anna: is december a done deal? oil optimism. opec boosts efforts to secure its production deal. the trump shocks fade. the dollar weakens as investors question whether financial markets may have overreacted to his victory. ♪ anna: a warm welcome to

bloomberg. we have some breaking news. yousef: let's get straight to it. what about the health of the european banking industry? at 607 million euros, the market was looking for 450 million euros. 60.6% at the end of september. call savings plan of 0.4 billion euros undermining profit, pretax restructuring charges at 144 million euros in the operating income coming in at 2.20 2 billion euros. bear in mind the bank returned to the stock market last year. it fits into the broader picture

, 28 positive surprises on the stoxx 600 in terms of bank earnings. upr to date it has been 5.5%. we will have an exclusive interview coming up. anna: in around 15 minutes time we will speak to a cfo and ceo in waiting. the first interview of the day will be right here on "bloomberg daybreak: europe." volatilitytalk about in this market. was evenly spread among the classics -- among the classes. yousef: complaining about how the market had crawled in terms of volatility in the you brought up this beautiful chart that shows how volatility jumps right ahead of the elecon and then it goes in a completely different direion. anna: stock market volatility in

blue. you can see how they diverged around the election, then both coming down a little bit. yousef: it shows they were flying a little blind when it comes to the treasury yields and the bond market. we will have to wait and see how the uncertainty unfolds. anna: i'll show you where we are on the assets overnight. asking questions for a second too fastwe go to far in terms of emerging away from the equity markets. the same conclusion in the forex markets. brought uphave also the 10 year yield, currently unchanged. it fits back into the full consolidation theme. ore, a bit of carpet

bombing there, down 6.5% as we speak. it has been crazy with industrial metals. the rally we saw off the back of election, now it's like, wait a minute, it's gone too far, too fast. anna: here is angie lau. consideringump nominating texas senator ted cruz to serve as u.s. attorney the -- attorney general. he was at trump tower in new york yesterday. when approached by reporters, he said the election was a mandate for change, but he did not say he was under consideration for a job. exchanged vicious attacks

with donald trump during the campaign. the stock market in for a bumpy ride as expectations are dashed that donald trump will quickly burke wrote. he says donald trump does not have a magic wand to drastically improve the economy. surprising those who expected a selloff. donald trump has delivered a double blow to investors in japanese corporate bonds as his u.s. focused stimulus plans make earnings unpredictable. bank of america merrill lynch says the average yield on the yen has risen to the highest level since january. and will germany walk away from talks in the global capital

world unless its key demands are met? insisting the country will not accept a deal at any price and has laid out demands, including .reas of action says greece deserve some space to allow its economy to grow after renewed calls to provide debt relief that will fuel its economy. during a visit to athens, the u.s. president said it would be better to come up with a durable solution as opposed to every six months or each year having a new negotiation. over to italy where economic development minister says the brexit strategy is chaotic. he spoke to bloomberg in wrong. -- in wrong. >> my perception is there is a lot of confusion. it's still a topic of internal

political debate in the u.k., which to be honest, is not acceptable. the u.k. went through a process of discussion before the referendum and they made a decision. they had a referendum, now what we need is to define the framework of the negotiations. anna: you can find more stories on the bloomberg. this is bloomberg. lot, and you. a let's check in on how the markets are holding up in asia. julia has all the details. day, most ofood the markets tracking higher. win sinceonvincing last thursday, starting to show maybe it's gone a

little too far, too fast. a lot of support coming through from emerging markets once again up 2%, rebounding from a four-month low. here in japan, stocks higher for a second consecutive session. another weekn session on the shanghai market. monday it was at a 10 month high and a lot of strength coming through in the one, helping trade of .8%. some positive games on the nikkei to 25, holding at the nine-month highs it reached on monday. butat close in australia new zealand had a good session and we been watching the you want once again -- watching the yu once again. the u.s. dollar to the

renminbi for the first time since 2010. weakest we've seen for the ninth day in a row. yousef: the debate over fiscal and monetary policy continues as the senior economic adviser on donald trump's transition team has taken aim at u.s. fiscal policy. he says the central bank needs a plan for downsizing its balance sheet. trump was highly critical of fed policy during the campaign, claiming low interest rates are creating a big fat ugly bubble in the stock market. adding that raising rates too fast could threaten the u.s. recovery. he isd vice chairman says

