year, as i have just said, we have had to everything, and we believe it will remain quite a difficult market, and the pricing will remain under pressure. it's great news for consumers, but from an airline's perspective, all airlines, pricing will be the thing that will actually be entrenched with this year. we don't see a reversal of the trend on pricing. that is what we have said and what we will say this morning.

again, no surprise on that. we have been consistent on that, as have other airlines over the last six months. anna: can i ask you about your plans about aircrafts? other airlines might be talking to aircraft suppliers at this point about their future plans. are you thinking of reviewing your plans around capacity? are you talking about delaying deliveries because of the uncertainties? -- wehave a fantastic have a very good fleet plan. we have really good flexibility in our plan, and you are absolutely right, we have renegotiated further flexibility in that. we actually have a shorter window within which to make decisions about fleet deferrals. we'll grow about 9% this year. we are confident about that growth because we believe there are strong opportunities to gro w organically. we're committed to that already

because we have, already booked a lot of people in place to deliver that growth. that's good news, because we see real opportunity in the markets. we're in very strong positions, number one or two in virtually all the top 20 airports in operation. that's a very strong position to be in, and we want to consolidate and grow that position. as far as future growth plans are concerned we will keep those under, review, because we have the flexibility on leases and deferrals. yousef: the future growth plan -- is it perhaps a good time to set up a new headquarters somewhere on mainland europe? >> no, it's definitely not a good time to set up headquarters there. we will remain headquartered in the u.k. we can say that now with confidence. we will, however, set up an eu operating company, which means that we will be able to operate routes across europe with confidence, because that is

what we have in working on for the last nine months, and we know that is something we have to do. but our headquarters will remain in the u.k. anna: and what about the operating certificate that you are referencing? what progress on that? >> good progress on that. as you know, we have a u.k. agency, a's list agency, and we will create an eu agency. we already employ 3000 people in europe and have 100 aircrafts in europe. this will be a technical airline operations it to forget. we will have an operating company in the eu, but as i said, no change to our headquarters in luton. no change to those we employ in the u.k., in fact we are growing. yousef: we understood you met with david davis. could you give us a sense of what was discussed, and whether any promises were made along the lines of the promises that were made to nissan?

>> well, it was a private meeting which i attended, as did many of my peers in the aviation industry. it was cross sector, not just airlines. and we were able to represent the issues but also the opportunities for aviation going forward in our relationship with europe. it was a very positive meeting, and i think david davis was very much in listening and i think david davis was very much in listening mode. anna: what sense did you get reachwhat is within his to deliver? to say it was a private meeting, but we did get a press release saying that market access remains a top priority. they want to explore new opportunities for further liberalization, but what can the u.k. government reach to deliver? alone deliver in these brexit talks you think? >> i think whether you are an air-traffic controller in the u.k., whether you are an airport or airline, every single one of us are saying that liberal and deregulated aviation, which we

have today, is what the industry wants. david davis understands that beingtely, and i think the third largest aviation market in the world and the largest aviation market in europe, i think there is some confidence that we will be in agreement. as i have said, he wasn't listening mode, because he wants to understand, but the issues he needs to address in any negotiation and the opportunities we have going forward. anna: ok, thank you for joining us. easyjet ceo carolyn mccall. numbers coming through from vodafone. let's get to the second quarter organic service revenue, by 2.4% with the estimate at 1.9%. that organic service revenue coming in ahead of estimates. yousef: it puts fiscal year , 5dance at 4 billion euros billion euros -- i'm looking here at the interim dividend at

4.74 four the first half of organic revenue growth for the first half. an interesting set of numbers as the company begins the uncertainty with the ongoing brexit situation. anna: let's get to the bloomberg first word news. reynolds american is seeking a higher price from british american tobacco after rejecting a $47 billion buyout offer as too low. they say the companies are in talks and b.a.t. is willing to increase the price slightly. they already own 42% of reynolds. both companies declined to comment. yousef: the fed chief robert kaplan has attacked the low interest rate environment in the united states. speaking in texas where he hopes in in your future some accommodation will be removed. monetary policy being the primary policy of the united states i think has come to an