not concerned over the lack of liquidity in u.s. markets and commented on the recent move in bond yields on the back of trump 's election win. >> i don't know what the answer to win are you going to change policy is. if i did know, i wouldn't tell you. is something we obviously have to look at at the moment. i don't see it as yet something that is terribly worrying. us is our guest who helped oversee 26 billion pounds of assets under management. about in terms of where we expect the fed to go in december and beyond. interesting to see that someone from trump's camp urging the fed

to shrink its talents sheet, not just change course and monetary policy. we have a chart that shows the size of the balance sheet and how it is grown over time. it speaks volumes about the way the monetary authorities have tried to tackled the problem. >> we all know that quantitative easing was an experiment. that's the way that it goes. this demand is not unusual. the question is, how do you end it? the u.s. set is the first to try to taper slowly. the effective that the last time we saw it was quite negative. so the sentiment is right. whether it works or not remains to be seen. i'm not convinced people know how to turn a profit. is pricing inrket

an implied probability in december. even what we're hearing from the trump camp in terms of advisors and potential candidates, it looks like they are ready to shake up the fed. how is that going to affect policy? i said we would see the fed rate rise. thought thatpeople is what was going to happen. my assumption is she stays through 2018, but you might do something earlier. let's wait and see. is, does the stimulus change what the fed does? we will have to say -- have to wait and see when he is inaugurated, and then we can judge. anna: we have to see what fiscal stimulus is actually proposed, let alone delivered, by the new u.s. administration.

the point being made overnight that donald trump has no magic wand when it comes to grow and a bumpy he will deliver ride for the stock markets. >> i think that is very clear. he is absolutely right. is givingelect trump a lot of contradictory policies. if he reduces corporate tax, that is good for stock markets, but if you pressures the fed to , you haveing off contradictory forces working. he has a big number in infrastructure but at the same time he wants to build protectionism. yousef: that brings us bacto what will happen to bond yields. markets taking a bit of a breather. where does this go from here? >> i am the equity guy, but i

we still believe it's been shifted down for at least the next 10 years. it's not going to go up a lot. the only thing that might affect that is if president trump says something about renegotiating debt, which he did talk about in the campaign, but were hoping he will not talk about is president. if the u.s.unusual would stand up and publicly say were going to renegotiate our debt, and then all bets are off. i'm hoping that doesn't happen. barring that, we're still on track. and the noiseoise doesn't change the fundamental picture. anna: here are some highlights of your day ahead.

reportthe world energy and 19 minutes later, the british jobs report. yousef: president obama continues his european farewell tour. he still in greece flying to berlin in the afternoon. anna: coming up, dutch courage. a new ceo is imminent and plans to reduce annual costs by 25%. we will speak with that incoming ceo after the break. romef: paul rhoads lead to -- all roads lead to rome. we will have more on that story. the nasdaq think of the next u.s. president's plan to roll back regulation? stay tuned for that. this is bloomberg. ♪

yousef: the state-controlled dutch lender that returned to the stock market last year has reported a jump in the third quarter. also announcing plans to cut 1500 more jobs. rejoined on the phone from amsterdam by the company's cfo. thanks for joining us on the program. let's get straight to that cost-cutting plan. are you responding to it tougher operating environment? >> that is indeed one of the reasons operating income is growing much less than it did the last couple of years. cost control is very important. anna: you must be pleased to see higher interest rates to some extent helping some aspects of your business. that's been a theme since last week, certainly. >> yes, that is true.

we are very happy, it has been a for 49 -- has been robust nine quarters. a very good result. impact does kind of donald trump's election have on the overall operating environment? bank stocks go on a tear. is that anything positive for your business? the bond markets reacted by increasing long-term interest rates, and an increased yield curve is better for banks in this flat yield curve. in that respect i would say that was a good development. anna: do you think with the way donald trump has been talking about reducing regulation, will that be something the whole set to will benefit from?

or will that be a u.s. story only? >> i think it is too early to tell. the dodd-frank discussions in the u.s., it's a bit different than in europe at this moment in time. capital, we are asel 4 results. b that is important for the regulatory environment of the whole world. yousef: has there been any more progress, have they tried to contact you again? >> i read it in the newspapers. we never comment on these kind of things, so sorry for that. anna: did they not formally approach you? >> i gave my reaction, i think. the dutch finance minister

has said he would like to sell down the rest of the government state before the election. beforesee that happening the dutch election takes place? >> that's entirely in the hands of the minister finance. it is his choice. do, sot what he will that is not in our domain. anna: would it make a difference position? inwe agree we want to be private hands again going forward, absolutely. we are hearing whispers from leading bank executives that are considering amsterdam as the new hope for their european operations. does amsterdam have the capacity to of sort that kind of activity? >> we definitely have capacity here in amsterdam. the scale is much bigger.

going toect banks paris and also amsterdam. anna: are you involved in efforts with the amsterdam authorities to try to encourage further development of the financial services sector there? favor of that. we don't have a high profile in that field but we would appreciate banks coming to amsterdam. anna: thanks so much for joining us. joining us on the line from amsterdam. yousef: let's pick up on the earnings story, i'm looking at the earnings analysis on the bloomberg. you've had 28 surprises to the upside terms of banks. it's been a good quarter for

you, hasn't it? >> of the ones that reported, across the board it's on the upside. the banks are not unique in this. but the banks are doing particularly well despite the low interest rates. for the banks, it's about cost-cutting. so there's no real growth as we saw in the past. >> they are managing their way out. the banks are in a stronger position and they are cutting cost. cutting costs, managing their way out. anna: there's a lot we don't know about regulation around banks. earlier aboutory

threatening to walk away if they continue to fall out. the fallout is around the use of your on model to measure risk, just underlining how the sector is in a state of flux so many years after the crisis. >> what have we done since the crisis? we have capitalized the banks. waswe go forward if trump to liberalize the financial system in the united states. i cannot see how the global market can work if we have the same kind of risk. be premature to say that the european banking system is healthy. what strikes you? >> the idea that the whole banking system should be healthy is unhealthy, if that makes sense. by and large the problem they have is, banks are in the

business of lending to companies to make monday -- to make money. growthe to see topline and that's what's holding the banks back. anna: also globalization influx under trump. along with the likes of singapore and many other global what is, it underlines at risk if globalization is attacked for the eurozone. >> and there is the conundrum. the united states cannot cut itself all. they can say we will shut the door. the problem is for the rest of massivelyonomies are connected. bashing brexit.

slamming the u.k. governments chaotic brexit strategy. more from our interview, after this break. this is bloomberg. ♪

yousef: a live shot of the imperial palace in tokyo, where it's 3:30 in the afternoon. group, a buying opportunity, the guinness bound to rebound to 100 on the ongoing risk, and uncertainty around the victory of donald trump. let's cross over to what's happening with the new edition of daybreak. let's look and see some of the top stories. anna: the cover story is opec.

cartel ministers and nonmembers are engaged in extensive consultation. you can see them talking. that is as the deadline approaches to limit production for the first time in eight years. the next story is germany's hardtop on basel 3. he will walknd away from talks it key demands are not met. anna: and central london real estate, land values fell 2.3% in the year through december come the most in at least five years as higher taxes and the brexit vote hurt luxury home prices. us for aur guest joins look at the markets. how far is this going to go?

>> asian stocks are rising for the first time in four days. emerging-market stocks up for a second day. you can see that most industry groups are in the green. financial some of the best performers. although the treasury 10 year yield is unchanged, you're seeing the yield push a little higher. a number of these banks gaining in japan. looking at energy stocks of more than 1% as well. biggesting after its surge in seven months. industrial metals dragging down material stocks .4%. as you highlighted at the top of the show, volatility is easing. volatilityowing index showshe move treasury volunteer in --

volatility easing as well. seen treasury yield premiums shrinking. dollar-yen overboard if you look at the relative strength index over 14 days. the third time this is happened this year. it's made the in the worst performer among gt and currencies month to date. will spurlicies alitical risk very they say more logical level is around 100 9% strongerr, about than where it is now. meantime it has spurred five straight days of gains for the topics index, on the brink of a bull market. the rallied almost 19% from february low. anna: thanks for bringing us that market analysis. brexittish government's

strategy is chaotic. there will be in fighting for the next few years according to italy's economic ministry. access to thehave common market without giving you people.n terms of i think this is wishful thinking. was, you are selling a lot of what we call process go in the u.k.. you will allow us to do this .ecause you don't want to lose maybe we will lose some, the i will lose one