end. it penalizes the savers, having rates this low. it creates distortion in the markets, distortion for businesses, and we have been saying we would like to see broader economic policy. anna: theresa may says british companies have a responsibility to help stop or the resentment for those who feel left behind by globalization. she spoke last night in london. that we believe, as i do, liberalism and globalization continue to offer the best future for our world, we must showwith the downsides and that we can make these twin forces work for everyone. yousef: a former goldman sachs banker has been recommended by donald trump's transition team to service treasury secretary. -- to serve as treasury secretary. the choice is said to be awaiting the president-elect's final decision. the national finance chairman

has been considered the leading candidate for the job. anna: global news, 24 hours a day, powered by over 2600 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . yousef: you can. and you can also check on the markets in asia. juliette saly is still standing by. a little bit of a different picture in asia, stocks fairly mixed, but you are seeing supply coming through in the emerging markets that have been hit quite hard over the course of the last week since the outcome of the u.s. presidential election. the dollar shows some signs of weakness; there has been buying coming through into these e.m. markets. toakata up, malaysia having a good day . hong kong closed at the lowest level in three months. a bit more conviction in the property stocks being hit hard, and banking stocks are also doing well. investors are searching for yield.

in shanghai, the market is down by .1% today. the index data hit a 10 month high during monday's session. and there's a little bit of fluctuation coming through in japan, the nikkei closing pretty flat. we had quite a bit of moves coming through against the dollar. the weekend session coming down by .4%, but new zealand looking quite strong. the other big action of the day has really been in the bond space. the yield on the 10 year japan rose above zero for the first time since september 21, a very small gain of .02%. investors are very much wondering how long or how high it will be allowed to move higher. in australia, there's a little more action, but you still have the 10 year up 2.66%, the highest level since april. we have seen some money coming out of the u.s. treasuries. anna: juliette, thank you.

up next, woes for cfos. we will dig into a new report that take the temperature of european finance heads. find out what is making them anxious and optimistic, after the break. this is bloomberg. ♪

yousef: welcome back. you are looking at a live shot of beautiful london. a little bit cloudy, 7:17 in the morning. 43 minutes away from the market open. futures are, in the words of an edwards, flattish. anna: that's a technical term, i'm sure. flat, asooking pretty is the dollar against the pound. let's get a bloomberg business

flash with juliette saly. juliette: thank you. reynolds american is getting a hard price from american tobacco after rejecting a $47 billion buyout, saying it is too low. they say the companies are in talks and b.a.t. is willing to increase the price slightly. they already own 42% of reynolds, the second-largest cigarette seller in the u.s. both companies declined to comment. estee lauder has agreed to buy a cosmetics company for about $1.45 billion. the deal would be its largest acquisition, and adds a brand popular with millennials to its lineup. it will also help asked and there on the -- help expand their online sales. that thehas said acquisition of mental graphics will allow for system miniaturization. he spoke to erik schatzker about

the $4.5 billion deal. >> at companies like mental graphics, there's another type of software company. transfer't able to that know how to miniaturization in pc design, because we own the recipe. and that is why we took that industry, and ticket to industrial manufacturing. juliette: russia has opened a criminal case against the country's economy minister. he allegedly received a $2 million bride to approve the sale of the government's 50% stake in bashnet. a spokeswoman for the investigative committee says he was detained yesterday, "in the act of receiving money." an economy ministry spokeswoman did not respond to requests for comment.

apple is waiting in the expansion into digital glasses, a risky but potentially lucrative area of wearable computing, according to people familiar with the matter. they say they are still in the exploration phase, that it would connect wirelessly to iphones, show images and other information in the field of vision, and could use augmented reality. and that is your bloomberg business flash. anna: thank you. europe's chief financial officers and cfos remain bullish in the face of political shocks, according to a survey. 2/3 of cfos view current levels of uncertainty as above normal, with brexit the key driver. ofthe positive side, 2/3 those surveyed expect revenues to grow in the year ahead. joining us more on the report, the chief economist at deloitte. great to have you on the program, as ever. this is a pan-european survey, isn't it? does this give us comfort,