country and you will lose 27, which means that we need to find a balance. my perception is there is a lot of confusion. a topic of the internal political debate of the u.k.. which to be honest is not acceptable, because the u.k. went through a process of discussion for the referendum. they made a decision, they had the referendum. now what we need is to define the framework of the negotiation. fascinated, it sounds like a new culinary essential. anna: it strikes me that the debate doesn't seem to move on, does it? , frome the comments there the dutch finance minister

talking about how boris johnson is offering an impossible scenario. means in ahnson general sense. both sides are actually negotiating. it's not surprising. but to negotiate, you have to give a bit of ground. they don't seem to be getting closer. >> what comes out of it, i'm not sure. it shows that the europeans are getting slightly worried that the brits have not got their house in order. yousef: if anything, positions are hardening.

>> the british government can afford to be less clear than the europeans at this stage, oddly enough. it is in the negotiators interest to be slightly less clear. on the other side, they are not sure quite how they are going to react. anna: that is a debate for another setting. i have a chart that shows how various companies are exposed to land values in london in particular, they have been underperforming. these companies are exposed to land values. we brought the story about landau use falling the most in five years. a real concern is an oversupply

of luxury properties in the london market. separate three things. commercial property has slowed down. have retail or home investment. the luxury sector is the one that had gone up so much. it was far too expensive. that was driven by foreign millionaires, and that's beginning to retreat. you could argue that the victory of donald trump is going to drive global uncertainty. >> i think the luxury into the market has been oversupplied for a long time. away from the specifics of

the property story, do you buy into the theory that donald trump is good for the u.k.? >> he might be good for the city of london. my worry was that the city would , new york would go back to being number one. but if president-elect trump chooses to close america often be slightly more aggressive toward foreigners, it might actually help us maintain our lead. amsterdam heard about becoming the new hub for banks. if it's going to be good for this city, then european banks need to stick around. banks will inevitably move some staff to mainland europe and they will take some back to new york on the banking side. aboutes guys are talking

family values. much.thank you very promotedhe nasdaq has a new ceo. speaking to betty liu, she addressed donald trump suggestion that he would roll back financial regulation and how such moves would impact the nasdaq. >> to the then that we have a republican administration and they continue to show a pro-business orientation, it tends to bring some level of what i will call balance in regulation. one area that has impacted our industry has been dodd-frank. there has been unintended

consequences. most notably that the banks are no longer in a position to offer much-needed liquidity into some of the markets that we operate. we would love to see the opportunity for dodd-frank to be modified to allow banks to take responsible risk taking into the markets to provide that important liquidity. we have to recognize that an enormous amount of work went into the creation of dodd-frank and there were a lot of reasons for it. we recognize the history would come from. whenever youthat put in new regulations, they are always unintended consequences that come with it. how can we be sure where modifying the relation to make sure it's having the impact we want it to have? is say it's good for the

financial market. what we've seen so far, i would say a republican administration with a pro-business orientation would generally be good for the financial industry. >> and he has pled to cut back on corporate taxes. >> generally speaking, if you have some of the tax policies it reallyonsidering, drives things so they companies can reinvest cash into the business appropriately and reinvest in growth. that is generally good for the economy. yousef: saudi arabia's sovereign wealth fund says it will not be selling down its hefty shareholding in local companies. how is the diversification drive going? we will get you the latest. earnings at 7:00

a.m. u.k. time. yousef: and stanley fischer not concerned about no liquidity. what is keeping him up at night? this is bloomberg. ♪

anna: welcome back. i live shot of new york. the asia-pacific has been up, point 8% right now. it's 1:46 in new york. let's get to the bloomberg business flash. jump in third-quarter profit, helped by net interest income. at 607 million euros,

beating analyst estimates. andbank was nationalized returned as a publicly traded company a year ago. paribas u.s. business was the most profitable among european investment banks in the first nine months of the year, according to first ever filings by the firms required by american regulators. of 3.80rofit on revenue 6 billion. snapchat's parent company has filed confidentially for an initial public offering, according to people familiar with the matter. one said it filed before the u.s. election with the valuation of as much as 25 alien dollars. a listing could come as early as

march although no final decision has made -- has been made on the size or timing of the ipo. has spoken out about a terror upon cars made in mexico. he told bloomberg how he favored free and fair trade. >> we will have to see when president-elect trump gets into office and the policies he advocates. are a global manufacturer with our home in the united states. the majority of our investments in north america are right here in the united dates, and just as leveraging manufacturing in other parts of the world, it goes both ways. release superll mario world wide on december 15. the first mobile edition will be free to download initially but will include an optional payment

of $9.99 to unlock all the features. that is your bloomberg business flash. yousef: i cannot believe it took this long for that to come out. let's get more on oil. gains: holding on to its after its biggest surge in seven months as opec members try to bridge the divide over reduction cuts. we're joined by manus cranny. what can we expect leading up to the breanna meeting? the push to salvage a reputation that's on the line. manus: all hands are on deck. , the foundert this of pixar talking to the audience

here. we've just been watching toy story. yes, i am absolutely focused on the oil market, but it's a great gathering here. the secretary-general is going to do a whirlwind tour. the russians are back in doha. informal talks by the russians, opec on a whirlwind tour. have a look at this chart. -- what'sng about the going to happen versus the rhetoric. the sum total of this is that the net longs in the market have dropped by the biggest in the most since 2012, 23%.

bob is saying the market is $44, give or take standard deviation. britt shorts are up by 65%, the highest in five years. anna: keep an eye on that oil price, and there's a lot of talk about the sovereign wealth fund and its attempt to diversify out from domestic assets. this is a story that has gripped the market the last couple of days. you look at the performance yesterday, at one point it was down 4%. denying they're in the process of divesting some of their key

holdings. 44% holding in in cb. we have five sources telling us they are getting ready to do this. down 4% yesterday but managed to recoup some of those losses. i will catch up with the economy minister a little bit later on and find out where we are on the great debate within vision 2030. it's bringing in foreign investment, people like me. wasexecution of my visa superfluous. about what are they doing for the rest of the world to expedite the system. yousef: manus cranny live for

us. wereve the opec meeting looking ahead to on november 30. i was in algiers and istanbul, that sense of optimism and confidence that they will be able to come up with something specific at that the anna meeting. is this realistic at all? >> a step back and say this time it doesn't matter if they come to an agreement or not. the reason i think it doesn't matter is how we were talking at the beginning of the program. the fact that president-elect seemednd president putin to be on the best of terms might imply a risk in oil prices. yousef: how much is priced in in terms of an agreement or lack thereof?

at $48-$50. >> there is not much movement. it will be a surprise if they do agree, but it's hard to see how. you understand there is a cash flow problem that they have. anna: something you've talked about a lot, various policies in the boardroom and how they the boardroom in the u.k.. you think it's possible to come ceo paya way of vetting that stops annoying people. >> let's start with the obvious. people are not happy with the system. we saw that with brexit and we saw that with president trump.

if you look at the u.k., it's very complicated. suggestion.with a them to work out whether society accepts it or not. secondly, make it simple. remuneration of ceos is like 14 pages and even i cannot read it. align them to the long-term. like my dad told me, if you're going to do something, give yourself a test. you do it publicly? if you hide it, you are ashamed of it. this is what we are going to pay the ceo and this is why. anna: theresa may was suggesting

that businesses themselves need to do more to sell globalization. >> as i said, the fact that we failed, i don't think we can debate. there has been a failure. the other thing prime minister may has suggested, it helps alignment. yousef: who's going to put on the pressure to make this happen? >> the shareholders should act more like stewart's and take our responsibilities seriously. is $75unt of savings trillion. we control the rest of the capital market. we can say to companies, what we do as business is good. for: thank you very much

spending the last hour with us. could a less liquid bond market be the road for the fed? we will discuss that and everything else. this is bloomberg. ♪