european cfos not quite as nurse about, for example, brexit and other uncertainties, the rise of populism? >> yeah, i don't think it's a bad picture. the cost varies if you are in turkey or the u.k. the symptoms are pretty low -- anna: but it hasn't deteriorated . >> it hasn't. the interesting thing, perhaps the paradox, is there is a lot of uncertainty, and the risk appetite is pretty constrained. but the levels of optimism are not just superlow. they are in the u.k., but elsewhere they are quite decent. i think they have got used to dealing with uncertainty. you probably ought to be fairly used to it. they are getting on with running their businesses. yousef: it is a paradox, and it doesn't add up. we have all the movers and shakers talking about their biggest concerns, a how that is goingnd to disrupt their business models and corporate earnings. then you come out with this survey which says, you know what, we are more optimistic

than we were. that means volatility, uncertainty, lack of clarity. all of that is good news for these businesses to make money. >> well, that is what interpretation. yousef: the cfos are saying that. mean,hink what it is -- i having gone through the u.s. election, we are now looking at the french and german elections next year. this is never ending. cfos have had to deal with this environment of political and geopolitical uncertainty ever since 2007. of course in europe, where they are into the third year of growth, it's not spectacular growth, but compared to where was the year ago, with deflation and ineffective monetary policy, it's not bad. i think what these guys are saying is they expect to continue the recovery. they remain focused on cost control.

but they are getting on with running their business. anna: perhaps that macro/micro thing, where ceos worried about a lot of things but when you ask them about their businesses, we aren't doing too badly. that can happen. talk us through the key concerns. you ask specific questions about what exactly is worrying them. brexit is the top issue, and specifically nontariff barriers. they really matter. fears that britain will start to diverge into the regulatory environment or product specifications, and that means complexity. >> it does. one of the things we see in the u.k. recently is this huge concern about bureaucracy and difficulty in doing business. they really don't like the increase to great in the machine -- increased grit in the machine. they see this as something that will add to the complexity and the difficulty of moving money across borders. yousef: who is leader and laggard in terms of optimism and pessimism?

>> that's a good question. russians are really happy. there has been a real change in optimism in russia. poland -- anna: this is pre-u.s. election. >> it is. poland optimism is high, sweden, norway. almost around the periphery, if that's a polite word. in terms of where sentiment is, there is sentiment in italy -- yousef: just ahead of the elections. >> exactly. and the u.k. is the outlier on every measure. yousef: perhaps turkey is one of the laggards? >> turkey is a laggard, yeah, with the coup attempt. you seem to have the highest level of optimism outside core europe, the big countries. there has also been a rise in spain and ireland, economies that have moved from recession to strong growth. it has been a strong upsurge in

sentiment. anna: how big an outlier is the u.k.? we have a focus on capital expenditure and hiring in the survey. how far behind the rest of europe are british companies falling? >> pretty much at the bottom of the universe of 17 countries. i was staggered by the u.k. results. we have done two surveys since the referendum. thethe first sentiment fell offa cliff. the second one, for months on from the referendum, there was little recovery. although the economy in the u.k. has bounced back quite decently, we aren't seeing it in the survey. anna: is this a forerunner to data to come? the data looks ok at the moment. >> it does. it is suddenly consistent with the idea that you receive a contraction in capex and a slowdown in hiring. yousef: how does that compare to the survey you would have done a year ago, or earlier in the

year, around the time of brexit? when you expect the fall in that kind of optimism going forward after the election of donald trump? -- ? the u.k. or across yousef: across european cfos. >> i mean, i think the adjusting thing -- yousef: where do we go from here? >> i guess is cfos will take their cue from the equity market, which is positive, in the reaction of economists, which seems to be fairly positive. you all were talking up growth in america. i suspect that will have an effect on sentiment. anna: certainly the markets have jumped on the infrastructure story. we should see how long that lasts. thank you very much. deloitte chief economist joining us to talk through cfo optimism. yousef: we are still around a flattish level, but more toward the green down the red, especially on the ftse 100 and cac. that's it for daybreak in europe. the european open is up next.

anna: we will be joined later on. 7:45 a.m. u.k. time. 20 minutes before the markets will open. this is bloomberg. ♪

juliette: good morning and welcome. we have your first rate of the day coming up. i'm guy johnson alongside matt miller in berlin. welcome. what are we watching? matt: it's a pleasure. guy: we will talk in a minute. flattening off this morning, the trump selloff abating. there is some uncertainty over the president-elect's policy.