>> is december a done deal? oil optimism. wti holds 45 bucks a barrel as opec boosts efforts to secure its production deal. we are live in rio. the trump shock. the dollar weakens as investors question whether financial market may have reacted to -- overreacted to trump's victory. ♪

welcome to bloomberg a break. hereflagship morning show in london. here with anna edwards. we have some breaking numbers coming in. anna: talking about market conditions remaining healthy. yousef: let's break these down a little bit more for you. third court or sales rate of 0.74. we are waiting for some further context. that is a stock that is down 20.74% so far this year. about my forever 1% before the announcement. .74.ales rate at seven analysts have a buy on the stock. one a sell. we are waiting for details on those numbers. point -- 3.4%.ee anna: from the residential side of the markets to the commercial pretaxe have adjusted

profit at 199 million pounds. a dividend for the second order 7.3.ven point -- seven -- to refinancets until 2020. we were carrying an interesting story a week ago about how british land is prepared to sell stake in the london tower. that is according to people familiar with the matter. no mention as yet in the release that i've seen of this. a return of -1.5%. office values have fallen the most in at least seven years in july after britain voted to leave the european union. we have seen the brexit referendum results have been forcing landlords to offer longer rent-free periods for

tract occupiers. rinse and the city and offices are set to drop as much as 12% over the next two years according to research. the brexitthat conversation is having an impact on the sector. the house builders outside london remaining resilient. within london, commercial real estate under pressure. a start of prolonged and certainly -- uncertainty. this is the start of prolonged uncertainty for the country. yousef: a few additional lines are coming, total trading remains in line with estimates. focused on delivery of time percent gross margins for fiscal year 17. what is going on with the futures? session over in asia was a positive one but that is dancing to a different tune when you can see the post-trump

election in effect. we are expecting to go higher on european markets. yousef: pretty much across the board. they look pretty flat. let's show you where we have been on a number of asset classes. mscitioned where the pacific was. oil stocks getting a big boost as we have seen a little bit of a pause in the recent movements lowering the oil price. the dollar spot index down by .1 of 1% but pausing for thought in various markets. yousef: soul-searching as well. and the u.s. ten-year pretty much flat as investors consider all the factors and iron ore, one of beating it is getting, down 1.65%. it went up far too fast off the back of outcomes election victory in hopes he will pile in all that money into infrastructure as if it were to translate into increased demand.

a long road to go with that front. let's get the bloomberg first word news now. donald trump is considering nominating ted cruz to serve as u.s. attorney general. according to a person should -- familiar. was at trump tower yesterday. when approached by reporters he said the election was a mandate for change but did not say he was under consideration for a job. cruz unsuccessfully sought the presidential nomination and exchange to vicious attacks with trump during the campaign. anna: the stock market is in for a bumpy ride as expectations are dashed. cofounder who predicted the outcome of the election in january said trump does not have a magic wand to rapidly improve the economy. the s&p 500 index has climbed 1.9 percent since the november election. donald trump has

delivered a double blow to holders of corporate bonds. making earnings unpredictable. has recommended safety and corporate bonds. maryland says the average yield of the yen, has risen to the highest level since january. away germany will walk from talks on revamping global capital rules unless its key demands are met. he insists of the country will not accept a deal at any price and has laid out a series of demands including two essential items of action. that is the international standardbearer. yousef: barack obama said greece deserves some space to allow its economy to grow. amid calls to provide debt really for that will fuel its recovery. during it trip to athens the u.s. president said he would be better to come up with a durable

solution as opposed to each year or every six months having a new negotiation. -- teargas was used against marchers who were protesting the obama visit. anna: global news 24 hours a day powered by more than 26 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg website. is standing by. nikkeiwe are seeing the closing. apanese equities holding and lot of conviction. emerging markets rallied and continued to today so brief -- rebounding from those four-month lows that they hit in the wake of that market reaction we saw to the u.s. presidential election. and now that decision, the hang

seng is up .6 of 1%, continuing to rebound from the three-month low it reached last week. the movement we are seeing in oil and also 10 sent -- yr tencent. will be watching closely the movement in bonds in the asian region and we did say that japanese 10 year yields rise to zero yesterday for the first time since september. it is holding at its highest level since march. up by .03 of a basis point. also looking at the 10 year yield in australia also holding at its highest level since april. quickly having a look at the stocks we are watching in the asian region. there is a lot of movement in hinoda.

the share price was sent higher and the rally in nintendo, all of this on the fact that super mario will be coming to your iphone or your ipad come december 15. i know you are waiting for that one. anna: thank you. she is determined for us to declare that we spend a lot of time gaming. the debate over fiscal and monetary policy continues. a member of the transition team has taken aim at fed policy. bond purchases have been harmful and the best trump was critical of fed policy during the presidential campaign claiming low interest rates were creating a big fat ugly bubble in the stock market. the fed president said it is too soon to know the effects of fiscal stimulus adding that raising rates too fast could threaten the u.s. recovery.

stanley fischer says he is not concerned about a lack of liquidity in u.s. markets and commented on the recent yields -- recent bond yields. >> it is a question of when you are going to change policy and if i did know i would not tell you. what you say to something we obviously have to look at at the yetnt, i do not see it as something that is terribly worrying. yousef: let's bring in our guest. great to have you on the show. let's pick up on what stanley fischer just said in terms of possible concerns around yield, he says not at the moment it is not on their radar. where do the treasury yields go from here, we're seeing the market consolidate and take a breather. guest: the first thing that is interesting to observe is we had

a very significant movement at the long and but if we look at the pricing of the fed funds, when we look at what is priced into the market, yes, a december rate set -- rate hike scenes in your certainty but beyond that the market is still pricing relatively little in terms of actual tightening. there does seem to be a bit of a question mark over where you square the stories between the long and in the short end of what is going on in the bond market. if we look further ahead if trump actually delivers on the fiscal stimulus, you would expect the fed to tighten further and much more of a flattening movement at that point in i do think we will see u.s. bond yields had higher from here. yousef: that seems to be a binary outcome. which one is the case? aest: it is more of slow-moving process. after the election, everyone was very excited, a lot of discussion about fiscal stimulus and i think what is seeping in now is the realization it will be the 20th of january until jet

-- donald trump comes into action at being the next u.s. president. it looks like some time to put in place a new budget. it will be springtime before we really now what kind of stimulus is coming. as you rightly pointed out earlier, infrastructure takes time to come through. tax cuts will be part of it as well. it will take time. it is less of a binary story then a slow-moving process over time. i think that is what the markets will be moving to. we were talking about how one of trump's advisers has talked about how the fed needs to shrink its balance sheet. on how the size of the balance sheet has grown. we know why that has happened. do you see the fed being in a this, noto shrink going it is one thing but actually shrinking this in the years ahead? guest: it is a little bit careful what you wish for. if u.s. on yields, if the fed were to shrink its bond yield at

an accelerated pace you would see an accelerated pace and that would a negative and could turn out to be negative for the rest of the world as well. think about the pressure that could create and that would create a backlash onto the u.s. economy as well. i do think it would be wise for the fed to tread carefully here. i think one of the ideas is to try and not have u.s. yields go up too quickly. yousef: what data points are you looking out for? the noise is dissipating and people are focusing on the raw numbers, what is on your radar and how do you expect the u.s. economy to hold up amidst all this uncertainty and volatility? guest: what we look at the underlying u.s. economy, the economy is fairly close to full capacity in terms of the labor market. the next key report is the enemy limit report. everyone will be watching that very closely. when you have a point when you thinkchange of policy, i

that becomes the focal point and i think that will remain the case. that is what will determine the economy once we get into the second half of 20 17. i do think the short term data points unless you get some very disappointing news have become a little bit less important. the other key feature for the fed is really what happens to the financial markets here. i think this is the other thing we have seen with the fed is financial stability matters greatly. there is a very big movement and bond markets, if there is nervous is coming through, it could turn negative for the equities and that, ironically, could end up delaying the fed. it is dated dependency but also very much so market dependency. is not concerned about what he sees and bond markets, to your point, maybe there could be in the future and others have said watch what happens in emerging markets in that regard as well. it would not be the first time the fed has had to think carefully about what is going on in the globe and whether that

can start weighing on the u.s. story and pulls on their policy shift intentions. guest: if you think about sitting back here in january, it seems like a long time ago but that was very much the situation we were in, very tumultuous markets where the fed had to slow down on its tightening and maybe that is part of what the short part of the market is telling us right now. would em be level at risk in terms of rates? ofst: it is a common nation so many factors. what we can look like -- look at and the dollar is a helpful guide, if you see a very strong movement usually that coincides. what kind of strength with the dollar need to be out for it to be a real worry? guest: i am an economist. i will never give you such a

black and white answer. you can try and hold me to it. i think, what do we need to be looking out for? we need to be looking out for what is trump saying in terms of foreign policy trade policy, that is one future which is important. we need to be watching what is happening in the commodity markets, he opec meeting on november 30 will be important for a lot of emerging markets as well. we will be watching what happens on the underlying u.s. economy. anna: thank you very much. staying one generale the program. economic growth returns to italy as the promised her prepares for a possible exit. the nation's economic development minister said he should say in his place regardless of what happens in the forthcoming vote. that is ahead. this is bloomberg. ♪

yousef: you're looking at a live shot of london. it is cloudy, but the sterling is holding up. , 3:19 p.m. in the afternoon. a 90% jump in income. underlying net income came in at 607 million euros beating analyst estimates. the bank which was nationalized financial crisis returned as a publicly traded company at a year ago when the dutch government sold a 23% stake in an ipo. bnp paribas u.s. business was the most profitable in the first nine months of the year according to the first ever filings required by american regulators. the u.s. unit made a three tax

profit of $958 million on revenue of 3.8 7 billion. in contrast, credit suisse lost money in the states because of restructuring costs. company has parent filed for a public offering. it filed papers before the u.s. election and it is targeting evaluation as -- a valuation as much as $25 billion. it could come as early as march although no final decision has been made on the timing of the ipo. a representative declined to comment. that is your bloomberg business flash. anna: thank you. let's talk about europe. we are two weeks away from the referendum on constitutional reform. economic development minister calenda.

year foran important us because we are going through a process of economic recovery. we have good figures for this year, wei think next can do even better. the point is that we also have a lot of turmoil around europe and in europe. to have stability is very important but having said that, it is the decision of the prime minister. the next big test for europe, we have the referendum on december 4, how do you think it will play out? guest: it is a very close call in the opinion polls at the moment. this is a posed to brexit --

opposed to exit trump. this is something the market has already thought about and taken into account. in the event of a no vote the negative would be that this could potentially slow the reform process in italy over a longer point of time and there has been a morning by dbrs that italy could be downgraded. agency that gave italy and a rating. that is the concern on a no vote but i do not think it is the same kind of gene -- game changing event. one thing i do want to emphasize is even in the event of a yes vote there is still the opinion on the electoral reform which needs to happen. and then there is the completion of this reform process. there are still some uncertainties. anna: i pulled up the function

and this is focusing in on the 10 year. this is the ramp-up we have seen in italian 10 year yields. you can play with this and look at all kinds of different things. you would not expect to see spreadspiking or yield really pulling away. and the results of a disappointing vote outcome for matthew renzi. that hask a loof already been discounted and we can see how the italian spreads have moved compared to other spreads. a lot of this risk is priced into the market. yousef: assuming you believe what the polls are saying because the track record of polls in the last year does not necessarily encourage someone to buy into that. italy is not your main concern, what is your main concern if you look at the european political space because we have a long list of elections in the pipeline? guest: a lot of my concern is

combined, the fact that we have all these elections and this is what we are seeing in italy as well. it is slowing us down on the reform process at the national level and the european level. we need to advance on the capital union, the list is a very long list and that is more about the long-term growth and solidifying the european institutions. this is what i am concerned about. i want to emphasize that when we look at the different political events in europe, each of them comes with its own risk but in these cases we are talking about tail risks. it is about that reform process that is being slowed down and it is about that uncertainty which will last until the spring of 2018 which when we get the next italian -- which is when we get the next italian referendum. there is a website that does some nice data. you get a 100 point increase and takes half as that

inoff gdp growth. it is important, it does matter. anna: what is the likelihood that the theme of infrastructure investment that we have seen so well embraced by markets from the u.s. in the last week or so, what is the chance that gets more fully picked up in europe? where could that actually play out, who has the space? guest: this is where the commission will be interesting because we get the opinion on the draft budget. we do not have very much physical space in europe today to launch a fiscal stimulus plans. what we have seen with the jun cker plan is it is hopeful but changing growth driver. you may see the odd country find a bit of room for infrastructure spend. it is not a game changer. what will be interesting is if the commission comes back on spain and says -- yousef: that is all the time we have. ofiety generale's head

economics. that will do it for this program. this is bloomberg. ♪

is the european open. i'm guy johnson in london. matt miller is in berlin. what are we watching this morning? trump allies urging the fed to shrink its balance sheet. budman sachs says